Exhibit 10.1
REVOLVING CREDIT AGREEMENT

THIS REVOLVING CREDIT AGREEMENT (this “Agreement”) dated November 9, 2011, among
AXION INTERNATIONAL HOLDINGS, INC., a Colorado corporation (“Borrower”) and
SAMUEL G. ROSE, an individual resident of the State of Florida  (“Lender”).

RECITALS

Lender and Borrower have agreed to a loan facility under which Lender will lend
up to $2,000,000 to Borrower, on a revolving basis, pursuant to the terms and
conditions set forth herein and in the documents and instruments entered into in
connection herewith.

NOW, THEREFORE, in consideration of the mutual agreements herein made, the
parties hereto, intending to be legally bound, hereby agree as follows:

Section 1.  Definitions.

1.1           Capitalized Terms.  For the purposes of this Agreement, the
following capitalized terms shall have the following meanings:

“Account Debtor” means any of Borrower’s customers and all other Persons
obligated to Borrower on an Account.

“Accounts” and “Accounts Receivable” means and includes all of Borrower’s
presently existing and hereafter arising or acquired accounts, receivables and
all present and future rights of Borrower to payment for goods sold or leased or
for services rendered, including, without limitation, those which are not
evidenced by instruments or chattel paper, and whether or not they have been
earned by performance.

“Agreement” means this Revolving Credit Agreement as the same may hereafter be
amended from time to time.

“Bankruptcy Code” means the United States Bankruptcy Code of 1978, as amended
from time to time, or any successor statute.

“Borrowing Base” means as of the date of determination, the sum of (i)
Borrower’s Accounts (but only to the extent such Accounts arise from bone-fide
sales to third parties not affiliated with Borrower, and are not more than sixty
days old), plus (ii) the actual cost of Borrower’s Inventory, determined in
accordance with GAAP.

“Borrowing Base Certificate” means a certificate, in the form reasonably
required by the Lender, signed by a duly authorized officer of Borrower, that
computes the Borrowing Base, together with any memo of returns and credits,
remittance report, schedule of Accounts and such other supporting documents and
materials which the Lender, in its reasonable discretion, may require to be
delivered with such certificate.

“Collateral” means and includes all Accounts and Inventory, whether now existing
or hereafter acquired or arising, together with (a) all books, records, ledger
cards and other property pertaining to any of the foregoing, and (b) all
products and proceeds of any of the foregoing, and all insurance proceeds
related to any of the foregoing, including, without limitation, any claims
against third parties for loss or damage to or destruction of any or all of the
foregoing and any cash, negotiable instruments and other instruments of money,
chattel paper, security agreements or other documents.

“Commitment Amount” means the obligation of the Lender to make Revolving Credit
Loans up to an aggregate principal amount at any one time outstanding equal to
Two Million Dollars ($2,000,000), as the same may be reduced hereunder from time
to time.

“Common Stock” means shares of Borrower’s common stock, no par value.
 
“Credit Documents” means, collectively, this Agreement, the Note, the UCC-1
financing statement and the Security Agreement, either as originally executed or
as the same may from time to time be supplemented or amended with the written
consent of the Lender.

 
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“Credit Extension” means a borrowing of a Loan hereunder.

“Credit Extension Date” means each date on which a Credit Extension is made.

“Debt” means, as to any Person, without duplication:  (a) all obligations of
such Person for borrowed money or evidenced by bonds, debentures, note or
similar instruments; (b) all obligations of such Person for the deferred
purchase price of property or services (including, without limitation,
obligations under agreements not to compete); (c) all capital lease obligations
of such Person; (d) all obligations of others of the kind described in clauses
(a), (b) or (c) hereof secured by a Lien on any asset or revenues of such Person
or a subsidiary of such Person, whether or not such obligation is assumed by
such Person or the subsidiary of such Person; (e) all obligations of others of
the kind described in clauses (a), (b) or (c) hereof to the extent directly or
indirectly guaranteed by such Person or a subsidiary of such Person or in
respect of which such Person or a subsidiary of such Person is contingently or
otherwise liable; and (f) all obligations of such Person, contingent or
otherwise, in respect of any letters of credit, bankers’ acceptances or similar
instruments.

“Default” means any condition or event which constitutes an Event of Default or
which would become an Event of Default with the giving of notice or lapse of
time or both.

“Dollars” and “$” means dollars in lawful money of the United States of America.

“Event of Default” has the meaning set forth in Section 7 hereof.

“GAAP” means generally accepted accounting principles applied on a consistent
basis.

“Government” means the government of the United States of America, the
government of any other nation, any political subdivision of the United States
of America or any other nation (including, without limitation, any state,
territory, federal district, municipality or political entity).

“Interest Rate” means Twelve Percent (12%).

“Inventory” has the meaning ascribed to it in the UCC.

“Lien” means, with respect to any asset, any security interest, mortgage,
pledge, assignment, lien or other encumbrance of any kind.

“Loan” means the Revolving Credit Loan.

“Material Adverse Change” or “Material Adverse Effect” means a material adverse
change in, or material adverse effect on, the business, results of operations,
operations, financial condition, cash flows or assets of the Borrower, or on the
ability of the Borrower to perform its obligations hereunder or under the Credit
Documents or on the ability of the Lender to enforce the terms of any of the
Credit Documents.

