Exhibit 10.1

 

Loan Agreement
Date of Agreement: November 13, 2014

                                                            Account Number:
XXXXXXXXX
Principal Amount:      $1,200,000

 
Introduction. This Agreement dated and effective as of November 13, 2014, is
entered into between Tel-Instrument Electronics Corp. (the "Borrower") and Bank
of America, NA (the "Bank"). The Borrower agrees to the following terms and
conditions:
 
1.  LOAN

1.1       Loan Amount. The Bank agrees to provide a term loan to the Borrower in
the amount of One Million Two Hundred Thousand and 00/100 Dollars
($1,200,000.00) (the "Commitment").
 
1.2       Availability Period. The loan is available in one disbursement from
the Bank on the date of this Agreement.

1.3       Interest Rate. The interest rate is 6% per year.

1.4        Repayment Terms. The Borrower will repay principal and interest in
equal combined installments of Thirty-Six Thousand Five Hundred Fifty-One and
26/100 Dollars ($36,551.26) beginning on December 13, 2014, and on the Same day
of each month thereafter, and ending on November 13, 2017 (the "Repayment
Period"). In any event, on the last day of the Repayment Period, the Borrower
will repay the remaining principal balance plus any interest then due. Each
installment, when paid, will be applied first to the payment of interest
accrued. The balance of each installment will be applied to the repayment of
principal.
 
1.5       Prepayments.
 
(a)        The Borrower may prepay the loan in full or in part at any time. The
prepayment will be applied to the most remote payment of principal due under
this Agreement
 
(b)        Each prepayment, whether voluntary, by reason of acceleration or
otherwise, will be accompanied by the amount of accrued interest on the amount
prepaid, and the prepayment fee described below.
 
(c)        The prepayment fee will be the sum of fees calculated separately for
each Prepaid Installment, as follows:
 
(i)          The Bank will first determine the amount of interest which would
have accrued each month for the Prepaid Installment had it remained outstanding
until the applicable Original Payment Date, using the interest rate applicable
to the Prepaid Installment under this Agreement;
 
(ii)         The Bank will then subtract from each monthly interest amount
determined in (i), above, the amount of interest which would accrue for that
Prepaid Installment if it were reinvested from the date of prepayment through
the Original Payment Date, using the Treasury Rate.
 
(iii)        If (i) minus (ii) for the Prepaid Installment is greater than zero,
the Bank will discount the monthly differences to the date of prepayment by the
Treasury Rate. The Bank will then add together all of the discounted monthly
differences for the Prepaid Installment.
 
(d)        The following definitions will apply to the calculation of the
prepayment fee:
 
(i)           "Original Payment Dates" mean the dates on which the prepaid
principal would have been paid if there had been no prepayment.  If any of the
principal would have been paid later than the end of the fixed rate interest
period in effect at the time of prepayment, then the Original Payment Date for
that amount will be the last day of the interest period.
 
 
 

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(ii)         "Prepaid Installment" means the amount of the prepaid principal
which would have been paid on a single Original Payment Date.
 
(iii)        "Treasury Rate" means the interest rate yield for U.S. Government
Treasury Securities which the Bank determines could be obtained by reinvesting a
specified Prepaid Installment in such securities from the date of prepayment
through the Original Payment Date. The Bank may adjust the Treasury Rate to
reflect the compounding, accrual basis, or other costs of the prepaid amount
Each of the rates is the Bank's estimate only and the Bank is under no
obligation to actually reinvest any prepayment The rates will be based on
information from either the Telerate or Reuters information services, The Wall
Street Journal, or other information sources the Bank deems appropriate.

2.  COLLATERAL

2.1       Personal Property. The personal property listed below now owned or
owned in the future by the parties listed below will secure Borrower's
obligations to the Bank under this Agreement The collateral is further defined
in security agreement(s) executed by the owners of the collateral. In addition,
all personal property collateral owned by the Borrower securing this Agreement
shall also secure all other present and future obligations of the Borrower to
the Bank and to any affiliate of the Bank (excludlng any consumer credit covered
by the federal Truth in Lending law, unless the Borrower has otherwise agreed in
writing or received written notice thereof). All personal property collateral
securing any other present or future obligations of the Borrower to the Bank
shall also secure this Agreement.

(a)        Equipment and fixtures owned by the Borrower.

(b)        Inventory owned by the Borrower.

(c)        Receivables owned by the Borrower.
 
