EXECUTION COPY
 
CREDIT AGREEMENT
Dated November 10, 2005
by and among
DEVCON SECURITY HOLDINGS, INC.,
DEVCON SECURITY SERVICES CORP.
COASTAL SECURITY COMPANY,
COASTAL SECURITY SYSTEMS, INC. and
CENTRAL ONE, INC.
as Borrowers,
and
CAPITALSOURCE FINANCE LLC,
as Agent and Lender
 

 

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TABLE OF CONTENTS

                              Page   1.   DEFINITIONS     2  
 
                2.   AMOUNT AND TERMS OF CREDIT     29  
 
  2.1   Revolving Credit Facility     29  
 
  2.2   Prepayments     30  
 
  2.3   Use of Proceeds     32  
 
  2.4   Interest and Applicable Margins     32  
 
  2.5   Cash Management Systems     34  
 
  2.6   Fees     36  
 
  2.7   Receipt of Payments     36  
 
  2.8   Application and Allocation of Payments     37  
 
  2.9   Loan Account and Accounting     37  
 
  2.10   Indemnity     38  
 
  2.11   Access     39  
 
  2.12   Taxes     40  
 
  2.13   Capital Adequacy; Increased Costs; Illegality     42  
 
  2.14   Single Loan     44  
 
  2.15   Uncommitted Incremental Commitment Increase     44  
 
  2.16   Borrower Funds Administrator     45  
 
  2.17   Acknowledgement of Joint and Several Liability     46  
 
                3.   CONDITIONS PRECEDENT     49  
 
  3.1   Conditions to the Initial Loans     49  
 
  3.2   Further Conditions to Each Loan     54  
 
                4.   REPRESENTATIONS AND WARRANTIES     55  
 
  4.1   Existence; Compliance with Law     55  
 
  4.2   Executive Offices, Collateral Locations, FEIN     55  
 
  4.3   Power, Authorization, Enforceable Obligations     55  
 
  4.4   Financial Statements and Projections     56  
 
  4.5   Material Adverse Effect     57  
 
  4.6   Ownership of Property; Liens     57  
 
  4.7   Labor Matters     58  
 
  4.8   Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness     58  
 
  4.9   Government Regulation     58  
 
  4.10   Margin Regulations     59  
 
  4.11   Taxes and Charges     59  
 
  4.12   ERISA     60  
 
  4.13   No Litigation     60  
 
  4.14   Brokers     61  
 
  4.15   Intellectual Property     61  
 
  4.16   Full Disclosure     61  
 
  4.17   Environmental Matters     62  

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                              Page  
 
  4.18   Insurance     62  
 
  4.19   Bank Accounts     63  
 
  4.20   [Intentionally Omitted]     63  
 
  4.21   Customer and Trade Relations     63  
 
  4.22   Bonding; Licenses     63  
 
  4.23   Solvency     63  
 
  4.24   OFAC     63  
 
  4.25   Patriot Act     64  
 
  4.26   Material Contracts     64  
 
  4.27   Absence of Defaults     64  
 
  4.28   Alarm Contracts     64  
 
  4.29   Write-Offs     64  
 
                5.   FINANCIAL STATEMENTS AND INFORMATION     64  
 
  5.1   Reports and Notices     64  
 
  5.2   Communication with Accountants     68  
 
                6.   AFFIRMATIVE COVENANTS     68  
 
  6.1   Maintenance of Existence and Conduct of Business     68  
 
  6.2   Payment of Taxes and Charges     69  
 
  6.3   Books and Records     69  
 
  6.4   Insurance; Damage to or Destruction of Collateral     70  
 
  6.5   Compliance with Laws     72  
 
  6.6   Supplemental Disclosure     72  
 
  6.7   Intellectual Property     73  
 
  6.8   Environmental Matters     73  
 
  6.9   Agreements Regarding Real Estate     74  
 
  6.10   Further Assurances     75  
 
  6.11   Future Borrowers     75  
 
  6.12   Interest Rate Fluctuations Protection     75  
 
  6.13   Alarm Contracts     76  
 
  6.14   Write-Off Policy     77  
 
                7.   NEGATIVE COVENANTS     77  
 
  7.1   Mergers, Subsidiaries, Etc     78  
 
  7.2   Investments; Loans and Advances     80  
 
  7.3   Indebtedness     81  
 
  7.4   Employee Loans and Affiliate Transactions     83  
 
  7.5   Capital Structure and Business     83  
 
  7.6   Guaranty Obligations     84  
 
  7.7   Liens     84  
 
  7.8   Sale of Stock and Assets     84  
 
  7.9   ERISA     84  
 
  7.10   Financial Covenants     85  
 
  7.11   Hazardous Materials     85  
 
  7.12   Sale-Leasebacks     85  
 
  7.13   Restricted Payments     85  

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                              Page  
 
  7.14   Change of Name or Location; Change of Fiscal Year     85  
 
  7.15   No Impairment of Intercompany Transfers     86  
 
  7.16   Changes Relating to Material Contracts     86  
 
                8.   TERM     86  
 
  8.1   Termination     86  
 
  8.2   Survival of Obligations Upon Termination of Financing Arrangements    
86  
 
                9.   FINANCIAL COVENANTS     86  
 
  9.1   Maximum Leverage Ratio     87  
 
  9.2   Minimum Fixed Charge Coverage Ratio     87  
 
  9.3   Maximum Capital Expenditures     87  
 
  9.4   Maximum Attrition Ratio     87  
 
  9.5   Accounting Changes     87  
 
                10.   EVENTS OF DEFAULT; RIGHTS AND REMEDIES     88  
 
  10.1   Events of Default     88  
 
  10.2   Remedies     90  
 
  10.3   Waivers by Borrowers     92  
 
  10.4   Intercreditor Agreements; Lenders Benefit     92  
 
  10.5   Rights to Appoint Receiver     93  
 
                11.   ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT     93
 
 
  11.1   Assignment and Participations     93  
 
  11.2   Appointment of Agent     95  
 
  11.3   Agent's Reliance, Etc.     96  
 
  11.4   CapitalSource and Affiliates     96  
 
  11.5   Lender Credit Decision     97  
 
  11.6   Indemnification     97  
 
  11.7   Successor Agent     97  
 
  11.8   Setoff and Sharing of Payments     98  
 
  11.9   Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert     99  
 
  11.10   Other Lender Rights     101  
 
                12.   SUCCESSORS AND ASSIGNS     101  
 
  12.1   Successors and Assigns     101  
 
                13.   MISCELLANEOUS     101  
 
  13.1   Complete Agreement; Modification of Agreement     101  
 
  13.2   Amendments and Waivers     102  
 
  13.3   Fees and Expenses     103  
 
  13.4   No Waiver     104  
 
  13.5   Remedies     105  
 
  13.6   Severability     105  
 
  13.7   Conflict of Terms     105  
 
  13.8   Confidentiality     105  

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                              Page  
 
  13.9   GOVERNING LAW     106  
 
  13.10   Notices     107  
 
  13.11   Section Titles     108  
 
  13.12   Counterparts     109  
 
  13.13   WAIVER OF JURY TRIAL     109  
 
  13.14   Press Releases and Related Matters     109  
 
  13.15   Reinstatement     109  
 
  13.16   Advice of Counsel     110  
 
  13.17   No Strict Construction     110  
 
  13.18   Collateral Matters     110  
 
  13.19   Release     110  

INDEX OF APPENDICES

         
Schedule I
  -   Commitments as of Closing Date
 
       
Exhibit 2.4(f)
  -   Form of Notice of Conversion/Continuation
Exhibit 2.5(b)(1)
  -   Form of Account Control Agreement
Exhibit 2.5(b)(2)
  -   Form of Lockbox Agreement
Exhibit 3.1(l)
  -   Form of Pledge Agreements
Exhibit 3.1(y)
  -   Form of Assignment and Modification Agreement
Exhibit 3.1(z)
  -   Form of Nonsolicitation and Nondisclosure Agreement
Exhibit 3.1(ee)
  -   Form of Collateral Assignment of Telephone Lines
Exhibit 3.1(ff)
  -   Form of Subordination Agreement
Exhibit 5.1(a)
  -   Form of Compliance Certificate
Exhibit 5.1(b)
  -   Form of Borrowing Base Certificate
Exhibit 6.11
  -   Form of Joinder
Exhibit 7.3(a)(x)
  -   Subordination Terms
Exhibit 11.1
  -   Form of Assignment Agreement
 
       
Disclosure Schedule 2.3
  -   Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 4.1
  -   Type of Entity; State of Organization
Disclosure Schedule 4.2
  -   Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 4.3
  -   Government Consents
Disclosure Schedule 4.4(a)
  -   Financial Statements
Disclosure Schedule 4.4(b)
  -   Pro Forma
Disclosure Schedule 4.4(c)
  -   Projections
Disclosure Schedule 4.6
  -   Real Estate and Leases
Disclosure Schedule 4.7
  -   Labor Matters
Disclosure Schedule 4.8
  -   Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 4.11
  -   Tax Matters
Disclosure Schedule 4.12
  -   ERISA Plans
Disclosure Schedule 4.13
  -   Litigation
Disclosure Schedule 4.14
  -   Brokers
Disclosure Schedule 4.15
  -   Intellectual Property
Disclosure Schedule 4.17
  -   Hazardous Materials

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Disclosure Schedule 4.18
  -   Insurance
Disclosure Schedule 4.19
  -   Bank Accounts
Disclosure Schedule 4.21
  -   Customer and Trade Relations
Disclosure Schedule 4.22
  -   Bonds; Patent, Trademark Licenses
Disclosure Schedule 4.26
  -   Material Contracts
Disclosure Schedule 4.29
  -   Write-Off Policy
Disclosure Schedule 6.1
  -   Trade Names
Disclosure Schedule 7.3
  -   Indebtedness
Disclosure Schedule 7.4(a)
  -   Transactions with Affiliates

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CREDIT AGREEMENT
          This CREDIT AGREEMENT (this “Agreement”), dated November 10, 2005, is
by and among DEVCON SECURITY HOLDINGS, INC. (f/k/a Devcon Security Services
Corp.), a Florida corporation (“Holdings”), DEVCON SECURITY SERVICES CORP.
(f/k/a Security Equipment Company, Inc.), a Delaware corporation (“Services”),
COASTAL SECURITY COMPANY (f/k/a Coastal Acquisition Company), a Delaware
corporation (“Coastal”), COASTAL SECURITY SYSTEMS, INC. (f/k/a Coastal
Acquisition Corporation and Coastal Security Systems (Delaware), Inc.), a
Delaware corporation (“Systems”), CENTRAL ONE, INC., Florida corporation
(“Central One” and together with Holdings, Services, Coastal, and Systems each
individually a “Borrower” and individually and collectively, together with any
other Borrower who becomes party hereto from time to time pursuant to
Section 6.11, jointly and severally the “Borrowers”), CAPITALSOURCE FINANCE LLC,
a Delaware limited liability company (in its individual capacity,
“CapitalSource”), for itself, as a Lender, and as Agent for Lenders, and the
other Lenders signatory hereto from time to time.
RECITALS
          A. Pursuant to the Coastal Purchase Agreement, as of the date of this
Agreement, Holdings is acquiring all of the capital stock of Coastal, which is
the sole owner of record and beneficially of all of the capital stock of
Systems, and Systems is the sole owner of record and beneficially of all of the
capital stock of Central One.
          B. The Borrowers have requested that Lenders make available a
revolving credit facility to the Borrowers in the maximum principal amount of
Seventy Million Dollars ($70,000,000) for the purpose of providing funds for
Permitted Acquisitions, to refinance existing Indebtedness, for the purchase and
generation of Alarm Contracts, for the issuance of letters of credit and for any
other lawful purpose not prohibited by this Agreement.
          C. Lenders are willing to make advances to the Borrowers under such
revolving credit facility upon the terms and conditions set forth herein.
          D. The Borrowers have agreed to secure all of their obligations under
the Loan Documents by granting to Agent for the benefit of Agent and Lenders, a
security interest in and first priority perfected lien upon substantially all of
their existing and after-acquired personal and real property.
          E. Devcon International Corp., a Florida corporation (“Parent”), as
sole shareholder of Holdings, is willing to pledge to Agent, for the benefit of
Agent and Lenders, all of the Stock of Holdings as further security for the
Borrowers’ obligations under the Loan Documents.
          F. This Background shall be construed as part of the Agreement.
          NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:

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1. DEFINITIONS
          Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
          “Account Control Agreement” means a tri-party account control
agreement in the form of Exhibit 2.5(b)(1) hereto among a Borrower, the Agent
and a Relationship Bank, or such other form as is acceptable to Agent in its
Permitted Discretion.
          “Account Debtor” means any Person who is obligated to any Borrower
under, with respect to, or on account of, an Account, Chattel Paper or General
Intangible (including a payment intangible).
          “Accounting Changes” has the meaning ascribed thereto in Section 9.5.
          “Accounts” means all “accounts,” as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower, including, without limitation,
any Borrower’s accounts, rental agreements and other contract rights (including,
without limitation, the Alarm Contracts and Material Contracts and all rights to
payment thereunder), rights to payment and other forms of obligation for the
payment of money to any Borrower, whether now existing or existing in the
future, whether or not earned by performance, whether secured or unsecured and
whether or not specifically sold or assigned to any Lender hereunder including,
without limitation, all (a) accounts receivable (whether or not specifically
listed on schedules furnished to Lenders), all accounts created by or arising
from all of any Borrower’s sales or leases of goods, financial instruments,
documents, permits or other items, or rendition of services, including funds
transfer services, made under any of any Borrower’s trade names or styles, or
through any of such Person’s subsidiaries or divisions, and all accounts
acquired by assignment in the ordinary course of business including, without
limitation, credit card receivables, drafts, and acceptances; (b) unpaid rights
(including rescission, replevin, reclamation and stoppage in transit) relating
to the foregoing or arising therefrom; (c) rights to any goods represented by
any of the foregoing and all other supporting obligations therefor, including
returned or repossessed goods; (d) reserves and credit balances held by any
Borrower with respect to any such accounts receivable or Account Debtors;
(e) guarantees, obligations of any Borrower to repay a portion of any purchase
price or to replace any Alarm Contracts purchased by any Borrower, or to replace
or collateral or any other supporting obligations for any of the foregoing;
(f) insurance policies or rights relating to any of the foregoing; (g) all
healthcare insurance receivables; and (h) all collateral security of any kind,
now or hereafter in existence, given by any Account Debtor or other Person with
respect to any of the foregoing.
          “Acquisition Documents” has the meaning given to such term in
Section 7.1(h).
          “Acquisition Report” has the meaning given to such term in
Section 7.1(h).
          “Additional Commitment Fee” has the meaning ascribed to it in
Section 2.6(c).
          “Advance” has the meaning given to such term in Section 2.1(a).

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          “Affiliate” means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 15% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person’s officers, directors, joint venturers and partners and (d) in
the case of an individual, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of such individual. For the
purposes of this definition, “control” of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that the term “Affiliate” shall
specifically exclude Agent and each Lender.
          “Agent” means CapitalSource in its capacity as Agent for Lenders or
its successor appointed pursuant to Section 11.7.
          “Agreement” means this Credit Agreement, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
          “Alarm Contract” means a written contract or agreement (including any
contract or agreement acquired by any Borrower) between a Borrower and a
Subscriber pursuant to which such Borrower provides regular and on-going
electronic monitoring services, closed-circuit television and access control
systems, maintenance, fire and/or other electronic security system related
services to such Subscriber.
          “Appendices” means the schedules, exhibits, disclosure schedules and
any other appendices to the Agreement, as further described herein.
          “Applicable Base Rate Margin” means the per annum interest rate margin
from time to time in effect and payable in addition to the Base Rate applicable
to the Advance, as determined by reference to Section 2.4(b).
          “Applicable LIBOR Margin” means the per annum interest rate from time
to time in effect and payable in addition to the LIBOR Rate applicable to the
Advances, as determined by reference to Section 2.4(b).
          “Applicable Margins” means collectively the Applicable Base Rate
Margin and the Applicable LIBOR Margin.
          “Assignment Agreement” has the meaning ascribed to it in Section 11.1.
          “Assignment and Modification Agreement” has the meaning ascribed to it
in Section 3.1(y).
          “Attrition Ratio” shall mean, for any period of determination, the
ratio of the following (x) and (y), each without duplication, expressed as a
percentage: (x) the Attrited RMR for the Measured Time Period, divided by
(y) the average BOM RMR for the Measured Time Period. The resulting percentage
shall then be annualized by multiplying it by the quotient of twelve (12)
divided by the number of months in the Measured Time Period.

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          “Attrited RMR” shall mean, without duplication, the sum of: (i) the
RMR that was cancelled during the Measured Time Period; plus (ii) the RMR from
all customers who were ninety (90) days or more past due from the applicable
invoice date at the end of the Measured Time Period, less the RMR from all
customers who were ninety (90) days or more past due from the applicable invoice
date at the beginning of the Measured Time Period; provided that RMR that is
subject to an account guarantee pursuant to a Permitted Acquisition as of the
end of the Measured Time Period shall not be included in any such calculation,
plus (iii) the RMR attributable to a customer account that, as of the date of
determination, no longer satisfied the definition of Slow Pay RMR; minus
(iv) the RMR of a Qualified Alarm Contract entered into with a Subscriber for
the same premises as was previously covered by a Qualified Alarm Contract with
Borrower that had been cancelled; minus (v) RMR of Qualified Alarm Contracts
received as replacement Qualified Alarm Contracts pursuant to a dealer guaranty
or similar agreement.
          “Bank Accounts” has the meaning ascribed to it in Section 2.5.
          “Bankruptcy Code” means the provisions of Title 11 of the United
States Code, 11 U.S.C. §§ 101 et seq.
          “Base Rate” means, for any day, a floating rate equal to the higher of
(i) the rate publicly quoted from time to time by The Wall Street Journal as the
“prime rate” (or, if The Wall Street Journal ceases quoting a prime rate, the
highest per annum rate of interest published by the Federal Reserve Board in
Federal Reserve statistical release H.15 (519) entitled “Selected Interest
Rates” as the Bank prime loan rate or its equivalent), and (ii) the Federal
Funds Rate plus 50 basis points (0.50%) per annum. Each change in any interest
rate provided for in the Agreement based upon the Base Rate shall take effect at
the time of such change in the Base Rate.
          “Base Rate Loan” means a Loan or portion thereof bearing interest by
reference to the Base Rate.
          “BOM RMR” shall mean the amount equal to the total Qualified RMR, as
determined on the first day of each Fiscal Month.
          “Borrower” and “Borrowers” have the meanings ascribed thereto in the
preamble to the Agreement.
          “Borrower Pledge Agreement” means the Pledge Agreement of even date
herewith executed by the Borrowers in favor of Agent, on behalf of itself and
Lenders, pledging all Stock of Services and any other Subsidiaries of any
Borrower, and all Intercompany Notes, if any, owing to or held by any of them.
          “Borrowing Availability” means, as of any date of determination,
(a) the Borrowing Base, less (b) the principal amount of Loans then outstanding.
          “Borrowing Base” means the lesser of (a) the Total Borrowing
Availability, or (b) the aggregate amount of (i) the product of twenty-six
(26) times the Qualified Retail RMR, plus (ii) the product of ten (10) times the
Qualified Wholesale RMR, minus (iii) $500,000.

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          “Borrowing Base Certificate” has the meaning ascribed to it in Section
5.1(b)(ii)(D).
          “Bridge Loan” means that certain loan by CapitalSource to the
Borrowers in the amount of Eight Million Dollars ($8,000,000) pursuant to that
certain Bridge Loan Agreement, between CapitalSource and the Borrowers, dated as
of the date hereof.
          “Bridge Loan Documents” means the Bridge Loan Agreement evidencing the
Bridge Loan and all the other agreements, instruments, documents and
certificates described in such agreement that are executed and/or delivered by
Borrowers to CapitalSource in connection therewith.
          “Business Day” means any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of Maryland
and in reference to LIBOR Loans shall mean any such day that is also a LIBOR
Business Day.
          “Capital Expenditures” means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP but
excluding expenditures for repairs or replacements of fixed assets or
improvements thereto, to the extent paid for with insurance proceeds or other
recoveries from third parties in respect thereof, and excluding the purchase
price payable in connection with any Permitted Acquisition.
          “Capital Lease” means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
          “Capital Lease Obligation” means, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
          “CapitalSource” means CapitalSource Finance LLC, a Delaware limited
liability company, and its successors and assigns.
          “Cash Management Systems” has the meaning ascribed to it in
Section 2.5.
          “Change of Control” means any event, transaction or occurrence as a
result of which (a) Parent ceases to own and control all of the economic and
voting rights associated with all of the outstanding common capital Stock of
Holdings, (b) Holdings ceases to own and control all of the economic and voting
rights associated with all of the outstanding common capital Stock of Services
or (c) any Borrower ceases to own and control all of the economic and voting
rights associated with all of the outstanding capital Stock of any of its
Subsidiaries other than with respect to an asset sale or disposition expressly
permitted by this Agreement.

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          “Change of Management” means if (a) Stephen Ruzika no longer holds the
position of President of each Borrower, (b) neither John Danneberg nor Keith
Godsey holds the position of Vice-President of each Borrower, or (c) any
material diminution occurs in the powers, duties or responsibilities of either
Stephen Ruzika as President of each Borrower, or John Danneberg and Keith
Godsey, as Vice-President of each Borrower, and, in the event of (a), (b) or
(c) occurring, any such individual is not replaced with a suitable individual
and in a manner satisfactory to Agent in its reasonable discretion within one
hundred eighty (180) days following the date on which he ceases to hold such
position or such material diminution occurs.
          “Charges” means all federal, state, county, city, municipal, local,
foreign or other governmental levies, assessments, charges, liens, claims or
encumbrances (other than Taxes) upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any
Borrower, (d) any Borrower’s ownership or use of any properties or other assets,
or (e) any other aspect of any Borrower’s business.
          “Chattel Paper” means any “chattel paper,” as such term is defined in
the UCC, including electronic chattel paper, now owned or hereafter acquired by
any Borrower, wherever located.
          “Coastal” means Coastal Security Company, a Delaware corporation.
          “Coastal Purchase Agreement” means that purchase agreement, dated as
of the date hereof, pursuant to which Holdings is acquiring the capital stock of
Coastal from the stockholders of Coastal.
          “Closing Date” means November 10, 2005.
          “Code” means the Internal Revenue Code of 1986, as amended, any
successor thereto and all regulations promulgated thereunder.
          “Collateral” means the property covered by the Security Agreement, the
Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
          “Collateral Assignment of Life Insurance” means an assignment, in form
and substance satisfactory to Agent, which assigns to Agent for the ratable
benefit of the Lenders, the Life Insurance Policy as Collateral for the
Obligations.
          “Collateral Assignment of Telephone Numbers” has the meaning ascribed
to it in Section 3.1(ee).
          “Collateral Documents” means the Security Agreement, the Pledge
Agreements, the Mortgages, any Patent Security Agreement, any Trademark Security
Agreement, any Copyright Security Agreement, the Collateral Assignment of Life
Insurance, the Collateral Assignment of Telephone Numbers, any Account Control
Agreement, any Lockbox Agreement, any agreement pursuant to which any Material
Contract or rights thereunder are being assigned

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and all similar agreements entered into guaranteeing payment of, or granting a
Lien upon property as security for payment of, the Obligations.
          “Collateral Reports” has the meaning ascribed to it in Section 5.1(b).
          “Collection Account” means such account as may be specified in writing
by Agent to the Borrowers for payment of any amounts due under any Loan
Document.
          “Commitment” means (a) as to any Lender, such Lender’s Commitment as
set forth on Schedule I to the Agreement or in the most recent Assignment
Agreement executed by such Lender and (b) as to all Lenders, the aggregate of
all Lenders’ Commitments, which aggregate commitment shall be Seventy Million
($70,000,000) on the Closing Date, as to each of clauses (a) and (b), as such
Commitment may be increased, reduced, amortized or adjusted from time to time in
accordance with the Agreement. Upon Borrowers’ request and at the approval of
the Requisite Lenders, the Commitment may be increased up to an amount equal to
One Hundred Million Dollars ($100,000,000.00) in accordance with Section 2.15.
          “Commitment Termination Date” means the earliest of (a) November 9,
2008, (b) the date of termination of Lenders’ obligations to make Advances or
permit existing Loans to remain outstanding pursuant to Section 10.2(b), and
(c) the date of prepayment in full by the Borrowers of the Loans and the
permanent reduction of the Commitments to zero dollars ($0).
          “Compliance Certificate” has the meaning ascribed to it in
Section 5.1(a)(iv).
          “Concentration Account” has the meaning ascribed to it in Section 2.5
(b).
          “Contracts” means all “contracts,” as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any Borrower may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.
          “Control Letter” means a letter agreement between Agent and, as
applicable, (i) the issuer of uncertificated securities with respect to
uncertificated securities in the name of any Borrower, (ii) a securities
intermediary with respect to securities, whether certificated or uncertificated,
securities entitlements and other financial assets held in a securities account
in the name of any Borrower, (iii) a futures commission merchant or clearing
house, as applicable, with respect to commodity accounts and commodity contracts
held by any Borrower, whereby, among other things, the issuer, securities
intermediary or futures commission merchant limits any security interest in the
applicable financial assets in a manner reasonably satisfactory to Agent,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Borrower.
          “Copyright License” means any and all rights now owned or hereafter
acquired by any Borrower under any written agreement granting any right to use
any Copyright or Copyright registration.

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          “Copyright Security Agreements” means any Copyright Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Borrower.
          “Copyrights” means all of the following now owned or hereafter adopted
or acquired by any Borrower: (a) all copyrights and General Intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
          “Debt Service” means, with respect to Holdings and its consolidated
Subsidiaries, for any fiscal period, an amount equal to the sum of (a) Interest
Expense for such period which is required to be paid in cash, and (b) the
regularly scheduled principal payments of any outstanding Indebtedness during
such period.
          “Default” means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
          “Default Rate” has the meaning ascribed to it in Section 2.4(e).
          “Deposit Accounts” means all “deposit accounts,” as such term is
defined in the UCC, now or hereafter held in the name of any Borrower.
          “Disclosure Schedules” means the Disclosure Schedules prepared by the
Borrowers and referenced herein as Disclosure Schedules to this Agreement, as
delivered to Agent on or before the Closing Date (as may be amended from time to
time with the consent of the Agent).
          “Documents” means any “documents,” as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower, wherever located.
          “Dollars” or “$” means lawful currency of the United States of
America.
          “EBITDA” means, with respect to Holdings and its consolidated
Subsidiaries, for any applicable period, without duplication, an amount equal to
(a) consolidated net income for such period, determined in accordance with GAAP,
minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) income
or gain from extraordinary items for such period, (iv) any aggregate net gain
(or net loss) during such period arising from the sale, exchange or other
disposition of capital assets (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities), (v) Restricted Payments, and (vi) any other non-cash
gains that have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income for such
period in accordance with GAAP, but without duplication, plus (c) the sum of
(i) any provision for income taxes, (ii) Interest Expense, including fees in
respect of any Indebtedness, (iii) loss from extraordinary items for such
period, (iv) depreciation and amortization for such period, and (v) any other
adjustments agreed to by Agent in its sole discretion; provided that, for
covenant compliance purposes, EBITDA shall be calculated to

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include (or exclude), on a pro forma basis, cash flow relating to the
acquisition (or disposition/cancellation) of Alarm Contracts during such
reporting period (the “Pro Forma Cash Flow Adjustment”). Subject to the review
and consent of the Agent, such Pro Forma Cash Flow Adjustment shall be
determined by multiplying (a) the combined RMR of such Alarm Contracts over the
applicable period by (b) the actual EBITDA Margin for such period (calculated
without reference to this proviso).
          “EBITDA Margin” means (A) EBITDA divided by (B) Total Revenue.
          “Environmental Laws” means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of the environment,
natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation),
and human health and safety to the extent affected by any Hazardous Material.
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”);
the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§
5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
§§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.); the
Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act (42
U.S.C. §§ 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. §§
1251 et seq.); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.)
to the extent relating to exposure to any Hazardous Material; and the Safe
Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state, local and foreign counterparts
or equivalents and any transfer of ownership notification or approval statutes
relating to the foregoing.
          “Environmental Liabilities” means, with respect to any Borrower, all
material liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts and consultants), fines, penalties, sanctions and interest
incurred as a result of or related to any claim, suit, action, investigation,
proceeding or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law,
that arise under or relate to any Environmental Laws, Environmental Permits, or
in connection with any Release or presence of a Hazardous Material whether on,
at, in, under, from or about or in the vicinity of any real or personal
property.
          “Environmental Permits” means all material permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
          “Equipment” means all “equipment,” as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower, wherever located and, in any
event, including all any Borrower’s machinery and equipment, including
processing equipment, conveyors, machine

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tools, data processing and computer equipment, including embedded software and
peripheral equipment and all engineering, processing and manufacturing
equipment, office machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks, forklifts,
molds, dies, stamps, motor vehicles, rolling stock and other equipment of every
kind and nature, trade fixtures and fixtures not forming a part of real
property, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
          “ERISA Affiliate” means, with respect to any Borrower, any trade or
business (whether or not incorporated) that, together with such Borrower, are
treated as a single employer within the meaning of Sections 414(b), (c), (m) or
(o) of the Code.
          “ERISA Event” means, with respect to any Borrower or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan for which the PBGC has not waived the thirty day notice
requirement; (b) the withdrawal of any Borrower or ERISA Affiliate from a Title
IV Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Borrower or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (e) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (f) the failure by any Borrower or ERISA
Affiliate to make when due required contributions to a Multiemployer Plan or
Title IV Plan unless such failure is cured within thirty (30) days; (g) any
other event or condition that could reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; or (i) the loss of a Qualified Plan’s qualification or tax exempt
status; or (j) the termination of a Plan described in Section 4064 of ERISA.
          “ESOP” means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the Code.
          “Event of Default” has the meaning ascribed to it in Section 10.1.
          “Excluded Taxes” means with respect to Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of any
Borrower hereunder or any other Loan Document:
          (a) taxes imposed on or measured by its overall net income by the
United States;

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          (b) taxes imposed on or measured by its overall net income or profits
(however denominated) and franchise taxes imposed on or measured by its income,
earnings or retained earnings by (i) the state or foreign jurisdiction (or any
political subdivision thereof) in or under the laws of which it is organized or
any political subdivision thereof, or (ii) the state or foreign jurisdiction (or
any political subdivision thereof) of its principal office, applicable lending
office or in which it is “doing business” or any political subdivision thereof;
          (c) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which its principal office or
applicable lending office is located or in which it is “doing business,” or any
political subdivision thereof; and
          (d) in the case of a Foreign Lender, any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office) or is
attributable to such Foreign Lender’s failure or inability (other than as a
result of a change in law) to comply with Section 2.12(c), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from any Borrower with respect to such withholding tax pursuant to
Section 2.12(a).
          “Existing Increase Lender” has the meaning ascribed to it in
Section 2.15(b).
          “Fair Labor Standards Act” means the Fair Labor Standards Act, 29
U.S.C. §201 et seq.
          “Federal Funds Rate” means, for any day, a floating rate equal to the
weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent, which
determination shall be final, binding and conclusive (absent manifest error).
          “Federal Reserve Board” means the Board of Governors of the Federal
Reserve System.
          “Fee Letter” means that certain Fee Letter, dated the date hereof,
between CapitalSource and Borrowers, as amended in writing from time to time.
          “Fees” means any and all fees of any nature payable to Agent or any
Lender pursuant to the Fee Letter, this Agreement or any of the other Loan
Documents.
          “Financial Covenants” means the financial covenants set forth in
Section 9.
          “Financial Statements” means the consolidated income statements,
statements of cash flows and balance sheets of Holdings delivered in accordance
with Section 4.4 and Section 5.1.
          “Fiscal Month” means any of the monthly accounting periods of the
Borrowers.
          “Fiscal Quarter” means any of the quarterly accounting periods of the
Borrowers, ending on March 31, June 30, September 30 and December 31 of each
year.

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          “Fiscal Year” means any of the annual accounting periods of the
Borrowers ending on December 31 of each year.
          “Fixed Charge Coverage Ratio” means, for any fiscal period, the ratio
of (a) EBITDA in such period, to (b) Fixed Charges for such period.
          “Fixed Charges” means, for any fiscal period, the sum, for Holdings
and its consolidated Subsidiaries for such period, of: (a) income taxes required
to be paid in such period; (b) Capital Expenditures to the extent paid during
such period (excluding the financed portion thereof); and (c) Debt Service paid.
          “Fixtures” means all “fixtures,” as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower.
          “Foreign Lender” means any Lender that is not a “United States person”
(as such term is defined in Code Section 7701(a)(30)).
          “GAAP” means generally accepted accounting principles in the United
States of America, consistently applied, as such term is further defined in
Section 9 of the Agreement.
          “General Intangibles” means “general intangibles,” as such term is
defined in the UCC, now owned or hereafter acquired by any Borrower, including
all right, title and interest that such Borrower may now or hereafter have in or
under any Contract, all payment intangibles, Subscriber lists, Licenses,
Copyrights, Trademarks, Patents, and all applications therefor and reissues,
extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
Stock and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Borrower or any computer bureau or
service company from time to time acting for such Borrower.
          “Goods” means any “goods” as defined in the UCC, now owned or
hereafter acquired by any Borrower, wherever located, including embedded
software to the extent included in “goods” as defined in the UCC, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
          “Governmental Approvals” means any and all licenses, approvals,
consents, qualifications and authorizations from any Governmental Authority.

