Exhibit 10.1
 
CREDIT AND SECURITY AGREEMENT
 
by and among
 
TRANS-LUX CORPORATION,
TRANS-LUX DISPLAY CORPORATION,
TRANS-LUX MIDWEST CORPORATION,
TRANS-LUX ENERGY CORPORATION,
AND ANY ADDITIONAL ENTITY THAT MAY
HEREAFTER BE ADDED AS A BORROWER
 
each a Borrower, and collectively, the Borrowers
 
and
 
SCM SPECIALTY FINANCE OPPORTUNITIES FUND, L.P.
 
as the Lender
 
Dated as of
July 12, 2016
 
 
 

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CREDIT AND SECURITY AGREEMENT
 
Table of Contents
 
Page
 
I.
DEFINITIONS
1
       
1.1
General Terms
1
 
1.2
Specific Terms
1
 
1.3
Other Definitional and Interpretative Provisions
21
 
1.4
Time is of the Essence
22
       
II.
ADVANCES, PAYMENT AND INTEREST
22
       
2.1
Loan Advances
22
 
2.2
Evidence of Obligations; Date Due
24
 
2.3
Interest on Revolving Loan
25
 
2.4
Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate
25
 
2.5
Collections; Repayment; Borrowing Availability and Lockbox
26
 
2.6
Promise to Pay; Manner of Payment
27
 
2.7
Repayment of Excess Advances
28
 
2.8
Payments by Lender
28
 
2.9
Grant of Security Interest; Collateral
28
 
2.10
Collateral Administration
29
 
2.11
Power of Attorney
32
 
2.12
Setoff Rights
33
       
III.
FEES AND OTHER CHARGES
33
       
3.1
Facility Fee
33
 
3.2
Unused Line Fee
34
 
3.3
Collateral Management Fee
34
 
3.4
Early Termination Fees
34
 
3.5
Computation of Fees; Lawful Limits
34
 
3.6
Default Rate of Interest
35
 
3.7
Acknowledgement of Joint and Several Liability
35
       
IV.
CONDITIONS PRECEDENT
38
       
4.1
Conditions to Closing and Advances
38
 
4.2
Post-Closing Requirements
41
       
V.
REPRESENTATIONS AND WARRANTIES
42
       
5.1
Organization and Authority
42
 
5.2
Loan Documents
43

 
 
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5.3
Subsidiaries, Capitalization and Ownership Interests
43
 
5.4
Properties
43
 
5.5
Other Agreements
44
 
5.6
Litigation
44
 
5.7
Labor Matters
44
 
5.8
Compliance with Environmental Requirements; No Hazardous Substances
45
 
5.9
Tax Returns, Governmental Reports
46
 
5.10
Financial Statements and Reports
46
 
5.11
Compliance with Law
46
 
5.12
Intellectual Property
47
 
5.13
Licenses and Permits
48
 
5.14
Disclosure
48
 
5.15
Existing Indebtedness; Investments, Guarantees and Certain Contracts
48
 
5.16
Agreements with Affiliates
49
 
5.17
Insurance
49
 
5.18
Names, Location of Offices, Records and Collateral
49
 
5.19
Material Contracts
49
 
5.20
Non-Subordination
50
 
5.21
Interest Rate
50
 
5.22
Reliance on Representations; Survival
50
 
5.23
Equipment Purchase
50
       
VI.
AFFIRMATIVE COVENANTS
51
       
6.1
Financial Statements, Reports and Other Information
51
 
6.2
Payment of Obligations
53
 
6.3
Conduct of Business and Maintenance of Existence and Assets
53
 
6.4
Compliance with Legal, Tax and Other Obligations
54
 
6.5
Insurance
54
 
6.6
True Books
55
 
6.7
Inspection; Period Audits
55
 
6.8
Further Assurances; Post Closing
55
 
6.9
Lien Terminations
56
 
6.10
Use of Proceeds
56
 
6.11
Collateral Documents; Security Interest in Collateral
56
 
6.12
Right of First Refusal
57
 
6.13
Taxes and Other Charges
57
 
6.14
Payroll Agent
58
 
6.15
Hazardous Substances
59
       
VII.
NEGATIVE COVENANTS
59
       
7.1
Financial and Loan Covenants
59
 
7.2
No Debt other than Permitted Indebtedness
59
 
7.3
No Liens other than Permitted Liens
59
 
7.4
Investments, New Facilities or Collateral; Subsidiaries
60
 
7.5
Prohibited Payments
60

 
 
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7.6
Transactions with Affiliates
61
 
7.7
Charter Documents; Fiscal Year; Dissolution; Use of Proceeds
61
 
7.8
Asset Sales
61
 
7.9
Restrictive Agreements
62
 
7.10
Management
62
 
7.11
Modifications of Certain Agreements
62
 
7.12
Payments and Modifications of Subordinated Debt
63
 
7.13
Deposit Accounts
63
 
7.14
Truth of Statements
64
 
7.15
IRS Form 8821
64
 
7.16
Limitations on Excluded Subsidiaries.
64
       
VIII.
EVENTS OF DEFAULT
64
       
8.1
Events of Default
64
 
8.2
Acceleration and Suspension or Termination of Commitments
66
       
IX.
RIGHTS AND REMEDIES AFTER DEFAULT
67
       
9.1
Rights and Remedies
67
 
9.2
Application of Proceeds
68
 
9.3
Rights of Lender to Appoint Receiver
68
 
9.4
Application of Payments Following Default
69
 
9.5
Rights and Remedies not Exclusive
69
       
X.
WAIVERS AND JUDICIAL PROCEEDINGS
69
       
10.1
Waivers
69
 
10.2
Delay; No Waiver or Defaults
69
 
10.3
Jury Waiver
70
 
10.4
Cooperation in Discovery and Litigation
70
       
XI.
EFFECTIVE DATE AND TERMINATION
70
       
11.1
Effectiveness and Termination
70
 
11.2
Survival
71
       
XII.
ASSIGNMENTS AND PARTICIPATIONS
71
       
12.1
Assignments
71
 
12.2
Participations
72
 
12.3
Defaulting Participants
72
 
12.4
Definitions
73
       
XIII.
MISCELLANEOUS
73
       
13.1
Governing Law; Jurisdiction; Service of Process; Venue
73
 
13.2
Successors and Assigns; Participants; New Lenders
74

 
 
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13.3
Revival of Obligations
74
 
13.4
Indemnity
74
 
13.5
Notice
75
 
13.6
Severability; Captions; Counterparts; Facsimile or other Electronic Signatures
75
 
13.7
Expenses
76
 
13.8
Entire Agreement
76
 
13.9
Lender Approvals
77
 
13.10
Confidentiality and Publicity
77
 
13.11
USA Patriot Act Notification
77
 
13.12
Release of Lender
77

 
 
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ANNEX I
 
Financial and Loan Covenants
 
EXHIBITS
 
Exhibit A
-
Borrowing Certificate
     
Exhibit B
-
Compliance Certificate

 
SCHEDULES
 
Schedule 2.1
-
Term Loan Amortization Schedule
     
Schedule 2.4
-
Borrower’s Account for Funding Wires
     
Schedule 2.9
-
Collateral
     
Schedule 5.1
-
Organization
     
Schedule 5.3
-
Capitalization, Organization Chart (including all subsidiaries,
authorized/issued capitalization, owners, directors, officers and managers) and
Joint Ventures
     
Schedule 5.4
-
Real Property Owned or Leased
     
Schedule 5.6
-
Litigation
     
Schedule 5.8
-
Environmental Exceptions
     
Schedule 5.12
-
Intellectual Property
     
Schedule 5.17
-
Insurance
     
Schedule 5.18
-
Names Under Which Business Is Transacted; Business and Collateral Locations
     
Schedule 5.19
-
Material Contracts
     
Schedule 7.2
-
Existing Contingent Obligations
     
Schedule 7.3
-
Existing Liens
     
Schedule 7.13
-
Excluded Deposit Accounts

 
 
 

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CREDIT AND SECURITY AGREEMENT
 
THIS CREDIT AND SECURITY AGREEMENT (the “Agreement”) dated as of July 12, 2016,
is entered into by and among TRANS-LUX CORPORATION, a Delaware corporation
(“Trans-Lux”), TRANS-LUX DISPLAY CORPORATION, a Delaware corporation (“TDC”),
TRANS-LUX MIDWEST CORPORATION, an Iowa corporation (“TMC”), TRANS-LUX ENERGY
CORPORATION, a Connecticut corporation (“TEC”), and any additional borrower that
may hereafter be added to this Agreement (together with Trans-Lux, TDC, TMC, and
TEC, individually as a “Borrower,” and collectively as “Borrowers”), and SCM
SPECIALTY FINANCE OPPORTUNITIES FUND, L.P., a Delaware limited partnership (the
“Lender”).
 
WHEREAS, Borrower has requested that Lender make available to Borrower a
revolving credit facility (the “Revolving Facility”);
 
WHEREAS, Borrower has requested Lender make available to Borrower a term loan in
an original principal amount equal to the Term Loan Commitment (the “Term Loan”;
together with the Revolving Facility, collectively, the “Facility”); and
 
WHEREAS, Lender is willing to make the Revolving Facility available to Borrower
and is willing to fund said Term Loan upon the terms and subject to the
conditions set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which hereby are
acknowledged, Borrower and Lender hereby agree as follows:
 
I.           DEFINITIONS
 
1.1           General Terms
 
For purposes of this Agreement, in addition to the definitions above and
elsewhere in this Agreement, the terms listed below shall have the meanings set
forth.  All capitalized terms used which are not specifically defined shall have
meanings provided in Article 9 of the UCC to the extent the same are used or
defined therein.  Unless otherwise specified herein, any agreement or contract
referred to herein shall mean such agreement as modified, amended or
supplemented from time to time.  Unless otherwise specified, as used in the Loan
Documents or in any certificate, report, instrument or other document made or
delivered pursuant to any of the Loan Documents, all accounting terms not
defined elsewhere in this Agreement shall have the meanings given to such terms
in and shall be interpreted in accordance with GAAP applied on a basis
consistent with the most recent audited consolidated financial statements of
each Borrower and its Consolidated Subsidiaries delivered to Lender on or prior
to the Closing Date.
 
1.2           Specific Terms
 
“Account Debtor” shall mean “account debtor”, as defined in Article 9 of the
UCC, and any other obligor in respect of an Account.
 
 
 

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“Accounts” shall mean all of Borrower’s interest in any (a) right to payment of
a monetary obligation, (b) “accounts” (as that term is defined in the UCC), any
account receivable (whether in the form of payments for services rendered or
goods sold, rents, license fees or otherwise), any “payment intangibles” (as
defined in the UCC) and all other rights to payment and/or reimbursement of
every kind and description, whether or not earned by performance, (c) all
accounts, “general intangibles” (as defined in the UCC), Intellectual Property,
rights, remedies, Guarantees, “supporting obligations” (as defined in the UCC),
“letter-of-credit rights” (as defined in the UCC) and security interests in
respect of the foregoing, all rights of enforcement and collection, all books
and records evidencing or related to the foregoing, and all rights under the
Loan Documents in respect of the foregoing, (d) all information and data
compiled or derived by any Borrower or to which any Borrower is entitled in
respect of or related to the foregoing, and (e) all proceeds of any of the
foregoing.
 
“Advance” shall mean a borrowing under the Revolving Facility.  Any amounts paid
by Lender on behalf of Borrower or any Guarantor under any Loan Document shall
also be an Advance for purposes of this Agreement.  Each Advance shall increase
the principal amount outstanding hereunder.
 
“Affiliate” shall mean, as to any Person, any other Person (a) that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person, (b) who is a director or officer (i) of
such Person, (ii) of any Subsidiary of such Person, or (iii) of any Person
described in clause (a) above with respect to such Person, (c) which, directly
or indirectly through one or more intermediaries, is the beneficial or record
owner (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended, as the same is in effect on the date hereof) of ten percent (10%) or
more of any class of the outstanding voting stock, securities or other equity or
ownership interests of such Person and (d) any spouses, parents, descendants and
siblings of any of the Persons described in clauses (a), (b) and (c) above.  For
purposes of this definition, the term “control” (and the correlative terms,
“controlled by” and “under common control with”) shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
administrative management or policies, whether through ownership of securities
or other interests, by contract or otherwise.
 
“Applicable Margin” means (a) with respect to Revolving Loans and all other
Obligations (other than the Term Loan) four percent (4.0%), and (b) with respect
to the Term Loan, six percent (6.0%).
 
“Applicable Rate” shall mean the interest rate applicable from time to time to
Revolving Facility Advances and the Term Loan under this Agreement.
 
“Asset Disposition” means any sale, lease, license, transfer, assignment or
other consensual disposition by any Credit Party of any asset.
 
“Availability” shall mean the Revolving Loan Limit less all Revolving Loans
outstanding, minus any reserves against Availability imposed by the Lender in
its Permitted Discretion.
 
“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as the same may be amended, modified or supplemented from time to
time, and any successor statute thereto.
 
 
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“Books and Records” shall mean Borrower’s books and records specifically
relating to Accounts, including, but not limited to, ledgers, records
indicating, summarizing, or evidencing Borrower’s Accounts and all computer
programs, disc or tape files, printouts, runs, and other computer prepared
information with respect to the foregoing and any software necessary to operate
the same.
 
“Borrower” and “Borrowers” mean the entity(ies) described in the first paragraph
of this Agreement and each of their successors and permitted assigns.
 
“Borrowing Base” shall mean, as of any date of determination:
 
(a)           eighty five percent (85%) of Net Eligible Receivables.  “Net
Eligible Receivables” for purposes of this definition shall mean the Eligible
Receivables net of reserves as determined by Lender with reference to the most
recent Borrowing Certificate, other factors deemed relevant by Lender and
otherwise in accordance with the Agreement; provided, however, that if, as of
the date of determination, the most recent Borrowing Certificate is of a date
more than four (4) Business Days before or after such date, the Borrowing Base
shall be determined by Lender in its sole discretion; provided, further, the
eighty five percent (85%) factor identified above may be modified by Lender to
the extent that reserves do not fully reflect the risks associated with the
expected collectability of Eligible Receivables.  Any such adjustment to the
percentage factor set forth above shall be made by Lender as warranted by
Lender’s underwriting practices and procedures in its Permitted Discretion and
shall be based on Lender’s due diligence and audits; plus
 
(b)           the lesser of (i) eighty-five percent (85%) multiplied by the
Orderly Liquidation Value of the Inventory (as defined in the respective
appraisal), or (ii) fifty percent (50%) multiplied by the value of the Eligible
Inventory, valued at the lower of first-in-first-out cost or market cost, and
after factoring in all rebates, discounts and other incentives or rewards
associated with the purchase of the applicable Inventory; minus
 
(c)           the amount of the Equity Raise Reserve and any other reserves
and/or adjustments against the Borrowing Base provided for in this Agreement or
determined by Lender from time to time, in its Permitted Discretion, to be
reasonably appropriate to reflect risks associated with the Collateral and the
financial condition of Borrower.
 
“Borrowing Certificate” shall mean a Borrowing Certificate substantially in the
form of Exhibit A.
 
“Borrowing Date” shall have the meaning assigned to that term in Section 2.4.
 
“Business Day” shall mean any day other than a Saturday, Sunday, Good Friday or
other day on which the Federal Reserve or Lender is closed.
 
“Capital Lease” shall mean, as to any Person, a lease or any interest in any
kind of property or asset by that Person as lessee that is, should be or should
have been recorded as a “capital lease” in accordance with GAAP.
 
 
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“Capitalized Lease Obligations” shall mean all obligations of any Person under
Capital Leases, in each case, taken at the amount thereof accounted for as a
liability in accordance with GAAP.
 
“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C.A. § 9601 et seq., as the same may be amended
from time to time.
 
“Change of Control” shall mean any of the following:  (a) the occurrence of a
merger, consolidation, reorganization, recapitalization or share or interest
exchange, sale or transfer or any other transaction or series of transactions as
a result of which the owners, directly or indirectly, of a majority of any
Credit Party’s voting stock or voting power as of the date hereof cease to be
entitled to elect or appoint at least a majority of such Credit Party’s Board of
Directors, (b) the resignation, termination, replacement, death, disability or
any other event the result of which is the failure of the existing Chief
Executive Officer of Borrower to function in his/her current capacity, unless,
(i) in the case of a replacement, the replacement is reasonably acceptable to
Lender, or (ii) in all other cases a replacement reasonably satisfactory to
Lender is identified and engaged within 30 days following such event,
(c) Trans-Lux shall cease to beneficially own, directly or indirectly, one
hundred percent (100%), on a fully diluted basis, of the economic and voting
interests in the equity interests of any other Borrower or (d) the sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the Borrower’s assets to, or a consolidation or merger with
or into, any other Person, other than any such transaction where immediately
thereafter the surviving Person is a direct or indirect subsidiary of the
Borrower.
 
“Closing” shall mean, subject to the conditions of Article 4, such time as all
of the conditions contained in Sections 4.1 and 4.2 hereof are completed.
 
“Closing Date” shall mean the date of this Agreement.
 
“Closing Date Subordinated Creditor” means Carlisle Investments Inc., including
its successors and assigns as permitted hereunder.
 
“Closing Date Subordination Agreement” mean that certain Subordination Agreement
dated as of even date herewith by and between Closing Date Subordinated Creditor
and Lender and acknowledged by Borrower.
 
“Closing Date Subordinated Debt” means any Indebtedness of Borrowers incurred
pursuant to the terms of the Closing Date Subordinated Debt Documents.
 
“Closing Date Subordinated Debt Documents” means (i) that certain promissory
note dated as of April 27, 2016 by Trans-Lux payable to the Closing Date
Subordinated Creditor in the aggregate original principal amount of Five Hundred
Thousand Dollars ($500,000) and (ii) each of the other documents, instruments
and agreements executed and delivered in connection therewith, each as amended,
restated, supplemented or otherwise modified from time to time as permitted
hereunder.
 
 
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“Collateral” shall mean, collectively and each individually, all collateral
and/or security identified in Section 2.9, together with any additional
collateral and/or security now or hereafter granted to Lender by any Credit
Party pursuant to a Loan Document.
 
“Collateral Management Fee” shall have the meaning assigned to the term in
Section 3.3.
 
“Commitment Expiration Date” means the date that is three (3) years following
the Closing Date.
 
“Compliance Certificate” shall have the meaning assigned to the term in Section
6.1(a).
 
“Concentration Account” shall have the meaning assigned to the term in Section
2.5.
 
“Contingent Obligation” means, with respect to any Person, any direct or
indirect liability of such Person:  (a) with respect to any Indebtedness of
another Person (a “Third Party Obligation”) if the purpose or intent of such
Person incurring such liability, or the effect thereof, is to provide assurance
to the obligee of such Third Party Obligation that such Third Party Obligation
will be paid or discharged, or that any agreement relating thereto will be
complied with, or that any holder of such Third Party Obligation will be
protected, in whole or in part, against loss with respect thereto; (b) with
respect to any undrawn portion of any letter of credit issued for the account of
such Person or as to which such Person is otherwise liable for the reimbursement
of any drawing; (c) under any Swap Contract, to the extent not yet due and
payable; (d) to make take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement; or (e) for any
obligations of another Person pursuant to any Guaranty (other than a Guaranty of
the Obligations or any part thereof) or pursuant to any agreement to purchase,
repurchase or otherwise acquire any obligation or any property constituting
security therefor, to provide funds for the payment or discharge of such
obligation or to preserve the solvency, financial condition or level of income
of another Person.  The amount of any Contingent Obligation shall be equal to
the amount of the obligation so guaranteed or otherwise supported or, if not a
fixed and determinable amount, the maximum amount so guaranteed or otherwise
supported.
 
“Controlled Group” means all members of any group of corporations and all
members of a group of trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.
 
“Credit Party” means any Guarantor under a Guaranty of the Obligations or any
part thereof, any Borrower and any other Person (other than Lender or a
participant of a Lender), whether now existing or hereafter acquired or formed,
that becomes obligated as a borrower, guarantor, surety, indemnitor, pledgor,
assignor or other obligor under any Loan Document, and “Credit Parties” means
all such Persons, collectively.
 
“Current Issuance” shall mean each issuance as of the Closing Date to any Person
of any series B convertible preferred stock of Trans-Lux, the terms of which
shall be the same as those currently in place as of the Closing Date.
 
 
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“Debtor Relief Law” shall mean, collectively, the United States Bankruptcy Code
and all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization or similar debtor relief
laws from time to time in effect affecting the rights of creditors generally, as
amended from time to time.
 
“Default” shall mean (a) any event, fact, circumstance or condition that, with
the giving of applicable notice or passage of time or both, would, unless cured
or waived, constitute, be, become or result in an Event of Default and (b) any
Event of Default.
 
“Default Rate” shall have the meaning assigned to the term in Section 3.6.
 
“Dissolving Subsidiary” shall mean, collectively, Trans-Lux Commercial
Corporation, a Utah corporation, Trans-Lux Experience Corporation, a New York
corporation, Trans-Lux Seaport Corporation, a New York corporation, and
Trans-Lux Southwest Corporation, a New Mexico corporation.
 
“Distribution” means as to any Person (a) any dividend or other distribution
(whether in cash, securities or other property) on any equity interest in such
Person (except those payable solely in its equity interests of the same class),
(b) any payment by such Person on account of (i) the purchase, redemption,
retirement, defeasance, surrender, cancellation, termination or acquisition of
any equity interests in such Person or any claim respecting the purchase or sale
of any equity interest in such Person, or (ii) any option, warrant or other
right to acquire any equity interests in such Person, (c) any management fees,
salaries, bonuses or other fees or compensation to any Person holding an equity
interest in a Borrower or a Subsidiary of a Borrower (other than reasonable and
customary (i) payments of salaries to individuals, (ii) directors fees, and
(iii) advances and reimbursements to employees or directors, all in the ordinary
course of business), an Affiliate of a Borrower or an Affiliate of any
Subsidiary of a Borrower, (d) any lease or rental payments to an Affiliate or
Subsidiary of a Borrower, or (e) repayments of or debt service on loans or other
indebtedness held by any Person holding an equity interest in a Borrower or a
Subsidiary of a Borrower, an Affiliate of a Borrower or an Affiliate of any
Subsidiary of a Borrower unless permitted under and made pursuant to a
Subordination Agreement applicable to such loans or other indebtedness.
 
“Eligible Inventory” means Inventory owned by a Borrower and acquired and
dispensed by such Borrower in the ordinary course of business that Lender, in
its good faith credit judgment and discretion, deems to be Eligible
Inventory.  Without limiting the generality of the foregoing, no Inventory shall
be Eligible Inventory if:
 
a.           such Inventory is not owned by a Borrower free and clear of all
Liens and rights of any other Person (including the rights of a purchaser that
has made progress payments and the rights of a surety that has issued a bond to
assure such Borrower’s performance with respect to that Inventory);
 
b.           such Inventory is placed on consignment, Work-In-Process or is in
transit, unless such Inventory is located on a premises with respect to which
Lender has received a landlord, warehouseman, bailee or mortgagee letter
acceptable in form and substance to Lender;
 
 
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c.           such Inventory is covered by a negotiable document of title, unless
such document has been delivered to Lender with all necessary endorsements, free
and clear of all Liens except those in favor of Lender;
 
d.           such Inventory is excess, obsolete, unsalable, shopworn, seconds,
damaged, unfit for sale, unfit for further processing, is of substandard
quality, is not of good and merchantable quality, free from any defects, or has
been marked with a warehouse code of “quarantine”;
 
e.           such Inventory consists of marketing materials, display items or
packing or shipping materials, or manufacturing supplies;
 
f.           such Inventory is not subject to a first priority Lien in favor of
Lender;
 
g.           such Inventory consists of goods that can be transported or sold
only with licenses that are not readily available or of any substances defined
or designated as hazardous or toxic waste, hazardous or toxic material,
hazardous or toxic substance, or similar term, by any environmental law or any
Governmental Authority applicable to Borrowers or their business, operations or
assets;
 
h.           such Inventory is not covered by casualty insurance acceptable to
Lender;
 
i.           any covenant, representation or warranty contained in the Loan
Documents with respect to such Inventory has been breached in any material
respect;
 
j.           such Inventory is located (i) outside of the continental United
States or (ii) on premises where the aggregate amount of all Inventory (valued
at cost) of Borrower(s) located thereon is less than $10,000;
 
k.           such Inventory is located on a premises with respect to which
Lender has not received a landlord, warehouseman, bailee or mortgagee letter
acceptable in form and substance to Lender;
 
l.           such Inventory consists of (A) discontinued items, (B) slow-moving
or excess items held in inventory, or (C) used items held for resale;
 
m.           such Inventory does not consist of finished goods, unless such
Inventory is located on a premises with respect to which Lender has received a
landlord, warehouseman, bailee or mortgagee letter acceptable in form and
substance to Lender;
 
n.           such Inventory does not meet all standards imposed by any
applicable Governmental Authority, including with respect to its production,
acquisition or importation (as the case may be);
 
o.           such Inventory has an expiration date within the next twelve (12)
months;
 
p.           such Inventory consists of products for which Borrowers have a
greater than twelve (12) month supply on hand;
 
 
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q.           such Inventory is held for rental or lease by or on behalf of
Borrowers;
 
r.           such Inventory is subject to any licensing, patent, royalty,
trademark, trade name or copyright agreement with any third parties, which
agreement restricts the ability of Lender to sell or otherwise dispose of such
Inventory; or
 
s.           such Inventory fails to meet such other specifications and
requirements which may from time to time be established by Lender in its good
faith credit judgment.  Lender and Borrowers agree that Inventory shall be
subject to periodic appraisal by Lender and that valuation of Inventory shall be
subject to adjustment pursuant to the results of such
appraisal.  Notwithstanding the foregoing, the valuation of Inventory shall be
subject to any legal limitations on sale and transfer of such Inventory.
 
“Eligible Receivables” means, subject to the criteria below, an account
receivable of a Borrower, which was generated in the ordinary course of
business, which was generated originally in the name of a Borrower and not
acquired via assignment or otherwise, and which Lender, in its good faith credit
judgment and discretion, deems to be an Eligible Account.  Without limiting the
generality of the foregoing, no Account shall be an Eligible Account if:
 
a.           the Account remains unpaid one hundred twenty (120) days past the
invoice date;
 
b.           the Account is subject to any defense, set-off, recoupment,
counterclaim, deduction, discount, credit, chargeback, freight claim, allowance,
or adjustment of any kind (but only to the extent of such defense, set-off,
recoupment, counterclaim, deduction, discount, credit, chargeback, freight
claim, allowance, or adjustment), or the applicable Borrower is not able to
bring suit or otherwise enforce its remedies against the Account Debtor through
judicial process;
 
c.           if the Account arises from the sale of goods, any part of any goods
the sale of which has given rise to the Account has been returned, rejected,
lost, or damaged (but only to the extent that such goods have been so returned,
rejected, lost or damaged);
 
d.           if the Account arises from the sale of goods, the sale was not an
absolute, bona fide sale, or the sale was made on consignment or on approval or
on a sale-or-return or bill-and-hold or progress billing basis, or the sale was
made subject to any other repurchase or return agreement, or the goods have not
been shipped to the Account Debtor or its designee or the sale was not made in
compliance with applicable Laws;
 
e.           if the Account arises from the performance of services, the
services have not actually been performed or the services were undertaken in
violation of any Law or the Account represents a progress billing for which
services have not been fully and completely rendered;
 
f.           the Account is subject to a Lien other than a Permitted Lien, or
Lender does not have a first priority, perfected Lien on such Account;
 
g.           the Account is evidenced by Chattel Paper or an Instrument of any
kind, or has been reduced to judgment, unless such Chattel Paper or Instrument
has been delivered to Lender;
 
 
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h.           the Account Debtor is an Affiliate or Subsidiary of a Credit Party,
or if the Account Debtor holds any Indebtedness of a Credit Party;
 
i.           more than fifty percent (50%) of the aggregate balance of all
Accounts owing from the Account Debtor obligated on the Account are ineligible
under subclause (a) above (in which case all Accounts from such Account Debtor
shall be ineligible);
 
j.           without limiting the provisions of clause (i) above, fifty percent
(50%) or more of the aggregate unpaid Accounts from the Account Debtor obligated
on the Account are not deemed Eligible Accounts under this Agreement for any
reason;
 
k.           the total unpaid Accounts of the Account Debtor obligated on the
Account exceed thirty-five percent (35%) of the net amount of all Eligible
Accounts owing from all Account Debtors (but only the amount of the Accounts of
such Account Debtor exceeding such thirty-five percent (35%) limitation shall be
considered ineligible);
 
l.           any covenant, representation or warranty contained in the Loan
Documents with respect to such Account has been breached in any respect;
 
m.           the Account is unbilled or has not been invoiced to the Account
Debtor in accordance with the procedures and requirements of the applicable
Account Debtor;
 
n.           the Account is an obligation of a Governmental Account Debtor,
unless Lender has agreed to the contrary in writing and Lender has received from
the Account Debtor the acknowledgement of receipt of Lender’s notice of
assignment of such obligation pursuant to this Agreement;
 
o.           the Account is an obligation of an Account Debtor that has
suspended business, made a general assignment for the benefit of creditors, is
unable to pay its debts as they become due or as to which a petition has been
filed (voluntary or involuntary) under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or the Account is an Account as
to which any facts, events or occurrences exist which could reasonably be
expected to impair the validity, enforceability or collectability of such
Account or reduce the amount payable or delay payment thereunder;
 
p.           the Account Debtor has its principal place of business or executive
office outside the United States;
 
q.           the Account is payable in a currency other than United States
dollars;
 
r.           the Account Debtor is an individual;
 
s.           the Borrower owning such Account has not signed and delivered to
Lender notices to Account Debtors, in the form requested by Lender, directing
the Account Debtors to make payment to the applicable Lockbox Account;
 
t.           the Account includes late charges or finance charges (but only such
portion of the Account shall be ineligible);
 
 
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u.           the Account arises out of the sale of any Inventory upon which any
other Person holds, claims or asserts a Lien; or
 
v.           the Account or Account Debtor fails to meet such other
specifications and requirements which may from time to time be established by
Lender in its good faith credit judgment and discretion.
 
