Exhibit 10.6

CREDIT AND SECURITY AGREEMENT

THIS CREDIT AND SECURITY AGREEMENT (this “Agreement”) is made as of December 29,
2005 between TVI CORPORATION, a Maryland corporation (“TVI”), CAPA MANUFACTURING
CORP., a Maryland corporation, SAFETY TECH INTERNATIONAL, INC., a Maryland
corporation and TVI AIR SHELTERS, LLC, a Maryland limited liability company
(together with TVI, collectively, the “Borrowers”) and BANK OF AMERICA, N.A., a
national banking association (the “Lender”).

RECITALS

The Borrowers have requested that the Lender make available to the Borrowers a
revolving credit facility pursuant to which the Lender will make advances to the
Borrowers from time to time in an aggregate principal amount not to exceed Ten
Million Dollars ($10,000,000) at any one time outstanding. The Lender has agreed
to make such credit facility available to the Borrowers, subject to and upon the
terms and conditions hereinafter set forth.

AGREEMENTS

SECTION 1. The Credit Facilities.

1.1. Definitions. All capitalized terms used herein and not otherwise defined
shall have the following meanings:

“Account Debtor” means any Person who may become obligated to either of the
Borrowers under, with respect to, or on account of, an Account, Chattel Paper or
General Intangibles (including a Payment Intangible).

“Accounts” has the meaning given to such term in the UCC.

“Additional Financing Documents” has the meaning given to such term in
Section 1.3(e) hereof.

“Advances” means advances made by the Lender to the Borrowers under the
Revolving Credit Facility.

“Applicable Margin” shall mean the margin added to the LIBOR Rate to obtain the
interest rate for the outstanding Advances under the Revolving Credit Facilities
set forth in the Table attached hereto as Attachment I. The Applicable Margin
during any calendar quarter shall be set based upon the Borrowers’ ratio of
Total Funded Debt to EBITDA as of the last day of the immediately prior calendar
quarter, and the Applicable Margin shall be determined and adjusted quarterly on
the first day of the first month after the date by which the annual and
quarterly compliance certificates and related financial statements and
information are required in accordance with the provisions of this Agreement.

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“AutoBorrow Service Agreement” means any AutoBorrow Service Agreement in effect
from time to time between the Borrowers and the Lender.

“Board” means the Board of Governors of the Federal Reserve System of the United
States.

“Borrowers” shall mean, collectively, TVI, CAPA Manufacturing Corp., a Maryland
corporation, Safety Tech International, Inc., a Maryland corporation and TVI Air
Shelters, LLC, a Maryland limited liability company.

“Business Day” means any day other than Saturday, Sunday or other day on which
commercial banks in the State of Maryland are authorized to close.

“Capital Lease” means any lease that has been or should be capitalized on the
books of the Borrowers in accordance with GAAP.

“Chattel Paper” has the meaning given to such term in the UCC.

“Claim” has the meaning given to such term in Section 7.9(a).

“Closing Date” means the date on which all conditions to closing as set forth in
Section 2.1 of this Agreement are satisfied.

“Collateral” means all of the Borrowers’ personal property, both now owned and
hereafter acquired, including, insofar as any of the following are applicable,
but not limited to:

 

  (a) Accounts, including, without limitation, all collateral security of any
kind given to any Account Debtor or other Person with respect to any Account;

 

  (b) As-extracted collateral;

 

  (c) Chattel Paper;

 

  (d) Commodity Accounts;

 

  (e) Commodity Contracts;

 

  (f) Deposit Accounts;

 

  (g) Documents;

 

  (h) Equipment;

 

  (i) Farm Products;

 

  (j) Fixtures;

 

  (k) General Intangibles, including, but not limited to, (i) all patents, and
all unpatented or unpatentable inventions; (ii) all trademarks, service marks,
and trade names; (iii) all copyrights and literary rights; (iv) all computer
software programs; (v) all mask works of semiconductor chip products; (vi) all
trade secrets, proprietary information, customer lists, manufacturing,
engineering and production plans, drawings, specifications, processes and
systems;

  (l) Goods, and all accessions thereto and goods with which the Goods are
commingled;

 

  (m) Health Care Insurance Receivables;

 

  (n) Instruments;

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  (o) Inventory;

 

  (p) Investment Property;

 

  (q) Letter-of-Credit Rights;

 

  (r) Payment Intangibles;

 

  (s) Promissory Notes;

 

  (t) Software;

 

  (u) The commercial tort claims specifically described on Schedule 1.1, if any.

 

  (v) Letters patent, applications for letters patent, trademarks, applications
for trademarks, service marks, trade names, and copyrights, whether registered
or unregistered, together with all royalties, fees, and other payments made or
to be made with respect to any of the foregoing, and all rights, interests,
claims, and demands that the Borrowers have or may have and existing and future
profits and damages for past or future infringement thereof; and

 

  (w) all proceeds and products of any of the foregoing.

“Collateral Account” has the meaning set forth in Section 7.5 of this Agreement.

“Collection Account” means the collection account established pursuant to this
Agreement.

“Commodity Accounts” has the meaning given to such term in the UCC.

“Commodity Contracts” has the meaning given to such term in the UCC.

“Credit Facilities” means the Revolving Credit Facility, as amended, modified,
or supplemented from time to time.

“Default” has the meaning set forth in Section 6 of this Agreement.

“Default Rate” means a floating and fluctuating per annum rate of interest
calculated by adding the sum of four percent (4.0%) to the rate of interest
otherwise then in effect.

“Deposit Accounts” has the meaning given to such term in the UCC.

“Documents” has the meaning given to such term in the UCC.

“Earn-Out Obligations” means the deferred purchase price payments due from time
to time to Persons or their businesses acquired by the Borrowers upon
satisfaction of certain performance or other contingencies.

“EBITDA” shall mean (a) net income, after income tax, (b) less income or plus
loss from discontinued operations and extraordinary items, (c) plus interest
expense on all operations, (d) plus taxes, (e) plus depreciation, (f) plus
depletion, and (g) plus amortization (and other non-cash charges), calculated on
a trailing twelve-month basis.

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“Enforcement Costs” means all reasonable expenses, charges, recordation or other
taxes, costs and fees (including reasonable attorneys’ fees and expenses) of any
nature whatsoever advanced, paid or incurred by or on behalf of the Lender in
connection with (a) the collection or enforcement of this Agreement or any of
the other Financing Documents, (b) the creation, perfection, maintenance,
preservation, defense, protection, realization upon, disposition, collection,
sale or enforcement of all or any part of the Collateral, and (c) the exercise
by the Lender of any rights or remedies available to it under the provisions of
this Agreement, or any of the other Financing Documents.

“Environmental Laws” means all laws, statutes, rules, regulations or ordinances
which relate to Hazardous Materials and/or the protection of the environment or
human health.

“Equipment” means all of the Borrowers’ equipment, as such term is defined by
the Uniform Commercial Code, together with all additions, parts, fittings,
accessories, special tools, attachments, and accessions now and hereafter
affixed thereto and/or used in connection therewith, and all replacements
thereof and substitutions therefor.

“ERISA” means the Employee Retirement Income Security Act of 1974 (“ERISA”).

“Event of Default” has the meaning set forth in Section 6 of this Agreement.

“Farm Products” has the meaning given to such term in the UCC.

“Field Exam” has the meaning set forth in Section 4.9 of this Agreement.

“Financing Documents” means, collectively, this Agreement, the Note, any Hedge
Agreement, any Letter of Credit Agreement, any Additional Financing Documents
and any other instrument, document or agreement now or hereafter executed,
delivered or furnished by the Borrowers or any other person evidencing,
guaranteeing, securing or in connection with this Agreement or all or any part
of the Credit Facilities.

“Fixtures” has the meaning given to such term in the UCC.

“GAAP” means generally accepted accounting principles in the United States of
America.

“General Intangibles” means all of the Borrowers’ general intangibles, as such
meaning is defined by the Uniform Commercial Code, together with all of the
Borrowers’ letters patent, applications for letters patent, trademarks,
applications for trademarks, service marks, trade names and copyrights, whether
registered or unregistered, together with all goodwill of the business of the
Borrowers relating thereto, any and all reissues, extensions, divisions or
continuations thereof, all royalties, fees and other payments made or to be made
to the Borrowers with respect thereto, and all rights, interests, claims and
demands that the Borrowers have or may have in existing and future profits and
damages for past and future infringements thereof.

“Goods” has the meaning given to such term in the UCC.

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“Government Contract” means (i) any contract entered into by the Borrowers with
the United States government or any state or local government or any division,
department, or instrumentality thereof and (ii) any contract entered into
between the Borrowers and any “prime” contractor providing goods and services to
the United States government or any state or local government or any division,
department, or instrumentality thereof.

“Hazardous Materials” shall mean hazardous wastes, hazardous substances, toxic
chemicals and substances, oil and petroleum products and their by-products,
radon, asbestos, pollutants or contaminants.

“Hedge Agreement” means any agreement between the Borrowers and the Lender or
any affiliate of the Lender now existing or hereafter entered into, which
provides for an interest rate, credit, commodity or equity swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross-currency rate
swap, currency option, or any similar transaction or any combination of, or
option with respect to, these or similar transactions, for the purpose of
hedging the Borrowers’ exposure to fluctuations in interest or exchange rates,
loan, credit, exchange, security or currency valuations or commodity prices.

“Health Care Insurance Receivables “ shall have the meaning given to such term
in the UCC.

“Instruments” has the meaning given to such term in the UCC.

“Interest Payment Date” has the meaning set forth in Section 1.2(d) of this
Agreement.

“Interest Rate Change Date” shall mean the first day of each one-month period;
provided, however, that if any such day is not a Business Day, at Lender’s
option, the Interest Rate Change Date shall be the next succeeding Business Day.

“Inventory” means all of the Borrowers’ now owned and hereafter acquired
inventory as such term is defined by the Uniform Commercial Code, wherever
located and however constituted, including, without limitation, raw materials,
work and goods in process, finished goods, goods or inventory returned or
repossessed or stopped in transit, supplies, packaging, shipping and other
materials, all other goods, merchandise and personal property used or consumed
in the business of the Borrowers, and all documents and documents of title
relating to any of the foregoing.

“Investment Property” has the meaning given to such term in the UCC.

“Letter of Credit” means any letter of credit issued by the Lender for the
account of the Borrowers under the Revolving Credit Facility.

“Letter of Credit Account” has the meaning set forth in Section 1.2(l) of this
Agreement.

“Letter of Credit Agreement” means an Application and Agreement for Letter of
Credit on the Lender’s standard form, as such form may be revised by the Lender
in its discretion at any time and from time to time hereafter.

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“Letter of Credit Exposure” means at any time the sum of (x) the undrawn amount
of all Letters of Credit outstanding at such time, and (y) all Letter of Credit
Obligations outstanding at such time.

“Letter of Credit Fee” has the meaning set forth in Section 1.2(k) of this
Agreement.

“Letter of Credit Obligations” means, collectively, (i) the amount of each draft
drawn under or purporting to be drawn under a Letter of Credit, (ii) the amount
of any and all charges, reasonable costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) which the Lender may
charge, pay or incur for drawings under a Letter of Credit, transfers of a
Letter of Credit, amendments to and extensions of a Letter of Credit and for the
prosecution or defense of any action arising out of or in connection with any
Letter of Credit, including, without limitation, any action to enjoin full or
partial payment of any draft drawn under or purporting to be drawn under any
Letter of Credit, including, but not limited to, Letter of Credit Fees,
(iii) interest on all amounts payable under (i) and (ii) above from the date due
until paid in full at a per annum rate of interest equal at all times to the
Default Rate.

“Letter of Credit Rights” has the meaning given to such term in the UCC.

“Lender” shall mean Bank of America, N.A., a national banking association.

“LIBOR-Based Rate” means a per annum rate of interest equal at all times to the
sum of the LIBOR Rate plus the Applicable Margin. The LIBOR-Based Rate shall
change immediately and contemporaneously with each change in the LIBOR Rate.

“LIBOR Rate” means, at any time, the rate of interest equal to the rate per
annum (rounded upwards to the nearest 1/100 of one percent) equal to the British
Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other
commercially available source providing quotations of BBA LIBOR as selected by
the Lender from time to time) as determined for each Interest Rate Change Date
at approximately 11:00 a.m. London time two (2) London Banking Days prior to
the Interest Rate Change Date, for U.S. Dollar deposits (for delivery on the
first day of such interest period) with a term of one month, as adjusted from
time to time in the Lender’s sole discretion for Reserve Requirements, deposit
insurance assessment rates and other regulatory costs. If such rate is not
available at such time for any reason, then the rate for that interest period
will be the Prime-based Rate.

“London Banking Day” means a day on which the Lender’s London Banking Center is
open for business and dealing in offshore dollars.

“Note” means the Revolving Loan Note of even date herewith from the Borrowers
made payable to the order of the Lender.

“Obligations” shall mean all present and future indebtedness, liabilities and
obligations of any kind and nature whatsoever of the Borrowers to the Lender
both now existing and hereafter arising under, as a result of, on account of, or
in connection with, this Agreement and any and all amendments, restatements,
supplements and modifications hereof made at any time and from time to time
hereafter, the Note, any and all extensions, renewals or replacements thereof,
amendments thereto and restatements or modifications thereof made at any time or
from time to

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time hereafter, the Letter of Credit Agreements, or the other Financing
Documents, including, without limitation, future advances, principal, interest,
indemnities, fees, late charges, Letter of Credit Exposure, Enforcement Costs
and other costs and expenses whether direct, contingent, joint, several, matured
or unmatured, and the indebtedness owed under any Hedge Agreement.