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          “Governmental Authority” means any nation or government, any state or
any political subdivision thereof (including, without limitation, any district,
city, township, municipality or similar jurisdiction and any quasi governmental
association or institution), and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
          “Guaranty Obligations” means, as to any Person, any obligation of such
Person guaranteeing, providing comfort or otherwise supporting any Indebtedness,
lease, dividend, or other obligation (“primary obligation”) of any other Person
(the “primary obligor”) in any manner, including any obligation or arrangement
of such Person to (a) purchase or repurchase any such primary obligation,
(b) advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (d) protect the beneficiary of such arrangement from loss (other
than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranty Obligations at any time shall be deemed to
be an amount equal to the lesser at such time of (x) the stated or determinable
amount of the primary obligation in respect of which such Guaranty Obligations
are incurred and (y) the maximum amount for which such Person may be liable
pursuant to the terms of the instrument embodying such Guaranty Obligations, or,
if not stated or determinable, the maximum reasonably anticipated liability
(assuming full performance) in respect thereof.
          “Hazardous Material” means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
“solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,”
“extremely hazardous waste,” “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s),
or any radioactive substance.
          “Holdback Liabilities” means any obligations required to be paid by
any Borrower in connection with a Permitted Acquisition which are reserved for a
period of time following closing in connection with Alarm Contracts purchased in
such Permitted Acquisition which are cancelled, terminated or otherwise
determined not to comply with the terms of the related acquisition agreement.
          “Indebtedness” means, with respect to any Person, without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred ninety (90) days or
more, but excluding obligations to trade creditors incurred in the ordinary
course of business that are unsecured and not overdue by more than ninety
(90) days, (b) all reimbursement and other obligations with respect to letters
of credit, bankers’ acceptances and performance, surety and appeal bonds,
whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with

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respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (e) all Capital Lease Obligations and
the present value (discounted at the Base Rate as in effect on the date of
determination) of future rental payments under all synthetic leases, (f) all net
obligations of such Person under commodity purchase or option agreements or
other commodity price hedging arrangements, in each case whether contingent or
matured, (g) all net obligations of such Person under any foreign exchange
contract, currency swap agreement, interest rate swap, cap or collar agreement
or other similar agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or interest rates, in each
case whether contingent or matured, (h) all Indebtedness referred to above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property or other
assets (including accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness, (i) the Obligations, and (j) any Holdback Liabilities.
          “Indemnified Liabilities” has the meaning ascribed to it in
Section 2.10(a).
          “Indemnified Person” has the meaning ascribed to it in
Section 2.10(a).
          “Indemnified Taxes” means Taxes other than Excluded Taxes and Other
Taxes.
          “Initial Advance” has the meaning ascribed to it in Section 3.1(g).
          “Instruments” means all “instruments,” as such term is defined in the
UCC, now owned or hereafter acquired by any Borrower, wherever located, and, in
any event, including all certificated securities, all certificates of deposit,
and all promissory notes and other evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
          “Intellectual Property” means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
          “Intercompany Notes” has the meaning ascribed to it in
Section 7.3(a)(iv).
          “Interest Expense” means, for any fiscal period, interest expense
(whether cash or non-cash) and fees of Holdings and its consolidated
Subsidiaries in respect of Indebtedness determined in accordance with GAAP for
the relevant period, including interest expense and fees with respect to any
Total Debt and interest expense for the relevant period that has been
capitalized on the balance sheet of Holdings and its consolidated Subsidiaries;
provided that, Interest Expense is not intended to include any of the up-front
fees required to be paid pursuant to the Fee Letter on or prior to the Closing
Date that might otherwise be treated as interest expense in accordance with
GAAP.
          “Interest Payment Date” means (a) as to any Base Rate Loan, the first
Business Day of each calendar month to occur while such Loan is outstanding, and
(b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided,
that in the case of any LIBOR Period greater than three months in duration,
interest shall be payable at three month intervals and on the last day of such
LIBOR Period; and provided further that, in addition to the foregoing,

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each of (x) the date upon which all of the Commitments have been terminated and
the Loans have been paid in full and (y) the Termination Date shall be deemed to
be an “Interest Payment Date” with respect to any interest that has then accrued
under the Agreement.
          “Inventory” means any “inventory,” as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower, wherever located, and in any
event including inventory, merchandise, goods and other personal property that
are held by or on behalf of any Borrower for sale or lease or are furnished or
are to be furnished under a contract of service, or that constitute raw
materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in any Borrower’s business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including all supplies and embedded
software.
          “Investment Property” means all “investment property” as such term is
defined in the UCC now owned or hereafter acquired by any Borrower, wherever
located, including (i) all securities, whether certificated or uncertificated,
including stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of any Borrower, including the rights of such Borrower
to any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account;
(iii) all securities accounts of any Borrower; (iv) all commodity contracts of
any Borrower; and (v) all commodity accounts held by any Borrower.
          “IRS” means the Internal Revenue Service.
          “Lenders” means CapitalSource Finance, the other Lenders named on the
signature pages of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include any assignee of
such Lender, so long as any such Person holds any Commitment or Loans pursuant
to the terms of this Agreement.
          “Letter-of Credit Rights” means “letter-of-credit rights” as such term
is defined in the UCC, now owned or hereafter acquired by any Borrower,
including rights to payment or performance under a letter of credit, whether or
not such Borrower, as beneficiary, has demanded or is entitled to demand payment
or performance.
          “LIBOR Business Day” means a Business Day on which banks in the City
of London are generally open for interbank or foreign exchange transactions.
          “LIBOR Loan” means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
          “LIBOR Period” means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by the Borrowers pursuant to this
Agreement and ending thirty, sixty or ninety days thereafter, as selected by the
Borrowers’ irrevocable notice to Agent as set forth in Section 2.4(f); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:

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     (a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next succeeding LIBOR
Business Day unless the result of such extension would be to carry such LIBOR
Period into another calendar month in which event such LIBOR Period shall end on
the immediately preceding LIBOR Business Day;
     (b) any LIBOR Period that would otherwise extend beyond the Maturity Date
shall end on such date;
     (c) any LIBOR Period that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such LIBOR Period) shall end on the last
LIBOR Business Day of a calendar month;
     (d) the Borrowers shall select LIBOR Periods so as not to require a payment
or prepayment of any LIBOR Loan during a LIBOR Period for such Loan; and
     (e) the Borrowers shall select LIBOR Periods so that there shall be no more
than 8 separate LIBOR Loans in existence at any one time.
          “LIBOR Rate” means for each LIBOR Period, a rate of interest
determined by Agent equal to:
     (a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by
     (b) a number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of reserve requirements in effect on
the day that is two (2) LIBOR Business Days prior to the beginning of such LIBOR
Period (including basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Federal Reserve Board) that are required to be maintained by
a member bank of the Federal Reserve System.
     If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and the
Borrowers.
          “License” means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Borrower.
          “Lien” means any mortgage or deed of trust, pledge, hypothecation,
collateral assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of

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any kind or nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the UCC or comparable law of any
jurisdiction).
          “Life Insurance Policy” means a current, valid and fully paid key man
life insurance policy in the amount of at least $2,500,000 that insures the life
of Stephen Ruzika and that (i) names Borrowers as the sole beneficiaries,
(ii) is issued by a carrier and otherwise is in form and substance acceptable to
Agent in its Permitted Discretion, and (iii) is collaterally assigned to Agent
for the ratable benefit of Lenders and as such expressly provides that it cannot
be altered, amended, modified or canceled without thirty (30) Business Days
prior written notice to Agent and that it inures to the benefit of Agents and
Lenders notwithstanding any action or omission or negligence of or by any
Borrower or any insured thereunder.
          “Litigation” has the meaning ascribed to it in Section 4.13.
          “Loan” means, at any time, the aggregate amount of Advances
outstanding to Borrowers from a Lender or all Lenders, as applicable.
          “Loan Account” has the meaning ascribed to it in Section 2.9.
          “Loan Documents” means the Agreement, any Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates
identified in Section 3.1 executed and delivered to, or in favor of, Agent or
any Lender and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, letter of credit agreements and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Borrower, or any employee of any Borrower, and delivered to Agent or any
Lender in connection with the Agreement or the transactions contemplated
thereby. Any reference in the Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and shall
refer to the Agreement or such Loan Document as the same may be in effect at any
and all times such reference becomes operative.
          “Lockbox Account” has the meaning ascribed to it in Section 2.5(b).
          “Lockbox Agreement” means a tri-party lockbox agreement in the form of
Exhibit 2.5(b)(2) hereto among a Borrower, the Agent and a Lockbox Bank or such
other form as is acceptable to Agent in its Permitted Discretion.
          “Lockbox Bank” has the meaning ascribed to it in Section 2.5(b).
          “Margin Stock” has the meaning ascribed to it in Section 4.10.
          “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, operations or financial or other condition of the Borrowers
considered as a whole, (b) the Borrowers’ ability to pay any of the Loans or to
pay or perform any of the other Obligations in accordance with the terms of this
Agreement or the other Loan Documents, (c) the Collateral (taken as a whole) or
Agent’s Liens, on behalf of itself and Lenders, on the Collateral or the

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priority of such Liens, or (d) Agent’s or any Lender’s rights and remedies under
this Agreement and the other Loan Documents or their ability to enforce the
same.
          “Material Contract” means: (a) any agreement relating to the
acquisition of Alarm Contracts; (b) any Monitoring Contract; (c) any Off Site
Storage Agreement; (d) all licensing or other use agreements relating to
computer software of any Borrower; (e) all agreements and contracts of any
Borrower for the use of telephone lines; and (f) such other agreements,
documents and contracts as Agent may reasonably designate as “material” from
time to time by written notice to the Borrowers; all of the foregoing, as
amended, supplemented, restated or replaced from time to time.
          “Maturity Date” means November 9, 2008.
          “Maximum Amount” means, as of any date of determination, an amount
equal to the aggregate of all Lenders’ Commitments, as of such date.
          “Measured Time Period” shall mean, for the first six (6) months after
the Closing Date, the number of months then ended since the Closing Date
beginning with November 2005; and thereafter it shall mean the immediately
preceding six (6) months.
          “Monitoring Contract” means an agreement between any Borrower and a
third party pursuant to which such Borrower subcontracts the electronic
monitoring of alarm systems provided for under Alarm Contracts.
          “Mortgages” means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Borrower to Agent, on behalf of
itself and Lenders, from time to time, with respect to any Real Estate, all in
form and substance reasonably satisfactory to Agent.
          “Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA, and to which any Borrower or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make within the
last six years, contributions on behalf of participants who are or were employed
by any of them.
          “Non-Corporate Domestic Lender” means any Lender that is a “United
States person” but is not a “domestic” corporation (as such terms are defined in
Code Section 7701(a)).
          “Non-Funding Lender” has the meaning ascribed to it in
Section 11.9(a)(ii).
          “Nonsolicitation and Disclosure Agreements” has the meaning ascribed
to it in Section 3.1(z).
          “Note” and “Notes” mean any notes issued pursuant to Section 2.1(b).
          “Notice of Advance” has the meaning ascribed to it in Section 2.1(a).
          “Notice of Conversion/Continuation” has the meaning ascribed to it in
Section 2.4(f).

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          “Notice of Termination” has the meaning ascribed to it in
Section 2.2(a).
          “Obligations” means all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any
Borrower to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement, letter of credit agreement or other instrument, arising
under the Agreement or any of the other Loan Documents. This term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Borrower in bankruptcy, whether or
not allowed in such case or proceeding), Fees, hedging obligations under swaps,
caps and collar arrangements provided by any Lender, expenses, in-house and
external attorneys’ fees and any other sum chargeable to any Borrower under the
Agreement or any of the other Loan Documents.
          “Off Site Storage Agreement” means any agreement between any Borrower
and a storage company, bailee or other third party, regarding the bailment,
holding or storage or Alarm Contracts or other assets or property of such
Borrower.
          “Other Taxes” means present or future stamp or documentary taxes and
any other excise, property or similar taxes, charges or levies that arise from
or in connection with any payment made hereunder or under any other Loan
Document or from the execution, delivery or registration of, performance under,
or otherwise with respect to, this Agreement or any other Loan Document.
          “Parent” has the meaning ascribed thereto in the Recitals to the
Agreement.
          “Parent Pledge Agreement” means the Pledge Agreement of even date
herewith executed by Parent in favor of Agent, on behalf of itself and Lenders,
pledging all Stock of Holdings.
          “Patent License” means rights under any written agreement now owned or
hereafter acquired by any Borrower granting any right with respect to any
invention on which a Patent is in existence.
          “Patent Security Agreements” means the Patent Security Agreements made
in favor of Agent, on behalf of itself and Lenders, by each applicable Borrower.
          “Patents” means all of the following in which any Borrower now holds
or hereafter acquires any interest: (a) all letters patent of the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any state or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
          “PBGC” means the Pension Benefit Guaranty Corporation.
          “Pension Plan” means a Plan described in Section 3(2) of ERISA.

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          “Permitted Acquisition” has the meaning ascribed to it in Section 7.1.
          “Permitted Discretion” means a determination or judgment made by Agent
in good faith in the exercise of reasonable (from the perspective of a secured
lender making loans of the type evidenced hereby) business judgment.
          “Permitted Encumbrances” means the following Liens and encumbrances:
(a) Liens for Taxes and Charges due but not yet delinquent or which are being
contested in accordance with Section 6.2(b); (b) pledges or deposits of money
securing statutory obligations under workers’ compensation, unemployment
insurance, social security or public liability laws or similar legislation
(excluding Liens under ERISA) provided in aggregate amount of outstanding of
contingent liabilities of the Borrowers at any one time outstanding thereunder
does not exceed $500,000; (c) pledges or deposits of money securing bids,
tenders, contracts (other than contracts for the payment of money) or leases to
which any Borrower is a party as lessee made in the ordinary course of business
provided in aggregate amount of outstanding or contingent liabilities of the
Borrowers at any one time outstanding thereunder does not exceed $500,000;
(d) deposits securing, or in lieu of, surety, performance, appeal or customs
bonds in proceedings to which any Borrower is a party and securing liabilities
in the ordinary course of business provided in aggregate amount of outstanding
or contingent liabilities of the Borrowers at any one time outstanding
thereunder does not exceed $500,000; (e) any attachment or judgment lien not
constituting an Event of Default under Section 10.1(i); (f) zoning restrictions,
easements, right-of-ways, licenses, or other restrictions on the use of any Real
Estate or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not, individually or in the aggregate,
materially impair the use, value, or marketability of such Real Estate;
(g) presently existing or hereafter created Liens in favor of Agent, on behalf
of Lenders; (h) Liens expressly permitted under Section 7.7 of the Agreement,
(i) with respect to any Real Estate, matters disclosed on the title commitment
with respect thereto so long as such matters do not, individually or in the
aggregate, materially affect the marketability or have a material impact on the
value or quality of such title; (j) landlord’s liens so long such liens are
subordinated in right of payment to the Obligations in accordance with a
landlord’s agreement to the extent required pursuant to Section 6.9; and
(k) Liens arising from UCC financing statement filings regarding operating
leases entered into by any Borrower in the ordinary course of business, limited
to the assets so leased; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, any Person
becoming a Subsidiary of any Borrower; provided further, however, that any such
Lien may not extend to any other property owned by any Borrower.
          “Person” means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
          “Plan” means, at any time, an “employee benefit plan,” as defined in
Section 3(3) of ERISA, that any Borrower or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any Borrower.

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          “Pledge Agreements” means the Borrower Pledge Agreement, the Parent
Pledge Agreement, and any other pledge agreement entered into after the Closing
Date by any other Person (as required by this Agreement or any other Loan
Document).
          “Post Closing Agreement” has the meaning ascribed to it in
Section 6.10.
          “Pro Rata Share” means with respect to all matters relating to any
Lender (a) prior to the Commitment Termination Date, the percentage obtained by
dividing (i) the Commitment of that Lender by (ii) the aggregate Commitments of
all Lenders, as any such Commitments and percentages may be adjusted by
assignments permitted pursuant to Section 11.1, and (b) on and after the
Commitment Termination Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Loans held by that Lender, by
(ii) the outstanding principal balance of the Loans held by all Lenders.
          “Proceeds” means “proceeds,” as such term is defined in the UCC,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Borrower from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due and
payable to any Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Borrower against third parties
(i) for past, present or future infringement of any Patent or Patent License, or
(ii) for past, present or future infringement or dilution of any Copyright,
Copyright License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Borrower against third parties with respect to any litigation or dispute
concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.
          “Projections” means Holdings’ forecasted consolidated: (a) balance
sheets; (b) income statements; and (c) cash flow statements and otherwise
consistent with the books and records from the previous period in all material
respects, except as noted therein with reasonable explanatory comments, together
with appropriate supporting details and a statement of underlying assumptions.
          “Qualified Alarm Contract” means an Alarm Contract payable in the
lawful currency of the United States of America:
          (a) as to which a Borrower (i) owns all right, title and interest,
free and clear of all Liens, other than Permitted Encumbrances, (ii) no later
than the date of acquisition or replacement, (A) in connection with any Alarm
Contract acquired through a Permitted Acquisition after the Closing Date, has
filed either a blanket or precautionary UCC-1 financing statements against the
related dealer, in the appropriate jurisdiction, covering all of the dealers
Alarm Contracts or listing such Alarm Contract, as applicable, and (B) has
obtained

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acknowledgement from the related dealer that all future Alarm Contracts with the
Subscribers listed in the existing acquisition agreement have been transferred
to such Borrower under the applicable acquisition agreement and (iii) no later
than the date of filing of any UCC-1 financing statements required by the
preceding clause (A), has obtained authorization from the related dealer to file
such UCC-1 financing statements;
          (b) which is fully executed and in full force and effect, enforceable
in accordance with its terms;
          (c) which (i) is fully assignable (or consent to assignment has been
provided in form and substance reasonably satisfactory to Agent), (ii) includes
limitation of liability and third party indemnification provisions acceptable to
Agent, (iii) complies with applicable Law including without limitation all
federal and state consumer credit laws, and (iv) is otherwise in form and
substance reasonably satisfactory to Agent;
          (d) as to which the alarm system related to such Alarm Contract (i) is
installed in (A) New York or Florida or (B) any other state consented to in
writing by Agent, (ii) is in good working order and condition, and (iii) has
been installed and maintained in accordance with good and workmanlike practices
prevailing in the alarm industry in the jurisdiction in which the applicable
alarm system is installed;
          (e) as to which all parties related to such Alarm Contract have
performed all obligations under or with respect to such Alarm Contract or the
related alarm system and no such party is in default thereunder (except as
permitted under the definition of Qualified RMR), and neither any Borrower nor
the related dealer has received any notice of a default or breach (or
anticipated default or breach) under such Alarm Contract or terminated,
cancelled or written off such Alarm Contract;
          (f) in connection with any Alarm Contract acquired through a Permitted
Acquisition after the Closing Date, to the best of any Borrower’s knowledge
after due inquiry, as to which the related dealer and seller, if any, has all
licenses and permits necessary and material to the enforceability of such Alarm
Contract, including, without limitation, having filed and maintained an
effective and current notice of business activities report or similar evidence
of qualification to transact business in each state in which such dealer (and
seller) enters into, services or acquires Alarm Contracts;
          (g) as to which no notice of cancellation or termination has been
received by any Borrower or the related dealer or subcontractor;
          (h) as to which all of the representations, warranties and covenants
made under this Agreement relating to such Alarm Contract are true and correct
(as of any date made), including, without limitation, the covenants set forth in
Section 6.13 hereof;
          (i) as to which there exists only one original executed copy (for
purposes hereof and elsewhere in this Agreement, carbon copies not to be
considered originals);

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          (j) as to which the alarm system related to such Alarm Contract and
its installation and monitoring conform in all material respects to the terms of
such Alarm Contract and applicable Law;
          (k) as to which the applicable Subscriber is not (i) a Subsidiary,
Affiliate or employee of Parent, any Borrower or the related dealer, or
(ii) paying pursuant to a negotiated payment plan as a result of non-payment,
insolvent or the subject of any bankruptcy or insolvency proceedings of any kind
or any other proceeding or action which might have a material adverse effect on
such Subscriber; and
          (l) is otherwise satisfactory to the Agent in its reasonable
discretion.
          “Qualified Assignee” means (a) any Lender, any Affiliate of any Lender
and, with respect to any Lender that is an investment fund that invests in
commercial loans, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in
each case, which has a rating of BBB or higher from S&P and a rating of Baa2 or
higher from Moody’s at the date that it becomes a Lender and which, through its
applicable lending office, is capable of lending to Borrower without the
imposition of any withholding or similar taxes; provided that, no Person
proposed to become a Lender after the Closing Date who (i) is determined by
Agent to be acting in the capacity of a vulture fund or distressed debt
purchaser or (ii) holds Subordinated Debt or Stock issued by any Borrower, shall
be a Qualified Assignee.
          “Qualified Plan” means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the Code.
          “Qualified Retail RMR” means RMR which meets each of the following
criteria: (a) such RMR is (i) not more than ninety (90) days past due (except
for the Slow Pay RMR, which is deemed to be Qualified Retail RMR for purposes of
this definition) and (ii) such RMR has not been terminated, cancelled or written
off, nor has the Subscriber provided notice of termination; (b) not more than
22% of such RMR are from Qualified Alarm Contracts which are more than thirty
(30) days past due; (c) no such RMR is from a Qualified Alarm Contract entered
into after March 31, 2001 with a residential Subscriber whose “Beacon” credit
score, at the time such Qualified Alarm Contract was entered into, was less than
600; (d) not more than $75,000 of such RMR is from Qualified Alarm Contracts
which are Governmental Authorities subject to the Federal Assignment of Claims
Act of 1940, as amended, or any similar state or local law (unless the Agent has
been delivered evidence reasonably satisfactory to it that the Agent has a
properly perfected first priority security interest in the related Qualified
Alarm Contract and has received all consents from any Government Authority
necessary to enable Lender to fully protect its interest in such Qualified Alarm
Contract); (e) such RMR is not attributable to Wholesale RMR; and (f) such RMR
is otherwise satisfactory to the Agent in its reasonable discretion. In
addition, the Borrowers acknowledge and agree that the RMR attributable to Boca
Pointe HOA shall be excluded from the calculation of Qualifying Retail RMR.

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          “Qualified Retail RMR Leverage Ratio” means, as of any date of
determination, the ratio of (a) the amount of the Loan, less the product of ten
(10) times the amount of Qualified Wholesale RMR, to (b) Qualified Retail RMR.
          “Qualified RMR” means the aggregate amount of the Qualified Retail RMR
and the Qualified Wholesale RMR.
          “Qualified Wholesale RMR” means that portion of the RMR that is
attributable to Wholesale RMR and which meets each of the following criteria:
(a) such RMR is (i) not more than ninety (90) days past due; and (ii) such RMR
has not been terminated, cancelled or written off, nor has the alarm dealer
provided notice of termination; (b) not more than 22% of such RMR are from
Qualified Alarm Contracts which are more than thirty (30) days past due; and
(c) such RMR is otherwise satisfactory to Lender in its reasonable discretion.
          “Real Estate” has the meaning ascribed to it in Section 4.6.
          “Relationship Bank” has the meaning ascribed to it in Section 2.5(a).
          “Release” means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dumping, or leaching of Hazardous Material in the indoor or
outdoor environment.
          “Requisite Lenders” means Lenders having (a) more than 66 and 2/3% of
the Commitments of all Lenders, or (b) if the Commitments have been terminated,
more than 66 and 2/3% of the aggregate outstanding amount of the Loans.
          “Restricted Payment” means, with respect to any Borrower (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Borrower’s Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Borrower
now or hereafter outstanding; (e) any payment of a claim for the rescission of
the purchase or sale of, or for material damages arising from the purchase or
sale of, any shares of such Borrower’s Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission; (f) any payment, loan, contribution, or other transfer of
funds or other property to any Stockholder of such Borrower other than
(i) payment of compensation or reimbursement of business related expenses in the
ordinary course of business to Stockholders who are employees of such Borrower
and (ii) the reimbursement of out-of-pocket expenses of the directors of any
Borrower for such director’s attendance of board meetings not to exceed $25,000
in any Fiscal Year; (g) any payment of management fees (or other fees of a
similar nature) by such Borrower to the Parent or any Affiliate of the Parent or
any Borrower; and (h) any payment on account of working capital adjustments or
earn-out payments made pursuant

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to any acquisition agreement; provided that, this is not intended to restrict
the payment of any Holdback Liabilities required to be paid pursuant to the
related acquisition agreement.
          “Retiree Welfare Plan” means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant’s termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the Code
and at the sole expense of the participant or the beneficiary of the
participant.
          “RMR” means, for any calendar month, the aggregate recurring regular
monthly amount paid by Subscribers, including other alarm dealers, under
Qualified Alarm Contracts for a one-month period as payment for regular and
on-going electronic monitoring services, closed-circuit television and access
control systems, maintenance, fire and/or other electronic security system
related services (but excluding any non-recurring, special or one-time charges
(including, without limitation, amounts billed for installation charges and/or
repairs), taxes, fees and other assessments or amounts imposed by Governmental
Authorities or fire or law enforcement institutions related to such Qualified
Alarm Contracts, charges or costs associated with equipment purchases, lease
financing revenue, charges related to telephone transmission of alarm signals
and other utility charges, antenna rental charges, panel use, franchise and
license fees, false alarm charges and similar charges).
          “Security Agreement” means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Borrower that is a signatory thereto.
          “Slow Pay RMR” means RMR (other than Wholesale RMR) that is due from a
commercial Subscriber under a Qualified Alarm Contract of which at least a
portion is more than ninety (90) days past due, but no portion is more than one
hundred twenty (120) days past due; and provided that such Subscriber has made
one or more payments during the ninety (90) days immediately prior to the date
of determination in an aggregate amount of not less than one month’s RMR under
such Qualified Alarm Contract.
          “Software” means all “software” as such term is defined in the UCC,
now owned or hereafter acquired by any Borrower, other than software embedded in
any category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
          “Solvent” means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; and (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature. The amount of contingent liabilities (such as litigation, guaranties and
pension plan liabilities) at any time shall be computed as the amount that, in
light of all the facts and circumstances existing at the time, represents the
amount that can reasonably be expected to become an actual or matured liability.

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          “Stock” means all shares, options, warrants, general or limited
partnership interests, membership or limited liability company interests or
other equivalents (regardless of how designated) of or in a corporation,
partnership, limited liability company or equivalent entity whether voting or
nonvoting, including common stock, preferred stock or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934); provided that any earn-out or similar
obligation incurred pursuant to a Permitted Acquisition shall be deemed not to
constitute Stock.
          “Stockholder” means, with respect to any Person, each holder of Stock
of such Person.
          “Subscriber” means an individual or other Person obligated under an
Alarm Contract, who receives regular and on-going electronic monitoring
services, closed-circuit television and access control systems, maintenance,
fire and/or other electronic security system related services from a Borrower.
          “Subordinated Debt” means any Indebtedness of any Borrower fully
subordinated to the Obligations in a manner and form satisfactory to Agent as to
right and time of payment and as to any other rights and remedies thereunder.
          “Subsidiary” means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of any Borrower.
          “Supporting Obligations” means all “supporting obligations” as such
term is defined in the UCC, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
          “Taxes” means taxes, levies, imposts, deductions, or withholdings, and
all liabilities with respect thereto, imposed by any Governmental Authority.
          “Termination Date” means the date on which (a) the Loans have been
indefeasibly repaid in full, (b) all other Obligations, other than residual
indemnity that survive payment in full of the Loans, under the Agreement and the
other Loan Documents have been completely discharged, and (c) the Borrowers
shall not have any further right to borrow any monies under the Agreement.

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          “Termination Fee” has the meaning ascribed to it in the Fee Letter.
          “Third Party Consent Form” means a form signed by any Person, other
than any Borrower, that is a party to a Material Contract, consenting to the
assignment of a Material Contract to such Borrower.
          “Title IV Plan” means a Pension Plan (other than a Multiemployer
Plan), that is covered by Title IV of ERISA, and that any Borrower or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
          “Total Borrowing Availability” means, as of any date, the Maximum
Amount minus $500,000.
          “Total Debt” means, with respect to Holdings and its consolidated
Subsidiaries, without duplication, the principal portion of all Indebtedness for
borrowed money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and that by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at any such Person’s option under
a revolving credit or similar agreement obligating the lender or lenders to
extend credit over a period of more than one year from the date of creation
thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
the Borrowers, the Obligations and, without duplication, Guaranty Obligations
consisting of guaranties of Total Debt of other Persons; provided that, the
aggregate amount of performance, surety and appeal bonds, to the extent not in
excess, at any time of measurement, of $500,000, shall be excluded from any
calculation of Total Debt to the extent that such amount would otherwise be
included therein.
          “Total Revenue” means, for any fiscal period, all revenue of Holdings
on a consolidated basis, as calculated for such period in accordance with GAAP.
          “Trademark License” means rights under any written agreement now owned
or hereafter acquired by any Borrower granting any right to use any Trademark.
          “Trademark Security Agreements” means the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Borrower.
          “Trademarks” means all of the following now owned or hereafter adopted
or acquired by any Borrower: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, service name, logos, other source
or business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.

