Document:

Unassociated Document

     

    EXECUTION
COUNTERPART

     

    
      
        

      

    AMENDED
AND RESTATED

    REVOLVING
CREDIT

    

    AND

    

    TERM
LOAN AGREEMENT

    

    by
and among

    

    CYALUME
TECHNOLOGIES HOLDINGS, INC., as Guarantor

    

    CYALUME
TECHNOLOGIES, INC., as Borrower

    

    and
the Subsidiary Guarantors

    from
time to time party hereto,

    as
Guarantors

    

    and

    

    TD
BANK, N.A., as Agent and a Lender

    

    and

    

    The
Additional Lenders From

    Time
to Time Party Hereto

    

    July
29, 2010

     

    
      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

      Table of
Contents

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
      	 
      	
                                            Page

                                          
	 
      	 
      	 
      
	
                                            ARTICLE
      1.  DEFINITIONS AND RULES OF INTERPRETATION

                                          	
                                            1

                                          
	
                                            Section
      1.1

                                          	
                                            Definitions

                                          	
                                            1

                                          
	
                                            Section
      1.2

                                          	
                                            Rules
      of Interpretation

                                          	
                                            24

                                          
	 	 
	
                                            ARTICLE
      2.  THE REVOLVING CREDIT FACILITY

                                          	
                                            25

                                          
	 	 
	
                                            Section
      2.1

                                          	
                                            Commitment
      to Lend

                                          	
                                            25

                                          
	
                                            Section
      2.2

                                          	
                                            Revolving
      Loan Commitment Fee

                                          	
                                            26

                                          
	
                                            Section
      2.3

                                          	
                                            Reduction
      of Revolving Credit Loan Commitment

                                          	
                                            26

                                          
	
                                            Section
      2.4

                                          	
                                            The
      Revolving Credit Note

                                          	
                                            26

                                          
	
                                            Section
      2.5

                                          	
                                            Requests
      for Revolving Loans; Continuation and Conversion

                                          	
                                            27

                                          
	
                                            Section
      2.6

                                          	
                                            Payment
      and Sharing of Payment

                                          	
                                            29

                                          
	
                                            Section
      2.7

                                          	
                                            Change
      in Borrowing Base

                                          	
                                            29

                                          
	 	 
	
                                            ARTICLE
      3.  REPAYMENT OF THE REVOLVING CREDIT LOANS

                                          	
                                            29

                                          
	 	 
	
                                            Section
      3.1

                                          	
                                            Maturity

                                          	
                                            29

                                          
	
                                            Section
      3.2

                                          	
                                            Mandatory
      Repayments of Revolving Credit Loans

                                          	
                                            30

                                          
	
                                            Section
      3.3

                                          	
                                            Optional
      Repayments of Revolving Credit Loans

                                          	
                                            30

                                          
	 	 
	
                                            ARTICLE
      4.  TERM LOAN AND REAL ESTATE LOAN

                                          	
                                            30

                                          
	 	 
	
                                            Section
      4.1

                                          	
                                            Term
      Loan; Real Estate Loan

                                          	
                                            30

                                          
	
                                            Section
      4.2

                                          	
                                            The
      Term Notes

                                          	
                                            30

                                          
	
                                            Section
      4.3

                                          	
                                            Term
      Loan and Real Estate Loan Continuation

                                          	
                                            31

                                          
	 	 
	
                                            ARTICLE
      5.  REPAYMENT OF TERM LOAN AND REAL ESTATE LOAN

                                          	
                                            31

                                          
	 	 
	
                                            Section
      5.1

                                          	
                                            Scheduled
      Principal Amortization

                                          	
                                            31

                                          
	
                                            Section
      5.2

                                          	
                                            Optional
      Prepayments

                                          	
                                            31

                                          
	
                                            Section
      5.3

                                          	
                                            Mandatory
      Prepayments

                                          	
                                            32

                                          
	
                                            Section
      5.4

                                          	
                                            Term
      Loan and Real Estate Loan Payments Settlement.

                                          	
                                            33

                                          
	
                                            Section
      5.5

                                          	
                                            Late
      Fee

                                          	
                                            33

                                          
	 	 
	
                                            ARTICLE
      6.  CERTAIN GENERAL PROVISIONS

                                          	
                                            33

                                          
	 	 
	
                                            Section
      6.1

                                          	
                                            Amendment
      Fee

                                          	
                                            33

                                          
	
                                            Section
      6.2

                                          	
                                            Interest
      on Loans

                                          	
                                            33

                                          
	
                                            Section
      6.3

                                          	
                                            Funds
      for Payments

                                          	
                                            34

                                          
	
                                            Section
      6.4

                                          	
                                            Computations

                                          	
                                            34

                                          
	
                                            Section
      6.5

                                          	
                                            Additional
      Costs, Etc

                                          	
                                            34

                                          
	
                                            Section
      6.6

                                          	
                                            Capital
      Adequacy

                                          	
                                            35

                                          
	
                                            Section
      6.7

                                          	
                                            Certificate

                                          	
                                            36

                                          
	
                                            Section
      6.8

                                          	
                                            Interest
      Following Event of Default; Late Charge

                                          	
                                            36

                                          
	
                                            Section
      6.9

                                          	
                                            Inability
      to Determine LIBOR

                                          	
                                            36

                                          
	
                                            Section
      6.10

                                          	
                                            Illegality

                                          	
                                            36

                                          
	
                                            Section
      6.11

                                          	
                                            Indemnity

                                          	
                                            37

                                          
	
                                            Section
      6.12

                                          	
                                            Taxes

                                          	
                                            38

                                          
	
                                            Section
      6.13

                                          	
                                            General
      Obligations

                                          	
                                            39

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    Table of
Contents

    

    
      
        
          
            
              
                
                  
                    
                      	 
      	 
      	
                              Page

                            
	 
      	 
      	 
      
	
                              Section
      6.14

                            	
                              Replacement
      of Lender Due to Increased Costs

                            	
                              40

                            
	 	 
	
                              ARTICLE
      7.  LETTERS OF CREDIT SUBLIMIT; FOREIGN EXCHANGE
      SUBLIMIT

                            	
                              40

                            
	 	 
	
                              Section
      7.1

                            	
                              Letter
      of Credit Commitments

                            	
                              40

                            
	
                              Section
      7.2

                            	
                              Reimbursement
      Obligation of the Borrower

                            	
                              41

                            
	
                              Section
      7.3

                            	
                              Letter
      of Credit Payments

                            	
                              41

                            
	
                              Section
      7.4

                            	
                              Obligations
      Absolute

                            	
                              41

                            
	
                              Section
      7.5

                            	
                              Reliance
      by Issuer

                            	
                              42

                            
	
                              Section
      7.6

                            	
                              Letter
      of Credit Fee

                            	
                              42

                            
	
                              Section
      7.7

                            	
                              Foreign
      Exchange Facility

                            	
                              42

                            
	 	 
	
                              ARTICLE
      8.  COLLATERAL SECURITY

                            	
                              44

                            
	 	 
	
                              ARTICLE
      9.  REPRESENTATIONS AND WARRANTIES

                            	
                              44

                            
	 	 
	
                              Section
      9.1

                            	
                              Corporate
      Authority

                            	
                              44

                            
	
                              Section
      9.2

                            	
                              Governmental
      Approvals

                            	
                              45

                            
	
                              Section
      9.3

                            	
                              Title
      to Properties; Leases

                            	
                              45

                            
	
                              Section
      9.4

                            	
                              Financial
      Statements and Projections

                            	
                              46

                            
	
                              Section
      9.5

                            	
                              No
      Material Changes, Etc

                            	
                              46

                            
	
                              Section
      9.6

                            	
                              Franchises,
      Patents, Copyrights, Etc

                            	
                              46

                            
	
                              Section
      9.7

                            	
                              Litigation

                            	
                              47

                            
	
                              Section
      9.8

                            	
                              No
      Materially Adverse Contracts, Etc

                            	
                              47

                            
	
                              Section
      9.9

                            	
                              Compliance
      with Other Instruments, Laws, Etc

                            	
                              47

                            
	
                              Section
      9.10

                            	
                              Tax
      Status

                            	
                              47

                            
	
                              Section
      9.11

                            	
                              No
      Event of Default

                            	
                              48

                            
	
                              Section
      9.12

                            	
                              Holding
      Company and Investment Company Acts

                            	
                              48

                            
	
                              Section
      9.13

                            	
                              Absence
      of Financing Statements, Etc

                            	
                              48

                            
	
                              Section
      9.14

                            	
                              Perfection
      of Security Interest

                            	
                              48

                            
	
                              Section
      9.15

                            	
                              Certain
      Transactions

                            	
                              48

                            
	
                              Section
      9.16

                            	
                              Employee
      Benefit Plans

                            	
                              49

                            
	
                              Section
      9.17

                            	
                              Regulations
      T, X and U

                            	
                              49

                            
	
                              Section
      9.18

                            	
                              Environmental
      Compliance

                            	
                              49

                            
	
                              Section
      9.19

                            	
                              Ownership;
      Subsidiaries, Etc

                            	
                              51

                            
	
                              Section
      9.20

                            	
                              Bank
      Accounts

                            	
                              51

                            
	
                              Section
      9.21

                            	
                              Chief
      Executive Offices

                            	
                              51

                            
	
                              Section
      9.22

                            	
                              Fiscal
      Year

                            	
                              51

                            
	
                              Section
      9.23

                            	
                              No
      Amendments to Certain Documents

                            	
                              51

                            
	
                              Section
      9.24

                            	
                              Disclosure

                            	
                              52

                            
	
                              Section
      9.25

                            	
                              Intentionally
      Omitted.

                            	
                              52

                            
	
                              Section
      9.26

                            	
                              Insurance

                            	
                              52

                            
	
                              Section
      9.27

                            	
                              Foreign
      Assets Control Regulation, Etc

                            	
                              52

                            
	
                              Section
      9.28

                            	
                              Use
      of Proceeds

                            	
                              53

                            
	
                              Section
      9.29

                            	
                              Licenses
      and Permits

                            	
                              53

                            
	
                              Section
      9.30

                            	
                              Product
      Liability

                            	
                              53

                            

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
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    Table of
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                                Page

                              
	 
      	 
      	 
      
	
                                Section
      9.31

                              	
                                Government
      Contracts

                              	
                                53

                              
	
                                Section
      9.32

                              	
                                Export
      Licenses and Compliance

                              	
                                55

                              
	 	 
	
                                ARTICLE
      10.  AFFIRMATIVE COVENANTS OF THE BORROWER

                              	
                                56

                              
	 	 
	
                                Section
      10.1

                              	
                                Punctual
      Payment

                              	
                                56

                              
	
                                Section
      10.2

                              	
                                Maintenance
      of Office

                              	
                                57

                              
	
                                Section
      10.3

                              	
                                Records
      and Accounts

                              	
                                57

                              
	
                                Section
      10.4

                              	
                                Financial
      Statements, Certificates and Information

                              	
                                57

                              
	
                                Section
      10.5

                              	
                                Notices

                              	
                                59

                              
	
                                Section
      10.6

                              	
                                Legal
      Existence; Maintenance of Properties

                              	
                                60

                              
	
                                Section
      10.7

                              	
                                Insurance

                              	
                                60

                              
	
                                Section
      10.8

                              	
                                Taxes

                              	
                                61

                              
	
                                Section
      10.9

                              	
                                Inspection
      of Properties and Books, Etc

                              	
                                61

                              
	
                                Section
      10.10

                              	
                                Compliance
      with Laws, Contracts, Licenses, and Permits

                              	
                                62

                              
	
                                Section
      10.11

                              	
                                Employee
      Benefit Plans

                              	
                                62

                              
	
                                Section
      10.12

                              	
                                Bank
      Accounts

                              	
                                63

                              
	
                                Section
      10.13

                              	
                                Further
      Assurances

                              	
                                63

                              
	
                                Section
      10.14

                              	
                                Use
      of Proceeds

                              	
                                63

                              
	 	 
	
                                ARTICLE
      11.  CERTAIN NEGATIVE COVENANTS OF THE BORROWER

                              	
                                63

                              
	 	 
	
                                Section
      11.1

                              	
                                Restrictions
      on Indebtedness

                              	
                                63

                              
	
                                Section
      11.2

                              	
                                Restrictions
      on Liens

                              	
                                64

                              
	
                                Section
      11.3

                              	
                                Restrictions
      on Investments

                              	
                                66

                              
	
                                Section
      11.4

                              	
                                Restricted
      Payments

                              	
                                67

                              
	
                                Section
      11.5

                              	
                                Merger,
      Consolidation and Disposition of Assets

                              	
                                68

                              
	
                                Section
      11.6

                              	
                                Sale
      and Leaseback

                              	
                                69

                              
	
                                Section
      11.7

                              	
                                Compliance
      with Environmental Laws

                              	
                                69

                              
	
                                Section
      11.8

                              	
                                Employee
      Benefit Plans

                              	
                                69

                              
	
                                Section
      11.9

                              	
                                Modification
      of Documents

                              	
                                70

                              
	
                                Section
      11.10

                              	
                                Negative
      Pledges

                              	
                                70

                              
	
                                Section
      11.11

                              	
                                Transactions
      with Affiliates

                              	
                                70

                              
	
                                Section
      11.12

                              	
                                Upstream
      Limitations

                              	
                                70

                              
	
                                Section
      11.13

                              	
                                Inconsistent
      Agreements

                              	
                                71

                              
	
                                Section
      11.14

                              	
                                Bank
      Accounts

                              	
                                71

                              
	
                                Section
      11.15

                              	
                                Restriction
      on Subsidiaries

                              	
                                71

                              
	
                                Section
      11.16

                              	
                                Restrictions
      on Loans and Advances

                              	
                                71

                              
	
                                Section
      11.17

                              	
                                Line
      of Business

                              	
                                72

                              
	
                                Section
      11.18

                              	
                                Use
      of Proceeds

                              	
                                72

                              
	
                                Section
      11.19

                              	
                                Activity
      of the Holding Company

                              	
                                72

                              
	 	 
	
                                ARTICLE
      12.  FINANCIAL COVENANTS OF THE BORROWER

                              	
                                72

                              
	 	 
	
                                Section
      12.1

                              	
                                Coverage
      Ratios

                              	
                                72

                              
	
                                Section
      12.2

                              	
                                Leverage
      Ratio

                              	
                                72

                              
	
                                Section
      12.3

                              	
                                Capital
      Expenditures

                              	
                                73

                              

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
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    Table of
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                              Page

                            
	 
      	 
      	 
      
	
                              Section
      12.4

                            	
                              Current
      Ratio

                            	
                              73

                            
	
                              Section
      12.5

                            	
                              Minimum
      EBITDA

                            	
                              73

                            
	 	 
	
                              ARTICLE
      13.  CLOSING CONDITIONS

                            	
                              73

                            
	 	 
	
                              Section
      13.1

                            	
                              Loan
      Documents

                            	
                              73

                            
	
                              Section
      13.2

                            	
                              Granite
      Subordinated Debt Documents

                            	
                              74

                            
	
                              Section
      13.3

                            	
                              Certified
      Copies of Charter Documents

                            	
                              74

                            
	
                              Section
      13.4

                            	
                              Corporate
      Action

                            	
                              74

                            
	
                              Section
      13.5

                            	
                              Incumbency
      Certificate

                            	
                              74

                            
	
                              Section
      13.6

                            	
                              Validity
      of Liens

                            	
                              74

                            
	
                              Section
      13.7

                            	
                              Perfection
      Certificates and Lien Search Results

                            	
                              74

                            
	
                              Section
      13.8

                            	
                              Reserved

                            	
                              74

                            
	
                              Section
      13.9

                            	
                              Reserved

                            	
                              74

                            
	
                              Section
      13.10

                            	
                              Solvency
      Certificate

                            	
                              74

                            
	
                              Section
      13.11

                            	
                              Opinion
      of Counsel

                            	
                              75

                            
	
                              Section
      13.12

                            	
                              Reserved

                            	
                              75

                            
	
                              Section
      13.13

                            	
                              Payment
      of Fees

                            	
                              75

                            
	
                              Section
      13.14

                            	
                              Material
      Adverse Effect

                            	
                              75

                            
	
                              Section
      13.15

                            	
                              Consents

                            	
                              75

                            
	
                              Section
      13.16

                            	
                              Borrowing
      Base Report

                            	
                              75

                            
	
                              Section
      13.17

                            	
                              Granite
      Subordination Payment and Documents

                            	
                              75

                            
	
                              Section
      13.18

                            	
                              Agent
      Approved Subordination Agreement

                            	
                              75

                            
	 	 
	
                              ARTICLE
      14.  CONDITIONS TO ALL BORROWINGS

                            	
                              75

                            
	 	 
	
                              Section
      14.1

                            	
                              Representations
      True; No Event of Default

                            	
                              76

                            
	
                              Section
      14.2

                            	
                              No
      Legal Impediment

                            	
                              76

                            
	
                              Section
      14.3

                            	
                              Governmental
      Regulations

                            	
                              76

                            
	
                              Section
      14.4

                            	
                              Proceedings
      and Documents

                            	
                              76

                            
	
                              Section
      14.5

                            	
                              Borrowing
      Base Certificate

                            	
                              76

                            
	 	 
	
                              ARTICLE
      15.  EVENTS OF DEFAULT; ACCELERATION; ETC

                            	
                              76

                            
	 	 
	
                              Section
      15.1

                            	
                              Events
      of Default and Acceleration

                            	
                              76

                            
	
                              Section
      15.2

                            	
                              Termination
      of Total Commitment

                            	
                              79

                            
	
                              Section
      15.3

                            	
                              Remedies

                            	
                              80

                            
	
                              Section
      15.4

                            	
                              Distribution
      of Collateral Proceeds

                            	
                              80

                            

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

    Table of
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                                  Page

                                
	 
      	 
      
	
                                  ARTICLE
      16.  SETOFF

                                	
                                  81

                                
	 	 
	
                                  ARTICLE
      17.  EXPENSES

                                	
                                  81

                                
	 	 
	
                                  ARTICLE
      18.  INDEMNIFICATION

                                	
                                  82

                                
	 	 
	
                                  ARTICLE
      19.  SURVIVAL OF COVENANTS, ETC

                                	
                                  83

                                
	 	 
	
                                  ARTICLE
      20.  AGENT

                                	
                                  83

                                
	 	 	 
	
                                  Section
      20.1

                                	
                                  Appointment
      and Authorization of Agent

                                	
                                  83

                                
	
                                  Section
      20.2

                                	
                                  Delegation
      of Duties

                                	
                                  83

                                
	
                                  Section
      20.3

                                	
                                  Liability
      of the Agents

                                	
                                  84

                                
	
                                  Section
      20.4

                                	
                                  Reliance
      by Agent

                                	
                                  84

                                
	
                                  Section
      20.5

                                	
                                  Notice
      of Default

                                	
                                  84

                                
	
                                  Section
      20.6

                                	
                                  Credit
      Decision; Disclosure of Information by Agent

                                	
                                  85

                                
	
                                  Section
      20.7

                                	
                                  Indemnification
      of Agent

                                	
                                  85

                                
	
                                  Section
      20.8

                                	
                                  Agent
      in its Individual Capacity

                                	
                                  86

                                
	
                                  Section
      20.9

                                	
                                  Successor
      Agent

                                	
                                  86

                                
	
                                  Section
      20.10

                                	
                                  Agent
      May File Proofs of Claim

                                	
                                  86

                                
	
                                  Section
      20.11

                                	
                                  Collateral
      and Guaranty Matters

                                	
                                  87

                                
	
                                  Section
      20.12

                                	
                                  Lender
      Pledge

                                	
                                  87

                                
	
                                  Section
      20.13

                                	
                                  Return
      of Payments; Defaulting Lender

                                	
                                  88

                                
	
                                  Section
      20.14

                                	
                                  Right
      to Perform, Preserve and Protect

                                	
                                  88

                                
	
                                  Section
      20.15

                                	
                                  Amendment
      of Article 20

                                	
                                  89

                                
	 	 
	
                                  ARTICLE
      21.  ASSIGNMENT AND PARTICIPATION

                                	
                                  89

                                
	 	 
	
                                  Section
      21.1

                                	
                                  Conditions
      to Assignment by any Lender

                                	
                                  89

                                
	
                                  Section
      21.2

                                	
                                  Participations

                                	
                                  89

                                
	
                                  Section
      21.3

                                	
                                  Disclosure

                                	
                                  89

                                
	
                                  Section
      21.4

                                	
                                  Assignee
      or Participant Affiliated with the Borrower

                                	
                                  89

                                
	
                                  Section
      21.5

                                	
                                  Assignment
      by the Borrower

                                	
                                  90

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
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                    Page

                  
	 
      	 
      
	
                    ARTICLE
      22.  NOTICES, ETC

                  	
                    90

                  
	 
      	 
      
	
                    ARTICLE
      23.  GOVERNING LAW

                  	
                    91

                  
	 
      	 
      
	
                    ARTICLE
      24.  HEADINGS

                  	
                    91

                  
	 
      	 
      
	
                    ARTICLE
      25.  COUNTERPARTS

                  	
                    91

                  
	 
      	 
      
	
                    ARTICLE
      26.  ENTIRE AGREEMENT, ETC

                  	
                    91

                  
	 
      	 
      
	
                    ARTICLE
      27.  WAIVER OF JURY TRIAL

                  	
                    91

                  
	 
      	 
      
	
                    ARTICLE
      28.  CONSENTS, AMENDMENTS, WAIVERS, ETC

                  	
                    92

                  
	 
      	 
      
	
                    ARTICLE
      29.  SEVERABILITY

                  	
                    93

                  
	 
      	 
      
	
                    ARTICLE
      30.  RATIFICATION

                  	
                    93

                  

          

        

      

    

    
      
         

      

      
        vi

        
          

        

      

      
         

      

    

    List of
Exhibits and Schedules

    

    
      
        
          
            	
                    Exhibits

                  	
                    Exhibit
      A-1

                  	
                    Form
      of Revolving Credit Note

                  
	 
      	
                    Exhibit
      A-2

                  	
                    Form
      of Amended and Restated Term Note

                  
	 
      	
                    Exhibit
      A-3

                  	
                    Form
      of Real Estate Loan Note

                  
	 
      	
                    Exhibit
      B

                  	
                    Form
      of Notice of Borrowing (Revolving Loan)

                  
	 
      	
                    Exhibit
      C

                  	
                    Form
      of Notice of Borrowing (Term Loans)

                  
	 
      	
                    Exhibit
      D

                  	
                    Form
      of Compliance Certificate

                  
	 
      	
                    Exhibit
      E

                  	
                    Form
      of Assignment and Acceptance Agreement

                  
	 
      	
                    Exhibit
      F

                  	
                    Form
      of Management Fees Subordination Agreement

                  
	 
      	
                    Exhibit
      G

                  	
                    Form
      of Consulting Fee Subordination
Letter

                  

          

        

      

    

    

    
      
        
          
            	
                    Schedules

                  	
                    Schedule
      1.1

                  	
                    Omniglow
      Litigation Description

                  
	 
      	
                    Schedule
      9.3

                  	
                    Title
      to Property; Leases

                  
	 
      	
                    Schedule
      9.5

                  	
                    Material
      Changes

                  
	 
      	
                    Schedule
      9.6

                  	
                    Franchises,
      Patents, Copyrights, Etc.