3.  LOAN ADMINISTRATION AND FEES
 
3.1       Fees.
 
(a)       The Borrower will pay to the Bank the fees set forth on Schedule A.
 
3.2       Collection of Payments.
 
(a)        Payments will be made by debit to a deposit account, if direct debit
is provided for in this Agreement or is otherwise authorized by the Borrower.
For payments not made by direct debit, payments will be made by mail to the
address shown on the Borrower's statement, or by such other method as may be
permitted by the Bank.

(b)       Each disbursement by the Bank and each payment by the Borrower will be
evidenced by records kept by the Bank which will, absent manifest error, be
conclusively presumed to be correct and accurate and constitute an
account stated between the Borrower and the Bank.
 
3.3       Borrower's Instructions.
 
(a)        Subject to the terms. conditions and procedures stated elsewhere in
this Agreement, the Bank may honor instructions for advances or repayments and
any other instructions under this Agreement given by the Borrower (if an
individual), or by anyone of the individuals the Bank reasonably believes is
authorized to sign loan agreements on behalf of the Borrower, or any other
individual(s) designated by anyone of such authorized signers (each an
"Authorized Individual"). The Bank may honor any such instructions made by
anyone of the Authorized Individuals. whether such instructions are given in
writing or by telephone, telefax or Internet and intranet websites designated by
the Bank with respect to separate products or services offered by the Bank.
 
 
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3.4       Direct Debit.
 
(a)        The Borrower agrees that on the due date of any amount due under this
Agreement, the Bank will debit the amount due from deposit account number
NJ-004044013471 owned by the Borrower, or such other of Borrower's accounts with
the Bank as designated in writing by the Borrower (the "Designated Account").
Should there be insufficient funds in the Designated Account to pay all such
sums when due, the full amount of such deficiency shall be immediately due and
payable by the Borrower.
 
(b)        The Borrower may terminate this direct debit arrangement at any time
by sending written notice to the Bank. If the Borrower terminates this
arrangement, then the principal amount outstanding under this Agreement will at
the option of the Bank bear interest at a rate per annum which is one (1.0)
percentage point higher than the rate of interest otherwise provided under this
Agreement and the amount of each payment will be increased accordingly.
 
3.5       Banking Days. Unless otherwise provided in this Agreement, a banking
day is a day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close, or are in fact closed, in the state where the
Bank's lending office is located. All payments and disbursements which would be
due or which are received on a day which is not a banking day will be due or
applied, as applicable, to the credit on the next banking day.
 
3.6       Interest Calculation. Except as otherwise stated in this Agreement,
all interest and fees, if any, will be computed on the basis of a 360-day year
and the actual number of days elapsed. This results in more interest or a higher
fee than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.
 
3.7       Default Rate. Upon the occurrence of any default or after maturity or
after judgment has been rendered on any obligation under this Agreement, all
amounts outstanding under this Agreement, including any unpaid interest, fees,
or costs, will at the option of the Bank bear interest at a rate which is 6.0
percentage points) higher than the rate of interest otherwise provided under
this Agreement. This may result in compounding of interest. This will not
constitute a waiver of
any default.

4.  CONDITIONS
 
Before the Bank is required to extend any credit to the Borrower under this
Agreement, it must receive any documents and other items it may reasonably
require, in form and content acceptable to the Bank, including any items
specifically listed below.
 
4.1       Authorizations. If the Borrower or any guarantor is anything other
than a natura! person, evidence that the execution, delivery and performance by
the Borrower and/or such guarantor of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.
 
4.2       Governing Documents. If required by the Bank, a copy of the Borrower's
organizational documents.
 
4.3       Security Agreements. Signed original security agreements covering the
.personal property collateral! which the Bank requires.
 
4.4       Perfection and Evidence of Priority. Evidence that the security
interests and liens in favor of the Bank are valid, enforceable, properly
perfected in a manner acceptable to the Bank and prior to all others' rights and
interests, except those the Bank consents to in writing. All title documents for
motor vehicles which are part of the collateral must show the Bank's interest.
 
4.5       Payment of Fees. Payment of all fees, expenses and other amounts due
and owing to the Bank. If any fee is not paid in cash, the Bank may, in its
discretion, treat the fee as a principal advance under this Agreement or deduct
the fee from the loan proceeds.
 
4.6       Environmental Information. A completed Bank form Environmental
Questionnaire.
 
 
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5.  REPRESENTATION AND WARRANTIES
 
When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewal of these representations and
warranties as of the date of the request:
 
5.1       Formation. If the Borrower is anything other than a natural person, it
is duly formed and existing under the laws of the state or other jurisdiction
where organized.

