Exhibit
10.1


 


LIMITED FORBEARANCE AGREEMENT


 


THIS LIMITED
FORBEARANCE AGREEMENT (this “Agreement”) is made as of November 20,
2008, by and among TVI CORPORATION, a Maryland corporation (“TVI”), CAPA
MANUFACTURING CORP., a Maryland corporation (“Capa”), SAFETY TECH
INTERNATIONAL, INC., a Maryland corporation (“Safety Tech”), and
SIGNATURE SPECIAL EVENT SERVICES, INC., a Maryland corporation (formerly named
“TVI Holdings One, Inc.”) (“Signature TVI”), jointly
and severally (each of TVI, Capa, Safety Tech, and Signature TVI, a “Borrower”;
TVI, Capa, Safety Tech, and Signature TVI, collectively, the “Borrowers”);
and BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation (the
“Lender”).


 


RECITALS


 


A.            The Borrowers and the Lender entered
into an Amended and Restated Financing and Security Agreement dated
February 22, 2008 (as amended by First Amendment to Amended and Restated
Financing and Security Agreement dated July 3, 2008 and as amended,
restated, modified, substituted, extended, and renewed from time to time, the “Financing
Agreement”). Capitalized terms not otherwise defined in this Agreement
shall have the meaning set forth or provided for in the Financing Agreement.


 


B.            The Financing Agreement contains
agreements between the Borrowers and the Lender with respect to the “Loans”
(as defined in the Financing Agreement), including (i) the Revolving
Credit Facility in the maximum principal amount of $11,000,000 and
(ii) the Term Loan in the amount of $22,500,000.  Loans under the Revolving Credit Facility are
evidenced by, and repaid with interest in accordance with, the terms and
conditions of that certain Second Amended and Restated Revolving Credit Note
dated July 3, 2008 from the Borrowers, as makers, payable to the order of
the Lender in the maximum principal amount of the Revolving Loan (the “Revolving
Credit Note”).  The Term Loan is
evidenced by, and repaid with interest in accordance with, the terms and
conditions of that certain Amended and Restated Term Note dated
February 22, 2008 from the Borrowers, as makers, payable to the order of
the Lender in the original principal amount of the Term Loan (the “Term Note”).  The Revolving Credit Note, the Term Note and
any other instrument that now or hereafter evidences the Borrowers’ obligation
to repay any part of the Obligations (all as amended, restated, modified,
substituted, extended and renewed from time to time) are sometimes referred to
in this Agreement as the “Notes.”


 


C.            The “Obligations” (as defined
in the Financing Agreement), including, without limitation, the Loans, are
secured by, among other things (i) the “Collateral” (as defined in
the Financing Agreement, and (ii) the Collateral Assignment of Patents as
Security (TVI Corporation), the Collateral Assignment of Patents as Security
(CAPA Manufacturing Corp.), the Collateral Assignment of Trademarks as Security
(TVI Corporation),  the Collateral
Assignment of Trademarks as Security (TVI Holdings One, Inc.), and the
Pledge, Assignment and Security Agreement, each dated as of the Original
Closing Date (as that term is defined in the Financing Agreement).


 

















 


D.            Events of Default (as that term is
defined in the Financing Agreement) exist under the Financing Agreement due to
the Borrowers’ failure to pay when due the October, 2008 principal and interest
payments due on the Term Note, the failure of the Borrowers to pay continuing
Borrowing Base Deficiencies (as that term is defined in the Financing
Agreement), and events occurring before the date of this Agreement which events
are known to the Lender and which alone or in the aggregate have had a Material
Adverse Effect on any of the Borrowers or the Collateral (such Events of
Default collectively, the “Existing Events of Default”).


 


E.             The Lender has agreed, subject to
the terms, conditions and understandings expressed in this Agreement, to
refrain and forbear temporarily from exercising and enforcing its remedies with
respect to the Existing Events of Default during the Forbearance Period
(defined below), provided that, among other things, the Borrowers execute and
deliver this Agreement.


