8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): November 23, 2015

STG GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-36149	46-3134302
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

11091 Sunset Hills Road, suite 200
Reston, Virginia	20190
(Address of principal executive offices)	(Zip Code)

(703) 691-2480

(Registrant’s telephone number, including area code)

Not Applicable

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

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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

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

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

Introductory Note

Global Defense & National Security Systems Inc. (“GDEF”), a special purpose acquisition company focused on the U.S. defense and national security sector, announced the successful completion on November 23, 2015 (the “Closing Date”) of the previously announced business combination (the “Business Combination”) with STG Group, Inc., a provider of cyber, software and intelligence solutions to the U.S. government. At the closing of the Business Combination, GDEF changed its name to “STG Group, Inc.” The Business Combination was consummated pursuant to the stock purchase agreement (the “Business Combination Agreement”), dated as of June 8, 2015, by and among GDEF, STG Group, Inc., the stockholders of STG Group, Inc., Global Defense & National Security Holdings LLC (the “Sponsor) and Simon S. Lee, as Stockholders’ Representative.

In connection with the closing of the Business Combination, STG Group, Inc. changed its name to “STG Group Holdings, Inc.” (“STG”). Unless the context otherwise requires, the “Company”, “we,” “us,” and “our” refers to GDEF.

Item 1.01. Entry into a Material Definitive Agreement.

Credit Agreement

Overview

On November 23, 2015, GDEF, together with STG, STG, Inc., and Access Systems, Incorporated (“Access Systems“) entered into a Credit Agreement (the “Credit Agreement”) with the lenders party thereto from time to time, MC Admin Co LLC, as administrative agent, PNC Bank, National Association, as collateral agent (the “Collateral Agent”), and MC Admin Co LLC, as lead arranger. GDEF served as the initial borrower of the term loans under the Credit Agreement, and STG, Inc. and Access Systems (collectively, the “Borrowers”) each immediately assumed all obligations of GDEF under the Credit Agreement as if they had originally incurred them as borrowers. GDEF and STG Group Holdings, Inc. have each guaranteed Borrowers’ obligations under the Credit Agreement.

The Credit Agreement provides for (i) a term loan in an aggregate principal amount of $81,750,000 (the “Term Loan”), (ii) a $15,000,000 asset-based revolving line of credit at closing (the “New Revolving Loan”) and (iii) an uncommitted accordion facility to be used to fund acquisitions (subject to additional lender commitments) of up to $90,000,000 (the “Incremental Facility,” and together, with the Term Loan and Revolving Loan, the “Loans” ). Substantially concurrently with the consummation of the Business Combination, the full amount of the Term Loan was drawn, and neither the Incremental Facility nor any amount under the Revolving Loan was drawn.

Each of the Revolving Loan and the Term Loan matures on November 23, 2020.

Borrowing Base

Advances under the Revolving Loan are limited by a borrowing base which may not exceed the lesser of (x) the difference between $15,000,000 and amounts outstanding under letters of credit issued pursuant to the Credit Agreement; and (y) an amount equal to the sum of (i) up to 85% of certain accounts receivable of the Borrowers plus (ii) up to 100% of unrestricted cash on deposit in the Borrowers’ accounts with the Collateral Agent, minus (iii) amounts outstanding under letters of credit issued pursuant to the Credit Agreement, minus (iv) reserves established by the Collateral Agent from time to time in its reasonable credit judgment exercised in good faith (the “Borrowing Base Formula Amount”).

Interest Rate and Fees

The Borrowers may designate any Loan as a Base Rate Loan or a Eurodollar Loan. The interest rate per annum applicable to Base Rate Loans will be equal to the sum of 6.80% plus the “Base Rate”, which is equal to the highest of: (a) the base commercial lending rate of Collateral Agent as publicly announced to be in effect from time to time, as adjusted by the Collateral Agent, (b) the sum of 0.50% per annum and the Federal Funds Rate (as defined in the Credit Agreement), (c) the daily one month LIBOR rate as published each business day in the Wall Street Journal for a one month period divided by a number equal to 1.00 minus the Reserve Percentage (as defined in the Credit Agreement) plus 100 basis points, as of such day and (d) 2.00%.

The interest rate per annum applicable to Eurodollar Loans will be equal to the sum of 7.80% plus the “Eurodollar Rate,” which is equal to the highest of (a) the amount calculated by dividing (x) the rate which appears on the Bloomberg Page BBAM1, or the rate which is quoted by another authorized source, two business days prior to the commencement of any interest period as the London interbank offered rate for such an amount by (y) a number equal to 1.00 minus the Reserve Percentage and (b) 1.00%.

Overdue principal and, to the extent permitted by law, overdue interest in respect of each Loan will bear interest at a rate per annum equal to the greater of the then applicable rate plus 2% and the rate then applicable to Base Rate Loans plus 2%.

Prepayments

Borrowers may voluntarily prepay any amount of principal outstanding under the Term Loan at any time following the first anniversary of the closing date as long as Borrowers also pay accrued and unpaid interest, any applicable unpaid fee plus the applicable prepayment premium based on the principal amount prepaid and the time when the prepayment is made as reflected below. The below prepayment premiums would also apply to prepayments in connection with accelerations of the Term Loan or certain mandatory repayments in connection with a default under the Credit Agreement.

Period	Prepayment Premium as a Percentage of Principal Prepaid
Closing Date through last day of the 12th full month thereafter	10%
First day of the 13th full month after the Closing Date through the last day of the 24th full month after the Closing Date	4%
First day of the 25th full month after the Closing Date through the last day of the 36th full month after the Closing Date	2.5%
First day of the 37th full month after the Closing Date through the last day of the 48th full month after the Closing Date	1%
Thereafter	0%

Mandatory Repayments

If at any time the outstanding principal amount of Revolving Loans plus the amount of outstanding letters of credit exceeds the Borrowing Base Formula Amount, the Borrowers must immediately prepay the difference.

If GDEF or any of its subsidiaries incurs indebtedness other than certain permitted indebtedness or sells assets other than certain permitted sales, then Borrowers must prepay any outstanding Term Loan in an amount equal to 100% of the net cash proceeds from the incurrence of indebtedness or the asset sale as applicable unless, in the case of an asset sale, a Borrower reinvests such proceeds within 360 days after the sale.

To the extent that GDEF and its subsidiaries on a consolidated basis have any Excess Cash Flow (as defined in the Credit Agreement) with respect to any of GDEF’s fiscal years commencing with its fiscal year ending December 31, 2016, the Borrowers must prepay any outstanding Term Loan in an amount equal to 100% of such Excess Cash Flow no later than 110 days after the close of GDEF’s applicable fiscal year.

If the Borrowers cure a financial covenant default through a contribution of equity capital to a Borrower, then that Borrower must prepay any outstanding Term Loan in an amount equal to 100% of the amount contributed to the capital of that Borrower.

If GDEF or any of its subsidiaries receives any condemnation or insurance proceeds, then the Borrowers must prepay any outstanding Term Loan in an amount equal to 100% of those proceeds.

While the lenders under the Credit Agreement may waive the requirement for Borrowers to make a mandatory prepayment, neither GDEF nor the Borrowers can assure that the Lenders will waive such mandatory prepayment at any time or that, if the Lenders do waive, that the amount of the mandatory prepayment will be waived in full or waived without additional consideration payable.

Amortization of Principal of Term Loan

Principal under the Term Loan amortizes, and Borrowers are required to repay a percentage of the original principal amount of the Term Loan, as set forth below with the remaining balance of the principal falling due in full on November 23, 2020:

Scheduled Repayment Date	Percentage
The last business day of each fiscal quarter of GDEF, beginning on the last business day of the fiscal quarter ending December 31, 2015 through the last Business Day of the fiscal quarter ending September 30, 2016	0.625%
The last business day of each fiscal quarter of GDEF beginning on the last business day of the fiscal quarter ending December 31, 2016 through the last business day of the fiscal quarter ending September 30, 2017	1.250%
The last business day of each fiscal quarter of GDEF, beginning on the last business day of the fiscal quarter ending December 31, 2017 through the last business day of the fiscal quarter ending September 30, 2018	1.750%
The last business day of each fiscal quarter of GDEF, beginning on the last business day of the fiscal quarter ending December 31, 2018 through the last business day of the fiscal quarter ending September 30, 2019	2.500%
Maturity date	75.500%

Certain Covenants and Events of Default

The Credit Agreement contains a number of customary affirmative and negative covenants that, among other things, limit or restrict the ability of GDEF, STG and Borrowers, among other things, to: incur additional indebtedness (including guaranty obligations); incur liens; liquidate or enter into any merger, consolidation or sale of assets except as otherwise permitted; pay dividends and make other payments in respect of capital stock; make acquisitions, investments, loans and advances; engage in certain transactions with affiliates; make capital expenditures that exceed certain limits; modify the Business Combination Agreement, dated as of June 8, 2015, by and among GDEF and the other parties thereto, GDEF’s amended and restated certificate of incorporation or any intercompany note; limit the ability of any of their subsidiaries to pay dividends or make loans or other distributions to a parent; or issue preferred equity.

GDEF has also agreed to certain minimums for its fixed charge coverage ratio and consolidated EBITDA and certain maximums for its senior secured leverage ratio.

The Credit Agreement contains customary events of default, including, among other things, nonpayment of principal, interest, fees or other amounts; material inaccuracy of a representation or warranty when made; default in performance of certain covenants; cross-default to indebtedness as long as such indebtedness is at least $3,000,000; bankruptcy events; creation of a material lien, security or liability due to non-compliance under ERISA; the failure of any material provision of the Security Agreement to be in full force and effect; the failure of any guaranty under the Credit Agreement to be in full force and effect; any judgment against GDEF or its subsidiaries in an amount equal or exceeding $2,000,000; a change of control; subordination of the indebtedness under the Credit Agreement; loss of a key executive unless such executive has been replaced within 30 days by an individual approved by the Administrative Agent; or the occurrence of a “reportable compliance event” as defined under the Credit Agreement. If an Event of Default has occurred and is continuing, or if the Borrowers fail to maintain at least $5,000,000 in Undrawn Availability (as defined in the Credit Agreement) under the Revolving Loan, then the Administrative Agent may sweep cash from the Borrowers’ accounts for the account of the Administrative Agent. Also, in the event that an Event of Default has occurred and is continuing, the Collateral Agent has customary remedies available to it at law and in equity and pursuant to the Security Agreement and the Pledge Agreement.

Security Agreement and Pledge Agreement

In connection with entering into the Credit Agreement, GDEF, STG, and the Borrowers entered into a (1) a Security Agreement with the Collateral Agent, dated as of November 23, 2015 (the “Security Agreement”), and (2) a Pledge Agreement with the Collateral Agent, dated as of November 23, 2015 (the “Pledge Agreement”) for the purpose of securing the payment of GDEF and the Borrowers’ obligations under the Credit Agreement. A copy of the Security Agreement is attached to this Current Report on Form 8-K as Exhibit 10.2 and is incorporated by reference as though it were fully set forth herein, and a copy of the Pledge Agreement is attached to this Current Report on Form 8-K as Exhibit 10.3 and is incorporated by reference as though it were fully set forth herein.

Pursuant to the Security Agreement, as of the effective date of the Security Agreement and the Pledge Agreement, the Borrowers’ and GDEF’s obligations under the Credit Agreement are secured by the grant of a security interest in GDEF’s and the Borrowers’ now existing and hereafter acquired (a) accounts; (b) cash; (c) cash collateral account and monies, securities and instruments deposited in the cash collateral account; (d) chattel paper; (e) commercial tort claims described in an annex to the Security Agreement; (f) computer programs and intellectual property rights and all other proprietary information; (g) contracts and contract rights; (h) copyrights; (i) equipment; (j) deposit accounts; (k) documents; (l) general intangibles; (m) goods; (n) instruments; (o) inventory; (p) investment property, excluding all pledge agreement collateral; (q) promissory notes; (r) letter-of-credit rights; (s) marks; (t) patents; (u) permits; (v) software and software licensing rights; (w) supporting obligations; (x) books and records relating to the foregoing items; and (y) proceeds and products of all of the foregoing.

In addition, pursuant to the Pledge Agreement, the Borrowers’ and GDEF’s obligations under the Credit Agreement are secured by the pledge of GDEF’s and the Borrowers’ right, title and interest in collateral accounts, securities, limited liability company interests, partnerships, security entitlements, financial assets and all proceeds held in any of the foregoing from time to time (the “Collateral”). The Collateral does not include any voting stock in excess of 66-2/3% of the total combined voting power of all classes of equity interests of any foreign subsidiary.

Copies of the Credit Agreement, Security Agreement and Pledge Agreement are filed with this Current Report on Form 8-K as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference, and the foregoing descriptions of the Credit Agreement, Security Agreement and Pledge Agreements are qualified in their entirety by reference thereto.

Registration Rights Agreements

On the Closing Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the STG Stockholders, pursuant to which the Company has granted certain registration rights to the STG Stockholders with respect to, among other things, the shares of Company common stock, $0.0001 par value (the “Common Stock”), issued to the STG Stockholders pursuant to the Purchase Agreement (the “Registrable Securities”).

Under the Registration Rights Agreement, the STG Stockholders have certain customary registration rights, including demand rights and piggyback rights, subject to certain underwriter cutbacks and issuer blackout periods. The Company agreed to pay certain fees and expenses relating to registrations under the Registration Rights Agreement.

In addition, on the Closing Date, the Company entered into an amended and restated registration rights agreement with the Sponsor (the “Sponsor Registration Rights Agreement”), which amends and restates the registration rights agreement entered into by and between the Company and the Sponsor on October 23, 2013 to include the shares that the Sponsor acquired pursuant to that certain Second Amended and Restated Backstop Common Stock Purchase Agreement, dated as of November 23, 2015.

A copy of the Registration Rights Agreement is filed with this Current Report on Form 8-K as Exhibit 10.4 and a copy of the Sponsor Registration Rights Agreement is filed with this Current Report on Form 8-K as Exhibit 10.5, and such agreements are incorporated herein by reference, and the foregoing descriptions are qualified in its entirety by reference thereto.

Voting Agreement

On the Closing Date, (i) the Company, (ii) the Sponsor and (iii) the STG Stockholders (the “Stockholder Group”) entered into a voting agreement (the “Voting Agreement”). Pursuant to the Voting Agreement, as long as the Stockholder Group or Sponsor (each, an “Investor Party”) beneficially owns at least 5% of the then outstanding Common Stock (the “Minimum Equity Holdings”), such Investor Party may designate one individual for nomination to the Company’s Board of Directors. Pursuant to the Voting Agreement, each Investor Party will support the other Investor Party’s designee for nomination as director. The Voting Agreement also provides that in the event of the death, resignation, removal or other termination of any designee of an Investor Party, such vacancy shall be filled by a new director designated for nomination by the same Investor Party.

In addition, as long as any Investor Party maintains the Minimum Equity Holdings, each Investor Party will attempt to reach a unanimous decision on actions that require a stockholder vote.

Pursuant to the Voting Agreement, the Investor Parties will take all necessary action so that the number of directors comprising the Board of Directors will initially be fixed at five directors, and that the Board of Directors shall have a classified structure.

In addition, the Investor Parties agree to endorse and vote to approve the nominees for Class I directors proposed by the Board of Directors of the Company (or the nomination and governance committee thereof) at annual meeting of stockholders of the Company in 2016, unless all of the Investor Parties agree in writing in advance of such meeting to propose to the stockholders alternative directors.

The Voting Agreement further provides that for the eighteen (18) months following the date thereof, each Investor Party has agreed not to purchase or otherwise acquire, or offer, seek, propose or agree to purchase or otherwise acquire, ownership of any Common Stock, or any direct or indirect rights or options to acquire, or any securities convertible into, Common Stock, or to form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the securities of the Company (other than as a result of the Voting Agreement).

A copy of the Voting Agreement is filed with this Current Report on Form 8-K as Exhibit 10.6 and is incorporated herein by reference, and the foregoing description of the Voting Agreement is qualified in its entirety by reference thereto.

Escrow Agreement

In connection with the Business Combination Agreement, GDEF and the Stockholders’ Representative will enter into an escrow agreement (the “Escrow Agreement”) with Branch Banking and Trust Company, a North Carolina banking corporation, as escrow agent, to partially secure the STG Stockholders’ indemnification obligations pursuant to the Business Combination Agreement.

Establishment of Escrow

At the Closing, GDEF withheld (a) $3,310,000 (the “Cash Escrow Deposit”) from the Cash Consideration and (b) 313,744 shares of GDEF Common Stock, with an aggregate value equal to approximately $3,310,000 (the “Escrow Share Amount”), or $10.55 per share (the “Escrow Shares” and together with the Cash Escrow Deposit, or the balance thereof remaining from time to time, the “Escrow Amount”), from the stock consideration and deposited such amounts into escrow pursuant to the terms of the Escrow Agreement.

Disbursement of the Escrow Amount

In the event that any indemnified party pursuant to the Business Combination Agreement claims that it is entitled to release from the escrow fund, it must submit a claim notice to the escrow agent and the Stockholders’ Representative. The Stockholders’ Representative will have the opportunity to contest any such claim. If no written notice of contest is given, the escrow agent will disburse to the indemnified party specified in the applicable claim notice the amounts claimed. If a written notice of contest is given, the parties agree to work out the dispute independently and then resort to legal proceedings in accordance with the Business Combination Agreement. Upon receipt of a written notice of contest, the escrow agent may not disburse the disputed portion of the funds claimed unless and until resolution either by a written mutual agreement between GDEF and the Stockholders’ Representative or by a court of competent jurisdiction in accordance with the Business Combination Agreement. Any shares being released shall be valued as of their average closing market price at which such shares traded on Nasdaq over the last ten trading days immediately prior to the date such claim is satisfied.

Claims against the Escrow Amount shall first be paid from the amount of the Cash Escrow Deposit in the Escrow Amount, and second, once the total amount of the Cash Escrow Deposit has been disbursed, be paid as a transfer to the indemnified party of the number of Escrow Shares that is equal to the claim amount (or remaining portion thereof). Notwithstanding the foregoing, if Escrow Shares otherwise would be disbursed to the indemnified party against an indemnification claim pursuant to the Business Combination Agreement, but the Stockholders’ Representative notifies GDEF in writing that, in the Stockholders’ Representative reasonable opinion, the effect of such disbursement, if made, would cause the Transaction to fail to satisfy the Control Requirement (as defined in the Business Combination Agreement), the Stockholders’ Representative may cause all or part of such indemnification claim to be satisfied by a cash payment directly to the indemnified party, and the disbursement request shall instead direct that the number of Escrow Shares (rounded down to the nearest whole share) that is equal to the amount of cash paid directly to the indemnified party be disbursed pro rata to the STG Stockholders.

If, on any date that a number of Escrow Shares is to be disbursed, (a) the aggregate value of the Escrow Shares remaining in the Escrow Amount is less than the amount requested in the disbursement request and (b) the aggregate value of the Escrow Shares disbursed as of such date is less the Escrow Share Amount, the STG Stockholders jointly and severally agree to promptly (and in any event within two business days following notice from the escrow agent) provide to the Stockholders’ Representative for deposit with the escrow agent (within two business days following receipt from the STG Stockholders) an amount in cash, by wire transfer of immediately available funds, equal to the difference between (x) the Escrow Share Amount and (y) the aggregate value of the Escrow Shares disbursed as of such date (such difference, the “Additional Cash Escrow”). The Additional Cash Escrow shall be added to the Escrow Amount, and the escrow agent shall then transfer to the indemnified party the Escrow Shares remaining in the Escrow Amount, plus a portion of the Additional Cash Escrow necessary to satisfy the disbursement request. Thereafter, any subsequent disbursement request shall be satisfied from the Additional Cash Escrow. In no event shall the aggregate value disbursed from the Escrow Amount exceed the sum of the Cash Escrow Deposit and the Escrow Share Amount. Once an amount equal to the sum of the Cash Escrow Deposit and the Escrow Share Amount has been disbursed from the Escrow Amount, any remaining Escrow Shares shall be distributed pro rata to the STG Stockholders.

Release of the Escrow Amount

The date that is 18 months after the Closing Date is the “Release Date.” If there are no pending claim notices on the Release Date, GDEF and the Stockholders’ Representative shall jointly provide the escrow agent with an executed disbursement request instructing the escrow agent to disburse the Escrow Amount (including any amount of Additional Cash Escrow, if any) pro rata to the STG Stockholders. In the event there are any pending claim notices on the Release Date, GDEF and the Stockholders’ Representative shall jointly instruct the escrow agent to retain only the portion of the Cash Escrow Deposit and/or that number of the Escrow Shares equal to the disputed amount in any pending claim notice and release to the STG Stockholders all of the Escrow Amount in excess of the pending claim amount as set forth in the joint instructions.

A copy of the Escrow Agreement is filed with this Current Report on Form 8-K as Exhibit 10.7 and is incorporated herein by reference, and the foregoing description of the Escrow Agreement is qualified in its entirety by reference thereto.

Second Amended and Restated Backstop Common Stock Purchase Agreement

On November 23, 2015, the Company entered into a Second Amended and Restated Backstop Common Stock Purchase Agreement (the “Backstop Purchase Agreement”) with the Sponsor, which amended and restated the stock purchase agreement that the Company had previously reported on a Current Report on Form 8-K filed with the Securities and Exchange Commission on October 20, 2015. The Backstop Purchase Agreement granted the Sponsor the right to purchase shares of Common Stock, at a price of $10.63 per share (the “Backstop Purchase”) in connection with the close of the Business Combination. The purchase right was exercisable only in the event, and to the extent, that the Company would not meet the Threshold Cash Amount. The term “Threshold Cash Amount” means $20,000,000 in cash available to the Company from (1) the Company’s Trust Account (as defined in the Company’s Amended and Restated Certificate of Incorporation) at the closing of the Business Combination between the Company and STG following the payment in full to the Company’s stockholders who requested to be redeemed in connection with the closing of the Business Combination, and (2) the payment of any aggregate purchase price for the Backstop Purchase.

A copy of the Backstop Purchase Agreement is filed with this Current Report on Form 8-K as Exhibit 10.8 and is incorporated herein by reference, and the foregoing description of the Backstop Purchase Agreement is qualified in its entirety by reference thereto.

Contribution and Exchange Agreement

Concurrently with the exercise of the Sponsor’s purchase right under the Backstop Purchase Agreement, the Company and the Sponsor entered into a Contribution and Exchange Agreement, dated as of November 23, 2015 (the “Contribution Agreement”) on the Closing Date, pursuant to which the Sponsor agreed to contribute to the capital of the Company an amount of cash equal to $10,950,000, being the aggregate purchase price of the Backstop Purchase, in exchange for 1,030,103 shares of Common Stock, in a transaction in which the Company will not recognize taxable income.

A copy of the Contribution Agreement is filed with this Current Report on Form 8-K as Exhibit 10.9 and is incorporated herein by reference, and the foregoing description of the Contribution Agreement is qualified in its entirety by reference thereto.

Employment Agreements

Paul Fernandes

In connection with the closing of the Business Combination, we entered into an employment agreement with Paul Fernandes (the “Fernandes Employment Agreement”), providing that Mr. Fernandes would serve as the Company’s President beginning on the Closing Date. Pursuant to the Fernandes Employment Agreement, the Company will pay Mr. Fernandes an annual salary of $400,752, and Mr. Fernandes will be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company.

Pursuant to the Fernandes Employment Agreement, in the event of the termination of his employment by the Company without Cause (as defined in the Fernandes Employment Agreement) or by Mr. Fernandes for Good Reason (as defined in the Fernandes Employment Agreement), Mr. Fernandes would be entitled to cash severance equal to the sum of 18 months of his annual base salary in effect immediately prior to the date of termination.

A copy of the Employment Agreement with Mr. Fernandes is filed with this Current Report on Form 8-K as Exhibit 10.10 and is incorporated herein by reference, and the foregoing description of the Employment Agreement is qualified in its entirety by reference thereto.

Charles Cosgrove

In connection with the closing of the Business Combination, we entered into an employment agreement with Charles L. Cosgrove (the “Cosgrove Employment Agreement”), providing that Mr. Cosgrove would serve as the Company’s Chief Financial Officer beginning on the Closing Date. Pursuant to the Cosgrove Employment Agreement, the Company will pay Mr. Cosgrove an annual salary of $330,000. Mr. Cosgrove will be eligible to participate in the Company’s Annual Incentive plan, at up to a 50% target of his salary, and will be eligible to participate in the Company’s deferred compensation plan. Mr. Cosgrove also will be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company.

In addition, upon any termination of Mr. Cosgrove’s employment by the Company without Cause (as defined in the Cosgrove Employment Agreement) or by Mr. Cosgrove for Good Reason (as defined in the Cosgrove Employment Agreement) within one year of his start date for any reason other than for Cause, he will be eligible for one month of severance equal to his then-current base salary, for each completed month of service. If the Company terminates Mr. Cosgrove’s employment on or after one year of his start date for any reason other than for Cause, he will be eligible for twelve months’ severance equal to his current base salary.

A copy of the Employment Agreement with Mr. Cosgrove is filed with this Current Report on Form 8-K as Exhibit 10.11 and is incorporated herein by reference, and the foregoing description of the Employment Agreement is qualified in its entirety by reference thereto. 

Glenn W. Davis, Jr.

In connection with the closing of the Business Combination, we entered into an employment agreement with Glenn W. Davis, Jr. (the “Davis Employment Agreement”), providing that Mr. Davis would serve as the Company’s Senior Vice President & General Manager beginning on the Closing Date. Pursuant to the Davis Employment Agreement, the Company will pay Mr. Davis an annual salary of $265,000, and Mr. Davis will be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company.

Pursuant to the Davis Employment Agreement, in the event of the termination of his employment by the Company without Cause (as defined in the Davis Employment Agreement) or by Mr. Davis for Good Reason (as defined in the Davis Employment Agreement), Mr. Davis would be entitled to cash severance equal to the greater of (1) the sum of two months of his annual base salary in effect immediately prior to the date of termination or (2) the product of (x) one month of Mr. Davis’ annual base salary in effect immediately prior to the date of termination, multiplied by (y) the number of years that Mr. Davis has been employed by the Company, not to exceed twelve months.

A copy of the Employment Agreement with Mr. Davis is filed with this Current Report on Form 8-K as Exhibit 10.12 and is incorporated herein by reference, and the foregoing description of the Employment Agreement is qualified in its entirety by reference thereto.

Keith Lynch

In connection with the closing of the Business Combination, we entered into an employment agreement with Keith Lynch (the “Lynch Employment Agreement”), providing that Mr. Lynch would serve as the Company’s Vice President, Accounting & Controller beginning on the Closing Date. Pursuant to the Lynch Employment Agreement, the Company will pay Mr. Lynch an annual salary of approximately $217,498, and Mr. Lynch will be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company.

Pursuant to the Lynch Employment Agreement, in the event of the termination of his employment by the Company without Cause (as defined in the Lynch Employment Agreement) or by Mr. Lynch for Good Reason (as defined in the Lynch Employment Agreement), Mr. Lynch would be entitled to cash severance equal to the greater of (1) the sum of nine months of his annual base salary in effect immediately prior to the date of termination or (2) the product of (x) one month of Mr. Lynch’s annual base salary in effect immediately prior to the date of termination, multiplied by (y) the number of years that Mr. Lynch has been employed by the Company, not to exceed twelve months.

A copy of the Employment Agreement with Mr. Lynch is filed with this Current Report on Form 8-K as Exhibit 10.13 and is incorporated herein by reference, and the foregoing description of the Employment Agreement is qualified in its entirety by reference thereto.

Dale R. Davis

On November 30, 2015, we entered into an employment agreement with Dale Davis (the “CIO Employment Agreement”), providing that Mr. Davis would serve as the Company’s Chief Integration Officer beginning on November 30, 2015. Pursuant to the CIO Employment Agreement, the Company will pay Mr. Davis an annual salary of $346,000. Mr. Davis will be eligible to participate in the Company’s Annual Incentive plan, at up to a 50% target of his salary, and will be eligible to participate in the Company’s deferred compensation plan. Mr. Davis also will be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company.

Pursuant to the CIO Employment Agreement, in the event of the termination of his employment by the Company without Cause (as defined in the CIO Employment Agreement) or by Mr. Davis for Good Reason (as defined in the CIO Employment Agreement), Mr. Davis would be entitled to cash severance equal to the greater of (1) the sum of two months of his annual base salary in effect immediately prior to the date of termination or (2) the product of (x) one month of Mr. Davis’ annual base salary in effect immediately prior to the date of termination, multiplied by (y) the number of years that Mr. Davis has been employed by the Company, not to exceed twelve months.

A copy of the Employment Agreement with Mr. Davis is filed with this Current Report on Form 8-K as Exhibit 10.14 and is incorporated herein by reference, and the foregoing description of the Employment Agreement is qualified in its entirety by reference thereto.

Services Agreement

On November 23, 2015, Global Strategies Group (North America) Inc. and STG entered into a services agreement (the “Services Agreement”), pursuant to which STG may retain Global Strategies Group (North America) Inc. from time to time to perform certain services as described under task orders to be issued from time to time.  The services may include the following, in each case, at agreed upon prices:

· Corporate development services, such as sourcing acquisition targets, negotiating transactions with potential targets, and assisting STG in post-integration matters;

· Regulatory compliance support services;

· Financial services such as planning, analysis, compilation of budget proposals and requests, and financial reporting;

· Business development and strategic services, such as new-business-opportunity identification and review;

· Marketing and public relations services; and

· Human resources services.

The Services Agreement may be terminated by either party at its convenience, with or without cause, upon 15 days’ prior written notice to the other party.  Global Strategies Group (North America) Inc. is an affiliate of both the Sponsor and Damian Perl, who will serve on the board of directors following the Business Combination.

A copy of the Services Agreement is filed with this Current Report on Form 8-K as Exhibit 10.15 and is incorporated herein by reference, and the foregoing description of the Services Agreement is qualified in its entirety by reference thereto.

Item 1.02. Termination of a Material Definitive Agreement.

In connection with the closing, the Second Amended and Restated Management Trust Agreement, dated October 23, 2013, between GDEF and American Stock Transfer & Trust Company, as trustee, was terminated.

Item 2.01. Completion of Acquisition or Disposition of Assets.

The disclosure set forth under “Introductory Note” above is incorporated in this Item 2.01 by reference. The material provisions of the Purchase Agreement are described in the Company’s Proxy Statement dated October 22, 2015 (the “Proxy Statement”) relating to the Special Meeting (as defined below) in the section entitled “The Business Combination,” which is incorporated by reference herein.

As previously reported, the Business Combination was approved by GDEF’s stockholders at the Special Meeting in lieu of 2015 Annual Meeting of the Stockholders held on November 13, 2015 (the “Special Meeting”). At the Special Meeting, 4,598,665 shares of Common Stock were voted in favor of the proposal to approve the Business Combination and 676,350 shares of Common Stock were voted against that proposal.

In connection with the closing, GDEF’s public stockholders redeemed a total of 2,031,383 shares of its Common Stock pursuant to the terms of GDEF’s amended and restated certificate of incorporation, resulting in a total payment to redeeming stockholders of $21,593,601.29. In connection with the Business Combination, GDEF paid the following consideration to the STG Stockholders: (i) $68,000,000 in aggregate cash consideration and (ii) 8,578,199 shares of Common Stock, valued at a price of $10.55 per share. In addition, GDEF issued to the STG Stockholders 445,161 shares of Common Stock that were previously held by the Sponsor and contributed by the Sponsor to GDEF immediately prior to the Business Combination, and the Sponsor transferred 35,000 shares of Common Stock previously held by the Sponsor to the STG Stockholders for no consideration.

In accordance with the terms of the Business Combination Agreement, the STG Stockholders elected to convert approximately $7,000,000 of the cash consideration payable to them thereunder into an additional 658,513 shares of Common Stock at a value of $10.63 each (the “Conversion Shares”).

As of the Closing Date, following the redemption, there were 13,774,962 shares of Common Stock outstanding. As of the Closing Date, the STG Stockholders owned approximately 9,716,873 shares of Common Stock. As of the Closing Date, the Sponsor owned approximately 23.8% of the outstanding common stock of the Company and the public stockholders owned approximately 5.7% of the outstanding common stock of the Company.

In connection with the closing of the Business Combination, the non-interest bearing promissory notes, dated as of July 21, 2015 and November 5, 2015, by and between the Company and the Sponsor, for $351,436 and $56,296, respectively, were paid in full. In addition, the non-interest bearing convertible promissory notes issued on May 15, 2014, May 12, 2015, October 8, 2015, and November 13, 2015 were also paid in full.

In addition, pursuant to the Second Amended and Restated Backstop Common Stock Purchase Agreement, dated as of November 23, 2015, by and between the Company and the Sponsor (the “Backstop Purchase Agreement”), the Sponsor purchased 1,030,103 shares of Common Stock at a price of $10.63 per share.

The Company has declared a dividend of one share of Common Stock for every 1.06 shares of Common Stock payable to stockholders of record immediately following the consummation of the Business Combination. The Sponsor and the STG Stockholders have agreed to forfeit any dividend shares that they would be entitled to in exchange for no consideration, provided that the Sponsor will not forfeit any right to receive any dividend shares in respect of any shares it acquired pursuant to the Backstop Purchase Agreement and the STG Stockholders will not forfeit any right to receive any dividend shares in respect of the Conversion Shares.

GDEF was formed as a vehicle to effect a business combination with one or more operating businesses. After the closing, the Company became a holding company whose assets primarily consist of interests in its subsidiary, STG. The following information is provided about the business of the Company reflecting the consummation of the Business Combination.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Company makes forward-looking statements in this Current Report on Form 8-K. These forward-looking statements relate to outlooks or expectations for earnings, revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on business, results of operations or financial condition. Specifically, forward-looking statements may include statements relating to:

• the benefits of the Business Combination;

• the future financial performance of the Company following the Business Combination;

• expansion plans and opportunities;

• maintaining/increasing the growth rates of the Company through marketing and an effective sales force;

• maintaining the Company’s technology platforms and continue to develop enhancements;

• maintaining cost-effectiveness of technology and operations;

• maintaining and successfully bidding for government contracts;

• changes in economic, business, competitive, technological and/or regulatory factors;

• identify and consummating acquisitions on an accretive basis; and

• other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.

Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. These forward-looking statements are based on information available to us as of the date of this Current Report on Form 8-K and current expectations, forecasts and assumptions and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made.

These forward-looking statements involve a number of known and unknown risks and uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

• costs related to the Business Combination;

• success in retaining or recruiting, or changes required in, the Company’s officers, key employees or directors;

• economic weakness, either nationally, or in the local markets in which the Company operates;

• the size of the Company’s addressable markets and the amount of U.S. government spending on private contractors;

• adverse litigation or arbitration results;

• changes in economic, business, competitive, technological and/or regulatory factors;

• competitors in the Company’s various markets;

• the recent delisting of the Company’s securities from the NASDAQ Capital Market as discussed in the section entitled “Risk Factors” below;

• the potential liquidity and trading of the Company’s securities;

• risks and costs associated with regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act); and

• other risks and uncertainties set forth in the Proxy Statement in the section entitled “Risk Factors” beginning on page 30.

Business

The business of GDEF prior to the Business Combination is described in the Proxy Statement in the section entitled “GDEF’s Business” beginning on page 137, which is incorporated by reference herein. The business of STG prior to the Business Combination is described in the Proxy Statement in the section entitled “STG’s Business” beginning on page 181, which is incorporated by reference herein.

Risk Factors

The risk factors related to the Company’s business and operations are described in the Proxy Statement in the section entitled “Risk Factors” beginning on page 30, which is incorporated by reference herein, as supplemented below.

Our Common Stock has been delisted from NASDAQ, which could limit investors’ ability to make transactions in our shares and subject us to additional trading restrictions.

On November 25, 2015, our Common Stock was delisted from NASDAQ and our shares are currently quoted in the over-the-counter market on the OTC Pink Current Information tier. As a result of delisting, we could face material adverse consequences, including:

· a limited availability of market quotations for our shares;

· reduced liquidity for our shares;

· a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our shares;

· a limited amount of news and analyst coverage; and

· a decreased ability to issue additional securities or obtain additional financing in the future.

Selected Financial Information

Selected Historical Financial Information of STG

STG’s consolidated balance sheet data as of September 30, 2015 and consolidated statement of operations data for the three months and nine months ended September 30, 2015 and 2014 are derived from STG’s unaudited condensed consolidated financial statements, which are included elsewhere in this Current Report on Form 8-K. The September 30, 2014 consolidated balance sheet was derived from internal consolidated financial statements. STG’s consolidated balance sheet data as of December 31, 2014, December 31, 2013 and December 31, 2012 and consolidated statement of operations data for the three years ended December 31, 2014 are derived from STG’s audited consolidated financial statements, which were included in the Proxy Statement beginning on page F-1 and are incorporated herein by reference.

The information is only a summary and should be read in conjunction with each of STG’s consolidated financial statements and related notes and “STG’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this Current Report on Form 8-K are not indicative of the future performance of STG.

	For the three months ended September 30,						For the nine months ended September 30,						For the years ended December 31,
	2015			2014			2015			2014			2014			2013			2012
	(US dollars in thousands)
Income Statement Data:
Contract revenue	$	50,081		$	53,588		$	149,138		$	158,801		$	209,727		$	248,858		$	212,767
Direct expenses		34,721			36,644			102,224			107,631			141,925			172,685			143,279
Gross profit		15,360			16,944			46,914			51,170			67,802			76,173			69,488
Indirect and selling expenses		11,718			14,041			40,933			45,798			61,286			70,041			63,928
Impairment of intangible assets (including goodwill)		2,970			—			2,970			—			6,928			1,655			—
Operating income		672			2,903			3,011			5,372			(412	)		4,477			5,560
Total other income, net		(423	)		(131	)		(302	)		45			243			702			335
Net income (loss)		249			2,772			2,709			5,417			(169	)		5,179			5,895
Balance Sheet Data:
Contract receivables, net	$	26,775		$	39,161		$	26,775		$	39,161		$	47,517		$	54,766		$	58,819
Total current assets		37,889			44,481			37,889			44,481			54,140			62,284			63,170
Total assets		44,022			66,438			44,022			66,438			68,635			84,351			91,361
Total current liabilities		24,920			27,491			24,920			27,491			37,401			44,228			46,314
Total liabilities		29,877			36,391			29,877			36,391			45,678			53,044			54,100
Total stockholders’ equity		14,145			30,047			14,145			30,047			22,957			31,307			37,261
Cash Flow Data:
Net cash provided by operating activities		12,815			463			38,027			26,331		$	13,991		$	11,752		$	17,485
Net cash used in investing activities		(557	)		(74	)		(1,371	)		(906	)		(1,280	)		(838	)		(1,413	)
Net cash used in financing activities		(7,636	)		(541	)		(31,182	)		(25,184	)		(12,526	)		(11,178	)		(15,661	)
Adjusted EBITDA (1)	$	4,416		$	4,965		$	13,588		$	13,020		$	17,521		$	18,634		$	13,834

Selected Unaudited Pro Forma Condensed Combined Financial Information of the Combined Company

The selected unaudited pro forma condensed combined financial information has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information included elsewhere in this Current Report on Form 8-K.

The unaudited pro forma condensed combined statements of operations information for the nine months ended September 30, 2015 and the year ended December 31, 2014 give pro forma effect to the Business Combination and the related proposed financing transactions as if they had occurred on January 1, 2014. The unaudited pro forma condensed combined balance sheet as of September 30, 2015 assumes that the Business Combination and the related proposed financing transactions were completed on September 30, 2015.

The unaudited pro forma condensed combined balance sheet information as of September 30, 2015 was derived from STG’s unaudited consolidated balance sheet as of September 30, 2015 and GDEF’s unaudited balance sheet as of September 30, 2015. The unaudited pro forma condensed combined statement of operations information for the nine months ended September 30, 2015 and the year ended December 31, 2014 was derived from STG’s unaudited consolidated statement of operations for the nine months ended September, 2015, STG’s audited consolidated statement of operations for the year ended December 31, 2014, GDEF’s unaudited statement of operations for the nine months ended September, 2015 and GDEF’s audited statement of operations for the year ended December 31, 2014.

The pro forma adjustments are based on the information currently available. The assumptions and estimates underlying the pro forma adjustments are described in the section entitled “ Unaudited Pro Forma Condensed Financial Information .” The unaudited pro forma condensed combined statement of operations is not necessarily indicative of what the actual results of operations would have been had the Business Combination taken place on the date indicated, nor is it indicative of the future consolidated results of operations of the post-combination company. The selected unaudited pro forma condensed combined financial information below should be read in conjunction with the sections entitled “ Unaudited Pro Forma Condensed Combined Financial Information ,” “ Management’s Discussion and Analysis of Financial Condition and Results of Operations of STG ” and the historical consolidated financial statements and notes thereto of GDEF and STG.

_________

(1) EBITDA represents net income before interest expenses, income taxes, depreciation and amortization, and impairment of goodwill and intangible assets. Adjusted EBITDA represents EBITDA adjusted for operational restructuring charges and non-cash or non-operational losses or gains, including long-lived asset impairment charges, formal cost reduction plans, transactional legal fees, other professional fees and special employee bonuses. Adjusted EBITDA is included because it is used by management and certain investors to measure STG’s operating performance. Adjusted EBITDA is also used by management in its determination of the fair value of STG’s common stock and is also reviewed periodically as a measure of financial performance by STG’s board of directors. Adjusted EBITDA is not an item recognized by the generally accepted accounting principles in the United States of America, or U.S. GAAP, and should not be considered as an alternative to net income, operating income, or any other indicator of a company’s operating performance required by U.S. GAAP. STG’s definition of Adjusted EBITDA used here may not be comparable to the definition of Adjusted EBITDA used by other companies. A reconciliation of income from net income to Adjusted EBITDA is as follows:

	For the three  months ended September 30,						For the nine  months ended September 30,						For the  years ended  December 31,
	2015			2014			2015			2014			2014			2013			2012
	(US dollars in thousands)
Net income (loss)	$	249		$	2,772		$	2,709		$	5,417		$	(169	)	$	5,179		$	5,895
State income taxes		(80	)		(10	)		202			348			346			394			332
Interest expense, net		24			9			34			32			58			116			68
Depreciation & Amortization		143			304			760			878			1,179			1,162			1,229
Amortization of intangible assets		198			156			594			468			625			1,633			626
Impairment of goodwill		2,064			—			2,064			—			5,117			1,655			—
Impairment of other intangible assets		906			—			906			—			1,811			—			—
EBITDA		3,504			3,231			7,269			7,143			8,966			10,139			8,150
Adjustments to EBITDA:
CEO expenses(1)	$	106		$	549		$	1,069		$	1,727		$	2,462		$	3,758		$	2,753
Excess rent expenses(2)		39			205			2,384			996			1,212			1,739			1,030
Excess business development costs(3)		—			583			—			1,827			2,281			2,733			2,680
Discontinued  operations		—			322			—			1,501			1,529			3			—
Employee terminations & related costs(4)		599			732			2,208			2,265			2,755			801			433
Accruals and reserve adjustments(5)		—			(278	)		221			(1,259	)		(246	)		514			—
Acquisition  costs(6)		296			—			1,026			—			—			—			—
Cost plus contracts revenue adjustments(7)		(128	)		(379	)		(589	)		(1,180	)		(1,438	)		(1,053	)		(1,212	)
Adjusted EBITDA		4,416			4,965			13,588			13,020			17,521			18,634			13,834

(1) Salary, bonus and miscellaneous expenses directly related to Simon Lee, the Owner and Chairman of STG, and certain other family members. Management considers these expenses to be non-recurring, as Mr. Lee or his family members were not fully active in the business and will continue to not be active in an executive capacity post-closing. The compensation costs of STG’s president are included in the historical results.

(2) Cost incurred in unutilized lease space as well as the anticipated reduction in the price per square foot upon the business’ relocation to STG’s new facility in July 2015.

(3) To reflect a plan implemented in 2015 to reduce the business development expenses to their appropriate level following implementation of the reduction plan.

(4) Salary, fringe, bonus and severance for terminated employees included in three separate reductions in force in 2013, 2014 and 2015.

(5) Reversal of excess accruals and unutilized provisions in the periods when the expenses were initially reflected in the financial statements.

(6) Transaction costs associated with the Business Combination.

(7) To adjust for the revenue effect of the above adjustments on cost-plus contracts.

Selected Unaudited Pro Forma Condensed Combined Statement of Operations Nine Months Ended September 30, 2015 (in thousands, except share and per share information)
(U.S. dollars in thousands)
Contract revenue	$	149,138
Gross profit	$	46,914
Operating loss	$	(8,753	)
Net loss	$	(9,228	)
Net income per share – basic	$	(0.57	)
Net income per share – diluted	$	(0.57	)
Weighted-average shares outstanding – basic		16,107,072
Weighted-average shares outstanding – diluted		16,107,072
Selected Unaudited Pro Forma Condensed Combined Statement of Operations Year Ended December 31, 2014 (in thousands, except share and per share information)
Contract revenue	$	209,727
Gross profit	$	67,802
Operating loss	$	(11,140	)
Net loss	$	(11,580	)
Net income per share – basic	$	(0.72	)
Net income per share – diluted	$	(0.72	)
Weighted-average shares outstanding – basic		16,107,072
Weighted-average shares outstanding – diluted		16,107,072
Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data At September 30, 2015
Cash and cash equivalents	$	19,154
Long-term debt, net of current portion	$	81,239
Net current Assets	$	21,660
Total assets	$	235,515
Total liabilities	$	123,516
Total stockholders’ equity	$	111,999

Unaudited Pro Forma Condensed Combined Financial Statements

The following unaudited pro forma condensed combined financial statements give effect to the Business Combination and the proposed related financing transactions. This transaction which was signed on June 8, 2015 and closed on November 23, 2015 will be accounted for using the acquisition method of accounting under the provisions of Accounting Standards Codification (“ASC”) 805, “Business Combinations”, (“ASC 805”). The pro forma adjustments are based on the information currently available and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined balance sheet of GDEF and STG as of September 30, 2015 assumes the Business Combination had occurred on that date. Such pro forma information is based upon the unaudited historical balance sheet of GDEF and unaudited historical consolidated balance sheet of STG as of September 30, 2015.

The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2015 and for the year ended December 31, 2014 assumes the Business Combination had occurred on January 1, 2014. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2015 is based upon the historical unaudited statement of operations of GDEF and the historical unaudited consolidated statement of income of STG for the nine months ended September 30, 2015. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2014 is based on the historical audited statement of operations of GDEF and the historical audited consolidated statement of income of STG for the year ended December 31, 2014.

The unaudited pro forma condensed combined financial statements are based on estimates and assumptions set forth in the notes to these financial statements, which have been made solely for purposes of developing this pro forma information. The unaudited pro forma consolidated financial statements are not necessarily an indication of the results that would have been achieved had such transactions been consummated as of the dates indicated or that may be achieved in the future. Furthermore, these pro forma condensed combined financial statements do not reflect changes which may occur as a result of post-Business Combination activities and other matters.

These unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements and related notes of STG and GDEF, which are included as exhibits to this Current Report on Form 8-K.

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only. The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the Business Combination, (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the results of the post-combination company.

The following table summarizes the consideration, sources and uses for the Business Combination, and ownership interests:

US dollars in thousands
Cash consideration		$	68,000
Stock consideration (1)			102,200
		$	170,200
Public stockholders			783,422
Stock Dividend			739,077
STG stockholders - Stock consideration			9,023,360
STG stockholders – Promote shares received from GDEF at close			35,000
STG stockholders – Conversion Shares			658,513
STG stockholders – Stock Dividend			621,238
Sponsor - Shares held since IPO			2,279,564
Sponsor – Promote shares transferred to STG stockholders at close			(35,000	)
Sponsor - Backstop			1,030,103
Sponsor - Stock Dividend			971,795
			16,107,072
% Non-public shares	%		90.6
Ownership interest of STG stockholders	%		64.2
Ownership interest of Sponsor	%		26.4
Ownership interest of public stockholders	%		9.4
Sources and Uses of Cash
Sources
Proceeds from debt financing		$	81,750
Share consideration to STG			90,500
Equity from Public Capital Markets			7,448
Equity from Private Capital Markets - Sponsor			10,950
Equity from Private Capital Markets - STG stockholders			7,000
Satisfaction of Note receivable from STG stockholders			2,500
GDEF and STG cash balance at November 23, 2015			2,796
		$	202,944
Uses
Cash consideration to STG stockholders			68,000
Share consideration to STG stockholders			90,500
STG stockholders – Conversion Shares			7,000
Estimated transaction fees and expenses			8,955
Repayment of GDEF affiliated debt			4,986
Repayment of GDEF liabilities			2,569
Cash Consideration Adjustment for Working Capital			6,793
Cash to Balance Sheet			14,141
		$	202,944

Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2015
(in thousands)

	GDEF – Historical		STG – Historical		Pro Forma Adjustments for Redemption, Merger, Recapitalization and Debt Financing			Notes	Pro Forma Adjustments Redemption			Notes	Pro Forma Combined Redemption
ASSETS
Current Assets
Cash and cash equivalents	$	226	$	5,814	$	33,819		2a, 2b, 2f, 2g, 2i, 2m, 2l, 2n		(22,473	)	2b, 2k	$	17,385
Contract receivables, net		—		26,775										26,775
Investments held in Rabbi Trust		—		4,279		(4,279	)	2j						—
Prepaid expenses and other current assets		20		1,021										1,041
Total current assets		246		37,889		29,540				(22,473	)			45,201
Property and equipment, net		—		1,915										1,915
Goodwill		—		2,635		135,395		2a, 2e, 2h, 2o, 2p, 2q, 2r						138,030
Intangible assets, net		—		1,500		41,850		2p, 2q						43,350
Cash and investments held in Trust Account		63,914		—		(63,914	)	2b						—
Other assets		—		83		5,338		2f						5,421
Total long-term assets		63,914		8,633		118,669				—				188,716
TOTAL ASSETS	$	64,160	$	44,022	$	148,209			$	(22,473	)		$	233,917
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Long-term debt, current portion	$	—	$	—		511		2f						511
Convertible promissory note to affiliate		2,607		—		(2,607	)	2l						—
Accounts payable and accrued expenses		2,346		14,911		(2,346	)	2l						14,911
Accrued payroll and related liabilities		—		9,599										9,599
Billings in excess of revenue recognized		—		288										288
Due to affiliate		1,465		—		(1,465	)	2l						—
Deferred rent		—		122		(122	)	2o						—
Total current liabilities		6,418		24,920		(6,029	)			—				25,310

Unaudited Pro Forma Condensed Combined Balance Sheet – (continued)
As of September 30, 2015

(in thousands)

	GDEF –  Historical			STG – Historical		Pro Forma Adjustments for Redemption, Merger, Recapitalization and Debt Financing			Notes	Pro Forma Adjustments Redemption			Notes	Pro Forma Combined Redemption
Long-term debt, net of current portion							81,239		2f						81,239
Deferred compensation plan		—			4,279		(4,279	)	2j						—
Deferred equity underwriter fees		1,898			—		(1,898	)	2i						—
Deferred income taxes		—			—		16,967		2h						16,967
Deferred rent		—			678		(678	)	2o						—
Total long-term liabilities		1,898			4,957		91,352				—				98,206
TOTAL LIABILITIES		8,315			29,877		85,323				—				123,516
Redeemable securities		50,845			—		(50,845	)	2k						—
STOCKHOLDERS’ EQUITY
Common stock		—			—		1		2c, 2m, 2n						1
Additional paid-in capital		11,742			10,391		119,610		2a, 2c, 2d, 2e, 2h, 2k, 2l, 2m, 2n	$	(22,473	)	2b, 2k		119,270
Retained earnings		(6,743	)		3,754		(5,881	)	2d, 2e, 2g						(8,869	)
TOTAL STOCKHOLDERS’ EQUITY		5,000			14,145		113,731				(22,473	)			110,401
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	64,160		$	44,022	$	148,209			$	(22,473	)		$	233,917

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2015
(in thousands, except share and per share information)

	GDEF –  Historical			STG –  Historical			Pro Forma Adjustments for Redemption, Merger, Recapitalization and Debt Financing			Notes	Pro Forma Adjustments		Notes	Pro Forma Combined
Contract revenue	$	—		$	149,138									$	149,138
Direct expenses		—		$	102,224										102,224
Gross profit		—			46,914			—				—			46,914
Operating Expenses
Indirect and selling expenses		4,536		$	40,933		$	7,228		3c, 3d					52,697
Impairment of goodwill		—			2,064										2,064
Impairment of other intangible assets		—			906										906
Total Operating Expenses		4,536			43,903			7,228				—			55,667
Operating income (loss)		(4,536	)		3,011			(7,228	)			—			(8,753	)
Other income (expense)
Other (expense) income, net		1			(259	)									(258	)
Interest expense		—			(43	)		(6,110	)	3a					(6,153	)
Total other Income (expense)		1			(302	)		(6,110	)			—			(6,410	)
Income (loss) before income taxes		(4,535	)		2,709			(13,337	)			—			(15,163	)
Tax provision (benefit)								(5,935	)	3b		—			(5,935	)
Net income (loss)	$	(4,535	)	$	2,709		$	(7,403	)		$	—		$	(9,228	)
Net income (loss) per share available to common stockholders
Basic and diluted	$	(1.26	)	$	2,438									$	(0.57	)
Weighted average number of common shares outstanding
Basic and diluted		3,601,715			1,111			12,504,246		4a					16,107,072

NOTE — basic and diluted is equivalent since there is a combined loss. The only common stock equivalents are the convertible related party notes which are non-interest bearing and are convertible into GDEF Common Stock at the greater of the 30-day average trading price or $10 per share. The assumed conversion price was the average daily trading price for December 1, 2014 through December 31, 2014 (the applicable 30-day period prior to January 1, 2015) of $10.27.

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2014
(in thousands, except share and per share information)

	GDEF –  Historical			STG –  Historical			Pro Forma Adjustments for Redemption, Merger, Recapitalization and Debt Financing			Notes	Pro Forma Adjustments		Pro Forma Combined
Contract revenue	$	—		$	209,727								$	209,727
Direct expenses		—			141,925									141,925
Gross profit		—			67,802			—				—		67,802
Operating Expenses
Indirect and selling expenses		2,145			61,286		$	8,583		3c, 3d				72,014
Impairment of goodwill		—			5,117									5,117
Impairment of other intangible assets		—			1,811									1,811
Total Operating Expenses		2,145			68,214			8,583				—		78,942
Operating income (loss)		(2,145	)		(412	)		(8,583	)			—		(11,140	)
Other income (expense)
Other (expense) income, net		23			313									336
Interest expense		—			(70	)		(8,124	)	3a				(8,194	)
Total other Income (expense)		23			243			(8,124	)			—		(7,858	)
Income (loss) before income taxes		(2,122	)		(169	)		(16,707	)			—		(18,998	)
Tax provision (benefit)								(7,409	)	3b				(7,409	)
Net income (loss)	$	(2,122	)	$	(169	)	$	(9,298	)		$	—	$	(11,583	)
Net income (loss) per share available to common stockholders
Basic and diluted	$	(0.62	)	$	(152.12	)							$	(0.72	)
Weighted average number of common shares outstanding
Basic and diluted		3,399,156			1,111			12,706,805		4a				16,107,072

NOTE — basic and diluted is equivalent since there is a combined loss. The only common stock equivalents are the convertible related party notes which are non-interest bearing and are convertible into GDEF Common Stock at the greater of the 30-day average trading price or $10 per share. The assumed conversion price was the average daily trading price for December 1, 2013 through December 31, 2014 (the applicable 30-day period prior to January 1, 2014) of $10.05.

Notes to Unaudited Pro Forma Condensed Combined Financial Information

1. Description of Transaction

Pursuant to the Business Combination Agreement, upon the effectiveness of the Business Combination shares of common stock of STG were exchanged for cash and validly issued shares of GDEF Common Stock paid and issued to the STG Stockholders. The Business Combination purchase price of $170.9 million was subject to working capital and other customary adjustments determined at the closing of the Business Combination in accordance with the terms of the Business Combination Agreement. The Business Combination occurred on November 23, 2015, the consideration paid to the STG Stockholders for their shares of STG common stock was $177.0 million, consisting of $68 million in cash (the “Cash Consideration”), $7 million in Conversion Shares (658,513 shares) and $90.5 million in common equity, or 8,578,199 shares, valued at approximately $10.55 per share, issued by GDEF, and $6.8 million of purchase price adjustments for cash on the balance sheet and net working capital differences between the estimated working capital at close and the targeted working capital of $10.1 million. GDEF issued to the STG Stockholders 445,161 shares ($4.7 million) of GDEF Common Stock held by the Sponsor that was contributed by the Sponsor to GDEF immediately prior to the closing of the transactions contemplated by the Business Combination Agreement.

In addition, at close, the Sponsor transferred to the STG Stockholders 35,000 shares of GDEF common stock immediately prior to closing the transaction.

If, immediately following the closing of the transaction, the share consideration was, in the aggregate, less than 56.7% of the outstanding shares of GDEF Common Stock, as of the closing, a portion of the Cash Consideration may have been exchanged for additional shares of GDEF Common Stock at a price of $10.55 per share, so that the STG Stockholders would own, in the aggregate, 56.7% of the outstanding shares of GDEF Common Stock following the closing of the Business Combination. In addition, in the event that the transaction otherwise did not qualify for the tax treatment described in the Business Combination Agreement, a portion of the Cash Consideration would have been exchanged for additional shares of GDEF Common Stock at a price of $10.55 per share, so that the STG Stockholders, the Sponsor and any other person who receives shares of GDEF Common Stock in connection with an equity financing completed in connection with the closing, would own 80% of the outstanding shares of GDEF Common Stock at closing. The Cash Consideration was increased by $5.9 million by the amount of estimated working capital and cash at close exceeding the defined threshold.

The Cash Consideration was paid using proceeds held in our Trust Account and the balance of the Cash Consideration was paid using proceeds from debt financing. The remainder of the proceeds from the debt financing will be used by GDEF to pay debt and transaction related expenses and for general corporate purposes after closing. GDEF finalized debt financing of $81.75 million at close, while remaining cash raised in the Company’s IPO and remaining in trust in the amount of $8.3 million was transferred from the Trust (as defined below) to GDEF at close. Shares redeemed at close amounted to 2,031,383 at $10.63 per share ($21.6 million).

On October 17, 2015, GDEF entered into an Amended and Restated Backstop Common Stock Purchase Agreement (the “Backstop Purchase Agreement”) with the Sponsor. The Backstop Purchase Agreement granted the Sponsor the right to purchase shares of GDEF Common Stock, at a price of $10.63 per share (the “Backstop Purchase”). The purchase right was exercisable only in the event, and to the extent, that the Company did not meet the Threshold Cash Amount. The term “Threshold Cash Amount” means $20,000,000 in cash available to the Company from (1) the Trust Account at the closing of the Business Combination following the payment in full to Public Stockholders who have requested to be redeemed in connection with the closing of the Business Combination, and (2) the payment of any aggregate purchase price for the Backstop Purchase. In connection with the closing of the Business Combination, the Sponsor purchased 1,030,103 shares for consideration of approximately $10.95 million.

GDEF declared a dividend of one share of GDEF Common Stock for every 1.06 shares of GDEF Common Stock payable to Stockholders of record immediately following the consummation of the Business Combination, which occurred on November 23, 2015. The Sponsor, with respect to the shares of GDEF Common Stock currently held by the Sponsor and any shares that may be acquired by the Sponsor upon any conversion of the convertible promissory notes currently held by the Sponsor, and STG Stockholders, have agreed to forfeit any Dividend Shares they would be entitled to in exchange for no consideration. The Sponsor did not forfeit any right to receive any Dividend Shares in respect of any shares it acquired pursuant to the Backstop Purchase and the STG Stockholders did not forfeit any right to receive Dividend Shares with respect to the Conversion Shares. Payment of the dividend was contingent upon the closing of the Business Combination and made as soon as practicable after close of the Business Combination.

On July 17, 2015, GDEF held a special meeting of stockholders (the “July Extension Meeting”). At the July Extension Meeting, the stockholders approved amendments to the Charter to extend the date by which the Company must consummate its initial business combination from July 24, 2015 to October 24, 2015. In accordance with our Charter, in connection with the July Extension Meeting and the approval of the amendments to the Charter, our Public Stockholders were entitled to redeem their GDEF Common Stock for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including any amounts representing interest earned on the Trust Account, less any interest released to GDEF to pay franchise or income taxes. Our stockholders redeemed 876,072 shares of GDEF Common Stock at a price of $10.55 per share, for a total redemption of approximately $9,242,560 that was effected on July 24, 2015.

In addition, in connection with the July Extension Meeting, on July 21, 2015, GDEF issued a non-interest bearing promissory note to the Sponsor for an aggregate of approximately $361,436. GDEF used the proceeds from the note to deposit $0.06 per share that was not redeemed in the Trust Account. In connection with the October Extension Meeting, on October 23, 2015, GDEF issued a non-interest bearing promissory note to the Sponsor for an aggregate approximately $56,300. GDEF used the proceeds from the note to deposit $0.02 per share that was not redeemed in the Trust Account. The notes will be repaid on the earlier of (1) November 24, 2015, or (2) immediately following consummation of GDEF’s initial business combination. After giving effect to the redemptions and the additional deposits, there was approximately $29,921,377 in the Trust Account as of October 30, 2015, or approximately $10.63 per public share. There were 3,209,123 shares redeemed at $10.61 per share. 

In connection with the closing, GDEF’s public stockholders elected to redeem 2,031,383 shares of Common Stock pursuant to the terms of GDEF’s amended and restated certificate of incorporation, at a price per share of $10.63, resulting in a total payment to redeeming stockholders of $21,593,601.29.

2. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments

The estimated purchase price and the allocation of the estimated purchase price discussed below are preliminary. An independent third-party valuation firm assisted in performing a preliminary valuation. The final allocation of the purchase price will be determined at a later date and is dependent on a number of factors, including the determination of the final aggregate consideration paid in connection with the Business Combination as a result of all adjustments set forth in the Business Combination Agreement and the final evaluation of STG’s tangible and identifiable intangible assets acquired and liabilities assumed. Such final adjustments may be material. The allocation is expected to occur within one year of the consummation of the Business Combination. The preliminary consideration and allocation of the purchase price to the fair value of STG’s assets acquired and liabilities assumed as if the acquisition date was September 30, 2015 is presented as follows (in thousands):

	Note	Amount
Calculation of consideration
Purchase price – cash consideration	(refer to 2 (a) below)	$	68,000
Purchase price – share consideration	(refer to 2 (a) below)		102,200
Purchase price adjustments (cash and workings capital)	(refer to 2 (a) below)		6,793
Total consideration		$	176,993
Recognized amounts of identifiable assets acquired and liabilities assumed
Book value of STG’s net assets	(refer to 2 (d), 2 (e) below)	$	16,645
Less: Transaction costs incurred by STG	(refer to 2 (a) below)		(730	)
Less: Historical STG goodwill	(refer to 2 (r) below)		(2,635	)
Less: Historical STG intangible assets	(refer to 2 (p) below)		(1,500	)
Add: Historical STG deferred rent liabilities	(refer to 2 (o) below)		800
			12,580
Fair value adjustments of net assets acquired
Identifiable intangible assets
Customer relationships	(refer to 2 (p) below)		28,480
Trade name	(refer to 2 (q) below)		14,870
Deferred tax liabilities – Identifiable intangible assets	(refer to 2 (h) below)		(16,967	)
Goodwill	(refer to 2 (r) below)	$	138,030

Notes to Unaudited Pro Forma Condensed Combined Financial Information

2. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments  – (continued)

Cash and cash equivalents — Merger, Recapitalization and Debt Financing

(US dollars in thousands)
Cash consideration – business combination	$	(82,240	)	(refer to 2 (a) below)
Cash from Trust Account (100%)		29,921		(refer to 2 (b) below)
Debt		81,750		(refer to 2 (f) below)
Estimated transaction fees and expenses		(8,955	)	(refer to 2 (i) below)
Equity from Private Capital Markets - Sponsor		10,950		(refer to 2 (n) below)
Equity from Private Capital Markets - STG stockholders		7,000		(refer to 2 (n) below)
STG Shareholder loan		2,500		(refer to 2 (m) below)
Settlement of promissory note		(4,986	)	(refer to 2 (l) below)
Settlement of accounts payable		(2,123	)	(refer to 2 (l) below)
	$	33,819

Pro forma adjustment to reflect the Business Combination, recapitalization and debt financing on the additional paid-in capital account balance is as follows:

Additional paid-in capital — Merger, Recapitalization and Debt Financing

(US dollars in thousands)
Share consideration – business combination	$	95,200		(refer to 2 (a) below)
Redemption of shares		(33,992	)	(refer to 2 (b) below)
Elimination of additional paid-in capital of STG		(10,391	)	(refer to 2 (d) 2 (e) below)
Share consideration (9,023,360 shares issued to STG)		(1	)	(refer to 2 (c) below)
Equity from Private Capital Markets - Sponsor		10,950		(refer to 2 (n) below)
Equity from Private Capital Markets - STG stockholders		7,000		(refer to 2 (n) below)
Redeemable securities		50,845		(refer to 2 (k) below)
	$	119,610

Pro forma adjustment to reflect the Business Combination, recapitalization and debt financing on the retained earnings account balance is as follows for all the scenarios:

Retained earnings — Merger, Recapitalization and Debt Financing

(US dollars in thousands)
Transaction fees of buyer	$	(1,719	)	(refer to 2 (g) below)
Reversal of seller transaction fees paid at closing		730		(refer to 2 (a) below)
GDEF operating expenses		(1,138	)	(refer to 2 (l) below)
Termination of retained earnings of STG (S-election)		(3,754	)	(refer to 2 (d), 2 (e) below)
	$	(5,881	)

Notes to Unaudited Pro Forma Condensed Combined Financial Information

2. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments  – (continued)

(a) Assuming a September 30, 2015 transaction date, the total consideration is (i) $68.0 million for the Cash Consideration, $7 million in Conversion shares (658,513 shares), and a $6.8 million adjustment for cash and estimated working capital surplus; (ii) $90.5 million in common equity for 8,578,199 newly issued shares at $10.55 per share. In addition, GDEF issued to the STG Stockholders 445,161 shares ($4.7 million) of GDEF Common Stock held by the Sponsor that were contributed by the Sponsor to GDEF immediately prior to the closing of the transactions contemplated by the Business Combination Agreement. Transaction fees of approximately $7.1 million and underwriting fees of $1.9 million are settled at close of the transaction and deducted from cash. STG transaction costs of approximately $0.7 million will be paid out of the STG’s proceeds. There is no impact on the pro forma adjustments for these costs.

(b) 72.2% of the Trust balance was paid to public stockholders who redeemed their common stock, with 27.8% ($8.3 million) of the Trust utilized to pay the deferred underwriters’ fees and a portion of the Cash Consideration for the Business Combination. The remaining cash in the Trust, $21.6 million, was paid to stockholders to satisfy the redemption of common shares. Our stockholders redeemed 876,072 shares of GDEF Common Stock at a price of $10.55 per share, for a total redemption of approximately $9.2 million that was effected on July 24, 2015. In addition, in connection with the July Extension Meeting, on July 21, 2015, GDEF issued a non-interest bearing promissory note to the Sponsor for an aggregate of approximately $361,436. GDEF used the proceeds from the note to deposit $0.06 per share that was not redeemed in the Trust. In connection with the October Extension Meeting, on October 23, 2015, GDEF issued a non-interest bearing promissory note to the Sponsor for an aggregate approximately $56,300. GDEF used the proceeds from the note to deposit $0.02 per share that was not redeemed in the Trust. The notes were repaid immediately following consummation of GDEF’s business combination. After giving effect to the redemptions and the additional deposits, there was approximately $29,921,377 in the Trust as of October 30, 2015, or approximately $10.63 per public share. There were 3,209,123 shares redeemed at $10.61 per share.

(c) As part of the equity consideration, up to 9,023,360 shares of GDEF will be issued to STG at a par value of $0.0001 per share.

(d) Represents the elimination of STG’s historic common stock, additional paid-in capital, and retained earnings due to the Business Combination.

(e) Reflects the acquisition of STG’s net assets as of September 30, 2015.

Notes to Unaudited Pro Forma Condensed Combined Financial Information

2. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments  – (continued)

(f) Represents borrowings of $81.75 million under a new term loan agreement. In connection with financing, debt issuance costs are capitalized and amortized on a straight line basis over the term of an agreement. For illustrative purposes, we have capitalized an estimated level of expenses and used the lower end of a 5 – 8 year range for the amortization period. Additionally, to show the impact of interest expense in the pro forma financial presentation, we have assumed an interest rate of 8.8% for illustrative purposes only, based upon the terms of the credit agreement of US LIBOR (with a floor of 1%) rate plus 7.8% .

(g) Represents the amount of estimated GDEF related transaction costs. The unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash with a corresponding decrease in retained earnings. These costs are not included in the pro forma statement of operations as they are directly related to the Business Combination and will be non-recurring.

(h) Represents $17.0 million being the deferred tax liability incurred on recognizing the identifiable intangible assets of customer relationships and trade name.

(i) Adjustment to pay (1) financing fees, (2) estimated GDEF transaction fees and expenses and (3) the deferred underwriters’ fees in cash. In accordance with the underwriters’ agreement with GDEF, the fees were paid upon consummation of the Business Combination.

(j) Adjustment to pay the deferred compensation plan participants at the time of the Business Combination. There are related investments held in a Rabbi Trust ($4.3 million) that are expected to be used to fund the payments to the participants. The investments will be liquidated in full at closing of this Business Combination.

(k) At the time of issuance, certain shares of GDEF Common Stock were subject to a possible redemption and, as such, an amount of $50.8 million was classified outside of the equity section in the GDEF historical balance sheet.

(l) Represents the settlement of the promissory notes owing to affiliate ($5.0 million and accounts payable and accrued expenses ($2.6 million)).

Notes to Unaudited Pro Forma Condensed Combined Financial Information

2. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments  – (continued)

(m) The amount due under the shareholder loan was netted against the proceeds paid to the sellers at closing of the Business Combination.

(n) Represents the Amended and Restated Backstop Common Stock Purchase Agreement (the “Backstop Purchase Agreement”) entered into by GDEF with the Sponsor and STG stockholders. The Backstop Purchase Agreement grants the Sponsor and STG stockholders the right to purchase shares of GDEF Common Stock, at a price of $10.63 per share (the “Backstop Purchase”).

(o) Represents the write-down of STG deferred rent liabilities due to the application of the acquisition method of accounting.

(p) Represents the increase in the carrying value of customer relationships by $27.0 million to reflect their estimated fair value of $28.5 million. The fair value estimate of the customer relationships is preliminary and was determined using an income-based approach. This approach evaluates the percent worth of the future estimated economic benefits that accrue to the investors. The present value of expected future cash flows indicates the fair value of the asset. Customer relationships are expected to be amortized over a period of approximately 8 years on an accelerated basis in line with expected attrition.

(q) Represents the increase in the carrying value of the trade name by $14.9 million to reflect the estimated fair value of $14.9 million. The fair value estimate of the trade name is preliminary and was determined using the relief from royalty method which is a variation of an income-based approach. This approach utilizes the percent value of hypothetical royalty streams to provide an estimate of the fair value of the asset. The trade name is expected to have a definite life and be amortized over a period of 15 years.

(r) Prior to the Business Combination, STG’s historical goodwill totaled $2.6 million. As a result of the Business Combination, goodwill is calculated as the difference between the fair value of the consideration expected to be transferred and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. The acquisition of STG by GDEF as of September 30, 2015 would have resulted in a net increase in goodwill of $129.8 million to $133.3 million.

3. Unaudited Pro Forma Condensed Combined Statements of Operations Adjustments

(a) Represents interest expense of approximately $6.1 million and $8.2 million, for the nine months ended September 30, 2015 and for the year ended December 31, 2014, respectively, on borrowings of $81.75 million under the Credit Agreement entered into at the consummation of the Business Combination.

(b) Represents the income tax effect of the pro forma adjustments related to the Business Combination of GDEF and STG calculated using the U.S. statutory income tax rate of 35% and U.S. state tax rates, for a blended rate, for the nine months ended September 30, 2015 and for the year ended December 31, 2014 of 39.14% and 39.05%, respectively. The effective tax rate of the combined company could be significantly different depending on the mix of post-Business Combination income and other activities.

(c) Represents the elimination of STG’s historic amortization expense.

(d) To record pro forma amortization expense on the portion of the purchase price allocated to identifiable intangible assets. The estimated amortization expense on the customer relationships and trade names for the year ended December 31, 2014 is estimated to be $7.1 million and $1.5 million respectively based on the preliminary fair value of $28.5 million and $14.9 million and the estimated useful lives of 8 years and 15 years. Amortization expense for the nine months ended September 30, 2015 is estimated to be $6.1 million for customer relationships and $1.1 million for trade names.

Notes to Unaudited Pro Forma Condensed Combined Financial Information

4. Earnings per Share

(a) The unaudited pro forma condensed combined basic and diluted earnings per share calculations are based on the historic GDEF weighted average number of shares outstanding of 16,107,072 for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively, adjusted by 9,023,360 shares issued to STG Stockholders, and further adjusted to reflect the redemptions, the Backstop Purchase, the Stock Dividend, and the Conversion Shares. The weighted average shares amount to 16,107,072 at September 30, 2015 and December 31, 2014, for 72.2% redemptions of common stock representing the total number of shares outstanding as of close of the Business Combination.

The convertible promissory note with the affiliate was not converted at the consummation of the Business Combination and settled in full therefore having no effect on the weighted number of shares in the earnings per share calculation. This adjustment includes total equity consideration upon consummation of the Business Combination of 8,578,199 shares of GDEF Common Stock and 445,161 shares held by the Sponsor that were contributed by the Sponsor to GDEF immediately prior to the closing of the Business Combination. In addition, at close, the Sponsor issued to STG Stockholders 35,000 shares of GDEF common stock immediately prior to closing the Business Combination.

The following table presents information used in the unaudited pro forma condensed combined financial information and the notes thereto, and other supplementary unaudited pro forma condensed combined financial information relevant to each of the scenarios presented that could result in consummation of the Business Combination:

Weighted average and ending share calculation, basic and diluted	# Shares
Public stockholders		783,422
Stock Dividend		739,077
STG stockholders - Stock consideration		9,023,360
STG stockholders - Promote shares received from GDEF at close		35,000
STG stockholders - Conversion Shares		658,513
STG stockholders - Stock Dividend		621,238
Sponsor - Shares held since IPO		2,279,564
Sponsor - promote shares transferred to STG stockholders at close		(35,000	)
Sponsor - Backstop		1,030,103
Sponsor - Stock Dividend		971,195
Weighted average and ending shares, basic and diluted		16,107,072
Pro Forma Book Value Per Share calculation
Total shareholders’ equity		111,999
Ending shares, basic and diluted		16,107,072
Book Value Per Share or Pro Forma Book Value Per Share as of September 30, 2015	$	6.95

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations of STG for the years ended December 31, 2014, 2013 and 2012 is set forth in the Proxy Statement in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of STG” beginning on page 192, which is incorporated by reference herein.

You should read the following management’s discussion and analysis for the quarters ended September 30, 2015 and 2014 together with STG’s audited and unaudited financial statements and the related notes included elsewhere or incorporated by reference in this Form 8-K. The following discussion and analysis should be read in conjunction with the “Selected Historical Financial Data of STG” and the accompanying financial statements and related notes included elsewhere in this Current Report on Form 8-K. The following discussion contains forward-looking statements that reflect STG’s future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside STG’s control. STG’s actual results could differ materially from those discussed in these forward-looking statements. Please read “Risk Factors” and “Forward-Looking Statements.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

Overview

STG provides specialist cyber, software and intelligence solutions to U.S. government organizations with a national security mandate. STG’s solutions are integral to national security-related programs run by more than 50 U.S. government agencies, including the Department of Defense, the Intelligence Community, the Department of Homeland Security, the Department of State and other government departments with national security responsibilities. STG’s programs are predominantly funded from base budgets and are essential to the effective day-to-day operations of its customers.

STG’s operational strength and track record has been established in securing highly sensitive, mission-critical national security networks, solving complex technology problems in mission-critical contexts and providing decision makers with actionable intelligence from multiple data sources.

STG specializes in three core areas of capability:

• Cyber Security and Secure Information Systems  — securing highly sensitive, mission-critical national security networks

• Software Development, Systems and Services  — solving complex problems in mission-critical contexts

• Intelligence and Analytics  — gathering and analyzing data from multiple sources to provide high quality, actionable intelligence across multiple contexts

Key Measures STG Uses to Evaluate Its Performance

EBITDA and Adjusted EBITDA

STG defines EBITDA as net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization and (gain)/loss on disposal of property, plant and equipment.

STG defines Adjusted EBITDA as EBITDA, excluding the impact of operational restructuring charges and non-cash or non-operational losses or gains, including long-lived asset impairment charges, formal cost reduction plans, excess and unutilized accruals, transactional legal fees, other professional fees and employee retention bonuses.

Management believes that Adjusted EBITDA provides a clear picture of STG’s operating results by eliminating expenses and income that are not reflective of the underlying business performance. STG uses this metric to facilitate a comparison of operating performance on a consistent basis from period to period and to analyze the factors and trends affecting its core business areas or operations. STG’s internal plans, budgets and forecasts use Adjusted EBITDA as a key metric and STG uses this measure to evaluate its operating performance and core business operating performance and to determine the level of incentive compensation paid to its employees. Adjusted EBITDA is not an item recognized by the generally accepted accounting principles in the United States of America, or U.S. GAAP, and should not be considered as an alternative to net income, operating income, or any other indicator of a company’s operating performance required by U.S. GAAP. STG’s definition of Adjusted EBITDA used here may not be comparable to the definition of EBITDA or Adjusted EBITDA used by other companies. A reconciliation of income from net income to Adjusted EBITDA is as follows:

Set forth below is a reconciliation of Adjusted EBITDA to net income (loss) (unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2015			2014			2015			2014
Net income (loss)	$	249		$	2,772		$	2,709		$	5,417
State income taxes		(80	)		(10	)		202			348
Interest expense		24			9			34			32
Depreciation & Amortization		143			304			760			878
Amortization of intangible assets		198			156			594			468
Impairment of goodwill		2,064			—			2,064			—
Impairment of other intangible assets		906			—			906			—
EBITDA	$	3,504		$	3,231		$	7,269		$	7,143
Adjustments to EBITDA:
CEO expenses (1)	$	106		$	549		$	1,069		$	1,727
Excess rent expenses (2)		39			205			2,384			996
Excess business development costs (3)		—			583			—			1,827
Discontinued operations		—			322			—			1,501
Employee terminations & related costs (4)		599			732			2,208			2,265
Accruals and reserve adjustments (5)		—			(278	)		221			(835	)
Acquisition costs (6)		296			—			1,026			—
Cost plus contracts revenue adjustments (7)		(128	)		(379	)		(589	)		(1,182	)
Adjusted EBITDA	$	4,416		$	4,965		$	13,588		$	13,442

(1) Salary, bonus and miscellaneous expenses directly related to Simon Lee, the Owner and Chairman of STG, and certain other family members. Management considers these expenses to be non-recurring, as Mr. Lee or his family members were not fully active in the business and will continue to not be active in an executive capacity post-closing. The compensation costs of STG’s president are included in the historical results.

(2) Cost incurred in the unutilized lease space as well as the pro forma reduction in the price per square foot upon the business’ relocation to STG’s new facility in July 2015.

(3) To reflect a plan implemented in 2015 to reduce the business development expenses to their appropriate level following implementation of the reduction plan.

(4) Salary, fringe, bonus and severance for terminated employees included in two separate reductions in force in 2014 and 2015.

(5) Reversal of excess accruals and unutilized provisions in the periods when the expenses were initially reflected in the financial statements.

(6) Transaction costs associated with the Business Combination.

(7) To adjust for the revenue effect of the above adjustments on cost-plus contracts.

Results of Operations

Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

Selected Financial Information

The table below summarizes STG’s 2015 and 2014 revenues and income from operations for the three months ended September 30, 2015 and 2014.

	Three Months Ended
	September 30, 2015			Increase/(Decrease)						September 30, 2014
(in millions, except percentages)				$			%
Contract revenue	$	50.1		$	(3.5	)		(6.5	)%	$	53.6
Direct expenses		34.7			(1.9	)		(5.3	)%		36.6
Gross profit		15.4			(1.6	)		(9.4	)%		17.0
Indirect and selling expenses		11.7			(2.3	)		(16.5	)%		14.0
Impairment of goodwill		2.1			2.1			100.0	%		0.0
Impairment of other intangible assets		0.9			0.9			100.0	%		0.0
Operating income		0.6			(2.3	)		88.5	%		2.9
Other (expense) income, net		(0.4	)		(0.3	)		231.7	%		(0.1	)
Interest expense		-			-			-	%		-
Net income	$	0.2		$	(2.6	)		92.9	%	$	2.8

Revenue

In the three months ended September 30, 2015, revenue decreased by $3.5 million compared to the three months ended September 30, 2014. The decrease in revenue is primarily due to loss of the Drug Enforcement Administration contract in June 2015. This contract was solicited as a small-business set-aside and the small business prime contractor STG teamed with was not successful in winning the work. As of September 30, 2015, STG had total backlog of $391.7 million.

The table below summarizes STG’s revenue by customer for the three months ended September 30, 2015 and 2014.

	Three months ended September 30,
Revenue by customer	2015				2014
	(in thousands, except percentages)
Department of Defense	$	22,429	44.8	%	$	22,313	41.6	%
Department of State		16,736	33.4	%		16,162	30.2	%
Department of Homeland Security		3,962	7.9	%		4,047	7.6	%
Intel Community		2,796	5.6	%		3,162	5.9	%
Drug Enforcement Administration		0	0.0	%		2,593	4.8	%
Other Federal Civilian		4,158	8.3	%		5,311	9.9	%
	$	50,081			$	53,588

The Department of Defense continues to be STG’s largest customer with 44.8% of total revenue generated from this customer in the three months ended September 30, 2015 compared to 41.6% of total revenue in the three months ended September 30, 2014. Revenue by customer remained relatively consistent in the three months ended September 30, 2015 compared to the three months ended September 30, 2014, except for the loss of the Drug Enforcement Administration contract.

Time-and-materials contract revenue decreased by $4 million in the three months ended September 30, 2015 compared to the three months ended September 30, 2014. The decrease in time-and-materials contract revenue was driven by loss of the Drug Enforcement Administration contract ending in the second half of 2015.

The table below summarizes STG’s revenue by contract billing type for the three months ended September 30, 2015 and 2014.

	Three months ended September 30,
Revenue by Contract Type	2015				2014
	(in thousands, except percentages)
T&M	$	15,635	31.2	%	$	19,689	36.7	%
Fixed price		15,446	30.9	%		13,533	25.3	%
CPFF		19,000	37.9	%		20,366	38.0	%
	$	50,081			$	53,588

STG’s prime contract revenue percentage increased by 1.16% in the three months ended September 30, 2015 compared to the three months ended September 30, 2014. The increase was attributable to a Decision Systems Technologies, Inc. (“DSTI”) contract ending in the second half of 2014. STG continues to concentrate on to increasing its presence as a prime contractor on larger, more complex programs where it delivers services to customers by deploying its own staff and expertise.

The table below summarizes STG’s revenue by prime and subcontract type for the three months ended September 30, 2015 and 2014.

	Three months ended September 30,
Revenue – Prime and Subcontract	2015				2014
	(in thousands, except percentages)
Prime	$	44,071	88.0	%	$	46,538	86.8	%
Subcontract		6,010	12.0	%		7,050	13.2	%
	$	50,081			$	53,588

Direct Expenses and Gross Profit

Direct expenses consist of direct labor, subcontractors and consultants, and other direct costs. In the three months ended September 30, 2015, direct expenses decreased by $1.9 million compared to the three months ended September 30, 2014, primarily as a result of the Drug Enforcement Administration contract that ended in the second half of 2015. As a result, direct labor, and subcontractor and consultant costs decreased in the three months ended September 30, 2015, contributing to the 5% decline in direct costs compared to the three months ended September 30, 2014.

Gross profit decreased by $1.6 million in the three months ended September 30, 2015 compared to the three months ended September 30, 2014, due to the decrease in revenue. Gross profit margin for the three months ended September 30, 2015 was 30.7%, representing a decrease of 0.9% compared to the three months ended September 30, 2014. The decrease in gross profit margin was due to the loss of the Drug Enforcement Administration contract in the second half of 2015.

Indirect and Selling Expenses

Indirect and selling expenses decreased by $2.3 million or 16.4% in the three months ended September 30, 2015 compared to the three months ended September 30, 2014. STG effected a cost reduction initiative to realign its cost base with the revenue it generates, resulting in a decrease of indirect and selling expenses in the three months ended September 30, 2015 compared to the three months ended September 30, 2014.

Impairment of Goodwill and Other Intangible Assets

In 2002, STG acquired DSTI and Seamast Incorporated (“Seamast”) as wholly-owned subsidiaries, which resulted in STG recording goodwill. Effective December 31, 2012, STG acquired Access Systems, which also resulted in STG recording additional amounts of goodwill. STG’s goodwill balance consists of the following (in thousands):

	DSTI			Seamast		Access			Total
Goodwill, January 1, 2013	$	2,098		$	1,898	$	7,475		$	11,471
Impairment loss		—			—		(1,655	)		(1,655	)
Goodwill, December 31, 2013		2,098			1,898		5,820			9,816
Impairment loss		(1,658	)		—		(3,459	)		(5,117	)
Goodwill, December 31, 2014	$	440		$	1,898	$	2,361		$	4,699
Impairment loss		0			0		(2,064	)		(2,064	)
Goodwill, September 30, 2015		440			1,898		297			2,635

For the quarter ended September 30, 2015, STG recorded an impairment loss on Access Systems goodwill of $2.1 million and an impairment loss on Access Systems customer relationships of $1.0 million for quarter ended September 30, 2015. The primary methods used to measure the impairment losses for DSTI and Access Systems were the income method and the market approach. The impairment is primarily due to declining revenues and future cash flows generated for the DSTI and Access Systems reporting units.

Operating Income

Operating income was $0.7 million for the three months ended September 30, 2015 compared to $2.9 million in the three months ended September 30, 2014.

The decrease in indirect and selling expenses was partially offset by a decrease in revenue and gross profit in the three months ended September 30, 2015 compared to the three months ended September 30, 2014. The impairment loss on goodwill and other intangible assets decreased the operating income in the current quarter by $3.0 million. Operating income margin was 1% in the three months ended September 30, 2015, representing a decrease of 4% compared to the three months ended September 30, 2014.

Other Income (Expense)

Other income is principally comprised of earnings generated from the Rabbi (“Trust”). Other income decreased by $0.3 million in the three months ended September 30, 2015 due to overall market performance of the investments held in the Trust when compared to the three months ended September 30, 2014.

Interest Expense

Interest is incurred on the revolving credit facility used to fund working capital. In the three months ended September 30, 2015 and 2014, there was an immaterial amount of interest expense incurred due to minimal average outstanding balances on the revolving credit facility during each period.

Income Tax Expense

STG has elected to be treated as an S corporation under Subchapter S of the Internal Revenue Code, which causes STG to not be subject to federal income tax (as well as most state income taxes) because all income of STG is taxed as income of its stockholders.

Operations in the Netherlands and Qatar are conducted through STG Netherlands, B.V. (“STG Netherlands”) and STG Doha, LLC (“STG Doha”). STG Netherlands and STG Doha are pass-through tax entities for U.S. income tax purpose, so that income of these entities is treated for U.S, income tax purposes in the same manner of STG’s own income. However, they operate foreign jurisdictions in which they may be taxed on their separate taxable income. Accordingly, STG records income tax liabilities as necessary for US jurisdictions that impose income taxes on S corporation and on income taxes on income that is taxable in Netherlands and Qatar to STG Netherlands and STG Doha. Any deferred income taxes are accounted for under the asset and liability method. Deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the amounts that are includible income or deductible for income tax purposes in a different period than they are accounted for in financial statements. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets may not be realized. Deferred tax assets and liabilities are adjusted for effects of changes in tax laws and rates on the date of enactment.

The acquisition of STG by the Company will be treated as a stock acquisition for federal income tax purposes, so that the tax basis of STG’s assets will not be adjusted for income tax purposes. For financial statement purposes, the acquisition of STG will be accounted for under “purchase accounting”, which will cause the carrying value of STG’s assets to be increased as if they had been purchased at the Closing in a taxable transaction. Correlative to this increase in carrying value, STG will be treated for financial statement purposes as having realized income on the Closing equal to the difference between the implicit value of its assets and their financial statement carrying value immediately before the Closing. Because no income tax will actually arise by reason of the acquisition of STG, the tax liability that would have arisen if STG had made a taxable sale of its assets will be recorded as a deferred tax liability. However, this tax liability would never be payable until and unless STG disposes of its assets in a taxable transaction. A portion of the deferred tax liability arising from the deemed sale of its assets will be eliminated as the excess of the financial statement carrying value of the STG assets is reduced by amortization of these assets for financial statement purposes.

As a result of the closing of the Business Combination, STG’s status as a subchapter S corporation terminated at that close of business on the day before the closing and STG became taxable as a regular “C corporation” under the Internal Revenue Code.  As a result of termination of STG’s subchapter S status, STG will be taxable at a cumulative federal and state tax rate in excess of 35% on its taxable income arising after the Closing.

Net Income

Net income decreased by $2.3 million or 92% in the three months ended September 30, 2015 compared to the three months ended September 30, 2014. The lower net income was primarily due to a $3.0 million non-cash impairment loss charge against goodwill and intangible assets.

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Selected Financial Information

The table below summarizes STG’s revenues and income from operations for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended
	September 30, 2015			Increase/(Decrease)						September 30, 2014
(in millions, except percentages)				$			%
Contract revenue	$	149.1		$	(9.7	)		(6.1	)%	$	158.8
Direct expenses		102.2			(5.4	)		(5.0	)%		107.6
Gross profit		46.9			(4.3	)		(8.4	)%		51.2
Indirect and selling expenses		40.9			(4.9	)		(10.7	)%		45.8
Impairment of goodwill		2.1			2.1			100.0	%		0.0
Impairment of other intangible assets		0.9			0.9			100.0	%		0.0
Operating income		3.0			(2.4	)		(44.4	)%		5.4
Other income, net		(0.3	)		(0.3	)		*
Interest expense		—			—			*			—
Net income	$	2.7		$	(2.7	)		(50.0	)%	$	5.4

Revenue

In the nine months ended September 30, 2015, revenue decreased by $9.7 million compared to the nine months ended September 30, 2014. The decrease in revenue is primarily due to a reduction in Department of State Access Systems contracts and a Drug Enforcement Administration contract that ended in the second half of 2015.

The table below summarizes STG’s revenue by customer for the nine months ended September 30, 2015 and 2014.

	Nine months ended September 30,
Revenue by customer	2015				2014
	(in thousands, except percentages)
Department of Defense	$	65,022	43.6	%	$	66,016	41.6	%
Department of State		46,063	30.9	%		49,406	31.1	%
Department of Homeland Security		13,621	9.1	%		11,942	7.5	%
Intel Community		8,005	5.4	%		9,979	6.3	%
Drug Enforcement Administration		3,980	2.7	%		7,601	4.8	%
Other Federal Civilian		12,489	8.4	%		13,857	8.7	%
	$	149,180			$	158,801

The Department of Defense continues to be STG’s largest customer with 44% of total revenue generated from this customer in the nine months ended September 30, 2015 compared to 42% of total revenue in the nine months ended September 30, 2014. Revenue by customer remained relatively consistent in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, except for the decrease in revenue from the Department of State, which resulted from the loss of Access Systems contracts ending in the second half of 2014, and a decrease in revenue from a contract with the Drug Enforcement Administration that ended in the second half of 2015.

Time-and-materials contract revenue decreased by $8.6 million in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. The decrease in time-and-materials contract revenue was a result of an Access Systems contract ending in second half of 2014 as well as the Drug Enforcement Administration contract ending in the second half of 2015.

As of September 30, 2015, STG had total contract backlog of $391.7 million.

The table below summarizes STG’s revenue by contract billing type for the nine months ended September 30, 2015 and 2014.

	Nine months ended September 30,
Revenue by Contract Type	2015				2014
	(in thousands, except percentages)
T&M	$	50,600	33.9	%	$	59,164	37.3	%
Fixed price		43,792	29.4	%		42,997	27.0	%
CPFF		54,788	36.7	%		56,639	35.7	%
	$	149,180			$	158,800

STG’s prime contract revenue percentage increased by 2% in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. The increase was attributable to a DSTI subcontract contract ending in the second half of 2014. As a result, subcontract revenue decreased by $4.2 million in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. STG continues to concentrate on increasing its presence as a prime contractor on larger, more complex programs where it delivers services to customers by deploying its own staff and expertise. The table below summarizes STG’s revenue by prime and subcontract type for the nine months ended September 30, 2015 and 2014.

The table below summarizes STG’s revenue by prime and subcontract type for the nine months ended September 30, 2015 and 2014.

	Nine months ended September 30,
Revenue – Prime and Subcontract	2015				2014
	(in thousands, except percentages)
Prime	$	131,722	88.3	%	$	137,120	86.4	%
Subcontract		17,458	11.7	%		21,681	13.6	%
	$	149,180			$	158,801

Direct Expenses and Gross Profit

Direct expenses consist of direct labor, subcontractors and consultants, and other direct costs. In the nine months ended September 30, 2015, direct expenses decreased by $5.4 million compared to the nine months ended September 30, 2014, primarily as a result of subcontractors and direct labor being released off the Drug Enforcement Administration contract as well as Access Systems contracts which ended. As a result, direct labor and subcontractor and consultant fees both decreased in the nine months ended September 30, 2015, contributing to the 5.0% decline in direct costs compared to the nine months ended September 30, 2014.

Gross profit decreased by $4.2 million in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, due to the decrease in revenue. Gross profit margin for the nine months ended September 30, 2015 was 31%, representing a decrease of 1% compared to the nine months ended September 30, 2014.

Indirect and Selling Expenses

Indirect and selling expenses decreased by $4.9 million or 10.7% in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. STG effected a cost reduction initiative to realign its cost base with the revenue it generates, resulting in a decrease of indirect and selling expenses compared to the nine months ended September 30, 2014.

Impairment of Goodwill and Other Intangible Assets

In 2002, STG acquired DSTI and Seamast Incorporated as wholly-owned subsidiaries, which resulted in STG recording goodwill. Effective December 31, 2012, STG acquired Access Systems, which also resulted in STG recording additional amounts of goodwill. STG’s goodwill balance consists of the following (in thousands):

	DSTI			Seamast		Access			Total
Goodwill, January 1, 2013	$	2,098		$	1,898	$	7,475		$	11,471
Impairment loss		—			—		(1,655	)		(1,655	)
Goodwill, December 31, 2013		2,098			1,898		5,820			9,816
Impairment loss		(1,658	)		—		(3,459	)		(5,117	)
Goodwill, December 31, 2014		440			1,898		2,361			4,699
Impairment loss		—			—		(2,064	)		(2,064	)
Goodwill, September 30, 2015	$	440		$	1,898	$	297		$	2,635

For the nine months ended September 30, 2015, STG recorded an impairment loss on Access Systems goodwill of $2.1 million and an impairment loss on Access Systems customer relationships of $1.0 million for the nine months ended September 30, 2015, primarily due to declining profits on contracts. The primary methods used to measure the impairment losses for DSTI and Access Systems were the income method and the market approach. The impairment is primarily due to declining revenues and future cash flows generated for the DSTI and Access Systems reporting units.

Operating Income

Operating income was $2.7 million for the nine months ended September 30, 2015 compared to $5.4 million in the nine months ended September 30, 2014. Operating income included $3.0 million in non cash impairment loss charges related to goodwill and intangible assets, a $1.1 million one time non cash loss incurred on capitalized leasehold improvements written off due to STG moving premises in the nine months ended September 30, 2015, and a $0.7 million one time lease termination costs associated with subletting two of the floors on the previous premises at a loss to maturity of the agreement. The decrease in indirect and selling expenses was offset by a decrease in revenue and gross profit in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

Other Income (Expense)

Other income is principally generated from the Trust. Other income decreased by $0.3 million in the nine months ended September 30, 2015 due to overall market performance of the investment held in the Trust when compared to the nine months ended September 30, 2014.

Interest Expense

Interest is incurred on the revolving credit facility used to fund working capital. In the nine months ended September 30, 2015 and 2014, there was an immaterial amount of interest expense incurred due to minimal average outstanding balances on the revolving credit facility during each period.

Income Tax Expense

STG has elected to be treated as an S corporation under Subchapter S of the Internal Revenue Code, which causes STG to not be subject to federal income tax (as well as most state income taxes) because all income of STG is taxed as income of its stockholders.

Operations in the Netherlands and Qatar are conducted through STG Netherlands, B.V. (“STG Netherlands”) and STG Doha, LLC (“STG Doha”). STG Netherlands and STG Doha are pass-through tax entities for U.S. income tax purpose, so that income of these entities is treated for U.S, income tax purposes in the same manner of STG’s own income. However, they operate foreign jurisdictions in which they may be taxed on their separate taxable income. Accordingly, STG records income tax liabilities as necessary for US jurisdictions that impose income taxes on S corporation and on income taxes on income that is taxable in Netherlands and Qatar to STG Netherlands and STG Doha. Any deferred income taxes are accounted for under the asset and liability method. Deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the amounts that are includible income or deductible for income tax purposes in a different period than they are accounted for in financial statements. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets may not be realized. Deferred tax assets and liabilities are adjusted for effects of changes in tax laws and rates on the date of enactment.

The acquisition of STG by the Company will be treated as a stock acquisition for federal income tax purposes, so that the tax basis of STG’s assets will not be adjusted for income tax purposes. For financial statement purposes, the acquisition of STG will be accounted for under “purchase accounting”, which will cause the carrying value of STG’s assets to be increased as if they had been purchased at the Closing in a taxable transaction. Correlative to this increase in carrying value, STG will be treated for financial statement purposes as having realized income on the Closing equal to the difference between the implicit value of its assets and their financial statement carrying value immediately before the Closing. Because no income tax will actually arise by reason of the acquisition of STG, the tax liability that would have arisen if STG had made a taxable sale of its assets will be recorded as a deferred tax liability. However, this tax liability would never be payable until and unless STG disposes of its assets in a taxable transaction. A portion of the deferred tax liability arising from the deemed sale of its assets will be eliminated as the excess of the financial statement carrying value of the STG assets is reduced by amortization of these assets for financial statement purposes.

As a result of the closing of the Business Combination, STG’s status as a subchapter S corporation terminated at that close of business on the day before the closing and STG became taxable as a regular “C corporation” under the Internal Revenue Code.  As a result of termination of STG’s subchapter S status, STG will be taxable at a cumulative federal and state tax rate in excess of 35% on its taxable income arising after the Closing.

Net Income

Net income decreased by $2.5 million or 51% in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. The lower income was primarily due to the $3.0 million in impairment charges related to goodwill and other intangible assets, a $1.1 million one time loss incurred on capitalized leasehold improvements written off due to STG moving premises in the three months ended September 30, 2015, and a $0.7 million one time loss recognized on subletting two of the floors on the previous premises at a loss to maturity of the agreement.

Backlog

Backlog, both funded and unfunded at, September 30, 2015 and December 31, 2014, 2013 and 2012, is as follows:

	At September 30		At December 31
Backlog	2015		2014		2013		2012
Backlog	$	391,729	$	378,369	$	431,249	$	346,330

All of STG’s existing contracts may have funded and unfunded backlog, each of which is described below. The contract values and management’s estimated revenues do not include any task orders or ceiling value under ID/IQ contracts, except to the extent that task orders have been awarded to STG under those contracts.

STG defines total backlog as the amount of revenue it expects to realize (i) over the remaining base contract performance period and (ii) from the exercise of option periods that management reasonably believes will be exercised, in each case from signed contracts in existence as of the measurement date. STG also includes in backlog its estimates of revenue from future delivery orders on requirements and ID/IQ contracts. At times, STG’s estimates of future revenue on such contracts are less than the contract ceiling.

STG defines funded backlog as the portion of its total backlog for which funding is currently appropriated and obligated to it under a signed contract or task order by the purchasing agency, or otherwise authorized for payment to STG by a customer upon completion of a specified portion of work. STG’s funded backlog does not include the full potential value of its contracts, because Congress often appropriates funds to be used by an agency for a particular program or contract only on a yearly or quarterly basis, even though the contract may call for performance over a number of years. As a result, contracts typically are only partially funded at any point during their term, and all or some of the work to be performed under the contracts may remain unfunded unless and until Congress makes subsequent appropriations and the procuring agency allocates funding to the contract. Unfunded backlog is primarily unfilled firm and expected follow-on orders that have not yet met STG’s established funding criteria. STG’s established funding criteria require both authorizations by the customer as well as its management’s determination that there is little or no risk of the authorized funding being rescinded. For example, option years on an existing contract are within the customer’s budgetary and procurement plans and represent their plans to continue work on the contract. Those option years are not constituted as “funded backlog” until the customer provides written authorization for work within that period of performance, which is usually expressed in one year terms.

STG’s funded and unfunded backlog estimates are determined by analyzing a number of key factors and attributes for executed contracts, task orders or delivery orders. Based upon the result of STG’s analysis it establishes the expected revenue value for each of those contracts, task orders or delivery orders and report those results on a consolidated basis. See “ Risk Factors — Risks Related to the Business, Operations and Industry of STG” in the Proxy Statement. STG may not realize the full amount of its backlog, which could lower future revenue.

There can be no assurance that STG’s existing contracts will result in actual revenue in any particular period, or at all, or that any contract included in backlog will be profitable. There is a higher degree of risk in this regard with respect to unfunded backlog. The actual receipt and timing of any revenue is subject to various contingencies, many of which are beyond STG’s control. The actual recognition of revenue on contracts included in STG’s backlog may never occur or may change because a program schedule could change, the program could be cancelled, a contract could be reduced, modified, or terminated early, whether for the convenience of the government or otherwise; or an option that STG had assumed would be exercised could not be exercised. The primary risks that could affect timing and recognition of backlog-related contract revenue include: schedule changes, contract modifications, and STG’s ability to assimilate and deploy new staff against funded backlog; U.S. government cost cutting initiatives and other efforts to reduce spending, which could reduce or delay funding for orders for services; and delayed funding of STG’s contracts due to delays in the completion of the U.S. government’s budgeting process and the use of continuing resolutions by the U.S. government to fund its operations, as described under “ Risk Factors — Risks Related to the Business, Operations and Industry of STG” in the Proxy Statement. STG depends on U.S. government contracts for substantially all of its revenue. Changes in the contracting or fiscal policies of the U.S. government could adversely affect STG’s business, financial condition, results of operations and ability to satisfy its financial obligations and grow its business and STG may not realize the full amount of its backlog, which could lower future revenue.

Liquidity and Capital Resources

Prior to the Business Combination, STG maintained a $15 million revolving credit facility (the “Old Revolving Loan”). STG has had no borrowed funds other than its Old Revolving Loan, which in the past has been used to mobilize new project wins and abnormal fluctuations in the cash receipts and payments.

If STG is unable to generate sufficient funds from operations or raise additional capital, there could be material adverse effects on STG’s liquidity.

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

	Nine Months Ended
(in millions)	September 30, 2015			Variance			September 30, 2014
Cash flows provided by operating activities	$	38.0		$	11.7		$	26.3
Cash flows used in investing activities		(1.4	)		(.5	)		(0.9	)
Cash flows used in financing activities		(31.1	)		(5.9	)		(25.2	)
Net increase in cash and cash equivalents		5.5			5.3			0.2
Cash and cash equivalents at beginning of period		0.3			0.1			0.2
Cash and cash equivalents at end of period	$	5.8		$	5.4		$	0.4
Depreciation and amortization		0.8			0.2			0.9
Capital expenditures		(1.4	)		(0.6	)		(0.9	)

Cash used in operating activities

Operating cash flows are primarily affected by STG’s ability to invoice and collect from its clients in a timely manner, its ability to manage its vendor payments, the overall profitability of its contracts and its cash interest expense. Customers are mostly billed monthly after services are rendered. In the nine months ended September 30, 2015, STG generated $38.0 million in cash from operations compared to the $26.3 million of cash it generated for the same period in 2014.

In the first nine months of financial year 2015, operating income when adjusted for the non cash goodwill and contracts rights impairments loss totaling $3.0 million, lease termination cost of $.7 million, and the loss on disposal of property and equipment of $1.1 million, increase by $2.1 million over the prior year. Improved collections for $3.7 million and accounts payables management of $5.4 million resulting in a $11.7 million difference in operating cash flow. Interest per annum remained consistent with that for the same period in 2014.

In the nine months ended September 30, 2015, STG collected $122.3 million of the $149.1 million of revenue generated in the first nine months of 2015 receivables, representing 82% of the revenue recognized. In the nine months of 2014, STG collected $111.3 million which was 70% of the $158.8 million in revenue recognized that half. Therefore, STG collected its revenue at the higher pace in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. STG expects to be able to sustain collections consistent with revenue performance.

STG computes accounts receivable days sales outstanding based on trailing twelve-month revenue. Days sales outstanding decreased by 8 days from 56 days as of September 30, 2014, to 48 days as of September 30, 2015. Days sales outstanding includes unbilled receivables in the calculation.

Cash used in investing activities

STG uses some of its cash to invest in equipment and software, leasehold improvements and internally-developed software. During each of the nine months ended September 30, 2015 and 2014, $0.8 million was spent for these types of capital expenditures.

STG expects its investing activities and capital expenditures on equipment and software to continue at comparable levels for the balance of 2015. In moving to new premises in September 2015, an investment of $1.3 million is expected to be expended on leasehold improvements in the second half of 2015.

Cash used in financing activities

The existing revolving credit facility balance (excluding letters of credit) was zero as of September 30, 2015 and $3.9 million at September 30, 2014. Net Payments of $13.5 million and $16.1 million were made against the revolving credit facility in the first nine months of 2015 and 2014.

Debt and covenant compliance

STG does not have any outstanding long term debt as of September 30, 2015. However, upon consummation of the Business Combination, STG entered into a debt financing agreement for $81.75 million to assist in financing this transaction together with any future acquisitions.

STG’s Old Revolving Loan as of September 30, 2015 requires the payment of administration fees and for STG to be in compliance with certain financial covenants, including the maintenance of a debt service coverage ratio, funded debt to EBITDA ratio, restriction on certain annual capital expenditures, and minimum EBITDA maintenance. As of September 30, 2015, STG was in compliance with these covenants. The Old Revolving Loan was terminated at the consummation of the Business Combination.

Capital Resources

STG believes that its cash balances, investment securities, operating cash flows, and funds available under the new debt financing arrangement upon the Business Combination, will, when taken together, provide adequate resources to fund operations, acquisitions, future expansion opportunities, and capital expenditures for at least twelve months, as well as to meet the covenants in the new debt financing agreement and the New Revolving Loan and to make required payments.

Short-term borrowings

When required for working capital purposes, STG has borrowed funds under the Old Revolving Loan. STG’s Old Revolving Loan borrowings had an interest rate of U.S. LIBOR plus 186 basis points (as of December 31, 2014).

STG may use its New Revolving Loan or any new sources of borrowings, as needed, to fund its anticipated cash requirements. STG currently expects that it will not maintain a balance on the New Revolving Loan for extended periods.

If the federal government were to implement further changes to its current payment practices, as a result of sequestration, budget cuts, policy changes, government shut downs, or otherwise, STG might have to use its New Revolving Loan to a more significant extent than currently expected. Delays in the government payment cycle could adversely affect STG’s short-term cash flows and increase its interest expense if it needs to use its New Revolving Loan to borrow larger amounts more frequently than it has in the past or currently plan to do in the future. The Old Revolving Loan was terminated upon the consummation of the Business Combination.

The following table summarizes the activity under STG’s revolving credit facility for the nine months ended September 30, 2015 and 2014, not including issued and outstanding letters of credit:

	Period Ended September 30,
Short term borrowings	2015			2014
	(in millions)
Balance – beginning of period	$	13.5		$	20.0
Net revolving credit facility repayments		(13.5	)		(16.1	)
Net change in revolving credit facility balance payable	$	0.0		$	3.9

Cash Management

To the extent possible, STG invests its available cash in short-term, investment grade securities with the priorities of maintaining the safety of STG’s principal, maintaining the liquidity of its investments, maximizing the yield on its investments and investing its cash to the fullest extent possible. Cash and cash equivalents include cash on hand, amounts due from banks and short term investments with maturity dates of three months or less at the date of purchase.

Contingent obligations

From time to time STG may be involved in litigation in the normal course of its business. STG’s management does not expect that the resolution of these matters would have a material adverse effect on STG’s business, operations, financial condition or cash flows.

STG has no other contingent obligations.

Related Party Transactions

A company owned by a party related to the majority stockholder of STG is a subcontractor to STG on various contracts. As of September 30, 2015 and December 31, 2014, amounts due from this entity relating to work performed under subcontracts totaled $0.02 million and $0.01 million, respectively. STG recorded revenue of $0.1 million through September 20, 2015. STG also recorded direct costs of $0.1 million, $0.6 million, $0.4 million and $0.2 million for the period ended September 30, 2015 and the years ended December 31, 2014, 2013, and 2012, respectively, relating to such work performed.

STG issued a note receivable to a stockholder on September 15, 2015, for $2.5 million. The note bears interest at 2.35%. The note was satisfied on the closing of the business combination with GDEF.

Off-Balance Sheet Arrangements

STG accounts for operating leases entered into in the routine course of business in accordance with ASC 840 Leases. STG has no off-balance sheet financing arrangements other than operating leases and a letter of credit under the Old Revolving Loan in the amount of $0.4 million. STG has no relationship with any unconsolidated or special purpose entity and has not issued any guarantees.

Contractual Obligations

Other contractual obligations which will impact STG’s cash flow include:

	Payments Due by Period
	Total		2015		2016 – 2017		2018 – 2019		Thereafter
Operating lease obligations	$	8,434		2,527		2,782		2,180		945
Total	$	8,434	$	2,527	$	2,782	$	2,180	$	945

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information known to the Company regarding beneficial ownership of shares of common stock of the Company as of the Closing Date, after giving effect to the Stock Dividend (as defined below), by:

• each person who is the beneficial owner of more than 5% of the outstanding shares of the Company’s common stock;

• each of the Company’s executive officers and directors; and

• all executive officers and directors of the Company as a group.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.

Beneficial ownership of common stock of the Company is based on 16,107,071 shares of common stock of the Company issued and outstanding as of November 23, 2015, the date the Business Combination was consummated, after giving effect to the stock dividend (the “Stock Dividend”) of one share for every 1.06 shares of stock owned by each record holder of shares of the Company’s common stock as of the record date of November 23, 2015.

Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

	Shares of Common Stock Beneficially Owned
	Number		Percent(1)
Global Defense & National Security Holdings LLC (2)		4,246,462		26.4	%
Julie Lee (3)		986,258		6.2	%
Simon S. Lee Management Trust (4)		8,319,080		51.6	%
Officers and Directors
Damian Perl (2)		4,246,462		26.4	%
Paul Fernandes		-		-
Charles L. Cosgrove		-		-
Simon S. Lee (4)		9,351,852		57.9	%
Glenn W. Davis, Jr.		-		-
Keith Lynch		-		-
Hon. David Gompert		-		-
Vice Adm. (ret.) Robert Murrett		-		-
Hon. Ronald R. Spoehel		-		-
Dale R. Davis		-		-

(1)           Based on a total of 16,107,071 shares of GDEF’s common stock issued and outstanding on November 23, 2015, after giving effect to the Stock Dividend.

(2)           Global Defense & National Security Holdings LLC, our Sponsor, is the record holder of all of these shares. Mr. Perl, a Director, is the ultimate beneficial owner of Global Defense & National Security Holdings LLC and has beneficial ownership of Global Defense & National Security Holdings LLC’s interests in GDEF. The business address of our Sponsor is 11921 Freedom Drive, Suite 550, Two Fountain Square, Reston, Virginia 20190. The Schedule 13D/A filed by the Sponsor and Mr. Perl on November 25, 2015 (the “Schedule 13D/A”), states that the Sponsor and Mr. Perl may be deemed part of a “group” with (i) Simon S. Lee Management Trust, Simon Lee Family Trust, AHL Descendants Trust, JSL Descendants Trust and Brian Lee Family Trust (the “Stockholder Trusts”), who are the other stockholders party to the Voting Agreement, (ii) Simon S. Lee, as Trustee of the Simon S. Lee Management Trust, the JSL Descendants Trust and the Brian Lee Family Trust and (iii) Julie S. Lee, as Trustee of the Simon Lee Family Trust and the AHL Descendants Trust. As a result, the Sponsor and Mr. Perl may be deemed to beneficially own the 10,338,110 shares owned by the other group members. The Sponsor and Mr. Perl disclaim beneficial ownership of such shares.

(3)           Julie Lee is Trustee for the Simon Lee Family Trust (493,129 shares) and the AHL Descendants Trust (493,129 shares). The Schedule 13D/A states that the Ms. Lee may be deemed part of a “group” with (i) the Stockholder Trusts, (ii) Simon S. Lee, as Trustee of the Simon S. Lee Management Trust, the JSL Descendants Trust and the Brian Lee Family Trust and (iii) the Sponsor and Mr. Perl. As a result, Ms. Lee may be deemed to beneficially own the 13,598,314 shares owned by the other group members. Ms. Lee disclaims beneficial ownership of such shares.

(4)           Simon S. Lee is Trustee for the Simon S. Lee Management Trust (8,319,080 shares), JSL Descendants Trust (521,039 shares) and Brian Lee Family Trust (511,733 shares). The Schedule 13D/A states that the Mr. Lee may be deemed part of a “group” with (i) the Stockholder Trusts, (ii) Julie S. Lee, as Trustee of the Simon Lee Family Trust and the AHL Descendants Trust and (iii) the Sponsor and Mr. Perl. As a result, Mr. Lee may be deemed to beneficially own the 5,232,720 shares owned by the other group members. Mr. Lee disclaims beneficial ownership of such shares.

Directors and Executive Officers

Information with respect to the Company’s directors and executive officers immediately after the consummation of the Business Combination is set forth in the Proxy Statement in the section entitled “GDEF Executive Officers, Directors, Executive Compensation and Corporate Governance Following the Business Combination” beginning on page 148 of the Proxy Statement, which is incorporated herein by reference, as supplemented below.

On November 13, 2015, Vice Adm. (ret.) Robert Murrett and the Hon. David Gompert were elected to serve as Class I directors effective upon consummation of the Business Combination, with terms expiring at the Company’s annual meeting of stockholders in 2016, the Hon. Ronald R. Spoehel was elected to serve as a Class II director, with a term expiring at the Company’s annual meeting of stockholders in 2017, and Damian Perl and Simon S. Lee were elected to serve as Class III directors, with initial terms expiring at the 2017 annual meeting of the stockholders. Biographical information for these individuals is set forth in the Proxy Statement in the section entitled “GDEF Executive Officers, Directors, Executive Compensation and Corporate Governance Following the Business Combination” beginning on page 148 of the Proxy Statement, which is incorporated herein by reference.

In connection with the closing, Messrs. Murrett, Gompert and Spoehel were appointed as the members of the Company’s Audit Committee, Nominating Committee and Compensation Committee. Information with respect to the Company’s Audit Committee, Nominating Committee and Compensation Committee is set forth in the Proxy Statement in the section entitled “GDEF Executive Officers, Directors, Executive Compensation and Corporate Governance Following the Business Combination” beginning on page 148 of the Proxy Statement.

In connection with the closing, Paul A. Fernandes was appointed President, Charles L. Cosgrove was appointed Chief Financial Officer, Glenn W. Davis, Jr. was appointed Senior Vice President, Defense Sector, Keith Lynch was appointed Vice President of Finance & Accounting and Simon S. Lee was appointed Chairman of the Board of Directors. Biographical information for these individuals is set forth in the Proxy Statement in the section entitled “GDEF Executive Officers, Directors, Executive Compensation and Corporate Governance Following the Business Combination” beginning on page 148 of the Proxy Statement.

In connection with the closing, Dale R. Davis resigned from his position as a director. In addition, upon the closing, Dale R. Davis, Frederic Cassis, Craig Dawson and Gavin Long resigned as officers of the Company. Mr. Davis was subsequently retained as Chief Integration Officer as described below.

Appointment of Dale R. Davis

On November 30, 2015, Dale R. Davis was appointed as our Chief Integration Officer. Information regarding Mr. Davis is set forth below:

Dale R. Davis, Chief Integration Officer

Mr. Davis served as the Company’s Chief Executive Officer, President and Director from July 2013 to November 2015. From 2010 through July 2013, he was employed by Global Strategies Group as Executive Vice President (Operations), and he was a member of the executive board. Mr. Davis’ role within GLOBAL also included oversight of GLOBAL corporate development.

Name	Age	Position
Dale R. Davis	54	Chief Integration Officer

Executive Compensation

The compensation of our executive officers is generally described in the Proxy Statement in the section entitled “GDEF Executive Officers, Directors, Executive Compensation and Corporate Governance Following the Business Combination” beginning on page 148, which is incorporated herein by reference. The compensation of STG’s named executive officers before the Business Combination is set forth in the Proxy Statement in the section entitled “Executive Officers, Directors, Corporate Governance and Executive Compensation of STG” beginning on page 189, which is incorporated herein by reference.

On November 13, 2015, the stockholders of the Company approved the 2015 Omnibus Incentive Plan (the “Plan”), effective upon the consummation of the Business Combination. The description of the Plan set forth in the section entitled “The Incentive Plan Proposal” beginning on page 121 of the Proxy Statement is incorporated herein by reference. A copy of the full text of the Plan is filed as Exhibit 10.16 to this Current Report on Form 8-K and is incorporated herein by reference.

Certain Relationships and Related Transactions

The description of certain relationships and related transactions is included in the Proxy Statement in the section entitled “Certain Relationships and Related Transactions” beginning on page 192, which is incorporated herein by reference.

The information set forth under “Item 1.01. Entry into a Material Definitive Agreement—Registration Rights Agreement,” “Item 1.01. Entry into a Material Definitive Agreement—Voting Agreement,” and “Item 1.01. Entry into a Material Definitive Agreement—Employment Agreements” of this Current Report on Form 8-K is incorporated herein by reference.

Independence of Directors

The description of director independence set forth in “GDEF Executive Officers, Directors, Executive Compensation and Corporate Governance Prior to the Business Combination – Director Independence” set forth in the Proxy Statement is herein incorporated by reference.

Legal Proceedings

Information about legal proceedings is set forth in the Proxy Statement in the section entitled “STG’s Business—Legal Proceedings” beginning on page 188, which is incorporated herein by reference.

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

Information about the market price, number of stockholders and dividends for the Company’s securities is set forth in the Proxy Statement in the section entitled “Price Range of Securities and Dividends” beginning on page 198, which is incorporated herein by reference, as supplemented below. As of the Closing Date, there were approximately 8 holders of record of the Common Stock.

The Company’s securities currently trade on the OTC Pink Current Information tier of the over-the-counter market, as a result of the delisting of the Company’s securities from The NASDAQ Capital Market.

In connection with the closing of the Business Combination, the Company’s common stock trading symbol will be changed to “STGG”.

Recent Sales of Unregistered Securities

On the Closing Date, the Company conducted the private placement of 1,030,103 shares of Common Stock pursuant to the Second Amended and Restated Backstop Purchase Agreement, dated November 23, 2015, by and between the Company and the Sponsor, at a price of $10.61 per share, for gross proceeds to the Company of approximately $10,950,000 in reliance upon an exemption from registration under the Securities Act, by reason of Section 4(a)(2) and Rule 506.

In addition, the Company sold 9,681,873 shares to the STG Stockholders in a private placement pursuant to the Business Combination Agreement in reliance upon an exemption from registration under the Securities Act, by reason of Section 4(a)(2) and Rule 506.

Description of the Company’s Securities

A description of the Company’s common stock and the Company’s warrants is included in the Proxy Statement in the section entitled “Description of GDEF Securities” beginning on page 194, which is incorporated by reference herein.

The Company has authorized 110,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock, $0.0001 par value per share, and 10,000,000 shares of preferred stock, $0.0001 par value per share. As of the Closing Date following the redemption, and before giving effect to the one for 1.06 Stock Dividend with a record date on the Closing Date, there were 13,774,962 shares of the Company’s common stock issued and outstanding, and no shares of preferred stock outstanding. As of the Closing Date, there were approximately 8 holders of record of the Common Stock. Such numbers do not include DTC participants or beneficial owners holding shares through nominee names.

Indemnification of Directors and Officers

Information about the indemnification of the Company’s directors and officers is set forth in the Proxy Statement in the section entitled “The Business Combination Agreement – Indemnification of Officers and Directors” on page 107 and in Amendment No. 4 to GDEF’s Registration Statement on Form S-1 (File No. 333-191195) filed with the SEC on October 22, 2013, in the section entitled “Limitation on Liability and Indemnification of Officers and Directors” beginning on page 89, which are incorporated herein by reference.

Financial Statements and Supplementary Data

The historical financial statements (and accompanying notes) of STG identified in Section (a) under “Item 9.01 Financial Statements and Exhibits of this Current Report on Form 8-K are incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under “Item 1.01. Entry into a Material Definitive Agreement—Credit Agreements” is incorporated in this Item 2.03 by reference.

Item 5.01. Changes in Control of the Registrant.

The disclosure set forth under “Introductory Note,” “Item 1.01. Entry into a Material Definitive Agreement” and “Item 2.01. Completion of Acquisition or Disposition of Assets” above is incorporated in this Item 5.01 by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Information with respect to the Company’s directors and executive officers immediately after and in connection with the consummation of the Business Combination is set forth in the Proxy Statement in the section entitled “Executive Officers, Directors, Corporate Governance and Executive Compensation of STG—Potential Payments Upon Termination or Change in Control” on page 194, which is incorporated herein by reference.

The information set forth under “Item 2.01. Completion of Acquisition or Disposition of Assets—Directors and Executive Officers,” “—Executive Compensation” and “—Director Compensation” of this Current Report on Form 8-K is incorporated herein by reference.

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

On November 13, 2015, the GDEF stockholders approved an amendment to the Company’s amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”), contingent upon consummation of the Business Combination. A description of that amendment is set forth in “The Post-Business Combination Charter Proposal” and “The Corporate Purpose Charter Proposal,” beginning pages 119 and 122 of the Proxy Statement, respectively, which are incorporated herein by reference.

A copy of the Amended and Restated Certificate of Incorporation, including an amendment to change GDEF’s name to “STG Group, Inc.” is filed with this Current Report on Form 8-K as Exhibit 3.1 and is incorporated herein by reference, and the description of the Amended and Restated Certificate of Incorporation is qualified in its entirety by reference thereto.