5.2       Authorization. This Agreement, and any instrument or agreement
required under this Agreement, are within the Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational papers.
 
5.3       Good Standing. In each state in which the Borrower does business, it
is properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.
 
5.4       Financial Information. All financial and other information that has
been or will be supplied to the Bank is sufficiently complete to give the Bank
accurate knowledge of the Borrowers (and any guarantor's) financial condition,
including all material contingent liabilities. Since the date of the most recent
financial statement provided to the Bank, there has been no material adverse
change in the business condition (financial or otherwise), operations,
properties or prospects of the Borrower (or any guarantor). If the Borrower is
comprised of the trustees of a trust, the above representations shall also
pertain to the trustor(s) of the trust.
 
5.5       Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.
 
5.6       Other Obligations. The Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation, except as have been disclosed in
writing to the Bank.
 
5.7       Tax Matters. The Borrower has no knowledge of any pending assessments
or adjustments of its income tax for any year and all taxes due have been paid,
except as have been disclosed in writing to the Bank.
 
5.8       No Event of Default. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.
 
5.9       Collateral. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects or any liens or
interests of others, except those which have been approved by the Bank in
writing.
 
5.10     ERISA Plans.

(a)        Each Plan (other than a multiemployer plan) is in compliance in all
material respects with ERISA, the Code and other federal or state law, including
all applicable minimum funding standards and there have been no prohibited
transactions with respect to any Plan (other than a multiemployer plan), which
has resulted or could reasonably be expected to result in a material adverse
effect.
 
(b)        With respect to any Plan subject to Title IV of ERISA:

(i)         No reportable event has occurred under Section 4043(c) of ERISA
which requires notice.
 
(ii)        No action by the Borrower or any ERISA Affiliate to terminate or
withdraw from any Plan has been taken and no notice of intent to terminate a
Plan has been filed under Section 4041 or 4042 of ERISA.

(c)        The following terms have the meanings indicated for purposes of this
Agreement:

(i)         "Code" means the Internal Revenue Code of 1986, as amended.
 
 
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(ii)        "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

(iii)       "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b} or (c) of the Code.
 
(iv)       "Plan" means a plan within the meaning of Section 3(2) of ERISA
maintained or contributed to by the Borrower or any ERISA Affiliate, including
any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.
 
6.  COVENANTS
  
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
 
6.1       Use of Proceeds. To use the proceeds of the credit only for business
purposes.
 
6.2       Financial Information. To provide the following financial information
and statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time. The Bank reserves the
right, upon written notice to the Borrower, to require the Borrower to deliver
financial information and statements to the Bank more frequently than otherwise
provided below, and to use such additional information and statements to measure
any applicable financial covenants in this Agreement.
 
(a)        Within 120 days of Borrower's fiscal year end:
 
(i)         The annual financial statements of the Borrower, certified and dated
by an authorized financial officer. These financial statements must be audited
(with an opinion satisfactory to the Bank) by a Certified Public Accountant
acceptable to the Bank.
 
(ii)        A detailed accounts payable aging of the Borrower by invoice or a
summary aging by account creditor, as specified by the Bank.
 
(iii)       A detailed receivables aging of the Borrower by invoice or a summary
aging by account debtor, as specified by the Bank.
 
(iv)       Copies of the Form 10-K Annual Report, with the Securities and
Exchange Commission.
 
6.3       Other Debts. Not to have outstanding or incur any direct or contingent
liabilities or lease obligations (other than
those to the Bank or to any affiliate of the Bank), or become liable for the
liabilities of others, without the Bank's written consent. This does not
prohibit:

(a)        Acquiring goods, supplies, or merchandise on normal trade credit.

(b)        Liabilities, lines of credit and leases in existence on the date of
this Agreement disclosed in writing to the Bank.

(c)        If the Borrower is a natural person, additional debts of the Borrower
as an individual for consumer purposes.
 
6.4       Other Liens. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower now or later owns,
except
 
(a)        Liens and security interests in favor of the Bank or any affiliate of
the Bank.
 
(b)        Liens outstanding on the date of this Agreement disclosed in writing
to the Bank.

(c)        Liens in favor of BCA Mezzanine Fund, L.P., a Delaware limited
partnership as related to the execution of Stock Warrants pursuant to the Common
Stock Warrant Agreement between the Borrower and BCA Mezzanine Fund, L.P. dated
September 10, 2010, July 13,2012, November 20,2012, February 19,2013, July 12,
2013, and August12, 2013 so long as said liens are subordinated to the Bank's
first security interest in all corporate assets.
 
