Amended and Restated Loan and Security Agreement, dated March 28, 2018, by and between the registrant and Pacific Western Bank

“Anti-Terrorism Laws” means any applicable laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the applicable laws comprising or implementing the Bank Secrecy Act, and the applicable laws administered by the United States Treasury Department’s Office of Foreign Assets Control and any other enabling legislation or executive order relating thereto (as any of the foregoing applicable laws may from time to time be amended, renewed, extended or replaced).

“this Agreement”, “the Loan Agreement” and “this Loan Agreement” mean collectively to this Amended and Restated Loan and Security Agreement and the Schedule and all exhibits and schedules thereto, as the same may be modified, amended or restated from time to time by a written agreement signed by Borrower and Lender.

“Business Day” means a day on which Lender is open for business.

“Change in Control” means: (i) other than by the sale of Borrower’s equity securities in a public offering, a change in the record or beneficial ownership of an aggregate of more than 50% of the outstanding shares of stock of Borrower, in one or more transactions, compared to the ownership of outstanding shares of stock of Borrower in effect on the date hereof, or Borrower shall cease to own 100% of the outstanding stock of any Subsidiary (unless otherwise permitted by this Agreement), in each case without the prior written consent of Lender, or (ii) a transaction other than a bona fide equity financing or series of financings on terms and from investors reasonably acceptable to Lender in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.

“Code” means the Uniform Commercial Code as adopted and in effect in the State of North Carolina from time to time.

“Collateral” has the meaning set forth in Section 2 above.

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.

“continuing” and “during the continuance of” when used with reference to a Default or Event of Default means that the Default or Event of Default has occurred and has not been either waived in writing by Lender or cured within any applicable cure period.

“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.

“Default” means any event which with notice or passage of time or both, would constitute an Event of Default.

“Default Rate” has the meaning set forth in Section 7.2 above.

“Deposit Accounts” means all present and future “deposit accounts” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all general and special bank accounts, demand accounts, checking accounts, savings accounts and certificates of deposit.

“Designated Foreign Subs” means nLight Laser Technology (Shanghai) Co., Ltd. and nLight Oy (Finland).

“Eligible Accounts” means Accounts and General Intangibles of Borrower or the Designated Foreign Subs, arising in the ordinary course of their business from the sale of goods or the rendition of services, or the non-exclusive licensing of Intellectual Property, which Lender, in its Good Faith Business Judgment, shall deem eligible for borrowing.  Without limiting the fact that

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the determination of which Accounts are eligible for borrowing is a matter of Lender’s Good Faith Business Judgment, the following (the “Minimum Eligibility Requirements”) are the minimum requirements for an Account to be an Eligible Account:

(i)                  the Account must not be outstanding for more than 90 days from its invoice date (the “Eligibility Period”);

(ii)               the Account must not represent progress billings (unless pre-approved in writing by Lender);

(iii)            the Account must not be subject to any contingencies (including Accounts arising from sales on consignment, guaranteed sale, bill and hold, sale on approval, or other terms pursuant to which payment by the Account Debtor may be conditional, but not including advanced billings (including maintenance Accounts) which have been pre-approved in writing by Lender);

(iv)           the Account must not be owing from an Account Debtor with whom Borrower or the Designated Foreign Sub has any dispute (whether or not relating to the particular Account), but if an Account is owing from an Account Debtor with whom Borrower or the Designated Foreign Sub has any dispute, the Account will not be Eligible under this clause (iv) only to the extent of the amount of the dispute;

(v)              the Account must not be owing from an Affiliate of Borrower;

(vi)           the Account must not be owing from an Account Debtor which is subject to any Insolvency Proceeding that Borrower has knowledge of (or should in the exercise of reasonable diligence have knowledge of), or whose financial condition is not acceptable to Lender, or which, fails or goes out of a material portion of its business;

(vii)        [intentionally omitted];

(viii)     [intentionally omitted];

(ix)           the Account must have been billed to the Account Debtor (except for Accounts that have not yet been billed, but which Lender has pre-approved in writing for inclusion as ‘Eligible Accounts’, and which meet the other Minimum Eligibility Requirements) and must not represent deposits (such as good faith deposits) or other property of the Account Debtor held by Borrower or the Designated Foreign Sub for the performance of services or delivery of goods which Borrower or the Designated Foreign Sub has not yet performed or delivered (“Account Debtor Deposits”), provided however, that the aggregate amount of Account Debtor Deposits held by Borrower from Persons who have no outstanding Indebtedness to Borrower shall be included in the determination of Eligible Accounts, but such amount included shall not at any time exceed $2,000,000; and

(x)              the Account must not be owing from an Account Debtor to whom Borrower or the Designated Foreign Sub is or may be liable for goods purchased from such Account Debtor or otherwise (but, in such case, the Account will be deemed not eligible only to the extent of any amounts owed by Borrower or the Designated Foreign Sub to such Account Debtor).

