Exhibit 10.1

EXECUTION VERSION

 

 

LOAN AND SECURITY AGREEMENT

Dated as of August 20, 2014

 

 

 

 

REVOLUTION LIGHTING TECHNOLOGIES, INC.,

LUMIFICIENT CORPORATION

LIGHTING INTEGRATION TECHNOLOGIES, LLC,

SEESMART TECHNOLOGIES, LLC,

RELUME TECHNOLOGIES, INC.,

TRI-STATE LED DE, LLC, and

VALUE LIGHTING, LLC

as Borrowers

and

THE GUARANTORS PARTY HERETO

 

 

 

 

BANK OF AMERICA, N.A.,

as Lender

 

 

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TABLE OF CONTENTS

 

         Page  

Section 1.

 

DEFINITIONS; RULES OF CONSTRUCTION

     1   

1.1.

 

Definitions

     1   

1.2.

 

Accounting Terms

     19   

1.3.

 

Uniform Commercial Code

     19   

1.4.

 

Certain Matters of Construction

     20   

Section 2.

 

CREDIT FACILITIES

     20   

2.1.

 

Revolver Commitment.

     20   

2.2.

 

Letter of Credit Facility

     21   

Section 3.

 

INTEREST, FEES AND CHARGES

     22   

3.1.

 

Interest

     22   

3.2.

 

Fees

     23   

3.3.

 

Computation of Interest, Fees, Yield Protection

     23   

3.4.

 

Reimbursement Obligations

     23   

3.5.

 

Illegality

     24   

3.6.

 

Inability to Determine Rates

     24   

3.7.

 

Increased Costs; Capital Adequacy

     24   

3.8.

 

Mitigation

     25   

3.9.

 

Funding Losses

     25   

3.10.

 

Maximum Interest

     25   

Section 4.

 

LOAN ADMINISTRATION

     25   

4.1.

 

Manner of Borrowing and Funding Revolver Loans

     25   

4.2.

 

Number and Amount of LIBOR Loans; Determination of Rate

     26   

4.3.

 

Borrower Agent

     26   

4.4.

 

One Obligation

     26   

4.5.

 

Effect of Termination

     26   

Section 5.

 

PAYMENTS

     27   

5.1.

 

General Payment Provisions

     27   

5.2.

 

Repayment of Revolver Loans

     27   

5.3.

 

Curative Equity

     27   

5.4.

 

Payment of Other Obligations

     27   

5.5.

 

Dominion Account

     27   

5.6.

 

Marshaling; Payments Set Aside

     27   

5.7.

 

Application of Payments

     28   

5.8.

 

Account Stated

     28   

5.9.

 

Taxes

     28   

5.10.

 

Nature and Extent of Each Obligor’s Liability

     29   

Section 6.

 

CONDITIONS PRECEDENT

     31   

6.1.

 

Conditions Precedent to Initial Loans

     31   

6.2.

 

Conditions Precedent to All Credit Extensions

     31   

Section 7.

 

COLLATERAL

     32   

7.1.

 

Grant of Security Interest

     32   

7.2.

 

Lien on Deposit Accounts; Cash Collateral

     32   

7.3.

 

Reserved

     32   

7.4.

 

Other Collateral

     33   

7.5.

 

Limitations

     33   

7.6.

 

Further Assurances; Extent of Liens

     33   

Section 8.

 

REPRESENTATIONS AND WARRANTIES

     33   

8.1.

 

General Representations and Warranties

     33   

8.2.

 

Complete Disclosure

     37   

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Section 9.

 

COVENANTS AND CONTINUING AGREEMENTS

     37   

9.1.

 

Affirmative Covenants

     37   

9.2.

 

Negative Covenants

     41   

9.3.

 

Financial Covenants

     44   

Section 10.

 

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

     45   

10.1.

 

Events of Default

     45   

10.2.

 

Remedies upon Default

     46   

10.3.

 

License

     47   

10.4.

 

Setoff

     47   

10.5.

 

Remedies Cumulative; No Waiver

     47   

10.6.

 

Curative Equity

     48   

Section 11.

 

MISCELLANEOUS

     48   

11.1.

 

Amendments and Waivers

     48   

11.2.

 

Power of Attorney

     48   

11.3.

 

Indemnity

     49   

11.4.

 

Notices and Communications

     49   

11.5.

 

Performance of Obligors’ Obligations

     50   

11.6.

 

Credit Inquiries

     50   

11.7.

 

Severability

     50   

11.8.

 

Cumulative Effect; Conflict of Terms

     50   

11.9.

 

Counterparts; Execution

     51   

11.10.

 

Entire Agreement

     51   

11.11.

 

No Control; No Advisory or Fiduciary Responsibility

     51   

11.12.

 

Confidentiality

     51   

11.13.

 

GOVERNING LAW

     52   

11.14.

 

Consent to Forum

     52   

11.15.

 

Waivers by Obligors

     52   

11.16.

 

PATRIOT Act Notice

     52   

11.17.

 

NO ORAL AGREEMENT

     52   

LIST OF SCHEDULES

 

Schedule 8.1.4    Names and Capital Structure Schedule 8.1.11    Patents,
Trademarks, Copyrights and Licenses Schedule 8.1.13    Environmental Matters
Schedule 8.1.14    Restrictive Agreements Schedule 8.1.15    Litigation Schedule
8.1.17    Pension Plans Schedule 8.1.31    Financing Statements and other
Filings Schedule 9.1.9    Deposit Accounts Schedule 9.1.10    Business Locations
Schedule 9.2.2    Existing Liens Schedule 9.2.17    Existing Affiliate
Transactions

 

(ii)

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EXHIBITS

 

Exhibit A    Form of Borrowing Base Certificate Exhibit B    Form of Compliance
Certificate Exhibit C    Conditions Precedent Exhibit D    Fees Exhibit E   
Financial Reporting Exhibit F    Collateral Reporting Exhibit G    Notice of
Borrowing

 

(iii)

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LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT is dated as of August 20, 2014, among
REVOLUTION LIGHTING TECHNOLOGIES, INC., a Delaware corporation (“RLT”),
LUMIFICIENT CORPORATION, a Minnesota corporation (“Lumificient”), LIGHTING
INTEGRATION TECHNOLOGIES, LLC, a Delaware limited liability company (“LIT”),
SEESMART TECHNOLOGIES, LLC, a Delaware limited liability company (“Seesmart
Tech”), RELUME TECHNOLOGIES, INC., a Delaware corporation (“Relume”), TRI-STATE
LED DE, LLC, a Delaware limited liability company (“Tri-State”), and VALUE
LIGHTING, LLC, a Delaware limited liability company (“Value Lighting”, and
together with RLT, Lumificient, LIT, Seesmart Tech, Relume and Tri-State, singly
and collectively, jointly and severally, “Borrowers” and each a “Borrower”), the
Guarantors party hereto, and BANK OF AMERICA, N.A., a national banking
association (“Lender”).

R E C I T A L S:

Borrowers have requested that Lender provide a credit facility to Borrowers to
finance their mutual and collective business enterprise. Lender is willing to
provide the credit facility on the terms and conditions set forth in this
Agreement.

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

 

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

1.1. Definitions. As used herein, the following terms have the meanings set
forth below:

Acquisition: means, with respect to any Person (a) an Investment in, or a
purchase of, a controlling interest in the Equity Interests of any other Person,
(b) a purchase or other acquisition of all or substantially all of the assets or
properties of, another Person or of any business unit, division or line of
business of another Person, (c) any merger or consolidation of such Person with
any other Person or other transaction or series of transactions resulting in the
acquisition of all or substantially all of the assets, or of any business unit,
division or line of business of another Person, or a controlling interest in the
Equity Interests, of any Person, in each case in any transaction or group of
transactions which are part of a common plan.

Additional Debt Principal Payment Conditions: means the following conditions
with respect to any payment of principal in cash on any of the Aston Debt and/or
the DPI/Epiphany Debt:

(a) before and after giving effect to such payment, no Event of Default shall
have occurred and be continuing;

(b) before and after giving effect to such payment Availability shall be no less
than $5,000,000; and

(c) after giving effect to such payment, the proforma Fixed Charge Coverage
shall be at least 1.25 to 1.0, calculated on a trailing 12 month basis.

Affiliate: with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have correlative meanings.

Aged A/P Reserve: means the aggregate amount of all Accounts owing by the
Borrowers that are unpaid for more than 90 days after the original invoice date,
which Aged A/P Reserve shall be reduced by the Lender on a dollar-for-dollar
basis as each such Account is paid in full, all as determined to the sole
satisfaction of the Lender. As of the Closing Date, the Aged A/P Reserve is
$2,141,000.

Allocable Amount: as defined in Section 5.10.3.

Anti-Terrorism Law: any law relating to terrorism or money laundering, including
the PATRIOT Act.

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Applicable Margin: the margin set forth below, as determined by the average
daily Excess Availability for the last Fiscal Quarter:

 

Level

   Average Daily
Excess Availability      Base Rate
Revolver Loans     LIBOR
Revolver Loans  

I

   ³ $  6,000,000         1.75 %      2.75 % 

II

   < $ 6,000,000         2.00 %      3.00 % 

Until December 31, 2014, margins shall be determined as if Level I were
applicable. Thereafter, the margins shall be subject to increase or decrease by
Lender on the first day of the calendar month following each Fiscal Month end.
If, Lender is unable to calculate average daily Excess Availability for a Fiscal
Month due to Borrowers’ failure to deliver any Borrowing Base Certificate when
required hereunder, then, at the option of Lender, margins shall be determined
as if Level II were applicable until the first day of the calendar month
following its receipt.

Approved Credit Enhancement: an irrevocable letter of credit that is in form and
substance reasonably acceptable to Lender, issued or confirmed by a bank
reasonably acceptable to Lender, and payable in Dollars at a place of payment
within the United States, which letter of credit is assigned to Lender for the
benefit of the Secured Parties (with such assignment acknowledged by the issuing
or confirming bank) or, if so requested by Lender, duly transferred to Lender
for the benefit of the Secured Parties together with sufficient documentation to
permit direct draws under any such letter of credit by Lender for the benefit of
the Secured Parties).

Aston: Aston Capital, LLC.

Aston Debt: means the Debt of RLT to Aston as evidenced by the Aston Note,
together with interest, costs and expenses set forth in the Aston Note.

Aston Note: means that certain Promissory Note, dated as of July 31, 2014, in
the original principal amount of $5,668,654.37 executed and delivered by RLT, as
maker, in favor of Aston, as payee, which Promissory Note amends, replaces and
supersedes (i) that certain Promissory Note, dated as of April 4, 2014, in the
original principal amount of $1,000,000 executed and delivered by RLT, as maker,
in favor of Aston, as payee and (ii) that certain Promissory Note, dated as of
June 30, 2014, in the original principal amount of $1,968,654.38 executed and
delivered by RLT, as maker, in favor of Aston, as payee.

Availability: the Borrowing Base minus Revolver Usage.

Availability Block: means $2,500,000, which amount shall be reduced by Lender to
$0.00 if the unaudited consolidated balance sheets as of the Fiscal Year ending
December 31, 2014 and the related unaudited consolidated statements of income,
cash flows and stockholder equity of RLT and Subsidiaries for such Fiscal Year,
evidence that the Obligors achieved at least eighty percent (80%) of the prior
projections as delivered by the Obligors to the Lender, all as determined to the
sole satisfaction of the Lender.

Availability Reserve: means the sum (without duplication) of (a) the Dilution
Reserve; (b) the Rent and Charges Reserve; (c) the Bank Product Reserve; (d) the
Aged A/P Reserve; (d) the Availability Block; and (e) such additional reserves,
in such amounts and with respect to such matters, as Lender in its reasonable
discretion may elect to impose from time to time.

Bank Product: any of the following products, services or facilities extended to
an Obligor or Affiliate of an Obligor by Lender or any of its Affiliates:
(a) Cash Management Services; (b) products under Hedging Agreements;
(c) commercial credit card and merchant card services and corporate purchasing
cards; and (d) leases and other banking products or services, other than Letters
of Credit.

Bank Product Debt: Debt, obligations and other liabilities of an Obligor or
Affiliate of an Obligor with respect to Bank Products.

 

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Bank Product Reserve: the aggregate amount of reserves established by Lender
from time to time in its reasonable discretion in respect of Bank Product Debt.

Bankruptcy Code: Title 11 of the United States Code.

Base Rate: for any day, a per annum rate equal to the greatest of (a) the Prime
Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or
(c) LIBOR for a thirty (30) day interest period as determined on such day, plus
1.0%.

Base Rate Loan: any Loan that bears interest based on the Base Rate.

Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base
Rate.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt
that (i) arises from the lending of money by any Person to such Obligor; (ii) is
evidenced by notes, drafts, bonds, debentures, credit documents or similar
instruments; (iii) accrues interest or is a type upon which interest charges are
customarily paid (excluding trade payables owing in the Ordinary Course of
Business); or (iv) was issued or assumed as full or partial payment for
Property; (b) Capital Leases; (c) reimbursement obligations with respect to
letters of credit; and (d) guaranties of any Debt of the foregoing types owing
by another Person.

Borrower Agent: as defined in Section 4.3.

Borrowing: a group of Loans that are made or converted together on the same day
and have the same interest option and, if applicable, Interest Period.

Borrowing Base: on any date of determination, an amount equal to the lesser of:

(a) the Revolver Commitment; or

(b) the sum of:

(i) 85% of the Value of Eligible Accounts; plus

(ii) the lesser of (A) 70% of the Value of Eligible Inventory; or (B) 85% of the
NOLV Percentage of the Value of Eligible Inventory; minus

(iii) the Availability Reserve.

Borrowing Base Certificate: a certificate substantially in the form of Exhibit A
(or such other form acceptable to Lender) and satisfactory to Lender in all
respects, by which Borrowers certify the Borrowing Base.

Business Day: any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, New York, New York, and if such day relates to a LIBOR Loan, any such
day on which dealings in Dollar deposits are conducted between banks in the
London interbank Eurodollar market.

Capital Expenditures: all liabilities incurred or expenditures made by an
Obligor for the acquisition of fixed assets, or any improvements, replacements,
substitutions or additions thereto with a useful life of more than one year.

Capital Lease: any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

Cash Collateral: cash, and any interest or other income earned thereon, that is
delivered to Lender to Cash Collateralize any Obligations.

 

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Cash Collateral Account: a demand deposit, money market or other account
maintained with Lender and subject to Lender’s Liens.

Cash Collateralize: the delivery of cash to Lender, as security for the payment
of Obligations, in an amount equal to (a) with respect to LC Obligations, 105%
of the aggregate LC Obligations; and (b) with respect to any inchoate,
contingent or other Obligations (including Obligations arising under Bank
Products), Lender’s good faith estimate of the amount due or to become due,
including fees, expenses and indemnification hereunder. “Cash Collateralization”
has a correlative meaning.

Cash Equivalents: (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States
government, maturing within 12 months of the date of acquisition;
(b) certificates of deposit, time deposits and bankers’ acceptances maturing
within 12 months of the date of acquisition, and overnight bank deposits, in
each case which are issued by Lender or a commercial bank organized under the
laws of the United States or any state or district thereof, rated A-1 (or
better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and
(unless issued by Lender) not subject to offset rights; (c) repurchase
obligations with a term of not more than 30 days for underlying investments of
the types described in clauses (a) and (b) entered into with any bank described
in clause (b); (d) commercial paper issued by Lender or rated A-1 (or better) by
S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date
of acquisition; and (e) shares of any money market fund that has substantially
all of its assets invested continuously in the types of investments referred to
above, has net assets of at least $500,000,000 and has the highest rating
obtainable from either Moody’s or S&P.

Cash Management Services: services relating to operating, collections, payroll,
trust, or other depository or disbursement accounts, including automated
clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled
disbursement, overdraft, depository, information reporting, lockbox and stop
payment services.

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).

CFC: means a controlled foreign corporation (as that term is defined in the
Code).

Change in Law: the occurrence, after the date hereof, of (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof; or (c) the making, issuance or
application of any enforceable request, guideline, requirement or directive
(whether or not having the force of law) by any Governmental Authority;
provided, however, that “Change in Law” shall include, regardless of the date
enacted, adopted or issued, all enforceable requests, rules, guidelines,
requirements or directives (i) under or relating to the Dodd-Frank Wall Street
Reform and Consumer Protection Act, or (ii) promulgated pursuant to Basel III by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any similar authority) or any other Governmental Authority.

Change of Control:

(a) Aston ceases to own and control, beneficially and of record, directly or
indirectly, fifty-one percent (51%) of the Equity Interests of RLT; or

(b) RLT ceases to own and control, beneficially and of record, directly or
indirectly, all Equity Interests in all Borrowers (except as a result of a
merger or consolidation of any Borrower into RLT); or

(c) without limiting the foregoing clause (a), any other Obligor ceases to own
and control, beneficially and of record, all of the Equity Interests of any of
its Subsidiaries (except as a result of a merger or consolidation of any
Borrower into RLT); or

(d) during any period of twelve (12) consecutive months, a majority of the
members of the board of directors or other equivalent governing body of RLT
cease to be composed of individuals (i) who were members of that board or
equivalent governing body on the first day of such period, (ii) whose election
or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in

 

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clause (i) or (ii) above constituting at the time of such election or nomination
at least a majority of that board or equivalent governing body (excluding, in
the case of both clause (ii) and clause (iii), any individual whose initial
nomination for, or assumption of office as, a member of that board or equivalent
governing body occurs as a result of an actual or threatened solicitation of
proxies or consents for the election or removal of one or more directors by any
person or group other than a solicitation for the election of one or more
directors by or on behalf of the board of directors); or

(e) the sale or transfer of all or substantially all assets of any Obligor,
except to the extent specifically permitted by this Agreement.

Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses)
at any time (including after Full Payment of the Obligations) incurred by any
Indemnitee or asserted against any Indemnitee by any Obligor or other Person, in
any way relating to (a) any Loans, Letters of Credit, Loan Documents, or the use
thereof or transactions relating thereto; (b) any action taken or omitted in
connection with any Loan Documents; (c) the existence or perfection of any
Liens, or realization upon any Collateral; (d) exercise of any rights or
remedies under any Loan Documents or applicable law; or (e) failure by any
Obligor to perform or observe any terms of any Loan Document, in each case
including all costs and expenses relating to any investigation, litigation,
arbitration or other proceeding (including an Insolvency Proceeding or appellate
proceedings), whether or not the applicable Indemnitee is a party thereto.

Closing Date: as defined in Section 6.1.

Code: the Internal Revenue Code of 1986.

Collateral: all Property described in Section 7.1, all Property described in any
Security Documents as security for any Obligations, and all other Property that
now or hereafter secures (or is intended to secure) any Obligations.

Commitment Termination Date: the earliest to occur of (a) the Revolver
Termination Date; (b) the date on which Borrowers terminate the Revolver
Commitment pursuant to Section 2.1.3; or (c) the date on which the Revolver
Commitment is terminated pursuant to Section 10.2.

Commitments: the Revolver Commitment.

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

Compliance Certificate: a certificate substantially in the form of Exhibit B,
and satisfactory to Lender in all respects, by which Borrowers certify
compliance with Section 9.3.

Connection Income Taxes – Other Connection Taxes that are imposed on or measured
by net income (however denominated), or are franchise or branch profits Taxes.

Contingent Obligation: any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease,
dividend or other obligation (“primary obligations”) of another obligor
(“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person under any (a) guaranty, endorsement, co-making or sale
with recourse of an obligation of a primary obligor; (b) obligation to make
take-or-pay or similar payments regardless of nonperformance by any other party
to an agreement; and (c) arrangement (i) to purchase any primary obligation or
security therefor, (ii) to supply funds for the purchase or payment of any
primary obligation, (iii) to maintain or assure working capital, equity capital,
net worth or solvency of the primary obligor, (iv) to purchase Property or
services for the purpose of assuring the ability of the primary obligor to
perform a primary obligation, or (v) otherwise to assure or hold harmless the
holder of any primary obligation against loss in respect thereof. The amount of
any Contingent Obligation shall be deemed to be the stated or determinable
amount of the primary obligation (or, if less, the maximum amount for which such
Person may be liable under the instrument evidencing the Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
with respect thereto.

 

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Control Agreement: a control agreement reasonably satisfactory to Lender
executed by an institution maintaining a Deposit Account or a Securities Account
for an Obligor, to perfect Lender’s Lien on such account.

Curative Equity: means the net amount of equity contributions made to Borrower
by Ashton, or another Person, on terms and conditions satisfactory to the Lender
in immediately available funds and which are designated “Curative Equity” by
Borrower under Section 10.6 of the Agreement at the time it is contributed. For
the avoidance of doubt, the forgiveness of antecedent debt (whether Debt, trade
payables, or otherwise) shall not constitute Curative Equity.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: as applied to any Person, without duplication, (a) all items that would be
included as liabilities on a balance sheet in accordance with GAAP, including
Capital Leases, but excluding trade payables incurred and being paid in the
Ordinary Course of Business; (b) all Contingent Obligations; (c) all
reimbursement obligations in connection with letters of credit issued for the
account of such Person; and (d) in the case of a Borrower, the Obligations. The
Debt of a Person shall include any recourse Debt of any partnership in which
such Person is a general partner or joint venturer.

Default: an event or condition that, with the lapse of time or giving of notice,
would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto; provided, however, if no interest rate is specifically applicable, the
Default Rate shall be equal to 2% plus the Base Rate in effect at such time plus
the Applicable Margin for Base Rate Revolving Loans.

Designated Jurisdiction: any country or territory that is the subject of any
Sanction.

Dilution Percent: the percent, determined for Borrowers’ most recent Fiscal
Quarter, equal to (a) bad debt write-downs or write-offs, discounts, returns,
promotions, credits, credit memos and other dilutive items with respect to
Accounts, divided by (b) gross sales.

Dilution Reserve: means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts by 1 percentage point for
each percentage point by which Dilution Percent exceeds 5%.

DPI: means DPI Management, Inc.

DPI/Epiphany Debt: means the Debt of RLT to DPI and Epiphany as evidenced by the
DPI/Epiphany Settlement Agreement.

DPI/Epiphany Settlement Agreement: means that certain Letter Agreement, dated as
of August 8, 2014, by and among DPI, Epiphany and RLT setting forth the terms
and conditions of the complete satisfaction of the DPI/Epiphany Payable.

DPI/Epiphany Payable: means the account payables owed by RLT to DPI and Epiphany
in the amount of $3,736,000.93 as of the Closing Date.

Distribution: any declaration or payment of a distribution, interest or dividend
on any Equity Interest (other than payment-in-kind); distribution, advance or
repayment of Debt to a holder of Equity Interests; or purchase, redemption, or
other acquisition or retirement for value of any Equity Interest.

Dollars: lawful money of the United States.

Dominion Account: a special account established by Borrowers at Lender or a bank
acceptable to Lender, over which Lender has exclusive control for withdrawal
purposes.

EBITDA: determined on a consolidated basis for RLT’s and Subsidiaries’ net
income or loss for any period calculated before interest expense and other
financing charges, provision for or benefit from income taxes,

 

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depreciation, and amortization expense, stock-based compensation expense, gains
or losses arising from sales of capital assets, losses on impairment of
long-lived assets and goodwill, unrealized gains and losses resulting from
changes in fair values of derivatives and financial instruments (including
changes in fair value of contingent consideration related to business
combinations), directly related charges related to the consummation of business
combinations (and, if such charges are paid in cash, solely to the extent
approved by the Lender), severance and restructuring charges (and, if such
charges are paid in cash, solely to the extent approved by the Lender),
extraordinary gains and losses (including losses and gains from extinguishment
of debt) and non-recurring expenses and income which do not represent cash items
in such period (in each case to the extent included in determining net income).

Eligible Account: Eligible Account: an Account owing to a Borrower that arises
in the Ordinary Course of Business from the sale of goods or rendition of
services and is deemed by Lender, in its discretion to be an Eligible Account.
Without limiting the foregoing, no Account shall be an Eligible Account if:

(a) it is unpaid for more than 60 days after the original due date, or more than
90 days after the original invoice date;

(b) 50% or more of the Accounts owing by the Account Debtor are not Eligible
Accounts under the foregoing clause;

(c) when aggregated with other Accounts owing by the Account Debtor, it exceeds
15% (or such higher percentage as Lender may establish for the Account Debtor
from time to time) of the aggregate Eligible Accounts;

(d) it does not conform in all material respects with a covenant or
representation herein;

(e) it is owing by a creditor or supplier, or is otherwise subject to a
potential offset, counterclaim, dispute, deduction, discount, recoupment,
rebate, reserve, defense, chargeback, credit or allowance, but only to the
extent thereof;

(f) an Insolvency Proceeding has been commenced by or against the Account
Debtor; or the Account Debtor has failed, has suspended or ceased doing
business, is liquidating, dissolving or winding up its affairs, or is not
Solvent; or the Borrower is not able to bring suit or enforce remedies against
the Account Debtor through judicial process;

(g) the Account Debtor is organized or has its principal offices or assets
outside the United States or Canada, except to the extent such sale is supported
or secured by an Approved Credit Enhancement;

(h) it is owing by a Governmental Authority, unless the Account Debtor is the
United States or any department, agency or instrumentality thereof and the
Account has been assigned to Lender in compliance with the Assignment of Claims
Act, or the Account Debtor is a state, province, territory, county or
municipality, or a political subdivision or agency thereof and Applicable Law
disallows or restricts an assignment of Accounts on which it is the Account
Debtor;

(i) it is not subject to a duly perfected, first priority Lien in favor of
Lender, or is subject to any other Lien;

(j) the goods giving rise to it have not been delivered to the Account Debtor,
the services giving rise to it have not been performed for the Account Debtor,
or it otherwise does not represent a final sale;

(k) it is evidenced by Chattel Paper or an Instrument of any kind, or has been
reduced to judgment;

(l) its payment has been extended (unless, as so extended, it is paid within the
terms set forth in clause (a) of this definition), the Account Debtor has made a
partial payment, or it arises from a sale on a cash-on-delivery basis;

(m) it arises from a sale to an Affiliate, from a sale on a bill-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment, or other
repurchase or return basis, or from a sale to a Person for such Person’s
personal, family or household purposes;

 

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(n) it represents a progress billing or retainage, or relates to services for
which a performance, surety or completion bond or similar assurance has been
issued on behalf of a Borrower;

(o) it includes a billing for interest, fees or late charges, but ineligibility
shall be limited to the extent thereof;

(p) the Account Debtor is located in any jurisdiction which imposes conditions
on the right of a creditor to collect accounts receivable unless the applicable
Borrower satisfies such conditions to collect, including, to the extent
necessary, qualifying to transact business in such jurisdiction as a foreign
entity or filing a Notice of Business Activities Report or other required report
with the appropriate officials in those jurisdictions for the then current year;

(q) it is payable in a currency other than Dollars; or

(r) it is due from a customer to the extent that the customer has cash or credit
on deposit.