“Payment Intangibles” has the meaning given to such term in the UCC.

“PBGC” means the Pension Benefit Guaranty Corporation or its successor entity.

“Permitted Acquisition” means the acquisition or purchase of, or investment in,
any Person, any operating division or unit of any Person, or the capital stock
or operational assets of any Person or the combination with any Person by any
Borrower or any Subsidiary (each individually, a “Subject Transaction”)
regardless of the structure of the Subject Transaction, provided that such
Subject Transaction is either (i) less than $3,000,000 per transaction or
(ii) the Subject Transaction is in an amount greater than $3,000,000 and the
Borrowers can provide evidence to the Lender’s reasonable satisfaction that the
Person that is the target of such Subject Transaction has demonstrated two
(2) consecutive calendar quarters of positive cash flow.

“Permitted Liens” has the meaning set forth in Section 5.3 of this Agreement.

“Person” means any natural person, individual, company, corporation,
partnership, joint venture, unincorporated association, government or political
subdivision or agency thereof, or any other entity of whatever nature.

“Plan” means any pension, employee benefit, multi-employer, profit sharing,
savings, stock bonus or other deferred compensation plan.

“Prime-Based Rate” means a floating and fluctuating per annum rate of interest
equal at all times to the Prime Rate.

“Prime Rate” shall mean the floating and fluctuating per annum rate of interest
of the Lender at any time and from time to time established and declared by the
Lender in its sole and absolute discretion as its prime rate, and does not
necessarily represent the lowest rate of interest charged by the Lender to
borrowers.

“Promissory Notes” has the meaning given to such term in the UCC.

“Reserve Requirements” means the maximum rate (expressed as a decimal) at which
reserves (including any marginal, supplemental, emergency or other reserves) are
required to be maintained under Regulation D of the Federal Reserve Board or
otherwise by any statute or regulation applicable to the class of commercial
banks which includes the Lender.

“Revolving Credit Account” means the loan account maintained by the Lender with
respect to advances, repayments and prepayments of Advances, the accrual and
payment of interest on Advances and all other amounts and charges owing to the
Lender in connection with Advances.

“Revolving Credit Amount” means the amount of Ten Million Dollars ($10,000,000).

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“Revolving Credit Expiration Date” means December 31, 2008, or such later date
as to which the Lender shall, in its discretion, agree to extend the Revolving
Credit Expiration Date.

“Revolving Credit Exposure” means, at any time, the sum of the aggregate
principal amount of outstanding Advances plus the Letter of Credit Exposure.

“Revolving Credit Facility” means the revolving credit facility established
pursuant to Section 1.2 hereof in a maximum principal amount at any one time
outstanding equal to the Revolving Credit Amount, made available to the
Borrowers pursuant to this Agreement.

“Software” has the meaning given to such term in the UCC.

“Subordinated Debt” means debt of the Borrowers, the payment of which
subordinated to the repayment of the Advances on terms satisfactory to the
Lender in its sole discretion.

“Subsidiary” means an entity of which the Borrowers directly or indirectly owns
or controls securities or other ownership interests representing more than 50%
of the ordinary voting power thereof.

“Subsidiary Guaranty” means each guaranty agreement executed and delivered by
each Subsidiary of the Borrowers to the Lender, in form and substance reasonably
satisfactory to the Lender.

“Subsidiary Security Agreement” means each security agreement executed and
delivered by each Subsidiary of the Borrowers to the Lender, in form and
substance reasonably satisfactory to the Lender.

“Total Funded Debt” shall mean all outstanding liabilities for borrowed money
and other interest-bearing liabilities, including current and long-term debt,
Capital Leases and Subordinated Debt, less the non-current portion of
Subordinated Debt. For the avoidance of doubt, Total Funded Debt does not
include Earn-Out Obligations, unless then earned and due.

“Unused Commitment Fee” shall mean the fee paid by the Borrowers to the Lender
pursuant to Section 1.2(e).

“Unused Commitment Fee Percentage” shall mean the percentage upon which the
Unused Commitment Fee shall be calculated, as determined in accordance with
Attachment I hereto. The Unused Commitment Fee Percentage earned during any
calendar quarter shall be determined based upon the Borrowers’ ratio of Total
Funded Debt to EBITDA as of the last day of the immediately prior calendar
quarter. The Unused Commitment Fee Percentage shall be determined and adjusted
quarterly on the first day of the first month after the date by which the annual
and quarterly compliance certificates and related financial statements and
information are required in accordance with the provisions of this Agreement.

1.2. Revolving Credit Facility.

(a) Advances and Letters of Credit. Subject to and upon the provisions of this
Agreement and relying upon the representations and warranties herein set forth,
the Lender

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agrees at any time and from time to time to make Advances to the Borrowers and
issue Letters of Credit for the account of the Borrowers from the date hereof
until the earlier of the Revolving Credit Expiration Date or the date on which
this Revolving Credit Facility is terminated pursuant to Section 7 hereof, in an
aggregate principal amount at any time outstanding not to exceed the Revolving
Credit Amount; provided however, that in no event shall the total Letter of
Credit Exposure exceed Two Million Dollars ($2,000,000) at any one time.

In no event shall the Lender be obligated to make an Advance or issue a Letter
of Credit hereunder if a Default shall have occurred and be continuing. Unless
sooner terminated pursuant to other provisions of this Agreement, this Revolving
Credit Facility and the obligation of the Lender to make Advances and issue
Letters of Credit hereunder shall automatically terminate on the Revolving
Credit Expiration Date without further action by, or notice of any kind from,
the Lender. Within the limitations set forth herein and subject to the
provisions of this Agreement, the Borrowers may borrow, repay and reborrow under
this Revolving Credit Facility. The fact that there may be no Advances or
Letters of Credit outstanding at any particular time shall not affect the
continuing validity of this Agreement.

(b) Use of Proceeds of Advances. Each Advance shall be advanced by the Lender
not later than the Business Day following the day (which shall be a Business
Day) of the Borrowers’ request therefor. The proceeds of each Advance may be
deposited by the Lender in the Borrowers’ demand deposit account with the
Lender. The proceeds of the Advances shall be used solely for working capital,
for acquisitions permitted by the terms of this Agreement, and for other lawful
purposes.

(c) Liability of Lender. Lender shall in no event be responsible or liable to
any person other than Borrowers for the disbursement of or failure to disburse
Advances or any part thereof, and no other party shall have any right or claim
against Lender under this Agreement or the other Financing Documents.

(d) Interest on Advances; Repayment of Advances. Except for any period during
which an Event of Default shall have occurred and be continuing, the Borrowers
shall pay interest (calculated on a daily basis) on the unpaid principal balance
of the Advances until maturity (whether by acceleration, extension or otherwise)
at a per annum rate of interest equal at all times to the LIBOR-Based Rate in
effect from time to time.

After maturity, or during any period in which an Event of Default exists and
remains continuing, the unpaid principal balance of the Advances shall bear
interest at a rate equal to the Default Rate.

Notwithstanding any other provision of this Agreement, if the Lender determines
in good faith (which determination shall be conclusive) (i) that any applicable
law, rule, or regulation, or any change in the interpretation of any such law,
rule, or regulation shall make it unlawful or impossible for the Lender to
charge or collect interest at the LIBOR-Based Rate, or (ii) that quotations of
interest rates for the relevant deposits referred to in the definition of the
LIBOR-Based Rate are not being provided in the relevant amounts or for the
relevant maturities, then upon notice from the Lender to the Borrowers, the
entire outstanding principal balance of the Revolving Credit Facility shall bear
interest at the Prime-Based Rate.

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Until the maturity of the Revolving Credit Facility, all accrued and unpaid
interest on all Advances shall be paid monthly on the first day of each month
(each, an “Interest Payment Date”).

If not sooner paid, the entire outstanding principal balance of the Advances,
together with all accrued and unpaid interest thereon, shall be due and payable
on the Revolving Credit Expiration Date.

(e) Unused Commitment Fee. During the period from the date hereof until the
earlier of the Revolving Credit Expiration Date or the date on which the
Revolving Credit Facility is terminated pursuant to the provisions hereof, the
Borrowers shall pay to the Lender an availability fee in a per annum amount
equal to the Unused Commitment Fee Percentage times the average daily unused
portion of the Revolving Credit Amount. Such availability fee shall commence to
accrue on the date hereof and shall be due and payable by the Borrowers
quarterly, in arrears, commencing on March 31, 2006 and on the last Business Day
of each third month thereafter, and on the earlier of the Revolving Credit
Expiration Date or on the date on which the Revolving Credit Facility is
terminated pursuant to Section 7 hereof.

(f) Note; Revolving Credit Account. The Borrowers’ obligation to pay the
Advances with interest shall be evidenced by the Note. The Lender will maintain
the Revolving Credit Account with respect to advances, repayments and
prepayments of Advances, the accrual and payment of interest on Advances and all
other amounts and charges owing to the Lender in connection with Advances.
Except for demonstrable error, the Revolving Credit Account shall be conclusive
as to all amounts owing by the Borrowers to the Lender in connection with and on
account of Advances.

(g) Notwithstanding anything contained herein to the contrary, so long as the
Borrowers opt to use the Lender’s “AutoBorrow” program and have executed and
delivered to the Lender an AutoBorrow Service Agreement (which AutoBorrow
Service Agreement remains in full force and effect), all Advances to be made
hereunder shall be made in accordance with, and all interest accrued on such
Advances and all repayments of such Advances shall be payable at the times and
in the manner provided for in, the AutoBorrow Service Agreement. To the extent
that any of the provisions of Section 1.2(a) through 1.2(g) hereof are
inconsistent with provisions of the AutoBorrow Service Agreement, the provisions
of the AutoBorrow Service Agreement shall govern. Any Advances made to the
Borrowers under the AutoBorrow Service Agreement shall nonetheless be deemed to
be an Advance hereunder, subject to all other terms hereof.

(h) Voluntary Prepayments; Voluntary Termination. The Borrowers may prepay any
Advance in whole or in part, from time to time without premium or penalty. Any
permitted prepayment need not be accompanied by payment of interest on the
amount prepaid except that any prepayment of Advances which constitutes a final
payment of all Advances shall be accompanied by payment of all interest thereon
accrued through the date of prepayment.

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(i) Terms of Letters of Credit. Each Letter of Credit shall (i) be a commercial
Letter of Credit or a standby Letter of Credit, (ii) be opened pursuant to a
Letter of Credit Agreement duly executed and delivered to the Lender by the
Borrowers prior to the issuance of such Letter of Credit, (iii) expire not later
than six (6) months after the Revolving Credit Expiration Date (unless such are
secured by cash or cash-equivalent collateral satisfactory to the Lender in the
Lender’s sole discretion) provided, however, that if the Revolving Credit
Facility is not renewed or extended, the Borrower shall provide cash security
for all outstanding Letters of Credit scheduled to expire after the Revolving
Credit Expiration date, not later than fifteen (15) days prior to the Revolving
Credit Expiration Date, (iv) be in an amount not less than $10,000, (v) be
issued in the ordinary course of the Borrowers’ business, and (vi) be issued in
accordance with the Lender’s then current practices relating to the issuance of
letters of credit. All powers, right, remedies and provisions set forth in any
Letter of Credit Agreement shall be in addition to those set forth herein. In
the event of any conflict between the provisions of this Agreement and the
provisions of any Letter of Credit Agreement, the provisions of this Agreement
shall prevail and control unless expressly provided otherwise herein or in the
Letter of Credit Agreement.

(j) Procedures for Letters of Credit. The Borrowers shall give the Lender
written notice of its request for a Letter of Credit at least three (3) Business
Days prior to the date on which the Letter of Credit is to be opened by
delivering to the Lender a duly executed Letter of Credit Agreement in form and
content acceptable to the Lender setting forth (i) the face amount of the Letter
of Credit, (ii) the name and address of the beneficiary of the Letter of Credit,
(iii) whether the Letter of Credit is irrevocable or revocable, (iv) whether the
Letter of Credit requested is a standby or commercial Letter of Credit, (v) the
date the Letter of Credit is to be opened and the date the Letter of Credit is
to expire, (vi) the purpose of the Letter of Credit, (vii) the terms and
conditions for any draws under the Letter of Credit, and (viii) such other
information as the Lender may reasonably deem to be necessary or desirable.

(k) Letter of Credit Fees. With respect to each Letter of Credit issued
hereunder, the Borrowers shall pay to the Lender a letter of credit fee (the
“Letter of Credit Fee”) in an amount per annum set forth in the table attached
hereto as Attachment I, payable quarterly in advance, plus the Lender’s then
standard fee for the issuance, negotiation, processing and administration of
letters of credit of the same type as the Letter of Credit. The amount of the
Letter of Credit Fee payable per annum with respect to any Letter of Credit
shall be a percentage of the face amount of such Letter of Credit, calculated on
the basis of the table included as Attachment I hereto, based upon the
Borrowers’ ratio of Total Funded Debt to EBITDA as of the end of the calendar
quarter immediately preceding the date of calculation.

(l) Agreement to Pay Letter of Credit Obligations. The Borrowers shall pay to
the Lender the Letter of Credit Obligations when due; provided, however, that
(a) so long as the Borrowers have availability under the Revolving Credit
Facility, the Lender may, and is hereby authorized to, make Advances to itself
to pay when due any or all Letter of Credit Obligations incurred in connection
with Letters of Credit. The Lender may maintain on its books a letter of credit
account (the “Letter of Credit Account”) with respect to the Letter of Credit
Obligations paid and payable from time to time hereunder. Except for
demonstrable error, the Letter of Credit Account shall be conclusive as to all
amounts owing by the Borrowers to the

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Lender in connection with and on account of the Letter of Credit Obligations.
From the date due until paid in full, all Letter of Credit Obligations shall
bear interest at the rate then applicable to Advances.

