redacted12thamendment






CHAR2\2444756v7 TWELFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT   This TWELFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT  (this “Amendment”), dated as of July 30, 2021, is entered into by and between KEWAUNEE SCIENTIFIC  CORPORATION, a Delaware corporation (the “Borrower”), and WELLS FARGO BANK, NATIONAL  ASSOCIATION (the “Bank”).  RECITALS  A. The Bank has made available to the Borrower certain term loans and lines of credit pursuant  to the terms and conditions of (i) that certain Credit and Security Agreement, dated as of May 6, 2013, by  and between the Borrower and the Bank, as amended by that certain First Amendment to Credit and Security  Agreement dated as of July 9, 2013, as further amended by that certain Second Amendment to Credit and  Security Agreement dated as of June 4, 2014, as further amended by that certain Third Amendment to  Credit and Security Agreement and First Amendment to Revolving Line of Credit Note dated as of  June 3, 2015 (the “Third Amendment”), as further amended by that certain Fourth Amendment to Credit  and Security Agreement and Second Amendment to Revolving Line of Credit Note dated as of  March 12, 2018 (the “Fourth Amendment”), as further amended by that certain Fifth Amendment to Credit  and Security Agreement dated as of April 22, 2019, as further amended by that certain Sixth Amendment  to Credit and Security Agreement dated as of May 28, 2019, as further amended by that certain Seventh  Amendment to Credit and Security Agreement and Third Amendment to Revolving Line of Credit Note  dated as of July 9, 2019 (the “Seventh Amendment”), as further amended by that certain Eighth  Amendment to Credit and Security Agreement and Fourth Amendment to Revolving Line of Credit Note  dated as of December 13, 2019 (the “Eighth Amendment”), as further amended by that certain Ninth  Amendment to Credit and Security Agreement, Fifth Amendment to Revolving Line of Credit Note and  Waiver dated as of July 20, 2020 (the “Ninth Amendment”), as further amended by that certain Tenth  Amendment to Credit and Security Agreement dated as of January 28, 2021, and as further amended by  that certain Eleventh Amendment to Credit and Security Agreement dated as of April 27, 2021 (as the same  may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit  Agreement”), (ii) that certain Revolving Line of Credit Note, dated May 6, 2013, made by the Borrower  and payable to the order of the Bank, as amended by the Third Amendment, the Fourth Amendment, the  Seventh Amendment, the Eighth Amendment and the Ninth Amendment (as the same may be further  amended, restated, supplemented or otherwise modified from time to time, the “Line of Credit Note”) and  (iii) certain other Loan Documents executed in connection therewith, as amended, restated, supplemented  or otherwise modified from time to time;  B. The Borrower has requested that the Bank further amend the Credit Agreement to extend  the Expiration Date to April 30, 2022 (the “Amended Expiration Date”) and make further modifications to  the Credit Agreement.  C. The Bank has agreed to do so, but only pursuant to the terms and conditions set forth herein.  AGREEMENT  NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein,  and for other good and valuable consideration, the receipt and sufficiency of which are hereby  acknowledged, the parties hereto agree as follows:  





 






2  CHAR2\2444756v7 1. Definitions.  Capitalized terms used herein but not otherwise defined herein shall have the  meanings provided to such terms in the Credit Agreement.  As used in this Amendment, the following terms  shall have the meanings set forth below:  “Amendment Fee” has the meaning set forth in Section 6.  “Bank” has the meaning set forth in the preamble to this Amendment.  “Borrower” has the meaning set forth in the preamble to this Amendment.  “Credit Agreement” has the meaning set forth in the Recitals.  “Effective Date” has the meaning set forth in Section 8.   “Released Party” and “Released Parties” have the respective meanings set forth in  Section 10.  2. Estoppel.  The Borrower hereby acknowledges and agrees  that, as of close of business on  July 29, 2021, the outstanding principal amount of the Line of Credit was not less than $ 8,431,449.99,  which amount constitutes a valid and subsisting obligation of the Borrower owed to the Bank that is not  subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind.  As of the date  hereof, the Term Loans have been paid in full and are no longer outstanding obligations of the Borrower.  3. Consent, Acknowledgement and Reaffirmation.  The Borrower hereby: (i) reaffirms the  covenants and agreements contained in each Loan Document to which it is party, including, in each case,  as such covenants and agreements may be modified by this Amendment and the transactions contemplated  hereby; (ii) reaffirms that each Lien created and granted in or pursuant to any Loan Document in favor of  the Bank is valid and subsisting, and acknowledges and agrees that this Amendment shall in no manner  impair or otherwise adversely affect such Lien; and (iii) confirms that each Loan Document to which the  Borrower is a party is and shall continue to be in full force and effect and the same is hereby ratified and  confirmed in all respects, except that upon the effectiveness of this Amendment, all references in such Loan  Document to the “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean the Credit  Agreement and the other Loan Documents, as the case may be, as in effect and as modified by this  Amendment.  4. Amendments to Credit Agreement.  Effective as of the Effective Date, and subject to the  terms and conditions set forth herein, the Credit Agreement (including all Annexes, Schedules, and Exhibits  thereto) is hereby amended in the form attached hereto as Exhibit A.1 5. Amendments to Schedules to Credit Agreement.  Schedules 5.2, 5.5, and 5.7 to the Credit  Agreement are amended and restated in their entirety to read in the forms attached hereto as Schedules 5.2,  5.5, and 5.7, respectively.  6. Amendment Fee.  In consideration of the agreements set forth herein, the Borrower shall  pay a one-time fee to the Bank in an amount equal to $75,000.00 (the “Amendment Fee”), which shall be  fully earned and non-refundable as of the Effective Date, with the first payment of $25,000.00 due on  October 29, 2021, and a second payment of $50,000.00 due on February 28, 2022; provided, however, that  1 For the avoidance of doubt and as noted in Section 5 hereto, while all Annexes, Schedules, and Exhibits to the Credit  Agreement are restated in Exhibit A hereto, only Annex 1 and Schedules 5.2, 5.5, and 5.7 to the Credit Agreement  have been amended.  





 






3  CHAR2\2444756v7 if the Line of Credit and all other obligations in connection therewith (other than the Amendment Fee) are  paid in full and any commitments thereunder have been terminated on or before October 29, 2021, the Bank  shall waive the Amendment Fee in its entirety, and if the Line of Credit and all other obligations in  connection therewith (other than any portion of the Amendment Fee not yet payable) are paid in full and  any commitments thereunder have been terminated after October 29, 2021, but on or before  February 28, 2022, the Bank shall waive $50,000.00 of the Amendment Fee.  7. Fees and Expenses.  Without in any way limiting the obligations of the Borrower under the  Loan Documents, on the Effective Date and on demand therefor, the Borrower shall reimburse the Bank  for all of its fees and expenses incurred in connection with this Amendment, the Credit Agreement and the  other Loan Documents, including, without limitation, the fees and expenses of Moore & Van Allen PLLC  (“MVA”) as legal counsel to the Bank.  8. Conditions Precedent.  This Amendment shall be effective on the date (the “Effective  Date”) that each of the following conditions shall have been satisfied or waived by the Bank:  (a) The Bank shall have received counterparts of this Amendment duly executed by  the Borrower and the Bank.  (b) The Bank shall have received reimbursement from the Borrower for all of the  Bank’s fees and expenses incurred in connection with this Amendment, the Credit Agreement and  the other Loan Documents (including, without limitation, the fees and expenses of MVA as legal  counsel to the Bank), except to the extent otherwise agreed by the Bank.  (c) The Bank shall have received a certificate of an authorized officer of Borrower  dated as of the date hereof (i) certifying that the Borrower has not modified its bylaws, operating  agreement, partnership agreement or like document since the date that such documents were last  delivered to the Bank or, if such documents have not previously been delivered or have been so  modified, attaching copies of such documents, and (ii) attaching such certificates of resolutions or  other action, incumbency certificates and/or other certificates of responsible officers of the  Borrower as the Bank may require evidencing the identity, authority and capacity of each such  responsible officer thereof authorized to act as a signatory in connection with this Amendment.  (d) The Bank shall have received a completed perfection certificate in form acceptable  to the Bank identifying all assets of the Borrower any matters that would reasonably be expected  to impact the perfection or priority of the Bank’s Liens.  (e) The Bank shall have received a duly executed Modification to Promissory Note in  form acceptable to the Bank.  (f) The Bank shall have received updated acknowledgment letters in favor of the Bank  which are effective through the Amended Expiration Date for any “bill and hold” receivables for  which the previous acknowledgement letter delivered to the Bank expires prior to the Amended  Expiration Date.   9. Representations of the Borrower.  The Borrower represents and warrants to the Bank on  the Effective Date as follows:  (a) The Borrower has all requisite power and authority to execute, deliver this  Amendment and perform its obligations under this Amendment and the other Loan Documents to  which it is a party.  The execution and delivery of this Amendment and the performance of this  





 






4  CHAR2\2444756v7 Amendment and the other Loan Documents by the Borrower are within the Borrower’s corporate  or other organizational powers, have been duly authorized by all necessary corporate or other  organizational action and do not: (i) contravene the terms of any of the Borrower’s organization  documents; (ii) conflict with or result in any breach or contravention of, or the creation of any Lien  under, or require any payment to be made under (A) any material contractual obligation to which  the Borrower is a party or affecting the Borrower or the properties of the Borrower or (B) any  material order, injunction, writ or decree of any governmental authority or any arbitral award to  which the Borrower or its property is subject; or (iii) violate in any material respect any applicable  law.  (b) This Amendment has been duly executed and delivered by the Borrower and this  Amendment constitutes, a legal, valid and binding obligation of the Borrower, enforceable against  the Borrower in accordance with its terms, except as such enforceability may be limited by  bankruptcy insolvency, reorganization, receivership, moratorium or other similar laws affecting  creditors’ rights generally, by general equitable principles or by principles of good faith and fair  dealing.  (c) No approval, consent, exemption, authorization, license or other action by, or  notice to, or filing with, any governmental authority or any other Person is necessary or required in  connection with the execution, delivery or performance by, or enforcement against, the Borrower  of this Amendment other than those that have already been obtained or are in full force and effect.  (d) After giving effect to this Amendment, (i) the representations and warranties the  Borrower set forth in Article II of the Credit Agreement and in each other Loan Document are true,  accurate and complete in all material respects (and in all respects if any such representation and  warranty is already qualified by materiality) on and as of the Effective Date to the same extent as  though made on and as of such date except to the extent such representations and warranties  specifically relate to an earlier date, in which case they are true, accurate and complete in all  material respects (and in all respects if any such representation and warranty is already qualified  by materiality) as of such earlier date, and (ii) no Event of Default exists on and as of the Effective  Date.  (e) There are no pending, or to the best of Borrower’s knowledge threatened, actions,  claims, investigations, suits or proceedings by or before any governmental authority, arbitrator,  court or administrative agency other than those disclosed on Schedule 9 hereto.  With respect to  the asbestos-related litigation listed on Schedule 9, all of the maximum potential exposure is  covered by insurance maintained by the Borrower.  None of the matters on Schedule 9, if adversely  decided or resolved, would have a material adverse effect on the financial condition or operation  of Borrower.  If any representation and warranty set forth in this Section is incorrect in any material respect on and as of  the Effective Date, then such incorrect representation and warranty shall constitute an immediate Event of  Default without regard to any otherwise applicable notice, cure or grace period.  10. Release.  The Borrower hereby releases and forever discharges the Bank and the Bank’s  predecessors, successors, assigns and attorneys (each a “Released Party” and collectively, the “Released  Parties”) from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and  causes of action of any nature whatsoever, in each case to the extent arising in connection with any of the  Loan Documents on or prior to the Effective Date, whether arising at law or in equity, whether known or  unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent,  





 






5  CHAR2\2444756v7 foreseen or unforeseen, and whether or not heretofore asserted, which the Borrower may have or claim to  have against any Released Party.  11. No Action, Claims.  The Borrower represents, warrants, acknowledges and confirms that,  as of the date hereof, it has no knowledge of any action, cause of action, claim, demand, damage or liability  of whatever kind or nature, in law or in equity, against any Released Party arising from any action by such  Persons, or failure of such Persons to act, under or in connection with any of the Loan Documents in each  case, on or prior to the Effective Date.  12. Incorporation of Agreement.  Except as specifically modified herein, the terms of the Loan  Documents shall remain in full force and effect.  The execution, delivery and effectiveness of this  Amendment shall not operate as a waiver of any right, power or remedy of the Bank under the Loan  Documents or constitute a waiver or amendment of any provision of the Loan Documents, except as  expressly set forth herein. This Amendment shall constitute a Loan Document.  13. No Third-Party Beneficiaries.  This Amendment and the rights and benefits hereof shall  inure to the benefit of each of the parties hereto and their respective successors and assigns, and the  obligations hereof shall be binding upon the Borrower.  No other Person (other than any Released Party  with respect to the provisions of Sections 10 and 11, which Persons are intended to be third party  beneficiaries of this Amendment) shall have or be entitled to assert rights or benefits under this Amendment.  14. Integration; Effectiveness.  This Amendment and the other Loan Documents constitute the  entire contract among the parties relating to the subject matter hereof and supersede any and all previous  agreements and understandings, oral or written, relating to the subject matter hereof.  In the event of any  conflict between the provisions of this Amendment and those of any other Loan Document, the provisions  of this Amendment shall control.  15. Counterparts.  This Amendment may be executed in multiple counterparts, each of which  shall be deemed an original, but all of which shall constitute one and the same agreement, and the signature  pages from any counterpart may be appended to any other counterpart to assemble fully-executed  counterparts.  Counterparts of this Amendment may be exchanged via electronic means, and a facsimile of  any party’s signature shall be deemed to be an original signature for all purposes.  This Amendment shall  be binding upon and shall inure to the benefit of the parties hereto and their respective successors and  assigns.  16. Governing Law / Arbitration; Waiver of Jury Trial.  The Governing Law provision  contained in Sections 7.10 of the Credit Agreement and the Arbitration; Waiver of Jury Trial provisions in  Section 7.11 of the Credit Agreement are hereby incorporated by reference mutatis mutandis.  17. Miscellaneous.  (a) Section headings in this Amendment are included herein for convenience of  reference only and shall not affect the interpretation of this Amendment.  (b) If any provision of this Amendment is held to be illegal, invalid or unenforceable,  (i) the legality, validity and enforceability of the remaining provisions of this Amendment shall not  be affected or impaired thereby, and (ii) the parties shall endeavor in good faith negotiations to  replace the illegal, invalid or unenforceable provisions with valid provisions, the economic effect  of which comes as close as possible to that of the illegal, invalid or unenforceable provision.  [Remainder of page intentionally left blank; signature pages follow.]  