 


NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Lender and the Borrowers, jointly and severally, hereby agree as follows:


 


AGREEMENTS


 


1.     Forbearance.  Subject to the terms, conditions and
understandings contained in this Agreement, and for so long as there does not
exist a “Forbearance Default” under the terms of this Agreement (as
hereinafter defined), the Lender hereby agrees to refrain and forbear
temporarily from exercising and enforcing any of its remedies (including,
without limitation,  rights of setoff
such as those described in Section 2.6.4 (Liens; Setoff) of the Financing
Agreement) under the Financing Agreement, under the Notes, under any of the
other Financing Documents, or under applicable Laws with respect to the
Existing Events of Default at any time during the period commencing on the date
of this Agreement and ending on, and including the week ending January 30,
2009 (the “Forbearance Period”); provided however, that the Forbearance
Period shall be automatically extended through and including April 30,
2009 in the event that the conditions set forth in Section 4 below have
been fully satisfied.  The Lender shall
have no obligation to refrain and forbear from exercising or enforcing any of
its rights or remedies during the Forbearance Period or at any time thereafter
upon the occurrence and during the continuance of a Forbearance Default.  The Borrowers acknowledge and agree that this
Agreement applies to and governs only the Obligations relating to the Loans,
and does not apply to or govern any other obligation, liability, or
indebtedness of the Borrowers or any other person to the Lender.


 


2.     Financing Agreements.  The Lender and the Borrowers hereby agree as
follows:


 


(a)   During the Forbearance Period the Borrowers
may carry a Borrowing Base Deficiency only if (i) the maximum amount of
the Borrowing Base Deficiency at no time exceeds $3,543,000 (the “Borrowing
Base Deficiency Cap”) and (ii) the Aggregate Net Negative Variance at
no time exceeds $177,150, (the “Negative Variance Cap”) unless the
Lender otherwise consents in writing.  As
used in this Agreement, the term:


 


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“Aggregate
Net Negative Variance” means the sum of each Weekly Borrowing Base
Variance.


 


“Available
Line” means the amount set forth in the “TVI CORPORATION - CASH FLOW
FORECAST” on the Summary page in the First Budget (defined in
Section 3(d) below and expressed for this definition as a positive
number) and the Second Budget (defined in Section 3(d) below and
expressed for this definition as a positive number), if the same is accepted by
the Lender in accordance with Section 3(d) below.   The Available Line is the Borrowers’
projection of the maximum Borrowing Base Deficiency for weekly periods.


 


“Weekly
Borrowing Base Variance” means the amount, determined on the last Business
Day of each week, commencing with the week ending November 14, 2008, equal
to (x) the Borrowing Base Deficiency minus (y) the Available Line.


 


By so agreeing to the Borrowing Base
Deficiency Cap and the Negative Variance Cap, the Lender is not waiving the
Existing Events of Default that exist on account of the Borrowing Base
Deficiency.  For the avoidance of doubt,
the Borrowers acknowledge that the Borrowing Base Deficiency shall be
immediately due and payable upon the expiration of the Forbearance Period,
without the need for notice or demand by the Lender.


 


(b)   The Borrowers may request, and the Lender
agrees to make, Advances during the Forbearance Period in accordance with the
provisions of the Financing Agreement provided that:


 


(x) the
Lender may not terminate, limit or suspend Advances on account of the existence
of an Event of Default other than a Forbearance Default, and


 


(y) 
after giving effect to the Borrowers’ request, the aggregate Revolver Usage
would not exceed the lesser of (i) Revolving Credit Committed Amount or
(ii) the Borrowing Base plus the Borrowing Base Deficiency Cap, and


 


(z) 
after giving effect to the Borrowers’ request, the aggregate Revolver Usage
would not exceed the Borrowing Base plus the Available Line plus the Negative
Variance Cap.


 


(c)   Principal installment payments on the Term
Note for the months of October, November, December, 2008 and January, 2009 (and
if the Forbearance Period is extended as provided below, for the months of
February, March and April, 2009) are hereby deferred until the maturity of
the Term Note (by acceleration or otherwise). 
For the avoidance of doubt, the Borrowers and the Lender confirm that
interest and other payments due under the Term Note have not been deferred and
that no Existing Event of Default is waived on account of the deferral.


 


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(d)   Any Term Loan Mandatory Prepayment otherwise
coming due during the Forbearance Period (including, without limitation,  any extensions thereof) shall be deferred
until and shall be due and payable on the date the Forbearance Period ends.


 


(e)   During the Forbearance Period, the net
proceeds derived by the Borrowers from all sales of assets outside of the
ordinary course of business shall be applied to the Obligations in such order
as the Lender may determine in the exercise of its sole and absolute discretion
from time to time, except to the limited extent the Lender has expressly agreed
otherwise including, without limitation, each “Agreement Regarding Asset Sale”
(each of which is one of the Financing Documents), related to the sales of
goods of Signature TVI, executed and delivered by the Lender prior to the date
of this Agreement, provided, however, that to the extent any such Agreement
Regarding Asset Sale includes the absence of an Event of Default as a condition
to Signature TVI’s use of sales proceeds in paying reasonable costs and
expenses (including, without limitation, reasonable attorneys’ fees) related to
the closure of Signature TVI’s Orlando, Florida facility, such condition shall
be limited during the Forbearance Period to Forbearance Defaults .