(m) Agreement to Pay Absolute. The obligation of the Borrowers to pay Letter of
Credit Obligations set forth above shall be absolute and unconditional and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit, (ii) the existence of any claim, setoff, defense or other right which
the Borrowers may at any time have against the beneficiary under any Letter of
Credit or the Lender, (iii) any draft or other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue provided that payment by the
Lender under such Letter of Credit against presentation of such draft shall not
have constituted gross negligence or willful misconduct, and (v) any other
events or circumstances whatsoever, whether or not similar to any of the
foregoing provided that the payment by the Lender under the Letter of Credit
shall not have constituted gross negligence or willful misconduct of the Lender.

(n) Commitment Fee. In consideration for the agreements of the Lender as set
forth herein, the Borrowers agree to pay to the Lender at closing the balance
remaining of its commitment fee of twenty-five (25) basis points times the
Revolving Credit Amount, which fee shall be deemed earned upon its receipt by
the Lender.

1.3. Additional Provisions.

(a) Interest Calculation. Other than calculations with respect to the Prime Rate
(which shall be computed on the basis of actual days elapsed in a 365/366 day
year), all interest and fees payable under the provisions of this Agreement or
the Note shall be computed on the basis of actual number of days elapsed over a
year of 360 days.

(b) Late Charges. Except for principal, interest and other charges due upon
acceleration of the Obligations, if the Borrowers fails to make any payment of
principal, interest, prepayments, fees or any other amount becoming due pursuant
to the provisions of this Agreement, the Note or any other Financing Document
within fifteen (15) days after the date due and payable, the Borrowers shall pay
to the Lender a late charge equal to five percent (5%) of the amount of such
payment. Such 15-day period shall not be construed in any way to extend the due
date of any such payment. Late charges are imposed for the purpose of defraying
the Lender’s expenses incident to the handling of delinquent payments, and are
in addition to, and not in lieu of, the exercise by the Lender of any rights and
remedies hereunder or under applicable laws and any fees and expenses of any
agents or attorneys which the Lender may employ upon the occurrence of an Event
of Default.

(c) Payments. Whenever any payment to be made by the Borrowers under the
provisions of this Agreement, the Note, the Letter of Credit Agreements or any
other Financing Document is due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, in the
case of any payment which bears interest, such extension of time shall be
included in computing interest on such payment. All payments of principal,
interest, fees or other amounts to be made by the Borrowers under the provisions
of

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this Agreement or the Note shall be paid without set-off or counterclaim to the
Lender at the Lender’s office at 1101 Wooton Parkway, 4th Floor, Rockville,
Maryland 20852, or to such other place as the Lender shall direct in writing, in
lawful money of the United States of America in immediately available funds.

(d) Interest On Overdue Amounts. If the principal of or interest on, the Note or
any other amount required to be paid to the Lender hereunder or under the Note
or any of the other Financing Documents is not paid within fifteen (15) days
after the date when the same becomes due and payable, whether by acceleration or
otherwise, the Borrowers shall on demand from time to time pay to the Lender
interest on such principal, interest or other amount from the date due until the
date of payment (after as well as before any judgment) at a rate per annum equal
to the Default Rate.

(e) Collateral and Subsidiary Guarantees. (1) In order to secure the full and
punctual payment of the Obligations in accordance with the terms thereof, and to
secure the performance of this Agreement and the other Financing Documents, the
Borrowers hereby pledge and assign to the Lender, and grant to the Lender a
continuing lien and security interest in and to the Collateral, both now owned
and existing and hereafter created, acquired and arising and regardless of where
located.

(2) Promptly, following the acquisition or creation thereof and in any event
within thirty (30) days after a request with respect thereto, the Borrowers
shall cause each of the Borrowers’ Subsidiaries formed after the execution of
this Agreement to become party to, and to execute and deliver, a Subsidiary
Guaranty Agreement, guarantying to the Lender the prompt payment, when and as
due, of all Obligations of the Borrowers under the Financing Documents,
including all obligations under any Hedge Agreements.

(3) Promptly, following the acquisition or creation thereof and in any event
within thirty (30) days after a request with respect thereto, the Borrowers
shall cause such Subsidiary to grant to the Lender a first priority lien on all
property (tangible and intangible) of such Subsidiary, including, without
limitation, all of the capital stock of any of its domestic subsidiaries and 65%
of the stock of any of its foreign subsidiaries, upon terms similar to those set
forth in the Financing Documents and otherwise reasonably satisfactory in form
and substance to the Lender. The Borrowers shall cause such Subsidiary, at its
own expense, to become a party to a Subsidiary Security Agreement and any other
Financing Document and to execute, acknowledge and deliver, or cause the
execution, acknowledgment and delivery of, and thereafter register, file or
record in any appropriate governmental office, any document or instrument
reasonably deemed by the Lender to be necessary or desirable for the creation
and perfection of the foregoing liens (including legal opinion, consents,
corporate documents and any additional or substitute security agreements or
mortgages). The Borrowers will cause such Subsidiary to take all actions
requested by the Lender (including, without limitation, the filing of UCC-1’s)
in connection with the granting of such security interests.

(4) The security interests required to be granted pursuant to this Section shall
be granted pursuant to such security documentation as is reasonably satisfactory
in form and substance to Lender (the “Additional Financing Documents”) and shall
constitute valid and

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enforceable perfected security interests prior to the rights of all third
Persons and subject to no other Liens except Liens permitted hereunder. The
Additional Financing Documents and other instruments related thereto shall be
duly recorded or filed in such manner and in such places and at such times as
are required by law to establish, perfect, preserve and protect the Liens, in
favor of the Lender, granted pursuant to the Additional Financing Documents and,
all taxes, fees and other charges payable in connection therewith shall be paid
in full by the Borrowers. At the time of the execution and delivery of
Additional Financing Documents, the Borrowers shall cause to be delivered to
Lender such agreements, opinions of counsel, and other related documents as may
be reasonably requested by the Lender to assure it that this Section has been
complied with.

(5) Automatic Debit. To ensure timely payment of all interest and other sums due
hereunder, the Borrowers hereby authorizes and instructs the Lender to either
(i) debit, on the due date thereof, demand deposit account no. 00393577 3043
maintained at the Lender for the amount then due, (ii) if the amount in the
foregoing demand deposit account is insufficient to satisfy the amount then due,
or (iii) if the Borrowers so instruct the Lender, cause an Advance to be made
sufficient to pay the amount then due. This authorization shall not affect the
obligation of the Borrowers to pay such sums when due, without notice, if there
are insufficient funds available to make any payment in full on the due date
thereof, or if the automatic debit feature is at any time terminated by the
Lender in its discretion.

1.4. The Borrowers’ Representative. Each of the Borrowers hereby represents and
warrants to the Lender that each of them will derive benefits, directly and
indirectly, from the proceeds of each Advance and Letter of Credit, both in its
separate capacity and as a member of the integrated business to which each of
the Borrowers belong. For administrative convenience, TVI is hereby irrevocably
appointed by each of the Borrowers as agent for each of the Borrowers for the
purpose of requesting Advances and Letters of Credit hereunder from the Lender,
receiving the proceeds of Advances and disbursing the proceeds of Advances among
the Borrowers. In its capacity as such agent, TVI shall have the power and
authority through its authorized officer or officers to (i) endorse any check
for the proceeds of any Advance for and on behalf of each of the Borrowers and
in the name of each of the Borrowers, and (ii) instruct the Lender to credit the
proceeds of any Advance directly to a banking account of any of the Borrowers.
By reason of the foregoing, the Lender is hereby irrevocably authorized by each
of the Borrowers to make Advances to the Borrowers and issue Letters of Credit
for the account of the Borrowers pursuant to this Agreement upon the request of
any one of the persons who is authorized to do so under the provisions of any
applicable corporate resolutions of TVI. The Lender assumes no responsibility or
liability for any errors, mistakes and/or discrepancies in any oral, telephonic,
written or other transmissions of any instructions, orders, requests and
confirmations between the Lender and any one or more of the Borrowers in
connection with any Advance, Letter of Credit or other transaction pursuant to
the provisions of this Agreement, except for acts of gross negligence and/or
willful misconduct.

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SECTION 2. Conditions Precedent.

2.1. Initial Advance or Letter of Credit. The Lender shall not be required to
make the initial Advance, or issue the initial Letter of Credit hereunder,
whichever occurs first, unless the following conditions precedent have been
satisfied in a manner reasonably acceptable to the Lender and its counsel:

(a) Borrowers’ Organizational Documents. The Lender shall have received with
respect to the Borrowers: (i) a copy, certified as of a recent date by the
Maryland State Department of Assessments and Taxation or other jurisdiction of
organization, as applicable, of the Borrowers’ Articles of Incorporation or
Articles of Organization, as applicable, as well as a copy of the Borrowers’
bylaws, operating agreements and all amendments thereto, as applicable (ii) a
Certificate of Good Standing for each of the Borrowers issued by the Maryland
State Department of Assessments and Taxation or other jurisdiction of
organization, as applicable, and (iii) a copy, certified to the Lender as true
and correct as of the date hereof by the Borrowers, of the resolutions of the
Borrowers’ boards of directors or managers, as applicable, authorizing the
execution and delivery of this Agreement and the other Financing Documents to
which the Borrowers are a party and designating by name and title the officer(s)
of the Borrowers who are authorized to sign this Agreement and such other
Financing Documents for and on behalf of the Borrowers and to make the
borrowings hereunder.

(b) Lists of Locations, Etc. The Borrowers shall have delivered to the Lender a
list showing the street address, city or county and state of the Borrowers’
chief executive office and of any other location where the Borrowers conducts or
has a place of business or where any of the Collateral is or may be located,
which list shall include the names of all landlords (and mortgagees) and be
accompanied by true and complete copies of all leases, together with all
amendments thereto;

(c) Insurance. The Borrowers shall have delivered to the Lender (or shall have
made arrangements for delivery within thirty (30) days of closing) an Accord
certificate of insurance reflecting the Borrowers’ property and casualty
insurance coverage policy from a well-rated and responsible insurance company
insuring the Collateral in amounts reasonably satisfactory to the Lender against
loss or damage resulting from fire and other risks insured against by extended
coverage, that lists the Lender as loss payee;

(d) Searches. The Lender shall have received the results of a search by an
attorney or company reasonably satisfactory to the Lender of the Uniform
Commercial Code filings with respect to the Borrowers in their jurisdictions of
organization and in which the Borrowers conduct or have a place of business or
in which any of the Collateral is or will be located, accompanied by copies of
such filings, if any, and evidence reasonably satisfactory to the Lender that
any security interest or other lien indicated in any such filing has or will be
released or is permitted by the Lender so that the Lender’s security interest in
the Collateral will be a perfected first security interest and lien on the
Collateral subject only to Permitted Liens and such other matters as the Lender
may approve;

(e) Opinions. The Lender shall have received the written opinion of counsel of
the Borrowers dated on or around the date of this Agreement, reasonably
satisfactory in form and content to the Lender, opining, among other things,
that the Borrowers are duly organized,

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validly existing, and in good standing, that the Financing Documents executed
and delivered by the Borrowers have been duly authorized by all requisite
corporate action, and that the Financing Documents executed and delivered by the
Borrowers constitute the legal, valid, binding, and enforceable obligations of
the Borrowers, enforceable against the Borrowers, as applicable, in accordance
with the terms thereof, subject to customary exceptions and limitations
reasonably acceptable to the Lender.

(f) Financing Documents. The Lender shall have received each of the Financing
Documents required by the Lender to be executed and delivered prior to the
making of the initial Advance.

(g) Due Diligence. The Lender shall have received and reviewed such financial
information and other due diligence reports as the Lender shall reasonably
require.

(h) Operating Account; Etc. The Borrowers shall have established an operating
account into which Advances shall be paid, and the Borrowers shall maintain its
primary accounts with the Lender.

(i) Additional Documents. The Borrowers shall have furnished in form and content
reasonably acceptable to the Lender any additional documents, agreements,
certifications, record searches, insurance policies or opinions which the Lender
may reasonably deem necessary or desirable.

2.2. All Advances and Letters of Credit. The Lender shall not be required to
make any Advances, including the initial Advance, or issue any Letter of Credit,
until compliance to the satisfaction of the Lender with all of the following
conditions at the time of and with respect to each Advance or Letter of Credit:

(a) Representations and Warranties. No representation or warranty made in or in
connection with this Agreement and the other Financing Documents shall be
untrue, incorrect or incomplete in any material respect on and as of the date of
any Advance or Letter of Credit as if made on such date, except for changes in
facts or circumstances arising in the ordinary course of business and which do
not constitute a breach of any covenant set forth herein; and

(b) Event of Default or Default. No Event of Default or Default shall have
occurred and be continuing.