“Maturity Date” means September 30, 2012.

“Note” means the Revolving Credit Note.

“Person” means any individual, corporation, partnership, association, trust or
other entity or organization, including a Government.

“Post-Default Rate” means, in respect of any principal of any Loan or any other
amount payable by the Borrower under any Credit Document which is not paid when
due (whether at stated maturity, by acceleration or otherwise), a rate during
the period from and including the due date to but excluding the date on which
such amount is paid in full equal to Eighteen Percent (18%) per year.

“Principal Market” means the OTC Bulletin Board provided, however, that in the
event the Company’s Common Stock is ever listed or traded on the NASDAQ Capital
Market, NASDAQ Global Market, the NASDAQ Global Select Market, the New York
Stock Exchange or the NYSE Amex, then the “Principal Market” shall mean such
other market or exchange on which the Company’s Common Stock is then listed or
traded.

“Revolving Credit Loan” has the meaning set forth in Section 2.1 hereof.

 
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“Revolving Credit Note” has the meaning set forth in Section 2.2 hereof.

“Secured Obligations” means all loans, advances, indebtedness and each and every
other obligation or liability of Borrower to Lender under this Agreement.

“Security Agreement” means the Security Agreement dated concurrently herewith
executed and delivered by Borrower to the Lender, as from time to time
supplemented and amended.

“Senior Officer” means a Borrower’s Chief Executive Officer or Chief Financial
Officer.

“UCC” means the Uniform Commercial Code as enacted in the State of Maryland.

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies:  (a) if the Common Stock is then listed or quoted on the
Principal Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Principal Market as
reported by Bloomberg L.P. (based on a Business Day from 9:30 a.m. (Eastern
Standard Time) to 4:00 p.m. (Eastern Standard Time), (b) if the Common Stock is
not then listed or quoted for trading on the Principal Market and if prices for
the Common Stock are then reported in the “Pink Sheets” published by Pink OTC
Markets, Inc. (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per share of the Common Stock so
reported, or (c) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Lender and reasonably acceptable to the Company, the fees and expenses of which
shall be paid by the Company.

1.2.          General Terms.

1.2.1.  The Borrower shall use the proceeds of the Loan for the purchase of raw
materials and for the conversion cost of raw materials into finished goods.

1.2.2.  Except as otherwise herein expressly provided, the proceeds of any
collection, sale or other realization of all or any part of the Collateral
pursuant hereto, and any other cash at the time held by the Lender hereunder
shall be applied by the Lender,

(a)            first, to the payment of all costs and expenses of such
collection, sale or other realization, including the Lender’s reasonable
attorneys’ fees and disbursements;

(b)            then, to the payment in full of the Secured Obligations in
accordance with the amounts then due and owing; and

(c)            then, to the extent any amounts shall remain unapplied after
payment in full of the Secured Obligations then due and payable, and after
payment in full of the foregoing any surplus remaining shall be paid to Borrower
or to whomsoever may be lawfully entitled to receive the same.  As used in this
Section 1.2.2, “proceeds” of Collateral shall mean cash, securities and other
property realized in respect of, and distributions in kind of, Collateral,
including any thereof received under any reorganization, liquidation or
adjustment of Debt of the Borrower or any issuer of or obligor on any of the
Collateral.

Section 2.  Commitment Amount; Borrowing Procedure; Interest Rates.

2.1.          Revolving Credit Loans.  During the period from and including the
date hereof to but excluding the Maturity Date, the Lender agrees, on the terms
and conditions set forth in this Agreement, to make one or more loans
(“Revolving Credit Loans”) to Borrower in minimum draws of Ten Thousand Dollars
($10,000) and in an aggregate principal amount at any one time outstanding up to
but not exceeding the lesser of (a) the amount of the Commitment Amount as then
in effect or (b) seventy percent (70%) of the Borrowing Base.  Subject to the
terms of this Agreement, during such period, Borrower may borrow, repay and
reborrow the amount of the Commitment Amount by means of Revolving Credit Loans.

2.2.          Revolving Credit Note.  The Revolving Credit Loans made by the
Lender shall be evidenced by a single promissory note of Borrower, in
substantially the form of Exhibit 2.2 hereto (the “Revolving Credit Note”),
dated the date hereof, payable to the order of the Lender in a principal amount
equal to the amount of the Commitment Amount as originally in effect and
otherwise duly completed.  The date, amount and interest rate of each Revolving
Credit Loan made by the Lender to Borrower, and each payment made on account of
the principal thereof, shall be recorded by the Lender on its books and records,
such recordation to constitute conclusive evidence in the absence of manifest
error of the amount of such Loan and payments.

 
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2.3.          Borrowing Procedure.  Borrower may request a Revolving Credit Loan
by written notice to the Lender, via facsimile transmission, electronic mail or
otherwise, no less than five (5) business days prior to the date Borrower
requests that such Revolving Credit Loan be advanced, which written request
shall include a Borrowing Base Certificate substantially in the form attached
hereto as Exhibit 2.3, certified by a Senior Officer of Borrower that sets forth
the calculation of the Borrowing Base as of such date.  The Borrowing Base
Certificate shall be accompanied by copies of the purchase orders, invoices and
other documents evidencing the transactions giving rise to the request for a
Revolving Credit Loan.  The Lender shall make each Revolving Credit Loan by wire
transfer to an account designated by Borrower within three (3) business days
following Lender’s receipt of the foregoing, or within five (5) business days if
Borrower requests such Revolving Credit Loan to be disbursed by
check.  Notwithstanding any provision in this Agreement to the contrary, the
Lender shall not be obligated to make any disbursement or advance to Borrower
during the continuance of an Event of Default.