In calculating delinquent portions of Accounts under clauses (a) and (b), credit
balances more than 60 days old will be excluded.

Eligible Inventory: Inventory owned by a Borrower that the Lender, in its
discretion, deems to be Eligible Inventory. Without limiting the foregoing, no
Inventory shall be Eligible Inventory unless it:

(a) is finished goods or raw materials and or work-in-process, packaging or
shipping materials, labels, replacement parts or manufacturing supplies;

(b) is not held on consignment, nor subject to any deposit or down payment;

(c) is in new and saleable condition and is not damaged, defective, shopworn or
otherwise unfit for sale;

(d) is not perishable, obsolete or unmerchantable, and does not constitute
returned or repossessed goods; (e) meets all standards imposed by any
Governmental Authority, has not been acquired from an entity subject to
Sanctions or any specially designated nationals list maintained by OFAC and does
not constitute hazardous materials under any Environmental Law;

(f) conforms with the covenants and representations herein;

(g) is subject to Lender’s duly perfected, first priority Lien, and no other
Lien (other than a Permitted Lien junior to Lender’s Lien or any other Lien for
which an Availability Reserve is being maintained);

(h) is within the continental United States or Canada, is not in transit except
between locations of Borrowers, and is not consigned to any Person or located at
a vendor;

(i) is not subject to any warehouse receipt or negotiable Document (unless
issued or endorsed to Lender);

(j) is not subject to any License or other arrangement that restricts such
Borrower’s or Lender’s right to dispose of such Inventory, unless Lender has
received an appropriate Lien Waiver;

(k) is not located on leased premises or in the possession of a warehouseman,
processor, repairman, mechanic, shipper, freight forwarder or other Person,
unless the lessor or such Person has delivered a Lien Waiver or an appropriate
Rent and Charges Reserve has been established; and

(l) is reflected in the details of a current perpetual inventory report.

Envirolight: Envirolight LED, LLC, a California limited liability company, and a
wholly owned Subsidiary of Seesmart.

Environmental Laws: applicable federal, state and local laws (including
programs, permits and guidance promulgated by regulatory agencies), relating to
public health (other than occupational safety and health regulated by OSHA) or
the protection or pollution of the environment, including, without limitation,
CERCLA, RCRA and CWA and state counterpart statutes

 

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Environmental Notice: a written notice from any Governmental Authority or other
Person of any possible noncompliance with, investigation of a possible violation
of, litigation relating to, or potential fine or liability under any
Environmental Law, or with respect to any Environmental Release, environmental
pollution or hazardous materials, including any complaint, summons, citation,
order, claim, demand or request for correction, remediation or otherwise.

Environmental Release: a release, disposal or discharge as defined in CERCLA or
under any other Environmental Law.

Epiphany: means Epiphany Lighting Products.

Equity Interest: the interest of any (a) shareholder in a corporation;
(b) partner in a partnership (whether general, limited, limited liability or
joint venture); (c) member in a limited liability company; or (d) other Person
having any other form of equity security or ownership interest.

ERISA: the Employee Retirement Income Security Act of 1974.

ERISA Affiliate: any trade or business (whether or not incorporated) under
common control with an Obligor within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) the determination that any Pension Plan or Multiemployer Plan is considered
an at risk plan or a plan in critical or endangered status under the Code, ERISA
or the Pension Protection Act of 2006; (f) an event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (g) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Obligor or ERISA Affiliate.

Event of Default: as defined in Section 10.

Excess Availability: means as of any date of determination, the amount equal to
Availability minus the aggregate amount, if any, of all trade payables of
Borrowers and their Subsidiaries aged in excess of historical levels with
respect thereto and all book overdrafts of Borrowers and their Subsidiaries in
excess of historical practices with respect thereto, in each case as determined
by Lender.

Excluded Swap Obligation: with respect to an Obligor, each Swap Obligation as to
which, and only to the extent that, such Obligor’s guaranty of or grant of a
Lien as security for such Swap Obligation is or becomes illegal under the
Commodity Exchange Act because the Obligor does not constitute an “eligible
contract participant” as defined in the act (determined after giving effect to
any keepwell, support or other agreement for the benefit of such Obligor, and
all guarantees of Swap Obligations by other Obligors) when such guaranty or
grant of Lien becomes effective with respect to the Swap Obligation. If a
Hedging Agreement governs more than one Swap Obligation, only the Swap
Obligation(s) or portions thereof described in the foregoing sentence shall be
Excluded Swap Obligation(s) for the applicable Obligor.

Excluded Tax: (a) Taxes imposed on or measured by a Recipient’s net income
(however denominated), franchise Taxes and branch profit Taxes (i) as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of Lender, its lending office located in, the
jurisdiction imposing such Tax, or (ii) constituting Other Connection Taxes; and
(b) U.S. federal withholding Taxes imposed pursuant to FATCA.

 

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Existing Lender: means Crestmark Bank.

Extraordinary Expenses: all reasonable costs, expenses or advances that Lender
may incur during a Default or Event of Default, including those relating to
(a) any audit, inspection, repossession, storage, repair, appraisal, insurance,
manufacture, preparation or advertising for sale, sale, collection, or other
preservation of or realization upon any Collateral; (b) any action, arbitration
or other proceeding (whether instituted by or against Lender, any Obligor, any
representative of creditors of an Obligor or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of Lender’s Liens with respect to any Collateral), Loan Documents,
Letters of Credit or Obligations, including any lender liability or other
Claims; (c) the exercise of any rights or remedies of Lender in, or the
monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any
taxes, charges or Liens with respect to any Collateral; (e) any action to
enforce any Obligations or Loan Documents or to realize upon any Collateral
(whether by judicial action, self-help, notification of Account Debtors,
exercise of set off or recoupment, credit bid or otherwise); and (f) negotiation
and documentation of any modification, waiver, workout, restructuring or
forbearance with respect to any Loan Documents or Obligations. Such costs,
expenses and advances include transfer fees, Other Taxes, storage fees,
insurance costs, permit fees, utility reservation and standby fees, legal fees,
appraisal fees, brokers’ and auctioneers’ fees and commissions, accountants’
fees, environmental study fees, wages and salaries paid to employees of any
Obligor or independent contractors in liquidating any Collateral, and travel
expenses.

FATCA: Sections 1471 through 1474 of the Code (including any amended or
successor version if substantively comparable and not materially more onerous to
comply with), and any agreements entered into pursuant to Section 1471(b)(1) of
the Code.

Federal Funds Rate: (a) the weighted average of interest rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on the applicable Business Day (or on the preceding
Business Day, if the applicable day is not a Business Day), as published by the
Federal Reserve Bank of New York on the next Business Day; or (b) if no such
rate is published on the next Business Day, the average rate (rounded up, if
necessary, to the nearest 1/8 of 1%) charged to Lender on the applicable day on
such transactions, as determined by Lender.

Fiscal Month: each period of one month, commencing on the first day of a Fiscal
Year.

Fiscal Quarter: each period of three (3) months, commencing on the first day of
a Fiscal Year.

Fiscal Year: the fiscal year of RLT and its Subsidiaries for accounting and tax
purposes, ending on December 31 of each year.

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for
RLT and its Subsidiaries for the most recent twelve (12) Fiscal Months, of
(a) EBITDA minus Capital Expenditures (except those financed with Borrowed Money
other than Revolver Loans) and cash taxes paid, to (b) Fixed Charges.

Fixed Charges: determined on a consolidated basis for RLT and its Subsidiaries
for any period of calculation the sum of cash interest expense (other than
payment-in-kind), scheduled cash principal payments made on Borrowed Money, and
Distributions permitted hereunder.

FLSA: the Fair Labor Standards Act of 1938.

Foreign Plan: any employee benefit plan or arrangement (a) maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States; or (b) mandated by a government other than the United States
for employees of any Obligor or Subsidiary.

Foreign Subsidiary: a Subsidiary that is a “controlled foreign corporation”
under Section 957 of the Code, such that a guaranty by such Subsidiary of the
Obligations or a Lien on the assets of such Subsidiary to secure the Obligations
would result in material tax liability to Borrowers.

Full Payment: with respect to any Obligations (except inchoate indemnity
obligations with respect to which Lender has received no notice), (a) the full
and indefeasible cash payment thereof, including any interest, fees and other
charges accruing during an Insolvency Proceeding (whether or not allowed in the
proceeding); (b) if such

 

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Obligations are LC Obligations, Cash Collateralization thereof (or delivery of a
standby letter of credit acceptable to Lender in its reasonable discretion, in
the amount of required Cash Collateral); and (c) a release of any Claims of
Obligors against Lender arising on or before the payment date. The Revolver
Loans shall not be deemed to have been paid in full unless the Commitment
Termination Date has occurred and the Lender’s obligation to issue Letters of
Credit has been terminated.

GAAP: generally accepted accounting principles in effect in the United States
from time to time.

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental Authority: any federal, state, local, foreign or other agency,
authority, body, commission, court, instrumentality, political subdivision,
central bank, or other entity or officer exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions for any
governmental, judicial, investigative, regulatory or self-regulatory authority
(including any supra-national bodies such as the European Union or European
Central Bank).

Guarantor Payment: as defined in Section 5.10.3.

Guarantors: Seesmart, Envirolight, Sentinel and Value Lighting Houston, and each
Borrower as to each other Borrower, and each other Person that guarantees
payment or performance of Obligations.

Guaranty: each guaranty agreement executed by a Guarantor in favor of Lender.

Hedging Agreement: any “swap agreement” as defined in Section 101(53B)(A) of the
Bankruptcy Code.

Indemnified Taxes: (a) Taxes, other than Excluded Taxes, imposed on or relating
to any payment of an Obligation; and (b) to the extent not otherwise described
in clause (a), Other Taxes.

Indemnitees: Lender, other Secured Parties, and each of their respective
officers, members, managers, partners, shareholders, directors, employees,
Affiliates, agents and attorneys.

Insolvency Proceeding: any case or proceeding commenced by or against a Person
under any state, federal or foreign law for, or any agreement of such Person to,
(a) the entry of an order for relief under the Bankruptcy Code, or any other
insolvency, debtor relief or debt adjustment law; (b) the appointment of a
receiver, trustee, liquidator, administrator, conservator or other custodian for
such Person or any part of its Property; or (c) an assignment or trust mortgage
for the benefit of creditors.

Intellectual Property: all intellectual and similar Property of a Person,
including, without limitation, all present and future: trade secrets, know-how
and other confidential or proprietary information; trademarks, trademark
applications, internet domain names, service marks, trade dress, trade names,
business names, designs, logos, slogans (and all translations, adaptations,
derivations and combinations of the foregoing) indicia and other source and/or
business identifiers, and all registrations or applications for registrations
which have heretofore been or may hereafter be issued thereon throughout the
world; all works of authorship and other copyrights and copyright applications
(including copyrights for computer programs) and all tangible and intangible
property embodying the copyrights, unpatented inventions (whether or not
patentable); patents and patent applications; industrial design applications and
registered industrial designs; rights under license agreements and franchise
agreements related to any of the foregoing and income therefrom; computer
software, including source codes, object codes, executable code, data and
databases; all other intellectual property; all common law and other rights
throughout the world in and to all of the foregoing; and all books and records
relating to the foregoing.

Intellectual Property Claim: any written claim or assertion that an Obligor’s or
Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory,
Equipment, Intellectual Property or other Property violates another Person’s
Intellectual Property.

Interest Period: as defined in Section 3.1.3.

 

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Inventory Reserve: reserves established by Lender in its reasonable credit
judgment to reflect factors that would reasonably be expected to negatively
impact the Value of Inventory, including change in salability, obsolescence,
seasonality, theft, shrinkage, imbalance, change in composition or mix,
markdowns and vendor chargebacks.

Investment: (a) a transaction or series of transactions resulting in
(i) acquisition of a business division or substantially all assets of a Person;
(ii) record or beneficial ownership of 50% or more of the Equity Interests of a
Person; or (iii) merger, consolidation or combination of a Borrower or
Subsidiary with another Person; (b) an acquisition of record or beneficial
ownership of any Equity Interests of a Person; or (c) an advance or capital
contribution to or other investment in a Person.

IP Assignment: a collateral assignment or security agreement pursuant to which
an Obligor grants a Lien on its Intellectual Property to Lender, as security for
the Obligations.

IRS: the United States Internal Revenue Service.

LC Application: an application by Borrower Agent to Lender for issuance of a
Letter of Credit, in form and substance satisfactory to Lender.

LC Conditions: the following conditions necessary for issuance of a Letter of
Credit: (a) each of the conditions set forth in Section 6 is satisfied as
determined by Lender; (b) after giving effect to such issuance, total LC
Obligations do not exceed the Letter of Credit Subline, no Overadvance exists or
would be caused thereby and Revolver Usage does not exceed the Borrowing Base;
(c) the Letter of Credit and payments thereunder are denominated in Dollars; and
(d) the purpose and form of the proposed Letter of Credit are satisfactory to
Lender in its reasonable discretion.

LC Documents: all documents, instruments and agreements (including LC Requests
and LC Applications) delivered by Borrowers or any other Person to Lender in
connection with any Letter of Credit.

LC Obligations: the sum of (a) all amounts owing by Borrowers for drawings under
Letters of Credit; and (b) the aggregate Stated Amount of all outstanding
Letters of Credit.

Letter of Credit: any standby or documentary letter of credit, foreign guaranty,
documentary banker’s acceptance or similar instrument issued by Lender for the
account or benefit of a Borrower or Affiliate of a Borrower.

Letter of Credit Subline: $4,000,000.

LIBOR: for the per annum rate of interest (rounded up to the nearest 1/8th of
1%) determined by Lender at or about 11:00 a.m. (London time) two Business Days
prior to an interest period, for a term equivalent to such period, equal to the
London Interbank Offered Rate, or comparable or successor rate approved by
Lender, as published on the applicable Reuters screen page (or other
commercially available source designated by Lender from time to time); provided
that any such comparable or successor rate shall be applied by Lender, if
administratively feasible, in a manner consistent with market practice.

LIBOR Loan: each set of LIBOR Revolver Loans having a common length and
commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

License: any license or agreement under which an Obligor is authorized to use
Intellectual Property (other than off-the-shelf software) in connection with any
manufacture, marketing, distribution or disposition of Collateral, any use of
Property or any other conduct of its business.

Licensor: any Person from whom an Obligor obtains the right to use any
Intellectual Property.

 

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Lien: any interest in Property that secures an obligation owed to, or a claim
by, another Person, including any lien, security interest, pledge,
hypothecation, assignment, trust, reservation, encroachment, easement,
right-of-way, covenant, condition, restriction, lease, or other title exception
or encumbrance.

Lien Waiver: an agreement, in form and substance reasonably satisfactory to
Lender, by which (a) for any material Collateral located on leased premises, the
lessor waives or subordinates any Lien it may have on the Collateral, and agrees
to permit Lender to enter upon the premises and remove the Collateral or to use
the premises to store or dispose of the Collateral; (b) for any Collateral held
by a warehouseman, processor, shipper, customs broker or freight forwarder, such
Person waives or subordinates any Lien it may have on the Collateral, agrees to
hold any Documents in its possession relating to the Collateral as agent for
Lender, and agrees to deliver the Collateral to Lender upon request; (c) for any
Collateral held by a repairman, mechanic or bailee, such Person acknowledges
Lender’s Lien, waives or subordinates any Lien it may have on the Collateral,
and agrees to deliver the Collateral to Lender upon request; and (d) for any
Collateral subject to a Licensor’s Intellectual Property rights, the Licensor
grants to Lender the right, vis-à-vis such Licensor, to enforce Lender’s Liens
with respect to the Collateral, including the right to dispose of it with the
benefit of the Intellectual Property, whether or not a default exists under any
applicable License.

Loan: a Revolver Loan.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Loan Year: each 12 month period commencing on the Closing Date and on each
anniversary of the Closing Date.

Management Services Agreement: that certain Management Services dated as of
April 16,2013 by and between Aston and RLT.

Margin Stock: as defined in Regulation U of the Board of Governors.

Material Adverse Effect: the effect of any event or circumstance that, taken
alone or in conjunction with other events or circumstances, (a) has or could be
reasonably expected to have a material adverse effect on the business,
operations, Properties, or condition (financial or otherwise) of the Obligors,
taken as a whole, or on the enforceability of any Loan Documents, or on the
validity or priority of Lender’s Liens on any Collateral; (b) impairs in any
material respect the ability of the Obligors to perform the obligations under
the Loan Documents of the Obligors, taken as a whole, including repayment of any
Obligations; or (c) otherwise impairs in any material respect the ability of
Lender to enforce or collect any Obligations or to realize upon any Collateral.

Material Contract: any agreement or arrangement to which an Obligor is party
(other than the Loan Documents) (a) that is deemed to be a material contract
under any securities law applicable to such Person, including the Securities Act
of 1933; (b) for which breach, termination, nonperformance or failure to renew
would reasonably be expected to have a Material Adverse Effect; (c) that relates
to Subordinated Debt, or to Permitted Debt in an aggregate amount of $250,000 or
more, (d) the Tri-State Agreement, and (e) the Value Lighting Merger Agreement.

Moody’s: Moody’s Investors Service, Inc., and its successors.

Multiemployer Plan: any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

Net Proceeds: with respect to any disposition of Property, proceeds (including,
when received, any deferred or escrowed payments) received by an Obligor in cash
from such disposition, net of (a) reasonable and customary costs and expenses
actually incurred in connection therewith, including legal fees and sales
commissions; (b) amounts applied to repayment of Debt secured by a Permitted
Lien senior to Lender’s Liens on Collateral sold; (c) transfer or similar taxes;
and (d) reserves for indemnities, until such reserves are no longer needed.

NOLV Percentage: the net orderly liquidation value of Inventory, expressed as a
percentage, expected to be realized at an orderly, negotiated sale held within a
reasonable period of time, net of all liquidation expenses, as determined from
the most recent appraisal of Borrowers’ Inventory performed by an appraiser and
on terms reasonably satisfactory to Lender.

 

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Notice of Borrowing: a Notice of Borrowing to be provided by Borrower Agent to
request a Borrowing of Revolver Loans, substantially in the form of Exhibit G
annexed hereto or otherwise in form and substance reasonably satisfactory to
Lender.

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be
provided by Borrower Agent to request a conversion or continuation of any Loans
as LIBOR Loans, substantially in the form of Exhibit G annexed hereto or
otherwise in form and substance reasonably satisfactory to Lender.

Obligations: all (a) principal of and premium, if any, on the Loans; (b) LC
Obligations and other obligations of Obligors with respect to Letters of Credit;
(c) interest, expenses, fees, indemnification obligations, Extraordinary
Expenses and other amounts payable by Obligors under Loan Documents; (d) Bank
Product Debt; and (e) other Debts, obligations and liabilities of any kind owing
by any Obligor to Lender, whether now existing or hereafter arising, whether
evidenced by a note or other writing, whether allowed in any Insolvency
Proceeding, whether arising from an extension of credit, issuance of a letter of
credit, acceptance, loan, guaranty, indemnification or otherwise, and whether
direct or indirect, absolute or contingent, due or to become due, primary or
secondary, or joint or several; provided, that Obligations of an Obligor shall
not include its Excluded Swap Obligations.

Obligor: each Borrower, Guarantor, or other Person that is liable for payment of
any Obligations or that has granted a Lien in favor of Lender on its assets to
secure any Obligations.

OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

Ordinary Course of Business: the ordinary course of business of any Obligor,
undertaken in good faith and consistent with applicable law and past practices.

Organic Documents: with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, articles of organization, limited liability
agreement, operating agreement, members agreement, shareholders agreement,
partnership agreement, certificate of partnership, certificate of formation,
voting trust agreement, or similar agreement or instrument governing the
formation or operation of such Person.

OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: each LC Document, Lien Waiver, Borrowing Base Certificate,
Compliance Certificate, promissory note, financial statement or report delivered
hereunder, or other document, instrument or agreement (other than this Agreement
or a Security Document) now or hereafter delivered by an Obligor or other Person
to Lender in connection with any transactions relating hereto.

Other Connection Taxes: Taxes imposed on a Recipient due to a present or former
connection between it and the taxing jurisdiction (other than connections
arising from the Recipient having executed, delivered, become party to,
performed obligations or received payments under, received or perfected a Lien
or engaged in any other transaction pursuant to, enforced, or sold or assigned
an interest in, any Loan or Loan Document.

Other Taxes: all present or future stamp, court, 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 Lien under, or otherwise with respect to, any Loan
Document, except Other Connection Taxes imposed with respect to an assignment.

Overadvance: as defined in Section 2.1.4.

PATRIOT Act: the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).

Payment Item: each check, draft or other item of payment payable to a Borrower,
including those constituting proceeds of any Collateral.

 

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PBGC: the Pension Benefit Guaranty Corporation.

Pension Plan: any employee pension benefit plan (as defined in Section 3(2) of
ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA
and is sponsored or maintained by any Obligor or ERISA Affiliate or to which the
Obligor or ERISA Affiliate contributes or has an obligation to contribute, or in
the case of a multiple employer or other plan described in Section 4064(a) of
ERISA, has made contributions at any time during the preceding five plan years.

Permitted Acquisition: means an Acquisition in which all of the following
conditions are satisfied:

(a) such Acquisition shall have been approved by the Board of Directors of the
Person (or similar governing body if such Person is not a corporation) which is
the subject of such Acquisition, and such Person shall not have announced that
it will oppose such Acquisition or shall not have commenced any action which
alleges that such Acquisition shall violate applicable Law;

(b) the Borrower Agent shall have furnished the Lender with ten (10) Business
Days’ prior written notice of such intended Acquisition and shall have furnished
the Lender with a current draft of the acquisition documents (and final copies
thereof as and when executed), and such other information as the Lender may
reasonably require, all of which shall be reasonably satisfactory to the Lender;

(c) the legal structure of the Acquisition shall be acceptable to the Lender in
its reasonable discretion;

(d) After giving effect to the Acquisition, if the Acquisition is an Acquisition
of the Equity Interests of a Person, such Person shall be a wholly-owned
Subsidiary of RLT or a wholly-owned Subsidiary of RLT’s Subsidiaries; and

(e) Any assets acquired shall be utilized in, and if the Acquisition involves a
merger, consolidation or Acquisition of Equity Interests, the Person which is
the subject of such Acquisition shall be engaged in, a business otherwise
permitted to be engaged in by an Obligor under this Agreement.

Permitted Debt: means: (a) the Obligations; (b) Subordinated Debt; (c) Purchase
Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a
Purchase Money Lien, as long as the aggregate amount does not exceed $2,500,000;
(d) Bank Product Debt incurred in the Ordinary Course of Business;
(e) Contingent Obligations (i) arising from endorsements of Payment Items for
collection or deposit in the Ordinary Course of Business; (ii) arising from
Hedging Agreements permitted hereunder; (iii) existing on the Closing Date, and
any extension or renewal thereof that does not increase the amount of such
Contingent Obligation when extended or renewed; (iv) incurred in the Ordinary
Course of Business with respect to surety, appeal or performance bonds, or other
similar obligations; (v) arising from customary indemnification obligations in
favor of purchasers in connection with dispositions of Equipment permitted
hereunder; (vi) arising under the Loan Documents; and (f) unsecured Debt that is
not included in any of the preceding clauses of this Section, is not secured by
a Lien and does not exceed $2,500,000 in the aggregate at any time.

Permitted Investment: means an Investment so long as (i) before and after giving
effect to such Investment, no Event of Default has occurred and is continuing,
(ii) the aggregate amount of all Investments (including any Permitted
Acquisitions) after the Closing Date shall not exceed $250,000, provided however
any Permitted Acquisition which is financed with the proceeds of an Equity
Issuance on terms and conditions satisfactory to Lender shall not be included in
the cap of $250,000, (iii) the Borrower has certified to Lender in writing that
after giving effect to such Investment, the Obligors shall be in pro forma
compliance with the financial covenants set forth in Section 9.3, and (iv) the
Obligors comply with the provisions of Section 9.2.9.

