Exhibit 10.2


 


WARRANT
TO PURCHASE COMMON STOCK


 


NEITHER THE SECURITIES REPRESENTED BY THIS INSTRUMENT NOR THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS INSTRUMENT HAS BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
NONE OF SUCH SECURITIES MAY BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT OR SUCH LAWS. THE SECURITIES REPRESENTED BY THIS
INSTRUMENT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS INSTRUMENT MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SUCH ACT AND SUCH
LAWS. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SUCH ACT AND SUCH LAWS
WILL BE VOID.


 


WARRANT


to
purchase


Up to
1,683,952


Shares
of Common Stock


 


of TVI
CORPORATION


 


Issue Date: November 20,
2008


 


1.                                       Definitions.
Unless the context otherwise requires, when used herein the following terms
shall have the meanings indicated.


 


“Board of Directors”
means the board of directors of the Company, including any duly authorized
committee thereof.


 


“Business Combination”
means a merger, consolidation, statutory share exchange or similar transaction
with unaffiliated third parties or party that requires the approval of the
Company’s stockholders.


 


“business day” means any
day except Saturday, Sunday and any day on which banking institutions in the
State of New York generally are authorized or required by law or other
governmental actions to close.


 


“Charter” means the
charter of the Company, as amended or supplemented from time to time.


 


“Common Stock” means the
common stock of the Company, par value $0.01 per share.


 


“Company” means TVI
Corporation, a Maryland corporation.


 


“Exchange Act” means the
Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.


 


“Exercise Price” has the
meaning set forth in Section 2.


 


“Expiration Time” has the
meaning set forth in Section 3.


 


“Financing Agreement”
means that certain Amended and Restated Financing and Security Agreement dated February 22,
2008 (as amended by First Amendment to Amended and Restated Financing and
Security Agreement dated July 3, 2008 and as amended, restated, modified,
substituted, extended, and renewed from time to time) by and among the Company,
Capa Manufacturing Corp, Safety Tech International, Inc., Signature
Special Event Services, Inc., and Branch Banking and Trust Company.


 


“Forbearance Agreement”
means that certain Limited Forbearance Agreement, dated as of November 20,
2008, as amended, restated, modified, substituted, extended and renewed from
time to time, by and among the Company, Capa Manufacturing Corp, Safety Tech
International, Inc., Signature Special Event Services,


 

















 


Inc., and Branch Banking and Trust Company.


 


“Issue Date” means the
date of this Warrant.


 


“Market Price” means,
with respect to shares of Common Stock, on any given day, the last reported
sale price regular way or, in case no such reported sale takes place on such
day, the average of the last closing bid and ask prices regular way, in either
case on the principal national securities exchange on which shares of Common
Stock are listed or admitted to trading, or if not listed or admitted to
trading on any national securities exchange, the average of the closing bid and
ask prices as furnished by two members of the Financial Industry Regulatory
Authority, Inc. selected from time to time by the Company for that
purpose. “Market Price” shall be determined without reference to after hours or
extended hours trading. If shares of Common Stock are not listed and traded in
a manner that the quotations referred to above are available for the period
required hereunder, the Market Price per share of Common Stock shall be deemed
to be the fair market value per share of such security as determined in good
faith by the Board of Directors which determination shall be conclusive
evidence of such fair market value. For the purposes of determining the Market
Price on the “trading day” preceding, on or following the occurrence of an
event, (i) that trading day shall be deemed to commence immediately after
the regular scheduled closing time of trading on the New York Stock Exchange
or, if trading is closed at an earlier time, such earlier time and (ii) that
trading day shall end at the next regular scheduled closing time, or if trading
is closed at an earlier time, such earlier time (for the avoidance of doubt,
and as an example, if the Market Price is to be determined as of the last
trading day preceding a specified event and the closing time of trading on a
particular day is 4:00 p.m. and the specified event occurs at 5:00 p.m.
on that day, the Market Price would be determined by reference to such 4:00 p.m.
closing price).