 


(f)      Commencing
as of the date of this Agreement and continuing throughout the Forbearance
Period, interest shall accrue on the unpaid principal balance of (i) the
Revolving Loan at the Prime Rate plus 1.50% per annum and (ii) the Term
Loan at the Prime Rate plus 2.00% per annum.


 


(g)   At the time this Agreement is executed and
delivered, TVI shall issue to the Lender a warrant to purchase common stock of
TVI equal to 4.9% of all equity interests of TVI in substantially the form
attached to this Agreement as Exhibit A


 


3.     Covenants.   The Borrowers hereby covenant and agree with
the Lender as follows:


 


(a)   Within five (5) business days from the
date of the execution of this Agreement, the Borrowers shall engage a
turnaround consultant (the “Consultant”), whose experience, reputation and
otherwise is reasonably acceptable to the Lender, for an engagement period
reasonably established for the completion of the scope of the engagement.  The scope of the Consultant’s engagement
shall include assisting the Borrowers in the preparation of a cash budget and
cash flow projections for the period through and including April 30, 2009,
evaluating the Borrowers’ operations and procedures, evaluating the Borrowers’
turnaround strategy, and providing recommendations for improving the same, all
pursuant to an engagement agreement reasonably satisfactory to the Lender.


 


(b)   The Borrowers agree that the Lender may
discuss with the Consultant the affairs, finances and accounts of the Borrowers
and shall have complete, direct and immediate access to the representatives,
employees and agents of the Consultant and its reports, projects, budgets,  work papers, recommendations, assessments and
other information and conclusions relating in any way to the Borrowers. Without
implying any limitation on the foregoing, the Borrowers acknowlege and agree
that, due in part to the limited duration of the Forbearance Period and the
Consultant’s engagement, such access to the Consultant is a material inducement
to the Lender to enter into this Agreement. 
The Consultant’s engagement letter shall contain the Consultant’s
agreement to cooperate fullly with the Lender in effecting such access.


 


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(c)   Each of the Borrowers hereby irrevocably
(without the Lender’s written consent) authorizes and directs the Consultant
and the representatives, employees and agents of the Consultant to exhibit and
deliver to the Lender any and all of its reports, projects, budgets,  work papers, recommendations, assessments and
other information and conclusions and to discuss candidly the same with the
Lender.  The Lender acknowledges that
engagement of the Consultant is the sole responsibility of the Borrower and all
reports, assessments and related working papers that come into the possession
of Lender are the property of the Borrowers, provided that the Borrowers and
the Consultants shall nonetheless allow the Lender unrestricted access to the
same.


 


(d)   The Borrowers have provided to the Lender a
weekly cash budget, cash flow, and Borrowing Base projections for the week
ended November 14, 2008 through and including the week ending
January 30, 2009 (the “First Budget”). On or before
December 20, 2008, the Borrowers, with the assistance of the Consultant,
shall submit a revised weekly cash budget, cash flow, Borrowing Base and the
Available Line projections for the Borrowers for the period commencing
January 1, 2009 through and including April 30, 2009, (the “Second
Budget”) which projections shall contain such detail as is reasonably
requested by the Lender, and shall be in form and substance satisfactory to the
Lender in the exercise of its reasonable discretion.   The First Budget and the Second Budget for
any applicable period being sometimes referred to as the “Budget”.  The First Budget shall be the applicable
Budget through and including the week ending January 9, 2009 and the
Second Budget shall be the applicable Budget thereafter; provided, however,
that if the Second Budget is not acceptable to the Lender in the exercise of
its reasonable discretion, the First Budget shall be the applicable Budget
until the termination of the Forbearance Period.


 


(e)   On or before December 31, 2008, the
Consultant shall have completed the terms of its engagement and the Borrower
shall have provided to the Lender with a copy of the final report from the
Consultant, which report shall validate the strategic plan of the Borrower (as
the same may be modified in consultation with the Consultant), the First
Budget, and the Second Budget (including without limitation, the cash budget,
cash flow projections, and the Available Line through and including
April 30, 2009) and shall otherwise be acceptable to the Lender in all
respects, in the Lender’s reasonable discretion.


