F.                                       The Debtors have requested that the Lender continue to make revolving loans and advances to the Debtors, and increase the maximum aggregate principal amount of the revolving loans available to the Debtors (subject to the terms and provisions of this Agreement and the other Financing Documents) from $11,000,000 to $19,000,000, notwithstanding the filing of the Chapter 11 Case.  The Lender is willing to provide such financing on the terms and conditions set forth in this Agreement, including, without limitation, a condition that the Bankruptcy Court approve this Agreement on an interim basis by entering the Interim Financing Order (as defined herein).

 

G.                                      In order to induce the Lender to make such post-petition loans and advances to the Debtors, the Debtors desire to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Debtors, jointly and severally, and the Lender mutually covenant, warrant and agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1                                       Additional Definitions.

 

As used in this Agreement, the terms defined in the Preamble and Recitals hereto shall have the respective meanings specified therein, capitalized terms not otherwise defined in this Agreement shall have the meaning set forth or provided for in the Financing Agreement and the other Financing Documents and the following terms shall have the respective meanings given to them below (and any defined terms similar to those set forth below) and shall be deemed and are hereby amended to include, in addition and not in limitation, each of the following, definitions:

 

“ Additional Real Estate Collateral ” means the real estate and improvements located in Frederick County, Maryland to be secured pursuant to the Deed of Trust (defined below), including, without limitation, all products and cash and non-cash proceeds thereof.

 

“ Bankruptcy Code ” means Title 11 of the United States Code, as the same has been or may hereafter be amended, recodified, modified or supplemented, together with all, rules, regulations and interpretations thereunder or related thereto.

 

“ Bankruptcy Court ” means the United States Bankruptcy Court for the District of Maryland (Greenbelt Division).

 

“ Budget ” means that certain weekly cash budget, consolidated cash flow projections, Borrowing Base (as defined in the Financing Agreement) projections and Bridge Amount (as defined in the Financing Agreement) projections and other financial information respecting the Debtors that was provided to the Lender in connection with this Agreement, the summary page of which is attached to and incorporated into the Financing Order, as now exists or may hereafter be amended (including, without limitation, amended to include adjustments for Additional Material Contracts (defined herein) and amended to include adjustments for Signature

 

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TVI Operational Events that, in each case, do not extend the period covered by the Budget), modified, supplemented, extended, renewed, restated or replaced with Lender’s express prior written consent, which may be given or withheld in the Lender’s sole and absolute discretion.  Without limiting the foregoing, and for purposes of clarification, the term “Budget” shall include the Existing Budget and the New Budget (as each is defined herein), as the same may be in effect from time to time.

 

“ Chapter 11 Case ” means the collective reference to each of (a) the TVI Chapter 11 Case, (b) the Capa Chapter 11 Case, (c) the Safety Tech Chapter 11 Case and (d) the Signature TVI Chapter 11 Case.

 

“ Collateral ” means, collectively, the Pre-Petition Collateral and the Post-Petition Collateral.

 

“ Deed of Trust ” means that certain Deed of Trust, Assignment and Security Agreement dated as of January 23, 2009 from Safety Tech, as Grantor, to the trustee or trustees named therein for the benefit of the Lender and to be recorded among the Land Records of Frederick County, Maryland, as the same may be amended, modified, supplemented, extended, renewed, restated or replaced.

 

“ Final Financing Order ” means a final, non-appealable order of the Bankruptcy Court consistent with this Agreement and the Interim Financing Order, with only such other provisions that the Lender expressly deems to be acceptable in the exercise of its sole and absolute discretion prior to the effectiveness thereof.

 

“ Financing Agreement ” means that certain Amended and Restated Financing and Security Agreement dated as of February 22, 2008 by and among the Debtors, jointly and severally, and the Lender, as amended by (a) that certain First Amendment to Amended and Restated Financing and Security Agreement dated as of July 3, 2008, (b) the Forbearance Agreement, (c) that certain Acknowledgment and Agreement dated as of January 30, 2009 and (d) this Agreement, as all of the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

“ Financing Documents ” means, collectively, this Agreement, that certain Third Amended and Restated Revolving Credit Note dated as of even date herewith from the Debtors to the order of the Lender, that certain Second Amended and Restated Term Note dated as of even date herewith from the Debtors to the order of the Lender, the Financing Agreement, the “Financing Documents” (as that term is defined in the Financing Agreement), and any other instrument, agreement or document previously, simultaneously or hereafter executed and delivered by any Borrower, any Debtor and/or any other Person, singly or jointly with another Person or Persons, evidencing, securing, guarantying or otherwise in connection with or relating to this Agreement, the Financing Agreement, any Notes, any of the Security Documents, any of the Facilities, and/or any of the Obligations together with all supplements, agreements, notes, documents, instruments and guarantees at any time executed and/or delivered in connection therewith or related thereto, and including, but not limited to, the agreements listed on Exhibit A

 

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hereto and made a part hereof, as all of the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

“ Financing Order ” means the reference to Interim Financing Order or the Final Financing Order, as the same may be in effect from time to time.