 
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(d)        Liens in favor of Millennium Trust Company, LLC Custodian FBO Vincent
J. Dowling, Jr., Roth IRA (Account No. 287B5524), an Illinois limited liability
company, as related to the execution of Stock Warrants pursuant to the Common
Stock Warrant Agreement between Borrower and Millennium Trust Company, LLC
Custodian FBO Vincent J. Dowling, Jr., Roth IRA (Account No. 287B5524) dated
July 26, 2012 and revised on April 11, 2014, so long as said liens are
subordinated to the Bank's first security interest in all corporate assets.
 
6.5       Maintenance of Assets.

(a)        Not to sell, assign, lease, transfer or otherwise dispose of any part
of the Borrower's business or the Borrower's assets except inventory sold in the
ordinary course of the Borrower's business.
 
(b)        Not to sell, assign, lease, transfer or otherwise dispose of any
assets for less than fair market value, or enter into any agreement to do so.
 
(c)        Not to enter into any sale and leaseback agreement covering any of
its fixed assets.

(d)        To maintain and preserve all rights, privileges, and franchises the
Borrower now has.
 
(e)        To make any repairs, renewals, or replacements to keep the Borrower's
properties in good working condition.
 
6.6       Loans.  Not to make any loans, advances or other extensions of credit
to any individual or entity except for extensions of credit  in the nature of
accounts receivable arising from the sale or lease of goods or services in the
ordinary course of business to non-affiliated entities.
 
6.7       Change of Management. Not to make any substantial change in the
present executive or management personnel of the Borrower.
 
6.8       Change of Ownership. If the Borrower is anything other than a natural
person, not to cause, permit, or suffer any change in capital ownership such
that there is a material change, as determined by the Bank in its sole
discretion, in the direct or indirect capital ownership of the Borrower.
 
6.9       Additional Negative Covenants. Not to, without the Bank's written
consent

(a)        Enter into any consolidation, merger, or other combination, or become
a partner in a partnership, a member of a joint venture, or a member of a
limited liability company.
 
(b)        Acquire or purchase a business or its assets.
 
(c)        Engage in any business activities substantially different from the
Borrower's present business.
 
(d)        Liquidate or dissolve the Borrower's business.
 
6.10     Notices to Bank. To promptly notify the Bank in writing of:

(a)        Any event of default under this Agreement, or any event which, with
notice or lapse of time or both, would constitute an event of default.

(b)        Any change in the Borrower's name, legal structure, principal
residence, or name on any driver's license or special identification card issued
by any state (for an individual), state of registration (for a registered
entity), place of business, or chief executive office if the Borrower has more
than one place of business.
 
 
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6.11     Insurance.
 
(a)        General Business Insurance. To maintain insurance as is usual for the
business it is in.
 
(b)        Insurance Covering Collateral. To maintain all risk property damage
insurance policies (including without limitation windstorm coverage, and
hurricane coverage as applicable) covering the tangible property comprising the
collateral. Each insurance policy must be for the full replacement cost of the
collateral and include a replacement cost endorsement. The insurance must be
issued by an insurance company acceptable to the Bank and must include a
lender's loss payable endorsement in favor of the Bank in a form acceptable to
the Bank.

(c)        Evidence of lnsurance. Upon the request of the Bank, to deliver to
the Bank a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.
 
6.12     Compliance with Laws. To comply with the laws (including any fictitious
or trade name statute), regulations, and orders of any government body with
authority over the Borrower's business. The Bank shall have no obligation to
make any advance to the Borrower except in compliance with all applicable laws
and regulations and the Borrower shall fully cooperate with the Bank in
complying with all such applicable laws and regulations.
 
6.13     Books and Records. To maintain adequate books and records.
 
6.14     Audits. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrower's properties, books or records are in
the possession of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books
and records.
 
6.15     Perfection of liens. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect its
security interests and liens.
 
6.16     Cooperation. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.
 
6.17     Bank as Principal Depository. To maintain the Bank or one of its
affiliates as its principal depository bank, including for the maintenance of
business, cash management, operating and administrative deposit accounts.