 


(f)    The Borrowers have advised the Lender that
the Borrowers intend to engage an investment banker and will consider the
recommendations of the Consultant, to advise the Borrowers on the feasibility
of and process by which the Company could attract either a financial or
strategic investor to restructure the Borrowers’ capital structure and agree
that prior to doing so they shall provide the Lender with the proposed
engagement letter. The Borrowers agree that they will not enter into such an
engagement unless the investment banker and the terms of the engagement
(including, without limitation, any and all commissions, fees, and other
amounts payable, exclusivity and tail) shall be acceptable to the Lender in the
exercise of its reasonable discretion.


 


(g)   All Revolving Loan credit accommodations
provided by the Lender to the Borrowers shall be used by the Borrowers in
accordance with the Budget in all material respects.


 


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(h)   The Borrowers agree to continue their weekly
meetings with the Lender to discuss, among other things, the Borrowers’
performance in comparison to the Budget. 
The Borrowers shall provide weekly (in time for discussion at the weekly
meetings, but in no event later than Tuesday of each week),  a cash flow report (the “Variance Report”),
which Variance Report shall show actual cash flow results and variances from
the Budget commencing with the week ending November 14, 2008 and through
the end of the week immediately preceding the week in which the Variance Report
is to be furnished. No later than the scheduled weekly meeting time, but in any
event Thursday of each week, the Borrowers shall also provide a weekly report
of information (including, without limitation, the Aggregate Net Negative
Variance and Weekly Borrowing Base Variance) with respect to the current week
and projections for the immediately following week.  The Variance Report and the other weekly
report shall contain such detail as is reasonably requested by the Lender and
shall be in form and substance satisfactory to the Lender.


 


(i)    The Borrowers shall provide to the Lender an
updated Perfection Certificate no later than November 25, 2008.


 


(j)    The Borrowers shall use continuing,
commercially reasonable efforts to obtain a landlord waiver for the Borrowers’
Glenn Dale, Maryland facility, in form and substance satisfactory to the
Lender.


 


(k)   To the extent the scheduled date on which the
Borrowers are to provide any Budget or Loan Base Report is a not a Business
Day, the date for providing the same shall be extended to the next Business
Day.


 


4.     Extension of Forbearance Period. The
Forbearance Period and the Revolving Credit Expiration Date shall be extended
through and including April 30, 2009 in the event that each of the
following conditions has been fully satisfied in all respects as of the close
of business on January 31, 2009:


 


(a)           The Second Budget submitted under
Section 3(d) is in form and substance satisfactory to the Lender in
the exercise of its reasonable discretion;


 


(b)           The Borrower is current on all
interest payments and other payment Obligations (after giving effect to the
Term Loan principal installment payment and Term Loan Mandatory Prepayment
deferrals described in Section 2 and the other provisions of this
Agreement) as required by the terms of this Agreement; and


 


(c)           There exists no Forbearance Default.


 


5.     Default.  The occurrence of any or more of the
following events or occurrences shall constitute a “Forbearance Default”
under this Agreement:


 


(a)   The Borrowing Base Deficiency exceeds the
Borrowing Base Deficiency Cap and such excess continues for a period of two
(2) consecutive Business Days.


 


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(b)   The Aggregate Net Negative Variance exceeds
the Negative Variance Cap without the Lender’s consent in writing.


 


(c)   The failure of the Borrowers to observe,
perform, or comply with any of the terms, conditions or provisions of this
Agreement and/or any other document executed and delivered in connection with
this Agreement, as and when required, which failure is not cured within any
applicable grace or cure period.


 


(d)   If any representation or warranty made in
this Agreement or in any report, statement, schedule, certificate, opinion
(including any opinion of counsel for the Borrowers), financial statement or
other document furnished in connection with this Agreement shall prove to have
been false or misleading when made (or, if applicable, when reaffirmed) in any
material respect.


 


(e)   The occurrence of an Event of Default other
than the Existing Events of Default and other than an Event of Default under
Section 6.1.14 (Financial Covenants).


 


(f)    If any Borrower commences, institutes, joins
or otherwise intervenes in any proceeding or action against the Lender or any
member of the Lender Group (as that term is defined below) in connection with
any of the Obligations, any of the Financing Documents, this Agreement or any
of the documents executed and delivered in connection with this Agreement.