 

“ Forbearance Agreement ” means that certain Limited Forbearance Agreement dated as of November 20, 2008 as amended, modified, supplemented, extended, renewed, restated or replaced.

 

“ Interim Financing Order ” means the order of the Bankruptcy Court approving this Agreement on an interim basis pursuant to the Federal Rules of Bankruptcy Procedure 2002, 4001, and 9014 and Sections 105, 361, 362, 363 and 364 of the Bankruptcy Code, which order shall be substantially in the form of Exhibit B attached to and made a part of this Agreement, with only those modifications that the Lender expressly deems to be acceptable in the exercise of its sole and absolute discretion prior to the effectiveness thereof.

 

“ Motor Vehicles ” means each of the Debtors’ licensed motor vehicles and trailers on which the Lender did not have a perfected, unavoidable security interest prior to the Petition Date, together with all accessions, additions, fittings, accessories, special tools, and improvements thereto and substitutions therefor and all parts and equipment which may be attached to or which are necessary or beneficial for the operation, use and/or disposition of such personal property, all licenses, warranties, franchises and general intangibles related thereto or necessary or beneficial for the operation, use and/or disposition of the same, together with all Accounts, Chattel Paper, Instruments and other consideration received by the Debtor on account of the sale, lease or other disposition of all or any part of the foregoing and all proceeds (cash and non-cash) of the foregoing.

 

“ Petition Date ” means the date of the commencement of the Chapter 11 Case.

 

“ Post-Petition Collateral ” means, collectively, all now existing or hereafter acquired property of the Debtors’ estate, wheresoever located, of any kind or nature, whether now or hereafter owned, existing, acquired or arising and wherever now or hereafter located, whether real or personal, and all cash and cash and non-cash proceeds, including, without limitation:

 

(1)                                   (a) all of the Debtors’ Accounts, Inventory, Chattel Paper, Documents, Instruments, Equipment (including, without limitation, the Motor Vehicles), Securities, and General Intangibles, whether now owned or existing or hereafter acquired or arising, (b) all returned, rejected or repossessed goods, the sale or lease of which shall have given or shall give rise to an Account or Chattel Paper, (c) all insurance policies relating to the foregoing and the right to receive refunds of unearned insurance premiums under those policies, (d) all books and records in whatever media (paper, electronic or otherwise) recorded or stored, with respect to the foregoing and all Equipment and General Intangibles necessary or beneficial to retain, access and/or process the information contained in those books and records, and (e) all cash and non-cash proceeds and products of the foregoing; and

 

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(2)                                   the Additional Real Estate Collateral; and

 

(3)                                   all present and future monies, securities, credit balances, deposits, deposit accounts and other property of the Debtors now or hereafter held or received by or in transit to the Lender or any of its affiliates or at any other depository or other institution from or for the account of the Debtors, whether for safekeeping, pledge, custody, transmission, collection or otherwise; and

 

(4)                                   all pre-petition and post-petition claims and property held by or received by, or on behalf of, the Debtors or its estate, or any trustee of the Debtors (whether in this Chapter 11 Case or in any subsequent Chapter 7 case of the Debtors) including, without limitation, all property recovered as a result of transfers or obligations avoided or actions taken under the Bankruptcy Code, as set forth in the Financing Order; and

 

(5)                                   all products and proceeds of the foregoing, in any form, including, without limitation, insurance proceeds and all claims against third parties for loss or damage to or destruction of any or all of the foregoing.

 

“ Post-Petition Obligations ” means all indebtedness, duties, obligations, and liabilities of the Debtors to the Lender arising on and after the Petition Date, whether the same is now existing or contemplated or hereafter arising, including, without limitation, those arising pursuant to, in connection with and/or on account of the provisions of this Agreement, the Financing Agreement, the Notes, each Security Document, and any of the other Financing Documents, the Loans, the Facilities, and any of the Credit Facilities including, without limitation, the principal of, and interest on, each of the Notes, late charges, the Fees, Enforcement Costs, and prepayment penalties (if any), letter of credit fees or fees charged with respect to any guaranty of any letter of credit; Post-Petition Obligations also means all future indebtedness, liabilities and obligations of the Debtors to the Lender arising on and after the Petition Date of any nature whatsoever regardless of whether such debts, obligations and liabilities be direct, indirect, primary, secondary, joint, several, joint and several, fixed or contingent; and also means any and all renewals, extensions, substitutions, increases, decreases, amendments, restatements and rearrangements of any such debts, obligations and liabilities, and all Enforcement Costs with respect thereto.

 

“ Pre-Petition Collateral ” means all “Collateral” (with the exception of the Motor Vehicles and the Additional Real Estate Collateral), as such term is defined in the Financing Agreement and all other security for the Pre-Petition Obligations as provided in the Financing Documents immediately prior to the Petition Date.