7.  HAZARDOUS SUBSTANCES
 
7.1        Indemnity Regarding Hazardous Substances. The Borrower will indemnify
and hold harmless the Bank from any loss or liability the Bank incurs in
connection with or as a result of this Agreement, which directly or indirectly
arises out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a hazardous substance.
This indemnity will apply whether the hazardous substance is on, under or about
the Borrower's property or operations or property leased to the Borrower. The
indemnity includes but is not limited to attorneys' fees (including the
reasonable estimate of the allocated cost of in-house counsel and staff). The
indemnity extends to the Bank, its parent, subsidiaries and all of their
directors, officers, employees, agents, successors, attorneys and assigns
 
7.2       Compliance Regarding Hazardous Substances. The Borrower represents and
warrants that the Borrower has complied with all current and future laws,
regulations and ordinances or other requirements of any governmental authority
relating to or imposing liability or standards of conduct concerning protection
of health or the environment or hazardous substances.
 
7.3       Notices Regarding Hazardous Substances. Until full repayment of the
loan, the Borrower will promptly notify the Bank in writing of any threatened or
pending investigation of the Borrower or its operations by any governmental
agency under any current or future law, regulation or ordinance pertaining to
any hazardous substance.
 
 
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7.4       Site Visits, Observations and Testing. The Bank and its agents and
representatives will have the right at any reasonable time, after giving
reasonable notice to the Borrower, to enter and visit any locations where the
collateral securing this Agreement (the "Collateral") is located for the
purposes of observing the Collateral, taking and removing environmental samples,
and conducting tests. The Borrower shall reimburse the Bank on demand for the
costs of any such environmental investigation and testing. The Bank will make
reasonable efforts during any site visit, observation or testing conducted
pursuant to this paragraph to avoid interfering with the Borrower's use of the
Collateral. The Bank is under no duty to observe the Collateral or to conduct
tests, and any such acts by the Bank will be solely for the purposes of
protecting the Bank's security and preserving the Bank's rights under this
Agreement. No site visit, observation or testing or any report or findings made
as a result thereof ("Environmental Report") (I) will result in a waiver of any
default of the Borrower; (ii) impose any liability on the Bank; or (iii) be a
representation or warranty of any kind regarding the Collateral (including its
condition or value or compliance with any laws) or the Environmental Report
(including its accuracy or completeness). In the event the Bank has a duty or
obligation under applicable laws, regulations or other requirements to disclose
an Environmental Report to the Borrower or any other party, the Borrower
authorizes the Bank to
make such a disclosure. The Bank may also disclose an Environmental Report to
any regulatory authority, and to any other parties as necessary or appropriate
in the Bank's judgment. The Borrower further understands and agrees that any
Environmental Report or other information regarding a site visit, observation or
testing that is disclosed to the Borrower by the Bank or its agents and
representatives is to be evaluated (including any reporting or other disclosure
obligations of the Borrower) by the Borrower without advice or assistance from
the Bank.
 
7.5       Definition of Hazardous Substances. "Hazardous substances" means any
substance, material or waste that is or becomes designated or regulated as
"toxic," "hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any current or future federal, state or local law (Whether
under common law, statute, regulation or otherwise) or judicial or
administrative interpretation of such, including without limitation petroleum or
natural gas.
 
7.6       Continuing Obligation. The Borrower's obligations to the Bank under
this Article, except the obligation to give
notices to the Bank, shall survive termination of this Agreement and repayment
of the Borrower's obligations to the Bank under this Agreement

8.  DEFAULT AND REMEDIES
 
Without limiting any of the Bank's rights and remedies in this Agreement, if any
of the following events of default occurs, the Bank may do one or more of the
following without prior notice: declare the Borrower in default, stop making any
additional credit available to the Borrower, and require the Borrower to repay
its entire debt immediately. If an event which, with notice or the passage of
time, will constitute an event of default has occurred and is continuing, the
Bank has no obligation to make advances or extend additional credit under this
Agreement. In addition, if any event of default occurs, the Bank shall have all
rights, powers and remedies available under any instruments and agreements
required by or executed in connection with this Agreement, as well as all rights
and remedies available at law or in equity. If an event of default occurs under
the paragraph entitled "Bankruptcy/Receivers," below, with respect to the
Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.
 
8.1       Failure to Pay. The Borrower fails to make a payment under this
Agreement when due.
 
8.2       Covenants. Any default in the performance of or compliance with any
obligation, agreement or other provision contained in this Agreement (other than
those specifically described as an event of default in this Article).
 