 






 





 






 





 






CHAR2\2444756v7 Schedule 5.2  Existing Indebtedness  Name of Agreement  Counterparty to  Agreement  Current Outstanding Amount  of Indebtedness  Corporate Guarantee on  India Revolver HSBC $3,013,927 (as of June 30)  





 






CHAR2\2444756v7 Schedule 5.5  Existing Loans, Advances and Investments  Loan/ Advance  Loans and Advances  Amount USD 1. Kewaunee Labway India Pvt. Ltd. $47,000.00  Accrued Interest not yet paid   $24,789.71  Total $71,789.71  Investment  Direct Capital Investment  Amount USD 1. Kewaunee Scientific Corporation Singapore Pte. Ltd.  $419,207.00  2. Kewaunee Labway India Pvt. Ltd. $406,000.00  Total $825,207.00  





 






CHAR2\2444756v7  Schedule 5.7  Existing Liens  Debtor Secured Party Jurisdiction File Date File Number  Amendments and  Continuations  Kewaunee Scientific  Corporation Key Equipment  Finance Inc.  Delaware  SoS 11/21/2005 20053605723 10/06/2010: Continuation (20103474669)  08/25/2015: Continuation (20153725719) Kewaunee Scientific  Corporation Key Equipment  Finance Inc.  Delaware  SoS 11/08/2010 20103904624 08/25/2015: Continuation (20153726485)  Kewaunee Scientific  Corporation Bluelinx Corporation Delaware  SoS 09/13/2011 20113512590 07/27/2016: Continuation (20164544373)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 09/29/2011 20113733915 04/04/2016: Continuation (20161982014)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 10/28/2011 20114177880 05/03/2016: Continuation (20162623385)  Kewaunee Scientific  Corporation Key Equipment  Finance Inc.  Delaware  SoS 07/18/2012 20122754820 04/12/2017: Continuation (20172395769)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 12/05/2012 20124699262 06/06/2017: Continuation (20173705586)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 12/05/2012 20124699320 06/06/2017: Continuation (20173705255)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 05/01/2013 20131663021 03/21/2018: Continuation (20181935481)  Kewaunee Scientific  Corporation Wells Fargo Bank,  National Association Delaware  SoS 05/06/2013 20131721761 11/08/2017: Continuation (20177409743)  09/27/2019: Amendment (20196739937) Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 07/11/2013 20132662048 06/06/2018: Continuation (20183845472)  Kewaunee Scientific  Corporation  Wells Fargo  Equipment Finance,  Inc.  North  Carolina SoS  10/02/2013 20130094461 06/26/2018: Continuation (20180065794C)  Kewaunee Scientific  Corporation Trumpf Inc. Delaware  SoS 01/18/2019 20190429675   Kewaunee Scientific  Corporation Wells Fargo Bank,  National Association Delaware  SoS 06/19/2019 20194234477 09/27/2019: Amendment (20196740331)  Kewaunee Scientific  Corporation  Key Equipment  Finance, a Division  of Keybank NA Delaware  SoS  09/27/2019 20196733229   Kewaunee Scientific  Corporation  Corporation Service  Company, As  Representative  Delaware  SoS  09/10/2020 20206248365 09/30/2020: Assignment (20206745485)  02/01/2021: Assignment (202110828021)  02/02/2021: Assignment (20210880527)  02/4/2021: Assignment (2021109762018)  02/05/2021: Assignment (20210986118)  02/09/2021: Assignment (20211083758) Kewaunee Scientific  Corporation  Corporation Service  Company, As  Representative  Iredell  County  Register of  Deeds, NC 09/30/2020 2738/2387 02/15/2021: Assignment (2782/1022)  Kewaunee Scientific  Corporation  Corporation Service  Company, As  Representative  Iredell  County  Register of  Deeds, NC 02/04/2021 2779/1354 02/17/2021: Assignment (2783/1395)  Kewaunee Scientific  Corporation  Corporation Service  Company, As  Representative  Iredell  County  Register of  Deeds, NC 02/15/2021 2782/1018 02/17/2021: Assignment (2783/1401)  Kewaunee Scientific  Corporation Cisco Systems  Capital Delaware  SoS 05/12/2021 20213704120   





 






    EXHIBIT A    Amended Credit Agreement      [See attached.]     





 






-1- CHAR2\2445046v5 CREDIT AND SECURITY AGREEMENT  THIS CREDIT AND SECURITY AGREEMENT (this “Agreement”) is entered into as of May 6,  2013, by and between KEWAUNEE SCIENTIFIC CORPORATION, a Delaware corporation  (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).  All capitalized  terms used but not defined herein have the meanings specified in Annex I attached hereto. RECITALS  Borrower has requested that Bank extend or continue credit to Borrower as described below, and  Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.  NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby  acknowledged, Bank and Borrower hereby agree as follows:  ARTICLE I  CREDIT TERMS, GUARANTY & COLLATERAL  SECTION 1.1. LINE OF CREDIT.  (a) Line of Credit.    (i) Subject to the terms and conditions of this Agreement, Bank hereby agrees to make  advances to Borrower from time to time up to and including April 30, 2022 (the “Expiration Date”), not  to exceed at any time the aggregate principal amount of Fifteen Million and 00/100 Dollars  ($15,000,000.00) (“Line of Credit”), the proceeds of which shall be used (a) to refinance existing  indebtedness of the Borrower to Bank of America, N.A. and (b) for working capital, the issuance of  letters of credit, short term financing of capital equipment, and other general corporate purposes.   Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by a promissory note  dated as of the Closing Date (“Line of Credit Note”), all terms of which are incorporated herein by this  reference.  (ii) In addition to the provisions of Section 1.1(c) regarding Letters of Credit, for purposes  of determining the amount available under the Line of Credit, the principal amount outstanding under the  Line of Credit shall be deemed to include the aggregate principal amount outstanding under all lines of  credit, or other credit facilities, provided by the Bank, or any affiliate of the Bank, to any of the  Borrower’s Foreign Subsidiaries (collectively, the “Foreign Subsidiary Credit Lines”).    (b) Limitation on Borrowings.    (i) Outstanding borrowings under the Line of Credit, to a maximum of the principal amount  set forth above, shall not at any time exceed an aggregate of Four Million and 00/100 Dollars  ($4,000,000.00) in respect of advances made for the purpose of financing capital equipment  (the “Equipment Finance Subfacility”).  (ii) Outstanding borrowings under the Line of Credit, to a maximum of the principal amount  set forth in clause (a) of this Section 1.1, shall not at any time exceed an aggregate of eighty percent  (80%) of Borrower’s Eligible Accounts Receivable, plus twenty-one percent (21%) of the value of  Borrower’s eligible inventory (including unbilled inventory but exclusive of work in process, inventory  which is obsolete, unsaleable or damaged and crating material), with value defined as the lower of cost or  market value; provided, however, that unbilled inventory shall not be included in eligible inventory after  





 






-2- CHAR2\2445046v5 January 31, 2020; provided, further, that outstanding borrowings against inventory shall not at any time  exceed an aggregate of Five Million and 00/100 Dollars ($5,000,000); plus, in Bank’s sole discretion, a  percentage of the value of Borrower’s properly margined unencumbered equipment, such percentage to  be determined by Bank in its sole discretion, as evidenced by the equipment appraisal delivered to Bank  pursuant to Section 4.12.  All of the foregoing shall be determined by Bank upon receipt and review of all  collateral reports required hereunder and such other documents and collateral information as Bank may  from time to time require.  Borrower acknowledges that said borrowing base was established by Bank  with the understanding that, among other items, the aggregate of all returns, rebates, discounts, credits and  allowances for the immediately preceding three (3) months at all times shall be less than five percent  (5%) of Borrower’s gross sales for said period.  If such dilution of Borrower’s accounts for the  immediately preceding three (3) months at any time exceeds five percent (5%) of Borrower’s gross sales  for said period, or if there at any time exists any other matters, events, conditions or contingencies which  Bank reasonably believes may affect payment of any portion of Borrower’s accounts, Bank, in its sole  discretion, may reduce the foregoing advance rate against Eligible Accounts Receivable to a percentage  appropriate to reflect such additional dilution and/or establish additional reserves against Borrower’s  Eligible Accounts Receivable, provided that the amount of any reserve established by Bank shall have a  reasonable relationship to the matter, event, condition or contingency that is the basis for such reserve and  shall not be duplicative of any other reserve established and currently maintained.  (c) Letter of Credit Subfeature.  As a subfeature under the Line of Credit, Bank agrees from  time to time during the term thereof to issue or cause an affiliate to issue commercial or standby letters of  credit for the account of Borrower (each, a “Letter of Credit” and collectively, “Letters of Credit”);  provided however, that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any  time exceed Five Million Three Hundred and Forty-Four Thousand Two Hundred Ninety-Three and  00/100 Dollars ($5,344,293), provided that, from and after the earlier of (a) the date that is 30 days after  the Sixth Amendment Effective Date and (b) the cancellation of the Terminating Letter of Credit, such  undrawn amount shall not exceed the aggregate principal amount of Three Million and 00/100 Dollars  ($3,000,000.00).  The form and substance of each Letter of Credit shall be subject to approval by Bank, in  its sole discretion and shall be subject to the additional terms of the Letter of Credit agreements,  applications, and any related documents required by Bank in connection with the issuance thereof (each  a “Letter of Credit Agreement”).  Each Letter of Credit shall be issued for a term not to exceed the  maturity date of the Line of Credit; provided, further, that no Letter of Credit shall be issued with, nor  shall Bank be required to renew or (if applicable) allow automatic renewal of any Letter of Credit so that  it will have, an expiration date that is subsequent to the maturity date of the Line of Credit.  The undrawn  amount of all Letters of Credit shall be reserved under the Line of Credit and shall not be available for  borrowings thereunder.  Each Letter of Credit shall be subject to the additional terms and conditions of  the Letter of Credit Agreements.  Each drawing paid under a Letter of Credit shall be deemed an advance  under the Line of Credit and shall be repaid by Borrower in accordance with the terms and conditions of  this Agreement applicable to such advances; provided however, that if advances under the Line of Credit  are not available, for any reason, at the time any drawing is paid, then Borrower shall immediately pay to  Bank the full amount drawn, together with interest thereon from the date such drawing is paid to the date  such amount is fully repaid by Borrower, at the rate of interest applicable to advances under the Line of  Credit.  In such event Borrower agrees that Bank, in its sole discretion, may debit any account maintained  by Borrower with Bank for the amount of any such drawing.  (d) Borrowing and Repayment.  Borrower may from time to time during the term of the Line of  Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the  limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that  the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum  principal amount available thereunder, as set forth above.  





