Document:

EXHIBIT 10.1

                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

                            DATED AS OF APRIL 3, 2007

                                      AMONG

                          LASALLE BUSINESS CREDIT, LLC,
              SUCCESSOR BY MERGER TO LASALLE BUSINESS CREDIT, INC.,

                                    AS AGENT,

                                       AND

          THE FINANCIAL INSTITUTIONS FROM TIME TO TIME A PARTY HERETO,

                                   AS LENDERS,

                                       AND

                    PROTECTIVE APPAREL CORPORATION OF AMERICA
                           POINT BLANK BODY ARMOR INC.
                             AND NDL PRODUCTS, INC.,

                                  AS BORROWERS

                                       AND

                       DHB INDUSTRIES, INC., AS GUARANTOR

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                                TABLE OF CONTENTS

                                                                                                                PAGE

<S>      <C>                                                                                                     <C>
1.       DEFINITIONS..............................................................................................5

2.       LOANS....................................................................................................5
         (A)      REVOLVING LOANS.................................................................................5
         (B)      REPAYMENTS......................................................................................5
         (C)      NOTES...........................................................................................5
         (D)      BORROWER REPRESENTATIVE.........................................................................5

3.       LETTERS OF CREDIT........................................................................................5
         (A)      GENERAL TERMS...................................................................................5
         (B)      REQUESTS FOR LETTERS OF CREDIT..................................................................5
         (C)      OBLIGATIONS ABSOLUTE............................................................................5
         (D)      EXPIRATION DATES OF LETTERS OF CREDIT...........................................................5
         (E)      PARTICIPATION...................................................................................5

4.       INTEREST, FEES AND CHARGES...............................................................................5
         (A)      INTEREST RATE...................................................................................5
         (B)      OTHER LIBOR PROVISIONS..........................................................................5
         (C)      FEES AND CHARGES................................................................................5
         (D)      MAXIMUM INTEREST................................................................................5

5.       COLLATERAL...............................................................................................5
         (A)      REAFFIRMATION OF GRANT OF SECURITY INTEREST TO AGENT............................................5
         (B)      OTHER SECURITY..................................................................................5
         (C)      POSSESSORY COLLATERAL...........................................................................5
         (D)      ELECTRONIC CHATTEL PAPER........................................................................5

6.       PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN..................................5

7.       POSSESSION OF COLLATERAL AND RELATED MATTERS.............................................................5

8.       COLLECTIONS..............................................................................................5

9.       COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.............................................5
         (A)      BORROWING REPORTS...............................................................................5
         (B)      MONTHLY REPORTS AND FINANCIAL STATEMENTS........................................................5
         (C)      QUARTERLY AND ANNUAL FINANCIAL STATEMENTS.......................................................5
         (D)      ANNUAL PROJECTIONS..............................................................................5
         (E)      EXPLANATION OF BUDGETS AND PROJECTIONS..........................................................5
         (F)      PUBLIC REPORTING................................................................................5

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         (G)      ERISA...........................................................................................5
         (H)      OTHER INFORMATION...............................................................................5

10.      TERMINATION; AUTOMATIC RENEWAL...........................................................................5

11.      REPRESENTATIONS AND WARRANTIES...........................................................................5
         (A)      THE FINANCIAL AND OTHER INFORMATION.............................................................5
         (B)      LOCATIONS.......................................................................................5
         (C)      LOANS BY THE BORROWERS..........................................................................5
         (D)      ACCOUNTS AND INVENTORY..........................................................................5
         (E)      LIENS...........................................................................................5
         (F)      ORGANIZATION, AUTHORITY AND NO CONFLICT.........................................................5
         (G)      LITIGATION......................................................................................5
         (H)      COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.................................................5
         (I)      AFFILIATE TRANSACTIONS..........................................................................5
         (J)      NAMES AND TRADENAMES............................................................................5
         (K)      EQUIPMENT.......................................................................................5
         (L)      ENFORCEABILITY..................................................................................5
         (M)      SOLVENCY........................................................................................5
         (N)      INDEBTEDNESS....................................................................................5
         (O)      MARGIN SECURITY AND USE OF PROCEEDS.............................................................5
         (P)      PARENT, SUBSIDIARIES AND AFFILIATES.............................................................5
         (Q)      NO DEFAULTS.....................................................................................5
         (R)      EMPLOYEE MATTERS................................................................................5
         (S)      INTELLECTUAL PROPERTY...........................................................................5
         (T)      ENVIRONMENTAL MATTERS...........................................................................5
         (U)      ERISA MATTERS...................................................................................5
         (V)      LEVY, SEIZURE OR ATTACHMENT.....................................................................5
         (W)      FORMER DHB SUBSIDIARIES.........................................................................5
         (X)      GOVERNMENT CONTRACTS............................................................................5

12.      AFFIRMATIVE COVENANTS....................................................................................5
         (A)      MAINTENANCE OF RECORDS..........................................................................5
         (B)      NOTICES.........................................................................................5
         (C)      COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.................................................5
         (D)      INSPECTION AND AUDITS...........................................................................5
         (E)      INSURANCE.......................................................................................5
         (F)      COLLATERAL......................................................................................5
         (G)      USE OF PROCEEDS.................................................................................5
         (H)      TAXES...........................................................................................5
         (I)      INTELLECTUAL PROPERTY...........................................................................5
         (J)      MANAGEMENT TEAM.................................................................................5
         (K)      PATRIOT ACT, BANK SECRECY ACT AND OFFICE OF FOREIGN ASSETS CONTROL..............................5
         (L)      LISTING DEVELOPMENTS............................................................................5

13.      NEGATIVE COVENANTS.......................................................................................5
         (A)      GUARANTIES......................................................................................5

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         (B)      INDEBTEDNESS....................................................................................5
         (C)      LIENS...........................................................................................5
         (D)      MERGERS, SALES, ACQUISITIONS, SUBSIDIARIES AND OTHER TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF
                  BUSINESS........................................................................................5
         (E)      DIVIDENDS AND DISTRIBUTIONS.....................................................................5
         (F)      INVESTMENTS; LOANS..............................................................................5
         (G)      FUNDAMENTAL CHANGES, LINE OF BUSINESS...........................................................5
         (H)      EQUIPMENT.......................................................................................5
         (I)      USE OF PROCEEDS.................................................................................5
         (J)      AFFILIATE TRANSACTIONS..........................................................................5
         (K)      SETTLING OF ACCOUNTS............................................................................5
         (L)      SUBORDINATION OF INTERCOMPANY INDEBTEDNESS......................................................5
         (M)      TRANSFER OF ASSETS..............................................................................5
         (N)      FINANCIAL COVENANT AMENDMENT....................................................................5
         (O)      OFAC............................................................................................5

14.      FINANCIAL COVENANTS......................................................................................5
         (A)      CAPITAL EXPENDITURES............................................................................5
         (B)      NET SALES.......................................................................................5

15.      DEFAULT..................................................................................................5
         (A)      PAYMENT.........................................................................................5
         (B)      BREACH OF THIS AGREEMENT AND THE OTHER AGREEMENTS...............................................5
         (C)      BREACHES OF OTHER OBLIGATIONS...................................................................5
         (D)      BREACH OF REPRESENTATIONS AND WARRANTIES........................................................5
         (E)      LOSS OF COLLATERAL..............................................................................5
         (F)      BANKRUPTCY OR SIMILAR PROCEEDINGS...............................................................5
         (G)      APPOINTMENT OF RECEIVER.........................................................................5
         (H)      JUDGMENT........................................................................................5
         (I)      DISSOLUTION OF OBLIGOR..........................................................................5
         (J)      DEFAULT OR REVOCATION OF GUARANTY...............................................................5
         (K)      LEVY, SEIZURE OR ATTACHMENT.....................................................................5
         (L)      CRIMINAL PROCEEDINGS............................................................................5
         (M)      CHANGE OF CONTROL...............................................................................5
         (N)      MATERIAL ADVERSE CHANGE.........................................................................5

16.      REMEDIES UPON AN EVENT OF DEFAULT........................................................................5

17.      CONDITIONS PRECEDENT.....................................................................................5

18.      SETTLEMENTS, DISTRIBUTIONS AND APPORTIONMENT OF PAYMENTS.................................................5

19.      AGENT....................................................................................................5
         (A)      APPOINTMENT OF AGENT............................................................................5
         (B)      NATURE OF DUTIES OF AGENT.......................................................................5
         (C)      LACK OF RELIANCE ON AGENT.......................................................................5

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         (D)      CERTAIN RIGHTS OF AGENT.........................................................................5
         (E)      RELIANCE BY AGENT...............................................................................5
         (F)      INDEMNIFICATION OF AGENT........................................................................5
         (G)      AGENT IN ITS INDIVIDUAL CAPACITY................................................................5
         (H)      HOLDERS OF NOTES................................................................................5
         (I)      SUCCESSOR AGENT.................................................................................5
         (J)      COLLATERAL MATTERS..............................................................................5
         (K)      ACTIONS WITH RESPECT TO DEFAULTS................................................................5
         (L)      DELIVERY OF INFORMATION.........................................................................5
         (M)      DEMAND..........................................................................................5
         (N)      NOTICE OF DEFAULT...............................................................................5

20.      ASSIGNABILITY............................................................................................5

21.      AMENDMENTS, ETC..........................................................................................5

22.      NONLIABILITY OF AGENT AND LENDERS........................................................................5

23.      INDEMNIFICATION..........................................................................................5

24.      NOTICE...................................................................................................5

25.      CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION...................................................5

26.      CONFIRMATION OF EXISTING OBLIGATIONS.....................................................................5

27.      HEADINGS OF SUBDIVISIONS.................................................................................5

28.      POWER OF ATTORNEY........................................................................................5

29.      CONFIDENTIALITY..........................................................................................5

30.      SYNDICATION..............................................................................................5

31.      COUNTERPARTS.............................................................................................5

32.      ELECTRONIC SUBMISSIONS...................................................................................5

33.      WAIVER OF JURY TRIAL; OTHER WAIVERS......................................................................5

34.      JOINT AND SEVERAL OBLIGATIONS; GUARANTEES................................................................5

35.      WAIVER OF EXISTING DEFAULTS..............................................................................5

36.      EFFECT OF AMENDMENT AND RESTATEMENT......................................................................5

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EXHIBITS

Exhibit A.........Compliance Certificate

Exhibit B.........Business and Collateral Locations

Exhibit C.........Commercial Tort Claims

Exhibit D.........Form of Intercompany Note

Exhibit E.........Form of Assignment and Acceptance

SCHEDULES

Schedule 2(a)(ii)          Eligible Inventory Valuation

Schedule 9(b)(iii)         Financial Condition Matters

Schedule 11(g)             Litigation

Schedule 11(h)             Compliance with Laws

Schedule 11(i)             Affiliate Transactions

Schedule 11(j)             Names and Trade Names

Schedule 11(k)             Equipment

Schedule 11(o)             Margin Security

Schedule 11(p)             Parents, Subsidiaries and Affiliates

Schedule 11(u)             Plans

Schedule 11(x)             Government Contracts

Schedule 12(a)             Maintenance of Records

Schedule 13(b)             Indebtedness

Schedule 17(a)             Closing Document Checklist

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                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

         THIS AMENDED AND  RESTATED  LOAN AND  SECURITY  AGREEMENT  (as amended,
modified or supplemented  from time to time, this "AGREEMENT") made this 3rd day
of April,  2007 by and among LASALLE  BUSINESS  CREDIT,  LLC, a Delaware limited
liability company,  successor by merger to LaSalle Business Credit, Inc. (in its
individual  capacity,  "LASALLE"),  as administrative agent and collateral agent
(in such agent  capacities,  "AGENT") for itself and all other lenders from time
to time a  party  hereto  ("LENDERS"),  located  at 135  South  LaSalle  Street,
Chicago,  Illinois 60603-4105,  and PROTECTIVE APPAREL CORPORATION OF AMERICA, a
New  York  corporation  ("PACA"),  POINT  BLANK  BODY  ARMOR  INC.,  a  Delaware
corporation  ("POINT  BLANK")  and NDL  PRODUCTS,  INC.,  a Florida  corporation
("NDL",  and together with PACA and Point Blank,  collectively,  the "BORROWERS"
and each,  individually,  a "BORROWER"),  and DHB  INDUSTRIES,  INC., a Delaware
corporation (f/k/a DHB Capital Group, Inc.) (the "PARENT" and a "GUARANTOR").

                                   WITNESSETH:

         WHEREAS, LaSalle extended a term credit facility and a revolving credit
facility to Borrowers  pursuant to that  certain  Loan and  Security  Agreement,
dated  September  24, 2001 (as  amended,  restated,  supplemented  or  otherwise
modified from time to time prior to giving effect to this Agreement,  the "PRIOR
LOAN AGREEMENT," and together with all Other Agreements as in effect immediately
prior to giving effect to this Agreement,  the "PRIOR LOAN  DOCUMENTS"),  by and
among the Borrowers, Parent and LaSalle; and

         WHEREAS,  Borrowers,  Parent, Agent, and Lenders have agreed to further
amend and to restate the terms of the Prior Loan Agreement as set forth herein.

         NOW,  THEREFORE,  in  consideration  of any Loan (including any Loan by
renewal or extension) or Letter of Credit heretofore or hereafter made to or for
the benefit of the  Borrowers  by Agent and/or  Lenders,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged by the parties hereto,  including without  limitation,  any Lender,
the parties  hereto  agree to amend and restate the Prior Loan  Agreement in its
entirety, as follows:

         1.       DEFINITIONS.

         "ACCOUNT", "ACCOUNT DEBTOR", "CHATTEL PAPER", "COMMERCIAL TORT CLAIMS",
"DEPOSIT  ACCOUNTS",  "DOCUMENTS",   "ELECTRONIC  CHATTEL  PAPER",  "EQUIPMENT",
"FIXTURES",   "GENERAL  INTANGIBLES",   "GOODS",   "INSTRUMENTS",   "INVENTORY",
"INVESTMENT  PROPERTY",   "LETTER-OF-CREDIT  RIGHT",  "PROCEEDS"  and  "TANGIBLE
CHATTEL PAPER" shall have the respective  meanings assigned to such terms in the
New York  Uniform  Commercial  Code,  as the same may be in effect  from time to
time.

         "0014  CONTRACT" means contract  number  W91CRB-04-D-0014,  dated as of
June 7, 2004, by and between the United States  Government  and Point Blank,  as
amended,  restated or otherwise modified from time to time,  including,  without

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limitation, by 0014 Modification P00006.

         "0014  MODIFICATION  P00006" means amendment  number P00006 to the 0014
Contract, dated and effective as of January 24, 2007.

         "0030  CONTRACT" means contract  number  W91CRB-06-D-0030,  dated as of
August 3, 2006, by and between the United States  Government and Point Blank, as
amended,  restated or otherwise modified from time to time,  including,  without
limitation, by 0030 Modification P00003.

         "0030  MODIFICATION  P00003" means amendment  number P00003 to the 0030
Contract, dated and effective as of December 11, 2006.

         "ACQUIRED DEBT" means  indebtedness with respect to capitalized  leases
or purchase money security  interest  financing of a Person existing at the time
such Person became a Subsidiary or assumed by Parent or any Subsidiary of Parent
pursuant to a Permitted  Acquisition  (and not created or incurred in connection
with or in anticipation of such Permitted Acquisition).

         "ADJUSTED AVAILABILITY" shall mean, as of any date of determination, an
amount,  determined by the Agent in a commercially  reasonable manner,  equal to
the excess of (a) the Revolving Loan Limit OVER (b) the sum of (i) the principal
amount of all outstanding  Revolving Loans and all Letter of Credit  Obligations
PLUS (ii) the aggregate  amount of all outstanding and unpaid trade payables and
other  obligations  of Parent and the  Borrowers  which are more than sixty (60)
days  past  due  as of  such  date  (excluding  payables  for  professional  and
restructuring costs and expenses).

         "AFFILIATE"  shall  mean any Person (i) which  directly  or  indirectly
through  one or more  intermediaries  controls,  is  controlled  by, or is under
common control with,  Parent or any Borrower,  (ii) which  beneficially  owns or
holds ten  percent  (10%) or more of the voting  control or  outstanding  equity
interests of Parent or any  Borrower,  or (iii) ten percent (10%) or more of the
voting control or outstanding equity interests of which is beneficially owned or
held by Parent or any Borrower.

         "APPLICABLE  MARGIN"  means a percentage  equal to: (i) with respect to
all Prime Rate  Loans,  0.25%;  and (ii) with  respect to all LIBOR Rate  Loans,
2.25%.

         "APPRAISAL" means a Monthly Desktop Appraisal or Quarterly Appraisal.

         "APPRAISER"  means Hilco  Appraisal  Services LLC or another  appraiser
selected by Borrowers which is reasonably acceptable to Agent.

         "ASSIGNMENT AND ACCEPTANCE"  shall have the meaning in SUBSECTION 20(C)
hereof.

         "AUDIT  FEE" shall  have the  meaning  specified  in  SUBSECTION  12(D)
hereof.

         "AVAILABILITY" shall mean, as of any date of determination,  an amount,
determined by the Agent in a commercially reasonable manner, equal to the excess
of (a) the Revolving Loan Limit OVER (b) the sum of the principal  amount of all

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outstanding Revolving Loans and all Letter of Credit Obligations.

         "BLOCKED  ACCOUNT" shall have the meaning  specified in SUBSECTION 8(A)
hereof.

         "BORROWER  REPRESENTATIVE" shall mean Point Blank or any other Borrower
that Borrowers and Parent shall  collectively  designate in writing from time to
time after the Closing Date upon not less than five (5) Business  Days'  written
notice to Agent.

         "BUSINESS  DAY" shall mean any day other than a  Saturday,  a Sunday or
(i) with  respect to all  matters,  determinations,  fundings  and  payments  in
connection with LIBOR Rate Loans,  any day on which banks in London,  England or
Chicago,  Illinois are required or permitted to close,  and (ii) with respect to
all other  matters,  any day that banks in  Chicago,  Illinois  are  required or
permitted to close.

         "CAPITAL   ADEQUACY  CHARGE"  shall  have  the  meaning   specified  in
SUBSECTION 4(C)(V) hereof.

         "CAPITAL   ADEQUACY  DEMAND"  shall  have  the  meaning   specified  in
SUBSECTION 4(C)(V) hereof.

         "CAPITAL  EXPENDITURES"  shall mean,  with  respect to any period,  the
aggregate of all  expenditures  (whether paid in cash or accrued as  liabilities
and including expenditures for capitalized lease obligations) made by Parent and
its  Subsidiaries  during such period that are  required by  generally  accepted
accounting  principles,  consistently applied, to be included in or reflected by
the property, plant and equipment or similar fixed asset accounts (or intangible
accounts subject to  amortization)  on the consolidated  balance sheet of Parent
and its Subsidiaries.

         "CLOSING DATE" shall mean April 3, 2007.

         "CLOSING DATE  AVAILABILITY  RESERVES"  shall mean,  collectively,  the
First Availability Reserve and the Second Availability Reserve.

         "CLOSING  DOCUMENT  CHECKLIST"  shall  have the  meaning  specified  in
SUBSECTION 17(A)(I) hereof.

         "COLLATERAL"  shall  mean all of the  property  of the  Parent  and the
Borrowers  described  in  SECTION 5  hereof,  together  with all  other  real or
personal property of any Obligor or any other Person now or hereafter pledged or
assigned  to Agent,  for the  benefit of Agent and  Lenders,  to secure,  either
directly or indirectly, repayment of any of the Liabilities.

         "COMPLETED FINANCIAL PACKAGE" means all of the following,  each in form
and substance reasonably acceptable to Agent:

                  (a)      the    annual    projections   of   Parent  and   its
         Subsidiaries  described in  SUBSECTION  9(D) hereof for the Fiscal Year
         ending  December  31,  2008,  which shall be  accompanied  by a written
         certification  by the Chief  Financial  Officer of Parent (on behalf of

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         Parent and its Subsidiaries) that such annual projections were prepared
         in good faith based upon estimates,  information  and assumptions  that
         Parent and its  Subsidiaries  believed  were  reasonable at the time of
         preparation thereof; and

                  (b)      the  Form  10-K  of Parent  and its  Subsidiaries for
         Fiscal Year 2006 (which shall include a  consolidated  balance sheet as
         at each of December 31, 2005 and December 31, 2006,  and a consolidated
         income  statement and  consolidated  statement of cash flow for each of
         Fiscal Year 2004,  Fiscal  Year 2005 and Fiscal Year 2006),  which Form
         10-K (and all financial  statements included therein) shall be prepared
         in   accordance   with   generally   accepted   accounting   principles
         (consistently   applied)  and  all  other   applicable   SEC  reporting
         requirements,  and shall be accompanied  by: (i) an  unqualified  audit
         opinion by independent  certified public accountants selected by Parent
         and reasonably  satisfactory to Agent that such consolidated  financial
         statements  for each such Fiscal Year  present  fairly in all  material
         respects the  financial  condition  and results of operations of Parent
         and  its  Subsidiaries  on a  consolidated  basis  in  accordance  with
         generally accepted accounting principles  consistently applied for each
         such Fiscal  Year;  and (ii) copies of all related  management  letters
         sent to Parent or any Subsidiary  thereof by such  accountants.  Parent
         and Borrowers  shall  further use  commercially  reasonable  efforts to
         cause such  accountants  to deliver to Agent (for the  benefit of Agent
         and Lenders) a letter  acknowledging  that such  accountants  are aware
         that a  primary  intent of  Parent  and  Borrowers  in  obtaining  such
         financial  statements  and  unqualified  audit  opinion is to influence
         Agent and Lenders  and that Agent and  Lenders  are  relying  upon such
         financial  statements and unqualified  audit opinion in connection with
         the exercise of their rights hereunder.

         "COMPLIANCE  CERTIFICATE" shall mean a certificate in the form attached
hereto as  EXHIBIT A and  signed by the Chief  Financial  Officer  of Parent and
Borrowers.

         "DEFAULT" shall have the meaning specified in SUBSECTION 2(A) hereof.

         "DEFAULTING LENDER" shall have the meaning specified in SUBSECTION 2(A)
hereof.

         "DFAS"  shall  mean the  Defense  Financing  & Account  Service  or any
department thereof, wherever located.

         "DISPROPORTIONATE   ADVANCE"  shall  have  the  meaning   specified  in
SUBSECTION 2(A) hereof.

         "DISTRIBUTION"  shall have the meaning  specified in  SUBSECTION  13(L)
hereof.

         "EBITDA" shall having the meaning  specified in Schedule 1 to EXHIBIT A
hereto.

         "ELIGIBLE  ACCOUNT"  shall mean an Account owing to a Borrower which is
acceptable  to  Agent  in  its  sole  discretion,  exercised  in a  commercially
reasonable  manner, for lending purposes.  Without limiting Agent's  discretion,
Agent shall consider an Account (or portion  thereof) to be an Eligible  Account
if it meets, and so long as it continues to meet, the following requirements:

         (i)      it is genuine and in all respects what it purports to be;

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         (ii)     it  is owned by a  Borrower,  such  Borrower  has the right to
subject it to a security interest in favor of Agent or assign it to Agent and it
is subject to a first priority perfected security interest in favor of Agent and
to no other claim, lien, security interest or encumbrance whatsoever, other than
Permitted Liens;

         (iii)    it  arises from (A) the  performance of services by a Borrower
in the ordinary course of such Borrower's business,  and such services have been
fully performed and acknowledged and accepted by the Account Debtor  thereunder;
or (B) the sale or lease of Goods by a Borrower in the  ordinary  course of such
Borrower's  business,  and (w) such Goods have been completed in accordance with
the Account Debtor's  specifications (if any) and shipped to the Account Debtor,
(x) or,  in the case of  Accounts  where the  United  States  Government  is the
Account Debtor,  such Goods have been segregated in an area of a warehouse where
such  Borrower  to which  such  Accounts  are  owed  stores  Inventory,  clearly
designated as containing Goods to be shipped to the United States Government and
which Goods have been accepted and approved by the United States Government on a
completed and signed form DD-250, (y) and shall not include any portion of Goods
which such Account Debtor has refused to accept,  returned or offered to return,
which are the subject of such Account,  and (z) such Borrower has possession of,
or such  Borrower  has  delivered  to Agent (at Agent's  request),  shipping and
delivery receipts evidencing shipment of such Goods;

         (iv)     it  is evidenced by an invoice  rendered to the Account Debtor
thereunder  and is not  outstanding  beyond the  earlier of: (i) sixty (60) days
past the due date;  and (ii) (x) in the case of all Account  Debtors  other than
the United States Government, ninety (90) days past the invoice date, and (y) in
the case of the United States Government, one hundred and twenty (120) days past
the  invoice  date;  PROVIDED,  HOWEVER,  that  Accounts  owing by DFAS up to an
aggregate  maximum of $5,000,000 at any time outstanding  shall not be deemed to
be  ineligible  under this CLAUSE (IV) if, and to the extent,  such Accounts are
not outstanding beyond one hundred and fifty (150) days past the invoice date;

         (v)      it  is  a  valid,   legally   enforceable  and   unconditional
obligation of the Account Debtor  thereunder;  PROVIDED that any portion of such
Account,  and only such  portion,  which is  subject  to  setoff,  counterclaim,
credit,  allowance or adjustment by such Account Debtor, or to any claim by such
Account Debtor denying  liability  thereunder in whole or in part,  shall not be
deemed an "ELIGIBLE ACCOUNT" hereunder;

         (vi)     it  does not arise out of a contract  or order  which fails in
any material respect to comply with the requirements of applicable law;

         (vii)    the  Account  Debtor  thereunder  is not a  current  or former
director,  officer,  employee  or agent of Parent or a  Borrower,  a current  or
former  Subsidiary  of a Borrower or Parent or a current or former  Affiliate of
Parent or a Borrower;

         (viii)   the  Account  Debtor is located  within  the United  States of
America or is owing by the United States Government wherever located;

         (ix)     it  is not an Account owing by the United  States  Government,
unless the Borrower to which the Account is payable has duly  assigned its right

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to payment  of such  Account to the Agent  pursuant  to, and in full  compliance
with, the Federal Assignment of Claims Act of 1940; PROVIDED,  HOWEVER,  that an
Account that is an "ELIGIBLE  ACCOUNT" in all other respects shall not be deemed
to be  ineligible  under this CLAUSE  (IX)  solely  because it has not been duly
assigned in  compliance  with the Federal  Assignment  of Claims Act of 1940, so
long as: (A) the face amount of each such  Account  does not exceed  $10,000 and
(B) the  aggregate  outstanding  amount of all such  Accounts  referenced in the
immediately  preceding CLAUSE (A) does not exceed $60,000 at any time; PROVIDED,
FURTHER,  that from and after the Second Availability  Reserve Termination Date,
Accounts owing by the United States  Government that have not been duly assigned
to Agent  pursuant to the Federal  Assignment of Claims Act of 1940 as indicated
above, up to an aggregate maximum of $500,000 at any time outstanding,  shall be
deemed  "ELIGIBLE  ACCOUNTS" if, and to the extent,  such Accounts are otherwise
deemed to be "ELIGIBLE ACCOUNTS" hereunder;

         (x)      it  is not an Account owing by any state or local  government,
or any department,  agency or  instrumentality  thereof,  unless the Borrower to
which the Account is payable has  assigned  its right to payment of such Account
to the Agent pursuant to, and in full compliance  with, any local applicable law
comparable to the Federal Assignment of Claims Act of 1940;  PROVIDED,  HOWEVER,
that an Account that is an "ELIGIBLE ACCOUNT" in all other respects shall not be
deemed to be  ineligible  under this  CLAUSE (X) solely  because it has not been
duly assigned in compliance with such applicable  local law, so long as: (A) the
face amount of each such Account does not exceed  $15,000 and (B) the  aggregate
outstanding amount of all such Accounts referenced in the immediately  preceding
CLAUSE (A) does not exceed $50,000 at any time;

         (xi)     it  is not an Account owing by an Account  Debtor located in a
state  which  requires  the  Borrower  to which the  Account  is  payable,  as a
precondition to commencing or maintaining an action in the courts of that state,
either to (A) receive a  certificate  of authority to do business and be in good
standing in such state;  or (B) file a notice of business  activities  report or
similar report with such state's taxing authority,  unless (x) such Borrower has
taken the actions described in the immediately preceding CLAUSES (A) or (B); (y)
the failure to take one of the actions described in either immediately preceding
CLAUSE (A) or (B) may be cured  retroactively  by such Borrower at its election;
or (z) such Borrower has proven, to Agent's satisfaction, that it is exempt from
any such requirements under any such state's laws;

         (xii)    it  is not an Account owing by an Account Debtor if, when such
Account  is added to such  Account  Debtor's  other  indebtedness  to Parent and
Borrowers,  the result is that more than fifty  percent (50%) of the face amount
of all Accounts then owing by such Account  Debtor are not  "ELIGIBLE  ACCOUNTS"
hereunder;

         (xiii)   it  is not an  Account  with  respect  to  which  the  Account
Debtor's  obligation  to pay is subject to any  repurchase  obligation or return
right, as with sales made on a bill-and-hold, guaranteed sale, sale on approval,
sale or return or consignment basis;

         (xiv)    it   is  not  an  Account  (A)  with   respect  to  which  any
representation  or warranty  contained in this Agreement is untrue; or (B) which
violates  any of the  covenants  of Parent  or any  Borrower  contained  in this
Agreement;

                                       6

<PAGE>

         (xv)     it  is not an Account owing by an Account  Debtor which,  when
added to all other  indebtedness  to Parent and Borrowers  owing by such Account
Debtor,  exceeds:  (A) 20% of all Accounts  owing by all Account  Debtors except
DFAS; provided, HOWEVER, that at no time shall the Accounts owing by DFAS exceed
80% of all  Accounts  owing  by  all  Account  Debtors,  or (B) a  credit  limit
determined  by  Agent  in  its  sole  discretion,  exercised  in a  commercially
reasonable  manner,  for that Account Debtor (except that (i) Accounts  excluded
from "ELIGIBLE ACCOUNTS" solely by reason of this CLAUSE (XV) shall be "ELIGIBLE
ACCOUNTS" to the extent of such credit  limit and (ii) Agent will not  establish
any credit limit under this CLAUSE (B) for the United States  Government so long
as no Default or Event of Default has occurred and is continuing);

         (xvi)    it  does  not  arise  out of  progress  billings  or  prior to
completion  of an order,  or is not subject to any adverse  security  deposit or
other  similar  advance  made by or for the  benefit of the  applicable  Account
Debtor;

         (xvii)   it is not an Account which  constitutes  advertising,  finance
charges, service charges or excise taxes; and

         (xix)    it is not an Account that is otherwise deemed to be ineligible
by Agent in its sole discretion, exercised in a commercially reasonable manner.

         "ELIGIBLE  ACCOUNT  EXCESS  AVAILABILITY"  means,  as of  any  date  of
determination,  the amount by which the  Eligible  Account  sublimit  calculated
pursuant to SUBSECTION  2(A)(I) hereof as of such date of determination  exceeds
the sum of (a) the aggregate  unpaid  principal  balance of all Revolving  Loans
made to all  Borrowers  PLUS (b) the  aggregate  amount of all  Letter of Credit
Obligations of all Borrowers, in each case as of such date of determination.

         "ELIGIBLE  INVENTORY"  shall  mean  Inventory  of a  Borrower  which is
acceptable  to  Agent  in  its  sole  discretion,  exercised  in a  commercially
reasonable  manner, for lending purposes.  Without limiting Agent's  discretion,
Agent shall consider Inventory to be Eligible Inventory if it meets, and so long
as it continues to meet, the following requirements:

         (i)      it  is owned by a  Borrower,  such  Borrower  has the right to
subject it to a security interest in favor of Agent and it is subject to a first
priority  perfected  security  interest in favor of Agent and to no other claim,
lien, security interest or encumbrance whatsoever, other than Permitted Liens;

         (ii)     it  is located on one of the premises  listed on EXHIBIT B (or
other  locations  of which  Agent  has  been  advised  in  writing  pursuant  to
SUBSECTION 12(B)(I) hereof) and is not in transit except between such locations;

         (iii)    if  held for sale or lease or  furnishing  under  contracts of
service, it is (except as Agent may otherwise consent in writing) new and unused
and free from defects  which would,  in Agent's  sole  determination,  made in a
commercially reasonable manner, affect its market value;

         (iv)     it  is not  stored  with a  bailee,  consignee,  warehouseman,
processor or similar party unless Agent has given its prior written approval and
the  relevant  Borrower  has caused any such  bailee,  consignee,  warehouseman,
processor or similar party to issue and deliver to Agent,  in form and substance
acceptable  to  Agent,  such  Uniform  Commercial  Code  financing   statements,

                                       7

<PAGE>

warehouse receipts, waivers and other documents as Agent shall require, or is on
consignment to a Borrower from any Person;

         (v)      Agent  has determined,  in accordance  with Agent's  customary
business  practices,  that it is not unacceptable due to age, type,  category or
quantity;

         (vi)     it  does  not  consist of supplies, packaging, parts or sample
Inventory;

         (vii)    no Borrower has  returned,  has  attempted  to return,  is  in
the  process  of returning or intends to return  such  Inventory  to  the vendor
thereof;

         (viii)   it is  not  damaged, obsolete,  slow  moving or  not currently
usable or saleable in the normal course of the applicable Borrower's operations;
and

         (ix)     it  is not  Inventory  (A) with  respect  to which  any of the
representations  and warranties  contained in this Agreement are untrue;  or (B)
which violates any of the covenants of any Borrower contained in this Agreement.

         "ENVIRONMENTAL LAWS" shall mean all federal, state, district, local and
foreign laws, rules,  regulations,  ordinances,  and consent decrees relating to
health,  safety,  hazardous substances,  pollution and environmental matters, as
now or at any time hereafter in effect, applicable to any Borrower's business or
facilities  owned or  operated  by any  Borrower,  including  laws  relating  to
emissions,   discharges,   releases  or  threatened   releases  of   pollutants,
contamination, chemicals, or hazardous, toxic or dangerous substances, materials
or wastes into the  environment  (including,  without  limitation,  ambient air,
surface  water,  ground water,  land surface or subsurface  strata) or otherwise
relating  to  the  generation,  manufacture,   processing,   distribution,  use,
treatment, storage, disposal, transport or handling of Hazardous Materials.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, modified or restated from time to time.

         "ERISA  AFFILIATE"  shall mean, with respect to Parent or any Borrower,
any trade or business (whether or not incorporated)  that,  together with Parent
or such Borrower,  are treated as a single employer under Section  4001(b)(1) of
ERISA or Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.

         "ERISA EVENT" shall mean,  with respect to Parent,  any Borrower or any
ERISA  Affiliate,  (i) any event described in Section 4043 of ERISA with respect
to a Title IV Plan;  (ii) the  withdrawal  of Parent,  any Borrower or any ERISA
Affiliate  from a Title IV Plan  subject to Section  4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA;  (iii) the complete or partial  withdrawal of Parent, any Borrower or any
ERISA  Affiliate  from any  Multiemployer  Plan;  (iv) the filing of a notice of
intent to terminate a Title IV Plan or the  treatment  of a plan  amendment as a
termination  under Section 4041 of ERISA;  (v) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (vi) the failure by
Parent,  any  Borrower  or  any  ERISA  Affiliate  to  make  when  due  required
contributions  to a  Multiemployer  Plan or Title IV Plan unless such failure is
cured within 30 days;  (vii) any other event or condition that might  reasonably
be  expected  to  constitute  grounds  under  Section  4042  of  ERISA  for  the

                                       8

<PAGE>

termination of, or the appointment of a trustee to administer, any Title IV Plan
or  Multiemployer  Plan or for the imposition of liability under Section 4069 or
4212(c) of ERISA;  (viii) the termination of a Multiemployer  Plan under Section
4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under
Section  4241  or  4245  of  ERISA;  or (ix)  the  loss  of a  Qualified  Plan's
qualification  or tax exempt status;  or (x) the termination of a Plan described
in Section 4064 of ERISA.

         "EVENT OF  DEFAULT"  shall  have the  meaning  specified  in SECTION 15
hereof.

         "FEDERAL  ASSIGNMENT  OF CLAIMS ACT OF 1940" shall mean,  collectively,
the Assignment of Claims Act of 1940, as amended,  31 U.S.C. ss. 3727, 41 U.S.C.
ss. 15, any applicable rules,  regulations and  interpretations  issued pursuant
thereto, and any amendments to any of the foregoing.

         "FINANCIAL   COVENANT  AMENDMENT"  shall  mean  an  amendment  to  this
Agreement,  in form and substance  acceptable to Agent and Requisite  Lenders in
their sole  discretion  and duly  executed and  delivered by Parent,  Borrowers,
Agent and Requisite  Lenders in accordance  with the terms hereof,  which shall,
among other things:  (i) establish  financial  covenants  with respect to Senior
Leverage Ratio,  Total Leverage Ratio,  minimum Tangible Net Worth, Fixed Charge
Coverage  Ratio  and  minimum  Consolidated  EBITDA,  in each  case,  at  levels
reasonably  acceptable to Parent,  Borrowers,  Agent and Requisite Lenders;  and
(ii) amend the definition of  "Applicable  Margin" to include a pricing grid for
determination of "Applicable Margin"  percentages that is reasonably  acceptable
to Parent, Borrowers, Agent and Requisite Lenders.

         "FIRST  AVAILABILITY  RESERVE"  shall  have the  meaning  specified  in
SUBSECTION 2(A) hereof.

         "FIRST  AVAILABILITY  RESERVE  TERMINATION  DATE"  means  the  earliest
Business Day on which all of the following  conditions shall have been satisfied
by  Borrowers  or waived by Agent in its sole  discretion:  (i) Agent shall have
received evidence  satisfactory to the Agent that the Borrowers have established
and implemented a perpetual inventory  reporting system reasonably  satisfactory
to Agent;  and (ii) no Default or Event of Default  shall have  occurred  and be
continuing as of such Business Day.

         "FISCAL QUARTER" shall mean any of the quarterly  accounting periods of
Parent ending on March 31, June 30, September 30 and December 31 of each year.

         "FISCAL  YEAR" shall mean each twelve (12) month  accounting  period of
Parent, which ends on December 31 of each year.

         "FIXED  CHARGES"  shall  having the meaning  specified in Schedule 2 to
EXHIBIT A.

         "FORMER DHB  SUBSIDIARY"  shall mean each of DHB Armor  Group,  Inc., a
Delaware corporation,  DHB Sports Group, Inc., a Delaware  corporation,  Lanxide
Armor Products Inc., a Delaware  corporation,  and Orthopedic Products,  Inc., a
Florida corporation.

         "GUARANTOR"  or  "GUARANTORS"   shall  have  the  respective   meanings
specified in SUBSECTION 34(B) hereof.

                                       9

<PAGE>

         "HAZARDOUS  MATERIALS"  shall mean any  hazardous,  toxic or  dangerous
substance,  materials and wastes,  including,  without limitation,  hydrocarbons
(including   naturally   occurring  or  man-made  petroleum  and  hydrocarbons),
flammable  explosives,  asbestos,  urea  formaldehyde  insulation,   radioactive
materials,   biological  substances,   polychlorinated  biphenyls,   pesticides,
herbicides  and any  other  kind  and/or  type  of  pollutants  or  contaminants
(including, without limitation, materials which include hazardous constituents),
sewage,  sludge,  industrial slag, solvents and/or any other similar substances,
materials,  or wastes and  including any other  substances,  materials or wastes
that are or become  regulated under any  Environmental  Law (including,  without
limitation  any that are or become  classified  as  hazardous or toxic under any
Environmental Law).

         "INDEMNIFIED  PARTY"  shall have the  meaning  specified  in SECTION 23
hereof.

         "INTEREST PERIOD" shall mean, with respect to any LIBOR Rate Loans, any
continuous  period of thirty (30), sixty (60), ninety (90) or one hundred eighty
(180) days,  as selected  from time to time by the  Borrower  Representative  by
irrevocable notice (in writing, by mail, facsimile, telecopy or other electronic
transmission)  given to Agent not less than two (2)  Business  Days prior to the
first day of each  respective  Interest  Period;  PROVIDED  that:  (i) each such
Interest Period  occurring after such initial  Interest Period shall commence on
the day on which the immediately  preceding  Interest  Period expires;  (ii) the
final Interest Period shall be such that its expiration  occurs on or before the
end of the Original Term or any Renewal Term,  as  applicable;  and (iii) if for
any reason a requesting Borrower shall fail to timely select an Interest Period,
then such Loans shall continue as, or revert to, Prime Rate Loans.

         "INTERNAL  REVENUE  CODE" means the Internal  Revenue Code of 1986,  as
amended, and all regulations promulgated thereunder.

         "INVENTORY   ADVANCE  LIMIT"  shall  have  the  meaning   specified  in
SUBSECTION 2(A) hereof.

         "LASALLE BANK" shall mean LaSalle Bank National  Association,  Chicago,
Illinois.

         "LETTER OF CREDIT"  shall mean any Letter of Credit issued on behalf of
a Borrower in accordance with this Agreement.

         "LETTER  OF  CREDIT   OBLIGATIONS"  shall  mean,  as  of  any  date  of
determination,  the sum of (i) the aggregate  undrawn face amount of all Letters
of Credit and (ii) the  aggregate  unreimbursed  amount of all drawn  Letters of
Credit not already converted to Loans hereunder.

         "LIABILITIES"  shall  mean  any and all  obligations,  liabilities  and
indebtedness  of  Parent  and each  Borrower  to Agent or any  Lender  or to any
parent,  affiliate or subsidiary  of Agent or any Lender,  of any and every kind
and  nature,  arising  under or  pursuant  to any of this  Agreement,  the Other
Agreements  or  the  Prior  Loan  Documents  or  the  transactions  contemplated
hereunder  or  thereunder  or,  howsoever  created,  arising  or  evidenced  and
howsoever owned, held or acquired,  whether now or hereafter  existing,  whether
now  due  or to  become  due,  whether  primary,  secondary,  direct,  indirect,
absolute, contingent or otherwise (including, without limitation, obligations of
performance),  whether several,  joint or joint and several, and whether arising
or existing under written or oral agreement or by operation of law.

                                       10

<PAGE>

         "LIBOR  RATE" shall mean,  with  respect to any LIBOR Rate Loan for any
Interest  Period, a rate per annum equal to (a) the offered rate for deposits in
United States  dollars for a period equal to such Interest  Period as it appears
on Reuters  Screen  LIBOR01  Page (or such other page as may replace the Reuters
Screen  LIBOR01  Page of that  service or such other  service)  as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest  Period,
divided  by (b) a number  equal to 1.0 minus  the  maximum  reserve  percentages
(express  as  a  decimal  fraction)   including,   without   limitation,   basic
supplemental, marginal and emergency reserves under any regulations of the Board
of  Governors  of the Federal  Reserve  System or other  governmental  authority
having  jurisdiction  with  respect  thereto,  as now and  from  time to time in
effect,  for  Eurocurrency  funding  (currently  referred  to  as  "EUROCURRENCY
LIABILITIES"  in Regulation D of such Board) which are required to be maintained
by the Lenders by the Board of  Governors  of the Federal  Reserve  System.  The
LIBOR Rate shall be adjusted  automatically  on and as of the effective  date of
any change in such reserve percentage.

         "LIBOR RATE LOANS" shall mean the Loans bearing interest with reference
to the LIBOR Rate.

         "LOANS"  shall  mean all loans and  advances  made by Agent  and/or any
Lender to or on  behalf  of any  Borrower  hereunder  or under  the  Prior  Loan
Agreement.

         "LOCK BOX" shall have the meaning specified in SUBSECTION 8(B) hereof.

         "LOCK BOX ACCOUNT" shall have the meaning  specified in SUBSECTION 8(B)
hereof.

         "MATERIAL  ADVERSE EFFECT" shall mean a material  adverse effect on the
business,  property,  assets, prospects,  operations or condition,  financial or
otherwise, of a Person.

         "MAXIMUM  REVOLVING  LOAN LIMIT"  shall have the meaning  specified  in
SUBSECTION 2(A) hereof.

         "MONTHLY  DESKTOP  APPRAISAL"  shall mean,  at any time,  the then most
recently  completed  monthly  desktop  evaluation  and  appraisal of  Borrowers'
Inventory   completed  by  Appraiser  in  a  manner   acceptable  to  Agent  and
substantially in the same form as the Monthly Hilco Report.

         "MONTHLY HILCO REPORT" means the updated  monthly  "desktop"  inventory
evaluation  and  appraisal of DHB  Industries,  Inc.  dated  January 9, 2007 and
prepared by Hilco Appraisal Services LLC.

         "MULTIEMPLOYER  PLAN" shall mean a  "multiemployer  plan" as defined in
Section  (3)(7)  of  ERISA,  and to which  Parent,  any  Borrower  or any  ERISA
Affiliate is making,  is obligated to make or has made or been obligated to make
in the past five years  contributions  on behalf of participants who are or were
employed by any of them or withdrawal liability payments.

         "NET ORDERLY LIQUIDATION VALUE" means, with respect to Inventory of any
Borrower,  the orderly  liquidation  value thereof as set forth in the then most
recently prepared Appraisal, net of all costs of liquidation thereof;  PROVIDED,
HOWEVER,  that the orderly  liquidation  value of  Inventory  consisting  of raw

                                       11

<PAGE>

materials  and  work-in-process  shall  be  calculated  in  accordance  with the
"conversion scenario" methodology applied in the Monthly Hilco Report.

         "NET SALES"  shall have the meaning  specified in Schedule 6 to EXHIBIT
A.

         "OBLIGOR" shall mean Parent, each Borrower and each other Person who is
or shall become primarily or secondarily liable for any of the Liabilities.

         "ORIGINAL TERM" shall have the meaning specified in SECTION 10 hereof.

         "OTHER   AGREEMENTS"   shall  mean  all  agreements,   instruments  and
documents, other than this Agreement, including, without limitation, guaranties,
mortgages,  trust deeds,  pledges,  powers of attorney,  consents,  assignments,
contracts,  notices,  security agreements,  leases, financing statements and all
other writings heretofore,  now or from time to time hereafter executed by or on
behalf of Parent,  one or more Borrowers,  or any other Obligor and delivered to
Agent  and/or any Lender or to any  parent,  affiliate  or  subsidiary  of Agent
and/or  any  Lender  in  connection  with the  Liabilities  or the  transactions
contemplated hereby (including,  without limitation,  the Prior Loan Documents),
as each of the same may be amended, modified or supplemented from time to time.

         "PBGC" shall have the meaning specified in SUBSECTION 12(B)(V) hereof.

         "PERMITTED  ACQUISITION" shall have the meaning specified in SUBSECTION
13(D) hereof.

         "PERMITTED  INVESTMENTS"  shall mean (i) marketable direct  obligations
issued or  unconditionally  guaranteed by the United States Government or issued
by any  agency  thereof  and  backed by the full  faith and credit of the United
States of America,  in each case,  maturing within one year from the date of the
acquisition  thereof;  (ii)  commercial  paper,  maturing not more than 270 days
after the date of issue rated P-1 by Moody's or A-1 by Standard & Poor's;  (iii)
certificates of deposit maturing not more than 270 days after the date of issue,
issued by commercial  banking  institutions  and money market or demand  deposit
accounts  maintained  at  commercial  banking  institutions,  each of which is a
member of the Federal Reserve System and has a combined  capital and surplus and
undivided  profits of not less than  $500,000,000;  (iv)  repurchase  agreements
having  maturities of not more than 90 days from the date of  acquisition  which
are  entered  into with major money  center  banks  included  in the  commercial
banking  institutions  described  in clause (iii) above and which are secured by
readily  marketable  direct  obligations of the United States  Government or any
agency thereof,  (v) money market  accounts  maintained with mutual funds having
assets in excess of  $2,500,000,000;  and (vi) tax exempt  securities rated A or
better by Moody's or A+ or better by Standard & Poor's.

