UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 31, 2007

KRATOS DEFENSE & SECURITY SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

4810 Eastgate Mall
San Diego, CA 92121

(Address of Principal Executive Offices) (Zip Code)

(858) 812-7300

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

The information set below under Item 2.03 is hereby incorporated by reference into this Item 1.01.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On December 31, 2007, Kratos Defense & Security Solutions, Inc., a Delaware corporation (“Kratos”), Kratos Government Solutions, Inc., a Delaware corporation and wholly-owned subsidiary of Kratos (“Parent”), Haverstick Acquisition Corporation, a Delaware corporation (“Merger Sub”), and Haverstick Consulting, Inc., an Indiana corporation (“Haverstick”), consummated the merger of the Merger Sub with and into Haverstick (the “Merger”) pursuant to the terms of that certain Agreement and Plan of Merger, dated as of November 2, 2007 (the “Merger Agreement”).

In connection with the Merger, all outstanding shares of capital stock of Haverstick were converted into the right to receive a ratable portion of the merger consideration.  The aggregate merger consideration paid by Parent in connection with the Merger was $90,000,000.  Of the merger consideration, $69,000,000 was paid in cash at closing and approximately $21,000,000 was paid with unregistered shares of Kratos stock.  Of the cash consideration, $35,000,000 is being utilized to pay Haverstick’s existing debt and approximately $1,000,000 cash and $8,000,000 of the Kratos stock is being retained for an indemnity holdback.  The aggregate $9,000,000 holdback will be released at the rate of 50% on the 12 month anniversary of the closing and the remaining 50% on the 21 month anniversary of the closing, with the exact amounts being subject to any unresolved and pending claims.  The equity portion of the transaction includes approximately 7.5 million of unregistered shares of Kratos stock.  The number of unregistered Kratos shares distributed was calculated using the trailing 20-day average stock price at the signing of the Merger Agreement.

The shares of Kratos common stock issued in connection with the Merger were issued in a private placement transaction pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations promulgated thereunder.  In the event that the shares of Kratos common stock issued at the closing (the “Closing Stock”) are not salable under Rule 144 promulgated under the Securities Act (“Rule 144”) or pursuant to an effective registration statement as of the twelve month anniversary of the closing date, holders of the Closing Stock may elect to exchange such shares for a cash amount equal to $2.74 per share in accordance with the terms of the Merger Agreement.  Until the date on which the shares of Closing Stock are salable under Rule 144 or pursuant to an effective registration statement, interest shall accrue on the value of the Closing Stock at a floating rate of one-month LIBOR plus four percent (4%) per annum. The value of the Closing Stock for purposes of calculating the accrued interest shall be determined in accordance with the terms of the Merger Agreement and the aggregate interest amount shall be payable by Parent in shares of Kratos common stock.

Parent paid the purchase price with cash provided under an $85,000,000 credit facility provided by KeyBank National Association (“KeyBank”) pursuant to the terms of those certain Credit Agreements by and among Kratos, KeyBank, the other financial institutions parties thereto and Keybanc Capital Markets (“KeyBanc”), dated December 31, 2007 (the “Credit Agreements”).  The consideration for and the other terms and conditions of the Merger were determined by arms-length negotiations between Kratos, Parent and Haverstick.

Haverstick is a provider of engineering, logistics, suborbital rockets and rocket launch support services, information technology, program management, and other professional services primarily to the federal, state and local governments, and the private sector.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the Merger Agreement attached as Exhibit 2.1 to the Current Report on Form 8-K filed by Kratos on November 7, 2007.  Kratos issued a press release on December 31, 2007 regarding the closing of the Merger, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 2.03 Creation of a Direct Financial Obligation.