                  
	 
      	
                    Schedule
      9.7

                  	
                    Litigation

                  
	 
      	
                    Schedule
      9.8

                  	
                    No
      Materially Adverse Contracts, Etc.

                  
	 
      	
                    Schedule
      9.9

                  	
                    Compliance
      with Other Instruments, Laws, Etc.

                  
	 
      	
                    Schedule
      9.15

                  	
                    Certain
      Transactions

                  
	 
      	
                    Schedule
      9.19A

                  	
                    Post-Closing
      Capitalization of Borrower

                  
	 
      	
                    Schedule
      9.19B

                  	
                    Post-Closing
      Capitalization of Holding Company

                  
	 
      	
                    Schedule
      9.20

                  	
                    Bank
      Accounts

                  
	 
      	
                    Schedule
      9.26

                  	
                    Insurance

                  
	 
      	
                    Schedule
      9.29

                  	
                    Licenses
      and Permits

                  
	 
      	
                    Schedule
      9.31

                  	
                    Government
      Contracts

                  
	 
      	
                    Schedule
      9.32

                  	
                    Export
      Licenses and Compliance

                  
	 
      	
                    Schedule
      11.9

                  	
                    Warrant

                  

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AMENDED
AND RESTATED

    REVOLVING
CREDIT AND TERM LOAN AGREEMENT

     

    This
AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of the
29TH
day of July, 2010, by and among CYALUME TECHNOLOGIES, INC., a Delaware
corporation (the “Borrower”), CYALUME TECHNOLOGIES HOLDINGS, INC., a Delaware
corporation (the “Holding Company”), the Lenders and the other financial
institutions or other entities from time to time parties hereto identified on
the signature pages hereto and TD Bank, N.A., a national banking association, as
Agent and as Lender.

     

    Background

     

    The
Borrower, the Holding Company and the Agent entered into that certain Revolving
Credit and Term Loan Agreement (the “Initial Credit Agreement”) dated as of the
Original Closing, which was amended by that certain First Amendment to Credit
Agreement and Limited Waiver dated as of September 1, 2009 (the “First
Amendment”), which was further amended by that certain Second Amendment to
Credit Agreement and Limited Waiver dated as of December 7, 2009 (the
“Second Amendment”, together with the First Amendment and the Initial Credit
Agreement, collectively, the “Original Credit Agreement”).  The
Borrower has requested the Agent and the Lender consent to the Borrower issuing
certain subordinated debt, to certain modifications to the financial covenants
and to the other modifications herein contained.

     

    NOW,
THEREFORE, in consideration of the promises and the agreements, provisions and
covenants herein contained, the Borrower, the Holding Company and the Agent
hereby agree as follows:

     

    ARTICLE
1.  DEFINITIONS AND RULES OF INTERPRETATION.

     

    Section
1.1    Definitions.  The
following terms shall have the meanings set forth in this Article 1 or elsewhere
in the provisions of this Credit Agreement referred to below:

     

    Account
Debtor.  Any Person who is or who may become obligated under,
with respect to, or on account of, an Account, Chattel Paper, or a General
Intangible.

     

    Account(s).  As
applied to any Person all now owned or hereafter acquired right, title, and
interest with respect to “accounts” (as such term is defined from time to time
in the Uniform Commercial Code), and any and all supporting obligations in
respect thereof.

     

    Acquired
EBITDA.  With respect to the twelve (12) month period following
the closing of a Permitted Acquisition, the maximum, stipulated, pro forma
amount approved by the Agent and the Lenders which can be added to actual
trailing twelve (12) month EBITDA.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Acquisition.  The
acquisition by a Subsidiary of the Holding Company on the Acquisition Closing
Date of substantially all of the assets of the Borrower.

     

    Acquisition
Closing Date.  The date on which the conditions set forth in
the Purchase Agreement have been satisfied and the Acquisition has been
consummated.

     

    Acquisition
Documents.  Collectively, the Purchase Agreement and all other
agreements and documents required to be entered into or delivered pursuant
thereto or in connection with the Acquisition, each in the form delivered to the
Agent on the Acquisition Closing Date and as amended as permitted
hereunder.

     

    Adjusted
EBITDA.  With respect to any period, an amount equal to EBITDA
for such period plus to the extent
accounted for in EBITDA and without duplication, the sum of (i) Acquired
EBITDA and (ii) legal and professional fees related to Permitted
Acquisitions to the extent included in Consolidated Net Income.

     

    Affiliate.  As
applied to any Person, any other Person who, directly or indirectly, controls,
is controlled by, or is under common control with, such Person.  For
purposes of this definition, “control” means the possession, directly or
indirectly, of the power to direct the management and policies of a Person,
whether through the ownership of Shares, by contract, or otherwise; provided that, for
purposes of Section 11.11 hereof:  (a) any Person which owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person; (b) each director (or comparable manager) of a
Person shall be deemed to be an Affiliate of such Person; and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be deemed to be an Affiliate of such Person.

     

    Agent.  TD
Bank, N.A., solely in its capacity as agent and collateral agent for the Lenders
hereunder and any other holder of Obligations, and any successor
thereto.

     

    Agent
Approved Subordination Agreement.  A subordination agreement in
form and substance satisfactory to the Agent, in its sole discretion, which
contains such payment, remedy blockages and standstill provisions and other such
terms as the Agent may require or may deem acceptable.

     

    Agent’s
Head Office.  The Agent’s office located at 370 Main Street,
Worcester, MA 01608 or such other location as the Agent may designate from time
to time.

     

    Agent’s
Special Counsel.  Choate, Hall & Stewart LLP or such other
counsel as may be approved by the Agent.

     

    Amendment
Fee.  See Section 6.1.

     

    Anti-Terrorism
Laws.  Any Laws relating to terrorism or money laundering,
including Executive Order No. 13224 (effective September 24, 2001),
the USA PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act,
and the Laws administered by OFAC.

     

    Applicable
Margin.  So long as no Event of Default exists and subject to
the terms of this definition, the applicable per annum percentage set forth
below.

     

    
      
        
        

      

      
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                          LIBOR Rate Margin

                        	 	
                          Base Rate Margin

                        	 
	 	 
      	 	 
      	 
	 	
                          4.0%

                        	 	
                          3.0%

                        	 

                

              

            

          

        

      

    

     

    Availability.  As
of any date of determination, if such date is a Business Day, and determined at
the close of business on the immediately preceding Business Day, if such date of
determination is not a Business Day, the amount that the Borrower is entitled to
borrow as Revolving Credit Loans under Section 2.1, after giving effect to
all then outstanding Obligations  and all sublimits applicable
hereunder.

     

    Balance
Sheet Date.  December 31, 2009.

     

    Bankruptcy
Code.  The provisions of Title 11 of the United States Code,
11 U.S.C., §§101 et seq., as now and hereafter in effect, any successors to
such statute and any other applicable insolvency or similar law of any
jurisdiction including, without limitation, any law of any jurisdiction
permitting a debtor to obtain a stay or a compromise of the claims of its
creditors against it.

     

    Base
Rate.  The term “Base Rate” shall mean the greater of:
(A) variable annual rate of interest designated from time to time by the
Wall Street Journal in the so-called “Money Rates Section” as being the “Prime
Rate” of interest or, if the “Prime Rate” ceases to be so published, the rate
which is in replacement thereof or substitution therefor, such interest rate to
be adjusted on the effective date of any change thereof and (B) three percent
(3%) per annum.  The Agent shall not be required to notify the
Borrower of adjustments in said interest rate.  The Base Rate is only
available for Revolving Credit Loans.

     

    Base
Rate Loan(s).  Any Revolving Credit Loans bearing interest
determined with reference to the Base Rate.

     

    Blocked
Person.  Any Person:  (i) listed in the annex
to, or is otherwise subject to the provisions of, Executive Order
No. 13224; (ii) a Person owned or controlled by, or acting for or on
behalf of, any Person that is listed in the annex to, or is otherwise subject to
the provisions of, Executive Order No. 13224; (iii) a Person with
which any Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law; (iv) a Person that commits,
threatens or conspires to commit or supports “terrorism” as defined in Executive
Order No. 13224; or (v) a Person that is named a “specially designated
national” or “blocked person” on the most current list published by OFAC or
other similar list.

     

    Borrower.  See
the preamble hereto.

     

    Borrower’s
Key Officers.  Derek Dunaway, Thomas McCarthy, Earl Cranor and
Michael Bielonko.

     

    Borrowing
Base.  At the relevant time of reference thereto, an amount
determined by the Agent by reference to the most recent Borrowing Base Report
delivered to the Agent pursuant to Section 10.4(h), as adjusted pursuant to
the provisions below, which is equal to the sum of:  80% of Eligible
Accounts Receivable plus the lesser of
(i) $2,000,000 or (ii) 50% of Eligible Raw Material  and
Finished Goods Inventory.

    
      
         

      

      
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    The
Required Lenders may, in their reasonable discretion, from time to time, in
accordance with Section 2.7:  (x) reduce the lending formula
with respect to any Eligible Accounts Receivable to the extent that the Required
Lenders reasonably determine that:  (i) the dilution with respect
of the Eligible Accounts Receivable for any period has increased in any material
respect or may be reasonably anticipated to increase in any material respect
above historical levels, or (ii) the general creditworthiness of account
debtors or other obligors of the Borrower has declined materially or
(y) reduce the lending formula with respect to any Eligible Raw Material
and Finished Goods Inventory to the extent that the Required Lenders determine
that:  (i) the number of days of the turnover of the inventory
owned by Borrower for any period has changed in any material adverse respect,
(ii) the liquidation value of any Eligible Raw Material and Finished Goods
Inventory, or any category thereof, has materially decreased, or (iii) the
nature and quality of the inventory has changed materially and
adversely.  In determining whether to reduce the lending formula(s),
the Required Lenders may consider events, conditions, contingencies or risks
which are also considered in determining Eligible Accounts Receivable and
Eligible Raw Material and Finished Goods Inventory.

     

    Borrowing
Base
Report.  A Borrowing Base Report signed by the Chief Financial
Officer and in substantially the form of Exhibit C
hereto.

     

    Business
Day.  Any day (other than Saturday, Sunday or holiday) on
which the Agent is open and conducting its customary banking transactions in The
Commonwealth of Massachusetts.

     

    Capital
Assets.  Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents,
copyrights, trademarks, franchises and goodwill).

     

    Capital
Expenditures.  For any date of determination, the aggregate
amount of payments made by the Borrower or any of its Subsidiaries for the
rental, lease, purchase, construction, or use of any property, the value or cost
of which under GAAP would appear on the Borrower’s balance sheet in the category
of property, plant or equipment or intangibles, minus the sum
of:  (i) expenditures made in Permitted Acquisitions, including,
without limitation, reasonable capitalized transaction costs related thereto and
approved by the Required Lenders and (ii) capitalized transaction costs
related to the obtaining and closing of the Loans approved by the Required
Lenders.

     

    Capitalization
Documents.  The Charter Documents of the Holding
Company.

     

    Capitalized
Lease(s).  Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.

     

    CERCLA.  See
Section 9.18(a).

    
      
         

      

      
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    Change
of Control.  The occurrence of any one of the following
events:  (i) the common stock of Holding Company is no longer
publicly traded or held under the Securities and Exchange Act of 1934;
(ii) the Holding Company shall cease to own 100% of the Shares of the
Borrower; (iii) there is a sale of all or substantially all of the assets
of the Borrower or (iv) any “person” or “group” (as such terms are used in
Sections 15(d) and 14(d) of the Securities Exchange Act of 1934 becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all securities that such person or group has the right
to acquire (such right, an “option right” whether such right is exercisable
immediately or only after the passage of time)) directly or indirectly, of 40%
or more of the equity interests of the Holding Company on a fully diluted
basis.

     

    Charter
Documents.  With respect to a Person which is a corporation,
its Certificate of Incorporation as amended with the consent of the Required
Lenders and in effect from time to time.

     

    Chattel
Paper.  All now owned or hereafter acquired right, title and
interest with respect to “chattel paper” including, without limitation,
“tangible chattel paper” and “electronic chattel paper”, as such terms are
defined from time to time in the UCC and any and all supporting obligations in
respect thereof.

     

    Closing
Date.  The first date on which the conditions set forth in
Article 13 have been satisfied and the Agent and the Lenders execute and deliver
this Credit Agreement.

     

    Code.  The
Internal Revenue Code of 1986, as amended.

     

    Collateral.  All
of the property, rights and interests of the Borrower and each Guarantor that
are or are intended to be subject to the security interests and mortgages
created by the Security Documents.

     

    Collateral
Access Agreements.  A waiver or
consent in form and substance satisfactory to the Agent executed by any lessor
of Real Estate leased by Borrower or any of its Subsidiaries at which Real
Estate any Collateral is located.

     

    Collateral
Assignment of Acquisition Documents.  The Collateral Assignment
of Acquisition Documents dated or to be dated on or prior to the Original
Closing Date, between the Borrower and the Agent, in form and substance
satisfactory to the Agent, as may be amended, modified or supplemented from time
to time.

     

    Commitment
Fee.  See Section 2.2.

     

    Consolidated
or consolidated or Consolidating or consolidating.  With
reference to any term defined herein, shall mean that term as applied to the
financial statements of the Holding Company and its Subsidiaries, consolidated
or consolidating in accordance with generally accepted accounting
principles.

    
      
         

      

      
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    Consolidated
Net Income (or Deficit).  For any period the gross revenues of
the Borrower and its Subsidiaries on a consolidated basis during such period,
less all expenses and other proper charges (including taxes on income), all
determined in accordance with generally accepted accounting principles, but in
any event, excluding:  (i) any gain arising from any write down
or write-up of assets, except to the extent inclusion thereof shall be approved
in writing by the Required Lenders; (ii) earnings of any Subsidiary accrued
prior to the date it became a Subsidiary; (iii) the net earnings of any
business entity (other than a Subsidiary) in which the Borrower or any
Subsidiary has an ownership interest, except to the extent such net earnings
shall have actually been received by the Borrower or such Subsidiary in the form
of cash distributions; (iv) the proceeds of any life insurance policy;
(v) any deferred or other credit representing any excess of the equity of
any Subsidiary at the date of acquisition thereof over the amount invested in
such Subsidiary; and (vi) any reversal of any contingency reserve, except
to the extent that provision for such contingency reserve shall be made from
income arising during such period.

     

    Consolidated
Total Debt Service.  For any period, the sum
of:  (i) Consolidated Total Interest Expense but excluding
deferred interest not paid in the applicable period plus (ii) all scheduled
installments of principal (which shall not include the annual mandatory
prepayment of Excess Cash Flow required in Section 5.3(e)) or other like
sums payable during such period on all Indebtedness of the Borrower and its
Subsidiaries outstanding during all or any part of such period.

     

    Consolidated
Total Interest Expense.  For any period, the aggregate amount
of cash interest required to be paid by the Borrower and its Subsidiaries during
such period on all Indebtedness of the Borrower and its Subsidiaries outstanding
during all or any part of such period, whether such interest was or is required
to be reflected as an item of expense or capitalized and including commitment
fees, agency fees, facility fees, and similar recurring fees in connection with
the borrowing of money.

     

    Consulting
Agreement.  A consulting agreement between Jarret Fass and the
Holding Company in form and substance reasonably satisfactory to the Required
Lenders, as may be amended, modified or supplemented from time to time in
accordance with the terms of this Credit Agreement, which agreement and
Consulting Fees payable thereunder have been subordinated pursuant to the
Consulting Fee Subordination Letter.

     

    Consulting
Fees.  All fees or compensation to be paid to Jarret Fass
pursuant to the Consulting Agreement.

     

    Consulting
Fee Subordination Letter.  The letter agreement between Jarret
Fass and the Agent, substantially in the form attached hereto as Exhibit G, or such
other form as is reasonably satisfactory to the Required Lenders, as may be
amended, modified or supplemented from time to time.

     

    Credit
Agreement.  This Amended and Restated Revolving Credit and Term
Loan Agreement, including the Schedules and Exhibits hereto, as the same may be
amended, modified or supplemented from time to time.

     

    CTSA.  Cyalume
Technologies, S.A.S., a corporation organized under the laws of France and which
is a Subsidiary of the Borrower.

     

    Current
Assets.  As of any date
of determination, all assets of the Holding Company and its Subsidiaries which
would, in accordance with generally accepted accounting principles, be
classified as current assets at such date.

     

    Current
Liabilities.  As of any date of determination, all liabilities
of the Holding Company and its Subsidiaries which would, in accordance with
generally accepted accounting principles, be classified as current liabilities
at such date but excluding therefrom the current maturities of long term debt
but including the outstanding Revolving Credit Loans.

    
      
         

      

      
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    Current
Ratio.  As of any date
of determination, the ratio of:  (i) Current Assets to
(ii) Current Liabilities.

     

    Default.  See
Section 15.1.

     

    Defaulting
Lender.  Any Lender that fails to make any Revolving Credit
Loan (or other extension of credit) that it is required to make hereunder
on the date that it is required to do so hereunder.

     

    Defaulting
Lender Rate. The
interest rate then applicable to Revolving Credit Loans that are either LIBOR
Rate Loans (inclusive of the LIBOR Rate Margin applicable thereto) or Base
Rate Loans plus two percent per annum.

     

    Default
Rate.  See Section 6.8.

     

    Derivative
Contract.  A forward contract, futures contract, swap, option
or other financing agreement or arrangement (including, without limitation,
caps, floors, collars and similar agreements), the value of which is dependent
upon interest rates, currency exchange rates, commodities or other indices and
the ISDA Master Agreement dated as of the Original Closing Date by and between
TD Bank and the Borrower and all schedules thereto.

     

    Derivative
Termination Value.  In respect of
any one or more Derivative Contracts, after taking into account the effect of
any legally enforceable netting arrangement relating to such Derivative
Contracts, for any date of determination, such calculation shall be made as if
such Derivative Contracts have been closed out on such date and termination
value(s) determined in accordance therewith as if terminated on such
date.

     

    Distribution.  As
to any Person, any of the following:  (i) the declaration or
payment of any dividend on or in respect of any Shares of the Borrower,
(ii) the purchase, redemption, or other retirement of any Shares of the
Borrower, directly or indirectly, through a Subsidiary of the Borrower or
otherwise, (iii) the return of capital by the Borrower to its owners as
such; or (iv) any other distribution on or in respect of any ownership
interests of the Borrower.

     

    Dollars
or $.  Dollars in lawful currency of the United States of
America.

     

    Domestic
Subsidiaries.  A Subsidiary that is organized under the laws of
any state of the United States of America.