 


6.     Remedies.  Upon the occurrence of any Forbearance
Default,  the Lender may, in the exercise
of its sole and absolute discretion from time to time and without further
notice to or consent of the Borrowers, limit, suspend or terminate Advances,
terminate the Forbearance Period and exercise and enforce any and all rights
and remedies available to the Lender under this Agreement, under any and all
documents executed and delivered in connection with this Agreement, under any
and all Financing Documents, and under applicable Laws to the same extent as
though this Agreement had never been executed, without regard to any notice or
cure period contained in any of the foregoing or otherwise available under
applicable Laws.  Further, upon the
occurrence of an Event of Default or Default specified in Sections 7.1.5
(Receiver; Bankruptcy) or 7.1.6 (Involuntary Bankruptcy, etc.) of the Financing
Agreement, the Forbearance Period shall automatically terminate.  All rights and remedies available to the
Lender under this Agreement, under any documents executed and delivered in
connection with this Agreement, under any and all of the Financing Documents,
and under applicable laws, may be asserted, enforced and exercised
concurrently, cumulatively or successively from time to time and at any time
until such time as all of the Obligations have been indefeasibly paid in full.


 


7.     Acknowledgements, Representations and
Warranties.  In order to induce the
Lender to enter into this Agreement, each of the Borrowers and their for
respective successors and assigns, hereby acknowledge, represent, warrant and
agree as follows:


 


(a)   The unpaid principal balance as of the close
of business on November 13, 2008 (i) under the Revolving Loan is
$8,411,460.46 (subject to adjustments for returned items and otherwise as
provided in the Financing Agreement); and (ii) under the Term Loan is
$19,052,272.73, provided, however, following the execution and delivery of this
Agreement, the Lender shall reverse the October, 2008 payment of the Term Loan
in the amount of $340,909.09, 


 


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the effect of
which reversal shall be that the Term Loan principal balance shall be increased
and the Revolving Loan balance shall be decreased by that amount.  Accrued and unpaid interest, fees and
expenses due and owing to the Lender, including, without limitation, unpaid
attorneys’ fees and expenses incurred by the Lender in connection with the
collection and enforcement of the Obligations are also owing, but are not past
due.


 


(b)   Each Borrower (i) is a corporation duly
organized, existing and in good standing under the laws of the jurisdiction of
its incorporation stated in the Perfection Certificate and is organized in no
other jurisdiction, (ii) has the corporate power to own its property and
to carry on its business as now being conducted, and (iii) is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned by it therein or in which the transaction
of its business makes such qualification necessary.


 


(c)   Each Borrower has full entity power and
authority to enter into this Agreement and to incur and perform all obligations
and covenants contained herein, all of which have been duly authorized by all
proper and necessary corporate action. 
Except for consents or approvals that the Borrowers have obtained, no
consent or approval of shareholders or any creditors of any Borrower, and no
consent, approval, filing or registration with or notice to any Governmental
Authority on the part of any Borrower, is required as a condition to the
execution, delivery, validity or enforceability of, or the performance under,
this Agreement.


 


(d)   The Borrowers, independently of the Lender,
determined that it was in their best interest to engage the Consultant, based
on the Borrowers’ exercise of their business judgment. The Consultant works for
the Borrowers alone, and the Borrowers retain complete control of the scope and
duration of the Consultant’s engagement, even though the Borrowers’ covenants
in this Agreement with respect to such engagement are a material inducement to
the Lender to enter into this Agreement.


 


(e)   The Borrowers are in default under and with
respect to the Obligations on account of the Existing Events of Default.  The Borrowers acknowledge and agree that such
defaults constitute material defaults under the Financing Documents and that
such defaults have not been, are not hereby and shall not be deemed to have
been, waived by the Lender, expressly, impliedly, through course of conduct or
otherwise.  The agreement of the Lender
to refrain and forbear from exercising any rights and remedies by reason of any
existing default or any future default shall not constitute a waiver of,
consent to, or condoning of, any existing or future default.


 


(f)    All understandings, representations,
warranties and recitals contained or expressed in this Agreement are true,
accurate, complete and correct in all respects; and, no such understanding,
representation, warranty or recital fails or omits to state or otherwise
disclose any material fact or information necessary to prevent such
understanding, representation, warranty or recital from being misleading.  The Borrowers acknowledge and agree that the
Lender has been induced in part to enter into this Agreement based upon the
Lender’s justifiable reliance on the truth, accuracy, and completeness of all
understandings, representations, warranties and recitals contained in this
Agreement.  There is no fact known to the
Borrowers that the Borrowers have not disclosed to the Lender in writing or in
TVI’s filings with the Securities and Exchange Commission on or prior to the
date of this Agreement which would or could materially and


 


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adversely
affect the understandings of the Lender expressed in this Agreement or any
representation, warranty or recital contained in this Agreement.