 

“ Pre-Petition Obligations ” means all indebtedness, duties, obligations, and liabilities arising before the Petition Date of the Debtors and any other Person to the Lender under, arising pursuant to, in connection with and/or on account of the provisions of the Financing Agreement, the Notes, each Security Document, and any of the other Financing Documents, the Loans, the Facilities and any of the Credit Facilities, including, without limitation, the principal of, and interest on, each of the Notes, late charges, the Fees, Enforcement Costs, and prepayment penalties (if any), letter of credit fees or fees charged with

 

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respect to any guaranty of any letter of credit; Pre-Petition Obligations also means the “Obligations” (as that term is defined in the Financing Agreement) and all other indebtedness, liabilities and obligations arising before the Petition Date of the Debtors to the Lender of any nature whatsoever regardless of whether such debts, obligations and liabilities be direct, indirect, primary, secondary, joint, several, joint and several, fixed or contingent, and all Enforcement Costs with respect thereto.

 

“ Signature TVI Operational Events ” means, collectively, any of the following, whether through one or more transactions, that in each case are approved by the Lender in the exercise of its sole and absolute discretion prior to the effectiveness thereof:  (a) the sale of all or a portion of the equity interests of Signature TVI, (b) the sale of all or a portion of the assets of Signature TVI outside of the ordinary course of business, or (c) ceasing the operations of Signature TVI in whole or in part.

 

“ Termination Date ” means the first to occur of:  (a) May 1, 2009 (or such later date that may be expressly agreed to in writing by the Lender in the exercise of its sole and absolute discretion), unless on or prior to that date, the Bankruptcy Court enters the Final Financing Order which is acceptable to the Lender in all respects in the exercise of its sole and absolute discretion; (b) June 15, 2009, unless on or prior to such date the Debtors provide the Lender with the New Budget that, without limiting any of the other provisions of this Agreement or the Financing Documents, is acceptable to the Lender in its sole and absolute discretion; (c) at the option of the Lender in the exercise of its sole and absolute discretion, the occurrence and continued existence of any Event of Default; (d) September 30, 2009, unless on or prior to that date, the Lender has expressly agreed in writing in its sole and absolute discretion to extend that date and to continue to advance funds under the Financing Documents in accordance with financing terms, budgets and such other documents and agreements acceptable to the Lender in all respects in the exercise of its sole and absolute discretion; (e) the expiration of the Debtors’ authorization to borrow from Lender pursuant to the Financing Documents, this Agreement or the Financing Order authorizing the granting of credit by Lender to the Debtors pursuant to Section 364 of the Bankruptcy Code as may hereafter be entered by the Bankruptcy Court; or (f) if the Debtors, or any one or more of the Debtors, seek the entry of any order which authorizes the sale, lease, or other disposition of property of the estate of any of the Debtors in which the Lender has a Lien, except for sales of the Debtors’ Inventory in the ordinary course of business, without the Lender’s express prior written consent.

 

Section 1.2                                       Definitions in Financing Documents.

 

(a)                                                           All references to the term “Collateral” in any of the Financing Documents or any other term referring to the security for the Pre-Petition Obligations in any of the Financing Documents shall be deemed, and each such reference is hereby amended to mean, collectively, the Pre-Petition Collateral and the Post-Petition Collateral.

 

(b)                                                          All references to the Debtors, including, without limitation, to the terms “Borrower”, “Borrowers”, “Debtor” or “Debtors” in any of the Financing Documents, shall be deemed and each such reference is hereby amended to mean and include each Person included in the term “Debtors” as defined by this Agreement, jointly and severally, unless a

 

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specific Debtor is expressly identified, and their respective successors and assigns (including any trustee or other fiduciary hereafter appointed as its legal representative or with respect to the property of the estate of such corporation whether under Chapter 11 of the Bankruptcy Code or any subsequent Chapter 7 case and its successor upon conclusion of the Chapter 11 Case of such corporation).

 

(c)                                                           All references to the term “Financing Documents” in any of the Financing Documents shall be deemed to include, and each such reference is hereby amended to include, in addition and not in limitation, this Agreement, all of the Financing Documents as ratified, assumed and adopted by the Debtors pursuant to the terms hereof, as amended and supplemented hereby, and the Financing Order, as each of the same now exists or may hereafter be amended, modified, supplemented extended, renewed, restated or replaced.

 

(d)                                                          All references to the term “Financing Agreement” in any of the Financing Documents shall be deemed to mean, and each such reference is hereby amended to mean, the Financing Agreement, as defined herein and amended hereby and ratified, assumed and adopted by the Debtors pursuant to the terms hereof and the Financing Order, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

(e)                                                           All references to the term “Obligations” in this Agreement and in any of the Financing Documents shall be deemed to mean, and each such reference in the Financing Documents is hereby amended to mean, both the Pre-Petition Obligations and the Post-Petition Obligations.