 






-3- CHAR2\2445046v5 (e) Cash Collateral Account.  Borrower shall maintain with Bank, and Borrower hereby grants  to Bank a security interest in, a non-interest bearing deposit account over which Borrower shall have no  control (“Cash Collateral Account”) and into which the proceeds of all Borrower’s accounts and other  rights to payment in which Bank has a security interest shall be deposited immediately upon their receipt  by Borrower.  Bank shall, and Borrower hereby authorizes Bank to, apply all such proceeds immediately  upon their receipt by Bank as a principal reduction on the Line of Credit.  SECTION 1.2. TERM LOANS.  (a) Term Loans.  Subject to the terms and conditions of this Agreement, Bank hereby agrees to:  (i) Make a loan to Borrower in the principal amount of Three Million, Four Hundred  Fifty Thousand and 22/100 Dollars ($3,450,000.22) (“Term Loan A”), the proceeds of which shall be  used to refinance existing indebtedness of the Borrower to Bank of America, N.A.  Borrower’s obligation  to repay the Term Loan A shall be evidenced by a promissory note dated as of the Closing Date (“Term  Note A”), all terms of which are incorporated herein by this reference.  Bank’s commitment to grant Term  Loan A shall terminate on the Closing Date.  (ii) Make a loan to Borrower in the principal amount of One Million, Five Hundred Forty- Nine Thousand Nine Hundred Ninety-Nine and 78/100 Dollars ($1,549,999.78) (“Term Loan B”), the  proceeds of which shall be used for working capital and general corporate purposes.  Borrower’s  obligation to repay the Term Loan B shall be evidenced by a promissory note dated as of the Closing Date  (“Term Note B”), all terms of which are incorporated herein by this reference.  Bank’s commitment to  grant the Term Loan B shall terminate on the Closing Date.  For purposes herein, Term Loan A and Term Loan B are collectively referred to herein as,  the “Term Loans”.  Term Note A and Term Note B are collectively referred to herein as, the “Term  Notes”.  (b) Repayment.  Principal and interest on the Term Loans shall be repaid in accordance with the  provisions of the Term Notes.  (c) Prepayment.  Borrower may prepay principal on the Term Loans solely in accordance with  the provisions of the Term Notes.  SECTION 1.3. INTEREST/FEES.  (a) Interest.  The outstanding principal balance of each credit subject hereto shall bear interest,  and the amount of each drawing paid under any Letter of Credit shall bear interest, from the date such  drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest set forth in each  promissory note or other instrument or document executed in connection therewith.  (b) Computation and Payment.  Interest shall be computed on the basis of a 360-day year, actual  days elapsed.  Interest shall be payable at the times and place set forth in each promissory note or other  instrument or document required hereby.  (c) Commitment Fee.  Borrower shall pay to Bank a non-refundable commitment fee for the  credit provided hereunder equal to Thirty-Two Thousand Five Hundred and 00/100 Dollars ($32,500.00)  which fee shall be due and payable in full on the Closing Date.  





 






-4- CHAR2\2445046v5 (d) Letter of Credit Fees.  Borrower shall pay to Bank fees upon the issuance of each Letter of  Credit, upon the payment or negotiation of each drawing under any Letter of Credit and upon the  occurrence of any other activity with respect to any Letter of Credit (including without limitation, the  transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank’s  standard fees and charges then in effect for such activity.  (e) Unused Fee.  Accruing from the Fourth Amendment Effective Date and continuing on the  last business day of each quarter thereafter until the Expiration Date, the Borrower shall pay a non- refundable unused fee to the Bank, in arrears, at the rate of one tenth of one percent (0.10%) per annum  on the average daily balance of the Line of Credit which is undisbursed and uncancelled during the  preceding quarter; provided, that for purposes of the foregoing the face amount of all outstanding Letters  of Credit shall be treated as amounts outstanding under the Line of Credit.  The unused fee shall be  computed on the basis of a year of 360 days and paid on the actual number of days elapsed.  SECTION 1.4. COLLECTION OF PAYMENTS.  Borrower authorizes Bank to collect all  principal, interest and fees due under each credit subject hereto by charging Borrower’s deposit account  number 4000144592 with Bank, or any other deposit account maintained by Borrower with Bank, for the  full amount thereof.  Should there be insufficient funds in any such deposit account to pay all such sums  when due, the full amount of such deficiency shall be immediately due and payable by Borrower.  SECTION 1.5. GUARANTY AND COLLATERAL.    (a) Guaranty.  The Borrower unconditionally and irrevocably guarantees to the Bank the punctual  payment of all sums now owing or which may in the future be owing by any Foreign Subsidiary under the  Foreign Subsidiary Credit Lines, when the same are due and payable, whether on demand, at stated  maturity, by acceleration or otherwise, and whether for principal, interest, fees, expenses, indemnification  or otherwise (all of the foregoing sums being the “Guaranteed Liabilities”).  The Guaranteed Liabilities  include, without limitation, interest accruing after the commencement of a proceeding under bankruptcy,  insolvency or similar laws of any jurisdiction at the rate or rates provided in the documents executed in  connection with the Foreign Subsidiary Credit Lines (the “Foreign Credit Documents”).  This is a guaranty  of payment and not of collection.  The Bank shall not be required to exhaust any right or remedy or take any  action against any Foreign Subsidiary or any other Person or any collateral.  The Borrower agrees that, as  between the Borrower and the Bank, the Guaranteed Liabilities may be declared to be due and payable for  the purposes of this guaranty notwithstanding any stay, injunction or other prohibition which may prevent,  delay or vitiate any declaration as regards any Foreign Subsidiary and that in the event of a declaration or  attempted declaration, the Guaranteed Liabilities shall immediately become due and payable by the  Borrower for the purposes of this guaranty.  (i) The Borrower guarantees that the Guaranteed Liabilities shall be paid strictly in  accordance with the terms of the Foreign Subsidiary Credit Lines.  The liability of the Borrower under this  Section 1.5 is absolute and unconditional irrespective of:  (a) any change in the time, manner or place of  payment of, or in any other term of, all or any of the Foreign Credit Documents or Guaranteed Liabilities, or  any other amendment or waiver of or any consent to departure from any of the terms of any Foreign Credit  Document or Guaranteed Liability, including any increase or decrease in the rate of interest thereon; (b) any  release or amendment or waiver of, or consent to departure from, any other guaranty or support document,  or any exchange, release or non-perfection of any collateral, for all or any of the Foreign Credit Documents  or Guaranteed Liabilities; (c) any present or future law, regulation or order of any jurisdiction (whether of  right or in fact) or of any agency thereof purporting to reduce, amend, restructure or otherwise affect any  term of any Foreign Credit Document or Guaranteed Liability; (d) without being limited by the foregoing,  any lack of validity or enforceability of any Foreign Credit Documents or Guaranteed Liabilities; and (e)  any other setoff, defense or counterclaim whatsoever (in any case, whether based on contract, tort or any  





 






-5- CHAR2\2445046v5 other theory) with respect to the Foreign Credit Documents or the transactions contemplated thereby which  might constitute a legal or equitable defense available to, or discharge of, any Foreign Subsidiary or a  guarantor.    (ii) The guaranty under this Section 1.5 is a continuing guaranty of the payment of all  Guaranteed Liabilities now or hereafter existing under the Foreign Subsidiary Credit Lines and shall remain  in full force and effect until payment in full of all Guaranteed Liabilities and until the Foreign Subsidiary  Credit Lines are no longer in effect.  (iii) The guaranty under this Section 1.5 shall continue to be effective or be reinstated,  as the case may be, if at any time any payment of any of the Guaranteed Liabilities is rescinded or must  otherwise be returned by the Bank on the insolvency, bankruptcy or reorganization of the Borrower or  otherwise, all as though the payment had not been made.  (iv)  All payments by the Borrower shall be made in the manner, at the place and in  the currency (the “Payment Currency”) required by the Foreign Credit Documents; provided, however, that  (if the Payment Currency is other than U.S. dollars) the Borrower may, at its option (or, if for any reason  whatsoever the Borrower is unable to effect payments in the foregoing manner, the Borrower shall be  obligated to) pay to the Bank at its principal office the equivalent amount in U.S. dollars computed at the  selling rate of the Bank or a selling rate chosen by the Bank, most recently in effect on or prior to the date  the Guaranteed Liability becomes due, for cable transfers of the Payment Currency to the place where the  Guaranteed Liability is payable.  In any case in which the Borrower makes or is obligated to make payment  in U.S. Dollars, the Borrower shall hold the Bank harmless from any loss incurred by the Bank arising from  any change in the value of U.S. Dollars in relation to the Payment Currency between the date the  Guaranteed Liability becomes due and the date the Bank is actually able, following the conversion of the  U.S. Dollars paid by the Borrower into the Payment Currency and remittance of such Payment Currency to  the place where such Guaranteed Liability is payable, to apply such Payment Currency to such Guaranteed  Liability.  (v) The Borrower further agrees that all payments to be made under this Section 1.5  shall be made without setoff or counterclaim and free and clear of, and without deduction for, any taxes,  levies, imposts, duties, charges, fees, deductions, withholdings or restrictions or conditions of any nature  whatsoever now or hereafter imposed, levied, collected, withheld or assessed by any country or by any  political subdivision or taxing authority thereof or therein (collectively, “Taxes”).  If any Taxes are required  to be withheld from any amounts payable to the Bank hereunder, the amounts so payable to the Bank shall  be increased to the extent necessary to yield to the Bank (after payment of all Taxes) the amounts payable  hereunder in the full amounts so to be paid.  Whenever any Tax is paid by the Borrower, as promptly as  possible thereafter, the Borrower shall send the Bank an official receipt showing payment thereof, together  with such additional documentary evidence as may be required from time to time by the Bank.  (b) Pledge of Pledged Interests as Security for Line of Credit.  The Borrower hereby grants to  the Bank, as collateral security for the payment, performance and satisfaction of all of the Borrower’s  obligations to the Bank hereunder with respect to the Line of Credit (including, without limitation, all  Letters of Credit and the Borrower’s obligations set forth in Section 1.5) and all of the Borrower’s  obligations to the Bank under any Swap Contract related to the Line of Credit, a first priority security  interest in all of the Collateral (as such term is defined in the Security Agreement) secured by the Security  Agreement and all of the following items of property now owned or hereafter owned by the Borrower  (collectively, together with the Equipment (defined below), the “Collateral”):  (i) all Equity Interests in all of its Direct Foreign Subsidiaries (limited, in each case  to Equity Interests that, when taken with all other Equity Interests pledged hereunder, constitute no more  





 






-6- CHAR2\2445046v5 than (i) 65% of the Voting Equity Interests of each Direct Foreign Subsidiary and (ii) 100% of the other  Equity Interests of the Borrower in each Direct Foreign Subsidiary), in each case, whether now existing or  hereafter created or acquired (collectively, the “Pledged Interests”), including without limitation the  Pledged Interests more particularly described on Schedule 1.5(b), as it may be updated from time to time  (such Direct Foreign Subsidiaries, are referred to collectively as the “Pledged Subsidiaries”);  (ii) all money, securities, security entitlements and other investment property,  dividends, rights, general intangibles and other property at any time and from time to time (i) declared or  distributed in respect of or in exchange for or on conversion of any Pledged Interest, or (ii) by its or their  terms exchangeable or exercisable for or convertible into any Pledged Interest;  (iii)  all other personal property of whatever character or description, including  money, securities, security entitlements and other investment property, and general intangibles hereafter  delivered to the Bank in substitution for or as an addition to any of the foregoing, but excluding any  Equity Interests in any of its Direct Foreign Subsidiaries in addition to those Equity Interests in which a  security interest is granted pursuant to Section 1.5(b)(i);  (iv) all securities accounts to which may at any time be credited any or all of the  foregoing or any proceeds thereof and all certificates and instruments representing or evidencing any of  the foregoing or any proceeds thereof; and  (v) all proceeds of any of the foregoing.  (c) Term Loan Collateral.  The Borrower hereby additionally grants to the Bank, as collateral  security for the payment, performance and satisfaction of all of the Borrower’s obligations to the Bank  hereunder with respect to the Term Loans and all Swap Contracts related to the Term Loans, a first  priority security interest in all Equipment now owned or hereafter owned by the Borrower, wherever  located.  “Equipment” as used herein means all goods (excluding inventory, farm products or consumer  goods), all machinery, machine tools, equipment, office equipment, furniture, furnishings, motors, motor  vehicles, tools, dies, parts, jigs, and all attachments, accessories, accessions, replacements, substitutions,  additions and improvements thereto, all supplies used or useful in connection therewith, and all other  “Equipment” as same is now or hereafter defined in Article 9 of the Uniform Commercial Code in effect  in the State of North Carolina, together with all rents, issues, profits, products and proceeds of any of the  foregoing.  (d) Preservation and Protection of Collateral.  (i) The Bank shall be under no duty or liability with respect to the collection,  protection or preservation of the Collateral or otherwise, beyond the use of reasonable care in the  custody and preservation thereof while in its possession.  (ii) The Borrower agrees to pay when due all Taxes, charges, Liens and  assessments against the Collateral, unless being contested in good faith by appropriate proceedings  diligently conducted and against which adequate reserves have been established in accordance with  GAAP, consistently applied and evidenced to the satisfaction of Bank and provided that all enforcement  proceedings in the nature of levy or foreclosure are effectively stayed.  Upon the Borrower’s failure to (i)  so pay or contest such Taxes, charges, Liens or assessments or (ii) pay any amount pursuant to  Section 1.5(i), the Bank at its option may pay or contest any of them (the Bank having the sole right to  determine the legality or validity and the amount necessary to discharge such Taxes, charges, Liens or  assessments) but shall not have any obligation to make any such payment or contest.  All sums so  disbursed by the Bank, including attorneys’ fees, court costs, expenses and other charges related thereto,  





 