SECTION 3. Representations and Warranties. The Borrowers represents and warrants
to the Lender that, except as specifically set forth on Schedule 3 attached
hereto, the following statements are true, correct and complete in all material
respects as of the date hereof and as of each date any Advance is to be made or
any Letter of Credit is to be issued hereunder, except for changes in facts or
circumstances arising in the ordinary course of business and which do not
constitute a breach of any covenant set forth herein:

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3.1. Authority, Etc. TVI is duly incorporated and in good standing under the
laws of Maryland under organizational identification number D00737676. CAPA
Manufacturing Corp. is duly incorporated and in good standing under the laws of
Maryland under organizational identification number D07907413. Safety Tech
International, Inc. is duly incorporated and in good standing under the laws of
Maryland under organizational identification number D10721777. TVI Air Shelters,
LLC is duly organized and in good standing under the laws of Maryland under
organizational identification number W10727758. The Borrowers are qualified to
do business in all states where the Borrowers do business, except where the
failure to be so qualified would not materially adversely affect the business,
operations or financial condition of the Borrower. The Borrowers have the full
power and authority to execute, deliver and perform this Agreement and the other
Financing Documents to which the Borrowers are a party. Neither such execution,
delivery and performance, nor compliance by the Borrowers with the provisions of
this Agreement and of the other Financing Documents to which the Borrowers are a
party will conflict with or result in a breach or violation of the Borrowers’
articles of incorporation or bylaws, or any judgment, order, regulation, ruling
or law to which the Borrowers are subject or any contract or agreement to which
the Borrowers are a party or to which the Borrowers’ assets and properties is
subject, or constitute a default thereunder. The execution, delivery and
performance of this Agreement and all other Financing Documents to which the
Borrowers are a party have been duly authorized and approved by all necessary
action by the Borrowers and constitute the legal, valid and binding obligations
of the Borrowers, enforceable in accordance with their terms except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally.

3.2. Litigation. Except as specified in Schedule 1.1, there is no litigation or
proceeding pending or, to the knowledge of any representative of the Borrowers
signing this Agreement on behalf of the Borrowers, specifically threatened in
writing, against or affecting the Borrowers which might materially adversely
affect the business, financial condition or operations of the Borrowers or the
ability of the Borrowers to perform and comply with this Agreement or the other
Financing Documents to which the Borrowers are a party.

3.3. Subsidiaries. TVI does not currently have any Subsidiaries other than the
Subsidiaries executing this Agreement.

3.4. Financial Condition. The Borrowers have heretofore furnished to the Lender
certain financial statements. Such financial statements and all other financial
statements and information furnished or to be furnished to the Lender hereunder
have been and will be prepared in accordance with generally accepted accounting
principles (subject to year-end adjustments and the omission of footnote
information) and fairly present in all material respects the financial condition
of the Borrowers as of the dates thereof and the results of the operations of
the Borrowers for the periods covered thereby. No material adverse change in the
business, financial condition or operations of the Borrowers (on an aggregated
basis) have occurred since the date of such financial statements. The Borrowers
do not have any indebtedness or liabilities that are required to be accrued on
financial statements prepared in accordance with GAAP other than that reflected
on such financial statements or expressly permitted by the provisions of this
Agreement, and accounts payable incurred in the ordinary course of business
since the date of such financial statements. The Borrowers are not in default
under any obligation for borrowed money.

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3.5. Taxes. The Borrowers have filed all federal, state and local income,
excise, property and other tax returns which are required to be filed and has
paid all taxes as shown on such returns or assessments received (including,
without limitation, all F.I.C.A. payments and withholding taxes, if
appropriate), except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. No tax liens have
been filed and no claims are being asserted with respect to such taxes or
assessments.

3.6. Title to Properties and Collateral. The Borrowers have good and marketable
title to all of the Borrowers’ assets and properties, including, without
limitation, the Collateral, and such assets and properties are subject to no
liens, security interests or other encumbrances except for those of the Lender
or other Permitted Liens.

3.7. Borrowers’ Name, Business Locations, etc. The correct legal names of the
Borrowers are those specified on Schedule 3.7. Except as provided on Schedule
3.7, the Borrowers have conducted business under their legal names since their
formation. The Borrowers do not do business under any trade or fictitious names.
The chief executive office of the Borrowers and the place where records
concerning Accounts and other Collateral are kept are as set forth on Schedule
3.7 hereto, and each other location at which the Borrowers conduct business or
keeps any of the Collateral is listed on Schedule 3.7 attached hereto. All
Equipment is personalty and is not and will not be affixed to real estate in
such a manner as to become a fixture and a part of such real estate except for
the Equipment described in Schedule 3.7 attached hereto, if any, which is or
will be attached to the real estate described in Schedule 3.7 attached hereto.
Such real estate, if any, is owned of record by the person or persons specified
in Schedule 3.7 attached hereto.

3.8. Compliance with Laws. (a) To the knowledge of the Borrowers, the Borrowers
are not in violation of any applicable federal, state or local law, statute,
rule, regulation or ordinance and has not received any notice of, and is not the
subject of, any pending investigation or complaint alleging that the Borrowers
or the Collateral (or any part thereof) or any other property owned, leased,
operated or used by the Borrowers are in violation of any such law, statute,
rule, regulation or ordinance, including, without limitation, Environmental
Laws, other than violations that will not have a material adverse effect on the
business, operations or financial condition of the Borrowers.

(b) To the knowledge of the Borrowers, no Hazardous Materials have been used,
located, installed, spilled, treated, released or stored on, under or from any
property in or on which the Borrowers conduct their operations except for those
which have been handled in a manner not prohibited by applicable Environmental
Laws or which will not have a material adverse effect on the business,
operations or financial condition of the Borrowers.

3.9. Federal Reserve Board Regulations. The Borrowers are not engaged in the
business of extending credit for the purpose of purchasing or carrying “margin
stock” within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System of the United States (the “Board”) and no part of the
proceeds of the Advances will be used for any purpose which entails a violation
of Regulations U or X of the Board.

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3.10. ERISA. No Plan maintained by the Borrowers or any trade or business group
with which the Borrowers are affiliated subject to the requirements of ERISA has
been terminated, no lien exists against the Borrowers in favor of the PBGC, and
no “reportable event” (as such term is defined in ERISA) has occurred with
respect to any such Plan. The Borrowers have not incurred any “accumulated
funding deficiency” within the meaning of ERISA or any liability to the PBGC in
connection with any Plan. Borrowers do not have any withdrawal or other
liability (absolute, contingent or otherwise) with respect to any multi-employer
plan as defined by Section 3(37) of ERISA. The Borrowers have complied with in
all material respects all provisions of ERISA and with all provisions of any
Plan sponsored, maintained by, or contributed to, by the Borrowers.

3.11. Licenses, etc. The Borrowers have obtained and now hold all licenses,
permits, franchises, patents, trademarks, copyrights and trade names which are
necessary to the conduct of the business of the Borrowers as now conducted free,
to the knowledge of the Borrowers, of any conflict with the rights of any other
person.

3.12. Labor Matters. Except as disclosed in writing to the Lender, the Borrowers
are not subject to any collective bargaining agreements or any agreements,
contracts, decrees or orders requiring the Borrowers to recognize, deal with or
employ any persons organized as a collective bargaining unit or other form of
organized labor. There are no strikes or other material labor disputes pending
or, to the knowledge of the Borrowers, threatened against the Borrowers. The
Borrowers have complied in all material respects with the Fair Labor Standards
Act.

3.13. Accuracy of Information. To the knowledge of the Borrowers, no
information, exhibit, report, statement, certificate or document furnished by
the Borrowers to the Lender in connection with this Agreement or the other
Financing Documents or the negotiation thereof contains any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained herein or therein not misleading.

3.14. No Debarment. The Borrowers are not subject to any pending or threatening
debarment proceedings.

3.15 Intellectual Property. Schedule 3.15 to this Agreement is a complete list
of all patents, trademark and service mark registrations, copyright
registrations, mask work registrations, and all applications therefor, in which
the Borrowers have any right, title, or interest, throughout the world. The
Borrowers will promptly notify the Lender of any acquisition (by adoption and
use, purchase, license or otherwise) of any material patent, trademark or
service mark registration, copyright registration, mask work registration, and
applications therefor, throughout the world, which are granted or filed or
acquired after the date hereof or which are not listed on Schedule 3.15. The
Borrowers authorizes the Lender, without notice to the Borrowers, to modify this
Agreement by adding same to Schedule 3.15 to include any such Collateral.

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3.16. Assignment of Government Payments. Borrowers have the right to assign to
the Lender all payments due or to become due under all of Borrowers’ U.S.
Government Contracts, if any, and there exists no uncanceled assignment of
payment rights under any such Government Contract.

3.17. Government Regulation. The Borrowers are not an “investment company” or an
“affiliated person” of or “provider” or “principal underwriter” for an
“investment company” as such terms are defined in the Investment Company Act of
1940, as amended. The Borrowers are not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligation hereunder.

3.18. Controlling Interests; Bank Secrecy Act, Etc. (a) No person who owns a
controlling interest in or otherwise controls any Borrower is (i) listed on the
Specially Designated Nationals and Blocked Persons List maintained by the Office
of Foreign Assets Control (“OFAC”), Department of the Treasury, and/or any
similar lists maintained by OFAC pursuant to any statute, execution order, or
regulation, or (ii) a Person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling
legislation, or any similar executive orders, and (b) the Borrowers are in
compliance with all Bank Secrecy Act (“BSA”) laws, regulations, and government
guidance on BSA compliance and on the prevention and detection of money
laundering violations.

SECTION 4. Affirmative Covenants. The Borrowers covenants and agrees with the
Lender that so long as any of the Obligations (or commitments therefor) shall be
outstanding:

4.1. Payment of Obligations. The Borrowers shall, and shall cause each
Subsidiary to, punctually pay the principal of and interest on the Credit
Facilities and the other Obligations, at the times and places, in the manner and
in accordance with the terms of this Agreement, the Note, and the other
Financing Documents.

4.2. Financial Statements and Other Reports. The Borrowers will be required to
maintain at all times a system of accounting established and administered in
accordance with sound business practices, and will deliver, or cause to be
delivered, to the Lender:

(a) Annual Financial Statements. Within one hundred twenty (120) days of the end
of each fiscal year of the Borrowers, the annual consolidated financial
statement of TVI (including statements of financial condition, income, profits
and loss, cash flows and changes in shareholder’s equity) audited by independent
certified public accountants reasonably satisfactory to the Lender, prepared in
accordance with GAAP;

(b) Quarterly Financial Statements. Within forty-five (45) days after the end of
each calendar quarter, the consolidated balance sheets and income statements of
the Borrowers prepared by an authorized financial officer of the Borrowers and
showing the financial condition of the Borrowers and its Subsidiaries as of the
end of such quarter and the results of operations of the Borrowers and its
Subsidiaries from the beginning of the current calendar year of the Borrowers to
the end of such quarter;

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(c ) Compliance Certificates. Concurrent with the delivery of the financial
statements described in Sections (a) and (b) above, a written certification,
signed by an authorized financial officer of TVI, to the effect that such
officer has no knowledge of the existence of any Defaults under the Financing
Documents or if such officer has knowledge of the existence of an Event of
Default, a statement as to the nature thereof and the action which the Borrowers
proposes to take with respect thereto. Such written certification shall include
the calculations made by the Borrowers to determine compliance by the Borrowers
with each of the financial covenants set forth herein as of the date of the
financial statements delivered therewith;

(d) Contract Backlog Report. Within forty-five (45) days after the end of each
quarter, a contract backlog report;

(e) Accounts Receivable Aging. Within forty-five (45) days after the end of each
quarter, an aging of the Borrowers’ Accounts, in form and substance reasonably
satisfactory to the Lender; and

(f) Other Information. Promptly upon request of the Lender such other
information, reports or documents respecting the business, properties, operation
or financial condition of the Borrowers as the Lender may at any time and from
time to time reasonably request.

4.3. Conduct of Business and Maintenance of Existence. The Borrowers and each
Subsidiary shall continue to engage in business of the same general type as now
being conducted by the Borrowers, and do and cause to be done all things
necessary to maintain and keep in full force and effect its corporate existence
in good standing in each jurisdiction in which it conducts business.

4.4. Compliance with Laws.

(a) The Borrowers shall, and shall cause each Subsidiary to, comply in all
material respects with all laws, statutes, ordinances, orders, rules or
regulations applicable to the Borrowers, any Subsidiary, or the Collateral (or
any part thereof) or to any other property owned, leased, operated or used by
the Borrowers or any Subsidiary, including, without limitation, Environmental
Laws.

(b) Neither the Borrowers nor any Subsidiary will use, locate, install, spill,
treat, release or store Hazardous Materials on, under or from any property
owned, leased, operated or used by the Borrowers or such Subsidiary unless such
Hazardous Materials are handled in a manner not prohibited by applicable
Environmental Laws and are handled in a manner and in such quantities that would
not constitute a hazard to the environment or human health and safety or subject
the Borrowers or any Subsidiary to any prosecution or material liability in
connection therewith. The Borrowers will, and will cause each Subsidiary to,
dispose of all Hazardous Materials only at facilities and/or with carriers that
maintain governmental permits under applicable Environmental Laws. The Borrowers
shall, and shall cause each Subsidiary to, promptly, at the cost and expense of
the Borrowers, take all action necessary or required by Environmental Laws to
remedy or correct any violation of Environmental Laws by the Borrowers or any
Subsidiary, the Collateral (or any part thereof) or by any other property owned,
leased, used or operated by the Borrowers or any Subsidiary.

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(c) If the Lender shall have, in the exercise of good faith, reason to believe
at any time or from time to time there are or may be Hazardous Materials
affecting the Collateral (or any part thereof) or any other property owned,
leased, operated or used by the Borrowers or any Subsidiary in violation of
applicable Environmental Laws, the Borrowers, upon the request of the Lender and
at the cost and expense of the Borrowers, shall furnish to the Lender an
environmental assessment of the Collateral and such other property in such
detail and content and by an environmental consultant or engineer acceptable to
the Lender. The Borrowers shall provide evidence to the Lender within ten
(10) business days of the Lender’s request, that such an assessment will be
promptly undertaken and completed.

