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Exhibit 10(l)    
  

        THIRD AMENDED AND RESTATED  

 REVOLVING CREDIT AND TERM LOAN AGREEMENT  

dated as of May 4, 2001 

between

VIDEO
DISPLAY CORPORATION, a Georgia corporation,

APEX ELECTRONICS, INC., a New Jersey corporation,

SOUTHWEST VACUUM DEVICES, INC., an Arizona corporation,

TELTRON TECHNOLOGIES, INC., a Georgia corporation,

Z-AXIS, INC., a Georgia corporation,

MENGEL INDUSTRIES, INC., a Pennsylvania corporation,

AYDIN DISPLAYS, INC., a Georgia corporation,

LEXEL IMAGING SYSTEMS, INC., a Delaware corporation 

and 

SOUTHTRUST
BANK,

an Alabama banking corporation 

THIRD AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT  

        THIS THIRD AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is dated as of May 4, 2001 among VIDEO DISPLAY CORPORATION, a Georgia corporation,
APEX ELECTRONICS, INC., a New Jersey corporation, SOUTHWEST VACUUM DEVICES, INC., an Arizona corporation, TELTRON TECHNOLOGIES, INC., a Georgia corporation,
Z-AXIS, INC., a Georgia corporation, MENGEL INDUSTRIES, INC., a Pennsylvania corporation, AYDIN DISPLAYS, INC., a Georgia corporation, and LEXEL IMAGING
SYSTEMS, INC., a Delaware corporation (collectively the "Borrower"), and SOUTHTRUST BANK, an Alabama banking corporation, successor by conversion to SouthTrust Bank, N.A. (the "Bank"). The
parties hereto hereby agree as follows: 

W
I T N E S S E T H: 

        WHEREAS,
Bank and some of the entities comprising Borrower are parties to that certain Second Amended and Restated Revolving Credit and Term Loan Agreement by and between certain of
those entities comprising Borrower, Fox International Ltd., Inc., Vanco International, Inc. and Bank dated as of August 26, 1994, as amended by Amendment No. 1 dated
as of August 1, 1995, by Amendment No. 2 dated as of January 15, 1996, by Amendment No. 3 dated as of April 19, 1996, by Amendment No. 4 dated as of
August 31, 1996, by Amendment No. 5 dated as of October 31, 1996, by Amendment No. 6 dated as of December 31, 1996, by Amendment No. 7 dated as of
February 18, 1997, by Amendment No. 8 dated as of March 6, 1997, by Amendment No. 9 dated as of March 18, 1997, by Amendment No. 10 dated as of
July 31, 1997, by Amendment No. 11 dated as of March 31, 1998, by Amendment No. 12 dated as of November 17, 1998, and by Amendment No. 13 dated as of
May 20, 1999 (collectively, the "Second Amended Loan Agreement"), pursuant to which Bank has extended to Borrower a $5,500,000.00 revolving line of credit (the "$5,500,000 Line of Credit"); 

        WHEREAS,
Bank has previously extended to Borrower Video Display Corporation a $3,000,000.00 term loan, evidenced by that certain Commercial Promissory Note dated May 1, 2000 (the
"$3,000,000 Term Loan"); 

        WHEREAS,
pursuant to the Second Amended Loan Agreement, Bank has previously extended to some of the entities comprising Borrower a $7,500,000.00 term loan, evidenced by that certain
Aydin Term Note dated November 17, 1998 (the "Aydin Term Loan"); 

        WHEREAS,
Borrower has requested Bank, on the terms and conditions as hereinafter set forth to consolidate the $5,500,000 Line of Credit and the $3,000,000 Term Loan into a new revolving
credit facility in the principal amount of $10,000,000; 

        WHEREAS,
Bank is willing to extend this new $10,000,000.00 revolving line of credit, subject to the terms and conditions as hereinafter set forth; and 

        NOW,
THEREFORE, for and in consideration of the sum of $10.00 in hand paid by Bank to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS  

        1.01.    Defined Terms.    As used in this Agreement, the following terms have the following meanings (terms defined
in the singular to have the same meaning, when used in the plural and vice versa): 

        "Account Debtor" any Person who is or may become obligated under or on account of an Account. 

        "Accounts" all accounts, accounts receivable, chattel paper, chattel mortgages, leases, instruments, documents, promissory notes,
contracts for receipt of money, conditional sales contracts, and evidences of debt of or owing to or acquired by Borrower whether now existing or 

 

hereafter arising, including, without limitation, (i) all accounts and other rights to payment of money which arise or result from Borrower's selling or other disposition of Borrower's goods
or the providing of services by Borrower, (ii) the proceeds of any insurance covering any collateral, and (iii) the return of unearned insurance premiums. 

        "Advance" shall mean a Revolving Credit Advance. 

        "Affiliate" shall mean any Person (a) which directly or indirectly controls, or is controlled by, or is under common control with,
Borrower; (b) which directly or indirectly beneficially owns or holds five percent (5%) or more of any class of voting stock of Borrower; or (c) five percent (5%) or more of the voting
stock of which is directly or indirectly beneficially owned or held by Borrower. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. 

        "Agreement" shall mean this Third Amended and Restated Revolving and Term Loan Agreement, as amended, supplemented or modified from time
to time. 

        "Agreement Date" shall mean May 4, 2001. 

        "Aydin Term Loan" shall mean the term loan made to some of the entities comprising Borrower, Vanco International, Inc., and Fox
International Ltd., Inc., as more fully and particularly described in Section 2.10 of this Agreement. 

        "Aydin Term Note" shall mean that certain Aydin Term Note in the original principal amount of $7,500,000.00, by some of the entities
comprising Borrower, Vanco International, Inc., and Fox International Ltd., Inc., in favor of Bank, dated November 17, 1998, which evidences the indebtedness of the Aydin
Term Loan. 

        "Base Rate" shall mean the per annum rate of interest designated from time to time by Bank to be its Base Rate, with any change in the
rate of interest resulting from a change in the Base Rate to be effective as of the opening of business of Bank on the day of such change. The Base Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any borrower. Bank may make commercial loans or any other loans at rates of interest at, above or below the Base Rate. 

        "Base Rate Advance" shall mean any Advance accruing interest at the Base Rate. 

        "Base Rate Loan" shall mean a Revolving Credit Advance accruing interest at the Base Rate. 

        "Borrowing Base" shall mean (i) eighty-five percent (85%) of Eligible Accounts, plus (ii) forty percent (40%) of
Eligible Inventory, not to exceed $6,500,000.00, plus (iii) seventy percent (70%) of the orderly liquidation value of equipment, plus (iv) seventy-five percent (75%) of the
appraised value of approved
real estate conveyed to Bank as collateral. The orderly liquidation value of equipment is to be determined by appraisals of equipment to be completed by an appraiser chosen by Bank. Equipment will be
added to the Borrowing Base only to the extent required to provide for a minimum excess availability of $2,000,000.00. In order for real estate to qualify as "approved real estate conveyed to Bank as
collateral," (a) it must be owned by an entity comprising Borrower, (b) Bank must have a first priority, perfected lien, security interest and/or security title in and to such real
estate pursuant to duly executed and delivered mortgage, deed of trust, or deed to secure debt, and (c) Bank must have received an acceptable mortgagee's title insurance policy insuring Bank's
interest in said real estate in an amount acceptable to Bank. 

        "Borrowing Base Certificate" shall mean a certificate, substantially in the form attached hereto as  Exhibit C and otherwise satisfactory to Bank, setting forth in
detail the Borrowing Base and certified by Borrower to be true and correct as of
its date. 

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        "Business Day" shall mean, with respect to a LIBOR Advance or a LIBOR Loan, any day other than a Saturday, Sunday, or a day on which
commercial banks are authorized or required to close for business, including dealings in Dollar deposits, in London, England and Atlanta, Georgia, and with respect to all other matters, any day other
than a Saturday, Sunday or a day on which commercial banks are required or authorized to close in Atlanta, Georgia. 

        "Capital Lease" shall mean all leases which have been or should be capitalized on the books of the lessee in accordance with GAAP. 

        "Change of Control Date" shall mean the first day on which (a) any Person, or group of related Persons, has beneficial ownership of
a majority in interest of the outstanding Voting Stock of any entity comprising Borrower, (b) any Person, or group of related Persons, shall acquire all or substantially all of the assets of
any entity comprising Borrower, or (c) any event shall occur which is defined as a "Change of Control" or similar transaction or transactions relating to the ownership or control of any entity
comprising Borrower, in any instrument creating or evidencing debt enabling any holder or holders of debt instruments to require any entity comprising Borrower to prepay, purchase or redeem such debt,  provided that a Change of Control Date as specified in clause (a) above shall not be deemed to have occurred if such entity shall have merged
with another corporation, provided that such entity shall be the continuing or surviving corporation and the surviving corporation shall be engaged in a line of business related to that of such entity
Borrower and no Person or group of related Persons shall have beneficial ownership of a majority in interest of the outstanding Voting Stock of such successor corporation. 

        "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations and published interpretations
thereof. 

        "Collateral" shall mean (i) the collateral as defined in the Security Agreements, and (ii) all proceeds thereof, all as more
fully set forth in the Security Agreements, all of which is given to secure the Secured Obligations. 

        "Debt" shall mean (1) indebtedness or liability for borrowed money; (2) obligations evidenced by bonds, debentures, notes or
other similar instruments; (3) obligations for the deferred purchase price of property or services (including trade obligations); (4) obligations as lessee under Capital Leases;
(5) current liabilities in respect of unfunded vested benefits under Plans covered by ERISA; (6) obligations under acceptance facilities; (7) all guaranties, endorsements (other
than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or entity, or
otherwise to assure a creditor against loss; and (8) obligations secured by any Liens whether or not the obligations have been assumed. 

        "Default" shall mean any of the events specified in Section 9.01 hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. 

        "Default Rate" shall mean the "Default Rate" as described and defined in Section 3.07 hereof. 

        "EBITDA" shall mean Borrower's earnings before interest, taxes, depreciation and amortization, as determined by generally accepted
accounting principles, consistently applied. 

        "Eligible Account" shall mean an Account arising in the ordinary course of Borrower's business from the sale of goods or rendition of
services which Bank, in its sole discretion, deems to be an Eligible Account. Without limiting the generality of the foregoing, no Account shall be an Eligible Account if: (i) it arises out of
a sale made by Borrower to an Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower; or (ii) it is unpaid for more than sixty (60) days after the original due date
shown on the invoice; or (iii) it is due or unpaid more than ninety 

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(90) days after the original invoice date; or (iv) fifty percent (50%) or more of the Accounts from the Account Debtor are not deemed Eligible Accounts hereunder; or (v) the
total unpaid Accounts of the Account Debtor exceed twenty-five percent (25%) of the net amount of all Accounts, to the extent of such excess; or (vi) any covenant, representation or
warranty contained in this Agreement with respect to such Account has been breached; or (vii) the Account Debtor is also Borrower's or an Affiliate's creditor or supplier, or has disputed
liability with respect to such Account, or has made any claim with respect to any other Account due from such Account Debtor to Borrower or an Affiliate, or the Account otherwise is or may become
subject to any right of setoff by the Account Debtor or an Affiliate of the Account Debtor; or (viii) the Account Debtor has commenced a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or made an assignment for the benefit of creditors, or a decree or order for relief under the federal bankruptcy laws has been filed against the Account Debtor, or if
the Account Debtor has failed, suspended business, ceased to be
Solvent, or consented to or suffered a receiver, trustee, liquidator or custodian to be appointed for it or for all or a significant portion of its assets or affairs; or (ix) unless approved in
writing by Bank, it arises from a sale to an Account Debtor outside the United States or to an Account Debtor who is not a resident of the United States or involves a shipment to an address outside of
the United States; or (x) it arises from a sale to the Account Debtor on a bill-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or any other repurchase or return basis; or (xi) Bank believes, in its sole discretion, that collection of such Account is insecure or that
payment thereof is doubtful or will be delayed by reason of the Account Debtor's financial condition; or (xii) the Account Debtor is the United States of America or any department, agency or
instrumentality thereof, unless Borrower assigns its right to payment of such Account to Bank, in form and substance satisfactory to Bank, so as to comply with the Assignment of Claims Act of 1940, as
amended; or (xiii) the Account is subject to a Lien; or (xiv) the goods giving rise to such Account have not been delivered to and accepted by the Account Debtor or the services giving
rise to such Account have not been performed by Borrower and accepted by the Account Debtor or the Account otherwise does not represent a final sale; or (xv) the total unpaid Accounts of the
Account Debtor exceed a credit limit determined by Bank, in its sole discretion, to the extent such Account exceeds such limit; or (xvi) the Account is evidenced by chattel paper, a note, or an
instrument of any kind, or has been reduced to judgment; or (xvii) Borrower has made any agreement with the Account Debtor for any deduction therefrom, except for discounts or allowances which
are made in the ordinary course of business for prompt payment and which discounts or allowances are reflected in the calculation of the face value of each invoice related to such Account; or
(xviii) Borrower has made an agreement with the Account Debtor to extend the time of payment thereof; or (xix) the Account arises from a retail sale of goods to a Person who is
purchasing same primarily for personal, family or household purposes; or (xx) an account of Fox International, Ltd., Video Display Europe B.V., Video Electronics S.A. de C.V., or Video
Display Ltd; or (xxi) the Account is deemed ineligible by Bank in its sole discretion. In addition, Eligible Account shall not include any portion of an Account which consists of service
charges, late charges or penalties, interest of Account Debtors, or other charges relating to the extension of credit by Borrower or the timing of payment by Account Debtor. In determining the
aggregate amount of Eligible Accounts, there shall be excluded from consideration any credit balance of an Account Debtor which is more than 90 days old as measured from the date of original
posting of said credit balance to Borrower's books and records. 