     

    Drawdown
Date.  The date on which any Revolving Credit Loan is made or
is to be made.

    
      
         

      

      
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    EBITDA.  With respect to
any period, an amount equal to the Consolidated Net Income of the Borrower and
its Subsidiaries for such period, plus to the extent
accounted for in Consolidated Net Income during such period and without
duplication the sum of:  (i) depreciation and amortization,
(ii) Consolidated Total Interest Expense for such period,
(iii) non-cash expenses, (iv) income tax expense, (v) up to $1,500,000
in the aggregate, to be added back during the period incurred, for the term of
this Credit Agreement for the reserves or charges for the Omniglow Litigation
and (vi) extraordinary losses (net of tax effects) approved by the Agent in
writing and (vii) up to $800,000 during the term of this Credit Agreement
to be included during the fiscal quarter in which they are paid, fees and
expenses incurred by Borrower in connection with transactions contemplated by
this Credit Agreement and the Granite Subordinated Debt Documents (including,
without limitation, any amendments, waivers, consents, future findings and other
agreements entered into in connection herewith) determined in accordance with
GAAP, in each case to be included during the fiscal quarter in which they are
paid, minus the sum of:  (a) interest and dividend income during
such period, (b) gain on the sale of assets other than the sale of
inventory in the ordinary course of business during such period,
(c) extraordinary gains during such period, and (d) any non-cash
components of income during such period.

     

    EBITDA
Threshold.  With respect to any period ending prior to December
31, 2011, $7,500,000, with respect to any period ending on or after December 31,
2011 and prior to December 31, 2012, $7,750,000, and with respect to any
period ending on or after December 31, 2012, $8,000,000.

     

    Eligible
Accounts Receivable.  The aggregate of the unpaid portions of
Accounts (net of any credits, rebates, offsets, holdbacks or other adjustments
or commissions payable to third parties that are adjustments to such
Accounts) (i) that the Borrower reasonably and in good faith
determines to be collectible; (ii) that are with account debtors or other
obligors that (a) are not Affiliates of the Borrower; (b) purchased
the goods or services giving rise to the relevant Account in an arm’s length
transaction, (c) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar
law of any jurisdiction and (d) are, in the Required Lenders’ reasonable
judgment, creditworthy; (iii) that are in payment of obligations that have
been fully performed, do not consist of progress billings to any Person
bill-and-hold guaranteed sale, sale-and-return, sale on approval, consignment or
any other repurchase or return basis or is evidenced by Chattel Paper;
(iv) that are not subject to any pledge, restriction, security interest or
other lien or encumbrance other than those created by the Loan Documents and
Permitted Liens; (v) in which the Agent has a valid and perfected first
priority security interest; (vi) that are not outstanding for more than
sixty (60) days from the due date; (vii) that are not due from an
account debtor or other obligor located in New Jersey or Minnesota unless the
Borrower (a) has received a certificate of authority to do business and is
in good standing in such state or (b) has filed a notice of business
activities report with the appropriate office or agency of such state for the
current year; (viii) that are not due from any single account debtor or
other obligor if more than twenty-five percent (25%) of the aggregate
amount of all Accounts owing from such account debtor or other obligor would
otherwise not be Eligible Accounts Receivable; (ix) that are payable in
Dollars; (x) that are not payable from an office outside of the United
States (including Puerto Rico) and Canada unless Borrower has delivered credit
insurance, in form and substance satisfactory to Agent, for each Account owed by
an Account Debtor which is not organized under the laws of a State in the United
States of America or Canada which insurance has been assigned to Agent pursuant
to an assignment in form and substance satisfactory to Agent; (xi) that are
not secured by a letter of credit unless the Agent has a prior, perfected
security interest in such letter of credit; (xii) that are accounts of the
Federal Government unless the Borrower has been in compliance with the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et
seq. and 41 U.S.C. Sub-Section 15 et. seq.); (xiii) the account debtor
has not asserted a right of set off, has disputed liability or made any claim
regarding its obligation to repay and is not a contra account and (xiv) the
Account is not otherwise satisfactory to the Agent in its reasonable
discretion.  The general criteria for Eligible Accounts Receivable may
be established and revised from time to time by the Agent upon notice to the
Borrower pursuant to Section 2.7.

    
      
         

      

      
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    Eligible
Assignee.  Any of:  (i) a commercial bank or
finance company or similar institutional lender organized under the laws of the
United States, or any State thereof or the District of Columbia, and having
total assets in excess of $250,000,000; (ii) a savings and loan association
or savings bank organized under the laws of the United States, or any State
thereof or the District of Columbia, and having a net worth of at least
$250,000,000; (iii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development (the “OECD”), or a political subdivision of any such country, and
having total assets in excess of $250,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; and
(iv) if, no Default or Event of Default has occurred and is continuing, any
other bank, insurance company, commercial finance company or other financial
institution or other Person approved by the Borrower, such approval not to be
unreasonably withheld, conditioned or delayed.

     

    Eligible
Raw Material and Finished Goods Inventory.  Inventory valued at
the lower of cost or market value, determined in accordance with the first-in,
first-out method of inventory accounting, as reflected on the Borrower’s books
in accordance with generally accepted accounting principles consistently
applied, of (i) finished goods held for sale and (ii) raw materials
used to produce the Borrower’s Inventory, and excluding any work in process and
any slow-moving or unmerchantable goods, as to which the Borrower has acquired
title and the Agent has a valid and perfected first priority security interest
under all applicable law and as to which the Borrower has furnished reasonably
detailed information to the Agent in a Borrowing Base Report, determined after
taking into account all charges and liens (other than those of the
Agent) of all kinds against finished goods and reductions in the market
value thereof, all as determined by the Required Lenders in their reasonable
discretion, which, absent manifest error, shall be final and binding upon the
Borrower.  Inventory shall not constitute Eligible Raw Material and
Finished Goods Inventory if it (i) does not conform to all standards
imposed by any Governmental Authority which has regulatory authority over such
goods or the use or sale thereof; (ii) is located outside the United States
of America; (ii) is consigned; (iv) is the subject of any dispute;
(v) is subject to a license agreement or other agreement that limits,
conditions or restricts the Borrower or Agent’s right to sell or otherwise
dispose of such Inventory; (vi) is situated at a location not owned by
Borrower unless the owner or occupier of such location has executed in favor of
Agent a Collateral Access Agreement or (vii) in transit.  Such
finished goods inventory and raw materials immediately loses the status of
Eligible Raw Material and Finished Goods Inventory if and when Borrower sells
it, otherwise passes title thereto, or consumes it or the Agent releases or
transfers its security interest therein, or if and when an Eligible Accounts
Receivable arises by virtue of constituting proceeds of such
inventory.  Notwithstanding the foregoing, but without duplication,
Eligible Raw Material and Finished Goods Inventory shall be reduced by the
amount of any specific reserve with respect to any Eligible Raw Material and
Finished Goods Inventory, including, without limitation, the reserve account for
excess and obsolete stock and stock not readily saleable in the U.S. domestic
market or no longer saleable in any market in which such stock was customarily
sold, established by the Borrower in accordance with generally accepted
accounting principles and any reserve account for inventory adjustment, the
amounts thereof being subject to verification and adjustment from time to time
based upon periodic reviews conducted at the expense of the Borrowers by the
Required Lenders’ examiners.  General criteria for Eligible Raw
Material and Finished Goods Inventory may be established and revised from time
to time by the Required Lenders upon notice to the Borrower pursuant to
Section 2.7.

    
      
         

      

      
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    Employee
Benefit Plan.  Any employee benefit plan within the meaning of
Section (3) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.

     

    Environmental
Laws.  See Section 9.18(a).

     

    ERISA.  The
Employee Retirement Income Security Act of 1974, as amended.

     

    ERISA
Affiliate.  Any Person which is treated as a single employer
with the Borrower under §414 of the Code.

     

    ERISA
Reportable Event.  A reportable event with respect to a
Guaranteed Pension Plan within the meaning of §4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.

     

    Event of
Default.  See Section 15.1.

     

    Excess
Cash Flow.  With respect to
the Borrower and its Subsidiaries, for any fiscal year of the Borrower, an
amount equal to EBITDA for such fiscal year minus Fixed Charges
during such fiscal year.

     

    Extraordinary
Receipts.  Any proceeds that the Borrower or any of its
Subsidiaries receives not in the ordinary course of their respective businesses,
including without limitation, from (i) any casualty insurance policies
maintained by the  Borrower and/or any Subsidiary which the Agent is
permitted hereunder to apply to the repayment of the Obligations; (ii) tax
refunds of the Borrower and its Domestic Subsidiaries, (iii) pension plan
reversions, (iv) condemnation awards (and payments in lieu thereof),
(v) indemnity payments or (vi) any extraordinary gains realized by the
Borrower and/or any Subsidiary.

     

    Following
Business Day Convention.  The convention
for adjusting any relevant date that would otherwise fall on a day that is not a
Business Day so that the date will be the first following day that is a Business
Day.

     

    Fixed
Charge Coverage Ratio.  As of any date of determination, the
ratio of:  (i) EBITDA for the period of the four (4) fiscal
quarters then ending to (ii) Fixed Charges for such period.

     

    Fixed
Charges.  For any applicable period, the sum, without
duplication, of:  (i) Consolidated Total Debt Service (other than
principal payments on the Revolving Credit Loan) plus (ii) all
income tax expenses for such period (excluding deferred income taxes) plus (iii) all
Capital Expenditures made during such period plus (iv) the
amount of all Distributions for such period plus (v) all
capitalized costs associated with the development of patents and trademarks
plus
(vi) the amount of all cash payments made by Borrower to Holdings since
July 1, 2010 for Permitted Holdco Distributions.

    
      
         

      

      
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    Foreign
Exchange Contracts.  See Section 7.7.1.

     

    Foreign
Exchange Limit.  At the time of any determination, an amount
equal to the lesser of (x) the Revolving Loan Commitment minus the sum of
(i) the outstanding Revolving Credit Loans plus (ii) the
Foreign Exchange Reserve plus (iii) the
Maximum Drawing Amount and Unreimbursed Obligations; (y) the Borrowing Base
and (z) $500,000.

     

    Foreign
Exchange Reserve.  At the time of any determination, an amount
which equals ten percent (10%) of the aggregate notional amount of all
outstanding Foreign Exchange Contracts.

     

    Foreign
Lender.  See Section 6.12(c).

     

    Foreign
Lender Complete Exemption Certificate.  See Section
6.12(c).

     

    Foreign
Subsidiary.  Any Subsidiary of the Borrower which is not a
Domestic Subsidiary.

     

    General
Intangible.  As applied to
any Person, all now owned or hereafter acquired right, title, and interest with
respect to “general intangibles” (as such term is defined from time to time in
the UCC), and any and all supporting obligations in respect
thereof.

     

    GAAP or
generally accepted accounting principles.  (i) When used
in this Credit Agreement, whether directly or indirectly through reference to a
capitalized term used therein, means (x) principles that are consistent
with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect for the fiscal year ended on the Balance
Sheet Date, and (y) to the extent consistent with such principles, the
accounting practice of the Borrower reflected in its financial statements for
the year ended on the Balance Sheet Date, and (ii) when used in general,
other than as provided above, means principles that are (x) consistent with
the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, as in effect from time to time, and
(y) consistently applied with past financial statements of the Borrower
adopting the same principles; provided, that in
each case referred to in this definition of “generally accepted accounting
principles” a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles
have been properly applied.

     

    Governmental
Authority.  The government
of the United States of America or any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to
government.

     

    Granite
Subordinated Loan Agreement.  That certain Subordinated Loan
Agreement by and among the Holding Company, the Borrower, Granite Creek Partners
Agent, LLC, as Agent, and the Lenders from time to time party thereto, dated
July 29, 2010, as amended, modified or supplemented from time to
time.

    
      
         

      

      
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    Granite
Subordinated Notes.  Those certain subordinated promissory
notes issued by the Borrower to Granite Creek Flex Cap I, L.P. and its
Affiliates, each dated the date hereof and any replacements thereof, in an
aggregate principal amount of $8,500,000, on such terms and conditions as are
acceptable to Agent in its sole discretion.

     

    Granite
Subordinated Debt Documents.  The Granite Subordinated Notes,
the Granite Subordinated Loan Agreement and the “Loan Documents” as defined in
the Granite Subordinated Loan Agreement in effect on the date
hereof.

     

    Guaranteed
Pension Plan.  Any employee pension benefit plan within the
meaning of §3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.

     

    Guarantor.  The
Holding Company and each Domestic Subsidiary of the Borrower now or hereafter
existing.

     

    Guaranty.
 The guaranty of
any Guarantor in form and substance satisfactory to the Lenders, as amended,
modified or supplemented from time to time.

     

    Hazardous
Substances.  See Section 9.18(b).

     

    Holding
Company.  See the preamble
hereto.

     

    Indebtedness.  As
to any Person and whether recourse is secured by or is otherwise available
against all or only a portion of the assets of such Person and whether or not
contingent, but without duplication:

     

    (i)        every
obligation of such Person for money borrowed;

     

    (ii)       every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses or secured by a lien or other encumbrance on
any property of such Person;

     

    (iii)      every
reimbursement obligation of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the account of such
Person;

     

    (iv)      every
obligation of such Person issued or assumed as the deferred purchase price of
property or services (including securities repurchase agreements but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business which are not overdue or which are being contested in good
faith);

     

    (v)       every
obligation of such Person under any Capitalized Lease;

    
      
         

      

      
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    (vi)      every
obligation of such Person under any lease (a “synthetic lease”) treated as
an operating lease under generally accepted accounting principles and as a loan
or financing for U.S. income tax purposes;

     

    (vii)     all
sales by such Person of:  (x) accounts or general intangibles for
money due or to become due, (y) chattel paper, instruments or documents
creating or evidencing a right to payment of money or (z) other receivables
(collectively “receivables”), whether pursuant to a purchase facility or
otherwise, other than in connection with the disposition of the business
operations of such Person relating thereto or a disposition of defaulted
receivables for collection and not as a financing arrangement, and together with
any obligation of such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection
therewith;

     

    (viii)    every
obligation of such Person (an “equity related purchase obligation”) to
purchase, redeem, retire or otherwise acquire for value any shares of capital
stock or membership interests or membership units of any class issued by such
Person, any warrants, options or other rights to acquire any such shares, or any
rights measured by the value of such shares, warrants or other similar
right;

     

    (ix)       every
obligation of such Person under a Derivative Contract;

     

    (x)        every
obligation in respect of Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent that
such Person is liable therefor as a result of such Person’s ownership interest
in or other relationship with such entity, except to the extent that the terms
of such Indebtedness provide that such Person is not liable therefor and such
terms are enforceable under applicable law; and

     

    (xi)       every
obligation, contingent or otherwise, of such Person guaranteeing, or having the
economic effect of guarantying or otherwise acting as surety for, any obligation
of a type described in any of clauses (i) through (x) (the “primary
obligation”) of another Person (the “primary obligor”), in any manner,
whether directly or indirectly, and including, without limitation, any
obligation of such Person (A) to purchase or pay (or advance or supply
funds for the purchase of) any security for the payment of such primary
obligation, (B) to purchase property, securities or services for the
purpose of assuring the payment of such primary obligation, or (C) to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay
such primary obligation.

     

    The
“amount” or “principal amount” of any Indebtedness at any time of determination
represented by:  (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered
capital or principal investment of the purchaser (other than the Borrower or any
of its wholly-owned Subsidiaries) thereof, excluding amounts representative
of yield or interest earned on such investment, (x) any synthetic lease
shall be the stipulated loss value, termination value or other equivalent
amount, (y) any Derivative Contract shall be the maximum amount of any
termination or loss payment required to be paid by such Person if such
Derivative Contract were, at the time of determination, to be terminated by
reason of any event of default or early termination event thereunder, whether or
not such event of default or early termination event has in fact occurred and
(z) any equity related purchase obligation shall be the maximum fixed
redemption or purchase price thereof inclusive of any accrued and unpaid
dividends to be comprised in such redemption or purchase price.

    
      
         

      

      
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    Indemnified
Liabilities.  See Section 18.

     

    Insolvency
Proceeding. Any proceeding
commenced by or against any Person under any provision of the Bankruptcy Code or
under any other state or federal bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.

     

    Intercompany
Agreement.  That certain Intercompany Agreement between the
Borrower and CTSA, dated as of February 26, 2007, as the same may be amended,
modified or supplemented from time to time with the prior written consent of the
Agent.

     

    Interest
Period.  With respect to each LIBOR Rate Loan, a period of one,
two or three months selected by the Borrower (commencing on the date of such
borrowing and ending on the numerically corresponding day, or if there is no
numerically corresponding day, on the last day).  No Interest Period
may end beyond the Maturity Date of the applicable Note.  The term
Interest Period with respect to each Base Rate Loan shall mean consecutive
periods of one (1) day each.

     

    Inventory.  As
applied to any Person, all now owned or hereafter acquired right, title, and
interest with respect to inventory, including goods held for sale or lease or to
be furnished under a contract of service, goods that are leased by such Person
as lessor, goods that are furnished by such Person under a contract of service,
and raw materials, work in process, or materials used or consumed in the
business of such Person and as such term is defined in the UCC.

     

    Investments.  All
expenditures made and all liabilities incurred (contingently or
otherwise) for the acquisition of stock, membership interests or membership
units, or Indebtedness of, or for loans, advances or capital contributions to,
or in respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person.  In determining the
aggregate amount of Investments outstanding at any particular time: (i) the
amount of any Investment represented by a guaranty shall be taken at not less
than the principal amount of the obligations guaranteed and still outstanding;
(ii) there shall be included as an Investment all interest accrued with
respect to Indebtedness constituting an Investment unless and until such
interest is paid; (iii) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by repurchase,
redemption, retirement, repayment, liquidating dividend or liquidating
distribution); (iv) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (ii) may be deducted when paid; and
(v) there shall not be deducted from the aggregate amount of Investments
any decrease in the value thereof.

    
      
         

      

      
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    Lender.  Each
of:  (i) TD Bank, (ii) each other Person party hereto in its
capacity as a lender, (iii) each other Eligible Assignee that becomes a
party hereto and (iv) the respective successors of all of the foregoing,
and “Lenders” means all of the foregoing.

     

    Letter
of Credit.  See Section 7.1.1.

     

    Letter
of Credit Application.  See Section 7.1.1.

     

    Letter
of Credit Sublimit.  An amount equal to
$500,000.  The Letter of Credit Sublimit is part of, and not in
addition to, the Revolving Credit Loan Commitment.

     

    LIBO
Rate or LIBOR.  The term “LIBO Rate” or “LIBOR” shall
mean:  the greater of (x) with respect to each Interest Period,
the rate per annum (rounded upward, if necessary, to the nearest 1/32 of one
percent) as determined on the basis of the offered rates for deposits in
Dollars, for a period of time comparable to such Interest Period which appears
on the Telerate Page 3750 as of 11:00 A.M. (London time) on the day that is
two (2) Business Days prior to the beginning of such Interest Period; provided, however, that if the
rate described above does not appear on the Telerate System on any date of
determination, the LIBO Rate shall for such date will be the arithmetic mean of
the rates quoted by major banks in London, selected by the Agent, (rounded
upwards as described above, if necessary) for deposits in Dollars for a
period substantially equal to the Interest Period, as of 11:00 A.M. (London
time) on the day that is two (2) Business Days prior to the beginning
of such Interest Period and (y) two percent (2%) per annum, provided, however, for purposes
of a LIBOR Rate Loan associated with a Derivative Contract, the two percent (2%)
referred to in (y) immediately preceding shall be disregarded.

     

    LIBOR
Rate Loan.  Any portion of the Loans bearing interest
determined with reference to LIBOR.

     

    Loan
Documents.  This Credit Agreement, the Notes, the Guaranty, the
Letters of Credit, the Foreign Exchange Contracts, the Derivative Contracts, the
Letter of Credit Applications, and the Security Documents and each of the other
documents, instruments and agreements executed in connection therewith in favor
of the Agent and/or the Lenders, as each may be amended, modified or
supplemented from time to time including, without limitation, in connection with
the execution, delivery and implementation of this Credit
Agreement.

     

    Loans.  Collectively,
the Revolving Credit Loans, the Term Loan and the Real Estate Loan.

     

    London
Banking Day.  Any day on which dealings in deposits in Dollars
are transacted in the London interbank market.

     

    Management
Agreement.  A management agreement between Selway or an
Affiliate thereof and the Holding Company in form and substance
reasonably satisfactory to the Required Lenders, as may be amended, modified or
supplemented from time to time in accordance with the terms of this Credit
Agreement, which agreement and the Management Fees payable thereunder have been
subordinated pursuant to the Management Fee Subordination
Letter.

    
      
         

      

      
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    Management
Fees.  All fees or other compensation to be paid to Selway
pursuant to the Management Agreement.