On the Closing Date, the Company’s bylaws were amended and restated (the “Amended and Restated Bylaws”) pursuant to the closing of the Business Combination. The Amended and Restated Bylaws make certain changes to the prior bylaws. The Amended and Restated Bylaws, among other things, (i) provide that a special meeting of stockholders may be called by the Chairman, President or Secretary of the Company pursuant to a resolution adopted by a majority of the Board of Directors; (ii) delete provisions providing certain rights for the Sponsor, including the Sponsor’s right to designate a number of representatives to the Board of Directors proportional to the Sponsor’s ownership of Common Stock as long as the Sponsor holds 15% of the total outstanding Common Stock; (iii) provide that the Company’s Board of Directors shall be divided into three classes consistent with the provisions of the Charter; (iv) delete certain sections of the Bylaws that are only applicable to the Company prior to its consummation of an initial business combination; and (v) provide that no action required or permitted to be taken at any meeting of stockholders may be taken by written consent without meeting. 

A copy of the Amended and Restated Bylaws is filed with this Current Report on Form 8-K as Exhibit 3.2 and is incorporated herein by reference, and the foregoing description of the Amended and Restated Bylaws is qualified in its entirety by reference thereto.

Item 5.06. Change in Shell Company Status.

As a result of the Business Combination, which fulfilled the definition of an initial business combination as required by GDEF’s Amended and Restated Certificate of Incorporation, the Company ceased to be a shell company as of the Closing Date. The material terms of the Business Combination are described in the Proxy Statement in the section entitled “The Business Combination Agreement” beginning on page 100, which is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of businesses acquired

The financial statements of STG included in the Proxy Statement beginning on page F-32 are incorporated herein by reference.

The condensed consolidated financial statements of STG as of September 30, 2015 and for the three and nine months ended September 30, 2015 and September 30, 2014 are attached as Exhibit 99.1 hereto.

(b) Pro forma financial information.

Reference is made to Item 2.01 of this Current Report on Form 8-K (“Completion of Acquisition or Disposition of Assets – Unaudited Pro Forma Condensed Combined Financial Statements”) for the following pro forma financial information:

Introduction

Unaudited Pro Forma Balance Sheet as of September 30, 2015

Unaudited Pro Forma Condensed Combined Statement of Operations for the Nine Months Ended September 30, 2015

Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2014

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

(d) Exhibits

2.1

Stock Purchase Agreement, dated as of June 8, 2015, by and among (i) Global Defense & National Security Systems, Inc., (ii) Global Defense & National Security Holdings LLC, (iii) STG Group, Inc. (iv) the stockholders set forth on Annex A thereto and (v) Simon Lee, as Stockholders’ Representative, solely for purposes of Sections 1.2, 1.3, 6.3, 6.5, 6.7 and 6.22 and ARTICLES IX and XII. (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed by GDEF on June 9, 2015).

3.1*

Amended and Restated Certificate of Incorporation of Global Defense & National Security Systems, Inc.

3.2*	Amended and Restated Bylaws of Global Defense & National Security Systems, Inc.
10.1*	Credit Agreement, dated as of November 23, 2015, by and among GDEF, STG, STG, Inc., Access Systems Incorporated, the lenders party thereto from time to time, MC Admin Co LLC, as administrative agent, PNC Bank, National Association, as collateral agent, and MC Admin Co LLC, as lead arranger.
10.2*	Security Agreement, dated as of November 23, 2015, by and among GDEF, STG, STG, Inc., Access Systems, Incorporated, and such other assignors party thereto and PNC Bank, National Association.
10.3*	Pledge Agreement, dated as of November 23, 2015, by and among GDEF, STG, STG, Inc., Access Systems, Incorporated, such other Pledgors party thereto and PNC Bank, National Association
10.4*	Registration Rights Agreement, dated as of November 23, 2015, by and among GDEF and the STG Stockholders.
10.5*	Amended and Restated Registration Rights Agreement, dated as of November 23, 2015, by and among GDEF and the Sponsor.
10.6*	Voting Agreement, dated as of November 23, 2015, by and among GDEF, the STG Stockholders and the Sponsor.
10.7*	Escrow Agreement, dated as of November 23, 2015, by and among the Company, the STG Stockholders, Simon S. Lee, as Stockholders’ Representative, and Branch Banking & Trust Company.
10.8*	Second Amended and Restated Backstop Common Stock Purchase Agreement, dated as of November 23, 2015, issued by the Company to Global Defense & National Security Holdings LLC.
10.9*	Contribution and Exchange Agreement, dated as of November 23, 2015, by and between GDEF and the Sponsor.
10.10*	Employment Agreement, dated as of November 23, 2015, by and between the Company and Paul Fernandes
10.11*	Employment Agreement, dated as of November 23, 2015, by and between the Company and Charles Cosgrove
10.12*	Employment Agreement, dated as of November 23, 2015, by and between the Company and Glenn W. Davis, Jr.
10.13*	Employment Agreement, dated as of November 23, 2015, by and between the Company and Keith Lynch
10.14*	Employment Agreement, dated as of November 30, 2015, by and between the Company and Dale R. Davis
10.15*	Master Services Agreement, dated as of November 10, 2015, by and between the Company and Global Strategies Group (North America) Inc.
10.16	Global Defense & National Security Systems, Inc. Omnibus Incentive Plan (incorporated by reference from Annex D to the Definitive Proxy Statement filed by the Registrant on October 22, 2015).
99.1*	Unaudited condensed consolidated financial statements of STG as of September 30, 2015 and September 30, 2014.
99.2*	Press Release Announcing the Business Combination, dated November 24, 2015.

* Filed herewith.

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.

STG GROUP, INC.
By:	/s/ Charles L. Cosgrove
Name:	Charles L. Cosgrove
Title:	Chief Financial Officer

Date: November 30, 2015

EXHIBIT INDEX

2.1	Stock Purchase Agreement, dated as of June 8, 2015, by and among (i) Global Defense & National Security Systems, Inc., (ii) Global Defense & National Security Holdings LLC, (iii) STG Group, Inc. (iv) the stockholders set forth on Annex A thereto and (v) Simon Lee, as Stockholders’ Representative, solely for purposes of Sections 1.2, 1.3, 6.3, 6.5, 6.7 and 6.22 and ARTICLES IX and XII. (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed by GDEF on June 9, 2015).
3.1*	Amended and Restated Certificate of Incorporation of Global Defense & National Security Systems, Inc.
3.2*	Amended and Restated Bylaws of Global Defense & National Security Systems, Inc.
10.1*	Credit Agreement, dated as of November 23, 2015, by and among GDEF, STG, STG, Inc., Access Systems Incorporated, the lenders party thereto from time to time, MC Admin Co LLC, as administrative agent, PNC Bank, National Association, as collateral agent, and MC Admin Co LLC, as lead arranger.
10.2*	Security Agreement, dated as of November 23, 2015, by and among GDEF, STG, STG, Inc., Access Systems, Incorporated, and such other assignors party thereto and PNC Bank, National Association.
10.3*	Pledge Agreement, dated as of November 23, 2015, by and among GDEF, STG, STG, Inc., Access Systems, Incorporated, such other Pledgors party thereto and PNC Bank, National Association
10.4*	Registration Rights Agreement, dated as of November 23, 2015, by and among GDEF and the STG Stockholders.
10.5*	Amended and Restated Registration Rights Agreement, dated as of November 23, 2015, by and among GDEF and the Sponsor.
10.6*	Voting Agreement, dated as of November 23, 2015, by and among GDEF, the STG Stockholders and the Sponsor.
10.7*	Escrow Agreement, dated as of November 23, 2015, by and among the Company, the STG Stockholders, Simon S. Lee, as Stockholders Representative, and Branch Banking and Trust Company.
10.8*	Second Amended and Restated Backstop Common Stock Purchase Agreement, dated as of November 23, 2015, issued by the Company to Global Defense & National Security Holdings LLC.
10.9*	Contribution and Exchange Agreement, dated as of November 23, 2015, by and between GDEF and the Sponsor.
10.10*	Employment Agreement, dated as of November 23, 2015, by and between the Company and Paul Fernandes
10.11*	Employment Agreement, dated as of November 23, 2015, by and between the Company and Charles Cosgrove
10.12*	Employment Agreement, dated as of November 23, 2015, by and between the Company and Glenn W. Davis, Jr.
10.13*	Employment Agreement, dated as of November 23, 2015, by and between the Company and Keith Lynch
10.14*	Employment Agreement, dated as of November 30, 2015, by and between the Company and Dale R. Davis
10.15*	Master Services Agreement, dated as of November 10, 2015, by and between the Company and Global Strategies Group (North America) Inc.
10.16	Global Defense & National Security Systems, Inc. Omnibus Incentive Plan (incorporated by reference from Annex D to the Definitive Proxy Statement filed by the Registrant on October 22, 2015).
99.1*	Unaudited condensed consolidated financial statements of STG as of September 30, 2015 and September 30, 2014.
99.2*	Press Release Announcing the Business Combination, dated November 24, 2015.

* Filed herewith.

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.

Pursuant to Sections 242 and 245 of the

Delaware General Corporation Law

Global Defense & National Security Systems, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “GCL”), does hereby certify as follows:

(1) The name of the Corporation is Global Defense & National Security Systems, Inc. The Corporation was originally incorporated under the name Global Defense & National Security Systems, Inc. The original certificate of incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware on July 3, 2013, was amended and restated on October 18, 2013 and October 23, 2013 and was corrected pursuant to Section 103(f) of the GCL on April 3, 2014, and further amended on July 21, 2015, October 23, 2015, November 13, 2015 and November ___, 2015 (the “Prior Certificate of Incorporation”).

(2) This Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”) was duly adopted by the Board of Directors of the Corporation in accordance with Sections 242 and 245 of the GCL.

(3) This Amended and Restated Certificate of Incorporation restates and integrates and does not further amend the Prior Certificate of Incorporation as heretofore amended or supplemented other than as permitted under GCL 242(b)(1).

(4) The text of the Prior Certificate of Incorporation is hereby amended and restated in its entirety as follows:

FIRST: The name of the Corporation is STG Group, Inc. (the “Corporation”).

SECOND: The address of the registered office of the Corporation in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Zip Code 19801. The name of its registered agent at that address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the GCL as set forth in Title 8 of the Delaware Code. 

FOURTH:

(A) Authorized Capital Stock. The total number of shares of stock which the Corporation shall have authority to issue is one hundred ten million (110,000,000) shares of capital stock, consisting of (i) one hundred million (100,000,000) shares of common stock, par value $0.0001 per share (“Common Stock”), and (ii) ten million (10,000,000) shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”).

(B) Preferred Stock.

(i) The Board of Directors of the Corporation (the “Board of Directors”) is hereby expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.

(ii) The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock, without a vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders of Preferred Stock is required pursuant to another provision of this Certificate, including any certificate of designation for any series of Preferred Stock.

(C) Common Stock. Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of Preferred Stock, the holders of Common Stock shall exclusively possess all voting power and each share of Common Stock shall be entitled to one vote.

FIFTH: The Corporation’s existence shall be perpetual.

SIXTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(2) The Board of Directors shall consist of not less than one or more than fifteen members, the exact number of which shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the Board of Directors then in office.

(3) The Board of Directors shall be and is divided into three classes designated as Class I, Class II and Class III, respectively, as nearly equal in size as possible. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors.

(4) Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, that each initial director in Class I shall serve for a term ending on the date of the annual meeting in 2016; each initial director of Class II shall serve for a term ending on the date of the annual meeting in 2017; and each initial director in Class III shall serve for a term ending on the date of the annual meeting in 2018; and provided further, that the term of each director shall be subject to the election and qualification of his successor and to his earlier death, resignation or removal.

(5) In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as a director of the class of which he is a member and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes whose terms of offices are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution adopted by the Board of Directors

(6) Directors shall be elected by a plurality of the votes cast at each annual meeting of stockholders.

(7) Unless and except to the extent that the By-Laws shall so require, the election of directors need not be by written ballot.

(8) Subject to the terms of any one or more classes or series of Preferred Stock, any vacancy on the Board of Directors shall be filled by an affirmative vote of a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall hold office and shall hold office until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of the Corporation may be removed from office at any time, but only by the affirmative vote of the holders of at least a majority of the total number of votes of the Corporation’s capital stock represented at the meeting and entitled to vote on such question. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of the certificate of designation applicable thereto.

(9) No action required or permitted to be taken at any meeting of stockholders may be taken by written consent without meeting.

(10) Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the By-Laws.

(11) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Amended and Restated Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.

SEVENTH: No director shall be personally liable to the Corporation or any of its stockholders for a breach of fiduciary duty as a director if such director acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation and had no reasonable cause to believe that his or her conduct was unlawful unless he or she authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from his or her actions as a director. In the case of proceedings by or in the right of the Corporation, no director shall be personally liable until he or she shall have been finally adjudged by a court to be liable to the Corporation, unless and only to the extent that any court in which the proceeding was brought or the Court of Chancery of the State of Delaware shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such director is fairly and reasonably entitled to indemnification, to be held harmless or to exoneration. Notwithstanding the foregoing, no director shall be entitled to indemnification to the extent that he or she is finally adjudged by a court of competent jurisdiction that such director breached his or her duty of loyalty or engaged in any intentional misconduct. Any repeal or modification of this Article SEVENTH shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

EIGHTH: The Corporation shall indemnify its directors, officers, employees and agents to the fullest extent permitted by applicable law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided that, the Corporation shall not be obligated to indemnify any director, officer, employee or agent (or his or her heirs, executors or personal or legal representatives) in connection with any claim made against such director or officer: (a) for which payment has actually been received by or on behalf of such director or officer under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount actually received under any insurance policy, contract, agreement, other indemnity provision or otherwise; (b) for an accounting of profits made from the purchase and sale (or sale and purchase) by such director or officer of the Corporation’s securities within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; or (c) for payments in fulfillment of the obligations of such director or officer pursuant to such director’s or officer’s letter agreement with us, substantially in the form listed as Exhibit 10.1 to the registration statement of the Corporation on Form S-1, as amended (File No. 333-191195). Notwithstanding the foregoing, no director, officer, employee or agent shall be entitled to indemnification to the extent that such person is finally adjudged by a court of competent jurisdiction that such person breached his or her duty of loyalty or engaged in any intentional misconduct or a knowing violation of law. The right to indemnification conferred by this Article EIGHTH shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition. The rights to indemnification and to the advance of expenses conferred in this Article EIGHTH shall not be exclusive of any other right which any person may have or hereafter acquire under this Amended and Restated Certificate of Incorporation, the By-Laws of the Corporation, any statute, agreement, vote of stockholders or disinterested directors or otherwise. Any repeal or modification of this Article EIGHTH shall not adversely affect any rights to indemnification and to the advancement of expenses of a director, officer, employee or agent of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification.

NINTH: The doctrine of corporate opportunity, or any other analogous doctrine, shall not apply with respect to the Corporation or any of its officers or directors in circumstances where the application of any such doctrine would conflict with any fiduciary duties or contractual obligations they may have as of the date of this Amended and Restated Certificate.

TENTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.

ELEVENTH: Nothing in this Amended and Restated Certificate of Incorporation or the Corporation’s By-Laws shall be deemed to limit or restrict any director or officer of the Corporation from acting in his capacity as such director or officer or from exercising his or her fiduciary duties and responsibilities in accordance with applicable law. This Article ELEVENTH shall be applicable to the other provisions in this Amended and Restated Certificate of Incorporation or the Corporation’s By-Laws, irrespective of whether Article ELEVENTH is specifically referenced in any other Article of this Amended and Restated Certificate of Incorporation or any other Section of the Corporation’s By-Laws.

TWELFTH: In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation’s By-Laws in any manner not inconsistent with the laws of the State of Delaware, Section 9.1 of the Corporation’s By-Laws or this Amended and Restated Certificate of Incorporation. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal the Corporation’s By-Laws. The Corporation’s By-Laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3 %) of the voting power of the shares entitled to vote at an election of directors. As used in this Article TWELFTH, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies.

THIRTEENTH: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or employee of the Corporation to the Corporation or the Corporation's stockholders, (iii) any action asserting a claim against the Corporation or any director, officer, or employee of the Corporation arising pursuant to any provision of the GCL or this Amended and Restated Certificate of Incorporation or the Corporation’s Bylaws, or (iv) any action asserting a claim against the Corporation or any director, officer, or employee of the Corporation governed by the internal affairs doctrine of the State of Delaware; provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or federal court located within the State of Delaware. Failure to enforce the foregoing provisions would cause the Corporation irreparable harm and the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. Any person or entity purchasing or otherwise acquiring any interest in any share of capital stock of the Corporation shall be deemed to have notice of and consent to the provisions of this Article THIRTEENTH.

FOURTEENTH: The Corporation elects to not be governed by Section 203 of the GCL.

FIFTEENTH: The Corporation reserves the right at any time from time to amend, alter, change or repeal any provision contained in this Certificate, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law. All rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons or entities whomsoever by and pursuant to this Certificate in its present form or as hereafter amended are granted subject to the right reserved in this Article FIFTEENTH. Notwithstanding any other provisions of this Certificate or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any series of Preferred Stock required by law, by this Certificate or by any resolutions providing for the issuance of such class or series of stock adopted by the Board of Directors, the affirmative vote of at least sixty-six and two-thirds percent (66 2/3 %) of the voting power of the shares shall be required to amend, alter or repeal, or adopt any provision inconsistent with Article SIXTH, Article SEVENTH, Article EIGHTH, Article TWELFTH, or this Article FIFTEENTH, or in each case, any successor provision (including, without limitation, any such article or section as renumbered as a result of any amendment, alteration, change, repeal or adoption of any other provision of this Certificate).

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed on its behalf this 23rd day of November, 2015.

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Frederic Cassis
Name:	Frederic Cassis
Title:	Secretary

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BY-LAWS

OF

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.

A Delaware Corporation

Effective as of November 23, 2015

TABLE OF CONTENTS

		Page
ARTICLE I OFFICES		1
Section 1.1	Registered Office	1
Section 1.2	Other Offices	1
ARTICLE II MEETINGS OF STOCKHOLDERS		1
Section 2.1	Place of Meetings	1
Section 2.2	Annual Meetings	1
Section 2.3	Special Meetings	1
Section 2.4	Notice	1
Section 2.5	Adjournments	1
Section 2.6	Quorum	2
Section 2.7	Voting	2
Section 2.8	Proxies	2
Section 2.9	Consent of Stockholders in Lieu of Meeting	3
Section 2.10	List of Stockholders Entitled to Vote	2
Section 2.11	Record Date.	3
Section 2.12	Stock Ledger	3
Section 2.13	Conduct of Meetings	3
Section 2.14	Inspectors of Election	3
Section 2.15	Nature of Business at Meetings of Stockholders	4
Section 2.16	Nomination of Directors	5
ARTICLE III DIRECTORS		7
Section 3.1	Number and Election of Directors	7
Section 3.2	Vacancies	7
Section 3.3	Duties and Powers	7
Section 3.4	Meetings	7
Section 3.5	Organization	7
Section 3.6	Resignations and Removals of Directors	8
Section 3.7	Quorum	8
Section 3.8	Actions of the Board by Written Consent	8

Section 3.9	Meetings by Means of Conference Telephone	8
Section 3.10	Committees	8
Section 3.11	Compensation	9
Section 3.12	Interested Directors	9
Section 3.13	Obligations as Director	9
ARTICLE IV OFFICERS		10
Section 4.1	General	10
Section 4.2	Election	10
Section 4.3	Voting Securities Owned by the Corporation	10
Section 4.4	Chairman of the Board of Directors	10
Section 4.5	President	10
Section 4.6	Vice Presidents	10
Section 4.7	Secretary	11
Section 4.8	Treasurer	11
Section 4.9	Assistant Secretaries	11
Section 4.10	Assistant Treasurers	11
Section 4.11	Other Officers	11
Section 4.12	Obligations as Officer	11
ARTICLE V STOCK		12
Section 5.1	Form of Certificates	12
Section 5.2	Signatures	12
Section 5.3	Lost Certificates	12
Section 5.4	Transfers	12
Section 5.5	Dividend Record Date	12
Section 5.6	Record Owners	12
Section 5.7	Transfer and Registry Agents	13
ARTICLE VI NOTICES		13
Section 6.1	Notices	13
Section 6.2	Waivers of Notice	13
ARTICLE VII GENERAL PROVISIONS		13
Section 7.1	Dividends	13
Section 7.2	Disbursements	14
Section 7.3	Fiscal Year	14
Section 7.4	Corporate Seal	14
ARTICLE VIII INDEMNIFICATION		14
Section 8.1	Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation	14
Section 8.2	Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation	14
Section 8.3	Authorization of Indemnification	15
Section 8.4	Good Faith Defined	15
Section 8.5	Indemnification by a Court	15
Section 8.6	Expenses Payable in Advance	16
Section 8.7	Nonexclusivity of Indemnification and Advancement of Expenses	16
Section 8.8	Insurance	16

Section 8.9	Certain Definitions	16
Section 8.10	Survival of Indemnification and Advancement of Expenses	17
Section 8.11	Limitation on Indemnification	17
Section 8.12	Indemnification of Employees and Agents	17
ARTICLE IX AMENDMENTS		17
Section 9.1	Amendments	17
Section 9.2	Entire Board of Directors	17

AMENDED AND RESTATED BY-LAWS
OF
GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
(hereinafter called the “Corporation”)

ARTICLE I

OFFICES

Section 1.1            Registered Office. The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

Section 1.2            Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 2.1            Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that a meeting of the stockholders shall not be held at any place, but may instead be held solely by means of remote communication in the manner authorized by the General Corporation Law of the State of Delaware (the “GCL”).

Section 2.2            Annual Meetings. The Annual Meeting of Stockholders for the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the Annual Meeting of Stockholders.

Section 2.3            Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended and restated from time to time (the “Certificate of Incorporation”), Special Meetings of Stockholders, for any purpose or purposes, may be called by either (i) the Chairman, if there be one, (ii) the President, or (iii) the Secretary, and only shall be called by any such officer at the request in writing of the Board of Directors, pursuant to a resolution adopted by at least a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting. At a Special Meeting of Stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto).

Section 2.4            Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a Special Meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by law, written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to notice of and to vote at such meeting.

Section 2.5            Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting in accordance with the requirements of Section 2.4 shall be given to each stockholder of record entitled to notice of and to vote at the meeting.

1

Section 2.6            Quorum. Unless otherwise required by applicable law or the Certificate of Incorporation, the holders of a majority of the Corporation’s capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 2.5, until a quorum shall be present or represented.

Section 2.7            Voting. Unless otherwise required by law, the Certificate of Incorporation or these By-Laws or permitted by the rules of any stock exchange on which the Corporation’s shares are listed and traded, any question brought before any meeting of the stockholders, other than the election of directors, shall be decided by the vote of the holders of a majority of the total number of votes of the Corporation’s capital stock represented at the meeting and entitled to vote on such question, voting as a single class. Unless otherwise provided in the Certificate of Incorporation, and subject to Section 2.11(a), each stockholder represented at a meeting of the stockholders shall be entitled to cast one (1) vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 2.8. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of the stockholders, in such officer’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

Section 2.8            Proxies. Each stockholder entitled to vote at a meeting of the stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon after eleven (11) months from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:

(i)                 A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.

(ii)               A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information on which they relied.

Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

2

Section 2.9            Consent of Stockholders in Lieu of Meeting. No action required or permitted to be taken at any meeting of stockholders may be taken by written consent without meeting.

Section 2.10          List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of the 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 the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall 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. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

Section 2.11          Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, 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 sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 2.12          Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 2.10 or the books of the Corporation, or to vote in person or by proxy at any meeting of the stockholders.

Section 2.13          Conduct of Meetings. The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of any meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants.

Section 2.14          Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman or the President shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable law.

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Section 2.15          Nature of Business at Meetings of Stockholders.

Only such business (other than nominations for election to the Board of Directors, which must comply with the provisions of Section 2.16) may be transacted at an Annual Meeting of Stockholders as is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.15 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 2.15.

In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or seventy (70) days after such anniversary date, notice by the stockholder in order to be timely must be so received not less than ninety (90) days nor more than one hundred twenty (120) days prior to such Annual Meeting or ten (10) days following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each matter such stockholder proposes to bring before the Annual Meeting, a brief description of the business desired to be brought before the Annual Meeting and the proposed text of any proposal regarding such business (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend these bylaws, the text of the proposed amendment), and the reasons for conducting such business at the Annual Meeting, and (b) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made, (i) the name and address of such person, (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons (including their names) in connection with or relating to (A) the Corporation or (B) the proposal, including any material interest in, or anticipated benefit from the proposal to such person, or any affiliates or associates of such person, (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the Annual Meeting pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder.

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A stockholder providing notice of business proposed to be brought before an Annual Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.15 shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of the Annual Meeting.

No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 2.15; provided, however, that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 2.15 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Nothing contained in this Section 2.15 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision of law).

Section 2.16          Nomination of Directors

Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.16 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting or Special Meeting and (ii) who complies with the notice procedures set forth in this Section 2.16.

In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation (a) in the case of an Annual Meeting, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or seventy (70) days after such anniversary date, notice by the stockholder in order to be timely must be so received not less than ninety (90) days nor more than one hundred twenty (120) days prior to such Annual Meeting or ten (10) days following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs; and (b) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than ten (10) days following the day on which notice of the date of the Special Meeting was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting or a Special Meeting called for the purpose of electing directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

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To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of such person, (ii) a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made, including, but not limited to, principal occupation or employment of such person(s), (iii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation, (iv) such person’s written representation and agreement that such person (A) is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director of the Corporation that has not been disclosed to the Corporation in such representation and agreement and (C) in such person’s individual capacity, would be in compliance, if elected as a director of the Corporation, and will comply with, all applicable publicly disclosed confidentiality, corporate governance, conflict of interest, Securities and Exchange Commission Regulation Fair Disclosure (FD), code of conduct and ethics, and stock ownership and trading policies and guidelines of the Corporation and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice, and the beneficial owner, if any, on whose behalf the nomination is being made, (i) the name and record address of the stockholder giving the notice and the name and principal place of business of such beneficial owner; (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of (A) all agreements, arrangements, or understandings (whether written or oral) between such person, or any affiliates or associates of such person, and any proposed nominee, or any affiliates or associates of such proposed nominee, (B) all agreements, arrangements, or understandings (whether written or oral) between such person, or any affiliates or associates of such person, and any other person or persons (including their names) pursuant to which the nomination(s) are being made by such person, or otherwise relating to the Corporation or their ownership of capital stock of the Corporation, and (C) any material interest of such person, or any affiliates or associates of such person, in such nomination, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting or Special Meeting to nominate the persons named in its notice; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. Each proposed nominee must agree to furnish such other information as the Corporation may reasonably require, including such information as may be necessary or appropriate in determining the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

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A stockholder providing notice of any nomination proposed to be made at an Annual Meeting or Special Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.16 shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting or Special Meeting, and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of such Annual Meeting or Special Meeting.

If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

ARTICLE III

DIRECTORS

Section 3.1            Number and Election of Directors. The Board of Directors shall consist of not less than one nor more than fifteen members, the exact number of which shall initially be fixed at five members and thereafter from time to time by a majority of the Board of Directors then in office, provided that it may not be reduced below a number necessary to comply with the last sentence of this Section. Except as provided in Section 3.3, directors shall be elected by a plurality of the votes cast at each Annual Meeting of Stockholders. Directors need not be stockholders.

Section 3.2            Terms of Office. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, that each initial director in Class I shall serve for a term ending on the date of the annual meeting of stockholders in 2016; each initial director in Class II shall serve for a term ending on the date of the annual meeting of stockholders in 2017; and each initial director in Class III shall serve for a term ending on the date of the annual meeting of stockholders in 2018; and provided further, that the term of each director shall be subject to the election and qualification of his successor and to his earlier death, resignation or removal.

Section 3.3            Vacancies. Unless otherwise required by law or the Certificate of Incorporation, vacancies on the Board of Directors or any committee thereof arising through death, resignation, removal, an increase in the number of directors constituting the Board of Directors or such committee or otherwise may be filled only by an affirmative vote of a majority of the directors then in office, though less than a quorum, or by a sole remaining director. The directors so chosen shall, in the case of the Board of Directors, hold office until their successors are duly elected and qualified, or until their earlier death, resignation or removal and, in the case of any committee of the Board of Directors, shall hold office until their successors are duly appointed by the Board of Directors or until their earlier death, resignation or removal.

Section 3.4            Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders.

Section 3.5            Meetings. The Board of Directors and any committee thereof may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors or any committee thereof may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors or such committee, respectively. Special meetings of the Board of Directors may be called by the Chairman, if there be one, the President, or the Secretary. Special meetings of any committee of the Board of Directors may be called by the chairman of such committee, if there be one, the President, or the Secretary. Notice thereof stating the place, date and hour of the meeting shall be given to each director (or, in the case of a committee, to each member of such committee) either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, telegram or electronic means on twenty-four (24) hours’ notice.

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Section 3.6           Organization. At each meeting of the Board of Directors or any committee thereof, the Chairman of the Board of Directors or the chairman of such committee, as the case may be, or, in his or her absence or if there be none, a director chosen by a majority of the directors present, shall act as chairman. Except as provided below, the Secretary of the Corporation shall act as secretary at each meeting of the Board of Directors and of each committee thereof. In case the Secretary shall be absent from any meeting of the Board of Directors or of any committee thereof, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting. Notwithstanding the foregoing, the members of each committee of the Board of Directors may appoint any person to act as secretary of any meeting of such committee and the Secretary or any Assistant Secretary of the Corporation may, but need not if such committee so elects, serve in such capacity.

Section 3.7           Resignations and Removals of Directors. Any director of the Corporation may resign from the Board of Directors or any committee thereof at any time, by giving notice in writing or by electronic transmission to the Chairman of the Board of Directors, if there be one, the President or the Secretary of the Corporation and, in the case of a committee, to the chairman of such committee, if there be one. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Except as otherwise required by applicable law and subject to the rights, if any, of the holders of shares of preferred stock then outstanding, any director or the entire Board of Directors may be removed from office at any time by the affirmative vote of the holders of at least a majority of the total number of votes of the Corporation’s capital stock represented at the meeting and entitled to vote on such question. Any director serving on a committee of the Board of Directors may be removed from such committee at any time by the Board of Directors.

Section 3.8            Quorum. Except as otherwise required by law, the Certificate of Incorporation or the rules and regulations of any securities exchange or quotation system on which the Corporation’s securities are listed or quoted for trading, at all meetings of the Board of Directors or any committee thereof, a majority of the Board of Directors or a majority of the directors constituting such committee, as the case may be, shall constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board of Directors or any committee thereof, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors or any committee thereof, as applicable, unless the Certificate of Incorporation or these bylaws shall require the vote of a greater number. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

Section 3.9            Actions of the Board by Written Consent. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 3.10          Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, members of the Board of Directors of the Corporation, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.10 shall constitute presence in person at such meeting.

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Section 3.11          Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Subject to the phase-in provisions of the Nasdaq Stock Market Rules, each member of a committee must meet the requirements for membership, if any, imposed by applicable law and the Nasdaq Stock Market Rules. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. Subject to the Nasdaq Stock Market Rules, in the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another qualified member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes and report to the Board of Directors periodically. Notwithstanding anything to the contrary contained in this Article III, the resolution of the Board of Directors establishing any committee of the Board of Directors and/or the charter of any such committee may establish requirements or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set forth in these By-Laws and, to the extent that there is any inconsistency between these By-Laws and any such resolution or charter, the terms of such resolution or charter shall be controlling.

Section 3.12          Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary for service as director, payable in cash or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for service as committee members.

Section 3.13          Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because any such director’s or officer’s vote is counted for such purpose if: (i) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

Section 3.14          Obligations as Director. Nothing in these By-Laws shall be deemed to limit or restrict any director of the Corporation from acting in his capacity as such director or from exercising his or her fiduciary duties and responsibilities in accordance with applicable law. This Section 3.14 shall be applicable to the other provisions in these By-Laws, irrespective of whether Section 3.14 is specifically referenced in any other Section of these By-Laws.

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ARTICLE IV

OFFICERS

Section 4.1            General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, also may choose a Chairman of the Board of Directors (who must be a director) and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these By-Laws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation.

Section 4.2            Election. The Board of Directors shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and each officer of the Corporation shall hold office until such officer’s successor is elected and qualified, or until such officer’s earlier death, resignation or removal. Any officer elected by the Board of Directors may be removed by a vote of not less than two-thirds of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors.

Section 4.3            Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.

Section 4.4            Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the stockholders and of the Board of Directors. Except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as may from time to time be assigned by these By-Laws or by the Board of Directors.

Section 4.5            President. The President shall, subject to the control of the Board of Directors and, if there be one, the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-Laws, the Board of Directors or the President. In the absence or disability of the Chairman of the Board of Directors, or if there be none, the President shall preside at all meetings of the stockholders and, provided the President is also a director, the Board of Directors. If there be no Chairman of the Board of Directors, or if the Board of Directors shall otherwise designate, the President shall be the Chief Executive Officer of the Corporation. The President shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer by these By-Laws or by the Board of Directors.

Section 4.6            Vice Presidents. At the request of the President or in the President’s absence or in the event of the President’s inability or refusal to act (and if there be no Chairman of the Board of Directors), the Vice President, or the Vice Presidents if there are more than one (in the order designated by the Board of Directors), shall perform 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. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Chairman of the Board of Directors and no Vice President, the Board of Directors shall, by a majority vote, designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of the President to act, shall perform 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.

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Section 4.7            Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for committees of the Board of Directors when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board of Directors or the President, under whose supervision the Secretary shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by such officer’s signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

Section 4.8            Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of the Treasurer and for the restoration to the Corporation, in case of the Treasurer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Treasurer’s possession or under the Treasurer’s control belonging to the Corporation.

Section 4.9            Assistant Secretaries. Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.

Section 4.10          Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of the Treasurer’s inability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of Assistant Treasurer and for the restoration to the Corporation, in case of the Assistant Treasurer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Assistant Treasurer’s possession or under the Assistant Treasurer’s control belonging to the Corporation.

Section 4.11          Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

Section 4.12          Obligations as Officer. Nothing in these By-Laws shall be deemed to limit or restrict any officer of the Corporation from acting in his capacity as such officer or from exercising his or her fiduciary duties and responsibilities in accordance with applicable law. This Section 4.12 shall be applicable to the other provisions in these By-Laws, irrespective of whether Section 4.12 is specifically referenced in any other Section of these By-Laws.

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ARTICLE V

STOCK

Section 5.1            Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation (i) by the Chairman of the Board of Directors, or the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such stockholder in the Corporation.

Section 5.2            Signatures. Any or all of the signatures on a 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 be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 5.3            Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issuance of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or such owner’s legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate.

Section 5.4            Transfers. Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person’s attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; provided, however, that such surrender and endorsement or payment of taxes shall not be required in any case in which the officers of the Corporation shall determine to waive such requirement. Every certificate exchanged, returned or surrendered to the Corporation shall be marked “Cancelled,” with the date of cancellation, by the Secretary or Assistant Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

Section 5.5            Dividend Record Date. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, 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 be not more than sixty (60) days prior to such action. If 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.

Section 5.6            Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.

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Section 5.7            Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.

ARTICLE VI

NOTICES

Section 6.1            Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person’s address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under applicable law, the Certificate of Incorporation or these By-Laws shall be effective if given by a form of electronic transmission if consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed to be revoked if (i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by electronic transmission, as described above, shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder. Notice to directors or committee members may be given personally or by telegram, telex, cable or by means of electronic transmission.

Section 6.2            Waivers of Notice. Whenever any notice is required by applicable law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to notice, or a waiver by electronic transmission by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the 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. Neither the business to be transacted at, nor the purpose of, any Annual or Special Meeting of Stockholders or any regular or special meeting of the directors or members of a committee of directors need be specified in any written waiver of notice unless so required by law, the Certificate of Incorporation or these By-Laws.

ARTICLE VII

GENERAL PROVISIONS

Section 7.1            Dividends. Dividends upon the capital stock of the Corporation, subject to the requirements of the GCL and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with Section 3.9), and may be paid in cash, in property, or in shares of the Corporation’s capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.

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Section 7.2            Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 7.3            Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 7.4            Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE VIII

INDEMNIFICATION

Section 8.1            Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 8.3, 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 such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation 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 such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and had no reasonable cause to believe such person’s conduct was unlawful unless such person authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from such person’s actions in the Corporation. 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 adversely affect the right of the person to indemnification or create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

Section 8.2            Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 8.3, 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 such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation 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 such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and had no reasonable cause to believe that such person’s conduct was unlawful. No indemnification for expenses shall be made in respect of any claim, issue or matter as to which such person shall have been finally adjudged by a court to be liable to the Corporation, unless and only to the extent that the Court of Chancery of the State of Delaware or any court in which such proceeding 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 the Court of Chancery of the State of Delaware or such other court shall deem proper. Notwithstanding the foregoing, such person shall not be entitled to indemnification to the extent that is finally adjudged by a court of competent jurisdiction that such person breached his or her duty of loyalty or engaged in any intentional misconduct or a knowing violation of law.

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Section 8.3            Authorization of Indemnification. Any indemnification under this Article VIII (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 present or former director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Sections 8.1 or 8.2, as the case may be. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, unless such directors elect to have such determination made by independent legal counsel in a written opinion. To the extent, however, that a present or former director or officer of the Corporation is a party to (or a participant in) and has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, the Corporation shall, to the fullest extent permitted by applicable law, indemnify such person against all expenses actually and reasonably incurred by such person in connection therewith. If such person is not wholly successful in such proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such proceeding, the Corporation shall, to the fullest extent permitted by applicable law, indemnify such person against all expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. Notwithstanding the foregoing, the Corporation shall not be obligated to make any indemnification in connection with any claim made against a director or officer: (a) for which payment has actually been received by or on behalf of such person under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount actually received under any insurance policy, contract, agreement, other indemnity provision or otherwise; (b) for an accounting of profits made from the purchase and sale (or sale and purchase) by such person of securities of the Corporation within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; or (c) for payments in fulfillment of the obligations of such person pursuant to such person’s letter agreement with the Corporation, substantially in the form listed as Exhibit 10.1 to the registration statement of the Corporation on Form S-1, as amended (File No. 333-191195).

Section 8.4            Good Faith Defined. For purposes of any determination under Section 8.3, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person’s conduct was unlawful, if such person’s action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The provisions of this Section 8.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 8.1 or 8.2, as the case may be.

Section 8.5            Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 8.3, and notwithstanding the absence of any determination thereunder, any director or officer may apply to the Court of Chancery of the State of Delaware or any other court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 8.1 or 8.2. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Sections 8.1 or 8.2, as the case may be. Neither a contrary determination in the specific case under Section 8.3 nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 8.5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.

15

Section 8.6            Expenses Payable in Advance. To the fullest extent not prohibited by applicable law, the Corporation shall pay the expenses incurred by a director or officer (or reasonably expected by such person to be incurred within three months) in connection with any proceeding within ten (10) days after the receipt by the Corporation of a statement or statements requesting such advances from time to time, prior to the final disposition of any proceeding. Advances shall be made without regard to such person’s ability to repay the expenses and without regard to such person’s ultimate entitlement to be indemnified under Sections 8.1 or 8.2. Advances shall include any and all reasonable expenses incurred pursuing a proceeding to enforce this right of advancement, including expenses incurred preparing and forwarding statements to the Corporation to support the advances claimed. To the fullest extent required by applicable law, such payments of expenses in advance of the final disposition of the proceeding shall be made only upon the Corporation’s receipt of an undertaking, by or on behalf of the such person, to repay the advance to the extent that it is ultimately determined that such person is not entitled to be indemnified by the Corporation under this Article VIII, such person’s letter agreement with the Corporation, substantially in the form listed as Exhibit 10.1 to the registration statement of the Corporation on Form S-1, as amended (File No. 333-191195), the Corporation’s amended and restated certificate of incorporation, applicable law or otherwise. This Section shall not apply to any claim made by a director or officer for which an indemnification payment is excluded pursuant to Section 8.3.

Section 8.7            Nonexclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 8.1 or 8.2 shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Sections 8.1 or 8.2 but whom the Corporation has the power or obligation to indemnify under the provisions of the GCL, or otherwise.

Section 8.8            Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation 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 such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VIII.

Section 8.9            Certain Definitions. For purposes of this Article VIII, 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 or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. The term “another enterprise” as used in this Article VIII shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. For purposes of this Article VIII, 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 any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person 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 Article VIII.

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Section 8.10          Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 8.11          Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 8.5), the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation.

Section 8.12          Indemnification of Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and officers of the Corporation.

ARTICLE IX

AMENDMENTS

Section 9.1            Amendments. These By-Laws may be altered, amended or repealed, in whole or in part, or new By-Laws may be adopted by the stockholders or by the Board of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such meeting of the stockholders or Board of Directors, as the case may be. All such amendments must be approved by either the holders of at least two-thirds of the outstanding capital stock entitled to vote thereon or by a majority of the entire Board of Directors.

Section 9.2            Entire Board of Directors. As used in this Article IX and in these By-Laws generally, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies.

* * *

Adopted as of: November 23, 2015

17

EX-10.1

Exhibit 10.1

EXECUTION VERSION

CREDIT AGREEMENT

among

Global Defense & National Security Systems, Inc.,

STG Group, Inc.,

STG, INC.,

ACCESS SYSTEMS, INCORPORATED,

VARIOUS LENDERS,

MC ADMIN CO LLC,

as ADMINISTRATIVE AGENT,

AND

PNC BANK, NATIONAL ASSOCIATION,
AS COLLATERAL AGENT

Dated as of NOVEMBER 23, 2015

MC ADMIN CO LLC,

as LEAD ARRANGER and BOOK RUNNER

TABLE OF CONTENTS

		Page
SECTION 1.	Definitions and Accounting Terms	2
1.01.	Defined Terms	2
SECTION 2.	Amount and Terms of Loans	43
2.01.	The Loans	43
2.02.	Minimum Amount of Each Borrowing	46
2.03.	Notice of Borrowing	46
2.04.	Disbursement of Funds	48
2.05.	Notes	48
2.06.	Conversions	49
2.07.	Pro Rata Borrowings	50
2.08.	Interest	50
2.09.	Interest Periods	51
2.10.	Increased Costs, Illegality, etc	52
2.11.	Compensation	55
2.12.	Change of Lending Office	55
2.13.	Replacement of Lenders	55
SECTION 3.	Letters of Credit	57
3.01.	Letters of Credit	57
3.02.	Maximum Letter of Credit Outstandings; Final Maturities	59
3.03.	Letter of Credit Applications; Minimum Stated Amount	59
3.04.	Letter of Credit Participations	60
3.05.	Agreement to Repay Letter of Credit Drawings	63
3.06.	Increased Costs	64
SECTION 4.	Commitment Commission; Fees; Reductions of Commitment	65
4.01.	Fees	65
4.02.	Voluntary Termination of Revolving Loan Commitments	66
4.03.	Mandatory Reduction of Commitments	67
SECTION 5.	Prepayment Premiums	67
5.01.	[Intentionally Omitted]	67
5.02.	Prepayment Premiums	67
SECTION 6.	Prepayments; Payments; Taxes	69
6.01.	Voluntary Prepayments	69
6.02.	Mandatory Repayments	69
6.03.	Method and Place of Payment	74
6.04.	Net Payments	75
SECTION 7.	Conditions Precedent to Credit Events on the Closing Date	79
7.01.	Effective Date; Notes	79

i

TABLE OF CONTENTS

(continued)

		Page
7.02.	Officer’s Certificate	79
7.03.	Opinions of Counsel	79
7.04.	Company Documents; Proceedings; etc	79
7.05.	Employee Benefit Plans; Shareholders’ Agreements; Employment Agreements; Non-Compete Agreements; Collective Bargaining Agreements; Existing Indebtedness Agreements	80
7.06.	Consummation of Acquisition; etc	81
7.07.	Consummation of the Refinancing	81
7.08.	Adverse Change, Approvals	82
7.09.	Litigation	83
7.10.	Subsidiaries Guaranty; Intercompany Note	83
7.11.	Pledge Agreement	83
7.12.	Security Agreement	83
7.13.	Capitalization Information	84
7.14.	Organization Chart	84
7.15.	Financial Statements; Pro Forma Balance Sheet; Projections	84
7.16.	Solvency Certificate; Insurance Certificates, etc	84
7.17.	Fees, etc	84
7.18.	Availability	85
7.19.	General	85
7.20.	Lien Waiver Agreements	85
7.21.	Field Examination	85
SECTION 8.	Conditions Precedent to All Credit Events	85
8.01.	No Default; Representations and Warranties	86
8.02.	Notice of Borrowing; Letter of Credit Application	86
SECTION 9.	Representations, Warranties and Agreements	86
9.01.	Company Status	87
9.02.	Power and Authority	87
9.03.	No Violation	87
9.04.	Approvals	88
9.05.	Financial Statements; Financial Condition; Undisclosed Liabilities; Projections	88
9.06.	Litigation	90
9.07.	True and Complete Disclosure	90
9.08.	Use of Proceeds; Margin Regulations	90
9.09.	Tax Returns and Payments	91
9.10.	Compliance with ERISA	92
9.11.	Security Documents	93
9.12.	Properties	94
9.13.	Capitalization	94
9.14.	Subsidiaries	96

ii

TABLE OF CONTENTS

(continued)

		Page
9.15.	Compliance with Statutes, etc	96
9.16.	Investment Company Act	96
9.17.	Insurance	96
9.18.	Environmental Matters	96
9.19.	Employment and Labor Relations	97
9.20.	Intellectual Property	97
9.21.	Indebtedness	98
9.22.	Representations and Warranties in Other Documents	98
9.23.	Subordination	98
9.24.	Anti-Terrorism Laws	98
9.25.	Anti-Corruption Laws	99
9.26.	Swaps	99
SECTION 10.	Affirmative Covenants	100
10.01.	Information Covenants	100
10.02.	Books, Records and Inspections; Annual Meetings	105
10.03.	Maintenance of Property; Insurance	106
10.04.	Existence; Franchises	107
10.05.	Compliance with Statutes, etc	107
10.06.	Compliance with Environmental Laws	107
10.07.	ERISA	108
10.08.	End of Fiscal Years; Fiscal Quarters	110
10.09.	Performance of Obligations	110
10.10.	Payment of Taxes	110
10.11.	Use of Proceeds	110
10.12.	Additional Security; Further Assurances; etc	111
10.13.	Ownership of Subsidiaries; etc	112
10.14.	Contributions	112
10.15.	Anti-Terrorism	112
10.16.	Permitted Acquisitions	113
10.17.	Foreign Subsidiaries Security	115
10.18.	Information Rights	116
10.19.	Keepwell	116
10.20.	Government Receivables	116
10.21.	Cash Management Systems	117
SECTION 11.	Negative Covenants	118
11.01.	Liens	118
11.02.	Consolidation, Merger, Purchase or Sale of Assets, etc	121
11.03.	Dividends	124
11.04.	Indebtedness	125
11.05.	Advances, Investments and Loans	127
11.06.	Transactions with Affiliates	130

iii

TABLE OF CONTENTS

(continued)

		Page
11.07.	Capital Expenditures	131
11.08.	Fixed Charge Coverage Ratio	132
11.09.	Senior Secured Leverage Ratio	133
11.10.	Minimum Consolidated EBITDA	133
11.11.	[Reserved]	134
11.12.	Modifications of Acquisition Documents, Certificate of Incorporation, By-Laws and Certain Other Agreements; Limitations on Voluntary Payments, etc	134
11.13.	Limitation on Certain Restrictions on Subsidiaries	135
11.14.	Limitation on Issuance of Equity Interests	136
11.15.	Business; etc	136
11.16.	Limitation on Creation of Subsidiaries	137
11.17.	Certain Deposit Accounts	138
SECTION 12.	Events of Default	138
12.01.	Payments	138
12.02.	Representations, etc	138
12.03.	Covenants	138
12.04.	Default Under Other Agreements	139
12.05.	Bankruptcy, etc	139
12.06.	ERISA	140
12.07.	Security Documents	140
12.08.	Guaranties	140
12.09.	Judgments	141
12.10.	Change of Control	141
12.11.	Subordination	141
12.12.	Loss of Key Executive	141
12.13.	Reportable Compliance Event	141
SECTION 13.	The Administrative Agent; the Collateral Agent	143
13.01.	Appointment	143
13.02.	Nature of Duties	143
13.03.	Lack of Reliance on the Agents	145
13.04.	Certain Rights of the Agents	146
13.05.	Reliance	146
13.06.	Indemnification	146
13.07.	Each Agent in its Individual Capacity	147
13.08.	Holders	147
13.09.	Resignation by the Agents	147
13.10.	Collateral Matters	148
13.11.	Delivery of Information	149
13.12.	Delegation of Duties	149

iv

TABLE OF CONTENTS

(continued)

		Page
13.13.	No Reliance on either Agent’s Customer Identification Program; Certifications From Banks and Participants; USA PATRIOT Act	150
SECTION 14.	Miscellaneous	151
14.01.	Payment of Expenses, etc	151
14.02.	Right of Setoff	153
14.03.	Notices	154
14.04.	Benefit of Agreement; Assignments; Participations	155
14.05.	No Waiver; Remedies Cumulative	158
14.06.	Payments Pro Rata	158
14.07.	Calculations; Computations	159
14.08.	GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL	160
14.09.	Counterparts	161
14.10.	Effectiveness	161
14.11.	Headings Descriptive	161
14.12.	Amendment or Waiver; etc	162
14.13.	Survival	164
14.14.	Domicile of Loans	164
14.15.	Register	164
14.16.	Confidentiality	165
14.17.	Special Provisions Regarding Pledges of Equity Interests in, and Promissory Notes Owed by, Persons Not Organized in the United States	167
14.18.	Patriot Act	167
14.19.	Post-Closing Actions	168
14.20.	Interest Rate Limitation	168
14.21.	Entire Agreement	168
14.22.	Agreement Among Lenders	169
SECTION 15.	Holdings Guaranty	171
15.01.	Guaranty	171
15.02.	Bankruptcy	171
15.03.	Nature of Liability	171
15.04.	Independent Obligation	171
15.05.	Authorization	171
15.06.	Reliance	171
15.07.	Subordination	171
15.08.	Waiver	171
15.09.	Payments	175
15.10.	Maximum Liability	175

v

SCHEDULE I	Commitments
SCHEDULE II	Credit Party Addresses
SCHEDULE III	Real Property
SCHEDULE IV	Plans
SCHEDULE V	Subsidiaries
SCHEDULE VI	Existing Indebtedness
SCHEDULE VII	Insurance
SCHEDULE VIII	Existing Liens
SCHEDULE IX	Existing Investments
SCHEDULE X	Contract Matters
SCHEDULE XI	Capitalization
SCHEDULE XII	Post-Closing Matters
SCHEDULE XIII	Necessary Authorizations
SCHEDULE XIV	Cash Management Accounts
SCHEDULE XV	Tax Returns
EXHIBIT A-1	Form of Notice of Borrowing
EXHIBIT A-2	Form of Notice of Conversion/Continuation
EXHIBIT B-1	Form of Term Note
EXHIBIT B-2	Form of Revolving Note
EXHIBIT B-3	Form of Incremental Note
EXHIBIT C	Form of Section 6.04(c)(ii) Certificate
EXHIBIT D	Form of Officer’s Certificate
EXHIBIT E	Form of Subsidiaries Guaranty
EXHIBIT F	Form of Pledge Agreement
EXHIBIT G	Form of Security Agreement
EXHIBIT H	Form of Solvency Certificate
EXHIBIT I	Form of Compliance Certificate
EXHIBIT J	Form of Assignment and Assumption Agreement
EXHIBIT K	Form of Intercompany Note
EXHIBIT L	Form of Borrowing Base Certificate
EXHIBIT M	Form of Affirmation and Assumption Agreement

CREDIT AGREEMENT, dated as of November 23, 2015 among Global Defense & National Security Systems, Inc., a Delaware corporation (“Holdings”) (whose obligations as Borrower (as defined below) hereunder will be immediately assumed by STG, Inc., a Virginia corporation (the “Administrative Borrower”) and ACCESS SYSTEMS, INCORPORATED, a Virginia corporation (“Access”) immediately upon closing), STG Group, Inc., a Delaware corporation (“Parent”), the Guarantors party hereto from time to time, the Lenders party hereto from time to time, MC ADMIN CO LLC, as Administrative Agent, PNC BANK, NATIONAL ASSOCIATION (“PNC Bank”), as Collateral Agent and MC ADMIN CO LLC, as Lead Arranger. All capitalized terms used herein and defined in Section 1.01 are used herein as therein defined.

WITNESSETH:

WHEREAS, subject to and upon the terms and conditions set forth herein, the Lenders are willing to make available to the Initial Borrower and the Borrowers the respective credit facilities provided for herein;

WHEREAS, immediately following the effectiveness of this Agreement, the extension of the initial Borrowings hereunder, and the Transaction, Holdings shall be renamed STG Group, Inc. and Parent shall be renamed STG Group Holdings, Inc. on the Closing Date.

NOW, THEREFORE, IT IS AGREED:

SECTION 1.      Definitions and Accounting Terms.

1.01.     Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Accepting Lender” shall have the meaning assigned to such term in Section 6.02(l).

“Access” shall have the meaning provided in the first paragraph of this Agreement.

“Accounting Change” shall have the meaning provided in Section 14.07(a).

“Acquired EBITDA” shall mean, for any Acquired Entity or Business for any period, the Consolidated EBITDA as determined for such Acquired Entity or Business for such period on a basis substantially the same (with necessary reference changes) as provided in the definition of Consolidated EBITDA contained herein, except that (i) all references therein and in the component definitions used in determining Consolidated EBITDA to “Holdings and its Subsidiaries” shall be deemed to be references to the respective Acquired Entity or Business and (ii) the adjustments contained in clauses (iv) and (v) of the first sentence, and the adjustments contained in the last sentence, of the definition of Consolidated EBITDA shall not be made.

2

“Acquired Entity or Business” shall mean either (x) the assets constituting a business, division or product line of any Person not already a Subsidiary of any Borrower or (y) 100% of the Equity Interests of any such Person, which Person shall, as a result of the acquisition of such Equity Interests, become a Wholly-Owned Domestic Subsidiary of any Borrower (or shall be merged with and into any Borrower or another Wholly-Owned Domestic Subsidiary of any Borrower that is a Subsidiary Guarantor, with any Borrower or such Subsidiary Guarantor being the surviving or continuing Person).

“Acquisition” shall mean the transactions described in the Acquisition Agreement.

“Acquisition Agreement” shall mean that certain Stock Purchase Agreement, dated as of June 8, 2015 among Holdings, Global Defense & National Security Holding, LLC, Parent, and the other parties thereto.

“Acquisition Documents” shall mean the Acquisition Agreement and all other agreements and documents relating to the Acquisition including, without limitation, the Voting Agreement, dated as of the Closing Date, by and among Holdings, Global Defense & National Security Holdings LLC, Simon S. Lee Management Trust, Simon Lee Family Trust, AHL Descendants Trust, JSL Descendants Trust and Brian Lee Family Trust.

“Act” shall have the meaning provided in Section 14.18.

“Additional Security Documents” shall have the meaning provided in Section 10.12.

“Adjusted Consolidated Net Income” shall mean, for any period, Consolidated Net Income for such period plus the sum of the amount of all net non-cash charges (including, without limitation, depreciation, amortization, deferred tax expense and non-cash interest expense) and net non-cash losses which were included in arriving at Consolidated Net Income for such period, less the amount of all net non-cash gains and non-cash credits which were included in arriving at Consolidated Net Income for such period.

“Adjusted Consolidated Working Capital” shall mean, at any time, Consolidated Current Assets (but excluding therefrom all cash and Cash Equivalents) less Consolidated Current Liabilities at such time.

“Administrative Agent” shall mean MC ADMIN CO LLC, in its capacity as Administrative Agent for the Lenders hereunder and under the other Credit Documents, and shall include any successor to the Administrative Agent appointed pursuant to Section 13.09.

“Administrative Borrower” shall have the meaning provided in the first paragraph of this Agreement.

“Advance Rate” shall have the meaning provided in Section 2.01(c).

“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power (i) to vote 10% or more of the securities having ordinary voting power for the election of directors (or equivalent governing body) of such Person or (ii) to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise; provided, however, that none of the Administrative Agent, any Lender or any of their respective Affiliates shall be considered an Affiliate of Holdings or any Subsidiary thereof.

3

“Affirmation Agreement” means that certain Affirmation and Assumption Agreement, in the form of Exhibit M attached hereto, dated as of the date hereof executed by the Administrative Borrower and Access.

“Aggregate Consideration” shall mean, with respect to any Permitted Acquisition, the sum (without duplication) of (i) the fair market value of the Holdings Common Stock (based on the good faith determination of the senior management of Holdings) issued (or to be issued) as consideration in connection with such Permitted Acquisition (including, without limitation, Holdings Common Stock which may be required to be issued as earn-out consideration upon the achievement of certain future performance goals of the respective Acquired Entity or Business), (ii) the aggregate amount of all cash paid (or to be paid) by Holdings or any of its Subsidiaries in connection with such Permitted Acquisition (including, without limitation, payments of fees and costs and expenses in connection therewith) and all contingent cash purchase price, earn-out, non-compete and other similar obligations of Holdings and its Subsidiaries incurred and reasonably expected to be incurred in connection therewith (as determined in good faith by Holdings), (iii) the aggregate principal amount of all Indebtedness assumed, incurred, refinanced and/or issued in connection with such Permitted Acquisition to the extent permitted by Section 11.04, (iv) the aggregate liquidation preference of all Qualified Preferred Stock issued as consideration in connection with the proposed Permitted Acquisition and (v) the Fair Market Value of all other consideration payable in connection with such Permitted Acquisition.

“Agreement” shall mean this Credit Agreement, as modified, supplemented, amended, restated (including any amendment and restatement hereof), extended or renewed from time to time.

“Agreement Among Lenders” means that certain Agreement Among Lenders dated as of the date hereof among the Lenders party thereto, the Collateral Agent and the Administrative Agent.

“Anti-Terrorism Laws” shall mean any laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, all as amended, supplemented or replaced from time to time.

“Applicable Margin” shall mean (i) with respect to any Eurodollar Loan, a percentage per annum equal to 7.80% and (ii) with respect to any Base Rate Loan, a percentage per annum equal to 6.80%.

“Asset Sale” shall mean any sale, transfer or other disposition by (i) Holdings or any of its Subsidiaries to any Person (including by way of redemption by such Person) other than to Holdings or a Wholly-Owned Subsidiary of Holdings and (ii) any Non-Wholly Owned Subsidiary of Holdings to any Person other than Holdings or a Wholly-Owned Subsidiary of Holdings, in each case of any asset (including, without limitation, any capital stock or other securities of, or Equity Interests in, another Person), but excluding (x) any sales of inventory in the ordinary course of business, (y) sales of assets pursuant to Sections 11.02(ii), (v), (vi), (vii) (viii), (ix), (x), (xii), (xiii), (xiv), (xv), and (z) any other sales, transfers or dispositions that generate Net Sale Proceeds of less than $1,000,000 in the aggregate during any fiscal year.

4

“Assignment and Assumption Agreement” shall mean an Assignment and Assumption Agreement substantially in the form of Exhibit J (appropriately completed).

“Authorized Officer” shall mean, with respect to (i) delivering Notices of Borrowing, Notices of Conversion/Continuation and similar notices, any person or persons that has or have been authorized by the board of directors of Holdings, Parent or the Administrative Borrower to deliver such notices pursuant to this Agreement and that has or have appropriate signature cards on file with the Administrative Agent or the respective Issuing Lender, (ii) delivering financial information and officer’s certificates pursuant to this Agreement, the chief financial officer, the treasurer or the principal accounting officer of Holdings, Parent or each Borrower, and (iii) any other matter in connection with this Agreement or any other Credit Document, any officer (or a person or persons so designated by any two officers) of Holdings, Parent or the Borrowers.

“Bankruptcy Code” shall have the meaning provided in Section 12.05.

“Base Rate” shall mean, for any day, a rate per annum equal to the highest of (a) the base commercial lending rate of Collateral Agent as publicly announced to be in effect from time to time, as notified by the Collateral Agent to the Administrative Agent, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate (this rate of interest is determined from time to time by Collateral Agent as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by the Collateral Agent to any particular class or category of customers of Collateral Agent), (b) the sum of one half of one percent (0.50%) per annum and the Federal Funds Rate, and (c) the daily one month Eurodollar Rate (the “LIBOR” rate as published each Business Day in the Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, as published in another publication selected by Collateral Agent)) divided by a number equal to 1.00 minus the Reserve Percentage plus 100 basis points (1%), in each instance, as of such day. Any change in the Base Rate due to a change in any of the foregoing shall be effective on the effective date of such change in the “base commercial lending rate”, the Federal Funds Rate or the Eurodollar Rate for an Interest Period of one (1) month.

“Base Rate Loan” shall mean each Loan designated or deemed designated as such by the Initial Borrower or the Administrative Borrower at the time of the incurrence thereof or conversion thereto.

“Blocked Person” shall have the meaning provided in Section 9.24.

“Borrower” shall mean (i) Holdings prior to the Acquisition and the execution, delivery and effectiveness of the Affirmation Agreement by the Administrative Borrower and Access (in such capacity, the “Initial Borrower”), and (ii) each of the Administrative Borrower and Access, following the Acquisition and the execution, delivery and effectiveness of the Affirmation Agreement by the Administrative Borrower and Access.

5

“Borrowers” shall mean the Administrative Borrower and Access collectively, following the Acquisition and the execution, delivery and effectiveness of the Affirmation Agreement by the Administrative Borrower and Access.

“Borrowing” shall mean the borrowing of one Type of Loan of a single Tranche from all the Lenders having Commitments of the respective Tranche on a given date (or resulting from a conversion or conversions on such date) having in the case of Eurodollar Loans the same Interest Period, provided that Base Rate Loans incurred pursuant to Section 2.10(b) shall be considered part of the related Borrowing of Eurodollar Loans.

“Borrowing Base Certificate” shall mean a certificate in substantially the form of Exhibit L hereto duly executed by an Authorized Officer of the Administrative Borrower and delivered to the Collateral Agent and Administrative Agent, appropriately completed, by which such Authorized Officer shall certify to Collateral Agent and Administrative Agent the Formula Amount and calculation thereof as of the date of such certificate.

“Business Day” shall mean (i) for all purposes other than as covered by clause (ii) below, any day except Saturday, Sunday and any day which shall be in New York, New York or East Brunswick, NJ, a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, any day which is a Business Day described in clause (i) above and which is also a day for trading by and between banks in U.S. dollar deposits in the interbank Eurodollar market.

“Calculation Period” shall mean, with respect to any Permitted Acquisition or any other event expressly required to be calculated on a Pro Forma Basis pursuant to the terms of this Agreement, the Test Period most recently ended prior to the date of such Permitted Acquisition or other event for which financial statements have been delivered to the Lenders pursuant to Section 10.01(b) or (c), as applicable.

“Capital Expenditures” shall mean, with respect to any Person, all expenditures by such Person which should be capitalized in accordance with GAAP and, without duplication, the amount of Capitalized Lease Obligations incurred by such Person.

“Capitalized Lease Obligations” shall mean, with respect to any Person, all rental obligations of such Person which, under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at the amount thereof accounted for as indebtedness in accordance with such principles.

“Cash Dominion Event” shall mean (a) the failure of the Borrowers to maintain Undrawn Availability of at least $5,000,000 each day for five (5) consecutive days, or (b) an Event of Default has occurred and is continuing.

6

“Cash Equivalents” shall mean, as to any Person, (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition, (ii) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within six months from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s, (iii) Dollar denominated time deposits, certificates of deposit and bankers acceptances of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company having, a long-term unsecured debt rating of at least “A” or the equivalent thereof from S&P or “A2” or the equivalent thereof from Moody’s with maturities of not more than six months from the date of acquisition by such Person, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iii) above, (v) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P 1 or the equivalent thereof by Moody’s and in each case maturing not more than six months after the date of acquisition by such Person, (vi) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (v) above.

“Cash Management Accounts” means the bank accounts of each Credit Party maintained at one or more banks listed on Schedule XIV.

“Cash Management Bank” shall have the meaning provided in Section 10.21(a).

“Cash Management Liabilities” shall have the meaning provided in the definition of “Cash Management Products and Services.”

“Cash Management Products and Services” shall mean agreements or other arrangements under which Collateral Agent or any Lender or any Affiliate of Collateral Agent or a Lender provides any of the following products or services to the Borrowers: (a) credit cards; (b) credit card processing services; (c) debit cards and stored value cards; (d) commercial cards; (e) ACH transactions; and (f) cash management and treasury management services and products, including without limitation controlled disbursement accounts or services, lockboxes, automated clearinghouse transactions, overdrafts, interstate depository network services. The indebtedness, obligations and liabilities of each Borrower to the provider of any Cash Management Products and Services (including all obligations and liabilities owing to such provider in respect of any returned items deposited with such provider) (the “Cash Management Liabilities”) shall be “Obligations” hereunder and otherwise treated as Obligations for purposes of each of the Credit Documents.

“Cash Management Products and Services Reserves” means, as of any date of determination, the amount of reserves that the Collateral Agent has established (based upon the Collateral Agent’s reasonable determination of the related credit exposure) in respect of Cash Management Products and Services Reserves then provided or outstanding.

“CEA” shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from time to time, and any successor statute.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same has been amended and may hereafter be amended from time to time, 42 U.S.C. § 9601 et seq.

7

“CFTC” shall mean the Commodity Futures Trading Commission.

“Change in Law” shall have the meaning provided in Section 12.06(a).

“Change of Control” shall mean (i) Holdings shall at any time cease to own directly or indirectly 100% of the Equity Interests of the Parent, the Administrative Borrower, and Access (ii) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 50% on a fully diluted basis of the economic or voting interests in Holdings’ capital stock (other than any such person or group who is such a beneficial owner on the Closing Date), (iii) the Board of Directors of Holdings shall cease to consist of a majority of Continuing Directors or (iv) a “change of control” or similar event shall occur as provided in any Qualified Preferred Stock (or the documentation governing the same) or any other documents or agreements governing any material indebtedness of any of the Credit Parties.

“CIP Regulations” shall have the meaning provided in Section 13.13(a).

“Claims” shall have the meaning provided in the definition of “Environmental Claims”.

“Closing Date” shall mean the Business Day occurring on or after the Effective Date on which the initial Borrowing occurs.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor.

“Collateral” shall mean all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Security Document, including, without limitation, all Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged Properties, and all cash and Cash Equivalents delivered as collateral pursuant to Section 6.02 or 11.

“Collateral Agent” shall mean PNC Bank, National Association acting as collateral agent for the Secured Creditors pursuant to the Security Documents.

“Collective Bargaining Agreements” shall have the meaning provided in Section 7.05(v).

“Commitment” shall mean, for each Lender, such Lender’s “Commitment”, i.e. a Term Loan Commitment or a Revolving Loan Commitment, as shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 14.15, which in aggregate shall be equal to the applicable amount set forth on Schedule I.

“Commitment Commission” shall have the meaning provided in Section 4.01(a).

8

“Company” shall mean any corporation, limited liability company, partnership or other business entity (or the adjectival form thereof, where appropriate).

“Consolidated Current Assets” shall mean, at any time, the consolidated current assets of Holdings and its Subsidiaries at such time.

“Consolidated Current Liabilities” shall mean, at any time, the consolidated current liabilities of Holdings and its Subsidiaries at such time, but excluding the current portion of any Indebtedness under this Agreement and the current portion of any other long-term Indebtedness which would otherwise be included therein.

“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period (without giving effect to (x) any extraordinary gains, (y) any non-cash income, and (z) any gains or losses from sales of assets other than in the ordinary course of business) adjusted by adding thereto (in each case to the extent deducted in determining Consolidated Net Income for such period), without duplication, the amount of (i) total interest expense (inclusive of amortization of deferred financing fees and other original issue discount and banking fees, charges and commissions (e.g., letter of credit fees and commitment fees)) of Holdings and its Subsidiaries determined on a consolidated basis for such period, (ii) provision for taxes based on income and foreign withholding taxes for Holdings and its Subsidiaries determined on a consolidated basis for such period, (iii) all depreciation and amortization expense of Holdings and its Subsidiaries determined on a consolidated basis for such period, (iv) any fees, expenses or charges (other than depreciation or amortization expense as described in the preceding clause (iii)) actually incurred and related to one or more Permitted Acquisitions or Asset Sales, incurred prior to or on the date such Permitted Acquisitions or Asset Sales are consummated, terminated or abandoned, in an aggregate amount not to exceed 15% of Consolidated EBITDA for the Test Period ended as of the last day of such period (prior to giving effect to such add backs), (v) in the case of any period including the fiscal quarter of Holdings ending (i) December 31, 2015, the amount of all fees and expenses incurred in connection with the Transaction during such fiscal quarter and (ii) March 31, 2016, up to $250,000 of fees and expenses incurred in connection with the Transaction during such fiscal quarter (in each case, other than interest expense as described in the preceding clause (i)), (vi) any (A) extraordinary items reducing Consolidated Net Income for such period and (B) unusual or non-recurring items reducing Consolidated Net Income for such period, to the extent such addbacks have been approved in writing by the Administrative Agent, (vii) any non-cash items reducing Consolidated Net Income for such period, and (viii) non-cash accounting adjustments (including non-cash impairment charges) and the cumulative effect of changes in accounting principles. For the avoidance of doubt, it is understood and agreed that, to the extent any amounts are excluded from Consolidated Net Income by virtue of the proviso to the definition thereof contained herein, any add backs to Consolidated Net Income in determining Consolidated EBITDA as provided above shall be limited (or denied) in a fashion consistent with the proviso to the definition of Consolidated Net Income contained herein. Notwithstanding anything to the contrary contained above, for purposes of determining Consolidated EBITDA for any Test Period which ends prior to the first anniversary of the Closing Date, Consolidated EBITDA for all portions of such period occurring prior to the Closing Date shall be calculated in accordance with the definition of Test Period contained herein.

9

“Consolidated Indebtedness” shall mean, at any time, the sum of (without duplication) (i) all Indebtedness of Holdings and its Subsidiaries (on a consolidated basis) as would be required to be reflected as debt or Capitalized Lease Obligations on the liability side of a consolidated balance sheet of Holdings and its Subsidiaries in accordance with GAAP, (ii) all Indebtedness of Holdings and its Subsidiaries of the type described in clauses (ii), (vii) and (viii) of the definition of Indebtedness and (iii) all Contingent Obligations of Holdings and its Subsidiaries in respect of Indebtedness of any third Person of the type referred to in preceding clauses (i) and (ii); provided that (x) the aggregate amount available to be drawn (i.e., unfunded amounts) under all letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar obligations issued for the account of Holdings or any of its Subsidiaries (but excluding, for avoidance of doubt, all unpaid drawings or other matured monetary obligations owing in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar obligations) shall not be included in any determination of “Consolidated Indebtedness” and (y) the amount of Indebtedness in respect of the Interest Rate Protection Agreements and Other Hedging Agreements shall be at any time the unrealized net loss position, if any, of Holdings and/or its Subsidiaries thereunder on a marked-to-market basis determined no more than one month prior to such time.

“Consolidated Interest Expense” shall mean, for any period, (i) the total consolidated cash interest expense of Holdings and its Subsidiaries (including, without limitation, all commissions, discounts and other commitment and banking fees and charges (e.g., fees with respect to letters of credit, Interest Rate Protection Agreements and Other Hedging Agreements)) for such period, adjusted to exclude (to the extent same would otherwise be included in the calculation above in this clause (i)) the amortization of any deferred financing costs for such period, plus (ii) without duplication, (x) that portion of Capitalized Lease Obligations of Holdings and its Subsidiaries on a consolidated basis representing the interest factor for such period and (y) the “deemed interest expense” (i.e., the interest expense which would have been applicable if the respective obligations were structured as on-balance sheet financing arrangements) with respect to all Indebtedness of Holdings and its Subsidiaries of the type described in clause (viii) of the definition of Indebtedness contained herein (to the extent same does not arise from a financing arrangement constituting an operating lease) for such period. Notwithstanding anything to the contrary contained above, for purposes of determining the Fixed Charge Coverage Ratio, to the extent Consolidated Interest Expense is to be determined for any Test Period which ends prior to the first anniversary of the Closing Date, Consolidated Interest Expense for all portions of such period occurring prior to the Closing Date shall be calculated in accordance with the definition of Test Period contained herein.

“Consolidated Net Income” shall mean, for any period, the net income (or loss) of Holdings and its Subsidiaries determined on a consolidated basis for such period (taken as a single accounting period) in accordance with GAAP, provided that the following items shall be excluded in computing Consolidated Net Income (without duplication): (i) the net income (or loss) of any Person in which a Person or Persons other than Holdings and its Wholly-Owned Subsidiaries has an Equity Interest or Equity Interests to the extent of such Equity Interests held by Persons other than Holdings and its Wholly-Owned Subsidiaries in such Person, (ii) except for determinations expressly required to be made on a Pro Forma Basis, the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or all or substantially all of the property or assets of such Person are acquired by a Subsidiary and (iii) the net income of any Subsidiary to the extent that the declaration or payment of cash dividends or similar cash distributions by such Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary.

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“Consolidated Senior Secured Indebtedness” shall mean, at any time, the sum of all Consolidated Indebtedness which is secured by a Lien at such time.

“Contingent Obligation” shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of any other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

“Continuing Directors” shall mean the directors of Holdings on the Effective Date and each other director if such director’s nomination for election to the Board of Directors of Holdings is recommended or approved by a majority of the then Continuing Directors.

“Control Agreement” means a tri-party deposit account, securities account or commodities account control agreement by and among the applicable Credit Party, the Collateral Agent and the depository, securities intermediary or commodities intermediary, and each in form and substance reasonably satisfactory to the Collateral Agent and the Administrative Agent and in any event providing to the Collateral Agent “control” of such deposit account, securities or commodities account within the meaning of Articles 8 and 9 of the UCC.

“Covered Entity” shall mean each Borrower, its Affiliates and Subsidiaries, all Guarantors, pledgors of Collateral, all owners of the foregoing, and all brokers or other agents of each Borrower acting in any capacity in connection with the Obligations.

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“Credit Documents” shall mean this Agreement, the Subsidiaries Guaranty, each Security Document, Affirmation Agreement, the Intercompany Notes, each other subordination agreement relating to the Obligations and, after the execution and delivery thereof pursuant to the terms of this Agreement, each Note, any Lender-Provided Interest Rate Protection Agreement, any Lender-Provided Other Hedging Agreements and each other Security Document and all other agreements, documents, certificates and instruments executed and delivered to the Administrative Agent, the Collateral Agent or any Lender in their capacity as such by any Credit Party in connection therewith, including, without limitation, all letters for the payments of fees, guaranties and collateral documents.

“Credit Event” shall mean the making of any Loan or the issuance, amendment, extension or renewal of any Letter of Credit (other than any amendment, extension or renewal that does not increase the maximum Stated Amount of such Letter of Credit).

“Credit Party” shall mean Holdings, each Borrower and each Subsidiary Guarantor.

“Cure Amount” shall have the meaning provided in Section 12.

“Cure Right” shall have the meaning provided in Section 12.

“Customer” shall mean and include the account debtor with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property or perform any services provided, that with respect to any Receivable arising out of any contract between any Borrower and the United States, any state or any department, agency or instrumentality of any of them, “Customer” shall mean the state, department, agency or instrumentality that is the signatory party to the contract or contract right giving rise to such Receivable.

“Declined Proceeds” shall have the meaning assigned to such term in Section 6.02(l).

“Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

“Defaulting Lender” shall mean any Lender with respect to which a Lender Default is in effect.

“Dissolution Subsidiaries” shall mean each of STG Doha, LLC, STG Netherlands B.V., STG Ventures, LLC, STG Sentinel AFG, LLC and STG Sentinel, LLC.

“Dividend” shall mean, with respect to any Person, that such Person has declared or paid a dividend, distribution or returned any equity capital to its stockholders, partners or members or authorized or made any other distribution, payment or delivery of property (other than common Equity Interests of such Person) or cash to its stockholders, partners or members in their capacity as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for a consideration any shares of any class of its capital stock or any other Equity Interests outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock or any other Equity Interests of such Person outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests). Without limiting the foregoing, “Dividends” with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes.

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“Documents” shall mean, collectively, (i) the Credit Documents, (ii) the Acquisition Documents and (iii) the Refinancing Documents.

“Dollars” and the sign “$” shall each mean freely transferable lawful money of the United States.

“Domestic Subsidiary” of any Person shall mean any Subsidiary of such Person incorporated or organized in the United States or any State or territory thereof or the District of Columbia.

“Drawing” shall have the meaning provided in Section 3.05(b).

“Effective Date” shall have the meaning provided in Section 14.10.

“Eligibility Date” shall mean, with respect to each Credit Party and each Swap, the date on which this Agreement or any Credit Document becomes effective with respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be the effective date of such Swap if this Agreement or any Credit Document is then in effect with respect to such Credit Party, and otherwise it shall be the effective date of this Agreement and/or such Credit Document(s) to which such Credit Party is a party).

“Eligible Contract Participant” shall mean an “eligible contract participant” as defined in the CEA and regulations thereunder.

“Eligible Insured Foreign Receivable or Receivables” shall mean Receivables that meet the requirements of Eligible Receivables, except clause (f) of such definition, provided that such Receivables are credit insured (the insurance carrier, amount and terms of such insurance shall be reasonably acceptable to Collateral Agent and shall name Collateral Agent as beneficiary or loss payee, as applicable) or backstopped by a letter of credit.

“Eligible Receivables” shall mean and include, with respect to each Borrower, each Receivable of such Borrower arising in the Ordinary Course of Business and which Collateral Agent, in its Permitted Discretion shall deem to be an Eligible Receivable, based on such considerations as Collateral Agent may from time to time deem appropriate in its Permitted Discretion. A Receivable shall not be deemed eligible unless such Receivable is subject to Collateral Agent’s first priority perfected security interest and no other Lien (other than Permitted Liens), and is evidenced by an invoice or other documentary evidence satisfactory to Collateral Agent in its Permitted Discretion. In addition, no Receivable shall be an Eligible Receivable if:

(a)          it arises out of a sale made by any Borrower to an Affiliate of any Borrower or to a Person controlled by an Affiliate of any Borrower;

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(b)          it is due or unpaid more than ninety (90) days after the original invoice date or sixty (60) days after the original due date;

(c)          fifty percent (50%) or more of the Receivables from such Customer are ineligible due to subclause (b) above;

(d)          any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached in any material respect (except to the extent such covenant, representation, or warranty is already qualified by materiality in which case such covenant, representation or warranty shall be ineligible if such covenant, representation or warranty has been breached in any respect);

(e)          an Insolvency Event shall have occurred with respect to such Customer;

(f)          the sale is to a Customer outside the United States of America, unless the sale giving rise thereto is on letter of credit, guaranty or acceptance terms, in each case acceptable to Collateral Agent in its Permitted Discretion or such Receivable constitutes an Eligible Insured Foreign Receivable; provided, that the contracted-for performance of the services relating to such Receivable by such Customer at a location outside the United States of America shall not make such Receivable ineligible under this clause (f);

(g)         the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;

(h)         Collateral Agent believes, in its Permitted Discretion, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay;

(i)          the Customer is the United States, any state (to the extent such state has a law comparable to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) (the “Assignment of Claims Act”)) or any department, agency or instrumentality of the United States; provided, however, that this clause (i) shall not apply to amounts where the applicable Borrower has delivered to the Administrative Agent executed copies of all documentation necessary to assign such Borrower’s rights to payment of such Receivable to Collateral Agent pursuant to the Assignment of Claims Act (or, to the extent this Agreement provides a time period for delivery of such documentation, such time period has not yet expired);

(j)          the goods giving rise to such Receivable have not been delivered to and accepted by the Customer or the services giving rise to such Receivable have not been performed by the applicable Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale;

(k)         the Receivables of the Customer exceed a credit limit determined by Collateral Agent, in its Permitted Discretion, to the extent such Receivable exceeds such limit;

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(l)          the Receivable is subject to any offset, deduction, defense, dispute, credits or counterclaim (but such Receivable shall only be ineligible to the extent of such offset, deduction, defense or counterclaim), the Customer is also a creditor or supplier of a Borrower (unless a no-offset letter satisfactory to the Collateral Agent in its Permitted Discretion has been executed by such Customer and the relevant Borrower, or prior evidence of no-offset terms has been delivered to the Collateral Agent which is satisfactory to the Collateral Agent in its Permitted Discretion) or the Receivable is contingent in any respect or for any reason;

(m)        the applicable Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto;

(n)         any return, rejection or repossession of the merchandise has occurred or the rendition of services has been disputed;

(o)         such Receivable is not payable to a Borrower; or

(p)         such Receivable is not otherwise satisfactory to Collateral Agent in its Permitted Discretion.

“Eligible Transferee” shall mean and include a commercial bank, an insurance company, a finance company, a financial institution, any fund that invests in loans or any other “accredited investor” (as defined in Regulation D of the Securities Act), but in any event excluding Holdings and its Subsidiaries and Affiliates.

“Employee Benefit Plans” shall have the meaning provided in Section 7.05(i).

“Employment Agreements” shall have the meaning provided in Section 7.05(iii).

“Environmental Claims” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, notices of non-compliance or violation, investigations or proceedings (hereafter, “Claims”) relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law, including, without limitation, (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials.

“Environmental Law” shall mean any federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.

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“Equity Interests” of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interest in (however designated) equity of such Person, including any common stock, preferred stock, any limited or general partnership interest and any limited liability company membership interest.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

“ERISA Affiliate” shall mean all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with any Borrower and/or Holdings, are treated as a single employer under Section 414 of the Code.

“Eurodollar Loan” shall mean each Loan designated as such by the Initial Borrower or the Administrative Borrower at the time of the incurrence thereof or conversion thereto.

“Eurodollar Rate” shall mean for any Eurodollar Loan for the then current Interest Period relating thereto, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (a) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by the Administrative Agent which has been approved by the Intercontinental Exchange Benchmark Administration as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (a “LIBOR Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount comparable to such Loan and having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any LIBOR Alternate Source, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error), provided that if the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page) or the rate that appears on a LIBOR Alternate Source, as applicable, shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement), by (b) a number equal 1.00 minus the Reserve Percentage. The Eurodollar Rate may also be expressed by the following formula:

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	Average of London interbank offered rates quoted by Bloomberg or appropriate successor as shown on
Eurodollar Rate =	Bloomberg Page BBAM1 1.00 – Reserve Percentage

The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. The Administrative Agent shall give reasonably prompt notice to the Administrative Borrower of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

“Event of Default” shall have the meaning provided in Section 12.

“Excess Cash Flow” shall mean, for any period, the remainder of (a) the sum of, without duplication, (i) Adjusted Consolidated Net Income for such period and (ii) the decrease, if any, in Adjusted Consolidated Working Capital from the first day to the last day of such period, minus (b) the sum of, without duplication, (i) the aggregate amount of all Capital Expenditures made by Holdings and its Subsidiaries during such period (other than Capital Expenditures to the extent financed with equity proceeds, Equity Interests, asset sale proceeds, insurance proceeds or Indebtedness (other than Revolving Loans)), (ii) the aggregate amount of permanent principal payments of Indebtedness for borrowed money of Holdings and its Subsidiaries and the permanent repayment of the principal component of Capitalized Lease Obligations of Holdings and its Subsidiaries during such period (other than (1) repayments made pursuant to the Refinancing, (2) repayments made with the proceeds of asset sales, sales or issuances of Equity Interests, insurance or Indebtedness and (3) payments of Loans and/or other Obligations, provided that repayments of Loans shall be deducted in determining Excess Cash Flow to the extent such repayments were (x) required as a result of a Scheduled Repayment pursuant to Section 6.02(b) or (y) made as a voluntary prepayment pursuant to Section 6.01 with internally generated funds (but in the case of a voluntary prepayment of Revolving Loans, only to the extent accompanied by a voluntary reduction to the Total Revolving Loan Commitment in an amount equal to such prepayment)), (iii) the increase, if any, in Adjusted Consolidated Working Capital from the first day to the last day of such period and (iv) the aggregate amount of all cash payments made in respect of all Permitted Acquisitions consummated by Holdings and its Subsidiaries during such period (other than any such payments to the extent financed with equity proceeds, asset sale proceeds, insurance proceeds or Indebtedness). No payment of Excess Cash Flow under Section 6.02(f) shall be subject to the Prepayment Premium under Section 5.02, unless such payment is in connection with an acceleration of the Loans pursuant to Section 12 (or solely to the extent the action giving rise to such payment constitutes a Default hereunder).

“Excess Cash Payment Date” shall mean the date occurring 110 days after the last day of each fiscal year of Holdings (commencing with the fiscal year of Holdings ended December 31, 2016).

“Excess Cash Payment Period” shall mean (i) with respect to the repayment required on the first Excess Cash Payment Date, the period from the Closing Date to the last day of Holdings’ fiscal quarter ending closest to December 31, 2016 (taken as one accounting period), and (ii) with respect to the repayment required on each successive Excess Cash Payment Date, the immediately preceding fiscal year of Holdings.

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“Excess Cash Percentage” shall mean, at any time with respect to an Excess Cash Payment Period, 50%; provided that if the Senior Secured Leverage Ratio at the end of the applicable Excess Cash Payment Period is less than or equal to 2.50 to 1.00 (as set forth in the officer’s certificate delivered pursuant to Section 10.01(g) for the fiscal quarter or fiscal year, as the case may be, of Holdings then last ended for which financial statements are available), such percentage shall be 0%.

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

“Excluded Accounts” means (a) any payroll account and other employee wage and benefit accounts, (b) any zero balance account and (c) tax (including any sales tax accounts), escrow accounts and fiduciary or trust accounts.

“Excluded Hedge Liability or Liabilities” shall mean, with respect to each Credit Party, each of its Swap Obligations if, and only to the extent that, all or any portion of this Agreement or any Credit Document that relates to such Swap Obligation is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, solely by virtue of such Credit Party’s failure to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap. Notwithstanding anything to the contrary contained in the foregoing or in any other provision of this Agreement or any Credit Document, the foregoing is subject to the following provisos: (a) if a Swap Obligation arises under a master agreement governing more than one Swap, this definition shall apply only to the portion of such Swap Obligation that is attributable to Swaps for which such guaranty or security interest is or becomes illegal under the CEA, or any rule, regulations or order of the CFTC, solely as a result of the failure by such Credit Party for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap; (b) if a guarantee of a Swap Obligation would cause such obligation to be an Excluded Hedge Liability but the grant of a security interest would not cause such obligation to be an Excluded Hedge Liability, such Swap Obligation shall constitute an Excluded Hedge Liability for purposes of the guaranty but not for purposes of the grant of the security interest; and (c) if there is more than one Credit Party executing this Agreement or the Credit Documents and a Swap Obligation would be an Excluded Hedge Liability with respect to one or more of such Persons, but not all of them, the definition of Excluded Hedge Liability or Liabilities with respect to each such Person shall only be deemed applicable to (i) the particular Swap Obligations that constitute Excluded Hedge Liabilities with respect to such Person, and (ii) the particular Person with respect to which such Swap Obligations constitute Excluded Hedge Liabilities.

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“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (A) Taxes imposed on or measured by net income (however denominated) franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (B) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by a Borrower under Section 2.13) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 6.04, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (C) Taxes attributable to such Recipient’s failure to comply with Section 6.04(b)-(e) and (D) any U.S. federal withholding Taxes imposed under FATCA.

“Existing Credit Agreement” shall mean that certain Credit Agreement, dated as of November 26, 2012, among the Administrative Borrower, as borrower, STG Group, Inc., and Bank of America, NA, as lender, and the other lenders party thereto (as amended through and including the Closing Date).

“Existing Indebtedness” shall have the meaning provided in Section 7.07(c).

“Existing Indebtedness Agreements” shall have the meaning provided in Section 7.05.

“Facing Fee” shall have the meaning provided in Section 4.01(c).

“Fair Market Value” shall mean, with respect to any asset (including any Equity Interests of any Person), the price at which a willing buyer, not an Affiliate of the seller, and a willing seller who does not have to sell, would agree to purchase and sell such asset, as determined in good faith by the board of directors or other governing body or, pursuant to a specific delegation of authority by such board of directors or governing body, a designated senior executive officer, of Holdings, or the Subsidiary of Holdings selling such asset.

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any applicable intergovernmental agreement entered into thereunder (and any foreign legislation implemented to give effect to such intergovernmental agreements) and any agreement entered into pursuant to Section 1471(b)(1) of the Code.

“Federal Funds Rate” shall mean for any day the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by the Administrative Agent (an “Alternate Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error)); provided however, that if such day is not a Business Day, the Federal Funds Rate for such day shall be the “open” rate on the immediately preceding Business Day. If and when the Federal Funds Rate changes, the rate of interest with respect to any advance to which the Federal Funds Rate applies will change automatically without notice to the Administrative Borrower, effective on the date of any such change.

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“Fees” shall mean all amounts payable pursuant to or referred to in the Credit Documents.

“Financial Performance Covenants” shall have the meaning provided in Section 12.

“First Period” shall have the meaning provided in Section 5.02(a)(i).

“Fixed Charge Coverage Ratio” shall mean, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Fixed Charges for such period.

“Fixed Charges” shall mean, for any period, the sum, without duplication, of (i) Consolidated Interest Expense for such period, (ii) the scheduled principal amount of all amortization payments on all Indebtedness of Holdings and its Subsidiaries for such period (including the principal component of all Capitalized Lease Obligations but excluding payments pursuant to the Refinancing) as determined on the first day of such period (or, with respect to a given issue of Indebtedness incurred thereafter, on the date of the incurrence thereof), (iii) the amount of all cash payments made by Holdings and its Subsidiaries in respect of income taxes or income tax liabilities during such period (net of cash tax refunds received by Holdings and its Subsidiaries during such period and excluding taxes related to asset sales not in the ordinary course of business), (iv) the aggregate amount of all Capital Expenditures made by Holdings and its Subsidiaries during such period (other than Capital Expenditures, to the extent financed with equity proceeds, asset sale proceeds, insurance proceeds or Indebtedness (other than Revolving Loans)) and (v) the aggregate amount of all cash Dividends (including stock repurchases and redemptions) paid by Holdings in accordance with this Agreement for such period. Notwithstanding anything to the contrary contained above, for purposes of determining the Fixed Charge Coverage Ratio, to the extent Fixed Charges are to be determined for any Test Period which ends prior to the first anniversary of the Closing Date, Fixed Charges for all portions of such period occurring prior to the Closing Date shall be calculated in accordance with the definition of Test Period contained herein.

“Flood Laws” shall mean all applicable laws relating to policies and procedures that address requirements placed on federally regulated lenders under the National Flood Insurance Reform Act of 1994 and other applicable laws related thereto.

“Foreign Pension Plan” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States by Holdings or any one or more of its Subsidiaries primarily for the benefit of employees of Holdings or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.

“Foreign Subsidiary” of any Person shall mean any Subsidiary of such Person that is not a Domestic Subsidiary.

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“Formula Amount” shall have the meaning set forth in Section 2.01(c) hereof.

“Fourth Period” shall have the meaning provided in Section 5.02(a)(iv).

“GAAP” shall mean generally accepted accounting principles in the United States as in effect from time to time; provided that determinations in accordance with GAAP for purposes of Sections 6.02, 10.16 and 11, including defined terms as used therein, and for all purposes of determining the Financial Performance Covenants, are subject (to the extent provided therein) to Section 14.07(a).

“Governmental Authority” shall mean the government of the United States, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guaranteed Creditors” shall mean and include each of the Administrative Agent, the Collateral Agent, the Issuing Lenders, the Lenders and each party (other than any Credit Party) party to an Interest Rate Protection Agreement or Other Hedging Agreement to the extent such party constitutes a Secured Creditor under the Security Documents.

“Guaranteed Obligations” shall mean (i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of the principal and interest on each Note issued by, and all Loans made to, each Borrower under this Agreement and all reimbursement obligations and Unpaid Drawings with respect to Letters of Credit, together with all the other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), indebtedness and liabilities (including, without limitation, indemnities, fees and interest (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for herein, whether or not such interest is an allowed claim in any such proceeding) thereon) of a Borrower to the Lenders, the Issuing Lenders, the Administrative Agent and the Collateral Agent now existing or hereafter incurred under, arising out of or in connection with this Agreement and each other Credit Document to which a Borrower is a party and the due performance and compliance by the applicable Borrower with all the terms, conditions and agreements contained in the Credit Agreement and in each such other Credit Document and (ii) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for herein, whether or not such interest is an allowed claim in any such proceeding) of a Borrower owing under any Interest Rate Protection Agreement or Other Hedging Agreement entered into by a Borrower with any Lender or any affiliate thereof (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason) so long as such Lender or affiliate participates in such Interest Rate Protection Agreement or Other Hedging Agreement and their subsequent assigns, if any, whether now in existence or hereafter arising, and the due performance and compliance with all terms, conditions and agreements contained therein.

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“Guarantor” shall mean Holdings and each Subsidiary Guarantor.

“Guaranty” shall mean each of the Holdings Guaranty and the Subsidiaries Guaranty.

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

“Hedge Agreements Reserves” means, as of any date of determination, the amount of any reserves that Collateral Agent has established (based upon Collateral Agent’s reasonable determination of the related Hedge Liabilities) in respect of Lender-Provided Interest Rate Protection Agreement and Lender-Provided Other Hedging Agreements then provided or outstanding.

“Hedge Liabilities” shall mean collectively, the Interest Rate Hedge Liabilities and the Other Hedging Agreement Liabilities.

“Holdings” shall have the meaning provided in the first paragraph of this Agreement.

“Holdings Common Stock” shall have the meaning provided in Section 9.13(a).

“Holdings Guaranty” shall mean the guaranty of Holdings pursuant to Section 15.

“Holdings Materials” shall have the meaning provided in Section 10.01.

“Incremental Amendment” shall have the meaning provided in Section 2.01(b)(iii).

“Incremental Loan” shall have the meaning provided in Section 2.01(b)(i).

“Incremental Loan Commitment” shall mean a Commitment to make an Incremental Loan.

“Incremental Note” shall have the meaning provided in Section 2.05(a).

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“Indebtedness” shall mean, as to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn or paid under all letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of such Person and all unpaid drawings and unreimbursed payments in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations, (iii) all indebtedness of the types described in clause (i), (ii), (iv), (v), (vi), (vii) or (viii) of this definition secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided that, if the Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the Fair Market Value of the property to which such Lien relates), (iv) all Capitalized Lease Obligations of such Person, (v) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person, (vii) all obligations under any Interest Rate Protection Agreement, any Other Hedging Agreement or under any similar type of agreement and (viii) all Off-Balance Sheet Liabilities of such Person. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, Indebtedness shall not include trade payables, accrued expenses and deferred tax and other credits incurred by any Person in accordance with customary practices and in the ordinary course of business of such Person.

“Indemnified Person” shall have the meaning provided in Section 14.01(a)(iii).

“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Credit Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Initial Borrower” shall have the meaning provided in the definition of “Borrower.”

“Insolvency Event” shall mean, with respect to any Person, including without limitation any Lender, such Person or such Person’s direct or indirect parent company (a) becomes the subject of a bankruptcy or insolvency proceeding (including any proceeding under Title 11 of the United States Code), or regulatory restrictions, (b) has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it or has called a meeting of its creditors, (c) admits in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (d) with respect to a Lender, such Lender is unable to perform hereunder due to the application of applicable law, or (e) in the good faith determination of Administrative Agent or Collateral Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment of a type described in clauses (a) or (b), provided that an Insolvency Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by a Governmental Authority or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Intercompany Debt” shall mean any Indebtedness, payables or other obligations, whether now existing or hereafter incurred, owed by Holdings or any Subsidiary of Holdings to Holdings or any other Subsidiary of Holdings.

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“Intercompany Loans” shall have the meaning provided in Section 11.05(viii).

“Intercompany Note” shall mean a promissory note evidencing Intercompany Loans, duly executed and delivered substantially in the form of Exhibit K (or such other form as shall be satisfactory to the Administrative Agent in its sole discretion), with blanks completed in conformity herewith.

“Interest Determination Date” shall mean, with respect to any Loan, the second Business Day prior to the commencement of any Interest Period relating to such Loan.

“Interest Period” shall have the meaning provided in Section 2.09.

“Interest Rate Hedge Liabilities” shall have the meaning assigned in the definition of Lender-Provided Interest Rate Protection Agreement.

“Interest Rate Protection Agreement” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement or other similar agreement or arrangement.

“Inventory” shall mean and include, as to each Borrower, all such Borrower’s inventory (as defined in Article 9 of the Uniform Commercial Code) and all of such Borrower’s goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Borrower’s business or used in selling or furnishing such goods, merchandise and other personal property, and all Documents (as defined in the Security Agreement).

“Investments” shall have the meaning provided in Section 11.05.

“ISP98 Rules” shall have the meaning provided in Section 3.01(a).

“Issuing Lender” shall mean PNC Bank, National Association (except as otherwise provided in Section 13.09) and any other Lender reasonably acceptable to the Administrative Agent and Collateral Agent which agrees to issue Letters of Credit hereunder. Any Issuing Lender may, in its discretion, arrange for one or more Letters of Credit to be issued by one or more Affiliates of such Issuing Lender (and such Affiliate shall be deemed to be an “Issuing Lender” for all purposes of the Credit Documents).

“L/C Supportable Obligations” shall mean (i) obligations of the Parent or any of its Subsidiaries with respect to workers compensation, surety bonds and other similar statutory obligations and (ii) such other obligations of the Parent or any of its Subsidiaries as are reasonably acceptable to the respective Issuing Lender and otherwise permitted to exist pursuant to the terms of this Agreement (other than obligations in respect of (y) any other Indebtedness or other obligations that are subordinated in right of payment to the Obligations and (z) any Equity Interests).

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“Lead Arranger” shall mean MC ADMIN CO LLC in its capacity as Lead Arranger and Book Runner, and any successor thereto.

“Leaseholds” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.

“Lender” shall mean each Person that becomes a “Lender” hereunder on the Effective Date or pursuant to Section 2.13 or 14.04(b), in each case as evidenced in the Register maintained by the Administrative Agent pursuant to Section 14.15. For the purpose of any Credit Document which provides for the granting of a security interest or other Lien to the Collateral Agent for the benefit of Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such Obligation (specifically including any Hedge Liabilities and any Cash Management Liabilities) is owed.

“Lender Default” shall mean, as to any RL Lender, (i) the wrongful refusal (which has not been retracted) of such RL Lender or the failure of such RL Lender to make available its portion of any Borrowing or to fund its portion of any unreimbursed payment with respect to a Letter of Credit pursuant to Section 3.04(c) or 3.05, (ii) such RL Lender having been deemed insolvent or having become the subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory authority, or (iii) such RL Lender having notified the Administrative Agent, any Issuing Lender and/or any Credit Party (x) that it does not intend to comply with its obligations under Section 2.01(c) or in circumstances where such non-compliance would constitute a breach of such RL Lender’s obligations under the respective Section or (y) of the events described in preceding clause (ii); provided that, for purposes of (and only for purposes of) Section 3.03(b), Section 6.02(k) and any documentation entered into pursuant to the Letter of Credit Back-Stop Arrangements (and the term “Defaulting Lender” as used therein), the term “Lender Default” shall also include, as to any RL Lender, (i) any Affiliate of such RL Lender that has “control” (within the meaning provided in the definition of “Affiliate”) of such RL Lender having been deemed insolvent or having become the subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory authority, (ii) any previously cured “Lender Default” of such RL Lender under this Agreement, unless such Lender Default has ceased to exist for a period of at least 90 consecutive days, (iii) any default by such RL Lender with respect to its obligations under any other credit facility to which it is a party and which any Issuing Lender, Collateral Agent, or the Administrative Agent believes in good faith has occurred and is continuing, and (iv) the failure of such RL Lender to make available its portion of any Borrowing or to fund its portion of any unreimbursed payment with respect to a Letter of Credit pursuant to Section 3.04(c) or 3.05 within one (1) Business Day of the date (x) PNC Bank (in its capacity as a Lender) or (y) RL Lenders constituting the Majority Lenders with Revolving Loan Commitments has or have, as applicable, funded its or their portion thereof.

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“Lender-Provided Interest Rate Protection Agreement” shall mean an Interest Rate Protection Agreement which is provided by any Lender and for which such Lender confirms to Collateral Agent and the Administrative Agent in writing prior to the execution thereof that it:  (a) is documented in a standard International Swap Dealers Association, Inc. Master Agreement or another reasonable and customary manner; (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner; and (c) is entered into for hedging (rather than speculative) purposes. The liabilities owing to the provider of any Lender-Provided Interest Rate Protection Agreement (the “Interest Rate Hedge Liabilities”) by any Borrower, Guarantor, or Subsidiary that is party to such Lender-Provided Interest Rate Protection Agreement shall, for purposes of this Agreement and all Credit Documents be “Obligations” of such Person and of each other Borrower and Guarantor, be guaranteed obligations under any Guaranty and secured obligations under any Security Document, as applicable, and otherwise treated as Obligations for purposes of the Credit Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. The Liens securing the Interest Rate Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Credit Documents.

“Lender-Provided Other Hedging Agreement” shall mean an Other Hedging Agreement which is provided by any Lender and for which such Lender confirms to Collateral Agent and the Administrative Agent in writing prior to the execution thereof that it:  (a) is documented in a standard International Swap Dealers Association, Inc. Master Agreement or another reasonable and customary manner; (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner; and (c) is entered into for hedging (rather than speculative) purposes. The liabilities owing to the provider of any Lender-Provided Other Hedging Agreement (the “Other Hedge Liabilities”) by any Credit Party or Subsidiary that is party to such Lender-Provided Other Hedging Agreement shall, for purposes of this Agreement and all Credit Documents be “Obligations” of such Person and of each other Credit Party, be guaranteed obligations under any Guaranty and secured obligations under any Security Document, as applicable, and otherwise treated as Obligations for purposes of the Credit Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. The Liens securing the Other Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Credit Documents.

“Letter of Credit” shall have the meaning provided in Section 3.01(a).

“Letter of Credit Application” shall have the meaning provided in Section 3.03(a).

“Letter of Credit Back-Stop Arrangements” shall have the meaning provided in Section 3.03(b).

“Letter of Credit Borrowing” shall have the meaning provided in Section 3.04(d).

“Letter of Credit Fee” shall have the meaning provided in Section 4.01(b).

“Letter of Credit Outstandings” shall mean, at any time, the sum of (i) the Stated Amount of all outstanding Letters of Credit at such time and (ii) the aggregate amount of all Unpaid Drawings in respect of all Letters of Credit at such time.

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).

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“Lien Waiver Agreement” shall mean an agreement which is executed in favor of Collateral Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time in form and substance satisfactory to Administrative Agent and Collateral Agent.

“Loan” shall mean each Term Loan, each Revolving Loan and each Incremental Loan.

“Majority Lenders” of any Tranche shall mean those Non-Defaulting Lenders which would constitute the Required Lenders under, and as defined in, this Agreement if all outstanding Obligations of the other Tranche under this Agreement were repaid in full and all Commitments with respect thereto were terminated.

“Margin Stock” shall have the meaning provided in Regulation U.

“Material Adverse Effect” shall mean (i) a material adverse effect on the business, operations, property, assets, liabilities, or condition (financial or otherwise) of any Borrower or Holdings and its Subsidiaries taken as a whole or (ii) a material adverse effect (x) on the rights or remedies of the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other Credit Document or (y) on the ability of any Credit Party to perform its obligations hereunder or under any other Credit Document.

“Material Contract” means any contract, or group of related contracts, which represent 5% or greater of the consolidated revenues of Holdings (i) for the most recently ended fiscal year, (ii) for the most recently ended four fiscal quarter period or (iii) in the budget for the current fiscal year delivered pursuant to Section 10.01(f).

“Maturity Date” shall mean, with respect to the relevant Tranche of Loans, the Term Loan Maturity Date or the Revolving Loan Maturity Date, as the case may be.

“Maximum Rate” shall have the meaning provided in Section 14.20.

“MC Admin” shall mean MC Admin Co LLC, in its individual capacity, and any successor corporation thereto by merger, consolidation or otherwise.

“MC Released Claims” shall have the meaning provided in Section 14.01(c).

“MC Releasees” shall have the meaning provided in Section 14.01(c).

“Minimum Borrowing Amount” shall mean, for Revolving Loans, $100,000.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Mortgage” shall mean a mortgage, leasehold mortgage, deed of trust, leasehold deed of trust, deed to secure debt, leasehold deed to secure debt or similar security instrument.

“Mortgage Policy” shall mean a Lender’s title insurance policy (Form T-2).

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“Mortgaged Property” shall mean any Real Property owned or leased by Holdings or any of its Subsidiaries which is encumbered (or required to be encumbered) by a Mortgage pursuant to the terms hereof.

“Multiemployer Plan” shall mean any “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate makes, is making or is obligated to make contributions or has made or been obligated to make contributions during the preceding 5 years.

“NAIC” shall mean the National Association of Insurance Commissioners.

“Necessary Authorizations” shall mean all material authorizations, consents, permits, approvals, waivers, licenses, and exemptions from, and all filings and registrations with, and all reports to, any Governmental Authority whether federal, state, local, and all agencies thereof, which are required for the transactions contemplated by the Credit Documents and necessary to the conduct of the businesses and the ownership (or lease) of the properties and assets of the Credit Parties.

“Net Cash Proceeds” shall mean for any event requiring a reduction of the Total Revolving Loan Commitment and/or repayment of Term Loans pursuant to Section 6.02, as the case may be, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) received from any such event.

“Net Sale Proceeds” shall mean for any sale or other disposition of assets, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such sale or other disposition of assets, net of (i) reasonable transaction costs (including, without limitation, any underwriting, brokerage or other customary selling commissions, reasonable legal, advisory and other fees and expenses (including title and recording expenses), associated therewith and sales, VAT and transfer taxes arising therefrom), (ii) payments of unassumed liabilities relating to the assets sold or otherwise disposed of at the time of, or within 30 days after, the date of such sale or other disposition, (iii) the amount of such gross cash proceeds required to be used to permanently repay any Indebtedness (other than Indebtedness of the Lenders pursuant to this Agreement) which is secured by the respective assets which were sold or otherwise disposed of, and (iv) the estimated net marginal increase in income taxes which will be payable by Holdings’ consolidated group or any Subsidiary of Holdings with respect to the fiscal year of Holdings in which the sale or other disposition occurs as a result of such sale or other disposition; provided, however, that such gross proceeds shall not include any portion of such gross cash proceeds which Holdings determines in good faith should be reserved for post-closing adjustments (to the extent Holdings delivers to the Lenders a certificate signed by an Authorized Officer as to such determination), it being understood and agreed that on the day that all such post-closing adjustments have been determined (which shall not be later than six months following the date of the respective asset sale), the amount (if any) by which the reserved amount in respect of such sale or disposition exceeds the actual post-closing adjustments payable by Holdings or any of its Subsidiaries shall constitute Net Sale Proceeds on such date received by Holdings and/or any of its Subsidiaries from such sale or other disposition.

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“Non-Compete Agreements” shall have the meaning provided in Section 7.05(iv).

“Non-Defaulting Lender” and “Non-Defaulting RL Lender” shall mean and include each Lender or RL Lender, as the case may be, other than a Defaulting Lender.

“Non-Qualifying Party” shall mean any Credit Party that on the Eligibility Date fails for any reason to qualify as an Eligible Contract Participant.

“Non-Wholly Owned Subsidiary” shall mean, as to any Person, each Subsidiary of such Person which is not a Wholly-Owned Subsidiary of such Person.

“Note” shall mean each Term Note, each Revolving Note, and each Incremental Note.

“Notice of Borrowing” shall have the meaning provided in Section 2.03(a).

“Notice of Conversion/Continuation” shall have the meaning provided in Section 2.06.

“Notice Office” shall mean the office of the Administrative Agent located at 2200 Atlantic Street, 5th Floor, Stamford CT 06902, Attention: Jonathan Tunis and Purvang Desai or such other office or person as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

“Obligations” shall mean all amounts owing to the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender pursuant to the terms of this Agreement or any other Credit Document including any Cash Management Products and Services, Lender-Provided Interest Rate Protection Agreement or Lender-Provided Other Hedging Agreements (including all interest which accrues after the commencement of any case or proceeding in bankruptcy after the insolvency of, or for the reorganization of Holdings or any of its Subsidiaries, whether or not allowed in such case or proceeding); provided that the aggregate amount of Lender-Provided Interest Rate Protection Agreement and Lender-Provided Other Hedging Agreements included in the Obligations shall not exceed $1,000,000 in the aggregate at any time.

“OFAC” shall mean the U.S. Treasury Department’s Office of Foreign Assets Control.

“Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactions that do not create a liability on the balance sheet of such Person, (iii) any obligation under a Synthetic Lease or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.

“OID” shall have the meaning assigned in Section 2.01(b)(ii).

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“Ordinary Course of Business” shall mean, with respect to Credit Party, the ordinary course of such Credit Party’s business as conducted on the Closing Date or any business that is reasonably related, similar, complementary, ancillary to or a reasonable extension, development or expansion of its business.

“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document).

“Other Hedge Liabilities” shall have the meaning assigned in the definition of Lender-Provided Other Hedging Agreements.

“Other Hedging Agreements” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar arrangements, or arrangements designed to protect against fluctuations in currency values or commodity prices.

“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.13).

“Parent” shall have the meaning provided in the first paragraph of this Agreement.

“Participant” shall have the meaning provided in Section 3.04(a).

“Participant Register” shall have the meaning provided in Section 14.04(e).

“Payment Office” shall mean the office of the Administrative Agent located at 2200 Atlantic Street, 5th Floor, Stamford CT 06902 or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

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“Permitted Acquisition” shall mean the acquisition by the Parent (or a Wholly-Owned Domestic Subsidiary of the Parent which is a Credit Party) of an Acquired Entity or Business (including by way of merger of such Acquired Entity or Business with and into Parent (so long as the Parent is the surviving corporation) or a Wholly-Owned Domestic Subsidiary of Parent which is a Credit Party (so long as the Credit Party is the surviving corporation)), provided that (in each case) (A) the consideration paid or to be paid by the Parent or such Wholly-Owned Domestic Subsidiary consists solely of cash (including proceeds of Revolving Loans), Holdings Common Stock, Qualified Preferred Stock, the issuance or incurrence of Indebtedness otherwise permitted by Section 11.04 and the assumption/acquisition of any Indebtedness (calculated at face value) which is permitted to remain outstanding in accordance with the requirements of Section 11.04, (B) in the case of the acquisition of 100% of the Equity Interests of any Acquired Entity or Business (including by way of merger), such Acquired Entity or Business shall own no Equity Interests of any other Person unless either (x) such Acquired Entity or Business owns 100% of the Equity Interests of such other Person or (y) if such Acquired Entity or Business owns Equity Interests in any other Person which is a Non-Wholly Owned Subsidiary of such Acquired Entity or Business, (1) such Acquired Entity or Business shall not have been created or established in contemplation of, or for purposes of, the respective Permitted Acquisition, and (2) any such Non-Wholly Owned Subsidiary of the Acquired Entity or Business shall have been a Non-Wholly Owned Subsidiary of such Acquired Entity or Business prior to the date of the respective Permitted Acquisition and shall not have been created or established in contemplation thereof, (C) all of the business, division or product line acquired pursuant to the respective Permitted Acquisition, or the business of the Person acquired pursuant to the respective Permitted Acquisition and its Subsidiaries taken as a whole, is in the United States (provided, that the contracted-for performance of services by a Person may occur at a location outside the United States of America, to the extent either (i) the Customer in respect of such services is the United States, any state or any department, agency or instrumentality of any of them or (ii) the Customer in respect of such services is disclosed in advance to Administrative Agent, and such Customer(s) are satisfactory to Administrative Agent), (D) the Acquired Entity or Business acquired pursuant to the respective Permitted Acquisition is in a business permitted by Section 11.15 and (E) all requirements of Sections 10.16, 11.02 and 11.16 applicable to Permitted Acquisitions are satisfied. Notwithstanding anything to the contrary contained in the immediately preceding sentence, an acquisition which does not otherwise meet the requirements set forth above in the definition of “Permitted Acquisition” shall constitute a Permitted Acquisition if, and to the extent, the Required Lenders agree in writing, prior to the consummation thereof, that such acquisition shall constitute a Permitted Acquisition for purposes of this Agreement.

“Permitted Acquisition Basket Amount” shall mean $75,000,000 during the term of this Agreement.

“Permitted Cure Securities” shall mean any Holdings Common Stock issued pursuant to the Cure Right.

“Permitted Discretion” shall mean, with respect to any Person, a determination or judgment made by such Person in the exercise of reasonable (in the business of secured asset-based lending) credit or business judgment and in good faith.

“Permitted Encumbrance” shall mean, with respect to any Mortgaged Property, such exceptions to title as are set forth in the Mortgage Policy delivered with respect thereto, all of which exceptions must be acceptable to the Administrative Agent in its reasonable discretion.

“Permitted Liens” shall have the meaning provided in Section 11.01.

“Person” shall mean any individual, partnership, joint venture, firm, corporation, association, limited liability company, trust or other enterprise or any Governmental Authority.

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“Plan” shall mean any plan as defined in Section 3(3) of ERISA , which is contributed to by any Borrower or any ERISA Affiliate or any such plan to which any Borrower or an ERISA Affiliate is required to contribute (other than a Multiemployer Plan).

“Platform” shall have the meaning assigned in Section 10.01.

“Pledge Agreement” shall have the meaning provided in Section 7.11.

“Pledge Agreement Collateral” shall mean all “Collateral” as defined in the Pledge Agreement.

“Pledgee” shall have the meaning provided in the Pledge Agreement.

“PNC Bank” shall have the meaning assigned in the first paragraph of this Agreement.

“Post-Closing Period” shall have the meaning assigned in Section 10.16(a).

“Preferred Equity”, as applied to the Equity Interests of any Person, means Equity Interests of such Person (other than common Equity Interests of such Person) of any class or classes (however designed) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Equity Interests of any other class of such Person, and shall include any Qualified Preferred Stock.

“Prepayment Premium” shall have the meaning provided in Section 5.02(a).

“primary obligations” shall have the meaning provided in the definition of “Contingent Obligation”.

“primary obligor” shall have the meaning provided in the definition of “Contingent Obligation”.

“Pro Forma Basis” shall mean, in connection with any calculation of compliance with any financial covenant or financial term, the calculation thereof after giving effect on a pro forma basis to (x) the incurrence of any Indebtedness (other than revolving Indebtedness, except to the extent same is incurred to refinance other outstanding Indebtedness or to finance a Permitted Acquisition) after the first day of the relevant Calculation Period or Test Period, as the case may be, as if such Indebtedness had been incurred (and the proceeds thereof applied) on the first day of such Test Period or Calculation Period, as the case may be, (y) the permanent repayment of any Indebtedness (other than revolving Indebtedness, except to the extent accompanied by a corresponding permanent commitment reduction) after the first day of the relevant Test Period or Calculation Period, as the case may be, as if such Indebtedness had been retired or repaid on the first day of such Test Period or Calculation Period, as the case may be, and (z) any Permitted Acquisition then being consummated as well as any other Permitted Acquisition if consummated after the first day of the relevant Test Period or Calculation Period, as the case may be, and on or prior to the date of the respective Permitted Acquisition then being effected, with the following rules to apply in connection therewith:

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(i)          all Indebtedness (x) (other than revolving Indebtedness, except to the extent same is incurred to refinance other outstanding Indebtedness or to finance Permitted Acquisitions) incurred or issued after the first day of the relevant Test Period or Calculation Period (whether incurred to finance a Permitted Acquisition, to refinance Indebtedness or otherwise) shall be deemed to have been incurred or issued (and the proceeds thereof applied) on the first day of such Test Period or Calculation Period, as the case may be, and remain outstanding through the date of determination (and thereafter, in the case of projections pursuant to Section 10.16(a)) and (y) (other than revolving Indebtedness, except to the extent accompanied by a corresponding permanent commitment reduction) permanently retired or redeemed after the first day of the relevant Test Period or Calculation Period, as the case may be, shall be deemed to have been retired or redeemed on the first day of such Test Period or Calculation Period, as the case may be, and remain retired through the date of determination (and thereafter, in the case of projections pursuant to Section 10.16(a));

(ii)         all Indebtedness assumed to be outstanding pursuant to preceding clause (i) shall be deemed to have borne interest at (x) the rate applicable thereto, in the case of fixed rate indebtedness, or (y) the rates which would have been applicable thereto during the respective period when same was deemed outstanding, in the case of floating rate Indebtedness (although interest expense with respect to any Indebtedness for periods while same was actually outstanding during the respective period shall be calculated using the actual rates applicable thereto while same was actually outstanding); provided that all Indebtedness (whether actually outstanding or deemed outstanding) bearing interest at a floating rate of interest shall be tested on the basis of the rates applicable at the time the determination is made pursuant to said provisions; and

(iii)        in making any determination of Consolidated EBITDA on a Pro Forma Basis, pro forma effect shall be given to any Permitted Acquisition if effected during the respective Calculation Period or Test Period (or thereafter, for purposes of determinations pursuant to Sections 10.16(a) only) as if same had occurred on the first day of the respective Calculation Period or Test Period, as the case may be, taking into account, in the case of any Permitted Acquisition, factually supportable and identifiable cost savings and expenses which would otherwise be accounted for as an adjustment pursuant to Article 11 of Regulation S-X under the Securities Act, as if such cost savings or expenses were realized on the first day of the respective period but without taking into account any pro forma cost savings and expenses in an amount not to exceed 15% of the then Acquired EBITDA of the prospective Acquired Entity or Business, so long as the foregoing is verified by a third-party independent accounting firm reasonably acceptable to the Administrative Agent.

“Projections” shall mean the 2015-2020 financial projections that were prepared by or on behalf of the Administrative Borrower in connection with the Transaction and most recently delivered to the Administrative Agent and the Lenders prior to the Closing Date.

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“Properly Contested” shall mean, in the case of any amount of any Borrower that is not paid as and when due or payable by reason of such Borrower’s bona fide dispute concerning its liability to pay the same or concerning the amount thereof: (a) such amount is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (b) such Borrower has established appropriate reserves as shall be required in conformity with GAAP; (c) the non-payment of such amount will not have a Material Adverse Effect or will not result in the forfeiture of any assets of such Borrower; (d) no Lien is imposed upon any of such Borrower’s assets with respect to such amount unless such Lien (y) is at all times junior and subordinate in priority to the Liens in favor of the Collateral Agent (except only with respect to property Taxes that have priority as a matter of applicable state law) and (z) enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; and (e) if such amount results from, or is determined by the entry, rendition or issuance against such Borrower or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review.

“Public Lender” shall have the meaning assigned in Section 10.01.

“Qualified ECP Loan Party” shall mean each Credit Party that on the Eligibility Date is (a) a corporation, partnership, proprietorship, organization, trust, or other entity other than a “commodity pool” as defined in Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets exceeding $10,000,000 or (b) an Eligible Contract Participant that can cause another person to qualify as an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise providing a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A)(v)(II) of the CEA.

“Qualified Preferred Stock” shall mean any Preferred Equity of Holdings so long as the terms of any such Preferred Equity (v) do not contain any mandatory put, redemption, repayment, sinking fund or other similar provision prior to six months following the Maturity Date, (w) do not require the cash payment of dividends or distributions that would otherwise be prohibited by the terms of this Agreement or any other agreement or contract of Holdings or any of its Subsidiaries, (x) do not contain any covenants (other than periodic reporting requirements), (y) do not grant the holders thereof any voting rights except for (I) voting rights required to be granted to such holders under applicable law and (II) limited customary voting rights on fundamental matters such as mergers, consolidations, sales of all or substantially all of the assets of Holdings, or liquidations involving Holdings, and (z) are otherwise reasonably satisfactory to the Administrative Agent.

“Quarterly Payment Date” shall mean the last Business Day of each March, June, September and December occurring after the Closing Date.

“Real Property” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.

“Receivables” shall mean and include, as to each Borrower, all of such Borrower’s accounts (as defined in Article 9 of the Uniform Commercial Code) and all of such Borrower’s contract rights, instruments (including those evidencing indebtedness owed to such Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, contract rights, instruments, documents and chattel paper, and drafts and acceptances, credit card receivables and all other forms of obligations owing to such Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Collateral Agent hereunder.

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“Recipient” shall mean (a) the Administrative Agent, (b) any Lender or (c) any Issuing Lender, as applicable.

“Recovery Event” shall mean the receipt by Holdings or any of its Subsidiaries of any cash insurance proceeds or condemnation awards payable (i) by reason of theft, loss, physical destruction, damage, taking or any other similar event with respect to any property or assets of Holdings or any of its Subsidiaries and (ii) under any policy of insurance required to be maintained under Section 10.03.

“Refinancing” shall mean the refinancing transactions described in Sections 7.07(a) and (b).

“Refinancing Documents” shall mean all pay-off letters, guaranty releases, Lien releases (including, without limitation, UCC termination statements) and other documents and agreements entered into in connection with the Refinancing.

“Register” shall have the meaning provided in Section 14.15.

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.

“Regulation T” shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

“Regulation U” shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

“Regulation X” shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

“Release” shall mean actively or passively disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping, migrating or the like, into or upon any land or water or air, or otherwise entering into the environment.

“Released Claims” shall have the meaning provided in Section 13.02(c).

“Releasees” shall have the meaning provided in Section 13.02(c).

“Replaced Lender” shall have the meaning provided in Section 2.13.

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“Replacement Lender” shall have the meaning provided in Section 2.13.

“Reportable Compliance Event” shall mean that any Covered Entity (x) becomes a Sanctioned Person, or (y) is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or (z) has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual violation of any Anti-Terrorism Law in a manner (with respect to any violation under this clause (z)) that could reasonably be expected to have a Material Adverse Effect.

“Reportable Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.

“Required Lenders” shall mean, at any time, Non-Defaulting Lenders the sum of whose outstanding Term Loans and Revolving Loan Commitments at such time (or, after the termination thereof, outstanding Revolving Loans and RL Percentages of Letter of Credit Outstandings at such time) represents at least 66 2/3% of the sum of (i) all outstanding Term Loans of Non-Defaulting Lenders and (ii) the Total Revolving Loan Commitment in effect at such time less the Revolving Loan Commitments of all Defaulting Lenders at such time (or, after the termination thereof, the sum of then total outstanding Revolving Loans of Non-Defaulting Lenders and the aggregate RL Percentages of all Non-Defaulting Lenders of the total Letter of Credit Outstandings at such time).

“Required Prepayment Date” shall have the meaning assigned to such term in Section 6.02(l).

“Reserve Percentage” shall mean as of any day the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).

“Reserves” means, as of any date of determination, such amounts (including, without limitation, the amount of any Cash Management Products and Services Reserves, and Hedge Agreement Reserves) as the Collateral Agent may from time to time establish in its reasonable credit judgment, exercised in good faith (a) to reflect events, conditions, contingencies or risks which (i) adversely affect any Collateral or the Collateral Agent or Administrative Agent’s access thereto, or (ii) adversely affect the priority, perfection or enforceability of any of the security interests of the Collateral Agent, Administrative Agent or any Lender in the Collateral, or (b) in respect of any state of facts which the Collateral Agent or Administrative Agent reasonably determine to constitute a Default or an Event of Default. The amount of any Reserve established by the Collateral Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such Reserve as determined by the Collateral Agent in its reasonable credit judgment, exercised in good faith. Absent an Event of Default, imposition of any of the foregoing Reserve shall require three (3) Business Days prior notice to the Administrative Borrower and the Administrative Agent by the Collateral Agent.