        "Eligible Inventory" shall mean Inventory valued at the lesser of cost or current market value, all of which Inventory is, at any given
time, (a) not damaged or defective in any way; (b) not sold or segregated for sale and reflected as an Account of Borrower; (c) not consigned Inventory; (d) not
inventory-in-transit; (e) not work-in-process Inventory; (f) not constituting packaging materials and supplies; (g) not Inventory
evidenced by negotiable warehouse receipts or by non-negotiable warehouse receipts or documents of title which have not been issued in the name 

4

 

of Bank; (h) not subject to a document of title such as a warehouse receipt or bill of lading; (i) not Inventory held by Fox International Ltd., Inc., Video Display Europe
B.V., Video Electronics S.A. de C.V., or Video Display Ltd.; and (j) not Inventory deemed ineligible by Bank in its sole discretion. 

        "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and published
interpretations thereof. 

        "ERISA Affiliate" shall mean, as of any date, any trade or business (whether or not incorporated) which together with Borrower is treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code. 

        "Event of Default" shall mean any of the events specified in Section 9.01 hereof, provided that any requirement for the giving of
notice, the lapse of time, or both, or any other condition, has been satisfied. 

        "Interest Period" shall mean with respect to a LIBOR Advance and a LIBOR Loan, a period of one (1), three (3) or six
(6) months, as Borrower may elect as provided in this Agreement; provided that (1) the first day of an Interest Period must be a Business Day; (ii) any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day, unless such Business Day falls in the next calendar month, in which case the Interest Period
shall end on the next preceding Business Day; (iii) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of an Interest Period) shall end on the last Business Day of a calendar month; (iv) with respect to a LIBOR Loan, each principal installment shall have an
Interest Period ending on an installment payment date and the remaining principal balance, if any, on such LIBOR Loan shall have an Interest Period as set forth above and (iv) no Interest
Period with respect to any LIBOR Advance shall extend beyond the Revolving Credit Termination Date, [and with respect to the LIBOR Loans,] beyond their respective Maturity
Dates. 

        "Inventory" all inventory of whatever kind or nature of Borrower, now owned or hereafter acquired by Borrower, and wherever located,
including, without limitation, all goods held for sale or lease or furnished or to be furnished under contracts, and any raw materials, goods in transit, work in process or finished goods, supplies,
returned or repossessed goods, together with all goods and materials used or consumed in Borrower's business. 

        "LIBOR" shall mean, for any Interest Period, a per annum rate of interest equal to the London Interbank Offered Rate (LIBOR) for contracts
with a maturity date corresponding to the applicable Interest Period, as quoted in the MONEY RATES section of The Wall Street Journal as effective for
contracts entered into on the first day of the applicable Interest Period (expressed as a decimal). 

        "LIBOR Advance" shall mean any Advance accruing interest based on LIBOR. 

        "LIBOR Adjustment" shall mean the percentage to be added to LIBOR in determining the per annum rate of interest accruing on LIBOR
Advances, as determined in Article II hereof. 

        "LIBOR Loan" shall mean a Revolving Credit Advance accruing interest based on LIBOR. 

        "Lien" shall mean any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), or preference, priority, or other security agreement or preferential arrangement, charge, or encumbrance of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the 

5

 

foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction to evidence any of the foregoing). 

        "Loan" shall mean the revolving loan evidenced by the Revolving Credit Note. 

        "Loan Documents" shall mean this Agreement, the Note, the Security Agreement, and any certificates or other documents delivered hereunder
or pursuant hereto. 

        "Maturity Date" shall mean, with respect to each Revolving Credit Advance, July 1, 2003. 

        "Minimum Debt Service Coverage Ratio" shall mean the ratio in which the initial number is the sum of the net income (after provision for
federal and state taxes and excluding any extraordinary income) of Borrower calculated based upon the 12 month period preceding the applicable date plus the interest expenses of Borrower for
said period, plus the sum of all federal and state taxes paid, plus the sum of non-cash expenses or allowances for Borrower for such period (including, without limitation, amortization or
write-down of intangible assets, depreciation, depletion, and deferred taxes), and the second number is the sum of the current portion of all outstanding principal due under all debt owed
by Borrower as of the applicable date plus the interest expenses of Borrower for the 12 month period preceding the applicable date. 

        "Multiemployer Plan" shall mean a "multiemployer plan" as defined in section 400(a)(3) of ERISA. 

        "Note" or "Notes" shall mean collectively the Revolving Credit Note and the Aydin Term
Note. 

        "Notice of Borrowing" shall have the meaning set forth in Section 2.03 hereof. 

        "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. 

        "Person" shall mean an individual, partnership, corporation, business trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture or other entity or a government (or a political subdivision or agency thereof). 

        "Plan" shall mean any "employee benefit plan" as defined in Section 3(3) of ERISA maintained by or on behalf of Borrower or any
ERISA Affiliate, including, but not limited to any defined benefit pension plan, profit sharing plan, money purchase pension plan, savings or thrift plan, stock bonus plan, employee stock ownership
plan, Multiemployer Plan, or any plan, fund, program, arrangement or practice providing for medical (including post-retirement medical), hospitalization, accident, sickness, disability or
life insurance benefits. 

        "Prohibited Transaction" shall mean any transaction set forth in Section 406 of ERISA or Section 4975 of the Code. 

        "Reportable Event" shall mean any of the events set forth in Section 4043 of ERISA. 

        "Reserve Percentage" shall mean, for any day, the stated maximum rate (expressed as a decimal) of all reserves required to be maintained
with respect to liabilities or assets consisting of or including "eurocurrency liabilities", as prescribed by Regulation D of the Board of Governors of the Federal Reserve System (or by any
other governmental body having jurisdiction with respect thereto), including without limitation any basic, marginal, emergency, supplemental, special, transitional or other reserves, the rate so
determined to be rounded upward to the nearest whole multiple of 1/100 of 1%. 

        "Revolving Credit Advance" shall mean an advance under the Revolving Credit Commitment. 

        "Revolving Credit Commitment" shall have the meaning set forth in Section 2.01(a)
hereof. 

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        "Revolving Credit Note" shall mean the $10,000,000 Amended and Restated Revolving Note as described in
Section 2.01(b) hereof. 

        "Revolving Credit Notice of Borrowing" shall have the meaning set forth in  Section 2.03 hereof. 

        "Revolving Credit Termination Date" shall have the meaning set forth in  Section 2.01(d). 

        "Secured Obligations" shall mean all indebtedness, liabilities, and obligations of Borrower of any nature whatsoever which Bank may now or
hereafter have, own or hold, and which are now or hereafter owing to Bank regardless of however and whenever created, arising or evidenced, whether now, heretofore or hereafter incurred, whether now,
heretofore or hereafter due and payable, whether alone or together with another or others, whether direct or indirect, primary or secondary, absolute or contingent, or joint or several, and whether as
principal, maker, endorser, guarantor, surety or otherwise, and also regardless of whether such Secured Obligations are from time to time reduced and thereafter increased or entirely extinguished and
thereafter reincurred including, without limitation, all such indebtedness, liabilities or obligations which may now or hereafter arise under any of the Notes, the Security Agreements or on account of
the Loan, as well as all Bank's fees, charges and expenses of or incidental to the preparation, renewal, modification or enforcement of Borrower's obligations arising out of the Loans and any and all
extensions or renewals thereof in whole or in part; and any indebtedness, liabilities or obligations of Borrower to Bank under any later or future advances or loans made by Bank to Borrower, and any
obligation or other indebtedness owing by Borrower to Bank under any interest rate swap agreement. 

        "Security Agreement" shall mean, collectively, the agreements of Borrower creating security interests in favor of Bank in the Collateral,
including, without limitation, any security agreements, deeds of trust, mortgages, or deeds to secure debt, as security for the Secured Obligations. 

        "Senior Funded Debt" shall mean all Debt which has not been subordinated to Debt owed to Bank. 

        "Senior Funded Debt to EBITDA Ratio" shall mean the ratio of Borrower's Senior Funded Debt to EBITDA, measured at the end of each fiscal
quarter for the rolling twelve (12) month period then ended, as determined by generally accepted accounting principles. 

        "Tangible Net Worth" of an entity shall mean the total of all items and categories of property of such entity, which, in accordance with
generally accepted accounting principles in the United States, would be included in determining total assets as shown on the assets side of such entity's balance sheet at the date as of which such
total assets are determined (excluding any value for receivables owing by officers, directors, employees or affiliates of such entity, and any value for intangible assets, including, without
limitation, good will, trademarks, patents, copyrights, going concern value, organization expense and other similar items), plus any LIFO reserve, if applicable, less the total of all items and
categories of indebtedness, obligations and liabilities of such entity which, in accordance with generally accepted accounting principles in the United States, would be included in determining total
liabilities as shown on the liabilities side of such entity's balance sheet at the date as of which such total liabilities are to be determined, but excluding the indebtedness of such entity, if any,
payment of which has been subordinated to the payment in full of all amounts owed to Bank under to the Loan Documents, pursuant to a written instrument in form and substance satisfactory to Bank. 

        "Voting Stock" shall mean securities of any class or classes of a Person, the holders of which are entitled to vote in the election of
directors, managers or trustees (or Persons performing similar functions) of such Person. 

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        1.02.    Accounting Terms.    All accounting terms not specifically defined herein shall be construed in accordance
with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in  Section 6.08 hereof, and all financial data submitted
pursuant to this Agreement shall be prepared in accordance with such principles. 

ARTICLE II

AMOUNT AND TERMS OF THE REVOLVING CREDIT COMMITMENT AND THE AYDIN TERM LOAN FACILITY  

        2.01.    Revolving Credit Advances and the Revolving Credit Note.    

        (a)
Subject to and upon the terms and conditions set forth in this Agreement, Bank agrees to make available to Borrower from time to time until the Revolving Credit Termination Date,
Revolving Credit Advances in aggregate principal amounts at any one time outstanding not to exceed Ten Million Dollars ($10,000,000) (the "Revolving Credit
Commitment"). Within the limits of the Revolving Credit Commitment, Borrower may borrow, repay and reborrow under the terms of this Agreement a maximum aggregate amount of
Revolving Credit Advances not to exceed the lesser of (i) the Revolving Credit Commitment or (ii) the Borrowing Base minus the outstanding principal balance of the Aydin Term Loan;  provided, however, that Borrower may neither borrow nor reborrow should there exist a Default or an Event of Default under this Agreement. If at any
time the outstanding principal balance of the Revolving Credit Note exceeds the Borrowing Base minus the outstanding principal balance of the Aydin Term Loan, Borrower shall pay Bank immediately,
without notice or demand, the amount of such excess, regardless of the stipulated date of maturity, if not payable on demand. 

        (b)
All Revolving Credit Advances shall be evidenced by the records of Bank and by the Revolving Credit Note payable to Bank in the form of  Exhibit A attached hereto with appropriate insertions. The
Revolving Credit Note shall be dated the date hereof, shall be payable to the order of
Bank in a principal amount equal to Ten Million Dollars ($10,000,000), shall bear interest as hereinafter provided and shall mature on the Revolving Credit Termination Date or sooner should the
principal and accrued interest thereon be declared immediately due and payable as provided for hereinafter. The Bank shall have no obligation to advance funds in excess of the amount of the Revolving
Credit Commitment. 

        (c)
The Revolving Credit Commitment available for advance shall reduce to $9,500,000.00 on July 1, 2001, and to $9,000,00.00 on July 1, 2002 (the
"Reduced Commitment Amount"). After July 1, 2001, Borrower shall not reborrow beyond the then applicable Reduced Commitment Amount.
Notwithstanding the foregoing, all accrued interest and outstanding principal shall be due in full on the Maturity Date. 

        (d)
All outstanding principal amounts under the Revolving Credit Commitment shall be due and payable in full on July 1, 2003, unless sooner accelerated in accordance with  Section 9.02 hereof (the
"Revolving Credit Termination Date"). 

        2.02.    Interest on Revolving Credit Note.    Interest shall accrue on the unpaid principal amount of each Revolving
Credit Advance at the following per annum rates (referred to in the Revolving Credit Note as "Adjusted Libor"), which shall be determined applying Borrower's Senior Funded Debt to EBITDA Ratio for
each fiscal quarter end, based on Borrower's financial statements, for the rolling twelve (12) month period immediately preceding the first day of an Interest Period selected by 

8

 

Borrower, as hereafter provided), by adding to LIBOR the applicable LIBOR Adjustment shown below: 

	Senior Funded Debt to

EBITDA Ratio
	 	LIBOR Adjustment
	 
	Less than or equal to 1.75	 	1.50	%
	

Greater than 1.75 but less than or equal to 2.25	
 	

1.75	
%
	

Greater than 2.25 but less than or equal to 2.75	
 	

2.00	
%
	

Greater than 2.75 but less than or equal to 3.25	
 	

2.25	
%
	

Greater than 3.25 but less than or equal to 3.75	
 	

2.50	
%
	

Greater than 3.75 but less than or equal to 4.25	
 	

2.75	
%
	

Greater than 4.25	
 	

3.00	
%

        2.03.    Method of Borrowing.    The Borrower shall give Bank written (including by telecopy) or telephonic notice
(promptly confirmed in writing) of any requested Revolving Credit Advance (a "Revolving Credit Notice of Borrowing") specifying (i) the principal
amount of such Advance, (ii) the date such Advance is to be made (which shall be a Business Day), (iii) the duration of the initial Interest Period applicable thereto. Each Revolving
Credit Notice of Borrowing shall be given to Bank, not later than 11:00 A.M. (Atlanta, Georgia time) on the second Business Day preceding the date of such requested Advance and with respect to
a Base Rate Advance, not later than 11:00 A.M. (Atlanta, Georgia time) on the day of such requested Revolving Credit Advance. The Bank shall be entitled to rely on any telephonic Revolving
Credit Notice of Borrowing which it believes in good faith to have been given by a duly authorized officer or employee of Borrower and any such Advances made by Bank based on such telephonic notice,
when credited to Borrower in accordance with Borrower's instructions, shall be Revolving Credit Advances for all purposes hereunder. 