Permitted Lien: means: (a) Liens in favor of Lender; (b) Purchase Money Liens
securing Purchase Money Debt that is permitted under Section 9.2.1; (c) Liens
for Taxes not yet due or being Properly Contested; (d) statutory Liens (other
than Liens for Taxes or imposed under ERISA) arising in the Ordinary Course of
Business, but only if (i) payment of the obligations secured thereby is not yet
due or is being Properly Contested, and (ii) such Liens do not materially impair
the value or use of the Property or materially impair operation of the business
of any Borrower or Subsidiary; (e) Liens incurred or deposits made in the
Ordinary Course of Business to secure the performance of government tenders,
bids, contracts, statutory obligations and other similar obligations, as long as
such Liens are at

 

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all times junior to Lender’s Liens and are required or provided by law;
(f) Liens arising in the Ordinary Course of Business that are subject to Lien
Waivers; (g) Liens arising by virtue of a judgment or judicial order against any
Borrower or Subsidiary, or any Property of a Borrower or Subsidiary, as long as
such Liens are (i) in existence for less than 20 consecutive days or being
Properly Contested, and (ii) at all times junior to Lender’s Liens;
(h) easements, rights-of-way, restrictions, covenants or other agreements of
record, and other similar charges or encumbrances on Real Estate, that do not
secure any monetary obligation and do not interfere with the Ordinary Course of
Business; (i) normal and customary rights of setoff upon deposits in favor of
depository institutions, and Liens of a collecting bank on Payment Items in the
course of collection; and (j) existing Liens shown on Schedule 9.2.2.

Person: any individual, corporation, limited liability company, partnership,
joint venture, association, trust, unincorporated organization, Governmental
Authority or other entity.

Plan: any employee benefit plan (as such term is defined in Section 3(3) of
ERISA) established by an Obligor or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

Platform: as defined in Section 11.4.3.

Pledge Agreement: that certain pledge agreement executed and delivered by the
Obligors in favor of Lender, pursuant to which such Obligors grant to Lender a
Lien on Equity Interests held by such Obligors, as security for the Obligations.

Prime Rate: the rate of interest announced by Lender from time to time as its
prime rate. Such rate is set by Lender on the basis of various factors,
including its costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above or below such rate. Any change in such rate publicly announced
by Lender shall take effect at the opening of business on the day specified in
the announcement.

Properly Contested: with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP;
(d) non-payment would not reasonably be expected to have a Material Adverse
Effect, nor result in forfeiture or sale of any material assets of the Obligor;
(e) no Lien is imposed on assets of the Obligor, unless bonded and stayed to the
reasonable satisfaction of Lender; and (f) if the obligation results from entry
of a judgment or other order, such judgment or order is stayed pending appeal or
other judicial review.

Property: any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of
the purchase price of fixed assets; (b) Debt (other than the Obligations)
incurred within 10 days before or after acquisition of any fixed assets, for the
purpose of financing any of the purchase price thereof; and (c) any renewals,
extensions or refinancings (but not increases) thereof.

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only
the fixed assets acquired with such Debt and constituting a Capital Lease or a
purchase money security interest under the UCC.

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another Person to qualify as an “eligible contract participant”
under Section 1a(18)(A)(v)(II) of such act.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

 

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Recipient: Lender or any other recipient of a payment to be made by an Obligor
under a Loan Document or on account of an Obligation.

Reimbursement Date: as defined in Section 2.3.2.

Rent and Charges Reserve: the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder, broker or other Person who possesses any
Collateral or could assert a Lien on any Collateral; and (b) a reserve equal to
three months’ rent and other charges that could be payable to any such Person
(including any past-due rent), unless it has executed a Lien Waiver.

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other
than events for which the thirty (30) day notice period has been waived.

Restricted Investment: any Investment by an Obligor, other than (a) Investments
in Subsidiaries to the extent existing on the Closing Date; and (b) Cash
Equivalents that are subject to Lender’s Lien and control, pursuant to
documentation in form and substance satisfactory to Lender; (c) loans and
advances permitted under Section 9.2.7; and (d) Permitted Investments.

Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of any Borrower, Subsidiary or other Obligor to incur or
repay Borrowed Money, to grant Liens on any assets, to declare or make
Distributions, to modify, extend or renew any agreement evidencing Borrowed
Money, or to repay any intercompany debt amongst the Obligors.

Revolver Commitment: Lender’s obligation to make Revolver Loans and to issue
Letters of Credit in an amount up to $25,000,000 in the aggregate.

Revolver Loan: a loan made pursuant to Section 2.1.

Revolver Termination Date: August 20, 2017.

Revolver Usage: the aggregate amount of outstanding Revolver Loans, plus the
aggregate Stated Amount of outstanding Letters of Credit.

Royalties: all royalties, fees, expense reimbursement and other amounts payable
by an Obligor under a License.

S&P: Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill
Companies, Inc., and any successors thereto.

Sanction: any international economic sanction administered or enforced by the
United States Government (including OFAC), the United Nations Security Council,
the European Union, Her Majesty’s Treasury or other relevant sanctions
authority.

Secured Parties: Lender and providers of Bank Products.

Security Documents: the this Agreement, the Guaranties, IP Assignment, Control
Agreements, the Pledge Agreement, and all other documents, instruments and
agreements now or hereafter securing (or given with the intent to secure) any
Obligations.

Seesmart: Seesmart, Inc., a Delaware corporation, and a wholly owned Subsidiary
of Seesmart Tech.

Senior Officer: the chairman of the board, president, chief executive officer or
chief financial officer of a Borrower or, if the context requires, an Obligor.

Sentinel: Sentinel System, LLC, a Michigan limited liability company and a
wholly owned Subsidiary of Relume.

 

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Solvent: as to any Person, such Person (a) owns Property whose fair salable
value (as defined below) is greater than the amount required to pay all of its
debts (including contingent, subordinated, unmatured and unliquidated
liabilities); (b) owns Property whose present fair salable value is greater than
the probable total liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities) of such Person as they become absolute and
matured; (c) is able to pay all of its debts as they mature; (d) has capital
that is not unreasonably small for its business and is sufficient to carry on
its business and transactions and all business and transactions in which it is
about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of
the Bankruptcy Code; and (f) has not incurred (by way of assumption or
otherwise) any obligations or liabilities (contingent or otherwise) under any
Loan Documents, or made any conveyance in connection therewith, with actual
intent to hinder, delay or defraud either present or future creditors of such
Person or any of its Affiliates. “Fair salable value” means the amount that
could be obtained for assets within a reasonable time, either through collection
or through sale under ordinary selling conditions by a capable and diligent
seller to an interested buyer who is willing (but under no compulsion) to
purchase.

Specified Obligor: an Obligor that is not then an “eligible contract
participant” under the Commodity Exchange Act (determined prior to giving effect
to Section 5.10).

Stated Amount: the stated amount of a Letter of Credit, including any automatic
increase provided by the terms of the Letter of Credit or related LC Documents,
whether or not then effective.

Subordinated Debt: all of the indebtedness owed by any Obligor to any Person the
repayment of which is subordinated to the repayment of the Obligations pursuant
to the terms of a debt subordination agreement approved by Lender in its
reasonable discretion. For sake of clarity, the DPI/Epiphany Debt and the Aston
Debt constitute Subordinated Debt.

Subsidiary: any entity at least 50% of whose voting securities or Equity
Interests is owned by a Borrower or combination of Borrowers (including indirect
ownership through other entities in which the Borrower directly or indirectly
owns 50% of the voting securities or Equity Interests).

Swap Obligations: with respect to any Obligor, its obligations under a Hedging
Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the
Commodity Exchange Act.

Taxes: all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

Tri-State Agreement: that certain agreement entitled “Membership Interest
Purchase Agreement By and Among Revolution Lighting Technologies, Inc.,
Tri-State LED DE, LLC, Tri-State LED, Inc., Ronald Young, Jr. and Robert
Ostrander Dated as of November 15, 2013”.

Tri-State Earnout Payment Conditions: means the following conditions with
respect to any payment of any Tri-State Earnout Payments in cash:

(a) before and after giving effect to such payment, no Event of Default shall
have occurred and be continuing;

(b) before and after giving effect to such payment Availability shall be no less
than $5,000,000; and

(c) after giving effect to such payment, the proforma Fixed Charge Coverage
shall be at least 1.25 to 1.0.

Tri-State Earnout Payments: means the earnout payments required to be paid to
the Seller (as that term is defined in the Tri-State Agreement) pursuant to the
terms and conditions of the Tri-State Agreement.

Tri-State Agreement Subsequent Payment: means “Subsequent Payment” as that term
is defined in Section 1.4(b) of the Tri-State Agreement in effect as of the
Closing Date in the amount of $1,500,000 plus applicable interest in the amount
of $54,167, as such Subsequent Payment due date was extended pursuant to an
agreement amongst the parties to the Tri-State Agreement.

 

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UCC: the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other jurisdiction govern the perfection or enforcement of any
Lien, the Uniform Commercial Code of such jurisdiction.

Unfunded Pension Liability: the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to the Code, ERISA or the Pension Protection Act of
2006 for the applicable plan year.

Unused Line Fee Rate: a per annum rate equal to (a) 0.50%, if the average daily
Revolver Usage was 50% or less of the Revolver Commitment during the preceding
calendar month, or (b) 0.375%, if the average daily Revolver Usage was more than
50% of the Revolver Commitment during the preceding calendar month.

Value: (a) for Inventory, its value determined on the basis of the lower of cost
or market, calculated on a first-in, first-out basis, and excluding any portion
of cost attributable to intercompany profit among Borrowers and their
Affiliates; and (b) for an Account, its face amount, net of any returns,
rebates, discounts (calculated on the shortest terms), credits, allowances or
Taxes (including sales, excise or other taxes) that have been or could be
claimed by the Account Debtor or any other Person as an offset against the face
amount thereof.

Value Lighting Earnout Payment Conditions: means the following conditions with
respect to any payment of any Value Lighting Earnout Payments in cash:

(a) before and after giving effect to such payment, no Event of Default shall
have occurred and be continuing;

(b) before and after giving effect to such payment Availability shall be no less
than $5,000,000; and

(c) after giving effect to such payment, the proforma Fixed Charge Coverage
shall be at least 1.25 to 1.0.

Value Lighting Earnout Payments: means the earnout payments required to be paid
to the Stockholders (as that term is defined in the Value Lighting Merger
Agreement) pursuant to the terms and conditions of the Value Lighting Merger
Agreement.

Value Lighting Houston: Value Lighting of Houston, LLC, a Texas limited
liability company, and a wholly owned Subsidiary of Value Lighting.

Value Lighting Merger Agreement: that certain agreement entitled “Agreement and
Plan of Merger By and Among Revolution Lighting Technologies, Inc., Value Merger
Sub, LLC, Value Lighting, Inc., AL Enterprises, Inc., Value Lighting of Houston,
LLC and The Stockholders Dates as of March 6, 2014.”

Value Lighting Merger Agreement Subsequent Payment: means “Subsequent Payment”
as that term is defined in Section 1.4(b) of the Value Lighting Merger Agreement
in effect as of the Closing Date.

1.2. Accounting Terms. Under the Loan Documents (except as otherwise specified
herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Borrowers delivered to Lender before the Closing Date
and using the same inventory valuation method as used in such financial
statements, except for any change required or permitted by GAAP if Borrowers’
certified public accountants concur in such change, the change is disclosed to
Lender, and all relevant provisions of the Loan Documents are amended in a
manner reasonably satisfactory to Lender to take into account the effects of the
change.

1.3. Uniform Commercial Code. As used herein, the following terms are defined in
accordance with the UCC in effect in the State of New York from time to time:
“Account,” “Account Debtor,” “Chattel Paper,” “Commercial Tort Claim,” “Deposit
Account,” “Document,” “Electronic Chattel Paper,” “Equipment,” “Fixtures,”
“General Intangibles,” “Goods,” “Instrument,” “Inventory,” “Investment
Property,” “Letter-of-Credit Right” and “Supporting Obligation.”

 

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1.4. Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. In the computation of periods of time from a
specified date to a later specified date, “from” means “from and including,” and
“to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws include all related regulations, interpretations,
supplements, amendments and successor provisions; (b) any document, instrument
or agreement include any amendments, waivers and other modifications, extensions
or renewals (to the extent permitted by the Loan Documents); (c) any section
mean, unless the context otherwise requires, a section of this Agreement;
(d) any exhibits or schedules mean, unless the context otherwise requires,
exhibits and schedules attached hereto, which are hereby incorporated by
reference; (e) any Person include successors and assigns; (f) time of day mean
time of day at Lender’s notice address under Section 11.4.1; or (g) except where
otherwise qualified, discretion of Lender mean its sole and absolute discretion.
All references to Value, Borrowing Base components, Loans, Letters of Credit,
Obligations and other amounts herein shall be denominated in Dollars, unless
expressly provided otherwise, and all determinations (including calculations of
Borrowing Base and financial covenants) made from time to time under the Loan
Documents shall be made in light of the circumstances existing at such time.
Borrowing Base calculations shall be consistent with historical methods of
valuation and calculation, and otherwise satisfactory to Lender (and not
necessarily calculated in accordance with GAAP). Obligors shall have the burden
of establishing any alleged negligence, misconduct or lack of good faith by
Lender under any Loan Documents. No provision of any Loan Documents shall be
construed against any party by reason of such party having, or being deemed to
have, drafted the provision. Reference to an Obligor’s “knowledge” or similar
concept means actual knowledge of a Senior Officer.

 

SECTION 2. CREDIT FACILITIES

2.1. Revolver Commitment.

2.1.1. Revolver Loans. Lender agrees, on the terms set forth herein, to make
Revolver Loans to Borrowers in an aggregate amount up to the Revolver
Commitment, from time to time through the Commitment Termination Date. The
Revolver Loans may be repaid and reborrowed as provided herein. In no event
shall Lender have any obligation to honor a request for a Revolver Loan if
Revolver Usage at such time plus the requested Revolver Loan would exceed the
Borrowing Base.

2.1.2. Use of Proceeds. The proceeds of Revolver Loans and Letters of Credit
shall be used by Borrowers solely (a) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing under or in
connection with Borrowers’ existing credit facility with the Existing Lender;
(b) to satisfy existing Debt pursuant to the terms and conditions of this
Agreement; (c) to pay fees and transaction expenses associated with the closing
of this credit facility; (d) to pay Obligations in accordance with this
Agreement; and (e) for other lawful corporate purposes of Obligors, including
working capital, in each case to the extent permitted under the Loan Documents.
Borrowers shall not, directly or indirectly, use any Letter of Credit or the
proceeds of any Loan, nor use, lend, contribute or otherwise make available any
Letter of Credit or proceeds of any Loan to any Subsidiary not wholly owned by a
Borrower or another wholly-owned Subsidiary, or to a joint venture partner or
other Person, (y) to fund any activities of or business with any Person, or in
any country, territory or jurisdiction, that, at the time of issuance of the
Letter of Credit or funding of the Loan, is the subject of Sanctions; or (z) in
any manner that will result in a violation of Sanctions by any Person (including
any Secured Party or other individual or entity participating in the
transaction.

2.1.3. Termination of Revolver Commitment. The Revolver Commitment shall
terminate on the Revolver Termination Date, unless sooner terminated in
accordance with this Agreement. Upon at least fifteen (15) days’ prior written
notice to Lender Borrowers may, at their option, terminate the Revolver
Commitment and this credit facility. Any notice of termination given by
Borrowers shall be irrevocable. On the Revolver Termination Date, Borrowers
shall make Full Payment of all Obligations.

2.1.4. Overadvances. If Revolver Usage exceeds the Borrowing Base
(“Overadvance”) at any time, the excess amount shall be payable by Borrowers on
demand by Lender, but all such Revolver Loans shall nevertheless constitute
Obligations secured by the Collateral and entitled to all benefits of the Loan
Documents. Any funding or sufferance of an Overadvance shall not constitute a
waiver of the Event of Default caused thereby.

 

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2.2. Letter of Credit Facility.

2.2.1. Issuance of Letters of Credit. Lender agrees to issue Letters of Credit
from time to time until thirty (30) days prior to the Revolver Termination Date
(or until the Commitment Termination Date, if earlier), on the terms set forth
herein, including the following:

(a) Each Borrower acknowledges that Lender’s willingness to issue any Letter of
Credit is conditioned upon its receipt of a LC Application with respect to the
requested Letter of Credit, as well as such other instruments and agreements as
Lender may customarily require for issuance of a letter of credit of similar
type and amount. Lender shall have no obligation to issue any Letter of Credit
unless (i) it receives a LC Application at least three Business Days prior to
the requested date of issuance; and (ii) each LC Condition is satisfied.

(b) Letters of Credit may be requested by a Borrower to support obligations of a
Borrower or a wholly-owned Subsidiary incurred in the Ordinary Course of
Business, or as otherwise approved by Lender. Increase, renewal or extension of
a Letter of Credit shall be treated as issuance of a new Letter of Credit,
except that Lender may require a new LC Application in its reasonable
discretion.

(c) Borrowers assume all risks of the acts, omissions or misuses of any Letter
of Credit by the beneficiary. In connection with issuance of any Letter of
Credit, Lender shall not be responsible for the existence, character, quality,
quantity, condition, packing, value or delivery of any goods purported to be
represented by any Documents; any differences or variation in the character,
quality, quantity, condition, packing, value or delivery of any goods from that
expressed in any Documents; the form, validity, sufficiency, accuracy,
genuineness or legal effect of any Documents or of any endorsements thereon; the
time, place, manner or order in which shipment of goods is made; partial or
incomplete shipment of, or failure to ship, any goods referred to in a Letter of
Credit or Documents; any deviation from instructions, delay, default or fraud by
any shipper or other Person in connection with any goods, shipment or delivery;
any breach of contract between a shipper or vendor and a Borrower; errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise;
errors in interpretation of technical terms; the misapplication by a beneficiary
of any Letter of Credit or the proceeds thereof; or any consequences arising
from causes beyond the control of Lender, including any act or omission of a
Governmental Authority. No Indemnitee shall be liable to any Obligor or other
Person for any action taken or omitted to be taken in connection with any Letter
of Credit or LC Documents except to the extent resulting from its gross
negligence or willful misconduct. Lender shall be fully subrogated to the rights
and remedies of each beneficiary whose claims against Borrowers are discharged
with proceeds of any Letter of Credit.

(d) In connection with its administration of and enforcement of rights or
remedies under any Letters of Credit or LC Documents, Lender shall be entitled
to act, and shall be fully protected in acting, upon any certification,
documentation or communication in whatever form believed by Lender, in good
faith, to be genuine and correct and to have been signed, sent or made by a
proper Person. Lender may consult with and employ legal counsel, accountants and
other experts to advise it concerning its obligations, rights and remedies, and
shall be entitled to act upon, and shall be fully protected in any action taken
in good faith reliance upon, any advice given by such experts. Lender may employ
agents and attorneys-in-fact in connection with any matter relating to Letters
of Credit or LC Documents, and shall not be liable for the negligence or
misconduct of agents and attorneys-in-fact selected with reasonable care.

(e) Lender shall not issue any Letter of Credit, if:

(i) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain Lender from issuing such Letter
of Credit, or any Applicable Law or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
Lender shall prohibit, or request that Lender refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon Lender with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which Lender is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon Lender any
unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which Lender in good faith deems material to it;

 

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(ii) [reserved];

(iii) except as otherwise agreed by Lender, such Letter of Credit is to be
denominated in a currency other than Dollars; provided that if Lender issues a
Letter of Credit denominated in a currency other than Dollars, all
reimbursements by the Borrowers of the honoring of any drawing under such Letter
of Credit shall be paid in the currency in which such Letter of Credit was
denominated;

(iv) one or more of the applicable conditions specified in Section 6 is not then
satisfied; or

(v) such Letter of Credit contains any provisions for automatic reinstatement of
the stated amount thereof after any drawing thereunder.

2.2.2. Reimbursement. If Lender honors any request for payment under a Letter of
Credit, Borrowers shall pay to Lender, on the same day (“Reimbursement Date”),
the amount paid under such Letter of Credit and all applicable fees, together
with interest at the interest rate for Base Rate Revolver Loans from the
Reimbursement Date until payment by Borrowers. The obligation of Borrowers to
reimburse Lender for any payment made under a Letter of Credit shall be
absolute, unconditional, irrevocable, and joint and several, and shall be paid
without regard to any lack of validity or enforceability of any Letter of Credit
or the existence of any claim, setoff, defense or other right that Borrowers may
have at any time against the beneficiary. Whether or not Borrower Agent submits
a Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing
of Base Rate Revolver Loans in an amount necessary to pay all amounts due on any
Reimbursement Date.

2.2.3. Cash Collateral. If at any time (a) an Event of Default exists, (b) the
Commitment Termination Date has occurred, or (c) the Revolver Termination Date
is scheduled to occur within twenty (20) Business Days, then Borrowers shall, at
Lender’s request, Cash Collateralize all outstanding Letters of Credit. If
Borrowers fail to provide any Cash Collateral as required hereunder, Lender may
advance, as Revolver Loans, the amount of Cash Collateral required.

 

SECTION 3. INTEREST, FEES AND CHARGES

3.1. Interest.

3.1.1. Rates and Payment of Interest.

(a) The Obligations shall bear interest (i) if a Base Rate Loan, at the Base
Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR
Loan, at LIBOR for the applicable Interest Period, plus the Applicable Margin;
and (iii) if any other Obligation (including, to the extent permitted by law,
interest not paid when due), at the Base Rate in effect from time to time, plus
the Applicable Margin for Base Rate Revolver Loans.

(b) During the continuation of an Event of Default if Lender in its discretion
so elects, Obligations shall bear interest at the Default Rate (whether before
or after any judgment). Each Obligor acknowledges that the cost and expense to
Lender due to an Event of Default are difficult to ascertain and that the
Default Rate is fair and reasonable compensation for this.

(c) Interest shall accrue from the date a Loan is advanced or Obligation is
incurred or payable, until paid in full by Borrowers. Interest accrued on the
Loans shall be due and payable in arrears, (i) (A) on the first day of each
month, if a Base Rate Loan, and (B) at the end of the applicable Interest
Period, if a LIBOR Loan; (ii) on any date of prepayment, with respect to the
principal amount of Loans being prepaid; and (iii) on the Commitment Termination
Date. Interest accrued on any other Obligations shall be due and payable as
provided in the Loan Documents and, if no payment date is specified, shall be
due and payable on demand. Notwithstanding the foregoing, interest accrued at
the Default Rate shall be due and payable on demand.

 

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3.1.2. Application of LIBOR to Outstanding Loans.

(a) Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Loans to,
or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
Loan. During any Default or Event of Default, Lender may declare that no Loan
may be made, converted or continued as a LIBOR Loan.

(b) Whenever Borrowers desire to convert or continue Loans as LIBOR Loans,
Borrower Agent shall give Lender a Notice of Conversion/Continuation, no later
than 11:00 a.m. at least two (2) Business Days before the requested conversion
or continuation date. Each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be thirty (30) days if
not specified). If, upon the expiration of any Interest Period in respect of any
LIBOR Loans, Borrowers shall have failed to deliver a Notice of
Conversion/Continuation, they shall be deemed to have elected to convert such
Loans into Base Rate Loans. Lender does not warrant or accept responsibility
for, nor shall it have any liability with respect to, administration, submission
or any other matter related to any rate described in the definition of LIBOR.

3.1.3. Interest Periods. In connection with the making, conversion or
continuation of any LIBOR Loans, Borrowers shall select an interest period
(“Interest Period”) to apply, which interest period shall be 30, 60, or 90 days
(if available from Lender); provided, however, that:

(a) the Interest Period shall begin on the date the Loan is made or continued
as, or converted into, a LIBOR Loan, and shall expire on the numerically
corresponding day in the calendar month at its end;

(b) if any Interest Period begins on a day for which there is no corresponding
day in the calendar month at its end or if such corresponding day falls after
the last Business Day of such month, then the Interest Period shall expire on
the last Business Day of such month; and if any Interest Period would otherwise
expire on a day that is not a Business Day, the period shall expire on the next
Business Day; and

(c) no Interest Period shall extend beyond the Revolver Termination Date.

3.1.4. Interest Rate Not Ascertainable. If, due to any circumstance affecting
the London interbank market, Lender determines that adequate and fair means do
not exist for ascertaining LIBOR on any applicable date or that any Interest
Period is not available on the basis provided herein, then Lender shall
immediately notify Borrowers of such determination. Until Lender notifies
Borrowers that such circumstance no longer exists, the obligation of Lender to
make affected LIBOR Loans shall be suspended, and no further Loans may be
converted into or continued as such LIBOR Loans.

3.2. Fees. Borrowers jointly and severally shall pay to Lender the fees set
forth on Exhibit D to this Agreement.

3.3. Computation of Interest, Fees, Yield Protection. All interest, as well as
fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days. Each determination by
Lender of any interest, fees or interest rate hereunder shall be final,
conclusive and binding for all purposes, absent manifest error. All fees shall
be fully earned when due and shall not be subject to rebate, refund or
proration. All fees payable under Section 3.2 are compensation for services and
are not, and shall not be deemed to be, interest or any other charge for the
use, forbearance or detention of money. A certificate as to amounts payable by
Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.9, submitted to Borrower Agent
by Lender shall be final, conclusive and binding for all purposes, absent
manifest error, and Borrowers shall pay such amounts to the appropriate party
within ten (10) Business Days following receipt of the certificate.