“Environmental Laws” means any present and future federal, state, provincial,
territorial, municipal and local laws, statutes, ordinances, rules, regulations,
standards, policies and other governmental directives or requirements, as well
as common law, pertaining to the environment, natural resources, pollution,
health (including any environmental clean-up statutes and all regulations
adopted by any local, state, federal, provincial, territorial, municipal or
other Governmental Authority, and any statute, ordinance, code, order, decree,
law rule or regulation all of which pertain to or impose liability or standards
of conduct concerning medical waste or medical products, equipment or supplies),
safety or clean-up that apply to any Borrower and relate to Hazardous
Substances, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Clean Air Act (42
U.S.C. § 7401 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act
(7 U.S.C. § 136 et seq.), the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. § 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C. §
651 et seq.), the Residential Lead-Based Paint Hazard Reduction Act (42 U.S.C. §
4851 et seq.), any analogous state, federal, territorial, provincial, municipal
or local laws, any amendments thereto, and the regulations promulgated pursuant
to said laws, together with all amendments from time to time to any of the
foregoing and judicial interpretations thereof.
 
“Equipment” means “equipment” as defined in Article 9 of the UCC.
 
“Equipment Purchase” means that certain purchase by Trans-Lux of certain
equipment and services more particularly described on Exhibit A to the Purchase
Agreement, pursuant to the terms and provisions of the Purchase Agreement.
 
“Equity Raise Reserve” means an amount equal to $250,000 which reserve shall be
released by Lender upon receipt by Lender of evidence, in form and substance
satisfactory to Lender, that Trans-Lux has received an equity contribution equal
to or greater than $1,000,000.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as the same
may be amended, modified or supplemented from time to time, and any successor
statute thereto, and any and all rules or regulations promulgated from time to
time thereunder.
 
“ERISA Plan” means any “employee benefit plan,” as such term is defined in
Section 3(3) of ERISA (other than a Multiemployer Plan), which any Borrower
maintains, sponsors or contributes to, or, in the case of an employee benefit
plan which is subject to Section 412 of the Code or Title IV of ERISA, to which
any Borrower or any member of the Controlled Group may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five (5)
years, or by reason of being deemed to be a contributing sponsor under
Section 4069 of ERISA.
 
 
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“Event of Default” shall mean the occurrence of any event set forth in Article
VIII.
 
“Excluded Deposit Accounts” shall mean, collectively, those deposit accounts set
forth on Schedule 7.13.
 
“Excluded Subsidiary” shall mean, collectively each Dissolving Subsidiary and
each Restricted Subsidiary.
 
“Facility Fee” shall have the meaning set forth in Section 3.1.
 
“Future Issuances” shall mean each issuance after the Closing Date to any Person
of (a) any series B convertible preferred stock of Trans-Lux or (b) any series C
convertible preferred stock of Trans-Lux or such other series of convertible
preferred stock of Trans-Lux, if any, the terms of which shall be the same as
those currently in place for the series B convertible preferred stock of
Trans-Lux as of the Closing Date; provided, however, such issuance may provide
for (i) dividends at the rate of up to ten percent (10%) of the Stated Value (as
defined in the charter documents of Trans-Lux, provided such value shall not be
greater than the Stated Value of the series B convertible preferred stock of
Trans-Lux set forth in the charter documents of Trans-Lux in effect as of the
Closing Date) per annum on each share of series C convertible preferred stock
and (ii) such other variations from the terms of the series B convertible
preferred stock of Trans-Lux to the extent such variations are not less
favorable in terms to Lender.
 
“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time as applied by nationally recognized
accounting firms.
 
“Government Contract” shall be defined to mean all contracts (including all
amendments thereto) relating to the payment of Government Receivables (a) with
the United States government or with any agency or instrumentality thereof, or
(b) with any State or Territory of the United States or the District of Columbia
or with any agency or instrumentality thereof.
 
“Governmental Account Debtor” means the United States government or a political
subdivision thereof, or any state, county or municipality or department, agency
or instrumentality thereof, that is responsible for payment of an Account, or
any agent, administrator, intermediary or carrier for the foregoing.
 
“Governmental Authority” shall mean any federal, state, municipal, national,
local or other governmental department, court, commission, board, bureau, agency
or instrumentality or political subdivision thereof, or any entity or officer
exercising executive, legislative or judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case, whether
of the United States or a state, territory or possession thereof, a foreign
sovereign entity or country or jurisdiction or the District of Columbia.
 
 
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“Guarantor” shall mean any guarantor of the Obligations or any part thereof,
including any guarantor of the accuracy of any one or more representations
and/or warranties of Borrower contained in this Agreement.
 
“Guaranty” shall mean any obligation, contingent or otherwise, of such Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise), or (b) entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
provided, however, that the term Guaranty shall not include endorsements for
collection or deposit in the ordinary course of business.  The term “Guaranty”
used as a verb has a corresponding meaning.  The term “Guaranties” shall mean
the plural of Guaranty.
 
“Hazardous Substances” means petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives, flammable
materials; radioactive materials; polychlorinated biphenyls and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials; underground or above-ground storage tanks, whether empty or
containing any substance; any substance the presence of which is prohibited by
any Environmental Laws; any contaminant, pollutant, waste or substance that is
likely to cause immediately or at some future time harm or degradation to the
surrounding environment or risk to human health; toxic mold, any substance that
requires special handling; and any other material or substance now or in the
future defined, classified or listed as a “hazardous substance,” “hazardous
material,” “hazardous waste,” “toxic substance,” “toxic pollutant,”
“contaminant,” “pollutant”, “radioactive”, “dangerous” or other words of similar
import within the meaning of any Environmental Law, including:  (a) any
“hazardous substance” defined as such in (or for purposes of) CERCLA, or any
so-called “superfund” or “superlien” Law, including the judicial interpretation
thereof; (b) any “pollutant or contaminant” as defined in 42 U.S.C.A. §
9601(33); (c) any material now defined as “hazardous waste” pursuant to 40
C.F.R. Part 260; (d) any petroleum or petroleum by-products, including crude oil
or any fraction thereof; (e) natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel; (f) any “hazardous chemical” as defined
pursuant to 29 C.F.R. Part 1910; (g) any toxic or harmful substances, wastes,
materials, pollutants or contaminants (including, without limitation, asbestos,
polychlorinated biphenyls (“PCB’s”), flammable explosives, radioactive
materials, infectious substances, materials containing lead-based paint or raw
materials which include hazardous constituents); and (h) any other toxic
substance or contaminant that is subject to any Environmental Laws or other past
or present requirement of any Governmental Authority.
 
“Hazardous Substances Contamination” means contamination (whether now existing
or hereafter occurring) of the improvements, buildings, facilities, personalty,
soil, groundwater, air or other elements on or of the relevant property by
Hazardous Substances, or any derivatives thereof, or on or of any other property
as a result of Hazardous Substances, or any derivatives thereof, generated on,
emanating from or disposed of in connection with the relevant property.
 
 
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“Indebtedness” of a Person means at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising and paid on a timely
basis and in the ordinary course of business, (d) all capital leases of such
Person, (e) all non-Contingent Obligations of such Person to reimburse any bank
or other Person in respect of amounts paid under a letter of credit, banker’s
acceptance or similar instrument, (f) all equity securities of such Person
subject to repurchase or redemption other than at the sole option of such
Person, (g) all obligations secured by a Lien on any asset of such Person,
whether or not such obligation is otherwise an obligation of such Person, (h)
“earnouts,” purchase price adjustments, profit sharing arrangements, deferred
purchase money amounts and similar payment obligations or continuing obligations
of any nature of such Person arising out of purchase and sale contracts, (i) all
Indebtedness of others guaranteed by such Person, (j) off-balance sheet
liabilities and/or Pension Plan or Multiemployer Plan liabilities of such
Person, and (k) obligations arising under non-compete agreements.
 
“Indemnified Persons” shall have the meaning assigned to the term in Section
13.4.
 
“Intellectual Property” means, with respect to any Person, all patents, patent
applications and like protections, including improvements divisions,
continuation, renewals, reissues, extensions and continuations in part of the
same, trademarks, trade names, trade styles, trade dress, service marks, logos
and other business identifiers and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of such Person connected with and symbolized thereby, copyright
rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative works, whether published or unpublished,
technology, know-how and processes, operating manuals, trade secrets, computer
hardware and software (including source code and related documentation), rights
to unpatented inventions and all applications and licenses therefor, used in or
necessary for the conduct of business by such Person and all claims for damages
by way of any past, present or future infringement of any of the foregoing.
 
“Intellectual Property Security Agreement” shall mean that certain Intellectual
Property Security Agreement of even date herewith made by Borrower in favor of
Lender.
 
“Landlord Waiver and Consent” shall mean a waiver/consent in form and substance
reasonably satisfactory to Lender from the owner/lessor of 6100 Aviator Drive
St. Louis, Missouri, 1700 Delaware Avenue, Des Moines, IA  50317, and 2301 Dean
Avenue, Des Moines, IA  50317 and any other premises not owned by Borrower at
which billing operations are conducted or Books and Records are maintained, or
any of the Collateral is now or hereafter located for the purpose of providing
Lender access to such Collateral, in each case as such may be modified, amended
or supplemented from time to time and subordinating in favor of Lender any
claims that the owner/lessor may have against Borrower or against any of
Lender’s Collateral.
 
“Laws” means any and all federal, state, provincial, territorial, municipal,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, injunctions, permits, governmental
agreements and governmental restrictions, whether now or hereafter in effect,
which are applicable to any Credit Party in any particular circumstance.  “Laws”
includes, without limitation, Environmental Laws.
 
 
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“Lien” shall mean any mortgage, pledge, security interest, encumbrance,
restriction, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof), or any other arrangement pursuant to which title
to the property is retained by or vested in some other Person for security
purposes.  For the purposes of this Agreement and the other Loan Documents, any
Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
 
“Loan” or “Loans” means the Term Loan, the Revolving Loan and each and every
advance under the Revolving Loan, or any combination of the foregoing, as the
context may require.  All references herein to the “making” of a Loan or words
of similar import shall mean, with respect to any Revolving Loan, the making of
any advance in respect of such Revolving Loan.
 
“Loan Documents” shall mean, collectively and each individually, this Agreement,
any documents that provide, as security for all or any portion of the
Obligations, a Lien on any assets in favor of Lender, the Guaranties and any
documents evidencing a security interest in assets as collateral for the
Guaranties, the Lockbox Agreements, the Intellectual Property Security
Agreement, the Uniform Commercial Code Financing Statements and all other
documents or instruments necessary to create or perfect the Liens in the
Collateral, the Subordination Agreements, the Landlord Waiver and Consents, the
Borrowing Certificates, and all other agreements, documents, instruments and
certificates heretofore or hereafter executed or delivered to Lender in
connection with any of the foregoing or the Loans, as the same may be amended,
modified or supplemented from time to time; all of which shall be in form and
substance acceptable to Lender in its sole discretion.
 
“Lockbox Accounts” shall mean the accounts maintained by Borrower at the Lockbox
Banks into which all collections or payments on their Accounts and Collateral
are paid.
 
“Lockbox Agreement” shall have the meaning assigned to the term in Section 2.5.
 
“Lockbox Bank” shall have the meaning assigned to the term in Section 2.5.
 
“Material Adverse Effect” or “Material Adverse Change” means with respect to any
event, act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, which results directly or indirectly in (a) a material adverse change
in, or a material adverse effect upon, any of (i) the condition (financial or
otherwise), operations, business or properties of any of the Credit Parties,
(ii) the rights and remedies of Lender under any Loan Document, or the ability
of any Credit Party to perform any of its obligations under any Loan Document to
which it is a party, (iii) the legality, validity or enforceability of any Loan
Document, (iv) the existence, perfection or priority of any security interest
granted in any Loan Document, or (v) the value of any material Collateral;
(b) an impairment to the likelihood that Eligible Accounts in general will be
collected and paid in the ordinary course of business of any Borrower and upon
the same schedule and with the same frequency as such Borrowers’ recent
collections history; or (c) the imposition of a fine against or the creation of
any liability (other than tax liabilities incurred in the ordinary course of
business as permitted hereunder) of any Credit Party to any Governmental
Authority in excess of $200,000.00.
 
 
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“Material Contracts” has the meaning set forth in Section 5.19.
 
“Note and Debenture Subordinated Debt” means any Indebtedness of Borrowers
incurred pursuant to the terms of the Note and Debenture Subordinated Debt
Documents.
 
“Note and Debenture Subordinated Debt Documents” means, individually and
collectively, that certain Indenture, dated as of March 1, 2004, by and between
Trans-Lux and Wells Fargo Bank, N.A., as trustee, for 8¼% Limited Convertible
Senior Subordinated Notes due 2012 and that certain Indenture, by and between
Trans-Lux and Continental Stock Transfer and Trust Company, for 9½% Subordinated
Debentures due 2012, and each other document, instrument, and agreement executed
and delivered in connection therewith, each as amended, restated, supplemented
or otherwise modified from time to time as permitted hereunder.
 
“Obligations” shall mean all present and future obligations, Indebtedness and
liabilities of any Credit Party to Lender at any time and from time to time of
every kind, nature and description, direct or indirect, secured or unsecured,
joint and several, absolute and contingent, due or to become due, matured or
unmatured, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, under any of the Loan Documents or under applicable
law, including, without limitation, all applicable fees, charges and expenses
and/or all amounts paid or advanced by Lender on behalf of or for the benefit of
any Credit Party for any reason at any time, including in each case obligations
of performance as well as obligations of payment and interest that accrue after
the commencement of any proceeding under any Debtor Relief Law by or against any
such Person.
 
“Orderly Liquidation Value” means the net amount (after all costs of sale),
expressed in terms of money, which Lender, in its good faith discretion,
estimates can be realized from a sale, as of a specific date, given a reasonable
period to find a purchaser(s), with the seller being compelled to sell on an
as-is/where-is basis.
 
“Organizational Documents” means, with respect to any Person other than a
natural person, the documents by which such Person was organized (such as a
certificate of incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the
internal governance of such Person (such as by-laws, a partnership agreement or
an operating, limited liability company or members agreement), including any and
all shareholder agreements or voting agreements relating to the capital stock or
other equity interests of such Person.
 
 
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“Permit” means all governmental licenses, authorizations, provider numbers,
supplier numbers, registrations, permits, drug or device authorizations and
approvals, certificates, franchises, qualifications, accreditations, consents
and approvals of a Credit Party required under all applicable Laws and required
for such Credit Party in order to carry on its business as now conducted.
 
“Permitted Contest” means, with respect to any tax obligation or other
obligation allegedly or potentially owing from any Borrower or its Subsidiary to
any governmental tax authority or other third party, a contest maintained in
good faith by appropriate proceedings promptly instituted and diligently
conducted and with respect to which such reserve or other appropriate provision,
if any, as shall be required in conformity with GAAP shall have been made on the
books and records and financial statements of the applicable Credit Party(ies);
provided, however, that (a) compliance with the obligation that is the subject
of such contest is effectively stayed during such challenge; (b) Borrowers’ and
its Subsidiaries’ title to, and its right to use, the Collateral is not
adversely affected thereby and Lender’s Lien and priority on the Collateral are
not adversely affected, altered or impaired thereby; (c) Borrowers have given
prior written notice to Lender of a Borrower’s or its Subsidiary’s intent to so
contest the obligation; (d) the Collateral or any part thereof or any interest
therein shall not be in any danger of being sold, forfeited or lost by reason of
such contest by Borrowers or its Subsidiaries; (e) Borrowers have given Lender
notice of the commencement of such contest and upon request by Lender, from time
to time, notice of the status of such contest by Borrowers and/or confirmation
of the continuing satisfaction of this definition; (f) a final determination of
such contest could not result in Lender’s Lien and its priority on the
Collateral being adversely affected, altered or impaired; (g) any reserves as
may be required by GAAP with respect thereto shall have been made on Borrower’s
books; and (h) upon a final determination of such contest, Borrowers and its
Subsidiaries shall promptly comply with the requirements thereof.
 
“Permitted Contingent Obligations” means (a) Contingent Obligations arising in
respect of the Indebtedness under the Loan Documents; (b) Contingent Obligations
resulting from endorsements for collection or deposit in the ordinary course of
business; (c) Contingent Obligations outstanding on the date of this Agreement
and set forth on Schedule 7.2 (but not including any refinancings, extensions,
increases or amendments to the indebtedness underlying such Contingent
Obligations other than extensions of the maturity thereof without any other
change in terms); (d) Contingent Obligations incurred in the ordinary course of
business with respect to surety and appeal bonds, performance bonds and other
similar obligations not to exceed $25,000 in the aggregate at any time
outstanding; (e) Contingent Obligations arising under indemnity agreements with
title insurers to cause such title insurers to issue to Lender mortgagee title
insurance policies; (f) Contingent Obligations arising with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions of personal property assets permitted under Section 7.8; (g) so
long as there exists no Event of Default both immediately before and immediately
after giving effect to any such transaction, Contingent Obligations existing or
arising under any Swap Contract, provided, however, that such obligations are
(or were) entered into by Borrower or an Affiliate in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person and not for purposes of speculation; and (h) other
Contingent Obligations not permitted by clauses (a) through (g) above, not to
exceed $25,000 in the aggregate at any time outstanding.
 
 
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“Permitted Discretion” shall mean a determination or judgment made by Lender in
good faith in the exercise of its business judgment.
 
“Permitted Indebtedness” shall mean:  (i) Indebtedness under the Loan Documents,
(ii) Capitalized Lease Obligations incurred after the Closing Date and secured
only by the equipment being leased pursuant to such Capitalized Lease
Obligations; (iii) Indebtedness incurred pursuant to purchase money Liens,
provided that the aggregate amount thereof outstanding at any time shall not
exceed $100,000, (iv) Indebtedness in connection with advances made by a
stockholder in order to cure any default of the financial and loan covenants set
forth on Annex I; provided, however, that such Indebtedness shall be on an
unsecured basis, subordinated in right of repayment and remedies to all of the
Obligations and to all of Lender’s rights and in form and substance satisfactory
to Lender; (v) accounts payable to trade creditors and current operating
expenses incurred in the ordinary course of business and paid on a timely basis;
(vi) borrowings incurred in the ordinary course of business and not exceeding
$25,000 individually or in the aggregate outstanding at any one time; provided,
however, that such Indebtedness shall be on an unsecured basis, subordinated in
right of repayment and remedies to all of the Obligations and to all of the
Lender’s rights and in form and substance satisfactory to Lender; (vii) so long
as there exists no Event of Default both immediately before and immediately
after giving effect to any such transaction, Indebtedness existing or arising
under any Swap Contract, provided, however, that such obligations are (or were)
entered into by Borrower or an Affiliate in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person and not for purposes of speculation; (viii) Indebtedness in the form
of insurance premiums financed through the applicable insurance company; (ix)
the Closing Date Subordinated Debt and the Note and Debenture Subordinated Debt;
(x) Indebtedness outstanding on the date of this Agreement and set forth on
Schedule 7.2 (but not including any refinancings, extensions, increases or
amendments to such Indebtedness other than extensions to the maturity thereof
without any other change in terms); and (xi) any other Indebtedness that Lender
may expressly consent to in writing prior to its incurrence, which consent shall
be in the sole discretion of Lender.  Notwithstanding the foregoing, Borrower
shall incur no Indebtedness if the incurrence of such Indebtedness will,
directly or indirectly, cause a Default or an Event of Default under this
Agreement.  Borrower shall not make prepayments on an existing or future
Indebtedness to any Person other than to Lender or to the extent specifically
permitted by this Agreement or any subsequent agreement between Borrower and
Lender.
 
“Permitted Liens” means:  (a) deposits or pledges of cash to secure obligations
under worker’s compensation, social security or similar laws, or under
unemployment insurance pertaining to a Borrower’s or its Subsidiary’s employees;
(b) deposits or pledges of cash to secure bids, tenders, contracts (other than
contracts for the payment of money or the deferred purchase price of property or
services), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of business;
(c) carrier’s, warehousemen’s, mechanic’s, workmen’s, materialmen’s or other
like Liens on Collateral, other than any Collateral which is part of the
Borrowing Base, arising in the ordinary course of business with respect to
obligations which are not due, or which are being contested pursuant to a
Permitted Contest; (d) Liens on Collateral, other than Accounts, for taxes or
other governmental charges not at the time delinquent or thereafter payable
without penalty or the subject of a Permitted Contest; (e) attachments, appeal
bonds, judgments and other similar Liens on Collateral other than Accounts, for
sums not exceeding $100,000 in the aggregate arising in connection with court
proceedings; provided, however, that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are the subject of a
Permitted Contest; (f) Liens and encumbrances in favor of Lender under the Loan
Documents; (g) Liens on Collateral, other than Collateral which is part of the
Borrowing Base, existing on the date hereof and set forth on Schedule 7.3;
(h) any Lien on any Equipment securing Indebtedness permitted under subpart
(iii) of the definition of Permitted Indebtedness, provided, however, that such
Lien attaches concurrently with or within twenty (20) days after the acquisition
thereof; (i) [Reserved]; (j) easements, rights of way, restrictions (including
zoning restrictions), covenants, encroachments, and other similar real estate
charges or encumbrances, minor defects or irregularities in title and other
similar real estate Liens, in each case solely affecting real property, none of
which, individually or collectively, (i) interfere in any material respect with
the ordinary conduct of the business of any Borrower or any Subsidiary thereof
or (ii) materially or adversely affect the value of the real property; (k)
leases, subleases, licenses or sublicenses of the assets or properties of any
Borrower or Subsidiary, in each case entered into in the ordinary course of such
Borrower or Subsidiary and not interfering in any material respect with the
business of any Borrower or any Subsidiary thereof; (l) normal and customary set
off rights against deposits of cash in depository accounts permitted hereunder
in favor of banks at which a Borrower or any Subsidiary thereof maintains such
depository accounts, which set off rights only secure the obligations of such
Borrower or Subsidiary thereof to pay ordinary course fees and bank charges; (m)
Liens consisting of precautionary filings of UCC financing statements filed with
respect to operating leases permitted hereunder and any interest of title of a
lessor under any operating lease permitted hereunder; and (n) non-exclusive
licenses of Intellectual Property granted in the ordinary course of business.
 
 
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“Permitted Modifications” means (a) such amendments or other modifications to a
Borrower’s or Subsidiary’s Organizational Documents as are required under this
Agreement or by applicable Law and fully disclosed to Lender within thirty (30)
days after such amendments or modifications have become effective, and (b) such
amendments or modifications to a Borrower’s or Subsidiary’s Organizational
Documents (other than those involving a change in the name of a Borrower or
Subsidiary or involving a reorganization of a Borrower or Subsidiary under the
laws of a different jurisdiction) that would not adversely affect the rights and
interests of the Lender and fully disclosed to Lender within thirty (30) days
after such amendments or modifications have become effective.
 
“Person” shall mean any natural person, corporation, limited liability company,
professional association, limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any Governmental Authority or any other entity of whatever nature.
 
“Prime Rate” shall mean a fluctuating interest rate per annum equal at all times
to the rate of interest announced, from time to time, within Wells Fargo Bank at
its principal office in San Francisco as its “prime rate,” with the
understanding that the “prime rate” is one of Wells Fargo Bank’s base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publications as Wells Fargo Bank may designate; provided that Lender
may, upon prior written notice to Borrower, choose a reasonably comparable index
or source to use as the basis for the Prime Rate, and further provided, that in
no event shall the Prime Rate be lower than such rate as in effect as of the
Closing Date, and further provided, that each change in the fluctuating interest
rate shall take effect simultaneously with the corresponding change in the Prime
Rate.
 
 
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“Purchase Agreement” means that certain that certain Supply Contract, dated as
of January 5, 2016, between Trans-Lux and Prima Power North America, Inc., an
Illinois corporation, as amended, restated, supplemented or otherwise modified
from time to time as permitted hereunder.
 
“Purchase Documents” means the Purchase Agreement and each of the other material
documents, instruments and agreements executed and delivered in connection with
the Equipment Purchase.
 
“Receipt” shall have the meaning assigned in Section 13.5.
 
“Related Property” shall mean, with respect to each Account, the following:  (i)
all records of any nature evidencing or related to the Account, including
contracts, invoices, charges slips, credit memoranda, notes and other
instruments and other documents, books, records and other information
(including, without limitation, computer data); (ii) all security interests or
liens and property subject thereto from time to time purporting to secure
payment of such Account, whether pursuant to the contract related to such
Account or otherwise, including all rights of stoppage in transit, replevin,
reclamation, supporting obligations and letter of credit rights (as such terms
are defined in the Uniform Commercial Code), and all claims of lien filed or
held by the Borrower on personal property; (iii) all rights to any goods whose
sale gave rise to such Account, including returned or repossessed goods; (iv)
all instruments, documents, chattel paper and general intangibles (each as
defined in the Uniform Commercial Code) arising from, related to or evidencing
such Account; (v) all UCC financing statements covering any collateral securing
payment of such Account; (vi) all guaranties and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Account whether pursuant to the contract related to such Account
or otherwise; and (vii) all proceeds and amounts received or receivable arising
from any of the foregoing.
 
“Restricted Subsidiary” shall mean, collectively, Trans-Lux Investment
Corporation, a Delaware corporation, and TLC.
 
“Revolving Facility Termination” shall mean any of the following:
 
(i)           A termination of the Revolving Facility by the Borrower under
Section 11.1 hereof,
 
(ii)           any other voluntary or involuntary prepayment of the Revolving
Facility and/or Obligations relating to the Revolving Facility by Borrower or
any other Person occurs (other than reductions to zero of the outstanding
balance of the Revolving Facility resulting from the ordinary course operation
of the provisions of Section 2.5), whether by virtue of Lender’s exercising its
right of set-off or otherwise,
 
 
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(iii)           Lender demands or Borrower is otherwise required to make payment
in full of the Revolving Facility and/or Obligations relating to the Revolving
Facility upon the occurrence of an Event of Default,
 
(iv)           Lender terminates its obligations to make Advances hereunder upon
the occurrence of an Event of Default, or
 
(v)           any payment reduction or reduction of the outstanding balance of
the Revolving Loan and/or the Revolving Facility is made during a bankruptcy,
reorganization or other proceeding or is made pursuant to any plan of
reorganization or liquidation or any Debtor Relief Law.
 
“Revolving Loan” means the aggregate of the loans made pursuant to Section
2.1(a).
 
“Revolving Loan Commitment Amount” shall be $2,000,000, plus such increases as
may be made pursuant to Section 2.1(a)(ii).
 
“Revolving Loan Limit” means, at any time, the lesser of (a) the Revolving Loan
Commitment Amount and (b) the Borrowing Base.
 
“Subordination Agreement” means each agreement, including the Closing Date
Subordination Agreement, between Lender and another creditor of Borrowers, as
the same may be amended, supplemented, restated or otherwise modified from time
to time in accordance with the terms thereof, pursuant to which the Indebtedness
owing from any Borrower(s) and/or the Liens securing such Indebtedness granted
by any Borrower(s) to such creditor are subordinated in any way to the
Obligations and the Liens created under the Loan Documents, the terms and
provisions of such Subordination Agreements to have been agreed to by and be
acceptable to Lender in the exercise of its sole discretion.
 
“Subordinated Debt” means any Indebtedness, including the Closing Date
Subordinated Debt and the Note and Debenture Subordinated Debt, of Borrowers
incurred pursuant to the terms of the Subordinated Debt Documents and with the
prior written consent of Lender, all of which documents must be in form and
substance acceptable to Lender in its sole discretion.
 
“Subordinated Debt Documents” means (i) any documents evidencing and/or securing
Debt governed by a Subordination Agreement, including the Closing Date
Subordinated Debt Documents, and (ii) the Note and Debenture Subordinated Debt
Documents, which are subordinated by their terms, all of which documents must be
in form and substance acceptable to Lender in its sole discretion.
 
“Subsidiary” shall mean (i) as to Borrower, any Person in which more than 50% of
all equity, membership, partnership or other ownership interests is owned
directly or indirectly by Borrower or one or more of its Subsidiaries, and (ii)
as to any other Person, any Person in which more than 50% of all equity,
membership, partnership or other ownership interests is owned directly or
indirectly by such Person or by one or more of such Person’s
Subsidiaries.  Unless the context otherwise requires, each reference to a
Subsidiary shall be a reference to a Subsidiary of a Borrower.
 
 
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“Term Loan Commitment” means $1,000,000.
 
“Termination Date” means the earlier to occur of (a) the Commitment Expiration
Date, (b) any date on which Lender accelerates the maturity of the Loans
pursuant to Article VIII, or (c) the termination date stated in any notice of
termination of this Agreement provided by Borrowers in accordance with Section
11.1.
 