(d) The Borrowers hereby agree to indemnify and hold the Lender and its
employees and agents harmless from and against any and all liability, loss,
damage, costs and expenses suffered or incurred by the Lender during or after
the term of this Agreement arising out of or resulting from a violation of any
Environmental Laws by the Borrowers, any Subsidiary, the Collateral (or any part
thereof) and any other property owned, leased, used or operated by the Borrowers
or any Subsidiary provided, however that the Borrowers shall not be required to
indemnify any party for liability, loss, damage, costs, or expenses arising from
such party’s own gross negligence or willful misconduct. The obligations and
liabilities of the Borrowers under the foregoing indemnity, together with
interest thereon commencing ten (10) days after the date written demand is
received by the Borrowers until paid in full at the interest rate then
applicable to Advances hereunder, shall be paid by the Borrowers to the Lender
upon written demand and shall be a part of the Obligations hereunder. The
foregoing indemnity shall survive the payment of all other Obligations and the
release of the Collateral.

4.5. Payment of Liabilities and Taxes. The Borrowers shall pay, and shall cause
each Subsidiary to pay, when due, all of their indebtedness and liabilities, and
pay and discharge promptly all taxes, assessments and governmental charges and
levies (including, without limitation, F.I.C.A. payments and withholding taxes)
upon the Borrowers or any Subsidiary or upon the Borrowers’ or any Subsidiary’s
income, profits or property (including, without limitation, the Collateral),
except to the extent the amount or validity thereof is contested in good faith
by appropriate proceedings so long as adequate reserves have been set aside
therefore, in each case unless the failure to do so involves less than $100,000
in the aggregate.

4.6. Contractual Obligations. The Borrowers shall comply, and shall cause each
Subsidiary to comply, with any agreement or undertaking to which the Borrowers
or any Subsidiary is a party and maintain in full force and effect all contracts
and leases to which the Borrowers or any Subsidiary is or become a party, in
each case unless the failure to do so would not have a material adverse effect
on the business, operation, properties or financial condition of the Borrowers
and its Subsidiaries on an aggregated basis.

4.7. Maintenance of Properties; Collateral. The Borrowers shall, and shall cause
each Subsidiary to, do all things necessary to maintain, preserve, protect and
keep their properties, including the Collateral, in good repair, working order
and condition, and make all necessary and

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proper repairs, renewals and replacements so that the Borrowers’ and each
Subsidiary’s business may be properly conducted at all times, in each case
unless the failure to do so would not have a material adverse effect on the
business, operation or financial condition of the Borrowers and its Subsidiaries
(on an aggregated basis). The Borrowers shall promptly notify the Lender of any
event causing deterioration, loss or depreciation in value of any substantial
portion of the Collateral and the amount of such loss or depreciation. The
Borrowers and each Subsidiary shall perform, observe, and comply with all of the
reasonable terms and provisions to be performed, observed or complied with by
them under each contract, agreement or obligation relating to the Collateral.
The Lender shall have no duty to, and the Borrowers hereby release the Lender
from all claims for loss or damage caused by the failure of the Lender to,
collect, protect, preserve or enforce any of the Collateral or preserve rights
against account debtors and prior parties to the Collateral, except for acts of
gross negligence or willful misconduct.

4.8. Insurance. The Borrowers shall maintain, and shall cause each Subsidiary to
maintain, with financially sound, well rated and reputable insurance companies
insurance in such amounts and covering such risks as is consistent with sound
business practice, and in any event as is ordinarily and customarily carried by
(and, as implied, economically available to) companies similarly situated and in
the same or similar businesses as the Borrowers. The Borrowers will pay, when
due, all premiums on such insurance and will furnish to the Lender, upon
request, evidence of payment of such premiums and other information as to the
insurance carried by the Borrowers. Such insurance shall include, as applicable
and without limitation, (a) comprehensive fire and extended coverage insurance
on the physical assets and properties of the Borrowers (including, without
limitation, the Collateral) against such risks, with such loss deductible
amounts and in such amounts conforming to prudent business practices and in such
minimum amounts that the Borrowers will not be deemed a co-insurer under
applicable insurance laws, regulations, policies and practices, and (b) public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrowers, and (c) worker’s compensation
insurance (as applicable). Each policy of such insurance covering the Collateral
shall contain a provision or endorsement reasonably satisfactory to the Lender
naming the Lender as loss payee and providing that (a) such policy may not be
canceled or significantly altered and the Lender may not be removed as loss
payee without at least thirty days prior written notice to the Lender, and
(b) no act or default of the Borrowers or any other person shall affect the
right of the Lender to recover under such policy. The Borrowers hereby
irrevocably (x) assign and grant to the Lender a security interest in any and
all proceeds of each such insurance policy covering the Collateral, and during
the continuation of an Event of Default, (y) direct each insurance company to
pay all such proceeds directly to the Lender, and (z) constitute and appoint the
Lender (and all officers, employees or agents designated by the Lender) as the
Borrowers’ true and lawful attorney-in-fact (coupled with an interest) with
authority and power on behalf of the Borrowers to make, adjust, settle or
compromise all claims under each such insurance policy, to collect and receive
all proceeds payable under each such insurance policy and to endorse any check,
draft or instrument for such proceeds. Any proceeds of such insurance received
by the Lender (less the amount of any reasonable costs and settlement of such
losses) shall be held and applied, at the option of the Lender, to the
Obligations (whether matured or unmatured) in such manner and at such times as
the Lender may determine in its sole discretion or to the restoration or
replacement of the damaged or destroyed Collateral upon terms and conditions
reasonably satisfactory in all material respects to the Lender.

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4.9. Inspection. The Borrowers and each Subsidiary shall permit the Lender, by
its representatives and agents, to inspect any of the properties, books and
financial records of the Borrowers, to examine and make copies of the books of
accounts and other financial records of the Borrowers, and to discuss the
affairs, finances and accounts of the Borrowers and its Subsidiaries with, and
to be advised as to the same by, the Borrowers and each Subsidiary (or its
representatives) at such reasonable times and intervals as the Lender may
designate. In connection with the foregoing, the Lender and its representatives
and agents shall have the right, upon reasonable notice and during regular
working hours, to (a) enter any business premises of the Borrowers or any other
premises where the Collateral and the records relating thereto may be located
and to audit, appraise, examine and inspect the Collateral and all records
related thereto and to make extracts therefrom and copies thereof, and
(b) verify under reasonable procedures the validity, amount, quality, quantity,
value and condition of, and any other matter relating to, the Collateral,
including contacting account debtors or any person possessing any of the
Collateral. Without limiting the foregoing, the Borrowers specifically agree
that upon the occurrence of an Event of Default the Borrowers will permit the
Lender to conduct, at the expense of the Borrowers (not to exceed $15,000 per
Field Exam), a field exam to be performed by the Lender’s Asset Based Lending
Services Group (or similar enterprise) (each, a “Field Exam”) To the extent that
the Lender receives any confidential information from or with respect to the
Borrowers, as a result of Field Exams or otherwise, (a) the Lender will not
reproduce or distribute any such information, or any notes, interpretations or
other documents based in whole or in part upon such information, to
non-affiliated parties, other than financial or legal advisors also bound by an
obligation of confidentiality, and (b) the Lender will keep permanently
confidential all such information, except to the extent that (i) such
information ceases to be confidential by reason of its being in the public
domain, other than as a result of a disclosure by the Lender or its
representatives, or (ii) such information was within the Lender’s possession or
becomes available to the Lender on a non-confidential basis from a source other
than the Borrowers, or any representative of the Borrowers, or (iii) the Lender
is legally required to disclose such information to any tribunal or governmental
authority.

4.10. Collection of Accounts. The Borrowers and each Subsidiary shall, subject
to the provisions of Section 4.14 hereof, collect its Accounts only in the
ordinary course of business, and shall not, except in the ordinary course of its
business, without the Lender’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, compromise or adjust the amount
of any Account or extend the time for payment of any Account, excepting ordinary
course trade discounts and other similar adjustments and compromises.

4.11. Sale of Inventory, etc. The Borrowers and each Subsidiary shall sell its
Inventory only in the ordinary course of business, and will not, without the
prior written consent of the Lender, consign or otherwise dispose of its
Inventory.

4.12. Further Assurances. The Borrowers shall defend the security interest and
lien of the Lender on the Collateral against all persons and against all
security interests and liens on the Collateral adverse to those of the Lender.
The Borrowers will, from time to time, at the expense

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of the Borrowers, execute, deliver, acknowledge and cause to be duly filed,
recorded or registered any statement, assignment, instrument, paper, agreement
or other document and take any other action that from time to time may be
necessary or desirable, or that the Lender may reasonably request, in order to
create, preserve, continue, perfect, confirm or validate the security interest
and lien of the Lender on the Collateral or to enable the Lender to obtain the
full benefits of this Agreement or to exercise and enforce any of its rights,
powers and remedies hereunder or under applicable laws. The Borrowers shall pay
all costs of, and incidental to, the filing, recording or registration of any
such document as well as any recordation, transfer or other tax required to be
paid in connection with any such filing, recordation or registration. The
Borrowers hereby covenant to save harmless and indemnify the Lender from and
against any liability resulting from the failure to pay any required documentary
stamps, recordation and transfer taxes and recording costs incurred by the
Lender in connection with this Agreement or the Collateral which covenant shall
survive the termination of this Agreement and the payment of all other
Obligations. The Borrowers agree that a carbon, photographic, photostatic or
other reproduction of this Agreement or of a financing statement signed by the
Borrowers in connection with this Agreement shall be sufficient as a financing
statement. If, in the reasonable opinion of the Lender, any Equipment is or may
become a part of any real estate owned or leased by the Borrowers, the Borrowers
will, upon the request of the Lender, furnish to the Lender in form and content
satisfactory to the Lender, a landlord’s waiver by the record owner of such real
estate and a mortgagee’s waiver by any person who has a security interest or
lien on such real estate which is or may be superior to the security interest
and lien of the Lender on such Equipment. If any Collateral is or becomes the
subject of any registration certificate, certificate of deposit or negotiable
document of title, including any warehouse receipt or bill of lading, the
Borrowers shall immediately deliver such document to the Lender, together with
any necessary endorsement.

4.13. Notice. The Borrowers shall promptly give written notice to the Lender of
(a) the occurrence of any Default or Event of Default or any event, development
or circumstance specific to any Borrower which might materially adversely effect
the business, operations, properties or financial condition of the Borrowers or
any Subsidiary, (b) any litigation instituted or threatened in writing against
the Borrowers or any Subsidiary or any judgment against the Borrowers or any
Subsidiary where claims against the Borrowers or such Subsidiary exceed $250,000
(in the aggregate) and are not covered in full by insurance (subject to any
deductible), (c) any notice of a claim against, or investigation of, the
Borrowers, any Subsidiary, the Collateral or any other property owned, leased,
operated or used by the Borrowers or any Subsidiary alleging a violation of
Environmental Laws or the discovery, use, location, installation, spill,
treatment, release or storage of any Hazardous Materials by the Borrowers or any
Subsidiary or on, under or from the Collateral (or any part thereof) or any
other property owned, leased, used or operated by the Borrowers or any
Subsidiary which could result in a breach of the provisions of Section 4.4
hereof, (d) the occurrence of any “reportable event” within the meaning of ERISA
or any assertion of liability of the Borrowers or any Subsidiary by the PBGC,
(e) notice of any suspension or debarment by any governmental authority, or any
termination of any Governmental Contract for default and (f) the opening by the
Borrowers of a new place of business.

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4.14. Collections.

(a) At any time while an Event of Default shall occur and be continuing, the
Borrowers shall notify and direct all account debtors promptly following written
request by the Lender to make all payments on or in respect of Accounts and/or
the sale or lease of Inventory (other than electronic funds transfers) directly
to an account in the name of the Borrowers to be maintained at the Lender (the
“Collection Account”). So long as no Event of Default has occurred, the
Borrowers may continue to permit electronic payments to be made to the
Borrowers’ operating accounts (collectively, the “Operating Accounts”).

(b) At any time while an Event of Default shall be continuing, the Lender may
(1) terminate the authority of the Borrowers to receive electronic payments into
the Operating Accounts, whereupon all account debtors shall be directed to remit
all payments directly to the Collection Account, and (2) terminate the authority
of the Borrowers to withdraw funds from the Collection Account whereupon (i) the
Collection Account will automatically convert into an account over which the
Lender has exclusive dominion, control and power of access and withdrawal, and,
for that purpose, the Lender is hereby authorized to take all appropriate
actions to block the Borrowers’ access to the Collection Account, including
without limiting the generality of the foregoing, denying electronic access and
returning unpaid any checks, drafts or other instruments theretofore or
thereafter issued by the Borrowers and drawn upon the Collection Account, all
without any liability whatsoever on the part of the Lender to the Borrowers or
to any other person for having done so, (ii) any cash, checks, drafts or other
remittances on or in respect of Accounts and/or the sale or lease of Inventory
received by the Borrowers and held in trust for the Lender as above provided
shall be immediately delivered to the Lender for deposit to the Collection
Account in precisely the form received, except for the addition thereto of the
endorsement of the Borrowers where required for collection of any such checks,
drafts or other remittances which endorsement the Borrowers agree to make and
with respect to such checks, drafts and other remittances the Borrowers waives
notice of presentment, protest and non-payment and (iii) the Lender shall have
the right at any time and from time to time to apply funds held by it in the
Collection Account to the payment of all or any part of the Obligations, whether
matured or unmatured, in such order and manner as the Lender may determine in
its sole discretion.