 


“Obligations” has the
meaning ascribed to it in the Financing Agreement.


 


“Person” has the meaning
given to it in Section 3(a)(9) of the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act.


 


“SEC” means the U.S.
Securities and Exchange Commission.


 


“Securities Act” means
the Securities Act of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.


 


“Shares” has the meaning
set forth in Section 2.


 


“Term Loan” has the
meaning ascribed to it in the Financing Agreement.


 


“trading day” means (A) if
the shares of Common Stock are not traded on any national or regional
securities exchange or association or over-the-counter market, a business day
or (B) if the shares of Common Stock are traded on any national or
regional securities exchange or association or over-the-counter market, a
business day on which such relevant exchange or quotation system is scheduled
to be open for business and on which the shares of Common Stock (i) are
not suspended from trading on any national or regional securities exchange or
association or over-the-counter market for any period or periods aggregating
one half hour or longer, and (ii) have traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the shares of Common
Stock.


 


“Vesting Date” has the
meaning set forth in Section 13(A).


 


“Warrantholder” has the
meaning set forth in Section 2.


 


“Warrant” means this
Warrant, issued pursuant to the Forbearance Agreement.


 


2.                                      Number
of Shares; Exercise Price. This certifies that, for value received, the
Branch Banking and Trust Company, a North Carolina banking corporation, or its
permitted assigns (the “Warrantholder “) is entitled, upon the terms and
subject to the conditions hereinafter set forth, to acquire from the Company,
in whole or in part, up to an aggregate of 1,683,952 fully paid and
nonassessable shares of Common Stock, at a purchase price per share


 


2

















 


of Common Stock equal to $0.164 per share (the “Exercise Price”).  The number of shares of Common Stock that are
issuable upon exercise of this Warrant (the “Shares”) and the Exercise Price
are subject to adjustment as provided herein, and all references to “Common
Stock,” “Shares” and “Exercise Price” herein shall be deemed to include any
such adjustment or series of adjustments.


 


3.                                      Exercise
of Warrant; Term. Subject to Section 2, the right to purchase the
Shares represented by this Warrant is exercisable, in whole or in part by the
Warrantholder, at any time or from time to time after the first business day
immediately following the Vesting Date, but in no event later than 5:00 p.m.,
Eastern time on the tenth anniversary of the Vesting Date (the “Expiration Time”),
by (A) the surrender of this Warrant and Notice of Exercise annexed
hereto, duly completed and executed on behalf of the Warrantholder, at the
principal executive office of the Company located at the address set forth in Section 20
(or such other office or agency of the Company in the United States as it may
designate by notice in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and (B) payment of
the Exercise Price for the Shares thereby purchased:


 


(i)                      with the
consent of the Company (except as otherwise provided in this subparagraph (i) below),
by having the Company withhold, from the shares of Common Stock that would
otherwise be delivered to the Warrantholder upon such exercise, shares of
Common Stock issuable upon exercise of the Warrant equal in value to the
aggregate Exercise Price as to which this Warrant is so exercised based on the
Market Price of the Common Stock on the trading day on which this Warrant is
exercised and the Notice of Exercise is delivered to the Company pursuant to
this Section 3; provided, however,
that such consent of the Company shall not be required if a registration statement
under the Securities Act registering for resale the shares of Common Stock
issuable upon such exercise either (A) is not effective on the date of
such exercise or (B) if such registration statement is not effective on
the date of such exercise then, in addition to such failure to be effective,
such registration statement has not been effective for at least twenty (20) of
the thirty (30) business days immediately preceding the date of such exercise,
or


 


(ii)                       by
tendering in cash, by certified or cashier’s check payable to the order of the
Company, or by wire transfer of immediately available funds to an account
designated by the Company.


 


If the Warrantholder does
not exercise this Warrant in its entirety, the Warrantholder will be entitled
to receive from the Company within a reasonable time, and in any event not
exceeding three business days, a new warrant in substantially identical form
for the purchase of that number of Shares equal to the difference between the
number of Shares subject to this Warrant and the number of Shares as to which
this Warrant is so exercised.