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“Restricted” shall mean, when referring to cash or Cash Equivalents of Holdings or any of its Subsidiaries, that such cash or Cash Equivalents (i) appears (or would be required to appear) as “restricted” on a consolidated balance sheet of Holdings or of any such Subsidiary (unless such appearance is related to the Credit Documents or Liens created thereunder), (ii) are subject to any Lien in favor of any Person other than the Collateral Agent for the benefit of the Secured Creditors or (iii) are not otherwise generally available for use by Holdings or such Subsidiary.

“Returns” shall have the meaning provided in Section 9.09.

“Revolving Loan” shall have the meaning provided in Section 2.01(c).

“Revolving Loan Commitment” shall mean, for each Lender, the amount set forth opposite such Lender’s name in Schedule I directly below the column entitled “Revolving Loan Commitment,” as same may be (x) reduced from time to time or terminated pursuant to Sections 4.02, 4.03 and/or 11, as applicable, or (y) adjusted from time to time as a result of assignments to or from such Lender pursuant to Section 2.13 or 14.04(b).

“Revolving Loan Maturity Date” shall mean November 23, 2020.

“Revolving Note” shall have the meaning provided in Section 2.05(a).

“RL Lender” shall mean each Lender with a Revolving Loan Commitment or with outstanding Revolving Loans.

“RL Percentage” of any RL Lender at any time shall mean a fraction (expressed as a percentage) the numerator of which is the Revolving Loan Commitment of such RL Lender at such time and the denominator of which is the Total Revolving Loan Commitment at such time, provided that if the RL Percentage of any RL Lender is to be determined after the Total Revolving Loan Commitment has been terminated, then the RL Percentages of such RL Lender shall be determined immediately prior (and without giving effect) to such termination.

“Sanctioned Country” means a country subject to a sanctions program maintained under any Anti-Terrorism Law.

“Sanctioned Person” means any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law.

“S&P” shall mean Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.

“Scheduled Repayment” shall have the meaning provided in Section 6.02(b).

“Scheduled Repayment Date” shall have the meaning provided in Section 6.02(b).

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“SEC” shall have the meaning provided in Section 10.01(i).

“Second Period” shall have the meaning provided in Section 5.02(a)(ii).

“Section 6.04(c)(ii) Certificate” shall have the meaning provided in Section 6.04(c)(ii).

“Secured Creditors” shall have the meaning assigned that term in the respective Security Documents and includes any Lender to whom any Cash Management Liabilities or Hedge Liabilities are owed.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Security Agreement” shall have the meaning provided in Section 7.12.

“Security Agreement Collateral” shall mean all “Collateral” as defined in the Security Agreement.

“Security Document” shall mean and include each of the Security Agreement, the Pledge Agreement, each Mortgage and, after the execution and delivery thereof, each Additional Security Document; provided, that any cash collateral or other agreements entered into pursuant to the Letter of Credit Back-Stop Arrangements shall constitute “Security Documents” solely for purposes of (x) Section 11.01(iv) and (y) the term “Credit Documents” as used in Sections 11.04(i), 11.13 and 14.01.

“Senior Secured Leverage Ratio” shall mean, on any date of determination, the ratio of (x) Consolidated Senior Secured Indebtedness on such date to (y) Consolidated EBITDA for the Test Period most recently ended on or prior to such date; provided that (i) for purposes of any calculation of the Senior Secured Leverage Ratio pursuant to this Agreement, Consolidated EBITDA shall be determined on a Pro Forma Basis in accordance with clause (iii) of the definition of “Pro Forma Basis” contained herein and (ii) for purposes of any calculation of the Senior Secured Leverage Ratio pursuant to Section 10.16(a) only, Consolidated Senior Secured Indebtedness shall be determined on a Pro Forma Basis in accordance with the requirements of the definition of “Pro Forma Basis” contained herein.

“Shareholders’ Agreements” shall have the meaning provided in Section 7.05(ii).

“Stated Amount” of each Letter of Credit shall mean, at any time, the maximum amount available to be drawn thereunder, in each case determined (x) as if any future automatic increases in the maximum amount available that are provided for in any such Letter of Credit had in fact occurred at such time and (y) without regard to whether any conditions to drawing could then be met but after giving effect to all previous drawings made thereunder.

“Subordinated Debt” shall mean any unsecured Indebtedness of a Credit Party incurred from time to time that is subordinated in right of payment to the Obligations on terms and conditions acceptable to the Administrative Agent and that (i) is only guaranteed by a Credit Party, (ii) is not subject to scheduled amortization, redemption, sinking fund or similar payment, does not have a final maturity and does not require any cash interest or other cash payments, in each case, on or before the date that is six months after the Obligations are indefeasibly paid in full, (iii) does not include any covenant or similar agreement and (iv) contains deep subordination (including permanent payment blocks and permanent blocks on enforcing rights and remedies) and turnover provisions and shall not have any cross default or cross acceleration provisions, as the same may be modified, amended or supplemented from time to time pursuant to the terms hereof and thereof.

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“Subordinated Debt Documents” shall mean all documents, agreements or instruments executed and delivered with respect to any Subordinated Debt, all of the foregoing in form and substance reasonable acceptable to the Administrative Agent.

“Subordinated Provisions” shall have the meaning provided in Section 12.11(i).

“Subsidiaries Guaranty” shall have the meaning provided in Section 7.10(a).

“Subsidiary” shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Holdings and any predecessors of such Subsidiary or Subsidiaries. For purposes of all representations and warranties made under this Agreement and the other Credit Documents as of the Closing Date, unless otherwise specifically stated herein or therein, such representations and warranties shall be deemed to be made immediately following the consummation of the Acquisition and, as a result, Parent and its Subsidiaries shall be Subsidiaries of Holdings for purposes of such representations and warranties.

“Subsidiary Guarantor” shall mean each Domestic Subsidiary of Holdings, each Subsidiary of Holdings which, directly or indirectly, owns any Equity Interests in Parent, the Administrative Borrower or Access and, to the extent required by Section 10.17 pursuant to such change in the relevant sections of the Code or the regulations, rules, rulings, notices or other official pronouncements issued or promulgated thereunder, each Foreign Subsidiary of Holdings (in each case, whether existing on the Closing Date or established, created or acquired after the Closing Date), unless and until such time as the respective Subsidiary is released from all of its obligations under the Subsidiaries Guaranty in accordance with the terms and provisions thereof.

“Swap” shall mean any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder, other than (a) a swap entered into, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation 32.3(a).

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“Swap Obligation” means any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap which is also a Lender-Provided Interest Rate Protection Agreement, or a Lender-Provided Other Hedge Agreement.

“Synthetic Lease” shall mean a lease transaction under which the parties intend that (i) the lease will be treated as an “operating lease” by the lessee and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.

“Taxes” (or “Tax” as the context may require) means any taxes, charges, fees, levies, penalties or other assessments imposed by any Taxing Authority, including, income, premium, excise, property, sales, use, value added, goods and services, transfer, franchise, payroll, withholding, social security or other taxes, including any interest, penalties or additions to tax attributable thereto.

“Taxing Authority” means any Governmental Authority with the authority to impose Tax.

“Term Loan” shall have the meaning provided in Section 2.01(a).

“Term Loan Commitment” shall mean, for each Lender, the amount set forth opposite such Lender’s name in Schedule I directly below the column entitled “Term Loan Commitment,” as the same may be terminated pursuant to Sections 4.03 and/or 11.

“Term Loan Maturity Date” shall mean November 23, 2020.

“Term Note” shall have the meaning provided in Section 2.05(a).

“Test Period” shall mean each period of four consecutive fiscal quarters of Holdings then last ended, in each case taken as one accounting period; provided that in the case of any Test Period which includes any fiscal quarter ended on or prior to the Effective Date, the rules set forth in the immediately succeeding sentence shall apply; provided further, that in the case of determinations of the Senior Secured Leverage Ratio pursuant to this Agreement, such further adjustments (if any) as described in the proviso to the definition of the “Senior Secured Leverage Ratio” contained herein shall be made to the extent applicable. If the respective Test Period (i) includes the fiscal quarter of Holdings ended December 31, 2014, (x) Consolidated EBITDA for such fiscal quarter shall be deemed to be $5,033,000, and (y) Fixed Charges for such fiscal quarter shall be deemed to be $2,650,300, (ii) includes the fiscal quarter of Holdings ended March 31, 2015, (x) Consolidated EBITDA for such fiscal quarter shall be deemed to be $4,627,000, and (y) Fixed Charges for such fiscal quarter shall be deemed to be $3,273,000, (iii) includes the fiscal quarter of Holdings ended June 30, 2015, (x) Consolidated EBITDA for such fiscal quarter shall be deemed to be $5,507,000, and (y) Fixed Charges for such fiscal quarter shall be deemed to be $3,145,000, (iv) includes the fiscal quarter of Holdings ended September 30, 2015, (x) Consolidated EBITDA for such fiscal quarter shall be deemed to be $4,828,000, and (y) Fixed Charges for such fiscal quarter shall be deemed to be $4,145,000, and (v) includes the fiscal quarter of Holdings ended December 31, 2015, (x) Consolidated EBITDA for such fiscal quarter shall be the actual Consolidated EBITDA for such fiscal quarter, and (y) Fixed Charges shall be deemed to be the sum of (1) actual Fixed Charges, other than Consolidated Interest Expense, for such fiscal quarter plus (2) actual Consolidated Interest Expense for the period from and including the Closing Date to and including the last day of such fiscal quarter multiplied by a fraction the numerator of which is the number of days in said fiscal quarter and the denominator of which is the number of days in said fiscal quarter from and including the Closing Date.

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“Third Period” shall have the meaning provided in Section 5.02(a)(iii).

“Total Commitment” shall mean, at any time, the sum of the Commitments of each of the Lenders at such time.

“Total Revolving Loan Commitment” shall mean, at any time, the sum of the Revolving Loan Commitments of each of the Lenders at such time.

“Total Term Loan Commitment” shall mean, at any time, the sum of the Term Loan Commitments of each of the Lenders at such time.

“Total Unutilized Revolving Loan Commitment” shall mean, at any time, an amount equal to the remainder of (x) the Total Revolving Loan Commitment in effect at such time less (y) the sum of (i) the aggregate principal amount of all Revolving Loans outstanding at such time plus (ii) the aggregate amount of all Letter of Credit Outstandings at such time.

“Tranche” shall mean the respective facility and commitments utilized in making Loans hereunder, with there being two separate Tranches, i.e., Term Loans and Revolving Loans.

“Transaction” shall mean, collectively, (i) the consummation of the Acquisition and the other transactions contemplated by the Acquisition Documents, (ii) the consummation of the Refinancing, (iii) the execution, delivery and performance by each Credit Party of the Credit Documents to which it is a party, the incurrence of Loans on the Closing Date and the use of proceeds thereof, and (iv) the payment of all fees and expenses in connection with the foregoing.

“Type” shall mean the type of Loan determined with regard to the interest option applicable thereto, i.e., whether a Base Rate Loan or a Eurodollar Loan.

“UCC” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.

“UCP” shall have the meaning assigned in Section 3.01(a).

“Undrawn Availability” at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Total Revolving Loan Commitment minus the Letter of Credit Outstandings, minus (b) the sum of (i) the outstanding amount of Revolving Loans plus (ii) all amounts due and owing to any Borrower’s trade creditors which are outstanding beyond sixty (60) days or more past their due date, unless the payment of any such past due amount is being Properly Contested, in which case such past due amount shall not be included in the calculation of all such past due amounts under this clause (ii), plus (iii) fees and expenses incurred in connection with the Transactions for which the Borrowers are liable but which have not been paid or charged to the Borrowers’ account by the Collateral Agent as permitted hereunder.

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“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which the value of the accumulated plan benefits under the Plan determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds the Fair Market Value of all plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions).

“United States” and “U.S.” shall each mean the United States of America.

“Unpaid Drawing” shall have the meaning provided in Section 3.05(a).

“Unrestricted” shall mean, when referring to cash or Cash Equivalents of Holdings or any of its Subsidiaries, that such cash or Cash Equivalents are not Restricted.

“Unutilized Revolving Loan Commitment” shall mean, with respect to any Lender at any time, such Lender’s Revolving Loan Commitment at such time less the sum of (i) the aggregate outstanding principal amount of all Revolving Loans made by such Lender at such time and (ii) such Lender’s RL Percentage of the Letter of Credit Outstandings at such time.

“Waivable Mandatory Prepayment” shall have the meaning assigned to such term in Section 6.02(l).

“Wholly-Owned Domestic Subsidiary” shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.

“Wholly-Owned Foreign Subsidiary” shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.

“Wholly-Owned Subsidiary” shall mean, as to any Person, (i) any corporation 100% of whose capital stock is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time (other than, in the case of a Foreign Subsidiary of a Borrower with respect to the preceding clauses (i) and (ii), director’s qualifying shares and/or other nominal amount of shares required to be held by Persons other than any Borrower and its Subsidiaries under applicable law).

“Yield Differential” shall have the meaning assigned in Section 2.01(b)(ii).

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SECTION 2.          Amount and Terms of Loans.

2.01.      The Loans.

(a)          Subject to and upon the terms and conditions set forth herein, each Lender with a Commitment severally agrees to make a term loan (a “Term Loan” and, collectively, the “Term Loans”) to the Initial Borrower (which shall be immediately assumed by the Borrowers), which Term Loans (i) shall be incurred pursuant to a single drawing on the Closing Date, (ii) shall be denominated in Dollars, and (iii) shall be made by each such Lender in that aggregate principal amount which does not exceed the Commitment of such Lender on the Closing Date. Once repaid, Term Loans incurred hereunder may not be reborrowed. All references herein to a “Term Loan” or “Term Loans”, to “principal” or the “principal amount” of any Term Loan or Term Loans and other terms of like import shall mean Term Loans incurred by the Initial Borrower, minus repayments and prepayments of Term Loans pursuant to this Agreement.

(b)          Incremental Facility. (i) The Administrative Borrower may at any time or from time to time, in accordance with and subject to the terms of this Agreement, by notice to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy to each of the Lenders), request one or more additional tranches of loans (other than Revolving Loans) (each of which shall be deemed separate and independent tranches from the Loans and from each other such additional tranche of loans unless such additional tranche of loans has terms identical in all respects to the Loans or any other then existing tranche of additional term loans) to be funded in Dollars (the “Incremental Loans”); provided that (x) at the time of any such request no Default or Event of Default shall exist and at the time that any such Incremental Loan is made and, after giving effect thereto, no Default or Event of Default shall exist, (y) each tranche of Incremental Loans shall be in an aggregate principal amount that is not less than $10,000,000 (and in minimum increments of $5,000,000 in excess thereof), and the aggregate principal amount of all Incremental Loans funded pursuant to this Section 2.01(b) shall not exceed $90,000,000, and (z) each Borrower shall be in compliance with the financial covenants contained in Sections 11.08 through 11.10, inclusive, on a Pro Forma Basis after giving effect to the proposed Incremental Loan and the Permitted Acquisitions, if any, funded thereby. Holdings shall deliver to Administrative Agent, prior to the effectiveness of any Incremental Loan Commitment, a certificate of an Authorized Officer of Holdings certifying that the condition set forth clause (z) in the immediately preceding sentence is satisfied after giving effect to any such Incremental Loan Commitment and containing reasonably detailed calculations.

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(ii)          The Incremental Loans (v) shall rank pari passu or junior in right of payment and of security with the Loans (including, without limitation, with respect to voluntary prepayments and mandatory prepayments), (w) shall not mature earlier than the Maturity Date, (x) shall not have a shorter weighted average life to maturity than the Loans, (y) shall have an amortization schedule (subject to the immediately preceding clause (x)), interest rate margin, rate floors, fees, premiums and funding discounts as determined by the Administrative Borrower and the Lenders funding the applicable Incremental Loans; provided that in the event that the initial yield for any Incremental Loans is greater than the then-applicable yield for any Loan (such excess yield, the “Yield Differential”), then the Margins for all such Loans shall be increased by an amount equal to the Yield Differential (expressed as a positive number); provided, further, that in determining any yield applicable to the Loans and the Incremental Loans, respectively, underlying interest rate indices, interest rate margins, upfront fees (which shall be deemed, solely for purposes of this provision, to constitute like amounts of original issue discount (“OID”)) payable by the Borrowers to the Lenders of the applicable Loans or the Incremental Loans, and rate floors, shall be included (with deemed OID being equated to interest based on an assumed four-year life to maturity) and customary arrangement or structuring fees payable to the Administrative Agent (or its Affiliates) in connection with the applicable Loans or the Incremental Loans shall be excluded, and (z) may otherwise have terms and conditions different from those of the Term Loan (but subject, in any event, to the terms and provisions of this Agreement pertaining to Incremental Loans); provided that if any such differences are materially more favorable to the Incremental Loans versus the Loan, such differences shall be subject to the consent of the Administrative Agent.

(iii)         Incremental Loan Commitments shall become commitments under this Agreement pursuant to an amendment (an “Incremental Amendment”) to this Agreement and, as appropriate, the other Credit Documents, executed by each Borrower, each Lender agreeing to provide such Incremental Loan Commitment, and the Administrative Agent; provided that such Incremental Amendment shall not be effective prior to the date that is ten (10) Business Days (or such shorter period as agreed to by the Administrative Agent) from the date Administrative Agent first receives the notice required pursuant to Section 2.01(b)(i). Each Lender providing an Incremental Loan Commitment shall be subject to approval of the Administrative Agent in its sole discretion. The Incremental Amendment may, subject to Section 2.01(b)(ii), without the consent of any other Lenders, effect such amendments to this Agreement and the other Credit Documents as may be necessary, in the reasonable opinion of the Administrative Agent and the Administrative Borrower, to effect the provisions of this Section 2.01(b). The effectiveness of any Incremental Amendment (and the funding of Incremental Loans thereunder) shall be subject to the satisfaction on the date thereof (and the date of funding such Incremental Loans) of (w) such conditions as the parties thereto shall agree, (x) the terms of this Section 2.01(b) in respect of the Incremental Loan Commitments then being requested and the applicable Incremental Loans then being funded and after giving effect thereto, (y) the truth and correctness in all material respects (or in any respect if such representation or warranty contains any materiality qualifier, including references to “material,” “Material Adverse Effect” or dollar thresholds) of any representation or warranty by the Borrowers contained herein or in any other Credit Document as of such date (or as of a specific earlier date if such representation or warranty expressly relates to an earlier date and except for changes therein expressly permitted or expressly contemplated by this document) after giving effect to the creation of the applicable Incremental Loan Commitments and the funding of the applicable Incremental Loans and (z) the absence of any Default or Event of Default having occurred and continuing or resulting from the creation of the applicable Incremental Loan Commitments and the funding of the applicable Incremental Loans. The Borrowers will use the proceeds of the Incremental Loans solely to finance Permitted Acquisitions (including fees, costs, expenses, “earn-outs” and similar deferred payment obligations in connection therewith even if, in the case of “earn-outs” and similar deferred payment obligations, such payments are made subsequent to the consummation of such Permitted Acquisitions). In the event any Incremental Loans are made, such Incremental Loans shall mature and be repaid in amounts and on dates as agreed between the Administrative Borrower and the relevant Lenders of such Incremental Loans in the applicable Incremental Amendment, subject to the requirements set forth in Section 2.01(b)(ii). Amounts paid or prepaid on account of any Incremental Loans may not be reborrowed. This Section 2.01(b)(iii) shall supersede any provisions in Section 14.12 to the contrary.

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(iv)        The existing Lenders may, but shall not be obligated to, participate in any Incremental Loan on a pro rata basis. Each existing Lender will be deemed to have declined participation in such Incremental Loan unless such Lender affirmatively elects in writing to participate within 5 Business Days following receipt of a request for participation. To the extent the existing Lenders decline to provide the entire amount of such Incremental Loan, the Borrowers may invite other parties to participate as Lenders; provided each Lender providing any portion of any Incremental Loan shall be subject to approval of the Administrative Agent (not to be unreasonably withheld or delayed).

(c)          Subject to and upon the terms and conditions set forth herein, each RL Lender severally agrees to make, at any time and from time to time on or after the Closing Date and prior to the Revolving Loan Maturity Date, a revolving loan or revolving loans (each, a “Revolving Loan” and, collectively, the “Revolving Loans”) to the Borrowers in aggregate amounts not to exceed at any time outstanding the amount of such RL Lender’s Revolving Loan Commitment; provided, however, that the aggregate principal amount of all Revolving Loans outstanding at any time shall not exceed the lesser of (x) the difference between the Total Revolving Loan Commitment, less the Letter of Credit Outstandings or (y) an amount equal to the sum of: (i) up to 85% (the “Advance Rate”) of Eligible Receivables, plus (ii) up to 100% of Unrestricted cash on deposit in the Borrowers’ accounts with Collateral Agent, minus (iii) the Letter of Credit Outstandings, minus (iv) Reserves. The amount derived from the sum of (x) Sections 2.01(c)(y)(i) and (ii), minus the sum of (y) Section 2.01(c)(y)(iii) and (iv) at any time and from time to time shall be referred to as the “Formula Amount”. The Advance Rates may be increased or decreased by Collateral Agent at any time and from time to time in its Permitted Discretion. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing or imposing reserves may limit or restrict advances requested by the Borrowers. Prior to the occurrence and continuation of an Event of Default, Collateral Agent and Administrative Agent shall give the Administrative Borrower three (3) Business Days prior written notice of its intention to decrease the Advance Rates.

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(i)          The Revolving Loans (x) shall be denominated in Dollars, (y) shall, at the option of the Administrative Borrower, be incurred and maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans, provided that except as otherwise specifically provided in Section 2.10(b), all Revolving Loans comprising the same Borrowing shall at all times be of the same Type, and (z) may be repaid and reborrowed in accordance with the provisions hereof.

2.02.         Minimum Amount of Each Borrowing. The aggregate principal amount of each Borrowing of Loans under a respective Tranche shall not be less than the Minimum Borrowing Amount applicable to such Tranche. More than one Borrowing may occur on the same date, but at no time shall there be outstanding more than six Borrowings of Eurodollar Loans in the aggregate for all Tranches of Loans.

2.03.         Notice of Borrowing. (a) Whenever the Borrowers desire to incur (x) Eurodollar Loans hereunder, the Administrative Borrower shall give the Administrative Agent at the Notice Office and the Collateral Agent at least three Business Days’ prior notice of each Eurodollar Loan to be incurred hereunder and (y) Base Rate Loans hereunder, the Administrative Borrower shall give the Administrative Agent at the Notice Office and the Collateral Agent at least the same Business Day’s prior notice of each Base Rate Loan to be incurred hereunder on such Business Day, provided that (in each case) any such notice shall be deemed to have been given on a certain day only if given before 10:00 A.M. (New York City time) on such day. Each such notice (each, a “Notice of Borrowing”), except as otherwise expressly provided in Section 2.10, shall be irrevocable and shall be in writing, or by telephone promptly confirmed in writing, in the form of Exhibit A-1, appropriately completed to specify: (i) the aggregate principal amount of the Loans to be incurred pursuant to such Borrowing, (ii) the date of such Borrowing (which shall be a Business Day), (iii) whether the Loans being incurred pursuant to such Borrowing shall constitute Term Loans or Revolving Loans, (iv) whether the Loans being incurred pursuant to such Borrowing are to be initially maintained as Base Rate Loans or, to the extent permitted hereunder, Eurodollar Loans and, if Eurodollar Loans, the initial Interest Period to be applicable thereto, and (v) in the case of a Borrowing of Revolving Loans the proceeds of which are to be utilized to finance, in whole or in part, a Permitted Acquisition (or to pay any fees and expenses incurred in connection therewith), the amount of the Total Unutilized Revolving Loan Commitment after giving effect to such Borrowing. The Administrative Agent shall promptly give each Lender which is required to make Loans of the Tranche specified in the respective Notice of Borrowing, notice of such proposed Borrowing, of such Lender’s proportionate share thereof and of the other matters required by the immediately preceding sentence to be specified in the Notice of Borrowing.

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(b)          Without in any way limiting the obligation of the Administrative Borrower to confirm in writing any telephonic notice of any Borrowing or prepayment of Loans, the Collateral Agent or the Administrative Agent may act without liability upon the basis of telephonic notice of such Borrowing or prepayment, as the case may be, believed by the Collateral Agent or Administrative Agent in good faith to be from an Authorized Officer of the Administrative Borrower, prior to receipt of written confirmation. In each such case, the Borrowers hereby waive the right to dispute the Administrative Agent’s record of the terms of such telephonic notice of such Borrowing or prepayment of Loans, as the case may be, absent manifest error.

(c)          During any time when springing cash dominion is in effect pursuant to Section 10.21, the Lenders and each Borrower hereby authorizes Collateral Agent, at Administrative Agent’s direction, to, and Collateral Agent shall, at Administrative Agent’s direction, from time to time, charge the account of each Borrower with any amount due and payable by such Borrower or any other Credit Party under any Credit Document (specifically including any amount required to be paid hereunder by the Borrowers as a principal payment, as cash collateralization or as interest, fees or other charges hereunder and any amount required to be paid hereunder or under any other Credit Documents by such Borrower or any other Credit Party to reimburse Administrative Agent or Collateral Agent for the expenditure of any amount by such agent in performance of any covenants of such Borrower or such Credit Party under any Credit Document). Each of the Lenders and each Borrower agrees that Collateral Agent shall have the right to make such charges whether or not any Default or Event of Default shall have occurred and be continuing or whether any of the conditions precedent in Section 8 have been satisfied. Any amount charged to the account of a Borrower shall be deemed a Revolving Loan hereunder requested by a Borrower and made by the applicable Lenders to a Borrower as a Base Rate Loan, funded by Collateral Agent on behalf of the applicable Lenders and subject to Section 2 of this Agreement and the obligations of Lenders thereunder. The proceeds of such Revolving Loans shall be disbursed as direct payment of the relevant Obligations. The Lenders and each Borrower confirms that any charges which Collateral Agent may so make to the account of any Borrower as herein provided will be made as an accommodation to such Borrower and solely at Collateral Agent’s discretion; provided that, for the avoidance of doubt, Collateral Agent shall from time to time upon the request of the Administrative Agent, charge the account of a Borrower with any amount due and payable under any Credit Document. In addition, Collateral Agent may, at Administrative Agent’s direction, charge any such Obligations for any such amounts then due and payable by a Borrower or any other Credit Party under any Credit Document against any operating, investment or other account of any Borrower maintained with Collateral Agent or any of its Affiliates.

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2.04.         Disbursement of Funds. No later than 1:00 P.M. (New York City time) on the date specified in each Notice of Borrowing, each Lender with a Commitment of the respective Tranche will make available its pro rata portion (determined in accordance with Section 2.07) of each such Borrowing requested to be made on such date. All such amounts will be made available in Dollars and in immediately available funds at the Payment Office, and the Administrative Agent will make available to a Borrower at the Payment Office the aggregate of the amounts so made available by the Lenders; provided that, if, on the date of a Borrowing of Revolving Loans, there are Unpaid Drawings then outstanding, then the proceeds of such Borrowing shall be applied, first, to the payment in full of any such Unpaid Drawings with respect to Letters of Credit, and second, to such Borrower as otherwise provided above. Unless the Administrative Agent shall have been notified by any Lender prior to the date of Borrowing that such Lender does not intend to make available to the Administrative Agent such Lender’s portion of any Borrowing to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing and the Administrative Agent may (but shall not be obligated to), in reliance upon such assumption, make available to a Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Administrative Borrower and such applicable Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent also shall be entitled to recover on demand from such Lender or any Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to such Borrower until the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if recovered from such Lender, the overnight Federal Funds Rate for the first three days and at the interest rate otherwise applicable to such Loans for each day thereafter and (ii) if recovered from a Borrower, the rate of interest applicable to the respective Borrowing, as determined pursuant to Section 2.08. Nothing in this Section 2.04 shall be deemed to relieve any Lender from its obligation to make Loans hereunder or to prejudice any rights which any Borrower may have against any Lender as a result of any failure by such Lender to make Loans hereunder.

2.05.         Notes. (a) The Borrowers’ obligation to pay the principal of, and interest on, the Loans made by each Lender shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 14.15 and shall, if requested by such Lender, also be evidenced (i) in the case of Term Loans, by a promissory note duly executed and delivered by each Borrower substantially in the form of Exhibit B-1, with blanks appropriately completed in conformity herewith (each, a “Term Note” and, collectively, the “Term Notes”), (ii) in the case of Revolving Loans, by a promissory note duly executed and delivered by each Borrower substantially in the form of Exhibit B-2, with blanks appropriately completed in conformity herewith (each, a “Revolving Note” and, collectively, the “Revolving Notes”), and (iii) in the case of Incremental Loans, by a promissory note duly executed and delivered by each Borrower substantially in the form of Exhibit B-3, with blanks appropriately completed in conformity herewith (each, an “Incremental Note” and, collectively, the “Incremental Notes”).

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(b)          Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and prior to any transfer of any of its Notes will endorse on the reverse side thereof the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in such notation shall not affect each Borrower’s obligations in respect of such Loans.

(c)          Notwithstanding anything to the contrary contained above in this Section 2.05 or elsewhere in this Agreement, Notes shall only be delivered to Lenders which at any time specifically request the delivery of such Notes. No failure of any Lender to request or obtain a Note evidencing its Loans to the Borrowers shall affect or in any manner impair the obligations of each Borrower to pay the Loans (and all related Obligations) incurred by the Borrowers which would otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or guaranties therefor provided pursuant to the various Credit Documents. Any Lender which does not have a Note evidencing its outstanding Loans shall in no event be required to make the notations otherwise described in preceding clause (b). At any time when any Lender requests the delivery of a Note to evidence any of its Loans, each Borrower shall promptly execute and deliver to the respective Lender the requested Note in the appropriate amount or amounts to evidence such Loans.

2.06.         Conversions. The Administrative Borrower shall have the option to convert, on any Business Day, all or a portion equal to at least the Minimum Borrowing Amount of the outstanding principal amount of Loans made pursuant to one or more Borrowings (so long as of the same Tranche) of one or more Types of Loans into a Borrowing (of the same Tranche) of another Type of Loan, provided that, (i) except as otherwise provided in Section 2.10(b), Eurodollar Loans may be converted into Base Rate Loans only on the last day of an Interest Period applicable to the Loans being converted and no such partial conversion of Eurodollar Loans shall reduce the outstanding principal amount of such Eurodollar Loans made pursuant to a single Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii) unless the Required Lenders otherwise agree, Base Rate Loans may only be converted into Eurodollar Loans if no Default or Event of Default is in existence on the date of the conversion, and (iii) no conversion pursuant to this Section 2.06 shall result in a greater number of Borrowings of Eurodollar Loans than is permitted under Section 2.02. Each such conversion shall be effected by the Administrative Borrower by giving the Administrative Agent at the Notice Office prior to 10:00 A.M. (New York City time) at least (x) in the case of conversions of Base Rate Loans into Eurodollar Loans, two Business Days’ prior notice and (y) in the case of conversions of Eurodollar Loans into Base Rate Loans, prior notice, which may be provided on the same day as the conversion (each, a “Notice of Conversion/Continuation”), in each case in the form of Exhibit A-2, appropriately completed to specify the Loans to be so converted, the Borrowing or Borrowings pursuant to which such Loans were incurred and, if to be converted into Eurodollar Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall give each Lender prompt notice of any such proposed conversion affecting any of its Loans.

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2.07.       Pro Rata Borrowings. All Borrowings of Term Loans and Revolving Loans under this Agreement shall be incurred from the Lenders pro rata on the basis of their Term Loan Commitments or Revolving Loan Commitments, as the case may be. It is understood that no Lender shall be responsible for any default by any other Lender of its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to make its Loans hereunder.

2.08.       Interest. (a) The Borrowers agrees to pay interest in respect of the unpaid principal amount of each Base Rate Loan from the date of Borrowing thereof until the earlier of (i) the maturity thereof (whether by acceleration or otherwise) and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan pursuant to Section 2.06 or 2.09, as applicable, at a rate per annum which shall be equal to the sum of the relevant Applicable Margin plus the greater of (x) the Base Rate, as in effect from time to time, and (y) 2.00%.

(b)          The Borrowers agrees to pay interest in respect of the unpaid principal amount of each Eurodollar Loan from the date of Borrowing thereof until the earlier of (i) the maturity thereof (whether by acceleration or otherwise) and (ii) the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section 2.06, 2.09 or 2.10, as applicable, at a rate per annum which shall, during each Interest Period applicable thereto, be equal to the sum of the relevant Applicable Margin as in effect from time to time during such Interest Period plus the greater of (x) the Eurodollar Rate for such Interest Period and (y) 1.00%.

(c)          Overdue principal and, to the extent permitted by law, overdue interest in respect of each Loan shall, in each case, bear interest at a rate per annum equal to the greater of (x) the rate which is 2% in excess of the rate then borne by such Loans and (y) the rate which is 2% in excess of the rate otherwise applicable to Base Rate Loans of the respective Tranche from time to time, and all other overdue amounts payable hereunder and under any other Credit Document shall bear interest at a rate per annum equal to the rate which is 2% in excess of the rate applicable to Revolving Loans that are maintained as Base Rate Loans from time to time. Interest that accrues under this Section 2.08(c) shall be payable on demand. Amounts payable under this clause (c) shall not accrue if interest is accruing under clause (f) below.

(d)          Accrued (and theretofore unpaid) interest shall be payable in respect of each Loan (x) quarterly in arrears on the applicable Quarterly Payment Date (it being understood and agreed that such amount shall be calculated through the end of such calendar quarter even if such Quarterly Payment Date is prior to the end of such calendar quarter), (y) on the date of any repayment or prepayment in full of all outstanding Loans of any Tranche, and (z) at maturity (whether by acceleration or otherwise) and, after such maturity, on demand.

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(e)          Upon each Interest Determination Date, the Administrative Agent shall determine the Eurodollar Rate for each Interest Period applicable to the respective Eurodollar Loans and shall promptly notify the Administrative Borrower and the applicable Lenders thereof. Each such determination shall, absent manifest error, be final and conclusive and binding on all parties hereto.

(f)          Automatically upon the occurrence of any Event of Default set forth in Section 12.05, the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder and, to the extent permitted by law, overdue interest in respect of all interest due and payable on such Obligations, in each case, at a rate per annum equal to the rate which is 2% in excess of the rate otherwise applicable to the Loans from time to time. Interest that accrues under this Section 2.08(f) shall be payable in cash on demand.

2.09.       Interest Periods. At the time the Administrative Borrower gives any Notice of Borrowing or Notice of Conversion/Continuation in respect of the making of, or conversion into, any Eurodollar Loan (in the case of the initial Interest Period applicable thereto) or prior to 11:00 A.M. (New York City time) on the third Business Day prior to the expiration of an Interest Period applicable to such Eurodollar Loan (in the case of any subsequent Interest Period), the Administrative Borrower shall have the right to elect the interest period (each, an “Interest Period”) applicable to such Eurodollar Loan, which Interest Period shall, at the option of the Administrative Borrower, be a one, two, three, six or, to the extent approved by each Lender with Loans and/or Commitments under the relevant Tranche, twelve month period, provided that (in each case):

(i)          all Eurodollar Loans comprising a Borrowing shall at all times have the same Interest Period;

(ii)         the initial Interest Period for any Eurodollar Loan shall commence on the date of Borrowing of such Eurodollar Loan (including the date of any conversion thereto from a Base Rate Loan) and each Interest Period occurring thereafter in respect of such Eurodollar Loan shall commence on the day on which the next preceding Interest Period applicable thereto expires;

(iii)        if any Interest Period for a Eurodollar Loan begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month;

(iv)        if any Interest Period for a Eurodollar Loan would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided, however, that if any Interest Period for a Eurodollar Loan would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day;

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(v)         unless the Required Lenders otherwise agree, no Interest Period may be selected at any time when a Default or an Event of Default is then in existence;

(vi)        no Interest Period in respect of any Borrowing of any Tranche of Loans shall be selected which extends beyond the Maturity Date for such Tranche of Loans;

(vii)       no Interest Period in respect of any Borrowing of Term Loans shall be selected which extends beyond any date upon which a mandatory repayment of such Term Loans, as the case may be, will be required to be made under Section 6.02(b), as the case may be, if the aggregate principal amount of such Term Loans, as the case may be, which have Interest Periods which will expire after such date will be in excess of the aggregate principal amount of such Term Loans, as the case may be, then outstanding less the aggregate amount of such required repayment; and

(viii)      no more than five Borrowings of Revolving Loans maintained as Eurodollar Loans may be outstanding at any time.

If by 10:00 A.M. (New York City time) on the third Business Day prior to the expiration of any Interest Period applicable to a Borrowing of Eurodollar Loans, the Administrative Borrower has failed to elect, or is not permitted to elect, a new Interest Period to be applicable to such Eurodollar Loans as provided above, the Borrowers shall be deemed to have elected to convert such Eurodollar Loans into Base Rate Loans effective as of the expiration date of such current Interest Period.

2.10.       Increased Costs, Illegality, etc. (a) In the event that any Lender shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto but, with respect to clause (i) below, may be made only by the Administrative Agent):

(i)          on any Interest Determination Date that, by reason of any changes arising after the date of this Agreement affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate; or

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(ii)         at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Eurodollar Loan because of (x) any change since the Effective Date in any applicable law or governmental rule, regulation, order, guideline or request (whether or not having the force of law) or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, order, guideline or request, such as, but not limited to: (A) a change in law which subjects any Lender to any Taxes (other than Indemnified Taxes or Excluded Taxes) in respect of payments of the principal of or interest on the Loans or the Notes or any other amounts payable hereunder or (B) a change in official reserve requirements, but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Eurodollar Rate and/or (y) other circumstances arising since the Effective Date affecting such Lender, the interbank Eurodollar market or the position of such Lender in such market (including that the Eurodollar Rate with respect to such Eurodollar Loan does not adequately and fairly reflect the cost to such Lender of funding such Eurodollar Loan); or

(iii)        at any time, that the making or continuance of any Eurodollar Loan has been made (x) unlawful by any law or governmental rule, regulation or order, (y) impossible by compliance by any Lender in good faith with any governmental request (whether or not having force of law) or (z) impracticable as a result of a contingency occurring after the Effective Date which materially and adversely affects the interbank Eurodollar market;

then, and in any such event, such Lender (or the Administrative Agent, in the case of clause (i) above) shall promptly give notice (by telephone promptly confirmed in writing) to the Administrative Borrower and, except in the case of clause (i) above, to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no longer be available until such time as the Administrative Agent notifies the Administrative Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist, and any Notice of Borrowing or Notice of Conversion/Continuation given by the Administrative Borrower with respect to Eurodollar Loans which have not yet been incurred (including by way of conversion) shall be deemed rescinded by the Borrowers (y) in the case of clause (ii) above, each Borrower agrees to pay to such Lender, upon such Lender’s written request therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as shall be required to compensate such Lender for such increased costs or reductions in amounts received or receivable hereunder (a written notice as to the additional amounts owed to such Lender, showing in reasonable detail the basis for the calculation thereof, submitted to the Administrative Borrower by such Lender shall, absent manifest error, be final and conclusive and binding on all the parties hereto) and (z) in the case of clause (iii) above, the Borrowers shall take one of the actions specified in Section 2.10(b) as promptly as possible and, in any event, within the time period required by law.

(b)          At any time that any Eurodollar Loan is affected by the circumstances described in Section 2.10(a)(ii), the Borrowers may, and in the case of a Eurodollar Loan affected by the circumstances described in Section 2.10(a)(iii), the Borrowers shall, either (x) if the affected Eurodollar Loan is then being made initially or pursuant to a conversion, cancel such Borrowing by giving the Administrative Agent telephonic notice (confirmed in writing) on the same date that the Administrative Borrower was notified by the affected Lender or the Administrative Agent pursuant to Section 2.10(a)(ii) or (iii) or (y) if the affected Eurodollar Loan is then outstanding, upon at least three Business Days’ written notice to the Administrative Agent, require the affected Lender to convert such Eurodollar Loan into a Base Rate Loan, provided that, if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this Section 2.10(b).

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(c)          If any Lender determines that after the Effective Date the introduction of or any change in any applicable law or governmental rule, regulation, order, guideline, directive or request (whether or not having the force of law) concerning capital adequacy, or any change in interpretation or administration thereof by the NAIC or any Governmental Authority, central bank or comparable agency, will have the effect of increasing the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender based on the existence of such Lender’s Commitments hereunder or its obligations hereunder, then each Borrower agrees to pay to such Lender, upon its written demand therefor, such additional amounts as shall be required to compensate such Lender or such other corporation for the increased cost to such Lender or such other corporation or the reduction in the rate of return to such Lender or such other corporation as a result of such increase of capital. In determining such additional amounts, each Lender will act reasonably and in good faith and will use averaging and attribution methods which are reasonable, provided that such Lender’s determination of compensation owing under this Section 2.10(c) shall, absent manifest error, be final and conclusive and binding on all the parties hereto. Each Lender, upon determining that any additional amounts will be payable pursuant to this Section 2.10(c), will give prompt written notice thereof to the Administrative Borrower, which notice shall show in reasonable detail the basis for calculation of such additional amounts, although the failure to give any such notice shall not release or diminish such Borrower’s obligation to pay additional amounts pursuant to this Section 2.10(c) upon the subsequent receipt of such notice.

(d)          Failure or delay on the part of any Lender or Issuing Lender to demand compensation pursuant to this Section 2.10 shall not constitute a waiver of such Lender’s or Issuing Lender’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender or Issuing Lender pursuant to this Section 2.10 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or Issuing Lender notifies the Administrative Borrower of the change or changes specified in this Section 2.10 giving rise to such increased costs or reductions, and of such Lender’s or Issuing Lender’s intention to claim compensation therefor (except that, if the change giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

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2.11.       Compensation. Each Borrower agrees to compensate each Lender, upon its written request (which request shall set forth in reasonable detail the basis for requesting such compensation), for all losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Eurodollar Loans but excluding loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender or the Administrative Agent) a Borrowing of, or conversion from or into, Eurodollar Loans does not occur on a date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn by any Borrower or deemed withdrawn pursuant to Section 2.10(a)); (ii) if any prepayment or repayment (including any prepayment or repayment made pursuant to Section 6.01, Section 6.02 or as a result of an acceleration of the Loans pursuant to Section 12) or conversion of any of its Eurodollar Loans occurs on a date which is not the last day of an Interest Period with respect thereto; (iii) if any prepayment of any of its Eurodollar Loans is not made on any date specified in a notice of prepayment given by the Administrative Borrower; or (iv) as a consequence of (x) any other default by the Borrowers to repay Eurodollar Loans when required by the terms of this Agreement or any Note held by such Lender or (y) any election made pursuant to Section 2.10(b).

2.12.       Change of Lending Office. Each Lender agrees that on the occurrence of any event giving rise to the operation of Section 2.10(a)(ii) or (iii), Section 2.10(c), Section 3.06 or Section 6.04 with respect to such Lender, it will, if requested by the Administrative Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans or Letters of Credit affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 2.12 shall affect or postpone any of the obligations of the Borrowers or the right of any Lender provided in Sections 2.10, 3.06 and 6.04.

2.13.       Replacement of Lenders. (x) If any Lender becomes a Defaulting Lender, (y) upon the occurrence of any event giving rise to the operation of Section 2.10(a)(ii) or (iii), Section 2.10(c), Section 3.06 or Section 6.04 with respect to any Lender which results in such Lender charging to a Borrower increased costs in excess of those being generally charged by the other Lenders or (z) in the case of a refusal by a Lender to consent to a proposed change, waiver, discharge or termination with respect to this Agreement which has been approved by the Required Lenders as (and to the extent) provided in Section 14.12(b), the Borrowers shall have the right, in accordance with Section 14.04(b), if no Default or Event of Default then exists or would exist after giving effect to such replacement, to replace such Lender (the “Replaced Lender”) with one or more other Eligible Transferees, none of whom shall constitute a Defaulting Lender at the time of such replacement (collectively, the “Replacement Lender”) and each of which shall be reasonably acceptable to the Administrative Agent (and the Collateral Agent, in the case of any replacement RL Lender) or, in the case of a replacement as provided in Section 14.12(b) where the consent of the respective Lender is required with respect to less than all Tranches of its Loans or Commitments, to replace the Commitments and/or outstanding Loans of such Lender in respect of each Tranche where the consent of such Lender would otherwise be individually required, with identical Commitments and/or Loans of the respective Tranche provided by the Replacement Lender; provided that:

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(a)          at the time of any replacement pursuant to this Section 2.13, the Replacement Lender shall enter into one or more Assignment and Assumption Agreements pursuant to Section 14.04(b) (and with all fees payable pursuant to said Section 14.04(b) to be paid by the Replacement Lender and/or the Replaced Lender (as may be agreed to at such time by and among the Borrowers, the Replacement Lender and the Replaced Lender)) pursuant to which the Replacement Lender shall acquire all of the Commitments and outstanding Loans (or, in the case of the replacement of only (a) the Revolving Loan Commitment, the Revolving Loan Commitment and outstanding Revolving Loans and participations in Letter of Credit Outstandings and/or (b) the outstanding Term Loans of any Tranche, the outstanding Term Loans of the respective Tranche or Tranches with respect to which such Lender is being replaced) of, and in each case (except for the replacement of only the outstanding Term Loans of any or all Tranches of Term Loans of the respective Lender) all participations in Letters of Credit by, the Replaced Lender and, in connection therewith, shall pay to (x) the Replaced Lender in respect thereof an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the respective Replaced Lender under each Tranche with respect to which such Replaced Lender is being replaced, (B) an amount equal to all Unpaid Drawings (unless there are no Unpaid Drawings with respect to the Tranche being replaced) that have been funded by (and not reimbursed to) such Replaced Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but theretofore unpaid, Fees owing to the Replaced Lender (but only with respect to the relevant Tranche, in the case of the replacement of less than all Tranches of Loans then held by the respective Replaced Lender) pursuant to Sections 4.01 and 5.02, and (y) except in the case of the replacement of only the outstanding Term Loans of one or more Tranches of a Replaced Lender, each Issuing Lender an amount equal to such Replaced Lender’s RL Percentage of any Unpaid Drawing relating to Letters of Credit issued by such Issuing Lender (which at such time remains an Unpaid Drawing) to the extent such amount was not theretofore funded by such Replaced Lender; and

(b)          all obligations of the Borrowers then owing to the Replaced Lender (other than those (a) specifically described in clause (a) above in respect of which the assignment purchase price has been, or is concurrently being, paid, but including all amounts, if any, owing under Section 2.11 or (b) relating to any Tranche of Loans and/or Commitments of the respective Replaced Lender which will remain outstanding after giving effect to the respective replacement) shall be paid in full to such Replaced Lender concurrently with such replacement.

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Upon receipt by the Replaced Lender of all amounts required to be paid to it pursuant to this Section 2.13, the Administrative Agent shall be entitled (but not obligated) and authorized to execute an Assignment and Assumption Agreement on behalf of such Replaced Lender, and any such Assignment and Assumption Agreement so executed by the Administrative Agent and the Replacement Lender shall be effective for purposes of this Section 2.13 and Section 14.04. Upon the execution of the respective Assignment and Assumption Agreement, the payment of amounts referred to in clauses (a) and (b) above, recordation of the assignment on the Register by the Administrative Agent pursuant to Section 14.15 and, if so requested by the Replacement Lender, delivery to the Replacement Lender of the appropriate Note or Notes executed by the Borrowers, (x) the Replacement Lender shall become a Lender hereunder and, unless the respective Replaced Lender continues to have outstanding Term Loans and/or a Revolving Loan Commitment hereunder, the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 2.10, 2.11, 3.06, 6.04, 13.06, 14.01 and 14.06), which shall survive as to such Replaced Lender and (y) except in the case of the replacement of only outstanding Term Loans pursuant to this Section 2.13, the RL Percentages of the Lenders shall be automatically adjusted at such time to give effect to such replacement.

SECTION 3.         Letters of Credit.

3.01.      Letters of Credit. (a) Subject to and upon the terms and conditions set forth herein, the Administrative Borrower may request that an Issuing Lender issue, at any time and from time to time on and after the Closing Date and prior to the 60th day prior to the Revolving Loan Maturity Date, for the account of the Borrowers and for the benefit of (x) any holder (or any trustee, agent or other similar representative for any such holders) of L/C Supportable Obligations, an irrevocable standby letter of credit, in a form customarily used by such Issuing Lender or in such other form as is reasonably acceptable to such Issuing Lender, and (y) sellers of goods to the Borrowers or any of their Subsidiaries, an irrevocable trade letter of credit, in a form customarily used by such Issuing Lender or in such other form as has been approved by such Issuing Lender (each such letter of credit, a “Letter of Credit” and, collectively, the “Letters of Credit”). All Letters of Credit shall be denominated in Dollars and shall be issued on a sight basis only. Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (the “UCP”) or the International Standby Practices (International Chamber of Commerce Publication Number 590) (the “ISP98 Rules”), or any subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by Issuing Lender, and each trade Letter of Credit shall be subject to the UCP. All disbursements or payments related to Letters of Credit shall be deemed to be Revolving Loans and shall bear interest at the rate applicable to Revolving Loans in accordance with Section 4.01. Letters of Credit that have not been drawn upon shall not bear interest.

(b)          Subject to and upon the terms and conditions set forth herein, each Issuing Lender agrees that it will, at any time and from time to time on and after the Closing Date and prior to the 60th day prior to the Revolving Loan Maturity Date, following its receipt of the respective Letter of Credit Application, issue for account of the Borrowers, one or more Letters of Credit as are permitted to remain outstanding hereunder without giving rise to a Default or an Event of Default, provided that no Issuing Lender shall be under any obligation to issue any Letter of Credit of the types described above if at the time of such issuance:

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(i)          any order, judgment or decree of any Governmental Authority or arbitrator shall purport by its terms to enjoin or restrain such Issuing Lender from issuing such Letter of Credit or any requirement of law applicable to such Issuing Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Lender shall prohibit, or request that such Issuing Lender refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Lender with respect to such Letter of Credit any restriction or reserve or capital requirement (for which such Issuing Lender is not otherwise compensated hereunder) not in effect with respect to such Issuing Lender on the date hereof, or any unreimbursed loss, cost or expense which was not applicable or in effect with respect to such Issuing Lender as of the date hereof and which such Issuing Lender reasonably and in good faith deems material to it;

(ii)         the issuance of such Letter of Credit would violate one or more policies of the Issuing Lender applicable to letters of credit generally; or

(iii)        such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.

(c)          Each Borrower agrees to be bound by the terms of the Letter of Credit Application and by the Issuing Lender’s interpretations (based on its commercially reasonable judgment) of any Letter of Credit issued on behalf of such Borrower and by the Issuing Lender’s written regulations and customary practices relating to letters of credit, though the Issuing Lender’s interpretations may be different from the interpretations of a Borrower. In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence, bad faith or willful misconduct (as determined by a court of competent jurisdiction in a final nonappealable judgment), none of the Issuing Lender, the Collateral Agent or the Administrative Agent shall be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any instructions of the Borrower or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

(d)          In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.

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3.02.       Maximum Letter of Credit Outstandings; Final Maturities. Notwithstanding anything to the contrary contained in this Agreement, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and prior to the issuance of, the respective Letter of Credit) at such time would exceed either (x) $3,000,000 or (y) when added to the aggregate principal amount of all Revolving Loans then outstanding, the lesser of (A) an amount equal to the Total Revolving Loan Commitment at such time and (B) the Formula Amount (calculated without giving effect to the deductions provided for in Section 2.01(c)(y)(iii)), and (ii) each Letter of Credit shall by its terms terminate (x) in the case of standby Letters of Credit, on or before the earlier of (A) the date which occurs 12 months after the date of the issuance thereof (although any such standby Letter of Credit may be extendible for successive periods of up to 12 months, but, in each case, not beyond the tenth Business Day prior to the Revolving Loan Maturity Date, on terms acceptable to the Issuing Lender) and (B) ten Business Days prior to the Revolving Loan Maturity Date, and (y) in the case of trade Letters of Credit, on or before the earlier of (A) the date which occurs 180 days after the date of issuance thereof and (B) 30 days prior to the Revolving Loan Maturity Date.

3.03.       Letter of Credit Applications; Minimum Stated Amount. (a) Whenever the Borrowers desire that a Letter of Credit be issued for their account, the Administrative Borrower shall deliver to the Administrative Agent at the Payment Office, the Collateral Agent and the respective Issuing Lender, prior to 10:00 a.m., at least five Business Days prior to the issuance date (or such shorter period as is acceptable to such Issuing Lender in writing), the Issuing Lender’s form of letter of credit application (the “Letter of Credit Application”), completed to the reasonable satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. The Administrative Borrower shall authorize and direct the Issuing Lender to name it as the “Applicant” or “Account Party” of each Letter of Credit. If the Collateral Agent is not the Issuing Lender of any Letter of Credit, the Administrative Borrower shall authorize and direct the Issuing Lender to deliver to the Administrative Agent all instruments, documents, and other writings and property received by the Issuing Lender pursuant to the Letter of Credit and to accept and rely upon the Administrative Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor.

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(b)          The making of each Letter of Credit Application shall be deemed to be a representation and warranty by each Borrower to the Lenders that such Letter of Credit may be issued in accordance with, and will not violate the requirements of, Section 3.02. Unless the respective Issuing Lender has received notice from the Administrative Borrower, any other Credit Party or the Required Lenders before it issues a Letter of Credit that one or more of the conditions specified in Section 7 or 8 are not then satisfied, or that the issuance of such Letter of Credit would violate Section 3.02, then such Issuing Lender shall, subject to the terms and conditions of this Agreement, issue the requested Letter of Credit for the account of the Borrowers in accordance with such Issuing Lender’s usual and customary practices. Upon the issuance of or modification or amendment to any standby Letter of Credit, each Issuing Lender shall promptly notify the Administrative Borrower, the Administrative Agent, and the Collateral Agent in writing of such issuance, modification or amendment and such notice shall be accompanied by a copy of such Letter of Credit or the respective modification or amendment thereto, as the case may be. Promptly after receipt of such notice the Administrative Agent and the Collateral Agent shall notify the Participants, in writing, of such issuance, modification or amendment. On the first Business Day of each week, each Issuing Lender shall furnish the Administrative Agent and the Collateral Agent with a written (including via facsimile) report of the daily aggregate outstanding of trade Letters of Credit issued by such Issuing Lender for the immediately preceding week. Notwithstanding anything to the contrary contained in this Agreement, in the event that a Lender Default exists with respect to any RL Lender, no Issuing Lender shall be required to issue, renew, extend or amend any Letter of Credit, unless such Issuing Lender has entered into arrangements satisfactory to it and the Administrative Borrower to eliminate such Issuing Lender’s risk with respect to each Defaulting Lender’s participation in Letters of Credit issued by such Issuing Lender (which arrangements are hereby consented to by the Lenders), including by cash collateralizing each Defaulting Lender’s RL Percentage of the Letter of Credit Outstandings with respect to such Letters of Credit, in an amount equal to one hundred and five percent (105%) of the Letter of Credit Outstandings (such arrangements, the “Letter of Credit Back-Stop Arrangements”)

(c)          The initial Stated Amount of each Letter of Credit shall not be less than $100,000 or such lesser amount as is acceptable to the respective Issuing Lender.

3.04.       Letter of Credit Participations. (a) Immediately upon the issuance by an Issuing Lender of any Letter of Credit, such Issuing Lender shall be deemed to have sold and transferred to each RL Lender, and each such RL Lender (in its capacity under this Section 3.04, a “Participant”) shall be deemed irrevocably and unconditionally to have purchased and received from such Issuing Lender, without recourse or warranty, an undivided interest and participation, to the extent of such Participant’s RL Percentage, in such Letter of Credit, each drawing or payment made thereunder and the obligations of the Borrowers under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto. Upon any change in the Revolving Loan Commitments or RL Percentages of the Lenders pursuant to Section 2.13 or 14.04(b), it is hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid Drawings relating thereto, there shall be an automatic adjustment to the participations pursuant to this Section 3.04 to reflect the new RL Percentages of the assignor and assignee Lender, as the case may be.

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(b)          In determining whether to pay under any Letter of Credit, no Issuing Lender shall have any obligation relative to the other Lenders other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear to substantially comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by an Issuing Lender under or in connection with any Letter of Credit issued by it shall not create for such Issuing Lender any resulting liability to any Borrower, any other Credit Party, any Lender or any other Person unless such action is taken or omitted to be taken with gross negligence or willful misconduct on the part of such Issuing Lender (as determined by a court of competent jurisdiction in a final and non-appealable decision).

(c)          In the event that an Issuing Lender makes any payment under any Letter of Credit issued by it and the Borrowers shall not have reimbursed such amount in full to such Issuing Lender pursuant to Section 3.05(a), such Issuing Lender shall promptly notify the Administrative Agent, which shall promptly notify each Participant of such failure, and each Participant shall promptly and unconditionally pay to such Issuing Lender the amount of such Participant’s RL Percentage of such unreimbursed payment in Dollars and in same day funds. If the Administrative Agent so notifies, prior to 12:00 Noon (New York City time) on any Business Day, any Participant required to fund a payment under a Letter of Credit, such Participant shall make available to the respective Issuing Lender in Dollars such Participant’s RL Percentage of the amount of such payment on such Business Day in same day funds, whereupon such Participants shall (subject to Section 3.04(d)) each be deemed to have made a Revolving Loan that is a Base Rate Loan to the Borrowers in that amount. If and to the extent such Participant shall not have so made its RL Percentage of the amount of such payment available to respective Issuing Lender by no later than 2:00 p.m. (New York City time) with respect to any Letter of Credit on the Drawing Date, such Participant agrees to pay to such Issuing Lender, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to such Issuing Lender at the overnight Federal Funds Rate for the first three days and at the interest rate applicable to Revolving Loans that are maintained as Base Rate Loans for each day thereafter. The Administrative Agent will promptly give notice of the occurrence of the Drawing Date, but failure of the Administrative Agent to give any such notice on the Drawing Date or in sufficient time to enable any RL Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 3.04(c) provided that such Lender shall not be obligated to pay interest as provided in Section 4.01 until and commencing from the date of receipt of notice from the Administrative Agent of a drawing. The failure of any Participant to make available to an Issuing Lender its RL Percentage of any payment under any Letter of Credit issued by such Issuing Lender shall not relieve any other Participant of its obligation hereunder to make available to such Issuing Lender its RL Percentage of any payment under any Letter of Credit on the date required, as specified above, but no Participant shall be responsible for the failure of any other Participant to make available to such Issuing Lender such other Participant’s RL Percentage of any such payment. Each RL Lender’s payment to the Issuing Lender pursuant to this Section 3.04(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “Participation Revolving Loan” from such Lender in satisfaction of its Revolving Loan Commitment under this Section 3.04.

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(d)          With respect to any unreimbursed drawing that is not converted into a Revolving Loan to the Borrowers in whole or in part as contemplated by Section 3.05(a), because of the failure of the Borrowers to satisfy the conditions set forth in Sections 7 or 8 (other than any notice requirements) or for any other reason, the Borrowers shall be deemed to have incurred from the Issuing Lender a borrowing (each a “Letter of Credit Borrowing”) in the currency in which such Letter of Credit is denominated in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum equal to the interest rate on Revolving Loans that are Base Rate Loans.

(e)          Whenever an Issuing Lender receives a payment of a reimbursement obligation as to which it has received any payments from the Participants pursuant to clause (c) above, such Issuing Lender shall pay to each such Participant which has paid its RL Percentage thereof, in Dollars and in same day funds, an amount equal to such Participant’s share (based upon the proportionate aggregate amount originally funded by such Participant to the aggregate amount funded by all Participants) of the principal amount of such reimbursement obligation and interest thereon accruing after the purchase of the respective participations.

(f)          If the Issuing Lender is required at any time to return to the Borrowers or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Event, any portion of the payments made by a Borrower to the Issuing Lender pursuant to Section 3.05 in reimbursement of a payment made under any Letter of Credit or interest or fee thereon, each RL Lender shall, on demand of the Issuing Lender, forthwith return to the Issuing Lender the amount of its applicable pro rata share of any amounts so returned by the Issuing Lender plus interest at the Federal Funds Rate.

(g)          Upon the request of any Participant, each Issuing Lender shall furnish to such Participant copies of any standby Letter of Credit issued by it and such other documentation as may reasonably be requested by such Participant.

(h)          The obligations of the Participants to make payments to each Issuing Lender with respect to Letters of Credit shall be irrevocable and not subject to any qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances:

(i)          any lack of validity or enforceability of this Agreement or any of the other Credit Documents;

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(ii)         the existence of any claim, setoff, defense or other right which Holdings or any of its Subsidiaries may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, the Collateral Agent, any Participant, or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between Holdings or any Subsidiary of Holdings and the beneficiary named in any such Letter of Credit);

(iii)        any draft, certificate or any other document presented under any 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;

(iv)        the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; and

(v)         the occurrence of any Default or Event of Default.

(i)          Each Participant’s Revolving Loan Commitment shall continue until the last to occur of any of the following events: (x) the Issuing Lender ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncanceled and (z) all Secured Parties have been fully reimbursed for all payments made under or relating to Letters of Credit.

3.05.       Agreement to Repay Letter of Credit Drawings. (a) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Lender will promptly notify the Administrative Borrower. The Borrowers shall reimburse (such obligation to reimburse the Issuing Lender together with any fees thereon pursuant to Section 4.01 shall be referred to as a “Unpaid Drawing”) the Issuing Lender prior to 12:00 noon (New York City time) on such date that an amount is paid by the Issuing Lender under any Letter of Credit (each such date, a “Drawing Date”) in an amount and in the currency equal to the amount and currency so paid by the Issuing Lender. In the event the Borrowers fail to reimburse the Issuing Lender for the full amount of any drawing under any Letter of Credit by 12:00 noon (New York City time) with respect to any Letter of Credit on the Drawing Date, the Administrative Agent will promptly notify each RL Lender thereof, and the Administrative Borrower shall be deemed to have requested that a Revolving Loan that is a Base Rate Loan be made by the RL Lenders pursuant to Section 2.01(c) to be disbursed on the Drawing Date under such Letter of Credit. Any notice given by the Administrative Agent pursuant to this Section 3.05(a) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

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(b)          The obligations of the Borrowers under this Section 3.05 to reimburse each Issuing Lender with respect to drafts, demands and other presentations for payment under Letters of Credit issued by it (each, a “Drawing”) (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which Holdings or any Subsidiary of Holdings may have or have had against any Lender (including in its capacity as an Issuing Lender or as a Participant), including, without limitation, any defense based upon the failure of any drawing under a Letter of Credit to conform to the terms of the Letter of Credit or any nonapplication or misapplication by the beneficiary of the proceeds of such Drawing; provided, however, that the Borrowers shall not be obligated to reimburse any Issuing Lender for any wrongful payment made by such Issuing Lender under a Letter of Credit issued by it as a result of acts or omissions constituting willful misconduct or gross negligence on the part of such Issuing Lender (as determined by a court of competent jurisdiction in a final and non-appealable decision).

3.06.       Increased Costs. (a) If at any time after the Effective Date, the introduction of or any change in any applicable law, rule, regulation, order, guideline or request or in the interpretation or administration thereof by the NAIC or any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Issuing Lender or any Participant with any request or directive by the NAIC or by any such Governmental Authority (whether or not having the force of law), shall either (i) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against letters of credit issued by any Issuing Lender or participated in by any Participant, or (ii) impose on any Issuing Lender or any Participant any other conditions relating, directly or indirectly, to this Agreement or any Letter of Credit; and the result of any of the foregoing is to increase the cost to any Issuing Lender or any Participant of issuing, maintaining or participating in any Letter of Credit, or reduce the amount of any sum received or receivable by any Issuing Lender or any Participant hereunder or reduce the rate of return on its capital with respect to Letters of Credit (except for changes in the rate of tax on, or determined by reference to, the net income or net profits of such Issuing Lender or such Participant pursuant to the laws of the jurisdiction in which it is organized or in which its principal office or applicable lending office is located or any subdivision thereof or therein), then, upon the delivery of the certificate referred to below to the Administrative Borrower by any Issuing Lender or any Participant (a copy of which certificate shall be sent by such Issuing Lender or such Participant to the Administrative Agent), the Borrowers agree to pay to such Issuing Lender or such Participant such additional amount or amounts as will compensate such Issuing Lender or such Participant for such increased cost or reduction in the amount receivable or reduction on the rate of return on its capital. Any Issuing Lender or any Participant, upon determining that any additional amounts will be payable to it pursuant to this Section 3.06, will give prompt written notice thereof to the Administrative Borrower, which notice shall include a certificate submitted to the Administrative Borrower by such Issuing Lender or such Participant (a copy of which certificate shall be sent by such Issuing Lender or such Participant to the Administrative Agent), setting forth in reasonable detail the basis for the calculation of such additional amount or amounts necessary to compensate such Issuing Lender or such Participant. The certificate required to be delivered pursuant to this Section 3.06 shall, absent manifest error, be final and conclusive and binding on the Borrowers.

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(b)          Failure or delay on the part of any Issuing Lender to demand compensation pursuant to this Section 3.06 shall not constitute a waiver of such Issuing Lender’s right to demand such compensation; provided that the Borrowers shall not be required to compensate an Issuing Lender pursuant to this Section 3.06 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Issuing Lender notifies the Administrative Borrower of the change or changes specified in this Section 3.06 giving rise to such increased costs or reductions, and of such Issuing Lender’s intention to claim compensation therefor (except that, if the change giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

SECTION 4.         Commitment Commission; Fees; Reductions of Commitment.

4.01.      Fees. (a) The Borrowers agree to pay to the Administrative Agent for distribution to each Non-Defaulting RL Lender a commitment commission (the “Commitment Commission”) for the period from and including the Effective Date to and including the Revolving Loan Maturity Date (or such earlier date on which the Total Revolving Loan Commitment has been terminated) computed at a rate per annum equal to ½ of 1% of the Unutilized Revolving Loan Commitment of such Non-Defaulting RL Lender as in effect from time to time. Accrued Commitment Commission shall be due and payable quarterly in arrears on each Quarterly Payment Date and on the date upon which the Total Revolving Loan Commitment is terminated.

(b)          The Borrowers agree to pay to the Administrative Agent for distribution to each RL Lender (based on each such RL Lender’s respective RL Percentage) a fee in respect of each Letter of Credit (the “Letter of Credit Fee”) for the period from and including the date of issuance of such Letter of Credit to and including the date of termination or expiration of such Letter of Credit, computed at a rate per annum equal to the Applicable Margin as in effect from time to time during such period with respect to Revolving Loans that are maintained as Eurodollar Loans on the daily Stated Amount of each such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on each Quarterly Payment Date and on the first day on or after the termination of the Total Revolving Loan Commitment upon which no Letters of Credit remain outstanding.

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(c)          The Borrowers agree to pay to each Issuing Lender, for its own account, a facing fee in respect of each Letter of Credit issued by it (the “Facing Fee”) for the period from and including the date of issuance of such Letter of Credit to and including the date of termination or expiration of such Letter of Credit, computed at a rate per annum equal to 1/4 of 1% on the daily Stated Amount of such Letter of Credit, provided that in any event the minimum amount of Facing Fees payable in any twelve-month period for each Letter of Credit shall be not less than $500, it being agreed that, on the day of issuance of any Letter of Credit and on each anniversary thereof prior to the termination or expiration of such Letter of Credit, if $500 will exceed the amount of Facing Fees that will accrue with respect to such Letter of Credit for the immediately succeeding twelve-month period, the full $500 shall be payable on the date of issuance of such Letter of Credit and on each such anniversary thereof. Except as otherwise provided in the proviso to the immediately preceding sentence, accrued Facing Fees shall be due and payable quarterly in arrears on each Quarterly Payment Date and upon the first day on or after the termination of the Total Revolving Loan Commitment upon which no Letters of Credit remain outstanding.

(d)          The Borrowers agree to pay to each Issuing Lender, for its own account, upon each payment under, issuance of, or amendment to, any Letter of Credit issued by it, such amount as shall at the time of such event be the administrative charge and the reasonable expenses which such Issuing Lender is generally imposing in connection with such occurrence with respect to letters of credit.

(e)          From and after the date hereof and until the Maturity Date, to the Collateral Agent, a monthly collateral management fee of $2,000, payable on the Closing Date and monthly thereafter (on the first day of each month). In addition, fees for field examinations and collateral analyses shall be charged at an additional rate of $850 per day for each person employed to perform such field examinations and collateral analyses, plus expenses and administrative fees; provided, that the frequency of field examinations at Borrowers’ expense (excluding, for the avoidance of doubt, the initial field examination conducted prior to the Closing Date) shall be limited to one (1) time per each twelve-month period following the Closing Date, unless (i) Undrawn Availability is less than $10,000,000 each day for any five (5) day consecutive period or (ii) average Undrawn Availability is less than $10,000,000 for the immediately preceding thirty (30) day period, after which date the frequency of field examinations shall be determined by the Collateral Agent in its reasonable credit judgment exercised in good faith; provided, further, no such limitation on the number of field examinations shall apply if an Event of Default has occurred and is continuing.

(f)          The Borrowers agrees to pay to the Administrative Agent such fees as may be agreed to in writing from time to time by Holdings or any of its Subsidiaries and the Administrative Agent.

4.02.       Voluntary Termination of Revolving Loan Commitments. Upon at least thirty (30) days’ prior written notice to the Administrative Agent at the Notice Office and the Collateral Agent (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Administrative Borrower shall have the right, at any time or from time to time, to terminate the Total Revolving Loan Commitment in whole, or reduce it in part, pursuant to this Section 4.02, in a minimum amount of $2,000,000 (or greater amount in an integral multiple of $1,000,000 in the case of partial reductions to the Total Revolving Loan Commitment), provided that each such reduction shall apply proportionately to permanently reduce the Revolving Loan Commitment of each RL Lender, and after giving effect to such reduction/termination, so long as Cerberus PNC Senior Loan Fund, L.P. or any Affiliate is holding any portion of the Term Loan, the Total Revolving Loan Commitment shall not be less than $10,000,000.

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4.03.       Mandatory Reduction of Commitments. (a) The Total Commitment (and the Commitment of each Lender) shall terminate in its entirety on November 23, 2015, unless the Closing Date has occurred on or prior to such date.

(b)          In addition to any other mandatory commitment reductions pursuant to this Section 4.03, the Total Term Loan Commitment (and the Term Loan Commitment of each Lender) shall terminate in its entirety on the Closing Date (after giving effect to the making of the Term Loans on such date).

(c)          In addition to any other mandatory commitment reductions pursuant to this Section 4.03, the Total Revolving Loan Commitment shall terminate in its entirety upon the Revolving Loan Maturity Date.

(d)          In addition to any other mandatory commitment reductions pursuant to this Section 4.03, the Total Revolving Loan Commitment shall be permanently reduced from time to time to the extent required by Section 6.02(h).

(e)          Each reduction to, or termination of, the Total Revolving Loan Commitment pursuant to this Section 4.03 shall be applied to proportionately reduce or terminate, as the case may be, the Revolving Loan Commitment of each Lender with a Revolving Loan Commitment.

SECTION 5.          Prepayment Premiums.

5.01.       [Intentionally Omitted].

5.02.       Prepayment Premiums. (a) Upon (x) the occurrence of any voluntary prepayment of all or a portion of the principal of the Term Loans pursuant to Section 6.01 (whether or not a Default exists), (y) repayment of or a distribution in respect of the Term Loans following acceleration thereof pursuant to Section 12 or applicable provisions of the Bankruptcy Code or any other applicable insolvency laws or (z) such amount otherwise becoming or being declared immediately due and payable pursuant to the terms hereof (or upon the occurrence of any prepayment of all or a portion of the principal of the Term Loans pursuant to Section 6.02, but solely to the extent that the action giving rise to such prepayment constitutes a Default hereunder), then, in each such case, in addition to the payment of the principal amount of the Term Loans, accrued and unpaid interest, and Fees, the Borrowers shall pay the following prepayment premium (each a “Prepayment Premium”) to the Lenders:

(i)          if any such prepayment occurs after the Closing Date but prior to or on the last day of the 12th full month following the Closing Date (it being understood that, pursuant to Section 6.01, no voluntary prepayments are permitted during such period) (the “First Period”), the Borrowers shall pay the Lenders a prepayment premium equal to ten percent (10.00%) of the principal amount of the Term Loans prepaid or repaid at such time;

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(ii)         if any such prepayment or repayment occurs after the First Period but prior to or on the last day of the 24th full month following the Closing Date (the “Second Period”), the Borrowers shall pay the Lenders a prepayment premium equal to four percent (4.00%) of the principal amount of the Term Loans prepaid or repaid at such time;

(iii)        if any such prepayment or repayment occurs after the Second Period but prior to or on the last day of the 36th full month following the Closing Date (the “Third Period”), the Borrowers shall pay the Lenders a prepayment premium equal to two and one-half percent (2.50%) of the principal amount of the Term Loans prepaid or repaid at such time;

(iv)        if any such prepayment or repayment occurs after the Third Period but prior to or on the last day of the 48th full month following the Closing Date (the “Fourth Period”), the Borrowers shall pay the Lenders a prepayment premium equal to one percent (1.00%) of the principal amount of the Term Loans prepaid or repaid at such time;

(v)         if any such prepayment or repayment occurs after the Fourth Period, the Borrowers shall not be obligated to pay any prepayment premium.

(b)          Each Borrower agrees that the premiums required under this Section 5.02 are a reasonable calculation of the Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from a prepayment of any Loan. All prepayment premiums under this Section 5.02 shall be in addition to all other amounts which may be due to the Lenders from time to time pursuant to the terms of this Agreement and the other Credit Documents. All of the Loans shall be subject to the prepayment premiums set forth in this Section 5.02 and the payment of one prepayment premium on a portion of the Loans shall not excuse or reduce the payment of a premium on any subsequent prepayment or repayment of the Loans.

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SECTION 6.          Prepayments; Payments; Taxes.

6.01.       Voluntary Prepayments. The Borrowers shall have the right to prepay the Loans, subject to the Prepayment Premium, if applicable, in whole or in part at any time and from time to time on and after the first anniversary of the Closing Date on the following terms and conditions: (i) the Administrative Borrower shall give the Administrative Agent prior to 12:00 Noon (New York City time) at the Notice Office (x) in the case of Revolving Loans, at least three Business Days’, and in the case of Term Loans, at least thirty days’, prior written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay Base Rate Loans and (y) in the case of Revolving Loans, at least three Business Days’, and in the case of Term Loans, at least thirty days’, prior written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay Eurodollar Loans, which notice (in each case) shall specify whether Term Loans or Revolving Loans shall be prepaid, the amount of such prepayment and the Types of Loans to be prepaid and, in the case of Eurodollar Loans, the specific Borrowing or Borrowings pursuant to which such Eurodollar Loans were made, and which notice the Administrative Agent shall promptly transmit to each of the Lenders; (ii) (x) each partial prepayment of Term Loans pursuant to this Section 6.01 shall be in an aggregate principal amount of at least $1,000,000 (or such lesser amount as is acceptable to the Administrative Agent in any given case), and (y) each partial prepayment of Revolving Loans pursuant to this Section 6.01 shall be in an aggregate principal amount of at least $500,000 (or such lesser amount as is acceptable to the Administrative Agent), provided that if any partial prepayment of Eurodollar Loans made pursuant to any Borrowing shall reduce the outstanding principal amount of Eurodollar Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount applicable thereto, then such Borrowing may not be continued as a Borrowing of Eurodollar Loans (and same shall automatically be converted into a Borrowing of Base Rate Loans) and any election of an Interest Period with respect thereto given by the Administrative Borrower shall have no force or effect; (iii) each prepayment pursuant to this Section 6.01 in respect of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans, provided that at the Administrative Borrower’s election in connection with any prepayment of Revolving Loans pursuant to this Section 6.01, such prepayment shall not, so long as no Default or Event of Default then exists, be applied to any Revolving Loan of a Defaulting Lender; (iv) each voluntary prepayment of Term Loans pursuant to this Section 6.01 shall be applied to the Term Loans on a pro rata basis; and (v) each prepayment of Term Loans pursuant to this Section 6.01 shall reduce the then remaining Scheduled Repayments of the Term Loans on a pro rata basis (based upon the then remaining principal amount of each such Scheduled Repayment after giving effect to all prior reductions thereto).

6.02.       Mandatory Repayments. (a) On any day on which the sum of (I) the aggregate outstanding principal amount of all Revolving Loans (after giving effect to all other repayments thereof on such date) and (II) the aggregate amount of all Letter of Credit Outstandings exceeds the Formula Amount at such time, the Borrowers shall prepay on such day the principal of Revolving Loans in an amount equal to such excess. If, after giving effect to the prepayment of all outstanding Revolving Loans, the aggregate amount of the Letter of Credit Outstandings exceeds the Formula Amount at such time, the Borrowers shall pay to the Administrative Agent at the Payment Office on such day an amount of cash and/or Cash Equivalents equal to the amount of such excess (up to a maximum amount equal to the Letter of Credit Outstandings at such time), such cash and/or Cash Equivalents to be held as security for all Obligations of the Borrowers to the Issuing Lenders and the Lenders hereunder in a cash collateral account to be established by the Administrative Agent.

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(b)          In addition to any other mandatory repayments pursuant to this Section 6.02, on each date set forth or otherwise described below (each, a “Scheduled Repayment Date”), the Borrowers shall be required to repay the percentage of the original principal amount of Term Loans, to the extent Term Loans are then outstanding, as is set forth opposite each such date below (each such repayment, as the same may be reduced as provided in Section 6.01 or 6.02(h), a “Scheduled Repayment”):

Scheduled Repayment Date	Percentage
The last Business Day of each fiscal quarter of Holdings, beginning on the last Business Day of the fiscal quarter ending December 31, 2015 through the last Business Day of the fiscal quarter ending September 30, 2016	0.625%
The last Business Day of each fiscal quarter of Holdings, beginning on the last Business Day of the fiscal quarter ending December 31, 2016 through the last Business Day of the fiscal quarter ending September 30, 2017	1.250%
The last Business Day of each fiscal quarter of Holdings, beginning on the last Business Day of the fiscal quarter ending December 31, 2017 through the last Business Day of the fiscal quarter ending September 30, 2018	1.750%
The last Business Day of each fiscal quarter of Holdings, beginning on the last Business Day of the fiscal quarter ending December 31, 2018 through the last Business Day of the fiscal quarter ending September 30, 2019	2.500%
Maturity Date	75.500%

(c)          [Intentionally Omitted].

(d)          In addition to any other mandatory repayments or commitment reductions pursuant to this Section 6.02, on each date on or after the Closing Date upon which Holdings or any of its Subsidiaries receives (x) any cash proceeds from any issuance or incurrence by Holdings or any of its Subsidiaries of Indebtedness (other than Indebtedness to be incurred pursuant to Section 11.04) or (y) any Cure Amount, an amount equal to 100% of the Net Cash Proceeds of the respective incurrence of Indebtedness or Cure Amount shall be applied on such date as a mandatory repayment and/or commitment reduction in accordance with the requirements of Sections 6.02(h) and (i).

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(e)          In addition to any other mandatory repayments or commitment reductions pursuant to this Section 6.02, on each date on or after the Closing Date upon which Holdings or any of its Subsidiaries receives any cash proceeds from any Asset Sale (or other sale or disposition of assets pursuant to Sections 11.02(vi) or (xii)), an amount equal to 100% of the Net Sale Proceeds therefrom shall be applied on such date as a mandatory repayment and/or commitment reduction in accordance with the requirements of Sections 6.02(h) and (i); provided, however, that such Net Sale Proceeds shall not be required to be so applied on such date so long as no Default or Event of Default then exists and such Net Sale Proceeds shall be used to purchase assets (other than inventory and working capital) used or to be used in the businesses permitted pursuant to Section 11.15 within 360 days following the date of such Asset Sale (or other sale or disposition of assets pursuant to Sections 11.02(vi) or (xii)), and provided further, that if all or any portion of such Net Sale Proceeds not required to be so applied as provided above in this Section 6.02(e) are not so reinvested within such 360-day period (or such earlier date, if any, as Holdings or the relevant Subsidiary determines not to reinvest the Net Sale Proceeds from such Asset Sale (or other sale or disposition of assets pursuant to Sections 11.02(vi) or (xii)) as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date, as the case may be) as provided above in this Section 6.02(e) without regard to the preceding proviso.

(f)          In addition to any other mandatory repayments or commitment reductions pursuant to this Section 6.02, on each Excess Cash Payment Date, an amount equal to the Excess Cash Percentage of the Excess Cash Flow for the related Excess Cash Payment Period shall be applied as a mandatory repayment and/or commitment reduction in accordance with the requirements of Sections 6.02(h) and (i).

(g)          In addition to any other mandatory repayments or commitment reductions pursuant to this Section 6.02, on each date on or after the Closing Date upon which Holdings or any of its Subsidiaries receives any cash proceeds from any Recovery Event (other than Recovery Events where the Net Cash Proceeds therefrom do not exceed $1,000,000), an amount equal to 100% of the Net Cash Proceeds from such Recovery Event shall be applied on such date as a mandatory repayment and/or commitment reduction in accordance with the requirements of Sections 6.02(h) and (i); provided, however, that such Net Cash Proceeds shall not be required to be so applied on such date so long as no Default or Event of Default then exists and Holdings has delivered a certificate to the Administrative Agent on such date stating that such Net Cash Proceeds shall be used to replace or restore any properties or assets in respect of which such Net Cash Proceeds were paid within 360 days following the date of the receipt of such Net Cash Proceeds (which certificate shall set forth the estimates of the Net Cash Proceeds to be so expended), and provided further, that if all or any portion of such Net Cash Proceeds not required to be so applied pursuant to the preceding proviso are not so used within 360 days after the date of the receipt of such Net Cash Proceeds (or such earlier date, if any, as Holdings or the relevant Subsidiary determines not to reinvest the Net Cash Proceeds relating to such Recovery Event as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date, as the case may be) as provided above in this Section 6.02(g) without regard to the immediately preceding proviso.

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(h)          Each amount required to be repaid pursuant to Sections 6.02(d), (e), (f) and (g) and applied in accordance with this Section 6.02(h) shall be applied (i) first, to repay the outstanding principal amount of Term Loans, and (ii) second, to the extent in excess of the amounts required to be applied pursuant to the preceding clause (i), to reduce the Total Revolving Loan Commitment in the manner provided in Section 4.03(d) (it being understood and agreed that (x) the amount of any reduction to the Total Revolving Loan Commitment as provided in immediately preceding clause (ii) shall be deemed to be an application of proceeds for purposes of this Section 6.02(h) even though cash is not actually applied and (y) any cash received by Holdings or any of its Subsidiaries will be retained by such Person except to the extent that either (A) such cash is otherwise required to be applied as provided in Section 6.02(a) as a result of any reduction to the Total Revolving Loan Commitment or (B) a Default or an Event of Default then exists, in which case such cash (after giving effect to any application otherwise required pursuant to preceding sub-clause (A)) shall be deposited with the Administrative Agent as security for all Obligations of the Borrowers to the Lenders hereunder in a cash collateral account to be established by the Administrative Agent)). The amount of each principal repayment of Term Loans made as required by Sections 6.02(d), (e), (f) and (g) shall be applied (i) pro rata to each Term Loan (based upon the then outstanding principal amounts of the Term Loans) and (ii) to reduce the then remaining Scheduled Repayments of the Loans on a pro rata basis (based upon the then remaining principal amount of each such Scheduled Repayment of the Term Loans after giving effect to all prior reductions thereto).

(i)          With respect to each repayment of Loans required by this Section 6.02, the Administrative Borrower may designate the Types of Loans of the respective Tranche which are to be repaid and, in the case of Eurodollar Loans, the specific Borrowing or Borrowings of the respective Tranche pursuant to which such Eurodollar Loans were made, provided that: (i) repayments of Eurodollar Loans pursuant to this Section 6.02 may only be made on the last day of an Interest Period applicable thereto unless all Eurodollar Loans of the respective Tranche have been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount applicable thereto, such Borrowing shall be automatically converted into a Borrowing of Base Rate Loans; and (iii) each repayment of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans. In the absence of a designation by the Administrative Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its sole discretion.

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(j)          In addition to any other mandatory repayments pursuant to this Section 6.02, (i) all then outstanding Loans of a respective Tranche shall be repaid in full on the respective Maturity Date for such Tranche of Loans, and (ii) unless the Required Lenders otherwise agree in writing, all then outstanding Loans shall be repaid in full on the date on which a Change of Control occurs.

(k)          If any RL Lender becomes a Defaulting Lender at any time that any Letter of Credit issued by any Issuing Lender is outstanding, the Borrowers shall enter into the applicable Letter of Credit Back-Stop Arrangements with such Issuing Lender no later than 10 Business Days after the date such RL Lender becomes a Defaulting Lender.

(l)          Anything contained herein to the contrary notwithstanding, in the event the Borrowers are required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of the Term Loans in accordance with clauses (b) through (g) above, not later than 1:00 p.m., New York City time, three (3) Business Days prior to the date (the “Required Prepayment Date”) on which the Administrative Borrower elects (or are otherwise required) to make such Waivable Mandatory Prepayment, the Administrative Borrower shall notify Administrative Agent of the amount of such prepayment, and Administrative Agent will promptly thereafter notify each Lender holding an outstanding Term Loan of the amount of such Lender’s pro rata share of such Waivable Mandatory Prepayment and such Lender’s option to refuse such amount. Each such Lender may exercise such option by giving written notice to the Administrative Agent of its election to do so not later than 1:00 p.m., New York City time, the second Business Day prior to the Required Prepayment Date (it being understood that any Lender which does not notify the Administrative Agent of its election to exercise such option on or before the first Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option). On the Required Prepayment Date, the Borrowers shall pay to the Administrative Agent the amount of the Waivable Mandatory Prepayment less the amount of the Declined Proceeds (as defined below), which amount shall be applied by the Administrative Agent to prepay the Term Loans of those Lenders that have elected to accept such Waivable Mandatory Prepayment (each, an “Accepting Lender”) (which prepayment shall be applied to the scheduled installments of principal of the Loans in accordance with Section 6.02(h)). The portion of the Waivable Mandatory Prepayment otherwise payable to those Lenders that have elected to exercise such option and decline such Waivable Mandatory Prepayment (such declined amounts, the “Declined Proceeds”) and which has not been accepted by other Lenders may be retained by the Borrowers and used for any purpose not prohibited by this Agreement. For the avoidance of doubt, the Declined Proceeds shall be offered to each Accepting Lender based on each such Lender’s pro rata share until such time as there are either (x) no remaining Accepting Lenders or (y) no remaining Declined Proceeds.

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(m)          Cash Dominion. At such time as the Administrative Agent or the Collateral Agent is sweeping cash from the Cash Management Accounts pursuant to Section 10.21(b), the Administrative Agent shall on each following Business Day apply all funds transferred to or deposited with the Administrative Agent to the payment in whole or in part, of the Revolving Loans (or, in the event the Revolving Loans have been paid in full, to the cash collateralization of any outstanding Letters of Credit) in an amount equal to one hundred and five percent (105%) of the Letter of Credit Outstandings.

6.03.       Method and Place of Payment. Except as otherwise specifically provided herein, all payments under this Agreement and under any Note shall be made to the Administrative Agent for the account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York City time) on the date when due and shall be made in Dollars in immediately available funds at the Payment Office. Any payments received by the Administrative Agent after such time shall be deemed to have been received on the next Business Day and any applicable interest or fee shall continue to accrue; provided that for the purpose of computing interest charges for the Obligations during any time when springing cash dominion is in effect pursuant to Section 10.21 all items of payment (including customer remittances received into any Cash Management Accounts and applied to the Obligations under any cash dominion arrangements described in Section 10.21) shall be deemed applied by the Administrative Agent one (1) Business Day after (A) the Business Day following the Administrative Agent or Collateral Agent’s receipt of such payments via wire transfer or electronic depository check or (B) in the case of payments received by the Administrative Agent or Collateral Agent in any other form, the Business Day such payment constitutes good funds. This approach is acknowledged by the parties to be an integral aspect of the price of the Lenders’ financing of the Borrowers and shall apply irrespective of the characterization of whether receipts are owned by a Borrower or the Lenders. Each Borrower and each other Credit Party hereby irrevocably waives the right to direct the application during the continuance of an Event of Default of any and all payments in respect of any Obligation and any proceeds of Collateral. Each Borrower hereby authorizes the Administrative Agent, the Collateral Agent and each Lender to make a Revolving Loan (which shall be a Base Rate Loan) to pay (i) interest, principal, Unpaid Drawing, agent fees, Commitment Commission and Letter of Credit Fees, in each instance, on the date due, or (ii) after five (5) Business Days’ prior notice to the Administrative Borrower, other fees, costs or expenses payable by the Borrowers or any Credit Party hereunder or under the other Credit Documents. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.

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6.04.       Net Payments. (a) All payments made by any Credit Party under any Credit Document will be made without setoff, counterclaim or other defense. Except as required by applicable law, all such payments will be made free and clear of, and without deduction or withholding for any Taxes. If any applicable law (as determined in the good faith discretion of the applicable Credit Party) requires the deduction or withholding of any Tax from any such payment by such Credit Party, then such Credit Party shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and if any such Tax is an Indemnified Tax, then the Credit Party agrees to pay the full amount of such Indemnified Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under the relevant Credit Document, after withholding or deduction for or on account of any Indemnified Taxes (including such deductions and withholdings applicable to additional sums payable under this Section 6.04), will not be less than the amount provided for under such Credit Document. As soon as practicable after any payment of Taxes by any Credit Party to a Governmental Authority pursuant to this Section 6.04, such Credit Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. The Credit Parties shall jointly and severally indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Administrative Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. The Credit Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(b)          In addition to the obligations set forth in Section 6.04(c) or (d), as applicable, any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit Document shall deliver to the Administrative Borrower and the Administrative Agent, at the time or times reasonably requested by the Administrative Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Administrative Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Administrative Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Administrative Borrower or the Administrative Agent as will enable the Administrative Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in this Section 6.04(b), the completion, execution and submission of such documentation (other than such documentation set forth in Sections 6.04(c), (d) and (e) below), shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

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(c)          To the extent eligible, each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. federal income tax purposes agrees to deliver to the Administrative Borrower and the Administrative Agent on or prior to the Effective Date or, in the case of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to Section 2.13 or 14.04(b) (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Lender, (and from time to time thereafter upon the reasonable request of the Administrative Borrower or the Administrative Agent) (i) two accurate and complete original signed copies of Internal Revenue Service Form W-8ECI, W-8BEN-E or Form W-8BEN (with respect to an income tax treaty) (or successor forms) (as applicable) certifying to such Lender’s entitlement as of such date to any eligible reduction in, or complete exemption from, United States withholding tax with respect to payments to be made under any Credit Document, or (ii) if the Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and cannot deliver either Internal Revenue Service Form W-8ECI, Form W-8BEN-E or Form W-8BEN (with respect to a complete exemption under an income tax treaty) (or any successor forms) pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit C (any such certificate, a “Section 6.04(c)(ii) Certificate”) and (y) two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN or Form W-8BEN-E (with respect to the portfolio interest exemption) (or successor form) certifying to such Lender’s eligibility to an entitlement as of such date to a complete exemption from United States withholding tax with respect to payments of interest to be made under any Credit Document. In addition, each Lender agrees that from time to time after the Effective Date, when a lapse in time or change in circumstances renders the previous certification obsolete or inaccurate in any material respect, such Lender will deliver to the Administrative Borrower and the Administrative Agent two new accurate and complete original signed copies of Internal Revenue Service Form W-8ECI, Form W-8BEN-E or Form W-8BEN (with respect to the benefits of any income tax treaty), or Form W-8BEN-E or Form W-8BEN (with respect to the portfolio interest exemption) and a Section 6.04(c)(ii) Certificate, as the case may be, and such other forms as may be required in order to confirm or establish the entitlement of such Lender to any eligible continued exemption from or reduction in United States withholding tax with respect to payments under any Credit Document, or such Lender shall immediately notify the Administrative Borrower and the Administrative Agent of its inability to deliver any such Form or Certificate, in which case such Lender shall not be required to deliver any such Form or Certificate pursuant to this Section 6.04(c).

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(d)          Any Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. federal income tax purposes agrees to deliver to the Administrative Borrower and the Administrative Agent on or prior to the Effective Date or, in the case of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to Section 2.13 or 14.04(b) (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Lender, (and from time to time thereafter upon the reasonable request of the Administrative Borrower or the Administrative Agent), two accurate and complete original signed copies of Internal Revenue Service Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax. In addition, each Lender agrees that from time to time after the Effective Date, when a lapse in time or change in circumstances renders the previous Form obsolete or inaccurate in any material respect, to the extent eligible, such Lender will deliver to the Administrative Borrower and the Administrative Agent two new accurate and complete original signed copies of Internal Revenue Service Form W-9 and such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from U.S. federal backup withholding tax with respect to payments under any Credit Document, or such Lender shall immediately notify the Administrative Borrower and the Administrative Agent of its inability to deliver any such Form, in which case such Lender shall not be required to deliver any such Form pursuant to this Section 6.04(d).

(e)          If a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Administrative Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Administrative Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Administrative Borrower or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 6.04(e), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(f)          In addition, the Administrative Agent shall deliver to the Administrative Borrower, at the time or times reasonably requested by the Administrative Borrower, with respect to any payments received by the Administrative Agent, such documentation as a Lender would be required to deliver hereunder.

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(g)          If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 6.04 (including by the payment of additional amounts pursuant to this Section 6.04), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 6.04(g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 6.04(g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 6.04(g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 6.04(g) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(h)          Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Credit Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 14.04(e) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Credit Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (h).

(i)          Each party’s obligations under this Section 6.04 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Credit Document.

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SECTION 7.         Conditions Precedent to Credit Events on the Closing Date. The obligation of each Lender to make Loans, and the obligation of each Issuing Lender to issue Letters of Credit, on the Closing Date, is subject at the time of the making of such Loans or the issuance of such Letters of Credit to the satisfaction of the following conditions:

7.01.       Effective Date; Notes; Credit Documents. On or prior to the Closing Date, (i) the Effective Date shall have occurred as provided in Section 14.10, (ii) there shall have been delivered to the Administrative Agent for the account of each of the Lenders that has requested same the appropriate Term Note and/or Revolving Note executed by the Borrowers, in each case in the amount, maturity and as otherwise provided herein, and (iii) the Administrative Agent shall have received this Agreement and each other Credit Document to be delivered on or prior to the Closing Date, duly executed by each Credit Party party thereto and each other party party thereto.

7.02.       Officer’s Certificate. On the Closing Date, the Administrative Agent shall have received a certificate, dated the Closing Date and signed on behalf of each Borrower by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President or any Vice President of such Administrative Borrower in the form of Exhibit D, certifying on behalf of each Borrower that (i) there shall exist no Default or Event of Default, (ii) all representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects and (iii) all of the conditions in Sections 7.06 through 7.09, inclusive, and 8.01 have been satisfied on such date (other than whether any matters are satisfactory to the Administrative Agent).

7.03.       Opinions of Counsel. On the Closing Date, the Administrative Agent shall have received from Morrison & Foerster LLP, special counsel to the Credit Parties, an opinion addressed to the Administrative Agent, the Collateral Agent and each of the Lenders and dated the Closing Date covering the matters incident to the transactions contemplated herein as the Administrative Agent may reasonably request.

7.04.       Company Documents; Proceedings; etc. (a) On the Closing Date, the Administrative Agent shall have received a certificate from each Credit Party, dated the Closing Date, signed by the Chairman of the Board, the Chief Executive Officer, the President or any Vice President of such Credit Party, and attested to by the Secretary or any Assistant Secretary of such Credit Party, with appropriate insertions, together with copies of the certificate or articles of incorporation and by-laws (or other equivalent organizational documents), as applicable, of such Credit Party and the resolutions of such Credit Party referred to in such certificate, and each of the foregoing shall be in form and substance reasonably acceptable to the Administrative Agent.

(b)          On the Closing Date, all Company and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the other Documents shall be reasonably satisfactory in form and substance to the Administrative Agent, and the Administrative Agent shall have received all information and copies of all documents and papers, including records of Company proceedings, governmental approvals, good standing certificates and bring-down telegrams or facsimiles, if any, which the Administrative Agent reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper Company or Governmental Authorities.

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7.05.       Employee Benefit Plans; Shareholders’ Agreements; Employment Agreements; Non-Compete Agreements; Collective Bargaining Agreements; Existing Indebtedness Agreements. On or prior to the Closing Date, there shall have been delivered to the Administrative Agent true and correct copies of the following documents, certified as such by an Authorized Officer of Holdings:

(i)          all Plans (and for each Plan that is required to file an annual report on Internal Revenue Service Form 5500-series, a copy of the most recent such report (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information), and for each Plan that is a “single-employer plan” as defined in Section 4001(a)(15) of ERISA, the most recently prepared actuarial valuation therefor) and any other “employee benefit plans” as defined in Section 3(3) of ERISA, and any other material agreements, plans or arrangements, with or for the benefit of current or former employees of Holdings or any of its Subsidiaries or any ERISA Affiliate (provided that the foregoing shall apply in the case of any multiemployer plan, as defined in 4001(a)(3) of ERISA, only to the extent that any document described herein is in the possession of Holdings or any Subsidiary of Holdings or any ERISA Affiliate or is reasonably available thereto from the sponsor or trustee of any such plan) (collectively, the “Employee Benefit Plans”);

(ii)         all agreements entered into by Holdings or any of its Subsidiaries governing the terms and relative rights of its equity interests and any agreements entered into by its shareholders relating to any such entity with respect to its equity interests (collectively, the “Shareholders’ Agreements”);

(iii)        all material employment agreements entered into by Holdings or any of its Subsidiaries (collectively, the “Employment Agreements”);

(iv)        all non-compete agreements entered into by Holdings or any of its Subsidiaries which restrict the activities of Holdings or any of its Subsidiaries (collectively, the “Non-Compete Agreements”);

(v)         all collective bargaining agreements applying or relating to any employee of Holdings or any of any of its Subsidiaries (collectively, the “Collective Bargaining Agreements”); and

(vi)        all agreements evidencing or relating to Indebtedness of Holdings or any of its Subsidiaries which is to remain outstanding after giving effect to the Transaction (the “Existing Indebtedness Agreements”);

all of which Employee Benefit Plans, Shareholders’ Agreements, Employment Agreements, Non-Compete Agreements, Collective Bargaining Agreements, and Existing Indebtedness Agreements shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be in full force and effect on the Closing Date.

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7.06.       Consummation of Acquisition; etc. On the Closing Date, the Acquisition shall have been consummated in accordance with the terms and conditions of the applicable Documents therefor and all applicable law. On the Closing Date, (x) the Administrative Agent shall have received true and correct copies of all Acquisition Documents (with those Acquisition Documents which were executed on or before the Effective Date (together with the exhibits and schedules thereto to the extent finalized on or prior to such date) to be in the form so executed (and finalized)), in each case certified as such by an Authorized Officer of Holdings, (y) all such Documents and all terms and conditions thereof (including, without limitation, in the case of the Acquisition Documents, any changes to those Acquisition Documents which were executed on or before the Effective Date or waivers of the terms thereof) shall be in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent and (z) all such Documents shall be in full force and effect. The Required Buyer Stockholder Approval (as defined in the Acquisition Agreement) shall have been obtained. All conditions precedent to the consummation of the Acquisition, as set forth in the relevant Documents therefor, shall have been satisfied, and not waived unless such waiver is not adverse to the Lenders.

7.07.       Consummation of the Refinancing. (a) On or prior to the Closing Date and concurrently with the incurrence of Loans and the use of such Loans to finance the Refinancing on such date, all Indebtedness of Holdings and its Subsidiaries under the Existing Credit Agreement shall have been repaid in full, together with all fees and other amounts owing thereon, all commitments under the Existing Credit Agreement shall have been terminated and all letters of credit issued pursuant to the Existing Credit Agreement shall have been terminated.

(b)          On the Closing Date and concurrently with the incurrence of Loans on such date, all security interests in respect of, and Liens securing, the Indebtedness under the Existing Credit Agreement created pursuant to the security documentation relating to the Existing Credit Agreement shall have been terminated and released, and the Administrative Agent shall have received all such releases as may have been requested by the Administrative Agent, which releases shall be in form and substance reasonably satisfactory to the Administrative Agent. Without limiting the foregoing, there shall have been delivered to the Administrative Agent (x) proper termination statements (Form UCC-3 or the appropriate equivalent) for filing under the UCC or equivalent statute or regulation of each jurisdiction where a financing statement or application for registration (Form UCC-1 or the appropriate equivalent) was filed with respect to Holdings or any of its Subsidiaries in connection with the security interests created with respect to the Existing Credit Agreement, (y) terminations or reassignments of any security interest in, or Lien on, any patents, trademarks, copyrights, or similar interests of Holdings or any of its Subsidiaries on which filings have been made and (z) terminations of all mortgages, leasehold mortgages, hypothecs and deeds of trust created with respect to property of Holdings or any of its Subsidiaries, in each case, to secure the obligations under the Existing Credit Agreement, all of which shall be in form and substance reasonably satisfactory to the Administrative Agent.

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(c)          On the Closing Date and after giving effect to the consummation of the Transaction, Holdings and its Subsidiaries shall have no outstanding Preferred Equity or Indebtedness, except for (i) Indebtedness pursuant to or in respect of the Credit Documents, and (ii) certain other indebtedness existing on the Effective Date as listed on Schedule VI in an aggregate outstanding principal amount not to exceed $500,000 (with the Indebtedness described in this sub-clause (ii) being herein called the “Existing Indebtedness”). On and as of the Closing Date, all of the Existing Indebtedness shall remain outstanding after giving effect to the Transaction without any breach, required repayment, required offer to purchase, default, event of default or termination rights existing thereunder or arising as a result of the Transaction.

(d)          The Administrative Agent shall have received evidence in form, scope and substance reasonably satisfactory to it that the matters set forth in this Section 7.07 have been satisfied on the Closing Date.

7.08.       Adverse Change, Approvals. (a) Since December 31, 2014, nothing shall have occurred (and neither the Administrative Agent nor any Lender shall have become aware of any facts or conditions not previously known) which the Administrative Agent shall determine has had, or could reasonably be expected to have, a Material Adverse Effect.

(b)          On or prior to the Closing Date, all necessary governmental (domestic and foreign) and material third party authorizations, approvals and/or consents in connection with the Transaction (including the Acquisition and the transfer of all Necessary Authorizations thereunder), and the granting of Liens under the Credit Documents (including the authorizations, approvals and consents set forth on Schedule XIII) shall have been obtained and remain in effect, and all applicable waiting periods with respect thereto shall have expired without any action being taken by any competent authority which restrains, prevents or imposes materially adverse conditions upon the consummation of the Transaction (including the Acquisition and the transfer of all Necessary Authorizations thereunder) or the other transactions contemplated by the Documents or otherwise referred to herein or therein. On the Closing Date, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon the Transaction (including the Acquisition and the transfer of all Necessary Authorizations thereunder) or the other transactions contemplated by the Documents.

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7.09.      Litigation. On the Closing Date, there shall be no actions, suits or proceedings pending or threatened (i) with respect to the Transaction, this Agreement or any other Document, or (ii) which the Administrative Agent shall determine has had, or could reasonably be expected to have, a Material Adverse Effect.

7.10.      Subsidiaries Guaranty; Intercompany Note. (a) On the Closing Date, each Subsidiary Guarantor shall have duly authorized, executed and delivered the Subsidiaries Guaranty in the form of Exhibit E (as amended, modified and/or supplemented from time to time, the “Subsidiaries Guaranty”), and the Subsidiaries Guaranty shall be in full force and effect.

(b)          On the Closing Date, each Credit Party and each other Subsidiary of Holdings which is an obligee or obligor with respect to any Intercompany Debt shall have duly authorized, executed and delivered the Intercompany Note, and the subordination provisions therein shall be in full force and effect.

7.11.      Pledge Agreement. On the Closing Date, each Credit Party shall have duly authorized, executed and delivered the Pledge Agreement in the form of Exhibit F (as amended, modified, restated and/or supplemented from time to time, the “Pledge Agreement”) and shall have delivered to the Collateral Agent, as Pledgee thereunder, all of the Pledge Agreement Collateral, if any, referred to therein and then owned by such Credit Party, (x) endorsed in blank, or together with executed and undated endorsements for transfer, in the case of promissory notes constituting Pledge Agreement Collateral and (y) together with executed and undated endorsements for transfer in the case of Equity Interests constituting certificated Pledge Agreement Collateral, along with evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Pledge Agreement have been taken, and the Pledge Agreement shall be in full force and effect.

7.12.      Security Agreement. On the Closing Date, each Credit Party shall have duly authorized, executed and delivered the Security Agreement in the form of Exhibit G (as amended, modified, restated and/or supplemented from time to time, the “Security Agreement”) covering all of such Credit Party’s Security Agreement Collateral, together with:

(i)          proper financing statements (Form UCC-1 or the equivalent) fully executed for filing under the UCC or other appropriate filing offices of each jurisdiction as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Security Agreement;

(ii)         certified copies of requests for information or copies (Form UCC-11), or equivalent reports as of a recent date, listing all effective financing statements that name Holdings or any of its Subsidiaries as debtor and that are filed in the jurisdictions referred to in clause (i) above and in such other jurisdictions in which Collateral is located on the Closing Date, together with copies of such other financing statements that name Holdings or any of its Subsidiaries as debtor (none of which shall cover any of the Collateral except (x) to the extent evidencing Permitted Liens or (y) those in respect of which the Collateral Agent shall have received termination statements (Form UCC-3) or such other termination statements as shall be required by local law fully executed for filing); and

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(iii)        evidence that all other actions necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect and protect the security interests purported to be created by the Security Agreement have been taken, and the Security Agreement shall be in full force and effect.

7.13.      Capitalization Information. Holdings shall have provided an accurate and complete capitalization table reflecting all of the direct and indirect owners of Holdings and its Subsidiaries (including the applicable ownership percentages) as of: (i) the date immediately prior to the Closing Date, and (ii) the date immediately following the Closing Date.

7.14.      Organization Chart. Holdings shall have provided an accurate and complete organization chart reflecting all of the direct and indirect Subsidiaries of Holdings (including the applicable ownership percentages) as of: (i) the date immediately prior to the Closing Date, and (ii) the date immediately following the Closing Date.

7.15.      Financial Statements; Pro Forma Balance Sheet; Projections. On or prior to the Closing Date, the Administrative Agent shall have received true and correct copies of the historical financial statements, the pro forma financial statements and the Projections referred to in Sections 9.05(a) and (d), which historical financial statements, pro forma financial statements and Projections shall be in form and substance reasonably satisfactory to the Administrative Agent.

7.16.      Solvency Certificate; Insurance Certificates, etc. On the Closing Date, the Administrative Agent shall have received:

(i)          a solvency certificate from the chief financial officer or president of each of Holdings and Parent in the form of Exhibit H hereto; and

(ii)         certificates of insurance complying with the requirements of Section 10.03 for the business and properties of Holdings and its Subsidiaries, in form and substance reasonably satisfactory to the Administrative Agent and naming the Collateral Agent as an additional insured and/or as loss payee, and stating that such insurance shall not be canceled or materially revised without at least 30 days’ prior written notice by the insurer to the Collateral Agent.

7.17.      Fees, etc. On the Closing Date, the Borrower shall have paid to the Administrative Agent (and its relevant affiliates) and each Lender all costs, fees and expenses (including, without limitation, legal fees and expenses) and other compensation contemplated hereby payable to the Administrative Agent or such Lender to the extent then due.

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7.18.       Availability. On the Closing Date, no amounts shall be borrowed under the Revolving Loan Commitment and no Letters of Credit shall be issued. After giving effect to all Loans to be made on the Closing Date and the consummation of the Acquisition and the Refinancing (including the repayment of all prior indebtedness), the Borrowers shall have Undrawn Availability of at least $15,000,000. The Administrative Borrower shall deliver to the Administrative Agent a certificate of the chief financial officer or president of the Administrative Borrower certifying as to such Undrawn Availability.

7.19.      General. On or prior to the Closing Date, the Administrative Agent and the Collateral Agent shall have received and be satisfied in all respects with all information, documents, agreements or instruments reasonably requested by it, including any information, documents, searches or background checks with respect to the management of Holdings and its Subsidiaries or in connection with any “Know Your Customer” requirements.

7.20.      Lien Waiver Agreements. The Administrative Agent and Collateral Agent shall have received Lien Waiver Agreements with respect to all locations or places at which Inventory and books and records are located.

7.21.      Field Examination. The Administrative Agent and Collateral Agent shall have received and been satisfied with its review of the asset-based field examinations and appraisals to be completed by examiners selected by the Administrative Agent and Collateral Agent.

In determining the satisfaction of the conditions specified in this Section 7, (x) to the extent any item is required to be satisfactory to any Lender, such item shall be deemed satisfactory to each Lender which has not notified the Administrative Agent in writing prior to the occurrence of the Closing Date that the respective item or matter does not meet its satisfaction and (y) in determining whether any Lender is aware of any fact, condition or event that has occurred and which would reasonably be expected to have a Material Adverse Effect or a material adverse effect of the type described in Section 7.08, each Lender which has not notified the Administrative Agent in writing prior to the occurrence of the Closing Date of such fact, condition or event shall be deemed not to be aware of any such fact, condition or event on the Closing Date. Upon the Administrative Agent’s good faith determination that the conditions specified in this Section 7 have been met (after giving effect to the preceding sentence), then the Closing Date shall have been deemed to have occurred, regardless of any subsequent determination that one or more of the conditions thereto had not been met (although the occurrence of the Closing Date shall not release Holdings, Parent or any Borrower from any liability for failure to satisfy one or more of the applicable conditions contained in this Section 7).

SECTION 8.          Conditions Precedent to All Credit Events.

The obligation of each Lender to make Loans (including Loans made on the Closing Date), and the obligation of each Issuing Lender to issue Letters of Credit (including Letters of Credit issued on the Closing Date), is subject, at the time of each such Credit Event (except as hereinafter indicated), to the satisfaction of the following conditions:

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8.01.       No Default; Representations and Warranties. At the time of each such Borrowing and also after giving effect thereto (i) there shall exist no Default or Event of Default and (ii) all representations and warranties of the Credit Parties contained herein and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on the date of such Borrowing (it being understood and agreed that (x) any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date and (y) any representation or warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on such date).

8.02.       Notice of Borrowing; Letter of Credit Application. (i) Prior to the making of each Loan, the Administrative Agent and the Collateral Agent shall have received a Notice of Borrowing meeting the requirements of Section 2.03(a).

(ii)          Prior to the issuance of each Letter of Credit, the Administrative Agent, the Collateral Agent and the respective Issuing Lender shall have received a Letter of Credit Application meeting the requirements of Section 3.03(a).

(iii)        If applicable, prior to the issuance of each Incremental Loan there shall have been delivered to the Administrative Agent for the account of each of the Lenders that has requested same the appropriate Incremental Note executed by the Borrowers, in each case in the amount, maturity and as otherwise provided herein.

The acceptance of the benefits of each Credit Event shall constitute a representation and warranty by Holdings, Parent and each Borrower to the Administrative Agent and each of the Lenders that all the conditions specified in Section 7 (with respect to Credit Events on the Closing Date) and in this Section 8 (with respect to Credit Events on or after the Closing Date) and applicable to such Credit Event are satisfied as of that time (other than any condition that is subject to the satisfaction of the Administrative Agent). All of the Notes, certificates, legal opinions and other documents and papers referred to in Section 7 and in this Section 8, unless otherwise specified, shall be delivered to the Administrative Agent at the Notice Office for the account of each of the Lenders and, except for the Notes, in sufficient counterparts or copies for each of the Lenders and shall be in form and substance reasonably satisfactory to the Administrative Agent.

SECTION 9.         Representations, Warranties and Agreements.

In order to induce the Lenders to enter into this Agreement and to make the Loans, and issue (or participate in) the Letters of Credit as provided herein, each of Holdings, Parent and each Borrower makes the following representations, warranties and agreements, in each case after giving effect to the Transaction, all of which shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans and the issuance of the Letters of Credit, with the occurrence of each such Credit Event on or after the Closing Date being deemed to constitute a representation and warranty that the matters specified in this Section 9 are true and correct in all material respects on and as of the Closing Date and on the date of each such other Credit Event (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date).

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9.01.         Company Status. Each of Holdings and each of its Subsidiaries (i) is a duly organized and validly existing Company in good standing under the laws of the jurisdiction of its organization, (ii) has the Company power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the ownership, leasing or operation of its property or the conduct of its business requires such qualifications except for failures to be so qualified or authorized which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No certifications by any Governmental Authority are required for operation of the business of Holdings and its Subsidiaries that are not in place, except for such certifications or agreements, the absence of which could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

9.02.         Power and Authority. Each Credit Party and each of their respective Subsidiaries has the Company power and authority to execute, deliver and perform the terms and provisions of each of the Documents to which it is party and has taken all necessary Company action to authorize the execution, delivery and performance by it of each of such Documents. Each Credit Party has duly executed and delivered each of the Documents to which it is party, and each of such Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).

9.03.         No Violation. Neither the execution, delivery or performance by any Credit Party or any Subsidiary of the Documents to which it is a party, nor compliance by it with the terms and provisions thereof, (i) will contravene in any material respect any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or Governmental Authority, (ii) will conflict in any material respect with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the property or assets of any Credit Party or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, in each case to which any Credit Party or any of its Subsidiaries is a party or by which it or any its property or assets is bound or to which it may be subject (including, without limitation, any Subordinated Debt), or (iii) will violate any provision of the certificate or articles of incorporation, certificate of formation, limited liability company agreement or by-laws (or equivalent organizational documents), as applicable, of any Credit Party or any of its Subsidiaries.

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9.04.         Approvals. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except for (x) those that have otherwise been obtained or made on or prior to the Closing Date and which remain in full force and effect on the Closing Date and (y) filings which are necessary to perfect the security interests created or intended to be created under the Security Documents, which filings will be made within the time period set forth in (or referenced in) Section 14.19), or exemption by, any Governmental Authority is required to be obtained or made by, or on behalf of, any Credit Party or any Subsidiary to authorize, or is required to be obtained or made by, or on behalf of, any Credit Party or any Subsidiary in connection with, (i) the execution, delivery and performance of any Document or (ii) the legality, validity, binding effect or enforceability of any such Document.

9.05.         Financial Statements; Financial Condition; Undisclosed Liabilities; Projections. (a)(i) (I) The audited consolidated balance sheet of Holdings and its Subsidiaries at December 31, 2014 and the related consolidated statements of income and cash flows and changes in shareholders’ equity of Holdings and its Subsidiaries for the fiscal year of Holdings and its Subsidiaries ended on such date, in each case furnished to the Lenders prior to the Effective Date, present fairly in all material respects the consolidated financial position of Holdings and its Subsidiaries at the date of said financial statements and the results for the respective periods covered thereby, (II) the unaudited consolidated balance sheet of Holdings and its Subsidiaries at September 30, 2015 and the related consolidated statements of income and cash flows and changes in shareholders’ equity of Holdings and its Subsidiaries for the 9-month period ended on such date, furnished to the Lenders prior to the Effective Date, present fairly in all material respects the consolidated financial condition of Holdings and its Subsidiaries at the date of said financial statements and the results for the period covered thereby, subject to normal year-end adjustments, (III) the audited consolidated balance sheet of Parent and its Subsidiaries at December 31, 2014 and the related consolidated statements of income and cash flows and changes in shareholders’ equity of Parent and its Subsidiaries for the fiscal year of Parent and its Subsidiaries ended on such date, in each case furnished to the Lenders prior to the Effective Date, present fairly in all material respects the consolidated financial position of Parent and its Subsidiaries at the date of said financial statements and the results for the respective periods covered thereby and (IV) the unaudited consolidated balance sheet of Parent and its Subsidiaries at September 30, 2015 and the related consolidated statements of income and cash flows and changes in shareholders’ equity of Parent and its Subsidiaries for the 9-month period ended on such date, furnished to the Lenders prior to the Effective Date, present fairly in all material respects the consolidated financial condition of Parent and its Subsidiaries at the date of said financial statements and the results for the period covered thereby, subject to normal year-end adjustments. All such financial statements have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements and subject, in the case of the unaudited financial statements, to normal year-end audit adjustments (all of which are of a recurring nature and none of which, individually or in the aggregate, would be material) and the absence of footnotes.

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(ii)         The pro forma consolidated balance sheet of Holdings and its Subsidiaries as of September 30, 2015 (after giving effect to the Transaction and the financing therefor), a copy of which has been furnished to the Lenders prior to the Closing Date, presents a good faith estimate of the pro forma consolidated financial position of Holdings and its Subsidiaries as of such date.

(b)          On and as of the date of each Credit Event, and after giving effect to the Transaction and to all Indebtedness (including the Loans) being incurred or assumed and Liens created by the Credit Parties in connection therewith on such date, (i) the sum of the fair value of the assets, at a fair valuation, of each Borrower (on a stand-alone basis) and of Holdings and its Subsidiaries (taken as a whole) will exceed its or their respective debts, (ii) the sum of the present fair salable value of the assets of each Borrower (on a stand-alone basis) and of Holdings and its Subsidiaries (taken as a whole) will exceed its or their respective debts, (iii) each Borrower (on a stand-alone basis) and Holdings and its Subsidiaries (taken as a whole) has or have not incurred and does or do not intend to incur, and does or do not believe that it or they will incur, debts beyond its or their respective ability to pay such debts as such debts mature, and (iv) each Borrower (on a stand-alone basis) and Holdings and its Subsidiaries (taken as a whole) will have sufficient capital with which to conduct its or their respective businesses. For purposes of this Section 9.05(b), “debt” means any liability on a claim, and “claim” means (a) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (b) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

(c)          Except as fully disclosed in the financial statements delivered pursuant to Section 9.05(a), and except for the Indebtedness incurred under this Agreement, there were as of the Closing Date no liabilities or obligations with respect to Holdings or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, could reasonably be expected to be material to Holdings or any of its Subsidiaries. As of the Closing Date, neither Holdings, Parent, nor any Borrower knows of any basis for the assertion against it or any of its Subsidiaries of any liability or obligation of any nature whatsoever that is not fully disclosed in the financial statements delivered pursuant to Section 9.05(a) or referred to in the immediately preceding sentence which, either individually or in the aggregate, could reasonably be expected to be material to Holdings and its Subsidiaries taken as a whole.

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(d)          The Projections delivered to the Administrative Agent and the Lenders prior to the Closing Date have been prepared in good faith and are based on reasonable assumptions, and there are no statements or conclusions in the Projections which are based upon or include information known to Holdings, Parent or any Borrower to be misleading in any material respect or which fail to take into account material information known to Holdings, Parent or any Borrower regarding the matters reported therein. On the Closing Date, Holdings, Parent and each Borrower believe that the Projections are reasonable and attainable, it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results included in such Projections.

(e)          After giving effect to the Transaction, since December 31, 2014, nothing has occurred that has had, or could reasonably be expected to have, a Material Adverse Effect.

9.06.       Litigation. There are no actions, suits or proceedings pending or, to the knowledge of Holdings, Parent and any Borrower, threatened (i) with respect to the Transaction or any Document or (ii) that has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

9.07.       True and Complete Disclosure. All factual information (taken as a whole) furnished by or on behalf of Holdings, Parent or any Borrower in writing to the Administrative Agent or any Lender (including, without limitation, all information contained in the Documents) for purposes of or in connection with this Agreement, the other Credit Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Holdings, Parent or any Borrower to the Administrative Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided, it being understood and agreed that for purposes of this Section 9.07, such factual information shall not include the Projections or any pro forma financial information.

9.08.       Use of Proceeds; Margin Regulations. (a) All proceeds of the Loans will be used by the Initial Borrower and the Borrowers, as applicable, to finance the Acquisition and the Refinancing, to pay fees and expenses incurred in connection with the Transaction, to repay existing Indebtedness of Holdings and Parent and its Subsidiaries and for other general corporate purposes not prohibited by this Agreement.

(b)          All proceeds of the Revolving Loans will be used for the working capital and general corporate purposes of the Borrowers and their Subsidiaries; provided that no proceeds from Revolving Loans may be used for the purposes described in Section 9.08(a).

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(c)          No part of any Credit Event (or the proceeds thereof) will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan nor the use of the proceeds thereof nor the occurrence of any other Credit Event will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(d)          Without limiting the generality of Section 9.08(a) above, neither the Borrowers, the Guarantors nor any other Person which may in the future become party to this Agreement or the Documents as a Borrower or Guarantor, intends to use nor shall they use any portion of the proceeds of the Loans, directly or indirectly, for any purpose in violation of any applicable law.

9.09.       Tax Returns and Payments. Except as disclosed on Schedule XV, each of Holdings and each of its Subsidiaries has timely filed or caused to be timely filed (or have been granted an extension) with the appropriate Taxing Authority all material returns, statements, forms and reports for Taxes (the “Returns”) required to be filed by, or with respect to the income, properties or operations of, Holdings and/or any of its Subsidiaries. The Returns accurately reflect in all material respects all liability for Taxes of Holdings and its Subsidiaries, as applicable, for the periods covered thereby. Each of Holdings and each of its Subsidiaries has paid all material Taxes and assessments payable by it which have become due, other than those that are being contested in good faith and adequately disclosed and fully provided for by reserves on the financial statements of Holdings and its Subsidiaries in accordance with GAAP. There is no material action, suit, proceeding, investigation, or audit now pending or, to the best knowledge of Holdings or any of its Subsidiaries, threatened by any authority regarding any Taxes relating to Holdings or any of its Subsidiaries. As of the Closing Date, neither Holdings nor any of its Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of Taxes of Holdings or any of its Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of Holdings or any of its Subsidiaries not to be subject to the normally applicable statute of limitations. Neither Holdings nor any of its Subsidiaries has incurred, nor will any of them incur, any material Tax liability in connection with the Transaction or any other transactions contemplated hereby (it being understood that the representation contained in this sentence does not cover any future Tax liabilities of Holdings or any of its Subsidiaries arising as a result of (a) the operation of their businesses in the ordinary course of business and (b) gains and income recognized by any of them arising from the excess of the value of their assets over such assets’ adjusted tax basis, the recognition of which is not required by reason of the consummation of the Transaction or any other transactions contemplated hereby).

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9.10.       Compliance with ERISA.

(a)          Schedule IV sets forth each Plan and Multiemployer Plan as of the Closing Date. Each Plan (and each related trust, insurance contract or fund) is in substantial compliance with its terms and with all applicable laws, including without limitation ERISA and the Code. Each Plan (and each related trust, if any) which is intended to be qualified under Section 401(a) of the Code has received a determination letter or opinion letter from the Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) of the Code. All contributions required to be made with respect to a Plan or Multiemployer Plan have been timely made by Holdings, any Borrower or any ERISA Affiliate.

(b)          No Reportable Event has occurred within the last five (5) years. No Multiemployer Plan is insolvent or in reorganization or has an accumulated funding deficiency as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived.