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          “UCC” means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of Maryland; provided, that to the
extent that the UCC is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
UCC, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent’s or any Lender’s Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of Maryland, the term “UCC” shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
          “Unfunded Pension Liability” means, at any time, the aggregate amount,
if any, of the sum of the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes as if the Plan
terminated in effect under such Title IV Plan.
          “Unused Line Fee” has the meaning ascribed to it in Section 2.6(b).
          “Welfare Plan” means a Plan described in Section 3(1) of ERISA.
          “Wholesale RMR” means RMR paid by other alarm dealers that subcontract
with Borrower for the provision of alarm monitoring services to the customers of
such dealers.
          “Write-Off Policy” has the meaning ascribed to it in Section 4.29.
          Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth in Section 9. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the UCC to the
extent the same are used or defined therein. Unless otherwise specified,
references in the Agreement or any of the Appendices relating to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words “herein,” “hereof” and “hereunder” and other words of
similar import refer to the Agreement as a whole, including all schedules,
exhibits and disclosure schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such schedule, exhibit or
disclosure schedule.
          Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in any gender shall include all genders. The words “including,”
“includes” and “include” shall be deemed to be followed by the words “without
limitation”; the word “or” is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any

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amendments of the same and any successor statutes and regulations. Whenever any
provision in any Loan Document refers to the knowledge (or an analogous phrase)
of any Borrower, such words are intended to signify that such Borrower has
actual knowledge or awareness of a particular fact or circumstance or that such
Borrower, if it had exercised reasonable diligence, would have known or been
aware of such fact or circumstance.
2. AMOUNT AND TERMS OF CREDIT
     2.1 Revolving Credit Facility.
          (a) Subject to the terms and conditions hereof, each Lender shall make
available to the Borrowers from time to time until the Commitment Termination
Date its Pro Rata Share of advances (each, an “Advance”). The Pro Rata Share of
the Loan of any Lender shall not at any time exceed its separate Commitment. The
obligations of each Lender hereunder shall be several and not joint. Until the
Commitment Termination Date, the Borrowers may from time to time borrow, repay
and reborrow under this Section 2.1(a); provided, that the amount of any Advance
to be made at any time shall be at least equal to or greater than $250,000 and
not exceed Borrowing Availability at such time and at no time shall the total
amount of Advances outstanding exceed the Total Borrowing Availability. Each
Advance shall be made on notice by the Borrowers to the Agent at the address
specified in Section 13.10 or as otherwise specified by Agent to Borrowers in
writing. Any such notice (other than the notice for the Initial Advance) must be
given no later than (1) noon (New York time) on the date which is one
(1) Business Day prior to the proposed Advance, in the case of a Base Rate Loan,
or (2) noon (New York time) on the date which is three (3) Business Days prior
to the proposed Advance, in the case of a LIBOR Loan. Each such notice (a
“Notice of Advance”) must be given in writing (by telecopy or overnight courier)
in the form of a Borrowing Base Certificate as set forth in Exhibit 5.1(b). If
the Borrowers desire to have the Advances bear interest by reference to a LIBOR
Rate, it must comply with Section 2.4(f). Agent may charge Borrowers a wire fee
for each Advance.
          (b) (i) Agent shall maintain, in accordance with its usual practice,
electronic or written records evidencing the indebtedness and obligations to the
Lenders resulting from any Advance made by a Lender from time to time, including
without limitation, the amounts of principal and interest payable and paid to
such Lender from time to time under this Agreement.
               (ii) The Borrowers agree that:
                    (A) upon written notice by Agent to the Borrowers that a
promissory note or other evidence of indebtedness is requested by Agent or any
Lender to evidence the Loan and other Obligations owing or payable to, or to be
made by, such Lender, the Borrowers shall promptly (and in any event within five
(5) Business Days of any such request) execute and deliver to Agent an
appropriate promissory note or notes in form and substance reasonably acceptable
to Agent and Borrower, payable to the order of such Lender or in a principal
amount equal to the amount of the Loans owing or payable to Lender;
                    (B) all references to Notes in the Loan Documents shall mean
Notes, if any, to the extent issued (and not returned to the Borrowers for
cancellation) hereunder,

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as the same may be amended, modified, divided, supplemented and/or restated from
time to time; and
                    (C) upon a Lender’s written request, and in any event within
five (5) Business Days of any such request, Borrowers shall execute and deliver
to such Lender new Notes and/or divide the Notes in exchange for then existing
Notes in such smaller amounts or denominations as such Lender shall specify in
its sole and absolute discretion; provided, that the aggregate principal amount
of such new Notes shall not exceed the aggregate principal amount of the Notes
outstanding at the time such request is made; and provided, further, that such
Notes that are to be replaced shall then be deemed no longer outstanding
hereunder and replaced by such new Notes and returned to the Borrowers within a
reasonable period of time after Lender’s receipt of the replacement Notes.
          (c) The entire unpaid balance of the Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Maturity Date.
     2.2 Prepayments.
          (a) Voluntary Prepayments of Loans; Reductions in Commitments. The
Borrowers may at any time on at least five (5) Five Business Days’ prior written
notice to Agent (i) voluntarily prepay all or part of the Loans and/or
(ii) permanently reduce (but not terminate) the Commitment; provided that
(A) any such prepayments or reductions shall be in a minimum amount of $100,000
and integral multiples of $100,000 in excess of such amount, (B) the Commitment
shall not be reduced to an amount less than the aggregate amount of the
outstanding Loan at such time and (C) after giving effect to such reductions,
the Borrowers shall be in compliance with Section 2.2(b)(i). The Borrowers may
at any time on at least three (3) days’ prior written notice to Agent terminate
the Commitments (“Notice of Termination”). If the Borrowers terminate the
Commitments prior to the Commitment Termination Date, the Borrowers shall pay to
Agent, solely for Agent’s benefit (in addition to the then outstanding
principal, accrued interest and Obligations owing pursuant to the terms of this
Agreement and any other Loan Document), as yield maintenance for the loss of
bargain and not as a penalty, an amount equal to the applicable Termination Fee.
Any voluntary prepayment and any reduction or termination of the Commitments
must be accompanied by payment of any LIBOR funding breakage costs in accordance
with Section 2.10(b). Upon any such reduction or termination of the Commitments,
the Borrowers’ right to request Advances shall simultaneously be permanently
reduced or terminated.
          (b) Mandatory Prepayments.
               (i) If at any time the outstanding balance of the Loan exceeds
the Borrowing Base, including, as a result of any reduction in the amounts of
the Commitments as set forth on Schedule I hereto, the Borrowers shall promptly
(but in no event later than the second Business Day thereafter) repay the
aggregate outstanding Advances to the extent required to eliminate such excess.
Such prepayment will not, in and of itself, reduce any Commitment.

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               (ii) Upon receipt by any Borrower of any cash proceeds of any
asset disposition (other than Inventory disposed of in the ordinary course of
business), such Borrower shall promptly (but in no event later than the second
Business Day thereafter) prepay the Loan in an amount equal to all such
proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by such Borrower in connection therewith to an unrelated third party, (B) sales,
use and transfer taxes, (C) amounts payable to holders of senior Liens on such
asset (to the extent such Liens constitute Permitted Encumbrances hereunder), if
any, and, so long as no Event of Default has occurred and is continuing, and
(D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith. In the event of any escrow or holdback arrangement with
respect to any such disposition, the receipt of any deferred proceeds as a
result thereof shall be deemed to occur when and as such proceeds are actually
received by any Borrower. Notwithstanding the foregoing, the following shall not
be subject to mandatory prepayment under this clause (ii): (1) asset disposition
proceeds that are reinvested in similar assets within one hundred eighty
(180) days following receipt thereof; provided that (x) if such proceeds exceed
$500,000 for any one disposition, such Borrower notifies Agent of its intent to
reinvest at the time such proceeds are received and when such reinvestment
occurs, (y) no Event of Default exists from and including the date of such
disposition through and including the date of such reinvestment (and upon the
occurrence of such Event of Default, Agent may automatically, or Borrowers shall
at the instruction of the Agent, apply any such proceeds to prepayment of the
Loans) and (z) at all times prior to such reinvestment such proceeds shall be
deposited in a Bank Account (except to the extent the Agent, in its discretion,
requires such Borrower to deposit such amounts in a blocked account); and
(2) asset disposition proceeds invested in a Borrower and used to pay off such
Borrower’s obligations arising under the terms of the Bridge Loan and to
terminate any commitments arising thereunder. To the extent such funds are
placed in a blocked account, they shall be made available to such Borrower to
reinvest in similar assets upon any written request by such Borrower for the
release of funds necessary for such reinvestment, so long as no Event of Default
has occurred and is continuing at the time of such request. To the extent
(x) not used to reinvest in similar assets, or (y) if any Event of Default has
occurred or is continuing, such asset disposition proceeds shall be applied in
accordance with Section 2.2(c).
               (iii) If any Borrower issues Stock after the Closing Date or
Indebtedness for borrowed money (whether or not permitted pursuant to this
Agreement), such Borrower shall promptly (but in no event later than the second
Business Day following the date of receipt of the proceeds thereof) prepay the
Loans in an amount equal to all such proceeds, net of underwriting discounts and
commissions and other reasonable costs, fees and expenses paid in connection
therewith. Any such prepayment shall be applied in accordance with
Section 2.2(c). Notwithstanding the foregoing, the following shall not be
subject to prepayment under this clause (iii): (1) proceeds of Stock used to
fund Permitted Acquisitions; (2) proceeds of the issuance of additional
Indebtedness under this Agreement; (3) proceeds of any Indebtedness permitted
pursuant to Section 7.3(a); and (4) proceeds of Stock issued for the purpose of
paying off the Borrowers’ obligations arising under the terms of the Bridge
Loan, provided that, as to any of the above, (x) Borrower notifies Agent of its
intent to issue any such Stock, if applicable, and (y) no Event of Default
exists at the time of receipt of such proceeds (and at all times prior to such
permitted use, such proceeds shall be deposited into a Bank Account) and, upon
the occurrence of any Event of Default, Agent may automatically, or Borrowers
shall at the instruction of the Agent, apply any such proceeds to prepayment of
the Loans).

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          (c) Application of Prepayments. Any prepayment made on the Loan shall
be applied as follows: first, to Fees and reimbursable expenses (previously
documented for the Borrowers) of Agent then due and payable pursuant to any of
the Loan Documents; second, to interest then due and payable on the Loan,
ratably; and third, to the outstanding principal balance of the Loan until the
same has been paid in full. The Commitments shall be permanently reduced by the
amount of any such prepayments (other than such payments under clause (b)(i)
above). Agent may charge Borrowers a wire fee for any prepayment hereunder.
          (d) No Implied Consent. Nothing in this Section 2.2 shall be construed
to constitute Agent’s or any Lender’s consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.
     2.3 Use of Proceeds.
          The Borrowers shall utilize the proceeds of the Loans as set forth in
Recital A. Disclosure Schedule (2.3) contains a description of the Borrowers’
sources and uses of funds as of the Closing Date, including the Advance to be
made or incurred on that date, and a funds flow memorandum detailing how funds
from each source are to be transferred to particular uses.
     2.4 Interest and Applicable Margins.
          (a) The Borrowers shall pay interest to Agent, for the ratable benefit
of Lenders in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates:
(i) the Base Rate plus the Applicable Margin per annum, or (ii) at the election
of the Borrowers, the applicable LIBOR Rate plus the Applicable Margin per
annum.
          (b) The Applicable Margins shall be established by reference to the
following Levels of Applicable Margins set forth below:

      If Qualified Retail RMR     Leverage Ratio is:   Level of Applicable
Margins:
£ 18.0x
  Level I
> 18.0x but £ 20.0x
  Level II
> 20.0x but £ 22.0x
  Level III
> 22.0x but £ 24.0x
  Level IV
> 24.0x but £ 25.0x
  Level V
> 25.0x but £ 26.0x
  Level VI

          The Applicable Margins shall be as follows:

                                                      Level I   Level II   Level
III   Level IV   Level V   Level VI
Applicable Base Rate Margin
    1.50 %     2.00 %     2.50 %     3.00 %     3.75 %     4.25 %
Applicable LIBOR Margin
    3.25 %     3.25 %     3.75 %     4.25 %     5.25 %     5.75 %

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          From the Closing Date until the first adjustment as described below,
the Applicable Margins shall be set at Level VI. The Applicable Margins shall be
adjusted monthly and retroactively effective as of the first day of a calendar
month based upon the information set forth in the Borrowing Base Certificate for
the prior month. If an Event of Default has occurred and is continuing at the
time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day following the date on which such
Event of Default is waived or cured.
          (c) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension. The foregoing shall not be given
effect, however, in respect of the calculation of Financial Covenants relating
to scheduled principal payments.
          (d) All computations of Fees calculated on a per annum basis and
interest based on the LIBOR Rate shall be made by Agent on the basis of a
360-day year, in each case for the actual number of days occurring in the period
for which such interest and Fees are payable. All computations of interest based
on the Base Rate shall be made by Agent on the basis of a 365/366-day year, in
each case for the actual number of days occurring in the period for which such
interest and Fees are payable. The Base Rate is a floating rate determined for
each day. Each determination by Agent of interest rates and Fees hereunder
shall, absent manifest error, be presumptive evidence of the correctness of such
rates and Fees.
          (e) So long as an Event of Default has occurred and is continuing
under Section 10.1(a), (h) or (i), the interest rates applicable to the Loans
shall be increased by four percentage points (4%) per annum, and so long as any
other Event of Default (except under Section 10.1(a) to the extent the following
sentence shall apply) has occurred and is continuing and at the election of
Requisite Lenders confirmed by written notice from Agent to the Borrowers, the
interest rates applicable to the Loans shall be increased by two percentage
points (2%) per annum, above the rates of interest otherwise applicable
hereunder unless Agent or Requisite Lenders elect to impose a smaller increase
(the “Default Rate”), and all outstanding Obligations shall bear interest at the
Default Rate applicable to such Obligations. Interest at the Default Rate shall
accrue from the initial date of the applicable Event of Default until that Event
of Default is cured or waived and shall be payable upon demand.
          (f) Subject to the conditions precedent set forth in Section 2.2, the
Borrowers shall have the option to (i) request that any Advance be made as a
LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans from
Base Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to a Base Rate
Loan, subject to payment of LIBOR breakage costs in accordance with Section
2.10(b) if such conversion is made prior to the expiration of the LIBOR Period
applicable thereto, or (iv) continue all or any portion of any Loan as a LIBOR
Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after the last day
of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans
having the same proposed LIBOR Period to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $100,000 and integral
multiples of $100,000 in excess of such amount. Any such election must

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be made by noon (New York time) on the third Business Day prior to (1) the date
of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end
of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or
(3) the date on which the Borrowers wish to convert any Base Rate Loan to a
LIBOR Loan for a LIBOR Period designated by the Borrowers in such election. If
no election is received with respect to a LIBOR Loan by noon (New York time) on
the third Business Day prior to the end of the LIBOR Period with respect thereto
(or if an Event of Default has occurred and is continuing or the additional
conditions precedent set forth in Section 3.2 shall not have been satisfied),
that LIBOR Loan shall be converted to a Base Rate Loan at the end of its LIBOR
Period. The Borrowers must make such election by notice to Agent in writing, by
telecopy or overnight courier. In the case of any conversion or continuation,
such election must be made pursuant to a written notice (a “Notice of
Conversion/Continuation”) in the form of Exhibit 2.4(f).
          (g) Notwithstanding anything to the contrary set forth in this
Section 2.4, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the “Maximum Lawful Rate”), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If, due to any
circumstance whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall exceed any such Maximum Lawful
Rate, then, the obligation to be so fulfilled shall be reduced to such lawful
limit, and, if Borrowers shall have paid interest or any other charges of any
kind which might be deemed to be interest under applicable law in excess of the
Maximum Lawful Rate, then such excess shall be applied first to any unpaid fees
and charges hereunder, then to unpaid principal balance owed by Borrowers
hereunder, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Agent shall promptly refund such excess
amount to Borrowers and the provisions hereof shall be deemed amended to provide
for such permissible rate. The terms and provisions of this Section 2.4(g) shall
control to the extent any other provision of any Loan Document is inconsistent
herewith.
     2.5 Cash Management Systems.
          Each Borrower will maintain until the Termination Date, the cash
management systems described below (the “Cash Management Systems”).
          (a) Each Borrower shall (i) maintain all of it deposit and other bank
accounts (“Bank Accounts”) at the banks set forth in Disclosure Schedule (4.19),
and (ii) deposit and cause all of its Subsidiaries to deposit or cause to be
deposited promptly, and in any event no later than the third Business Day after
the date of receipt thereof, all cash, checks, drafts or other similar items of
payment relating to or constituting payments made in respect of any and all
Collateral into one or more such Bank Accounts in a Borrower’s name or any such
Subsidiary’s name and at a bank identified in Disclosure Schedule (4.19) (each,
a “Relationship Bank”).
          (b) As of the Closing Date, each Relationship Bank shall have entered
into an Account Control Agreement with Agent, for the benefit of itself and
Lenders, and the applicable

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Borrower, governing all Bank Accounts with such Relationship Bank. As of the
Closing Date, the Borrowers shall maintain one or more lockbox accounts
(individually and collectively, the “Lockbox Account”) with one or more banks
acceptable to Agent (each, a “Lockbox Bank”), and shall execute with each
Lockbox Bank one or more agreements acceptable to Agent (individually and
collectively, the “Lockbox Agreement”), and such other agreements related
thereto as Agent may require. Borrowers shall ensure that all collections of
Borrowers’ Accounts and all other cash payments received by Borrowers are paid
and delivered directly from Account Debtors and other Persons into the
appropriate Lockbox Account. The Lockbox Agreements shall provide that upon
receipt of written notice from Agent the Lockbox Banks immediately will transfer
all funds paid into the Lockbox Accounts into a depository account or accounts
(specified in the Lockbox Agreement or to be specified in such written notice)
maintained by Agent or an Affiliate of Agent at such bank as Agent may
communicate to Borrower from time to time (the “Concentration Account”).
Notwithstanding and without limiting any other provision of any Loan Document,
Agent shall apply, on a daily basis, all funds transferred into the
Concentration Account pursuant to the Lockbox Agreement and this Section 2.5(b)
in such order and manner as determined by Agent. Except to the extent applied to
reduce the obligations under the Bridge Loan and related Bridge Loan Documents,
all funds transferred to the Concentration Account for application to the
Obligations under this Agreement shall be applied to reduce the Obligations
under this Agreement. If as the result of collections of Accounts and/or any
other cash payments received by any Borrower pursuant to this Section 2.5(b) a
credit balance exists with respect to the Concentration Account, such credit
balance shall not accrue interest in favor of a Borrower, but shall be available
to Borrowers upon Borrowers’ written request. If applicable, at any time prior
to the execution of all or any of the Lockbox Agreements and operation of all or
any of the Lockbox Accounts, Borrowers and each Affiliate of a Borrower shall
direct all collections or proceeds it receives on Accounts or from other
Collateral to the account(s) and in the manner specified by Agent in its sole
discretion.
          (c) So long as no Event of Default has occurred and is continuing,
Borrower may amend Disclosure Schedule (4.19) to add or replace a Relationship
Bank or Bank Account; provided, that prior to the time of the opening of such
account, any Borrower or its Subsidiaries, as applicable, and such bank shall
have executed and delivered to Agent an Account Control Agreement and a Lockbox
Agreement. Each Borrower shall close any of its accounts (and establish
replacement accounts in accordance with the foregoing sentence) promptly and in
any event within sixty (60) days following notice from Agent that the
creditworthiness of any bank holding an account is no longer acceptable in
Agent’s reasonable judgment, or as promptly as practicable and in any event
within ninety (90) days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts of the bank holding such accounts or Agent’s liability under
any Account Control Agreement with such bank is no longer acceptable in Agent’s
reasonable judgment.
          (d) The Bank Accounts shall be cash collateral accounts, with all
cash, checks and other similar items of payment in such accounts securing
payment of the Loans and all other Obligations, and in which each Borrower and
each Subsidiary thereof shall have granted a Lien to Agent, on behalf of itself
and Lenders, pursuant to the Security Agreement.
          (e) Each Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a “Related

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          Person”) to (i) hold in trust for Agent, for the benefit of itself and
Lenders all checks, cash and other items of payment received by such Borrower or
any such Related Person in respect of such Borrower or any of the Collateral,
and (ii) within five (5) Business Day after receipt by such Borrower or any such
Related Person of any such checks, cash or other items of payment, deposit the
same into a Lockbox Account. Each Borrower on behalf of itself and each Related
Person acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral are part of the Collateral. All proceeds of
the sale or other disposition of any Collateral not paid directly to the Agent
shall be deposited directly into a Lockbox Account.
          (f) Each Bank Account shall at all times be subject to an Account
Control Agreement and each Lockbox Account shall at all times be subject to a
Lockbox Agreement.
     2.6 Fees.
          (a) On the Closing Date, as additional compensation, the Borrowers
shall pay to Agent solely for Agent’s benefit a commitment fee in the amount set
forth in the Fee Letter.
          (b) As additional compensation for the Lenders, the Borrowers shall
pay to Agent, for the ratable (as may be adjusted to reflect the revision of
Commitments during any Fiscal Quarter as a result of a Commitment Increase
pursuant to Section 2.15 hereof) benefit of Lenders, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date for the
immediately preceding month, commencing with the month ending on November 30,
2005 (which first payment shall cover the period from the Closing Date to such
date), and on the Commitment Termination Date, an unused commitment fee in the
amount set forth in the Fee Letter (the “Unused Line Fee”) for the Borrowers’
non-use of available funds.
          (c) In the event the Agent and the Requisite Lenders approve a
Commitment Increase, the Borrowers agree to pay to Agent solely for Agent’s
benefit, as additional compensation, an additional commitment fee in the amount
set forth in the Fee Letter (the “Additional Commitment Fee”), which additional
fee shall be due and payable at the time Agent notifies the Borrowers in writing
that sufficient Increase Lenders have committed to funding such Commitment
Increase.
          (d) In the event Borrowers terminate the Commitments prior to the
Commitment Termination Date, Borrowers shall pay the applicable Termination Fee
in accordance with Section 2.2(a).
     2.7 Receipt of Payments.
          The Borrowers shall make each payment under this Agreement not later
than 2:00 p.m. (New York time) on the day when due in immediately available
funds in Dollars to the Collection Account. For purposes of computing interest
and Fees and determining Borrowing Availability as of any date, all payments
shall be deemed received on the Business Day on which immediately available
funds therefor are received in the Collection Account prior to 2:00 p.m. New
York time. Payments received after 2:00 p.m. New York time on any Business Day
or on a day that is not a Business Day shall for such purposes be deemed to have
been received on the following Business Day.

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     2.8 Application and Allocation of Payments.
          (a) So long as no Event of Default has occurred and is continuing,
(i) payments matching specific scheduled payments then due shall be applied to
those scheduled payments; (ii) voluntary prepayments shall be applied in
accordance with the provisions of Section 2.2(a); and (iii) mandatory
prepayments shall be applied as set forth in Sections 2.2(b) and 2.2(c), as
applicable. All payments and prepayments applied to a particular Loan shall be
applied ratably to the portion thereof held by each Lender as determined by its
Pro Rata Share. As to any other payment, and as to all payments made when an
Event of Default has occurred and is continuing or following the Termination
Date, each Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of any Borrower,
and each Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations as
Agent may deem advisable notwithstanding any previous entry by Agent in the Loan
Account or any other books and records or anything in this Agreement to the
contrary. In the absence of a specific determination by Agent with respect
thereto, payments shall be applied to amounts then due and payable in the
following order: (1) to Agent’s and any Lender’s expenses reimbursable hereunder
(including, without limitation, to the extent reimbursable under Section 13.3);
(2) to any outstanding Fees; (3) to interest on Base Rate Loans; (4) to interest
on LIBOR Loans, ratably in the order of maturity; (5) to all then outstanding
obligations under any interest rate cap, swap or collar agreements, or other
agreements or arrangements secured by the Loan Documents designed to provide
protection against fluctuations in interest rates permitted hereunder, to the
extent the amount owed corresponds to interest on the notional amount thereof;
(6) to the principal amount of the Loan and all other outstanding Obligations;
and (7) to all other outstanding obligations under any interest rate cap, swap
or collar agreements, or other agreements or arrangements secured by the Loan
Documents designed to provide protection against fluctuations in interest rates
permitted hereunder.
          (b) Agent is authorized to, and at its sole election may, charge to
the Loan balance on behalf of the Borrowers and cause to be paid all Fees,
expenses, Taxes, Charges, costs (including insurance premiums in accordance with
Section 6.4(a)) and interest and principal, other than principal of the Loan,
owing by the Borrowers under this Agreement or any of the other Loan Documents
if and to the extent the Borrowers fail to pay promptly any such amounts as and
when due, after receipt of notice from Agent, even if the amount of such charges
would exceed Borrowing Availability at such time. At Agent’s option and to the
extent permitted by law, any charges so made shall constitute part of the Loan
hereunder.
     2.9 Loan Account and Accounting.
          Agent shall maintain a loan account (the “Loan Account”) on its books
to record: all Advances, all payments made by or on behalf of the Borrowers, and
all other debits and credits as provided in this Agreement with respect to the
Loans or any other Obligations. All entries in the Loan Account shall be made in
accordance with Agent’s customary accounting practices as in effect from time to
time. The balance in the Loan Account, as recorded on Agent’s most recent
printout or other written statement, shall, absent manifest error, be
presumptive evidence of the amounts due and owing to Agent and Lenders by the
Borrowers; provided that any failure to so record or any error in so recording
shall not limit or otherwise

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affect the Borrowers’ duty to pay the Obligations. Upon request (but not more
frequently than monthly), Agent shall render to the Borrowers a monthly
accounting of transactions with respect to the Loans setting forth the balance
of the Loan Account for the immediately preceding month. Unless the Borrowers
notify Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within fifteen (15) days after the
date thereof, each and every such accounting shall be presumptive evidence of
all matters reflected therein. Only those items expressly objected to in such
notice shall be deemed to be disputed by the Borrowers. Notwithstanding any
provision herein contained to the contrary, any Lender may elect (which election
may be revoked) to dispense with the issuance of any Notes to that Lender and
may rely on the Loan Account as evidence of the amount of Obligations from time
to time owing to it.
     2.10 Indemnity.
          (a) Each Borrower shall jointly and severally indemnify and hold
harmless each of Agent, Lenders and their respective Affiliates, and each such
Person’s respective officers, directors, employees, attorneys, agents and
representatives (each, an “Indemnified Person”), from and against any and all
suits, actions, proceedings, claims, damages, losses, liabilities and expenses
(including reasonable in-house and external attorneys’ fees and disbursements
and other costs of investigation or defense, including those incurred upon any
appeal) that may be instituted or asserted against or incurred by any such
Indemnified Person as the result of the execution, delivery and/or performance
of the Loan Documents, credit having been extended, suspended or terminated
under this Agreement and the other Loan Documents and the administration of such
credit, and in connection with or arising out of the transactions contemplated
hereunder and thereunder and any actions or failures to act in connection
therewith, including any and all Environmental Liabilities and legal costs and
expenses arising out of or incurred in connection with disputes between or among
any parties to any of the Loan Documents (collectively, “Indemnified
Liabilities”); provided, that no such Borrower shall be liable for any
indemnification to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from that
Indemnified Person’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING
CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
          (b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) the
Borrowers shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) the Borrowers shall refuse to accept any
borrowing of, or shall request a termination of any borrowing, conversion into
or continuation of LIBOR Loans after

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the Borrowers have given notice requesting the same in accordance herewith; or
(iv) the Borrowers shall fail to make any prepayment of a LIBOR Loan after the
Borrowers have given a notice thereof in accordance herewith, then the Borrowers
shall indemnify and hold harmless the Agent and each Lender from and against all
losses, costs and expenses resulting from or arising from any of the foregoing.
Such indemnification shall include any loss (including loss of margin) or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate deposits from which such funds were obtained. For the
purpose of calculating amounts payable to a Lender under this subsection, each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal
to the amount of that LIBOR Loan and having a maturity comparable to the
relevant LIBOR Period; provided, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit, and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this subsection. This covenant
shall survive the termination of this Agreement and the payment of the any Notes
and all other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide the Borrowers with its written
calculation in reasonable detail of all amounts payable pursuant to this
Section 2.10(b), and such calculation shall be binding on the parties hereto
unless the Borrowers shall object in writing within fifteen (15) Business Days
of receipt thereof, specifying the basis for such objection in detail.
     2.11 Access.
          Each Borrower that is a party hereto shall, during normal business
hours, from time to time not more than four times in any year, at Borrower’s
expense, except if an Event of Default has occurred and is continuing, in which
case no such notice shall be required: (a) provide Agent and any of its
officers, employees and agents access to its properties, facilities, advisors,
officers and employees, books, records, contracts and Accounts of each Borrower
and to the Collateral (provided that access to officers, employees and agents
shall be provided promptly, but in no event upon more than five (5) Business
Days’ prior notice), (b) permit Agent, and any of its officers, employees,
designees and agents, to inspect, audit and make extracts from any Borrower’s
books and records, contracts and Accounts, and (c) permit Agent, and its
officers, employees, designees and agents, to inspect, review, evaluate and make
test verifications and counts of the contracts, Accounts, Inventory and other
Collateral of any Borrower. If an Event of Default has occurred and is
continuing, each Borrower shall provide such access to Agent and to each Lender
(and their respective agents and designees) during normal business hours without
advance notice. Furthermore, so long as any Event of Default has occurred and is
continuing, the Borrowers shall provide Agent and each Lender with access to its
suppliers and Subscribers. Lenders agree to use their commercially reasonable
efforts to coordinate all such access with those of Agent and Agent and Lenders
shall use their commercially reasonable efforts to provide the Borrowers copies
of any written correspondence with Subscribers, provided that no liability shall
accrue to the Agent or any Lender for failure to deliver any such correspondence
to the Borrowers. Each Borrower shall make available to Agent and its counsel,
reasonably promptly, originals or copies of all books, records, contracts and
Accounts that Agent may reasonably request. Each Borrower shall deliver any
document or instrument necessary for Agent, as it may from time to time
reasonably request, to obtain records from any storage facility, bailee, service
bureau or other Person that maintains records for such Borrower.

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     2.12 Taxes.
          (a) Any and all payments by the Borrowers hereunder or under any Note
shall be made, in accordance with this Section 2.12, free and clear of and
without deduction for any and all present or future Indemnified Taxes and Other
Taxes. If the Borrowers shall be required by law to deduct any Indemnified Taxes
from or in respect of any sum payable hereunder or under the any Note, (i) the
sum payable shall be increased as much as shall be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.12), Agent or Lenders, as applicable, shall
receive an amount equal to the sum they would have received had no such
deductions been made, (ii) the Borrowers shall make such deductions, and
(iii) the Borrowers shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law (except for any
Indemnified Taxes or other liabilities that the Borrowers are contesting in good
faith by appropriate proceedings). Within thirty (30) days after the date of any
payment of Indemnified Taxes, the Borrowers shall furnish to Agent the original
or a certified copy of a receipt evidencing payment thereof, to the extent such
a receipt has been issued therefor, or such other written proof of payment
thereof that is reasonably satisfactory to Agent.
          (b) Each Borrower that is a signatory hereto shall indemnify and,
within thirty (30) days of written demand therefor, pay Agent and each Lender
for the full amount of Indemnified Taxes and Other Taxes (including any
Indemnified Taxes and Other Taxes imposed by any jurisdiction on amounts payable
under this Section 2.12) paid by Agent or such Lender, as appropriate, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally asserted. Agent and such Lender, as applicable, shall
include with any such written demand a statement setting forth in reasonable
detail the basis and calculation of any such payment or indemnity hereunder,
which statement shall, in the absence of demonstrable error, be conclusive and
binding as to the amount thereof.
          (c) On or prior to the date of its execution and delivery of this
Agreement in the case of each Lender that is listed on the signature pages of
this Agreement, and on or prior to the date of the assignment pursuant to
Section 11.1 pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter as reasonably requested in writing by
the Borrowers or Agent (but only so long thereafter as such Lender remains
lawfully able to do so):
               (i) each Lender that is a Non-Corporate Domestic Lender shall
provide to the Borrowers (with a copy to Agent) an original IRS Form W-9, or any
successor or other form prescribed by the IRS, properly completed and duly
executed under penalties of perjury; and
               (ii) each Lender that is a Foreign Lender shall provide to the
Borrowers (with a copy to Agent) either:
                    (A) an original IRS Form W-8BEN or W-8IMY, as appropriate,
or any successor or other form prescribed by the IRS, properly completed and
duly executed

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under penalties of perjury, certifying that such Lender is entitled to a zero
(0) rate of United States withholding tax on payments made pursuant to this
Agreement or any Notes,
                    (B) an original IRS Form W-8ECI, or any successor other form
prescribed by the IRS, properly completed and duly executed under penalties of
perjury, certifying that such Lender is exempt from United States withholding
tax on payments made pursuant to this Agreement or any Notes, or
                    (C) in the case of a Foreign Lender claiming the benefits of
the exemption for portfolio interest under Code Section 881(c), a certificate,
duly executed under penalties of perjury, that it is not (I) a “bank” (within
the meaning of Code Section 881(c)(3)(A)), (II) a “ten percent shareholder”
(within the meaning of Code Section 871(h)(3)(B)) of any Borrower, or (III) a
“controlled foreign corporation” related to any Borrower (within the meaning of
the Code Section 864(d)(4)), and an original IRS Form W-8BEN or Form W-8IMY, as
appropriate, or any successor or other form prescribed by the IRS, properly
completed and duly executed under penalties of perjury, certifying that such
Lender is exempt from United States withholding tax on payments made pursuant to
this Agreement or any Notes.
Each Lender shall deliver such new forms and documents prescribed by the IRS
upon the expiration or obsolescence of any previously delivered forms or other
documents referred to in this Section 2.12(c) or after the occurrence of any
event requiring a change in the most recent forms or other documents delivered
by such Lender. Such Lender shall promptly provide written notice to the
Borrowers (with a copy to Agent) at any time it determines that it is no longer
in a position to provide any previously delivered form or other document (or any
other form of certification adopted by the IRS for such purpose).
          (d) No Default. In no event shall any withholding by any Borrower, as
contemplated by this Section 2.12, on any payment under this Agreement or any
Note give rise to a Default under Section 10.1.
          (e) Mitigation. Each Lender agrees that it shall, to the extent
reasonable and without any additional cost (other than costs which the Borrowers
have paid to such Lender, unless waived by the Lender) or risk to it, (i) take
all actions reasonably requested by the Borrowers or Agent to maintain all
exemptions, if any, available to it from United States withholding tax (whether
available by treaty, statute, or existing administrative waiver), and
(ii) otherwise cooperate with the Borrowers to minimize any amounts payable by
the Borrowers pursuant to this Section 2.12.
          (f) Treatment of Certain Refunds. If Agent or any Lender determines,
in its sole discretion, that it is entitled to receive a refund (whether by way
of a direct payment or by offset) of any Indemnified Taxes or Other Taxes that
would reasonably be considered allocable to or resulting from any increase in
the amounts paid by the Borrowers or any indemnification by any Borrower
pursuant to this Section 2.12, it shall promptly notify the Borrowers of the
availability of such refund and shall, within thirty (30) days after the receipt
of a request from the Borrowers at the Borrowers’ sole cost and expense, apply
for such refund with the Borrowers being responsible for any incremental costs
associated with such refund request. If Agent or any Lender determines, in its
sole discretion, that it has received a refund (as described in the

