Document:

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                                                                    EXHIBIT 10.5

                         REAL ESTATE PURCHASE AGREEMENT
                     5.683 ACRES, TUTTLE CROSSING BOULEVARD

         DOMINION HOMES, INC., an Ohio corporation ("Buyer"), with an address of
5501 Frantz Road, Dublin, Ohio 43017, agrees to buy and CRAFTON PROPERTIES,
INC., an Ohio corporation ("Seller"), with an address of 3360 Tremont Road,
Columbus, Ohio 43221, agrees to sell, upon the terms hereinafter set forth, the
following real estate located in the State of Ohio, County of Franklin and City
of Dublin:

         Being two parcels containing 3.002 acres (the "North Parcel") and 2.681
         acres (the "South Parcel"), respectively, acres located on the north
         side of Tuttle Crossing Boulevard, as more particularly described or
         depicted on Exhibit A attached hereto and incorporated herein, together
         with all easements, rights and appurtenances thereto, all buildings and
         improvements situated thereon and all of Seller's rights, title and
         interest in all public ways adjoining the same. The North Parcel and
         the South Parcel are sometimes hereinafter referred to as the
         "Premises."

         1. Purchase Price and Expense Reimbursement. The purchase price of the
Premises shall be One Million Four Hundred Thousand Dollars ($1,400,000.00),
payable in cash at closing. The purchase price shall be allocated as follows:
$550,000.00 for the North Parcel and $850,000.00 for the South Parcel. In
addition, at closing Buyer shall reimburse Seller for any utility tap fees,
building permits or other expenses incurred by Seller in connection with its
development of the Premises, provided that the benefit of such expense is
entirely transferred to Buyer and that Seller provides Buyer with sufficient
documentation to substantiate such expense and benefit to Buyer's satisfaction.

         2. Possession and Closing. Seller shall deliver exclusive possession of
the Premises to Buyer at the closing. The closing shall be held within thirty
(30) days after all conditions of this Agreement are satisfied or waived. The
closing shall be held in Columbus, Ohio, as mutually agreed by the parties.

         3. Deposit. Within 10 days after expiration of the Investigation Period
(as hereinafter defined), Buyer agrees to deliver to Seller, as security for
Buyer's obligation to purchase the Premises, the amount of $10,000.00 (the
"Deposit"). The Deposit shall be held and returned or retained by Seller as
follows: (a) if this Agreement is terminated by Buyer pursuant to the provisions
of Section 6 or Section 7, the Deposit shall be returned to Buyer on the date of
termination; (b) if Seller defaults, or if any representations and warranties of
Seller set forth in this Agreement are untrue, the Deposit shall be returned to
Buyer, which return shall not in any way prejudice the rights of Buyer in any
action for damages or specific performance; (c) if Buyer purchases the Premises,
the Deposit shall be returned to Buyer or credited against the purchase price at
the closing; or (d) if for any reason, through no default of Seller, Buyer fails
to close on the Premises as required hereunder (after all conditions to closing
are satisfied or waived), the Deposit shall be retained by Seller, which
retention shall not in any way prejudice the rights of Seller in any action for
damages or specific performance.

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         4. Feasibility. Buyer shall have 60 days from acceptance hereof
(hereinafter the "Investigation Period") to conduct such physical examinations
of the Premises and such feasibility studies as Buyer deems necessary. Such
examinations and studies shall include, without limitation, examinations and
studies to determine that: (a) no portion of the Premises constitutes wetlands
or a final delineation of any wetland areas, under any applicable environmental
laws or regulations including, but not limited to, the Clean Water Act; (b) the
soil conditions on the Premises are adequate for construction of Buyer's
proposed office building(s) using normal methods of construction; (c) the
Premises does not contain any hazardous or toxic waste materials in violation of
any applicable environmental laws or regulations including, but not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act; (d)
all necessary public utilities, including, but not limited to, water, sanitary
sewer, gas, electric, storm sewer and drainage facilities are or can be made
available in sufficient quantities and capacities and at reasonable cost to
service Buyer's intended overall development; and (e) Buyer's intended
development of the Premises is economically feasible. If, within the
Investigation Period, Buyer shall notify Seller in writing that this Agreement
is terminated, then thereafter neither party shall have any further obligation
hereunder.

         5. Condition to Closing. Notwithstanding any provision contained
herein, Buyer's obligation to purchase the Premises is contingent upon Buyer,
within the period of time commencing upon Seller's acceptance hereof and ending
on December 31, 2002 (the "Contingency Period"), obtaining all governmental
approvals and permits as deemed necessary by Buyer for it to commence
construction of its proposed office building(s), including, without limitation,
final approval of Buyer's development plan and issuance of all requested
building permits and utility tap permits. Seller shall fully cooperate with
Buyer as necessary to satisfy the foregoing condition, and shall execute and
deliver, or join with Buyer in executing and delivering, such applications for
licenses, variances, approvals, permits and consents from governmental bodies,
utility companies, financial institutions and other entities, and shall take
such other actions, as Buyer may reasonably request in order to proceed with and
fully implement Buyer's intended development, including dedication of any
required right-of-way.

         6. Satisfaction or Waiver of Conditions. In the event that the
condition set forth in Section 5 is not satisfied or waived within the
Contingency Period, Buyer, at its option, may elect to terminate this Agreement,
to waive said condition, or to continue to attempt to satisfy said condition, as
follows:

                  (a) Termination. If Buyer elects to terminate this Agreement,
         Buyer shall so notify Seller in writing, and thereafter neither party
         shall have any further obligation hereunder, except as provided in
         Section 3 with respect to return of the Deposit.

                  (b) Waiver. If Buyer elects to waive said condition, the
         purchase and sale of the Premises shall be closed as provided in
         Section 2.

                  (c) Extension. If Buyer elects to continue to attempt to
         satisfy said condition, prior to expiration of the Contingency Period
         Buyer shall deposit with Seller the sum of $5,000.00 (the "Additional
         Deposit") and thereby the Contingency Period shall be extended for an
         additional period of 60 days (the "Extension Period"). In the event
         that the foregoing condition is not satisfied or waived within the
         Extension Period, if any,

                                      -2-

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         Buyer, at its option, may elect either to terminate this Agreement, as
         provided in Section 6(a), to waive said condition, as provided in
         Section 6(b), or to continue to attempt to satisfy said condition. If
         Buyer elects to continue to attempt to satisfy said condition, prior to
         expiration of the Extension Period Buyer shall deposit with Seller the
         additional sum of $5,000.00 and thereby the Contingency Period shall be
         extended for a second additional period of 60 days (the "Second
         Extension Period"). In the event that the foregoing condition is not
         satisfied or waived within the Second Extension Period, if any, Buyer,
         at its option, may elect either to terminate this Agreement, as
         provided in Section 6(a), or to waive said condition, as provided in
         Section 6(b). The deposit(s) delivered to Seller in connection with the
         Extension Period and Second Extension Period, if any, shall be referred
         to herein, collectively, as the "Additional Deposit." The Additional
         Deposit shall be non-refundable, except in the event that Buyer
         terminates this Agreement pursuant to the provisions of Section 7 or
         Seller defaults or any representations and warranties of Seller set
         forth in this Agreement are untrue. At the closing, the Additional
         Deposit shall neither be returned to Buyer nor credited against the
         purchase price.