3.4. Reimbursement Obligations. Borrowers shall pay all Extraordinary Expenses
promptly on demand. Borrowers also shall reimburse Lender for all legal,
accounting, appraisal, consulting, and other fees, costs and expenses incurred
by it in connection with (a) negotiation and preparation of any Loan Documents,
including any amendment or other modification thereof; (b) administration of and
actions relating to any Collateral, Loan Documents and transactions contemplated
thereby, including any actions taken to perfect or maintain priority of Lender’s
Liens on any Collateral, to maintain any insurance required hereunder or to
verify Collateral; (c) subject to the limits of Section 9.1.1(b), each
inspection, audit or appraisal with respect to any Obligor or Collateral,
whether prepared by Lender’s personnel or a third party; and (d) any action to
enforce any Loan Documents or to collect any payments due from any other
Obligor. All fees, costs and expenses for which Borrowers are responsible

 

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under this Section 3.4 shall be deemed part of the Obligations when incurred.
All legal, accounting and consulting fees shall be charged to Borrowers by
Lender’s professionals at their full hourly rates, regardless of any alternative
fee arrangements that Lender or any of its Affiliates may have with such
professionals that otherwise might apply to this or any other transaction.
Borrowers acknowledge that counsel may provide Lender with a benefit (such as a
discount, credit or accommodation for other matters) based on counsel’s overall
relationship with Lender, including fees paid hereunder. If, for any reason
(including inaccurate reporting by any Borrower), it is determined that a higher
Applicable Margin should have applied to a period than was actually applied,
then the proper margin shall be applied retroactively, and Borrowers shall
immediately pay to Lender an amount equal to the difference between the amount
of interest and fees that would have accrued using the proper margin and the
amount actually paid. All amounts payable by Borrowers under this Section shall
be due within ten (10) Business Days following demand.

3.5. Illegality. If Lender determines that any applicable law (including any
Change in Law) has made it unlawful, or that any Governmental Authority has
asserted that it is unlawful, for Lender to make, maintain or fund LIBOR Loans,
or to determine or charge interest rates based upon LIBOR, or any Governmental
Authority has imposed material restrictions on the authority of Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by Lender to Borrower Agent, any obligation of
Lender to make or continue LIBOR Loans or to convert Base Rate Loans to LIBOR
Loans shall be suspended until Lender notifies Borrower Agent that the
circumstances giving rise to such determination no longer exist. Upon delivery
of such notice, Borrowers shall prepay or, if applicable, convert all LIBOR
Loans to Base Rate Loans, either on the last day of the Interest Period
therefor, if Lender may lawfully continue to maintain LIBOR Loans to such day,
or immediately, if Lender may not lawfully continue to maintain LIBOR Loans.
Upon any such prepayment or conversion, Borrowers shall also pay accrued
interest on the amount so prepaid or converted.

3.6. Inability to Determine Rates. If Lender notifies Borrower Agent in
connection with a Borrowing, conversion or continuation of, a LIBOR Loan that
for any reason Lender determines that (a) Dollar deposits are not being offered
to banks in the London interbank Eurodollar market for the applicable Loan
amount or Interest Period, or (b) adequate and reasonable means do not exist for
determining LIBOR for the applicable Interest Period, or (c) LIBOR for the
applicable Interest Period does not adequately and fairly reflect the cost to
Lender of funding the Loan, then Lender’s obligation to make or maintain LIBOR
Loans and utilization of the LIBOR component in determining Base Rate shall be
suspended until Lender revokes the notice. Upon receipt of such notice, Borrower
Agent may revoke any pending request for a Borrowing, conversion or continuation
of a LIBOR Loan or, failing that, will be deemed to have submitted a request for
a Base Rate Loan.

3.7. Increased Costs; Capital Adequacy.

3.7.1. Increased Costs Generally. If any Change in Law shall:

(a) impose, modify or deem applicable any reserve, liquidity, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
Lender (except any reserve requirement reflected in LIBOR);

(b) subject any Recipient to Taxes (other than (i) Indemnified Taxes, (ii) Taxes
described in clause (b) of the definition of Excluded Taxes, or (iii) Connection
Income Taxes) with respect to any Loan, Letter of Credit, Commitment or other
obligations, or its deposits, reserves, other liabilities or capital
attributable thereto; or

(c) impose on Lender or any interbank market any other condition, cost or
expense affecting any Loan, Letter of Credit, Commitment or Loan Document;

and the result in clause (a), (b) or (c) above shall be to increase the cost to
Lender of making or maintaining any Loan or Commitment, or converting to or
continuing any interest option for a Loan, or to increase the cost to Lender of
issuing or maintaining any Letter of Credit (or of maintaining its obligation to
issue a Letter of Credit), or to reduce the amount of any sum received or
receivable by Lender hereunder (whether of principal, interest or any other
amount) then, upon request by Lender, Borrowers will pay to Lender such
additional amount or amounts as will compensate Lender for such additional costs
incurred or reduction suffered.

3.7.2. Capital Requirements. If Lender determines that a Change in Law affecting
Lender or its holding company regarding capital or liquidity requirements has or
would have the effect of reducing the rate of return on Lender’s or such holding
company’s capital as a consequence of this Agreement, Commitments, Loans or

 

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Letters of Credit to a level below that which Lender or such holding company
could have achieved but for such Change in Law (taking into consideration its
policies with respect to capital adequacy), then from time to time Borrowers
will pay to Lender such additional amounts as will compensate it or its holding
company for the reduction suffered.

3.7.3. LIBOR Loan Reserves. If Lender is required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits, Borrowers shall pay additional interest to Lender on each LIBOR
Loan equal to the costs of such reserves allocated to the Loan by Lender (as
determined by it in good faith, which determination shall be conclusive). The
additional interest shall be due and payable on each interest payment date for
the Loan; provided, however, that if Lender notifies Borrowers of the additional
interest less than 10 days prior to the interest payment date, then the
additional interest shall be payable 10 days after Borrowers’ receipt of the
notice.

3.7.4. Compensation. Failure or delay on the part of Lender to demand
compensation pursuant to this Section shall not constitute a waiver of its right
to demand such compensation, but Borrowers shall not be required to compensate
Lender for any increased costs or reductions suffered more than nine months
(plus any period of retroactivity of the Change in Law giving rise to the
demand) prior to the date that Lender notifies Borrower Agent of the applicable
Change in Law and of Lender’s intention to claim compensation therefor.

3.8. Mitigation. If Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if Borrowers are required to pay any
Indemnified Taxes or additional amounts under Section 5.9, then at the request
of Borrower Agent, Lender shall use reasonable efforts to designate a different
lending office or to assign its rights and obligations hereunder to another of
its offices, branches or Affiliates, if, in the judgment of Lender, such
designation or assignment (a) would eliminate the need for such notice or reduce
amounts payable or to be withheld in the future, as applicable; and (b) would
not subject Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to it or unlawful. Borrowers shall pay all reasonable costs
and expenses incurred by Lender in connection with any such designation or
assignment.

3.9. Funding Losses. If for any reason (a) any Borrowing, conversion or
continuation of, a LIBOR Loan does not occur on the date specified therefor in a
Notice of Borrowing or Notice of Conversion/Continuation (whether or not
withdrawn), (b) any repayment or conversion of a LIBOR Loan occurs on a day
other than the end of its Interest Period, or (c) Borrowers fail to repay a
LIBOR Loan when required hereunder, then Borrowers shall pay to Lender all
resulting losses and expenses, including loss of anticipated profits and any
loss, expense or fee arising from redeployment of funds or termination of match
fundings. For purposes of calculating amounts payable under this Section, Lender
shall be deemed to have funded a LIBOR Loan by a matching deposit or other
borrowing in the London interbank market for a comparable amount and period,
whether or not the Loan was in fact so funded.

3.10. Maximum Interest. Notwithstanding anything to the contrary contained in
any Loan Document, the interest paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by applicable law (“maximum rate”). If Lender shall receive interest in an
amount that exceeds the maximum rate, the excess interest shall be applied to
the principal of the Obligations or, if it exceeds such unpaid principal,
refunded to Borrowers. In determining whether the interest contracted for,
charged or received by Lender exceeds the maximum rate, Lender 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.

 

SECTION 4. LOAN ADMINISTRATION

4.1. Manner of Borrowing and Funding Revolver Loans.

4.1.1. Notice of Borrowing.

(a) Whenever Borrowers desire funding of a Revolver Loan, Borrower Agent shall
give Lender a Notice of Borrowing. Such notice must be received by Lender by
11:00 a.m. (i) on the requested funding date for a Base Rate Loan, and (ii) at
least two (2) Business Days prior to the requested funding date for a LIBOR
Loan. Notices received after such time shall be deemed received on the next
Business Day. Each Notice of Borrowing shall be irrevocable and shall specify
(A) the amount of the Borrowing, (B) the requested funding date

 

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(which must be a Business Day), (C) whether the Borrowing is to be made as a
Base Rate Loan or LIBOR Loan, and (D) in the case of a LIBOR Loan, the
applicable Interest Period (which shall be deemed to be thirty (30) days if not
specified).

(b) Unless payment is otherwise made by Borrowers, the becoming due of any
Obligations (whether principal, interest, fees or other charges, including
Extraordinary Expenses, LC Obligations, Cash Collateral and Bank Product Debt)
shall be deemed to be a request for a Base Rate Revolver Loan on the due date in
the amount due and the Loan proceeds shall be disbursed as direct payment of
such relevant Obligation. In addition, Lender may, at its option, charge such
amount against any operating, investment or other account of a Borrower
maintained with Lender or any of its Affiliates.

(c) The Obligors shall establish and maintain controlled disbursement accounts
with Lender or any of its Affiliates. The parties agree that presentation for
payment in the account of a Payment Item when there are insufficient funds to
cover it shall be deemed to be a request for a Base Rate Revolver Loan on the
presentation date, in the amount of the Payment Item. Proceeds of any Loan may
be disbursed directly to any controlled disbursement accounts.

4.1.2. Notices. Borrowers may request, convert or continue Loans, select
interest rates, and transfer funds based on telephonic or e-mailed instructions
to Lender. Borrowers shall confirm each such request by prompt delivery to
Lender of a Notice of Borrowing or Notice of Conversion/Continuation, if
applicable, but if it differs materially from the action taken by Lender, the
records of Lender shall govern. Lender shall not have any liability for any loss
suffered by a Borrower as a result of Lender acting upon its understanding of
telephonic or e-mailed instructions from a person believed in good faith to be a
person authorized to give such instructions on a Borrower’s behalf.

4.2. Number and Amount of LIBOR Loans; Determination of Rate. Each Borrowing of
LIBOR Loans when made shall be in a minimum amount of $500,000, plus any
increment of $100,000 in excess thereof. No more than five (5) Borrowings of
LIBOR Loans may be outstanding at any time, and all LIBOR Loans having the same
length and beginning date of their Interest Periods shall be aggregated together
and considered one Borrowing for this purpose. Upon determining LIBOR for any
Interest Period requested by Borrowers, Lender shall promptly notify Borrowers
thereof by telephone or electronically and, if requested by Borrowers, shall
confirm any telephonic notice in writing.

4.3. Borrower Agent. Each Obligor hereby designates RLT as its representative
and agent (in such capacities, “Borrower Agent”) for all purposes under the Loan
Documents, including requests for and receipts of Loans and Letters of Credit,
designation of interest rates, delivery or receipt of communications, delivery
of Borrowing Base and financial information and reports, payment of Obligations,
requests for waivers, amendments or other accommodations, actions under the Loan
Documents (including in respect of compliance with covenants), and all other
dealings with Lender. Borrower Agent hereby accepts such appointment. Lender
shall be entitled to rely upon, and shall be fully protected in relying upon,
any notice or communication (including any Notice of Borrowing) delivered by
Borrower Agent on behalf of any Obligor. Lender may give any notice or
communication with an Obligor hereunder to Borrower Agent on behalf of such
Obligor. Lender shall have the right, in its discretion, to deal exclusively
with Borrower Agent for all purposes under the Loan Documents. Each Obligor
agrees that any notice, election, communication, delivery, representation,
agreement, action or undertaking on its behalf by Borrower Agent shall be
binding upon and enforceable against it.

4.4. One Obligation. The Loans, LC Obligations and other Obligations shall
constitute one general obligation of Obligors and are secured by Lender’s Lien
on all Collateral; provided, however, that Lender shall be deemed to be a
creditor of, and the holder of a separate claim against, each Obligor to the
extent of any Obligations jointly or severally owed by such Obligor.

4.5. Effect of Termination. On the effective date of the termination of the
Revolver Commitment, the Obligations shall be immediately due and payable, and
each Secured Party may terminate its Bank Products. Until Full Payment of the
Obligations, all undertakings of Obligors contained in the Loan Documents shall
continue, and Lender shall retain its Liens in the Collateral and all of its
rights and remedies under the Loan Documents. Notwithstanding Full Payment of
the Obligations, Lender shall not be required to terminate its Liens in any
Collateral unless, with respect to any damages Lender may incur as a result of
the dishonor or return of Payment Items applied to Obligations, any obligations
that may thereafter arise with respect to Bank Products, and any

 

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Obligations that may thereafter arise under Section 11.3 hereof, Lender receives
(a) a written agreement, executed by Obligors, indemnifying Lender and its
Affiliates from any such damages; or (b) such Cash Collateral as Lender, in its
reasonable discretion, deems necessary to protect against any such damages.
Sections 3.4, 3.6, 3.7, 3.9, 5.6, 5.9, 11.3, this Section, and each indemnity or
waiver given by an Obligor in any Loan Document, shall survive Full Payment of
the Obligations.

 

SECTION 5. PAYMENTS

5.1. General Payment Provisions. All payments of Obligations shall be made in
Dollars, without offset, counterclaim or defense of any kind, free and clear of
(and without deduction for) any Taxes, and in immediately available funds, not
later than 12:00 noon on the due date. Any payment after such time shall be
deemed made on the next Business Day. Any payment of a LIBOR Loan prior to the
end of its Interest Period shall be accompanied by all amounts due under
Section 3.9. Obligors agree that Lender shall have the continuing, exclusive
right to apply and reapply payments and proceeds of Collateral against
Obligations, in such manner as Lender deems advisable, but whenever possible,
any prepayment of Loans shall be applied first to Base Rate Loans and then to
LIBOR Loans.

5.2. Repayment of Revolver Loans. Revolver Loans shall be due and payable in
full on the Revolver Termination Date, unless payment is sooner required
hereunder. Revolver Loans may be prepaid from time to time, without penalty or
premium. If an Overadvance exists at any time, Borrowers shall, on the sooner of
Lender’s demand or the first Business Day after any Borrower has knowledge
thereof, repay Revolver Loans in an amount sufficient to reduce Revolver Usage
to the Borrowing Base. If any asset disposition includes the disposition of
Accounts or Inventory, Borrowers shall apply Net Proceeds to repay Revolver
Loans equal to the greater of (a) the net book value of such Accounts and
Inventory, or (b) the reduction in Borrowing Base resulting from the
disposition.

5.3. Curative Equity. Within 1 Business Day of the date of receipt by Borrower
of the proceeds of any Curative Equity pursuant to Section 10.6, Borrower shall
prepay the outstanding principal of the Obligations in accordance with
Section 5.1 in an amount equal to 100% of such proceeds.

5.4. Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Obligors as provided in
the Loan Documents or, if no payment date is specified, within ten (10) Business
Days of demand therefor.

5.5. Dominion Account. Obligors shall maintain Dominion Accounts pursuant to
lockbox or other arrangements reasonably acceptable to Lender. Obligors shall
obtain an agreement (in form and substance reasonably satisfactory to Lender)
from each lockbox servicer and Dominion Account bank, establishing Lender’s
control over and Lien in the lockbox or Dominion Account, requiring immediate
deposit of all remittances received in the lockbox to a Dominion Account, and
waiving offset rights of such servicer or bank, except for customary
administrative charges. If a Dominion Account is not maintained with Lender,
Lender may require immediate transfer of all funds in such account to a Dominion
Account maintained with Lender. Lender assumes no responsibility to Obligors for
any lockbox arrangement or Dominion Account, including any claim of accord and
satisfaction or release with respect to any Payment Items accepted by any bank.
Obligors shall request in writing and otherwise take all necessary steps to
ensure that all payments on Accounts or otherwise relating to Collateral are
made directly to a Dominion Account (or a lockbox relating to a Dominion
Account). If any Obligor receives cash or Payment Items with respect to any
Collateral, it shall hold same in trust for Lender and promptly (not later than
the next Business Day) deposit same into a Dominion Account.

5.6. Marshaling; Payments Set Aside. Lender shall have no obligation to marshal
any assets in favor of any Obligor or against any Obligations. If any payment by
or on behalf of Borrowers is made to Lender, or Lender exercises a right of
setoff, and any of such payment or setoff is subsequently invalidated, declared
to be fraudulent or preferential, set aside or required (including pursuant to
any settlement entered into by Lender in its reasonable discretion) to be repaid
to a trustee, receiver or any other Person, then the Obligation originally
intended to be satisfied, and all Liens, rights and remedies relating thereto,
shall be revived and continued in full force and effect as if such payment or
setoff had not occurred.

 

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5.7. Application of Payments.

5.7.1. Dominion Account. The ledger balance in the main Dominion Account as of
the end of a Business Day shall be applied to the Obligations at the beginning
of the next Business Day. If, a credit balance results from such application, it
shall not accrue interest in favor of Borrowers and shall be made available to
Borrowers as long as no Default or Event of Default exists. Notwithstanding
anything herein to the contrary, monies and collateral proceeds obtained from an
Obligor shall not be applied to repayment of its Excluded Swap Obligations.

5.7.2. Insurance and Condemnation Proceeds. Any proceeds of insurance (other
than proceeds from workers’ compensation or D&O insurance) and any awards
arising from condemnation of any Collateral shall be paid to Lender. Any such
proceeds or awards that relate to Inventory shall be applied to payment of the
Revolver Loans, and then to other Obligations.

5.7.3. Reinvestment of Proceeds. If requested by Borrowers in writing within
thirty (30) days after Lender’s receipt of any insurance proceeds or
condemnation awards relating to any loss or destruction of Equipment, Borrowers
may use such proceeds or awards to repair or replace such Equipment (and until
so used, the proceeds shall be held by Lender as Cash Collateral) as long as
(i) no Default or Event of Default exists; (ii) such repair or replacement is
promptly undertaken and concluded, in accordance with plans satisfactory to
Lender; (iii) the repaired or replaced Property is free of Liens, other than
Permitted Liens that are not Purchase Money Liens; (iv) Borrowers comply with
disbursement procedures for such repair or replacement as Lender may reasonably
require; and (v) the aggregate amount of such proceeds or awards requested to be
used by Borrowers from any single casualty or condemnation does not exceed
$250,000.

5.8. Account Stated. Lender shall maintain, in accordance with customary
practices, loan account(s) evidencing the Debt of Obligors hereunder. Any
failure of Lender to record anything in a loan account, or any error in doing
so, shall not limit or otherwise affect the obligation of Obligors to pay any
amount owing hereunder. Entries made in a loan account shall constitute
presumptive evidence of the information contained therein. If any information
contained in a loan account is provided to or inspected by any Person, the
information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies Lender in
writing within thirty (30) days after receipt or inspection that specific
information is subject to dispute.

5.9. Taxes.

5.9.1. Payments Free of Taxes; Obligation to Withhold; Tax Payment.

(a) All payments of Obligations by Obligors shall be made without deduction or
withholding for any Taxes, except as required by applicable law. If applicable
law (as determined by Lender in its reasonable discretion) requires the
deduction or withholding of any Tax from any such payment by a Recipient or
Obligor, then the Recipient or Obligor shall be entitled to make such deduction
or withholding based on information and documentation provided pursuant to this
Section.

(b) If a Recipient or Obligor is required by the Code to withhold or deduct
Taxes, including backup withholding and withholding taxes, from any payment,
then the Recipient shall pay the full amount that it determines is to be
withheld or deducted to the relevant Governmental Authority pursuant to the
Code. If a Recipient or Obligor is required by any applicable law other than the
Code to withhold or deduct Taxes from any payment, then the Recipient or
Obligor, to the extent required by applicable law, shall timely pay the full
amount to be withheld or deducted to the relevant Governmental Authority. In
each case, to the extent the withholding or deduction is made on account of
Indemnified Taxes, the sum payable by the applicable Obligor shall be increased
as necessary so that the Recipient receives an amount equal to the sum it would
have received had no such withholding or deduction been made.

(c) Without limiting the foregoing, Obligors shall timely pay all Other Taxes to
the relevant Governmental Authority in accordance with applicable law or, at
Lender’s option, timely reimburse Lender for payment thereof.

5.9.2. Tax Indemnification. Obligors shall indemnify and hold harmless, on a
joint and several basis, each Recipient against any Indemnified Taxes (including
those imposed or asserted on or attributable to amounts payable under this
Section) payable or paid by a Recipient or required to be withheld or deducted
from a

 

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payment to a Recipient, and any penalties, interest and 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. Obligors shall make payment within ten (10) Business Days after
demand for any amount or liability payable under this Section. A certificate
delivered to Obligors by Lender (for itself or on behalf of a Recipient) as to
the amount of such payment or liability, shall be conclusive absent manifest
error.

5.9.3. Evidence of Payments. If Lender or an Obligor pays any Taxes pursuant to
this Section, then upon request, Lender or Borrower Agent, as applicable, shall
deliver to the other a copy of a receipt issued by the appropriate Governmental
Authority evidencing the payment, a copy of any return required by applicable
law to report the payment, or other evidence of payment reasonably satisfactory
to the requesting party.

5.9.4. Treatment of Certain Refunds. If Lender determines in its discretion that
it or another Recipient has received a refund of any Taxes that were indemnified
by Obligors or with respect to which a Borrower paid additional amounts pursuant
to this Section, Lender shall pay or shall cause the other Recipient to pay to
Obligors the amount of such refund (but only to the extent of indemnity payments
made, or additional amounts paid, by Obligors with respect to the Taxes giving
rise to the refund), net of all out-of-pocket expenses (including Taxes)
incurred by the Recipient and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Obligors
shall, upon request by Lender, repay to the Recipient any refund amount so paid
over to Obligors (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) if the Recipient is required to repay such
refund to the Governmental Authority. Notwithstanding anything herein to the
contrary, no Recipient shall be required to pay any amount to Obligors if such
payment would place the Recipient in a less favorable net after-Tax position
than it 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. In no event shall any Recipient be required to make its tax
returns (or any other information relating to its taxes that it deems
confidential) available to any Obligor or other Person.

5.9.5. Status of Lender. If Lender is entitled to an exemption from or reduction
of withholding Tax with respect to payments of Obligations, it shall deliver to
Obligors properly completed and executed documentation reasonably requested by
Obligors as will permit such payments to be made without or at a reduced rate of
withholding. In addition, Lender, if reasonably requested by Obligors, shall
deliver such other documentation prescribed by applicable law as is necessary to
enable Obligors to determine whether Lender is subject to backup withholding or
information reporting requirements. Notwithstanding the foregoing, such
documentation shall not be required if Lender believes delivery of the
documentation would subject it to any material unreimbursed cost or expense or
would materially prejudice its legal or commercial position.

5.9.6. Documentation. Without limiting the foregoing, Lender shall deliver to
Borrowers, from time to time upon reasonable request, executed originals of IRS
Form W-9 or W-8BEN, certifying that Lender is exempt from U.S. federal backup
withholding Tax. If payment of any Obligation to Lender would be subject to U.S.
federal withholding Tax imposed by FATCA if 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), Lender shall deliver to Borrowers at
the time(s) prescribed by law and otherwise as reasonably requested by Borrowers
such documentation prescribed by applicable law (including
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by Borrowers as may be necessary for them to comply with
their obligations under FATCA and to determine that Lender has complied with its
obligations under FATCA or to determine the amount to deduct and withhold from
such payment. Solely for purposes of the preceding sentence, “FATCA” shall
include any amendments made to FATCA after the date hereof. If any form or
certification delivered by Lender pursuant to this Section expires or becomes
obsolete or inaccurate in any respect, Lender shall update the form or
certification or notify Borrowers in writing of its inability to do so.

5.9.7. Survival. Each party’s obligations under this Section 5.9 shall survive
any assignment by Lender of rights or obligations hereunder, termination of the
Commitments, and any repayment, satisfaction, discharge or Full Payment of any
Obligations, and shall bind any assignee.

5.10. Nature and Extent of Each Obligor’s Liability.

5.10.1. Joint and Several Liability. Each Obligor agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Lender
the prompt payment and performance of, all Obligations,

 

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except its Excluded Swap Obligations. Each Obligor agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and
performance and not of collection, that such obligations shall not be discharged
until Full Payment of the Obligations, and that such obligations are absolute
and unconditional, irrespective of (a) the genuineness, validity, regularity,
enforceability, subordination or any future modification of, or change in, any
Obligations or Loan Document, or any other document, instrument or agreement to
which any Obligor is or may become a party or be bound; (b) the absence of any
action to enforce this Agreement (including this Section) or any other Loan
Document, or any waiver, consent or indulgence of any kind by Lender with
respect thereto; (c) the existence, value or condition of, or failure to perfect
a Lien or to preserve rights against, any security or guaranty for any
Obligations or any action, or the absence of any action, by Lender in respect
thereof (including the release of any security or guaranty); (d) the insolvency
of any Obligor; (e) any election by Lender in an Insolvency Proceeding for the
application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or
grant of a Lien by any other Obligor, as debtor-in-possession under Section 364
of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of
Lender against any Obligor for the repayment of any Obligations under
Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, except Full Payment of the Obligations.