In connection with the Merger, Kratos entered into senior secured credit agreements in the aggregate principal amount of $85,000,000 comprised of (i) a $50,000,000 first lien term loan facility and a $25,000,000 revolving credit facility (collectively, the “First Lien Credit Agreement”) with KeyBanc as lead arranger and book runner, KeyBank, as administrative agent, and the other lenders party thereto, and (ii) a $10,000,000 second lien term loan facility (the “Second Lien Credit Agreement”) with KeyBanc, as lead arranger and book runner, KeyBank, as administrative agent, and the other lenders party thereto.  The First Lien Credit Agreement and the Second Lien Credit Agreement are collectively referred to herein as the Credit Agreements.  Pursuant to the terms of the First Lien Credit Agreement, the first lien term loan will be a five year credit facility and the revolving credit facility will be a four year facility with a $10,000,000 sub-limit for letters of credit. Pursuant to the terms of the Second Lien Credit Agreement, the second lien term loan will be a five-and-one-half year credit facility.  The proceeds under the Credit Agreements may be used for general corporate purposes including refinancing or existing bank debt, working capital and acquisitions.

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Kratos may borrow funds under the Credit Agreements (i) at the base rate, determined as the greater of (A) the prime loan rate announced by KeyBank and (B) the sum of the weighted average overnight federal funds rate published by the Federal Reserve Bank plus 50 basis points, or (ii) at the offshore rate, determined by the Administrative Agent as the offered rate for U.S. dollar deposits in the approximate amount of the requested loan and having a maturity comparable to such interest period, which rate appears (A) on the British Bankers’ Association internet web page (http://www.bba.org.uk/public/libor/), or via (B) Reuters (BBALIBORS), Bloomberg, Moneyline Telerate (Page 3750) or any other information provider of the British Bankers’ Association daily Libor rates as of 11:00 A.M., London time, on the date which is the second day on which banks are open for interbank deposits in London prior to the commencement of such interest period; as adjusted for reserve requirements and rounded upwards if necessary to the next higher 1/100%.  First lien term loan borrowings, first lien revolver borrowings and second lien term loan borrowings may be subject to an additional 750 basis points, 325 basis points, and 800 basis points, respectively, based on Kratos’ credit ratings.  In addition, Kratos pays a fee ranging from 30 basis points per annum to 75 points per annum, based on its credit ratings, on the daily amount of the unused commitments under the First Lien Credit Facility.

The terms of the Credit Agreements include customary representations and warranties, as well as reporting and financial covenants, customary for financings of this type.  In connection with the closing of the Merger on December 31, 2007, Kratos borrowed $75,500,000 under the Credit Facility.

The foregoing description of the Credit Agreements does not purport to be complete and is qualified in its entirety by the Credit Agreements attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On December 31, 2007, the Board of Directors of Kratos amended and restated the Kratos Bylaws (the “Bylaws”), effective immediately, to update the Bylaws with the current name of the company and to permit the issuance of shares of Kratos’ capital stock in uncertificated form.  The amendments to the Bylaws will permit direct or “book-entry” registration of shares of Kratos’ capital stock and thereby facilitate Kratos’ eligibility to participate in a direct registration system (DRS).  This description of the Amended and Restated Bylaws is qualified in its entirety by reference to the Amended and Restated Bylaws filed herewith as Exhibit 3.1.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The financial information required by this item, if any, with respect to the Merger, will be filed as soon as practicable, and in any event not later than 71 days after the date on which any Current Report on Form 8-K is required to be filed pursuant to Item 2.01.

(b) Pro Forma Financial Information.

The pro forma financial information required by this item, if any, with respect to the Merger, will be filed as soon as practicable, and in any event not later than 71 days after the date on which any Current Report on Form 8-K is required to be filed pursuant to Item 2.01.

(d) Exhibits.

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(1)                                  Previously filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2007 and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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EXHIBIT INDEX

(1)                                  Previously filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2007 and incorporated herein by reference.

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EXHIBIT 3.1

BYLAWS

OF

KRATOS DEFENSE & SECURITY SOLUTIONS, INC.

A Delaware Corporation

TABLE OF CONTENTS

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ARTICLE I.

OFFICES

1.1           Registered Office.  The registered office of the corporation within the State of Delaware shall be in the City of Dover, County of Kent, State of Delaware.

1.2           Principal Offices.  The Board of Directors shall fix the location of the principal executive office of the corporation at any place within or outside the State of Delaware.

1.3           Other Offices.  The Board of Directors may at any time establish branch or subordinate offices at any place or places where the corporation is qualified to do business.

ARTICLE II.