     

    Management
Fee Subordination Letter.  The letter agreement among the
Holding Company, Selway or such Affiliate and the Agent substantially in the
form attached hereto as Exhibit F, or
such other form as is reasonably satisfactory to the Required Lenders with
respect to the payment of Management Fees.

     

    Mandatory
Prepayments.  See Section 5.3.

     

    Material
Adverse Effect.  A material adverse effect
on:  (a) the business condition (financial or otherwise),
operations, performance or properties, of the Holding Company, the Borrower and
the Borrower’s Subsidiaries, taken as a whole, or the Collateral, (b) the
rights and remedies of the Agent under any Loan Document, or (c) the
ability of the Holding Company or any Subsidiary to perform its or their
obligations under the Loan Documents.

     

    Maximum
Drawing Amount.  The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit, as such
aggregate amounts may be reduced from time to time pursuant to the terms of the
Letters of Credit.

     

    Mortgage.  The
mortgage dated the Original Closing Date between the Borrower and Agent,
pursuant to which the Borrower grants a mortgage in all of the Borrower’s right,
title and interest in that certain real estate more commonly known as 96 Windsor
Street, West Springfield, Massachusetts, together with the improvements
thereon.

     

    Multiemployer
Plan.  Any multiemployer plan within the meaning of
§3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.

     

    Net
Proceeds.  With respect to any proceeds of insurance or the
sale, transfer or other disposition by any Person of any group of Capital Assets
(other than Inventory in the ordinary course of business) means the amount
of cash in Dollars received by such Person from such insurance proceeds or sale
or other disposition after (i) provision for all income or other taxes of
such Person measured by or resulting from the receipt of such insurance proceeds
or as a result of such sale or other disposition, (ii) payment of all
reasonable brokerage commissions, reasonable attorney fees and other reasonable
fees and expenses related to such insurance proceeds, sale or other disposition
including the tax benefit resulting from a loss on such sale or other
disposition as and when such tax benefit is realized, (iii) deduction of
such appropriate amount to be provided by such Person as a reserve, in
accordance with GAAP, against any liabilities associated with such sale,
transfer, or other disposition and retained by such Person after such sale or
other disposition, (iv) transfer taxes, and (v) amounts payable to
holders of Permitted Liens to obtain a release of the Lien on the asset
sold.

     

    Notes.  Collectively,
the Revolving Credit Note, the Term Loan Note and the Real Estate Loan
Note.

     

    Notice
of Borrowing.  A Notice of Revolving Credit Loan Borrowing or
Notice of Term Loan Borrowing, as applicable.

    
      
         

      

      
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    Notice
of Revolving Credit Loan Borrowing.  See Section
2.5(a).

     

    Notice
of Term Loan Borrowing.  See Section
4.3.

     

    OFAC.  The U.S.
Department of Treasury Office of Foreign Assets Control.

     

    OFAC
Lists.  Collectively,
the Specially Designated Nationals and Blocked Persons List maintained by OFAC
pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25,
2001) and/or any other list of terrorists or other restricted Persons
maintained pursuant to any of the rules and regulations of OFAC or pursuant to
any other applicable Executive Orders.

     

    Obligations.  All
indebtedness, obligations and liabilities of the Holding Company, the Borrower
and the Borrower’s Subsidiaries to the Lenders, individually or collectively,
existing on the date of this Credit Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, arising or incurred under this Credit Agreement or any of
the other Loan Documents or in respect of any of the Loans made or Reimbursement
Obligations incurred or any of the Notes, Letters of Credit, Letter of Credit
Applications, Foreign Exchange Contracts, the Derivative Contracts, or other
instruments at any time evidencing any thereof.

     

    Omniglow
Litigation.  That certain litigation between the Borrower and
Omniglow LLC, as more particularly described on Schedule 1.1 hereto,
wherein Omniglow LLC was awarded $827,942.25 plus certain costs.

     

    Omniglow
Reserve.  An amount equal to $1,500,000; provided, however, that such
amount shall be reduced on a dollar-for-dollar basis simultaneously with the
making of any Revolving Credit Loans, the proceeds of which are used directly by
Borrower to pay any judgment, settlement or award and other costs and expenses
of the Omniglow Litigation, or any portion thereof, and such amount shall be
reduced to $0 at such time as all judgments, settlements or awards and all other
costs and expenses have been indefeasibly paid in full and all appeal periods
have expired, all in the reasonable judgment of the Agent.

     

    Operating
Account.  A demand deposit account of the Borrower and its
Subsidiaries maintained by the Borrower and its Subsidiaries at TD Bank and
designated by the Borrower and its Subsidiaries as their primary operating
account.

     

    Original
Closing Date.  December 19, 2008.

     

    Original
Credit Agreement.  See Background section hereto.

     

    Outstanding.  With
respect to the Loans, the aggregate unpaid principal thereof as of any date of
determination.

     

    PBGC.  The
Pension Benefit Guaranty Corporation created by §4002 of ERISA and any successor
entity or entities having similar responsibilities.

     

    Perfection
Certificate.  The Perfection Questionnaire as defined in the
Security Agreement.

    
      
         

      

      
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    Permitted
Acquisitions.  Acquisitions of a business in the national
security or homeland security industries approved by the Required Lenders in
writing.

     

    Permitted
Acquisition Indebtedness.  Indebtedness incurred (other than
hereunder) or assumed in connection with a Permitted Acquisition approved
by the Required Lenders in writing and all of the documents, instruments or
agreements evidencing or with respect to the payment of any Permitted
Acquisition Indebtedness are subject to an Agent Approved Subordination
Agreement; provided,
that no Default or Event of Default has occurred and is continuing at the
time such Permitted Acquisition Indebtedness is incurred or
assumed.

     

    Permitted
Holdco Distributions.  See Section 11.4(vi)

     

    Permitted
Liens.  Liens, security interests and other encumbrances
permitted by Section 11.2.

     

    Person.  Any
individual, corporation, partnership, trust, unincorporated association,
business, limited liability company or other legal entity, and any government or
any governmental agency or political subdivision thereof.

     

    Pledge
Agreement.  The Pledge Agreement dated the Original Closing,
between the Holding Company and the Agent, pursuant to which the Holding Company
pledges to the Agent all of the Shares of the Borrower, in form and substance
satisfactory to the Lenders, as may be amended, modified or supplemented from
time to time.

     

    Pro Rata
Share.  (i) with respect to a Term Loan Lender’s right to
receive payments of principal and interest with respect to Term Loan, the Term
Loan Commitment Percentage of such Term Loan Lender, (ii) with respect to a
Real Estate Loan Lender’s right to receive payments of principal and interest
with respect to the Real Estate Loan, the Real Estate Loan Commitment Percentage
of such Real Estate Loan Lender, and (iii) with respect to a Revolving
Credit Lender’s right to receive payments of principal and interest with respect
thereto, the right to receive the Commitment Fee and its obligation to make
Revolving Credit Loans, the Revolving Credit Loan Commitment Percentage of such
Revolving Credit Lender.

     

    Purchase
Agreement.  That certain
Stock Purchase Agreement dated February 14, 2008, as amended, among the Holding
Company, the Borrower, Cyalume Acquisition Corp. and GMS Acquisition Partners
Holdings, LLC.

     

    Real
Estate.  All real property owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.

     

    Real
Estate Loan.  The commercial real estate mortgage term loan in
the original aggregate amount of $2,500,000 made severally by the Real Estate
Lenders to the Borrower on the Original Closing Date.

     

    Real
Estate Loan Commitment Percentage.  As to any Real Estate Loan
Lender, the percentage set forth opposite such Real Estate Loan Lender’s name on
the Commitment Annex under the column “Real Estate Loan Commitment Percentage”
(if such Lender’s name is not so set forth thereon, then, on the Closing Date,
such percentage for such Real Estate Loan Lender shall be deemed to be
zero).

    
      
         

      

      
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    Real
Estate Loan Lenders.  All Lenders (i) committed to make,
subject to the terms and conditions herein contained, Real Estate Loan advances
hereunder or (ii) continue the Real Estate Loan.

     

    Real
Estate Loan Maturity Date.  December 19, 2013, unless sooner
occurring following acceleration.

     

    Real
Estate Loan Note.  See Section 4.2(b).

     

    Record.  The
grid attached to a Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Agent with respect to any
Loan referred to in such Note.

     

    Reemployment
Period.  See Section 6.11.

     

    Reimbursement
Obligation.  The Borrower’s obligation to reimburse the Bank on
account of any drawing under any Letter of Credit as provided in
Section 7.2.

     

    Rental
Obligations.  All present or future obligations of the Borrower
or any of its Subsidiaries under any rental agreements or leases of real or
personal property, other than:  (a) obligations that can be
terminated by the giving of notice without liability to the Borrower or such
Subsidiary in excess of the liability for rent due as of the date on which such
notice is given and under which no penalty or premium is paid as a result of any
such termination, and (b) obligations in respect of Capitalized
Leases.

     

    Required
Lenders.  Lenders holding an aggregate Pro Rata Share of the
outstanding principal balance of the Loans in an amount equal to or in excess of
51% of the total outstanding principal balance of the Loans and if there is no
outstanding principal balance of the Loans, Lenders having at least 51% of the
Revolving Credit Loan Commitments.

     

    Reserve
Adjusted LIBOR.  As applied to any Interest Period, shall mean
a rate per annum determined pursuant to the following formula:

     

    
      
        
          	
                  RAL  =

                	
                  [LIBOR]

                
	
                  [1.00
      – RP]

                
	 
      	 
      

        

      

    

    Where:

     

    RAL  =
Reserved Adjusted LIBOR

     

    LIBOR  =
as defined herein

     

    RP  =
Reserve Percentage

    
      
         

      

      
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    The
amount in brackets shall be rounded upwards, if necessary, to the next higher
1/100 of 1%.  Reserve Adjusted LIBOR shall be adjusted automatically
as of the effective date of any change in the Reserve Percentage.

     

    Reserve
Percentage.  As applied to any Interest Period, the rate
(expressed as a decimal rounded upward to the nearest 1/32 of
1%) applicable to any Lender during such Interest Period under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
for determining the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency or marginal reserve requirement) of such
Lender with respect to “Eurocurrency Liabilities” as that term is defined under
such regulations.

     

    Restricted
Payment.  As to the Borrower and its Subsidiaries, each of the
following: (i) any Distribution, (ii) any loan, advance or other
payment to the holders of any Shares of the Borrower (which payments shall not
include salaries or reasonable compensation paid to any such holder other than
to a Borrower Key Officer pursuant to such holder’s employment arrangement with
the Borrower, such employment arrangement to be approved by the board of
directors of the Borrower) or to any Affiliate of Borrower, or to any
Guarantor, (iii) any payment of any compensation, management fee or
expense, investment banking fee or similar amount to any Affiliate of the
Borrower, (iv) any payment under the Purchase Agreement after the Closing
Date, or (v) any payment to the holders of any Subordinated Debt except in
accordance with the Agent Approved Subordination Agreement applicable
thereto.

     

    Revolving
Credit Lender.  All Lenders
committed to make, subject to the terms and conditions herein contained,
Revolving Credit Loans hereunder.

     

    Revolving
Credit Loan(s).  Revolving credit loans made or to be made by
the Revolving Credit Lenders to the Borrower pursuant to Article 2.

     

    Revolving
Credit Loan Commitment.  The Revolving Credit Lenders’ several
commitments to make Revolving Credit Loans to the Borrower subject to the terms
and conditions hereof, in the maximum outstanding principal amount of
$5,000,000, subject to the limitations herein contained, as the same may be
reduced from time to time, or if such commitment is terminated pursuant to the
provisions hereof, zero.

     

    Revolving
Credit Loan Commitment Percentage.  As to any Revolving Credit
Lender:  (i) on the Closing Date, the percentage set forth
opposite such Lender’s name on Schedule 1 of the Commitment Annex under the
column “Revolving Credit Loan Commitment Percentage” (if such Lender’s name is
not so set forth thereon, then, on the Closing Date, such percentage for such
Lender shall be deemed to be zero) and (ii) on any date following the
Closing Date, the percentage equal to the Revolving Credit Loan Commitment
Amount of such Revolving Credit Lender on such date divided by the Revolving
Credit Loan Commitment on such date.

     

    Revolving
Credit Loan Maturity Date.  December 19, 2012, unless sooner
occurring following acceleration.

     

    Revolving
Credit Note.  See Section 2.4.

    
      
         

      

      
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    Revolving
Credit Note Record.  A Record with respect to a Revolving
Credit Note.

     

    SCP
Holders.  Each of Winston J. Churchill, Yaron Eitan, Thomas J.
Rebar and Wayne B. Weisman, as holders of the SCP Subordinated Notes, their
successors, assigns, heirs, executors and administrators.

     

    SCP
Partners.  A general partnership consisting of, inter alia, Winston J.
Churchill, Yaron Eitan, Thomas J. Rebar and Wayne B. Weisman.

     

    SCP
Subordinated Notes.  Those amended and restated unsecured
subordinated promissory notes each dated as of the Closing Date, in the original
principal amounts and held by the respective SCP Holder as
follows:  $800,000 held by Winston J. Churchill, $100,000 held by
Thomas J. Rebar and $100,000 held by Wayne B. Weisman, each in form and
substance satisfactory to the Agent.

     

    Selway.  Selway
Management, Inc., a Delaware corporation which is an Affiliate of SCP
Partners.

     

    Security
Agreement(s).  The Pledge and Security Agreement(s), dated the
Original Closing Date, between the Borrower and each of its Subsidiaries and
each Guarantor and the Agent, pursuant to which the Borrower and each of its
Subsidiaries and each Guarantor grants a security interest in all of its
tangible and intangible personal property, in form and substance satisfactory to
the Lenders, as may be amended, modified or supplemented from time to
time.

     

    Security
Documents.  The Security Agreements, the Collateral Assignment
of Acquisition Documents, the Pledge Agreement, the Collateral Access
Agreements, the Mortgage, the Collateral Assignment of Leases and all other
security agreements between the Agent and any Subsidiary of the Holding Company
and any Guarantor entered into on or after the Original Closing
Date.

     

    Seller.  GMS
Acquisition Partners Holdings, LLC, a Delaware limited liability
company.

     

    Seller
Notes.  Those certain subordinate promissory notes payable to a
seller in a Permitted Acquisition executed in connection with a Permitted
Acquisition, which are in form and substance satisfactory to the Agent, which
are subject to and the holder of such notes shall have executed and delivered,
an Agent Approved Subordination Agreement.

     

    Senior
Funded Debt.  Shall mean all of:

     

    (i)        Indebtedness
in respect of borrowed money other than the Subordinated Debt;

     

    (ii)       Indebtedness
in respect of Capitalized Lease Obligations;

     

    (iii)      Indebtedness
in respect of the deferred purchase price of assets (other than normal trade
accounts payable in the ordinary cause of business);

     

    (iv)      Indebtedness
in respect of unfunded pension liabilities;

    
      
         

      

      
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    (v)       Any
guaranties or any agreement having the economic affect of guarantying or
otherwise acting as a surety for any of the foregoing (i) through
(iv) in any manner, whether directly or indirectly, and including, without
limitation, any obligation (A) to purchase or pay (or advance or supply
funds for the purchase of) any security for the payment of such primary
obligation, (B) to purchase property, securities or services for the
purpose of assuring the payment of such primary obligation, or (C) to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor to pay such primary obligation;

     

    (vi)      For
purposes of calculating the financial covenants in Article 12, Indebtedness in the
amount of the aggregate Derivative Termination Value of all Derivative Contracts
under which the Agent is not the counterparty; and

     

    (vii)     Indebtedness
(other than the Loans) incurred at the time of, or within 20 days after,
the acquisition of fixed assets for the purpose of financing all or any part of
the acquisition cost thereof.

     

    Senior
Leverage Ratio.  As of any date of determination, the ratio
of:  (i) Senior Funded Debt of the Borrower and its Subsidiaries
on a consolidated basis as of any date of determination to (ii) Adjusted
EBITDA of the Borrower and its Subsidiaries on a consolidated basis for the
period of the four (4) consecutive quarters then ended.

     

    Services
Agreement.  That certain Services Agreement between the
Borrower and CTSA, dated as of January 1, 2007, as the same may be amended,
modified or supplemented from time to time with the prior written approval of
the Agent.

     

    Settlement
Date.  See Section 2.6.

     

    Shares.  With
respect to the Borrower, the Holding Company or any other Person, any and all
shares of capital stock or other shares, interests, participations or other
equivalents (however designated of any class) in the capital of or other
ownership interests therein.

     

    Subordinated
Debt.  The Indebtedness of the Borrower that is expressly
subordinated and made junior to the payment and performance in full of all of
the Obligations, and is either (w) evidenced by any Seller Notes, (x)
Permitted Acquisition Indebtedness or any other indebtedness approved by
the Agent and the Lenders in their sole and absolute discretion subordinated to
the obligations pursuant to an Agent Approved Subordination Agreement, (y) is
evidenced by the SCP Subordinated Notes or (z) evidenced by the Granite
Subordinated Notes or contained in the Granite Subordinated Debt
Documents.

     

    Subordinated
Debt Documents.  Collectively: any Seller Notes, the Granite
Subordinated Notes, any notes evidencing any other Subordinated Debt, the
Granite Subordinated Debt Documents and the Agent Approved Subordination
Agreements relating thereto.

     

    Subsidiary.  Any
corporation, limited liability company, association, trust or other business
entity of which the Holding Company shall at any time own directly or indirectly
through a subsidiary or subsidiaries at least a majority (by number of
votes) of the outstanding Voting Stock.

    
      
         

      

      
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    TD
Bank.  TD Bank, N.A., a national banking association organized
under the laws of the United States in its capacity as a Lender
hereunder.

     

    Telerate
Page 3750.  The display designated as “Page 3750” on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers’
Association as the information vendor for the purpose of displaying British
Bankers’ Association Interest Settlement Rates for U.S. Dollar
Deposits).

     

    Term
Loan.  The term loan with an outstanding principal amount on
the Closing Date in an amount equal to the aggregate principal amount of
$19,635,000 (without giving effect to any payments to be made on the Closing
Date), which term loan was made severally by the Term Loan Lenders to the
Borrower on the Original Closing Date.

     

    Term
Loan Commitment Percentage.  As to any Term Loan Lender, the
percentage set forth opposite such Term Loan Lender’s name on the Commitment
Annex under the column “Term Loan Commitment Percentage” (if such Lender’s name
is not so set forth thereon, then, on the Closing Date, such percentage for such
Term Loan Lender shall be deemed to be zero).

     

    Term
Loan Lenders.  All Lenders (i) committed to make, subject to
the terms and conditions herein contained, Term Loan advances hereunder or (ii)
continue the Term Loan.

     

    Term
Loan Maturity Date.  December 19, 2013, unless sooner occurring
following acceleration.

     

    Term
Loan Note.  See Section 4.2(a).

     

    Total
Debt Service.  For any applicable period, the sum of (i)
Consolidated Total Interest Expense plus (ii) all scheduled installments of
principal or other like sums payable during such period by the Borrower and its
Subsidiaries in respect of Indebtedness.

     

    Total
Debt Service Coverage Ratio.  As of any date of determination,
the ratio of:  (i) EBITDA for the period of the two
(2) fiscal quarters then ending (including deductions for any Restricted
Payments during such period) to (ii) Consolidated Total Debt Service for
such period.

     

    Total
Funded Debt.  Shall mean:

     

    (i)        all
Senior Funded Debt;

     

    (ii)       all
Subordinated Debt; and

     

    (iii)      (without
duplication) any guaranties or any agreement having the economic affect of
guarantying or otherwise acting as a surety for any of the foregoing (i) and
(ii) in any manner, whether directly or indirectly, and including, without
limitation, any obligation (A) to purchase or pay (or advance or supply funds
for the purchase of) any security for the payment of such primary obligation,
(B) to purchase property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor to pay such primary obligation.

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    Total
Leverage Ratio.  As at any date of determination, the ratio of
(a) Total Funded Debt of the Borrower and its Subsidiaries on a consolidated
basis to (b) Adjusted EBITDA of the Borrower and its Subsidiaries on a
consolidated basis for the period of the four (4) consecutive quarters then
ended.

     

    Uniform
Commercial Code.  The Uniform Commercial Code as in effect on
the date hereof in the Commonwealth of Massachusetts at Massachusetts General
Laws Chapter 106 §1-101 et. seq., as may be amended from time to
time.

     

    Uniform
Customs.  With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by TD Bank in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.

     

    Unpaid
Reimbursement Obligation.  Any Reimbursement Obligation for
which the Borrower does not reimburse the TD Bank on the date specified in, and
in accordance with, §7.2.

     

    Voting
Stock.  Shares or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or
other business entity involved, whether or not the right so to vote exists by
reason of the happening of a contingency.

     

    Wholly
Owned Subsidiary.  With respect to any Subsidiary, one hundred
percent (100%) of the Shares of such Subsidiary are owned directly by the
Holding Company.

     

    Section
1.2      Rules of Interpretation.