        2.04.    Selection of Successive Interest Periods.    If Bank does not receive timely notice with respect to any
Revolving Credit Advance of any succeeding Interest Period selected by Borrower as provided for herein or if Borrower selects an interest rate for an Interest Period which is not available under  Section 2.02, the next succeeding Interest Period shall have a duration of one (1) month. If a Default or Event of Default shall exist at
the end of an Interest Period applicable thereto, any such outstanding Advance shall be converted to a Base Rate Advance. 

        2.05.    Interest Payment Dates.    Interest on the Revolving Credit Note shall be payable in arrears (a) on
the last day of each calendar month and (b) on the Revolving Credit Termination Date. 

        2.06.    Prepayment of Revolving Credit Advances.    The Borrower shall have the right to prepay Revolving Credit
Advances, in whole at any time or in part from time to time, without premium or penalty but with accrued interest on the principal amount prepaid to the date of such prepayment;  provided, that
(a) Borrower gives Bank at least two Business Days' prior written notice of any such prepayment, specifying the date such
prepayment will occur and the Revolving Credit Advance to be prepaid, (b) each partial prepayment shall be in an amount of not less than $100,000 or a greater integral multiple of $10,000, and
(iii) a LIBOR Advance may only be prepaid on the last day of the then current Interest Period with respect thereto. Notwithstanding the foregoing, if (i) Borrower is acquired and the
Loan is either repaid or not assumed by the acquiring entity or is not assumable, given the current financial covenants between Borrower and Bank and Bank's credit criteria or (ii) the Loan is
refinanced at any time during the term of the Loan with another financial institution, then the following prepayment premiums shall be due and payable: 

	1.
	2.0%
of the then applicable Revolving Credit Commitment or Reduced Commitment Amount if the Loan is repaid prior to March 31, 2002; and 

9

 

	2.
	1.0%
of the outstanding principal balance if the Loan is repaid after March 31, 2002 but prior to March 31, 2003. 

        2.07.    Use of Proceeds.    The proceeds of each Revolving Credit Advance will be used by Borrower for general
working capital and corporate purposes. 

        2.08.    Commitment/Unused/Underwriting Fees.    The Borrower shall pay to Bank (a) a commitment fee on the
date hereof in the amount of $25,000.00, and (b) an unused commitment fee equal to 0.25% per annum on the average daily unused Revolving Credit Commitment during each quarter in arrears on the
last day of each March, June, September and December, commencing on June 30, 2001; and on the Revolving Credit Termination Date. 

        2.09.    Cash Management Practices.    Notwithstanding any provision of this Agreement governing or restricting
Revolving Credit Advances or LIBOR Advances to the contrary, Borrower and Bank acknowledge and agree that Bank may, in its sole and absolute discretion, repay and disburse Revolving Credit Advances on
a daily basis in accordance with Bank's standard cash management practices, based on excess or deficient cash positions in Borrower's operating accounts maintained by Bank. 

        2.10.    Aydin Term Loan.    Upon the terms and subject to the conditions of, and in reliance upon the representations
and warranties made in the agreements evidencing, securing and otherwise relating to the indebtedness evidenced by the Aydin Term Note, Bank made the Aydin Term Loan to some of the entities comprising
Borrower, Vanco International, Inc., and Fox International Ltd., Inc. on November 17, 1998, in accordance with the terms and conditions set forth in the Aydin Term Note.
Borrower acknowledges and agrees that the indebtedness evidenced by the Aydin Term Note is, and shall always be, a part of the Secured Obligations. 

ARTICLE III

GENERAL PAYMENT PROVISIONS  

        3.01.    Illegality.    Notwithstanding any other provisions of this Agreement, if the introduction of, or any change
in or in the interpretation or application of, any applicable law, regulation or directive shall
make it unlawful or impossible for Bank to make, maintain or fund any LIBOR Advance or any LIBOR Loan, as the case may be, the obligation of Bank hereunder to make, maintain or fund such LIBOR
Advances, or such LIBOR Loans, as the case may be, shall forthwith be cancelled, and Borrower shall, at its option, prepay all such LIBOR Advances or convert such Advances to Base Rate Advances,
subject to Section 3.03 hereof, and in the case of the LIBOR Loans, prepay the LIBOR Loans in full or in part or convert the LIBOR Loans in full
or in part to Base Rate Loans, subject to Section 3.03 hereof. 

        3.02.    Increased Costs.    In the event that the introduction of, or any change in or in the interpretation of or
application of, any applicable law, treaty or governmental regulation, or the compliance by Bank with any guideline, request or directive (whether or not having the force of law) from any central bank
or other U.S. or foreign financial, monetary or other governmental authority, shall: (a) subject Bank to any tax of any kind whatsoever with respect to this Agreement, any Advances or the Aydin
Term Loan or change the basis of taxation of payments to Bank of principal, interest, or any other amount payable hereunder (except for changes in the rate of tax in the overall net income of Bank);
(b) impose, modify, or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or
other credit extended by or committed to be extended by any office of Bank (other than any change by way of imposition or increase of reserve requirements under Regulation D of the Board of
Governors of the Federal Reserve System included in the Reserve Percentage); or (c) impose on Bank or on the London interbank market any other condition with respect to this Agreement, the
Notes or any Advances and the Aydin Term Loan made thereunder; and the result of any of the foregoing is to increase the cost to Bank of making or committing to make, renewing or maintaining any
Advance or 

10

 

the Aydin Term Loan or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any Advance or the Aydin Term Loan, THEN, IN ANY CASE, Borrower shall promptly
pay from time to time, upon demand of Bank, such additional amounts as will compensate Bank for such additional cost or such reduction, as the case may be. The Bank shall certify the amount of such
additional cost or reduced amount to Borrower, including a description of the calculation thereof in reasonable detail, and such certification shall be conclusive absent manifest error. 

        3.03.    Indemnity.    The Borrower hereby agrees to indemnify, Bank and hold Bank harmless from any loss, cost or
expense it may sustain or incur as a consequence of (a) the failure by Borrower to complete any LIBOR Advance, as a LIBOR Loan after notice thereof has been given to Bank, or (b) the
payment of any LIBOR Advance or the payment of any LIBOR Loan on a day other than the last day of the Interest Period applicable thereto, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds acquired or deemed acquired by Bank to fund such LIBOR Advance or such LIBOR Loan. The Bank shall certify the amount of
its loss or expense to Borrower, and such certification shall be conclusive absent manifest error. 

        3.04.    Capital Adequacy.    If. after the date of this Agreement, Bank shall have determined that the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change therein. or any change in the interpretation or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or compliance by Bank with any request or directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the effect of reducing the
rate of return on Bank's capital as a consequence of its obligations hereunder to a level below that which Bank could have achieved but for such adoption, change or compliance (taking into
consideration Bank's policies with respect to capital adequacy) by an amount deemed by Bank to be material, then from time to time, promptly upon demand by Bank, Borrower shall pay Bank such
additional amount or amounts as will compensate Bank for such reduction. A certificate of Bank setting forth the additional amount or amounts to be paid to it hereunder, providing a description of the
calculation thereof in reasonable detail, shall be conclusive absent manifest error. In determining any such amount, Bank may use any reasonable averaging and attribution methods. Notwithstanding the
foregoing, Bank shall determine the applicability of this Section 3.04 and shall calculate the amounts payable to it hereunder in a manner which,
in Bank's reasonable judgment, is consistent with the manner in which it applies similar provisions and calculates similar compensation in similar agreements to comparable borrowers. 

        3.05.    Survival.    The obligations of Borrower under Sections 3.02,
3.03 and 3.04 shall survive the termination of this Agreement and the payment of the Notes. 

        3.06.    Making of Payments.    All payments of principal of, or interest on, the Notes shall be made in immediately
available funds to Bank at its principal office in Atlanta, Georgia. All such payments shall be made not later than 11:00 A.M. (Atlanta, Georgia time) and funds received after that hour shall
be deemed to have been received by Bank on the next following Business Day. 

        3.07.    Default Rate of Interest.    If Borrower shall fall to pay on the due date therefor, whether by acceleration
or otherwise, any principal owing under any Note then interest shall accrue on such unpaid principal, and to the extent allowed by law, other amounts due, at the option of Bank, from the due date
until and including the date on which such principal or other amount is paid in full at (i) the then applicable interest rate with respect to Revolving Credit Advances until the end of the
Interest Period applicable thereto plus an additional two percent (2%) per annum and (ii) thereafter, a rate of interest equal to the Base Rate plus two percent (2%) per annum (the
"Default Rate"). 

        3.08.    Calculation of Interest.    Interest payable on LIBOR Advances and LIBOR Loans shall be calculated on the
basis of a year of 360 days and paid for the actual number of days elapsed, and 

11

 

interest payable on Base Rate Advances and Base Rate Loans shall be calculated on the basis of a year of 360 days and paid for the actual number of days elapsed. 

ARTICLE IV

CONDITIONS PRECEDENT  

        4.01.    Conditions Precedent.    The obligation of Bank to make the initial Revolving Credit Advance to Borrower is
subject to the conditions precedent that Bank shall have received each of the following, in form and substance satisfactory to Bank and its counsel: 

	(a)
	A
duly executed version of this Agreement, all Security Agreements and related documents on all real property and UCC-1 financing statements in forms acceptable to Bank.

	(b)
	Duly
executed Revolving Credit Note.

	(c)
	A
copy of the Articles of Incorporation and Bylaws of each entity comprising Borrower, certified as true and correct by Borrower and, a certificate of existence with respect to each
Borrower from the Secretary of State of the state in which each Borrower is incorporated.

	(d)
	A
certificate of Borrower certifying (i) the names and true signatures of the officers of each Borrower authorized to execute this Agreement, the Note and the other Loan
Documents to be delivered hereunder, and (ii) the resolutions of Borrower approving this Agreement, the Revolving Credit Note and the Revolving Credit Advances thereunder.

	(e)
	A
favorable written opinion of Meadows Ichter & Trigg, P.C., counsel for Borrower, in form and content reasonably satisfactory to Bank, addressed to Bank.

	(f)
	A
duly executed Borrower's Closing Certificate substantially in the form of Exhibit B attached hereto.

	(g)
	All
company and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all Loan Documents and other documents incident thereto, or
delivered in connection therewith, shall be satisfactory in form and substance to Bank. 

        4.02.    Conditions Precedent to Each Advance.    At the time of the making by Bank of each Advance hereunder
(including the initial Revolving Credit Advance), (a) the following statements shall be true (and each of the giving by Borrower of a Notice of Borrowing in accordance with a Revolving Credit
Notice of Borrowing in accordance with Section 2.03 hereof and the acceptance by Borrower of the proceeds of each Advance shall constitute a
representation and warranty by Borrower that on the date of such Advance, before and after giving effect thereto and to the application of the proceeds therefrom, such statements are true): 

	(i)
	The
representations and warranties contained in Article V hereof and in any other Loan Document are true and correct on and as of the date of
such Advance as though made on and as of such date, and

	(ii)
	No
Default or Event of Default exists or would result from such Advance or from the application of the proceeds therefrom; and 

        (b)
Bank shall have received such other approvals, opinions or documents as it may reasonably request. 

12

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES  

        The Borrower represents and warrants to Bank that: 

        5.01.    Formation.    Each entity comprising Borrower is a corporation duly incorporated and existing under the laws
of the state of its incorporation, and is qualified to do business in all jurisdictions in which it conducts its business, except where the lack of such qualification would not have a material adverse
effect on the business, financial condition, operations, results of operations, or future prospects of Borrower. 

        5.02.    Authorization.    The execution, delivery, and performance by Borrower of the Loan Documents have been duly
authorized by all necessary corporate action and do not and will not (a) require any consent or approval of the shareholders of Borrower; (b) contravene Borrower's Articles of
Incorporation or Bylaws; (c) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination, or award presently in effect having applicability to
Borrower; (d) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease, or instrument to which Borrower is a party or by which
it or its properties may be bound or affected; (e) result in, or require, the creation or imposition of any Lien upon or with respect to any of the properties now owned or hereafter acquired by
Borrower (except for the Liens created under the Loan Documents; or (f) cause Borrower to be in default under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award or any such indenture, agreement, lease, or instrument. 

        5.03.    Legally Enforceable Agreement.    This Agreement is, and each of the other Loan Documents when delivered
under this Agreement will be, legal, valid, and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, and other similar laws affecting creditors'
rights generally. 

        5.04.    Financial Statements.    Borrower has furnished to Bank financial statements dated November 30, 2000
(the "Financial Statements"), which Financial Statements are true and correct in all material respects. Such Financial Statements fairly and accurately present the financial condition of Borrower as
of the date indicated. Since the date of the latest Financial Statements referred to above, there has been no material adverse change in the financial condition, business, operations or prospects of
Borrower, and, to the knowledge of Borrower, there exist no material contingent liability or obligation assertable against Borrower that is not identified and disclosed to Bank in the Financial
Statements. 

        5.05.    Labor Disputes and Acts of God.    Neither the business nor the properties of Borrower are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hall, earthquake, embargo, act of God or of the public enemy, or other casualty (whether or not covered by insurance)
materially and adversely affecting such business or properties or the operations of Borrower. 

        5.06.    Other Agreements.    The Borrower is not a party to any indenture, loan, or credit agreement, or to any lease
or other agreement or instrument, or subject to any charter or corporate restriction which could have a material adverse effect on the business, properties, assets, operations, or condition (financial
or otherwise) of Borrower, or the ability of Borrower to carry out its obligations under the Loan Documents. The Borrower is not in default in any respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in any such agreement or instrument material to its business to which it is a party. 