         7. Evidence of Title. Within thirty (30) days after acceptance hereof,
Seller shall furnish Buyer with a title insurance commitment for the Premises in
the amount of the purchase price of the Premises. The title insurance commitment
shall be issued by a title insurance company selected by Seller and reasonably
acceptable to Buyer (the "Title Company") and shall be updated with an
endorsement at the closing. Such commitment and endorsement shall show in Seller
marketable title in fee simple, free and clear of all liens and encumbrances
except: (a) those created by or assumed by Buyer; (b) those specifically set
forth in this Agreement; (c) the lien of real estate taxes and assessments, if
any, not due at the time of conveyance; (d) zoning ordinances; (e) legal
highways; and (f) covenants, restrictions, conditions and easements of record
which in Buyer's judgment will not interfere with its intended use of the
Premises or its intended overall development. Based on such commitment and
endorsement, at the closing Seller shall provide Buyer with an owner's title
insurance policy in the amount of the purchase price of the Premises. Seller
shall pay for the cost of owner's title insurance. Buyer shall pay any
additional costs incurred in connection with mortgagee title insurance issued
for the protection of Buyer's lender.

         If title to all or part of the Premises is unmarketable, as determined
by Ohio law with reference to the Ohio State Bar Association's Standards of
Title Examination, or is subject to liens, encumbrances, easements, conditions,
restrictions or encroachments other than those excepted in this Agreement,
Seller shall use its best efforts to, within thirty (30) days after written
notice thereof, remedy or remove any such defect, lien, encumbrance, easement,
condition, restriction or encroachment or obtain title insurance without
exception therefor; provided, however, that if such title defect cannot be cured
within said period and if Buyer refuses to waive same, this Agreement will
terminate at Buyer's option.

         At the closing, Seller shall execute and deliver to Buyer and the title
insurance company an owner's affidavit as to mechanics' and materialmen's liens,
persons in possession of the Premises, and similar title matters required by the
Title Company as a condition of its deletion of the standard printed general
exceptions from the title policy. Seller shall apply the proceeds of

                                      -3-

<PAGE>

the closing to effectuate the release of any monetary encumbrances set forth in
the title insurance commitment.

         8. Seller's Representations and Warranties. Seller's representations
and warranties contained elsewhere in this Agreement and the following
representations and warranties shall survive the closing and passing of title to
Buyer whether made in this section or elsewhere herein:

                  (a) There are no actions, suits or proceedings, pending or
         threatened against Seller with respect to the Premises or affecting any
         of its rights with relation to the Premises, at law or in equity, or
         before any federal, state, municipal or other governmental agency or
         instrumentality, nor is Seller aware of any facts which to its
         knowledge might result in any action, suit or proceeding, nor is Seller
         in default with respect to any order or decree of any court or of any
         governmental agency or instrumentality.

                  (b) There are no rights of possession to the Premises
         outstanding in anyone except Seller. No part of the Premises is subject
         to a lease agreement, either oral or written. No part of the Premises
         is subject to a right of first refusal or other right which Seller or
         any predecessor in title, may have granted to other persons or parties
         as to the Premises, or any part thereof, whether written or verbal.

                  (c) No notice, either oral or written, has been received by
         Seller that any governmental or quasi-governmental agency or authority
         intends to commence construction of any special or off-site
         improvements or impose any special or other assessment against the
         Premises or any part thereof.

                  (d) Seller has full authority and capacity to enter into this
         Agreement and to execute all documents contemplated hereby. Seller's
         execution, delivery and performance of this Agreement will not violate
         the provisions of any agreement to which Seller is a party or by which
         it is bound.

                  (e) Seller shall transfer the Premises to Buyer in its present
         condition, excepting normal wear between the date hereof and the
         closing.

                  (f) There are no agreements, commitments or representations
         between Seller or any of Seller's predecessors in title and any
         governmental, public or quasi-public agency which would impose any
         obligation or require Buyer to pay any sums to any other party.

                  (g) Seller has not used the Premises for the disposal of any
         hazardous or toxic waste materials, nor to the best of Seller's
         knowledge and belief has the Premises ever contained nor do they
         currently contain any hazardous or toxic waste materials, in violation
         of any environmental laws, nor has any "clean-up" of the Premises
         occurred pursuant to any environmental laws which could give rise to:
         (i) liability on the part of Buyer to reimburse any governmental
         authority for the costs of such clean-up, or (ii) a

                                       -4-

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         lien or encumbrance on the Premises. Seller has received no notice from
         any governmental authority with respect to any violation(s) of any
         environmental law or clean-up on the Premises, nor is Seller aware of
         any such contemplated notices, nor is Seller aware of any environmental
         studies or reports conducted regarding the Premises which have not been
         delivered to Buyer.

                  (h) Neither the Premises nor any part thereof is within a
         special assessment district, nor has any application been made or
         submitted for the creation thereof or annexation thereby.

                  (i) To the best of Seller's knowledge, no portion of the
         Premises constitutes wetlands or a final delineation of any wetland
         areas, under any applicable environmental laws or regulations
         including, but not limited to, the federal Clean Water Act.

                  (j) Seller has not filed for relief as a debtor under any
         state receivership laws or federal bankruptcy laws.

                  (k) The Premises has been finally and unappealably zoned so as
         to permit Buyer's construction on the Premises of Buyer's proposed
         office building(s) and, except as set forth in the approved zoning text
         attached hereto as Exhibit B and this Agreement, no other development
         restrictions have been placed upon the Premises.

                  (l) All representations and warranties of Seller contained in
         this Agreement, whether under this section or elsewhere, shall be true
         as at the date of the closing as if those representations and
         warranties were made at such time, and shall survive the closing
         hereunder. If requested, Seller agrees to execute and deliver to Buyer
         an affidavit upon closing certifying that all of the representations
         and warranties made in this Agreement are true and accurate as of that
         date.

         9. Tests and Engineering Studies. For and during the entire period that
this Agreement is in effect, Buyer shall, without cost or expense to Seller,
have the right through Buyer's associates, employees and/or contractors and
agents, to enter upon the Premises for the purpose of surveying, inspecting,
making contour surveys, temporary excavations (to be refilled by Buyer as
promptly as the same shall have served their purpose), test borings and for any
other purposes required by Buyer. Buyer agrees to return the Premises after any
such tests to as nearly as possible its original condition. Further, Buyer
agrees to indemnify and hold Seller harmless from any damages to persons or
property arising out of the actions of Buyer as a result of completing such
studies on the Premises.

         10. Deed. At the closing, Seller shall convey to Buyer marketable title
in fee simple by transferable and recordable general warranty deed, free and
clear of all liens and encumbrances not excepted by this Agreement.

         11. Taxes and Assessments. At the closing, Seller shall pay or credit
on the purchase price all delinquent taxes, including penalties and interest,
all agricultural recoupment charges (CAUV) for years through and including the
year of closing (whether or not presently due and

                                       -5-

<PAGE>

payable), and all assessments which are a lien on the date of contract. At the
closing, Seller shall also pay or credit on the purchase price all other unpaid
real estate taxes which are a lien on the Premises for years prior to closing
and a portion of such taxes for the year of closing prorated through the date of
closing based on a 365-day year and, if undetermined, on the most recently
available tax rate and valuation; provided, however, that the parties shall
adjust and reprorate such tax prorations based upon final and unappealable real
estate tax bills. Such adjustment shall be made within 10 days after demand by
the party to whom a credit is due. Seller represents and warrants that it has
not received notice from a public authority of any future improvements of which
a part of the cost may be assessed against the Premises.

         12. Assignment. Buyer may assign all of its rights and obligations
hereunder to a nominee of its choice without Seller's consent. Seller may assign
all of its rights and obligations hereunder only with Buyer's written consent.

         13. Tax-Deferred Exchange. Buyer hereby consents to Seller's assignment
of this Agreement to a qualified intermediary of Seller's choice for the purpose
of effectuating a tax-deferred property exchange pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, and Buyer otherwise agrees to
cooperate with Seller and the intermediary in such exchange, provided that
Seller or the qualified intermediary shall pay any incremental transfer taxes,
recording fees or similar closing costs resulting from such exchange.