         "PERMITTED   LIENS"  shall  mean  (i)  liens  of  lessors  under  lease
agreements and statutory liens of landlords, carriers, warehousemen, processors,
mechanics,  materialmen or suppliers incurred in the ordinary course of business
and  securing  amounts  not  yet  due or  declared  to be  due  by the  claimant
thereunder;  (ii) liens or security  interests  in favor of Agent;  (iii) zoning
restrictions and easements, licenses, covenants and other restrictions affecting
the use of real property  that do not  individually  or in the aggregate  have a
material  adverse effect on Parent's or any Borrower's  ability to use such real
property for its intended purpose in connection with such Parent's or Borrower's
business;  (iv)  liens  in  connection  with  purchase  money  indebtedness  and

                                       12

<PAGE>

capitalized  leases otherwise  permitted  pursuant to this Agreement;  provided,
that such liens  attach only to the  specific  assets the  purchase of which was
financed by such  purchase  money  indebtedness  or which is the subject of such
capitalized  leases;  (v) liens securing the payment of taxes not yet due or the
payment  of  which  is  being   contested  in  good  faith  and  by  appropriate
proceedings;  PROVIDED,  that (a)  adequate  reserves  for such  taxes have been
established to the extent required by generally accepted accounting  principles,
consistently  applied,  and (b) no notice of any such lien has been filed in any
jurisdiction;  (vi) deposits under workers compensation,  unemployment insurance
or  social  security  laws,  or to  secure  the  performance  of bids,  tenders,
contracts or leases, or to secure statutory obligations, surety or appeal bonds,
or other  bonds  in the  ordinary  course  of  business;  (vii)  liens  securing
judgments  or awards which do not  constitute  Events of Default  hereunder  and
which are being appealed while a stay is in effect; (viii) the filing of Uniform
Commercial  Code  financing  statements  solely as a  precautionary  measure  in
connection  with  operating  leases  or  consignment  of goods;  (ix)  leases or
subleases  of property of Parent or any  Borrower,  in each case entered into in
the ordinary  course of such Person's  business;  (x) licenses or sublicenses of
intellectual  property  granted by Parent or any Borrower in the ordinary course
of its business and not interfering in any material  respect with the conduct of
the business of Parent and the Borrowers,  taken as a whole; (xi) liens securing
Acquired Debt incurred or assumed in connection with any Permitted  Acquisition;
PROVIDED such liens attach only (a) in the case of mortgage indebtedness, to the
real  estate  previously  financed  by  such  lienholder,  (b)  in the  case  of
indebtedness  with respect to  capitalized  leases,  to the assets which are the
subject of such capitalized leases, or (c) in the case of any other indebtedness
in respect of purchase money security  interest  financing,  to the assets which
are the subject of such purchase money  security  interest  financing;  it being
understood  and agreed that in no event shall any liens under this clause  (xii)
attach to any assets  constituting  Collateral;  (xiii)  other liens that secure
obligations,  the aggregate principal amount of which does not exceed, as of any
date of determination,  One Hundred Thousand and No/100 Dollars ($100,000);  and
(xiv) liens to which Agent has given its prior written consent.

         "PERSON" shall mean any individual,  sole proprietorship,  partnership,
joint venture, trust,  unincorporated  organization,  association,  corporation,
limited  liability  company,  institution,  entity,  party or  foreign or United
States  government  (whether  federal,   state,   county,   city,  municipal  or
otherwise),  including,  without  limitation,  any  instrumentality,   division,
agency, body or department thereof.

         "PLAN" shall mean, at any time, an "employee  benefit plan," as defined
in Section  3(3) of ERISA,  that  Parent,  any  Borrower or any ERISA  Affiliate
maintains,  contributes  to or has an obligation  contribute to on behalf of its
employees.

         "PRE-SETTLEMENT DETERMINATION DATE" shall have the meaning specified in
SUBSECTION 18(A) hereof.

         "PRIMARY  SYNDICATION"  shall have the meaning  specified in SECTION 30
hereof.

         "PRIME RATE" shall mean LaSalle Bank's  publicly  announced  prime rate
(which is not intended to be LaSalle  Bank's  lowest or most  favorable  rate in
effect at any time) in effect from time to time.

                                       13

<PAGE>

         "PRIME RATE LOANS" shall mean the Loans bearing interest with reference
to the Prime Rate.

         "PRIOR CLOSING DATE" means September 24, 2001.

         "PRIOR  LIABILITIES"  shall have the  meaning  specified  in SECTION 36
hereof.

         "PRO RATA SHARE" shall mean at any time, with respect to any Lender,  a
fraction  (expressed as a percentage  in no more than nine (9) decimal  places),
the numerator of which shall be the sum of the Revolving Loan Commitment of such
Lender at such time and the denominator of which shall be the Maximum  Revolving
Loan Limit at such time.

         "QUALIFIED PLAN" shall mean a Plan that is intended to be tax-qualified
under Section 401(a) of the Internal Revenue Code.

         "QUARTERLY  APPRAISAL"  shall mean, at any time, the then most recently
completed  full  quarterly  evaluation  and  appraisal of  Borrowers'  Inventory
completed by Appraiser in a manner  acceptable to Agent and substantially in the
same form as the Quarterly Hilco Report.

         "QUARTERLY  HILCO REPORT" means the Inventory  Evaluation and Appraisal
of DHB Industries, Inc. dated September 22, 2006 and prepared by Hilco Appraisal
Services LLC.

         "REGISTER" shall have the meaning specified in SUBSECTION 20(E) hereof.

         "REGULATORY  CHANGE"  shall have the meaning  specified  in  SUBSECTION
4(B)(III) hereof.

         "RENEWAL TERM" shall have the meaning specified in SECTION 10 hereof.

         "REQUISITE  LENDERS"  shall mean, at any time,  Lenders having Pro Rata
Shares  aggregating at least fifty and one-tenth  percent (50.1%),  unless there
are only two Lenders, in which case both Lenders.

         "REVOLVING  LOAN  COMMITMENT"  shall mean, with respect to each Lender,
the maximum  amount of  Revolving  Loans which such Lender has agreed to make to
Borrowers,  subject to the terms and conditions of this Agreement,  as set forth
on the signature page hereto or an Assignment  and  Acceptance  executed by such
Lender.

         "REVOLVING  LOAN LIMIT" shall have the meaning  specified in SUBSECTION
2(A) hereof.

         "REVOLVING  LOANS" shall have the meaning  specified in SUBSECTION 2(A)
hereof.

         "SEC" shall mean the United States Securities and Exchange Commission.

         "SECOND  AVAILABILITY  RESERVE" shall have the meaning ascribed to such
term in SUBSECTION 2(A) hereof.

         "SECOND  AVAILABILITY  RESERVE  TERMINATION  DATE"  means the  earliest
Business Day on which all of the following  conditions shall have been satisfied
by the  Borrowers  or  waived  by Agent in its sole  discretion:  (i) the  First
Availability  Reserve  Termination Date shall have occurred;  (ii) the Financial

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Covenant  Amendment  shall have been duly  executed and  delivered by Borrowers,
Parent,  Agent,  and  Requisite  Lenders  and shall have  become  effective  and
enforceable  against the parties  thereto in  accordance  with its terms;  (iii)
Agent shall have received the Completed  Financial Package;  and (iv) no Default
or Event of Default  shall have  occurred and be  continuing as of such Business
Day.

         "SENIOR LEVERAGE RATIO" shall having the meaning  specified in Schedule
4 to EXHIBIT A hereto.

         "SETTLEMENT  DATE" shall have the meaning specified in SUBSECTION 18(A)
hereof.

         "SUBSIDIARY"  shall mean, as to any Person,  any  corporation  of which
more than fifty percent (50%) of the  outstanding  capital stock having ordinary
voting power to elect a majority of the board of  directors of such  corporation
(irrespective  of  whether  at  the  time  stock  of any  other  class  of  such
corporation  shall have or might have voting power by reason of the happening of
any contingency) is at the time,  directly or indirectly,  owned by such Person,
or any  partnership,  joint venture or limited  liability  company of which more
than fifty percent (50%) of the  outstanding  equity  interests are at the time,
directly or  indirectly,  owned by such Person or any  partnership of which such
Person is a general partner.

         "TANGIBLE  NET WORTH" shall having the meaning  specified in Schedule 5
to EXHIBIT A hereto.

         "TAX" shall mean any tax, levy, impost, duty, deduction, withholding or
charges of  whatever  nature  required  to be paid by Agent or any Lender (i) in
relation to any LIBOR Rate Loans and the applicable  LIBOR Rate,  and/or (ii) to
be withheld or deducted from any payment otherwise required hereby to be made by
one or more  Borrowers  to Agent or any  Lender;  PROVIDED,  that the term "TAX"
shall not include any taxes imposed upon the net income of Agent or any Lender.

         "TITLE IV PLAN" shall mean a Plan (other  than a  Multiemployer  Plan),
that is  covered  by Title IV of ERISA or Section  412 of the  Internal  Revenue
Code,  and  that  Parent,  any  Borrower  or  any  ERISA  Affiliate   maintains,
contributes  to or has an obligation to contribute to on behalf of  participants
who are or were employed by any of them.

         "TOTAL LEVERAGE RATIO" shall having the meaning specified in Schedule 3
to EXHIBIT A hereto.
         "UNFUNDED  PENSION  LIABILITY"  shall mean, at any time,  the aggregate
amount, if any, of the amount by which the present value of all accrued benefits
under each Title IV Plan  exceeds  the fair  market  value of all assets of such
Title IV Plan  allocable to such benefits in accordance  with Title IV of ERISA,
all determined as of the most recent  valuation date for each such Title IV Plan
using the actuarial assumptions for purposes of determining the funded status of
each such Title IV Plan under Section 412 of the Internal Revenue Code.

         "UNITED  STATES  GOVERNMENT"  means the United States of America or any
department, agency, instrumentality or other subdivision thereof.

                                       15

<PAGE>

         2.       LOANS.

                  (A)      REVOLVING LOANS.

         Subject to the terms and  conditions  of this  Agreement  and the Other
Agreements,  during the Original Term and each Renewal Term, if any,  commencing
on the date the  conditions  in  SUBSECTION  17(A) are  satisfied,  each Lender,
severally and not jointly,  agrees to make its Pro Rata Share of revolving loans
and advances to the Borrowers  (the  "REVOLVING  LOANS") upon the request of the
Borrower  Representative,  on  behalf  of the  Borrowers,  up to  such  Lender's
Revolving  Loan  Commitment,  so long as after giving  effect to such  Revolving
Loans, the sum of the aggregate unpaid principal  balance of the Revolving Loans
and the Letter of Credit  Obligations does not exceed an amount up to the sum of
the following sublimits (the "REVOLVING LOAN LIMIT"):

                  (i)      Up to eighty-five percent (85%) of the face amount of
         the Borrowers'  Eligible Accounts (less maximum discounts,  credits and
         allowances  which may be taken by or granted to the Account  Debtors in
         connection   therewith  in  the  ordinary   course  of  the  Borrowers'
         business); PLUS

                  (ii)     Up to the lesser of: (A) sixty-five  percent (65%) of
         the Borrowers'  Eligible  Inventory  valued at cost (in accordance with
         the procedures described in SCHEDULE 2(A)(II)); (B) eighty-five percent
         (85%) of the Net Orderly  Liquidation Value of the Borrowers'  Eligible
         Inventory as determined by the then most recently completed  Appraisal;
         (C) fifty percent  (50%) of the Maximum  Revolving  Loan Limit;  or (D)
         $17,500,000 (the "INVENTORY ADVANCE LIMIT"); MINUS

                  (iii)    Prior to the First Availability  Reserve  Termination
         Date,  an additional  reserve in the amount of  $3,500,000  (the "FIRST
         AVAILABILITY RESERVE"); MINUS

                  (iv)     Prior to the Second Availability  Reserve Termination
         Date,  an additional  reserve in the amount of $3,500,000  (the "SECOND
         AVAILABILITY RESERVE"); MINUS

                  (v)      such  additional  reserves  Agent elects to establish
         from time to time in its sole  discretion,  exercised in a commercially
         reasonable manner;

PROVIDED,  that (x) the aggregate undrawn amount of all Letters of Credit issued
or guaranteed by Lenders, with respect to all Borrowers, shall at no time exceed
Five Million and No/100 Dollars  ($5,000,000),  and (y) the Revolving Loan Limit
with  respect  to  Revolving  Loans  made  to all  Borrowers,  at any  one  time
outstanding,  shall in no event exceed  Thirty-Five  Million and No/100  Dollars
($35,000,000) (the "MAXIMUM REVOLVING LOAN LIMIT").

         The aggregate unpaid  principal  balance of the Revolving Loans made to
all  Borrowers,  at any one time  outstanding,  shall not at any time exceed the
lesser of (i) the Revolving Loan Limit MINUS the Letter of Credit Obligations of
all  Borrowers  and (ii) the  Maximum  Revolving  Loan Limit MINUS the Letter of
Credit  Obligations of all Borrowers.  If at any time the outstanding  aggregate
principal  amount of such Revolving Loans exceeds the Revolving Loan Limit MINUS
such Letter of Credit Obligations,  or any portion of the outstanding  principal
of such  Revolving  Loans  and such  Letter of Credit  Obligations  exceeds  any

                                       16

<PAGE>

applicable  sublimit  within the  Revolving  Loan  Limit,  the  Borrowers  shall
immediately,  on a joint and several basis,  and without the necessity of demand
by Agent, pay to Agent such amount as may be necessary to eliminate such excess,
and Agent shall apply such payment to the Revolving Loans in such order as Agent
shall determine in its sole  discretion;  PROVIDED,  that Agent may, in its sole
discretion, permit such excess (the "INTERIM ADVANCE") to remain outstanding and
continue to advance Revolving Loans to any Borrower on behalf of Lenders without
the  consent of any Lender for a period of up to sixty (60)  calendar  days,  so
long as (i) the amount of the Interim  Advances  does not exceed at any time One
Million  and  No/100  Dollars  ($1,000,000),   (ii)  the  aggregate  outstanding
principal  balance of the Revolving Loans and Letter of Credit  Obligations does
not  exceed the  Maximum  Revolving  Loan  Limit,  and (iii)  Agent has not been
notified by  Requisite  Lenders to cease  making such  Revolving  Loans.  If the
Interim  Advance is not repaid in full within time period  specified  above,  no
future  advances  may be made to any  Borrower  without the consent of Requisite
Lenders until the Interim Advance is repaid in full.

         Neither  Agent nor any Lender shall be  responsible  for any failure by
any other Lender to perform its obligations to make Revolving  Loans  hereunder,
and the failure of any Lender to make its Pro Rata Share of any  Revolving  Loan
hereunder shall not relieve any other Lender of its obligation,  if any, to make
its Pro Rata Share of any Revolving Loans hereunder.

         If Borrower Representative,  on behalf of any Borrower, makes a request
for a Revolving Loan as provided  herein,  Agent shall advance the amount of the
proposed   Revolving   Loan   to   such   Borrower(s)    disproportionately   (a
"DISPROPORTIONATE ADVANCE") out of Agent's own funds on behalf of Lenders, which
advance shall be on the same day as Borrower  Representative's  request therefor
with respect to Prime Rate Loans if Borrower  Representative  notifies  Agent of
such  request  by 1:00 p.m.  (New  York  time) on such  day,  and shall  request
settlement in accordance  with SECTION 18 hereof such that upon such  settlement
each Lender's  share of the  outstanding  Revolving  Loans  (including,  without
limitation,  the  amount of any  Disproportionate  Advance)  equals its Pro Rata
Share.

         If and to the  extent  that a Lender  does  not  settle  with  Agent as
required  under this  Agreement  (a  "DEFAULTING  LENDER"),  each  Borrower  and
Defaulting  Lender  severally  agree to repay to Agent  forthwith on demand such
amount  required to be paid by such  Defaulting  Lender to Agent,  together with
interest  thereon,  for each day from the date such amount is made  available to
the applicable  Borrower(s) until the date such amount is repaid to Agent (x) in
the case of a Defaulting  Lender,  at the rate published by the Federal  Reserve
Bank of New York on the next succeeding Business Day as the "Federal Funds Rate"
or if no such rate is published for any Business Day, at the average rate quoted
for such day for such  transactions  from  three (3)  federal  funds  brokers of
recognized  standing selected by Agent, and (y) in the case of any Borrower,  at
the  interest  rate  applicable  at such  time for such  Loans;  provided,  that
Borrowers'  obligation  to repay such  advance to Agent shall not  relieve  such
Defaulting Lender of its liability to Agent for failure to settle as provided in
this Agreement.

         Each  Borrower  hereby   authorizes  Agent,  in  its  sole  discretion,
exercised in a commercially  reasonable manner, to charge any of such Borrower's
accounts or advance Revolving Loans to make any payments of principal, interest,
fees, costs or expenses required to be made to Agent under this Agreement or the
Other Agreements.

                                       17

<PAGE>

         A request for a  Revolving  Loan shall be made or shall be deemed to be
made, each in the following manner:  Borrower  Representative,  on behalf of the
Borrowers,  shall give Agent same day notice, no later than 11:30 a.m. (New York
time) for such day, of its  request  for a Revolving  Loan as a Prime Rate Loan,
and at least two (2) Business  Days' prior notice of its request for a Revolving
Loan as a LIBOR Rate Loan, in which notice Borrower Representative shall specify
the amount and type of the proposed  borrowing and the proposed  borrowing date;
PROVIDED,  HOWEVER, that no such request may be made at a time when there exists
an Event of Default  or an event  which,  with the  passage of time or giving of
notice,  will  become an Event of  Default  (a  "DEFAULT").  In the event that a
Borrower  maintains a control  disbursement  account at LaSalle Bank, each check
presented for payment  against such control  disbursement  account and any other
charge or request for payment  against such control  disbursement  account shall
constitute  a  request  for  a  Revolving  Loan  as a  Prime  Rate  Loan.  As an
accommodation  to  each  Borrower,  Agent  may  permit  telephone  requests  for
Revolving  Loans and  electronic  transmittal of  instructions,  authorizations,
agreements or reports to Agent by such Borrower.  Unless a Borrower specifically
directs  Agent in writing  not to accept or act upon  telephonic  or  electronic
communications  from  such  Borrower,  Agent  shall  have no  liability  to such
Borrower for any loss or damage suffered by such Borrower as a result of Agent's
honoring of any  requests,  execution  of any  instructions,  authorizations  or
agreements  or reliance  on any reports  communicated  to it  telephonically  or
electronically  and purporting to have been sent to Agent by such Borrower,  and
Agent shall have no duty to verify the origin of any such  communication  or the
authority of the Person sending it.

         Each  Borrower  hereby  irrevocably  authorizes  Agent to disburse  the
proceeds of each  Revolving  Loan  requested by such  Borrower,  or deemed to be
requested by such  Borrower,  as follows:  the proceeds of each  Revolving  Loan
requested under this SUBSECTION 2(A) shall be disbursed by Agent in lawful money
of the United States of America in immediately  available  funds, in the case of
the initial  borrowing by such  Borrower,  in  accordance  with the terms of the
written  disbursement  letter from Borrower  Representative,  and in the case of
each subsequent  borrowing,  by wire transfer or Automated  Clearing House (ACH)
transfer to such bank  account as may be agreed upon by such  Borrower and Agent
from time to time, or elsewhere if pursuant to a written direction from Borrower
Representative.

                  (B)      REPAYMENTS.

         The obligation of the Borrowers to repay the Liabilities shall be joint
and several.  The Revolving Loans and all other  Liabilities  shall be repaid in
full  on the  last  day of the  Original  Term,  or any  Renewal  Term,  if this
Agreement is renewed pursuant to SECTION 10 hereof.  Revolving Loans borrowed as
Prime Rate Loans may be repaid at any time in whole or in part.  Revolving Loans
borrowed as LIBOR Rate Loans may be repaid at the end of the  relevant  Interest
Period.  Any  proceeds of tax refunds  received by  Borrowers  shall be promptly
delivered  to Agent to be applied  to the  outstanding  principal  amount of the
Revolving  Loans which are Prime Rate Loans until paid in full, and  thereafter,
to any other outstanding Revolving Loans, in such order as Agent shall determine
in its  sole  discretion;  PROVIDED  that so long as no  Event  of  Default  has
occurred and is continuing,  tax refund payments  received by Agent shall not be
applied to the unmatured  portion of the LIBOR Rate Loans,  but shall be held in
an  interest  bearing  cash  collateral  account  maintained  by Agent until the

                                       18

<PAGE>

earlier of (i) the last Business Day of the Interest  Period  applicable to such
LIBOR Rate Loans and (ii) the occurrence of an Event of Default.

                  (C)      NOTES.

         The Loans shall, in Agent's and Lender's sole discretion,  exercised in
a commercially  reasonable  manner, be evidenced by one or more promissory notes
in form and  substance  satisfactory  to each  Lender,  and the  entries on such
promissory notes shall be deemed to be accurate, absent manifest error. However,
if such  Loans  are not so  evidenced,  such  Loans may be  evidenced  solely by
entries upon the books and records  maintained by Agent and each Lender,  absent
manifest error.

                  (D)      BORROWER REPRESENTATIVE.

         Each  Borrower  hereby  designates   Borrower   Representative  as  its
representative  and agent on its behalf for the  purpose  of  requesting  Loans,
giving  instructions  with  respect to the  disbursement  of the proceeds of the
Loans, selecting interest rate options, requesting Letters of Credit, giving and
receiving  all other  notices and  consents  hereunder or under any of the Other
Agreements and taking all other actions (including in respect of compliance with
covenants) on behalf of Borrowers under this Agreement or the Other  Agreements.
Borrower  Representative hereby accepts such appointment.  Agent and each Lender
may regard any notice or other  communication  pursuant to this Agreement or any
Other Agreement from Borrower  Representative as a notice or communication  from
all Borrowers.  Each warranty,  covenant,  agreement and undertaking made on any
Borrower's behalf by Borrower Representative shall be deemed for all purposes to
have  been  made by such  Borrower  and shall be  binding  upon and  enforceable
against such  Borrower to the same extent as if the same had been made  directly
by such Borrower.

         3.       LETTERS OF CREDIT.

                  (A)      GENERAL TERMS.

         Subject  to the terms and  conditions  of the  Agreement  and the Other
Agreements,  during the Original Term and each Renewal  Term,  commencing on the
date the conditions in SUBSECTION 17(A) are satisfied,  Agent shall from time to
time cause to be issued and co-sign for or otherwise  guarantee,  upon  Borrower
Representative's request in respect of any Borrower,  documentary and/or standby
Letters of Credit;  PROVIDED, that the aggregate undrawn face amount of all such
Letters of Credit  shall at no time  exceed  Five  Million  and  No/100  Dollars
($5,000,000). Payments made by the issuer of a Letter of Credit to any Person on
account of any Letter of Credit shall constitute Revolving Loans hereunder,  and
each Borrower  agrees that each payment made by the issuer of a Letter of Credit
in respect of a Letter of Credit shall constitute a request by the Borrowers for
a Revolving  Loan to  reimburse  such  issuer.  For each month  during which any
Letter of Credit Obligation shall remain  outstanding,  the Borrowers agree on a
joint and several basis to remit to Agent, for the benefit of Lenders,  a Letter
of Credit fee in an amount  equal to the  product of the average  daily  undrawn
face  amount  of all  Letters  of  Credit  issued,  co-signed  for or  otherwise
guaranteed  hereunder  multiplied  by a per annum rate  equal to the  Applicable
Margin in respect of LIBOR Rate Loans in effect  from time to time.  Such Letter

                                       19

<PAGE>

of Credit fee shall be payable to Agent  monthly in arrears on the last Business
Day of each month.  The Borrowers  shall also agree on a joint and several basis
to pay on demand the normal and customary  administrative  charges of the issuer
of the  Letter  of Credit  for  issuance,  amendment,  negotiation,  renewal  or
extension of any Letter of Credit.

                  (B)      REQUESTS FOR LETTERS OF CREDIT.

         The request by Borrower Representative, on behalf of Borrowers, for the
issuance  of a Letter  of  Credit  shall  be made in  writing  at least  two (2)
Business Days prior to the date such Letter of Credit is to be issued. Each such
request shall specify the date such Letter of Credit is to be issued, the amount
thereof,  the name and address of the  beneficiary  thereof and a description of
the transaction to be supported thereby. Any such notice shall be accompanied by
the form of Letter of Credit  requested  and any  application  or  reimbursement
agreement  required by the issuer of such Letter of Credit.  If any term of such
application or reimbursement agreement is inconsistent with this Agreement, then
the  provisions  of  this  Agreement   shall  control  to  the  extent  of  such
inconsistency.

                  (C)      OBLIGATIONS ABSOLUTE.

         The Borrowers shall be obligated jointly and severally to reimburse the
issuer of any Letter of Credit, or Agent and/or Lenders, if Agent and/or Lenders
have reimbursed such issuer on any one or more of the Borrowers' behalf, for any
payments  made in respect of any Letter of  Credit,  which  obligation  shall be
unconditional  and  irrevocable and shall be paid regardless of: (i) any lack of
validity or enforceability of any Letter of Credit, (ii) any amendment or waiver
of or consent or departure  from all or any  provisions of any Letter of Credit,
this  Agreement or any Other  Agreement,  (iii) the existence of any claim,  set
off,  defense or other  right which any  Borrower  or any other  Person may have
against any  beneficiary  of any Letter of Credit,  or Agent,  any Lender or the
issuer of the Letter of Credit, (iv) any draft or other document presented under
any Letter of Credit proving to be forged, fraudulent,  invalid, or insufficient
in any  respect or any  statement  therein  being  untrue or  inaccurate  in any
respect,  (v) any payment under any Letter of Credit against  presentation  of a
draft or other  document  that does not comply  with the terms of such Letter of
Credit,  and (vi) any other act or  omission  to act or delay of any kind of the
issuer of such Letter of Credit,  Agent,  any Lender or any other  Person or any
other event or circumstance that might otherwise constitute a legal or equitable
discharge of any of the Borrowers' obligations hereunder,  except in any case to
the  extent  of the  issuer's  or  the  Lender's  gross  negligence  or  willful
misconduct.  It is understood and agreed by each Borrower that the issuer of any
Letter of Credit may accept  documents  that appear on their face to be in order
without  further   investigation  or  inquiry,   regardless  of  any  notice  or
information to the contrary.

                  (D)      EXPIRATION DATES OF LETTERS OF CREDIT.

         The expiration date of each Letter of Credit shall be no later than the
earlier  of (i) one (1) year from the date of  issuance  and (ii) the  thirtieth
(30th)  day  prior  to the  end of  the  Original  Term  or  any  Renewal  Term.
Notwithstanding  the  foregoing,  a Letter of Credit may provide  for  automatic
extensions of its expiration date for one or more one (1) year periods,  so long
as the issuer thereof has the right to terminate the Letter of Credit at the end
of each one (1) year period and no extension  period  extends past the thirtieth

                                       20

<PAGE>

(30th) day prior to the end of the Original Term or any Renewal Term.

                  (E)      PARTICIPATION.

         Immediately  upon the issuance of a Letter of Credit in accordance with
this   Agreement,   each  Lender  shall  be  deemed  to  have   irrevocably  and
unconditionally purchased and received from Agent, without recourse or warranty,
an undivided  interest and participation  therein to the extent of such Lender's
Pro Rata Share (including, without limitation, all obligations of Borrowers with
respect thereto). Each Borrower hereby indemnifies Agent and each Lender against
any and all liability and expense it may incur in connection  with any Letter of
Credit and agrees to  reimburse  Agent and each Lender for any  payment  made by
Agent or any Lender to the issuer.

         4.       INTEREST, FEES AND CHARGES.

                  (A)      INTEREST RATE.

         Subject to the terms and  conditions  set forth below,  the Loans shall
bear  interest at the per annum rates of interest set forth in  SUBSECTION  (I),
(II), or (III) below:

                  (i)      Revolving  Loans  borrowed  as Prime  Rate Loans (and
         all  other   Liabilities   (other   than   contingent   indemnification
         obligations  as to which no  unsatisfied  claim has been  asserted) not
         otherwise referenced in this SECTION 4(A)) shall bear interest for each
         day at the Prime Rate in effect for such day PLUS the Applicable Margin
         in respect of Prime Rate Loans in effect for such day.

                  (ii)     Each  Revolving  Loan  borrowed  as a LIBOR Rate Loan
         shall bear  interest  each day of the Interest  Period  therefor at the
         LIBOR  Rate in effect  for such  Interest  Period  PLUS the  Applicable
         Margin in respect of LIBOR Rate Loans in effect for such day.

                  (iii)    Upon the  occurrence  of  an  Event  of  Default  and
         during the continuance  thereof,  all Loans and other Liabilities shall
         bear interest at the rate of two percent  (2.0%) per annum in excess of
         the interest rate otherwise  payable  thereon,  which interest shall be
         payable on demand.

                  (iv)     All  interest  shall  be  calculated  on the basis of
         a 360-day year. Unless otherwise  indicated  herein,  interest shall be
         payable in arrears on the first Business Day of each month.

                  (B)      OTHER LIBOR PROVISIONS.

                  (i)      Subject to the  provisions  of  this  Agreement,  the
         Borrowers  shall have the option (A) as of any date,  to convert all or
         any part of the Prime Rate Loans to, or request  that new Loans be made
         as, LIBOR Rate Loans of various  Interest  Periods;  (B) as of the last
         day of any  Interest  Period,  to  continue  all or any  portion of the
         relevant  LIBOR Rate Loans as LIBOR Rate Loans;  (C) as of the last day

                                       21

<PAGE>

         of any Interest Period, to convert all or any portion of the LIBOR Rate
         Loans to Prime Rate Loans; and (D) at any time, to request new Loans as
         LIBOR Rate Loans or Prime Rate  Loans;  PROVIDED  that Loans may not be
         continued as or converted to LIBOR Rate Loans,  if the  continuation or
         conversion thereof would violate the provisions of SUBSECTIONS 4(B)(II)
         or 4(B)(III)  of this  Agreement or if an Event of Default has occurred
         and is continuing.

                  (ii)     Agent's  determination of  LIBOR  as  provided above,
         shall be conclusive,  absent manifest error.  Furthermore,  if Agent or
         any Lender  determines,  in good faith  (which  determination  shall be
         conclusive,  absent manifest  error),  prior to the commencement of any
         Interest Period, that (A) U.S. Dollar deposits of sufficient amount and
         maturity  for  funding  the  Loans are not  available  to Agent or such
         Lender in the London Interbank Eurodollar market in the ordinary course
         of business,  or (B) by reason of  circumstances  affecting  the London
         Interbank  Eurodollar market,  adequate and fair means do not exist for
         ascertaining  the  rate  of  interest  to be  applicable  to the  Loans
         requested by Borrower  Representative,  on behalf of  Borrowers,  to be
         LIBOR Rate Loans or the Loans  bearing  interest at the rates set forth
         in SUBSECTION  4(A) of this Agreement shall not represent the effective
         pricing to such Lender for U.S. Dollar deposits of a comparable  amount
         for the  relevant  period  (such as for  example,  but not  limited to,
         official  reserve  requirements  required by Regulation D to the extent
         not given effect in determining the rate),  Agent shall promptly notify
         Borrower  Representative  and (1) all  existing  LIBOR Rate Loans shall
         convert to Prime Rate  Loans  upon the end of the  applicable  Interest
         Period, and (2) no additional LIBOR Rate Loans shall be made until such
         circumstances are cured.

                  (iii)    If, after the date hereof, the introduction of,or any
         change in, any applicable law, treaty, rule, regulation or guideline or
         in the  interpretation  or  administration  thereof by any governmental
         authority  or any  central  bank or  other  fiscal,  monetary  or other
         authority having  jurisdiction  over Agent or any Lender or its lending
         offices (a "REGULATORY  CHANGE"),  shall,  in the opinion of counsel to
         Lender,  make it unlawful  for Agent or such Lender to make or maintain
         LIBOR  Rate  Loans,   then  Agent  shall   promptly   notify   Borrower
         Representative  and (A) the LIBOR Rate Loans shall immediately  convert
         to  Prime  Rate  Loans on the last  Business  Day of the then  existing
         Interest  Period  or  Interest  Periods,  or on  such  earlier  date as
         required  by law and (B) no  additional  LIBOR Rate Loans shall be made
         until such circumstance is cured.

                  (iv)     If, for any reason, a LIBOR Rate Loan is repaid prior
         to the last Business Day of any Interest Period or if a LIBOR Rate Loan
         does not occur on a date  specified by Borrower  Representative  in its
         request (other than as a result of a default by Agent or a Lender), the
         Borrowers  agree  jointly and  severally  to  indemnify  Agent and each
         Lender  against any loss  (including  any loss on  redeployment  of the
         deposits  or other  funds  acquired  by Agent or such Lender to fund or
         maintain  such LIBOR Rate Loan),  cost or expense  incurred by Agent or
         such Lender as a result of such prepayment.

                  (v)      If any Regulatory  Change (whether or not having  the
         force  of  law)  shall  (A)  impose,  modify  or  deem  applicable  any
         assessment,  reserve,  special deposit or similar  requirement  against
         assets  held by, or  deposits  in or for the account of or loans by, or
         any  other  acquisition  of funds  or  disbursements  by,  Agent or any
         Lender;  (B) subject Agent or any Lender or the LIBOR Rate Loans to any

                                       22

<PAGE>

         Tax or change the basis of  taxation of payments to Agent or any Lender
         of principal or interest due from the Borrowers to Agent or such Lender
         hereunder  (other  than a change in the  taxation  of the  overall  net
         income of Agent or such  Lender);  or (C) impose on  Lenders  any other
         condition  regarding  the LIBOR Rate  Loans or Agent's or any  Lender's
         funding  thereof,  and  Agent  or any  Lender  shall  determine  (which
         determination shall be conclusive,  absent any manifest error) that the
         result of the foregoing is to increase the cost to Agent or such Lender
         of making or  maintaining  the LIBOR Rate Loans or to reduce the amount
         of  principal or interest  received by Agent or such Lender  hereunder,
         then the Borrowers  shall be jointly and severally  obligated to pay to
         such party,  on demand,  such  additional  amounts as such party shall,
         from time to time, determine are sufficient to compensate and indemnify
         such party from such increased cost or reduced amount.

                  (vi)     Each of Agent and each Lender shall  receive payments
         of amounts of principal of and interest  with respect to the LIBOR Rate
         Loans free and clear of, and without  deduction for, any Taxes.  If (A)
         Agent or any Lender shall be subject to any Tax in respect of any LIBOR
         Rate Loans or any part thereof or, (B) the Borrowers  shall be required
         to  withhold  or deduct  any Tax from any such  amount,  the LIBOR Rate
         applicable  to such LIBOR Rate Loans shall be adjusted by Agent or such
         Lender to reflect all additional costs incurred by Agent or such Lender
         in  connection  with  the  payment  by  Agent  or  such  Lender  or the
         withholding  by the  Borrowers  of such  Tax and  the  Borrowers  shall
         provide  Agent or such Lender with a statement  detailing the amount of
         any such Tax actually paid by the Borrowers.  Determination by Agent or
         any  Lender of the  amount of such costs  shall be  conclusive,  absent
         manifest  error.  If after any such adjustment any part of any Tax paid
         by Agent  or any  Lender  is  subsequently  recovered  by Agent or such
         Lender,  such party shall  reimburse the Borrowers to the extent of the
         amount so recovered. A certificate of an officer of Agent or any Lender
         setting forth the amount of such recovery and the basis  therefor shall
         be conclusive, absent manifest error.

                  (vii)    Each  request  for  LIBOR  Rate Loans  shall be in an
         amount  of not less than  Five  Hundred  Thousand  and  No/100  Dollars
         ($500,000),  and in  integral  multiples  of One Hundred  Thousand  and
         No/100 Dollars ($100,000).

                  (viii)  Unless otherwise specified by Borrower Representative,
         all Loans shall be Prime Rate Loans.

                  (ix)     No  more  than  three (3) Interest  Periods may be in
         effect with respect to outstanding LIBOR Rate Loans at any one time.

                  (x)      No  more than ninety percent (90%) of  the  aggregate
         principal amount of Loans outstanding at any one time may be LIBOR Rate
         Loans.

                  (C)      FEES AND CHARGES.

                  (i)      COMMITMENT  FEE:  The  Borrowers  shall  jointly  and
         severally pay to Agent,  for the benefit of Lenders  according to their
         respective  Pro Rata Shares,  a commitment fee of Two Hundred Sixty Two
         Thousand Five Hundred and No/100 Dollars ($262,500), which fee shall be

                                       23
<PAGE>

         fully earned and payable in immediately  available funds on the Closing
         Date and non-refundable upon receipt by Agent.

                  (ii)     UNUSED LINE FEE: The Borrowers jointly and  severally
         agree to pay to Agent,  for the benefit of Lenders  according  to their
         respective  Pro Rata Shares,  an unused line fee of half of one percent
         per annum (0.50%) of the difference  each month between (i) the Maximum
         Revolving  Loan  Limit  and  (ii)  the  average  daily  balance  of the
         Revolving Loans, PLUS the outstanding Letter of Credit Obligations,  in
         each case for such month,  PROVIDED,  HOWEVER,  that such fee shall not
         exceed One Hundred Thousand and No/100 Dollars  ($100,000) per calendar
         year for all years following the year in which the Second  Availability
         Reserve  Termination  Date occurred.  Said fee shall be fully earned by
         Lenders and payable in immediately  available  funds monthly in arrears
         on the first  Business  Day of each month for the previous  month,  and
         shall be calculated on the basis of a 360 day year.

                  (iii)    COLLATERAL MANAGEMENT FEE: The Borrowers  jointly and
         severally  agree to pay to Agent,  for its own  account,  a  collateral
         management  fee of Seven  Thousand  Five  Hundred  and  No/100  Dollars
         ($7,500) per month, provided, however, that such fee will be reduced to
         Two Thousand Five Hundred and No/100 Dollars ($2,500) per month for all
         months  following  the month in which the Second  Availability  Reserve
         Termination Date occurred.  Said fee shall be fully earned by Agent and
         payable in immediately  available funds monthly in arrears on the first
         Business Day of each month for the previous month,  shall be calculated
         on the basis of a 360 day year and shall be non-refundable upon receipt
         by Agent.

                  (iv)     COSTS AND EXPENSES: The Borrowers shall be  obligated
         jointly and severally to reimburse  Agent for all  out-of-pocket  costs
         and  expenses,   including,  without  limitation,  legal  expenses  and
         reasonable  attorneys'  fees incurred by Agent,  in connection with the
         (i) negotiation, documentation and consummation of this transaction and
         any other  transactions  among the Parent and/or  Borrowers,  Agent and
         Lenders,  including,  without  limitation,  Uniform Commercial Code and
         other public record  searches and filings,  overnight  courier or other
         express  or  messenger  delivery,   appraisal  costs,  surveys,   title
         insurance and  environmental  audit or review costs;  (ii)  collection,
         protection or enforcement of any rights in or to the Collateral;  (iii)
         collection of any Liabilities;  and (iv) administration and enforcement
         of any of Agent's  and/or any  Lender's  rights or remedies  under this
         Agreement  or  any  Other  Agreement  (including,  without  limitation,
         reasonable  costs and expenses of any third party  provider  engaged by
         Agent for such  purposes).  The Borrowers  shall also agree jointly and
         severally  to pay  all  normal  service  charges  with  respect  to all
         accounts maintained by each Borrower with any Lender,  Affiliate of any
         Lender or LaSalle Bank and any additional  services requested by any of
         the Borrowers from any Lender, Affiliate of any Lender or LaSalle Bank,
         as applicable.  All such costs,  expenses and charges shall, if owed to
         LaSalle  Bank,  be  reimbursed  by  the  Lenders  (according  to  their
         respective  Pro Rata  Shares)  and,  in such event or in the event such
         costs  and  expenses   are  owed  to  Agent  and  Lenders,   constitute
         Liabilities  hereunder,  shall be payable by the Borrowers  jointly and
         severally to Agent on demand,  and, until paid,  shall bear interest at
         the highest rate then applicable to Loans hereunder.

                                       24

<PAGE>

                  (v)      CAPITAL  ADEQUACY  CHARGE.  If any Lender shall  have
         determined  that the adoption after the date hereof of any law, rule or
         regulation  regarding  capital  adequacy,  or after the date hereof any
         change  therein or in the  interpretation  or application  thereof,  or
         compliance by such Lender with any request or directive  after the date
         hereof regarding  capital adequacy  (whether or not having the force of
         law) from any central bank or governmental  authority enacted after the
         date  hereof,  does or shall  have the effect of  reducing  the rate of
         return on such  party's  capital as a  consequence  of its  obligations
         hereunder to a level below that which such Lender  could have  achieved
         but for such adoption,  change or compliance (taking into consideration
         such party's  policies with respect to capital  adequacy) by a material
         amount,  then from time to time,  after  submission  by such Lenders to
         Borrower Representative of a written demand therefor ("CAPITAL ADEQUACY
         DEMAND") together with the certificate described below, Borrowers shall
         pay to such party such additional amount or amounts ("CAPITAL  ADEQUACY
         CHARGE") as will compensate such party for such reduction, such Capital
         Adequacy  Demand to be made with reasonable  promptness  following such
         determination.   A  certificate  of  Agent  or  such  Lender   claiming
         entitlement  to payment as set forth above shall be  conclusive  in the
         absence of manifest error.  Such certificate shall set forth the nature
         of the  occurrence  giving  rise to such  reduction,  the amount of the
         Capital  Adequacy  Charge to be paid to Agent or such  Lender,  and the
         method by which such amount was determined. In determining such amount,
         the applicable  party may use any reasonable  averaging and attribution
         method, applied on a non-discriminatory basis.

                  (D)      MAXIMUM INTEREST.

         It is the intent of the  parties  that the rate of  interest  and other
charges to the Borrowers under this Agreement and the Other  Agreements shall be
lawful; therefore, if for any reason the interest or other charges payable under
this  Agreement  are  found by a court  of  competent  jurisdiction,  in a final
determination, to exceed the limit which Agent or any Lender may lawfully charge
the  Borrowers,  then the  obligation  to pay interest and other  charges  shall
automatically  be reduced  to such  limit  and,  if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to the Borrowers.

         5.       COLLATERAL.

                  (A)      REAFFIRMATION OF GRANT OF SECURITY INTEREST TO AGENT.

         As  security  for the  payment  of all  Loans  and  Letters  of  Credit
outstanding  or in the future made or issued to Borrowers  hereunder and for the
payment  or other  satisfaction  of all other  Liabilities  (including,  without
limitation, all Prior Liabilities),  each of Parent and each Borrower,  pursuant
to  Section 5 of the Prior Loan  Agreement,  assigned  and  granted to LaSalle a
continuing  security  interest in all  property  referenced  in Section 5 of the
Prior Loan  Agreement.  Each of Parent and each  Borrower  hereby  ratifies  and
reaffirms such assignment and grant of continuing security, and acknowledges and
agrees that such  assignment  and grant of security shall continue and remain in
full force and effect from and after the execution,  delivery and  effectiveness
of this  Agreement  with  the  same  validity,  enforceability,  perfection  and
priority under this Agreement as existed under the Prior Loan Agreement. Without
in any way limiting or otherwise affecting such existing assignment and grant of
continuing security (including,  without limitation,  the attachment,  validity,

                                       25

<PAGE>

enforceability,  perfection  or priority  thereof),  and out of the abundance of
caution, each of Parent and each Borrower hereby re-assigns and grants to Agent,
for the benefit of itself and the Lenders, a continuing security interest in the
following  property of Parent or such Borrower,  whether now or hereafter owned,
existing,  acquired or arising and wherever now or  hereafter  located:  (a) all
Accounts  (whether or not Eligible  Accounts) and all Goods whose sale, lease or
other  disposition  by Parent or such  Borrower,  has given rise to Accounts and
have been returned to, or  repossessed  or stopped in transit by, Parent or such
Borrower; (b) all Chattel Paper, Instruments,  Documents and General Intangibles
(including,  without limitation,  all patents, patent applications,  trademarks,
trademark  applications,   tradenames,  trade  secrets,  goodwill,   copyrights,
copyright applications,  registrations, licenses, software, franchises, customer
lists,  tax refund  claims,  claims  against  carriers and  shippers,  guarantee
claims,  contracts rights,  payment  intangibles,  security interests,  security
deposits  and rights to  indemnification);  (c) all  Inventory  (whether  or not
Eligible Inventory);  (d) all Goods (other than Inventory),  including,  without
limitation,  Equipment,  vehicles and Fixtures; (e) all Investment Property; (f)
all Deposit Accounts,  bank accounts,  deposits, cash and such cash equivalents;
(g) all Letter-of-Credit  Rights; (h) Commercial Tort Claims listed on EXHIBIT C
hereto;  (i) all policies and  certificates  of insurance of Parent insuring the
property and assets of any of the Borrowers and the Life Insurance  Policy,  and
all policies and  certificates  of  insurance  of each  Borrower;  (j) any other
property  of Parent  and each  Borrower,  now or  hereafter  in the  possession,
custody or control of Agent or any Lender or any agent or any parent,  affiliate
or subsidiary of Agent or any Lender or any  participant  with any Lender in the
Loans or Letters of Credit,  for any purpose (whether for safekeeping,  deposit,
collection,  custody,  pledge,  transmission or otherwise) and (k) all additions
and accessions to, substitutions for, and replacements, products and Proceeds of
the foregoing property, including, without limitation, proceeds of all insurance
policies insuring the foregoing property, and all of Parent's or such Borrower's
books and  records  relating  to any of the  foregoing  and to such  Parent's or
Borrower's business.

                  (B)      OTHER SECURITY.

         Agent,  in its  sole  discretion,  without  waiving  or  releasing  any
obligation,  liability or duty of Parent or any Borrower under this Agreement or
the Other  Agreements  or any  Default or Event of  Default,  may at any time or
times  hereafter,  but shall not be  obligated  to,  pay,  acquire  or accept an
assignment  of any security  interest,  lien,  encumbrance  or claim (other than
Permitted Liens) asserted by any Person in, upon or against the Collateral.  All
sums  paid by  Agent  in  respect  thereof  and all  costs,  fees  and  expenses
including, without limitation, reasonable attorney fees, all court costs and all
other charges relating  thereto incurred by Agent shall constitute  Liabilities,
payable by the  Borrowers  on a joint and several  basis to Agent on demand and,
until paid,  shall bear  interest at the highest rate then  applicable  to Loans
hereunder.

                  (C)      POSSESSORY COLLATERAL.

         Immediately  upon the receipt by Parent and/or one or more Borrowers of
any portion of the Collateral evidenced by an agreement, Instrument or Document,
including,  without  limitation,  any Tangible  Chattel Paper and any Investment
Property consisting of certificated  securities,  Parent and/or such Borrower or
Borrowers  shall  deliver  the  original  thereof  to  Agent  together  with  an
appropriate  endorsement,  issuer  acknowledgment,  irrevocable  proxy  or other

                                       26

<PAGE>

specific  evidence  of  assignment  thereof  to Agent  (in  form  and  substance
acceptable  to  Agent).   PARENT  AND  EACH  BORROWER  EACH  HEREBY  IRREVOCABLY
CONSTITUTES  AND  APPOINTS  AGENT (ON  BEHALF OF THE  LENDERS)  AS THE PROXY AND
ATTORNEY-IN-FACT   OF  SUCH  PERSON  WITH  RESPECT  TO  THE  PLEDGED  COLLATERAL
REFERENCED  IN THIS  SUBSECTION  5(C),  INCLUDING  THE RIGHT TO VOTE THE PLEDGED
SHARES,  WITH FULL POWER OF  SUBSTITUTION  TO DO SO. THE APPOINTMENT OF AGENT AS
PROXY AND  ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE
UNTIL THE  INDEFEASIBLE  SATISFACTION  IN FULL OF ALL  LIABILITIES  (OTHER  THAN
CONTINGENT INDEMNIFICATION OBLIGATIONS AS TO WHICH NO UNSATISFIED CLAIM HAS BEEN
ASSERTED).  IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE APPOINTMENT
OF AGENT AS PROXY AND  ATTORNEY-IN-FACT  SHALL INCLUDE THE RIGHT TO EXERCISE ALL
OTHER RIGHTS,  POWERS,  PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED
COLLATERAL WOULD BE ENTITLED  (INCLUDING GIVING OR WITHHOLDING  WRITTEN CONSENTS
OF  SHAREHOLDERS,  CALLING SPECIAL  MEETINGS OF SHAREHOLDERS  AND VOTING AT SUCH
MEETINGS).  SUCH  PROXY  SHALL  BE  EFFECTIVE,  AUTOMATICALLY  AND  WITHOUT  THE
NECESSITY OF ANY ACTION  (INCLUDING  ANY  TRANSFER OF ANY PLEDGED  SHARES ON THE
RECORD BOOKS OF PARENT OR ANY  BORROWER) BY ANY PERSON  (INCLUDING  PARENT,  ANY
BORROWER OR ANY OFFICER OR AGENT  THEREOF),  UPON THE OCCURRENCE OF ANY EVENT OF
DEFAULT.  NOTWITHSTANDING  THE  FOREGOING,  AGENT  SHALL  NOT  HAVE  ANY DUTY TO
EXERCISE  ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY
FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.

                  (D)      ELECTRONIC CHATTEL PAPER.

         To the  extent  that  Parent  and/or  one or more  Borrowers  obtain or
maintain any Electronic Chattel Paper,  Parent and/or such Borrower or Borrowers
shall create,  store and assign the record or records  comprising the Electronic
Chattel  Paper in such a manner  that  (i) a  single  authoritative  copy of the
record or records exists which is unique,  identifiable  and except as otherwise
provided  in  clauses  (iv),   (v)  and  (vi)  below,   unalterable,   (ii)  the
authoritative  copy  identifies  Agent as the assignee of the record or records,
(iii) the  authoritative  copy is communicated to and maintained by the Agent or
its  designated  custodian,  (iv)  copies  or  revisions  that add or  change an
identified  assignee  of the  authoritative  copy  can  only  be made  with  the
participation of Agent, (v) each copy of the authoritative  copy and any copy of
a copy is readily  identifiable as a copy that is not the authoritative copy and
(vi) any  revision  of the  authoritative  copy is  readily  identifiable  as an
authorized or unauthorized revision.