“Termination Fee” shall mean the amount equal to two percent (2%) of the
Revolving Loan Commitment Amount if a Revolving Facility Termination occurs
before the Termination Date.  The Termination Fee is an “Obligation,” as that
term is defined herein.
 
“TLC” shall mean Trans-Lux Canada Ltd., an Ontario corporation.
 
“UCC” and “Uniform Commercial Code” means the Uniform Commercial Code of the
State of New York or of any other state the laws of which are required to be
applied in connection with the perfection of security interests in any
Collateral.
 
“Unused Line Fee” shall have the meaning assigned to the term in Section 3.2.
 
1.3           Other Definitional and Interpretative Provisions
 
References in this Agreement to “Articles”, “Sections”, “Annexes”, “Exhibits”,
or “Schedules” shall be to Articles, Sections, Annexes, Exhibits or Schedules of
or to this Agreement unless otherwise specifically provided.  Any term defined
herein may be used in the singular or plural.  “Include”, “includes” and
“including” shall be deemed to be followed by “without limitation”.  Except as
otherwise specified or limited herein, references to any Person include the
successors and assigns of such Person.  References “from” or “through” any date
mean, unless otherwise specified, “from and including” or “through and
including”, respectively.  Unless otherwise specified herein, the settlement of
all payments and fundings hereunder between or among the parties hereto shall be
made in lawful money of the United States and in immediately available
funds.  Unless otherwise specified herein, all amounts (including, for the
avoidance of doubt, for purposes of calculating the Borrowing Base) shall be
calculated in United States Dollars.  References to any statute or act shall
include all related current regulations and all amendments and any successor
statutes, acts and regulations.  All amounts used for purposes of financial
calculations required to be made herein shall be without
duplication.  References to any statute or act, without additional reference,
shall be deemed to refer to federal statutes and acts of the United
States.  References to any agreement, instrument or document shall include all
schedules, exhibits, annexes and other attachments thereto.  As used in this
Agreement, the meaning of the term “material” or the phrase “in all material
respects” is intended to refer to an act, omission, violation or condition which
reflects or could reasonably be expected to result in a Material Adverse
Effect.  References to capitalized terms that are not defined herein, but are
defined in the UCC, shall have the meanings given them in the UCC.  All
references herein to times of day shall be references to daylight or standard
time, as applicable.
 
 
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1.4           Time is of the Essence
 
Time is of the essence in Borrower’s and each other Credit Party’s performance
under this Agreement and all other Loan Documents.
 
II.           ADVANCES, PAYMENT AND INTEREST
 
2.1           Loan Advances
 
(a)           Revolving Facility
 
(i)           Subject to the provisions of this Agreement, Lender shall make
Advances to Borrower under the Revolving Facility from time to time during the
Term, and not more than once per each week unless agreed to by Lender and
subject to the processing fees set forth in Section 2.4; provided that,
notwithstanding any other provision of this Agreement (but subject to the
provisions of this Section 2.1(a)), the aggregate amount of all Advances at any
one time outstanding shall not exceed the Revolving Loan Limit.  The Revolving
Facility is a revolving credit facility, which may be drawn, repaid and redrawn,
from time to time as permitted under this Agreement.  Any determination as to
whether there is availability within the Borrowing Base for Advances shall be
made by Lender in its Permitted Discretion and is final and binding upon
Borrower.  Unless otherwise permitted by Lender, each Advance requested by
Borrower shall be in an amount of at least $25,000.  Subject to Availability and
the provisions of this Agreement, Borrower may request Advances under the
Revolving Facility from time to time as set forth in Section 2.4.  Advances
under the Revolving Facility automatically may, in the discretion of the Lender,
be made for the payment of interest on the Revolving Facility and other
Obligations on the date when due to the extent of Availability and as provided
for herein.
 
(ii)           At the request of Borrower, the Revolving Loan Commitment Amount
may be, in the Lender’s sole discretion, increased in one increment of
$1,000,000.  In the event that the Revolving Loan Commitment Amount is
increased, Borrower shall pay to Lender a Facility Fee in an amount equal to one
percent (1.00)% of the amount by which the Revolving Loan Commitment Amount is
increased.
 
(iii)           Lender may in its sole and absolute discretion make one or more
Advances in excess of Availability.  The making of any Advance in excess of
Availability shall not be deemed an acknowledgement that any additional such
Advances will be made or may be required to be made; nor shall any such Advance
be deemed to establish any course of conduct, waiver, or estoppel that would
obligate Lender to make any further such Advances or prevent the Lender from
treating the Borrower’s failure to repay such Advance(s) as a Default or an
Event of Default.  In the event outstanding Advances under the Revolving
Facility exceed the Availability (whether because of an intentional Advance in
excess of Availability or a reduction in the Borrowing Base or otherwise),
Lender may charge an over-advance fee of 10% of the amount by which such
outstanding Advances exceed the Availability.  Such over-advance fee shall be in
addition to any other fees, charges or other provisions that may increase the
Applicable Rate of interest hereunder and the assessment or collection of such
over-advance fee shall not, unless Lender specifically agrees in writing to the
contrary, prevent Lender from considering any such over-advance from being a
Default or an Event of Default.  The over-advance fee shall be paid on the first
Business Day of each week if the amount outstanding hereunder is in excess of
the Availability at any time during the immediately preceding week.
 
 
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(b)           Term Loan
 
(i)           Term Loan Amounts
 
(A)           On the terms and subject to the conditions set forth herein, the
Lender hereby agrees to make to Borrowers the Term Loan on the Closing Date in
an original principal amount equal to the Term Loan Commitment.  Any portion of
the Lender’s Term Loan Commitment not funded as of the close of business on the
Closing Date shall thereupon automatically be terminated.
 
(B)           No Borrower shall have any right to reborrow any portion of the
Term Loan that is repaid or prepaid from time to time.
 
(ii)           Scheduled Repayments; Mandatory Prepayments
 
(A)           There shall become due and payable, and Borrowers shall repay the
Term Loan through, scheduled payments as set forth on Schedule 2.1 attached
hereto.  Notwithstanding the payment schedule set forth on Schedule 2.1, the
outstanding principal amount of the Term Loan shall become immediately due and
payable in full on the Termination Date.
 
(B)           There shall become due and payable and Borrowers shall prepay the
Term Loan in the following amounts and at the following times:
 
(i)           Unless Lender shall otherwise consent in writing, on the date on
which any Credit Party (or Lender as lender’s loss payable or assignee) receives
any casualty proceeds in excess of $25,000 with respect to assets upon which
Lender maintained a Lien, an amount equal to one hundred percent (100%) of such
proceeds (net of out-of-pocket expenses and repayment of secured debt permitted
under clause (iii) of the definition of Permitted Indebtedness and encumbering
the property that suffered such casualty), or such lesser portion of such
proceeds as Lender shall elect to apply to the Obligations.  Notwithstanding the
foregoing and so long as no Event of Default or Default then exists:  (1) any
such casualty proceeds in excess of $250,000 (other than with respect to
Inventory and any real property, unless Lender shall otherwise elect) may be
used by Borrowers within one hundred eighty (180) days from the receipt of such
proceeds to replace or repair any assets in respect of which such proceeds were
paid so long as (x) prior to the receipt of such proceeds, Borrowers have
delivered to Lender a reinvestment plan detailing such replacement or repair
acceptable to Lender in its Permitted Discretion and (y) such proceeds are
deposited into an account with Lender promptly upon receipt by such Borrower;
and (2) proceeds of personal property asset dispositions that are not made in
the ordinary course of business (other than Collateral upon which the Borrowing
Base is calculated, unless Lender shall otherwise elect) may be used by
Borrowers within one hundred eighty (180) days from the receipt of such proceeds
to purchase new or replacement assets of comparable value, provided, however,
that such proceeds are deposited into an account with Lender promptly upon
receipt by such Borrower.  All sums held by Lender pending reinvestment as
described in subsections (1) and (2) above shall be deemed additional collateral
for the Obligations and may be commingled with the general funds of Lender.
 
 
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(ii)           An amount equal to any interest that is deemed to be in excess of
the maximum lawful rate and is required to be applied to the reduction of the
principal balance of the Loans by the Lender shall be paid as provided for in
Section 3.6.
 
(iii)           Unless Lender shall otherwise consent in writing, upon receipt
by any Credit Party of the proceeds of any Asset Disposition that is not made in
the ordinary course of business or that pertains to any Collateral upon which a
Borrowing Base is calculated, an amount equal to one hundred percent (100%) of
the net cash proceeds of such asset disposition (net of out-of-pocket expenses
and repayment of secured debt permitted under clause (iii) of the definition of
Permitted Indebtedness and encumbering such asset) shall be paid to Lender, or
such lesser portion as Lender shall elect to apply to the Obligations.
 
(iv)           Unless Lender shall otherwise consent in writing, upon receipt by
any Credit Party of any extraordinary receipts or the proceeds from the
incurrence of Indebtedness or issuance and sale of any Indebtedness or equity
securities, an amount equal to one hundred percent (100%) of such extraordinary
receipts shall be paid to Lender, or such lesser portion as Lender shall elect
to apply to the Obligations.
 
(iii)           All Prepayments.  Except as this Agreement may specifically
provide otherwise, all prepayments of the Term Loan shall be applied by Lender
to the Obligations in inverse order of maturity.  The monthly payments required
under Schedule 2.1 shall continue in the same amount (for so long as the Term
Loan and/or (if applicable) any advances thereunder shall remain outstanding)
notwithstanding any partial prepayment of the Term Loan.  Notwithstanding
anything to the contrary contained in the foregoing, each prepayment of the Term
Loan shall be applied by Lender to reduce and prepay the principal balance of
the Term Loan then outstanding.
 
(iv)           Prime Rate.  The Term Loan shall accrue interest at the Prime
Rate plus the Applicable Margin.
 
2.2           Evidence of Obligations; Date Due
 
(a)           Lender shall maintain a loan account (the “Loan Account”) on its
books to record Loans and other extensions of credit made by the Lender
hereunder or under any other Loan Document, and all payments thereon made by or
on behalf of each Borrower.  All entries in the Loan Account shall be made in
accordance with Lender’s customary accounting practices as in effect from time
to time.  The balance in the Loan Account, as recorded in Lender’s books and
records at any time shall be conclusive and binding evidence of the amounts due
and owing to Lender by each Borrower absent manifest error; provided, however,
that any failure to so record or any error in so recording shall not limit or
otherwise affect any Borrower’s duty to pay all amounts owing hereunder or under
any other Loan Document.  Lender shall endeavor to provide Borrowers with a
monthly statement regarding the Loan Account (but Lender shall have no liability
if Lender shall fail to provide any such statement).  Unless any Borrower
notifies Lender of any objection to any such statement (specifically describing
the basis for such objection) within sixty (60) days after the date of receipt
thereof, it shall be deemed final, binding and conclusive upon Borrowers in all
respects as to all matters reflected therein.
 
 
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(b)           All amounts outstanding hereunder and other Obligations shall be
due and payable in full, if not earlier in accordance with this Agreement, on
the Termination Date.
 
2.3           Interest on Revolving Loan
 
Interest shall accrue on the principal amount of the Revolving Facility
outstanding from time to time hereunder at a rate per annum equal to the Prime
Rate plus the Applicable Margin calculated on the basis of a 360-day year and
adjusted for the actual number of calendar days elapsed in each interest
calculation period.  Interest shall be payable by Borrower monthly in arrears
but in no event later than the first Business Day of each calendar month,
commencing August 1, 2016.
 
Interest payments may, at the discretion of the Lender, be made (i) by
application of funds in the Concentration Account as set forth in Section 2.5,
(ii) by an Advance on the Revolving Facility, as set forth in Section 2.1,
without any further action by Borrower, or (iii) directly by Borrower.  Interest
shall continue until the irrevocable payment in full in cash of the
Obligations.  Any accrued but unpaid interest shall be added to the Obligations
and increase the principal amount outstanding hereunder on the first Business
Day of each month.
 
2.4           Revolving Facility Disbursements; Requirement to Deliver Borrowing
Certificate
 
So long as no Default or Event of Default shall have occurred and be continuing,
Borrower may give Lender written notice requesting an Advance under the
Revolving Facility by delivering to Lender not later than 11:00 a.m. (New York
City time) at least one but not more than four Business Days before the proposed
borrowing date of such requested Advance (the “Borrowing Date”), a completed
Borrowing Certificate and relevant supporting documentation satisfactory to
Lender in its Permitted Discretion, which shall (i) specify the proposed
Borrowing Date of such Advance which shall be a Business Day, (ii) specify the
principal amount of such requested Advance, and (iii) certify the matters
specified therein.  In the event that Borrower does not request an Advance
during any two consecutive calendar weeks, Borrower shall, on the last Business
Day of the second such week (and more frequently if Lender shall so request)
until the Obligations are indefeasibly paid in cash in full and this Agreement
is terminated, deliver to Lender a Borrowing Certificate which shall (i) certify
the matters specified therein, and (ii) be accompanied by a separate detailed
aging and categorizing of Borrower’s accounts receivable and such other
supporting documentation with respect to the figures and information in the
Borrowing Certificate as Lender shall reasonably request from a credit or
security perspective or otherwise.  On each Borrowing Date, Borrower authorizes
Lender to disburse the proceeds of the requested Advance to the Borrower’s
account(s) as set forth on Schedule 2.4 (or to such other account as to which
the Borrower shall expressly instruct Lender in writing), for credit by the
recipient of such proceeds to the Borrower, via federal funds wire transfer no
later than 4:00 p.m. (New York City time); provided, however, if any amounts are
then due to Lender on account of any interest, fees or expense reimbursements
due under the Loan Documents at the time such Advance is requested, Lender is
authorized (but not required) to reduce the proceeds to Borrower with respect to
such Advance by the amount of such interest, fees or expense reimbursements and
to retain such amounts as payment of such interest, fees or expense
reimbursements.  Lender shall charge a processing fee of $100.00 for each
Advance.
 
 
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2.5           Collections; Repayment; Borrowing Availability and Lockbox
 
Prior to the consummation of the transactions contemplated by this Agreement,
the Borrower shall establish and maintain at the Borrower’s expense an account
(the “Lockbox Account”) with a depository institution satisfactory to the Lender
into which all collections in respect of all Eligible Receivables and proceeds
of Eligible Inventory shall be deposited, pursuant to one or more agreements
acceptable to Lender in its sole discretion (collectively, the “Lockbox
Agreement”).  (The depository institution(s) in which the Lockbox Account is
maintained are referred to as the “Lockbox Bank”.)  The Borrower hereby agrees
to direct each payor of an Account to remit all payments with respect to such
Account for deposit in the Lockbox Account by (A) delivering to each such payor
a notice containing such instructions and (B) identifying the Lockbox Account as
the “pay to” address on all bills sent to payors of all Accounts.  The Borrower
further agrees not to change such directive to payors without the prior written
consent of the Lender.  The Borrower agrees not to terminate the Lockbox
Account.  The Lockbox Agreement shall instruct the Lockbox Bank to immediately
transfer all funds paid into the Lockbox Accounts into a depository account or
accounts owned and maintained by Lender or an Affiliate of Lender at such bank
as Lender may communicate to the Lockbox Bank from time to time (the
“Concentration Account”).  The Borrower agrees not to revoke such instructions
and the Borrower hereby agrees not to change or direct the custodian thereof to
modify such sweep order or to provide any other or additional instructions to
the custodian thereof.  In the event the payors with respect to any Eligible
Receivables receive any instruction whatsoever from or on behalf of the Borrower
indicating that collections with respect to the Eligible Receivables or proceeds
of Eligible Inventory should be sent to any location other than the Lockbox
Account, the Borrower hereby acknowledges and agrees that such actions would be
an express violation of this Agreement, would cause irreparable harm to the
Lender for which there would be no adequate remedy at law, and agrees and
consents to entry of an order by a court of competent jurisdiction granting the
Lender specific performance of the terms and provisions of this Agreement as to
the Borrower.
 
To the extent that any Account collections of Borrower or any other cash
payments received by Borrower are not sent directly to the Lockbox Account but
are received by Borrower or any of its Affiliates, such collections and proceeds
shall be held in trust for the benefit of the Lender and immediately remitted
(and in any event within three (3) Business Days), in the form received (or,
with respect to cash, by check or wire transfer), to the Lockbox Account for
immediate transfer to the Concentration Account.  Borrower acknowledges and
agrees that compliance with the terms of this Section 2.5 is an essential term
of this Agreement, and that, in addition to and notwithstanding any other rights
Lender may have hereunder under any other Loan Document, under applicable law or
equity, upon each and every failure by Borrower or any of its Affiliates to
cause collections with respect to Eligible Receivables or any other payments to
Borrower with respect to the Collateral to be deposited into the Lockbox Account
as set forth in this Section 2.5, Lender shall be entitled to assess Borrower
with a non-compliance fee in an amount equal to ten percent (10%) of the amount
of such collections or other payments; provided that such non-compliance fee
shall be in addition to any other fees, charges or other provisions that may
increase the Applicable Rate of interest hereunder and the assessment or
collection of such non-compliance fee shall not, unless Lender specifically
agrees in writing to the contrary, prevent Lender from considering any such
non-compliance to be a Default or an Event of Default.  For purposes of
determining Availability, all funds transferred to the Concentration Account in
accordance with this Section shall be applied in accordance with the foregoing
sentence as of the date of the transfer.  For purposes of calculating interest,
all funds transferred to the Concentration Account in accordance with this
Section shall be subject to a three (3) Business Day clearance period and all
interest accruing on such funds during such clearance period shall accrue for
the benefit of the Lender.  All funds transferred to the Concentration Account
for application to the Obligations shall be applied to reduce the Obligations
hereunder in the following order of priority:  (i) payment of any fees and
expense reimbursements due to Lender under the Loan Documents, (ii) any other
Obligations of Borrower not included in items (iii) and (iv) below, (iii) to any
interest then due and owing hereunder, and (iv) to the principal amount
outstanding hereunder.  If as the result of collections of Accounts and/or any
other cash payments received by Borrower pursuant to this Section 2.5 there is a
positive balance in favor of Borrower in the Concentration Account, such
positive balance shall not accrue interest in favor of Borrower, but shall be
available to Borrower in accordance with the terms of this Agreement.  If
applicable, at any time prior to the execution of all or any of the Lockbox
Agreements and operation of all or any of the Lockbox Accounts, Borrower and its
Affiliates shall direct all collections or proceeds it receives on Accounts or
from other Collateral to the account(s) and in the manner specified by Lender in
its Permitted Discretion so long as any amounts are outstanding under the
Revolving Facility or the Term Loan.
 
 
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2.6           Promise to Pay; Manner of Payment
 
Borrower promises to pay principal, interest and all other amounts payable
hereunder, or under any other Loan Document, without any right of rescission and
without any deduction whatsoever, including any deduction for any setoff,
counterclaim or recoupments, and notwithstanding any damage to, defects in or
destruction of the Collateral or any other event, including obsolescence of any
property or improvements.  Unless paid in accordance with Section 2.5, all
payments made by Borrower (other than payments automatically paid through
Advances under the Revolving Facility as provided herein), shall be made only by
wire transfer on the date when due, without offset or deduction for
counterclaim, in U.S. Dollars, in immediately available funds to such account as
may be indicated in writing by Lender to Borrower from time to time.  Any such
payment received after 4:00 p.m. (New York City time) on the date when due shall
be deemed received on the following Business Day.  Whenever any payment
hereunder shall be stated to be due or shall become due and payable on a day
other than a Business Day, the due date thereof shall be extended to, and such
payment shall be made on, the next succeeding Business Day, and such extension
of time in such case shall be included in the computation of payment of any
interest (at the interest rate then in effect during such extension) and/or
fees, as the case may be.  In the absence of receipt by Lender of a written
designation by Borrower, at least two (2) Business Days prior to such
prepayment, that such prepayment is to be applied to the Term Loan, Borrowers
hereby authorize and direct Lender, subject to the provisions of Section 9.4
hereof, to apply such prepayment against then outstanding Revolving Loans, and
second, if no Revolving Loans are then outstanding, against the outstanding Term
Loan in accordance with the provisions of Section 2.1(b)(iii);
provided, however, that if Lender at any time determines that payments received
by Lender were in respect of a mandatory prepayment event, Lender shall apply
such payments in accordance with the provisions of Section 2.1(b)(ii) and shall
be fully authorized by Borrowers to make corresponding Loan Account reversals in
respect thereof.
 
 
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2.7           Repayment of Excess Advances
 
Subject to the following sentence, any balance of Advances under the Revolving
Facility outstanding at any time in excess of the Revolving Loan Limit shall be
immediately due and payable by Borrower upon demand (or, if such overadvance was
created as a result of Lender’s adjustment of the advance rates for Availability
or eligibility criteria, then within five (5) Business Days, unless such
adjustment by Lender was the result of any misrepresentation or fraud of the
Borrower, in which as there shall be no grace period and any such overadvance
shall be immediately due and payable), whether or not a Default or Event of
Default has occurred or is continuing and shall be paid in the manner specified
in Section 2.6.  Notwithstanding the foregoing, if Lender intentionally makes an
Advance which is in excess of Availability, such Advance shall be repaid within
five (5) Business Days of a demand for repayment or when it is otherwise
required to be repaid pursuant to other Sections of this Agreement.
 
2.8           Payments by Lender
 
Should any amount required to be paid under any Loan Document remain unpaid
after it is due and payable and after the expiration of any cure period, if
applicable, such amount may be paid by Lender, which payment shall be deemed a
request for an Advance under the Revolving Facility as of the date such payment
is due, and Borrower irrevocably authorizes disbursements of any such funds to
Lender by way of direct payment of the relevant amount, interest or
Obligations.  No payment or prepayment of any amount by Lender or any other
Person shall entitle any Person to be subrogated to the rights of Lender under
any Loan Document unless and until the Obligations have been fully performed and
paid irrevocably in cash and this Agreement has been terminated.  Any sums
expended by Lender as a result of any Borrower’s or any Guarantor’s failure to
pay, perform or comply with any Loan Document or any of the Obligations may be
charged to Borrower’s account as an Advance under the Revolving Facility and
added to the Obligations and increase the principal amount of the Revolving
Loans outstanding hereunder.
 
2.9           Grant of Security Interest; Collateral
 
(a)           To secure the payment and performance of the Obligations, and
without limiting any grant of a Lien and security interest in any other Loan
Document, the Borrower hereby grants to Lender a continuing security interest in
and Lien upon, and pledges to Lender, all of its right, title and interest in
and to the personal property set forth on Schedule 2.9 attached hereto and made
a part hereof.
 
(b)           Upon the execution and delivery of this Agreement, and upon the
proper filing of the necessary financing statements without any further action,
Lender will have a good, valid and perfected first priority Lien and security
interest in all Collateral which may be perfected by the filing of financing
statements, subject to no transfer or other restrictions or Liens of any kind in
favor of any other Person except for Permitted Liens.  No financing statement
relating to any of the Collateral is on file in any public office except those
(i) on behalf of Lender, and/or (ii) in connection with Permitted Liens.
 
 
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2.10           Collateral Administration
 
(a)           All Collateral (except funds required to be deposited in the
Lockbox Accounts) will at all times be kept by Borrower at the locations
(including warehouses) set forth on Schedule 5.18 hereto and shall not, without
concurrent written notice to Lender, be moved therefrom and in any case shall
not be moved outside the continental United States.
 
(b)           Borrower shall keep accurate and complete records of its Accounts
and all payments and collections thereon and shall submit such records to Lender
on such periodic basis as Lender may request.  After the occurrence and during
the continuance of an Event of Default, and upon Lender’s request, Borrower
shall execute and deliver to Lender formal written assignments of all of its
Accounts weekly or daily as Lender may request, including all Accounts created
since the date of the last assignment, together with copies of invoices and/or
other information related thereto.  To the extent that collections from such
assigned Accounts exceed the amount of the Obligations, such excess amount shall
not accrue interest in favor of Borrower, but shall be available to Borrower
upon Borrower’s written request.
 
(c)           Any of Lender’s officers, employees, representatives or agents
shall have the right, at any time during normal business hours upon reasonable
prior notice to Borrower, to verify the validity, amount or any other matter
relating to any Accounts of Borrower.  Borrower shall cooperate fully with
Lender in an effort to facilitate and promptly conclude such verification.
 
(d)           Lender shall have the right at all times after the occurrence and
during the continuance of an Event of Default to notify Account Debtors owing
Accounts to Borrower that their Accounts have been assigned to Lender and to
collect such Accounts directly in its own name and to charge collection costs
and expenses, including reasonable attorneys’ fees, to Borrower.
 
(e)           As and when determined by Lender in its Permitted Discretion,
Lender shall have the right to perform the searches described in clauses (i) and
(ii) below against Borrower and Guarantors (the results of which are to be
consistent with Borrower’s representations and warranties under this Agreement),
at Borrower’s reasonable expense:  (i) UCC searches with the Secretary of State
and local filing offices of each jurisdiction where Borrower maintains its
executive offices, a place of business or assets or in which they are organized;
and (ii) judgment and federal, state and local tax lien searches, in each
jurisdiction searched under clause (i) above.
 
(f)           Borrower (i) shall provide prompt written notice to its current
bank to transfer all items, collections and remittances to the Concentration
Account, (ii) shall direct each Account Debtor to make payments to the Lockbox
Account as set forth in Section 2.5, and Borrower hereby authorizes Lender, upon
any failure to send such notices and directions within ten (10) calendar days
after the date of this Agreement (or ten (10) calendar days after the Person
becomes an Account Debtor), to send any and all similar notices and directions
to such Account Debtors, and (iii) shall do anything further that may be
lawfully required by Lender to secure Lender and effectuate the intentions of
the Loan Documents.
 
 
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(g)           As of the Closing Date, no Borrower has any ownership interest in
any Chattel Paper (as defined in Article 9 of the UCC), letter of credit rights,
commercial tort claims, Instruments, documents or investment property (other
than equity interests in any Subsidiaries of such Borrower disclosed on Schedule
5.3) and Borrowers shall give notice to Lender promptly (but in any event not
later than the delivery by Borrowers of the next Borrowing Certificate required
pursuant to Section 2.4 above) upon the acquisition by any Borrower of any such
Chattel Paper, letter of credit rights, commercial tort claims, Instruments,
documents, investment property.  No Person other than any Lender has “control”
(as defined in Article 9 of the UCC) over any Deposit Account, investment
property (including securities accounts and commodities account), letter of
credit rights or electronic chattel paper in which any Borrower has any interest
(except for such control arising by operation of law in favor of any bank or
securities intermediary or commodities intermediary with whom any Deposit
Account, securities account or commodities account of Borrowers is maintained).
 
(h)           Borrowers will conduct a physical count of the Inventory at least
once per year and at such other times as Lender requests, and Borrowers shall
provide to Lender a written accounting of such physical count in form and
substance satisfactory to Lender.  Each Borrower will use commercially
reasonable efforts to at all times keep its Inventory in good and marketable
condition.  In addition to the foregoing, from time to time, Lender may require
Borrowers to obtain and deliver to Lender appraisal reports in form and
substance and from appraisers reasonably satisfactory to Lender stating the then
current fair market values of all or any portion of Inventory owned by each
Borrower or any Subsidiaries.
 
(i)           In addition to the foregoing, from time to time, Lender may
require Borrowers to obtain and deliver to Lender appraisal reports, at the
Borrower’s expense, in form and substance and from appraisers reasonably
satisfactory to Lender stating the then current Orderly Liquidation Values, as
required by the Lender, and fair market values of all or any portion of
Inventory, Intellectual Property and furniture, fixtures and equipment owned by
each Borrower or any Subsidiaries.
 
(j)           Borrowers shall not adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any Account Debtor, or allow
any credit or discount thereon (other than adjustments, settlements,
compromises, credits and discounts in the ordinary course of business, made
while no Default exists and in amounts which are not material with respect to
the Account and which, after giving effect thereto, do not cause the Borrowing
Base to be less than the Revolving Loans outstanding) without the prior written
consent of Lender.  Without limiting the generality of this Agreement or any
other provisions of any of the Loan Documents relating to the rights of Lender
after the occurrence and during the continuance of an Event of Default, Lender
shall have the right at any time after the occurrence and during the continuance
of an Event of Default to:  (i) exercise the rights of Borrowers with respect to
the obligation of any Account Debtor to make payment or otherwise render
performance to Borrowers and with respect to any property that secures the
obligations of any Account Debtor or any other Person obligated on the
Collateral, and (ii) adjust, settle or compromise the amount or payment of such
Accounts.
 
 
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(k)           Without limiting the generality of Sections 2.10(g) and (j):
 
(A)           Borrowers shall deliver to Lender all tangible Chattel Paper and
all Instruments and documents owned by any Borrower and constituting part of the
Collateral duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to
Lender.  Borrowers shall provide Lender with “control” (as defined in Article 9
of the UCC) of all electronic Chattel Paper owned by any Borrower and
constituting part of the Collateral by having Lender identified as the assignee
on the records pertaining to the single authoritative copy thereof and otherwise
complying with the applicable elements of control set forth in the
UCC.  Borrowers also shall deliver to Lender all security agreements securing
any such Chattel Paper and securing any such Instruments.  Borrowers will mark
conspicuously all such Chattel Paper and all such Instruments and documents with
a legend, in form and substance satisfactory to Lender, indicating that such
Chattel Paper and such instruments and documents are subject to the security
interests and Liens in favor of Lender created pursuant to this Agreement and
the Security Documents.
 