        5.07.    Litigation.    There is no pending or threatened action or proceeding against or affecting Borrower before
any court, governmental agency, or arbitrator, which may, in any one case or in the aggregate, materially adversely affect the financial condition, operations, properties, or business of 

13

 

Borrower or the ability of Borrower to perform its obligation under the Loan Documents, except as set forth in Schedule 5.07 attached hereto. 

        5.08.    No Defaults on Outstanding Judgments or Orders.    The Borrower has satisfied all judgments, and is not in
default with respect to any judgment, writ, injunction, decree, rule, or regulation of any court, arbitrator, or any governmental authority, commission, board, bureau, agency, or instrumentality,
domestic or foreign. 

        5.09.    Ownership and Liens.    The Borrower has title to, or valid leasehold interests in, all of its properties and
assets, real and personal (other than any properties or assets disposed of in the ordinary course of
business), and none of the properties and assets owned by Borrower and none of its leasehold interests is subject to any Lien, except such as may be permitted pursuant to  Section 7.01 of this
Agreement. 

        5.10.    ERISA.    Except as disclosed on Schedule 5.10
attached hereto: 

        (a)
Identification of Plans. Neither Borrower nor any ERISA Affiliate maintains or contributes to, or has maintained or contributed to,
any Plan. 

        (b)
Liabilities. Neither Borrower nor any Subsidiary is currently or will become subject to any liability (other than routine Plan
expenses or contributions, if timely paid), tax or penalty whatsoever to any Person whomsoever, which liability, tax or penalty is directly or indirectly related to any Plan including, but not limited
to, any penalty or liability arising under Title I or Title IV of ERISA, any tax or penalty resulting from a loss of deduction under Section 404 or 419 of the Code, or any tax or penalty under
Chapter 43 of the Code, except such liabilities, taxes or penalties (when taken as a whole) as would not have a material adverse effect on the business, properties, assets, operations or condition
(financial or otherwise) of Borrower; and 

        (c)
Funding. The Borrower and each ERISA Affiliate has made full and timely payment of all amounts (i) required to be contributed
under the terms of each Plan and applicable law and (ii) required to be paid as expenses of each Plan. No Plan would have an "amount of unfunded benefit liabilities" (as defined in
Section 4001(a)(18) of ERISA) if such Plan were terminated as of the date on which this representation and warranty is made. 

        5.11.    Operation of Business.    The Borrower possesses all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, to conduct its respective businesses substantially as now conducted and as presently proposed to be conducted, and, to the knowledge of Borrower,
Borrower is not in violation of any valid rights of others with respect to any of the foregoing. 

        5.12.    Taxes.    All federal, state and other tax returns of Borrower required by law to be filed have been
completed in full and have been duly filed, and all taxes, assessments and withholdings shown on such returns or billed to Borrower have been paid, and Borrower maintains adequate reserves and
accruals in respect of all such federal, state and other taxes, assessments and withholdings. There are no unpaid assessments pending against Borrower or any taxes or withholding, and Borrower knows
of no bases therefor. 

        5.13.    Debt.    Schedule 5.13 is a complete and correct list
of all credit agreements, indentures, purchase agreements, guaranties, Capital Leases, and other investments, agreements, and arrangements presently in effect providing for or relating to extensions
of credit (including agreements and arrangements for the issuance of letters of credit or for acceptance financing) in respect of which Borrower is in any manner directly or contingently obligated;
and the maximum principal or face amounts of the credit in
question, which are outstanding and which can be outstanding, are correctly stated, and all Liens of any nature given or agreed to be given as security therefor are correctly described or indicated in
such Schedule. 

14

 

        5.14.    Pollution and Other Laws and Regulations.    The Borrower is in compliance in all material respects with all
laws and regulations relating to pollution and environmental control, equal employment opportunity and employee safety and other Federal, State and local laws with respect to its operations and the
conduct of its business in each jurisdiction in which Borrower is presently doing business. 

ARTICLE VI

AFFIRMATIVE COVENANTS  

        So long as the Note or any Advance thereunder shall remain unpaid, Borrower will: 

        6.01.    Maintenance of Existence.    Preserve and maintain its company existence and good standing in the
jurisdiction of its formation, and qualify and remain qualified, and to qualify and remain qualified, as a foreign corporation in each jurisdiction in which such qualification is required, except
where the lack of such qualification would not have a material adverse effect on the business, financial condition, operations, results of operations, or future prospects of Borrower. 

        6.02.    Maintenance of Records.    Keep adequate records and books of account, in which complete entries will be made
in accordance with generally accepted accounting principals, consistently applied, reflecting all financial transactions of Borrower. 

        6.03.    Maintenance of Properties.    Maintain, keep and preserve all of its properties (tangible and intangible)
necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear expected. 

        6.04.    Conduct of Business.    Continue to engage in an efficient and economical manner in a business of the same
general type as now conducted by it on the date of this Agreement. 

        6.05.    Maintenance of Insurance.    Maintain and keep in force insurance of the type and amounts customarily carried
in lines of business similar to Borrower's, including, without limitation, fire, public liability, property damage, worker's compensation insurance, which insurance shall be carried with
companies in an amount reasonably satisfactory to Bank, and Borrower shall deliver to Bank from time to time at Bank's request schedules setting forth all insurance in effect and if applicable,
certificates showing the Bank as loss payee or an additional insured thereunder. 

        6.06.    Compliance With Laws.    Comply in all material respects with all applicable laws, rules, regulations, and
orders, such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments, and governmental charges imposed upon it or upon its property. 

        6.07.    Right of Inspection.    At any reasonable time and from time to time, permit Bank or any agent or
representative thereof to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, Borrower and to discuss the affairs, finances and accounts of
Borrower with any of its respective officers and directors and Borrower's independent accountants. 

        6.08.    Reporting Requirements.    Furnish to Bank: 

        (a)  Quarterly Financial Statements. As soon as practicable and in any event within forty five (45) days after the end of each
quarter in each year, a statement (consolidated for each entity comprising Borrower) of results of operations, reconciliation of surplus statement and statement of changes in cash flow of Borrower for
the period from the beginning of the current fiscal year to the end of such quarter, an accounts receivable aging report, a Borrowing Base Certificate and a balance sheet of Borrower as at the end of
such quarter, setting forth in each case in comparative figures for the corresponding period in the preceding fiscal year all in reasonable detail and certified by an authorized financial officer of
Borrower, subject to changes resulting from year-end adjustments. 

15

 

        (b)
Annual Audited Financial Statements. As soon as practicable and in any event within 90 days after the end of each fiscal year,
a statement (consolidated for each entity comprising Borrower) of results of operations, reconciliation of surplus statement and statement of changes in cash flow of Borrower for such year, an income
statement and a balance sheet of Borrower (consolidated for each entity comprising Borrower) as at the end of such year, setting forth in each case in comparative form corresponding figures from the
preceding annual audit, all being in unqualified form and in reasonable detail and satisfactory in scope to Bank and, as to the statements, certified to Borrower by independent public accountants of
recognized standing selected by Borrower whose certificate shall be in scope and substance satisfactory to Bank; 

        (c)
Management Letters. Promptly upon receipt thereof, copies of any reports submitted to Borrower by its independent certified public
accountants in connection with examination of the financial statements of Borrower made by such accountants; 

        (d)
Compliance Certificate. Simultaneously with the delivery of the financial statements referred to in Sections
6.08(a) and (b) hereof, a certificate of the chief financial officer of Borrower (a) certifying that to the best
of her knowledge no Default or Event of Default has occurred and is continuing or, if a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action
which is proposed to be taken with respect thereto and (b) with computations demonstrating compliance with the covenants contained in Article VIII; 

        (e)
Accountant's Report. Simultaneously with the delivery of the annual financial statements referred to in  Section 6.08(b), a certificate of the
independent public accountants who audited such statements to the effect that, in making the examination
for the audit of such statements, they have obtained no knowledge of any condition or event which constitutes a Default or Event of Default, or if such accountants shall have obtained knowledge of any
such condition or event, specifying in such certificate each such condition or event of which they have knowledge and the nature and status thereof; 

        (f)
Projections. As soon as practicable and in any event, within 60 days after the end of each fiscal year, (i) a projected
income statement of Borrower for the next succeeding fiscal year, and (ii) a projected capital expenditure budget for the next succeeding fiscal year, each setting forth in detail reasonably
satisfactory to Bank the assumptions which form the basis of such projections; 

        (g)  Notice of Litigation. Promptly after the commencement thereof, notice of all actions, suits, and proceedings before any court or
governmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, affecting Borrower which, if determined adversely to Borrower, could have a material adverse effect
on the business, properties, assets, operations or condition (financial or otherwise) of Borrower; 

        (h)
Notice of Defaults and Events of Default. As soon as possible and in any event within ten (10) days after the occurrence of any
Default or Event of Default, a written notice setting forth the details of such Default or Event of Default and the action which is proposed to be taken by Borrower with respect thereto; 

        (i)
ERISA Reports. As soon as possible, and in any event within thirty (30) days after Borrower knows or has reason to know that
any circumstances exist that constitute grounds entitling the PBGC to institute proceedings to terminate a Plan subject to ERISA with respect to Borrower or any ERISA Affiliate, and promptly but in
any event within two (2) Business Days of receipt by Borrower or any ERISA Affiliate of notice that the PBGC intends to terminate a Plan or appoint a trustee to administer the same, and
promptly but in any event within five (5) Business Days of the receipt of notice concerning the imposition of withdrawal liability with respect to Borrower or any ERISA Affiliate, Borrower will
deliver to Bank a certificate of the chief financial officer of 

16

 

Borrower setting forth all relevant details and the action which Borrower proposes to take with respect thereto; 

        (j)
Reports to Other Creditors. Promptly after the furnishing thereof, copies of any statement or report furnished to any other party
pursuant to the terms of any indenture, loan, credit, or similar agreement and not otherwise required to be furnished to Bank pursuant to any other clause of this  Section 6.08; 

        (k)
Proxy Statements, etc. Promptly after the sending or filing thereof, copies of all proxy statements, financial statements, and reports
which Borrower sends to its stockholders, and copies of all regular, periodic, and special reports, and all registration statements which Borrower files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or with any national securities exchange; and 

        (l)  Further Assurances. The Borrower shall execute and deliver to Bank such further instruments, provide it with such further data and
information and take such further action as Bank may reasonably request, including without limitation any changes to the projections delivered pursuant to subsection (f) which could materially
affect such projections, and a quarterly covenant compliance certificate in the form and content reasonably acceptable to Bank. 

        6.09.    Environment.    Be and remain in compliance with the provisions of all federal, state, and local
environmental, health, and safety laws, codes and ordinances, and all rules and regulations issued thereunder except as noted in Schedule 6.09;
notify Bank immediately of any notice of a hazardous discharge or environmental complaint received from any governmental agency or any other party; notify Bank immediately of any hazardous discharge
from or affecting its premises; immediately contain and remove the same, in compliance with all applicable laws; promptly pay any fine or penalty assessed in connection therewith; permit Bank to
inspect the premises, to conduct tests thereon, and to inspect all books, correspondence, and records pertaining thereto, and at Bank's request, and at Borrower's expense, provide a report of a
qualified environmental engineer, satisfactory in scope, form, and content to Bank, and such other and further assurances reasonably satisfactory to Bank that the condition has been corrected. 

        6.10.    Change of Control.    The Borrower covenants that, so long as Bank (for the purpose of this paragraph the
term "Bank" shall include Bank's subsidiaries and affiliates) shall be the holder of any of the Notes in the event that a Change of Control Date shall occur relative to Borrower, Borrower will, within
10 days after such Change of Control Date, give Bank written notice thereof and shall describe in reasonable detail the facts and circumstances giving rise thereto. Upon the occurrence of a
Change of Control Date relative to Borrower, Borrower will prepay, if Bank shall so request, all outstanding principal under the Notes plus interest accrued to the date of prepayment and Bank may
terminate the Revolving Credit Commitment and the Line of Credit Commitment. Such request (the "Prepayment Notice") shall be made by Bank in writing not
later than 60 days after receipt by Bank of written notice from Borrower of such Change of Control Date and shall specify the date upon which Borrower shall prepay the Notes, which date shall
be not less than 30 days nor more than 60 days from the date of the Prepayment Notice. On the date fixed for prepayment Borrower shall prepay the outstanding principal under the Notes
plus interest accrued on the Notes, to the date fixed for prepayment. 

        6.11.    Prompt Payment of Taxes and Indebtedness.    Promptly pay and discharge, or cause to be paid and discharged,
prior to the earliest date on which any penalty or interest is incurred or begins to accrue, all lawful taxes, assessments and governmental charges or levies imposed upon any of its income, profits,
property or business; provided, that any such tax, assessment, charge or levy need not be paid (a) if the same shall currently be contested in good faith by appropriate proceedings,
(b) if Borrower shall have set aside on its books adequate reserves with respect thereto, and (c) if no proceedings shall have been commenced to foreclose any Lien which may have
attached as security therefore. The Borrower will promptly pay when due all its other Debt and dividends declared by it. 

17

 

ARTICLE VII

NEGATIVE COVENANTS  

        So long as the Note or any Advance thereunder shall remain unpaid, Borrower will not: 

        7.01.    Liens.    Create, assume or suffer to exist any Lien upon any of its assets (including, without limitation,
the Collateral) whether now owned or hereafter acquired, except: 

        (a)
Liens in favor of Bank given to secure any Debt, whether now owing or hereafter coming into existence, owed from Borrower to Bank; 

        (b)
Liens for taxes or assessments or other governmental charges or levies not yet due or which are being actively contested in good faith by appropriate proceedings if adequate reserves
with respect thereto are maintained on the books of Borrower or any subsidiary in accordance with generally accepted accounting principles; 

        (c)
Statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law created in the ordinary course of business for amounts not yet
due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained; 

        (d)
Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workmen's compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (other than obligations for the payment of borrowed money); 

        (e)
Easements, rights-of-way, restrictions and other similar charges or encumbrances not interfering with the ordinary conduct of the business of Borrower or any
of its subsidiaries or any of their respective properties; and 

        (f)
Existing Liens set forth on Schedule 7.01 attached hereto. For purposes of this Agreement, a negative pledge constitutes a
Lien. 