2.4.          Interest Rates.

2.4.l.  Each Loan shall bear interest on the outstanding principal amount, for
each day from the date such Loan is made until it becomes due, at a rate per
annum equal to the Interest Rate.

2.4.2.  Accrued Interest shall be paid in full by Borrower in cash on the first
business day of each month.  Provided that Lender gives written notice to
Borrower (30) days in advance, Lender may elect to accept all or any portion of
such accrued Interest in the form of Common Stock. If Interest is paid in the
form of Common Stock, such stock shall be valued at the lesser of (a) eighty
(80) cents per share, or (b) ten (10) cents per share less than the average VWAP
for the thirty (30) days ending one (1) trading day prior to the date of
issuance.

2.4.3.  Notwithstanding the provisions of the preceding Section 2.4.1, all
unpaid principal of any Revolving Credit Loan shall bear interest after maturity
(whether by acceleration or otherwise) at a rate per annum equal to the higher
of (a) the rate in effect prior to such maturity or (b) the Post-Default Rate.

2.4.4.  Interest shall be calculated on the basis of a year of three hundred
sixty (360) days and paid for the actual number of days elapsed (including the
first day but excluding the last day).

2.5.          Maturity of Revolving Credit Loans.  Each Revolving Credit Loan
shall mature, and the principal thereof shall be due and payable, on the
Maturity Date.

 
2.6.
Optional Prepayments: Reborrowings.

2.6.1.  Borrower may at any time and from time to time prepay the Revolving
Credit Loans in whole or in part, without premium or penalty.  Partial
prepayments shall be in an aggregate principal amount of Ten Thousand Dollars
($10,000) or a whole multiple thereof.

2.6.2.  Subject to the terms and provisions of this Agreement and if Borrower is
not then in Default hereunder, the Lender will reloan to the Borrower such
amounts as have been paid and applied on the principal balance of a Revolving
Credit Loan prepaid pursuant to this Section.

2.7.         Mandatory Prepayments.  If at any time the aggregate outstanding
amount of the Revolving Credit Loans made hereunder is greater than seventy
percent (70%) of the Borrowing Base (as shown on Borrower’s Weekly Flash Report
referred to in Section 6.2.6 hereof), within three (3) business days, the
Borrower shall make prepayments of one or more of the Revolving Credit Loans
such that, at all times, seventy percent (70%) of the Borrowing Base equals or
exceeds the aggregate outstanding amount of the Revolving Credit Loans made
hereunder.  Any mandatory prepayments pursuant to this Section 2.7 shall be
subject to Section 2.6.

2.8.          Conversion of Principal to Equity.  Lender may at any time and
from time to time, upon 10 days written notice to Borrower, convert up to Fifty
Percent (50%) of the trailing Ninety (90) day average of outstanding principal
amount under the Revolving Credit Loans into Common Stock.  For purposes of this
Section 2.8, Common Stock shall be valued at the lesser of (a) $0.80 per share,
or (b) ten (10) cents per share less than the average VWAP for the thirty (30)
days ending one (1) trading day prior to the date of issuance.  Subject to the
terms and provisions of this Agreement and if Borrower is not then in Default
hereunder, the Lender will reloan to the Borrower such amounts of principal as
have been converted pursuant to this Section.

 
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2.9.          Termination or Reduction of Commitment Amount.  The Borrower shall
have the right, upon not less than five (5) business days’ written notice to the
Lender, to terminate the Commitment Amount, or, from time to time, reduce the
amount of the Commitment Amount, provided that (a) any such reduction shall be
accompanied by prepayment of all of the Revolving Credit Loans then outstanding
hereunder, together with accrued interest on the amount so prepaid to the date
of such prepayment, to the extent, if any, that the sum of the aggregate amount
of the Revolving Credit Loans made hereunder exceeds the amount of the
Commitment Amount as then reduced, and (b) any such termination of the
Commitment Amount shall be accompanied by prepayment in full of all of the
Revolving Credit Loans then outstanding hereunder, together with accrued
interest thereon to the date of such prepayment.  In addition, the Borrower
shall pay to the Lender, on the date of either such prepayment, any amounts due
under Sections 2.4 or 2.7 hereof.

2.10.        Maximum Rate.  Notwithstanding any provision to the contrary in
this Agreement or in the Revolving Credit Note, in no event shall the interest
rate charged on the Loan exceed the maximum rate of interest permitted under
applicable state and/or federal usury law.  Any payment of interest that would
be deemed unlawful under applicable law for any reason shall be deemed received
on account of, and will automatically be applied to reduce, the principal sum
outstanding and any other sums (other than interest) due and payable to the
Lender under the Note, and the provisions hereof shall be deemed amended to
provide for the highest rate of interest permitted under applicable law.