         14. Notice. Any notice or other writing required under this Agreement
shall be deemed given when delivered to that party's address as set forth below
or when mailed by certified United States mail, postage prepaid, return receipt
requested, or via national overnight carrier, addressed as follows:

            (a)      If to Seller:

                     Crafton Properties, Inc.
                     Attn:  Francis E. Barnes
                     3360 Tremont Road
                     Columbus, Ohio 43221

            (b)      If to Buyer:                    With Copy to:

                     Dominion Homes, Inc.            Dominion Homes, Inc.
                     Attn:David S. Borror            Attn: Joseph A. Sugar, Esq.
                     5501 Frantz Road                5501 Frantz Road
                     Dublin, Ohio 43017-0766         Dublin, Ohio 43017-0766

         15. Brokers. Each party represents to the other that there is no broker
or other person who may be entitled to a commission or similar fee in connection
with this transaction. Each party agrees to defend, indemnify and save harmless
the other from and against all other claims for brokerage or other commissions
or similar fees or compensation for any service rendered at its instance in
connection with this transaction.

                                      -6-

<PAGE>

         16. Miscellaneous. This Agreement constitutes the entire agreement
between Seller and Buyer and no change in this Agreement may be made except by
an agreement in writing signed by the party against whom enforcement of any
change is sought. This Agreement shall be binding upon and inure to the benefit
of Seller and Buyer and their respective heirs, personal representatives,
successors and assigns. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio. This Agreement shall be construed
without reference to the titles of the various sections, which are inserted for
convenience of reference only. The covenants, agreements, representations,
warranties and obligations of the parties in this Agreement shall survive the
closing. Time is of the essence for purposes of this Agreement. In any action
brought to enforce this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and other expenses incurred in connection with such
action. Whenever used in this Agreement, the singular shall be deemed to include
the plural, and vice versa, and the use of any gender shall be deemed to include
all others.

         17. Duration of Offer. This Agreement constitutes an offer by Buyer to
Seller which shall be open for acceptance until 5:00 p.m., on                 ,
2002, by returning a signed original hereof to Buyer.
<TABLE>
<CAPTION>
<S>                                                                          <C>
DOMINION HOMES, INC.,                                         Seller agrees to and accepts the foregoing
an Ohio corporation                                           offer this 27th day of August, 2002.

                                                              CRAFTON PROPERTIES, INC., an Ohio
By:      /s/ David S. Borror                                  corporation
    --------------------------------------
David S. Borror, Executive Vice President

Date:  August 27, 2002                                        By:   /s/ Francis E. Barnes
                                                                -------------------------------
                                                              Francis E. Barnes, President
</TABLE>

Attached Exhibits:

Exhibit A -    Description of Premises
Exhibit B -    Zoning Text

                                      -7-<PAGE>

                                  Exhibit 10.1

                     WORKING CAPITAL REVOLVING LOAN FACILITY
                             AND SECURITY AGREEMENT

         THIS WORKING CAPITAL REVOLVING LOAN FACILITY AND SECURITY AGREEMENT
(this "Agreement") dated as of November __, 2002, is made by and among RZB
Finance, LLC, a Delaware limited liability company with an address at 1133
Avenue of the Americas, 16/th/ Floor, New York, New York 10036 (the "Lender");
Isomet Corporation, a New Jersey corporation with its principal place of
business at 5263 Port Royal Road, Springfield, Virginia 22151 ("Isomet Corp.");
Isomet UK, a wholly owned subsidiary of Isomet Corp., with an address at 18 John
Baker Close, Llantarnam Industrial Park, Cwmbran Gwent NP44 3AX, United Kingdom
("Isomet UK"); and Isomet Foreign Sales Corporation, a wholly owned subsidiary
of Isomet Corp., with an address at c/o Ernst & Young, P.O. Box 261, Bay Street,
Bridgetown, Barbados ("IFSC"). Isomet Corp., Isomet UK and IFSC are collectively
and individually from time to time herein referred to as the "Borrower."

         WHEREAS, Borrower has requested that the Lender establish a Loan
Facility ("Loan Facility") for the purpose of providing the Borrower with
pre-export working capital to finance the manufacture or purchase and subsequent
sale of the Items and for such other purposes as are expressly set forth herein;
and

         WHEREAS, Borrower has executed a borrower agreement (the "Borrower
Agreement") which has been acknowledged by the Lender and which is attached
hereto as Exhibit "A" and the terms of which are incorporated by reference
herein; and

         WHEREAS, the Export-Import Bank of the United States ("Ex-Im Bank")
will guarantee the payment of one hundred percent (100%) of the principal
amounts disbursed and outstanding under such Loan Facility and all interest
accrued thereon, subject to the terms and conditions of a Master Guarantee
Agreement dated September 20, 2002 (the "Master Guarantee Agreement") by and
between Ex-Im Bank and the Lender and a Loan Authorization Agreement by and
between Ex-Im Bank and the Lender ("Loan Authorization Agreement") which is
attached hereto as Exhibit "B" and incorporated by reference herein; and

         WHEREAS, Lender is prepared to establish the Loan Facility pursuant to
the terms and subject to the conditions herein set forth.

         NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereby agree as follows.

1.       DEFINITIONS.

         1.1   Construction. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned to them in the Borrower
Agreement or in the Loan Authorization Agreement. For the purposes of
interpreting this Agreement, if any of the capitalized terms defined in this
Agreement conflict with the same terms as they are defined in

<PAGE>

either the Borrower Agreement or the Loan Authorization Agreement, the
definitions of the capitalized terms in this Agreement shall prevail.

         1.2   Incorporation of Recitals. The recitals to this Agreement are
incorporated into and shall constitute a part of this Agreement.

         1.3   Definitions. As used in this Agreement, including the recitals
hereto, the following terms shall have the following meanings:

         "Account Debtor" shall have the meaning as defined in Article 9 of the
UCC.

         "Accounts Receivable" shall have the meaning as defined in Section 1.01
of the Borrower Agreement.

         "Availability Date" shall have the meaning as defined in Section 11.1
of this Agreement.

         "Borrowing Base" shall have the same meaning as "Export-Related
Borrowing Base" as that term is defined in Section 1.01 of the Borrower
Agreement.

         "Controlled Account" shall have the meaning set forth in Section 2.7 of
this Agreement.

         "Credit Accommodations" shall have the meaning as defined in Section
1.01 of the Borrower Agreement.

         "Disbursement" shall mean an advance of a working capital loan from
Lender to Borrower under the Loan Facility.

         "Disbursement Rates" shall mean the advance rates specified in Section
5(C) of the Loan Authorization Agreement for each category of Collateral.

         "Eligible Export-Related Accounts Receivable" shall mean, to the extent
not excluded under the Borrower Agreement, those export-related trade accounts
from the sale of Items due and payable to the Borrower in the United States and
any notes, drafts, letters of credit or insurance proceeds supporting payment
thereof, provided, however, the Lender may include in the Borrowing Base,
Accounts Receivable due and collectible in the United Kingdom by Isomet UK or
denominated in British pounds if all of the special conditions set forth in
Article 9 of this Agreement have been met by Borrower.

         "Eligible Costs" shall mean those working capital costs associated with
an Export Order or an Indirect Export which are not excluded under the Borrower
Agreement.

         "Event of Default" shall have the meaning as set forth in Section 12.1
of this Agreement.

                                       2

<PAGE>

         "Export Order" shall mean a written export order or contract for the
purchase by a buyer from the Borrower of any of the Items.

         "General Intangibles" shall mean all intellectual property and other
"general intangibles" (as such term is defined in the UCC) necessary or
desirable to or for the disposition of Inventory.

         "Inventory" shall mean "inventory" (as such term is defined in the
UCC), now or hereafter owned or acquired by Borrower, wherever located,
including all inventory, merchandise, goods and other personal property which
are held by or on behalf of Borrower for sale or lease or are furnished or are
to be furnished under a contract of service or which constitute raw materials,
work in process or materials used or consumed or to be used or consumed in
Borrower's business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies.