     

    (a)    
A reference to any document or agreement shall include such document or
agreement as amended, modified or supplemented from time to time in accordance
with its terms and the terms of this Credit Agreement.

     

    (b)    
The singular includes the plural and the plural includes the
singular.

     

    (c)    
A reference to any law includes any amendment or modification to such
law.

     

    (d)    
A reference to any Person includes its permitted successors and permitted
assigns.

     

    (e)    
Accounting terms not otherwise defined herein have the meanings assigned
to them by generally accepted accounting principles applied on a consistent
basis by the accounting entity to which they refer.

     

    (f)    
The words “include”, “includes” and “including” are not
limiting.

     

    (g)    
All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial Code as
in effect in the Commonwealth of Massachusetts, have the meanings assigned to
them therein, with the term “instrument” being that defined under Article 9 of
the Uniform Commercial Code.

    
      
         

      

      
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    (h)    
Reference to a particular “Section” refers to that section of this Credit
Agreement unless otherwise indicated.

     

    (i)    
The words “herein”, “hereof”, “hereunder” and words of like import shall
refer to this Credit Agreement as a whole and not to any particular section or
subdivision of this Credit Agreement.

     

    (j)    
Unless otherwise expressly indicated, in the computation of periods of
time from a specified date to a later specified date, the word “from” means
“from and including,” the words “to” and “until” each mean “to but excluding,”
and the word “through” means “to and including.”

     

    (k)    This
Credit Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar
matters.  All such limitations, tests and measurements are, however,
cumulative and are to be performed in accordance with the terms
thereof.

     

    (l)    
This Credit Agreement and the other Loan Documents are the result of
negotiation among, and have been reviewed by counsel to, among others, the
Lenders and the Borrower and are the product of discussions and negotiations
among all parties.  Accordingly, this Credit Agreement and the other
Loan Documents are not intended to be construed against the Lenders merely on
account of the Agent’s involvement in the preparation of such
documents.

     

    (m)    Reference
to a “schedule” in Article 9 hereof shall be deemed to include updates of such
schedule or the information disclosed thereon which update may be provided in
writing from the Borrower to the Agent in accordance with Article 22
hereof.

     

    (n)    
Reference to a statute or regulation in this Credit Agreement shall mean
such statute or regulation and any statute or regulation which is enacted in
replacement or substitution thereof or as a successor thereto.

     

    ARTICLE
2.  THE REVOLVING CREDIT FACILITY.

     

    Section
2.1    Commitment to
Lend.  Subject to the terms and conditions set forth in this
Credit Agreement, each Revolving Credit Lender severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time
between the Closing Date and the Revolving Credit Loan Maturity Date upon notice
by the Borrower to the Agent given in accordance with Section 2.5, (each a
“Revolving Loan” and collectively “Revolving Credit Loans”) such sums equal
to such Revolving Credit Lender’s Revolving Credit Loan Commitment Percentage
requested by Borrower hereunder; provided, that the
sum of the outstanding amount of the Revolving Credit Loans (after giving effect
to all amounts requested) plus the Foreign
Exchange Reserve plus the Omniglow
Reserve plus
the Maximum Drawing Amount and Unpaid Reimbursement Obligations, shall not at
any time exceed the lesser of (a) the Revolving Credit Loan Commitment and
(b) the Borrowing Base.  Each request for a Revolving Credit Loan
or the entering into a Foreign Exchange Contract or the submission of an
application for the issuance of a Letter of Credit hereunder shall constitute a
representation and warranty by the Borrower that the conditions set forth in
Article 13, in the case of entering into this Credit Agreement on the Closing
Date, and Article 14, in the case of all others have been satisfied on the date
of such request.

    
      
         

      

      
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    Section
2.2    Revolving Loan Commitment
Fee.  The Borrower shall pay to the Agent for the benefit of
all Revolving Credit Lenders, in accordance with their respective Pro Rata Share
of the Revolving Credit Loan Commitment, a commitment fee (the “Commitment
Fee”) in the amount calculated by multiplying:  (i) one half
of one percent (0.50%) per annum and (ii) the average daily amount
during each calendar quarter or portion thereof from the Closing Date to the
Revolving Credit Loan Maturity Date by which the Revolving Credit Loan
Commitment exceeds the outstanding amount of Revolving Credit Loans during such
calendar quarter or portion thereof.  The Commitment Fee shall be
payable quarterly in arrears on the last day of each calendar quarter or portion
thereof for the immediately preceding calendar quarter such payment commencing
on September 30, 2010, with a final payment on the Revolving Credit Loan
Maturity Date or any earlier date on which the Revolving Credit Loan Commitment
shall terminate.

     

    Section
2.3     Reduction of Revolving Credit Loan
Commitment.  Subject to the payment of any fees, indemnities,
costs and expenses for prepaying any LIBOR Rate Loans as required hereunder, the
Borrower shall have the right at any time and from time to time upon five
(5) Business Days’ prior written notice to the Agent to reduce by $100,000
or an integral multiple thereof or terminate entirely the Revolving Credit Loan
Commitment, whereupon the Revolving Credit Loan Commitment shall be reduced
pro rata in accordance
with the Revolving Credit Commitments of the Revolving Credit Lenders by the
amount specified in such notice or, as the case may be, terminated; provided, that the
Borrower shall not reduce the Revolving Credit Loan Commitment more than twice
prior to the Revolving Credit Maturity Date and provided, further, that the
Revolving Credit Loan Commitment shall not be reduced to an amount less than the
Foreign Exchange Reserve.  Upon the effective date of any such
reduction or termination, the Borrower shall pay to the Agent for the benefit of
the Revolving Credit Lenders the full amount of any commitment fee then accrued
on the amount of such reduction.  No reduction or termination of the
Revolving Credit Loan Commitment may be reinstated.

     

    Section
2.4     The Revolving Credit
Note.  The Revolving Credit Loans made by each Revolving Credit
Lender shall be evidenced by a promissory note of the Borrower in favor of such
Revolving Credit Lenders in substantially the form of Exhibit A-1 hereto
(the “Revolving Credit Note”), in the amount of such Revolving Credit Lender’s
Pro Rata Share of the Revolving Credit Loan Commitment dated as of the Original
Closing Date.  The Revolving Credit Note shall be payable to the order
of each Revolving Credit Lender in the principal amount of their Pro Rata Share
of the Revolving Credit Loan Commitment.  The Borrower irrevocably
authorizes the Agent to make or cause to be made, at or about the time of the
Drawdown Date of any Revolving Credit Loan or at the time of receipt of any
payment of principal, an appropriate notation on each Lender’s Revolving Credit
Note Record reflecting the making of such Revolving Credit Loan or (as the case
may be) the receipt of such payment.  The outstanding amount of
the Revolving Credit Loans set forth on each Revolving Credit Lender’s Revolving
Credit Note Record or other records of each Revolving Credit Lender shall be,
absent manifest error, prima facie evidence of the principal amount thereof
owing and unpaid to such Revolving Credit Lender, but the failure to record, or
any error in so recording, any such amount on such Revolving Credit Lender’s
Revolving Credit Note Record shall not limit or otherwise affect the obligations
of the Borrower hereunder or under any Revolving Credit Note to make payments of
principal of, or interest on, any Revolving Credit Note when
due.

    
      
         

      

      
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    Section
2.5     Requests for Revolving Loans;
Continuation and Conversion.

     

    (a)    
Whenever the Borrower desires to obtain or to continue a Revolving Credit
Loan hereunder or convert an outstanding Revolving Credit Loan into a Revolving
Credit Loan of another type, the Borrower shall notify (“Notice of Revolving
Credit Loan Borrowing) in the form annexed hereto as Exhibit B as of the
date of the Notice of Revolving Credit Loan Borrowing, the Agent by written
notice (which notice shall be irrevocable and may be provided by telecopy)
received no later than 1:00 p.m. Boston time on the Business Day on which the
requested Revolving Credit Loan is to be made or continued as or converted to a
Base Rate Loan and in the case of a LIBOR Rate Loan received no later than 11:00
p.m. Boston time on the date two (2) Business Days before the day on which the
requested Revolving Credit Loan is to be made or continued as or converted to a
LIBOR Rate Loan.  For purposes of the Notice of Revolving Credit Loan
Borrowing for a LIBOR Rate Loan, such notice must specify:  the
minimum of the outstanding principal the Borrower wishes the LIBOR Rate to apply
to, provided such borrowing shall be in the minimum amount of $500,000 and in
integrals of $125,000 above such amount.  All LIBOR Rate Loans
hereunder shall be limited to not more than four (4) different maturities at any
time.  If the Agent does not receive a Notice of Revolving Credit Loan
Borrowing containing an Interest Period for a LIBOR Rate Loan within the
applicable time limits set forth herein, or if when a Notice of Revolving Credit
Loan Borrowing must be given, a Default exists or an Event of Default has
occurred and is continuing, the Borrower shall be deemed to have elected to
borrow or to convert such Revolving Credit Loan, in whole, into a Base Rate Loan
on the last day of the then current Interest Period.  Each Notice of
Revolving Credit Loan Borrowing shall be irrevocable and binding on the Borrower
and shall obligate the Borrower to accept the Revolving Credit Loan requested
from the Lenders on the applicable Drawdown Date.  Each Revolving
Credit Loan will be made at the Agent’s Head Office by depositing the amount
thereof into the Operating Account.

     

    (b)    
Promptly after receipt of a Notice of Revolving Credit Loan Borrowing,
the Agent shall notify each Revolving Credit Lender by telephone, telex or
telecopy of the proposed borrowing.  Each Revolving Credit Lender
agrees that after its receipt of notification from the Agent of the Agent’s
receipt of a Notice of Revolving Credit Loan Borrowing, such Revolving Credit
Lender shall send its Pro Rata Share (or such portion thereof as may be
necessary to provide the Agent with such Pro Rata Share in Dollars and in
immediately available funds, without consideration or use of any contra accounts
of any Revolving Credit Lender) of the requested Revolving Credit Loan by
wire transfer to the Agent so that the Agent receives such Pro Rata Share in
Dollars and in immediately available funds not later than 12:00 p.m. (Boston,
Massachusetts time) on the Business Day for such Revolving Credit Loan set
forth in the Notice of Revolving Credit Loan Borrowing.  The Agent
shall advance funds to the Borrower’s by depositing such funds in the Operating
Account upon the Agent’s receipt of such Pro Rata Shares in the amount of the
Pro Rata Shares of such Revolving Credit Loan in the Agent’s
possession.  Unless the Agent shall have been notified by any
Revolving Credit Lender (which notice may be telephonic if confirmed promptly in
writing) in respect of any Revolving Credit Loan which such Revolving
Credit Lender is obligated to make under this Credit Agreement, that such
Revolving Credit Lender does not intend to make available to the Agent such
Revolving Credit Lender’s Pro Rata Share of such Revolving Credit Loan on such
date, the Agent may assume that such Revolving Credit Lender has made such
amount available to the Agent on such date and the Agent, in its sole discretion
may, but shall not be obligated to, make available to the Borrower a
corresponding amount on such date.  If such corresponding amount is
not in fact made available to the Agent by such Revolving Credit Lender, the
Agent shall be entitled to recover such corresponding amount from such Revolving
Credit Lender promptly upon demand by the Agent together with interest thereon,
for each day from such date until the date such amount is paid to the Agent, at
the Defaulting Lender Rate.  If such Revolving Credit Lender does not
pay such corresponding amount forthwith upon the Agent’s demand therefor, the
Agent shall promptly notify the Borrower and the Borrower shall promptly pay
such corresponding amount to the Agent.  Nothing contained in this
Section 2.5(b) shall be deemed to relieve any Revolving Credit Lender from
its obligation to fulfill its obligations hereunder or to prejudice any rights
which the Borrower may have against any Revolving Credit Lender as a result of
any default by such Revolving Credit Lender hereunder.

    
      
         

      

      
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    (c)           Within
ten (10) days after any Revolving Credit Lender notifies the Agent that such
Revolving Credit Lender does not intend to make available such Revolving Credit
Lender’s Pro Rata Share (which notice Agent shall promptly (but in no event more
than one (1) day after receipt) provide to the Borrower), the Borrower may, at
its option, so long as no Default or no Event of Default has occurred and is
continuing, notify such Defaulting Lender and Agent of its intention to obtain,
at Defaulting Lender’s expense, a replacement lender (“Replacement Lender”) for
such Revolving Credit Lender, which Replacement Lender must be reasonably
satisfactory to the Agent.  In the event the Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, Defaulting Lender shall sell, at par, Defaulting Lender’s interest in the
Revolving Credit Loans, the Obligations related thereto and its rights hereunder
as a Revolving Credit Lender arising from and after the date of such sale (but
not its rights and liabilities in respect thereof or under this Credit Agreement
and the other Loan Documents for obligations, indemnities and other matters
arising or matters occurring before the date of such sale) shall terminate on
the date of such sale, and Defaulting Lender shall promptly execute all
documents reasonably requested to surrender and transfer such
interest.  Upon any such sale and payment, such replaced Defaulting
Lender shall no longer constitute a “Lender” for purposes hereof (except to the
extent that such Lender is also a Term Loan  Lender or a Real Estate
Loan Lender), other than with respect to such rights and obligations that
survive termination as set forth herein.  Without in any manner
limiting the remedies of Lenders, the obligations of a Defaulting Lender to sell
and assign its Pro Rata Share under this Section 2.5(c) shall be specifically
enforceable by the Borrower, Agent and/or the other Lenders, by an action
brought in any court of competent jurisdiction for such purpose, it being
acknowledged and agreed that, in light of the disruption in the administration
of the Loans and the other terms of the Loan Documents that a Defaulting Lender
may cause, damages and other remedies at law are not adequate.

    
      
         

      

      
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    Section
2.6           Payment and Sharing of
Payment.

     

    (a)           On
a Business Day of each week as selected from time to time by the Agent, or more
frequently (including daily), if the Agent so elects (each such day being a
“Settlement Date”), the Agent will advise each Revolving Credit Lender by
telephone, facsimile or e-mail of the amount of each such Revolving Credit
Lender’s Pro Rata Share of the Revolving Credit Loan balance as of the close of
business of the Business Day immediately preceding the Settlement
Date.  In the event that payments are necessary to adjust the amount
of such Revolving Credit Lender’s actual Pro Rata Share of the Revolving Credit
Loan balance to such Revolving Credit Lender’s required Pro Rata Share of the
Revolving Credit Loan balance as of any Settlement Date, the party from which
such payment is due shall pay the Agent, without setoff or discount, not later
than noon (Boston time) on the Business Day following the Settlement Date
the full amount necessary to make such adjustment.  Any obligation
arising pursuant to the immediately preceding sentence shall be absolute and
unconditional and shall not be affected by any circumstance
whatsoever.  In the event settlement shall not have occurred by the
date and time specified in the second preceding sentence, interest shall accrue
on the unsettled amount at the Defaulting Lender Rate, until paid.

     

    (b)           On
each Settlement Date, the Agent shall advise each Revolving Credit Lender by
telephone, facsimile or e-mail of the amount of such Revolving Credit Lender’s
Pro Rata Share of principal, interest and fees paid for the benefit of Revolving
Credit Lenders with respect to each applicable Revolving Credit Loan, to the
extent of such Revolving Credit Lender’s credit exposure with respect thereto,
and shall make payment to such Revolving Credit Lender not later than noon
(Boston time) on the Business Day following the Settlement Date of such
amounts in accordance with wire instructions delivered by such Revolving Credit
Lender to the Agent, as the same may be modified from time to time by written
notice to the Agent; provided, that, in
the case such Revolving Credit Lender is a Defaulting Lender, the Agent shall be
entitled to set off the funding short-fall against that Defaulting Lender’s
respective share of all payments received from the Borrower.

     

    (c)           The
provisions of this Section 2.6 shall be deemed to be binding upon the Agent
and the Revolving Credit Lenders notwithstanding the occurrence of any Default
or Event of Default, or any Insolvency Proceeding pertaining to Borrower or any
of its Subsidiaries.

     

    Section
2.7          Change in Borrowing
Base.  The Borrowing Base shall be determined monthly (or at
such other interval as may be specified pursuant to Section 10.4(h) by the
Agent by reference to the Borrowing Base Report delivered to the Agent pursuant
to Section 10.4(h).  The Agent shall give written notice to the
Borrower of any change in the Borrowing Base as determined by the Required
Lenders.  In the case of a reduction in the lending formula with
respect to Eligible Accounts Receivable or Eligible Raw Material and Finished
Goods Inventory, such notice shall be effective two (2) days after its
receipt by the Borrower, and in the case of any change in the general criteria
for Eligible Accounts Receivable or Eligible Raw Material and Finished Goods
Inventory, such notice shall be effective upon its receipt by the
Borrower.  Prior to the time that such notice becomes effective, the
Borrowing Base shall be computed as it would have been computed in the absence
of such notice.

     

    ARTICLE
3.  REPAYMENT OF THE REVOLVING CREDIT LOANS.

     

    Section
3.1          Maturity.  The
Borrower promises to pay on the Revolving Credit Loan Maturity Date, and there
shall become absolutely due and payable on the Revolving Credit Loan Maturity
Date, all of the Revolving Credit Loans outstanding on such date, together with
any and all accrued and unpaid interest thereon.

    
      
         

      

      
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    Section
3.2           Mandatory Repayments of Revolving
Credit Loans.  If at any time, the sum of the outstanding
amount of the Revolving Credit Loans plus the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations plus the Foreign
Exchange Reserve exceeds the lesser of (i) the Revolving Credit Loan
Commitment and (ii) the Borrowing Base, then the Borrower shall immediately
pay the amount of such excess to the Agent for application:  first, to
any Unpaid Reimbursement Obligations, second to the Revolving Credit Loans for
the accounts of the Revolving Credit Lenders for application to their Pro Rata
Share; and third, to provide TD Bank cash collateral for Reimbursement
Obligations as contemplated by Section 7.2(b) and
(c).  Notwithstanding the foregoing, in the event that the sum of the
outstanding amount of the Revolving Credit Loans plus the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations plus the Foreign
Exchange Reserve exceeds the lesser of (i) the Revolving Credit Loan Commitment
and (ii) the Borrowing Base as a result of a change in the Borrowing Base
pursuant to Section 2.7 hereof, the Borrower shall not be required to make
such mandatory repayment until the date that any Borrowing Base Report
immediately following the date of such change in the Borrowing Base is required
to be delivered.

     

    Section
3.3           Optional Repayments of Revolving
Credit Loans.  The Borrower may, at any time or from time to
time, prepay the outstanding amount of the Revolving Credit Loans, as a whole or
in part, at any time without penalty or premium.  The Borrower shall
give the Agent, no later than 11:00 a.m. (Boston time) at least one
(1) Business Day’s prior written notice, by facsimile or otherwise
(confirmed in writing), of any proposed prepayment pursuant to this Section 3.3
of any Revolving Credit Loans specifying the proposed date of prepayment of
Revolving Credit Loans and the principal amount to be
prepaid.  Partial prepayments of the Revolving Credit Loans shall be
in an integral multiple of $50,000 or any multiple of $10,000 in excess
thereof.

     

    ARTICLE
4.  TERM LOAN AND REAL ESTATE LOAN.

     

    Section
4.1          
 Term Loan; Real Estate Loan.

     

    (a)           The
Term Loan and the Real Estate Loan were made pursuant to the Original Credit
Agreement on the Original Closing Date and may not be reborrowed.

     

    Section
4.2            The
Term Notes.

     

    (a)           The
Term Loan made by each Term Loan Lender is evidenced by an amended and
restated  promissory note of the Borrower in favor of such Term Loan
Lender, in substantially the form of Exhibit A-2 hereto
(the “Term Loan Note”) in the amount of such Term Loan Lender’s Term Loan
Commitment Percentage dated as of the Closing Date.

     

    (b)           The
Real Estate Loan made by each Real Estate Loan Lender shall be evidenced by a
promissory note of the Borrower in favor of such Real Estate Loan Lender, in
substantially the form of Exhibit A-3 hereto
(the “Real Estate Loan Note”) in the amount of such Real Estate Loan
Lender’s Real Estate Loan Commitment Percentage dated as of the Original Closing
Date.

    
      
         

      

      
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    Section
4.3           Term Loan and Real Estate Loan
Continuation.  Whenever the Borrower desires to continue a Term
Loan or Real Estate Loan hereunder, the Borrower shall notify (“Notice of Term
Loan Borrowing) in the form annexed hereto as Exhibit C as of the
date of the Notice of Term Loan Borrowing, the Agent by written notice (which
notice shall be irrevocable and may be provided by telecopy) received no
later than 11:00 p.m. Boston time on the date two (2) Business Days before
the day on which the requested Term Loan and/or Real Estate Loan is to be
continued.  For purposes of the Notice of Term Loan Borrowing for a
LIBOR Rate Loan, such notice must specify:  the minimum of the
outstanding principal the Borrower wishes the LIBOR Rate to apply to, provided
such borrowing shall be in the minimum amount of $500,000 and in integrals of
$125,000 above such amount.  All LIBOR Rate Loans hereunder shall be
limited to not more than five (5) different maturities at any
time.  If the Agent does not receive a Notice of Term Loan Borrowing
containing an Interest Period for a LIBOR Rate Loan within the applicable time
limits set forth herein, or if when a Notice of Term Loan Borrowing must be
given, a Default exists or an Event of Default has occurred and is continuing,
the Borrower shall be deemed to continue such Term Loan and/or Real Estate Loan,
in whole with the same Interest Period, on the last day of the then current
Interest Period.