2.11.                          Fees.  As consideration for the Revolving Credit
Loans hereby extended, the Borrower shall: (a) pay all reasonable legal and
accounting costs associated with the documentation of the Revolving Credit
Loans; and (b) issue to Lender 250,000 shares of restricted Common Stock.

2.12.                  Registration of Stock.

2.12.1  The Company agrees to use all commercially reasonable efforts to
register all restricted Common Stock heretofore issued to Lender or hereafter
issued to Lender, including but not limited to shares issued under Section
2.4.4, Section 2.8 or Section 2.11 hereof, within six (6) months following the
date hereof.  If all of Lender’s Common Stock is not registered within six (6)
months following the date hereof, then the Company shall redeem all of Lender’s
unregistered Common Stock in cash, at a price equal to the greater of (i) the
average VWAP for the thirty (30) days ending one (1) trading day prior to the
date of issuance, or (b) ninety (90) cents per share.  Failure to timely so
shall be an Event of Default under this Agreement.

2.12.2  Without limiting the provisions of Section 2.12.2 hereof, if the Company
shall determine to register any of its securities under the Securities Act of
1933 in connection with the public offering of such securities either for its
own account of any security holder, other than (A) a registration relating to
employee benefit plans, (B) a registration relating to a merger or similar
translation, or (C) a registration on any form that does not include
substantially the same information as could be required to be included in any
registration covering the sale of the shares of common stock issuable to Lender
under this Agreement (upon conversion of the Note or otherwise), the Company
will: (a) promptly give to the Lender written notice thereof; and (b) use
commercially reasonable efforts to include in such registration (and any related
qualifications under blue sky laws or other compliance) all the underlying
shares of common stock specified in a written request or request, made within
twenty (20) days after receipt of such written notice from the Company except
the Company shall not be required to include such registerable securities if
such securities are eligible for resale pursuant to Rule 144 without any
restrictions or if it is an underwritten offering, the underwriter for such
offering has advised the Company that it would be impractical to include in such
registration statement any or all of such securities.

Section 3.  DELETED

Section 4.  Conditions Precedent.

4.1.          Initial Credit Extension.  The obligation of the Lender to make
its initial Credit Extension hereunder is subject to each of the following
conditions precedent (including, without limitation, that each document to be
received by the Lender shall be in form and substance satisfactory to the
Lender):

4.1.1.  The Lender shall have received the Note duly completed, executed and
delivered by the Borrower.

4.1.2.  The Lender shall have received the duly executed Credit Documents.

4.1.3.  The Lender shall have received copies of a duly completed UCC financing
statement with respect to the Collateral in the form attached hereto as Exhibit
4.1.3, in proper form for filing in Colorado and in any other jurisdictions in
which such filing is necessary or appropriate to establish, perfect, protect and
preserve the rights, titles, interests, remedies, powers, privileges and Liens
of the Lender on such property, as a first-priority lien on the Collateral.

 
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4.1.4.  The Lender shall have received a certificate of a Senior Officer to the
effect set forth in Sections 4.2.1, 4.2.2 and 4.2.3 hereof.

4.1.5.  The Lender shall have received a Borrowing Base Certificate, duly
executed and completed by a Senior Officer, setting forth the calculation of the
Borrowing Base as of the initial Credit Extension Date, together with the other
documents described in Section 2.3.

4.1.6.  The Lender shall have received such other certificates, opinions,
documents and instruments relating to the transactions contemplated hereby as
the Lender or counsel to the Lender may reasonably request.

In consideration of the Lender’s entry into this Agreement, and as security for
the prompt payment when due of all sums of principal, purchase price and
interest advanced by the Lender pursuant to the Note as well as for payment of
any other sums owing pursuant to this Agreement, or any of the other Credit
Documents, together with any and all extensions, renewals, modifications and
amendments thereof and as security for the performance and observance of all of
the covenants, agreements and conditions contained in the Note, this Agreement
and all of the other Credit Documents, the Borrower shall, at its sole expense,
execute and deliver or cause to be executed and delivered to the Lender and
record or cause to be recorded, if appropriate, the Credit Documents, each of
which shall be in such form and content, and executed by such persons and/or
entities, as the Lender shall in its reasonable discretion require.

4.2.          Initial and Subsequent Credit Extensions.  The obligation of the
Lender to make each Credit Extension to the Borrower (including, without
limitation, the making of the initial Credit Extension) is subject to the
further conditions precedent that, both immediately prior to such Credit
Extension and after giving effect thereto:

4.2.1.  no Default shall have occurred and be continuing; and

4.2.2.  the representations and warranties made by the Borrower herein shall be
true and complete on and as of the date of the making of such Loans with the
same force and effect as if made on and as of such date (except to the extent
such representations and warranties expressly relate to an earlier date); and

4.2.3.  the sum of (a) the aggregate unpaid principal amount of Revolving Credit
Loans plus (b) the aggregate principal amount of the Revolving Credit Loan or
Loans to be made on such Credit Extension Date (if any) shall not exceed an
amount equal to the Borrowing Base reflected on the most recent Borrowing Base
Certificate delivered pursuant to Sections 2.3 hereof and dated not more than
thirty (30) days prior to the date of such Credit Extension.