4.15. Assignment of Payments Under Certain Government Contracts and Government
Accounts. At any time while an Event of Default has occurred and is continuing,
and thereafter upon the creation of any Government Contract, if so requested by
the Lender, the Borrowers shall execute and deliver to the Lender specific
assignments of payments due or to become due with respect to any Government
Contracts. The Lender may, in its sole and absolute discretion, from time to
time exclude from this requirement contracts that (a) provide for payments to
Borrowers of less than $500,000, or (b) are less than six (6) months in
duration; provided, however that any such exclusion, if granted, shall not
release the Borrowers from the obligation to provide such assignments in the
future, at the Lender’s discretion. The separate assignment to the Lender of a
right to payment under specific Government Contracts, as contemplated under this
Section, shall not be deemed to limit the Lender’s security interest to payments
under those particular Government Contracts, but rather the Lender’s security
interest, as stated above, shall extend to payments under any and all Government
Contracts and proceeds thereof, now or hereafter owned or acquired by Borrowers.
Borrowers acknowledge that the Lender will be

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irreparably harmed if Borrowers fails to assign payments due or to become due
under any Government Contract when required by this Agreement, and that the
Lender shall have no adequate remedy at law. Therefore, the Borrowers agree that
the Lender shall be entitled, in addition to all other remedies allowed by law
or under this Agreement, to injunctive or other equitable relief to compel
Borrowers’ compliance with the provisions of this Agreement requiring the
Borrowers to assign payments due or to become due under any Government Contract.

4.16. Intellectual Property. The Borrowers will, at their expense, diligently
prosecute all patent, trademark or service mark or copyright applications
pending on or after the date hereof, if any, will maintain in effect all issued
patents and will renew all trademark and service mark registrations, if any,
including payment of any and all maintenance and renewal fees relating thereto.
The Borrowers will at its expense protect and defend all rights in such
Collateral against any claims and demands of all persons other than the Lender
and will, at their expense, enforce all rights in such Collateral against any
and all infringers of the Collateral.

4.17. Primary Operating Accounts. The Borrowers hereby agree to maintain the
primary operating account for the business operations of the Borrowers with the
Lender. The Borrowers recognize and agree that the pricing for the Revolving
Credit Facility set forth herein is based on the assumption that the Borrowers
will so maintain their primary operating accounts with the Lender, and that, in
the event that the Borrowers fail to do so, the Lender may, among other things,
adjust the applicable interest rate or fees in order to maintain its required
rate of return.

SECTION 5. Financial and Negative Covenants. The Borrowers covenant and agree
with the Lender that so long as any of the Obligations (or commitments therefor)
shall be outstanding:

5.1. Total Funded Debt to EBITDA Ratio. The Borrowers shall not permit their
consolidated ratio of Total Funded Debt to EBITDA, on a rolling 4-calendar
quarter basis, to be greater than 1.75 to 1.0.

5.2 Indebtedness. The Borrowers shall not, and shall not permit any Subsidiary
to, create, incur, assume or permit to exist any indebtedness (including Capital
Leases) except (a) indebtedness to the Lender, (b) other indebtedness existing
on the date hereof or expressly permitted by the provisions hereof (including
the indebtedness arising in connection with “earn-out” obligations in connection
with Permitted Acquisitions and any other acquisitions otherwise permitted by
this Agreement, as itemized on Schedule 5.2 hereof and supplemented in writing
from time to time), (c) indebtedness incurred by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, and
(d) indebtedness incurred in the ordinary course of business which is unsecured
and consists of open accounts extended by suppliers on normal trade terms in
connection with the purchase of goods and services.

5.3. Liens. The Borrowers shall not, and shall not permit any Subsidiary to,
create, incur, assume or permit to exist any lien, security interest or
encumbrance of any nature whatsoever on the Borrowers’ or any Subsidiary’s
property or assets, both now owned and

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hereafter acquired and including, without limitation, the Collateral, except for
(a) any lien or security interest now or hereafter securing all or any part of
the Obligations, (b) any lien, security interest or encumbrance existing on the
date hereof which was immediately prior hereto disclosed to, and approved by,
the Lender in writing, (including those created to secure the Subordinated
Debt), (c) any lien, security interest or other encumbrance subsequently
approved by the Lender in writing after the date hereof, (d) liens for taxes not
delinquent or for taxes being diligently contested by Borrowers or its
Subsidiary in good faith and for which adequate reserves are maintained,
(e) mechanic’s, artisan’s, materialmen’s, vendor’s or other similar liens
arising in the ordinary course of business, and (f) any deposit of funds made in
the ordinary course of business to secure obligations of the Borrowers or a
Subsidiary under workers compensation, social security or similar laws or to
secure public or statutory obligations or the performance of bids, tenders,
contracts, leases, subleases, surety and appeals bonds and the like, (g) zoning
or other similar and customary land use restrictions, (h) duly perfected liens
securing purchase money indebtedness not prohibited by this Agreement, including
duly perfected liens obtained in favor of lessors of tangible personal property
arising under operating leases to the extent such leases are recharacterized as
sales and (i) licenses or sub-licenses granted in the ordinary course of
business. Any lien, security interest or encumbrance permitted by this
subsection is called a “Permitted Lien.”

5.4. Loans and Investments. The Borrowers shall not, and shall not permit any
Subsidiary to, make or permit to remain outstanding any loan or advance to,
provide any guaranty for, or make or own any investment in, any person except
(a) reasonable advances for business expenses of the Borrowers’ or such
Subsidiary’s employees that would be reimbursable under the Borrowers’ or such
Subsidiary’s existing expense reimbursement policy, (b) investments in existing
subsidiaries at least 75% owned, directly or indirectly, by the Borrowers, and
new subsidiaries purchased in accordance with the terms hereof (including
Permitted Acquisitions), (c) investments in obligations of, or guaranteed by,
the United States government or any agency thereof, (d) investments in
securities issued by entities having an investment-grade rating (or better) by
Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and
(e) transactions incident to and in connection with Permitted Acquisitions.

5.5. Dividends. Neither the Borrowers nor any Subsidiary shall, without the
prior written consent of the Lender, declare or pay dividends on account of any
class of stock or membership interests in such Borrower or Subsidiary, or make
any distribution of assets to such stockholders or members, whether in cash,
assets or obligations of such Borrower or Subsidiary, except for any
reimbursement to the members of any limited liability company Borrower for pass
through income tax liability of such members.

5.6. Mergers, Acquisitions, Etc. The Borrowers shall not, and shall not permit
any Subsidiary to, enter into any merger or consolidation or acquire or purchase
all or substantially all of the assets, properties or stock of any other person,
other than Permitted Acquisitions, without the Lender’s prior written consent.
The Lender will consider providing its prior written consent to transactions
other than Permitted Acquisitions after its receipt and review of financial
information that is, in the Lender’s discretion, adequate, and includes a
consolidating forecast or projection that demonstrates pro forma compliance with
all terms and conditions after giving effect to such acquisition. In the latter
event, the Lender will endeavor to respond to the

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Borrowers’ request to consider such an acquisition as soon as possible and in
any event will so respond within twenty (20) days of receiving a complete set of
such financial information and projections.

5.7. Sale of Assets and Liquidation. The Borrowers shall not sell, and shall not
permit any Subsidiary to, lease or otherwise dispose of, in one transaction or a
series of transactions, assets or properties, including, without limitation, the
Collateral, in an annual amount in excess of $100,000 other than in the ordinary
course of the Borrowers’ business, or take any action to liquidate, dissolve or
wind up the Borrowers or any Subsidiary or its business.

5.8. Change of Business. The Borrowers shall not, and shall not permit any
Subsidiary to, enter into any business other than its business as of the date of
closing, and similar, complementary, or related enterprises.

5.9. Change of Name, Location, Etc. The Borrowers shall not (a) change their
legal name, identity or structure, (b) change the location of their chief
executive office or its chief place of business, or jurisdiction of
incorporation, or (c) change the location where they keeps their records
concerning the Collateral, unless the Borrowers shall have given the Lender
prior written notice thereof and shall at their cost and expense have executed,
delivered, acknowledged, filed, recorded or registered all financing statements
and other documents as may be required by the Lender in order to create,
perfect, continue, preserve, confirm or validate the security interest and lien
of the Lender on the Collateral and their priority; provided, that the Borrowers
shall not in any event change the location of any Collateral if such change
would cause the security interest and lien of the Lender on the Collateral (or
the perfection thereof) to lapse, or if required to be perfected prior to such
change, to cease to be perfected.

5.10. Fiscal year. The Borrowers shall not change their fiscal year.

5.11. Affiliates. The Borrowers shall not, and shall not permit any Subsidiary
to, enter into or participate in any transaction with an affiliate except (a) on
terms and at rates no more favorable than those which would have prevailed in an
arm’s length transaction between unrelated third parties or (b) any transactions
among any of the Borrowers and its Subsidiaries.

5.12. ERISA. The Borrowers shall not, and shall not permit any Subsidiary to,
engage in any “prohibited transaction” (as such term is defined by ERISA), incur
any “accumulated funding deficiency” (as such term is defined by ERISA) whether
or not waived, or terminate any Plan in a manner which could result in the
imposition of a lien on any property of the Borrowers or any Subsidiary pursuant
to the provisions of ERISA.

5.13. Sale and Leaseback. The Borrowers shall not, and shall not permit any
Subsidiary to, enter into any arrangement whereby Borrowers or any Subsidiary
sell or transfer all or a substantial part of its fixed assets then owned by
them and thereupon, or within one (1) year thereafter, rents or leases the
assets so sold or transferred from the purchaser or transferee (or their
respective successors and assigns).

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5.14. Financing Statements. The Borrowers shall not file or cause to be filed
any amendments, correction statements, or termination statements concerning the
Collateral without the prior written consent of the Lender.

SECTION 6. Events of Default. The occurrence of any one or more of the following
events shall constitute a default under the provisions of this Agreement, and
the term “Event of Default” shall mean, whenever it is used in this Agreement,
any one or more of the following events (and the term “Default” as used herein
means one or more of the following events, whether or not any requirement for
the giving of notice, the lapse of time, or both has been satisfied):

6.1. Payment of Obligations. The failure of the Borrowers to pay any of the
Obligations as and when the same becomes due and payable in accordance with the
provisions of this Agreement, the Note, and/or any of the other Financing
Documents, whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof;

6.2. Certain Provisions of this Agreement. The failure of the Borrowers to
perform any of its obligations under Sections 4.2, 4.5, 4.14 or Section 5 of
this Agreement;

6.3. Perform, etc. Provisions of This Agreement. The failure of the Borrowers to
perform, observe or comply with any of the provisions of this Agreement other
than those covered by Sections 4.17, 6.1 or 6.2 of this Agreement and such
failure is not cured within a period of thirty (30) days after the delivery of
written notice thereof by the Lender to the Borrowers, it being understood that
the Borrowers’ failure to comply with Section 4.17 hereof may result in an
adjustment of the applicable interest rate or fees hereunder in order to
maintain the Lender’s expected rate of return;

6.4. Representations and Warranties. If any representation and warranty
contained herein or any statement or representation made in any certificate or
any other written information at any time given by or on behalf of the Borrowers
or any guarantor or furnished by the Borrowers or any guarantor in connection
with this Agreement or any of the other Financing Documents shall prove to be
false, incorrect or misleading in any material respect on the date as of which
made;

6.5. Default under Other Financing Documents. The occurrence of a default (as
defined and described therein) by the Borrowers, any guarantor, or any other
party or parties under the provisions of the Note or any of the other Financing
Documents which is not cured within applicable cure periods, if any;

6.6. Liquidation, Termination, Dissolution, etc. If any Borrower or any
guarantor or any other Subsidiary shall liquidate, dissolve or terminate its
existence, other than a merger or consolidation of any Subsidiary with or into
any Borrower or other Subsidiary;

6.7. Default under Other Indebtedness. If any Borrowers or any guarantor shall
default in any payment of (a) any other indebtedness owing to the Lender, or
(b) an indebtedness in excess of $100,000 owing to any other party beyond the
period of grace unless such

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indebtedness is in good faith being disputed, if any, provided in the instrument
or agreement under which such indebtedness was created, or default in the
observance or performance of any other agreement or condition relating to any
such indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur, in each case, the
effect of which default or other event is to cause or to permit the holder or
holders of such indebtedness or beneficiary or beneficiaries of such
indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice, if required,
such indebtedness to become due prior to its stated maturity;

6.8. Attachment. The issuance of any attachment or garnishment against property
or credits of any Borrower serving as Collateral or the issuance of any
attachment or garnishment against any other property or credits of any Borrowers
or any guarantor, in either case for an amount in excess, singly or in the
aggregate, of $100,000 during each calendar year, which shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days after the
issuance thereof;

6.9. Judgments. One or more judgments or decrees shall be entered against any
Borrowers or any guarantor involving in the aggregate a liability in excess of
$250,000 for each calendar year, and all such judgments or decrees shall not
have been vacated, discharged (or otherwise paid or settled), stayed or bonded
pending appeal within 30 days after the entry thereof;

6.10. Inability to Pay Debts, etc. If any Borrowers or any guarantor shall admit
its inability to pay its debts as they mature or shall make any assignment for
the benefit of any of its creditors;

6.11. Bankruptcy. If proceedings in bankruptcy, or for reorganization of the
Borrowers or any guarantor, or for the readjustment of any of the Borrowers’ or
any guarantor’s debts, under the United States Bankruptcy Code (as amended) or
any part thereof, or under any other applicable laws, whether state or federal,
for the relief of debtors, now or hereafter existing, shall be commenced against
or by any Borrowers or any guarantor and, except with respect to any such
proceedings instituted by a Borrower or any guarantor, shall not be discharged
within sixty (60) days of their commencement;

6.12. Receiver, etc. A receiver or trustee shall be appointed for any Borrower
or any guarantor or for any substantial part of the Borrowers’ or any
guarantor’s assets, or any proceedings shall be instituted for the dissolution
or the full or partial liquidation of any Borrower or any guarantor and, except
with respect to any such appointments requested or instituted by the Borrowers
or any guarantor, such receiver or trustee shall not be discharged within sixty
(60) days of his or her appointment, and, except with respect to any such
proceedings instituted by any Borrower or any guarantor, such proceedings shall
not be discharged within sixty (60) days of their commencement;

6.13. Change in Ownership or Control. The majority ownership or voting control
of any Borrower is directly or indirectly sold, assigned, transferred,
encumbered or otherwise conveyed without the prior written consent of the
Lender, which consent shall not be unreasonably withheld;

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6.14. Financial Condition. The occurrence of any change in the financial
condition of the Borrowers (on an aggregated basis) which is materially adverse
and not covered by insurance, and any such change is not cured within thirty
(30) days after the date of written notice thereof by the Lender to the
Borrowers;

6.15. Financing Documents Unenforceable. Any Borrower or any guarantor shall
assert in writing that any Financing Document is unenforceable, or the Borrowers
or any guarantor shall assert in writing that any security interest purported to
be created by any Financing Document and required hereunder or thereunder to be
perfected is not (except as otherwise expressly permitted in this Agreement or
the other Financing Documents) a valid first lien and prior perfected security
interest in the securities, assets or properties purported to be covered
thereby.