(B)           Borrowers shall deliver to Lender all letters of credit on which
any Borrower is the beneficiary and which give rise to letter of credit rights
owned by such Borrower which constitute part of the Collateral in each case duly
endorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to Lender.  Borrowers shall take any and
all actions as may be necessary or desirable, or that Lender may request, from
time to time, to cause Lender to obtain exclusive “control” (as defined in
Article 9 of the UCC) of any such letter of credit rights in a manner acceptable
to Lender.
 
(C)           Borrowers shall promptly advise Lender upon any Borrower becoming
aware that it has any interests in any commercial tort claim that constitutes
part of the Collateral, which such notice shall include descriptions of the
events and circumstances giving rise to such commercial tort claim and the dates
such events and circumstances occurred, the potential defendants with respect
such commercial tort claim and any court proceedings that have been instituted
with respect to such commercial tort claims, and Borrowers shall, with respect
to any such commercial tort claim, execute and deliver to Lender such documents
as Lender shall request to perfect, preserve or protect the Liens, rights and
remedies of Lender with respect to any such commercial tort claim.
 
(D)           Except for Accounts and Inventory in an aggregate amount of
$25,000, no Accounts or Inventory or other Collateral shall at any time be in
the possession or control of any warehouse, consignee, bailee or any of
Borrowers’ agents or processors without prior written notice to Lender and the
receipt by Lender, if Lender has so requested, of warehouse receipts,
consignment agreements or bailee lien waivers (as applicable) satisfactory to
Lender prior to the commencement of such possession or control.  Borrower has
notified Lender that Inventory is currently located at the locations set forth
on Schedule 5.18.  Borrowers shall, upon the request of Lender, notify any such
warehouse, consignee, bailee, agent or processor of the security interests and
Liens in favor of Lender created pursuant to this Agreement and the Loan
Documents, instruct such Person to hold all such Collateral for Lender’s account
subject to Lender’s instructions and shall obtain an acknowledgement from such
Person that such Person holds the Collateral for Lender’s benefit.
 
 
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(E)           Borrowers shall cause all equipment and other tangible Personal
Property other than Inventory to be maintained and preserved in the same
condition, repair and in working order as when new, ordinary wear and tear
excepted, and shall promptly make or cause to be made all repairs, replacements
and other improvements in connection therewith that are necessary or desirable
to such end.  Upon request of Lender, Borrowers shall promptly deliver to Lender
any and all certificates of title, applications for title or similar evidence of
ownership of all such tangible Personal Property and shall cause Lender to be
named as lienholder on any such certificate of title or other evidence of
ownership.  Borrowers shall not permit any such tangible Personal Property to
become fixtures to real estate unless such real estate is subject to a Lien in
favor of Lender.
 
(F)           Each Borrower acknowledges that Lender is authorized to file
without the signature of such Borrower one or more UCC financing statements
relating to liens on personal property relating to all or any part of the
Collateral, which financing statements may list Lender as the “secured party”
and such Borrower as the “debtor” and which describe and indicate the collateral
covered thereby as all or any part of the Collateral under the Loan Documents
(including an indication of the collateral covered by any such financing
statement as “all assets” of such Borrower now owned or hereafter acquired), in
such jurisdictions as Lender from time to time determines are appropriate, and
to file without the signature of such Borrower any continuations of or
corrective amendments to any such financing statements, in any such case in
order for Lender to perfect, preserve or protect the Liens, rights and remedies
of Lender with respect to the Collateral.  Each Borrower also ratifies its
authorization for Lender to have filed in any jurisdiction any initial UCC
financing statements or amendments thereto if filed prior to the date hereof.
 
(G)           As of the Closing Date, no Borrower holds, and after the Closing
Date Borrowers shall promptly notify Lender in writing upon creation or
acquisition by any Borrower of, any Collateral which constitutes a claim against
any Governmental Authority, including, without limitation, the federal
government of the United States or any instrumentality or agency thereof, the
assignment of which claim is restricted by any applicable Law, including,
without limitation, the federal Assignment of Claims Act and any other
comparable Law.  If any Collateral at any time constitutes a claim against a
Governmental Authority, upon the request of Lender, Borrowers shall take such
steps as may be necessary or desirable, or that Lender may reasonably request,
to comply with any such applicable Law.
 
(H)           Borrowers shall furnish to Lender from time to time any statements
and schedules further identifying or describing the Collateral and any other
information, reports or evidence concerning the Collateral as Lender may
reasonably request from time to time.
 
2.11           Power of Attorney
 
Lender is hereby irrevocably made, constituted and appointed the true and lawful
attorney-in-fact for Borrower (without requiring Lender to act as such) with
full power of substitution to do the following:  (i) upon the occurrence and
during the continuance of an Event of Default, endorse the name of the Borrower
upon any and all checks, drafts, money orders, and other instruments for the
payment of money that are payable to Borrower and constitute collections on its
Accounts; (ii) upon the occurrence and during the continuance of Event of
Default, execute in the name of Borrower any financing statements, schedules,
assignments, instruments, documents, and statements that it is obligated to give
Lender under any of the Loan Documents; (iii) upon the occurrence and during the
continuance of an Event of Default, do such other and further acts and deeds in
the name of Borrower that Lender may reasonably deem necessary or desirable to
enforce any Account or other Collateral including, without limitation, (a)
demand, collect, receive for and give renewals, extensions, discharges and
releases of any Account, (b) take possession of and liquidate any Account, (c)
institute and prosecute legal and equitable proceedings to realize upon any
Account, and (d) settle, compromise, compound or adjust claims in respect of any
Account or any legal proceedings brought in respect thereof; (iv) upon the
occurrence and during the continuance of an Event of Default, in the name of
Borrower, notify the Post Office authorities to change the address for the
delivery of mail addressed to Borrower to such address as Lender may designate
(notwithstanding the foregoing, for the purposes of notice and service of
process to or upon Borrower as set forth in this Agreement, Lender’s rights to
change the address for the delivery of mail shall not give Lender the right to
change the address for notice and service of process to or upon Borrower in this
Agreement); (v) perfect Lender’s security interest or lien in any Collateral,
(vi) engage, on behalf of Borrower, a third party to service and collect
Borrower’s receivables, including billing and rebilling third party payors; and
(vii) sign IRS Forms W-9 on behalf of Borrower reflecting Borrower’s address as
the address of the Lockboxes established pursuant to Section 2.5 and deliver
such Forms to third party payors on the Borrower’s Accounts.  In addition, if
Borrower breaches its obligation hereunder to direct payments of Accounts or the
proceeds of any other Collateral to the Lockbox Account, Lender, as the
irrevocably made, constituted and appointed true and lawful attorney for
Borrower pursuant to this paragraph, may by the signature or other act of any of
Lender’s officers or authorized signatories (without requiring any of them to do
so), direct any federal, state or private payor or fiscal intermediary to pay
proceeds of Accounts or any other Collateral to the Lockbox Account.  The
appointment of Lender as attorney-in-fact for Borrower is coupled with an
interest and is irrevocable.
 
 
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2.12           Setoff Rights
 
During the continuance of any Event of Default, Lender is hereby authorized by
Borrower at any time or from time to time, with reasonably prompt subsequent
notice to Borrower (any prior or contemporaneous notice being hereby expressly
waived) to set off and to appropriate and to apply any and all (a) balances held
by Lender or any of Lender’s Affiliates for the account of Borrower or any of
its Subsidiaries (regardless of whether such balances are then due to Borrower
or its Subsidiaries), and (b) other property at any time held or owing by Lender
to or for the credit or for the account of Borrower or any of its Subsidiaries,
against and on account of any of the Obligations.
 
III.           FEES AND OTHER CHARGES
 
3.1           Facility Fee
 
On or before the Closing Date, Borrower shall pay to Lender one percent (1.0%)
of the Revolving Loan Commitment Amount plus the Term Loan Commitment as a
nonrefundable and fully earned closing fee.  The fees payable pursuant to this
Section 3.1 and the fee payable pursuant to the last sentence of Section
2.1(a)(ii) are herein collectively referred to as the “Facility Fee”.
 
 
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3.2           Unused Line Fee
 
Borrower shall pay to Lender monthly an unused line fee (the “Unused Line Fee”)
in an amount equal to forty-two thousandths of one percent (0.042%) per month of
the difference derived by subtracting (i) the average daily outstanding balance
under the Revolving Facility during the preceding month, from (ii) the Revolving
Loan Commitment Amount.  The Unused Line Fee shall be payable monthly in arrears
but in no event later than the first Business Day of each successive calendar
month (starting with August 1, 2016).  Payment of the Unused Line Fee may be
made, at the discretion of Lender:  (i) by application of available funds in the
Concentration Account pursuant to Section 2.5, (ii) by application of Advances
under the Revolving Facility pursuant to Section 2.1, or (iii) directly by
Borrower.
 
3.3           Collateral Management Fee
 
Borrower shall pay Lender as additional interest a monthly collateral management
fee (the “Collateral Management Fee”) for monitoring and servicing the Facility,
equal to twelve hundredths of one percent (0.12%) per month calculated on the
basis of the average daily balance under the Facility outstanding during the
preceding month.  The Collateral Management Fee shall be payable monthly in
arrears but in no event later than the first Business Day of each successive
calendar month (starting with August 1, 2016).  Payment of the Collateral
Management Fee may be made, at the discretion of Lender:  (i) by application of
available funds in the Concentration Account pursuant to Section 2.5, (ii) by
application of Advances under the Revolving Facility pursuant to Section 2.1, or
(iii) directly by Borrower.  The final payment shall be prorated to the date of
payment in full and shall be paid on that date as part of the Obligations.
 
3.4           Early Termination Fees
 
Upon a Revolving Facility Termination, Borrower shall pay Lender (in addition to
the then outstanding principal, accrued interest and other Obligations (other
than indemnity obligations with respect to which no claim has been made)
relating to the Revolving Facility pursuant to the terms of this Agreement and
any other Loan Documents), as yield maintenance for the loss of bargain and not
as a penalty, an amount equal to the applicable Termination
Fee.  Notwithstanding any other provision of any Loan Document, no Termination
Fee as described above shall be due and payable if (i) Borrower refinances the
Obligations with Lender (which, for purposes hereof, shall include Lender, and
any of its parents, subsidiaries or Affiliates), (ii) this Agreement terminates
in accordance with its terms at the end of its Term, or (iii) Borrower
terminates this Agreement within 10 days after Borrower provides written notice
to Lender of a default by Lender hereunder, and such default by Lender remains
uncured as of the date of such termination.
 
3.5           Computation of Fees; Lawful Limits
 
All fees hereunder shall be computed on the basis of a year of 360 days and for
the actual number of days elapsed in each calculation period, as applicable.  In
no contingency or event whatsoever, whether by reason of acceleration or
otherwise, shall the interest and other charges paid or agreed to be paid to
Lender for the use, forbearance or detention of money hereunder exceed the
maximum rate permissible under applicable law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto.  If, due
to any circumstance whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall exceed any such limit, then,
the obligation to be so fulfilled shall be reduced to such lawful limit, and, if
Lender shall have received interest or any other charges of any kind which might
be deemed to be interest under applicable law in excess of the maximum lawful
rate, then such excess shall be applied first to any unpaid fees and charges
hereunder, then to unpaid principal balance owed by Borrowers hereunder, and if
the then remaining excess interest is greater than the previously unpaid
principal balance, Lender shall promptly refund such excess amount to Borrowers
and the provisions hereof shall be deemed amended to provide for such
permissible rate.  The terms and provisions of this Section shall control to the
extent any other provision of any Loan Document is inconsistent herewith.
 
 
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3.6           Default Rate of Interest
 
Upon the occurrence and during the continuation of an Event of Default, the
Applicable Rate of interest in effect at such time with respect to the
Obligations shall be increased by 5% per annum (the “Default Rate”).  Such
increase shall be in addition to any other specific charges provided for herein
for noncompliance with specific provisions of this Agreement.
 
3.7           Acknowledgement of Joint and Several Liability
 
(a)           Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender under this Agreement, for the mutual
benefit, directly and indirectly, of such Borrower and in consideration of the
undertakings of each other Borrower to accept joint and several liability for
the Obligations.
 
(b)           Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as surety but also as a co-debtor, joint and
several liability with the other Borrowers, with respect to the performance of
all of the Obligations (including, without limitation, any Obligations arising
under this Section 3.7), it being the intention of the parties hereto that all
the Obligations shall be the joint and several obligations of the Borrowers
without preference or distinction among them and that all of the
representations, warranties, covenants, obligations, conditions, agreements and
other terms contained in the Loan Documents shall be applicable to and be
binding upon each Borrower.
 
(c)           If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
each other Borrower will make such payment with respect to, or perform, such
Obligation.
 
(d)           The Obligations of any Borrower under the provisions of this
Section 3.7 constitute the full recourse Obligations of such Borrower
enforceable against such Borrower to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or the other Loan Documents or any other circumstance whatsoever as to
any other Borrower.
 
 
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(e)           Except as otherwise expressly provided herein, each Borrower
hereby waives promptness, diligence, presentment, demand, protest, notice of
acceptance of its joint and several liability, notice of any and all Advances
under the Revolving Facility, notice of occurrence of any Default or Event of
Default (except to the extent notice is expressly required to be given pursuant
to the terms of this Agreement or any of the Loan Documents), or of any demand
for any payment under this Agreement, notice of any action at any time taken or
omitted by Lender or under or in respect of any of the Obligations hereunder,
any requirement of diligence and, generally, all demands, notices and other
formalities of every kind in connection with this Agreement and other Loan
Documents.  Each Borrower hereby waives all defenses which may be available by
virtue of any valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshaling of assets of such
Borrower and any other entity or Person primarily or secondarily liable with
respect to any of the Obligations, and all suretyship defenses generally.  Each
Borrower hereby assents to, and waives notice of, any extension or postponement
of the time for the payment, or place or manner for payment, compromise,
refinancing, consolidation or renewals of any of the Obligations hereunder, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Lender at any time or times in respect of any default by such
Borrower in the performance or satisfaction of any term, covenant,  condition or
provision of this Agreement and the other Loan Documents, any and all other
indulgences whatsoever by Lender in respect of any of the Obligations hereunder,
and the taking, addition, substitution or release, in whole or in part, of such
Borrower or any other entity or Person primarily or secondarily liable for any
Obligation.  Each Borrower further agrees that its Obligations shall not be
released or discharged, in whole or in part, or otherwise affected by the
adequacy of any rights which the Lender may have against any collateral security
or other means of obtaining repayment of any of the Obligations, the impairment
of any collateral security securing the Obligations, including, without
limitation, the failure to protect or preserve any rights which Lender may have
in such collateral security or the substitution, exchange, surrender, release,
loss or destruction of any such collateral security, any other act or omission
which might in any manner or to any extent vary the risk of such Borrower, or
otherwise operate as a release or discharge of such Borrower, all of which may
be done without notice to such Borrower; provided, however, that the foregoing
shall in no way be deemed to create commercially unreasonable standards as to
Lender’s duties as secured party under the Loan Documents (as such rights and
duties are set forth therein).  If for any reason any Borrower has no legal
existence or is under no legal obligation to discharge any of the Obligations,
or if any of the Obligations have become irrecoverable from any Borrower by
reason of any insolvency, bankruptcy or reorganization or by other operation of
law or for any reason, this Agreement and the other Loan Documents to which it
is a party shall nevertheless be binding on each other Borrower to the same
extent as if such Borrower at all times had been the sole obligor on such
Obligations.  Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or failure to act on the part of
Lender, including, without limitation, any failure strictly or diligently to
assert any right or to pursue any remedy or to comply fully with applicable laws
or regulations thereunder which might, but for the provisions of this Section
3.7, afford grounds for terminating, discharging or relieving such Borrower, in
whole or in part, from any of its obligations under this Section 3.7, it being
the intention of such Borrower that, so long as any of the Obligations hereunder
remain unsatisfied, the obligations of such Borrower under Section 3.7 shall not
be discharged except by performance and then only to the extent of such
performance.  The Obligations of each Borrower under this Section 3.7 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
amalgamation, arrangement, liquidation, reconstruction or similar proceeding
with respect to any other Borrower or the Lender.  The joint and several
liability of each Borrower hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, ownership, membership, constitution or place of
formation of such Borrower or the Lender.  Each Borrower acknowledges and
confirms that it has established its own adequate means of obtaining from each
other Borrower on a continuing basis all information desired by such Borrower
concerning the financial condition of each other Borrower and that such Borrower
will look to each other Borrower and not to Lender for such Borrower to keep
adequately informed of changes in each of the other Borrowers’ respective
financial conditions.
 
 
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(f)           Each Borrower acknowledges that all or any portion of the
Obligations may now or hereafter be secured by a Lien or Liens upon property of
such Borrower.  Lender may foreclose under all or any portion of one or more
said Liens by means of judicial or nonjudicial sale or sales.  Each Borrower
agrees that Lender may exercise whatever rights and remedies it may have in
respect to said security, all without affecting the liability of such Borrower
hereunder, except to the extent Lender realizes payment by such action or
proceeding.  No election to proceed in one form of action or against any party,
or on any obligation shall constitute a waiver of Lender’s right to proceed in
any other form of action or against any Borrower or other Person, or diminish
the liability of any Borrower, or affect the right of Lender to proceed against
any Borrower for any deficiency, except to the extent Lender realizes payment by
such action, notwithstanding the effect of such action upon any Borrower’s
rights of subrogation, reimbursement or indemnity, if any, against any other
Borrower or any other person.
 
(g)           The provisions of this Section 3.7 are made for the benefit of the
Lender and its permitted successors and assigns, and may be enforced by it from
time to time against any or all of the Borrowers as often as occasion may arise
without requirement on the part of Lender or such successor or assign first to
marshal any of its claims or to exercise any of its rights against any other
Borrower or to exhaust any remedies available to it against any other Borrower
or to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy.  The provisions of this
Section 3.7 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied.  If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this Section 3.7
will forthwith be reinstated in effect, as though such payment had not been
made.
 
(h)           Each Borrower hereby agrees that it will not enforce any of its
rights of reimbursement, contribution, subrogation or the like against any other
Borrower with respect to any liability incurred by it hereunder or under any of
the other Loan Documents, any payments made by it to Lender with respect to any
of the Obligations or any collateral security therefor until such time as all of
the Obligations have been indefeasibly satisfied.  Any claim which any Borrower
may have against any other Borrower with respect to any payments to Lender
hereunder or under other Loan Documents are hereby expressly made subordinate
and junior in right of payment, without limitation as to any increases in the
Obligations arising hereunder or thereunder, to the prior payment in full of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to such Borrower, its debts, or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full before any
payment or distribution of any character, whether in cash, securities or other
property, shall be made to any other Borrower therefor.
 
 
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(i)           Each Borrower hereby agrees that the payment of any amounts due
with respect to the indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior payment in full in cash of the
Obligations.  Each Borrower hereby agrees that after the occurrence and during
the continuance of any Default or Event of Default, each Borrower will not
demand, sue for or otherwise attempt to collect any indebtedness of any other
Borrower owing to any Borrower until the Obligations shall have been paid in
full in cash.  If, notwithstanding the foregoing sentence, any Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for Lender and be paid over to Lender to be applied to repay the Obligations.
 
IV.           CONDITIONS PRECEDENT
 
4.1           Conditions to Closing and Advances
 
The obligations of Lender to consummate the transactions contemplated herein and
to make any Advance under the Revolving Facility and to fund the Term Loan are
subject to the satisfaction (or waiver), in the sole judgment of Lender, of the
following:
 
(a)           Each Borrower shall have delivered to Lender:
 
(i)           the Loan Documents to which it is a party, each duly executed by
an authorized officer of Borrower and any other parties thereto;
 
(ii)           A Closing Certificate certifying to the organizational documents
of Borrower, the good standing or existence of Borrower in its jurisdiction of
organization, the adoption of resolutions approving the Loans and the incumbency
of its authorized officers;
 
(iii)           a Borrowing Certificate in the form of Exhibit A executed by an
authorized officer of Borrower,
 
(b)           Each Guarantor shall have duly executed and delivered to Lender a
Guaranty Agreement, and each Guarantor who is an equity owner of any Borrower
shall have delivered to Lender a pledge of such Guarantor’s equity interest in
such Borrower as security for the payment of the Obligations;
 
(c)           Legal counsel to each Borrower and each Guarantor shall have
delivered to Lender a written legal opinion, in form and substance satisfactory
to Lender and its counsel;
 
 
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(d)           Each Borrower shall have delivered to Lender all applicable
Landlord Waivers and Consents;
 
(e)           Each Borrower shall have executed and delivered to Lender an IRS
Form 8821 in form acceptable to Lender naming Tax Guard as appointee;
 
(f)           Lender shall have received (i) copies of all insurance policies
required by Section 6.5, (ii) a copy of the declarations page for such insurance
policies, and (iii) certificates of insurance and applicable endorsements
confirming that the Lender has been named as sole beneficiary, lender’s loss
payable or additional insured, as appropriate;
 
(g)           Each Borrower shall have provided Lender with all information
(including, including without limitation, user identifications and passwords)
necessary for Lender to have on-line access to view all information regarding
all of the Borrowers’ bank accounts;
 
(h)           Each Borrower shall have provided evidence reasonably satisfactory
to Lender of such Borrower’s compliance with the requirements of Section 6.14
(relating to tracking of payroll tax payments);
 
(i)           Lender shall have received each document (including, without
limitation, any Uniform Commercial Code financing statement) required by any
Loan Documents or under law or requested by Lender to be filed, registered or
recorded to create in favor of Lender, a perfected first priority security
interest upon the Collateral, including, without limitation, deposit account
control agreements with respect to all of Borrower’s deposit accounts (other
than the Excluded Deposit Accounts);
 
(j)           Lender shall have received, in form and substance satisfactory to
Lender, (i) payoff letters for all existing indebtedness secured by the
Collateral, (ii) evidence of the repayment in full of all existing indebtedness
secured by the Collateral and termination of any and all Liens, security
interests and Uniform Commercial Code financing statements relating thereto, or
(iii) in the sole discretion of Lender, such existing indebtedness is (A)
expressly subordinated to the Obligations of Borrower hereunder pursuant to a
Subordination Agreement acceptable in form and substance to Lender, (B) matures
subsequent to the Commitment Expiration Date, (C) does not require any payment
other than interest during the Term, and (D) will receive no payments following
an Event of Default under this Agreement;
 
(k)           Borrower shall have established Lockbox Accounts and Lender shall
have received Lockbox Agreements, all in accordance with Section 2.5;
 
(l)           Lender shall have:
 
(i)           completed its examinations, the results of which shall be
satisfactory in form and substance to Lender, of the Collateral, the financial
statements and the books, records, business, obligations, financial condition
and operational state of each Borrower and Guarantor, and each such Person shall
have demonstrated to Lender’s satisfaction that (i) its operations comply, in
all material respects, with all applicable federal, state, foreign and local
laws, statutes and regulations, except where the failure to comply would not
reasonably be expected to have a Material Adverse Effect, (ii) its operations
are not the subject of any governmental investigation, evaluation or any
remedial action which could reasonably be expected to result in any Material
Adverse Effect, and (iii) it has no liability (whether contingent or otherwise)
that would reasonably be expected to have a Material Adverse Effect;
 
 
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(ii)           completed its legal due diligence examinations of each Borrower,
the results of which shall be satisfactory in form and substance to Lender, as
evidenced by Lender’s execution of the Loan Documents;
 
(iii)           completed a background check of the principals of each Borrower
and all Guarantors and the results of such background checks are satisfactory to
Lender in its sole discretion;
 
(iv)           received a report of Uniform Commercial Code financing statement,
tax and judgment lien searches performed with respect to each Borrower and each
Guarantor in each jurisdiction determined by Lender in its Permitted Discretion,
and such report shall show no Liens on the Collateral (other than Permitted
Liens and Liens that will be terminated within five (5) Business Days after the
Closing Date);
 
(v)           received all fees, charges and expenses payable to Lender on or
prior to the date of the Advance pursuant to the Loan Documents;
 
(m)           All corporate and other proceedings, documents, instruments and
other legal matters in connection with the transactions contemplated by the Loan
Documents shall be satisfactory to Lender;
 
(n)           each of the representations and warranties made by each Borrower
in or pursuant to this Agreement shall be accurate in all material respects on
and as of the date the Advance is requested as if made on and as of such date,
before and after giving effect to such Advance; and no Default or Event of
Default shall have occurred and be continuing or would exist after giving effect
to the Advance under the Revolving Facility or draw on the Term Loan on such
date;
 
(o)           (i) No default shall exist pursuant to any Borrower’s obligations
under any material contract and each Borrower shall be in compliance with all
applicable laws in all material respects, in each case except to the extent such
failure would not reasonably be expected to have a Material Adverse Effect, and
(ii) each Borrower has no accounts payable or taxes payable that have been
outstanding for more than 90 days, or to the extent that such accounts payable
or taxes payable exist, each Borrower shall provide to Lender written evidence
(satisfactory to Lender in its sole discretion) from such account creditors
and/or taxing authorities of payment plans with respect thereto;
 
(p)           Immediately after giving effect to the requested Advance, the
aggregate outstanding principal amount of Advances under the Revolving Facility
shall not exceed the Revolving Loan Limit;
 
(q)           confirmation that the Equipment Purchase shall have been
consummated in accordance with the Purchase Documents, and Lender shall have
received a fully executed Collateral Assignment of Purchase Documents, together
with a fully executed copy of the Purchase Documents, which shall be true,
correct and complete and shall otherwise be in form and substance reasonably
satisfactory to Lender;
 
 
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(r)           Lender shall have received, in form and substance satisfactory to
Lender, a letter agreement from Prima Power North America, Inc., an Illinois
corporation (“Prima”), in connection with the Equipment Purchase confirming
that, upon receipt by Prima of the Release Amount (as defined therein) (i) all
liens and security interests of any kind of Prima on and in any and all of the
equipment purchased pursuant to the Purchase Agreement or any other property
shall be deemed to be released and terminated and (ii) title to all such
equipment shall be deemed to have been automatically transferred from Prima to
Trans-Lux;
 
(s)           No event has occurred which has had or would reasonably be
expected to have a Material Adverse Effect; and
 
(t)           Lender shall have received such other documents, certificates,
information or legal opinions as Lender may reasonably request, all in form and
substance reasonably satisfactory to Lender.
 
4.2           Post-Closing Requirements
 
The obligation of Lender to make any Advance under the Revolving Facility or
fund the Term Loan is subject to the Borrowers taking, in the sole judgment of
Lender, the actions identified below by the dates indicated.
 
(a)           No later than three (3) Business Days following the Closing Date,
the Borrowers shall deliver to Lender evidence that all past due amounts owed
pursuant to that certain Retirement Pension Plan for Employees of Trans-Lux
Corporation and Certain of its Subsidiaries and/or Affiliates, effective
January 1, 1945, as amended in the amount of approximately $300,000 have been
paid in full;
 
(b)           No later than ten (10) Business Days following the Closing Date,
the Borrowers shall provide notice to all Account Debtors to commence
redirecting payments from Bankers Trust account number 0000089400 to Enterprise
Bank & Trust;
 
(c)           No later than fifteen (15) Business Days following the Closing
Date, the Borrowers shall deliver to Lender original stock certificates
representing Trans-Lux’s ownership of 100% of the equity interests of each of
TDC, TMC and TEC;
 
(d)           No later than forty-five (45) calendar days following the Closing
Date, Lender shall have performed a collateral audit of Borrowers the results of
which shall be in form and substance satisfactory to Lender;
 
(e)           No later than 60 calendar days following the Closing Date, the
Borrowers shall deliver to Lender evidence that the UCC Financing Statement
filed with the Iowa Secretary of State by Safe Leasing LLC on July 26, 2010 at
File # X10018118-2 has been terminated;
 
 
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(f)           No later than 60 calendar days following the Closing Date,
Borrower shall provide to Lender (i) a specific endorsement to Borrower’s
liability insurance policy naming Lender as additional insured thereunder and
(ii) a specific endorsement to Borrower’s property insurance policy naming
Lender as lender’s loss payable thereunder;
 
(g)           No later than 90 calendar days following the Closing Date, the
Borrowers shall deliver to Lender evidence that the depository account at
Bankers Trust account number 0000089400 has been closed;
 
(h)           No later than 180 calendar days following the Closing Date, the
Borrowers shall deliver to Lender evidence of the satisfaction of State Tax Lien
against TDC in favor of New York State Department of Taxation and Finance
identified by Warrant ID# E-008024172-W001-6;
 
(i)           No later than 210 calendar days following the Closing Date, the
Borrowers shall deliver to Lender evidence of the dissolution of each of the
Dissolving Entities; and
 
(j)           Following the Closing Date, the Borrowers shall use commercially
reasonable efforts to deliver to Lender evidence of the release of each of the
Note and Debenture Subordinated Debt Documents, to the extent such Note and
Debenture Subordinated Debt Documents are released in connection with the tender
of the remaining outstanding notes and debentures issued thereunder.
 
V.           REPRESENTATIONS AND WARRANTIES
 
In order to induce Lender to enter into this Agreement and to advance funds to
the Borrowers, each Borrower represents and warrants as of the date hereof, the
Closing Date, and each Borrowing Date as follows:
 
5.1           Organization and Authority
 
Each Credit Party is an entity of the type specified on Schedule 5.1, is duly
organized, validly existing and in good standing or existence under the laws of
the jurisdiction specified on Schedule 5.1 and no other jurisdiction.  Each
Credit Party (i) has all requisite corporate power and authority to own its
properties and assets and to carry on its business as now being conducted and as
contemplated in the Loan Documents, (ii) is duly qualified to do business in
every jurisdiction in which failure so to qualify would reasonably be expected
to have a Material Adverse Effect, and (iii) has requisite power and authority
(A) to execute, deliver and perform the Loan Documents to which it is a party
and all amendments thereto, (B) to borrow hereunder, (C) to consummate the
transactions contemplated under the Loan Documents, and (D) to grant the Liens
with regard to the Collateral pursuant to the Loan Documents to which it is a
party.  No Credit Party is an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is any
Credit Party controlled by or a subsidiary of such an “investment company.”
 