Each request for a Credit Extension by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in Sections 4.2.1 and
4.2.2 above (both as of the date of such notice and, unless the Borrower
otherwise notifies the Lender, as of the date of such Credit Extension).

Section 5.  Representations and Warranties.  

The Borrower represents and warrants to the Lender:

5.1.          Existence.  The Borrower:  (a) is a corporation, duly organized
and validity existing under the laws of the jurisdiction of its formation;
(b) has all requisite corporate power and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (c) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Material Adverse Effect.

5.2.          Financial Condition.  All financial statements and information
relating to Borrower which has been filed with the United States Securities and
Exchange Commission (“SEC”) is materially true and correct as of the date filed
and has been prepared in accordance with past practices consistently applied.

5.3.          Litigation.  There are no legal or arbitral proceedings or any
proceedings by or before any Governmental or regulatory authority or agency now
pending or (to the knowledge of the Borrower) threatened against the Borrower
which, if adversely determined, is reasonably likely to have a Material Adverse
Effect.

 
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5.4           No Violation.  The execution, delivery and performance by the
Borrower shall not contravene any law or any governmental rule or order binding
on the Borrower or its respective articles of incorporation or bylaws, nor
violate any agreement or instrument by which the Borrower is bound nor result in
the creation of a Lien on any assets of the Borrower except the Lien granted to
the Lender herein.  No notice to, or consent by, any governmental body is needed
in connection with this transaction.

5.5.          Borrower Action.  The Borrower has all necessary corporate power
and authority to execute, deliver and perform its respective obligations under
each of the Credit Documents to which it is a party and the execution, delivery
and performance thereof by the Borrower has been duly authorized by all
necessary corporate action on its part; and this Agreement has been duly and
validity executed and delivered by the Borrower and constitutes, and each of the
Credit Documents to which the Borrower is a party when executed and delivered by
the Borrower will constitute the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms, except that the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and by application of general principles of equity (regardless of
whether enforcement is considered in proceedings at law or in equity).

5.6           Approvals.  Except for any filings under applicable securities
laws, no authorizations, approvals or consents of, and no filings or
registrations with, any Governmental or regulatory authority or agency are
necessary for the execution, delivery or performance by the Borrower of the
Credit Documents to which it is a party or for the validity or enforceability
thereof.

5.7.          Taxes.  The Borrower is delinquent in filing its federal income
tax returns.    Borrower does not anticipate any material balances due upon
filing its delinquent returns.  The charges, accruals and reserves on the books
of the Borrower in respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate.

5.8.          Compliance with Laws.  The Borrower is in compliance with all
laws, regulations, rulings, orders, injunctions, decrees, conditions or other
requirements applicable to or imposed upon the Borrower by any law or by a
governmental authority, court or agency, except to the extent the failure to so
comply would not have a Material Adverse Effect.

5.9.          Disclosure.  No information, report, financial statement, exhibit,
schedule or disclosure letter furnished in writing by or on behalf of the
Borrower to the Lender in connection with the negotiation of this Agreement or
other Credit Documents or included therein or delivered thereto contains any
untrue statement of material fact or omits or omitted to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.  All written information furnished after
the date hereof by the Borrower to the Lender in connection with this Agreement
and the transactions contemplated hereby will be true, complete and accurate in
every material respect or based on reasonable estimates on the date as of which
such information is stated or certified.  No fact is known to the Borrower
(other than matters of a general economic nature) which would cause a Material
Adverse Effect.

5.10.        Credit.  As security for the full and timely payment of the Secured
Obligations in accordance with the terms hereof, from and after the initial
Credit Extension Date, this Agreement shall create in favor of the Lender a
legal, valid, enforceable and (when the financing statements referred to in
Section 4.1.3 hereof have been filed in the relevant offices) perfected security
interest in all right, title and interest of the Borrower in the Collateral.

5.11.        Reaffirmation.  Each request for an advance made by the Borrower
pursuant to this Agreement shall, unless the Lender is otherwise notified in
writing prior to the time of such advance, constitute (a) an automatic
representation and warranty by the Borrower to the Lender that there does not
then exist an Event of Default, and (b) a reaffirmation as of the date of said
request that all of the representations and warranties of the Borrower contained
in this Agreement or any of the other Credit Documents are true, accurate and
correct in all material respects except with respect to those representations
and warranties which are made as of a specific date.

5.12.        Survival of Representation and Warranties.  Borrower represents,
warrants and covenants to the Lender that all representations and warranties of
the Borrower contained in this Agreement and each of the other Credit Documents
shall be true at the time of the Borrower’s execution of this Agreement and such
other Credit Documents, and shall survive the execution, delivery and acceptance
thereof by the Lender and the parties hereto and the closing of the transactions
described therein or related thereto.

Section 6.  Covenants.  

Until the later of (a) the Maturity Date or (b) the date the Commitment Amount
is no longer in effect or (c) the date payment in full of the principal and
interest on all Loans has been made and all other amounts payable by the
Borrower hereunder has occurred:

6.1.          Litigation.  The Borrower will promptly give the Lender notice of:

 
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6.1.1.  all legal or arbitral proceedings, and of all proceedings by or before
any Governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceeding, affecting the Borrower, except
proceedings which, if adversely determined, would not have a Material Adverse
Effect; or

6.1.2.  the issuance by any United States Federal or state court or any United
States Federal or state regulatory authority of any injunction, order or other
restraint prohibiting, or having the effect of prohibiting or delaying, the
making of Credit Extensions, or the institution of any litigation or similar
proceedings seeking any such injunction, order or other restraint.