        7.02.    Debt.    Create, incur, assume, or suffer to exist any Debt in excess of $250,000 (including lease
obligations of any description whatsoever not existing as of the date of this Agreement, except (a) Debt incurred under this Agreement; (b) any trade indebtedness incurred in the
ordinary course of business payable within 90 days of its incurrence, or (c) with the prior written consent of Bank, which consent shall not be unreasonably withheld, Debt owing to
Ronald D. Ordway. 

        7.03.    Mergers, Etc.    Wind up, liquidate or dissolve itself, reorganize, merge or consolidate with or into, or
convey, sell, assign, transfer, lease, or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter
acquired) to any Person, or acquire all or substantially all of the assets or the business of any Person without the prior written consent of Bank, which consent shall not be unreasonably withheld. 

        7.04.    Leases.    Create, incur, assume, or suffer to exist any obligation as lessee for the rental or hire of any
real or personal property, except: (a) leases existing on the date of this Agreement set forth on Schedule 7.04 attached hereto and any
extensions or renewals thereof; and (b) leases (other than Capital Leases) which do not in the aggregate require Borrower on a consolidated basis to make payments (including taxes, insurance,
maintenance, and similar expenses which Borrower is required to pay under the terms of any lease) in any fiscal year of Borrower in excess of Five Hundred Thousand Dollars ($500,000). 

        7.05.    Sale and Leaseback.    Sell, transfer, or otherwise dispose of any real or personal property to any Person
and thereafter directly or indirectly lease back the same or similar property. 

18

 

        7.06.    Capital Expenditures.    Without the prior written consent of Bank, which consent shall not be unreasonably
withheld, make any additional investment and fixed assets in any one fiscal year in excess of a yearly aggregate of $2,000,000.00. 

        7.07.    Sale of Assets.    Sell, lease, assign, transfer, or otherwise dispose of any of its now owned or hereafter
acquired assets (including without limitation, receivables and leasehold interests) except: (a) inventory disposed of in the ordinary course of business; and (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business. 

        7.08.    Investments.    Make any loans, advances, or extensions of Credit to any Person in excess of $100,000.00, or
purchase or otherwise acquire any capital stock, assets, obligations, or other securities of, make any capital contribution to, or otherwise invest in or acquire any interest in any Person (without
the prior written consent of Bank, which consent shall not be unreasonably withheld), or participate as a partner or joint venturer with any other Person,  except: (a) direct obligations of the
United States or any agency thereof with maturities of one year or less from the date of acquisition;
(b) commercial paper of a domestic issuer rated at least "A-1" by Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc.;
(c) certificates of deposit with maturities of one year or less from the date of acquisition issued by any commercial bank having capital and surplus in excess of Five Hundred Million Dollars
($500,000,000); and (c) stock, obligations, or securities received in settlement of debts (created in the ordinary course of business) owing to Borrower. 

        7.09.    Guaranties, Etc.    Assume, guaranty, endorse, or otherwise be or become directly or contingently responsible
or liable (including, but not limited to, an agreement to purchase any obligation, stock, assets, goods, or services, or to supply or advance any funds, assets, goods, or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth, or otherwise to assure the creditors of any Person against loss) for obligations of any Person,  except: guaranties by
endorsement of negotiable instruments for deposits or collection or similar transactions in the ordinary course of business. 

        7.10.    Transactions With Affiliates.    Enter into any transaction, including without limitation, the purchase,
sale, or exchange of property or the rendering of any service, with any Affiliate, including without limitation, the purchase, sale, or exchange of property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of Borrower's business and upon fair and reasonable terms no less favorable to Borrower than would be obtained
in a comparable arm's-length transaction with a Person not an Affiliate. 

        7.11.    Use of Proceed.    Use the proceeds of any Advance under the Revolving Credit Note except for the purposes
stated herein. 

ARTICLE VIII

FINANCIAL COVENANTS  

        So long as the Note or any Advances thereunder shall remain unpaid, Borrower will: 

        8.01.    Minimum Tangible Net Worth.    Maintain at all times a tangible net worth of not less than Twenty Million and
No/100 Dollars ($20,000,000.00), measured at May 31, 2000, and increasing by seventy-five percent (75%) of net income at the end of each fiscal quarter thereafter. 

        8.02.    Minimum Debt Service Coverage Ratio.    As of the end of each calendar quarter commencing on June 30,
2001, Borrower's Minimum Debt Service Coverage Ratio will equal or exceed 1.25 to 1.00, calculated for the rolling four (4) quarters then ended. 

        8.03.    Senior Funded Debt to EBITDA Ratio.    Maintain at all times a Senior Funded Debt to EBITDA Ratio of not
greater than 4:50 to 1:00 as of May 31, 2000, 4:00 to 1:00 as of February 28, 2001, and 3.50 to 1.00 as of February 28, 2002. 

19

 

ARTICLE IX

EVENTS OF DEFAULT  

        9.01.    Events of Default.    Any one or more of the following shall constitute an Event of Default hereunder: 

        (a)
The Borrower should fail to pay the principal of, or any interest on the Note, or any fee, within three (3) days after the date when due and payable; 

        (b)
Any representation or warranty made or deemed made by Borrower in this Agreement or in any other Loan Document or which is contained in any certificate, document, opinion, or
financial or other statement furnished at any time under or in connection with any Loan Document shall prove to have been incorrect, incomplete, or misleading in any material respect on or as of the
date made or deemed made; 

        (c)
The Borrower shall fail to perform or observe any term, covenant, or agreement contained in Articles VI, VII or VIII hereof; 

        (d)
The Borrower shall (i) fail to pay any indebtedness for borrowed money (other than the Note) which individually as to a single creditor, or in the aggregate as to all
creditors, equals more than $1,000,000.00 or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise), or (ii) fail to
perform or observe any term, covenant, or condition on its part to be performed or observed under any agreement or instrument relating to any such indebtedness, when required to be performed or
observed, if the effect of such failure to perform or observe is to accelerate, or to permit the acceleration of, after the giving of notice or passage of time, or both, the maturity of such
indebtedness, whether or not such failure to perform or observe shall be waived by the holder of such indebtedness; or any such indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; 

        (e)
The Borrower (i) shall generally not pay, or shall be unable to pay, or shall admit in writing its inability to pay its debts as such debts become due; or (ii) shall
make an assignment for the benefit of creditors, or petition or apply to any tribunal for the appointment of a custodian, receiver, or trustee for it or a substantial part of its assets; or
(iii) shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iv) shall have had any such petition or application filed or any such proceeding commenced against it in which an order for relief is entered or an adjudication or
appointment is made, and which remains undismissed for a period of sixty (60) days or more; or (v) shall take any corporate action indicating its consent to, approval of, or acquiescence
in any such petition, application, proceeding, or order for relief or the appointment of a custodian, receiver, or trustee for all or any substantial part of its properties; or (vi) shall
suffer any such custodianship, receivership, or trusteeship to continue undismissed for a period of sixty (60) days or more; 

        (f)
One or more judgments, decrees, or orders for the payment of money in excess of One Hundred Thousand Dollars ($100,000) in the aggregate shall be rendered against Borrower, and such
judgments, decrees, or orders shall continue unsatisfied and in effect for a period of sixty (60) consecutive days without being vacated, discharged, satisfied, or stayed or bonded pending
appeal; 

        (g)
Any of the following events shall occur or exist with respect to Borrower and any ERISA Affiliate under ERISA: any Reportable Event shall occur; complete or partial withdrawal from
any Multiemployer Plan shall take place; any Prohibited Transaction shall occur; a notice of intent to terminate a Plan shall be filed, or a Plan shall be terminated; or circumstances shall exist
which constitute grounds entitling the PBGC to institute proceedings to terminate a Plan, or the PBGC 

20

 

shall institute such proceedings; and in each case above, such event or condition, together with all other events or conditions, if any, could subject Borrower to any tax, penalty, or other liability
which in the aggregate may exceed One Hundred Thousand Dollars ($100,000); or 

        (h)
If Bank receives its first notice of a hazardous discharge or any environmental complaint from a source other than Borrower, and Bank does not receive notice (which may be given in
oral form, provided same is followed with all due dispatch by written notice given by certified mail, return receipt requested) of such hazardous discharge or environmental complaint from Borrower
within twenty-four (24) hours of the time Bank first receives said notice from a source other than Borrower; or if any federal, state, or local agency asserts or creates a Lien upon
any or all of the assets, equipment, property, leaseholds, or other facilities of Borrower by reason of the occurrence of a hazardous discharge or an environmental complaint; or if any federal, state,
or local agency asserts a claim against Borrower and/or its assets, equipment, property, leaseholds, or other facilities for damages or cleanup costs relating to a hazardous discharge or any
environmental complaint; provided, however, that such claim shall not constitute a default if, within five (5) Business Days of the occurrence
giving rise to the claim, (i) Borrower can prove to Bank's satisfaction that Borrower has commenced and is diligently pursuing either: (A) a cure or correction of the event which
constitutes the basis for the claim, and continues diligently to pursue such cure or correction to completion or (B) proceedings for an injunction, a restraining order, or other appropriate
emergent relief preventing such agency or agencies from asserting such claim, which relief is granted within ten (10) Business Days of the occurrence giving rise to the claim and the
injunction, order, or emergent relief is not thereafter resolved or reversed on appeal; and (ii) in either of the foregoing events, Borrower has posted a bond, letter of credit, or other
security satisfactory in form, substance, and amount to both Bank and the agency or entity asserting the claim to secure the proper and complete cure or correction of the event which constitutes the
basis for the claim. 

        9.02.    Remedies on Default.    

        (a)
Upon the occurrence and during the continuation of an Event of Default (other than an Event of Default described in  Section 9.01(e), Bank may (i) terminate its obligations to Borrower,
including, without limitation, all obligations to make Advances under
the Revolving Credit Commitment, (ii) declare the Notes, including, without limitation, principal, accrued interest and costs of collection (including, without limitation, reasonable attorneys'
fees actually incurred if collected by or through an attorney at law or in bankruptcy, receivership or other judicial proceedings) immediately due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are expressly waived. 

        (b)
Upon occurrence of an Event of Default under Section 9.01(g), (i) all obligations of Bank to Borrower, including,
without limitation, all obligations to make Advances under the Revolving Credit Commitment, shall terminate automatically and (ii) the Notes, including, without limitation, principal, accrued
interest and costs of collection (including, without limitation, reasonable attorneys' fees actually incurred if collected by or through an attorney at law or in bankruptcy, receivership or other
judicial proceedings) shall be immediately due and payable, without presentment, demand, protest, or any other notice of any kind, all of which are expressly waived. 

        (c)
Upon the occurrence of an Event of Default and the acceleration of the Notes as provided in (a) or (b) above, and in the case of an Event of Default under
Section 9.01(c) involving a breach of covenant only, after not less than thirty (30) days notice and opportunity to cure such Event, Bank may pursue any remedy available under this
Agreement, under the Notes or under any other Loan Document, or available at law or in equity, all of which shall be cumulative. The order and manner in which the rights and remedies of Bank under the
Loan Documents and otherwise may be exercised shall be determined by Bank. 

21

 

        (d)
Upon the occurrence and during the continuance of any Event of Default, Bank is hereby authorized at any time and from time to time, without notice to Borrower (any such notice being
expressly waived by Borrower), to set off and apply 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 against any and all of the obligations of Borrower now or hereafter existing under this Agreement, the Notes, or any other Loan Document, irrespective of
whether or not Bank shall have made any demand under this Agreement, the Notes or any other Loan Document and although such obligations may be unmatured. The Bank agrees promptly to notify Borrower
after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. 

ARTICLE X

MISCELLANEOUS  

        10.01.    Amendments, Etc.    No amendment, modification, termination, or waiver of any provision of any Loan Document
to which Borrower is a party, nor consent to any departure by Borrower from any Loan Document to which it is a party, shall in any event be effective unless the same shall be in writing and signed by
Bank, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 

        10.02.    Notices, Etc.    All notices and other communications provided for under this Agreement and under the other
Loan Documents to which Borrower is a party shall be in writing and mailed, telecopied or delivered by hand or overnight courier, 

if
to Borrower, at its address: 

VIDEO
DISPLAY CORPORATION

1868 Tucker Industrial Drive

Tucker, Georgia 30084

Attn: Ronald D. Ordway 

if
to Bank, at its address: 

SOUTHTRUST
BANK

600 West Peachtree Street

27th Floor

Atlanta, Georgia 30308

Attn: Jon R. Hauseman, Corporate Lending Department 

or,
as to each party, at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this  Section 10.02. Except as
otherwise provided in this Agreement all such notices and communications shall be effective (i) if mailed, upon
the earlier of receipt or the third Business Day after such communication is deposited in the United States mail, registered or certified with first class postage prepaid, addressed as aforesaid,
(ii) if telecopied, when sent, and (iii) if delivered by hand or by courier, when received at the address specified herein, except that notices to Bank pursuant to the provisions of
Article II shall not be effective until received by Bank. 

        10.03.    No Waiver.    No failure or delay on the part of Bank in exercising any right, power, or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right,
power, or remedy hereunder. The rights and remedies provided herein are cumulative, and are not exclusive of any other rights, powers, privileges, or remedies, now or hereafter existing, at law or in
equity or otherwise. 