MEETINGS OF STOCKHOLDERS

2.1           Place of Meetings.  Meetings of stockholders shall be held at any place within or outside the State of Delaware designated by the Board of Directors.  In the absence of any such designation, stockholders’ meetings shall be held at the principal executive office of the corporation.

2.2           Annual Meeting.  The annual meeting of the stockholders shall be held each year within six (6) months of the end of the corporation’s fiscal year on a date and at a time designated by the Board of Directors.  If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same hour.  At the annual meeting, the stockholders shall elect a Board of Directors, consider reports of the affairs of the corporation and transact such other business as may be properly brought before the meeting.

2.3           Special Meeting.  Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or the Certificate of Incorporation, may be called at any time by the President, and shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors or one or more stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote.  The written request shall state the purpose or purposes of the special meeting.  Business transacted at any special meeting shall be limited to the purposes stated in the notice.

2.4           Notice of Stockholders’ Meetings.  Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.  The written notice of any meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting.  If mailed, notice is given when deposited in the United States mail postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation.  An affidavit of the mailing or other means of giving any notice of any stockholders’ meeting shall be executed by the Secretary, Assistant Secretary or any transfer agent of the corporation giving the notice, and shall be filed and maintained in the minute book of the corporation and shall, in the absence of fraud, be prima facie evidence of facts stated herein.

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2.5           Quorum.  The presence in person or by proxy of the holders of a majority of the stock issued and outstanding and entitled to vote at any meeting of stockholders shall constitute a quorum for the transaction of business.

2.6           Adjourned Meeting; Notice.  Any stockholders’ meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the shares represented at that meeting, either in person or by proxy, but in the absence of a quorum, no other business may be transacted at that meeting.  When any meeting of stockholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at a meeting at which the adjournment is taken, unless the adjournment is for more than 30 days from the date set for the original meeting, or if after adjournment a new record date is fixed for the adjourned meeting.  Notice of any such adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting in accordance with Section 4 of this Article II.  At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting.

2.7           Voting; Proxies.  The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 11 of this Article II, subject to the provisions of Section 217 of the Delaware General Corporation Law (relating to voting shares held by a fiduciary or in joint ownership)Except as otherwise provided by the Certificate of Incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by him which has voting power upon the matter in question.  Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.  All proxies must be filed with the Secretary of the corporation at the beginning of each meeting in order to be counted.  A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.  A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the corporation.  Unless otherwise required under these bylaws or the Delaware General Corporation Law, voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors of election unless so determined by the holders of shares of stock owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote which are present in person or by proxy at such meeting.  At any stockholder meeting at which a quorum is present, the affirmative vote of a majority of the stock issued and outstanding and entitled to vote at any meeting of stockholders shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by the Delaware General Corporation Law or by the Certificate of Incorporation.  There shall be no cumulative voting.

2.8                           Record Date for Stockholder Notice, Voting and Giving Consents.  For purposes of determining the stockholders entitled to notice of any meeting or to vote or entitled to give consent to corporate action without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date shall not be more than 60 days nor less than 10 days before the date of any such meeting nor more than 10 days before any such action without a meeting.

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If the Board of Directors does not so fix a record date:

(a)                   The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

(b)                  The record date for determining stockholders entitled to give consent to corporate action in writing without a meeting (i) when no prior action by the Board has been taken, shall be the day on which the first written consent is given, or (ii) when prior action of the Board has been taken, shall be at the close of business on the day on which the Board adopts the resolution relating to that action.

2.9           List of Stockholders Entitled to Vote.  The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.  Such list shall be open to examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified in the notice of the meeting or if no notice is given, at the place where the meeting is to be held.  The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

2.10         Telephonic Meetings.  At any meeting held pursuant to these Bylaws, shareholders may participate by means of a telephone conference or similar method of communication by which all persons participating in the meeting can hear each other.  Participation in such a meeting constitutes presence in person at the meeting.