 


(g)   Each of the Financing Documents continues in
full force and effect notwithstanding the execution and delivery of this
Agreement.  The Borrowers hereby reissue,
ratify and confirm the enforceability and validity of all Financing Documents
to which it is a party and agree that this Agreement and each of the Financing
Documents constitute the legal, valid and binding obligations of the Borrowers,
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties, and general
principles of equity regardless of whether applied in a proceeding in equity or
at law.  In addition, the Borrowers
acknowledge and agree that neither the execution and delivery of this Agreement
nor any of the terms, provisions, covenants or agreements contained in this
Agreement shall, except as expressly provided in this Agreement, in any manner
release, impair, lessen, modify, waive or otherwise affect the liability and
obligations of the Borrowers under the terms of the Financing Documents.


 


(h)   The Lender has acted in good faith and has
conducted itself in a commercially reasonable manner in its relationships with
the Borrowers in connection with this Agreement and in connection with the
Loans, the Obligations and the Financing Documents, the Borrowers hereby
waiving and releasing any claims to the contrary.  The Borrowers have no defenses, affirmative
or otherwise, rights of setoff, rights of recoupment, claims, counterclaims,
actions or causes of action of any kind or nature whatsoever against the Lender
or any past, present or future agent, attorney, legal representative,
predecessor in interest, affiliate, successor, assign, employee, director or
officer of the Lender (collectively, the “Lender Group”), directly or
indirectly, arising out of, based upon, or in any manner connected with, any
transaction, event, circumstance, action, failure to act, or occurrence of any
sort or type, whether known or unknown, which occurred, existed, was taken,
permitted, or begun prior to the execution of this Agreement and occurred,
existed, was taken, permitted or begun in accordance with, pursuant to, or by
virtue of the Obligations or any of the terms or conditions of the Financing
Documents, or which directly or indirectly relate to or arise out of or in any
manner are connected with the Obligations or any of the Financing Documents; to
the extent any such defenses, affirmative or otherwise, rights of setoff,
rights of recoupment, claims, counterclaims, actions or causes of action exist
or existed, such defenses, rights, claims, counterclaims, actions and causes of
action are hereby forever waived, discharged and released.  The Borrowers hereby acknowledge and agree
that the execution of this Agreement by the Lender shall not constitute an acknowledgment
of or admission by the Lender or any member of the Lender Group of the
existence of any claims or of liability for any matter or precedent upon which
any claim or liability may be asserted. 
The Borrowers further acknowledge and agree that, to the extent any such
claims may exist, they are of a speculative nature so as to be incapable of
objective valuation and that, in any event, the value to the Borrowers of the
covenants and obligations of the Lender contained in this Agreement and the other
documents executed and delivered in connection with this Agreement
substantially and materially exceeds any and all value of any kind or nature
whatsoever of any such claims.  The
Borrowers further acknowledge and agree that Lender is not in any way responsible
or liable for the previous, current or future condition or deterioration of the
business operations and/or financial condition of the Borrowers and that. to
TVI’s knowledge,  the Lender


 


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has not breached
any agreement or commitment to loan money or otherwise make financial
accommodations available to the Borrowers or to fund any operations of the
Borrowers at any time.


 


(i)    EACH
BORROWER HEREBY ACKNOWLEDGES THAT IT HAS FREELY AND VOLUNTARILY ENTERED INTO
THIS AGREEMENT AFTER AN ADEQUATE OPPORTUNITY AND SUFFICIENT PERIOD OF TIME TO
REVIEW, ANALYZE AND DISCUSS (I) ALL TERMS AND CONDITIONS OF THIS
AGREEMENT, (II) ANY AND ALL OTHER DOCUMENTS EXECUTED AND DELIVERED IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND
(III) ALL FACTUAL AND LEGAL MATTERS RELEVANT TO THIS AGREEMENT AND/OR ANY
AND ALL SUCH OTHER DOCUMENTS, WITH COUNSEL FREELY AND INDEPENDENTLY SELECTED BY
THE BORROWERS.  EACH BORROWER FURTHER
ACKNOWLEDGES AND AGREES THAT IT HAS ACTIVELY AND WITH FULL UNDERSTANDING
PARTICIPATED IN THE NEGOTIATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS
EXECUTED AND DELIVERED IN CONNECTION WITH THIS AGREEMENT AFTER CONSULTATION AND
REVIEW WITH ITS COUNSEL, THAT ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT
AND THE OTHER DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AGREEMENT HAVE BEEN NEGOTIATED AT ARM’S-LENGTH, AND THAT THIS AGREEMENT AND ANY
ALL SUCH OTHER DOCUMENTS HAVE BEEN NEGOTIATED, PREPARED AND EXECUTED WITHOUT
FRAUD, DURESS, UNDUE INFLUENCE, OR COERCION OF ANY KIND OR NATURE WHATSOEVER
HAVING BEEN EXERTED BY OR IMPOSED UPON ANY PARTY TO THIS AGREEMENT UPON ANY
OTHER PARTY.  NO PROVISION OF THIS
AGREEMENT OR SUCH OTHER DOCUMENTS SHALL BE CONSTRUED AGAINST OR INTERPRETED TO
THE DISADVANTAGE OF ANY PARTY TO THIS AGREEMENT BY ANY COURT OR OTHER
GOVERNMENTAL OR JUDICIAL AUTHORITY BY REASON OF SUCH PARTY HAVING OR BEING
DEEMED TO HAVE STRUCTURED, DICTATED OR DRAFTED SUCH PROVISION.