5.10.2. Waivers.

(a) Each Obligor expressly waives all rights that it may have now or in the
future under any statute, at common law, in equity or otherwise, to compel
Lender to marshal assets or to proceed against any Obligor, other Person or
security for the payment or performance of any Obligations before, or as a
condition to, proceeding against such Obligor. Each Obligor waives all defenses
available to a surety, guarantor or accommodation co-obligor other than Full
Payment of Obligations and waives, to the maximum extent permitted by law, any
right to revoke any guaranty of Obligations as long as it is a Obligor. It is
agreed among each Obligor and Lender that the provisions of this Section 5.10
are of the essence of the transaction contemplated by the Loan Documents and
that, but for such provisions, Lender would decline to make Loans and issue
Letters of Credit. Each Obligor acknowledges that its guaranty pursuant to this
Section is necessary to the conduct and promotion of its business, and can be
expected to benefit such business.

(b) Lender may, in its discretion, pursue such rights and remedies as it deems
appropriate, including realization upon Collateral or any Real Estate by
judicial foreclosure or non-judicial sale or enforcement, without affecting any
rights and remedies under this Section 5.10. If, in taking any action in
connection with the exercise of any rights or remedies, Lender shall forfeit any
other rights or remedies, including the right to enter a deficiency judgment
against any Obligor or other Person, whether because of any applicable laws
pertaining to “election of remedies” or otherwise, each Obligor consents to such
action and waives any claim based upon it, even if the action may result in loss
of any rights of subrogation that any Obligor might otherwise have had. Any
election of remedies that results in denial or impairment of the right of Lender
to seek a deficiency judgment against any Obligor shall not impair any other
Obligor’s obligation to pay the full amount of the Obligations. Each Obligor
waives all rights and defenses arising out of an election of remedies, such as
non-judicial foreclosure with respect to any security for Obligations, even
though that election of remedies destroys such Obligor’s rights of subrogation
against any other Person. Lender may bid Obligations, in whole or part, at any
foreclosure, trustee or other sale, including any private sale, and the amount
of such bid need not be paid by Lender but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether Lender
or any other Person is the successful bidder, shall be conclusively deemed to be
the fair market value of the Collateral, and the difference between such bid
amount and the remaining balance of the Obligations shall be conclusively deemed
to be the amount of the Obligations guaranteed under this Section 5.10,
notwithstanding that any present or future law or court decision may have the
effect of reducing the amount of any deficiency claim to which Lender might
otherwise be entitled but for such bidding at any such sale.

5.10.3. Extent of Liability; Contribution.

(a) Notwithstanding anything herein to the contrary, each Obligor’s liability
under this Section 5.10 shall not exceed the greater of (i) all amounts for
which such Obligor is primarily liable, as described in clause (c) below, and
(ii) such Obligor’s Allocable Amount.

(b) If any Obligor makes a payment under this Section 5.10 of any Obligations
(other than amounts for which such Obligor is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments previously or
concurrently made by any other Obligor, exceeds the amount that such Obligor

 

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would otherwise have paid if each Obligor had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such Obligor’s
Allocable Amount bore to the total Allocable Amounts of all Obligors, then such
Obligor shall be entitled to receive contribution and indemnification payments
from, and to be reimbursed by, each other Obligor for the amount of such excess,
ratably based on their respective Allocable Amounts in effect immediately prior
to such Guarantor Payment. The “Allocable Amount” for any Obligor shall be the
maximum amount that could then be recovered from such Obligor under this
Section 5.10 without rendering such payment voidable under Section 548 of the
Bankruptcy Code or under any applicable state fraudulent transfer or conveyance
act, or similar statute or common law.

(c) Section 5.10.3(a) shall not limit the liability of any Obligor to pay or
guarantee Loans made directly or indirectly to it (including Loans advanced
hereunder to any other Person and then re-loaned or otherwise transferred to, or
for the benefit of, such Obligor), LC Obligations relating to Letters of Credit
issued to support its business, Bank Products incurred to support its business,
and all accrued interest, fees, expenses and other related Obligations with
respect thereto, for which such Obligor shall be primarily liable for all
purposes hereunder.

(d) Each Obligor that is a Qualified ECP when its guaranty of or grant of Lien
as security for a Swap Obligation becomes effective hereby jointly and
severally, absolutely, unconditionally and irrevocably undertakes to provide
such funds or other support to each Specified Obligor with respect to such Swap
Obligation as may be needed by such Specified Obligor from time to time to honor
all of its obligations under the Loan Documents in respect of such Swap
Obligation (but, in each case, only up to the maximum amount of such liability
that can be hereby incurred without rendering such Qualified ECP’s obligations
and undertakings under this Section 5.10 voidable under any applicable
fraudulent transfer or conveyance act). The obligations and undertakings of each
Qualified ECP under this Section shall remain in full force and effect until
Full Payment of the Obligations. Each Obligor intends this Section to
constitute, and this Section shall be deemed to constitute, a guarantee of the
obligations of, and a “keepwell, support or other agreement” for the benefit of,
each Obligor for all purposes of the Commodity Exchange Act.

5.10.4. Joint Enterprise. Each Obligor has requested that Lender make this
credit facility available to Obligors on a combined basis, in order to finance
Obligors’ business most efficiently and economically. Obligors’ business is a
mutual and collective enterprise, and the successful operation of each Obligor
is dependent upon the successful performance of the integrated group. Obligors
believe that consolidation of their credit facility will enhance the borrowing
power of each Obligor and ease administration of the facility, all to their
mutual advantage. Obligors acknowledge that Lender’s willingness to extend
credit and to administer the Collateral on a combined basis hereunder is done
solely as an accommodation to Obligors and at Obligors’ request.

5.10.5. Subordination. Each Obligor hereby subordinates any claims, including
any rights at law or in equity to payment, subrogation, reimbursement,
exoneration, contribution, indemnification or set off, that it may have at any
time against any other Obligor, howsoever arising, to the Full Payment of its
Obligations.

 

SECTION 6. CONDITIONS PRECEDENT

6.1. Conditions Precedent to Initial Loans. In addition to the conditions set
forth in Section 6.2, Lender shall not be required to fund any requested Loan,
issue any Letter of Credit or otherwise extend credit to Obligors hereunder,
until the date (“Closing Date”) that each of the conditions precedent set forth
on Exhibit C has been satisfied. The acceptance by Borrowers of any Loans made
or Letters of Credit issued on the Closing Date shall be deemed to be a
representation and warranty made by Borrowers to the effect that all of the
conditions precedent to the making of such Loans or the issuance of such Letters
of Credit have been satisfied (other than such conditions that are subject to
the satisfaction of Lender), with the same effect as delivery to Lender of a
certificate signed by a Senior Officer of Borrowers, dated the Closing Date, to
such effect.

6.2. Conditions Precedent to All Credit Extensions. Lender shall not be required
to fund any Loans, issue any Letters of Credit, or grant any other accommodation
to or for the benefit of Obligors, unless the following conditions are
satisfied:

(a) No Default or Event of Default shall exist at the time of, or result from,
such funding, issuance or grant;

 

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(b) The representations and warranties of each Obligor in the Loan Documents
shall be true and correct on the date of, and upon giving effect to, such
funding, issuance or grant (except for representations and warranties that
expressly relate to an earlier date);

(c) All conditions precedent in any other Loan Document shall be satisfied;

(d) No Material Adverse Effect has occurred;

(e) With respect to issuance of a Letter of Credit, the LC Conditions shall be
satisfied; and

(f) No Overadvance shall result from such funding or issuance.

Each request (or deemed request) by Obligors for funding of a Loan, issuance of
a Letter of Credit or grant of an accommodation shall constitute a
representation by Obligors that the foregoing conditions are satisfied on the
date of such request and on the date of such funding, issuance or grant. As an
additional condition to any funding, issuance or grant, Lender shall have
received such other information, documents, instruments and agreements as it
deems appropriate in connection therewith.

 

SECTION 7. COLLATERAL

7.1. Grant of Security Interest. To secure the prompt payment and performance of
the Obligations, each Obligor hereby grants to Lender, on behalf of itself and
the other Secured Parties, a continuing security interest in and Lien upon all
personal Property of such Obligor, including all of the following Property,
whether now owned or hereafter acquired, and wherever located: (a) all Accounts;
(b) all Chattel Paper, including Electronic Chattel Paper; (c) all Commercial
Tort Claims, including those shown on Schedule 8.1.15; (d) all Deposit Accounts;
(e) all Documents; (f) all General Intangibles, including Intellectual Property;
(g) all Goods, including Inventory, Equipment and Fixtures; (h) all Instruments;
(i) all Investment Property; (j) all Letter-of-Credit Rights; (k) all Supporting
Obligations; (l) all monies, whether or not in the possession or under the
control of Lender, or a bailee or Affiliate of Lender, including any Cash
Collateral; (m) all accessions to, substitutions for, and all replacements,
products, and cash and non-cash proceeds of the foregoing, including proceeds of
and unearned premiums with respect to insurance policies, and claims against any
Person for loss, damage or destruction of any Collateral; and (n) all books and
records (including customer lists, files, correspondence, tapes, computer
programs, print-outs and computer records) pertaining to the foregoing;
provided, that in no event shall the Collateral include more than 65% of the
voting stock of any Foreign Subsidiary.

7.2. Lien on Deposit Accounts; Cash Collateral.

7.2.1. Deposit Accounts. To further secure the prompt payment and performance of
the Obligations, each Obligor hereby grants to Lender a continuing security
interest in and Lien upon all amounts credited to any Deposit Account of such
Obligor, including sums in any blocked, lockbox, sweep or collection account.
Each Obligor hereby authorizes and directs each bank or other depository to
deliver to Lender, upon request, all balances in any Deposit Account maintained
for such Obligor, without inquiry into the authority or right of Lender to make
such request.

7.2.2. Cash Collateral. Cash Collateral may be invested, at Lender’s reasonable
discretion (and with the consent of Obligors, as long as no Event of Default
exists), but Lender shall have no duty to do so, regardless of any agreement or
course of dealing with any Obligor, and shall have no responsibility for any
investment or loss. As security for its Obligations, each Obligor hereby grants
to Lender a security interest in and Lien upon all Cash Collateral held from
time to time and all proceeds thereof, whether held in a Cash Collateral Account
or otherwise. Lender may apply Cash Collateral to the payment of Obligations as
they become due, in such order as Lender may elect. Each Cash Collateral Account
and all Cash Collateral shall be under the sole dominion and control of Lender,
and no Obligor or other Person shall have any right to any Cash Collateral,
until Full Payment of the Obligations.

7.3. Reserved.

 

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7.4. Other Collateral.

7.4.1. Commercial Tort Claims. Obligors shall promptly notify Lender in writing
if any Obligor has a Commercial Tort Claim (other than, as long as no Default or
Event of Default exists, a Commercial Tort Claim for less than $100,000), shall
promptly amend Schedule 8.1.15 to include such claim, and shall take such
actions as Lender deems appropriate to subject such claim to a duly perfected,
first priority Lien in favor of Lender.

7.4.2. Certain After-Acquired Collateral. Obligors shall promptly notify Lender
in writing if, after the Closing Date, any Obligor obtains any interest in any
Collateral consisting of Deposit Accounts, Chattel Paper, Documents,
Instruments, Intellectual Property, Investment Property or Letter-of-Credit
Rights with a face amount or representing Property having a Value exceeding
$100,000 and, upon Lender’s request, shall promptly take such actions as Lender
deems appropriate to effect Lender’s duly perfected, first priority Lien upon
such Collateral, including obtaining any appropriate possession, Control
Agreement or Lien Waiver. If any Collateral is in the possession of a third
party, at Lender’s request, Obligors shall obtain an acknowledgment that such
third party holds the Collateral for the benefit of Lender.

7.5. Limitations. The Lien on Collateral granted hereunder is given as security
only and shall not subject Lender to, or in any way modify, any obligation or
liability of Obligors relating to any Collateral. In no event shall the grant of
any Lien under any Loan Document secure an Excluded Swap Obligation of the
granting Obligor.

7.6. Further Assurances; Extent of Liens. All Liens granted to Lender under the
Loan Documents are for the benefit of Secured Parties. Promptly upon request,
Obligors shall deliver such instruments, assignments, title certificates,
supplements and agreements, and shall take such actions, as Lender deems
appropriate under applicable law to evidence, perfect, preserve or protect its
Lien on any Collateral, or otherwise to give effect to the intent of this
Agreement. Each Obligor authorizes Lender to file any financing statement that
describes the Collateral as “all assets” or “all personal property” of such
Obligor, or words to similar effect, and any amendments or continuations with
respect to such financing statements, and ratifies any action taken by Lender
before the Closing Date to effect or perfect its Lien on any Collateral. Each
Obligor hereby further authorizes Agent to file filings with the United States
Patent and Trademark Office and United States Copyright Office (or any successor
office or any similar office in any other country) or other necessary documents
for the purpose of perfecting, confirming, continuing, enforcing or protecting
the security interest granted by such Obligor hereunder in any Intellectual
Property, without the signature of such Obligor, and naming such Obligor, as
debtor, and Lender, as secured party.

 

SECTION 8. REPRESENTATIONS AND WARRANTIES

8.1. General Representations and Warranties. To induce Lender to enter into this
Agreement and to make available the Commitments, Loans and Letters of Credit,
each Obligor represents and warrants that:

8.1.1. Organization and Qualification. Each Obligor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Each Obligor is duly qualified, authorized to do business and in
good standing as a foreign corporation in each jurisdiction where failure to be
so qualified could reasonably be expected to have a Material Adverse Effect.

8.1.2. Power and Authority. Each Obligor is duly authorized to execute, deliver
and perform each Loan Document to which it is a signatory. The execution,
delivery and performance of the Loan Documents have been duly authorized by all
necessary action, and do not (a) require any consent or approval of any holders
of Equity Interests of any Obligor, except those already obtained;
(b) contravene the Organic Documents of any Obligor; (c) violate or cause a
default under any applicable law or Material Contract; or (d) result in or
require the imposition of a Lien (other than a Lien in favor of Lender) on any
Obligor’s Property.

8.1.3. Enforceability. Each Loan Document is a legal, valid and binding
obligation of each Obligor party thereto, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally.

8.1.4. Capital Structure. Schedule 8.1.4 shows, for each Obligor and Subsidiary,
its name, jurisdiction of organization, authorized and issued Equity Interests,
holders of its Equity Interests, and agreements binding on such holders with
respect to such Equity Interests. Except as disclosed on Schedule 8.1.4, in the
five years preceding the Closing Date, no Obligor or Subsidiary has acquired any
substantial assets from any other

 

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Person nor been the surviving entity in a merger or combination. Each Obligor
has good title to its Equity Interests in its Subsidiaries, subject only to
Lender’s Lien, and all such Equity Interests are duly issued, fully paid and
non-assessable. Except as disclosed on Schedule 8.1.4, there are no outstanding
purchase options, warrants, subscription rights, agreements to issue or sell,
convertible interests, phantom rights or powers of attorney relating to Equity
Interests of any Obligor or Subsidiary.

8.1.5. Title to Properties; Priority of Liens. Each Obligor and Subsidiary has
good and marketable title to (or valid leasehold interests in) all of its Real
Estate, and good title to all personal Property material to the conduct of its
business, including all Property reflected in any financial statements delivered
to Lender, in each case free of Liens except Permitted Liens. Each Obligor and
Subsidiary has paid and discharged all lawful claims that, if unpaid, could
become a Lien on its Properties, other than Permitted Liens. All Liens of Lender
in the Collateral are duly perfected, first priority Liens, subject only to
Permitted Liens that are expressly allowed to have priority over Lender’s Liens.

8.1.6. Accounts. Lender may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by Borrowers with respect
thereto. Obligors warrant, with respect to each Account at the time it is shown
as an Eligible Account in a Borrowing Base Certificate, that: (a) it is genuine
and enforceable in accordance with its terms and is not evidenced by a judgment;
(b) it arises out of a completed, bona fide sale and delivery of goods or
rendition of services in the Ordinary Course of Business, and substantially in
accordance with any purchase order, contract or other document relating thereto;
(c) it is for a sum certain, maturing as stated in the invoice covering such
sale or rendition of services, a copy of which has been furnished or is
available to Lender on request; (d) it is not subject to any offset, Lien (other
than Lender’s Lien), deduction, defense, dispute, counterclaim or other adverse
condition except as arising in the Ordinary Course of Business and disclosed to
Lender; (e) no purchase order, agreement, document or applicable law restricts
assignment of the Account to Lender; and (f) no extension, compromise,
settlement, modification, credit, deduction or return has been authorized with
respect to the Account, except discounts or allowances granted in the Ordinary
Course of Business for prompt payment that are reflected on the face of the
invoice related thereto and in the reports submitted to Lender hereunder.

8.1.7. Financial Statements. The consolidated and consolidating balance sheets,
and related statements of income, cash flow and shareholders’ equity, of RLT and
Subsidiaries that have been and are hereafter delivered to Lender, are prepared
in accordance with GAAP, and fairly present the financial positions and results
of operations of RLT and Subsidiaries at the dates and for the periods
indicated. All projections delivered from time to time to Lender have been
prepared in good faith, based on reasonable assumptions in light of the
circumstances at such time. Since December 31, 2013, there has been no change in
the condition, financial or otherwise, of any RLT or Subsidiary that could
reasonably be expected to have a Material Adverse Effect. No financial statement
delivered to Lender at any time contains any untrue statement of a material
fact, nor fails to disclose any material fact necessary to make such statement
not materially misleading. The Obligors, taken as a whole, are Solvent.

8.1.8. Surety Obligations. No Obligor Subsidiary is obligated as surety or
indemnitor under any bond or other contract that assures payment or performance
of any obligation of any Person, except as permitted hereunder.

8.1.9. Taxes. Each Obligor and Subsidiary has filed all federal, state and local
tax returns and other reports that it is required by law to file (except where
on extension authorized by applicable law), and has paid, or made provision for
the payment of, all Taxes upon it, its income and its Properties that are due
and payable, except to the extent being Properly Contested. The provision for
Taxes on the books of each Obligor and Subsidiary is adequate for all years not
closed by applicable statutes, and for its current Fiscal Year.

8.1.10. Brokers. There are no brokerage commissions, finder’s fees or investment
banking fees payable in connection with any transactions contemplated by the
Loan Documents.

8.1.11. Intellectual Property. Each Obligor and Subsidiary owns or has the
lawful right to use all Intellectual Property necessary for the conduct of its
business, without conflict with any rights of others. There is no pending
Intellectual Property Claim or, to any Obligor’s knowledge, any Intellectual
Property Claim threatened in writing with respect to any Obligor, any Subsidiary
or any of their material Property (including any material Intellectual
Property). Except as disclosed on Schedule 8.1.11, no Obligor or Subsidiary pays
or owes any Royalty or other compensation to any Person with respect to any
Intellectual Property. All material Intellectual Property owned, used or
licensed by, or otherwise subject to any interests of, any Obligor or Subsidiary
is shown on Schedule 8.1.11.

 

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8.1.12. Governmental Approvals. Each Obligor and Subsidiary has, is in
compliance with, and is in good standing with respect to, all Governmental
Approvals necessary to conduct its business and to own, lease and operate its
Properties. All necessary import, export or other licenses, permits or
certificates for the import or handling of any goods or other Collateral have
been procured and are in effect, and Obligors and Subsidiaries have complied
with all foreign and domestic laws with respect to the shipment and importation
of any goods or Collateral, except where noncompliance could not reasonably be
expected to have a Material Adverse Effect.

8.1.13. Compliance with Laws. Each Obligor and Subsidiary has duly complied, and
its Properties and business operations are in compliance, with all applicable
law, except where noncompliance could not reasonably be expected to have a
Material Adverse Effect. There have been no citations, notices or orders of
material noncompliance issued to any Obligor or Subsidiary under any applicable
law. No Inventory has been produced in violation of the FLSA. Except as
disclosed on Schedule 8.1.13, no Obligor’s or Subsidiary’s past or present
operations, Real Estate or other Properties are subject to any federal, state or
local investigation to determine whether any remedial action is needed to
address any environmental pollution, hazardous material or environmental
clean-up. No Obligor or Subsidiary has received any Environmental Notice. No
Obligor or Subsidiary has any contingent liability with respect to any
Environmental Release, environmental pollution or hazardous material on any Real
Estate now or previously owned, leased or operated by it.

8.1.14. Burdensome Contracts. No Obligor or Subsidiary is party or subject to
any Restrictive Agreement, except as shown on Schedule 8.1.14. No such
Restrictive Agreement prohibits the execution, delivery or performance of any
Loan Document by an Obligor.

8.1.15. Litigation. Except as shown on Schedule 8.1.15, there are no proceedings
or investigations pending or, to any Obligor’s knowledge, threatened against any
Obligor or Subsidiary, or any of their businesses, operations, Properties,
prospects or conditions, that (a) relate to any Loan Documents or transactions
contemplated thereby; or (b) could reasonably be expected to have a Material
Adverse Effect if determined adversely to any Obligor or Subsidiary. Except as
shown on such Schedule, no Obligor has a Commercial Tort Claim (other than, as
long as no Default or Event of Default exists, a Commercial Tort Claim for less
than $100,000). No Obligor or Subsidiary is in default with respect to any
order, injunction or judgment of any Governmental Authority.

8.1.16. No Defaults. No event or circumstance has occurred or exists that
constitutes a Default or Event of Default. No Obligor or Subsidiary is in
default, and no event or circumstance has occurred or exists that with the
passage of time or giving of notice would constitute a default, under any
Material Contract or in the payment of any Borrowed Money or allow termination
of any Material Contract.

8.1.17. ERISA. Except as disclosed on Schedule 8.1.17:

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code, and other federal and state laws. Each Plan that
is intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the knowledge
of Obligors, nothing has occurred which would prevent, or cause the loss of,
such qualification. Each Obligor and ERISA Affiliate has met all applicable
requirements under the Code, ERISA and the Pension Protection Act of 2006, and
no application for a waiver of the minimum funding standards or an extension of
any amortization period has been made with respect to any Plan.

(b) There are no pending or, to the knowledge of Obligors, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan that could reasonably be expected to have a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted in or could
reasonably be expected to have a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) no Obligor or ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (iv) no Obligor or ERISA Affiliate
has incurred, or reasonably expects to incur, any

 

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liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; (v) no Obligor or ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA; and (vi) as of the most recent valuation date for any Pension
Plan or Multiemployer Plan, the funding target attainment percentage (as defined
in Section 430(d)(2) of the Code) is at least 60%, and no Obligor or ERISA
Affiliate knows of any fact or circumstance that could reasonably be expected to
cause the funding target attainment percentage for any such plan to drop below
60% as of such date.

8.1.18. Trade Relations. There exists no actual or threatened termination,
limitation or modification of any business relationship between any Obligor or
Subsidiary and any customer or supplier, or any group of customers or suppliers,
who individually or in the aggregate are material to the business of such
Obligor or Subsidiary. There exists no condition or circumstance that could
reasonably be expected to impair the ability of any Obligor or Subsidiary to
conduct its business at any time hereafter in substantially the same manner as
conducted on the Closing Date.

8.1.19. Labor Relations. No Obligor or Subsidiary is party to or bound by any
collective bargaining agreement, management agreement or consulting agreement.
There are no material grievances, disputes or controversies with any union or
other organization of any Obligor’s or Subsidiary’s employees, or, to any
Obligor’s knowledge, any asserted or threatened strikes, work stoppages or
demands for collective bargaining.

8.1.20. Payable Practices. No Obligor or Subsidiary has made any material change
in its historical accounts payable practices from those in effect on the Closing
Date.

8.1.21. Not a Regulated Entity. No Obligor is (a) an “investment company” or a
“person directly or indirectly controlled by or acting on behalf of an
investment company” within the meaning of the Investment Company Act of 1940; or
(b) subject to regulation under the Federal Power Act, the Interstate Commerce
Act, any public utilities code or any other applicable law regarding its
authority to incur Debt.

8.1.22. Margin Stock. No Obligor or Subsidiary is engaged, principally or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any Margin Stock. No Loan proceeds or Letters of
Credit will be used by Obligors to purchase or carry, or to reduce or refinance
any Debt incurred to purchase or carry, any Margin Stock or for any related
purpose governed by Regulations T, U or X of the Board of Governors.

8.1.23. OFAC. No Obligor, Subsidiary or, to the knowledge of any Obligor or
Subsidiary, any director, officer, employee, agent, affiliate or representative
thereof, is an individual or entity currently the subject of any Sanctions. No
Obligor or Subsidiary is located, organized or resident in a Designated
Jurisdiction.

8.1.24. Deposit Accounts. Schedule 9.1.9 sets forth all Deposit Accounts
maintained by Obligors, including all Dominion Accounts.

8.1.25. Business and Property of Borrowers. Upon and after the Closing Date,
Obligors do not propose to engage in any business other than the business in
which such Persons are currently engaged as of the Closing Date and activities
necessary or related to or reasonably contemplated by the conduct of the
foregoing. On the Closing Date, each Borrower will own or have the right to use
all the material Property and possess all of the material rights and consents
necessary for the conduct of the business of such Borrower.