-7- CHAR2\2445046v5 shall be payable on demand by the Borrower to the Bank and shall be additional obligations secured by  the Collateral, as the case may be, and any amounts not so paid on demand (in addition to other rights  and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in  full at the default rate set forth in promissory notes evidencing the Line of Credit and the Term Loans.  (iii) The Borrower hereby irrevocably authorizes Bank to file (with, or to the extent  permitted by applicable law, without the signature of the Borrower appearing thereon) financing  statements (including amendments thereto and continuations and copies thereof) showing the Borrower  as “debtor” at such time or times and in all filing offices as the Bank may from time to time determine to  be necessary or advisable to perfect or protect its Lien and security interest in the Collateral.  Any such  financing statement covering the Collateral shall describe the Collateral as described in Sections 1.5(b)  and 1.5(c) above.  (e) Default.  If any Event of Default occurs, the Bank is given full power and authority, then or  at any time thereafter, to sell, assign, deliver or collect the whole or any part of the Collateral, or any  substitute therefor or any addition thereto, in one or more sales, with or without any previous demands or  demand of performance or, to the extent permitted by law, notice or advertisement, in such order as the  Bank may elect; and any such sale may be made either at public or private sale at the Bank’s place of  business or elsewhere, either for cash or upon credit or for future delivery, at such price or prices as the  Bank may reasonably deem fair; and the Bank may be the purchaser of any or all Collateral so sold and  hold the same thereafter in its own right free from any claim of the Borrower or right of redemption.   Demands of performance, advertisements and presence of property and sale and notice of sale are hereby  waived to the extent permissible by law.  Any sale hereunder may be conducted by an auctioneer or any  officer or agent of the Bank.  The Borrower recognizes that the Bank may be unable to effect a public sale  of the Collateral described in Section 1.5(b) by reason of certain prohibitions contained in the Securities  Act of 1933, as amended (the “Securities Act”), and applicable state law, and may be otherwise delayed  or adversely affected in effecting any sale by reason of present or future restrictions thereon imposed by  governmental authorities, and that as a consequence of such prohibitions and restrictions the Bank may be  compelled (i) to resort to one or more private sales to a restricted group of purchasers who will be obliged  to agree, among other things, to acquire such Collateral for their own account, for investment and not with  a view to the distribution or resale thereof, or (ii) to seek regulatory approval of any proposed sale or  sales, or (iii) to limit the amount of such Collateral sold to any Person or group.  The Borrower agrees and  acknowledges that private sales so made may be at prices and upon terms less favorable to the Borrower  than if such Collateral was sold either at public sales or at private sales not subject to other regulatory  restrictions, and that the Bank has no obligation to delay the sale of any of such Collateral for the period  of time necessary to permit the Pledged Subsidiary to register or otherwise qualify such Collateral, even if  such Pledged Subsidiary would agree to register or otherwise qualify such Collateral for public sale under  the Securities Act or applicable state law.  The Borrower further agrees, to the extent permitted by  applicable law, that the use of private sales made under the foregoing circumstances to dispose of such  Collateral shall be deemed to be dispositions in a commercially reasonable manner.  The Borrower hereby  acknowledges that a ready market may not exist for the Pledged Interests if they are not traded on a  national securities exchange or quoted on an automated quotation system and agrees and acknowledges  that in such event the Pledged Interests may be sold for an amount less than a pro rata share of the fair  market value of the Pledged Subsidiary’s assets minus its liabilities.  In addition to the foregoing, the  Bank may exercise such other rights and remedies as may be available under the Loan Documents, at law  (including without limitation the UCC) or in equity.   (f) Proceeds of Sale.  The net cash proceeds resulting from the collection, liquidation, sale, or  other disposition of the Collateral (other than the Equipment) shall be applied first to the expenses  (including attorney’s fees) of retaking, holding, storing, processing and preparing for sale, selling,  collecting, liquidating and the like, and then to the satisfaction of all obligations hereunder with respect to  





 






-8- CHAR2\2445046v5 the Line of Credit (including, without limitation, all Letters of Credit and the Borrower’s obligations set  forth in Section 1.5) and under any Swap Contract related to the Line of Credit.  The net cash proceeds  resulting from the collection, liquidation, sale, or other disposition of the Equipment shall be applied first  to the expenses (including attorney’s fees) of retaking, holding, storing, processing and preparing for sale,  selling, collecting, liquidating and the like, and then to the satisfaction of all obligations hereunder with  respect to the Term Loans and under any Swap Contract related to the Term Loans.  To the extent  required by the UCC, any surplus of net cash or net cash proceeds held by the Bank and remaining after  payment in full of all of the Borrower’s obligations hereunder shall be paid over to the Borrower or to  whomsoever may be lawfully entitled to receive such surplus.  The Borrower shall be liable to the Bank  for, and shall pay to the Bank on demand, any deficiency or deficiencies which may remain after such  sale, disposition, collection or liquidation of the Collateral.  (g) Presentments, Demands and Notices.  The Bank shall not be under any duty or obligation  whatsoever to make or give any presentments, demands for performances, notices of nonperformance,  protests, notice of protest or notice of dishonor in connection with any obligations or evidences of  indebtedness held thereby as collateral, or in connection with any obligations or evidences of  indebtedness which constitute in whole or in part the obligations secured hereby.  (h) Voting Rights.  (i) So long as no Event of Default has occurred, the registration of the Collateral  described in Section 1.5(b) in the name of the Borrower as record and beneficial owner shall not be  changed and the Borrower shall be entitled to exercise all voting and other rights and powers pertaining to  such Collateral for all purposes not inconsistent with the terms hereof.  (ii) If any Event of Default occurs, at the option of the Bank, all rights and powers of the  Borrower described in clause (a) above shall cease and the Bank may thereupon (but shall not be  obligated to), at its request, cause such Collateral to be registered in the name of the Bank or its nominee  and/or exercise such rights and powers as appertain to ownership of such Collateral, and to that end the  Borrower hereby appoints the Bank as its proxy, with full power of substitution, to vote and exercise all  other rights as a shareholder with respect to such Pledged Interests, which proxy is coupled with an  interest and is irrevocable, and the Borrower hereby agrees to provide such further proxies as the Bank  may request; provided, that the Bank in its discretion may from time to time refrain from exercising, and  shall not be obligated to exercise, any such rights or powers or such proxy.  (i) Attorney-in-Fact.  The Borrower hereby appoints the Bank as the Borrower’s attorney-in- fact for the purposes of carrying out the provisions of this Section 1.5 and taking any action and executing  any instrument which the Bank may deem necessary or advisable to accomplish the purposes hereof,  which appointment is irrevocable and coupled with an interest; provided, that the Bank shall have and  may exercise rights under this power of attorney only if any Event of Default occurs.  Without limiting  the generality of the foregoing, if any Event of Default occurs, the Bank shall have the right and power to  receive, endorse and collect all checks and other orders for the payment of money made payable to the  Borrower representing any dividend, interest payment, principal payment or other distribution payable or  distributable in respect to the Collateral or any part thereof and to give full discharge for the same.  (j) Reinstatement.  This Section 1.5 shall continue to be effective or be reinstated, as the case  may be, if at any time any payment received by the Bank in respect of any obligation secured hereby is  rescinded or must otherwise be returned by the Bank or is repaid by the Bank in whole or in part in good  faith settlement of a pending or threatened avoidance claim.  The provisions of this Section 1.5(i) shall  survive the repayment in full of all of the obligations hereunder and the termination of the Line of Credit.   





 






-9- CHAR2\2445046v5 (k) Further Assurances.  At the request of the Bank, the Borrower will from time to time (i)  execute and deliver, at its expense, all share certificates, documents, instruments, agreements, financing  statements (and amendments thereto and continuations thereof), assignments, control agreements, or other  writings to carry out the terms of this Section 1.5 or to protect or enforce the Bank’s Liens and security  interests in the Collateral, and (ii) do, at its expense, all things determined by the Bank to be necessary or  advisable to perfect and keep in full force and effect the Bank’s Liens and security interests in the  Collateral, including the prompt payment of all out-of-pocket fees and expenses incurred in connection  with any filings made to perfect or continue the Bank’s Liens and security interests in the Collateral.  (l) Miscellaneous.  (i) The Borrower agrees to register the interest of the Bank in the Collateral described in  Section 1.5(b) on its own books and records and the registration books of each of the Pledged  Subsidiaries.   (ii) Any forbearance, failure or delay by the Bank in exercising any right, power or  remedy hereunder shall not be deemed to be a waiver of such right, power or remedy.  (iii) Subject to the provisions of Section 1.5(k), upon satisfaction in full of all the  Borrower’s obligations hereunder and the termination of the Line of Credit, the Bank shall, at the  Borrower’s sole expense, promptly deliver to the Borrower the certificates evidencing its shares of  Pledged Interests (and any other property received as a dividend or distribution or otherwise in respect of  such Pledged Interests to the extent then held by the Bank as additional Collateral hereunder), together  with any cash then constituting the Collateral not then sold or otherwise disposed of in accordance with  the provisions hereof, and take such further actions at the request of the Borrower as may be necessary to  effect the same.  ARTICLE II  REPRESENTATIONS AND WARRANTIES  Borrower makes the following representations and warranties to Bank, which representations and  warranties shall survive the execution of this Agreement and shall continue in full force and effect until  the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject  to this Agreement.  SECTION 2.1. LEGAL STATUS.  Borrower is (a) a corporation, duly organized and existing  and in good standing under the laws of Delaware, and is qualified or licensed to do business (and is in  good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or  licensing is required or in which the failure to so qualify or to be so licensed could have a material  adverse effect on Borrower; and (b) not the target of any trade or economic sanctions promulgated by the  United Nations or the governments of the United States, the United Kingdom, the European Union, or any  other jurisdiction in which the Borrower is located or operates (collectively, “Sanctions”).  SECTION 2.2. AUTHORIZATION AND VALIDITY.  This Agreement and each promissory  note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank  in connection herewith (collectively, the “Loan Documents”) have been duly authorized, and upon their  execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding  agreements and obligations of Borrower or the party which executes the same, enforceable in accordance  with their respective terms.  





 






-10- CHAR2\2445046v5 SECTION 2.3. NO VIOLATION.  The execution, delivery and performance by Borrower of  each of the Loan Documents do not violate any provision of any law or regulation, or contravene any  provision of the Articles of Incorporation or By-Laws of Borrower, or result in any breach of or default  under any contract, obligation, indenture or other instrument to which Borrower is a party or by which  Borrower may be bound.  SECTION 2.4. LITIGATION.  There are no pending, or to the best of Borrower’s knowledge  threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority,  arbitrator, court or administrative agency which could have a material adverse effect on the financial  condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the  date hereof.  SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT.  The annual financial  statement of Borrower dated April 30, 2012, and all interim financial statements delivered to Bank since  said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are  complete and correct and present fairly the financial condition of Borrower, (b) disclose all liabilities of  Borrower that are required to be reflected or reserved against under GAAP, whether liquidated or  unliquidated, fixed or contingent, and (c) have been prepared in accordance with GAAP consistently  applied.  Since the dates of such financial statements there has been no material adverse change in the  financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or  otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by  Bank in writing.  SECTION 2.6. INCOME TAX RETURNS.  Borrower has no knowledge of any pending  assessments or adjustments of its income tax payable with respect to any year.  SECTION 2.7. NO SUBORDINATION.  There is no agreement, indenture, contract or  instrument to which Borrower is a party or by which Borrower may be bound that requires the  subordination in right of payment of any of Borrower’s obligations subject to this Agreement to any other  obligation of Borrower.  SECTION 2.8. PERMITS, FRANCHISES.  Borrower possesses, and will hereafter possess, all  permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names,  patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now  engaged in compliance with applicable law.  SECTION 2.9. ERISA.  Borrower is in compliance in all material respects with all applicable  provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time  to time (“ERISA”); Borrower has not violated any provision of any defined employee pension benefit  plan (as defined in ERISA) maintained or contributed to by Borrower (each, a “Plan”); no Reportable  Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower;  Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each  Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents  and under GAAP.  SECTION 2.10. OTHER OBLIGATIONS.  Borrower is not in default on any obligation for  borrowed money, any purchase money obligation or any other material lease, commitment, contract,  instrument or obligation.  SECTION 2.11. ENVIRONMENTAL MATTERS.  Except as disclosed by Borrower to Bank in  writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable  





 






-11- CHAR2\2445046v5 federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations  adopted pursuant thereto, which govern or affect any of Borrower’s operations and/or properties,  including without limitation, the Comprehensive Environmental Response, Compensation and Liability  Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource  Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the  same may be amended, modified or supplemented from time to time.  None of the operations of Borrower  is the subject of any federal or state investigation evaluating whether any remedial action involving a  material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into  the environment.  Borrower has no material Environmental Liability in connection with any release of any  toxic or hazardous waste or substance into the environment.  For purposes herein, “Environmental  Liability” means any liability, contingent or otherwise (including any liability for damages, costs of  environmental remediation, fines, penalties or indemnities), of Borrower directly or indirectly resulting  from or based upon (a) violation of any environmental law, (b) the generation, use, handling,  transportation, storage, treatment or disposal of any hazardous materials, (c) exposure to any hazardous  materials, (d) the release or threatened release of any hazardous materials into the environment or (e) any  contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed  with respect to any of the foregoing.  SECTION 2.12. COLLATERAL.    (a) All of the Pledged Interests are validly issued and outstanding, fully paid and non-assessable  and constitute 65% of the issued and outstanding Voting Equity Interests (or if the Borrower owns less  than 65% of such Voting Equity Interests, then 100% of the Voting Equity Interests owned by the  Borrower) and 100% of the other issued and outstanding Equity Interests of each Pledged Subsidiary, and  are accurately described on Schedule 1.5(b).  (b) All Collateral is owned by the Borrower free of any liens, charges, equities, options,  hypothecations, encumbrances and restrictions on pledge or transfer, including transfer of voting rights,  other than Liens permitted by Section 5.7.  Without limiting the foregoing, the Pledged Interests are not  and will not be subject to any voting trust, shareholders agreement, right of first refusal, voting proxy,  power of attorney or other similar arrangement.  ARTICLE III  CONDITIONS  SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation of  Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank’s  satisfaction of all of the following conditions:  (a) Approval of Bank Counsel.  All legal matters incidental to the extension of credit by Bank  shall be satisfactory to Bank’s counsel.  (b) Documentation.  Bank shall have received, in form and substance satisfactory to Bank, each  of the following, duly executed:  (i) This Agreement and each promissory note or other instrument or document required  hereby;  (ii) Revolving Line of Credit Note;  (iii) Term Note A; and  (iv) Term Note B.  