2.11         Stockholder Action by Written Consent Without a Meeting.   Any action which may be taken at any annual or special meeting of stockholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which ail shares entitled to vote on that action were present and voted.  Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

2.12         Inspectors of Election.  Before any meeting of stockholders, the corporation shall appoint one or more inspectors of election to act at the meeting if so required under Section 7 of this Article II and make a written report thereon.  If no inspectors of election are able to act at a meeting of the stockholders, the Chairman of the meeting shall appoint one or more inspectors of election to act at the meeting.  If inspectors are appointed at a meeting, the holders of a majority of shares or their proxies present at the meeting shall determine how many inspectors are to be appointed.  If any person appointed as inspector fails to appear or fails or refuses to act, the Chairman of the meeting shall appoint a person to fill that vacancy.

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These inspectors shall:

(a)           Determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies;

(b)           Hear, determine and retain for a reasonable period a record of the disposition of all challenges and questions in any way arising in connection with the right to vote;

(c)           Count and tabulate all votes or consents;

(d)           Determine when the polls shall close;

(e)           Determine the result.

ARTICLE III.

DIRECTORS

3.1           Powers.  Subject to the provisions of the Delaware General Corporation law and any limitations in the Certificate of Incorporation and these Bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.

3.2           Number of Directors.  The number of directors of the corporation shall not be less than three (3) nor more than seven (7).  The exact number of directors shall be four (4) until changed, within the limits specified above, by a bylaw amending this Section 2, duly adopted by the board of directors or by the shareholders.  The indefinite number of directors may be changed, or a definite number fixed without provision for an indefinite number, by a duly adopted amendment to the articles of incorporation or by an amendment to this bylaw duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote.

3.3           Vacancies.  Vacancies in the Board of Directors may be filled by n majority of the remaining directors, though less than a quorum, or by a sole remaining director.  Each director so elected shall hold office until the next annual meeting of the stockholders and until a successor has been elected and qualified.  A vacancy or vacancies in the Board of Directors shall be deemed to exist in the event of the death, resignation, disqualification or removal of any director, or otherwise.  Any director may resign effective on giving written notice to the corporation.  If no directors are in office, then an election of directors may be held in the manner provided in statute.  If, at the time of filling any vacancy or newly created directorship, the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery of the State of Delaware may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares of stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

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Any director may resign effective on giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors, unless the notice specifies a later time for that resignation to become effective.  If the resignation of a director is effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective.

No reduction of the authorized number of directors shall have the effect of removing any director before that directors term of office expires.

3.4           Regular and Special Meetings; Place of Meetings; Notice; Meetings by Telephone.   Regular meetings of the Board of Directors may be held without call and at any place within or outside the State of Delaware that has been designated from time to time by resolution of the Board.  Such meetings may be held without notice.  In the absence of such a designation, regular meetings shall be held at the principal executive office of the corporation.  Special meetings of the Board may be called by the President, any Vice President, the Secretary or any member of the Board of Directors and shall be held at any place within or outside the State of Delaware that has been designated in the notice of the meeting or, if not stated in the notice or if no notice is given, at the principal executive office of the corporation.  Notice of a special meeting shall be given by the person or persons calling the meeting at least 24 hours before the special meeting.  Any meeting, regular or special, may be held by conference telephone or similar communication equipment, so long as all directors participating in the meeting can hear one another, and all such directors shall be deemed to be present in person at the meeting.  The Board of Directors may keep the books of the corporation outside the State of Delaware.

3.5           Quorum; Vote Required for Action.   A majority of the authorized number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 7 of this Article III.  Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these Bylaws.

3.6           Action Without Meeting.  Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the Board shall individually or collectively consent in writing to that action.  Such action by written consent shall have the same force and effect as a unanimous vote of the Board of Directors.  Such written consent or consents shall be filed with the minutes of the proceedings of the Board.

3.7           Adjournment; Notice.  If a quorum shall not be present at any meeting of the Board of Directors the directors present thereat may adjourn the meeting from time to time.  Notice of the time and place of holding an adjourned meeting need not be given, unless the meeting is adjourned for more than 24 hours, in which case notice of the time and place shall be given at least 24 hours before the time of the adjourned meeting to the directors who were not present at the time of the adjournment.

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3.8           Fees and Compensation of Directors.  Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement of expenses, as may be fixed or determined by resolution of the Board of Directors.  No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

3.9           Indemnification.

(a)                   The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.  The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(b)           The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suite was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper.