         "Indirect Exports" shall mean those sales of the Items, not excluded
under the Borrower Agreement, from the Borrower to a buyer who intends to export
the Items.

         "Items" shall mean acousto-optic laser control devices, electronic
drivers and birefringent material.

         "Loan Facility" shall mean the revolving loan facility established by
the Lender for the Borrower under this Agreement.

         "Loan Documents" shall have the meaning as defined in Section 1.01 of
the Borrower Agreement.

         "Maturity Date" shall have the meaning as defined in Section 2.3
herein.

         "Maximum Amount" shall have the meaning as defined in Section 2.1
herein.

         "Note" shall have the meaning as defined in Section 2.3 herein.

         "Obligations" shall have the meaning as defined in Section 4.1 herein.

         "Permitted Liens" shall mean those liens of Bank of America Leasing &
Capital, LLC and Lombard North Central PLC Capital Leases that are authorized by
Ex-Im Bank under Section 6(c) of the Loan Authorization Agreement.

         "Prime Rate" shall mean the "Prime Rate" as published in the "Money
Rates" section of the Wall Street Journal.

         "Secured Accounts Receivable" shall have the meaning as defined in
Section 4.1(b) herein.

                                       3

<PAGE>

         "Secured Collateral" shall have the meaning as defined in Section 4.1
herein.

         "UCC" shall mean the Uniform Commercial Code as the same may be in
effect from time to time in the jurisdiction in which the Borrower or the
Collateral is located.

2.       BASIC TERMS AND CONDITIONS OF LOAN FACILITY

         2.1   Loan Facility. On the terms and subject to the conditions of this
Agreement, Lender agrees to lend to Borrower and Borrower agrees to borrow from
Lender through the Loan Facility funds in an amount not to exceed at any time
the "Maximum Amount." The Maximum Amount shall mean the principal dollar amount
outstanding under the Loan Facility at any one time equal to the lesser of (a)
One Million Five Hundred Thousand Dollars ($1,500,000.00), or (b) the Borrowing
Base. The Borrower shall use the Credit Accommodations under the Loan Facility
solely for the purpose set forth in Section 6.1 of this Agreement and for the
purpose of enabling the Borrower to finance the costs of manufacturing,
producing, purchasing or selling the Items as permitted by the Borrower
Agreement and the Loan Authorization Agreement.

         2.2   Disbursements. Disbursements under the Loan Facility shall be
made in accordance with the provisions of Article 7 of this Agreement and in
accordance with the Borrower Agreement and the Loan Authorization Agreement
(including the applicable Disbursement Rates set forth therein and the special
conditions attached as Schedule B thereto).

         2.3   The Note. The obligation of the Borrower to repay Disbursements
made under the Loan Facility shall be evidenced by the Borrower's promissory
note of even date herewith (the "Note") payable to the order of the Lender and
in the form attached hereto as Exhibit "C". The Note shall be in the principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) and shall
bear interest as set forth in Section 2.4 herein. Unless the Loan Facility is
renewed or extended by Lender with the consent of Ex-Im Bank, Borrower shall pay
in full all amounts outstanding under the Loan Facility and all accrued and
unpaid interest thereon no later than the first business day following the Final
Disbursement Date (the "Maturity Date").

         2.4   Interest. Each Disbursement under the Loan Facility shall bear
interest from the date of the respective Disbursement to the date of payment to
Lender at a per annum rate equal to the sum of (a) two percent (2.00%), and (b)
the Prime Rate. Interest shall be calculated daily on the basis of the actual
number of days elapsed (including the first day but excluding the last day) over
a year of 360 days.

         2.5   Overdue Interest. Any principal not paid when due shall bear
interest from the date when due until payment is made, payable on demand, at a
per annum rate equal to the sum of (a) three percent (3.00%), and (b) the Prime
Rate.

         2.6   Prepayment; New Disbursements. The Borrower shall have the right
on not less than five business Days written notice to the Lender to prepay the
Loan Facility in whole at any

                                        4

<PAGE>

time, without premium or penalty but with accrued interest on the principal
being prepaid to the date of prepayment. The Borrower shall have the right to
repay the Loan Facility in part at any time, without premium or penalty but with
accrued interest on the principal being prepaid to the date of prepayment. The
Borrower shall further have the right to obtain new Disbursements up to the
Availability Date so long as the conditions in Article 7 are met and the
aggregate unpaid Disbursements at no time exceed the Maximum Amount.

         2.7   Controlled Account. Prior to the first Disbursement under the
Loan Facility, Lender will establish a Controlled Account with a bank acceptable
to Lender (the "Controlled Account"). The Controlled Account will operate as a
"lock box" account and all payments from Borrower's customers shall be wired or
mailed directly to the selected bank and deposited into the Controlled Account.
The Borrower agrees to notify its customers that all amounts owing to Borrower
have been assigned to Lender and direct its customers to remit payments to the
Controlled Account. The Lender may, in its discretion, apply amounts in the
Controlled Account to any amounts outstanding under the Loan Facility.

3.       FEES AND EXPENSES

         3.1   Fees and Expenses. The Borrower shall pay to the Lender the fees
and expenses specified below:

               (a)   An arrangement fee of Twenty Five Thousand Dollars
($25,000.00) payable prior to the first Disbursement under the Loan Facility.

               (b)   A facility fee with an Annual Facility Fee Percentage of
one and one-half percent (1.5%) per annum and calculated as set forth in
Schedule A to the Loan Authorization Agreement payable prior to the first
Disbursement under the Loan Facility.

               (c)   A fee of Three Hundred Fifty Dollars ($350) for each
Disbursement made to the Borrower under this Agreement.

               (d)   All reasonable out of pocket costs and expenses, including
legal fees, costs and expenses, incurred by the Lender in connection with (i)
the preparation, review and amendment of all documentation relating to the
establishment of the Loan Facility; (ii) collection efforts and filing and
effecting payment on claims made against Ex-Im Bank under the Working Capital
Guarantee, (iii) the establishment, preservation and enforcement of Lender's
security interest in and liens on the Secured Collateral and (iv) the
enforcement of this Agreement against the Borrower. Such costs and expenses may
be deducted from the Controlled Account if not otherwise paid by Borrower.

                                       5

<PAGE>

4.   SECURITY AGREEMENT

     4.1  Grant of Security Interest; Secured Collateral. As security for the
payment of all of the obligations evidenced by this Agreement, the Note and any
other Loan Documents and for Borrower's performance of, and compliance with, all
terms, covenants, conditions, stipulations and agreements contained in this
Agreement, the Note and any other Loan Documents, whether direct or contingent
(collectively the "Obligations"), Borrower hereby grants to Lender and agrees
that Lender shall have a perfected, first priority, continuing security interest
in all of the following property and assets, wherever situated (the "Secured
Collateral"):

          (a) All Inventory of the Borrower in all of its forms and of every
nature, kind and description, wherever located and whether now owned or
hereafter acquired;

          (b) All "Secured Accounts Receivable" which shall mean all of the
following that arise from the sale of the Items: all accounts, Accounts
Receivable, other receivables, book debts and other forms of obligations and all
present and future rights of the Borrower to payment for goods or products sold
or leased or for services rendered or from any other transaction whether earned
by performance and whether evidenced by an instrument, chattel paper or a
general obligation; all amounts owing to the Borrower arising out of or under
its instruments, documents, contract rights, chattel paper and general
intangibles and all other debts, obligations, and amounts of whatever nature and
in whatever form owing to the Borrower; all rights in, to and under all purchase
orders or receipts for goods or services; all rights to payment of interest or
finance charges, insurance proceeds, costs of collection and enforcement,
reasonable attorney's fees and other amounts with respect to any and all of the
foregoing; all rights of an unpaid seller (including rescission, replevin,
reclamation and stoppage of delivery in transit or for service) for unpaid
goods; rights in any goods or products represented by any and all of the
foregoing, including returned, rejected, rerouted or repossessed goods;
sureties' obligations, security, guarantees or collateral for any and all of the
foregoing including rights at law and in equity with respect thereto; and all
proceeds (cash and non-cash) and all products of any and all of the foregoing.