Accounts owing from one Account Debtor will not be deemed Eligible Accounts to the extent they exceed 25% of the total Accounts outstanding.  In addition, if more than 25% of the Accounts owing from an Account Debtor are outstanding for a period longer than their Eligibility Period or are otherwise not Eligible Accounts, then all Accounts owing from that Account Debtor will be deemed ineligible for borrowing.  Lender may, from time to time, in its Good Faith Business Judgment, revise the Minimum Eligibility Requirements, upon 30 days prior written notice to Borrower.

“Eligible Inventory” means Inventory consisting of finished goods held for sale in the ordinary course of their business by, and raw materials, subassemblies and work-in-process of, the Borrower or the Designated Foreign Subs, valued at the lower of cost or market in accordance with GAAP, which Lender, in its Good Faith Business Judgment, shall deem eligible for borrowing.  Without limiting the fact that the determination of which Inventory is eligible for borrowing is a matter of Lender’s Good Faith Business Judgment, the following (the “Minimum Inventory Eligibility Requirements”) are the minimum requirements for Inventory to be Eligible Inventory:

(i)                  the Inventory must be in the possession of Borrower or the Designated Foreign Subs, except for Inventory temporarily at vendors for further processing in the ordinary course of business in a total amount not to exceed $150,000, and (other than Inventory of the Designated Foreign Subs) the Inventory must be located at premises where there is in effect a Landlord Waiver or Agreement in favor of Lender, in form and substance acceptable to Lender in its Good Faith Business Judgment, provided that said Landlord Waiver with respect to Borrower’s premises located at Vancouver, Washington and Hillsboro, Oregon shall not be required until 45 days after the date hereof, during which time Borrower shall use commercially reasonable efforts to obtain said Landlord Waiver, and, if Borrower is not able to obtain said Landlord Waiver, no Landlord Agreement or Waiver will be required for such location (but Lender may, in its discretion, thereafter increase the Reserves by an amount equal to two month’s rent at such location)

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(ii)               the Inventory (other than Inventory of the Designated Foreign Subs) must be subject to a perfected first priority security interest in Lender’s favor;

(iii)            the Inventory may not be (A) covered by any negotiable or non-negotiable warehouse receipt, bill of lading or other document of title, (B) on consignment from any consignor, or on consignment to any consignee or subject to any bailment unless the consignee or bailee has executed an agreement with Lender in form and substance acceptable to Lender in its Good Faith Business Judgment, or (C) located in any third-party warehouse, unless the warehouse has executed an agreement with Lender waiving any lien of such warehouse on the Inventory and containing such other provisions as Lender shall specify in its Good Faith Business Judgment;

(iv)           the Inventory may not consist of supplies, packaging, parts or sample Inventory, or customer supplied parts or Inventory;

(v)              the Inventory may not be damaged, defective, obsolete, slow moving or not currently saleable in the normal course of Borrower’s operations (except for raw materials for new products of Borrower that may not be saleable);

(vi)           the Inventory may not consist of Inventory that has been returned to Borrower or the Designated Foreign Subs, or that Borrower or the Designated Foreign Subs have attempted to return, are in the process of returning or intend to return to the vendor of the Inventory;

(vii)        the Inventory may not be subject to a Lien in favor of any Person other than Lender; and

(viii)     the Inventory may not constitute Excluded Inventory.

“Equipment” means all present and future “equipment” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

“Event of Default” means any of the events set forth in Section 7.1 of this Agreement.

“Excluded Inventory” means (i) any demonstration products delivered to customers or sales representatives in the ordinary course of business, and (ii) any inventory consigned to third parties in the ordinary course of business in connection with coding, processing or testing of such Inventory.