 
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5.2           Loan Documents
 
The execution, delivery and performance by each Credit Party of the Loan
Documents to which it is a party, and the consummation of the transactions
contemplated thereby, including the grants of Liens and security interests in
the Collateral, (i) have been duly authorized by all requisite action of the
appropriate Credit Party and have been duly executed and delivered by or on
behalf of such Credit Party; (ii) do not violate any provisions of (A)
applicable law, statute, rule, regulation, ordinance or tariff, (B) any order of
any Governmental Authority binding on any Credit Party or any of the Credit
Parties’ respective properties the effect of which would reasonably be expected
to have a Material Adverse Effect, or (C) the certificate of incorporation or
bylaws (or any other equivalent governing agreement or document) of each Credit
Party, or any agreement between any Credit Party and its shareholders, members,
partners or equity owners or among any such shareholders, members, partners or
equity owners; (iii) are not in conflict with, and do not result in a breach or
default of or constitute an Event of Default, or an event, fact, condition,
breach, Default or Event of Default under, any indenture, agreement or other
instrument to which any Credit Party is a party, or by which the properties or
assets of any Credit Party are bound, the effect of which would reasonably be
expected to have a Material Adverse Effect; (iv) except as set forth therein,
will not result in the creation or imposition of any Lien of any nature upon any
of the properties or assets of any Credit Party, and (v) do not require the
consent, approval or authorization of, or filing, registration or qualification
with, any Governmental Authority or Credit Party unless otherwise
obtained.  When executed and delivered, each of the Loan Documents to which each
Credit Party is a party will constitute the legal, valid and binding obligation
of the respective Credit Party, enforceable against such Credit Party in
accordance with its terms.
 
5.3           Subsidiaries, Capitalization and Ownership Interests
 
As of the date of this Agreement, each Credit Party has no Subsidiaries other
than those Persons listed as Subsidiaries on Schedule 5.3, each of which is a
Credit Party.  Schedule 5.3 also states the authorized and issued capitalization
of each Credit Party and each subsidiary, the number and class of equity
securities and/or ownership, voting or partnership interests issued and
outstanding of Borrower and the record and beneficial owners thereof (including
options, warrants and other rights to acquire any of the foregoing).  The
outstanding equity securities and/or ownership, voting or partnership interests
of each Credit Party have been duly authorized and validly issued and are fully
paid and nonassessable, and each Person listed on Schedule 5.3 owns beneficially
and of record all of the equity securities and/or ownership, voting or
membership interests it is listed as owning free and clear of any Liens other
than Liens created by the Loan Documents.  Except as listed on Schedule 5.3, no
Credit Party owns an interest in or participates or engages in any joint
venture, partnership or similar arrangements with any Persons.
 
5.4           Properties
 
Each Borrower (i) is the sole owner and has good, valid and marketable title to,
or a valid leasehold interest in, all of its material properties and assets,
including the Collateral, whether personal or real, subject to no transfer
restrictions or Liens of any kind except for Permitted Liens, and (ii) is in
compliance in all material respects with each lease to which it is a party or
otherwise bound except for such noncompliance as would not reasonably be
expected to have a Material Adverse Effect.  Schedule 5.4 lists all real
properties (and their locations) owned or leased by or to each Borrower.  Each
Borrower enjoys peaceful and undisturbed possession under all such leases and
such leases are all the leases necessary for the operation of such properties
and assets, are valid and subsisting and are in full force and effect.
 
 
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5.5           Other Agreements
 
No Credit Party is (i) a party to any judgment, order or decree or any
agreement, document or instrument, or subject to any restriction, which would
materially adversely affect its ability to execute and deliver, or perform
under, any Loan Document or to pay the Obligations, (ii) in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any agreement, document or instrument to which it is a party or to
which any of its properties or assets are subject, which default, if not
remedied within any applicable grace or cure period would reasonably be expected
to have a Material Adverse Effect, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both; would constitute or
result in a conflict, breach, default or event of default under, any of the
foregoing which, if not remedied within any applicable grace or cure period
would reasonably be expected to have a Material Adverse Effect; or (iii) a party
or subject to any agreement, document or instrument with respect to, or
obligation to pay any, service or management fee to a third party (other than
Affiliates) with respect to, the ownership, operation, leasing or performance of
any of its business or any facility, nor is there any manager with respect to
any such facility.
 
5.6           Litigation
 
Except as set forth on Schedule 5.6, there is no action, suit, proceeding or
investigation pending or, to any Credit Party’s knowledge, threatened against a
Credit Party that (i) could reasonably be expected to affect the validity of any
of the Loan Documents or the right of a Borrower to enter into any Loan Document
or to consummate the transactions contemplated thereby or (ii) could reasonably
be expected to be or have, either individually or in the aggregate, any Material
Adverse Change or Material Adverse Effect.  No Credit Party is a party or
subject to any order, writ, injunction, judgment or decree of any Governmental
Authority that could reasonably be expected to have a Material Adverse
Effect.  There is no action, suit, proceeding or, to any Credit Party’s
knowledge, investigation initiated with respect to any Credit Party currently
pending.
 
5.7           Labor Matters
 
As of the Closing Date, there are no strikes, slowdowns, work stoppages,
lockouts, grievances, other collective bargaining or labor related disputes
pending or, to any Borrower’s knowledge, threatened against any Credit
Party.  Hours worked and payments made to the employees of the Credit Parties
have not been in violation of the Fair Labor Standards Act or any other
applicable Law dealing with such matters.  No Credit Party is engaged in unfair
labor practice, and there is no unfair labor practice, complaint or complaint of
employment discrimination pending against any Credit Party or, to any Credit
Party’s knowledge, threatened against any Credit Party.  All payments due from
the Credit Parties, or for which any claim may be made against any of them, on
account of wages and employee and retiree health and welfare insurance and other
benefits have been paid or accrued as a liability on their books, as the case
may be.  Each Credit Party and each of its predecessors and Affiliates has
complied and is in compliance with all Laws pertaining to any terms or
conditions of employment, including Laws governing or regarding employment
standards, labor relations, application and employee background checking,
immigration, the payment of wages or other compensation, including overtime
compensation, employee leave, employee benefits, the classification of workers
as employees and independent contractors, employment discrimination and
harassment and retaliation, pay equity, occupational safety and health, workers’
compensation, and any and all other Laws governing or pertaining to the terms
and conditions of employment.  The provisions of any collective agreement are
consistent with applicable industry standards respecting wage rates, benefits
and working rules.  The Borrower is not in breach of any provision of any
collective agreement that it is a party to.  The consummation of the
transactions contemplated by the Loan Documents will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which it is a party or by which it is bound.
 
 
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5.8           Compliance with Environmental Requirements; No Hazardous
Substances
 
Except in each case as set forth on Schedule 5.8:
 
(a)           no investigation, proceeding, directive, notice, notification,
demand, request for information, citation, summons, complaint or order has been
issued, no complaint has been filed, no penalty has been assessed which has not
been paid and no investigation or review is pending or, to such Borrower’s
knowledge, threatened by any Governmental Authority or other Person with respect
to any (i) alleged violation by any Credit Party of any Environmental Law,
(ii) alleged failure by any Credit Party to have any Permits required in
connection with the conduct of its business or to comply with the terms and
conditions thereof, (iii) any generation, treatment, storage, recycling,
transportation or disposal of any Hazardous Substances, or (iv) release of
Hazardous Substances;
 
(b)           no property now owned or leased by any Credit Party and, to the
knowledge of each Borrower, no such property previously owned or leased by any
Credit Party, to which any Credit Party has, directly or indirectly, transported
or arranged for the transportation of any Hazardous Substances, is listed or, to
such Borrower’s knowledge, proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any similar
state list or is the subject of federal, state or local enforcement actions or,
to the knowledge of such Borrower, other investigations which may lead to claims
against any Credit Party for clean-up costs, remedial work, damage to natural
resources or personal injury claims, including, without limitation, claims under
CERCLA;
 
(c)           each Credit Party and its business, operations, assets, equipment,
property, leaseholds and other facilities is in compliance in all material
respects with all Environmental Laws, specifically including all Environmental
Laws concerning the storage and handling of Hazardous Substances; and
 
 
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(d)           there has been no material emission, spill, release, or discharge
into or upon (i) the air; (ii) soils, or any improvements located thereon; (iii)
surface water or groundwater; or (iv) the sewer, septic system or waste
treatment, storage or disposal system servicing the premises, of any Hazardous
Substances at or from any of the real property listed on Schedule 5.4.
 
For purposes of this Section 5.8, each Credit Party shall be deemed to include
any business or business entity (including a corporation) that is, in whole or
in part, a predecessor of such Credit Party.
 
5.9           Tax Returns, Governmental Reports
 
Each Credit Party (i) has filed all material federal, state, foreign (if
applicable) and local tax returns and other reports which are required by law to
be filed by such Credit Party, and (ii) has paid all taxes, assessments, fees
and other governmental charges, including, without limitation, payroll and other
employment related taxes, in each case that are due and payable.
 
5.10           Financial Statements and Reports
 
All financial information and statements relating to any Credit Party that have
been or may hereafter be delivered to Lender by any Credit Party are accurate
and complete in all material respects as of such date of delivery and have been
prepared in accordance with GAAP, except as may be disclosed in such financial
statements, consistently applied with prior periods.  No Credit Party has any
material obligations or liabilities of any kind not disclosed in such financial
information or statements, and since the date of the most recent financial
statements submitted to Lender, there has not occurred any Material Adverse
Change, Material Adverse Effect or, to Borrower’s knowledge, any other event or
condition that would reasonably be expected to have a Material Adverse Effect.
 
5.11           Compliance with Law
 
Each Borrower (i) is in substantial compliance with all laws, statutes, rules,
regulations, ordinances and tariffs of any Governmental Authority applicable to
such Borrower and/or such Borrower’s business, assets or operations, including,
without limitation, ERISA, and (ii) is not in violation of any order of any
Governmental Authority or other board or tribunal, in each case except where
noncompliance or violation would not reasonably be expected to have a Material
Adverse Effect.  There is no event, fact, condition or circumstance which, with
notice or passage of time, or both, would constitute or result in any
noncompliance with, or any violation of, any of the foregoing, in each case
except where noncompliance or violation would not reasonably be expected to have
a Material Adverse Effect.  No Borrower has received any notice that it is not
in compliance in any respect with any of the requirements of any of the
foregoing.  No Credit Party has (a) engaged in any Prohibited Transactions as
defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder, (b)
failed to meet any applicable minimum funding requirements under Section 302 of
ERISA in respect of its plans and no such funding requirements have been
postponed or delayed, (c) any knowledge of any event or occurrence which would
cause the Pension Benefit Guaranty Corporation to institute proceedings under
Title IV of ERISA to terminate any of the employee benefit plans, (d) any
fiduciary responsibility under ERISA for investments with respect to any plan
existing for the benefit of Persons other than its employees or former
employees, or (e) withdrawn, completely or partially, from any multi-employer
pension plans so as to incur liability under the MultiEmployer Pension Plan
Amendments of 1980.  With respect to each Credit Party, there exists no event
described in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12
C.F.R. § 26153 has not been waived.  Each ERISA Plan (and the related trusts and
funding agreements) complies in form and in operation with, has been
administered in compliance with, and the terms of each ERISA Plan satisfy, the
applicable requirements of ERISA and the Code in all material respects.  Each
ERISA Plan which is intended to be qualified under Section 401(a) of the Code is
so qualified, and the United States Internal Revenue Service has issued a
favorable determination letter with respect to each such ERISA Plan which may be
relied on currently.  No Credit Party has incurred liability for any material
excise tax under any of Sections 4971 through 5000 of the Code.
 
 
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5.12           Intellectual Property
 
Each Credit Party owns, is licensed to use or otherwise has the right to use,
all Intellectual Property that is material to the condition (financial or
other), business or operations of such Credit Party.  All Intellectual Property
existing as of the Closing Date which is issued, registered or pending with any
United States or foreign Governmental Authority (including, without limitation,
any and all applications for the registration of any Intellectual Property with
any such United States or foreign Governmental Authority) and all licenses under
which any Borrower is the licensee of any such registered Intellectual Property
(or any such application for the registration of Intellectual Property) owned by
another Person are set forth on Schedule 5.12.  Such Schedule 5.12 indicates in
each case whether such registered Intellectual Property (or application
therefor) is owned or licensed by such Credit Party, and in the case of any such
licensed registered Intellectual Property (or application therefor), lists the
name and address of the licensor and the name and date of the agreement pursuant
to which such item of Intellectual Property is licensed and whether or not such
license is an exclusive license and indicates whether there are any purported
restrictions in such license on the ability to such Credit Party to grant a
security interest in and/or to transfer any of its rights as a licensee under
such license.  Except as indicated on Schedule 5.12, the applicable Credit Party
is the sole and exclusive owner of the entire and unencumbered right, title and
interest in and to each such registered Intellectual Property (or application
therefor) purported to be owned by such Credit Party, free and clear of any
Liens and/or licenses in favor of third parties or agreements or covenants not
to sue such third parties for infringement.  All registered Intellectual
Property of each Credit Party is duly and properly registered, filed or issued
in the appropriate office and jurisdictions for such registrations, filings or
issuances, except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect.  No Credit Party is party to, nor bound by, any
material license or other agreement with respect to which any Credit Party is
the licensee that prohibits or otherwise restricts such Credit Party from
granting a security interest in such Borrower’s interest in such license or
agreement or other property.  To such Borrower’s knowledge, each Credit Party
conducts its business without infringement or claim of infringement of any
Intellectual Property rights of others and there is no infringement or claim of
infringement by others of any Intellectual Property rights of any Credit Party,
which infringement or claim of infringement could reasonably be expected to have
a Material Adverse Effect.
 
 
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5.13           Licenses and Permits
 
Each Credit Party is in substantial compliance with and has all Permits
necessary or required by applicable law or Governmental Authority for the
operation of its businesses except where the failure to be in compliance would
not reasonably be expected to have a Material Adverse Effect.  All of the
foregoing are in full force and effect and not in known conflict with the rights
of others except where the failure to be in compliance would not reasonably be
expected to have a Material Adverse Effect.  No Borrower is (i) in breach of or
default under the provisions of any of the foregoing, nor is there any event,
fact, condition or circumstance which, with notice or passage of time or both,
would constitute or result in a conflict, breach, Default or Event of Default
under, any of the foregoing which, if not remedied within any applicable grace
or cure period would reasonably be expected to have a Material Adverse Effect,
(ii) a party to or subject to any agreement, instrument or restriction that is
so unusual or burdensome that it might have a Material Adverse Effect.
 
5.14           Disclosure
 
No Loan Document nor any other agreement, document, certificate, or statement
furnished to Lender by or on behalf of any Credit Party in connection with the
transactions contemplated by the Loan Documents, when taken as a whole contains
any untrue statement of material fact or omits to state any fact necessary to
make the statements therein not materially misleading in light of current
circumstances.  All financial projections delivered to Lender by any Credit
Party (or their agents) have been prepared on the basis of the assumptions
stated therein.  Such projections represent each Credit Party’s best estimate of
such Credit Party’s future financial performance and such assumptions are
believed by such Credit Party to be fair and reasonable in light of current
business conditions; provided, however, that no Credit Party can give any
assurance that such projections will be attained.
 
5.15           Existing Indebtedness; Investments, Guarantees and Certain
Contracts
 
Except as permitted by the Loan Documents, each Borrower (i) has no outstanding
Indebtedness other than Permitted Indebtedness, (ii) is not subject or party to
any mortgage, note, indenture, indemnity or guarantee of, with respect to or
evidencing any Indebtedness of any other Person other than in connection with a
Permitted Lien, or (iii) does not own or hold any equity or long-term debt
investments in, and does not have any outstanding advances to or any outstanding
guarantees for the obligations of, or any outstanding borrowings from, any
Person.  Except as set forth on Schedule 5.15, each Borrower has performed all
material obligations required to be performed by such Borrower pursuant to or
connection with its outstanding Indebtedness and the items permitted by the Loan
Documents and there has occurred no breach, default or event of default under
any document evidencing any such items or any fact, circumstance, condition or
event which, with the giving of notice or passage of time or both, would
constitute or result in a breach, default or event of default thereunder.
 
 
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5.16           Agreements with Affiliates
 
Except as set forth on Schedule 5.16, there are no existing or proposed material
agreements, arrangements, understandings or transactions between any Credit
Party and any of its officers, members, managers, directors, stockholders,
partners, other interest holders, employees or Affiliates or any members of
their respective immediate families.
 
5.17           Insurance
 
Each Borrower has in full force and effect such insurance policies as are
customary in its industry and as may be required pursuant to Section 6.5
hereof.  All such insurance policies as in force on the date of this Agreement
are listed and described on Schedule 5.17.
 
5.18           Names, Location of Offices, Records and Collateral
 
During the preceding five years, no Borrower has conducted business under or
used any name (whether corporate, partnership or assumed) other than as shown on
Schedule 5.18.  Borrower is the sole owner of all of its names listed on
Schedule 5.18, and any and all business done and invoices issued in such names
are such Borrower’s sales, business and invoices.  Each Borrower maintains its
places of business and chief executive offices only at the locations set forth
on Schedule 5.18.  Schedule 5.18 also identifies all of the addresses (including
warehouses) at which any of the Collateral is located or books and records of
Borrowers regarding any Collateral are kept and identifying which Collateral and
which books and records are kept at each location, the nature of such location
(e.g., leased business location operated by Borrowers, third party warehouse,
consignment location, processor location, etc.) and the name and address of the
third party owning and/or operating such location.  No Collateral and no books
and records in connection therewith or in any way relating thereto or that
evidence the Collateral are located at any other location.  All of the
Collateral is and shall remain located only in the continental United States.
 
5.19           Material Contracts
 
Except for the Organizational Documents and the other agreements set forth on
Schedule 5.19 (collectively with the Organizational Documents, the “Material
Contracts”), as of the Closing Date there are no (a) employment agreements
covering the management of any Credit Party, (b) collective bargaining
agreements or other similar labor agreements covering any employees of any
Credit Party, (c) agreements for managerial, consulting or similar services to
which any Credit Party is a party or by which it is bound, (d) agreements
regarding any Credit Party, its assets or operations or any investment therein
to which any of its equity holders is a party or by which it is bound, (e) real
estate leases, Intellectual Property licenses or other lease or license
agreements to which any Credit Party is a party, either as lessor or lessee, or
as licensor or licensee (other than licenses arising from the purchase of “off
the shelf” products), (f) customer, distribution, marketing or supply agreements
to which any Credit Party is a party, in each case with respect to the preceding
clauses (a) through (f) requiring payment of more than $25,000 in any year,
(g) partnership agreements to which any Credit Party is a general partner or
joint venture agreements to which any Credit Party is a party, (h) third party
billing arrangements to which any Credit Party is a party, or (i) any other
agreements or instruments to which any Credit Party is a party, and the breach,
nonperformance or cancellation of which, or the failure of which to renew, could
reasonably be expected to have a Material Adverse Effect.  Schedule 5.19 sets
forth, with respect to each real estate lease agreement to which any Borrower is
a party (as a lessee) as of the Closing Date, the address of the subject
property and the annual rental (or, where applicable, a general description of
the method of computing the annual rental).  The consummation of the
transactions contemplated by the Loan Documents will not give rise to a right of
termination in favor of any party to any Material Contract (other than any
Credit Party), except for such Material Contracts the noncompliance with which
would not reasonably be expected to have a Material Adverse Effect.
 
 
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5.20           Non-Subordination
 
The Obligations are not subordinated in any way to any other obligations of any
Borrower or to the rights of any other Person.
 
5.21           Interest Rate
 
The rate of interest paid under this Agreement and the method and manner of the
calculation thereof do not violate any usury or other law or applicable Laws,
any of the Organizational Documents, or any of the Loan Documents.
 
5.22           Reliance on Representations; Survival
 
Each Borrower makes the representations and warranties contained herein with the
knowledge and intention that Lender is relying and will rely thereon.  All such
representations and warranties will survive the execution and delivery of this
Agreement and the making of the Advances under the Revolving Facility or funding
of the Term Loan.  No investigation or inquiry made by or on behalf of Lender
nor knowledge by Lender which is in any fashion inconsistent with the
representations and warranties contained herein, shall in any way (i) affect or
lessen the representations and warranties made and entered into by any Borrower
hereunder, or (ii) reduce or in any way affect Lender’s rights with respect to a
breach of such representations and warranties.
 
5.23           Equipment Purchase
 
The Equipment Purchase is being consummated concurrently with the Closing
pursuant to the terms of the Purchase Documents and in compliance with all
applicable laws.  On or prior to the Closing Date, the applicable Borrower has
provided to Lender complete copies of the Purchase Documents, including all
schedules, exhibits and disclosure letters referred to therein or delivered
pursuant thereto, if any, and all amendments thereto, waivers relating
thereto.  As of the Closing Date, none of such agreements and documents has been
amended or supplemented, nor have any material provisions thereof been waived,
except pursuant to a written agreement or agreement which has heretofore been
delivered to Lender.
 
 
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VI.           AFFIRMATIVE COVENANTS
 
Each of the Borrowers covenants and agrees that, until full performance and
satisfaction, and payment in full in cash, of all the Obligations (other than
indemnity obligations with respect to which no claim has been made) and
termination of this Agreement:
 
6.1           Financial Statements, Reports and Other Information
 
(a)           Financial Reports.  Each Borrower shall furnish to Lender (i) as
soon as available and in any event within one hundred twenty (120) calendar days
after the end of each fiscal year of each Borrower, annual consolidated and
consolidating financial statements of each Borrower, including the notes
thereto, consisting of a consolidated and consolidating balance sheet at the end
of such completed fiscal year and the related consolidated and consolidating
statements of income, retained earnings, cash flows and owners’ equity for such
completed fiscal year, compiled by an accounting firm reasonably acceptable to
Lender, and, if any Borrower’s annual revenues exceed $50,000,000, such
financial statements shall be audited and certified without qualification by an
independent certified public accounting firm reasonably acceptable to Lender and
accompanied by related management letters, if available, and (ii) within thirty
(30) calendar days after the end of each calendar month, unaudited consolidated
and consolidating financial statements of each Borrower consisting of a balance
sheet and statements of income, retained earnings, cash flows and owners’ equity
as of the end of such calendar month.  All such financial statements shall be
prepared in accordance with GAAP consistently applied with prior periods.  With
each such financial statement, each Borrower shall also deliver a compliance
certificate of its chief executive officer or chief financial officer in the
form set forth in Exhibit B showing compliance with all financial and loan
covenants set forth in Annex I (a “Compliance Certificate”).  In addition to the
above financial reports, each Borrower shall furnish to Lender as soon as
available and in any event within ten (10) calendar days after the end of each
calendar month, statements from each Borrower’s bank showing all account
activity for the preceding  calendar month.  Notwithstanding any other provision
of this Agreement, in the event any of the financial statements or other
financial reports due by any Borrower under this Section 6.1(a) are not timely
delivered to Lender, such Borrower shall pay Lender a late fee equal to $250 per
day until such statements or reports are delivered to Lender.  Such late fee
shall be in addition to any other fees, charges or other provisions that may
increase the Applicable Rate of interest hereunder and the assessment or
collection of such late fee shall not, unless Lender specifically agrees in
writing to the contrary, prevent Lender from considering any such non-timely
delivery to be a Default or an Event of Default.
 
(b)           Accounts Payable and Accounts Receivable Aging Schedules.  Each
Borrower shall furnish to Lender as soon as available, and in any event within
ten (10) calendar days after the end of each calendar month, detailed accounts
payable and accounts receivable aging schedules as of the end of such month, in
a form satisfactory to Lender.
 
(c)           Forms 941.  Within thirty (30) calendar days following the end of
each pay period of Borrower, Borrower shall furnish, or shall cause to be
furnished, to Lender a report detailing the amount of taxes which Borrower
withholds for income tax, social security tax or Medicare tax from its
employees’ paychecks or which Borrower must pay the employer’s portion of on
social security or Medicare tax.  To the extent available to Borrower, Borrower
shall also, within thirty (30) calendar days following the end of each calendar
quarter, furnish Lender with a copy of the IRS Form 941 required to be filed by
Borrower with respect to the quarter then ended.
 
 
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(d)           Other Materials.  Each Borrower shall furnish to Lender as soon as
available, and in any event within fifteen (15) calendar days after the
preparation or issuance thereof or at such other time as set forth below:
 
(i)           Shareholder Communications.  Any reports, returns, information,
notices and other materials that any Borrower shall send to its stockholders,
members, partners or other equity owners at any time;
 
(ii)           Insurance Renewals.  Prior to the expiration date of each of the
insurance policies required to be maintained pursuant to Section 6.5, proof of
the renewal of each such insurance policy together with copies of the
declarations page for each such renewed policy.
 
(iii)           Accountants Communications.  Promptly upon receipt thereof,
copies of any reports submitted to any Borrower by its independent accountants
in connection with any interim audit of the books of such Person or any of its
Affiliates and copies of each management control letter provided by such
independent accountants; and
 
(iv)           Documents Requested by Lender.  Such additional information,
documents, statements, reports and other materials as Lender may reasonably
request from a credit or security perspective or otherwise from time to time,
including, but not limited to, periodic receivable and payable aging reports,
payroll tax information, dilution analyses, origination reports and
default/charge off reports.
 
(e)           Notices.  Each Borrower shall promptly, and in any event within
five (5) Business Days after any Credit Party or any officer of any Credit Party
obtains knowledge thereof, notify Lender in writing of (i) any pending
litigation, suit, investigation, arbitration, formal dispute resolution
proceeding or administrative proceeding brought against or initiated by any
Credit Party or otherwise affecting or involving or relating to any Credit Party
or any of its property or assets to the extent (A) the amount in controversy
exceeds Fifty Thousand Dollars ($50,000), or (B) to the extent any of the
foregoing seeks injunctive relief, (ii) any Default or Event of Default, which
notice shall specify the nature and status thereof, the period of existence
thereof and what action is proposed to be taken with respect thereto, (iii) any
other development, event, fact, circumstance or condition that would reasonably
be expected to have a Material Adverse Effect, in each case describing the
nature and status thereof and the action proposed to be taken with respect
thereto, (iv) any notice received by Borrower from any payor of an Account to
the effect that such payor has one or more claim against any Credit Party
involving aggregate amounts in excess of Fifty Thousand Dollars ($50,000), (v)
any matter(s) affecting the value, enforceability or collectability of any of
the Collateral, including without limitation, claims or disputes in the amount
of Fifty Thousand Dollars ($50,000) or more, singly or in the aggregate, in
existence at any one time, (vi) any notice given by Borrower to any other lender
of Borrower and shall furnish to Lender a copy of such notice, (vii) receipt of
any notice or request from any Governmental Authority or governmental payor
regarding any liability or claim of liability outside the ordinary course of
business, (viii) termination of any executive manager of any facility owned,
operated or leased by any Credit Party, and/or (ix) if any Account becomes
evidenced or secured by an Instrument or Chattel Paper.
 
 
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(f)           Consents.  Each Borrower shall obtain and deliver from time to
time all required consents, approvals and agreements from such third parties as
Lender shall determine are necessary or desirable in its Permitted Discretion
(as communicated to such Borrower by written notice) for the protection of its
Collateral and that are reasonably satisfactory to Lender with respect to the
Loan Documents and the transactions contemplated thereby or any of the
Collateral, including, without limitation, Landlord Waivers and Consents with
respect to leases entered into after the Closing Date.
 
(g)           Operating Budget.  If requested by Lender, Borrower shall furnish
to Lender on or prior to the Closing Date and for each fiscal year of Borrower
thereafter by year end, consolidated and consolidating month by month projected
operating budgets, annual projections, balance sheets and cash flow reports of
and for Borrower for such upcoming fiscal year (including an income statement
for each month), in each case prepared in accordance with GAAP consistently
applied with prior periods.
 
6.2           Payment of Obligations
 
Each Borrower (a) will pay and discharge, and cause each Subsidiary to pay and
discharge, on a timely basis as and when due, all of their respective
obligations and liabilities, except for such obligations and/or liabilities
(i) that may be the subject of a Permitted Contest, and (ii) the nonpayment or
nondischarge of which could not reasonably be expected to have a Material
Adverse Effect or result in a Lien against any Collateral, except for Permitted
Liens, (b) without limiting anything contained in the foregoing clause (a), pay
all amounts due and owing in respect of Taxes (including without limitation,
payroll and withholdings tax liabilities) on a timely basis as and when due, and
in any case prior to the date on which any fine, penalty, interest, late charge
or loss may be added thereto for nonpayment thereof, (c) will maintain, and
cause each Subsidiary to maintain, in accordance with GAAP, appropriate reserves
for the accrual of all of their respective obligations and liabilities, and
(d) will not breach or permit any Subsidiary to breach, or permit to exist any
default under, the terms of any lease, commitment, contract, instrument or
obligation to which it is a party, or by which its properties or assets are
bound, except for such breaches or defaults which could not reasonably be
expected to have a Material Adverse Effect.  Notwithstanding the foregoing, each
Borrower shall make full and timely payment in cash of the principal of and
interest on the Loans, Advances and all other Obligations when due and payable.
 