 


4.                                      Issuance
of Shares; Authorization; Listing. Certificates for Shares issued upon
exercise of this Warrant will be issued in such name or names as the
Warrantholder may designate, subject (with respect to transfers of this
Warrant) to the limitations on transfer provided in Section 8, and will be
delivered to such named Person or Persons within a reasonable time, not to
exceed three business days after the date on which this Warrant has been duly
exercised in accordance with the terms of this Warrant. The Company hereby
represents and warrants that any Shares issued upon the exercise of this
Warrant in accordance with the provisions of Section 3 will be duly and
validly authorized and issued, fully paid and nonassessable and free from all
taxes, liens and charges (other than liens or charges created by the
Warrantholder, income and franchise taxes incurred in connection with the
exercise of this Warrant or taxes in respect of any transfer occurring
contemporaneously therewith). The Company agrees that the Shares so issued will
be deemed to have been issued to the Warrantholder as of the close of business
on the date on which this Warrant and payment of the Exercise Price are
delivered to the Company in accordance with the terms of this Warrant,
notwithstanding that the stock transfer books of the Company may then be closed
or certificates representing such Shares may not be actually delivered on such
date. The Company will take all actions necessary to make available the Shares
issuable upon exercise of this Warrant at any time, including amending its
Charter to increase the number of authorized shares of Common Stock.  The Company will procure, at its sole
expense, the listing of the Shares issuable upon exercise of this Warrant at
any time, subject to issuance or notice of issuance, on all principal stock
exchanges, if any, on which the Common Stock is then listed or traded.


 


5.                                      No
Fractional Shares or Scrip. No fractional Shares or scrip representing
fractional Shares shall be issued upon any exercise of this Warrant. In lieu of
any fractional Share to which the Warrantholder would otherwise be entitled,
the Warrantholder shall be entitled to receive a cash payment equal to the
Market Price of the Common Stock on the last trading day preceding the date of
exercise less the pro-rated Exercise Price for such


 


3

















 


fractional share.


 


6.                                      No
Rights as Stockholders; Transfer Books. This Warrant does not entitle the
Warrantholder to any voting rights or other rights as a stockholder of the
Company prior to the date of exercise hereof. The Company will at no time close
its transfer books against transfer of this Warrant in any manner which
interferes with the timely exercise of this Warrant.


 


7.                                      Charges,
Taxes and Expenses. Issuance of certificates for Shares to the
Warrantholder upon the exercise of this Warrant shall be made without charge to
the Warrantholder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company.


 


8.                                      Transfer/Assignment.


 


(A)                              Subject
to compliance with clauses (B) and (C) of this Section 8, this
Warrant and all rights hereunder are transferable, in whole or in part
(provided that in the case of a partial transfer of this Warrant, the number of
Shares subject to the partial transfer shall not be less than 420,988), upon
the books of the Company by the registered holder hereof in person or by duly
authorized attorney, and a new warrant shall be made and delivered by the
Company, of the same tenor and date as this Warrant but registered in the name
of the transferee, upon surrender of this Warrant, duly endorsed, to the
principal executive office of, or agency designated by, the Company set forth
in Section 19. All expenses (other than stock transfer taxes) and other
charges payable in connection with the preparation, execution and delivery of
the new warrants pursuant to this Section 8 shall be paid by the Company.