8.1.26. Leases. Each Obligor and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, all of such material leases are valid
and subsisting and, to Obligors’ knowledge, no material default by the
applicable Obligor or its Subsidiaries exists under any of them.

8.1.27. Eligible Inventory. As to each item of Inventory that is identified by
Borrowers as Eligible Inventory, in a Borrowing Base Certificate submitted to
Lender, such Inventory is (a) of good and merchantable quality, free from known
defects, and (b) not excluded as ineligible by virtue of one or more of the
excluding criteria (other than any Lender-discretionary criteria) set forth in
the definition of Eligible Inventory.

 

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8.1.28. Location of Equipment and Inventory and Chief Executive Office. Except
as set forth in Schedule 9.1.10, the Equipment and Inventory of the Obligors is
not stored with a bailee, warehouseman, or similar party and is located only at,
or in-transit between, the locations identified on Schedule 9.1.10 (or such
other location as to which notice has been provided to Lender pursuant to
Section 9.1.10). Each Obligor’s chief executive office is at the location
identified on Schedule 9.1.10.

8.1.29. Inventory Records. Each Obligor keeps in all material respects correct
and accurate records itemizing and describing the type, quality, and quantity of
its and its Subsidiaries’ Inventory and the book value thereof.

8.1.30. Subordinated Debt. Borrowers have delivered to Lender complete and
correct copies of the DPI/Epiphany Settlement Agreement and the Aston Note,
including all schedules and exhibits thereto. No Obligor is in default in the
performance or compliance with any material provisions thereof.

8.1.31. Financing Statements and other Filings. Each Obligor represents and
warrants that the only filings, registrations and recordings necessary and
appropriate to create, preserve, protect, publish notice of and perfect the
security interest granted by each Obligor to Lender pursuant to this Agreement
(in Collateral with respect to which a security interest can be perfected by the
filing of a financing statement under the UCC) are listed on Schedule 8.1.31
hereto. Each Obligor represents and warrants that all such filings,
registrations and recordings have been delivered to Lender in completed and, to
the extent necessary or appropriate, duly executed form for filing in each
governmental, municipal or other office specified in Schedule 8.1.31.

8.2. Complete Disclosure. No Loan Document contains any untrue statement of a
material fact, nor fails to disclose any material fact necessary to make the
statements contained therein not materially misleading. There is no fact or
circumstance that any Obligor has failed to disclose to Lender in writing that
could reasonably be expected to have a Material Adverse Effect.

 

SECTION 9. COVENANTS AND CONTINUING AGREEMENTS

9.1. Affirmative Covenants. As long as any Commitment or Obligations are
outstanding, each Borrower shall, and shall cause each Subsidiary to:

9.1.1. Inspections; Appraisals.

(a) Permit Lender from time to time, subject (except when a Default or Event of
Default exists) to reasonable notice and normal business hours, to visit and
inspect the Properties of any Obligor or Subsidiary, inspect, audit and make
extracts from any Obligor’s or Subsidiary’s books and records, and discuss with
its officers, employees, agents, advisors and independent accountants such
Obligor’s or Subsidiary’s business, financial condition, assets, prospects and
results of operations. Lender shall not have any duty to any Obligor to make any
inspection, nor to share any results of any inspection, appraisal or report with
any Obligor. Obligors acknowledge that all inspections, appraisals and reports
are prepared by Lender for its purposes, and Obligors shall not be entitled to
rely upon them.

(b) Reimburse Lender for all its charges, costs and expenses in connection with:

(i) examinations of any Obligor’s books and records or any other financial or
Collateral matters as Lender deems appropriate, up to two (2) times per Loan
Year; and appraisals of Inventory, up to two (2) times per Loan Year, and

(ii) such examinations up to an additional one (1) time per Loan Year; and such
appraisals up to an additional one (1) time per Loan Year, if at any time,
Availability is less than the greater of (A) $2,000,000, and (B) 10% of the
lesser of (1) the Revolver Commitment or (2) the Borrowing Base for three
(3) consecutive Business Days; provided, however, that if an examination or
appraisal is initiated during a Default or Event of Default, all charges, costs
and expenses therefor shall be reimbursed by Obligors without regard to such
limits. Subject to and without limiting the foregoing, Obligors agree to pay
Lender’s then standard charges for examination activities, including the
standard charges of Lender’s internal examination and appraisal groups, as well
as the charges of any third party used for such purposes.

 

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9.1.2. Financial and Other Information. Keep adequate records and books of
account with respect to its business activities, in which proper entries are
made in accordance with GAAP reflecting all financial transactions; and furnish
to Lender all financial statements, reports and other items set forth on
Exhibit E no later than the time specified therein, which financial statements
may be delivered electronically pursuant to a method agreed to by Lender and
Borrowers.

9.1.3. Collateral Reporting. Provide Lender with each certificate, report or
schedule set forth on Exhibit F attached hereto no later than the times
specified therein, which reports may be delivered electronically pursuant to a
method agreed to by Lender and Borrowers.

9.1.4. Notices. Notify Lender in writing, promptly after a Obligor’s obtaining
knowledge thereof, of any of the following that affects an Obligor:

(a) the commencement or written threat of any proceeding or investigation,
whether or not covered by insurance, if an adverse determination could
reasonably be expected to have a Material Adverse Effect;

(b) any material labor dispute, strike or walkout, or the expiration of any
material labor contract;

(c) any default under or termination (but not expiration) of a Material
Contract;

(d) the existence of any Default or Event of Default;

(e) any judgment in an amount exceeding $250,000 not covered by insurance;

(f) any violation or written notice of a violation of any applicable law
(including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse
resolution could reasonably have a Material Adverse Effect;

(g) the occurrence of any ERISA Event;

(h) [reserved];

(i) the discharge of or any withdrawal or resignation by Obligors’ independent
accountants,

(j) any Intellectual Property Claim, if an adverse resolution could reasonably
be expected to have a Material Adverse Effect,

(k) any opening of a new office or place of business, at least ten (10) days
prior to such opening;

(l) such Obligor’s obtaining rights to, and filing applications for registration
of, any new Intellectual Property, or otherwise acquiring ownership of any
registered Intellectual Property (other than the acquisition by such Obligor of
the right to sell products containing the trademarks of others in the ordinary
course of such Obligor’s business);

(m) such Obligor’s becoming entitled to the benefit of any registered
Intellectual Property whether as licensee or licensor (other than commercially
available off the shelf computer programs, products or applications and such
Obligor’s right to sell products containing the trademarks of others in the
ordinary course of such Obligor’s business);

(n) such Obligor’s entering into any new Licenses with respect to the
Intellectual Property (other than commercially available off the shelf computer
programs, products or applications and such Obligor’s right to sell products
containing the trademarks of others in the ordinary course of such Obligor’s
business); or

(o) such Obligor’s knowing, or having reason to know, that any application or
registration relating to any Intellectual Property may, other than as provided
in Section 3 of the IP Assignment, become forfeited, abandoned or dedicated to
the public, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark office, the United States
Copyright Office or any court or tribunal) regarding such Obligor’s ownership
of, or the validity or enforceability of, any Intellectual Property or such
Obligor’s right to register the same or to own and maintain the same.

 

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9.1.5. Compliance with Laws. Comply with all applicable laws, including ERISA,
Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding
collection and payment of Taxes, and maintain all Governmental Approvals
necessary to the ownership of its Properties or conduct of its business, unless
failure to comply (other than failure to comply with Anti-Terrorism Laws) or
maintain could not reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, if any Environmental Release
occurs at or on any Properties of any Obligor or Subsidiary, it shall act
promptly and diligently to investigate and report to Lender and all appropriate
Governmental Authorities the extent of, and to make appropriate remedial action
to eliminate, such Environmental Release, whether or not directed to do so by
any Governmental Authority.

9.1.6. Taxes. Pay and discharge all Taxes prior to the date on which they become
delinquent or penalties attach, unless such Taxes are being Properly Contested.
If an Account of any Obligor includes a charge for any Taxes, Lender is
authorized, in its discretion, to pay the amount thereof to the proper taxing
authority for the account of such Obligor and to charge Obligors therefor;
provided, however, that Lender shall not be liable for any Taxes that may be due
from Obligors or with respect to any Collateral.

9.1.7. Insurance.

(a) Maintain insurance with respect to the Collateral, covering casualty,
hazard, theft, malicious mischief, flood and other risks, in amounts, with
endorsements and with insurers (with a Best Rating of at least A-/VII, unless
otherwise approved by Lender in its reasonable discretion) reasonably
satisfactory to Lender. All proceeds under each policy shall be payable to
Lender. From time to time upon request, Obligors shall deliver to Lender the
originals or certified copies of its insurance policies and updated flood plain
searches. For each policy, by no later than thirty (30) days after the Closing
Date, the Lender shall have received copies of satisfactory endorsements
(i) showing Lender as lender’s loss payee or additional insured as its interests
may appear; (ii) requiring thirty (30) days prior written notice to Lender in
the event of cancellation of the policy for any reason whatsoever; and
(iii) specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of any Obligor or the owner of the Property,
nor by the occupation of the premises for purposes more hazardous than are
permitted by the policy. If any Obligor fails to provide and pay for any
insurance, Lender may, at its option, but shall not be required to, procure the
insurance and charge Obligors therefor. Each Obligor agrees to deliver to
Lender, promptly as rendered, copies of all reports made to insurance companies.
While no Event of Default exists, Obligors may settle, adjust or compromise any
insurance claim, as long as the proceeds are delivered to Lender. If an Event of
Default exists, only Lender shall be authorized to settle, adjust and compromise
such claims.

(b) Without limiting clause (a) above, maintain insurance with insurers (with a
Best Rating of at least A-/VII, unless otherwise approved by Lender in its
reasonable discretion) reasonably satisfactory to Lender, (i) with respect to
the Properties and business of Obligors and Subsidiaries of such type (including
product liability, workers’ compensation, larceny, embezzlement, or other
criminal misappropriation insurance), in such amounts, and with such coverages
and deductibles as are customary for companies similarly situated; and
(ii) business interruption insurance in an amount not less than $1,000,000, with
deductibles and subject to an insurance assignment satisfactory to Lender.

9.1.8. Licenses. Keep each License affecting any Collateral (including the
manufacture, distribution or disposition of Inventory) or any other material
Property of Obligors and Subsidiaries in full force and effect and pay all
Royalties when due, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect.

9.1.9. Deposit Accounts; Depository Bank. Take all actions necessary to
establish Lender’s control of each Deposit Account (other than an (a) account
exclusively used for (i) payroll, (ii) payroll taxes, (iii) employee benefits,
or (b) an account containing not more than $50,000 at any time). Each Obligor
shall be the sole account holder of each Deposit Account and shall not allow any
other Person (other than Lender) to have control over a Deposit Account or any
Property deposited therein. Each Obligor shall promptly notify Lender of any
opening or closing of a Deposit Account and, with the consent of Lender, will
amend Schedule 9.1.9 to reflect same. Obligors also shall maintain Lender as its
principal depository bank, including for the maintenance of all operating,
collection, disbursement and other deposit accounts and for all Cash Management
Services; provided that the foregoing shall not be deemed to prohibit
Lumificient from maintaining its primary deposit account at Alerus

 

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Financial, N.A. so long such deposit account is subject to a Control Agreement
in favor of Lender by no later than September 30, 2014 or otherwise does not
contain more than $10,000 at any time, and (ii) pursuant to such Control
Agreement, all balances in such account, net of any minimum amounts required to
be maintained pursuant to the Control Agreement, shall be transferred daily to a
Dominion Account for application to the Obligations in accordance with the terms
hereof. The Borrowers shall close the deposit accounts maintained at all banks
other than Lender and Alerus Financial, N.A. not later than 90 Days after
Closing Date and shall provide the Lender with such evidence as the Lender may
reasonably require to evidence the same.

9.1.10. Other Collateral Covenants. Comply with the following additional
covenants related to Collateral:

(a) All tangible items of Collateral, other than Inventory in transit, shall at
all times be kept by Obligors at the business locations set forth in Schedule
9.1.10, except that Obligors may (a) make sales or other dispositions of
Collateral in accordance with Section 9.2.5; and (b) move Collateral to another
location in the United States, upon ten (10) Business Days’ prior written notice
to Lender.

(b) Whether or not a Default or Event of Default exists, Lender shall have the
right at any time, in the name of Lender, any designee of Lender or any Obligor,
to verify the validity, amount or any other matter relating to any Accounts of
Obligors by mail, telephone or otherwise. Obligors shall cooperate fully with
Lender in an effort to facilitate and promptly conclude any such verification
process.

(c) All expenses of protecting, storing, warehousing, insuring, handling,
maintaining and shipping any Collateral, all Taxes payable with respect to any
Collateral (including any sale thereof), and all other payments required to be
made by Lender to any Person to realize upon any Collateral, shall be borne and
paid by the applicable Obligors. Lender shall not be liable or responsible in
any way for the safekeeping of any Collateral, for any loss or damage thereto
(except for reasonable care in its custody while Collateral is in Lender’s
actual possession), for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency or other Person
whatsoever, but the same shall be at Obligors’ sole risk.

(d) Each Obligor shall defend its title to Collateral and Lender’s Liens therein
against all Persons, claims and demands, except Permitted Liens.

(e) Except for normal wear and tear and obsolescence, each Obligor shall ensure
that the Equipment is mechanically and structurally sound, and capable of
performing the functions for which it was designed, in accordance with
manufacturer specifications.

(f) Upon request, each Obligor shall provide Lender with copies of all existing
agreements, and promptly after execution thereof provide Lender with copies of
all future agreements, between an Obligor and any landlord, warehouseman,
processor, shipper, bailee or other Person that owns any premises at which any
Collateral may be kept or that otherwise may possess or handle any Collateral.

(g) Obligors shall use, store and maintain all Inventory with reasonable care
and caution, in accordance with applicable standards of any insurance and in
conformity with all applicable law, and shall make current rent payments (within
applicable grace periods provided for in leases) at all locations where any
Collateral is located.

(h) Obligors shall, at any and all times, within a reasonable time after written
request by Lender, furnish or cause to be furnished to Lender, in such manner
and in such detail as may be reasonably requested by Lender, additional
information with respect to the Collateral.

9.1.11. Lien Waivers. By no later than sixty (60) days after the Closing Date,
Lender shall have received executed Lien Waivers, in the form and substance
reasonably satisfactory to Lender, with respect to the following locations:
(i) 177 Broad Street, Stamford, CT 06901; (ii) 4500 PGA Boulevard, Palm Beach
Gardens, FL 33418; (iii) 1795 N. Lapeer Rd., Oxford, MI 48371; (iv) 79 W.
Howard, Pontiac, MI 48342; (v) 4139 Guardian Street, Simi Valley, CA 93063;
(vi) 345 Memorial Drive, Suite A, Crystal Lake, IL 60014; (vii) 1135 Hayden
Drive, Carrollton, TX 75006; and (viii) and 2205 Hutton Drive. Carrollton, TX
75006. If, notwithstanding the Obligors’ commercially reasonable efforts, the
Obligors are unable to timely obtain the foregoing Lien Waivers, such failure
shall not constitute a Default or Event of Default, and the Lender reserves the
right to institute a Rent and Charges Reserve for each such location.

 

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9.1.12. Orbian UCC Termination. By no later than forty-five (45) days after the
Closing Date, the Lender shall have received satisfactory evidence of the
termination of UCC financing statement No. 20124214369 filed on November 1, 2012
with the Secretary of State of the State of Delaware by Orbian Financial
Services II, LLC against Relume.

9.1.13. Alerus Financial Line of Credit Termination. By no later than thirty
(30) days after the Closing Date, the Lender shall have received satisfactory
evidence of the termination and cancellation of that certain Promissory Note,
dated as of May 25, 2011, in the amount of $25,000, made by Lumificient in favor
of Alerus Financial, N.A.

9.2. Negative Covenants. As long as any Commitment or Obligations are
outstanding, each Obligor shall not, and shall cause each Subsidiary not to:

9.2.1. Permitted Debt. Create, incur, guarantee or suffer to exist any Debt,
except for Permitted Debt.

9.2.2. Permitted Liens. Create or suffer to exist any Lien upon any of its
Property, except Permitted Liens.

9.2.3. Distributions; Upstream Payments. Declare or make any Distributions,
except a Distribution by a Subsidiary of an Obligor to such Obligor; or create
or suffer to exist any encumbrance or restriction on the ability of a Subsidiary
to make any Distribution to a Obligor, except for restrictions under the Loan
Documents, under applicable law or in effect on the Closing Date as shown on
Schedule 8.1.14.

9.2.4. Restricted Investments. Make any Restricted Investment.

9.2.5. Disposition of Assets. Sell, lease, license, consign, transfer or
otherwise dispose of any Property of an Obligor or a Subsidiary of an Obligor,
including a disposition of Property in connection with a sale-leaseback
transaction or synthetic lease, except (a) as long as no Default or Event of
Default exists and all Net Proceeds are remitted as required in this Agreement,
a disposition of Property of an Obligor that is (i) a sale of Inventory in the
Ordinary Course of Business; (ii) dispositions of Equipment that, in the
aggregate during any 12 month period, has a fair market or book value (whichever
is more) of $175,000 or less; or (iii) dispositions of Inventory that is
obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of
Business; (b) replacement of Equipment that is worn, damaged or obsolete with
Equipment of like function and value, if the replacement Equipment is acquired
substantially contemporaneously with such disposition and is free of Liens
except Permitted Liens; or (c) a transfer of Property by a Subsidiary or Obligor
to another Obligor.

9.2.6. Loans. Make any loans or other advances of money to any Person, except
advances to an officer, director, or employee for salary, travel expenses,
commissions and similar items in the Ordinary Course of Business.

9.2.7. Restrictions on Payment of Certain Debt. Make any payments (whether
voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or
acquisition) with respect to any:

(a) Value Lighting Earnout Payments, unless the Borrower Agent has certified to
Lender within five (5) Business Days prior to the making of such payment, that
the Value Lighting Earnout Payment Conditions have been and will continue to be
satisfied;

(b) Value Lighting Merger Agreement Subsequent Payment, unless such payment is
made in shares of capital stock of RLT as permitted by Section 1.4(b) of the
Value Lighting Merger Agreement, in effect as of the Closing Date;

(c) Tri-State Earnout Payments, unless the Borrower Agent has certified to
Lender within five (5) Business Days prior to the making of such payment, that
the Tri-State Earnout Payment Conditions have been and will continue to be
satisfied;

 

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(d) any payment under the Tri-State Agreement, other than the Tri-State
Agreement Subsequent Payment, which Tri-State Agreement Subsequent Payment may
be paid in cash on the Closing Date;

(e) Aston Debt, except that the Borrowers may:

(i) on the Closing Date, make a payment consisting of principal on the Aston
Debt and all Accrued Interest (as defined in the Aston Note) in the aggregate
amount of $3,249,000;

(ii) make regularly scheduled payments of interest on the Aston Debt so long as
before and after giving effect to such payment, no Event of Default shall have
occurred and be continuing; and

(iii) make regularly scheduled payments of principal, but not prepayments, on
the Aston Debt so long as:

(A) such payment is (1) made with the proceeds of an Equity Issuance on terms
and conditions satisfactory to the Lender, (2) made pursuant to a conversion of
all or any portion of the Aston Debt to Equity Interests in RLT on terms and
conditions satisfactory to the Lender, or (3) made with the proceeds of a
capital infusion made by Aston to RLT on terms and conditions satisfactory to
the Lender; provided that each of the (1), (2) and (3) shall be consummated
reasonably contemporaneously with the proposed payment to Aston, or

(B) the Borrower Agent has certified to Lender within five (5) Business Days
prior to the making of such payment, that the Additional Debt Principal Payment
Conditions have been and will continue to be satisfied.

(f) the DPI/Epiphany Debt, except that the Borrowers may:

(i) make regularly scheduled payments of interest on the DPI/Epiphany Debt so
long as before and after giving effect to such payment, no Event of Default
shall have occurred and be continuing; and

(ii) make regularly scheduled payments of principal, but not prepayments, on the
DPI/Epiphany Debt so long as:

(A) such payment is (1) made with the proceeds of an Equity Issuance on terms
and conditions satisfactory to the Lender, or (2) made pursuant to a conversion
of all or any portion of the DPI/Epiphany Debt in Equity Interests in RLT on
terms and conditions satisfactory to the Lender; provided that each of the
(1) and (2) shall be consummated reasonably contemporaneously with the proposed
payment to Epiphany and/or DPI, or

(B) the Borrower Agent has certified to Lender within five (5) Business Days
prior to the making of such payment, that the Additional Principal Payment
Conditions have been and will continue to be satisfied.

(g) Borrowed Money (other than the Obligations, the DPI/Epiphany Debt, and the
Aston Debt) prior to its due date under the agreements evidencing such Debt as
in effect on the Closing Date (or as amended thereafter with the written consent
of Lender);

(h) any other Subordinated Debt not referred to above, except to the extent
expressly permitted under any subordination agreement relating to such Debt (and
a Senior Officer of Borrower Agent shall certify to Lender, not less than five
(5) Business Days prior to the date of payment, that all conditions under such
agreement have been satisfied); and

(i) any cash payments to Aston pursuant to the Management Services Agreement,
provided, however, the Borrower may pay compensation to Aston with 500,000
shares of common stock of RLT as permitted by Section 2 of the Management
Services Agreement as in effect as of the Closing Date.

 

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9.2.8. Fundamental Changes. Change its name or conduct business under any
fictitious name; change its tax, charter or other organizational identification
number; change its form or state of organization; liquidate, wind up its affairs
or dissolve itself; or merge, combine or consolidate with any Person, whether in
a single transaction or in a series of related transactions, except for mergers
or consolidations of a wholly-owned Subsidiary with another wholly-owned
Subsidiary or into a Borrower.

9.2.9. Subsidiaries.

(i) Form or acquire any Subsidiary after the Closing Date except in connection
with a Permitted Acquisition and so long as, at the time that any Obligor forms
any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date pursuant to such Permitted Acquisition, within ten
(10) days of such formation or acquisition (or such later date as permitted by
Lender in its sole discretion) (a) cause such new Subsidiary to provide to
Lender a joinder to this Agreement, together with such other security agreements
(including mortgages with respect to any Real Estate owned in fee of such new
Subsidiary with a fair market value greater than $250,000), as well as
appropriate financing statements (and with respect to all property subject to a
mortgage, fixture filings), all in form and substance reasonably satisfactory to
Lender (including being sufficient to grant Lender a first priority Lien
(subject to Permitted Liens) in and to the assets of such newly formed or
acquired Subsidiary); provided, that the joinder to this Agreement, and such
other security agreements shall not be required to be provided to Lender with
respect to any Subsidiary of RLT that is a CFC if providing such agreements
would result in adverse tax consequences or the costs to the Obligors of
providing such guaranty or such security agreements are unreasonably excessive
(as determined by Lender in consultation with Borrower Agent) in relation to the
benefits to Lender of the security or guarantee afforded thereby, (b) provide,
or cause the applicable Obligor to provide, to Lender a pledge agreement (or an
addendum to this Agreement) and appropriate certificates and powers or financing
statements, pledging all of the direct or beneficial ownership interest in such
new Subsidiary in form and substance reasonably satisfactory to Lender;
provided, that only 65% of the total outstanding voting Equity Interests of any
first tier Subsidiary of RLT that is a CFC (and none of the Equity Interests of
any Subsidiary of such CFC) shall be required to be pledged if pledging a
greater amount would result in adverse tax consequences or the costs to the
Obligors of providing such pledge are unreasonably excessive (as determined by
Lender in consultation with Borrower Agent) in relation to the benefits to
Lender of the security afforded thereby (which pledge, if reasonably requested
by Lender, shall be governed by the laws of the jurisdiction of such
Subsidiary), and (c) provide to Lender all other documentation, including one or
more opinions of counsel reasonably satisfactory to Lender, which, in its
opinion, is appropriate with respect to the execution and delivery of the
applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all Real Estate owned in fee
and subject to a mortgage). Any document, agreement, or instrument executed or
issued pursuant to this Section 9.2.9 shall constitute a Loan Document.

or (ii) permit any existing Subsidiary to issue any additional Equity Interests
except directors’ qualifying shares.

9.2.10. Organic Documents. Amend, modify or otherwise change any of its Organic
Documents, except in connection with a transaction permitted under
Section 9.2.9.

9.2.11. Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than Borrowers and Subsidiaries.

9.2.12. Accounting Changes. Make any material change in accounting treatment or
reporting practices, except as required by GAAP and in accordance with
Section 1.2; or change its Fiscal Year.

9.2.13. Restrictive Agreements. Become a party to any Restrictive Agreement,
except a Restrictive Agreement (a) in effect on the Closing Date and listed on
Schedule 8.1.14; or (b) relating to secured Debt permitted hereunder, as long as
the restrictions apply only to collateral for such Debt.

9.2.14. Hedging Agreements. Enter into any Hedging Agreement, except to hedge
risks arising in the Ordinary Course of Business and not for speculative
purposes.

 

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9.2.15. Conduct of Business. Engage in any business, other than its business as
conducted on the Closing Date and any activities incidental thereto.