(c)          No Plan has an Unfunded Current Liability which, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other Plans, exceeds $1,000,000. Each of Holdings, each Borrower and any ERISA Affiliate has met all applicable minimum funding requirements under Section 302 of ERISA or Section 412 of the Code in respect of each Plan and each Multiemployer Plan, and each Plan is in compliance with Sections 412, 430 and 436 of the Code or Sections 206(g), 302 and 303 of ERISA, without regard to waivers and variances. Neither any Plan nor, to the knowledge of any Borrower or any ERISA Affiliate, any Multiemployer Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA or Section 412(a) of the Code, whether or not waived. Neither Holdings, nor any Borrower, nor any ERISA Affiliate has incurred or reasonably expects to incur any material liability (including any indirect, contingent or secondary liability) to or on account of a Plan or a Multiemployer Plan pursuant to Section 406, 409, 502(i), 502(l), 515, 4041, 4041A, 4042, 4062, 4063, 4064, 4069, 4201, 4203, 4204, 4205, 4212, or 4245 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to incur any such liability under any of the foregoing sections with respect to any Plan or Multiemployer Plan. In addition, no condition exists which presents a material risk to Holdings, any Borrower, or any ERISA Affiliate of incurring a liability to or on account of a Plan or Multiemployer Plan pursuant to the foregoing provisions of ERISA and the Code. Neither Holdings, nor any Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums and there are no premium payments which have become due which are unpaid.

(d)          No proceedings have been instituted to terminate or appoint a trustee to administer any Plan or Multiemployer Plan which is subject to Title IV of ERISA. No action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan or, to the knowledge of any Borrower or any ERISA Affiliate, any Multiemployer Plan (other than routine claims for benefits) is pending, expected or threatened. Using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of Holdings, Borrowers, and ERISA Affiliates to all Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Plan ended prior to the date of the most recent Credit Event, would not exceed $1,000,000.

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(e)          Each group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees or former employees of Holdings, any Borrower, or any ERISA Affiliate has at all times been operated in compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code (“COBRA”). Neither Holdings nor any Borrower nor any ERISA Affiliate is required to contribute to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with COBRA or other applicable state Law. Each group health plan (as defined in 45 Code of Federal Regulations Section 160.103) which covers or has covered employees or former employees of Holdings, any Borrower or any ERISA Affiliate has at all times been operated in compliance with the provisions of the Health Insurance Portability and Accountability Act of 1996 and the regulations promulgated thereunder.

(f)          No lien imposed under the Code or ERISA on the assets of Holdings, any Borrower, or any ERISA Affiliate exists or is likely to arise on account of any Plan or Multiemployer Plan. Holdings and Borrowers and their ERISA Affiliates may cease contributions to or terminate any employee benefit plan maintained by any of them without incurring any material liability.

(g)          Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. All contributions required to be made with respect to a Foreign Pension Plan have been timely made. Neither Holdings, nor any Borrower nor any ERISA Affiliate has incurred any obligation in connection with the termination of, or withdrawal from, any Foreign Pension Plan. The present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of Holdings’ most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities.

9.11.       Security Documents. (a) The provisions of the Security Agreement are effective to create in favor of the Collateral Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of the Credit Parties in the Security Agreement Collateral described therein, and the Collateral Agent, for the benefit of the Secured Creditors, has (or within 10 days following the Closing Date will have) a fully perfected security interest in all right, title and interest in all of the Security Agreement Collateral described therein, subject to no other Liens other than Permitted Liens. The recordation of (x) the Grant of Security Interest in U.S. Patents and (y) the Grant of Security Interest in U.S. Trademarks in the respective form attached to the Security Agreement, in each case in the United States Patent and Trademark Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States trademarks and patents covered by the Security Agreement, and the recordation of the Grant of Security Interest in U.S. Copyrights in the form attached to the Security Agreement with the United States Copyright Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States copyrights covered by the Security Agreement.

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(b)          The security interests created under the Pledge Agreements in favor of the Collateral Agent, as Pledgee, for the benefit of the Secured Creditors, constitute perfected security interests in the Pledge Agreement Collateral described in the Pledge Agreements, subject to no security interests of any other Person. No filings or recordings are required in order to perfect (or maintain the perfection or priority of) the security interests created in the Pledge Agreement Collateral under the Pledge Agreements other than with respect to that portion of the Pledge Agreement Collateral constituting a “general intangible” under the UCC.

(c)          Each Mortgage creates, as security for the obligations purported to be secured thereby, a valid and enforceable perfected security interest in and mortgage lien on the respective Mortgaged Property in favor of the Collateral Agent (or such other trustee as may be required or desired under local law) for the benefit of the Secured Creditors, superior and prior to the rights of all third Persons (except that the security interest and mortgage lien created on such Mortgaged Property may be subject to the Permitted Encumbrances related thereto) and subject to no other Liens (other than Permitted Encumbrances related thereto).

9.12.       Properties. All Real Property owned or leased by Holdings or any of its Subsidiaries as of the Closing Date, and the nature of the interest therein, is correctly set forth in Schedule III. Each of Holdings and each of its Subsidiaries has good and indefeasible title to all material properties (and to all buildings, fixtures and improvements located thereon) owned by it, including all material property reflected in the most recent historical balance sheets referred to in Section 9.05(a) (except as sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business or as permitted by the terms of this Agreement), free and clear of all Liens, other than Permitted Liens. Each of Holdings and each of its Subsidiaries has a valid and indefeasible leasehold interest in the material properties leased by it free and clear of all Liens other than Permitted Liens.

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9.13.      Capitalization. (a) On the Closing Date, before giving effect to any exercise of redemption rights by Holding’s stockholders in connection with the stockholder meeting to approve the business combination with Parent, the authorized capital stock of Holdings consists of one hundred million (100,000,000) shares of common stock, $0.0001 par value per share (such authorized shares of common stock, together with any subsequently authorized shares of common stock of Holdings, the “Holdings Common Stock”), 5,539,530 of which shares are issued and outstanding, and ten million (10,000,000) shares of preferred stock $0.0001 par value per share, none of which shares are issued and outstanding. All such outstanding shares have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. As of the Closing Date, except as set forth on Schedule XI hereto, Holdings does not have outstanding any capital stock or other securities convertible into or exchangeable for its capital stock or any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.

(b)          On the Closing Date, the authorized capital stock of the Administrative Borrower consists of 1,000 shares of common stock, $1.00 par value per share, 1,000 of which shares are issued and outstanding and owned by Parent. All such outstanding shares have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. As of the Closing Date, the Administrative Borrower does not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.

(c)          On the Closing Date, after giving effect to the Acquisition, the authorized capital stock of the Parent consists of 2,000 shares of common stock, $.001 par value per share, 1,111 of which shares are issued and outstanding and owned by Holdings. All such outstanding shares have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. As of the Closing Date, the Parent does not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.

(d)          On the Closing Date, the authorized capital stock of Access consists of 5,000 shares of common stock, no par value per share, 500 of which shares are issued and outstanding and owned by the Administrative Borrower. All such outstanding shares have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. As of the Closing Date, Access does not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.

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9.14.      Subsidiaries. On and as of the Closing Date, after giving effect to the Acquisition, Holdings has no Subsidiaries other than those Subsidiaries listed on Schedule V. Schedule V sets forth, as of the Closing Date, the percentage ownership (direct and indirect) of Holdings in each class of capital stock or other Equity Interests of each of its Subsidiaries and also identifies the direct owner thereof. All outstanding shares of Equity Interests of each Subsidiary of Holdings have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. No Subsidiary of Holdings has outstanding any securities convertible into or exchangeable for its Equity Interests or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its Equity Interests or any stock appreciation or similar rights.

9.15.      Compliance with Statutes, etc. Each of Holdings and each of its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

9.16.      Investment Company Act. Neither Holdings nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

9.17.      Insurance. Schedule VII sets forth a listing of all insurance maintained by Holdings and its Subsidiaries as of the Closing Date (other than local insurance policies maintained by Foreign Subsidiaries of Holdings that are not material), with the amounts insured (and any deductibles) set forth therein. Such insurance complies with the requirements of Section 10.03.

9.18.      Environmental Matters. (a) Each of Holdings and each of its Subsidiaries is in compliance with all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws. There are no pending or, to the knowledge of Holdings, Parent and each Borrower, threatened Environmental Claims against Holdings or any of its Subsidiaries or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries (including any such claim arising out of the ownership, lease or operation by Holdings or any of its Subsidiaries of any Real Property formerly owned, leased or operated by Holdings or any of its Subsidiaries but no longer owned, leased or operated by Holdings or any of its Subsidiaries). There are no facts, circumstances, conditions or occurrences with respect to the business or operations of Holdings or any of its Subsidiaries, or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries (including any Real Property formerly owned, leased or operated by Holdings or any of its Subsidiaries but no longer owned, leased or operated by Holdings or any of its Subsidiaries) or, to the knowledge of Holdings, Parent and each Borrower, any property adjoining or adjacent to any such Real Property that could be reasonably expected (i) to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries or (ii) to cause any Real Property owned, leased or operated by Holdings or any of its Subsidiaries to be subject to any restrictions on the ownership, lease, occupancy or transferability of such Real Property by Holdings or any of its Subsidiaries under any applicable Environmental Law.

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(b)          Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, or Released on or from, any Real Property owned, leased or operated by Holdings or any of its Subsidiaries or, to the knowledge of Holdings, Parent and each Borrower, any property adjoining or adjacent to any Real Property, where such generation, use, treatment, storage, transportation or Release has violated or could be reasonably expected to violate any applicable Environmental Law or give rise to an Environmental Claim.

(c)          Notwithstanding anything to the contrary in this Section 9.18, the representations and warranties made in this Section 9.18 shall be untrue only if the effect of any or all conditions, violations, claims, restrictions, failures and noncompliances of the types described above could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

9.19.      Employment and Labor Relations. Neither Holdings nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings, Parent and each Borrower, threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings, Parent and each Borrower, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings, Parent and each Borrower, threatened against Holdings or any of its Subsidiaries, (iii) no union representation question exists with respect to the employees of Holdings or any of its Subsidiaries, (iv) no equal employment opportunity charges or other claims of employment discrimination are pending or, to the knowledge of Holdings, Parent and each Borrower, threatened against Holdings or any of its Subsidiaries and (v) no wage and hour department investigation has been made of Holdings or any of its Subsidiaries, except (with respect to any matter specified in clauses (i) – (v) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect.

9.20.      Intellectual Property. Each of Holdings and each of its Subsidiaries owns or has the right to use all the patents, trademarks, permits, domain names, service marks, trade names, copyrights, licenses, franchises, inventions, trade secrets, proprietary information and know-how of any type, whether or not written (including, but not limited to, rights in computer programs and databases) and formulas, or rights with respect to the foregoing, and has obtained assignments of all leases, licenses and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others which, or the failure to own or have which, as the case may be, could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.

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9.21.      Indebtedness. Schedule VI sets forth a list of all Indebtedness for borrowed money (including Contingent Obligations with respect to borrowed money) of Holdings and its Subsidiaries as of the Closing Date and which is to remain outstanding after giving effect to the Transaction (excluding the Loans and the Letters of Credit), in each case showing the aggregate principal amount thereof and the name of the respective borrower and any Credit Party or any of its Subsidiaries which directly or indirectly guarantees such debt.

9.22.      Representations and Warranties in Other Documents. All representations and warranties set forth in the other Credit Documents are true and correct in all material respects as of the Closing Date as if such representations or warranties were made on and as of such date (it being understood and agreed that any such representation or warranty which by its terms is made as of a specified date shall be true and correct in all material respects as of such specified date).

9.23.      Subordination. The subordination provisions contained in the Subordinated Debt Documents, if any, are enforceable against Credit Parties, as applicable, and to each of Holdings’, Parent’s and each Borrower’s knowledge the holders of such Indebtedness, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law), and all Obligations hereunder and all obligations of the Credit Parties under the other Credit Documents (including without limitation, the Holdings Guaranty and the Subsidiaries Guaranty) are within the definitions of “Senior Debt” or “Guarantor Senior Debt”, as applicable, and “Designated Senior Debt” (or other similar terms) included in such subordination provisions.

9.24.      Anti-Terrorism Laws. (a) None of the Credit Parties nor, to the knowledge of the Credit Parties, any Affiliates of any Credit Parties is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the Anti-Terrorism Laws.

(b)          None of the Credit Parties, nor, to the knowledge of the Credit Parties, any Affiliates of any Credit Parties, or their respective agents acting or benefiting in any capacity in connection with the Loans, Letters of Credit or other transactions hereunder, is any of the following (each, a “Blocked Person”):

(i)          a Person that is blocked pursuant to any of the OFAC Sanctions Programs, including a Person named on OFAC’s list of Specially Designated Nationals and Blocked Persons;

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(ii)         a Person that is owned or controlled by, or that owns or controls, or that is acting for or on behalf of, any Person described in (A), above;

(iii)        a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; and

(iv)        a Person that is affiliated or associated with a Person described in (A) through (C), above.

(c)          None of the Credit Parties, nor, to the knowledge of the Credit Parties, any of their Affiliates, unless authorized by the U.S. Government (A) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (B) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to any OFAC Sanctions Programs.

(d)          Without limiting or contradicting (or being limited or contradicted by) the foregoing, (x) no Covered Entity is a Sanctioned Person and (y) no Covered Entity, either in its own right or, to the knowledge of the Credit Parties, through any third party, (A) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (B) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (C) engages in any dealings or transactions prohibited by any Anti-Terrorism Law.

9.25.      Anti-Corruption Laws. Neither Holdings nor any of its Subsidiaries or Affiliates, nor any director, officer, or employee, nor, to any Credit Parties knowledge, any agent or representative of Holdings, Parent or any Borrower or of any of their respective subsidiaries or Affiliates, has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage; and Holdings, each Borrower and their respective subsidiaries and Affiliates have conducted their businesses in all material respects in compliance with applicable anti-corruption laws and have instituted and maintain and will continue to maintain policies and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein.

9.26.      Swaps. No Borrower is a party to, nor will any Borrower be a party to, any swap agreement whereby such Borrower has agreed or will agree to swap interest rates or currencies unless same provides that damages upon termination following an event of default thereunder are payable on an unlimited “two-way basis” without regard to fault on the part of either party.

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SECTION 10.      Affirmative Covenants.

Each of Holdings, Parent and each Borrower hereby covenants and agrees that on and after the Effective Date and until the Total Commitment and all Letters of Credit have terminated (to the extent not cash collateralized in an amount equal to one hundred and five percent (105%) of the Letter of Credit Outstandings) and the Loans, Notes and Unpaid Drawings (in each case together with interest thereon), fees and all other Obligations (other than indemnities described in Section 14.13 which are not then due and payable) incurred hereunder and thereunder, are paid in full:

10.01.    Information Covenants. Holdings will furnish to each Lender:

(a)          Monthly Reports. Within 40 days after the end of each fiscal month of Holdings, (i) the consolidated and consolidating balance sheet of Holdings and its Subsidiaries as at the end of such fiscal month and the related consolidated and consolidating statements of income and retained earnings and statement of cash flows for such fiscal month and for the elapsed portion of the fiscal year ended with the last day of such fiscal month, in each case setting forth comparative figures for the corresponding fiscal month in the prior fiscal year and comparable budgeted figures for such fiscal month as set forth in the respective budget delivered pursuant to Section 10.01(f), all of which shall be certified by the chief financial officer of Holdings that they fairly present in all material respects in accordance with GAAP the financial condition of Holdings and its Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes, and (ii) a monthly Consolidated EBITDA forecast on a consolidating basis for the remainder of such fiscal year, a historical summary of Consolidated EBITDA to such date from the beginning of such fiscal year and for such month, together with a Consolidated EBITDA forecast for the next fiscal year, in each case on a consolidating basis.

(b)          Quarterly Financial Statements. Within 55 days after the close of each of the quarterly accounting periods in each fiscal year of Holdings, (i) the consolidated and consolidating balance sheet of Holdings and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated and consolidating statements of income and retained earnings and statement of cash flows for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, in each case setting forth comparative figures for the corresponding quarterly accounting period in the prior fiscal year and comparable budgeted figures for such quarterly accounting period as set forth in the respective budget delivered pursuant to Section 10.01(f), all of which shall be certified by the chief financial officer of Holdings that they fairly present in all material respects in accordance with GAAP the financial condition of Holdings and its Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes, and (ii) management’s discussion and analysis of the important operational and financial developments during such quarterly accounting period and (iii) a historical summary of Consolidated EBITDA to such date from the beginning of such fiscal year and for such quarter.

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(c)          Annual Financial Statements. Within 105 days after the close of each fiscal year of Holdings, (i) the consolidated and consolidating balance sheet of Holdings and its Subsidiaries as at the end of such fiscal year and the related consolidated and consolidating statements of income and retained earnings and statement of cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year and certified without qualification by BDO USA, LLP or other independent certified public accountants of recognized national standing reasonably acceptable to the Administrative Agent, which audit was conducted in accordance with generally accepted auditing standards, and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year.

(d)          Schedules. Deliver to the Administrative Agent and Collateral Agent on or before the twentieth (20th) day of each month as and for the prior month (a) accounts receivable ageings inclusive of reconciliations to the general ledger, (b) accounts payable schedules inclusive of reconciliations to the general ledger, (c) Inventory reports and (d) a Borrowing Base Certificate in form and substance satisfactory to the Administrative Agent and Collateral Agent (which shall be calculated as of the last day of the prior month and which shall not be binding upon the Administrative Agent or Collateral Agent or restrictive of the Administrative Agent and Collateral Agent’s rights under this Agreement). In addition, the Administrative Borrower will deliver to the Administrative Agent and Collateral Agent on or before the twentieth (20th) day of each month: (i) confirmatory assignment schedules; (ii) copies of Customer’s invoices; (iii) evidence of shipment or delivery; and (iv) such further schedules, documents and/or information regarding the Collateral as the Administrative Agent and Collateral Agent may require including trial balances and test verifications. The Administrative Agent and Collateral Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable and do whatever it may deem reasonably necessary to protect its interests hereunder. The items to be provided under this Section are to be in form reasonably satisfactory to the Administrative Agent and Collateral Agent and executed by the Administrative Borrower and delivered to the Administrative Agent and Collateral Agent from time to time solely for the Administrative Agent’s and Collateral Agent’s convenience in maintaining records of the Collateral, and the Administrative Borrower’s failure to deliver any of such items to the Administrative Agent and Collateral Agent shall not affect, terminate, modify or otherwise limit Collateral Agent’s Lien with respect to the Collateral.

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(e)          Management Letters. Promptly after Holdings’ or any of its Subsidiaries’ receipt thereof, a copy of any “management letter” received from its certified public accountants and management’s response thereto.

(f)           Budgets. Within 15 days of each fiscal year end of Holdings, a budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income, sources and uses of cash and balance sheets for Holdings and its Subsidiaries on a consolidated and consolidating basis and including a report tracking such budgeted statements against projected Consolidated EBITDA) (i) for each of the twelve months of the forthcoming fiscal year prepared in detail and (ii) for the three immediately succeeding fiscal years prepared in reasonable summary form, in each case setting forth, with appropriate discussion, the principal assumptions upon which such budget is based.

(g)          Officer’s Certificates. At the time of the delivery of the financial statements provided for in Sections 10.01(b) and (c), a compliance certificate from the chief financial officer of Holdings in the form of Exhibit I certifying on behalf of Holdings that, to such officer’s knowledge after due inquiry, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof, which certificate shall (i) set forth in reasonable detail the calculations required to establish whether Holdings and its Subsidiaries were in compliance with the provisions of Sections 6.02(e), 6.02(g), 11.01(x), 11.01(xx), 11.02(iv), 11.02(xiii), 11.03(ii), 11.03(iv), 11.04(iv), 11.04(vii), 11.04(ix), 11.04(xii), 11.05(v), 11.05(viii), 11.05(ix), 11.05(xv), 11.05(xvi) and 11.07 through 11.10 inclusive, at the end of such fiscal quarter or year, as the case may be, (ii) if delivered with the financial statements required by Section 10.01(c), set forth in reasonable detail the amount of (and the calculations required to establish the amount of) Excess Cash Flow for the respective Excess Cash Payment Period, (iii) certify that the Credit Parties have delivered to the Collateral Agent all documentation required under Section 10.20, and (iv) certify that there have been no changes to Annexes C through F, and Annexes I through K, in each case of the Security Agreement and Annexes A through F of any of the Pledge Agreements, in each case since the Closing Date or, if later, since the date of the most recent certificate delivered pursuant to this Section 10.01(g), or if there have been any such changes, a list in reasonable detail of such changes (but, in each case with respect to this clause (iii), only to the extent that such changes are required to be reported to the Collateral Agent pursuant to the terms of such Security Documents) and whether Holdings and the other Credit Parties have otherwise taken all actions required to be taken by them pursuant to such Security Documents in connection with any such changes.

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(h)          Notice of Default, Litigation and Material Adverse Effect. Promptly, and in any event within three Business Days after any officer of Holdings or any of its Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or an Event of Default, (ii) any litigation or governmental investigation or proceeding pending against Holdings or any of its Subsidiaries (x) which, either individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect or (y) with respect to any Document, or (iii) any other event, change or circumstance that has had, or could reasonably be expected to have, a Material Adverse Effect.

(i)           Other Reports and Filings. Promptly after the filing, delivery or receipt thereof, copies of all financial information, proxy materials, reports, notices and other material communications if any, which Holdings or any of its Subsidiaries shall (i) publicly file with the Securities and Exchange Commission or any successor thereto (the “SEC”) or any Governmental Authority or (ii) deliver to or receive from holders (or any trustee, agent or other representative therefor) of any Qualified Preferred Stock, any Subordinated Debt or any of its material Indebtedness.

(j)           Environmental Matters. Promptly after any officer of Holdings or any of its Subsidiaries obtains knowledge thereof, notice of one or more of the following environmental matters to the extent that such environmental matters, either individually or when aggregated with all other such environmental matters, could reasonably be expected to have a Material Adverse Effect or result in a liability against, or remediation or other expenses of Holdings and its Subsidiaries in excess of $2,000,000:

(i)          any pending or threatened Environmental Claim against Holdings or any of its Subsidiaries or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries;

(ii)         any condition or occurrence on or arising from any Real Property owned, leased or operated by Holdings or any of its Subsidiaries that (a) results in noncompliance by Holdings or any of its Subsidiaries with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries or any such Real Property;

(iii)        any condition or occurrence on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries that could reasonably be expected to cause such Real Property to be subject to any restrictions on the ownership, lease, occupancy, use or transferability by Holdings or any of its Subsidiaries of such Real Property under any Environmental Law; and

(iv)        the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency; provided that in any event Holdings shall deliver to each Lender all notices received by Holdings or any of its Subsidiaries from any government or governmental agency under, or pursuant to, CERCLA which identify Holdings or any of its Subsidiaries as potentially responsible parties for remediation costs or which otherwise notify Holdings or any of its Subsidiaries of potential liability under CERCLA.

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All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and Holdings’ or such Subsidiary’s response thereto.

(k)          Insurance. Prior to the end of each fiscal year of Holdings, Holdings shall deliver current copies of all insurance policies of Holdings and its Subsidiaries maintained in accordance with Section 10.03 hereof, together with an explanation of any projected changes to such insurance coverage for the forthcoming fiscal year.

(l)           Contract Matters. With respect to the contract listed on Schedule X, if any Credit Party receives demand for any payment with respect to the notice identified on such Schedule, relating to the foregoing contract and task orders, such Credit Party shall notify the Administrative Agent and the Collateral Agent in reasonable written detail satisfactory to Administrative Agent, with a copy of any such demand.

(m)          Other Information. From time to time, such other information or documents (financial or otherwise) with respect to Holdings or any of its Subsidiaries as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request.

Documents required to be delivered pursuant to Section 10.01(a), 10.01(b), 10.01(c), or 10.01(i), may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (x) on which Holdings posts such documents, or provides a link thereto on Holding’s public website on the Internet; or (y) on which such documents are posted on Holding’s behalf on an Internet or intranet website (including www.sec.gov/edgar.shtml), if any, to which each Lender and the Administrative Agent have access (whether a commercial, third party website or whether sponsored by the Administrative Agent); provided that, in each such case Holdings shall notify the Administrative Agent that such documents have been posted electronically.

Holdings hereby acknowledges that (a) the Administrative Agent may, but shall not be obligated to, make available to the Lenders materials and/or information provided by or on behalf of Holdings hereunder (collectively, “Holdings Materials”) by posting Holdings Materials on IntraLinks, Syndtrak, ClearPar or a substantially similar electronic transmission system (the “Platform”) and (b) certain of the Lenders (each a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to Holdings or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Holdings hereby agrees that (w) all Holdings Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Holdings Materials “PUBLIC,” Holdings shall be deemed to have authorized the Administrative Agent, the Arrangers and the Lenders to treat such Holdings Materials as not containing any material non-public information with respect to Holdings or its securities for purposes of United States federal and state securities laws (provided, however, that to the extent such Holdings Materials shall be treated as set forth in Section 14.16); (y) all Holdings Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent shall be entitled to treat any Holdings Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated as “Public Side Information.”

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10.02.    Books, Records and Inspections; Annual Meetings. (a) Holdings will, and will cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries in conformity with GAAP and all requirements of law shall be made of all dealings and transactions in relation to its business and activities. Holdings will, and will cause each of its Subsidiaries to, permit officers and designated representatives of the Administrative Agent or any Lender to visit and inspect, under guidance of officers of Holdings or such Subsidiary, any of the properties of Holdings or such Subsidiary, and to examine the books of account of Holdings or such Subsidiary and discuss the affairs, finances and accounts of Holdings or such Subsidiary with, and be advised as to the same by, its and their officers and independent accountants, all upon reasonable prior notice and at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or any such Lender may reasonably request (provided that no more than two such visits per year shall be at the cost of the Credit Parties unless an Event of Default exists).

(b)          On one or more dates (but no more than four per fiscal year, unless an Event of Default exists) to be mutually agreed upon between the Administrative Agent and Holdings during each fiscal year of Holdings, Holdings will, at the request of the Administrative Agent, hold a meeting (which may be held telephonically in the Administrative Agent’s discretion) with all of the Lenders at which meeting will be reviewed the financial results of Holdings and its Subsidiaries and the budgets and projections presented for the current fiscal year of Holdings and such other matters as may be requested by the Administrative Agent.

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10.03.    Maintenance of Property; Insurance. (a) Holdings will, and will cause each of its Subsidiaries to, (i) keep all property necessary to the business of Holdings and its Subsidiaries in good working order and condition, ordinary wear and tear excepted and subject to the occurrence of casualty events, natural catastrophe and other covered occurrences or events that may cause damage to, or partial or complete loss of, the property except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (ii) maintain with financially sound and reputable insurance companies having a rating from A.M. Best Company of A or better, policies of insurance, lawfully issued and enforceable, on all such property and against all such risks in amounts not less than sufficient to cover the full replacement of the property, in addition to any taxes or assessments that may be due or payable, on such terms and subject to such conditions as is consistent and in accordance with industry practice for companies similarly situated owning similar properties and engaged in similar businesses as Holdings and its Subsidiaries, and (iii) furnish to the Administrative Agent and the Collateral Agent, upon its request therefor, full information as to the insurance carried. Such insurance shall include physical damage insurance on all real and personal property (whether now owned or here-after acquired) on an all risk basis and including any business interruption and contingent business interruption insurance. The provisions of this Section 10.03 shall be deemed supplemental to, but not duplicative of, the provisions of any Security Documents that require the maintenance of insurance. In addition to the foregoing, Holdings, Parent and each Borrower acknowledge and agree that on an annual basis, to review the insurance then being maintained by Holdings and its Subsidiaries. All such insurance policies shall at all times be valid and enforceable in accordance with their terms and shall be in full force and effect (assuming no default by any such insurer), all premiums thereon have been paid when due and Holdings, Parent and each Borrower shall be otherwise in compliance in all material respects with the terms and provisions of such policies. The Administrative Borrower shall promptly deliver written notice to the Administrative Agent of any written notice of cancellation, termination or revocation or other written notice that any such policy is no longer in full force or effect or that the issuer of any policy is not willing or able to perform its obligations thereunder that is, in each case, received by Holdings, Parent or the Borrowers. Each Borrower has taken all actions reasonably requested by Administrative Agent or the Collateral Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, providing such agent with the address and/or GPS coordinates of each structure located upon any Real Property that will be subject to a Mortgage in favor of Collateral Agent, for the benefit of Lenders, and, to the extent required, obtaining flood insurance for such property, structures and contents prior to such property, structures and contents becoming Collateral.

(b)          Holdings will, and will cause each of its Subsidiaries to, at all times keep its property insured in favor of the Collateral Agent, and all policies or certificates (or certified copies thereof) with respect to such insurance (and any other insurance maintained by Holdings and/or such Subsidiaries) (i) shall be endorsed to the Collateral Agent’s satisfaction for the benefit of the Collateral Agent (including, without limitation, by naming the Collateral Agent as loss payee and/or additional insured), (ii) shall state that such insurance policies shall not be canceled or materially revised without at least 30 days’ prior written notice thereof by the respective insurer to the Collateral Agent; provided, however, that if the relevant insurer is unable to state that the Collateral Agent will receive notice of any material revisions, the Administrative Borrower shall be responsible for providing such advance notice, (iii) shall provide that the respective insurers irrevocably waive any and all rights of subrogation with respect to the Collateral Agent and the other Secured Creditors, and (iv) shall be delivered to the Collateral Agent.

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(c)          If Holdings or any of its Subsidiaries shall fail to maintain insurance in accordance with this Section 10.03, or if Holdings or any of its Subsidiaries shall fail to so endorse and deliver all policies or certificates with respect thereto, the Administrative Agent shall have the right (but shall be under no obligation) to procure such insurance and Holdings, Parent and each Borrower jointly and severally agree to reimburse the Administrative Agent for all costs and expenses of procuring such insurance.

10.04.    Existence; Franchises. Holdings will, and will cause each of its Subsidiaries to, do or cause to be done, all things necessary to (x) preserve and keep in full force and effect its existence and its material rights, franchises, licenses, permits, copyrights, trademarks and patents and (y) maintain all Necessary Authorizations; except in each case where the failure to do so could not reasonably be a Material Adverse Effect, provided, however, that nothing in this Section 10.04 shall prevent (i) sales of assets and other transactions by Holdings or any of its Subsidiaries in accordance with Section 11.02 or (ii) the withdrawal by Holdings or any of its Subsidiaries of its qualification as a foreign Company in any jurisdiction if such withdrawal could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

10.05.    Compliance with Statutes, etc. Holdings will, and will cause each of its Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

10.06.    Compliance with Environmental Laws. (a) Holdings will comply, and will cause each of its Subsidiaries to comply, with all Environmental Laws and permits applicable to, or required by, the ownership, lease or use of its Real Property now or hereafter owned, leased or operated by Holdings or any of its Subsidiaries, except such noncompliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, and will keep or cause to be kept all such Real Property free and clear of any Liens imposed pursuant to such Environmental Laws. Neither Holdings nor any of its Subsidiaries will generate, use, treat, store, Release or dispose of, or permit the generation, use, treatment, storage, Release or disposal of Hazardous Materials on any Real Property now or hereafter owned, leased or operated by Holdings or any of its Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any such Real Property, except for Hazardous Materials generated, used, treated, stored, Released or disposed of at any such Real Properties in compliance in all material respects with all applicable Environmental Laws and as required in connection with the normal operation, use and maintenance of the business or operations of Holdings or any of its Subsidiaries.

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(b)          (i) After the receipt by the Administrative Agent or any Lender of any notice of the type described in Section 10.01(j), (ii) at any time that Holdings or any of its Subsidiaries are not in compliance with Section 10.06(a) or (iii) in the event that the Administrative Agent or the Lenders have exercised any of the remedies pursuant to the second to last paragraph of Section 12, Holdings, Parent and each Borrower will (in each case) provide, at the sole expense of Holdings, Parent and each Borrower and at the request of the Administrative Agent, an environmental site assessment report concerning any Real Property owned, leased or operated by Holdings or any of its Subsidiaries, prepared by an environmental consulting firm reasonably approved by the Administrative Agent, indicating the presence or absence of Hazardous Materials and the potential cost of any removal or remedial action in connection with such Hazardous Materials on such Real Property. If Holdings, Parent or any Borrower fails to provide the same within 30 days after such request was made, the Administrative Agent may order the same, the cost of which shall be borne by Holdings, Parent and each Borrower, and Holdings, Parent and each Borrower shall grant and hereby grant to the Administrative Agent and the Lenders and their respective agents access to such Real Property and specifically grant the Administrative Agent and the Lenders an irrevocable non-exclusive license, subject to the rights of tenants, to undertake such an assessment at any reasonable time upon reasonable notice to Holdings, Parent or each Borrower, all at the sole expense of Holdings, Parent and each Borrower.

10.07.    ERISA.

(a)          As soon as possible and, in any event, within thirty (30) days after Holdings, any Borrower, or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, Holdings will deliver to each of the Lenders a certificate of the chief financial officer of Holdings setting forth the full details as to such occurrence and the action, if any, that Holdings, such Borrower, or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given or filed by Holdings, such Borrower or such ERISA Affiliate to or with the PBGC or any other Governmental Authority, or a Plan participant and any notices received by Holdings, any Borrower, or an ERISA Affiliate from the PBGC or any other Governmental Authority, or a Plan participant with respect thereto, together with the action, if any, which such Holdings, any Borrower or any ERISA Affiliate has taken, is taking, or proposes to take with respect thereto:

(i)          that a Reportable Event has occurred (except to the extent that Holdings has previously delivered to the Lenders a certificate and notices (if any) concerning such event pursuant to the next clause hereof);

(ii)         that an accumulated funding deficiency, within the meaning of Section 412 of the Code or Section 302 of ERISA, has been incurred or an application may be or has been made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code or Section 303 or 304 of ERISA;

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(iii)        that any contribution required to be made with respect to a Plan or Multiemployer Plan or Foreign Pension Plan has not been timely made (including a determination that a Plan is considered an at-risk plan or a Plan or a Multiemployer Plan in endangered or critical status within the meaning of Sections 430, 431, and 432 of the Code or Sections 303, 304, and 305 of ERISA);

(iv)        that a Plan or a Multiemployer Plan has been or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA;

(v)         that a Plan has an Unfunded Current Liability which, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other Plans, exceeds the aggregate amount of such Unfunded Current Liabilities that existed on the Closing Date by $2,500,000;

(vi)        that proceedings may be or have been instituted to terminate or appoint a trustee to administer a Plan or a Multiemployer Plan which is subject to Title IV of ERISA;

(vii)       that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan or a Multiemployer Plan;

(viii)      that Holdings, any Borrower, or any ERISA Affiliate will or may incur (a) any liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan or a Multiemployer Plan under Section 4041, 4042, 4062, 4063, 4064, 4069, 4201, 4203, 4204, 4205, or 4212 of ERISA or (b) any material liability with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code; and with respect to any prohibited transaction (as defined in Section 406 of ERISA or Section 4975 of the Code) that would reasonably be expected to result in material liability with respect to a Plan, a written statement such transaction and the action which has been taken, is taking or is proposed to take with respect thereto; or

(ix)         that Holdings or any Borrower or any ERISA Affiliate may incur any material liability pursuant to (i) any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA, or by any similar state law) or (ii) a Plan or a Multiemployer Plan as a result of any increase in the benefits of any existing Plan or Multiemployer Plan.

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(b)          If, at any time after the Closing Date, Holdings, any Borrower, or any ERISA Affiliate maintains, or contributes to (or incurs an obligation to contribute to), a welfare plan as defined in Section 3(1) with respect to which Holdings, any Borrower, or any ERISA Affiliate may incur any material liability or a pension plan as defined in Section 3(2) of ERISA, which is not set forth in Schedule IV, as may be updated from time to time, then Holdings shall deliver to the Lenders an updated Schedule IV as soon as possible and, in any event, within thirty (30) days after Holdings, such Borrower or such ERISA Affiliate commencing contributing to or incurring an obligation to contribute to such welfare plan or pension plan. Such updated Schedule IV shall supersede and replace the existing Schedule IV.

(c)          Holdings and each of its applicable Subsidiaries shall ensure that all Foreign Pension Plans administered by it or into which it makes payments obtains or retains (as applicable) registered status under and as required by applicable law and is administered in a timely manner in all respects in compliance with all applicable laws except where the failure to do any of the foregoing would not be reasonably likely to result in a Material Adverse Effect.

10.08.    End of Fiscal Years; Fiscal Quarters. Holdings will cause (i) its and each of its Subsidiaries’ fiscal years to end on December 31 of each calendar year and (ii) its and each of its Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each calendar year.

10.09.    Performance of Obligations. Holdings will, and will cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, indenture, security agreement, loan agreement or credit agreement and each other agreement, contract or instrument by which it is bound, except such non-performances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

10.10.    Payment of Taxes. Holdings will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any properties of Holdings or any of its Subsidiaries not otherwise permitted under Section 11.01(i); provided that neither Holdings nor any of its Subsidiaries shall be required to pay any such Tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.

10.11.    Use of Proceeds. The Initial Borrower and the Borrowers will use the proceeds of the Loans only as provided in Section 9.08.

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10.12.    Additional Security; Further Assurances; etc. (a) Holdings will, and will cause each other Credit Party to, grant to the Collateral Agent for the benefit of the Secured Creditors security interests in all assets that constitute Collateral (including Mortgages and Real Property of Holdings and such other Credit Party) as are not covered by the original Security Documents and as may be reasonably requested from time to time by the Administrative Agent, the Collateral Agent or the Required Lenders (collectively, the “Additional Security Documents”), along with such opinions of counsel, title insurance and other related documents as may be requested by the Collateral Agent. All such security interests and Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Collateral Agent and shall constitute valid and enforceable perfected security interests, hypothecations and Mortgages superior to and prior to the rights of all third Persons and enforceable against third parties and subject to no other Liens except for Permitted Liens or, in the case of Real Property, the Permitted Encumbrances related thereto. The Additional Security Documents or instruments related thereto shall have been duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Security Documents and all taxes, fees and other charges payable in connection therewith shall have been paid in full. Notwithstanding the foregoing, this Section 10.12(a) shall not apply to (and Holdings and its Subsidiaries shall not be required to grant a Mortgage in) any owned Real Property the Fair Market Value of which is less than $5,000,000 or any Leasehold.

(b)          Holdings will, and will cause each of the other Credit Parties to, at the expense of Holdings, Parent and each Borrower, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, real property surveys, reports, landlord waivers, bailee agreements, control agreements and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents as the Collateral Agent may reasonably require. Furthermore, Holdings will, and will cause the other Credit Parties that are Subsidiaries of Holdings to, deliver to the Collateral Agent such opinions of counsel, title insurance and other related documents as may be reasonably requested by the Administrative Agent or the Collateral Agent to assure itself that this Section 10.12 has been complied with.

(c)          Holdings will, and will cause each of the other Credit Parties to, deliver to the Administrative Agent and the Collateral Agent Lien Waiver Agreements with respect to all locations or places at which Inventory and books and records are located.

(d)          If the Administrative Agent or the Required Lenders reasonably determine that they are required by law or regulation to have appraisals prepared in respect of any Real Property of Holdings and the other Credit Parties constituting Collateral, Holdings, Parent and each Borrower will, at their own expense, provide to the Administrative Agent appraisals which satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of the Financial Institution Reform, Recovery and Enforcement Act of 1989, as amended, and which shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent.

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(e)          Holdings, Parent and each Borrower agrees that each action required by clauses (a) through (d) of this Section 10.12 shall be completed as soon as possible, but in no event later than 90 days after such action is requested to be taken by the Administrative Agent or the Required Lenders (or such later date as may be agreed by the Administrative Agent in its sole discretion); provided that, in no event will Holdings or any of its Subsidiaries be required to take any action, other than using its best efforts, to obtain consents from third parties with respect to its compliance with this Section 10.12.

10.13.    Ownership of Subsidiaries; etc. Except as a result of a Permitted Acquisition consummated in accordance with the terms hereof, Holdings will, and will cause each of its Subsidiaries to, own 100% of the Equity Interests of each of their Subsidiaries (other than directors’ qualifying shares to the extent required by applicable law or Investments in joint ventures permitted by this Agreement).

10.14.    Contributions. Holdings will, upon its receipt thereof, contribute as an equity contribution to the capital of Parent, any net cash proceeds received by Holdings from any asset sale, any incurrence of Indebtedness, any Recovery Event, any sale or issuance of its equity, any cash capital contributions or any tax refunds.

10.15.    Anti-Terrorism. (a) None of the Credit Parties nor any of their Subsidiaries shall:

(i)           conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person in violation in any material respect of any Anti-Terrorism Law,

(ii)          deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the OFAC Sanctions Programs in violation of any Anti-Terrorism Law, or

(iii)         engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the OFAC Sanctions Programs, the USA PATRIOT Act or any other Anti-Terrorism Law.

(b)          Without limiting or contradicting (or being limited or contradicted by) the foregoing, Credit Parties further covenants and agree that: (i) no Covered Entity will engage in activities that provide basis for designation as a Sanctioned Person, (ii) no Covered Entity, either in its own right or through any third party, will (A) have any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (B) do business in or with, or derive any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; (C) engage in any dealings or transactions prohibited by any Anti-Terrorism Law or (D) use the advances to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law, (iii) each Covered Entity shall comply with all Anti-Terrorism Laws and (iv) the Administrative Borrower shall promptly notify the Administrative Agent in writing upon the occurrence of a Reportable Compliance Event.

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10.16.    Permitted Acquisitions. (a) Subject to the provisions of this Section 10.16 and the requirements contained in the definition of Permitted Acquisition, Parent and each Wholly-Owned Subsidiary of Parent which is a Credit Party may from time to time effect Permitted Acquisitions, so long as (in each case except to the extent the Required Lenders otherwise specifically agree in writing in the case of a specific Permitted Acquisition): (i) no Default or Event of Default shall have occurred and be continuing at the time of the consummation of the proposed Permitted Acquisition or immediately after giving effect thereto; (ii) the Administrative Borrower shall have given to the Administrative Agent and the Lenders at least 15 Business Days’ prior written notice of any Permitted Acquisition (or such shorter period of time as may be reasonably acceptable to the Administrative Agent in its sole discretion), which notice shall describe in reasonable detail the principal terms and conditions of such Permitted Acquisition; (iii) calculations are made by the Borrowers with respect to the financial covenants contained in Sections 11.08 through 11.10, inclusive, for the respective Calculation Period on a Pro Forma Basis as if the respective Permitted Acquisition (as well as all other Permitted Acquisitions theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period, and such calculations shall show that (A) the Senior Secured Leverage Ratio calculated on a Pro Forma Basis to give effect to the Permitted Acquisition as if such Permitted Acquisition had occurred on the first day of such Calculation Period would (x) be .25 times less than the maximum Senior Secured Leverage Ratio otherwise permitted under this Agreement for the fiscal quarter most recently ended and (y) not exceed 4.25:1.00 and (B) the financial covenants would have been complied with if the Permitted Acquisition had occurred on the first day of such Calculation Period; (iv) based on good faith projections prepared by the Borrowers for the period from the date of the consummation of the respective Permitted Acquisition to the date which is one year thereafter, the level of financial performance measured by the financial covenants set forth in Sections 11.08 through 11.10, inclusive, shall be better than or equal to such level as would be required to provide that no Default or Event of Default would exist under the financial covenants contained in such Sections 11.08 through 11.10, inclusive, as compliance with such financial covenants would be required through the date which is one year from the date of the consummation of the respective Permitted Acquisition; (v) all representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Permitted Acquisition (both before and after giving effect thereto), unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date; (vi) the Aggregate Consideration payable for the proposed Permitted Acquisition, when added to the Aggregate Consideration paid or payable for all other Permitted Acquisitions theretofore consummated, does not exceed the Permitted Acquisition Basket Amount; (vii) immediately before and after giving effect to such Permitted Acquisition (but, for this purpose calculated as if the payment of all post-closing purchase price adjustments required (in the reasonable determination of the Borrowers) in connection with such Permitted Acquisition (and all other Permitted Acquisitions for which such purchase price adjustments may be required to be made) and all Capital Expenditures (and the financing thereof) reasonably anticipated by the Borrowers to be made in the business acquired pursuant to such Permitted Acquisition within the 360-day period (such period for any Permitted Acquisition, a “Post-Closing Period”) following such Permitted Acquisition (and in the businesses acquired pursuant to all other Permitted Acquisitions with Post-Closing Periods ended during the Post-Closing Period of such Permitted Acquisition) were then being paid with the proceeds of Revolving Loans), the sum of (x) the Unrestricted cash and Cash Equivalents of Holdings and its Subsidiaries plus (y) the Undrawn Availability at such time shall equal or exceed $5,000,000; (viii) the Administrative Agent shall be satisfied with the terms, structure and documentation in respect of such Permitted Acquisition; (ix) the Administrative Borrower shall have delivered to the Administrative Agent and each Lender a certificate executed by their respective chief financial officers, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i) through (vii), inclusive, and containing the calculations (in reasonable detail) (A) required by preceding clauses (iii), (iv), (vi) and (vii) and (B) necessary to establish the Acquired EBITDA of the Acquired Entity or Business acquired pursuant to each Permitted Acquisition for the most recently ended 12-month period for which financial statements are available for such Acquired Entity or Business; (x) the Acquired Entity or Business acquired pursuant to each Permitted Acquisition shall be engaged in a similar line of business as the Parent or such Wholly-Owned Subsidiary of Parent and (xi) Consolidated EBITDA of Holdings and its Subsidiaries for the most recent Test Period for which financial statements have been delivered, on a Pro Forma Basis for such acquisition, shall be greater than actual historical Consolidated EBITDA of Holdings and its Subsidiaries for such Test Period.

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(b)          At the time of each Permitted Acquisition involving the creation or acquisition of a Subsidiary, or the acquisition of capital stock or other Equity Interest of any Person, the capital stock or other Equity Interests thereof created or acquired in connection with such Permitted Acquisition shall be pledged for the benefit of the Secured Creditors pursuant to (and to the extent required by) the relevant Security Document.

(c)          Parent will cause each Subsidiary which is formed to effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and to execute and deliver all of the documentation as and to the extent required by, Sections 10.12 and 10.17, to the reasonable satisfaction of the Administrative Agent.

(d)          The consummation of each Permitted Acquisition shall be deemed to be a representation and warranty by each of Holdings, Parent and each Borrower that the certifications pursuant to this Section 10.16 (other than a condition subject to the satisfaction of the Administrative Agent) are true and correct and that all conditions thereto have been satisfied and that same is permitted in accordance with the terms of this Agreement, which representation and warranty shall be deemed to be a representation and warranty for all purposes hereunder, including, without limitation, Sections 8 and 11.

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10.17.    Foreign Subsidiaries Security. If following a change in the relevant sections of the Code or the regulations, rules, rulings, notices or other official pronouncements issued or promulgated thereunder, counsel for the Borrowers reasonably acceptable to the Administrative Agent does not within 60 days after a request from the Administrative Agent or the Required Lenders deliver evidence, in form and substance mutually satisfactory to the Administrative Agent and the Administrative Borrower, with respect to any Foreign Subsidiary of any Borrower which has not already had all of its Equity Interests pledged pursuant to the Pledge Agreement to secure all of the Obligations (as defined in the Pledge Agreement) that (i) a pledge of more than 66⅔% of the total combined voting power of all classes of Equity Interests of such Foreign Subsidiary entitled to vote, (ii) the entering into by such Foreign Subsidiary of a security agreement in substantially the form of the Security Agreement, (iii) the entering into by such Foreign Subsidiary of a pledge agreement in substantially the form of the Pledge Agreement or (iv) the entering into by such Foreign Subsidiary of a guaranty in substantially the form of the Subsidiaries Guaranty, in any such case could reasonably be expected to (x) cause the undistributed earnings of such Foreign Subsidiary as determined for federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiary’s United States parent for federal income tax purposes or (y) otherwise subject any Borrower or such Foreign Subsidiary to material adverse tax consequences, then in the case of a failure to deliver the evidence described in clause (i) above, that portion of such Foreign Subsidiary’s outstanding Equity Interests so issued by such Foreign Subsidiary, in each case not theretofore pledged pursuant to the Pledge Agreement to secure all of the Obligations (as defined in the Pledge Agreement), shall be pledged to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement in substantially similar form, if needed), and in the case of a failure to deliver the evidence described in clause (ii) or (iii) above, such Foreign Subsidiary shall execute and deliver the Security Agreement (or another security agreement in substantially similar form, if needed) or the Pledge Agreement (or another pledge agreement in substantially similar form, if needed), as the case may be, granting to the Collateral Agent for the benefit of the Secured Creditors a security interest in all of such Foreign Subsidiary’s assets or Equity Interests and promissory notes owned by such Foreign Subsidiary, as the case may be, and securing the obligations of the Borrowers under the Credit Documents and under any Interest Rate Protection Agreement or Other Hedging Agreement and, in the event the Subsidiaries Guaranty shall have been executed by such Foreign Subsidiary, the obligations of such Foreign Subsidiary thereunder, and in the case of a failure to deliver the evidence described in clause (iv) above, such Foreign Subsidiary shall execute and deliver the Subsidiaries Guaranty (or another guaranty in substantially similar form, if needed), guaranteeing the obligations of the Borrowers under the Credit Documents and under any Interest Rate Protection Agreement or Other Hedging Agreement, in each case to the extent that the entering into of such Security Agreement, the Pledge Agreement or the Subsidiaries Guaranty (or substantially similar document) is permitted by the laws of the respective foreign jurisdiction and with all documents delivered pursuant to this Section 10.17 to be in form and substance reasonably satisfactory to the Administrative Agent and/or the Collateral Agent.

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10.18.    Information Rights. Whenever the Senior Secured Leverage Ratio is greater than 2.00:1.00 as of the most recent fiscal quarter end, Holdings will provide to the Administrative Agent a copy of the board package delivered to members of the directors of Holdings in advance of each board meeting of Holdings. Portions of such board package may be redacted where and to the extent that Holdings reasonably believe that such redaction is reasonably necessary (i) to preserve attorney-client, work product or similar privilege between the Credit Parties and their counsel with respect to any matter, (ii) to comply with the terms and conditions of confidentiality agreements between Holdings and its Subsidiaries, on the one hand, and any third parties, on the other, or (iii) because the Credit Parties have determined, in good faith, that there exists, with respect to the subject of such redacted information, an actual or potential conflict of interest between the Administrative Agent, Lender or Issuing Lender, on one hand, and the Credit Parties, on the other hand.

10.19.    Keepwell. If it is a Qualified ECP Loan Party, then jointly and severally, together with each other Qualified ECP Loan Party, hereby absolutely unconditionally and irrevocably (a) guarantees the prompt payment and performance of all Swap Obligations owing by each Non-Qualifying Party (it being understood and agreed that this guarantee is a guaranty of payment and not of collection), and (b) undertakes to provide such funds or other support as may be needed from time to time by any Non-Qualifying Party to honor all of such Non-Qualifying Party’s obligations under this Agreement or any Credit Document in respect of Swap Obligations (provided, however, that each Qualified ECP Loan Party shall only be liable under this Section 10.19 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 10.19, or otherwise under this Agreement or any Credit Document, voidable under applicable law, including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Loan Party under this Section 10.19 shall remain in full force and effect until payment in full of the Obligations and termination of this Agreement and the Credit Documents. Each Qualified ECP Loan Party intends that this Section 10.19 constitute, and this Section 10.19 shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of each Borrower and the Subsidiary Guarantors for all purposes of Section 1a(18)(A)(v)(II) of the CEA.

10.20.    Government Receivables. Each Credit Party shall take all steps necessary to protect Collateral Agent’s interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and deliver to Collateral Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of any contract between any Borrower and the United States, any state or any department, agency or instrumentality of any of them; provided that the Collateral Agent shall not transmit any instruments under the Federal Assignment of Claims Act to the applicable federal department, agency or instrumentality unless an Event of Default has occurred and is continuing.

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10.21.    Cash Management Systems. (a) Each Borrower shall (i) cause all Cash Management Accounts maintained by any Credit Party (other than Excluded Accounts) as set forth on Schedule XIV (as such schedule may be updated in accordance with the terms hereof) to be subject to Control Agreements with the account bank with respect to such Cash Management Account (each, a “Cash Management Bank”), (x) with respect to any such Cash Management Accounts maintained on the Closing Date, within sixty (60) days following the Closing Date (or such later date as may be agreed to by the Administrative Agent in its sole discretion) and (y) with respect to any such Cash Management Accounts acquired in a Permitted Acquisition, within sixty (60) days following the date of such Permitted Acquisition and (ii) after execution of such Control Agreements, (A) deposit or cause to be deposited promptly, and in any event no later than the second Business Day after the date of receipt thereof, all proceeds in respect of any Collateral, all collections (of a nature susceptible to a deposit in a bank account), and all other amounts received by any Credit Party (including payments made by Customers directly to any Credit Party and remittances on credit card sales) into a Cash Management Account and (B) shall not maintain cash, Cash Equivalents or other amounts in any deposit account or securities account, unless the Collateral Agent shall have received a Control Agreement in respect of each such deposit account or securities account (other than Excluded Accounts). Prior to the execution of the Control Agreements required by the prior sentence, the Credit Parties shall cause all amounts in such Cash Management Accounts to be swept each Business Day to an account maintained at the Collateral Agent.

(b)          Upon the terms and subject to the conditions set forth in a Control Agreement with respect to a Cash Management Account, all amounts received in such Cash Management Account shall be wired each Business Day to the account of the Borrowers, except that, so long as (i) no Event of Default has occurred and is continuing or (ii) no Cash Dominion Event has occurred and is continuing, neither Administrative Agent nor Collateral Agent will direct any Cash Management Bank to transfer funds in such Cash Management Account to the account of the Administrative Agent. For the avoidance of any doubt, during any cash dominion period described above, Collateral Agent may (or shall, upon request by the Administrative Agent) sweep cash from the Cash Management Accounts maintained with any bank or financial institution to the account of the Administrative Agent.

(c)          The Administrative Borrower may amend Schedule XIV from time to time to add or replace a Cash Management Bank or amend Schedule XIV to add or replace a Cash Management Account; provided, however, that, other than in connection with a Permitted Acquisition, (i) such prospective Cash Management Bank shall be reasonably satisfactory to the Administrative Agent and the Collateral Agent and (ii) prior to the time of adding such account to Schedule XIV, the applicable Credit Party and such prospective Cash Management Bank shall have executed and delivered to the Administrative Agent and Collateral Agent a Control Agreement.

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(d)          Following the occurrence of a Cash Dominion Event, if (i) for a period of thirty (30) consecutive days (x) no Event of Default shall have occurred and be continuing and (y) Undrawn Availability shall at all times during such thirty (30) day period be greater than $5,000,000, and (ii) the Administrative Borrower shall have delivered to the Collateral Agent and the Administrative Agent a certificate certifying to the conditions in clause (i) above, such Cash Dominion Event shall terminate.

(e)          During any time when Administrative Agent or Collateral Agent are sweeping cash from the Cash Management Accounts pursuant to Section 10.21(b) above, no Credit Party shall commingle such collections with the proceeds of any assets not included in the Collateral. No checks, drafts or other instrument received by the Administrative Agent shall constitute final payment to the Administrative Agent unless and until such instruments have actually been collected.

SECTION 11.      Negative Covenants.

Each of Holdings, Parent and each Borrower hereby covenants and agrees that on and after the Effective Date and until the Total Commitment and all Letters of Credit have terminated (to the extent not cash collateralized in an amount equal to one hundred and five percent (105%) of the Letter of Credit Outstandings) and the Loans, Notes and Unpaid Drawings (in each case, together with interest thereon), fees and all other Obligations (other than any indemnities described in Section 14.13 which are not then due and payable) incurred hereunder and thereunder, are paid in full:

11.01.    Liens. Holdings will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible) of Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable with recourse to Holdings or any of its Subsidiaries), or assign any right to receive income or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute; provided that the provisions of this Section 11.01 shall not prevent the creation, incurrence, assumption or existence of the following (Liens described below are herein referred to as “Permitted Liens”):

(i)           inchoate Liens for taxes, assessments or governmental charges or levies not yet due or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;

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(ii)          Liens in respect of property or assets of Holdings or any of its Subsidiaries imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar Liens arising in the ordinary course of business, and (x) which do not in the aggregate materially detract from the value of Holdings’ or such Subsidiary’s property or assets or materially impair the use thereof in the operation of the business of Holdings or such Subsidiary or (y) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien;

(iii)         Liens in existence on the Closing Date which are listed, and the property subject thereto described, in Schedule VIII, but only to the respective date, if any, set forth in such Schedule VIII for the removal, replacement and termination of any such Liens, plus renewals, replacements and extensions of such Liens to the extent set forth on such Schedule VIII, provided that (x) the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase from that amount outstanding at the time of any such renewal, replacement or extension and (y) any such renewal, replacement or extension does not encumber any additional assets or properties of Holdings or any of its Subsidiaries;

(iv)         Liens created by or pursuant to this Agreement and the Security Documents, including, without limitation, Liens securing Cash Management Products and Services and Hedge Liabilities;

(v)          (x) licenses, sublicenses, leases or subleases granted by Holdings or any of its Subsidiaries to other Persons not materially interfering with the conduct of the business of Holdings or any of its Subsidiaries and (y) any interest or title of a lessor, sublessor or licensor under any lease or license agreement permitted by this Agreement to which a Borrower or any of its Subsidiaries is a party;

(vi)         Liens upon assets of a Borrower or any of its Subsidiaries subject to Capitalized Lease Obligations to the extent such Capitalized Lease Obligations are permitted by Section 11.04(iv), provided that (x) such Liens only serve to secure the payment of Indebtedness arising under such Capitalized Lease Obligation and (y) the Lien encumbering the asset giving rise to the Capitalized Lease Obligation does not encumber any asset of Holdings, Parent or any other asset of a Borrower or any Subsidiary of a Borrower;

(vii)        Liens placed upon equipment or machinery acquired after the Closing Date and used in the ordinary course of business of a Borrower or any of its Subsidiaries and placed at the time of the acquisition thereof by a Borrower or such Subsidiary or within 90 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such equipment or machinery or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided that (x) the Indebtedness secured by such Liens is permitted by Section 11.04(iv) and (y) in all events, the Lien encumbering the equipment or machinery so acquired does not encumber any asset of Holdings, Parent or any other asset of a Borrower or such Subsidiary;

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(viii)       easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies, in each case not securing Indebtedness and not materially interfering with the conduct of the business of Holdings or any of its Subsidiaries;

(ix)          Liens arising from precautionary UCC financing statement filings regarding operating leases entered into in the ordinary course of business;

(x)           Liens arising out of the existence of judgments or awards that would not result in an Event of Default under Section 12.09 in respect of which Holdings or any of its Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review, for which adequate reserves have been established in accordance with GAAP, and in respect of which there shall have been secured a subsisting stay of execution pending such appeal or proceedings;

(xi)          statutory and common law landlords’ liens under leases to which a Borrower or any of its Subsidiaries are a party;

(xii)         Liens (other than Liens imposed under ERISA) incurred in the ordinary course of business in connection with workers compensation claims, unemployment insurance and social security benefits and Liens securing the performance of bids, tenders, leases and contracts in the ordinary course of business, statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business and consistent with past practices (exclusive of obligations in respect of the payment for borrowed money);

(xiii)        Permitted Encumbrances;

(xiv)       Liens on property or assets acquired pursuant to a Permitted Acquisition, or on property or assets of a Subsidiary of any Borrower in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition, provided that (x) any Indebtedness that is secured by such Liens is permitted to exist under Section 11.04(vii), and (y) such Liens are not incurred in connection with, or in contemplation or anticipation of, such Permitted Acquisition and do not attach to any asset of Holdings, Parent or any other asset of a Borrower or any of its Subsidiaries;

(xv)        Liens arising out of any conditional sale, title retention, consignment or other similar arrangements for the sale of goods entered into by a Borrower or any of its Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such arrangements;

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(xvi)      Liens (x) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (y) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(xvii)     bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by Holdings or any Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements;

(xviii)    Liens on cash deposits of a Credit Party pledged to secure performance bonds, surety bonds, appeal bonds or customs bonds; provided that the aggregate amount of all cash subject to all Liens permitted by this clause (xviii) shall not at any time exceed the amounts permitted under Section 11.04(ix);

(xix)       [Intentionally Omitted];

(xx)        additional Liens of the Borrowers or any Subsidiary of the Borrowers not otherwise permitted by this Section 11.01 that (w) were not incurred in connection with borrowed money, (x) do not materially impair the use of such assets in the operation of the business of the Borrowers or such Subsidiaries and (y) do not secure obligations in excess of $3,500,000 in the aggregate for all such Liens at any time.

In connection with the granting of Liens of the type described in clauses (iii), (vi), (vii), (ix) and (xiv) of this Section 11.01 by a Borrower of any of its Subsidiaries, the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate by it in connection therewith (including, without limitation, by executing appropriate lien releases or lien subordination agreements in favor of the holder or holders of such Liens, in either case solely with respect to the item or items of equipment or other assets subject to such Liens).

11.02.    Consolidation, Merger, Purchase or Sale of Assets, etc. Holdings will not, and will not permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any partnership, joint venture, or transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of all or any part of its property or assets (other than sales of inventory in the ordinary course of business), or enter into any sale-leaseback transactions, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business) of any Person (or agree to do any of the foregoing at any future time), except that:

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(i)          Capital Expenditures by a Borrower and its Subsidiaries shall be permitted to the extent not in violation of Section 11.07;

(ii)         a Borrower and its Subsidiaries may liquidate or otherwise dispose of obsolete, surplus or worn-out property in the ordinary course of business;

(iii)        Investments may be made to the extent permitted by Section 11.05;

(iv)        a Borrower and its Subsidiaries may sell assets (other than the capital stock or other Equity Interests of any Wholly-Owned Subsidiary), so long as (v) no Default or Event of Default then exists or would result therefrom, (w) each such sale is in an arm’s-length transaction and such Borrower or the respective Subsidiary receives at least Fair Market Value, (x) the consideration received by such Borrower or such Subsidiary consists of at least 75% cash and is paid within 90 days of the closing of such sale, (y) the Net Sale Proceeds therefrom are applied and/or reinvested as (and to the extent) required by Section 6.02(e) and (z) the aggregate amount of the cash and non-cash proceeds received from all assets sold pursuant to this clause (iv) for all Borrowers shall not exceed $5,000,000 in any fiscal year of Holdings (for this purpose, using the Fair Market Value of property other than cash);

(v)         each of the Borrowers and their Subsidiaries may lease (as lessee) or license (as licensee) real or personal property (so long as any such lease or license does not create a Capitalized Lease Obligation except to the extent permitted by Section 11.04(iv));

(vi)        each of the Borrowers and their Subsidiaries may sell or discount, in each case without recourse and in the ordinary course of business, accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and not as part of any financing transaction;

(vii)       each of the Borrowers and their Subsidiaries may grant licenses, sublicenses, leases or subleases to other Persons in the ordinary course of business and not materially interfering with the conduct of the business of a Borrower or any of its Subsidiaries, in each case so long as (v) no such grant contains non-disturbance or subordination agreements or otherwise affects the Collateral Agent’s security interest in the Collateral that is subject thereto, (w) no Default or Event of Default then exists or would result therefrom, (x) each such grant is in an arm’s-length transaction and such Borrower or the respective Subsidiary receives at least Fair Market Value, (y) the consideration received by such Borrower or such Subsidiary consists of at least 75% cash and (z) the Net Sale Proceeds therefrom are applied and/or reinvested as (and to the extent) required by Section 6.02(e);

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(viii)      any Subsidiary of a Borrower may convey, sell or otherwise transfer all or any part of its business, properties and assets to a Borrower or to any Subsidiary of a Borrower which is a Credit Party, so long as with respect to the Collateral, any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the Collateral so transferred shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such transfer) and all actions required to maintain said perfected status have been taken;

(ix)         any Subsidiary of a Borrower may merge or consolidate with and into, or be dissolved or liquidated into, a Borrower or any Wholly-Owned Domestic Subsidiary of a Borrower which is a Subsidiary Guarantor, so long as (i) in the case of any such merger, consolidation, dissolution or liquidation involving a Borrower, such Borrower is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation, (ii) in all other cases, a Wholly-Owned Domestic Subsidiary of a Borrower which is a Subsidiary Guarantor is the surviving or continuing corporation of any such merger, consolidation, dissolution or liquidation, and (iii) any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets of such Subsidiary shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such merger, consolidation, dissolution or liquidation) and all actions required to maintain said perfected status have been taken;

(x)          any Foreign Subsidiary of a Borrower may be merged, consolidated or amalgamated with and into, or be dissolved or liquidated into, or transfer any of its assets to, any Wholly-Owned Foreign Subsidiary of a Borrower, so long as (i) such Wholly-Owned Foreign Subsidiary of such Borrower is the surviving or continuing entity of any such merger, consolidation, amalgamation, dissolution or liquidation and (ii) any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the Equity Interests and other assets of such Wholly-Owned Foreign Subsidiary and such Foreign Subsidiary shall remain in full force and effect and perfected and enforceable (to at least the same extent as in effect immediately prior to such merger, consolidation, amalgamation, dissolution, liquidation or transfer) and all actions required to maintain said perfected status have been taken;

(xi)         Permitted Acquisitions may be consummated in accordance with the requirements of Section 10.16;

(xii)        a Borrower and its Subsidiaries may liquidate or otherwise dispose of Cash Equivalents in the ordinary course of business, in each case for cash at Fair Market Value and in a transaction not otherwise prohibited by the other terms of this Agreement;

(xiii)       a Borrower and its Subsidiaries may dispose of property pursuant to sale-leaseback transactions, so long as (v) no Default or Event of Default then exists or would result therefrom, (w) each such transaction is in an arm’s-length transaction and such Borrower or the respective Subsidiary receives at least Fair Market Value, (x) the consideration received by such Borrower or such Subsidiary consists of at least 75% cash, (y) the Net Sale Proceeds therefrom are applied and/or reinvested as (and to the extent) required by Section 6.02(e) and (z) the Fair Market Value of all property so disposed of shall not exceed $1,500,000 in any fiscal year;

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(xiv)      sale or issuance of Equity Interests to Holdings, Parent, any Borrower or any Subsidiary Guarantor shall be permitted; and

(xv)       the sale, dissolution, liquidation, or winding up of the Dissolution Subsidiaries shall be permitted, provided that the proceeds of the property and assets of the Dissolution Subsidiaries pursuant to such dissolution shall be distributed to a Credit Party.

To the extent the Required Lenders waive the provisions of this Section 11.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 11.02 (other than to Holdings or a Subsidiary thereof), such Collateral shall be sold free and clear of the Liens created by the Security Documents (provided that such Lien shall continue as to any proceeds of such sale to the extent such assets constituted Collateral), and the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing.

11.03.    Dividends. Holdings will not, and will not permit any of its Subsidiaries to, authorize, declare or pay any Dividends with respect to Equity Interests of Holdings, Holdings or any of its Subsidiaries, except that:

(i)          any Subsidiary of a Borrower may pay cash Dividends to such Borrower or to any Wholly-Owned Domestic Subsidiary of any Borrower and any Foreign Subsidiary of a Borrower also may pay cash Dividends to such Borrower, any Subsidiary Guarantor or any Wholly-Owned Foreign Subsidiary of any Borrower;

(ii)         any Borrower may pay cash Dividends to Holdings and Parent, so long as the proceeds thereof are promptly used by Holdings and Parent to pay operating expenses incurred in the ordinary course of business (including, without limitation, outside directors and professional fees, expenses and indemnities) and other similar corporate overhead costs and expenses, provided that (x) the aggregate amount of all cash Dividends paid pursuant to this clause (ii) shall not exceed $2,500,000 in any fiscal year of Holdings (exclusive of customary costs and expense required for Parent to maintain itself as a public company) and (y) in no event shall such operating expenses be paid to Affiliates;

(iii)        Access may pay cash Dividends to the Administrative Borrower, and the Administrative Borrower may pay cash Dividends to Parent, and Parent may pay cash Dividends to Holdings, at the times and in the amounts necessary to enable Holdings and Parent to pay its tax obligations; provided that (x) the amount of cash Dividends paid pursuant to this clause (iii) to enable Holdings and Parent to pay federal and state income taxes at any time shall not exceed the amount of such federal and state income taxes actually owing by Holdings and Parent at such time for the respective period and (y) any refunds received by Holdings and Parent shall promptly be returned by Holdings and Parent to such Borrower;

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(iv)        any Borrower may pay cash Dividends to Holdings (through Parent) in an aggregate amount for all such Dividends not to exceed $5,000,000 (although no more than $1,500,000 of such Dividends may be paid in any fiscal year of Holdings) for the purpose of enabling Holdings to redeem, repurchase or otherwise acquire for value, and Holdings may redeem, repurchase or otherwise acquire for value, outstanding shares of Holdings Common Stock (or options or warrants to purchases Holdings Common Stock) following the death, disability or termination of employment of officers, directors or employees of Holdings or any of its Subsidiaries, provided that (x) the only consideration paid by Holdings in respect of such redemptions or purchases shall be cash, (y) the aggregate amount paid by Holdings in cash in respect of all such redemptions or purchases shall not exceed $5,000,000 in respect of all such redemptions and purchases (although no more than $1,500,000 of such redemptions and purchases may be made in any fiscal year of Holdings) and (z) at the time of any cash Dividend, purchase or payment permitted to be made pursuant to this Section 11.03(iv), no Default or Event of Default shall then exist or result therefrom;

(v)         Holdings may pay regularly scheduled Dividends on its Qualified Preferred Stock pursuant to the terms thereof solely through the issuance of additional shares of such Qualified Preferred Stock (but not in cash), provided that in lieu of issuing additional shares of such Qualified Preferred Stock as Dividends, Holdings may increase the liquidation preference of the shares of Qualified Preferred Stock in respect of which such Dividends have accrued; and

(vi)        Holdings may pay Dividends solely to the extent necessary to consummate the redemption of its Equity Interest on the Closing Date with proceeds held in trust by Holdings.

11.04.    Indebtedness. Holdings will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, except:

(i)          Indebtedness incurred pursuant to this Agreement and the other Credit Documents;

(ii)         Existing Indebtedness outstanding on the Closing Date and listed on Schedule VI (as reduced by any repayments of principal thereof), without giving effect to any subsequent extension, renewal or refinancing thereof except to the extent set forth on Schedule VI, provided that the aggregate principal amount of the Indebtedness to be extended, renewed or refinanced does not increase from that amount outstanding at the time of any such extension, renewal or refinancing and, provided further, that any Intercompany Debt listed on Schedule VI (and subsequent extensions, refinancings, renewals, replacements and refundings thereof as permitted pursuant to this Section 11.04(ii)) (x) may only be extended, refinanced, renewed, replaced or refunded if the Intercompany Debt so extended, refinanced, renewed, replaced or refunded has the same obligor(s) and obligee(s) as the Intercompany Debt being extended, refinanced, renewed, replaced or refunded and (y) shall be subject to the requirements of clauses (w), (x) and (y) appearing in the proviso to Section 11.05(viii);

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(iii)        Indebtedness of any Borrower under (x) Interest Rate Protection Agreements entered into with respect to other Indebtedness permitted under this Section 11.04 and (y) Other Hedging Agreements entered into in the ordinary course of business and providing protection to a Borrower and its Subsidiaries against fluctuations in currency values in connection with such Borrower’s or any of its Subsidiaries’ operations, in either case so long as the entering into of such Interest Rate Protection Agreements or Other Hedging Agreements are bona fide hedging activities and are not for speculative purposes;

(iv)        Indebtedness of a Borrower and its Subsidiaries evidenced by Capitalized Lease Obligations (to the extent permitted pursuant to Section 11.07) and purchase money Indebtedness described in Section 11.01(vii), provided that in no event shall the sum of the aggregate principal amount of all Capitalized Lease Obligations and purchase money Indebtedness permitted by this clause (iv) exceed $1,500,000 at any time outstanding;

(v)         Indebtedness constituting Intercompany Loans to the extent permitted by Section 11.05(viii);

(vi)        Indebtedness consisting of guaranties (x) by a Borrower and the Wholly-Owned Domestic Subsidiaries of a Borrower that are Subsidiary Guarantors of each other’s Indebtedness and lease and other contractual obligations permitted under this Agreement and (y) by Wholly-Owned Foreign Subsidiaries of a Borrower of each other’s Indebtedness and lease and other contractual obligations permitted under this Agreement;

(vii)       Indebtedness of a Subsidiary of a Borrower acquired pursuant to a Permitted Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition of an asset securing such Indebtedness), provided that (x) such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition, (y) such Indebtedness does not constitute debt for borrowed money, it being understood and agreed that Capitalized Lease Obligations and purchase money Indebtedness shall not constitute debt for borrowed money for purposes of this clause (y) and (z) the aggregate principal amount of all Indebtedness permitted by this clause (vii) shall not exceed $2,500,000 at any one time outstanding;

(viii)      Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, so long as such Indebtedness is extinguished within four Business Days of its incurrence;

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(ix)         Indebtedness of a Borrower and its Subsidiaries with respect to performance bonds, surety bonds, appeal bonds or customs bonds required in the ordinary course of business or in connection with the enforcement of rights or claims of a Borrower or any of its Subsidiaries or in connection with judgments that do not result in a Default or an Event of Default, provided that the aggregate outstanding amount of all such performance bonds, surety bonds, appeal bonds and customs bonds permitted by this clause (ix) shall not at any time exceed $3,000,000;

(x)          [Intentionally Omitted]

(xi)         Indebtedness of a Borrower or any of its Subsidiaries which may be deemed to exist in connection with agreements providing for indemnification, purchase price adjustments and similar obligations in connection with the acquisition or disposition of assets in accordance with the requirements of this Agreement, so long as any such obligations are those of the Person making the respective acquisition or sale, and are not guaranteed by any other Person except as permitted by Section 11.04(vi); and

(xii)        so long as no Default or Event of Default then exists or would result therefrom, additional Indebtedness incurred by a Borrower and its Subsidiaries in an aggregate principal amount not to exceed $5,000,000 at any one time outstanding, which Indebtedness shall be unsecured unless otherwise permitted under Section 11.01(xx).

11.05.    Advances, Investments and Loans. Holdings will not, and will not permit any of its Subsidiaries to, directly or indirectly, lend money or credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other Equity Interest in, or make any capital contribution to, any other Person, (each of the foregoing an “Investment” and, collectively, “Investments”), except that the following shall be permitted:

(i)          a Borrower and its Subsidiaries may acquire and hold accounts receivables owing to any of them, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms of a Borrower or such Subsidiary;

(ii)         Holdings and its Subsidiaries may acquire and hold cash and Cash Equivalents;

(iii)        Holdings and its Subsidiaries may hold the Investments held by them on the Closing Date and described on Schedule IX, provided that any additional Investments made with respect thereto shall be permitted only if permitted under the other provisions of this Section 11.05;

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(iv)        a Borrower and its Subsidiaries may acquire and own investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

(v)         a Borrower and its Subsidiaries may make loans and advances to their officers and employees for moving, relocation and travel expenses and other similar expenditures, in each case in the ordinary course of business in an aggregate amount not to exceed $1,000,000 at any time (determined without regard to any write-downs or write-offs of such loans and advances);

(vi)        Holdings and its Subsidiaries may acquire and hold obligations of their officers and employees in connection with such officers’ and employees’ acquisition of shares of Holdings Common Stock (so long as no cash is actually advanced by Holdings or any of its Subsidiaries in connection with the acquisition of such obligations);

(vii)       a Borrower may enter into Interest Rate Protection Agreements and Other Hedging Agreements to the extent permitted by Section 11.04(iii);

(viii)      (I) any Credit Party may make intercompany loans and advances to any other Credit Party, (II) a Borrower and its Domestic Subsidiaries may make intercompany loans and advances to any Wholly-Owned Foreign Subsidiary, (III) any Subsidiary which is not a Credit Party may make intercompany loans and advances to any Credit Party or any other Subsidiary and (IV) any Foreign Subsidiary may make intercompany loans and advances to any other Foreign Subsidiary that is a Wholly-Owned Subsidiary (such intercompany loans and advances referred to in preceding clauses (I) through (IV), collectively, the “Intercompany Loans”), provided, that (t) Undrawn Availability at the time any Intercompany Loans are made pursuant to clause (II) above shall not be less than $7,500,000 after giving effect to such Intercompany Loans, (u) at no time shall the aggregate outstanding principal amount of all Intercompany Loans made pursuant to preceding sub-clause (II) of this clause (viii), when added to the amount of contributions, acquisitions of Equity Interests, capitalizations and forgivenesses theretofore made pursuant to subclause (II) of Section 11.05(ix) (for this purposes, taking the Fair Market Value of any property (other than cash) so contributed at the time of such contribution), exceed $1,000,000 (determined without regard to any write-downs or write-offs of such loans and advances and net of any returns on any such Investment in the form of a principal repayment, distribution, dividend or redemption, as applicable), (v) no Intercompany Loan may be made pursuant to subclause (II) above at any time that an Event of Default has occurred and is continuing, (w) each Intercompany Loan shall be evidenced by an Intercompany Note, (x) each such Intercompany Note owned or held by a Credit Party shall be pledged to the Collateral Agent pursuant to the relevant Security Document and (y) any Intercompany Loans made to any Subsidiary Guarantor or any Wholly-Owned Foreign Subsidiary pursuant to this clause (viii) shall cease to be permitted by this clause (viii) if such Subsidiary Guarantor or Wholly-Owned Foreign Subsidiary, as the case may be, ceases to constitute a Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary or a Wholly-Owned Foreign Subsidiary, as the case may be;

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(ix)         (I) a Borrower and any Subsidiary Guarantor may make capital contributions to, or acquire Equity Interests of, any Subsidiary Guarantor which is a Wholly-Owned Domestic Subsidiary, (II) a Borrower and its Domestic Subsidiaries may make capital contributions to, or acquire Equity Interests of, Wholly-Owned Foreign Subsidiaries, and may capitalize or forgive any Indebtedness owed to them by a Wholly-Owned Foreign Subsidiary and outstanding under clause (viii) of this Section 11.05, and (III) any Wholly-Owned Foreign Subsidiary may make capital contributions to, or acquire Equity Interests of, any other Wholly-Owned Foreign Subsidiary, and may capitalize or forgive any Indebtedness owed to it by a Wholly-Owned Foreign Subsidiary; provided that (v) Undrawn Availability at the time any capital contributions are made pursuant to clause (II) above shall not be less than $7,500,000 after giving effect to such capital contributions, (w) the aggregate amount of contributions, acquisitions of Equity Interests, capitalizations and forgiveness on and after the Closing Date made pursuant to preceding subclause (II) (for this purpose, taking the Fair Market Value of any property (other than cash) so contributed at the time of such contribution), when added to the aggregate outstanding principal amount of Intercompany Loans made to Wholly-Owned Foreign Subsidiaries pursuant to subclause (II) of Section 11.05(viii) (determined without regard to any write-downs or write-offs thereof and net of any returns on any such Investment in the form of a principal repayment, distribution, dividend or redemption, as applicable), shall not exceed an amount equal to $1,000,000, (x) no contribution, capitalization or forgiveness may be made pursuant to preceding subclause (II) at any time that a Default or an Event of Default has occurred and its continuing, (y) in the case of any contribution pursuant to preceding subclauses (I) and (II), any security interest granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in any assets so contributed shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such contribution) and all actions required to maintain said perfected status have been taken (subject, in the case of subclause (II) to Section 10.17) and (z) any Investment made in or to any Subsidiary Guarantor or any Wholly-Owned Foreign Subsidiary pursuant to this clause (ix) shall cease to be permitted hereunder if such Subsidiary Guarantor or Wholly-Owned Foreign Subsidiary, as the case may be, ceases to constitute a Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary or a Wholly-Owned Foreign Subsidiary, as the case may be;

(x)          Holdings and its Subsidiaries may own the Equity Interests of their respective Subsidiaries created or acquired in accordance with the terms of this Agreement (so long as all amounts invested in such Subsidiaries are independently justified under another provision of this Section 11.05);

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(xi)         Contingent Obligations permitted by Section 11.04, to the extent constituting Investments;

(xii)        Permitted Acquisitions shall be permitted in accordance with the requirements of Section 10.16 and the Acquisition shall be permitted in accordance with the terms of the Acquisition Documents;

(xiii)       a Borrower and its Subsidiaries may receive and hold promissory notes and other non-cash consideration received in connection with any asset sale permitted by Section 11.02(iv);

(xiv)      a Borrower and its Subsidiaries may make advances in the form of a prepayment of expenses to vendors, suppliers and trade creditors consistent with their past practices, so long as such expenses were incurred in the ordinary course of business of a Borrower or such Subsidiary;

(xv)       a Borrower and its Subsidiaries may make Investments in joint ventures in an aggregate amount for such Investments made pursuant to this clause (xv) (determined without regard to any write-downs or write-offs thereof), not to exceed $2,500,000; and

(xvi)      in addition to Investments permitted by clauses (i) through (xv) of this Section 11.05, a Borrower and its Subsidiaries may make additional loans, advances and other Investments to or in a Person in an aggregate amount for all loans, advances and other Investments made pursuant to this clause (xvi) (determined without regard to any write-downs or write-offs thereof), net of cash repayments of principal in the case of loans, sale proceeds in the case of Investments in the form of debt instruments and cash equity returns (whether as a distribution, dividend, redemption or sale) in the case of equity investments, not to exceed $3,000,000.

11.06.    Transactions with Affiliates. Holdings will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of related transactions with any Affiliate of Holdings or any of its Subsidiaries, other than in the ordinary course of business and on terms and conditions substantially as favorable to Holdings or such Subsidiary as would reasonably be obtained by Holdings or such Subsidiary at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that the following in any event shall be permitted:

(i)          Dividends may be paid to the extent provided in Section 11.03;

(ii)         loans may be made and other transactions may be entered into by Holdings and its Subsidiaries to the extent permitted by Sections 11.02, 11.04 and 11.05;

(iii)        customary fees, indemnities and reimbursements may be paid to non-officer directors of Holdings and its Subsidiaries;

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(iv)        Holdings may issue Holdings Common Stock and Qualified Preferred Stock;

(v)         Holdings and its Subsidiaries may enter into, and may make payments under, employment agreements, employee benefits plans, stock option plans, indemnification provisions and other similar compensatory arrangements with officers, employees and directors of Holdings and its Subsidiaries in the ordinary course of business;

(vi)        Subsidiaries of a Borrower may pay management fees, licensing fees and similar fees to a Borrower or to any Wholly-Owned Domestic Subsidiary of a Borrower that is a Subsidiary Guarantor;

(vii)       transactions among a Borrower and any Subsidiary Guarantor; and

(viii)      transactions among Subsidiaries who are not Credit Parties.

Notwithstanding anything to the contrary contained above in this Section 11.06, in no event shall Holdings or any of its Subsidiaries pay any management, consulting or similar fee to any of their respective Affiliates except as specifically provided in clause (vi) of this Section 11.06.

11.07.         Capital Expenditures. (a) Holdings will not, and will not permit any of its Subsidiaries to, make any Capital Expenditures, except that (i) during the period from the Closing Date through and including December 31, 2015, the Borrowers and their Subsidiaries may make Capital Expenditures so long as the aggregate amount of all such Capital Expenditures does not exceed $50,000, and (ii) during any fiscal year of Holdings set forth below (taken as one accounting period), the Borrowers and their Subsidiaries may make Capital Expenditures so long as the aggregate amount of all such Capital Expenditures does not exceed in any fiscal year of Holdings set forth below the amount set forth opposite such fiscal year below:

Fiscal Year Ending	Amount
December 31, 2016	$	750,000
December 31, 2017	$	1,000,000
December 31, 2018	$	1,000,000
December 31, 2019	$	1,000,000
December 31, 2020	$	1,000,000

(b)         In addition to the foregoing, in the event that the amount of Capital Expenditures permitted to be made by the Borrowers and their Subsidiaries pursuant to clause (a)(ii) above in any fiscal year of Holdings (before giving effect to any increase in such permitted Capital Expenditure amount pursuant to this clause (b)) is greater than the amount of Capital Expenditures actually made by the Borrowers and their Subsidiaries during such fiscal year, the lesser of (x) such excess and (y) 50% of the applicable permitted scheduled Capital Expenditure amount as set forth in such clause (a) above may be carried forward and utilized to make Capital Expenditures in the immediately succeeding fiscal year, provided that no amounts once carried forward pursuant to this Section 11.07(b) may be carried forward to any fiscal year of Holdings thereafter, provided, further, that in any fiscal year the corresponding amount set forth in Section 11.07(a) shall be deemed to have been utilized in full prior to the utilization of any amounts pursuant to this Section 11.07(b).

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(c)          In addition to the foregoing, the Borrowers and their Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 11.07(a) or (b)) with the amount of (x) Net Sale Proceeds received by a Borrower or any of its Subsidiaries from any Asset Sale so long as such Net Sale Proceeds are reinvested within 360 days following the date of such Asset Sale, but only to the extent that such Net Sale Proceeds are not otherwise required to be applied as a mandatory repayment and/or commitment reduction pursuant to Section 6.02(e).

(d)          In addition to the foregoing, the Borrowers and their Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 11.07(a) or (b)) with the amount of Net Cash Proceeds received by a Borrower or any of its Subsidiaries from any Recovery Event so long as such Net Cash Proceeds are used to replace or restore any properties or assets in respect of which such Net Cash Proceeds were paid within 360 days following the date of receipt of such Net Cash Proceeds from such Recovery Event, but only to the extent that such Net Cash Proceeds are not otherwise required to be applied as a mandatory repayment pursuant to Section 6.02(g).

(e)          In addition to the foregoing, the Borrowers and their Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 11.07(a) or (b)) constituting Permitted Acquisitions effected in accordance with the requirements of Section 10.16.

11.08.    Fixed Charge Coverage Ratio. Holdings will not permit the Fixed Charge Coverage Ratio for any Test Period ending on the last day of a fiscal quarter of Holdings set forth below to be less than the ratio set forth opposite such fiscal quarter below:

Fiscal Quarter Ending	Ratio
December 31, 2015	1.05:1.00
March 31, 2016	1.05:1.00
June 30, 2016	1.05:1.00
September 30, 2016	1.05:1.00
December 31, 2016	1.05:1.00
March 31, 2017	1.05:1.00
June 30, 2017	1.05:1.00
September 30, 2017	1.05:1.00
December 31, 2017	1.05:1.00
March 31, 2018	1.05:1.00
June 30, 2018	1.05:1.00
September 30, 2018	1.05:1.00
December 31, 2018	1.05:1.00
March 31, 2019	1.05:1.00
June 30, 2019	1.05:1.00
September 30, 2019	1.05:1.00
December 31, 2019	1.15:1.00
March 31, 2020	1.25:1.00
June 30, 2020	1.50:1.00
September 30, 2020	1.50:1.00

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11.09.    Senior Secured Leverage Ratio. Holdings will not permit the Senior Secured Leverage Ratio for any Test Period ending on the last day of a fiscal quarter of Holdings set forth below to be greater than the ratio set forth opposite such fiscal quarter below:

Fiscal Quarter Ending	Ratio
December 31, 2015	5.50:1.00
March 31, 2016	5.50:1.00
June 30, 2016	5.50:1.00
September 30, 2016	5.00:1.00
December 31, 2016	4.50:1.00
March 31, 2017	4.25:1.00
June 30, 2017	4.00:1.00
September 30, 2017	4.00:1.00
December 31, 2017	4.00:1.00
March 31, 2018	3.75:1.00
June 30, 2018	3.50:1.00
September 30, 2018	3.50:1.00
December 31, 2018	3.25:1.00
March 31, 2019	3.00:1.00
June 30, 2019	3.00:1.00
September 30, 2019	2.75:1.00
December 31, 2019	2.75:1.00
March 31, 2020	2.75:1.00
June 30, 2020	2.75:1.00
September 30, 2020	2.75:1.00

11.10.    Minimum Consolidated EBITDA. Holdings will not permit Consolidated EBITDA for any fiscal quarter of Holdings set forth below to be less than the amount set forth opposite such fiscal quarter below:

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Fiscal Quarter Ending	Amount
December 31, 2015	$	3,000,000
March 31, 2016	$	3,000,000
June 30, 2016	$	3,500,000
September 30, 2016	$	4,250,000
December 31, 2016	$	4,250,000
March 31, 2017	$	4,250,000
June 30, 2017	$	4,750,000
September 30, 2017	$	4,750,000
December 31, 2017	$	4,750,000
March 31, 2018	$	5,000,000
June 30, 2018	$	5,250,000
September 30, 2018	$	5,000,000
December 31, 2018	$	5,250,000
March 31, 2019	$	5,500,000
June 30, 2019	$	5,750,000
September 30, 2019	$	5,750,000
December 31, 2019	$	5,750,000
March 31, 2020	$	6,000,000
June 30, 2020	$	6,000,000
September 30, 2020	$	6,250,000

From and after the consummation of any Permitted Acquisition, each of the amounts set forth above in this Section 11.10 from and after such time shall be increased by an amount (if positive) equal to the Acquired EBITDA of the respective Acquired Entity or Business acquired in each such Permitted Acquisition for the most recently ended 12-month period for which financial statements are available for such Acquired Entity or Business prior to the date of such Permitted Acquisition (as certified in the respective officer’s certificate delivered pursuant to clause (ix) of Section 10.16(a)).

11.11.    [Reserved].

11.12.    Modifications of Acquisition Documents, Certificate of Incorporation, By-Laws and Certain Other Agreements; Limitations on Voluntary Payments, etc. Holdings will not, and will not permit any of its Subsidiaries to:

(i)          amend, modify, change or waive any term or provision of any Acquisition Document unless, in the case of any amendment, modification or change to any Acquisition Document, such amendment, modification, change or waiver could not reasonably be expected to be materially adverse to the interests of the Lenders;

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(ii)         amend, modify or change its certificate or articles of incorporation (including, without limitation, by the filing or modification of any certificate or articles of designation), certificate of formation, limited liability company agreement or by-laws (or the equivalent organizational documents), as applicable, or any agreement entered into by it with respect to its capital stock or other Equity Interests (including any Shareholders’ Agreement and any Qualified Preferred Stock), or enter into any new agreement with respect to its capital stock or other Equity Interests, unless such amendment, modification, change or other action contemplated by this clause (ii) could not reasonably be expected to be materially adverse to the interests of the Lenders;

(iii)        amend, modify change or terminate any Material Contract unless, in the case of any amendment, modification, change or termination of any Material Contract, such amendment, modification, change or termination could not reasonably be expected to be materially adverse to the interests of the Lenders;

(iv)        amend, modify, change or waive any Necessary Authorization unless such amendment, modification, change or waiver could not reasonably be expected to be materially adverse to the interests of the Lenders or be materially adverse to the Credit Parties;

(v)         designate any Indebtedness (or related interest obligations) as “Designated Senior Debt” or similar term except for the Obligations;

(vi)        on and after the execution and delivery thereof, amend, modify or waive, or permit the amendment, modification or waiver of, any provision of the Intercompany Note without the prior consent of the Administrative Agent; and

(vii)       make (or give any notice in respect of) any principal or interest payment on, or any redemption or acquisition for value of, or any other payment with respect to any Subordinated Debt except as permitted by the subordination terms of the Subordinated Debt Documents.

11.13.    Limitation on Certain Restrictions on Subsidiaries. Holdings will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other Equity Interest or participation in its profits owned by Holdings or any of its Subsidiaries, or pay any Indebtedness owed to Holdings or any of its Subsidiaries, (b) make loans or advances to Holdings or any of its Subsidiaries or (c) transfer any of its properties or assets to Holdings or any of its Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement and the other Credit Documents, (iii) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of Holdings or any of its Subsidiaries, (iv) customary provisions restricting assignment of any licensing agreement (in which Holdings or any of its Subsidiaries is the licensee) or other contract entered into by Holdings or any of its Subsidiaries in the ordinary course of business, (v) restrictions on the transfer of any asset pending the close of the sale of such asset, and (vi) restrictions on the transfer of any asset subject to a Lien permitted by Section 11.01(iii), (vi), (vii), (xv) or (xvi).

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11.14.    Limitation on Issuance of Equity Interests. (a) Holdings will not, and will not permit any of its Subsidiaries to, issue (i) any Preferred Equity (other than Qualified Preferred Stock issued pursuant to clause (c) below) or (ii) any redeemable common stock or other redeemable common Equity Interests other than common stock or other redeemable common Equity Interests that is or are redeemable at the sole option of Holdings or such Subsidiary, as the case may be.

(b)          Holdings will not permit any of its Subsidiaries to issue any capital stock or other Equity Interests (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, capital stock or other Equity Interests, except (i) for transfers and replacements of then outstanding shares of capital stock or other Equity Interests, (ii) for stock splits, stock dividends and other issuances which do not decrease the percentage ownership of Holdings or any of its Subsidiaries in any class of the capital stock or other Equity Interests of such Subsidiary, (iii) in the case of Foreign Subsidiaries of Holdings, to qualify directors to the extent required by applicable law and for other nominal share issuances to Persons other than Holdings and its Subsidiaries to the extent required under applicable law, (iv) for issuances by Subsidiaries of a Borrower which are newly created or acquired in accordance with the terms of this Agreement, (v) to Holdings, a Borrower or a Wholly-Owned Subsidiary, provided that such entity (other than a Borrower) is a Guarantor, and (vi) Non-Wholly Owned Subsidiaries may issue Equity Interests, subject to compliance with Section 11.02).

(c)          Holdings may from time to time (i) issue Qualified Preferred Stock, so long as (x) no Default or Event of Default shall exist at the time of any such issuance or immediately after giving effect thereto, and (y) with respect to each issuance of Qualified Preferred Stock, the gross cash proceeds therefrom (or in the case of Qualified Preferred Stock directly issued as consideration for a Permitted Acquisition, the Fair Market Value of the assets received therefor) shall be at least equal to 100% of the liquidation preference thereof at the time of issuance and (ii) issue additional shares of Qualified Preferred Stock to pay in kind regularly scheduled Dividends on Qualified Preferred Stock theretofore issued in compliance with this Section 11.14(c).

11.15.    Business; etc. (a) Holdings will not, and will not permit any of its Subsidiaries to, engage directly or indirectly in any business other than the businesses engaged in by Holdings and its Subsidiaries as of the Closing Date and reasonable extensions thereof and businesses ancillary or complimentary thereto.

(b)          Notwithstanding the foregoing or anything else in this Agreement to the contrary, Holdings will not engage in any business or own any significant assets or have any material liabilities other than (i) (x) its ownership of the capital stock of Parent and (y) holding up to $1,000,000 of cash and Cash Equivalents in the aggregate at any time (together with any investment income thereon) and (ii) those liabilities which it is responsible for under this Agreement and the other Documents to which it is a party, provided that Holdings may engage in those activities that are incidental to (x) the maintenance of its existence in compliance with applicable law and (y) legal, tax and accounting matters in connection with any of the foregoing activities.

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(c)          Notwithstanding the foregoing or anything else in this Agreement to the contrary, none of the Dissolution Subsidiaries shall hold any assets, receive any Investment or extension of credit from Holdings or any of its Subsidiaries or engage directly or indirectly in any business other than as necessary to (i) complete the dissolution of such Dissolution Subsidiaries on or prior to the dates required pursuant to Section 14.19 and (ii) maintain their existence until dissolution.

11.16.    Limitation on Creation of Subsidiaries. (a) Holdings will not, and will not permit any of its Subsidiaries to, establish, create or acquire after the Closing Date any Subsidiary (other than Non-Wholly Owned Subsidiaries permitted to be established, created or acquired in accordance with the requirements of Section 11.16(b)), provided that a Borrower and its Wholly-Owned Subsidiaries shall be permitted to establish, create and, to the extent permitted by this Agreement, acquire Wholly-Owned Subsidiaries, so long as, in each case, (i) at least 5 days’ prior written notice thereof is given to the Administrative Agent (or such shorter period of time as is acceptable to the Administrative Agent in any given case), (ii) the capital stock or other Equity Interests of such new Subsidiary are promptly pledged pursuant to, and to the extent required by, this Agreement and the Pledge Agreement and the certificates, if any, representing such stock or other Equity Interests, together with stock or other appropriate powers duly executed in blank, are delivered to the Collateral Agent, (iii) each such new Wholly-Owned Domestic Subsidiary (and, to the extent required by Section 10.17, each such new Wholly-Owned Foreign Subsidiary) executes a counterpart of the Subsidiaries Guaranty, the Security Agreement, the Pledge Agreement and the Intercompany Note, and (iv) each such new Wholly-Owned Domestic Subsidiary (and, to the extent required by Section 10.17, each such new Wholly-Owned Foreign Subsidiary), to the extent requested by the Administrative Agent or the Required Lenders, takes all actions required pursuant to Section 10.12. In addition, each new Wholly-Owned Subsidiary that is required to execute any Credit Document shall execute and deliver, or cause to be executed and delivered, all other relevant documentation (including opinions of counsel) of the type described in Section 7 as such new Subsidiary would have had to deliver if such new Subsidiary were a Credit Party on the Closing Date.

(b)          In addition to Subsidiaries of a Borrower created pursuant to preceding clause (a), a Borrower and its Subsidiaries may establish, acquire or create, and make Investments in, Non-Wholly Owned Subsidiaries after the Effective Date as a result of Permitted Acquisitions (subject to the limitations contained in the definition thereof) and Investments expressly permitted to be made pursuant to Section 11.05, provided that, to the extent permitted by any applicable joint venture agreement (i) all of the capital stock or other Equity Interests of each such Non-Wholly Owned Subsidiary shall be pledged by any Credit Party which owns such capital stock or other Equity Interests as, and to the extent, required by this Agreement or the relevant Security Document, and (ii) each such Non-Wholly Owned Subsidiary shall take the actions specified in Section 11.16(a) to the same extent that such Non-Wholly Owned Subsidiary would have been required to take if it were a Wholly-Owned Subsidiary of a Borrower.

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11.17.    Certain Deposit Accounts. Without limiting the provisions of Section 10.21, none of the Credit Parties will maintain a lockbox account or a deposit account in which the Credit Parties hold more than an average daily balance of $500,000 measured on a rolling trailing thirty (30) day basis for the Credit Parties (on an individual basis), unless such lockbox account or deposit account is (x) subject to a “control agreement” referred to in Section 3.9 of the Security Agreement or (y) otherwise under the “control” (within the meaning of Section 9-104 of the New York UCC) of the Collateral Agent excluding the Excluded Accounts. At any time following the date which is sixty (60) days following the Closing Date (or such later date as may be agreed by the Administrative Agent in its sole discretion), the total amount deposited in accounts not subject to a “control agreement” or otherwise under the “control” of the Collateral Agent, excluding the Excluded Accounts, shall not exceed $1,500,000 at any time. For so long as PNC Bank serves as the Collateral Agent, the Borrowers shall maintain their principal operating and deposit accounts at PNC Bank.

SECTION 12.       Events of Default.

Upon the occurrence of any of the following specified events (each, an “Event of Default”):

12.01.    Payments. Any Borrower shall (i) default in the payment when due of any principal of any Loan or any Note or (ii) default, and such default shall continue unremedied for three or more Business Days, in the payment when due of any interest on any Loan or Note, any Unpaid Drawings or any Fees or any other amounts owing hereunder or under any other Credit Document; or

12.02.    Representations, etc. Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or in any certificate delivered to the Administrative Agent or any Lender pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or

12.03.    Covenants. Holdings or any of its Subsidiaries shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Section 6.02(k), 10.01, 10.04, 10.05, 10.12, 10.14, 10.15, 10.17, 10.18, or Section 11 or (ii) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement (other than those set forth in Sections 12.01 and 12.02) or any other Credit Document and such default under this Section 12.03(ii) shall continue unremedied for a period of 30 days after the occurrence thereof; or

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12.04.    Default Under Other Agreements. (i) Holdings or any of its Subsidiaries shall (x) default in any payment of any Indebtedness (other than the Obligations) beyond the period of grace, if any, provided in an instrument or agreement under which such Indebtedness was created or (y) default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the Obligations) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity, or (ii) any Indebtedness (other than the Obligations) of Holdings or any of its Subsidiaries shall be declared to be (or shall become) due and payable, or required to be prepaid (other than by (x) a regularly scheduled required prepayment or (y) a mandatory prepayment (unless such required prepayment or mandatory prepayment results from a default thereunder or an event of the type that constitutes an Event of Default)), prior to the stated maturity thereof, provided that it shall not be a Default or an Event of Default under this Section 12.04 unless the aggregate principal amount of all Indebtedness as described in preceding clauses (i) and (ii) is at least $3,000,000; or

12.05.    Bankruptcy, etc. Holdings or any of its Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto (the “Bankruptcy Code”); or an involuntary case is commenced against Holdings or any of its Subsidiaries, and the petition is not dismissed within 60 days after the filing thereof, provided, however, that during the pendency of such period, each Lender shall be relieved of its obligation to extend credit hereunder; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of Holdings or any of its Subsidiaries, to operate all or any substantial portion of the business of Holdings or any of its Subsidiaries, or Holdings or any of its Subsidiaries commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Holdings or any of its Subsidiaries, or there is commenced against Holdings or any of its Subsidiaries any such proceeding which remains undismissed for a period of 60 days after the filing thereof, or Holdings or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Holdings or any of its Subsidiaries makes a general assignment for the benefit of creditors; or any Company action is taken by Holdings or any of its Subsidiaries for the purpose of effecting any of the foregoing; or

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12.06.    ERISA. (a) Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof under Section 412 of the Code or Section 302 of ERISA or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code or Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), any determination that any Plan or Multiemployer Plan is considered at-risk or in endangered or critical status as defined in Sections 303, 304 and 305 of ERISA or Sections 430, 431, and 432 of the Code, any Plan or Multiemployer Plan which is subject to Title IV of ERISA shall have had or it is reasonable likely to have a trustee appointed to administer such Plan or Multiemployer Plan, any Plan or Multiemployer Plan which is subject to Title IV of ERISA is, shall have been terminated or to be the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a contribution required to be made with respect to a Plan, a Multiemployer Plan or a Foreign Pension Plan has not been timely made, Holdings, any Borrower, or any ERISA Affiliate has incurred any liability to or on account of a Plan or a Multiemployer Plan or it is reasonably likely that any such liability shall be incurred under Section 409, 502(i), 502(l), 515, 4041, 4041A, 4042, 4062, 4063, 4064, 4069, 4071, 4201, 4203, 4204, 4205, 4212, or 4245 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on account of a group health plan (as defined in Section 607(1) of ERISA, Section 4980B(g)(2) of the Code or 45 Code of Federal Regulations Section 160.103) under Section 4980B of the Code and/or the Health Insurance Portability and Accountability Act of 1996, or Holdings, any Borrower, or any ERISA Affiliate has incurred or is likely to incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or Plans or Foreign Pension Plans, a “default,” within the meaning of Section 4219(c)(5) of ERISA, shall occur with respect to any Multiemployer Plan; any applicable law, rule or regulation is adopted, changed or interpreted, or the interpretation or administration thereof is changed, in each case after the date hereof, by any Governmental Authority (a “Change in Law”), or, as a result of a Change in Law, an event occurs following a Change in Law, with respect to or otherwise affecting any Plan or any Multiemployer Plan; and (b) there shall result from any such event or events described in subsection (a) either the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (c) such lien, security interest or liability, described in subsection (b) individually, and/or in the aggregate, has had, or could reasonably be expected to have, in the opinion of the Required Lenders, a Material Adverse Effect; or

12.07.    Security Documents. Any material provision of the Security Documents shall fail or cease to be in full force and effect, or shall fail or cease to give the Collateral Agent for the benefit of the Secured Creditors the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral, in favor of the Collateral Agent, superior to and prior to the rights of all third Persons (except as permitted by Section 11.01), and subject to no other Liens (except as permitted by Section 11.01)), or any Credit Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any such Security Document and such default shall continue beyond the period of grace, if any, specifically applicable thereto pursuant to the terms of such Security Document; or

12.08.    Guaranties. Any material provision of any Guaranty shall cease to be in full force or effect as to any Guarantor (except as a result of a release of any Subsidiary Guarantor in accordance with the terms thereof), or any Guarantor or any Person acting for or on behalf of such Guarantor shall deny or disaffirm such Guarantor’s obligations under the Guaranty to which it is a party or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Guaranty to which it is a party; or

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12.09.    Judgments. One or more judgments or decrees shall be entered against Holdings or any Subsidiary of Holdings involving in the aggregate for Holdings and its Subsidiaries a liability (not paid or to the extent not covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 45 consecutive days, and the aggregate amount of all such judgments equals or exceeds $2,000,000; or

12.10.    Change of Control. A Change of Control shall occur; or

12.11.    Subordination. (i) The subordination provisions of the documents evidencing or governing any subordinated Indebtedness (the “Subordinated Provisions”) shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of applicable subordinated Indebtedness; or (ii) any Borrower or any other Credit Party shall, directly or indirectly, disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Subordinated Provisions, (B) that the Subordinated Provisions exist for the benefit of the Administrative Agent, Collateral Agent and the Lenders or (C) that all payments of principal of or premium and interest on the applicable subordinated Indebtedness, or realized from the liquidation of any property of any Credit Party, shall be subject to any of the Subordinated Provisions;

12.12.    Loss of Key Executive. Any time any two of Damian Perl, Paul A. Fernandes, Dale Davis, or Simon Lee shall cease to either (i) act or maintain his or her appointment in the role at the Credit Parties which such individual holds on the Closing Date (or a role with substantially similar or greater responsibilities and duties) or (ii) serve on the Board of Directors of Holdings, unless such individual is replaced within sixty (60) days by an individual approved in writing by the Administrative Agent; or

12.13.    Reportable Compliance Event. The occurrence of any Reportable Compliance Event, or any Borrower’s failure to immediately report a Reportable Compliance Event in accordance with Section 10.15 hereof.

then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent, upon the written request of the Required Lenders, shall by written notice to the Administrative Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent, any Lender or the holder of any Note to enforce its claims against any Credit Party (provided that, if an Event of Default specified in Section 12.05 shall occur with respect to any Borrower, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the Total Commitment terminated, whereupon all Commitments of each Lender shall forthwith terminate immediately and any Commitment Commission shall forthwith become due and payable without any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans and the Notes and all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party; (iii) terminate any Letter of Credit which may be terminated in accordance with its terms; (iv) direct the Administrative Borrower to pay (and the Borrowers agree that upon receipt of such notice, or upon the occurrence of an Event of Default specified in Section 12.05 with respect to the Borrowers, they will pay) to the Collateral Agent at the Payment Office such additional amount of cash or Cash Equivalents, to be held as security by the Collateral Agent, as is equal to the aggregate Stated Amount of all Letters of Credit issued for the account of the Borrowers and then outstanding; (v) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents; (vi) enforce each Guaranty; and (vii) apply any cash collateral held by the Administrative Agent or the Collateral Agent pursuant to Section 6.02 to the repayment of the Obligations.

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Notwithstanding anything to the contrary contained in this Section 12, in the event that any Borrower fails (or, but for the operation of this paragraph, would fail) to comply with the covenants set forth in Sections 11.08 through 11.10 (such applicable covenants, the “Financial Performance Covenants”) as of the last day of any fiscal quarter, at any time after such last day until the day that is ten (10) Business Days after the date the certificate calculating the Financial Performance Covenants for such fiscal quarter is required to be delivered pursuant to Section 10.01(g) or, if earlier, on the date on which such certificate is delivered, Holdings shall have the right to issue Permitted Cure Securities for cash or otherwise receive cash contributions to the capital of Holdings (collectively, the “Cure Right”), which cash shall be contributed as common Equity Interests to a Borrower (such contributed amount, the “Cure Amount”); provided, however, that such Cure Amount shall not exceed the amounts set forth below and such Financial Performance Covenants shall be recalculated by increasing Consolidated EBITDA with respect to such fiscal quarter and any four-quarter period that contains such fiscal quarter, solely for the purpose of measuring the Financial Performance Covenants and not for any other purpose under this Agreement (including any “baskets”), by an amount equal to the Cure Amount; provided, that, (i) until the Maturity Date there shall be no more than three (3) Cure Rights exercised in the aggregate, and no more than two (2) Cure Rights exercised during any four consecutive fiscal quarter period and not in successive fiscal quarters, (ii) for purposes of this paragraph, the Cure Amount shall be no greater than the least of (x) the amount required for purposes of complying with the Financial Performance Covenants, (y) $2,500,000, and (z) 20% of Consolidated EBITDA, (iii) for purposes of this paragraph, the aggregate amount of all Cure Amounts shall be no greater than $5,000,000 and (iv) for the avoidance of doubt, in recalculating the Financial Performance Covenants by increasing Consolidated EBITDA as set forth above, there shall be no pro forma effect given to any reduction of Loans with the Cure Amount in such recalculation of the Financial Performance Covenants. Each Cure Amount shall be applied pursuant to Section 6.02 to the repayment of the Obligations. If, after giving effect to the adjustments in this paragraph, the Borrowers shall then be in compliance with the requirements of the Financial Performance Covenants, the Borrowers shall be deemed to have satisfied the requirements of the Financial Performance Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the Financial Performance Covenants that had occurred shall be deemed cured for the purposes of this Agreement.

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SECTION 13.       The Administrative Agent; the Collateral Agent.

13.01.    Appointment. The Lenders hereby irrevocably designate and appoint MC ADMIN CO LLC as Administrative Agent and PNC BANK, NATIONAL ASSOCIATION as Collateral Agent (for purposes of this Section 13, the term “Agents” shall refer to both MC ADMIN CO LLC in its capacity as Administrative Agent and PNC BANK, NATIONAL ASSOCIATION in its capacity as Collateral Agent pursuant to the Security Documents collectively, and the term “Agent” shall refer to each of them as applicable in their respective roles) to act as specified herein and in the other Credit Documents. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Agents to take such action on its behalf under the provisions of this Agreement, the other Credit Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of each Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agents may perform any of their respective duties hereunder by or through its officers, directors, agents, employees or affiliates.

13.02.    Nature of Duties. (a) No Agent shall have any duties or responsibilities except those expressly set forth in this Agreement and in the other Credit Documents. Neither Agent nor any of their respective officers, directors, agents, employees or affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Credit Document or in connection herewith or therewith, unless caused by its own gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision). The duties of each Agent shall be mechanical and administrative in nature; the Agents shall not have by reason of this Agreement or any other Credit Document a fiduciary relationship in respect of any Lender or the holder of any Note; and nothing in this Agreement or in any other Credit Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agents any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein or therein.

(b)          Notwithstanding any other provision of this Agreement or any provision of any other Credit Document, the Lead Arranger is named as such for recognition purposes only, and in its capacity as such shall have no powers, duties, responsibilities or liabilities with respect to this Agreement or the other Credit Documents or the transactions contemplated hereby and thereby; it being understood and agreed that the Lead Arranger shall be entitled to all indemnification and reimbursement rights in favor of the Agents as, and to the extent, provided for under Sections 13.06 and 14.01. Without limitation of the foregoing, the Lead Arranger shall not, solely by reason of this Agreement or any other Credit Documents, have any fiduciary relationship in respect of any Lender or any other Person.

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(c)          Each Lender unconditionally and irrevocably acquits and fully forever releases and discharges each Agent and all its affiliates, members, partners, subsidiaries, officers, employees, agents, attorneys, principals, directors and shareholders and its respective heirs, legal representatives, successors and assigns (collectively, the “Releasees”) on the date each interest payment on the Loans is made by the Borrowers from any and all claims, demands, causes of action, obligations, remedies, suits, damages and liabilities of any nature whatsoever, whether now known, suspected or claimed, whether arising under common law, in equity or under statute, which such party hereto ever had or now has against any of the Releasees and which has arisen at any time prior to the date of such interest payment out of this Agreement, the other Credit Documents or any other related documents, instruments, agreements or matters or the enforcement or attempted or threatened enforcement by any of the Releasees of any of their respective rights, remedies or recourse related thereto (collectively, the “Released Claims”) (but in each case referred to in this clause (c), excluding any claims, demands, causes of actions, obligations, remedies, suits, damages or liabilities to the extent same occurred by reason of the gross negligence or willful misconduct of the Releasee to be indemnified (as determined by a court of competent jurisdiction in a final and non-appealable decision)).  Each Lender covenants and agrees never to commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against any of the Releasees any action or other proceeding based upon any of the Released Claims.

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13.03.    Lack of Reliance on the Agents. (a) Each Lender from time to time party to this Agreement (i) confirms that it has received a copy of this Agreement and the other Credit Documents, together with copies of the financial statements referred to therein, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to become a Lender under this Agreement, (ii) agrees that it has made and will, independently and without reliance upon either Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Credit Documents and, except as expressly provided in this Agreement, the Agents shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, provided that, upon the reasonable request of a Lender, each Agent shall provide to such Lender any documents or reports delivered to such Agent by the Credit Parties pursuant to the terms of this Agreement or any other Credit Document unless such Agent is restricted from doing so due to confidentiality requirements of Section 14.16, (iii) acknowledges and agrees that no fiduciary or advisory relationship between either Agent and any Lender is intended to be or has been created in respect of any of the transactions contemplated by this Agreement, (iv) acknowledges and agrees that each Agent, on the one hand, and each Lender on the other hand, have an arms-length business relationship that does not directly or indirectly give rise to, and no Lender relies on, any fiduciary duty on either Agent’s part, (v) acknowledges and agrees that each Lender is capable of evaluating and understanding, and each such Lender understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement, (vi) acknowledges and agrees that each Agent or any of their respective Affiliates may have received fees or other compensation from any Credit Party or any Affiliate of any Credit Party in connection with this Agreement which may or may not be publicly disclosed and such fees or compensation do not affect any Lender’s independent credit decision to enter into the transactions contemplated by this Agreement, (vii) acknowledges and agrees that notwithstanding that no fiduciary or similar relationship exists between the Agents and any Lender, each such Lender hereby waives, to the fullest extent permitted by law, any claims it may have against the Agents or their Affiliates for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Agents and their Affiliates shall have no liability (whether direct or indirect) to any Lender in respect of such a fiduciary duty claim or to any Person asserting a fiduciary duty claim on behalf of or in right of any Lender, including any such Lender’s affiliates, members, partners, subsidiaries, officers, employees, agents, attorneys, principals, directors and shareholders and respective heirs, legal representatives, successors and assigns and creditors, in each case subject to and without limiting the terms of Section 13.02(a), and (viii) agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Credit Documents are required to be performed by it as a Lender. The Agents shall not be responsible to any Lender or the holder of any Note for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of this Agreement or any other Credit Document or the financial condition of Holdings or any of its Subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Credit Document, or the financial condition of Holdings or any of its Subsidiaries or the existence or possible existence of any Default or Event of Default.

(b)          To the full extent permitted by applicable law, each party hereto and each Indemnified Person shall not assert, and hereby waives, any claim against any other party hereto or any other Indemnified Person, on any theory of liability, for special, indirect, consequential or incidental damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document, any other agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby or any Loan or the use of the proceeds thereof; provided, however, that the foregoing provisions shall not relieve any Borrower of its indemnification obligations as provided in Section 14.01(a) to the extent any Indemnified Person is found liable for any such damages. No party hereto and no Indemnified Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby, except to the extent the liability of such Person results from such Person’s gross negligence, willful misconduct or bad faith (as determined by a court of competent jurisdiction in a final and non-appealable decision); provided, however, that the foregoing provisions shall not relieve any Borrower of its indemnification obligations as provided in Section 14.01(a) to the extent any Indemnified Person is found liable for any such damages.

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13.04.    Certain Rights of the Agents. If either Agent requests instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Credit Document, such Agent shall be entitled to refrain from such act or taking such action unless and until such Agent shall have received instructions from the Required Lenders; and such Agent shall not incur liability to any Lender by reason of so refraining. Without limiting the foregoing, each Agent shall be entitled to refrain from any act or action, and neither any Lender nor the holder of any Note shall have any right of action whatsoever against such Agent as a result of such Agent refraining from such act or action, unless or until such Agent shall have received, pursuant to an escrow arrangement satisfactory to it, from the Borrowers or the Lenders an amount initially equal to $250,000 and supplemented or increased thereafter on a monthly basis to the extent necessary (in the reasonable judgment of such Agent) to reimburse such Agent for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature that may be imposed on, asserted against or incurred by such Agent as a result of such act or action and for which such Agent would be entitled to indemnification pursuant to Section 13.06 or Section 14.01 hereof. Any amounts subject to such escrow arrangement remaining after payment in full of all such indemnification obligations shall be returned to the Lenders or the Borrowers, as applicable.

13.05.    Reliance. The Agents shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype, facsimile or e-mail message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that either Agent believed to be the proper Person, and, with respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder, upon advice of counsel selected by either Agent.

13.06.    Indemnification. To the extent each Agent (or any affiliate thereof) is not reimbursed and indemnified by each Borrower, the Lenders will reimburse and indemnify each Agent (and any affiliate thereof) in proportion to their respective “percentage” as used in determining the Required Lenders for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature (including, without limitation, any customary indemnifications provided to a deposit account bank pursuant to a “control agreement” referred to in the Security Agreement which may be imposed on, asserted against or incurred by such Agent (or any affiliate thereof) in performing its duties hereunder or under any other Credit Document) or in any way relating to or arising out of this Agreement or any other Credit Document; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s (or such affiliate’s) gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).

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13.07.    Each Agent in its Individual Capacity. With respect to its obligation to make Loans, or issue or participate in Letters of Credit, under this Agreement each Agent shall have the rights and powers specified herein for a “Lender” and may exercise the same rights and powers as though it were not performing the duties specified herein; and the term “Lender,” “Majority Lenders,” “Required Lenders,” “Holders of Notes” or any similar terms shall, unless the context clearly indicates otherwise, include the Agents in their respective individual capacities. The Agents and their affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, investment banking, trust or other business with, or provide debt financing, equity capital or other services (including financial advisory services) to any Credit Party or any Affiliate of any Credit Party (or any Person engaged in a similar business with any Credit Party or any Affiliate thereof) as if they were not performing the duties specified herein, and may accept fees and other consideration from any Credit Party or any Affiliate of any Credit Party for services in connection with this Agreement which may or may not be publicly disclose and otherwise without having to account for the same to the Lenders.

13.08.    Holders. Each Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.

13.09.    Resignation by the Agents. (a) Each Agent may resign from the performance of all its respective functions and duties hereunder and/or under the other Credit Documents at any time by giving 3 Business Days’ prior written notice to the Lenders and, unless a Default or an Event of Default under Section 12.05 then exists, the Borrowers. Any such resignation by an Agent hereunder shall also constitute its resignation as an Issuing Lender, in which case the resigning Agent (x) shall not be required to issue any further Letters of Credit hereunder and (y) shall maintain all of its rights as Issuing Lender with respect to any Letters of Credit issued by it prior to the date of such resignation. Such resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below or as otherwise provided below.

(b)          Subject to clause (e) below, upon any such notice of resignation by the Agent, the Required Lenders shall appoint a successor Agent hereunder or thereunder to fulfill the same role as the resigning Agent who shall be a commercial bank or trust company reasonably acceptable to the Administrative Borrower, which acceptance shall not be unreasonably withheld or delayed (provided that the Administrative Borrower’s approval shall not be required if an Event of Default then exists).

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(c)          If no successor Agent has been appointed pursuant to clause (b) above by the 3rd Business Day after the date such notice of resignation was given by such Agent, the applicable Agent’s resignation shall become effective and the Required Lenders shall thereafter perform all the duties of the applicable Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Agent as provided above.

(d)          Upon a resignation of any Agent pursuant to this Section 13.09, such Agent shall remain indemnified to the extent provided in this Agreement and the other Credit Documents and the provisions of this Section 13 (and the analogous provisions of the other Credit Documents) shall continue in effect for the benefit of such Agent for all of its actions and inactions while serving as the applicable Agent.

(e)          Upon PNC Bank ceasing to be a Revolving Lender, PNC Bank shall resign as Collateral Agent. Upon any such notice of resignation by the Collateral Agent, the Administrative Agent, or its designee, shall become the successor Collateral Agent hereunder or thereunder to fulfill the same role as the resigning Collateral Agent, provided that, if such role is filled by the Administrative Agent’s designee, such designee shall be a commercial bank or trust company reasonably acceptable to the Administrative Borrower, which acceptance shall not be unreasonably withheld or delayed (provided that the Administrative Borrower’s approval shall not be required if an Event of Default then exists) and each Lender hereby accepts and ratifies such appointment.

13.10.    Collateral Matters. (a) Each Lender authorizes and directs the Collateral Agent to enter into the Security Documents for the benefit of the Lenders and the other Secured Creditors. Each Lender hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.

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(b)          The Lenders hereby authorize the Collateral Agent, at its option and in its discretion, to (1) release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon termination of the Commitments and payment and satisfaction of all of the Obligations (other than inchoate indemnification obligations) at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting property being sold or otherwise disposed of (to Persons other than Holdings and its Subsidiaries) upon the sale or other disposition thereof in compliance with Section 11.02, (iii) if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 14.12) or (iv) as otherwise may be expressly provided in the relevant Security Documents, and (2) release any Guarantor from its obligations under the applicable Guaranty if such Person ceases to be a Subsidiary Guarantor as a result of a transaction permitted under the Credit Documents or is otherwise permitted to be released from the applicable Guaranty pursuant to the Credit Documents. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release particular types or items of Collateral or Guarantors from its obligations under the Subsidiaries Guaranty pursuant to this Section 13.10.

(c)          The Collateral Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by any Credit Party or is cared for, protected or insured or that the Liens granted to the Collateral Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 13.10 or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent’s own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).

13.11.    Delivery of Information. The Agents shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by the Agents from any Credit Party, any Subsidiary, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Credit Document except (i) as specifically provided in this Agreement or any other Credit Document and (ii) as specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of the Agents at the time of receipt of such request and then only in accordance with such specific request.

13.12.    Delegation of Duties. The Agents may perform any and all of their duties and exercise its rights and powers hereunder or under any other Credit Document by or through any one or more sub agents appointed by either Agent (including, without limitation, MC Admin or any of its Affiliates). Each Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective officers, directors, employees, representatives, agents, sub-agents or advisors thereof. The Agents shall not be responsible for the negligence or misconduct of any respective sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that such Agent acted with gross negligence or willful misconduct in the selection of such sub agents.

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13.13.    No Reliance on either Agent’s Customer Identification Program; Certifications From Banks and Participants; USA PATRIOT Act. (a) Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on either Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other requirements imposed by the USA PATRIOT Act or the regulations issued thereunder, including the regulations set forth in 31 CFR § 103.121, as hereafter amended or replaced (“CIP Regulations”), or any other Anti-Terrorism Laws or the equivalent on any applicable jurisdiction, including any programs involving any of the following items relating to or in connection with any of the Credit Parties, their Affiliates or their agents, the Credit Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any recordkeeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or other regulations issued under the USA PATRIOT Act. Each Lender, Affiliate, participant or assignee subject to Section 326 of the USA PATRIOT Act will perform the measures necessary to satisfy its own responsibilities under the CIP Regulations or any equivalent provisions in any applicable jurisdiction.

(b)          Each Lender or assignee or participant of a Lender that is not incorporated under the laws of the United States or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to each Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1) within ten (10) days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act.

(c)          The USA PATRIOT Act requires all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, each Agent or Lender may from time to time request, and each Credit Party shall provide to such agents or Lender, such Borrower’s name, address, tax identification number and/or such other identifying information as shall be necessary for Lender to comply with the USA PATRIOT Act and any other Anti-Terrorism Law.

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SECTION 14.      Miscellaneous.