 


(B)                                Unless
the Company has failed to pay Obligations (as that term is defined in the
Financing Agreement) in full upon the acceleration of the Obligations or upon
the maturity of the Obligations (in the case of which failure, this clause (B) does
not apply), if the Warrantholder proposes to transfer this Warrant, in whole or
in part, the Warrantholder shall promptly give written notice (the “Transfer
Notice”) to the Company of such transfer. 
The Transfer Notice shall describe in reasonable detail the proposed
transfer including, without limitation, the number of shares covered by the
portion of the Warrant to be transferred, the nature of such transfer, the
form, amount and timing of the consideration to be paid, and the name and
address of each prospective purchaser or transferee.  For a period of ten (10) business days
following receipt of the Transfer Notice, the Company shall have the right to
purchase the Warrant, or the part thereof, subject to such notice on the same
terms and conditions as set forth therein. 
The Company’s purchase right shall be exercised by written notice signed
by an officer of the Company (the “Company Notice”) and delivered to the
Warrantholder within such ten (10) business day period.  The Company shall effect the purchase of the
Warrant or part thereof to be transferred on the terms set forth in the
Transfer Notice. If Company does not deliver the Company Notice within such ten
(10) business day period or if the Company fails to effect the purchase as
required, then the Warrantholder within such ten (10) business day
thereafter shall effect the transfer strictly in the manner set forth in the
Transfer Notice or, if it does not, the Transfer Notice shall be null and void
and no other transfer of the Warrant or part thereof shall be made unless the
requirement of this clause (B) have been met with respect to such other
transfer.


 


(C)                                Neither
the securities represented by this Warrant nor the securities issuable upon
exercise of this Warrant have been registered under the Securities Act and such
securities may be resold only if registered pursuant to the Securities Act or
if an exemption from registration is available. Further, the securities
issuable upon exercise of this Warrant may be issued and sold to the holder
hereof only if the issuance thereof has been registered under the Securities
Act or an exemption from registration is available.


 


9.                                      Exchange
and Registry of Warrant. This Warrant is exchangeable, upon the surrender
hereof by the Warrantholder to the Company, for a new warrant or warrants of
like tenor and representing the right to purchase the same aggregate number of
Shares. The Company shall maintain a registry showing the name and address of
the Warrantholder as the registered holder of this Warrant. This Warrant may be
surrendered for exchange or exercise in accordance with its terms, at the
principal executive office of the Company, and the Company shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such
registry.


 


10.                                Loss,
Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence 


 


4

















 


reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and in the
case of any such loss, theft or destruction, upon receipt of a bond, indemnity
or security reasonably satisfactory to the Company, or, in the case of any such
mutilation, upon surrender and cancellation of this Warrant, the Company shall
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
aggregate number of Shares as provided for in such lost, stolen, destroyed or
mutilated Warrant.


 


11.                                Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall not be a
business day, then such action may be taken or such right may be exercised on
the next succeeding day that is a business day.


 


12.                                Public
Information.   The Company covenants
that it will use its commercially reasonable efforts to timely file all reports
and other documents required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations promulgated by the SEC
thereunder unless the Company is not required to file such reports.  The Company shall have no obligation to
maintain the listing of its Common Stock on any exchange or quotation system or
to continue to remain subject to the reporting requirements of the Exchange
Act. The Company will use commercially reasonable efforts to take such further
action as any Warrantholder may reasonably request, in each case to the extent
required from time to time to enable such holder to, if permitted by the terms
of this Warrant, sell this Warrant without registration under the Securities
Act within the limitation of the exemptions provided by (A) Rule 144
under the Securities Act, as such rule may be amended from time to time,
or (B) any successor rule or regulation hereafter adopted by the
SEC.  If the Company is not required to
file reports under the Exchange Act, the Company will deliver to the
Warrantholder (a) within 120 days after each fiscal year end, annual
financial statements and (b) within forty five (45) days after the close
of each fiscal quarter of the Company, 
quarterly financial statements, which financial statements shall be meet
the requirements for financial statements set forth in Section 6.1.1 (a) and
(c) of the Financing Agreement (even though the Financing Agreement may no
longer be in effect).