“Foreign Subs” has the meaning given in Section 8(d) of the Schedule.

“FX Contracts” means contracts between Borrower and Lender for foreign exchange transactions.

“Foreign Exchange Reserve Percentage” means reserves in an amount equal to a percentage of FX Contracts outstanding, as determined by Lender, in its sole discretion from time to time.

“GAAP” means generally accepted accounting principles consistently applied, as in effect from time to time in the United States.

“General Intangibles” means all present and future “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all Intellectual Property, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

“Good Faith Business Judgment” means Lender’s business judgment, exercised honestly and in good faith and not arbitrarily.

“Guarantor” means any Person who has guaranteed, or in the future guarantees, any of the Obligations.

“including” means including (but not limited to).

“Indebtedness” means (a) all indebtedness created, assumed or incurred in any manner by Borrower representing money borrowed (including by the issuance of debt securities, notes, bonds debentures or similar instruments), (b) all indebtedness for the deferred purchase price of property or services, (c) the Obligations, (d) obligations and liabilities of any Person secured by a Lien or claim on property owned by Borrower, even though Borrower has not assumed or become liable therefor, (e) obligations and liabilities created or arising under any capital lease or conditional sales contract or other title retention agreement with respect to property used or acquired by Borrower, even though the rights and remedies of the lessor, seller or lender are limited to

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repossession or otherwise limited; (f) all obligations of Borrower on or with respect to letters of credit, bankers’ acceptances and other similar extensions of credit whether or not representing obligations for borrowed money; and (g) the amount of any Contingent Obligations.

“Intellectual Property” means all of Borrower’s right, title, and interest in and to the following: Copyrights, Trademarks and Patents; any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held; any and all design rights which may be available to Borrower now or hereafter existing, created, acquired or held; any and all claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above; all licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use; and all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other state, federal or other bankruptcy or insolvency law, now or hereafter in effect, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, readjustment of debt, dissolution or liquidation, or other relief.

“Inventory” means all present and future “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit, and including any returned goods and any documents of title representing any of the above.

“Investment” means any beneficial ownership interest in any Person (including stock, securities, partnership interest, limited liability company interest, or other interests), and any loan, advance or capital contribution to any Person, including the creation or capital contribution to a wholly-owned or partially-owned subsidiary)

“Investment Property” means all present and future investment property, securities, stocks, bonds, debentures, debt securities, partnership interests, limited liability company interests, options, security entitlements, securities accounts, commodity contracts, commodity accounts, and all financial assets held in any securities account or otherwise, and all options and warrants to purchase any of the foregoing, wherever located, and all other securities of every kind, whether certificated or uncertificated.

“Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by Lender at Borrower’s request.

“Letter of Credit Fees” is defined in Section 1.7.

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance (for the avoidance of doubt, prepayments on capital expenditures shall not constitute “Liens”).

“Loan Documents” means, collectively, this Agreement, the Representations, and all other present and future documents, instruments and agreements between Lender and Borrower, including, but not limited to those relating to this Agreement, and all amendments and modifications thereto and replacements therefor.

“Material Adverse Change” means any circumstances which would reasonably be expected to have a Material Adverse Effect; provided that, in determining whether a Material Adverse Effect has occurred, Lender will take into consideration (a) whether Borrower will have, as determined in Lender’s good faith judgment, sufficient cash resources to repay the Obligations as and when due, and (b) whether Borrower’s investors will continue to fund Borrower in the amounts and timeframe necessary, in Lender’s good faith judgment, to enable Borrower to satisfy the Obligations as they become due and payable.

“Material Adverse Effect” means a material adverse effect on (i) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents, or (iii) Borrower’s interest in, or the value, perfection or priority of Lender’s security interest in the Collateral.