 


(j)    Except as otherwise disclosed in TVI’s filings
with the Securities and Exchange Commission prior to the date of this Agreement
, there are no proceedings or investigations pending or, so far as the
Borrowers know, threatened before any court or arbitrator or before or by, any
governmental, administrative or judicial authority or agency, or arbitrator,
against the Borrowers.


 


(k)   Neither the execution, delivery and
performance of the terms of this Agreement and/or any of the other documents
executed and delivered in connection with this Agreement by any Borrower nor
the consummation of the transactions contemplated by this Agreement will
conflict with, violate or be prevented by (a) any Borrower’s
Organizational Documents, (b) any existing mortgage, indenture, contract
or agreement binding on any Borrower or affecting its property, or (c) any
Laws.


 


10
















 


8.     Releases and Waivers.


 


Each Borrower
hereby, knowingly and voluntarily, forever releases, acquits and discharges the
Lender and the Lender Group from and of any and all claims that the Lender or
any of the Lender Group is in any way responsible for the past, current or
future condition or deterioration of the business operations and/or financial
condition of the Borrowers, and from and of any and all claims that the Lender
or any of the Lender Group breached any agreement to loan money or make other financial
accommodations available to the Borrowers or to fund any operations of the
Borrowers at the time of or at any time prior to the execution and delivery of
this Agreement.  Each Borrower further
hereby jointly and severally, knowingly and voluntarily forever releases,
acquits and discharges the Lender and the Lender Group, from and of any and all
other claims, damages, losses, actions, counterclaims, suits, judgments,
obligations, liabilities, defenses, affirmative defenses, setoffs, and demands
of any kind or nature whatsoever, in law or in equity, whether presently known
or unknown, which such Borrower may have had, now have, or which they can,
shall or may have for, upon, or by reason of any matter, course or thing
whatsoever relating to, arising out of, based upon, or in any manner connected
with, any transaction, event, circumstance, action, failure to act, or
occurrence of any sort or type, whether known or unknown, which occurred,
existed, was taken, permitted, begun, or otherwise related or connected to or
with any or all of the Obligations, at the time of or at any time prior to the
execution and delivery of this Agreement, any or all of the Financing
Documents, and/or any direct or indirect action or omission of the Lender
and/or any of the Lender Group.  Each
Borrower further agrees that from and after the date hereof, it will not assert
to any person or entity that any deterioration of the business operations or
financial condition of the Borrowers was caused by any breach or wrongful act
of the Lender or any of the Lender Group which occurred or existed at the time
of or at any time prior to the execution and delivery of this Agreement.


 


9.     Expenses.  The Borrowers shall pay at the time this
Agreement is executed and delivered all fees, commissions, costs, charges,
taxes and other expenses incurred by the Lender and its counsel in connection
with this Agreement, including, but not limited to, reasonable fees and
expenses of the Lender’s counsel and all recording fees, taxes and charges.  All of the foregoing are part of the
Enforcement Costs and are payable upon demand.


 


10.   WAIVER OF JURY TRIAL.      EACH BORROWER AND THE LENDER EACH HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH SUCH BORROWER AND THE
LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS
AGREEMENT, (B) ANY OF THE DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION
WITH THIS AGREEMENT, (C) ANY OF THE OBLIGATIONS, AND (D) ANY OF THE
FINANCING DOCUMENTS.  IT IS AGREED AND
UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.


 


THIS
WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH BORROWER AND THE LENDER,
AND EACH BORROWER AND THE LENDER HEREBY REPRESENT AND WARRANT THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE


 


11

















 


THIS
WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  EACH BORROWER FURTHER REPRESENTS THAT IT HAS
BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT
IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.


 


11.   Other Agreements.  The parties to this Agreement further agree:


 


(a)   This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Maryland.