 






-12- CHAR2\2445046v5 (c) Financial Condition.  There shall have been no material adverse change, as determined by  Bank, in the financial condition or business of Borrower, nor any material decline, as determined by  Bank, in the market value of any collateral required hereunder or a substantial or material portion of the  assets of Borrower.  (d) Insurance.  Borrower shall have delivered to Bank evidence of insurance coverage on all  Borrower’s property, in form, substance, amounts, covering risks and issued by companies satisfactory to  Bank, and where required by Bank, with loss payable endorsements in favor of Bank.  (e) Lien Searches.  Bank shall have received lien searches (including Uniform Commercial  Code, judgments, bankruptcy and taxes) with respect to the Borrower and each of its fictitious trade  names (at the state and county level) from the jurisdiction of its organization and each other jurisdiction in  which it maintains an office, (i) showing no existing Liens on the property of the Borrower except as  permitted hereunder or (ii) accompanied by necessary termination statements, release statements and any  other types of release in connection with any impermissible Liens disclosed by such searches that have  been filed or for which satisfactory arrangements have been made for such filing on the Closing Date.  (f) Payoff Letter; Termination of Liens.  For each lender whose outstanding debt is to be  satisfied by remittance of proceeds of any loan on the Closing Date, Bank shall have received a complete  and final payoff letter or other evidence satisfactory to the Bank, that as of the Closing Date, (i) all  commitments and indebtedness owed to such lender will be repaid and cancelled on or before the first  disbursement under this Agreement and (ii) all Liens in favor of such lender will be terminated and  cancelled promptly in connection with the repayment and cancellation of the commitments and  indebtedness described in clause (i) above.  (g) Organizational Documents.  Bank shall have received a copy of the Borrower’s  organizational documents, in form and substance satisfactory to the Bank.    (h) Good Standings.  Bank shall have received a certificate of existence, authorization, good  standing certificate, or its equivalent of the Borrower from the Secretary of State of its jurisdiction of  incorporation and the Secretary of State of each other jurisdiction in which it is qualified to do business as  a foreign corporation, if any.  (i) Secretary’s Certificate.  Bank shall have received a certificate in form and substance  satisfactory to Bank from the Borrower, dated the Closing Date and signed on behalf of the Borrower by  an authorized officer of the Borrower certifying as to (i) true copies of the organizational documents of  the Borrower and any amendments thereto, (ii) the resolutions of the directors and/or shareholders (as the  case may be) of the Borrower authorizing the execution and delivery of this Agreement and the other  Loan Documents to which it is a party and (iii) the names, true signatures and incumbency of the officers  of the Borrower authorized to execute and deliver the Loan Documents to which it is a party.  The Bank  may conclusively rely on such certification unless and until a later certificate revising the prior certificate  has been furnished to the Bank.    (j) Opinion of Counsel.  Bank shall have received an opinion of counsel on behalf of the  Borrower, dated the Closing Date, in form and substance satisfactory to the Bank in absolute discretion.  (k) Deposit Accounts.  Bank shall have received evidence that the Borrower as required hereby  has established its primary operating and depository accounts with the Bank.  (l) Miscellaneous.  Bank shall have received such other instruments, documents, certificates,  assurances and opinions as may be set forth in the closing checklist delivered to the Borrower in  





 






-13- CHAR2\2445046v5 connection with this Agreement or as the Bank shall reasonably require to evidence and secure the Loans,  to comply with the provisions hereof and the requirements of regulatory authorities to which the Bank is  subject, all of which, including those referred to above in this Section 3.1 shall be satisfactory in form,  content and substance to the Bank.  SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of Bank  to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to  Bank’s satisfaction of each of the following conditions:  (a) Compliance.  The representations and warranties contained herein and in each of the other  Loan Documents shall be true on and as of the date of the signing of this Agreement and on the date of  each extension of credit by Bank pursuant hereto, with the same effect as though such representations and  warranties had been made on and as of each such date, and on each such date, no Event of Default as  defined herein, and no condition, event or act which with the giving of notice or the passage of time or  both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.  (b) Documentation.  Bank shall have received all additional documents which may be required  in connection with such extension of credit.  ARTICLE IV  AFFIRMATIVE COVENANTS  Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant  hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank  under any of the Loan Documents remain outstanding, and until payment in full of all obligations of  Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:  SECTION 4.1. PUNCTUAL PAYMENTS.  Punctually pay all principal, interest, fees or other  liabilities due under any of the Loan Documents at the times and place and in the manner specified  therein, and immediately upon demand by Bank, the amount by which the outstanding principal balance  of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.  SECTION 4.2. ACCOUNTING RECORDS.  Maintain adequate books and records in  accordance with GAAP consistently applied, and permit any representative of Bank, at any reasonable  time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the  properties of Borrower.  If at any time any change in generally accepted accounting principles would  affect the computation of any covenant (including the computation of any financial covenant) and/or  pricing grid set forth in this Agreement or any other Loan Document, Borrower and Bank shall negotiate  in good faith to amend such covenant and/or pricing grid to preserve the original intent in light of such  change; provided, that, until so amended, (i) such covenant and/or pricing grid shall continue to be  computed in accordance with the application of generally accepted accounting principles prior to such  change and (ii) Borrower shall provide to Bank a written reconciliation in form and substance reasonably  satisfactory to Bank, between calculations of such covenant and/or pricing grid made before and after  giving effect to such change in generally accepted accounting principles.  SECTION 4.3. FINANCIAL STATEMENTS.  Provide to Bank all of the following, in form  and detail satisfactory to Bank:  (a) as soon as available, but in any event within 120 days after the end of each fiscal year of the  Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal  year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows  





 






-14- CHAR2\2445046v5 for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year,  all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be  audited and accompanied by a report and opinion of a certified public accounting firm reasonably  acceptable to the Bank, which report and opinion shall be prepared in accordance with generally accepted  auditing standards and applicable securities laws and shall not be subject to any “going concern” or like  qualification or exception or any qualification or exception as to the scope of such audit or with respect to  the absence of any material misstatement;  (b) as soon as available, but in any event within 45 days after the end of each fiscal quarter of  the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such  fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and  cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting  forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous  fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such  consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or  controller of the Borrower as fairly presenting the financial condition, results of operations, shareholders’  equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to  normal year-end audit adjustments and the absence of footnotes;  (c) contemporaneously with each annual and quarterly financial statement of Borrower required  hereby, a compliance certificate, signed by an authorized financial officer of the Borrower (i) certifying  that said financial statements are accurate and that there exists no Event of Default nor any condition, act  or event which with the giving of notice or the passage of time or both would constitute an Event of  Default and (ii) setting forth the information and computations (in sufficient detail) to establish that the  Borrower is in compliance with all financial covenants at the end of the period covered by the financial  statements then being furnished;  (d) promptly after any request by the Bank, copies of any detailed audit reports, management  letters or recommendations submitted to the board of directors (or the audit committee of the board of  directors) of the Borrower by independent accountants in connection with the accounts or books of the  Borrower or any of its Subsidiaries, or any audit of any of them;  (e) promptly after the same are available, copies of each annual report, proxy or financial  statement or other report or communication sent to the stockholders of the Borrower, and copies of all  annual, regular, periodic and special reports and registration statements which the Borrower may file or  be required to file with the Securities Exchange Commission (“SEC”) under Section 13 or 15(d) of the  Securities Exchange Act of 1934, or with any national securities exchange, and in any case not otherwise  required to be delivered to the Bank pursuant hereto;  (f) not later than 30 days after the end of each fiscal year, the company-prepared financial  projections of Borrower, to include a projected balance sheet and related statements of projected  operations and cash flow, as of the end of such fiscal year and for the next succeeding fiscal year and  setting forth the assumptions used for purposes of preparing such budget and, promptly when available,  any significant revisions of such projections; provided that the financial projections for the fiscal year  ending April 30, 2022 shall be delivered no later than March 15, 2021 and shall be subject to review and  approval by a financial advisor approved by Bank in its sole discretion;  (g) promptly, and in any event within five (5) business days after receipt thereof by the  Borrower or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC  (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible  





 






-15- CHAR2\2445046v5 investigation or other inquiry by such agency regarding financial or other operational results of the  Borrower or any Subsidiary thereof;  (h) on the last business day of each calendar week, a forecast of cash flows of the Borrower for  the following thirteen-week period;  (i) not later than 30 days after the end of each calendar month, a completed and fully executed  Borrowing Base Certificate together with all supporting schedules and calculations and, upon request by  Bank, copies of any executed acknowledgment letters in favor of Bank;  (j) not later than the third business day of each month, an accounting of Supplemental  Liquidity, as defined in Section 4.9(b) herein, including all cash and cash equivalents of the Borrower  held in the United States together with all supporting schedules and calculations, as may be requested by  the Bank; and  (k) promptly, such additional information regarding the business, financial, legal or corporate  affairs of the Borrower or any Subsidiary thereof, or compliance with the terms of the Loan Documents,  as the Bank may from time to time reasonably request.  SECTION 4.4. COMPLIANCE.  Preserve and maintain all licenses, permits, governmental  approvals, rights, privileges and franchises necessary for the conduct of its business; comply with the  provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s  continued existence; and comply with the requirements of all laws, rules, regulations and orders of any  jurisdiction in which the Borrower is located or doing business, or otherwise is applicable to Borrower,  including, without limitation, (a) all Sanctions, (b) all laws and regulations that relate to money  laundering, any predicate crime to money laundering, or any financial record keeping and reporting  requirements related thereto, (c)  the U.S. Foreign Corrupt Practices Act of 1977, as amended, (d) the  U.K. Bribery Act of 2010, as amended, and (e) any other applicable anti-bribery or anti-corruption laws  and regulations.  SECTION 4.5. INSURANCE.  Maintain and keep in force, for each business in which  Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines of  business, including but not limited to fire, extended coverage, public liability, flood, property damage and  workers’ compensation, with all such insurance carried with companies and in amounts satisfactory to  Bank, and deliver to Bank from time to time at Bank’s request schedules setting forth all insurance then in  effect.    SECTION 4.6. FACILITIES.  Keep all properties useful or necessary to Borrower’s business  in good repair and condition, and from time to time make necessary repairs, renewals and replacements  thereto so that such properties shall be fully and efficiently preserved and maintained.  SECTION 4.7. TAXES AND OTHER LIABILITIES.  Pay and discharge when due any and all  indebtedness, obligations, assessments and Taxes, both real or personal, including without limitation  federal and state income Taxes and state and local property Taxes and assessments, except (a) such as  Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which  Borrower has made provision, to Bank’s satisfaction, for eventual payment thereof in the event Borrower  is obligated to make such payment.  SECTION 4.8. LITIGATION; ENVIRONMENTAL MATTERS.  Promptly give notice in  writing to Bank of, (a) any litigation pending or threatened against Borrower with a claim in excess of  $250,000, and (b) any pending or threatened Environmental Liabilities against Borrower or any of its  





 






-16- CHAR2\2445046v5 properties in excess of $500,000 (to the extent not covered by independent third-party insurance as to  which the insurer does not dispute coverage).    SECTION 4.9. FINANCIAL CONDITION.  Maintain Borrower’s financial condition as  follows using GAAP consistently applied and used consistently with prior practices (except to the extent  modified by the definitions herein):  (a) Minimum Monthly Liquidity as of the end of each calendar month not less than (i) during  the period from the Eighth Amendment Effective Date through January 31, 2020, $1,500,000 and (ii)  thereafter, $2,000,000; with “Minimum Monthly Liquidity” defined as the “Total Borrowing Base  Availability” as indicated on the Borrowing Base Certificate for such calendar month.    (b) Supplemental Liquidity as of the first day of each calendar month not less than (i) during the  period from August 1, 2021 through December 31, 2021, $1,000,000 and (ii) thereafter $1,500,000.   As used in this section, “Supplemental Liquidity” shall mean the “Total Borrowing Base Availability” as  indicated on the most recently delivered Borrowing Base Certificate, plus any cash of the Borrower held  in the United States as of the first day of such calendar month minus (i) any amounts outstanding pursuant  to the Line of Credit as of the first day of such calendar month, (ii) any amounts outstanding pursuant to  issued Letters of Credit as of the first day of such calendar month and (iii) $2,000,000.  SECTION 4.10. NOTICE TO BANK.  Promptly (but in no event more than five (5) days after  the occurrence of each such event or matter) give written notice to Bank in reasonable detail of:  (a) the  occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the  passage of time or both would constitute an Event of Default; (b) any change in the name or the  organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited  Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any  termination or cancellation of any insurance policy which Borrower is required to maintain, or any  uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any  other cause affecting Borrower’s property in excess of an aggregate of $250,000.00.  SECTION 4.11.  REPATRIATION.  Initiate no later than December 31, 2019 a cash repatriation  in an amount not less than $4,000,000, calculated on a pre-tax basis.  SECTION 4.12.  APPRAISALS.  Provide to Bank the following, in each case to be prepared by  a Person acceptable to Bank in its sole discretion, and at the expense of Borrower: (a) as soon as  available, but in any event within sixty (60) days after the Eighth Amendment Effective Date, an appraisal  of all equipment of Borrower, (b) at any time upon request by Bank, but not more than two (2) times per  calendar year, an appraisal of all inventory of Borrower and (c) at any time upon request by Bank, but not  more than two (2) times per calendar year, a field examination of Borrower.  ARTICLE V  NEGATIVE COVENANTS  Borrower further covenants that so long as Bank remains committed to extend credit to Borrower  pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to  Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of  Borrower subject hereto, Borrower will not without Bank’s prior written consent:  SECTION 5.1. USE OF FUNDS.  Use any of the proceeds of any credit extended hereunder  except for the purposes stated in Article I hereof, or directly or indirectly use any such proceeds for the  purpose of (a) providing financing to, or otherwise funding, any targets of Sanctions; or (b) providing  