          (c) All General Intangibles (including, without limitation, payment
intangibles, all books and records, things in action, contractual rights, tax
returns, goodwill, trademarks, copyrights and patents), both now owned or
hereafter acquired by the Borrower.

          (d) All proceeds (cash and non cash) and products of any of the
foregoing.

The security interest granted hereunder shall extend and attach to all Secured
Collateral which is presently in existence or may hereafter arise and which is
owned by the Borrower or in which the Borrower has any interest whether held by
the Borrower or others for its account. In no event shall prior recourse to any
Secured Collateral or other security granted to the Lender be a prerequisite to
the Lender's right to demand payment of any obligation owed to the Lender under
this Agreement. Further, it is understood that the Lender shall not have any
obligation or liability whatsoever to perform in any respect any of the
Borrower's respective contracts or obligations

                                       6

<PAGE>

relating to the Secured Accounts Receivable. The Secured Collateral shall remain
personal property at all times. Borrower shall not affix any of the Collateral
to any real property in any manner which would change its nature from that of
personal property to real property or to a fixture.

     4.2 Lender's First Priority Security Interest. Lender shall receive prior
to the first Disbursement an official report from each state or jurisdiction in
which the Borrower or Secured Collateral is located and each other state in
which the Lender desires to file Financing Statements indicating that Lender's
security interest in the Secured Collateral is prior to all other security
interests or other interests reflected in the report except for (i) the
Permitted Liens, (ii) liens of Bank of America to be released pursuant to
Section 6.2 hereof, and (iii) liens of Lloyds Bank on assets of Isomet UK to be
released prior to the receivables of Isomet UK being included in any calculation
of the Borrowing Base.

     4.3 No Obligation to Marshall Liens. To the extent that the obligations of
the Borrower under this Agreement are now or hereafter secured by any assets or
property other than by the Secured Collateral, then the Lender shall have the
right, in its sole discretion exercised in good faith, to determine which
rights, liens or remedies the Lender shall at any time pursue, foreclose upon,
relinquish, subordinate, modify or to take any other action with respect to,
without in any way modifying or effecting any of such rights, liens or remedies
or any of the Lender's rights hereunder.

     4.4 Set-Off. Any deposits, reserves or sums of any kind credited by or due
from the Lender to the Borrower and any other funds, property or assets of the
Borrower in the possession of the Lender may be held by the Lender as security
for the obligations of the Borrower under this Agreement and set-off by the
Lender at any time in whole or in partial satisfaction of the obligations of the
Borrower to the Lender under this Agreement.

     4.5 Financing Statements. The Borrower hereby authorizes the Lender from
time to time to file one or more financing statements or continuations or
amendments thereto or any other document necessary or desirable to obtain a
perfected, first priority continuing security interest in any jurisdiction in
which Borrower or the Secured Collateral are located pursuant to the UCC or any
other law to which Borrower or the Secured Collateral are subject, (the
"Financing Statements"), without the Borrower's signature appearing thereon, as
appropriate under any applicable law that the Lender deems desirable to
evidence, perfect or protect its security interest in, and other liens on, the
Secured Collateral in such form(s) as are satisfactory to the Lender. The
Borrower shall pay the cost of filing all Financing Statements and other notices
in all public offices where filing is deemed by the Lender to be necessary or
desirable to perfect, protect or enforce the security interest and liens granted
to the Lender hereunder. A photographic copy or other reproduction of this
Agreement or of a Financing Statement is sufficient as an attachment to any
Financing Statement. The Lender is hereby authorized to give notice to any
person as may be necessary or desirable under applicable laws to evidence,
protect, perfect or enforce the Lender's security interest in the Secured
Collateral.

                                       7

<PAGE>

     4.6 Limitations on Lender's Duties Relating to Secured Collateral. The
Borrower shall bear the risk of loss of the Secured Collateral. Neither the
Lender, nor any of its directors, officers, employees or agents shall be liable
for any failure to demand, collect or realize all or any part of the Secured
Collateral or for any delay in doing so. Neither the Lender, nor any of its
directors, officers, employees or agents shall be under any obligation to sell
or otherwise dispose of any Secured Collateral upon the request of the Borrower
or otherwise. Lender shall have no duty to collect any income accruing on the
Secured Collateral or to preserve any rights relating to the Secured Collateral.

     4.7 Additional Security. The Borrower shall at all times ensure that the
Borrowing Base exceeds the amount disbursed and outstanding under the Loan
Facility. If informed by the Lender or if the Borrower otherwise has actual
knowledge that the Borrowing Base is at any time less than the amount disbursed
and outstanding under the Loan Facility, the Borrower shall within five (5)
Business Days, either (a) furnish additional security to the Lender, in form and
amount satisfactory to Lender and Ex-Im Bank, or (b) pay to the Lender an amount
equal to the difference between the amount disbursed and outstanding and the
Borrowing Base.

5.   CONDITIONS PRECEDENT TO FIRST DISBURSEMENT

     The obligation of the Lender to permit the first Disbursement under the
Loan Facility is subject to the following conditions:

     5.1 Execution and Delivery of Loan Documents. Each of the Loan Documents
shall have been duly authorized, executed and delivered to Lender by the
respective parties thereto and shall constitute the legal, valid and binding
obligations of the respective parties thereto and shall be enforceable in
accordance with its terms.

     5.2 Fees and Expenses. Lender shall have been paid the fees set forth in
Section 3.1 and such costs and expenses which may have been incurred by Lender
as provided in Section 3.1(d).

     5.3 Landlord Waiver. The Borrower shall have delivered to the Lender, in
form and substance satisfactory to the Lender, a certificate which has been
executed by the Borrower's landlord waiving any and all rights in the Secured
Collateral. By its terms, the waiver certificate shall authorize the Lender, its
successors and assigns, to enter onto the premises in order to inspect the
Secured Collateral and related books and records, or enforce its security
interest thereon.

     5.4 Assignment of Key-Man Life Insurance Policy. The Borrower shall have
delivered to the Lender, in form and substance satisfactory to the Lender, an
assignment of a key-man life insurance policy opened in the name of Henry
Zenzie, in the amount of One Million Five Hundred Thousand Dollars
($1,500,000.00). The Borrower shall notify the Lender and Ex-

                                       8

<PAGE>

Im Bank in writing immediately in the event a claim is filed under such key-man
life insurance policy.

     5.5  Controlled Account. The Controlled Account shall have been
established.

     5.6  Compliance with Section 7.1. Borrower shall have delivered the
documents and complied with the conditions set forth in Section 7.1.

     5.7  Liens. Lender shall have received the official reports confirming the
priority of Lender's security interest in the Secured Collateral as provided in
Section 4.2 of this Agreement.

     5.8  Other Documents. Borrower shall have delivered to Lender such other
documents as Lender may reasonably require Borrower to execute or deliver, in
form and substance satisfactory to Lender.

6.   SPECIAL PERMITTED USE OF FIRST DISBURSEMENT

     6.1  Special Permitted Use of First Disbursement. All or a portion of the
first Disbursement under the Loan Facility, in an amount not to exceed Seven
Hundred Thousand Dollars ($700,000), may be used by Borrower to refinance the
Borrower's existing line of credit with Bank of America.

     6.2  Special Condition. The use of the Disbursement permitted under Section
6.1 of this Agreement is expressly conditioned on Borrower, prior to the first
Disbursement under the Loan Facility, delivering to Lender a written agreement
of Bank of America, in form and substance acceptable to Lender, to release all
security interests it holds in the Secured Collateral concomitantly with the
delivery by Borrower of the proceeds from the first Disbursement described in
Section 6.1 of this Agreement.