(c)           To the extent that a director, officer, employee or agent of the corporation shall be successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (3) and (b), or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connect ion therewith.

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(d)                  Any indemnification under paragraphs (a) and (b) (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) and (b).  Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders.

(e)                   Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in paragraph (d) upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation as authorized in this Section 9.

(f)                    The indemnification provided by this Section 9 shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(g)                  The Board of Directors may authorize the corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Section 9.

(h)           For the purposes of this Section 9, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of corporation, partnership, joint venture trust or other enterprise, shall stand in the same position under the provisions of this Section 9 with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

(i)            For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Section 9.

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ARTICLE IV.

COMMITTEES

4.1           Committees of Directors.  The Board of Directors may designate one or more committees, each consisting of one or more directors, to serve at the pleasure of the Board.  The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.  In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.  Any committee, to the extent provided in the resolution of the Board, shall have all the authority of the Board, except with respect to:

(a)           the amendment of these Bylaws;

(b)                  a distribution to the stockholders of the corporation;

(c)                   the amendment of the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the Delaware General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series);

(d)           adopting an agreement f merger or consolidation under Sections 251 or 252 of the Delaware General Corporation Law;

(e)           recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets; or

(f)            recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution.

4.2           Meetings and Action of Committees.  Committees shall conduct their business and meetings in the same manner as the Board of Directors conducts its business pursuant to these Bylaws.

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ARTICLE V.

OFFICERS

5.1           Officers.  The officers of the corporation shall be a President, a Secretary and a Chief Financial Officer.  The corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, a Chief Executive Officer, one or more Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article V.  Any number of offices may be held by the same person.

5.2           Election of Officers.  The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article V, shall be chosen by the Board of Directors, and each shall serve at the pleasure of the Board, subject to the rights, if any, of an officer under any contract of employment.

5.3           Subordinate Officers.  The Board of Directors may appoint, and may empower the President to appoint, such other officers as the business of the corporation may require, each of whom shall bold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the Board of Directors may from time to time determine.

5.4           Removal and Resignation of Officers.  Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Board of Directors, at any regular or special meeting of the Board, or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors.  Any officer may resign at any time by giving written notice to the corporation.

5.5           Vacancies in Offices.  A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to that office.

5.6           Chairman of the Board.  The Chairman of the Board, if such an officer be elected, shall, if present, preside at meetings of the stockholders and the Board of Directors, and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by the Bylaws.  If there is no President, the Chairman of the Board shall in addition be the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in Section 1 of this Article V.

5.7           President.  Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President shall be the Chief Executive Officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and the officers of the corporation.  In the absence of the Chairman of the Board, or if there be none, the president shall preside at all meetings of the stockholders and the Board of Directors.  He shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws.

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5.8           CEO, Vice Presidents.  In the absence or disability of the President, the CEO and the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, the CEO, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President.  The CEO, and the Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for each of them, respectively, by the Board of Directors or the Bylaws, and the President or the Chairman of the Board.

5.9           Secretary.  The Secretary shall keep or cause to be kept, at the principal executive office or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of directors, committees of directors and stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice given, the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings, The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation.

The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required by the Bylaws or by law to be given, and shall keep the seal of the corporation, if one be adopted, in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws.

5.10         Chief Financial Officer (Treasurer).  The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares.  The books of account shall at all reasonable times be open to inspection by any directors.

The Chief Financial Officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors.  He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the President and directors, whenever they request it, an account of all of his transactions as Chief Financial Officer and of the financial condition of the corporation, and shall have the powers and perform such other duties as may be prescribed by the Board of Directors or the Bylaws.

5.11         Excessive Compensation.  If the Internal Revenue Service disallows as 3 business deduction to the corporation any part of the salary or other compensation paid by it to any officer, director or employee, as being excessive compensation, that part disallowed shall be repaid to the corporation by the office, director or employee.

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ARTICLE VI.

RECORDS AND REPORTS

6.1           Inspection of Books and Records.

(a)                                        Any stockholder, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom.  A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder.  In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder.  The demand under oath shall be directed to the corporation at its registered office in the State of Delaware or at its principal place of business.