SECTION 7. Rights and Remedies.

7.1. Rights and Remedies. If any Event of Default shall occur and be continuing,
the Lender may (i) declare the Credit Facilities hereunder and any obligation or
commitment of the Lender hereunder to make Advances to or issue Letters of
Credit for the account of the Borrowers to be terminated, whereupon the same
shall forthwith terminate, and (ii) declare the unpaid principal amount of the
Note, together with accrued and unpaid interest thereon, and all other
Obligations then outstanding to be immediately due and payable, whereupon the
same shall become and be forthwith due and payable by the Borrowers to the
Lender, without presentment, demand, protest or notice of any kind, all of which
are expressly waived by the Borrowers; provided that in the case of any Event of
Default referred to in Sections 6.11 or 6.12 above, the Credit Facilities
hereunder and any obligation or commitment of the Lender hereunder to make
Advances to, or issue Letters of Credit for the account of, the Borrowers shall
immediately and automatically terminate and the unpaid principal amount of the
Note, together with accrued and unpaid interest thereon, and all other
Obligations then outstanding shall be automatically and immediately due and
payable by the Borrowers to the Lender without notice, presentment, demand,
protest or other action of any kind, all of which are expressly waived by the
Borrowers. Upon the occurrence and during the continuation of any Event of
Default, then in each and every case, the Lender shall be entitled to exercise
in any jurisdiction in which enforcement thereof is sought, the following rights
and remedies, in addition to the rights and remedies available to the Lender
under the other provisions of this Agreement and the other Financing Documents,
the rights and remedies of a secured party under the Uniform Commercial Code and
all other rights and remedies available to the Lender under applicable law, all
such rights and remedies being cumulative and enforceable alternatively,
successively or concurrently:

(a) The Lender shall have the right to take possession of the Collateral, and
for that purpose, so far as the Borrowers may give authority therefor or to the
extent permitted under applicable laws, to enter upon any premises on which the
Collateral or any part thereof may be situated and remove therefrom all or any
of the Collateral without any liability for suit, action or other proceeding.
THE BORROWERS HEREBY WAIVE ANY AND ALL RIGHTS TO PRIOR NOTICE AND TO JUDICIAL
HEARING WITH RESPECT TO REPOSSESSION OF COLLATERAL, and require the Borrowers,
at the Borrowers’ expense, to assemble and deliver all or any of the Collateral
to such place or places as the Lender may designate.

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(b) The Lender shall have the right to operate, manage and control all or any of
the Collateral (including use of the Collateral and any other property or assets
of the Borrowers in order to continue or complete performance of the Borrowers’
obligations under any contracts of Borrowers), or permit the Collateral or any
portion thereof to remain idle or store the same, and collect all rents and
revenues therefrom and sell, lease or otherwise dispose of any or all of the
Collateral upon such terms and under such conditions as the Lender, in its sole
discretion, may determine, and purchase or acquire any of the Collateral at any
such sale or other disposition, all to the extent permitted by applicable law.
Any purchaser or lessee of any of the Collateral so sold or leased shall hold
the property so sold or leased free from any claim or right of the Borrowers and
the Borrowers hereby waives (to the extent permitted by law) all rights of
redemption, stay or appraisal with respect thereto. The Lender and the Borrowers
agree that commercial reasonableness and good faith require the Lender to give
to the Borrowers no more than ten (10) days prior written notice of any public
sale or other disposition of the Collateral or of the time after which any
private sale or other disposition of the Collateral is to be made.

(c) The Lender shall have the right, and the Borrowers hereby irrevocably
designate and appoint the Lender and its designees as the attorney-in-fact of
the Borrowers, with power of substitution and with power and authority in the
Borrowers’ name, the Lender’s name or otherwise and for the use and benefit of
the Lender (i) to notify persons obligated to make payments or other remittances
on or with respect to the Collateral to make such payments and other remittances
directly to the Lender, (ii) to demand, collect, sue for, take control of,
compromise, settle, change the terms of, release, exchange, substitute, extend,
renew or otherwise deal with, the Collateral or any person obligated on or under
the Collateral in any manner as the Lender may deem advisable, (iii) to remove
from any place of business of the Borrowers copies of (or, if deemed by the
Lender to be reasonably necessary, originals of) all records in respect of the
Collateral and, at the cost and expense of the Borrowers, to make use of any
place of business of the Borrowers as may be necessary or desirable to
administer, control, collect, sell or otherwise dispose of the Collateral,
(iv) to receive and endorse the Borrowers’ name on any checks, drafts, money
orders or other instruments of payment relating to any of the Collateral, (v) to
sign any proofs of claim or loss, (vi) to commence, prosecute or defend any
action, suit or proceeding relating to the Collateral or the collection,
enforcement or realization upon the Collateral, (vii) to adjust and compromise
any claims under insurance policies, and (viii) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with any or all of
the Collateral and to do all other acts and things necessary to carry out this
Agreement as though the Lender were absolute owner of the Collateral. This power
of attorney, being coupled with an interest, is irrevocable and all acts by the
Lender and its designees pursuant thereto are hereby ratified and confirmed by
the Borrowers. Neither the Lender nor any of its designees shall be liable for
any acts of commission or omission, nor for any error of judgment or mistake of
fact or law other than acts of actual fraud, willful misconduct or gross
negligence. The provisions of this subsection shall not (x) be construed as
requiring or obligating the Lender or any designee to take any action authorized
hereunder and any action taken or any action not taken hereunder shall not give
rise to any liability on the part of the Lender or its designees or to any
defense, claim, counterclaim or offset in favor of the

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Borrowers, (y) be construed to mean the Lender has assumed any of the
obligations of the Borrowers under any instrument or agreement as the Lender
shall not be responsible in any way for the performance of the Borrowers of any
of the provisions thereof, and (z) relieve the Borrowers of any of its
obligations hereunder or in any way limit the exercise by the Lender of any
other or further rights it may have hereunder, under the other Financing
Documents, by law or otherwise.

7.2. Default Rate. Notwithstanding the entry of any decree, order, judgment or
other judicial action, upon the occurrence of an Event of Default hereunder, the
unpaid principal amount of the Note and all other monetary Obligations
outstanding or becoming outstanding while such Event of Default exists shall
bear interest from the date of such Event of Default until such Event of Default
has been cured, at a floating and fluctuating per annum rate of interest equal
at all times to the Default Rate, irrespective of whether or not as a result
thereof, the Note or any of the Obligations has been declared due and payable or
the maturity thereof accelerated. The Borrowers shall on demand from time to
time pay such interest to the Lender and the same shall be a part of the
Obligations hereunder.

7.3. Liens, Set-Off. As security for the payment of the Obligations and the
performance of the Financing Documents, the Borrowers hereby grant to the Lender
a continuing security interest and lien on, in and upon all indebtedness owing
to, and all deposits (general or special), credits, balances, monies, securities
and other property of, the Borrowers and all proceeds thereof, both now and
hereafter held or received by, in transit to, or due by, the Lender. In addition
to, and without limitation of, any rights of the Lender under applicable laws,
if any Event of Default occurs and is continuing, the Lender may at any time and
from time to time thereafter during the continuance of such Event of Default,
without notice to the Borrowers, set-off, hold, segregate, appropriate and apply
at any time and from time to time thereafter all such indebtedness, deposits,
credits, balances (whether provisional or final and whether or not collected or
available), monies, securities and other property toward the payment of all or
any part of the Obligations in such order and manner as the Lender in its sole
discretion may determine and whether or not the Obligations or any part thereof
shall then be due or demand for payment thereof made by the Lender.

7.4. Enforcement Costs. The Borrowers agree to pay to the Lender on demand
(a) all Enforcement Costs paid, incurred or advanced by or on behalf of the
Lender including, without limitation, reasonable attorneys’ fees, costs and
expenses, and (b) interest on such Enforcement Costs from the date payment for
the same is demanded until paid in full at a per annum rate of interest equal at
all times to the Default Rate. All Enforcement Costs, with interest as above
provided, shall be a part of the Obligations hereunder.

7.5 Collateral Account. If any Event of Default shall occur and be continuing,
and the Lender shall elect to terminate the Revolving Credit Facility, the
Borrowers at any time and from time to time during the continuance of such Event
of Default shall upon demand of the Lender deliver to the Lender cash or U.S.
Treasury Bills with maturities of not more than thirty (30) days in an amount
equal to the amount of issued or pending Letters of Credit as of such time. The
Lender may also deposit to the Collateral Account (defined below) any cash,
monies or funds received by the Lender from the collection of the Obligations or
the sale or other

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disposition of the Collateral which the Lender, in its discretion, designates as
being held against issued or pending Letters of Credit as of such time. Such
cash, monies, funds or U.S. Treasury Bills shall be held by the Lender in an
account (the “Collateral Account”) and invested or reinvested (as the case may
be) in U.S. Treasury Bills with maturities of no more than thirty (30) days from
the date of investment. The Lender shall have the sole power of access and
withdrawal from the Collateral Account. As collateral and security for the
payment of the Obligations, the Borrowers hereby assigns and pledges to the
Lender, and grants to the Lender a security interest in and to, all cash,
monies, funds, U.S. Treasury Bills and other securities and instruments at any
time and from time to time held by the Lender in the Collateral Account and any
interest, income, earnings and proceeds thereof, all of which shall be a part of
the Collateral hereunder. If any Event of Default shall occur and be continuing,
the Lender is irrevocably authorized to make such withdrawals from the
Collateral Account at any time and from time to time and apply the same to any
of the Obligations (including, without limitation, Letter of Credit Obligations)
in such order and manner as the Lender in its sole discretion may determine.
After all Obligations have been indefeasibly paid in full and there are no
Letters of Credit outstanding or any commitment on the part of the Lender to
open and issue Letters of Credit, any cash, monies, funds, U.S. Treasury Bills
or other securities and instruments held by the Lender in the Collateral Account
will be turned over to the Borrowers or to such other person who may be entitled
to the same under applicable laws.

7.6. Application of Proceeds. During the continuance of any Event of Default,
any proceeds of the collection of the Obligations and/or the sale or other
disposition of the Collateral will be applied by the Lender to the payment of
Enforcement Costs, and any balance of such proceeds (if any) will be applied by
the Lender to the payment of the remaining Obligations (whether then due or
not), at such time or times and in such order and manner of application as the
Lender may from time to time in its sole discretion determine. If the sale or
other disposition of the Collateral fails to satisfy all of such Obligations,
the Borrowers shall remain liable to the Lender for any deficiency.

7.7. Remedies, etc. Cumulative. Each right, power and remedy of the Lender as
provided for in this Agreement or in the other Financing Documents or now or
hereafter existing under applicable laws or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Agreement or in the other Financing Documents or now or
hereafter existing under applicable laws or otherwise, and the exercise or
beginning of the exercise by the Lender of any one or more of such rights,
powers or remedies shall not preclude the simultaneous or later exercise by the
Lender of any or all such other rights, powers or remedies.

7.8. No Waiver, Etc. No failure or delay by the Lender to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement or
of the other Financing Documents, or to exercise any right, power or remedy
consequent upon a breach thereof, shall constitute a waiver of any such term,
condition, covenant or agreement or of any such breach, or preclude the Lender
from exercising any such right, power or remedy at any later time or times. By
accepting payment after the due date of any amount payable under this Agreement
or under any of the other Financing Documents, the Lender shall not be deemed to
waive the right either to require prompt payment when due of all other amounts
payable under

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this Agreement or under any of the other Financing Documents, or to declare an
Event of Default for failure to effect such prompt payment of any such other
amount. The payment by the Borrowers or any other person and the acceptance by
the Lender of any amount due and payable under the provisions of this Agreement
or the other Financing Documents at any time during which an Event of Default
exists shall not in any way or manner be construed as a waiver of such Event of
Default by the Lender or preclude the Lender from exercising any right of power
or remedy consequent upon such Event of Default.

7.9 Arbitration.

(a) This paragraph concerns the resolution of any controversies or claims
between the parties, whether arising in contract, tort or by statute, including
but not limited to controversies or claims that arise out of or relate to:
(i) this Agreement (including any renewals, extensions or modifications); or
(ii) any document related to this Agreement (collectively a “Claim”). For the
purposes of this arbitration provision only, the term “parties” shall include
any parent corporation, subsidiary or affiliate of the Lender involved in the
servicing, management or administration of any obligation described or evidenced
by this Agreement.