22

 

        10.04.    Successors and Assigns.    This Agreement shall be binding upon and inure to the benefit of Borrower and
Bank and their respective successors and assigns, except that Borrower may not assign or transfer any of its rights under any Loan Document to which Borrower is a party without the prior written
consent of Bank. 

        10.05.    Costs, Expenses, and Taxes.    The Borrower agrees to pay all costs and expenses (a) incurred by Bank
in connection with the preparation, execution and delivery of this Agreement and the other Loan Documents, including without limitation the reasonable cost's and expenses of counsel (including
in-house counsel) to Bank, (b) incurred by Bank in connection with the administration of the Advances
and the Loan Documents in accordance with the provisions thereof which would not be considered in the ordinary course of business and the preparation, execution and delivery of any waiver, amendment
or consent by Bank relating to the Loan Documents, including without limitation the reasonable costs and expense of counsel (including in-house counsel) for Bank; and (c) incurred
by Bank in enforcing the Loan Documents, including, without limitation, reasonable costs and expenses of counsel (including in-house counsel) of Bank. In addition, Borrower shall pay any
and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing, and recording of any of the Loan Documents and other documents to be
delivered under any such Loan Documents, and agrees to hold Bank harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes
and fees. This provision shall survive termination of this Agreement. 

        10.06.    Integration.    This Agreement and the Loan Documents contain the entire agreement between the parties
relating to the subject matter hereof and supersede all oral statements and prior writings with respect thereto. 

        10.07.    Indemnity.    The Borrower hereby agrees to defend, indemnify, and hold Bank and its directors, officers,
agents and employees harmless from and against any and all claims, damages, judgments, penalties, costs, and expenses (including attorneys' fees and court costs now or hereafter arising from the
aforesaid enforcement of this clause) arising directly or indirectly from the activities of Borrower, its predecessors in interest, or third parties with whom it has a contractual relationship, or
arising directly or indirectly from the violation of any environmental protection, health, or safety law, whether such claims are asserted by any governmental agency or any other person. This
indemnity shall survive termination of this Agreement. 

        10.08.    GOVERNING LAW.    THIS AGREEMENT AND EACH OF THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF GEORGIA. 

        10.09.    Severability of Provisions.    Any provision of any Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of such Loan Document or affecting
the validity or enforceability of such provision in any other jurisdiction. 

        10.10.    Headings.    Article and Section headings in the Loan Documents are included in such Loan Documents for the
convenience of reference only and shall not constitute a part of the applicable Loan Documents for any other purpose. 

        10.11.    Entire Agreement.    This Agreement and the other Loan Documents executed and delivered contemporaneously
herewith, together with the exhibits and schedules attached hereto and thereto, constitute the entire understanding, of the parties with respect to the subject matter hereof, and any prior or
contemporaneous agreements, whether In writing or oral, with respect thereto including,
without limitation, any loan commitment from Bank to Borrower, are expressly superseded hereby. The execution of this Agreement and the other Loan Documents by Borrower was not based upon any facts 

23

 

or materials provided by Bank, nor was Borrower induced to execute this Agreement or any other Loan Document by any representation, statement or analysis by Bank. 

        10.12.    JURY TRIAL WAIVER.    TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BANK AND THE BORROWER HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. 

[SIGNATURES
COMMENCE ON NEXT PAGE] 

24

 

        IN
WITNESS THEREOF, the parties have caused this Agreement to be executed and delivered under seal by their respective officers thereunto duly authorized, as of the date first above
written. 

	 	 	VIDEO DISPLAY CORPORATION,
 a Georgia corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Ronald D. Ordway

Chief Executive Officer
	

 	
 	

 	
 	

[CORPORATE SEAL]
	

 	
 	
SOUTHWEST VACUUM DEVICES, INC.,
 an Arizona corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Ronald D. Ordway,

Chief Executive Officer
	

 	
 	

 	
 	

[CORPORATE SEAL]
	

 	
 	
TELTRON TECHNOLOGIES, INC.,
 a Georgia corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Ronald D. Ordway

Chief Executive Officer
	

 	
 	

 	
 	

[CORPORATE SEAL]
	

 	
 	
Z-AXIS, INC.,
 a Georgia corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Ronald D. Ordway

Chief Executive Officer
	

 	
 	

 	
 	

[CORPORATE SEAL]
	

 	
 	
MENGEL INDUSTRIES, INC.,
 a Pennsylvania corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Ronald D. Ordway

Chief Executive Officer
	

 	
 	

 	
 	

[CORPORATE SEAL]

25

 

	

 	
 	
AYDIN DISPLAYS, INC.,
 a Georgia corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Ronald D. Ordway

Chief Executive Officer
	

 	
 	

 	
 	

[CORPORATE SEAL]
	

 	
 	
LEXEL IMAGING SYSTEMS, INC.,
 a Delaware corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Ronald D. Ordway

Chief Executive Officer
	

 	
 	

 	
 	

[CORPORATE SEAL]
	

 	
 	
APEX ELECTRONICS, INC.,
 a New Jersey corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Ronald D. Ordway

Chief Executive Officer
	

 	
 	

 	
 	

[CORPORATE SEAL]
	

 	
 	
SOUTHTRUST BANK,
 an Alabama banking corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Jon R. Hauseman

Group Vice President

26

   
Schedule 5.07 

Litigation

27

 

Schedule 5.10 

ERISA
Plans 

The
Company maintains/contributes to the "                         RETIREMENT SAVINGS PLAN" 

28

 

Schedule 5.13 

Debt

Lender:

LOAN
NUMBER: 

Date: 

Due: 

Loan
Amount: 

29

 

Schedule 6.09 

Environmental
Liabilities 

30

 

Schedule 7.01 

Existing
Liens 

31

 

Schedule 7.04 

Existing
Leases 

32

 

Exhibits To Be Attached 

Exhibit A—Form
of Revolving Credit Note. 

Exhibit B—Borrower's
Closing Certificate. 

Exhibit C—Form
of Borrowing Base Certificate 

33

QuickLinks

Exhibit 10(l)<Page>

                                                                     EXHIBIT 4.1

                     STOCKHOLDER RIGHTS AND VOTING AGREEMENT

     This Stockholder Rights and Voting Agreement (this "Agreement"), dated as
of January 2, 2002, by and among SafeNet, Inc., a Delaware corporation (the
"Company"), and each of the parties identified on EXHIBIT A hereto
(collectively, the "Stockholders").

                                    RECITALS

     WHEREAS, the Company is a party to the Agreement and Plan of Reorganization
(the "Merger Agreement"), dated December 14, 2001, by and among the Company,
Pijnenburg Securealink, Inc., a Delaware corporation ("Pijnenburg Securealink"),
PBSL Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
the Company ("Merger Sub"), and certain other parties, pursuant to which, at
such effective time as is set forth in the Merger Agreement (the "Effective
Time"), Merger Sub will be merged with and into Pijnenburg Securealink and
Pijnenburg Securealink will become a wholly-owned subsidiary of the Company;

     WHEREAS, pursuant to the Merger Agreement, the Company agreed, among other
things, to issue up to an aggregate of 575,000 shares (the "Original Shares") of
common stock, $.01 par value per share, of the Company (the "Common Stock") to
the Stockholders as part of the consideration to be issued pursuant to the
Merger Agreement; and

     WHEREAS, it is a condition to the obligations of the Company, Merger Sub
and Pijnenburg Securealink under the Merger Agreement that this Agreement be
executed by the parties hereto, and the parties are willing to execute this
Agreement and to be bound by the provisions hereof;

     NOW, THEREFORE, in consideration of the foregoing, the agreements set forth
below, and the parties' desire to further the interests of the Company and its
present and future stockholders, the parties hereby agree with each other as
follows:

     1. CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
shall have the following respective meanings:

               (a) "Board" means the Board of Directors of the Company.

               (b) "Bylaws" means the Bylaws of the Company, as amended from
          time to time.

               (c) "Commission" means the Securities and Exchange Commission or
          any other federal agency at the time administering the Securities Act.

               (d) "Common Stock" has the meaning ascribed to it in the Recitals
          to this Agreement.

               (e) "Common Stock Outstanding" means all shares of Stock issued
          and outstanding at any time and from time to time during the term of
          this Agreement.

               (f) "Company" has the meaning ascribed to it in the introductory
          paragraph to this Agreement.

               (g) "Company Indemnitees" has the meaning ascribed to it in
          Section 2.6(b).

               (h) "Corporate Developments" has the meaning ascribed to it in
          Section 2.1(c).

               (i) "Delaware Law" means the Delaware General Corporation Law and
          all amendments and additions thereto.

               (j) "Effective Time" has the meaning ascribed to it in the
          Recitals to this Agreement.

               (k) "Election Meeting" means any annual or special meeting of the
          holders of the Common Stock Outstanding at which either (i) all
          members of the Board are to be elected, or (ii) a member of the Board
          is to be elected to fill the vacancy resulting from the death,
          resignation or removal of a Stockholder Designee as a member of the
          Board.

               (l) "Exchange Act" means the Securities Exchange Act of 1934, as
          amended, and the rules and regulations of the Commission thereunder.

               (m) "Deferral Notice" has the meaning ascribed to it in Section
          2.2(d).

               (n) "Holders" means the Stockholders and any Permitted
          Transferees.

               (o) "Holder Indemnitees" has the meaning ascribed to it in
          Section 2.6(a).

                                       17

<Page>

               (p) "Indemnitees" has the meaning ascribed to it in Section
          2.6(c).

               (q) "Majority Stockholders" shall mean the Stockholder(s) (and
          Permitted Transferees) holding at least a majority of the Shares.

               (r) "Material Event" has the meaning ascribed to it in Section
          2.2(d).

               (s) "Merger Agreement" has the meaning ascribed to it in the
          Recitals to this Agreement.

               (t) "Merger Sub" has the meaning ascribed to it in the Recitals
          to this Agreement.

               (u) "Original Shares" has the meaning ascribed to it in the
          Recitals to this Agreement.

               (w) "Person" means a corporation, an association, a partnership,
          an organization, a business, an individual, a governmental or
          political subdivision thereof or a governmental agency.

               (x) "Permitted Transferee" has the meaning ascribed to it in
          Section 8.

               (y) "Pijnenburg Securealink" has the meaning ascribed to it in
          the Recitals to this Agreement.

               (z) "Proxy" has the meaning ascribed to it in Section 4.2.

               (aa) "Registrable Securities" means the Original Shares and
          shares of Common Stock issuable upon conversion of the 5% Subordinated
          Convertible Notes to be issued as part of the consideration pursuant
          to the Merger Agreement ("Conversion Shares") and any Common Stock
          issued or issuable with respect to any Original Shares or Conversion
          Shares by way of stock dividend or stock split or in connection with a
          combination of shares, recapitalization, merger, consolidation or
          other reorganization or otherwise. As to any particular Registrable
          Securities, once issued such securities shall cease to be Registrable
          Securities when (i) any registration statement with respect to the
          sale of such securities shall have become effective under the
          Securities Act, (ii) they shall have become eligible for sale to the
          public pursuant to Rule 144 (or any successor provision) under the
          Securities Act, (iii) they shall have been sold or otherwise
          transferred to any Person other than a Permitted Transferee, or (iv)
          they shall have ceased to be outstanding.

               (bb) "Registration Request" has the meaning ascribed to it in
          Section 2.1(a).

               (cc) "Registration Statement" has the meaning ascribed to it in
          Section 2.1(b).

               (dd) "Rule 144" has the meaning ascribed to it in Section 2.7.

               (ee) "Securities Act" means the Securities Act of 1933, as
          amended, and the rules and regulations of the Commission thereunder.

               (ff) "Shares" means and include all Original Shares and shares of
          Stock issuable to a Stockholder upon conversion of the convertible
          promissory notes issued to the Stockholders pursuant to Section 1.13
          of the Merger Agreement.

               (gg) "Stock" shall mean and include all shares of Common Stock
          and all other securities of the Company which may be issued in
          exchange for or in respect of shares of Common Stock (whether by way
          of stock split, stock dividend, combination, reclassification,
          reorganization, or any other means).

               (hh) "Stockholders" has the meaning ascribed to it in the
          introductory paragraph to this Agreement.

               (ii) "Stockholder Designee" means an individual designated by the
          Majority Stockholders in a written notice delivered to the Company to
          stand for election to the Board at an Election Meeting in accordance
          with Article 3, or, if permitted by the Bylaws and Delaware Law, to be
          appointed by the Board to fill a vacancy in accordance with Section
          3.2.

               (jj) "Violation" means, with respect to the Registration
          Statement:

                    (A) any untrue statement or alleged untrue statement of a
               material fact contained in the Registration Statement, including
               any preliminary prospectus or final prospectus contained therein
               or any amendments or supplements thereto;

                    (B) the omission or alleged omission to state therein a
               material fact required to be stated therein or necessary to make
               the statements therein, in light of the circumstances in which
               they were made, not misleading; or

                    (C) any violation or alleged violation by the Company of the
               Securities Act, the Exchange Act, any

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               state securities law or any rule or regulation promulgated under
               the Securities Act, the Exchange Act or any state securities law
               in connection with any matter relating to the Registration
               Statement.

     2. REGISTRATION UNDER SECURITIES ACT, ETC.

          2.1 SHELF REGISTRATION.

               (a) Subject to Section 2.1(c), at any time after March 31, 2002,
          Holders holding in the aggregate at least a majority of the
          Registrable Securities may request, in writing (the "Registration
          Request"), that the Company effect the registration of all of the
          Registrable Securities then outstanding. If the Holders initiating the
          registration intend to distribute the Registrable Securities by means
          of an underwriting, they shall so advise the Company in the
          Registration Request. Upon receipt of the Registration Request, the
          Company shall promptly give written notice of the requested
          registration to all of the Holders. In the event the registration is
          to be underwritten, the right of any Holder to participate shall be
          conditioned on such Holder's participation in such underwriting.