6.3           Conduct of Business and Maintenance of Existence and Assets
 
Each Borrower shall (i) engage principally in the same or similar lines of
business substantially as heretofore conducted, (ii) collect its Accounts in the
ordinary course of business, (iii) maintain all of its material properties,
assets and equipment used or useful in its business in good repair, working
order and condition (normal wear and tear excepted and except as may be disposed
of in the ordinary course of business and in accordance with the terms of the
Loan Documents and otherwise as determined by each Borrower using commercially
reasonable business judgment), (iv) from time to time make all necessary or
desirable repairs, renewals and replacements thereof, as determined by each
Borrower using commercially reasonable business judgment, (v) maintain and keep
in full force and effect its existence and all material Permits and
qualifications to do business and good standing or existence in each
jurisdiction in which the ownership or lease of property or the nature of its
business makes such Permits or qualification necessary and in which failure to
maintain such Permits or qualification could reasonably be likely to have a
Material Adverse Effect; and (vi) remain in good standing or existence and
maintain operations in all jurisdictions necessary due to the ownership or lease
of property or the nature of its business.  If all or any part of the Collateral
useful or necessary in its business, or upon which any Borrowing Base is
calculated, becomes damaged or destroyed, each Borrower will, and will cause
each Subsidiary to, promptly and completely repair and/or restore the affected
Collateral in a good and workmanlike manner, regardless of whether Lender agrees
to disburse insurance proceeds or other sums to pay costs of the work of repair
or reconstruction.
 
 
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6.4           Compliance with Legal, Tax and Other Obligations
 
Each Borrower shall (i) substantially comply with all laws, statutes, rules,
regulations, ordinances and tariffs of all Governmental Authorities applicable
to it or its business, assets or operations, (ii) pay all taxes, assessments,
fees, governmental charges, claims for labor, supplies, rent and all other
obligations or liabilities of any kind, as and when due and payable, except
liabilities being contested in good faith and against which adequate reserves
have been established; provided, however, all payroll taxes payable in
connection with each payroll shall be paid or funds shall set aside in a reserve
in an amount adequate to pay all such payroll taxes contemporaneously with the
payment of such payroll, and (iii) perform in accordance with its terms each
contract, agreement or other arrangement to which it is a party or by which it
or any of the Collateral is bound, except where the failure to comply, pay or
perform would not reasonably be expected to have a Material Adverse Effect,
except where the failure to comply with any of the foregoing provisions of this
Section 6.4 would reasonably be expected not to have a Material Adverse Effect.
 
6.5           Insurance
 
(a)           Each Borrower shall (i) keep all of its insurable properties and
assets adequately insured in all material respects against losses, damages and
hazards as are customarily insured against by businesses engaging in similar
activities or owning similar assets or properties and at least the minimum
amount required by applicable law, (ii) maintain business interruption
insurance, (iii) maintain general public liability insurance at all times
against liability on account of damage to persons and property having such
limits, deductibles, exclusions and co-insurance and other provisions as are
customary for a business engaged in activities similar to those of each
Borrower; and (iv) maintain insurance under all applicable workers’ compensation
laws.  All of the insurance policies referenced above shall be (x) satisfactory
in form and substance to Lender in its Permitted Discretion and (y) placed with
insurers having an A.M. Best policyholder rating acceptable to Lender in its
Permitted Discretion.  Each Borrower agrees that it shall not alter, amend,
modify or cancel its insurance policies without thirty (30) Business Days prior
written notice to Lender unless such alteration, amendment, modification or
cancellation, shall be in compliance with the requirements set forth above.  The
insurance policies referenced in clauses (i) and (ii) shall name Lender as
lender’s loss payable thereunder.  The insurance policies referenced in clause
(iii) shall name Lender as an additional insured thereunder.
 
 
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(b)           In the event any Borrower fails to provide Lender with evidence of
the insurance coverage required by this Agreement, Lender may purchase insurance
at such Borrower’s expense to protect Lender’s interests in the
Collateral.  This insurance may, but need not, protect such Borrower’s
interests.  The coverage purchased by Lender may not pay any claim made by such
Borrower or any claim that is made against such Borrower in connection with the
Collateral.  Such Borrower may later cancel any insurance purchased by Lender,
but only after providing Lender with evidence that such Borrower has obtained
insurance as required by this Agreement.  If Lender purchases insurance for the
Collateral, Borrowers will be responsible for the costs of that insurance to the
fullest extent provided by law, including interest and other charges imposed by
Lender in connection with the placement of the insurance, until the effective
date of the cancellation or expiration of the insurance.  The costs of the
insurance may be added to the Obligations.  The costs of the insurance may be
more than the cost of insurance such Borrower is able to obtain on its own.
 
6.6           True Books
 
Each Borrower shall (i) keep true, complete and accurate books of record and
accounts in accordance with commercially reasonable business practices in which
true and correct entries are made of all of its dealings and transactions in all
material respects; and (ii) set up and maintain on its books such reserves as
may be required by GAAP with respect to doubtful accounts and all taxes,
assessments, charges, levies and claims and with respect to its business, and
include such reserves in its quarterly as well as year end financial statements.
 
6.7           Inspection; Period Audits
 
Each Borrower shall permit the representatives of Lender, at the expense of such
Borrower, from time to time during normal business hours, upon reasonable notice
but not more than four times in any calendar year (provided that upon the
occurrence and during the continuance of an Event of Default, there shall be no
restrictions on the number of times that Lender may perform the activities
described in this Section 6.7 nor shall Lender be required to give prior notice
to Borrower), to (i) visit and inspect any of its offices or properties or any
other place where Collateral is located to inspect the Collateral and/or to
examine or audit all of such Borrower’s books of account, records, reports and
other papers, (ii) make copies and extracts therefrom, and (iii) discuss such
Borrower’s business, operations, prospects, properties, assets, liabilities,
condition and/or Accounts with such Borrower’s officers and independent public
accountants (and by this provision such officers and accountants are authorized
to discuss the foregoing).
 
6.8           Further Assurances; Post Closing
 
At such Borrower’s cost and expense, each Borrower shall (i) within five (5)
Business Days after Lender’s reasonable request, take such further actions, and
duly execute and deliver such further agreements, assignments, instructions or
documents and do such further acts and things as may be necessary or proper in
the reasonable opinion of Lender to carry out more effectively the provisions
and purposes of this Agreement and the Loan Documents, and (ii) upon the
exercise by Lender or any of its Affiliates of any power, right, privilege or
remedy pursuant to any Loan Documents or under applicable law or at equity which
requires any consent, approval, registration, qualification or authorization of
any Person, including without limitation a Governmental Authority, execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments and other documents that Lender or its Affiliate may be required to
obtain for such consent, approval, registration, qualification or
authorization.  Without limiting the generality of the foregoing, (x) each
Borrower shall, at the time of the delivery of any Compliance Certificate
disclosing the acquisition by an Credit Party of any registered Intellectual
Property or application for the registration of Intellectual Property, deliver
to Lender a duly completed and executed supplement to the applicable Credit
Party’s Intellectual Property Security Agreement as required thereunder, and
(y) at the request of Lender, following the disclosure by any Borrowers on any
Compliance Certificate of the acquisition by any Credit Party of any rights
under a license as a licensee with respect to any registered Intellectual
Property or application for the registration of any Intellectual Property owned
by another Person, the applicable Borrower shall execute any documents requested
by Lender to establish, create, preserve, protect and perfect a first priority
lien in favor of Lender, to the extent legally possible, in such Borrower’s
rights under such license and shall use their commercially reasonable best
efforts to obtain the written consent of the licensor which such license to the
granting in favor of Lender of a Lien on such Borrower’s rights as licensee
under such license.
 
 
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6.9           Lien Terminations
 
If Liens other than Permitted Liens exist, the applicable Borrower immediately
shall take, execute and deliver all actions, documents and instruments necessary
to release and terminate such Liens.
 
6.10           Use of Proceeds
 
The Borrowers shall use the proceeds of Revolving Loans and the Term Loan solely
for (a) to repay existing indebtedness of Borrowers, (b) transaction fees
incurred in connection with the Loan Documents, (c) for working capital needs of
Borrowers and their Subsidiaries.  No portion of the proceeds of the Loans will
be used for family, personal, agricultural or household use, and (d), with
respect to the Term Loan, the purchase of equipment.
 
6.11           Collateral Documents; Security Interest in Collateral
 
Each Borrower hereby authorizes Lender to file UCC-1 Financing Statements with
respect to the Collateral, and any amendments or continuations relating thereto,
without the signature of any Borrower and hereby ratifies, confirms and consents
to any such filings made by Lender prior to the date hereof.  In addition to the
UCC financing statements references in Section 2.10(k)(F), each Borrower hereby
agrees to execute any additional documents or financing statements which Lender
deems necessary in its reasonable discretion in order to evidence Lender’s
security interest in the Collateral.  No Borrower shall allow any financing
statement (other than that filed by or on behalf of Lender and other than
Permitted Liens) to be on file in any public office covering any Collateral or
the proceeds thereof.  Pursuant to Section 2.11, Lender has full power of
attorney to execute, deliver, file, register and/or record in the name of each
Borrower and financing statements, schedules, assignments, instruments, and
documents necessary to perfect Lender’s security interest in or lien on any
Collateral.  If necessary or advisable beyond that power of attorney, and at the
reasonable request of Lender upon reasonable notice, a Borrower shall (i)
execute, obtain, deliver, file, register and/or record any and all financing
statements, continuation statements, stock powers, instruments and other
documents, or cause the execution, filing, registration, recording or deliver of
any and all of the foregoing, that are necessary or required under law or
otherwise or reasonably requested by Lender to be executed, filed, registered,
obtained, delivered or recorded to create, maintain, perfect, preserve, validate
or otherwise protect the pledge of the Collateral to Lender and Lender’s
perfected first priority Lien on the Collateral (and such Borrower irrevocably
grants Lender the right, at Lender’s option, to file any or all of the
foregoing) and (ii) defend the Collateral and Lender’s perfected first priority
Lien thereon against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to Lender, and pay all reasonable costs
and expenses (including, without limitation, reasonable in-house documentation
and diligence fees and reasonable legal expenses and reasonable attorneys’ fees
and expenses) in connection with such defense, which may at Lender’s discretion
be added to the Obligations and increase the principal amount outstanding
hereunder.
 
 
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6.12           Right of First Refusal
 
If at any time any Borrower receives from a third party an offer, term sheet or
commitment or makes a proposal accepted by any Person (each, an “Offer”) which
provides for any type of financing for the any Borrower or any of its then
current subsidiaries, such Borrower shall notify Lender of the Offer in writing
(including all material terms of the Offer) and Lender shall have twenty (20)
calendar days after Receipt of such notice (the “Option Period”) to agree to
provide financing in the place of such Person upon terms and conditions no less
favorable to such Borrower as set forth in the Offer, together with such
additional terms as may generally be standard or reasonable in similar
financings.  Lender shall notify such Borrower in writing of Lender’s acceptance
of the Offer pursuant hereto (the “Acceptance Notice”), in which case such
Borrower shall obtain such financing from Lender and shall not accept the Offer
from such other Person.  If no Acceptance Notice has been Received from Lender
within the Option Period, such Borrower may consummate the Offer with the other
Person on the terms and conditions set forth in the Offer (the “Transaction”);
provided, however, that none of the foregoing or any failure by Lender to issue
an Acceptance Notice shall be construed as a waiver of any of the terms,
covenants or conditions of any of the Loan Documents.  If the Transaction is not
consummated on the terms set forth in the Offer or with the Person providing the
Offer during the ninety (90) calendar day period following the expiration of the
Option Period, such Borrower shall not be permitted to consummate the
Transaction without again complying with this Section 6.12.  For purposes of
this Section 6.12, “Lender” shall include SCM Specialty Finance Opportunities
Fund, L.P., a Delaware limited partnership, and any of its parents, subsidiaries
or Affiliates.
 
6.13           Taxes and Other Charges
 
All payments and reimbursements to Lender made under any Loan Document shall be
free and clear of and without deduction for all taxes, levies, imposts,
deductions, assessments, charges or withholdings, and all liabilities with
respect thereto of any nature whatsoever, excluding taxes to the extent imposed
on Lender’s net income.  If any Borrower shall be required by law to deduct any
such amounts from or in respect of any sum payable under any Loan Document to
Lender, then the sum payable to Lender shall be increased as may be necessary so
that, after making all required deductions, Lender receives an amount equal to
the sum it would have received had no such deductions been
made.  Notwithstanding any other provision of any Loan Document, if at any time
after the Closing (i) any change in any applicable law, regulation, treaty or
directive or in the interpretation or application thereof, (ii) any new law,
regulation, treaty or directive (whether or not having the force of law) from
any Governmental Authority (A) subjects Lender to any tax, levy, impost,
deduction, assessment, charge or withholding of any kind whatsoever with respect
to any Loan Document, or changes the basis of taxation of payments to Lender of
any amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or facility fees or other fees
payable hereunder or changes in the rate of tax on the overall net income of
Lender), or (B) imposes on Lender any other condition or increased cost in
connection with the transactions contemplated thereby or participations therein;
and the result of any of the foregoing is to increase the cost to Lender of
making or continuing any Loan hereunder or to reduce any amount receivable
hereunder, then, in any such case, the Borrowers shall promptly pay to Lender
any additional amounts necessary to compensate Lender, on an after-tax basis,
for such additional cost or reduced amount as determined by Lender.  If Lender
becomes entitled to claim any additional amounts pursuant to this Section 6.13
it shall promptly notify the Borrowers of the event by reason of which Lender
has become so entitled, and each such notice of additional amounts payable
pursuant to this Section 6.13 submitted by Lender to the Borrowers shall, absent
manifest error, be final, conclusive and binding for all purposes.  For purposes
of this Section, (i) the Dodd-Frank Wall Street Reform and Consumer Protection
Act and all requests, rules, guidelines or directives thereunder or issued in
connection therewith and (ii) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “change in any applicable Law”, regardless of the
date enacted, adopted or issued.
 
 
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6.14           Payroll Agent
 
Each Borrower shall at all times either (a) retain and use a payroll agent for
purposes of processing, managing and paying such Borrower’s payroll, including
all payroll tax payments required to be made under applicable tax laws and
regulations, or (b) be enrolled in the Electronic Federal Payment Tax Service on
line at www.efpts.com and provide such information and authorizations to Lender
as may be required for Lender to monitor payment of periodic payroll taxes or
(c) utilize a professional employer service organization to lease employees
provided that such organization provides to such Borrower adequate insurance
against the failure of such organization to make required tax payments with
respect to the leased employees.  If such Borrower uses a payroll agent, the
payroll agent shall be a third party, independent of such Borrower, reasonably
acceptable to Lender.  Such Borrower shall instruct the payroll agent to provide
such reports directly to Lender as Lender may request from time to time
reflecting payment of applicable payroll taxes and, in any event, such payroll
agent shall deliver to Lender within ten (10) calendar days after the end of
each calendar month a report of such Borrower’s payroll taxes for the
immediately preceding calendar month and evidence of payment thereof.
 
 
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6.15           Hazardous Substances
 
(a)           If any release or disposal of Hazardous Substances shall occur or
shall have occurred on any real property or any other assets of any Borrower or
any other Credit Party, such Borrower will cause, or direct the applicable
Credit Party to cause, the prompt containment and removal of such Hazardous
Substances and the remediation of such real property or other assets as is
necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets.  Without limiting the generality of the
foregoing, each Borrower shall, and shall cause each other Credit Party to,
comply with each Environmental Law requiring the performance at any real
property by any Borrower or any other Credit Party of activities in response to
the release or threatened release of a Hazardous Substances.
 
(b)           Borrowers will provide Lender within thirty (30) days after
written  demand therefor with a bond, letter of credit or similar financial
assurance evidencing to the reasonable satisfaction of Lender that sufficient
funds are available to pay the cost of removing, treating and disposing of any
Hazardous Substances or Hazardous Substances Contamination and discharging any
assessment which may be established on any property as a result thereof, to the
extent a Credit Party is obligated under Environmental Law to remove, treat or
dispose of such Hazardous Substance, such demand to be made, if at all, upon
Lender’s reasonable business determination that the failure to remove, treat or
dispose of any Hazardous Substances or Hazardous Substances Contamination, or
the failure to discharge any such assessment could reasonably be expected to
have a Material Adverse Effect.
 
VII.           NEGATIVE COVENANTS
 
Each of the Borrowers covenants and agrees that, until full performance and
satisfaction, and payment in full in cash, of all the Obligations (other than
indemnity obligations with respect to which no claim has been made) and
termination of this Agreement:
 
7.1           Financial and Loan Covenants
 
No Borrower shall violate the financial and loan covenants set forth on Annex I
to this Agreement, which is incorporated herein and made a part hereof.
 
7.2           No Debt other than Permitted Indebtedness
 
No Borrower will, or will permit any Subsidiary to, directly or indirectly,
create, incur, assume, guarantee or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except for Permitted
Indebtedness.  No Borrower will, or will permit any Subsidiary to, directly or
indirectly, create, assume, incur or suffer to exist any Contingent Obligations,
except for Permitted Contingent Obligations.
 
7.3           No Liens other than Permitted Liens
 
No Borrower shall create, incur, assume or suffer to exist any Lien upon, in or
against, or pledge of, any of the Collateral or any of its properties or assets
or any of its shares, securities or other equity or ownership or partnership
interests, whether now owned or hereafter acquired, except the Permitted Liens.
 
 
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7.4           Investments, New Facilities or Collateral; Subsidiaries
 
No Borrower, directly or indirectly, shall (i) purchase, own, hold, invest in or
otherwise acquire obligations or stock or securities of, or any other interest
in, or all or substantially all of the assets of, any Person or any joint
venture whether by merger, consolidation, outright purchase or otherwise, or
(ii) make or permit to exist any loans, advances or guarantees to or for the
benefit of any Person or assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable for or upon or incur any obligation of any
Person (other than those created by the Loan Documents and Permitted
Indebtedness and other than (A) trade credit extended in the ordinary course of
business, (B) advances for business travel and similar temporary advances made
in the ordinary course of business to officers, directors and employees, (C)
deposits to landlords and (D) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business).  No Borrower, directly or indirectly, shall purchase, own, operate,
hold, invest in or otherwise acquire any facility, property or assets or any
Collateral that is not located at the locations set forth on Schedule 5.18
unless such Borrower shall provide to Lender at least thirty (30) Business Days
prior written notice.  No Borrower shall have any Subsidiaries other than such
Subsidiaries existing at Closing.
 
7.5           Prohibited Payments
 
No Borrower shall (i) declare, pay or make any dividend or distribution on any
shares of capital stock or other securities or interests (other than (i)
dividends or distributions payable in its equity securities, or split-ups or
reclassifications of its equity securities or (ii) dividend or distributions
payable to holders of the Current Issuance or to holders of Future Issuances;
provided, that no payments in connection with the Current Issuance or Future
Issuances shall be permitted if an Event of Default has occurred and remains in
effect or would be caused by or result from such payment); (ii) apply any of its
funds, property or assets to the acquisition, redemption or other retirement or
any capital stock or other securities or interests or of any options to purchase
or acquire any of the foregoing (provided, however, that a Borrower may redeem
its equity securities from terminated employees pursuant to, but only to the
extent required under, the terms of the related employment agreements as long as
no Default or Event of Default has occurred and is continuing or would be caused
by or result therefrom, (iii) otherwise make any payments or Distributions to
any stockholder, member, partner or other equity owner in such Person’s capacity
as such, (iv) make any payment with respect to any loan or other Indebtedness
from any Affiliate (other than (i) payments in connection with the Note and
Debenture Subordinated Debt and (ii) those payments which are expressly
permitted by the Closing Date Subordination Agreement; provided, that no
payments in connection with the Note and Debenture Subordinated Debt shall be
permitted if an Event of Default has occurred and remains in effect or would be
caused by or result from such payment); (v) make any payment of any management,
or related or similar fee to any Person or with respect to any facility owned,
operated or leased by such Borrower if such payment directly or indirectly
causes such Borrower to be in default of any of the financial or loan covenants
set forth in Annex I or (vi) declare, pay or make any dividend or make any other
payment or distribution, directly or indirectly (whether in cash, securities or
other property) to any Excluded Subsidiary (other than in connection with
certain intercompany loans by Trans-Lux to TLC, the amount of which shall not
exceed $100,000 in the aggregate outstanding at any time.
 
 
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7.6           Transactions with Affiliates
 
No Borrower shall enter into or consummate any transactions of any kind with any
of its Affiliates other than:  (i) salary, bonus, employee stock option and
other compensation to and employment arrangements with directors, officers or
employees in the ordinary course of business, provided, that no payment of any
bonus shall be permitted if an Event of Default has occurred and remains in
effect or would be caused by or result from such payment, (ii) payments
permitted pursuant to Section 7.5, (iii) transactions with Lender or any
Affiliate of Lender, and (iv) payments (other than those referenced in cause (i)
above) permitted under and pursuant to written agreements entered into by and
between a Borrower and one or more of its Affiliates (A) both reflect and
constitute transactions on overall terms at least as favorable to such Borrower
as would be the case in an arm’s-length transaction between unrelated parties of
equal bargaining power, (B) do not grant a security interest in the Collateral
to any Affiliate of such Borrower, and (C) contain payment obligations, if any,
that are subordinate to the Obligations, provided, that notwithstanding the
foregoing no Borrower shall enter into, consummate, or perform with respect to
any transactions or agreement pursuant to which it becomes a party to any
mortgage, note, indenture or guarantee evidencing any Indebtedness of any of its
Affiliates or otherwise to become responsible or liable, as a guarantor, surety
or otherwise, pursuant to agreement for any Indebtedness of any such Affiliate
other than Permitted Indebtedness and Permitted Contingent Obligations.
 
7.7           Charter Documents; Fiscal Year; Dissolution; Use of Proceeds
 
No Borrower shall (i) change its state of formation, or amend, modify, restate
or change its certificate of incorporation or formation or bylaws or similar
charter documents in a manner that would be materially adverse to Lender and, in
any event, without five (5) days’ notice to Lender, provided however that
Trans-Lux may amend such Organization Documents in connection with the
contemplated increase in authorized preferred stock of Trans-Lux following its
2016 annual meeting (ii) change its fiscal year, unless Borrower demonstrates to
Lender’s satisfaction compliance with the covenants contained herein for both
the fiscal year in effect prior to any change and the new fiscal year period by
delivery to Lender of appropriate interim and annual pro forma, historical and
current compliance certificates for such periods and such other information as
Lender may reasonably request, (iii) amend, alter or suspend or terminate or
make provisional in any material way, any Permit without the prior written
consent of Lender, which consent shall not be unreasonably withheld, (iv) wind
up, liquidate or dissolve (voluntarily or involuntarily) or commence or suffer
any proceedings seeking to wind up, liquidate or dissolve or that would result
in any of the foregoing, or (v) use any proceeds of any Advance for “purchasing”
or “carrying” “margin stock” as defined in Regulations U, T or X of the Board of
Governors of the Federal Reserve System.
 
7.8           Asset Sales
 
No Borrower shall, without the prior written approval of Lender, directly or
indirectly sell, convey, transfer, assign, license, lease (that has the effect
of a disposition) or otherwise dispose of (including, without limitation, any
merger or consolidation or upon any condemnation, eminent domain or similar
proceedings) to any Person, in one transaction or a series of related
transactions, any assets of the Borrower which constitute substantially all of
an operating unit of a Borrower or any other assets (including without
limitation Intellectual Property) of a Borrower outside of the ordinary course
of business other than (i) the grant of licenses, sublicenses (including
licenses and sublicenses of Intellectual Property), leases or subleases in the
ordinary course of business, (ii) the abandonment of Intellectual Property
rights or allowing of Intellectual Property rights to lapse, in each case, in
the ordinary course of business and which are not collectively material to the
conduct of the business of the Borrower, (iii) the disposition or transfer of
obsolete, worn-out or surplus inventory or equipment that is not material to the
conduct of a Borrowers’ business in the ordinary course of business, (iv) the
disposition or transfer of cash or cash equivalent investments in the ordinary
course of business and consistent with past practices, and (v) the disposition
or transfer of any leasehold interest at the natural expiration of such lease or
upon the earlier termination of the lease as provided therein.
 
 
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7.9           Restrictive Agreements
 
No Borrower will, or will permit any Subsidiary to, directly or indirectly
(a) enter into or assume any agreement (other than the Loan Documents, the
Closing Date Subordinated Debt Documents, the Note and Debenture Subordinated
Debt Documents, and any agreements for purchase money debt permitted under
clause (iii) of the definition of Permitted Indebtedness) prohibiting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired (other than a Permitted Lien), or (b) create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind (except as provided by the Loan
Documents, the Closing Date Subordinated Debt Documents and the Note and
Debenture Subordinated Debt Documents) on the ability of any Subsidiary
to:  (i) pay or make Distributions to any Borrower or any Subsidiary; (ii) pay
any Indebtedness owed to any Borrower or any Subsidiary; (iii) make loans or
advances to any Borrower or any Subsidiary; or (iv) transfer any of its property
or assets to any Borrower or any Subsidiary; provided, that, the Closing Date
Subordinated Debt Documents, the Note and Debenture Subordinated Debt Documents
and any agreements for purchase money debt shall not prohibit (i) the creation
or assumption of any Lien upon any assets or properties to secure the
Obligations or (ii) the repayment of the Obligations.
 
7.10           Management
 
No Borrower shall pay any compensation or other amounts to senior management of
any Borrower in excess of such amounts as are usual and customary for companies
in similar businesses and of a similar size.
 
7.11           Modifications of Certain Agreements
 
No Borrower will, or will permit any Subsidiary to, directly or indirectly,
amend or otherwise modify any Material Contract, which amendment or modification
in any case:  (a) is contrary to the terms of this Agreement or any other Loan
Document; (b) could reasonably be expected to be adverse to the rights,
interests or privileges of the Lender or their ability to enforce the same;
(c) results in the imposition or expansion in any material respect of any
obligation of or restriction or burden on any Borrower or any Subsidiary; or
(d) reduces in any material respect any rights or benefits of any Borrower or
any Subsidiaries (it being understood and agreed that any such determination
shall be in the discretion of the Lender).  Each Borrower shall, prior to
entering into any amendment or other modification of any of the foregoing
documents, deliver to Lender reasonably in advance of the execution thereof, any
final or execution form copy of amendments or other modifications to such
documents, and such Borrower agrees not to take, nor permit any of its
Subsidiaries to take, any such action with respect to any such documents without
obtaining such approval from Lender.
 
 
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7.12           Payments and Modifications of Subordinated Debt
 
No Borrower will, or will permit any Subsidiary to, directly or indirectly
(a) declare, pay, make or set aside any amount for payment in respect of
Subordinated Debt, except for payments made in full compliance with and
expressly permitted under the Subordination Agreement, (b) amend or otherwise
modify the terms of any Subordinated Debt, except for amendments or
modifications made in full compliance with the Subordination Agreement,
(c) declare, pay, make or set aside any amount for payment in respect of any
Indebtedness hereinafter incurred that, by its terms, or by separate agreement,
is subordinated to the Obligations, except for payments made in full compliance
with and expressly permitted under the subordination provisions applicable
thereto, or (d) amend or otherwise modify the terms of any such Indebtedness if
the effect of such amendment or modification is to (i) increase the interest
rate or fees on, or change the manner or timing of payment of, such
Indebtedness, (ii) accelerate or shorten the dates upon which payments of
principal or interest are due on, or the principal amount of, such Indebtedness,
(iii) change in a manner adverse to any Credit Party or Lender any event of
default or add or make more restrictive any covenant with respect to such
Indebtedness, (iv) change the prepayment provisions of such Indebtedness or any
of the defined terms related thereto, (v) change the subordination provisions
thereof (or the subordination terms of any guaranty thereof), or (vi) change or
amend any other term if such change or amendment would materially increase the
obligations of the obligor or confer additional material rights on the holder of
such Indebtedness in a manner adverse to Borrowers, any Subsidiaries, or
Lender.  Borrowers shall, prior to entering into any such amendment or
modification, deliver to Lender reasonably in advance of the execution thereof,
any final or execution form copy thereof.
 
7.13           Deposit Accounts
 
Each Borrower has provided Lender with all information (including, without
limitation, user identifications and passwords) necessary for Lender to have
on-line access to all information regarding all of Borrowers’ deposit accounts,
as required by Section 4.1(g).  Borrowers shall not make any changes to their
deposit accounts, Lockbox Accounts or establish new deposit accounts or change
the passwords or user identification information with respect thereto in such a
fashion as would result in Lender not having on-line access to view all
information regarding all of Borrowers’ deposit accounts and Lockbox Accounts or
having control of all of Borrowers’ deposit accounts through deposit account
control agreements.  The provisions of this Section requiring deposit account
control agreements shall not apply to (i) the deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of Borrowers’ employees and identified to Lender by Borrowers as
such and (ii) the Excluded Deposit Accounts; provided, however, that at all
times that any Obligations remain outstanding, Borrowers shall maintain one or
more separate deposit accounts to hold any and all amounts to be used for
payroll, payroll taxes and other employee wage and benefit payments, and shall
not commingle any monies allocated for such purposes with funds in any other
deposit account; provided, further, Borrowers shall no less frequently than once
a day forward to the Concentration Account all available amounts in deposit
account number 0000089400 at Bankers Trust when such amounts exceed $5,000 and
until such time as (i) all Account Debtors have been redirected to Enterprise
Bank & Trust and (ii) Borrowers have delivered evidence to Lender that such
account has been closed.
 