 






-17- CHAR2\2445046v5 financing for, or otherwise funding, any transaction which would be prohibited by Sanctions or would  otherwise cause Bank or any of Bank’s affiliates to be in breach of any Sanctions.  SECTION 5.2. OTHER INDEBTEDNESS.  Create, incur, assume or permit to exist any  indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured,  matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to  Bank, (b) any other liabilities of Borrower existing as of the date hereof and set forth on Schedule 5.2, (c)  current accounts payable, accrued expenses and other expenses arising out of transactions (other than  borrowing) in the ordinary course of business on ordinary and customary trade terms, (d) additional  indebtedness and capital lease obligations for business purposes which do not exceed an individual  principal amount of $1,000,000, or an aggregate principal amount of $2,000,000 outstanding in any fiscal  year of the Borrower and (e) in connection with the endorsement and deposit of checks in the ordinary  course of business for collection.  For the avoidance of doubt, the provisions of this Section shall not  apply to any obligations of the Borrower under any operating leases.  SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  (a) Merge into or  consolidate with any other Person; (b) make any substantial change in the nature of Borrower’s business  as conducted as of the date hereof; (c) acquire all or substantially all of the assets of any other Person; nor  (d) sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower’s assets  except in the ordinary course of its business.  SECTION 5.4. GUARANTIES.  Guarantee or become liable in any way as surety, endorser  (other than (i) pursuant to the HSBC Unsecured Guaranty or (ii) as endorser of negotiable instruments for  deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor  pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other  Person.  SECTION 5.5. LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to or  investments in any Person, except (a) investments, loans, advances and extensions of credit disclosed in  Schedule 5.5, (b) investments made after the date hereof in the Borrower’s Subsidiaries in an aggregate  amount not to exceed $400,000 outstanding at any time, unless such Subsidiaries guaranty the Borrower’s  obligations hereunder on terms and conditions satisfactory to the Bank, (c) investments in U.S. treasury  bills and other obligations of the federal government or any agency thereo, (d) repurchase obligations  with a term of not more than ninety (90) days for underlying investments of the types described in clause  (c) above, (e) other investments approved in writing by the Bank in its sole discretion, (f) loans, advances  and extensions of credit made after the date hereof to the Borrower’s Subsidiaries in an aggregate amount  not to exceed $400,000 outstanding at any time, unless such Subsidiaries guaranty the Borrower’s  obligations hereunder on terms and conditions satisfactory to the Bank, (g) loans, advances and  extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease  of goods or services in the ordinary course of business to non-affiliated Persons or to affiliated Persons  upon terms and conditions that are consistent with dealings on an arm’s length basis and (h) other loans,  advances and extensions of credit not exceeding $100,000 in the aggregate in any fiscal year of the  Borrower.  SECTION 5.6. DIVIDENDS, DISTRIBUTIONS.  Declare or pay any dividend or distribution  either in cash, stock or any other property on Borrower’s stock now or hereafter outstanding, nor redeem,  retire, repurchase or otherwise acquire any shares of any class of Borrower’s stock now or hereafter  outstanding, except for (a) dividends and distributions made under Borrower’s restricted stock  compensation plan, long-term incentive plan or directors’ compensation plan and (b) cash dividends and  distributions from the Borrower to its owners, so long as (a) no Event of Default or event which, with  notice or the passage of time, will constitute an Event of Default has occurred and is continuing or will  





 






-18- CHAR2\2445046v5 result therefrom (giving effect thereto on a pro forma basis as if such payment were made on the first day  of the fiscal quarter ending April 30, 2021) and (b) the Fixed Charge Coverage Ratio, calculated as of the  last day of the immediately preceding calendar month, for the twelve-month period then ended, is greater  than 2.50.  As used herein, “Fixed Charge Coverage Ratio” means for the Borrower and its Subsidiaries,  as of any date of determination, the ratio of (a) EBITDA for the twelve-month period then ended plus  lease expense and rent expense for such period, minus income taxes paid, and dividends, withdrawals,  and other distributions made, in such period, to (b) the sum of interest expense, lease expense, rent  expense for such period, plus the current portion of long term debt, and the current portion of capitalized  lease obligations required to have been made during such period (whether or not such payments are  actually made).  SECTION 5.7. PLEDGE OF ASSETS.  Grant or permit to exist any Lien upon, all or any  portion of Borrower’s assets now owned or hereafter acquired, except (a) Liens and security interests in  favor of the Bank, (b) Liens for taxes not yet due, (c) Liens existing on the date of this Agreement  disclosed in Schedule 5.7, (d) additional capitalized lease obligations and purchase money security  interests in assets acquired after the date of this Agreement, if the total principal amount secured by such  Liens does not exceed $500,000 at any one time, (e) Liens incidental to the conduct of business or the  ownership of properties and assets (including Liens in connection with worker’s compensation,  unemployment insurance and other like laws (excluding Liens imposed by ERISA or the substantial  equivalent under foreign law (including any statutory Liens for profit sharing plans imposed by foreign  law)), warehousemen’s mechanic’s materialmen’s and attorneys’ Liens, and statutory or common law  landlords’ Liens (or the substantial equivalent under foreign law)) and Liens and pledges or deposits to  secure the performance of bids, tenders or trade contracts, or to secure statutory obligations, surety or  appeal bonds or other Liens of like general nature incurred in the ordinary course of business and not in  connection with the borrowing of money, provided, in each case, the obligation secured is not more than  30 days overdue or, if so overdue, is being contested in good faith by appropriate actions or proceedings  and adequate reserves have been established in accordance with GAAP, (f) Liens of or resulting from any  judgment or award not constituting an Event of Default under Section 6.1(h), (g) minor survey exceptions  or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other  similar purposes, or zoning or other restrictions as to the use of real properties, which are necessary for  the conduct of the activities of the Borrower and its Subsidiaries or which customarily exist on properties  of companies engaged in similar activities and similarly situated and which do not in any event materially  impair their use in the operation of the business of the Borrower and its Subsidiaries, (h) Liens or set-off  rights arising by contract in the ordinary course of business or by law and in connection with cash  management and banking arrangements entered into in the ordinary course of business or (i) Liens  securing obligations under interest rate hedge agreements.  Without limiting the generality of the  foregoing, Borrower shall not grant or permit to exist any Lien upon the real property and improvements  located at 2700 West Front Street, Statesville, Iredell County, North Carolina 28677, except for Liens  described in clauses (b), (e), (f) and (g) of the immediately preceding sentence.  SECTION 5.8. DOUBLE NEGATIVE PLEDGE.  Borrower will not enter into or permit to  exist any material agreement (other than this Agreement or any other Loan Document) that (a) limits the  ability of Borrower to create, incur, assume or suffer to exist Liens on its property; or (b) requires the  grant of a Lien to secure an obligation of Borrower if a Lien is granted to secure another obligation of  Borrower.  SECTION 5.9. COLLATERAL.  (a) Not to permit any Pledged Interests (i) to be held or maintained in the form of a security  entitlement or credited to any securities account and (ii) which constitute a “security” (or as to which the  related Pledged Subsidiary has elected to have treated as a “security”) under Article 8 of the UCC  





 






-19- CHAR2\2445046v5 (including, for the purposes of this Section 5.9(a), the Uniform Commercial Code of any other applicable  jurisdiction) to be maintained in the form of uncertificated securities.  (b) To cause the Pledged Interests that constitute “securities” (or as to which the issuer elects to  have treated as “securities”) under the UCC to be represented by the certificates now and hereafter  delivered to Bank and that it shall cause each of the Pledged Subsidiaries not to issue any Equity Interests,  or securities convertible into, or exchangeable or exercisable for, Equity Interests, at any time during the  term of this Agreement.  SECTION 5.10. CHANGE IN NATURE OF BUSINESS.  Engage in any material line of  business substantially different from those lines of business conducted by the Borrower and its  Subsidiaries on the date hereof or any business substantially related or incidental thereto.  SECTION 5.11. ACCOUNTING CHANGES.  Make any change in (a) accounting policies or  reporting practices, except as required by GAAP, or (b) fiscal year.  SECTION 5.12. CHANGE OF MANAGEMENT.  Make any substantial change in the present  executive or management personnel of the Borrower without providing the Bank written notice within ten  (10) days of such change.  SECTION 5.13. CHANGE OF CONTROL.  Cause, permit, or suffer any change in control of  Borrower or any Person or combination of Persons that directly or indirectly control Borrower, with  “control” defined as ownership of an aggregate of fifty percent (50%) or more of the common stock,  members’ equity or other ownership interest (other than a limited partnership interest).  ARTICLE VI  EVENTS OF DEFAULT  SECTION 6.1. The occurrence of any of the following shall constitute an “Event of Default”  under this Agreement:  (a) Borrower shall fail to pay when due any principal, interest, fees or other amounts payable  under any of the Loan Documents.   (b) Any financial statement or certificate furnished to Bank in connection with, or any  representation or warranty made by Borrower or any other party under this Agreement or any other Loan  Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.   (c) [Reserved].  (d) Borrower fails to perform or observe any term, covenant or agreement contained in any of  Section 4.3, 4.4, 4.9 or Article V.  (e) Any default in the performance of or compliance with any obligation, agreement or other  provision contained herein or in any other Loan Document (other than those specifically described as an  “Event of Default” in this Section 6.1), and with respect to any such default that by its nature can be  cured, such default shall continue for a period of thirty (30) days from its occurrence.   (f) Any default in the payment or performance of any obligation, or any defined Event of  Default, under the terms of any contract, instrument or document (other than any of the Loan Documents)  pursuant to which Borrower or any of its Subsidiaries has incurred any debt or other liability to any  





 






-20- CHAR2\2445046v5 Person, including Bank; provided, however, that any cure period applicable to such default has expired,  and with respect to a default under any obligation to any Person other than Bank, the amount of said  obligation exceeds $1,000,000, individually or in the aggregate.   (g) Borrower or any of its Subsidiaries shall become insolvent, or shall suffer or consent to or  apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or  shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit  of creditors; Borrower or any of its Subsidiaries shall file a voluntary petition in bankruptcy, or seeking  reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the  Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time  (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or  hereafter in effect; or Borrower or any of its Subsidiaries shall file an answer admitting the jurisdiction of  the court and the material allegations of any involuntary petition; or Borrower or any its Subsidiaries shall  be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any of its  Subsidiaries by any court of competent jurisdiction under the Bankruptcy Code or any other applicable  state or federal law relating to bankruptcy, reorganization or other relief for debtors.  (h) Any judgments or arbitration awards are entered against the Borrower or any of its  Subsidiaries, or the Borrower or any of its Subsidiaries enters into any settlement agreements with respect  to any litigation or arbitration, in an aggregate amount $500,000 (to the extent not covered by independent  third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been  notified of the potential claim and does not dispute coverage).  (i) The service of a notice of levy and/or of a writ of attachment or execution, or other like  process, against all or any material part of the assets of Borrower or any of its Subsidiaries and is not  released, vacated or fully bonded within 30 days after its issue or levy.   (j) Any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other  applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or  commenced against Borrower or any of its Subsidiaries, and the involuntary petition or proceeding  continues undismissed more than 60 days following the date of its filing.   (k) The Bank fails to have an enforceable first Lien on or security interest in any property given  as security for the Borrower’s obligations under this Agreement and the other Loan Documents, subject to  Liens permitted by Section 5.7.  (l) The dissolution or liquidation of Borrower or any of its material Subsidiaries; or Borrower or  any of its material Subsidiaries, or any of its directors, stockholders or members, shall take action seeking  to effect the dissolution or liquidation of Borrower or such Subsidiary.   (m) Any provision of this Agreement or any Loan Document, at any time after its execution and  delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in  full of all the Borrower’s obligations hereunder or thereunder, ceases to be in full force and effect in any  material respect; or the Borrower or any other Person contests in any manner the validity or enforceability  of any provision of this Agreement or any Loan Document; or the Borrower denies that it has any or  further liability or obligation under this Agreement or any Loan Document (provided, however, that if  Borrower claims that such obligations have been paid, such claim shall not be considered a denial of  liability), or purports to revoke, terminate or rescind any provision of this Agreement or any Loan  Document.  