               (b) Upon receipt of a Registration Request, the Company shall
          file with the Commission, promptly but not later than thirty (30) days
          after the date the Registration Request is delivered to the Company, a
          registration statement (the "Registration Statement") on Form S-3 (or
          a successor form) covering the resale to the public by the Holders of
          the Registrable Securities. Except as otherwise expressly provided
          herein, the Company shall use commercially reasonable efforts to cause
          the Registration Statement to be declared effective and shall keep the
          Registration Statement continuously effective under the Securities Act
          until the earlier of (i) two (2) years from the date of the Effective
          Time, or (ii) such date that all of the Registrable Securities
          registered thereunder have been sold.

               (c) Notwithstanding the provisions of this Section 2.1, the
          Company's obligations to file the Registration Statement or cause such
          Registration Statement to become effective shall be suspended for such
          period as the Company deems reasonably necessary if during the time
          period at or after the Registration Request is delivered and prior to
          the Registration Statement being declared effective there is the
          occurrence or existence of any event, fact or pending corporate
          development (a "Corporate Development") that, in the good faith
          determination of the Board, makes it appropriate to suspend the
          Company's obligations to file the Registration Statement and cause it
          to become effective.

          2.2 REGISTRATION PROCEDURES. If and whenever the Company is required
     to use commercially reasonable efforts to effect the registration of the
     Registrable Securities under the Securities Act as provided herein, the
     Company shall:

               (a) prepare and file with the Commission an appropriate form of
          the Registration Statement and such amendments and supplements to the
          Registration Statement and the prospectus used in connection with the
          Registration Statement, and use commercially reasonable efforts to
          cause the Registration Statement, and each such amendment and
          supplement, to become and remain effective, as may be necessary to
          comply with the provisions of the Securities Act with respect to the
          disposition of all securities covered by the Registration Statement;

               (b) furnish to the Holders of Registrable Securities covered by
          the Registration Statement such reasonable number of copies of the
          prospectus, including the preliminary prospectus, Registration
          Statement, and any amendments (in each case, including all exhibits)
          in conformity with the requirements of the Securities Act, and such
          other documents as they may reasonably request in order to facilitate
          the disposition of Registrable Securities owned by them;

               (c) use commercially reasonable efforts to register or qualify
          the securities covered by the Registration Statement under such other
          securities or blue sky laws of such states and jurisdictions as shall
          be reasonably requested by the Holders, to cause all Registrable
          Securities to be registered with or approved by such other
          governmental agencies or authorities as may be necessary to enable the
          Holders to consummate the disposition of such Registrable Securities,
          to keep such registrations or qualifications in effect for so long as
          the Registration Statement remains in effect and do any and all other
          acts and things that may be necessary to enable the Holders to
          consummate in such states the public sale or other disposition of the
          Registrable Securities owned by the Holders, including the removal of
          legends from certificates registered pursuant to the Registration
          Statement (and to the end of removing the legend from certificates, if
          the Company is required to do so by the Company's transfer agent and
          the facts underlying the sale are made available to the Company's
          counsel by way of representations reasonably acceptable to such
          counsel, the Company shall deliver to its transfer agent an opinion of
          counsel in form and substance reasonably acceptable to the transfer
          agent and reasonably capable of being given by such counsel (with a
          copy to such Holder)); except that the Company shall not be required
          in connection therewith or as a condition thereto to qualify to do
          business or file a general consent to service of process in any such
          state or jurisdiction;

               (d) notify each Holder covered by the Registration Statement, at
          any time when a prospectus relating thereto covered by such
          Registration Statement is required to be delivered under the
          Securities Act, of (i) the issuance by the Commission of a stop order
          suspending the effectiveness of the Registration Statement or the
          initiation of proceedings with respect to the Registration Statement
          under Section 8(d) or 8(e) of the Securities Act, (ii) the occurrence
          of any event or the existence of any fact (a "Material Event") as a
          result of which the Registration Statement shall contain any untrue
          statement of a material fact or omit to state any material fact
          required to be stated therein or necessary to make the statements
          therein not misleading, or any prospectus shall contain any untrue
          statement of a material fact or omit to state any material fact
          required to be stated therein or necessary to make the statements
          therein, in the light of the circumstances under which they were made,
          not misleading, or (iii) the occurrence or existence of a Corporate
          Development that, in the good faith determination of the Board, makes
          it appropriate to suspend the availability of the Registration
          Statement and the related prospectus. Upon the occurrence of any of
          clause (i), (ii), or (iii) above, then

                                       19
<Page>

          the Company shall as promptly as practicable (A) in the case of clause
          (ii) above, subject to the next sentence, prepare and file a
          post-effective amendment to the Registration Statement or a supplement
          to the related prospectus or any document incorporated therein by
          reference or file any other required document that would be
          incorporated by reference into such Registration Statement and
          prospectus so that the Registration Statement does not contain any
          untrue statement of a material fact or omit to state any material fact
          required to be stated therein or necessary to make the statements
          therein not misleading, and such prospectus does not contain any
          untrue statement of a material fact or omit to state any material fact
          required to be stated therein or necessary to make the statements
          therein, in the light of the circumstances under which they were made,
          not misleading, as thereafter delivered to the purchasers of the
          Registrable Securities being sold thereunder, and, in the case of a
          post-effective amendment to the Registration Statement, subject to the
          next sentence, use all reasonable efforts to cause it to be declared
          effective as promptly as is reasonably practicable, and (B) give
          notice to the Holder of any Registrable Securities that the
          availability of the Registration Statement is suspended (a "Deferral
          Notice") and, upon receipt of any Deferral Notice, each Holder shall
          cease making offers and sales of any Registrable Securities pursuant
          to the Registration Statement and the prospectus until such Holder's
          receipt of copies of the supplemented or amended Registration
          Statement and prospectus provided for in clause (A) above, or until it
          is advised in writing by the Company that the Registration Statement
          and prospectus may be used, and has received copies of any additional
          or supplemental filings that are incorporated or deemed incorporated
          by reference in the Registration Statement and prospectus. The Company
          will use all reasonable efforts to ensure that offers and sales of
          Registrable Securities under the Registration Statement and prospectus
          may be resumed (x) in the case of clause (i) above, as promptly as is
          practicable, (y) in the case of clause (ii) above, as soon as, in the
          good faith determination of the Board, public disclosure of such
          Material Event would not be prejudicial to or contrary to the
          interests of the Company or, if necessary to avoid unreasonable burden
          or expense, as soon as reasonably practicable thereafter and (z) in
          the case of clause (iii) above, as soon as, in the good faith
          determination of the Board, such suspension is no longer appropriate;

               (e) promptly apply for listing and list the Registrable
          Securities being registered on any national securities exchange on
          which a class of the Company's equity securities is listed; and

               (f) promptly notify the Holders: (a) when the Registration
          Statement, the prospectus or any prospectus supplement related thereto
          or post-effective amendment to the Registration Statement has been
          filed, and, with respect to the Registration Statement or any
          post-effective amendment thereto, when the same has become effective;
          (b) of any request by the Commission for amendments or supplements to
          the Registration Statement or any prospectus or for additional
          information; (c) of the issuance by the Commission of any stop order
          suspending the effectiveness of the Registration Statement or the
          initiation of any proceedings by any Person for that purpose; and (d)
          of the receipt by the Company of any notification with respect to the
          suspension of the qualification of any Registrable Securities for sale
          under the securities or blue sky laws of any jurisdiction or the
          initiation or threat of any proceeding for such purpose.

          2.3 PREPARATION; REASONABLE INVESTIGATION. The Company will not file
     the Registration Statement or amendment thereto or any prospectus or any
     supplement thereto (including such documents incorporated by reference and
     proposed to be filed after the initial filing of the Registration
     Statement) to which Holders of at least a majority of the Registrable
     Securities shall reasonably object, provided that the Company, after
     allowing the Holders an opportunity to review such filing pursuant to this
     Section 2.3, may file such document in a form required by law or upon the
     written advice of its counsel. Subject to the foregoing sentence, in
     connection with the preparation and filing of the Registration Statement
     under the Securities Act pursuant to this Agreement, the Company will give
     the Holders, their underwriters, if any, and their respective counsel and
     accountants, the opportunity to participate (by delivery of written
     comments to the Company) in the preparation of the Registration Statement,
     each prospectus included therein or filed with the Commission, and each
     amendment thereof or supplement thereto.

          2.4 REQUIREMENTS OF HOLDERS.

               (a) It shall be a condition precedent to the obligations of the
          Company to take any action pursuant to this Article 2 in respect of
          the Registrable Securities of any selling Holder that such selling
          Holder shall furnish to the Company such information regarding itself,
          the Registrable Securities held by it, and the intended method of
          disposition of such Registrable Securities as shall be required to
          effect the registration of such Registrable Securities. To the extent
          a Holder fails to provide such information in a timely manner, and if
          the Company determines it appropriate, the Company may either (i)
          delay the filing of the Registration Statement until the Holder
          provides such information, or (ii) upon the written request of Holders
          holding a majority of the Registrable Securities, exclude the
          Registrable Securities held by such Holder from registration under the
          Registration Statement.

               (b) No Holder shall distribute any prospectus or make any offer
          to sell (or solicit any offer to purchase) or sell any Registrable
          Securities in a transaction covered by the Registration Statement and
          any prospectus thereunder from and after the time that the Company
          delivers a Deferral Notice to such Holder until such time as such
          Holder may resume offers and sales of Registrable Securities under
          Section 2.2(d).

               (c) During any calendar month in which the Registration Statement
          is effective, no Holder shall offer to sell or sell any Registrable
          Securities in excess of the amount equal to one percent (1%) of the
          aggregate number shares of Common Stock of the Company outstanding, as
          disclosed in the most recent annual or quarterly report filed by the
          Company with the Commission under the Exchange Act prior to such
          month.

               (d) Each Holder shall comply with the prospectus delivery
          requirements of the Securities Act in connection with offers to sell,
          solicitations of offers to purchase, and sales of Registrable
          Securities in connection with any offer or sale pursuant to the
          Registration Statement.

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<Page>

          2.5 EXPENSES OF REGISTRATION. The Holders shall bear all expenses
     incurred in connection with the registration, filing or qualification of
     Registrable Securities pursuant to this Agreement, including but not
     limited to all registration, filing and qualification fees, exchange
     listing fees, state securities law fees and expenses, printing and
     accounting fees, underwriting discounts and commissions, fees and
     disbursements of counsel for the Company, and fees and disbursements of
     counsel for the Holders.

          2.6 INDEMNIFICATION.

               (a) The Company shall indemnify and hold harmless each selling
          Holder, the officers, directors, partners, agents and employees of
          each selling Holder, any underwriter (as defined in the Securities
          Act) for such Holder and each Person, if any, who controls such
          selling Holder or underwriter within the meaning of the Securities Act
          or the Exchange Act and their agents (collectively, the "Holder
          Indemnitees"), against any losses, claims, damages or liabilities
          (joint or several) to which they may become subject under the
          Securities Act, the Exchange Act or any other federal or state law,
          insofar as such losses, claims, damages or liabilities (or actions in
          respect thereof) arise out of or are based upon any Violation. The
          indemnity agreement contained in this Section 2.6(a) shall not apply
          to amounts paid in settlement of any loss, claim, damage, liability or
          action if such settlement is effected without the consent of the
          Company, nor shall the Company be liable to any Holder Indemnitee in
          any such case for any such loss, claim, damage, liability or action
          (i) to the extent that it arises out of or is based upon a Violation
          which occurs in reliance upon and in conformity with written
          information furnished by any Holder; or (ii) in the case of a sale
          directly by a Holder (including a sale of such Registrable Securities
          through any underwriter retained by such Holder engaging in a
          distribution solely on behalf of such Holder), that results from an
          untrue statement or alleged untrue statement or omission or alleged
          omission that was contained in a preliminary prospectus and corrected
          in a final or amended prospectus, and such Holder failed to deliver a
          copy of the final or amended prospectus at or prior to the
          confirmation of the sale of the Registrable Securities to the Person
          asserting any such loss, claim, damage or liability in any case in
          which such delivery is required by the Securities Act.

               (b) Each Holder shall indemnify and hold harmless the Company,
          each of its directors, each of its officers who has signed the
          Registration Statement, each Person, if any, who controls the Company
          within the meaning of the Securities Act or the Exchange Act, each
          agent and any underwriter for the Company, and any other selling
          Holder or other stockholder selling securities in such Registration
          Statement or any of its directors, officers, partners, agents or
          employees or any Person who controls such selling Holder or such other
          stockholder or such underwriter (collectively, the "Company
          Indemnitees") against any losses, claims, damages or liabilities
          (joint or several) to which any Company Indemnitee may become subject
          under the Securities Act, the Exchange Act or other federal or state
          law, insofar as such losses, claims, damages or liabilities (or
          actions in respect thereto) arise out of or are based upon any
          Violation, in each case to the extent (and only to the extent) that
          such Violation occurs in reliance upon and in conformity with written
          information furnished by or on behalf of such selling Holder expressly
          for use in connection with such registration; provided, however, that
          the indemnity agreement contained in this Section 2.6(b) shall not
          apply to amounts paid in settlement of any such loss, claim, damage,
          liability or action if such settlement is effected without the consent
          of such selling Holder nor, in the case of a sale directly by the
          Company of its securities (including a sale of such securities through
          any underwriter retained by the Company to engage in a distribution
          solely on behalf of the Company), shall such selling Holder be liable
          to the Company in any case in which such untrue statement or alleged
          untrue statement or omission or alleged omission was contained in a
          preliminary prospectus and corrected in a final or amended prospectus,
          and the Company failed to deliver a copy of the final or amended
          prospectus at or prior to the confirmation of the sale of the
          securities to the Person asserting any such loss, claim, damage or
          liability in any case in which such delivery is required by the
          Securities Act.