 

(f)                                                             All references to the term “Revolving Loan” in any of the Financing Documents shall be deemed to mean, and each such reference is hereby amended to mean, the Revolving Loan, as defined in the Financing Agreement and amended hereby and ratified, assumed and adopted by the Debtors pursuant to the terms hereof and the Financing Order, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, all whether the Obligations with respect thereto constitute Pre-Petition Obligations or Post-Petition Obligations.

 

Section 1.3                                       Other Provisions for Definitions.

 

(a)                                                           For purposes of this Agreement, unless otherwise defined or amended herein, including, but not limited to, those terms used and/or defined in the Preamble and Recitals hereto, all terms used herein shall have the respective meanings assigned to such terms in the Financing Agreement.

 

(b)                                                          All references to the terms “Lender”, or any other Person pursuant to the definitions in the Preamble and Recitals hereto, or otherwise, shall include its respective successor and assigns.

 

(c)                                                           All references to any term in the singular shall include the plural and all references to any term in the plural shall include the singular.

 

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(d)                                                          All terms not specifically defined herein which are defined in the Uniform Commercial Code of the State of Maryland shall have the meaning set forth therein, except that the term, “Lien” or “lien” shall have the meaning set forth in Section 101(37) of the Bankruptcy Code.

 

ARTICLE II

ACKNOWLEDGEMENT

 

Section 2.1                                       Pre-Petition Obligations.

 

The Debtors hereby acknowledge, confirm and agree that:

 

(a)                                                           The unpaid balance of the Loans as of the close of business on March 31, 2009 are, respectively, as follows:

 

Loan		Principal			Interest			Total
Revolving Loan (including, without limitation, Letter of Credit Obligations)		$	10,227,876.27		$	5,317.86		$	10,233,194.13
Term Loan		$	17,103,291.61		$	8,307.21		$	17,111,598.82

 

(b)                                                          The Pre-Petition Obligations also include unpaid fees and expenses due and owing to the Lender, including, without limitation, unpaid reasonable attorneys’ fees and expenses incurred by the Lender in connection with the Forbearance Agreement and related Financing Documents, the collection and enforcement of the Pre-Petition Obligations, to the extent the same are permitted by the of the Financing Documents and/or applicable Laws.  Without limiting the foregoing, (i) the Debtors hereby authorize the Lender to pay Lender’s reasonable counsel’s fees and expenses as part of the Pre-Petition Obligations by debit to the Revolving Loan in the manner provided by Section 2.1.2 (Procedure for Making Advances Under the Revolving Loan; Lender Protection Advances) of the Financing Agreement and (ii) the Debtors hereby acknowledge, confirm and agree that the Debtors shall pay (whether by debit to the Revolving Loan or otherwise) all such fees and expenses upon demand, whether or not such fees and expenses are included in, or otherwise made a part of, the Budget.

 

(c)                                                           Subject to the effect of the Financing Order, each of the Debtors agrees that there does not exist (or to the extent that there does exist, each of the Debtors hereby irrevocably waives and releases) any defense or right of set-off, recoupment or counterclaim to the payment when due of those amounts due under the Loans or any of the other Pre-Petition Obligations, and that there does not exist (or to the extent that there does exist, each of the Debtors hereby irrevocably waives and releases) any other claim against the Lender with respect to the Loans, the Notes, the Pre-Petition Obligations, or otherwise.  Each Debtor hereby releases, acquits and forever discharges each of the Lender, its respective officers, employees,

 

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and agents, from any and all claims, actions, causes of action, demands, rights, damages, costs, loss of services, expenses and compensation whatsoever, which any of the Debtors now have, or which may have accrued prior to the date of this Agreement, or which arise from, relate to, may arise from, may relate to or are in any way are connected to any set of facts, situations, acts or omissions of any person or entity (including, without limitation, the Lender, its respective officers, employees, and agents) prior to the date of this Agreement, in each case, whether known or unknown by any or all of the Debtors, on account of or that in any way arise out of or result from any of the Pre-Petition Obligations, this Agreement, any of the other Financing Documents, any of the transactions, duties or obligations arising under or relating to any of the Pre-Petition Obligations, this Agreement, any of the other Financing Documents, or any other agreements, transactions, duties or obligations, or facts whatsoever, whether related to the Pre-Petition Obligations, this Agreement, any of the other Financing Documents or otherwise, whether arising in contract or tort, in law or in equity.  Without limiting the foregoing, each Debtor hereby specifically releases, acquits and forever discharges each of the Lender, its respective officers, employees, and agents, from any and all contract or common law claims, and avoidance actions under 11 U.S.C. Sections 542, 544, 545, 547, 548, 549, 550, or 553 if any, against Lender arising from or related to the Financing Documents, including, without limitation, this Agreement.

 

Section 2.2                                       Acknowledgement of Security Interests.