“Obligations” means all present and future Loans, advances, debts, liabilities, obligations, guaranties, covenants, duties and indebtedness at any time owing by Borrower to Lender, whether evidenced by this Agreement or any note or other instrument or document, or otherwise, whether arising from an extension of credit, opening of a letter of credit, banker’s acceptance, loan, guaranty, indemnification, Ancillary Service, or otherwise, whether direct or indirect (including, without limitation, those

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acquired by assignment and any participation by Lender in Borrower’s debts owing to others, and any interest and other obligations that accrue after the commencement of an Insolvency Proceeding), absolute or contingent, due or to become due, including, without limitation, all interest, charges, expenses, fees, attorney’s fees, expert witness fees, audit fees, letter of credit fees, collateral monitoring fees, closing fees, facility fees, termination fees, minimum interest charges and any other sums chargeable to Borrower under this Agreement or under any other Loan Documents.  Notwithstanding anything in this Agreement, the term “Obligations” shall not include any of Borrower’s obligations under any warrants or other related agreements governing the rights of the holder of any warrant or equity security issuable upon exercise or conversion of a warrant.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“Other Property” means the following as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and all rights relating thereto: all present and future “commercial tort claims” (including without limitation any commercial tort claims identified in the Representations), “documents”, “instruments”, “promissory notes”, “chattel paper”, “letters of credit”, “letter-of-credit rights”, “fixtures”, “farm products” and “money”; and all other goods and personal property of every kind, tangible and intangible, whether or not governed by the Code.

“Overadvance” is defined in Section 1.3.

“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

“Payment” means all checks, wire transfers and other items of payment received by Lender (including proceeds of Accounts and payment of the Obligations in full) for credit to Borrower’s outstanding Loans.

“Permitted Indebtedness” means:

(i)                  the Obligations;

(ii)               Indebtedness existing on the date hereof and disclosed in the Representations;

(iii)            trade payables incurred in the ordinary course of business;

(iii-A)  Indebtedness incurred on corporate credit cards in a total amount outstanding at any time not to exceed $1,000,000.

(iv)           Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

(v)              capitalized leases and purchase money Indebtedness secured by Permitted Liens in an aggregate amount not exceeding $3,000,000 at any time outstanding, provided the amount of such capitalized leases and purchase money Indebtedness do not exceed, at the time they were incurred, the lesser of the cost or fair market value of the property so leased or financed with such Indebtedness;

(vi)           Subordinated Debt;

(vii)        Indebtedness of a Borrower owed to another Borrower or to a Subsidiary (but payments on Indebtedness of a Borrower to Foreign Subs shall be subject to Section 8(d) of the Schedule);

(viii)     guaranties of Indebtedness that otherwise constitutes Permitted Indebtedness;

(ix)           Other Indebtedness not exceeding $1,000,000 in the aggregate outstanding at any time; and

(x)              extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness in clauses (ii) through (ix) above, provided that the principal amount thereof is not increased and the terms thereof are not modified to impose more burdensome terms upon Borrower.

“Permitted Intercompany Investments” is defined in Section 8(d) of the Schedule.

“Permitted Investments” means:

(i)                  Investments existing on the date hereof and disclosed in the Representations;

(ii)               Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, Lender’s certificates of deposit maturing no more than one year from the date of

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investment therein, and Lender’s money market accounts; Investments in regular deposit or checking accounts held with Lender or subject to a control agreement in favor of Lender;

(iii)            [intentionally omitted];

(iv)           Investments of a Borrower in another Borrower;

(v)              Investments not to exceed $500,000 outstanding in the aggregate at any time consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors;

(vi)           Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;

(vii)        Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business;

(viii)     Permitted Intercompany Investments; and

(ix)           other Investments in an aggregate amount not to exceed $1,000,000 in any fiscal year.

“Permitted Liens” means the following:

(i)                  purchase money security interests in specific items of Equipment;

(ii)               leases of specific items of Equipment;

(ii-A) Liens listed on the Representations;

(iii)            Liens for taxes not yet payable;

(iv)           additional security interests which are consented to in writing by Lender, which consent may be withheld in its Good Faith Business Judgment, and which are subordinate to the security interest of Lender pursuant to a Subordination Agreement or Intercreditor Agreement in such form and containing such provisions as Lender shall specify in its Good Faith Business Judgment;

(v)              Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default;

(vi)           security interests being terminated substantially concurrently with this Agreement;

(vii)        Liens incurred on deposits made in the ordinary course of business in connection with workers compensation, unemployment insurance, social security and other like laws or to secure the performance of statutory obligations, in an aggregate amount not exceeding $500,000 at any time;

(viii)     Liens of mechanics, materialmen, workers, repairmen, fillers and common carriers arising by operation of law for amounts that are not yet due and payable or which are being contested in good faith by Borrower by appropriate proceedings, in an aggregate amount not exceeding $1,000,000 at any time; and