 






-21- CHAR2\2445046v5 (n) Any government authority takes action that the Bank believes materially adversely affects  the Borrower’s financial condition or ability to repay.  (o) A material portion of the Equipment is so demolished, destroyed or damaged that, in the  reasonable opinion of the Bank, the Equipment cannot be restored, rebuilt or replaced with available  funds within a reasonable period of time and in any event, prior to the maturity of the Term Loans.  (p) The aggregate amount of the HSBC Unsecured Guaranty exceeds Six Million and 00/100  Dollars ($6,000,000.00) for more than thirty (30) consecutive days.  SECTION 6.2. REMEDIES.  Upon the occurrence of any Event of Default:  (a) all  indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary  notwithstanding, shall at Bank’s option and without notice become immediately due and payable without  presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by  Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan  Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and  remedies available under each of the Loan Documents, or accorded by law, including without limitation  the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights  of a beneficiary or secured party pursuant to applicable law.  All rights, powers and remedies of Bank  may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default,  are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies  provided by law or equity.  ARTICLE VII  MISCELLANEOUS  SECTION 7.1. NO WAIVER.  No delay, failure or discontinuance of Bank in exercising any  right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right,  power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude,  waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or  remedy.  Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under  any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such  writing.  SECTION 7.2. NOTICES.  All notices, requests and demands which any party is required or  may desire to give to any other party under any provision of this Agreement must be in writing delivered  to each party at the following address:   BORROWER: Kewaunee Scientific Corporation  P.O. Box 1842  Statesville, North Carolina  28687  Attention:  Thomas D. Hull III   BANK: WELLS FARGO BANK, NATIONAL ASSOCIATION  301 S. College St. 15th Floor  Charlotte, NC 28202  Attention: Kristin Davis  SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS’ FEES; INDEMNITY.    





 






-22- CHAR2\2445046v5 (a) Borrower shall pay to Bank immediately upon demand the full amount of all payments,  advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel  fees and all allocated costs of Bank’s in-house counsel), expended or incurred by Bank in connection with  (a) the negotiation and preparation of this Agreement and the other Loan Documents, Bank’s continued  administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto,  (b) the enforcement of Bank’s rights and/or the collection of any amounts which become due to Bank  under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to  any of the Loan Documents, including without limitation, any action for declaratory relief, whether  incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the  foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any  adversary proceeding, contested matter or motion brought by Bank or any other Person) relating to  Borrower or any other Person.  (b) Borrower shall indemnify Bank and each of its affiliates and the partners, directors, officers,  employees, agents and advisors (each, an “Indemnitee”) against, and hold each of them harmless from,  any and all costs, losses, liabilities, claims, damages and related expenses, including the fees, charges and  disbursements of any counsel for any Indemnitee, which may be incurred by or asserted against any  Indemnitee arising out of, in connection with or as a result of (i) the execution or delivery of any this  Agreement or any other agreement or instrument contemplated hereby, the performance by the parties  hereto of their respective obligations hereunder or the consummation of any of the transactions  contemplated hereby, (ii) any of the Line of Credit or the Term Loans or any actual or proposed use of the  proceeds therefrom, (iii) any actual or alleged presence or release of hazardous materials on or from any  property owned by Borrower or any Environmental Liability related in any way to Borrower or (iv) any  actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing,  whether based on contract, tort, or any other theory and regardless of whether any Indemnitee is a party  thereto; provided, that Borrower shall not be obligated to indemnify any Indemnitee for any of the  foregoing arising out of such Indemnitee’s gross negligence or willful misconduct as determined by a  court of competent jurisdiction in a final and nonappealable judgment.  SECTION 7.4. SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding upon and  inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of  the parties; provided however, that Borrower may not assign or transfer its interests or rights hereunder  without Bank’s prior written consent.  Bank reserves the right to sell, assign, transfer, negotiate or grant  participations in all or any part of, or any interest in, Bank’s rights and benefits under each of the Loan  Documents.  In connection therewith, Bank may disclose all documents and information which Bank now  has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, or any  collateral required hereunder.  SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other Loan  Documents constitute the entire agreement between Borrower and Bank with respect to each credit  subject hereto and supersede all prior negotiations, communications, discussions and correspondence  concerning the subject matter hereof.  This Agreement may be amended or modified only in writing  signed by each party hereto.  SECTION 7.6. NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered  into for the sole protection and benefit of the parties hereto and their respective permitted successors and  assigns, and no other Person shall be a third party beneficiary of, or have any direct or indirect cause of  action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not  a party.  





 






-23- CHAR2\2445046v5 SECTION 7.7. TIME.  Time is of the essence of each and every provision of this Agreement  and each other of the Loan Documents.  SECTION 7.8. SEVERABILITY OF PROVISIONS.  If any provision of this Agreement shall  be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of  such prohibition or invalidity without invalidating the remainder of such provision or any remaining  provisions of this Agreement.  SECTION 7.9. COUNTERPARTS.  This Agreement may be executed in any number of  counterparts, each of which when executed and delivered shall be deemed to be an original, and all of  which when taken together shall constitute one and the same Agreement.  SECTION 7.10. GOVERNING LAW.  This Agreement shall be governed by and construed in  accordance with the laws of the State of North Carolina, without reference to the conflicts of law or  choice of law principles thereof.  SECTION 7.11. ARBITRATION; WAIVER OF JURY TRIAL.  (a) Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding  arbitration all claims, disputes and controversies between or among them (and their respective employees,  officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising  out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation,  execution, collateralization, administration, repayment, modification, extension, substitution, formation,  inducement, enforcement, default or termination; or (ii) requests for additional credit.  (b) Governing Rules.  Any arbitration proceeding will (i) proceed in a location in North Carolina  selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration  Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of  the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the  parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution  procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest,  arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s  optional procedures for large, complex commercial disputes (the commercial dispute resolution  procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as  applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the  terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration  following a demand by any other party shall bear all costs and expenses incurred by such other party in  compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any  party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state  law.  (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration  requirement does not limit the right of any party to (i) foreclose against real or personal property  collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or  repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief,  attachment or the appointment of a receiver, before during or after the pendency of any arbitration  proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit  any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions  detailed in sections (i), (ii) and (iii) of this paragraph.  





 






-24- CHAR2\2445046v5 (d) Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in  controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules,  and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in  controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators;  provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The  arbitrator will be a neutral attorney licensed in the State of North Carolina or a neutral retired judge of the  state or federal judiciary of North Carolina, in either case with a minimum of ten years’ experience in the  substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will  determine whether or not an issue is arbitrable and will give effect to the statutes of limitation in  determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or  with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to  dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all  disputes in accordance with the substantive law of North Carolina and may grant any remedy or relief that  a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary  to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and  fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same  extent a judge could pursuant to the Federal Rules of Civil Procedure, the North Carolina Rules of Civil  Procedure or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in  any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of  a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the  plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for  judicial relief.  (e) Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the  Rules.  All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated  and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the  discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon  a showing that the request for discovery is essential for the party’s presentation and that no alternative  means for obtaining information is available.  (f) Class Proceedings and Consolidations.  No party hereto shall be entitled to join or  consolidate disputes by or against others in any arbitration, except parties who have executed any Loan  Document, or to include in any arbitration any dispute as a representative or member of a class, or to act  in any arbitration in the interest of the general public or in a private attorney general capacity.   (g) Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of  the arbitration proceeding.  (h) Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties  shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the  dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the  existence, content or results thereof, except for disclosures of information by a party required in the  ordinary course of its business or by applicable law or regulation.  If more than one agreement for  arbitration by or between the parties potentially applies to a dispute, the arbitration provision most  directly related to the Loan Documents or the subject matter of the dispute shall control.  This arbitration  provision shall survive termination, amendment or expiration of any of the Loan Documents or any  relationship between the parties.  (i) Waiver of Jury Trial.  The parties hereto hereby acknowledge that by agreeing to binding  arbitration they have irrevocably waived their respective rights to a jury trial with respect to any action,  claim or other proceeding arising out of any dispute in connection this Agreement or any other agreement  





 






-25- CHAR2\2445046v5 or document delivered in connection herewith, any rights or obligations hereunder or thereunder, or the  performance of such rights and obligations.  This provision is a material inducement for the parties  entering into this Agreement.  [SIGNATURE PAGE FOLLOWS]  





 






CHAR2\2445046v5  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed, with the  intention that it constitute an instrument under seal, as of the day and year first written above.  KEWAUNEE SCIENTIFIC WELLS FARGO BANK,  CORPORATION NATIONAL ASSOCIATION  By:  (seal) By:   Name: Donald T. Gardner III Name: Kristin Davis  Title: Vice President – Finance and Title: Senior Vice President  Chief Financial Officer  





 






CHAR2\2445046v5  Annex I  Certain Definitions  In addition to words and terms defined elsewhere in the Agreement, the following terms shall  have the meanings provided below:  “Borrowing Base Certificate” means a certificate substantially in the form of Exhibit B or in such  other form as determined from time to time by Bank in its sole discretion.  “Closing Date” means the date of this Agreement.  “Direct Foreign Subsidiary” means any Foreign Subsidiary if Equity Interests representing more  than 50% of either the aggregate ordinary voting power or the aggregate equity value represented by the  issued and outstanding Equity Interests of such Person are owned by the Borrower, a Domestic  Subsidiary or any combination thereof.  “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political  subdivision of the United States.  “Eighth Amendment Effective Date” means December 13, 2019.”  “Eligible Accounts Receivable” (a) means trade accounts created in the ordinary course of  Borrower’s business, upon which Borrower’s right to receive payment is absolute and not contingent  upon the fulfillment of any condition whatsoever, and in which Bank has a perfected security interest of  first priority and (b) shall not include:   (i) any account that has been outstanding more than (A) three times Borrower’s standard  selling terms or (B) 60 days past due or 90 days from the date of the invoice, whichever is less;   (ii) that portion of any account for which there exists any right of setoff, defense or  discount (except regular discounts allowed in the ordinary course of business to promote prompt  payment) or for which any defense or counterclaim has been asserted;   (iii) that portion of any account which represents an obligation of any state or municipal  government or of the United States government or any political subdivision thereof (except accounts  which represent obligations of the United States government and for which the assignment provisions of  the Federal Assignment of Claims Act, as amended or recodified from time to time, have been complied  with to Bank’s satisfaction) that exceeds ten percent (10%) of Borrower’s total accounts;   (iv) any account which represents an obligation of an account debtor located in a foreign  country, except to the extent any such account, in Bank’s determination, is supported by a letter of credit  or insured under a policy of foreign credit insurance, in each case in form, substance and issued by a party  acceptable to Bank;   (v) any account which arises from the sale or lease to or performance of services for, or  represents an obligation of, an employee, affiliate, partner, member, parent or subsidiary of Borrower;   (vi) that portion of any account, which represents interim or progress billings or retention  rights on the part of the account debtor;  





 






CHAR2\2445046v5  (vii) that portion of all “bill and hold” receivables that exceeds fifty percent (50%) of  Borrower’s total accounts, provided that, on and after February 1, 2020, any “bill and hold” receivables  that are not subject to an acknowledgment letter in favor of Bank substantially in the form of Exhibit A  shall be excluded from Eligible Accounts Receivable;  (viii) any account which represents an obligation of any account debtor when twenty  percent (20%) or more of Borrower’s accounts from such account debtor are not eligible pursuant to (i)  above;   (ix) that portion of any account from an account debtor which represents the amount by  which Borrower’s total accounts from said account debtor exceeds twenty-five percent (25%) of  Borrower’s total accounts; or   (x) any account deemed ineligible by Bank when Bank, in its sole discretion, deems the  creditworthiness or financial condition of the account debtor, or the industry in which the account debtor  is engaged, to be unsatisfactory.  “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other  ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase  or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in)  such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other  ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition  from such Person of such shares (or such other interests), and all of the other ownership or profit interests  in such Person (including partnership, member or trust interests therein), whether voting or nonvoting,  and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of  determination.  “Foreign Subsidiary” means a Subsidiary other than a Domestic Subsidiary and for purposes of  clarity with regards to Foreign Subsidiary Credit Lines includes Kewaunee Labway India Pvt. Ltd.  “Funded Debt” means the sum of all obligations for borrowed money (including the stated  amount of all letters of credit (including Letters of Credit), and all outstanding borrowings under the Line  of Credit and each Term Loan) plus obligations pursuant to any guarantee agreement (including pursuant  to the HSBC Unsecured Guaranty) plus capital lease obligations.  “GAAP” means generally accepted accounting principles in the United States of America.  “HSBC Unsecured Guaranty” means that certain Limited Guaranty, as most recently amended on  September 19, 2019, by the Borrower, as guarantor, in favor of The Hongkong and Shanghai Banking  Corporation Limited, India Branch, in an aggregate amount not to exceed the lesser of either INR 450  Million and 00/100 (INR 450,000,000) and Six Million and 00/100 Dollars ($6,000,000.00).  “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,  encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or  preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including  any conditional sale or other title retention agreement, any easement, right of way or other encumbrance  on title to real property, and any financing lease having substantially the same economic effect as any of  the foregoing).  