7.   DISBURSEMENTS

     7.1  Conditions Precedent to Each Disbursement. The obligation of the
Lender to permit any Disbursement, including the first Disbursement, shall be
subject to the delivery to the Lender of the documents indicated below and to
the fulfillment, as of the date of such Disbursement, in a manner satisfactory
to the Lender, of the conditions set forth below:

          (a) A Request for Disbursement substantially in the form attached
hereto as Exhibit "D", and made a part hereof.

          (b) A Borrowing Base Certificate, substantially in the form attached
hereto as Exhibit "E", and made a part hereof current within the past thirty
(30) calendar days of the date of the requested Disbursement.

                                       9

<PAGE>

          (c) A copy of the Export Orders referenced in the Request for
Disbursement or, if permitted by Lender, a written summary of the Export Orders.

          (d) For any eligible Disbursement related to an Indirect Export, the
Borrower shall deliver to Lender an executed copy of both the purchase contract
between the Borrower and the buyer and a written certification from the Borrower
and the buyer that the Items sold pursuant to such purchase contract will be
exported to a country which Ex-Im Bank is not legally prohibited from doing
business.

          (e) Borrower shall have complied and shall be in compliance with all
terms, covenants and conditions of this Agreement, the Borrower Agreement and
the Note which are binding upon it.

          (f) There shall exist no Event of Default and no event which, with the
giving of notice or the passage of time, or both, would constitute an Event of
Default.

          (g) The representations and warranties contained in Article 8 shall be
true and correct with the same effect as though such representations and
warranties had been made at the time of the making of the Disbursement.

          (h) Lender shall have received payment of the fees specified in
Section 3.1 and all other fees and expenses due and payable under Article 3.

     7.2  Limitations on Disbursements. Lender shall not be obligated to make
any Disbursements to the Borrower:

          (a) after the Availability Date;

          (b) following the occurrence of an Event of Default or of any event
which but for the giving of notice would constitute an Event of Default;

          (c) during any period in which the outstanding principal balance of
the Loan Facility exceeds the Borrowing Base;

          (d) except for the first Disbursement described in Section 6.1, that
is not supported by an Export Order or, if an Indirect Export, supported by the
contracts and certifications specified in Section 7.1(d) above;

          (e) if the Lender has knowledge that the Disbursement will be used in
a manner prohibited by Section 2.01 of the Borrower Agreement;

          (f) if the Lender has knowledge that no outstanding Export Orders
exist;

                                       10

<PAGE>

          (g)  if the Lender has knowledge that Borrower has included in the
Borrowing Base any of the exclusions set forth in Section 2.04 of the Borrower
Agreement; or

          (h)  if the Borrower has violated any terms and conditions of this
Agreement, the Borrower Agreement, or the Loan Authorization Agreement.

8.   REPRESENTATIONS, WARRANTIES AND COVENANTS

     8.1  Representations and Warranties of the Borrower. The Borrower
represents and warrants to the Lender that:

          (a)  Existence and Authority. The Borrower is duly organized and
validly existing under the laws of its jurisdiction of incorporation with full
power, authority and legal right to own its property and carry on its business
as now conducted and has taken all actions necessary or advisable to authorize
it to execute, deliver, perform and observe the terms and conditions of this
Agreement and all other documents submitted under this Agreement.

          (b)  Restrictions. The execution, delivery and performance or
observance by the Borrower of the terms of and consummation by the Borrower of
the transactions contemplated by this Agreement does not and will not conflict
with or result in a breach or violation of: (i) the articles of incorporation,
charter, operating agreement, stockholders' agreement, by-laws or similar
documents of the Borrower; or (ii) any order, writ, injunction, judgment or
decree of any court or other tribunal. Further, the execution, delivery and
performance or observance by the Borrower of the terms of and consummation by
the Borrower of the transactions contemplated by this Agreement does not and
will not conflict with or result in a breach of any agreement or instrument to
which the Borrower is a party or by which it or any of its revenues, properties
or assets may be subject, or result in the creation or imposition of any lien
upon any of the revenues, properties or assets of the Borrower pursuant to any
such agreement or instrument.

          (c)  Binding Effect. This Agreement, and all other documents submitted
under this Agreement which have been executed on or before the date hereof have
been duly executed and delivered by the Borrower. This Agreement and each of the
documents which may hereafter be executed and delivered under this Agreement
will constitute a direct, general and unconditional obligation of the Borrower
which is legal, valid and binding upon the Borrower and enforceable against the
Borrower in accordance with its respective terms, except as such enforceability
may be limited by applicable insolvency, reorganization, liquidation,
moratorium, readjustment of debt, or other similar laws affecting the
enforcement of creditors' rights generally and by the application of general
principles of equity regardless of whether such enforceability is considered in
a proceeding at law or in equity. The Borrower's obligations to the Lender under
this Agreement will rank in all respects superior in priority of payment and in
right of security to all other debts of the Borrower except for the indebtedness
secured by the Permitted Liens, and (ii) the indebtedness secured by liens of
Lloyds Bank on assets of Isomet UK to be released prior to the receivables of
Isomet UK being included in any calculation of the Borrowing Base.

                                       11

<PAGE>

          (d)  Borrower's Financial Statements. The Borrower's financial
statements shall present fairly the financial condition of the Borrower at the
date of such statements and the results of the operations of the Borrower for
such quarter. The Borrower's financial statements have been and shall be
prepared in accordance with generally accepted accounting principles in the
United States of America. Except as fully reflected in the Borrower's financial
statements, there are no liabilities or obligations with respect to the Borrower
of any nature for the period to which the Borrower's financial statements relate
that either individually or in the aggregate would be material to the Borrower.
Since the date of the Borrower's financial statements, there has been no
material adverse change in the financial condition, business, prospects or
operations of the Borrower.

          (e)  No Taxes. There is no tax imposed on or in connection with: (i)
the execution, delivery or performance of this Agreement or of any of the
documents submitted under this Agreement; (ii) the enforcement of any of the
documents submitted under this Agreement, or (iii) on any payment to be made to
the Lender under any of the documents submitted under this Agreement.

          (f)  Payment of Taxes. All taxes, assessments and governmental charges
and liens imposed on the Borrower and its properties, operations and income
(collectively the "Taxes") have been paid and discharged prior to the date when
any interest or penalty would accrue for nonpayment thereof.

          (g)  Perfected Lien on Inventory, General Intangibles and Accounts
Receivable. This Agreement creates a valid security interest in the Inventory,
General Intangibles and the Secured Accounts Receivable, and upon the due filing
of UCC-1 financing statements, all filings and other actions necessary or
desirable to perfect and protect such security interest will have been duly
taken.

     8.3  Affirmative Covenants of the Borrower. The Borrower covenants and
agrees that until all amounts owing under this Agreement have been paid in full,
the Borrower will, unless the Lender shall have consented in writing:

          (a)  Notice of Defaults. Notify Lender promptly but in no event later
than seventy-two (72) hours after it has knowledge of an Event of Default.

          (b)  Notice of Adverse Changes. Promptly notify the Lender of any
material circumstance of which it has knowledge which (i) may result in the
occurrence of an Event of Default; or (ii) may result in the Borrower's being
unable to perform its obligations under this Agreement.

          (c)  Notice of Material Litigation. Promptly notify Lender if any
material litigation is filed against the Borrower.

          (d)  Financial Statements. (i) Beginning with the financial period
ending September 30, 2002 and continuing until all amounts owing under this
Agreement have been paid

                                       12

<PAGE>

in full, the Borrower shall furnish to the Lender within forty-five (45) days
after the end of each quarter, a copy of its financial statements in form and
substance satisfactory to Lender, including its balance sheet, statement of
income, and statement of cash flow for that quarter all of which have been
prepared by an independent accounting firm acceptable to the Lender; and (ii)
such additional financial reports and other data and information regarding its
financial condition, business and operations as the Lender may reasonably
request.