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preceding sentence), it shall pay to the Borrowers, within thirty (30) days from
the date of such receipt, an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by the Borrowers under
this Section with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of Agent or such Lender, as the
case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided that the
Borrowers, upon the request of Agent or such Lender to the Borrowers, agrees to
repay the amount paid over to the Borrowers (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to Agent or such
Lender in the event Agent or such Lender is required to repay such refund to
such Governmental Authority. This subsection shall not be construed to require
Agent or any Lender to make available its tax returns (or any other information
relating to its Taxes that it deems confidential) to the Borrowers or any other
Person.
     2.13 Capital Adequacy; Increased Costs; Illegality.
          (a) If any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted or
made after the Closing Date, from any central bank or other Governmental
Authority increases or would have the effect of increasing the amount of
capital, reserves or other funds required to be maintained by such Lender and
thereby reducing the rate of return on such Lender’s capital as a consequence of
its obligations hereunder, then the Borrowers shall from time to time promptly
after demand by such Lender (with a copy of such demand to Agent) pay to Agent
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction, provided that the Borrowers shall not be required to
compensate a Lender pursuant to this Section for any such additional amounts
incurred more than six months prior to the date that such Lender notifies the
Borrowers of the change in law giving rise to such additional amount; provided
further, that if the change resulting in such increased costs is retroactive,
then such six month period shall be extended to include the retroactive period.
A certificate as to the amount of that reduction and showing in reasonable
detail the basis of the computation thereof submitted by such Lender to the
Borrowers and to Agent shall be presumptive evidence of the matters set forth
therein.
          (b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any published guideline from any central bank or other
Governmental Authority (whether or not having the force of law) applicable
generally to banks or any class of banks within the same jurisdiction (but not
any guideline specifically required of a single bank), in each case adopted or
made after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any LIBOR Loan
(other than any such increase in cost resulting from (A) Indemnified Taxes or
Other Taxes (as to which Section 2.12 shall govern), (B) the imposition of, or
any change in the rate of, any Excluded Tax payable by such Lender, or
(C) changes reflected in the LIBOR Rate) then Borrowers shall from time to time
promptly after demand by such Lender (with a copy of such demand to Agent), pay
to Agent promptly for the account of such Lender additional amounts sufficient
to compensate such Lender for such increased cost; provided that Borrowers shall
not be required to compensate a Lender pursuant to

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this Section for any such additional amount incurred more than six (6) months
prior to the date that such Lender notifies Borrowers of the change in law
giving rise to such additional amount; provided further, that if the change
resulting in such increased costs is retroactive, then such six (6) month period
shall be extended to include the retroactive period. A certificate showing in
reasonable detail the amount of such increased cost, submitted to Borrowers and
to Agent by such Lender, shall be presumptive evidence of the matters set forth
therein. Each Lender agrees that, as promptly as practicable after it becomes
aware of any circumstances referred to above which would result in any such
increased cost, the affected Lender shall, to the extent not inconsistent with
such Lender’s internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to
it by Borrowers pursuant to this Section 2.13(b).
          (c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) after the date hereof shall make it unlawful, or any
central bank or other Governmental Authority shall assert after the date hereof
that it is unlawful, for any Lender to agree to make or to make or to continue
to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or
to continue to fund or to maintain such LIBOR Loan at another branch or office
of that Lender without, in that Lender’s reasonable opinion, materially
adversely affecting it or its Loans or the income obtained therefrom, on notice
thereof and demand therefor by such Lender to Borrowers through Agent, (i) the
obligation of such Lender to agree to make or to make or to continue to fund or
maintain LIBOR Loans shall terminate and (ii) Borrowers shall forthwith prepay
in full all outstanding LIBOR Loans owing to such Lender, together with interest
accrued thereon, unless Borrowers, within five (5) Business Days after the
delivery of such notice and demand, converts all LIBOR Loans of such Lender into
Base Rate Loans.
          (d) Within sixty (60) days after receipt by Borrowers of written
notice and demand from any Lender (an “Affected Lender”) for payment of
additional amounts or increased costs as provided in Sections 2.12(a), 2.12(b),
2.13(a) or 2.13(b), Borrowers may, at its option, notify Agent and such Affected
Lender of its intention to replace the Affected Lender. So long as no Event of
Default has occurred and is continuing, Borrowers, with the consent of Agent,
which consent shall not be unreasonably withheld or delayed, may obtain, at the
Borrowers’ expense, a replacement Lender (“Replacement Lender”) for the Affected
Lender, which Replacement Lender must be reasonably satisfactory to Agent. If
the Borrowers obtain a Replacement Lender within one hundred eighty (180) days
following notice of its intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender for an amount equal
to the principal balance of all Loans held by the Affected Lender and all
accrued interest and Fees with respect thereto through the date of such sale and
such assignment shall not require the payment of an assignment fee to Agent;
provided, that Borrowers shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, the Borrowers shall not have the right to obtain a Replacement Lender
if the Affected Lender rescinds its demand for increased costs or additional
amounts with in fifteen (15) days following its receipt of the Borrowers’ notice
of intention to replace such Affected Lender. Furthermore, if the Borrowers give
a notice of intention to replace and does not so replace such Affected Lender
within one hundred eighty (180) days thereafter, the Borrowers’ rights under
this Section 2.13(d) shall terminate with respect to such

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Affected Lender in respect of the circumstances giving rise to such notice of
termination, and the Borrowers shall promptly pay all increased costs or
additional amounts demanded by such Affected Lender pursuant to
Sections 2.12(a), 2.12(b), 2.13(a) and 2.13(b).
          (e) If Lender requests payment of additional amounts or increased
costs as provided in Sections 2.12(a), 2.12(b), 2.13(a) or 2.13(b), then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce the
additional amounts or increased costs payable pursuant to Sections 2.12(a),
2.12(b), 2.13(a) or 2.13(b), as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be materially disadvantageous to such Lender or otherwise be
prohibited by applicable law. The Borrowers hereby agree to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
     2.14 Single Loan. All Loans, including all Advances, to Borrowers, and all
of the other Obligations of the Borrowers arising under this Agreement and the
other Loan Documents shall constitute one general joint and several obligation
of Borrowers secured, until the Termination Date, by all of the Collateral.
     2.15 Uncommitted Incremental Commitment Increase. Subject to the terms and
conditions set forth below, prior to the Commitment Termination Date, the total
aggregate Commitment may be increased at the request of the Borrowers and with
the prior written consent of the Agent (each such increase being the “Commitment
Increase”), provided that the aggregate total of all Commitment Increases shall
never exceed $30,000,000 and the total aggregate of all Lenders’ Commitments
shall never exceed $100,000,000. The Borrowers may request no more than three
(3) Commitment Increases, with a minimum of $10,000,000 (or increments of
$2,500,000 in excess thereof) for such request and shall pay to Agent the
Additional Commitment Fee in accordance with Section 2.6(c). A Commitment
Increase shall be effectuated pursuant to the following procedures:
          (a) Not less than thirty (30) days prior to the proposed effective
date of a Commitment Increase, the Borrowers shall notify the Agent in writing
of its request for a Commitment Increase (an “Increase Request”), including the
intended date and amount thereto. All other terms and conditions applicable to
such Commitment Increase shall be the same as applicable to the Commitment in
general. Such Increase Request shall be accompanied by (i) a certificate from
the Borrowers certifying to the Agent that (A) no other approvals or consents
from any Person are required by any such Person except to the extent they have
been received, including without limitation, any other Indebtedness permitted to
exist in accordance with the terms of Section 7.3 or otherwise and (B) no
Default or Event of Default has occurred and is continuing, and (ii) financial
projections in form and substance reasonably acceptable to the Agent and
demonstrating compliance with the Financial Covenants throughout the term of
this Agreement after giving effect to the Commitment Increase.
          (b) Upon receipt of such Increase Request and the other information
required by subsection (a) above, the Agent and the Requisite Lenders in their
sole discretion shall

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determine whether to consent to such an increase. The Agent shall promptly
notify existing Lenders of such request by the Borrowers and each such Lender
shall have ten (10) Business Days in which to notify the Agent in writing of
such Lender’s approval or rejection of the Commitment Increase and intent to
participate in such increase (each an “Existing Increase Lender”), and the
amount of the Commitment Increase such Existing Increase Lender is willing to
commit to (which amount shall be allocated to each Existing Increase Lender
according to their existing Pro Rata Shares should there be an over-commitment)
which notice shall be irrevocable once received by Agent. Notwithstanding the
foregoing, in no event shall the Agent be obligated to agree to any Commitment
Increase nor shall any Lender be obligated to agree to or participate in any
Commitment Increase. Participation in any such Commitment Increase shall be
completely optional and at the sole discretion of each Lender. Agent’s failure
to notify Borrowers of Agent’s and the Requisite Lenders decision with respect
to a Commitment Increase within twenty (20) Business Days of receipt of the
Increase Request and the information set forth in subsection (a) above shall be
deemed a rejection of such Increase Request.
          (c) To the extent that the entire Commitment Increase requested by the
Borrowers and consented to by Agent and the Requisite Lenders is not accepted by
Existing Increase Lenders, the Borrowers may propose to Agent additional new
lenders acceptable to Agent and Requisite Lenders (“New Lenders”) who agree to
commit to that portion of the Commitment Increase not accepted by Existing
Increase Lenders. Thus, any Commitment Increase shall be effected by an increase
in any one or more of the Existing Increase Lenders’ Commitments, and/or by the
addition of the Commitments of New Lender(s) (in each case, the “Increase
Lenders”).
          (d) Notwithstanding the foregoing, final allocation of the Commitment
Increase shall be at the sole discretion of the Agent in consultation with
Borrowers; and each Increase Lender shall commit to an amount not less than
$5,000,000, but shall accept any allocation amount designated by the Borrowers
and the Agent that is equal to or less than its proposed portion of the
Commitment Increase.
     2.16 Borrower Funds Administrator.
          (a) The Borrowers maintain an integrated cash management system
reflecting their interdependence on one another and the mutual benefits shared
among them as a result of their respective operations. In order to efficiently
fund and operate their respective businesses and minimize the number of
borrowings which they will make under this Agreement and thereby reduce the
administrative costs and record keeping required in connection therewith,
including the necessity to enter into and maintain separately identified and
monitored borrowing facilities, The Borrowers have requested, and Agent and
Lenders have agreed that, subject to Section 2.17, all the Loans and all
Advances will be advanced to and for the account of the Borrowers on a joint and
several basis in accordance with the other provisions hereof. Each Borrower
hereby acknowledges that it will be receiving a direct benefit from each Loan
made pursuant to this Agreement.
          (b) Each Borrower hereby designates, appoints, authorizes and empowers
Holdings as its agent to act as specified in this Agreement and each of the
other Loan Documents and Holdings hereby acknowledges such designation,
authorization and empowerment, and

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accepts such appointment. Each Borrower hereby irrevocably authorizes and
directs Holdings to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents, and any other instruments, documents and
agreements referred to herein or therein, and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of Holdings by the respective terms and provisions hereof and thereof,
and such other powers as are reasonably incidental thereto, including, without
limitation, to take the following actions for and on such Borrower’s behalf:
               (i) to submit on behalf of each Borrower Notices of Advances to
the Agent in accordance with the provisions of this Agreement;
               (ii) to receive on behalf of each Borrower the proceeds of Loan
in accordance with the provisions of this Agreement, such proceeds to be
disbursed to or for the account of the applicable Borrower as soon as
practicable after its receipt thereof; and
               (iii) to submit and receive on behalf of each Borrower,
Compliance Certificates and all other certificates, notices and other
communications given or required to be given hereunder.
Holdings is further authorized and directed by each Borrower to take all such
actions on behalf of such Borrower necessary to exercise the specific power
granted in clauses (i) through (iii) above and to perform such other duties
hereunder and under the other Loan Documents, and deliver such documents as
delegated to or required of Holdings by the terms hereof or thereof. The agency
relationship established pursuant to this Section 2.16(b) is for administrative
convenience only and such agency relationship shall not extend to any matter
outside the scope of the Loan Documents.
          (c) The administration by the Agent and the Lenders of the credit
facilities under this Agreement as a co-borrowing facility with a funds
administrator in the manner set forth herein is solely as an accommodation to
the Borrowers and at their request and neither the Agent nor any Lender shall
incur any liability to any Borrower as a result thereof.
          (d) If the Borrowers intend at any time that a Borrower other than
Holdings act as funds administrator for the Borrowers pursuant to this
Section 2.16, all Borrowers shall notify the Agent in writing of such intent
and, upon the written consent of the Agent (which consent shall not be
unreasonably withheld or delayed), such newly appointed Borrower shall act in
the capacity of funds administrator pursuant to this Section 2.16.
     2.17 Acknowledgement of Joint and Several Liability.
          (a) Each Borrower acknowledges that it is jointly and severally liable
for all of the Obligations under the Loan Documents. Each Borrower expressly
understands, agrees and acknowledges that (i) the Borrowers are all affiliated
entities by common ownership, (ii) each Borrower desires to have the
availability of one common credit facility instead of separate credit
facilities, (iii) each Borrower has requested that the Lenders extend such a
common credit facility on the terms herein provided, (iv) the Lenders will be
lending against, and relying on a lien upon, all of the each Borrower’s assets
even though the proceeds of any particular loan made hereunder may not be
advanced directly to a particular Borrower, (v) each Borrower will

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nonetheless benefit by the making of all such loans by each Lender and the
availability of a single credit facility of a size greater than each could
independently warrant, (vi) all of the representations, warranties, covenants,
obligations, conditions, agreements and other terms contained in the Loan
Documents shall be applicable to and shall be binding upon each Borrower
(provided that no Borrower is deemed, by this statement, to have made any
representation, warranty or covenant that is intended, by its terms to apply
specifically to another Borrower or to the extent that such representation or
warranty expressly relates to an earlier date), and (vii) the Borrowers have
each executed any Note as co-makers of such Note and that it would not be able
to obtain the credit provided by the Lenders hereunder without the financial
support provided by the other Borrowers.
          (b) Each Borrower’s obligations under this Agreement shall, to the
fullest extent permitted by law, be unconditional irrespective of (i) the
validity or enforceability, avoidance, or subordination of the Obligations of
any other Borrower or of any promissory note or other document evidencing all or
any part of the Obligations of any other Borrower, (ii) the absence of any
attempt to collect the Obligations from any other Borrower, or any other
security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance, or granting of any indulgence
by Agent and/or any Lender with respect to any provision of any instrument
evidencing the Obligations of any other Borrower or any part thereof, or any
other agreement now or hereafter executed by any other Borrower and delivered to
Agent and/or any Lender, (iv) the failure by Agent and/or any Lender to take any
steps to perfect and maintain its security interest in, or to preserve its
rights to, any security or collateral for the Obligations of any other Borrower,
(v) Agent’s and/or any Lender’s election, in any proceeding instituted under the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (vi) any borrowing or grant of a security interest by any other Borrower,
as debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the
disallowance of all or any portion of Agent’s and/or any Lender’s claim(s) for
the repayment of the Obligations of any other Borrower under Section 502 of the
Bankruptcy Code, or (viii) any other circumstances which might constitute a
legal or equitable discharge or defense of a guarantor or of any other Borrower
(other than actual indefeasible payment in full in cash). With respect to any
Borrower’s obligations arising as a result of the joint and several liability of
Borrowers hereunder with respect to Advances made to or for any of the other
Borrowers hereunder, such Borrower waives, until the Obligations shall have been
indefeasibly paid in full and this Agreement shall have been terminated, any
right to enforce any right of subrogation or any remedy which Agent and/or any
Lender now has or may hereafter have against any other Borrower, or any endorser
of all or any part of the Obligations, and any benefit of, and any right to
participate in, any security or collateral given to Agent and/or any Lender to
secure payment of the Obligations or any other liability of any Borrower to
Agent and/or any Lender. During the existence of any Event of Default, Agent may
proceed directly and at once, without notice, against any Borrower to collect
and recover the full amount, or any portion of the Obligations, without first
proceeding against any other Borrower or any other Person, or against any
security or collateral for the Obligations. Each Borrower consents and agrees
that Agent shall be under no obligation to marshal any assets in favor of any
Borrower or against or in payment of any or all of the Obligations.
          (c) Each Borrower is obligated to repay the Obligations as joint and
several obligors under this Agreement. To the extent that any Borrower shall,
under this Agreement as a joint and several obligor, repay any of the
Obligations constituting Advances made to or for

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another Borrower hereunder or other Obligations incurred directly and primarily
by any other Borrower (an “Accommodation Payment”), then the Borrowers making
such Accommodation Payment shall be entitled to contribution and indemnification
from, and be reimbursed by, each of the other Borrowers in an amount, for each
of such other Borrowers, equal to a fraction of such Accommodation Payment, the
numerator of which fraction is such other Borrower’s Allocable Amount and the
denominator of which is the sum of the Allocable Amounts of all of the
Borrowers. As of any date of determination, the “Allocable Amount” of each
Borrower shall be equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder without
(i) rendering such Borrower “insolvent” within the meaning of Section 101
(31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act
(“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”),
(ii) leaving such Borrower with unreasonably small capital or assets, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or
Section 5 of the UFCA, or (iii) leaving such Borrower unable to pay its debts as
they become due within the meaning of Section 548 of the Bankruptcy Code or
Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification, and reimbursement under this Section 2.17 shall
be subordinate in right of payment to the prior payment in full of the
Obligations. The provisions of this Section 2.17 shall, to the extent
inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.
          (d) If (i) any court holds that Borrowers are guarantors and not
jointly and severally liable or (ii) bankruptcy or reorganization proceedings at
any time are instituted by or against any Borrower under the Bankruptcy Code or
any similar debtor relief law, each Borrower hereby: (A) until indefeasible
payment in full in cash of the Obligations, expressly and irrevocably waives, to
the fullest extent possible, on behalf of such Borrower, any and all rights at
law or in equity to subrogation, to reimbursement, to exoneration, to
contribution, to indemnification, to set off or to any other rights that could
accrue to a surety against a principal, to a guarantor against a maker or
obligor, to an accommodation party against the party accommodated, to a holder
or transferee against a maker, or to the holder of a claim against any Person,
and which such Borrower may have or hereafter acquire against any Person in
connection with or as a result of such Borrower’s execution, delivery and/or
performance of this Agreement, or any other documents to which such Borrower is
a party or otherwise; (B) expressly and irrevocably waives any “claim” (as such
term is defined in the Bankruptcy Code) of any kind against any other Borrower,
and further agrees that it shall not have or assert any such rights against any
Person (including any surety), either directly or as an attempted set off to any
action commenced against such Borrower by Agent or a Lender or any other Person;
and (C) acknowledges and agrees (I) that this waiver is intended to benefit
Lenders and shall not limit or otherwise affect such Borrower’s liability
hereunder or the enforceability of this Agreement, and (II) that Agent and
Lenders and their successors and assigns are intended beneficiaries of this
waiver, and agreements set forth in this Section 2.17 and their rights under
this Section 2.17 shall survive payment in full of the Obligations.
          (e) This Agreement shall in all respects be continuing, absolute and
unconditional, and shall remain in full force and effect with respect to each
Borrower until all Obligations shall have been indefeasibly fully paid. No
compromise, settlement, release or discharge of, or indulgence with respect to,
or failure, neglect or omission to enforce or exercise

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any right against, any one or more of the Borrowers shall release or discharge
any other Borrowers.
3. CONDITIONS PRECEDENT
     3.1 Conditions to the Initial Loans.
          No Lender shall be obligated to make any Advance on the Closing Date,
or to take, fulfill, or perform any other action hereunder on the Closing Date,
until the following conditions have been satisfied or waived in writing by,
Agent and Requisite Lenders:
          (a) Credit Agreement. This Agreement or original counterparts hereof
shall have been duly executed by, and delivered to Agent.
          (b) Appendices. All Appendices to this Agreement shall be in form and
substance reasonably satisfactory to Agent.
          (c) Collateral Documents. Agent shall have received duly executed
originals of the Security Agreement and other Collateral Documents, dated the
Closing Date, and all schedules, instruments, documents and agreements executed
pursuant thereto.
          (d) Insurance. Agent shall have received (a) satisfactory evidence
that the insurance policies required by Section 6.4 are in full force and
effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements, as reasonably requested by Agent, in
favor of Agent, on behalf of Lenders, (b) the original policy of the Life
Insurance Policy and (c) the Collateral Assignment of Life Insurance Policy,
duly executed by Borrowers and acknowledged by the respective insurance carrier.
          (e) Security Interests and UCC Filings. The following shall have been
delivered to Agent:
               (i) Evidence reasonably satisfactory to that Agent (for the
benefit of itself and Lenders) has a valid and perfected first priority security
interest in all of the Collateral, including (A) such documents duly executed by
each Borrower and Parent (including financing statements under the UCC and other
applicable documents under the laws of any jurisdiction with respect to the
perfection of Liens) as Agent may reasonably request in order to perfect its
security interests in the Collateral and (B) copies of UCC search reports
listing all effective financing statements that name any Borrower as debtor,
together with copies of such financing statements, none of which shall cover the
Collateral other than Permitted Encumbrances, or arrangements reasonably
satisfactory to the Agent for the perfection of its security interests in the
Collateral shall have been made.
               (ii) Evidence reasonably satisfactory to Agent, including copies,
of any UCC-1 and other financing statements filed in favor of any Borrower with
respect to each location, if any, at which any Collateral may be consigned.
               (iii) Control Letters from (A) all issuers of uncertificated
securities and financial assets held by any Borrower, if any, (B) all securities
intermediaries with respect to all

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securities accounts and securities entitlements of any Borrower, if any, and
(C) all futures commission agents and clearing houses with respect to all
commodities contracts and commodities accounts held by any Borrower, if any.
          (f) Payoff Letter; Termination Statements. Copies of a duly executed
payoff letter, shall have been delivered to Agent in form and substance
reasonably satisfactory to Agent, by and between all holders of outstanding
Indebtedness on the Closing Date evidencing repayment in full of all such
Indebtedness, if any, together with (a) authorization for Agent to file UCC-3 or
other appropriate termination statements, in form and substance satisfactory to
Agent, releasing all liens of the holders of such Indebtedness upon any of the
assets being so acquired, and (b) termination of all blocked account agreements,
bank agency agreements or other similar agreements or arrangements or
arrangements in favor of such holders, if applicable.
          (g) Initial Notice of Advance. Duly executed originals of a Notice of
Advance, dated the Closing Date, with respect to the initial Advance to be
requested by Borrower on the Closing Date, shall have been delivered to Agent
(the “Initial Advance”).
          (h) Charter and Good Standing. For the Parent and each Borrower, such
Person’s (a) charter (articles or certificate of incorporation, or similar
organizational document) and all amendments thereto, (b) good standing
certificates (including verification of tax status, if available) in its state
of incorporation and (c) good standing certificates (including verification of
tax status, if available) and certificates of qualification to conduct business
in each jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, each dated a recent date prior to the
Closing Date and certified by the applicable Secretary of State or other
authorized Governmental Authority, shall have been delivered to Agent.
          (i) Bylaws and Resolutions. For the Parent and each Borrower, (a) such
Person’s bylaws, together with all amendments thereto and (b) resolutions of
such Person’s Board of Directors and the manager or other governing body,
approving and authorizing the execution, delivery and performance of the Loan
Documents to which such Person is a party and the transactions to be consummated
in connection therewith, each certified as of the Closing Date by such Person’s
corporate secretary or an assistant secretary as being in full force and effect
without any modification or amendment, shall have been delivered to Agent.
          (j) Incumbency Certificates. For the Parent and each Borrower,
signature and incumbency certificates of the officers of each such Person
executing any of the Loan Documents, certified as of the Closing Date by such
Person’s corporate secretary or an assistant secretary as being true, accurate,
correct and complete, shall have been delivered to Agent.
          (k) Opinions of Counsel. Duly executed originals of opinions of
Akerman Senterfit counsel for the Parent and each Borrower, together with any
local counsel opinions reasonably requested by Agent, including, without
limitation, a perfection opinion with respect to the Collateral, each in form
and substance reasonably satisfactory to Agent and its counsel, dated the
Closing Date, shall have been delivered to Agent.

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          (l) Pledge Agreements. Duly executed originals of each of the Pledge
Agreements, in the form of Exhibit 3.1(l), accompanied by (as applicable)
(a) any share certificates representing all of the outstanding Stock being
pledged pursuant to such Pledge Agreement and stock powers for such share
certificates executed in blank and (b) any original Intercompany Notes and other
instruments evidencing Indebtedness being pledged pursuant to such Pledge
Agreement, duly endorsed in blank, shall have been delivered to Agent.
          (m) Accountants’ Letter. A letter from the Borrowers to their
independent auditors, authorizing the independent certified public accountants
of the Borrowers to communicate with Agent and Lender in accordance with
Section 5.2, shall have been delivered to Agent.
          (n) Due Diligence Questionnaires. A completed due diligence
questionnaire from each Borrower shall have been delivered to Agent.
          (o) Officer’s Certificate. Agent shall have received duly executed
originals of a certificate of the President of each Borrower, dated the Closing
Date, in form satisfactory to Agent, stating that, since December 31, 2004
(i) no event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (ii) no Litigation has been
commenced which could reasonably be expected to have a Material Adverse Effect
or could challenge any of the transactions contemplated by the Agreement and the
other Loan Documents; (iii) there have been no Restricted Payments made by any
Borrower, except as permitted pursuant to the terms of that certain Credit
Agreement dated as of February 28, 2005 by and among Holdings and Services, as
borrowers, CIT Financial USA, Inc., as the agent and a lender, and certain other
lenders party thereto from time to time; and (iv) there has been no material
increase in liabilities, liquidated or contingent, and no material decrease in
assets of any Borrower (except for the incurrence of the Obligations and the
Bridge Loan).
          (p) Mortgage. To the extent a Borrower owns real property, Agent shall
have received a duly executed Mortgage covering all of such Real Estate, in form
satisfactory to Agent, together with: (i) a title insurance policy satisfactory
in form and substance to Agent in its sole discretion; (ii) evidence that
counterparts of such Mortgage have been delivered to a title company for
recordation in all places to the extent necessary or desirable, in the judgment
of Agent, to create a valid and enforceable first priority lien (subject to
Permitted Encumbrances) on the Real Estate in favor of Agent for the benefit of
itself and Lenders (or in favor of such other trustee as may be required or
desired under local law); and (iii) an opinion of counsel in Florida, relating
to such Mortgage, in form and substance and from counsel reasonably satisfactory
to Agent. For the purposes of the initial Closing, Borrowers shall not be
required to obtain a Mortgage on the Real Estate located at 798 Airport Road,
Panama City, Florida for the purposes of securing the Loan.
          (q) Financials; Financial Condition. Agent shall have received the
Financial Statements, Projections and other materials set forth in Section 4.4,
certified by Holdings’ President, in form and substance reasonably satisfactory
to Agent, and Agent shall be satisfied, in its sole discretion, with all of the
foregoing. Agent shall have further received a certificate of the President of
Holdings, based on such Pro Forma and Projections, to the effect that: (i) each
Borrower will be Solvent upon the consummation of the transactions contemplated
herein;

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(ii) the Pro Forma fairly presents in all material respects the financial
condition of each Borrower as of the date thereof after giving effect to the
transactions contemplated by the Loan Documents; (iii) the Projections are
reasonable and fair in light of current conditions and current facts known to
the Borrowers and, as of the Closing Date, reflect each Borrower’s good faith
and reasonable estimates of the future financial performance of the Borrowers
for the period set forth therein; provided that, the Projections, as
projections, are inherently subject to economic and competitive uncertainties
and contingencies beyond the control of the Borrowers, and are based upon
assumptions with respect to future business decisions which are subject to
change, and therefore are not necessarily indicative of future operational
results of the Borrowers; and (iv) containing such other statements with respect
to the solvency of Borrower and matters related thereto as Agent shall
reasonably request.
          (r) Material Contracts. Agent shall have reviewed true and correct
copies of (i) each Material Contract and (ii) each Third Party Consent Form
received by any Borrower, in form and substance reasonably satisfactory to
Agent, if any, and received separate assignments of any Material Contract for
which it requests an assignment, including without limitation the Coastal
Purchase Agreement and the restrictive covenants in certain employment-related
agreements between a Borrower or Parent and Stephen Ruzika, John Danneberg,
Sheldon Katz and Mike McIntosh.
          (s) Approvals. Agent shall have received satisfactory evidence that
each Borrower has obtained required consents, licenses, and approvals of all
Persons, including all requisite material Governmental Approvals, to the
execution, delivery and performance of this Agreement and the other Loan
Documents and the making of the Loans, and the operation and maintenance of each
Borrower’s business, including, without limitation, copies of all licenses
relating to the provision and servicing of alarm contract services.
          (t) Payment of Fees. The Borrowers shall have paid the Fees required
to be paid on the Closing Date, in the respective amounts specified in
Section 2.6 and in the Fee Letter, and shall have reimbursed Agent for all
reasonable fees, costs and expenses of closing presented as of the Closing Date.
          (u) Capital Structure. The capital structure of each Borrower shall be
as described in Disclosure Schedule 4.8 hereto.
          (v) Searches; Liens. Agent shall have received the results of UCC, tax
lien, judgment, pending litigation and bankruptcy lien searches, showing no
Liens against any Borrower (including alternate and predecessor names) and such
predecessors-in-interest as are deemed material by Agent with respect to any
assets of any such party (including, without limitation, any Alarm Contracts or
other Collateral), other than Permitted Encumbrances, with results of each of
the searches performed reasonably satisfactory to Agent, and the Liens granted
to the Agent pursuant to the Collateral Documents shall be first priority
perfected Liens on the Collateral subject to no other Liens other than Permitted
Encumbrances.
          (w) Due Diligence. Agent shall have completed its business, accounting
and legal due diligence, including the financial due diligence performed at
Agent’s request, with results reasonably satisfactory to Agent.