9.2.16. Affiliate Transactions. Enter into or be party to any transaction with
an Affiliate, except (a) transactions expressly permitted by the Loan Documents;
(b) payment of reasonable compensation to officers and employees for services
actually rendered, and payment of customary directors’ fees and indemnities;
(c) the Management Services Agreement; and (d) transactions with Affiliates in
the Ordinary Course of Business (including those consummated prior to the
Closing Date and shown on Schedule 9.2.17) so long as such transactions are upon
fair and reasonable terms fully disclosed to Lender and no less favorable than
would be obtained in a comparable arm’s-length transaction with a non-Affiliate.

9.2.17. Plans. Become party to any Multiemployer Plan or Foreign Plan, other
than any in existence on the Closing Date.

9.2.18. Amendments to Subordinated Debt and Material Contracts.

(a) Amend, supplement or otherwise modify any document, instrument or agreement
relating to any Subordinated Debt, if such modification (a) increases the
principal balance of such Debt, or increases any required payment of principal
or interest; (b) accelerates the date on which any installment of principal or
any interest is due, or adds any additional redemption, put or prepayment
provisions; (c) shortens the final maturity date or otherwise accelerates
amortization; (d) increases the interest rate; (e) increases or adds any fees or
charges; or (f) modifies any covenant in a manner or adds any representation,
covenant or default that is more onerous or restrictive in any material respect
for any Borrower or Subsidiary, or that is otherwise materially adverse to any
Borrower, any Subsidiary or Lender.

(b) Amend, supplement or otherwise modify any Material Contract if the result
thereof would have a Material Adverse Effect on any Obligor or the Lender.

9.2.19. Returns of Inventory; Affixed Equipment. Return any Inventory to a
supplier, vendor or other Person, whether for cash, credit or otherwise, unless
(a) such return is in the Ordinary Course of Business; (b) no Default, Event of
Default or Overadvance exists or would result therefrom; (c) Lender is promptly
notified if the aggregate Value of all Inventory returned in any month exceeds
$175,000; and (d) any payment received by a Obligor for a return is promptly
remitted to Lender for application to the Obligations. No Obligor shall permit
any Equipment to become affixed to real Property unless any landlord or
mortgagee delivers a Lien Waiver.

9.2.20. Acquisition, Sale and Maintenance of Inventory. Acquire or accept any
Inventory on consignment or approval, and Obligors shall take all steps to
assure that all Inventory is produced in accordance with applicable law,
including the FLSA. No Obligor shall sell any Inventory on consignment or
approval or any other basis under which the customer may return or require a
Obligor to repurchase such Inventory.

9.3. Financial Covenants. As long as any Commitment or Obligations are
outstanding, Obligors shall:

9.3.1. Fixed Charge Coverage Ratio. Maintain, a Fixed Charge Coverage Ratio,
tested as of the last day of each of the following Fiscal Quarters, as follows:

(a) for the one (1) Fiscal Quarter commencing July 1, 2014 and ending
September 30, 2014, 1.1 : 1.0;

(b) for the two (2) Fiscal Quarter period commencing July 1.2014 and ending
December 31, 2014, 1.1 : 1.0;

(c) for the three (3) Fiscal Quarter period commencing July 1, 2014 and ending
March 31, 2015, 1.1 : 1.0;

 

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(d) for the four (4) Fiscal Quarter period commencing July 1, 2014 and ending
June 30, 2015, 1.1 : 1.0; and

(e) thereafter, as of the end of each subsequent Fiscal Quarter, 1.1 : 1.0,
calculated on a trailing twelve (12) month basis.

 

SECTION 10. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

10.1. Events of Default. Each of the following shall be an “Event of Default” if
it occurs for any reason whatsoever, whether voluntary or involuntary, by
operation of law or otherwise:

(a) Any Obligor fails to pay the Obligations when due (whether at stated
maturity, on demand, upon acceleration or otherwise);

(b) Any representation, warranty or other written statement of an Obligor made
in connection with any Loan Documents or transactions contemplated thereby is
incorrect or misleading in any material respect when given;

(c) A Obligor breaches or fail to perform any covenant contained in Section 5.5,
5.7, 7.2, 7.4, 7.6, 9.1.1, 9.1.2, 9.1.3, 9.1.4(d), 9.1.7, 9.1.10, 9.2 or 9.3;

(d) An Obligor breaches or fails to perform any other covenant contained in any
Loan Documents, and such breach or failure is not cured within fifteen (15) days
after a Senior Officer of such Obligor has knowledge thereof or receives notice
thereof from Lender, whichever is sooner; provided, however, that such notice
and opportunity to cure shall not apply if the breach or failure to perform is
not capable of being cured within such period or is a willful breach by an
Obligor;

(e) A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an
Obligor or third party denies or contests the validity or enforceability of any
Loan Documents or Obligations, or the perfection or priority of any Lien granted
to Lender; or any Loan Document ceases to be in full force or effect for any
reason (other than a waiver or release by Lender);

(f) Any breach or default of an Obligor occurs under (i) any Hedging Agreement;
or (ii) any instrument or agreement to which it is a party or by which it or any
of its Properties is bound, relating to any Debt (other than the Obligations) in
excess of $250,000, if the maturity of or any payment with respect to such Debt
may be accelerated or demanded due to such breach;

(g) Any judgment or order for the payment of money is entered against an Obligor
in an amount that exceeds, individually or cumulatively with all unsatisfied
judgments or orders against all Obligors, $250,000 (net of insurance coverage
therefor that has not been denied by the insurer), unless a stay of enforcement
of such judgment or order is in effect, by reason of a pending appeal or
otherwise;

(h) A loss, theft, damage or destruction occurs with respect to any Collateral
if the amount not covered by insurance exceeds $250,000;

(i) An Obligor is enjoined, restrained or in any way prevented by any
Governmental Authority from conducting any material part of its business, which
business constitutes a material part of Obligors’ business taken as a whole; an
Obligor suffers the loss, revocation or termination of any material license,
permit, lease or agreement necessary to its business, which revocation or
termination would reasonably be expected to have a Material Adverse Effect;
there is a cessation of any material part of an Obligor’s business for a
material period of time, which cessation would reasonably be expected to have a
Material Adverse Effect; any material Collateral or Property of an Obligor is
taken or impaired through condemnation, which taking or impairment would
reasonably be expected to have a Material Adverse Effect; an Obligor agrees to
or commences any liquidation, dissolution or winding up of its affairs; or the
Obligors taken as a whole, are not Solvent;

(j) (i) An Insolvency Proceeding is commenced by an Obligor; (ii) an Obligor
makes an offer of settlement, extension or composition to its unsecured
creditors generally; (iii) a trustee is appointed to take possession of any
substantial Property of or to operate any of the business of an Obligor; or
(iv) an Insolvency

 

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Proceeding is commenced against an Obligor and the Obligor consents to
institution of the proceeding, the petition commencing the proceeding is not
timely contested by the Obligor, the petition is not dismissed within 30 days
after filing, or an order for relief is entered in the proceeding;

(k) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan
that has resulted or could reasonably be expected to result in liability of an
Obligor to a Pension Plan, Multiemployer Plan or PBGC, or that constitutes
grounds for appointment of a trustee for or termination by the PBGC of any
Pension Plan or Multiemployer Plan; an Obligor or ERISA Affiliate fails to pay
when due any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan; or any event similar to the
foregoing occurs or exists with respect to a Foreign Plan;

(l) An Obligor or any of its Senior Officers is criminally indicted or convicted
for (i) a felony committed in the conduct of the Obligor’s business, or
(ii) violating any state or federal law (including the Controlled Substances
Act, Money Laundering Control Act of 1986 and Illegal Exportation of War
Materials Act) that could lead to forfeiture of any material Property or any
Collateral; or

(m) any security interest and Lien purported to be created by this Agreement or
any Security Document shall cease to be in full force and effect, or shall cease
to give Lender the Liens, rights, powers and privileges purported to be created
and granted under such Security Documents (including a perfected first priority
security interest in and Lien on all of the Collateral thereunder (except as
otherwise expressly provided in this Agreement or in such Security Document) in
favor of Lender , or shall be asserted in writing by any Obligor not to be a
valid, perfected, first priority security interest in or Lien on the Collateral
covered thereby;

(n) any Loan Document or any material provisions thereof shall at any time and
for any reason be declared by a court of competent jurisdiction to be null and
void, or a proceeding shall be commenced by any Obligor or any Affiliate
thereof, or by any Governmental Authority, seeking to establish the invalidity
or unenforceability thereof (exclusive of questions of interpretation of any
provision thereof), or any Obligor shall repudiate or deny any portion of its
liability or obligation for the Obligations in writing;

(o) the subordination and intercreditor provisions of the documents evidencing
or governing any Debt (including, without limitation, the Intercreditor
Agreement) (collectively, the “Subordination 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 the applicable Debt (other than expressly in
accordance with the terms hereof or thereof); or (ii) any Borrower or any other
Obligor shall, directly or indirectly, disavow or contest in any manner (A) the
effectiveness, validity or enforceability of any of the Subordination
Provisions, (B) that the Subordination Provisions exist for the benefit of
Lender, or (C) that all payments of principal of or premium and interest on the
applicable Debt, or realized from the liquidation of any property of any
Obligor, shall be subject to any of the Subordination Provisions;

(p) a Change of Control occurs; or

(q) or any event occurs or condition exists that has a Material Adverse Effect.

10.2. Remedies upon Default. If an Event of Default described in Section 10.1(j)
occurs with respect to any Obligor, then to the extent permitted by applicable
law, all Obligations shall become automatically due and payable and all
Commitments shall terminate, without any action by Lender or notice of any kind.
In addition, or if any other Event of Default exists, Lender may in its
discretion do any one or more of the following from time to time:

(a) declare any Obligations immediately due and payable, whereupon they shall be
due and payable without diligence, presentment, demand, protest or notice of any
kind, all of which are hereby waived by Obligors to the fullest extent permitted
by law;

(b) terminate, reduce or condition any Commitment, or make any adjustment to the
Borrowing Base;

 

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(c) require Obligors to Cash Collateralize their LC Obligations, Bank Product
Debt and other Obligations that are contingent or not yet due and payable, and,
if Obligors fail to deposit such Cash Collateral, Lender may advance the
required Cash Collateral as Revolver Loans; and

(d) exercise any other rights or remedies afforded under any agreement, by law,
at equity or otherwise, including the rights and remedies of a secured party
under the UCC or other applicable law. Such rights and remedies include the
rights to (i) take possession of any Collateral; (ii) require Obligors to
assemble Collateral, at Obligors’ expense, and make it available to Lender at a
place designated by Lender; (iii) enter any premises where Collateral is located
and store Collateral on such premises until sold (and if the premises are owned
or leased by a Obligor, Obligors agree not to charge for such storage); and
(iv) sell or otherwise dispose of any Collateral in its then condition, or after
any further manufacturing or processing thereof, at public or private sale, with
such notice as may be required by applicable law, in lots or in bulk, at such
locations, all as Lender, in its discretion, deems advisable. Each Obligor
agrees that 10 days’ notice of any proposed sale or other disposition of
Collateral by Lender shall be reasonable, and that any sale conducted on the
internet or to a licensor of Intellectual Property shall be commercially
reasonable. Lender may conduct sales on any Obligor’s premises, without charge,
and any sales may be adjourned from time to time in accordance with applicable
law. Lender shall have the right to sell, lease or otherwise dispose of any
Collateral for cash, credit or any combination thereof, and Lender may purchase
any Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of the purchase price, may set off the amount of such price
against the Obligations. Upon the occurrence and during the continuance of an
Event of Default, Lender shall be entitled to apply any cash proceeds of
Collateral (including, without limitation, any then balance in any Dominion
Account) against the Obligations at such times and manner as Lender may
determine in its sole discretion.

10.3. License. Without limiting Lender’s rights as a holder of a Lien on
Intellectual Property hereunder, Lender is hereby granted an irrevocable,
non-exclusive license or other right to use, license or sub-license (without
payment of royalty or other compensation to any Person) any or all Intellectual
Property of Obligors, computer hardware and software, trade secrets, brochures,
customer lists, promotional and advertising materials, labels, packaging
materials and other Property, in advertising for sale, marketing, selling,
collecting, completing manufacture of, or otherwise exercising any rights or
remedies with respect to, any Collateral provided, however, the Lender shall
have no right to use any License, which by the terms of said License, prohibits
the use thereof by a Person other than the applicable Obligor. Each Obligor’s
rights and interests under Intellectual Property shall inure to Lender’s
benefit.

10.4. Setoff. At any time during an Event of Default, Lender and its Affiliates
are authorized, to the fullest extent permitted by applicable law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by Lender or such Affiliate to or for the
credit or the account of an Obligor against its Obligations, whether or not
Lender or such Affiliate shall have made any demand under this Agreement or any
other Loan Document and although such Obligations may be contingent or unmatured
or are owed to a branch or office of Lender or such Affiliate different from the
branch or office holding such deposit or obligated on such indebtedness. The
rights of Lender and each such Affiliate under this Section are in addition to
other rights and remedies (including other rights of offset) that such Person
may have.

10.5. Remedies Cumulative; No Waiver.

10.5.1. Cumulative Rights. All agreements, warranties, guaranties, indemnities
and other undertakings of Obligors under the Loan Documents are cumulative and
not in derogation of each other. The rights and remedies of Lender under the
Loan Documents are cumulative, may be exercised at any time and from time to
time, concurrently or in any order, and are not exclusive of any other rights or
remedies available by agreement, by law, at equity or otherwise. All such rights
and remedies shall continue in full force and effect until Full Payment of all
Obligations.

10.5.2. Waivers. No waiver or course of dealing shall be established by (a) the
failure or delay of Lender to require strict performance by any Obligor under
any Loan Document, or to exercise any rights or remedies with respect to
Collateral or otherwise; (b) the making of any Loan or issuance of any Letter of
Credit during a Default, Event of Default or other failure to satisfy any
conditions precedent; or (c) acceptance by Lender of any payment or performance
by an Obligor under any Loan Documents in a manner other than that specified
therein. Any failure to satisfy a financial covenant on a measurement date shall
not be cured or remedied by satisfaction of such covenant on a subsequent date.

 

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10.6. Curative Equity.

10.6.1. Subject to the limitations set forth in clause (e) below, Borrower may
cure (and shall be deemed to have cured) an Event of Default arising out of a
breach of any of the financial covenants set forth in Sections 9.3.1 and 9.3.2
(the “Specified Financial Covenants”) if it receives the cash proceeds of an
investment of Curative Equity within 10 Business Days after the applicable date
on which the Specified Financial Covenants are first required to be tested
pursuant to the terms hereof.

10.6.2. Borrower shall promptly notify Lender of its receipt of any proceeds of
Curative Equity (and shall immediately apply the same to the payment of the
Obligations in the manner specified in Section 5.3).

10.6.3. Any investment of Curative Equity shall be in immediately available
funds and, subject to the limitations set forth in Section 10.6.5 below, shall
be in an amount that is sufficient to cause Borrower to be in compliance with
the applicable Specified Financial Covenant after giving effect to such Curative
Equity.

10.6.4. Upon delivery of a certificate by Borrower to Lender as to the amount of
the proceeds of such Curative Equity and that such amount (i) has been applied
in accordance with Section 10.6.2 above, and (ii) is in an amount equal to or
greater than the amount required by Section 10.6.3 above, then any Event of
Default that occurred and is continuing from a breach of any of the Specified
Financial Covenants shall be deemed cured with no further action required by the
Lender. Prior to the date of the delivery of a certificate conforming to the
requirements of this Section, any Event of Default that has occurred as a result
of a breach of any of the Specified Financial Covenants shall be deemed to be
continuing and, as a result, the Lender shall have no obligation to make
additional Loans or otherwise extend additional credit hereunder. In the event
Borrower does not cure all financial covenant violations as provided in this
Section 10.6, the existing Event(s) of Default shall continue unless waived in
writing by the Lender.

10.6.5. Notwithstanding anything to the contrary contained in the foregoing or
this Agreement, (i) the Curative Equity contributed in any fiscal quarter shall
be no greater than the amount required to cause Borrower to be in compliance
with the Specified Financial Covenants as at the end of such fiscal quarter, and
(ii) the Curative Equity shall be disregarded for purposes of determining EBITDA
for any other financial covenant based conditions or any baskets with respect to
the covenants contained in this Agreement and there shall be no pro forma
reduction in Debt with the proceeds of any Curative Equity for determining
compliance with the Specified Financial Covenants or for determining any other
financial covenant based conditions or baskets with respect to the covenants
contained in this Agreement, in each case in the quarter in which such Curative
Equity is used.

 

SECTION 11. MISCELLANEOUS

11.1. Amendments and Waivers.

11.1.1. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Obligors, Lender, and their respective successors and assigns,
except that no Obligor shall have the right to assign its rights or delegate its
obligations under any Loan Documents.

11.1.2. Amendments and Other Modifications. No modification of any Loan
Document, including any extension or amendment of a Loan Document or any waiver
of a Default or Event of Default, shall be effective without the prior written
agreement of Lender and each Obligor party to such Loan Document; provided,
however, that only the consent of the parties to a Bank Product agreement shall
be required for any modification of such agreement. Any waiver or consent
granted by Lender shall be effective only if in writing, and only for the matter
specified.

11.2. Power of Attorney. Each Obligor hereby irrevocably constitutes and
appoints Lender (and all Persons designated by Lender) as such Obligor’s true
and lawful attorney (and agent-in-fact) for the purposes provided in this
Section. Lender, or Lender’s designee, may, without notice and in either its or
a Obligor’s name, but at the cost and expense of Obligors:

(a) Endorse a Obligor’s name on any Payment Item or other proceeds of Collateral
(including proceeds of insurance) that come into Lender’s possession or control;
and

 

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(b) During an Event of Default, (i) notify any Account Debtors of the assignment
of their Accounts, demand and enforce payment of Accounts, by legal proceedings
or otherwise, and generally exercise any rights and remedies with respect to
Accounts; (ii) settle, adjust, modify, compromise, discharge or release any
Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral
upon such terms, for such amounts and at such times as Lender deems advisable;
(iv) collect, liquidate and receive balances in Deposit Accounts, Securities
Accounts or other investment accounts, and take control, in any manner, of
proceeds of Collateral; (v) prepare, file and sign an Obligor’s name to a proof
of claim or other document in a bankruptcy of an Account Debtor, or to any
notice, assignment or satisfaction of Lien or similar document; (vi) receive,
open and dispose of mail addressed to an Obligor, and notify postal authorities
to deliver any such mail to an address designated by Lender; (vii) endorse any
Chattel Paper, Document, Instrument, bill of lading or other document or
agreement relating to any Accounts, Inventory or other Collateral; (viii) use an
Obligor’s stationery and sign its name to verifications of Accounts and notices
to Account Debtors; (ix) use information contained in any data processing,
electronic or information systems relating to Collateral; (x) make and adjust
claims under insurance policies; (xi) take any action as may be necessary or
appropriate to obtain payment under any letter of credit, banker’s acceptance or
other instrument for which any Obligor is a beneficiary; and (xii) take any
action as Lender deems appropriate to carry out the intent and purpose of this
Agreement or to fulfill any Obligor’s obligations under the Loan Documents.

11.3. Indemnity. EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE,
INCLUDING CLAIMS ASSERTED BY ANY OBLIGOR OR OTHER PERSON OR ARISING FROM THE
NEGLIGENCE OF AN INDEMNITEE, including, without limitation, any and all losses,
claims, causes of action, damages, liabilities, settlement payments, reasonable
and documented out-of-pocket costs (including the reasonable fees, charges and
disbursements of counsels for Lender and other Indemnitees) incurred by any
Indemnitee or asserted against any Indemnitee by any third party or by any
Borrower or any other Obligor arising out of, in connection with, or as a result
of (i) the execution or delivery of this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby or thereby, the performance by
the parties hereto of their respective obligations hereunder or thereunder, the
consummation of the transactions contemplated hereby or thereby, or the
administration of this Agreement and the other Loan Documents, (ii) any Loan or
Letter of Credit or the use or proposed use of the proceeds therefrom (including
any refusal by Lender to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit, any bank advising or confirming a
Letter of Credit and any other Person seeking to enforce the rights of an
Obligor, beneficiary, transferee, or assignee or Letter of Credit proceeds or
the holder of an instrument or document related to any Letter of Credit),
(iii) any actual or alleged presence or release of hazardous materials on or
from any property owned or operated by any Obligor or any of its Subsidiaries,
or any environmental liability related in any way to any Obligor or any of its
Subsidiaries, (iv) any claims of, or amounts paid by any Secured Party to, any
Person which has entered into a control agreement with any Secured Party
hereunder, or (v) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by any Borrower or any
other Obligor or any of the Obligors’ directors, shareholders or creditors, and
regardless of whether any Indemnitee is a party thereto, 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; provided that, in no event
shall any party to an Obligor have any obligation thereunder to indemnify or
hold harmless an Indemnitee with respect to a Claim to the extent determined in
a final, non-appealable judgment by a court of competent jurisdiction to result
from the gross negligence or willful misconduct of such Indemnitee.

11.4. Notices and Communications.

11.4.1. Notice Address. Subject to Section 4.1.2, all notices and other
communications by or to a party hereto shall be in writing and shall be given to
any Obligor, at Obligor Agent’s address shown on the signature pages hereof, and
to any other Person at its address shown on the signature pages hereof, or at
such other address as a party may hereafter specify by notice in accordance with
this Section 11.4. Each communication shall be effective only (a) if given by
facsimile transmission, when transmitted to the applicable facsimile number, if
confirmation of receipt is received; (b) if given by mail, three Business Days
after deposit in the U.S. mail, with first-class postage pre-paid, addressed to
the applicable address; or (c) if given by personal delivery, when duly
delivered to the notice address with receipt acknowledged.

 

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Notwithstanding the foregoing, no notice to Lender pursuant to Section 2.1.3,
2.3, 3.1.2, 4.1.1 or 5.3.3 shall be effective until actually received by the
individual to whose attention at Lender such notice is required to be sent. Any
written communication that is not sent in conformity with the foregoing
provisions shall nevertheless be effective on the date actually received by the
noticed party. Any notice received by Obligor Agent shall be deemed received by
all Obligors.

11.4.2. Electronic Communications; Voice Mail. Electronic mail and internet
websites, including, but not limited to, valid hyperlinks to EDGAR (Electronic
Data Gathering, Analysis, and Retrieval system), may be used only for routine
communications, such as delivery of financial statements, Borrowing Base
Certificates and other information required by Section 9.1.2, administrative
matters, distribution of Loan Documents, and matters permitted under
Section 4.1.3. Lender make no assurances as to the privacy and security of
electronic communications. Electronic and voice mail may not be used as
effective notice under the Loan Documents.

11.4.3. Platform. Borrowing Base information, reports, financial statements and
other materials shall be delivered by Obligors pursuant to procedures approved
by Lender, including electronic delivery (if possible) upon request by Lender to
an electronic system maintained by it (“Platform”). Obligors shall notify Lender
of each posting of reports or other information on the Platform. All information
shall be deemed received by Lender only upon its receipt of such notice. The
Platform is provided “as is” and “as available.” NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY LENDER WITH RESPECT TO
THE PLATFORM. Lender does not warrant the adequacy or functioning of the
Platform, and expressly disclaims liability for any issues involving the
Platform. No Indemnitee shall have any liability to Obligors or any other Person
for losses, claims, damages, liabilities or expenses of any kind (whether in
tort, contract or otherwise) relating to use by any Person of the Platform or
delivery of any information over the internet.

11.4.4. Non-Conforming Communications. Lender may rely upon any communications
purportedly given by or on behalf of any Obligor even if they were not made in a
manner specified herein, were incomplete or were not confirmed, or if the terms
thereof, as understood by the recipient, varied from a later confirmation. Each
Obligor shall indemnify and hold harmless each Indemnitee from any liabilities,
losses, costs and expenses arising from any electronic or telephonic
communication purportedly given by or on behalf of a Obligor.

11.5. Performance of Obligors’ Obligations. Lender may, in its reasonable
discretion at any time and from time to time, at Obligors’ expense, pay any
amount or do any act required of a Obligor under any Loan Documents or otherwise
lawfully requested by Lender to (a) enforce any Loan Documents or collect any
Obligations; (b) protect, insure, maintain or realize upon any Collateral; or
(c) defend or maintain the validity or priority of Lender’s Liens in any
Collateral, including any payment of a judgment, insurance premium, warehouse
charge, finishing or processing charge, or landlord claim, or any discharge of a
Lien. All payments, costs and expenses (including Extraordinary Expenses) of
Lender under this Section shall be reimbursed by Obligors, within ten
(10) Business Days of demand therefor, with interest from the date incurred
until paid in full, at the Default Rate applicable to Base Rate Revolver Loans.
Any payment made or action taken by Lender under this Section shall be without
prejudice to any right to assert an Event of Default or to exercise any other
rights or remedies under the Loan Documents.

11.6. Credit Inquiries. Lender may (but shall have no obligation) to respond to
usual and customary credit inquiries from third parties concerning any Obligor
or Subsidiary.

11.7. Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under applicable law. If any
provision is found to be invalid under applicable law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.

11.8. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
limitations or measurements to regulate similar matters, and they agree that
these are cumulative and that each must be performed as provided. Except as
otherwise

 

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provided in another Loan Document (by specific reference to the applicable
provision of this Agreement), if any provision contained herein is in direct
conflict with any provision in another Loan Document, the provision herein shall
govern and control.