          (e)  Inventory Reports. Submit to the Lender in writing within twenty
(20) days after each month-end, a schedule detailing all of the Borrower's
Inventory for the preceding month.

          (f)  Accounts Receivable Aging Report. Submit to the Lender on a
monthly basis, within twenty (20) days after each month-end, in writing an
Accounts Receivable and Accounts Payable aging report detailing the terms of the
amount due from and owing to each Account Debtor.

          (g)  Inspections. Permit representatives of the Lender and Ex-Im Bank,
upon reasonable prior notice, to make reasonable inspections as provided in
Section 2.09 of the Borrower's Agreement of the Borrower's books and records in
connection with this Agreement and cause the Borrower's officers and employees
to give full cooperation and assistance in connection therewith.

          (h)  Use of Disbursements. Use the Disbursements only for the purposes
allowed under Section 2.01 of the Borrower Agreement or as otherwise expressly
provided in this Agreement.

          (i)  Notices of Changes, Transfer, Dissolution and Litigation. Notify
the Lender in writing within five (5) Business Days if (a) the Borrower changes
its name or identity in any manner, (b) the Borrower changes the location of its
principal place of business, (c) the nature of any of the Secured Collateral is
changed or any of the Secured Collateral is transferred to another location, (d)
any of the books or records related to the Secured Collateral are transferred to
another location, (e) a proceeding in bankruptcy or an action for debtor's
relief is filed by, against or on behalf of the Borrower, (f) the Borrower fails
to obtain the dismissal or termination within thirty (30) calendar days of the
commencement of any proceeding or action referred to in (e) above, (g) the
Borrower begins any procedure for its dissolution or liquidation, or a procedure
therefore has been commenced against it, or (h) any material litigation is filed
against the Borrower.

          (j)  Terms of Sale. Ensure that all export sales financed with the
Loan Facility shall be paid in U.S. Dollars on one of the following terms (i)
open account uninsured, or (ii) cash payment received prior to shipment.

          (k)  Insurance Premium. Timely pay all premiums on the insurance
policy described in Section 5.4 of this Agreement.

                                       13

<PAGE>

          (l)  Other Acts. From time to time, do and perform any and all acts
and execute and furnish any and all documents as may be necessary or as
reasonably requested by the Lender in order to effect the purposes of this
Agreement and to protect the interests of the Lender under this Agreement.

     8.5  Negative Covenants Of The Borrower. The Borrower covenants and agrees
that until all amounts owing to the Lender under this Agreement have been paid
in full, it will not without the prior written consent of the Lender:

          (a)  Liens on Items. Create, assume, permit or suffer to exist any
liens on any of its assets or property except the following:

               (i)   liens for taxes, assessments, or governmental charges or
levies if the same shall at the time not be delinquent or thereafter can be paid
without penalty or are being contested in good faith and by appropriate
proceedings;

               (ii)  liens imposed by law such as carriers', warehousemen's, and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than thirty (30) days past
due or which are being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been set aside on its books; or

               (iii) the Permitted Liens.

          (b)  Loans to Stockholders. From and after August 31, 2002 make or
permit any loans, advances to, or guarantee any loans or advances to any
stockholder of the Borrower or entity affiliated with the Borrower.

          (c)  Indebtedness. The Borrower shall not create, incur, assume or
suffer to exist any Indebtedness other than (i) Indebtedness Outstanding as of
August 31, 2002, including any renewals, refinancings or extensions of such
Indebtedness (provided, however, except as may have existed on August 31, 2002,
no liens or other assets may secure such Indebtedness); and (ii) unsecured
current liability (not the result of borrowing) incurred in the ordinary and
regular course of business for current purposes and not overdue.

          (d)  Dividend Restrictions. Declare or pay, or set apart any funds for
the payment of, any dividends (other than dividends payable in stock of the
Borrower) on any shares of stock of any class of the Borrower, or make any
payment to purchase, redeem, retire or acquire any shares of stock of any class
of the Borrower or any option, warrant or other right to acquire such stock.

          (e)  Change in Business. Make any material change in its
organizational structure or the scope or nature of its business or operations.

          (f)  Merger, Consolidation, Dissolution and Sale. Merge or consolidate
with any other entity; dissolve or terminate its legal existence; sell, lease,
transfer or otherwise dispose of,

                                       14

<PAGE>

other than in the ordinary course of Borrower's business, any substantial part
of its properties or any of its properties essential to the conduct of its
business or operations as now or hereafter conducted or enter into any agreement
to do any of the foregoing.

9.   SPECIAL CONDITIONS PERTAINING TO CERTAIN ACCOUNTS RECEIVABLE

     9.1  Receivables Due and Collectible Outside the U.S. Notwithstanding
Section 2.04 of the Borrower Agreement, the Lender may include in the Borrowing
Base, Eligible Export-Related Accounts Receivable due and collectible in the
United Kingdom to Isomet UK, provided that:

          (a)  The Accounts Receivable shall derive exclusively from Eligible
Exports originating from the United States;

          (b)  One hundred percent (100%) of all proceeds from such Accounts
Receivable are remitted by Isomet UK to the United States on a minimum of a
weekly basis;

          (c)  No more than fifty percent (50%) of the Export-Related Borrowing
Base may consist of Accounts Receivable due and collectible in the United
Kingdom;

          (d)  Borrower shall submit a report to Lender, in form and substance
satisfactory to Lender, on a minimum of a monthly basis evidencing Borrower's
compliance with Section 9.1(c) of this Agreement;

          (e)  Lender obtains a valid and enforceable first priority security
interest (or its equivalent) in the Accounts Receivable in the jurisdiction
where the Accounts Receivable are located;

          (f)  Lender obtains a pledge of stock from Isomet Corp., in form and
substance satisfactory to Lender, all of the issued and outstanding stock of
Isomet UK and IFSC stock sufficient to allow Lender to gain control of Isomet UK
and IFSC and all of its assets if there is an Event of Default; and

          (g)  Lender obtains a legal opinion, in form and substance
satisfactory to Lender, from counsel to Isomet UK licensed to practice in the
jurisdiction of incorporation of Isomet UK with regard to the enforceability of
the first priority security interest (or its equivalent) in Accounts Receivables
of Isomet UK referenced in Section 9.1(e).

     9.2  Accounts Receivable Payable in Non-U.S. Currency. Notwithstanding
Section 2.01 of the Borrower Agreement, the Borrower may denominate Eligible
Export-Related Accounts Receivable in British pounds, provided that any such
Accounts Receivable are hedged against foreign currency exchange risks.

                                       15

<PAGE>

10.  GOVERNING LAW AND JURISDICTION

     10.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, United States of America.

     10.2 Choice Of Forum. As a specifically bargained inducement for the Lender
to enter into this Agreement and to extend credit to Borrower, the Borrower
agrees that any action, suit or proceeding in respect of or arising out of this
Agreement, its validity or performance, may be initiated and prosecuted in New
York at the discretion of the Lender. The Borrower consents to and submits to
the exercise of jurisdiction over their person by any state or federal court
located in New York having jurisdiction over the subject matter, waive personal
service of any and all process upon them and consent that all such service of
process be made by U.S. registered mail directed to the Borrower and the Lender
at their respective addresses as set forth in Section 13.1 hereof; and service
so made shall be deemed to be completed five business days after such process
shall have been deposited in the U.S. mail, registered mail, postage prepaid.
The Borrower waives any objection based on forum non conveniens, and any
objection to venue of any action instituted hereunder.

     10.3 JURY TRIAL. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR THE LENDER TO
ENTER INTO THIS LOAN AGREEMENT AND TO EXTEND CREDIT TO THE BORROWER, THE
BORROWER AND LENDER WAIVE TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT
OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS LOAN AGREEMENT AND THE
CONDUCT OF THE RELATIONSHIP BETWEEN LENDER AND BORROWER.