8.3       Other Bank Agreements. Any default occurs under any guaranty,
subordination agreement, security agreement, deed of trust, mortgage, or other
document required by or delivered in connection with this Agreement or any such
document is no longer in effect, or any guarantor purports to revoke or disavow
the guaranty; or any representation or warranty made by any guarantor is false
when made or deemed to be made; or any default occurs under any other agreement
the Borrower (or any Obligor) has with the Bank or any affiliate of the Bank.
For purposes of this Agreement, "Obligor" shall mean any guarantor, any party
pledging collateral to the Bank, or, if the Borrower is comprised of the
trustees of a trust, any trustor.
 
8.4       Cross-default. Any default occurs under any agreement in connection
with any credit the Borrower (or any Obligor) has obtained from anyone else or
which the Borrower (or any Obligor) or any of the Borrower's related entities or
affiliates has guaranteed.
 
8.5       False Information. The Borrower or any Obligor has given the Bank
false or misleading information or representations.
 
 
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8.6       Bankruptcy/~Receivers. The Borrower, any Obligor, or any general
partner of the Borrower or of any Obligor files a bankruptcy petition, a
bankruptcy petition is filed against any of the foregoing parties and such
petition is not dismissed within a period of forty-five (45) days after the
filing, or the Borrower, any Obligor, or any general partner of the Borrower or
of any Obligor makes a general assignment for the benefit of creditors; or a
receiver or similar official is appointed for a substantial portion of
Borrower's or any Obligor's business; or the business is terminated, or such
Obligor is liquidated or dissolved
 
8.7       Revocation or Termination. If the Borrower is comprised of the
trustee(s) of a trust, the trust is revoked or otherwise terminated or all or a
substantial part of the Borrower's assets are distributed or otherwise disposed
of.
 
8.8       Lien Priority. The Bank fails to have an enforceable first lien
(except for any prior liens to which the Bank has consented in writing) on or
security interest in any property given as security for this Agreement (or any
guaranty).
 
8.9       Judgments. Any judgments or arbitration awards are entered against the
Borrower or any Obligor.
 
8.10     Death. If the Borrower or any Obligor is a natural person, the Borrower
or such Obligor dies or becomes legally incompetent; if the Borrower or any
Obligor is ~ trust, a trustor dies or becomes legally incompetent; if the
Borrower or any Obligor is a partnership, any general partner dies or becomes
legally incompetent.
 
8.11     Material Adverse Change. A material adverse change occurs, or is
reasonably likely to occur, in the Borrower's (or any Obligor's) business
condition (financial or otherwise), operations, or properties, or ability to
repay the credit
 
8.12     Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's or any Obligor's financial
condition or ability to repay.
 
8.13     ERISA Plans. A reportable event occurs under Section 4043(c) of ERISA,
or any Plan termination (or commencement of proceedings to terminate a Plan) or
the full or partial withdrawal from a Plan under Section 4041 or 4042 of ERISA
occurs; provided such event or events could reasonably be expected, in the
judgment of the Bank, to have
a material adverse effect.

9.  ENFORCING THIS AGREEMENT; MISCELLANEOUS
 
9.1       GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied or another basis
acceptable to the Bank.
 
9.2       Governing Law. Except to the extent that any law of the United States
may apply, this Agreement shall be governed and interpreted according to the
laws of New Jersey (the "Governing Law State"), without regard to any choice of
law, rules or principles to the contrary. Nothing in this paragraph shall be
construed to limit or otherwise affect any rights or remedies of the Bank under
federal law,
 
9.3       Venue and Jurisdiction. The Borrower agrees that any action or suit
against the Bank arising out of or relating to this Agreement shall be filed in
federal court or state court located in the Governing Law State. The Borrower
agrees that the Bank shall not be deemed to have waived its rights to enforce
this section by filing an action or suit against the Borrower in a venue outside
of the Governing Law State. If the Bank does commence an action or suit arising
out of or relating to this Agreement, the Borrower agrees that the case may be
filed in federal court or state court in the Governing Law State. The Bank
reserves the right to commence an action or suit in any other jurisdiction where
the Borrower, any Guarantor, or any collateral has any presence or is located,
The Borrower consents to personal jurisdiction and venue in such forum selected
by the Bank and waives any right to contest jurisdiction and venue and the
convenience of any such forum, The provisions of this section are material
inducements to the Bank's acceptance of this Agreement.
 
9.4       Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent.
 
 
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9.5       Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (a) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER DOCUMENTS
CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION AND (c) CERTIFIES THAT THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE.
 