 






CHAR2\2445046v5  “Person” means any natural person, corporation, limited liability company, trust, joint venture,  association, company, partnership, governmental authority or other entity.  “Security Agreement” means that certain Security Agreement, dated June 19, 2019, between the  Bank and the Borrower, as amended and in effect from time to time.  “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability  company or other business entity of which a majority of the shares of securities or other interests having  ordinary voting power for the election of directors or other governing body (other than securities or  interests having such power only by reason of the happening of a contingency) are at the time beneficially  owned, or the management of which is otherwise controlled, directly, or indirectly through one or more  intermediaries, or both, by such Person.  “Swap Contract” means any agreement, whether or not in writing, relating to any Swap  Transaction, including, unless the context otherwise clearly requires, any form of master agreement (the  “Master Agreement”) published by the International Swaps and Derivatives Association, Inc., or any  other master agreement, entered into between Swap Counterparty and the Borrower (or its affiliate) in  connection with the Line of Credit or any of the Term Loans, together with any related schedule and  confirmation, as amended, supplemented, superseded or replaced from time to time, relating to or  governing any Swap Transaction.  “Swap Counterparty” means the Bank or an affiliate of the Bank, in its capacity as counterparty  under any Swap Contract.  “Swap Transaction” means any transaction that is a rate swap, basis swap, forward rate  transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill  option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction,  currency swap, cross-currency rate swap, swap option, currency option or any other similar transaction  (including any option to enter into the foregoing) or any combination of the foregoing, entered into  between any Swap Counterparty and the Borrower (or its affiliate).  “Terminating Letter of Credit” means that certain irrevocable standby Letter of Credit issued by  Bank, dated June 12, 2014, naming Hongkong and Shanghai Banking Corporation Limited, India Branch  as beneficiary (no.  IS0191986U), naming Borrower as obligor and account party, in the amount of Five  Million and 0/100 Dollars ($5,000,000) with an expiration date of March 1, 2021, as amended from time  to time. “Voting Equity Interests” means, with respect to any Person, the Equity Interests entitled to vote  for members of the board of directors or equivalent governing body of such Person.  “UCC” means the Uniform Commercial Code as in effect in the State of North Carolina, as may  be amended from time to time.  





 






CHAR2\2445046v5  Schedule 1.5(b)  Pledged Interests  Name, Jurisdiction of  Formation and Type  of Entity of Pledged  Subsidiary  Class or  Type of  Pledged  Interest  Total  Amount of  Class or Type  of Pledged  Interests  Authorized  Total Amount  of Class or  Type  Outstanding  Total  Amount  Pledged  Certificate  Number (if  applicable)  Par Value  (if  applicable)  Name of  Transfer Agent  (if any)  (1) Equity  Shares 500,000  Authorized 99,323  Outstanding 48,171 01,02,03,04,  05 RS.  100 each None  (2) Equity  Shares  1   Authorized  1  Outstanding  65%  interest in  1 share 02 SGD 1.00 None  (1) Kewaunee Scientific Corporation India Private Limited (India) - 25,213 shares held by Kewaunee  Scientific Corporation Singapore Pte. Ltd.; 74,110 shares held by Kewaunee Scientific Corporation  (USA)  (2) Kewaunee Scientific Corporation Singapore Pte. Ltd. - wholly owned by Kewaunee Scientific  Corporation (USA)  





 






CHAR2\2445046v5  Schedule 5.2  Existing Indebtedness  Name of Agreement  Counterparty to  Agreement  Current Outstanding Amount  of Indebtedness  Corporate Guarantee on  India Revolver HSBC $3,013,927 (as of June 30)  





 






CHAR2\2445046v5  Schedule 5.5  Existing Loans, Advances and Investments  Loan/ Advance  Loans and Advances  Amount USD 1. Kewaunee Labway India Pvt. Ltd. $47,000.00  Accrued Interest not yet paid   $24,789.71  Total $71,789.71  Investment  Direct Capital Investment  Amount USD 1. Kewaunee Scientific Corporation Singapore Pte. Ltd. $419,207.00  2. Kewaunee Labway India Pvt. Ltd. $406,000.00  Total $825,207.00  





 






CHAR2\2445046v5  Schedule 5.7  Existing Liens  Debtor Secured Party Jurisdiction File Date File Number  Amendments and  Continuations  Kewaunee Scientific  Corporation Key Equipment  Finance Inc.  Delaware  SoS 11/21/2005 20053605723 10/06/2010: Continuation (20103474669)  08/25/2015: Continuation (20153725719) Kewaunee Scientific  Corporation Key Equipment  Finance Inc.  Delaware  SoS 11/08/2010 20103904624 08/25/2015: Continuation (20153726485)  Kewaunee Scientific  Corporation Bluelinx Corporation Delaware  SoS 09/13/2011 20113512590 07/27/2016: Continuation (20164544373)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 09/29/2011 20113733915 04/04/2016: Continuation (20161982014)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 10/28/2011 20114177880 05/03/2016: Continuation (20162623385)  Kewaunee Scientific  Corporation Key Equipment  Finance Inc.  Delaware  SoS 07/18/2012 20122754820 04/12/2017: Continuation (20172395769)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 12/05/2012 20124699262 06/06/2017: Continuation (20173705586)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 12/05/2012 20124699320 06/06/2017: Continuation (20173705255)  Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 05/01/2013 20131663021 03/21/2018: Continuation (20181935481)  Kewaunee Scientific  Corporation Wells Fargo Bank,  National Association Delaware  SoS 05/06/2013 20131721761 11/08/2017: Continuation (20177409743)  09/27/2019: Amendment (20196739937) Kewaunee Scientific  Corporation Fifth Third Bank Delaware  SoS 07/11/2013 20132662048 06/06/2018: Continuation (20183845472)  Kewaunee Scientific  Corporation  Wells Fargo  Equipment Finance,  Inc.  North  Carolina  SoS 10/02/2013 20130094461 06/26/2018: Continuation (20180065794C)  Kewaunee Scientific  Corporation Trumpf Inc. Delaware  SoS 01/18/2019 20190429675   Kewaunee Scientific  Corporation Wells Fargo Bank,  National Association Delaware  SoS 06/19/2019 20194234477 09/27/2019: Amendment (20196740331)  Kewaunee Scientific  Corporation  Key Equipment  Finance, a Division  of Keybank NA Delaware  SoS  09/27/2019 20196733229   Kewaunee Scientific  Corporation  Corporation Service  Company, As  Representative  Delaware  SoS  09/10/2020 20206248365 09/30/2020: Assignment (20206745485)  02/01/2021: Assignment (202110828021)  02/02/2021: Assignment (20210880527)  02/4/2021: Assignment (2021109762018)  02/05/2021: Assignment (20210986118)  02/09/2021: Assignment (20211083758) Kewaunee Scientific  Corporation  Corporation Service  Company, As  Representative  Iredell  County  Register of  Deeds, NC 09/30/2020 2738/2387 02/15/2021: Assignment (2782/1022)  Kewaunee Scientific  Corporation  Corporation Service  Company, As  Representative  Iredell  County  Register of  Deeds, NC 02/04/2021 2779/1354 02/17/2021: Assignment (2783/1395)  Kewaunee Scientific  Corporation  Corporation Service  Company, As  Representative  Iredell  County  Register of  Deeds, NC 02/15/2021 2782/1018 02/17/2021: Assignment (2783/1401)  Kewaunee Scientific  Corporation Cisco Systems  Capital Delaware  SoS 05/12/2021 20213704120   





 






CHAR2\2445046v5  Exhibit A  FORM OF BILL/HOLD ACKNOWLEDGMENT LETTER  BILL AND HOLD LETTER  [SELLER’S NAME]  ___________________________  ____________________________  ______________, 201__  [CUSTOMER’S NAME]  ________________________  ________________________  Attention:______________  Dear Customer:  From time to time you (the “Customer”) may request that the undersigned (the “Seller”)  manufacture and produce certain goods for future shipment to you.    This will confirm the agreement of Customer and Seller that, notwithstanding anything to the  contrary contained in any purchase order, invoice or other agreement between Customer and Seller, title  to such goods manufactured and produced by Seller for Customer and risk of loss as to such goods passes  to Customer when Seller has completed production of the goods covered by Customer’s order and the  goods have been invoiced by Seller to Customer, notwithstanding that the goods so sold may remain on  the premises of Seller or otherwise in its control or possession.  Such goods are held for the account of  Customer and at its risk and each invoice with respect to such goods issued to Customer by Seller  represents a definitive and final sale and Customer shall pay the same when due, regardless of whether the  goods have been shipped or delivered to Customer as of such time or are otherwise accepted by  Customer.  Customer agrees that, except as provided below, in no event shall Customer, or any person  claiming by, through or under it, offset or withhold payment in respect of any account for any offset,  claim, defense, counterclaim, abatement, suspension, recoupment or deduction which Customer may have  against Seller for any amounts which may now or hereafter be due to Customer from Seller for any  reason, except that Customer may, in the ordinary course of business assert any bona fide offsets or  deductions it may lawfully have only against accounts due to the Customer by reason of the delivery to  Customer by Seller of defective or non-conforming goods to the extent that the basis for the offset or  deduction arises out of the same transaction giving rise to the account due which is subject to the asserted  offset or deduction.  The fact that Customer has limited its setoff and recoupment rights against accounts  due to Seller shall not limit any rights or remedies Customer may have against Seller or any of its other  assets.  Customer waives any right that it may have under any Federal, State or other law, including,  without limitation, all rights under Section 553 of the U.S. Bankruptcy Code, to assert any such rights.  





 






CHAR2\2445046v5  Seller may store the goods at its premises or in leased warehouse space.  The goods will be  shipped to Customer from time to time at its request upon reasonable prior notice in accordance with  Seller’s policies as in effect from time to time.  All out-of-pocket expenses incurred by Seller for storage, insurance or disposal in connection  with the goods manufactured for Customer by Seller are to be billed by Seller to Customer in accordance  with Seller’s policies as in effect from time to time.  





 






CHAR2\2445046v5  Seller would appreciate the confirmation of the agreement of Customer to the above  arrangements by signing and returning to Seller the enclosed copy of this letter.  The agreement of  Customer in this letter will be binding on its successors and assigns.  In making loans to Seller based on  the accounts payable by Customer to Seller from such sales, Wells Fargo Bank, National Association,  the lender to Seller, is relying on the agreements of Customer in this letter and the terms of this letter will  inure to the benefit of such lender and its successors and assigns (including any other lender that  refinances or replaces its financing) and such lender and successors and assigns will be entitled to enforce  the terms hereof directly.  The terms of this letter may not be modified by course of dealing or otherwise  than in writing signed by Seller and approved in writing by its lender.  We would like to take this opportunity to thank you for your continued business.  Very truly yours,  [SELLER’S NAME]  By:____________________  Name:__________________  Title:___________________  AGREED:  [CUSTOMER’S NAME]  By:____________________  Name:__________________  Title:___________________  





 






CHAR2\2445046v5  Exhibit B  FORM OF BORROWING BASE CERTIFICATE  Kewaunee Scientific Corporation - Borrowing Base Certificate for period ending:  [_____]  in 000s Accounts Receivable  Source Document  Gross A/R (Domestic) [_____] Less: Ineligible A/R a. Past Dues [_____] b. Past Due Credits [_____] c. Cross Age [_____] d. Intercompany [_____] e. Foreign [_____] f. Retainage [_____] g. Government Receivables [_____] h. Advance Sales (FE and ENG)                      [_____] i. Bill and Hold (B&H Letters on File) [_____] Total A/R Ineligibles [_____]  Net Eligible A/R [_____]  Advance Rate [__]% Available A/R [_____] Inventory  Gross Inventory (Domestic) [_____] Plus: Bill & Hold Inventory [_____] Plus: Unbilled Inventory [_____] Less: Ineligible Inventory a. Obsolescence/Excess [_____] b. WIP [_____] c. Crating Materials [_____] Total Inventory Ineligibles [_____] Net Eligible Inventory [_____] Advance Rate [__]% Eligible Inventory [_____] 





 






CHAR2\2445046v5  Machinery and Equipment  Appraised M&E [_____] Advance Rate [__]% Eligible M&E [     ] TOTAL BB Availability  $   [_____] Plus: Outstanding Letters of Credit [_____] Plus: Outstanding Loan Balance [_____] Total Loans and SLCs Outstanding [_____] Plus: Minimum Additional Liquidity [_____] Total Required Borrowing Base Assets [_____] Excess / (Limited) Availability   $   [_____] Line of Credit Commitment [_____] Excess / (Suppressed) Availability ([_____]) Calculations  Gross B&H A/R [_____] B&H Cap (50% of total AR) [_____] Net Eligible B&H A/R (Lesser of 50% or Gross Amount) [_____] Gross B&H Inv [_____] B&H Cap (50% of total Inv.) [_____] Net Eligible B&H Inv. (Lesser of 50% or Gross Amount) [_____] Gross Unbilled Inv [_____] B&H Cap (50% of total Inv.) [_____] Net Eligible Unbilled Inv. (Lesser of 50% or Gross Amount) [_____] Gross Government Receivables A/R [_____] Govt AR Cap (10% of total AR) [_____] Net Eligible Govt A/R (Lesser of 10% or Gross Amount) [_____] 





 






CHAR2\2445046v5  Bill and Hold Schedule  Company Name Invoice # Amount