11.  AVAILABILITY DATE

     11.1 Availability Date. The Lender shall not be obligated to make any
Disbursements under this Agreement to the Borrower subsequent to September 30,
2003 (the "Availability Date"), unless Lender and Ex-Im Bank otherwise consent
in writing.

12.  EVENTS OF DEFAULT

     12.1 Events of Default. Upon the occurrence of any of the following events
or conditions (each an "Event of Default"):

     (a)  any failure by the Borrower to pay when due any amount owing under
thisAgreement or any Note; or

     (b)  any representation or warranty made or deemed made by the Borrower in
this Agreement, or in connection herewith or any statement made in any
certificate, report or financial statement furnished by the Borrower to the
Lender, or any statement made in the legal opinions of the Borrower concerning
facts relating to the Borrower or, as the case may be, relating to the

                                       16

<PAGE>

transactions contemplated hereby has proven to have been false or misleading in
any material respect when made; or

         (c) any failure by the Borrower to perform or comply with any of the
covenants, agreements or provisions set forth in this Agreement; or

         (d) any failure by the Borrower to pay when due including any period of
grace provided to the Borrower with respect thereto, any amounts (which in the
reasonable judgment of the Lender if the Borrower is required to pay such amount
would affect materially and adversely the ability of the Borrower to pay the
amounts due under this Agreement) that are payable under any other agreement or
instrument providing for the payment by the Borrower of borrowed money or for
the deferred purchase price of property or services received or any such amount
has prior to the stated maturity thereof become due, or any events specified in
any such agreement or instrument shall occur the effect of which is to cause or
with the giving of notice or lapse of time or both to permit any person to cause
such amounts to become due or to be repaid in full prior to their stated
maturity; or

         (e) the Borrower shall be unable to pay their debts as they fall due or
shall admit in writing their inability to pay their debts as they fall due or
shall become insolvent; or

         (f) proceedings in bankruptcy or an action for debtor's relief is filed
by, against, or on behalf the Borrower and, with respect to any such proceedings
or action instituted by a person or entity other than the Borrower, such
proceedings or action are not terminated or dismissed within thirty (30)
calendar days of filing; or

         (g) the Borrower begins any procedure for liquidation or dissolution or
any such procedure is commenced against any of them; or

         (h) any judgment against the Borrower shall have been entered on a
claim not covered by insurance in an amount which in the reasonable judgment of
the Lender if the Borrower is required to pay such amount would affect
materially and adversely the ability of the Borrower to pay the amounts due
under this Agreement and such judgment has remained unpaid, unvacated, unbonded
or unstayed by appeal or otherwise for a period of thirty (30) days from the
date of its entry; or

         (i) the disbursed amount outstanding under the Loan Facility exceeds
the Borrowing Base and the Borrower fails within five (5) days after being
informed thereof by the Lender either to (a) furnish additional security to the
Lender or (b) pay to the Lender an amount equal to the difference between the
Disbursed Amount outstanding and the Borrowing Base; or

         (j) any other default occurs under any of the Loan Documents;

then and in any such event, and at any time thereafter, if such event is
continuing, the Lender by written notice to the Borrower may terminate all
obligations on Lender's part to make any further

                                       17

<PAGE>

Disbursement and/or may declare immediately due and payable all or any portion
of the principal amount of the Loan Facility then outstanding, including accrued
interest thereon to the date of payment, and all other amounts owing under this
Agreement. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
The aforementioned right to accelerate is in addition to and not a substitute
for any other rights and remedies available to the Lender under this Agreement
and under applicable laws.

13.      MISCELLANEOUS

         13.1 Notices. Any notice or notification required, permitted or
contemplated hereunder shall be in writing, shall be addressed to the party to
be notified at the address set forth below or at such other address as each
party may designate for itself from time to time by notice hereunder, and shall
be deemed to have been validly served, given or delivered (a) five days
following deposit in the United States mails, registered mail, with proper
postage prepaid, or (b) the next business day after such notice was delivered to
a regularly scheduled overnight delivery carrier with delivery fees either
prepaid or an arrangement, satisfactory with such carrier, made for the payment
of such fees, or (c) upon receipt of notice given by facsimile transmission,
telex, or personal delivery:

         To Lender:          RZB Finance LLC
                             1133 Avenue of the Americas
                             15/th/ Floor
                             New York, New York 10036
                             Attn: Mr. Vincent Herman
                             Tel: (212) 845-4105
                             Fax: (212) 944-6389

         To Borrower:        Isomet Corporation and Subsidiaries
                             5263 Port Royal Road
                             Springfield, Virginia 22151
                             Attn: Mr. Jerry Rayburn
                             Tel: (703) 321-8301
                             Fax: (703) 321-8546

         With a copy to:     Isomet UK
                             18 John Baker Close
                             Llantarnam Industrial Park
                             Cwmbran Gwent, NP44 3AX
                             Tel: 011-44-16338-72721

         With a copy to:     Isomet Foreign Sales Corporation
                             c/o Ernst & Young
                             P.O. Box 261, Bay Street
                             Bridgetown, Barbados
                             Tel: (246) 430-3900

                                       18

<PAGE>

         13.2 Priority Allocation Of Funds. The Lender is hereby authorized to
apply any amounts received or due to the Lender in the order of priority
determined by Lender in its discretion.

         13.3 Disclaimer. The Lender shall not be responsible in any way for the
performance of the Export Order or orders associated with Indirect Exports, and
no claim with respect thereto will affect the obligations of the Borrower under
this Agreement or any of the Loan Documents.

         13.4 Disposition of Indebtedness. The Lender may sell, assign,
transfer, pledge, negotiate, grant participation in, or otherwise dispose of all
or any part of its interest in all or any part of the Borrower's indebtedness
under this Agreement and the Note to any party (collectively, a "Disposition of
Indebtedness"), and any such party shall enjoy all the rights and privileges of
the Lender under this Agreement and the Note. The Borrower shall, at the request
of the Lender, execute and deliver to the Lender or to any party that the Lender
may designate, any such further instruments as may be necessary or desirable to
give full force and effect to a Disposition of Indebtedness. Notwithstanding
anything to the contrary, the Borrower may not assign or otherwise transfer any
of its obligations under this Agreement without the prior written consent of the
Lender.

         13.5 Benefit Of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.

         13.6 No Waiver; Remedies Cumulative. No failure or delay on the part of
the Lender in exercising any right, power or privilege under this Agreement and
no course of dealing between the Borrower and the Lender shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other right, power or privilege thereunder. The
remedies expressly provided herein are cumulative and not exclusive of any
rights or remedies which the Lender would otherwise have. No notice to or demand
on the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Lender to any other or further action in any circumstances without
notice or demand.

         13.7 Entire Agreement. This Agreement, the Loan Authorization Agreement
and the Borrower Agreement and all attachments hereto and thereto contain the
entire agreement between the parties relating to the Loan Facility.

         13.8 Amendment Or Waiver. This Agreement may not be changed or amended
without the written consent of the parties hereto and no provision hereof may be
waived without the written consent of the party to be bound thereby.

                                       19

<PAGE>

         13.9  Counterparts. This Agreement may be signed in separate
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.

         13.10 Severability. To the extent permitted by applicable law, the
legality or unenforceability of any provision of this Agreement shall not in any
way effect or impair the legality or enforceability of the remaining provisions
of this Agreement.

         IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed and delivered, as of the date first written above.

RZB FINANCE LLC

____________________________________
By: ________________________________
         (Print Name and Title)

ISOMET CORPORATION

____________________________________
By: Jerry Rayburn
    Executive Vice President

ISOMET UK

By:_________________________________
Its:________________________________

ISOMET FOREIGN SALES CORPORATION

By:_________________________________
Its:________________________________

                                       20

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