               (c) Promptly after receipt by any Company Indemnitee or Holder
          Indemnitee (collectively, the "Indemnitees") under this Section 2.6 of
          notice of the commencement of any action (including any governmental
          action), such Indemnitee will, if a claim in respect thereof is to be
          made against any indemnifying party under this Section 2.6, deliver to
          the indemnifying party a written notice of the commencement thereof
          and the indemnifying party shall have the right to participate in,
          and, to the extent the indemnifying party so desires, jointly with any
          other indemnifying party similarly noticed, to assume and control the
          defense thereof with counsel mutually satisfactory to the parties;
          provided, however, that such Indemnitee shall have the right to retain
          its own counsel, with the fees and expenses to be paid by the
          indemnifying party, if representation of such Indemnitee by the
          counsel retained by the indemnifying party would be inappropriate due
          to actual or potential differing interests, as reasonably determined
          by either party, between such Indemnitee and any other party
          represented by such counsel in such proceeding. In no event shall the
          Indemnitees be entitled to more than one firm of counsel at the
          expense of the indemnifying party. The failure to deliver written
          notice to the indemnifying party within a reasonable time of the
          commencement of any such action, if materially prejudicial to its
          ability to defend such action, shall relieve such indemnifying party
          of any liability to the Indemnitee under this Section 2.6 to the
          extent of such prejudice, but the omission to so deliver written
          notice to the indemnifying party will not relieve it of any liability
          that it may have to such Indemnitee otherwise than under this Section
          2.6.

               (d) The obligations of the Company and the Holders under this
          Section 2.6 shall survive the completion of any offering of
          Registrable Securities in a Registration Statement whether under this
          Article 2 or otherwise.

               (e) If the indemnification provided for in this Section 2.6 is
          unavailable to a party that would have been an Indemnitee under this
          Section 2.6 in respect of any losses, claims, damages or liabilities
          (or actions or proceedings in respect thereof) referred to herein,
          then each party that would have been an indemnifying party hereunder
          shall, in lieu of indemnifying such Indemnitee, contribute to the
          amount paid or payable by such Indemnitee as a result of such losses,
          claims, damages or liabilities (or actions or proceedings in respect

                                       21
<Page>

          thereof) in such proportion as is appropriate to reflect the relative
          fault of such indemnifying party, on the one hand, and such
          Indemnitee, on the other hand, in connection with the statements or
          omissions which resulted in such losses, claims, damages or
          liabilities (or actions or proceedings in respect thereof). The
          relative fault shall be determined by reference to, among other
          things, whether the Violation relates to information supplied by such
          indemnifying party or such Indemnitee and the parties' relative
          intent, knowledge, access to information and opportunity to correct or
          prevent such Violation. The parties agree that it would not be just
          and equitable if contribution pursuant to this Section 2.6(e) were
          determined by pro rata allocation or by any other method of allocation
          which does not take account of the equitable considerations referred
          to in the preceding sentence. The amount paid or payable by a
          contributing party as a result of the losses, claims, damages or
          liabilities (or actions or proceedings in respect thereof) referred to
          above in this Section 2.6(e) shall include any legal or other expenses
          reasonably incurred by such Indemnitee in connection with
          investigating or defending any such action or claim. No Person guilty
          of fraudulent misrepresentation (within the meaning of Section 11(f)
          of the Securities Act) shall be entitled to contribution from any
          Person who was not guilty of such fraudulent misrepresentation.

          2.7 REPORTS UNDER THE EXCHANGE ACT. With a view to making available to
     the Holders the benefits of Rule 144 promulgated under the Securities Act
     ("Rule 144") and any other rule or regulation of the Commission that may at
     any time permit a Holder to sell securities of the Company to the public
     without registration, the Company agrees to:

               (a) use commercially reasonable efforts to make and keep public
          information available, as those terms are understood and defined in
          Rule 144, at all times;

               (b) use commercially reasonable efforts to file with the
          Commission in a timely manner all reports and other documents required
          of the Company under the Securities Act and the Exchange Act; and

               (c) furnish to any Holder upon request (i) a written statement by
          the Company as to its compliance with the reporting requirements of
          Rule 144 and of the Securities Act and the Exchange Act (at any time
          after it has become subject to such reporting requirements), (ii) a
          copy of the most recent annual or quarterly report of the Company
          filed with the Commission under the Exchange Act, and (iii) such other
          reports and documents of the Company as such Holder may reasonably
          request to avail itself of any similar rule or regulation of the
          Commission allowing it to sell any such securities without
          registration.

     3. STOCKHOLDER DESIGNEE.

          3.1 NOMINATION OF STOCKHOLDER DESIGNEE. At each Election Meeting held
     after the Effective Time and prior to the termination of this Article 3
     pursuant to Section 3.3, the Company and the Board, subject to applicable
     fiduciary duties, shall take any and all actions necessary to nominate the
     Stockholder Designee for election by the holders of the Common Stock
     Outstanding to serve as a member of the Board until the next Election
     Meeting, and until his successor is elected and qualified, or until his
     prior death, resignation or removal.

          3.2 DEATH, RESIGNATION, REMOVAL. Any Stockholder Designee that is
     elected by the holders of the Common Stock Outstanding (or appointed by the
     Board pursuant to this Section 3.2) to serve as a member of the Board may
     resign or be removed as a member of the Board as provided in the Bylaws or
     under Delaware Law. If a Stockholder Designee serving as a member of the
     Board dies or resigns or is removed as a member of the Board, and the Board
     is permitted under the Bylaws and Delaware Law to appoint an individual to
     fill the vacancy resulting from such death, resignation or removal, then
     promptly after the Majority Stockholders deliver a notice designating a
     replacement Stockholder Designee, the Board shall appoint such replacement
     Stockholder Designee to fill such vacancy. If a Stockholder Designee
     serving as a member of the Board dies or resigns or is removed as a member
     of the Board, and the Board is not permitted under the Bylaws and Delaware
     Law to appoint an individual to fill the vacancy resulting from such death,
     resignation or removal, then the Company and the Board shall take any and
     all actions necessary to nominate a replacement Stockholder Designee to be
     elected by the holders of the Common Stock Outstanding to fill such vacancy
     at the next Election Meeting thereafter.

          3.3 TERMINATION. This Article 3 shall terminate and be of no further
     force and effect immediately upon to the earliest to occur of:

               (a) the mutual agreement of the Company and the Majority
          Stockholders, or

               (b) such time as the aggregate number of Shares held by the
          Stockholders (and any Permitted Transferees) is less than the number
          equal to five percent (5%) of the Common Stock Outstanding.

          3.4 SPECIFIC ENFORCEMENT. The Company expressly agrees that the
     Stockholders (and any Permitted Transferees) will be irreparably damaged if
     this Article 3 is not specifically enforced. Upon a breach or threatened
     breach of the terms, covenants and/or conditions of this Agreement by the
     Company, then the Stockholders (and any Permitted Transferees) shall, in
     addition to all other remedies, be entitled to seek a temporary or
     permanent injunction, without showing any actual damage, and/or a decree
     for specific performance, in accordance with the provisions hereof.

                                       22
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     4. VOTING AGREEMENT.

          4.1 VOTING AGREEMENT. Each Stockholder agrees that at all times after
     the Effective Time and prior to the termination of this Article 4 pursuant
     to Section 4.3, with regard to any matter submitted for consideration of
     the stockholders of the Company, such Stockholders shall vote all Shares
     held by it in accordance with the instructions given by the Board. Any
     instructions given by the Board pursuant to this Section 4.1 shall be given
     only upon the vote or consent of at least a majority of the members of the
     Board. The voting of Shares pursuant to this Article 4 may be effected in
     person, by proxy, by written consent or in any other manner permitted by
     applicable law.

          4.2 PROXY. In connection with the execution and delivery of this
     Agreement, each Stockholder hereby agrees to execute and deliver to the
     Company a proxy coupled with an interest in the form attached hereto as
     EXHIBIT B (the "Proxy").

          4.3 TERMINATION. This Article 4 shall terminate and be of no further
     force and effect immediately upon to the earliest to occur of:

               (a) the mutual agreement of the Company and the Majority
          Stockholders, or

               (b) such time as the aggregate number of Shares held by the
          Stockholders (and any Permitted Transferees) is less than the number
          equal to five percent (5%) of the Common Stock Outstanding.

          4.4 SPECIFIC ENFORCEMENT. The Stockholders expressly agree that the
     Company will be irreparably damaged if this Article 4 is not specifically
     enforced. Upon a breach or threatened breach of the terms, covenants and/or
     conditions of this Agreement by any Stockholder (or any Permitted
     Transferee), then the Company shall, in addition to all other remedies, be
     entitled to seek a temporary or permanent injunction, without showing any
     actual damage, and/or a decree for specific performance, in accordance with
     the provisions hereof.

     5. LEGEND. Each certificate evidencing any of the Shares shall bear a
legend substantially as follows:

     "The shares represented by this certificate are subject to certain
     restrictions on voting set forth in that certain Stockholder Rights and
     Voting Agreement, a copy of which the Company will furnish to the holder of
     this certificate upon request and without charge."

     6. NOTICES. Except as otherwise provided in this Agreement, all notices,
requests and other communications that are required or otherwise delivered
hereunder shall be in writing and shall be given (a) in the case of the Company,
addressed to the Company at 8029 Corporate Drive, Baltimore, Maryland 21236,
facsimile: (410) 931-2229, attn: Chief Executive Officer; or (b) in the case of
a Stockholder, at the address set forth for such Stockholder on EXHIBIT A hereto
or at such other address as such Stockholder shall have furnished to the Company
in writing (or in the case of any Permitted Transferee, at the address that such
Permitted Transferee shall have furnished to the Company in writing). Each such
notice, request or other communication shall be sufficiently given if in writing
and delivered in person, transmitted by facsimile transmission (fax) or sent by
registered or certified mail (return receipt requested) or recognized overnight
delivery service postage pre-paid. A notice or communication will be effective
(i) if delivered in person or by overnight delivery, on the business day it is
delivered, (ii) if transmitted by fax, on the business day of actual confirmed
receipt by the addressee thereof, and (iii) if sent by registered or certified
mail, three (3) business days after dispatch.

     7. COURSE OF DEALING; AMENDMENTS, WAIVERS AND CONSENTS. No course of
dealing between the parties shall operate as a waiver of any party's rights
under this Agreement. Each party acknowledges that if any party, without being
required to do so by this Agreement, gives any notice or information to, or
obtains any consent from, the other party, such party shall not by implication
have amended, waived or modified any provision of this Agreement, or created any
duty to give any such notice or information or to obtain any such consent on any
future occasion. No delay or omission on the part of any party in exercising any
right under this Agreement shall operate as a waiver of such right or any other
right hereunder or thereunder. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.
No amendment, waiver or consent with respect to this Agreement shall be binding
unless it is in writing and signed by each of the Company and the Majority
Stockholders.

     8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and each of their respective
successors and assigns; PROVIDED, HOWEVER, that the rights of any Stockholder
under this Agreement shall not inure to the benefit of and be enforceable by any
successor or assignee of such Stockholder other than any successor or assignee
that is controlled by, under common control with, or controls such Stockholder
or who is a member of the immediate family of such Stockholder (a "Permitted
Transferee"), PROVIDED, HOWEVER, that any such Permitted Transferee agrees in
writing to be bound by the provisions of this Agreement to which the
Stockholders are subject and executes and delivers the Proxy.

     9. DESCRIPTIVE HEADINGS. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.

                                       23
<Page>

     10. GOVERNING LAW, SUBMISSION TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
as applied to contracts entered into by Delaware residents and performed
entirely in Delaware, without giving effect to its principles or rules regarding
conflicts of laws, other than such principles directing application of the laws
of Delaware. Each party hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement or for recognition and enforcement of
any judgment in respect hereof brought by another party hereto or its successors
or assigns shall be brought and determined only by either a state court or
federal court sitting in the State of Maryland and each party hereto hereby
irrevocably submits with regard to any such action or proceeding for itself and
in respect to its property, generally and unconditionally, to the nonexclusive
jurisdiction of the aforesaid courts. Each party hereto hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense, counter claim
or otherwise, in any action or proceeding with respect to this Agreement, (a)
any claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to serve process in
accordance with this Section 10, (b) that it or its property is exempt or immune
from jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.

     11. WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING ARISING HEREFROM,
THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR THEIR SUCCESSORS
IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.

     12. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

     13. ENTIRE AGREEMENT. This Agreement and the Proxy embody the entire
agreement and understanding between the Company and each other party hereto
relating to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.

     14. SEVERABILITY. If any provision of this Agreement, or the application of
such provisions to any party or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to the parties
or circumstances other than those to which it is held invalid, shall not be
affected thereby.

                         [Signatures on Following Page]

                                       24
<Page>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.

COMPANY:

SAFENET, INC.

By:      /S/ ANTHONY A. CAPUTO
         ----------------------
Name:                                    Anthony A. Caputo
Title:                                    CEO

                                  STOCKHOLDERS:

PIJNENBURG BEHEER,  N.V.

By:      /S/ COR PIJNENBURG
         -------------------
Name:                                    Cor Pijnenburg
Title:                                    President

          /S/ CEES JAN KOOMEN
          --------------------
Name:     Cees Jan Koomen

                                       25
<Page>

                                    EXHIBIT A
                                  STOCKHOLDERS

Pijnenburg Beheer, N.V.
P.O. Box 330
5260 AH Vught, The Netherlands
attn:  Cor Pijnenburg
fax:  31 73 684 8400

Cees Jan Koomen
20 S. Santa Cruze Ave., 308
Los Gatos, California  94030
fax:  (408) 354-9159

                                      II-1

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