6.2.          Existence, Etc.  Borrower will:

6.2.1.  preserve and maintain its corporate existence and all of its material
licenses, rights, privileges, franchises, governmental authorizations, patents,
trademarks, copyrights or other rights necessary for the ownership of its
properties and the advantageous conduct of its business and as may be required
from time to time by applicable law;

6.2.2.  comply with the requirements of all applicable laws, rules, regulations
and orders of Governmental or regulatory authorities if failure to comply with
such requirements would have a Material Adverse Effect;

6.2.3.  pay and discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its property prior
to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained;

6.2.4.  maintain all of its properties used or useful in its business in good
working order and condition, ordinary wear and tear excepted;

6.2.5.  keep proper books of record and account in accordance with GAAP, in
which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities, and permit
representatives of the Lender, during normal business hours and upon reasonable
prior notice to the Borrower, to examine, copy and make extracts from their
books and records, to inspect its properties, and to discuss their business and
affairs with their officers and independent public accountants (and by this
provision the Borrower authorizes said accountants to discuss the business and
affairs of the Borrower with such representatives), all to the extent reasonably
requested by the Lender;

6.2.6.  provide Lender by fax or email, each Wednesday by 12 noon Eastern time,
Borrower’s Weekly Flash Report reflecting Borrower’s current balances of cash,
accounts receivable, accounts payable, inventory and sales order activity
through the previous Friday, and within three (3) business days thereafter, make
any mandatory prepayment required under Section 2.7;

6.2.7.  immediately notify Lender of the receipt of any payment on any Account
or Account Receivable, or the occurrence of any event which has a material
impact (positive or negative) on the Borrower’s financial condition or business
prospects.  For purposes of this Section 6.2.7, an item will be deemed to have a
material impact if it involves an increase or decrease, or a receipt or
expenditure, of $250,000 or more.

6.2.8.  provide Lender quarterly financial statements within thirty (30) days
after the end of each calendar quarter, with such detail as Lender may
reasonably require; and

6.2.9.  provide Lender a weekly report (which may be by telephone) regarding all
sales, collections and any other significant events regarding the Borrower or
its business.

6.3.          Use of Proceeds.  The Borrower will use the proceeds of the Loans
as provided in Section 1.2.1.

6.4.          Computation of Borrowing Base.  For the purpose of computing the
Borrowing Base and its components and for the purpose of establishing the
location and value of Collateral, the Borrower shall promptly upon request of
the Lender furnish to the Lender information reasonably adequate to identify the
Inventory, the Borrower’s Accounts and the other Collateral at such times and in
such form and substance as may be reasonably requested by the Lender, including,
but not limited to, copies of sales orders and raw material purchase
documents.  Any documents, schedules, invoices or other paper delivered to the
Lender by the Borrower may be destroyed or otherwise disposed of by the Lender
six (6) months after they are delivered to or received by the Lender.  The
Lender may make permanent records of all such documents, schedules, invoices and
other papers, and the Lender shall be under no obligation to destroy or to
return such documents, schedules, invoices and other papers to the Borrower.

 
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6.5.          Verification.  The Borrower hereby authorizes the Lender to make
verifications of its Accounts and Inventory in any manner and through any
reasonable medium that the Lender considers advisable.

6.6           Taxes.  Within six (6) months following the date hereof, Borrower
shall file all delinquent federal income and other tax returns which are
required to be filed by it.  Borrower will pay all taxes due pursuant to such
returns or pursuant to any assessment received by Borrower, except to the extent
the same may be contested.  In addition, from and after the date hereof,
Borrower shall file all federal income tax returns and other tax returns
required to be filed prior to the date such returns are delinquent.  Borrower’s
failure to comply strictly with the provisions of this Section 6.6 shall be an
Event of Default under this Agreement.

Section 7.  Events of Default.

7.1.          Events of Default.  If one or more of the following events (herein
called “Events of Default”) shall occur and be continuing:

7.1.1.  The Borrower shall default in the payment when due of any principal of
any Loan; or

7.1.2.  The Borrower shall default in the payment when due of interest on any
Loan or any fee or other amount payable by them under any Credit Document and
such default shall continue unremedied for ten (10) days or more; or

7.1.3.  Any representation, warranty or certification made or deemed made by the
Borrower or in any certificate, document or other written statement furnished to
the Lender pursuant to the provisions thereof, shall prove to have been
materially false or misleading as of the time made or deemed made in any
material respect; or

7.1.4.  The Borrower shall default in the performance of any of its obligations
in this Agreement; or

7.1.5.  The Borrower shall default in the performance of any of its obligations
under any of the Credit Documents (other than this Agreement) after giving
effect to any applicable grace period; or

7.1.6.  The Borrower shall admit in writing its inability to pay its Debts as
such Debts become due; or

7.1.7.  Borrower shall (a) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (b) make a general assignment
for the benefit of its creditors, (c) commence a voluntary case under the
Bankruptcy Code (as now or hereafter in effect), (d) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of Debts, (e) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code, or
(f) take any action for the purpose of effecting any of the foregoing; or