 
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7.14           Truth of Statements
 
Borrowers shall not furnish to Lender any certificate or other document that
contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.
 
7.15           IRS Form 8821
 
Borrowers shall not materially alter, amend, restate, or otherwise modify, or
withdraw, terminate or re-file the IRS Form 8821 required to be delivered
pursuant to the Conditions Precedent in Section 4.1, hereof.
 
7.16           Limitations on Excluded Subsidiaries.
 
Except to the extent permitted under Section 7.5(vi) hereof, no Borrower shall
assign or otherwise transfer any Collateral or any proceeds of the Loans to any
Excluded Subsidiary.  No Borrower shall permit any Excluded Subsidiary to (a)
own any assets other than those necessary to maintain its separate
organizational existence, (b) incur any liabilities other than minimal
liabilities necessary to maintain its separate organizational existence, (c)
incur any Indebtedness, (d) enter into or suffer to exist any agreement that,
directly or indirectly, creates any Lien upon or with respect to any part of its
property or assets, whether now owned or hereafter acquired or (e) have any
employees or engage in any trade or business.
 
VIII.        EVENTS OF DEFAULT
 
8.1           Events of Default
 
The occurrence of any one or more of the following shall constitute an “Event of
Default”:
 
(a)           Borrowers shall fail to pay any amount on the Obligations or
provided for in any Loan Document when due (whether on any payment date, at
maturity, by reason or acceleration, by notice of intention to prepay, by
required prepayment or otherwise);
 
(b)           Any representation, statement or warranty made or deemed made by
any Credit Party in any Loan Document or in any other certificate, document,
report or opinion delivered in conjunction with any Loan Document to which it is
a party, (i) shall not be true and correct in all material respects, or (ii)
shall have been false or misleading in any material respect on the date when
made or deemed to have been made (except to the extent already qualified by
materiality, in which case it shall be true and correct in all respects and
shall not be false or misleading in any respect);
 
 
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(c)           Any Credit Party or other party thereto other than Lender shall be
in violation, breach or default of, or shall fail to perform, observe or comply
with any covenant, obligation or agreement set forth in any Loan Document and
such violation, breach, default or failure shall not be cured within the
applicable period set forth in the applicable Loan Documents; provided that,
with respect to the affirmative covenants set forth in Article VI (other than
Sections 6.2, 6.3 (i), 6.9 and 6.11 for which there shall be no cure period),
there shall be a fifteen (15) calendar day cure period commencing from the
earlier of (i) receipt by such Person of written notice of such breach, default,
violation or failure, and (ii) the time at which such Person or any officer
thereof knew or became aware, or should have known or been aware, of such
failure, violation, breach or default;
 
(d)           (i) Any of the Loan Documents ceases to be in full force and
effect, or (ii) any Lien created thereunder ceases to constitute a valid
perfected first priority Lien on the Collateral in accordance with the terms
thereof, or Lender ceases to have a valid perfected first priority security
interest in any material portion of the Collateral;
 
(e)           One or more judgments or decrees is rendered against any Borrower
or Guarantor in an amount in excess of $50,000 individually or $100,000 in the
aggregate at one time outstanding, which is/are not satisfied, stayed, bonded,
vacated or discharged of record within thirty (30) calendar days of being
rendered;
 
(f)           (i) Any default occurs, which is not cured within any applicable
grace period or cure period or waived, (x) in the payment of any amount with
respect to any Indebtedness (other than the Obligations), other than the Closing
Date Subordinated Debt, of any Borrower or Guarantor in excess of $50,000, (y)
in the performance, observance or fulfillment of any provision contained in any
agreement, contract, document or instrument to which any Credit Party is a party
or to which any of their properties or assets are subject or bound under or
pursuant to which any Indebtedness, other than the Closing Date Subordinated
Debt, was issued, created, assumed, guaranteed or secured and such Default
continues for more than any applicable grace period or permits the holder of any
Indebtedness, other than the Closing Date Subordinated Debt, to accelerate the
maturity thereof, or (z) in the performance, observance or fulfillment of any
provision contained in any agreement, contract, document or instrument between
any Credit Party and Lender or Affiliate of Lender (other than the Loan
Documents), other than the Closing Date Subordinated Debt, or (ii) any
Indebtedness, other than the Closing Date Subordinated Debt, of any Credit Party
is declared to be due and payable or is required to be prepaid (other than by a
regularly scheduled payment) prior to the stated maturity thereof, or any
obligation of such Person for the payment of Indebtedness (other than the
Obligations), other than the Closing Date Subordinated Debt, is not paid when
due or within any applicable grace period, or any such obligation becomes or is
declared to be due and payable before the expressed maturity thereof, or there
occurs an event which, with the giving of notice or lapse of time, or both,
would cause any such obligation to become, or allow any such obligation to be
declared to be, due and payable;
 
(g)           Any Credit Party shall (i) be unable to pay its debts generally as
they become due, (ii) file a petition under any insolvency statute, (iii) make a
general assignment for the benefits of its creditors, (iv) commence a proceeding
for the appointment of a receiver, trustee, liquidator or conservator of itself
or of the whole or any substantial part of its property, or (v) file a petition
seeking reorganization or liquidation or similar relief under any Debtor Relief
Law or any other applicable law or statute;
 
 
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(h)           (i) A court of competent jurisdiction shall (A) enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of any Credit Party or the whole or any substantial part of any such
Person’s properties and, if such order, judgment or decree is issued without
notice to the Credit Party and a hearing, such order, judgment or decree remains
unstayed and in effect for a period of sixty (60) calendar days, (B) shall
approve a petition filed against any Credit Party seeking reorganization,
liquidation or similar relief under any Debtor Relief Law or any other
applicable law or statute, which is not dismissed within sixty (60) calendar
days or, (C) under the provisions of any Debtor Relief Law or other applicable
law or statute, assume custody or control of any Credit Party or of the whole or
any substantial part of any such Person’s properties, which is not irrevocably
relinquished within sixty (60) calendar days, or (ii) there is commenced against
any Credit Party any proceeding or petition seeking reorganization, liquidation
or similar relief under any Debtor Relief Law or any other applicable law or
statute, (A) which is not unconditionally dismissed within sixty (60) calendar
days after the date of commencement, or (B) with respect to which such Credit
Party takes any action to indicate its approval or consent;
 
(i)           (i) Any Change of Control occurs or any agreement or commitment to
cause or that may result in any such Change of Control is entered into, (ii) any
Material Adverse Effect, Material Adverse Change occurs, or (iii) any Credit
Party ceases any material portion of its business operations as currently
conducted;
 
(j)           Lender receives any indication or evidence that any Credit Party
may have directly or indirectly been engaged in any type of activity which, in
Lender’s judgment, might result in forfeiture of any property to a Governmental
Authority which shall have continued unremedied for a period of ten (10)
calendar days after written notice from Lender;
 
(k)           Any Credit Party or any of their respective directors/members or
senior officers is criminally indicted or convicted under any law that could
lead to a forfeiture of any material portion of any Credit Party’s respective
assets;
 
(l)           The issuance of any process for levy, attachment or garnishment or
execution upon or prior to any judgment for in any one instance or in the
aggregate an amount of $50,000 or more against any Credit Party or any of their
respective property or assets; or
 
(m)           Any Credit Party is in default, which default is not cured within
any applicable grace period or cure period or waived, under any Purchase
Document.
 
8.2           Acceleration and Suspension or Termination of Commitments
 
Upon the occurrence and during the continuance of an Event of Default,
notwithstanding any other provision of any Loan Documents, Lender may by notice
to Borrowers (i) suspend or terminate the Revolving Loan Commitment or the Term
Loan Commitment and the obligation of the Lender with respect thereto and/or
(ii) by notice to Borrowers declare all or any portion of the Obligations to be
due and payable immediately (except in the case of an Event of Default under
Section 8.1(g) or (h), in which event all of the foregoing shall automatically
and without further act by Lender be due and payable), provided that, with
respect to non-material breaches or violations that constitute Events of Default
under clause (ii) of Section 8.1(d), there shall be a three (3) Business Day
cure period commencing from the earlier of (A) Receipt by the Borrowers of
written notice of such breach or violation or any event, fact or circumstance
constituting or resulting in any of the foregoing, and (B) the time at which the
Borrowers or any officer thereof knew or became aware, or should have known or
been aware, of such breach or violation and resulting Event of Default or of any
event, fact or circumstance constituting or resulting in any of the foregoing),
in each case without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrowers.
 
 
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IX.           RIGHTS AND REMEDIES AFTER DEFAULT
 
9.1           Rights and Remedies
 
(a)           In addition to the acceleration provisions set forth in Article
VIII above, upon the occurrence and continuation of an Event of Default, Lender
shall have the right to exercise any and all rights, options and remedies
provided for in any Loan Document, under the UCC or at law or in equity,
including, without limitation, the right to (i) apply any property of any
Borrower received or held by Lender to reduce the Obligations in such manner as
Lender may deem advisable, (ii) foreclose the Liens created under the Loan
Documents, (iii) realize upon, take possession of and/or sell any Collateral or
securities pledged with or without judicial process, (iv) exercise all rights
and powers with respect to the Collateral as any Borrower might exercise, (v)
collect and send notices regarding the Collateral with or without judicial
process, (vi) at Borrowers’ expense, require that all or any part of the
Collateral be assembled and made available to Lender at any reasonable place
designated by Lender, (vii) reduce or otherwise change the Revolving Loan
Commitment Amount, (viii) engage, on behalf of Borrowers, a third party to
service and collect Borrowers’ receivables, including billing and rebilling
third party payors to the extent of their obligations thereunder, and/or (ix)
relinquish or abandon any Collateral or securities pledged or any Lien
thereon.  Notwithstanding any provision of any Loan Document, Lender, in its
Permitted Discretion, shall have the right, at any time that any Borrower fails
to do so, and from time to time, without prior notice, to:  (i) obtain insurance
covering any of the Collateral to the extent required hereunder; (ii) pay for
the performance of any Obligations; (iii) discharge taxes or liens on any of the
Collateral that are in violation of any Loan Document unless such Borrower is in
good faith with due diligence by appropriate proceedings contesting those items;
and (iv) pay for the maintenance and preservation of the Collateral.  Such
expenses and advances shall be added to the Obligations and increase the
principal amount outstanding hereunder, until reimbursed to Lender and shall be
secured by the Collateral, and such payments by Lender shall not be construed as
a waiver by Lender of any Event of Default or any other rights or remedies of
Lender.
 
(b)           Each Borrower agrees that notice received by it at least ten (10)
calendar days before the time of any intended public sale, or the time after
which any private sale or other disposition of Collateral is to be made, shall
be deemed to be reasonable notice of such sale or other disposition.  If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower.  At any sale or
disposition of Collateral or securities pledged, Lender may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by any Borrower which right is hereby waived and
released.  Each Borrower covenants and agrees not to, and not to permit or cause
any of its Subsidiaries to, interfere with or impose any obstacle to Lender’s
exercise of its rights and remedies with respect to the Collateral.  Lender, in
dealing with or disposing of the Collateral or any part thereof, shall not be
required to give priority or preference to any item of Collateral or otherwise
to marshal assets or to take possession or sell any Collateral with judicial
process.
 
 
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9.2           Application of Proceeds
 
In addition to any other rights, options and remedies Lender has under the Loan
Documents, the UCC, at law or in equity, all dividends, interest, rents, issues,
profits, fees, revenues, income and other proceeds collected or received from
collecting, holding, managing, renting, selling, or otherwise disposing of all
or any part of the Collateral or any proceeds thereof upon exercise of its
remedies hereunder shall be applied in the following order of priority:  (i)
first, to the payment of all reasonable out-of-pocket costs and expenses of such
collection, storage, lease, holding, operation, management, sale, disposition or
delivery and of conducting any Borrower’s business and of maintenance, repairs,
replacements, alterations, additions and improvements of or to the Collateral,
and to the payment of all sums which Lender may be required or may elect to pay,
if any, for taxes, assessments, insurance and other charges upon the Collateral
or part thereof, and all other payments that Lender may be required or
authorized to make under any provision of this Agreement (including, without
limitation, in each such case, in-house documentation and diligence fees and
legal expenses, search, audit, recording, professional and filing fees and
expenses and reasonable attorneys’ fees and all expenses, expert witness fees,
liabilities and advances made or incurred in connection therewith, whether
litigation is commenced or not); (ii) second, to the payment of all Obligations
as provided herein, (iii) third, to the satisfaction of Indebtedness secured by
any subordinate security interest of record in the Collateral if written
notification of demand therefore is received before distribution of the proceeds
is completed, provided, that, if requested by Lender, the holder of a
subordinate security interest shall furnish reasonable proof of its interest,
and unless it does so, Lender need not address its claims; and (iv) fourth, to
the payment of any surplus then remaining to Borrowers, unless otherwise
provided by law or directed by a court of competent jurisdiction, provided that
Borrowers shall be liable for any deficiency if such proceeds are insufficient
to satisfy the Obligations or any of the other items referred to in this
Section.
 
9.3           Rights of Lender to Appoint Receiver
 
Without limiting and in addition to any other rights, options and remedies
Lender has under the Loan Documents, the UCC, at law or in equity, upon the
occurrence and continuation of an Event of Default, Lender shall have the right
to apply for and have a receiver appointed by a court of competent jurisdiction
in any action taken by Lender to enforce its rights and remedies in order to
manage, protect and preserve the Collateral and continue the operation of the
business of any Borrower to the extent necessary to collect all revenues and
profits thereof and apply the same to the payment of all expenses and other
charges of such receivership including the compensation of the receiver and to
the payments as aforesaid until a sale or other disposition of such Collateral
shall be finally made and consummated.  Borrowers waive any right to require a
bond to be posted by or on behalf of any such receiver.
 
 
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9.4           Application of Payments Following Default
 
Following the occurrence and during the continuance of an Event of Default,
Lender shall apply any and all payments received by Lender in respect of the
Obligations, and any and all proceeds of Collateral received by Lender, in such
order as Lender may from time to time elect.
 
9.5           Rights and Remedies not Exclusive
 
Lender shall have the right in accordance with the terms hereof, in its
Permitted Discretion to determine which rights, Liens and/or remedies Lender may
at any time pursue, relinquish, subordinate or modify, and such determination
will not in any way modify or affect any of Lender’s rights, Liens or remedies
under any Loan Document, applicable law or equity.  The enumeration of any
rights and remedies in any Loan Document is not intended to be exhaustive, and
all rights and remedies of Lender described in any Loan Document are cumulative
and are not alternative to or exclusive of any other rights or remedies which
Lender otherwise may have.  The partial or complete exercise of any right or
remedy shall not preclude any other further exercise of such or any other right
or remedy.
 
X.           WAIVERS AND JUDICIAL PROCEEDINGS
 
10.1           Waivers
 
Except as expressly provided for herein, Borrowers hereby waive setoff,
counterclaim, demand, presentment, protest, all defenses with respect to any and
all instruments and all notices and demands of any description, and the pleading
of any statute of limitations as a defense to any demand under any Loan
Document.  Borrowers hereby waive any and all defenses and counterclaims it may
have or could interpose in any action or procedure brought by Lender to obtain
an order of court recognizing the assignment of, or Lien of Lender in and to,
any Collateral.  With respect to any action hereunder, Lender conclusively may
rely upon, and shall incur no liability to any Borrower in acting upon, any
request or other communication that Lender reasonably believes to have been
given or made by a person authorized on any Borrower’s behalf, whether or not
such person is listed on the incumbency certificate delivered pursuant to
Section 4.1 hereof.  In each such case, Borrowers hereby waive the right to
dispute Lender’s action based upon such request or other communication, absent
manifest error.
 
10.2           Delay; No Waiver or Defaults
 
Other than any waiver granted by Lender in writing, and except as otherwise
provided in the Loan Documents, no course of action or dealing, renewal, release
or extension of any provisions of any Loan Document, or single or partial
exercise of any such provision, or delay, failure or omission on Lender’s part
in enforcing any such provision shall affect the liability of any Borrower or
Guarantor or operate as a waiver of such provision or affect the liability of
any Borrower or Guarantor or preclude any other or further exercise of such
provision.  No waiver by any party to any Loan Document of any one or more
defaults by any other party in the performance of any of the provisions of any
Loan Document shall operate or be construed as a waiver of any future default,
whether of a like or different nature, and each such waiver shall be limited
solely to the express terms and provisions of such waiver.  Notwithstanding any
other provision of any Loan Document, by completing the Closing under this
Agreement and/or by making Advances, Lender does not waive any breach of any
representation or warranty of under any Loan Document, and all of Lender’s
claims and rights resulting from any such breach or misrepresentation are
specifically reserved.
 
 
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10.3           Jury Waiver
 
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS OR IN ANY WAY
CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THE
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY.
 
10.4           Cooperation in Discovery and Litigation
 
In any litigation, arbitration or other dispute resolution proceeding relating
to any Loan Document, Borrowers waive any and all defenses, objections and
counterclaims they may have or could interpose with respect to (i) any of its
directors, officers, employees or agents being deemed to be employee or managing
agents of any Borrower for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a
deposition, at trial or otherwise), (ii) Lender’s counsel examining any such
individuals as if under cross-examination and using any discovery deposition of
any of them as if it were an evidence deposition, and/or (iii) using all
commercially reasonable efforts to produce in any such dispute resolution
proceeding, at the time and in the manner requested by Lender, all Persons,
documents (whether in tangible, electronic or other form) and/or other things
under its control and relating to the dispute.
 
XI.           EFFECTIVE DATE AND TERMINATION
 
11.1           Effectiveness and Termination
 
(a)           Termination by Lender.  Subject to Lender’s right to terminate and
cease making Advances upon the occurrence and during the continuance of an Event
of Default, this Agreement shall continue in full force and effect until the
full performance and indefeasible payment in cash of all Obligations (other than
indemnity obligations with respect to which no claim has been made), unless
terminated sooner as provided in this Section 11.1.
 
(b)           Termination by Borrower.  Borrowers may terminate this Agreement
at any time on or before upon not less than thirty (30) calendar days’ prior
written notice to Lender and upon full performance and indefeasible payment in
full in cash of all Obligations (other than indemnity obligations with respect
to which no claim has been made) on or prior to such 30th calendar day after
Receipt by Lender of such written notice.  Borrowers may elect to terminate this
Agreement in its entirety only.  No section of this Agreement or type of Loan
available hereunder may be terminated singly.
 
 
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(c)           Effectiveness of Termination.  All of the Obligations (other than
indemnity obligations with respect to which no claim has been made) shall be
immediately due and payable upon the Termination Date.  All undertakings,
agreements, covenants, warranties and representations of Borrowers contained in
the Loan Documents shall survive any such termination and Lender shall retain
its Liens in the Collateral and Lender shall retain all of its rights and
remedies under the Loan Documents notwithstanding such termination until all
Obligations have been irrevocably discharged or paid, in full, in immediately
available funds, including, without limitation, all Obligations under Section
3.4 and the terms of any fee letter resulting from such
termination.  Notwithstanding the foregoing or the payment in full of the
Obligations, Lender shall not be required to terminate its Liens in the
Collateral unless, with respect to any loss or damage Lender may incur as a
result of dishonored checks or other items of payment received by Lender from
Borrowers or any Account Debtor and applied to the Obligations, Lender shall, at
its option, (i) have received a written agreement satisfactory to Lender,
executed by Borrowers and by any Person whose loans or other advances to
Borrowers are used in whole or in part to satisfy the Obligations, indemnifying
Lender from any such loss or damage or (ii) have retained cash Collateral or
other Collateral for such period of time as Lender, in its discretion, may deem
necessary to protect Lender from any such loss or damage.
 
11.2           Survival
 
All obligations, covenants, agreements, representations, warranties, waivers and
indemnities made by Borrowers in any Loan Document shall survive the execution
and delivery of the Loan Documents, the Closing, the making of the Advances and
any termination of this Agreement until all Obligations (other than indemnity
obligations with respect to which no claim has been made) are fully performed
and indefeasibly paid in full in cash.  Notwithstanding the foregoing sentence
of this Section 11.2, the obligations and provisions of Article III and
Sections 10.1, 13.1, 13.3, 13.4, 13.7 and 13.12 shall survive termination of the
Loan Documents and any payment, in full or in part, of the then-outstanding
Obligations.
 
XII.           ASSIGNMENTS AND PARTICIPATIONS
 
12.1           Assignments
 
Lender may at any time assign the Lender’s rights and obligations hereunder and
under all other Loan Documents to one or more Eligible Assignees.  Upon Receipt
of notice of such assignment, Borrowers shall treat the assignee as the Lender
for all purposes hereunder and under the other Loan Documents.  Each Eligible
Assignee shall have all of the rights and benefits with respect to the
Obligations, Collateral and/or Loan Documents held by it as fully as if the
original holder thereof; provided that, Borrowers shall not be obligated to pay
under this Agreement to any Eligible Assignee any sum in excess of the sum which
Borrowers would have been obligated to pay to Lender had such assignment not
been effected.  Notwithstanding any other provision of a Loan Document, Lender
may disclose to any Eligible Assignee all information, reports, financial
statements, certificates and documents obtained under any provision of any Loan
Document.  Borrowers may not offset any amounts owing to Borrowers by an
Eligible Assignee from any amounts owed by Borrowers to such Eligible Assignee
pursuant to this Agreement.
 
 
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12.2           Participations
 
Lender may at any time, without the consent of, or notice to, Borrowers, sell to
one or more Persons participating interests in its Loan, commitments or other
interests hereunder (any such Person, a “Participant”).  Notwithstanding any
other provision of a Loan Document, Lender may disclose to any Participant all
information, reports, financial statements, certificates and documents obtained
under any provision of any Loan Document.  Subject to Section 12.3, in the event
of a sale by Lender of a participating interest to a Participant, (i) Borrowers
shall continue to deal solely and directly with Lender in connection with
Lender’s rights and obligations hereunder, and (ii) all amounts payable by
Borrowers shall be determined as if Lender had not sold such participation and
shall be paid directly to Lender.  Borrowers agree that if amounts outstanding
under this Agreement are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement.
 
12.3           Defaulting Participants
 
Lender may from time to time notify Borrowers of the participations sold by
Lender hereunder and the share of each Participant’s interest in the Loan (such
notification, as it may be amended from time to time, is referred to herein as a
“Participation Notice”).  Following Receipt by Borrowers of a Participation
Notice, (i) it shall be the responsibility of the Participant identified in the
Participation Notice to fund each Advance in an amount equal to such
Participant’s share of each Advance as set forth in the Participation Notice,
(ii) Borrowers will look solely to Participant identified in the Participation
Notice for the funding of such portion of each Advance as is equal to the
Participant’s share of such Advance as set forth in the Participation Notice,
and (iii) notwithstanding any other provision of this Agreement or any other
Loan Document, Lender shall not be obligated to fund any portion of an Advance
which is the responsibility of a Participant as set forth in a Participation
Notice.  Following Receipt by Borrowers of a Participation Notice, any
Participant which shall fail to make any Advance or other credit accommodation,
disbursement, settlement or reimbursement required pursuant to the terms of any
Loan Document, for so long as such failure shall remain in existence and
uncured, shall be deemed to be a “Defaulting Participant.”  After a Participant
becomes a Defaulting Participant, and the circumstances causing such status
shall not have been cured or waived, each of the Borrowers and Lender may, at
their respective option, notify such Defaulting Participant of such Person’s
intention to obtain a replacement Participant (“Replacement Participant”) for
the Defaulting Participant, which Replacement Participant shall be an Eligible
Assignee.  In the event Borrowers or Lender, as applicable, obtain a Replacement
Participant, the Borrowers shall look to the Replacement Participant rather than
the Defaulting Participant for the funding of future Advances in an amount equal
to the Defaulting Participant’s share of each Advance set forth in the
Participation Notice.  Any Replacement Participant shall not be responsible for,
and such Replacement Participant’s interest in the Loan shall not be subject to,
any liabilities of the Defaulting Participant to Borrowers accruing prior to the
date of the transfer of the participation interest.  Borrowers may not offset
any amounts owing to Borrowers by the Defaulting Participant from any amounts
owed by Borrowers to Lender pursuant to this Agreement.
 
 
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12.4           Definitions
 
For purposes of this Article XII, the following terms shall have the following
meanings:
 
“Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c)
an Approved Fund, and (d) any other Person (other than a natural person)
approved by Lender; provided, however, that notwithstanding the foregoing,
“Eligible Assignee” shall not include Borrower or any of Borrower’s Affiliates.
 
“Approved Fund” means any (a) investment company, finance company, fund, trust,
securitization vehicle or conduit that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of business or (b) any Person (other
than a natural person) which temporarily warehouses loans for any Lender or any
entity described in the preceding clause (a) and that, with respect to each of
the preceding clauses (a) and (b), is administered or managed by (i)  Lender,
(ii) an Affiliate of Lender, or (iii) a Person (other than a natural person) or
an Affiliate of a Person (other than a natural person) that administers or
manages Lender.
 
XIII.           MISCELLANEOUS
 
13.1           Governing Law; Jurisdiction; Service of Process; Venue
 
The Loan Documents shall be governed by and construed in accordance with the
internal substantive laws of the State of New York without giving effect to its
choice of law provisions.  Any judicial proceeding against Borrower with respect
to the Obligations, any Loan Documents or any related agreement may be brought
in any federal or state court of competent jurisdiction located in the State of
New York.  By execution and delivery of each Loan Document to which it is a
party, each of Borrower and Lender (i) accepts the non-exclusive jurisdiction of
the aforesaid courts and irrevocably agrees to be bound by any judgment rendered
thereby, (ii) waives personal service of process, (iii) agrees that service of
process upon it may be made by certified or registered mail, return receipt
requested, pursuant to Section 13.5, hereof, (iv) waives any objection to
jurisdiction and venue of any action instituted hereunder and agrees not to
assert any defense based on lack of jurisdiction, venue or convenience, and (v)
agrees that this loan was made in New York, that Lender has accepted in New York
the Loan Documents executed by Borrower and has disbursed Advances under the
Loan Documents in New York.  Nothing shall affect the right of Lender to serve
process in any manner permitted by law or shall limit the right of Lender to
bring proceedings against Borrower in the courts of any other jurisdiction
having jurisdiction.  Any judicial proceedings against Lender involving,
directly or indirectly, the Obligations, any Loan Document or any related
agreement shall be brought only in a federal or state court located in the State
of New York.  All parties acknowledge that they participated in the negotiation
and drafting of this Agreement and that, accordingly, no party shall move or
petition a court construing this Agreement to construe it more stringently
against one party than against any other.
 
 
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13.2           Successors and Assigns; Participants; New Lenders
 
The Loan Documents shall inure to the benefit of Lender, Transferees and all
future holders of any Revolving Loan, the Term Loan, the Obligations and/or any
of the Collateral, and each of their respective successors and assigns.  Each
Loan Document shall be binding upon the Persons other than Lender that are
parties thereto and their respective successors and assigns, and no such Person
may assign, delegate or transfer any Loan Document or any of its rights or
obligations thereunder without the prior written consent of Lender.  No rights
are intended to be created under any Loan Document for the benefit of any Person
who is not a party to such Loan Document.  Nothing contained in any Loan
Document shall be construed as a delegation to Lender of any other Person’s duty
of performance.  BORROWERS ACKNOWLEDGE AND AGREE THAT LENDER AT ANY TIME AND
FROM TIME TO TIME MAY SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR
TRANSFER ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER ANY LOAN DOCUMENT,
THE OBLIGATIONS AND/OR THE COLLATERAL TO OTHER PERSONS (EACH SUCH TRANSFEREE,
ASSIGNEE OR PURCHASER, A “TRANSFEREE”).
 
13.3           Revival of Obligations
 
To the extent that any payment made or received with respect to the Obligations
is subsequently invalidated, determined to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver,
custodian or any other Person under any Debtor Relief Law, common law or
equitable cause or any other law, then the Obligations intended to be satisfied
by such payment (whether or not previously terminated) shall be revived and
shall continue as if such payment had not been received by Lender.  Any payments
received with respect to such revived Obligations shall be credited and applied
in such manner and order, as Lender shall decide in its Permitted Discretion.
 