     

    ARTICLE
5.  REPAYMENT OF TERM LOAN AND REAL ESTATE LOAN.

     

    Section
5.1           
Scheduled Principal Amortization.

     

    (a)           Term Loan
Note.  The Borrower promises to make, in addition to interest
thereon, principal payments to the Term Loan Lenders, monthly in the amount of
$148,000 commencing with the payment on February 1, 2011 and on the last day of
each month thereafter through and including the Term Loan Maturity Date when all
remaining outstanding principal shall be due and payable.

     

    (b)           Real Estate Loan
Note.  The Borrower promises to make, in addition to interest
thereon, principal payments to the Real Estate Loan Lenders monthly commencing
with the payment on February 1, 2009 and on the first day of each month
thereafter through and including the Real Estate Loan Maturity Date, in equal
principal amounts of $10,416.67 with all remaining outstanding principal
thereunder due and payable on the Real Estate Loan Maturity Date.

     

    Section
5.2          Optional
Prepayments.  The Borrower may, at any time or from time to
time, subject to also making the payments required under this Section 5.2, upon
not less than three (3) Business Days irrevocable written notice to the
Agent in respect of LIBOR Rate Loans, prepay the Term Loan or the Real Estate
Loan in whole or in part, in the minimum amount of $100,000 (or the remainder if
less), and all other charges provided in this Section 5.2.  Such
notice of prepayment shall specify the date and amount of such prepayment and
the portion of the Term Loan being prepaid.  If such notice is given
by the Borrower, the Borrower shall make such prepayment and the prepayment
amount specified in such notice shall be due and payable on the date specified
therein, together, with accrued interest to each such date on the amount prepaid
and, in the case of LIBOR Rate Loans any amounts required to be paid under
Article 6 hereof for prepayment of any LIBOR Rate Loans other than on the last
day of an Interest Period.  Optional prepayments of the Term Loan
shall be applied to principal payment installments in their inverse order of
maturity.

    
      
         

      

      
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    Section
5.3           Mandatory
Prepayments.

     

    The
Borrower shall be required to make prepayments of the Term Loan and the Real
Estate Loan as set forth below (each a “Mandatory Prepayment”), such payments
being due and payable on the date on which any amount described below is
received by the Borrower or the Borrower is entitled to receive cash payments
therefor to be applied first to the repayment of the Term Loan and when the Term
Loan has been repaid in full then to the repayment of the Real Estate
Loan:

     

    (a)           an
amount equal to 100% of the Net Proceeds received by the Borrower or any of its
Subsidiaries from the sale or other disposition of any of its Capital Assets,
except for (i) sales of inventory in the ordinary course of business or
(ii) sales of any assets no longer used or useful in the conduct of such
business, provided, with
respect to clause (ii) immediately preceding, that no Default or Event of
Default then exists or would exist after giving effect to such use of Net
Proceeds, the value of such assets does not exceed $500,000 in any fiscal year,
the Borrower or such Subsidiary uses the cash proceeds of any such sale to
purchase replacement or other equipment within 120 days of such sale, and such
sales are at fair market value;

     

    (b)           subject
to Section 11.1, an amount equal to 100% of the proceeds received by the
Guarantor or any of its Subsidiaries (i) from the incurrence of any Indebtedness
for borrowed money other than borrowings permitted hereunder and (ii) from the
issuance of any Shares of the Guarantor or any of its Subsidiaries (referred to
herein, collectively, as “New Equity”), in each case, excluding reasonable fees
and expenses incurred by such Person relating to the incurrence of such
Indebtedness or issuance of such Shares;

     

    (c)           an
amount equal to 100% of the Net Proceeds received by the Borrower or any of its
Subsidiaries as insurance proceeds or condemnation awards, other than insurance
proceeds or condemnation awards not in excess of an aggregate amount of $500,000
in respect of loss or damage to equipment, Inventory, fixed assets or real
property to the extent such cash proceeds are applied to replace or repair the
equipment, Inventory, fixed assets or real property in respect of which such
proceeds were received, so long as such application is made within one hundred
and twenty (120) days after the occurrence of such loss, damage, or
condemnation;

     

    (d)           subject
to the requirement to turn over certain proceeds described in
Section 11.4(v), an amount equal to 100% of all Extraordinary Receipts
received by the Holding Company or any of its Subsidiaries; and

     

    (e)           commencing
with a payment on June 1, 2012 and on each June 1 of each year thereafter, an
amount equal to 60% of Excess Cash Flow for the immediately preceding fiscal
year of the Borrower, for application to the prepayment of the Term Loan and
thereafter to the Real Estate Loan as provided above.  The payment of
such Excess Cash Flow shall be in addition to, and not in lieu of, any monthly
amortization payment required hereunder.

     

    (f)           the
proceeds derived under (a) – (d) above shall be applied first, to the extent
possible, to prepay any Base Rate Loans and then to prepay LIBOR Rate Loans
(provided, that
upon Borrower’s written request, so long as no Default or no Event of Default
has occurred and is continuing, the Agent shall use commercially reasonable
efforts to hold such proceeds as cash collateral, so long as such proceeds are
in a segregated account to which the Borrower and its Subsidiaries have no
access or withdrawal rights, to be used to prepay LIBOR Rate Loans to minimize
breakage costs).

    
      
         

      

      
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    Section
5.4           Term Loan and Real Estate Loan
Payments Settlement.

     

    (a)           Payments
of principal, interest and fees in respect of the Term Loan and the Real Estate
Loan will be settled on the date of receipt if received by Agent on the first
Business Day of a month or on the Business Day immediately following the date of
receipt if received on any day other than the first Business Day of a
month.

     

    (b)           Any
amounts required to be paid under Section 5.3 shall be applied to the prepayment
of the Term Loan pro rata in accordance
with each Term Loan Lender’s Pro Rata Share of the Term Loan and if the Term
Loan shall have been repaid pro rata in accordance
with each Real Estate Loan Lender’s Pro Rata Share of the Real Estate Loan and
if the Real Estate Loan shall have been repaid, then such payments shall be
applied pro
rata in
accordance with each Lender’s Pro Rata Share of the Revolving Credit Loan
Commitment.

     

    Section
5.5          Late Fee.  The
Borrower will pay on demand a late charge for payments of interest and principal
which are not made when due and payable assessed at five percent (5%) of
the overdue payment.  Such late charge payments are made for the
purpose of compensating the Lenders for their administrative costs and expenses
in handling late payments, losses in connection therewith and increased
risk.  If Lender elects to charge such late fee, then the outstanding
Loans shall not accrue interest at the Default Rate.

     

    ARTICLE
6.  CERTAIN GENERAL PROVISIONS.

     

    Section
6.1          Amendment Fee.  The
Borrower will pay to the Agent for the benefit of the Lenders on the Closing
Date an amendment fee (the “Amendment Fee”) in the amount of Fifty Thousand
Dollars ($50,000).  The Amendment Fee shall be deemed fully earned on
the Closing Date and shall not be subject to rebate or return, in whole or in
part under any circumstances.

     

    Section
6.2          Interest on
Loans.

     

    (a)          Unless
an Event of Default shall have occurred and the Default Rate applies, the
outstanding principal of the Term Loan and the Real Estate Loan shall bear
interest at (x) the Reserve Adjusted LIBOR plus the Applicable Margin for the
LIBOR Rate Loans or the Base Rate plus the Applicable Margin for the Base Rate
Loans.

     

    (b)          Unless
an Event of Default shall have occurred and the Default Rate applies, the
outstanding principal of the Revolving Credit Loans shall bear interest at a
rate per annum selected by the Borrower equal to:

     

    (i)           the
Base Rate plus the Applicable Margin for the Base Rate Loans; or

     

    (ii)          Reserve
Adjusted LIBOR plus the Applicable Margin for the LIBOR Rate
Loans.

    
      
         

      

      
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    (c)          The
Borrower promises to pay interest on the outstanding amount of each Revolving
Credit Loan, in arrears, on the first day of each calendar month commencing with
the payment to be made on August 1, 2010 (subject to the Following Business
Day Convention).

     

    (d)          The
Borrower promises to pay interest on the outstanding amount of each of the Term
Loan and the Real Estate Loan, in arrears, on the first day of each calendar
month commencing with the payment to be made on August 1, 2010 (subject to
the Following Business Day Convention).

     

    Section
6.3           Funds for
Payments.

     

    (a)          All
payments of principal, interest, commitment fees, facility fees and any other
amounts due hereunder or under any of the other Loan Documents shall be made to
the Agent at the Agent’s Head Office, in each case in immediately available
funds.

     

    (b)          All
payments by the Borrower hereunder and under any of the other Loan Documents to
or for the account of any Lender or the Agent hereunder or under any of the
other Loan Documents shall be made without setoff or counterclaim and free and
clear of and without deduction for any taxes, levies, imposts, duties, charges,
fees, deductions, withholdings, compulsory loans, restrictions or conditions of
any nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless the
Borrower is compelled by law to make such deduction or
withholding.  If any such obligation is imposed upon the Borrower with
respect to any amount payable by it hereunder or under any of the other Loan
Documents, the Borrower will pay to the Agent for the benefit of the Lenders on
the date on which such amount is due and payable hereunder or under such other
Loan Document, such additional amount in Dollars as shall be necessary to enable
each Lender to receive the same net amount which such Lender would have received
on such due date had no such obligation been imposed upon the
Borrower.

     

    Section
6.4           Computations.  All
computations of interest on the Loans and of other fees to the extent applicable
shall be based on a 360-day year and paid for the actual number of days elapsed
for LIBOR Rate Loans.  Whenever a payment hereunder or under any of
the other Loan Documents becomes due on a day that is not a Business Day, the
due date for such payment shall, except as otherwise provided in the case of a
LIBOR Rate Loan, be extended to the next succeeding Business Day, and interest
shall accrue during such extension.

     

    Section
6.5           Additional Costs,
Etc.  If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Lender
by any central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall:

     

    (a)           subject
any Lender to any tax, levy, impost, duty, charge, fee, deduction or withholding
of any nature with respect to this Credit Agreement, the other Loan Documents,
the Revolving Credit Loan Commitment or the Loans, any Letters of Credit or any
Foreign Exchange Contracts (other than taxes based upon or measured by the
income or profits of a Lender or taxes in lieu thereof), or

    
      
         

      

      
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    (b)          materially
change the basis of taxation (except for changes in taxes on income or
profits) of payments to any Lender of the principal of or the interest on
any Loans or any other amounts payable to any Lender under this Credit Agreement
or the other Loan Documents, or

     

    (c)          impose
or increase or render applicable (other than to the extent specifically provided
for elsewhere in this Credit Agreement) any special deposit, reserve,
assessment, liquidity, capital adequacy or other similar requirements (whether
or not having the force of law) against assets held by, or deposits in or
for the account of, or loans, Letters of Credit or Foreign Exchange Contracts
by, or commitments of an office of a Lender, or

     

    (d)          impose
on any Lender any other conditions or requirements with respect to this Credit
Agreement, the other Loan Documents, the Loans, the Revolving Credit Loan
Commitment, or any class of loans or commitments of which any of the Loans or
the Revolving Credit Loan Commitment forms a part;

     

    and the
result of any of the foregoing is:

     

    (i)           to
increase the cost to such Lender of making, funding, issuing, renewing,
extending or maintaining any of the Loans or the Revolving Credit Loan
Commitment issuing the Letter of Credit or enter into the Foreign Exchange
Contract, or

     

    (ii)          to
reduce the amount of principal, interest or other amount payable to such Lender
hereunder on account of the Revolving Credit Loan Commitment or any of the
Loans, or

     

    (iii)         to
require such Lender to make any payment or to forego any interest or other sum
payable hereunder, the amount of which payment or foregone interest or other sum
is calculated by reference to the gross amount of any sum receivable or deemed
received by such Lender from the Borrower hereunder,

     

    then, and
in each such case, the Borrower will, upon demand made by such Lender at any time and from
time to time and as often as the occasion therefor may arise, pay to such Lender
such additional amounts as will be sufficient to compensate such Lender for such
additional cost, reduction, payment or foregone interest or Reimbursement
Obligation or other sum.  Such Lender shall allocate such cost
increases among its customers in good faith and on an equitable
basis.

     

    Section
6.6         Capital
Adequacy.  If any present or future law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) or the interpretation thereof by a court or Governmental Authority
with appropriate jurisdiction affects the amount of capital required or expected
to be maintained by any Lender or any corporation controlling any Lender
determines that the amount of capital required to be maintained by it is
increased by or based upon the existence of such Loans made or deemed to be made
pursuant hereto (or any issuance of any Letter of Credit or entering into any
Foreign Exchange Contract), then such Lender may notify the Borrower
of such fact, and the Borrower shall pay to such Lender from time to time on
demand, as an additional fee payable hereunder, such amount as such Lender shall
determine in good faith and certify in a notice to the Borrower to be an amount
that will adequately compensate such Lender in light of these circumstances for
its increased costs of maintaining such capital.  Such Lender shall
allocate such cost increases among its customers in good faith and on an
equitable basis.

    
      
         

      

      
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    Section
6.7         Certificate.  A
certificate setting forth any additional amounts payable pursuant to Sections
6.5 or 6.6 and a brief explanation of such amounts which are due, submitted by
such Lender to the Borrower, shall be prima facie evidence that such amounts are
due and owing.

     

    Section
6.8         Interest Following Event of Default;
Late Charge.  At the option of the Lenders, overdue principal
and (to the extent permitted by applicable law) interest on the Loans and
all other overdue amounts payable hereunder or under any of the other Loan
Documents and all amounts outstanding after the occurrence of any Event of
Default which is continuing, shall bear interest payable on demand at a rate
(“Default Rate”) per annum equal to two percent (2%) above the highest
rate then otherwise applicable on the Loans until such amount shall be paid in
full (after as well as before judgment) or the Borrower shall pay on demand
therefor by the Agent, to the Agent for the benefit of the Lenders, a late fee
of five percent (5%) of the amount which is overdue which late fee is not a
penalty but is a liquidated damages payment to compensate the Lenders for such
late payments.  The imposition of the Default Rate or the charge of
such late fee shall not cure any Event of Default which was caused by the
failure to make such timely payment.

     

    Section
6.9          Inability to Determine
LIBOR.  In the event, prior to the commencement of any Interest
Period relating to any LIBOR Rate Loan, the Agent shall determine that adequate
and reasonable methods do not exist for ascertaining the LIBOR Rate that would
otherwise determine the rate of interest to be applicable to any LIBOR Rate Loan
during any Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Lenders) to the Borrower and the Lenders.  In such
event:  (a) any Notice of Borrowing with respect to LIBOR Rate
Loans shall be automatically withdrawn and the LIBOR Rate Loan shall be
converted into a Base Rate Loan, (b) each LIBOR Rate Loan will
automatically, on the last day of the then current Interest Period thereof, be
converted into a Base Rate Loan, and (c) the obligations of the Lenders to
make LIBOR Rate Loans shall be suspended until the Agent determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Agent shall so notify the Borrower and the Lenders.

     

    Section
6.10       Illegality. Notwithstanding any
other provisions herein, if any present or future law, regulation, treaty or
directive or interpretation or application thereof shall make it unlawful for
any Lender to make or maintain LIBOR Rate Loans, such Lender shall forthwith
give notice of such circumstances to the Borrower and the other Lenders and
thereupon (a) the commitment of such Lender to make LIBOR Rate Loans or
convert Loans of another type to LIBOR Rate Loans shall forthwith be suspended
and (b) such Lender’s LIBOR Rate Loans then outstanding shall be converted
automatically to a rate determined in the good faith of the Agent on the last
day of each Interest Period applicable to such LIBOR Rate Loans or within such
earlier period as may be required by law.  The Borrower hereby agrees
promptly to pay the Agent for the account of such Lender, upon demand by such
Lender, any additional amounts necessary to compensate such Lender for any costs
incurred by the Agent or any Lender in making any conversion as such payments
are described in accordance with this Section 6.10, including any interest or
fees payable by such Lender to lenders of funds obtained by it in order to make
or maintain its LIBOR Rate Loans hereunder.

    
      
         

      

      
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    Section
6.11       Indemnity.  If the
Borrower shall at any time:  (a) repay or prepay any principal of
any LIBOR Rate Loan on a date other than the last day of an Interest Period with
respect thereto (whether a voluntary payment, a payment as a consequence of
acceleration, or a mandatory repayment to reduce the principal outstanding or
otherwise) or (b) for any reason fail to borrow or convert a LIBOR
Rate Loan on the date specified therefor in any Notice of Borrowing delivered by
the Borrower to the Agent pursuant to Section 2.5, or to continue or convert a
loan pursuant to Section 4.3, the Borrower shall indemnify each Lender, on
demand of the Agent, at any time and as often as the occasion therefor may
arise, against all losses, costs or expenses which each Lender may at any time
or from time to time occur as a consequence of such repayment, prepayment or
failure to borrow.  The amount of such losses, costs or expenses shall
be an amount equal to the remainder, if any, of:

     

    (a)          the
total amount of interest which would otherwise have accrued hereunder on the
principal so paid, not borrowed or converted at a rate equal to the interest
rate which otherwise would have been applicable to such principal during the
period (the “Reemployment Period”);

     

    (i)           in
the case of any such repayment or prepayment, beginning on the date of such
payment and ending on the last day of the applicable Interest Period of the
amount so paid, or

     

    (ii)          in
the case of any such failure to borrow or convert, beginning on the date for the
borrowing or conversion that shall have been requested in any notice of
borrowing relating thereto and ending on the date that would have been the
applicable last day of the Interest Period if such amount had been borrowed or
converted;

     

    minus    (b)          an
amount equal to the aggregate interest to be earned by the Agent (or the
applicable Lender) by reinvesting the amount prepaid, repaid or not
borrowed or converted, or the Reemployment Period at the yield to maturity on a
United States treasury security selected by the Agent (or the applicable
Lender) equal in amount to the amount prepaid, repaid, or not borrowed or
converted and having a maturity approximately equal to the Reemployment
Period.

    
      
         

      

      
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    Section
6.12        Taxes.

     

    (a)          Unless
otherwise required by a taxing authority, all payments of principal and interest
on the Loans and all other amounts payable hereunder shall be made free and
clear of and without deduction for any present or future excise, stamp,
documentary or property taxes and other taxes, fees, duties, levies,
assessments, withholdings or other charges of any nature whatsoever (including
interest and penalties thereon) imposed by any taxing authority, excluding
taxes imposed on or measured by the Agent’s or any Lender’s net income or
revenue by any jurisdiction under which the Agent or such Lender is organized or
conducts business (all non-excluded items being called “Taxes”).  If
any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
then the Borrower will:  (i) pay directly to the relevant
Governmental Authority the full amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
Governmental Authority; and (iii) pay to the Agent for the account of the
Agent and the Lenders such additional amount or amounts as is necessary to
ensure that the net amount actually received by the Agent and each Lender will
equal the full amount the Agent and such Lender would have received had no such
withholding or deduction been required.  If any Taxes are directly
asserted against the Agent or any Lender with respect to any payment received by
the Agent or such Lender hereunder, the Agent or such Lender may pay such Taxes
and Borrower will promptly pay such additional amounts (including any penalty,
interest or expense, other than as a result of delay by the Agent or a
Lender) as is necessary in order that the net amount received by such
Person after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount such Person would have received had such
Taxes not been asserted so long as such amounts have accrued on or after the day
which is ninety (90) days prior to the date on which the Agent or such
Lender first made demand therefor; provided, that the
foregoing obligation to pay such additional amounts shall not
apply:  (i) to any payment to a Lender that fails to comply with
Section 6.12(c), or (ii) to any Taxes imposed by reason of the voluntary
change by a Lender of the jurisdiction to which such Lender is subject from the
United States to a jurisdiction outside the United States.

     

    (b)          If
Borrower fails to pay any Taxes when due to the appropriate Governmental
Authority or fails to remit to the Agent, for the account of the Agent and the
respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agent and each Lender for any
incremental Taxes, interest or penalties that may become payable by the Agent or
any Lender as a result of any such failure.