 


13.                                Adjustments
and Other Rights. The Exercise Price and the number of Shares issuable upon
exercise of this Warrant shall be subject to adjustment from time to time as
follows:


 


(A)                              Adjustments
Related to the Term Loan.  The number
of Shares issuable upon exercise of this Warrant shall be reduced by (i) 420,988
shares if the Term Loan balance is reduced by 50% of the balance on the Issue
Date on or before July 31, 2009, (ii) 841,976 shares (including any
prior reduction under clause (i)) if the Term Loan balance is paid in full on
or before October 31, 2009, or (iii) 100% if the Obligations are paid
in full on or before April 30, 2010 (the “Vesting Date”); provided, however, that the Warrantholder
shall not be entitled to the reductions under clause (i) or clause (ii) unless
on the date of determination (x) no Event of Default (as defined in the
Financing Agreement) exists and (y) the Warrantholder has positive Availability
(as that term is defined in the Financing Agreement) after excluding from the
Borrowing Base (as that term is defined in the Financing Agreement) accounts
and inventory that were not of the type eligible for inclusion in Eligible
Receivables and Eligible Inventory (as such terms are defined in the Financing
Agreement), respectively, on the Closing Date (as defined in the Financing
Agreement).


 


(B)                                Stock
Splits, Subdivisions, Reclassifications or Combinations. If, after the
Issue Date, the Company shall (i) declare and pay a dividend or make a
distribution on its Common Stock in shares of Common Stock, (ii) subdivide
or reclassify the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding shares of Common
Stock into a smaller number of shares, the number of Shares issuable upon
exercise of this Warrant at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Warrantholder
after such date shall be entitled to purchase the number of shares of Common
Stock that such holder would have owned or been entitled to receive in respect
of the shares of Common Stock subject to this Warrant after such date had this
Warrant been exercised immediately prior to such date. In such event, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted to the number obtained by dividing (x) the
product of (1) the number of Shares issuable upon the exercise of this
Warrant before such adjustment and (2) the Exercise Price in effect
immediately prior to


 


5

















 


the record or effective date, as the case may be, for
the dividend, distribution, subdivision, combination or reclassification giving
rise to this adjustment by (y) the new number of Shares issuable upon
exercise of this Warrant determined pursuant to the immediately preceding
sentence.


 


(C)                                Adjustments
for Certain Dilutive Issuances.


 


(i)                                    (X)                               If
the Company shall issue, after the Issue Date, any Additional Stock (as defined
below) for a consideration per share less than the Exercise Price in effect
immediately prior to the issuance of such Additional Stock, the Exercise Price
in effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price equal to the
price paid per share for such Additional Stock.


 


(Y)                                In
the case of the issuance of Common Stock for cash, the consideration shall be
deemed to be the amount of cash paid therefore before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in connection with the issuance and
sale thereof.  In the case of the
issuance of the Common Stock for a consideration in whole or in part other than
cash, the consideration other than cash shall be deemed to be the fair value
thereof as determined by the Board of Directors irrespective of any accounting
treatment.


 


(Z)                                In
the case of the issuance (whether before, on or after the Issue Date) of
options to purchase or rights to subscribe for Common Stock, securities by
their terms convertible into or exchangeable for Common Stock or options to
purchase or rights to subscribe for such convertible or exchangeable
securities, the following provisions shall apply for all purposes of this
subsection 13(C)(i):


 


(1)                                  The
shares of Common Stock deliverable upon exercise of such options to purchase or
rights to subscribe for Common Stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subsections 13(C)(i)(Y)),
if any, received by the Company upon the issuance of such options or rights
plus the minimum exercise price provided in such options or rights for the
Common Stock covered thereby.


 


(2)                                   The
shares of Common Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration, if any, received by
the Company for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued dividends), plus
the minimum additional consideration, if any, to be received by the Company
upon the conversion or exchange of such securities or other exercise of any
related options or rights (the consideration in each case to be determined in
the manner provided in subsections 13(C)(i)(Y)).


 


(ii)                                      “Additional
Stock” shall mean any shares of Common Stock issued (or deemed to have been issued
pursuant to subsection 13(C)(i)(Z)) by the Company after the Issue Date other
than shares of Common Stock issuable or issued to employees, directors, and
consultants of the Company directly or pursuant to a stock option plan,
restricted stock plan or other equity incentive plan approved by Board of
Directors of the Company.