 

The Debtors hereby acknowledge, confirm and agree that the Lender has and shall continue to have valid, enforceable and perfected first priority and senior security interests in and liens upon all Pre-Petition Collateral heretofore granted to the Lender pursuant to the Financing Agreement and the other Financing Documents as in effect immediately prior to the Petition Date to secure all of the Obligations, as well as valid and enforceable first priority and senior security interests in and liens upon all Post-Petition Collateral granted to the Lender under the Financing Order or hereunder or under any of the other Financing Documents or otherwise granted to or held by the Lender; except, however , that, with respect to the Liens on the Post-Petition Collateral, the Liens securing the Post-Petition Obligations with respect to the Revolving Loan shall be deemed to have priority over the Liens securing the Pre-Petition Obligations with respect to the Revolving Loan.

 

Section 2.3                                       Binding Effect of Documents.

 

The Debtors hereby acknowledge, confirm and agree that (a) this Agreement and each of the other Financing Documents to which any of the Debtors is a party has been duly executed and delivered to the Lender by the Debtors and each is in full force and effect as of the date hereof, except that this Agreement is subject to the approval of the Bankruptcy Court as set forth in the Financing Order, (b) the agreements and Obligations of the Debtors contained in this Agreement and the other Financing Documents constitute the legal, valid and binding obligations of the Debtors enforceable against the Debtors in accordance with their respective terms and the Debtors have no valid defense, offset or counterclaim to the enforcement of the Obligations and (c) the Lender is and shall be entitled to all of the rights, remedies and benefits provided for in this Agreement, the other Financing Documents and the Financing Order.

 

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ARTICLE III

ADOPTION AND RATIFICATION

 

The Debtors hereby (a) ratify, assume, adopt and agree to be bound by the Financing Documents in accordance with the terms thereof and (b) agree to pay all of the Obligations in accordance with the terms of the Financing Documents and the Financing Order, including, without any limitation, interest on the Pre-Petition Obligations.  All of the Financing Documents are hereby incorporated herein by reference and hereby are and shall be deemed adopted and assumed in full by the Debtors, as the Debtors and the Debtors-in-Possession, and considered as agreements by and between the Debtors and the Lender.  The Debtors hereby ratify, restate, affirm and confirm all of the terms and conditions of the Financing Documents, as amended and supplemented pursuant hereto and the Financing Order, and Lender agrees to lend pursuant to, and the Debtors agree to be fully bound by, as the Debtors and the Debtors-in-Possession, the terms of the Financing Documents to which any Debtor is a party.

 

ARTICLE IV

GRANT OF SECURITY INTEREST

 

As collateral security for the prompt performance, observance and payment in full of all of the Obligations (including, without limitation, the Pre-Petition Obligations and the Post-Petition Obligations), the Debtors, as the Debtors and the Debtors-in-Possession, hereby grant, pledge and assign to the Lender, and also confirm, reaffirm and restate the prior grant to the Lender of, continuing security interests in and liens upon, and rights of setoff against, all of the Collateral, provided , that , the Motor Vehicles and the Additional Real Estate Collateral shall only secure the Post-Petition Obligations, subject to the terms of the Financing Order.

 

ARTICLE V

ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

 

In addition to the continuing representations, warranties and covenants heretofore and hereafter made by the Debtors to the Lender, whether pursuant to this Agreement, the Financing Agreement, the other Financing Documents or otherwise, and not in limitation thereof, the Debtors hereby represent, warrant and covenant to the Lender the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of which, or compliance with, being a continuing condition of the making of Loans by the Lender:

 

Section 5.1                                       Use of Proceeds.

 

All Loans and credit accommodations provided by the Lender to the Debtors pursuant to the Financing Order, this Agreement, the Financing Agreement, the other Financing Documents or otherwise, shall be used by the Debtors, in each case in a manner consistent with the terms and conditions of this Agreement and the other Financing Documents and in accordance with the Budget, as follows: (a) solely for (x) payment of obligations incurred by the Debtors post-petition (and payment of certain pre-petition debts and MIP Payments (defined herein) that may be requested by the Debtors, that are consented to by the Lender in its sole and absolute discretion, and that are ultimately approved by the Bankruptcy Court after notice and hearing)

 