         6.  PRESERVATION  OF COLLATERAL  AND  PERFECTION  OF SECURITY INTERESTS
 THEREIN.

         The Parent and the Borrowers shall, at Agent's request, at any time and
from time to time,  authenticate,  execute and  deliver to Agent such  financing
statements,  documents and other agreements and instruments (and pay the cost of
filing or recording the same in all public offices deemed necessary or desirable
by Agent) and do such other  acts and things or cause  third  parties to do such
other  acts and  things as Agent may deem  necessary  or  desirable  in its sole

                                       27

<PAGE>

discretion  in order to establish  and maintain a valid,  attached and perfected
security  interest  in the  Collateral  in favor of Agent (free and clear of all
other  liens,  claims,  encumbrances  and  rights of third  parties  whatsoever,
whether voluntarily or involuntarily created,  except Permitted Liens) to secure
payment of the  Liabilities,  and in order to facilitate  the  collection of the
Collateral.   Each  of  Parent  and  each  Borrower  irrevocably  hereby  makes,
constitutes  and appoints  Agent (and all Persons  designated  by Agent for that
purpose)  as  Parent's  or  such   Borrower's   true  and  lawful  attorney  and
agent-in-fact to execute and file such financing statements, documents and other
agreements and instruments and do such other acts and things as may be necessary
to preserve and perfect Agent's  security  interest in the  Collateral.  Each of
Parent and each Borrower further agrees that a carbon, photographic, photostatic
or other  reproduction  of this Agreement or of a financing  statement  shall be
sufficient as a financing  statement.  Each of Parent and each Borrower  further
ratifies  and  confirms  the  prior  filing  by Agent  of any and all  financing
statements  which identify  Parent or such Borrower as debtor,  Agent as secured
party (or LaSalle in its individual  capacity as a secured party pursuant to the
Prior Loan Agreement) and any or all Collateral as collateral.

         7.       POSSESSION OF COLLATERAL AND RELATED MATTERS.

         Unless  an  Event of  Default  has  occurred  and is  continuing,  each
Borrower shall have the right,  except as otherwise  expressly  provided in this
Agreement,  in the ordinary  course of such  Borrower's  business,  to (a) sell,
lease or furnish  under  contracts of service any of such  Borrower's  Inventory
normally held by such Borrower for any such purpose; and (b) use and consume any
raw materials, work in process or other materials normally held by such Borrower
for such  purpose;  PROVIDED,  HOWEVER,  that a sale in the  ordinary  course of
business  shall not include any  transfer  or sale in  satisfaction,  partial or
complete, of a debt owed by such Borrower.

         8.       COLLECTIONS.

         (a)     Each Obligor shall direct all of its Account Debtors that remit
payment on the  Accounts  due to such Obligor by  electronic  funds  transfer to
remit such  amounts  directly to one or more  deposit  accounts in Agent's  name
established by such Obligor at LaSalle Bank or at another financial  institution
acceptable  to Agent (each a "BLOCKED  ACCOUNT," and  collectively  the "BLOCKED
ACCOUNTS").  The  financial  institution  with  which  such  Blocked  Account is
established shall acknowledge and agree, in a manner satisfactory to Agent, that
the amounts in such  Blocked  Accounts  are the sole and  exclusive  property of
Agent,  that such financial  institution  will follow the  instructions of Agent
with respect to the disposition of funds in the Blocked Accounts without further
consent of such Obligor,  that such financial institution has no right of setoff
or recoupment  against the Blocked Accounts or against any account maintained by
such  financial  institution  into which any  amounts  are  remitted  by Account
Debtors of such  Obligor,  and that the  financial  institution  shall wire,  or
otherwise  transfer  in  immediately  available  funds  to  Agent  in  a  manner
satisfactory  to Agent,  funds  deposited  into the Blocked  Accounts on a daily
basis as such funds are collected. Each Obligor agrees that all payments made to
the Blocked Accounts of such Obligor or otherwise received by Agent,  whether in
respect of the Accounts or as Proceeds of other Collateral or otherwise, will be
applied on account of the  Liabilities  then due and payable in accordance  with
the terms of this  Agreement;  PROVIDED  that so long as no Event of Default has
occurred  and is  continuing,  payments  received  by Agent  shall  not,  unless
requested by Borrower  Representative in advance of such payment,  be applied to

                                       28

<PAGE>

the unmatured  portion of the LIBOR Rate Loans, but shall be held in an interest
bearing cash collateral  account  maintained by Agent,  until the earlier of (i)
the last Business Day of the Interest Period applicable to such LIBOR Rate Loans
and (ii)  the  occurrence  of an Event of  Default.  The  Obligors  jointly  and
severally  agree to pay all fees,  costs and expenses in connection with opening
and maintaining the Blocked Accounts.  All of such fees, costs and expenses,  if
not paid by the  Obligors,  may be paid by Agent and in such  event all  amounts
paid by Agent shall constitute Liabilities hereunder,  shall be payable to Agent
by the Obligors  jointly and severally upon demand,  and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder. For the purpose
of this section, each Obligor irrevocably hereby makes, constitutes and appoints
Agent (and all Persons  designated by Agent for that purpose) as such  Obligor's
true and lawful attorney and  agent-in-fact to perform all acts and other things
that Agent reasonably deems necessary to perfect, preserve, or realize upon such
Obligor's property or assets and Agent's liens thereon.

         (b)      Each Obligor shall  direct all of its Account  Debtors to make
all  payments  on the  Accounts  due to such  Obligor,  other than  payments  by
electronic funds transfer addressed in SUBSECTION 8(A) above, directly to a post
office box (a "LOCK  BOX")  designated  by, and under the  exclusive  control of
Agent at a  financial  institution  acceptable  to  Agent.  Each  Obligor  shall
establish an account (the "LOCK BOX  ACCOUNT") in Agent's name with LaSalle Bank
or another  financial  institution  acceptable to Agent, into which all payments
received in the Lock Box shall be  deposited,  and into which such  Obligor will
immediately  deposit all  payments  received by such  Obligor on Accounts in the
identical form in which such payments were  received,  whether by cash or check.
If an Obligor,  any  Affiliate or Subsidiary  of any Obligor,  any  shareholder,
officer,  director,  employee  or  agent  of any  Obligor  or any  Affiliate  or
Subsidiary of any Obligor, or any other Person acting for or in concert with any
Obligor  shall  receive  any monies,  checks,  notes,  drafts or other  payments
relating to or as Proceeds of  Accounts or other  Collateral,  such  Obligor and
each such other  Person  shall  receive all such items in trust for,  and as the
sole and  exclusive  property  of,  Agent  and,  except as  otherwise  permitted
pursuant to SUBSECTION (F) below,  shall remit the same (or cause the same to be
remitted) in kind to the Lock Box Account  immediately upon the receipt thereof.
The financial  institution with which the Lock Box Account is established  shall
acknowledge  and agree, in a manner  satisfactory to Agent,  that the amounts on
deposit  in such  Lock  Box and  Lock Box  Account  are the  sole and  exclusive
property of Agent, that such financial  institution will follow the instructions
of  Agent  with  respect  to  disposition  of funds in the Lock Box and Lock Box
Account  without  further  consent  from  such  Obligor,   that  such  financial
institution  has no right to setoff  against the Lock Box or Lock Box Account or
against any other account  maintained by such financial  institution  into which
the contents of the Lock Box or Lock Box Account are transferred,  and that such
financial institution shall wire, or otherwise transfer in immediately available
funds to Agent in a manner  satisfactory  to Agent,  funds deposited in the Lock
Box Account on a daily basis as such funds are  collected.  Each Obligor  agrees
that all payments made to such Lock Box Account or otherwise  received by Agent,
whether in respect of the Accounts or as Proceeds of other  Collateral,  will be
applied on  account  of the  Liabilities  in  accordance  with the terms of this
Agreement;  PROVIDED, that so long as no Event of Default has occurred, payments
received by Agent shall not,  unless  requested  by Borrower  Representative  in
advance of Agent receiving such payment,  be applied to the unmatured portion of
the LIBOR Rate Loans,  but shall be held in an interest  bearing cash collateral
account  maintained by Agent,  until the earlier of (i) the last Business Day of
the Interest  Period  applicable to such LIBOR Rate Loan and (ii) the occurrence
of an Event of Default;

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<PAGE>

PROVIDED,  FURTHER,  that so long as no  Event  of  Default  has  occurred,  the
immediately available funds in such cash collateral account may be disbursed, at
the  Borrowers'  discretion,  to one or more of the  Borrowers  so long as after
giving effect to such  disbursement,  the Borrowers'  Availability  at such time
equals or exceeds the sum of outstanding  Revolving Loans and outstanding Letter
of Credit  Obligations at such time. All checks,  drafts,  instruments and other
items of payment or Proceeds of Collateral  shall be endorsed by the  applicable
Obligor to Agent,  and, if that  endorsement  of any such item shall not be made
for any reason,  Agent is hereby  irrevocably  authorized to endorse the same on
such Obligor's behalf. For the purpose of this section, each Obligor irrevocably
hereby  makes,  constitutes  and appoints  Agent (and all persons  designated by
Agent  for  that  purpose)  as such  Obligor's  true  and  lawful  attorney  and
agent-in-fact  (i) to  endorse  such  Obligor's  name upon said items of payment
and/or Proceeds of Collateral and upon any Chattel Paper, Document,  Instrument,
invoice or similar document or agreement relating to any Account of such Obligor
or Goods pertaining  thereto;  (ii) to take control in any manner of any item of
payment or  Proceeds  thereof and (iii) to have access to any lock box or postal
box into which any of such Obligor's mail is deposited, and open and process all
mail addressed to such Obligor and deposited therein.

         (c)      Agent  may,  at  any  time  and  from  time  to time after the
occurrence and during the continuance of an Event of Default,  whether before or
after  notification  to any  Account  Debtor  and  whether  before  or after the
maturity  of  any of  the  Liabilities,  (i)  enforce  collection  of any of any
Obligor's  Accounts or other  amounts owed to any Obligor by suit or  otherwise;
(ii)  exercise all of Obligor's  respective  rights and remedies with respect to
proceedings  brought to  collect  any  Accounts  or other  amounts  owed to such
Obligor; (iii) surrender, release or exchange all or any part of any Accounts or
other  amounts owed to such  Obligor,  or  compromise or extend or renew for any
period  (whether  or not  longer  than the  original  period)  any  indebtedness
thereunder,  as Agent may deem appropriate in its reasonable judgment; (iv) sell
or assign any  Account of any Obligor or other  amount owed to any Obligor  upon
such terms,  for such amount and at such time or times as Agent deems  advisable
in its reasonable judgment; (v) prepare, file and sign any Obligor's name on any
proof of claim in  bankruptcy  or other  similar  document  against  any Account
Debtor or other Person obligated to any Obligor;  and (vi) do all other acts and
things  which  are  necessary,  in  Agent's  sole  discretion,  exercised  in  a
commercially  reasonable manner, to fulfill any Obligor's obligations under this
Agreement  and to allow Agent to collect the  Accounts or other  amounts owed to
any Obligor.  In addition to any other provision hereof,  Agent may at any time,
after the  occurrence  and during the  continuance  of an Event of  Default,  at
Obligors'  expense,  notify any parties obligated on any of the Accounts to make
payment directly to Agent of any amounts due or to become due thereunder.

         (d)      For purpose s of  calculating  interest and fees, Agent shall,
within one (1)  Business  Day after  receipt by Agent at its office in  Chicago,
Illinois of (i) checks and (ii) cash or other  immediately  available funds from
collections  of items of payment  and  Proceeds  of any  Collateral,  apply such
collections  or  Proceeds  against  the  Liabilities  then due in such  order as
provided  herein  or,  if any  Event  of  Default  shall  have  occurred  and be
continuing,  as Agent shall  determine in its sole  discretion.  For purposes of
determining  the amount of Loans  available for borrowing  purposes,  checks and
cash or other  immediately  available funds from collections of items of payment
and Proceeds of any Collateral  shall be applied  against the  Liabilities  then
due, in such order as Agent shall determine in its sole  discretion,  on the day
of receipt, subject to actual collection.

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<PAGE>

         (e)      On   a   monthly   basis,  Agent  shall  deliver  to  Borrower
Representative  an account  statement  showing all Loans,  charges and payments,
which shall be deemed final,  binding and conclusive upon the Borrowers,  unless
Borrower Representative notifies Agent in writing, specifying any error therein,
within  sixty  (60) days of the date  such  account  statement  is  received  by
Borrower  Representative  and any such notice shall only constitute an objection
to the items specifically identified.

         (f)      Notwithstanding anything in this SECTION  8  to  the contrary,
Parent and Borrowers shall not be required to make Account Number  2000015077343
maintained by Point Blank at Wachovia Bank,  N.A. or Account  Number  3601061876
maintained  by PACA at Regions  Bank a Blocked  Account and may deposit  monies,
checks,  notes,  drafts or other payments relating to or as Proceeds of Accounts
or other  Collateral into such accounts;  PROVIDED that the aggregate  amount of
all funds  deposited  into such  accounts  shall at no time  exceed  Twenty-Five
Thousand and No/Dollars ($25,000) in the aggregate.

         9.       COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.

                  (A)      BORROWING REPORTS.

         Borrower Representative,  on behalf of the Borrowers,  shall deliver to
Agent an executed  loan report and  certificate  in Agent's then current form on
each day on which Borrower Representative,  on behalf of the Borrowers, requests
a Revolving  Loan.  Not less than once each week,  Borrower  Representative,  on
behalf of the Parent and  Borrowers,  shall  deliver to Agent (i) copies of each
Borrower's  and Parent's sales  journal,  cash receipts  journal and credit memo
journal  for the  immediately  preceding  week,  and (ii) and a  calculation  of
Borrowers' aggregate  Availability as at the immediately preceding Business Day.
Such report  shall  reflect the  activity of each such  Borrower and Parent with
respect to Accounts of each such Borrower for the  immediately  preceding  week,
and shall be in a form and with such  specificity as is reasonably  satisfactory
to Agent, and shall contain such additional  information concerning Accounts and
Inventory  as  may  be  reasonably  requested  by  Agent,   including,   without
limitation,  but only if specifically requested by Agent, copies of all invoices
prepared  in  connection  with such  Accounts.  To the extent  that  information
concerning  Inventory is required to be provided  more often than monthly  under
this SUBSECTION 9(A), Agent  acknowledges and agrees that such information shall
only be required to be updated on a monthly basis.

                  (B)      MONTHLY REPORTS AND FINANCIAL STATEMENTS.

         Borrower Representative,  on behalf of Parent and the Borrowers,  shall
deliver  to Agent (in  addition  to any other  reports),  in form and  substance
reasonably acceptable to Agent, as soon as practicable and in any event:

                  (i)      within fifteen(15)days after the end of each calendar
         month,  (A) an amended  SCHEDULE 11(X), (B) a detailed trial balance of
         Accounts, aged per invoice date, that shall include without limitation,
         the names and addresses (which may be in a separate document or ledger)
         or such  comparable  information as is reasonably  satisfactory  to the
         Agent of all Accounts, and (C) a summary and detail of accounts payable

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<PAGE>

         (such Accounts and accounts payable divided into such time intervals as
         Agent may require in its reasonable discretion), including a listing of
         any held  checks,  in the case of CLAUSES  (A),  (B) and (C), as of the
         last day of such calendar month;

                  (ii)     within forty-five (45) days  after  the  end of  each
         calendar month, (A) the general ledger inventory account balance and an
         inventory  report in Agent's  standard form of Inventory report then in
         effect  or in the  form  most  recently  requested  from  the  Borrower
         Representative  by Agent, in each case for Parent and Borrowers by each
         category  of  Inventory,  together  with a  description  of the monthly
         change in each category of Inventory; and (B) prior to the month during
         which the First  Availability  Reserve  Termination  Date  occurred,  a
         Monthly  Desktop  Appraisal,  in the case of CLAUSES (A) and (B), as of
         the last day of such calendar month; PROVIDED,  HOWEVER, that the items
         referenced  in  CLAUSES  (A) and (B) above  shall be  delivered  within
         thirty  (30) days after the end of each  calendar  month from and after
         the  earliest  to  occur  of:  (x) the  first  calendar  month in which
         Availability for any Business Day during such month does not exceed Ten
         Million and No/100 Dollars ($10,000,000), (y) the calendar month during
         which the First  Availability  Reserve  Termination Date occurs, or (z)
         the calendar month ending September 30, 2007; PROVIDED,  FURTHER,  that
         Borrowers shall not be required to deliver a Monthly Desktop  Appraisal
         for any month if the Eligible  Account  Excess  Availability  as at the
         last day of such month  exceeds  Fifteen  Million  and  No/100  Dollars
         ($15,000,000); and

                  (iii)    within  forty-five (45) days  after  the  end of each
         calendar  month from the  calendar  month  ending on January  31,  2007
         through and including the calendar  month ending on September 30, 2007,
         and thereafter within thirty (30) days after the end of each subsequent
         calendar  month,   unaudited  consolidated  and  consolidating  monthly
         balance  sheets,  statements of income,  and  shareholders'  equity and
         consolidated statements of cash flows of Parent and its Subsidiaries as
         of the last day of each such calendar month, as certified in writing by
         the Chief  Financial  Officer  of Parent  (on  behalf of Parent and its
         Subsidiaries)  as  presenting  fairly  in  all  material  respects  the
         financial  condition  and  results  of  operations  of  Parent  and its
         Subsidiaries for such calendar month; PROVIDED,  HOWEVER, that for each
         month  from and  after the month  during  which the First  Availability
         Reserve  Termination Date occurred,  such financial  statements must be
         (A)  prepared  in  accordance   with  generally   accepted   accounting
         principles  consistently applied for each such month, and (B) certified
         in  writing  by the Chief  Financial  Officer  of Parent  (on behalf of
         Parent  and its  Subsidiaries)  as  presenting  fairly in all  material
         respects the  financial  condition  and results of operations of Parent
         and  its  Subsidiaries  on a  consolidated  basis  in  accordance  with
         generally accepted accounting principles  consistently applied for each
         such calendar month,  subject to the finalization of the matters listed
         in SCHEDULE 9(B)(III).

                  (C)      QUARTERLY AND ANNUAL FINANCIAL STATEMENTS.

         The  Borrower  Representative,  on behalf of the Parent and  Borrowers,
shall deliver to Agent the following financial  information,  all of which shall
be accompanied by a Compliance  Certificate which shall include a calculation of
all financial  covenants  referenced  therein (both prior to and after execution
and delivery of the Financial Covenant Amendment):

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<PAGE>

                  (i)      within sixty (60) days after  the end of each  Fiscal
         Quarter  through and  including the Fiscal  Quarter  ending on or about
         June 30, 2007, and thereafter within forty-five (45) days after the end
         of  each  subsequent   Fiscal  Quarter,   unaudited   consolidated  and
         consolidating  balance sheets,  statements of income and  shareholders'
         equity  and  consolidated  statements  of cash  flows of Parent and its
         Subsidiaries  as of the  last  day of  each  such  Fiscal  Quarter,  as
         certified  in  writing  by the Chief  Financial  Officer  of Parent (on
         behalf of Parent  and its  Subsidiaries)  as  presenting  fairly in all
         material respects the financial  condition and results of operations of
         Parent and its Subsidiaries on a consolidated and  consolidating  basis
         for such  Fiscal  Quarter;  PROVIDED,  HOWEVER,  that  for each  Fiscal
         Quarter  from and  after  the  Fiscal  Quarter  during  which the First
         Availability   Reserve   Termination  Date  occurred,   such  financial
         statements must be (A) prepared in accordance  with generally  accepted
         accounting  principles   consistently  applied  for  each  such  Fiscal
         Quarter, and (B) certified in writing by the Chief Financial Officer of
         Parent (on behalf of Parent and its  Subsidiaries) as presenting fairly
         in all  material  respects  the  financial  condition  and  results  of
         operations of Parent and its  Subsidiaries  on a consolidated  basis in
         accordance with generally accepted accounting  principles  consistently
         applied for each such Fiscal Quarter;

                  (ii)     within sixty (60) days after  the end of each  Fiscal
         Quarter  through and  including the Fiscal  Quarter  ending on or about
         June 30, 2007, and thereafter within forty-five (45) days after the end
         of each  subsequent  Fiscal  Quarter,  in each  case  until  the  First
         Availability  Reserve Termination Date, a Quarterly Appraisal as of the
         last day of such Fiscal Quarter; and

                  (iii)    within  ninety (90) days after the end of each Fiscal
         Year  (except  for the  Fiscal  Year ended  December  31,  2006,  which
         deadline  shall  be  September  30,  2007),  audited  annual  financial
         statements including, without limitation, balance sheets and statements
         of income,  retained earnings,  cash flows and stockholders  equity, of
         Parent and its Subsidiaries,  on a consolidated  basis,  which shall be
         accompanied  by  (A)  an  unqualified   audit  opinion  by  independent
         certified  public   accountants   selected  by  Parent  and  reasonably
         satisfactory  to Agent,  that such  consolidated  financial  statements
         present  fairly in all material  respects the  financial  condition and
         results of operations of Parent and its  Subsidiaries on a consolidated
         basis in  accordance  with  generally  accepted  accounting  principles
         consistently  applied for each such Fiscal Year;  and (B) copies of all
         related  management letters sent to Parent or any Subsidiary thereof by
         such  accountants.  Parent and Borrowers shall further use commercially
         reasonable  efforts to cause such  accountants to deliver to Agent (for
         the  benefit  of Agent and  Lenders) a letter  acknowledging  that such
         accountants  are aware that a primary intent of Parent and Borrowers in
         obtaining such financial statements and unqualified audit opinion is to
         influence Agent and Lenders and that Agent and Lenders are relying upon
         such financial  statements and unqualified  audit opinion in connection
         with the exercise of their rights hereunder.

                  (D)      ANNUAL PROJECTIONS.

         As soon as practicable  and in any event no later than thirty (30) days
following  the  beginning  of each  Fiscal  Year from and after the Fiscal  Year
ending  December 31, 2008,  Borrower  Representative  shall deliver to Agent and

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<PAGE>

each  Lender  projected  balance  sheets,  statements  of income,  cash flow and
Availability   for  Parent  and  its   Subsidiaries,   on  a  consolidated   and
consolidating basis, for each of the twelve (12) months during such Fiscal Year,
which shall  include the  assumptions  used therein,  together with  appropriate
supporting details as reasonably requested by Agent.

                  (E)      EXPLANATION OF BUDGETS AND PROJECTIONS.

         In  conjunction  with  the  delivery  of  the  annual  presentation  of
projections  or  budgets   referred  to  in  SUBSECTION  9(D)  above,   Borrower
Representative,  on behalf of the Borrowers,  shall deliver a letter,  signed by
the  President  or a Vice  President  of Parent  and by the  Treasurer  or Chief
Financial  Officer of Parent and otherwise in a form and with reasonable  detail
reasonably  acceptable to Agent,  describing and analyzing  such  projections or
budgets.

                  (F)      PUBLIC REPORTING.

         Promptly upon the filing thereof, Borrower Representative shall deliver
to Agent copies of all registration statements and annual, quarterly, monthly or
other  regular  reports which Parent or any of its  Subsidiaries  files with the
SEC,  as well as  promptly  providing  to Agent  copies of any reports and proxy
statements delivered to its shareholders.

                  (G)      ERISA.

         Borrower  Representative  shall  provide  Agent copies of the then most
recent  actuarial  reports  with  respect to any Title IV Plans  within five (5)
Business Days of each such report  becoming  available.  Promptly upon Parent or
any Borrower  becoming aware of any fact or condition which could  reasonably be
expected to result in an ERISA Event,  Borrower  Representative shall deliver to
Agent a summary  of such  facts and  circumstances  and any  action  Parent  and
Borrowers intend to take regarding such facts and circumstances.

                  (H)      OTHER INFORMATION.

         Promptly  following  request therefor by Agent,  such other business or
financial  data,  reports,  appraisals  and  projections as Agent may reasonably
request,  which may include,  but not be limited to, reports showing daily sales
and  collections,   monthly  accounts  receivable  agings  and  reconciliations,
Inventory by category and location, and accounts payable agings.

         10.      TERMINATION; AUTOMATIC RENEWAL.

         THIS  AGREEMENT  SHALL BE IN  EFFECT  FOR A PERIOD  (SUCH  PERIOD,  THE
"ORIGINAL TERM") FROM THE DATE HEREOF UNTIL APRIL 3, 2010, AND SHALL BE EXTENDED
THEREAFTER  FOR  SUCCESSIVE  TWELVE MONTH  PERIODS  (EACH SUCH  EXTENSION  BEING
REFERRED  TO HEREIN AS A  "RENEWAL  TERM")  SOLELY AT THE OPTION OF THE AGENT OR
REQUISITE  LENDERS,  AS  APPLICABLE,  UNLESS  (A) AGENT,  AT THE  REQUEST OF THE
REQUISITE  LENDERS,  MAKES DEMAND FOR REPAYMENT PRIOR TO THE END OF THE ORIGINAL
TERM OR THE THEN CURRENT  RENEWAL TERM;  (B) THE DUE DATE OF THE  LIABILITIES IS
ACCELERATED  PURSUANT  TO  SECTION 16 HEREOF OR (C) ANY  BORROWER  OR ANY LENDER

                                       34

<PAGE>

ELECTS TO TERMINATE THIS AGREEMENT AT THE END OF THE ORIGINAL TERM OR AT THE END
OF ANY RENEWAL TERM BY GIVING THE OTHER PARTIES  HERETO  WRITTEN  NOTICE OF SUCH
ELECTION AT LEAST THIRTY (30) DAYS PRIOR TO THE END OF THE ORIGINAL  TERM OR THE
THEN CURRENT  RENEWAL TERM AND BY THE  BORROWERS  PAYING ALL OF THE  LIABILITIES
(OTHER THAN  CONTINGENT  INDEMNIFICATION  OBLIGATIONS AS TO WHICH NO UNSATISFIED
CLAIM HAS BEEN ASSERTED) IN FULL ON THE LAST DAY OF SUCH TERM. If one or more of
the events  specified  in clauses  (A),  (B) or (C)  occurs,  or this  Agreement
otherwise  expires,  then (i) Agent and  Lenders  shall not make any  additional
Loans or issue any additional  Letters of Credit on or after the date identified
as the date on which such Liabilities are to be repaid;  and (ii) this Agreement
shall terminate on the date  thereafter that such  Liabilities are paid in full.
At such time as the  Borrowers  have repaid all of the  Liabilities  (other than
contingent indemnification obligations as to which no unsatisfied claim has been
asserted) and this Agreement has terminated in accordance with the terms hereof,
(i) Parent and the Borrowers  shall  deliver to Agent and Lenders a release,  in
form  and  substance  reasonably  satisfactory  to  Agent  and  Lenders,  of all
obligations and liabilities of Agent and Lenders and their respective  officers,
directors, employees, agents, parents, subsidiaries and affiliates to Parent and
the  Borrowers,  and if the Parent and/or  Borrowers are obtaining new financing
from another  lender,  Parent and the  Borrowers  shall  deliver  such  lender's
indemnification  of  Agent  and  Lenders,  in  form  and  substance   reasonably
satisfactory  to Agent,  effective for a period not longer than ninety (90) days
after the termination of this Agreement,  for checks which Agent has credited to
any account of Parent and the Borrowers,  but which  subsequently are dishonored
for any reason or for automatic  clearinghouse  or wire transfers not yet posted
to any account of Parent or the  Borrowers,  and (ii) the Agent shall deliver to
the  Borrowers  and  all  other  Obligors,  in  form  and  substance  reasonably
satisfactory to the Borrowers,  a release of all obligations and shall discharge
all liens and security interests,  including any filed financing statements, and
shall provide  Borrowers copies thereof.  Borrowers may terminate this Agreement
and prepay all of the  Liabilities in full in cash solely upon  satisfaction  of
all of the following  conditions:  (i) Agent shall have received from  Borrowers
not  less  than  thirty  (30)  days'  written  notice  of  such  prepayment  and
termination,  and (ii) Borrowers shall pay Agent, for the benefit of the Lenders
according to their respective Pro Rata Shares, a prepayment premium (in addition
to the  payment of all other  Liabilities)  in  immediately  available  funds as
follows:  (A) in the event Borrowers  terminate this Agreement and prepay all of
the Liabilities on or before April 3, 2008,  then, in such event, on the date of
such prepayment the Borrowers shall jointly and severally pay to Agent an amount
equal to one and one-half percent (1.5%) of the Maximum  Revolving Loan Limit in
effect on such date;  (B) in the event  Borrowers  terminate  this Agreement and
prepay  all of the  Liabilities  after  April 3, 2008 but on or before  April 3,
2009,  then, in such event,  on the date of such  prepayment the Borrowers shall
jointly and  severally  pay to Agent an amount  equal to  three-fourths  percent
(0.75%) of the Maximum  Revolving  Loan Limit in effect on such date;  or (C) in
the event  Borrowers  terminate this Agreement and prepay all of the Liabilities
after April 3, 2009 but before the  expiration  of the Original Term or any then
current  Renewal Term, as applicable,  then, in such event,  on the date of such
prepayment  the  Borrowers  shall  jointly and  severally pay to Agent an amount
equal to  one-fourth  percent  (0.25%) of the  Maximum  Revolving  Loan Limit in
effect on such date.

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<PAGE>

         11.      REPRESENTATIONS AND WARRANTIES.

         Parent and each Borrower hereby represent and warrant to Agent and each
Lender, as applicable,  which  representations and warranties (whether appearing
in this SECTION 11 or  elsewhere)  shall be true at the time of such  Borrower's
execution hereof and the closing of the transactions described herein or related
hereto,  shall remain true until the repayment in full and  satisfaction  of all
the Liabilities and termination of this Agreement, and shall be remade by Parent
and each Borrower, as applicable, at the time each Loan is made pursuant to this
Agreement.

                  (A)      THE FINANCIAL AND OTHER INFORMATION.

         The  financial  information  delivered or to be delivered by Parent and
the  Borrowers to Agent or any Lender at or prior to the date of this  Agreement
accurately reflect the financial condition of Parent and each Borrower as of the
dates  thereof  and for the  periods  covered  thereby.  As of the  date of this
Agreement, there has been no material adverse change in the financial condition,
the  operations  or any other status of Parent or any Borrower  since August 22,
2006. All written information  furnished since August 22, 2006 by Parent and the
Borrowers  to LaSalle,  Agent or any Lender is true and correct in all  material
respects as of the date with respect to which such information was furnished.

                  (B)      LOCATIONS.

         The office where Parent and each Borrower keeps its books,  records and
accounts  (or copies  thereof)  concerning  the  Collateral,  such  Parent's and
Borrower's  principal  place of business and all of such Parent's and Borrower's
other places of  business,  locations  of  Collateral  and post office boxes and
locations of bank accounts are as set forth in EXHIBIT B and at other  locations
within the  continental  United  States of which  Agent has been  advised by the
Parent and Borrowers in accordance  with  SUBSECTION  12(B)(I).  The Collateral,
including,  without limitation, the Equipment (except any part thereof which the
Parent  or any  Borrower  shall  have  advised  Agent  in  writing  consists  of
Collateral  normally  used in more than one  state) is kept,  or, in the case of
vehicles,  based,  only at the  addresses  set forth on  EXHIBIT B, and at other
locations  within the continental  United States of which Agent has been advised
by the Parent or any Borrower in writing in accordance with SUBSECTION  12(B)(I)
hereof.

                  (C)      LOANS BY THE BORROWERS.

         Neither  Parent nor any  Borrower has made any loans or advances to any
Affiliate or other Person except for advances authorized hereunder to employees,
officers and  directors of Parent or any of the  Borrowers  for travel and other
expenses arising in the ordinary course of Parent's or such Borrower's  business
and loans permitted pursuant to SUBSECTION 13(F) hereof.

                  (D)      ACCOUNTS AND INVENTORY.

         Each Account or item of Inventory which the Borrowers shall,  expressly
or by  implication,  request  Agent to  classify  as an  Eligible  Account or as
Eligible  Inventory,  respectively,  shall,  as of the time when such request is
made, conform in all respects to the requirements of such  classification as set

                                       36

<PAGE>

forth  in  the  respective  definitions  of  "ELIGIBLE  ACCOUNT"  and  "ELIGIBLE
INVENTORY" as set forth herein.

                  (E)      LIENS.

         Parent and each  Borrower  is the lawful  owner of all  Collateral  now
purportedly owned or hereafter  purportedly acquired by Parent or such Borrower,
free from all liens,  claims,  security  interests and encumbrances  whatsoever,
whether voluntarily or involuntarily created and whether or not perfected, other
than the Permitted Liens.

                  (F)      ORGANIZATION, AUTHORITY AND NO CONFLICT.

                  (i)      PACA is duly organized, validly existing  and in good
         standing  in  the  State  of New  York,  but  does  not  have  a  state
         organizational   identification   number;  (ii)  Point  Blank  is  duly
         organized,  validly  existing  and in good  standing  in the  State  of
         Delaware,  and  its  state  organizational   identification  number  is
         2475533;  (iii) NDL is duly  organized,  validly  existing  and in good
         standing  in  the  State  of  Florida,  and  its  state  organizational
         identification  number  is  P94000091162;   and  (iv)  Parent  is  duly
         organized,  validly  existing  and in good  standing  in the  State  of
         Delaware and its state organizational identification number is 2431782.
         Parent and each Borrower is duly  qualified and in good standing in all
         states where the nature and extent of the business  transacted by it or
         the  ownership of its assets  makes such  qualification  necessary  and
         where the failure to be so qualified would not have a Material  Adverse
         Effect on the Parent or such Borrower. Parent and each Borrower has the
         right and power and is duly  authorized  and  empowered  to enter into,
         execute and deliver this Agreement and the Other Agreements and perform
         its obligations hereunder and thereunder.  Parent's and each Borrower's
         execution,  delivery and  performance  of this  Agreement and the Other
         Agreements does not conflict with the provisions of the  organizational
         documents  of  Parent  or  such  Borrower,  any  statute,   regulation,
         ordinance or rule of law, or any agreement,  contract or other document
         which may now or hereafter be binding on Parent or such  Borrower,  and
         Parent's and such  Borrower's  execution,  delivery and  performance of
         this  Agreement  and the  Other  Agreements  shall  not  result  in the
         imposition  of any lien or other  encumbrance  upon any of  Parent's or
         such Borrower's property under any existing indenture,  mortgage,  deed
         of trust,  loan or credit agreement or other agreement or instrument by
         which  Parent or such  Borrower or any of its  property may be bound or
         affected.

                  (G)      LITIGATION.

         Except as disclosed on SCHEDULE  11(G)  attached  hereto,  there are no
actions or  proceedings  which are pending or threatened  against  Parent or any
Borrower which could reasonably be expected to have a Material Adverse Effect on
Parent and the Borrowers,  taken as a whole, and Parent and each Borrower shall,
promptly  upon  becoming  aware of any such  pending  or  threatened  action  or
proceeding,  give  written  notice  thereof  to Agent.  Neither  Parent  nor any
Borrower has any Commercial  Tort Claims other than those set forth on EXHIBIT C
hereto, as EXHIBIT C may be amended from time to time.

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<PAGE>

                  (H)      COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.

         Parent  and each  Borrower  has  obtained  all  governmental  consents,
franchises, certificates,  licenses, authorizations,  approvals and permits, the
lack of which would have a Material  Adverse Effect on Parent and the Borrowers,
taken as a whole.  Parent and each  Borrower are in  compliance  in all material
respects with all applicable federal, state, local and foreign statutes, orders,
regulations, rules and ordinances (including, without limitation,  Environmental
Laws and,  except as  described on SCHEDULE  11(H)  attached  hereto,  statutes,
orders,  regulations,  rules and  ordinances  relating  to taxes,  employer  and
employee contributions and similar items,  securities,  ERISA or employee health
and  safety)  the  failure to comply  with which  would have a Material  Adverse
Effect on Parent and the Borrowers, taken as a whole.

                  (I)      AFFILIATE TRANSACTIONS.

         Except as set forth on SCHEDULE  11(I) hereto or as permitted  pursuant
to  SUBSECTIONS  13(B),  13(D),  13(E) and 13(F) hereof,  neither Parent nor any
Borrower is conducting, permitting or suffering to be conducted, any transaction
with any  Affiliate  other than:  (i)  transactions  in the  ordinary  course of
business pursuant to terms that are no less favorable to Parent or such Borrower
than the terms upon which such  transfers or  transactions  would have been made
had  they  been  made to or with a  Person  that  is not an  Affiliate,  or (ii)
transactions  between Parent and its  Subsidiaries  with respect to the purchase
from third parties of raw materials, other inventory and centralized services by
Parent on behalf of Borrowers,  payment of taxes and similar charges,  repayment
of indebtedness permitted under SUBSECTION 13(F) hereof,  expenses of litigation
and other legal and administrative  proceedings,  and general and administrative
expenses,  in each case pursuant to transfer  pricing and other terms  compliant
with generally accepted accounting principles.

                  (J)      NAMES AND TRADENAMES.

         Parent's and each  Borrower's  name has always been as set forth on the
first page of this  Agreement and Parent and each  Borrower uses no  tradenames,
assumed  names,  fictitious  names or  division  names in the  operation  of its
business, except in each case as set forth on SCHEDULE 11(J) hereto.

                  (K)      EQUIPMENT.

         Except as described  in SCHEDULE  11(K),  Parent and each  Borrower has
good and  indefeasible  and  merchantable  title to and  ownership of all of its
Equipment,  and no Equipment is a Fixture to real estate unless such real estate
is owned by Parent or such  Borrower  and is subject  to a mortgage  in favor of
Agent, or if such real estate is leased, is subject to a landlord's agreement in
favor of Agent on terms  acceptable to Agent,  or an accession to other personal
property  unless such personal  property is subject to a first  priority lien in
favor of Agent.

                  (L)      ENFORCEABILITY.

         This Agreement and the Other Agreements to which Parent or any Borrower
is a party  are the  legal,  valid  and  binding  obligations  of Parent or such
Borrower, and are enforceable against Parent or such Borrower in accordance with
their  respective  terms,  except  as  such  enforceability  may be  limited  by

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<PAGE>

bankruptcy,   insolvency,   fraudulent   conveyance  and  other  laws  affecting
creditors' rights,  and by general  limitations on the availability of equitable
remedies.

                  (M)      SOLVENCY.

         Parent and its Subsidiaries, taken as a whole, are, and Parent and each
Borrower, individually, is, after giving effect to the transactions contemplated
hereby,  solvent,  able to pay  its  debts  as  they  become  due,  has  capital
sufficient  to carry on its business,  now owns property  having a value both at
fair  valuation  and at present  fair  saleable  value  greater  than the amount
required to pay its debts,  and will not be rendered  insolvent by the execution
and delivery of this  Agreement or any of the Other  Agreements or by completion
of the transactions contemplated hereunder or thereunder.

                  (N)      INDEBTEDNESS.

         Except  for  indebtedness  permitted  under  SUBSECTION  13(B)  hereof,
neither Parent nor any Borrower is obligated  (directly or indirectly),  for any
loans or other  indebtedness  for  borrowed  money  other than the Loans and the
Letters of Credit.

                  (O)      MARGIN SECURITY AND USE OF PROCEEDS.

         Except as set forth on  SCHEDULE  11(O)  hereto,  none of Parent or any
Borrower  owns any  margin  securities,  and none of the  proceeds  of the Loans
hereunder  shall be used for the purpose of  purchasing  or carrying  any margin
securities or for the purpose of reducing or retiring any indebtedness which was
originally  incurred to purchase any margin  securities or for any other purpose
not permitted by  Regulation U of the Board of Governors of the Federal  Reserve
System as in effect from time to time.

                  (P)      PARENT, SUBSIDIARIES AND AFFILIATES.

         Except as set forth on SCHEDULE 11(P) hereto,  Parent and each Borrower
has no parents,  Subsidiaries  or other  Affiliates  or  divisions,  and neither
Parent nor any Borrower is engaged in any joint venture or partnership  with any
other Person.  The  percentage of ownership of each  Subsidiary and Affiliate of
Parent or any Borrower  listed on SCHEDULE 11(P) (which  Schedule may be amended
from time to time with the prior written consent of Agent) and all  certificates
representing such ownership, are set forth on SCHEDULE 11(P) hereto.

                  (Q)      NO DEFAULTS.

         Neither  Parent nor any Borrower is in default in any respect under any
contract,  lease or  commitment  to which it is a party or by which it is bound,
nor  does  Parent  nor any  Borrower  know of any  dispute  regarding  any  such
contract,  lease or  commitment  which in any such case  would  have a  Material
Adverse Effect on Parent and the Borrowers, taken as a whole.

                  (R)      EMPLOYEE MATTERS.

         There are no  controversies  pending or, to any  Borrower's or Parent's
knowledge  threatened  between  Parent or any Borrower and any of its respective
employees,  agents or  independent  contractors  other than employee  grievances

                                       39

<PAGE>

arising in the ordinary  course of business  which would not, in the  aggregate,
have a Material  Adverse Effect on Parent and the  Borrowers,  taken as a whole,
and Parent and each  Borrower is in  compliance  with all federal and state laws
respecting employment and employment terms, conditions and practices, except for
such non-compliance which would not have a Material Adverse Effect on Parent and
the Borrowers, taken as a whole.

                  (S)      INTELLECTUAL PROPERTY.

         Parent and each Borrower possess  adequate  licenses,  patents,  patent
applications,  copyrights,  service marks,  trademarks,  trademark applications,
tradestyles  and tradenames to continue to conduct their  respective  businesses
substantially as heretofore conducted by them.

                  (T)      ENVIRONMENTAL MATTERS.

         Neither Parent nor any Borrower has generated,  used, stored,  treated,
transported,  manufactured,  handled,  produced  or  disposed  of any  Hazardous
Materials,  on or off its  premises  (whether  or not owned by it) in any manner
which  at any  time  violates  any  Environmental  Law or any  license,  permit,
certificate, approval or similar authorization thereunder, and the operations of
Parent and each Borrower comply in all material  respects with all Environmental
Laws  and  all   licenses,   permits,   certificates,   approvals   and  similar
authorizations  thereunder.   There  has  been  no  investigation,   proceeding,
complaint,  order,  directive,  claim,  citation  or notice by any  governmental
authority or any other Person, nor is any pending or to the best of Parent's and
each Borrower's  knowledge threatened with respect to any non-compliance with or
violation  of the  requirements  of any  Environmental  Law by  Parent  or  such
Borrower  or the  release,  spill or  discharge,  threatened  or actual,  of any
Hazardous Materials or the generation, use, storage, treatment,  transportation,
manufacture,  handling, production or disposal of any Hazardous Materials or any
other  environmental,  health or safety  matter,  which  affects  Parent or such
Borrower or its business, operations or assets or any properties at which Parent
or such Borrower has transported, stored or disposed of any Hazardous Materials.
Neither Parent nor any Borrower has material liability (contingent or otherwise)
in connection with a release,  spill or discharge,  threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment,  transportation,
manufacture, handling, production or disposal of any Hazardous Materials.

                  (U)      ERISA MATTERS.

                  (i)      SCHEDULE  11  (U)   lists  all  Title  IV  Plans  and
         Multiemployer  Plans to which  Parent or any  Borrower is subject as of
         the Closing  Date.  As of the Closing  Date,  copies of all such listed
         Plans,  together  with a copy of the three  most  recent  form  IRS/DOL
         5500-series  for each such Plan,  to the extent  applicable,  have been
         delivered to Agent.  Parent and each  Borrower has paid and  discharged
         all  obligations  and  liabilities  arising  under ERISA of a character
         which,  if unpaid or  unperformed,  might result in the imposition of a
         lien against any of its  properties  or assets.  Except with respect to
         Multiemployer  Plans,  each Qualified  Plan has been  determined by the
         Internal  Revenue  Service  to  qualify  under  Section  401(a)  of the
         Internal Revenue Code, and to the knowledge of Parent or the applicable
         Borrower,  nothing  has  occurred  that  would  cause  the loss of such

                                       40

<PAGE>

         qualification.  Except as would not  reasonably  be  expected to have a
         Material Adverse Effect,  each Plan is in material  compliance with the
         applicable  provisions of ERISA and the Internal Revenue Code.  Neither
         Parent,  any  Borrower nor any ERISA  Affiliate  has failed to make any
         contribution or pay any amount due as required by either Section 412 of
         the  Internal  Revenue Code or Section 302 of ERISA or the terms of any
         Title IV Plan.  Neither  Parent  nor any  Borrower  has  engaged in any
         "prohibited  transaction,"  as  defined  in  Section  406 of ERISA  and
         Section 4975 of the Internal Revenue Code, in connection with any Plan,
         that  would  subject  Parent or any  Borrower  to any  material  tax on
         prohibited  transactions  imposed by Section 502(i) of ERISA or Section
         4975 of the Internal Revenue Code.

                  (ii)     As of the  Closing  Date:  (A) no  Title  IV Plan has
         any Unfunded Pension  Liability;  (B) no ERISA Event or event described
         in  Section  4062(e)  of ERISA  with  respect  to any Title IV Plan has
         occurred or is reasonably  expected to occur; (C) there are no pending,
         or to the knowledge of Parent or any Borrower, threatened claims (other
         than claims for benefits in the normal course),  sanctions,  actions or
         lawsuits,  asserted  or  instituted  against  any Plan or any Person as
         fiduciary  or  sponsor of any Plan that could  result in  liability  to
         Parent or any Borrower; (D) within the last five years no Title IV Plan
         of Parent,  any Borrower or any ERISA  Affiliate  has been  terminated,
         whether  or not in a  "standard  termination"  as that  term is used in
         Section  404(b)(1)  of  ERISA,   that  remains   unsatisfied  or  could
         reasonably be expected to result in liability to Parent and  Borrowers,
         nor has  any  Title  IV  Plan of  Parent,  any  Borrower  or any  ERISA
         Affiliate  (determined  at any time  within the past five  years)  with
         Unfunded  Pension   Liabilities   been   transferred   outside  of  the
         "controlled group" (within the meaning of Section 4001(a)(14) of ERISA)
         of  Parent,  any  Borrower  or any  ERISA  Affiliate  that has or could
         reasonably be expected to result in a Material Adverse Effect.

         (V)      LEVY, SEIZURE OR ATTACHMENT.

         No  Person  has made or has  attempted  to make any  levy,  seizure  or
attachment upon any of the Collateral which could reasonably be expected to have
a Material Adverse Effect on the Parent and the Borrowers, taken as a whole.

         (W)      FORMER DHB SUBSIDIARIES.

         Each Former DHB Subsidiary has either been dissolved in accordance with
applicable  law or is an  inactive  Subsidiary  of the Parent or  Borrowers,  as
applicable,  and in any  event  does not (i) own,  lease or  otherwise  have any
interest in any assets or properties, (ii) have any liabilities, or (iii) engage
in any business activities.

         (X)      GOVERNMENT CONTRACTS.

         Attached  hereto as SCHEDULE  11(X) is a complete and accurate  list of
all  contracts  in effect as of the  Closing  Date  between any of Parent or any
Borrower, on the one hand, and the United States Government,  on the other hand,
concerning  the sale of  Inventory  and  other  products  to the  United  States
Government.  All of the following  information  set forth in SCHEDULE 11(X) with
respect to each  contract  listed  therein is true and correct as of the Closing
Date:  (i)  the  name  and  address  of the  particular  department,  agency  or

                                       41

<PAGE>

instrumentality of the United States Government that is the counter-party to the
contract;  (ii) the name and address of the  contracting  officer and disbursing
officer of the United  States  Government,  (iii) the  contract  term,  (iv) the
contract number,  and (v) the general  description of the subject  Inventory and
other  products.  Each amended  SCHEDULE  11(X)  delivered to Agent  pursuant to
SUBSECTION 9(B)(I) hereof, and all information of the type described above which
is contained therein,  shall be true and correct as of the last day of the month
for which it is  delivered.  No Account  owing by the United  States  Government
exists that (i) arose under the 0014 Contract prior to the  effectiveness of the
0014  Modification  P00006,  or (ii) arose under the 0030 Contract  prior to the
effectiveness of the 0030 Modification P00003.

         12.      AFFIRMATIVE COVENANTS.

         Until payment and  satisfaction in full of all Liabilities  (other than
contingent indemnification obligations as to which no unsatisfied claim has been
asserted) and termination of this Agreement in accordance with the terms hereof,
unless Parent or the Borrowers obtain  Requisite  Lenders' prior written consent
waiving or modifying any of their covenants  hereunder in any specific instance,
Parent and each Borrower, as applicable, covenant and agree as follows:

                  (A)      MAINTENANCE OF RECORDS.

         Parent and each Borrower  shall at all times keep accurate and complete
books,  records and  accounts  with respect to all of such  Borrower's  business
activities, in accordance with sound accounting practices and generally accepted
accounting  principles  consistently  applied,  except as  described on SCHEDULE
12(A) hereto,  and shall keep such books,  records and accounts,  and any copies
thereof, only at the addresses indicated for such purpose on EXHIBIT B.

                  (B)      NOTICES.

         Parent and the Borrowers shall:

                  (i)      LOCATIONS.  Promptly  (but in no event less than  ten
         (10) days prior to the occurrence thereof) notify Agent of the proposed
         opening of any new place of business or new location of Collateral, the
         closing of any  existing  place of business or location of  Collateral,
         any  change  in the  location  of any  Borrower's  books,  records  and
         accounts (or copies thereof), the opening or closing of any post office
         box,  the  opening  or closing  of any bank  account  or, if any of the
         Collateral  consists of Goods of a type  normally used in more than one
         state,  the use of any such  Goods in any state  other  than a state in
         which the Borrowers have previously  advised Agent that such Goods will
         be used.