 


(D)                                Other
Distributions.  In the event the
Company shall declare a distribution payable to holders of Common Stock in any
of its assets or debt securities or any rights or warrants to purchase debt
securities, assets, or other securities of the Company, the Exercise Price
shall be adjusted as follows: the Exercise Price immediately before such
distribution shall be multiplied by a fraction, the numerator of which shall be
(1) the current Market Price per share of Common Stock on the record date
of the other distribution (“Other Distribution Record Date”) minus (2) the
fair market value on the Other Distribution Record Date of the assets,
securities, rights or warrants applicable to one share of Common Stock; the 


 


6

















 


denominator of which shall be the current Market Price
per share of Common Stock on the Other Distribution Record Date.  The Board of Directors of the Company shall
make a reasonable determination of the fair market value.  This subsection (D) does not apply to
any transactions referred to in subsection (B) of this Section 13.


 


(E)                                  Notice
of Business Combinations. If the Company shall to propose to enter into
a Business Combination, at the same time the Company gives any notice to
shareholders of, and in any event least ten (10) days before, the closing
of the proposed Business Combination, the Company shall provide the
Warrantholder with written notice thereof. 
This notice shall set forth:  (i) the
name and address of the proposed parties in the transaction; (ii) the
proposed structure of the Business Combination; (iii) the proposed kind
and amount of stock, securities or the property receivable and the terms and
conditions of payment in connection with the Business Combination; (iv) the
number of outstanding shares of capital stock of the Company at such time, and (v) such
facts with respect to the Business Combination as shall be reasonably necessary
to indicate the kind and amount of stock, securities or the property receivable
as a result of such Business Combination if the Warrantholder were to exercise
its rights under this Warrant.


 


(F)                                  Rounding
of Calculations; Minimum Adjustments. All calculations under this Section 13
shall be made to the nearest one-tenth (1/10th) of a cent or to the
nearest one-hundredth (1/100th) of a share, as the case may be. Any
provision of this Section 13 to the contrary notwithstanding, no
adjustment in the Exercise Price or the number of Shares into which this
Warrant is exercisable shall be made if the amount of such adjustment would be
less than $0.01 or one-tenth (1/10th) of a share of Common Stock, but any
such amount shall be carried forward and an adjustment with respect thereto
shall be made at the time of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts so carried forward,
shall aggregate $0.01 or one-tenth (1/10th) of a share of Common Stock, or
more.


 


(G)                                 Timing
of Issuance of Additional Common Stock Upon Certain Adjustments. In any
case in which the provisions of this Section 13 shall require that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to
the Warrantholder of this Warrant exercised after such record date and before
the occurrence of such event the additional shares of Common Stock issuable
upon such exercise by reason of the adjustment required by such event over and
above the shares of Common Stock issuable upon such exercise before giving
effect to such adjustment and (ii) paying to such Warrantholder any amount
of cash in lieu of a fractional share of Common Stock; provided,
however, that the Company upon request shall deliver to such
Warrantholder a due bill or other appropriate instrument evidencing such
Warrantholder’s right to receive such additional shares, and such cash, upon
the occurrence of the event requiring such adjustment.


 


(H)                                Statement
Regarding Adjustments. Whenever the Exercise Price or the number of Shares
into which this Warrant is exercisable shall be adjusted as provided in this Section 13,
the Company shall forthwith file at the principal executive office of the
Company a statement showing in reasonable detail the facts requiring such
adjustment and the Exercise Price that shall be in effect and the number of
Shares into which this Warrant shall be exercisable after such adjustment, and
the Company shall also cause a copy of such statement to be sent by mail, first
class postage prepaid, to each Warrantholder at the address appearing in the
Company’s records.