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for working capital and general corporate purposes and (y) payment of costs of administration of the Chapter 11 Case, to the extent set forth in the Budget; and (b) for payment of the Pre-Petition Obligations with respect to the Revolving Loan as a gradual “roll up”, and for payment of the Obligations (including, without limitation, Obligations due and owing to BB&T Financial FSB (“BB&T FSB”) under the Commercial Credit Agreement and the Amended Commercial Credit Agreement (as those terms are defined in the Financing Order)), in accordance with this Agreement and the other Financing Documents and the terms of the Financing Order.  No portion of any administrative expense claim or other claim relating to the Chapter 11 Case shall be paid with the proceeds of such Revolving Loans and credit accommodations provided by the Lender to the Debtors, except as set forth in the Financing Order.  Notwithstanding the foregoing, or anything else to the contrary contained in this Agreement or in any of the Financing Documents, without the Lender’s express prior written consent to be given or withheld in the Lender’s sole and absolute discretion, the Debtors shall not cause or permit Revolver Usage (as defined in the Financing Agreement) to exceed at any time (x) Three Million Five Hundred Thousand Dollars ($3,500,000) for Additional Material Contract Advances (as defined herein), and (y) Fifteen Million Five Hundred Thousand Dollars ($15,500,000) for Ordinary Working Capital Advances (defined herein).  For purposes of this Agreement and the other Financing Documents:  The term “ Additional Material Contract Advances ” means advances under the Revolving Loan for the Debtors’ ordinary working capital purposes relating solely to the Additional Material Contracts and not otherwise prohibited by the provisions of this Agreement and the other Financing Documents, but excluding Ordinary Working Capital Advances; and the term “ Ordinary Working Capital Advances ” means advances under the Revolving Loan for ordinary working capital purposes of the Debtors’ business and not prohibited by the provisions of this Agreement or the other Financing Documents, but excluding Additional Material Contract Advances.  “ Additional Material Contract ” means a contract for the performance of services or delivery of goods by the Debtors entered into after the Petition Date, which contract provides for net cash payments to the Debtors in excess of $2,000,000 in the aggregate payable during the one (1)-year period immediately following the date the contract is awarded to the Debtors, and which contract is otherwise in form and substance, and for a project or projects, acceptable to the Lender in its sole and absolute discretion.  “ Additional Material Contracts ” means the collective reference to each Additional Material Contract.

 

Section 5.2             No Defaults.

 

Except for those defaults disclosed to the Lender prior to the Petition Date or at the effective date of this Agreement and those defaults set forth on Exhibit C attached hereto and made a part hereof (those defaults disclosed to the Lender prior to the Petition Date or at the effective date of this Agreement and those defaults set forth on such Exhibit C , collectively, the “ Noticed Pre-Petition Defaults ”) and those defaults that may have occurred prior to the Petition Date or the effective date of this Agreement that have not been disclosed to the Lender, but are not material defaults as determined by the Lender in its sole and absolute discretion exercised in good faith (collectively, the “ Non-Noticed Pre-Petition Defaults” ; the Noticed Pre-Petition Defaults and the Non-Noticed Pre-Petition Defaults, collectively, the “ Pre-Petition Defaults” ), no Debtor: (a) is in default in the payment of any amounts at any time due on any material indebtedness for borrowed money owed by the Debtors (including, without limitation, the Obligations) or in the performance of any other material terms or covenants of any evidence of

 

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such indebtedness (including, without limitation, the Obligations) or of any mortgage, security agreement, indenture, pledge or other agreement relating thereto or securing such indebtedness (including, without limitation, the Financing Documents); or (b) is in default (i) under any contract with any single Person, or affiliated group of Persons, which provides for revenue to the Debtors equal to or in excess of $500,000 in any one (1)-year period, or (ii) under any contracts with any single Person, or affiliated group of Persons, that, when aggregated together, provide revenue to the Debtors equal to or in excess of $500,000 in any one (1)-year period.

 

Section 5.3             Motor Vehicles.

 

Within fifteen (15) days from the date of this Agreement, the Debtors shall provide to the Lender a true, correct and complete list of each of the Motor Vehicles which the Debtors are granting to the Lender as additional collateral for the Post-Petition Obligations, which list shall contain the aggregate book value of such Motor Vehicles.

 

Section 5.4             Deed of Trust.

 

The Debtors shall cooperate fully with Lender in the recording, indexing and insuring of the Deed of Trust, and otherwise in connection with Lender’s efforts to perfect and insure its Lien in the Additional Real Estate Collateral and, without in any way limiting any covenants or agreements contained in this Agreement, the Deed of Trust or the other Financing Documents, the Debtors shall pay on demand all recordation fees, title insurance premiums and other costs, filing fees, courier fees, county clerk fees and costs, taxes, recordation taxes, stamp taxes and all other costs, fees and expenses incurred, or to be incurred, in connection with the recording, indexing and insuring of the Deed of Trust, or otherwise in connection with the Deed of Trust.  All such costs, fees and expenses may be paid by debit to the Revolving Loan in the manner provided by Section 2.1.2 (Procedure for Making Advances Under the Revolving Loan; Lender Protection Advances) of the Financing Agreement.

 

Section 5.5             Accuracy of Budget.

 

The Debtors represent and warrant that, to the best of the Debtors’ knowledge, the Budget accurately reflects substantially all of the projected revenue and expenses of the Debtors for the period or periods covered by the Budget and has been compiled by the Debtors in accordance with sound business judgment and practice.  The Debtors shall re-make and confirm, and shall be deemed to re-make and confirm in all material respects, the representations and warranties contained in this Section at the time the Debtors present the New Budget to the Lender, each time the Debtor presents any modification or amendment to the Budget for consideration by the Lender and each the time the Debtors request, and again at each time the Lender makes, any Loans.

 

ARTICLE VI

OTHER CONDITIONS.

 

Section 6.1             Interest Provisions.