14.01.    Payment of Expenses, etc. (a) Each Borrower hereby agrees to:

(i)          whether or not the transactions herein contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and disbursements of DLA Piper LLP (US) as the Administrative Agent’s counsel, and the Administrative Agent’s other counsel and consultants) in connection with the preparation, execution, delivery and administration of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein and any amendment, waiver or consent relating hereto or thereto, of the Administrative Agent and its Affiliates in connection with its or their syndication efforts with respect to this Agreement and of the Administrative Agent and of each Issuing Lender in connection with the Letter of Credit Back-Stop Arrangements entered into by such Persons and, after the occurrence of an Event of Default, each of the Administrative Agent, the Collateral Agent, the Issuing Lenders and Lenders in connection with the enforcement of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings (including, in each case without limitation, the reasonable fees and disbursements of counsel and consultants for the Administrative Agent and the Collateral Agent, and, after the occurrence of an Event of Default, counsel for each of the Collateral Agent, the Issuing Lenders and Lenders);

(ii)         pay and hold the Administrative Agent, the Collateral Agent, and of the Issuing Lenders and each of the Lenders harmless from and against any and all present and future stamp, excise and other similar documentary taxes with respect to the foregoing matters and save the Administrative Agent, the Collateral Agent, each of the Issuing Lenders and each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to the Administrative Agent, the Collateral Agent, such Issuing Lender or such Lender) to pay such taxes; and

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(iii)        indemnify the Administrative Agent, the Collateral Agent, each Issuing Lender and each Lender, and each of their respective officers, directors, employees, representatives, agents, affiliates, trustees and investment advisors (each, an “Indemnified Person”) from and hold each of them harmless against any and all liabilities, obligations (including removal or remedial actions), losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including reasonable attorneys’ and consultants’ fees and disbursements) incurred by, imposed on or assessed against any of them as a result of, or arising out of, or in any way related to, or by reason of, (y) any investigation, litigation or other proceeding (whether or not the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender is a party thereto and whether or not such investigation, litigation or other proceeding is brought by or on behalf of any Credit Party) related to the entering into and/or performance of this Agreement or any other Credit Document or the use of any Letter of Credit or the proceeds of any Loans hereunder or the consummation of the Transaction or any other transactions contemplated herein or in any other Credit Document or the exercise of any of their rights or remedies provided herein or in the other Credit Documents, or (z) the actual or alleged presence of Hazardous Materials in the air, surface water or groundwater or on the surface or subsurface of any Real Property at any time owned, leased or operated by Holdings or any of its Subsidiaries, the generation, storage, transportation, handling or disposal of Hazardous Materials by Holdings or any of its Subsidiaries at any location, whether or not owned, leased or operated by Holdings or any of its Subsidiaries, the non-compliance by Holdings or any of its Subsidiaries with any Environmental Law (including applicable permits thereunder) applicable to any Real Property, or any Environmental Claim asserted against Holdings, any of its Subsidiaries or any Real Property at any time owned, leased or operated by Holdings or any of its Subsidiaries, including, in each case, without limitation, the reasonable fees and disbursements of counsel and other consultants incurred in connection with any such investigation, litigation or other proceeding IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE (but excluding any losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the Indemnified Person to be indemnified (as determined by a court of competent jurisdiction in a final and non-appealable decision)). To the extent that the undertaking to indemnify, pay or hold harmless the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, each Borrower shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law.

(b)          To the full extent permitted by applicable law, each of Holdings, Parent and each Borrower shall not assert, and hereby waives, any claim against any Indemnified Person, on any theory of liability, for special, indirect, consequential or incidental damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnified Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby, except to the extent the liability of such Indemnified Person results from such Indemnified Person’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).

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(c)          Each of Holdings, Parent and each Borrower unconditionally and irrevocably acquits and fully forever releases and discharges the Administrative Agent, the Collateral Agent, the Issuing Lenders and the Lenders and all their respective affiliates, members, partners, subsidiaries, officers, employees, agents, attorneys, principals, directors and shareholders and its respective heirs, legal representatives, successors and assigns (collectively, the “MC Releasees”) on the date each interest payment on the Loans is made by the Borrowers from any and all claims, demands, causes of action, obligations, remedies, suits, damages and liabilities of any nature whatsoever, whether now known, suspected or claimed, whether arising under common law, in equity or under statute, which such party hereto ever had or now has against any of the MC Releasees and which has arisen at any time prior to the date of such interest payment out of this Agreement, the other Credit Documents or any other related documents, instruments, agreements or matters or the enforcement or attempted or threatened enforcement by any of the MC Releasees of any of their respective rights, remedies or recourse related thereto (collectively, the “MC Released Claims”) (but in each case referred to in this clause (c), excluding any claims, demands, causes of actions, obligations, remedies, suits, damages or liabilities to the extent same occurred by reason of the gross negligence or willful misconduct of the MC Releasee to be indemnified (as determined by a court of competent jurisdiction in a final and non-appealable decision)).  Each of Holdings, Parent and each Borrower covenants and agrees never to commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against any of the MC Releasees any action or other proceeding based upon any of the MC Released Claims.

14.02.    Right of Setoff.

(a)          In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent, each Issuing Lender and each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Credit Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by the Administrative Agent, such Issuing Lender or such Lender or any Affiliate, branch or agency thereof (including, without limitation, by branches and agencies of the Administrative Agent, such Issuing Lender or such Lender wherever located) to or for the credit or the account of Holdings or any of its Subsidiaries against and on account of the Obligations and liabilities of the Credit Parties to the Administrative Agent, such Issuing Lender or such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations purchased by such Lender pursuant to Section 14.04(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not the Administrative Agent, such Issuing Lender or such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Each Lender and Issuing Lender agrees to notify the Administrative Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

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(b)          NOTWITHSTANDING THE FOREGOING SUBSECTION (a), AT ANY TIME THAT THE LOANS OR ANY OTHER OBLIGATION SHALL BE SECURED BY REAL PROPERTY LOCATED IN CALIFORNIA, NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY NOTE UNLESS IT IS TAKEN WITH THE CONSENT OF THE REQUIRED LENDERS OR APPROVED IN WRITING BY THE ADMINISTRATIVE AGENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY OR ENFORCEABILITY OF THE LIENS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THE SECURITY DOCUMENTS OR THE ENFORCEABILITY OF THE NOTES AND OTHER OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OF ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE REQUIRED LENDERS OR THE ADMINISTRATIVE AGENT SHALL BE NULL AND VOID. THIS SUBSECTION (b) SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS AND THE ADMINISTRATIVE AGENT HEREUNDER.

14.03.    Notices. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including via email, facsimile and other electronic communication) and mailed, emailed, faxed or otherwise delivered: if to any Credit Party, to the Administrative Borrower, at the address specified on Schedule II or in the other relevant Credit Documents; if to any Lender, at its address specified to the Administrative Agent; and if to the Administrative Agent, at the Notice Office; or, as to any Credit Party or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each Lender, at such other address as shall be designated by such Lender in a written notice to the Administrative Borrower and the Administrative Agent. All such notices and communications shall, when mailed (certified return receipt required), emailed, faxed or sent by overnight courier, be effective when deposited in the mails, delivered to the email service provider or overnight courier, as the case may be, or sent by fax or email, except that notices and communications to the Administrative Agent and any Credit Party shall not be effective until received by the Administrative Agent or the Administrative Borrower or any Credit Party, as the case may be.

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14.04.    Benefit of Agreement; Assignments; Participations. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided, however, neither Holdings, Parent nor any Borrower may assign or transfer any of its rights, obligations or interest hereunder without the prior written consent of the Lenders and, provided further, that, although any Lender may transfer, assign or grant participations in its rights hereunder, such Lender shall remain a “Lender” for all purposes hereunder (and may not transfer or assign all or any portion of its Commitments or Obligations hereunder except as provided in Sections 2.13 and 14.04(b)) and the transferee, assignee or participant, as the case may be, shall not constitute a “Lender” hereunder and, provided further, that no Lender shall transfer or grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (i) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Loan Maturity Date) in which such participant is participating, or reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof (it being understood that any amendment or modification to the financial definitions in this Agreement or to Section 14.07(a) shall not constitute a reduction in the rate of interest or Fees payable hereunder), or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Total Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment (or the available portion thereof) or Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (ii) consent to the assignment or transfer by Holdings, Parent or any Borrower of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under all of the Security Documents (except as expressly provided in the Credit Documents) supporting the Loans or Letters of Credit hereunder in which such participant is participating. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto) and all amounts payable by any Borrower hereunder shall be determined as if such Lender had not sold such participation.

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(b)          Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may (x) assign all or a portion of its Commitments and related outstanding Obligations (or, if the Commitments with respect to the relevant Tranche have terminated, outstanding Obligations) hereunder to (i)(A) its parent company and/or any affiliate of such Lender which is at least 50% owned by such Lender or its parent company or (B) to one or more other Lenders or any affiliate of any such other Lender which is at least 50% owned by such other Lender or its parent company (provided that any fund that invests in loans and is managed or advised by the same investment advisor of another fund which is a Lender (or by an Affiliate of such investment advisor) shall be treated as an affiliate of such other Lender for the purposes of this sub-clause (x)(i)(B)), or (ii) in the case of any Lender that is a fund that invests in loans, any other fund that invests in loans and is managed or advised by the same investment advisor of any Lender or by an Affiliate of such investment advisor or (y) assign all, or if less than all, a portion equal to at least $1,000,000 in the aggregate for the assigning Lender or assigning Lenders, of such Commitments and related outstanding Obligations (or, if the Commitments with respect to the relevant Tranche have terminated, outstanding Obligations) hereunder to one or more Eligible Transferees (treating any fund that invests in loans and any other fund that invests in loans and is managed or advised by the same investment advisor of such fund or by an Affiliate of such investment advisor as a single Eligible Transferee), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Assumption Agreement, provided that (i) at such time, Schedule I shall be deemed modified to reflect the Commitments and/or outstanding Loans, as the case may be, of such new Lender and of the existing Lenders, (ii) upon the surrender of the relevant Notes by the assigning Lender (or, upon such assigning Lender’s indemnifying any Borrower for any lost Note pursuant to a customary indemnification agreement) new Notes will be issued, at such Borrower’s expense, to such new Lender and to the assigning Lender upon the request of such new Lender or assigning Lender, such new Notes to be in conformity with the requirements of Section 2.05 (with appropriate modifications) to the extent needed to reflect the revised Commitments and/or outstanding Loans, as the case may be, (iii) the consent of the Administrative Agent and, so long as no Event of Default then exists, the Borrowers, shall be required in connection with any such assignment pursuant to clause (y) above (such consent, in any case, not to be unreasonably withheld, delayed or conditioned), provided that each Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 7 Business Days after having received notice thereof, (iv) the Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $3,500 and (v) no such transfer or assignment will be effective until recorded by the Administrative Agent on the Register pursuant to Section 14.15. To the extent of any assignment pursuant to this Section 14.04(b), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Commitments and outstanding Loans. At the time of each assignment pursuant to this Section 14.04(b) to a Person which is not already a Lender hereunder and which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for federal income tax purposes, the respective assignee Lender shall, to the extent legally entitled to do so, provide to the Borrowers the appropriate Internal Revenue Service Forms (and, if applicable, a Section 6.04(c)(ii) Certificate) described in Section 6.04(c). To the extent that an assignment of all or any portion of a Lender’s Commitments and related outstanding Obligations pursuant to Section 2.13 or this Section 14.04(b) would, at the time of such assignment, result in increased costs under Section 2.10, 3.06 or 6.04 from those being charged by the respective assigning Lender prior to such assignment, then the Borrowers shall not be obligated to pay such increased costs (although the Borrowers, in accordance with and pursuant to the other provisions of this Agreement, shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective assignment).

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(c)          Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank and, with prior notification to the Administrative Agent (but without the consent of the Administrative Agent or the Administrative Borrower), any Lender which is a fund may pledge all or any portion of its Loans and Notes to its trustee or to a collateral agent providing credit or credit support to such Lender in support of its obligations to such trustee, such collateral agent or a holder of such obligations, as the case may be. No pledge pursuant to this clause (c) shall release the transferor Lender from any of its obligations hereunder.

(d)          Any Lender which assigns all of its Commitments and/or Loans hereunder in accordance with Section 14.04(b) shall cease to constitute a “Lender” hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 2.10, 2.11, 3.06, 6.04, 13.06, 14.01 and 14.06), which shall survive as to such assigning Lender.

(e)          Each Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.10 and 6.04 (subject to the requirements and limitations therein, including the requirements under Sections 6.04(b)-(e) (it being understood that the documentation required under Sections 6.04(b)-(e) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 14.04; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.12 and 2.13 as if it were an assignee under Section 14.04; and (B) shall not be entitled to receive any greater payment under Sections 2.10 or 6.04, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Credit Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

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14.05.    No Waiver; Remedies Cumulative. No failure or delay on the part of the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrowers or any other Credit Party and the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein or in any other Credit Document expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender to any other or further action in any circumstances without notice or demand.

14.06.    Payments Pro Rata. (a) Except as otherwise expressly provided in this Agreement, the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of any Borrower in respect of any Obligations hereunder, the Administrative Agent shall distribute such payment to the Lenders entitled thereto (other than (i) if Lender that has expressly consented in writing to waive its pro rata share of any such payment, in which case such amounts shall be reallocated on a pro rata basis among the other Lenders or (ii) if all Lenders shall have expressly consented in writing to waive their pro rata share of such payment, such payment shall be returned to such Borrower) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received.

(b)          Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker’s lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the respective Credit Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lenders, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

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(c)          Notwithstanding anything to the contrary contained herein, the provisions of the preceding Sections 14.06(a) and (b) shall be subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.

14.07.    Calculations; Computations. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by Holdings to the Lenders); provided that, (i) except as otherwise specifically provided herein, all computations of Excess Cash Flow and all computations and all definitions (including accounting terms) used in determining compliance with Section 10.16 and Sections 11.07 through 11.10, inclusive, shall utilize GAAP and policies in conformity with those used to prepare the audited financial statements of Holdings referred to in Section 9.05(a) for the fiscal year ended December 31, 2014, (ii) notwithstanding anything to the contrary contained herein, all such financial statements shall be prepared, and all financial covenants contained herein or in any other Credit Document shall be calculated, in each case, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any similar accounting principle) permitted a Person to value its financial liabilities at the fair value thereof and (iii) to the extent expressly provided herein, certain calculations shall be made on a Pro Forma Basis. In the event of any change in GAAP (any such change, for the purpose of this Section 14.07, an “Accounting Change”) that occurs after the date of this Agreement, then the Credit Parties and the Administrative Agent, on behalf of the Lenders, agree to enter into good faith negotiations in order to amend such provisions of this Agreement so as to equitably reflect any such Accounting Change with the desired result that the criteria for evaluating the financial condition of Holdings and its Subsidiaries shall be the same after such Accounting Change as if such Accounting Change had not been made, and until such time as such an amendment shall have been executed and delivered by the Credit Parties and Required Lenders, (i) all financial covenants, standards and terms in this Agreement shall be calculated and/or construed as if such Accounting Change had not been made, and (ii) Holdings shall prepare footnotes to each certificate and the financial statements required to be delivered pursuant to Sections 10.01(a), (b), (c), and (g) hereunder that show the differences between the financial statements delivered (which reflect such Accounting Change) and the basis for calculating financial covenant compliance (without reflecting such Accounting Change).

(b)          All computations of interest, Commitment Commission and other Fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day; except that in the case of Letter of Credit Fees and Facing Fees, the last day shall be included) occurring in the period for which such interest, Commitment Commission or Fees are payable.

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14.08.    GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN ANY MORTGAGE OR ANY SECURITY DOCUMENT, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK (OR (X) IN THE CASE OF ANY SECURITY DOCUMENT, PROCEEDINGS MAY ALSO BE BROUGHT BY THE ADMINISTRATIVE AGENT OR COLLATERAL AGENT IN THE STATE OR OTHER JURISDICTION IN WHICH THE RESPECTIVE COLLATERAL IS LOCATED OR ANY OTHER RELEVANT JURISDICTION AND (Y) IN THE CASE OF ANY BANKRUPTCY, INSOLVENCY OR SIMILAR PROCEEDINGS WITH RESPECT TO ANY CREDIT PARTY, ACTIONS OR PROCEEDINGS RELATED TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS MAY BE BROUGHT IN SUCH COURT HOLDING SUCH BANKRUPTCY, INSOLVENCY OR SIMILAR PROCEEDINGS), AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, EACH OF HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF HOLDINGS AND EACH BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER HOLDINGS OR ANY BORROWER, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORE-MENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER HOLDINGS OR ANY BORROWER. EACH OF HOLDINGS AND EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO HOLDINGS OR EACH BORROWER AT ITS ADDRESS SET FORTH ON SCHEDULE II BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST HOLDINGS OR ANY BORROWER IN ANY OTHER JURISDICTION.

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(b)          EACH OF HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c)          EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

14.09.    Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Administrative Borrower and the Administrative Agent. Delivery of an executed counterpart hereof by facsimile or electronic transmission shall be as effective as delivery of any original executed counterpart hereof.

14.10.    Effectiveness. This Agreement shall become effective on the date (the “Effective Date”) on which Holdings, Parent, each Borrower, the Administrative Agent, the Lead Arranger and each of the Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered the same to the Administrative Agent at the Notice Office or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written or notice via electronic transmission (actually received) at such office that the same has been signed and mailed to it. The Administrative Agent will give Holdings, Parent, the Administrative Borrower and each Lender prompt written notice of the occurrence of the Effective Date.

14.11.    Headings Descriptive. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

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14.12.    Amendment or Waiver; etc. (a) Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the respective Credit Parties party hereto or thereto and the Required Lenders (although additional parties may be added to (and annexes may be modified to reflect such additions), and Subsidiaries of each Borrower may be released from, the Subsidiaries Guaranty and the Security Documents in accordance with the provisions hereof and thereof without the consent of the other Credit Parties party thereto or the Required Lenders), provided that no such change, waiver, discharge or termination shall, without the consent of each Lender (other than a Defaulting Lender) (with Obligations being directly affected in the case of following clause (i)), (i) extend the final scheduled maturity of any Loan or Note or extend the stated expiration date of any Letter of Credit beyond the Revolving Loan Maturity Date, or reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with the waiver of applicability of any post-default increase in interest rates), or reduce (or forgive) the principal amount thereof (it being understood that any amendment or modification to the financial definitions in this Agreement or to Section 14.07(a) shall not constitute a reduction in the rate of interest or Fees for the purposes of this clause (i)), (ii) release all or substantially all of the Collateral (except as expressly provided in the Credit Documents) under all the Security Documents, (iii) amend, modify or waive any provision of this Section 14.12(a) (except for technical amendments with respect to additional extensions of credit pursuant to this Agreement (including Incremental Loans) which afford the protections to such additional extensions of credit of the type provided to the Term Loans and the Revolving Loan Commitments on the Effective Date), (iv) reduce the voting threshold specified in the definition of Required Lenders (it being understood that additional extensions of credit pursuant to this Agreement (including Incremental Loans) shall be included in the determination of the Required Lenders on substantially the same basis as the extensions of Term Loans and Revolving Loan Commitments are included on the Effective Date) or (v) consent to the assignment or transfer by Holdings, Parent, or any Borrower of any of its rights and obligations under this Agreement; provided further, that no such change, waiver, discharge or termination shall (1) increase the Commitments of any Lender over the amount thereof then in effect without the consent of such Lender (it being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default or of a mandatory reduction in the Total Commitment shall not constitute an increase of the Commitment of any Lender, and that an increase in the available portion of any Commitment of any Lender shall not constitute an increase of the Commitment of such Lender), (2) without the consent of each Issuing Lender, amend, modify or waive any provision of Section 3 or alter its rights or obligations with respect to Letters of Credit, (3) without the consent of the Administrative Agent, amend, modify or waive any provision of Section 13 or any other provision of this Agreement or any other Credit Document as same relates to the rights or obligations of the Administrative Agent, (4) without the consent of Collateral Agent, amend, modify or waive any provision relating to the rights or obligations of the Collateral Agent, (5) except in cases where additional extensions of term loans (including Incremental Loans) and/or revolving loans are being afforded substantially the same treatment afforded to the Term Loans and Revolving Loans pursuant to this Agreement on the Effective Date, without the consent of the Majority Lenders of each Tranche which is being allocated a lesser prepayment, repayment or commitment reduction as a result of the actions described below, alter the required application of any prepayments or repayments (or commitment reduction), as between the various Tranches, pursuant to Section 6.02(h) (it being understood, however, that the Required Lenders may waive, in whole or in part, any such prepayment, repayment or commitment reduction, so long as the application, as amongst the various Tranches, of any such prepayment, repayment or commitment reduction which is still required to be made is not altered), (6) without the consent of the Majority Lenders of the respective Tranche affected thereby, amend the definition of Majority Lenders (it being understood that additional extensions of credit pursuant to this Agreement (including Incremental Loans) shall be included in the determination of the Majority Lenders on substantially the same basis as the extensions of Loans and Commitments are included on the Effective Date), (7) without the written consent of the Majority Lenders with Revolving Loans and/or Revolving Commitments, amend, modify or waive any condition precedent set forth in Sections 7 or 8 with respect to the making of Revolving Loans or the issuance of Letters of Credit, or (8) reduce the amount of, or extend the date of, any Scheduled Repayment without the consent of the a majority of Lenders holding Term Loans.

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(b)          If, in connection with any proposed change, waiver, discharge or termination of or to any of the provisions of this Agreement as contemplated by clauses (i) through (v), inclusive, of the first proviso to Section 14.12(a), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrowers shall have the right, so long as all non-consenting Lenders whose individual consent is required are treated as described below, to replace each such non-consenting Lender or Lenders (or, at the option of the Borrowers, if the respective Lender’s consent is required with respect to less than all Tranches of Loans (or related Commitments), to replace only the Revolving Loan Commitments and/or Loans of the respective non-consenting Lender which gave rise to the need to obtain such Lender’s individual consent) with one or more Replacement Lenders pursuant to Section 2.13 so long as at the time of such replacement, each such Replacement Lender consents to the proposed change, waiver, discharge or termination, provided further, that the Borrowers shall not have the right to replace a Lender, terminate its Commitment or repay its Loans solely as a result of the exercise of such Lender’s rights (and the withholding of any required consent by such Lender) pursuant to the second proviso to Section 14.12(a).

(c)          Notwithstanding the foregoing, (x) any provision of this Agreement may be amended by an agreement in writing entered into by Holdings, Parent, each Borrower, the Required Lenders and the Administrative Agent (and, if their rights or obligations are affected thereby, each Issuing Lender) if (i) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment and (ii) at the time such amendment becomes effective, each Lender not consenting thereto receives payment (including pursuant to an assignment to a replacement Lender in accordance with Section 14.04) in full of this principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement and (y) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Administrative Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Credit Documents with the Term Loans and the Revolving Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders.

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(d)          [Intentionally Omitted].

(e)          Notwithstanding the foregoing, technical and conforming modifications to the Credit Documents may be made with the consent of each Administrative Borrower and the Administrative Agent to the extent necessary to cure any ambiguity, omission, defect or inconsistency.

14.13.    Survival. All indemnities set forth herein including, without limitation, in Sections 2.10, 2.11, 3.06, 6.04, 13.06 and 14.01 shall survive the execution, delivery and termination of this Agreement and the Notes and the making and repayment of the Obligations.

14.14.    Domicile of Loans. Each Lender may transfer and carry its Loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender. Notwithstanding anything to the contrary contained herein, to the extent that a transfer of Loans pursuant to this Section 14.14 would, at the time of such transfer, result in increased costs under Section 2.10, 2.11, 3.06 or 6.04 from those being charged by the respective Lender prior to such transfer, then the Borrowers shall not be obligated to pay such increased costs (although the Borrowers shall be obligated to pay any other increased costs of the type described above resulting from changes occurring after the date of the respective transfer).

14.15.    Register. Each Borrower hereby designates the Administrative Agent to serve as its agent, solely for purposes of this Section 14.15, to maintain a register (the “Register”) at one of its offices in the United States on which it will record the Commitments from time to time of each of the Lenders, the Loans made by each of the Lenders and each repayment in respect of the principal amount of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrowers’ obligations in respect of such Loans. With respect to any Lender, the transfer of the Commitments of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Commitments shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Commitments and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitments and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Commitments and Loans shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 14.04(b). Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note (if any) evidencing such Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender at the request of any such Lender. The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. Each Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this Section 14.15 other than as a result of the Administrative Agent’s gross negligence or willful misconduct. Each Lender shall be entitled to review the Register solely relating to such information that pertains specifically to such Lender and shall have no right to view any information that pertains to any other Lender.

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14.16.    Confidentiality. (a) Subject to the provisions of clause (b) of this Section 14.16, each Lender agrees that it will not disclose without the prior consent of Holdings (other than to its employees, auditors, advisors or counsel to another Lender if such Lender or such Lender’s holding or parent company in its sole discretion determines that any such party should have access to such information, provided such Persons shall be subject to the provisions of this Section 14.16 to the same extent as such Lender) any information with respect to Holdings or any of its Subsidiaries which is now or in the future furnished pursuant to this Agreement or any other Credit Document, provided that any Lender may disclose any such information (i) as has become generally available to the public other than by virtue of a breach of this Section 14.16(a) by the respective Lender, (ii) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors, (iii) as may be required or appropriate in respect to any summons or subpoena or in connection with any litigation, (iv) in order to comply with any law, order, regulation or ruling applicable to such Lender, (v) to the Administrative Agent or the Collateral Agent, (vi) to any direct or indirect contractual counterparty in any Swap, hedge or similar agreement (or to any such contractual counterparty’s professional advisor), so long as such contractual counterparty (or such professional advisor) agrees to be bound by the provisions of this Section 14.16 and (vii) to any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Notes or Commitments or any interest therein by such Lender, provided that such prospective transferee agrees to be bound by the confidentiality provisions contained in this Section 14.16, and (viii) to (A) any bank or financial institution and (B) S&P, Moody’s, Fitch Ratings and/or other ratings agencies, in each case, as such Lender deems necessary or appropriate in connection with such Lender’s obtaining financing; provided, however, that such financial institution or ratings agency shall be informed of the confidentiality of such information and either agrees to be bound by the confidentiality provisions contained in this Section 14.16 or is otherwise subject to a confidentiality agreement with such Lender (x) to its investors or potential investors as such Lender reasonably deems necessary or appropriate; provided, however, that such investors or potential investors shall be informed of the confidentiality of such information and either agree to be bound by the confidentiality provisions contained in this Section 14.16 or are otherwise subject to a confidentiality agreement with such Lender.

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(b)          Each of Holdings, Parent and each Borrower hereby acknowledges and agrees that each Lender may share with any of its affiliates, and such affiliates may share with such Lender, any information related to Holdings or any of its Subsidiaries (including, without limitation, any non-public customer information regarding the creditworthiness of Holdings and its Subsidiaries), provided such Persons shall be subject to the provisions of this Section 14.16 to the same extent as such Lender.

(c)          Notwithstanding anything to the contrary contained in this Section 14.16, each of Holdings, Parent, and each Borrower hereby agrees that the Administrative Agent and its Affiliates may publicize its services in connection with this Agreement and the other Credit Documents and the transactions contemplated herein and therein, including, without limitation, through granting interviews with and providing information to the financial press and other media and by publicizing such services on its web-site or other electronic medium; provided, however, that the Administrative Agent and its Affiliates shall not publicize as contemplated above in this clause (c) until the earlier to occur of (i) the fifth day following the Closing Date and (ii) such date as Holdings shall have publicly announced the consummation of the Transaction. In addition, each of Holdings, Parent, and each Borrower hereby authorizes the Administrative Agent to place a customary “tombstone” advertisement regarding this Agreement and the transactions contemplated herein related hereto in publications of its choice at the Borrowers’ expense.

(d)          Each of the Administrative Agent, the Collateral Agent and the Lenders acknowledges that (x) any information with respect to Holdings or any of its Subsidiaries which is now or in the future furnished pursuant to this Agreement or any other Credit Document may include material non-public information concerning Holdings or one or more of its Subsidiaries, as the case may be, (y) it has developed compliance procedures regarding the use of material non-public information, and (z) it will handle such material non-public information in accordance with applicable laws, including federal and state securities laws.

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14.17.    Special Provisions Regarding Pledges of Equity Interests in, and Promissory Notes Owed by, Persons Not Organized in the United States. The parties hereto acknowledge and agree that the provisions of the various Security Documents executed and delivered by the Credit Parties may require that, among other things, all promissory notes executed by, and capital stock and other Equity Interests in, various Persons owned by the respective Credit Party be pledged, and delivered for pledge, pursuant to the Security Documents. The parties hereto further acknowledge and agree that each Credit Party shall be required to take all actions under the laws of the jurisdiction in which such Credit Party is organized or where the respective assets are located to create and perfect all security interests granted pursuant to the various Security Documents in accordance with such Security Documents and to take all actions under the laws of the United States and any State thereof to perfect the security interests in the assets, capital stock and other Equity Interests of, and promissory notes issued by, any Person organized under the laws of said jurisdictions (in each case, to the extent said capital stock, other Equity Interests or promissory notes are owned by any Credit Party). Except as provided in the immediately preceding sentence, to the extent any Security Document requires or provides for the pledge of assets or promissory notes issued by, or capital stock or other Equity Interests in, any Person organized under the laws of a jurisdiction other than those specified in the immediately preceding sentence, it is acknowledged that, as of the Closing Date, no actions have been required to be taken to perfect, under local law of the jurisdiction where the respective assets are located or of the Person who issued the respective promissory notes or whose capital stock or other Equity Interests are pledged, under the Security Documents in accordance with the Security Documents. Each Borrower hereby agrees that, following any request by the Administrative Agent or the Required Lenders to do so, each Borrower will, and will cause its Subsidiaries to, take such actions under the local law of any jurisdiction with respect to which such actions have not already been taken as are determined by the Administrative Agent or the Required Lenders to be necessary or desirable in order to fully perfect, preserve or protect the security interests granted pursuant to the various Security Documents under the laws of such jurisdictions. If requested to do so pursuant to this Section 14.17, all such actions shall be taken in accordance with the provisions of this Section 14.17 and Section 10.12 and within the time periods set forth therein. All conditions and representations contained in this Agreement and the other Credit Documents shall be deemed modified to the extent necessary to effect the foregoing and so that same are not violated by reason of the failure to take actions under local law (but only with respect to capital stock of, other Equity Interests in, and promissory notes issued by, Persons organized under laws of jurisdictions other than the United States and any State thereof) not required to be taken in accordance with the provisions of this Section 14.17, provided that to the extent any representation or warranty would not be true because the foregoing actions were not taken, the respective representation of warranties shall be required to be true and correct in all material respects at such time as the respective action is required to be taken in accordance with the foregoing provisions of Section 10.12 and this Section 14.17.

14.18.    Patriot Act. Each Lender subject to the USA PATRIOT ACT (Title 111 of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies Holdings, Parent and each Borrower that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies Holdings, each Borrower and the other Credit Parties and other information that will allow such Lender to identify Holdings, each Borrower and the other Credit Parties in accordance with the Act.

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14.19.    Post-Closing Actions. The Credit Parties hereby agree to deliver or take the actions described on Schedule XII hereto, within the applicable time periods set forth therein (which periods may be extended by the Administrative Agent in its sole discretion), in form and substance reasonably acceptable to the Administrative Agent. All conditions precedent and representations contained in this Agreement and the other Credit Documents shall be deemed modified to the extent necessary to effect the foregoing (and to permit the taking of the actions described above within the time periods required above, rather than as elsewhere provided in the Credit Documents), provided that (x) to the extent any representation and warranty would not be true because the foregoing actions were not taken on the Closing Date, the respective representation and warranty shall be required to be true and correct in all material respects at the time the respective action is taken (or was required to be taken) in accordance with the foregoing provisions of this Section 14.19 and (y) all representations and warranties relating to the Security Documents shall be required to be true immediately after the actions required to be taken by this Section 14.19 have been taken (or were required to be taken). The acceptance of the benefits of each Credit Event shall constitute a representation, warranty and covenant by each Borrower to each of the Lenders that the actions required pursuant to this Section 14.19 will be, or have been, taken within the relevant time periods referred to in this Section 14.19 and that, at such time, all representations and warranties contained in this Agreement and the other Credit Documents shall then be true and correct without any modification pursuant to this Section 14.19, and the parties hereto acknowledge and agree that the failure to take any of the actions required above, within the relevant time periods required above, shall give rise to an immediate Event of Default pursuant to this Agreement.

14.20.    Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Credit Document, the interest paid or agreed to be paid under the Credit Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

14.21.    Entire Agreement. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

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14.22.    Agreement Among Lenders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

14.23.    Assumption by the Administrative Borrower and Access and Release of Holdings as the Borrower. Concurrently with the effectiveness of this Agreement, and the initial Borrowings hereunder, the Administrative Borrower and Access have executed and delivered the Affirmation Agreement, pursuant to which each of the Administrative Borrower and Access have affirmed that each is a Borrower under this Agreement, and have assumed all of the Obligations of Holdings as the Borrower hereunder as if the Administrative Borrower and Access had initially incurred them. The Affirmation Agreement shall be effective upon the execution and delivery thereof. From and after the effectiveness of the Affirmation Agreement, Holdings shall be and hereby is released from any and all Obligations as the Borrower hereunder; provided that Holdings’ Guaranty of any and all of the Obligations hereunder shall continue.

14.24.    Administrative Borrower. (a) Access hereby irrevocably appoints and constitutes the Administrative Borrower as its agent to request and receive Loans and Letters of Credit pursuant to this Agreement in the name or on behalf of Access. The Administrative Agent and the Lenders may disburse the Loans to such bank account of the Administrative Borrower or Access or otherwise make such Loans to a Borrower and provide such Letters of Credit to a Borrower as the Administrative Borrower may designate or direct, without notice to any other Borrower or Guarantor. The Administrative Borrower hereby accepts the appointment by Access and each other Credit Party (for the purposes set forth below) to act as the agent of Access and agrees to ensure that the disbursement of any Loans to a Borrower requested by or paid to or for the account of such Borrower, or the issuance of any Letter of Credit for a Borrower hereunder, shall be paid to or for the account of such Borrower. Access and each other Credit Party hereby irrevocably appoints and constitutes the Administrative Borrower as its agent to receive statements on account and all other notices from the Administrative Agent, Collateral Agent and the Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Credit Documents. Any notice, election, representation, warranty, agreement or undertaking made on behalf of any other Borrower or Credit Party by the Administrative Borrower shall be deemed for all purposes to have been made by such Borrower or Credit Party, as the case may be, and shall be binding upon and enforceable against such Borrower or such Credit Party, as applicable, to the same extent as if made directly by such Borrower or such Credit Party.

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(b) The Administrative Borrower operates a centralized cash management system for Holdings and its Subsidiaries, including the maintenance of appropriate records to determine the amount of intercompany accounts owing among the Credit Parties and their Subsidiaries. All Loans or Letters of Credit requested by the Administrative Borrower for ultimate use by the Credit Parties (or for the benefit of their Subsidiaries) may be drawn or obtained in the name of the Administrative Borrower or the name of Access designated by the Administrative Borrower. Upon request, the Administrative Borrower shall promptly confirm for the Administrative Agent that each Loan or Letter of Credit has been issued in the name of the appropriate Borrower (and, if applicable, for the benefit of any of their Subsidiaries) and, in the event of any error, the respective records shall be adjusted without prejudice to the rights of the Administrative Agent, Collateral Agent or the Lenders.

(c) The handling of the credit facility for the Borrowers as a co-borrowing facility with an administrative borrower acting as agent in the manner set forth in this Agreement is solely as an accommodation to the Borrowers and at their request. Neither the Administrative Agent, Collateral Agent nor any Lender shall incur liability to any Borrower or Credit Party as a result thereof. To induce the Administrative Agent, Collateral Agent and Lenders to do so and in consideration thereof, each Credit Party hereby indemnifies the Administrative Agent, Collateral Agent, and each Lender and holds the Administrative Agent, Collateral Agent and each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against the Administrative Agent, Collateral Agent or any Lender by any Person arising from or incurred by reason of the handling of the financing arrangements of the Borrowers as provided herein, reliance by the Administrative Agent, Collateral Agent or any Lender on any request or instruction from the Administrative Borrower or any other action taken by the Administrative Agent, Collateral Agent or any Lender with respect to this Section 14.24 except due to willful misconduct or gross negligence by the indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable judgment).

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SECTION 15.      Holdings Guaranty.

15.01.    Guaranty. In order to induce the Administrative Agent, the Collateral Agent, the Issuing Lenders and the Lenders to enter into this Agreement and to extend credit hereunder, and to induce the other Guaranteed Creditors to enter into Interest Rate Protection Agreements and Other Hedging Agreements and in recognition of the direct benefits to be received by Holdings from the proceeds of the Loans, the issuance of the Letters of Credit and the entering into of such Interest Rate Protection Agreements and Other Hedging Agreements, Holdings hereby agrees with the Guaranteed Creditors as follows: Holdings hereby unconditionally and irrevocably guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, acceleration or otherwise, of any and all of the Guaranteed Obligations of each Borrower to the Guaranteed Creditors. If any or all of the Guaranteed Obligations of each Borrower to the Guaranteed Creditors becomes due and payable hereunder, Holdings, unconditionally and irrevocably, promises to pay such indebtedness to the Administrative Agent and/or the other Guaranteed Creditors, or order, on demand, together with any and all expenses which may be incurred by the Administrative Agent and the other Guaranteed Creditors in collecting any of the Guaranteed Obligations. If claim is ever made upon any Guaranteed Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including any Borrower), then and in such event Holdings agrees that any such judgment, decree, order, settlement or compromise shall be binding upon Holdings, notwithstanding any revocation of this Holdings Guaranty or other instrument evidencing any liability of any Borrower, and Holdings shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.

15.02.    Bankruptcy. Additionally, Holdings unconditionally and irrevocably guarantees the payment of any and all of the Guaranteed Obligations to the Guaranteed Creditors whether or not due or payable by any Borrower upon the occurrence of any of the events specified in Section 12.05, and irrevocably and unconditionally promises to pay such indebtedness to the Guaranteed Creditors, or order, on demand, in lawful money of the United States.

15.03.    Nature of Liability. The liability of Holdings hereunder is primary, absolute and unconditional, exclusive and independent of any security for or other guaranty of the Guaranteed Obligations, whether executed by any other guarantor or by any other party, and the liability of Holdings hereunder shall not be affected or impaired by (a) any direction as to application of payment by any Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Guaranteed Obligations, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by any Borrower, or (e) any payment made to any Guaranteed Creditor on the Guaranteed Obligations which any such Guaranteed Creditor repays to any Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and Holdings waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, or (f) any action or inaction by the Guaranteed Creditors as contemplated in Section 15.05, or (g) any invalidity, irregularity or enforceability of all or any part of the Guaranteed Obligations or of any security therefor.

171

15.04.    Independent Obligation. The obligations of Holdings hereunder are independent of the obligations of any other guarantor, any other party or any Borrower, and a separate action or actions may be brought and prosecuted against Holdings whether or not action is brought against any other guarantor, any other party or any Borrower and whether or not any other guarantor, any other party or any Borrower be joined in any such action or actions. Holdings waives, to the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by any Borrower or other circumstance which operates to toll any statute of limitations as to any Borrower shall operate to toll the statute of limitations as to Holdings.

15.05.    Authorization. Holdings authorizes the Guaranteed Creditors without notice or demand (except as shall be required by applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to:

(a)          change the manner, place or terms of payment of, and/or change or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including any increase or decrease in the principal amount thereof or the rate of interest or fees thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and this Holdings Guaranty shall apply to the Guaranteed Obligations as so changed, extended, renewed or altered;

(b)          take and hold security for the payment of the Guaranteed Obligations and sell, exchange, release, impair, surrender, realize upon or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;

(c)          exercise or refrain from exercising any rights against any Borrower, any other Credit Party or others or otherwise act or refrain from acting;

(d)          release or substitute any one or more endorsers, guarantors, any Borrower, other Credit Parties or other obligors;

(e)          settle or compromise any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of any Borrower to its creditors other than the Guaranteed Creditors;

(f)           apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of any Borrower to the Guaranteed Creditors regardless of what liability or liabilities of any Borrower remain unpaid;

172

(g)          consent to or waive any breach of, or any act, omission or default under, this Agreement, any other Credit Document, any Interest Rate Protection Agreement or any Other Hedging Agreement or any of the instruments or agreements referred to herein or therein, or otherwise amend, modify or supplement this Agreement, any other Credit Document, any Interest Rate Protection Agreement or any Other Hedging Agreement or any of such other instruments or agreements; and/or

(h)          take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of Holdings from its liabilities under this Holdings Guaranty.

15.06.    Reliance. It is not necessary for any Guaranteed Creditor to inquire into the capacity or powers of Holdings or any of its Subsidiaries or the officers, directors, partners or agents acting or purporting to act on their behalf, and any Guaranteed Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.

15.07.    Subordination. Any indebtedness of any Borrower now or hereafter owing to Holdings is hereby subordinated to the Guaranteed Obligations owing to the Guaranteed Creditors; and if the Administrative Agent so requests at a time when an Event of Default exists, all such indebtedness of any Borrower to Holdings shall be collected, enforced and received by Holdings for the benefit of the Guaranteed Creditors and be paid over to the Administrative Agent on behalf of the Guaranteed Creditors on account of the Guaranteed Obligations to the Guaranteed Creditors, but without affecting or impairing in any manner the liability of Holdings under the other provisions of this Holdings Guaranty. Prior to the transfer by Holdings of any note or negotiable instrument evidencing any such indebtedness of any Borrower to Holdings, Holdings shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, Holdings hereby agrees with the Guaranteed Creditors that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Holdings Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash.

15.08.    Waiver. (a) Holdings waives any right (except as shall be required by applicable statute and cannot be waived) to require any Guaranteed Creditor to (i) proceed against any Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from any Borrower, any other guarantor or any other party or (iii) pursue any other remedy in any Guaranteed Creditor’s power whatsoever. Holdings waives any defense based on or arising out of any defense of each Borrower, any other guarantor or any other party, other than payment of the Guaranteed Obligations to the extent of such payment, based on or arising out of the disability of any Borrower, Holdings, any other guarantor or any other party, or the validity, legality or unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Borrower other than payment of the Guaranteed Obligations to the extent of such payment. The Guaranteed Creditors may, at their election, foreclose on any security held by the Administrative Agent, the Collateral Agent or any other Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Guaranteed Creditors may have against any Borrower or any other party, or any security, without affecting or impairing in any way the liability of Holdings hereunder except to the extent the Guaranteed Obligations have been paid. Holdings waives any defense arising out of any such election by the Guaranteed Creditors, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of Holdings against any Borrower or any other party or any security.

173

(b)          Holdings waives all presentments, demands for performance, protests and notices, including without limitation notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Holdings Guaranty, and notices of the existence, creation or incurring of new or additional Guaranteed Obligations. Holdings assumes all responsibility for being and keeping itself informed of each Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which Holdings assumes and incurs hereunder, and agrees that neither the Administrative Agent nor any of the other Guaranteed Creditors shall have any duty to advise Holdings of information known to them regarding such circumstances or risks.

(c)          Until such time as the Guaranteed Obligations have been paid in full in cash, Holdings hereby waives all rights of subrogation which it may at any time otherwise have as a result of this Holdings Guaranty (whether contractual, under Section 509 of the Bankruptcy Code, or otherwise) to the claims of the Guaranteed Creditors against each Borrower or any other guarantor of the Guaranteed Obligations and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from any Borrower or any other guarantor which it may at any time otherwise have as a result of this Holdings Guaranty.

(d)          Holdings hereby acknowledges and affirms that it understands that to the extent the Guaranteed Obligations are secured by Real Property located in California, Holdings shall be liable for the full amount of the liability hereunder notwithstanding the foreclosure on such Real Property by trustee sale or any other reason impairing Holdings’ or any Guaranteed Creditor’s right to proceed against any Borrower or any other guarantor of the Guaranteed Obligations. In accordance with Section 2856 of the California Code of Civil Procedure, Holdings hereby waives until such time as the Guaranteed Obligations have been paid in full in cash:

(i)          all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available to Holdings by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California Code of Civil Procedure;

174

(ii)         all rights and defenses that Holdings may have because the Guaranteed Obligations are secured by Real Property located in California, meaning, among other things, that: (A) the Guaranteed Creditors may collect from Holdings without first foreclosing on any real or personal property collateral pledged by any Borrower or any other Credit Party, and (B) if the Guaranteed Creditors foreclose on any Real Property collateral pledged by any Borrower or any other Credit Party, (1) the amount of the Guaranteed Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (2) the Guaranteed Creditors may collect from Holdings even if the Guaranteed Creditors, by foreclosing on the Real Property collateral, have destroyed any right Holdings may have to collect from any Borrower, it being understood that this is an unconditional and irrevocable waiver of any rights and defenses Holdings may have because the Guaranteed Obligations are secured by Real Property (including, without limitation, any rights or defenses based upon Sections 580a, 580d or 726 of the California Code of Civil Procedure); and

(iii)        all rights and defenses arising out of an election of remedies by the Guaranteed Creditors, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for the Guaranteed Obligations, has destroyed Holdings’ rights of subrogation and reimbursement against any Borrower by the operation of Section 580d of the California Code of Civil Procedure or otherwise.

(e)          Holdings warrants and agrees that each of the waivers set forth above is made with full knowledge of its significance and consequences and that if any of such waivers are determined to be contrary to any applicable law of public policy, such waivers shall be effective only to the maximum extent permitted by law.

15.09.    Payments. All payments made by Holdings pursuant to this Section 15 shall be made in Dollars and will be made without setoff, counterclaim or other defense, and shall be subject to the provisions of Sections 6.03 and 6.04.

15.10.    Maximum Liability. It is the desire and intent of Holdings and the Guaranteed Creditors that this Holdings Guaranty shall be enforced against Holdings to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If, however, and to the extent that, the obligations of Holdings under this Holdings Guaranty shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers), then the amount of Holdings’ obligations under this Holdings Guaranty shall be deemed to be reduced and Holdings shall pay the maximum amount of the Guaranteed Obligations which would be permissible under applicable law.

* * *

175

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.

Global Defense & National Security Systems, Inc., as Holdings
By:	/s/ Damian Perl
	Name: Damian Perl
	Title:Chairman of the Board
STG GROUP, INC., as Parent
By:	/s/ Paul Fernandes
	Name: Paul Fernandes
	Title: President
Global Defense & National Security Systems, Inc., as the Borrower (whose obligations as Borrower hereunder will be immediately assumed by STG, Inc. and Access Systems, Incorporated as the Borrowers)
By:	/s/ Damian Perl
	Name: Damian Perl
	Title:Chairman of the Board
MC ADMIN CO LLC
	Individually and as Administrative Agent
By:	/s/ Jonathan Tunis
	Name: Jonathan Tunis
	Title: Managing Director

[Signature Page to Credit Agreement]

MC ADMIN CO LLC
	as Lead Arranger
By:	/s/ Jonathan Tunis
	Name: Jonathan Tunis
	Title: Managing Director
PNC BANK, NATIONAL ASSOCIATION
Individually and as Collateral Agent
By:	/s/ Virginia L. Kiseljack
	Name: Virginia L. Kiseljack
	Title: Senior Vice President

[Signature Page to Credit Agreement]

SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC., STG, GROUP, INC., STG, INC., ACCESS SYSTEMS, INCORPORATED, THE GUARANTORS PARTY HERETO FROM TIME TO TIME, THE LENDERS PARTY HERETO FROM TIME TO TIME, MC ADMIN CO LLC, AS ADMINISTRATIVE AGENT, PNC BANK, NATIONAL ASSOCIATION, AS COLLATERAL AGENT AND MC ADMIN CO LLC, AS LEAD ARRANGER
NAME OF INSTITUTION:
CERBERUS PNC SENIOR LOAN FUND, L.P.
By:	Cerberus PSL GP, LLC
Its:	General Partner
By:	/s/ Kevin Genda
	Name: Kevin Genda
	Title: Senior Managing Director

[Signature Page to Credit Agreement]

SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC., STG, GROUP, INC., STG, INC., ACCESS SYSTEMS, INCORPORATED, THE GUARANTORS PARTY HERETO FROM TIME TO TIME, THE LENDERS PARTY HERETO FROM TIME TO TIME, MC ADMIN CO LLC, AS ADMINISTRATIVE AGENT, PNC BANK, NATIONAL ASSOCIATION, AS COLLATERAL AGENT AND MC ADMIN CO LLC, AS LEAD ARRANGER
NAME OF INSTITUTION:
MC CREDIT FUND I LP
By:	/s/ A. Nayyar
	Name:
	Title:

[Signature Page to Credit Agreement]

SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC., STG, GROUP, INC., STG, INC., ACCESS SYSTEMS, INCORPORATED, THE GUARANTORS PARTY HERETO FROM TIME TO TIME, THE LENDERS PARTY HERETO FROM TIME TO TIME, MC ADMIN CO LLC, AS ADMINISTRATIVE AGENT, PNC BANK, NATIONAL ASSOCIATION, AS COLLATERAL AGENT AND MC ADMIN CO LLC, AS LEAD ARRANGER
NAME OF INSTITUTION:
MC CREDIT FUND II LP
By:	/s/ A. Nayyar
	Name:
	Title:

[Signature Page to Credit Agreement]

ACKNOWLEDGED AND AGREED:
STG, INC.
By:	/s/ Paul Fernandes
	Name: Paul Fernandes
	Title: President
ACCESS SYSTEMS, INCORPORATED
By:	/s/ Paul Fernandes
	Name: Paul Fernandes
	Title: Chief Operating Officer

[Signature Page to Credit Agreement]

EX-10.2

Exhibit 10.2

SECURITY AGREEMENT

among

Global Defense & National Security Systems, Inc.,

STG GROUP, INC.,

STG, INC.,

ACCESS SYSTEMS, INCORPORATED,

SUCH OTHER ASSIGNORS PARTY HERETO

and

PNC BANK, NATIONAL ASSOCIATION
as COLLATERAL AGENT

Dated as of November 23, 2015

TABLE OF CONTENTS

		Page
ARTICLE I	SECURITY INTERESTS	2
1.1	Grant of Security Interests	2
1.2	Grant of License	5
1.3	Power of Attorney	5
ARTICLE II	GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS	6
2.1	Necessary Filings	6
2.2	No Liens	6
2.3	Other Financing Statements	6
2.4	Chief Executive Office, Record Locations	7
2.5	Location of Inventory and Equipment	7
2.6	Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; Location; Organizational Identification Numbers; Changes Thereto; etc	7
2.7	Trade Names; Etc	7
2.8	Certain Significant Transactions	8
2.9	Non-UCC Property and Certificates of Title	8
2.10	As-Extracted Collateral; Timber-to-be-Cut	8
2.11	Collateral in the Possession of a Bailee	8
ARTICLE III	SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL	9
3.1	Additional Representations and Warranties	9
3.2	Maintenance of Records	9
3.3	Direction to Account Debtors; Contracting Parties; etc	9
3.4	Modification of Terms; etc	10
3.5	Collection	10
3.6	Instruments	10
3.7	Assignors Remain Liable Under Accounts	11
3.8	Assignors Remain Liable Under Contracts	11
3.9	Deposit Accounts; Etc	11
3.10	Letter-of-Credit Rights	12
3.11	Commercial Tort Claims	12
3.12	Chattel Paper	13
3.13	Further Actions	13
3.14	Motor Vehicles	13
ARTICLE IV	SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES	14
4.1	Additional Representations and Warranties	14

i 

TABLE OF CONTENTS
(continued)

		Page
4.2	Licenses and Assignments	14
4.3	Infringements	15
4.4	Preservation of Marks and Domain Names	15
4.5	Maintenance of Registration	15
4.6	Future Registered Marks and Domain Names	15
4.7	Remedies	15
ARTICLE V	SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS	16
5.1	Additional Representations and Warranties	16
5.2	Licenses and Assignments	16
5.3	Infringements	16
5.4	Maintenance of Patents or Copyrights	17
5.5	Prosecution of Patent or Copyright Applications	17
5.6	Other Patents and Copyrights	17
5.7	Remedies	17
ARTICLE VI	PROVISIONS CONCERNING ALL COLLATERAL	18
6.1	Protection of Collateral Agent’s Security	18
6.2	Warehouse Receipts Non-Negotiable	18
6.3	Additional Information	18
6.4	Further Actions	18
6.5	Financing Statements	19
ARTICLE VII	REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT	19
7.1	Remedies; Obtaining the Collateral Upon Default	19
7.2	Remedies; Disposition of the Collateral	22
7.3	Waiver of Claims	22
7.4	Application of Proceeds	23
7.5	Remedies Cumulative	26
7.6	Discontinuance of Proceedings	26
ARTICLE VIII	INDEMNITY	27
8.1	Indemnity	27
8.2	Indemnity Obligations Secured by Collateral; Survival	28
ARTICLE IX	DEFINITIONS	28
ARTICLE X	MISCELLANEOUS	34
10.1	Notices	34
10.2	Waiver; Amendment	35
10.3	Obligations Absolute	35
10.4	Successors and Assigns	36

ii 

TABLE OF CONTENTS
(continued)

		Page
10.5	Headings Descriptive	36
10.6	GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL	36
10.7	Assignor’s Duties	37
10.8	Termination; Release	37
10.9	Counterparts	38
10.10	Severability	38
10.11	The Collateral Agent and the other Secured Creditors	38
10.12	Additional Assignors	39
10.13	Release of Assignors	39
10.14	Agreement Among Lenders	40
10.15	Administrative Borrower	40

ANNEX A	Schedule of Chief Executive Offices Address(es) of Chief Executive Office
ANNEX B	Schedule of Inventory and Equipment Locations
ANNEX C	Schedule of Legal Names, Type of Organization, Jurisdiction of Organization, Location, Organizational Identification Numbers and Federal Employer Identification Numbers
ANNEX D	Schedule of Trade and Fictitious Names
ANNEX E	Description of Certain Significant Transactions Occurring Within One Year Prior to the Date of the Security Agreement
ANNEX F-1	Schedule of Deposit Accounts
ANNEX F-2	Schedule of Deposit Accounts Subject to Control Agreement
ANNEX G	Reserved
ANNEX H	Schedule of Commercial Tort Claims
ANNEX I	Schedule of Marks and Applications; Internet Domain Name Registrations
ANNEX J	Schedule of Patents
ANNEX K	Schedule of Copyrights
ANNEX L	Grant of Security Interest in United States Trademarks
ANNEX M	Grant of Security Interest in United States Patents
ANNEX N	Grant of Security Interest in United States Copyrights

[Remainder of this page intentionally left blank]

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SECURITY AGREEMENT

SECURITY AGREEMENT, dated as of November 23, 2015, made by each of the undersigned assignors (each, an “Assignor” and, together with any other entity that becomes an assignor hereunder pursuant to Section 10.12 hereof, the “Assignors”) in favor of PNC Bank, National Association, as collateral agent (together with any successor collateral agent, the “Collateral Agent”), for the benefit of the Secured Creditors (as defined below). Certain capitalized terms as used herein are defined in Article IX hereof. Except as otherwise defined herein, all other capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.

WITNESSETH:

WHEREAS, Global Defense & National Security Systems, Inc. (which shall be renamed STG Group, Inc. immediately following the closing), a Delaware corporation (“Holdings”) (whose obligations as Borrower (as defined in the Credit Agreement) under the Credit Agreement will be immediately assumed by STG, Inc., a Virginia corporation (“STG”) and Access Systems, Incorporated, a Virginia corporation (“Access”) immediately upon closing), STG Group, Inc. (which shall be renamed STG Group Holdings, Inc. immediately following the closing), a Delaware corporation (“Parent”), the Guarantors from time to time party thereto, the lenders from time to time party thereto (the “Lenders”), MC Admin Co LLC, as administrative agent (together with any successor administrative agent, the “Administrative Agent”), PNC Bank, National Association as collateral agent (together with any successor collateral agent, the “Collateral Agent”) have entered into a Credit Agreement, dated as of November 23, 2015 (as amended, modified, restated and/or supplemented from time to time, the “Credit Agreement”; defined terms used but not defined herein shall have the respective meaning ascribed thereto in the Credit Agreement), providing for the making of Loans to the Initial Borrower and the Borrowers, as contemplated therein (the Lenders, the Administrative Agent and the Collateral Agent are herein called the “Secured Creditors”);

WHEREAS, it is a condition precedent to the making of Loans to the Initial Borrower and the Borrowers under the Credit Agreement that each Assignor shall have executed and delivered to the Collateral Agent this Agreement;

WHEREAS, pursuant to the Holdings Guaranty, Holdings has jointly and severally guaranteed the payment and performance when due of all Guaranteed Obligations as described therein;

WHEREAS, pursuant to the Subsidiaries Guaranty, the Subsidiaries party thereto have jointly and severally guaranteed the payment and performance when due of all Guaranteed Obligations as described therein; and

WHEREAS, each Assignor will obtain benefits from the incurrence of Loans by the Initial Borrower and the Borrowers under the Credit Agreement and, if applicable, the entering into by the Initial Borrower and the Borrowers and/or one or more of their Subsidiaries of Interest Rate Protection Agreements and, accordingly, desires to enter into this Agreement in order to satisfy the conditions described in the precedingrecital and to induce the Lenders to make Loans and enter into Interest Rate Protection Agreements for the benefit of the Initial Borrower and the Borrowers;

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Assignor, the receipt and sufficiency of which are hereby acknowledged, each Assignor hereby makes the following representations and warranties to the Collateral Agent for the benefit of the Secured Creditors and hereby covenants and agrees with the Collateral Agent for the benefit of the Secured Creditors as follows:

ARTICLE I

SECURITY INTERESTS

1.1           Grant of Security Interests. (a) As security for the prompt and complete payment and performance when due of all of its Obligations, each Assignor does hereby assign and transfer unto the Collateral Agent, and does hereby pledge and grant to the Collateral Agent, in each case for the benefit of the Secured Creditors, a continuing security interest in all of the right, title and interest of such Assignor in, to and under all of the following personal property and fixtures (and all rights therein) of such Assignor, or in which or to which such Assignor has any rights, in each case whether now existing or hereafter from time to time acquired:

(i)          each and every Account;

(ii)         all cash;

(iii)        the Cash Collateral Account and all monies, securities, Instruments and other investments deposited or required to be deposited in the Cash Collateral Account;

(iv)        all Chattel Paper (including, without limitation, all Tangible Chattel Paper and all Electronic Chattel Paper);

(v)         all Commercial Tort Claims (including all Commercial Tort Claims described in Annex H hereto);

(vi)        all computer programs of such Assignor and all intellectual property rights therein and all other proprietary information of such Assignor, including but not limited to Domain Names and Trade Secret Rights;

(vii)       all Contracts, together with all Contract Rights arising thereunder;

(viii)      all Copyrights;

(ix)        all Equipment;

(x)          all Deposit Accounts and all other demand, deposit, time, savings, cash management, passbook and similar accounts maintained by such Assignor with any Person and all monies, securities, Instruments and other investments deposited or required to be deposited in any of the foregoing, excluding any Excluded Accounts;

2

(xi)        all Documents;

(xii)       all General Intangibles;

(xiii)      all Goods;

(xiv)      all Instruments;

(xv)       all Inventory;

(xvi)      all Investment Property;

(xvii)     all Promissory Notes;

(xviii)    all Letter-of-Credit Rights (whether or not the respective letter of credit is evidenced by a writing);

(xix)       all Marks, together with the registrations and right to all renewals thereof, the goodwill of the business of such Assignor symbolized by the Marks and all causes of action arising prior to or after the date hereof for infringement of any of the Marks or unfair competition regarding the same;

(xx)        all Patents, together with all causes of action arising prior to or after the date hereof for infringement of any of the Patents or unfair competition regarding the same;

(xxi)       all Permits;

(xxii)      all Software and all Software licensing rights, all writings, plans, specifications and schematics, all engineering drawings, customer lists, goodwill and licenses, and all recorded data of any kind or nature, regardless of the medium of recording;

(xxiii)     all Supporting Obligations;

(xxiv)    all books and records relating to the items referred to in the preceding clauses (i) through (xxiii) (including all books, databases, customer lists, credit files, ledgers, computer programs, printouts, customer data and records, whether tangible or electronic, and other computer materials and records (and all media on which such data, files, programs, materials and records are or may be stored) which contain any information relating to any of the items referred to in the preceding clauses (i) through (xxiii)); and

(xxv)     all Proceeds and products of any and all of the foregoing (all of the above, including this clause (xxv), the “Collateral”).

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(b)          The security interest of the Collateral Agent under this Agreement extends to all Collateral which any Assignor may acquire, or with respect to which any Assignor may obtain rights, at any time during the term of this Agreement.

(c)          Notwithstanding any of the other provisions set forth in this Section 1 to the contrary, the term Collateral shall not include, and this Agreement shall not constitute a grant of a security interest in any (x) instrument, contract, license, permit or other General Intangible during the period in which under applicable law, such instrument, contract, license, permit or other General Intangible cannot be, or requires any consent (which has not been obtained) to be, pledged, transferred or assigned by Assignor, or to the extent that granting a security interest therein without a consent, waiver, or amendment (which has not been obtained) would result in a breach or default under, or give rise to a right by any party to terminate, the instrument, contract, license, permit or other General Intangible (in each case after giving effect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the UCC (or any successor provision or provisions) or any other applicable law); provided, however, that with respect to any potential Collateral described in this clause (c) requiring a consent, waiver or amendment prior to the effective grant of a security interest, the affected Assignor shall have used commercially reasonable efforts to obtain such consent, waiver or amendment and such instrument, contract, license, permit or other General Intangible shall become part of the Collateral immediately upon obtaining such required consent, waiver or amendment or upon a relevant change in applicable law and provided that that Proceeds of the such instrument, contract, license, permit or other General Intangible shall constitute Collateral as defined in this Agreement, (y) any “intent-to-use” application for registration of a Mark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law, or (z) any Excluded Equity Interests.

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1.2         Grant of License. For purposes of enabling the Collateral Agent to exercise rights and remedies under this Agreement, each Assignor hereby grants to the Collateral Agent and its agents, representatives and designees an irrevocable, nonexclusive, royalty free license, rent-free license and rent-free lease (which will be binding on any successor or assignee of such Assignor) to, after the occurrence and during the continuance of an Event of Default, have access to and use all of such Assignor’s Collateral constituting (x) Real Property (including the buildings and other improvements thereon), Equipment and fixtures (whether or not considered Real Property), and (y) intellectual property (including, without limitation, all Domain Names, Patents, Marks, Copyrights, Trade Secrets and object code and access to all media, written or electronic, in which any licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, as well as an irrevocable, nonexclusive license to grant to any third party a sub-licensable sub-license to use the foregoing rights, but excluding any source code) for which the Collateral Agent hereby agrees to take all commercially reasonable actions in connection with its use of such intellectual property to protect such Assignor’s rights and interest in such intellectual property (provided that in any event, the Collateral Agent shall not have any liability in connection therewith), for the purpose of (i) arranging for and effecting the sale, distribution or other disposition of Collateral located on any such Real Property, including the manufacture, production, completion, packaging, advertising, distribution and other preparation of such Collateral (including, without limitation, work-in-process, raw materials and complete Inventory) for sale, distribution or other disposition, (ii) selling (by public auction, private sale, going out of business sale or similar sale, whether in bulk, in lots or to customers in the ordinary course of business or otherwise and which sale may include augmented Inventory of the same type sold in any Assignor’s business), (iii) storing or otherwise dealing with the Collateral, (iv) collecting all Accounts and copying, using and preserving any and all information relating to the Collateral, and (v) otherwise dealing with the Collateral as part of the exercise of any rights or remedies provided to the Collateral Agent hereunder or under the other Credit Documents, in each case without the interference by any Assignor or any Subsidiary of any Assignor and without incurring any liability to any Assignor or any Subsidiary of any Assignor, except any liability which is the direct result of the Collateral Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision). Each Assignor will, and will cause each of its Subsidiaries to, cooperate with the Collateral Agent and its agents, representatives and designees in allowing the Collateral Agent to exercise the foregoing rights. To the extent that any asset of any Assignor in which the Collateral Agent has access or use rights as provided above is to be sold or otherwise disposed of after the occurrence and during the continuance of an Event of Default, such Assignor shall, if requested by the Collateral Agent in writing, cause the buyer to agree in writing to be subject to, and comply with the terms of, this Section 1.2. The Collateral Agent shall have the right to bring an action to enforce its rights under this Section 1.2, including, without limitation, an action seeking possession of the applicable Collateral and/or specific performance of this Section 1.2.

1.3         Power of Attorney. (a) Each Assignor hereby constitutes and appoints the Collateral Agent its true and lawful attorney, irrevocably, with full power after the occurrence of and during the continuance of an Event of Default (in the name of such Assignor or otherwise) to act, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys due or to become due to such Assignor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Collateral Agent may deem to be necessary or advisable to protect the interests of the Secured Creditors, which appointment as attorney is coupled with an interest.

(b)          Each Assignor hereby appoints the Collateral Agent and the Collateral Agent’s designee as such Assignor’s attorney, with power: (i) to sign any documents or file any certificate of title, license and/or application, as may be required pursuant to any Motor Vehicle Statutes in the applicable jurisdiction to perfect, maintain, protect, and enforce the Liens on Motor Vehicles in accordance with Section 3.14 hereof and (ii) to do all things reasonably necessary to carry out this Agreement. Each Assignor ratifies and approves all acts of such attorney. None of the Secured Creditors or the Collateral Agent or their attorneys will be liable for any acts or omissions or for any error of judgment or mistake of fact or law except for their gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision). This power, being coupled with an interest, is irrevocable until the Credit Agreement has been terminated and the Obligations have been fully satisfied.

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ARTICLE II

GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Assignor represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows:

2.1           Necessary Filings. All filings, registrations, recordings and other actions necessary or appropriate to create, preserve and perfect the security interest granted by such Assignor to the Collateral Agent hereby in respect of the Collateral have been accomplished and the security interest granted to the Collateral Agent pursuant to this Agreement in and to the Collateral creates (or upon such filings will create) a valid and, together with all such filings, registrations, recordings and other actions, a perfected security interest therein to the extent a perfected security interest can be granted therein pursuant to the laws of the United States, which perfected security interest will be prior to the rights of all other Persons therein and subject to no other Liens (other than Permitted Liens) and is entitled to all the rights, priorities and benefits afforded by the UCC or other relevant law as enacted in any relevant jurisdiction to perfected security interests, in each case to the extent that the Collateral consists of the type of property in which a security interest may be perfected (i) by possession or control (within the meaning of the UCC as in effect on the date hereof in the State of New York), (ii) by filing a financing statement under the UCC as enacted in any relevant jurisdiction or (iii) by a filing of a Grant of Security Interest in the respective form attached hereto in the United States Patent and Trademark Office or in the United States Copyright Office, as the case may be.

2.2           No Liens. Such Assignor is, and as to all Collateral acquired by it from time to time after the date hereof such Assignor will be, the owner of all Collateral free from any Lien, security interest, encumbrance or other right, title or interest of any Person (other than Permitted Liens), and such Assignor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Collateral Agent.

2.3           Other Financing Statements. As of the date hereof, there is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Collateral (other than financing statements filed in respect of Permitted Liens), and so long as the Termination Date has not occurred, such Assignor will not execute or authorize to be filed in any public office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interests granted hereby by such Assignor or in connection with Permitted Liens.

2.4           Chief Executive Office, Record Locations. The chief executive office of such Assignor is, on the date of this Agreement, located at the address indicated on Annex A hereto for such Assignor. During the period of the four calendar months preceding the date of this Agreement, the chief executive office of such Assignor has not been located at any address other than that indicated on Annex A in accordance with the immediately preceding sentence, in each case unless each such other address is also indicated on Annex A hereto for such Assignor.

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2.5           Location of Inventory and Equipment. All Inventory and Equipment held on the date hereof, or held at any time during the four calendar months prior to the date hereof, by each Assignor is located at one of the locations shown on Annex B hereto for such Assignor.

2.6           Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; Location; Organizational Identification Numbers; Changes Thereto; etc. As of the date hereof, the exact legal name of each Assignor, the type of organization of such Assignor, whether or not such Assignor is a Registered Organization, the jurisdiction of organization of such Assignor, such Assignor’s Location, the organizational identification number (if any) of such Assignor, is listed on Annex C hereto for such Assignor. Such Assignor shall not change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its jurisdiction of organization, its Location, or its organizational identification number (if any) from that listed on Annex C hereto, except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Secured Debt Agreements and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) such Assignor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, outside the United States or a State thereof) if (i) it shall have given to the Collateral Agent and the Administrative Agent not less than 15 days’ (or such shorter period as may be acceptable to the Collateral Agent) prior written notice of each change to the information listed on Annex C (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Annex C which shall correct all information contained therein for such Assignor, and (ii) in connection with such respective change or changes, it shall have taken all action reasonably requested by the Collateral Agent or the Administrative Agent to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect. In addition, to the extent that such Assignor does not have an organizational identification number on the date hereof and later obtains one, such Assignor shall promptly thereafter notify the Collateral Agent and the Administrative Agent of such organizational identification number and shall take all actions reasonably satisfactory to the Collateral Agent and the Administrative Agent to the extent necessary to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.

2.7           Trade Names; Etc. Such Assignor does not have nor does it operate in any jurisdiction under, nor in the preceding five years has it had or operated in any jurisdiction under, any trade names, fictitious names or other names except its legal name as specified in Annex C and such other trade or fictitious names as are listed on Annex D hereto for such Assignor. Such Assignor may assume or operate in any jurisdiction under any new trade, fictitious or other name if (i) it shall have given to the Collateral Agent and the Administrative Agent not more than 15 days’ prior written notice of any such assumption or operation, clearly describing such new name and the jurisdictions in which such new name will be used and providing such other information in connection therewith as the Collateral Agent or the Administrative Agent may reasonably request and (ii) with respect to such new name, it shall have taken all action reasonably requested by the Collateral Agent or the Administrative Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.

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2.8           Certain Significant Transactions. During the one year period preceding the date of this Agreement, no Person shall have merged or consolidated with or into any Assignor, and no Person shall have liquidated into, or transferred all or substantially all of its assets to, any Assignor, in each case except as described in Annex E hereto. With respect to any transactions so described in Annex E hereto, the respective Assignor shall have furnished such information with respect to the Person (and the assets of the Person and locations thereof) which merged with or into or consolidated with such Assignor, or was liquidated into or transferred all or substantially all of its assets to such Assignor, and shall have furnished to the Collateral Agent and the Administrative Agent such UCC lien searches as may have been requested by the Collateral Agent or the Administrative Agent with respect to such Person and its assets, to establish that no security interest (excluding Permitted Liens) continues perfected on the date hereof with respect to any Person described above (or the assets transferred to the respective Assignor by such Person), including without limitation pursuant to Section 9-316(a)(3) of the UCC.

2.9           Non-UCC Property and Certificates of Title. No more than an aggregate amount of $500,000 of all property of the Assignors of the types described in clauses (1), (2) and (3) of Section 9-311(a) of the UCC, where the filing of a financing statement does not perfect the security interest in such property in accordance with the provisions of Section 9-311(a) of the UCC, shall be owned by all Assignors (based on the aggregate fair market value thereof, as determined by the Assignors in good faith) unless the Assignors shall provide immediate written notice of such excess to the Collateral Agent and the Administrative Agent and promptly (and in any event within 7 Business Days, unless the Collateral Agent shall extend such period in its sole discretion) take such actions (at their own cost and expense) as may be required under the respective United States, State or other laws referenced in Section 9-311(a) of the UCC to perfect the security interests granted herein in any such excess property.

2.10         As-Extracted Collateral; Timber-to-be-Cut. On the date hereof, such Assignor does not own, or expect to acquire, any property which constitutes, or would constitute, As-Extracted Collateral or Timber-to-be-Cut. If at any time after the date of this Agreement such Assignor owns, acquires or obtains rights to any As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall furnish the Collateral Agent and the Administrative Agent with prompt written notice thereof (which notice shall describe in reasonable detail the As-Extracted Collateral and/or Timber-to-be-Cut and the locations thereof) and shall take all actions as may be deemed reasonably necessary or desirable by the Collateral Agent or the Administrative Agent to perfect the security interest of the Collateral Agent therein.

2.11         Collateral in the Possession of a Bailee. No more than $500,000 of Inventory, Equipment or other Goods may be in the possession of a third party bailee at any time, unless such Assignor shall promptly notify the Collateral Agent and the Administrative Agent thereof and obtain an acknowledgment from such bailee, in form and substance reasonably satisfactory to the Collateral Agent and the Administrative Agent, that the bailee holds such Collateral for the benefit of the Collateral Agent and shall act upon the instructions of the Collateral Agent, without the further consent of such Assignor. The Collateral Agent agrees with such Assignor that the Collateral Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the respective Assignor with respect to any such bailee.

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ARTICLE III

SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;
INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL

3.1           Additional Representations and Warranties. As of the time when each of its Accounts arises, each Assignor shall be deemed to have represented and warranted that each such Account, and all original records, papers and documents relating thereto (if any) are genuine and what they purport to be, and that all papers and documents (if any) relating thereto (i) will, to the knowledge of such Assignor, represent the genuine, legal, valid and binding obligation of the account debtor evidencing indebtedness unpaid and owed by the respective account debtor arising out of the performance of labor or services or the sale or lease and delivery of the merchandise listed therein, or both, (ii) will be the only original writings evidencing and embodying such obligation of the account debtor named therein (other than copies created for general accounting purposes), (iii) will evidence true and valid obligations, enforceable in accordance with their respective terms, and (iv) will be in compliance and will conform in all material respects with all applicable federal, state and local laws and applicable laws of any relevant foreign jurisdiction.

3.2           Maintenance of Records. Each Assignor will keep and maintain at its own cost and expense accurate records in all material respects of its Accounts and Contracts, including, but not limited to, records of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and such Assignor will make the same available on such Assignor’s premises to the Collateral Agent and the Administrative Agent for inspection as otherwise permitted by the terms of the respective Secured Debt Agreements. Upon the occurrence and during the continuance of an Event of Default and at the request of the Collateral Agent or the Administrative Agent, such Assignor shall, at its own cost and expense, deliver all tangible evidence of its Accounts and Contract Rights (including, without limitation, all documents evidencing the Accounts and all Contracts) and such books and records to the Collateral Agent or the Administrative Agent or to their respective representatives (copies of which evidence and books and records may be retained by such Assignor). Upon the occurrence and during the continuance of an Event of Default and if the Collateral Agent so directs, such Assignor shall legend, in form and manner satisfactory to the Collateral Agent and the Administrative Agent, the Accounts and the Contracts, as well as books, records and documents (if any) of such Assignor evidencing or pertaining to such Accounts and Contracts with an appropriate reference to the fact that such Accounts and Contracts have been assigned to the Collateral Agent and that the Collateral Agent has a security interest therein.

3.3           Direction to Account Debtors; Contracting Parties; etc. Upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent so directs any Assignor, such Assignor agrees (x) to instruct all obligors with respect to the Accounts and Contracts to make all payments on account of the Accounts and Contracts directly to the Cash Collateral Account, (y) that the Collateral Agent may, at its option, directly notify the obligors with respect to any Accounts and/or under any Contracts to make payments with respect thereto as provided in the preceding clause (x), and (z) that the Collateral Agent may enforce collection of any such Accounts and Contracts and may adjust, settle or compromise the amount of payment thereof, in the same manner and to the same extent as such Assignor. Without notice to or assent by any Assignor, the Collateral Agent may, upon the occurrence and during the continuance of an Event of Default, apply any or all amounts then in, or thereafter deposited in, the Cash Collateral Account toward the payment of the Obligations in the manner provided in Section 7.4 of this Agreement. The reasonable costs and expenses of collection (including reasonable attorneys’ fees), whether incurred by an Assignor or the Collateral Agent, shall be borne by the relevant Assignor. The Collateral Agent shall deliver a copy of each notice referred to in the preceding clause (y) to the Administrative Borrower for the relevant Assignor, provided that (x) the failure by the Collateral Agent to so notify such Assignor shall not affect the effectiveness of such notice or the other rights of the Collateral Agent created by this Section 3.3 and (y) no such notice shall be required if an Event of Default of the type described in Section 12.05 of the Credit Agreement has occurred and is continuing.

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3.4           Modification of Terms; etc. Except in accordance with such Assignor’s ordinary course of business or as is consistent with reasonable business judgment or as permitted by Section 3.5 hereof and Section 11.12 of the Credit Agreement, no Assignor shall rescind or cancel any indebtedness evidenced by any Account or under any Contract, or modify any material term thereof or make any material adjustment with respect thereto, or extend or renew the same, or compromise or settle any material dispute, claim, suit or legal proceeding relating thereto, or sell any Account or Contract, or interest therein, without the prior written consent of the Collateral Agent and the Administrative Agent. No Assignor will do anything to impair the rights of the Collateral Agent in the Accounts or Contracts.

3.5           Collection. Each Assignor shall endeavor in accordance with reasonable business practices to cause to be collected from the account debtor named in each of its Accounts or obligor under any Contract, as and when due (including, without limitation, amounts which are delinquent, such amounts to be collected in accordance with generally accepted lawful collection procedures) any and all amounts owing under or on account of such Account or Contract and apply promptly upon receipt thereof all such amounts as are so collected to the outstanding balance of such Account or under such Contract. Except as otherwise directed by the Collateral Agent after the occurrence and during the continuation of an Event of Default, any Assignor may allow in the ordinary course of business as adjustments to amounts owing under its Accounts and Contracts (i) an extension or renewal of the time or times of payment, or settlement for less than the total unpaid balance, which such Assignor finds appropriate in accordance with reasonable business judgment, and (ii) a refund or credit due as a result of returned or damaged merchandise or improperly performed services or for other reasons which such Assignor finds appropriate in accordance with reasonable business judgment. The reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) of collection, whether incurred by an Assignor or the Collateral Agent, shall be borne by the relevant Assignor.

3.6           Instruments. If any Assignor owns or acquires any Instrument in excess of $500,000 constituting Collateral (other than checks and other payment instruments received and collected in the ordinary course of business), such Assignor will within 7 Business Days thereafter notify the Collateral Agent and the Administrative Agent thereof, and upon request by the Collateral Agent will promptly deliver such Instrument to the Collateral Agent appropriately endorsed to the order of the Collateral Agent as further security hereunder.

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3.7           Assignors Remain Liable Under Accounts. Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Accounts to observe and perform all of the conditions and obligations to be observed and performed by them thereunder, all in accordance with the terms of any agreement giving rise to such Accounts. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Account pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by them or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.

3.8           Assignors Remain Liable Under Contracts. Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Contracts to observe and perform all of the conditions and obligations to be observed and performed by them thereunder, all in accordance with and pursuant to the terms and provisions of each Contract. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Contract by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Contract pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any performance by any party under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.

3.9           Deposit Accounts; Etc. (a) No Assignor maintains, or at any time after the date of this Agreement shall establish or maintain, any demand, time, savings, passbook or similar account, except for such accounts maintained with a bank (as defined in Section 9-102 of the UCC) whose jurisdiction (determined in accordance with Section 9-304 of the UCC) is within a State of the United States. Annex F-1 hereto accurately sets forth, as of the date of this Agreement, for each Assignor, each Deposit Account maintained by such Assignor (including a description thereof and the respective account number), the name of the respective bank with which such Deposit Account is maintained, and the jurisdiction of the respective bank with respect to such Deposit Account. Annex F-2 hereto accurately sets forth, as of the date of this Agreement, for each Assignor, each Deposit Account (other than Excluded Accounts) maintained by such Assignor in the United States (including a description thereof and the respective account number). For each Deposit Account listed on Annex F-2 hereto, the respective Assignor shall use its commercially reasonable efforts to cause the bank with which the Deposit Account is maintained to execute and deliver to the Collateral Agent, within 30 days after the date of this Agreement or, if later, at the time of the establishment of the respective Deposit Account, a “control agreement” substantially in the form as may be reasonably acceptable to the Collateral Agent and the Administrative Agent. Except as otherwise provided in the proviso to the immediately preceding sentence, if any bank with which a Deposit Account listed on Annex F-2 hereto is maintained refuses to, or does not, enter into such a “control agreement”, then, at the request of the Collateral Agent or the Administrative Agent or the Required Lenders, the respective Assignor shall within 30 days close the respective Deposit Account and transfer all balances therein to the Cash Collateral Account or another Deposit Account meeting the requirements of this Section 3.9. If any bank with which a Deposit Account listed on Annex F-2 hereto is maintained refuses to subordinate all its claims with respect to such Deposit Account to the Collateral Agent’s security interest therein on terms satisfactory to the Collateral Agent and the Administrative Agent, then the Collateral Agent, at its option, may (x) require that such Deposit Account be terminated in accordance with the immediately preceding sentence or (y) agree to a “control agreement” without such subordination, provided that in such event the Collateral Agent may at any time, at its option, subsequently require that such Deposit Account be terminated (within 30 days after notice from the Collateral Agent) in accordance with the requirements of the immediately preceding sentence.

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(b)          After the date of this Agreement, no Assignor shall establish any new demand, time, savings, passbook or similar account, except for Deposit Accounts established and maintained with banks and meeting the requirements of preceding clause (a). At the time any such Deposit Account is established, the appropriate “control agreement” shall be entered into in accordance with the requirements of preceding clause (a) and the respective Assignor shall furnish to the Collateral Agent a supplement to Annex F-2 hereto containing the relevant information with respect to the respective Deposit Account and the bank with which same is established.

3.10       Letter-of-Credit Rights. If any Assignor is at any time a beneficiary under a letter of credit with a stated amount of $500,000 or more, such Assignor shall promptly notify the Collateral Agent and the Administrative Agent thereof and, at the request of the Collateral Agent, such Assignor shall, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent and the Administrative Agent, use its best efforts to either (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under such letter of credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of such letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be applied as provided in this Agreement after the occurrence and during the continuance of an Event of Default.

3.11       Commercial Tort Claims. All Commercial Tort Claims of, and known to, each Assignor in existence on the date of this Agreement are described in Annex H hereto. If any Assignor shall at any time after the date of this Agreement acquire a Commercial Tort Claim in an amount (taking the greater of the aggregate claimed damages thereunder or the reasonably estimated value thereof) of $500,000 or more, such Assignor shall promptly notify the Collateral Agent and the Administrative Agent thereof in a writing signed by such Assignor and describing the details thereof and shall grant to the Collateral Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent and the Administrative Agent.

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3.12       Chattel Paper. Upon the request of the Collateral Agent or the Administrative Agent made at any time or from time to time, each Assignor shall promptly furnish to the Collateral Agent and the Administrative Agent a list of all Electronic Chattel Paper held or owned by such Assignor. Furthermore, if at any time an Assignor owns Chattel Paper in an amount in the aggregate of $500,000 or more, if requested by the Collateral Agent or the Administrative Agent, each Assignor shall promptly take all actions which are reasonably practicable so that the Collateral Agent has “control” of all Electronic Chattel Paper in accordance with the requirements of Section 9-105 of the UCC. If at any time an Assignor owns Chattel Paper in an amount in the aggregate of $500,000 or more, such Assignor will promptly (and in any event within 10 Business Days) following any request by the Collateral Agent or the Administrative Agent, deliver all of its Tangible Chattel Paper to the Collateral Agent.

3.13       Further Actions. Each Assignor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps, including any and all actions as may be necessary or required under the Federal Assignment of Claims Act, relating to its Accounts, Contracts, Instruments and other property or rights covered by the security interest hereby granted, as the Collateral Agent or the Administrative Agent may reasonably require. The Collateral Agent agrees that the filing of such documentation necessary or required under the Federal Assignment of Claims Act shall not be filed with the applicable Governmental Authority unless an Event of Default has occurred and is continuing.

3.14       Motor Vehicles. (a) As of the date hereof, subject to Section 2.9, (i) each Assignor shall have noted the name and other necessary details in respect of the Collateral Agent, on the certificate of title for any equipment that is subject to any motor vehicle registration statute (or analogous provision for serial number goods under the PPSA) in the United States or Canada (each a “Motor Vehicle Statute”), including, without limitation, any of those statutes described in Section 9-311(a)(2) of the UCC, as adopted in any state in which any Assignor holds such equipment, that are owned by such Assignor (the “Motor Vehicles”), in such manner as shall indicate that the Collateral Agent is the lienholder of record such that a security interest has been perfected in favor of the Collateral Agent in accordance with the Motor Vehicle Statutes adopted in the state where such Motor Vehicles are titled, and (ii) each Assignor shall have taken or caused to be taken all such other actions necessary to maintain, protect, enforce and perfect, the Collateral Agent’s Liens.

(b)          In respect of any Motor Vehicle (x) purchased by any Assignor after the date hereof or (y) relocated to a jurisdiction for a period of time which would require compliance with the Motor Vehicle Statute of such jurisdiction, in each case subject to Section 2.9, (i) each Assignor shall, within 7 Business Days after such purchase or relocation, unless otherwise directed by the Collateral Agent, note the name and other necessary details in respect of the Collateral Agent, on the certificate of title for such Motor Vehicle, in such manner as shall indicate that the Collateral Agent is the lienholder of record such that a security interest has been perfected in favor of the Collateral Agent in accordance with the Motor Vehicle Statutes adopted in the state where such Motor Vehicles are titled, and (ii) each Assignor shall, within thirty (30) days after such purchase or relocation, take or cause to be taken all other actions necessary to maintain, protect, enforce and, with respect to the Motor Vehicles, perfect the Liens in favor of the Collateral Agent.

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(c)          Notwithstanding anything in this Section 3.14 to the contrary, actions under this Section 3.14 must be taken only for (i) an individual Motor Vehicle for which the fair market value exceeds $150,000 or (ii) all Motor Vehicles of the Assignors, only to the extent the aggregate fair market value of all Motor Vehicles not otherwise in compliance with this Section 3.14 exceeds $350,000.

ARTICLE IV

SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES

4.1         Additional Representations and Warranties. Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use the registered Marks and Domain Names listed in Annex I hereto for such Assignor and that said listed Marks and Domain Names include all marks and applications for marks registered in the United States Patent and Trademark Office and all Domain Names that such Assignor owns or uses in connection with its business as of the date hereof. Each Assignor represents and warrants that it owns, is licensed to use or otherwise has the right to use, all Marks and Domain Names that are necessary for the conduct of its business. Each Assignor further warrants that it has no knowledge of any third party claim received by it that any aspect of such Assignor’s present or contemplated business operations infringe or will infringe any trademark, service mark or trade name of any other Person other than as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Assignor represents and warrants as of the date hereof that it is the true and lawful owner of or otherwise has the right to use all trademark registrations and applications and Domain Name registrations listed in Annex I hereto and that said registrations are valid, subsisting, have not been canceled and that such Assignor is not aware of any third-party claim that any of said registrations is invalid or unenforceable, and is not aware that there is any reason that any of said registrations is invalid or unenforceable, and is not aware that there is any reason that any of said applications will not mature into registrations. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of an Event of Default, any document which may be required by the United States Patent and Trademark Office or similar registrar in order to effect an absolute assignment of all right, title and interest in each Mark and/or Domain Name, and record the same.

4.2         Licenses and Assignments. Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any material Mark or Domain Name absent prior written approval of the Collateral Agent and the Administrative Agent.

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4.3           Infringements. Each Assignor agrees, promptly, and in any event within 7 Business Days of learning thereof, to notify the Collateral Agent and the Administrative Agent in writing of the name and address of, and to furnish such pertinent information that may be available with respect to, any party who such Assignor believes is, or may be, infringing or diluting or otherwise violating any of such Assignor’s rights in and to any Mark or Domain Name in any manner that could reasonably be expected to have a Material Adverse Effect, or with respect to any party claiming that such Assignor’s use of any Mark or Domain Name material to such Assignor’s business violates in any material respect any property right of that party. Each Assignor further agrees to prosecute diligently in accordance with reasonable business practices any Person infringing any Mark or Domain Name in any manner that could reasonably be expected to have a Material Adverse Effect.

4.4           Preservation of Marks and Domain Names. Each Assignor agrees to use its Marks and Domain Names which are material to such Assignor’s business in interstate commerce during the time in which this Agreement is in effect and to take all such other actions as are reasonably necessary to preserve such Marks as trademarks or service marks under the laws of the United States (other than any such Marks which are no longer used or useful in its business or operations).

4.5           Maintenance of Registration. Each Assignor shall, at its own expense, diligently process all documents reasonably required to maintain all Mark and/or Domain Name registrations, including but not limited to affidavits of use and applications for renewals of registration in the United States Patent and Trademark Office for all of its material registered Marks, and shall pay all fees and disbursements in connection therewith and shall not abandon any such filing of affidavit of use or any such application of renewal prior to the exhaustion of all administrative and judicial remedies without prior written consent of the Collateral Agent and the Administrative Agent, which consent shall not be unreasonably withheld (other than with respect to registrations and applications deemed by such Assignor in its reasonable business judgment to be no longer prudent to pursue).

4.6           Future Registered Marks and Domain Names. If any Mark registration is issued hereafter to any Assignor as a result of any application now or hereafter pending before the United States Patent and Trademark Office or any Domain Name is registered by any Assignor, within 30 days receipt of such certificate or similar indicia of ownership, such Assignor shall deliver to the Collateral Agent and the Administrative Agent a copy of such registration certificate or similar indicia of ownership, and a grant of a security interest in such Mark and/or Domain Name, to the Collateral Agent and at the expense of such Assignor, confirming the grant of a security interest in such Mark and/or Domain Name to the Collateral Agent hereunder, the form of such grant of a security interest to be substantially in the form of Annex L hereto or in such other form as may be reasonably satisfactory to the Collateral Agent and the Administrative Agent.

4.7           Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title and interest of such Assignor in and to each of the Marks and Domain Names, together with all trademark rights and rights of protection to the same, vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such rights, title and interest shall immediately vest, in the Collateral Agent for the benefit of the Secured Creditors, and the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged and notarized and record said absolute assignment with the applicable agency or registrar; (ii) take and use or sell the Marks or Domain Names and the goodwill of such Assignor’s business symbolized by the Marks or Domain Names and the right to carry on the business and use the assets of such Assignor in connection with which the Marks or Domain Names have been used; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from using the Marks or Domain Names in any manner whatsoever, directly or indirectly, and such Assignor shall execute such further documents that the Collateral Agent or the Administrative Agent may reasonably request to further confirm the foregoing and to transfer ownership of the Marks or Domain Names and registrations and any pending trademark application in the United States Patent and Trademark Office or applicable Domain Name registrar to the Collateral Agent.

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ARTICLE V

SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS

5.1           Additional Representations and Warranties. Each Assignor represents and warrants that it is the true and lawful owner of (i) all rights in (w) all Trade Secret Rights, (x) the Patents listed in Annex J hereto for such Assignor and that said Patents include all the United States patents and applications for United States patents that such Assignor owns as of the date hereof and (y) the Copyrights listed in Annex K hereto for such Assignor and that said Copyrights constitute all the United States copyrights registered with the United States Copyright Office and applications to United States copyrights that such Assignor owns as of the date hereof and (ii) all rights in, or otherwise has the right to use, all Trade Secrets and proprietary information necessary to operate the business of such Assignor (“Trade Secret Rights”). Each Assignor further warrants that it has no knowledge of any third party claim that any aspect of such Assignor’s present or contemplated business operations infringes or will infringe any patent of any other Person or such Assignor has misappropriated any Trade Secret or other proprietary information which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of any Event of Default, any document which may be required by the United States Patent and Trademark Office or the United States Copyright Office in order to effect an absolute assignment of all right, title and interest in each Patent or Copyright, and to record the same.

5.2           Licenses and Assignments. Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Patent or Copyright absent prior written approval of the Collateral Agent and the Administrative Agent.

5.3           Infringements. Each Assignor agrees, promptly, and in any event within 5 Business Days of learning thereof, to furnish the Collateral Agent and the Administrative Agent in writing with all pertinent information available to such Assignor with respect to any infringement, contributing infringement or active inducement to infringe or other violation of such Assignor’s rights in any Patent or Copyright or to any claim that the practice of any Patent or use of any Copyright violates any property right of a third party, or with respect to any misappropriation of any Trade Secret Right or any claim that practice of any Trade Secret Right violates any property right of a third party, in each case, in any manner which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor further agrees, absent direction of the Collateral Agent and the Administrative Agent to the contrary, to diligently prosecute any Person infringing any Patent or Copyright or any Person misappropriating any Trade Secret Right, in each case to the extent that such infringement or misappropriation, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

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5.4           Maintenance of Patents or Copyrights. At its own expense, each Assignor shall make timely payment of all post-issuance fees required to maintain in force its rights under each Patent or Copyright, absent prior written consent of the Collateral Agent and the Administrative Agent (other than any such Patents or Copyrights which are no longer used or are deemed by such Assignor in its reasonable business judgment to no longer be useful in its business or operations).

5.5           Prosecution of Patent or Copyright Applications. At its own expense, each Assignor shall diligently prosecute all material applications for (i) United States Patents listed in Annex J hereto and (ii) Copyrights listed on Annex K hereto, in each case for such Assignor and shall not abandon any such application prior to exhaustion of all administrative and judicial remedies (other than applications deemed by such Assignor in its reasonable business judgment to be no longer prudent to pursue or necessary in the conduct of the Assignors’ business), absent written consent of the Collateral Agent and the Administrative Agent, which consent shall not be unreasonably withheld.

5.6           Other Patents and Copyrights. Within 30 days of the acquisition or issuance of a United States Patent, registration of a Copyright, or acquisition of a registered Copyright, or of filing of an application for a United States Patent or Copyright, the relevant Assignor shall deliver to the Collateral Agent and the Administrative Agent a copy of said Copyright or Patent, or certificate or registration of, or application therefor, as the case may be, with a grant of a security interest as to such Patent or Copyright, as the case may be, to the Collateral Agent and at the expense of such Assignor, confirming the grant of a security interest, the form of such grant of a security interest to be substantially in the form of Annex M or N hereto, as appropriate, or in such other form as may be reasonably satisfactory to the Collateral Agent and the Administrative Agent.

5.7           Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title, and interest of such Assignor in each of the Patents and Copyrights vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such right, title, and interest shall immediately vest in the Collateral Agent for the benefit of the Secured Creditors, in which case the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 5.1 hereof to execute, cause to be acknowledged and notarized and to record said absolute assignment with the applicable agency; (ii) take and practice or sell the Patents and Copyrights; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from practicing the Patents and using the Copyrights directly or indirectly, and such Assignor shall execute such further documents as the Collateral Agent or the Administrative Agent may reasonably request further to confirm the foregoing and to transfer ownership of the Patents and Copyrights to the Collateral Agent for the benefit of the Secured Creditors.

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ARTICLE VI

PROVISIONS CONCERNING ALL COLLATERAL

6.1           Protection of Collateral Agent’s Security. Except as otherwise permitted by the Secured Debt Agreements, each Assignor will do nothing to impair the rights of the Collateral Agent in the Collateral. Each Assignor will at all times maintain insurance in favor of the Collateral Agent, at such Assignor’s own expense to the extent and in the manner provided in the Secured Debt Agreements. Except to the extent otherwise permitted to be retained by such Assignor or applied by such Assignor pursuant to the terms of the Secured Debt Agreements, the Collateral Agent shall, at the time any proceeds of such insurance are distributed to the Secured Creditors, apply such proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Assignor to pay the Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to such Assignor.

6.2           Warehouse Receipts Non-Negotiable. To the extent practicable, each Assignor agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued with respect to any of its Inventory, such Assignor shall request that such warehouse receipt or receipt in the nature thereof shall not be “negotiable” (as such term is used in Section 7-104 of the UCC as in effect in any relevant jurisdiction or under other relevant law).

6.3           Additional Information. Each Assignor will, at its own expense, from time to time upon the reasonable request of the Collateral Agent or the Administrative Agent, promptly (and in any event within 7 Business Days after its receipt of the respective request) furnish to the Collateral Agent such information with respect to the Collateral (including with reasonable specificity and in summary form, the identity of the Collateral or such components thereof as may have been reasonably requested by the Collateral Agent or the Administrative Agent, the value and location of such Collateral, etc.) as may be reasonably requested by the Collateral Agent or the Administrative Agent. Without limiting the forgoing, each Assignor agrees that it shall promptly (and in any event within 7 Business Days after its receipt of the respective request) furnish to the Collateral Agent and the Administrative Agent such updated Annexes hereto as may from time to time be reasonably requested by the Collateral Agent or the Administrative Agent.

6.4           Further Actions. Each Assignor will, at its own expense and upon the reasonable request of the Collateral Agent or the Administrative Agent, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such lists, descriptions and designations of its Collateral, warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to the Collateral and other property or rights covered by the security interest hereby granted, which the Collateral Agent deems reasonably appropriate or advisable to perfect, preserve or protect its security interest in the Collateral.

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6.5         Financing Statements. Each Assignor agrees to authorize, execute (where applicable) and deliver to the Collateral Agent such financing statements, in form reasonably acceptable to the Collateral Agent and the Administrative Agent, as the Collateral Agent may from time to time reasonably request or as are reasonably necessary or desirable in the opinion of the Collateral Agent to establish and maintain a valid, enforceable, perfected security interest in the Collateral as provided herein and the other rights and security contemplated hereby. Each Assignor will pay any applicable filing fees, recordation taxes and related expenses relating to its Collateral. Each Assignor hereby authorizes the Collateral Agent to file any such financing statements, continuation statements or amendments without the signature of such Assignor where permitted by law (and such authorization includes describing the Collateral as “all assets” or “all personal property” of such Assignor, or words of similar effect).

ARTICLE VII

REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT

7.1         Remedies; Obtaining the Collateral Upon Default. Each Assignor agrees that, if any Event of Default shall have occurred and be continuing, then and in every such case, the Collateral Agent, in addition to any rights now or hereafter existing under applicable law and under the other provisions of this Agreement, shall have all rights as a secured creditor under the UCC, and such additional rights and remedies to which a secured creditor is entitled under the laws in effect in all relevant jurisdictions and may:

(i)          personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from such Assignor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon such Assignor’s premises where any of the Collateral is located and remove the same and use in connection with such removal any and all services, supplies, aids and other facilities of such Assignor;

(ii)         instruct the obligor or obligors on any agreement, instrument or other obligation (including, without limitation, the Accounts and the Contracts) constituting the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Collateral Agent and may exercise any and all remedies of such Assignor in respect of such Collateral;

(iii)        instruct all depository banks which have entered into a control agreement with the Collateral Agent to transfer all monies, securities and instruments held by such depositary bank to the Cash Collateral Account in accordance with the terms of the respective control agreement (including by issuing a “Notice of Exclusive Control” in accordance with the terms thereof);

(iv)        withdraw all monies, securities and instruments in the Cash Collateral Account and/or in any other Deposit Account maintained with the Collateral Agent (whether or not such Deposit Accounts are maintained with the Collateral Agent in its capacity as such) for application to the Obligations in accordance with Section 7.4 hereof;

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(v)         sell, assign or otherwise liquidate any or all of the Collateral or any part thereof in accordance with Section 7.2 hereof, or direct such Assignor to sell, assign or otherwise liquidate any or all of the Collateral or any part thereof, and, in each case, take possession of the proceeds of any such sale or liquidation;

(vi)        take possession of the Collateral or any part thereof, by directing such Assignor in writing to deliver the same to the Collateral Agent at any reasonable place or places designated by the Collateral Agent, in which event such Assignor shall at its own expense:

(x)          forthwith cause the same to be moved to the place or places so designated by the Collateral Agent and there delivered to the Collateral Agent;

(y)          store and keep any Collateral so delivered to the Collateral Agent at such place or places pending further action by the Collateral Agent as provided in Section 7.2 hereof; and

(z)          while the Collateral shall be so stored and kept, provide such security and maintenance services as shall be reasonably necessary to protect the same and to preserve and maintain it in good condition;

(vii)       license or sublicense, whether on an exclusive or nonexclusive basis, any Marks, Domain Names, Patents or Copyrights included in the Collateral for such term and on such conditions and in such manner as the Collateral Agent shall in its sole judgment determine;

(viii)      apply any monies constituting Collateral or proceeds thereof in accordance with the provisions of Section 7.4;

(ix)         appoint by instrument in writing a receiver (which term as used in this Agreement includes a receiver and manager) or agent of all or any part of the Collateral and remove or replace from time to time any receiver or agent;

(x)          institute proceedings in any court of competent jurisdiction for the appointment of a receiver of all or any part of the Collateral;

(xi)         institute proceedings in any court of competent jurisdiction for sale or foreclosure of all or any part of the Collateral;

(xii)        file proofs of claim and other documents to establish claims to the Collateral in any proceeding relating to any Assignor; and

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(xiii)       take any other action as specified in clauses (1) through (5), inclusive, of Section 9-607 of the UCC; it being understood that each Assignor’s obligation so to deliver the Collateral is of the essence of this Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by such Assignor of said obligation. By accepting the benefits of this Agreement and each other Security Document, the Secured Creditors expressly acknowledge and agree that this Agreement and each other Security Document may be enforced only by the action of the Collateral Agent acting upon the instructions of the Required Secured Creditors and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent or the holders of at least a majority of the outstanding Other Obligations, as the case may be, for the benefit of the Secured Creditors upon the terms of this Agreement and the other Security Documents.

In addition to the remedies set forth above in this Section 7.1 and elsewhere in this Agreement, whenever any Event of Default shall have occurred and be continuing, the Collateral Agent may:

(i)          require any Assignor, by notice in writing, to disclose to the Collateral Agent the location or locations of the Collateral and each Assignor agrees to promptly make such disclosure when so required;

(ii)         repair, process, modify, complete or otherwise deal with the Collateral and prepare for the disposition of the Collateral, whether on the premises of any Assignor or otherwise;

(iii)        redeem any prior security interest against any Collateral, procure the transfer of such security interest to itself, or settle and pass the accounts of the prior mortgagee, chargee or encumbrancer (any accounts to be conclusive and binding on each Assignor);

(iv)        pay any liability secured by any Lien against any Collateral (and the Assignors agree to immediately on demand reimburse the Collateral Agent for all such payments);

(v)         carry on all or any part of the business of any Assignor and, to the exclusion of all others including the Assignors, enter upon, occupy and use all or any of the premises, buildings, and other property of or used by any Assignor for such time as the Collateral Agent sees fit, free of charge, and the Collateral Agent and the Secured Creditors are not liable to any Assignor for any act, omission or negligence (other than their own gross negligence or willful misconduct) in so doing or for any rent, charges, depreciation or damages incurred in connection with or resulting from such action;

(vi)        borrow for the purpose of carrying on the business of any Assignor or for the maintenance, preservation or protection of the Collateral and grant a security interest in the Collateral, whether or not in priority to the security interest created hereunder, to secure repayment; and

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(vii)       commence, continue or defend any judicial or administrative proceedings for the purpose of protecting, seizing, collecting, realizing or obtaining possession or payment of the Collateral, and give good and valid receipts and discharges in respect of the Collateral and compromise or give time for the payment or performance of all or any part of the accounts or any other obligation of any third party to any Assignor.

7.2         Remedies; Disposition of the Collateral. If any Event of Default shall have occurred and be continuing, then any Collateral repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and any other Collateral whether or not so repossessed by the Collateral Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Collateral Agent may, in compliance with any mandatory requirements of applicable law, determine to be commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Collateral Agent or after any overhaul or repair at the expense of the relevant Assignor which the Collateral Agent shall determine to be commercially reasonable. Any such sale, lease or other disposition may be effected by means of a public disposition or private disposition, effected in accordance with the applicable requirements (in each case if and to the extent applicable) of Sections 9-610 through 9-613 of the UCC and/or such other mandatory requirements of applicable law as may apply to the respective disposition. The Collateral Agent may, without notice or publication, adjourn any public or private disposition or cause the same to be adjourned from time to time by announcement at the time and place fixed for the disposition, and such disposition may be made at any time or place to which the disposition may be so adjourned. To the extent permitted by any such requirement of law, the Collateral Agent may bid for and become the purchaser (and may pay all or any portion of the purchase price by crediting Obligations against the purchase price) of the Collateral or any item thereof, offered for sale in accordance with this Section 7.2 without accountability to the relevant Assignor. If, under applicable law, the Collateral Agent shall be permitted to make disposition of the Collateral within a period of time which does not permit the giving of notice to the Administrative Borrower for the relevant Assignor as hereinabove specified, the Collateral Agent need give the Administrative Borrower only such notice of disposition as shall be reasonably practicable in view of such applicable law. Each Assignor agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such disposition or dispositions of all or any portion of the Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Assignor’s expense.

7.3         Waiver of Claims. Except as otherwise provided in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR THE COLLATERAL AGENT’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES,

and each Assignor hereby further waives, to the extent permitted by law:

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(i)          all damages occasioned by such taking of possession or any such disposition except any damages which are the direct result of the Collateral Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision);

(ii)         all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agent’s rights hereunder; and

(iii)        all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Assignor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.

Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the relevant Assignor therein and thereto, and shall be a perpetual bar both at law and in equity against such Assignor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Assignor.

7.4         Application of Proceeds. (a) All moneys collected by the Collateral Agent upon any sale or other disposition of the Collateral (and, to the extent either the Pledge Agreement or any other Security Document requires proceeds of collateral under such other Security Document to be applied in accordance with the provisions of this Agreement, all monies collected by the Pledgee or collateral agent under such other Security Document upon any sale or other disposition of the collateral under any such Security Document), together with all other moneys received by the Collateral Agent hereunder and under each other Security Document, shall be applied in accordance with the terms of the Agreement Among Lenders. To the extent permitted to be applied to the Obligations pursuant to the terms of the Agreement Among Lenders, such moneys shall be applied as follows:

(i)          first, to the payment of all amounts owing to the Collateral Agent of the type described in clauses (iii), (iv), (v) and (vi) of the definition of “Obligations”;

(ii)         second, to the extent proceeds remain after the application pursuant to preceding clause (i), an amount equal to the outstanding Primary Obligations which are Credit Document Obligations shall be paid to the Secured Creditors as provided in Section 7.4(d) hereof, with each Secured Creditor receiving an amount equal to the outstanding Primary Obligations owing to it which are Credit Document Obligations or, if the proceeds are insufficient to pay in full all such Primary Obligations, its Pro Rata Share of such amount remaining to be distributed;

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(iii)        third, to the extent proceeds remain after the application pursuant to preceding clauses (i) and (ii), an amount equal to the outstanding Secondary Obligations which are Credit Document Obligations shall be paid to the Secured Creditors as provided in Section 7.4(d) hereof, with each Secured Creditor receiving an amount equal to the outstanding Secondary Obligations owing to it which are Credit Document Obligations or, if the proceeds are insufficient to pay in full all such Secondary Obligations, its Pro Rata Share of such amount remaining to be distributed;

(iv)        fourth, to the extent proceeds remain after the application pursuant to preceding clauses (i), (ii) and (iii), an amount equal to the outstanding Primary Obligations owing to it under a Secured Hedge Agreement shall be paid to the Secured Creditors as provided in Section 7.4(d) hereof, with each Secured Creditor receiving an amount equal to the outstanding Primary Obligations owing to it under a Secured Hedge Agreement or, if the proceeds are insufficient to pay in full all such Primary Obligations, its Pro Rata Share of such amount remaining to be distributed;

(v)         fifth, to the extent proceeds remain after the application pursuant to preceding clauses (i) through (iv), inclusive, an amount equal to the outstanding Secondary Obligations owing to it under a Secured Hedge Agreement shall be paid to the Secured Creditors as provided in Section 7.4(d) hereof, with each Secured Creditor receiving an amount equal to the outstanding Secondary Obligations owing to it under a Secured Hedge Agreement or, if the proceeds are insufficient to pay in full all such Secondary Obligations, its Pro Rata Share of such amount remaining to be distributed; and

(vi)        sixth, to the extent proceeds remain after the application pursuant to preceding clauses (i) through (v), inclusive, and following the termination of this Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor or to whomever may be lawfully entitled to receive such surplus.

(b)          For purposes of this Agreement, (x) “Pro Rata Share” shall mean, when calculating a Secured Creditor’s portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of the Primary Obligations or Secondary Obligations owing to it, as the case may be, and the denominator of which is the then outstanding amount of all Primary Obligations or Secondary Obligations owing to all of the applicable Secured Creditors entitled thereto, as the case may be, (y) “Primary Obligations” shall mean all principal of, premium, fees and interest on, all Loans, all Fees and all Other Obligations (other than indemnities, fees (including, without limitation, attorneys’ fees) and similar obligations and liabilities), and (z) “Secondary Obligations” shall mean all Obligations other than Primary Obligations.

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(c)          When payments to Secured Creditors are based upon their respective Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall be applied (for purposes of making determinations under this Section 7.4 only) (i) first, to the Primary Obligations owing to them and (ii) second, to the Secondary Obligations owing to them. If any payment to any Secured Creditor of its Pro Rata Share of any distribution would result in overpayment to such Secured Creditor, such excess amount shall instead be distributed in respect of the unpaid Primary Obligations or Secondary Obligations, as the case may be, owing to the other Secured Creditors, with each Secured Creditor holding Primary Obligations or Secondary Obligations, as the case may be, which have not been paid in full to receive an amount equal to such excess amount multiplied by a fraction the numerator of which is the unpaid Primary Obligations or Secondary Obligations, as the case may be, owing to such Secured Creditor entitled to distribution and the denominator of which is the unpaid Primary Obligations or Secondary Obligations, as the case may be, owing to all Secured Creditors entitled to such distribution.

(d)          All payments required to be made hereunder shall be made (x) if to the Secured Creditors on account of Credit Document Obligations, to the Collateral Agent for the account of such Secured Creditors, and (y) if to the Secured Creditors on account of Secured Hedging Agreements, to the trustee, paying agent or other similar representative for such Secured Creditors (the “Representative”), or, in the absence thereof, directly to such Secured Creditors.

(e)          For purposes of applying payments received in accordance with this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the Administrative Agent and (ii) the Representative or, in the absence of such a Representative, upon the Secured Creditors for a determination (which the Administrative Agent, each Representative and the Secured Creditors agree (or shall agree) to provide upon request of the Collateral Agent) of the outstanding Obligations owing to the Secured Creditors. Unless it has received written notice from a Secured Creditor to the contrary, the Administrative Agent and each Representative, in furnishing information pursuant to the preceding sentence, and the Collateral Agent, in acting hereunder, shall be entitled to assume that no Secondary Obligations are outstanding. Unless and until it has consented to the entry into a Secured Hedging Agreement, the Collateral Agent, in acting hereunder, shall be entitled to assume that no such Secured Hedging Agreement is in existence.

(f)          This Agreement is made with full recourse to each Assignor and pursuant to and upon all the warranties, representations, covenants and agreements on the part of such Assignor contained herein, in the Secured Debt Agreements and otherwise in writing in connection herewith or therewith. It is understood and agreed that the Assignors shall remain jointly and severally liable with respect to their Obligations to the extent of any deficiency between (i) the amount of the proceeds of the Collateral pledged by them hereunder and, without duplication, the collateral granted under the other Security Documents and (ii) the aggregate amount of such Obligations.

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(g)          It is understood and agreed by each Assignor and each Secured Creditor that the Collateral Agent shall have no liability for any determinations made by it in this Section 7.4, in each case except to the extent resulting from the gross negligence or willful misconduct of the Collateral Agent (as determined by a court of competent jurisdiction in a final and non-appealable decision). Each Assignor and each Secured Creditor also agrees that the Collateral Agent may (but shall not be required to), at any time and in its sole discretion, and with no liability resulting therefrom, petition a court of competent jurisdiction regarding any application of Collateral in accordance with the requirements hereof, and the Collateral Agent shall be entitled to wait for, and may conclusively rely on, any such determination.

7.5         Remedies Cumulative. Each and every right, power and remedy hereby specifically given to the Collateral Agent shall be in addition to every other right, power and remedy specifically given to the Collateral Agent under this Agreement, the other Secured Debt Agreements or now or hereafter existing at law, in equity or by statute and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Collateral Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission of the Collateral Agent in the exercise of any such right, power or remedy and no renewal or extension of any of the Obligations shall impair any such right, power or remedy or shall be construed to be a waiver of any Default or Event of Default or an acquiescence therein. No notice to or demand on any Assignor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Collateral Agent to any other or further action in any circumstances without notice or demand. In the event that the Collateral Agent shall bring any suit to enforce any of its rights hereunder and shall be entitled to judgment, then in such suit the Collateral Agent may recover reasonable expenses, including reasonable attorneys’ fees, and the amounts thereof shall be included in such judgment.

7.6         Discontinuance of Proceedings. In case the Collateral Agent shall have instituted any proceeding to enforce any right, power or remedy under this Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case the relevant Assignor, the Collateral Agent and each holder of any of the Obligations shall be restored to their former positions and rights hereunder with respect to the Collateral subject to the security interest created under this Agreement, and all rights, remedies and powers of the Collateral Agent shall continue, to the extent permitted by applicable law, as if no such proceeding had been instituted.

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ARTICLE VIII

INDEMNITY

8.1         Indemnity. (a) Without limiting the provisions of the other Secured Debt Agreements, the Assignors jointly and severally agrees to indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor (in its capacity as such) and their respective successors, assigns, employees, affiliates, advisors and agents (hereinafter in this Section 8.1 referred to individually as “Indemnitee,” and collectively as “Indemnitees”) harmless from any and all liabilities, obligations, losses, damages, injuries, penalties, claims, demands, actions (including removal or remedial actions), suits, judgments and any and all costs, expenses or disbursements (including reasonable attorneys’ and consultants’ fees and expenses) (for the purposes of this Section 8.1 the foregoing are collectively called “expenses”) of whatsoever kind and nature imposed on, asserted against or incurred by any of the Indemnitees in any way relating to or arising out of this Agreement or the enforcement of any of the terms hereof, or the preservation of any rights hereunder, or in any way relating to or arising out of the manufacture, ownership, ordering, purchase, delivery, control, acceptance, lease, financing, possession, operation, condition, sale, return or other disposition, or use of the Collateral (including, without limitation, latent or other defects, whether or not discoverable), the violation of the laws of any country, state or other governmental body or unit, any tort (including, without limitation, claims arising or imposed under the doctrine of strict liability, or for or on account of injury to or the death of any Person (including any Indemnitee), or property damage), or contract claim; provided that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent caused by the gross negligence or willful misconduct of such Indemnitee (as determined by a court of competent jurisdiction in a final and non-appealable decision). Each Assignor agrees that upon written notice by any Indemnitee of the assertion of such a liability, obligation, damage, injury, penalty, claim, demand, action, suit or judgment, the relevant Assignor shall assume full responsibility for the defense thereof. Each Indemnitee agrees to use its best efforts to promptly notify the relevant Assignor of any such assertion of which such Indemnitee has knowledge.

(b)          Without limiting the application of Section 8.1(a) hereof, the Assignors agree, jointly and severally, to pay or reimburse the Collateral Agent for any and all reasonable fees, costs and expenses of whatever kind or nature incurred in connection with the creation, preservation or protection of the Collateral Agent’s Liens on, and security interest in, the Collateral, including, without limitation, all fees and taxes in connection with the recording or filing of instruments and documents in all applicable public offices, payment or discharge of any taxes or Liens upon or in respect of the Collateral, premiums for insurance with respect to the Collateral and all other fees, costs and expenses in connection with protecting, maintaining or preserving the Collateral and the Collateral Agent’s interest therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions, suits or proceedings arising out of or relating to the Collateral.

(c)          Without limiting the application of Section 8.1(a) or (b) hereof, the Assignors agree, jointly and severally, to pay, indemnify and hold each Indemnitee harmless from and against any loss, costs, damages and expenses which such Indemnitee may suffer, expend or incur in consequence of or growing out of any misrepresentation by any Assignor in this Agreement or in any writing contemplated by or made or delivered pursuant to or in connection with this Agreement.

(d)          If and to the extent that the obligations of any Assignor under this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.

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8.2         Indemnity Obligations Secured by Collateral; Survival. Any amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement hereunder or under the other Credit Documents shall constitute Obligations secured by the Collateral. The indemnity obligations of each Assignor contained in this Article VIII shall continue in full force and effect notwithstanding the full payment of all of the other Obligations and notwithstanding the full payment of all the Notes issued, and Loans made, under the Credit Agreement, the termination of all Secured Hedging Agreements, and the payment of all other Obligations and notwithstanding the discharge thereof and the occurrence of the Termination Date.

ARTICLE IX

DEFINITIONS

The following terms shall have the meanings herein specified. Such definitions shall be equally applicable to the singular and plural forms of the terms defined.

“Account” shall mean any “account” as such term is defined in the UCC as in effect on the date hereof in the State of New York, and in any event shall include but shall not be limited to, all rights to payment of any monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State. Without limiting the foregoing, the term “account” shall include all Health-Care-Insurance Receivables.

“Administrative Agent” shall have the meaning provided in the recitals of this Agreement.

“Agreement” shall mean this Security Agreement as the same may be amended, modified, restated and/or supplemented from time to time in accordance with its terms.

“Agreement Among Lenders” shall have the meaning ascribed thereto in the Credit Agreement.

“As-Extracted Collateral” shall mean “as-extracted collateral” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Assignor” shall have the meaning provided in the first paragraph of this Agreement.

“Cash Collateral Account” shall mean a non-interest bearing cash collateral account maintained with, and in the sole dominion and control of, the Collateral Agent for the benefit of the Secured Creditors.

“Chattel Paper” shall mean “chattel paper” as such term is defined in the UCC as in effect on the date hereof in the State of New York. Without limiting the foregoing, the term “Chattel Paper” shall in any event include all Tangible Chattel Paper and all Electronic Chattel Paper.

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“Collateral” shall have the meaning provided in Section 1.1(a) of this Agreement.

“Collateral Agent” shall have the meaning provided in the first paragraph of this Agreement.

“Commercial Tort Claims” shall mean “commercial tort claims” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Contract Rights” shall mean all rights of any Assignor under each Contract, including, without limitation, (i) any and all rights to receive and demand payments under any or all Contracts, (ii) any and all rights to receive and compel performance under any or all Contracts, and (iii) any and all other rights, interests and claims now existing or in the future arising in connection with any or all Contracts.

“Contracts” shall mean all contracts between any Assignor and one or more additional parties (including, without limitation, any Secured Hedging Agreements, licensing agreements and any partnership agreements, joint venture agreements and limited liability company agreements).

“Copyrights” shall mean any United States or foreign copyright now or hereafter owned by any Assignor, including any registrations of any copyrights, in the United States Copyright Office or any foreign equivalent office, as well as any application for a copyright registration now or hereafter made with the United States Copyright Office or any foreign equivalent office by any Assignor.

“Credit Agreement” shall have the meaning provided in the recitals of this Agreement.

“Credit Document Obligations” shall have the meaning provided in the definition of “Obligations” in this Article IX.

“Deposit Accounts” shall mean all “deposit accounts” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Documents” shall mean “documents” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Domain Names” shall mean all Internet domain names and associated URL addresses in or to which any Assignor now or hereafter has any right, title or interest.

“Electronic Chattel Paper” shall mean “electronic chattel paper” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Equipment” shall mean any “equipment” as such term is defined in the UCC as in effect on the date hereof in the State of New York now or hereafter owned by any Assignor, and in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by any Assignor and any and all additions, substitutions and replacements of any of the foregoing and all accessions thereto, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

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“Excluded Equity Interests” shall mean any voting stock in excess of 66⅔% of the total combined voting power of all classes of Equity Interests of any Foreign Subsidiary.

“Event of Default” shall mean any Event of Default (or similar term) under, and as defined in, the Credit Agreement or any Secured Hedging Agreement entered into with a Secured Creditor and shall in any event include, without limitation, any payment default on any of the Obligations after the expiration of any applicable grace period.

“General Intangibles” shall mean “general intangibles” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Goods” shall mean “goods” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Health-Care-Insurance Receivable” shall mean any “health-care-insurance receivable” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Indemnitee” shall have the meaning provided in Section 8.1(a) of this Agreement.

“Instrument” shall mean “instruments” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Inventory” shall mean merchandise, inventory and goods, and all additions, substitutions and replacements thereof and all accessions thereto, wherever located, together with all goods, supplies, incidentals, packaging materials, labels, materials and any other items used or usable in manufacturing, processing, packaging or shipping same, in all stages of production from raw materials through work in process to finished goods, and all products and proceeds of whatever sort and wherever located any portion thereof which may be returned, rejected, reclaimed or repossessed by the Collateral Agent from any Assignor’s customers, and shall specifically include all “inventory” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Investment Property” shall mean “investment property” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Lenders” shall have the meaning provided in the recitals of this Agreement.

“Letter-of-Credit Rights” shall mean “letter-of-credit rights” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Location” of any Assignor, shall mean such Assignor’s “location” as determined pursuant to Section 9-307 of the UCC.

“Marks” shall mean all right, title and interest in and to any trademarks, service marks and trade names now held or hereafter acquired by any Assignor, including any registration or application for registration of any trademarks and service marks now held or hereafter acquired by any Assignor, which are registered or filed in the United States Patent and Trademark Office or the equivalent thereof in any state of the United States or any equivalent foreign office or agency, as well as any unregistered trademarks and service marks used by any Assignor and any trade dress including logos, designs, fictitious business names and other business identifiers used by any Assignor.

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“Motor Vehicle Statute” shall have the meaning provided in Section 3.14(a) of this Agreement.

“Motor Vehicles” shall have the meaning provided in Section 3.14(a) of this Agreement.

“Obligations” shall mean and include, as to any Assignor, all of the following:

(i)          the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, principal, premium, interest, fees, costs and indemnities (including, in each case, without limitation, all interest, fees and expenses that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Assignor or any Subsidiary thereof at the rate provided for in the respective documentation, whether or not a claim for post-petition interest, fee or expense is allowed in any such proceeding) of all Credit Parties to the Secured Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with, the Credit Agreement and the other Credit Documents (including, without limitation, in the event such Assignor is Holdings or a Subsidiary Guarantor that becomes party hereto, all such obligations, liabilities and indebtedness of such Assignor under the Holdings Guaranty or the applicable Subsidiaries Guaranty, respectively) and the due performance and compliance by all Credit Parties of and with all of the terms, conditions and agreements contained in the Credit Agreement and in such other Credit Documents (all such obligations, liabilities and indebtedness under this clause (i), except to the extent consisting of obligations, liabilities or indebtedness with respect to Secured Hedging Agreements, being herein collectively called the “Credit Document Obligations”);

(ii)         the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, in each case, without limitation, all interest, fees and expenses that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Credit Party or any of its Subsidiaries at the rate provided for in the respective documentation, whether or not a claim for post-petition interest, fee or expense is allowed in any such proceeding) owing by all Credit Parties to the Secured Creditors, now existing or hereafter incurred under, arising out of or in connection with any Secured Hedging Agreement to which such Credit Party is a party, whether such Secured Hedging Agreement is now in existence or hereinafter arising (including, without limitation, in the event such Assignor is Holdings or a Subsidiary Guarantor that becomes party hereto, all such obligations, liabilities and indebtedness of such Assignor under the Holdings Guaranty or the applicable Subsidiaries Guaranty, respectively), and the due performance and compliance by such Credit Parties of and with all of the terms, conditions and agreements contained in each such Secured Hedging Agreement (all such obligations, liabilities and indebtedness under this clause (ii) being herein collectively called the “Other Obligations”);

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(iii)        any and all sums advanced by the Collateral Agent in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral;

(iv)        in the event of any proceeding for the collection or enforcement of any indebtedness, obligations, or liabilities of such Assignor referred to in clauses (i) and (ii) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with reasonable attorneys’ fees and court costs;

(v)         all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 8.1 of this Agreement; it being acknowledged and agreed that the “Obligations” shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement; and

(vi)        all amounts owing to either the Collateral Agent or Administrative Agent pursuant to any of the Credit Documents in its capacity as such.