7.1.8.  A proceeding or case shall be commenced, without the application or
consent of Borrower, in any court of competent jurisdiction, seeking (a) its
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its Debts, (b) the appointment of a trustee, receiver,
custodian, liquidator or the like of Borrower or all or any substantial part of
its assets, or (c) similar relief in respect of Borrower under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of Debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of ninety (90) or more
days; or an order for relief against Borrower shall be entered in an insolvency
case under the Bankruptcy Code; or

7.1.9.  The Liens created by the Credit Documents shall at any time not
constitute a valid and perfected Lien on the Collateral described therein (to
the extent perfection by filing, registration, recordation or possession is
required herein or therein) in favor of the Lender, or any of the provisions
hereof shall at any time cease to be in full force and effect or shall be
declared null and void or the validity or enforceability thereof shall be
contested by the Borrower; or

7.2.          Remedies.  Upon the occurrence of any Event of Default, the Lender
may, at its option, do any or all of the following:

7.2.1.  Cancel the Commitment Amount and/or declare the principal of all amounts
owing under this Agreement and the other Credit Documents and all other
indebtedness of the Borrower to the Lender, together with interest thereon, to
be forthwith due and payable, regardless of any other specified maturity or due
date, without notice of default, presentment or demand for payment, protest or
notice of nonpayment or dishonor, or other notices or demands of any kind or
character, and without the necessity of prior recourse to any security;

 
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7.2.2.  Implement any or all remedies available to the Lender under or in
connection with the Credit Documents;

7.2.3.  If the Event of Default may be cured by the Lender by taking actions or
making payments of money, the Lender shall have the right (but not the
obligation) to take such actions (including without limitation the retention of
attorneys and the commencement or prosecution of actions on its own behalf or on
behalf of the Borrower), make such payments and pay for the costs of such
actions (including without limitation reasonable attorneys’ fees and
disbursements and court costs) from its own funds; provided, that the taking of
such actions at the Lender’s expense or the making of such payments by the
Lender out of the Lender’s own funds shall not be deemed to cure such Event of
Default, and the same shall not be so cured unless and until the Borrower shall
have reimbursed the Lender for such payment, together with interest at the
Post-Default Rate from the date of such payment until the date of
reimbursement.  If the Lender advances its own funds for such purposes, such
funds shall be secured by the Credit Documents, notwithstanding that such
advances may cause the total amount advanced thereunder to exceed the amount
committed to be advanced pursuant to this Agreement, and the Borrower shall
immediately upon demand reimburse the Lender therefore with interest at the
Post-Default Rate, from the date of such advance until the date of
reimbursement;

7.2.4.  Exercise any and all of its rights under the Credit Documents, or
otherwise as a secured creditor, including, without limitation, foreclosing any
security, and exercising any other rights with respect to security whether under
the Credit Documents or any other agreement or as provided by law, all in such
order and in such manner as the Lender in its sole discretion may determine; and

7.2.5.  In the case of the occurrence of an Event of Default referred to in
Sections 7.1.7 or 7.1.8, the Commitment Amount shall automatically be cancelled
and the principal amount then outstanding of, and the accrued interest on, the
Loans and all other amounts payable by the Borrower hereunder and under the Note
shall automatically become immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrower.

7.3.          Other Amounts Deemed Loans.  If the Borrower fails to pay any tax,
assessment, Governmental charge or levy within the time permitted, or to comply
with any other obligation, the Lender may, but shall not be obligated to, pay,
satisfy, discharge or bond the same for the account of the Borrower, and to the
extent permitted by law and at the option of the Lender, all monies so paid by
the Lender on behalf of the Borrower shall be deemed Secured Obligations.

7.4.          Cumulative Remedies; No Waiver.  All remedies of the Lender
provided for herein are cumulative and shall be in addition to any and all other
rights and remedies provided in the Note, this Agreement, or any of the Credit
Documents, or provided by law from time to time.  The exercise of any right or
remedy by the Lender hereunder shall not in any way constitute a cure or waiver
of default hereunder or under the Note, this Agreement or the Credit Documents,
nor invalidate any notice of default or any act done pursuant to any such
notice, nor prejudice the Lender in the exercise of any rights hereunder or
under the Credit Documents, unless in the exercise of said right, the Lender
realizes all amounts owed to it under the Credit Documents and all Events of
Default are cured.  No waiver by the Lender of any default or breach by the
Borrower hereunder shall be implied from any omission by the Lender to take
action on account of such default if such default persists or is other than the
default expressly made the subject of the waiver.  Any such express waiver shall
be operative only for the time and to the extent therein stated.  Any waiver of
any covenant, term or condition contained herein shall not be construed as a
waiver of any subsequent breach of the same covenant term or condition.  The
consent or approval by the Lender to or of any act by the Borrower shall not be
deemed to waive or render unnecessary consent or approval to or of any
subsequent act.

Section 8.  Miscellaneous.