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          (x) Compliance Certificate. Agent shall have received a Compliance
Certificate demonstrating, as of the Closing Date, after giving pro forma effect
to the Initial Advance, compliance with each of the Financial Covenants set
forth in Sections 9.1 and 9.2.
          (y) Monitoring Arrangements. Agent shall have received, a complete and
final copy of any Monitoring Contract currently in effect, which contract is
fully assignable or consent to assignment has been given (including Agent’s
right to cure) pursuant to a consent to assignment agreement in the form of
Exhibit 3.1(y) (“Assignment and Modification Agreement”) to Agent, together with
evidence of UL listings with respect to each monitoring contractor, and a power
of attorney provided to the Agent relating to the direction of telephone lines,
monitoring station software and customer data.
          (z) Nonsolicitation Agreements. Agent shall have received
non-solicitation and non-disclosure agreements, in substantially the form of
Exhibit 3.1(z), from Borrowers and Parent, whereby Borrowers and Parent agree
to, among other things, not solicit Subscribers, to terminate or enter into new
security alarm contracts with an alarm monitoring servicing company other than
Borrowers and not to disclose the names of the Subscribers or the terms of this
Agreement to third parties, except as required under applicable law
(collectively, the “Nonsolicitation and Nondisclosure Agreements”);
          (aa) Leases; Landlord and Bailee Consents. Agent shall have received
copies of all leases of real property, warehouseman’s agreements, Off Site
Storage Agreements and related bailee agreements and any similar arrangements
for any location where any Borrower or any of its Collateral is located,
together with (i) waivers and/or consents from the related third parties, and
(ii) leasehold mortgages, relating to any leased location at which any Alarm
Contracts (or copies thereof), any monitoring equipment (or other systems), or
any other Collateral which the Agent, in its sole discretion, deems material, is
located.
          (bb) No Material Adverse Change. No material adverse change,
including, without limitation, no material pending or threatened litigation,
bankruptcy or other proceeding in the financial condition, operations, business
prospects or assets of any Borrower, or any Material Adverse Effect shall have
occurred to any Borrower since December 31, 2004.
          (cc) Closing Costs. Agent shall have received evidence that the
Borrowers have paid or has made arrangements satisfactory to the Agent to pay
all fees, costs and expenses incurred in connection with the transactions
contemplated hereby, including, without limitation, any documented audit fees,
lien search fees, filing fees and the fees and expenses of Agent’s in-house and
external legal counsel, as required pursuant to the terms of the Fee Letter.
          (dd) Alarm Contracts. With respect to all Alarm Contracts owned by any
Borrower on the Closing Date, Agent shall have received a certified list of all
Alarm Contracts held and/or being purchased pursuant to the Coastal Purchase
Agreement, together with: (i) each Borrower’s forms of Alarm Contracts used in
each state in which it transacts business (ii) a representative sampling of the
Alarm Contracts certified as to by each Borrower and (iii) evidence reasonably
satisfactory to the Agent that such Alarm Contracts are Qualified Alarm
Contracts (subject to the post-closing audit to the completed by the Agent
pursuant to

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Section 6.13), a perfection opinion with respect to the Collateral, in form and
substance reasonably satisfactory to Agent and its counsel, dated the Closing
Date.
          (ee) Telephone Numbers. Agent shall have received a collateral
assignment of telephone numbers from Borrowers, in substantially the form of
Exhibit 3.1(ee), relating to the telephone numbers used to monitor Alarm
Contracts comprising RMR or otherwise used by Borrowers in connection with the
operation of their businesses (the “Collateral Assignment of Telephone
Numbers”).
          (ff) Subordination Agreement. Agent shall have received a
subordination agreement from Borrowers in substantially the form of
Exhibit 3.1(ff), relating to the subordination of any Indebtedness of any
Borrower to Parent or to any other Affiliate of a Borrower that is not itself a
Borrower.
          (gg) Other Documents. Agent shall have received such other
certificates, documents and agreements respecting any Borrower as Lender may
reasonably request.
     3.2 Further Conditions to Each Loan. No Lender shall be (i) obligated to
fund any Advance until the Borrowers shall have (x) provided to Agent a Notice
of Advance, together with any required deliveries pursuant to Section 7.1 hereof
or any other Section of this Agreement, (y) other than as to the Initial Advance
on the Closing Date, complied with, and provided to the Agent the items required
by the Post Closing Agreement hereof, and (z) delivered to Agent, at least two
(2) days before the borrowing date of the proposed Advance, a Borrowing Base
Certificate certifying that none of the conditions set forth in (a) through
(d) below exists as of the time of the delivery of the Borrowing Base
Certificate or will exist as a result of the Advance, or (ii) obligated to
convert or continue any portion of the Loan as a LIBOR Loan if, as of the date
thereof, the provision of (b) below is applicable:
          (a) any representation or warranty by any Borrower contained herein or
in any other Loan Document is untrue or incorrect in any material respect as of
such date, except to the extent that such representation or warranty expressly
relates to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement, and Lenders have determined not to
make such Advance, as a result of the fact that such warranty or representation
is untrue or incorrect in any material respect;
          (b) any Default or Event of Default has occurred and is continuing or
would result after giving effect to any Advance, or any Material Adverse Effect
has occurred or would occur upon the funding of such Advance;
          (c) the amount of the Advance exceeds Borrowing Availability; or
          (d) after giving effect to any Advance, the outstanding principal
amount of the Loan would exceed the Borrowing Base.
The request and acceptance by any Borrower of the proceeds of any Advance or the
conversion or continuation of any Borrowing Base Loan into, or as, a LIBOR Loan
shall be deemed to constitute, as of the date thereof, (i) a representation and
warranty by each Borrower that the conditions in this Section 3.2 have been
satisfied and (ii) a reaffirmation by each Borrower of its

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representations and warranties, except to the extent that such representations
and warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date), and of the granting and continuance of Agent Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.
4. REPRESENTATIONS AND WARRANTIES
          To induce Lenders to make the Loans, the Borrowers, jointly and
severally, make the following representations and warranties to Agent and each
Lender with respect to all Borrowers, each and all of which shall survive the
execution and delivery of this Agreement.
     4.1 Existence; Compliance with Law. Each Borrower (a) is a corporation,
limited liability company or limited partnership duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation or organization set forth in Disclosure Schedule (4.1); (b) is
duly qualified to conduct business and is in good standing in each other
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses or liabilities which could
reasonably be expected to have a Material Adverse Effect; (c) has the requisite
organizational power and authority and the legal right to own, pledge, mortgage
or otherwise encumber and operate its properties, to lease the property it
operates under lease and to conduct its business as now conducted or proposed to
be conducted (including, without limitation, to enter into the transactions
described herein); (d) subject to specific representations regarding
Environmental Laws, has all material Governmental Approvals from or by, and has
made all material filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (e) is in compliance with its charter and
bylaws or partnership or operating agreement, as applicable; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable provisions of law,
except where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
     4.2 Executive Offices, Collateral Locations, FEIN.
          Each Borrower’s name as it appears in official filings in its state of
incorporation or organization, organization type, organization number, if any,
issued by its state of incorporation or organization, and the current location
of each Borrower’s chief executive office and the warehouses and premises at
which any Collateral is located are set forth in Disclosure Schedule (4.2), and
none of such locations has changed within four (4) months preceding the Closing
Date. In addition, Disclosure Schedule (4.2) lists as of the Closing Date the
federal employer identification number of each Borrower.
     4.3 Power, Authorization, Enforceable Obligations.
          The execution, delivery and performance by each Borrower of the Loan
Documents to which it is a party and the creation of all Liens provided for
therein: (a) are within such Person’s corporate or other organizational power;
(b) have been duly authorized by all necessary corporate, limited liability
company or limited partnership action; (c) do not

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contravene in any material respect any provision of such Person’s charter,
bylaws or partnership or operating agreement as applicable; (d) do not violate
in any material respect any law or regulation, or any order or decree of any
court or Governmental Authority; (e) do not in any material respect conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
material consent or approval of any Governmental Authority or any other Person,
except those referred to in Disclosure Schedule 4.3, all of which will have been
duly obtained, made or complied with prior to the Closing Date. Each of the Loan
Documents shall be duly executed and delivered by each Borrower that is a party
thereto and each such Loan Document shall constitute a legal, valid and binding
obligation of such Borrower enforceable against it in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity.
     4.4 Financial Statements and Projections.
          Except for the Projections, all Financial Statements concerning the
Borrowers that are referred to below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
          (a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule (4.4(a)) have been delivered on the date hereof:
               (i) The audited consolidated balance sheet at December 31, 2004,
and the related statement of income and cash flows of Holdings for the fiscal
year then ended.
               (ii) The unaudited consolidated balance sheets at September 30,
2005, and the related statements of income and cash flows of Holdings for the
Fiscal Quarter then ended.
          (b) Pro Forma. The Pro Forma delivered on the date hereof and attached
hereto as Disclosure Schedule (4.4(b)) was prepared by Holdings giving pro forma
effect to the Loans, was based on the unaudited consolidated balance sheets of
Holdings.
          (c) Projections. The Projections delivered on the date hereof and
attached hereto as Disclosure Schedule (4.4(c)) have been prepared by the
Borrowers and reflect projections for the five (5) year period beginning on
January 1, 2005, on a year-by-year basis thereafter. The Borrowers reasonably
believe the Projections to be reasonable and fair in light of current conditions
and current facts known to the Borrowers and, as of the Closing Date, reflect
each Borrower’s good faith and reasonable estimates of the future financial
performance of the Borrowers for the period set forth therein; provided that,
the Projections, as projections, are

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inherently subject to economic and competitive uncertainties and contingencies
beyond the control of the Borrowers, and are based upon assumptions with respect
to future business decisions which are subject to change, and therefore are not
necessarily indicative of future operational results of Holdings and its
consolidated Subsidiaries.
     4.5 Material Adverse Effect.
          Between December 31, 2004 and the Closing Date, (a) no Borrower has
incurred any obligations, contingent or noncontingent liabilities, liabilities
for Taxes or Charges, long-term leases or unusual forward or long-term
commitments that are not reflected in the Pro Forma and that, alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect,
(b) no contract, lease or other agreement or instrument has been entered into by
any Borrower or has become binding upon any Borrower’s assets and no law or
regulation applicable to any Borrower has been adopted that has had or could
reasonably be expected to have a Material Adverse Effect, and (c) neither any
Borrower nor, to any Borrower’s knowledge, any third party is in default under
any Material Contract, lease or other agreement or instrument, that in any such
case alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Except for events disclosed to the Agent in writing by any of
the Borrowers, since the Closing Date, no event has occurred that alone or
together with other events, has had or could reasonably be expected to have a
Material Adverse Effect.
     4.6 Ownership of Property; Liens.
          The real estate (“Real Estate”) listed in Disclosure Schedule (4.6)
constitutes all of the material real property owned, leased, subleased, or used
by any Borrower. Except as set forth on Disclosure Schedule (4.6), except for
defects in title that do not materially interfere with its ability to conduct
its business as currently conducted or to utilize such property or assets for
their intended purposes and except where the failure to have such title could
not reasonably be expected to have a Material Adverse Effect, each Borrower owns
good and marketable fee simple title to all of its owned Real Estate, and valid
and marketable leasehold interests in all of its leased Real Estate, all as
described on Disclosure Schedule (4.6), and copies of all such leases or a
summary of terms thereof reasonably satisfactory to Agent have been delivered to
Agent. Disclosure Schedule (4.6) further describes any Real Estate with respect
to which any Borrower or any Subsidiary is a lessor, sublessor or assignor. Each
Borrower has good and marketable title to, or valid leasehold interests in, all
of its personal property and assets except for defects in title that do not
materially interfere with its ability to conduct its business as currently
conducted or to utilize such property or assets for their intended purposes and
except where the failure to have such title could not reasonably be expected to
have a Material Adverse Effect. None of the properties and assets of any
Borrower or any Subsidiary are subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions known to any
Borrower that may reasonably be expected to result in any Liens (including Liens
arising under Environmental Laws) other than Permitted Encumbrances. Except as
set forth on Disclosure Schedule (4.6), each Borrower or each Subsidiary has
received, or will receive simultaneously with the closing of the Loan, all
material deeds, assignments, waivers, consents, nondisturbance and attornment or
similar agreements, bills of sale and other documents, and has duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect such Borrower’s right, title and interest in and to all such Real Estate
and other material properties and assets.

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Disclosure Schedule (4.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate.
Except as set forth on Disclosure Schedule (4.6), no portion of any Borrower’s
Real Estate has suffered any material damage by fire or other casualty loss that
has not heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. All material permits required to have
been issued or appropriate to enable such Real Estate to be lawfully occupied
and used for all of the purposes for which it is currently occupied and used
have been lawfully issued and are in full force and effect.
     4.7 Labor Matters.
          Except as set forth on Disclosure Schedule (4.7): (a) no strikes or
other material labor disputes against any Borrower are pending or, to any
Borrower’s knowledge, threatened; (b) hours worked by and payment made to
employees of Borrowers comply in all material respects with the Fair Labor
Standards Act and each other material federal, state, local or foreign law
applicable to such matters; (c) all material payments due from any Borrower for
employee health and welfare insurance have been paid or accrued as a liability
on the books of such Borrower; (d) no Borrower is a party to or bound by, or has
assumed, any collective bargaining agreement, management agreement, consulting
agreement, employment agreement, bonus, restricted stock, stock option, or stock
appreciation plan or agreement or any similar plan, agreement or arrangement
except for agreements that can be terminated on no more than thirty (30) days
notice without material penalty (and true and complete copies of any written
agreements described on Disclosure Schedule (4.7) have been made available to
Agent); (e) there are no representation proceedings involving any Borrower
pending or, to any Borrower’s knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of any
Borrower, or assumed by any Borrower, has made a pending demand for recognition
by any Borrower; and (f) there are no material complaints or charges against any
Borrower pending or, to the knowledge of any Borrower, threatened to be filed
with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by any Borrower of any individual.
     4.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness.
          Except as set forth in Disclosure Schedule (4.8): (i) no Borrower has
any Subsidiaries, or is engaged in any joint venture or partnership with any
other Person; (ii) all of the issued and outstanding Stock of each Borrower is
owned by each of the Stockholders and in the amounts set forth in Disclosure
Schedule (4.8); (iii) there are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which any Borrower may be
required to issue, sell, repurchase or redeem any of its Stock or other equity
securities or any Stock or other equity securities of its Subsidiaries; and
(iv) no Borrower has any outstanding Indebtedness or Guaranty Obligations
(except for the Obligations) or as permitted by Section 7.3.
     4.9 Government Regulation.
          No Borrower is an “investment company” or an “affiliated person” of,
or “promoter” or “principal underwriter” for, an “investment company,” as such
terms are defined in

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the Investment Company Act of 1940. No Borrower is 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 obligations hereunder. The making of the Loans by
Lenders to Borrower, the application of the proceeds thereof and repayment
thereof, the taking or perfection of Agent’s Liens in the Collateral and the
enforcement of any rights or remedies under the Loan Documents, will not violate
any provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission or any other Governmental Authority or any
Governmental Approval issued to the Parent or any Borrower.
     4.10 Margin Regulations.
          No Borrower is engaged, nor will it engage, principally or as one of
its important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” as such terms are defined in
Regulation U of the Federal Reserve Board as now and from time to time hereafter
in effect (such securities being referred to herein as “Margin Stock”). No
Borrower owns any Margin Stock, and none of the proceeds of the Loan or other
extensions of credit under this Agreement will be used, directly or indirectly,
for the purpose of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness that was originally incurred to purchase
or carry any Margin Stock or for any other purpose that might cause any of the
Loans or other extensions of credit under this Agreement to be considered a
“purpose credit” within the meaning of Regulations T, U or X of the Federal
Reserve Board. No Borrower will take or permit to be taken any action that might
cause any Loan Document to violate any regulation of the Federal Reserve Board.
     4.11 Taxes and Charges.
          All Federal and other material tax returns, reports and statements,
including information returns, required by any Governmental Authority to be
filed by any Borrower have been filed with the appropriate Governmental
Authority, and all Taxes have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been duly paid),
except Taxes, Charges or other amounts being contested in accordance with
Section 6.2(b). Each Borrower has complied with all applicable federal, state,
local and foreign withholding obligations with respect to its employees.
Disclosure Schedule (4.11) sets forth those taxable years of any Borrower
currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described in Disclosure
Schedule (4.11), no Borrower has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any material
Taxes or Charges. None of the Borrowers or their respective predecessors are
liable for any Taxes or Charges (with respect to predecessors, only those Taxes
and Charges assumed by the Borrowers): (x) under any agreement (including any
tax sharing agreement) or (y) to each Borrower’s knowledge, as a transferee. No
Borrower has agreed or been requested to make any adjustment under Code Section
481(a) by reason of a change in accounting method or otherwise.

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     4.12 ERISA.
          (a) Disclosure Schedule (4.12) lists all Plans sponsored or maintained
by any Borrower and all Plans sponsored and maintained by an ERISA Affiliate the
operating of which could lead to a liability of any Borrower which could
reasonably be expected to have a Material Adverse Effect, and separately
identifies any Pension Plans, including Title IV Plans, Multiemployer Plans,
ESOPs and Welfare Plans, including all Retiree Welfare Plans. Copies of all such
listed Plans, together with a copy of the latest form IRS/DOL 5500-series for
each such Plan have been made available to Agent. Except with respect to
Multiemployer Plans, each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the Code (or has been adapted using a prototype
plan document that has been approved by the IRS), the trusts created thereunder
have been determined to be exempt from tax under the provisions of Section 501
of the Code, and, to each Borrower’s knowledge, nothing has occurred that would
cause the loss of such qualification or tax-exempt status. Each Plan is in
compliance with the applicable provisions of ERISA and the Code, except to the
extent any such non-compliance could not reasonably be expected to have a
Material Adverse Effect. No Borrower, or ERISA Affiliate has failed to make any
contribution or pay any amount due as required by either Section 412 of the Code
or Section 302 of ERISA or the terms of any such Plan, except to the extent any
such failure could not reasonably expected to have a Material Adverse Effect. No
Borrower or any ERISA Affiliate has engaged in, or assumed any liability in
connection with, a non-exempt “prohibited transaction,” as defined in
Section 406 of ERISA and Section 4975 of the Code, in connection with any Plan,
that could reasonably be expected to have a Material Adverse Effect.
          (b) Except as set forth in Disclosure Schedule (4.12) and except as
could not reasonably be expected to have a Material Adverse Effect: (i) no Title
IV Plan has any material Unfunded Pension Liability; (ii) no ERISA Event or
event described in Section 4062(e) of ERISA with respect to any Title IV Plan
has occurred or is reasonably expected to occur; (iii) there are no pending, or
to the knowledge of any Borrower, threatened material claims (other than claims
for benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Borrower or ERISA Affiliate has incurred, assumed or reasonably expects
to incur or assume any material liability as a result of a complete or partial
withdrawal from a Multiemployer Plan; (v) within the last five (5) years no
Title IV Plan of any Borrower or ERISA Affiliate has been terminated, other than
in a “standard termination” as that term is used in Section 4041 of ERISA;
(vi) Stock of all Borrowers and their ERISA Affiliates makes up, in the
aggregate, no more than ten percent (10%) of fair market value of the assets of
any Plan measured on the basis of fair market value as of the latest valuation
date of any Plan; and (vii) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor’s Corporation or an equivalent rating by
another nationally recognized rating agency.
     4.13 No Litigation.
          No action, claim, lawsuit, demand, investigation (known to any
Borrower) or proceeding is now pending or, to the knowledge of any Borrower,
threatened against any Borrower before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, “Litigation”), (a) that
challenges any Borrower’s right or power to enter into or

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perform any of its obligations under the Loan Documents to which it is a party,
or the validity or enforceability of any Loan Document or any action taken
thereunder, or (b) that could reasonably be expected to have a Material Adverse
Effect. Except as set forth on Disclosure Schedule (4.13), (or any other date to
which this representation is reaffirmed) there is no Litigation pending, or to
any Borrower’s knowledge, threatened that seeks damages in excess of $300,000 or
injunctive relief against, or alleges criminal misconduct of, any Borrower.
     4.14 Brokers.
          Except as set forth on Disclosure Schedule (4.14), no broker or finder
acting on behalf of any Borrower or Affiliate thereof brought about the
obtaining, making or closing of the Loan, and no Borrower or Affiliate thereof
has any obligation to any Person in respect of any finder’s or brokerage fees in
connection therewith.
     4.15 Intellectual Property.
          Except as set forth on Disclosure Schedule (4.15), each Borrower owns
or has rights to use all material Intellectual Property necessary to continue to
conduct its business as now conducted by it or presently proposed to be
conducted by it, and each Trademark, Copyright, Patent or Patent application,
and Internet domain name and URL (and all registrations or applications for any
of the foregoing) owned or leased, together with application or registration
numbers, as applicable, is listed in Disclosure Schedule (4.15). Each Borrower
conducts its business and affairs without known infringement of or interference
with any Intellectual Property materially necessary to continue to conduct its
business as now conducted by it or presently proposed to be conducted by it of
any other Person in any material respect. Except as set forth in Disclosure
Schedule (4.15), no Borrower is aware of any material infringement claim by any
other Person with respect to any Intellectual Property.
     4.16 Full Disclosure.
          No information contained in this Agreement, any of the other Loan
Documents, any Financial Statements or Collateral Reports or other written
reports from time to time prepared by any Borrower and delivered hereunder or
any written statement prepared by any Borrower and furnished by or on behalf of
any Borrower to Agent or any Lender pursuant to the terms of this Agreement
taken as a whole contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which, and at the time, they were made. The Projections from
time to time delivered hereunder are or will be based upon the estimates and
assumptions stated therein, all of which the Borrowers shall reasonably believe
to be reasonable and fair in light of current conditions and current facts known
to the Borrowers as of the date such Projections are delivered, and shall
reflect each Borrower’s good faith and reasonable estimates of the future
financial performance of the Borrowers for the period set forth therein;
provided that, the Projections, as projections, are inherently subject to
economic and competitive uncertainties and contingencies beyond the control of
the Borrowers, and are based upon assumptions with respect to future business
decisions which are subject to change, and therefore are not necessarily
indicative of future operational results of Holdings and its consolidated
Subsidiaries. The Liens granted to Agent or

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any Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances.
     4.17 Environmental Matters.
          (a) Except as set forth in Disclosure Schedule (4.17): (i) the owned
Real Estate, and to the knowledge of the Borrowers, the leased Real Estate, is
free of contamination from any Hazardous Material except for such contamination
that would not result in Environmental Liabilities that could reasonably be
expected to exceed $300,000; (ii) no Borrower has caused or suffered to occur
any Release of Hazardous Materials on, at, in, under, from, or to any of its
Real Estate that could reasonably be expected to result in Environmental
Liabilities in excess of $300,000; (iii) the Borrowers are in material
compliance with all Environmental Laws, except for such noncompliance that would
not result in Environmental Liabilities which could reasonably be expected to
exceed $300,000; (iv) the Borrowers have obtained, and are in material
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain, or materially
comply with, such Environmental Permits would not result in Environmental
Liabilities that could reasonably be expected to exceed $300,000, and all such
Environmental Permits are, to the knowledge of any Borrower holding such
Environmental Permit, validly issued and not subject to any administrative or
judicial appeal; (v) no Borrower is involved in any operations or knows of any
facts, circumstances or conditions that are reasonably likely to cause such
Borrower to incur any Environmental Liabilities which could reasonably be
expected to exceed $300,000; (vi) there is no Litigation alleging that any
Borrower is liable under, or has violated, criminally or civilly, any
Environmental Laws with respect to the owned or leased Real Estate; (vii) no
notice has been received by any Borrower identifying it as a “potentially
responsible party” or requesting information under CERCLA or analogous state
statutes, and, to the knowledge of Borrowers; there are no facts, circumstances
or conditions that may reasonably result in any Borrower being identified as a
“potentially responsible party” under CERCLA or analogous state statutes; and
(viii) Borrowers have provided to Agent copies of all existing environmental
reports, reviews and audits in their possession pertaining to actual or
potential Environmental Liabilities with respect to the owned or leased Real
Estate, in each case relating to any Borrower.
          (b) Each Borrower hereby acknowledges and agrees that Agent (i) is not
now, and has not ever been, pursuant to this Agreement or the other Loan
Documents, in control of any of the Real Estate or any Borrower’s affairs, and
(ii) except as provided in the Loan Documents, does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Borrower’s conduct with respect to the ownership, operation or management of any
of its Real Estate or compliance with Environmental Laws or Environmental
Permits.
     4.18 Insurance.
          Disclosure Schedule (4.18) lists all insurance policies of any nature
maintained, for current occurrences by any Borrower, as well as a brief
description of the types of coverage with respect to each such policy.

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     4.19 Bank Accounts.
          Disclosure Schedule (4.19) lists all banks and other financial
institutions at which any Borrower maintains deposit or other accounts, and such
Schedule correctly identifies the name, address and telephone number of each
depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number therefor.
     4.20 [Intentionally Omitted].
     4.21 Customer and Trade Relations.
          Except as set forth on Disclosure Schedule (4.21), there exists no
actual or, to the knowledge of any Borrower, threatened termination or
cancellation of (other than through any stated expiration of term or maturity of
contract), or any material adverse modification or change in the business
relationship of any Borrower with any Subscriber or group of Subscribers whose
contracts during the preceding twelve (12) months accounted for greater than
five percent (5%) of the revenues of any Borrower; or the business relationship
of any Borrower with any supplier essential to its operations that could
reasonably be expected to have a Material Adverse Effect.
     4.22 Bonding; Licenses.
          Except as set forth on Disclosure Schedule (4.22), neither any
Borrower nor any Subsidiary is a party to or bound by any surety bond agreement
or bonding requirement with respect to products or services sold by it or any
License with respect to products sold by it.
     4.23 Solvency.
          Both before and after giving effect to (a) the Advance to be made on
the Closing Date or such other date as any Advance requested hereunder is made,
(b) the disbursement of the proceeds of such Advance pursuant to the
instructions of the Borrowers, and (c) the payment and accrual of all
transaction costs in connection with the foregoing, each Borrower is and will be
Solvent.
     4.24 OFAC.
          No Borrower or any Affiliate thereof (i) is a person whose property or
interest in property is blocked or subject to blocking pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions
prohibited by Section 2 of such executive order, or is otherwise associated with
any such person in any manner violative of such Section 2, or (iii) is a person
on the list of Specially Designated Nationals and Blocked Persons or subject to
the limitations or prohibitions under any other U.S. Department of Treasury’s
Office of Foreign Assets Control regulation or executive order.

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     4.25 Patriot Act.
          Each Borrower and each Affiliate thereof is in compliance, in all
material respects, with (i) the Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (ii) Title III of the
Uniting And Strengthening America By Providing Appropriate Tools Required To
Intercept And Obstruct Terrorism (USA Patriot Act of 2001). No part of the
proceeds of the Loans will be used, directly or indirectly, for any payments to
any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.
     4.26 Material Contracts.
          Disclosure Schedule (4.26) sets forth a complete and accurate list of
all Material Contracts of any Borrower in effect. Other than as set forth in
Disclosure Schedule 4.26, each such Material Contract is, and after giving
effect to the consummation of the transactions contemplated by the Loan
Documents will be, in full force and effect in accordance with the terms
thereof. Except as disclosed in Disclosure Schedule (4.26), each Material
Contract is, pursuant to the terms thereunder, assignable to Agent.
     4.27 Absence of Defaults.
          Each Borrower (and, to the knowledge of the Borrowers, each other
party to any Material Contract, agreement, instrument, decree or order), is in
compliance with all provisions of all Material Contracts, agreements,
instruments, decrees and orders to which such Borrower is a party or by which
such Borrower or its property is bound or affected (or in the case of such other
parties, each Material Contract), the breach or default of which could
reasonably be expected to have a Material Adverse Effect.
     4.28 Alarm Contracts.
          All Alarm Contracts owned by the Borrowers comply with the provisions
of Sections 6.13(a) and (d).
     4.29 Write-Offs.
          Disclosure Schedule 4.29 sets forth Borrowers’ current policies for
writing off accounts receivable on its books of account (collectively, the
“Write-Off Policy”).
5. FINANCIAL STATEMENTS AND INFORMATION
     5.1 Reports and Notices.
          (a) Each Borrower executing this Agreement hereby agrees that from and
after the Closing Date and until the Loans have been paid in full and the
Commitments have

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terminated, it shall deliver the Financial Statements, notices, Projections and
other information at the times, to the Persons and in the manner set forth
below:
               (i) Monthly Financials. To the Agent and each Lender, within
thirty (30) days after the end of each Fiscal Month: (i) consolidated unaudited
balance sheets of Holdings as of the close of such Fiscal Month and the related
statements of income and cash flows for that portion of the Fiscal Year ending
as of the close of such Fiscal Month; (ii) consolidated and unaudited statements
of income of Holdings for such Fiscal Month, setting forth in comparative form
(for each Fiscal Month ending after the first anniversary of the Closing Date)
the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments and the absence of footnotes);
(iii) a summary of the outstanding balance of all Intercompany Notes as of the
last day of that Fiscal Month. Such financial information shall be accompanied
by a certificate of the President or Chief Financial Officer of Borrowers (each,
a “Compliance Certificate”) which shall include, among other things, the
calculations used in determining compliance with each of the Financial Covenants
that is tested on a monthly basis and the certification that (i) such financial
information presents fairly in all material respects in accordance with GAAP
(subject to normal year-end adjustments and the absence of footnotes) the
financial position, results of operations and statements of cash flows of
Holdings, on a consolidated basis, as at the end of such Fiscal Month and for
that portion of the Fiscal Year then ended, (ii) such financial information
presents fairly in all material respects the financial position and results of
operations of Holdings, on a consolidated basis, as at the end of such Fiscal
Month and for that portion of the Fiscal Year then ended, and (iii) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default has occurred and is continuing, describing the
nature thereof and efforts undertaken to cure such Default or Event of Default.
Each such Compliance Certificate must be given in writing (by telecopy or
overnight courier) in the form of Exhibit 5.1(a), and shall include the
information and attachments required in such Exhibit.
               (ii) Quarterly Financials. To the Agent and each Lender, within
forty-five (45) days after the end of each Fiscal Quarter: (i) consolidated
unaudited balance sheets of Holdings as of the close of such Fiscal Quarter and
the related statements of income and cash flow for that portion of the Fiscal
Year ending as of the close of such Fiscal Quarter; and (ii) consolidated
unaudited statements of income of Holdings for such Fiscal Quarter, in each case
setting forth in comparative form the figures for the corresponding period in
the prior year and the figures contained in the Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments and the absence of footnotes).
               (iii) Operating Plan. To the Agent and each Lender, as soon as
available, but not later than sixty (60) days after the end of each Fiscal Year,
an annual operating plan for Holdings, and its consolidated Subsidiaries,
approved by the Board of Directors of Parent, for the following Fiscal Year,
which (i) includes a statement of all of the material assumptions on which such
plan is based, (ii) includes monthly balance sheets and a monthly budget for the
following year and (iii) integrates sales, gross profits, operating expenses,
operating profit, cash flow projections and Borrowing Availability projections,
all prepared on the same basis and in similar detail as that on which operating
results are reported (and in the

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case of cash flow projections, representing management’s good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities.
               (iv) Annual Audited Financials. To the Agent and each Lender,
within one hundred and twenty (120) days after the end of each Fiscal Year,
audited Financial Statements for Holdings on a consolidated basis, consisting of
balance sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form (for each Fiscal Year ending after the first
anniversary of the Closing Date) in each case the figures for the previous
Fiscal Year, which Financial Statements shall be prepared in accordance with
GAAP and certified without qualification, by an independent certified public
accounting firm of national standing or otherwise reasonably acceptable to
Agent. Such Financial Statements shall be accompanied by (i) a statement
prepared in reasonable detail showing the calculations used in determining
compliance with each of the Financial Covenants, (ii) a report from such
accounting firm to the effect that, in connection with their audit examination,
nothing has come to their attention to cause them to believe that a Default or
Event of Default has occurred with respect to the Financial Covenants (or
specifying those Defaults and Events of Default that they became aware of), it
being understood that such audit examination extended only to accounting matters
and that no special investigation was made with respect to the existence of
Defaults or Events of Default, (iii) the annual letters to such accountants in
connection with their audit examination detailing contingent liabilities and
material litigation matters, (iv) unaudited versions of such Financial
Statements, and (v) the certification of the President or Chief Financial
Officer of Holdings that (A) all such Financial Statements present fairly in all
material respects in accordance with GAAP the financial position, results of
operations and statements of cash flows of Holdings on a consolidated basis, as
at the end of such Fiscal Year and for the period then ended, (B) all such
Financial Statements present fairly in all material respects the financial
position, results of operations and statements of cash flows of Holdings on a
consolidated basis, as at the end of such Fiscal Year and for the period then
ended, and (C) that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and a detailed summary of efforts undertaken to
cure such Default or Event of Default.
               (v) Management Letters. To the Agent, within ten (10) Business
Days after receipt thereof by any Borrower, copies of all management letters,
exception reports or similar letters or reports received by such Borrower from
its independent certified public accountants.
               (vi) Default Notices. To the Agent, as soon as practicable, and
in any event within five (5) Business Days after an executive officer of
Borrower has actual knowledge of the existence of any event that has had a
Material Adverse Effect, any Default or Event of Default, telephonic or
telecopied notice specifying the nature of such Default or Event of Default or
other event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business Day.
               (vii) Subordinated Debt and Equity Notices. To the Agent, as soon
as practicable, copies of all material written notices given or received by any
Borrower with respect to any Subordinated Debt or Stock of such Person, and,
within five (5) Business Days after any

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Borrower obtains knowledge of any matured or unmatured event of default with
respect to any Subordinated Debt, notice of such event of default.
               (viii) Supplemental Schedules. To the Agent, supplemental
disclosures, if any, required by Section 6.6.
               (ix) Litigation. To the Agent in writing, promptly upon learning
thereof and in any event within five (5) Business Days, notice of any Litigation
commenced or threatened against any Borrower that (i) seeks damages in excess of
$300,000, (ii) seeks injunctive relief, (iii) is asserted or instituted against
any Plan, its fiduciaries or its assets or against any Borrower or ERISA
Affiliate in connection with any Plan, (iv) alleges criminal misconduct by any
Borrower, (v) alleges the violation of any law regarding, or seeks remedies in
connection with, any Environmental Liabilities; or (vi) involves any product
recall, that could in any such case reasonably be expected to have a Material
Adverse Effect.
               (x) Insurance Notices. To the Agent, disclosure of losses or
casualties required by Section 6.4.
               (xi) Lease and Material Contract Default Notices. To the Agent
(i) promptly, but not later than five (5) days after receipt thereof, copies of
any and all default notices received under or with respect to any leases of real
property, warehouseman’s agreements, Off Site Storage Agreements and related
bailee agreements and any similar arrangements for any location where any
Borrower or any of its Collateral is located (other than any self-storage unit
which does not contain any Alarm Contracts or other assets with a value in
excess of $50,000), (ii) within five (5) days after receipt thereof, copies of
any and all default notices received under or with respect to any Material
Contract, and (iii) such other notices or documents as Agent may reasonably
request.
               (xii) Changes in Applicable Law. To the Agent, promptly upon
knowledge thereof, notice of any change in any requirement of law governing any
Alarm Contract which could reasonably be expected to require an amendment to
such Alarm Contract.
               (xiii) Other Documents. Such other financial and other
information respecting any Borrower’s business or financial condition as Agent
or the Requisite Lenders shall, from time to time, reasonably request.
          (b) Each Borrower executing this Agreement hereby agrees that from and
after the Closing Date and until the Loans have been indefeasibly paid in full
and the Commitments have been terminated, it shall deliver the various
collateral reports (the “Collateral Reports”) set forth below at the times, to
the Persons and in the manner set forth below.
               (i) To Agent (A) within thirty (30) days of the end of each
month, electronic copies of all Alarm Contracts, and (B) at the time of delivery
of each of the quarterly Financial Statements delivered pursuant to Section 5.1,
to the extent the following has changed from the prior delivery thereof, a list
of any applications for the registration of any Patent, Trademark or Copyright
filed by any Borrower with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in the prior
Fiscal Quarter.