“Other Obligations” shall have the meaning provided in the definition of “Obligations”.

“Patents” shall mean any United States or foreign patent in or to which any Assignor now or hereafter has any right, title or interest therein, and any divisions, continuations (including, but not limited to, continuations-in-parts) and improvements thereof, as well as any application for a United States or foreign patent now or hereafter made by any Assignor.

“Permits” shall mean, to the extent permitted to be assigned by the terms thereof or by applicable law, all licenses, permits, rights, orders, variances, franchises or authorizations of or from any governmental authority or agency.

“Pledged Company” shall mean, each Person whose Equity Interests are pledged by any Assignor as Collateral to the Secured Parties.

“Primary Obligations” shall have the meaning provided in Section 7.4(b) of this Agreement.

“Pro Rata Share” shall have the meaning provided in Section 7.4(b) of this Agreement.

“Promissory Note” shall mean “promissory notes” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

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“Proceeds” shall mean all “proceeds” as such term is defined in the UCC as in effect in the State of New York on the date hereof and, in any event, shall also include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Collateral Agent or any Assignor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to any Assignor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any person acting under color of governmental authority) and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

“Registered Organization” shall have the meaning provided in the UCC as in effect in the State of New York.

“Representative” shall have the meaning provided in Section 7.4(d) of this Agreement.

“Required Secured Creditors” shall mean (i) at any time when any Credit Document Obligations are outstanding (other than contingent indemnity obligations that are not then due and payable), the Required Lenders (or, with respect to amendments that under Section 14.12 of the Credit Agreement require the consent of all Lenders, all of the Lenders) and (ii) at any time after all of the Credit Document Obligations have been paid in full in cash (other than contingent indemnity obligations that are not then due and payable), the holders of a majority in outstanding principal amount of the Other Obligations.

“Secondary Obligations” shall have the meaning provided in Section 7.4(b) of this Agreement.

“Secured Creditors” shall have the meaning set forth in the recitals hereto, and shall include any Lender or an affiliate of a Lender that is counterparty to any Secured Hedging Agreement.

“Secured Debt Agreements” shall mean and include (i) this Agreement and the other Credit Documents and (ii) the Secured Hedging Agreements entered into with any Secured Creditor.

“Secured Hedging Agreements” shall mean and include any Lender-Provided Interest Rate Protection Agreements or Lender-Provided Other Hedging Agreements.

“Software” shall mean “software” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Supporting Obligations” shall mean any “supporting obligation” as such term is defined in the UCC as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor, or in which any Assignor has any rights, and, in any event, shall include, but shall not be limited to, all of such Assignor’s rights in any Letter-of-Credit Right or secondary obligation that supports the payment or performance of, and all security for, any Account, Chattel Paper, Document, General Intangible, Instrument or Investment Property.

“Tangible Chattel Paper” shall mean “tangible chattel paper” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

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“Termination Date” shall have the meaning provided in Section 10.8(a) of this Agreement.

“Timber-to-be-Cut” shall mean “timber-to-be-cut” as such term is defined in the UCC as in effect on the date hereof in the State of New York.

“Trade Secret Rights” shall have the meaning provided in Section 5.1 of this Agreement.

“Trade Secrets” shall mean any secretly held existing engineering or other data, information, production procedures and other know-how relating to the design manufacture, assembly, installation, use, operation, marketing, sale and/or servicing of any products or business of an Assignor worldwide whether written or not.

“UCC” shall mean the Uniform Commercial Code in the State of New York from time to time; provided that all references herein to specific sections or subsections of the UCC are references to such sections or subsections, as the case may be, of the Uniform Commercial Code as in effect in the State of New York on the date hereof.

ARTICLE X

MISCELLANEOUS

10.1       Notices. Except as otherwise provided herein, all notices and communications hereunder shall be in writing (including via email, facsimile, and other electronic communication) and mailed, emailed, faxed or otherwise delivered and all such notices and communications shall, when mailed (certified return receipt required), emailed, faxed, or sent by overnight courier, be effective when deposited in the mails, delivered to the email service provider or overnight courier, as the case may be, or sent by fax or email, except that notices and communications to the Collateral Agent or any Assignor shall not be effective until received by the Collateral Agent or the Administrative Borrower on behalf of such Assignor, as the case may be. All notices and other communications shall be in writing and addressed as follows:

(a)          if to any Assignor, at:

c/o STG, Inc.

11091 Sunset Hills Road, suite 200

Reston, VA 20190

Attention: Keith A. Lynch

Telephone No.: (703) 691-2480 x1172

Facsimile No.: (703) 691-3261                  

Email: Klynch@stg.com

With a copy to:

Morrison & Foerster LLP

250 W. 55^th Street

New York, NY 10019-9601

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Attention: Geoffrey R. Peck, Esq.

Telephone No.: (212) 336-4183

Facsimile No.: (212) 468-7900

Email:Gpeck@mofo.com

(b)          if to the Collateral Agent, at:

600 Galleria Parkway, Suite 890

Atlanta, GA 30339

Facsimile No.: (770)-953-6046

Attention: Heath J. Hayes

With a copy to:

Blank Rome LLP

The Chrysler Building

405 Lexington Avenue

New York, NY 10174-0208

Attention: Lawrence F. Flick II

Telephone No.: (212) 885-5556

Facsimile No.: (212) 832-5556

Email: Flick@blankrome.com

(c)          if to any Secured Creditor (other than the Collateral Agent), at such address as such Secured Creditor shall have specified in the Credit Agreement; or at such other address or addressed to such other individual as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.

10.2       Waiver; Amendment. Except as provided in Sections 10.8 and 10.12 hereof, none of the terms and conditions of this Agreement or any other Security Document may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Assignor directly affected thereby (it being understood that the addition or release of any Assignor hereunder shall not constitute a change, waiver, discharge or termination affecting any Assignor other than the Assignor so added or released) and (in each case) the Collateral Agent (with the written consent of the Required Secured Creditors); provided, however, (i) that supplements to the Annexes hereto and to the other Security Documents may be made without the consent of any Secured Creditor, other than the Collateral Agent, as provided herein or therein, and (ii) Assignors may be released from their obligations hereunder and under the other Security Documents and new Assignors may be added hereto and to the other Security Documents without the consent of any Secured Creditors other than the Collateral Agent, as provided herein or therein (subject to Section 14.12 of the Credit Agreement).

10.3       Obligations Absolute. The obligations of each Assignor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Assignor; (b) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement or any other Secured Debt Agreement; or (c) any amendment to or modification of any Secured Debt Agreement or any security for any of the Obligations; whether or not such Assignor shall have notice or knowledge of any of the foregoing.

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10.4         Successors and Assigns. This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or termination as set forth in Section 10.8 hereof, (ii) be binding upon each Assignor, its successors and assigns; provided, however, that no Assignor shall assign any of its rights or obligations hereunder or under the other Credit Documents without the prior written consent of the Collateral Agent (with the prior written consent of the Required Secured Creditors), and (iii) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent, the other Secured Creditors and their respective successors, transferees and assigns. All agreements, statements, representations and warranties made by each Assignor herein or in any certificate or other instrument delivered by such Assignor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Secured Debt Agreements regardless of any investigation made by the Secured Creditors or on their behalf.

10.5         Headings Descriptive. The headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

10.6         GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH ASSIGNOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH ASSIGNOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH ASSIGNOR. EACH ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH ASSIGNOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY ASSIGNOR IN ANY OTHER JURISDICTION.

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(b)          EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c)          EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

10.7       Assignor’s Duties. It is expressly agreed, anything herein contained to the contrary notwithstanding, that, prior to the Termination Date, each Assignor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and, except as otherwise provided hereunder, the Collateral Agent shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Collateral Agent be required or obligated in any manner to perform or fulfill any of the obligations of any Assignor under or with respect to any Collateral.

10.8       Termination; Release. (a) After the Termination Date, this Agreement shall terminate (provided that all indemnities set forth herein including, without limitation in Article 8 hereof, shall survive such termination) and the Collateral Agent, at the request and expense of the respective Assignor, will promptly execute and deliver to the Administrative Borrower on behalf of such Assignor a proper instrument or instruments (including UCC termination statements on form UCC-3) acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Collateral Agent and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement. As used in this Agreement, “Termination Date” shall mean the date upon which the Commitments under the Credit Agreement have been terminated, all Secured Hedging Agreements have been terminated and all Loans thereunder have been repaid in full, and all other Obligations (other than indemnities described in the Credit Documents, in each case which are not then due and payable) then due and payable have been paid in full in cash in accordance with the terms thereof.

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(b)          In the event that any part of the Collateral is sold or otherwise disposed of (to a Person other than a Credit Party or a Subsidiary thereof) (x) at any time prior to the time at which all Credit Document Obligations have been paid in full, in connection with a sale or disposition permitted by the Secured Debt Agreements or is otherwise released at the direction of the Required Lenders (or all the Lenders if required by the Credit Agreement) or (y) at any time thereafter, to the extent permitted by the other Secured Debt Agreements, and in the case of clauses (x) and (y), the proceeds of such sale or other disposition (or from such release) are applied in accordance with the terms of the Credit Agreement or such other Secured Debt Agreements, as the case may be, to the extent required to be so applied, the Collateral Agent, at the request and expense of such Assignor, will duly release from the security interest created hereby (and will execute and deliver such documentation, including termination or partial release statements and the like in connection therewith) and assign, transfer and deliver to the Administrative Borrower on behalf of such Assignor or to the applicable purchaser or transferee (if any) specified by such Assignor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or otherwise disposed of, or released, and as may be in the possession of the Collateral Agent and has not theretofore been released pursuant to this Agreement. Furthermore, upon the release of any Subsidiary Guarantor from the Subsidiaries Guaranty in accordance with the provisions thereof, such Assignor (and the Collateral at such time assigned by the respective Assignor pursuant hereto) shall be released from this Agreement.

(c)          At any time that an Assignor desires that the Collateral Agent take any action to acknowledge or give effect to any release of Collateral pursuant to the foregoing Section 10.8(a) or (b), the Administrative Borrower shall deliver to the Collateral Agent a certificate signed by a senior officer of such Assignor stating that the release of the respective Collateral is permitted pursuant to such Section 10.8(a) or (b). At any time that Holdings or the respective Assignor desires that a Subsidiary of Holdings which has been released from the Subsidiaries Guaranty be released hereunder as provided in the last sentence of Section 10.8(b) hereof, it shall deliver to the Collateral Agent a certificate signed by an authorized officer of Holdings and the respective Assignor stating that the release of the respective Assignor (and its Collateral) is permitted pursuant to such Section 10.8(b).

(d)          The Collateral Agent shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in the absence of gross negligence and willful misconduct believes to be in accordance with) this Section 10.8.

10.9       Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart hereof by facsimile or electronic transmission shall be effective as delivery of an original executed counterpart hereof.

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10.10     Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.11     The Collateral Agent and the other Secured Creditors. The Collateral Agent will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed that the obligations of the Collateral Agent as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Section 13 of the Credit Agreement. The Collateral Agent shall act hereunder on the terms and conditions set forth herein and in Section 13 of the Credit Agreement.

10.12     Additional Assignors. It is understood and agreed that any Subsidiary Guarantor that desires to become an Assignor hereunder, or is required to execute a counterpart of this Agreement after the date hereof pursuant to the respective Secured Debt Agreements, shall become an Assignor hereunder by executing a counterpart hereof and delivering same to the Collateral Agent, or by executing a joinder to this Agreement, (y) delivering supplements to Annexes A through F, inclusive, and H through K, inclusive, hereto as are necessary to cause such Annexes to be complete and accurate with respect to such additional Assignor on such date, and (z) taking all actions as specified in this Agreement as would have been taken by such Assignor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Collateral Agent and with all documents and actions required above to be taken to the reasonable satisfaction of the Collateral Agent and the Administrative Agent.

10.13     Release of Assignors. If at any time all of the Equity Interests of any Assignor owned by Holdings or any of their Subsidiaries are sold to a Person other than a Credit Party in a transaction permitted pursuant to the Credit Agreement (and which does not violate the terms of any other Secured Debt Agreement then in effect), then, such Assignor shall be released as a Assignor pursuant to this Agreement without any further action hereunder (it being understood that the sale of all of the Equity Interests in any Person that owns, directly or indirectly, all of the Equity Interests in any Assignor shall be deemed to be a sale of all of the Equity Interests in such Assignor for purposes of this Section), and the Collateral Agent is authorized and directed to execute and deliver such instruments of release as are reasonably satisfactory to it. At any time that Holdings desires that a Assignor be released from this Agreement as provided in this Section 10.13, Holdings shall deliver to the Collateral Agent a certificate signed by an authorized officer of Holdings stating that the release of such Assignor is permitted pursuant to this Section 10.13. If requested by Collateral Agent (although the Collateral Agent shall have no obligation to make any such request), any of the Assignors shall furnish legal opinions (from counsel reasonably acceptable to the Collateral Agent) to the effect set forth in the immediately preceding sentence. The Collateral Agent shall have no liability whatsoever to any other Secured Creditor as a result of the release of any Assignor by it in accordance with, or which it believes to be in accordance with, this Section 10.13.

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10.14       Agreement Among Lenders. Each of the undersigned Assignors hereby acknowledges the terms and provisions of the Agreement Among Lenders and agrees to be bound by such terms solely in relation to the application of payments or proceeds made as set forth in the Agreement Among Lenders, including Section 7 thereof. Notwithstanding anything to the contrary contained herein or in any other Credit Document, in the event of any conflict or inconsistency between this Agreement and the Agreement Among Lenders, the terms of the Agreement Among Lenders shall govern and control.

10.15       Administrative Borrower. Each Assignor confirms and accepts that the provisions contained in Section 14.25 of the Credit Agreement applicable to each Assignor are incorporated by reference herein as if contained herein, and are applicable to each Assignor hereunder.

[Remainder of this page intentionally left blank; signature page follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.

GLOBAL DEFENSE & NATIONAL
SECURITY SYSTEMS, INC.,
as an Assignor
By:	/s/ Damian Perl
	Name:	Damian Perl
	Title:	Chairman of the Board
STG GROUP, INC.,
as an Assignor
By:	/s/ Paul Fernandes
	Name:	Paul Fernandes
	Title:	President
STG, INC.,
as an Assignor
By:	/s/ Paul Fernandes
	Name:	Paul Fernandes
	Title:	President
ACCESS SYSTEMS, INCORPORATED,
as an Assignor
By:	/s/ Paul Fernandes
	Name:	Paul Fernandes
	Title:	Chief Operating Officer

[Signature Page to Security Agreement]

Accepted and Agreed to:
PNC BANK, NATIONAL ASSOCIATION,
as Collateral Agent
By:	/s/ Virginia L. Kiseljack
	Name:	Virginia L. Kiseljack
	Title:	Senior Vice President

[Signature Page to Security Agreement]

EX-10.3

Exhibit 10.3

PLEDGE AGREEMENT

among

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.,

STG GROUP, INC.,

STG, INC.,

ACCESS SYSTEMS, INCORPORATED,

SUCH OTHER PLEDGORS PARTY HERETO,

as the PLEDGORS,

and

PNC BANK, NATIONAL ASSOCIATION,

as PLEDGEE

Dated as of November 23, 2015

Table of Contents

			Page
1.	SECURITY FOR OBLIGATIONS		2
2.	DEFINITIONS		3
3.	PLEDGE OF SECURITIES, ETC		7
	3.1	Pledge	7
	3.2	Procedures	9
	3.3	Subsequently Acquired Collateral	11
	3.4	Transfer Taxes	11
	3.5	Definition of Pledged Notes	12
	3.6	Certain Representations and Warranties Regarding the Collateral	12
4.	APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC		12
5.	VOTING, ETC., WHILE NO EVENT OF DEFAULT		12
6.	DIVIDENDS AND OTHER DISTRIBUTIONS		13
7.	REMEDIES IN CASE OF AN EVENT OF DEFAULT		13
8.	REMEDIES, CUMULATIVE, ETC		15
9.	RECEIVER’S POWERS		15
10.	APPLICATION OF PROCEEDS		16
11.	PURCHASERS OF COLLATERAL		16
12.	INDEMNITY; WAIVER OF CLAIMS		17
	12.1	Indemnification	17
	12.2	Waiver of Claims	17
13.	PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER		18
14.	FURTHER ASSURANCES; POWER-OF-ATTORNEY		19
15.	THE PLEDGEE AS COLLATERAL AGENT		19
16.	TRANSFER BY THE PLEDGORS		19
17.	REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS		19
18.	LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION); JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; CHANGES THERETO; ETC		22
19.	PLEDGORS’ OBLIGATIONS ABSOLUTE, ETC		23
20.	REGISTRATION, ETC		23

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Table of Contents

(CONTINUED)

		Page
21.	TERMINATION; RELEASE	24
22.	NOTICES, ETC	25
23.	WAIVER; AMENDMENT; OBLIGATIONS ABSOLUTE	27
24.	SUCCESSORS AND ASSIGNS	27
25.	HEADINGS DESCRIPTIVE	27
26.	GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL	28
27.	PLEDGOR’S DUTIES	28
28.	COUNTERPARTS	29
29.	SEVERABILITY	28
30.	RECOURSE	28
31.	ADDITIONAL PLEDGORS	29
32.	LIMITED OBLIGATIONS	29
33.	RELEASE OF PLEDGORS	29
34.	AGREEMENT AMONG LENDERS	30
35.	ADMINISTRATIVE BORROWER	30

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ANNEX A	-	SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION, JURISDICTION OF ORGANIZATION, LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS
ANNEX B	-	SCHEDULE OF SUBSIDIARIES
ANNEX C-1	-	SCHEDULE OF STOCK
ANNEX C-2	-	SCHEDULE OF CERTIFICATED SECURITIES
ANNEX D	-	SCHEDULE OF NOTES
ANNEX E	-	SCHEDULE OF LIMITED LIABILITY COMPANY INTERESTS
ANNEX F	-	SCHEDULE OF PARTNERSHIP INTERESTS
ANNEX G	-	SCHEDULE OF CHIEF EXECUTIVE OFFICES
ANNEX H	-	FORM OF AGREEMENT REGARDING UNCERTIFICATED SECURITIES, LIMITED LIABILITY COMPANY INTERESTS AND PARTNERSHIP INTERESTS

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PLEDGE AGREEMENT

PLEDGE AGREEMENT (as amended, modified or supplemented from time to time, this “Agreement”), dated as of November 23, 2015, among each of the undersigned pledgors (each, a “Pledgor” and, together with any other entity that becomes a pledgor hereunder pursuant to Section 31 hereof, the “Pledgors”) and PNC Bank, National Association, as collateral agent (the “Collateral Agent” and, together with any successor collateral agent, the “Pledgee”), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.

WITNESSETH:

WHEREAS, Global Defense & National Security Systems, Inc. (which shall be renamed STG Group, Inc. immediately following the closing), a Delaware corporation (“Holdings”) (whose obligations as Borrower (as defined in the Credit Agreement) under the Credit Agreement will be immediately assumed by STG, Inc., a Virginia corporation (“STG”) and Access Systems, Incorporated, a Virginia corporation (“Access”) immediately upon closing), STG Group, Inc. (which shall be renamed STG Group Holdings, Inc. immediately following the closing), a Delaware corporation (“Parent”), the Guarantors from time to time party thereto, the lenders from time to time party thereto (the “Lenders”), MC Admin Co LLC, as administrative agent (together with any successor administrative agent, the “Administrative Agent”), PNC Bank, National Association as collateral agent (together with any successor collateral agent, the “Collateral Agent”) have entered into a Credit Agreement, dated as of November 23, 2015 (as amended, modified, restated and/or supplemented from time to time, the “Credit Agreement”; defined terms used but not defined herein shall have the respective meaning ascribed thereto in the Credit Agreement), providing for the making of Loans to the Initial Borrower and the Borrowers, as contemplated therein (the Lenders, the Administrative Agent and the Collateral Agent are herein called the “Secured Creditors”);

WHEREAS, it is a condition precedent to the making of Loans to the Initial Borrower and the Borrowers under the Credit Agreement that each Pledgor shall have executed and delivered to the Pledgee this Agreement;

WHEREAS, pursuant to the Holdings Guaranty, Holdings has jointly and severally guaranteed the payment and performance when due of all Guaranteed Obligations as described therein;

WHEREAS, pursuant to the Subsidiaries Guaranty, the Subsidiaries party thereto have jointly and severally guaranteed the payment and performance when due of all Guaranteed Obligations as described therein; and

WHEREAS, each Pledgor will obtain benefits from the incurrence of Loans by the Initial Borrower and the Borrowers under the Credit Agreement and, if applicable, the entering into by the Borrowers and/or one or more of their Subsidiaries of Secured Hedging Agreements and, accordingly, desires to enter into this Agreement in order to satisfy the conditions described in the preceding recitals and to induce the Lenders to make Loans and enter into Secured Hedging Agreements to the Borrowers;

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby makes the following representations and warranties to the Pledgee for the benefit of the Secured Creditors and hereby covenants and agrees with the Pledgee for the benefit of the Secured Creditors as follows:

1.          SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor for the benefit of the Secured Creditors to secure:

(i)          the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, principal, premium (including any Prepayment Premium), interest, fees, costs, and indemnities (including in each case, without limitation, all interest, fees or expenses that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Pledgor or any Subsidiary thereof at the rate provided for in the respective documentation, whether or not a claim for post-petition interest, fee or expense is allowed in any such proceeding) of all Credit Parties to the Secured Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with, the Credit Agreement and the other Credit Documents (including, in the case of Holdings or any Subsidiary Guarantor that becomes party hereto, all such obligations, liabilities and indebtedness of such Pledgor under the Holdings Guaranty or the applicable Subsidiary Guaranty, respectively) and the due performance and compliance by all Credit Parties of and with all of the terms, conditions and agreements contained in the Credit Agreement and in such other Credit Documents (all such obligations, liabilities and indebtedness under this clause (i) except to the extent consisting of obligations, liabilities or indebtedness with respect to Secured Hedging Agreements, being herein collectively called the “Credit Document Obligations”);

(ii)         the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, in each case, without limitation, all interest, fees and expenses that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Credit Party or any of its Subsidiaries at the rate provided for in the respective documentation, whether or not a claim for post-petition interest, fee or expense is allowed in any such proceeding) owing by all Credit Parties to the Secured Creditors under, or with respect to (including, in the case of Holdings or any Subsidiary Guarantor that becomes party hereto, all such obligations, liabilities and indebtedness of such Pledgor under the Holdings Guaranty or the applicable Subsidiary Guaranty, respectively), each Secured Hedging Agreement to which such Credit Party is a party, whether such Secured Hedging Agreement is now in existence or hereafter arising and the due performance and compliance by such Pledgor of and with all of the terms, conditions and agreements contained therein (all such obligations, liabilities and indebtedness described in this clause (ii) being herein collectively called the “Other Obligations”);

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(iii)        any and all sums advanced by the Pledgee in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral;

(iv)        in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of such Pledgor referred to in clauses (i) and (ii) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Pledgee of its rights hereunder, together with reasonable attorneys’ fees and court costs;

(v)         all amounts paid by any Secured Creditor as to which such Secured Creditor has the right to reimbursement under Section 12 of this Agreement; and

(vi)        all amounts owing to the Administrative Agent, the Pledgee or any of their respective affiliates pursuant to any of the Credit Documents in its capacity as such;

all such obligations, liabilities, indebtedness, sums and expenses set forth in clauses (i) through (vi) of this Section 1 being herein collectively called the “Obligations,” it being acknowledged and agreed that the “Obligations” shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.

2.          DEFINITIONS. (a) Reference to singular terms shall include the plural and vice versa.

(b)          The following capitalized terms used herein shall have the definitions specified below:

“Administrative Agent” shall have the meaning set forth in the recitals hereto.

“Adverse Claim” shall have the meaning given such term in Section 8-102(a)(1) of the UCC.

“Agreement” shall have the meaning set forth in the first paragraph hereof.

“Agreement Among Lenders” shall have the meaning ascribed thereto in the Credit Agreement.

“Certificated Security” shall have the meaning given such term in Section 8-102(a)(4) of the UCC.

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“Clearing Corporation” shall have the meaning given such term in Section 8-102(a)(5) of the UCC.

“Collateral” shall have the meaning set forth in Section 3.1 hereof.

“Collateral Accounts” shall mean any and all accounts established and maintained by the Pledgee in the name of any Pledgor to which Collateral may be credited.

“Credit Agreement” shall have the meaning set forth in the recitals hereto.

“Credit Document Obligations” shall have the meaning set forth in Section 1(i) hereof.

“Equity Interest” of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interest in (however designated) equity of such Person, including, without limitation, any common stock, preferred stock, any limited or general partnership interest and any limited liability company membership interest.

“Event of Default” shall mean any Event of Default (or similar term) under, and as defined in, the Credit Agreement or in any Secured Hedging Agreement entered into with a Secured Creditor and shall in any event include, without limitation, any payment default on any of the Obligations after the expiration of any applicable grace period.

“Excluded Equity Interests” shall mean any voting stock in excess of 66⅔% of the total combined voting power of all classes of Equity Interests of any Foreign Subsidiary.

“Financial Asset” shall have the meaning given such term in Section 8-102(a)(9) of the UCC.

“Holdings” shall have the meaning set forth in the recitals hereto.

“Holdings Guaranty” shall mean the guaranty provided by Holdings pursuant to Section 15 of the Credit Agreement.

“Indemnitees” shall have the meaning set forth in Section 12 hereof.

“Instrument” shall have the meaning given such term in Section 9-102(a)(47) of the UCC.

“Investment Property” shall have the meaning given such term in Section 9-102(a)(49) of the UCC.

“Lenders” shall have the meaning set forth in the recitals hereto.

“Limited Liability Company Assets” shall mean all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all limited liability company capital and interest in other limited liability companies), at any time owned by any Pledgor or represented by any Limited Liability Company Interest.

4

“Limited Liability Company Interests” shall mean the entire limited liability company membership interest at any time owned by any Pledgor in any limited liability company.

“Location” of any Pledgor shall mean such Pledgor’s “location” as determined pursuant to Section 9-307 of the UCC.

“Notes” shall mean (x) all intercompany notes at any time issued to each Pledgor and (y) all other promissory notes from time to time issued to, or held by, each Pledgor.

“Obligations” shall have the meaning set forth in Section 1 hereof.

“Other Obligations” shall have the meaning set forth in Section 1(ii) hereof.

“Partnership Assets” shall mean all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all partnership capital and interest in other partnerships), at any time owned or represented by any Partnership Interest.

“Partnership Interest” shall mean the entire general partnership interest or limited partnership interest at any time owned by any Pledgor in any general partnership or limited partnership.

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

“Pledged Notes” shall have the meaning set forth in Section 3.5 hereof.

“Pledgee” shall have the meaning set forth in the first paragraph hereof.

“Pledgor” shall have the meaning set forth in the first paragraph hereof.

“Proceeds” shall have the meaning given such term in Section 9-102(a)(64) of the UCC and, in any event, shall also include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Pledgee or any Pledgor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to any Pledgor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any Person acting under color of governmental authority), and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

“Registered Organization” shall mean a “registered organization” as such term is defined in Section 9-102 (a) (70) of the UCC.

“Required Lenders” shall have the meaning given such term in the Credit Agreement.

“Required Secured Creditors” shall have the meaning provided in the Security Agreement.

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“Secured Creditors” shall have the meaning set forth in the recitals hereto, and shall include any Lender or an affiliate of a Lender that is counterparty to any Secured Hedging Agreement.

“Secured Debt Agreements” shall mean and include (i) this Agreement and the other Credit Documents and (ii) the Secured Hedging Agreements entered into with any Secured Creditor.

“Secured Hedging Agreements” shall mean and include any Lender-Provided Interest Rate Protection Agreements or Lender-Provided Other Hedging Agreements.

“Securities Account” shall have the meaning given such term in Section 8-501(a) of the UCC.

“Securities Act” shall mean the Securities Act of 1933, as amended, as in effect from time to time.

“Securities Intermediary” shall have the meaning given such term in Section 8-102(14) of the UCC.

“Security” and “Securities” shall have the meaning given such term in Section 8-102(a)(15) of the UCC and shall in any event also include all Stock and all Notes.

“Security Entitlement” shall have the meaning given such term in Section 8-102(a)(17) of the UCC.

“Stock” shall mean all of the issued and outstanding shares of capital stock at any time owned by any Pledgor of any corporation.

“Subsidiary” means, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person, and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time.

“Termination Date” shall have the meaning set forth in Section 21 hereof.

“UCC” shall mean the Uniform Commercial Code as in effect in the State of New York from time to time; provided that all references herein to specific sections or subsections of the UCC are references to such sections or subsections, as the case may be, of the Uniform Commercial Code as in effect in the State of New York on the date hereof.

“Uncertificated Security” shall have the meaning given such term in Section 8-102(a)(18) of the UCC.

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3.          PLEDGE OF SECURITIES, ETC.

3.1         Pledge. To secure the Obligations now or hereafter owed or to be performed by such Pledgor, each Pledgor does hereby grant, pledge and assign to the Pledgee for the benefit of the Secured Creditors, and does hereby create a continuing security interest in favor of the Pledgee for the benefit of the Secured Creditors in, all of its right, title and interest in and to the following, whether now existing or hereafter from time to time acquired (collectively, the “Collateral”):

(a)         each of the Collateral Accounts, including any and all assets of whatever type or kind deposited by such Pledgor in each such Collateral Account, whether now owned or hereafter acquired, existing or arising, including, without limitation, all Financial Assets, Investment Property, monies, checks, drafts, Instruments, Securities or interests therein of any type or nature deposited or required by the Credit Agreement or any other Secured Debt Agreement to be deposited in each such Collateral Account, and all investments and all certificates and other Instruments (including depository receipts, if any) from time to time representing or evidencing the same, and all dividends, interest, distributions, cash and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing;

(b)         all Securities owned or held by such Pledgor from time to time and all options and warrants owned by such Pledgor from time to time to purchase Securities, together with all rights, privileges, authority and powers of such Pledgor relating to such Securities in each such issuer or under any organizational document of each such issuer, and the certificates, instruments and agreements representing such Securities and any and all interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such Securities;

(c)         all Limited Liability Company Interests owned by such Pledgor from time to time and all of its right, title and interest in each limited liability company to which each such interest relates, whether now existing or hereafter acquired, including, without limitation, to the fullest extent permitted under the terms and provisions of the documents and agreements governing such Limited Liability Company Interests and applicable law:

(A)        all the capital thereof and its interest in all profits, income, surpluses, losses, Limited Liability Company Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Limited Liability Company Interests;

(B)         all other payments due or to become due to such Pledgor in respect of Limited Liability Company Interests, whether under any limited liability company agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;

(C)         all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any limited liability company agreement or operating agreement, or at law or otherwise in respect of such Limited Liability Company Interests;

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(D)        all present and future claims, if any, of such Pledgor against any such limited liability company for monies loaned or advanced, for services rendered or otherwise;

(E)         all of such Pledgor’s rights under any limited liability company agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Limited Liability Company Interests, including any power to terminate, cancel or modify any such limited liability company agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of any of such Pledgor in respect of such Limited Liability Company Interests and any such limited liability company, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Limited Liability Company Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and

(F)         all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;

(d)         all Partnership Interests owned by such Pledgor from time to time and all of its right, title and interest in each partnership to which each such interest relates, whether now existing or hereafter acquired, including, without limitation, to the fullest extent permitted under the terms and provisions of the documents and agreements governing such Partnership Interests and applicable law:

(A)        all the capital thereof and its interest in all profits, income, surpluses, losses, Partnership Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Partnership Interests;

(B)        all other payments due or to become due to such Pledgor in respect of Partnership Interests, whether under any partnership agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;

(C)        all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any partnership agreement or operating agreement, or at law or otherwise in respect of such Partnership Interests;

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(D)        all present and future claims, if any, of such Pledgor against any such partnership for monies loaned or advanced, for services rendered or otherwise;

(E)         all of such Pledgor’s rights under any partnership agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Partnership Interests, including any power to terminate, cancel or modify any partnership agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of any of such Pledgor in respect of such Partnership Interests and any such partnership, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Partnership Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and

(F)         all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;

(e)         all Security Entitlements owned by such Pledgor from time to time in any and all of the foregoing;

(f)          all Financial Assets and Investment Property owned by such Pledgor from time to time; and

(g)         all Proceeds of any and all of the foregoing.

Notwithstanding any of the other provisions set forth in this Section 3.1 to the contrary, the term Collateral shall not include, and this Agreement shall not constitute a grant of a security interest in any Excluded Equity Interests.

3.2         Procedures. (a) To the extent that any Pledgor at any time or from time to time owns, acquires or obtains any right, title or interest in any Collateral, such Collateral shall automatically (and without the taking of any action by the respective Pledgor) be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto, the respective Pledgor shall (to the extent provided below) take the following actions as set forth below (as promptly as practicable and, in any event, within 7 Business Days after it obtains such Collateral (or such longer period as agreed to by the Collateral Agent in its sole discretion) for the benefit of the Pledgee and the other Secured Creditors:

(i)          with respect to a Certificated Security (other than a Certificated Security credited on the books of a Clearing Corporation or Securities Intermediary), the respective Pledgor shall physically deliver such Certificated Security to the Pledgee, endorsed to the Pledgee or endorsed in blank (and on the date hereof, the Holdings shall deliver to the Pledgee the Certificated Securities set forth on Annex C-2 hereto, endorsed to the Pledgee or endorsed in blank);

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(ii)         with respect to an Uncertificated Security (other than an Uncertificated Security credited on the books of a Clearing Corporation or Securities Intermediary), the respective Pledgor shall cause the issuer of such Uncertificated Security (or, in the case of an issuer that is not a Subsidiary of such Pledgor, will use its reasonable efforts to cause such issuer) to duly authorize and execute, and deliver to the Pledgee, an agreement for the benefit of the Pledgee and the other Secured Creditors substantially in the form of Annex H hereto (appropriately completed to the reasonable satisfaction of the Pledgee and with such modifications, if any, as shall be reasonably satisfactory to the Pledgee) pursuant to which such issuer agrees to comply with any and all instructions originated by the Pledgee without further consent by the registered owner and not to comply with instructions regarding such Uncertificated Security originated by any other Person other than a court of competent jurisdiction;

(iii)        with respect to a Certificated Security, Uncertificated Security, Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary (including a Federal Reserve Bank, Participants Trust Company or The Depository Trust Company), the Administrative Borrower on behalf of the respective Pledgor shall promptly notify the Pledgee and the Administrative Agent thereof and shall promptly take all reasonable actions required (x) to comply with the applicable rules of such Clearing Corporation or Securities Intermediary, and (y) to perfect the security interest of the Pledgee under applicable law (including, in any event, under Sections 9-314(a) and (c), 9-106 and 8-106(d) of the UCC). The Pledgor further agrees to take such actions as the Pledgee deems reasonably necessary or desirable to effect the foregoing;

(iv)        with respect to a Partnership Interest or a Limited Liability Company Interest (other than a Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary), (x) if such Partnership Interest or Limited Liability Company Interest is represented by a certificate and is a Security for purposes of the UCC, the procedure set forth in Section 3.2(a)(i) hereof, and (y) if such Partnership Interest or Limited Liability Company Interest is not represented by a certificate or is not a Security for purposes of the UCC, the procedure set forth in Section 3.2(a)(ii) hereof;

(v)         with respect to any Note, physical delivery of such Note to the Pledgee, endorsed to the Pledgee or endorsed in blank; and

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(vi)        with respect to cash proceeds from any of the Collateral described in Section 3.1 hereof for which the Pledgee is entitled to retain pursuant to the terms of this Agreement, (i) establishment by the Pledgee of a cash account in the name of such Pledgor over which the Pledgee shall have “control” within the meaning of the UCC and at any time any Default or an Event of Default is in existence no withdrawals or transfers may be made therefrom by any Person except with the prior written consent of the Pledgee and the Administrative Agent and (ii) deposit of such cash in such cash account.

(b)         In addition to the actions required to be taken pursuant to Section 3.2(a) hereof, each Pledgor shall take the following additional actions with respect to the Securities and Collateral:

(i)          with respect to all Collateral of such Pledgor whereby or with respect to which the Pledgee may obtain “control” thereof within the meaning of Section 8-106 of the UCC (or under any provision of the UCC as same may be amended or supplemented from time to time, or under the laws of any relevant State other than the State of New York), the respective Pledgor shall take all actions as may be reasonably requested from time to time by the Pledgee or the Administrative Agent so that “control” of such Collateral is obtained and at all times held by the Pledgee; and

(ii)         each Pledgor shall from time to time cause appropriate financing statements (on Form UCC-1 or other appropriate form) under the Uniform Commercial Code as in effect in the various relevant States, covering all Collateral hereunder (with the form of such financing statements to be satisfactory to the Pledgee and the Administrative Agent), to be filed in the relevant filing offices so that at all times the Pledgee has a security interest in all Investment Property and other Collateral which is perfected by the filing of such financing statements (in each case to the maximum extent perfection by filing may be obtained under the laws of the relevant States, including, without limitation, Section 9-312(a) of the UCC).

3.3         Subsequently Acquired Collateral. If any Pledgor shall acquire (by purchase, stock dividend or similar distribution or otherwise) any additional Collateral at any time or from time to time after the date hereof, such Collateral shall automatically (and without any further action being required to be taken) be subject to the pledge and security interests created pursuant to Section 3.1 hereof and, furthermore, the respective Pledgor will thereafter take (or cause to be taken) all action (as promptly as practicable and, in any event, within 7 Business Days after it obtains such Collateral) with respect to such Collateral in accordance with the procedures set forth in Section 3.2 hereof, and will promptly thereafter deliver to the Pledgee and the Administrative Agent (i) a certificate executed by an authorized officer of such Pledgor describing such Collateral and certifying that the same has been duly pledged in favor of the Pledgee (for the benefit of the Secured Creditors) hereunder, and (ii) such supplements to Annexes A through G hereto as are reasonably necessary to cause such annexes to be complete and accurate at such time.

3.4         Transfer Taxes. Each pledge of Collateral under Section 3.1 or Section 3.3 hereof shall be accompanied by any transfer tax stamps required, or such other documentation as will establish that any applicable tax has been paid, in connection with the pledge of such Collateral.

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3.5         Definition of Pledged Notes. All Notes at any time pledged or required to be pledged hereunder are hereinafter called the “Pledged Notes.”

3.6         Certain Representations and Warranties Regarding the Collateral. Each Pledgor represents and warrants that on the date hereof: (i) the exact legal name of such Pledgor, the type of organization of such Pledgor, whether or not such Pledgor is a Registered Organization, the jurisdiction of organization of such Pledgor, such Pledgor’s Location, the organizational identification number (if any) of such Pledgor, is listed on Annex A hereto; (ii) each Subsidiary of such Pledgor, and the direct ownership thereof, is listed in Annex B hereto; (iii) the Stock (and any warrants or options to purchase Stock) held by such Pledgor consists of the number and type of shares of the stock (or warrants or options to purchase any stock) of the corporations as described in Annex C-1 hereto; (iv) such Stock constitutes that percentage of the issued and outstanding capital stock of the issuing corporation as is set forth in Annex C-1 hereto; (v) the Notes held by such Pledgor consist of the promissory notes described in Annex D hereto where such Pledgor is listed as the lender; (vi) the Limited Liability Company Interests held by such Pledgor consist of the number and type of interests of the Persons described in Annex E hereto; (vii) each such Limited Liability Company Interest constitutes that percentage of the issued and outstanding equity interest of the issuing Person as set forth in Annex E hereto; (viii) the Partnership Interests held by such Pledgor consist of the number and type of interests of the Persons described in Annex F hereto; (ix) each such Partnership Interest constitutes that percentage or portion of the entire partnership interest of the Partnership as set forth in Annex F hereto; (x) the exact address of the chief executive office of such Pledgor is listed on Annex G hereto; (xi) the Pledgor has complied with the respective procedure set forth in Section 3.2(a) hereof with respect to each item of Collateral described in Annexes B through F hereto; and (xi) on the date hereof, such Pledgor owns no other Securities, Stock, Notes, Limited Liability Company Interests or Partnership Interests.

4.          APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have the right to appoint one or more sub-agents for the purpose of retaining physical possession of the Collateral, which may be held (in the discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a sub-agent appointed by the Pledgee; provided, that no such appointment of a sub-agent shall affect the obligations of the Pledgee under this Agreement.

5.          VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have occurred and be continuing an Event of Default, each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral owned by it, and to give consents, waivers or ratifications in respect thereof; provided that, in each case, no vote shall be cast or any consent, waiver or ratification given or any action taken or omitted to be taken which would violate, result in a breach of any covenant contained in, or be inconsistent with any of the terms of any Secured Debt Agreement, or which could reasonably be expected to have the effect of materially impairing the value of the Collateral or any part thereof, or in a manner adverse to the position or interests of the Pledgee or any other Secured Creditor in the Collateral, unless expressly permitted by the terms of the Secured Debt Agreements. All such rights of each Pledgor to vote and to give consents, waivers and ratifications shall cease in case an Event of Default has occurred and is continuing (provided that no such notice shall be required if any Event of Default under Section 12.05 of the Credit Agreement has occurred and is continuing), and Section 7 hereof shall become applicable.

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6.          DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there shall have occurred and be continuing an Event of Default, all cash dividends, cash distributions, cash Proceeds and other cash amounts payable in respect of the Collateral shall be paid to the respective Pledgor. The Pledgee shall be entitled to receive directly, and to retain as part of the Collateral:

(i)          all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash dividends other than as set forth above) paid or distributed by way of dividend or otherwise in respect of the Collateral;

(ii)         all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash (although such cash may be paid directly to the respective Pledgor so long as no Event of Default then exists)) paid or distributed in respect of the Collateral by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar rearrangement; and

(iii)        all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash but only if an Event of Default has occurred and is continuing) which may be paid in respect of the Collateral by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate or other reorganization.

Nothing contained in this Section 6 shall limit or restrict in any way the Pledgee’s right to receive the proceeds of the Collateral in any form in accordance with Section 3 of this Agreement. All dividends, distributions or other payments which are received by any Pledgor contrary to the provisions of this Section 6 or Section 7 hereof shall be received in trust for the benefit of the Pledgee, shall be segregated from other property or funds of such Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).

7.          REMEDIES IN CASE OF AN EVENT OF DEFAULT. If there shall have occurred and be continuing an Event of Default, then and in every such case, the Pledgee shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Agreement, any other Secured Debt Agreement or by law) for the protection and enforcement of its rights in respect of the Collateral, and the Pledgee shall be entitled to exercise all the rights and remedies of a secured party under the UCC as in effect in any relevant jurisdiction and also shall be entitled, without limitation, to exercise the following rights (to the extent permitted by the terms of the Agreement Among Lenders), which each Pledgor hereby agrees to be commercially reasonable:

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(i)          to receive all amounts payable in respect of the Collateral otherwise payable under Section 6 hereof to the respective Pledgor;

(ii)         to transfer all or any part of the Collateral into the Pledgee’s name or the name of its nominee or nominees;

(iii)        to accelerate any Pledged Note which may be accelerated in accordance with its terms, and take any other lawful action to collect upon any Pledged Note (including, without limitation, to make any demand for payment thereon);

(iv)        to appoint by instrument in writing a receiver (which term as used in this Agreement includes a receiver and manager) or agent of all or any part of the Collateral and remove or replace from time to time any receiver or agent;

(v)         to institute proceedings in any court of competent jurisdiction for the appointment of a receiver of all or any part of the Collateral;

(vi)        to vote (and exercise all rights and powers in respect of voting) all or any part of the Collateral (whether or not transferred into the name of the Pledgee) and give all consents, waivers and ratifications in respect of the Collateral and otherwise act with respect thereto as though it were the outright owner thereof (each Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with full power of substitution to do so);

(vii)       at any time and from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or to redeem or otherwise purchase or dispose of all or any part of the Collateral, or any interest therein (all of which are hereby waived by each Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Pledgee in its absolute discretion may determine, provided that at least 5 days’ written notice of the time and place of any such sale shall be given to the Administrative Borrower for the respective Pledgor. The Pledgee shall not be obligated to make any such sale of Collateral regardless of whether any such notice of sale has theretofore been given. Each Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security or the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured Creditors may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Pledgee nor any other Secured Creditor shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and

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(viii)      to set-off any and all Collateral against any and all Obligations, and to withdraw any and all cash or other Collateral from any and all Collateral Accounts and to apply such cash and other Collateral to the payment of any and all Obligations.

8.          REMEDIES, CUMULATIVE, ETC. Each and every right, power and remedy of the Pledgee provided for in this Agreement or in any other Secured Debt Agreement, or now or hereafter existing at law or in equity or by statute shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Pledgee or any other Secured Creditor of any one or more of the rights, powers or remedies provided for in this Agreement or any other Secured Debt Agreement or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee or any other Secured Creditor of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee or any other Secured Creditor to exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on any Pledgor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee or any other Secured Creditor to any other or further action in any circumstances without notice or demand. The Secured Creditors agree that this Agreement may be enforced only by the action of the Pledgee, in each case, acting upon the instructions of the Required Secured Creditors, and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Pledgee for the benefit of the Secured Creditors upon the terms of this Agreement and the Security Agreement.

9.          RECEIVER’S POWERS. (a) Any receiver appointed by the Pledgee pursuant to Section 7 hereof is vested with the rights and remedies which could have been exercised by the Pledgee in respect of any Pledgor or the Collateral and such other powers and discretions as are granted in the instrument of appointment and any supplemental instruments. The identity of the receiver, its replacement and its remuneration are within the sole and unfettered discretion of the Pledgee.

(b)          Any receiver appointed by the Pledgee pursuant to Section 7 hereof will act as agent for the Pledgee for the purposes of taking possession of the Collateral, but otherwise and for all other purposes (except as provided below), as agent for the Pledgors. The receiver may sell, lease, or otherwise dispose of Collateral in accordance with the terms hereof as agent for the Pledgors or as agent for the Pledgee as the Pledgee may determine in its discretion. Each Pledgor agrees to ratify and confirm all actions of the receiver acting as agent for such Pledgor so long as such actions are taken in accordance with the terms hereof.

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(c)          The Pledgee, in appointing or refraining from appointing any receiver, does not incur liability to the receiver, the Pledgors or otherwise and is not responsible for any misconduct or negligence of such receiver except to the extent resulting from the gross negligence or willful misconduct of the Pledgee (as determined by a court of competent jurisdiction in a final and non-appealable decision) it being agreed that appointing or refraining from appointing any receiver in the reasonable judgment of the Pledgee’s or based on the advice of advisors or counsel shall not constitute gross negligence or willful misconduct.

10.         APPLICATION OF PROCEEDS. (a) All monies collected by the Pledgee upon any sale or other disposition of the Collateral pursuant to the terms of this Agreement, together with all other monies received by the Pledgee hereunder, shall be applied in the manner provided in Section 7.4 of the Security Agreement.

(b)          It is understood and agreed that the Pledgors shall remain jointly and severally liable with respect to their Obligations to the extent of any deficiency between (i) the amount of the proceeds of the Collateral pledged by them hereunder and the collateral granted under the other Security Documents and (ii) the aggregate amount of such Obligations.

(c)          It is understood and agreed by each Pledgor and each Secured Creditor that the Pledgee shall have no liability for any determinations made by it in this Section 10, in each case except to the extent resulting from the gross negligence or willful misconduct of the Pledgee (as determined by a court of competent jurisdiction in a final and non-appealable decision). Each Pledgor and each Secured Creditor also agrees that the Pledgee may (but shall not be required to), at any time and in its sole discretion, and with no liability resulting therefrom, petition a court of competent jurisdiction regarding any application of Collateral in accordance with the requirements hereof, and the Pledgee shall be entitled to wait for, and may conclusively rely on, any such determination.

11.         PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the Pledgee or the officer making such sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Pledgee or such officer or be answerable in any way for the misapplication or nonapplication thereof.

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12.         INDEMNITY; WAIVER OF CLAIMS.

12.1       Indemnification. Each Pledgor jointly and severally agrees (i) to indemnify and hold harmless the Pledgee and each other Secured Creditor (in their capacity as such) and their respective successors, assigns, employees, advisors, agents (including any receiver appointed pursuant to Section 7 hereof) and affiliates (individually an “Indemnitee,” and collectively, the “Indemnitees”) from and against any and all obligations, damages, injuries, penalties, claims, demands, losses, judgments and liabilities (including, without limitation, liabilities for tax, penalties, and interest on either) of whatsoever kind or nature, and (ii) to reimburse each Indemnitee for all reasonable costs, expenses and disbursements, including reasonable attorneys’ fees and expenses, in each case arising out of or resulting from this Agreement or the exercise by any Indemnitee of any right or remedy granted to it hereunder (but excluding any obligations, damages, injuries, penalties, claims, demands, losses, judgments and liabilities (including, without limitation, liabilities for penalties) or expenses of whatever kind or nature to the extent incurred or arising by reason of the gross negligence or willful misconduct of such Indemnitee (as determined by a court of competent jurisdiction in a final and non-appealable decision)). In no event shall the Pledgee hereunder be liable, in the absence of gross negligence or willful misconduct on its part (as determined by a court of competent jurisdiction in a final and non-appealable decision), for any matter or thing in connection with this Agreement other than to account for monies actually received by it in accordance with the terms hereof. If and to the extent that the obligations of any Pledgor under this Section 12 are unenforceable for any reason, such Pledgor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law. The indemnity obligations of each Pledgor contained in this Section 12 shall continue in full force and effect notwithstanding the full payment of all Loans made under the Credit Agreement, the termination of all Secured Hedging Agreements, and the payment of all other Obligations and notwithstanding the discharge thereof and the occurrence of the Termination Date.

12.2       Waiver of Claims. Except as otherwise provided in this Agreement, EACH PLEDGOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR THE COLLATERAL AGENT’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Pledgor hereby further waives, to the extent permitted by law:

(i)          all damages occasioned by such taking of possession or any such disposition except any damages which are the direct result of the Collateral Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision);

(ii)         all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agent’s rights hereunder; and

(iii)        all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Pledgor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.

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Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the relevant Pledgor therein and thereto, and shall be a perpetual bar both at law and in equity against such Pledgor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Pledgor.

13.        PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER. (a) Nothing herein shall be construed to make the Pledgee or any other Secured Creditor liable as a member of any limited liability company or as a partner of any partnership and neither the Pledgee nor any other Secured Creditor by virtue of this Agreement or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited liability company or as a partner in any partnership. The parties hereto expressly agree that, unless the Pledgee shall become the absolute owner of Collateral consisting of a Limited Liability Company Interest or a Partnership Interest pursuant hereto and is admitted as a member or partner of the respective Limited Liability Company or Partnership, this Agreement shall not be construed as creating a partnership or joint venture between or among the Pledgee, any other Secured Creditor, any Pledgor and/or any other Person.

(b)         Except as provided in the last sentence of paragraph (a) of this Section 13, the Pledgee, by accepting this Agreement, did not intend to become a member of any limited liability company or a partner of any partnership or otherwise be deemed to be a co-venturer with respect to any Pledgor, any limited liability company, partnership and/or any other Person either before or after an Event of Default shall have occurred. The Pledgee shall have only those powers set forth herein and the Secured Creditors shall assume none of the duties, obligations or liabilities of a member of any limited liability company or as a partner of any partnership or any Pledgor except as provided in the last sentence of paragraph (a) of this Section 13.

(c)         The Pledgee and the other Secured Creditors shall not be obligated to perform or discharge any obligation of any Pledgor as a result of the pledge hereby effected.

(d)         The acceptance by the Pledgee of this Agreement, with all the rights, powers, privileges and authority so created, shall not at any time or in any event obligate the Pledgee or any other Secured Creditor to appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or to take any action hereunder or thereunder, or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.

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14.         FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees that it will join with the Pledgee in executing and, at such Pledgor’s own expense, file and refile under the UCC or other applicable law such financing statements, continuation statements and other documents, in form reasonably acceptable to the Pledgee, in such offices as the Pledgee (acting on its own or on the instructions of the Required Lenders) may deem reasonably necessary or appropriate and wherever required or permitted by law in order to perfect and preserve the Pledgee’s security interest in the Collateral hereunder and hereby authorizes the Pledgee to file financing statements and amendments thereto relative to all or any part of the Collateral (including, without limitation, (x) financing statements which list the Collateral specifically and/or “all assets” as collateral and (y) “in lieu of” financing statements) without the signature of such Pledgor where permitted by law, in such offices as the Pledgee may reasonably deem necessary or advisable or wherever required or permitted by law in order to perfect and preserve the Pledgee’s security interest in the Collateral hereunder, and agrees to do such further acts and things and to execute and deliver to the Pledgee such additional conveyances, assignments, agreements and instruments as the Pledgee or the Administrative Agent may reasonably require or deem reasonably necessary to carry into effect the purposes of this Agreement or to further assure and confirm unto the Pledgee its rights, powers and remedies hereunder or thereunder.

(b)          Each Pledgor hereby constitutes and appoints the Pledgee its true and lawful attorney-in-fact, irrevocably, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time solely after the occurrence and during the continuance of an Event of Default, in the Pledgee’s reasonable discretion, to act, require, demand, receive and give acquittance for any and all monies and claims for monies due or to become due to such Pledgor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings and to execute any instrument which the Pledgee may deem necessary or advisable to accomplish the purposes of this Agreement, which appointment as attorney is coupled with an interest.

15.         THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood, acknowledged and agreed by each Secured Creditor that by accepting the benefits of this Agreement, each such Secured Creditor acknowledges and agrees (i) that the obligations of the Pledgee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Section 13.10 of the Credit Agreement. The Pledgee shall act hereunder on the terms and conditions set forth herein and in Section 13.10 of the Credit Agreement.

16.         TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein, except for Permitted Liens or sales or transfers permitted by the Credit Agreement.

17.         REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. (a) Each Pledgor represents, warrants and covenants as to itself and each of its Subsidiaries that:

(i)          it is the legal, beneficial and record owner of, and has good and marketable title to, all of its Collateral consisting of one or more Securities, Partnership Interests and Limited Liability Company Interests and that it has sufficient interest in all of its Collateral in which a security interest is purported to be created hereunder for such security interest to attach (subject, in each case, to no pledge, lien, mortgage, hypothecation, security interest, charge, option, Adverse Claim or other encumbrance whatsoever, except the liens and security interests created by this Agreement);

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(ii)         it has full power, authority and legal right to pledge all the Collateral pledged by it pursuant to this Agreement;

(iii)        this Agreement has been duly authorized, executed and delivered by such Pledgor and constitutes a legal, valid and binding obligation of such Pledgor enforceable against such Pledgor in accordance with its terms, except to the extent that the enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law);

(iv)        except to the extent already obtained or made, no consent of any other party (including, without limitation, any stockholder, partner, member or creditor of such Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required to be obtained by such Pledgor in connection with (a) the execution, delivery or performance of this Agreement by such Pledgor, (b) the validity or enforceability of this Agreement against such Pledgor (except as set forth in clause (iii) above), (c) the perfection or enforceability of the Pledgee’s security interest in such Pledgor’s Collateral, or (d) except for compliance with or as may be required by applicable securities laws, the exercise by the Pledgee of any of its rights or remedies provided herein;

(v)         neither the execution, delivery or performance by such Pledgor of this Agreement, nor compliance by it with the terms and provisions hereof nor the consummation of the transactions contemplated herein: (i) will contravene any provision of any applicable law, statute, rule or regulation, or any applicable order, writ, injunction or decree of any court, arbitrator or governmental instrumentality, domestic or foreign, applicable to such Pledgor; (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the properties or assets of such Pledgor or any of its Subsidiaries pursuant to the terms of any indenture, lease, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or other instrument to which such Pledgor or any of its Subsidiaries is a party or is otherwise bound, or by which it or any of its properties or assets is bound or to which it may be subject; or (iii) will violate any provision of the certificate of incorporation, by-laws, certificate of partnership, partnership agreement, certificate of formation or limited liability company agreement (or equivalent organizational documents), as the case may be, of such Pledgor or any of its Subsidiaries;

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(vi)        all of such Pledgor’s Collateral (consisting of Securities, Limited Liability Company Interests or Partnership Interests) has been duly and validly issued and acquired, is fully paid and non-assessable and is subject to no options to purchase or similar rights;

(vii)       each of such Pledgor’s Pledged Notes constitutes, or when executed by the obligor thereof will constitute, the legal, valid and binding obligation of such obligor, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law);

(viii)      the pledge, collateral assignment and delivery to the Pledgee of such Pledgor’s Collateral consisting of Certificated Securities and Pledged Notes pursuant to this Agreement creates a valid and perfected first priority security interest in such Certificated Securities and Pledged Notes, and the proceeds thereof, subject to no prior Lien or encumbrance or to any agreement purporting to grant to any third party a Lien or encumbrance on the property or assets of such Pledgor which would include the Securities and the Pledgee is entitled to all the rights, priorities and benefits afforded by the UCC or other relevant law as enacted in any relevant jurisdiction to perfect security interests in respect of such Collateral;

(ix)         “control” (as defined in Section 8-106 of the UCC) has been obtained by the Pledgee over all of such Pledgor’s Collateral consisting of Securities (including, without limitation, Notes which are Securities, if any) with respect to which such “control” may be obtained pursuant to Section 8-106 of the UCC except to the extent that the obligation of the applicable Pledgor to provide the Pledgee with “control” of such Collateral has not yet arisen under this Agreement; provided that in the case of the Pledgee obtaining “control” (as such term is used in the UCC) over Collateral consisting of a Security Entitlement, such Pledgor shall have taken all steps in its control so that the Pledgee obtains “control” (as such term is used in the UCC) over such Security Entitlement; and

(x)          the Pledgors shall not take any action to cause any limited liability, unit or other membership interest of the Collateral to be or become a “security” within the meaning of, or to be governed by, Article 8 of the Uniform Commercial Code as in effect under the laws of any state having jurisdiction, and shall not cause any Subsidiary to “opt in” or to take any other action seeking to establish any membership interest of the Collateral as a “security” or to become certificated unless such interest is certificated, pledged and delivered to the Pledgee in accordance with Section 3.2(a)(i) hereof.

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(b)          Each Pledgor covenants and agrees that it will defend the Pledgee’s right, title and security interest in and to such Pledgor’s Collateral and the proceeds thereof against the claims and demands of all persons whomsoever; and each Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee by such Pledgor as Collateral hereunder and will likewise defend the right thereto and security interest therein of the Pledgee and the other Secured Creditors.

(c)          Each Pledgor covenants and agrees that it will take no action which would violate any of the terms of any Secured Debt Agreement.

18.        LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION); JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; CHANGES THERETO; ETC. The exact legal name of each Pledgor, the type of organization of such Pledgor, whether or not such Pledgor is a Registered Organization, the jurisdiction of organization of such Pledgor, such Pledgor’s Location, and the organizational identification number (if any) of such Pledgor, as of the date hereof, are listed on Annex A hereto for such Pledgor. No Pledgor shall change its legal name, its type of organization (including without limitation its status as a Registered Organization, in the case of each Registered Organization), its jurisdiction of organization, its Location or its organizational identification number (if any) from that listed on Annex A hereto for such Pledgor or those that may have been established after the date of this Agreement in accordance with the immediately succeeding sentence of this Section 18. No Pledgor shall change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), as the case may be, its jurisdiction of organization, its Location, or its organizational identification number (if any), except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Secured Debt Agreements and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) any Pledgor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, outside the United States or a State thereof) if (i) it shall have given to the Pledgee and the Administrative Agent not less than 15 days’ prior written notice of each change to the information listed on Annex A (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Annex A which shall correct all information contained therein for the respective Pledgor, and (ii) in connection with such respective change or changes, it shall have taken all action reasonably requested by the Pledgee to maintain the security interests of the Pledgee in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect. In addition, to the extent that any Pledgor does not have an organizational identification number on the date hereof and later obtains one, the Administrative Borrower on behalf of such Pledgor shall promptly thereafter notify the Pledgee and the Administrative Agent of such organizational identification number and shall take all actions reasonably satisfactory to the Pledgee and the Administrative Agent to the extent necessary to maintain the security interest of the Pledgee in the Collateral intended to be granted hereby fully perfected and in full force and effect.

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19.        PLEDGORS’ OBLIGATIONS ABSOLUTE, ETC. Prior to the Termination Date, the obligations of each Pledgor under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by any circumstance or occurrence whatsoever, including, without limitation: (i) any renewal, extension, amendment or modification of or addition or supplement to or deletion from any Secured Debt Agreement or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof (except to the extent that any such modification expressly and directly relates to such Pledgor’s obligations under this Agreement); (ii) any waiver, consent, extension, indulgence or other action or inaction under or in respect of any such agreement or instrument including, without limitation, this Agreement; (iii) any furnishing of any additional security to the Pledgee or its assignee or any acceptance thereof or any release of any security by the Pledgee or its assignee; (iv) any limitation on any party’s liability or obligations under any such instrument or agreement or any invalidity or unenforceability, in whole or in part, of any such instrument or agreement or any term thereof; or (v) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to any Pledgor or any Subsidiary of any Pledgor, or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding, whether or not such Pledgor shall have notice or knowledge of any of the foregoing.

20.        REGISTRATION, ETC. (a) If there shall have occurred and be continuing an Event of Default then, and in every such case, upon receipt by any Pledgor from the Pledgee of a written request or requests that such Pledgor cause any registration, qualification or compliance under any Federal or state securities law or laws to be effected with respect to all or any part of the Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests of, or owned by, such Pledgor, such Pledgor as soon as practicable and at its expense will cause such registration to be declared effected (and be kept effective) and will cause such qualification and compliance to be declared effected (and be kept effective) as may be so requested and as would permit or facilitate the sale and distribution of such Collateral including, without limitation, registration under the Securities Act, as then in effect (or any similar statute then in effect), appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with any other governmental requirements; provided, that the Pledgee shall furnish to the Administrative Borrower on behalf of such Pledgor such information regarding the Pledgee as the Administrative Borrower on behalf of such Pledgor may reasonably request in writing and as shall be required in connection with any such registration, qualification or compliance. The Administrative Borrower on behalf of the respective Pledgor will cause the Pledgee to be kept reasonably advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, will furnish to the Pledgee such number of prospectuses, offering circulars or other documents incident thereto as the Pledgee from time to time may reasonably request, and will indemnify the Pledgee, each other Secured Creditor and all others participating in the distribution of such Collateral against all claims, losses, damages and liabilities caused by any untrue statement (or alleged untrue statement) of a material fact contained therein (or in any related registration statement, notification or the like) or by any omission (or alleged omission) to state therein (or in any related registration statement, notification or the like) a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to the Administrative Borrower on behalf of such Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.

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(b)          If at any time when the Pledgee shall determine to exercise its right to sell all or any part of the Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests pursuant to Section 7 hereof, and the Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act, as then in effect, the Pledgee may, in its sole and absolute discretion, sell such Collateral, as the case may be, or part thereof by private sale in such manner and under such circumstances as the Pledgee may deem reasonably necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Pledgee, in its sole and absolute discretion (i) may proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Collateral or part thereof shall have been filed under such Securities Act, (ii) may approach and negotiate with a single possible purchaser to effect such sale, and (iii) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of such Collateral or part thereof. In the event of any such sale, the Pledgee shall incur no responsibility or liability for selling all or any part of the Collateral at a price which the Pledgee, in its sole and absolute discretion, in good faith deems reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration as aforesaid.

21.        TERMINATION; RELEASE. (a) After the Termination Date, this Agreement and the security interest created by hereby shall automatically terminate (provided that all indemnities set forth herein including, without limitation, in Section 12 hereof shall survive any such termination), and the Pledgee, at the request and expense of the Administrative Borrower on behalf of such Pledgor, will execute and deliver to the Administrative Borrower on behalf of any Pledgor a proper instrument or instruments (including UCC termination statements) acknowledging the satisfaction and termination of this Agreement (including, without limitation, UCC termination statements and instruments of satisfaction, discharge and/or reconveyance), and will duly release from the security interest created hereby and, and will duly assign, transfer and deliver to the Administrative Borrower on behalf of such Pledgor or to the applicable purchaser or transferee (if any) specified by such Pledgor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Pledgee and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement, together with any moneys at the time held by the Pledgee or any of its sub-agents hereunder and, with respect to any Collateral consisting of an Uncertificated Security, a Partnership Interest or a Limited Liability Company Interest (other than an Uncertificated Security, Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary), a termination of the agreement relating thereto executed and delivered by the issuer of such Uncertificated Security pursuant to Section 3.2(a)(ii) or by the respective partnership or limited liability company pursuant to Section 3.2(a)(iv). As used in this Agreement, “Termination Date” shall mean the date upon which the Commitments under the Credit Agreement have been terminated, all Secured Hedging Agreements entered into with any Secured Creditors have been terminated and all Loans thereunder have been repaid in full, and all other Obligations (other than indemnities described in Section 12 hereof and described in Section 13.06 of the Credit Agreement, and any other indemnities set forth in any other Security Documents, in each case which are not then due and payable) then due and payable have been paid in full in cash in accordance with the terms thereof.

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(b)          In the event that any part of the Collateral is sold or otherwise disposed of (to a Person other than a Credit Party) (x) at any time prior to the time at which all Credit Document Obligations have been paid in full and all Commitments under the Credit Agreement have been terminated, in connection with a sale or other disposition permitted by Section 11.02 of the Credit Agreement or is otherwise released at the direction of the Required Lenders (or all the Lenders if required by Section 14.12 of the Credit Agreement) or (y) at any time thereafter, to the extent permitted by the other Secured Debt Agreements, and in the case of clauses (x) and (y), the proceeds of such sale or disposition (or from such release) are applied in accordance with the terms of the Credit Agreement or such other Secured Debt Agreement, as the case may be, to the extent required to be so applied, the Pledgee, at the request and expense of such Pledgor, will duly release from the security interest created hereby (and will execute and deliver such documentation, including termination or partial release statements and the like in connection therewith) and assign, transfer and deliver to the Administrative Borrower on behalf of such Pledgor or to the applicable purchaser or transferee (if any) specified by the Administrative Borrower on behalf of such Pledgor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or released and as may be in the possession of the Pledgee (or, in the case of Collateral held by any sub-agent designated pursuant to Section 4 hereto, such sub-agent) and has not theretofore been released pursuant to this Agreement.

(c)          At any time that any Pledgor desires that Collateral be released as provided in the foregoing Section 21(a) or (b), the Administrative Borrower on behalf of such Pledgor shall deliver to the Pledgee (and the relevant sub-agent, if any, designated pursuant to Section 4 hereof) and the Administrative Agent a certificate signed by an authorized officer of such Pledgor stating that the release of the respective Collateral is permitted pursuant to Section 21(a) or (b) hereof.

(d)          The Pledgee shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with this Section 21.

22.        NOTICES, ETC. Except as otherwise provided herein, all notices and communications hereunder shall be in writing (including via email, facsimile, and other electronic communication) and mailed, emailed, faxed or otherwise delivered and all such notices and communications shall, when mailed (certified return receipt required), emailed, faxed, or sent by overnight courier, be effective when deposited in the mails, delivered to the email service provider or overnight courier, as the case may be, or sent by fax or email, except that notices and communications to the Pledgee or any Pledgor shall not be effective until received by the Pledgee or the Administrative Borrower on behalf of such Pledgor, as the case may be. All such notices and other communications shall be in writing and addressed as follows:

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(a)          if to any Pledgor, at:

c/o STG, Inc.

11091 Sunset Hills Road, suite 200

Reston, VA 20190

Attention: Keith A. Lynch

Telephone No.: (703) 691-2480 x1172

Facsimile No.: (703) 691-3261                  

Email: Klynch@stg.com

With a copy to:

Morrison & Foerster LLP

250 W. 55^th Street

New York, NY 10019-9601

Attention: Geoffrey R. Peck, Esq.

Telephone No.: (212) 336-4183

Facsimile No.: (212) 468-7900

Email:GPeck@mofo.com

(b)          if to the Pledgee, at:

600 Galleria Parkway, Suite 890

Atlanta, GA 30339

Attention: Heath J. Hayes

Facsimile No.: (770)-953-6046

With a copy to:

Blank Rome LLP

The Chrysler Building

405 Lexington Avenue

New York, NY 10174-0208

Attention: Lawrence F. Flick II

Telephone No.: (212) 885-5556

Facsimile No.: (212) 832-5556

Email: Flick@blankrome.com

(c)          if to any Secured Creditor, at such address as such Secured Creditor shall have specified in the Credit Agreement;

or at such other address or addressed to such other individual as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.

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23.        WAIVER; AMENDMENT; OBLIGATIONS ABSOLUTE. (a) Except as provided in Sections 21 and 31 hereof, none of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Pledgor directly affected thereby (it being understood that the addition or release of any Pledgor hereunder shall not constitute a change, waiver, discharge or termination affecting any Pledgor other than the Pledgor so added or released) and (in each case) the Collateral Agent (with the written consent of the Required Secured Creditors); provided, however, (i) that supplements to the Annexes hereto may be made without the consent of any Secured Creditor, other than the Collateral Agent, as provided herein or therein, and (ii) Pledgors may be released from their obligations hereunder and new Pledgors may be added hereto without the consent of any Secured Creditors other than the Collateral Agent, as provided herein or therein.

(b)          The obligations of each Pledgor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Pledgor; (b) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement or any other Secured Debt Agreement; or (c) any amendment to or modification of any Secured Debt Agreement or any security for any of the Obligations, whether or not the Administrative Borrower on behalf of such Pledgor shall have notice or knowledge of any of the foregoing.

24.        SUCCESSORS AND ASSIGNS. This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or termination as set forth in Section 21 hereof, (ii) be binding upon each Pledgor, its successors and assigns; provided, however, that no Pledgor shall assign any of its rights or obligations hereunder without the prior written consent of the Pledgee (with the prior written consent of the Required Secured Creditors), and (iii) inure, together with the rights and remedies of the Pledgee hereunder, to the benefit of the Pledgee, the other Secured Creditors and their respective successors, transferees and assigns. All agreements, statements, representations and warranties made by each Pledgor herein or in any certificate or other instrument delivered by such Pledgor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Secured Debt Agreements regardless of any investigation made by the Secured Creditors or on their behalf.

25.        HEADINGS DESCRIPTIVE. The headings of the several Sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

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26.        GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PLEDGOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PLEDGOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH PLEDGOR. EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH PLEDGOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 22 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE PLEDGEE UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION.

(b)          EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c)          EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

27.        PLEDGOR’S DUTIES. It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Pledgor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Pledgee shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Pledgee be required or obligated in any manner to perform or fulfill any of the obligations of any Pledgor under or with respect to any Collateral.

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28.         COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart hereof by facsimile or electronic transmission shall be effective as delivery of an original executed counterpart hereof.

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

30.         RECOURSE. This Agreement is made with full recourse to each Pledgor and pursuant to and upon all the representations, warranties, covenants and agreements on the part of such Pledgor contained herein and in the other Secured Debt Agreements and otherwise in writing in connection herewith or therewith.

31.         ADDITIONAL PLEDGORS. It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Agreement after the date hereof pursuant to the Credit Agreement or any other Credit Document shall become a Pledgor hereunder by (x) executing a counterpart hereof or a joinder agreement and delivering the same to the Pledgee and the Administrative Agent, (y) delivering supplements to Annexes A through G hereto as are necessary to cause such annexes to be complete and accurate with respect to such additional Pledgor on such date and (z) taking all actions as specified in this Agreement as would have been taken by such Pledgor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Pledgee and the Administrative Agent and with all documents and actions required above to be executed or taken, as the case may be, to the reasonable satisfaction of the Pledgee and the Administrative Agent.

32.         LIMITED OBLIGATIONS. It is the desire and intent of each Pledgor and the Secured Creditors that this Agreement shall be enforced against each Pledgor to the fullest extent permissible under the laws applied in each jurisdiction in which enforcement is sought. Notwithstanding anything to the contrary contained herein, in furtherance of the foregoing, it is noted that the obligations of Holdings and each Pledgor constituting a Subsidiary Guarantor have been limited as provided in the Holdings Guaranty or the applicable Subsidiary Guaranty, if any.

33.         RELEASE OF PLEDGORS. If at any time all of the Equity Interests of any Pledgor owned by Holdings or any of its Subsidiaries are sold to a Person other than a Credit Party in a transaction permitted pursuant to the Credit Agreement (and which does not violate the terms of any other Secured Debt Agreement then in effect), then, such Pledgor shall be released as a Pledgor pursuant to this Agreement without any further action hereunder (it being understood that the sale of all of the Equity Interests in any Person that owns, directly or indirectly, all of the Equity Interests in any Pledgor shall be deemed to be a sale of all of the Equity Interests in such Pledgor for purposes of this Section), and the Pledgee is authorized and directed to execute and deliver such instruments of release as are reasonably satisfactory to it. At any time that Holdings desires that a Pledgor be released from this Agreement as provided in this Section 33, the Administrative Borrower on behalf of Holdings shall deliver to the Pledgee and the Administrative Agent a certificate signed by an authorized officer of Holdings stating that the release of such Pledgor is permitted pursuant to this Section 33. If requested by Pledgee or the Administrative Agent (although the Pledgee shall have no obligation to make any such request), the Administrative Borrower on behalf of Holdings shall furnish legal opinions (from counsel reasonably acceptable to the Pledgee and the Administrative Agent) to the effect set forth in the immediately preceding sentence. The Pledgee shall have no liability whatsoever to any other Secured Creditor as a result of the release of any Pledgor by it in accordance with, or which it believes to be in accordance with, this Section 33.

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34.         AGREEMENT AMONG LENDERS. Each of the undersigned Pledgors hereby acknowledges the terms and provisions of the Agreement Among Lenders and agrees to be bound by such terms solely in relation to the application of payments or proceeds made as set forth in the Agreement Among Lenders, including Section 7 thereof. Notwithstanding anything to the contrary contained herein or in any other Credit Document, in the event of any conflict or inconsistency between this Agreement and the Agreement Among Lenders, the terms of the Agreement Among Lenders shall govern and control.

35.         ADMINISTRATIVE BORROWER. Each Pledgor confirms and accepts that the provisions contained in Section 14.25 of the Credit Agreement applicable to each Pledgor are incorporated by reference herein as if contained herein, and are applicable to each Pledgor hereunder.

* * * *

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IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.

PLEDGORS:
GLOBAL DEFENSE & NATIONAL
SECURITY SYSTEMS, INC.,
as Pledgor
By:	/s/ Damian Perl
	Name:	Damian Perl
	Title:	Chairman of the Board
STG GROUP, INC.,
as Pledgor
By:	/s/ Paul Fernandes
	Name:	Paul Fernandes
	Title:	President
STG, INC.,
as Pledgor
By:	/s/ Paul Fernandes
	Name:	Paul Fernandes
	Title:	President
ACCESS SYSTEMS, INCORPORATED,
as Pledgor
By:	/s/ Paul Fernandes
	Name:	Paul Fernandes
	Title:	Chief Operating Officer

[Signature Page to Pledge Agreement]

Accepted and Agreed to:
PNC BANK, NATIONAL ASSOCIATION,
as Collateral Agent
By:	/s/ Virginia L. Kiseljack
	Name:	Virginia L. Kiseljack
	Title:	Senior Vice President

[Signature Page to Pledge Agreement]

EX-10.4

Exhibit 10.4

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of November 23, 2015, by and among Global Defense & National Security Systems, Inc.,, a Delaware corporation (the “Company”), each Person listed on Schedule I attached hereto (the “Investors”).

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

Section 1.          Definitions.

“Agreement” has the meaning set forth in the Preamble.

“Common Stock” means the common stock, par value $0.0001 per share, of the Company.

“Company” has the meaning set forth in the Preamble.

“Demand Registrations” means a registration requested pursuant to Section 2.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

“FINRA” means the Financial Industry Regulatory Authority.

“Free Writing Prospectus” means a free-writing prospectus, as defined in Rule 405.

“Holdback Period” has the meaning set forth in Section 4(a)(i).

“Indemnified Parties” has the meaning set forth in Section 7(a).

“Investors” has the meaning set forth in the Preamble.

“Lock-Up Period” has the meaning set forth in Section 4(a).

“Long-Form Registration” means a registration on Form S-1 or any similar long-form registration statement; provided, however, that a registration on Form S-1 or any similar long-form registration statement filed during the Lock-Up Period in order to effect the rights of holders to transfer Registrable Securities up to the amounts set forth in Section 4(a), shall not be deemed a Long-Form Registration for purposes of the limitations thereon in Section 2(a) hereof.

“Permitted Transferee” means, with respect to an Investor, such Investor’s spouse, any lineal ascendants or descendants or trusts or other entities in which such Investor or such Investor’s spouse, lineal ascendants or descendants hold (and continue to hold while such trusts or other entities hold Common Stock) 75% or more of such entity’s beneficial interests.

“Piggyback Registrations” has the meaning set forth in Section 3(a).

“Public Offering” means any sale or distribution by the Company and/or holders of Registrable Securities to the public of Common Stock pursuant to an offering registered under the Securities Act.

“Registrable Securities” means any Common Stock issued to the Investors (or their Permitted Transferees) pursuant to the Stock Purchase Agreement. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they have been (a) sold or distributed pursuant to a Public Offering, (b) sold in compliance with Rule 144, or (c) repurchased by the Company or a Subsidiary of the Company.

“Registration Expenses” has the meaning set forth in Section 6(a).

“Rule 144,” “Rule 158,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any successor provision) by the Securities and Exchange Commission, as the same shall be amended from time to time, or any successor rule then in force.

“Sale Transaction” has the meaning set forth in Section 4(b)(i)(A).

“Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

“Shelf Registration” has the meaning set forth in Section 2(b).

“Short-Form Registration” means a registration on Form S-3 (including pursuant to Rule 415) or any similar short-form registration statement.

“Stock Purchase Agreement” means that certain Stock Purchase Agreement, dated as of June 8, 2015, by and among the Company, Global Defense & National Security Holdings LLC, a Delaware limited liability company, the Investors and Simon Lee, as Stockholders’ Representative.

“Suspension Period” has the meaning set forth in Section 5(a)(vii).

“Violation” has the meaning set forth in Section 7(a).

Section 2.          Demand Registrations.

(a)          Requests for Registration. Subject to the terms and conditions of this Agreement, the holders of Registrable Securities shall be entitled to direct that the Company register the sale of all or any portion of their Registrable Securities under the Securities Act. Short-Form Registrations shall be unlimited in number, but the Company shall not be obligated to effect more than two (2) Long-Form Registrations in any twenty-four (24) month period.

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(b)          Short-Form Registrations. Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use any applicable short form and if the managing underwriters (if any) or a majority of those holders demanding the Demand Registration agree to the use of a Short-Form Registration. The Company shall use its reasonable best efforts to make Short-Form Registrations available for the sale of Registrable Securities. If the holders of a majority of the Registrable Securities request that a Short-Form Registration be filed pursuant to Rule 415 (a “Shelf Registration”) and the Company is qualified to do so, the Company shall use its reasonable best efforts to cause the Shelf Registration to be declared effective under the Securities Act as soon as practicable after filing, and once effective, the Company shall cause the Shelf Registration to remain continuously effective for a period ending on the earlier of (i) the date on which all Registrable Securities included in such registration have been sold or distributed pursuant to the Shelf Registration or (ii) the date as of which all of the Registrable Securities included in such registration are able to be sold by the holder of the Registrable Securities without limitation or restriction in compliance with Rule 144. If thereafter for any reason the Company becomes ineligible to utilize Form S-3, the Company shall prepare and file with the Securities and Exchange Commission a registration statement or registration statements on such form that is available for the sale of Registrable Securities.

(c)          Long-Form Registrations. A registration shall not count as a Long-Form Registration for purposes of the last sentence of Section 2(a) unless (i) at least 75% of the Registrable Securities requested to be included in such registration by the requesting holders have been registered and (ii) such registration has become effective in accordance with the Securities Act; provided, that if a Long-Form Registration is withdrawn by the holders of Registrable Securities who requested such registration prior to the time it has become effective for reasons other than the disclosure of information concerning the Company that is materially adverse to the Company or the trading price of the Common Stock (which disclosure is made by the Company after the date that such registration is requested pursuant to Section 2(a)), such Long-Form Registration shall count as a Long-Form Registration for purposes of the last sentence of Section 2(a) unless the holders of Registrable Securities who requested such registration reimburse the Company for all of the reasonable Registration Expenses incurred by the Company prior to such withdrawal.

(d)          Priority on Demand Registrations. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included which, in the opinion of such underwriters, can be sold, without any such adverse effect, pro rata among the respective holders thereof on the basis of the amount of Registrable Securities owned by each such holder.

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(e)          Procedures and Restrictions on Demand Registrations. Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the intended method of distribution. Within ten (10) days after receipt of any such request, the Company shall give written notice of the Demand Registration to all other holders of Registrable Securities and, subject to the terms of Section 2(d), shall include in such Demand Registration (and in all related registrations and qualifications under state blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the receipt of the Company’s notice. The Company shall not be obligated to effect any Demand Registration, including any Shelf Registration, if (i) the holders of Registrable Securities, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters’ discounts or commissions) of less than $3,000,000; provided, that the foregoing limitation shall not be applicable to a Demand Registration during the Lock-Up Period to effect the rights of holders to register the sale of Registrable Securities up to the amounts set forth in Section 4(a), or (ii) within one hundred eighty (180) days after the effective date of a previous Demand Registration or a previous registration in which Registrable Securities were included pursuant to Section 3 in which, in either case, there was no reduction in the number of Registrable Securities requested to be included. The Company may postpone, for up to ninety (90) days from the date of the request, the filing or the effectiveness of a registration statement for a Demand Registration, if the Company’s board of directors determines in its reasonable good faith judgment that not postponing such Demand Registration (i) would interfere with a material corporate transaction or (ii) would require the disclosure of material non-public information concerning the Company that at the time is not, in the reasonable good faith judgment of the Company’s board of directors, in the best interest of the Company to disclose and is not, in the opinion of the Company’s legal counsel, otherwise required to be disclosed; provided, that the Company may only exercise this right twice in any calendar year and for no more than one hundred twenty (120) days in the aggregate in any calendar year.

(f)          Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any Common Stock. Except as provided in this Agreement, the Company shall not grant to any Persons the right to request the Company to register any Common Stock, or any securities convertible or exchangeable into or exercisable for Common Stock, without the prior written consent of the holders of a majority of the Registrable Securities; provided, that the Company may grant rights to other Persons to participate in Piggyback Registrations so long as such rights are subordinate in all respects to the rights of the holders of Registrable Securities with respect to such Piggyback Registrations as set forth in Section 3(c) and Section 3(d).

Section 3.          Piggyback Registrations.

(a)          Right to Piggyback. Whenever the Company proposes to register any of its securities under the Securities Act (other than (i) pursuant to a Demand Registration, or (ii) in connection with registrations on Form S-4 or S-8 promulgated by the Securities and Exchange Commission or any successor or similar forms) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice to all holders of Registrable Securities of its intention to effect such Piggyback Registration and, subject to the terms of Section 3(c) and Section 3(d), shall include in such Piggyback Registration (and in all related registrations or qualifications under blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after delivery of the Company’s notice.

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(b)          Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities shall be paid by the Company in all Piggyback Registrations, whether or not any such registration became effective.

(c)          Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the holders of such Registrable Securities on the basis of the number of shares owned by each such holder, and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.

(d)          Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s Securities (who have registration rights with respect thereto permitted under the terms of this Agreement), and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of shares owned by each such holder which, in the opinion of the underwriters, can be sold without any such adverse effect and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.

Section 4.          Lock-Up and Holdback Agreements.

(a)          Lock-Up. Each of the Investors and their Permitted Transferees agrees to comply with the following provisions with respect to the Common Stock:

(i)          Until the earlier of (A) twelve (12) months after the date hereof, or (B) the date on which the Company consummates a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property (such applicable period being the “Lock-Up Period”), the holders of Registrable Securities shall not (x) sell, offer to sell, contract or agree to sell, hypothecate, pledge, encumber, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to Registrable Securities, (y) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Registrable Securities, whether any such transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise, or (z) agree or publicly announce any intention to effect any transaction specified in the foregoing (x) or (y).

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(ii)         Notwithstanding the foregoing paragraph (a), (x) each holder may transfer shares of Registrable Securities to a Permitted Transferee thereof prior to the expiration of the Lock-Up Period if such Permitted Transferee agrees in writing for the benefit of the Company to be bound by the transfer restrictions set forth in this Section 4(a); (y) each holder may transfer on or after the 6-month anniversary hereof and prior to the expiration of the Lock-Up Period up to a number of Registrable Securities (in the form of Common Stock), in the aggregate, equal to or less than $3,000,000; and (z) each holder may transfer on or after the 9-month anniversary hereof and prior to the expiration of the Lock-Up Period up to a number of Registrable Securities (in the form of Common Stock), in the aggregate, equal to or less than 25% of the amount of Registrable Securities owned by such holder on the date hereof.

(b)          Holdback Agreements.

(i)          Holders of Registrable Securities. If requested by the Company, each holder of Registrable Securities participating in an underwritten Public Offering shall enter into lock-up agreements or arrangements with the managing underwriter(s) of such Public Offering (in addition to the arrangement set forth in Section 4(a) hereof, in such form as is reasonably requested by such managing underwriter(s). In addition to any such lock-up agreement or arrangement with the managing underwriter(s), each holder of Registrable Securities agrees as follows:

(A)         In connection with any underwritten Public Offering and without the prior written consent of the underwriters managing such Public Offering, such holder shall not, for a period ending one hundred eighty (180) days following the date of the final prospectus (the “Holdback Period”) relating to such Public Offering, (x) offer, hypothecate, pledge, encumber sell, contract, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or other securities of the Company or (y) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of owning Common Stock or other securities of the Company, whether any such transaction described in clause (x) or (y) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise (each such transaction, a “Sale Transaction”).

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(B)         The foregoing clause (i)(A) shall not apply to (w) transactions relating to shares of Common Stock or other securities acquired in open market transactions, provided, that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with transfers or dispositions of such shares of Common Stock or other securities acquired in such open market transactions (other than a filing on Form 5 made after the expiration of the Holdback Period), or (x) transfers to a Permitted Transferee of such holder, or (y) transfers that are bona fide gifts, or (z) distributions by a trust to its beneficiaries, provided, that in the case of any transfer or distribution pursuant to clause (x), (y), or (z), (1) each transferee, donee or distributee shall agree in writing to be bound by lock-up provisions substantially the same as the lock-up provisions agreed to by such holder and (2) no such transfer or distribution in (x), (y), or (z) shall be permitted if it shall require a filing under Section 16(a) or Section 13(d) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Common Stock, and no such filing under Section 16(a) or Section 13(d) of the Exchange Act shall be voluntarily made during the Holdback Period.

The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the restrictions set forth in this Section 4(a) until the end of the Holdback Period.

(ii)         The Company. In the event of any Holdback Period occurring in connection with the exercise by a party to this Agreement of its registration rights with respect to Registrable Securities pursuant to Section 2, the Company (A) shall not file any registration statement for a Public Offering or cause any such registration statement to become effective during any Holdback Period, and (B) shall use its reasonable best efforts to cause (x) each holder of at least 5% of its Common Stock, or any securities convertible into or exchangeable or exercisable for at least 5% of its Common Stock (on a fully-diluted basis), purchased from the Company at any time after the date of this Agreement (other than in a Public Offering) and (y) each of its directors and executive officers, to agree not to effect any Sale Transaction during any Holdback Period, except as part of such underwritten registration, if otherwise permitted, unless the underwriters managing the Public Offering otherwise agree in writing.

(iii)        The foregoing limitations of this Section 4 shall not apply to a registration in connection with an employee benefit plan or in connection with any type of acquisition transaction of or exchange offer by the Company.

Section 5.          Registration Procedures.

(a)          Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of distribution thereof, and pursuant thereto the Company shall as expeditiously as possible:

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(i)          in accordance with the Securities Act and all applicable rules and regulations promulgated thereunder, prepare and file with the Securities and Exchange Commission the applicable registration statement, and all amendments and supplements thereto and related prospectuses, with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective (provided, that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed or furnished and all Free Writing Prospectus with respect to such proposed sale of securities covered by such registration statement, which documents shall be subject to the review and comment of such counsel);

(ii)         notify each holder of Registrable Securities of (A) the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose, (B) the issuance by the Securities and Exchange Commission of any comments to any registration statement, (C) any communication with the Securities and Exchange Commission with respect to such registration statement, whether telephonic or otherwise, and permit such counsel to participate in such communication, (D) the receipt by the Company or its counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (E) the effectiveness of each registration statement filed hereunder;

(iii)        use its reasonable best efforts to maintain the effectiveness of any registration statement for up to one hundred eighty (180) days or until the completion of the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that: (i) such 180-day period shall be extended for a period of time equal to the period the holder of Registrable Securities refrains from selling any securities included in such registration pursuant to this Agreement including at the request of an underwriter of Common Stock (or other securities) of the Company and (ii) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 180-day period shall be extended, if necessary, to keep the registration statement effective until the earlier to occur of (A) 120 days following the effectiveness of the registration statement, or (B) the date that all such Registrable Securities are sold;

(iv)        prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period ending when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of distribution by the sellers thereof set forth in such registration statement (but in any event not before the expiration of any longer period required under the Securities Act or, if such registration statement relates to an underwritten Public Offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sale of Registrable Securities by an underwriter or dealer) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

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(v)         furnish to each seller of Registrable Securities thereunder such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), each Free Writing Prospectus and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

(vi)        use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph or (B) consent to general service of process in any such jurisdiction;

(vii)       notify each seller of such Registrable Securities (A) promptly after it receives notice thereof, of the date and time when such registration statement and each post-effective amendment thereto has become effective or a prospectus or supplement to any prospectus relating to a registration statement has been filed and when any registration or qualification has become effective under a state securities or blue sky law or any exemption thereunder has been obtained; (B) promptly after receipt thereof, of any request by the Securities and Exchange Commission for the amendment or supplementing of such registration statement or prospectus or for additional information and (C) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading; provided, that at any time, upon written notice to the participating holders of Registrable Securities, the Company may delay the filing or effectiveness of any registration statement or suspend the use or effectiveness of any registration statement (the “Suspension Period”) (and the holders of Registrable Securities hereby agree not to offer or sell any Registrable Securities pursuant to such registration statement during the Suspension Period) if the Company’s board of directors determines in its reasonable good faith judgment that delaying the filing or effectiveness of such registration statement or suspending the use or effectiveness of such registration statement (i) would interfere with a material corporate transaction or (ii) would require the disclosure of material non-public information concerning the Company that at the time is not, in the reasonable good faith judgment of the Company’s board of directors, in the best interest of the Company to disclose; provided, that the Company may only exercise its right to institute a Suspension Period twice in any calendar year and for no more than one hundred twenty (120) days in the aggregate in any calendar year;

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(viii)      use reasonable best efforts to cause all such Registrable Securities to be listed on any securities exchange on which similar securities issued by the Company are then listed;

(ix)         use reasonable best efforts to provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

(x)          enter into and perform a customary underwriting agreement, if applicable;

(xi)         make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate and business documents and properties of the Company as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors, employees, agents, representatives and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

(xii)        take all reasonable actions to ensure that any Free-Writing Prospectus utilized in connection with any registration hereunder complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, shall not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(xiii)       otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission at all times, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158;

(xiv)      permit any holder of Registrable Securities to participate in the preparation of such registration or comparable statement and to allow such holder to propose language for insertion therein, in form and substance reasonably satisfactory to the Company, which in the reasonable judgment of such holder and its counsel should be included;

(xv)       in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or the issuance of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Registrable Securities included in such registration statement for sale in any jurisdiction, use reasonable best efforts promptly to obtain the withdrawal of such order;

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(xvi)      use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;

(xvii)     cooperate with the holders of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the registration statement and enable such securities to be in such denominations and registered in such names as the managing underwriter, or agent, if any, or such holders may request;

(xviii)    cooperate with each holder of Registrable Securities covered by the registration statement and each underwriter or agent, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;

(xix)       use its reasonable best efforts to make available the executive officers of the Company to participate with the holders of Registrable Securities and any underwriters in any “road shows” or other selling efforts that may be reasonably requested by the holders in connection with the methods of distribution for the Registrable Securities;

(xx)        use its reasonable best efforts to obtain one or more signed comfort letters from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters; and

(xxi)       provide the holder with all CUSIP and other identification numbers associated with the Registrable Securities;

(xxii)      use its reasonable best efforts to provide a legal opinion of the Company’s outside counsel in customary form and covering such matters of the type customarily covered by such legal opinion, dated the effective date of such registration statement.

(b)          The Company shall not undertake any voluntary act that could be reasonably expected to cause a Violation or result in delay or suspension under Section 5(a)(vii). During any Suspension Period, and as may be extended hereunder, the Company shall use its reasonable best efforts to correct or update any disclosure causing the Company to provide notice of the Suspension Period and to file and cause to become effective or terminate the suspension of use or effectiveness, as the case may be, the subject registration statement. In the event that the Company shall exercise its right to delay or suspend the filing or effectiveness of a registration hereunder, the applicable time period during which the registration statement is to remain effective shall be extended by a period of time equal to the duration of the Suspension Period. The Company may extend the Suspension Period for an additional consecutive sixty (60) days with the consent of the holders of a majority of the Registrable Securities registered under the applicable registration statement, which consent shall not be unreasonably withheld. If so directed by the Company, all holders of Registrable Securities registering shares under such registration statement shall (i) not offer to sell any Registrable Securities pursuant to the registration statement during the period in which the delay or suspension is in effect after receiving notice of such delay or suspension and (ii) use their reasonable best efforts to deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such holders’ possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice.

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(c)          Notwithstanding anything herein to the contrary, the Company shall not limit the number of Registrable Securities to be included in a registration statement requested pursuant to a Demand Registration in order to include securities offered for the Company’s own account.

Section 6.          Registration Expenses.

(a)          The Company’s Obligation. All expenses incident to the Company’s performance of or compliance with this Agreement (including, without limitation, all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding underwriting discounts and commissions) and other Persons retained by the Company) (all such expenses being herein called “Registration Expenses”), shall be borne by the Company except as otherwise expressly provided in this Agreement. Without limiting the generality of the foregoing the Company shall, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed. Each Person that sells securities pursuant to a Demand Registration or Piggyback Registration hereunder shall bear and pay all underwriting discounts and commissions, if any, applicable to the securities sold for such Person’s account.

(b)          Counsel Fees and Disbursements. In connection with each Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration.

(c)          Security Holders. To the extent any Registration Expenses are to be borne by the holders of Registrable Securities and not the Company under the terms of this Agreement, each holder of securities included in any registration hereunder shall pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable shall be borne by all sellers of securities included in such registration (including the Company, as applicable) in proportion to the aggregate selling price of the securities to be so registered.

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Section 7.          Indemnification and Contribution.

(a)          By the Company. The Company shall indemnify and hold harmless, to the extent permitted by law, each holder of Registrable Securities, such holder’s officers, directors employees, agents and representatives, and each Person who controls such holder (within the meaning of the Securities Act) (the “Indemnified Parties”) against all losses, claims, actions, damages, liabilities and expenses (including with respect to actions or proceedings, whether commenced or threatened, and including reasonable attorney fees and expenses) caused by, resulting from, arising out of, based upon or related to any of the following statements, omissions or violations (each a “Violation”) by the Company: (i) any untrue or alleged untrue statement of material fact contained in (a) any registration statement, prospectus, preliminary prospectus or Free-Writing Prospectus, or any amendment thereof or supplement thereto or (b) any application or other document or communication (in this Section 7, collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration under the securities laws thereof; (ii) any omission or alleged omission of a material fact required to be stated in any of the materials referenced in (i)(a) or (i)(b) above or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance. In addition, the Company will reimburse such Indemnified Party for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such losses. Notwithstanding the foregoing, the Company shall not be liable in any such case to the extent that any such losses result from, arise out of, are based upon, or relate to an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, preliminary prospectus or Free-Writing Prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished in writing to the Company by an Indemnified Party expressly for use therein or by an Indemnified Party’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such Indemnified Party with a sufficient number of copies of the same.

(b)          By Each Security Holder. In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its officers, directors, employees, agents and representatives, and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by or on behalf of such holder; provided, that the obligation to indemnify shall be individual, not joint and several, for each holder and shall be limited to the net amount of proceeds (before taxes) received by such holder from the sale of Registrable Securities pursuant to such registration statement.

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(c)          Claim Procedure. Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided, that the failure to give prompt notice shall impair any Person’s right to indemnification hereunder only to the extent such failure has prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicted indemnified parties shall collectively have a right to retain one separate counsel, chosen by the holders of a majority of the Registrable Securities of the conflicted indemnified parties, at the expense of the indemnifying party.

(d)          Contribution. If the indemnification provided for in this Section 7 is held by a court of competent jurisdiction to be unavailable to, or is insufficient to hold harmless, an indemnified party or is otherwise unenforceable with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party in lieu of indemnifying such indemnified party hereunder shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Registrable Securities, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if the contribution pursuant to this Section 7(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account such equitable considerations. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to herein shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject hereof. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

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(e)          Release. No indemnifying party shall, except with the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. Notwithstanding anything to the contrary in this Section 7, an indemnifying party shall not be liable for any amounts paid in settlement of any loss, claim, damage, liability, or action if such settlement is effected without the consent of the indemnifying party, such consent not to be unreasonably withheld, conditioned or delayed.

(f)          Non-exclusive Remedy; Survival. The indemnification and contribution provided for under this Agreement shall be in addition to any other rights to indemnification or contribution that any indemnified party may have pursuant to law or contract and shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of Registrable Securities and the termination or expiration of this Agreement. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

Section 8.          Underwritten Registrations.

(a)          Selection of Underwriters. The Company shall determine whether the offering pursuant to any registration under this Agreement is underwritten. In any Piggyback Registration, the Company shall have the right to select the investment banker(s) and manager(s) of the offering in its sole discretion and, in any Demand Registration, the Company shall have the right to select the investment banker(s) and manager(s) of the offering subject to the consent of the holders of a majority of the Registrable Securities to be included in such offering, such consent not to be unreasonably withheld, conditioned or delayed.

(b)          Participation. No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to any over-allotment or “green shoe” option requested by the underwriters; provided, that no holder of Registrable Securities shall be required to sell more than the number of Registrable Securities such holder has requested to include) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

(c)          Suspended Distributions. Each Person that is participating in any registration under this Agreement, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(a)(vi)(C), shall immediately discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by Section 5(a)(vi)(C). In the event the Company has given any such notice, the time period during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 8(c) to and including the date when each seller of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus.

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Section 9.          Current Public Information. The Company shall file all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144, including, without limitation, any Form 10 information as defined in Rule 144(i)(3). The Company shall use commercial reasonable efforts to file such Form 10 information within thirty (30) days of the date hereof. Upon reasonable request, the Company shall deliver to any holder of Restricted Securities a written statement as to whether it has complied with such requirements and use its reasonable best efforts to file on a timely basis with the Securities and Exchange Commission all information that the Securities and Exchange Commission may require under either of Section 13 or Section 15(d) of the Exchange Act, and so long as it is required to file such information, take all action that may be required as a condition to the availability of Rule 144 under the Securities Act (or any successor exemptive rule hereinafter in effect) with respect to the Company’s Common Stock.

Section 10.         Transfer of Registrable Securities.

(a)          Restrictions on Transfers. Notwithstanding anything to the contrary contained herein, except in the case of (i) a transfer to the Company, (ii) a transfer by an Investor to one of its Permitted Transferees, (iii) a Public Offering, or (iv) a sale pursuant to Rule 144, prior to transferring any Registrable Securities to any Person (including, without limitation, by operation of law), the transferring Investor shall cause the prospective transferee to execute and deliver to the Company a joinder agreeing to be bound by the terms of this Agreement. Any transfer or attempted transfer of any Registrable Securities in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Registrable Securities as the owner thereof for any purpose.

(b)          Legend. Each certificate evidencing any Registrable Securities and each certificate issued in exchange for or upon the transfer of any Registrable Securities (unless such Registrable Securities would no longer be Registrable Securities after such transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF NOVEMBER 23, 2015 AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S STOCKHOLDERS, AS AMENDED. A COPY OF SUCH REGISTRATION RIGHTS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

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The Company shall imprint such legend on certificates evidencing Registrable Securities outstanding prior to the date hereof. The legend set forth above shall be removed from the certificates evidencing any securities that have ceased to be Registrable Securities.

Section 11.         General Provisions.

(a)          Termination. Except with respect to the indemnification and contribution provisions contained in Section 7, the rights granted to an Investor (or a Permitted Transferee) pursuant to this Agreement shall terminate and forthwith become null and void in full on the earliest to occur of (i) the date on which such Investor (or Permitted Transferee) ceases to beneficially own any Registrable Securities and (ii) the later of (x) the seventh anniversary of the date of this Agreement, and (y) the date Rule 144 or another similar exemption under the Securities Act is available for the sale of all of the shares beneficially owned by such Investor (or Permitted Transferee) without limitation and restriction during a three (3) month period without registration.

(b)          Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended, modified or waived only with the prior written consent of the Company and holders of a majority of the Registrable Securities. The failure or delay of any Person to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such Person thereafter to enforce each and every provision of this Agreement in accordance with its terms. A waiver or consent to or of any breach or default by any Person in the performance by that Person of his, her or its obligations under this Agreement shall not be deemed to be a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person under this Agreement.

(c)          Remedies. The parties to this Agreement shall be entitled to enforce their rights under this Agreement specifically (without posting a bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that a breach of this Agreement would cause irreparable harm and money damages would not be an adequate remedy for any such breach and that, in addition to any other rights and remedies existing hereunder, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

(d)          Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited, invalid, illegal or unenforceable in any respect under any applicable law or regulation in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement in such jurisdiction or in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such prohibited, invalid, illegal or unenforceable provision had never been contained herein.

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(e)          Entire Agreement. Except as otherwise provided herein, this Agreement contains the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties hereto, written or oral, which may have related to the subject matter hereof in any way.

(f)          Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit and be enforceable by the Company and its successors and assigns and the holders of Registrable Securities and their respective successors and permitted assigns (whether so expressed or not). In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities.

(g)          Notices. All notices, demands or other communications to be given under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when delivered personally to the recipient; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient but, if not, then on the next business day; (iii) one (1) business day after it is sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) three (3) days after it is mailed to the recipient by first class mail, return receipt requested. Such notices, demands and other communications shall be sent to the Company at the address specified below and to any holder of Registrable Securities or to any other party subject to this Agreement at such address as indicated beneath such party’s signature hereto, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Any party may change its address for receipt of notice by providing prior written notice of the change to the sending party. The Company’s address is:

Global Defense & National Security Systems, Inc.

11921 Freedom Drive, Suite 550

Two Fountain Square

Reston, Virginia  20190

Attention:	Dale Davis
Telephone:	(202) 800-4333

E-mail: dale.davis@globalgroup.com

with a copy to:

Morrison & Foerster LLP

1650 Tysons Boulevard, Suite 400

McLean, Virginia  22102

Attention:	Lawrence T. Yanowitch, Esq.
	Charles W. Katz, Esq.
Telephone:	(703) 760-7318
Facsimile:	(703) 760-7777
E-mail:	lyanowitch@mofo.com
	ckatz@mofo.com

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or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

(h)          Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s chief executive office is located, the time period shall automatically be extended to the business day immediately following such Saturday, Sunday or legal holiday.

(i)          Governing Law. All issues and questions concerning the construction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(j)          MUTUAL WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

(k)          CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS PARAGRAPH. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(l)          Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than by limitation.

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(m)          No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

(n)          Counterparts. This Agreement may be executed in multiple counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together shall constitute one and the same agreement.

(o)          Electronic Delivery. This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent executed and delivered by means of a photographic, photostatic, facsimile or similar reproduction of such signed writing using a facsimile machine or electronic mail shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

(p)          Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each holder of Registrable Securities shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated hereby.

(q)          No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

(r)          No Superior Rights. The Company will not grant additional registration rights following the date hereof to any person or entity that are superior to the rights granted hereunder without first obtaining the prior written consent of the holders of a majority of the Registrable Securities, other than in connection with an Equity Financing pursuant to Section 6.18 of the Stock Purchase Agreement.

 20

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Damian Perl
	Name:  Damian Perl
	Title:  Chairman of the Board of Directors
SIMON S. LEE MANAGEMENT TRUST
By:	/s/ Simon Lee
	Name: Simon Lee
	Title: Trustee
SIMON S. LEE FAMILY TRUST
By:	/s/ Julie Lee
	Name: Julie Lee
	Title: Trustee
AHL DESCENDANTS TRUST
By:	Julie Lee
	Name: Julie Lee
	Title: Trustee
JSL DESCENDANTS TRUST
By:	/s/ Simon Lee
	Name: Simon Lee
	Title: Trustee
BRIAN LEE FAMILY TRUST
By:	/s/ Simon Lee
	Name: Simon Lee
	Title: Trustee

Signature Page to Registration Rights Agreement

SCHEDULE I

SCHEDULE OF INVESTORS

Simon S. Lee Management Trust

Simon Lee Family Trust

AHL Descendants Trust

JSL Descendants Trust

Brian Lee Family Trust

A-1 

EX-10.5

Exhibit 10.5

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is entered into as of November 23, 2015, by and between Global Defense & National Security Systems, Inc., a Delaware corporation (the “Company”), and Global Defense & National Security Holdings LLC (the “Investor”).

WHEREAS, the Company and the Investor are party to that certain Registration Rights Agreement, dated as of October 23, 2013 (the “ Original Registration Rights Agreement ”);

WHEREAS, the Investor and the Company desire to enter into this Agreement to provide the Investor with certain rights relating to the registration of the Initial Shares and the Private Placement Shares;

WHEREAS, pursuant to that Amended and Restated Backstop Common Stock Purchase Agreement (the “Backstop Agreement”), dated as of October 17, 2015, by and between the Investor and the Company, the Company agreed to amend the Original Registration Rights Agreement to include the Backstop Shares (as defined below); and

WHEREAS, the Company and the Investor wish to amend and restate the Original Registration Rights Agreement as set forth herein and as permitted by Section 6.7 of the Original Registration Rights Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions. The following capitalized terms used herein have the following meanings:

“Agreement” means this Agreement, as amended, restated, supplemented, or otherwise modified from time to time.

“Backstop Shares” means any shares of Common Stock acquired by the Investor pursuant to the Backstop Agreement.

“Board” means the board of directors of the Company.

“Business Combination” shall have the meaning set forth in the Amended and Restated Articles of Incorporation of the Company.

“Commission” means the Securities and Exchange Commission, or any other federal agency then administering the Securities Act or the Exchange Act.

“Common Stock” means the common stock, par value $0.0001 per share, of the Company.

“Company” is defined in the preamble to this Agreement.

“Demand Registration” is defined in Section 2.1.1.

“Demanding Holder” is defined in Section 2.1.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

“Form S-3” is defined in Section 2.3.

“Indemnified Party” is defined in Section 4.3.

“Indemnifying Party” is defined in Section 4.3.

“Initial Units” is defined in the recitals to this Agreement.

“Investor” is defined in the preamble to this Agreement.

“Investor Indemnified Party” is defined in Section 4.1.

“Maximum Number of Securities” is defined in Section 2.1.4.

“Notices” is defined in Section 6.3.

“Person” means an individual, a partnership, a limited liability company, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof, or any entity similar to any of the foregoing.

“Piggy-Back Registration” is defined in Section 2.2.1.

“Pro Rata” is defined in Section 2.1.4.

“Register,” “Registered” and “Registration” mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and such registration statement becoming effective.

“Registrable Securities” mean (i) the Initial Shares, (ii) the Private Placement Shares, (iii) any Working Capital Shares owned or held by the Investor, and (iv) any Backstop Shares. Registrable Securities include any warrants, shares of capital stock or other securities of the Company issued as a dividend or other distribution with respect to or in exchange for or in replacement of Registrable Securities. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act; (c) such securities shall have ceased to be outstanding; or (d) all such Registrable Securities held by the Investor may be sold in a single transaction without registration in compliance with Rule 144, including if applicable Rule 144(e), under the Securities Act.

“Registration Statement” means a registration statement filed by the Company with the Commission in compliance with the Securities Act for a public offering and sale of Common Stock or other securities of the Company (other than a registration statement on Form S-4 or S-8 (or any successor or substantially similar form), or in connection with (i) an employee stock option, stock purchase or compensation plan or securities issued or issuable pursuant to any such plan, (ii) a dividend reinvestment plan or (iii) an offering of debt that is convertible into equity securities of the Company).

“Release Date” means (a) with respect to the Private Placement Shares and the Working Capital Shares, the 30^th day following the consummation of a Business Combination, and (b) with respect to the Initial Shares, the date on which the Initial Shares may be released from escrow pursuant to the terms of the Amended and Restated Subscription Agreement between the Company and the Investor, dated as of July 19, 2013, relating to the Initial Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

“Private Placement Shares” is defined in the recitals to this Agreement.

“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer’s market-making activities.

“Working Capital Shares” means any shares held by the Investor, officers or directors of the Company or their affiliates which may be issued in payment of working capital loans made to the Company.

2. Registration Rights.

2.1 Demand Registration.

2.1.1 Request for Registration. At any time commencing three (3) months prior to the applicable Release Date, and from time to time thereafter, the holders of a majority-in-interest of the Registrable Securities held by the Investor or the permitted transferees of the Investor, may make a written demand for registration under the Securities Act of all or part of their Registrable Securities (a “Demand Registration”); provided, that any Registration Statement filed with the Commission with respect to a Demand Registration shall not be declared effective before the applicable Release Date. Any demand for a Demand Registration shall specify the number of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company will within ten (10) days of the Company’s receipt of the Demand Registration, notify all holders of Registrable Securities of the demand, and each holder of Registrable Securities who wishes to include all or a portion of such holder’s Registrable Securities in the Demand Registration (each such holder including Registrable Securities in such registration, a “Demanding Holder”) shall so notify the Company in writing within ten (10) days after the receipt by the holder of the notice from the Company. Upon any such request, the Demanding Holders shall be entitled to have their Registrable Securities included in the Demand Registration pursuant to a Demand Registration and the Company will effect, as soon thereafter as practicable, but not more than forty five (45) days immediately after the Company’s receipt of the Demand Registration. The Registration of all Registrable Securities requested by the Demanding Holders and Requesting Holders pursuant to such Demand Registration, subject to Sections 2.1.3, 2.1.4, 3.4 and the provisos set forth in Section 3.1.1. The Company shall not be obligated to effect more than an aggregate of two (2) Demand Registrations under this Section 2.1.1 in respect of Registrable Securities; provided, however, that a Registration shall not be counted for such purposes unless a Form S-1 or any similar long-form registration statement that may be available at such time ("Form S-1") has become effective and all of the Registrable Securities requested by the Demanding Holders to be registered on behalf of the Demanding Holders in such Form S-1 Registration have been sold, in accordance with Section 3.1 of this Agreement.

2.1.2 Effective Registration. Notwithstanding the provisions of subsection 2.1.1 above or any other part of this Agreement, a registration will not count as a Demand Registration until the Registration Statement filed with the Commission with respect to such Demand Registration has been declared effective and the Company has complied with all of its material obligations under this Agreement with respect thereto; provided, however, that if, after such Registration Statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the Registration Statement with respect to such Demand Registration will be deemed not to have been declared effective unless and until such stop order or injunction is removed, rescinded or otherwise terminated; provided, further, that the Company shall not be obligated to file a second Registration Statement until a Registration Statement that has been filed is counted as a Demand Registration or is terminated.

2.1.3 Underwritten Offering. If a majority-in-interest of the Demanding Holders so elects and such holders so advise the Company as part of their written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, the right of any holder to include its Registrable Securities in such registration shall be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting to the extent provided herein. All Demanding Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwriting by a majority-in-interest of the Demanding Holders, which Underwriter or Underwriters shall be reasonably acceptable to the Company.

2.1.4 Reduction of Offering. If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advises the Company and the Demanding Holders in writing that the dollar amount or amount of Registrable Securities which the Demanding Holders desire to sell, taken together with all other shares of Common Stock or other securities which the Company desires to sell and the shares of Common Stock or other securities, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other stockholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of securities that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (pro rata in accordance with the number of shares that each such Person has requested be included in such registration, regardless of the number of shares held by each such Person (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock or other securities for the account of other Persons that the Company is obligated to register pursuant to written contractual arrangements with such Persons and that can be sold without exceeding the Maximum Number of Securities.

2.1.5 Withdrawal. If a majority-in-interest of the Demanding Holders disapproves of the terms of any underwriting or are not entitled to include all of their Registrable Securities in any offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such offering by giving written notice to the Company and the Underwriter or Underwriters of their request to withdraw prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Demand Registration.

2.2 Piggy-Back Registration.

2.2.1 Piggy-Back Rights. If at any time after the applicable Release Date, the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account and/or for stockholders of the Company for their account, then the Company shall (x) give written notice of such filing to the holders of Registrable Securities, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall cause such Registrable Securities to be included in such registration and shall use reasonable efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.

2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of shares of Common Stock or other securities which the Company desires to sell, taken together with shares of Common Stock or other securities, if any, as to which registration has been demanded pursuant to written contractual arrangements with Persons other than the holders of Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 2.2, and the shares of Common Stock or other securities, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities, then the Company shall include in any such registration:

(a) If the registration is undertaken for the Company’s account: (i) first, the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the shares of Common Stock or other securities, if any, comprised of Registrable Securities as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock or other securities for the account of other Persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such Persons and that can be sold without exceeding the Maximum Number of Securities; and

(b) If the registration is a “demand” registration undertaken at the demand of Persons other than the holders of Registrable Securities, (i) first, the shares of Common Stock or other securities for the account of the demanding Persons that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock or other securities comprised of Registrable Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the shares of Common Stock or other securities for the account of other Persons that the Company is obligated to register pursuant to written contractual arrangements with such Persons, that can be sold without exceeding the Maximum Number of Securities.

2.2.3 Withdrawal. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration for any or no reason whatsoever by giving written notice to the Company and the Underwriter or Underwriters (if any) of such request to withdraw prior to the effectiveness of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by Persons making a demand pursuant to written contractual obligations) may withdraw (or postpone the filing of) a registration statement at any time prior to the effectiveness of the Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 3.3.

2.3 Registrations on Form S-3. The holders of Registrable Securities may at any time and from time to time, request in writing that the Company, pursuant to Rule 415 under the Securities Act (or any successor rule promulgated thereunder by the Commission), register the resale of any or all of such Registrable Securities on Form S-3 or any similar short-form registration which may be available at such time (“Form S-3”); provided, however, that the Company shall not be obligated to effect such request through an underwritten offering. Within five (5) days of the Company's receipt of such written request, the Company will give written notice of the proposed registration to all other holders of Registrable Securities, and, as soon as practicable thereafter, effect the registration of all or such portion of such holder’s or holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities or other securities of the Company, if any, of any other holder or holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration pursuant to this Section 2.3: (i) if Form S-3 is not available for such offering; or (ii) if the holders of the Registrable Securities, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at any aggregate price to the public of less than $1,000,000. Registrations effected pursuant to this Section 2.3 shall not be counted as Demand Registrations effected pursuant to Section 2.1.

2.3.1 Restrictions on Registration Rights. If (A) during the period starting with the date sixty (60) days prior to the Company's good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Company initiated Registration and provided that the Company has delivered written notice to the Holders prior to receipt of a Demand Registration pursuant to subsection 2.1.1 and it continues to actively employ, in good faith, all reasonable efforts to cause the applicable Registration Statement to become effective; (B) the Holders have requested an Underwritten Registration and the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer; or (C) in the good faith judgment of the Board such Registration would be seriously detrimental to the Company and the Board concludes as a result that it is essential to defer the filing of such Registration Statement at such time, then in each case the Company shall furnish to such Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board it would be seriously detrimental to the Company for such Registration Statement to be filed in the near future and that it is therefore essential to defer the filing of such Registration Statement. In such event, the Company shall have the right to defer such filing for a period of not more than thirty (30) days; provided, however, that the Company shall not defer its obligation in this manner more than once in any 12-month period. Notwithstanding anything to the contrary contained in this Agreement, no Registration shall be effected or permitted and no Registration Statement shall become effective, with respect to any Registrable Securities held by any Holder, until after the expiration of the applicable escrow period.

3. Registration Procedures.

3.1 Filings; Information. Whenever the Company is required to effect the registration of any Registrable Securities pursuant to Section 2, the Company shall use its reasonable efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as reasonably practicable, and in connection with any such request:

3.1.1 Filing Registration Statement. Subject to Sections 2.1.6 and 2.3.1, the Company shall, as expeditiously as reasonably possible and in any event within sixty (60) days after receipt of a demand for registration of Registrable Securities pursuant to Sections 2.1 or 2.3, prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use reasonable efforts to cause such Registration Statement to become and remain effective for the period required by Section 3.1.3.

3.1.2 Copies. The Company shall upon request, prior to filing a Registration Statement or prospectus in respect of Registrable Securities, or any amendment or supplement thereto, furnish without charge to the holders of Registrable Securities included in such registration, and such holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus), and such other documents as the holders of Registrable Securities included in such registration or legal counsel for any such holders may request in order to facilitate the disposition of the Registrable Securities owned by such holders.

3.1.3 Amendments and Supplements. The Company shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities and other securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement (which period shall not exceed the sum of one hundred eighty (180) days plus any period during which any such disposition is interfered with by any stop order or injunction of the Commission or any governmental agency or court).

3.1.4 Notification. After the filing of a Registration Statement, the Company shall promptly, and in no event more than two (2) business days after such filing, notify the holders of Registrable Securities included in such Registration Statement of such filing, and shall further notify such holders within two (2) business days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the Company shall take all reasonable actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the holders of Registrable Securities included in such Registration Statement any such supplement or amendment.

3.1.5 State Securities Laws Compliance. The Company shall use its reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph or subject itself to taxation in any such jurisdiction.

3.1.6 Agreements for Disposition. The Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. The representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the holders of Registrable Securities included in such Registration Statement. Such holders shall agree to such representations, warranties, covenants and indemnification and contribution obligations for selling stockholders as are customarily contained in agreements of that type used by the Underwriters.

3.1.7 Cooperation. The principal executive officer of the Company, the principal financial officer of the Company, the principal accounting officer of the Company and all other officers and members of the management of the Company shall cooperate in any offering of Registrable Securities hereunder, which cooperation shall include, without limitation, the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors.

3.1.8 Records. The Company shall make available for inspection by the holders of Registrable Securities included in a Registration Statement, any Underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other professional retained by any holder of Registrable Securities included in such Registration Statement or any Underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any of them in connection with such Registration Statement.

3.1.9 Opinions and Comfort Letters. If a Registration Statement in respect of Registrable Securities includes an underwritten public offering, the Company shall furnish or cause to be furnished such documents and certificates as may be reasonably requested by the participating holders and the managing Underwriters, including customary opinions of counsel and “cold comfort” letters as may be reasonably required pursuant to the underwriting agreement relating thereto. In the event no legal opinion is delivered to any Underwriter, the Company shall furnish to each holder of Registrable Securities included in such Registration Statement, at any time that such holder elects to use a prospectus, a letter of counsel to the Company to the effect that the Registration Statement containing such prospectus has been declared effective and that no stop order is in effect.

3.1.10 Earnings Statement. The Company shall comply with all applicable rules and regulations of the Commission promulgated under the Securities Act, and make available to its stockholders, as soon as practicable, an earnings statement covering a period of twelve (12) months, beginning within three (3) months after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

3.1.11 Listing. The Company shall use its reasonable efforts to cause all Registrable Securities included in any registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by the Company are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to the majority-in-interest, on an as-converted to Common Stock basis, of the holders of Registrable Securities included in such Registration Statement.

3.2 Obligation to Suspend Distribution. Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1.4(iv), or, in the case of a resale registration on Form S-3 pursuant to Section 2.3 hereof, upon any suspension by the Company, pursuant to a written insider trading compliance program adopted by the Board, of the ability of all “insiders” covered by such program to transact in the Company’s securities because of the existence of material non-public information, each holder of Registrable Securities included in any registration shall immediately discontinue disposition of such Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such holder receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv) or the restriction on the ability of “insiders” to transact in the Company’s securities is removed, as applicable, and, if so directed by the Company, each such holder will deliver to the Company all copies, other than permanent file copies then in such holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.

3.3 Registration Expenses. The Company shall bear all costs and expenses incurred in connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any registration on Form S-3 effected pursuant to Section 2.3, and all expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees, (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) printing expenses, (iv) the Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees), (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.11, (vi) Financial Industry Regulatory Authority, Inc. fees, (vii) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1.9), (viii) the fees and expenses of any special experts retained by the Company in connection with such registration, and (ix) the fees and expenses of one legal counsel selected by the holders of a majority-in-interest of the Registrable Securities included in such registration. The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders. Additionally, in an underwritten offering, all selling stockholders and the Company shall bear the reimbursable expenses of the Underwriter, if any, pro rata in proportion to the respective amount of shares each is selling in such offering.

3.4 Information. The holders of Registrable Securities shall provide such information as may reasonably be requested by the Company or the managing Underwriter, if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 2 and in connection with the Company’s obligation to comply with federal and applicable state securities laws.

4. Indemnification and Contribution.

4.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless the Investor and each other holder of Registrable Securities, and each of their respective officers, employees, affiliates, directors, partners, members, attorneys and agents, and each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) the Investor or other holder of Registrable Securities (each, an “Investor Indemnified Party”), from and against any expenses, losses, judgments, claims, damages or liabilities, whether joint or several, arising out of or based upon any untrue statement (or allegedly untrue statement) of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, free writing prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission (or alleged omission) to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration; and the Company shall promptly reimburse the Investor Indemnified Party for any legal and any other expenses reasonably incurred by such Investor Indemnified Party in connection with investigating and defending any such expense, loss, judgment, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based upon any untrue statement or allegedly untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, free writing prospectus, final prospectus, or summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by such selling holder expressly for use therein. The Company also shall indemnify any Underwriter of the Registrable Securities, their officers, affiliates, directors, partners, members and agents and each Person who controls such Underwriter on substantially the same basis as that of the indemnification provided above in this Section 4.1.

4.2 Indemnification by Holders of Registrable Securities. Each selling holder of Registrable Securities will, in the event that any registration is being effected under the Securities Act pursuant to this Agreement of any Registrable Securities held by such selling holder, indemnify and hold harmless the Company, each of its directors and officers and each Underwriter (if any), and each other selling holder and each other Person, if any, who controls another selling holder or such Underwriter within the meaning of the Securities Act, against any expenses, losses, judgments, claims, damages or liabilities, whether joint or several, insofar as such expenses, losses, judgments, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or allegedly untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or the alleged omission to state a material fact required to be stated therein or necessary to make the statement therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such selling holder expressly for use therein, and each selling holder of Registrable Securities shall reimburse the Company, its directors, officers and each Underwriter (if any), and each other selling holder or controlling Person for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, judgment, claim, damage, liability or action. Each selling holder’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling holder.