                  (ii)     ELIGIBLE ACCOUNTS AND INVENTORY. Promptly upon senior
         management of Parent or any Borrower  becoming  aware  thereof,  notify
         Agent if any Account with a face amount,  or any Inventory  with a book
         value,  greater than Twenty-Five  Thousand and No/100 Dollars ($25,000)
         identified by the Borrowers to Agent as an Eligible Account or Eligible
         Inventory, as applicable, becomes ineligible for any reason.

                  (iii)    LITIGATION AND PROCEEDINGS.  Promptly  upon  becoming
         aware  thereof,  notify Agent of any actions or  proceedings  which are
         pending or threatened against Parent or any Borrower which might have a

                                       42

<PAGE>

         Material Adverse Effect on Parent and Borrowers,  taken as a whole, and
         of each  Commercial  Tort Claim in excess of  $100,000 of Parent or any
         Borrower  which may arise,  which notice shall  constitute  Parent's or
         such Borrower's authorization to amend EXHIBIT C to add such Commercial
         Tort Claim.

                  (iv)     NAMES AND TRADENAMES.   Notify  Agent within ten (10)
         days of any change of any Borrower's or Parent's name or the use of any
         tradename,   assumed  name,   fictitious  name  or  division  name  not
         previously disclosed to Agent in writing by a Borrower or Parent.

                  (v)      ERISA  MATTERS.  Promptly  notify  Agent  of  (x) the
         occurrence of any "reportable  event" (as defined in ERISA) which might
         result in the termination by the Pension Benefit  Guaranty  Corporation
         (the  "PBGC") of any Plan  covering  any  officers or  employees of the
         Parent or any  Borrower,  any benefits of which are, or are required to
         be,  guaranteed by the PBGC, (y) receipt of any notice from the PBGC of
         its  intention  to seek  termination  of any Plan or  appointment  of a
         trustee therefor or (z) its intention to terminate or withdraw from any
         Plan.

                  (vi)     ENVIRONMENTAL  MATTERS.   Immediately  notify   Agent
         upon becoming aware of any investigation, proceeding, complaint, order,
         directive, claim, citation or notice with respect to any non-compliance
         with or  violation  of the  requirements  of any  Environmental  Law by
         Parent or any  Borrower or the  generation,  use,  storage,  treatment,
         transportation,  manufacture,  handling,  production or disposal of any
         Hazardous Materials or any other environmental, health or safety matter
         which  affects  Parent  or  any  Borrower  or its  respective  business
         operations or assets or any  properties at which Parent or any Borrower
         has transported, stored or disposed of any Hazardous Materials.

                  (vii)    DEFAULT;   MATERIAL  ADVERSE  CHANGE. Promptly advise
         Agent of any material adverse change in the business, property, assets,
         prospects,  operations or condition,  financial or otherwise, of Parent
         and the  Borrowers,  taken as a  whole,  and of the  occurrence  of any
         Default or Event of Default hereunder.

                  (viii)   UNITED  STATES GOVERNMENT CONTRACTS.  Within ten (10)
         Business  Days of entering into any new contract with the United States
         Government, notify Agent of such event and provide Agent a copy of such
         new contract and all information and  documentation  Agent may request,
         such as size and  duration of such  contract,  the  existence  of a "no
         offset  commitment"  provision,  and all information  necessary for due
         submission  of a Notice of Assignment  under the Federal  Assignment of
         Claims Act of 1940,  including any required  instruments  of assignment
         executed  by the  applicable  Borrower  as  required  under the Federal
         Assignment  of  Claims  Act of  1940  (and  any  comparable  notice  of
         assignment  under  applicable  state or local law) with respect to such
         contract;  PROVIDED,  HOWEVER,  that Parent and Borrowers  shall not be
         required to notify  Agent of any new  contract  with the United  States
         Government  so long as at  such  time  the  aggregate  of all  payments
         contemplated  under all contracts with the United States Government not
         previously  disclosed to the Agent (including the contract in question)
         do not exceed  $500,000 in the  aggregate.  Each contract  entered into
         with the United States Government by Parent or any Borrower on or after
         the Closing  Date shall:  (i) not prohibit  the  assignment  thereof to

                                       43

<PAGE>

         Agent (for the  benefit  of Agent and  Lenders),  and (ii) if  Accounts
         arising  under such  contract  will be included  in Eligible  Accounts,
         expressly  provide  that,  in  compliance  with  48  C.F.R.   52.232.23
         Alternate I (April  1984),  all  payments to an assignee of any amounts
         due or to become  due under  such  contract  shall  not,  to the extent
         specified in the Federal  Assignment  of Claims Act of 1940, be subject
         to reduction or setoff by the United States Government.

                  (ix)     NOTICE OF DEFAULT UNDER CERTAIN LEASES. Promptly, but
         in any event  within three (3) Business  Days of senior  management  of
         Parent or any Borrower  becoming  aware of such default,  provide Agent
         written notice of any default or alleged default under any lease of any
         property  of any  Obligor  subject  to a  landlord  waiver  or  similar
         agreement  that  could  give  the  applicable  landlord  the  right  to
         terminate such lease.

All of the  foregoing  notices  shall be provided by the  Borrowers  to Agent in
writing.

                  (C)      COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.

                  (i)      Parent   and   each   Borrower  shall   maintain  all
         governmental    consents,    franchises,     certificates,    licenses,
         authorizations,  approvals and permits,  the lack of which would have a
         Material Adverse Effect on Parent and the Borrowers,  taken as a whole,
         and  Parent  and each  Borrower  shall  remain in  compliance  with all
         applicable  federal,   state,  local  and  foreign  statutes,   orders,
         regulations,  rules  and  ordinances  (including,  without  limitation,
         Environmental  Laws  and  statutes,  orders,  regulations,   rules  and
         ordinances relating to taxes,  employer and employee  contributions and
         similar  items,  securities,  ERISA or employee  health and safety) the
         failure  with which to comply would have a Material  Adverse  Effect on
         Parent and the Borrowers,  taken as a whole. Following any commercially
         reasonable determination by Agent that there is non-compliance,  or any
         condition  which  requires  any action by or on behalf of Parent or any
         Borrower in order to avoid non-compliance,  with any Environmental Law,
         Agent  may  cause,   at  such   Borrower's   expense,   an  independent
         environmental engineer acceptable to Agent to conduct such tests of the
         relevant site(s) as are appropriate and prepare and deliver a report to
         Agent  setting  forth the  results of such tests,  a proposed  plan for
         remediation and an estimate of the costs thereof.

                  (ii)    Parent and each Borrower shall use its best efforts to
         comply with all of the  provisions of the Federal  Assignment of Claims
         Act of 1940 within  sixty (60) days of the Closing Date with respect to
         each  material  contract  such  Borrower  entered  into with the United
         States  Government  prior to the date of this Agreement;  PROVIDED that
         the failure by a Borrower to obtain  countersignatures on any notice of
         assignment shall not, of itself, constitute a Default hereunder.  After
         the Closing Date,  each Borrower shall provide Agent with all necessary
         information  and  instruments  of assignment for each new contract such
         Borrower  enters  into with the  United  States  Government  that would
         require  notice to Agent  pursuant to  SUBSECTION  12(B)(VIII)  hereof,
         within five (5) Business Days of entering  into such new  contract.  If
         within sixty (60) days of the Agent  sending a Notice of  Assignment to
         the applicable  contracting or disbursement  officer  indicated by such
         Borrower  with respect to each such new  contract,  the Agent shall not

                                       44

<PAGE>

         have received an  acknowledgement  by the United  States  Government of
         receipt of such  Notice of  Assignment,  then  Agent  may,  in its sole
         discretion,  deem  any  Account  related  to such  new  contract  to be
         thereafter excluded from the definition of Eligible Account herein.

                  (D)      INSPECTION AND AUDITS.

         Parent and the Borrowers shall permit Agent,  or any Person  designated
by Agent,  to call at any of the  respective  places of  business  of Parent and
Borrowers,  upon reasonable  notice and at any reasonable  times,  and,  without
hindrance or delay,  but without undue disruption to the Parent's and Borrowers'
business,  to inspect  the  Collateral  and to  inspect,  audit,  check and make
extracts  from  any  books,  records,   journals,   orders,   receipts  and  any
correspondence  of Parent or any Borrower and other data relating to Parent's or
any Borrower's business,  the Collateral or any transactions between the parties
hereto, and shall have the right to make such verification  concerning  Parent's
or any Borrower's business as Agent may consider  commercially  reasonable under
the  circumstances.  Parent  and the  Borrowers  shall  furnish  to  Agent  such
information  relevant to Agent's  and/or any rights under this Agreement and the
Other  Agreements  as Agent  shall at any  time and from  time to time  request.
Notwithstanding whether the Parent and Borrowers are required to deliver Monthly
Desktop Appraisals or Quarterly  Appraisals pursuant to SUBSECTIONS 9(B) or 9(C)
hereto,  Agent hereby expressly reserves the right to require such appraisals be
delivered from time to time upon the Agent's reasonable request pursuant to this
SUBSECTION 12(D).  Agent,  through its officers,  employees or agents shall have
the right,  at any time and from time to time,  in Agent's  name,  to verify the
validity,  amount or any other  matter  relating  to any of the  Accounts of any
Borrower, by mail, telephone,  facsimile,  electronic mail or otherwise.  Parent
and each Borrower authorizes Agent and Lenders to discuss the affairs,  finances
and  business  of  Parent  or such  Borrower  with any  officers,  employees  or
directors of such  Borrower or Parent or any Affiliate  thereof,  and to discuss
the  financial  condition  of Parent or such  Borrower  with  Parent's  and such
Borrower's independent public accountants. Any such discussions shall be without
liability to Agent or any Lender or to Parent's or such  Borrower's  independent
public  accountants.  The Borrowers  shall agree jointly and severally to pay to
Agent  all  reasonable   and  customary  fees  and  all  reasonable   costs  and
out-of-pocket  expenses  incurred  by  Agent  in  the  exercise  of  its  rights
hereunder,  including  fees in connection  with any audits or inspections of any
Collateral or Parent's and Borrowers'  respective operations or businesses (such
fee, the "AUDIT  FEE"),  which Audit Fee shall be in the amount of $800 per day,
per person.  All of such fees, costs and expenses shall  constitute  Liabilities
hereunder,  shall be payable on demand and,  until paid,  shall bear interest at
the highest rate then applicable to Loans hereunder.

                  (E)      INSURANCE.

         Parent and each Borrower shall:

                  (i)    Keep the Collateral properly housed and insured for the
         full  insurable  value thereof  against loss or damage by fire,  theft,
         explosion,  sprinklers,  collision (in the case of motor  vehicles) and
         such other risks as are customarily  insured against by Persons engaged
         in businesses similar to that of such Borrower, with such companies, in
         such amounts,  with such deductibles,  and under policies in such form,
         as shall be reasonably  satisfactory to Agent.  Original (or certified)
         copies of such  policies  of  insurance  have been or shall be,  within
         thirty (30) days of the date hereof,  delivered to Agent, together with

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<PAGE>

         evidence of payment of all premiums due therefor,  and shall contain an
         endorsement,  in form and substance  acceptable to Agent,  showing loss
         under such  insurance  policies  payable to Agent,  for the  benefit of
         Agent and  Lenders.  Such  endorsement,  or an  independent  instrument
         furnished to Agent, shall provide that the insurance company shall give
         Agent at least thirty (30) days written  notice  before any such policy
         of insurance is materially altered or canceled and that no act, whether
         willful or negligent,  or default of Parent, such Borrower or any other
         Person shall affect the right of Agent to recover  under such policy of
         insurance in case of loss or damage. In addition,  after the occurrence
         and  during the  continuance  of an Event of  Default,  Parent and each
         Borrower  shall  cause  to  be  executed  and  delivered  to  Agent  an
         assignment of proceeds of its business interruption insurance policies.
         Parent and each Borrower hereby directs all insurers under all policies
         of insurance to pay all proceeds payable thereunder  directly to Agent.
         Parent and each Borrower  irrevocably  makes,  constitutes and appoints
         Agent (and all  officers,  employees or agents  designated by Agent) as
         such   Parent's   or   Borrower's   true  and  lawful   attorney   (and
         agent-in-fact),  after the occurrence and during the  continuance of an
         Event of Default,  for the purpose of making,  settling  and  adjusting
         claims under such  policies of  insurance,  endorsing  the name of such
         Parent or Borrower  on any check,  draft,  instrument  or other item of
         payment for the proceeds of such  policies of insurance  and making all
         determinations   and  decisions   with  respect  to  such  policies  of
         insurance.

                  (ii)     Maintain, at  its  expense, such public liability and
         third party  property  damage  insurance  as is  customary  for Persons
         engaged  in  businesses  similar  to that of such  Borrower  with  such
         companies and in such amounts, with such deductibles and under policies
         in such form as shall be reasonably  satisfactory to Agent and original
         (or  certified)  copies of such  policies have been or shall be, within
         thirty (30) days after the date hereof,  delivered  to Agent,  together
         with evidence of payment of all premiums due therefor; each such policy
         shall  contain an  endorsement  showing Agent and Lenders as additional
         insured  thereunder and providing that the insurance company shall give
         Agent at least thirty (30) days written  notice  before any such policy
         shall be materially altered or canceled.

If Parent or any Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance  required above or to pay when due any
premium  relating  thereto,   then  Agent,  without  waiving  or  releasing  any
obligation  or default by such Parent or Borrower  hereunder,  may (but shall be
under no  obligation  to) obtain and maintain such policies of insurance and pay
such  premiums and take such other  actions with respect  thereto as Agent deems
advisable. Such insurance, if obtained by Agent, may, but need not, protect such
Parent's or Borrower's interests or pay any claim made by or against such Parent
or Borrower with respect to the Collateral. Such insurance may be more expensive
than the cost of insurance  such Parent or Borrower may be able to obtain on its
own and may be cancelled  only upon such Parent or Borrower  providing  evidence
that it has obtained  the  insurance as required  above.  All sums  disbursed by
Agent in connection with any such actions, including,  without limitation, court
costs, expenses,  other charges relating thereto and reasonable attorneys' fees,
shall constitute  Revolving Loans  hereunder,  shall be payable on demand by the
Borrowers jointly and severally to Agent and, until paid, shall bear interest at
the highest rate then applicable to Revolving Loans hereunder.

                                       46

<PAGE>

                  (F)      COLLATERAL.

         Parent and each Borrower shall keep the Collateral  owned by it in good
condition,  repair and order  (reasonable wear and tear excepted) and shall make
all commercially reasonable repairs to the Equipment and replacements thereof so
that the  operating  efficiency  and the  value  thereof  shall at all  times be
preserved  and  maintained.  Parent and each  Borrower  shall  permit  Agent and
Lenders to examine any of the  Collateral  owned by it at any time and  wherever
the Collateral may be located and, Parent and each Borrower  shall,  immediately
upon  request  therefor  by  Agent,  deliver  to Agent any and all  evidence  of
ownership of any of the Equipment owned by it,  including,  without  limitation,
certificates of title and applications of title. Parent and each Borrower shall,
at the request of Agent,  indicate on its records concerning Collateral owned by
it a notation,  in form satisfactory to Agent, of the security interest of Agent
hereunder.

                  (G)      USE OF PROCEEDS.

         All monies and other property  obtained by Parent and the Borrower from
Agent and Lenders  pursuant to this Agreement  shall be used (i) for the general
business  purposes of the Parent and Borrower,  including,  without  limitation,
funding the ongoing working capital  requirements of the Parent and Borrower and
the acquisition of Equipment,  and (ii) to fund the payment of transaction costs
and expenses in connection with the transactions described in this Agreement.

                  (H)      TAXES.

         Except as set forth on  SCHEDULE  11(H),  the Parent and each  Borrower
shall  file  all  required  tax  returns  and pay  all of its  taxes  when  due,
including,  without  limitation,  taxes  imposed by federal,  state or municipal
agencies, and shall cause any liens for taxes to be promptly released;  PROVIDED
that Parent and each Borrower  shall have the right to contest the assessment or
payment of such taxes in good faith by  appropriate  proceedings  so long as (i)
the  amount so  contested  is shown on  Parent's  or such  Borrower's  financial
statements or in the notes thereto;  (ii) the contesting of any such  assessment
or  payment  does not give rise to a lien for  taxes;  and (iii)  Parent or such
Borrower shall establish an adequate  reserve therefor to the extent required by
generally accepted accounting  principles,  consistently  applied; and PROVIDED,
FURTHER, that the items set forth on SCHEDULE 11(H) hereto shall not be excepted
from  application  of this  SUBSECTION  12(H) from and after October 1, 2007. If
Parent or any  Borrower  fails to pay any such  taxes and in the  absence of any
such  contest  by Parent or  Borrower,  the  Lenders  may (but shall be under no
obligation to) advance and pay any sums required to pay any such taxes and/or to
secure the release of any lien therefor, and any sums so advanced by the Lenders
shall  constitute  Revolving  Loans  hereunder,  shall be  payable  by Parent or
Borrowers to Agent (for the benefit of the Lenders) on demand,  and, until paid,
shall bear  interest at the highest  rate then  applicable  to  Revolving  Loans
hereunder.  Notwithstanding  anything in this SUBSECTION  12(H) to the contrary,
Parent and  Borrowers  shall have thirty (30) days from the filing of the Fiscal
Year 2006 Form 10-K of Parent and its  Subsidiaries  referenced in clause (b) of
the definition of "Completed  Financial Package" to file any amended tax returns
required as a result of the restated financial statements set forth in such Form
10-K.

                                       47

<PAGE>

                  (I)      INTELLECTUAL PROPERTY.

         Parent and each  Borrower  shall  maintain  licenses,  patents,  patent
applications,  copyrights,  service marks,  trademarks,  trademark applications,
tradestyles and tradenames which such Person  reasonably deems to be adequate to
continue  its  business  substantially  as  heretofore  conducted  by  it  or as
hereafter conducted by it.

                  (J)      MANAGEMENT TEAM.

         Parent shall at all times employ (in the same or substantially  similar
capacities) the senior  management  personnel that were employed by it as of the
Closing Date, or such other senior management  personnel  selected by Parent and
reasonably acceptable to Agent.

                  (K)      PATRIOT ACT, BANK SECRECY ACT AND OFFICE OF FOREIGN
ASSETS CONTROL.

         As required by federal law and the Agent's and each  Lender's  policies
and practices,  the Agent and each Lender may need to obtain,  verify and record
certain customer identification information and documentation in connection with
opening or  maintaining  accounts,  or  establishing  or  continuing  to provide
services and Parent and each  Borrower  agrees to provide such  information.  In
addition, and without limiting the foregoing sentence,  Parent and each Borrower
shall (a) ensure, and cause each Subsidiary to ensure, that no Person who owns a
controlling  interest in or  otherwise  controls  Parent or any  Borrower or any
Subsidiary thereof is or shall be listed on the Specially  Designated  Nationals
and  Blocked  Person List or other  similar  lists  maintained  by the Office of
Foreign Assets Control  ("OFAC"),  the Department of the Treasury or included in
any Executive Orders, (b) not use or permit the use of the proceeds of the Loans
to violate any of the foreign asset control  regulations of OFAC or any enabling
statute or Executive Order relating thereto,  and (c) comply,  and cause each of
its  Subsidiaries  to comply,  with all applicable Bank Secrecy Act ("BSA") laws
and regulations, as amended.

                  (L)      LISTING DEVELOPMENTS.

         On or prior to the first Business day of each calendar month commencing
with the calendar  month  ending  October 31,  2007,  Parent  shall  prepare and
deliver  to Agent a written  summary of the  status  and  anticipated  timing of
Parent  becoming  relisted on the American  Stock  Exchange or other  nationally
recognized  stock  exchange,  which  summary  shall  be in  form  and  substance
reasonably acceptable to Agent. Without limiting the foregoing,  within five (5)
Business  Days of becoming  aware of any adverse  determination  with respect to
such relisting made by the  applicable  stock exchange or the SEC,  Parent shall
notify Agent in writing of such  adverse  determination  and the asserted  basis
therefor.

         13.      NEGATIVE COVENANTS.

         Until payment and  satisfaction in full of all Liabilities  (other than
contingent indemnification obligations as to which no unsatisfied claim has been
asserted) and termination of this Agreement in accordance with the terms hereof,
unless Parent and Borrowers  obtain  Requisite  Lenders'  prior written  consent
waiving or modifying any of their covenants  hereunder in any specific instance,
Parent and each Borrower, as applicable, agree as follows:

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<PAGE>

                  (A)      GUARANTIES.

         No Borrower or Parent shall assume,  guarantee or endorse, or otherwise
become liable in connection  with, the obligations of any Person,  except (i) by
endorsement of instruments for deposit or collection or similar  transactions in
the ordinary course of business,  (ii) for guaranties given to suppliers,  other
vendors  and   customers  in  the  ordinary   course  of  business,   (iii)  for
indemnifications  given to the officers,  directors and professional advisors of
Parent and each Borrower and (iv) pursuant to this Agreement.

                  (B)      INDEBTEDNESS.

         Neither Parent nor any Borrower shall create,  incur,  assume or become
obligated  (directly or  indirectly),  for any loans or other  indebtedness  for
borrowed money other than the Loans and  Liabilities,  except that Parent or any
of the Borrowers may (i) borrow money from a Person other than Agent and Lenders
on an unsecured and subordinated basis if a subordination  agreement in favor of
Agent and Lenders and in form and  substance  satisfactory  to Agent is executed
and delivered to Agent relative thereto; (ii) maintain the existing indebtedness
listed on SCHEDULE 13(B) hereto;  (iii) incur  unsecured  indebtedness  to trade
creditors  in the  ordinary  course of  business  and for the  financing  of the
payment of insurance premiums; (iv) incur indebtedness to extend, renew, replace
or refinance any indebtedness  expressly  permitted  hereunder that does not (a)
accelerate  the scheduled date for payment  thereof,  (b) increase the principal
amounts  thereof,  (c) materially  increase any interest rate or fees applicable
thereto,  (d) add  additional  obligors  therefor,  (e) enhance  the  collateral
thereof or the  priority  thereof,  or (f)  include  terms and  conditions  with
respect to Parent or any Borrower  which are more  burdensome or  restrictive in
any  material  respect  than those  included in the  indebtedness  so  extended,
renewed, replaced or refinanced;  (v) incur Acquired Debt assumed in a Permitted
Acquisition under SUBSECTION 13(D) hereof; (vi) incur indebtedness consisting of
guaranties or similar  contingent  obligations  if the primary  obligations  are
permitted  hereunder (in which case, such  guaranties or contingent  obligations
shall not be considered  additional  indebtedness);  (vii) incur  purchase money
indebtedness  or  capitalized  lease  obligations  in  connection  with  Capital
Expenditures  permitted  pursuant to  SUBSECTION  14(A)  hereof in an  aggregate
principal  amount not to exceed One  Million  and  No/100  Dollars  ($1,000,000)
during any Fiscal Year; (ix) incur indebtedness on account of intercompany loans
permitted  under  SUBSECTION  13(F)  hereof;   and  (x)  incur  other  unsecured
indebtedness  up to Two Hundred Fifty Thousand and no/100 Dollars  ($250,000) in
principal amount in any Fiscal Year.

                  (C)      LIENS.

         Neither  Parent  nor any  Borrower  shall  grant  or  permit  to  exist
(voluntarily  or  involuntarily)  any lien,  claim,  security  interest or other
encumbrance whatsoever on any of its assets, other than Permitted Liens.

                  (D)      MERGERS, SALES,  ACQUISITIONS, SUBSIDIARIES AND OTHER
TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF BUSINESS.

         Neither  Parent nor any  Borrower  shall:  (i) enter into any merger or
consolidation;  PROVIDED, HOWEVER, that any Borrower may merge with and into any
other Person,  so long as such Borrower is the surviving  entity of such merger,

                                       49

<PAGE>

and any  Borrower  may merge with and into any other  Borrower;  (ii) change the
state of its organization or enter into any transaction  which has the effect of
changing  its state of  organization  (iii)  purchase  the stock,  other  equity
interests  or all or a material  portion of the assets of any Person or division
of such Person, PROVIDED, HOWEVER, that Parent and Borrowers may purchase out of
the ordinary  course of their  business  assets of other  Persons in one or more
transactions  in an  aggregate  amount not to exceed Two  Million  Five  Hundred
Thousand  and  no/100  Dollars  ($2,500,000)  in any  one  Fiscal  Year  (each a
"PERMITTED ACQUISITION", and collectively, the "PERMITTED ACQUISITIONS") so long
as (A) no Default or Event of Default is then  continuing  or would  result from
the proposed  acquisition,  and (B)  Borrowers'  Adjusted  Availability  exceeds
Twenty Million and no/100 Dollars ($20,000,000) as of each and every day for the
thirty (30) day period prior to the consummation of the proposed acquisition and
immediately   after   giving   effect   to  such   acquisition,   and   Borrower
Representative,  on behalf of Parent and Borrowers, provides evidence reasonably
satisfactory to Agent that such condition has been satisfied;  or (iv) purchase,
redeem or  retire  any  shares  of any  class of its  stock or any other  equity
interest;  PROVIDED,  HOWEVER, that Parent may purchase, redeem or retire shares
of its stock (or warrants or other rights to receive or purchase shares thereof)
solely if: (A) no Default or Event of Default is then continuing or would result
from the proposed  transaction,  (B) both  immediately  before,  and immediately
after,  giving effect to the proposed  transaction,  Parent and each Borrower is
solvent as described in SUBSECTION  11(M) hereof;  and (C)  Borrowers'  Adjusted
Availability shall exceed Twenty Million and no/100 Dollars  ($20,000,000) as of
each and every day for the thirty (30) day period prior to the  consummation  of
the  proposed   transaction  and   immediately   after  giving  effect  to  such
transaction,  and Borrower  Representative,  on behalf of Parent and  Borrowers,
provides evidence reasonably  satisfactory to Agent that such condition has been
satisfied.  Except to the  extent  permitted  by  SUBSECTION  13(F)  hereof,  no
Borrower  shall  form any  Subsidiaries  or enter  into any  joint  ventures  or
partnerships with any other Person.

                  (E)      DIVIDENDS AND DISTRIBUTIONS.

         Neither  Parent nor any Borrower  shall  declare or pay any dividend or
other distribution (whether in cash or in kind) on any class of its stock (if it
is a  corporation)  or on account of any equity  interest  in itself (if it is a
partnership, limited liability company or other type of entity), except:

                  (i)      to the extent permitted under SUBSECTION 13(F)hereof,
         and solely for the purposes described therein;

                  (ii)     in the event  Borrowers  file a  consolidated  income
         tax return with Parent,  the Borrowers may make distributions to Parent
         to permit  Parent to pay  federal and state  income  taxes then due and
         owing,  franchise  taxes and other similar  licensing taxes incurred in
         the ordinary course of business; PROVIDED, that the amount of each such
         distribution shall not be greater,  nor the receipt by the Borrowers of
         tax  benefits  less,  than they would have been had the  Borrowers  not
         filed a consolidated income tax return with Parent;

                  (iii)    any  Borrower  may  make other cash  distributions to
         Parent not permitted  elsewhere in this  SUBSECTION  13(E) if: (a) such
         distributions are used by Parent for the purposes described in

                                       50

<PAGE>

         subclause (ii) of SUBSECTION  11(I); (b) no Default or Event of Default
         is then continuing or would result from the proposed distribution,  (c)
         both immediately  before, and immediately after,  giving effect to such
         distribution, such Borrower is solvent as described in SUBSECTION 11(M)
         hereof;  and (d) at all  times on or prior to the  Second  Availability
         Reserve  Termination  Date,  Borrowers'  Availability  shall exceed Ten
         Million  and no/100  Dollars  ($10,000,000)  immediately  after  giving
         effect to the proposed distribution; and

                  (iv)     at any time following the Second Availability Reserve
         Termination  Date,  Parent  may pay cash  dividends  on  account of its
         outstanding  capital  stock if:  (a) no  Default or Event of Default is
         then  continuing or would result from the proposed  dividend,  (b) both
         immediately  before,  and  immediately  after,  giving  effect  to such
         dividend,   Parent  and  each  Borrower  is  solvent  as  described  in
         SUBSECTION 11(M) hereof, and (c) Borrowers' Adjusted Availability shall
         exceed Twenty Million and no/100 Dollars  ($20,000,000)  as of each and
         every day for the  thirty  (30) day  period  prior to the making of the
         proposed dividend and immediately after giving effect to such dividend,
         and Borrower Representative,  on behalf of Parent and Borrowers,  shall
         have  provided  evidence  reasonably  satisfactory  to Agent  that such
         condition has been satisfied.

                  (F)      INVESTMENTS; LOANS.

         No Borrower or Parent shall purchase or otherwise acquire,  or contract
to purchase or otherwise  acquire,  the obligations or stock of any Person,  nor
shall Parent or any  Borrower  lend or  otherwise  advance  funds to any Person,
except:

                  (i)      to the extent permitted under SUBSECTION 13(E)hereof,
         and solely for the purposes described therein;

                  (ii)     for advances made to employees,officers and directors
         for  travel  and  other  expenses  arising  in the  ordinary  course of
         business;

                  (iii)    other loans to employees not exceeding Fifty Thousand
         Dollars and No/100 Dollars  ($50,000) in the aggregate  outstanding for
         all such Persons at any one time;

                  (iv)     Permitted Investments which, within a reasonable time
         following Agent's request,  shall be made subject to an account control
         agreement in form and substance reasonably acceptable to Agent;

                  (v)      any Obligor (for purposes of this CLAUSE  (V), each a
         "LENDING  OBLIGOR")  may loan monies to any other Obligor (for purposes
         of this SUBSECTION  (V), a "BORROWING  OBLIGOR");  PROVIDED,  that: (a)
         such loan is permitted  under all  applicable  laws,  (b) no Default or
         Event of Default shall be continuing  immediately prior to the time of,
         or would occur as a result of,  making such loan;  (c) the  proceeds of
         the loan are used for a purpose  not  otherwise  prohibited  under this
         Agreement or any Other  Agreement;  (d) both  immediately  before,  and
         immediately  after,  giving  effect  to the loan,  each of the  Lending
         Obligor and the Borrowing Obligor is solvent as described in SUBSECTION
         11(M) hereof,  and (e) the Borrowing Obligor shall have duly executed a

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<PAGE>

         subordinated intercompany note in the form attached hereto as EXHIBIT D
         and the applicable Lending Obligor making such loan shall have executed
         an assignment of such subordinated  intercompany note in favor of Agent
         in the form attached as EXHIBIT D; PROVIDED, HOWEVER, that at all times
         prior to the Second Availability Reserve Termination Date, as a further
         condition  precedent  to any  Obligor  making  any  loan  to any  other
         Obligor,  Borrowers'  Availability  shall exceed Ten Million and no/100
         Dollars ($10,000,000) immediately after giving effect to such loan;

                  (vi)     Parent and Borrowers may  make  investments  in joint
         ventures  in one or more  transactions  in an  aggregate  amount not to
         exceed  Two  Million   Five  Hundred   Thousand   and  No/100   Dollars
         ($2,500,000)  in any one Fiscal Year (each a "PERMITTED JV INVESTMENT,"
         and  collectively,  the "PERMITTED JV  INVESTMENTS")  so long as (A) no
         Default or Event of Default is then continuing or would result from the
         proposed  investment,  and (B) Borrowers'  Adjusted  Availability shall
         exceed Twenty Million and no/100 Dollars  ($20,000,000)  as of each and
         every day for the thirty (30) day period prior to the  consummation  of
         the proposed  investment  and  immediately  after giving effect to such
         investment,  and  Borrower  Representative,  on behalf  of  Parent  and
         Borrowers,  shall have provided  evidence  reasonably  satisfactory  to
         Agent that such condition has been satisfied;  PROVIDED,  HOWEVER, that
         the  maximum  liability  which  Parent and the  Borrowers  can incur in
         connection  with each  Permitted JV Investment  shall be limited to the
         amount invested therein.

                  (G)      FUNDAMENTAL CHANGES, LINE OF BUSINESS.

         Neither  Parent  nor  any  Borrower  shall  amend  its   organizational
documents  or change its fiscal year in any manner  adverse to the  interests of
the Agent or Lenders,  and no  Borrower  shall enter into a new line of business
materially  different from its current business of  manufacturing,  distributing
and/or  selling  protective  apparel and equipment  (and  activities  incidental
thereto).

                  (H)      EQUIPMENT.

         No  Borrower  or Parent  shall (i)  permit  any  Equipment  to become a
Fixture to real property unless such real property is owned by such Borrower and
is subject to a mortgage in favor of Agent,  or (ii) permit any of its Equipment
(other than Equipment  acquired under purchase money  arrangements) to become an
accession  to any other  personal  property  unless  such  personal  property is
subject to a first priority lien in favor of Agent.

                  (I)      USE OF PROCEEDS.

         No  Borrower  nor any  Affiliate  thereof  shall use any portion of the
proceeds of the Loans,  either  directly or  indirectly,  for the purpose of (i)
purchasing  any  securities   underwritten  or  privately  placed  by  ABN  AMRO
Securities (USA) Inc. ("AASI"), an affiliate of Agent, (ii) purchasing from AASI
any  securities  in which AASI makes a market,  or (iii)  refinancing  or making
payments of  principal,  interest or  dividends  on any  securities  issued by a
Borrower or any Affiliate,  and  underwritten,  privately  placed or dealt in by
AASI. The proceeds of distributions  made by the Borrowers to Parent pursuant to
SUBSECTION 13(E) hereof shall only be used by Parent for the respective purposes
specified in SUBSECTION 13(E).

                                       52

<PAGE>

                  (J)      AFFILIATE TRANSACTIONS.

         Except as permitted  pursuant to SUBSECTIONS  13(B),  13(D),  13(E) and
13(F) hereof, neither Parent nor any Borrower shall conduct, permit or suffer to
be conducted,  transactions with Affiliates other than in the ordinary course of
business (i) pursuant to terms that are less favorable to such Borrower than the
terms upon which such  transfers or  transactions  would have been made had they
been made to or with a Person  that is not an  Affiliate,  or (ii)  transactions
between  Parent and its  Subsidiaries  with respect to the  purchase  from third
parties of raw materials,  other inventory and centralized services by Parent on
behalf  of  Borrowers,  payment  of taxes  and  similar  charges,  repayment  of
indebtedness permitted under SUBSECTION 13(F) hereof, expenses of litigation and
other legal and  administrative  proceedings,  and  general  and  administrative
expenses,  in each case pursuant to transfer  pricing and other terms  compliant
with generally accepted accounting principles.

                  (K)      SETTLING OF ACCOUNTS.

         Except in the ordinary course of its business, no Borrower shall settle
or adjust any Account identified by the Borrowers as an Eligible Account or with
respect to which the  Account  Debtor is an  Affiliate  without  the  consent of
Lender;  PROVIDED that following the occurrence and during the continuance of an
Event of Default,  no  Borrower  shall  settle or adjust any  Account  exceeding
$5,000 in value without the consent of Agent.

(                 L)       SUBORDINATION OF INTERCOMPANY INDEBTEDNESS.

         Parent  and each  Borrower  agrees and  acknowledges  that its right to
receive any  distribution,  dividend,  loan or other  payment from Parent or any
other Borrower  pursuant to SUBSECTIONS 13(E) and (F) hereof or otherwise (each,
for purposes of this SUBSECTION  13(L), a  "DISTRIBUTION")  shall be subordinate
and junior in right of payment to Agent's and Lenders' right to receive  payment
of the  Liabilities.  Parent and each  Borrower  agrees  that,  until all of the
Liabilities shall have been repaid in full in cash, it shall instruct Parent and
each  other  Borrower  not to pay,  and  agrees  not to accept  payment  of, any
Distribution  of any kind from Parent or any other Borrower  except as expressly
permitted  under  SUBSECTION  13(E).  If Parent  or any  Borrower  receives  any
Distribution or any other amounts from Parent or any other Borrower in violation
of this SUBSECTION  13(L) or any other terms of this Agreement,  Parent and each
Borrower  agrees to receive and hold in trust for and promptly  turn over to the
Agent, in the form received,  any such sums at any time paid to, or received by,
the Parent or such other Borrower until payment in full of the Liabilities,  and
to reimburse  the Agent for all costs,  including  reasonable  attorney's  fees,
incurred by the Agent in the course of  collecting  said sums,  should Parent or
such  Borrower  fail  voluntarily  to turn the same  over to the Agent as herein
required.

                  (M)      TRANSFER OF ASSETS.

         Notwithstanding  the terms of SUBSECTION  13(J) hereof,  neither Parent
nor any Borrower  shall sell,  lease,  convey or  otherwise  transfer any of its
interest in any assets or property to any Former DHB Subsidiary.

                                       53

<PAGE>

                  (N)      FINANCIAL COVENANT AMENDMENT.

         On or prior to December 31, 2007,  Parent and  Borrowers  shall execute
and deliver to Agent the  Financial  Covenant  Amendment,  in form and substance
reasonably satisfactory to Agent and Requisite Lenders; PROVIDED,  HOWEVER, that
the deadline for execution  and delivery of such  Financial  Covenant  Amendment
shall be extended to June 30, 2008 solely if the Borrowers' Availability exceeds
$15,000,000 for each Business Day from and including October 1, 2007 through and
including June 29, 2008;  PROVIDED,  FURTHER,  that if, on any Business Day from
and  including  January 1, 2008 through and including  June 29, 2008  Borrowers'
Availability does not exceed $15,000,000, Parent and Borrowers shall execute and
deliver to Agent the Financial  Covenant Amendment within ten (10) Business Days
after the Business Day on which Borrowers'  Availability  first failed to exceed
$15,000,000.

                  (O)      OFAC.

         Neither  Holdings nor any  Subsidiary of Holdings (i) is a person whose
property or  interest in property is blocked or subject to blocking  pursuant to
Section 1 of Executive  Order 13224 of September 23, 2001 Blocking  Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism  (66  Fed.  Reg.  49079  (2001)),  (ii)  engages  in any  dealings  or
transactions  prohibited by Section 2 of such executive  order,  or is otherwise
knowingly  associated with any such person in any manner violative of Section 2,
or (iii) is a person on the list of Specially  Designated  Nationals and Blocked
Persons or  subject  to the  limitations  or  prohibitions  under any other U.S.
Department  of  Treasury's  Office  of  Foreign  Assets  Control  regulation  or
executive order.

         14.      FINANCIAL COVENANTS.

         Parent  and the  Borrowers  shall  maintain  and keep in full force and
effect each of the financial covenants set forth below:

                  (A)      CAPITAL EXPENDITURES.

         Parent and Borrowers  shall not make any Capital  Expenditure if, after
giving effect to such Capital Expenditure,  the aggregate cost of all such fixed
assets purchased or otherwise  acquired by Parent and Borrowers would exceed Ten
Million and No/100 Dollars ($10,000,000) during any Fiscal Year, commencing with
the Fiscal Year ending December 31, 2007.

                  (B)      NET SALES.

         Parent and Borrowers on a consolidated  basis shall have, at the end of
each  period  set forth  below,  Net Sales for such  period of not less than the
following:

         -------------------------------------------------- ------------------
         PERIOD                                             AMOUNT
         -------------------------------------------------- ------------------
         January 1, 2007  through and  including  February  $47,150,000
         28, 2007
         -------------------------------------------------- ------------------

                                       54

<PAGE>

         -------------------------------------------------- ------------------
         PERIOD                                             AMOUNT
         -------------------------------------------------- ------------------
         January 1, 2007 through and  including  March 31,  $68,465,000
         2007
         -------------------------------------------------- ------------------
         January 1, 2007 through and  including  April 30,  $83,997,000
         2007
         -------------------------------------------------- ------------------
         January 1, 2007  through  and  including  May 31,  $101,260,000
         2007
         -------------------------------------------------- ------------------
         January 1, 2007  through and  including  June 30,  $120,925,000
         2007
         -------------------------------------------------- ------------------
         January 1, 2007  through and  including  July 31,  $136,850,000
         2007
         -------------------------------------------------- ------------------
         January 1, 2007 through and including  August 31,  $155,210,000
         2007
         -------------------------------------------------- ------------------
         January 1, 2007 through and  including  September  $178,900,000
         30, 2007
         -------------------------------------------------- ------------------
         January 1, 2007  through  and  including  October  $186,950,000
         31, 2007
         -------------------------------------------------- ------------------
         January 1, 2007  through and  including  November  $202,580,000
         30, 2007
         -------------------------------------------------- ------------------
         January 1, 2007  through and  including  December  $214,810,000
         31, 2007
         -------------------------------------------------- ------------------
         The twelve  month  period  ending on the last day  $214,810,000
         of each  calendar  month from and after the month
         ending January 31, 2008
         -------------------------------------------------- ------------------

15.      DEFAULT.

         The  occurrence  of any  one or  more  of the  following  events  shall
constitute an "EVENT OF DEFAULT" hereunder:

                  (A)      PAYMENT.

         The failure of any of the  Borrowers to pay when due,  declared due, or
demanded by Agent, with the consent or at the request of the Requisite  Lenders,
any of the Liabilities.

                                       55

<PAGE>

                  (B)      BREACH OF THIS AGREEMENT AND THE OTHER AGREEMENTS.

                  (i)      The failure of any Obligor to perform,keep or observe
         any of the covenants,  conditions,  promises, agreements or obligations
         of such Obligor under SECTION 5 (other than SECTION  5(C)),  SECTION 6,
         SECTION  7,  SECTION  8,  SUBSECTIONS  12(A),   12(B)(I),   12(B)(III),
         12(B)(VIII),  12(D), 12(E), 12(G), 12(H), 12(K),  SECTION 13 or SECTION
         14 of this  Agreement or any  provision  of any Other  Agreement to the
         extent such breach is not capable of being cured;

                  (ii)     The failure of any Obligor to perform,keep or observe
         any covenant  contained in any of SUBSECTIONS  9(A), 9(B) or 12(B)(II),
         and such failure shall have  continued  unremedied for a period of five
         (5) days;

                  (iii)    The failure of any Obligor to perform,keep or observe
         any covenant  contained in any of SUBSECTIONS  9(C),  9(D) or 9(E), and
         such failure shall have  continued  unremedied for a period of ten (10)
         days; and

                  (iv)     The failure of any Obligor to perform,keep or observe
         any  of  the  other  covenants,  conditions,  promises,  agreements  or
         obligations  of such Obligor  under this  Agreement or any of the Other
         Agreements (other than any such term, provision,  covenant or agreement
         that is the subject of another  provision  of this SECTION 15, in which
         event such other  provision  of this  SECTION 15 shall  apply) and such
         failure  continues  for a period of  thirty  (30)  days  following  the
         occurrence thereof.

                  (C)      BREACHES OF OTHER OBLIGATIONS.

         The  failure  of  any  Obligor  to  (i)  pay  any  amount  when  due on
indebtedness  of such  Obligor for  borrowed  money,  the then unpaid  aggregate
principal amount of which is One Hundred Thousand and No/100 Dollars  ($100,000)
or greater; or (ii) perform,  keep or observe any of the covenants,  conditions,
promises,  agreements or obligations  of such Obligor under any other  agreement
with any Person if such failure could  reasonably be expected to have a Material
Adverse Effect on Parent and Borrower, taken as a whole.

                  (D)      BREACH OF REPRESENTATIONS AND WARRANTIES.

         The making or  furnishing  by any Obligor to Agent or any Lender of any
representation,  warranty, certificate,  schedule, report or other communication
within or in  connection  with this  Agreement  or the  Other  Agreements  or in
connection  with any other agreement  between such Obligor and Lender,  which is
untrue or misleading in any material respect.

                  (E)      LOSS OF COLLATERAL.

         The loss,  theft,  damage or  destruction  of, or (except to the extent
expressly  permitted  hereunder)  sale,  lease or furnishing under a contract of
service of any of the  Collateral  (excluding,  for the avoidance of doubt,  any
write downs of  inventory  in  accordance  with  generally  accepted  accounting
principles)  (each,  a  "LOSS")  having a fair  market  value in  excess of Five
Hundred  Thousand  and  No/100  Dollars  ($500,000)  unless  (i)  such  Loss  is
reasonably  determined by Agent to be covered by an insurance policy as to which
coverage has been or will be accepted by the applicable insurer (less applicable

                                       56

<PAGE>

deductible), and (ii) the insurance proceeds in respect of such Loss are paid to
the applicable Obligor(s) within one hundred twenty (120) days of the occurrence
of such Loss.

                  (F)      BANKRUPTCY OR SIMILAR PROCEEDINGS.

         The  commencement  of any  proceedings  in bankruptcy by or against any
Obligor or for the  liquidation or  reorganization  of any Obligor,  or alleging
that such Obligor is insolvent or unable to pay its debts as they mature, or for
the readjustment or arrangement of any such Obligor's  debts,  whether under the
United States  Bankruptcy Code or under any other law, whether state or federal,
now or hereafter existing, for the relief of debtors, or the commencement of any
analogous  statutory or  non-statutory  proceedings  involving any such Obligor;
PROVIDED, HOWEVER, that if such commencement of proceedings against such Obligor
is involuntary, such action shall not constitute an Event of Default unless such
proceedings are not dismissed within forty-five (45) days after the commencement
of such proceedings.

                  (G)      APPOINTMENT OF RECEIVER.

         The  appointment  of a receiver or trustee for any Obligor,  for any of
the Collateral or for any substantial  part of any such Obligor's  assets or the
institution  of any  proceedings  for the  dissolution,  or the full or  partial
liquidation, or the merger or consolidation (unless such merger or consolidation
is  otherwise  permitted  hereunder),  of any  Obligor  which is a  corporation,
limited  liability  company or a partnership;  PROVIDED,  HOWEVER,  that if such
appointment or commencement of proceedings  against such Obligor is involuntary,
such action shall not constitute an Event of Default unless such  appointment is
not revoked or such  proceedings are not dismissed  within  forty-five (45) days
after the commencement of such proceedings.

                  (H)      JUDGMENT.

         The  entry of any  judgment  or order in an  amount  in  excess  of Two
Hundred Fifty Thousand and No/100 Dollars  ($250,000)  against any Obligor which
remains  unsatisfied  or  undischarged  and in effect for thirty (30) days after
such entry without a stay of enforcement or execution.

                  (I)      DISSOLUTION OF OBLIGOR.

         The  dissolution  of  any  Obligor,  except  by  operation  of  law  in
connection with a merger transaction  expressly permitted under SUBSECTION 13(D)
hereof.

                  (J)      DEFAULT OR REVOCATION OF GUARANTY.

         The  occurrence  of an event of default  under,  or the  revocation  or
termination of, any agreement,  instrument or document executed and delivered by
any Person to Agent or any Lender  pursuant to which such Person has  guaranteed
to Agent or any  Lender  the  payment  of all or any of the  Liabilities  or has
granted  Agent a security  interest in or lien upon some or all of such Person's
real  and/or  personal  property  to  secure  the  payment  of all or any of the
Liabilities.

                                       57

<PAGE>

                  (K)      LEVY, SEIZURE OR ATTACHMENT.

         The making by any Person of any levy, seizure or attachment upon any of
the Collateral  having a fair market value in excess of One Hundred Thousand and
No/100 Dollars ($100,000).

                  (L)      CRIMINAL PROCEEDINGS.

         The indictment or conviction of any Obligor for any felony.

                  (M)      CHANGE OF CONTROL.

         The  failure of Parent to own  beneficially  and of record  100% of the
issued and  outstanding  shares of capital  stock of PACA and at least 99.35% of
the  issued  and  outstanding  shares of capital  stock of Point  Blank,  or the
failure of Parent and Point Blank to collectively own beneficially and of record
100% of the issued and outstanding shares of capital stock of NDL.

                  (N)      MATERIAL ADVERSE CHANGE.

         Any material  adverse  change in the  Collateral,  business,  property,
assets, prospects, operations or condition, financial or otherwise of Parent and
the  Borrowers,  taken as a whole,  as determined by Requisite  Lenders in their
sole judgment,  exercised in a commercially reasonable manner, or the occurrence
of any  event  which,  in  Requisite  Lenders'  sole  judgment,  exercised  in a
commercially  reasonable manner,  could have a Material Adverse Effect on Parent
and the Borrowers, taken as a whole.

          16.     REMEDIES UPON AN EVENT OF DEFAULT.

         (a) Upon the occurrence of an Event of Default  described in SUBSECTION
15(F) hereof, all of the Liabilities shall immediately and automatically  become
due and payable,  without  notice of any kind.  Upon the occurrence of any other
Event of Default,  all Liabilities may, at the option of Requisite Lenders,  and
without  demand,  notice  or  legal  process  of  any  kind,  be  declared,  and
immediately shall become, due and payable.