13.4           Indemnity
 
Borrower shall indemnify Lender, its Affiliates and its and their respective
managers, members, officers, employee, Affiliates, agents, representatives,
successors, assigns, accountants and attorneys (collectively, the “Indemnified
Persons”) from and against any and all liability, obligations, losses, damages,
penalties, actions, judgments, suits, reasonable out-of-pocket costs, expenses
and disbursements of any kind of nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel, expert witness fees,
and reasonable in-house documentation and diligence fees and reasonable legal
expenses) which may be imposed on, incurred by or asserted against any
Indemnified Person with respect to or arising out of, or in any way relating to
any litigation, proceeding or investigation instituted or conducted by any
Person with respect to any aspect of, or any transaction contemplated by or
referred to in, or any matter related to, any Loan Document or any agreement,
document or transaction contemplated thereby, whether or not such Indemnified
Person is a party thereto, except to the extent that any of the foregoing (i)
arises out of the bad faith, gross negligence or willful misconduct of any
Indemnified Person as determined by a final, nonappealable judgment by a court
of competent jurisdiction or (ii) arises out of a dispute between or among any
Indemnified Persons.  If any Indemnified Person uses in-house counsel for any
purpose for which any Borrower is responsible to pay or indemnify, each Borrower
expressly agrees that its indemnification obligations include reasonable charges
for such work commensurate with the fees that would otherwise be charged by
outside legal counsel selected by Indemnified Person in its Permitted Discretion
for the work performed.  Lender agrees to give Borrowers reasonable notice of
any event of which Lender becomes aware for which indemnification may be
required under this Section 13.4, and Lender may elect (but is not obligated) to
direct the defense thereof, provided that the selection of counsel shall be
subject to Borrowers’ consent which consent shall not be unreasonably withheld
or delayed.  Any Indemnified Person may in its reasonable discretion, take such
actions, as it deems necessary and appropriate to investigate, defend or settle
any event or take other remedial or corrective actions with respect thereto as
may be necessary for the protection of such Indemnified Person or the
Collateral.  Notwithstanding the foregoing, if any insurer agrees to undertake
the defense of an event (an “Insured Event”), Lender agrees not to exercise its
right to select counsel to defend the event if that would cause any Borrowers’
insurer to deny coverage; provided, however, that Lender reserves the right to
retain counsel to represent any Indemnified Person with respect to an Insured
Event at its sole cost and expense.  To the extent that Lender obtains recovery
from a third party other than an Indemnified Person of any of the amounts that
any Borrower has paid to Lender pursuant to the indemnity set forth in this
Section 13.4, then Lender shall promptly pay to such Borrower the amount of such
recovery.
 
 
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13.5           Notice
 
Any notice or request under any Loan Document shall be given to any party to
this Agreement at such party’s address set forth beneath its signature on the
signature page to this Agreement, or at such other address as such party may
hereafter specify in a notice given in the manner required under this
Section 13.5.  Any notice or request hereunder shall be given only by, and shall
be deemed to have been received upon (each, a “Receipt”):  (i) registered or
certified mail, return receipt requested, on the date on which such received as
indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier, or
(iii) facsimile or electronic transmission, in each case upon telephone or
further electronic communication from the recipient acknowledging receipt
(whether automatic or manual from recipient), as applicable.  Any notice or
request under any Loan Document or otherwise pursuant to any applicable law
which is given to one Borrower will be deemed to be notice (or, if applicable, a
request) to each Borrower.
 
13.6           Severability; Captions; Counterparts; Facsimile or other
Electronic Signatures
 
If any provision of any Loan Document is adjudicated to be invalid under
applicable laws or regulations, such provision shall be inapplicable to the
extent of such invalidity without affecting the validity or enforceability of
the remainder of the Loan Documents which shall be given effect so far as
possible.  The captions in the Loan Documents are intended for convenience and
reference only and shall not affect the meaning or interpretation of the Loan
Documents.  The Loan Documents may be executed in one or more counterparts
(which taken together, as applicable, shall constitute one and the same
instrument) and by facsimile or other electronic transmission, which facsimile
or other electronic signatures shall be considered original executed
counterparts.  Each party to this Agreement agrees that it will be bound by its
own facsimile or other electronic signature and that it accepts the facsimile or
other electronic signature of each other party.
 
 
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13.7           Expenses
 
Borrowers shall pay, whether or not the Closing occurs, all usual and customary
costs and expenses incurred by Lender and/or its Affiliates, including, without
limitation, documentation and diligence fees and expenses, all search, audit,
appraisal, recording reasonable professional and filing fees and expenses and
all other actual out-of-pocket charges and expenses (including, without
limitation, UCC and judgment and tax lien searches and UCC filings and fees for
post-Closing UCC and judgment and tax lien searches and audit expenses), and
reasonable attorneys’ fees and expenses, incurred (i) in any effort to enforce,
protect or collect payment of any Obligation or to enforce any Loan Document or
any related agreement, document or instruments (ii) in connection with entering
into, negotiating, preparing, reviewing and executing the Loan Documents and/or
any related agreements, documents or instruments, (iii) arising in any way out
of administration of the Obligations, (iv) in connection with instituting,
maintaining, preserving, enforcing and/or foreclosing on Lender’s Liens in any
of the Collateral or securities pledged under the Loan Documents, whether
through judicial proceedings or otherwise, (v) in defending or prosecuting any
actions, claims or proceedings arising out of or relating to Lender’s
transactions with Borrower, (vi) in seeking, obtaining or receiving any advice
with respect to its rights and obligations under any Loan Document and any
related agreement, document or instrument, (vii) in connection with any
modification, restatement, supplement, amendment, waiver or extension of any
Loan Document and/or any related agreement, document or instrument and/or (viii)
in connection with all actions, visits, audits and inspections undertaken by
Lender or its Affiliates pursuant to the Loan Documents, subject to the
provisions of Section 6.7 hereof.  In addition, Borrowers shall pay Lender a
wire fee of $25.00 with respect to each domestic wire transfer of funds by
Lender to or for the benefit of Borrowers.  All of the foregoing shall be
charged to Borrowers’ account and shall be part of the Obligations.  If Lender
or any of its Affiliates uses in-house counsel for any purpose under any Loan
Document for which Borrowers are responsible to pay or indemnify, Borrowers
expressly agree that their Obligations include reasonable charges for such work
commensurate with the fees that would otherwise be charged by outside legal
counsel selected by Lender or such Affiliate in its Permitted Discretion for the
work performed.  Without limiting the foregoing, Borrowers shall pay all taxes
(other than taxes based upon or measured by Lender’s income or revenues or any
personal property tax), if any, in connection with the transactions contemplated
by this Agreement and the Loan Documents and the filing and/or recording of any
documents and/or financing statements.
 
13.8           Entire Agreement
 
This Agreement and the other Loan Documents to which Borrowers are parties
constitute the entire agreement between Borrowers and Lender with respect to the
subject matter hereof and thereof, and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof.  Any
promises, representations, warranties or guarantees not herein contained and
hereafter made shall have no force and effect unless in writing signed by
Borrowers and Lender, provided, however, additional covenants, representations,
warranties and guarantees will be enforceable if executed by the party against
whom enforcement is sought.  No provision of this Agreement may be changed,
modified, amended, restated, waived, supplemented, discharged, canceled or
terminated orally or by any course of dealing or in any other manner other than
by an agreement in writing signed by Lender and Borrowers.  Each party hereto
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement and is not relying upon oral
representations or statements inconsistent with the terms and provisions hereof.
 
 
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13.9           Lender Approvals
 
Unless expressly provided herein to the contrary, any approval, consent, waiver
or satisfaction of Lender with respect to any matter that is subject of any Loan
Document may be granted or withheld by Lender in its sole and absolute
discretion.
 
13.10           Confidentiality and Publicity
 
Except as may be required by the securities laws or listing requirements
applicable to a public company, no Party shall disclose, publicize or advertise
in any manner this Agreement or the discussions and/or negotiations giving rise
to this Agreement without the prior written consent of the other Parties,
including consent as to the timing and content of such disclosure. Except as may
be required by securities laws or listing requirements applicable to a public
company, no Party shall use the name of the other Parties, or any affiliate of
the other Parties, in any promotion, publication or advertisement, without the
prior written consent of the other Parties, except that Lender may (x) disclose
a general description of transactions arising under the Loan Documents for
advertising, marketing or other similar purposes to the extent such information
is publicly available or made publicly available by Borrowers and, if not
publicly available, with Borrowers’ prior approval and (y) use any Borrowers’ or
any Guarantor’s name, logo or other indicia germane to such party in connection
with such advertising, marketing or other similar purposes.
 
13.11           USA Patriot Act Notification
 
Lender hereby notifies each Borrower that pursuant to the requirements of the
USA PATRIOT Act, it is required to obtain, verify and record certain information
and documentation that identifies any Borrower, which information includes the
name and address of any Borrower and such other information that will allow
Lender to identify any Borrower in accordance with the USA PATRIOT Act.
 
13.12           Release of Lender
 
Notwithstanding any other provision of any Loan Document, each Borrower
voluntarily, knowingly, unconditionally and irrevocably, with specific and
express intent, for and on behalf of itself, its managers, members, directors,
officers, employees, stockholders, Affiliates, agents, representatives,
accountants, attorneys, successors and assigns and their respective Affiliates
(collectively, the “Releasing Parties”), (i) hereby fully and completely
releases and forever discharges the Indemnified Persons and any other Person or
insurer which may be responsible or liable for the acts or omissions of any of
the Indemnified Persons, or who may be liable for the injury or damage resulting
therefrom (collectively, with the Indemnified Persons, the “Released Parties”),
of and from any and all actions, causes of action, damages, claims, obligations,
liabilities, costs, expenses and demands of any kind whatsoever, at law or in
equity, matured or unmatured, vested or contingent, that any of the Releasing
Parties has against any of the Released Parties as of the date of the Closing,
except in the event such liability is attributable to the fraud, bad faith,
gross negligence or willful misconduct of a Released Party as determined by a
final, nonappealable judgment by a court of competent jurisdiction, and (ii)
 
 
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by acceptance of each Advance hereunder fully and completely releases and
forever discharges the Released Parties, of and from any and all actions, causes
of action, damages, claims, obligations, liabilities, costs, expenses and
demands of any kind whatsoever, at law or in equity, matured or unmatured,
vested or contingent, that any of the Releasing Parties has against any of the
Released Parties as of the date of each such Advance, except in the event such
liability is attributable to the fraud, bad faith, gross negligence or willful
misconduct of a Released Party as determined by a final, nonappealable judgment
by a court of competent jurisdiction. Each Borrower acknowledges that the
foregoing release is a material inducement to Lender’s decision to extend to
Borrowers the financial accommodations hereunder and will be relied upon by
Lender in making the Advances.
 
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
 
 
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IN WITNESS WHEREOF, each of the parties has duly executed this Credit and
Security Agreement as of the date first written above.
 
BORROWERS:
TRANS-LUX CORPORATION, a Delaware corporation
TRANS-LUX DISPLAY CORPORATION, a Delaware corporation
TRANS-LUX MIDWEST CORPORATION, an Iowa corporation
TRANS-LUX ENERGY CORPORATION, a Connecticut corporation
 
 
 
By:
/s/ Robert J. Conologue    
Name:  Robert J. Conologue
Title: Senior Vice President and Chief Financial Officer
 
As Senior Vice President and Chief Financial Officer of each of the above
entities and, in such capacity, intending by this signature to legally bind each
of the above entities
 
 
Address for Notice:
445 Park Ave, Suite 2001
New York NY 10022
Attention:  Robert J. Conologue
Telephone: 212-897-2228
Fax:  212-308-0697
Email: rconologue@trans-lux.com

 
 
Signature Page to Credit Agreement
 
 

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LENDER:
SCM SPECIALTY FINANCE OPPORTUNITIES FUND, L.P.,
a Delaware limited partnership
 
 
 
By:
/s/ Bradley D. Asness    
Name:
Bradley D. Asness    
Title:
Authorized Signatory        
Address for Notice:
SCM Specialty Finance Opportunities Fund, L.P.
c/o CNH Partners
2 Greenwich Plaza, 1st Floor
Greenwich, CT 06830
Attention: Tim Peters
Telephone:  (203) 742-3051
Fax:  (203) 742-3072
Email:  tpeters@cnhfinance.com
 
With copy to (delivery of copy will not constitute notice):
 
Duane Morris LLP
190 S. LaSalle Street, Suite 3700
Chicago, IL  60603
Attention: Michael A. Witt, Esq.
Telephone:  (312) 499-6716
Fax:  (312) 277-9519
Email: MAWitt@duanemorris.com

 
 
Signature Page to Credit Agreement
 
 

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ANNEX I
Financial and Loan Covenants
     
EXHIBITS
     
Exhibit A
-
Borrowing Certificate
     
Exhibit B
-
Compliance Certificate
     
SCHEDULES
     
Schedule 2.1
-
Term Loan Amortization Schedule
     
Schedule 2.4
-
Borrower’s Account for Funding Wires
     
Schedule 2.9
-
Collateral
     
Schedule 5.1
-
Organization
     
Schedule 5.3
-
Capitalization, Organization Chart (including all subsidiaries,
authorized/issued capitalization, owners, directors, officers and managers) and
Joint Ventures
     
Schedule 5.4
-
Real Property Owned or Leased
     
Schedule 5.6
-
Litigation
     
Schedule 5.8
-
Environmental Exceptions
     
Schedule 5.12
-
Intellectual Property
     
Schedule 5.17
-
Insurance
     
Schedule 5.18
-
Names Under Which Business Is Transacted; Business and Collateral Locations
     
Schedule 5.19
-
Material Contracts
     
Schedule 7.2
-
Existing Contingent Obligations
     
Schedule 7.3
-
Existing Liens
     
Schedule 7.13
-
Excluded Deposit Accounts

 
 
 

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ANNEX I
 
FINANCIAL AND LOAN COVENANTS
 
1)           Fixed Charge Coverage Ratio (EBITDA/Fixed Charges)
 
Commencing with August 31, 2016 and on the last Business Day at the end of each
Test Period thereafter, the Fixed Charge Coverage Ratio shall not be less than
1.1 to 1.0.
 
2)           Loan Turnover Rate
 
Commencing with August 31, 2016, the amount calculated by dividing (A) 365 by
(B) the result achieved by dividing (i) the product of the aggregate of all
collections received in the Lockbox Accounts during each Test Period with
respect to all of Borrowers’ Accounts, multiplied by 4, by (ii) the outstanding
principal balance of the Revolving Facility as of the last Business Day of such
Test Period, shall not be greater than the applicable amount set forth in the
table below for such period.
 
Loan Turnover Rate as of:
Calendar month ending July 31 for each fiscal year
35
Calendar month ending August 31 for each fiscal year
35
Calendar month ending September 30 for each fiscal year
35
Calendar month ending October 31 for each fiscal year
35
Calendar month ending November 30 for each fiscal year
35
Calendar month ending December 31 for each fiscal year
35
Calendar month ending January 31 for each fiscal year
45
Calendar month ending February 28 or February 29 (as applicable) for each fiscal
year
45
Calendar month ending March 31 for each fiscal year
45
Calendar month ending April 30 for each fiscal year
45
Calendar month ending May 31 for each fiscal year
45
Calendar month ending June 30 for each fiscal year
45

 
 
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For purposes of the covenants set forth in this Annex I, the terms listed below
shall have the following meanings:
 
“Capital Expenditures” shall mean, for any period, all direct or indirect (by
way of acquisition of securities of a Person or the expenditure of cash or the
transfer of property or the incurrence of Indebtedness) expenditures in respect
of the purchase or other acquisition of fixed or capital assets determined in
conformity with GAAP.
 
“Distributions” shall mean (a) dividends or other distributions on capital stock
or other equity interest of any Borrower (b) redemption, repurchase or
acquisition of such stock or equity interests or of warrants, rights or other
options to purchase such stock or other equity interests, and (c) loans made to
any shareholders, officers, directors or Affiliates of the Borrower.
 
“EBITDA” shall mean, for any Test Period, the sum, without duplication, of the
following, on a consolidated basis:  Net Income, plus, (a) Interest Expense, (b)
taxes on income, whether paid, payable or accrued, (c) depreciation expense, (d)
amortization expense, (e) all other non-cash, non-recurring charges and
expenses, excluding accruals for cash expenses made in the ordinary course of
business, and (f) loss from any sale of assets, other than sales in the ordinary
course of business, all of the foregoing determined in accordance with GAAP,
minus (a) gains from any sale of assets, other than sales in the ordinary course
of business and (b) other extraordinary or non-recurring gains.
 
“Fixed Charge Coverage Ratio” shall mean the ratio of (a) EBITDA for the Test
Period, to (b) Fixed Charges for the Test Period.
 
“Fixed Charges” shall mean the sum of the following:  (a) all Interest Expenses,
all principal payments made on Indebtedness, all payments with respect to
Capitalized Lease Obligations (to the extent not otherwise included), and all
sinking fund payments made by Borrower, plus (b) all Capital Expenditures by
Borrowers, plus (c) all Distributions to equity holders, plus (d) all payments
described in Section 7.5(ii); provided, however, any Distributions made solely
as a result of the Current Issuance or Future Issuances shall be excluded as a
Fixed Charge during the eighteen (18) month period immediately following the
date of such Distribution.
 
 
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“Interest Expense” shall mean, for any Test Period, total interest expense
(including interest expense attributable to Capital Leases in accordance with
GAAP) and fees with respect to all outstanding Indebtedness including
capitalized interest but excluding commissions, discounts and other fees owed
with respect to letters of credit and bankers’ acceptance financing and net
costs under Interest Rate Agreements.
 
“Net Income” shall mean, the net income (or loss) determined in conformity with
GAAP, provided that there shall be excluded (i) the income (or loss) of any
Person in which any other Person (other than any Borrower) has a joint interest,
except to the extent of the amount of dividends or other Distributions actually
paid to a Borrower by such Person, (ii) the income (or loss) of any Person
accrued prior to the date it becomes a Borrower or is merged into or
consolidated with a Borrower or that Person’s assets are acquired by a Borrower,
(iii) the income of any Subsidiary of a Borrower to the extent that the
declaration or payment of dividends or similar Distributions of that income by
that Subsidiary is not at the time permitted by operation of the terms of the
Person’s organizational charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that Subsidiary,
(iv) compensation expense resulting from the issuance of capital stock, stock
options or stock appreciation rights issued to former or current employees,
including officers, of a Borrower, or the exercise of such options or rights, in
each case to the extent the obligation (if any) associated therewith is not
expected to be settled by the payment of cash by a Borrower or any Affiliate
thereof, and (v) compensation expense resulting from the repurchase of capital
stock, options and rights described in clause (iv) of this definition of Net
Income.
 
“Test Period” shall mean (i) with respect to the Fixed Charge Coverage Ratio,
(a) the three (3) calendar months ending August 31, 2016 (taken as one
accounting period), (b) the four (4) calendar months ending September 30, 2016
(taken as one accounting period), (c) the five (5) calendar months ending
October 31, 2016 (taken as one accounting period), (d) the six (6) calendar
months ending November 30, 2016 (taken as one accounting period), (e) the seven
(7) calendar months ending December 31, 2016 (taken as one accounting period),
(f) the eight (8) calendar months ending January 31, 2017 (taken as one
accounting period), (g) the nine (9) calendar months ending February 28, 2017
(taken as one accounting period), (h) the ten (10) calendar months ending March
31, 2017 (taken as one accounting period), (i) the eleven (11) calendar months
ending April 30, 2017 (taken as one accounting period), (j) the twelve (12)
calendar months ending May 31, 2017 (taken as one accounting period) and (k) the
twelve (12) most recent calendar months then ended for each calendar month
thereafter (taken as one accounting period), and (ii) with respect to the Loan
Turnover Rate, the three (3) consecutive month period then ended for each
calendar month (taken as one accounting period), or such other period as
specified in the Agreement or any Annex thereto.
 
 
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EXHIBIT A
 
BORROWING CERTIFICATE
Dated as of [__________, 20__]
 
[BORROWER], a [_______________] corporation (the “Borrower”), by the undersigned
duly authorized officer, hereby certifies to Lender in accordance with the
Credit and Security Agreement dated as of July 6, 2016, between Borrower and SCM
SPECIALTY FINANCE OPPORTUNITIES FUND, L.P., a Delaware limited partnership
(“Lender”) (as amended, supplemented or modified from time to time, the “Credit
Agreement;” all capitalized terms not defined herein have the meanings given
them in the Credit Agreement) and other Loan Documents that:
 
A.           Borrowing Base and Compliance
 
Attached as Schedule 1 is a Borrowing Base Certificate complying in all respects
with the Credit Agreement and confirming that, after giving effect to the
requested Advance, the principal amount outstanding under the Revolving Facility
will not exceed the lesser of (i) Availability or (ii) the Revolving Loan
Commitment Amount.  The amounts, calculations and representations set forth
below and on Schedule 1 are true and correct in all respects and were determined
in accordance with the Credit Agreement and GAAP.  All of the Accounts referred
to (other than those entered as ineligible on Schedule 1) are Eligible
Receivables.  All of the Inventory referred to (other than those entered as
ineligible on Schedule 1) is Eligible Inventory.  Attached are reports with
detailed aging and categorizing of Borrower’s accounts receivable and payables
and Inventory and supporting documentation with respect to the amounts,
calculation and representations set forth on Schedule 1, all as reasonably
requested by Lender pursuant to the Credit Agreement.
 
B.           Borrowing Notice (to be completed and effective only if Borrower is
requesting an Advance)
 
The undersigned hereby irrevocably requests from Lender an Advance under the
Revolving Facility pursuant to the Credit Agreement in the aggregate principal
amount of $_____________ (“Requested Advance”) to be made on
_____________________ (the “Borrowing Date”), which day is a Business Day.
 
[For initial Advance Only]  The undersigned requests that the Advance be
disbursed as follows:
 
1.           To Lender:  $______________
 
2.           To Lender’s Legal Counsel:  $___________________
 
3.           To [name of creditor/IRS]:  $ ___________________
 
4.           To Borrower:  $ _________________________
 
 
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C.           General Certifications
 
The undersigned officer hereby certifies that, both before and after giving
effect to the request above (a) each of the conditions precedent set forth in
Section 4.1 of the Credit Agreement have been satisfied as of the date hereof
and will be satisfied as of the Borrowing Date (if applicable), (b) all of the
representations and warranties contained in the Credit Agreement and the other
Loan Documents are true, correct and complete as of the date hereof and on the
Borrowing Date (if applicable), (c) no Default or Event of Default has occurred
and is continuing on the date hereof or will exist after giving effect to the
advance requested hereby, and (d) Borrower has paid all payroll taxes through
the payroll period ended ______________.
 
This Borrowing Certificate may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which taken together shall
constitute but one and the same document.  A signature hereto sent or delivered
by facsimile or other electronic transmission shall be as legally binding and
enforceable as a signed original for all purposes.
 
IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed
as of the date first written above.
 

   
[BORROWER]
     
Prepared by:
 
______________________________________________
 
Approved by:
 
______________________________________________
Name:
___________________________________________  
Name:
___________________________________________
Title:
___________________________________________  
Title:
___________________________________________

 
 
E-A-2

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SCHEDULE 1 TO BORROWING CERTIFICATE
UNDER
CREDIT AND SECURITY AGREEMENT FOR
[BORROWER]
 
As of [date]
 
Accounts Receivable Aging (by invoice date)
           
0-30 Days
        $ -  
31-60 Days
        $ -  
61-90 Days
        $ -  
91-120 Days
        $ -  
121+ Days
        $ -  
Total Accounts Receivable
        $ -  
Aged invoice
  $ -          
Credit balance
  $ -          
Contras
  $ -          
Crossage
  $ -          
Intercompany
  $ -          
Foreign
  $ -          
Dilution
  $ -          
Other Reserve
  $ -          
Other Reserve
  $ -          
Total Ineligible
          $ -  
Eligible Accounts Receivable
          $ -  
Equity Raise Reserve
  $ -          
Other Reserve
  $ -          
Total Accounts Receivable after Reserves
          $ -  
Advance Rate
            85 %
Total Accounts Receivable Availability
          $ -                    

 
 
E-A-3

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Total Inventory
        $ -   Reserve   $ -           Reserve   $ -          
Total Ineligible
          $ -  
Total Eligible Inventory
          $ -  
Advance Rate
            50 %
Total Eligible Inventory Availability
          $ -                    
Total Inventory (OLV)
          $ -      
Reserve
    $ -      
Reserve
    $ -  
Total Ineligible
          $ -  
Total Inventory (OLV)
          $ -  
Advance Rate
            85 %
Total Inventory (OLV) Availability
          $ -                    
Total Inventory Availability
          $ -                    
Total A/R and Inventory Availability
          $ -  

 
 
E-A-4

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EXHIBIT B
 
COMPLIANCE CERTIFICATE
Dated as of [__________, 20___]
 
This Compliance Certificate is delivered by [BORROWER] (the “Borrower”), in
accordance with the Credit and Security Agreement dated as of July 12, 2016,
between Borrower and SCM SPECIALTY FINANCE OPPORTUNITIES FUND, L.P., a Delaware
limited partnership (“Lender”) (as amended, supplemented or modified from time
to time, the “Credit Agreement”).  All capitalized terms not defined herein have
the meanings given them in the Credit Agreement and other Loan Documents.
 
The undersigned hereby certifies that:
 
(a)           The financial statements delivered with this certificate in
accordance with Section 6.1 of the Credit Agreement fairly present in all
material respects the results of operations and financial condition of Borrower
as of the dates and the accounting periods covered by such financial statements;
 
(b)           I have reviewed the terms of the Credit Agreement and have made,
or caused to be made under my supervision, a review in reasonable detail of the
transactions and financial condition of Borrower during the accounting period
covered by such financial statements;
 
(c)           Such review has not disclosed the existence during or at the end
of such accounting period, and I have no knowledge of the existence as of the
date hereof, of any condition or event that constitutes a Default or an Event of
Default, except as set forth in Schedule 1 attached hereto, which includes a
description of the nature and period of existence of such Default or an Event of
Default and what action Borrower has taken, is undertaking and proposes to take
with respect thereto;
 
(d)           Except as noted on Schedule 2 attached hereto, the undersigned has
no knowledge of any federal or state tax liens having been filed against the
Borrower or any Collateral;
 
(e)           Except as noted on Schedule 3 attached hereto, the undersigned has
no knowledge of any failure of the Borrower to make required payments of
withholding or other tax obligations of the Borrower during the accounting
period to which the attached statements pertain or any subsequent period.
 
(f)           Except as described in the Credit Agreement or on Schedule 4
attached hereto, the undersigned has no knowledge of any current, pending or
threatened:
 
(i)           litigation against the Borrower;
 
(ii)           inquiries, investigations or proceedings concerning the business
affairs, practices, licensing or reimbursement entitlements of Borrower;
 
(iii)           default by Borrower under any material contract to which either
of them is a party, including, without limitation, any leases.
 
 
E-B-1

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(g)           Borrower is in compliance with the financial and loan covenants
contained in Annex I of the Credit Agreement, as demonstrated by the calculation
of such covenants below, except as set forth below; in determining such
compliance, the following calculations have been made:  [See attached
worksheets].  Such calculations and the certifications contained therein are
true, correct and complete.
 
Certified to as of [date] by:
 
Chief Financial Officer of [Borrower]
 
 
E-B-2

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Schedules to Compliance Certificate
 
Schedule 1 – Non-Compliance with Covenants
 
Schedule 2 – Federal or State Tax Liens
 
Schedule 3 – Unpaid Tax or Withholding Obligations
 
Schedule 4 – Pending Litigation, Inquiries or Investigations; Defaults under
Material Contracts
 
Worksheet(s) for Financial or Other Covenant Calculations
 
 
E-B-3

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Loan Turnover Rate Worksheet (Attachment to Compliance Certificate)
 
1.  Total collections received in the Lockbox Accounts during the Test Period:
$___________
   
2.  Line 1 multiplied by 4:
$___________
   
3.  Outstanding principal balance of Revolving Facility as of the last Business
Day of such Test Period:
$___________
   
4.  Line 2 divided by Line 3:
$___________
   
5.  365 divided by Line 4:
________days
   
6.  Maximum Loan Turnover Rate:
[35/45] days
   
7.  In compliance:
-YES   -   NO

 
 
E-B-4

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Fixed Charge Coverage Ratio Worksheet (Attachment to Compliance Certificate)
 
1.  EBITDA for the Test Period most recently ended:
$___________
   
2.  Fixed Charges for the Test Period most recently ended:
$___________
   
3.  Ratio of Line 1 to Line 2:
____________
   
4.  Minimum Fixed Charge Coverage Ratio:
1.1 to 1.0
   
5.  In compliance:
YES   -   NO

 
 
E-B-5

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EBITDA Worksheet (Attachment to Compliance Certificate)
 
1.  Net Income as of the end of the Test Period:
$___________
 
2.             (a) Interest Expense  $______________
 
(b) taxes on income, whether paid, payable or accrued $____________
 
(c) depreciation expense $__________________
 
(d) amortization expense $________________
 
(e) all other non-cash, non-recurring charges and expenses, excluding accruals
for cash expenses made in the ordinary course of business $_________________
 
(f) loss from any sale of assets, other than sales in the ordinary course of
business, all of the foregoing determined in accordance with GAAP
$________________
 
Total of (a) through (f):
 
 
 
 
 
 
 
 
 
 
$___________
 
3.             (a) gains from any sale of assets, other than sales in the
ordinary course of business $_____________
 
(b) other extraordinary or non-recurring gains $______________
 
Total of (a) and (b):
 
$____________
 
4.  EBITDA (line 1, plus lines 2(a) through (f), minus lines 3(a) and (b):
$____________
   
5.  In compliance:
YES   -   NO

 
 
E-B-6

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Fixed Charges Worksheet (Attachment to Compliance Certificate)
 
1.             (a) Interest Expense  $______________
 
(b) all principal payments made on Indebtedness $____________
 
(c) all payments with respect to Capitalized Lease Obligations (to the extent
not otherwise included) $__________________
 
(d) all sinking fund payments made by Borrower $________________
 
Total of (a) through (d):
 
 
 
 
 
 
$___________
 
2.             all Capital Expenditures by Borrower
$____________
   
3.             all distributions to equity holders
$____________
   
4.             all payments described in Section 7.5(ii) of the Credit Agreement
$____________
   
5.  Fixed Charges (lines 1(a) through (d), plus line 2, plus line 3, plus line
4):
$____________

 
E-B-7

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