(ix)           leases or subleases of real property granted in the ordinary course of business, and leases, subleases, non-exclusive licenses or sublicenses of personal property granted in the ordinary course of business;

(x)              non-exclusive license of intellectual property granted to third parties in the ordinary course of business, and other licenses of Intellectual Property in the ordinary course of business that may be exclusive in certain respects, but that could not result in a legal transfer of title of the licensed property and that do not constitute a transfer of a significant portion of the value of the licensed property;

(xi)           Liens in favor of other financial institutions arising in connection with deposit and/or securities accounts held at such institutions, provided that, (A) such Liens are limited to usual and customary charges for services rendered in connection with said accounts, and erroneous entries or charge-backs to said accounts, and (B) subject to Section 8(c) of the Schedule to this Agreement, Lender has a perfected security interest in the amounts held in such deposit and/or securities accounts;

(xii)        Liens existing as of the date hereof and disclosed in the Representations;

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(xiii)  Liens in favor of customs or revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; and

(xiv) deposits or pledges of cash to secure bids, tenders, contracts (other than contracts for the payment of money), leases, surety and appeal bonds and other obligations of a like nature arising in the ordinary course of business, in an aggregate amount not exceeding a total of $1,000,000 at any time.

Lender will have the right to require, as a condition to its consent under subparagraph (iv) above, that the holder of the additional security interest or voluntary Lien sign a subordination agreement on Lender’s then standard form, acknowledge that the security interest is subordinate to the security interest in favor of Lender, and agree not to take any action to enforce its subordinate security interest so long as any Obligations remain outstanding, and that Borrower agree that any uncured default in any obligation secured by the subordinate security interest shall also constitute an Event of Default under this Agreement.

“Person” means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, government, or any agency or political division thereof, or any other entity.

“Prime Rate” means the variable rate of interest per annum, most recently announced by Lender as its “prime rate” (whether or not such announced rate is the lowest rate available from Lender).

“Representations” means the written Borrower Information Certificate provided by Borrower to Lender referred to in the Schedule.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFCA.

“Sanctioned Person” means a Person named on the OFAC-maintained list of “Specially Designated Nationals” (as defined by OFAC).

“Reserves” means, as of any date of determination, such amounts as Lender may from time to time establish and revise in its Good Faith Business Judgment, reducing the amount of Loans, and other financial accommodations which would otherwise be available to Borrower under the lending formulas provided in the Schedule: (a) to reflect events, conditions, contingencies or risks which, as determined by Lender in its Good Faith Business Judgment, do or may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Lender in the Collateral (including the enforceability, perfection and priority thereof); or (b) to reflect Lender’s good faith belief that any Collateral report or financial information furnished by or on behalf of Borrower or any Guarantor to Lender is or may have been incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state of facts which Lender determines in good faith constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.

“Subordinated Debt” means unsecured Indebtedness for borrowed money, which is on terms and conditions satisfactory to Lender in its Good Faith Business Judgment, which has a maturity date at least three months after the Maturity Date, and which is fully subordinated to the Obligations pursuant to a Subordination Agreement in such form as Lender shall specify in its Good Faith Business Judgment.

“Subsidiary” means, with respect to any Person, a Person of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by such Person or one or more Affiliates of such Person.

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

Other Terms.  All accounting terms used in this Agreement, unless otherwise indicated, shall have the meanings given to such terms in accordance with GAAP, consistently applied; provided, however, that if at any time any change in GAAP would affect the computation of any covenant or requirement set forth in any Loan Document, and either Borrower or Lender shall so request, Borrower and Lender shall negotiate in good faith to amend such covenant or requirement to preserve the original intent thereof in light of such change in GAAP; provided, further, that until so amended, (i) such covenant or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide Bank financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP; provided further that

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(x) any obligations of a Person under a lease (whether existing now or entered into in the future) that is not (or would not be) a capital lease obligation under GAAP as in effect on the date hereof shall not be treated as a capital lease obligation solely as a result of the implementation of changes in GAAP.  All other terms contained in this Agreement, unless otherwise indicated, shall have the meanings provided by the Code, to the extent such terms are defined therein.

9.     GENERAL PROVISIONS.