 

Interest on the Obligations shall accrue at the rate or rates provided in the Financing Agreement, as amended hereby, which are with respect to the Loans as set forth in Section 8.2

 

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(Amendments to Other Provisions of Financing Documents) of this Agreement below.  Interest shall continue to be due and payable at the times provided in the Financing Agreement and the Notes and may be paid by debit to the Revolving Loan in the manner provided by Section 2.1.2 (Procedure for Making Advances Under the Revolving Loan; Lender Protection Advances) of the Financing Agreement.

 

Section 6.2             Financing Order.

 

The Lender shall have no obligation to provide any financing to the Debtors unless and until the Interim Financing Order has been duly entered, and only so long as the Financing Order is valid, subsisting and continuing and has not been vacated, modified, reversed on appeal, or vacated or modified by any order of the Bankruptcy Court and is not subject to any pending appeal or stay.

 

Section 6.3             Loan Fee.

 

The Debtors shall pay the Lender a loan fee in respect of the financing provided by the Lender to the Debtors in the Chapter 11 Case in an amount of Twenty-Five Thousand Dollars ($25,000), which loan fee shall be fully earned and due and payable in full as of the date of the entry (if at all) of the Interim Financing Order.  Such loan fee is part of the Obligations that may be debited to the Revolving Loan in the manner provided in Section 2.1.2 (Procedure for Making Advances Under the Revolving Loan; Lender Protection Advances) of the Financing Agreement.

 

Section 6.4             No Use of Cash Collateral or Priming Liens.

 

The Debtors agree that until such time as all of the Obligations are indefeasibly paid in full in cash, and otherwise performed and satisfied in full, and the Financing Documents are terminated in accordance with the terms thereof, the Debtors shall not seek the Bankruptcy Court’s authority to use, sell, or lease cash collateral as defined in Section 361 of the Bankruptcy Code over the objection of the Lender pursuant to Section 363(c) of the Bankruptcy Code at any time in the Chapter 11 Case and acknowledge and agree that, without such agreement, the Lender would be unwilling to enter into this Agreement.  The Debtors further agree that the Debtors shall not in any way prime or seek to prime the security interests and liens of the Lender provided to the Lender under the Financing Documents and the Financing Order by offering a subsequent lender, or a party-in-interest a superior or pari passu lien or claim pursuant to Section 364(d) of the Bankruptcy Code, or otherwise, and acknowledge and agree that, without such agreement, the Lender would be unwilling to enter into this Agreement.

 

Section 6.5             Budget

 

(a)             All Revolving Loans and credit accommodations provided by the Lender to the Debtors pursuant to the Financing Order, the Financing Agreement, the Financing Documents, or otherwise, shall be used by the Debtors strictly in accordance with the Budget, and the Debtors shall not make any payment of any expense or make any other payment to the extent actual expenses exceed, or would exceed after giving effect to any proposed payment on a pro-forma basis, the amount set forth in any line item in the Budget, except as permitted by Section 6.5(c) of this Agreement and except for Enforcement Costs (which Enforcement Costs shall be due and payable on demand).  The Debtors acknowledge that the Budget that is attached

 

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to the Interim Financing Order (as such Budget may be amended, modified, substituted, replaced or otherwise modified with Lender’s prior written consent, to be given or withheld in Lender’s sole and absolute discretion, the “ Existing Budget ”) only contains consolidated cash flow projections, Borrowing Base projections and Bridge Amount projections and other financial information respecting the Debtors through and including June 26, 2009.  On or before June 15, 2009, the Debtors shall provide the Lender with a new budget covering the period from and including June 27, 2009 through and including October 2, 2009 (as such Budget may be amended, modified, substituted, replaced or otherwise modified with Lender’s prior written consent, to be given or withheld in Lender’s sole and absolute discretion, the “ New Budget ”), which New Budget shall be in the same format and contain the same detail as the Existing Budget.  The New Budget shall be acceptable to the Lender in its sole and absolute discretion, and the Lender shall have no obligation to continue to provide any financing or credit accommodation to the Debtors under the Financing Order, this Agreement, the Financing Agreement, the Financing Documents, or otherwise, if the New Budget is not acceptable to the Lender in its sole and absolute discretion.

 

(b)             The Debtors and the Lender hereby agree that the Debtors shall, within five (5) Business Days of being awarded each Additional Material Contract (that meets all of the criteria set forth in the Financing Agreement and, without limitation, is acceptable to the Lender in the exercise of its sole and absolute discretion) and at the time of the Debtors’ proposal of any of the Signature TVI Operational Events, submit a revised and adjusted Budget to the Lender for the Lender’s review and consideration.  Provided that such revised and adjusted Budget is acceptable to the Lender in its sole and absolute discretion and, without limiting that discretion of the Lender, does not extend the period covered by the Budget, the Lender shall substitute such revised and adjusted Budget and such revised and adjusted Budget shall become the “Budget” for the purposes set forth in this Agreement, the Financing Order and the other Financing Documents.