8.1.          Waiver.  No failure on the part of the Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement or any Note shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
this Agreement or any Note operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under this Agreement or any
Note preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

8.2.          Notices.  Except as otherwise expressly provided herein, any
notice or other communication in connection with this Agreement must be in
writing and must be sent by United States certified mail, return receipt
requested, postage prepaid, by a nationally recognized overnight courier
guaranteeing next day delivery, by facsimile transmission, or by personal
delivery, properly addressed as follows:

 
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If to Borrower, to:
Axion International Holdings, Inc.
180 South Street, Suite 104
New Providence, NJ  07974
Attn: Steve Silverman
Facsimile:  908-542-0999
   
with a copy to:
Joel D. Mayersohn
Roetzel & Andress, LPA
350 East Las Olas Boulevard, Ste. 1150
Fort Lauderdale, FL  33301
Facsimile:  954-462-4260
   
If to Lender, to:
Greenebaum & Rose Associates, Inc.
5301 Wisconsin Avenue, N.W.
Suite 510
Washington, D.C.  20015
Attention: Samuel G. Rose
Facsimile:  202-686-3617
   
and to:
Samuel G. Rose
7661 Fisher Island Drive
Miami, FL  33109
   
with a copy to:
Ronald S. Shapiro
Shapiro, Lifschitz and Schram, PC
1742 N Street, NW
Washington, D.C.  20036
Facsimile:  202-689-1901
   

All notices will be deemed given three (3) business days following deposit in
the United States mail with respect to certified or registered letters, one (1)
business day following deposit if delivered to an overnight courier guaranteeing
nationwide next day delivery (e.g., UPS or FedEx), and on the same day if sent
by personal delivery or by facsimile transmission (with proof of
transmission).  Attorneys for each party will be authorized to give notices for
each such party.  Any party may change its address for the service of notice by
giving written notice of such change to the other party in any manner above
specified.

8.3.          Amendments, Etc.  Except as otherwise expressly provided herein,
any provision of this Agreement or the Note may be amended or modified only by
an instrument in writing signed by the Borrower and the Lender, and any
provision of this Agreement may be waived by the Lender.

8.4.          Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
 

8.5.          Assignments and Participations.  Neither party may assign its
rights or obligations hereunder or under the Note without the prior consent of
the other party.

8.6.          Further Assurances.  The Borrower shall execute, acknowledge and
deliver or cause to be executed, acknowledged and delivered, any and all such
further assurances and other agreements or instruments, and take or cause to be
taken all such other action, as shall be reasonable necessary from time to time
to give effect to the Credit Documents and the transactions contemplated
thereby.

8.7.          Captions.  The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

8.8.          Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, taken together,
shall constitute one and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart.

 
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8.9.          Confidential Information.  Lender acknowledges that the
information it will receive under this Agreement, including but not limited to
the information provided by Borrower under Sections 6.2.7, 6.2.8 and 6.2.9
hereof, is confidential and has been (or will be) prepared solely for Lender’s
private and confidential use and is not to be used for any purpose other than in
connection with this Agreement.  By accepting this information, now and in the
future, Lender agrees with the Borrower to maintain such confidential
information in confidence, to the extent that such information is material and
is not otherwise public.  Lender furthermore recognizes and acknowledges its
obligations under applicable federal securities laws as to the use of such
information.

8.10.       Governing Law:  Submission to Jurisdiction; Waiver of Jury
Trial.  THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF MARYLAND.  THE BORROWER HEREBY SUBMITS
TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES DISTRICT COURT OR MARYLAND
STATE COURT SITTING IN MONTGOMERY COUNTY, MARYLAND, FOR THE PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  THE BORROWER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND
ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.  THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  THIS PROVISION IS A MATERIAL INDUCEMENT TO
THE LENDER TO ENTER INTO THE FINANCING TRANSACTION.  IT SHALL NOT IN ANY WAY
AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE LENDER’S  ABILITY TO PURSUE ITS
REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR COGNOVIT
PROVISION CONTAINED HEREIN OR ANY OTHER DOCUMENT RELATED HERETO OR THERETO.

 
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IN WITNESS WHEREOF, the Borrower has caused this Agreement to be duly executed
as of the day and year first above written.

AXION INTERNATIONAL HOLDINGS, INC.,
a Colorado corporation
 
By:
/s/ Steve Silverman
Print Name:  Steve Silverman
Title:  Chief Executive Officer

Personal Undertaking

The undersigned Steve Silverman hereby agrees, in his personal capacity, that so
long as any amount remains outstanding under the Revolving Credit Note, if the
Borrower voluntarily or involuntarily becomes the subject of a bankruptcy,
insolvency, reorganization or similar proceeding, or if the Borrower defaults in
the payment of any obligation owing to Lender, the undersigned will continue to
act on behalf of the Company and use commercially reasonable efforts to cause
the Company to collect the Accounts and Accounts Receivable and to liquidate any
other Collateral for the Lender’s benefit.

 
/s/ Steve Silverman
   
Steve Silverman
 

 
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IN WITNESS WHEREOF, the Lender has caused this Agreement to be duly executed as
of the day and year first above written.

/s/ Samuel G. Rose
Samuel G. Rose

 
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EXHIBIT 2.2

REVOLVING CREDIT NOTE

 
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EXHIBIT 2.3

BORROWING BASE CERTIFICATE

 
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EXHIBIT 4.1.3

UCC FINANCING STATEMENT

 
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