11.9. Counterparts; Execution. Any Loan Document may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement shall become
effective when Lender has received counterparts bearing the signatures of all
parties hereto. Delivery of a signature page of any Loan Document by telecopy or
other electronic means shall be effective as delivery of a manually executed
counterpart of such agreement. Any electronic signature, contract formation on
an electronic platform and electronic record-keeping shall have the same legal
validity and enforceability as a manually executed signature or use of a
paper-based recordkeeping system to the fullest extent permitted by applicable
law, including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any similar
state law based on the Uniform Electronic Transactions Act.

11.10. Entire Agreement. Time is of the essence with respect to all Loan
Documents and Obligations. The Loan Documents constitute the entire agreement,
and supersede all prior understandings and agreements, among the parties
relating to the subject matter thereof.

11.11. No Control; No Advisory or Fiduciary Responsibility. Nothing in any Loan
Document and no action of Lender pursuant to any Loan Document shall be deemed
to constitute control of any Obligor by Lender. In connection with all aspects
of each transaction contemplated by any Loan Document, Obligors acknowledge and
agree that (a)(i) this credit facility and all related services by Lender or its
Affiliates are arm’s-length commercial transactions between Obligors and such
Person; (ii) Obligors have consulted their own legal, accounting, regulatory and
tax advisors to the extent they have deemed appropriate; and (iii) Obligors are
capable of evaluating, and understand and accept, the terms, risks and
conditions of the transactions contemplated by the Loan Documents; (b) each of
Lender and its Affiliates is and has been acting solely as a principal and,
except as expressly agreed in writing by the relevant parties, has not been, is
not, and will not be acting as an advisor, agent or fiduciary for Obligors,
their Affiliates or any other Person, and has no obligation with respect to the
transactions contemplated by the Loan Documents except as expressly set forth
therein; and (c) Lender and its Affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of Obligors and their
Affiliates, and have no obligation to disclose any of such interests to Obligors
or their Affiliates. To the fullest extent permitted by applicable law, each
Obligor hereby waives and releases any claims that it may have against Lender
and its Affiliates with respect to any breach of agency or fiduciary duty in
connection with any transaction contemplated by a Loan Document.

11.12. Confidentiality. Lender agrees to maintain the confidentiality of all
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates, and its and their partners, directors, officers, employees,
agents, advisors and representatives (provided they are informed of the
confidential nature of the Information and instructed to keep it confidential);
(b) to the extent requested by any governmental, regulatory or self-regulatory
authority purporting to have jurisdiction over it or its Affiliates; (c) to the
extent required by applicable law or by any subpoena or other legal process;
(d) to any other party hereto; (e) in connection with any action or proceeding
relating to any Loan Documents or Obligations; (f) subject to an agreement
containing provisions substantially the same as this Section, to any potential
or actual transferee of any interest in a Loan Document or any actual or
prospective party (or its advisors) to any Bank Product or to any swap,
derivative or other transaction under which payments are to be made by reference
to an Obligor or Obligor’s obligations; (g) with the consent of Borrower Agent;
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) is available to Lender or its
Affiliates on a non-confidential basis from a source other than Obligors.
Notwithstanding the foregoing, subject to Borrower Agent’s prior written
consent, Lender may publish or disseminate general information concerning this
credit facility, and may use Obligors’ logos, trademarks or product photographs
in advertising materials. As used herein, “Information” means all information
received from an Obligor or Subsidiary relating to it or its business, that is
identified as confidential when delivered. Person required to maintain the
confidentiality of Information pursuant to this Section shall be deemed to have
complied if it exercises a degree of care similar to that accorded its own
confidential information. Lender acknowledges that (i) Information may include
material non-public information; (ii) it has developed compliance procedures
regarding the use of such information; and (iii) it will handle the material
non-public information in accordance with applicable law.

 

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11.13. GOVERNING LAW. UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL CLAIMS, SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES EXCEPT FEDERAL LAWS RELATING TO NATIONAL BANKS.

11.14. Consent to Forum.

11.14.1. Forum. LENDER AND EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER
NEW YORK COUNTY, NEW YORK AND THE SOUTHERN DISTRICT OF NEW YORK, IN ANY DISPUTE,
ACTION, LITIGATION OR OTHER PROCEEDING RELATING IN ANY WAY TO ANY LOAN
DOCUMENTS, AND AGREES THAT ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING
SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT; PROVIDED, HOWEVER THE LENDER
MAY ELECT TO CONSENT TO ANY OTHER JURISDICTION IF REQUIRED TO FORECLOSE ANY
SECURITY INTEREST IN ANY COLLATERAL. LENDER AND EACH OBLIGOR IRREVOCABLY AND
UNCONDITIONALLY WAIVE ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE
REGARDING ANY OF THE FOREGOING COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION,
VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE JURISDICTION OF SUCH COURTS AND CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 11.4.1. A final judgment in any
proceeding of any such court shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or any other manner provided by applicable
law.

11.14.2. Other Jurisdictions. Nothing herein shall limit the right of Lender to
bring proceedings against any Obligor in any other court, nor limit the right of
any party to serve process in any other manner permitted by applicable law.
Nothing in this Agreement shall be deemed to preclude enforcement by Lender of
any judgment or order obtained in any forum or jurisdiction.

11.15. Waivers by Obligors. To the fullest extent permitted by applicable law,
each Obligor waives (a) the right to trial by jury (which Lender hereby also
waives) in any proceeding or dispute of any kind relating in any way to any Loan
Documents, Obligations or Collateral; (b) presentment, demand, protest, notice
of presentment, default, non-payment, maturity, release, compromise, settlement,
extension or renewal of any commercial paper, accounts, documents, instruments,
chattel paper and guaranties at any time held by Lender on which a Obligor may
in any way be liable, and hereby ratifies anything Lender may do in this regard;
(c) notice prior to taking possession or control of any Collateral; (d) any bond
or security that might be required by a court prior to allowing Lender to
exercise any rights or remedies; (e) the benefit of all valuation, appraisement
and exemption laws; (f) any claim against Lender, on any theory of liability,
for special, indirect, consequential, exemplary or punitive damages (as opposed
to direct or actual damages) in any way relating to any enforcement action,
Obligations, Loan Documents or transactions relating thereto; and (g) notice of
acceptance hereof. Each Obligor acknowledges that the foregoing waivers are a
material inducement to Lender entering into this Agreement and that Lender is
relying upon the foregoing in its dealings with Obligors. Each Obligor has
reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial and other rights following consultation with
legal counsel. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

11.16. PATRIOT Act Notice. Lender hereby notifies Obligors that pursuant to the
PATRIOT Act, Lender is required to obtain, verify and record information that
identifies each Obligor, including its legal name, address, tax ID number and
other information that will allow Lender to identify it in accordance with the
PATRIOT Act. Lender will also require information regarding each personal
guarantor, if any, and may require information regarding Obligors’ management
and owners, such as legal name, address, social security number and date of
birth. Obligors shall, promptly upon request, provide all documentation and
other information as Lender may request from time to time in order to comply
with any obligations under “know your customer,” anti-money laundering or other
requirements of applicable law.

11.17. NO ORAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

 

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[Remainder of page intentionally left blank; signatures begin on following page]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

LENDER: BANK OF AMERICA, N.A. By:  

/s/ Cynthia Stannard

Name:  

Cynthia Stannard

Title:  

Senior Vice President

Address:  

Bank of America, N.A.

 

CityPlace 1

 

185 Asylum Street, 35th Floor

 

Hartford, CT 06103

 

Mail Code CT2-500-35-02

  Telephone:  

860-952-6827

  Facsimile:  

860-952-6830

BORROWERS: REVOLUTION LIGHTING TECHNOLOGIES, INC. By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President, CFO, Secretary and Treasurer

Address:  

177 Broad Street, 12th Floor

 

Stamford, CT 06901

LUMIFICIENT CORPORATION By:  

/s/ Carey Burkett

Name:  

Carey Burkett

Title:  

President

Address:  

177 Broad Street, 12th Floor

 

Stamford, CT 06901

LIGHTING INTEGRATION TECHNOLOGIES, LLC By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President

Address:  

177 Broad Street, 12th Floor

 

Stamford, CT 06901

 

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SEESMART TECHNOLOGIES, LLC By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President

Address:    

177 Broad Street, 12th Floor

 

Stamford, CT 06901

RELUME TECHNOLOGIES, INC. By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President, Secretary and Treasurer

Address:    

177 Broad Street, 12th Floor

 

Stamford, CT 06901

TRI-STATE LED DE, LLC By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President

Address:    

177 Broad Street, 12th Floor

 

Stamford, CT 06901

VALUE LIGHTING, LLC By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President

Address:    

177 Broad Street, 12th Floor

 

Stamford, CT 06901

GUARANTORS: SEESMART, INC. By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President

Address:    

177 Broad Street, 12th Floor

 

Stamford, CT 06901

 

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SENTINEL SYSTEM, LLC By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President

Address:    

177 Broad Street, 12th Floor

 

Stamford, CT 06901

VALUE LIGHTING OF HOUSTON, LLC By:   Value Lighting, LLC,   Its Sole Member By:
 

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President

Address:    

177 Broad Street, 12th Floor

 

Stamford, CT 06901

ENVIROLIGHT LED, LLC By:   Seesmart, Inc.,   Its Sole Member By:  

/s/ Charles J. Schafer

Name:  

Charles J. Schafer

Title:  

President and Secretary

Address:    

177 Broad Street, 12th Floor

 

Stamford, CT 06901

 

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EXHIBIT A

FORM OF BORROWING BASE CERTIFICATE

[To be provided by Lender]

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EXHIBIT B

COMPLIANCE CERTIFICATE

In accordance with the terms of the Loan and Security Agreement dated August 20,
2014 (as the same may be amended, restated, supplemented, or otherwise modified
from time to time, the “Loan Agreement”) by and among REVOLUTION LIGHTING
TECHNOLOGIES, INC., a Delaware corporation (“RLT”), LUMIFICIENT CORPORATION, a
Minnesota corporation (“Lumificient”), LIGHTING INTEGRATION TECHNOLOGIES, LLC, a
Delaware limited liability company (“LIT”), SEESMART TECHNOLOGIES, LLC, a
Delaware limited liability company (“Seesmart Tech”), RELUME TECHNOLOGIES, INC.,
a Delaware corporation (“Relume”), TRI-STATE LED DE, LLC, a Delaware limited
liability company (“Tri-State”), and VALUE LIGHTING, LLC, a Delaware limited
liability company (“Value Lighting”, and together with RLT, Lumificient, LIT,
Seesmart Tech, Relume and Tri-State, singly and collectively, jointly and
severally, “Borrowers” and each a “Borrower”) and Bank of America, N.A., I
hereby certify that:

 

1. I am the [President] [Chief Financial Officer] of Borrowers;

 

2. The enclosed financial statements are prepared in accordance with generally
accepted accounting principles;

 

3. No Default (as defined in the Loan Documents) or any event which, upon the
giving of notice or passing of time or both, would constitute such a Default,
has occurred.

 

4. Borrowers are in compliance with the financial covenant(s) set forth in
Sections 9.3 of the Loan Agreement, as demonstrated by the calculations
contained in Schedule I, attached hereto and made a part hereof.

 

5. The Applicable Margin level is level     , based upon Excess Availability, as
calculated on Schedule I, attached hereto and made a part hereof.

 

REVOLUTION LIGHTING TECHNOLOGIES, INC., as Borrower Agent By:  

 

Name:  

 

Title:  

 

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SCHEDULE I TO COMPLIANCE CERTIFICATE

[Borrowers to provide detailed calculations of financial covenants and
Applicable Margin]

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EXHIBIT C

CONDITIONS PRECEDENT

(a) Each Loan Document shall have been duly executed and delivered to Lender by
each of the signatories thereto, and each Obligor shall be in compliance with
all terms thereof.

(b) Lender shall have received acknowledgments of all filings or recordations
necessary to perfect its Liens in the Collateral, as well as UCC and Lien
searches and other evidence satisfactory to Lender that such Liens are the only
Liens upon the Collateral, except Permitted Liens.

(c) Lender shall have received duly executed agreements establishing each
Dominion Account and related lockbox, in form and substance, and with financial
institutions, satisfactory to Lender.

(d) Lender shall have received certificates, in form and substance satisfactory
to it, from a knowledgeable Senior Officer of Borrower Agent certifying that,
after giving effect to the initial Loans and transactions hereunder, (i) the
Obligors taken as a whole are Solvent; (ii) no Default or Event of Default
exists; (iii) the representations and warranties set forth in Section 8 are true
and correct; and (iv) such Borrower has complied with all agreements and
conditions to be satisfied by it under the Loan Documents.

(e) Lender shall have received a certificate of a duly authorized officer of
each Obligor, certifying (i) that attached copies of such Obligor’s Organic
Documents are true and complete, and in full force and effect, without amendment
except as shown; (ii) that an attached copy of resolutions authorizing execution
and delivery of the Loan Documents is true and complete, and that such
resolutions are in full force and effect, were duly adopted, have not been
amended, modified or revoked, and constitute all resolutions adopted with
respect to this credit facility; and (iii) to the title, name and signature of
each Person authorized to sign the Loan Documents. Lender may conclusively rely
on this certificate until it is otherwise notified by the applicable Obligor in
writing.

(f) Lender shall have received a written opinion of Lownestein Sandler LLP, as
well as any local counsel to Borrowers or Lender, in form and substance
satisfactory to Lender.

(g) Lender shall have received Lien Waivers from such Persons as the Lender
shall have requested.

(h) Lender shall have received copies of the charter documents of each Obligor,
certified by the Secretary of State or other appropriate official of such
Obligor’s jurisdiction of organization. Lender shall have received good standing
certificates for each Obligor, issued by the Secretary of State or other
appropriate official of such Obligor’s jurisdiction of organization and each
jurisdiction where such Obligor’s conduct of business or ownership of Property
necessitates qualification.

(i) Lender shall have received copies of policies or certificates of insurance
for the insurance policies carried by Borrowers, all in compliance with the Loan
Documents.

(j) Lender shall have completed its business, financial and legal due diligence
of Obligors, including a roll-forward of its previous field examination, with
results satisfactory to Lender. No material adverse change in the financial
condition of any Obligor or in the quality, quantity or value of any Collateral
shall have occurred since December 31, 2013.

(k) Borrowers shall have paid all fees and expenses to be paid to Lender on the
Closing Date.

(l) Lender shall have received a Borrowing Base Certificate prepared as of
August 19, 2014. Upon giving effect to the initial funding of Loans and issuance
of Letters of Credit, and the payment by Borrowers of all fees and expenses
incurred in connection herewith as well as any payables stretched beyond their
customary payment practices, Excess Availability shall be at least $5,000,000.

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(m) Aston, Lender and the Borrowers shall have entered into a subordination
agreement with the Lender and Borrowers on terms and conditions satisfactory to
Lender with respect to the Aston Debt.

(n) Lender shall have received a letter, in form and substance satisfactory to
Lender, from Existing Lender to Lender with respect to the amount necessary to
repay in full all of the obligations of the Obligors and their Subsidiaries
owing to Existing Lender and obtain a release of all of the Liens existing in
favor of Existing Lender in and to the assets of the Obligors and their
Subsidiaries, together with termination statements and other documentation
evidencing the termination by Existing Lender of its Liens in and to the
properties and assets of the Obligors and their Subsidiaries.

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EXHIBIT D

FEES

(a) Unused Line Fee. On the first day of each month and on the Commitment
Termination Date, Borrowers shall pay to Lender a fee equal to the Unused Line
Fee Rate times the amount by which the Revolver Commitment exceeded the average
daily Revolver Usage during the immediately preceding month (or, in the case of
such payment made on the Commitment Termination Date, during the period
commencing on the date the immediately preceding unused line fee was due and
ending on the Commitment Termination Date). Such fee shall be payable monthly in
arrears commencing September 1, 2014.

(b) LC Facility Fees. Borrowers shall pay to Lender (i) a fee equal to the
Applicable Margin in effect for LIBOR Revolver Loans times the average daily
Stated Amount of Letters of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; (ii) a fronting fee equal to 0.125% per
annum on the Stated Amount of each Letter of Credit, which fee shall be payable
monthly in arrears, on the first day of each month; and (iii) all customary
charges associated with the issuance, amending, negotiating, payment,
processing, transfer and administration of Letters of Credit, which charges
shall be paid as and when incurred. During an Event of Default, the fee payable
under clause (i) shall be increased by 2% per annum.

(c) Closing Fee. On the Closing Date, Borrowers shall pay to Lender a closing
fee of $125,000. Such fee shall be earned as of the Closing Date and shall not
be subject to rebate or refund under any circumstances.

(d) Administrative Fee. On the Closing Date, Borrowers shall pay to Lender, in
advance for the Loan Year immediately following the Closing Date, an
administrative fee in the amount of $21,000 (the “Administrative Fee”). On the
first anniversary of the Closing Date, and on each subsequent anniversary
thereafter, the Lender shall have earned as of such date, and the Borrowers
agree to pay to the Lender, an Administrative Fee for such Loan Year. Borrowers
shall pay to Lender such Administrative Fee for subsequent Loan Years in monthly
installments, each of which shall be in the amount of $1,750, and shall be paid
on the first day of each month commencing September, 2015. The Administrative
Fee shall be earned as of the Closing Date and each anniversary thereof, and
shall not be subject to rebate or refund under any circumstances.

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EXHIBIT E

FINANCIAL REPORTING

As long as any Commitment or Obligations are outstanding, each Borrower shall,
and shall cause each Subsidiary to furnish to Lender:

(a) as soon as available, and in any event within ninety (90) days after the
close of each Fiscal Year, audited consolidated balance sheets as of the end of
such Fiscal Year and the related consolidated statements of income, cash flows
and stockholder equity of RLT and Subsidiaries for such Fiscal Year, and
supplemental consolidating balance sheets and statements of income of Borrowers
and Subsidiaries, all prepared in accordance with GAAP, accompanied by a report
(without qualification) by a firm of independent certified public accountants of
recognized standing selected by RLT and reasonably acceptable to Lender, and
shall set forth in comparative form corresponding figures for the preceding
Fiscal Year;

(b) as soon as available, and in any event within forty-five (45) days after the
end of each Fiscal Quarter (except for the fourth (4th) Fiscal Quarter of a
Fiscal Year), unaudited consolidated balance sheet of RLT and its Subsidiaries
as of the end of such Fiscal Quarter and the related consolidated statements of
income for such quarter and for the portion of the Fiscal Year then elapsed,
setting forth in comparative form corresponding figures for the preceding Fiscal
Year and certified by the chief financial officer of Borrower Agent as prepared
in accordance with GAAP and fairly presenting the financial position and results
of operations for such quarter and period, subject to normal year-end
adjustments and the absence of footnotes and other disclosures;

(c) as soon as available, and in any event within twenty (20) days after the end
of each month, a management- prepared financial metric statement of RLT and its
Subsidiaries for the immediately preceding month, including a calculation of
EBITDA and a “snap shot” of sales for the previous month, and certified by the
chief financial officer of Borrower Agent as prepared in accordance with GAAP;

(d) concurrently with delivery of financial statements under clauses (a) and
(b) above, or more frequently if requested by Lender while a Default or Event of
Default exists, a Compliance Certificate executed by the chief financial officer
of Borrower Agent;

(e) concurrently with delivery of financial statements under clause (a) above,
copies of all management letters and other material reports submitted to
Borrowers by their accountants in connection with such financial statements;

(f) not later than thirty (30) days after the end of each Fiscal Year,
projections of Borrowers’ quarterly consolidated balance sheets, statement of
income, statements of cash flows and Availability for the next Fiscal Year;

(f) at not later than twenty (20) prior to the end of each month, a listing of
each Borrower’s trade payables, specifying the trade creditor and balance due,
and a detailed trade payable aging, all in form satisfactory to Lender;

(g) promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or reports that any Borrower has made generally
available to its shareholders; copies of any regular, periodic and special
reports or registration statements or prospectuses that any Borrower files with
the Securities and Exchange Commission or any other Governmental Authority, or
any securities exchange; and copies of any press releases or other statements
made available by a Borrower to the public concerning material changes to or
developments in the business of such Borrower;

(h) promptly after the sending or filing thereof, copies of any annual report to
be filed in connection with each Plan or Foreign Plan; and

(i) such other reports and information (financial or otherwise) as Lender may
request from time to time in connection with any Collateral or any Borrower’s,
Subsidiary’s or other Obligor’s financial condition or business.

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EXHIBIT F

COLLATERAL REPORTING

(a) (i) By the fifteenth (15th) day of each month Borrowers shall deliver to
Lender a Borrowing Base Certificate prepared as of the close of business of the
previous month, provided that if a Default or Event of Default exists, or if
Excess Availability is at any time less than the greater of (i) $3,375,000, and
(ii) 22.5% of the lesser of (A) the Revolver Commitment or (B) the Borrowing
Base, Borrowers shall deliver to Lender, on the Wednesday of each week, a
Borrowing Base Certificate prepared as of the close of business of the previous
Friday for the then ending week, and (ii) at such other times as Lender may
request. All calculations of Availability in any Borrowing Base Certificate
shall originally be made by Borrowers and certified by a Senior Officer,
provided that Lender may from time to time review and adjust any such
calculation (a) to reflect its reasonable estimate of declines in value of any
Collateral, due to collections received in the Dominion Account or otherwise;
(b) to adjust advance rates to reflect changes in dilution, quality, mix and
other factors affecting Collateral; and (c) to the extent the calculation is not
made in accordance with this Agreement or does not accurately reflect the
Availability Reserve.

(b) Each Obligor shall keep accurate and complete records of its Accounts,
including all payments and collections thereon, and shall submit to Lender
sales, collection, reconciliation and other reports in form satisfactory to
Lender, on such periodic basis as Lender may request. Each Obligor shall also
provide to Lender, on or before the Tuesday of each week, a detailed aged trial
balance of all Accounts as of the Friday of the preceding week, specifying each
Account’s Account Debtor name and address, amount, invoice date and due date,
showing any discount, allowance, credit, authorized return or dispute, and
including such proof of delivery, copies of invoices and invoice registers,
copies of related documents, repayment histories, status reports and other
information as Lender may reasonably request. If Accounts in an aggregate face
amount of $250,000 or more cease to be Eligible Accounts, Obligors shall notify
Lender of such occurrence promptly (and in any event within one Business Day)
after any Obligor has knowledge thereof.

(c) Each Obligor shall keep accurate and complete records of its Inventory,
including costs and daily withdrawals and additions, and shall submit to Lender
inventory and reconciliation reports in form satisfactory to Lender, on such
periodic basis as Lender may request. Each Obligor shall conduct a physical
inventory at least once per calendar year (and on a more frequent basis if
requested by Lender when an Event of Default exists) and periodic cycle counts
consistent with historical practices, and shall provide to Lender a report based
on each such inventory and count promptly upon completion thereof, together with
such supporting information as Lender may request. Lender may participate in and
observe each physical count.3

(d) Each Obligor shall keep accurate and complete records of its Equipment,
including kind, quality, quantity, cost, acquisitions and dispositions thereof,
and shall submit to Lender, on such periodic basis as Lender may request, a
current schedule thereof, in form satisfactory to Lender. Promptly upon request,
Obligors shall deliver to Lender evidence of their ownership or interests in any
Equipment.

(e) The obligations of Obligors hereunder may be kept on their behalf by one or
more Borrowers.

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EXHIBIT G

[NOTICE OF BORROWING]/[NOTICE OF CONVERSION/CONTINUATION]

Date:                     

 

To: Bank of America, N.A., as lender under the Loan and Security Agreement dated
as of August 20, 2014 (as amended, restated, supplemented or otherwise modified
and in effect from time to time, the “Loan Agreement”) by and among
(i) Revolution Lighting Technologies, Inc., a Delaware corporation, as borrower
agent (in such capacity, the “Borrower Agent”) for itself and the other
Borrowers party thereto from time to time, (ii) the other Borrowers party
thereto from time to time, (iii) the Guarantors party thereto from time to time,
and (iv) Bank of America, N.A., as lender (in such capacity, the “Lender”).

Ladies and Gentlemen:

The undersigned Borrower Agent refers to the Loan Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you irrevocable
notice of a [Borrowing][conversion of a Loan from a Base Rate Loan or a LIBOR
Loan][continuation of a Loan] with respect to a Revolver Loan requested by the
undersigned as specified below:

1. The Business Day of the proposed [Borrowing][conversion][continuation] is
                    .

2. The aggregate amount of the proposed [Borrowing][Loan to be converted][Loan
to be continued] is as follows: $        .

3. The [Borrowing][Loan to be converted][Loan to be continued] is to be
comprised of [$         of Base Rate Loans] [$         of LIBOR Loans].

4. The duration of the Interest Period(s) for the LIBOR Loans, if any, included
in such [Borrowing][conversion][continuation] shall be as follows: [30
days][sixty days][90 days].

Borrower Agent hereby represents and warrants that (a) the [Borrowing]
[conversion][continuation] requested herein complies with the provisions of
Section 4.1.1 of the Loan Agreement and (b) the conditions specified in
Section 6.2 of the Loan Agreement have been satisfied or waived on and as of the
date of the applicable [Borrowing] [conversion][continuation].

 

REVOLUTION LIGHTING TECHNOLOGIES, INC., as Borrower Agent By:  

 

Name:  

 

Title: