EdgarFiling





Exhibit 10.1


 


 


 


 


 


 


 


 


 


 


 


 


 


	 


 


LOAN AGREEMENT


 


DATED AS OF DECEMBER
4, 2017



CHEMICAL BANK


 


 


	 


 


 


 


 


 


 


 


 


 


 


 


 






     

     

    

 


TABLE OF CONTENTS






 




	1.   DEFINITIONS	1
	1.1   Defined Terms	1
	1.2   Accounting Terms	13
	1.3   Uniform Commercial Code Terms	13
	2.   REVOLVING CREDIT	13
	2.1   Revolving Credit	13
	2.2   Accrual of Interest and Maturity	13
	2.3   Requesting Advances	14
	2.4   Disbursement of Loan Proceeds	15
	2.5   Prepayment	15
	2.6   Reduction of Indebtedness	15
	2.7   Use of Proceeds	15
	3.   [Reserved].	15
	4.   [Reserved].	15
	5.   [Reserved].	15
	6.   CONDITIONS.	15
	6.1   Corporate Authority	15
	6.2   Execution of Loan Documents	16
	6.3   Insurance	16
	6.4   Compliance with Contractual Obligations	16
	6.5   Opinion of Counsel	17
	6.6   Lease Agreements	17
	6.7   Payment of Fees	17
	6.8   Payoff Letter	17
	6.9   No Material Adverse Change	17
	6.10   Closing Conditions	17
	7.   REPRESENTATIONS AND WARRANTIES.	17
	7.1   Corporate Authority	17
	7.2   Due Authorization; Non-Contravention; Binding Obligations	17
	7.3   Good Title; Property; Leases; No Liens	18
	7.4   No Litigation	18
	7.5   Compliance with Laws	19
	7.6   ERISA	19
	7.7   Accuracy of Information	19
	7.8   Taxes	19
	7.9   Anti-Terrorism Laws	20
	7.10   Subsidiaries	20
	7.11   Environmental and Safety Matters	20



 






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	7.12   No Investment Company or Margin Stock	20
	7.13   Conditions Affecting Business or Properties	21
	7.14   Solvency	21
	7.15   Capitalization	21
	7.16   Customer and Supplier Relationships	21
	7.17   Employee Matters	21
	8.   AFFIRMATIVE COVENANTS.	22
	8.1   Financial Statements; Certificate; Other Information	22
	8.2   Payment of Obligations	23
	8.3   Maintenance of Property; Insurance	23
	8.4   Inspection of Property; Books and Records	24
	8.5   Notices	24
	8.6   Licenses; Permits	25
	8.7   Conduct of Business	25
	8.8   ERISA	25
	8.9   Hedging Contracts	26
	8.10   Change of Control	26
	8.11   Further Assurances	26
	8.12   Deposit Accounts	26
	8.13   Environmental Compliance	26
	8.14   Use of Proceeds	27
	8.15   Additional Collateral	27
	9.   NEGATIVE COVENANTS.	27
	9.1   Limitations on Debt	27
	9.2   Limitations on Mergers; Sales of Assets	29
	9.3   Limitation of Guarantee Obligations	29
	9.4   Limitations on Acquisitions	30
	9.5   Limitations on Liens	30
	9.6   Restricted Payments	30
	9.7   Transactions with Affiliates	31
	9.8   Acquisition or Creation of new Subsidiaries or Affiliates	31
	9.9   Limitations on Investments	31
	9.10   Limitation on Other Restrictions	32
	9.11   Prepayment of Debt	32
	9.12   Amendment of Debt Documents	32
	9.13   Amendment to Organizational Documents	32
	9.14   Change in Business	33
	9.15   Limitation on Sale – Leaseback Transactions	33
	9.16   Fiscal Year and Accounting Principles	33
	9.17   [Reserved].	33
	9.18   Anti-Terrorism Laws	33
	10.   EVENTS OF DEFAULT.	33
	10.1   Event of Default	33
	10.2   Exercise of Remedies	36



 






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	10.3   Application of Proceeds	36
	10.4   Rights Cumulative	37
	10.5   Set-Off	37
	10.6   Waiver of Defaults	37
	10.7   Waiver by Borrower of Certain Laws	37
	11.   MISCELLANEOUS.	38
	11.1   Successors and Assigns	38
	11.2   Attorney Fees and Expenses	38
	11.3   Indulgence	38
	11.4   Notices	38
	11.5   Law of Michigan; Consent to Jurisdiction	39
	11.6   Amendment and Waiver	40
	11.7   Payments	40
	11.8   Interest	41
	11.9   Waiver of Consequential, Indirect, Special and Punitive Damages	41
	11.10   WAIVER OF JURY TRIAL	41
	11.11   Counterparts	42
	11.12   Complete Agreement; Conflicts	42
	11.13   Severability	42
	11.14   Independence of Covenants	42
	11.15   Reliance on and Survival of Various Provisions	42
	11.16   Indemnification.	42
	11.17   Patriot Act Notice	43


 


 


 


 


 


 


 






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EXHIBITS:


 


Exhibit AForm of Borrowing Base Certificate


Exhibit BForm of Revolving Credit Note


Exhibit CForm of Security Agreement


Exhibit DForm of Mortgage


 


SCHEDULES:


 


Schedule 6.1Jurisdictions


Schedule 6.3(e)Names


Schedule 7.3(b)Real Property


Schedule 7.4Litigation


Schedule 7.5Compliance with Laws


Schedule 7.6ERISA


Schedule 7.7/7.8Audits


Schedule 7.10Subsidiaries of Borrower


Schedule 7.11Environmental


Schedule 7.15Capitalization


Schedule 7.17Union Contracts


Schedule 9.1(b)Debt


Schedule 9.3Guarantees


Schedule 9.5(c)Liens


Schedule 9.7Affiliate Transactions


Schedule 9.9(d)Investments


 


 


 


 


 


 


 


 






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LOAN AGREEMENT






 


LOAN AGREEMENT (the “Agreement”),
dated December 4, 2017, between PERCEPTION, INC., a Michigan corporation (“Borrower”) and CHEMICAL BANK (“Bank”).


 


RECITALS


 


A.       Borrower
desires to obtain a line of credit from Bank as provided in this Agreement.


 


B.       Bank
is willing to extend such credit to Borrower on the terms and conditions herein set forth.


 


NOW, THEREFORE, in consideration of the mutual
agreements herein contained, Bank and Borrower agree as follows:


 


		1.	DEFINITIONS



 


1.1             
Defined Terms. For the purposes of this Agreement the following terms will have the following meanings:


 


“Account” shall have the meaning
assigned to it in the Code on the date of this Agreement.


 


“Account Debtor” shall mean each
Person obligated in any way on or in connection with an Account.


 


“Advance” shall mean a borrowing
requested by Borrower and made by Bank under Section 2.


 


“Affiliate” shall mean as to any
Person, any other Person (excluding any Foreign Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person. For purposes of this definition, a Person shall be deemed to be “controlled
by” a Person if such Person possesses, directly or indirectly, power either (i) to vote twenty percent (20%) or more of the
securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.


 


“Anti-Terrorism Laws” shall mean
those laws and sanctions relating to terrorism or money laundering, including Executive order No. 13224, the USA Patriot Act (Public
Law 107-56), the Bank Secrecy Act (Public Law 91-508), the Trading with the Enemy Act (50 U.S.C. App. Section 1 et. seq.), the
International Emergency Economic Powers Act (50 U.S.C. Section 1701 et. seq.), and the sanction regulations promulgated pursuant
thereto by the Office of Foreign Assets Control, as well as laws relating to prevention and detection of money laundering in 18
U.S.C. Sections 1956 and 1957 (as any of the foregoing may from time to time be amended, renewed, extended or replaced).


 


“Asset Sale” shall mean the sale,
transfer, lease or other disposition by Borrower or any of its Subsidiaries of any asset to any Person.


 






     

     

    

 


“Bank” shall have the meaning set
forth in the preamble to this Agreement, and includes any successors and assigns of Bank.


 


“Blocked Person” shall mean any
of the following: (a) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order
No. 13224; (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order No. 13224; (c) a Person with which Bank is prohibited from dealing
or otherwise engaging in any transaction by any Anti-Terrorism Law; (d) a Person that commits, threatens or conspires to commit
or supports “terrorism” as defined in the Executive Order No. 13224; (e) a Person that is named as a “specially
designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at
its official website or any replacement website or other replacement official publication of such list; or (f) a Person who is
affiliated or associated with a Person listed above.


 


“Borrowing Base” shall mean as of
any date of determination, thereof the sum of (i) 80% of Eligible Accounts, plus (ii) the lesser of (x) 80% of Eligible Ford Foreign
Accounts and (y) $1,000,000, plus (iii) the lesser of (x) 80% of Eligible GM Foreign Accounts and (y) $2,000,000, plus (iv) the
lesser of (x) 50% of Eligible Inventory and (y) $3,000,000, provided, however, that the Borrowing Base shall be determined on the
basis of the most recent Borrowing Base Certificate, and provided further, that the amount determined as the Borrowing Base shall
be subject to such reserves as Bank may establish from time to time, in its reasonable credit judgment, including, without limitation,
any reserves or other adjustments established by Bank on the basis of any collateral audits conducted hereunder.


 


“Borrowing Base Certificate” shall
mean a Borrowing Base Certificate substantially in the form of Exhibit A, executed by an authorized officer of Borrower.


 


“Business Day” means any day other
than a Saturday, a Sunday, or other day on which Bank is authorized or required to be closed; and if the applicable Business Day
relates to any loan or other obligation hereunder accruing interest based on the LIBOR Rate, such day must also be a day for dealings
in foreign exchange and for trading by and between banks in US dollar deposits in the London interbank market.


 


“Capitalized Lease” shall mean any
lease of any property (whether real, personal or mixed) by any Person as lessee which, in conformity with GAAP, is or is required
to be accounted for as a capital lease on the balance sheet of such Person, together with any renewals of such leases (or entry
into new leases) on substantially similar terms.


 






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“Cash Equivalents” shall include:


 


		(a)	direct general obligations of the United States of America or obligations the payment of principal
of and interest on which is unconditionally guaranteed by the United States of America;



 


		(b)	obligations of a state of the United States, the District of Columbia or any possession of the
United States, or any political subdivision thereof, which are described in Section 103(a) of the Internal Revenue Code and are
graded in any of the highest three (3) major grades as determined by at least one nationally recognized statistical rating organization;
or secured, as to payments of principal and interest, by a letter of credit provided by a financial institution or insurance provided
by a bond insurance company which in each case is itself or its debt is rated in one of the highest three (3) major grades as determined
by at least one nationally recognized statistical rating organization;



 


		(c)	banker’s acceptances, commercial accounts, demand deposit accounts, money market accounts,
certificates of deposit, or depository receipts issued by or maintained with any bank, trust company, savings and loan association,
savings bank or other financial institution whose deposits are insured by the Federal Deposit Insurance Corporation and whose reported
capital and surplus equal at least $250,000,000, provided that such minimum capital and surplus requirement shall not apply to
demand deposit accounts maintained by Borrower or any of the Subsidiaries in the ordinary course of business;



 


		(d)	commercial paper rated at the time of purchase within the two highest classifications established
by not less than two nationally recognized statistical rating organizations, and which matures within 270 days after the date of
issue;



 


		(e)	secured repurchase agreements against obligations itemized in clause (a) above, and executed by
a bank or trust company or by members of the association of primary dealers or other recognized dealers in United States government
securities, the market value of which must be maintained at levels at least equal to the amounts advanced; and



 


		(f)	any fund or other pooling arrangement which exclusively purchases and holds the items listed in
(a) through (e) above.



 


“Code” shall have the meaning given
to such term in Section 1.3.


 


“Collateral” shall mean all property
or rights in which a security interest, mortgage, Lien or other encumbrance for the benefit of Bank is or has been granted or arises
or has arisen, under or in connection with this Agreement, the other Loan Documents, or otherwise to secure the Indebtedness.


 


“Debt” shall mean as to any Person,
without duplication (a) all Funded Debt of such Person, (b) all Guarantee Obligations of such Person, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (d)
all indebtedness of such Person arising in connection with any Hedging Contract entered into by such Person, (e) all recourse Debt
of any partnership of which such Person is the general partner and (f) all Off-Balance Sheet Liabilities.


 






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“Default” shall mean any condition
or event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default.


 


“Effective Date” shall mean the
date on which all the conditions precedent set forth in Section 6 have been satisfied.


 


“Eligible Accounts” shall mean an
Account of Borrower which has been included in a Borrowing Base Certificate as an Eligible Account to determine the Borrowing Base,
and as to which Account, unless otherwise approved by Bank in its sole discretion, the following is true and accurate as of the
time it was utilized to determine the Borrowing Base:


 


		(a)	such Account arose in the ordinary course of the business of Borrower out of either (i) a bona
fide sale of Inventory (as defined in the Code) by Borrower, and in such case such Inventory has in fact been shipped to the appropriate
Account Debtor or the sale has otherwise been consummated in accordance with such order, or (ii) services performed by the Borrower
under an enforceable contract (written or oral), and in such case such services have in fact been performed for the appropriate
Account Debtor in accordance with such contract;



 


		(b)	such Account represents a legally valid and enforceable claim which is due and owing to the Borrower
by such Account Debtor and for such amount as is represented by Borrower to Bank in the applicable Borrowing Base Certificate;



 


		(c)	such Account is evidenced by an invoice dated not later than the date of shipment of the related
Inventory or the date of performance, as applicable, giving rise to such Account and not more than ninety (90) days have passed
since the invoice date corresponding to such Account;



 


		(d)	such Account is not billed in advance, payable on delivery, for consigned goods, for guaranteed
sales, payable at a future date, bonded or insured by a surety company or subject to retainage or holdback by the Account Debtor;



 


		(e)	the unpaid balance of such Account as represented by Borrower to Bank in the applicable Borrowing
Base Certificate is not subject to any defense, counterclaim, setoff, contra account, credit, allowance or adjustment by the Account
Debtor because of returned, inferior or damaged Inventory or services, or for any other reason, except for customary discounts
allowed by Borrower in the ordinary course of business for prompt payment, except that, to the extent there is any agreement between
Borrower, the related Account Debtor and any other person, for any rebate, discount, concession or release of liability in respect
of such Account, in whole or in part, only the amount of such rebate, discount, concession or release of liability shall be excluded
from the Borrowing Base;



 






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		(f)	the transactions leading to the creation of such Account comply with all applicable local, state
and federal laws and regulations of the jurisdiction in which such Account was created where the failure to comply therewith could
reasonably be expected to impair the collectability of such Account;



 


		(g)	the Borrower has granted to the Bank, under or in accordance with the Loan Documents, a perfected
security interest in such Account prior in right to all other persons or entities and such Account has not been sold, transferred
or otherwise assigned or encumbered by Borrower to any person or entity other than the Bank;



 


		(h)	it is not owing by an Account Debtor who, as of the date of determination, has failed to pay twenty-five
percent (25%) or more of the aggregate amount of its respective Accounts owing to Borrower within ninety (90) days since the original
invoice date;



 


		(i)	it is not an Account owing by any Account Debtor which when aggregated with all other Accounts
owing by such Account Debtor would cause the Accounts owing from such Account Debtor to Borrower to exceed an amount equal to twenty
five percent (25%) (or with respect to Accounts for which General Motors Company is the Account Debtor, fifty percent (50%)) of
Borrower’s aggregate Eligible Accounts owing from all Account Debtors; provided that only the amount of any such Account
in excess of twenty five percent (25%) (or with respect to Accounts for which General Motors Company is the Account Debtor, fifty
percent (50%)) of Borrower’s aggregate Eligible Accounts shall be excluded from the Borrowing Base;



 


		(j)	such Account is not represented by any note, trade acceptance, draft or other negotiable instrument
or by any chattel paper, except any such as has been endorsed and delivered by Borrower or in accordance with the Loan Documents
on or prior to such Account’s inclusion in any applicable Borrowing Base Certificate;



 


		(k)	Borrower has not received, with respect to such Account, any notice of the death of the related
Account Debtor or any general partner thereof, nor of the dissolution, liquidation, termination of existence, insolvency, business
failure, appointment of a receiver for any part of the property of, assignment for the benefit of creditors by, or the filing of
a petition in bankruptcy or the commencement of any proceeding under any bankruptcy or insolvency laws by or against, such Account
Debtor;



 


		(l)	the Account Debtor on such Account is not:



 


		(i)	an Affiliate, officer, employee, director, partner, joint venture, agent of any Loan Party or an
entity that has common shareholders with any Loan Party, unless the Account Debtor and such Loan Party are publicly traded companies;



 


		(ii)	unless Borrower has complied with the provisions of the Federal Assignment of Claims Act, the United
States of America or any department, agency, or instrumentality thereof;



 






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		(iii)	a citizen or resident of any jurisdiction other than one of the United States, unless such Account
is supported by a letter of credit issued by a bank acceptable to the Bank and in form and substance acceptable to Bank, in its
sole discretion; or



 


		(iv)	an Account Debtor with respect to which Bank, acting in its commercially reasonable judgment, has
notified Borrower that such Account Debtor’s Accounts will not constitute Eligible Accounts because the collectability of
such Accounts is or will be impaired; and



 


		(m)	it is not an Eligible Ford Foreign Account;



 


		(n)	it is not an Eligible GM Foreign Account; and



 


		(o)	such Account satisfies any other eligibility criteria established from time to time by Bank.



 


Any Account which is at any time an Eligible
Account but which subsequently fails to meet any of the foregoing requirements shall forthwith cease to be an Eligible Account.


 


“Eligible Ford Foreign Accounts”
shall mean Accounts for which a Mexican or Canadian subsidiary of Ford Motor Company is the Account Debtor and which satisfies
all of the requirements to be an Eligible Account except for subsection (l)(iii) and (m). Any Account which is at any time an Eligible
Ford Foreign Account but which subsequently fails to meet any of the requirements shall forthwith cease to be an Eligible Ford
Foreign Account.


 


“Eligible GM Foreign Accounts” shall
mean Accounts for which a Mexican or Canadian subsidiary of General Motors Corporation is the Account Debtor and which satisfies
all of the requirements to be an Eligible Account except for subsection (l)(iii) and (n). Any Account which is at any time an Eligible
GM Foreign Account but which subsequently fails to meet any of the requirements shall forthwith cease to be an Eligible GM Foreign
Account.


 


“Eligible Inventory” shall mean
Inventory of Borrower which meets each of the following requirements:


 


		(a)	it (i) is subject to a perfected Lien in favor of Bank and (ii) is not subject to any other assignment,
claim or Lien or retention of title provisions;



 


		(b)	it is saleable;



 


		(c)	(i) it is in the possession and control of Borrower and (A) it is stored and held in facilities
owned by Borrower or (B) if stored and held at a leased location (other than a warehouse facility) of Borrower, Bank is in possession
of a collateral access agreement in form and substance reasonably acceptable to Bank with respect thereto, or (ii) if stored or
held at a warehouse facility leased by Borrower, Bank is in possession of a bailee’s agreement, or other collateral access
agreement reasonably satisfactory to Bank with respect thereto;



 






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		(d)	it is not subject to any agreement which would restrict Bank’s ability to sell or otherwise
dispose of such Inventory;



 


		(e)	it is located in the United States of America or in any territory or possession of the United States
of America that has adopted Article 9 of the Code;



 


		(f)	it is not held by Borrower on consignment;



 


		(g)	it is not work-in-progress inventory;



 


		(h)	it is not in transit to Borrower; and



 


		(i)	Bank shall not have determined in its reasonable credit judgment, that it is unacceptable for any
reason whatsoever.



 


Inventory which is at any time Eligible Inventory but which subsequently
fails to meet any of the foregoing requirements shall forthwith immediately cease to be Eligible Inventory.


 


“Environmental Laws” shall mean
all federal, state and local laws including statutes, regulations, ordinances, codes, rules, and other governmental restrictions
and requirements, relating to environmental pollution, contamination or other impairment of the environment or any hazardous or
toxic substances of any nature, including but not being limited to the Federal Solid Waste Disposal Act, the Federal Clean Air
Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, and the Federal Superfund Amendments and Reauthorization Act of 1986, each as
amended from time to time.


 


“ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute
of similar import and the rules and regulations promulgated thereunder as from time to time in effect.


 


“Event of Default” shall mean any
of the events of default specified in Section 10.


 


“Foreign Exchange Reserve” shall
mean the amount as determined by Bank from time to time in accordance with Bank’s credit policies to be the Bank’s
credit exposure to Borrower under foreign exchange contracts with Borrower.


 


“Foreign Subsidiary” means any Subsidiary
that is not organized or incorporated in the United States or any State or territory thereof.


 


“Funded Debt” of any Person shall
mean (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services as of such
date (other than operating leases and trade liabilities incurred in the ordinary course of business and payable in accordance with
customary practices and equipment purchased for which the purchase price is due and payable less than one year from the date the
equipment is delivered to such Person and insurance premiums paid over a period of less than one year) or which is evidenced by
a note, bond, debenture or similar instrument, (b) the principal component of all obligations of such person under Capitalized
Leases, (c) all reimbursement obligations (actual, contingent or otherwise) of such Person in respect of letters of credit, acceptances
or similar obligations issued or created for the account of such Person and which are the functional equivalent of indebtedness
for borrowed money, (d) all liabilities secured by any consensual Liens on any property owned by such Person as of such date even
though such Person has not assumed or otherwise become liable for the payment thereof, and (e) all Guarantee Obligations of such
Person in respect of any liability which constitutes Funded Debt, in each case determined in accordance with GAAP; provided however
that so long as such Person is not personally liable for any such liability, the amount of such liability shall be deemed to be
the lesser of the fair market value at such date of the property subject to the Lien securing such liability and the amount of
the liability secured, provided further, however that Funded Debt shall not include any indebtedness under any Hedging Transaction
entered into by such Person prior to the occurrence of a termination event with respect thereto.


 






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“GAAP” shall have the meaning given
to such term in Section 1.2.


 


“Guarantee Obligations” shall mean
as to any Person (the “guaranteeing person”) any obligation of the guaranteeing person in respect of any obligation
of another Person (the “primary obligor”) (including, without limitation, any bank under any letter of credit) guaranteeing
or in effect guaranteeing any Debt, leases, dividends or other obligations (the “primary obligations”) in any manner,
whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance
or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities
or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant
to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which
such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall
be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by Borrower in good
faith.


 


“Guaranties” shall mean the Guaranties
dated as of December 4, 2017 by the Guarantors in favor of Bank, and those guaranties of the Indebtedness executed and delivered
to the Bank after the Effective Date, as the same may be amended or modified from time to time, and “Guaranty” shall
mean any of them.


 


“Guarantors” shall mean the Persons,
other than the Borrower, who, at any time, guaranty or other otherwise become obligated to pay any or all of the Indebtedness,
including without limitation Perceptron Software Technology, Inc., Perceptron Global, Inc., and each Person required to guaranty
the Indebtedness under the provisions of Section 9.8 and “Guarantor” shall mean each of them.


 






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“Hazardous Materials” shall mean
and include any hazardous, toxic or dangerous waste, substance or material defined as such in (or for purposes of) the Environmental
Laws.


 


“Hedging Contract” shall mean any
foreign exchange contract, currency swap agreement, futures contract, commodities hedge agreement, interest rate protection agreement,
interest rate future agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, option
agreement or any other similar hedging agreement or arrangement entered into by a Person in the ordinary course of business.


 


“Indebtedness” shall mean all loans,
advances, indebtedness, obligations and liabilities of each Loan Party to Bank under this Agreement or any of the other Loan Documents,
together with all other indebtedness, obligations and liabilities whatsoever of such Loan Party to Bank arising under or in connection
with this Agreement, or otherwise, whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent,
joint or several, due or to become due, now existing or hereafter arising, and any renewals or refinancing of the same.


 


“Intercompany Note” shall mean any
promissory note issued or to be issued by any Subsidiary payable to Borrower to evidence an intercompany loan in form and substance
satisfactory to Bank.


 


“Inventory” shall have the meaning
assigned to it in the Code on the date of this Agreement.


 


“Lien” shall mean the security interest
or lien arising from any pledge, assignment, hypothecation, mortgage, security interest, deposit arrangement, option, trust receipt,
conditional sale or title retaining contract, sale and leaseback transaction, Capitalized Lease, consignment or bailment for security,
or any other type of lien, charge, encumbrance, title exception, preferential or priority arrangement affecting property, whether
based on common law or statute.


 


“Loan Documents” shall mean this
Agreement, the Notes, any Hedging Contract, any guaranties, security agreements, mortgages, collateral assignments, pledge agreements,
dominion of funds/lockbox agreement, account assignments, control agreements, letter of credit application and agreement or other
reimbursement agreements, any subordination agreements, intercreditor agreements and any and all other agreements, instruments
and documents, including powers of attorney, consents, and all other writings heretofore, now or hereafter executed by any Loan
Party or delivered to Bank in connection with this Agreement.


 


“Loan Parties” shall mean collectively,
Borrower, its Subsidiaries (other than its Foreign Subsidiaries) and Guarantors, and “Loan Party” shall mean any one
of them, as the context indicates or otherwise requires.


 


“Material Adverse Effect” shall
mean a material adverse effect on (a) the business, operations, property, or financial condition of any Loan Party, (b) the ability
of any Loan Party to perform its respective obligations under this Agreement, the Notes or any other Loan Document to which it
is a party, or (c) the validity or enforceability of this Agreement, the Notes or any of the other Loan Documents or the rights
or remedies of Bank hereunder or thereunder.


 






    	 	9	 



     

    

 


“Mortgage(s)” shall mean any mortgages,
substantially in the form of Exhibit F, over real property executed and delivered by any Loan Party for the benefit of Bank and
securing the Indebtedness, as the same may be amended, restated or otherwise modified from time to time.


 


“Notes” shall mean the Revolving
Credit Note, and each other note executed and delivered by Borrower to Bank under this Agreement, or otherwise, as such notes may
be amended or supplemented from time to time and any other note issued in substitution, replacement or renewal thereof from time
to time, and “Note” shall mean any of them.


 


“Off-Balance Sheet Liability(ies)”
of a Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivables
sold by such Person, (ii) any liability under any sale and leaseback transaction which is not a Capitalized Lease, (iii) any liability
under any so-called “synthetic lease” transaction entered into by such Person, or (iv) any obligation arising with
respect to any other transaction which is the functional equivalent of Debt or of any of the liabilities set forth in subsections
(i)-(iii) of this definition, but which does not constitute a liability on the balance sheets of such Person.


 


“PBGC” is defined in Section 7.6.


 


“Pension Plan” is defined in Section
7.6.


 


“Permitted Liens” shall mean with
respect to any Person:


 


		(a)	Liens for taxes not yet delinquent or which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on the books of such Person in conformity with GAAP;



 


		(b)	Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
landlord’s Liens or other like Liens arising in the ordinary course of business which secure obligations that are not overdue
for a period of more than 30 days or are being contested in good faith by appropriate proceedings, provided that (i) in the case
of any such contest, enforcement of such Liens has been suspended and (ii) appropriate reserves have been made on the books of
such Person as may be required by GAAP, consistently applied, therefor;



 


		(c)	Liens arising in connection with worker’s compensation, unemployment insurance, old age pensions
and social security benefits and similar statutory obligations which are not overdue for a period of more than 30 days or are being
contested in good faith by appropriate proceedings diligently pursued, provided that in the case of any such contest (i) any proceedings
commenced for the enforcement of such Liens shall have been duly suspended; and (ii) such provision for the payment of such liens
has been made on the books of such Person as may be required by GAAP, consistently applied;



 


		(d)	(i) Liens incurred in the ordinary course of business to secure the performance of statutory obligations
arising in connection with progress payments or advance payments due under contracts with the United States government or any agency
thereof entered into in the ordinary course of business and (ii) Liens incurred or deposits made in the ordinary course of business
to secure the performance of statutory obligations (not otherwise permitted under subsection (c) of this definition), bids, leases,
fee and expense arrangements with trustees and fiscal agents, trade contracts, surety and appeal bonds, performance bonds and other
similar obligations (exclusive of obligations incurred in connection with the borrowing of money, any lease-purchase arrangements
or the payment of the deferred purchase price of property), provided that full provision for the payment of all such obligations
set forth in clauses (i) and (ii) has been made on the books of such Person as may be required by GAAP, consistently applied;



 






    	 	10	 



     

    

 


		(e)	Any attachment or judgment Lien and any Lien that is required to stay enforcement of a judgment
or protect or enforce rights in any administrative, arbitration or other proceeding, provided that the amount of obligations secured
by such Lien or the aggregate book value of the assets of the Loan Parties subject to such Liens shall not exceed, in either case,
$50,000 in the aggregate for any judgment Lien with respect to which no enforcement steps have been taken other than the filing
of public record and $50,000 in aggregate at any time outstanding of all other such Liens;



 


		(f)	Liens arising in connection with any condemnation or eminent domain proceeding affecting real property
which is not otherwise a Default or Event of Default under this Agreement;



 


		(g)	Any interest or title of a lessor under any lease entered into by any Loan Party in the ordinary
course of business;



 


		(h)	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, or any interest
of any lessor or sublessor under any lease permitted hereunder which, in each case, does not materially interfere with the business
of such Person;



 


		(i)	Any provision in the invoicing or sale documentation of any supplier of a Loan Party which provides
for retention of title to an asset by the supplier or transferor, provided that such Loan Party does not finance the acquisition
of such asset on retention of title terms and such Lien is not perfected;



 


		(j)	Liens arising in the ordinary course of business which (i) do not secure Debt, (ii) do not in the
aggregate materially detract from the value of any asset of any Loan Party or materially impair the use thereof in the operation
of the business of the Loan Parties, and (iii) do not secure obligations in excess, in aggregate, of $50,000 outstanding at any
time (all as determined in the reasonable commercial judgment of Bank); and



 


		(k)	Continuations or renewals of Liens that are permitted under subsections (a)-(j) hereof, provided
such continuations or renewals do not violate the specific time periods or are being contested as set forth in subsections (b)
and (c), and provided further that such Liens do not extend to any additional property or assets of any Loan Party or secure any
additional obligations of any Loan Party.



 






    	 	11	 



     

    

 


“Person” shall mean any individual,
sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association,
limited liability company, institution, public benefit corporation, joint venture, entity or governmental body.


 


“Reportable Event” shall mean an
event described in Section 4043(c) of ERISA with respect to a Pension Plan other than those events as to which the thirty-day notice
period is waived under subsection 22, 23, 25, 27, 28 or 29 of PBGC Regulation Section 4043.


 


“Request for Advance” shall mean
a Request for Advance in form acceptable to Bank pursuant to which the Borrower may request an Advance under Section 2.


 


“Revolving Credit Amount” shall
mean Eight Million Dollars ($8,000,000), subject to reduction or termination under Section 2.


 


“Revolving Credit Note” shall mean
the Revolving Credit Note described in Section 2.1 made by Borrower to Bank in the form of Exhibit C, as such note may be amended,
renewed, replaced, extended or supplemented from time to time.


 


“Security Agreement” shall mean
the individual and collective reference to the Security Agreements in the form of Exhibit D executed and delivered by Borrower
and Guarantors and each other party thereto, as the same may be amended restated or otherwise modified from time to time.


 


“Subordination Agreement(s)” shall
mean each Subordination Agreement executed and delivered by any Subordinated Lenders in favor of Bank in form and substance satisfactory
to Bank, as each may be amended, restated or otherwise modified from time to time in compliance with the terms thereof and of this
Agreement.


 


“Subordinated Debt” shall mean all
Debt which is subordinated to the Indebtedness under the terms of a Subordination Agreement.


 


“Subordinated Debt Documents” shall
mean and all agreements, documents and instruments relating to or evidencing any Subordinated Debt, each as amended, restated or
otherwise modified from time to time, subject to the terms hereof and of the applicable Subordination Agreement.


 


“Subordinated Lenders” shall mean
each Person from which a Loan Party receives Subordinated Debt financing.


 


“Subsidiary” shall mean a corporation
or other entity of whose shares of stock or other ownership interests having ordinary voting power (other than stock or other ownership
interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation,
are owned, directly or indirectly, by Borrower.


 






    	 	12	 



     

    

 


1.2             
Accounting Terms. All accounting terms not specifically defined herein shall be defined in accordance with Generally
Accepted Accounting Principles as promulgated by the United States of America Financial Accounting Standards Board in the United
States of America in effect from time to time (“GAAP”). All financial computations to be made under this Agreement,
unless otherwise specifically provided herein, shall be construed in accordance with GAAP. Whenever the term “Borrower and
its Subsidiaries” is used in respect of a financial covenant or a related definition, it shall be understood to mean Borrower
and its Subsidiaries (other than its Foreign Subsidiaries) on a consolidated basis unless the context clearly requires otherwise.


 


1.3             
Uniform Commercial Code Terms. All capitalized terms used herein with reference to the Collateral and defined in
the Uniform Commercial Code as adopted in the State of Michigan from time to time (“Code”) shall have the meaning given
therein unless otherwise defined herein. To the extent the definition of any category or type of Collateral is expanded by any
amendment, modification or revision to the Code, such expanded definition will apply automatically as of the effective date of
such amendment, modification or revision.


 


		2.	REVOLVING CREDIT



 


2.1             
Revolving Credit. Subject to the terms and conditions of this Agreement (including without limitation Section 2.3),
Bank may in its sole discretion, make Advances to Borrower at any time, provided, that, in no event shall the aggregate principal
amount of such Advances plus the Foreign Exchange Reserve exceed at any one time outstanding the Revolving Credit Amount. All of
the Advances under this Section 2 shall be evidenced by the Revolving Credit Note under which Advances, repayments and readvances
may be made, subject to the terms and conditions of this Agreement and the Revolving Credit Note.


 


2.1A.        Demand Nature. Borrower hereby
acknowledges and agrees that the Revolving Credit Note is on a demand basis and that Borrower’s compliance with the terms
and conditions set forth herein, and the absence of any Event of Default hereunder, shall not, in any way whatsoever, limit, restrict
or otherwise affect or impair Bank’s right or ability to make demand for payment of any or all of the Indebtedness under
the Revolving Credit, in Bank’s sole and absolute discretion, with or without reason or cause, and the existence of any Event
of Default hereunder shall not be the sole reason or basis for enabling Bank to make demand for payment of all or any part of such
Indebtedness.


 


2.2             
Accrual of Interest and Maturity. Each Advance from time to time outstanding shall bear interest as provided in the
Revolving Credit Note. The amount and date of each Advance, and the amount and date of any repayment shall be noted on Bank’s
records, which records will be conclusive evidence thereof absent manifest error.


 


2.3             
Requesting Advances.


 


		(a)	Borrower may request an Advance under this Section 2 upon the delivery to Bank of a Request for
Advance executed by an authorized officer of Borrower. Borrower must request Advances no later than 1:00 p.m. (Troy, Michigan local
time) on a Business Day; and



 






    	 	13	 



     

    

 


		(b)	Each Request for Advance shall constitute a certification by Borrower, as of the date thereof:



 


		(i)	both before and after giving effect to such Advance, the obligations of the Loan Parties set forth
in this Agreement and the other Loan Documents to which such Persons are parties are valid, binding and enforceable obligations
of such Persons;



 


		(ii)	all conditions to Advances have been satisfied (including, without limitation, delivery of the
Borrowing Base Certificate as otherwise required herein), and shall remain satisfied to the date of such Advance (both before and
after giving effect to such Advance);



 


		(iii)	there is no Default or Event of Default in existence, and none will exist upon the making of such
Advance (both before and after giving effect to such Advance);



 


		(iv)	the representations and warranties contained in this Agreement and the other Loan Documents are
true and correct in all material respects and shall be true and correct in all material respects as of the making of such Advance
(both before and after giving effect to such Advance), other than any representation or warranty that expressly speaks only as
of a different date; and



 


		(v)	the execution of such Request for Advance will not violate the material terms and conditions of
any material contract, agreement or other borrowing of any Loan Party.



 


Bank may, at its option, lend under this Section
2 upon the telephone or email request of an authorized officer of Borrower and, in the event Bank makes any such Advance upon a
telephone or email request, the requesting authorized officers shall, if so requested by Bank, fax to Bank, on the same day as
such telephone or email request, a Request for Advance. Borrower hereby authorizes Bank to disburse Advances under this Section
2 pursuant to the telephone or email instructions of any person(s) purporting to be an authorized officer of Borrower and Borrower
shall bear all risk of loss resulting from disbursements made upon any telephone or email request. Each telephone or email request
for an Advance shall constitute a certification of the matters set forth in this Section 2.3.


 


2.4             
Disbursement of Loan Proceeds. During the term of this Agreement, Borrower may use Advances under the Revolving Credit
Note by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof. The proceeds of Advances
under the Revolving Credit Note requested by Borrower shall be made available to Borrower on the day so requested by way of credit
to Borrower's operating account with Bank, in immediately available funds.


 


2.5             
Prepayment. Borrower may prepay all or part of the outstanding balance of the Advances under the Revolving Credit
Note as provided in the Revolving Credit Note.


 






    	 	14	 



     

    

 


2.6             
Reduction of Indebtedness. If at any time and for any reason the aggregate outstanding principal amount of Advances
hereunder to Borrower plus the Foreign Exchange Reserve, shall exceed the lesser of (i) the Revolving Credit Amount or (ii) the
then applicable Borrowing Base, then Borrower shall immediately reduce any pending request for an Advance on such day by the amount
of such excess and, to the extent any excess remains thereafter, immediately repay an amount of the Indebtedness equal to such
excess. Borrower acknowledges that, in connection with any repayment required hereunder, it shall also be responsible for the reimbursement
of any prepayment or other costs required under the terms of the Revolving Credit Note.


 


2.7             
Use of Proceeds. Proceeds of Advances under the Revolving Credit Note shall be used solely to refinance existing
indebtedness of Borrower, for working capital and general corporate purposes of Borrower and its Subsidiaries, including to pay
all costs, fees and expenses due in connection with the issuance of the Indebtedness.


 


		3.	[Reserved].



 


		4.	[Reserved].



 


		5.	[Reserved].



 


		6.	CONDITIONS.



 


The Effective Date shall be deemed to have occurred
upon the satisfaction or waiver of each of the following conditions:


 


6.1             
Corporate Authority. Borrower agrees to furnish Bank, in form and substance reasonably satisfactory to Bank, with
(a) certified copies of resolutions of the boards of directors, members, managers or partners, as applicable, of each Loan Party
evidencing approval of the transactions contemplated hereunder and authorizing the execution and delivery of the Loan Documents,
and in the case of Borrower, the Requests for Advances hereunder, including incumbency and signatures of authorized officers of
the applicable Loan Party; (b) a certificate of good standing from the state of each Loan Party’s organization and from the
state(s) in which a failure by any of them to be qualified to do business would have a Material Adverse Effect (each such jurisdiction
being listed on Schedule 6.1); (c) copies of each Loan Party’s articles of incorporation and bylaws, articles of organization
and operating agreement, partnership certificate and agreement or other constitutional documents as applicable, as in effect on
the Effective Date, (d) a trust certificate, executed by the trustee of any trust that is a Loan Party, and (e) such other similar
documents and instruments as Bank may reasonably require.


 


6.2             
Execution of Loan Documents. Borrower agrees to furnish, execute and deliver to Bank, or cause to be furnished, executed
and delivered to Bank, prior to or simultaneously with the initial borrowing hereunder, in form and substance reasonably satisfactory
to Bank, the following:


 


		(a)	this Agreement;



 






    	 	15	 



     

    

 


		(b)	the Revolving Credit Note;



 


		(c)	the initial Borrowing Base Certificate;



 


		(d)	each Security Agreement;



 


		(e)	the Guaranties;



 


		(f)	the Mortgage;



 


		(g)	financing statements required or requested by Bank to perfect all security interests to be conferred
upon Bank under any Loan Document and to accord Bank a perfected first priority security position under the Code (subject only
to the Liens permitted by Section 9.5);



 


		(h)	certified copies of uniform commercial code requests for information, or a similar search report
certified by a party reasonably acceptable to Bank, dated a date reasonably near to the Effective Date, listing all effective financing
statements which name Borrower or any Loan Party or any Guarantor granting a security interest in Collateral (under their present
names or under any previous names, trade names or d/b/a’s used within five (5) years prior to the date hereof, such names
being listed in their entirety on Schedule 6.3(e)) as debtors and which are filed in the jurisdictions in which filings are to
be made pursuant to the Loan Documents, together with copies of such financing statements; and



 


		(i)	Such other documents or agreements of security and appropriate assurances of validity, perfection
of Liens for the benefit of Bank and first priority of Liens for the benefit of Bank (subject only to the Liens permitted by Section
9.5) as Bank may reasonably request at any time.



 


6.3             
Insurance. Bank shall have received evidence reasonably satisfactory to it that the Loan Parties have obtained the
insurance policies required by the Loan Documents, including but not limited to Section 8.3 hereof and that such insurance policies
are in full force and effect.


 


6.4             
Compliance with Contractual Obligations. Borrower (and any of its Subsidiaries or Affiliates) shall have each performed
and complied in all material respects with all agreements and conditions contained in this Agreement, the other Loan Documents,
or any agreement or other document executed thereunder and required to be performed or complied with by each of them (as of the
applicable date), and none of such parties shall be in material default in the performance of or compliance with any of their terms
or provisions.


 


6.5             
Opinion of Counsel. The Loan Parties shall furnish Bank with an opinion of counsel to the Loan Parties, dated as
of the Effective Date and covering such matters as reasonably required by and otherwise reasonably satisfactory in form and substance
to Bank.


 


6.6             
Lease Agreements. For each piece of real property leased by any Loan Party, on the Effective Date, Bank shall have
received a copy of the applicable lease agreement.


 






    	 	16	 



     

    

 


6.7             
Payment of Fees. On or before the Effective Date, Borrower shall have paid to Bank, (i) a non-refundable closing
fee in the amount of $10,000 and (ii) all fees and expenses (including, but not limited to reasonable attorney’s fees and
recordation costs) incurred in connection with the execution and delivery of this Agreement and the related Loan Documents.


 


6.8             
Payoff Letter. A payoff letter from the incumbent lenders, in form and substance reasonably acceptable to Bank.


 


6.9             
No Material Adverse Change. No material adverse change to the finances, condition, operations, prospects, property
or business expectations of any Loan Party shall result from the consummation of the transactions contemplated by this Agreement,
other than any material adverse change that results from or could be expected to result from the incurrence of the Indebtedness
under this Agreement and the Loan Documents.


 


6.10         
Closing Conditions. The Borrower states, by executing this Agreement, that, to the best of its knowledge after due
inquiry, (a) the conditions set forth in this Section 6 have been satisfied; (b) the representations and warranties made by Loan
Parties in this Agreement or any of the other Loan Documents, shall have been true and correct in all material respects when made
and on the Effective Date; and (c) no Default or Event of Default shall have occurred and be continuing on the Effective Date.


 


		7.	REPRESENTATIONS AND WARRANTIES.



 


Borrower represents and warrants as follows
and such representations and warranties shall survive until the irrevocable final payment in full of the Indebtedness and the performance
by the Loan Parties of all other obligations under this Agreement and the other Loan Documents:


 


7.1             
Corporate Authority. Each Loan Party is duly organized and existing in good standing under the laws of the jurisdiction
of its organization; each Loan Party is in good standing in each jurisdiction in which it is required to be qualified to do business,
except where the failure to be so qualified would not have a Material Adverse Effect.


 


7.2             
Due Authorization; Non-Contravention; Binding Obligations. Execution, delivery and performance of the applicable
Loan Documents to which any Loan Party is a party, are within such Loan Party’s powers, have been duly authorized, are not
in contravention of law or such Loan Party’s organizational documents or of the unwaived terms of any material indenture,
contract, agreement or undertaking to which such Loan Party is a party or by which it is bound, and do not require the consent
or approval of any third party, governmental body, agency or authority; and the Loan Documents and other documents and instruments
required thereunder, when issued and delivered, will be valid and binding on such Loan Party in accordance with their terms, except
as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or
law).


 


7.3             
Good Title; Property; Leases; No Liens.


 


		(a)	Each Loan Party, to the extent applicable, has good and valid title (or, in the case of real property,
good and marketable title) to all assets owned by it, and, each Loan Party has a valid leasehold interest or interest as a licensee
in all of its leased real property;



 






    	 	17	 



     

    

 


		(b)	The real property described in Schedule 7.3(b) constitutes all of the real property owned or leased
(including all warehouse locations) by the Loan Parties on the Effective Date;



 


		(c)	On the Effective Date, each Loan Party will own or have a valid leasehold interest in all real
property and assets necessary for the continued operation of its business in substantially the same manner as immediately prior
to the Effective Date;



 


		(d)	No material condemnation, eminent domain or expropriation action has been commenced, or, to the
best knowledge of Borrower, threatened, with respect to any real property owned or leased by any Loan Party;



 


		(e)	There are no security interests, Liens, mortgages, or other encumbrances on and no financing statements
on file with respect to any of the assets owned by the Loan Parties, except for (i) the financing statements and mortgage of record
the date hereof in favor of Comerica Bank with the State of Michigan which Borrower acknowledges will be terminated pursuant to
that certain Payoff Letter dated December 1, 2017 executed by Comerica Bank and delivered to Borrower, and (ii) the Liens permitted
under Section 9.5 of this Agreement;



 


		(f)	There are no defaults by any party under any real property lease agreement which, either singly
or in the aggregate, could reasonably be expected to have a Material Adverse Effect; each real property lease agreement is the
valid and binding obligation of the Persons party thereto; and



 


		(g)	All real property leases (and all amendments thereto) of the Loan Parties in effect on the Effective
Date shall have been delivered to Bank prior to the date hereof.



 


7.4             
No Litigation. Except as described in Schedule 7.4, no litigation or other proceeding before any court or administrative
agency is pending, or to the best knowledge of Borrower is threatened against any Loan Party or any Foreign Subsidiary, the outcome
of which could reasonably be expected to have a Material Adverse Effect. Except as described in Schedule 7.4, there is not outstanding
against any Loan Party any judgment, decree, injunction, rule, or order of any court, government, department, commission, agency,
instrumentality or arbitrator nor is any Loan Party in violation of any applicable law, regulation, ordinance, order, injunction,
decree or requirement of any governmental body or court where such matters would reasonably be expected to have a Material Adverse
Effect.


 


7.5             
Compliance with Laws. Except as disclosed on Schedule 7.5, each Loan Party has complied with all applicable federal,
state and local laws, ordinances, codes, rules, regulations and guidelines (including consent decrees and administrative orders)
including but not limited to Environmental Laws, and the requirements of its own organizational documents except to the extent
that failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. Neither the extension of credit
made pursuant to this Agreement or the use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, nor
any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
or any enabling legislation or executive order relating thereto, or The United and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Act of 2001, Public Law 10756, October 26, 2001 or Executive
Order 13224 of September 23, 2001 issued by the President of the United States (66 Fed. Reg. 49049 (2001)).


 






    	 	18	 



     

    

 


7.6             
ERISA. No Loan Party maintains or contributes to any employee pension benefit plan subject to title IV of ERISA,
except those set forth in Schedule 7.6 (each, a “Pension Plan”). There is no material unfunded past service liability
of any Pension Plan maintained by any Loan Party, and there is no “accumulated funding deficiency” within the meaning
of Section 302 of ERISA, or any existing material liability with respect to any Pension Plan owed to the Pension Benefit Guaranty
Corporation (“PBGC”) or any successor thereto, except any funding deficiency for which an application to the PBGC for
waiver is pending or for which a waiver has been granted by the PBGC.


 


7.7             
Accuracy of Information. The financial statements delivered to Bank dated as of June 30, 2017 fairly present in all
material respects the financial condition of Borrower and its Subsidiaries as of such date. The projections and pro forma financial
information delivered to Bank are based upon good faith estimates and assumptions believed by Borrower to be accurate and reasonable
at the time made. Since said date there has been no material adverse change in the financial condition of Borrower and its Subsidiaries
(other than the execution and delivery of this Agreement, the related Loan Documents, and the incurrence of the Indebtedness under
such documents). Borrower and its Subsidiaries do not have any material contingent obligations (including any liability for taxes)
not disclosed by or reserved against in the balance sheet previously delivered to Bank and dated as of June 30, 2017, except as
otherwise disclosed to Bank in writing prior to the Effective Date. On the Effective Date there are no material unrealized or anticipated
losses from any present commitment of Borrower or any of its Subsidiaries that are not disclosed by or reserved against in the
financial statements delivered to Bank dated as of June 30, 2017.


 


7.8             
Taxes. All tax returns and tax reports of the Loan Parties required by law to have been filed have been duly filed
or extensions in respect thereof have been obtained, and all taxes, assessments and other governmental charges or levies (other
than those presently payable without penalty and those currently being contested in good faith for which adequate reserves have
been established) upon any Loan Party (or any of its properties) which are due and payable and for which the failure to pay could
reasonably be expected to have a Material Adverse Effect have been paid. The charges, accruals and reserves on the books of the
Loan Parties in respect of U.S. Federal income tax for all periods are adequate in the opinion of Borrower.


 


7.9             
Anti-Terrorism Laws. No Loan Party is in violation of any Anti-Terrorism Law or engaged in nor has it conspired to
engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law. No Loan Party (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in
any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.


 






    	 	19	 



     

    

 


7.10         
Subsidiaries. As of the Effective Date, Borrower has no Subsidiaries except as listed in Schedule 7.10.


 


7.11         
Environmental and Safety Matters. Except as set forth in Schedule 7.11 and except for such matters that could not
reasonably be expected to have a Material Adverse Effect:


 


		(a)	all facilities and property owned or leased by the Loan Parties are in compliance with all Environmental
Laws;



 


		(b)	to the best knowledge of Borrower, there have been no unresolved and outstanding past, and there
are no pending or threatened:



 


		(i)	claims, complaints, notices or requests for information received by any Loan Party with respect
to any alleged violation of any Environmental Law, or



 


		(ii)	written complaints, notices or inquiries to any Loan Party regarding potential liability of the
Loan Parties under any Environmental Law; and



 


		(c)	to the best knowledge of Borrower, no conditions exist at, on or under any property now or previously
owned or leased by the Loan Parties which, with the passage of time, or the giving of notice or both, would give rise to liability
of the Loan Parties under any Environmental Law.



 


7.12         
No Investment Company or Margin Stock. No Loan Party is an “investment company” within the meaning of
the Investment Company Act of 1940, as amended. No Loan Party is engaged principally, or as one of its important activities, directly
or indirectly, in the business of extending credit for the purpose of purchasing or carrying margin stock, and none of the proceeds
of any of the Indebtedness hereunder will be used, directly or indirectly, for any purpose which would violate the provisions of
Regulation U or X of the Board of Governors of the Federal Reserve System. Terms for which meanings are provided in Regulation
U of the Board of Governors of the Federal Reserve System or any regulations substituted therefor, as from time to time in effect,
are used in this Section with such meanings.


 


7.13         
Conditions Affecting Business or Properties. None of the businesses or the properties of any Loan Party is affected
by any fire, storm, hail, earthquake, explosion, accident, Act of God, strike, lockout, dispute, embargo, or other casualty which,
(a) after giving effect to the Loan Party’s receipt of the insurance proceeds therefor, to the extent applicable, could reasonably
be expected to have a Material Adverse Effect, or (b) if such strike, lockout, dispute or embargo were to continue for more than
seven (7) days, it could reasonably be expected to have a Material Adverse Effect.


 


7.14         
Solvency. After giving effect to the transactions contemplated by this Agreement, each Loan Party will be solvent,
able to pay all of its indebtedness as it matures and will have capital sufficient to carry on its business and all business in
which it is about to engage. No Loan Party is insolvent, nor will any Loan Party be rendered insolvent by its execution and delivery
to Bank of this Agreement, any Loan Document or by the consummation of the transactions contemplated by this Agreement, or any
Loan Document, and the capital and monies remaining in the Loan Parties are not now and will not become so unreasonably small as
to preclude the Loan Parties from carrying on their respective businesses. No Loan Party intends to, nor does management of any
Loan Party believe it will, incur debts beyond its ability to pay them as they mature. No Loan Party contemplates filing a petition
in bankruptcy or for an arrangement or reorganization under Bankruptcy Code or any similar law of any jurisdiction now or hereafter
in effect relating to any Loan Party, nor does any Loan Party have any knowledge of any threatened bankruptcy or insolvency proceedings
against a Loan Party.


 






    	 	20	 



     

    

 


7.15         
Capitalization. Schedule 7.15 sets forth as of the Effective Date the number of authorized, issued and outstanding
shares (or other equity interests) of each Loan Party, the par value of such shares and, except for Perceptron, Inc., the holders
of such shares. All issued and outstanding shares of capital stock of (or other equity interests in) each Loan Party are duly authorized
and validly issued, fully paid, nonassessable, and in the case of Subsidiaries constituting Loan Parties, free and clear of all
Liens (except for the benefit of Bank and those certain Permitted Liens set forth in subsection (a) of the definition of Permitted
Liens) and such shares (or other equity interests) were issued in compliance with all applicable state and federal laws concerning
the issuance of securities. No shares (or other equity interests) of any Loan Party, other than those described above, are issued
and outstanding as of the Effective Date. Except as set forth in Schedule 7.15, as of the Effective Date, there are no preemptive
or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition
from any Loan Party, of any shares of capital stock or other securities or ownership interests of any Loan Party.


 


7.16         
Customer and Supplier Relationships. No Loan Party has knowledge of any intention or indication by a customer or
supplier of a Loan Party that such customer or supplier intends to limit or alter or terminate its business relationship with any
Loan Party, where such limitation, alteration or termination could have a Material Adverse Effect.


 


7.17         
Employee Matters. Set forth on Schedule 7.17 are all union contracts or agreements to which any Loan Party is party
as of the Effective Date and the related expiration dates of each such contract. There are no slowdowns, unfair labor practice
complaints, strikes, grievances, work stoppages, arbitration proceedings or controversies pending or, to the best knowledge of
the Borrower, threatened against any Loan Party, other than such grievances or controversies arising in the ordinary course of
business which in the aggregate could not reasonably be expected to have a Material Adverse Effect.


 


		8.	AFFIRMATIVE COVENANTS.



 


Borrower covenants and agrees, until the irrevocable
final payment in full of the Indebtedness and the performance by the Loan Parties of all other obligations under this Agreement
and the other Loan Documents, as follows:


 


8.1             
Financial Statements; Certificate; Other Information.


 


		(a)	Borrower shall deliver or cause to be delivered to Bank within one hundred twenty (120) days after
the end of each fiscal year, a consolidated and consolidating audit of Borrower's and its Subsidiaries financial condition and/or
Borrower's and its Subsidiaries assets which constitute security for the loan, prepared by an independent certified public accountant
satisfactory to Bank;



 






    	 	21	 



     

    

 


		(b)	Borrower shall furnish Bank with, as soon as available, but in no event later than forty five (45)
days after the end of each fiscal quarter of Borrower, in the case of Borrower’s first three fiscal quarters, and seventy
five (75) days after the end of such fiscal quarter, in the case of Borrower’s fourth fiscal quarter, Borrower’s and
its Subsidiaries consolidated and consolidating financial statements, including a balance sheets and income statements for the
fiscal quarter then ended, prepared by Borrower and certified by Borrower's president, chief financial officer or other officer
or person acceptable to Bank as fairly representing Borrower's financial condition and results of operations as of the end of such
period.



 


		(c)	Borrower shall provide a Borrowing Base Certificate to Bank within thirty (30) days after and as
of each month end (or more frequently if required by Bank), each such Borrowing Base Certificate to be accompanied by (i) a report
of the aging of accounts receivable and accounts payable and (ii) an inventory report, in each case in form and detail reasonably
acceptable to Bank;



 


		(d)	as soon as available, Borrower shall provide to Bank Borrower’s, 10-Q and 10-K reports filed
with the federal Securities and Exchange Commission, and in any event, with respect to the 10-Q report, within forty five (45)
days of the end of each of the first three fiscal quarters of each of Borrower’s fiscal years, and with respect to the 10-K
report, within one hundred twenty (120) days after and as of the end of each of Borrower’s fiscal years; and as soon as available,
copies of all material filings, reports or other documents filed by Borrower or any of its Subsidiaries with the federal Securities
and Exchange Commission or other federal regulator or comparable agencies or authorities in foreign jurisdictions, or any stock
exchanges in such jurisdiction;



 


		(e)	Borrower shall deliver or cause to be delivered to Bank such information as required by the terms
and conditions of any Loan Documents;



 


		(f)	Borrower shall deliver or cause to be delivered to Bank such additional schedules, certificates
and reports respecting all or any of the Collateral, the items or amounts received by any Loan Party in full or partial payment
thereof (for the sales as permitted hereunder), and any goods (the sale or lease of which shall have given rise to any of the Collateral)
possession of which has been obtained by any Loan Party, all to such extent as Bank may reasonably request. Any such schedule,
certificate or report shall be certified as accurate in all material respects (except as to any projections contained in such schedule,
certificate or report which shall be certified as reasonable in all material respects taking into account all facts and information
known or reasonably available to the Borrower) by a duly authorized officer of Borrower and shall be in such form and detail as
Bank may reasonably specify; and



 






    	 	22	 



     

    

 


		(g)	Borrower shall deliver or cause to be delivered to Bank promptly, and in form to be reasonably
satisfactory to Bank, such other information as Bank may reasonably request from time to time.



 


All financial statements required to be delivered under this Section
8.1 (other than projections which shall be reasonable in all material respects taking into account all facts and information known
or reasonably available to Borrower) to be complete and correct in all material respects as of the date when made and to be prepared
in reasonable detail and in accordance with GAAP throughout the periods reflected therein and consistent with prior periods (except
as approved by an officer and disclosed therein).


 


8.2             
Payment of Obligations. Borrower shall and, as applicable, shall cause the Loan Parties to pay and discharge all
taxes and other governmental charges, and all contractual obligations calling for the payment of money, before the same shall become
overdue except (i) where the failure to do so could not reasonably be expected to have a Material Adverse Effect on a Loan Party
or its property or (ii) to the extent only that such payment is being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided upon the books of the Loan Parties, provided that, in any event,
Borrower will, and will cause the Loan Parties to pay any such tax, charge or other obligation prior to the commencement of any
proceeding to foreclose any Lien securing the same.


 


8.3             
Maintenance of Property; Insurance.


 


		(a)	Borrower shall and shall cause the Loan Parties to keep all material property useful and necessary
in its and the Loan Parties’ business in working order (ordinary wear and tear excepted); and



 


		(b)	Borrower shall maintain, and cause the Loan Parties to maintain, insurance coverage on their physical
assets against business risks in such amounts and of such types as are customarily carried by companies similar in size and nature,
and in the event of acquisition of additional property, real or personal, or of incurrence of additional risks of any nature, increase
such insurance coverage in such manner and to such extent as prudent business judgment and present practice would dictate; and
in the case of all policies covering property mortgaged or pledged to Bank or property in which Bank shall have a security interest
of any kind whatsoever, all such insurance policies shall provide that the loss payable thereunder shall be payable to the applicable
Loan Party and Bank (as mortgagee or lender loss payee, as applicable) as their respective interests may appear, and all liability
policies shall name Bank as an additional insured, all such policies, including all endorsements thereon, or copies thereof or
any insurance certificates relating thereto, to be deposited with Bank.



 


8.4             
Inspection of Property; Books and Records. Borrower shall permit Bank or cause Bank to be permitted, through its
authorized attorneys, accountants and representatives, to examine each Loan Party’s books, accounts, records, ledgers and
assets of every kind and description at all reasonable times upon oral or written request of Bank, which shall include but shall
not be limited to collateral audits of each Loan Party conducted by Bank, at Borrower’s own cost and expense (provided, that,
Borrower shall not be required to pay for or reimburse Bank for the costs and expenses of more than two such audits in each calendar
year, provided, further, that such limitation shall not apply upon the occurrence and during the continuance of an Event of Default)
and to visit each Loan Party’s offices and discuss financial matters with each Loan Party’s officers. Borrower hereby
authorizes (and will cause each other Loan Party to authorize) its independent certified public accountants to discuss the finances
and affairs of the Loan Parties (and agrees to request such accountants to so discuss with the Bank) and to examine any of its
or their books and other corporate records, provided that Borrower is offered the opportunity to participate in such discussions.


 






    	 	23	 



     

    

 


8.5             
Notices.


 


		(a)	Borrower shall promptly notify Bank of any condition or event which constitutes a Default or an
Event of Default under this Agreement, and promptly inform Bank of the existence or occurrence of any condition or event which
could reasonably be expected to have a Material Adverse Effect;



 


		(b)	Borrower shall promptly notify Bank in writing of any “Default” or “Event of
Default” (as such terms are defined in the Subordinated Debt Documents) under the Subordinated Debt Documents;



 


		(c)	Borrower shall promptly notify Bank in writing of any litigation or other proceeding before any
court or administrative agency that arises, or to the knowledge of the officers of the Borrower is threatened against any Loan
Party after the Effective Date, the outcome of which could reasonably be expected to have a Material Adverse Effect;



 


		(d)	Borrower shall deliver to Bank, not less than ten (10) Business Days prior to the proposed effective
date thereof, copies of any proposed amendments, restatements or modifications (in substantially final form) made on or after the
Effective Date to any Subordinated Debt Documents or any material real property leases;



 


		(e)	Borrower shall provide Bank with copies and/or verbal notice (if verbal notice is only notice given)
of all notices of default or event of default under any real property lease, or any agreement with a supplier or customer which,
in any case, is material to any Loan Party, concurrently with delivery or promptly after receipt thereof;



 


		(f)	Borrower shall provide written notice to Bank (i) of all new jurisdictions in which any Loan Party
has become qualified in order to transact business promptly after such qualification has occurred, and (ii) not less than ten (10)
Business Days prior to the proposed effectiveness thereof, of any material change in the authorized and issued equity interests
of any Loan Party, other than issuances of common stock by the Borrower, or the creation of any joint venture or any other material
amendment to any Loan Party’s charter, by-laws or other organizational documents, such notice in each case to identify the
applicable jurisdictions, capital structures or amendments, as applicable; and



 






    	 	24	 



     

    

 


		(g)	Borrower shall promptly deliver to Bank copies of any written notices to the Subordinated Debt
Holders other than notices otherwise required hereunder.



 


8.6             
Licenses; Permits. Borrower shall maintain, and cause the Loan Parties to maintain, in good standing all licenses
permits or approvals required by their respective states of incorporation or organization or any agency thereof, or other governmental
authority or any other third party that may be necessary or required for the Loan Parties to carry on their respective general
business objects and purposes, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.


 


8.7             
Conduct of Business. Borrower shall continue, and shall cause the Loan Parties to continue, to engage in its business
and operations substantially as conducted immediately prior to the Effective Date, or in other businesses and operations related
or complementary thereto.


 


8.8             
ERISA. Borrower shall, with respect to any Plan or Multiemployer Plan, as such terms are defined in Sections 3(2),
3(37) and 4001 (a) (3) of ERISA:


 


		(a)	at all times make prompt payment of contributions required to meet the minimum funding standards
set forth in Section 302 through 305 of the ERISA;



 


		(b)	promptly, after the filing thereof, furnish to Bank copies of each annual report required to be
filed pursuant to Section 103 of ERISA for the plan year, including any certified financial statements or actuarial statements
required pursuant to said Section 103;



 


		(c)	notify Bank immediately of any fact, including, but not limited to, any “Reportable Event,”
as that term is defined in Section 4043 of ERISA, arising in connection with Borrower’s Plan which might constitute grounds
for termination thereof by the Pension Benefit Guaranty Corporation or for the appointment by the appropriate United States District
Court of a Trustee to administer Borrower’s Plan;



 


		(d)	notify Bank of the occurrence of any “Prohibited Transaction”, as that term is defined
in Section 406 of ERISA;



 


		(e)	not:



 


		(i)	intentionally engage in any “Prohibited Transaction;”



 


		(ii)	permit any Plan to be determined to be in “at-risk” status, as defined in Section 303(i)(4)
of ERISA or Section 430(i)(4) of the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time,
and any successor statute of similar import and the rules and regulations promulgated thereunder as from time to time in effect;
or



 


		(iii)	intentionally terminate any Plan in a manner which could result in the imposition of a lien on
the property of Borrower pursuant to Part 4068 of ERISA.



 






    	 	25	 



     

    

 


8.9             
Hedging Contracts. Except as authorized by Bank, Borrower is not currently a party to, nor will it be a party to
any Hedging Contract.


 


8.10         
Change of Control.


 


		(a)	Borrower shall maintain a majority of the directors or managers who constitute the board of directors
or the managing body of Borrower on the date hereof, unless replacement of any existing board or managing body member (other than
owing to death or disability) shall have been approved by such board of directors or managing body as constituted on the date hereof
or as reconstituted as permitted by this section; and



 


		(b)	Borrower shall maintain, directly or indirectly, at least 100% of the outstanding voting equity
interests of any existing or future Subsidiary, free and clear of all liens (other than in favor of Bank).



 


8.11         
Further Assurances. Borrower shall furnish Bank, or cause to be furnished to Bank, upon Bank’s request, in
form and substance reasonably satisfactory to Bank such additional pledges, assignments, mortgages, Lien instruments or other security
instruments covering any Loan Party’s real and personal property of every nature and description, whether now owned or hereafter
acquired and all voting equity interests held by Borrower and the other Loan Parties in Subsidiaries and rights to acquire such
interests (in each case as to all property or equity interests to the extent a Lien or pledge for the benefit of Bank has been
made or is required to be made under this Agreement or any Loan Document), as Bank may in its sole discretion require, and defend
all Collateral pledged to Bank as security for the Indebtedness pursuant to the terms of the Security Agreement, any applicable
Mortgage and any other related Loan Documents, as applicable, from any Liens other than Liens permitted under Section 9.5.


 


8.12         
Deposit Accounts. Within sixty (60) days after the date of this Agreement, Borrower shall maintain and cause each
of its domestic Subsidiaries to maintain, all operating deposit accounts with Bank.


 


8.13         
Environmental Compliance.


 


		(a)	Borrower shall, and shall cause the Loan Parties to, use and operate all of its facilities and
properties in compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations
under Environmental Laws in effect and remain in compliance therewith, and handle all Hazardous Materials in compliance with all
applicable Environmental Laws except where the failure to do so could not reasonably be expected to have a Material Adverse Effect;



 


		(b)	Borrower shall promptly notify Bank and provide copies upon receipt of all written claims, complaints,
notices or inquiries received by any Loan Party relating to its facilities and properties or compliance with Environmental Laws,
and shall promptly cure all violations of or noncompliance with all Environmental Laws to the extent that such violations could
reasonably be likely to have a Material Adverse Effect and shall diligently undertake to have dismissed with prejudice to the satisfaction
of Bank any actions and proceedings relating to compliance with Environmental Laws to which any Loan Party is named a party, other
than such actions or proceedings being contested in good faith and with the establishment of a reserve in an amount acceptable
to Bank;



 






    	 	26	 



     

    

 


		(c)	Borrower shall, to the extent necessary to comply with Environmental Laws, remediate or monitor
contamination arising from a release or disposal of Hazardous Material; and



 


		(d)	Borrower shall provide such information and certifications which Bank may reasonably request from
time to time to evidence compliance with this Section 8.13.



 


8.14         
Use of Proceeds. Borrower shall use all Advances under the Revolving Credit Note as set forth in Section 2.7.


 


8.15         
 Additional Collateral. With respect to any warehouse where assets of any Loan Party are held, Borrower shall cause
the applicable Loan Party to deliver an executed bailee’s waiver for such location, in form and substance, acceptable to
Bank.


 


		9.	NEGATIVE COVENANTS.



 


Borrower covenants and agrees, until the irrevocable
final payment in full of the Indebtedness and the performance by the Loan Parties of all other obligations under this Agreement
and the other Loan Documents, as follows:


 


9.1             
Limitations on Debt. The Loan Parties shall not create, incur, assume or suffer to exist any Debt, except:


 


		(a)	the Indebtedness and any renewals or refinancings thereof;



 


		(b)	any Debt as described in Schedule 9.1(b) and any renewals or refinancings of such Debt in amounts
not exceeding the scheduled amounts (less any required amortization according to the terms thereof or other payments made reducing
the principal amount of such Debt) on substantially the same terms or terms that are not more burdensome on such Loan Party as
in effect on the Effective Date and otherwise in compliance with this Agreement, provided that no Default or Event of Default has
occurred and is continuing, both before and after giving effect to the incurrence, renewal or refinancing thereof;



 


		(c)	Debt incurred in connection with the acquisition, construction or improvement of fixed or capital
assets (whether pursuant to a loan or a Capitalized Lease) in an aggregate amount not exceeding $500,000 at any time outstanding,
and any renewals or refinancing of such Debt, on substantially the same terms or terms that are not more burdensome on such Loan
Party as in effect on the date of incurrence of such Debt and otherwise in compliance with this Agreement, provided that no Default
or Event of Default has occurred and is continuing, both before and after giving effect to the incurrence, renewal or refinancing
thereof;



 






    	 	27	 



     

    

 


		(d)	the existing Subordinated Debt, and any renewals or refinancings thereof in amounts not exceeding
the original principal amount thereof as of the Effective Date after giving effect to any payments made reducing the principal
amount of the existing Subordinated Debt permitted under the existing Subordination Agreement plus the amount of any payable in
kind interest, such renewals and refinancings being subject to the terms of the existing Subordination Agreement and the other
provisions of this Agreement;



 


		(d-1)	the Debt of Subsidiaries owed to Borrower to the extent permitted under Section 9.9(c-1) below;



 


		(e)	Debt in respect of Hedging Contracts authorized as required under Section 8.9;



 


		(f)	Guarantee Obligations to the extent permitted under Section 9.3;



 


		(g)	Debt incurred in the ordinary course of business with respect to surety and appeal bonds, performance
and return-of-money bonds and other similar obligations or to or for the benefit of any Person providing workers’ compensation,
health, disability or other employee benefits or property, casualty or liability insurance, all in the ordinary course of business
in accordance with customary industry practices, in amounts and for the purposes customary in the Loan Parties’ industry
and not, in the aggregate in excess of $250,000 at any time outstanding, plus the amount of any such appeal bonds required in connection
with appeals relating to the Borrower’s pending litigation disclosed in Schedule 7.4; and



 


		(h)	additional unsecured Debt of the Loan Parties not otherwise described above, such additional unsecured
Debt to consist of Debt not in excess of $500,000 in aggregate principal amount at any one time outstanding, provided that no Default
or Event of Default shall have occurred and be continuing at the time of incurring such Debt or shall result from the incurrence
of such Debt.



 


9.2             
Limitations on Mergers; Sales of Assets. The Loan Parties shall not enter into any merger or consolidation or sell,
lease, assign, transfer, or dispose of all, substantially all, or any part of its assets, except:


 


		(a)	leases or sales of Inventory leased or sold in the ordinary course of its business;



 


		(b)	sales or other dispositions of obsolete, damaged or worn out property, or property no longer useful
or useable in the conduct of any Loan Party’s business;



 


		(c)	transfers of assets (i) to Borrower from another Loan Party, provided that each Loan Party which
receives assets as permitted hereunder takes such actions as Bank may require to ensure that Bank shall have a perfected first
priority Lien over such transferred assets, or (ii) expressly permitted by Sections 9.5, 9.6, 9.7, or 9.9(c-1);



 


		(d)	leases or subleases to third parties of real property owned in fee or leased by any Loan Party
or a disposition or assignment as lessor of a lease of real property or a non-exclusive license of intellectual property, in each
case in the ordinary course of business;



 






    	 	28	 



     

    

 


		(e)	(i) mergers or consolidations of any Subsidiary of Borrower with or into Borrower (so long as Borrower
shall be the continuing or surviving entity); and (ii) mergers or consolidations of any Subsidiary of Borrower with or into any
other Subsidiary, so long as, if the non-surviving subsidiary is a Guarantor, the continuing or surviving entity is a Guarantor;
provided, however, that at the time of each such merger or consolidation under sub-clauses (i) and (ii) of this clause (e), both
before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or result therefrom
and notice of such merger or consolidation is provided to Bank at least fifteen (15) Business Days prior to its consummation;



 


		(f)	dispositions of cash or Cash Equivalents in the ordinary course of business;



 


		(g)	the settlement, discount or compromise of receivables in connection with the collection thereof,
provided that such settlement, discount or compromise shall be in the ordinary course of such Loan Party’s business and pursuant
to customary and reasonable industry practices;



 


		(h)	Other Asset Sales approved in writing by Bank; and



 


		(i)	Asset Sales in any fiscal year with an aggregate book value of not greater than $500,000, provided
that an Event of Default shall not have occurred and be continuing on the date of any such Asset Sale and an Event of Default shall
not occur after giving effect to any such Asset Sale.



 


9.3             
Limitation of Guarantee Obligations. The Loan Parties shall not guarantee, endorse, or otherwise become secondarily
liable for or upon the obligations of others, except (i) by endorsement for deposit in the ordinary course of business, (ii) guarantees
in favor of Bank, (iii) guarantees set forth on Schedule 9.3, and (iv) guarantees of Debt of other Persons (including joint ventures)
to the extent such guarantees constitute investments permitted under Section 9.9.


 


9.4             
Limitations on Acquisitions. The Loan Parties shall not purchase or otherwise acquire or become obligated for the
purchase of all or substantially all or any material portion of the assets or business interests or a division or other business
unit of any person, firm or corporation or any shares of stock of any corporation, trusteeship or association or in any other manner
effectuate or attempt to effectuate an expansion of present business by such an acquisition.


 


9.5             
Limitations on Liens. The Loan Parties shall not affirmatively pledge or mortgage any of its assets (including any
property or revenue), whether now owned or hereafter acquired, or create, suffer or permit to exist any Lien, security interest
in, or encumbrance thereon, except:


 


		(a)	for the benefit of Bank;



 


		(b)	the Permitted Liens;



 






    	 	29	 



     

    

 


		(c)	Liens described in Schedule 9.5(c) and continuations or renewals of such Liens, provided that such
continuations or renewals do not extend to any additional property or assets of any Loan Party or secure any additional obligations,
and that any Debt secured by such Liens satisfies the requirements of Section 9.1(b); and



 


		(d)	Liens and security interests securing Debt permitted by Section 9.1(c) provided that (i) such Liens
are created upon fixed or capital assets acquired, constructed or improved by Borrower after the Effective Date (including by virtue
of a Capitalized Lease); (ii) any such Lien or security interest is created solely for the purpose of securing indebtedness representing,
or incurred to finance, the cost of the acquisition, construction, improvement or leasing of the item of property subject thereto;
(iii) the principal amount of the Debt or Capitalized Lease secured by such Lien does not exceed 100% of the fair value of the
property at the time it was acquired; and (iv) the Lien or security interest does not cover any property other than such item of
property; provided, however, that no such Lien shall be created over any owned real property of any Loan Party for which Bank has
received a Mortgage or for which such Loan Party is required to execute a Mortgage pursuant to the terms of this Agreement.



 


9.6             
Restricted Payments. The Loan Parties shall not declare or make, or permit any Loan Party to declare or make any
dividends, payments or other distribution upon its stock or other ownership interests, as applicable, (whether in the form of cash,
assets, properties, rights, obligations or securities) or purchase, redeem or acquire for value any shares of its stock or other
ownership interests, as applicable, or any warrants, rights or options to acquire such shares or other ownership interests, as
applicable, except:


 


		(a)	dividends payable in the stock or other equity interests of any Loan Party, provided the issuance
of such stock or other equity interests does not otherwise violate the terms of this Agreement; and



 


		(b)	cash dividends by any Loan Party to Borrower;



 


provided, in the case of subparagraph (a) that no Default or Event
of Default has occurred and is continuing or would result from the making of such dividend, distribution, repurchase, acquisition
or redemption.


 


9.7             
Transactions with Affiliates. Except as set forth on Schedule 9.7, the Loan Parties shall not enter into any transaction
or series of transactions with any Affiliate other than (a) transactions expressly permitted under this Agreement, (b) employment
arrangements and employee benefit plans entered into in the ordinary course of business, (c) transactions among the Loan Parties
and their respective Subsidiaries, not involving other Affiliates, (d) customary director’s fees for directors of any Loan
Party which are not employees, directors or officers of the holders of any Subordinated Debt, and are otherwise deemed to be “outside”
directors, (e) equity issuances by Borrower, and (f) transactions on terms and conditions as favorable to the applicable Loan Party
as would be obtainable in a comparable arms-length transaction with a Person other than an Affiliate.


 






    	 	30	 



     

    

 


9.8             
Acquisition or Creation of new Subsidiaries or Affiliates. Borrower shall not allow any Person to become a Subsidiary
(other than a Foreign Subsidiary) of any Loan Party without the consent of the Bank. Borrower shall, with respect to each Person
which becomes a Subsidiary (other than a Foreign Subsidiary) of any Loan Party subsequent to the date of this Agreement with the
Bank's consent, promptly cause each such Subsidiary to execute and deliver to Bank, (i) a guaranty or joinder to guaranty, as applicable
and (ii) a joinder to the Security Agreement, together with such supporting documentation, including without limitation corporate
authority items, certificates and opinions of counsel, as reasonably required by Bank. All documents delivered under this Section
9.8 shall be, in form and substance, reasonably acceptable to Bank. In addition, Borrower shall take, or cause to be taken, such
steps as are necessary or advisable under applicable law to perfect and ensure the first priority of the Liens required to be granted
under this Section 9.8, subject to the Liens permitted under Section 9.5.


 


9.9             
Limitations on Investments. The Loan Parties shall not make or allow to remain outstanding any investment (whether
such investment shall be of the character of investment in shares of stock, evidence of indebtedness or other securities or otherwise)
in, or any loans or advances or extensions of credit to, any person, firm, corporation or other entity or association, except:


 


		(a)	investments of surplus cash in Cash Equivalents;



 


		(b)	sales on open account and in the ordinary course of business;



 


		(c)	deposits made in the ordinary course of business in order to obtain goods or services in an aggregate
amount not to exceed $250,000 at any one time;



 


		(c-1)	intercompany loans or intercompany investments made by a Loan Party to or in any of its Subsidiaries;
provided that, in the case of any intercompany loans or intercompany investments made by the Loan Parties in their Subsidiaries,
the aggregate amount of which in any fiscal year of Borrower shall not exceed $1,000,000 and the aggregate amount from time to
time outstanding in respect thereof shall not exceed $3,000,000.00; and provided, further, that in each case, no Default or Event
of Default shall have occurred and be continuing at the time of making such intercompany loan or intercompany investment or result
from such intercompany loan or intercompany investment being made and that any intercompany loans shall be pledged to Bank under
the Security Agreement;



 


		(d)	the investments listed on Schedule 9.9(d);



 


		(e)	investments consisting of (i) prepaid expenses, (ii) negotiable instruments held for collection,
(iii) lease, utility, workers’ compensation, performance and other similar deposits (iv) insurance claim receivables and
(v) stock, obligations and securities received in satisfaction of judgments, foreclosure of Liens or settlement of debts (whether
pursuant to a plan of reorganization or similar arrangement or otherwise), provided, however, for those investments described in
(iv) and (v) hereof, a first priority security interest is granted over such investments for the benefit of Bank; and



 






    	 	31	 



     

    

 


9.10         
Limitation on Other Restrictions. The Loan Parties shall not enter into any agreement, contract or arrangement (excluding
this Agreement and the other Loan Documents) restricting the ability of any Loan Party to (a) pay or make dividends or distributions
in cash or kind to Borrower, to make loans, advances or other payments of whatever nature to any Loan Party, or (b) make transfers
or distributions of all or any part of its assets to any Loan Party, excluding: (i) usual and customary restrictions on subletting
or assignment of any lease governing a leasehold interest of any Loan Party, and (ii) restrictions on the transfer of property
which is the subject of an existing sale agreement which is permitted under this Agreement.


 


9.11         
Prepayment of Debt. The Loan Parties shall not prepay, purchase, redeem or defease any Debt for money borrowed, excluding
the Indebtedness.


 


9.12         
Amendment of Debt Documents. The Loan Parties shall not amend, modify or otherwise alter any of the material terms
and conditions of those documents or instruments evidencing or otherwise related to (a) any Debt set forth on Schedule 9.1(b),
in a manner (i) that makes any term more onerous, restrictive or adverse to the applicable Loan Party or the rights of Bank under
this Agreement or any other Loan Document, (ii) that would violate the terms and conditions of this Agreement, or (iii) that could
reasonably be expected to have a Material Adverse Effect, and (b) the Subordinated Debt, except as permitted by the applicable
Subordination Agreement.


 


9.13         
Amendment to Organizational Documents. The Loan Parties shall not make, permit or consent to any amendment or other
modification to the constitutional documents of any of the Loan Parties except to the extent that any such amendment (i) does not
violate the terms and conditions of this Agreement, (ii) does not materially adversely affect the interest of Bank as creditor
under this Agreement or any other document or instrument in any respect and (iii) could not reasonably be expected to have a Material
Adverse Effect; Borrower shall provide thirty (30) days prior written notice to the Bank of any amendment or other modification.


 


9.14         
Change in Business. None of the Loan Parties shall (i) change its name, (ii) change its jurisdiction of incorporation
or organization, or (iii) change its warehouses or locations at which Collateral is held or stored, or the location of its records
concerning the Collateral or its books, in each case without at least thirty (30) days prior written notice to Bank and after Bank’s
written acknowledgment that any reasonable action requested by Bank to continue the perfection of any Liens in favor of Bank in
any Collateral, has been completed or taken, and provided that any such new location shall be in the continental United States.


 


9.15         
Limitation on Sale – Leaseback Transactions. The Loan Parties shall not enter into any arrangement with any
Person providing for the leasing by any Loan Party of real or personal property which has been or is to be sold or transferred
by such Loan Party to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security
of such property or rental obligations of such Loan Party.


 


9.16         
Fiscal Year and Accounting Principles. The Loan Parties shall not permit the fiscal year of Borrower and its Subsidiaries
to end on a day other than June 30, nor permit any changes in its accounting principles without the consent of the Bank, except
changes required by GAAP.


 






    	 	32	 



     

    

 


9.17         
[Reserved].


 


9.18         
Anti-Terrorism Laws. Neither Borrower nor any of its Subsidiaries shall at any time, (a) directly or through its
Affiliates and agents, conduct any business or engage in any transaction or dealing with any Blocked Person, including the making
or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (b) directly or through
its Affiliates and agents, deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order No. 13224; (c) directly or through its Affiliates and agents, engage in or conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law; or (d) fail to deliver to Bank any certification or other evidence requested from time to
time by Bank in its sole discretion, confirming the compliance of Borrower with this section.


 


		10.	EVENTS OF DEFAULT.



 


10.1         
Event of Default. The occurrence of any of the following events shall constitute an Event of Default hereunder:


 


		(a)	non-payment when due of (i) the principal on the Indebtedness under this Agreement and/or the Notes,
(ii) the interest on the Indebtedness under this Agreement and the Notes and the continuance thereof for three (3) days or (iii)
any fees or other amounts payable by any Loan Party hereunder or under any other Loan Document and the continuance thereof for
three (3) days;



 


		(b)	default in the observance or performance of any of the conditions, covenants or agreements set
forth in Sections 8.1(c), 8.3, 8.4, 8.5(a), 8.12 or Section 9 in its entirety;



 


		(b-1)	default in the observance or performance of any of the conditions, covenants or agreements set
forth in Sections 8.1(a), 8.1(b) and 8.1(d) and such failure shall continue for ten (10) days;



 


		(c)	default in the observance or performance of any of the other conditions, covenants or agreements
set forth herein and continuance thereof for thirty (30) days after written notice thereof to the Borrower by the Bank;



 


		(d)	any representation or warranty made by any Loan Party herein or in any Loan Document proves untrue
in any material adverse respect when made or deemed made;



 


		(e)	default in the observance or performance of any of the conditions, covenants or agreements of any
Loan Party set forth in any Loan Document or in any other agreement or instrument related to or connected with this Agreement or
the Indebtedness and continuance thereof beyond any applicable periods of cure;



 


		(f)	default in the payment of any other obligations of any Loan Party or Foreign Subsidiary to Bank
for borrowed money and continuance thereof beyond any applicable period of cure, or in the observance or performance of any conditions,
covenants or agreements related or given with respect to any such obligations for borrowed money which continues beyond any applicable
period of cure and which is sufficient to permit the Bank to accelerate the maturity of such obligations;



 






    	 	33	 



     

    

 


		(g)	default in the payment of any other obligations of any Loan Party to any Person other than Bank
for borrowed money in an aggregate amount in excess of $100,000 individually or in the aggregate when due (whether by acceleration
or otherwise) and continuance thereof beyond any applicable period of cure, or in the observance or performance of any conditions,
covenants or agreements related or given with respect to any such obligations for borrowed money in an aggregate amount in excess
of $100,000, individually or in the aggregate, which continues beyond any applicable period of cure;



 


		(h)	judgments (not covered by insurance from a solvent insurer who is defending such action without
reservation of rights) for the payment of money in excess of the sum of $100,000 in the aggregate shall be rendered against any
Loan Party and such judgments shall remain unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of thirty
(30) consecutive days from the date of its entry or any action shall be legally taken by a judgment creditor to levy upon assets
or properties of any Loan Party to enforce such judgment;



 


		(i)	the occurrence of any event, which is determined by the PBGC to constitute grounds for termination
by the PBGC of any Pension Plan or for the appointment of a trustee (in the case of a Pension Plan, by the appropriate United States
District Court) to administer such plan, and such event is not corrected and such determination is not revoked within sixty (60)
days after notice thereof has been given to the plan administrator or any Loan Party; or the institution of proceedings by the
PBGC to terminate any such Pension Plan or to appoint a trustee to administer such plan; or the appointment of a trustee (in the
case of a Pension Plan by the appropriate United States District Court) to administer any such Pension Plan;



 


		(j)	except as specifically permitted hereby, any Loan Party shall be dissolved or liquidated, or any
judgment, order or decree dissolving or liquidating a Loan Party or a Foreign Subsidiary shall be entered; or a creditors’
committee shall have been appointed for the business of any Loan Party or any Foreign Subsidiary; or any Loan Party or any Foreign
Subsidiary shall have made a general assignment for the benefit of creditors; or a petition in bankruptcy or for reorganization
or to effect a plan or arrangement with creditors is filed by or against any Loan Party or any Foreign Subsidiary and, if filed
against a Loan Party or any Foreign Subsidiary, shall not have been dismissed within sixty (60) days; or any Loan Party or any
Foreign Subsidiary shall fail to pay, or shall admit in writing its inability or refusal to pay, its debts generally as such debts
become due in the ordinary course of business (except as contested in good faith and for which adequate reserves are made in such
party’s financial statements); or any Loan Party or any Foreign Subsidiary shall file an answer to a creditor’s petition
or other petition filed against it in any bankruptcy or insolvency proceeding admitting the material allegations thereof; or any
Loan Party or any Foreign Subsidiary shall have applied for or permitted the appointment of a receiver or trustee or custodian
for any of its property or assets, or such receiver, trustee or custodian shall have been appointed for any of its property or
assets (otherwise than upon application or consent of any Loan Party or any Foreign Subsidiary, as applicable) and shall not have
been removed within sixty (60) days; or if an order shall be entered approving any petition for reorganization of any Loan Party
or any Foreign Subsidiary shall not have been reversed or dismissed within sixty (60) days; or any Loan Party or any Foreign Subsidiary
shall take any action (corporate or other) authorizing or in furtherance any of the actions described above in this subsection;



 






    	 	34	 



     

    

 


		(k)	Bank fails to have an enforceable first lien (except for any prior liens to which the Bank has
consented in writing) on or security interest in any Collateral;



 


		(l)	Borrower’s business is interrupted or suspended for a period of thirty (30) days or more;



 


		(m)	any Loan Party loses any of its right, title, and interest in any patents, patent licenses, copyrights,
copyright licenses, trademarks, trademark licenses, trade secrets, registrations, goodwill, franchises, permits, proprietary information,
customer lists, designs, inventions or other intellectual property and proprietary rights, the loss of which could have a Material
Adverse Effect;



 


		(n)	(i) any provision of any Loan Document shall at any time for any reason cease to be valid, binding
and enforceable against any Loan Party (other than in accordance with the terms thereof) or, in the case of any Subordination Agreement,
any applicable Subordinated Lender, (ii) the validity, binding effect or enforceability thereof shall be contested by any Loan
Party or any Foreign Subsidiary or by, in the case of any Subordination Agreement, any applicable Subordinated Lender, (iii) any
Loan Party or, in the case of any Subordination Agreement, any applicable Subordinated Lender, shall deny that it has any or further
liability or obligation under any Loan Document, or any such Loan Document shall be terminated (other than in accordance with the
terms thereof), invalidated, revoked or set aside or in any way cease to give or provide to Bank the benefits purported to be created
thereby, or (iv) the death of any Guarantor that is a natural person;



 


		(o)	Borrower fails to comply with or to perform any term, obligation, covenant or condition contained
in or the occurrence or existence of any event of default, termination event or other similar event under or with respect to any
Hedging Contract; or



 


		(p)	Bank reasonably determines that a material adverse change has occurred with respect to (a) Borrower’s
financial condition, results of operations, business or prospects, (b) Borrower’s ability to pay the Indebtedness in accordance
with the terms thereof, or (c) the value of the Collateral, or the priority of Bank’s lien on any Collateral.



 






    	 	35	 



     

    

 


10.2         
Exercise of Remedies. If an Event of Default has occurred and is continuing hereunder:


 


		(a)	Bank may declare the entire unpaid principal Indebtedness, immediately due and payable, without
presentment, notice or demand, all of which are hereby expressly waived by Borrower;



 


		(b)	Upon the occurrence of any Event of Default specified in subsection 10.1(j), above, and notwithstanding
the lack of any declaration by Bank, the entire unpaid principal Indebtedness shall become automatically and immediately due and
payable; and



 


		(c)	Bank may exercise any remedy permitted by this Agreement, the other Loan Documents or law.



 


10.3         
Application of Proceeds. All of the Indebtedness shall constitute one loan secured by Bank’s security interest
in the Collateral and by all other security interests, mortgages, Liens, claims, and encumbrances now and from time to time hereafter
granted by any Loan Party to Bank. Upon the occurrence and during the continuance of an Event of Default, to the extent permissible
under applicable law, Bank may in its sole discretion apply the Collateral to any portion of the Indebtedness. Bank may apply to
any court of competent jurisdiction for, and obtain appointment without bond of, a receiver for the Collateral and any other assets
or business of the Borrower and with respect to any sale of Collateral consisting of real estate. The proceeds of any sale or other
disposition of the Collateral authorized by this Agreement or any of the other Loan Documents shall be applied by Bank, first upon
all expenses authorized by the Code (or other applicable law) or otherwise in connection with the sale and all reasonable attorneys’
fees and legal expenses incurred by Bank; the balance of the proceeds of such sale or other disposition shall be applied in the
payment of the Indebtedness, first to interest, then to principal, then to other Indebtedness and the surplus, if any, shall be
paid over to the applicable Loan Party or to such other Person or Persons as may be entitled thereto under applicable law. Borrower
shall remain liable for any deficiency, which Borrower shall pay to Bank immediately upon demand.


 


10.4         
Rights Cumulative. The remedies provided for herein are cumulative to the remedies for collection of the Indebtedness
as provided by law, in equity or by any mortgage, security agreement or other document contemplated hereby. Nothing herein contained
is intended, nor shall it be construed, to preclude Bank from pursuing any other remedy for the recovery of any other sum to which
Bank may be or become entitled for the breach of this Agreement by Borrower.


 


10.5         
Set-Off. Upon the occurrence and during the continuance of any Event of Default, Bank may at any time and from time
to time, without notice to Borrower (any requirement for such notice being expressly waived by Borrower), set off and apply against
the Indebtedness, any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness
at any time owing by Bank to or for the credit or the account of Borrower, irrespective of whether or not such deposits held or
indebtedness owing by Bank may be contingent and unmatured and regardless of whether any Collateral then held by Bank is adequate
to cover the Indebtedness. Promptly following any such setoff, Bank shall give written notice to Borrower of the occurrence thereof.
Borrower hereby grants to Bank a Lien on and security interest in all such deposits, indebtedness and property as collateral security
for the payment and performance of all of the obligations of Borrower under this Agreement. The rights of Bank under this Section
10.5 are in addition to the other rights and remedies (including, without limitation, other rights of setoff) which Bank may have.


 






    	 	36	 



     

    

 


10.6         
Waiver of Defaults. No Event of Default may be waived by Bank except in a writing signed by an officer of Bank. No
single or partial exercise of any right, power or privilege hereunder, nor any delay in the exercise thereof, shall preclude other
or further exercise of its rights by Bank. No waiver of any Event of Default shall extend to any other or further Event of Default.
No forbearance on the part of Bank in enforcing any of its rights shall constitute a waiver of any of its rights. Borrower expressly
agrees that this Section 10.6 may not be waived or modified by Bank by course of performance, estoppel or otherwise.


 


10.7         
Waiver by Borrower of Certain Laws. To the extent permitted by applicable law, Borrower hereby agrees to waive, and
does hereby absolutely and irrevocably waive and relinquish the benefit and advantage of any valuation, stay, appraisement, extension
or redemption laws now existing or which may hereafter exist, which, but for this provision, might be applicable to any sale made
under the judgment, order or decree of any court, on any claim for interest on the Note or any of them, or any security interest
or mortgage contemplated by or granted under or in connection with this Agreement. These waivers have been voluntarily given, with
full knowledge of the consequences thereof.


 


		11.	MISCELLANEOUS.



 


11.1         
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Borrower and Bank
and their respective successors and assigns, except that neither the credit provided for under this Agreement nor any part thereof
nor any obligation of Bank hereunder shall be assignable or otherwise transferable by Borrower, and no assignment by Borrower of
its rights or duties hereunder shall be made (or be effective) in either case, without the prior written approval of Bank.


 


11.2         
Attorney Fees and Expenses. Borrower agrees to pay all costs, expenses (including reasonable attorneys’ fees),
and disbursements incurred by Bank on Borrower’s behalf (a) in all efforts made to enforce payment of the Indebtedness or
effect collection of any Collateral, (b) in connection with entering into, modifying, amending, and enforcing this Agreement or
any consents or waivers hereunder and all related agreements, documents and instruments, (c) in maintaining, storing, or preserving
any Collateral, or in instituting, enforcing and foreclosing on Bank’s security interest in any Collateral or possession
of any premises containing any Collateral, whether through judicial proceedings or otherwise, (d) in defending or prosecuting any
actions or proceedings arising out of or relating to Bank’s transactions with Borrower, or (e) in connection with any advice
given to Bank with respect to its rights and obligations under this Agreement and all related agreements. Expenses being reimbursed
by Borrower under this section include costs and expenses incurred in connection with: (t) appraisals and insurance reviews; (u)
environmental examinations and reports; (v) field examinations and the preparation of reports based thereon; (w) the fees charged
by a third party retained by Bank or the internally allocated fees for each Person employed by Bank with respect to each field
examination; (x) background checks regarding senior management and/or key investors, as deemed necessary or appropriate in the
sole discretion of Bank; (y) taxes, fees and other charges for (i) lien and title searches and title insurance and (ii) the recording
of any mortgages, filing of any financing statements and continuations, and other actions to perfect, protect, and continue Bank’s
security interests; (z) sums paid or incurred to take any action required of Borrower under the Loan Documents that Borrower fails
to pay or take; and (aa) forwarding loan proceeds, collecting checks and· other items of payment, and costs and expenses
of preserving and protecting the Collateral.


 






    	 	37	 



     

    

 


11.3         
Indulgence. No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right,
power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of
any other power, right or privilege. The rights of Bank under this Agreement are cumulative and not exclusive of any right or remedies
which Bank would otherwise have.


 


11.4         
Notices. Except as expressly provided otherwise in this Agreement, all notices and other communications provided
to any party hereto under this Agreement shall be in writing and shall be given by personal delivery, by mail, by reputable overnight
courier, or by facsimile and addressed or delivered to it at its address set forth below or at such other address as may be designated
by such party in a notice to the other parties that complies as to delivery with the terms of this Section 11.4. Any notice, if
personally delivered or if mailed and properly addressed with postage prepaid and sent by registered or certified mail, shall be
deemed given when received; any notice, if given to a reputable overnight courier and properly addressed, shall be deemed given
two (2) Business Days after the date on which it was sent, unless it is actually received sooner by the named addressee; and any
notice, if transmitted by facsimile, shall be deemed given when received (receipt confirmed in the case of telecopies). Bank may,
but shall not be required to, take any action on the basis of any notice given to it by telephone, but Borrower shall promptly
confirm such notice in writing or by facsimile, and such notice will not be deemed to have been received until such confirmation
is deemed received in accordance with the provisions of this Section set forth above. If such telephonic notice conflicts with
any such confirmation, the terms of such telephonic notice shall control.


 


To Borrower:


 


Address:


47827 Halyard Drive


Plymouth, Michigan 48170


Attention: President


Fax No.: (734) 414-4800


 


With a copy to:


 


Dykema Gossett PLLC


400 Renaissance Center


Detroit, MI 48243


Attn: Thomas S. Vaughn, Esq.


Telephone: (855) 252-7985


 






    	 	38	 



     

    

 


To Bank:


 


Chemical Bank


17900 Haggerty Road


Livonia, Michigan 48152


Attention: Robert A. Rosati


 


With a copy to:


 


Bodman PLC


1901 St. Antoine Street


6th Floor at Ford Field


Detroit, MI 48226


Attention: Scott P. Gyorke, Esq.


 


11.5         
Law of Michigan; Consent to Jurisdiction. This Agreement and the Notes have been delivered at Troy, Michigan, and
shall be governed by and construed and enforced in accordance with the laws of the State of Michigan. Whenever possible each provision
of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
Borrower and Bank hereby irrevocably submit to the non-exclusive jurisdiction of any United States Federal Court sitting in the
Eastern District of Michigan or Michigan state court sitting in Oakland County, Michigan in any action or proceeding arising out
of or relating to this Agreement or any of the Loan Documents and Borrower and Bank hereby irrevocably agree that all claims in
respect of such action or proceeding may be heard and determined in any such United States Federal Court or Michigan state court.
Borrower irrevocably consents to the service of any and all process in any such action or proceeding brought in any such court
by the delivery of copies of such process to Borrower at its respective address specified herein or by certified mail directed
to such address or such other address as may be designated by Borrower in a notice to the other parties that complies as to delivery
with the terms of Section 11.4. Nothing in this Section shall affect the right of Bank to serve process in any other manner permitted
by law or limit the right of Bank to bring any such action or proceeding against any Loan Party or any of its or their property
in the courts with subject matter jurisdiction of any other jurisdiction. Borrower hereby irrevocably waives any objection to the
laying of venue of any such suit or proceeding in the above described courts.


 


11.6         
Amendment and Waiver. No amendments or waiver of any provisions of this Agreement nor consent to any departure by
Borrower therefrom shall in any event be effective unless the same shall be in writing and signed by Bank and Borrower, and then
such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
No amendment, waiver or consent with respect to any provision of this Agreement shall affect any other provision of this Agreement.


 


11.7         
Payments.


 






    	 	39	 



     

    

 


		(a)	All sums payable by Borrower to Bank under this Agreement or the other documents contemplated hereby
shall be paid directly to Bank at its principal office set forth in Section 11.4 hereof in immediately available United States
funds, without set off, deduction or counterclaim; and



 


		(b)	Any payment of the Indebtedness made by mail will be deemed tendered and received only upon actual
receipt by Bank at the address designated for such payment, whether or not Bank has authorized payment by mail or any other manner,
and shall not be deemed to have been made in a timely manner unless received on the date due for such payment, time being of the
essence. Borrower expressly assumes all risks of loss or liability resulting from non-delivery or delay of delivery of any item
of payment transmitted by mail or in any other manner. Acceptance by Bank of any payment in an amount less than the amount then
due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be
a Default or an Event of Default, and at any time thereafter and until the entire amount then due has been paid, Bank shall be
entitled to exercise any and all rights conferred upon it herein upon the occurrence of a Default or an Event of Default. Upon
the occurrence and during the continuance of an Event of Default, Borrower waives the right to direct the application of any and
all payments at any time or times hereafter received by Bank from or on behalf of Borrower. Upon the occurrence and during the
continuance of an Event of Default, Borrower agrees that Bank shall have the continuing exclusive right to apply and to reapply
any and all payments received at any time or times hereafter against the Indebtedness in such manner as Bank may deem advisable,
notwithstanding any entry by Bank upon any of its books and records. Borrower expressly agrees that to the extent that Bank receives
any payment or benefit and such payment or benefit, or any part thereof, is subsequently invalidated, declared to be fraudulent
or preferential, set aside or is required to be repaid to a trustee, receiver, or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then to the extent of such payment or benefit, the Indebtedness or part thereof
intended to be satisfied shall be revived and continued in full force and effect as if such payment or benefit had not been made
and, further, any such repayment by Bank, to the extent that Bank did not directly receive a corresponding cash payment, shall
be added to and be additional Indebtedness payable upon demand by Bank.



 


11.8         
Interest. In the event Borrower’s obligation to pay interest on the principal balance of any Note is or becomes
in excess of the maximum interest rate which Borrower is permitted by law to contract or agree to pay, giving due consideration
to the execution date of this Agreement, then, in that event, the rate of interest applicable to such Note shall be deemed to be
immediately reduced to such maximum rate and all previous payments in excess of such maximum rate shall be deemed to have been
payments in reduction of principal and not of interest.


 


11.9         
Waiver of Consequential, Indirect, Special and Punitive Damages. The Borrower hereby agrees to waive its right to
make a claim against the Bank for consequential, indirect, special or punitive damages (a) based upon or arising out of this Agreement,
or the other Loan Documents, or (b) arising from any banking relationship existing in connection with this Agreement. The Borrower
acknowledges that this waiver is a material inducement for the Bank to enter into or continue a business relationship with the
Borrower. The Borrower further warrants and represents that it has reviewed this waiver with its legal counsel, and that it knowingly
and voluntarily waives its right to make any claim for consequential, indirect, special or punitive damages following consultation
with its legal counsel. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and this waiver
shall apply to any subsequent amendments, renewals, supplements or modifications to this Agreement and the other Loan Documents.


 






    	 	40	 



     

    

 


11.10     
WAIVER OF JURY TRIAL. The parties acknowledge and agree that there may be a constitutional right to a jury trial
in connection with any claim, dispute or lawsuit arising between or among them, but that such right may be waived. Accordingly,
the parties agree that, notwithstanding such constitutional right, in this commercial matter the parties believe and agree that
it shall be in their best interests to waive such right, and, accordingly, hereby waive such right to a jury trial, and further
agree that the best forum for hearing any claim, dispute, or lawsuit, if any, arising in connection with this Agreement, the Loan
Documents, or the relationship among the parties, in each case whether now existing or hereafter arising, or whether sounding in
contract or tort or otherwise, shall be a court of competent jurisdiction sitting without a jury.


 


11.11     
Counterparts. This Agreement may be executed in several counterparts, and each executed copy shall constitute an
original instrument, but such counterparts together shall constitute but one and the same instrument.


 


11.12     
Complete Agreement; Conflicts. This Agreement, the Notes and any Requests for Advance hereunder, and the other Loan
Documents contain the entire agreement of the parties hereto, superseding all prior agreements, discussions and understandings
relating to the subject matter hereof, and none of the parties shall be bound by anything not expressed in writing. In the event
of any conflict between the terms of this Agreement and the other Loan Documents, this Agreement shall govern.


 


11.13     
Severability. In case any one or more of the obligations of any Loan Party under this Agreement, the Notes or any
of the other Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining obligations of such Loan Party shall not in any way be affected or impaired thereby, and such invalidity, illegality
or unenforceability in one jurisdiction shall not affect the validity, legality or enforceability of the obligations of such Loan
Party under this Agreement, the Notes or any of the other Loan Documents in any other jurisdiction.


 


11.14     
Independence of Covenants. Each covenant hereunder shall be given independent effect (subject to any exceptions stated
in such covenant) so that if a particular action or condition is not permitted by any such covenant (taking into account any such
stated exception), the fact that it would be permitted by an exception to, or would be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default.


 


11.15     
Reliance on and Survival of Various Provisions. All terms, covenants, agreements, representations and warranties
of any Loan Party to any of the Loan Documents made herein or in any of the Loan Documents or in any certificate, report, financial
statement or other document furnished by or on behalf of any Loan Party in connection with this Agreement or any of the Loan Documents
shall be deemed to have been relied upon by Bank, notwithstanding any investigation heretofore or hereafter made by Bank, and those
covenants and agreements of the Borrower set forth in Sections 11.2 and 11.16 (together with any other indemnities of any Loan
Party contained elsewhere in this Agreement or in any of the other Loan Documents) shall survive the repayment in full of the Indebtedness
and the termination of any obligation of Bank to extend credit to Borrower, and any termination of the Loan Documents, or any of
them, in connection with any payoff of the Indebtedness.


 






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11.16     
Indemnification.


 


		(a)	Borrower agrees to indemnify and hold Bank harmless from all loss, damage, liability and reasonable
expenses and costs, including reasonable house and outside attorneys’ fees and disbursements (but without duplication of
fees and expenses for the same services), incurred by Bank by reason of any breach of any representation or warranty, covenant
or agreement of the Loan Parties in this Agreement or the other Loan Documents, including the occurrence of any Default or an Event
of Default, or by reason of enforcing the obligations of any Loan Party or the Subordinated Lenders under this Agreement or any
of the other Loan Documents or in the prosecution or defense of any action or proceeding concerning any matter growing out of or
connected with this Agreement or any of the Loan Documents, excluding, however, any loss, cost, damage, liability or expenses arising
solely as a result of the gross negligence or willful misconduct of the party seeking to be indemnified under this Section 11.16(a),
as determined by a court of competent jurisdiction by final and non-appealable judgment; and



 


		(b)	Borrower agrees to defend, indemnify and hold harmless Bank, and its respective employees, agents,
officers and directors from and against any and all claims, demands, penalties, fines, liabilities, settlements, damages, reasonable
costs or reasonable expenses of whatever kind or nature (including without limitation, reasonable attorneys and consultants fees,
investigation and laboratory fees, environmental studies required by Bank in connection with the violation of Environmental Laws,
court costs and litigation expenses, excluding however, those arising solely as a result of the gross negligence or willful misconduct
of the Person seeking indemnification, as the case may be, as determined by a court of competent jurisdiction by final and non-appealable
judgment) arising out of or related to (i) the presence, use, disposal, release or threatened release of any Hazardous Materials
on, from or affecting any premises owned or occupied by any Loan Party in violation of or non-compliance with applicable Environmental
Laws, (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such
Hazardous Materials, (iii) any lawsuit or other proceeding brought or threatened, settlement reached or governmental order or decree
relating to such Hazardous Materials, (iv) the cost of remediation or monitoring of all Hazardous Materials in violation of or
non-compliance with applicable Environmental Laws from all or any portion of any premises owned by any Loan Party, (v) complying
or coming into compliance with all Environmental Laws applicable to the Loan Parties or premises owned or operated by the Loan
Parties and/or (vi) any violation of Environmental Laws applicable to the Loan Parties or premises owned or operated by the Loan
Parties. The obligations of Borrower under this Section 11.16(b) shall be in addition to any and all other obligations and liabilities
Borrower may have to Bank at common law or pursuant to any other agreement.



 






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11.17     
Patriot Act Notice. IMPORTANT INFORMATION ABOUT PROCEDURES REQUIRED BY THE USA PATRIOT ACT. To help the government
fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each Person who opens an account or establishes a relationship with Bank.


 


What this shall mean: When a Person opens an
account or establishes a relationship with Bank, Bank may ask for the name, address, date of birth, and other information that
will allow the Bank to identify the Person who opens an account or establishes a relationship with Bank. Bank may also ask to see
identifying documents for the Person.


 


[Signatures on following page]


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






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WITNESS the due execution hereof as of the day
and year first above written.


 





	 	PERCEPTION, INC.	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ David L. Watza	 
	 	Name:	David L. Watza	 
	 	Title:	President, Chief Executive Officer	 
	 	 	and Chief Financial Officer	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	CHEMICAL BANK	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Robert A. Rosati	 
	 	Name:	Robert A. Rosati	 
	 	Title:	Managing Director	 







 


 


  


 


 


 


 


 


 





[Signature Page to Loan Agreement (14911371)]