(b)                                       If the corporation, or an officer or agent thereof, refuses to permit an inspection sought by a stockholder or attorney or other agent acting for the stockholder pursuant to la) above or does not reply to the demand within five business days after the demand has been made, the stockholder may apply to the Court of Chancery in the State of Delaware for an order to compel such inspection in accordance with Section 220(c) of the Delaware General Corporation Law.

(c)                                        Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his position as a director.

ARTICLE VII.

GENERAL CORPORATE MATTERS

7.1           Record Date for Purposes Other Than Notice and Voting.  For purposes of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action (other than action by stockholders by written consent without a meeting), the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted and which record date shall not be more than 60 days before any such action.  It no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

7.2           Checks, Drafts, Evidences of Indebtedness.  All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as from time to time may be determined by resolution of the Board of Directors.

7.3           Certificate for Shares.   The shares of stock of the corporation may be represented by certificates or uncertificated, as provided under the General Corporation Law of Delaware.   Certificates for the shares of stock of the corporation shall be in such form as is consistent with

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the Certificate of Incorporation and applicable law.   Every holder of stock in the corporation represented by certificate, and upon written request to the corporation’s transfer agent or registrar, any holder of uncertificated shares, shall be entitled to have a certificate signed by or in the name of the corporation by the Chairman of the Board of Directors, the Chief Executive Officer, the President or any Vice President and by the Chief Financial Officer, the Treasurer, Assistant Treasurer, the Secretary or Assistant Secretary, certifying the number of shares owned by him in the corporation.   Where such certificate is countersigned by a transfer agent other than the corporation or its employee, or by a registrar other than the corporation or its employee, any other signature on the certificate may be a facsimile.   In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may issued with the same effect as if he were such officer transfer agent, or registrar at the date of issue.   Each certificate shall state upon the face or back thereof, in full or in summary, all of the designations, preferences, limitations, restrictions on transfer and relative rights of the shares authorized to be issued; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.   (Del.  Code Ann., tit. 8, Section 158).

7.4           Lost Certificates.  Except as provided in this Section 4, no new certificates for shares shall be issued to replace an old certificate unless the latter is surrendered to the corporation and cancelled at the same time.  The corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, or it may issue uncertificated shares if the shares represented by such certificate have been designated as uncertificated shares in a resolution adopted pursuant to Section 3, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the Board of Directors may require for the protection of the corporation or any transfer agent or registrar.

7.5           Construction and Definitions.  Unless the context requires otherwise, the general provisions, rules of construction and definitions in the Delaware General Corporation law shall govern the construction of these Bylaws.  Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular and the term “person” includes both a corporation and a natural person.

7.6           Transfers of Stock.  Upon the surrender to the corporation, or the transfer agent of the corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue new certificates to the persons entitled thereto, cancel the old certificates and record the transaction upon its books.

7.7           Registered Stockholders.  The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.

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7.8           Dividends.

(a)           Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation, in any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law.  Dividends may be paid in cash, in property, or in shares of capital stock, subject to the provisions of the Certificate of Incorporation.

(b)           Before payment of any dividend the directors may set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interests of the corporation, and the directors may abolish such reserve.

7.9           Fiscal Year.  The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

7.10         Notices.

(a)           Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail.  Notice to directors may also be given by telephone or telegram.

(b)           Whenever any notice is required to be given under the provisions of th–2 statutes or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed to be equivalent.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except, when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

7.11         Annual Statement.  The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.

7.12         S Election.  If at any time the corporation elects to be treated for federal or state tax purposes as an S Corporation, unless such S election has been revoked by the affirmative action of the majority of the shares entitled to vote on such action, the corporation will not, nor be compelled to recognize, for so long as the Corporation’s status as an S Corporation continues, any transfer to whom or to which in the opinion of counsel to the corporation could disqualify the corporation as an S Corporation.

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ARTICLE VIII.

RIGHT OF FIRST REFUSAL

8.1           Right of First Refusal.  No stockholder shall sell, assign, pledge, or in any manner transfer any of the shares of stock of the corporation or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, except by a transfer which meets the requirements hereinafter set forth in this bylaw:

(a)           If the stockholder desires to sell or otherwise transfer any of his shares of stock, then the stockholder shall first give written notice thereof to the corporation.  The notice shall name the proposed transferee and state the number of shares to be transferred, the proposed consideration, and all other terms and conditions of the proposed transfer.