         (b)      Upon the occurrence and during the continuance  of an Event of
Default,  (i)  Agent may  exercise  from time to time any  rights  and  remedies
available to it under the Uniform  Commercial Code and any other  applicable law
in addition to, and not in lieu of, any rights and remedies expressly granted in
this  Agreement or in any of the Other  Agreements and all of Agent's rights and
remedies shall be cumulative and  non-exclusive  to the extent permitted by law,
(ii) in particular,  but not by way of limitation of the  foregoing,  Agent may,
without notice,  demand or legal process of any kind (to the extent permitted by
applicable law), take possession of any or all of the Collateral (in addition to
Collateral of which it already has  possession),  wherever it may be found,  and
for that  purpose may pursue the same  wherever  it may be found,  and may enter
onto any of premises of the Borrowers  where any of the  Collateral  may be, and
search for, take  possession  of,  remove,  keep and store any of the Collateral
until the same shall be sold or otherwise  disposed of, and Agent shall have the
right to store the same at any of  premises  of the  Borrowers  without  cost to
Agent or  Lenders,  and  (iii) at  Agent's  request,  the  Borrowers  shall,  at
Borrowers'  expense,  which they agree shall be a joint and several  obligation,

                                       58

<PAGE>

assemble the  Collateral and make it available to Agent at one or more places to
be designated by Agent and reasonably convenient to Agent and the Borrowers. The
Borrowers recognize that if Borrowers fail to perform,  observe or discharge any
of their Liabilities under this Agreement or the Other Agreements,  no remedy at
law will  provide  adequate  relief to Agent and  Lenders,  and agree that Agent
shall be entitled to temporary and permanent  injunctive relief in any such case
without the necessity of proving actual  damages.  Any  notification of intended
disposition  of any of the  Collateral  required  by law will be  deemed to be a
reasonable authenticated  notification of disposition if given at least ten (10)
days prior to such  disposition and such notice shall (i) describe Agent and the
Borrowers,  (ii)  describe  the  Collateral  that is the subject of the intended
disposition, (iii) state the method of the intended disposition, (iv) state that
Borrowers are entitled to an accounting of the Liabilities and state the charge,
if any,  for an  accounting  and (v)  state  the  time and  place of any  public
disposition  or the time after which any private  sale is to be made.  Agent and
Lenders may  disclaim any  warranties  that might arise in  connection  with the
sale,  lease or other  disposition  of the  Collateral  and has no obligation to
provide any warranties at such time. Any Proceeds of any disposition by Agent of
any of the  Collateral  may be  applied by Agent to the  payment  of  reasonable
expenses in connection with the Collateral, including, without limitation, legal
expenses and reasonable attorneys' fees, and any balance of such Proceeds may be
applied by Agent  toward the  payment  of such of the  Liabilities,  and in such
order of application, as Agent may from time to time elect.

         17.      CONDITIONS PRECEDENT.

         (a)      The effectiveness  of  this  Agreement  and  the obligation of
Agent and Lenders to fund the Loans,  and to issue or cause to be issued Letters
of Credit hereunder,  is subject to the satisfaction or waiver on or before such
funding date of the following conditions precedent as determined by Agent in its
sole  discretion  (provided,  that Agent shall  notify  Parent and  Borrowers in
writing  once it has  determined  all such  conditions  have been  satisfied  or
waived):

                  (i)      Agent shall have received each  of  the   agreements,
         opinions,   reports,  approvals,   consents,   certificates  and  other
         documents set forth on the closing document  checklist  attached hereto
         as SCHEDULE 17(A) (the "CLOSING DOCUMENT CHECKLIST");

                  (ii)     Since August 22, 2006, no event  shall have  occurred
         which  has had or  could  reasonably  be  expected  to have a  Material
         Adverse Effect on Parent and its Subsidiaries,  taken as a whole, or on
         Parent  or any  Borrower,  individually,  as  determined  by  Agent  or
         Requisite Lenders in their sole discretion, exercised in a commercially
         reasonable manner;

                  (iii)    Agent shall have received payment in full of all fees
         and expenses  payable to it by the  Borrowers  or any other  Obligor in
         connection herewith, on or before the Closing Date;

                  (iv)     Agent  shall  have  determined that immediately after
         giving effect to:

                           (A)  the  making  of any  Revolving  Loans,  if  any,
                  requested to be made on the Closing Date;

                                       59

<PAGE>

                           (B) the  issuance  of any Letter of  Credit,  if any,
                  requested to be made on the Closing Date;

                           (C) the  payment  of all fees  due  upon the  Closing
                  Date;

                           (D) the payment or  reimbursement by the Borrowers of
                  Agent  for  all  closing   costs  and  expenses   incurred  in
                  connection with the transactions contemplated hereby;

                           (E) all Availability Closing Date Reserves; and

                           (F) assuming  all of  Borrowers'  trade  payables and
                  outstanding   debt   other   than    professional   fees   and
                  restructuring  expenses  which  remain  unpaid more than sixty
                  (60)  days  after  the  due  dates  thereof  on  the  date  of
                  determination, are paid by drawing additional Revolving Loans,
                  on a PRO FORMA basis,  Adjusted Availability shall not be less
                  than Ten Million and No/100 Dollars ($10,000,000);

                  (v)      Agent shall have  completed to its  satisfaction  its
         due diligence  review of the Parent and the  Borrowers,  their business
         and financial  affairs and the members of their  management team, Agent
         shall have  received  background  investigations  on the key  operating
         members of such team, and shall have reviewed to its  satisfaction  the
         results of a field examination performed by Agent, as of a recent date,
         of  the  Collateral,  including  a  Monthly  Desktop  Appraisal  of the
         Borrowers' Inventory, based on acceptable valuation definitions, and of
         the Parent's and each Borrower's books and records;

                  (vi)     Parent and the Borrowers,  taken as a whole, shall be
         in  compliance  in all  material  respects  with all  applicable  legal
         requirements  and  shall  not be in  material  default  of any of their
         respective obligations to any third parties;

                  (vii)    Agent shall  have  received   and   reviewed  to  its
         satisfaction  evidence of each Borrower's  insurance coverage and Agent
         and  Lenders,  as  applicable,  shall  have been named as loss payee or
         additional  insured under each policy of insurance  (other than workers
         compensation insurance),  the terms of each endorsement naming Agent as
         loss payee or additional insured to be satisfactory to Agent;

                  (viii)   Agent shall have had  satisfactory  discussions  with
         appropriate  personnel  of  financial  institutions  with which  Parent
         and/or the Borrowers have had banking or lending relationships;

                  (ix)     Agent and counsel to Agent  shall have  received  and
         reviewed  to  their  reasonable   satisfaction  all  documentation  and
         agreements  evidencing and governing any  indebtedness of Parent or any
         Borrower;

                  (x)      Agent  shall   have   reviewed  to  its    reasonable
         satisfaction  the  corporate  and capital  structure  of Parent and its
         Subsidiaries,  on  a  consolidated  basis,  as  of  the  date  of  this
         Agreement;

                                       60

<PAGE>

                  (xi)     Agent shall have  received  (i)  landlord's   waivers
         with respect to each property  being leased by Parent or a Borrower and
         where a material  portion of the  Collateral is being  stored,  and, if
         required,  a  waiver  from  any  landlord's   mortgagees  and  (ii)  an
         acknowledgement and waiver of liens from each warehouse in which Parent
         or a Borrower is storing a material portion of the Inventory;

                  (xii)    Agent   shall   have   received   and reviewed to its
         reasonable   satisfaction  (A)  the   unclassified   sections  of  each
         government  sales  contract  to which  Parent or a  Borrower  is party,
         including  without  imitation each material contract between DFAS and a
         Borrower  and (B) the  duly  executed  amendments  to  contract  number
         W91CRB-06-D-0030  between  Point  Blank and DFAS  dated as of August 3,
         2006 and contract number W91CRB-04-D-0014  between Point Blank and DFAS
         dated  as of  June  7,  2004  which  specify  that  the  United  States
         Government  cannot  exercise  any  offset  rights  against  any  of the
         Borrowers' Accounts;

                  (xiii)   Agent  shall  have   received  and  reviewed  to  its
         reasonable  satisfaction  a Notice  of  Assignment  under  the  Federal
         Assignment of Claims Act of 1940 which has been  countersigned  by DFAS
         with  respect to (A) contract  number  W91CRB-06-D-0030  between  Point
         Blank  and DFAS  dated as of August  3,  2006 and (B)  contract  number
         W91CRB-04-D-0014 between Point Blank and DFAS dated as of June 7, 2004;

                  (xiv)    no   Default  or   Event   of  Default  would   occur
         immediately after giving effect to this Agreement; and

                  (xv)     The Obligors  shall  have  executed and  delivered to
         Agent all such other documents,  instruments and agreements which Agent
         determines  are  reasonably  necessary to consummate  the  transactions
         contemplated hereby.

         (b)      After the date of the making of the  initial  Revolving  Loans
and issuance of the initial  Letters of Credit on the Closing  Date, if any, the
obligation of Agent and Lenders to make any  requested  Loan or issue any Letter
of Credit is subject to the  satisfaction of the conditions  precedent set forth
below.  Each such request shall  constitute a  representation  and warranty that
such conditions are satisfied:

                  (i)      All representations and warranties  contained in this
         Agreement  and the Other  Agreements  shall be true and  correct in all
         material  respects  on and as of the date of such  request,  as if then
         made, other than  representations  and warranties that relate solely to
         an earlier date;

                  (ii)     No  Default or Event of  Default shall have  occurred
         and be  continuing,  or would  result from the making of the  requested
         Loan or issuance of the requested Letter of Credit,  which has not been
         waived; and

                  (iii)    Since  August 22, 2006, no event has  occurred  which
         has had or would be reasonably likely to have a Material Adverse Effect
         on Parent and its Subsidiaries, taken as a whole.

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<PAGE>

18.      SETTLEMENTS, DISTRIBUTIONS AND APPORTIONMENT OF PAYMENTS.

         (a)      On a weekly basis (or more frequently  if  requested  by Agent
(a "SETTLEMENT DATE")),  Agent shall provide each Lender with a statement of the
outstanding  balance  of the  Liabilities  as of the  end  of the  Business  Day
immediately  preceding the Settlement  Date (the  "PRE-SETTLEMENT  DETERMINATION
DATE") and the current  balance of the Loans funded by each Lender (whether made
directly by such Lender to Borrowers or constituting a settlement by such Lender
of a previous Disproportionate Advance made by Agent on behalf of such Lender to
Borrowers).  If such statement  discloses that such Lender's  current balance of
the Loans as of the Pre-Settlement  Determination Date exceeds such Lender's Pro
Rata Share of the Liabilities outstanding as of the Pre-Settlement Determination
Date, then Agent shall, on the Settlement Date, transfer, by wire transfer,  the
net amount due to such Lender in accordance with such Lender's instructions, and
if such statement  discloses that such Lender's  current balance of the Loans as
of the  Pre-Settlement  Determination  Date is less than such  Lender's Pro Rata
Share of the  Liabilities  outstanding  as of the  Pre-Settlement  Determination
Date, then such Lender shall, on the Settlement Date, transfer, by wire transfer
the net  amount  due to  Agent  in  accordance  with  Agent's  instructions.  In
addition,  payments  actually  received by Agent with  respect to the  following
items shall be distributed by Agent to Lenders as follows:

         (b)      Within  one  (1)  Business  Day  of receipt  thereof by Agent,
payments  to be applied to interest on the Loans shall be paid to each Lender in
proportion  to  its  Pro  Rata  Share,   subject  to  any  adjustments  for  any
Disproportionate  Advances as provided in  SUBSECTION  2(A), so that Agent shall
receive  interest on the  Disproportionate  Advances  and each Lender shall only
receive interest on the amount of funds actually advanced by such Lender;

         (c)      Within one (1)  Business  Day  of  receipt  thereof  by Agent,
payments to be applied to the Letter of Credit fee set as provided in SUBSECTION
3(A) hereof shall be paid to each Lender in proportion to its Pro Rata Share;

         (d)      Within  one  (1)  Business  Day  of receipt  thereof by Agent,
payments to be applied to the commitment  fee as provided in SUBSECTION  4(C)(I)
shall be paid to each Lender in proportion to its Pro Rata Share;

         (e)      Within  one  (1) Business  Day  of  receipt  thereof by Agent,
payments to be applied to the unused line fee set forth in  SUBSECTION  4(C)(II)
hereof shall be paid to each Lender in proportion to its Pro Rata Share; and

         (f)      Within one (1) Business  Day  of  receipt  thereof  by  Agent,
payments  to be  applied  to the  prepayment  fee set forth in SECTION 10 hereof
shall be paid to each Lender in proportion to its Pro Rata Share.

         Notwithstanding the foregoing, Agent shall not be obligated to transfer
to any  Defaulting  Lender any payment made by any Borrower to Agent,  nor shall
such Defaulting Lender be entitled to share any interest,  fees or other payment
hereunder,  until payment is made by such Defaulting Lender to Agent as required
in this Agreement.

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         19.      AGENT.

                  (A)      APPOINTMENT OF AGENT.

                  (i)      Each Lender hereby designates LaSalle as Agent to act
         as herein specified. Each Lender hereby irrevocably authorizes Agent to
         take such action on its behalf under the  provisions of this  Agreement
         and the notes and any other  instruments  and  agreements  referred  to
         herein and to exercise such powers and to perform such duties hereunder
         and thereunder as are specifically delegated to or required of Agent by
         the terms  hereof and thereof and such other  powers as are  reasonably
         incidental  thereto.  Except as otherwise provided herein,  Agent shall
         hold all  Collateral  and all payments of  principal,  interest,  fees,
         charges and expenses  received pursuant to this Agreement or any of the
         Other  Agreements for the benefit of Lenders.  Agent may perform any of
         its duties hereunder by or through its agents or employees.

                  (ii)     The  provisions  of this  SECTION  19 are  solely for
         the benefit of Agent and Lenders (and their  respective  successors and
         assigns),  and neither Parent,  Borrowers,  nor any other Obligor shall
         have any rights as a third party  beneficiary  of any of the provisions
         hereof.  In performing  its functions and duties under this  Agreement,
         Agent  shall act  solely as agent of  Lenders  and does not  assume and
         shall  not  be  deemed  to  have  assumed  any  obligation   toward  or
         relationship of agency or trust with or for any Obligor.

                  (B)      NATURE OF DUTIES OF AGENT.

         Agent shall not have duties,  obligations  or  responsibilities  except
those  expressly set forth in this Agreement and the Other  Agreements.  Neither
Agent nor any of its  officers,  directors,  employees or agents shall be liable
for any  action  taken  or  omitted  by it as such  hereunder  or in  connection
herewith,  unless caused by its or their gross negligence or willful misconduct.
The duties of Agent shall be  mechanical  and  administrative  in nature;  Agent
shall not have by reason of this  Agreement or the Other  Agreements a fiduciary
relationship  in respect of any  Lender;  and nothing in this  Agreement  or the
Other Agreements,  expressed or implied, is intended to or shall be so construed
as to impose  upon Agent any  obligations  in respect of this  Agreement  or the
Other Agreements except as expressly set forth herein.

                  (C)      LACK OF RELIANCE ON AGENT.

                  (i)      Independently and without reliance upon  Agent,  each
         Lender, to the extent it deems appropriate, has made and shall continue
         to make (A) its own independent investigation of the financial or other
         condition  and affairs of Agent,  each  Obligor and any other Lender in
         connection  with the taking or not  taking of any action in  connection
         herewith and (B) its own  appraisal of the  creditworthiness  of Agent,
         each Obligor and any other Lender, and, except as expressly provided in
         this Agreement, Agent shall not have any duty or responsibility, either
         initially  or on a  continuing  basis,  to provide  any Lender with any
         credit or other  information with respect thereto,  whether coming into
         its  possession  before the making of the Loans or at any time or times
         thereafter.

                  (ii)     Agent shall not be responsible to any  Lender for any
         recitals, statements, information, representations or warranties herein
         or  in  any  document,   certificate  or  other  writing  delivered  in

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         connection herewith or for the execution,  effectiveness,  genuineness,
         validity,  enforceability,  collectibility,  priority or sufficiency of
         this Agreement or the Other Agreements or any notes or the financial or
         other condition of any Obligor. Agent shall not be required to make any
         inquiry  concerning  either the performance or observance of any of the
         terms,  provisions  or  conditions  of  this  Agreement  or  the  Other
         Agreements, or the financial condition of any Obligor, or the existence
         or possible existence of any Event of Default.

                  (D) CERTAIN RIGHTS OF AGENT.

         Agent  shall  have the right to  request  instructions  from  Requisite
Lenders or all Lenders, as applicable,  pursuant to this Agreement, by notice to
each Lender.  If Agent shall request  instructions from Requisite Lenders or all
Lenders, as applicable, with respect to any act or action (including the failure
to act) in connection  with this  Agreement,  Agent shall be entitled to refrain
from such act or taking such action  unless and until Agent shall have  received
instructions  from Requisite  Lenders or all Lenders,  as applicable,  and Agent
shall not incur  liability  to any  Person by reason of so  refraining.  Without
limiting  the  foregoing,  no Lender  shall have any right of action  whatsoever
against Agent as a result of Agent acting or refraining from acting hereunder in
accordance  with the  instructions  of  Requisite  Lenders  or all  Lenders,  as
applicable.

                  (E)      RELIANCE BY AGENT.

         Agent shall be under no duty to examine, inquire into, or pass upon the
validity,  effectiveness  or  genuineness  of this  Agreement,  any of the Other
Agreements  or any  instrument,  document or  communication  furnished  pursuant
hereto or  thereto  or in  connection  herewith  or  therewith.  Agent  shall be
entitled  to rely,  and  shall be fully  protected  in  relying,  upon any note,
writing,  resolution,  notice,  statement,   certificate,   telex,  teletype  or
telecopier  message,  cablegram,  radiogram,  order,  electronic  mail or  other
documentary,  teletransmission or telephone message believed by it to be genuine
and correct and to have been signed,  sent or made by the proper  person.  Agent
may consult with legal counsel  (including  counsel for any Obligor with respect
to matters  concerning any Obligor),  independent  public  accountants and other
experts and advisors selected by it and shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.

                  (F)      INDEMNIFICATION OF AGENT.

         To the extent  Agent is not  promptly  reimbursed  and  indemnified  by
Parent and  Borrowers,  each Lender  will  reimburse  and  indemnify  Agent,  in
proportion  to its Pro Rata  Share,  for and  against  any and all  liabilities,
obligations,  losses, damages, penalties,  actions, judgments, suits, reasonable
and out-of-pocket costs and expenses  (including  counsel,  consultant and other
professional  advisor fees and  disbursements)  or  disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
in  performing  its duties  hereunder,  in any way relating to or arising out of
this Agreement; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  resulting  from Agent's gross  negligence or
willful  misconduct.  If any indemnity furnished to Agent for any purpose shall,
in the opinion of Agent, be insufficient or become impaired,  Agent may call for

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additional  indemnities  and  cease  to do,  or not  commence,  the  acts  to be
indemnified against, even if so directed by Requisite Lenders or all Lenders, as
applicable,  until such additional  indemnification is provided. The obligations
of Lenders under this SUBSECTION  19(F) shall survive the payment in full of the
Liabilities and the termination of this Agreement.

                  (G)      AGENT IN ITS INDIVIDUAL CAPACITY.

         With respect to the Loans made by it pursuant hereto,  Agent shall have
the same rights and powers  hereunder as any other Lender or holder of a note or
participation interest and may exercise the same as though it was not performing
the duties specified herein; and the terms "Lenders," "Requisite Lenders" or any
similar terms shall,  unless the context clearly  otherwise  indicates,  include
Agent in its individual capacity. Agent may accept deposits from, lend money to,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial  advisor or other  business  with any Borrower or any Affiliate of any
Borrower  as if it were not  performing  the duties  specified  herein,  and may
accept fees and other consideration from any Borrower for services in connection
with this  Agreement  and  otherwise  without  having to account for the same to
Lenders,  to the extent such activities are not in contravention of the terms of
this Agreement.

                  (H)      HOLDERS OF NOTES.

         Agent may deem and treat the payee of any promissory  note as the owner
thereof  for all  purposes  hereof  unless  and  until a  written  notice of the
assignment or transfer  thereof  shall have been filed with Agent.  Any request,
authority  or consent of any Person who,  at the time of making such  request or
giving such authority or consent, is the holder of any promissory note, shall be
conclusive and binding on any subsequent holder,  transferee or assignee of such
promissory note or of any promissory note or notes issued in exchange therefor.

                  (I)      SUCCESSOR AGENT.

                  (i)      Agent  may,  upon  five  (5) Business Days' notice to
         Lenders,  Parent and Borrowers,  resign at any time (effective upon the
         appointment  of a successor  Agent  pursuant to the  provisions of this
         SUBSECTION  19(I)) by giving written notice thereof to Lenders,  Parent
         and Borrowers. Upon any such resignation,  Requisite Lenders shall have
         the right, upon five (5) days' notice, to appoint a successor Agent. If
         no successor  Agent shall have been so  appointed by Requisite  Lenders
         and  accepted  such  appointment,  within  thirty  (30) days  after the
         retiring  Agent's giving of notice of resignation,  then, upon five (5)
         days' notice,  the retiring Agent may, on behalf of Lenders,  appoint a
         successor  Agent,  which  shall be a bank or a trust  company  or other
         financial  institution  which maintains an office in the United States,
         or a commercial  bank organized  under the laws of the United States of
         America or of any State thereof, or any affiliate of such bank or trust
         company or other financial  institution which is engaged in the banking
         business,  having a combined  capital  and  surplus  of at least  Fifty
         Million and No/100 Dollars ($50,000,000.00).

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                  (ii)     Upon the acceptance  of any appointment  as an  Agent
         hereunder by a successor  Agent,  such successor  Agent shall thereupon
         succeed to and become  vested with all the rights,  powers,  privileges
         and duties of the  retiring  Agent,  and the  retiring  Agent  shall be
         forever  released and discharged from its duties and obligations  under
         this Agreement.  After any retiring  Agent's  resignation  hereunder as
         Agent,  the provisions of this SECTION 19 shall inure to its benefit as
         to any actions taken or omitted to be taken by it while it was an Agent
         under this Agreement.

                  (J)      COLLATERAL MATTERS.

                  (i)      Each  Lender  authorizes  and  directs Agent to enter
         into the Other  Agreements  for the  benefit of  Lenders.  Each  Lender
         hereby agrees that,  except as otherwise  set forth herein,  any action
         taken by Requisite  Lenders in accordance  with the  provisions of this
         Agreement or the Other  Agreements,  and the exercise by the  Requisite
         Lenders of the powers set forth herein or therein,  together  with such
         other powers as are reasonably incidental thereto,  shall be authorized
         and binding upon all Lenders.  Agent is hereby  authorized on behalf of
         all Lenders,  without the necessity of any notice to or further consent
         from any Lender to take any action with  respect to any  Collateral  or
         Other  Agreements  which may be  necessary  or prudent  to perfect  and
         maintain  perfected  the  security  interest  in  and  liens  upon  the
         Collateral granted pursuant to this Agreement and the Other Agreements.

                  (ii)     Without  the  verbal consent of  all Lenders,   which
         consent shall (a) be confirmed  promptly  thereafter in writing and (b)
         not be  unreasonably  withheld or  delayed,  Agent will not execute any
         release of  Agent's  security  interest  in any  Collateral  except for
         releases  relating to  dispositions of Collateral (x) permitted by this
         Agreement or (y) in connection with the repayment in full of all of the
         Liabilities  by Borrowers and the  termination  of all  obligations  of
         Agent and  Lenders  under  this  Agreement  and the  Other  Agreements;
         provided, that with the consent of Requisite Lenders, Agent may release
         its  liens on  Collateral  having a book  value  not  greater  than ten
         percent (10%) of the total book value of all Collateral,  as determined
         by  Agent,  either  in  a  single  transaction  or  series  of  related
         transactions,  not to exceed twenty  percent (20%) of the book value of
         all  Collateral  in any Fiscal  Year.  Agent  shall not be  required to
         execute any such  release on terms  which,  in Agent's  opinion,  would
         expose  Agent to  liability  or create  any  obligation  or entail  any
         consequence  other than the release of such liens  without  recourse or
         warranty.  In  the  event  of  any  sale  or  transfer  of  any  of the
         Collateral,  Agent shall be  authorized  to deduct all of the  expenses
         reasonably  incurred  by Agent  from the  proceeds  of any such sale or
         transfer.

                  (iii)    Lenders  hereby agree that  the lien granted to Agent
         in any property sold or disposed of in accordance  with the  provisions
         of the Agreement shall be  automatically  released;  provided,  however
         that Agent's lien shall attach to and continue for the benefit of Agent
         and Lenders in the proceeds and products of such property  arising from
         any such sale or disposition.

                  (iv)     To the  extent,  pursuant to  the provisions of  this
         SUBSECTION 19(J), Agent's execution of a release is required to release

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         its lien upon any sale and transfer of Collateral which is consented to
         in writing by Requisite Lenders or all Lenders, as applicable, and upon
         at least five (5) business  days' prior  written  request by Borrowers,
         Agent  shall  (and is hereby  irrevocably  authorized  by  Lenders  to)
         execute  such  documents as may be necessary or prudent to evidence the
         release of the liens granted to Agent for the benefit of Lenders herein
         or pursuant hereto upon the Collateral that was sold or transferred.

                  (v)      Agent  shall  not   have  any  obligation  whatsoever
         to Lenders or to any other Person to assure that the Collateral  exists
         or is  owned by a  Borrower  or any  other  Obligor  or is  cared  for,
         protected  or  insured  or that the liens  granted  to Agent  herein or
         pursuant hereto have been properly or sufficiently or lawfully created,
         perfected,  protected  or  enforced or are  entitled to any  particular
         priority,  or to exercise or to  continue  exercising  at all or in any
         manner or under any duty of care,  disclosure  or  fidelity  any of the
         rights,  authorities  and powers  granted or available to Agent in this
         SECTION 19 or in any of the Other  Agreements,  it being understood and
         agreed that in respect of the Collateral, or any act, omission or event
         related thereto,  Agent may act in any manner it may deem  appropriate,
         in its sole discretion, given Agent's own interest in the Collateral as
         one of  Lenders  and  that  Agent  shall  have  no  duty  or  liability
         whatsoever  to  Lenders,  except  for its gross  negligence  or willful
         misconduct.

                  (vi)     In the event that any Lender receives any Proceeds of
         any Collateral by setoff, recoupment,  exercise of any banker's lien or
         otherwise,  in an amount in excess of such  Lender's  Pro Rata Share of
         such  Proceeds,  such Lender shall purchase for cash (and other Lenders
         shall sell)  interests in each of such other Lender's Pro Rata Share of
         the Liabilities as would be necessary to cause all Lenders to share the
         amount  so set off or  otherwise  received  with each  other  Lender in
         accordance  with their  respective  Pro Rata  Shares.  No Lender  shall
         exercise  any  right  of  setoff,  recoupment,  banker's  lien or other
         similar right without the prior written consent of Agent.

                  (K)      ACTIONS WITH RESPECT TO DEFAULTS.

         In  addition  to  Agent's  right to take  actions  on its own accord as
permitted under this Agreement, Agent shall take such action with respect to any
Default or Event of Default as shall be  directed  by  Requisite  Lenders or all
Lenders, as applicable,  under this Agreement;  provided, that until Agent shall
have  received such  directions,  Agent may (but shall not be obligated to) take
such  action,  or refrain  from taking  such  action,  with  respect to any such
Default or Event of Default as it shall deem advisable and in the best interests
of Lenders.  No Lender shall have any right  individually  to enforce or seek to
enforce this Agreement or any Other Agreement or to realize upon any Collateral,
unless instructed to do so by Agent.

                  (L)      DELIVERY OF INFORMATION.

         Agent  shall not be  required  to deliver to any  Lender  originals  or
copies  of  any  documents,   instruments,   notices,  communications  or  other
information received by Agent from any Borrower or any other Obligor,  Requisite
Lenders,  any  Lender  or any  other  Person  under or in  connection  with this
Agreement or any Other  Agreement  except (i) as  specifically  provided in this
Agreement or any Other Agreement and (ii) as specifically requested from time to

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time in writing by any Lender with respect to a specific  document,  instrument,
notice or other written communication received by and in the possession of Agent
at the time of receipt of such  request  and then only in  accordance  with such
specific request.

                  (M)      DEMAND.

         Subject to the terms of this  Agreement,  Agent  shall make  demand for
repayment by Borrowers of all Liabilities  owing by Borrowers  hereunder,  after
the  occurrence  of an Event of Default,  upon the written  request of Requisite
Lenders. Agent shall make such demand in such manner as it deems appropriate, in
its sole discretion, to effectuate the request of the Requisite Lenders. Nothing
contained  herein shall limit the discretion of Agent to take reserves,  to deem
certain Accounts and Inventory  ineligible,  or to exercise any other discretion
granted to Agent in this Agreement.

                  (N)      NOTICE OF DEFAULT.

         Agent shall not be deemed to have knowledge or notice of the occurrence
of any Event of Default or any event  which,  with  passage of time or giving of
notice,  could  become an Event of  Default,  except  with  respect to Events of
Default arising as a result of any Borrower's failure to pay principal, interest
or fees  required to be paid to Agent for the benefit of Lenders,  unless  Agent
shall have received  written notice from a Lender or a Borrower  describing such
Event of Default or event  which,  with the passage of time or giving of notice,
could become an Event of Default,  and which  identifies such event as a "notice
of  default".  Upon  receipt  of any such  notice or Agent  becoming  aware of a
Borrower's  failure to pay  principal,  interest or fees  required to be paid to
Agent for the benefit of Lenders,  Agent will notify each Lender of such receipt
or event.

         20.      ASSIGNABILITY.

         (a)      No  Borrower  shall have the right to assign this Agreement or
any  interest  therein  except with the prior  written  consent of Agent and all
Lenders.

         (b)      Any Lender may make, carry or transfer Loans at, to or for the
account  of, any of its branch  offices  or the office of an  Affiliate  of such
Lender  except to the extent such  transfer  would result in increased  costs to
Borrowers.

         (c)      Each Lender may, with the consent of Agent which consent shall
not be  unreasonably  withheld,  but without the consent of any other  Lender or
Borrowers, assign to one or more banks or other financial institutions generally
involved in extending revolving facilities of the type described herein all or a
portion  of its  rights  and  obligations  under  this  Agreement  and the Other
Agreements;  provided,  that (i) for each such  assignment,  the parties thereto
shall  execute and deliver to Agent,  for its  acceptance  and  recording in the
Register (as defined below), an Assignment and Acceptance  Agreement in the form
attached hereto as EXHIBIT E (the "ASSIGNMENT AND ACCEPTANCE"), and a processing
and recordation  fee of Five Thousand and No/100 Dollars  ($5,000.00) to be paid
to Agent by the assignee, and (ii) no such assignment shall be for less than Ten
Million and No/100 Dollars ($10,000,000.00). Upon such execution and delivery of
the Assignment and Acceptance to Agent, from and after the date specified as the
effective  date in the Assignment and  Acceptance,  (x) the assignee  thereunder
shall  be a party  hereto,  and,  to the  extent  that  rights  and  obligations

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hereunder have been assigned to it pursuant to such  Assignment and  Acceptance,
such assignee shall have the rights and  obligations  of a Lender  hereunder and
(y) the assignor  thereunder  shall,  to the extent that rights and  obligations
hereunder have been assigned by it pursuant to such  Assignment and  Acceptance,
relinquish  its rights (other than any rights it may have pursuant to SECTION 23
of this Agreement which will survive) and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).

         (d)      By executing  and  delivering  an Assignment  and  Acceptance,
the  assignee  thereunder  confirms  and  agrees as  follows:  (i) other than as
provided in such  Assignment  and  Acceptance,  the  assigning  Lender  makes no
representation  or warranty  and assumes no  responsibility  with respect to any
statements,  warranties or  representations  made in or in connection  with this
Agreement  and  the  Other  Agreements  or the  execution,  legality,  validity,
enforceability,  genuineness,  sufficiency  or value of this Agreement or any of
the Other  Agreements,  (ii) such assigning  Lender makes no  representation  or
warranty and assumes no responsibility  with respect to the financial  condition
of  Borrowers  or any other  Obligor or the  performance  or  observance  by any
Borrower or any other Obligor of its  obligations  under this  Agreement and the
Other  Agreements,  (iii) such assignee  confirms that it has received a copy of
this Agreement and the Other  Agreements,  together with copies of the financial
statements  referred to in SECTION 9 of this Agreement and such other  documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance,  (iv) such assignee will,
independently  and without  reliance upon Agent,  such  assigning  Lender or any
other  Lender  and based on such  documents  and  information  as it shall  deem
appropriate at the time,  continue to make its own credit decisions in taking or
not  taking  action  under  this  Agreement,  (v)  such  assignee  appoints  and
authorizes Agent to take such action as agent on its behalf and to exercise such
powers  under this  Agreement  as are  delegated  to Agent by the terms  hereof,
together  with such powers as are  reasonably  incidental  thereto and (vi) such
assignee  agrees that it will perform in accordance  with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

         (e)      Agent shall maintain at its  address  referred  to in  SECTION
24 of the Agreement a copy of each  Assignment and  Acceptance  delivered to and
accepted by it and a register for the  recordation of the names and addresses of
Lenders and the Revolving Loan Commitment of, and principal  amount of the Loans
owing to,  each Lender  from time to time (the  "REGISTER").  The entries in the
Register  shall be  conclusive  and binding for all  purposes,  absent  manifest
error,  and  Borrowers,  Agent and Lenders  may treat each Person  whose name is
recorded  in the  Register  as a  Lender  hereunder  for  all  purposes  of this
Agreement.  The Register and copies of each  Assignment and Acceptance  shall be
available for  inspection by  Borrowers,  Agent or any Lender at any  reasonable
time and from time to time upon reasonable prior notice.

         (f)      Upon its receipt of an Assignment  and  Acceptance executed by
an assigning  Lender,  Agent shall,  if such  Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT E hereto,  (i) accept such
Assignment and Acceptance,  (ii) record the information contained therein in the
Register  and (iii) give prompt  notice  thereof to  Borrowers.  Within five (5)
Business  Days after its receipt of such  notice,  Borrowers  shall  execute and
deliver to Agent in exchange for the surrendered promissory note or notes, a new
promissory  note or notes to the order of the assignee in amounts  equal to such

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assignee's  commitments  and  outstanding  Loans hereunder and, if the assigning
Lender has retained a portion of the Loans,  a new  promissory  note or notes to
the  order  of  the  assigning  Lender  in an  amount  equal  to  the  remaining
commitments and outstanding  loans hereunder of such assigning  Lender under the
terms of this Agreement. Such new promissory note or notes shall re-evidence the
indebtedness  outstanding under the old promissory note or notes and shall be in
the aggregate  principal  amount of such  surrendered  promissory note or notes,
shall be dated of even date herewith and shall otherwise be in substantially the
form of the promissory note or notes subject to such assignment.

         (g)      Each Lender may sell  participations  (without the  consent of
Agent, Borrowers or any other Lender) to one or more parties, in or to all (or a
portion) of its rights and obligations under this Agreement (including,  without
limitation, all or a portion of its Revolving Loan Commitment or the Loans owing
to it); provided,  that (i) such Lender's obligations under this Agreement shall
remain unchanged,  (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations,  (iii) Borrowers, Agent,
and the other  Lenders  shall  continue  to deal solely and  directly  with such
Lender in  connection  with such  Lender's  rights  and  obligations  under this
Agreement  and (iv) such Lender shall not  transfer,  grant,  assign or sell any
participation  under  which the  participant  shall have  rights to approve  any
amendment or waiver of this Agreement.

         (h)      Each Lender agrees that,  without the prior written consent of
Borrowers and Agent, it will not make any assignment  hereunder in any manner or
under any circumstances that would require  registration or qualification of, or
filings in respect of, any Loan or other  Liabilities  under the securities laws
of the United States of America or of any jurisdiction.

         (i)      In  connection  with the efforts  of any Lender  to assign its
rights or obligations or to participate interests,  such Lender may disclose any
information in its possession regarding Borrowers.

         21.      AMENDMENTS, ETC.

         No amendment or waiver of any provision of this Agreement or any of the
Other Agreements,  nor consent to any departure by any Obligor therefrom,  shall
in any event be  effective  unless the same  shall be in  writing  and signed by
Parent,  each Borrower,  Agent and Requisite Lenders, or if Lenders shall not be
parties thereto,  by the parties thereto and consented to by Requisite  Lenders,
and each  such  amendment,  waiver or  consent  shall be  effective  only in the
specific instance and for the specific purpose for which given;  provided,  that
no  amendment,  waiver or consent  shall,  unless in  writing  and signed by all
Lenders, do any of the following: (i) increase the Revolving Loan Commitments of
Lenders or subject  Lenders to any  additional  obligations  to extend credit to
Borrowers,  (ii) reduce the  principal of, or interest on, the Loans (other than
as expressly  permitted  herein) or any fees hereunder,  (iii) postpone any date
fixed for any payment in respect of  principal  of, or interest  on, the Loan or
any fees  hereunder,  (iv)  change the  definition  of Pro Rata  Shares,  or any
minimum  requirement  necessary  for  Lenders or  Requisite  Lenders to take any
action  hereunder,  (v) amend or waive this SECTION 21, or change the definition
of  Requisite  Lenders,  or (vii)  except  in  connection  with  the  financing,
refinancing,  sale or other  disposition  of any asset of Parent or any Borrower

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permitted under this Agreement (or to the extent  Requisite Lender approval only
is required with any such release pursuant to SUBSECTION 19(J) hereof),  release
or  subordinate  any  liens in favor of  Agent,  for the  benefit  of Agent  and
Lenders,  on any of the  Collateral  and provided  further,  that no  amendment,
waiver or consent  affecting the rights or duties of Agent under this  Agreement
or any Other  Agreement  shall in any event be effective,  unless in writing and
signed by Agent in addition to Lenders required hereinabove to take such action.
Notwithstanding any of the foregoing to the contrary,  for purposes of voting or
consenting to matters with respect to this Agreement and the Other Agreements, a
Defaulting Lender shall not be considered a Lender and such Defaulting  Lender's
Revolving Loan Commitment shall be deemed to be $0 until such Defaulting  Lender
makes the payments required in this Agreement.

         In the event  that any  consent,  waiver  or  amendment  requiring  the
agreement  of all  Lenders  as set forth  above is  agreed  to by the  Requisite
Lenders,  but not all  Lenders,  Agent may,  in its sole  discretion,  cause any
non-consenting  Lender to assign its rights and obligations under this Agreement
and the Other  Agreements to one or more new Lenders or existing  Lenders in the
manner and  according  to the terms set forth in  SECTION 20 of this  Agreement;
provided,  that  (i)  no  Lender  may be  required  to  assign  its  rights  and
obligations to a new Lender because such lender is unwilling to increase its own
loan  commitments,  (ii) such new  Lender  must be  willing  to  consent  to the
proposed  amendment,  waiver  or  consent  and  (iii) in  connection  with  such
assignment  the new  Lender  pays the  assigning  Lender an amount  equal to the
Liabilities owing to such assigning Lender, including all principal, accrued and
unpaid  interest  and accrued and unpaid  fees to the date of  assignment.  Such
assignment  shall  occur  within  thirty  (30)  days of  notice by Agent to such
non-consenting  Lender of Agent's intent to cause such non-consenting  Lender to
assign its interests hereunder.

         22.      NONLIABILITY OF AGENT AND LENDERS.

         The  relationship  between Parent and  Borrowers,  on the one hand, and
Agent and  Lenders,  on the other  hand,  shall be solely  that of  obligor  and
lender.  Neither Agent nor any Lender shall have any fiduciary  responsibilities
to  Parent,  Borrowers  or any  other  Obligor.  Neither  Agent  nor any  Lender
undertakes any responsibility to Parent or Borrowers to review or inform Parent,
Borrowers  or any other  Obligor of any matter in  connection  with any phase of
Parent's or Borrowers' business or operations.

         23.      INDEMNIFICATION.

         The  Borrowers  agree,  on a joint and several  basis,  to defend (with
counsel reasonably satisfactory to Lender), protect, indemnify and hold harmless
Agent and each Lender,  each  affiliate or  subsidiary of Agent and each Lender,
and each of their  respective  officers,  directors,  employees,  attorneys  and
agents (each an "INDEMNIFIED  PARTY") from and against any and all  liabilities,
obligations,  losses, damages, penalties, actions, judgments, suits, claims, and
out-of-pocket  and reasonable  costs,  expenses and disbursements of any kind or
nature (including, without limitation, the disbursements and the reasonable fees
of counsel for each  Indemnified  Party in  connection  with any  investigative,
administrative  or judicial  proceeding,  whether or not the  Indemnified  Party
shall be designated a party  thereto),  which may be imposed on, incurred by, or
asserted   against,   any  Indemnified   Party  (whether  direct,   indirect  or
consequential  and  whether  based  on any  federal,  state  or  local  laws  or
regulations,  including,  without  limitation,  securities laws and regulations,

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Environmental  Laws and commercial laws and regulations,  under common law or in
equity,  or based on contract or otherwise) in any manner relating to or arising
out of this Agreement or any Other  Agreement,  or any act, event or transaction
related or attendant  thereto,  the making or issuance and the management of the
Loans or any Letters of Credit or the use or intended use of the proceeds of the
Loans or any Letters of Credit; PROVIDED,  HOWEVER, that the Borrowers shall not
have any obligation  hereunder to any Indemnified  Party with respect to matters
caused by or resulting  from the willful  misconduct or gross  negligence of any
Indemnified  Party. To the extent that the undertaking to indemnify set forth in
the preceding  sentence may be unenforceable  because it is violative of any law
or public policy,  the Borrowers  shall satisfy such  undertaking to the maximum
extent  permitted by applicable law. Any liability,  obligation,  loss,  damage,
penalty,  cost or  expense  covered  by  this  indemnity  shall  be paid to each
Indemnified Party on demand, and, failing prompt payment,  shall,  together with
interest thereon at the highest rate then applicable to Loans hereunder from the
date incurred by each Indemnified Party until paid by the Borrowers, be added to
the  Liabilities  of  the  Borrowers  and be  secured  by  the  Collateral.  The
provisions of this SECTION 23 shall survive the  satisfaction and payment of the
other Liabilities and the termination of this Agreement.

         24.      NOTICE.

         All written  notices and other written  communications  with respect to
this  Agreement  shall be sent by  ordinary,  certified or  overnight  mail,  by
facsimile,  electronic  mail or  delivered  in person,  and in the case of Agent
shall be sent to it at LaSalle  Business Credit,  LLC, 2 Commerce  Square,  2001
Market Street, Suite 2610,  Philadelphia,  Pennsylvania 19103,  attention Credit
Manager,  facsimile number (267) 386-8841, in the case of a Lender shall be sent
to it out the address set forth below its name on the  signature  page hereto or
in the  Assignment  and  Acceptance  Agreement and, in the case of Parent or the
Borrowers  shall be sent to it at its  principal  place of business set forth on
EXHIBIT B hereto or as otherwise directed by Parent or the Borrowers in writing.
All notices shall be deemed  received upon actual receipt  thereof or refusal of
delivery.

         25.      CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.

         THIS  AGREEMENT  AND  THE  OTHER   AGREEMENTS  SHALL  BE  GOVERNED  AND
CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT  REGARD TO SUCH
JURISDICTION'S CONFLICTS OF LAWS PRINCIPLES.  If any provision of this Agreement
shall  be held  to be  prohibited  by or  invalid  under  applicable  law,  such
provision  shall  be  ineffective  only to the  extent  of such  prohibition  or
invalidity,  without  invalidating  the remainder of such provision or remaining
provisions of this Agreement.

         To induce  Agent and Lenders to accept this  Agreement,  Parent and the
Borrowers irrevocably agree that, subject to Agent's sole and absolute election,
ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM
OR RELATED TO THIS AGREEMENT,  THE OTHER  AGREEMENTS OR THE COLLATERAL  SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF NEW YORK, STATE OF NEW YORK;
PROVIDED that Agent may elect to commence an action or  proceeding  with respect

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to the  Collateral  in another  jurisdiction.  PARENT AND THE  BORROWERS  HEREBY
CONSENT AND SUBMIT TO THE  JURISDICTION  OF ANY LOCAL,  STATE OR FEDERAL  COURTS
LOCATED WITHIN SAID CITY AND STATE.  Parent and the Borrowers hereby irrevocably
appoint and designate The Corporation Trust Company located at Corporation Trust
Center, 1209 Orange Street, Wilmington, DE 19801 (or any other person having and
maintaining  a place of business in such state whom Parent and the Borrowers may
from time to time hereafter designate upon ten (10) days written notice to Agent
and whom Agent has agreed in its sole discretion in writing is satisfactory  and
who has  executed  an  agreement  in form and  substance  satisfactory  to Agent
agreeing to act as such attorney and agent), as Parent's and Borrowers' true and
lawful  attorney and duly  authorized  agent for  acceptance of service of legal
process.  Parent and the Borrowers  agree that service of such process upon such
person  shall  constitute  personal  service of such process upon Parent and the
Borrowers.  PARENT  AND THE  BORROWERS  HEREBY  WAIVE ANY RIGHT THEY MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION  BROUGHT AGAINST PARENT OR ANY OF
THE BORROWERS BY AGENT IN ACCORDANCE WITH THIS SECTION.

         26.      CONFIRMATION OF EXISTING OBLIGATIONS.

         Parent,  each Borrower,  Agent and Lenders each  acknowledge  and agree
that,  as of  April  2,  2007,  (i)  the  aggregate  principal  balance  of  the
outstanding  Loans under the Prior Loan  Agreement was  $3,472,359.97,  (ii) the
aggregate  principal  balance of the  outstanding  Letter of Credit  Obligations
under the Prior Loan Agreement was $620,654.00 (Agent acknowledges that $475,000
of such Letter of Credit Obligations are presently cash collateralized with Loan
proceeds,  which cash  collateral  Agent and Lenders agree shall be released and
applied  to the  outstanding  Loans  within  a  reasonable  time  following  the
effectiveness of this Agreement),  (iii) the accrued and unpaid interest arising
under the Prior Loan Documents was $2,138.03,  and (iii) the aggregate amount of
billed but unpaid  reimbursable  costs and expenses arising under the Prior Loan
Documents  known to the Agent  was  $13,416.40.  The  foregoing  amounts  do not
include  any  unbilled  and/or  unknown  fees,  costs,  and  expenses  that  are
reimbursable  under the Prior Loan  Agreement  or Prior Loan  Documents,  all of
which  fees,  costs  and  expenses  Agent  and  Lenders  shall  continue  to  be
reimbursable  in  accordance  with  the  terms  hereof.  All  of  the  foregoing
Liabilities are outstanding, and Borrowers and Parent agree and acknowledge that
(i) they are jointly and severally  liable for such  Liabilities,  and (ii) they
have no right of offset,  defense,  or counterclaim  with respect to any of such
Liabilities,  in each  case,  both  prior to and  after  giving  effect  to this
Agreement.

         27.      HEADINGS OF SUBDIVISIONS.

         The headings of  subdivisions  in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of this Agreement.

         28.      POWER OF ATTORNEY.

         Parent and the Borrowers  acknowledge and agree that their  appointment
of Agent as their attorney and agent-in-fact for the purposes  specified in this
Agreement is an  appointment  coupled with an interest and shall be  irrevocable

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until all of the Liabilities (other than inchoate  indemnification  obligations)
are satisfied and paid in full and this Agreement is terminated.

         29.      CONFIDENTIALITY.

         Agent  and each  Lender  hereby  agree to use  commercially  reasonable
efforts  to assure  that any and all  information  relating  to  Parent  and the
Borrowers  which is (i) furnished by Parent or a Borrower to Agent or any Lender
(or to any affiliate of Agent or any Lender); and (ii) non-public,  confidential
or proprietary in nature, shall be kept confidential by Agent and such Lender or
such  affiliate and not used for any purpose other than in connection  with this
Agreement,  the Agent's  syndication  of this  Agreement,  and the  transactions
contemplated  hereunder;  PROVIDED,  HOWEVER,  that such  information  and other
credit information  relating to Parent or a Borrower may be distributed by Agent
or any Lender or such  affiliate  (subject,  to the extent  practicable,  to the
restrictions  set forth in this  SECTION  29) to  Agent's  or  Lender's  or such
affiliate's,  directors, officers, employees, attorneys, affiliates,  assignees,
existing or potential assignees,  existing or potential participants,  auditors,
agents  and  regulators,  and  upon the  order of a court or other  governmental
agency having jurisdiction over Agent or any other Lender or such affiliate,  to
any other party;  PROVIDED,  FURTHER that Agent will have any  potential  Lender
execute a nondisclosure agreement which imposes the confidentiality restrictions
contained in this SECTION 29 on such potential  Lender prior to distributing any
non-public  information  concerning  Parent or any  Borrower  to such  potential
Lender. In addition,  such information may be distributed by Agent or any Lender
to  potential  participants  or  assignees  of any  portion of the  Liabilities,
PROVIDED,  that such  potential  participant  or  assignee  agrees to follow the
confidentiality   requirements  set  forth  in  this  SECTION  29.  Parent,  the
Borrowers, Agent and each Lender further agree that this provision shall survive
the termination of this Agreement. Notwithstanding the foregoing, Parent and the
Borrowers  hereby consent to Lender  publishing,  with Parent's prior reasonable
review) a tombstone or similar  advertising  material  relating to the financing
transaction contemplated by this Agreement.