 


(I)                                     Notice
of Adjustment Event. In the event that the Company shall propose to take
any action of the type described in this Section 13 (but only if the
action of the type described in this Section 13 would result in an
adjustment in the Exercise Price or the number of Shares into which this
Warrant is exercisable or a change in the type of securities or property to be
delivered upon exercise of this Warrant), the Company shall give notice to the
Warrantholder, in the manner set forth in Section 13(I), which notice
shall specify the record date, if any, with respect to any such action and the
approximate date on which such action is to take place. Such notice shall also
set forth the facts with respect thereto as shall be reasonably necessary to
indicate the effect on the Exercise Price and the number, kind or class of
shares or other securities or property that shall be deliverable upon exercise
of this Warrant. In the case of any action that would require the fixing of a
record date, such notice shall be given at least 10 days prior to the date so
fixed, and in case of all other action, such notice shall be given at least 15
days prior to the taking of such


 


7

















 


proposed action. Failure
to give such notice, or any defect therein, shall not affect the legality or
validity of any such action.


 


(J)                                      Proceedings
Prior to Any Action Requiring Adjustment. As a condition precedent to the
taking of any action that would require an adjustment pursuant to this Section 13,
the Company shall take any action that may be necessary, including obtaining
regulatory, securities exchange or stockholder approvals or exemptions, in
order that the Company may thereafter validly and legally issue as fully paid
and nonassessable all shares of Common Stock that the Warrantholder is entitled
to receive upon exercise of this Warrant pursuant to this Section 13.


 


(K)                                  Adjustment
Rules. Any adjustments pursuant to this Section 13 shall be made
successively whenever an event referred to herein shall occur. If an adjustment
in Exercise Price made hereunder would reduce the Exercise Price to an amount
below par value of the Common Stock, then such adjustment in Exercise Price
made hereunder shall reduce the Exercise Price to the par value of the Common
Stock.


 


14.                                 No
Avoidance. The Company will not, by amendment of its Charter or through any
reorganization, transfer of all or substantially all of the assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company; provided,
for the sake of clarity, a Business Combination for which the Company has
complied with the requirements of Section 13(E) (Business
Combinations) does not violate this Section.


 


15.                                 Governing
Law. This Warrant will be governed by and
construed in accordance with the laws of the State of Maryland. To the extent
permitted by applicable law, each of the Company and the Warrantholder hereby
unconditionally waives trial by jury in any legal action or proceeding relating
to this Warrant or the transactions contemplated hereby or thereby.


 


16.                                 Binding
Effect. This Warrant shall be binding upon any successors or assigns of the
Company.


 


17.                                 Amendments.
This Warrant may be amended and the observance of any term of this Warrant may
be waived only with the written consent of the Company and the Warrantholder.


 


18.                                 Prohibited
Actions. The Company agrees that it will not take any action that would
entitle the Warrantholder to an adjustment of the Exercise Price if the total
number of shares of Common Stock issuable after such action upon exercise of
this Warrant, together with all shares of Common Stock then outstanding and all
shares of Common Stock then issuable upon the exercise of all outstanding
options, warrants, conversion and other rights, would exceed the total number
of shares of Common Stock then authorized by its Charter.


 


19.                                 Notices.
Any notice, request, instruction or other document to be given hereunder by any
party to the other will be in writing and will be deemed to have been duly
given (a) on the date of delivery if delivered personally, or by
facsimile, upon confirmation of receipt, or (b) on the second business day
following the date of dispatch if delivered by a recognized next day courier
service. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the
party to receive such notice:


 


	
  (A)

  	
  if to the Company:

  
	
   

  	
   

  
	
   

  	
   

  	
  TVI Corporation

  
	
   

  	
   

  	
  7100 Holladay-Tyler Road

  
	
   

  	
   

  	
  Glenn Dale, MD 20769

  
	
   

  	
   

  	
  Attention: Chief Executive Officer

  
	
   

  	
   

  	
  Facsimile: (301) 352-8818

  



 


8

















 


	
   

  	
   

  	
  With copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Duane Morris LLP

  
	
   

  	
   

  	
  30 South 17th Street

  
	
   

  	
   

  	
  Philadelphia, Pennsylvania 19010

  
	
   

  	
   

  	
  Richard A. Silfen, Esq.

  
	
   

  	
   

  	
  Facsimile: (215) 689-4385

  
	
   

  	
   

  	
   

  
	
  (B)

  	
  if to the Warrantholder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Branch Banking and Trust Company

  
	
   

  	
   

  	
  8200 Greensboro Drive, Suite 800

  
	
   

  	
   

  	
  McLean, Virginia 22102

  
	
   

  	
   

  	
  Attention:                                         Derek T.
  Whitwer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Miles & Stockbridge P.C.

  
	
   

  	
   

  	
  10 Light Street

  
	
   

  	
   

  	
  Baltimore, MD 21202

  
	
   

  	
   

  	
  Attn:                    Frederick W. Runge, Jr.

  



 


20.                                Entire
Agreement. This Warrant and the Forbearance Agreement (including all
documents incorporated therein), contain the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or undertakings with respect thereto.


 


The Company’s signature
is on the following page.  The rest of
this page is intentionally left blank.


 


9

















 


COMPANY’S SIGNATURE PAGE
TO

WARRANT TO PURCHASE COMMON STOCK


 


IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by a duly authorized
officer.


 


Dated:  November 20, 2008


 


 


	
  TVI CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Harley Hughes

  	
   

  
	
  Name: Harley Hughes

  	
   

  
	
  Title: President and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Sherri Voelkel

  	
   

  
	
  Name: Sherri Voelkel

  	
   

  
	
  Title: Senior Vice President, Chief Financial
  Officer and Secretary

  	
   

  
				



 


[Signature
Page to Warrant]


 

















 


[Form of
Notice of Exercise]


 


Date:              


 


TO: TVI Corporation (the “Company”)


 


RE: Election to Purchase Common Stock


 


The undersigned, pursuant
to the provisions set forth in the attached Warrant, hereby subscribes for and
purchases the number of shares of the Common Stock set forth below covered by
such Warrant, or for all of the shares issuable on the date hereof upon
exercise of such Warrant if this Notice of Exercise does not specify the number
of shares of Common Stock for which the undersigned so subscribes and
purchases. The undersigned, in accordance with Section 3 of the Warrant,
hereby agrees to pay the aggregate Exercise Price for such shares of Common
Stock in the manner set forth below.  To
the extent that the Exercise Price A new warrant evidencing the remaining
shares of Common Stock covered by such Warrant, but not yet subscribed for and
purchased, if any, should be issued in the name set forth below.


 


Number of Shares of Common Stock:


 


Method of Payment of Exercise Price:


 


(Check
the appropriate box below to indicate method of payment of Exercise Price.  If no box is checked, then such Warrant shall
be deemed to have been exercised pursuant to Section 3(ii) of Such
Warrant; provided, however, that
no exercise of such Warrant shall be effective unless and until the Company has
received payment in full, in the manner prescribed by Section 3(ii) of
such Warrant, of the aggregate Exercise Price payable with respect to the
number of shares of Common Stock subscribed for and purchased by this Notice of
Exercise.)


 


o                                   Cashless
exercise pursuant to Section 3(i) of such Warrant; or


 


Note:                  If the undersign
indicates “cashless exercise” pursuant to Section 3(i) of such
Warrant, then the Warrant shall not be
effective unless and until consent of the Company to such method of
payment is indicated by execution of this Notice of Exercise on behalf of the
Company in the space provided below, unless such consent of the Company is not
required by Section 3(i) of such Warrant.


 


o                                   Cash
exercise pursuant to Section 3(ii) of such Warrant.


 


[Signature
page follows]


 


11

















 


The undersigned hereby
represents that the undersigned is an “accredited investor” as defined in
Regulation D under the Securities Act of 1933, as amended.


 


	
  Holder:

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


 


[Consent by the Company to “Cashless Exercise” of such Warrant pursuant
to Section 3(i) of such Warrant (to the Extent Required by Section 3(i) of
such Warrant):


TVI CORPORATION


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
  ]

  



 


12