 

(c)  Notwithstanding anything contained in this Agreement or in any of the other Financing Documents to the contrary, the Debtors shall not make any payment of: (i) Payroll and Benefits Expenses that would, in the aggregate, exceed one hundred and ten percent (110%) of the amount set forth in the Consolidated Cash Flow for DIP (the “Summary Cash Budget”) that is part of the Budget, measured weekly, on a cumulative basis, for the period beginning on the Petition Date through April 3, 2009 and measured weekly thereafter; (ii) Other Expenses that would, in the aggregate exceed one hundred and ten percent (110%) of the amount set forth in the Summary Cash Budget that is part of the Budget, measured weekly, on a cumulative basis, for the period beginning on the Petition Date through April 3, 2009 and measured weekly thereafter; (iii) Vendor Payments (other than Critical Vendor Payments) that would, in the aggregate, exceed one hundred and ten percent (110%) of the amount set forth in the Summary Cash Budget that is part of the Budget, measured weekly, on a cumulative basis, for the period beginning on the Petition Date through April 3, 2009 and measured weekly thereafter; and (iv) Facility Costs that would, in the aggregate, exceed one hundred and ten percent (110%) of the amount set forth in the Summary Cash Budget that is part of the Budget, measured weekly, on a cumulative basis, for the period beginning on the Petition Date through April 3, 2009 and measured weekly thereafter.  The Debtors are not permitted to make, and shall not make, any of the payments set forth in the preceding sentence if such payments are prohibited by any terms of

 

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this Agreement or the other Financing Documents, or if the Debtors are not in strict compliance with the terms of this Agreement and the other Financing Documents, both immediately prior to such proposed payment and after giving effect to any such proposed payment on a pro-forma basis.

 

(d)  Notwithstanding anything contained in this Agreement, the Financing Agreement or in any of the other Financing Documents to the contrary, but subject to the other provisions of this subsection (d), it shall be an Event of Default under each of this Agreement, the Financing Agreement, the Financing Order and the other Financing Documents if the Debtors fail to achieve actual collections of at least the following minimum percentages of the projected collections that are set forth in the Budget, to be measured as of Friday of each week, commencing with April 17, 2009, for the applicable test period set forth in the following table:

 

Test Date		Test Period		Minimum Percentage of Projected Collections
April 17, 2009		The three (3)-week period ending on such test date		Seventy-Five Percent (75%)
April 24, 2009		The four (4)-week period ending on such test date		Eighty Percent (80%)
May 1, 2009		The five (5)-week period ending on such test date		Eighty-Five Percent (85%)
May 8, 2009 and each test date thereafter		The six (6)-week period ending on such test date		Ninety Percent (90%)

 

provided, however, that if the Debtors fail to meet the foregoing test on any test date, but (x) the Debtors meet such test on the immediately following test date and (y) the Lender has not declared an Event of Default for such failure in writing prior to such immediately following test date, then the Lender shall be deemed to waive such Event of Default.

 

The Debtors shall provide the Lender with reports of actual collections in form and substance satisfactory to the Lender in its sole and absolute discretion on a weekly basis by not later than Thursday of each week.

 

Section 6.6             Variance Report.

 

The Debtors hereby agree to continue their weekly meetings with the Lender to discuss, among other things, the Debtors’ performance in comparison to the Budget.  The Debtors shall

 

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provide weekly (in time for discussion at such weekly meetings, but in no event later than Thursday of each week), a cash flow report (the “ Variance Report ”), which Variance Report shall show actual cash flow results and variances from the Budget commencing with the week ending April 3, 2009 and through the end of the week immediately preceding the week in which the Variance Report is to be furnished. No later than the scheduled weekly meeting time, but in any event by Thursday of each week, the Debtors shall also provide a weekly report of information (including, without limitation, the Bridge Amount for the applicable week) with respect to the current week and projections for the immediately following week.  The Variance Report and the other weekly report shall contain such detail as is reasonably requested by the Lender and shall be in form and substance satisfactory to the Lender in its sole and absolute discretion.

 

Section 6.7             Investment Banker.

 

(a)           By not later May 8, 2009, unless such date is expressly extended by the Lender in writing in its sole and absolute discretion, the Debtors hereby agree to engage an investment banker (the “ Investment Banker ”), whose experience, reputation and otherwise is reasonably acceptable to the Lender, to value the Debtors’ business.   The Debtors hereby agree that, prior to engaging such Investment Banker, they shall provide the Lender with the proposed engagement letter.  The Debtors agree that they will not enter into such an engagement unless the Investment Banker and the terms of the engagement of the Investment Banker (including, without limitation, any and all commissions, fees, and other amounts payable, exclusivity and tail) shall be acceptable to the Lender in the exercise of its reasonable discretion.

 

(b)           The Debtors hereby agree that the Lender may discuss with the Investment Banker the affairs, finances, valuation and prospects of the Debtors and shall have complete, direct and immediate access to the representatives, employees and agents of the Investment Banker and its reports, projects, estimates, work papers, recommendations, assessments and other information and c