         30.      SYNDICATION.

         Parent and Borrowers hereby agree and acknowledge that Agent may in its
discretion,  prior to and after the  Closing  Date,  initiate  discussions  with
potential lenders and investors in order to syndicate the Loans. In consultation
with Borrowers,  Agent will manage and control all aspects of the syndication of
the Loans to other financial  institutions and lenders ("PRIMARY  SYNDICATION").
Parent and Borrowers agree to use  commercially  reasonable  efforts to actively
assist and  cooperate  (and cause each of their  respective  Affiliates  and all
necessary parties to assist and cooperate) with Agent in the Primary Syndication
process.  This assistance includes  participation in meetings and preparation of
information including the preparation of a confidential  information memorandum,
presentations  and other  offering  materials to be used in connection  with the
Primary  Syndication  and  confirming  the  completeness  and  accuracy  of such
materials.   Borrowers   agree  that,   until  the  completion  of  the  Primary
Syndication,  they shall not (and shall cause their  affiliates not to), without
the prior  written  consent of Agent  attempt or agree to offer,  issue,  place,
syndicate or arrange any debt securities or debt facilities for the Borrowers or
make or authorize any  announcement of any of the foregoing.  Any assignments of
the Loans entered into to complete the Primary  Syndication shall not be subject
to any consent,  minimum amounts and fee provisions set forth in this Agreement.
This  paragraph  shall survive the execution and delivery of this  Agreement and

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shall  remain in full  force and  effect  until the  completion  of the  Primary
Syndication.

         31.      COUNTERPARTS.

         This Agreement any of the Other Agreements and any amendments, waivers,
consents or  supplements  may be executed in any number of  counterparts  and by
different  parties  hereto in  separate  counterparts,  each of  which,  when so
executed  and  delivered,  shall  be  deemed  an  original,  but  all  of  which
counterparts  together  shall  constitute  but one  agreement.  Any  counterpart
delivered by facsimile or other electronic  transmission  shall constitute,  and
have the same force and effect as, a manually signed counterpart.

         32.      ELECTRONIC SUBMISSIONS.

         Upon  not less  than  thirty  (30)  days'  prior  written  notice  (the
"APPROVED  ELECTRONIC  FORM  NOTICE"),  Agent may permit or require  (in Agent's
reasonable judgment, taking into account Borrowers' existing electronic systems)
that  any  of  the   documents,   certificates,   forms,   deliveries  or  other
communications,  authorized,  required or  contemplated by this Agreement or the
Other  Agreements,  be  submitted  to Agent in  "APPROVED  ELECTRONIC  FORM" (as
hereafter defined), subject to any reasonable terms, conditions and requirements
in  the  applicable  Approved  Electronic  Forms  Notice.  For  purposes  hereof
"ELECTRONIC FORM" means e-mail, e-mail attachments,  data submitted on web-based
forms or any other  communication  method that delivers machine readable data or
information to Agent,  and "APPROVED  ELECTRONIC  FORM" means an Electronic Form
that has been approved in writing by Agent (which  approval has not been revoked
or  modified  by  Agent)  and sent to  Borrower  Representative  in an  Approved
Electronic  Form  Notice.  Except  as  otherwise  specifically  provided  in the
applicable   Approved  Electronic  Form  Notice,  any  submissions  made  in  an
applicable  Approved  Electronic  Form shall have the same force and effect that
the same  submissions  would  have had if they had been  submitted  in any other
applicable  form  authorized,  required or contemplated by this Agreement or the
Other Agreements.

         33.      WAIVER OF JURY TRIAL; OTHER WAIVERS.

         (a)      PARENT,  THE BORROWERS,  AGENT  AND EACH  LENDER  EACH  HEREBY
WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR  PROCEEDING  WHICH  PERTAINS
DIRECTLY OR  INDIRECTLY  TO THIS  AGREEMENT,  ANY OF THE OTHER  AGREEMENTS,  THE
LIABILITIES,  THE  COLLATERAL,  ANY  ALLEGED  TORTIOUS  CONDUCT BY PARENT OR ANY
BORROWER OR AGENT OR ANY LENDER OR WHICH,  IN ANY WAY,  DIRECTLY OR  INDIRECTLY,
ARISES OUT OF OR RELATES TO THE  RELATIONSHIP  BETWEEN PARENT AND THE BORROWERS,
ON THE ONE HAND, AND AGENT AND LENDERS. IN NO EVENT SHALL AGENT OR ANY LENDER BE
LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.

         (b)      Parent and each  Borrower  hereby  waive  demand, presentment,
protest  and  notice of  nonpayment,  and  further  waives  the  benefit  of all
valuation, appraisal and exemption laws.

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         (c)      Parent and each Borrower hereby  waive the  benefit of any law
that would  otherwise  restrict or limit Agent or any Lender or any affiliate of
Agent or any Lender in the exercise of its right,  which is hereby  acknowledged
and agreed to, to set-off  against the  Liabilities,  without notice at any time
hereafter, any indebtedness,  matured or unmatured, owing by Agent or any Lender
or such  affiliate of Agent or any Lender to Parent or any Borrower,  including,
without  limitation,  any  deposit  account  at  Agent  or any  Lender  or  such
affiliate.

         (d)      PARENT AND EACH BORROWER HEREBY WAIVE ALL RIGHTS TO NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY AGENT OR ANY LENDER OF THEIR RIGHTS
TO REPOSSESS  THE  COLLATERAL OF THE BORROWERS  WITHOUT  JUDICIAL  PROCESS OR TO
REPLEVY, ATTACH OR LEVY UPON SUCH COLLATERAL.

         (e)      Agent and/or Lenders' failure, at any time or times hereafter,
to require strict performance by Parent or any Borrower of any provision of this
Agreement or any of the Other Agreements shall not waive, affect or diminish any
right of  Agent  or any  Lender  thereafter  to  demand  strict  compliance  and
performance  therewith.  Any  suspension  or waiver by Agent or any Lender of an
Event of Default  under this  Agreement  or any  default  under any of the Other
Agreements  shall not suspend,  waive or affect any other Event of Default under
this Agreement or any other default under any of the Other  Agreements,  whether
the  same is  prior  or  subsequent  thereto  and  whether  of the  same or of a
different kind or character.  No delay on the part of Agent or any Lender in the
exercise  of any right or remedy  under this  Agreement  or any Other  Agreement
shall preclude other or further exercise thereof or the exercise of any right or
remedy.  None  of  the  undertakings,   agreements,  warranties,  covenants  and
representations of Parent or the Borrowers contained in this Agreement or any of
the Other  Agreements  and no Event of Default  under this  Agreement or default
under any of the Other  Agreements  shall be  deemed to have been  suspended  or
waived by Agent and/or Lenders  unless such  suspension or waiver is in writing,
signed by a duly authorized officer of Agent,  Requisite Lenders or all Lenders,
as required  herein,  and directed to Parent or the  Borrowers  specifying  such
suspension or waiver.

34. JOINT AND SEVERAL OBLIGATIONS; GUARANTEES.

         (a)      Each Borrower shall be jointly and severally liable with  each
other Borrower for the payment and performance when due of all Liabilities.

         (b)      For purposes of this SUBSECTION 34(B), each of Parent and each
Borrower shall be referred to individually as a "GUARANTOR" and collectively, as
the  "GUARANTORS".  Each  Guarantor  unconditionally  guarantees,  as a  primary
obligor  and not  merely as a surety,  jointly  and  severally  with each  other
Guarantor, the due and punctual payment of the principal and interest on each of
the Loans and all Letter of Credit  Obligations  and all fees due hereunder,  in
each case when and as due, whether at maturity,  by  acceleration,  by notice of
prepayment  or  otherwise,  and the due and  punctual  performance  of all other
Liabilities.  Each Guarantor further agrees that the Liabilities may be extended
and renewed,  in whole or in part,  without notice to or further assent from it,
and that it will remain bound upon its guarantee  notwithstanding  any extension
or renewal of any Liabilities.

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         (c)      Each Guarantor waives  presentment to, demand  of payment from
and protest to the Borrowers of any of the  Liabilities,  and also waives notice
of  acceptance  of its  guarantee  and notice of  protest  for  nonpayment.  The
obligations of a Guarantor hereunder shall not be affected by (a) the failure of
the Agent to  assert  any  claim or  demand  or to  enforce  any right or remedy
against  the  Borrowers  or any other  Guarantor  under the  provisions  of this
Agreement  or any of the  Other  Documents  or  otherwise;  (b) any  rescission,
waiver,  amendment or  modification  of any of the terms or  provisions  of this
Agreement or any of the Other  Agreements;  (c) the release of any security held
by the Agent for the  Liabilities;  (d) the failure of the Agent to exercise any
right or remedy against any other Guarantor of the  Liabilities;  (e) failure by
Agent or any  Lender to take any steps to  perfect  and  maintain  its  security
interest in, or to preserve its rights to, any  security or  collateral  for the
Liabilities; (f) the institution of any proceeding under the Bankruptcy Code, or
any  similar  proceeding,  by or  against  Parent or any  Borrower  or Agents or
Lenders'  election  in  any  such  proceeding  of  the  application  of  Section
1111(b)(2)  of the  Bankruptcy  Code;  (g) any  borrowing or grant of a security
interest  by any  Borrower  as  debtor-in-possession  under  Section  364 of the
Bankruptcy Code; (h) the disallowance, under Section 502 of the Bankruptcy Code,
of all or any  portion of Agent's or  Lenders'  claim(s)  for  repayment  of any
Liabilities;  or (i) any other circumstance  which might otherwise  constitute a
legal or equitable discharge or defense of a guarantor.

         (d)      Each Guarantor further agrees that its guarantee constitutes a
guarantee  of payment  when due and not of  collection,  and waives any right to
require that any resort be had by the Agent to any security (including,  without
limitation,  any  Collateral)  held for  payment  of the  Liabilities  or to any
balance of any  deposit  account or credit on the books of the Agent in favor of
any Guarantor or any other person.

         (e)      The  obligations  of each  Guarantor  hereunder  shall  not be
subject to any reduction, limitation,  impairment or termination for any reason,
including,   without  limitation,  any  claim  of  waiver,  release,  surrender,
alteration  or  compromise,  and shall not be subject to any  defense or setoff,
counterclaim,  recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Liabilities or otherwise. Without limiting
the generality of the  foregoing,  the  obligations of each Guarantor  hereunder
shall not be discharged or impaired or otherwise  affected by the failure of the
Agent to assert  any  claim or  demand  or to  enforce  any  remedy  under  this
Agreement or under any Other  Agreements,  by any waiver or  modification of any
provision thereof, by any default,  failure or delay,  willful or otherwise,  in
the performance of the Liabilities, or by any other act or omission which may or
might  in any  manner  or to any  extent  vary  the  risk of such  Guarantor  or
otherwise operate as a discharge of such Guarantor as a matter of law or equity.

         (f)      Each   Guarantor   further  agrees  that its  guarantee  shall
continue to be  effective or be  reinstated,  as the case may be, if at any time
payment,  or any part  thereof,  of principal of or interest on any Liability is
rescinded  or must  otherwise  be returned by the Agent upon the  bankruptcy  or
reorganization of a Guarantor or otherwise.

         (g)      Each Guarantor  hereby  agrees  not  to  assert  or  exercise,
until all Liabilities have been paid or satisfied in full and the Borrowers have
no further right to borrow Loans  hereunder,  any and all rights of  subrogation
against the  Borrowers  and their  property  and all rights of  indemnification,
contribution and  reimbursement  from the Borrowers and their property,  in each

                                       77

<PAGE>

case in connection  with this  guarantee and any payments  made  hereunder,  and
regardless  of whether  such  rights  arise by  operation  of law,  pursuant  to
contract or otherwise.

         (h)      Notwithstanding  any  provisions  of  this  Agreement  to  the
contrary, it is intended that the joint and several nature of the Liabilities of
Parent and Borrowers and the liens and security  interests granted by Parent and
Borrowers to secure the  Liabilities,  not constitute a "Fraudulent  Conveyance"
(as defined below).  Consequently,  Agent,  Lenders,  Parent and Borrowers agree
that if the  Liabilities  of Parent or any  Borrowers,  or any liens or security
interests granted by Parent or such Borrower securing the Liabilities would, but
for the application of this sentence,  constitute a Fraudulent  Conveyance,  the
Liabilities  of Parent or such  Borrower  and the liens and  security  interests
securing such  Liabilities  shall be valid and  enforceable  only to the maximum
extent that would not cause such  Liabilities or such lien or security  interest
to constitute a Fraudulent  Conveyance,  and the  Liabilities  of Parent or such
Borrower and this Agreement shall  automatically  be deemed to have been amended
accordingly.  For purposes hereof,  "Fraudulent  Conveyance"  means a fraudulent
conveyance under Section 548 of Chapter 11 of Title II of the United States Code
(11 U.S.C. ss. 101, et seq.), as amended (the "Bankruptcy Code") or a fraudulent
conveyance  or  fraudulent  transfer  under  the  applicable  provisions  of any
fraudulent  conveyance or  fraudulent  transfer law or similar law of any state,
nation or other governmental unit, as in effect from time to time.

         (i)      Parent  and  each Borrower assumes  responsibility for keeping
itself  informed of the financial  condition of Parent and each other  Borrower,
and any and all  endorsers  and/or  guarantors  of any  instrument  or  document
evidencing all or any part of Parent or such other Borrower's Liabilities and of
all other  circumstances  bearing upon the risk of  nonpayment by Parent or such
other  Borrowers of their  Liabilities  and Parent and each Borrower agrees that
Agent and Lenders  shall not have any duty to advise  Parent or such Borrower of
information  known to Agent or any Lender  regarding  such condition or any such
circumstances  or to  undertake  any  investigation  not a part  of its  regular
business routine. If Agent or any Lender, in its sole discretion,  undertakes at
any time or from time to time to  provide  any such  information  to Parent or a
Borrower,  neither Agent nor any Lender shall be under any  obligation to update
any such  information  or to  provide  any such  information  to  Parent or such
Borrower on any subsequent occasion.

         35.      WAIVER OF EXISTING DEFAULTS.

         Subject  to the  effectiveness  of this  Agreement,  Agent and  Lenders
hereby waive any Events of Default  arising  prior to the Closing Date under the
Prior  Loan  Documents;  provided,  that  such  waiver  shall  not be  deemed or
otherwise  construed  to  constitute  a waiver of any other  Default or Event of
Default,  or to prejudice  any right,  power or remedy which Agent or any Lender
may now  have or may  have in the  future,  under  or in  connection  with  this
Agreement or any Other Agreements after giving effect to this Agreement,  all of
which  rights,  powers and remedies are hereby  expressly  reserved by Agent and
Lenders.

                                       78

<PAGE>

         36.      EFFECT   OF   AMENDMENT   AND   RESTATEMENT.        Upon   the
effectiveness  of this Agreement,  the Prior Loan Agreement shall be amended and
restated  by this  Agreement;  PROVIDED,  HOWEVER,  that  the  Loans  and  other
Liabilities  arising  under the  Prior  Loan  Agreement  and  other  Prior  Loan
Documents  (collectively,  the "PRIOR LIABILITIES") shall, subject to SECTION 26
hereof,  continue in full force and effect and the liens and security  interests
securing  payment  thereof shall be continuing  but shall now be governed by the
terms of this Agreement and the Other  Agreements.  No action or inaction by any
of  LaSalle,  Agent  or any  Lender  prior  to the  effectiveness  date  of this
Agreement  shall be deemed to have  established a course of conduct  between the
parties  hereto.  Upon the  effectiveness  of this  Agreement,  all  rights  and
obligations of the Parent,  Borrowers,  Agent and Lenders shall be solely as set
forth  in  this  Agreement  and  the  Other  Agreements.  This  Agreement  shall
constitute  an  amendment  and  restatement  of the  terms  governing  the Prior
Liabilities  and shall not be deemed to evidence a novation  or a repayment  and
reborrowing of the Prior Liabilities.

         All  references  to  the  "Loan  Agreement"  in  the  Other  Agreements
delivered  pursuant to or otherwise in connection  with the Prior Loan Agreement
shall be deemed to refer to this  Agreement  without  further  amendment of such
Other  Agreements.  The Other  Agreements  executed in connection with the Prior
Loan  Agreement  that  are not  superseded  by  corresponding  Other  Agreements
executed and delivered in connection  with this  Agreement  shall remain in full
force  and  effect  (collectively,   the  "CONTINUING  OTHER  AGREEMENTS").  All
references to the Prior Loan Agreement in the Continuing  Other Agreements shall
be deemed to refer to this Agreement without further amendment thereof.  Parent,
Borrowers,  Agent and  Lenders  hereby  acknowledge  and agree  that each of the
Continuing Other  Agreements  remains in full force and effect and hereby ratify
and  reaffirm  all of their  respective  payment  and  performance  obligations,
contingent or otherwise,  under each of the Continuing Other Agreements to which
they are a party and, to the extent  Parent and  Borrowers  granted  liens on or
security interests in any of their properties  pursuant to any of the Continuing
Other  Agreements as security for the  Liabilities,  Parent and Borrowers hereby
ratify and  reaffirm  such  grants of  security  and confirm and agree that such
liens and security  interests  secure all of the  Liabilities and remain in full
force and effect after giving effect to this Agreement.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       79

<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have duly executed this Amended
and Restated Loan and Security Agreement as of the date first written above.

                          LASALLE BUSINESS CREDIT, LLC, successor by merger to
                          LASALLE BUSINESS CREDIT, INC., as Agent and a Lender

                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________

                          REVOLVING LOAN COMMITMENT: $35,000,000

      [Signature Page to Amended and Restated Loan and Security Agreement]

<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have duly executed this Amended
and Restated Loan and Security Agreement as of the date first written above.

                          PROTECTIVE APPAREL CORPORATION OF AMERICA, as Borrower

                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________

                          POINT BLANK BODY ARMOR INC., as Borrower

                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________

                          NDL PRODUCTS, INC., as Borrower

                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________

                          DHB INDUSTRIES, INC., as Guarantor

                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________

      [Signature Page to Amended and Restated Loan and Security Agreement]Exhibit 10.1 - Agreement and Plan of Merger

    
      

      

    

    

       

      

      

      

      

      

      

      AGREEMENT
        AND PLAN OF MERGER

      

      BY
        AND
        AMONG

      

      COESFX
        HOLDINGS, INC.,

      

      COESFX
        ACQUISITION CORP.

      

      AND

      

      SFG
        FINANCIAL CORPORATION

      

      

      

      

      

      

      

       

      

      

      

      

      

      

      

      

      

      March
        1,
        2007

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      TABLE
        OF
        CONTENTS

      

      
        	
                ARTICLE
                  I THE MERGER; CONVERSION OF SHARES

              	 
	 	 	 
	
                1.1

              	
                The
                  Merger

              	
                4

              
	
                1.2

              	
                Effective
                  Time

              	
                5

              
	
                1.3

              	
                Conversion
                  of Interests

              	
                5

              
	
                1.4

              	
                Exchange
                  of COESfx Common Stock

              	
                6

              
	
                1.5

              	
                Articles
                  of Incorporation of the Surviving Corporation

              	
                7

              
	
                1.6

              	
                Bylaws
                  of the Surviving Corporation

              	
                7

              
	
                1.7

              	
                Directors
                  and Officers of the Surviving Corporation and SFG

              	
                7

              
	
                1.8

              	
                Dissenting
                  Interests

              	
                7

              
	
                1.9

              	
                Amendments
                  to SFG's Articles of Incorporation

              	
                7

              
	 	 	 
	
                ARTICLE
                  II CLOSING

              	 
	 	 	 
	
                2.1

              	
                Closing
                  Date and Place

              	
                8

              
	 	 	 
	
                ARTICLE
                  III PRE-CLOSING OBLIGATIONS

              	 
	 	 	 
	
                3.1

              	
                Obligations
                  of the Parties

              	
                8

              
	
                3.2

              	
                Conduct
                  of Business Prior to Closing

              	
                8

              
	
                3.3

              	
                Access;
                  Cooperation

              	
                10

              
	
                3.4

              	
                Notice
                  Regarding Dissenters' Rights Actions

              	
                10

              
	
                3.5

              	
                No
                  Negotiation

              	
                10

              
	
                3.6

              	
                Best
                  Efforts to Obtain Shareholder Approval

              	
                11

              
	
                3.7

              	
                Disclosure
                  of Certain Matters

              	
                11

              
	 	 	 
	
                ARTICLE
                  IV REPRESENTATIONS AND WARRANTIES OF COESFX

              	 
	 	 	 
	
                4.1

              	
                Due
                  Organization; No Subsidiaries

              	
                11

              
	
                4.2

              	
                Books
                  and Records

              	
                12

              
	
                4.3

              	
                Capitalization

              	
                12

              
	
                4.4

              	
                Financial
                  Statements

              	
                12

              
	
                4.5

              	
                Absence
                  of Changes

              	
                12

              
	
                4.6

              	
                Title
                  to Assets

              	
                14

              
	
                4.7

              	
                Receivables

              	
                14

              
	
                4.8

              	
                Equipment

              	
                14

              
	
                4.9

              	
                Real
                  Property

              	
                14

              
	
                4.10

              	
                Proprietary
                  Assets

              	
                14

              
	
                4.11

              	
                Contracts

              	
                15

              
	
                4.12

              	
                Liabilities

              	
                15

              

      

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      
        	
                4.13

              	
                Compliance
                  with Legal Requirements

              	
                16

              
	
                4.14

              	
                Government
                  Authorizations

              	
                16

              
	
                4.15

              	
                Tax
                  Matters

              	
                17

              
	
                4.16

              	
                Employee
                  and Labor Matters

              	
                17

              
	
                4.17

              	
                Benefit
                  Plans; ERISA

              	
                18

              
	
                4.18

              	
                Environmental
                  Matters

              	
                18

              
	
                4.19

              	
                Insurance

              	
                19

              
	
                4.20

              	
                Related
                  Party Transaction

              	
                19

              
	
                4.21

              	
                Certain
                  Payments, Etc.

              	
                20

              
	
                4.22

              	
                Proceedings;
                  Orders

              	
                20

              
	
                4.23

              	
                Authority;
                  Binding Nature of Agreements

              	
                20

              
	
                4.24

              	
                Non-Contravention;
                  Consents

              	
                20

              
	
                4.25

              	
                Brokers

              	
                21

              
	
                4.26

              	
                Full
                  Disclosure

              	
                21

              
	
                4.27

              	
                Restricted
                  Securities

              	
                21

              
	 	 	 
	
                ARTICLE
                  V REPRESENTATIONS AND WARRANTIES OF SFG

              	 
	 	 	 
	
                5.1

              	
                Due
                  Organization; Subsidiaries, Etc.

              	
                22

              
	
                5.2

              	
                Books
                  and Records

              	
                22

              
	
                5.3

              	
                Capitalization

              	
                22

              
	
                5.4

              	
                SEC
                  Filings

              	
                23

              
	
                5.5

              	
                Financial
                  Statements

              	
                23

              
	
                5.6

              	
                Absence
                  of Changes

              	
                24

              
	
                5.7

              	
                Title
                  to Assets

              	
                25

              
	
                5.8

              	
                Receivables

              	
                26
                  

              
	
                5.9

              	
                Inventory

              	
                26

              
	
                5.10

              	
                Equipment

              	
                26

              
	
                5.11

              	
                Real
                  Property 

              	
                26

              
	
                5.12

              	
                Proprietary
                  Assets 

              	
                26

              
	
                5.13

              	
                Contracts
                  

              	
                26

              
	
                5.14

              	
                Liabilities,
                  Bankruptcy

              	
                26

              
	
                5.15

              	
                Compliance
                  with Legal Requirements

              	
                27

              
	
                5.16

              	
                Government
                  Authorizations

              	
                27

              
	
                5.17

              	
                Tax
                  Matters

              	
                27

              
	
                5.18

              	
                Employees

              	
                28

              
	
                5.19

              	
                Employee
                  Benefit Plans

              	
                28

              
	
                5.20

              	
                Environmental
                  Matters

              	
                28

              
	
                5.21

              	
                Insurance

              	
                29

              
	
                5.22

              	
                Related
                  Party Transactions 

              	
                29

              
	
                5.23

              	
                Subsidiaries
                  and Investments 

              	
                30

              
	
                5.24

              	
                Certain
                  Payments, Etc. 

              	
                30

              
	
                5.25

              	
                Proceedings;
                  Orders 

              	
                31

              
	
                5.26

              	
                Authority;
                  Binding Nature of Agreements 

              	
                31

              
	
                5.27

              	
                Non-Contravention;
                  Consents 

              	
                31

              
	
                5.28

              	
                Brokers

              	
                32

              

      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                5.29

              	
                Internal
                  Accounting Controls

              	
                32

              
	
                5.30

              	
                Listing
                  and Maintenance Requirements

              	
                33

              
	
                5.31

              	
                Application
                  of Takeover Protections 

              	
                33

              
	
                5.32

              	
                No
                  SEC or NASD Inquiries 

              	
                33

              
	
                5.33

              	
                Full
                  Disclosure 

              	
                33

              
	 	 	 
	
                ARTICLE
                  VI CLOSING CONDITIONS

              	 
	 	 	 
	
                6.1

              	
                Conditions
                  to the Obligations of COESfx

              	
                33

              
	
                6.2

              	
                Conditions
                  to the Obligations of SFG 

              	
                36

              
	 	 	 
	
                ARTICLE
                  VII NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES

              	
                40

              
	
                 

              	 	 
	
                ARTICLE
                  VIII TERMINATION

              	 
	 	 	 
	
                8.1

              	
                Events
                  of Termination 

              	
                40

              
	 	 	 
	
                ARTICLE
                  IX MISCELLANEOUS

              	 
	 	 	 
	
                9.1

              	
                Severability
                  

              	
                41

              
	
                9.2

              	
                Entire
                  Agreement 

              	
                41

              
	
                9.3

              	
                Corporate
                  Affairs 

              	
                41

              
	
                9.4

              	
                Notices
                  

              	
                42

              
	
                9.5

              	
                Amendments;
                  Waivers 

              	
                42

              
	
                9.6

              	
                Successors
                  and Assigns 

              	
                43

              
	
                9.7

              	
                Governing
                  Law; Submission to Jurisdiction 

              	
                43

              
	
                9.8

              	
                Waiver
                  of Jury Trial 

              	
                43

              
	
                9.9

              	
                Subsequent
                  Documentation

              	
                43

              
	
                9.10

              	
                Counterparts
                  

              	
                43

              
	
                9.11

              	
                Interpretation
                  

              	
                43

              

      

      

      Exhibit
        A
        - Certain Definitions

      Exhibit
        B
        - Articles of Amendment to SFG Articles of Incorporation

      Exhibit
        C
        - COESfx Shareholder Transmittal Document

      Schedule
        1.3(b) - SFG

      Schedule
        1.1 - SFG Securities 

      Disclosure
        Schedule COESfx

      Disclosure
        Schedule SFG

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      AGREEMENT
        AND PLAN OF MERGER

      

      THIS
        AGREEMENT AND PLAN OF MERGER (the “Agreement”) is dated March 1, 2007, by and
        among SFG Financial Corporation, a Delaware corporation ("SFG"), COESfx
        Acquisition Corp., a New York , corporation and wholly-owned subsidiary of
        SFG
        ("Merger Subsidiary"), and COESfx Holdings, Inc., a New York corporation
        ("COESfx").

       

      RECITALS

      

      The
        Boards of Directors for COESfx, SFG and Merger Subsidiary, have approved
        the
        merger of the Merger Subsidiary with and into COESfx (the "Merger") upon
        the
        terms and subject to the conditions set forth herein.

      

      As
        a
        result of the Merger, COESfx will be a wholly-owned subsidiary of SFG, and
        the
        shareholders of COESfx will, in the aggregate, own approximately 97% of the
        outstanding shares of SFG common stock immediately following the Effective
        Time
        of the Merger (subject to adjustment in accordance with the terms of this
        Agreement).

      

      For
        federal income tax purposes, it is intended that the Merger will qualify
        as a
        reorganization within the meaning of Sections 368(a)(1)(A) and (a)(2)(D)
        of the
        Internal Revenue Code of 1986, as amended (the "Code").

      

      The
        parties desire to make certain representations, warranties, and agreements
        in
        connection with the Merger and also to prescribe various conditions to the
        Merger.

      

      Certain
        terms used in this Agreement are defined and attached in Exhibit
        "A."

      

      

      NOW
        THEREFORE, in consideration of the mutual covenants and agreements hereinafter
        set forth, the receipt and sufficiency of which are hereby acknowledged,
        the
        Parties, intending to be legally bound, agree as follows:

      

      ARTICLE
        I

      

      THE
        MERGER; CONVERSION OF SHARES

      

      1.1
        The
        Merger. Subject to the terms and conditions of this Agreement, at the Effective
        Time (as defined in Section 1.2), the Merger Subsidiary will be merged with
        and
        into COESfx in accordance with the provisions of the Business Corporation
        Law of
        the State of New York (the "BCL"), whereupon the separate corporate existence
        of
        the Merger Subsidiary will cease, and COESfx will continue as the surviving
        corporation (the "Surviving Corporation"). From and after the Effective Time,
        the Surviving Corporation will possess all the rights, privileges, powers,
        and
        franchises and be subject to all the restrictions, disabilities, and duties
        of
        COESfx and Merger Subsidiary, all as more fully described in the
        BCL.

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      1.2
        Effective Time. As soon as practicable after each of the conditions set forth
        in
        Sections 6.1 and 6.2 have been satisfied or waived, COESfx and Merger Subsidiary
        will file, or cause to be filed, with the Department of State of the State
        of
        New York, Articles of Merger for the Merger, in the form required by, and
        executed in accordance with, the applicable provisions of the BCL. The Merger
        will become effective at the time of the filing or, if agreed to by SFG and
        COESfx, such later time or date set forth in the Articles of Merger (the
        "Effective Time").

      

      1.3
        Conversion of Interests. Subject to the terms and conditions of this Agreement,
        at the Effective Time, by virtue of the Merger, and without any action of
        the
        part of COESfx and/or the Merger Subsidiary:

      

      (a)
        All
        of the (i) shares of COESfx Common Stock ("COESfx Common Stock") and (ii)
        all
        stock options, warrants, convertible debt, other convertible securities,
        or
        other rights to acquire COESfx Common Stock at an exercise or conversion,
        as
        applicable, price of less than $0.20 per share of COESfx Common Stock
        (collectively the “Non-Exempt COESfx Convertible Securities”) issued and
        outstanding immediately prior to the Effective Time (except for COESfx Common
        Stock owned by dissenting shareholders of COESfx) will be converted into
        the
        right to receive an aggregate of 356,562,688 shares common stock of SFG,
        par
        value $0.001 per share ("SFG Shares"). The SFG Shares into which shares of
        COESfx Common Stock, whether owned presently or receivable after the Closing
        upon exercise or conversion, as appropriate, of the Non-Exempt COESfx
        Convertible Securities, are converted as a result of the Merger are referred
        to
        herein as the "Merger Consideration". As a result of the Merger, each share
        of
        COESfx Common Stock will be converted into the right to receive 8.0808554
        SFG
        Shares. SFG has the authorization to issue only 100,000,000 shares of common
        stock of which 5,513,856 presently shown as owed and outstanding. Accordingly
        SFG will be required to amend its Certificate of Corporation as soon as
        practicable after the Closing, to allow the issuance of all of the Merger
        Consideration. Accordingly at the Effective Time, COESfx Shareholders shall
        be
        issued 94,486,144 SFG shares and the irrevocable right to receive an additional
        262,076,544 SFG Shares (“Irrevocable Rights”) immediately upon the filing of the
        Amended COI

      

      (b)
        All
        Non-Exempt COESfx Convertible Securities and stock options, warrants,
        convertible debt, other convertible securities or other rights to acquire
        COESfx
        Common Stock at an exercise or conversion, as applicable, price of no less
        than
        $0.20 per share (collectively, the “COES Convertible Securities”) outstanding at
        the Effective Time, whether or not vested (all of which are listed on Schedule
        1.3(b) hereto), shall remain outstanding following the Effective Time but
        shall
        be assumed by SFG. Non-Exempt COESfx Convertible Securities and COESfx
        Convertible Securities shall continue to have, and be subject to, the same
        terms
        and conditions as set forth in the documents underlying such Non-Exempt COESfx
        Convertible Securities and COESfx Convertible Securities. Non-Exempt COESfx
        Convertible Securities will be convertible into SFG Shares at the rate of
        8.0808554 SFG Shares for each share of COESfx Common Stock to which they
        would
        otherwise be entitled, which shares shall be issued from a reserve set aside
        for
        such purpose from the Merger Consideration, as described in Schedule 1.3(b).
        COESfx Convertible Securities will be exercisable or convertible, as
        appropriate, as set forth in the underlying documents and shall be an obligation
        of SFG without regard to the reserve set aside from the Merger
        Consideration.

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      (c)
        At
        the Effective time, irrevocable rights to receive 5,513,856 SFG Shares shall
        be
        issued to Concord Management Associates LLC or its designee(s) (“Concord”) as
        consideration for its contributions in conjunction with the Merger. These
        shares
        will be issued to Concord upon the filing of the Amended COI and will be
        subject
        to the Reverse Split. 

      

      (d)
        At
        the Effective Time, one hundred (100) shares of COESfx Common Stock shall
        be
        issued to SFG to result in SFG owing 100% of the issued and outstanding shares
        of COESfx.

      

      (e)
        Each
        share of Merger Subsidiary common stock, par value $0.001 per share, issued
        and
        outstanding immediately prior to the Effective Time, will be canceled as
        of the
        Effective Time.

      

      1.4
        Exchange of COESfx Stock.

      

      (a)
        At
        the Closing, COESfx will arrange for each holder of record ("COESfx
        Shareholder") of COESfx Common Stock outstanding immediately prior to the
        Effective Time to deliver to SFG appropriate evidence of such COESfx
        Shareholder's shares ("COESfx Certificates"), together with an appropriate
        assignment signed by the COESfx Shareholder, in exchange for the number of
        whole
        SFG Shares into which such COESfx Shares have been converted and the Irrevocable
        Rights as provided in Section 1.3(a), and the surrendered COESfx Certificate(s)
        will be canceled.

      

      (b)
        All
        SFG Shares issued upon the surrender and exchange of shares of COESfx Common
        Stock in accordance with the terms of this Agreement will be deemed to have
        been
        issued in full satisfaction of all rights pertaining to such COESfx Common
        Stock.

      

      (c)
        As of
        the Effective Time, the holders of shares of COESfx Common Stock will cease
        to
        have any rights as shareholders of COESfx, except for those rights, if any,
        that
        they may have pursuant to the BCL. Except as provided in Section 1.8 of this
        Agreement, until such COESfx Certificates are surrendered for exchange, each
        COESfxCertificate will, after the Effective Time, represent for all purposes
        only the right to receive certificates representing the number of whole SFG
        Shares and Irrevocable Rights into which COESfx Common Stock shall have been
        converted pursuant to the Merger as provided in Section 1.3(a).

      

      (d)
        No
        fractional SFG Shares will be issued in the Merger. Any fractional share
        otherwise required as Merger Consideration will be rounded up to the nearest
        whole share.

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (e)
        Immediately prior to the Effective Time, SFG will have no more than 5,513,856
        shares of SFG common stock outstanding. Immediately prior to the Closing,
        SFG
        will have no stocks, options, warrants, convertible debt, other convertible
        securities or other rights to acquire any equity of SFG shares outstanding
        other
        than rights granted to COESfx shareholders and Concord pursuant to this
        Agreement, rights to receive the Preferred Stock described in Section 6.2(m),
        the irrevocable rights to Concord in Section 1.3(c), rights to Concord as
        described Section 6.2(m) upon completion of the Financing and warrants issued
        to
        Concord and SFG as described in Section 6.2(n). Immediately after the Closing,
        there will be approximately 367,590,400 common shares of SFG Shares issued
        and
        outstanding (including shares to be issued under the Irrevocable Rights)
        and the
        Concord rights described in Section 1.3(c) exclusive of shares held in a
        reserve
        for issuance in connection with the exercise or conversion, as appropriate,
        of
        the COESfx Convertible Securities, the warrants issued pursuant to Section
        6.2(n) and the Preferred Stock. In addition, upon the filing of the Amend
        COI,
        additional shares will be issued to Concord pursuant to Section
        6.2(m).

      

      1.5
        Articles of Incorporation of the Surviving Corporation. The Articles of
        Incorporation of COESfx in effect immediately prior to the Effective Time
        will
        be the Articles of Incorporation of the Surviving Corporation.

      

      1.6
        Bylaws of the Surviving Corporation. The bylaws of COESfx in effect immediately
        prior to the Effective Time will be the bylaws of the Surviving Corporation,
        until such time, if any, as they are amended in accordance with applicable
        law.

      

      1.7
        Directors and Officers of the Surviving Corporation and SFG.

      

      (a)
        Directors and Officers of the Surviving Corporation. The current directors
        and
        officers of COESfx, as of the Effective Time, shall resign and the persons
        listed in Sections 6.1(i) and 6.2(q) shall be appointed as officers and
        directors of the Surviving Corporation.

      

      (b)
        Directors of SFG. At the Effective Time, the current officers and directors
        of
        the SFG shall resign and those persons listed n Sections 6.1(i) and 6.2(q)
        shall
        be appointed as officers and directors of SFG.

      

      1.8
        Dissenting Interests. As a condition to Closing, there shall be no dissenting
        COESfx Shareholders under the BCL which account for more than 5% of the issued
        and outstanding shares of COESfx immediately prior to the Effective
        Time.

      

      1.9
        Amendments to SFG’s Articles of Incorporation. As soon as practicable after the
        Effective Time, SFG shall amend its Articles of Incorporation to (i) change
        its
        name to XLFX Inc. (ii) increase its authorized capital stock from 100,000,000
        to
        400,000,000 common shares; (iii) approve a 1 for 7.351808 reverse split of
        the
        issued and outstanding SFG shares outstanding immediately after the Effective
        Time (“Reverse Split”) and (iv) authorize the issuance of preferred stock
        necessary to complete the Financing (as described in Section 6.2(m) below).
        The
        Articles of Amendment to be filed pursuant to this. Section 1.9 shall be
        substantially in the form of Exhibit B attached hereto (the “Amended
        COI”).

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      ARTICLE
        II

      CLOSING

      

      2.1
        Closing Date and Place. Subject to the satisfaction of the conditions herein
        described, the closing of the Merger (the "Closing") shall take place on
        such
        date (the “Closing Date”) as the Parties may mutually agree following the
        satisfaction (or waiver) of the conditions to Closing set forth in Article
        VI at
        the offices of ____________________________.

      

      ARTICLE
        III

      PRE-CLOSING
        OBLIGATIONS

      

      3.1
        Obligations of the Parties. The Parties shall apply for and diligently prosecute
        all applications for, and shall use commercially reasonable efforts promptly
        to
        obtain, such Consents, authorizations, and approvals from such Persons as
        shall
        be necessary to permit the consummation of the Merger, and shall use
        commercially reasonable best efforts to bring about the satisfaction as soon
        as
        practicable of all the conditions contained in Article VI and to effect the
        consummation of the Merger.

      

      3.2
        Conduct of Business Prior to Closing. From the date of this Agreement and
        until
        the Closing, except as contemplated by this Agreement, as set forth on Schedule
        3.2 or as otherwise consented to by the Parties in writing, such consent
        not to
        be unreasonably withheld, conditioned or delayed, each of SFG and COESfx
        agrees
        to:

      

      (a)
        Carry
        on its business only in the Ordinary Course of Business and use commercially
        reasonable efforts to preserve intact its present business organization,
        keep
        available the services of its executive officers and key employees and preserve
        its relationships with customers, clients, service providers and others having
        material business dealings with it;

      

      (b)
        Timely file all Tax Returns and timely withhold and pay all Taxes;

      

      (c)
        Maintain in full force and effect all Governmental Authorizations reasonably
        required for the operation of its business as presently conducted;

      

      (d)
        Comply with all obligations contained in this Agreement;

      

      (e)
        Comply in all material respects with all Legal Requirements and Governmental
        Authorizations applicable to them;

      

      (f)
        Except as contemplated herein, not amend its articles of incorporation or
        bylaws;

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      (g)
        Except as contemplated herein, not merge or consolidate with, or agree to
        merge
        or consolidate with, or purchase substantially all of the assets of, or
        otherwise acquire any business of, or enter into any joint venture or
        partnership with, any Person;

      

      (h)
        Not
        take any action or omit to take any action that would result in a Breach
        of any
        of the representations warranties and/or covenants set forth in this Agreement
        at, or prior to, the Closing; 

      

      (i)
        Except as contemplated on Schedule 3.2(i), not issue, reissue, sell, deliver,
        pledge, authorize, or propose the issuance, reissuance, sale, delivery or
        pledge
        of shares of capital stock of any class, or securities convertible into capital
        stock of any class, or any rights, warrants or options to acquire any
        convertible securities or capital stock;

      

      (j)
        Except as contemplated hereby, not adjust, split, combine, subdivide, reclassify
        or redeem, purchase or otherwise acquire, or propose to redeem or purchase
        or
        otherwise acquire, any shares of its capital stock, or any of its other
        securities; 

      

      (k)
        Not
        declare, set aside or pay any dividend or other distribution (whether in
        cash,
        stock or property or any combination thereof) in respect of its capital stock,
        redeem or otherwise acquire any shares of its capital stock or other securities,
        or alter any term of any of its outstanding securities;

      

      (l)
        Except as required under any employment agreement, not increase in any manner
        the compensation of any of its directors, officers, or other employees; (ii)
        not
        pay, or agree to pay, any pension, retirement allowance or other employee
        benefit not required or permitted by any existing plan, agreement or arrangement
        to any such director, officer or employee, whether past or present; or (iii)
        not
        commit itself to any additional pension, profit-sharing, bonus, incentive,
        deferred compensation, stock purchase, stock option, stock appreciation right,
        group insurance, severance pay, retirement or other employee benefit plan,
        agreement or arrangement, or to any employment agreement or consulting agreement
        (arising out of prior employment ) with or for the benefit of any person,
        or,
        except to the extent required to comply with applicable law, amend any of
        such
        plans or any of such agreements in existence on the date of this Agreement;
        

      

      (m)
        Not
        terminate, enter into or amend in any material respect any contract, agreement,
        lease, license or commitment, or take any action, or omit to take any action
        that will cause a breach, violation or default (however defined) under any
        contract, except in the ordinary course of business and consistent with past
        practice;

      

      (n)
        Not
        permit any of its current insurance (or reinsurance) policies to be cancelled
        or
        terminated or any of the coverage thereunder to lapse, unless simultaneously
        with such termination, cancellation or lapse, replacement policies providing
        coverage equal to or greater than coverage remaining under those cancelled,
        terminated or lapsed policies are in full force and effect;

      

      
        
          
          

        

        
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      (o)
        Not
        enter into other material agreements, commitments or contracts not in the
        ordinary course of business;

      

      (p)
        Not
        maintain its books of account and records in other than its usual, regular
        and
        ordinary manner, consistent with its past practice; and 

      

      (q)
        Promptly advise the other Party, in writing, of any fact, condition, occurrence
        or change known to the Party that reasonably could be expected to have,
        individually or in the aggregate, a Material Adverse Effect on such Party,
        as
        the case may be, or cause a Breach of this Article III or require an amendment
        to a Party’s Disclosure Schedule.

      

      3.3
        Access; Cooperation. Each Party shall provide the other Party and its
        Representatives the right, upon reasonable notice and during normal business
        hours, permission to enter into its offices to inspect its records and business
        operations and to consult with its management, executives and legal and
        accounting advisors and, subject to mutually agreed upon timing and procedures,
        to consult with any personnel that report to any of the management or executives
        of such Party to complete the other Party's due diligence investigation.
        Each
        Party shall cooperate with the other Party and its Representatives and,
        generally, do all other acts and things in good faith as may be reasonable
        to
        timely effectuate the purposes of this Agreement and the consummation of
        the
        transactions contemplated herein.

      

      3.4
        Notice Regarding Dissenters’ Rights Actions. COESfx shall give SFG prompt notice
        of any written shareholder demand received by it prior to the Closing Date,
        under which COESfx will be required to purchase shares of capital stock pursuant
        to the dissenting rights provisions of the BCL.

      

      3.5
        No
        Negotiations. (a)
        During the period after execution of this Agreement and prior to the Closing,
        SFG agrees the neither it nor any of its Affiliates (collectively “SFG
        Affiliates”) shall engage in any negotiations with any Entity other than COESfx
        regarding a Prohibited Transaction and SFG shall not permit any SFG Affiliate
        to:

       

      (i)
        directly or indirectly solicit, respond to, or accept any inquiries or offers
        from, or engage in communications, negotiations or discussions with any Person
        other than COESfx and its professional advisers with respect to any Prohibited
        Transaction;

      

      (ii)
        enter into any agreement (whether or not legally binding) with any Person
        other
        than COESfx with respect to a Prohibited Transaction;

      

      (iii)
        allow any Person (other than COESfx and its professional advisers) known
        or
        believed by SFG to be considering or evaluating a Prohibited Transaction
        to have
        access to any information relating to SFG or to any information relating
        to SFG
        or to any SFG or any SFG’s properties.

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (b)
        For
        purposes of this section the term “Prohibited Transaction” means any of the
        following transactions: (A) a sale, transfer or other disposition of any
        unissued and/or outstanding equity interests of the SFG; (B) a sale, transfer
        or
        other disposition of all or a material part of the assets of the SFG; and/or
        (C)
        the issue or grant of any equity interests or securities, or options with
        respect to any equity interests or securities, in SFG (issued or unissued)
        and/or (D) a merger, reorganization, and/or similar transaction.

      

      (c)
        In
        addition to seeking all other legal rights, remedies and monetary damages
        with
        respect to COESfx’s rights pursuant to this Section 3.5, COESfx shall be
        entitled to seek injunctive relief in the event of a breach and/or anticipatory
        breach by SFG and/or any SFG Affiliates of this Section, without the posting
        of
        any bond or indemnity.

      

      3.6
        Best
        Efforts to Obtain Shareholder Approval. Each party shall promptly upon execution
        of this Merger Agreement use its best efforts, to the extent required by
        this
        Agreement, to prepare all documents and prepare all filings necessary to
        obtain
        the approval of its respective shareholders of the transactions contemplated
        by
        this Agreement and the approval of the Amended COI. SFG shall promptly prepare
        and file with the United States Securities and Exchange Commission (“SEC”) a
        preliminary proxy statement with respect to seeking approval of the shareholders
        of SFG of this Merger Agreement and the Amended COI. Each party will as soon
        as
        possible hold a shareholders’ meeting of its respective shareholders to approve
        the transactions and other requirements of each party contemplated by this
        Agreement.

      

      3.7
        Disclosure of Certain Matters. Each party shall promptly advise the other
        party
        orally and in writing if there exists a material breach of any representation
        warranty or covenant contained herein or if there occurs any change or event
        which results in the executive officers of such party having a good faith
        belief
        that such change or event has resulted in, or is reasonably likely to result
        in,
        a material breach of a representation warranty or covenant contained herein.
        

      

      

      ARTICLE
        IV

      REPRESENTATIONS
        AND WARRANTIES OF COESFX

      

      Subject
        to the exceptions set forth in the Disclosure Schedule of COESfx, attached
        as
        Schedule IV, COESfx represents and warrants to SFG as follows:

      

      4.1
        Due
        Organization. COESfx and each of its Subsidiaries are duly organized, validly
        existing, and in good standing under the laws of the State of New York. Neither
        COESfx nor its Subsidiaries are required to be qualified, authorized,
        registered, or licensed to do business as a foreign corporation in any
        jurisdiction other than the jurisdictions in which it is so licensed, qualified,
        or registered, or where the failure to be so licensed, qualified or registered
        would not have a Material Adverse Effect on its business and operations.
        

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      4.2
        Books
        and Records. The books and records of COESfx delivered to SFG prior to the
        Closing fully and fairly reflect the transactions to which COESfx is a party
        or
        by which its assets are bound.

      

      4.3
        Capitalization. The authorized capital stock of COESfx consists of (i)
        100,000,000 shares of common stock, $0.001 par value, of which 43,478,874
        shares
        are issued and outstanding, and (ii) 5,071,816 shares to be issued upon the
        exercise of outstanding warrants and options. No shares of COESfx preferred
        stock have been issued. All of the issued and outstanding shares of COESfx
        capital stock are duly authorized, validly issued, fully paid, non-assessable
        and free of preemptive rights. At the Effective Time, all of the issued and
        outstanding shares of COESfx Common Stock will be converted into the right
        to
        receive SFG Shares issued or issuable as part of the Merger Consideration.
        There
        are no voting trusts or any other agreements or understandings with respect
        to
        the voting of COESfx's capital stock except as contemplated in this
        Agreement.

      

      4.4
        Financial Statements.

      

      (a)
        COESfx has provided SFG with a copy of the audited balance sheets of COESfx
        as
        of December 31, 2005, 2004 and 2003, and the related statements of operations,
        stockholders' deficiency, and cash flows for the three years then ended,
        together with the report thereon (except with respect to its continuation
        as a
        going concern) of certified public accountant ("CPA"), independent auditors
        (collectively, "COESfx's Audited Financials").