9.6       Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
 
9.7       Expenses.
 
(a)        The Borrower shall pay to the Bank immediately upon demand the full
amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys' fees, expended or incurred by the Bank in connection with
(i) the negotiation and preparation of this Agreement and any related
agreements, the Bank's continued administration of this Agreement and such
related agreements, and the preparation of any amendments and waivers related to
this Agreement or such related agreements, (ii) filing, recording and search
fees. appraisal fees, field examination fees, title report fees, and
documentation fees with respect to any collateral and books and records of the
Borrower or any Obligor, (iii) the Bank's costs or losses arising from any
changes in law which are allocated to this Agreement or any credit outstanding
under this Agreement, and (iv) costs or expenses required to be paid by the
Borrower or any Obligor that are paid, incurred or advanced by the Bank,
 
(b)        The Borrower will indemnify and hold the Bank harmless from any loss,
liability, damages, judgments, and costs of any kind relating to or arising
directly or indirectly out of (i) this Agreement or any document required
hereunder, (ii) any credit extended or committed by the Bank to the Borrower
hereunder, and (iii) any litigation or proceeding related to or arising out of
this Agreement, any such document, or any such credit, including, without
limitation, any act resulting from the Bank complying with instructions the Bank
reasonably believes are made by any Authorized Individual. This paragraph will
survive this Agreement's termination, and will benefit the Bank and its
officers, employees, and agents.

(c)        The Borrower shall reimburse the Bank for any reasonable costs and
attorneys' fees incurred by the Bank in connection with (i) the enforcement or
preservation of the Bank's rights and remedies and/or the collection of any
obligations of the Borrower which become due to the Bank and in connection with
any "workout" or restructuring, and (ii) the prosecution or defense of any
action in any way related to this Agreement, the credit provided hereunder or
any related agreements, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by the Bank or any
other person) relating to the Borrower or any other person or entity.
 
9.8       Individual Liability. If the Borrower is a natural person, the Bank
may proceed against the Borrower's business and non-business property in
enforcing this and other agreements relating to this loan. If the Borrower is a
partnership, the Bank may proceed against the business and non-business property
of each general partner of the Borrower in enforcing this and other agreements
relating to this loan.
 
9.9       Joint and Several Liability. If two or more Borrowers sign this
Agreement, each Borrower agrees that it is jointly and severally liable to the
Bank for the payment of all obligations arising under this Agreement, and that
such liability is independent of the obligations of the other Borrowers.
 
 
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9.10     Set-Off. Upon and after the occurrence of an event of default under
this Agreement, (a) the Borrower hereby authorizes the Bank, at any time and
from time to time, without notice, which is hereby expressly waived by the
Borrower, and whether or not the Bank shall have declared any credit subject
hereto to be due and payable in accordance with the terms hereof, to set off
against, and to appropriate and apply to the payment of, the Borrower's
Obligations (whether matured or unmatured, fixed or contingent. liquidated or
unliquidated), any and all amounts owing by the Bank to the Borrower (Whether
payable in U.S. dollars or any other currency, whether matured or unmatured, and
in the case of deposits, whether general or special (except trust and escrow
accounts), time or demand and however evidenced), and (b) pending any such
action, to the extent necessary, to hold such amounts as collateral to secure
such Obligations and to return as unpaid for insufficient funds any and all
checks and other items drawn against any deposits so held as the Bank, in its
sole discretion, may elect. The Borrower hereby grants to the Bank a security
interest in all deposits and accounts maintained with the Bank to secure the
payment of all Obligations of the Borrower to the Bank under this Agreement and
all agreements, instruments and documents related to this Agreement
"Obligations" means all obligations, now or hereafter existing, of the Borrower
to the Bank under this Agreement and under any other agreement or instrument
executed in connection with this Agreement.
 
9.11     One Agreement. This Agreement and any related security or other
agreements required by this Agreement constitute the entire agreement between
the Borrower and the Bank with respect to each credit subject hereto and
supersede all prior negotiations, communications, discussions and correspondence
concerning the subject matter hereof.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
 
9.12     Notices. Unless otherwise provided in this Agreement or in another
agreement between the Bank and the Borrower, all notices required under this
Agreement shall be personally delivered or sent by first class mail. postage
prepaid. or by overnight courier to the addresses on the signature page of this
Agreement, or to such other addresses as the Bank and the Borrower may specify
from time to time in writing. Notices and other communications shall be
effective (i) if mailed, upon the earlier of receipt or five (5) days after
deposit in the U.S. mail, first class, postage prepaid, or (ii) if
hand-delivered, by courier or otherwise (including telegram, lettergram or
mailgram). when delivered.
 