(b) At the request of any party to this Agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U.S. Code) (the “Act”). The Act will apply even though this Agreement provides
that it is governed by the law of a specified state. The arbitration will take
place on an individual basis without resort to any form of class action.

(c) Arbitration proceedings will be determined in accordance with the Act, the
then-current rules and procedures for the arbitration of financial services
disputes of the American Arbitration Association or any successor thereof
(“AAA”), and the terms of this paragraph. In the event of any inconsistency, the
terms of this paragraph shall control. If AAA is unwilling or unable to
(i) serve as the provider of arbitration or (ii) enforce any provision of this
arbitration clause, any party to this agreement may substitute another
arbitration organization with similar procedures to serve as the provider of
arbitration.

(d) The arbitration shall be administered by AAA and conducted in Washington,
D.C. All Claims shall be determined by one arbitrator; however, if Claims exceed
Five Million Dollars ($5,000,000), upon the request of any party, the Claims
shall be decided by three arbitrators. All arbitration hearings shall commence
within ninety (90) days of the demand for arbitration and close within ninety
(90) days of commencement and the award of the arbitrator(s) shall be issued
within thirty (30) days of the close of the hearing. However, the arbitrator(s),
upon a showing of good cause, may extend the commencement of the hearing for up
to an additional sixty (60) days. The arbitrator(s) shall provide a concise
written statement of reasons for the award. The arbitration award may be
submitted to any court having jurisdiction to be confirmed, judgment entered and
enforced.

(e) The arbitrator(s) will give effect to statutes of limitation in determining
any Claim and may dismiss the arbitration on the basis that the Claim is barred.
For purposes of the application of the statute of limitations, the service on
AAA under applicable AAA rules of a notice of Claim is the equivalent of the
filing of a lawsuit. Any dispute concerning this

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arbitration provision or whether a Claim is arbitrable shall be determined by
the arbitrator(s). The arbitrator(s) shall have the power to award reasonable
legal fees pursuant to the terms of this Agreement.

(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or non-judicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.

(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.

(h) By agreeing to binding arbitration, the parties irrevocably and voluntarily
waive any right they may have to a trial by jury in respect of any Claim.
Furthermore, without intending in any way to limit this agreement to arbitrate,
to the extent any Claim is not arbitrated, the parties irrevocably and
voluntarily waive any right they may have to a trial by jury in respect of such
Claim. This provision is a material inducement for the parties entering into
this Agreement.

SECTION 8. Miscellaneous.

8.1. Course of Dealing; Amendment. No course of dealing between the Lender and
the Borrowers shall be effective to amend, modify or change any provision of
this Agreement or the other Financing Documents. The Lender shall have the right
at all times to enforce the provisions of this Agreement and the other Financing
Documents in strict accordance with the provisions hereof and thereof,
notwithstanding any conduct or custom on the part of the Lender in refraining
from so doing at any time or times. The failure of the Lender at any time or
times to enforce its rights under such provisions, strictly in accordance with
the same, shall not be construed as having created a custom in any way or manner
contrary to specific provisions of this Agreement or the other Financing
Documents or as having in any way or manner modified or waived the same. This
Agreement and the other Financing Documents to which the Borrowers are a party
may not be amended, modified, or changed in any respect except by an agreement
in writing signed by the Lender and the Borrowers.

8.2. Waiver of Default. The Lender may, at any time and from time to time,
execute and deliver to the Borrowers a written instrument waiving, on such terms
and conditions as the Lender may specify in such written instrument, any of the
requirements of this Agreement or of the other Financing Documents or any Event
of Default or Default and its consequences, provided, that any such waiver shall
be for such period and subject to such conditions as shall be specified in any
such instrument. In the case of any such waiver, the Borrowers and the Lender
shall be restored to their former positions prior to such Event of Default or
Default and shall have the same rights as they had hereunder. No such waiver
shall extend to any subsequent or other Event of Default or Default, or impair
any right consequent thereto and shall be effective only in the specific
instance and for the specific purpose for which given.

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8.3. Notices. All notices, requests and demands to or upon the parties to this
Agreement shall be deemed to have been given or made when delivered by hand, or
when received after being deposited in the mail, postage prepaid by registered
or certified mail, return receipt requested, one day after being sent by
reputable overnight delivery service, or, in the case of notice by telegraph,
telex or facsimile transmission, when properly transmitted, addressed as follows
or to such other address as may be hereafter designated in writing by one party
to the other:

 

If to any Borrower:

  

TVI CORPORATION

  

7100 Holladay-Tyler Road

  

Glenn Dale, Maryland 20769

  

Attn: President and Chief Executive Officer

  

And

  

TVI CORPORATION

  

7100 Holladay-Tyler Road

  

Glenn Dale, Maryland 20769

  

Attn: General Counsel

With a copy to:

  

Frank S. Jones, Esquire

  

Whiteford, Taylor & Preston L.L.P.

  

Suite 1400, Seven St. Paul Street

  

Baltimore, Maryland 21202

  

Fax (410) 347-9478

If to Lender:

  

Bank of America, N.A.

  

1101 Wooton Parkway

  

4th Floor

  

Rockville, Maryland 20852

  

Attention: Michael Brannan, Senior Vice President

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With a copy to:    Ober, Kaler Grimes & Shriver,    A Professional Corporation
   1401 H Street, N.W.    Washington, D.C. 20005    Attention: Nikolaus F.
Schandlbauer, Esquire    Telecopy No.: 202-408-0640

except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed.

8.4. Right to Perform. For so long as an Event of Default has occurred and is
continuing, then and in each such case, the Lender may (but shall be under no
obligation whatsoever to) upon concurrent notice to or demand upon the Borrowers
remedy any such failure by advancing funds or taking such action as it deems
appropriate for the account and at the expense of the Borrowers. The advance of
any such funds or the taking of any such action by the Lender shall not be
deemed or construed to cure an Event of Default or waive performance by the
Borrowers of any provisions of this Agreement. The Borrowers shall pay to the
Lender on demand, together with interest thereon from the date of such demand
until paid in full at a per annum rate of interest equal at all times to the
Default Rate, any such funds so advanced by the Lender and any costs and
expenses advanced or incurred by or on behalf of the Lender in taking any such
action, all of which shall be a part of the Obligations hereunder.

8.5. Costs and Expenses. The Borrowers agree to indemnify the Lender against,
and promptly pay to the Lender on demand, all such fees, recordation and other
taxes, costs and expenses of whatever kind and nature, including reasonable
attorney’s fees and disbursements, which the Lender may incur or which are
payable in connection with the closing and the administration of the Credit
Facilities, including, without limitation, the preparation of this Agreement and
the other Financing Documents, the recording or filing of any and all of the
Financing Documents and obtaining lien searches. All such fees, costs,
recordation and other taxes shall be a part of the Obligations hereunder.

8.6. Consent to Jurisdiction. The Borrowers irrevocably (a) consent and submit
to the jurisdiction and venue of any state or federal court sitting in the State
of Maryland over any suit, action or proceeding arising out of or relating to
this Agreement or any of the other Financing Documents, (b) waives, to the
fullest extent permitted by law, any objection that the Borrowers may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum, and
(c) consents to the service of process in any such suit, action or proceeding in
any such court by the mailing of copies of such process to the Borrowers by
certified or registered mail at the Borrowers’ address set forth herein for the
purpose of giving notice.

8.7. WAIVER OF JURY TRIAL. THE BORROWERS AND THE LENDER HEREBY VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY

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HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THE CREDIT FACILITIES,
THIS AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS.

8.8. Certain Definitional Provisions. All terms defined in this Agreement shall
have such defined meanings when used in any of the other Financing Documents.
Accounting terms used in this Agreement shall have the respective meanings given
to them under generally accepted accounting principles in effect from time to
time in the United States of America. The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. As used herein, the singular number shall include the plural, the
plural, the singular and the use of the masculine, feminine or neuter gender
shall include all genders, as the context may require. Unless otherwise defined
herein, all terms used herein which are defined by the Uniform Commercial Code
shall have the same meanings as assigned to them by the Uniform Commercial Code
unless and to the extent varied by this Agreement.

8.9. Severability. The invalidity, illegality or unenforceability of any
provision of this Agreement shall not affect the validity, legality or
enforceability of any of the other provisions of this Agreement which shall
remain effective.

8.10. Survival. All representations, warranties and covenants contained among
the provisions of this Agreement shall survive the execution and delivery of
this Agreement and all other Financing Documents.

8.11. Binding Effect. This Agreement and all other Financing Documents shall be
binding upon and inure to the benefit of the Borrowers and the Lender and their
respective personal representatives, successors and assigns, except that the
Borrowers shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender.

8.12. Applicable Law and Time of Essence. This Agreement and the rights and
obligations of the parties hereunder shall be construed and interpreted in
accordance with the laws of the State of Maryland, both in interpretation and
performance. Time is of the essence in connection with all obligations of the
Borrowers hereunder and under any of the other Financing Documents.

8.13. Duplicate Originals and Counterparts. This Agreement may be executed in
any number of duplicate originals or counterparts, each of such duplicate
originals or counterparts shall be deemed to be an original and all taken
together shall constitute but one and the same instrument.

8.14. Headings. Section and subsection headings in this Agreement are included
herein for convenience of reference only, shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.

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8.15 Public Use of Borrowers’ Name. With the Borrowers’ permission, the Lender
may in its discretion use the Borrowers’ corporate name in press releases,
public announcements and other promotional items or literature of the Lender. To
that end, the Borrowers hereby consent to the creation of one or more items
commemorating this transaction and use information related to the transaction in
internal communications. In addition, the Borrowers hereby consent to the
Lender’s use of the Borrowers name and information related to this transaction
in connection with marketing, press releases or other transactional
announcements or updates provided to investor or trade publications, but only
after Borrowers file an SEC Form 8-K with respect to the Revolving Credit
Facility (in form and substance determined to be appropriate by the Borrowers).

8.16 Termination of Security Interest. Upon payment in full of the outstanding
Obligations and the termination of the Revolving Loan Commitment, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the Borrowers. Upon any such termination, the Lender will execute and
deliver to the Borrowers such documents as the Borrowers shall reasonably
request to evidence such termination.

8.17 Joint and Several Liability, Etc. The Borrowers shall be jointly and
severally liable for the payment and performance of the Obligations. The Lender
may, without notice to or consent of any of the Borrowers and with or without
consideration, release, discharge, compromise or settle with, waive, grant
indulgences to, proceed against or otherwise deal with, any of the Borrowers
without in any way affecting, limiting, modifying, discharging or releasing any
of the obligations and liabilities under this Agreement or any other Financing
Documents of the other Borrowers. Each of the Borrowers consents and agrees that
(a) the Lender shall be under no obligation to marshall any assets in favor of
such Borrower or against or in payment of any or all of the obligations and
liabilities of such Borrower under this Agreement or any of the other Financing
Documents, (b) any rights such Borrower may have against the other Borrowers for
contribution, exoneration from payment or otherwise, in respect of any amounts
paid by such Borrower pursuant to any of the Financing Documents or which
continue to be owing pursuant to any of the Financing Documents, shall be
postponed until the Obligations have been indefeasibly paid in full and no
commitments therefor are outstanding and (c) the Lender may enforce and collect
the obligations and liabilities of such Borrower hereunder or under the other
Financing Documents irrespective of any attempt, pursuit, enforcement or
exhaustion of any rights and remedies the Lender may at any time have to collect
the obligations and liabilities hereunder or under the other Financing Documents
of the other Borrowers.

[remainder of page left intentionally blank]

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

 

WITNESS:   TVI CORPORATION  

/s/ Sean Hunt

  By:  

/s/ Richard V. Priddy

  (SEAL)     Printed Name: Richard V. Priddy       Title: President and CEO  
WITNESS:   CAPA MANUFACTURING CORP.  

/s/ Sean Hunt

  By:  

/s/ Richard V. Priddy

  (SEAL)     Printed Name: Richard V. Priddy       Title: President   WITNESS:  
TVI AIR SHELTERS, LLC  

/s/ Sean Hunt

  By:  

/s/ Richard V. Priddy

  (SEAL)     Printed Name: Richard V. Priddy       Title: General Manager  
WITNESS:   SAFETY TECH INTERNATIONAL, INC.  

/s/ Sean Hunt

  By:  

/s/ Richard V. Priddy

  (SEAL)     Printed Name: Richard V. Priddy       Title: President   WITNESS:  
BANK OF AMERICA, N.A.  

/s/ Cynthia Newsome

  By:  

/s/ Michael Brannan

  (SEAL)     Michael Brannan       Senior Vice President  

--------------------------------------------------------------------------------

Attachment I

 

Tier

  

Total Funded Debt to

EBITDA

  

Unused

Commitment

Fee Percentage

  

Applicable

Margin

  

Letter of

Credit Fee

I    Less than or equal to 1.0 to 1.0    25 bps    125 bps    125 bps II    Less
than or equal to 1.5 to 1.0 but greater than 1.0 to 1.0    25 bps    150 bps   
150 bps III    Less than or equal to 1.75 to 1:0 but greater than 1.5 to 1.0   
30 bps    175 bps    175 bps

bps = basis points

Note: to the extent that the results of the calculations required to calculate
the Applicable Margin result in a measurement in excess of that specified by
Tier III, default pricing ( calculated by adding 400 basis points to such
Applicable Margin, resulting in a default Applicable Margin of 575 basis points)
shall apply.