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               (ii) To Agent, within thirty (30) days of the end of each month
end:
                    (A) an attrition detail report for the immediately preceding
six (6) Fiscal Months, in form and substance satisfactory to Agent in its
Permitted Discretion, prepared and certified to by the President, Vice President
or Chief Financial Officer of Holdings;
                    (B) an RMR summary report for the Fiscal Year-to-date, in
form and substance satisfactory to Agent in its Permitted Discretion, prepared
and certified to by the President, Vice President or Chief Financial Officer of
Holdings;
                    (C) an acquisitions schedule for the Fiscal Year-to-date, in
form and substance satisfactory to Agent in its Permitted Discretion, prepared
and certified to by the President, Vice President or Chief Financial Officer of
Holdings; and
                    (D) a month-end Qualified RMR report, providing details of
all RMR and Qualified RMR, including, without limitation, the reasons that any
RMR is not Qualified RMR, prepared and certified to by the President, Vice
President or Chief Financial Officer of Holdings in the form of Exhibit 5.1(b)
(a “Borrowing Base Certificate”).
                    (E) a month-end accounts receivable report, providing all
balances outstanding by customer.
     5.2 Communication with Accountants.
          Each Borrower executing this Agreement authorizes Agent and each
Lender, so long as an Event of Default has occurred and is continuing, to
communicate directly with its independent certified public accountants and
authorizes and shall instruct those accountants and advisors to communicate to
Agent and each Lender through the Agent information relating to any Borrower
with respect to the business, results of operations and financial condition of
any Borrower.
6. AFFIRMATIVE COVENANTS
          Each Borrower executing this Agreement jointly and severally agrees
that from and after the date hereof and until the Loans have been indefeasibly
paid in full and the Commitments have been terminated:
     6.1 Maintenance of Existence and Conduct of Business.
          Except as otherwise permitted under this Agreement, each such Borrower
shall: (i) do or cause to be done all things necessary to preserve and keep in
full force and effect its existence and its material rights and franchises;
(ii) continue to conduct its business substantially as conducted as of the
Closing Date or as otherwise permitted hereunder; (iii) at all times maintain,
preserve and protect all of its material assets and properties used or useful in
the conduct of its business, and keep all of its material tangible assets and
properties in good repair, working order and condition in all material respects
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices; and (iv) give

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thirty (30) days prior written notice to Agent of any proposed change in its
name from that set forth in Disclosure Schedule (6.1).
     6.2 Payment of Taxes and Charges.
          (a) Subject to Section 6.2(b), each such Borrower shall pay and
discharge or cause to be paid and discharged prior to the imposition of any
penalties therefor all material Taxes and Charges payable by it, including,
without limitation: (i) Taxes and Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Taxes or
Charges with respect to social security and unemployment withholding with
respect to its employees; (ii) lawful claims for labor, materials, supplies and
services or otherwise, that would, if not paid, become Charges; and (iii) all
storage or rental charges payable to warehousemen and bailees, in each case,
before any penalty is imposed for failure to pay, except in the case of clauses
(ii) and (iii) where the failure to pay or discharge such Charge could not
reasonably be expected to result in a Material Adverse Effect.
          (b) Each such Borrower may in good faith contest, by appropriate
proceedings, including negotiations, the validity or amount of any Tax or
Charge, or claims described in Section 6.2(a); provided, that: (i) adequate
reserves with respect to such contest are maintained on the books of such
Borrower, in accordance with GAAP; (ii) no Lien, other than Permitted
Encumbrances, shall be imposed to secure payment of such Tax or Charge (other
than payments to warehousemen and/or bailees) that is superior to any of the
Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence (including by conducting negotiations) and
operates to suspend collection or enforcement of such Tax or Charge; (iii) none
of the Collateral becomes subject to forfeiture or loss as a result of such
contest; (iv) such Borrower shall promptly pay or discharge such contested Tax
or Charge, or claims and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence reasonably acceptable to
Agent of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Borrower or the conditions set forth in this
Section 6.2(b) are no longer met; and (v) Agent has not advised Borrower in
writing that Agent reasonably believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
     6.3 Books and Records.
          Each such Borrower shall keep (a) adequate books and records with
respect to its business activities in which proper entries, reflecting all
financial transactions, are made in accordance with GAAP, with such books and
records for a given period to be on a basis consistent with the books and
records from the previous period in all material respects, except as noted
therein with reasonable explanatory comments and (b) set up and maintain on its
books such reserves as may be required by GAAP with respect to doubtful accounts
and all taxes, assessments, charges, levies and claims and with respect to its
business.

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     6.4 Insurance; Damage to or Destruction of Collateral.
          (a) Each such Borrower shall maintain in full force and effect, at its
own expense, with insurers reasonably acceptable to the Agent and comply with
all terms and conditions of the following insurance coverages:
               (i) All Risk Real and Personal Property and Boiler and Machinery
Insurance. ‘All risk’ or ‘special form’ real and personal property insurance
against direct physical loss or damage on an all risks basis, including
comprehensive boiler and machinery coverage but, so long as the Borrowers
provide evidence reasonably acceptable to the Agent that any Real Estate is not
located in a hazardous flood zone, excluding flood and earthquake, subject to a
maximum deductible of $5,000. The property shall be insured for the full
replacement cost and no co-insurance.
               (ii) Business Income. As an extension of the coverage required
under paragraph (a)(i) above, business income insurance including extra expense
in an agreed amount equal to six (6) months projected loss of net profits,
continuing expenses and debt service payments, subject to a maximum deductible
of ninety-six (96) hours and shall contain an agreed amount endorsement waiving
any coinsurance penalty.
               (iii) Commercial General Liability/Errors & Omissions Insurance:
Commercial general liability/errors & omissions insurance written on an
occurrence basis with a limit of not less than $1,000,000 each occurrence and
$3,000,000 in the aggregate per location. Such coverage shall include, but not
be limited to, premises/operations, blanket contractual liability, independent
contractors, broad form products and completed operations, personal injury, fire
legal liability, employee benefits liability, and losses resulting from the
negligent acts, errors or omissions of the named insured and arising out of the
operations of the named insured, and shall cover all contract forms used or
acquired by any Borrower. Such insurance shall not exclude coverage for punitive
or exemplary damages where insurable by law.
               (iv) Workers’ Compensation/Employers Liability. Workers’
compensation insurance in accordance with statutory provisions covering
accidental injury, illness or death of an employee of such Borrower while at
work or in the scope of his or her employment with such Borrower and employer’s
liability insurance in an amount not less than $500,000. Such coverage shall not
contain any occupational disease exclusions.
               (v) Automobile Liability. Automobile liability insurance covering
owned, non-owned, leased, hired or borrowed vehicles against bodily injury or
property damage. Such coverage shall have a limit of not less than $1,000,000 or
such higher amount as may be required by law.
               (vi) Excess/Umbrella Liability. Excess or umbrella liability
insurance in an amount not less than $10,000,000, written on an occurrence basis
providing coverage limits in excess of the insurance limits required under
paragraphs (a)(iii), (a)(iv) (employers liability only), and (a)(v) above. Such
insurance shall follow from the primary insurances and drop down in case of
exhaustion of underlying limits and /or aggregates. Such insurance shall not
exclude coverage for punitive or exemplary damages where insurable by law.

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               (vii) Keyman Life Insurance. The Life Insurance Policy.
Without limiting the obligations of the Borrowers under the provisions of this
Section, in the event any Borrower shall fail to maintain in full force and
effect insurance as required by this Section, then Agent may, but shall have no
obligation to, procure insurance covering the interests of the Agent and Lenders
in such amounts and against such risks as Agent shall deem appropriate, and such
Borrower shall reimburse Agent in respect of any premiums paid by Agent (all
such amounts being deemed additional Obligations).
          (b) In addition to the foregoing, each Borrower and each Subsidiary
shall maintain at its own expense, with insurers acceptable to the Agent, such
other insurance to such extent and against such risks, as are reasonably
satisfactory to the Agent.
          (c) The Borrowers shall cause each insurance policy (other than any
policy referred to in clause (a)(iv) above related to workers’ compensation)
pertaining to the insurable properties to (i) name the Agent and each Lender as
an “additional insured” if such policy is a liability policy, (ii) name the
Agent for itself and on behalf of the Lenders as “loss payee” if such policy is
a property and/or boiler & machinery policy or a business income policy,
(iii) provide that the Agent and each Lender shall be notified in writing of any
proposed cancellation or material change in risk, of such policy, initiated by
the insurer at least thirty (30) days prior to any proposed cancellation or
material change in risk, (iv) contain a waiver of subrogation in favor of the
Agent for itself and on behalf of the Lenders; (v) contain a breach of warranty
provision in favor of the loss payee; (vi) contain a cross liability/separation
of insureds clause, (vii) provide that the insurance shall be primary and
without right of contribution from any other insurance which may be available to
the Agent and Lenders, (viii) provide that the Agent and Lenders have no
responsibility for premiums, warranties or representations to underwriters.
          (d) On the Closing Date and at least thirty (30) days prior to expiry
of the policies, the Borrowers shall deliver or cause to be delivered to the
Agent a certificate of insurance which shall (i) evidence that all the coverages
listed in this Section have been renewed and will continue to be in full force
and effect for such period as shall be then stipulated, (ii) specify the
insurers with whom the insurances are carried and (iii) contain such other
certifications and undertakings as are customarily provided to lenders, as
reasonably requested by the Agent.
          (e) Each Borrower shall promptly notify Agent of any loss, damage, or
destruction to any property in the amount of $125,000 or more, whether or not
covered by insurance. After deducting from the proceeds of such insurance
(i) the expenses incurred by Agent in the collection or handling thereof, and
(ii) amounts required to be paid to creditors (other than Lenders) having
Permitted Encumbrances, Agent shall apply such proceeds to the reduction of the
Obligations in accordance with Section 2.2(c); provided, that if no Event of
Default has occurred or is continuing, such insurance proceeds do not exceed
$250,000 in the aggregate and such proceeds together with other funds available
to such Borrower will be sufficient for such purpose, at such Borrower’s request
Agent shall permit the applicable Borrower to use such money, or any part
thereof, to replace, repair, restore or rebuild the affected property in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction or to acquire
other assets to be

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used on the location of the damaged or destroyed property; provided further that
if (x) such Borrower has not completed or entered into binding agreements to
complete such replacement, restoration, repair or rebuilding or to acquire such
related assets within one hundred eighty (180) days of such casualty, or (y) and
Event of Default has occurred or is continuing during such period, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
2.2(c). All insurance proceeds made available to any Borrower to replace,
repair, restore or rebuild property shall be deposited in a Bank Account (except
to the extent the Agent, in its reasonable discretion, requires such Borrower to
deposit such amounts into a blocked account). To the extent such funds are
placed in a blocked account, they shall be made available to such Borrower to
replace, repair, restore or rebuild the property as follows: (i) such Borrower
shall request that an Advance or release from any such blocked account be made
to such Borrower in the amount requested to be released; (ii) so long as no
Event of Default has occurred and is continuing, Lenders shall make such Advance
or Agent shall release funds from such blocked account; and (iii) in the case of
insurance proceeds applied against the Loan, any reserve established with
respect to such insurance proceeds shall be reduced by the amount of such
Advance. To the extent (x) not used to replace, repair, restore or rebuild
property, or (y) if any Event of Default has occurred or is continuing, such
insurance proceeds shall be applied in accordance with Section 2.2(c).
     6.5 Compliance with Laws.
          Except as otherwise required hereunder, each such Borrower shall
comply in all material respects, with all material, federal, state, local and
foreign laws and regulations applicable to it, except to the extent that the
failure to comply would not reasonably be expected to give rise to a Material
Adverse Effect.
     6.6 Supplemental Disclosure.
          Not more frequently than once each Fiscal Year at the request of the
Agent, the Borrowers shall and Borrowers may, at any time from time to time as
often as Borrowers elect, supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or as an exception to such representation or that is necessary to
correct any information in such Disclosure Schedule or representation which has
been rendered inaccurate thereby (and, in the case of any supplements to any
Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to
show the changes made therein); provided that no such supplement to any such
Disclosure Schedule or representation shall amend, supplement or otherwise
modify any Disclosure Schedule or representation, or be or be deemed a waiver of
any Default or Event of Default resulting from the matters disclosed therein,
unless consented to by the Requisite Lenders in writing, or unless such
supplement relates to any matter arising after the Closing Date that is not
prohibited by the terms hereof and the contents of the disclosure does not
evidence an event or circumstance that would give rise to an Event of Default.

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     6.7 Intellectual Property.
          Each such Borrower shall conduct its business and affairs without
knowing infringement of or interference with any Intellectual Property of any
other Person in any material respect and shall comply in all material respects
with the terms of its Licenses.
     6.8 Environmental Matters.
          Each such Borrower shall: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to result in Environmental Liabilities that could reasonably be
expected to exceed $300,000; (b) implement any and all investigation,
remediation, removal and response actions that are necessary to respond to any
Release that could reasonably be expected to result in Environmental Liabilities
in excess of $300,000, or legally required to respond to any Release unpermitted
by any applicable Environmental Law of any Hazardous Material, or to comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material, on, at, in, under, from, or to its Real Estate, except as
could not reasonably be expected, in each case, to result in Environmental
Liabilities in excess of $300,000; provided that upon prior written notice to
Agent, each affected Borrower may in good faith contest or challenge its
liability and shall not be deemed in violation of this covenant while any such
challenges are pending; and (c) notify Agent promptly after such Borrower
becomes aware of any Release unpermitted by any applicable Environmental Law of
a Hazardous Material, or of any violation of Environmental Laws or Environmental
Permits, on, at, in, under, from or to any of its Real Estate that, in each
case, is reasonably likely to result in Environmental Liabilities in excess of
$300,000 and promptly forward to Agent a copy of any order, notice, request for
information or any communication or report received by such Borrower in
connection with any such Release unpermitted by any applicable Environmental Law
or such violation of Environmental Laws or Environmental Permits as the Agent
may reasonably request in each case, regardless of whether a Governmental
Authority having jurisdiction to enforce any applicable Environmental Laws has
taken or threatened any action in connection with any such unpermitted Release
or violation. If Agent at any time has a reasonable basis to believe that, on,
at, in, under, from, or to the Real Estate of each Borrower, there is or has
been a Release unpermitted by any applicable Environmental Law of a Hazardous
Material, or a violation of any Environmental Laws or Environmental Permits by
any such Borrower or any Environmental Liability arising thereunder that, in
each case, could reasonably be expected to result in Environmental Liabilities
in excess of $300,000, then each such Borrower shall, upon Agent’s written
request, (i) cause the performance of such environmental assessments including
subsurface sampling of soil and groundwater, and preparation of such
environmental reports (“Environmental Assessments”), at the Borrowers’ expense,
as Agent may from time to time reasonably request, which shall be conducted by
reputable environmental consulting firms reasonably acceptable to Agent and
shall be in form and substance reasonably acceptable to Agent, and (ii) upon
reasonable notice, permit Agent or its representatives to have reasonable access
to all Real Estate for the purpose of conducting such Environmental Assessments
(to the extent any such Borrower has such access) as Agent reasonably deems
appropriate, including any sampling and testing of soil, surface water, or
groundwater which Agent or its representatives may reasonably request, it being
understood that any such Environmental

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Assessments shall not unreasonably interfere with any such Borrower’s business
or operations, shall be conducted in a manner consistent with all applicable
law, and shall not interfere with any investigation, assessment, or remedial
activities required by Environmental Law that may be underway or proposed. The
Agent and/or its consultants shall return the Real Estate to the same condition
that existed prior to the Environmental Assessments and shall indemnify any
Borrower from and against all loss, damage, cost or expense associated with any
claims, demands, suits, proceedings or judgments relating to the Real Estate and
resulting from a condition on, at, in, or under the Real Estate which was
created by performance of the Environmental Assessments. Borrowers shall
reimburse Agent for the reasonable costs of such Environmental Assessments and
the same will constitute a part of the Obligations secured hereunder.
     6.9 Agreements Regarding Real Estate.
          After the Closing Date, no real property, warehouse, storage, bailment
or other space, shall be owned, leased or otherwise used by any such Borrower
without the prior written consent of Agent (which consent shall not be
unreasonably withheld or delayed), and unless and until such Borrower has
obtained, unless waived by Agent in its sole discretion, (i) with respect to
leased property at which original Alarm Contracts are located or which is the
site of a Borrower’s central monitoring station or principal place of business,
a landlord lien waiver or similar agreement, as the case may be, or an
assignment of the existing landlord lien waiver, in form and substance
reasonably satisfactory to Agent, with respect to such location, and (ii) a
mortgage, deed of trust or leasehold mortgage, as applicable, granting to Agent
a first priority Lien (subject to Permitted Encumbrances) on such interest in
real property, together with, to the extent requested by Agent, environmental
audits, mortgage title insurance, real property insurances, real property
surveys, local counsel opinion(s), and supplemental casualty insurance and flood
insurance, and such other documents, instruments or agreements reasonably
requested by Agent, in each case, in form and substance reasonably satisfactory
to Agent. Each such Borrower shall timely and fully pay and perform its material
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any (a) Alarm Contracts, (b) monitoring
equipment or (c) Collateral with an aggregate value in excess of $50,000, is or
may be located, unless such obligations are being contested in accordance with
Section 6.2(b). To the extent permitted hereunder, if any such Borrower proposes
to acquire a fee ownership interest in Real Estate after the Closing Date, such
Borrower shall, promptly after such acquisition, provide to Agent a Mortgage
granting Agent a first priority Lien (subject to Permitted Encumbrances) on such
Real Estate, together with, to the extent requested by Agent, environmental
audits, mortgage title insurance (in an amount not to exceed the purchase price
of such real property), real property survey, local counsel opinion(s), and
supplemental casualty insurance and flood insurance, and such other documents,
instruments or agreements reasonably requested by Agent, in each case, in form
and substance reasonably satisfactory to Agent. In addition, at such time as the
Bridge Loan has been indefeasibly paid in full and all of any Borrower’s
obligations arising under the Bridge Loan Documents (other than the Account
Control Agreements and the Lockbox Agreements) have been terminated, Borrowers
shall promptly provide to Agent a Mortgage granting Agent, on its own behalf and
that of the Lenders, a first priority Lien (subject to Permitted Encumbrances)
on the Real Estate located at 798 Airport Road, Panama City, Florida.

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     6.10 Further Assurances.
          Each Borrower agrees that it shall and shall cause each other Borrower
to, at such Borrower’s expense and upon the reasonable request of Agent, duly
execute and deliver, or cause to be duly executed and delivered, to Agent within
five (5) Business Days of Agent’s demand such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of to carry out more effectively the provisions and purposes
of this Agreement and each Loan Document, including without limitation, take or
cause to be taken such actions and otherwise perform, observe and comply with
such obligations, as are set forth in that certain Post-Closing Agreement
between the Borrowers, the Agent and the Lenders, dated as of the date of this
Agreement (the “Post-Closing Agreement”), provided that Borrower shall be
obligated to perform, observe and comply with any obligations pursuant to the
Post-Closing Agreement in accordance with any date set forth therein.
     6.11 Future Borrowers.
          In the event that, subsequent to the Closing Date, any Person becomes
a direct or indirect Subsidiary of any Borrower, as permitted by this Agreement,
(a) the Borrower that owns the Stock of such Person shall pledge 100% of such
Stock and any Intercompany Notes issued by such Person to Agent pursuant to the
Pledge Agreement, and (b) such Person shall (i) execute a joinder agreement in
the form attached hereto as Exhibit 6.11, and, upon executing such an agreement
shall become a party hereto and be bound by all the terms and conditions hereof
to the same extent as though such Person had originally executed this Agreement
and the other Loan Documents as a Borrower, (ii) provide all relevant
documentation with respect thereto and to take such other actions as such Person
would have been required to provide and take pursuant to Section 3.1 if such
Person had been a Borrower on the Closing Date, (iii) provide all relevant
documentation with respect thereto and to take such other actions as such Person
would have been required to provide and take pursuant to Section 3.1 if such
Person had been a Borrower on the Closing Date and (iv) take all steps necessary
to comply with Sections 6.9 with respect to the matters set forth therein. Each
Borrower agrees that, following the delivery of any Collateral Documents
required to be executed and delivered by this Section 6.11, Agent shall have a
valid and enforceable, perfected, first priority Lien on the respective
Collateral covered thereby, free and clear of all Liens, other than Permitted
Encumbrances. All actions to be taken pursuant to this Section 6.11 shall be at
the expense of the Borrowers and shall be taken to the reasonable satisfaction
of Agent.
     6.12 Interest Rate Fluctuations Protection.
          Not later than sixty (60) days following the Agent’s written request,
after consultation with the Borrowers, and at all times thereafter prior to the
Maturity Date, Borrower shall enter into and maintain an interest rate cap,
swap, collar, or other agreement or arrangement designed to provide protection
against fluctuations in interest rates, pursuant to which Borrower is protected
against increases in interest rates from and after the date of such contracts as
to all or a portion of outstanding Loans at such time, as reasonably requested
by Agent. Whether or not required by this Section 6.12, all such interest rate
protection agreements entered into by any Borrower shall be on terms, for
periods (which shall not be required to exceed two (2) years) and with
counterparties reasonably acceptable to Agent.

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     6.13 Alarm Contracts.
          (a) As to each Alarm Contract generated, acquired or otherwise owned
by any Borrower from time to time:
               (i) Such Alarm Contract shall comply in all material respects
with requirements of law. To the extent any change in any requirement of law
governing any Alarm Contract could reasonably be expected to require an
amendment to such Alarm Contract, such Borrower shall use commercially
reasonable efforts to replace such Alarm Contract with an Alarm Contract which
complies with such law, and shall, in any case, amend all such Alarm Contracts
if a Material Adverse Effect could reasonably by expected to result from such
change in law.
               (ii) The alarm system related to such Alarm Contract is installed
in (A) New York or Florida or (B) any other state consented to in writing by
Agent.
               (iii) To the best of each Borrower’s knowledge after due inquiry,
the related dealer and seller, if any, has all licenses and permits necessary
and material to the enforceability of such Alarm Contract, including, without
limitation, having filed and maintained an effective and current notice of
business activities report or similar evidence of qualification to transact
business in each state in which such dealer (and seller) enters into, services
or acquires Alarm Contracts.
          (b) Upon the occurrence and during the continuance of any Event of
Default, the Agent may direct the Borrowers to promptly (but, in any case,
within ten (10) days) have the original of each Alarm Contract stored with a
third party bailee pursuant to an Off Site Storage Agreement and acknowledged by
a bailee acknowledgement letter granting the Agent access and control of such
Alarm Contracts without the consent of any Borrower and otherwise reasonably
acceptable to the Agent. Prior to any such direction, at all times on or after
the Closing Date, the Borrowers shall maintain all original Alarm Contracts
together at one real property location of a Borrower (subject to either a
mortgage or a leasehold mortgage (and corresponding landlord waiver and consent)
in favor of the Agent), segregated from any other Collateral, in locked
fireproof cabinets of a UL rating reasonably satisfactory to the Agent and shall
not remove any such original other than (i) to the extent the original is
required in connection with any legal proceedings, (ii) ninety (90) days
following cancellation of such Alarm Contract, or (iii) or as requested by the
Agent in connection with the exercise of any of its rights or remedies
hereunder; provided however, that and notwithstanding anything in this Agreement
to the contrary, Borrowers shall assure that such Alarm Contracts are locked in
such fireproof cabinets within forty-five (45) days after the Closing Date.
          (c) Notwithstanding any other provisions of this Agreement or any
other Loan Document, if at any time the original Alarm Contracts are maintained
by any Borrower, the Borrowers shall provide the Agent unfettered access to such
Alarm Contracts immediately upon any request of the Agent.
          (d) Additionally, every Alarm Contract shall be a Qualified Alarm
Contract, except to the extent designated as not being so in the Collateral
Reports delivered after such

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Alarm Contract ceases to be a Qualified Alarm Contract. Further with respect to
the Alarm Contracts: (i) the RMR related amounts shown on all invoices,
statements and Collateral Reports which may be delivered to the Agent with
respect thereto are actually and absolutely owing to a Borrower as indicated
thereon and are not in any way contingent; (ii) no payments have been or shall
be made thereon except payments immediately delivered to the applicable Bank
Accounts or the Agent as required pursuant to the terms of this Agreement;
(iii) to each Borrower’s knowledge, all Alarm Contract subscribers have the
capacity to contract; (iv) no Alarm Contract is evidenced by a judgment, an
Instrument or Chattel Paper or secured by a letter of credit, except (A) such
judgment as has been assigned to the Agent, for the benefit of the Lenders,
(B) such Instrument or Chattel Paper as has been endorsed and delivered to the
Agent, for the benefit of the Lenders, or (C) such letter of credit as has been
assigned and delivered to the Agent with any necessary notification to the
issuer thereof); (v) each represents a bona fide completed transaction; (vi) the
amount shown on books and records and on any list, invoice or statement
furnished to the Agent with respect to each such Alarm Contract is owing to it
or by it (as the case may be); and (vii) the title to each such Alarm Contract
is absolute, and any Borrower’s interest in each such Alarm Contract has not
been transferred or assigned to any other Person (except for the granting of the
liens in favor of Agent); and (viii) no set-off or counter-claim on the part of
any other parties to each such Alarm Contract exists, and no agreement has been
made with any person under which any deduction or discount may be claimed or any
extension of time for the payment thereof.
          (e) The Borrowers will use their commercially reasonable efforts to
timely enforce and exercise any of their rights under any stock or asset
purchase agreement to maximize the rights and interests (whether for
indemnities, holdbacks or otherwise) which may be available to Borrowers with
respect thereto.
          (f) Not less frequently than once during each Fiscal Quarter, the
Borrowers will back up their Subscriber data with DICE Corporation (“Dice”),
using Dice’s disaster recovery methodology.
          (g) Borrowers shall deliver to Agent a copy of each Monitoring
Contract entered into after the Closing Date and shall cause each monitoring
contractor that provides electronic monitoring services to a Subscriber to enter
into an Assignment and Modification Agreement within fifteen (15) days of the
RMR of such Subscriber becoming Collateral hereunder.
     6.14 Write-Off Policy.
          Borrowers shall continue to give effect to the Write-Off Policy unless
otherwise agreed to by Agent in writing.
7. NEGATIVE COVENANTS
          Each Borrower executing this Agreement jointly and severally agrees
that from and after the date hereof until the Loans have been indefeasibly paid
in full and the Commitments have been terminated:

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     7.1 Mergers, Subsidiaries, Etc.
          Except as otherwise permitted under this Agreement, no such Borrower
shall directly or indirectly, by operation of law or otherwise, (1) form or
acquire any Subsidiary, (2) merge with, consolidate with, or otherwise combine
with any Person, (3) acquire, whether through purchase or exchange of Stock or
assets or otherwise, all or any part of the assets of any other Person
(including, without limitation, Alarm Contracts) or any Stock of or other equity
interest in any other Person, (4) dissolve, terminate its existence, consummate
any recapitalization, reorganization or other change in its capital structure or
the respective voting rights of its members, including without limitation the
issuance of any new, additional or different type or class of Stock, the
modification, reduction or retirement of any existing class of Stock, or (5)
enter into any agreement to do any of the foregoing.
          Notwithstanding the foregoing, at any time and from time to time, so
long as at the time thereof and after giving effect thereto no Default or Event
of Default has occurred and is continuing, any Borrower may (A) form
wholly-owned Subsidiaries organized under the laws of the United States or any
State thereof (so long as the terms of Section 6.11 are fully complied with) and
(B) acquire all or any part of the assets of any Person organized under the laws
of the United States or any State thereof (the “Target”), including any Alarm
Contracts of a Target (in each case, a “Permitted Acquisition”), subject to the
satisfaction of each of the following conditions:
          (a) Agent shall receive at least seven (7) days prior written notice
of such proposed Permitted Acquisition, which notice shall include a draft of
the proposed acquisition agreement for such proposed Permitted Acquisition;
          (b) such Permitted Acquisition shall only involve assets located in
the United States and comprising a business, or those assets of a business, of
the type engaged in by the Borrowers as of the Closing Date, and which business
would not subject Agent or any Lender to regulatory or third party approvals in
connection with the exercise of its rights and remedies under this Agreement or
any other Loan Documents other than approvals applicable to the exercise of such
rights and remedies with respect to Borrower prior to such Permitted
Acquisition;
          (c) no additional Indebtedness, Guaranty Obligations, contingent
obligations or other liabilities shall be incurred, assumed or otherwise be
reflected on a consolidated balance sheet of the Borrowers after giving effect
to such Permitted Acquisition, except (A) the Loan made hereunder, or (B) other
Indebtedness, Guaranty Obligations, contingent obligations and other liabilities
permitted hereunder;
          (d) such Permitted Acquisition shall have a purchase price (whether
payable in cash, Stock, Indebtedness or other form of consideration) in an
amount less than $2,500,000, and such purchase price, when added to the purchase
price paid in all Permitted Acquisitions in any Fiscal Year shall not exceed
$7,500,000;

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          (e) the business and assets acquired in such Permitted Acquisition
shall be free and clear of all Liens (other than Permitted Encumbrances) and
Liens otherwise permitted hereunder;
          (f) at or prior to the closing of any Permitted Acquisition, Agent
will be granted a first priority perfected Lien (subject to Permitted
Encumbrances) in all assets acquired pursuant thereto, and the Borrowers shall
have executed such documents and taken such actions as may be required by Agent
in connection therewith (including, without limitation, adequate UCC financing
statements and assignments);
          (g) Concurrently with delivery of the notice referred to in subsection
(a) above, the Borrowers shall have delivered to Agent, in form and substance
reasonably satisfactory to Agent, a pro forma consolidated balance sheet, income
statement and cash flow statement of Holdings (the “Acquisition Pro Forma”),
based on recent financial statements, which shall be complete and shall fairly
present in all material respects the assets, liabilities, financial condition
and results of operations of Holdings and its consolidated Subsidiaries in
accordance with GAAP consistently applied, but taking into account such
Permitted Acquisition and the funding of all Advances in connection therewith,
and such Acquisition Pro Forma shall reflect that (i) on a pro forma basis, the
Borrowers would have been in compliance with the Financial Covenants for the
four quarter period reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Section 5.1(a) prior to the consummation of such
Permitted Acquisition (after giving effect to such Permitted Acquisition and all
Advances funded in connection therewith as if made on the first day of such
period), and (ii) on a pro forma basis, no Event of Default has occurred and is
continuing or would result after giving effect to such Permitted Acquisition,
and certified by the President or Chief Financial Officer of Holdings to the
effect that: (A) each Borrower (after taking into consideration all rights of
contribution and indemnity any Borrower has against Parent and any other
Borrower) will be Solvent upon the consummation of the Permitted Acquisition;
(B) the Acquisition Pro Forma fairly presents in all material respects the
financial condition of the Borrowers (on a consolidated basis) as of the date
thereof after giving effect to the Permitted Acquisition; and (C) no Event of
Default has occurred and is continuing or would result after giving effect to
such Permitted Acquisition;
          (h) at least one (1) Business Day prior to the date of such Permitted
Acquisition, Agent shall have received the following acquisition documents, in
form and substance reasonably satisfactory to Agent (collectively, the
“Acquisition Documents”):
               (i) a copy of the fully-executed complete and final purchase
agreement and bill of sale relating to such Permitted Acquisition, including,
without limitation, all exhibits and schedules thereto and related documents and
agreements;
               (ii) Lien searches on the Target (and any dealers from whom the
Target acquired such Alarm Contracts if the two entities are different) and its
assets, in form and substance (and with results) satisfactory to Agent, and
releases, in form and substance satisfactory to Agent all Liens disclosed in
such searches;
               (iii) a duly completed report, in form and substance reasonably
satisfactory to Agent, summarizing the financial and operation details of such
acquisition (an