9.13     Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement. Ref #: 1001739330" Tel-Instrument Electronics Corp.
 
9.14     Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when so executed, shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement. Delivery of an executed counterpart of this Agreement (or of any
agreement or document required by this Agreement and any amendment to this
Agreement) by telecopy or other electronic imaging means shall be as effective
as delivery of a manually executed counterpart of this Agreement; provided,
however, that the telecopy or other electronic image shall be promptly followed
by an original if required by the Bank.
 
9.15     Borrower Information; Reporting to Credit Bureaus. The Borrower
authorizes the Bank at any time to verify or check any information given by the
Borrower to the Bank, check the Borrower's credit references, verify employment,
and obtain credit reports. The Borrower agrees that the Bank shall have the
right at all times to disclose and report to credit reporting agencies and
credit rating agencies such information pertaining to the Borrower and/or all
guarantors as is consistent with the Bank's policies and practices from time to
time in effect.
 
9.16     Customary Advertising Material. The Borrower and each Obligor consent
to the publication by the Bank of customary advertising material relating to the
transactions contemplated hereby using the name, product photographs, logo or
trademark of the Borrower or such Obligor.
 
9.17    Amendments. This Agreement may be amended or modified only in writing
signed by each party hereto.
 
9.18     Limitation of Interest and Other Charges. If, at any time, the rate of
interest, together with all amounts which constitute interest and which are
reserved, charged or taken by the Bank as compensation for fees, services or
expenses incidental to the making, negotiating or collection of the loan
evidenced hereby, shall be deemed by any competent court of law, governmental
agency or tribunal to exceed the maximum rate of interest permitted to be
charged by the Bank to the Borrower under applicable law, then, during such time
as such rate of interest would be deemed excessive, that portion of each sum
paid attributable to that portion of such interest rate that exceeds the maximum
rate of interest so permitted shall be deemed a voluntary prepayment of
principal. As used herein, the term "applicable law" shall mean the law in
effect as of the date hereof; provided, however, that in the event there is a
change in the law which results in a higher permissible rate of interest, then
this Agreement shall be governed by such new law as of its effective date.
 
 
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This Agreement is executed as of the date stated at the top of the first page,
 
 
 
 
Borrower:   Tel-Instrument Electronics Corp.
 
 
 
 
Address where notices to Tel-Instrument Electronics Corp, are to be sent:
 
1 Branca Road
East Rutherford, NJ 07073
Address where notices to the Bank are to be sent:
 
Doc Retention -GCF
CT2-515-BB-03
70 Batterson Park Road
Farmington, CT 06032

 
 
Federal law requires Bank of America, N.A. (the "Bank") to provide the following
notice. The notice is not part of the foregoing agreement or instrument and may
not be altered. Please read the notice carefully.
 
(1) USA PATRIOT ACT NOTICE
 
Federal law requires all financial institutions to obtain, verify and record
information that identifies each person who opens an account or obtains a loan.
The Bank will ask for the Borrower's legal name, address, tax ID number or
social security number and other identifying information. The Bank may also ask
for additional information or documentation or take other actions reasonably
necessary to verify the identity of the Borrower, guarantors or other related
persons.
 
 
 
Ref #: 1001739330: -Tel-Instrument
Electronics Corp. AFS Loan Agreement
 
 
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SCHEDULE A
FEES
 
 
(a)        Loan Fee. The Borrower agrees to pay a loan fee in the amount of Ten
Thousand and 00/100 Dollars ($10,000.00). This fee is due on the date of this
Agreement.
 
(b)       Waiver Fee. If the Bank, at its discretion, agrees to waive or amend
any terms of this Agreement, the Borrower will, at the Bank's option, pay the
Bank a fee for each waiver or amendment in an amount advised by the Bank at the
time the Borrower requests the waiver of amendment. Nothing in this paragraph
shall imply that the Bank is obligated to agree to any waiver or amendment
requested by the Borrower. The Bank may impose additional requirements as a
condition to any waiver or amendment.
 
(c)        Late Fee. To the extent permitted by law, the Borrower agrees to pay
a late fee in an amount not to exceed four percent (4%) of any payment that is
more than fifteen (15) days late. The imposition and payment of a late fee shall
not constitute a waiver of the Bank's rights with respect to the default.
 
 
 
 
 
 
 
 
 
 
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