     

    (c)          Each
Lender, assignee and participant that is a U.S. person as defined in Section
7701(a)(30) of the Code shall deliver to the Borrower and the Agent, and if
applicable, the assigning Lender (or, in the case of a participant, to the
Lender from which the related participation shall have been purchased) on
or before the date on which it becomes a party to this Credit Agreement (or, in
the case of a participant, on or before the date on which such participant
purchases the related participation), two duly completed and signed copies of
Internal Revenue Service Form W-9.  Each Lender, assignee and
participant that is not a U.S. person as defined in Section 7701(a)(30) of
the Code (a “Foreign Lender”) shall deliver to the Borrower and the Agent,
and if applicable, the assigning Lender (or, in the case of a participant, to
the Lender from which the related participation shall have been
purchased) on or before the date on which it becomes a party to this Credit
Agreement (or, in the case of a participant, on or before the date on which such
participant purchases the related participation) either:

     

    (i)           two
duly completed and signed copies of any of Internal Revenue Service Form W-8ECI,
Form W-BEN (with respect to a complete exemption under any income tax
treaty) or Form W-8IMY or successor and related applicable forms, as the
case may be, certifying to such Lender’s entitlement as of such date to a
complete exemption from United States withholding tax with respect to payments
to be made under this Credit Agreement (or successor forms), or

    
      
         

      

      
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    (ii)           in
the case of a Foreign Lender that is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code and that does not comply with the requirements of
clause (A) hereof, (x) a statement in form and content reasonably
acceptable to Agent and Borrower to the effect that such Foreign Lender is
eligible for a complete exemption from withholding of U.S. Taxes under Code
section 871(h) or 881(c) (a “Foreign Lender Complete Exemption
Certificate”), and (y) two duly completed and signed copies of Internal
Revenue Service Form W-8BEN or successor and related applicable
form.

     

    Further,
each Foreign Lender agrees (i) to deliver to the Borrower and the Agent,
and if applicable, the assigning Lender (or, in the case of a participant, to
the Lender from which the related participation shall have been purchased), two
further duly completed and signed copies of the applicable Form W-8 or successor
and related applicable forms or certificates, on or before the date that any
such form or certificate, as the case may be, expires or becomes obsolete and
promptly after the occurrence of any event requiring a change from the most
recent form(s) or certificate(s) previously delivered by it to the
Borrower (or, in the case of participant, to the Lender from which the related
participation shall have been purchased) in accordance with applicable U.S.
laws and regulations, (ii) in the case of a Foreign Lender that delivers a
Foreign Lender Complete Exemption Certificate, to deliver to the Borrower and
the Agent, and if applicable, the assigning Lender, such statement on an annual
basis on the anniversary of the date on which such Foreign Lender became a party
to this Credit Agreement and to deliver promptly to the Borrower and the Agent,
and if applicable, the assigning Lender, such additional statements and forms as
shall be reasonably requested by the Borrower from time to time, and
(iii) to notify promptly the Borrower and the Agent (or, in the case of
Participant, the Lender from which the related participation shall have been
purchased) if it is no longer able to deliver, or if it is required to
withdraw or cancel, any form or certificate previously delivered by it pursuant
to this Section 6.12.  The Borrower shall not be required to pay
additional amounts to any Lender pursuant to this Section 6.12 with respect
to United States withholding and income Taxes to the extent that the obligation
to pay such additional amounts would not have arisen but for the failure of such
Lender to comply with this paragraph other than as a result of a change in
law.

     

    Section
6.13       General
Obligations.  All extensions of credit by any Lender to the
Borrower under the Revolving Credit Note, the Term Loan Note or the Real Estate
Loan Note and all other Obligations to the Agent and the Lenders under this
Credit Agreement and any of the Loan Documents shall constitute one general
obligation secured by the security interest in all of the Collateral and by all
other security interests, liens, claims, and encumbrances heretofore, now, or at
any time or times hereafter granted by the Borrower and its Subsidiaries to the
Agent and the Lenders.  The Borrower agrees that all of the rights of
the Agent and the Lenders set forth in this Credit Agreement shall apply to any
modification of or supplement to this Credit Agreement, any supplements or
exhibits hereto, and other agreements, unless otherwise agreed in
writing.

    
      
         

      

      
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    Section
6.14       Replacement of Lender Due to
Increased Costs.  Anything contained herein to the contrary
notwithstanding, in the event that:  (a) (i) any Lender (an “Increased
Cost Lender”) shall give notice to the Borrower that such Lender is entitled to
receive payments under Section 6.5 or 6.10, the Borrower may, at its option, so
long as no Default or no Event of Default has occurred and is continuing, notify
such Increased Cost Lender and the Agent of its intention to obtain, at the
Borrower’s expense, a replacement lender (“Increased Cost Replacement Lender”)
for such Increased Cost Lender, which Increased Cost Replacement Lender must be
reasonably satisfactory to the Agent.  In the event the Borrower
obtains an Increased Cost Replacement Lender within ninety (90) days following
notice of its intention to do so, Increased Cost Lender shall sell, at par, its
interest in the Loans, the Obligations related thereto and its rights hereunder
as a Lender arising from and after the date of such sale (but not its rights and
liabilities in respect thereof or under this Credit Agreement and the other Loan
Documents for obligations, indemnities and other matters arising or matters
occurring before the date of such sale) shall terminate on the date of such
sale, and Increased Cost Lender shall promptly execute all documents reasonably
requested to surrender and transfer such interest.  Upon any such sale
and payment, such replaced Increased Cost Lender shall no longer constitute a
“Lender” for purposes hereof, other than with respect to such rights and
obligations that survive termination as set forth herein.  Without in
any manner limiting the remedies of the Lenders, the obligations of an Increased
Cost Lender to sell and assign its Pro Rata Share under this Section 6.14 shall
be specifically enforceable by the Borrower, by an action brought in any court
of competent jurisdiction for such purpose, it being acknowledged and agreed
that, in light of the disruption in the administration of the Loans and the
other terms of the Loan Documents that an Increased Cost Lender may cause,
damages and other remedies at law are not adequate.

     

    ARTICLE
7.  LETTERS OF CREDIT SUBLIMIT; FOREIGN EXCHANGE
SUBLIMIT.

     

    Section
7.1          Letter of
Credit Commitments.

     

    Section
7.1.1    Commitment to Issue Letters of
Credit.  Subject to the terms and conditions hereof, TD Bank,
in reliance upon the representations and warranties of the Borrower contained
herein, agrees to issue, extend and renew for the account of the Borrower one or
more standby letters of credit (individually, a “Letter of Credit”), in such
form as may be requested from time to time by the Borrower and agreed to by TD
Bank; provided,
however, that
TD Bank will not be required to issue or cause to be issued any Letters of
Credit to the extent that the issuance thereof would then cause the sum of (i)
the outstanding Revolving Credit Loans plus (ii) the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations plus (iii) the
Foreign Exchange Reserve to exceed at any one time the lesser of (x) the
Revolving Credit Loan Commitment minus the Foreign
Exchange Reserve, and (y) the Borrowing Base.  In addition to the
foregoing limitation, the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not exceed, in the aggregate, at any time, the Letter of
Credit Sublimit.

     

    Section
7.1.2    Letter of Credit
Applications.  The issuance of a Letter of Credit shall be
subject to the execution and delivery by the Borrower of a letter of credit
application on TD Bank’s customary form (a “Letter of Credit
Application”).  Each Letter of Credit Application shall be completed
to the satisfaction of TD Bank.  In the event that any provisions of
any Letter of Credit Application shall be inconsistent with any provision of
this Credit Agreement, then the provisions of this Credit Agreement shall, to
the extent of any such inconsistency, govern.

    

    Section
7.1.3    Terms of Letters of
Credit.  Each Letter of Credit issued, extended or renewed
hereunder shall, among other things, (a) provide for the payment of sight
drafts for honor thereunder when presented in accordance with the terms thereof
and when accompanied by the documents described therein, and (b) have an
expiry date no later than the date which is fourteen (14) days (or, if the
beneficiary is located outside of the United States of America, forty-five
(45) days) prior to the Revolving Credit Loan Maturity
Date.  Each Letter of Credit so issued, extended or renewed shall be
subject to the Uniform Customs.

    
      
         

      

      
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    Section
7.2          Reimbursement Obligation of the
Borrower.  In order to
induce TD Bank to issue, extend and renew each Letter of Credit, the Borrower
hereby agrees to reimburse or pay to TD Bank, with respect to each Letter of
Credit issued, extended or renewed by TD Bank hereunder,

     

    (a)           except
as otherwise expressly provided in Sections 7.2(b) and (c), on each
date that any draft presented under such Letter of Credit is honored by TD Bank,
or TD Bank otherwise makes a payment with respect thereto, (i) the amount
paid by TD Bank under or with respect to such Letter of Credit, and
(ii) the amount of any taxes, fees, charges or other costs and expenses
whatsoever incurred by TD Bank in connection with any payment made by TD Bank
under, or with respect to, such Letter of Credit; provided, however, that if TD
Bank delivers notice pursuant to Section 7.3 requiring reimbursement later than
12:00 p.m. (Boston, Massachusetts time), payment shall not be required to be
made until the succeeding Business Day;

     

    (b)           upon
the reduction (but not termination) of the Revolving Credit Loan Commitment
to an amount less than the Maximum Drawing Amount, an amount equal to such
difference, which amount shall be held by TD Bank as cash collateral for all
Reimbursement Obligations; and

     

    (c)           upon
the termination of the Revolving Credit Loan Commitment, or the acceleration of
the Reimbursement Obligations with respect to all Letters of Credit in
accordance with Article 16, an amount equal to the then Maximum Drawing
Amount on all Letters of Credit, which amount shall be held by the Bank as cash
collateral for all Reimbursement Obligations.

     

    Each such
payment shall be made to TD Bank at TD Bank’s Head Office in immediately
available funds.  Interest on any and all amounts remaining unpaid by
the Borrower under this Section 7.2 at any time from the date such amounts
become due and payable (whether as stated in this Section 7.2, by
acceleration or otherwise) until payment in full (whether before or after
judgment) shall be payable to TD Bank on demand at the Default
Rate.

     

    Section
7.3          Letter of Credit Payments.  If any draft
shall be presented or other demand for payment shall be made under any Letter of
Credit, TD Bank shall notify the Borrower of the date and amount of the draft
presented or demand for payment and of the date and time when it expects to pay
such draft or honor such demand for payment.  The responsibility of TD
Bank to the Borrower shall be only to determine that the documents (including
each draft) delivered under each Letter of Credit in connection with such
presentment shall be in conformity in all material respects with such Letter of
Credit.

     

    Section
7.4          Obligations Absolute.  The Borrower’s
obligations under this Section 7 shall be absolute and unconditional under
any and all circumstances and irrespective of the occurrence of any Default or
Event of Default or any condition precedent whatsoever or any setoff,
counterclaim or defense to payment which the Borrower may have or have had
against TD Bank, or any beneficiary of a Letter of Credit.  The
Borrower further agrees with TD Bank that TD Bank shall not be responsible for,
and the Borrower’s Reimbursement Obligations under Section 7.2 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, fraudulent or forged, or any dispute between or
among the Borrower, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrower against the beneficiary of any
Letter of Credit or any such transferee.  TD Bank shall not be liable
for any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit.  The Borrower agrees that any action taken or
omitted by TD Bank under or in connection with each Letter of Credit and the
related drafts and documents, if done in good faith and without gross
negligence, shall be binding upon the Borrower and shall not result in any
liability on the part of  TD Bank to the Borrower.

    
      
         

      

      
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    Section
7.5         Reliance by Issuer.  To the extent not
inconsistent with Section 7.4, TD Bank shall be entitled to rely, and shall
be fully protected in relying upon, any Letter of Credit, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons and upon advice and statements of legal
counsel, independent accountants and other experts selected by TD
Bank.

     

    Section
7.6         Letter of Credit Fee.  The Borrower
shall, on the date of issuance or any extension or renewal of any Letter of
Credit and at such other time or times as such charges are customarily made by
TD Bank, pay a fee (in each case, a “Letter of Credit Fee”) to TD Bank in
respect of each Letter of Credit equal to three percent (3%) of the maximum
face amount of such Letter of Credit.

     

    Section
7.7          Foreign
Exchange Facility.

     

    Section
7.7.1    Until the Revolving Credit Loan Maturity
Date, TD Bank at its discretion, may enter into foreign exchange contracts
(collectively, “Foreign Exchange Contracts”) with the Borrower on a
specified date (the “Settlement Date”).  The maximum amount of Foreign
Exchange Contracts the Borrower may enter into will be Five Million U.S. Dollars
(U.S. $5,000,000 provided that the
Borrower will not exceed the Foreign Exchange Limit.

    

    Section
7.7.2    TD Bank shall not be required to make any
U.S. Dollar or foreign currency settlement payment to the Borrower until TD Bank
receives evidence satisfactory to it that the Borrower has paid TD Bank at least
two (2) banking days prior to the Settlement Date all of the Borrower’s
U.S. Dollar and foreign currency settlement payments.  TD Bank shall
not be liable for interest or other damages caused by any such failure to pay or
deliver or any such delay in payment or delivery.

    

    Section
7.7.3     The Borrower will pay TD Bank on
demand TD Bank’s then standard Foreign Exchange Contract fees for each
contract.

    

    Section
7.7.4     Foreign Exchange Contracts will be in
form and substance satisfactory to TD Bank.

    

    Section
7.7.5     No Foreign Exchange Contracts will
mature later than the Revolving Credit Loan Maturity Date.

    
      
         

      

      
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    Section
7.7.6     The Borrower understands the risks of,
and is financially able to bear any losses resulting from, entering into Foreign
Exchange Contracts.  TD Bank shall not be liable for any loss suffered
by the Borrower as a result of the Borrower’s foreign exchange
trading.  The Borrower will enter into each Foreign Exchange Contract
in reliance only upon the Borrower’s own judgment.  The Borrower
acknowledges that in entering into foreign exchange contracts with the Borrower,
TD Bank is not acting as a fiduciary.  The Borrower understands that
neither TD Bank nor the Borrower has any obligation to enter into any particular
Foreign Exchange Contract with the other.

    

    Section
7.7.7     The Borrower hereby requests TD Bank
to rely upon and execute the Borrower’s telephonic instructions regarding
Foreign Exchange Contracts, and the Borrower agrees that TD Bank shall incur no
liability for its acts or omissions which result from interruption of
communications, misunderstood communications or instructions from unauthorized
persons, unless caused by the willful misconduct or gross negligence of TD Bank
or its officers or employees.  The Borrower agrees to protect TD Bank
and hold it harmless from any and all loss, damage, claim, expense (including
the reasonable fees of outside counsel and the allocated costs of staff
counsel) or inconvenience, however arising, which TD Bank suffers or incurs
or might suffer or incur, based on or arising out of said acts or omissions
other than those arising out of the gross negligence or willful misconduct of TD
Bank.

    

    Section
7.7.8     The Borrower agrees to promptly review
all confirmations sent to the Borrower by TD Bank.  The Borrower
understands that these confirmations are not legal contracts but only evidence
of the valid and binding oral contract which the Borrower has already entered
into with TD Bank.  The Borrower agrees to promptly execute and return
to the Bank confirmations which accurately reflect the terms of a Foreign
Exchange Contract, and immediately contact the Bank if the Borrower believes a
confirmation is not accurate.  In the event of a conflict,
inconsistency or ambiguity between the provisions of this Credit Agreement and
the provisions of a confirmation, the provisions of this Credit Agreement will
prevail.

    

    Section
7.7.9     The Borrower agrees that TD Bank may
electronically record all telephonic conversations with the Borrower relating to
foreign exchange contracts and that such tape recordings may be submitted in
evidence to any court or in any other proceedings relating to such
contracts.  The Borrower agrees that in the event of a conflict,
inconsistency or ambiguity between the terms of a foreign exchange contract as
reflected in a tape recording and the terms stated on a confirmation, the terms
reflected in the tape recording shall control.

    

    Section
7.7.10   Any sum owed to TD Bank under a Foreign Exchange
Contract may, at the option of the Bank, be added to the principal amount
outstanding under this Credit Agreement.  The amount will bear
interest and be due as described elsewhere in this Credit
Agreement.  The Borrower hereby authorizes TD Bank to debit the
Borrower’s account with TD Bank for payments due from the Borrower to TD Bank
with respect to any Foreign Exchange Contract.  The Borrower
acknowledges that any collateral pledged to secure the Borrower’s performance of
its obligations under this Credit Agreement secures its obligations under
Foreign Exchange Contracts with TD Bank.

    
      
         

      

      
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    Section
7.7.11    In addition to any other rights or remedies
which TD Bank may have under this Credit Agreement or otherwise, upon the
occurrence of an Event of Default, TD Bank may:

    

    (i)           suspend
performance of its obligations to the Borrower under any Foreign Exchange
Contract;

     

    (ii)          declare
all Foreign Exchange Contracts, interest and any other amounts which are payable
by the Borrower to TD Bank immediately due and payable; and

     

    (iii)         without
notice to the Borrower, close out any or all Foreign Exchange Contracts or
positions of the Borrower with TD Bank.

     

    TD Bank shall not be under any
obligation to exercise any such rights or remedies or to exercise them at a time
or in a manner beneficial to the Borrower.  The Borrower shall be
liable for any amount owing to TD Bank after exercise of any such rights and
remedies.

     

    ARTICLE
8.  COLLATERAL SECURITY.

     

    The
Obligations shall be secured by a perfected first priority security interest
(subject only to Permitted Liens and only to a 65% pledge of all of the equity
interests in CTSA and any other Foreign Subsidiary now owned or hereafter formed
or acquired) in favor of the Agent for the benefit of the Lenders, in all
of the assets (including, without limitation, in all Real Property) of the
Borrower and its Domestic Subsidiaries, whether now owned or hereafter formed or
acquired pursuant to the terms of the Security Documents to which the Borrower
and its Domestic Subsidiaries, are a party and, by a guaranty of the Holding
Company and a pledge by the Holding Company of all of the Shares of the Borrower
each in favor of the Agent for the benefit of the Lenders.

     

    ARTICLE
9.  REPRESENTATIONS AND WARRANTIES.

     

    In order
to induce the Lenders to enter into this Credit Agreement and to make Loans, the
Holding Company, the Borrower and each of the Borrower’s Subsidiaries a party
hereto represents and warrants to the Agent and to each of the Lenders as
follows:

     

    Section
9.1           Corporate
Authority.

     

    (a)           The
Holding Company, the Borrower and each of the Borrower’s
Subsidiaries:  (i) is a company duly organized, validly existing
and in good standing under the laws of its state of organization, (ii) has
all requisite power to own its property and conduct its business as now
conducted and as presently contemplated, and (iii) is in good standing as a
foreign company and is duly authorized to do business in each jurisdiction in
which the nature of the business conducted therein or the property owned by it
therein makes such qualification necessary except where a failure to be so
qualified or in good standing would not have or could not reasonably be expected
to have a Material Adverse Effect.

    
      
         

      

      
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    (b)           The
execution, delivery and performance of this Credit Agreement and the other Loan
Documents to which the Holding Company or any of its Subsidiaries is or is to
become a party and the transactions contemplated hereby and
thereby:  (i) are within the corporate authority of such Person,
(ii) have been duly authorized by all necessary corporate proceedings,
(iii) do not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which the Holding Company or
any of its Subsidiaries is subject or any judgment, order, writ, injunction,
license or permit applicable to the Holding Company or any of its Subsidiaries
except where such conflict, breach or contravention does not have, or could not
reasonably be expected to have, a Material Adverse Effect and (iv) do not
conflict with any provision of (A) the Charter Documents, (B) the
Capitalization Documents or (C) any other instrument binding upon the
Holding Company or any of its Subsidiaries except, in the case of this clause C
only, where such conflicts could not reasonably be expected to have a Material
Adverse Effect..

     

    (c)           The
execution and delivery of this Credit Agreement and the other Loan Documents to
which the Holding Company or any of its Subsidiaries is or is to become a party
will result in valid and legally binding obligations of such Person enforceable
against it in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights or by general equitable principles and except
to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.

     

    Section
9.2          Governmental
Approvals.  The execution, delivery and performance by the
Holding Company and any of its Subsidiaries of this Credit Agreement, the other
Loan Documents or the Capitalization Documents to which the Holding Company or
any of its Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby do not require the approval or consent of, or
filing with, any Governmental Authority other than those already
obtained.

     

    Section
9.3          Title to Properties;
Leases.  Except as indicated on Schedule 9.3 hereto,
the Holding Company and each of its Subsidiaries own all of the assets reflected
in the balance sheet of the Holding Company and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date or
disposed of in accordance with the terms and conditions of this Credit
Agreement), subject to no rights of others, including any mortgages, leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances except Permitted Liens.

    
      
         

      

      
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    Section
9.4           
Financial Statements and Projections.