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“Acquisition Report”), including, without limitation, as attachments thereto
(1) evidence of the filing of either a blanket or precautionary UCC-1 financing
statements against the related dealer, in the appropriate jurisdiction, covering
all of the dealers Alarm Contracts or listing such the Alarm Contracts being
acquired, as applicable, and (2) the related non-solicitation agreement (which
agreement shall be in form and substance reasonably satisfactory to Agent);
               (iv) a sampling, if requested by the Agent, of certified true and
correct copies of the Alarm Contracts, together with evidence of delivery of
originals pursuant to any required Off Site Storage Agreement; and
               (v) if any of the acquired Alarm Contracts relate to alarm
systems located in a state in which such Borrower does not operate as of the
Closing Date, Borrower will deliver to the Agent evidence that such Borrower has
all Governmental Approvals necessary with respect to such acquisition and that
Agent shall not be required to obtain any Governmental Approval in order to take
or perfect its Lien on such Collateral or enforce its remedies with respect
thereto, together with such other evidence of compliance with the Laws of such
new state (including without limitation licensing Laws) as Agent may reasonably
require, including, without limitation, opinions of counsel relating thereto;
               (vi) evidence of such approvals and consents as may be required
in connection with such proposed transaction and evidence that the parties from
whom such assets are being acquired were properly licensed and qualified to do
business in all relevant jurisdictions; and
               (vii) such other reports, certificates, filings, documents,
agreements, opinions of counsel and information as the Agent may require in
connection therewith, with all such items to be in form and substance
satisfactory to the Agent.
          (i) as applicable, the conditions set forth in Section 6.11 shall be
satisfied as of the closing date of the Permitted Acquisition; and
          (j) Borrowers shall collaterally assign non-competition agreements or
restrictive covenants arising out of the Permitted Acquisition.
     7.2 Investments; Loans and Advances.
          No such Borrower shall make or permit to exist any investment in, or
make, accrue or permit to exist loans or advances of money to, any Person,
through the direct or indirect lending of money, holding of securities or
otherwise, except that such Borrower may:
          (a) maintain its existing investments in its Subsidiaries as of the
Closing Date and investments in new Subsidiaries formed and Targets acquired
through Permitted Acquisitions pursuant to Section 7.1;
          (b) so long as no Event of Default has occurred and is continuing,
make investments, subject to Control Letters in favor of Agent for the benefit
of Lenders or otherwise subject to a perfected security interest in favor of
Agent for the benefit of Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of

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America or any agency thereof maturing within one (1) year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one (1) year
from the date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor’s Ratings Group or Moody’s Investors
Service, Inc., (iii) certificates of deposit maturing no more than one (1) year
from the date of creation thereof issued by commercial banks incorporated under
the laws of the United States of America, each having combined capital, surplus
and undivided profits of not less than $300,000,000 and having a senior
unsecured rating of “A” or better by a nationally recognized rating agency (an
“A Rated Bank”), (iv) time deposits maturing no more than thirty (30) days from
the date of creation thereof with A Rated Banks and (v) mutual funds that invest
solely in one or more of the investments described in clauses (i) through (iv)
above;
          (c) make investments permitted by Section 7.4(b);
          (d) hold checking and deposits accounts used in the ordinary course of
business subject to compliance with Section 2.5;
          (e) issue Guaranty Obligations permitted by Section 7.6;
          (f) make investments consisting of advances from any Borrower to
another Borrower and evidenced by Intercompany Notes as set forth in
Section 7.3(a)(iv);
          (g) make Capital Expenditures to the extent permitted hereunder;
          (h) make investments constituting (i) accounts receivable received and
other trade credit granted in the ordinary course of business; (ii) prepaid
expenses, negotiable instruments held for collection and lease, and utility and
workers’ compensation, performance and other similar deposits; (iii) deposits of
proceeds from sales and other dispositions permitted pursuant hereto with a
“qualified intermediary,” “qualified trustee” or similar Person for purposes of
facilitating a “like-kind” exchange made in accordance with the applicable
provisions of the UCC; and (iv) Investments in connection with the bankruptcy or
reorganization of suppliers or Subscribers and in settlement of delinquent
obligations of, and other disputes with, Subscribers arising in the ordinary
course of business; and
          (i) make investments in interest rate cap, swap or collar agreements,
or other agreements or arrangements designed to provide protection against
fluctuations in interest rates, to the extent required hereby.
     7.3 Indebtedness.
          (a) No such Borrower shall create, incur, assume or permit to exist
any Indebtedness, except (without duplication):
               (i) the Loans and the other Obligations and the Bridge Loan;
               (ii) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain unfunded
under applicable law;

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               (iii) existing Indebtedness described in Disclosure Schedule
(7.3) and refinancings thereof or amendments or modifications thereof that do
not have the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and that are otherwise on
terms and conditions taken as a whole no less favorable to any Borrower, Agent
or any Lender, as reasonably determined by Agent, than the terms of the
Indebtedness being refinanced, amended or modified;
               (iv) Indebtedness consisting of intercompany loans and advances
made by any Borrower to any other Borrower; provided, that: (A) such Borrower
shall have executed and delivered to each such Borrower, and each such Borrower
shall have executed and delivered to Borrower a demand note (collectively, the
“Intercompany Notes”) to evidence any such intercompany Indebtedness owing at
any time by any Borrower to another Borrower, which Intercompany Notes shall be
in form and substance reasonably satisfactory to Agent and shall be pledged and
delivered to Agent pursuant to the applicable Pledge Agreement or Security
Agreement as additional collateral security for the Obligations; (B) such
Borrower shall record all intercompany transactions on its books and records in
a manner consistent with GAAP; (C) the obligations of any Borrower under any
such Intercompany Notes shall be subordinated to the Obligations of Borrower
hereunder in a manner reasonably satisfactory to Agent; (D) at the time any such
intercompany loan or advance is made by Borrower and after giving effect
thereto, each Borrower shall be Solvent; and (E) no Event of Default exists or
would occur before or after giving effect to any such proposed intercompany
loan;
               (v) Guaranty Obligations permitted under Section 7.6;
               (vi) Indebtedness under any interest rate cap, swap or collar
agreements, or other agreements or arrangements required hereunder to provide
protection against fluctuations in interest rates;
               (vii) Indebtedness in respect of statutory obligations,
performance, surety or appeal bonds, bankers acceptances, or other obligations
of a like nature incurred in the ordinary course of business;
               (viii) lease payment and other monetary obligations under
equipment Capital Leases, including obligations that give rise to purchase money
security interests, provided the aggregate amount of such obligations for all
Borrowers does not exceed $750,000;
               (ix) Indebtedness of up to $50,000 in the aggregate for all
Borrowers provided that it is incurred in the ordinary course of business, is
not for borrowed money, is not evidenced by a promissory note and is unsecured;
and
               (x) Indebtedness acquired from a seller or incurred by a Borrower
and payable to a seller in connection with a Permitted Acquisition provided such
Indebtedness is unsecured and subordinated to the Obligations in accordance with
Exhibit 7.3 (a)(x).
               (xi) Subordinated Indebtedness as such term is defined in that
(A) Subordination and Intercreditor Agreement dated as of the date of this
Agreement between and among Borrower, CapitalSource and Parent and
(B) Subordination and Intercreditor Agreement dated as of the date hereof among
Borrowers, CapitalSource and Devcon

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Construction Management, Inc. and in each case only to the extent such
Subordinated Indebtedness remedies subject to the terms of the applicable
Subordination Agreement.
          (b) No such Borrower shall directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness prior to its scheduled
maturity, other than:
               (i) Indebtedness arising under the Loan Documents and the Bridge
Loan Documents;
               (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Sections 7.8 (b) or (c);
               (iii) Indebtedness permitted by Section 7.3(a)(iv) upon any
refinancing thereof in accordance with Section 7.3(a)(iii); and
               (iv) Indebtedness permitted pursuant to Section 7.3(a)(viii) and
(ix).
     7.4 Employee Loans and Affiliate Transactions.
          (a) Except as otherwise permitted in this Section 7 with respect to
Affiliates, no Borrower shall enter into or be a party to any transaction with
any other Borrower or any Affiliate thereof except upon fair and reasonable
terms that are no less favorable to such Borrower than would be obtained in a
comparable arm’s length transaction with a Person not an Affiliate of such
Borrower. All such transactions existing as of the date hereof are described in
Disclosure Schedule (7.4(a)).
          (b) No Borrower shall enter into any lending or borrowing transaction
with any employees of any Borrower, except loans and advances to any Borrower’s
respective employees in the ordinary course of business for travel and
entertainment expenses, relocation costs and similar purposes up to a maximum of
$100,000 to any employee and up to a maximum of $250,000 in the aggregate at any
one time outstanding.
     7.5 Capital Structure and Business.
          No Borrower shall issue additional Stock unless immediately upon such
issuance such additional Stock is pledged to Agent pursuant to a Pledge
Agreement in form and substance reasonably satisfactory to Agent. No Borrower
shall amend its charter or bylaws in a manner that would adversely affect Agent
or Lenders or such Borrower’s duty or ability to repay the Obligations. No
Borrower shall engage in any business other than the acquisition and servicing
of Alarm Contracts and no Person described by clauses (a) and (b) of the
definition of Affiliate of any Borrower (including, without limitation, the
Parent and any Subsidiary or Person described by clauses (a) and (b) of the
definition of Affiliate of the Parent), other than Borrowers, shall engage in
the business of acquiring or servicing Alarm Contracts.

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     7.6 Guaranty Obligations.
          No Borrower shall create, incur, assume or permit to exist any
Guaranty Obligations except (a) by endorsement of instruments or items of
payment for deposit to the general account of any Borrower, and (b) for Guaranty
Obligations incurred for the benefit of any other Borrower if the primary
obligation is expressly permitted by this Agreement.
     7.7 Liens.
          (a) No such Borrower shall create, incur, assume or permit to exist
any Lien on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for (i) Liens securing
Capital Leases and purchase money Indebtedness permitted under Section 7.3
hereof, (ii) Liens pursuant to the Bridge Loan Documents and (iii) Permitted
Encumbrances.
          (b) No such Borrower shall become a party to any agreement, note,
indenture or instrument, or take any other action, that would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, Capital Leases or Licenses which prohibit Liens upon
the assets that are subject thereto except: (i) any negative pledge incurred or
provided in favor of any holder of Indebtedness outstanding on the date any
Subsidiary of any Borrower becomes a Subsidiary (so long as such agreement was
not entered into solely in contemplation of such Subsidiary becoming a
Subsidiary of any Borrower), (ii) any encumbrance or restriction that restricts
in a customary manner the subletting, assignment or transfer of any property or
asset that is subject to a lease, license or other contract or the assignment,
encumbrance or hypothecation of such lease, license or other contract, (iii) any
limitation or restriction contained in any Permitted Encumbrance to the extent
such limitation or restriction restricts the transfer of the property subject to
such Permitted Encumbrance, and (iv) any restriction imposed pursuant to an
agreement entered into in connection with a sale or other disposition permitted
pursuant hereto pending the closing of such sale or other disposition.
     7.8 Sale of Stock and Assets.
     No such Borrower shall sell, transfer, convey, assign or otherwise dispose
of any of its properties or other assets, including the Stock of any of its
Subsidiaries to any Person other than another Borrower, other than (a) the sale
of Inventory in the ordinary course of business, (b) the discount or compromise
of Accounts (for purposes of collection) in the ordinary course of business, and
(c) so long as no Event of Default has occurred and is continuing, sales of
assets (other than Stock of any of its Subsidiaries) in the ordinary course of
business to the extent that such disposition shall have a sale price (whether
payable in cash, Stock, Indebtedness or other form of consideration) in an
amount less than $1,000,000, and such sale price, when added to the sale price
paid in all such sales shall not exceed $2,500,000 in the aggregate (and
provided that all other applicable provisions of this Agreement are complied
with).
     7.9 ERISA.
          No such Borrower shall or shall cause or permit any ERISA Affiliate
to, cause or permit to occur (i) an event that could result in the imposition of
a Lien on the assets of any

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Borrower under Section 412 of the Code or Section 302 or 4068 of ERISA or
(ii) an ERISA Event, to the extent any such event or ERISA Event combined with
all other ERISA Events could reasonably be expected to result in a Material
Adverse Effect.
     7.10 Financial Covenants.
          No such Borrower shall breach or fail to comply with any of the
Financial Covenants.
     7.11 Hazardous Materials.
          No such Borrower shall cause or permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the Real Estate
where such Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities under, any Environmental Laws or Environmental Permits
or (b) otherwise adversely impact the value or marketability of any of the Real
Estate or any of the Collateral, other than such violations or Environmental
Liabilities or impacts that could not reasonably be expected to have a Material
Adverse Effect.
     7.12 Sale-Leasebacks.
          No such Borrower shall engage in any sale-leaseback, synthetic lease
or similar transaction involving any of its assets.
     7.13 Restricted Payments.
          No such Borrower shall make any Restricted Payment, except:
(a) intercompany loans and advances among the Borrowers to the extent permitted
by Section 7.3; (b) dividends and distributions to another Borrower;
(c) employee loans permitted under Section 7.4(b); (d) payments of principal and
interest of Intercompany Notes issued in accordance with Section 7.3; and
(e) any payment of reasonable and customary expenses to the Parent or any
Borrower or Affiliate thereof, so long as such expenses are paid in the ordinary
course of business, on an arm’s length basis, in an aggregate amount not to
exceed $360,000 plus the amount of any reasonable out-of-pocket expenses
incurred in connection with the management of Borrowers in any Fiscal Year; and
provided that no Event of Default exists or would occur before or after giving
effect to any such proposed payment in clauses (a) through (e) of this Section.
     7.14 Change of Name or Location; Change of Fiscal Year.
          No such Borrower shall (a) change its name as it appears in official
filings in the state of its incorporation or other organization, (b) change its
chief executive office, principal place of business, corporate offices or
warehouses or locations at which Collateral is held or stored, or the location
of its records concerning the Collateral, (c) change the type of entity that it
is, (d) change its organization identification number, if any, issued by its
state of incorporation or other organization, or (e) change its state of
incorporation or organization, in each case without at least thirty (30) days
prior written notice to Agent and after Agent’s written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the

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perfection of any Liens in favor of Agent, on behalf of Lenders, in any
Collateral, has been completed or taken, and provided that any such new location
shall be in the continental United States. No Borrower shall change its Fiscal
Year.
     7.15 No Impairment of Intercompany Transfers.
          No Borrower shall directly or indirectly enter into or become bound by
any agreement, instrument, indenture or other obligation (other than this
Agreement and the other Loan Documents) that could directly or indirectly
restrict, prohibit or require the consent of any Person with respect to the
payment of dividends or distributions or the making or repayment of intercompany
loans by a Subsidiary of any Borrower to such Borrower.
     7.16 Changes Relating to Material Contracts.
          No Borrower shall change or amend the terms of any Material Contract
in any respect that could reasonably be expected to be materially adverse to
Lenders or could reasonably be expected to have a Material Adverse Effect.
8. TERM
     8.1 Termination.
          The financing arrangements contemplated hereby shall be in effect
until the Maturity Date, and the Loan and all other Obligations shall be
automatically due and payable in full on such date.
     8.2 Survival of Obligations Upon Termination of Financing Arrangements.
          Except as otherwise provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Borrowers or the rights of Agent and Lenders relating to
any unpaid portion of the Loan or any other Obligations, due or not due,
liquidated, contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the performance of which
is required after the Termination Date. Except as otherwise expressly provided
herein or in any other Loan Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon the Borrowers, and all rights
of Agent and each Lender, all as contained in the Loan Documents, shall not
terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that the provisions of Section 11, the payment obligations under
Section 2.12 and Section 2.13, and the indemnities contained in the Loan
Documents shall survive the Termination Date.
9. FINANCIAL COVENANTS
          The Borrowers shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:

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     9.1 Maximum Leverage Ratio.
          Holdings and its Subsidiaries shall maintain on a consolidated basis
at all times a Qualifying Retail RMR Leverage Ratio of not greater than 26.0 to
1.0.
     9.2 Minimum Fixed Charge Coverage Ratio.
          Holdings and its Subsidiaries shall maintain at all times, to be
measured on a consolidated basis at the end of each Fiscal Month, commencing
with November 30, 2005, a Fixed Charge Coverage Ratio for the six (6) month
period then ended of not less than 1.25 to 1.0.
          Notwithstanding the foregoing, for the purpose of calculating the
Fixed Charge Coverage Ratio (i) Fixed Charges and EBITDA for the six (6) month
period ending November 30, 2005 shall be calculated as Fixed Charges and EBITDA
for the one (1) month period ending November 30, 2005 multiplied by six,
(ii) Fixed Charges and EBITDA for the six (6) month period ending December 31,
2005 shall be calculated as Fixed Charges and EBITDA for the two (2) month
period ending December 31, 2005 multiplied by three, (iii) Fixed Charges and
EBITDA for the six (6) month period ending January 31, 2006 shall be calculated
as Fixed Charges and EBITDA for the three (3) month period ending January 31,
2006 multiplied by two, (iv) Fixed Charges and EBITDA for the six (6) month
period ending February 28, 2006 shall be calculated as Fixed Charges and EBITDA
for the four (4) month period ending February 28, 2006 multiplied by one and
one-half and (v) Fixed Charges and EBITDA for the five (5) month period ending
March 31, 2006 shall be calculated as Fixed Charges and EBITDA for the five
(5) month period ending March 31, 2006 multiplied by one and two-tenths.
     9.3 Maximum Capital Expenditures.
          Holdings and its Subsidiaries shall not incur more than $1,500,000 of
Capital Expenditures in the aggregate in any Fiscal Year (other than Capital
Expenditures for Inventory installed pursuant to Alarm Contracts).
     9.4 Maximum Attrition Ratio.
          Holdings and its Subsidiaries shall maintain on a consolidated basis,
at the end of each Fiscal Month, commencing with November 30, 2005, an Attrition
Ratio of not greater than eleven percent (11%).
     9.5 Accounting Changes.
          Unless otherwise specifically provided herein, any accounting term
used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase “in accordance with GAAP” shall in no way
be construed to limit the foregoing. If any Accounting Changes (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then the Borrowers, Agent and Lenders agree to enter into negotiations
in order to amend such provisions of the Agreement so as to equitably reflect
such Accounting Changes with the desired result that

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the criteria for evaluating the Borrowers’ and its Subsidiaries’ financial
condition shall be the same after such Accounting Changes as if such Accounting
Changes had not been made, provided, however, that the agreement of the Agent
and the Requisite Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. “Accounting Changes” means (i) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), (ii) changes in accounting principles concurred
in by the Borrowers’ certified public accountants; and (iii) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
the Borrowers and Requisite Lenders agree upon the required amendments, then
after appropriate amendments have been executed and the underlying Accounting
Change with respect thereto has been implemented, any reference to GAAP
contained in the Agreement or in any other Loan Document shall, only to the
extent of such Accounting Change, refer to GAAP, consistently applied after
giving effect to the implementation of such Accounting Change. If Agent, the
Borrowers and Requisite Lenders cannot agree upon the required amendments within
thirty (30) days following the date of implementation of any Accounting Change,
then all Financial Statements delivered and all calculations of financial
covenants and other standards and terms in accordance with the Agreement and the
other Loan Documents shall be prepared, delivered and made without regard to the
underlying Accounting Change.
10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
     10.1 Events of Default.
          The occurrence of any one or more of the following events (regardless
of the reason therefor) shall constitute an “Event of Default” hereunder:
          (a) The Borrowers fail to (i) make any payment of principal of any
Obligations when due, (ii) pay any interest on, or Fees owing in respect of, the
Loans or any of the other Obligations when due and payable, and such Default
continues for three (3) Business Days or more thereafter; or (iii) pay or
reimburse Agent or any Lender for any expense reimbursable hereunder or under
any other Loan Document within ten (10) Business Days following Agent’s (or a
Lender’s written demand for such reimbursement or payment of expenses.
          (b) if any representation or warranty made (or deemed made pursuant to
the terms of this Agreement or any other Loan Document) by any Borrower or the
Parent in any Loan Document or in any certificate, agreement, instrument,
statement, or report made or delivered pursuant to or in connection with any
thereof, or if any information furnished to the Lenders or the Agent shall prove
to have been incorrect in any material respect when made (or deemed made
pursuant to the terms of this Agreement or any other Loan Document) or
furnished, except to the extent already qualified by materiality, in which case
it shall be true and correct in all respects and shall not be false or
misleading in any respect;

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          (c) Any Borrower fails or neglects to perform, keep or observe any of
the provisions set forth in Sections 2.5, 7 or 9, the Parent fails or neglects
to perform, keep or observe any of the provisions of the Parent Pledge
Agreement, or any Borrower fails or neglects to perform, keep or observe any of
the provisions set forth in Section 5, and the same shall remain unremedied for
five (5) days or more.
          (d) Any Borrower fails or neglects to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents (other
than any provision embodied in or covered by any other clause of this
Section 10.1) and the same shall remain unremedied for ten (10) Business Days or
more.
          (e) Any Borrower or Parent fails or neglects to perform or keep or
observe any of the provisions of any of the Bridge Loan Documents, and the same
is not cured within any applicable grace period therefor.
          (f) A default or breach occurs under any agreement, document or
instrument to which any Borrower or any Subsidiary is a party other than the
Loan Documents or the Bridge Loan Documents that is not cured or waived within
any applicable grace period therefor, and such default or breach (i) involves
the failure to make any payment when due in respect of any Indebtedness or
Guaranty Obligations of any Borrower in excess of $300,000 individually or
$500,000 in the aggregate (including (x) undrawn committed or available amounts
and (y) amounts owing to all creditors under any combined or syndicated credit
arrangements), or (ii) causes, or permits any holder of such Indebtedness or
Guaranty Obligations or a trustee to cause, Indebtedness or Guaranty Obligations
or a portion thereof in excess of $300,000 individually or $500,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral to be demanded in respect
thereof, in each case, regardless of whether such right is exercised, by such
holder or trustee.
          (g) Assets of any Borrower or any Subsidiary with a fair market value
of $500,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Borrower and such
condition continues for sixty (60) days or more.
          (h) A case or proceeding is commenced against any Borrower or Parent
seeking a decree or order in respect of such Borrower or Parent (i) under the
Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for such Borrower or Parent or for
any substantial part of any such Borrower’s or Parent’s assets, or
(iii) ordering the winding-up or liquidation of the affairs of such Borrower,
and such case or proceeding shall remain undismissed or unstayed for sixty
(60) days or more or a decree or order granting the relief sought in such case
or proceeding is granted by a court of competent jurisdiction.
          (i) Any Borrower or Parent (i) files a petition seeking relief under
the Bankruptcy Code or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) consents to or fails to contest in a timely and
appropriate manner to the institution of proceedings thereunder or to the filing
of any such petition or to the appointment of or taking

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possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Borrower or Parent or for any
substantial part of any Borrower’s or Parent’s assets, (iii) makes an assignment
for the benefit of creditors (other than a limited assignment of specified
assets in an amount not to exceed $100,000 in the aggregate to accomplish the
settlement of a claim or litigation), or (iv) takes any action in furtherance of
any of the foregoing, or (v) admits in writing its inability to, or is generally
unable to, pay its debts as such debts become due.
          (j) A final judgment or judgments for the payment of money in excess
of $300,000 individually or $500,000 in the aggregate at any time are
outstanding against any Borrower or any Subsidiary (which judgments are not
covered by insurance policies as to which liability has not been denied by the
insurance carrier), and the same are not, within sixty (60) days after the entry
thereof, discharged or execution thereof stayed or bonded pending appeal, or
such judgments are not discharged within sixty (60) days following the
expiration of any such stay.
          (k) Any provision of any Loan Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or any Borrower
shall challenge in writing the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien created under any Loan Document ceases to be a valid and perfected
first priority Lien (except as otherwise permitted herein or therein) in any of
the Collateral purported to be covered thereby.
          (l) Any Change of Control, Change of Management or Material Adverse
Effect occurs.
          (m) Holdings, Services or Systems ceases any material portion of its
business operations as conducted as of the Closing Date.
          (n) Any “Event of Default” shall occur under Article 8 of the Bridge
Loan Agreement evidencing the Bridge Loan.
     10.2 Remedies.
          (a) If any Event of Default has occurred and is continuing, Agent may
(and at the written request of the Requisite Lenders shall), without notice,
suspend the Commitment with respect to additional Advances, whereupon any
additional Advances shall be made or incurred in the sole discretion of the
Requisite Lenders so long as such Event of Default is continuing. If any Event
of Default has occurred and is continuing, no action permitted under Article 7
hereof may be taken unless approved by Agent in writing and Agent may (and at
the written request of Requisite Lenders shall), without prior notice except as
otherwise expressly provided herein, increase the rate of interest applicable to
the Loans to the Default Rate; provided, that upon the occurrence of an Event of
Default specified in Sections 10.1(a), (h) or (i), the Default Rate shall
immediately be applicable to the Loans. The Agent agrees to notify the Borrowers
following an election as set forth above to apply the Default Rate to the Loans,
provided that the Agent shall

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have no liability to the Borrowers for any failure to provide such notice.
Notwithstanding the foregoing, if the Event of Default which gave rise to any
suspension of the Commitment was as a result of an Event of Default arising
under Section 10.1(a), no additional Advances shall be made or incurred
following such suspension without the consent of all Lenders and Agent.
          (b) If any Event of Default has occurred and is continuing, Agent may
(and at the written request of the Requisite Lenders shall), without notice:
(i) terminate the Commitment with respect to further Advances; (ii) reduce the
Commitment from time to time; (iii) declare all or any portion of the
Obligations (other than Obligations in respect of hedging obligations or
interest rate swaps obligations permitted hereunder), including all or any
portion of the Loan to be forthwith due and payable, all without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
by all Borrowers; or (iv) exercise any rights and remedies provided to Agent
under the Loan Documents or at law or equity, including all remedies provided
under the UCC; provided, that upon the occurrence of an Event of Default
specified in Sections 10.1(h) or (i), the Commitments shall be immediately
terminated and all of the Obligations (other than Obligations in respect of
hedging obligations or interest rate swaps obligations permitted hereunder),
including the Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
          (c) Without limiting the generality of the foregoing or limiting in
any way the rights of the Lenders and Agent under the Loan Documents or
otherwise under applicable law, at any time, and from time to time, after the
earliest to occur of (i) acceleration of the Loan, (ii) the occurrence, and
during the continuance, of an Event of Default specified in Sections 10.1(a),
(e) (g), (h), (i) or (k), or (iii) thirty (30) days following the occurrence,
and during the continuance, of an Event of Default not specified in
Sections 10.1(a), (e), (g), (h), (i) or (k), the Agent shall be, whether such
action is undertaken at its option or at the direction of the Requisite Lenders,
entitled to apply for and have a receiver or receiver and manager appointed
under state, or Federal law by a court of competent jurisdiction in any action
taken by Agent or Lenders to enforce their rights and remedies hereunder and
under the other Loan Documents in order to manage, protect, preserve, sell and
otherwise dispose of all or any portion of the Collateral and continue the
operation of the business of Borrowers, and to collect all revenues and profits
thereof and apply the same to the payment of all expenses and other charges of
such receivership, including the compensation of the receiver, and to the
payment of any Note until a sale or other disposition of such Collateral shall
be finally made and consummated. EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO
AND WAIVES ANY RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A
RECEIVER AS PROVIDED ABOVE. EACH BORROWER GRANTS SUCH WAIVER AND CONSENT
KNOWINGLY AFTER HAVING DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL,
ACKNOWLEDGES THAT THE UNCONTESTED RIGHT TO HAVE A RECEIVER APPOINTED FOR THE
FOREGOING PURPOSES IS CONSIDERED ESSENTIAL BY LENDERS IN CONNECTION WITH THE
ENFORCEMENT OF THEIR RIGHTS AND REMEDIES HEREUNDER AND UNDER THE SECURITY
DOCUMENTS, AND THE AVAILABILITY OF SUCH APPOINTMENT AS A REMEDY UNDER THE
FOREGOING CIRCUMSTANCES WAS A MATERIAL FACTOR IN INDUCING LENDERS TO MAKE (AND
COMMIT TO MAKE) THE LOANS TO THE BORROWERS, AND AGREES TO ENTER INTO ANY AND ALL
STIPULATIONS IN ANY LEGAL ACTIONS, OR AGREEMENTS OR OTHER INSTRUMENTS IN
CONNECTION WITH THE

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FOREGOING AND TO COOPERATE FULLY WITH THE AGENT AND LENDERS IN CONNECTION WITH
THE ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER OVER ALL OR ANY PORTION
OF THE COLLATERAL.
     10.3 Waivers by Borrowers.
          Except as otherwise provided for in this Agreement or by applicable
law, each Borrower waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, all defenses, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Agent on which any Borrower may in any way be liable, and hereby
ratifies and confirms whatever Agent may reasonably do in this regard, (b) all
rights to notice and a hearing prior to Agent’s taking possession or control of,
or to Agent’s replevy, attachment or levy upon, the Collateral or any bond or
security that might be required by any court prior to allowing Agent to exercise
any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling
and exemption laws. For the purposes of clarity and notwithstanding anything in
this Agreement to the contrary, with respect to this Agreement the Borrowers’
obligations are absolute and unconditional without any right of rescission,
setoff, counterclaim or defense for any reason against Agent or any Lender.
     10.4 Intercreditor Agreements; Lenders Benefit.
          (a) Borrowers, Agent and Lenders acknowledge that, upon the exercise
of any rights and remedies by CapitalSource as the Agent under this Agreement
and the Loan Documents and as Lender under the Bridge Loan Documents (including,
the exercise of rights and remedies with respect to the Collateral), all
proceeds of the Collateral shall be applied first to satisfy the Bridge Loan and
all other obligations of Borrowers arising under the Bridge Loan Documents
before being applied to the Loan or Obligations. For so long as any such Bridge
Loan obligations remain unsatisfied, any payments (including payments from any
proceeds of Collateral) with respect to the Loans and other Obligations received
by the Agent or any Lender at any time (i) after all of the Obligations have
become immediately due and payable, with or without declaration, pursuant to
Section 10.2, or (ii) when an event of default has occurred and is continuing
under the Bridge Loan Documents and the occurrence or omission constituting such
event of default has not been cured or waived, shall be applied first to satisfy
the Bridge Loan and all other obligations of Borrowers arising under the Bridge
Loan Documents before being applied to the Loans or other Obligations. In the
event that any Lender under this Agreement shall receive any proceeds of
Collateral in contravention of this Agreement, the Lenders shall promptly so
notify CapitalSource and shall segregate and hold in trust any such payment or
distribution, which amounts shall be paid over promptly on demand to
CapitalSource for its benefit as Lender under the Bridge Loan, for application
to the payment of the Bridge Loan and other obligations of Borrowers arising
under the Bridge Loan Documents until the same shall have been indefeasibly paid
in full in cash. The Lenders hereby waive any claim they may now or hereafter
have arising out of the Requisite Lenders election, in any proceeding instituted
under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”)
of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code by any Borrower.

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          (b) The provisions of this Section 10.4 and the rights and benefits
hereof shall inure solely to the benefit of the CapitalSource in its capacity as
Lender under the Bridge Loan Documents and its respective successors and
permitted assigns thereunder and no other Person (including any Borrower) shall
have or be entitled to assert rights or benefits under this Section 10.4.
     10.5 Rights to Appoint Receiver.
          Without limiting and in addition to any other rights, options and
remedies Agent has for itself and the benefit of Lenders under the Loan
Documents, the UCC, at law or in equity, upon the occurrence and continuation of
an Event of Default, Agent shall have the right to apply for and have a receiver
appointed by a court of competent jurisdiction in any action taken by Agent to
enforce such rights and remedies in order to manage, protect and preserve the
Collateral and continue the operation of the business or any Borrower and to
collect all revenues and profits thereof and apply the same to the payment of
all expenses and other charges of such receivership including the compensation
of the receiver and to the payments as aforesaid until a sale or other
disposition of such Collateral shall be finally made and consummated.
11. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
     11.1 Assignment and Participations.
          Subject to the terms of this Section 11.1, any Lender may make an
assignment of, or sale of participations in, at any time or times, the Loan
Documents, Loans and any Commitment or any portion thereof or interest therein,
including any Lender’s rights, title, interests, remedies, powers or duties
thereunder. Any assignment by a Lender shall: (i) require (x) the consent of
Agent (which consent shall not be unreasonably withheld or delayed with respect
to a Qualified Assignee), and (y) the execution of an assignment agreement (an
“Assignment Agreement”) substantially in the form attached hereto as
Exhibit 11.1 and otherwise in form and substance reasonably satisfactory to, and
acknowledged by, Agent; (ii) be conditioned on such assignee Lender representing
to the assigning Lender and Agent that it is purchasing the applicable Loans to
be assigned to it for its own account, for investment purposes and not with a
view to the distribution thereof; (iii) after giving effect to any such partial
assignment, the assignee Lender shall have Commitments in an amount at least
equal to $5,000,000 and the assigning Lender shall have retained Commitments in
an amount at least equal to $5,000,000; and (iv) include a payment to Agent of
an assignment fee of $3,500. In the case of an assignment by a Lender under this
Section 11.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as all other Lenders hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Commitments or assigned portion thereof from and after the date of such
assignment. Each Borrower hereby acknowledges and agrees that any assignment
permitted hereunder shall give rise to a direct obligation of the Borrowers to
the assignee and that the assignee shall be considered to be a “Lender”. In all
instances, each Lender’s liability to make Loans hereunder shall be several and
not joint and shall be limited to such Lender’s Pro Rata Share of the applicable
Commitment. In the event Agent or any Lender assigns or otherwise transfers all
or any part of the Obligations, Agent or any such Lender shall so notify the
Borrowers and the Borrowers shall, upon the request of Agent or such Lender,
execute new Notes in exchange for the Notes, if any, being

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assigned. Notwithstanding the foregoing provisions of this Section 11.1, any
Lender may at any time pledge the Obligations held by it and such Lender’s
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank, and any Lender that is an investment fund may assign the Obligations held
by it and such Lender’s rights under this Agreement and the other Loan Documents
to another investment fund managed by the same investment advisor; provided,
that no such pledge to a Federal Reserve Bank shall release such Lender from
such Lender’s obligations hereunder or under any other Loan Document.
          (a) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by the
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of any scheduled amortization of the principal
amount of the Loan or the Maturity Date, and (iii) any release of all or
substantially all of the Collateral (other than in accordance with the terms of
this Agreement, the Collateral Documents or the other Loan Documents). Subject
to Section 11.1(f), solely for purposes of Sections 2.10, 2.12, 2.13 and 11.8,
each Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of the Borrowers to the participant and the participant shall
be considered to be a “Lender”; provided, however, a participant shall not be
entitled to receive any greater payment under Sections 2.10, 2.12, 2.13 or 11.8
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such participant, unless the sale of the participation
to such participant is made with any Borrower’s prior written consent. Except as
set forth in the preceding sentence no Borrower shall have any obligation or
duty to any participant. Neither Agent nor any Lender (other than the Lender
selling a participation) shall have any duty to any participant and may continue
to deal solely with the Lender selling a participation as if no such sale had
occurred.
          (b) Except as expressly provided in this Section 11.1, no Lender
shall, as between any Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, any Notes or other Obligations owed to such Lender.
          (c) Each Borrower shall assist any Lender permitted to sell
assignments or participations under this Section 11.1 as reasonably required to
enable the assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and all agreements,
notes and other documents and instruments not inconsistent with the terms of
this Agreement as shall be reasonably requested and the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants, provided that the requesting Lender
shall bear its own costs in connection with any such assignment and shall not be
entitled to reimbursement of such costs from any Borrower.
          (d) A Lender may furnish any information concerning Borrowers in the
possession of such Lender from time to time to assignees and participants
(including potential assignees and participants); provided that such potential
assignees or participants agree to confidentiality provisions substantially
equivalent to those contained in Section 13.8.