(b)           For thirty (30) days following receipt of such notice, the corporation shall have the option to purchase all (but not less than all) of the shares specified in the notice at the price and upon the terms set forth in such notice; provided, however, that, with the consent of the stockholder, the corporation shall have the option to purchase a lesser portion of the shares specified in said notice at the price and upon the terms set forth therein.  In the event of a gift, property settlement or other transfer in which the proposed transferee is not paying the full price for the shares, and that is not otherwise exempted from the provisions of this Section 1, the price shall be determined in accordance with the Delaware General Corporation Law.  In the event the corporation elects to purchase all of the shares or, with consent or the stockholder, a lesser portion of the shares, it shall give written notice to the transferring stockholder of its election and settlement for said shares shall be made as provided below in paragraph (d).

(c)           The corporation may assign its rights hereunder.

(d)           In the event the corporation and/or its assignee(s) elect to acquire any of the shares of the transferring stockholder as specified in said transferring stockholder notice, the Secretary of the corporation shall so notify the transferring stockholder and settlement thereof shall be made in cash within thirty (30) days after the Secretary of the corporation receives said transferring stockholder’s notice; provided that if the terms of payment set forth in said transferring stockholder’s notice were other than cash against delivery, the corporation and/or its assignee(s) shall pay for said shares on the same terms and conditions set forth in said transferring stockholder’s notice.

(e)           In the event the corporation and/or its assignee(s) do not elect to acquire all of the shares specified in the transferring stockholder’s notice, said transferring stockholder may, within the sixty–day period following the expiration of the option rights granted to the corporation and/or its assignee(s) herein, transfer the shares specified in said transferring stockholder’s notice which were not acquired by the corporation and/or its assignee(s) as specified in said transferring stockholder’s notice.  All shares so sold by said transferring stockholder shall continue to be subject to the provisions of this bylaw in the same manner as before said transfer.

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(f)            Anything to the contrary contained herein notwithstanding, the following transactions shall be exempt from the provisions of this bylaw if counsel for the corporation determines that any S–corporation election of the corporation will not be disturbed:

i.              A stockholder’s transfer of any or all shares held either during such stockholder’s lifetime or on death by will or intestacy to such stockholder’s immediate family or to any custodian or trustee for the account of such stockholder or such stockholder’s immediate family.  “Immediate family” as used herein shall mean spouse, lineal descendant, father, mother, brother, or sister of the stockholder making such transfer.

ii.             A stockholder’s bona fide pledge or mortgage of any shares with a commercial lending institution, provided that any subsequent transfer of said shares by said institution shall be conducted in the manner set forth in this bylaw.

iii.            A stockholder’s transfer of any or all of such stockholder’s shares to the corporation or to any other stockholder of the corporation.

iv.            A stockholder’s transfer of any or all of such stockholder’s shares to a person who, at the time of such transfer, is an officer or director of the corporation.

v.             A corporate stockholder’s transfer of any or all of its shares pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate stockholder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate stockholder.

vi.            A corporate stockholder’s transfer of any or all of its shares to any or al] of its stockholders.

vii.           A transfer by a stockholder that is a limited or general partnership to any or all of its partners or former partners.

In any such case, the transferee, assignee, or other recipient shall receive and hold such stock subject to the provisions of this bylaw, and there shall be no further transfer of such stock except in accord with this bylaw.

(g)           The provisions of this bylaw may be waived with respect to any transfer either by the corporation, upon duly authorized action of its Board of Directors, or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the corporation (excluding the votes represented by those shares to be transferred by the transferring stockholder).  This bylaw may be amended or repealed either by a duly authorized action of the Board of Directors or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the corporation.

(h)           Any sale or transfer, or purported sale or transfer, of securities of the corporation shall be null and void unless the terms, conditions, and provisions of this bylaw are strictly observed and followed.