4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any Person of any notice of any expense, loss, judgment, claim, damage or liability or any action in respect of which indemnity may be sought pursuant to Section 4.1 or 4.2, such Person (the “Indemnified Party”) shall, if a claim in respect thereof is to be made against any other Person for indemnification hereunder, notify such other Person (the “Indemnifying Party”) in writing of the expense, loss, judgment, claim, damage, liability or action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel reasonably satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel) to represent the Indemnified Party and its controlling Persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the reasonable fees and reasonable expenses of such counsel to be paid by such Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.

4.4 Contribution.

4.4.1 If the indemnification provided for in the foregoing Sections 4.1 and 4.2 is unavailable to any Indemnified Party in respect of any expense, loss, judgment, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such expense, loss, judgment, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such expense, loss, judgment, claim, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

4.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding Section 4.4.1.

4.4.3 The amount paid or payable by an Indemnified Party as a result of any expense, loss, judgment, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, no holder of Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

5. Underwriting and Distribution.

5.1 Rule 144. The Company covenants that it shall file any reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the holders of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar Rule or regulation hereafter adopted by the Commission.

6. Miscellaneous.

6.1 Other Registration Rights. The Company represents and warrants that no Person, other than a holder of the Registrable Securities, has any right to require the Company to register any shares of the Company’s capital stock for sale or to include shares of the Company’s capital stock in any registration filed by the Company for the sale of shares of capital stock for its own account or for the account of any other Person.

6.2 Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part. This Agreement and the rights, duties and obligations of the holders of Registrable Securities hereunder may be freely assigned or delegated by such holder of Registrable Securities in conjunction with and to the extent of any transfer of the Registrable Securities held by any such holder. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties hereto and the permitted assigns of the Investor or holder of Registrable Securities or of any assignee of the Investor or holder of Registrable Securities. This Agreement is not intended to confer any rights or benefits on any Persons that are not party hereto other than as expressly set forth in Article 4 and this Section 6.2.

6.3 Notices. All notices, demands, requests, consents, approvals or other communications (collectively, “Notices”) required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable overnight courier service with charges prepaid, or transmitted by hand delivery or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice. Notice shall be deemed given on the date of service or transmission if personally served or transmitted by facsimile; provided, that if such service or transmission is not on a business day or is after normal business hours, then such notice shall be deemed given on the next business day. Notice otherwise sent as provided herein shall be deemed given on the next business day following timely delivery of such notice to a reputable overnight courier service with an order for next-day delivery.

To the Company:

Global Defense & National Security Systems, Inc.

11921 Freedom Drive, Suite 550

Two Fountain Square

Reston, Virginia 20190

Attn: Dale R. Davis

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue, Suite 1400

Palo Alto, California 94301

Attn: Gregg A. Noel, Esq., Thomas J. Ivey, Esq.

To the Investor:

Global Defense & National Security Holdings LLC

c/o Global Defense & National Security Systems, Inc.

11921 Freedom Drive, Suite 550

Two Fountain Square

Reston, Virginia 20190

Attn: Frederic Cassis

6.4 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable.

6.5 Counterparts. This Agreement may be executed by facsimile and in multiple counterparts, all of which taken together shall constitute one and the same instrument.

6.6 Entire Agreement. This Agreement (including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto) constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.

6.7 Modifications and Amendments. The Company may from time to time supplement or amend this Agreement without the approval of the Investor in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company may deem necessary or desirable and that the Company, in the exercise of reasonable judgment, determines will not materially adversely affect the interest of the Investor. All other modifications or amendments shall require the written consent of the holders of a majority-in-interest of the Registrable Securities.

6.8 Titles and Headings. Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement.

6.9 Waivers and Extensions. Any party to this Agreement may waive any right, breach or default which such party has the right to waive, provided that such waiver will not be effective against the waiving party unless it is in writing, is signed by such party, and specifically refers to this Agreement. Waivers may be made in advance or after the right waived has arisen or the breach or default waived has occurred. Any waiver may be conditional. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof nor of any other agreement or provision herein contained. No waiver or extension of time for performance of any obligations or acts shall be deemed a waiver or extension of the time for performance of any other obligations or acts.

6.10 Remedies Cumulative. In the event that the Company fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the Investor or any other holder of Registrable Securities may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.

6.11 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed in that State, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and the New York Civil Practice Laws and Rules 327(b). The parties hereto agree that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and the parties hereto irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive. The parties hereto hereby waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

6.12 Waiver of Trial by Jury. Each party hereto hereby irrevocably and unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of, connected with or relating to this Agreement, the transactions contemplated hereby, or the actions of the Investor in the negotiation, administration, performance or enforcement hereof.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties have caused this Amended and Restated Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Frederic Cassis
Name: Frederic Cassis
Title: Secretary
GLOBAL DEFENSE & NATIONAL SECURITY HOLDINGS LLC
By:   Black Marlin, Ltd, its Manager
By:	/s/ Damian Perl
Name: Damian Perl
Title: Manager

[Amended and Restated Registration Rights Agreement]

EX-10.6

Exhibit 10.6

EXECUTION VERSION

VOTING AGREEMENT

This VOTING AGREEMENT (this “Agreement”) is made as of November 23, 2015, by and among Global Defense & National Security Systems, Inc., a Delaware corporation (the “Company”), (ii) Global Defense & National Security Holdings LLC, a Delaware limited liability company (the “Sponsor”), and (iii) collectively, Simon S. Lee Management Trust, Simon Lee Family Trust, AHL Descendants Trust, JSL Descendants Trust and Brian Lee Family Trust (the “Stockholder Group”). Sponsor and the Stockholder Group are referred to herein collectively as the “Investor Parties”, and each of Sponsor and the Stockholder Group as an “Investor Party”, and the Investor Parties, together with the Company, are referred to herein as the “Parties”.

RECITALS

WHEREAS, the Parties, STG Group, Inc., a Delaware corporation (“STG”) and Simon Lee, are parties to a Stock Purchase Agreement, dated as of June 8, 2015 (the “SPA”), whereby the Stockholder Group will receive shares of common stock of the Company (the “Common Stock”) as consideration for the sale of all their right and interest in the equity securities of STG Group, Inc., and certain other transactions, in each case on the terms set forth therein (collectively, the “Transaction”);

WHEREAS, the Sponsor also holds shares of Common Stock and the Parties desire to set forth the relationship of the Investor Parties with respect to the Common Stock, among other things;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereto agree as follows:

Article I

Agreements

1.1           Voting Issues.

(a)          Actions Requiring Stockholder Approval. Each Investor Party hereby agrees that, so long as both Investor Parties continue to maintain beneficial ownership (as determined under Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of at least 5% of the then outstanding Common Stock (the “Minimum Equity Holdings”), upon notice that there will be any action or item that requires a vote of the holders of the Common Stock, the Investor Parties shall confer and discuss such matters and attempt to reach a unanimous decision with respect to such impending vote. However, if the Investor Parties are not able to agree on any item or issue, there shall be no further consequence to either Investor Party under this Agreement.

(b)          Director Designations. Each Investor Party hereby agrees to vote all shares of Common Stock owned by it or over which it has the power to control the election of such shares in accordance with, and to effect and carry out, the following provisions:

(i)          Board Representation. Each Investor Party may designate one (1) nominee to the Board of Directors of the Company (the “Board”), each such designee to be in Class III, as more fully described in Section 1.2(b) below. Each Investor Party agrees to support the other Investor Party’s designee for nomination as director of the Board, by voting all its shares of Common Stock that are capable of voting in the election of directors, for the election of the other Investor Party’s director designee to effect such representation.

(ii)         Filling Vacancies. Any vacancy on the Board occurring by reason of death, resignation, removal or other termination of a director, shall be filled by a new director designated by the same Investor Party who was entitled to designate the previous director whose death, resignation, removal or other termination created such vacancy. Each Investor Party agrees to direct the director designated by such Investor Party to elect the person designated by such designating Investor Party as a director to fill such vacancy.

(iii)        Expiration of Provision. The obligations of each Investor Party pursuant to this Section 1.1(b) shall continue only during the Board Representation Period (as defined below) of the other Investor Party.

1.2           Board of Directors Composition. The Parties hereby agree to take all necessary corporate action to effect the following provisions:

(a)          Number. The number of directors comprising the Board shall initially be fixed at five directors.

(b)          Tiered Board Structure. The Board shall initially be comprised of directors in three classes as follows:

(i)          Class I: Two directors shall be in Class I. Each initial director in Class I shall serve for a term ending on the date of the annual meeting of stockholders of the Company in 2016. Directors in Class I shall be shall be independent (as defined under applicable listing standards of the NASDAQ Stock Market, and the Exchange Act and the SEC rules and regulations thereunder) and shall be nominated and elected pursuant to the applicable provisions of the bylaws of the Company.

(ii)         Class II: One director shall be in Class II. The initial director in Class II shall serve for a term ending on the date of the annual meeting of stockholders of the Company in 2017. The director in Class II shall be independent (as defined under applicable listing standards of the NASDAQ Stock Market, and the Exchange Act and the SEC rules and regulations thereunder) and shall be nominated and elected pursuant to the applicable provisions of the bylaws of the Company.

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(iii)        Class III: Two directors shall be in Class III. Each initial director in Class III shall serve for a term ending on the date of the annual meeting of stockholders of the Company in 2018. Directors in Class III shall be designated for nomination by the Investor Parties pursuant to Section 1.1(b) above and shall be elected pursuant to the applicable provisions of the bylaws of the Company.

1.3           Board of Directors Representation. “Board Representation Period” means the period of time beginning on the date an Investor Party “beneficially owns” (as determined under Rule 13d-3 of the Exchange Act) the Minimum Equity Holdings and ending on the date such Investor Party owns less than the Minimum Equity Holdings.

1.4           Acquisition of Additional Common Stock. Without the other Investor Party’s prior written consent, each Investor Party will not (and will ensure that its “affiliates” as defined in Rule 12b-2 under the Exchange Act will not), directly or indirectly, during the period commencing on the date first written above and ending eighteen (18) months from the date hereof: (a) purchase or otherwise acquire, or offer, seek, propose or agree to purchase or otherwise acquire, ownership (including, but not limited to, beneficial ownership as defined in Rule 13d-3 under the Exchange Act) of any Common Stock, or any direct or indirect rights or options to acquire any Common Stock or any securities convertible into Common Stock, or (b) form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the securities of the Company (other than as a result of this Agreement).

1.5           Nominees for Class I Directors. The Investor Parties agree to endorse and vote to approve the nominees for Class I directors proposed by the Board of Directors of the Company (or the nomination and governance committee thereof) at the annual meeting of stockholders of the Company in 2016, unless all of the Investor Parties agree in writing in advance of such meeting to propose to the stockholders alternative directors.

1.6           Good Faith. The Parties shall reasonably cooperate with one another in good faith with respect to this Agreement, including the items set forth in Article 1.

Article II

TERM

This Agreement is effective as of the date hereof. Except as expressly provided herein with respect to specific provisions of this Agreement, this Agreement shall terminate only upon the mutual written agreement of the Parties. If this Agreement is terminated pursuant to this Article II, all further obligations of each Party shall terminate without further liability or obligation of such Party to any other Party, including liability for damages; provided, however, that no such termination shall relieve any Party from any liability for breach of this Agreement arising prior to the termination date.

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Article III

MISCELLANEOUS

3.1           Certain Definitions. Unless otherwise defined herein, terms used herein that are defined in the SPA shall have the meanings set forth for such terms in the SPA.

3.2           Interpretation. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. Unless the context clearly indicates otherwise, where appropriate, the singular shall include the plural and the masculine shall include the feminine or neuter, and vice versa, to the extent necessary to give the terms defined herein and/or the terms otherwise used in this Agreement the proper meanings. The words “including,” “include” or “includes” shall mean including without limitation. Any reference in this Agreement to a statute shall be to such statute, as amended from time to time prior to the Closing, and to the rules and regulations promulgated thereunder. When reference is made in this Agreement to an Exhibit, Appendix, Article, Section or subsection, such reference shall be to an Exhibit, Appendix, Article, Section or subsection to or of this Agreement unless otherwise indicated.

3.3           Representations and Warranties. Each Party represents and warrants to each other Party as follows:

(a)          Such Party takes the legal form set forth in the Preamble to this Agreement and is duly organized and validly existing under the laws of its governing jurisdiction.

(b)          Such Party has all requisite corporate or comparable power and authority to execute and deliver this Agreement and to consummate the transactions contemplated to be performed by it hereby. The execution, delivery and performance by such Party of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate or comparable action, if applicable, on the part of such Party. No other approval is required in connection with such Party’s execution, delivery and performance of this Agreement and the consummation by such Party of the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Party and, assuming the due authorization, execution and delivery of this Agreement by each other Party, constitutes the legal, valid and binding agreement of such Party, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application that may affect the enforcement of creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

3.4           Further Assurances. Each Party shall execute and deliver such additional instruments and other documents and shall take such further actions as may be necessary or appropriate to effectuate, carry out and comply with all of its obligations under this Agreement.

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3.5           Successors and Assigns; No Assignment or Transfer. This Agreement and the rights of the Parties hereunder shall be binding upon and shall inure to the benefit of the Parties, their successors and permitted assigns. No Party shall, or shall have the right to, assign, sell, transfer, delegate or otherwise dispose of this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the other Party.

3.6           Injunctive Relief. Each Party acknowledges that its breach of its obligations under this Agreement would cause the other Party irreparable damage. Accordingly, the Parties agree that in the event of such breach or threatened breach, in addition to remedies at law, the non-breaching Parties shall have the right to injunctive or other equitable relief, including specific performance of the terms and provisions hereof, without the necessity of posting any bond or other security, to prevent the other Party’s violations of its obligations hereunder. Nothing in this Agreement shall be construed as preventing any Party from seeking an interim injunction or any similar equitable relief in any court of competent jurisdiction.

3.7           Severability. If any provision of this Agreement, or the application thereof to any Person, place or circumstance, is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, such provision shall be enforced to the maximum extent possible so as to effect the intent of the Parties, or, if incapable of such enforcement, shall be deemed to be deleted from this Agreement, and the remainder of this Agreement and such provisions as applied to other Persons, places and circumstances shall remain in full force and effect and, in such event, the Parties shall negotiate in good faith in an attempt to agree to another provision (in lieu of the term or application held to be invalid or unenforceable) that will be valid and enforceable and will carry out the Parties’ intentions hereunder.

3.8           Waivers. The waiver by a Party of a breach of or a default under any provision of this Agreement (a) shall not be effective unless such waiver is in writing, expressly states that it is a waiver hereunder, and identifies the breach or default to be waived and (b) shall not be construed as effective against or with respect to any other Party. No waiver hereunder shall, in any event, be construed as a waiver of any subsequent breach of, or default under, the same or any other provision of this Agreement, nor shall any delay or omission on the part of a Party in exercising or availing itself of any right or remedy, or any course of dealing hereunder, operate as a waiver of any right or remedy.

3.9           Amendments. This Agreement may be amended only by written document, expressly stating that it is an amendment to this Agreement, identifying the provisions of this Agreement to be amended, and duly executed on behalf of each of the Parties. No delay or omission on the part of a Party in exercising or availing itself of any right or remedy, or any course of dealing hereunder, operate as an amendment with respect to any provision hereof.

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3.10         Jurisdiction; Waiver of Jury Trial. The Parties agree that any Proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the Eastern District of Virginia or any Virginia state court with jurisdiction over Fairfax County, Virginia, and each of the Parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such Proceeding and irrevocably waives, to the fullest extent permitted by applicable Law, any objection that it may now or hereafter have to the laying of the venue of any such Proceeding in any such court or that any such Proceeding brought in any such court has been brought in an inconvenient forum. Process in any such Proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on such Party as provided in Section 3.14 shall be deemed effective service of process on such Party. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

3.11         Governing Law. This Agreement shall in all respects be interpreted, construed and governed by and in accordance with the Laws of the State of Delaware, without regard to its conflicts of laws principles.

3.12         Limitations on Damages. In no event shall any Party have any liability for loss of profits, revenue or goodwill, loss or interruption of business, loss of data, or for any indirect, incidental, special, consequential or punitive damages, arising out of or relating to this Agreement or the subject matter hereof, no matter what theory of liability, and even if advised of the possibility or probability of such damages.

3.13         No Third-Party Beneficiaries. Nothing expressed or referred to in this Agreement confers any rights or remedies upon any Person that is not a Party or permitted assign of a Party to this Agreement.

3.14         Notices. All notices, requests, consents, waivers and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given (a) if personally delivered, upon delivery or refusal of delivery, (b) if mailed by registered or certified United States mail, return receipt requested, postage prepaid, upon delivery or refusal of delivery, (c) if sent by a nationally recognized overnight delivery service, upon delivery or refusal of delivery, or (d) if sent by facsimile or electronic mail, upon confirmation of delivery. All notices, consents, waivers or other communications required or permitted to be given hereunder shall be addressed as follows:

If to the Company or Sponsor, to such entity at:

11921 Freedom Drive, Suite 550
Two Fountain Square
Reston, Virginia  20190
Attention:	Dale Davis
Telephone:	(202) 800-4333
E-mail:	dale.davis@globalgroup.com

6 

with a copy to:
Morrison & Foerster LLP
1650 Tysons Boulevard, Suite 400
McLean, Virginia  22102
Attention:	Lawrence T. Yanowitch, Esq.
	Charles W. Katz, Esq.
Telephone:	(703) 760-7318
Facsimile:	(703) 760-7777
E-mail:	lyanowitch@mofo.com
	ckatz@mofo.com
If to any Stockholder, sent care of:
Simon Lee
11091 Sunset Hills Road, Suite 200
Reston, Virginia  20190
Telephone:	(703) 691-2480
Facsimile:	(703) 691-3467
E-mail:	SLee@stg.com
with a copy to:
Holland & Knight LLP
1600 Tysons Boulevard, Suite 700
McLean, Virginia  22102
Attention:	William J. Mutryn
	Jonathan F.     Wolcott
Telephone:	(703) 720-8069
Facsimile:	(703) 720-8610
E-mail:	william.mutryn@hklaw.com
	jonathan.wolcott@hklaw.com

or at such other address or addresses as the Party addressed may from time to time designate in writing pursuant to notice given in accordance with this Section 3.14.

7 

3.15         Entire Agreement. This Agreement, the SPA and the other Transaction Documents (including the Exhibits and Schedules attached hereto and thereto, which are incorporated herein by reference) constitute the entire agreement of the Parties with respect to its subject matter. This Agreement, the SPA and the other Transaction Documents supersede all previous, contemporaneous and inconsistent agreements, negotiations, representations and promises between the Parties, written or oral, regarding the subject matter hereunder. There are no oral or written collateral representations, agreements or understandings except as provided herein and therein.

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

** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK **

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective authorized officers, as of the date first written above.

COMPANY:
GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Damian Perl
	Name:  Damian Perl
	Title:  Chairman of the Board of Directors
SPONSOR:
GLOBAL DEFENSE & NATIONAL SECURITY HOLDINGS LLC
By:	Black Marlin Ltd, its Manager
	By:	/s/ Damian Perl
	Name:	Damian Perl
	Title:	Manager

[Signature Page to Voting Agreement]

STOCKHOLDER GROUP:
SIMON S. LEE MANAGEMENT TRUST
By:	/s/ Simon Lee
	Name:
	Title:
SIMON S. LEE FAMILY TRUST
By:	/s/ Julie S. Lee
	Name:
	Title:
AHL DESCENDANTS TRUST
By:	/s/ Julie S. Lee
	Name:
	Title:
JSL DESCENDANTS TRUST
By:	/s/ Simon Lee
	Name:
	Title:
BRIAN LEE FAMILY TRUST
By:	/s/ Simon Lee
	Name:
	Title:

[Signature Page to Voting Agreement]

EX-10.7

Exhibit 10.7

EXECUTION VERSION

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Escrow Agreement”) is entered into as of November 23, 2015, by and among Global Defense & National Security Systems, Inc., a Delaware corporation, a Delaware corporation (the “Buyer”), each of the Persons set forth on the signature page hereto as a Stockholder (each a “Stockholder” and collectively, the “Stockholders”), who are stockholders of STG Group, Inc., a Delaware corporation (the “Company”), Simon Lee (the “Stockholders’ Representative”) and Branch Banking and Trust Company, a North Carolina banking corporation (the “Escrow Agent”). Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Purchase Agreement (as defined below).

WITNESSETH:

WHEREAS, the Buyer, Global Defense & National Security Holdings LLC, a Delaware limited liability company, the Company, the Stockholders and the Stockholders’ Representative, have entered into that certain Stock Purchase Agreement, dated as of June 8, 2015 (the “Purchase Agreement”), a copy of which has been delivered to the Escrow Agent;

WHEREAS, the Buyer, the Company, the Stockholders and the Stockholders’ Representative have agreed that at the Closing, pursuant to and subject to the terms and conditions set forth in the Purchase Agreement and this Escrow Agreement, the Cash Escrow Deposit (as defined below) and the Escrow Shares (as defined below) shall be delivered to the Escrow Agent to serve as partial security for the indemnification obligations of the Stockholders set forth in Article IX of the Purchase Agreement; and

WHEREAS, the Escrow Agent is willing to act as escrow agent on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the promises and agreements set forth herein, the undersigned hereby agree as follows:

ARTICLE I

TERMS AND CONDITIONS

1.1           Establishment of Escrow.  The undersigned have caused or will cause to be deposited with the Escrow Agent (a) an amount in cash equal to Three Million Three Hundred Ten Thousand Dollars ($3,310,000) (the “Cash Escrow Deposit”) and (b) Three Hundred Thirteen Thousand Seven Hundred Forty-Four (313,744) unregistered shares of Buyer Common Stock with an aggregate value equal to approximately Three Million Three Hundred Ten Thousand Dollars ($3,310,000) (the “Escrow Share Amount”), or $10.55 per Buyer Share (the “Escrow Shares,” and together with the Cash Escrow Deposit, or the balance thereof remaining from time to time, being referred to herein as the “Escrow Amount”).

1.2           Treatment of Escrow Amount.  The Cash Escrow Deposit and the Escrow Shares shall be deposited by the Buyer with the Escrow Agent in a segregated account pursuant to the terms of this Escrow Agreement. Such account shall be called the “Global Defense Escrow.” The Escrow Amount shall not be subject to any lien, attachment or trustee process, or any other judicial process by any creditor of any party to this Escrow Agreement. Absent any written investment direction, the Escrow Agent will invest the Cash Escrow Deposit in the BB&T Business Investment Deposit Account, type 169.

1.3           Purpose of the Escrow Amount. The purpose of the Escrow Amount is to, subject to the terms and conditions of the Purchase Agreement, serve as partial security for the indemnification obligations of the Stockholders set forth in the Purchase Agreement.

1.4           Escrow Procedure.

(a)          Indemnification Claims. Subject to the procedures and requirements set forth in this Section 1.4, the Buyer shall be entitled to make indemnification claims against the Escrow Amount for any and all Damages incurred by any Buyer Indemnified Party for which the Buyer Indemnified Party may seek indemnification under Article IX of the Purchase Agreement, pursuant to and in accordance with the procedures set forth in Article IX of the Purchase Agreement (subject always to the limitations and requirements set forth in the Purchase Agreement and this Escrow Agreement) (such indemnification claims, the “Indemnification Claims”).

(b)          Claim Notice. Any Indemnification Claim by the Buyer against the Escrow Amount shall be made by providing the Stockholders’ Representative with written notice (the “Claim Notice”) setting forth the following information: (i) that a Buyer Indemnified Party seeks indemnification under the Purchase Agreement in an aggregate stated indemnifiable amount arising from such Indemnification Claim (the “Claim Amount”), (ii) a brief description, in reasonable detail, of the facts, circumstances or events giving rise to such Indemnification Claim by such Buyer Indemnified Party, and (iii) an estimate of the portion of the Cash Escrow Deposit and/or the number of Escrow Shares to be released to the Buyer in order to satisfy such Claim Amount, as calculated in Section 1.4(d) below.

(c)          Notice of Contest. The Stockholders’ Representative may contest any Indemnification Claim by giving the Buyer written notice of such contest (the “Contest Notice”) within ten (10) Business Days after delivery of such Claim Notice (the “Contest Notice Period”). The Contest Notice shall include a statement of the grounds of such contest in reasonable detail and shall state the amount of the Claim Amount that the Stockholders’ Representative does not dispute. The undisputed portion of the Claim Amount, if any, stated in such Contest Notice shall be available for immediate release to the Buyer from the Escrow Amount (as directed pursuant to the Claim Notice), and the Buyer and Stockholders’ Representative shall provide the Escrow Agent with an executed Disbursement Request (as defined below) regarding the release of such undisputed portion of the Claim Amount from the Escrow Amount. None of the Escrow Amount shall be released to the Buyer with respect to the disputed portion of such Claim Amount unless and until such disputed portion is finally resolved either by a mutual agreement, in writing, between the Buyer and the Stockholders’ Representative or by a court of competent jurisdiction in accordance with Section 13.9 of the Purchase Agreement. Upon expiration of the Contest Notice Period, if no Contest Notice has been delivered to the Buyer during such period, the Buyer and the Stockholders’ Representative shall provide the Escrow Agent with an executed Disbursement Request to release a portion of the Escrow Amount with sufficient value to satisfy the Claim Amount, as calculated in Section 1.4(d) herein.

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(d)          Calculation of Values. In calculating the values of the Escrow Shares for purposes of satisfying any Indemnification Claim, each Escrow Share shall be valued at the average closing market price at which shares of Buyer Common Stock traded on Nasdaq over the last ten (10) trading days immediately prior to the date such claim is satisfied (the “Share Value”), and Indemnification Claims that are paid under this Agreement may be satisfied, in whole or in part, as specified in the Disbursement Request, and without duplication: (i) by transferring to the Buyer Indemnified Party the number of Escrow Shares that is equal to the Claim Amount (or part thereof) based on the Share Value per Escrow Share (rounded down to the nearest whole share), and/or (ii) by a cash disbursement from the Cash Escrow Deposit equal to the Claim Amount (or part thereof), and/or (iii) by pursuing any other remedies available to the Buyer under the terms of the Purchase Agreement.

(e)          Disbursement Request. Upon receipt by the Escrow Agent of a disbursement request, as set forth in Exhibit A hereto (the “Disbursement Request”), executed by the Buyer and the Stockholders’ Representative, the Escrow Agent is hereby authorized and directed to deliver the portion of the Escrow Amount in accordance with the joint written instructions of the Buyer and the Stockholders’ Representative in such Disbursement Request, within two (2) Business Days following receipt of such Disbursement Request. Claims against the Escrow Amount shall first, be paid from the amount of the Cash Escrow Deposit in the Escrow Amount, and second, once the total amount of the Cash Escrow Deposit has been disbursed, be paid as a transfer to the Buyer Indemnified Party the number of Escrow Shares that is equal to the claim amount (or remaining portion thereof), divided by the Share Value per Escrow Share, rounded down to the nearest whole share. Notwithstanding the foregoing; if Escrow Shares otherwise would be disbursed to the Buyer Indemnified Party against an Indemnification Claim pursuant to this Agreement, but the Stockholders’ Representative notifies the Buyer in writing that, in the Stockholders’ Representative reasonable opinion, the effect of such disbursement, if made, would cause the Transaction to fail to satisfy the Control Requirement, the Stockholders’ Representative may cause all or part of such Indemnification Claim to be satisfied by a cash payment directly to the Buyer Indemnified Party, and the Disbursement Request shall instead direct that the number of Escrow Shares that is equal to the amount of cash paid directly to the Buyer Indemnified Party, based on the Share Value per Escrow Share (rounded down to the nearest whole share), be disbursed to the Stockholders pro rata based upon their Per Share Portion.

(f)          Notice Requirements. Any notice pursuant to this Section 1.4 setting forth, claiming, containing, objecting to or in any way related to the distribution of the Escrow Amount, must be in writing or set forth in a Portable Document Format (“PDF”), executed by the appropriate party or parties hereto, as evidenced by the signatures of the Person or Persons signing this Escrow Agreement, and such notice shall be deemed delivered and effective only if the receiving or delivering party, as applicable, shall have actually delivered or received, as applicable, it on a business day by confirmed facsimile or as a PDF attached to an email only at the fax number or email address set forth in Section 3.3 below.

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1.5           Release of Escrow Amount.  

(a)          The date that is eighteen (18) months after the Closing Date is the “Release Date.” If there are no pending Claim Notices on the Release Date, the Buyer and the Stockholders’ Representative shall jointly provide the Escrow Agent with an executed Disbursement Request instructing the Escrow Agent to disburse the Escrow Amount (including any amount of Additional Cash Escrow, if any) to the Stockholders, pro rata based upon their Per Share Portion. In the event there are any pending Claim Notices on the Release Date, the Buyer and the Stockholders’ Representative shall jointly instruct the Escrow Agent, and the Escrow Agent shall follow such joint instructions, to retain only the Pending Claim Amount (as defined below) and release to the Stockholders all of the Escrow Amount in excess of the Pending Claim Amount as set forth in the joint instructions. For purposes of this Escrow Agreement, “Pending Claim Amount” shall mean that portion of the Cash Escrow Deposit and/or that number of the Escrow Shares equal to the disputed amount in any pending Claim Notice based on the Share Value.

(b)          Any portion of the Escrow Amount retained after the Release Date in respect of any pending Indemnification Claim shall not be subject to or retained in respect of any Indemnification Claim other than such Indemnification Claim so pending after such date and shall be released (in whole or in part) by the Escrow Agent to the Buyer and/or to the Stockholders, as the case may be, only pursuant to Section 1.4 hereof or upon receipt by the Escrow Agent of either: (i) a copy of a written settlement agreement executed by the Buyer and the Stockholders’ Representative resolving such pending Indemnification Claim with joint instructions of the Buyer and the Stockholders’ Representative that all or part of the Escrow Amount be released to the Buyer and/or the Stockholders; or (ii) a copy of a final order or judgment by the courts of the Eastern District of Virginia or any Virginia state court with jurisdiction over Fairfax County, Virginia instructing the Escrow Agent to release all or part of the Escrow Amount to the Buyer and/or the Stockholders. Any such portion of the Escrow Amount to be released to the Stockholders shall be released by the Escrow Agent to the Stockholders pro rata based upon their Per Share Portion. The Escrow Agent shall continue to hold the remaining Escrow Amount until otherwise permitted to release such remaining amount in accordance with the terms of this Section 1.5.

(c)          If, on any date that a number of Escrow Shares is to be disbursed pursuant to the terms hereof, (i) the aggregate value of the Escrow Shares remaining in the Escrow Amount, based on the Share Value per Escrow Share, is less than the amount requested in the Disbursement Request and (ii) the aggregate value of the Escrow Shares disbursed as of such date is less the Escrow Share Amount, the Stockholders jointly and severally agree to promptly (and in any event within two (2) Business Days following notice from the Escrow Agent) provide to the Stockholders’ Representative for deposit with the Escrow Agent (within two (2) Business Days following receipt from the Stockholders) an amount in cash, by wire transfer of immediately available funds, equal to the difference between (x) the Escrow Share Amount and (y) the aggregate value of the Escrow Shares disbursed as of such date (such difference, the “Additional Cash Escrow”). The Additional Cash Escrow shall be added to the Escrow Amount, and the Escrow Agent shall then transfer to the Buyer Indemnified Party the Escrow Shares remaining in the Escrow Amount, plus a portion of the Additional Cash Escrow necessary to satisfy the Disbursement Request. Thereafter, any subsequent Disbursement Request shall be satisfied from the Additional Cash Escrow.

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(d)          In no event shall the aggregate value disbursed from the Escrow Amount exceed the sum of the Cash Escrow Deposit and the Escrow Share Amount. Once an amount equal to the sum of the Cash Escrow Deposit and the Escrow Share Amount has been disbursed from the Escrow Amount, any remaining shares of Buyer Common Stock in the Escrow Amount shall be distributed to the Stockholders pro rata based upon their Per Share Portion.

(e)          Notwithstanding anything to the contrary herein, the Escrow Agent shall make distributions of the Escrow Amount any time and from time to time upon, and in accordance with, joint written instructions from only the Buyer and the Stockholders’ Representative.

(f)          If, on any date that Escrow Shares are to be released pursuant to the terms hereof, the Escrow Agent holds a stock certificate or other evidence representing more Escrow Shares than are to be released, the Escrow Agent shall be instructed to deliver such stock certificate to the Buyer, and the Buyer shall promptly cancel, or cause the registrar for the Buyer Common Stock to promptly cancel, such stock certificate and the number of Escrow Shares to be so released, and shall deliver to the Escrow Agent a stock certificate representing the remaining portion thereof to be held pursuant to the terms and conditions of this Escrow Agreement.

1.6           Termination. Unless terminated earlier with the joint written consent of the Buyer and the Stockholders’ Representative, this Escrow Agreement shall remain in full force and effect until all of the Escrow Amount shall have been released in accordance with the terms hereof.

1.7           Tax Matters.

(a)          All items of income, gains and losses with respect to the Cash Escrow Deposit will be reported for income tax purposes as items attributable to the Buyer to the same extent as if the Buyer were the owner of the Escrow Amount during the period that the Escrow Amount is held by the Escrow Agent; provided that such reporting position shall be controlling only for purposes of determining the party required to pay income tax on such income. The parties hereto also agree to treat all disbursements out of the Escrow Amount to the Stockholders as additional consideration paid by the Buyer on behalf of the Buyer pursuant to the Purchase Agreement in exchange for the Shares at the time such amount is disbursed from the Escrow Amount for purposes of section 453 of the Code, and to treat each such payment as composed of a principal amount and an interest amount pursuant to section 483 or 1272 of the Code, the interest amount being equal to the amount of interest that would have accrued on the principal amount from the Closing Date at the applicable Federal rate (as determined pursuant to Section 1274(d) of the Code).

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(b)          Escrow Shares held by the Escrow Agent shall be treated at all times as owned by the Stockholders pro rata based upon their Per Share Portion, and all transactions affecting such Escrow Shares shall be reported consistently for all tax purposes. During the retention of the Escrow Shares by the Escrow Agent, (i) all cash dividends received on such Escrow Shares shall be promptly distributed to the Stockholders pro rata based on their Per Share Portion, and (ii) the Stockholders shall be entitled to exercise all voting powers associated with their Per Share Portion of such Escrow Shares.

(c)          To the extent required by applicable Law, the Escrow Agent shall issue to the Buyer and the Stockholders appropriate Treasury Forms 1099 reflecting earnings on the Cash Escrow Deposit and the Escrow Shares for each calendar year consistently with Section 1.7(a) and (b) above. The Buyer and the Stockholders’ Representative agree to provide in a timely manner to the Escrow Agent all necessary and appropriate tax information and documentation required by the Escrow Agent to facilitate proper tax reporting hereunder. Upon execution of this Escrow Agreement, the parties hereto shall furnish the Escrow Agent with the Taxpayer Identification Number of the Buyer, the Stockholders and the Stockholders’ Representative on IRS Form W-9 (or Form W-8, if applicable).

ARTICLE II

PROVISIONS AS TO ESCROW AGENT

2.1           Limitation of Escrow Agent’s Capacity.

(a)          This Escrow Agreement expressly and exclusively sets forth the duties of the Escrow Agent with respect to any and all matters pertinent hereto, and no implied duties or obligations shall be read into this Escrow Agreement against the Escrow Agent. This Escrow Agreement constitutes the entire agreement between the Escrow Agent and the other parties hereto in connection with the subject matter of this escrow, and no other agreement entered into between the parties, or any of them, shall be considered as adopted or binding, in whole or in part, upon the Escrow Agent notwithstanding that any such other agreement may be referred to herein or deposited with the Escrow Agent or the Escrow Agent may have knowledge thereof, and the Escrow Agent’s rights and responsibilities shall be governed solely by this Escrow Agreement.

(b)          The Escrow Agent acts hereunder as a depository only and is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of the subject matter of this Escrow Agreement or any part thereof, or for the form of execution thereof, or for the identity or authority of any Person executing or depositing such subject matter. The Escrow Agent shall be under no duty to investigate or inquire as to the validity or accuracy of any document, agreement, instruction or request furnished to it hereunder believed by it to be genuine, and the Escrow Agent may rely and act upon, and shall not be liable for acting or not acting upon, any such document, agreement, instruction or request. The Escrow Agent shall in no way be responsible for notifying, nor shall it be its duty to notify, any party hereto or any other party interested in this Escrow Agreement of any payment required or maturity occurring under this Escrow Agreement or under the terms of any instrument deposited herewith.

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2.2           Authority to Act.

(a)          The Escrow Agent is hereby authorized and directed by the undersigned to deliver the subject matter of this Escrow Agreement only in accordance with the provisions of Article I of this Escrow Agreement.

(b)          The Escrow Agent shall be protected in acting upon any written notice, request, waiver, consent, certificate, receipt, authorization, power of attorney or other paper or document which the Escrow Agent in good faith believes to be genuine and what it purports to be, including, but not limited to, items directing investment or non-investment of funds, items requesting or authorizing release, disbursement or retainage of the subject matter of this Escrow Agreement and items amending the terms of this Escrow Agreement.

(c)          The Escrow Agent may consult with legal counsel at the joint and several cost and expense of the undersigned (other than the Escrow Agent) in the event of any dispute or question as to the construction of any of the provisions hereof or its duties hereunder, and it shall incur no liability and shall be fully protected in acting in accordance with the advice of such counsel.

(d)          In the event of any disagreement between any of the parties to this Escrow Agreement, or between any of them and any other Person, resulting in adverse claims or demands being made in connection with the matters covered by this Escrow Agreement, or in the event that the Escrow Agent, in good faith, is in doubt as to what action it should take hereunder, the Escrow Agent may, at its option, refuse to comply with any claims or demands on it, or refuse to take any other action hereunder, so long as such disagreement continues or such doubt exists, and in any such event, the Escrow Agent shall not be or become liable in any way or to any Person for its failure or refusal to act, and the Escrow Agent shall be entitled to continue so to refrain from acting until (i) the rights of all interested parties shall have been fully and finally adjudicated by a court of competent jurisdiction, or (ii) all differences shall have been adjudged and all doubt resolved by agreement among all of the interested Persons, and the Escrow Agent shall have been notified thereof in writing signed by all such Persons. Notwithstanding the foregoing, the Escrow Agent may in its discretion obey the order, judgment, decree or levy of any court, whether with or without jurisdiction, or of any agency of the United States or any political subdivision thereof, or of any agency of the Commonwealth of Virginia or of any political subdivision thereof, and the Escrow Agent is hereby authorized in its sole discretion, to comply with and obey any such orders, judgments, decrees or levies. The right of the Escrow Agent under this sub-paragraph are cumulative of all other rights which it may have by law or otherwise.

(e)          In the event that any controversy should arise among the parties hereto with respect to the Escrow Agreement, or should the Escrow Agent resign and the parties hereto fail to select another Escrow Agent to act in its stead, the Escrow Agent shall have the right to institute a bill of interpleader in any court of competent jurisdiction to determine the rights of the parties hereto.

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2.3           Compensation/Indemnification.

(a)          The Escrow Agent shall be entitled to reasonable compensation as well as reimbursement for its reasonable costs and expenses incurred in connection with the performance by it of service under this Escrow Agreement (including reasonable fees and expenses of the Escrow Agent’s counsel). The Stockholders’ Representative and the Buyer each agree to so pay the Escrow Agent fifty percent (50%) of such reasonable compensation and, further, to reimburse Escrow Agent fifty percent (50%) for such reasonable costs and expenses. The Stockholders’ Representative and the Buyer shall each pay fifty percent (50%) of the escrow fees due herein in the amount of Two Thousand Five Hundred Dollars ($2,500).

(b)          The Stockholders and the Buyer each hereby severally agree to indemnify and hold the Escrow Agent, its affiliates and their officers, employees, successors, assigns, attorneys and agents (each an “Escrow Agent Indemnified Party”) harmless from fifty percent (50%) of all losses, costs, claims, demands, expenses, damages, penalties and attorney’s fees suffered or incurred by any Escrow Agent Indemnified Party or the Escrow Agent as a result of anything which it may do or refrain from doing in connection with this Escrow Agreement or any litigation or cause of action arising from or in conjunction with this Escrow Agreement or involving the Cash Escrow Deposit or the Escrow Shares deposited hereunder or for any interest upon any such monies, including, without limitation, arising out of the negligence of Escrow Agent; provided that the foregoing indemnification shall not extend to the gross negligence or willful misconduct of the Escrow Agent. This indemnity shall include, but not be limited to, all costs incurred in conjunction with any interpleader which the Escrow Agent may enter into regarding this Escrow Agreement. Each of the Stockholders, jointly and severally, is liable for all costs and expenses that the Stockholders are obligated to pay pursuant to this Escrow Agreement.

2.4           Miscellaneous.

(a)          The Escrow Agent shall make no disbursement, investment or other use of the Cash Escrow Deposit or the Escrow Shares until and unless it has collected the Cash Escrow Deposit and the Escrow Shares. The Escrow Agent shall not be liable for collection items until the Cash Escrow Deposit and the Escrow Shares have been received.

(b)          The Escrow Agent agrees that the Buyer and the Stockholders’ Representative may at any time, in a writing signed by both the Buyer and the Stockholders’ Representative, remove it as Escrow Agent hereunder and substitute an individual or a bank or trust company for it, in which event the Escrow Agent, upon receipt of written notice thereof, shall account for and deliver to such substituted escrow agent all funds and obligations held by it, less any amounts then due and unpaid to it for fees and expenses as herein provided, and the Escrow Agent shall thereafter be discharged from all liability hereunder.

(c)          The Escrow Agent may resign at any time by giving written notice to the parties hereto, whereupon the parties hereto will immediately appoint a successor Escrow Agent. Until a successor Escrow Agent has been named and accepts its appointment or until another disposition of the subject matter of this Escrow Agreement has been agreed upon by all parties hereto, the Escrow Agent shall be discharged of all of its duties hereunder save to keep the subject matter whole.

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(d)          All representations, covenants, and indemnifications contained in this Article II shall survive the termination of this Escrow Agreement.

ARTICLE III

GENERAL PROVISIONS

3.1           Discharge of Escrow Agent.  Upon the delivery of all of the Cash Escrow Deposit and the Escrow Shares pursuant to the terms of this Escrow Agreement, the duties of the Escrow Agent shall terminate, and the Escrow Agent shall be discharged from any further obligation hereunder.

3.2           Escrow Instructions.  Where directions or instructions from more than one of the undersigned are required, such directions or instructions may be given by separate instruments of similar tenor. Any of the undersigned may act hereunder through an agent or attorney-in-fact; provided that satisfactory written evidence of authority is first furnished to any party hereto relying on such authority.

3.3           Notice.  Any payment, notice, request for consent, report or any other communication required or permitted in this Escrow Agreement shall be in writing or set forth in a PDF attached to an email and shall be deemed to have been delivered in accordance with the terms of this Escrow Agreement by facsimile, email or overnight courier only to the appropriate fax number, email address, or notice address set forth for each party hereto as follows:

If to the Escrow Agent:

Branch Banking and Trust Company

223 West Nash Street

Wilson, NC 27893

Fax No.: (252) 246-4303

Email: mrhart@bbandt.com

Attn: Corporate Trust Services

If to the Buyer:

Global Defense & National Security Systems, Inc.

11921 Freedom Drive, Suite 550

Two Fountain Square

Reston, Virginia 20190

Attention: Dale Davis

Tel No.: (202) 800-4333

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With copies to:

Morrison & Foerster LLP

1650 Tysons Boulevard, Suite 400

McLean, VA 22102

Attention: Lawrence T. Yanowitch, Esq.

Charles W. Katz, Esq.

Tel No.: (703) 760-7318

Fax No.: (703) 760-7777

If to the Stockholders or the Stockholders’ Representative:

Simon Lee

11091 Sunset Hills Road, Suite 200

Reston, Virginia 20190

Tel No.: (703) 691-2480

Fax No.: (703) 691-3467

With copies to:

Holland & Knight LLP

1600 Tysons Boulevard, Suite 700

McLean, Virginia 22102

Attention: William J. Mutryn

Jonathan F. Wolcott

Tel No.: (703) 720-8069

Fax No.: (703) 720-8610

Any party hereto may unilaterally designate a different address by giving notice of each such change in the manner specified above to each other party hereto. Notwithstanding the foregoing, no notice to the Escrow Agent shall be deemed given to or received by the Escrow Agent unless actually delivered to an officer of the Escrow Agent having responsibility under this Escrow Agreement.

3.4           Governing Law.  This Escrow Agreement is being made in and is intended to be construed according to the Laws of the Commonwealth of Virginia. It shall inure to and be binding upon the parties hereto and their respective successors, heirs and assigns.

3.5           Construction.  Words used in the singular number may include the plural, and the plural may include the singular. The section headings appearing in this instrument have been inserted for convenience only and shall be given no substantive meaning or significance whatsoever in construing the terms and conditions of this Escrow Agreement.

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3.6           Amendment.  The terms of this Escrow Agreement may be altered, amended, modified or revoked only by an instrument in writing signed by the undersigned and the Escrow Agent.

3.7           Force Majeure. The Escrow Agent shall not be liable to the undersigned for any loss or damage arising out of any acts of God, strikes, equipment or transmission failure, war, terrorism, or any other act or circumstance beyond the reasonable control of the Escrow Agent.

3.8           Written Agreement. This Escrow Agreement represents the final agreement among the parties hereto and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties hereto. There are no unwritten oral agreements among the parties hereto.

3.9           Counterparts. This Escrow Agreement may be executed in separate counterparts (whether transmitted by facsimile or other electronic means), none of which need contain the signatures of all parties hereto, each of which shall be deemed to be an original, and all of which taken together constitute one and the same instrument. It shall not be necessary in making proof of this Escrow Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.

3.10         Electronic Delivery. This Escrow Agreement and any signed agreement or instrument entered into in connection with this Escrow Agreement, and any amendments hereto or thereto, to the extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic Delivery”), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense related to lack of authenticity.

3.11         Severability. If any part of any provision of this Escrow Agreement shall be invalid or unenforceable under applicable Law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provisions or the remaining provisions hereof or of such agreement, document or writing.

[Signature Page(s) to Follow]

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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the date first set forth above.

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Damian Perl
	Name:  Damian Perl
	Title:  Chairman of the Board of Directors
STOCKHOLDERS’ REPRESENTATIVE
/s/ Simon Lee
Simon Lee
STOCKHOLDERS
SIMON S. LEE MANAGEMENT TRUST
By:	/s/ Simon Lee
	Name: Simon Lee
	Title: Trustee
SIMON S. LEE FAMILY TRUST
By:	/s/ Julie Lee
	Name: Julie Lee
	Title: Trustee
AHL DESCENDANTS TRUST
By:	/s/ Julie Lee
	Name: Julie Lee
	Title: Trustee

[Signature Page to Escrow Agreement]

STOCKHOLDERS, cont.
JSL DESCENDANTS TRUST
By:	/s/ Simon Lee
	Name: Simon Lee
	Title: Trustee
BRIAN LEE FAMILY TRUST
By:	/s/ Simon Lee
	Name: Simon Lee
	Title: Trustee

[Signature Page to Escrow Agreement]

Branch Banking and Trust Company, as Escrow Agent, hereby accepts its appointment as Escrow Agent as described in the foregoing Escrow Agreement, subject to the terms and conditions set forth therein.

		BRANCH BANKING AND TRUST COMPANY
Date:	November 23, 2015	By:	/s/ Maura S. Pope
		Name:	Maura S. Pope
		Title:	Vice President

EX-10.8

Exhibit 10.8

EXECUTION VERSION

SECOND AMENDED AND RESTATED BACKSTOP COMMON STOCK PURCHASE AGREEMENT

This Second Amended and Restated Backstop Common Stock Purchase Agreement (this “Agreement”), is entered into as of November 23, 2015, by and between Global Defense & National Security Systems, Inc., a Delaware corporation (the “Company”), and Global Defense & National Security Holdings LLC, a Delaware limited liability company (the “Purchaser”). Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Stock Purchase Agreement (as defined below).

WHEREAS, the Company is a party to (i) that certain Stock Purchase Agreement, dated as of June 8, 2015 (the “Stock Purchase Agreement”), among the Company, the Purchaser, STG Group, Inc. (“STG”), the Stockholders named therein and Simon Lee, as Stockholders’ Representative thereunder, with respect to a proposed transaction involving the Company and STG as described therein (the “Transaction”), and (ii) that certain Amended and Restated Backstop Common Stock Purchase Agreement, dated as of October 17, 2015 (the “First Amended and Restated Backstop Agreement”), by and between the Company and the Purchaser;

WHEREAS, the Purchaser desires to purchase, and the Company desires to sell to the Purchaser, shares of the common stock of the Company, par value $0.0001 per share (“Common Stock”), pursuant to the terms and conditions set forth herein; and

WHEREAS, the Company and the Purchaser wish to amend and restate the First Amended and Restated Backstop Agreement in its entirety as set forth herein.

NOW, THEREFORE, in consideration of the premises, representations, warranties and the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.                 Backstop Purchases. Subject to the terms and conditions contained in this Agreement, the Company grants the Purchaser the right to purchase (the “Backstop Purchase”) 1,030,103 shares of Common Stock from the Company, at a purchase price of $10.63 per share (the “Per Share Purchase Price”), payable by the Purchaser by wire transfer of immediately available funds at the closing of the Transaction (the “Closing”). The purchase right provided in this Agreement can only be exercised only in the event, and to the extent, that the Company determines that it will not meet the Threshold Cash Amount (as defined below). The term “Threshold Cash Amount” means Twenty Million Dollars ($20,000,000) in cash available to the Company from (1) the Trust Fund, following the payment in full to the Company’s stockholders who have requested to be redeemed in connection with the Closing, and (2) the payment of any aggregate purchase price for the Backstop Purchase. For the avoidance of doubt, any purchase of shares of Common Stock pursuant to this Section shall be at the Purchaser’s sole discretion.

2.                  Closing.

(a)         Purchase Price. At the Closing, the Purchaser shall deliver to the Company the Per Share Purchase Price for all of the shares being purchased by the Purchaser.

(b)         Certificates. At the Closing, the Company shall deliver to the Purchaser the shares purchased by the Purchaser pursuant to the Backstop Purchase (the “Shares”).

(c)         Legend. Each certificate evidencing the Shares and each certificate issued in exchange for or upon the transfer of any Shares shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR UNLESS SUCH REGISTRATION IS NOT REQUIRED IN THE OPINION OF COUNSEL FOR THE COMPANY.”

(d)         Registration Rights.  At the Closing, the Company and the Purchaser shall enter into an amendment to that certain Registration Rights Agreement, dated as of October 23, 2013, by and between the Company and the Purchaser, to provide that the Shares shall be considered “Registrable Securities” as defined therein.

(e)          Mutual Closing Conditions. The obligations of each party hereto to purchase shares of Common Stock under this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

(i)           The Transaction shall be consummated concurrently with or immediately following the purchase of the Shares.

(ii)          The representations and warranties of the other party in this Agreement shall have been true and correct as of the date hereof and shall be true and correct as of the Closing with the same effect as though such representations and warranties had been made on and as of such date (other than any such representation or warranty that is made by its terms as of a specified date, which shall be true and correct as of such specified date).

(iii)         No order, writ, judgment, injunction, decree, determination, or award shall have been entered by or with any governmental, regulatory, or administrative authority or any court, tribunal, or judicial, or arbitral body, and no other legal restraint or prohibition shall be in effect, preventing the purchase of the Shares.

3.                  Representations and Warranties of the Purchaser.  The Purchaser represents and warrants to the Company as follows:

(a)          Organization and Good Standing. The Purchaser is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware.

(b)          Power and Authority; Enforceability. This Agreement constitutes the legal, valid, and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms. The Purchaser has full entity power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The Purchaser has taken all actions necessary to authorize the execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Purchaser.

(c)          Investment Representations.

(i)           The Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).

(ii)          The Purchaser has received, has thoroughly read, is familiar with and understands the contents of this Agreement.

(iii)         The Purchaser hereby acknowledges that an investment in the Shares involves certain significant risks. The Purchaser acknowledges that there is a substantial risk that it will lose all or a portion of its investment and that it is financially capable of bearing the risk of such investment for an indefinite period of time. The Purchaser has no need for liquidity in its investment in the Shares for the foreseeable future and is able to bear the risk of that investment for an indefinite period. The Purchaser’s present financial condition is such that the Purchaser is under no present or contemplated future need to dispose of any portion of the Shares purchased hereby to satisfy any existing or contemplated undertaking, need or indebtedness. The Purchaser’s overall commitment to investments which are not readily marketable is not disproportionate to its net worth and the investment in the Company will not cause such overall commitment to become excessive.

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(iv)         The Purchaser acknowledges that the Shares have not been registered under the Securities Act, or any state securities act, and are being sold on the basis of exemptions from registration under the Securities Act and applicable state securities acts. Reliance on such exemptions, where applicable, is predicated in part on the accuracy of the Purchaser’s representations and warranties set forth herein. The Purchaser acknowledges and hereby agrees that the Shares will not be transferable under any circumstances unless the Shares are registered in accordance with federal and state securities laws or the Purchaser finds and complies with an available exemption under such laws. Accordingly, the Purchaser hereby acknowledges that there can be no assurance that it will be able to liquidate its investment in the Company.

(v)          There are substantial risk factors pertaining to an investment in the Company. The Purchaser acknowledges that it has read the information set forth above regarding certain of such risks and is familiar with the nature and scope of all such risks, including, without limitation, risks arising from the fact that the Company is an entity with limited operating history and financial resources; and the Purchaser is fully able to bear the economic risks of such investment for an indefinite period, and can afford a complete loss thereof.

(vi)         The Purchaser has been given the opportunity to (i) ask questions of and receive answers from the Company and its designated representatives concerning the terms and conditions of the purchase of the Shares, the Company and the business and financial condition of the Company and (ii) obtain any additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to assist the Purchaser in evaluating the advisability of the purchase of the Shares and an investment in the Company. The Purchaser further represents and warrants that, prior to signing this Agreement, it has asked such questions, received such answers and obtained such information as it has deemed necessary or advisable to evaluate the merits and risks of the purchase of the Shares and an investment in the Company. The Purchaser is not relying on any oral representation made by any person as to the Company or its operations, financial condition or prospects.

(vii)        The Purchaser understands that no federal, state or other governmental authority has made any recommendation, findings or determination relating to the merits of an investment in the Company.

(viii)       The Purchaser acknowledges that neither the Company, nor any of its officers, directors, employees, agents or affiliates has made any representation or warranty, express or implied, regarding the Company, the Shares or otherwise, other than the representations and warranties set forth herein.

(ix)          The Purchaser acknowledges its obligations under the Securities Act, and the rules and regulations promulgated thereunder, with respect to the treatment of non-public information relating to the Company.

4.                 Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as follows:

(a)          Organization. The Company is a corporation duly organized and validly existing under the laws of the State of Delaware.

(b)          Power and Authority; Enforceability. This Agreement constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms. The Company has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The Company has taken all actions necessary to authorize the execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed, and delivered by the Company.

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(c)          No Violation; Necessary Approvals. Neither the execution and delivery of this Agreement by the Company, nor the consummation or performance by the Company of any of the transactions contemplated hereby, will: (i) with or without notice or lapse of time, constitute, create or result in a breach or violation of, default under, loss of benefit or right under, termination, cancellation, suspension or modification of, or acceleration of performance of any obligation required under any (A) law (statutory, common or otherwise), constitution, ordinance, rule, regulation, executive order or other similar authority enacted, adopted, promulgated or applied by any legislature, agency, bureau, branch, department, division, commission, court, tribunal or other similar recognized organization or body of any federal, state, county, municipal, local or foreign government or other similar recognized organization or body exercising similar powers or authority (collectively, “Law”), (B) order, ruling, decision, award, judgment, injunction or other similar determination or finding by, before or under the supervision of any governmental authority or arbitrator (collectively, “Order”), (C) contract or agreement, (D) permit, license, certificate, waiver, filing, notice or authorization (collectively, “Permit”) to which the Company is a party or by which it is bound or any of its assets are subject, or (E) any provision of the Company’s organizational documents as in effect at the Closing, (ii) result in the imposition of any lien, claim or encumbrance upon any assets owned by the Company; (iii) require any consent, approval, notification, waiver, or other similar action under any contract or agreement or organizational document to which the Company is a party or by which it is bound (other than receipt of the Restated Certificate Approval); or (iv) require any Permit under any Law or Order other than (A) required filings, if any, with the Securities and Exchange Commission and (B) notifications or other filings with state or federal regulatory agencies after the Closing that are necessary or convenient and do not require approval of the agency as a condition to the validity of the transactions contemplated hereunder; or (v) trigger any rights of first refusal, preemptive or preferential purchase or similar rights with respect to any of the Shares.

(d)          Authorization of the Shares. The Shares have been duly authorized, and when issued in accordance with this Agreement, will be duly and validly issued, fully paid and non-assessable and will be free and clear of all liens, claims or encumbrances, other than (A) transfer restrictions hereunder, (B) transfer restrictions under federal and state securities laws, and (C) liens, claims or encumbrances imposed due to the actions of the Purchaser.

5.                  Termination.

This Agreement may be terminated at any time prior to the Closing:

(a)           by mutual written consent of the Company and the Purchaser; or

(b)           automatically upon any termination of the Stock Purchase Agreement.

In the event of any termination of this Agreement pursuant to this Section 5, this Agreement shall forthwith become null and void and have no effect, without any liability on the part of the Purchaser or the Company and their respective directors, officers, employees, partners, managers, members, or stockholders and all rights and obligations of each party shall cease; provided, however, that nothing contained in this Section 5 shall relieve either party from liabilities or damages arising out of any fraud or willful breach by such party of any of its representations, warranties, covenants or agreements contained in this Agreement.

6.                  General Provisions.

(a)          Survival of Representations and Warranties.  All of the representations and warranties contained herein shall survive the Closing.

(b)          Entire Agreement.  This Agreement, together with any documents, instruments and writings that are delivered pursuant hereto or referenced herein, constitutes the entire agreement and understanding of the parties hereto in respect of its subject matter and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby.

(c)          Successors.  All of the terms, agreements, covenants, representations, warranties, and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the parties hereto and their respective successors.

(d)          Assignments. Neither party hereto may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party.

(e)          Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument.

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(f)           Headings. The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.

(g)          Governing Law. This Agreement, the entire relationship of the parties hereto, and any litigation between the parties (whether grounded in contract, tort, statute, law or equity) shall be governed by, construed in accordance with, and interpreted pursuant to the laws of the State of Delaware, without giving effect to its choice of laws principles.

(h)          Waiver of Jury Trial.  The parties hereto hereby waive any right to a jury trial in connection with any litigation pursuant to this Agreement and the transactions contemplated hereby.

(i)           Amendments. This Agreement may not be amended, modified or waived as to any particular provision, except by a written instrument executed by all parties hereto.

(j)           Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this Agreement, as applied to either party hereto or to any circumstance, is adjudged by a governmental authority, arbitrator, or mediator not to be enforceable in accordance with its terms, the parties hereto agree that the governmental authority, arbitrator, or mediator making such determination will have the power to modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced.

(k)          Expenses. Except as otherwise expressly provided in this Agreement or in the definitive documents for the Transaction, each party hereto will bear its own costs and expenses incurred in connection with the preparation, execution and performance of this Agreement and the consummation of the transactions contemplated hereby.

(m)         Waiver. No waiver by either party hereto of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent occurrence.

(n)          Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional actions as either party reasonably may deem to be practical and necessary in order to consummate the purchase and sale of Common Stock as contemplated by this Agreement.

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(o)          Trust Fund Waiver. Reference is made to the final prospectus of the Company dated October 24, 2013 (File No. 333-191195) (the “Prospectus”). The Purchaser warrants and represents that it has read the Prospectus and understands that Company has established the Trust Fund containing the proceeds of the IPO initially in the amount of at least Seventy-Two Million Seven Hundred Ninety-Five Thousand Dollars ($72,795,000) for the benefit of the Company’s public stockholders and certain other parties (including the underwriters of the IPO) and that the Company may disburse monies from the Trust Fund, including any proceeds therefrom, only as provided in the Prospectus. For and in consideration of the Company agreeing to enter into this Agreement, the Purchaser agrees that, notwithstanding any provisions contained in this Agreement, the Purchaser does not now have, and shall not at any time prior to the Closing have, any claim to, or make any claim against, the Trust Fund, any asset contained therein or any Additional Person, regardless of whether such claim arises as a result of, in connection with or relating in any way to, the business relationship between STG or any of its Subsidiaries, on the one hand, and the Company, on the other hand, this Agreement or any other agreement or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability. The Purchaser (for itself and on behalf of its Affiliates and direct and indirect subsidiaries and stockholders, and its and their respective successors and assigns, and any Person claiming by or through the Purchaser) hereby irrevocably waives any and all rights, titles, interests and claims of any kind that the Purchaser may have, now or in the future (in each case, however, prior to the consummation of a business combination), and shall not take any action or suit, make any claim or demand or seek recovery of any Liability or recourse against, the Trust Fund or any Additional Person for any reason whatsoever in respect thereof. The Purchaser agrees and acknowledges that such irrevocable waiver is material to this Agreement and specifically relied upon by the Company to induce it to enter into this Agreement. The Purchaser further intends and understands such waiver to be valid, binding and enforceable under applicable Law. To the extent that the Purchaser commences any action or Proceeding based upon, in connection with, relating to or arising out of any matter relating to the Company or any Additional Person, which Proceeding seeks, in whole or in part, monetary relief against the Company or any Additional Person, the Purchaser hereby acknowledges and agrees that the Purchaser’s sole remedy shall be against the Company’s funds held outside of the Trust Fund and that such claim shall not permit the Purchaser (or any party claiming on the Purchaser’s behalf or in lieu of the Purchaser) to have any claim against any Additional Person or the Trust Fund or any amounts contained therein. In the event that the Purchaser commences any action or Proceeding based upon, in connection with, relating to or arising out of any matter relating to the Company or any Additional Person, which Proceeding seeks, in whole or in part, relief against the Trust Fund, the Company’s public stockholders or any Additional Person, whether in the form of money damages or injunctive relief, the Company shall be entitled to recover from the Purchaser the associated legal fees and costs in connection with any such action, in the event the Company prevails in such action or Proceeding.

[Signature page follows]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the date first set forth above.

COMPANY:
GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
	By:	/s/ Frederic Cassis
	Name: Frederic Cassis
	Title:  Secretary

	PURCHASER:
GLOBAL DEFENSE & NATIONAL SECURITY HOLDINGS LLC
	By: Black Marlin Ltd, its Manager
	By:	/s/ Damian Perl
	Name: Damian Perl
	Title:  Manager

[Signature Page to Second Amended & Restated Backstop Common Stock Purchase Agreement]

EX-10.9

Exhibit 10.9

EXECUTION VERSION

CONTRIBUTION AND EXCHANGE AGREEMENT

This CONTRIBUTION AND EXCHANGE AGREEMENT (this “Agreement”) is made as of the 23rd day of November, 2015 (the “Effective Date”), by and among GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC., a Delaware corporation (the “Company”), and GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS HOLDINGS LLC, a Delaware limited liability company, (the “Transferor”). Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Backstop Agreement (as defined below).

WHEREAS, the Company and the Transferor are parties to the Second Amended and Restated Backstop Common Stock Purchase Agreement, dated as of November 23, 2015 (the “Backstop Agreement”), pursuant to which the Transferor has the right under certain conditions to purchase shares of Common Stock, $0.0001 par value per share, of the Company (“Common Stock”), at a purchase price of $10.63 per share;

WHEREAS, the Company has determined that the conditions that permit the exercise of the Backstop Purchase Right by Transferor exist that would permit Transferor to purchase shares of Common Stock on the terms specified in the Backstop Agreement except as otherwise modified by this Agreement;

WHEREAS, the Transferor desires to exercise its right under the Backstop Agreement to purchase 1,030,103 shares of Common Stock under the Backstop Agreement (collectively, the “Backstop Shares”) in exchange for a contribution to the capital of the Company of cash in an amount equal to $10,950,000, being the per share purchase price of $10.63 multiplied by the number of Backstop Shares (the “Backstop Amount”); and

WHEREAS, the parties hereto acknowledge and intend that (i) the contribution of the Backstop Amount to the Company under this Agreement in exchange for the Backstop Shares is a “Contribution Agreement” referred to in the Stock Purchase Agreement, and (ii) the contributions under this Agreement and the Stock Purchase Agreement are intended to be consummated as a part of a single integrated plan for issuance of capital stock of the Company in an exchange described in Section 351 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.          Exchange. Upon the terms and subject to the conditions set forth in this Agreement and the Backstop Agreement, the Transferor shall transfer the Backstop Amount to the Company, and the Company shall deliver to the Transferor a certificate representing the Backstop Shares in consideration therefor.

2.          Closing. The exchange contemplated by Section 1 of this Agreement shall take place immediately prior to the closing of the exchange of stock of STG for Common Stock pursuant to the Stock Purchase Agreement (such closing under this Agreement, the “Backstop Closing”).

3.          Representations and Warranties of the Company. The Company hereby represents and warrants to the Transferor that each of the following representations and warranties shall be true on the Effective Date except as otherwise indicated:

3.1           Authorization. All corporate action on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance, exchange and delivery of the Backstop Shares has been taken or will be taken prior to or at the Backstop Closing, and this Agreement constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

3.2           Valid Issuance of Stock. The Backstop Shares have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Certificate of Incorporation of the Company and this Agreement, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than under applicable state and federal securities laws.

3.3           Compliance with Law and Instruments. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets or properties.

4.          Representations and Warranties of the Transferor. The Transferor hereby represents and warrants to the Company that each of the following representations and warranties shall be true on the Effective Date:

4.1           Securities Matters.

(a)          The Transferor has such knowledge and experience in financial and business matters so as to be capable of evaluating and understanding, and has evaluated and understood, the merits and risks of an investment in the Company and the exchange contemplated by this Agreement, and the Transferor has been given the opportunity (i) to obtain information and to examine all documents relating to the Company and its business, (ii) to ask questions of, and to receive answers from, the Company concerning the Company, its business and the terms and conditions of this investment, and (iii) to obtain any additional information, to the extent the Company possesses such information or could acquire it without unreasonable effort or expense, to verify the accuracy of any information previously furnished. All such questions have been answered to the Transferor’s full satisfaction, and all information and documents, records and books pertaining to this investment which the Transferor has requested have been made available to the Transferor.

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(b)          The Transferor is able to bear the substantial economic risks of the Transferor’s investment in the Company and the exchange contemplated by this Agreement in that, among other factors, the Transferor can afford to hold the Backstop Shares for an indefinite period and can afford a complete loss of the Transferor’s investment in the Company.

(c)          No material adverse change in the Transferor’s financial condition has taken place during the past twelve (12) months, and the Transferor will have sufficient liquidity with respect to the Transferor’s net worth for an adequate period of time to provide for the Transferor’s needs and personal contingencies.

(d)          The Transferor is acquiring the Backstop Shares for the Transferor’s own account for investment and not with a view to, or in connection with, any public offering or distribution of the same and without any present intention to sell the same at any particular event or circumstances. The Transferor has no agreement or other arrangement with any person to sell, transfer or pledge any part of the Backstop Shares subscribed for which would guarantee the Transferor any profit or protect against any loss with respect to the Backstop Shares.

(e)          The Transferor understands that no federal or state agency has passed on or made any recommendation or endorsement of the investment.

(f)          The Transferor understands that the Backstop Shares have not been registered under the Securities Act or applicable state securities laws, and are being offered and sold under an exemption from registration provided by such laws and the rules and regulations thereunder; further, the Transferor understands that the Company is under no obligation to register any of the Backstop Shares or to comply with any applicable exemption under any applicable securities laws with respect to the Backstop Shares. The Transferor must bear the economic risks of an investment in the Company for an indefinite period of time because it is not anticipated that there will be any market for the Backstop Shares and because the Backstop Shares cannot be resold unless subsequently registered under applicable securities laws or unless an exemption from such registration is available. The Transferor also understands that the exemption provided by Rule 144 under the Securities Act may not be available because of the conditions and limitations of such Rule, and that in the absence of the availability of such Rule, any disposition by the Transferor of any portion of the Backstop Shares held by the Transferor may require compliance with some other exemption under the Securities Act and that the Company is under no obligation and does not plan to take any action in furtherance of making Rule 144 or any other exemption so available.

(e)          The Transferor has been informed that legends referring to the restrictions indicated herein will be placed on the certificate(s) evidencing the Backstop Shares being acquired by the Transferor.

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5.          General.

5.1           Survival of Warranties. The warranties, representations and covenants of the Company and the Transferor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement, and the Closing shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Transferor or the Company.

5.2           Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties, provided that the Company shall not assign its obligation to issue the Backstop Shares to any other person, and the Transferor shall not assign its right to purchase the Backstop Shares in any manner inconsistent with treatment  the exchange under this Agreement and the Stock Purchase Agreement as an exchange described in Section 351 of the Internal Revenue Code of 1986, as amended. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

5.3           Governing Law; Venue. This Agreement shall be governed by and construed under the laws of the State of Delaware, without giving effect to its principles of conflicts of law. In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction and venue of the Court of Chancery of the State of Delaware or if such court lacks jurisdiction, any court of the United States located in the State of Delaware, in the event any controversy, claim or dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the Court of Chancery of the State of Delaware or, if under applicable law exclusive jurisdiction is vested in the federal courts, any court of the United States located in the State of Delaware.

5.4           Counterparts. This Agreement may be executed in one or more counterparts, including by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

5.5           Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

5.6           Amendments; Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Transferor.

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5.7           Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

COMPANY:
GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.,
a Delaware corporation
By:	/s/ Frederic Cassis
	Name:  Frederic Cassis
	Title:  Secretary
TRANSFEROR:
GLOBAL DEFENSE & NATIONAL SECURITY HOLDINGS LLC,
a Delaware limited liability company
By:  Black Marlin Ltd, its Manager
	By:	/s/ Damian Perl
		Name:  Damian Perl
		Title:  Manager

[SIGNATURE PAGE TO CONTRIBUTION AND EXCHANGE AGREEMENT]

EX-10.10

Exhibit 10.10

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made by and between Global Defense & National Security Systems, Inc., a Delaware corporation (the “Company”), and Paul A. Fernandes, a natural person (the “Executive”), and shall be effective as of the closing of the transactions contemplated by the Purchase Agreement (as defined below).

WHEREAS, a Stock Purchase Agreement, dated as of June 8, 2015 (the “Purchase Agreement”), was entered into among (i) the Company, (ii) Global Defense & National Security LLC, a Delaware limited liability company, solely for purposes of certain sections thereof, (iii) STG Group, Inc., a Delaware corporation (“STG”), (iv) each of the Persons set forth on Annex A thereto and (v) Simon Lee as Stockholders’ Representative, solely for purposes of certain sections thereof, pursuant to the terms and subject to the conditions of which the Company will acquire all of the issued and outstanding capital stock of STG;

WHEREAS, the Executive is an executive officer of STG;

WHEREAS, the Company’s obligations under the Purchase Agreement are conditioned upon execution and delivery of this Agreement by the Executive; and

WHEREAS, the Executive will benefit from the Company’s fulfillment of its obligations under the Purchase Agreement, and the Company and the Executive otherwise desire to enter into this Agreement relating to the Executive’s employment by the Company and to set forth certain covenants restricting certain competitive and other activities by the Executive.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises and respective covenants and agreements of the parties herein contained, the parties, intending to be legally bound, agree as follows:

1.          Employment. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein.

2.          At-Will Employment. The parties hereby agree that the Executive’s employment with the Company shall be “at-will” employment and may be terminated by either party at any time, subject to and in accordance with the terms of this Agreement.

3.          Position and Duties. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall initially serve as the President of the Company and as the President of STG and shall have such responsibilities and authority as is customary for a President of a company of similar size and nature as the Company or STG, as applicable, and shall have such title, duties and responsibilities as assigned to the Executive by the board of directors of the Company (the “Board”). The Executive shall devote the Executive’s full business time and attention to the business and affairs of the Company and its subsidiaries and affiliates. So long as the Executive is employed by the Company or any of its subsidiaries or affiliates, the Executive shall not, without the prior written consent of the Board, perform other services for compensation or engage in other business activities that could interfere with his responsibilities to the Company or its subsidiaries or affiliates or create a conflict of interest; provided that the Executive may, without the consent of the Board, engage in personal, charitable and professional activities, (a) subject to compliance with the Company’s normal conflicts procedures, and (b) provided that such activities do not materially conflict or interfere with the ability of the Executive to perform the duties and responsibilities hereunder. If, in the reasonable discretion of the Company, an outside activity subsequently creates a material conflict with the Company’s business or prospective business, the Executive agrees to immediately cease engaging in such activity at such time as requested.

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC

11921 FREEDOM DRIVE │ SUITE 550 │ TWO FOUNTAIN SQUARE │ RESTON │ VIRGINIA │ 20190 │ USA

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4.          Compensation, Benefits and Related Matters.

(a)          Salary. During the Executive’s employment with the Company pursuant to this Agreement, the Company shall pay to the Executive a gross salary at an initial rate of $400,752.00 dollars ($16,698.00 semi-monthly) per annum in equal installments as nearly as practicable on the normal payroll periods for employees of the Company generally (the “Base Salary”). The Board may, in its sole discretion, increase the Executive’s Base Salary at any time. In addition, the Executive shall be eligible for bonuses, as determined by the Board, in its sole discretion, from time to time.

(b)          Expenses. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to receive reimbursement for all reasonable out-of-pocket expenses incurred by the Executive in performing services hereunder (subject to reasonable documentation with respect thereto in accordance with the Company’s expense reimbursement policies).

(c)          Benefits. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company, including the standard vacation and sick leave benefit plan made available to senior executive officers of the Company, subject to the Company’s customary vesting periods and eligibility requirements. The Company may initiate, change and discontinue any such plan or arrangement at any time. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of any amounts payable to the Executive pursuant to this Section 4.

5.          Termination.

(a)          The Executive’s employment with the Company may be terminated by the Company (i) at any time for Cause or without Cause; or (ii) if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for four (4) consecutive months or any one hundred twenty (120) days in any twelve (12)-month period (a “Disability”). The Executive’s employment with the Company shall be terminated immediately upon the death of the Executive. The Executive’s employment with the Company may be terminated at any time by the Executive with or without Good Reason.

(b)          Any purported termination of the Executive’s employment by the Company or the Executive (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other in accordance with Section 15 hereof.

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(c)          Upon the termination of the Executive’s employment with the Company, or any of its subsidiaries or affiliates, as applicable, for any or no reason, the Executive shall immediately resign as an officer, director and/or manager of the Company, or any of its subsidiaries or affiliates, as applicable.

(d)          As used herein:

(i)          A “Notice of Termination” shall mean a notice that specifies the Date of Termination and that, in the case of a termination by the Executive, shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and that, in the case of a termination by the Company, shall indicate whether such termination is for Cause or without Cause and shall specify the grounds upon which Cause is alleged, if applicable.

(ii)         The “Date of Termination” with respect to any purported termination of the Executive’s employment shall mean (A) if the Executive’s employment is terminated for Disability, the date specified in the Notice of Termination, (B) if the Executive’s employment is terminated by reason of death, then the date thereof, and (C) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Executive, shall not be less than thirty (30) nor more than sixty (60) days from the date that such Notice of Termination is given).

(iii)        “Cause” shall mean that the Board has determined in good faith that the Executive (i) has been convicted of, or pleaded nolo contendere to, a misdemeanor involving moral turpitude or a felony, (ii) has committed any other act or omission involving dishonesty, disloyalty, theft, unethical business conduct or fraud with respect to the Company or any of its subsidiaries or affiliates or any of their customers or suppliers, (iii) has engaged in chronic substance abuse which has a material impact on the Executive’s performance of his duties hereunder, (iv) has consistently failed to comply with the lawful instructions of the Board, or (v) has materially breached this Agreement. Notwithstanding anything in this Agreement or elsewhere to the contrary, the Company may terminate the Executive’s employment for Cause only if (x) the Notice of Termination specifies the grounds upon which Cause is alleged and (y) the Executive fails to cure such grounds for Cause within thirty (30) days after he receives such notice, unless such grounds for Cause are not curable.

(iv)        “Good Reason” for the Executive to terminate his employment hereunder will exist if any of the following events occur without his prior written consent: (A) a relocation of more than fifty (50) miles of his principal place of employment, (B) a material reduction in the Executive’s then-current Base Salary (as such may have been increased from time to time from the amount set forth in Section 4(a) above), except to the extent of any broad-based salary reduction affecting the other senior executives of the Company, (C) without the prior consent of the Executive, (1) a material diminution of, or material reduction or material adverse alteration in, the Executive’s duties, or (2) the assignment to the Executive of duties materially inconsistent with those set forth in Section 3, or (D) a material breach by the Company of its obligations hereunder. Notwithstanding the foregoing, the Executive may only terminate his employment hereunder with Good Reason if (x) the Executive gives written notice to the Company within sixty (60) days of the initial existence of the event that gives rise to Good Reason; (y) the Company does not cure such event within thirty (30) days of receiving such notice; and (z) the Executive terminates his employment with the Company within one hundred twenty (120) days after such event occurs.

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6.          Severance Payments.

(a)          Upon any termination of the Executive’s employment by the Company without Cause or by the Executive for Good Reason, the Company shall pay as severance to the Executive an amount (the “Cash Severance Amount”) equal to the sum of eighteen (18) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination. The Company shall pay the Cash Severance Amount over the twelve (12)-month period immediately following the Date of Termination (the “Severance Period”), in equal installments as nearly as practicable, on the normal payroll dates for employees of the Company generally but in no event less frequently than monthly. Any amounts payable pursuant to this Section 6(a) shall not be paid until the first scheduled payment date following the date the release contemplated in Section 6(d) is executed and no longer subject to revocation, with the first such payment being in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, however, that any such amounts that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the sixtieth (60^th) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, further, that, if the Executive is a “specified employee” within the meaning of Code Section 409A, any amounts payable to the Executive under this Section 6(a) during the first six (6) months and one (1) day following the Date of Termination that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the date that is six (6) months and one (1) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled to during the period following the Date of Termination if such deferral had not been required.

(b)          In the event of any termination of the Executive’s employment (i) by the Company for Cause, or (ii) due to the Executive’s death or Disability, the Executive shall not be entitled to any severance or other payments or benefits as of the Date of Termination (except as required by applicable law) and all rights to receive a salary, benefits or other compensation shall termination as of the Date of Termination except as set forth in Section 7.

(c)          If the Executive breaches any provision of Sections 8 through 11 hereof, the Company shall no longer be obligated to make any payments or reimbursements or provide any benefits pursuant to this Section 6.

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(d)          The Company’s obligations under this Section 6 shall be contingent upon (i) the delivery by the Executive of a complete release in favor of the Company, its subsidiaries, affiliates, and respective officers, directors, employees, principals, managers, partners, members, attorneys and representatives, in substantially the form attached hereto as Annex A, within twenty-one (21) days after the Date of Termination and (ii) the Executive not revoking such release.

(e)          In the event that the Company fails to pay any of the amounts set forth in Section 6(a) within five (5) business days after the date when due, the overdue amounts shall accrue interest at a rate equal to five (5%) per year until such overdue amounts and interest are paid. If the Executive dies during the postponement period prior to the payment in full of amounts set forth in Section 6(a), the unpaid amounts shall be paid to the personal representative of the Executive’s estate when due.

(f)          The payments provided in Section 6(a) shall be in addition to the payments and benefits set forth in Section 7 hereof.

7.          Compensation Other than Severance Payments. If the Executive’s employment shall be terminated by him or the Company for any reason, the Company shall (i) pay the Executive’s normal post-termination compensation and benefits under, and in accordance with, the Company’s retirement, insurance and other compensation or benefit plans or programs during such period, (ii) pay the Executive, an amount in cash equal to the Executive’s accrued but unpaid Base Salary through the Date of Termination.

8.          Confidential Information. The Executive acknowledges that the Confidential Information obtained by him while employed by the Company or any subsidiary or affiliate of the Company is the property of the Company and such subsidiaries and affiliates. Therefore, the Executive agrees that he shall not (during his employment with the Company or at any time thereafter) disclose to any third party, other than the Company’s authorized employees and such other persons as the Company may have authorized to receive such Confidential Information, or use for his own purposes or for the benefit of any other person or entity any Confidential Information without the express prior written consent of the Board, unless and to the extent that the aforementioned matters: (a) become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (b) are required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment). The Executive further agrees to use such Confidential Information solely for the benefit of the Company and its subsidiaries and affiliates, as applicable, and to hold such Confidential Information in strictest confidence. The Executive shall deliver to the Company at the termination of his employment, or at any other time that the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined below) or the business of the Company or any subsidiary or affiliate that he may then possess or have under his control. The term “Confidential Information” includes, without limitation, any proprietary information, business/technical data, trade secrets or know-how, including without limitation research, business development plans, services, customer lists, market research, developments, processes, formulas, technology, designs, marketing information, finances or other business information, or any other confidential and proprietary information of the Company or any of its subsidiaries or affiliates that is not generally known outside the Company that may be of value to the Company, including confidential and proprietary information and trade secrets that third parties entrust to the Company in confidence. Confidential Information does not include any information that (i) has become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (ii) is required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment).

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9.          Inventions and Patents.

(a)          Subject to Section 9(b), the Executive hereby assigns to the Company all right, title and interest to all patents and patent applications, all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (in each case whether or not patentable), all copyrights and copyrightable works, all trade secrets, confidential information and know-how, and all other intellectual property rights that are conceived, reduced to practice, developed or made by the Executive while employed by the Company and its subsidiaries or affiliates and that (i) relate to the Company or any of its subsidiaries’ or affiliates’ actual or anticipated business, research and development or existing or future products or services; or (ii) are conceived, reduced to practice, developed or made using any material equipment, supplies, facilities, assets or resources of the Company or any of its subsidiaries or affiliates (including but not limited to any intellectual property rights) (“Work Product”). The Executive shall promptly disclose such Work Product to the Board and perform all actions reasonably requested by the Board (whether during his employment with the Company or at any time thereafter) to establish and confirm the Company’s ownership (including, without limitation, assignments, consents, powers of attorney, applications and other instruments).

(b)          To preclude any possible uncertainty, attached hereto as Annex B is a complete list of all Work Product that the Executive (i) has, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company; (ii) considers to be his property or the property of third parties; and (iii) wishes to have excluded from the scope of this Agreement (collectively, the “Prior Work Product”). If disclosure of any such Prior Work Product would cause the Executive to violate any prior confidentiality agreement, a space is provided in Annex B to disclose a cursory name for each such Prior Work Product, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such Prior Work Product has not been made for that reason. If no such disclosure is attached, the Executive represents that there is no Prior Work Product.

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10.         Noncompetition. In further consideration of the compensation to be paid to the Executive hereunder (including during the Severance Period), the Executive acknowledges that in the course of his employment with the Company he shall become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and its subsidiaries and affiliates and that his services have been and shall be of special, unique and extraordinary value to the Company and its subsidiaries and affiliates. Therefore, the Executive agrees that, from the date hereof until the later of (a) the two (2) year anniversary of the date hereof and (b) twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Noncompete Period”), he shall not, directly or indirectly (whether for compensation or otherwise) own or hold any interest in, manage, operate or control (excepting The Executive’s existing 10% ownership in DecisionPoint, LLC), any business engaged in a Competing Business or otherwise compete with the businesses of the Company or its subsidiaries or affiliates, either as a general or limited partner, proprietor, common or preferred shareholder, director, agent, trustee, affiliate or otherwise, or perform, on behalf of any Competing Business, any services that are substantially similar to the services that the Executive provided to the Company or its subsidiaries or affiliates during the Executive’s employment with the Company or its subsidiaries or affiliates. The Executive acknowledges that the Company’s and its subsidiaries’ and affiliates’ businesses are conducted nationally and agrees that the provisions in this Section 10 shall operate throughout the United States. Nothing herein shall prohibit the Executive from being a passive owner of (i) not more than two percent (2%) of the outstanding securities of any publicly traded company that constitutes a Competing Business, so long as the Executive has no active participation in the business of such company, or (ii) not more than ten percent (10%) of the outstanding securities of a business that is not primarily a Competing Business but has a direct or indirect subsidiary, division, affiliated entity or line of business that is a Competing Business, so long as the Executive is not involved, directly or indirectly, with any activity or in any capacity (including in a managerial capacity, whether as a director, officer, employee, independent contractor, consultant or advisor) with such business, other than such passive ownership. The Executive acknowledges that the business that the Company and its subsidiaries and affiliates currently conducts includes, without limitation, the provision of information technology services, information technology product fulfillment and systems engineering and integration services to customers in the federal government sector (directly or as a subcontractor). The term “Competing Business” means any line of business in which the Executive was substantially engaged or about which the Executive gained substantial Confidential Information during the Executive’s employment with the Company, that is either ( (A) conducted by the Company during the period of the Executive’s employment with the Company and at the time the Executive’s employment ends, or (B) planned or proposed by the Company at any time during the last twelve (12) months of the Executive’s employment with the Company.

11.         Non-Solicitation. From the date hereof until the later of (a) the two (2) year anniversary of the date hereof and (b) twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Nonsolicit Period”), the Executive shall not directly or indirectly through another entity (i) solicit, induce or attempt to induce or encourage any current employee of the Company or any of its subsidiaries or affiliates to terminate his or her relationship with the Company or any of its subsidiaries or affiliates; (ii) hire any person who was an employee of the Company or any of its subsidiaries or affiliates at any time during the twelve (12) months preceding the Date of Termination (or the twelve (12) months preceding the end of the Nonsolicit Period, if later) of the Executive; (iii) induce or attempt to induce any person or entity who was a customer, developer, client, member, supplier, licensee, licensor, franchisee or other business partner of the Company or any of its subsidiaries or affiliates at the time of or at any time within a twelve (12) month period of time immediately prior to the Date of Termination of the Executive to cease doing business with the Company or any of its subsidiaries or affiliates; or (iv) in any way influence or attempt to influence such customer, developer, client, member, supplier, licensee or business partner of the Company or any of its subsidiaries or affiliates (including, without limitation, making any negative statements or communications about the Company or any of its subsidiaries or affiliates) to transfer his, her or its business or patronage from the Company to any competitor of the Company.

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12.         Enforcement.

(a)          The Executive acknowledges and agrees that the provisions of Section 10 and Section 11 are in consideration of: (1) the Base Salary and the other compensation payable hereunder (including any payments during the Severance Period) and (2) additional good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. The Executive expressly agrees and acknowledges that: (i) the restrictions contained in Section 10 and Section 11 (A) are reasonable with respect to subject matter, time period and geographical area; (B) do not preclude the Executive from earning a livelihood; and (C) do not unreasonably impose limitations on the Executive’s ability to earn a living, (ii) the potential harm to the Company and its subsidiaries and affiliates of the non-enforcement of the restrictions contained in Section 10 and Section 11 outweighs any harm to the Executive of such enforcement by injunction or otherwise and (iii) the Executive has carefully read this Agreement, has given careful consideration to the restraints imposed upon the Executive by this Agreement and is in full accord as to their necessity for the reasonable and proper protection of the Confidential Information of the Company and its subsidiaries and affiliates.

(b)          If, at the time of enforcement of any of Sections 8 through 11, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. Because the Executive’s services are unique and because he has access to Confidential Information and Work Product, the parties hereto acknowledge and agree that money damages would not be an adequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by the Executive of any of Sections 8 through 11, the Noncompete Period and the Nonsolicit Period shall be tolled until such breach or violation has been duly cured. The Executive agrees that the restrictions contained in Sections 8 through 11 are reasonable.

13.         Successors; Binding Agreement; Assignment.

(a)          Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Section 13 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

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(b)          Binding Agreement. This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

(c)          Assignment. The Executive shall not, without the prior written consent of the Board, assign, transfer or delegate all or any portion of this Agreement or any rights or obligations hereunder. The Company may assign its rights and obligations hereunder (in whole or in part) without the Executive’s consent to (i) any affiliate of the Company, (ii) for collateral security purposes or (iii) to any subsequent purchaser of the Company or any of its businesses or any material portion of its assets (whether such sale is structured as a sale of stock, sale of assets, merger, recapitalization or otherwise).

14.         Representations. The Executive hereby represents and warrants to the Company that: (a) the execution, delivery and performance of this Agreement by the Executive do not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, (b) this Agreement constitutes the legal, valid and binding obligation of the Executive, enforceable in accordance with its terms and (c) the Executive has not and will not take any action that will conflict with, violate or cause a breach of any noncompete, nonsolicitation or confidentiality agreement to which the Executive is a party or by which the Executive is bound. The Executive hereby acknowledges and represents that he has carefully reviewed this Agreement, that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement (or, after carefully reviewing this Agreement, was given the opportunity to, but has freely decided not to, consult with independent legal counsel), and that he fully understands the terms and conditions contained herein.

15.         Notice. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given, delivered and received (a) if delivered personally or (b) if sent by registered or certified mail (return receipt requested) postage prepaid, or by courier guaranteeing next day delivery, in each case to the party to whom it is directed at the following addresses (or at such other address for any party as shall be specified by notice given in accordance with the provisions hereof, provided that notices of a change of address shall be effective only upon receipt thereof). Notices delivered personally shall be effective on the day so delivered, notices sent by registered or certified mail shall be effective three (3) days after mailing, and notices sent by courier guaranteeing next day delivery shall be effective on the next day after deposit with the courier:

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If to the Executive:	To the address listed on the signature
	page hereto
	Telephone:  703/887-3917
	Email:  pfernandes@stg.com
	with a copy to:
	STG, Inc.
	11091 Sunset Hills Road
	Reston, Virginia  22030
	Telephone: 703/691-2480
	Attention: Cheryl Garrison, Vice
	President, Human Capital
	Email: Cheryl.garrison@stg.com
If to the Company:	Global Defense & National Security
	Systems, Inc.
	11921 Freedom Drive, Suite 550
	Two Fountain Square
	Reston, Virginia  20190
	Attention: Dale Davis
	Telephone: (202) 800-4333
	Email: dale.davis@globalgroup.com
	with a copy to:
	Morrison & Foerster LLP
	1650 Tysons Boulevard
	Suite 400
	McLean, Virginia  22102
	Attention:  Lawrence T. Yanowitch
	Charles W. Katz
	Telephone: (703) 760-7318
	(703) 760-7777

16.         Complete Agreement. This Agreement and the documents and agreements contemplated hereby and thereby embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties or their representatives, written or oral, that may have related to the subject matter hereof in any way.

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17.         Miscellaneous. No provisions of this Agreement may be modified, waived or discharged, unless such waiver, modification or discharge is agreed to in writing signed by the Executive and a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. The Company and the Executive shall reasonably cooperate with respect to, and may jointly amend or modify the Agreement in any mutually agreeable manner to provide for, the application and effects of Code Section 409A and any related regulatory or administrative guidance issued by the Internal Revenue Service.

18.         Insurance. The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable. Executive agrees to reasonably cooperate in any medical or other examination, supply any reasonable information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance.

19.         Executive’s Cooperation. During and after the Executive’s employment, Executive shall cooperate with the Company and its subsidiaries and affiliates in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company or its subsidiaries or affiliates (including the Executive being available to the Company and its subsidiaries and affiliates upon reasonable notice for interviews and factual investigations, appearing at the Company’s or any subsidiary’s or affiliate’s reasonable request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company and its subsidiaries and affiliates all pertinent information and turning over to the Company and its subsidiaries and affiliates all relevant documents that are or may come into the Executive’s possession, all at times and on schedules as reasonably agreed to between the Company and the Executive. In the event the Company or any of its subsidiaries or affiliates requires the Executive’s cooperation in accordance with this Section 19, the Company shall reimburse the Executive for the Executive’s reasonable out-of-pocket expenses incurred in connection therewith (including lodging and meals, upon submission of receipts and compliance with the Company’s expense reimbursement policies).

20.         WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

21.         Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

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22.         Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein

23.         No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

24.         Indemnification and Reimbursement of Payments on Behalf of the Executive. The Company and its subsidiaries and affiliates shall be entitled to deduct or withhold from any amounts owing from the Company or any of its subsidiaries or affiliates to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes (“Taxes”) imposed with respect to the Executive’s compensation or other payments from the Company or any of its subsidiaries or affiliates or the Executive’s ownership interest in the Company or any of its subsidiaries or affiliates (including wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity). In the event the Company or any of its subsidiaries or affiliates does not make such deductions or withholdings, the Executive shall indemnify the Company and its subsidiaries and affiliates for any amounts paid with respect to any such Taxes.

25.         Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia, without giving effect to any choice of law or conflict of law rules or provisions (whether of the Commonwealth of Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Virginia.

26.         Survival. Notwithstanding any termination of the Executive’s employment under this Agreement, Sections 6 through 29 hereof shall survive and continue in full force until the performance of the obligations thereunder, if any, in accordance with their respective terms.

27.         Counterparts; Delivery by Facsimile or Email Attachment. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. This Agreement and any agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by e-mail attachment (e.g., PDF), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail as a defense to the formation of a contract and each such party forever waives any such defense.

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28.         Code Section 409A.

(a)          This Agreement is intended to comply with Code Section 409A and its corresponding regulations, or an exemption, and payments may only be made under this Agreement upon an event and in a manner permitted by Code Section 409A, to the extent applicable. Severance benefits under the Agreement are intended to be exempt from Code Section 409A under the “separation pay exception,” to the maximum extent applicable. Any payments that qualify for the “short-term deferral” exception or another exception under section 409 A shall be paid under the applicable exception. Notwithstanding anything in this Agreement to the contrary, if required by Code Section 409A, if the Executive is considered a “specified employee” for purposes of Code Section 409A and if payment of any amounts under this Agreement is required to be delayed for a period of six (6) months after separation from service pursuant to Code Section 409A, payment of such amounts shall be delayed as required by Code Section 409A, and the accumulated amounts shall be paid in a lump sum payment within ten (10) days after the end of the six (6)-month period. If the Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of Code Section 409A shall be paid to the personal representative of the Executive’s estate within sixty (60) days after the date of the Executive’s death. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)          A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(c)          To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (i) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (ii) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

(d)          For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

(e)          Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

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29.         Limitation on Payments. The Company will make the payments under this Agreement without regard to whether the deductibility of such payments (or any other payments or benefits) would be limited or precluded by Section 280G of the Code and without regard to whether such payments would subject the Executive to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided, however, that if the Total After-Tax Payments (as defined below) would be increased by the reduction or elimination of any payment and/or other benefit under this Agreement (the “Parachute Payments”), then the amounts payable under this Agreement will be reduced or eliminated by determining the Parachute Payment Ratio (as defined below) for each Parachute Payment and then reducing the Parachute Payments in order beginning with the Parachute Payment with the highest Parachute Payment Ratio. For Parachute Payments with the same Parachute Payment Ratio, such payments shall be reduced based on the time of payment of such Parachute Payments, with amounts having later payment dates being reduced first. For Parachute Payments with the same Parachute Payment Ratio and the same time of payment, such Parachute Payments shall be reduced on a pro rata basis (but not below zero) prior to reducing Parachute Payments with a lower Parachute Payment Ratio. For purposes hereof, the term “Parachute Payment Ratio” shall mean a fraction, the numerator of which is the value of the applicable payment for purposes of Section 280G of the Code, and the denominator of which is the intrinsic value of such Parachute Payment. The Company’s independent, certified public accounting firm (the “Accountants”) will determine whether and to what extent Parachute Payments under this Agreement are required to be reduced in accordance with this Section 29. Such determination by the Accountants shall be conclusive and binding upon the Executive and the Company for all purposes. For purposes of making the calculations required by this Section 29, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 29. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 29. If there is an underpayment or overpayment under this Agreement (as determined after the application of this Section 29), the amount of such underpayment or overpayment will be immediately paid to Executive or refunded by Executive, as the case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. For purposes of this Agreement, “Total After-Tax Payments” means the total economic value of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Executive (whether made under the Agreement or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described in Section 4999 of the Code), and present valued using the discount rate applicable under Section 280G of the Code.

[Signatures appear on following page(s)]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

COMPANY
GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Dale Davis
	Name:  Dale Davis
	Title:    CEO, President & Director
EXECUTIVE
/s/ Paul A. Fernandes
Name: Paul A. Fernandes

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC

11921 FREEDOM DRIVE │ SUITE 550 │ TWO FOUNTAIN SQUARE │ RESTON │ VIRGINIA │ 20190 │ USA

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EX-10.11

Exhibit 10.11

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made by and between Global Defense & National Security Systems, Inc., a Delaware corporation (the “Company”), and Charles Cosgrove, a natural person (the “Executive”), and shall be effective as of the closing of the transactions contemplated by the Purchase Agreement (as defined below).

WHEREAS, a Stock Purchase Agreement, dated as of June 8, 2015 (the “Purchase Agreement”), was entered into among (i) the Company, (ii) Global Defense & National Security Holdings LLC, a Delaware limited liability company, solely for purposes of certain sections thereof, (iii) STG Group, Inc., a Delaware corporation (“STG”), (iv) each of the Persons set forth on Annex A thereto and (v) Simon Lee, as Stockholders’ Representative, solely for purposes of certain sections thereof, pursuant to the terms and subject to the conditions of which the Company will acquire all of the issued and outstanding capital stock of STG;

WHEREAS, the Executive is an executive officer of STG;

WHEREAS, the Company’s obligations under the Purchase Agreement are conditioned upon execution and delivery of this Agreement by the Executive; and

WHEREAS, the Executive will benefit from the Company’s fulfillment of its obligations under the Purchase Agreement and the Company, and the Executive otherwise desire to enter into this Agreement relating to the Executive’s employment by the Company and to set forth certain covenants restricting certain competitive and other activities by the Executive.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises and respective covenants and agreements of the parties herein contained, the parties, intending to be legally bound, agree as follows:

1.           Employment. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein.

2.           At-Will Employment. The parties hereby agree that the Executive’s employment with the Company shall be “at-will” employment and may be terminated by either party at any time, subject to and in accordance with the terms of this Agreement.

3.           Position and Duties. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall initially serve as the Chief Financial Officer of the Company and shall have such responsibilities and authority as is customary for a Chief Financial Officer of a company of similar size and nature as the Company and shall have such title, duties and responsibilities as assigned to the Executive by the President of the Company (the “President”). The Executive shall devote the Executive’s full business time and attention to the business and affairs of the Company and its subsidiaries and affiliates. So long as the Executive is employed by the Company or any of its subsidiaries or affiliates, the Executive shall not, without the prior written consent of the board of directors of the Company (the “Board”), perform other services for compensation or engage in other business activities that could interfere with his responsibilities to the Company or its subsidiaries or affiliates or create a conflict of interest; provided that the Executive may, without the consent of the Board, engage in personal, charitable and professional activities, (a) subject to compliance with the Company’s normal conflicts procedures, and (b) provided that such activities do not materially conflict or interfere with the ability of the Executive to perform the duties and responsibilities hereunder. If, in the reasonable discretion of the Company, an outside activity subsequently creates a material conflict with the Company’s business or prospective business, the Executive agrees to immediately cease engaging in such activity at such time as requested.

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC

11921 FREEDOM DRIVE │ SUITE 550 │ TWO FOUNTAIN SQUARE │ RESTON │ VIRGINIA │ 20190 │ USA

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4.           Compensation, Benefits and Related Matters.

(a)          Salary. During the Executive’s employment with the Company pursuant to this Agreement, the Company shall pay to the Executive a gross salary at an initial rate of $330,000.00 dollars ($13,750.00 semi-monthly) per annum in equal installments as nearly as practicable on the normal payroll periods for employees of the Company generally (the “Base Salary”). The Board may, in its sole discretion, increase the Executive’s Base Salary at any time. In addition, the Executive shall be eligible for bonuses, as determined by the Board, in its sole discretion, from time to time.

(b)          Incentives. The Executive will be eligible to participate in the Company’s Annual Incentive Plan (“AIP”), at a 50% target of the Executive’s base salary (target assuming 100% achievement of plan) and will be eligible to participate in the Company’s Deferred Compensation Plan.

(c)          Additionally, upon completion and close of the business combination between STG, Inc. and Global Defense & National Security Systems, Inc., the Executive will be eligible for $500K of Options issued at close/hire day strike price (subject to exchange and SEC requirements on award grant and vesting timings, and per the Long Term Incentive Plan currently being finalized). An additional $250K of Options will be issued one year after the Executive’s start date, assuming the Executive remains a full-time, active employee in good standing.

(d)          Expenses. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to receive reimbursement for all reasonable out-of-pocket expenses incurred by the Executive in performing services hereunder (subject to reasonable documentation with respect thereto in accordance with the Company’s expense reimbursement policies).

(e)          Benefits. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company, including the standard vacation and sick leave benefit plan made available to senior executive officers of the Company, subject to the Company’s customary vesting periods and eligibility requirements. The Company may initiate, change and discontinue any such plan or arrangement at any time. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of any amounts payable to the Executive pursuant to this Section 4.

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5.           Termination.

(a)          The Executive’s employment with the Company may be terminated by the Company (i) at any time for Cause or without Cause; or (ii) if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for four (4) consecutive months or any one hundred twenty (120) days in any twelve (12)-month period (a “Disability”). The Executive’s employment with the Company shall be terminated immediately upon the death of the Executive. The Executive’s employment with the Company may be terminated at any time by the Executive with or without Good Reason.

(b)          Any purported termination of the Executive’s employment by the Company or the Executive (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other in accordance with Section 15 hereof.

(c)          Upon the termination of the Executive’s employment with the Company, or any of its subsidiaries or affiliates, as applicable, for any or no reason, the Executive shall immediately resign as an officer, director and/or manager of the Company, or any of its subsidiaries or affiliates, as applicable.

(d)          As used herein:

(i)          A “Notice of Termination” shall mean a notice that specifies the Date of Termination and that, in the case of a termination by the Executive, shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and that, in the case of a termination by the Company, shall indicate whether such termination is for Cause or without Cause and shall specify the grounds upon which Cause is alleged, if applicable.

(ii)         The “Date of Termination” with respect to any purported termination of the Executive’s employment shall mean (A) if the Executive’s employment is terminated for Disability, the date specified in the Notice of Termination, (B) if the Executive’s employment is terminated by reason of death, then the date thereof, and (C) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Executive, shall not be less than thirty (30) nor more than sixty (60) days from the date that such Notice of Termination is given).

(iii)        “Cause” shall mean that the Board has determined in good faith that the Executive (i) has been convicted of, or pleaded nolo contendere to, a misdemeanor involving moral turpitude or a felony, (ii) has committed any other act or omission involving dishonesty, disloyalty, theft, unethical business conduct or fraud with respect to the Company or any of its subsidiaries or affiliates or any of their customers or suppliers, (iii) has engaged in chronic substance abuse which has a material impact on the Executive’s performance of his duties hereunder, (iv) has consistently failed to comply with the lawful instructions of the President or the Board, or (v) has materially breached this Agreement. Notwithstanding anything in this Agreement or elsewhere to the contrary, the Company may terminate the Executive’s employment for Cause only if (x) the Notice of Termination specifies the grounds upon which Cause is alleged and (y) the Executive fails to cure such grounds for Cause within thirty (30) days after he receives such notice, unless such grounds for Cause are not curable.

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(iv)        “Good Reason” for the Executive to terminate his employment hereunder will exist if any of the following events occur without his prior written consent: (A) a relocation of more than fifty (50) miles of his principal place of employment (B) a material reduction in the Executive’s then-current Base Salary (as such may have been increased from time to time from the amount set forth in Section 4(a) above), except to the extent of any broad-based salary reduction affecting the other senior executives of the Company, or (C) a material breach by the Company of its obligations hereunder. Notwithstanding the foregoing, the Executive may only terminate his employment hereunder with Good Reason if (x) the Executive gives written notice to the Company within sixty (60) days of the initial existence of the event that gives rise to Good Reason; (y) the Company does not cure such event within thirty (30) days of receiving such notice; and (z) the Executive terminates his employment with the Company within one hundred twenty (120) days after such event occurs.

6.           Severance Payments.

Upon any termination of the Executive’s employment by the Company without Cause or by the Executive for Good Reason, the Company shall pay as severance to the Executive an amount (the “Cash Severance Amount”) equal to one month of severance for each completed month of service (if the Company terminates the Executive’s employment within one year of the Executive’s start date), severance equal to the Executive’s then-current base salary, less any applicable withholdings. If the Company terminates the Executive’s employment on or after one year of the Executive’s start date for any reason other than for Cause, the Executive’s will be eligible for twelve months of severance equal to the Executive’s base salary, less any applicable withholdings;provided that the aggregate Cash Severance Amount shall not exceed the sum of twelve (12) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination. The Company shall pay the Cash Severance Amount over a number of months immediately following the Date of Termination equal to the Employment Years (the “Severance Period”), in equal installments as nearly as practicable, on the normal payroll dates for employees of the Company generally but in no event less frequently than monthly. Any amounts payable pursuant to this Section 6(a) shall not be paid until the first scheduled payment date following the date the release contemplated in Section 6(d) is executed and no longer subject to revocation, with the first such payment being in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, however, that any such amounts that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the sixtieth (60^th) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, further, that, if the Executive is a “specified employee” within the meaning of Code Section 409A, any amounts payable to the Executive under this Section 6(a) during the first six (6) months and one (1) day following the Date of Termination that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the date that is six (6) months and one (1) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled to during the period following the Date of Termination if such deferral had not been required.

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(a)          In the event of any termination of the Executive’s employment (i) by the Company for Cause, or (ii) due to the Executive’s death or Disability, the Executive shall not be entitled to any severance or other payments or benefits as of the Date of Termination (except as required by applicable law) and all rights to receive a salary, benefits or other compensation shall termination as of the Date of Termination except as set forth in Section 7.

(b)          If the Executive breaches any provision of Sections 8 through 11 hereof, the Company shall no longer be obligated to make any payments or reimbursements or provide any benefits pursuant to this Section 6.

(c)          The Company’s obligations under this Section 6 shall be contingent upon (i) the delivery by the Executive of a complete release in favor of the Company, its subsidiaries, affiliates, and respective officers, directors, employees, principals, managers, partners, members, attorneys and representatives, in substantially the form attached hereto as Annex A, within twenty-one (21) days after the Date of Termination and (ii) the Executive not revoking such release.

(d)          In the event that the Company fails to pay any of the amounts set forth in Section 6(a) within five (5) business days after the date when due, the overdue amounts shall accrue interest at a rate equal to five (5%) per year until such overdue amounts and interest are paid. If the Executive dies during the postponement period prior to the payment in full of amounts set forth in Section 6(a), the unpaid amounts shall be paid to the personal representative of the Executive's estate when due.

(e)          The payments provided in Section 6(a) shall be in addition to the payments and benefits set forth in Section 7 hereof.

7.           Compensation Other than Severance Payments. If the Executive’s employment shall be terminated by him or the Company for any reason, the Company shall (i) pay the Executive’s normal post-termination compensation and benefits under, and in accordance with, the Company’s retirement, insurance and other compensation or benefit plans or programs during such period, (ii) pay the Executive, an amount in cash equal to the Executive’s accrued but unpaid Base Salary through the Date of Termination.

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8.           Confidential Information. The Executive acknowledges that the Confidential Information obtained by him while employed by the Company or any subsidiary or affiliate of the Company is the property of the Company and such subsidiaries and affiliates. Therefore, the Executive agrees that he shall not (during his employment with the Company or at any time thereafter) disclose to any third party, other than the Company’s authorized employees and such other persons as the Company may have authorized to receive such Confidential Information, or use for his own purposes or for the benefit of any other person or entity any Confidential Information without the express prior written consent of the Board, unless and to the extent that the aforementioned matters: (a) become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (b) are required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment). The Executive further agrees to use such Confidential Information solely for the benefit of the Company and its subsidiaries and affiliates, as applicable, and to hold such Confidential Information in strictest confidence. The Executive shall deliver to the Company at the termination of his employment, or at any other time that the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined below) or the business of the Company or any subsidiary or affiliate that he may then possess or have under his control. The term “Confidential Information” includes, without limitation, any proprietary information, business/technical data, trade secrets or know-how, including without limitation research, business development plans, services, customer lists, market research, developments, processes, formulas, technology, designs, marketing information, finances or other business information, or any other confidential and proprietary information of the Company or any of its subsidiaries or affiliates that is not generally known outside the Company that may be of value to the Company, including confidential and proprietary information and trade secrets that third parties entrust to the Company in confidence. Confidential Information does not include any information that (i) has become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (ii) is required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment).

9.           Inventions and Patents.

(a)          Subject to Section 9(b), the Executive hereby assigns to the Company all right, title and interest to all patents and patent applications, all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (in each case whether or not patentable), all copyrights and copyrightable works, all trade secrets, confidential information and know-how, and all other intellectual property rights that are conceived, reduced to practice, developed or made by the Executive while employed by the Company and its subsidiaries or affiliates and that (i) relate to the Company or any of its subsidiaries’ or affiliates’ actual or anticipated business, research and development or existing or future products or services; or (ii) are conceived, reduced to practice, developed or made using any material equipment, supplies, facilities, assets or resources of the Company or any of its subsidiaries or affiliates (including but not limited to any intellectual property rights) (“Work Product”). The Executive shall promptly disclose such Work Product to the President and perform all actions reasonably requested by the President (whether during his employment with the Company or at any time thereafter) to establish and confirm the Company’s ownership (including, without limitation, assignments, consents, powers of attorney, applications and other instruments).

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(b)          To preclude any possible uncertainty, attached hereto as Annex B is a complete list of all Work Product that the Executive (i) has, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company; (ii) considers to be his property or the property of third parties; and (iii) wishes to have excluded from the scope of this Agreement (collectively, the “Prior Work Product”). If disclosure of any such Prior Work Product would cause the Executive to violate any prior confidentiality agreement, a space is provided in Annex B to disclose a cursory name for each such Prior Work Product, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such Prior Work Product has not been made for that reason. If no such disclosure is attached, the Executive represents that there is no Prior Work Product.

10.          Noncompetition. In further consideration of the compensation to be paid to the Executive hereunder (including during the Severance Period), the Executive acknowledges that in the course of his or her employment with the Company he or she shall become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and its subsidiaries and affiliates and that his or her services have been and shall be of special, unique and extraordinary value to the Company and its subsidiaries and affiliates. Therefore, the Executive agrees that, from the date hereof until twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Noncompete Period”), he or she shall not, directly or indirectly (whether for compensation or otherwise) own or hold any interest in, manage, operate or control, any business engaged in a Competing Business or otherwise compete with the businesses of the Company or its subsidiaries or affiliates, either as a general or limited partner, proprietor, common or preferred shareholder, director, agent, trustee, affiliate or otherwise, or perform, on behalf of any Competing Business, any services that are substantially similar to the services that the Executive provided to the Company or its subsidiaries or affiliates during the Executive’s employment with the Company or its subsidiaries or affiliates. The Executive acknowledges that the Company’s and its subsidiaries’ and affiliates’ businesses are conducted nationally and agrees that the provisions in this Section 3 shall operate throughout the United States. Nothing herein shall prohibit the Executive from being a passive owner of not more than two percent (2%) of the outstanding securities of any publicly traded company that constitutes a Competing Business, so long as the Executive has no active participation in the business of such company. The term “Competing Business” means any current contracts or business opportunities which the Executive was substantially engaged or about which the Executive gained substantial Confidential Information during the Executive’s employment with the Company, that is either (i) conducted by the Company during the period of the Executive’s employment with the Company and at the time the Executive’s employment ends, or (ii) pursued or proposed by the Company at any time during the last twelve (12) months of the Executive’s employment with the Company.

11.          Non-Solicitation. From the date hereof until the later of (a) the two (2) year anniversary of the date hereof and (b) twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Nonsolicit Period”), the Executive shall not directly or indirectly through another entity (i) solicit, induce or attempt to induce or encourage any current employee of the Company or any of its subsidiaries or affiliates to terminate his or her relationship with the Company or any of its subsidiaries or affiliates; (ii) hire any person who was an employee of the Company or any of its subsidiaries or affiliates at any time during the twelve (12) months preceding the Date of Termination (or the twelve (12) months preceding the end of the Nonsolicit Period, if later) of the Executive; (iii) induce or attempt to induce any person or entity who was a customer, developer, client, member, supplier, licensee, licensor, franchisee or other business partner of the Company or any of its subsidiaries or affiliates at the time of or at any time within a twelve (12) month period of time immediately prior to the Date of Termination of the Executive to cease doing business with the Company or any of its subsidiaries or affiliates; or (iv) in any way influence or attempt to influence such customer, developer, client, member, supplier, licensee or business partner of the Company or any of its subsidiaries or affiliates (including, without limitation, making any negative statements or communications about the Company or any of its subsidiaries or affiliates) to transfer his, her or its business or patronage from the Company to any competitor of the Company.

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12.          Enforcement.

(a)          The Executive acknowledges and agrees that the provisions of Section 10 and Section 11 are in consideration of: (1) the Base Salary and the other compensation payable hereunder (including any payments during the Severance Period) and (2) additional good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. The Executive expressly agrees and acknowledges that: (i) the restrictions contained in Section 10 and Section 11 (A) are reasonable with respect to subject matter, time period and geographical area; (B) do not preclude the Executive from earning a livelihood; and (C) do not unreasonably impose limitations on the Executive’s ability to earn a living, (ii) the potential harm to the Company and its subsidiaries and affiliates of the non-enforcement of the restrictions contained in Section 10 and Section 11 outweighs any harm to the Executive of such enforcement by injunction or otherwise and (iii) the Executive has carefully read this Agreement, has given careful consideration to the restraints imposed upon the Executive by this Agreement and is in full accord as to their necessity for the reasonable and proper protection of the Confidential Information of the Company and its subsidiaries and affiliates.

(b)          If, at the time of enforcement of any of Sections 8 through 11, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. Because the Executive’s services are unique and because he has access to Confidential Information and Work Product, the parties hereto acknowledge and agree that money damages would not be an adequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by the Executive of any of Sections 8 through 11, the Noncompete Period and the Nonsolicit Period shall be tolled until such breach or violation has been duly cured. The Executive agrees that the restrictions contained in Sections 8 through 11 are reasonable.

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13.          Successors; Binding Agreement; Assignment.

(a)          Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Section 13 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(b)          Binding Agreement. This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

(c)          Assignment. The Executive shall not, without the prior written consent of the Board, assign, transfer or delegate all or any portion of this Agreement or any rights or obligations hereunder. The Company may assign its rights and obligations hereunder (in whole or in part) without the Executive’s consent to (i) any affiliate of the Company, (ii) for collateral security purposes or (iii) to any subsequent purchaser of the Company or any of its businesses or any material portion of its assets (whether such sale is structured as a sale of stock, sale of assets, merger, recapitalization or otherwise).

14.          Representations. The Executive hereby represents and warrants to the Company that: (a) the execution, delivery and performance of this Agreement by the Executive do not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, (b) this Agreement constitutes the legal, valid and binding obligation of the Executive, enforceable in accordance with its terms and (c) the Executive has not and will not take any action that will conflict with, violate or cause a breach of any noncompete, nonsolicitation or confidentiality agreement to which the Executive is a party or by which the Executive is bound. The Executive hereby acknowledges and represents that he has carefully reviewed this Agreement, that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement (or, after carefully reviewing this Agreement, was given the opportunity to, but has freely decided not to, consult with independent legal counsel), and that he fully understands the terms and conditions contained herein.

15.          Notice. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given, delivered and received (a) if delivered personally or (b) if sent by registered or certified mail (return receipt requested) postage prepaid, or by courier guaranteeing next day delivery, in each case to the party to whom it is directed at the following addresses (or at such other address for any party as shall be specified by notice given in accordance with the provisions hereof, provided that notices of a change of address shall be effective only upon receipt thereof). Notices delivered personally shall be effective on the day so delivered, notices sent by registered or certified mail shall be effective three (3) days after mailing, and notices sent by courier guaranteeing next day delivery shall be effective on the next day after deposit with the courier:

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If to the Executive:	To the address listed on the signature page hereto Telephone: (703) 759-3641 Email: chasgrov@msn.com with a copy to: STG, Inc. 11091 Sunset Hills Road Reston, Virginia 22030 Telephone: 703/691-2480 Attention: Cheryl Garrison, Vice President, Human Capital Email: Cheryl.garrison@stg.com
If to the Company:	Global Defense & National Security Systems, Inc. 11921 Freedom Drive, Suite 550 Two Fountain Square Reston, Virginia 20190 Attention: Dale Davis Telephone: (202) 800-4333 Email: dale.davis@globalgroup.com
	with a copy to: Morrison & Foerster LLP 1650 Tysons Boulevard Suite 400 McLean, Virginia 22102 Attention:  Lawrence T. Yanowitch                     Charles W. Katz Telephone:  (703) 760-7318                     (703) 760-7777

16.          Complete Agreement. This Agreement and the documents and agreements contemplated hereby and thereby embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties or their representatives, written or oral, that may have related to the subject matter hereof in any way.

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17.          Miscellaneous. No provisions of this Agreement may be modified, waived or discharged, unless such waiver, modification or discharge is agreed to in writing signed by the Executive and a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. The Company and the Executive shall reasonably cooperate with respect to, and may jointly amend or modify the Agreement in any mutually agreeable manner to provide for, the application and effects of Code Section 409A and any related regulatory or administrative guidance issued by the Internal Revenue Service.

18.          Insurance. The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable. Executive agrees to reasonably cooperate in any medical or other examination, supply any reasonable information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance.

19.          Executive’s Cooperation. During and after the Executive’s employment, Executive shall cooperate with the Company and its subsidiaries and affiliates in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company or its subsidiaries or affiliates (including the Executive being available to the Company and its subsidiaries and affiliates upon reasonable notice for interviews and factual investigations, appearing at the Company’s or any subsidiary’s or affiliate’s reasonable request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company and its subsidiaries and affiliates all pertinent information and turning over to the Company and its subsidiaries and affiliates all relevant documents that are or may come into the Executive’s possession, all at times and on schedules as reasonably agreed to between the Company and the Executive. In the event the Company or any of its subsidiaries or affiliates requires the Executive’s cooperation in accordance with this Section 19, the Company shall reimburse the Executive for the Executive’s reasonable out-of-pocket expenses incurred in connection therewith (including lodging and meals, upon submission of receipts and compliance with the Company’s expense reimbursement policies).

20.          WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

21.          Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

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22.          Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein

23.          No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

24.          Indemnification and Reimbursement of Payments on Behalf of the Executive. The Company and its subsidiaries and affiliates shall be entitled to deduct or withhold from any amounts owing from the Company or any of its subsidiaries or affiliates to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes (“Taxes”) imposed with respect to the Executive’s compensation or other payments from the Company or any of its subsidiaries or affiliates or the Executive’s ownership interest in the Company or any of its subsidiaries or affiliates (including wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity). In the event the Company or any of its subsidiaries or affiliates does not make such deductions or withholdings, the Executive shall indemnify the Company and its subsidiaries and affiliates for any amounts paid with respect to any such Taxes.

25.          Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia, without giving effect to any choice of law or conflict of law rules or provisions (whether of the Commonwealth of Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Virginia.

26.          Survival. Notwithstanding any termination of the Executive’s employment under this Agreement, Sections 6 through 29 hereof shall survive and continue in full force until the performance of the obligations thereunder, if any, in accordance with their respective terms.

27.          Counterparts; Delivery by Facsimile or Email Attachment. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. This Agreement and any agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by e-mail attachment (e.g., PDF), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail as a defense to the formation of a contract and each such party forever waives any such defense.

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28.          Code Section 409A.

(a)          This Agreement is intended to comply with Code Section 409A and its corresponding regulations, or an exemption, and payments may only be made under this Agreement upon an event and in a manner permitted by Code Section 409A, to the extent applicable. Severance benefits under the Agreement are intended to be exempt from Code Section 409A under the “separation pay exception,” to the maximum extent applicable. Any payments that qualify for the "short-term deferral" exception or another exception under Code Section 409A shall be paid under the applicable exception. Notwithstanding anything in this Agreement to the contrary, if required by Code Section 409A, if the Executive is considered a "specified employee" for purposes of Code Section 409A and if payment of any amounts under this Agreement is required to be delayed for a period of six (6) months after separation from service pursuant to Code Section 409A, payment of such amounts shall be delayed as required by Code Section 409A, and the accumulated amounts shall be paid in a lump sum payment within ten (10) days after the end of the six (6)-month period. If the Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of Code Section 409A shall be paid to the personal representative of the Executive's estate within sixty (60) days after the date of the Executive’s death. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)          A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(c)          To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (i) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (ii) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

(d)          For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

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(e)          Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

29.          Limitation on Payments. The Company will make the payments under this Agreement without regard to whether the deductibility of such payments (or any other payments or benefits) would be limited or precluded by Section 280G of the Code and without regard to whether such payments would subject the Executive to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided, however, that if the Total After-Tax Payments (as defined below) would be increased by the reduction or elimination of any payment and/or other benefit under this Agreement (the “Parachute Payments”), then the amounts payable under this Agreement will be reduced or eliminated by determining the Parachute Payment Ratio (as defined below) for each Parachute Payment and then reducing the Parachute Payments in order beginning with the Parachute Payment with the highest Parachute Payment Ratio. For Parachute Payments with the same Parachute Payment Ratio, such payments shall be reduced based on the time of payment of such Parachute Payments, with amounts having later payment dates being reduced first. For Parachute Payments with the same Parachute Payment Ratio and the same time of payment, such Parachute Payments shall be reduced on a pro rata basis (but not below zero) prior to reducing Parachute Payments with a lower Parachute Payment Ratio. For purposes hereof, the term “Parachute Payment Ratio” shall mean a fraction, the numerator of which is the value of the applicable payment for purposes of Section 280G of the Code, and the denominator of which is the intrinsic value of such Parachute Payment. The Company’s independent, certified public accounting firm (the “Accountants”) will determine whether and to what extent Parachute Payments under this Agreement are required to be reduced in accordance with this Section 29. Such determination by the Accountants shall be conclusive and binding upon the Executive and the Company for all purposes. For purposes of making the calculations required by this Section 29, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 29. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 29. If there is an underpayment or overpayment under this Agreement (as determined after the application of this Section 29), the amount of such underpayment or overpayment will be immediately paid to Executive or refunded by Executive, as the case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. For purposes of this Agreement, “Total After-Tax Payments” means the total economic value of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Executive (whether made under the Agreement or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described in Section 4999 of the Code), and present valued using the discount rate applicable under Section 280G of the Code.

[Signatures appear on following page(s)]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

COMPANY
GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Dale Davis
	Name:  Dale Davis
	Title:    CEO, President & Director
EXECUTIVE
/s/ Charles Cosgrove
Name:  Charles Cosgrove

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC

11921 FREEDOM DRIVE │ SUITE 550 │ TWO FOUNTAIN SQUARE │ RESTON │ VIRGINIA │ 20190 │ USA

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EX-10.12

Exhibit 10.12

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made by and between Global Defense & National Security Systems, Inc., a Delaware corporation (the “Company”), and Glenn Davis, a natural person (the “Executive”), and shall be effective as of the closing of the transactions contemplated by the Purchase Agreement (as defined below).