      

      (b)
        Prior
        to the closing, COESfx will provide to SFG unaudited balance sheets of COESfx
        as
        of December 31, 2006, and the related unaudited statement of operations,
        stockholders' deficiency and cash flows for the twelve months then ended,
        ("COESfx's Unaudited Financials").

      

      (c)
        COESfx's Audited Financials, and COESfx's Unaudited Financials, (collectively
        "COESfx's Financial Statements") are (i) in accordance with the books and
        records of COESfx, (ii) correct and complete in all material respects, (iii)
        fairly present the financial position and results of operations of COESfx
        as of
        the dates indicated, and (iv) prepared in accordance with U.S. Generally
        Accepted Accounting Principles (“GAAP”) (except that (x) unaudited financial
        statements may not be in accordance with GAAP because of the absence of
        footnotes normally contained therein, and (y) COESfx Uunaudited Financial
        Statements are subject to normal year-end audit adjustments that in the
        aggregate will not have a Material Adverse Effect on COESfx, its business,
        financial condition, or the results of operations).

      

      4.5
        Absence of Changes. Except (i) as set forth in Part 4.5 of the Disclosure
        Schedule, since December 31, 2006; and (ii) in furtherance of the
        Merger:

      

      (a)
        There
        has not been any adverse change to COESfx, and no event has occurred that
        would
        reasonably be expected to have a Material Adverse Effect on
        COESfx;

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      (b)
        There
        has not been any loss, damage, or destruction to, or any interruption in
        the use
        of, any of the assets of COESfx (whether or not covered by insurance) that
        would
        be expected to have a Material Adverse Effect on COESfx;

      

      (c)
        COESfx has not purchased or otherwise acquired any asset from any other Person,
        except for Contracts entered into, and assets acquired, by COESfx in the
        Ordinary Course of Business;

      

      (e)
        COESfx has made no capital expenditures outside of the Ordinary Course of
        Business; 

      

      (f)
        COESfx has not sold or otherwise transferred, or leased or licensed, any
        asset
        to any other Person except in the Ordinary Course of Business;

      

      (g)
        COESfx has not written off as uncollectible, or established any extraordinary
        reserve with respect to, any account receivable or other
        indebtedness;

      

      (h)
        COESfx has not made any loan or advance to any other Person;

      

      (i)
        COESfx has not (i) established or adopted any Employee Benefit Plan, or (ii)
        paid any bonus or made any profit-sharing or similar payment to, or increased
        the amount of the wages, salary, commissions, fees, fringe benefits or other
        compensation or remuneration payable to, any of its directors, officers,
        members, employees, or independent contractors;

      

      (j)
        No
        Contract by which COESfx (or any of the assets owned or used by COESfx) is
        or
        was bound, or under which COESfx has or had any rights or interests, has
        been
        amended or terminated;

      

      (k)
        COESfx has not incurred, assumed, or otherwise become subject to any Liability,
        other than accounts payable incurred by COESfx in bona fide transactions
        entered
        into in the Ordinary Course of Business;

      

      (l)
        COESfx has not discharged any Encumbrance or discharged or paid any indebtedness
        or other Liability, except for accounts payable paid in bona fide transactions
        in the Ordinary Course of Business;

      

      (m)
        COESfx has not forgiven any debt or otherwise released or waived any right
        or
        claim;

      

      (n)
        COESfx has not changed any of its methods of accounting or accounting practices
        in any respect;

      

      (o)
        COESfx has not entered into any transaction or taken any other action outside
        the Ordinary Course of Business; and

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      (p)
        COESfx has not agreed, committed, or offered (in writing or otherwise) to
        take
        any of the actions referred to in the clauses above.

      

      4.6
        Title
        to Assets. COESfx owns, and has good and valid title to, all assets it purports
        to own, including all assets reflected on COESfx Unaudited Financials; all
        assets acquired by COESfx since December 31, 2006; all rights of COESfx under
        the COESfx Contracts; and all other assets reflected in the books and records
        of
        COESfx as being owned by COESfx. Except as set forth in Part 4.6 of the
        Disclosure Schedule, all of its assets are owned by COESfx free and clear
        of any
        Encumbrances.

      

      4.7
        Receivables. COESfx’s Unaudited Financials provide an accurate summary of all
        accounts receivable, notes receivable, and other receivables of COESfx as
        of
        December 31, 2006. All existing COESfx accounts receivable represent valid
        obligations of COESfx customers arising from bona fide transactions entered
        into
        in the Ordinary Course of Business. 

      

      4.8
        Equipment. Part 4.8 of the Disclosure Schedule accurately identifies all
        material equipment, materials, prototypes, tools, supplies, vehicles, furniture,
        fixtures, improvements, and other tangible assets owned by COESfx. Part 4.8
        of
        the Disclosure Schedule also accurately identifies all material tangible
        assets
        leased to COESfx. Each asset identified or required to be identified in Part
        4.8
        of the Disclosure Schedule is adequate and appropriate for the uses to which
        it
        is being put. The assets identified in Part 4.8 of the Disclosure Schedule
        are
        adequate for the conduct of the business of COESfx in the manner in which
        such
        business is currently being conducted.

      

      4.9
        Real
        Property. COESfx owns no real property or any interest in real property,
        except
        for the leaseholds created under the real property leases identified in Part
        4.9
        of the Disclosure Schedule.

      

      4.10
        Proprietary Assets.

      

      (a)
        Part
        4.10(a) of the Disclosure Schedule sets forth each Proprietary Asset owned
        by
        COESfx, including, but not limited to, any Proprietary Asset registered with
        any
        Governmental Body or for which an application has been filed with any
        Governmental Body.

      

      (b)
        COESfx’s use of any Proprietary Asset in the Ordinary Course of Business does
        not materially violate, conflict with, or infringe on the rights of any other
        Person in a manner that would have a Material Adverse Effect on its business
        operations or this Agreement.

      

      (c)
        COESfx is the owner of all right, title and interest, or has otherwise obtained
        sufficient rights, in and to each of its Proprietary Assets necessary for
        COESfx
        to use such Proprietary Assets in the Ordinary Course of Business, free and
        clear of Encumbrances and other adverse claims.

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      (d)
        To
        the knowledge of COESfx, no COESfx employee has entered into any Contract
        that
        restricts or limits in any way the scope or type of work in which the employee
        may be engaged, or requires the employee to transfer, assign, or disclose
        information concerning his work to anyone other than COESfx. 

      

      4.11
        Contracts.

      

      (a)
        Part
        4.11 of the Disclosure Schedule identifies each COESfx Contract, except for
        any
        COESfx Immaterial Contract (the "COESfx Contracts"). COESfx has delivered
        or
        made available to SFG accurate and complete copies of all COESfx Contracts
        identified in Part 4.11 of the Disclosure Schedule, including all material
        contract amendments. Each COESfx Contract is valid and in full force and
        effect.

      

      (b)
        Except as set forth in Part 4.11 of the Disclosure Schedule: (i) to the best
        knowledge of COESfx, no Person has violated or breached, or declared or
        committed any default under, any COESfx Contract; (ii) to the best knowledge
        of
        COESfx, no event has occurred, and no circumstance or condition exists, that
        might (with or without notice or lapse of time) (A) result in a violation
        or
        breach of any of the provisions of any COESfx Contract, (B) give any Person
        the
        right to declare a default or exercise any remedy under any COESfx Contract,
        (C)
        give any Person the right to accelerate the maturity or performance of any
        COESfx Contract, or (D) give any Person the right to cancel, terminate, or
        modify any COESfx Contract; (iii) COESfx has not received any notice or other
        communication (in writing or otherwise) regarding any actual, alleged, possible,
        or potential violation or breach of, or default under, any COESfx Contract;
        and
        (iv) COESfx has not waived any right under any COESfx Contract.

      

      (c)
        The
        performance of COESfx Contracts will not result in any violation of or failure
        to comply with any Legal Requirement.

      

      (d)
        COESfx Contracts identified in Part 4.11 of the Disclosure Schedule (together
        with COESfx Immaterial Contracts) collectively constitute all of the Contracts
        necessary to enable COESfx to conduct its business in the manner that it
        currently conducts its business.

      

      4.12
        Liabilities

      

      (a)
        Except as may be set forth in Part 4.12 of the Disclosure Schedule, COESfx
        has
        no Liabilities, except for (i) liabilities identified as such in the COESfx
        Unaudited Financials; (ii) accounts payable incurred by COESfx in bona fide
        transactions entered into in the Ordinary Course of Business since December
        31,
        2006; and (iii) obligations under the Contracts listed in Part 4.11 of the
        Disclosure Schedule, to the extent that the existence of such obligations
        is
        ascertainable solely by reference to the COESfx Contracts.

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      (b)
        Part
        4.12 of the Disclosure Schedule (i) provides an accurate and complete breakdown
        and aging of COESfx accounts payable as of December 31, 2006 and (ii) provides
        an accurate and complete breakdown of all notes payable, and other indebtedness
        of COESfx, as of the date of this Agreement.

      

      (c)
        Except as set forth in Part 4.12 of the Disclosure Schedule, COESfx has not,
        at
        any time, (i) made a general assignment for the benefit of creditors, (ii)
        filed, or had filed against it, any bankruptcy petition or similar filing,
        (iii)
        suffered the attachment or other judicial seizure of all or a substantial
        portion of its assets, (iv) admitted in writing its inability to pay its
        debts
        as they become due, (v) been convicted of, or pleaded guilty or no contest
        to,
        any felony, or (vi) taken or been the subject of any action that may have
        an
        adverse effect on its ability to comply with or perform any of its covenants
        or
        obligations contemplated under this Agreement.

      

      4.13
        Compliance with Legal Requirements. Except as set forth in Part 4.13 of the
        Disclosure Schedule: (a) COESfx is in material compliance with each Legal
        Requirement that is applicable to it or to the conduct of its business or
        the
        ownership or use of any of its assets; (b) to the best of its knowledge,
        COESfx
        has at all times been in material compliance with each Legal Requirement
        that is
        or was applicable to it, or to the conduct of its business, or the ownership
        or
        use of any of its assets; (c) no event has occurred, and no condition or
        circumstance exists, that might (with or without notice or lapse of time)
        constitute or result directly or indirectly in a material violation by COESfx
        of, or a failure on the part of COESfx to comply with, any Legal Requirement;
        and (d) COESfx has not received, at any time, any notice or other communication
        (in writing or otherwise) from any Governmental Body or any other Person
        regarding (i) any actual, alleged, possible, or potential violation of, or
        failure to comply with, any Legal Requirement, or (ii) any actual, alleged,
        possible, or potential obligation on the part of COESfx to undertake, or
        to bear
        all or any portion of the cost of, any cleanup or any remedial, corrective
        or
        response action of any nature.

      

      4.14
        Government Authorizations. Part 4.14 of the Disclosure Schedule identifies:
        (i)
        each material Governmental Authorization that is held by COESfx; and (ii)
        each
        other material Governmental Authorization that, to the knowledge of COESfx,
        is
        held by any employee of COESfx and relates to, or is useful in connection
        with,
        COESfx's business. Each material Governmental Authorization identified or
        required to be identified in Part 4.14 of the Disclosure Schedule is valid
        and
        in full force and effect.

      

      (a)
        Except as set forth in Part 4.14 of the Disclosure Schedule: (i) COESfx is,
        and
        has at all times been, in material compliance with all of the terms and
        requirements of each material Governmental Authorization identified or required
        to be identified in Part 4.14 of the Disclosure Schedule; (ii) no event has
        occurred, and no condition or circumstance exists, that would reasonably
        be
        expected to (with or without notice or lapse of time) (A) constitute or result
        directly or indirectly in a material violation any material Governmental
        Authorization identified, or required to be identified, in Part 4.14 of the
        Disclosure Schedule, or (B) result directly or indirectly in the revocation,
        withdrawal, suspension, cancellation, termination, or modification of any
        material Governmental Authorization identified, or required to be identified,
        in
        Part 4.14 of the Disclosure Schedule; (iii) COESfx has never received any
        notice
        or other communication (in writing or otherwise) from any Governmental Body
        or
        any other Person regarding (A) any actual, alleged, possible, or potential
        violation of, or failure to comply with, any term or requirement of any material
        Governmental Authorization, or (B) any actual, proposed, possible, or potential
        revocation, withdrawal, suspension, cancellation, termination, or modification
        of any material Governmental Authorization.

       

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      (b)
        The
        Governmental Authorizations identified in Part 4.14 of the Disclosure Schedule
        constitute all of the material Governmental Authorizations necessary (i)
        to
        enable COESfx to conduct its business in the manner in which it currently
        conducts such business, and (ii) to permit COESfx to own and use its assets
        in
        the manner in which they are currently owned and used.

      

      4.15
        Tax
        Matters.

      

      (a)
        Each
        Tax Return required to be filed by COESfx has been duly filed with the
        appropriate Governmental Body. To the best knowledge of COESfx, each Tax
        that
        COESfx was required to have paid, or that was claimed by any Governmental
        Body
        to be payable by COESfx, has been duly paid in full. Any Tax required to
        have
        been withheld or collected by COESfx has been duly withheld and collected;
        and
        (to the extent required) each such Tax has been paid to the appropriate
        Governmental Body.

       

      (b)
        There
        has been no examination or audit of any Tax Return of COESfx that has been
        conducted since December 31, 1999.

      

      (c)
        No
        claim or other Proceeding is pending or has been threatened against COESfx
        in
        respect to any Tax. There are no unsatisfied Liabilities for Taxes (including
        liabilities for interest, additions to tax, and penalties thereon, or related
        expenses) with respect to any notice of deficiency or similar document received
        by COESfx.

      

      4.16
        Employee and Labor Matters.

      

      (a)
        Part
        4.16 of the Disclosure Schedule sets forth the employees of COESfx.

      

      (b)
        Except as set forth in Part 4.16 of the Disclosure Schedule, COESfx is not
        a
        party to or bound by, and has never been a party to or bound by, any employment
        contract or any union contract, collective bargaining agreement, or similar
        Contract.

      

      (c)
        Except as set forth in Part 4.16 of the Disclosure Schedule, the employment
        of
        the employees of COESfx is terminable by COESfx at will and no employee is
        entitled to severance pay or other benefits following termination or
        resignation, except as otherwise provided by law. 

      

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      (d)
        Except as provided for in Sec. 6.2(j), to the knowledge of COESfx (i) no
        employee of COESfx intends to terminate his employment (including, by reason
        of
        the consummation of the transactions contemplated herein, SFG's assumption
        of
        the employment arrangements COESfx holds with its employees prior to Closing
        in
        connection with SFG's assumption of COESfx's Contract obligation and rights);
        and (ii) no employee of COESfx is a party to, or is bound by, any
        confidentiality agreement, noncompetition agreement, or other Contract (with
        any
        Person) that may have an adverse effect on the employee's performance of
        any of
        his duties or responsibilities as an employee of the Surviving Corporation
        upon
        and after the consummation of the transactions contemplated in this
        Agreement.

      

      4.17
        Benefit Plans; ERISA.

      

      (a)
        Part
        4.17 of the Disclosure Schedule identifies each of COESfx's Employee Benefit
        Plans. Except as set forth in Part 4.17 of the Disclosure Schedule, COESfx
        has
        never established, adopted, maintained, sponsored, contributed to, participated
        in, or incurred any Liability with respect to any Employee Benefit Plan.
        COESfx
        has never provided or made available any fringe benefit, or other benefit
        of any
        nature, to any of its employees. Each contribution or other payment that
        is
        required to have been accrued or made under or with respect to any Employee
        Benefit Plan has been duly accrued and made on a timely basis.

      

      (b)
        No
        Employee Benefit Plan (i) provides or provided any benefit guaranteed by
        the
        Pension Benefit Guaranty Corporation; (ii) is or was a "multiemployer plan"
        as
        defined in Section 4001(a)(3) of ERISA; or (iii) is or was subject to the
        minimum funding standards of Section 412 of the Code or Section 302 of ERISA.
        There is no Person that (by reason of common control or otherwise) is, or
        has at
        any time been, treated together with COESfx as a single employer within the
        meaning of Section 414 of the Code.

      

      4.18
        Environmental Matters.

      

      (a)
        COESfx is not liable, or to the best knowledge of COESfx, potentially liable,
        for any response cost or natural resource damages under Section 107(a) of
        CERCLA, or under any of the other so-called "superfund" or "super lien" laws
        or
        similar Legal Requirements, at or with respect to any site.

      

      (b)
        COESfx has never received any notice or other communication (in writing or
        otherwise) from any Governmental Body or other Person regarding any actual,
        alleged, possible, or potential Liability arising from, or relating to, the
        presence, generation, manufacture, production, transportation, importation,
        use,
        treatment, refinement, processing, handling, storage, discharge, release,
        emission, or disposal of any Hazardous Material. No Person has ever commenced,
        or to the best knowledge of COESfx threatened to commence, any contribution
        action or other Proceeding against COESfx in connection with any such actual,
        alleged, possible, or potential Liability; and no event has occurred, and
        to the
        best knowledge of COESfx, no condition or circumstance exists, that may directly
        or indirectly give rise to, or result in COESfx

      becoming
        subject to, any such Liability.

      

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      (c)
        Except as set forth in Part 4.18 of the Disclosure Schedule, COESfx has never
        generated, manufactured, produced, transported, imported, used, treated,
        refined, processed, handled, stored, discharged, released, or disposed of
        any
        Hazardous Material (whether lawfully or unlawfully). Except as set forth
        in Part
        4.18 of the Disclosure Schedule, COESfx has never permitted (knowingly or
        otherwise) any Hazardous Material to be generated, manufactured, produced,
        used,
        treated, refined, processed, handled, stored, discharged, released, or disposed
        of (whether lawfully or unlawfully) (i) on or beneath the surface of any
        real
        property that is, or that has at any time been, owned by, leased to, controlled
        by or used by COESfx, (ii) in or into any surface water, groundwater, soil
        or
        air associated with or adjacent to any such real property; or (iii) in or
        into
        any well, pit, pond, lagoon, impoundment, ditch, landfill, building, structure,
        facility, improvement, installation, equipment, pipe, pipeline, vehicle,
        or
        storage container that is or was located on or beneath the surface of any
        such
        real property, or that is or has at any time been owned by, leased to,
        controlled by, or used by COESfx.

      

      4.19
        Insurance.

      

      (a)
        Part
        4.19 of the Disclosure Schedule accurately sets forth, with respect to each
        insurance policy maintained by or at the expense of, or for the direct or
        indirect benefit of, COESfx, the name of the insurance carrier that issued
        the
        policy and the policy number. Each of the policies identified in Part 4.19
        of
        the Disclosure Schedule is valid, enforceable, and in full force and effect.
        

      

      (b)
        To
        the knowledge of COESfx, no event has occurred, and no condition or circumstance
        exists, that might (with or without notice or lapse of time) directly or
        indirectly give rise, to or serve as a basis for, any insurance claim. COESfx
        has not received: (i) any notice or other communication (in writing or
        otherwise) regarding the actual or possible cancellation or invalidation
        of any
        of the policies identified in Part 4.19 of the Disclosure Schedule or regarding
        any actual or possible adjustment in the amount of the premiums payable with
        respect to any of said policies; (ii) any notice or other communication (in
        writing or otherwise) regarding any actual or possible refusal of coverage
        under, or any actual or possible rejection of any claim under, any of the
        policies identified in Part 4.19 of the Disclosure Schedule; or (iii) any
        indication that the issuer of any of the policies identified in Part 4.19
        of the
        Disclosure Schedule may be unwilling or unable to perform any of its obligations
        there under.

      

      4.20
        Related Party Transactions. Except as set forth in Part 4.20 of the Disclosure
        Schedule (a) no Related Party has any direct or indirect interest of any
        nature
        in any of the assets of COESfx; (b) no Related Party is, or has been at any
        time
        since December 31, 2002, indebted to COESfx; (c) since December 31, 2002,
        no
        Related Party has entered into, or has had any direct or indirect financial
        interest in, any COESfx Contract, transaction, or business dealing of any
        nature
        involving COESfx; (d) no Related Party is competing, or has at any time since
        December 31, 2002, competed, directly or indirectly, with COESfx.

      

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      4.21
        Certain Payments, Etc. Neither COESfx nor any officer, employee, agent or
        other
        Person associated with or acting for or on behalf of COESfx has, at any time,
        directly or indirectly: (a) used any entity funds (i) to make any unlawful
        political contribution or gift, or for any other unlawful purpose related
        to any
        political activity, (ii) to make any unlawful payment to any governmental
        official or employee, or (iii) to establish or maintain any unlawful or
        unrecorded fund or account of any nature; (b) made any false or fictitious
        entry, or failed to make any entry that should have been made, in any of
        the
        books of account or other COESfx records; (c) made any payoff, influence
        payment, bribe, rebate, kickback, or unlawful payment to any Person; (d)
        performed any favor or given any gift that was not deductible for federal
        income
        tax purposes; (e) made any payment (whether or not lawful) to any Person,
        or
        provided (whether lawfully or unlawfully) any favor or anything of value
        (whether in the form of property or services, or in any other form) to any
        Person, for the purpose of obtaining or paying for (i) favorable treatment
        in
        securing business, or (ii) any other special concession; or (f) agreed,
        committed, or offered (in writing or otherwise) to take any of the actions
        described in clauses "(a)" through "(e)" above.

      

      4.22
        Proceedings; Orders. Except as set forth in Part 4.22 of the Disclosure
        Schedule, to the knowledge of COESfx, there is no pending Proceeding, and
        no
        Person has threatened in writing to commence any Proceeding: (i) that involves
        COESfx or that otherwise relates to or might affect the business of COESfx
        or
        any assets of COESfx material to its business operations (whether or not
        COESfx
        is named as a party thereto); or (ii) that challenges, or that may have the
        effect of preventing, delaying, making illegal, or otherwise interfering
        with
        any of the transactions contemplated hereby. Except as set forth in Part
        4.22 of
        the Disclosure Schedule, no event has occurred, and no claim, dispute, or
        other
        condition or circumstance exists, that might directly or indirectly give
        rise
        to, or serve as a basis for, the commencement of any such Proceeding. There
        is
        no Order to which COESfx is subject; and no Related Party is subject to any
        Order that relates to COESfx’s business. To the knowledge of COESfx, no COESfx
        employee is subject to any Order that may prohibit that employee from engaging
        in, or continuing, any conduct, activity, or practice relating to the business
        of COESfx.

      

      4.23
        Authority; Binding Nature of Agreements. Subject to the approval of the COESfx
        Shareholders under the BCL, COESfx has the right, power, and authority to
        enter
        into and to perform its obligations under this Agreement, to which it is
        or may
        become a party; and the execution, delivery, and performance of this Agreement
        by COESfx have been duly authorized by all necessary action on the part of
        COESfx. Subject to the approval of COESfx Shareholders, this Agreement
        constitutes the legal, valid, and binding obligation of COESfx, enforceable
        against COESfx in accordance with its terms.

      

      4.24
        Non-Contravention; Consents. Neither the execution, nor the delivery of this
        Agreement, nor the consummation or performance of the Merger, will directly
        or
        indirectly (with or without notice or lapse of time): 

      

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      (a)
        contravene, conflict with, or result in a violation of, or give any Governmental
        Body or other Person the right to challenge the Merger or to exercise any
        remedy
        or obtain any relief under any Legal Requirement or any Order to which COESfx
        is
        subject;

      

      (b)
        contravene, conflict with or result in a violation of any of the terms or
        requirements of any Governmental Authorization, or give any Governmental
        Body
        the right to revoke, withdraw, suspend, cancel, terminate or modify, any
        Governmental Authorization;

      

      (c)
        contravene, conflict with, or result in a violation or breach of, or result
        in a
        default under, any provision of any Contract; or 

      

      (d)
        give
        any Person the right to (i) declare a default or exercise any remedy under
        any
        COESfx Contract, (ii) accelerate the maturity or performance of any COESfx
        Contract, or (iii) cancel, terminate, or modify any COESfx
        Contract.

      

      COESfx
        is
        not required to make any filing with, or give any notice to, or to obtain
        any
        Consent from any Person, other than its board of directors and shareholders,
        in
        connection with the execution and delivery of this Agreement or the consummation
        or performance of the Merger.

      

      4.25
        Brokers. COESfx has not agreed to pay, nor has it taken any action that might
        result in any Person claiming to be entitled to receive, any brokerage
        commission, finder's fee, or similar commission or fee in connection with
        the
        Merger.

      

      4.26
        Full
        Disclosure. To the knowledge of COESfx, the representations and warranties
        contained in this Article IV do not contain any untrue statement of a material
        fact or omit to state any material fact necessary to make the statements
        and the
        information contained in this Article IV is not misleading, except to the
        extent
        such omission would not reasonably be expected to result in a Material Adverse
        Effect.

      

      4.27
        Restricted Securities. COESfx understands that the SFG Shares received as
        the
        Merger Consideration will constitute "restricted securities" under the federal
        securities laws inasmuch as they are being acquired from SFG in a transaction
        not involving a public offering and, under such laws and applicable regulations,
        may not be resold without registration under, or the availability of an
        exemption from, the registration requirements of the Securities Act of 1933
        and
        similar state securities laws. As a condition to the receipt of SFG Shares
        in
        the Merger, each COESfx Shareholder shall represent that it is familiar with
        SEC
        Rule 144, as presently in effect, and each COESfx Shareholder understands
        the
        resale limitations and the Securities Act of 1933 pursuant to the form of
        Exhibit C attached hereto.

      

      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      ARTICLE
        V

      REPRESENTATIONS
        AND WARRANTIES OF SFG

      

      Subject
        to the exceptions set forth in SFG's Disclosure Schedule, as attached hereto
        as
        Schedule V, SFG represents and warrants to COESfx as follows:

      

      5.1
        Due
        Organization; Subsidiaries, Etc. SFG is a corporation duly organized, validly
        existing, and in good standing under the laws of the State of Delaware and
        SFG
        does not have any subsidiaries and does not own beneficially or otherwise,
        any
        shares or other securities of, or any direct or indirect interest of any
        nature,
        in any other Entity with the exception of the Merger Subsidiary which will
        be
        duly organized, validly existing, and in good standing under the laws of
        the
        State of New York as of the Closing Date. Except for any requirements arising
        as
        a result of the closing of the Merger, neither SFG, nor the Merger Subsidiary
        is
        required to be qualified, authorized, registered, or licensed to do business
        as
        a foreign corporation in any jurisdiction other than the jurisdictions in
        which
        they are so licensed, qualified or registered, or where the failure to be
        so
        licensed, qualified or registered would not have a Material Adverse Effect
        on
        SFG.

      

      5.2
        Books
        and Records. The books and records of SFG and the Merger Subsidiary delivered
        to
        COESfx prior to the Closing fully and fairly reflect the transactions to
        which
        SFG and the Merger Subsidiary is a party or by which they or their assets
        are
        bound.

      

      5.3
        Capitalization. SFG's authorized capital stock consists of 100,000,000 shares
        of
        common stock, of which 5,513.856 shares are issued and outstanding. As soon
        as
        practicable after the Closing, SFG shall amend its Articles of Incorporation
        by
        the filing of the Amended COI subject to compliance with all applicable Legal
        Requirements. Immediately prior to the Effective Time, SFG will have no more
        than 5,513,856 shares of SFG common stock outstanding. Immediately prior
        to the
        Closing, SFG will have no stocks, options, warrants, convertible debt, other
        convertible securities or other rights to acquire any equity of SFG outstanding,
        other than rights granted to COESfx shareholders pursuant to this Agreement,
        rights to receive the Preferred Stock described in Section 6.2(m), the
        irrevocable rights issued to Concord as described in Section 1.3(c), rights
        to
        Concord as described in Section 6.2(m) upon completion of the Financing and
        warrants issued to Concord and SFG as described in Section 6.2(n). Immediately
        after the Closing, there will be approximately 367,590,400 common shares
        of SFG
        issued and outstanding (including shares to be issued under the Irrevocable
        Rights, SFG Shares held in reserve for the exercise of Non-Exempt COES
        Convertible Securities and the Concord irrevocable rights described in Section
        1.3(c), exclusive of shares issuable in connection with the exercise or
        conversion, as appropriate, of the COES Convertible Securities, the warrants
        issued pursuant to Section 6.2(n), the Ppreferred Stock and SFG Shares issuable
        to Concord pursuant to Section 6.2(m).

      

      (b)
        All
        issued and outstanding shares of SFG capital stock are duly authorized, validly
        issued, fully paid, non-assessable, and free of preemptive rights. When issued
        in the Merger, the SFG Shares will be duly authorized, validly issued, fully
        paid, non-assessable, and free of preemptive rights.

      

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      (c)
        Except for SFG Shares to be issued upon the Merger and SFG Shares to be issued
        on the filing of the Amended COI to COESfx shareholders, SFG Shares to be
        issued
        upon the exercise of the COESfx Convertible Securities, shares of preferred
        stock and common stock to be issued in the Financing described in Section
        6.2(m), the irrevocable rights issued to Concord as described in Section
        1.3(c)
        and warrants issued to Concord and SFG as described in Section 6.2(n), there
        are
        no outstanding or authorized options, rights, warrants, calls, convertible
        securities, rights to subscribe, conversion rights, or other agreements or
        commitments to which SFG is a party or which are binding upon SFG providing
        for
        the issuance or transfer by SFG of additional shares of SFG's capital stock
        and
        SFG has not reserved any shares of its capital stock for issuance, nor are
        there
        any outstanding stock option rights, phantom equity or similar rights,
        contracts, arrangements or commitments to issue capital stock of SFG. There
        are
        no voting trusts or any other agreements or understandings with respect to
        the
        voting of SFG's capital stock. There are no obligations of SFG to repurchase,
        redeem, or otherwise re-acquire any shares of its capital stock as of the
        Closing.

      

      (d)
        No
        Person has any demand or piggyback registration rights with respect to any
        of
        SFG's capital stock.

      

      5.4
        SEC
        Reports. SFG has filed with the SECall reports required to be filed by it
        under
        the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and all
        rules and regulations promulgated thereafter (“SFG SEC Reports”). All SFG SEC
        reports comply in all material respects with the requirements of the Exchange
        Act. None of the SFG SEC Reports contain an untrue statement of a material
        fact
        or omit to state a material fact required to be stated therein or necessary
        to
        make the statements therein, in light of the circumstances under which they
        were
        made, not misleading. Except as disclosed in Part 5.4 of the Disclosure
        Schedule, the consolidated financial statements of SFG included in the SFG
        SEC
        Reports, comply in all material respects with the Exchange Act and the
        applicable accounting requirements and the published rules and regulations
        of
        the SEC with respect thereto, and the statements have been prepared in
        accordance with GAAP (except, in the case of unaudited statements, as permitted
        by the applicable form under the Securities Act of 1933, as amended, and/or
        the
        Exchange Act) applied on a consistent basis during the periods involved (except
        as may be indicated in the notes thereto) and fairly present the financial
        position of SFG as of the dates thereof and its consolidated statements of
        operations, stockholders' equity and cash flows for the periods then ended
        (subject, in the case of unaudited statements, to normal and recurring year-end
        audit adjustments that were not, and are not, expected to have a Material
        Adverse Effect on SFG).

      

      5.5
        Financial Statements.

      

      (a)
        Included in the SFG SEC Reports are SFG’s audited consolidated balance sheets as
        of January 31, 2004, 2005 and 2006 and the related statement of operations,
        stockholders' equity, and cash flows for each of the years then ended, together
        with the unqualified report thereon (except with respect to continuation
        as a
        going concern) of Thomas Bauman, CPA, Michael Masters & Co., independent
        auditors and/or any other auditor of SFG (collectively, "SFG's Audited
        Financials").

      

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      (b)
        Included in the SFG SEC Reports are the unaudited consolidated balance sheet
        of
        SFG as of October 31, 2006, and the related statement of operations,
        stockholders equity (deficit) and cash flows for the nine months then ended,
        as
        reviewed by Thomas Bauman, CPA ("SFG's Unaudited Financials").

      

      (c)
        SFG's
        Audited Financials and SFG's Unaudited Financials (collectively "SFG's Financial
        Statements") are (i) in accordance with the books and records of SFG, (ii)
        correct and complete, (iii) fairly present the financial position and results
        of
        operations of SFG and each Subsidiary as of the dates indicated, and (iv)
        prepared in accordance with GAAP and shall comply in all material respects
        with
        the Exchange Act and the applicable accounting requirements and the published
        rules and regulations of the SEC with respect thereto (except that (x) unaudited
        financial statements may not be in accordance with GAAP because of the absence
        of footnotes normally contained therein, and (y) interim (unaudited) financials
        are subject to normal year-end audit adjustments that in the aggregate will
        not
        have a Material Adverse Effect on SFG or the SFG Subsidiary.

      

      (d)
        There
        have been no disagreements with any accountant regarding SFG’s Financial
        Statements. There have no accounting discrepancies with any accountant regarding
        SFG’s Financial Statements which would reasonably be expected to have a Material
        Adverse Effect on SFG.

      

      5.6
        Absence of Changes. Except (i) as set forth in Part 5.6 of the Disclosure
        Schedule, since October 31, 2006; or (ii) as permitted by Article 1 of this
        Agreement; 

      

      (a)
        there
        has been no adverse change in, and no event has occurred that reasonably
        would
        be expected to have a Material Adverse Effect on, SFG or the Merger
        Subsidiary;

      

      (b)
        there
        has been no loss, damage or destruction to, or any interruption in the use
        of,
        any of the material assets of SFG or the Merger Subsidiary (whether or not
        covered by insurance);

      

      (c)
        neither SFG, nor the Merger Subsidiary has purchased or otherwise acquired
        any
        material assets from any other Person;

      

      (d)
        neither SFG, nor the Merger Subsidiary has leased or licensed any material
        asset
        from any other Person;

      

      (e)
        neither SFG, nor the Merger Subsidiary has made any capital
        expenditure;

      

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      (f)
        neither SFG, nor the Merger Subsidiary has sold or otherwise transferred,
        or
        leased, or licensed any material asset to any other Person;

      

      (g)
        neither SFG, nor the Merger Subsidiary has written off as uncollectible,
        or
        established any extraordinary reserve with respect to, any account receivable
        or
        other indebtedness;

      

      (h)
        neither SFG, nor the Merger Subsidiary has made any loan or advance to any
        other
        Person;

      

      (i)
        neither SFG, nor the Merger Subsidiary has established or adopted any Employee
        Benefit Plan; or

      

      (j)
        no
        Contract by which SFG nor the Merger Subsidiary is or was bound, or under
        which
        SFG or the SFG Subsidiary has or had any rights or interest, has been amended
        or
        terminated; 

      

      (k)
        neither SFG, nor the Merger Subsidiary has incurred, assumed or otherwise
        become
        subject to any Liability;

      

      (l)
        neither SFG, nor the Merger Subsidiary has forgiven any debt or otherwise
        released or waived any right or claim;

      

      (m)
        neither SFG, nor the Merger Subsidiary has changed its methods of accounting
        or
        accounting practices in any respect;

      

      (n)
        neither SFG, nor the Merger Subsidiary has entered into any transaction or
        taken
        any other action outside the Ordinary Course of Business;

      

      (o)
        SFG
        has not made any extraordinary distributions to any of its shareholders;
        

      

      (p)
        neither SFG, nor the Merger Subsidiary has issued any shares of capital stock
        or
        authorized any options, rights, warrants, calls, convertible securities,
        rights
        to subscribe, conversion rights, or other agreements or commitments to which
        SFG
        is a party or which are binding upon SFG providing for the issuance or transfer
        by SFG of additional shares of capital stock; and

      

      (q)
        neither SFG, nor the Merger Subsidiary has agreed, committed or offered (in
        writing or otherwise) to take any of the actions referred to in the clauses
        above.

      

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      5.7
        Title
        to Assets. SFG's assets consist, and at Closing will consist, primarily of
        cash.
        SFG owns, and has good and valid title to, all of the all assets purported
        to be
        owned by it, including all assets reflected on the SFG Unaudited Financials;
        all
        assets acquired by SFG since November 1, 2006; all rights of SFG under SFG's
        Contracts; and all other assets reflected in the books and records of SFG
        as
        being owned by SFG. 

      

      5.8
        Receivables. SFG has no receivables.

      

      5.9
        Inventory. SFG has no inventory.

      

      5.10
        Equipment. SFG has no equipment.

      

      5.11
        Real
        Property. None of SFG's assets consists of any owned real property or any
        interest in real property, except for the leasehold created under the real
        property leases identified in Part 5.11 of the Disclosure Schedule.

      

      5.12
        Proprietary Assets. SFG owns no Proprietary Assets.

      

      5.13
        Contracts.

      

      (a)
        Part
        5.13 of the Disclosure Schedule identifies and provides an accurate and complete
        description of each and every Contract entered into by SFG and/or the Merger
        Subsidiary (collectively the "SFG Contracts"). SFG has delivered, or made
        available to COESfx, accurate and complete copies of all SFG
        Contracts.

      

      (b)
        Except as set forth in Part 5.13 of the Disclosure Schedule: (i) to the best
        knowledge of SFG, no Person has violated or breached, or declared or committed
        any default under, any SFG Contract; (ii) to the best knowledge of SFG, no
        event
        has occurred, and no circumstance or condition exists, that might (with or
        without notice or lapse of time) (A) result in a violation or breach of any
        of
        the provisions of any SFG Contract, (B) give any Person the right to declare
        a
        default or exercise any remedy under any SFG Contract, (C) give any Person
        the
        right to accelerate the maturity or performance of any SFG Contract, or (D)
        give
        any Person the right to cancel, terminate, or modify any SFG Contract; (iii)
        SFG
        has not received any notice or other communication (in writing or otherwise)
        regarding any actual, alleged, possible, or potential violation or breach
        of, or
        default under, any SFG Contract; and (iv) SFG has not waived any right under
        any
        SFG Contract.

      

      (c)
        The
        performance of SFG Contracts will not result in any violation of, or failure
        to
        comply with, any Legal Requirement, and 

      

      (d)
        No
        Person is renegotiating, or has the right to renegotiate, any amount paid
        or
        payable to SFG under any SFG Contract or any other term or provision of any
        SFG
        Contract.

      

      5.14
        Liabilities, Bankruptcy.

      

      (a)
        Except as may be set forth in Part 5.14 of the Disclosure Schedule, SFG and
        the
        Merger Subsidiary have no Liabilities, except for (i) liabilities identified
        as
        such in the SFG Unaudited Financials; At the Closing, SFG shall have no
        Liabilities or Encumbrances other than those included in SFG’s Unaudited
        Financial Statements.

      

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      (b)
        Part
        5.14 of the Disclosure Schedule (i) provides an accurate and complete breakdown
        and aging of SFG's and the Merger Subsidiary accounts payable as of the date
        of
        this agreement, and (ii) provides an accurate and complete breakdown of all
        notes payable and other SFG indebtedness as of the date of this
        Agreement.

      

      (c)
        Neither SFG, nor the Merger Subsidiary has, at any time, (i) made a general
        assignment for the benefit of creditors, (ii) filed, or had filed against
        it,
        any bankruptcy petition or similar filing, (iii) suffered the attachment
        or
        other judicial seizure of all or a substantial portion of its assets, (iv)
        admitted in writing its inability to pay its debts as they become due, (v)
        been
        convicted of, or pleaded guilty or no contest to, any felony, or (vi) taken
        or
        been the subject of any action that may have an adverse effect on its ability
        to
        comply with or perform any of its covenants or obligations contemplated under
        this Agreement.

      

      5.15
        Compliance with Legal Requirements. Except as set forth in Part 5.15 of the
        Disclosure Schedule (a) SFG and the Merger Subsidiary is in material compliance
        with each Legal Requirement that is applicable to it, or to the conduct of
        its
        business or the ownership or use of any of its assets; (b) to the best of
        its
        knowledge, each of SFG and the Merger Subsidiary has at all times been in
        material compliance with each Legal Requirement that is or was applicable
        to it,
        or to the conduct of its business, or the ownership or use of any of its
        assets;
        (c) no event has occurred, and no condition or circumstance exists, that
        might
        (with or without notice or lapse of time) constitute or result directly or
        indirectly in a material violation by SFG of, or a failure on the part of
        SFG to
        comply with, any Legal Requirement; and (d) SFG has not received, at any
        time,
        any notice or other communication (in writing or otherwise) from any
        Governmental Body, or any other Person, regarding (i) any actual, alleged,
        possible, or potential violation of, or failure to comply with, any Legal
        Requirement, or (ii) any actual, alleged, possible, or potential obligation
        on
        SFG's part to undertake, or to bear all or any portion of the cost of, any
        cleanup or any remedial, corrective, or response action of any
        nature.

      

      5.16
        Government Authorizations. Except for its respective Articles of Incorporation,
        neither SFG, nor the Merger Subsidiary has any Governmental
        Authorization.

      

      5.17
        Tax
        Matters.

      

      (a)
        Except as set forth in Part 5.17 of the Disclosure Schedule, each Tax Return
        required to be filed by SFG has been duly filed with the appropriate
        Governmental Body. To the best knowledge of SFG, each Tax required to have
        been
        paid, or claimed by any Governmental Body to be payable, by SFG and the Merger
        Subsidiary has been duly paid in full. Any Tax required to have been withheld
        or
        collected by SFG and the Merger SFG Subsidiary has been duly withheld and
        collected; and (to the extent required) each such Tax has been paid to the
        appropriate Governmental Body.

      

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      (b)
        There
        has been no examination or audit of any SFG Tax Return and or any Tax Return
        of
        the Merger Subsidiary that has been conducted since December 31,
        1999.

      

      (c)
        There
        has been no claim or other Proceeding that is pending or has been threatened
        against, SFG or the Merger Subsidiary in respect to any Tax. There are no
        unsatisfied Liabilities for Taxes (including liabilities for interest, additions
        to taxes and penalties, or related expenses) with respect to any notice of
        deficiency or similar document received by SFG or the Merger
        Subsidiary.

      

      5.18.
        Employees. Except as described in Part 5.18 of the Disclosure Schedule, neither
        SFG, nor the Merger Subsidiary, has any employees. Except as described in
        Part
        5.18 of the Disclosure Schedule, neither SFG, nor the Merger Subsidiary owes
        any
        compensation of any kind, deferred or otherwise, to any current or previous
        employees. Except as described in Part 5.18 of the Disclosure Schedule, neither
        SFG, nor the Merger Subsidiary has a written or oral employment agreement
        with
        any officer or director of SFG or the SFG Subsidiary. Neither SFG, nor the
        Merger Subsidiary is a party to, or bound by, any collective bargaining
        agreement. Except as described in Part 5.18 of the Disclosure Schedule, there
        are no loans or other obligations payable or owing by SFG or the Merger
        Subsidiary to any stockholder, officer, director, or employee of SFG or the
        Merger Subsidiary, nor are there any loans or debts payable or owing by any
        of
        such persons to SFG or the Merger Subsidiary, or any guarantees by SFG or
        the
        Merger Subsidiary of any loan or obligation of any nature to which any such
        person is a party.

      

      5.19
        Employee Benefit Plans. Neither SFG, nor the Merger Subsidiary, has any (a)
        non-qualified deferred or incentive compensation or retirement plans or
        arrangements, (b) qualified retirement plans or arrangements, (c) other employee
        compensation, severance or termination pay or welfare benefit plans, programs
        or
        arrangements, or (d) any related trusts, insurance contracts, or other funding
        arrangements maintained, established or contributed to by SFG or the Merger
        Subsidiary. As a condition to the Closing, SFG shall adopt an incentive stock
        plan in the form agreed to by COESfx.

      

      5.20
        Environmental Matters.

      

      (a)
        Neither SFG, nor the Merger Subsidiary is liable or, to the best knowledge
        of
        SFG, potentially liable for any response cost or natural resource damages
        under
        Section 107(a) of CERCLA, or under any other so-called "superfund" or "super
        lien" law or similar Legal Requirement, at or with respect to any
        site.

      

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      (b)
        Neither SFG, nor the Merger Subsidiary, has ever received any notice or other
        communication (in writing or otherwise) from any Governmental Body, or other
        Person, regarding any actual, alleged, possible, or potential Liability arising
        from or relating to the presence, generation, manufacture, production,
        transportation, importation, use, treatment, refinement, processing, handling,
        storage, discharge, release, emission, or disposal of any Hazardous Material.
        No
        Person has ever commenced, to the best knowledge of SFG, or threatened to
        commence, any contribution action or other Proceeding against SFG or the
        Merger
        Subsidiary in connection with any such actual, alleged, possible, or potential
        Liability; and to the best knowledge of SFG, no event has occurred, and no
        condition or circumstance exists, that may directly or indirectly give rise
        to,
        or result in, SFG or the Merger Subsidiary becoming subject to any such
        Liability.

      

      (c)
        Neither SFG, nor the Merger Subsidiary, has generated, manufactured, produced,
        transported, imported, used, treated, refined, processed, handled, stored,
        discharged, released, or disposed of any Hazardous Material (whether lawfully
        or
        unlawfully). Neither SFG, nor the Merger Subsidiary, has permitted (knowingly
        or
        otherwise) any Hazardous Material to be generated, manufactured, produced,
        used,
        treated, refined, processed, handled, stored, discharged, released, or disposed
        of (whether lawfully or unlawfully) (i) on or beneath the surface of any
        real
        property that is, or that has at any time been, owned by, leased to, controlled
        by, or used by SFG or the Merger Subsidiary; (ii) in or into any surface
        water,
        groundwater, soil, or air associated with, or adjacent to, any such real
        property; or (iii) in or into any well, pit, pond, lagoon, impoundment, ditch,
        landfill, building, structure, facility, improvement, installation, equipment,
        pipe, pipeline, vehicle, or storage container that is, or was, located on
        or
        beneath the surface of any such real property, or that is, or has, at any
        time
        been owned by, leased to, controlled by, or used by SFG or the Merger
        Subsidiary.

      

      5.21
        Insurance. Neither SFG, nor the Merger Subsidiary, has any insurance policies
        in
        effect.

      

      5.22
        Related Party Transactions. Except as set forth in Part 5.22 of the Disclosure
        Schedule, (a) no Related Party has any direct or indirect interest of any
        nature
        in any of the assets of SFG or the Merger Subsidiary; (b) no Related Party
        is,
        or has, at any time since December 31, 2002, been indebted to SFG or the
        Merger
        Subsidiary; (c) since December 31, 2002, no Related Party has entered into,
        or
        has had any direct or indirect financial interest in, any SFG Contract,
        transaction, or business dealing of any nature involving SFG or the Merger
        Subsidiary; (d) no Related Party is competing, or has at any time since December
        31, 2002, competed, directly or indirectly, with SFG or the Merger Subsidiary;
        (e) no Related Party has any claim or right against SFG; and (f) no event
        has
        occurred, and no condition or circumstance exists, that might (with or without
        notice or lapse of time) directly or indirectly give rise to, or serve as
        a
        basis for, any claim or right in favor of any Related Party against SFG or
        the
        Merger Subsidiary.

       

       

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      5.23
        Subsidiaries and Investments. 

      

      (a)
        Except for the Merger Subsidiary, SFG does not own any capital stock or have
        any
        interest of any kind whatsoever in any corporation, partnership, or other
        form
        of business organization.

      

      (b)
        Part
        5.23 of the Disclosure Schedule sets forth true and complete copies of the
        charter of the Merger Subsidiary, as well as any limited liability company
        agreement, operating agreement, or shareholder agreement relating to the
        Merger
        Subsidiary, and any acquisition agreement relating to the Merger Subsidiary.
        All
        corporate or other action that has been taken by the Merger Subsidiary has
        been
        duly authorized and does not conflict with or violate any provision of its
        charter, bylaws or other organizational documents.

      

      (c)
        Except as set forth in Part 5.23 of the Disclosure Schedule, all outstanding
        shares of capital stock or other ownership interests of the Merger Subsidiary
        will be as of the closing, are validly issued, fully paid, nonassessable,
        and
        free of preemptive rights and are owned (either directly or indirectly) by
        SFG
        without any encumbrances.

      

      (d)
        Except as set forth in Parts 5.13 or 5.23 of the Disclosure Schedule, there
        are
        no outstanding securities convertible into, or exchangeable for, the capital
        stock of, or other equity interests in, the Merger Subsidiary, and no
        outstanding options, rights, subscriptions, calls commitments, warrants,
        or
        rights of any character for SFG, the Merger Subsidiary or any other Person
        or
        Entity to purchase, subscribe for, or to otherwise acquire any shares of
        such
        stock or other securities of the Merger Subsidiary.

      

      (e)
        Except as set forth in Parts 5.13 or 5.23 of the Disclosure Schedule, there
        are
        no outstanding agreements affecting or relating to the voting, issuance,
        purchase, redemption, repurchase, or transfer of any capital stock of, or
        other
        equity interests in, the Merger Subsidiary. 

      

      (f)
        The
        Merger Subsidiary's stock register, or similar register of ownership, has
        complete and accurate records indicating the following: (i) the name and
        address
        of each person or entity owning shares of capital stock or other equity interest
        of the Merger Subsidiary, and (ii) the certificate number of each certificate
        evidencing shares of capital stock or other equity interest issued by the
        Merger
        Subsidiary, the number of shares or other equity interests evidenced by each
        such certificate, the date of issuance of such certificate, and, if applicable,
        the date of cancellation. Copies of same have been made available to
        COESfx.