 


(b)   In case one or more
provisions contained in this Agreement shall be invalid, illegal, or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall
remain effective and binding and shall not be affected or impaired thereby.


 


(c)   This Agreement is one of the
Financing Documents.  If there is any
conflict between the terms of this Agreement, any of the documents executed and
delivered in connection with this Agreement, and any of the other Financing Documents,
the terms of this Agreement shall prevail.


 


(d)   This Agreement may be
amended, modified or supplemented only by written agreement of the parties
hereto.  No provision of this Agreement
may be waived except in writing signed by the party against whom such waiver is
sought to be enforced.


 


(e)   As used in this Agreement,
the singular number shall include the plural, the plural the singular and the
use of the masculine, feminine or neuter gender shall include all genders, as
the context may require.  Reference in
this Agreement and the other Financing Documents to the “Borrower”, the
“Borrowers”, “each Borrower” or otherwise with respect to any one
or more of the Borrowers shall mean each and every Borrower and any one or more
of the Borrowers, jointly and severally, unless a specific Borrower is
expressly identified.


 


(f)    The Recitals are part of
this Agreement.  The headings, titles and
captions of this Agreement are for the convenience only and are not part of
this Agreement.  Capitalized terms not otherwise
defined in this Agreement shall have the meaning set forth or provided for in
the Financing Agreement.


 


(g)   Time is of the essence of
this Agreement.


 


(h)   This Agreement shall be
binding upon and inure to the benefit of the Borrowers, the Lender and each of
their respective heirs, personal representatives, successors, and assigns. The
Borrowers shall not, however, assign any of their respective rights or
obligations under this Agreement.


 


(i)    This Agreement may be
executed in any number of duplicate originals or counterparts, each of such
duplicate originals or counterparts shall be deemed to be an original


 


12

















 


and all taken
together shall constitute but one and the same agreement.  Each party to this Agreement agrees that the
respective signatures of the parties may be delivered by fax, “.pdf,” or other
electronic means acceptable to the Lender and that the parties may rely on a
signature so delivered as an original. 
Any party who chooses to deliver its signature in such manner agrees to
provide promptly to the other parties a copy of this Agreement with its inked
signature, but the party’s failure to deliver a copy of this Agreement with its
inked signature shall not affect the validity, enforceability and binding
effect of this Agreement.


 


Signatures begin on the following page. 
The rest of this page is intentionally left blank.


 


13

















 


BORROWERS’ SIGNATURE PAGE TO


 


LIMITED FORBEARANCE AGREEMENT


 


(Page 1 of 2 Signature Pages)


 


IN WITNESS
WHEREOF, each of the parties hereto have executed and delivered this Agreement
under their respective seals as of the day and year first written above.


 


 


	
  ATTEST:

  	
   

  	
  TVI
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Sherri
  Voelkel

  	
   

  	
  By:

  	
  /s/ Harley
  A. Hughes

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  Harley A.
  Hughes

  	
   

  
	
  Secretary

  	
   

  	
   

  	
  President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  CAPA
  MANUFACTURING CORP.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Sherri
  Voelkel

  	
   

  	
  By:

  	
  /s/ Harley
  A. Hughes

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  Harley A.
  Hughes,

  	
   

  
	
  Secretary

  	
   

  	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  SAFETY TECH
  INTERNATIONAL, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Sherri
  Voelkel

  	
   

  	
  By:

  	
  /s/ Harley
  A. Hughes

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  Harley A.
  Hughes,

  	
   

  
	
  Secretary

  	
   

  	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  SIGNATURE
  SPECIAL EVENT SERVICES, INC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Sherri
  Voelkel

  	
   

  	
  By:

  	
  /s/ Harley
  A. Hughes

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  Harley A.
  Hughes,

  	
   

  
	
  Secretary

  	
   

  	
   

  	
  President

  	
   

  



 

















 


LENDER’S SIGNATURE PAGE TO


 


LIMITED FORBEARANCE AGREEMENT


 


(Page 2 of 2 Signature Pages)


 


IN WITNESS
WHEREOF, each of the parties hereto have executed and delivered this Agreement
under their respective seals as of the day and year first written above.


 


 


	
  WITNESS:

  	
   

  	
  BRANCH
  BANKING AND TRUST COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Lauren
  Williams

  	
   

  	
  By:

  	
  /s/ Derek T.
  Whitwer

  	
  (Seal)

  
	
  Lauren
  Williams

  	
   

  	
   

  	
  Derek T.
  Whitwer,

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice
  President

  	
   

  



 

















 


EXHIBIT A TO LIMITED FORBEARANCE AGREEMENT


 


See Form of Warrant Attached