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(i)            The foregoing right of first refusal shall terminate on either of the following dates, whichever shall first occur:

i.              On December 4, 2004; or

ii.             One hundred eighty days after the date securities of the corporation are first offered to the public pursuant to a registration statement filed with, and declared effective by, the United States Securities and Exchange Commission under the Securities Act of 1933, as amended.

(j)            The certificates representing shares of stock of the corporation shall bear on their face the following legend so long as the foregoing right of first refusal remains in effect:

The shares represented by this Certificate are subject to a right of first refusal option in favor of the Corporation and/or its Assignee(s), as provided in the Bylaws of the Corporation.

ARTICLE IX.

AMENDMENTS

9.1           Amendment of Bylaws.  New Bylaws may be adopted or these Bylaws may be amended or repealed by the vote or written consent of stockholders or the Board of Directors, when such power is conferred upon the Board by the Certificate of Incorporation, at any regular meeting of the stockholders or Board, or any special meeting of the stockholders or Board if notice of such alteration, amendment, repeal or adoption of new Bylaws was contained in the notice of such meeting.

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Exhibit 10.1

EXECUTION COPY

FIRST LIEN CREDIT AGREEMENT

among

KRATOS DEFENSE & SECURITY SOLUTIONS, INC.,

KEYBANK NATIONAL ASSOCIATION,

as Administrative Agent,
Lender and
Letter of Credit Issuing Lender

and

THE OTHER FINANCIAL
INSTITUTIONS PARTIES HERETO

with

KEYBANC CAPITAL MARKETS,

as Lead Arranger and
Book Runner

Dated as of December 31, 2007

$25,000,000 Revolving Credit Facility

$50,000,000 Term Loan Facility

TABLE OF CONTENTS

i

ii

iii

iv

EXHIBITS

v

SCHEDULES

vi

FIRST LIEN CREDIT AGREEMENT

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

RECITAL

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

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

SECTION I.  DEFINITIONS AND ACCOUNTING TERMS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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(b)           Consolidated Interest Charges;

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

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

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

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

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

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

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

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

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

minus

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

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

(z)            the Rental Variance.

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

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“Consolidated Excess Cash Flow” means:

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

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

minus

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

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

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

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

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

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

(1) Consolidated EBITDA;

(2) interest income;

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

(4) the Consolidated Working Capital Adjustment;

minus

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Credit Party” means Borrower and each Guarantor.

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

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

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

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

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

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

10

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

13

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

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

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

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

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

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

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

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

14

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

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

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

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

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

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

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

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

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

“Indebtedness” means, as to any Person:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“IRS” means the United States Internal Revenue Service.

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

“KeyBank” means KeyBank National Association.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Pro Rata Share” means:

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

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

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

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

“PT” means Pacific Time.

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

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

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

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

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

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

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

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

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

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

“Restricted Payment” means:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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1.2          USE OF CERTAIN TERMS.

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

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

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

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

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

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

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

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

SECTION II.
THE COMMITMENTS AND EXTENSIONS OF CREDIT

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

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

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

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

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

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

2.2          BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

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

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

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

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

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

2.3          LETTERS OF CREDIT.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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of Revolving Lenders or Requisite Lenders, as applicable; any action taken or omitted in the absence of gross negligence or willful misconduct; or the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit.  Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement.  No Administrative Agent-Related Person, nor Issuing Lender, nor any of the respective correspondents, participants or assignees of Issuing Lender, shall be liable or responsible for any of the matters described in subsection (g) above.  In furtherance and not in limitation of the foregoing, Issuing Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and Issuing Lender shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

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

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

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

2.4          PREPAYMENTS.

(a)           Voluntary Prepayments.

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

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

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

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

(b)           Mandatory Prepayments.

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

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

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

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

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

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

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

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

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

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

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

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

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

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(e)           Waiver of Certain Prepayments.

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

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

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

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

2.6          PRINCIPAL AND INTEREST.

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

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

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

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

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

2.7                               FEES.

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

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

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

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

2.9                               MAKING PAYMENTS.

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

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

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

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

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

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

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

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

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

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

2.12                        ADDITIONAL LOAN COMMITMENTS.

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

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

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

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

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

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

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

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

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

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

SECTION III.
TAXES, YIELD PROTECTION AND ILLEGALITY

3.1                               TAXES.

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

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

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

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

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

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

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