      

      5.24
        Certain Payments, Etc. Neither SFG, nor the Merger Subsidiary, has, and no
        officer, employee, agent or other Person associated with, or acting for or
        on
        behalf of, SFG or the SFG Subsidiary has, at any time, directly or indirectly,
        (a) used any corporate funds (i) to make any unlawful political contribution
        or
        gift, or for any other unlawful purpose relating to any political activity,
        (ii)
        to make any unlawful payment to any governmental official or employee, or
        (iii)
        to establish or maintain any unlawful or unrecorded fund or account of any
        nature; (b) made any false or fictitious entry, or failed to make any entry
        that
        should have been made, in any of the books of account or other records of
        SFG or
        the SFG Subsidiary; (c) made any payoff, influence payment, bribe, rebate,
        kickback, or unlawful payment to any Person; (d) performed any favor or given
        any gift that was not deductible for federal income tax purposes; (e) made
        any
        payment (whether or not lawful) to any Person, or provided (whether lawfully
        or
        unlawfully) any favor or anything of value (whether in the form of property
        or
        services, or in any other form) to any Person, for the purpose of obtaining
        or
        paying for (i) favorable treatment in securing business, or (ii) any other
        special concession; or (f) agreed, committed, or offered (in writing or
        otherwise) to take any of the actions described above in clauses "(a)" through
        "(e)."

      

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      5.25
        Proceedings; Orders. To the knowledge of SFG, there is no pending Proceeding,
        and no Person has threatened in writing to commence any Proceeding: (i) that
        involves SFG or the Merger Subsidiary or that otherwise relates to, or might
        affect the business of, SFG; or (ii) that challenges, or that may have the
        effect of preventing, delaying, making illegal, or otherwise interfering
        with,
        the Merger. To the knowledge of SFG, no event has occurred, and no claim,
        dispute, or other condition or circumstance exists, that might directly or
        indirectly give rise to or serve as a basis for the commencement of any such
        Proceeding. There is no Order to which SFG or the Merger Subsidiary, or any
        asset owned or used by SFG or its subsidiary, is subject; and none of the
        shareholders or any other Related Party is subject to any Order that relates
        to
        SFG's business or to any of the assets of SFG or the Merger
        Subsidiary.

      

      5.26
        Authority; Binding Nature of Agreements. Subject to the approval of the SFG
        Shareholders of the filing of the Amended COI and any other actions required
        under applicable Delaware law, SFG’s certificate of Incorporation and/or
        By-Laws,, SFG has the absolute and unrestricted right, power, and authority
        to
        enter into and to perform its obligations under this Agreement; and SFG's
        execution, delivery, and performance of this Agreement has been duly authorized
        by all necessary action on the part of SFG and its board of directors and
        officers. This Agreement constitutes the legal, valid, and binding obligation
        of
        SFG, enforceable against SFG in accordance with the terms of the Agreement.
        As
        soon as practicable after the execution of this Agreement SFG shall, in
        compliance with the Exchange Act and applicable Delaware law, seek the approval
        of SFG Shareholders of the filing of the Amended COI and any other actions
        required to be approved by the SFG Shareholders in order to consummate the
        Merger and the transactions contemplated hereby under applicable Delaware
        law,
        SFG’s Certificate of Incorporation and/or By-Laws.

       

      5.27
        Non-Contravention; Consents. 

      

      (a) Neither
        the execution, nor delivery, of this Agreement, nor the consummation or
        performance of the Merger, will directly or indirectly (with or without notice
        or lapse of time):

      

      (i)
        contravene, conflict with, or result in a violation of, or give any Governmental
        Body or other Person the right to challenge the Merger or to exercise any
        remedy
        or obtain any relief under any Legal Requirement or any Order to which SFG
        or
        any of the assets of SFG are subject;

      

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      (ii)
        contravene, conflict with, or result in a violation of any of the terms or
        requirements of, or give any Governmental Body the right to revoke, withdraw,
        suspend, cancel, terminate, or modify any Governmental Authorization that
        is
        held by SFG;

      

      (iii)
        contravene, conflict with, or result in a violation or breach of, or result
        in a
        default under any provision of any of the SFG Contracts;

      

      (iv)
        give
        any Person the right to (i) declare a default or exercise any remedy under
        any
        SFG Contract, (ii) accelerate the maturity or performance of any Contract,
        or
        (iii) cancel, terminate, or modify any SFG Contract; or 

      

      (v)
        result in the imposition or creation of any Encumbrance upon, or with respect
        to, any of SFG's assets.

      

      (b)
        SFG
        is not required to make any filing with, or give any notice to, or to obtain
        any
        Consent from, any Person other than its board of directors in connection
        with
        the execution and delivery of this Agreement, or the consummation or performance
        of the Merger and SFG’s Shareholders in connection with the filing of the
        Amended COI.. 

      

      5.28
        Brokers. Except as set forth in Part 5.28 of the Disclosure Schedule, SFG
        has
        not agreed to pay, nor has it taken any action that might result in any Person
        claiming to be entitled to receive, any brokerage commission, finder's fee,
        or
        similar commission or fee in connection with the Merger.

      

      5.29
        Since January 31, 2004, SFG has maintained a system of internal accounting
        controls sufficient to provide reasonable assurance that (i) transactions
        are
        executed in accordance with management's general or specific authorizations,
        (ii) transactions are recorded as necessary to permit preparation of financial
        statements in conformity with GAAP and to maintain asset accountability,
        (iii)
        access to assets is permitted only in accordance with management's general
        or
        specific authorization, and (iv) the recorded accountability for assets is
        compared with the existing assets at reasonable intervals and appropriate
        action
        is taken with respect to any differences. SFG has established disclosure
        controls and procedures (as defined in Exchange Act) for SFG and designed
        such
        disclosure controls and procedures to ensure that material information relating
        to SFG is made known to the certifying officer by others within those entities,
        particularly during the period in which SFG's Form 10-KSB or 10-QSB, as the
        case
        may be, is being prepared. SFG's certifying officer has evaluated the
        effectiveness of SFG's controls and procedures as of end of the filing period
        prior to the filing date of the Form 10-QSB for the quarter ended October
        31,
        2006 (the "Evaluation Date"). SFG presented in its most recently filed Form
        10-KSB, or Form 10-QSB, the conclusions of the certifying officer about the
        effectiveness of the disclosure controls and procedures based on his evaluation
        as of the Evaluation Date. Since the Evaluation Date, there have been no
        significant changes in SFG's internal controls (as such term is defined in
        Item
        307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge,
        in other factors that could significantly affect the Company's internal
        controls. 

      

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      5.30
        Listing and Maintenance Requirements. SFG is currently quoted on the Pink
        Sheets
        Electronic Quotation Service. SFG has not, in the 12 months preceding the
        date
        hereof, received any notice from the Pink Sheets, or the NASD, or any trading
        market on which SFG's common stock is, or has been, listed or quoted informing
        SFG that it is not in compliance with the quoting, listing, or maintenance
        requirements of the Pink Sheets, or such other trading market. SFG is, and
        has
        no reason to believe that it will not in the foreseeable future continue
        to be,
        in compliance with all such quoting, listing, and maintenance
        requirements.

      

      5.31
        Application of Takeover Protections. SFG and its board of directors have
        taken
        all necessary action, if any, to render inapplicable any control share
        acquisition, business combination, poison pill (including any distribution
        under
        a rights agreement) or other similar anti-takeover provision under SFG's
        certificate or articles of incorporation (or similar charter documents) or
        the
        laws of its state of incorporation that is, or could become, applicable to
        COESfx, or the COESfx Shareholders, as a result of the Merger or the exercise
        of
        any rights by COESfx, or the COESfx Shareholders, pursuant to this
        Agreement.

      

      5.32
        No
        SEC or NASD or State Inquiries. Neither SFG, nor, to the knowledge of any
        of
        SFG’s past or present officers or directors, is, or ever has been, the subject
        of any formal or informal inquiry or investigation by the SEC, NASD or any
        state
        securities agency.

      

      5.33
        Full
        Disclosure. To the knowledge of SFG, the representations and warranties
        contained in this Article V do not contain any untrue statement of a material
        fact, or omit to state any material fact necessary to make the statements
        and
        information contained in this Article V not misleading, except to the extent
        that such omission would not be reasonably expected to result in a Material
        Adverse Effect.

      

      

      ARTICLE
        VI

      CLOSING
        CONDITIONS

      

      6.1
        Conditions to the Obligations of COESfx. The obligations of COESfx to effect
        the
        Merger contemplated by this Agreement shall be subject to the fulfillment,
        or
        written waiver, by COESfx, at or prior to the Closing, of each of the following
        conditions:

      

      (a)
        At
        the Closing, SFG shall have delivered or caused to be delivered to COESfx
        the
        following:

      

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      (i)
        resolutions duly adopted by the Board of Directors of SFG authorizing and
        approving the Merger and the other actions of SFG required pursuant to this
        Agreement, and the execution, delivery, and performance of this Agreement
        and
        resolutions duly adopted by the Shareholders of SFG approving the filing
        of the
        Amended COI and any other actions required under applicable Delaware law,
        SFG’s
        certificate of Incorporation and/or By-Laws,;

      

      (ii)
        a
        certificate of good standing for SFG and the Merger Subsidiary from their
        respective jurisdictions of incorporation, dated not earlier than five days
        prior to the Closing Date;

      

      (iii)
        written resignations of all officers and directors of SFG and the Merger
        Subsidiary in office immediately prior to the Closing and the appointment
        of
        those persons listed in Sections 6.1(i) and 6.2(q) as the officers and directors
        of SFG and each SFG Subsidiary;

      

      (iv)
        all
        corporate records, agreements, seals, and any other information reasonably
        requested by COESfx's representatives with respect to SFG; and

      

      (v)
        such
        other documents as COESfx and/or the COESfx Shareholders may reasonably request
        in connection with the transactions contemplated hereby; 

      

      (b)
        At
        the Closing, SFG shall have no less than $1,800,000 in net cash proceeds,
        free
        and clear of any Encumbrance, after giving effect to the Financing described in
        Section 6.2 below. SFG shall provide COESfx with a bank statement reasonably
        satisfactory to COESfx showing such proceeds in a bank account in SFG’s name. In
        addition, SFG shall provide COESfx with new signature cards provided by the
        bank
        where such funds are deposited naming one or more parties designated by the
        New
        Board to be the new signatories with full power of disposition of such account
        from and after the Closing;

      

      (c)
        SFG
        shall have performed and complied, in all material respects, with the covenants
        and agreements contained in this Agreement required to be performed by it
        at or
        prior to the Closing, and COESfx shall have received a certificate to that
        effect from an officer of SFG, dated the Closing Date;

      

      (d)
        The
        representations and warranties of SFG set forth in this Agreement shall be
        true
        and correct in all material respects when made and as of the Closing Date
        with
        the same effect as though made at and as of the Closing Date, and COESfx
        shall
        have received a certificate to that effect from an officer of SFG, dated
        the
        Closing Date; 

      (e)
        No
        Material Adverse Effect relating to the business or financial condition of
        SFG
        and/or the Merger Subsidiary shall have occurred after the date of this
        Agreement or prior to the Closing;

      

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      (f)
        COESfx shall have received from SFG such further executed instruments and
        documents as are reasonably required to carry out the transactions contemplated
        by, and to evidence the fulfillment of, the conditions contained in this
        Agreement, and the performance by SFG of all conditions for the consummation
        of
        such transactions;

      

      (g)
        No
        party hereto shall be subject to any Order of a Governmental Body that prevents
        or delays any of the transactions contemplated by this Agreement, and no
        Proceeding shall be threatened in writing or pending before any Governmental
        Body;

      

      (h)
        SFG
        shall have filed with the appropriate Governmental Body each Tax Return required
        to be filed by it prior to the Closing, including, without limitation, those
        specified in Part 5.17 of SFG's Disclosure Schedule;

      

      (i)
        Immediately upon the Closing, the Board of Directors of SFG shall consist
        of
        three (3) members who shall be Bruce Stephens, Ralph Balzano or his designee
        and
        Michael Frey or his designee (the “New Board”). The bylaws of SFG shall specify
        that at the Closing directors of SFG shall hold their Seats for three-year
        terms. The New Board members shall have the right to appoint their respective
        successors during such three-year term. The New Board shall appoint Bruce
        Stephens as Chairman of the Board of Directors, Chief Executive Officer and
        President of SFG and Michael Frey as Chairman of the Advisory
        Committee.

      

      (j)
        Officers and “key” employees of SFG will resign effective with the closing of
        the Merger transaction and new officers shall be appointed by the New Board
        of
        Directors at the Closing. As part of such resignations, SFG shall be released
        from all obligations, both past and prospective, to such officers and “key”
employees. Such release shall apply to all obligations, whether incurred
        in
        conjunction with such officer’s or “key” employees’ employment or otherwise. The
        resignations shall also contain provisions that reasonably protect SFG from
        competition from the resigning officers and “key” employees on terms and
        conditions acceptable to the New Board.

      

      (k)
        All
        Legal Requirements shall have been met with respect to the authorization
        and
        filing the Amended COI as well as the approval of this Agreement, the Merger
        and
        all transactions contemplated hereby;

      

      (l)
        SFG
        shall be current with all its securities filings under the Securities Act
        of
        1933, as amended and the Exchange Act of 1934;

      

      (m)
        SFG
        shall be reinstated as a corporation in good standing under Delaware law
        through
        the payment of all outstanding franchise taxes;

      

      (n)
        COES
        has received a list detailing the names and amounts owned by each shareholder,
        warrant holder, option holder and all other equity rights holders of SFG
        in form
        and substance acceptable to COES;

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

      (o)
        COES
        has completed a due diligence review of the SFG and its operations, future
        operations, assets, liabilities, contingent liabilities, lawsuits, claims,
        potential claims, capitalization, legal status, regulatory status, obligations
        and other relevant matters and has determined, in COES sole discretion, that
        it
        is in the best interest of the COES shareholders to consummate the transaction.
        SFG shall promptly provide such information as may be reasonably requested
        by
        COES to facilitate such due diligence review; 

      

      (p)
        Holders of any SFG Shares owned by and/or to be issued in connection with
        the
        transactions contemplated by this Agreement or otherwise, shall deliver lock-up
        letters at or prior to the Closing prohibiting the public sale of their SFG
        Shares on terms and conditions acceptable to the New Board, provided, however
        that any such SFG Shares, excluding those issued pursuant to Section 6.2(m),
        held by Concord which are subject to lock-up letters shall be released therefrom
        if at the date which is 180 days after the Closing Date continuation of the
        lock-up letters has not been requested by a third party unaffiliated with
        the
        Company and the New Board determines that the absence of the lock-up letters
        would not have a Material Adverse Effect on SFG or COESfx.. A lock-up letter,
        if
        any, shall be subject to limitations on the public sale of SFG stock that
        are no
        more restrictive as those contained in any lock-up letters to be signed by
        any
        party owning 8% as described in Article 6.2 (l) of this Agreement. The terms
        of
        this section shall not apply to any sales undertaken pursuant to a registration
        statement filed with the United States Securities and Exchange Commission
        by
        SFG; and

      

      (q)
        COESfx has received the approval of its shareholders for the transactions
        contemplated by this Agreement.

      

      6.2
        Conditions to the Obligations of SFG. The obligations of SFG to effect the
        transactions contemplated by this Agreement shall be subject to the fulfillment,
        as reasonably determined by SFG, or, at the sole election of SFG, the waiver,
        at
        or prior to the Closing, of the following conditions :

      

      (a)
        At
        the Closing, COESfx shall have delivered or caused to be delivered to SFG
        the
        following:

       

      (i)
        resolutions duly adopted by the COESfx Board of Directors and the holders
        of a
        majority of the issued and outstanding shares of COESfx Common Stock authorizing
        and approving the Merger and the execution, delivery, and performance of
        this
        Agreement;

      

      (ii)
        a
        certificate of good standing for COESfx, from its respective jurisdiction
        of
        incorporation, dated not earlier than five days prior to the Closing
        Date;

      

      (b)
        COESfx shall have performed and complied in all material respects with the
        covenants and agreements contained in this Agreement required to be performed
        by
        COESfx at, or prior to, the Closing, and SFG shall have received a certificate
        to that effect from an officer of the Company, dated the Closing
        Date;

      

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

      (c)
        Any
        dissenting COESfx Shareholders shall not represent more than 5% of the issued
        and outstanding shares of COESfx Common Stock prior to the Closing;

      

      (d)
        COESfx shall have delivered all COESfx financial statements and pro forma
        financial statements required to be filed with the SEC as part of the
        post-Merger Form 8-K;

      

      (e)
        The
        representations and warranties of COESfx set forth in this Agreement shall
        be
        true and correct in all material respects when made, and as of the Closing
        Date,
        with the same effect as though made at, and as of, the Closing Date, and
        SFG
        shall have received a certificate to that effect from an officer of COESfx,
        dated the Closing Date;

      

      (f)
        No
        Material Adverse Effect relating to COESfx's business or financial condition
        shall have occurred after the date of this Agreement or prior to the
        Closing;

      

      (g)
        SFG
        shall have received from COESfx such further instruments and documents as
        are
        reasonably required to carry out the transactions contemplated by, and to
        evidence the fulfillment of, the agreements contained in this Agreement,
        and the
        performance of all conditions for the consummation of such transactions;
        

      

      (h)
        No
        party hereto shall be subject to any Order of a Governmental Body that would
        prevent or delay any of the transactions contemplated by this Agreement,
        and no
        Proceeding shall be threatened in writing or pending before any Governmental
        Body;

      

      (i)
        The
        delivery of written agreements by key employees and officers of COES as
        identified by SFG, agreeing that that their respective employment agreements
        will be irrevocably terminated and rendered null and void upon the Closing
        of
        the Merger transaction;

      

      (j)
        Officers and “key” employees of COESfx will resign effective with the closing of
        the Merger transaction and new officers shall be appointed by the New Board
        at
        the Closing. As part of such resignations, COESfx shall be released from
        all
        obligations, claims, causes of action, suits and demands of every nature,
        both
        past and prospective, to such officers and “key” employees, including, but not
        limited to, Michael Frey, Ronald Balzano, Michael Weiner, Anthony Collura
        and
        Gregory Mazzeo (the “Releasing Parties”) and the Releasing Parties and their
        affiliates shall be released from all obligations, causes of action, suits
        and
        demands of every nature, both past and prospective, to COESfx and its
        subsidiaries through the execution and delivery by COESfx and its subsidiaries
        of a standard general release. The release in favor of COESfx shall apply
        to all
        obligations, claims, causes of action, suits and demands of every nature
        whether
        incurred in conjunction with the Releasing Parties’ employment or otherwise,
        provided, however, that such releases shall not include the obligation of
        COESfx
        to repay monies lent to COESfx by the Releasing Parties provided such loans
        are
        set forth on the balance sheet of COESfx as of December 31, 2006 or schedule
        6.2
        (j). The resignations shall also contain provisions that reasonably protect
        SFG
        from competition from the Releasing Parties on terms and conditions acceptable
        to the New Board. The Releasing Parties shall also be required to deliver
        general releases to each other releasing one another from all obligations,
        claims, causes of action, suits and demands of every nature, both past and
        prospective, through the execution and delivery of standard general releases.
        The form of releases and agreements with respect to the requirements of this
        section shall be in a form reasonably acceptable to SFG;

      

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

      (k)
        Certain key employees of COESfx identified in by SFG shall enter into employment
        agreements with SFG or COESfx on terms mutually acceptable to COESfx, such
        employees and SFG;

      

      (l)
        The
        New Board shall institute a set of financial controls financial reporting
        practices sufficient to satisfy all requirements applicable to SFG or any
        of its
        subsidiaries whether by law or regulation. At a minimum, such financial controls
        shall include a requirement for dual signatures on all checks over $2,500.00.
        At
        the Closing any person or group owing more than 5% of the SFG Shares outstanding
        after the Closing will be required to deliver a written voting agreement
        irrevocably binding such person to vote in favor of the continued election
        of
        the members of the New Board for a period of three (3) years and against
        any
        shareholder proposal which has not been recommended by the New Board during
        such
        three year period. The voting agreement shall terminate three years after
        the
        Closing.

      

      (m)
        The
        New Board will agree in writing that in the event that on or before the Closing
        Date, Concord and/or parties affiliated with them (“Concord Affiliates”) provide
        or arrange for the purchase of $2,000,000 of preferred shares (“Preferred
        Stock”) of SFG (on terms and conditions set forth in the form of Certificate of
        Designation attached hereto as Exhibit D)( the “Financing”), Concord or parties
        designated by it, immediately after the filing of the Amended COI, will be
        issued post reverse split shares of SFG Common Stock in a number which when
        combined with the number of SFG Common Stock receivable upon conversion of
        the
        Preferred Stock equals a total of 14,666,322and paid a maximum of $200,000
        in
        cash. If any funding is provided after the Termination Date ( as defined
        below)
        , the parties will mutually agree on the compensation to be paid to the Concord
        Affiliates. For purposes of this section, the “Termination Date” shall be
        defined as the date which is the earlier of (i) that date which is 60 days
        after
        the Closing or (ii) the closing date of any material non-recurring transaction
        (such as a business combination transaction, merger, acquisition and/or
        reorganization other than the Financing, but specifically excluding any internal
        efforts resulting in sales growth) that materially increases the assets,
        income
        and/or equity value of SFG and/or COESfx.

      

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

      (n)
        As
        soon as reasonably possible after the Closing, the New Board shall authorize
        the
        issuance of two classes of SFG common stock purchase warrants. The first
        class
        of warrant shall provide for the issuance of an aggregate of 1,750,000 SFG
        Shares after giving effect to the Reverse Split at an exercise price of $.40
        per
        share (the “Class A Warrant”) and the second class of warrant shall provide for
        the issuance of an aggregate of 1,750,000 SFG Shares after giving effect
        to the
        Reverse Split at an exercise price of $1.00 per share (the “Class B Warrant”).
        The Class A and Class B Warrant shall be exercisable for a five (5) year
        period
        commencing on the Closing. Concord shall be issued Class A Warrants and Class
        B
        Warrants entitling them to purchase 1,000,000 common shares under each such
        Warrant after giving effect to the Reverse Split and the SFG shareholders,
        as
        existing immediately prior to the Effective Time shall be issued Class A
        Warrants and Class B Warrants entitling them to purchase 750,000 common shares
        under each such Warrant after giving effect to the Reverse Split.

      

      (o)
        The
        Releasing Parties and their affiliates, in their capacity as shareholders
        of
        COESfx, and not as officers or directors of COESfx, shall have executed,
        simultaneously with the execution of this Agreement, support agreements in
        the
        form annexed hereto as Exhibit 6.2(o), irrevocably binding the Releasing
        Parties
        to vote for the approval of the Merger and against any proposals in opposition
        to the Merger and/or actions which may negatively effect the consummation
        of the
        Merger. In addition, the support agreements shall provide that the Releasing
        Parties irrevocably appoint Bruce Stephens as their proxy with respect to
        all
        shares of COESfx owned by such parties in connection with any vote related
        to
        the Merger. Notwithstanding the foregoing, Bruce Stephens may not vote such
        proxies unless SFG has met all of the conditions contained in this Merger
        Agreement and/or COESfx has waived compliance with any such conditions, and
        any
        vote of the proxies shall be consistent with completion of the Merger
        transaction as contemplated herein.

      

      (p)
        COESfx and the Releasing Parties shall have delivered to SFG simultaneously
        with
        the execution of this Agreement, a certified list of shareholders and warrant
        holders of COESfx dated as of the date of this Agreement. The certification
        shall state that the shares and warrants issued on such list have been validly
        authorized and duly issued by COESfx, that the parties set forth on such
        certified list have paid the consideration required for the issuance and
        delivery of such shares and warrants, that the parties set forth on such
        list,
        according to the records of COESfx, are the true and lawful owners of such
        shares and warrants and that COESfx possesses no claims against such shares
        and/or warrants and/or any rights to rescind and/or cancel the issuance of
        such
        shares and/or warrants.

      

      (q)
        Immediately upon the Closing, the New Board shall consist of three (3) members
        who shall be Bruce Stephens, Ralph Balzano or his designee and Michael Frey
        or
        his designee The bylaws of SFG shall specify that at the Closing directors
        of
        SFG shall hold their Seats for three-year terms. The New Board members shall
        have the right to appoint their respective successors during such three-year
        term. The New Board shall appoint Brice Stephens as Chairman of the Board
        of
        Directors, Chief Executive Officer and President and Michael Frey as Chairman
        of
        the Advisory Committee.

      

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

      (r)
        COESfx will deliver proof, in a form acceptable to SFG, that COESfx does
        not
        have, nor ever had, any ownership or any other form of interest whatsoever
        in
        the Meta Trader platform currently operated by 57 Danvers LLC and Gregory
        Mazzeo
        under the trade name Spot Trader (“Spot Trader Platform”). In addition COESfx
        shall deliver proof, in a form acceptable to SFG, that COESfx owes no monetary
        obligations whatsoever to Gregory Mazzeo, 57 Danvers Lane LLC and/or any
        monies
        whatsoever in connection with the Spot Trader Platform.

      

      (s)
        COESfx has received the approval of a majority of its shareholders approving
        the
        transactions contemplated by this Merger Agreement.

      

      

      ARTICLE
        VII

      SURVIVAL
        OF REPRESENTATIONS AND WARRANTIES

      

      The
        representations and warranties made by SFG and COESfx (including the
        representations and warranties set forth in Sections 4 and 5 and the
        representations and warranties set forth in any certificate delivered at
        Closing
        by an officer of COESfx or SFG) shall survive the Closing. For purposes of
        this
        Agreement, each statement or other item of information set forth in a Party's
        Disclosure Schedule shall be deemed to be a part of the representations and
        warranties made by such Party in this Agreement.

      

      ARTICLE
        VIII

      TERMINATION

      

      8.1
        Events of Termination. This Agreement may, by notice given in the manner
        hereinafter provided, be terminated and abandoned at any time prior to
        completion of the Closing, as follows:

      

      (a)
        by
        COESfx if (1) there has been a material Breach by SFG and, in the case of
        a
        covenant or agreement Breach, such Breach shall not have been cured within
        ten
        (10) days after receipt by SFG of notice specifying particularly such Breach,
        (2) if COESfx identifies hereafter any fact, circumstance or event that could
        be
        reasonably determined to have a Material Adverse Effect on SFG and such fact,
        circumstance or event is not cured by SFG within ten (10) days after receipt
        by
        SFG of notice specifying particularly such fact, event or circumstance, or
        (3)
        if the Closing Conditions have not been satisfied by the close of business
        on
        May 31, 2007;

      

      (b)
        by
        SFG (1) if there has been a material Breach by COESfx and, in the case of
        a
        covenant or agreement Breach, such Breach shall not have been cured within
        ten
        (10) days after receipt by COESfx of notice specifying particularly such
        Breach,
        or (2) if SFG identifies hereafter any fact, circumstance or event that could
        be
        reasonably determined to have a Material Adverse Effect on COESfx following
        the
        Merger, and such fact, circumstance or event is not cured by COESfx within
        ten
        (10) days after receipt by COESfx of notice specifying particularly such
        fact,
        event or circumstance, or (3) if the Closing Conditions have not been satisfied
        by the close of business on May 31, 2007; or

      

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

      (c)
        at
        any time by mutual written agreement of COESfx and SFG. 

      

      This
        Agreement may not be terminated after completion of the Closing, except by
        mutual agreement of COESfx and SFG. 

      

      ARTICLE
        IX

      MISCELLANEOUS

      

      9.1
        Severability. If any provision of this Agreement is declared by any court
        or
        other Governmental Body to be null, void, or unenforceable, this Agreement
        shall
        be construed so that the provision at issue shall survive to the extent it
        is
        not so declared null, void, or unenforceable and all of the other provisions
        of
        this Agreement shall remain in full force and effect.

      

      9.2
        Entire Agreement. This Agreement, together with each party’s Disclosure
        Schedules, all exhibits and schedules hereto attached, constitutes the entire
        agreement among the Parties pertaining to the subject matter hereof and
        completely supersedes all prior or contemporaneous agreements, understandings,
        arrangements, commitments, negotiations, and discussions of the Parties,
        whether
        oral or written, all of which shall have no substantive significance or
        evidentiary effect. Each Party acknowledges, represents, and warrants that
        it
        has not relied on any representation, agreement, understanding, arrangement,
        or
        commitment that has not been expressly set forth in this Agreement. Each
        Party
        acknowledges, represents and warrants that this Agreement is fully integrated
        and parole evidence is not needed to reflect the intentions of the Parties.
        The
        Parties specifically intend that the literal words of this Agreement shall,
        alone, conclusively determine all questions concerning the Parties'
        intent.

      

      9.3
        Corporate Affairs. Each Party will make every reasonable effort to keep
        confidential any information obtained by them concerning the other Party,
        including its internal organization, finances, procedures, and customers.
        Neither Party will make any public announcement, or release any publicity
        regarding the other Party, other than routine oral communications with analysts,
        shareholders, and prospective investors without the prior written consent
        (which
        shall not be unreasonably withheld or delayed) of the Party being named,
        unless,
        in the good faith opinion of counsel to the party contemplating such disclosure,
        such disclosure is required by law and time does not permit the party to
        obtain
        such consent, or such disclosure may otherwise be necessary in connection
        with
        the filing of any reports under the Exchange Act or Tax Returns, or claims
        for
        refunds, or in conducting a Tax audit or other proceedings. This Section
        9.3
        shall survive the termination of this Agreement. Notwithstanding anything
        herein
        to the contrary, any Party (and any employee, representative, or other agent
        of
        such Party) may disclose to any and all persons, without limitation of any
        kind,
        the tax treatment and tax structure of the transactions contemplated by this
        Agreement and all materials of any kind (including opinions or other tax
        analyses) that are provided to it relating to such tax treatment and tax
        structure. For this purpose, tax treatment and tax structure shall not include
        the identity of any existing or future Party (or any affiliate of such Party)
        to
        this Agreement.

      

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

      9.4
        Notices. Unless otherwise expressly provided herein, all notices, requests,
        demands, instructions, documents, and other communications to be given hereunder
        by either Party to the other shall be in writing, shall be sent to the address
        set forth below (provided that any Party may at any time change the
        individual(s) to whom Notice is to be sent and/or its address for notice
        or
        other such information by giving written notice thereof in accordance with
        this
        Section), and shall be deemed to be duly given upon the earliest of (a) hand
        delivery, or (b) the first business day after sending by reputable overnight
        delivery service for next-day delivery.

      

      If
        to
        COESfx:

      

      Michael
        Frey

      Ronald
        Balzano

      255
        Executive Drive, Suite 408

      Plainview,
        NY 11803

      

      

      

      If
        to
        SFG:

      

      John
        A.
        Dugan

      85
        Amherst Street

      Garden
        City, NY 11530

      

      with
        a
        copy to:

      

      William
        J. Reilly, Esq.

      401
        Broadway, Suite 912

      New
        York,
        NY 10013

      

      

      9.5
        Amendments; Waivers. This Agreement may not be amended or modified unless
        such
        amendment or modification is in writing and signed by all of the Parties
        to this
        Agreement. The terms, covenants, representations, warranties, or conditions
        of
        this Agreement may only be waived in writing. Any waiver of any condition,
        or of
        the Breach of any provision, term, covenant, representation, or warranty
        contained in this Agreement, in any one or more instances, shall not be deemed
        to be or construed as a further or continuing waiver of any condition, or
        of the
        breach of any other provision, term, covenant, representation, or warranty
        of
        this Agreement.

      

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

      9.6
        Successors and Assigns. The rights and obligations under this Agreement may
        not
        be assigned or delegated unless in writing executed by the Parties hereto,
        and
        any attempted assignment or delegation without such prior written consent
        shall
        be void and of no force or effect. This Agreement shall inure to the benefit
        of,
        and shall be binding upon, the successors and permitted assigns of the Parties
        to this Agreement.

      

      9.7
        Governing Law; Submission to Jurisdiction. This Agreement and all transactions
        contemplated hereby shall be governed by, and construed and enforced in
        accordance with, the laws of the State of New York, and shall be treated
        in all
        respects as a State of New York contract, without regard to any state's laws
        related to choice or conflict of laws. The Parties irrevocably agree and
        consent
        to the jurisdiction of the courts of the States of New York and the federal
        courts of the United States sitting in such state for the adjudication of
        any
        matters arising under, or in connection with, this Agreement.

      

      9.8
        Waiver of Jury Trial. The parties hereby irrevocability waive any and all
        right
        to trial by jury in any legal action, proceeding, claim, or counterclaim,
        whether at law or in equity, arising out of, or relating to, this agreement
        or
        the transactions contemplated hereby.

      

      9.9
        Subsequent Documentation. At any time, and from time to time after the Closing
        Date, each of the Parties to this Agreement shall use its best efforts to
        take
        such action as may be necessary, or as may be reasonably requested by another
        Party to this Agreement, to carry out and consummate the transactions
        contemplated by this Agreement.

      

      9.10
        Counterparts. This Agreement may be executed in any number of counterparts
        and
        by different Parties on separate counterparts, each of which, when executed
        and
        delivered, shall be deemed to be an original, and all of which, when taken
        together, shall constitute but one and the same Agreement. Delivery of an
        executed counterpart of this Agreement by facsimile shall be equally as
        effective as delivery of an original executed counterpart of this Agreement.
        Any
        Party delivering an executed counterpart of this Agreement by facsimile also
        shall deliver an original executed counterpart of this Agreement, but the
        failure to deliver an original executed counterpart shall not affect the
        validity, enforceability, and binding effect of this Agreement.

      

      9.11
        Interpretation. In this Agreement, unless a clear contrary intention
        appears:

      

      (a)
        the
        singular number includes the plural number and vice versa;

      

      (b)
        reference to any Person includes such Person's successors and assigns, but,
        if
        applicable, only if such successors and assigns are not prohibited by this
        Agreement, and reference to a Person in a particular capacity excludes such
        Person in any other capacity or individually;

      

      
        
          
          

        

        
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      (c)
        reference to gender does not exclude the other gender;

      

      (d)
        reference to any agreement, document, or instrument means such agreement,
        document, or instrument as amended or modified and in effect from time to
        time
        in accordance with the terms thereof;

      

      (e)
        reference to any Legal Requirement means such Legal Requirement as amended,
        modified, codified, replaced, or reenacted, in whole or in part, and in effect
        from time to time, including rules and regulations promulgated thereunder,
        and
        reference to any section or other provision of any Legal Requirement means
        that
        provision of such Legal Requirement from time to time in effect and constituting
        the substantive amendment, modification, codification, replacement, or
        reenactment of such section or other provision;

      

      (f)
        "hereunder," "hereof," "hereto," and words of similar import shall be deemed
        references to this Agreement as a whole and not to any particular Article,
        Section, or other provision hereof; 

      

      (g)
        "including" (and with correlative meaning "include") means including without
        limiting the generality of any description preceding such term;

      

      (h)
        "or"
        is used in the inclusive sense of "and/or";

      

      (i)
        with
        respect to the determination of any period of time, "from" means "from and
        including" and "to" means "to but excluding"; and

      

      (j)
        references to documents, instruments, or agreements shall be deemed to refer
        as
        well to all addenda, exhibits, schedules, or amendments thereto.

      

      

      IN
        WITNESS WHEREOF, SFG and COESfx have executed, or caused to be executed by
        their
        duly authorized representatives, this Agreement as of the date first above
        written.

       

      
        

          
            	
                    SFG
                      FINANCIAL CORPORATION

                  	
                    COESFX
                      HOLDINGS, INC.

                  
	
                    A
                      Delaware corporation

                  	
                    A
                      New York corporation

                  
	 	 
	
                    By:
                      /s/ John A.
                      Dugan                       
                      

                  	
                    By:
                      /s/ Michael
                      Frey                      
                      

                  
	 	 
	
                    Title:
                      Chairman                                  

                  	
                    Title:
                      Chief Executive
                      Officer         
                      

                  

          

           

           

           

          
            
              
              

            

            
              44

              
                

              

            

            
              
              

            

          

        

      

      

        COESFX
          ACQUISITION CORP.

        A
          to be
          Formed New York corporation

         

        By: 
          /s/ Michael
          Frey                         

         

        Title: 
          Chief Executive
          Officer            

      

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
 

      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

      

      Exhibit
        A

      Certain
        Definitions

      

      For
        purposes of the Agreement (including this Exhibit A):

      

      Affiliate.”
        Affiliate” means with respect to a Person, any other Person that directly or
        indirectly controls, is controlled by, or is under common control with, such
        Person. As used in this definition, “control” (including its correlative
        meanings “controlled by” and “under common control with”) means possession,
        directly or indirectly, of power to direct or cause the direction of management
        or policies (whether through ownership of ten percent (10%) or more of
        outstanding voting securities or partnership or other ownership interests,
        by
        Contract or otherwise).

      

      Agreement.”
        Agreement” means the Agreement and Plan of Merger to which this Exhibit A
        is
        attached (including the Disclosure Schedules), as it may be amended from
        time to
        time.

      

      Breach.
        There
        shall be deemed to be a “Breach” of a representation, warranty, covenant,
        obligation, or other provision if there is or has been (a) any inaccuracy
        (subject to applicable knowledge and materiality qualifiers, if any) in,
        or
        breach of, or any failure to comply with, or perform, such representation,
        warranty, covenant, obligation, or other provision, or (b) any claim (by
        any Person) or other circumstance that is inconsistent with such representation,
        warranty, covenant, obligation, or other provision; and the term “Breach” shall
        be deemed to refer to any such inaccuracy, breach, failure, claim, or
        circumstance.

      

      CERCLA.“CERCLA”
        means the Comprehensive Environmental Response, Compensation and Liability
        Act.

      

      Claim.”
Claim”
        shall have the meaning specified in Section 7.4.

      

      Closing.”
        Closing” shall have the meaning specified in Section 2.1. 

      

      Closing
        Date.”
Closing
        Date” shall have the meaning specified in Section 2.1.

      

      Code.”
Code”
        means the Internal Revenue Code of 1986, as amended.

      

      Consent.”
        Consent” means any approval, consent, ratification, permission, waiver, or
        authorization (including any Governmental Authorization). 

      

      Contract.”
        Contract” means any written, oral, implied, or other agreement, contract,
        understanding, arrangement, instrument, note, guaranty, indemnity,
        representation, warranty, deed, assignment, power of attorney, certificate,
        purchase order, work order, insurance policy, benefit plan, commitment,
        covenant, assurance or undertaking of any nature, and shall include, without
        limitation, arrangements relating to employment.

      
        
          
          

        

        
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      Damages.”
        Damages” shall include any loss, damage, injury, Liability, claim, demand,
        settlement, judgment, award, fine, penalty, Tax, fee (including any legal
        fee,
        expert fee, accounting fee or advisory fee), charge, cost (including any
        cost of
        investigation), or expense of any nature. 

      

      Disclosure
        Schedule.”
        Disclosure Schedule” means the schedule (dated as of the date of the Agreement)
        delivered by each Party, copies of which are attached to the Agreement and
        incorporated in the Agreement by reference.

      

      Effective
        Time.”
        Effective Time” shall have the meaning specified in Section 1.2.

      

      Employee
        Benefit Plan.”
        Employee Benefit Plan” shall have the meaning specified in Section 3(3) of
        ERISA. 

      

      Encumbrance.”
        Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, security
        interest, encumbrance, equity, trust, equitable interest, claim, preference,
        right of possession, lease, tenancy, license, encroachment, covenant,
        infringement, interference, Order, proxy, option, right of first refusal,
        preemptive right, community property interest, legend, defect, impediment,
        exception, reservation, limitation, impairment, imperfection of title, condition
        or restriction of any nature (including any restriction on the transfer of
        any
        asset, any restriction on the receipt of any income derived from any asset,
        any
        restriction on the use of any asset and any restriction on the possession,
        exercise or transfer of any other attribute of ownership of any asset).

      

      Entity.”
Entity”
        means any corporation (including any non-profit corporation), general
        partnership, limited partnership, limited liability partnership, joint venture,
        estate, trust, cooperative, foundation, society, political party, union,
        company
        (including any limited liability company or joint stock company), firm or
        other
        enterprise, association, organization or entity.

      

      Environmental
        Law.
        “Environmental Law” means any applicable binding and enforceable federal, state,
        or local statute, law, rule, regulation, ordinance, or code relating to the
        environment, employee health and safety, or Hazardous Materials, including
        CERCLA, Resource Conservation and Recovery Act; the Federal Water Pollution
        Control Act, 33 U.S.C. § 1251 et
        seq.;
        the
        Toxic Substances Control Act, 15 U.S.C. § 2601 et seq; the Clean Air Act,
        42 USC § 7401 et seq.; the Safe Drinking Water Act, 42 USC. § 3803 et seq.; the
        Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq.; and the
        Occupational Safety and Health Act, 29 U.S.C. §651 et seq. (to the extent it
        regulates occupational exposure to Hazardous Materials).

      

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

      

      Governmental
        Authorization.”
        Governmental Authorization” means any: (a) permit, license, certificate,
        franchise, concession, approval, consent, ratification, permission, clearance,
        confirmation, endorsement, waiver, certification, designation, rating,
        registration, qualification, or authorization issued, granted, given, or
        otherwise made available by, or under the authority of, any Governmental
        Body,
        or pursuant to any Legal Requirement; or (b) right under any Contract with
        any
        Governmental Body. 

      

      
        
          
          

        

        
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      Governmental
        Body.”
        Governmental Body” means any: (a) nation, principality, state, commonwealth,
        province, territory, county, municipality, district, or other jurisdiction
        of
        any nature; (b) federal, state, local, municipal, foreign, or other government;
        (c) governmental or quasi-governmental authority of any nature (including
        any
        governmental division, subdivision, department, agency, bureau, branch, office,
        commission, council, board, instrumentality, officer, official, representative,
        organization, unit, body, or Entity and any court or other tribunal); (d)
        multi-national organization or body; or (e) individual, Entity or body
        exercising, or entitled to exercise, any executive, legislative, judicial,
        administrative, regulatory, police, military, or taxing authority or power
        of
        any nature.

      

      Hazardous
        Material.”
        Hazardous Material” means any substances that are defined or listed in, or
        otherwise classified pursuant to Environmental Laws as “hazardous substances,”
“hazardous materials,” “hazardous wastes,” “toxic substances,” “pollutants,”
“toxic pollutants,” “hazardous air pollutants” or any other similar
        designation.

      

      Immaterial
        Contract.”
        Immaterial Contract” means any Contract that: (a) was entered into in the
        Ordinary Course of Business; (b) may be terminated by the applicable Party
        (without penalty) within 31 days after the delivery of a termination notice
        by
        such Party to the other party involved defined as applying to this agreement;
        and (c) does not contemplate or involve the payment of cash or other
        consideration in an amount or having a value in excess of $50,000.

      

      Legal
        Requirement.”
Legal
        Requirement” means any federal, state, local, municipal, foreign, or other law,
        statute, legislation, constitution, principle of common law, resolution,
        ordinance, code, edict, decree, proclamation, treaty, convention, rule,
        regulation, ruling, directive, pronouncement, requirement, specification,
        determination, decision, opinion, or interpretation issued, enacted, adopted,
        passed, approved, promulgated, made, implemented, or otherwise put into effect
        by or under the authority of any Governmental Body.

      

      Liability.”
        Liability” means any debt, obligation, duty, or liability of any nature
        (including any unknown, undisclosed, unmatured, unaccrued, unasserted,
        contingent, indirect, conditional, implied, vicarious, derivative, joint,
        several, or secondary liability), regardless of whether such debt, obligation,
        duty, or liability would be required to be disclosed on a balance sheet prepared
        in accordance with generally accepted accounting principles and regardless
        of
        whether such debt, obligation, duty, or liability is immediately due and
        payable.

      

      Material
        Adverse Effect. “Material
        Adverse Effect” means a materially adverse effect on the financial condition,
        assets, or results of operations of the applicable Person’s business and
        financial condition.

      

      
        
          
          

        

        
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      Material
        Consents. “Material
        Consents” means those Consents designated by either Party as a condition to
        Closing required from third parties.

      

      Merger.”
Merger”
        means the merger of Merger Subsidiary into COESfx and the conversion of COESfx
        Shares into SFG Shares pursuant to the terms and conditions of this
        Agreement.

      

      Merger
        Consideration.”
Merger
        Consideration” means the SFG Shares issued in the Merger.

      

      Merger
        Subsidiary.”
Merger
        Subsidiary” means COESfx Acquisition Corp., a New York corporation.

      

      Order.”
Order”
        means any: (a) order, judgment, injunction, edict, decree, ruling,
        pronouncement, determination, decision, opinion, verdict, sentence, subpoena,
        writ or award issued, made, entered, rendered, or otherwise put into effect
        by
        or under the authority of any court, administrative agency, or other
        Governmental Body, or any arbitrator, or arbitration panel; or (b) Contract
        with
        any Governmental Body entered into in connection with any Proceeding.

      

      Ordinary
        Course of Business.
        An
        action taken by or on behalf of a Party shall not be deemed to have been
        taken
        in the “Ordinary Course of Business” unless:

      

      (a) such
        action is recurring in nature, is consistent with the past practices of such
        Party, and is taken in the ordinary course of the normal day-to-day operations
        of such Party; 

      

      (b) such
        action is taken in accordance with sound and prudent business
        practices;

      

      (c) such
        action is not required to be authorized by the shareholders of such Party,
        the
        board of directors of such Party, or any committee of the board of directors
        of
        such Party, and does not require any other separate or special authorization
        of
        any nature; and

      

      (d) such
        action is similar in nature and magnitude to actions customarily taken, without
        any separate or special authorization, in the ordinary course of the normal
        day-to-day operations of Comparable Entities.

      

      Party
        or Parties.”
Party”
        or “Parties shall have the meaning specified in the first
        paragraph.

      

      Person.”
Person”
        means any individual, Entity, or Governmental Body.

      

      Proceeding.”
        Proceeding” means any action, suit, litigation, arbitration, proceeding
        (including any civil, criminal, administrative, investigative, or appellate
        proceeding and any informal proceeding), prosecution, contest, hearing, inquiry,
        inquest, audit, examination, or investigation commenced, brought, conducted,
        or
        heard by or before, or otherwise involving, any Governmental Body, or any
        arbitrator or arbitration panel.

      

      
        
          
          

        

        
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      Proprietary
        Asset.
        “Proprietary Asset” means any patent, patent application, trademark (whether
        registered or unregistered and whether or not relating to a published work),
        trademark application, trade name, fictitious business name, service mark
        (whether registered or unregistered), service mark application, copyright
        (whether registered or unregistered), copyright application, maskwork, maskwork
        application, trade secret, know-how, customer list, franchise, system, computer
        software, invention, design, blueprint, engineering drawing, proprietary
        product, technology, proprietary right, or other intellectual property right
        or
        intangible asset.

      

      Related
        Party.
        Each of
        the following shall be deemed to be a “Related Party”: (a) each individual who
        is, or who has at any time been, an officer of the applicable Party; (b)
        each
        member of the family of each of the individuals referred to in clause “(a)”
above; and (c) any Entity (other than such Party) in which any one of the
        individuals referred to in clauses “(a)” and “(b)” above holds or held (or in
        which more than one of such individuals collectively hold or held), beneficially
        or otherwise, a controlling interest or a material voting, proprietary, or
        equity interest.

      

      Representatives.”
        Representatives” means officers, directors, employees, agents, attorneys,
        accountants, advisors, and representatives.

      

      Subsidiaries.“Subsidiaries”
        means COESfx, Inc., Currency Order Execution Systems, Inc., and COESfx Direct,
        Inc.

      

      Surviving
        Corporation.”
        Surviving Corporation” means COESfx, which shall be the survivor in the Merger
        with Merger Subsidiary.

      

      Tax.”
Tax”
        means any tax (including any income tax, franchise tax, capital gains tax,
        estimated tax, gross receipts tax, value-added tax, surtax, excise tax, ad
        valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
        tax, occupation tax, inventory tax, occupancy tax, withholding tax, or payroll
        tax), levy, assessment, tariff, impost, imposition, toll, duty (including
        any
        customs duty), deficiency, or fee, and any related charge or amount (including
        any fine, penalty, or interest), that is, has been, or may in the future
        be
        (a) imposed, assessed, or collected by or under the authority of any
        Governmental Body, or (b) payable pursuant to any tax-sharing agreement or
        similar Contract.

      

      Tax
        Return.”
Tax
        Return” means any return (including any information return), report, statement,
        declaration, estimate, schedule, notice, notification, form, election,
        certificate, or other document or information that is, has been, or may in
        the
        future be, filed with or submitted to, or required to be filed with or submitted
        to, any Governmental Body in connection with the determination, assessment,
        collection, or payment of any Tax, or in connection with the administration,
        implementation, or enforcement of or compliance with any Legal Requirement
        relating to any Tax.

      

      
        
          
          

        

        
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      Third-Party
        Claim.”
        Third-Party Claim” shall have the meaning specified in Article VII.

      

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

         

      

      

      51

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