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          (f) So long as no Event of Default has occurred and is continuing, no
Lender shall assign or sell participations in any portion of its Loans or
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 2.13(a), increased
costs under Section 2.13(b), or an inability to fund LIBOR Loans under
Section 2.13(c). A participant that would be a Non-Corporate Domestic Lender or
a Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.13 unless the Borrowers are notified of the participation sold to such
participant and such participant agrees, for the benefit of the Borrowers to
comply with Sections 2.12, 2.13(d) and 2.13(e) as though it were a Lender.
     11.2 Appointment of Agent.
          CapitalSource is hereby appointed to act on behalf of all Lenders as
Agent under this Agreement and the other Loan Documents. The provisions of this
Section 11.2 are solely for the benefit of Agent and Lenders and no Borrower nor
any other Person shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under this
Agreement and the other Loan Documents, Agent shall act solely as an agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Borrower or
any other Person. Agent shall have no duties or responsibilities except for
those expressly set forth in this Agreement and the other Loan Documents. The
duties of Agent shall be mechanical and administrative in nature and Agent shall
not have, or be deemed to have, by reason of this Agreement, any other Loan
Document or otherwise a fiduciary relationship in respect of any Lender. Except
as expressly set forth in this Agreement and the other Loan Documents, Agent
shall not have any duty to disclose, and shall not be liable for failure to
disclose, any information relating to any Borrower or any of their respective
Subsidiaries or any Account Debtor that is communicated to or obtained by
CapitalSource or any of its Affiliates in any capacity. Neither Agent nor any of
its Affiliates nor any of their respective officers, directors, employees,
agents or representatives shall be liable to any Lender for any action taken or
omitted to be taken by it hereunder or under any other Loan Document, or in
connection herewith or therewith, except for damages caused by its or their own
gross negligence or willful misconduct, as finally determined by a court of
competent jurisdiction.
          If Agent shall request instructions from Requisite Lenders or all
affected Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders or all affected Lenders,
as the case may be, and Agent shall not incur liability to any Person by reason
of so refraining. Agent shall be fully justified in failing or refusing to take
any action hereunder or under any other Loan Document (a) if such action would,
in the opinion of Agent, be contrary to law or the terms of this Agreement or
any other Loan Document, (b) if such action would, in the opinion of Agent,
expose Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or

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refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of Requisite Lenders or all affected Lenders, as
applicable.
     11.3 Agent’s Reliance, Etc.
          Neither Agent nor any of its Affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
the other Loan Documents, except for damages caused by its or their own gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction. Without limiting the generality of the foregoing, Agent: (a) may
treat the payee of any Note as the holder thereof until Agent receives written
notice of the assignment or transfer thereof in accordance with the provisions
of Section 11.1 signed by such payee and in form reasonably satisfactory to
Agent; (b) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements, warranties
or representations made in or in connection with this Agreement or the other
Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Borrower or to inspect
the Collateral (including the books and records) of any Borrower; (e) shall not
be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (f) shall incur no liability under or in respect of this Agreement
or the other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
     11.4 CapitalSource and Affiliates.
          With respect to its Commitments hereunder, CapitalSource shall have
the same rights and powers under this Agreement and the other Loan Documents as
any other Lender and may exercise the same as though it were not Agent; and the
term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include
CapitalSource in its individual capacity. CapitalSource and its Affiliates may
lend money to, invest in, and generally engage in any kind of business with, any
Borrower, any of their Affiliates and any Person who may do business with or own
securities of any Borrower or any such Affiliate, all as if CapitalSource were
not Agent and without any duty to account therefor to Lenders. CapitalSource and
its Affiliates may accept fees and other consideration from any Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders. CapitalSource may also purchase equity
interests in Affiliates of the Borrowers and may invest in a fund that has
invested debt or equity directly or indirectly in the Borrowers. CapitalSource
may also purchase equity interests in Parent or its Affiliates and may invest in
a fund that has invested debt or equity directly or indirectly in Parent. Each
Lender acknowledges the potential conflict of interest between CapitalSource as
a Lender holding disproportionate interests in the Loans, CapitalSource as a
Stockholder, warrant holder of Parent or indirect investor in debt or equity
issued by Parent, and CapitalSource as Agent. Notwithstanding anything in the
Loan Documents

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to the contrary, (i) CapitalSource and its Affiliates shall not be required to
execute and deliver an Assignment Agreement in connection with any transaction
involving its Affiliates or lenders and (ii) there shall be no limitation or
restriction on CapitalSource’s ability to assign or otherwise transfer any Loan
Document to any such Affiliate or lender; provided, however, CapitalSource shall
continue to be liable as a “Lender” under the Loan Documents unless such
Affiliate or lender executes an Assignment Agreement.
     11.5 Lender Credit Decision.
          Each Lender acknowledges that it has, independently and without
reliance upon Agent or any other Lender and based on the Financial Statements
referred to in Section 4.4(a) and such other documents and information as it has
deemed appropriate, made its own credit and financial analysis of the Borrowers
and its own decision to enter into this Agreement. Each Lender also acknowledges
that it will, independently and without reliance upon Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement. Each Lender acknowledges the potential conflict of
interest of each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.
     11.6 Indemnification.
          Lenders agree to indemnify Agent (to the extent not reimbursed by
Borrowers and without limiting the obligations of Borrowers hereunder), ratably
according to their respective Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted to be taken by Agent in connection therewith; provided, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Without limiting the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including reasonable in-house and external
counsel fees) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that Agent is not reimbursed for such expenses by
Borrowers.
     11.7 Successor Agent.
          Agent may resign at any time by giving not less than thirty (30) days’
prior written notice thereof to Lenders and the Borrowers. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within thirty (30) days after
the resigning Agent’s giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to

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accept such appointment, or otherwise shall be a commercial bank or financial
institution or a subsidiary of a commercial bank or financial institution if
such commercial bank or financial institution is organized under the laws of the
United States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000. If no successor Agent has been appointed
pursuant to the foregoing, within thirty (30) days after the date such notice of
resignation was given by the resigning Agent, such resignation shall become
effective and the Requisite Lenders shall thereafter perform all the duties of
Agent hereunder until such time, if any, as the Requisite Lenders appoint a
successor Agent as provided above. Any successor Agent appointed by Requisite
Lenders hereunder shall be subject to the written approval of the Borrowers,
such approval not to be unreasonably withheld or delayed; provided that such
approval shall not be required if any Default or Event of Default has occurred
and is continuing. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent’s resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent’s
resignation hereunder, the provisions of this Section 11 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was acting
as Agent under this Agreement and the other Loan Documents.
     11.8 Setoff and Sharing of Payments.
          In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default and subject to Section 11.9(f),
each Lender is hereby authorized at any time or from time to time, without prior
notice to any Borrower or to any Person other than Agent, to offset and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of any Borrower (regardless of whether such balances are then
due to any Borrower) and any other properties or assets at any time held or
owing by that Lender or that holder to or for the credit or for the account of
any Borrower against and on account of any of the Obligations that are not paid
when due; provided that the Lender exercising such offset rights shall give
notice thereof to the affected Borrower promptly after exercising such rights.
Any Lender exercising a right of setoff or otherwise receiving any payment on
account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender’s or holder’s Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares, (other than offset rights exercised by any
Lender with respect to Sections 2.10, 2.12 or 2.13). Each Borrower agrees, to
the fullest extent permitted by law, that (a) any Lender may exercise its right
to offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers’ lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
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the Lender that has exercised the right of offset, the purchase of
participations by that Lender shall be rescinded and the purchase price restored
without interest.
     11.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
          (a) Advances; Payments.
               (i) Agent shall notify appropriate Lenders, promptly after
receipt of a Notice of Advance and in any event prior to 1:00 p.m. (New York
time) on the date such Notice of Advance, is received, by telecopy, telephone or
other similar form of transmission. Each Lender shall make the amount of such
Lender’s Pro Rata Share of such Advance available to Agent in each case in same
day funds by wire transfer to Agent’s account as set forth in Section 11 not
later than 3:00 p.m. (New York time) on the requested funding date, in the case
of a Base Rate Loan, and not later than 11:00 a.m. (New York time) on the
requested funding date, in the case of a LIBOR Loan. After receipt of such wire
transfers (or, in the Agent’s sole discretion, before receipt of such wire
transfers), subject to the terms hereof, Agent shall make the requested Advance
to the Borrowers. All payments by each Lender shall be made without setoff,
counterclaim or deduction of any kind.
               (ii) Provided that each Lender has funded all payments and
Advances required to be made by it and purchased all participations required to
be purchased by it under this Agreement and the other Loan Documents as of the
date of any receipt of such payments by the Agent, Agent shall pay to each
Lender such Lender’s Pro Rata Share of principal, interest and Fees paid by the
Borrowers no later than the close of business with respect to any payments
received prior to 2:00 p.m. New York time and no later than 2:00 p.m. New York
time one Business Day thereafter with respect to all payments received by Agent
after 2:00 p.m. New York time on any Business Day for the benefit of such Lender
on the Loans held by it. To the extent that any Lender (a “Non-Funding Lender”)
has failed to fund all such payments and Advances or failed to fund the purchase
of all such participations, Agent shall be entitled to set off the funding
short-fall against that Non-Funding Lender’s Pro Rata Share of all payments
received from the Borrowers. Such payments shall be made by wire transfer to
such Lender’s account (as specified by such Lender in writing from time to time)
not later than the times set forth above.
          (b) Availability of Lender’s Pro Rata Share. Agent may assume that
each Lender will make its Pro Rata Share of each Advance available to Agent on
each funding date. If such Pro Rata Share is not, in fact, paid to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without setoff, counterclaim or deduction of any kind. If any Lender
fails to pay the amount of its Pro Rata Share forthwith upon Agent’s demand,
Agent shall promptly notify the Borrowers and the Borrowers shall immediately
repay such amount to Agent. Nothing in this Section 11.9(b) or elsewhere in this
Agreement or the other Loan Documents shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
the Borrowers may have against any Lender as a result of any default by such
Lender or hereunder. To the extent that Agent advances funds to the Borrowers on
behalf of any Lender and is not reimbursed therefor on the same Business Day as

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such Advance is made, Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable Lender.
          (c) Return of Payments.
               (i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from the Borrowers and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
               (ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to the Borrowers or paid to any
other Person pursuant to any insolvency law or otherwise, then, notwithstanding
any other term or condition of this Agreement or any other Loan Document, Agent
will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender, together with interest at such rate,
if any, as Agent is required to pay to the Borrowers or such other Person,
without setoff, counterclaim or deduction of any kind.
          (d) Non-Funding Lenders. The failure of any Non-Funding Lender to make
any Advance or any payment required by it hereunder shall not relieve any other
Lender (each such other Lender an “Other Lender”) of its obligations to make
such Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance, purchase a participation or make any other payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a “Lender” (or be included in the
calculation of “Requisite Lenders” hereunder), and the outstanding amounts of
any Loans held by a Non-Funding Lender shall not be deemed to be outstanding,
for any voting or consent rights under or with respect to any Loan Document. At
the Borrowers’ request, Agent, another Lender or a Person acceptable to Agent
shall have the right (but shall have no obligation) to purchase from any
Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent’s
request, sell and assign to Agent, another Lender or such Person, all of the
Commitments of that Non-Funding Lender for an amount equal to the principal
balance of all Loans held by such Non-Funding Lender and all accrued interest
and fees with respect thereto through the date of sale, such purchase and sale
to be consummated pursuant to an executed Assignment Agreement.
          (e) Dissemination of Information. Agent shall use reasonable efforts
to provide Lenders with any notice of Default or Event of Default received by
Agent from, or delivered by Agent to, any Borrower, with notice of any material
Event of Default of which Agent has actually become aware and with notice of any
action taken by Agent following any such Event of Default; provided, that Agent
shall not be liable to any Lender for any failure to do so, except to the extent
that such failure is attributable to Agent’s gross negligence or willful
misconduct, as finally determined by a court of competent jurisdiction.
Notwithstanding the foregoing, Lenders acknowledge that the Borrowers are
required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Section 5 hereof and to provide other

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documentation and information in connection with Advances or other provisions of
this Agreement, and agree that Agent shall have no duty to provide the same to
Lenders and Agent shall not be liable to Lenders should Agent fail to enforce
any provision of this Agreement or the other Loan Documents.
          (f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or any Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and any Notes shall be taken in concert and at the direction or with
the consent of Agent and Requisite Lenders.
     11.10 Other Lender Rights.
          Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement, including, without limitation, the obligations
owing to it and any Notes held by it and the other Loan Documents and
Collateral.
12. SUCCESSORS AND ASSIGNS
     12.1 Successors and Assigns.
          This Agreement and the other Loan Documents shall be binding on and
shall inure to the benefit of each Borrower, Agent, Lenders and their respective
successors and assigns (including, in the case of any Borrower, a
debtor-in-possession on behalf of such Borrower), except as otherwise provided
herein or therein. No Borrower may assign, transfer, hypothecate or otherwise
convey its rights, benefits, obligations or duties hereunder or under any of the
other Loan Documents without the prior express written consent of Agent and
Lenders. Any such purported assignment, transfer, hypothecation or other
conveyance by any Borrower without the prior express written consent of Lenders
shall be void. The terms and provisions of this Agreement are for the purpose of
defining the relative rights and obligations of each Borrower, Agent and Lenders
with respect to the transactions contemplated hereby and, except as otherwise
provided for herein, no Person shall be a third party beneficiary of any of the
terms and provisions of this Agreement or any of the other Loan Documents.
13. MISCELLANEOUS
     13.1 Complete Agreement; Modification of Agreement.
          The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 13.2. Any letter of interest,
fee letter, fee letter or confidentiality agreement, if any, between any
Borrower and Agent or any Lender or any of their respective Affiliates,
predating this Agreement and relating to a financing of substantially similar
form, purpose or effect shall be superseded by this Agreement, except to the
extent that the Fee Letter is, by the terms thereof, intended to survive.

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     13.2 Amendments and Waivers.
          (a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Borrowers and by Requisite Lenders or all affected
Lenders, as applicable. Except as set forth in clause (b) below, all such
amendments, modifications, terminations or waivers requiring the consent of any
Lenders shall require the written consent of Requisite Lenders.
          (b) No amendment, modification, termination or waiver shall, unless in
writing and signed by each Lender directly affected thereby: (i) increase the
principal amount of any Lender’s Commitment (which action shall be deemed to
directly affect all Lenders); (ii) reduce the principal of, rate of interest on
or Fees payable with respect to any Loan of any affected Lender; (iii) extend
any scheduled payment date (other than payment dates of mandatory prepayments
under Section 2.2(b)(ii)-(iii)) or final maturity date of the principal amount
of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or
postpone any payment of interest or Fees as to any affected Lender (provided
that the waiver of any Default or Event of Default shall not be deemed to be an
extension or postponement of any payment that otherwise would have been required
due to acceleration thereof); (v) except as otherwise permitted herein or in the
other Loan Documents, release, or permit any Borrower to sell or otherwise
dispose of, or otherwise subordinate (except Permitted Encumbrances), all or
substantially all of the Collateral (which action shall be deemed to directly
affect all Lenders and (vi) amend or waive this Section 13.2 or the definition
of the term “Requisite Lenders” insofar as such definitions affect the substance
of this Section 13.2. Furthermore, no amendment, modification, termination or
waiver affecting the rights or duties of Agent under this Agreement or any other
Loan Document shall be effective unless in writing and signed by Agent, in
addition to Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
termination, or waiver of any provision of any Note shall be effective without
the written concurrence of the holder of that Note. No notice to or demand on
any Borrower in any case shall entitle such Borrower or any other Borrower to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this Section 13.2 shall be binding upon each holder of any Note at the time
outstanding and each future holder of any Note.
          (c) If, in connection with any proposed amendment, modification,
waiver or termination (a “Proposed Change”) requiring the consent of all
affected Lenders, the consent of Requisite Lenders is obtained, but the consent
of other Lenders whose consent is required is not obtained (any such Lender
whose consent is not obtained as described in this clause (i) and in clauses
(ii) and (iii) below being referred to as “Non-Consenting Lender”), then, so
long as Agent is not a Non Consenting Lender, at the Borrowers’ request any
other Lender or a Person reasonably acceptable to Agent, shall have the right
with Agent’s consent (but shall have no obligation) to purchase from such Non
Consenting Lenders, and such Non Consenting Lenders agree that they shall, upon
Agent’s request, sell and assign to such Lender or such Person, all of

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the Commitments of such Non Consenting Lenders for an amount equal to the
principal balance of all Loans held by the Non Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
          (d) Upon indefeasible payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions proceedings, or claims are pending or threatened against
any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to the Borrowers, at the Borrowers’
sole cost and expense, termination statements, mortgage releases and other
documents reasonably necessary or appropriate to evidence the termination of the
Liens securing payment of the Obligations.
     13.3 Fees and Expenses.
          The Borrowers shall reimburse (i) Agent for all reasonable fees, costs
and expenses (including the reasonable fees and expenses of all of its in-house
and external counsel, advisors, consultants and auditors) and (ii) Agent (and,
with respect to clauses (c) and (d) below, all Lenders; provided that in the
case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders) for all
reasonable fees, costs and expenses, including the documented reasonable fees,
costs and expenses of in-house and external counsel or other advisors (including
environmental and management consultants and appraisers) incurred in connection
with the negotiation, preparation and filing and/or recordation of the Loan
Documents and incurred in connection with:
          (a) any amendment, modification or waiver of, or consent with respect
to, or termination of, any of the Loan Documents or advice in connection with
the syndication and administration of the Loans made pursuant hereto or its
rights hereunder or thereunder; provided, however, that so long as no Event of
Default has occurred or is continuing, upon the Borrowers’ written request, the
Agent shall consult with the Borrowers with respect to estimated fees and
expenses of counsel in connection with any proposed amendment, modification or
waiver of any of the Loan Documents;
          (b) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, any Borrower or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Borrowers or
any other Person that may be obligated to Agent by virtue of the Loan Documents,
including any such litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring of the Loans during the
pendency of one or more Events of Default; provided, that no Person shall be
entitled to reimbursement under this clause (b) in respect of any litigation,
contest, dispute, suit, proceeding or action to the extent any of the foregoing
results from such Person’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction;

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          (c) any attempt to enforce any remedies of Agent or any Lender against
any or all of the Borrowers or any other Person that may be obligated to Agent
or any Lender by virtue of any of the Loan Documents, including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans, in any case during the pendency of one or more Events of Default;
provided, that in the case of reimbursement of counsel for Lenders other than
Agent, such reimbursement shall be limited to one counsel for all such Lenders;
          (d) any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and provided, that in the case of reimbursement
of counsel for Lenders other than Agent, such reimbursement shall be limited to
one counsel for all such Lenders;
          (e) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Borrowers or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral; and
          (f) portfolio management and CapitalAnalytics or other underwriting
services.
including, as to each of clauses (a) through (e) above, all reasonable in-house
and external attorneys’ and other professional and service providers’ fees
arising from such services and other advice, assistance or other representation,
including those in connection with any appellate proceedings, and all reasonable
expenses, costs, charges and other fees incurred by such counsel and others in
connection with or relating to any of the events or actions described in this
Section 13.3, all of which shall be payable, on demand, by the Borrowers to
Agent. Without limiting the generality of the foregoing, such expenses, costs,
charges and fees may include: reasonable fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and in-house and external paralegals; court costs and
expenses; photocopying and duplication expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and reasonable expenses for
travel, lodging and food paid or incurred in connection with the performance of
such in-house and external legal or other advisory services.
     13.4 No Waiver.
          Agent’s or any Lender’s failure, at any time or times, to require
strict performance by the Borrowers of any provision of this Agreement or any
other Loan Document shall not waive, affect or diminish any right of Agent or
such Lender thereafter to demand strict compliance and performance herewith or
therewith. Any suspension or waiver of any Default or Event of Default shall not
suspend, waive or affect any other Default or Event of Default whether the same
is prior or subsequent thereto and whether the same or of a different type.
Subject to the provisions of Section 13.2, none of the undertakings, agreements,
warranties, covenants and representations of any Borrower contained in this
Agreement or any of the other Loan Documents and no Default or Event of Default
by any Borrower shall be deemed to have been suspended or waived by Agent or any
Lender, unless such waiver or suspension is by an

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instrument in writing signed by an officer of or other authorized employee of
Agent (to the extent required) and the applicable required Lenders and directed
to the Borrowers specifying such suspension or waiver.
     13.5 Remedies.
          Agent’s and Lenders’ rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies that Agent or any
Lender may have under any other agreement, including the other Loan Documents,
by operation of law or otherwise. Recourse to the Collateral shall not be
required.
     13.6 Severability.
          Wherever possible, each provision of this Agreement and the other Loan
Documents shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or any other Loan
Document shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement or such other Loan Document.
     13.7 Conflict of Terms.
          Except as otherwise provided in this Agreement or any of the other
Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control.
     13.8 Confidentiality.
          (a) Agent and each Lender agrees to use commercially reasonable
efforts (equivalent to the efforts Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as confidential
all financial information (including compliance certificates) provided to them
by the Borrowers which is marked confidential, and all other information which
the Borrowers have designated in writing as confidential, at all times prior to
the earlier of (i) the Maturity Date and (ii) the acceleration of the Loan,
except that Agent and each Lender may disclose such information: (a) to Persons
employed or engaged by Agent or such Lender or its affiliates; (b) to any bona
fide assignee or participant or potential assignee or participant that has
agreed to comply with the covenant contained in this Section 13.8 (and any such
bona fide assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described in
clause (a) above); (c) as required or requested by any Governmental Authority or
reasonably believed by Agent or such Lender to be compelled by any court decree,
subpoena or legal or administrative order or process or any other regulation,
order or decree; (d) to any of the parties that provide funding to any Lender or
any party engaged as an administrative agent with respect to such funding;
(e) to its affiliates, auditors, agents, officers or directors, or otherwise,
as, on the advice of Agent’s or such Lender’s counsel, is required by law;
(f) in connection with the exercise of any right or remedy under the Loan
Documents (whether prior to or after acceleration), or in connection with

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any Litigation to which Agent or such Lender is a party; or (g) that ceases to
be confidential through no fault of Agent or any Lender.
          (b) Except as required by law, Borrower(s) agree, and agree to cause
each of their Affiliates, (i) not to transmit or disclose provision of any Loan
Document to any Person (other than to Borrowers’ advisors and officers on a
need-to-know basis, including without limitation Lehman Brothers for the purpose
of raising equity capital) without Agent’s prior written consent, (ii) to inform
all Persons, including its advisors and officers, of the confidential nature of
the Loan Documents and to direct them not to disclose the same to any other
Person and to require each of them to be bound by these provisions. Borrowers
agree that Agent shall have the right to review and approve all materials (other
than Parent’s filings with the Securities and Exchange Commission (“SEC
Filings”) or other disclosure required by law) that any Borrower or any of its
respective Affiliates prepares or proposes to transmit or disclose that contain
the Agent’s or any Lender’s name or describe or refer to any Loan Document, any
of the terms thereof or any of the transactions contemplated thereby. Nothing
contained in any Loan Document is intended to permit or authorize any Borrower
or any of its respective Affiliates to contract on behalf of the Agent or any
Lender. To the extent a Borrower is required by law (other than with respect to
the SEC Filings) to disclose any provision of this Loan Agreement or an Agent or
Lender’s name, such Borrower shall give Agent prompt notice of such disclosure
upon becoming aware of the need for such disclosure. The parties hereto agree
that Agent, Lenders and their respective Affiliates may (i) disclose a general
description of transactions arising under the Loan Documents for advertising,
marketing or other similar purposes, and (ii) use any Borrower’s name, logo or
other indicia germane to such party in connection with such advertising,
marketing or other similar purposes.
     13.9 GOVERNING LAW.
          EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS,
IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
MARYLAND. EXCEPT AS OTHERWISE PROVIDED IN ANY OF THE LOAN DOCUMENTS EACH
BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
MARYLAND, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE BORROWERS, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT,
LENDERS AND THE BORROWERS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF MARYLAND AND; PROVIDED, FURTHER
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH BORROWER EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH

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JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
BORROWER HEREBY WAIVES ANY OBJECTION THAT SUCH BORROWER MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH
IN SECTION 13.10 OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR FIVE
(5) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
     13.10 Notices.
          Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and five (5) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission during normal business hours
of the recipient (with such telecopy or facsimile promptly confirmed by delivery
of a copy by personal delivery or United States Mail as otherwise provided in
this Section 13.10); (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated below or to such
other address (or facsimile number) as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than to the Borrowers or Agent)
designated below to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication. In addition, any delivery required to be made by the
Borrowers to the Lenders under this Agreement will be deemed effective if
delivered to the Agent as required; provided that the Borrowers shall have no
liability hereunder if any delivery of documentation and information required
hereunder shall have been furnished to Agent as required.

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  (a)   If to Agent or CapitalSource, at
 
       
 
      CapitalSource Finance LLC
 
      4445 Willard Avenue, 12th Floor
 
      Chevy Chase, MD 20815
 
      Attention: Health Care and Specialty Finance Business, Portfolio Manager
 
      Telecopier: 301-841-2340
 
      Telephone: 301-841-2700
 
       
 
      With copies to:
 
       
 
      Buchanan Ingersoll
 
      One Oxford Centre
 
      301 Grant Street
 
      Pittsburgh, PA 15219
 
      Attention: S. Bryan Lawrence
 
      Telecopier: 412-562-1041
 
      Telephone: 412-562-8830
 
       
 
  (b)   If to Borrowers, at
 
       
 
      Devcon Security Holdings, Inc.
 
      c/o Devcon International Corp.
 
      1350 E. Newport Center Drive, #201
 
      Deerfield Beach, FL 33442
 
      Attention: President
 
      Telecopier: 954-429-1506
 
      Telephone: 954-429-1500
 
       
 
      -and-
 
       
 
      Akerman Senterfit
 
      One Southeast 3rd Avenue
 
      28th Floor
 
      Miami, FL 33131
 
      Attention: Stephen Roddenberry
 
      Telecopier: 305-374-5095
 
      Telephone: 305-982-5618

     13.11 Section Titles.
          The Section titles and Table of Contents contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.

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     13.12 Counterparts.
          This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.
     13.13 WAIVER OF JURY TRIAL.
          BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG , LENDERS AND ANY BORROWER ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (EXCEPT AS
OTHERWISE PROVIDED THEREIN) OR THE TRANSACTIONS RELATED THERETO.
     13.14 Press Releases and Related Matters.
          Each Borrower executing this Agreement agrees that neither it nor its
controlled Affiliates will in the future issue any press releases or other
public disclosure using the name of CapitalSource or its affiliates or referring
to this Agreement, or the other Loan Documents without at least two (2) Business
Days’ prior notice to CapitalSource and without the prior written consent of
CapitalSource unless (and only to the extent that) such Borrower or Affiliate is
required to do so under law or by a Governmental Authority and then, in any
event, such Borrower or Affiliate will use its commercially reasonable efforts
to consult with CapitalSource before issuing such press release or other public
disclosure. Agent reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.
     13.15 Reinstatement.
          This Agreement shall remain in full force and effect and continue to
be effective should any petition be filed by or against any Borrower for
liquidation or reorganization, should any Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of any Borrower’s assets,
and shall continue to be effective or to be reinstated, as the case may be, if
at any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment
or performance had not been made. In the event that any

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payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations (and Agent’s Liens) shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
     13.16 Advice of Counsel.
     Each of the parties represents to each other party hereto that it has
discussed this Agreement and, specifically, the provisions of Sections 13.9 and
13.13, with its counsel.
     13.17 No Strict Construction.
          The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
     13.18 Collateral Matters.
          The Lenders irrevocably authorize the Agent, at its option and in its
discretion,
          (a) to release any Lien on any property granted to or held by the
Agent under any Loan Document (i) upon termination of the Commitments and
payment in full of all Obligations (other than contingent indemnification
obligations), (ii) that is sold or to be sold as part of or in connection with
any sale permitted hereunder or under any other Loan Document, or (iii) if
approved, authorized or ratified in writing by the Requisite Lenders;
          (b) to subordinate any Lien on any property granted to or held by the
Agent under any Loan Document to the holder of any Permitted Encumbrance; and
          (c) to release any Borrower from its obligations under the Loan
Documents if such Person ceases to be a Subsidiary of a Borrower as a result of
a transaction permitted hereunder.
Upon request by the Agent at any time, the Requisite Lenders will confirm in
writing the Agent’s authority to release or subordinate its interest in
particular types or items of property, or to release any Borrower from its
obligations under the Loan Documents pursuant to this Section 13.18.
     13.19 Release.
          Notwithstanding any other provision of any Loan Document, each
Borrower voluntarily, knowingly, unconditionally and irrevocably, with specific
and express intent, for and on behalf of itself (the “Releasing Party”), hereby
fully and completely releases and forever discharges each Indemnified Person and
any other Person or insurer which may be responsible or liable for the acts or
omissions of any of the Indemnified Persons, or who may be liable for the injury
or damage resulting therefrom (collectively, with the Indemnified Persons, the
“Released Parties”), of and from any and all actions, causes of action, damages,
claims, obligations,

110

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liabilities, costs, expenses and demands of any kind whatsoever, at law or in
equity, matured or unmatured, vested or contingent, that the Releasing Party has
against any of the Released Parties as of the Closing Date (“Losses”), other
than Losses resulting from the gross negligence or willful misconduct of the
Released Party. Each Borrower acknowledges that the foregoing release is a
material inducement to (a) Lender’s decision to extend to Borrower the financial
accommodations hereunder and has been relied upon by each Lender in agreeing to
make the Advances (b) CapitalSource’s decision to serve as Agent.

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          IN WITNESS WHEREOF, this Credit Agreement has been duly executed as of
the date first written above.

            BORROWERS:

DEVCON SECURITY SERVICES CORP.
      By:   /s/ Stephen J. Ruzika       Name:   Stephen J. Ruzika      Title:  
President & CEO        DEVCON SECURITY HOLDINGS, INC.
      By:   /s/ Stephen J. Ruzika       Name:   Stephen J. Ruzika      Title:  
President & CEO        COASTAL SECURITY COMPANY
      By:   /s/ Stephen J. Ruzika       Name:   Stephen J. Ruzika      Title:  
President & CEO        COASTAL SECURITY SYSTEMS, INC.
      By:   /s/ Stephen J. Ruzika       Name:   Stephen J. Ruzika      Title:  
President & CEO        CENTRAL ONE, INC. [Sic]
      By:   /s/ Stephen J. Ruzika       Name:   Stephen J. Ruzika      Title:  
President & CEO     

[Signature Page One to Credit Agreement — Revolver]

 

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            AGENT AND LENDER:

CAPITALSOURCE FINANCE LLC, as Agent and Lender
      By:   /s/William L. Polk, Jr.       Name:  William L. Polk, Jr.     
Title:   Managing Director     

[Signature Page Two to Credit Agreement — Revolver]

 

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SCHEDULE 1

          Lender   Commitment Amount   Commitment Percentage
CapitalSource Finance LLC
  $70,000,000   100%