WHEREAS, a Stock Purchase Agreement, dated as of June 8, 2015 (the “Purchase Agreement”), was entered into among (i) the Company, (ii) Global Defense & National Security Holdings LLC, a Delaware limited liability company, solely for purposes of certain sections thereof, (iii) STG Group, Inc., a Delaware corporation (“STG”), (iv) each of the Persons set forth on Annex A thereto and (v) Simon Lee, as Stockholders’ Representative, solely for purposes of certain sections thereof, pursuant to the terms and subject to the conditions of which the Company will acquire all of the issued and outstanding capital stock of STG;

WHEREAS, the Executive is an executive officer of STG;

WHEREAS, the Company’s obligations under the Purchase Agreement are conditioned upon execution and delivery of this Agreement by the Executive; and

WHEREAS, the Executive will benefit from the Company’s fulfillment of its obligations under the Purchase Agreement and the Company, and the Executive otherwise desire to enter into this Agreement relating to the Executive’s employment by the Company and to set forth certain covenants restricting certain competitive and other activities by the Executive.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises and respective covenants and agreements of the parties herein contained, the parties, intending to be legally bound, agree as follows:

1.          Employment. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein.

2.          At-Will Employment. The parties hereby agree that the Executive’s employment with the Company shall be “at-will” employment and may be terminated by either party at any time, subject to and in accordance with the terms of this Agreement.

3.          Position and Duties. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall initially serve as the Senior Vice President & General Manager of the Company and shall have such responsibilities and authority as is customary for a Senior Vice President & General Manager of a company of similar size and nature as the Company and shall have such title, duties and responsibilities as assigned to the Executive by the President of the Company (the “President”). The Executive shall devote the Executive’s full business time and attention to the business and affairs of the Company and its subsidiaries and affiliates. So long as the Executive is employed by the Company or any of its subsidiaries or affiliates, the Executive shall not, without the prior written consent of the board of directors of the Company (the “Board”), perform other services for compensation or engage in other business activities that could interfere with his responsibilities to the Company or its subsidiaries or affiliates or create a conflict of interest; provided that the Executive may, without the consent of the Board, engage in personal, charitable and professional activities, (a) subject to compliance with the Company’s normal conflicts procedures, and (b) provided that such activities do not materially conflict or interfere with the ability of the Executive to perform the duties and responsibilities hereunder. If, in the reasonable discretion of the Company, an outside activity subsequently creates a material conflict with the Company’s business or prospective business, the Executive agrees to immediately cease engaging in such activity at such time as requested.

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4.          Compensation, Benefits and Related Matters.

(a)          Salary. During the Executive’s employment with the Company pursuant to this Agreement, the Company shall pay to the Executive a gross salary at an initial rate of $265,000.00 dollars ($11,041.67 semi-monthly) per annum in equal installments as nearly as practicable on the normal payroll periods for employees of the Company generally (the “Base Salary”). The Board may, in its sole discretion, increase the Executive’s Base Salary at any time. In addition, the Executive shall be eligible for bonuses, as determined by the Board, in its sole discretion, from time to time.

(b)          Expenses. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to receive reimbursement for all reasonable out-of-pocket expenses incurred by the Executive in performing services hereunder (subject to reasonable documentation with respect thereto in accordance with the Company’s expense reimbursement policies).

(c)          Benefits. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company, including the standard vacation and sick leave benefit plan made available to senior executive officers of the Company, subject to the Company’s customary vesting periods and eligibility requirements. The Company may initiate, change and discontinue any such plan or arrangement at any time. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of any amounts payable to the Executive pursuant to this Section 4.

5.          Termination.

(a)          The Executive’s employment with the Company may be terminated by the Company (i) at any time for Cause or without Cause; or (ii) if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for four (4) consecutive months or any one hundred twenty (120) days in any twelve (12)-month period (a “Disability”). The Executive’s employment with the Company shall be terminated immediately upon the death of the Executive. The Executive’s employment with the Company may be terminated at any time by the Executive with or without Good Reason.

(b)          Any purported termination of the Executive’s employment by the Company or the Executive (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other in accordance with Section 15 hereof.

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(c)          Upon the termination of the Executive’s employment with the Company, or any of its subsidiaries or affiliates, as applicable, for any or no reason, the Executive shall immediately resign as an officer, director and/or manager of the Company, or any of its subsidiaries or affiliates, as applicable.

(d)          As used herein:

(i)          A “Notice of Termination” shall mean a notice that specifies the Date of Termination and that, in the case of a termination by the Executive, shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and that, in the case of a termination by the Company, shall indicate whether such termination is for Cause or without Cause and shall specify the grounds upon which Cause is alleged, if applicable.

(ii)         The “Date of Termination” with respect to any purported termination of the Executive’s employment shall mean (A) if the Executive’s employment is terminated for Disability, the date specified in the Notice of Termination, (B) if the Executive’s employment is terminated by reason of death, then the date thereof, and (C) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Executive, shall not be less than thirty (30) nor more than sixty (60) days from the date that such Notice of Termination is given).

(iii)        “Cause” shall mean that the Board has determined in good faith that the Executive (i) has been convicted of, or pleaded nolo contendere to, a misdemeanor involving moral turpitude or a felony, (ii) has committed any other act or omission involving dishonesty, disloyalty, theft, unethical business conduct or fraud with respect to the Company or any of its subsidiaries or affiliates or any of their customers or suppliers, (iii) has engaged in chronic substance abuse which has a material impact on the Executive’s performance of his duties hereunder, (iv) has consistently failed to comply with the lawful instructions of the President or the Board, or (v) has materially breached this Agreement. Notwithstanding anything in this Agreement or elsewhere to the contrary, the Company may terminate the Executive’s employment for Cause only if (x) the Notice of Termination specifies the grounds upon which Cause is alleged and (y) the Executive fails to cure such grounds for Cause within thirty (30) days after he receives such notice, unless such grounds for Cause are not curable.

(iv)        “Good Reason” for the Executive to terminate his employment hereunder will exist if any of the following events occur without his prior written consent: (A) a relocation of more than fifty (50) miles of his principal place of employment (B) a material reduction in the Executive’s then-current Base Salary (as such may have been increased from time to time from the amount set forth in Section 4(a) above), except to the extent of any broad-based salary reduction affecting the other senior executives of the Company, or (C) a material breach by the Company of its obligations hereunder. Notwithstanding the foregoing, the Executive may only terminate his employment hereunder with Good Reason if (x) the Executive gives written notice to the Company within sixty (60) days of the initial existence of the event that gives rise to Good Reason; (y) the Company does not cure such event within thirty (30) days of receiving such notice; and (z) the Executive terminates his employment with the Company within one hundred twenty (120) days after such event occurs.

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6.           Severance Payments.

(a)          Upon any termination of the Executive’s employment by the Company without Cause or by the Executive for Good Reason, the Company shall pay as severance to the Executive an amount (the “Cash Severance Amount”) equal to the greater of (i) the sum of two (2) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination or (ii) the product of (x) one (1) month of the Executive’s Base Salary in effect immediately prior to the Date of Termination, multiplied by (y) the number of years that the Executive has been employed by the Company (such number, the “Employment Years”); provided that the aggregate Cash Severance Amount shall not exceed the sum of twelve (12) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination. The Company shall pay the Cash Severance Amount over a number of months immediately following the Date of Termination equal to the Employment Years (the “Severance Period”), in equal installments as nearly as practicable, on the normal payroll dates for employees of the Company generally but in no event less frequently than monthly. Any amounts payable pursuant to this Section 6(a) shall not be paid until the first scheduled payment date following the date the release contemplated in Section 6(d) is executed and no longer subject to revocation, with the first such payment being in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, however, that any such amounts that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the sixtieth (60^th) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, further, that, if the Executive is a “specified employee” within the meaning of Code Section 409A, any amounts payable to the Executive under this Section 6(a) during the first six (6) months and one (1) day following the Date of Termination that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the date that is six (6) months and one (1) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled to during the period following the Date of Termination if such deferral had not been required.

(b)          In the event of any termination of the Executive’s employment (i) by the Company for Cause, or (ii) due to the Executive’s death or Disability, the Executive shall not be entitled to any severance or other payments or benefits as of the Date of Termination (except as required by applicable law) and all rights to receive a salary, benefits or other compensation shall termination as of the Date of Termination except as set forth in Section 7.

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(c)          If the Executive breaches any provision of Sections 8 through 11 hereof, the Company shall no longer be obligated to make any payments or reimbursements or provide any benefits pursuant to this Section 6.

(d)          The Company’s obligations under this Section 6 shall be contingent upon (i) the delivery by the Executive of a complete release in favor of the Company, its subsidiaries, affiliates, and respective officers, directors, employees, principals, managers, partners, members, attorneys and representatives, in substantially the form attached hereto as Annex A, within twenty-one (21) days after the Date of Termination and (ii) the Executive not revoking such release.

(e)          In the event that the Company fails to pay any of the amounts set forth in Section 6(a) within five (5) business days after the date when due, the overdue amounts shall accrue interest at a rate equal to five (5%) per year until such overdue amounts and interest are paid. If the Executive dies during the postponement period prior to the payment in full of amounts set forth in Section 6(a), the unpaid amounts shall be paid to the personal representative of the Executive's estate when due.

(f)          The payments provided in Section 6(a) shall be in addition to the payments and benefits set forth in Section 7 hereof.

7.           Compensation Other than Severance Payments. If the Executive’s employment shall be terminated by him or the Company for any reason, the Company shall (i) pay the Executive’s normal post-termination compensation and benefits under, and in accordance with, the Company’s retirement, insurance and other compensation or benefit plans or programs during such period, (ii) pay the Executive, an amount in cash equal to the Executive’s accrued but unpaid Base Salary through the Date of Termination.

8.           Confidential Information. The Executive acknowledges that the Confidential Information obtained by him while employed by the Company or any subsidiary or affiliate of the Company is the property of the Company and such subsidiaries and affiliates. Therefore, the Executive agrees that he shall not (during his employment with the Company or at any time thereafter) disclose to any third party, other than the Company’s authorized employees and such other persons as the Company may have authorized to receive such Confidential Information, or use for his own purposes or for the benefit of any other person or entity any Confidential Information without the express prior written consent of the Board, unless and to the extent that the aforementioned matters: (a) become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (b) are required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment). The Executive further agrees to use such Confidential Information solely for the benefit of the Company and its subsidiaries and affiliates, as applicable, and to hold such Confidential Information in strictest confidence. The Executive shall deliver to the Company at the termination of his employment, or at any other time that the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined below) or the business of the Company or any subsidiary or affiliate that he may then possess or have under his control. The term “Confidential Information” includes, without limitation, any proprietary information, business/technical data, trade secrets or know-how, including without limitation research, business development plans, services, customer lists, market research, developments, processes, formulas, technology, designs, marketing information, finances or other business information, or any other confidential and proprietary information of the Company or any of its subsidiaries or affiliates that is not generally known outside the Company that may be of value to the Company, including confidential and proprietary information and trade secrets that third parties entrust to the Company in confidence. Confidential Information does not include any information that (i) has become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (ii) is required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment).

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9.           Inventions and Patents.

(a)          Subject to Section 9(b), the Executive hereby assigns to the Company all right, title and interest to all patents and patent applications, all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (in each case whether or not patentable), all copyrights and copyrightable works, all trade secrets, confidential information and know-how, and all other intellectual property rights that are conceived, reduced to practice, developed or made by the Executive while employed by the Company and its subsidiaries or affiliates and that (i) relate to the Company or any of its subsidiaries’ or affiliates’ actual or anticipated business, research and development or existing or future products or services; or (ii) are conceived, reduced to practice, developed or made using any material equipment, supplies, facilities, assets or resources of the Company or any of its subsidiaries or affiliates (including but not limited to any intellectual property rights) (“Work Product”). The Executive shall promptly disclose such Work Product to the President and perform all actions reasonably requested by the President (whether during his employment with the Company or at any time thereafter) to establish and confirm the Company’s ownership (including, without limitation, assignments, consents, powers of attorney, applications and other instruments).

(b)          To preclude any possible uncertainty, attached hereto as Annex B is a complete list of all Work Product that the Executive (i) has, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company; (ii) considers to be his property or the property of third parties; and (iii) wishes to have excluded from the scope of this Agreement (collectively, the “Prior Work Product”). If disclosure of any such Prior Work Product would cause the Executive to violate any prior confidentiality agreement, a space is provided in Annex B to disclose a cursory name for each such Prior Work Product, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such Prior Work Product has not been made for that reason. If no such disclosure is attached, the Executive represents that there is no Prior Work Product.

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10.          Noncompetition. In further consideration of the compensation to be paid to the Executive hereunder (including during the Severance Period), the Executive acknowledges that in the course of his employment with the Company he shall become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and its subsidiaries and affiliates and that his services have been and shall be of special, unique and extraordinary value to the Company and its subsidiaries and affiliates. Therefore, the Executive agrees that, from the date hereof until the later of (a) the two (2) year anniversary of the date hereof and (b) twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Noncompete Period”), he shall not, directly or indirectly (whether for compensation or otherwise) own or hold any interest in, manage, operate or control, any business engaged in a Competing Business or otherwise compete with the businesses of the Company or its subsidiaries or affiliates, either as a general or limited partner, proprietor, common or preferred shareholder, director, agent, trustee, affiliate or otherwise, or perform, on behalf of any Competing Business, any services that are substantially similar to the services that the Executive provided to the Company or its subsidiaries or affiliates during the Executive’s employment with the Company or its subsidiaries or affiliates. The Executive acknowledges that the Company’s and its subsidiaries’ and affiliates’ businesses are conducted nationally and agrees that the provisions in this Section 10 shall operate throughout the United States. Nothing herein shall prohibit the Executive from being a passive owner of not more than two percent (2%) of the outstanding securities of any publicly traded company that constitutes a Competing Business, so long as the Executive has no active participation in the business of such company. The Executive acknowledges that the business that the Company and its subsidiaries and affiliates currently conducts includes, without limitation, the provision of information technology services, information technology product fulfillment and systems engineering and integration services to customers in the federal government sector (directly or as a subcontractor). The term “Competing Business” means any line of business in which the Executive was substantially engaged or about which the Executive gained substantial Confidential Information during the Executive’s employment with the Company, that is either (i) conducted by the Company during the period of the Executive’s employment with the Company and at the time the Executive’s employment ends, or (ii) planned or proposed by the Company at any time during the last twelve (12) months of the Executive’s employment with the Company.

11.          Non-Solicitation. From the date hereof until the later of (a) the two (2) year anniversary of the date hereof and (b) twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Nonsolicit Period”), the Executive shall not directly or indirectly through another entity (i) solicit, induce or attempt to induce or encourage any current employee of the Company or any of its subsidiaries or affiliates to terminate his or her relationship with the Company or any of its subsidiaries or affiliates; (ii) hire any person who was an employee of the Company or any of its subsidiaries or affiliates at any time during the twelve (12) months preceding the Date of Termination (or the twelve (12) months preceding the end of the Nonsolicit Period, if later) of the Executive; (iii) induce or attempt to induce any person or entity who was a customer, developer, client, member, supplier, licensee, licensor, franchisee or other business partner of the Company or any of its subsidiaries or affiliates at the time of or at any time within a twelve (12) month period of time immediately prior to the Date of Termination of the Executive to cease doing business with the Company or any of its subsidiaries or affiliates; or (iv) in any way influence or attempt to influence such customer, developer, client, member, supplier, licensee or business partner of the Company or any of its subsidiaries or affiliates (including, without limitation, making any negative statements or communications about the Company or any of its subsidiaries or affiliates) to transfer his, her or its business or patronage from the Company to any competitor of the Company.

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12.         Enforcement.

(a)          The Executive acknowledges and agrees that the provisions of Section 10 and Section 11 are in consideration of: (1) the Base Salary and the other compensation payable hereunder (including any payments during the Severance Period) and (2) additional good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. The Executive expressly agrees and acknowledges that: (i) the restrictions contained in Section 10 and Section 11 (A) are reasonable with respect to subject matter, time period and geographical area; (B) do not preclude the Executive from earning a livelihood; and (C) do not unreasonably impose limitations on the Executive’s ability to earn a living, (ii) the potential harm to the Company and its subsidiaries and affiliates of the non-enforcement of the restrictions contained in Section 10 and Section 11 outweighs any harm to the Executive of such enforcement by injunction or otherwise and (iii) the Executive has carefully read this Agreement, has given careful consideration to the restraints imposed upon the Executive by this Agreement and is in full accord as to their necessity for the reasonable and proper protection of the Confidential Information of the Company and its subsidiaries and affiliates.

(b)          If, at the time of enforcement of any of Sections 8 through 11, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. Because the Executive’s services are unique and because he has access to Confidential Information and Work Product, the parties hereto acknowledge and agree that money damages would not be an adequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by the Executive of any of Sections 8 through 11, the Noncompete Period and the Nonsolicit Period shall be tolled until such breach or violation has been duly cured. The Executive agrees that the restrictions contained in Sections 8 through 11 are reasonable.

13.         Successors; Binding Agreement; Assignment.

(a)          Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Section 13 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

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(b)          Binding Agreement. This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

(c)          Assignment. The Executive shall not, without the prior written consent of the Board, assign, transfer or delegate all or any portion of this Agreement or any rights or obligations hereunder. The Company may assign its rights and obligations hereunder (in whole or in part) without the Executive’s consent to (i) any affiliate of the Company, (ii) for collateral security purposes or (iii) to any subsequent purchaser of the Company or any of its businesses or any material portion of its assets (whether such sale is structured as a sale of stock, sale of assets, merger, recapitalization or otherwise).

14.         Representations. The Executive hereby represents and warrants to the Company that: (a) the execution, delivery and performance of this Agreement by the Executive do not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, (b) this Agreement constitutes the legal, valid and binding obligation of the Executive, enforceable in accordance with its terms and (c) the Executive has not and will not take any action that will conflict with, violate or cause a breach of any noncompete, nonsolicitation or confidentiality agreement to which the Executive is a party or by which the Executive is bound. The Executive hereby acknowledges and represents that he has carefully reviewed this Agreement, that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement (or, after carefully reviewing this Agreement, was given the opportunity to, but has freely decided not to, consult with independent legal counsel), and that he fully understands the terms and conditions contained herein.

15.         Notice. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given, delivered and received (a) if delivered personally or (b) if sent by registered or certified mail (return receipt requested) postage prepaid, or by courier guaranteeing next day delivery, in each case to the party to whom it is directed at the following addresses (or at such other address for any party as shall be specified by notice given in accordance with the provisions hereof, provided that notices of a change of address shall be effective only upon receipt thereof). Notices delivered personally shall be effective on the day so delivered, notices sent by registered or certified mail shall be effective three (3) days after mailing, and notices sent by courier guaranteeing next day delivery shall be effective on the next day after deposit with the courier:

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If to the Executive:	To the address listed on the signature page hereto Telephone: (703) 887-4950 Email: glenn_davisjr1@yahoo.com with a copy to: STG, Inc. 11091 Sunset Hills Road Reston, Virginia 22030 Telephone: 703/691-2480 Attention: Cheryl Garrison, Vice President, Human Capital Email: Cheryl.garrison@stg.com
If to the Company:	Global Defense & National Security Systems, Inc. 11921 Freedom Drive, Suite 550 Two Fountain Square Reston, Virginia 20190 Attention: Dale Davis Telephone: (202) 800-4333 Email: dale.davis@globalgroup.com
	with a copy to: Morrison & Foerster LLP 1650 Tysons Boulevard Suite 400 McLean, Virginia 22102 Attention:   Lawrence T. Yanowitch      Charles W. Katz Telephone: (703) 760-7318      (703) 760-7777

16.         Complete Agreement. This Agreement and the documents and agreements contemplated hereby and thereby embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties or their representatives, written or oral, that may have related to the subject matter hereof in any way.

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17.         Miscellaneous. No provisions of this Agreement may be modified, waived or discharged, unless such waiver, modification or discharge is agreed to in writing signed by the Executive and a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. The Company and the Executive shall reasonably cooperate with respect to, and may jointly amend or modify the Agreement in any mutually agreeable manner to provide for, the application and effects of Code Section 409A and any related regulatory or administrative guidance issued by the Internal Revenue Service.

18.         Insurance. The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable. Executive agrees to reasonably cooperate in any medical or other examination, supply any reasonable information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance.

19.         Executive’s Cooperation. During and after the Executive’s employment, Executive shall cooperate with the Company and its subsidiaries and affiliates in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company or its subsidiaries or affiliates (including the Executive being available to the Company and its subsidiaries and affiliates upon reasonable notice for interviews and factual investigations, appearing at the Company’s or any subsidiary’s or affiliate’s reasonable request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company and its subsidiaries and affiliates all pertinent information and turning over to the Company and its subsidiaries and affiliates all relevant documents that are or may come into the Executive’s possession, all at times and on schedules as reasonably agreed to between the Company and the Executive. In the event the Company or any of its subsidiaries or affiliates requires the Executive’s cooperation in accordance with this Section 19, the Company shall reimburse the Executive for the Executive’s reasonable out-of-pocket expenses incurred in connection therewith (including lodging and meals, upon submission of receipts and compliance with the Company’s expense reimbursement policies).

20.         WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

21.         Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

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22.         Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein

23.         No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

24.         Indemnification and Reimbursement of Payments on Behalf of the Executive. The Company and its subsidiaries and affiliates shall be entitled to deduct or withhold from any amounts owing from the Company or any of its subsidiaries or affiliates to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes (“Taxes”) imposed with respect to the Executive’s compensation or other payments from the Company or any of its subsidiaries or affiliates or the Executive’s ownership interest in the Company or any of its subsidiaries or affiliates (including wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity). In the event the Company or any of its subsidiaries or affiliates does not make such deductions or withholdings, the Executive shall indemnify the Company and its subsidiaries and affiliates for any amounts paid with respect to any such Taxes.

25.         Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia, without giving effect to any choice of law or conflict of law rules or provisions (whether of the Commonwealth of Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Virginia.

26.         Survival. Notwithstanding any termination of the Executive’s employment under this Agreement, Sections 6 through 29 hereof shall survive and continue in full force until the performance of the obligations thereunder, if any, in accordance with their respective terms.

27.         Counterparts; Delivery by Facsimile or Email Attachment. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. This Agreement and any agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by e-mail attachment (e.g., PDF), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail as a defense to the formation of a contract and each such party forever waives any such defense.

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28.         Code Section 409A.

(a)          This Agreement is intended to comply with Code Section 409A and its corresponding regulations, or an exemption, and payments may only be made under this Agreement upon an event and in a manner permitted by Code Section 409A, to the extent applicable. Severance benefits under the Agreement are intended to be exempt from Code Section 409A under the “separation pay exception,” to the maximum extent applicable. Any payments that qualify for the "short-term deferral" exception or another exception under Code Section 409A shall be paid under the applicable exception. Notwithstanding anything in this Agreement to the contrary, if required by Code Section 409A, if the Executive is considered a "specified employee" for purposes of Code Section 409A and if payment of any amounts under this Agreement is required to be delayed for a period of six (6) months after separation from service pursuant to Code Section 409A, payment of such amounts shall be delayed as required by Code Section 409A, and the accumulated amounts shall be paid in a lump sum payment within ten (10) days after the end of the six (6)-month period. If the Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of Code Section 409A shall be paid to the personal representative of the Executive's estate within sixty (60) days after the date of the Executive’s death. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)          A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(c)          To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (i) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (ii) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

(d)          For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

(e)          Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

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29.         Limitation on Payments. The Company will make the payments under this Agreement without regard to whether the deductibility of such payments (or any other payments or benefits) would be limited or precluded by Section 280G of the Code and without regard to whether such payments would subject the Executive to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided, however, that if the Total After-Tax Payments (as defined below) would be increased by the reduction or elimination of any payment and/or other benefit under this Agreement (the “Parachute Payments”), then the amounts payable under this Agreement will be reduced or eliminated by determining the Parachute Payment Ratio (as defined below) for each Parachute Payment and then reducing the Parachute Payments in order beginning with the Parachute Payment with the highest Parachute Payment Ratio. For Parachute Payments with the same Parachute Payment Ratio, such payments shall be reduced based on the time of payment of such Parachute Payments, with amounts having later payment dates being reduced first. For Parachute Payments with the same Parachute Payment Ratio and the same time of payment, such Parachute Payments shall be reduced on a pro rata basis (but not below zero) prior to reducing Parachute Payments with a lower Parachute Payment Ratio. For purposes hereof, the term “Parachute Payment Ratio” shall mean a fraction, the numerator of which is the value of the applicable payment for purposes of Section 280G of the Code, and the denominator of which is the intrinsic value of such Parachute Payment. The Company’s independent, certified public accounting firm (the “Accountants”) will determine whether and to what extent Parachute Payments under this Agreement are required to be reduced in accordance with this Section 29. Such determination by the Accountants shall be conclusive and binding upon the Executive and the Company for all purposes. For purposes of making the calculations required by this Section 29, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 29. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 29. If there is an underpayment or overpayment under this Agreement (as determined after the application of this Section 29), the amount of such underpayment or overpayment will be immediately paid to Executive or refunded by Executive, as the case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. For purposes of this Agreement, “Total After-Tax Payments” means the total economic value of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Executive (whether made under the Agreement or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described in Section 4999 of the Code), and present valued using the discount rate applicable under Section 280G of the Code.

[Signatures appear on following page(s)]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

COMPANY
GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Dale Davis
	Name:  Dale Davis
	Title:    CEO, President & Director
EXECUTIVE
/s/ Glenn Davis
Name:  Glenn Davis

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EX-10.13

Exhibit 10.13

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made by and between Global Defense & National Security Systems, Inc., a Delaware corporation (the “Company”), and Keith Lynch, a natural person (the “Executive”), and shall be effective as of the closing of the transactions contemplated by the Purchase Agreement (as defined below).

WHEREAS, a Stock Purchase Agreement, dated as of June 8, 2015 (the “Purchase Agreement”), was entered into among (i) the Company, (ii) Global Defense & National Security Holdings LLC, a Delaware limited liability company, solely for purposes of certain sections thereof, (iii) STG Group, Inc., a Delaware corporation (“STG”), (iv) each of the Persons set forth on Annex A thereto and (v) Simon Lee, as Stockholders’ Representative, solely for purposes of certain sections thereof, pursuant to the terms and subject to the conditions of which the Company will acquire all of the issued and outstanding capital stock of STG;

WHEREAS, the Executive is an executive officer of STG;

WHEREAS, the Company’s obligations under the Purchase Agreement are conditioned upon execution and delivery of this Agreement by the Executive; and  

WHEREAS, the Executive will benefit from the Company’s fulfillment of its obligations under the Purchase Agreement and the Company, and the Executive otherwise desire to enter into this Agreement relating to the Executive’s employment by the Company and to set forth certain covenants restricting certain competitive and other activities by the Executive.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises and respective covenants and agreements of the parties herein contained, the parties, intending to be legally bound, agree as follows:

1.          Employment. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein.

2.          At-Will Employment. The parties hereby agree that the Executive’s employment with the Company shall be “at-will” employment and may be terminated by either party at any time, subject to and in accordance with the terms of this Agreement.

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC

11921 FREEDOM DRIVE │ SUITE 550 │ TWO FOUNTAIN SQUARE │ RESTON │ VIRGINIA │ 20190 │ USA

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3.          Position and Duties. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall initially serve as the Vice President, Accounting & Controller of the Company and shall have such responsibilities and authority as is customary for a Vice President of a company of similar size and nature as the Company and shall have such title, duties and responsibilities as assigned to the Executive by the President of the Company (the “President”).  The Executive shall devote the Executive’s full business time and attention to the business and affairs of the Company and its subsidiaries and affiliates.  So long as the Executive is employed by the Company or any of its subsidiaries or affiliates, the Executive shall not, without the prior written consent of the board of directors of the Company (the “Board”), perform other services for compensation or engage in other business activities that could interfere with his responsibilities to the Company or its subsidiaries or affiliates or create a conflict of interest; provided that the Executive may, without the consent of the Board, engage in personal, charitable and professional activities, (a) subject to compliance with the Company’s normal conflicts procedures, and (b) provided that such activities do not materially conflict or interfere with the ability of the Executive to perform the duties and responsibilities hereunder.  If, in the reasonable discretion of the Company, an outside activity subsequently creates a material conflict with the Company’s business or prospective business, the Executive agrees to immediately cease engaging in such activity at such time as requested.

4.          Compensation, Benefits and Related Matters.

(a)          Salary.  During the Executive’s employment with the Company pursuant to this Agreement, the Company shall pay to the Executive a gross salary at an initial rate of $217,498.16 dollars ($9,062.42 semi-monthly) per annum in equal installments as nearly as practicable on the normal payroll periods for employees of the Company generally (the “Base Salary”).  The Board may, in its sole discretion, increase the Executive’s Base Salary at any time.  In addition, the Executive shall be eligible for bonuses, as determined by the Board, in its sole discretion, from time to time.

(b)          Expenses. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to receive reimbursement for all reasonable out-of-pocket expenses incurred by the Executive in performing services hereunder (subject to reasonable documentation with respect thereto in accordance with the Company’s expense reimbursement policies).

(c)          Benefits. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company, including the standard vacation and sick leave benefit plan made available to senior executive officers of the Company, subject to the Company’s customary vesting periods and eligibility requirements. The Company may initiate, change and discontinue any such plan or arrangement at any time. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of any amounts payable to the Executive pursuant to this Section 4.

5.          Termination.

(a)          The Executive’s employment with the Company may be terminated by the Company (i) at any time for Cause or without Cause; or (ii) if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for four (4) consecutive months or any one hundred twenty (120) days in any twelve (12)-month period (a “Disability”). The Executive’s employment with the Company shall be terminated immediately upon the death of the Executive. The Executive’s employment with the Company may be terminated at any time by the Executive with or without Good Reason.

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(b)          Any purported termination of the Executive’s employment by the Company or the Executive (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other in accordance with Section 15 hereof.

(c)          Upon the termination of the Executive’s employment with the Company, or any of its subsidiaries or affiliates, as applicable, for any or no reason, the Executive shall immediately resign as an officer, director and/or manager of the Company, or any of its subsidiaries or affiliates, as applicable.

(d)          As used herein:

(i)          A “Notice of Termination” shall mean a notice that specifies the Date of Termination and that, in the case of a termination by the Executive, shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and that, in the case of a termination by the Company, shall indicate whether such termination is for Cause or without Cause and shall specify the grounds upon which Cause is alleged, if applicable.

(ii)         The “Date of Termination” with respect to any purported termination of the Executive’s employment shall mean (A) if the Executive’s employment is terminated for Disability, the date specified in the Notice of Termination, (B) if the Executive’s employment is terminated by reason of death, then the date thereof, and (C) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Executive, shall not be less than thirty (30) nor more than sixty (60) days from the date that such Notice of Termination is given).

(iii)        “Cause” shall mean that the Board has determined in good faith that the Executive (i) has been convicted of, or pleaded nolo contendere to, a misdemeanor involving moral turpitude or a felony, (ii) has committed any other act or omission involving dishonesty, disloyalty, theft, unethical business conduct or fraud with respect to the Company or any of its subsidiaries or affiliates or any of their customers or suppliers, (iii) has engaged in chronic substance abuse which has a material impact on the Executive’s performance of his duties hereunder, (iv) has consistently failed to comply with the lawful instructions of the President or the Board, or (v) has materially breached this Agreement.  Notwithstanding anything in this Agreement or elsewhere to the contrary, the Company may terminate the Executive’s employment for Cause only if (x) the Notice of Termination specifies the grounds upon which Cause is alleged and (y) the Executive fails to cure such grounds for Cause within thirty (30) days after he receives such notice, unless such grounds for Cause are not curable.

(iv)         “Good Reason” for the Executive to terminate his employment hereunder will exist if any of the following events occur without his prior written consent: (A) a relocation of more than fifty (50) miles of his principal place of employment (B) a material reduction in the Executive’s then-current Base Salary (as such may have been increased from time to time from the amount set forth in Section 4(a) above), except to the extent of any broad-based salary reduction affecting the other senior executives of the Company, or (C) a material breach by the Company of its obligations hereunder.  Notwithstanding the foregoing, the Executive may only terminate his employment hereunder with Good Reason if (x) the Executive gives written notice to the Company within sixty (60) days of the initial existence of the event that gives rise to Good Reason; (y) the Company does not cure such event within thirty (30) days of receiving such notice; and (z) the Executive terminates his employment with the Company within one hundred twenty (120) days after such event occurs.

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6.          Severance Payments.

(a)          Upon any termination of the Executive’s employment by the Company without Cause or by the Executive for Good Reason, the Company shall pay as severance to the Executive an amount (the “Cash Severance Amount”) equal to the greater of (i) the sum of nine (9) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination or (ii) the product of (x) one (1) month of the Executive’s Base Salary in effect immediately prior to the Date of Termination, multiplied by (y) the number of years that the Executive has been employed by the Company (such number, the “Employment Years”); provided that the aggregate Cash Severance Amount shall not exceed the sum of twelve (12) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination.  The Company shall pay the Cash Severance Amount over a number of months immediately following the Date of Termination equal to the Employment Years (the “Severance Period”), in equal installments as nearly as practicable, on the normal payroll dates for employees of the Company generally but in no event less frequently than monthly.  Any amounts payable pursuant to this Section 6(a) shall not be paid until the first scheduled payment date following the date the release contemplated in Section 6(d) is executed and no longer subject to revocation, with the first such payment being in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, however, that any such amounts that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the sixtieth (60^th) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, further, that, if the Executive is a “specified employee” within the meaning of Code Section 409A, any amounts payable to the Executive under this Section 6(a) during the first six (6) months and one (1) day following the Date of Termination that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the date that is six (6) months and one (1) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled to during the period following the Date of Termination if such deferral had not been required.

(b)          In the event of any termination of the Executive’s employment (i) by the Company for Cause, or (ii) due to the Executive’s death or Disability, the Executive shall not be entitled to any severance or other payments or benefits as of the Date of Termination (except as required by applicable law) and all rights to receive a salary, benefits or other compensation shall termination as of the Date of Termination except as set forth in Section 7.

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(c)          If the Executive breaches any provision of Sections 8 through 11 hereof, the Company shall no longer be obligated to make any payments or reimbursements or provide any benefits pursuant to this Section 6.

(d)          The Company’s obligations under this Section 6 shall be contingent upon (i) the delivery by the Executive of a complete release in favor of the Company, its subsidiaries, affiliates, and respective officers, directors, employees, principals, managers, partners, members, attorneys and representatives, in substantially the form attached hereto as Annex A, within twenty-one (21) days after the Date of Termination and (ii) the Executive not revoking such release.

(e)          In the event that the Company fails to pay any of the amounts set forth in Section 6(a) within five (5) business days after the date when due, the overdue amounts shall accrue interest at a rate equal to five (5%) per year until such overdue amounts and interest are paid.  If the Executive dies during the postponement period prior to the payment in full of amounts set forth in Section 6(a), the unpaid amounts shall be paid to the personal representative of the Executive's estate when due.

(f)          The payments provided in Section 6(a) shall be in addition to the payments and benefits set forth in Section 7 hereof.

7.          Compensation Other than Severance Payments. If the Executive’s employment shall be terminated by him or the Company for any reason, the Company shall (i) pay the Executive’s normal post-termination compensation and benefits under, and in accordance with, the Company’s retirement, insurance and other compensation or benefit plans or programs during such period, (ii) pay the Executive, an amount in cash equal to the Executive’s accrued but unpaid Base Salary through the Date of Termination.  

8.          Confidential Information. The Executive acknowledges that the Confidential Information obtained by him while employed by the Company or any subsidiary or affiliate of the Company is the property of the Company and such subsidiaries and affiliates. Therefore, the Executive agrees that he shall not (during his employment with the Company or at any time thereafter) disclose to any third party, other than the Company’s authorized employees and such other persons as the Company may have authorized to receive such Confidential Information, or use for his own purposes or for the benefit of any other person or entity any Confidential Information without the express prior written consent of the Board, unless and to the extent that the aforementioned matters: (a) become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (b) are required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment).  The Executive further agrees to use such Confidential Information solely for the benefit of the Company and its subsidiaries and affiliates, as applicable, and to hold such Confidential Information in strictest confidence.  The Executive shall deliver to the Company at the termination of his employment, or at any other time that the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined below) or the business of the Company or any subsidiary or affiliate that he may then possess or have under his control.  The term “Confidential Information” includes, without limitation, any proprietary information, business/technical data, trade secrets or know-how, including without limitation research, business development plans, services, customer lists, market research, developments, processes, formulas, technology, designs, marketing information, finances or other business information, or any other confidential and proprietary information of the Company or any of its subsidiaries or affiliates that is not generally known outside the Company that may be of value to the Company, including confidential and proprietary information and trade secrets that third parties entrust to the Company in confidence.  Confidential Information does not include any information that (i) has become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (ii) is required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment).

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9.          Inventions and Patents.

(a)          Subject to Section 9(b), the Executive hereby assigns to the Company all right, title and interest to all patents and patent applications, all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (in each case whether or not patentable), all copyrights and copyrightable works, all trade secrets, confidential information and know-how, and all other intellectual property rights that are conceived, reduced to practice, developed or made by the Executive while employed by the Company and its subsidiaries or affiliates and that (i) relate to the Company or any of its subsidiaries’ or affiliates’ actual or anticipated business, research and development or existing or future products or services; or (ii) are conceived, reduced to practice, developed or made using any material equipment, supplies, facilities, assets or resources of the Company or any of its subsidiaries or affiliates (including but not limited to any intellectual property rights) (“Work Product”). The Executive shall promptly disclose such Work Product to the President and perform all actions reasonably requested by the President (whether during his employment with the Company or at any time thereafter) to establish and confirm the Company’s ownership (including, without limitation, assignments, consents, powers of attorney, applications and other instruments).

(b)          To preclude any possible uncertainty, attached hereto as Annex B is a complete list of all Work Product that the Executive (i) has, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company; (ii) considers to be his property or the property of third parties; and (iii) wishes to have excluded from the scope of this Agreement (collectively, the “Prior Work Product”).  If disclosure of any such Prior Work Product would cause the Executive to violate any prior confidentiality agreement, a space is provided in Annex B to disclose a cursory name for each such Prior Work Product, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such Prior Work Product has not been made for that reason.  If no such disclosure is attached, the Executive represents that there is no Prior Work Product.

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10.         Noncompetition. In further consideration of the compensation to be paid to the Executive hereunder (including during the Severance Period), the Executive acknowledges that in the course of his or her employment with the Company he or she shall become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and its subsidiaries and affiliates and that his or her services have been and shall be of special, unique and extraordinary value to the Company and its subsidiaries and affiliates. Therefore, the Executive agrees that, from the date hereof until twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Noncompete Period”), he or she shall not, directly or indirectly (whether for compensation or otherwise) own or hold any interest in, manage, operate or control, any business engaged in a Competing Business or otherwise compete with the businesses of the Company or its subsidiaries or affiliates, either as a general or limited partner, proprietor, common or preferred shareholder, director, agent, trustee, affiliate or otherwise, or perform, on behalf of any Competing Business, any services that are substantially similar to the services that the Executive provided to the Company or its subsidiaries or affiliates during the Executive’s employment with the Company or its subsidiaries or affiliates. The Executive acknowledges that the Company’s and its subsidiaries’ and affiliates’ businesses are conducted nationally and agrees that the provisions in this Section 3 shall operate throughout the United States. Nothing herein shall prohibit the Executive from being a passive owner of not more than two percent (2%) of the outstanding securities of any publicly traded company that constitutes a Competing Business, so long as the Executive has no active participation in the business of such company.  The term “Competing Business” means any current contracts or business opportunities  which the Executive was substantially engaged or about which the Executive gained substantial Confidential Information during the Executive’s employment with the Company, that is either (i) conducted by the Company during the period of the Executive’s employment with the Company and at the time the Executive’s employment ends, or (ii) pursued or proposed by the Company at any time during the last twelve (12) months of the Executive’s employment with the Company.

11.         Non-Solicitation. From the date hereof until the later of (a) the two (2) year anniversary of the date hereof and (b) twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Nonsolicit Period”), the Executive shall not directly or indirectly through another entity (i) solicit, induce or attempt to induce or encourage any current employee of the Company or any of its subsidiaries or affiliates to terminate his or her relationship with the Company or any of its subsidiaries or affiliates; (ii) hire any person who was an employee of the Company or any of its subsidiaries or affiliates at any time during the twelve (12) months preceding the Date of Termination (or the twelve (12) months preceding the end of the Nonsolicit Period, if later) of the Executive; (iii) induce or attempt to induce any person or entity who was a customer, developer, client, member, supplier, licensee, licensor, franchisee or other business partner of the Company or any of its subsidiaries or affiliates at the time of or at any time within a twelve (12) month period of time immediately prior to the Date of Termination of the Executive to cease doing business with the Company or any of its subsidiaries or affiliates; or (iv) in any way influence or attempt to influence such customer, developer, client, member, supplier, licensee or business partner of the Company or any of its subsidiaries or affiliates (including, without limitation, making any negative statements or communications about the Company or any of its subsidiaries or affiliates) to transfer his, her or its business or patronage from the Company to any competitor of the Company.

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12.         Enforcement.

(a)          The Executive acknowledges and agrees that the provisions of Section 10 and Section 11 are in consideration of: (1) the Base Salary and the other compensation payable hereunder (including any payments during the Severance Period) and (2) additional good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.  The Executive expressly agrees and acknowledges that: (i) the restrictions contained in Section 10 and Section 11 (A) are reasonable with respect to subject matter, time period and geographical area; (B) do not preclude the Executive from earning a livelihood; and (C) do not unreasonably impose limitations on the Executive’s ability to earn a living, (ii) the potential harm to the Company and its subsidiaries and affiliates of the non-enforcement of the restrictions contained in Section 10 and Section 11 outweighs any harm to the Executive of such enforcement by injunction or otherwise and (iii) the Executive has carefully read this Agreement, has given careful consideration to the restraints imposed upon the Executive by this Agreement and is in full accord as to their necessity for the reasonable and proper protection of the Confidential Information of the Company and its subsidiaries and affiliates.

(b)          If, at the time of enforcement of any of Sections 8 through 11, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. Because the Executive’s services are unique and because he has access to Confidential Information and Work Product, the parties hereto acknowledge and agree that money damages would not be an adequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by the Executive of any of Sections 8 through 11, the Noncompete Period and the Nonsolicit Period shall be tolled until such breach or violation has been duly cured. The Executive agrees that the restrictions contained in Sections 8 through 11 are reasonable.

13.         Successors; Binding Agreement; Assignment.

(a)          Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Section 13 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

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(b)          Binding Agreement. This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

(c)          Assignment.  The Executive shall not, without the prior written consent of the Board, assign, transfer or delegate all or any portion of this Agreement or any rights or obligations hereunder.  The Company may assign its rights and obligations hereunder (in whole or in part) without the Executive’s consent to (i) any affiliate of the Company, (ii) for collateral security purposes or (iii) to any subsequent purchaser of the Company or any of its businesses or any material portion of its assets (whether such sale is structured as a sale of stock, sale of assets, merger, recapitalization or otherwise).

14.         Representations. The Executive hereby represents and warrants to the Company that: (a) the execution, delivery and performance of this Agreement by the Executive do not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, (b) this Agreement constitutes the legal, valid and binding obligation of the Executive, enforceable in accordance with its terms and (c) the Executive has not and will not take any action that will conflict with, violate or cause a breach of any noncompete, nonsolicitation or confidentiality agreement to which the Executive is a party or by which the Executive is bound. The Executive hereby acknowledges and represents that he has carefully reviewed this Agreement, that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement (or, after carefully reviewing this Agreement, was given the opportunity to, but has freely decided not to, consult with independent legal counsel), and that he fully understands the terms and conditions contained herein.

15.         Notice. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given, delivered and received (a) if delivered personally or (b) if sent by registered or certified mail (return receipt requested) postage prepaid, or by courier guaranteeing next day delivery, in each case to the party to whom it is directed at the following addresses (or at such other address for any party as shall be specified by notice given in accordance with the provisions hereof, provided that notices of a change of address shall be effective only upon receipt thereof). Notices delivered personally shall be effective on the day so delivered, notices sent by registered or certified mail shall be effective three (3) days after mailing, and notices sent by courier guaranteeing next day delivery shall be effective on the next day after deposit with the courier:

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If to the Executive:	To the address listed on the signature
	page hereto
	Telephone:  (703) 796-2247
	Email:  KLynch@stg.com
	with a copy to:
	STG, Inc.
	11091 Sunset Hills Road
	Reston, Virginia  22030
	Telephone: 703/691-2480
	Attention: Cheryl Garrison,
	Chief People Officer & VP, Human
	Capital
	Email: Cheryl.garrison@stg.com
If to the Company:	Global Defense & National Security Systems, Inc.
	11921 Freedom Drive, Suite 550
	Two Fountain Square
	Reston, Virginia  20190
	Attention: Dale Davis
	Telephone: (202) 800-4333
	Email: dale.davis@globalgroup.com
	with a copy to:
	Morrison & Foerster LLP
	1650 Tysons Boulevard
	Suite 400
	McLean, Virginia  22102
	Attention: Lawrence T. Yanowitch
	Charles W. Katz
	Telephone: (703) 760-7318
	(703) 760-7777

16.         Complete Agreement.  This Agreement and the documents and agreements contemplated hereby and thereby embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties or their representatives, written or oral, that may have related to the subject matter hereof in any way.  

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17.         Miscellaneous. No provisions of this Agreement may be modified, waived or discharged, unless such waiver, modification or discharge is agreed to in writing signed by the Executive and a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. The Company and the Executive shall reasonably cooperate with respect to, and may jointly amend or modify the Agreement in any mutually agreeable manner to provide for, the application and effects of Code Section 409A and any related regulatory or administrative guidance issued by the Internal Revenue Service.

18.         Insurance.  The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable.  Executive agrees to reasonably cooperate in any medical or other examination, supply any reasonable information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance.

19.         Executive’s Cooperation.  During and after the Executive’s employment, Executive shall cooperate with the Company and its subsidiaries and affiliates in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company or its subsidiaries or affiliates (including the Executive being available to the Company and its subsidiaries and affiliates upon reasonable notice for interviews and factual investigations, appearing at the Company’s or any subsidiary’s or affiliate’s reasonable request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company and its subsidiaries and affiliates all pertinent information and turning over to the Company and its subsidiaries and affiliates all relevant documents that are or may come into the Executive’s possession, all at times and on schedules as reasonably agreed to between the Company and the Executive.  In the event the Company or any of its subsidiaries or affiliates requires the Executive’s cooperation in accordance with this Section 19, the Company shall reimburse the Executive for the Executive’s reasonable out-of-pocket expenses incurred in connection therewith (including lodging and meals, upon submission of receipts and compliance with the Company’s expense reimbursement policies).

20.         WAIVER OF JURY TRIAL.  AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

21.         Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

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22.         Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein

23.         No Strict Construction.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

24.         Indemnification and Reimbursement of Payments on Behalf of the Executive.  The Company and its subsidiaries and affiliates shall be entitled to deduct or withhold from any amounts owing from the Company or any of its subsidiaries or affiliates to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes (“Taxes”) imposed with respect to the Executive’s compensation or other payments from the Company or any of its subsidiaries or affiliates or the Executive’s ownership interest in the Company or any of its subsidiaries or affiliates (including wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity).  In the event the Company or any of its subsidiaries or affiliates does not make such deductions or withholdings, the Executive shall indemnify the Company and its subsidiaries and affiliates for any amounts paid with respect to any such Taxes.

25.         Governing Law.  All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia, without giving effect to any choice of law or conflict of law rules or provisions (whether of the Commonwealth of Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Virginia.

26.         Survival. Notwithstanding any termination of the Executive’s employment under this Agreement, Sections 6 through 29 hereof shall survive and continue in full force until the performance of the obligations thereunder, if any, in accordance with their respective terms.

27.         Counterparts; Delivery by Facsimile or Email Attachment. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.  This Agreement and any agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by e-mail attachment (e.g., PDF), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties.  No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail as a defense to the formation of a contract and each such party forever waives any such defense.

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28.         Code Section 409A.

(a)          This Agreement is intended to comply with Code Section 409A and its corresponding regulations, or an exemption, and payments may only be made under this Agreement upon an event and in a manner permitted by Code Section 409A, to the extent applicable. Severance benefits under the Agreement are intended to be exempt from Code Section 409A under the “separation pay exception,” to the maximum extent applicable. Any payments that qualify for the "short-term deferral" exception or another exception under Code Section 409A shall be paid under the applicable exception. Notwithstanding anything in this Agreement to the contrary, if required by Code Section 409A, if the Executive is considered a "specified employee" for purposes of Code Section 409A and if payment of any amounts under this Agreement is required to be delayed for a period of six (6) months after separation from service pursuant to Code Section 409A, payment of such amounts shall be delayed as required by Code Section 409A, and the accumulated amounts shall be paid in a lump sum payment within ten (10) days after the end of the six (6)-month period. If the Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of Code Section 409A shall be paid to the personal representative of the Executive's estate within sixty (60) days after the date of the Executive’s death.  In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)          A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(c)          To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (i) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (ii) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

(d)          For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

(e)          Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

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29.         Limitation on Payments.  The Company will make the payments under this Agreement without regard to whether the deductibility of such payments (or any other payments or benefits) would be limited or precluded by Section 280G of the Code and without regard to whether such payments would subject the Executive to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided, however, that if the Total After-Tax Payments (as defined below) would be increased by the reduction or elimination of any payment and/or other benefit under this Agreement (the “Parachute Payments”), then the amounts payable under this Agreement will be reduced or eliminated by determining the Parachute Payment Ratio (as defined below) for each Parachute Payment and then reducing the Parachute Payments in order beginning with the Parachute Payment with the highest Parachute Payment Ratio. For Parachute Payments with the same Parachute Payment Ratio, such payments shall be reduced based on the time of payment of such Parachute Payments, with amounts having later payment dates being reduced first.  For Parachute Payments with the same Parachute Payment Ratio and the same time of payment, such Parachute Payments shall be reduced on a pro rata basis (but not below zero) prior to reducing Parachute Payments with a lower Parachute Payment Ratio.  For purposes hereof, the term “Parachute Payment Ratio” shall mean a fraction, the numerator of which is the value of the applicable payment for purposes of Section 280G of the Code, and the denominator of which is the intrinsic value of such Parachute Payment.  The Company’s independent, certified public accounting firm (the “Accountants”) will determine whether and to what extent Parachute Payments under this Agreement are required to be reduced in accordance with this Section 29.  Such determination by the Accountants shall be conclusive and binding upon the Executive and the Company for all purposes.  For purposes of making the calculations required by this Section 29, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code.  The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 29.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 29.  If there is an underpayment or overpayment under this Agreement (as determined after the application of this Section 29), the amount of such underpayment or overpayment will be immediately paid to Executive or refunded by Executive, as the case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.  For purposes of this Agreement, “Total After-Tax Payments” means the total economic value of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Executive (whether made under the Agreement or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described in Section 4999 of the Code), and present valued using the discount rate applicable under Section 280G of the Code.

[Signatures appear on following page(s)]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

COMPANY
GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.
By:	/s/ Dale Davis
	Name:  Dale Davis
	Title:    CEO, President & Director
EXECUTIVE
/s/ Keith Lynch
Name:  Keith Lynch

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC

11921 FREEDOM DRIVE │ SUITE 550 │ TWO FOUNTAIN SQUARE │ RESTON │ VIRGINIA │ 20190 │ USA

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EX-10.14

Exhibit 10.14

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made by and between STG Group, Inc., a Delaware corporation (the “Company”), and Dale Davis, a natural person (the “Executive”), and shall be effective Monday, November 30, 2015.

WHEREAS, the Executive is an executive officer of STG Group, Inc.;

WHEREAS, the Company’s obligations are conditioned upon execution and delivery of this Agreement by the Executive; and

WHEREAS, the Company, and the Executive otherwise desire to enter into this Agreement relating to the Executive’s employment by the Company and to set forth certain covenants restricting certain competitive and other activities by the Executive.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises and respective covenants and agreements of the parties herein contained, the parties, intending to be legally bound, agree as follows:

1.          Employment. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein.

2.          At-Will Employment. The parties hereby agree that the Executive’s employment with the Company shall be “at-will” employment and may be terminated by either party at any time, subject to and in accordance with the terms of this Agreement.

3.          Position and Duties. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall initially serve as the Chief Integration Officer of the Company and shall have such responsibilities and authority as is customary for a Chief Integration Officer of a company of similar size and nature as the Company and shall have such title, duties and responsibilities as assigned to the Executive by the President of the Company (the “President”). The Executive shall devote the Executive’s full business time and attention to the business and affairs of the Company and its subsidiaries and affiliates. So long as the Executive is employed by the Company or any of its subsidiaries or affiliates, the Executive shall not, without the prior written consent of the board of directors of the Company (the “Board”), perform other services for compensation or engage in other business activities that could interfere with his responsibilities to the Company or its subsidiaries or affiliates or create a conflict of interest; provided that the Executive may, without the consent of the Board, engage in personal, charitable and professional activities, (a) subject to compliance with the Company’s normal conflicts procedures, and (b) provided that such activities do not materially conflict or interfere with the ability of the Executive to perform the duties and responsibilities hereunder. If, in the reasonable discretion of the Company, an outside activity subsequently creates a material conflict with the Company’s business or prospective business, the Executive agrees to immediately cease engaging in such activity at such time as requested.

STG GROUP, INC.

11091 SUNSET HILLS DRIVE | SUITE 200 | RESTON | VIRGINIA | 20190 | USA

4.          Compensation, Benefits and Related Matters.

(a)          Salary. During the Executive’s employment with the Company pursuant to this Agreement, the Company shall pay to the Executive a gross salary at an initial rate of $346,000.00 dollars ($14,416.67 semi-monthly) per annum in equal installments as nearly as practicable on the normal payroll periods for employees of the Company generally (the “Base Salary”). The Board may, in its sole discretion, increase the Executive’s Base Salary at any time. In addition, the Executive shall be eligible for bonuses, as determined by the Board, in its sole discretion, from time to time.

(b)          Incentives. The Executive will be eligible to participate in the Company’s Annual Incentive Plan (“AIP”), at up to a 50% target of the Executive’s base salary (target assuming 100% achievement of plan) and will be eligible to participate in the Company’s Deferred Compensation Plan.

(c)          Expenses. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to receive reimbursement for all reasonable out-of-pocket expenses incurred by the Executive in performing services hereunder (subject to reasonable documentation with respect thereto in accordance with the Company’s expense reimbursement policies).

(d)          Benefits. During the Executive’s employment with the Company pursuant to this Agreement, the Executive shall be entitled to participate in all of the employee benefit plans and arrangements generally provided from time to time to senior executive officers of the Company, including the standard vacation and sick leave benefit plan made available to senior executive officers of the Company, subject to the Company’s customary vesting periods and eligibility requirements. The Company may initiate, change and discontinue any such plan or arrangement at any time. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of any amounts payable to the Executive pursuant to this Section 4.

5.          Termination.

(a)          The Executive’s employment with the Company may be terminated by the Company (i) at any time for Cause or without Cause; or (ii) if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for four (4) consecutive months or any one hundred twenty (120) days in any twelve (12)-month period (a “Disability”). The Executive’s employment with the Company shall be terminated immediately upon the death of the Executive. The Executive’s employment with the Company may be terminated at any time by the Executive with or without Good Reason.

(b)          Any purported termination of the Executive’s employment by the Company or the Executive (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other in accordance with Section 15 hereof.

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(c)          Upon the termination of the Executive’s employment with the Company, or any of its subsidiaries or affiliates, as applicable, for any or no reason, the Executive shall immediately resign as an officer, director and/or manager of the Company, or any of its subsidiaries or affiliates, as applicable.

(d)          As used herein:

(i)          A “Notice of Termination” shall mean a notice that specifies the Date of Termination and that, in the case of a termination by the Executive, shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and that, in the case of a termination by the Company, shall indicate whether such termination is for Cause or without Cause and shall specify the grounds upon which Cause is alleged, if applicable.

(ii)         The “Date of Termination” with respect to any purported termination of the Executive’s employment shall mean (A) if the Executive’s employment is terminated for Disability, the date specified in the Notice of Termination, (B) if the Executive’s employment is terminated by reason of death, then the date thereof, and (C) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Executive, shall not be less than thirty (30) nor more than sixty (60) days from the date that such Notice of Termination is given).

(iii)        “Cause” shall mean that the Board has determined in good faith that the Executive (i) has been convicted of, or pleaded nolo contendere to, a misdemeanor involving moral turpitude or a felony, (ii) has committed any other act or omission involving dishonesty, disloyalty, theft, unethical business conduct or fraud with respect to the Company or any of its subsidiaries or affiliates or any of their customers or suppliers, (iii) has engaged in chronic substance abuse which has a material impact on the Executive’s performance of his duties hereunder, (iv) has consistently failed to comply with the lawful instructions of the President or the Board, or (v) has materially breached this Agreement. Notwithstanding anything in this Agreement or elsewhere to the contrary, the Company may terminate the Executive’s employment for Cause only if (x) the Notice of Termination specifies the grounds upon which Cause is alleged and (y) the Executive fails to cure such grounds for Cause within thirty (30) days after he receives such notice, unless such grounds for Cause are not curable.

(iv)        “Good Reason” for the Executive to terminate his employment hereunder will exist if any of the following events occur without his prior written consent: (A) a relocation of more than fifty (50) miles of his principal place of employment (B) a material reduction in the Executive’s then-current Base Salary (as such may have been increased from time to time from the amount set forth in Section 4(a) above), except to the extent of any broad-based salary reduction affecting the other senior executives of the Company, or (C) a material breach by the Company of its obligations hereunder. Notwithstanding the foregoing, the Executive may only terminate his employment hereunder with Good Reason if (x) the Executive gives written notice to the Company within sixty (60) days of the initial existence of the event that gives rise to Good Reason; (y) the Company does not cure such event within thirty (30) days of receiving such notice; and (z) the Executive terminates his employment with the Company within one hundred twenty (120) days after such event occurs.

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6.          Severance Payments.

(a)          Upon any termination of the Executive’s employment by the Company without Cause or by the Executive for Good Reason, the Company shall pay as severance to the Executive an amount (the “Cash Severance Amount”) equal to the greater of (i) the sum of two (2) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination or (ii) the product of (x) one (1) month of the Executive’s Base Salary in effect immediately prior to the Date of Termination, multiplied by (y) the number of years that the Executive has been employed by the Company (such number, the “Employment Years”); provided that the aggregate Cash Severance Amount shall not exceed the sum of twelve (12) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination. The Company shall pay the Cash Severance Amount over a number of months immediately following the Date of Termination equal to the Employment Years (the “Severance Period”), in equal installments as nearly as practicable, on the normal payroll dates for employees of the Company generally but in no event less frequently than monthly. Any amounts payable pursuant to this Section 6(a) shall not be paid until the first scheduled payment date following the date the release contemplated in Section 6(d) is executed and no longer subject to revocation, with the first such payment being in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, however, that any such amounts that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the sixtieth (60^th) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, further, that, if the Executive is a “specified employee” within the meaning of Code Section 409A, any amounts payable to the Executive under this Section 6(a) during the first six (6) months and one (1) day following the Date of Termination that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the date that is six (6) months and one (1) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled to during the period following the Date of Termination if such deferral had not been required.

(b)          In the event of any termination of the Executive’s employment (i) by the Company for Cause, or (ii) due to the Executive’s death or Disability, the Executive shall not be entitled to any severance or other payments or benefits as of the Date of Termination (except as required by applicable law) and all rights to receive a salary, benefits or other compensation shall termination as of the Date of Termination except as set forth in Section 7.

(c)          If the Executive breaches any provision of Sections 8 through Error! Reference source not found. hereof, the Company shall no longer be obligated to make any payments or reimbursements or provide any benefits pursuant to this Section 6.

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(d)          The Company’s obligations under this Section 6 shall be contingent upon (i) the delivery by the Executive of a complete release in favor of the Company, its subsidiaries, affiliates, and respective officers, directors, employees, principals, managers, partners, members, attorneys and representatives, in substantially the form attached hereto as Annex A, within twenty-one (21) days after the Date of Termination and (ii) the Executive not revoking such release.

(e)          In the event that the Company fails to pay any of the amounts set forth in Section 6(a) within five (5) business days after the date when due, the overdue amounts shall accrue interest at a rate equal to five (5%) per year until such overdue amounts and interest are paid. If the Executive dies during the postponement period prior to the payment in full of amounts set forth in Section 6(a), the unpaid amounts shall be paid to the personal representative of the Executive’s estate when due.

(f)          The payments provided in Section 6(a) shall be in addition to the payments and benefits set forth in Section 7 hereof.

7.          Compensation Other than Severance Payments. If the Executive’s employment shall be terminated by him or the Company for any reason, the Company shall (i) pay the Executive’s normal post-termination compensation and benefits under, and in accordance with, the Company’s retirement, insurance and other compensation or benefit plans or programs during such period, (ii) pay the Executive, an amount in cash equal to the Executive’s accrued but unpaid Base Salary through the Date of Termination.

8.          Confidential Information. The Executive acknowledges that the Confidential Information obtained by him while employed by the Company or any subsidiary or affiliate of the Company is the property of the Company and such subsidiaries and affiliates. Therefore, the Executive agrees that he shall not (during his employment with the Company or at any time thereafter) disclose to any third party, other than the Company’s authorized employees and such other persons as the Company may have authorized to receive such Confidential Information, or use for his own purposes or for the benefit of any other person or entity any Confidential Information without the express prior written consent of the Board, unless and to the extent that the aforementioned matters: (a) become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (b) are required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment). The Executive further agrees to use such Confidential Information solely for the benefit of the Company and its subsidiaries and affiliates, as applicable, and to hold such Confidential Information in strictest confidence. The Executive shall deliver to the Company at the termination of his employment, or at any other time that the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined below) or the business of the Company or any subsidiary or affiliate that he may then possess or have under his control. The term “Confidential Information” includes, without limitation, any proprietary information, business/technical data, trade secrets or know-how, including without limitation research, business development plans, services, customer lists, market research, developments, processes, formulas, technology, designs, marketing information, finances or other business information, or any other confidential and proprietary information of the Company or any of its subsidiaries or affiliates that is not generally known outside the Company that may be of value to the Company, including confidential and proprietary information and trade secrets that third parties entrust to the Company in confidence. Confidential Information does not include any information that (i) has become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions or (ii) is required to be disclosed by judicial process or law (provided that the Executive shall give prompt advance written notice of such requirement to the Board to enable the Company to seek any appropriate protective order or confidential treatment).

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9.          Inventions and Patents.

(a)          Subject to Section 9(b), the Executive hereby assigns to the Company all right, title and interest to all patents and patent applications, all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (in each case whether or not patentable), all copyrights and copyrightable works, all trade secrets, confidential information and know-how, and all other intellectual property rights that are conceived, reduced to practice, developed or made by the Executive while employed by the Company and its subsidiaries or affiliates and that (i) relate to the Company or any of its subsidiaries’ or affiliates’ actual or anticipated business, research and development or existing or future products or services; or (ii) are conceived, reduced to practice, developed or made using any material equipment, supplies, facilities, assets or resources of the Company or any of its subsidiaries or affiliates (including but not limited to any intellectual property rights) (“Work Product”). The Executive shall promptly disclose such Work Product to the President and perform all actions reasonably requested by the President (whether during his employment with the Company or at any time thereafter) to establish and confirm the Company’s ownership (including, without limitation, assignments, consents, powers of attorney, applications and other instruments).

(b)          To preclude any possible uncertainty, attached hereto as Annex B is a complete list of all Work Product that the Executive (i) has, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company; (ii) considers to be his property or the property of third parties; and (iii) wishes to have excluded from the scope of this Agreement (collectively, the “Prior Work Product”). If disclosure of any such Prior Work Product would cause the Executive to violate any prior confidentiality agreement, a space is provided in Annex B to disclose a cursory name for each such Prior Work Product, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such Prior Work Product has not been made for that reason. If no such disclosure is attached, the Executive represents that there is no Prior Work Product.

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10.         Noncompetition. The Executive acknowledges that in the course of his or her employment with the Company he or she may become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and its subsidiaries and affiliates and that his or her services have been and may be of special, unique and extraordinary value to the Company and its subsidiaries and affiliates. Therefore, the Executive agrees that, from the date hereof until twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Noncompete Period”), he or she shall not, directly or indirectly (whether for compensation or otherwise) perform, on behalf of any business engaged in a Competing Business, any services that are substantially similar to the services that the Executive provided to the Company or its subsidiaries or affiliates during the Executive’s employment with the Company or its subsidiaries or affiliates. The Executive acknowledges that the Company’s and its subsidiaries’ and affiliates’ businesses are conducted nationally and agrees that the provisions in this Section 3 shall operate throughout the United States. The term “Competing Business” means any current contracts or business opportunities which the Executive was substantially engaged or about which the Executive gained substantial Confidential Information during the Executive’s employment with the Company, that is either (i) conducted by the Company during the period of the Executive’s employment with the Company and at the time the Executive’s employment ends, or (ii) pursued or proposed by the Company at any time during the last twelve (12) months of the Executive’s employment with the Company. Notwithstanding the foregoing provisions in this Section 3, the Company retains the right to not enforce these provisions in which the Executive seeks to work for a Competing Business on a contract and/or potential business opportunity that the Company has decided to not pursue, where the contract and/or business opportunity has been awarded to another contractor because the Company is ineligible to bid on that contract, or because of any other contractual restrictions that might limit the enforcement of the provisions in this Section 3.

11.         Non-Solicitation. From the date hereof until the later of (a) the two (2) year anniversary of the date hereof and (b) twelve (12) months after the termination of the Executive’s employment with the Company or any of its subsidiaries or affiliates (collectively the “Nonsolicit Period”), the Executive shall not directly or indirectly through another entity (i) solicit, induce or attempt to induce any current Executive of the Company or any of its subsidiaries or affiliates to terminate his or her relationship with the Company or any of its subsidiaries or affiliates; (ii) hire any person who was an Executive of the Company or any of its subsidiaries or affiliates at any time during the twelve (12) months preceding the Date of Termination (or the twelve (12) months preceding the end of the Nonsolicit Period, if later) of the Executive; (iii) induce or attempt to induce any person or entity who was a customer, developer, client, member, supplier, licensee, licensor, franchisee or other business partner of the Company or any of its subsidiaries or affiliates at the time of or at any time within a twelve (12) month period of time immediately prior to the Date of Termination of the Executive to cease doing business with the Company or any of its subsidiaries or affiliates; or (iv) in any way influence or attempt to influence such customer, developer, client, member, supplier, licensee or business partner of the Company or any of its subsidiaries or affiliates (including, without limitation, making any negative statements or communications about the Company or any of its subsidiaries or affiliates) to transfer his, her or its business or patronage from the Company to any competitor of the Company.

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12.         Enforcement.

(a)          The Executive acknowledges and agrees that the provisions of Section Error! Reference source not found. and Section Error! Reference source not found. are in consideration of: (1) the Base Salary and the other compensation payable hereunder (including any payments during the Severance Period) and (2) additional good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. The Executive expressly agrees and acknowledges that: (i) the restrictions contained in Section Error! Reference source not found. and Section Error! Reference source not found. (A) are reasonable with respect to subject matter, time period and geographical area; (B) do not preclude the Executive from earning a livelihood; and (C) do not unreasonably impose limitations on the Executive’s ability to earn a living, (ii) the potential harm to the Company and its subsidiaries and affiliates of the non-enforcement of the restrictions contained in Section Error! Reference source not found. and Section Error! Reference source not found. outweighs any harm to the Executive of such enforcement by injunction or otherwise and (iii) the Executive has carefully read this Agreement, has given careful consideration to the restraints imposed upon the Executive by this Agreement and is in full accord as to their necessity for the reasonable and proper protection of the Confidential Information of the Company and its subsidiaries and affiliates.

(b)          If, at the time of enforcement of any of Sections 8 through Error! Reference source not found., a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. Because the Executive’s services are unique and because he has access to Confidential Information and Work Product, the parties hereto acknowledge and agree that money damages would not be an adequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by the Executive of any of Sections 8 through Error! Reference source not found., the Noncompete Period and the Nonsolicit Period shall be tolled until such breach or violation has been duly cured. The Executive agrees that the restrictions contained in Sections 8 through 11 are reasonable.

13.         Successors; Binding Agreement; Assignment.

(a)          Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Section 13 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

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(b)          Binding Agreement. This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

(c)          Assignment. The Executive shall not, without the prior written consent of the Board, assign, transfer or delegate all or any portion of this Agreement or any rights or obligations hereunder. The Company may assign its rights and obligations hereunder (in whole or in part) without the Executive’s consent to (i) any affiliate of the Company, (ii) for collateral security purposes or (iii) to any subsequent purchaser of the Company or any of its businesses or any material portion of its assets (whether such sale is structured as a sale of stock, sale of assets, merger, recapitalization or otherwise).

14.         Representations. The Executive hereby represents and warrants to the Company that: (a) the execution, delivery and performance of this Agreement by the Executive do not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, (b) this Agreement constitutes the legal, valid and binding obligation of the Executive, enforceable in accordance with its terms and (c) the Executive has not and will not take any action that will conflict with, violate or cause a breach of any noncompete, nonsolicitation or confidentiality agreement to which the Executive is a party or by which the Executive is bound. The Executive hereby acknowledges and represents that he has carefully reviewed this Agreement, that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement (or, after carefully reviewing this Agreement, was given the opportunity to, but has freely decided not to, consult with independent legal counsel), and that he fully understands the terms and conditions contained herein.

15.         Notice. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given, delivered and received (a) if delivered personally or (b) if sent by registered or certified mail (return receipt requested) postage prepaid, or by courier guaranteeing next day delivery, in each case to the party to whom it is directed at the following addresses (or at such other address for any party as shall be specified by notice given in accordance with the provisions hereof, provided that notices of a change of address shall be effective only upon receipt thereof). Notices delivered personally shall be effective on the day so delivered, notices sent by registered or certified mail shall be effective three (3) days after mailing, and notices sent by courier guaranteeing next day delivery shall be effective on the next day after deposit with the courier:

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If to the Executive:	To the address listed on the signature
	page hereto:
	Telephone: 703-395-7649
	Email: dale.davis@globalgroup.com
	with a copy to:
	STG Group, Inc.
	11091 Sunset Hills Road
	Reston, Virginia 22030
	Telephone: 703/691-2480
	Attention: Cheryl Garrison,
	Vice President, Human Capital
	Email: Cheryl.garrison@stg.com
If to the Company:	STG Group, Inc.
	11091 Sunset Hills Road
	Reston, Virginia 22030
	Telephone: 703/691-2480
	Attention: Cheryl Garrison,
	Vice President, Human Capital
	Email: Cheryl.garrison@stg.com
	with a copy to:
	Holland and Knight LLP
	1600 Tysons Blvd #700
	McLean, VA
	Attention: William Mutryn
	Jonathan Wolcott
	Telephone: (703) 720-8069
	(703) 720-8073

16.         Complete Agreement. This Agreement and the documents and agreements contemplated hereby and thereby embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties or their representatives, written or oral, that may have related to the subject matter hereof in any way.

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17.         Miscellaneous. No provisions of this Agreement may be modified, waived or discharged, unless such waiver, modification or discharge is agreed to in writing signed by the Executive and a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. The Company and the Executive shall reasonably cooperate with respect to, and may jointly amend or modify the Agreement in any mutually agreeable manner to provide for, the application and effects of Code Section 409A and any related regulatory or administrative guidance issued by the Internal Revenue Service.

18.         Insurance. The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable. Executive agrees to reasonably cooperate in any medical or other examination, supply any reasonable information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance.

19.         Executive’s Cooperation. During and after the Executive’s employment, Executive shall cooperate with the Company and its subsidiaries and affiliates in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company or its subsidiaries or affiliates (including the Executive being available to the Company and its subsidiaries and affiliates upon reasonable notice for interviews and factual investigations, appearing at the Company’s or any subsidiary’s or affiliate’s reasonable request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company and its subsidiaries and affiliates all pertinent information and turning over to the Company and its subsidiaries and affiliates all relevant documents that are or may come into the Executive’s possession, all at times and on schedules as reasonably agreed to between the Company and the Executive. In the event the Company or any of its subsidiaries or affiliates requires the Executive’s cooperation in accordance with this Section 19, the Company shall reimburse the Executive for the Executive’s reasonable out-of-pocket expenses incurred in connection therewith (including lodging and meals, upon submission of receipts and compliance with the Company’s expense reimbursement policies).

20.         WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

21.         Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

22.         Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

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23.         No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

24.         Indemnification and Reimbursement of Payments on Behalf of the Executive. The Company and its subsidiaries and affiliates shall be entitled to deduct or withhold from any amounts owing from the Company or any of its subsidiaries or affiliates to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes (“Taxes”) imposed with respect to the Executive’s compensation or other payments from the Company or any of its subsidiaries or affiliates or the Executive’s ownership interest in the Company or any of its subsidiaries or affiliates (including wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity). In the event the Company or any of its subsidiaries or affiliates does not make such deductions or withholdings, the Executive shall indemnify the Company and its subsidiaries and affiliates for any amounts paid with respect to any such Taxes.

25.         Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia, without giving effect to any choice of law or conflict of law rules or provisions (whether of the Commonwealth of Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Virginia.

26.         Survival. Notwithstanding any termination of the Executive’s employment under this Agreement, Sections 6 through 29 hereof shall survive and continue in full force until the performance of the obligations thereunder, if any, in accordance with their respective terms.

27.         Counterparts; Delivery by Facsimile or Email Attachment. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. This Agreement and any agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by e-mail attachment (e.g., PDF), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail as a defense to the formation of a contract and each such party forever waives any such defense.

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28.         Code Section 409A.

(a)          This Agreement is intended to comply with Code Section 409A and its corresponding regulations, or an exemption, and payments may only be made under this Agreement upon an event and in a manner permitted by Code Section 409A, to the extent applicable. Severance benefits under the Agreement are intended to be exempt from Code Section 409A under the “separation pay exception,” to the maximum extent applicable. Any payments that qualify for the “short-term deferral” exception or another exception under Code Section 409A shall be paid under the applicable exception. Notwithstanding anything in this Agreement to the contrary, if required by Code Section 409A, if the Executive is considered a “specified employee” for purposes of Code Section 409A and if payment of any amounts under this Agreement is required to be delayed for a period of six (6) months after separation from service pursuant to Code Section 409A, payment of such amounts shall be delayed as required by Code Section 409A, and the accumulated amounts shall be paid in a lump sum payment within ten (10) days after the end of the six (6)-month period. If the Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of Code Section 409A shall be paid to the personal representative of the Executive’s estate within sixty (60) days after the date of the Executive’s death. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)          A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(c)          To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (i) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (ii) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

(d)          For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

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(e)          Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

29.         Limitation on Payments. The Company will make the payments under this Agreement without regard to whether the deductibility of such payments (or any other payments or benefits) would be limited or precluded by Section 280G of the Code and without regard to whether such payments would subject the Executive to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided, however, that if the Total After-Tax Payments (as defined below) would be increased by the reduction or elimination of any payment and/or other benefit under this Agreement (the “Parachute Payments”), then the amounts payable under this Agreement will be reduced or eliminated by determining the Parachute Payment Ratio (as defined below) for each Parachute Payment and then reducing the Parachute Payments in order beginning with the Parachute Payment with the highest Parachute Payment Ratio. For Parachute Payments with the same Parachute Payment Ratio, such payments shall be reduced based on the time of payment of such Parachute Payments, with amounts having later payment dates being reduced first. For Parachute Payments with the same Parachute Payment Ratio and the same time of payment, such Parachute Payments shall be reduced on a pro rata basis (but not below zero) prior to reducing Parachute Payments with a lower Parachute Payment Ratio. For purposes hereof, the term “Parachute Payment Ratio” shall mean a fraction, the numerator of which is the value of the applicable payment for purposes of Section 280G of the Code, and the denominator of which is the intrinsic value of such Parachute Payment. The Company’s independent, certified public accounting firm (the “Accountants”) will determine whether and to what extent Parachute Payments under this Agreement are required to be reduced in accordance with this Section 29. Such determination by the Accountants shall be conclusive and binding upon the Executive and the Company for all purposes. For purposes of making the calculations required by this Section 29, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 29. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 29. If there is an underpayment or overpayment under this Agreement (as determined after the application of this Section 29), the amount of such underpayment or overpayment will be immediately paid to Executive or refunded by Executive, as the case may be, with interest at the applicable federal rate provided for in Section 7872(0(2) of the Code. For purposes of this Agreement, “Total After-Tax Payments” means the total economic value of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Executive (whether made under the Agreement or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described in Section 4999 of the Code), and present valued using the discount rate applicable under Section 280G of the Code.

[Signatures appear on following page(s)]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

COMPANY
STG GROUP, INC.
By:	/s/ Paul Fernandes
	Name: Paul Fernandes
	Title: President & Chief Operating Officer
EXECUTIVE
/s/ Dale Davis

STG GROUP, INC.

11091 SUNSET HILLS DRIVE | SUITE 200 | RESTON | VIRGINIA | 20190 | USA

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EX-10.15

Exhibit 10.15

SERVICES AGREEMENT

This SERVICES AGREEMENT (this “Services Agreement”) is entered into on November 10, 2015, by and between Global Strategies Group (North America) LLC (the “Service Provider”), and STG Group, Inc., a Delaware corporation (the “Company”) (hereinafter referred to collectively as the “Parties” and individually as a “Party”).

WHEREAS, the Parties desire that the Company obtain certain services from the Service Provider.

NOW, THEREFORE, in consideration of the foregoing and the obligations and covenants contained herein, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

1.           Services. The Company may retain the Service Provider from time to time to perform the services set forth in Schedule A to this Agreement, as may be amended from time to time (the “Services”). The Service Provider will use commercially reasonable efforts to perform the Services in a timely and professional manner. The Services shall be ordered by the Company through the issuance of Purchase Orders in the form prescribed on Schedule B. The Service Provider understands that no Services will be performed until the Service Provider has received a properly issued Purchase Order from the Company.

2.           Payment Terms. The Service Provider shall invoice the Company for all Services, and other payments due under the issued Purchase Order in accordance with the fees set forth on Schedule A and the terms of the Purchase Order. The Company shall pay such invoiced amounts within thirty (30) days of receipt of the invoice. The Company shall reimburse the Service Provider for all reasonable out-of-pocket expenses incurred by the Service Provider in connection with providing the Services and in accordance with the terms and conditions of the Purchase Order.

3.           Confidential Information. Each Party shall keep all Confidential Information of the other Party in strict confidence and use the same care and discretion to avoid disclosure, publication or dissemination of the Confidential Information of the other Party as it uses with its own similar information that it does not wish to disclose, publish or disseminate. A Party shall only use the Confidential Information of the other Party to the extent necessary to exercise its rights or perform its obligations hereunder. A Party may disclose the Confidential Information of the other Party only (a) to the extent necessary to exercise its rights or perform its obligations hereunder or under any other written agreement between the Parties; (b) to the extent that such disclosure is required by law or was approved in writing by the other Party prior to such disclosure; or (c) to prospective and current investors, sources of funding, and advisors subject to a duty of confidentiality to the disclosing Party with respect to such Confidential Information at least as restrictive as that contained herein. The “Confidential Information” of a Party consists of all non-public information disclosed by such Party to the other Party that is marked as confidential or otherwise provided to the other Party under circumstances reasonably indicating its confidentiality. Confidential Information does not include any information that (i) is or becomes generally known to the public through no unlawful act of the receiving Party; (ii) was or becomes known to the receiving Party from a source other than the disclosing Party without violation of the disclosing party’s rights; or (iii) was independently developed by the receiving party without any use of the Confidential Information of the disclosing Party. The terms and conditions of this Agreement shall be deemed the Confidential Information of each Party.

4.           Term and Termination.

4.1           Term. Either Party may terminate this Agreement at its convenience, with or without cause, upon fifteen (15) days prior written notice to the other Party.

4.2           Effect of Termination. Termination of this Agreement by either Party will not act as a waiver of any breach of this Agreement and will not act as a release of either Party from any liability for breach of such Party’s obligations under this Agreement. Except where otherwise expressly specified in this Agreement, the rights and remedies granted to a Party under this Agreement are cumulative and in addition to, and not in lieu of, any other rights or remedies which the Party may possess at law or in equity. The respective rights and obligations of the Parties under the provisions of Sections 3, 4.3, 5 and 6, and any payment obligations accrued prior to the termination, will survive any termination of this Agreement.

5.           Representations and Warranties.

5.1           Authority. Each Party represents and warrants to the other Party that it has the full power and authority to enter into this Agreement and to perform its obligations under this Agreement, and that the performance of its obligations under this Agreement will not conflict with or result in a breach of any agreement to which such Party is a party or is otherwise bound.

5.2           Disclaimer. EXCEPT FOR THE WARRANTIES EXPRESSLY MADE IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTIES THAT MAY ARISE OUT OF COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE.

5.3           Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES, OR DAMAGES FOR ANY LOSS OF PROFITS, REVENUE OR BUSINESS, EVEN IF SUCH PARTY IS NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. Each Party acknowledges that the limitation of liability set forth in this Section 5.3 and the allocation of risk that it implements is an essential element of the bargain agreed to by the Parties, without which the Parties would not have entered into this Agreement. The Service Provider’s aggregate liability for damages arising out of, relating to or in connection with this Agreement, regardless of the form of action giving rise to such liability (under any theory, whether in contract, tort, statutory or otherwise), shall not exceed the aggregate fees paid by the Company to the Service Provider for the Services in question.

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6.           Miscellaneous.

6.1           Notices. Any notice, request, demand or other communication required or permitted hereunder will be in writing and will be deemed to be properly given upon the earlier of (a) actual receipt by the addressee or (b) five (5) business days after deposit in the mail, postage prepaid, when mailed by registered or certified airmail, return receipt requested, or one (1) business day after being sent via private industry courier to the receiving Party at the address set forth below or to such other address as the Party may from time to time designate in a writing delivered pursuant to this Section 6.1:

In the case of the Service Provider:

Global Strategies Group (North America) LLC:

Two Fountain Square, Suite 550

11921 Freedom Dr,

Reston, VA 20190

Attention: Fred Cassis

Telephone: (703) 904-4300

E-mail: frederic.cassis@globalgroup.com;

In the case of the Company:

STG, Inc.

12011 Sunset Hills Road, Suite 1200

Reston, Virginia 20190

Telephone: (703) 691-2480

E-mail: pfernandes@stg.com

6.2           Assignment. Neither Party will assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, by operation of law or otherwise, this Agreement or any or its rights or obligations under this Agreement, without the prior written consent of the other Party; provided, however, that either Party may assign, sell, transfer, delegate or otherwise dispose of this Agreement or any of its rights and obligations hereunder as part of a merger, consolidation, corporate reorganization, sale of all or substantially all of such Party’s assets, sale of stock, change of name or like event without the consent of the other Party. Any purported assignment, sale, transfer, delegation or other disposition, except as permitted herein, will be null and void. Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the Parties and their respective successors and permitted assigns.

6.3           Governing Law. This Agreement is to be construed in accordance with and governed by the laws of the United States of America (to the extent federal law is applicable) and by the internal laws of the Commonwealth of Virginia (to the extent state law is applicable) without giving effect to any choice of law rule that would cause the application of the laws of any other jurisdictions to the rights and duties of the Parties. Any legal suit, action or proceeding arising out of or relating to this Agreement will be commenced in a federal court in the Eastern District of Virginia, Alexandria division, or in state court with jurisdiction over Fairfax County, Virginia, and each Party irrevocably submits to the exclusive jurisdiction and venue of any such court in any such suit, action or proceeding.

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6.4           Relationship of the Parties. This Agreement will not be construed as creating an agency, partnership, joint venture or any other form of association, for tax purposes or otherwise, between the Parties. The Parties will at all times be and remain independent contractors, and neither Party nor its agents will have any authority of any kind to bind the other Party in any respect whatsoever.

6.5           Waiver. No delay or failure by either Party to exercise any right or remedy under this Agreement, and no partial or single exercise of any such right or remedy, will operate to limit, preclude, cancel, waive or otherwise affect such right or remedy, nor will any single or partial exercise of such right or remedy limit, preclude, impair or waive any further exercise of such right or remedy or the exercise of any other right or remedy.

6.6           Severability. If the application of any provision or provisions of this Agreement to any particular facts of circumstances is held to be invalid or unenforceable by any court of competent jurisdiction, then (a) the validity and enforceability of such provision or provisions as applied to any other particular facts or circumstances and the validity of other provisions of this Agreement will not in any way be affected or impaired thereby, and (b) such provision or provisions will be reformed without further action by the Parties and only to the extent necessary to make such provision or provisions valid and enforceable when applied to such particular facts and circumstances.

6.7           Entire Agreement. This Agreement (including any exhibit(s) hereto, which are incorporated herein by this reference) serves to document formally the entire understanding between the Parties relating to the subject matter hereof, and supersedes and replaces any prior or contemporaneous agreements, negotiations or understandings (whether oral or written) relating to the same subject matter. No amendment or modification of any provision of this Agreement will be effective unless in writing and signed by a duly authorized signatory of the Party against which enforcement of the amendment or modification is sought.

6.8           Captions and Section Headings. The captions and section and paragraph headings used in this Agreement are inserted for convenience only and will not affect the meaning or interpretation of this Agreement.

6.9           Counterparts. This Agreement may be executed in one or more counterparts, with the same effect as if the Parties had signed the same document. Each counterpart so executed will be deemed to be an original, and all such counterparts will be construed together and will constitute one Agreement.

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IN WITNESS WHEREOF, the Parties hereto have executed this Services Agreement as of the date first above written.

SERVICE PROVIDER:
Global Strategies Group (North America) LLC
By:	/s/ Frederic Cassis
	Name:  Frederic Cassis
	Title:  Director of Legal
COMPANY:
STG GROUP, INC.
By:	/s/ Paul Fernandes
	Name: Paul Fernandes
	Title: President

SCHEDULE A

SERVICES

Service	Fee
Corporate Development Services: At the request of the Company, the Service Provider, either directly or through any US based affiliate thereof, will provide the following corporate-development services to the Company: 1) sourcing acquisition targets and, under the direction of the Company, negotiating with the potential targets; 2) conducting due diligence pertaining to potential targets; 3) providing advice with respect to deal structuring and execution; and 4) assisting the Company with post-integration matters. The Company shall have final and sole discretion on any decisions that could have a material effect on the Company and shall otherwise be subject to the terms of the Affiliates Operation Plan (AOP) filed with the Defense Security Service (DSS).	The Company shall pay the Service Provider the sum of $1,400 (One Thousand Six Hundred Dollars) per day, pro rata for any part thereof (on the basis of an eight hour work day), for any Corporate Development Services provided under this Agreement, inclusive of all applicable duties, charges, levies and taxes.
Regulatory Support Services: At the request of the Company, the Service Provider, will provide advice and expertise with respect to the regulatory-compliance obligations of a public company. These services will include assisting with preparation of Security Exchange Commission (“SEC”) and other company filings, preparation of annual and quarterly reports required by SEC regulations, and advice and assistance regarding other similar regulatory-compliance issues relevant to the Company. The Regulatory Support Services shall otherwise be subject to the terms of the AOP filed with DSS.	The Company shall pay the Service Provider the sum of $1,300 (One Thousand Six Hundred Dollars) per day, pro rata for any part thereof (on the basis of an eight hour work day), for any Regulatory Support Services provided under this Agreement, inclusive of all applicable duties, charges, levies and taxes.

Financial Services: At the request of the Company’s Chief Financial Officer (“CFO”), the Service Provider may assist the Company with the following financial services: 1) planning and analysis, comprising provision of budget-related templates and instructions; 2) compilation of budget proposals and requests; 3) reporting of interim and final budgets; 4) reporting of actual spending as compared to budget; 5) reporting of quarterly financial forecasts; and 6) compilation of financial information required to be disclosed pursuant to SEC and similar regulations. The Company CFO shall have complete oversight and final decision authority with respect to these services. The Financial Services shall otherwise be subject to the terms of the AOP filed with DSS.	The Company shall pay the Service Provider the sum of $1,300 (One Thousand Four hundred Dollars) per day, pro rata for any part thereof (on the basis of an eight hour work day), for any Financial Services provided under this Agreement, inclusive of all applicable duties, charges, levies and taxes.
Business Development and Strategic Services At the request of the Company, GSG NA may provide the Company support in furtherance of business-development opportunities, including new-business-opportunity identification, customer point-of-contact identification, business-opportunity development and review, and examination of solicitations for relevance to the Company’s capabilities. This service will not be used in connection with proposals or bids for classified contracts. GSG NA may also provide the Company with advice to obtain business-operations efficiencies. The Company shall act upon such advice, if at all, in its sole discretion.	The Company shall pay the Service Provider the sum of $1,300 (One Thousand Six Hundred Dollars) per day, pro rata for any part thereof (on the basis of an eight hour work day), for any Business Development and Strategic Services provided under this Agreement, inclusive of all applicable duties, charges, levies and taxes.
Marketing and Public Relations Services At the request of the Company, the Service Provider shall provide the following marketing and public-relations services to the Company: (1) creation and update of sales materials; (2) product marketing to include design and creation of presentations, advertisements, and supporting materials; (3) public relations interview support; (4) press-release content and distribution; and (5) social media support and messaging via Twitter, Facebook, LinkedIn, and other similar venues. The Marketing and Public Relations Services shall otherwise be subject to the terms of the AOP filed with DSS.	The Company shall pay the Service Provider the sum of $1,100 (One Thousand One Hundred Dollars) per day, pro rata for any part thereof (on the basis of an eight hour work day), for any Marketing and Public Relations Services provided under this Agreement, inclusive of all applicable duties, charges, levies and taxes.

Human Resources   At the request of the Company, the Services Provider may provide human resources (“HR”) services to the Corporation upon request by the Company. The following services will be provided to the Company: (1) employee benefits advice and administration; (2) employment policy administration guidance; (3) advice regarding organizational structure design and implementation; (4) assisting the Company with identification and recruitment of candidates (e.g., screening resumes and applications against criteria established by the Company but excluding any role in the substantive selection process for hiring); and (5) training and career development. The Human Resources Services shall otherwise be subject to the terms of the AOP filed with DSS.     The Company shall pay the Service Provider the sum of $1,200 (One Thousand Five Hundred Dollars) per day, pro rata for any part thereof (on the basis of an eight hour work day), for any Human Resources Services provided under this Agreement, inclusive of all applicable duties, charges, levies and taxes.

EX-99.1

Exhibit 99.1

STG Group, Inc.

Condensed Consolidated Balance Sheets

September 30, 2015 and December 31, 2014

(In Thousands, Except Share and Per Share Amounts)

	September 30, 2015		December 31, 2014
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	5,814	$	340
Contract receivables, net		26,775		47,517
Investments held in Rabbi Trust		4,279		4,310
Prepaid expenses and other current assets		1,021		1,973
Total current assets		37,889		54,140
Property and equipment, net		1,915		6,696
Goodwill		2,635		4,699
Intangible assets, net		1,500		3,000
Other assets		83		100
Total assets	$	44,022	$	68,635
Liabilities and Stockholders’ Equity
Current Liabilities
Outstanding checks in excess of bank balance	$	-	$	6,141
Line-of-credit		-		13,520
Accounts payable and accrued expenses		14,911		7,305
Accrued payroll and related liabilities		9,599		9,629
Billings in excess of revenue recognized		288		287
Deferred rent		122		519
Total current liabilities		24,920		37,401
Deferred compensation plan		4,279		4,310
Deferred rent		678		3,967
Total liabilities		29,877		45,678
Commitments and Contingencies
Stockholders’ Equity
Common stock; $0.001 par value; 2,000 shares
authorized; 1,111 shares issued and outstanding		-		-
Additional paid-in capital		12,891		12,891
		12,891		12,891
Less: Stockholder note receivable		2,500		-
		10,391		12,891
Retained earnings		3,754		10,066
Total stockholders’ equity		14,145		22,957
Total liabilities and stockholdersʼ equity	$	44,022	$	68,635

See accompanying notes to the condensed consolidated financial statements.

1

STG Group, Inc.

Unaudited Condensed Consolidated Statements of Income

Three and Nine Months Ended September 30, 2015 and 2014

(In Thousands, Except Share and Per Share Amounts)

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014
Contract revenue	$	50,081		$	53,588		$	149,138		$	158,801
Direct expenses		34,721			36,644			102,224			107,631
Gross profit		15,360			16,944			46,914			51,170
Indirect and selling expenses		11,718			14,041			40,933			45,798
Impairment of goodwill		2,064			-			2,064			-
Impairment of other intangible assets		906			-			906			-
		14,688			14,041			43,903			45,798
Operating income		672			2,903			3,011			5,372
Other income (expense)
Other income (expense), net		(398	)		(120	)		(259	)		86
Interest expense		(25	)		(11	)		(43	)		(41	)
		(423	)		(131	)		(302	)		45
Net income	$	249		$	2,772		$	2,709		$	5,417
Net Income per share available to common stockholders
Basic and diluted	$	224		$	2,495		$	2,438		$	4,876
Weighted average number of common shares outstanding
Basic and diluted		1,111			1,111			1,111			1,111

See accompanying notes to the condensed consolidated financial statements.

2

STG Group, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2015 and 2014

(In Thousands, Except Share and Per Share Amounts)

	2015			2014
Cash Flows From Operating Activities
Net income	$	2,709		$	5,417
Adjustments to reconcile net income to net cash provided by operating activities:
Lease termination costs		703			-
Loss on disposal of property and equipment		1,125			-
Deferred rent		(123	)		(670	)
Depreciation and amortization of property and equipment		761			878
Amortization of intangible assets		594			468
Impairment of goodwill		2,064			-
Impairment of other intangible assets		906			-
Changes in assets and liabilities:
(Increase) decrease in:
Contract receivables		20,742			15,605
Prepaid expenses and other current assets		952			2,419
Other assets		17			70
Increase (decrease) in:
Accounts payable and accrued expenses		7,606			2,227
Accrued payroll and related liabilities		(30	)		(286	)
Billings in excess of revenue recognized		1			203
Net cash provided by operating activities		38,027			26,331
Cash Flows From Investing Activities
Purchases of property and equipment		(1,371	)		(906	)
Net cash used in investing activities		(1,371	)		(906	)
Cash Flows From Financing Activities
Net repayments of line-of-credit		(13,520	)		(16,102	)
Decrease in outstanding checks in excess
of bank balance		(6,141	)		(2,405	)
Note receivable issued to stockholder		(2,500	)		-
Distributions to stockholders		(9,021	)		(6,677	)
Net cash used in financing activities		(31,182	)		(25,184	)
Net increase in cash and cash equivalents		5,474			241
Cash and Cash Equivalents
Beginning		340			155
Ending	$	5,814		$	396
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	16		$	41
Supplemental Disclosures of Non-Cash Investing Activities
Change in investments held in Rabbi Trust	$	(31	)	$	380
Change in deferred compensation plan/other liability	$	31		$	(380	)

See accompanying notes to the condensed consolidated financial statements.

3

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 1. Significant Accounting Policies and Business Combination

Basis of presentation: The accompanying unaudited condensed consolidated financial statements of STG Group, Inc. and its subsidiaries (“the Company”) have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements do not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes in the Company’s consolidated financial statements for the periods ended December 31, 2012, 2013 and 2014.

In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for the three and nine months ended September 30, 2015 and 2014 are not necessarily indicative of the results that may be expected for the entire fiscal year.

Amounts are expressed in thousands of dollars unless otherwise indicated.

Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates.

Significant estimates embedded in the consolidated financial statements for the periods presented include revenue recognition on fixed-price contracts, the allowance for doubtful accounts, the valuation and useful lives of intangible assets, the length of certain customer relationships, useful lives of property, plant and equipment, valuation of a Rabbi Trust and related deferred compensation liability. Estimates and assumptions are also used when determining the allocation of the purchase price in a business combination to the fair value of assets and liabilities and determining related useful lives.

Revenue recognition: Revenue is recognized when persuasive evidence of an arrangement exists, services have been rendered or goods delivered, the contract price is fixed or determinable and collectability is reasonably assured. Revenue associated with work performed prior to the completion and signing of contract documents is recognized only when it can be reliably estimated and realization is probable. The Company bases its estimates on previous experiences with the customer, communications with the customer regarding funding status and its knowledge of available funding for the contract.

Revenue on cost-plus-fee contracts is recognized to the extent of costs incurred plus a proportionate amount of the fee earned. The Company considers fixed fees under cost-plus-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract. The Company considers performance-based fees, including award fees, under any contract type to be earned when it can demonstrate satisfaction of performance goals, based upon historical experience, or when the Company receives contractual notification from the customer that the fee has been earned. Revenue on time-and-materials contracts is recognized based on the hours incurred at the negotiated contract billing rates, plus the cost of any allowable material costs and out-of-pocket expenses. Revenue on fixed-price contracts is primarily recognized using the proportional performance method of contract accounting. Unless it is determined as part of the Company’s regular contract performance review that overall progress on a contract is not consistent with costs expended to date, the Company determines the percentage completed based on the percentage of costs incurred to date in relation to total estimated costs expected upon completion of the contract. Revenue on other fixed-price service contracts is generally recognized on a straight-line basis over the contractual service period, unless the revenue is earned, or obligations fulfilled, in a different manner.

4

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 1. Significant Accounting Policies and Business Combination (Continued)

Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined and are recorded as forward loss liabilities in the consolidated financial statements. Changes in job performance, job conditions and estimated profitability may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.

Multiple agencies of the federal government directly or indirectly provided the majority of the Company's contract revenue during the three and nine months ended September 30, 2015 and 2014. For the three and nine months ended September 30, 2015 and 2014, there were two customers that each provided revenue in excess of 10% of total revenue and accounted for approximately 78% and 75%, respectively, of the Company’s total 2015 revenue and approximately 72% and 73%, respectively, of the Company’s total 2014 revenue.

Federal government contract costs, including indirect costs, are subject to audit and adjustment by the Defense Contract Audit Agency. Contract revenue has been recorded in amounts that are expected to be realized upon final settlement.

Costs of revenue: Costs of revenue include all direct contract costs, as well as indirect overhead costs and selling, general and administrative expenses that are allowable and allocable to contracts under federal procurement standards. Costs of revenue also include costs and expenses that are unallowable under applicable procurement standards and are not allocable to contracts for billing purposes. Such costs and expenses do not directly generate revenue, but are necessary for business operations.

For the three and nine months ended September 30, 2015 and 2014, there was one vendor that comprised approximately 11% and 11%, respectively, of the Company’s total 2015 direct expenses and approximately 12% and 11%, respectively, of the Company’s total 2014 direct expenses.

Investments held in Rabbi Trust: The Company has investments in mutual funds held in a Rabbi Trust that are classified as trading securities. Management determines the appropriate classification of the securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The securities are classified as trading securities because they are held for resale in anticipation of short-term (generally 90 days or less) fluctuations in market prices. The trading securities are stated at fair value. Realized and unrealized gains and losses and other investment income are included in other income in the accompanying consolidated statements of operations.

Contract receivables: Contract receivables are generated primarily from prime and subcontracting arrangements with federal governmental agencies. Billed contract receivables represent invoices that have been prepared based on contract terms and sent to the customer. Billed accounts receivable are considered past due if the invoice has been outstanding more than 30 days. The Company does not charge interest on accounts receivable; however, federal governmental agencies may pay interest on invoices outstanding more than 30 days. The Company records interest income from federal governmental agencies when received. All contract receivables are on an unsecured basis.

Unbilled amounts represent costs and anticipated profits awaiting milestones to bill, contract retainages, award fees and fee withholdings, as well as amounts currently billable.

In accordance with industry practice, contract receivables relating to long-term contracts are classified as current, even though portions of these amounts may not be realized within one year.

Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Management has recorded an allowance for contract receivables that are considered to be uncollectible. Both billed and unbilled receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received.

5

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 1. Significant Accounting Policies and Business Combination (Continued)

Valuation of long-lived assets: The Company accounts for the valuation of long-lived assets, including amortizable intangible assets, under authoritative guidance issued by the Financial Accounting Standards Board (FASB), which requires that long-lived assets and certain intangible assets be reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived assets is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. At September 30, 2015 and December 31, 2014, the Company recorded an impairment loss on its customer relationships of $0.91 million and $1.81 million, respectively.

Goodwill: The Company records the excess of the purchase price of an acquired company over the fair value of the identifiable net assets acquired as goodwill. In accordance with authoritative guidance issued by the FASB, entities can elect to use a qualitative approach to test goodwill for impairment. Under this approach, the Company performs a qualitative assessment to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying value. If the fair value of the reporting unit is less than the carrying value of the reporting unit, the Company is required to perform a goodwill impairment test using a two-step approach, which is performed at the reporting unit level. In the second step, the implied value of the goodwill is estimated at the fair value of the reporting unit, less the fair value of all other tangible and identifiable intangible assets of the reporting unit. If the carrying amount of the goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in the amount equal to that excess, not to exceed the carrying amount of the goodwill. If the fair value of the reporting unit is not less than the carrying value of the reporting unit, the two-step goodwill test is not required.

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the business, estimation of the useful life over which cash flows will occur and determination of the weighted-average cost of capital. This discounted cash flow analysis is corroborated by top-down analysis, including a market assessment of enterprise value.

The Company has elected to perform its annual analysis at the end of its reporting year at the reporting unit level, unless triggering events during an interim period require a quantitative analysis prior to the end of the reporting year. The Company has identified three reporting units that have goodwill: DSTI, Seamast, and Access. At September 30, 2015 and December 31, 2014, the Company recorded an impairment loss for goodwill of $2.06 million and $5.12 million, respectively.

6

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Income taxes: Effective January 1, 1996, the Company elected under the provisions of the Internal Revenue Service code to be taxed as a Subchapter S Corporation.  Accordingly, there has been no provision made for federal and most state income taxes as the liability for such taxes, if any, is attributable to individual shareholders. 

The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes (ASC740).  At the end of each interim period, the Company estimates an annualized effective tax rate expected for the full year based on the most recent forecast of pre-tax income, permanent book and tax differences, and global tax planning strategies. The Company uses this effective rate to provide for income taxes on a year-to-date basis, excluding the effect of significant, unusual, discrete or extraordinary items, and items that are reported net of their related tax effects. The Company records the tax effect of significant, unusual, discrete or extraordinary items, and items that are reported net of their tax effects in the period in which they occur.

The Company’s effective tax rate differs from the statutory federal rate as a result of the Company’s Subchapter S election and the provision for certain state income taxes. 

In accordance with authoritative guidance on accounting for uncertainty in income taxes issued by the FASB, management has evaluated the Company’s tax positions and has concluded that the Company has taken no uncertain tax positions that require adjustment to the quarterly condensed consolidated financial statements to comply with the provisions of this guidance.

The Company recognizes interest and penalties related to tax matters in tax expense. There was no accrued interest or penalties recorded at September 30, 2015 and December 31, 2014.

On November 23, 2015, the effective date of the merger with GDEF, the Company converted from a Subchapter S Corporation to a C Corporation.

Fair value of financial instruments: The carrying value of the Company’s cash and cash equivalents, contract receivables, line-of-credit, accounts payable and other short-term liabilities are believed to approximate fair value as of September 30, 2015 and December 31, 2014 because of the relatively short duration of these instruments.

Certain assets and liabilities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability between market participants in an orderly transaction on the measurement date. The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as the principal market. When no principal market exists, the most advantageous market is used. This is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received or minimizes the amount that would be paid. Fair value is based on assumptions market participants would make in pricing the asset or liability. Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available. When such prices or inputs are not available, the reporting entity should use valuation models.

7

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 1. Significant Accounting Policies and Pending Merger (Continued)

The Company's assets recorded at fair value on a recurring basis are categorized based on the priority of the inputs used to measure fair value. Fair value measurement standards require an entity to maximize the use of observable inputs (such as quoted prices in active markets) and minimize the use of unobservable inputs (such as appraisals or other valuation techniques) to determine fair value. The inputs used in measuring fair value are categorized into three levels, as follows:

Level 1 Inputs that are based upon quoted prices for identical instruments traded in active markets.

Level 2 Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar investments in markets that are not active, or models based on valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the investment.

Level 3 Inputs that are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. As of September 30, 2015, the Company has no financial assets or liabilities that are categorized as Level 3.

The Company has investments carried at fair value in mutual funds held in a Rabbi Trust, which is included in investments held in a Rabbi Trust in the accompanying condensed consolidated balance sheets.

Financial credit risk: The Company’s assets that are exposed to credit risk consist primarily of cash and cash equivalents, investments held in a Rabbi Trust and contract receivables. Cash and cash equivalents are deposited with high-credit, quality financial institutions whose balances may, at times, exceed federally insured limits. The Company has not experienced any losses in such amounts and believes that it is not exposed to any significant credit risk on cash and cash equivalents. The Company has no amounts on deposit in excess of federally insured limits at September 30, 2015 or December 31, 2014. Investments held in the Rabbi Trust are stated at fair value at each reporting period and are subject to market fluctuations. Contract receivables consist primarily of amounts due from various agencies of the federal government or prime contractors doing business with the federal government. Historically, the Company has not experienced significant losses related to contract receivables and, therefore, believes that the credit risk related to contract receivables is minimal.

8

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 1. Significant Accounting Policies and Pending Merger (Continued)

Net income per share: Basic net income per share available to common shareholders of the Company is calculated by dividing the net income by the weighted average number of common shares outstanding during the year. There are no additional potential shares of common stock for the Company to consider for the diluted net income per share calculation.

Recent accounting pronouncements: In May 2014, the FASB issued guidance on revenue recognition. The update establishes a comprehensive revenue recognition standard for virtually all industries under GAAP, including those that previously followed industry-specific guidance. Under the guidance, all entities should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for the Company in the first quarter of 2018. Early adoption is not permitted. Management will evaluate the potential impact of this guidance on its consolidated financial statements.

Business combination: On June 8, 2015, the Company, Global Defense & National Security Holdings LLC (“Sponsor”) and Global Defense & National Security Systems, Inc. (“GDEF”), a publicly-held company listed on the NASDAQ, announced they had reached a definitive agreement for GDEF to acquire the Company from its current owners. The purchase price consists of: (a) $68 million in cash (“Cash Consideration”); (b) 8,578,199 new shares of the common stock of GDEF, par value $0.0001 per share, valued at a price of $10.55 per share (“Share Consideration”); and (c) $7 million worth of stock at $10.63 per share (658,513 shares) in a private placement which were eligible for a 1.06 to 1.0 stock dividend for an additional 621,239 shares. In addition, GDEF will issue to the Company’s selling stockholders 445,161 shares of common stock acquired prior to GDEF’s initial public offering that are being contributed by the Sponsor to GDEF (subject to reduction to the extent the Sponsor forfeits any of these shares to GDEF) and an additional 35,000 shares of common stock that are being contributed by the Sponsor. GDEF intends to fund a portion of the purchase price through debt financing (refer to Note 11).

In the event that, immediately following the closing of the transaction, the Share Consideration would, in the aggregate, be less than 56.7% of the outstanding shares of the common stock of GDEF, as of the closing, a portion of the Cash Consideration may be exchanged for additional shares of common stock of GDEF at a price of $10.55 per share, so that the Company stockholders own, in the aggregate, 56.7% of the outstanding shares of GDEF common stock following the closing of the merger. In addition, in the event that the transaction otherwise would not qualify for the tax treatment described in the definitive agreement, a portion of the Cash Consideration may be exchanged for additional shares of the GDEF common stock at a price of $10.55 per share, so that the Company stockholders, the Sponsor and any other person who receives shares of GDEF common stock in connection with an equity financing completed in connection with the closing, own 80% of the outstanding shares of GDEF’s common stock immediately following the closing. The purchase price is also subject to a working capital adjustment.

The merger was completed on November 23, 2015.

Subsequent events: In preparing the accompanying condensed consolidated financial statements, the Company has reviewed, as deemed necessary by the Company’s management, events that have occurred after September 30, 2015 and up through November 30, 2015, the date of issuance.

9

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 2. Contract Receivables and Billings in Excess of Revenue Recognized

At September 30, 2015 and December 31, 2014, contract receivables consist of the following (in thousands):

	2015			2014
	(Unaudited)
Billed accounts receivable	$	17,819		$	43,914
Unbilled accounts receivable		9,306			3,953
		27,125			47,867
Less: allowance for doubtful accounts		(350	)		(350	)
	$	26,775		$	47,517

Billings in excess of revenue recognized as of September 30, 2015 and December 31, 2014 are comprised primarily of billings from firm fixed-price contacts, where revenue is recognized in accordance with the proportional performance method.

Note 3. Property and Equipment

At September 30, 2015 and December 31, 2014, property and equipment consists of the following (in thousands):

	Estimated	2015			2014
	Life	(Unaudited)
Leasehold improvements	Life of lease	$	1,486		$	8,375
Computer hardware and software	3 years		2,776			3,223
Office furniture and equipment	5 - 7 years		645			607
Automobiles	5 years		341			341
			5,248			12,546
Less: accumulated depreciation and amortization			(3,333	)		(5,850	)
		$	1,915		$	6,696

Depreciation and amortization expense on property and equipment totaled $0.14 million and $0.76 million for the three and nine months ended September 30, 2015 and totaled $0.31 million and $0.88 million for the three and nine months ended September 30, 2014, respectively.

10

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 4. Intangible Assets

Identifiable intangible assets as of September 30, 2015, consist of the following (in thousands):

	Estimated			Accumulated		Accumulated
	Life	Cost		Amortization		Impairment		Net
Customer relationships	1 - 10 years	$	6,500	$	2,283	$	2,717	$	1,500
Trade name	1 year		100		100		-		-
		$	6,600	$	2,383	$	2,717	$	1,500

Identifiable intangible assets as of December 31, 2014, consist of the following (in thousands):

	Estimated			Accumulated		Accumulated
	Life	Cost		Amortization		Impairment		Net
Customer relationships	1 - 10 years	$	6,500	$	1,689	$	1,811	$	3,000
Trade name	1 year		100		100		-		-
		$	6,600	$	1,789	$	1,811	$	3,000

Amortization expense amounted to $0.19 million and $0.59 million for the three and nine months ended September 30, 2015, respectively, and $0.16 million and $0.47 million for the three and nine months ended September 30, 2014, respectively.

The Company’s goodwill balance consists of the following as of September 30, 2015 and as of December 31, 2014 (in thousands):

	DSTI			Seamast		Access			Total
Goodwill, January 1, 2014	$	2,098		$	1,898	$	5,820		$	9,816
Impairment loss		(1,658	)		-		(3,459	)		(5,117	)
Goodwill, December 31, 2014		440			1,898		2,361			4,699
Impairment loss		-			-		(2,064	)		(2,064	)
Goodwill, September 30, 2015	$	440		$	1,898	$	297		$	2,635

The Company recorded an impairment loss on Access’ goodwill of $2.06 million and $3.46 million, respectively, for the nine months ended September 30, 2015 and for the year ended December 31, 2014 and $1.66 million on DSTI’s goodwill for the year ended December 31, 2014. The Company also recorded an impairment loss on Access’ customer relationships of $0.91 million and $1.81 million, respectively, for the nine months ended September 30, 2015 and for the year ended December 31, 2014, primarily due to declining profits on contracts. The primary methods used to measure the impairment losses for DSTI and Access were the income method and the market approach. The unobservable inputs used were based on Company-specific information and included estimates of revenue, profit margins and discount rates. The Company used the two-step approach in measuring the impairment loss. In the second step, the implied value of the goodwill is estimated at the fair value of the reporting unit less the fair value of all other tangible and identifiable intangible assets of the reporting unit. If the carrying amount of the goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in the amount equal to that excess, not to exceed the carrying amount of the goodwill.

11

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 5. Fair Value Measurements

The Company has investments in mutual funds held in a Rabbi Trust which are classified as trading securities and are included in current assets on the accompanying condensed consolidated balance sheets. The Rabbi Trust assets are used to fund amounts the Company owes to key managerial employees under the Company’s non-qualified deferred compensation plan (See Note 8). Based on the nature of the assets held, the Company uses quoted market prices in active markets for identical assets to determine fair values, which apply to Level 1 investments.

The mark to market adjustments are recorded in other income (expense), net, in the accompanying condensed consolidated statements of income for a net loss of $0.40 million and a net loss of $0.27 million for the three and nine months ended September 30, 2015, respectively, and a net loss of $0.12 million and a net gain of $0.08 million, for the three and nine months ended September 30, 2014, respectively.

12

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 6. Line-of-Credit

The Company maintains a bank line-of-credit agreement (Facility), whereby the Company may borrow up to the lesser of either (1) the sum of its billed accounts receivable and unbilled accounts receivable, less the balance in its doubtful accounts; or (2) $15 million at September 30, 2015 and $30 million at December 31, 2014. This facility is a revolving line-of-credit and STG may borrow during the availability period, subject to terms and conditions of the facility. Borrowings under this facility are secured by all assets of the Company. This facility bears interest at LIBOR plus 1.75%. The Company also maintains an uncommitted guidance facility of $30 million, which can be used with the bank’s approval to finance future transactions. This facility was extended and was scheduled to mature on December 31, 2015. The bank line-of-credit agreement calls for administration fees and requires the Company to be in compliance with certain financial covenants. The Company was in compliance with all financial covenants as of September 30, 2015 and December 31, 2014. As of September 30, 2015 the Company had no outstanding borrowings on the line-of-credit and as of December 31, 2014, the Company had outstanding borrowings on the line-of-credit of $13.52 million. This facility was closed on November 23, 2015 as a result of the business combination described further in Note 1. The new facility is described in Note 11.

Note 7. Commitments and Contingencies

Operating leases: The Company leases office space and equipment under the terms of noncancelable operating leases that expire at various dates through 2021.

On March 25, 2015, the Company terminated a portion of an office lease agreement. The Company agreed to vacate the space no later than August 31, 2015. The remaining space is still under a lease agreement that expires on December 31, 2021, and has been subleased under the terms of a sublease agreement. Because the Company vacated the space where its principal office was located, the Company disposed of the related leasehold improvements. There was a tenant improvement liability associated with the disposed assets. The Company recorded a loss on property and equipment of $1.13 million from the disposal of the assets and related liability. The Company also expects to incur a loss of approximately $0.70 million in lease termination costs related to the sublease agreements that are in effect on the remaining space.

On April 8, 2015, the Company entered into a new lease agreement to lease space under an agreement which expires on September 30, 2020. The new lease agreement includes rent abatement and an escalation clause which has increased the existing deferred rent liability related to the new lease.

In conjunction with the principal office lease agreement, the Company was required to issue a letter-of-credit to the landlord as security for the new facility in the amount of $0.81 million. The letter-of-credit can be reduced to $0.36 million in conjunction with the termination agreement. The security deposit shall be the security for the performance of the Company’s obligations, covenants and agreements under the deed of the lease.

Legal matters: From time to time the Company may be involved in litigation in the normal course of its business. Management does not expect that the resolution of these matters would have a material adverse effect on the Company’s business, operations, financial condition or cash flows.

13

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 8. Deferred Compensation Plan

The Company maintains a deferred compensation plan (the Deferred Compensation Plan) in the form of a Rabbi Trust, covering key managerial employees of the Company as determined by the Board of Directors. The Deferred Compensation Plan gives certain senior employees the ability to defer all, or a portion, of their salaries and bonuses on a pre-tax basis and invest the funds in marketable securities that can be bought and sold at the employee’s discretion. The future compensation is payable upon either termination of employment or change of control. The liabilities are classified within long-term liabilities as of September 30, 2015 and December 31, 2014 on the condensed consolidated balance sheets. The assets held in the Rabbi Trust are comprised of mutual funds and are carried at fair value based on the quoted market prices. As of September 30, 2015, the amount payable under the Deferred Compensation Plan was equal to the value of the assets owned by the Company. These assets total $4.28 million and $4.31 million as of September 30, 2015 and December 31, 2014, respectively, and are included as part of current assets in the accompanying condensed consolidated balance sheets. Additionally, the Company may make discretionary matching contributions to the Deferred Compensation Plan, which vest ratably over three years. The Company recorded contributions to the Deferred Compensation Plan of $0.02 million and $0.04 million for the three and nine months ended September 30, 2015 and $0.02 million and $0.07 million for the three and nine months ended September 30, 2014, respectively. The assets are available to satisfy the claims of the Company’s creditors in the event of bankruptcy or insolvency.

Pursuant to the business combination described further in Note 1, the change in control provision in the Deferred Compensation Plan was triggered; therefore, all payouts due under this plan will be paid within 60 days from the closing date of the transaction.

Note 9. Related Party Transactions

A company owned by a party related to the majority stockholder of the Company is both a subcontractor to and customer of the Company on various contracts. As of September 30, 2015 and December 31, 2014, amounts due from this entity totaled $0.02 million and $0.01 million, respectively. The Company recorded revenue of $0.04 million and $0.1 million, respectively, for the three and nine months ended September 30, 2015 and $0.06 million and $0.09 million, respectively, for the three and nine months ended September 30, 2014.

As of September 30, 2015 and December 31, 2014, amounts due to this entity relating to work performed under subcontracts totaled $0 and $0.10 million, respectively. The Company recorded direct costs of $0.08 million and $0.10 million, respectively, for the three and nine months ended September 30, 2015 and $0.05 million and $0.10 million, respectively, for the three and nine months ended September 30, 2014, respectively, relating to such work performed.

On September 15, 2015, the Company issued a note receivable to a stockholder for $2.5 million. The note bears interest at 2.35%. The principal and accrued interest is payable in full on the earlier of December 31, 2015 or the closing of the business combination with GDEF which is described previously in Note 1. The amount due under this note was netted against the proceeds paid to the sellers at closing of the business combination on November 23, 2015. See Note 1.

Note 10. Segment Information

Segment information is not presented since all of the Company’s revenue and operations are attributed to a single reportable segment. In accordance with authoritative guidance on segment reporting under the FASB, the chief operating decision maker has been identified as the Chief Executive Officer. The Chief Executive Officer reviews operating results to make decisions about allocating resources and assessing performance for the entire company.

14

STG Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 11. Subsequent Events

On November 23, 2015, as part of the business combination described further in Note 1, the Company entered into a new credit agreement with both a term loan and a line-of-credit with a syndicate of lenders. The Credit Agreement provides for (i) a term loan in an aggregate principal amount of $81,750,000 (the “Term Loan”), (ii) a $15,000,000 asset-based revolving line of credit (the “Revolving Loan”) and (iii) an uncommitted accordion facility to be used to fund acquisitions (subject to additional lender commitments) of up to $90,000,000 (the “Incremental Facility”). Concurrently with consummation of the Business Combination, the full amount of the Term Loan was drawn, and neither the Incremental Facility nor any amount under the Revolving Loan was drawn. Each of the Revolving Loan and Term Loan matures on November 23, 2020.

15

EX-99.2

Exhibit 99.2

   

Global Defense & National Security Systems, Inc.
Successfully Completes Transaction with STG Group Inc.

Transaction Strengthens STG’s Position at the Center of U.S. National Security

Provides Potential for Increased Organic Growth and Capital for Strategic M&A Opportunities

RESTON, Va., November 24, 2015 – Global Defense & National Security Systems Inc. (NASDAQ: GDEF) (“GDEF” or the “Company”), a special purpose acquisition company focused on the U.S. defense and national security sector, today announced the successful completion yesterday, November 23, 2015, of the previously announced transaction with STG Group, Inc. (“STG”), a leading provider of cyber, software and intelligence solutions to the U.S. government. At the closing of this transaction, the company changed its name to STG Group, Inc., and anticipates trading under the ticker STGG shortly.

Simon Lee, Founder and Chairman of STG, said “We are pleased to welcome our investors and partners in a deal that positions STG to realize its full potential. I look forward to working together with my board colleagues as we pursue new growth opportunities and build a market leader to create value for investors, clients and employees.”

Damian Perl, Chairman of GDEF and Chairman and CEO of Global Strategies Group, said, "We launched our GDEF initiative in 2013 and have precisely achieved our objective. In STG we have a highly capable platform from which to build a leading, mission focused business across U.S. defense and national security, utilizing our considerable operational and investment experience.” 

The transaction is expected to create significant opportunities for growth by combining STG’s broad client base and significant differentiated capabilities with GDEF’s extensive network of government and industry relationships and business best practices. The company intends to pursue acquisitions of innovative mission-critical companies to enhance and complement its current capability and serve a large addressable market.

Leadership

With the closing of this transaction, the company has changed the composition of its Board of Directors. Mr. Lee will serve as Chairman of the Board of Directors; he is joined on the Board by Mr. Perl, Chairman and CEO of Global Strategies Group; Hon. David Gompert, former Acting Director of National Intelligence; Hon. Ronald Spoehel, former CFO of NASA and ManTech; and Vice Admiral (Ret.) Robert Murrett, former Director of the National Geospatial-Intelligence Agency. Paul Fernandes will continue as President and Chief Operating Officer and newly appointed Charles Cosgrove will serve as Chief Financial Officer. Dale Davis, Chief Executive of GDEF and SVP Operations of Global Strategies Group, will take the role of Chief Integration Officer with the company, with broad ranging responsibility for integration and operational best practice.

Advisors

Cowen and Company, LLC served as financial advisor to GDEF on this transaction, and Morrison & Foerster LLP is serving as legal counsel.  Holland and Knight, LLP served as legal counsel to STG on this transaction.

About STG

STG, Inc. is a specialist provider of mission-critical technology, cyber and data solutions to more than 50 US Federal Agencies.  Applying decades of experience, the company works to ensure the security of the digital domain, the effectiveness of complex IT systems and the delivery of quality intelligence to decision makers. STG is headquartered in Reston, VA, and has employees based across the United States and overseas. STG is a Washington Technology Top 100 Company.

About GDEF

Global Defense & National Security Systems, Inc. (Nasdaq: GDEF) is a public company formed to acquire operating business in the U.S. defense and national security sectors. GDEF was established in 2013 by the leadership of Global Strategies Group (GLOBAL), an international defense and national security company operating and investing in the sector since 1998.  GDEF was established as part of the GLOBAL mission to build technology businesses operating at the nexus of U.S. defense and national security priorities. 

Forward Looking Statements

This presentation contains forward-looking statements that involve risks and uncertainties concerning the proposed business combination between GDEF and STG, STG’s expected financial performance, as well as STG’s strategic and operational plans. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.  Terms such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.  Actual events or results may differ materially from those described in this written communication due to a number of risks and uncertainties. The potential risks and uncertainties include, among others, the risk that the expected benefits from the transaction may not be fully realized or may take longer to realize than expected; disruptions in the business related to the transaction may make it more difficult for the Company to maintain relationships with customers, employees or suppliers and other risks and uncertainties associated with the combination.  In addition, please refer to the “Risk Factors” in documents that GDEF filed with the SEC on Forms 10-K, 10-Q and 8-K, as well as in GDEF’s definitive proxy statement on Schedule 14A filed with the SEC on October 22, 2015. The filings by GDEF identify and address other important factors that could cause its financial and operational results to differ materially from those contained in the forward-looking statements set forth in this written communication. GDEF is under no duty to update any of the forward-looking statements after the date of this written communication to conform to actual results.

CONTACTS:

Joele Frank, Wilkinson Brimmer Katcher

Jamie Moser / Leigh Parrish 

212-355-4449