RE: Amending AgreementARF Debt has now become a STRANGLEHOLD on company, Shareholders, Stock and Debentures
SENIOR CREDIT COVENANTCRITERIA
Under the current Credit Facilities, the mostsignificant restrictions relate to permitted investments and dividends, as
well as the maintenance of certain financialratios. The Credit Facilities financial covenant ratios are primarily linked
to trailing operating earnings before interest,taxes, depreciation and amortization, adjusted for certain inclusions,
such as the pro-forma earnings related toacquisitions, and certain exclusions (“Adjusted Earnings”). Under the terms
of the Credit Facilities, Armtec must maintain amaximum ratio of total funded debt (excludes convertible debentures)
to Adjusted Earnings on a rolling four quartersbasis (“Total Debt to EBITDARatio”), of 5.50:1 for the quarter ended
March 31, 2011, 5.25:1 for the quarter ended June30, 2011, 5.00:1 for the quarter ended September 30, 2011,
4.25:1 for the quarter ended December 31, 2011,and 4.00:1 thereafter. A minimum covenant ratio of Adjusted
Earnings over interest expense must be maintainedof 2.00:1 for the quarter ended March 31, 2011, 2.25:1 for the
quarter ended June 30, 2011, 2.50:1 for thequarters ended September 30, 2011 through December 31, 2011 and
3.00:1 thereafter. Armtec was in compliance with all covenants for thequarter ended March 31, 2011, with a Total
Debt to EBITDA Ratio of 5.3 times