     

    (a)           The
Borrower has furnished to the Agent an audited balance sheet of the Holding
Company and its Subsidiaries as at the Balance Sheet Date, and a statement of
income of the Holding Company and its Subsidiaries, on a consolidated basis, for
the fiscal year ended on December 31, 2009, and a related statement of cash
flows as of such date as audited by its accountant, CCR LLP.  Such
balance sheet, statement of income and statement of cash flows have been
prepared in accordance with generally accepted accounting principles and fairly
present, in all material respects, the financial condition of the Holding
Company and its Subsidiaries as at the close of business on the date thereof and
the results of operations for the period then ended (subject to the lack of
footnotes and year-end adjustments).  To the knowledge of the
Borrower, there are no contingent liabilities of the Holding Company and its
Subsidiaries as of such date involving material amounts, which were not
disclosed in such balance sheet and the notes related thereto other than
(a) liabilities incurred in the ordinary course of business since the
Balance Sheet Date and (b) executory obligations under contracts which are
not required to be disclosed in such financial statements in accordance with
GAAP.  The Borrower has also furnished to the Agent an unaudited,
balance sheet of the Borrower, as at April 30, 2010 and a statement of income of
the Holding Company and its Subsidiaries on a consolidated basis, for the period
and a related statement of cash flows as of such date, all prepared in good
faith and such financial statements present fairly, in all material respects,
the financial position and results of operations and cash flows of the Holding
Company and its Subsidiaries as of such date and for such periods in accordance
with GAAP, subject to normal year-end audit adjustments and the absence of
footnotes and other than (a) liabilities incurred in the ordinary course of
business since the Balance Sheet Date and (b) executory obligations under
contracts which are not required to be disclosed in such financial statements in
accordance with GAAP.  To the knowledge of the Borrower, except as
fully reflected in such financial statements, there are no material liabilities
or obligations with respect to the Holding Company or any of its Subsidiaries on
a consolidated basis, of any nature whatsoever (whether absolute, contingent or
otherwise and whether or not due).

     

    (b)           The
projections of the annual operating budgets of the Borrower and its Subsidiaries
on a consolidated basis, balance sheets and cash flow statements through the
Borrower’s fiscal year ending December 31, 2013, copies of which the Borrower
has delivered to the Agent, disclose all material assumptions made with respect
to general economic, financial and market conditions used in formulating such
projections.  To the knowledge of the Borrower, no facts exist that
(individually or in the aggregate) would result in any material change in
any of such projections.  The projections are based upon reasonable
estimates and assumptions, have been prepared on the basis of the assumptions
stated therein and reflect the reasonable estimates of the results of operations
and other information projected therein.  The projections delivered to
Agent are not guarantees of performance and the failure to achieve any such
projections shall not by itself constitute an Event of Default.

     

    Section
9.5           No Material Changes,
Etc.  Except as set forth on Schedule 9.5,
since the Balance Sheet Date there has occurred no Material Adverse Effect
(assuming the financial condition and business of the Borrower would have been
the same as the Borrower at such time) from the financial condition shown
on or reflected in the balance sheet of the Holding Company and its Subsidiaries
on a consolidated basis, as at the Balance Sheet Date, or from the statement of
income for the fiscal year then ended, other than changes in the ordinary course
of business that have not had any Material Adverse Effect, the occurrence of
which has not been waived in writing by the Required Lenders.  Since
the Closing Date, neither the Borrower nor any of its Subsidiaries has made any
Distribution other than a Distribution permitted pursuant to this Credit
Agreement.

     

    Section
9.6          Franchises, Patents, Copyrights,
Etc.  The Borrower and its Subsidiaries owns or licenses all
franchises, patents, copyrights, trademarks, trade names, licenses, rights under
distribution agreements and permits, and rights in respect of the foregoing
adequate for the conduct of its business substantially as conducted on the
Closing Date.  All of such franchises, patents, copyrights,
trademarks, tradenames, licenses, rights under distribution agreements or
permits which are material are listed on Schedule 9.6, and to
the knowledge of the Borrower and its Subsidiaries, the use thereof by the
Borrower or any of its Subsidiaries does not conflict with or infringe upon the
rights of others and all of any such licenses are in full force and
effect.

    
      
         

      

      
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    Section
9.7          Litigation.  There
are no actions, suits, proceedings or investigations of any kind pending or, to
Borrower’s knowledge, threatened against the Holding Company or any of its
Subsidiaries before any court, tribunal or administrative agency or board or
other Governmental Authority that, if adversely determined, might reasonably be
expected, either in any case or in the aggregate, to have a Material Adverse
Effect, or which question the validity of this Credit Agreement or any of the
other Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.  Schedule 9.7 hereto,
as the same may be updated pursuant to notices given under Section 10.5(d),
lists all material actions, suits, proceedings, or investigations of any kind
pending against the Holding Company or any of its Subsidiaries.

     

    Section
9.8         No Materially Adverse Contracts,
Etc.  Neither the Holding Company nor any of its Subsidiaries
are subject to any Charter Document or other legal restrictions, or any
judgment, decree, order, rule or regulation that has or is reasonably expected
to have a Material Adverse Effect in the future.  Other than those
contracts or agreements listed on Schedule 9.8, in
the judgment of the Borrower, none of the Holding Company or any of its
Subsidiaries is a party to any contract or agreement which, if terminated by a
party thereto, would have or could reasonably be expected to have a Material
Adverse Effect.

     

    Section
9.9         Compliance with Other Instruments,
Laws, Etc.  None of the Holding Company or any of its
Subsidiaries is in violation of any provision of its or their Charter Documents,
bylaws or any agreement or instrument to which it may be subject or by which it
or any of its properties may be bound or any decree, order, judgment, statute,
license, rule or regulation, in any of the foregoing cases in a manner that has,
or could reasonably be expected to have, a Material Adverse
Effect.  Schedule 9.9
accurately and completely lists each material agreement, contract and instrument
and each material license, consent, permit and other federal, state or local
authorization which are in effect in connection with the conduct of the business
of Holding Company and its Subsidiaries on the date hereof.  Except as
listed on Schedule
9.9, the Holding Company and its Subsidiaries, and to Borrower’s
knowledge, all other parties to such material agreements, contracts or
instruments are in material compliance with the terms thereof, and no default or
event of default by any party thereto exists thereunder.  The Borrower
and its Subsidiaries are in material compliance, with such governmental
consents, permits and authorizations.  The Holding Company and each of
its Subsidiaries have provided true, accurate and complete copies of each
material agreement, contracts or instruments listed on Schedule 9.9 together
with any and all amendments thereto in each case as in effect on the date
hereof.

     

    Section
9.10        Tax Status.  The
Holding Company, the Borrower and each of the Borrower’s
Subsidiaries:  (a) have made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them is subject or any legal extensions therefor
with the appropriate Governmental Authority, (b) have paid all taxes and
other governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith,
diligently and by appropriate proceedings, (c) have set aside on their
books provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply
in accordance with GAAP and (d) have no lien filed therefor on any assets
of the Holding Company, the Borrower or any of the Borrower’s
Subsidiaries.  There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
Borrower’s Key Officers know of no basis for any such claim.

    
      
         

      

      
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    Section
9.11        No Event of
Default.  No Default or Event of Default has occurred and is
continuing.

     

    Section
9.12       Holding Company and Investment
Company Acts.  Neither the Holding Company nor any of its
Subsidiaries is a “holding company”, or a “subsidiary company” of a “holding
company”, or an “affiliate” of a “holding company”, as such terms are defined in
the Public Utility Holding Company Act of 1935; nor is it an “investment
company”, or an “affiliate company” or a “principal underwriter” of an
“investment company”, as such terms are defined in the Investment Company Act of
1940.

     

    Section
9.13       Absence of Financing Statements,
Etc.  Except with respect to Permitted Liens, there is no
financing statement, security agreement, chattel mortgage, real estate mortgage
or other document filed or recorded with any filing records, registry or other
public office, that purports to cover, affect or give notice of any present or
possible future lien on, or security interest in, any assets or property of the
Holding Company, the Borrower or any of the Borrower’s Subsidiaries or any
rights relating thereto.

     

    Section
9.14       Perfection of Security
Interest.  All filings, assignments, pledges and deposits of
documents or instruments have been made or are being made and all other actions
have been taken or are being taken that are necessary or advisable, under
applicable law, to establish and perfect the Agent’s security interest in the
Collateral.  The Collateral and the Agent’s rights with respect to the
Collateral are not subject to any setoff, claims, withholdings or other
defenses.

     

    Section
9.15      Certain
Transactions.  Except (a) as otherwise permitted under
Section 11.11 and (b) the Management Agreement, none of the officers,
directors, employees or Affiliates of the Holding Company or any of its
Subsidiaries is presently a party to any transaction with the Holding Company or
any of its Subsidiaries (other than for services as employees, officers and
directors), including any contract agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, director, or any
Affiliate or employee has a substantial interest or is an officer, director
trustee or partner.  Except as set forth on Schedule 9.15,
neither Borrower nor any Guarantor has indemnified any other Person under any
contract, agreement or arrangement providing for the furnishing of services or
goods to such Person by Borrower or such Guarantor.

    
      
         

      

      
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    Section
9.16         Employee Benefit
Plans.

     

    (a)           Each
Employee Benefit Plan has been maintained and operated in compliance in all
material respects with the provisions of ERISA and, to the extent applicable,
the Code, including but not limited to the provisions thereunder respecting
prohibited transactions.

     

    (b)           Under
each Employee Benefit Plan which is an employee welfare benefit plan within the
meaning of §3(1) or §3(2)(B) of ERISA, no benefits are due unless the
event giving rise to the benefit entitlement occurs prior to plan termination
(except as required by Title I, Part 6 of ERISA).  The Borrower or an
ERISA Affiliate, as appropriate, may terminate each such Plan at any time (or at
any time subsequent to the expiration of any applicable bargaining
agreement) in the discretion of the Borrower or such ERISA Affiliate
without liability to any Person.

     

    (c)           Each
contribution required to be made to a Guaranteed Pension Plan, whether required
to be made to avoid the incurrence of an accumulated funding deficiency, the
notice or lien provisions of §302(f) or ERISA, or otherwise, has been
timely made.  No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to any
Guaranteed Pension Plan. No liability to the PBGC (other than required insurance
premiums, all of which have been paid) has been incurred by the Borrower or
any ERISA Affiliate with respect to any Guaranteed Pension Plan and there has
not been any ERISA Reportable Event, or any other event or condition which
presents a material risk of termination of any Guaranteed Pension Plan by the
PBGC.  Based on the latest valuation of each Guaranteed Pension Plan
(which in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed for that
valuation, the aggregate benefit liabilities of all such Guaranteed Pension
Plans within the meaning of §4001 of ERISA did not exceed the aggregate value of
the assets of all such Guaranteed Pension Plans, disregarding for this purpose
the benefit liabilities and assets of any Guaranteed Pension Plan with assets in
excess of benefit liabilities, by more than $100,000.

     

    (d)           Neither
the Borrower nor any ERISA Affiliate has incurred any material liability
(including secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under §4201 of ERISA
or as a result of a sale of assets described in §4204 of
ERISA.  Neither the Borrower nor any ERISA Affiliate has been notified
that any Multiemployer Plan is in reorganization or insolvent under and within
the meaning of §4241 or §4245 of ERISA or that any Multiemployer Plan intends to
terminate or has been terminated under §4041A of ERISA.

     

    Section
9.17        Regulations T, X and
U.  No portion of any Loan is to be used and no portion of any
Letter of Credit is to be obtained for the purpose of purchasing or carrying any
“margin security” or “margin stock” or for any other purpose which might cause
any of the Loans to be considered a “purpose credit” as such terms are used in
Regulations T, U and X of the Board of Governors of the Federal Reserve
System.

     

    Section
9.18        Environmental
Compliance.  Each of the Holding Company, the Borrower and the
Borrower’s Subsidiaries has made reasonable inquiry into the past and present
condition and usage of the Real Estate and the operations conducted
thereon:

    
      
         

      

      
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    (a)           none
of the Holding Company, the Borrower or the Borrower’s Subsidiaries or, to
Borrower’s knowledge, any operator of the Real Estate or any operations thereon
is in violation, or alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and Recovery
Act (“RCRA”), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended (“CERCLA”), the Superfund Amendments and
Reauthorization Act of 1986 (“SARA”), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment (hereinafter “Environmental Laws”), which violation would have, or
could reasonably be expected to have, a Material Adverse Effect;

     

    (b)           neither
the Holding Company, the Borrower nor any of the Borrower’s Subsidiaries has
received written notice from any third party including, without limitation: any
federal, state or local Governmental Authority, (i) that any one of them
has been identified by the United States Environmental Protection Agency
(“EPA”) as a potentially responsible party under CERCLA with respect to a
site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B
(1986); (ii) that any hazardous waste, as defined by 42 U.S.C. §9601(5),
any hazardous substances as defined by 42 U.S.C. §9601(14), any pollutant or
contaminant as defined by 42 U.S.C. §9601(33) and any toxic substances, oil
or hazardous materials or other chemicals or substances regulated by any
Environmental Laws (“Hazardous Substances”) which any one of them has
generated, transported or disposed of has been found at any site at which a
federal, state or local agency or other third party has conducted or has ordered
that any of the Holding Company, the Borrower or any of the Borrower’s
Subsidiaries conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a named
party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising
out of any third party’s incurrence of costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous
Substances;

     

    (c)           (i) no
portion of the Real Estate has been used by the Borrower for the handling,
processing, storage or disposal of Hazardous Substances except in accordance
with applicable Environmental Laws: and no underground tank or other underground
storage receptacle for Hazardous Substances is located on any portion of the
Real Estate except in accordance with applicable Environmental Laws;
(ii) in the course of any activities conducted by the Borrower or any of
its Subsidiaries or its operators of its properties, no Hazardous Substances
have been generated or are being used on the Real Estate except in accordance
with applicable Environmental Laws in all material respects; (iii) there
have been no releases (i.e. any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Substances on,
upon, into or from the properties of the Holding Company or its Subsidiaries by
the Holding Company, the Borrower or any of its Subsidiaries or, any other
Person, which releases could reasonably be expected to have a Material Adverse
Effect; (iv) to the Borrower’s knowledge, there have been no releases on,
upon, from or into any real property in the vicinity of any of the Real Estate
which, through soil or groundwater contamination, may have come to be located on
the Real Estate, and which could reasonably be expected to have a Material
Adverse Effect; and (v) in addition, any Hazardous Substances that have
been generated on any of the Real Estate have, to the Borrower’s knowledge, been
transported offsite only by carriers having an identification number issued by
the EPA, treated or disposed of only by treatment or disposal facilities
maintaining valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the Borrower’s knowledge,
operating in compliance with such permits and applicable Environmental Laws;
and

    
      
         

      

      
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    (d)           neither
the Borrower nor any of the Borrower’s Subsidiaries or any of
the  Real Estate is subject to any applicable Environmental Law that
at the time of making this representation requires them to perform Hazardous
Substances site assessments, or to remove or remediate Hazardous Substances, or
to give notice to any Governmental Authority or to record or deliver to other
Persons any environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby, or as a condition to the
recording of any mortgage or to the effectiveness of any other transactions
contemplated hereby.

     

    Section
9.19        Ownership; Subsidiaries,
Etc.  On the Closing Date, the Holding Company has a Wholly
Owned Subsidiary which is the Borrower and the Borrower has no Subsidiaries
other than CTSA.  As of the Closing Date and as of the date of any
Notice of Borrowing, the authorized, issued and outstanding Shares of the
Borrower is as set forth on Schedule 9.19A
which also lists the number of Shares or interests owned of record or
beneficially by any Person on a fully diluted basis and the name of owners of
more than five percent (5%) of the outstanding Shares and of the officers and
directors thereof.  As of the Closing Date, the authorized, issued and
outstanding shares of the Holding Company is as set forth on Schedule 9.19B which
also lists the number of Shares or interests owned of record or beneficially by
any Person that owns five percent (5%) or more of the Holding Company on a fully
diluted basis and the name of such owner.  All of such outstanding
Shares are duly authorized, validly issued, fully paid and nonassessable and are
free and clear of all liens.  Except as listed on Schedule 9.19A, the
Borrower has not issued any securities convertible into, or options or warrants
for, any common or preferred Shares and there are no agreements, voting trusts
or understandings binding upon the Holding Company or Borrower or affecting in
any manner, the sale, pledge, assignment or other disposition thereof, including
any right of first refusal, option, redemption, call or other right with respect
thereto.

     

    Section
9.20        Bank
Accounts.  Schedule 9.20, as
updated in writing and delivered to the Agent from time to time in accordance
with Article 22, sets forth the account numbers and location of all bank
accounts of the Borrower and each of its Subsidiaries.

     

    Section
9.21        Chief Executive
Offices.  The Holding Company’s and the Borrower’s chief
executive office is located at which location its books and records are
kept.

     

    Section
9.22        Fiscal Year.  The
Holding Company and its Subsidiaries have a fiscal year which is the twelve
(12) months ending on December 31 of each year.

     

    Section
9.23        No Amendments to Certain
Documents.  Except for amendments effectuated prior to or on
the Closing Date, neither the Borrower nor the Holding Company has amended the
Purchase Agreement, any Seller Note, the SCP Subordinated Notes, the Management
Agreement or any of the Granite Subordinated Debt Documents.  Each of
the representations and warranties made by the Holding Company and the Borrower
in any of the Loan Documents or the Subordinated Debt Documents was true and
correct in all material respects when made and continues to be true and correct
in all material respects on and as of the Closing Date, except to the extent
that any of such representations and warranties relate, by the express terms
thereof, solely to a date falling prior to the Closing Date, and except to the
extent that any of such representations and warranties may have been affected by
the consummation of the transactions contemplated and permitted or required by
the Loan Documents.

    
      
         

      

      
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    Section
9.24      Disclosure.  No
representation or warranty made by the Holding Company or any of its
Subsidiaries in this Credit Agreement or in any agreement, instrument, document,
certificate, statement or letter furnished to the Agent or any of the Lenders by
or on behalf of the Holding Company or any of its Subsidiaries in connection
with any of the transactions contemplated by any of the Loan Documents contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances in which they are made.  There is no
existing condition known to the Holding Company or any of its Subsidiaries which
is reasonably likely in the future to cause a Material Adverse
Effect.

     

    Section
9.25         Intentionally
Omitted.  

     

    Section
9.26       Insurance.  The
Borrower and each of its Subsidiaries maintains with financially sound and
reputable insurers insurance with respect to its properties and businesses
against such casualties and contingencies as are in accordance with sound
business practices, with the details of such coverage being more fully described
on Schedule
9.26, as updated in writing and delivered to the Agent from time to time
in accordance with Article 22.

     

    Section
9.27        Foreign Assets Control Regulation,
Etc.  Neither the making of the Loans nor the incurrence of the
Indebtedness evidenced thereby nor the Holding Company’s nor any of its
Subsidiaries use of the proceeds thereof will violate the Trading with the Enemy
Act, as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto or
any Anti-Terrorism Laws.  Without limiting the foregoing, neither the
Holding Company nor any of its Subsidiaries:  (a) is, or will
become, a Person described or designated in the Specially Designated Nationals
and Blocked Persons List of the Office of Foreign Assets Control or in Section 1
of Executive Order No. 13,244 of September 24, 2001, Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended, or (b) engages or
will engage in any dealings or transactions, or is or will be otherwise
associated, with any such Person.  The Holding Company and its
Subsidiaries are in compliance, in all material respects, with the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act) Act of 2001, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time in
effect.  No part of the proceeds from the Loans will be used, directly
or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases
that such Act applies to the Borrower and its Subsidiaries.

    
      
         

      

      
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    Section
9.28        Use of
Proceeds.  The Borrower is using the proceeds of the Revolving
Credit Loans as provided in Section 10.14.

     

    Section
9.29        Licenses and Permits. The
Borrower holds all licenses, permits, authorizations, certifications,
accreditations, provider agreements and associated provider numbers
(collectively, the “Licenses”) issued by a Governmental Authority or other
organization which are material to the Borrower to operate its business, and
which are capable of being issued at this time and each of the Licenses is
listed on Schedule
9.29 attached hereto.  The Borrower is in material compliance
with the Licenses, except where failure to be in compliance could not reasonably
be expected to have a Material Adverse Effect.  All Licenses which
have been issued are in full force and effect.  The Borrower does not
know of any threatened suspension, revocation or invalidation of any of the
Licenses, or any basis therefore.

     

    Section
9.30        Product
Liability.  All of Borrower’s and Guarantors’ products are
non-toxic and do not contain any Hazardous Substances.

     

    Section
9.31        Government
Contracts.

     

    (a)          Schedule 9.31 lists
all Government Contracts, and Schedule
9.31 lists all Government Bids.  “Government Contract”
means any contract that:  (a) is between the Borrower or a Guarantor
and a U.S. or other governmental entity, or is entered into by the Borrower as a
subcontractor (at any tier) in connection with a contract between another entity
and a U.S. or other governmental entity; and (b) for which final payment to the
Borrower was not made prior to the Closing Date.  “Government Bid”
means any offer to sell made by the Borrower prior to the Closing Date which, if
accepted, would result in a Government Contract.

     

    (b)          Except
as set forth in Schedule 9.31, none
of Borrower, any Guarantor nor any director, officer, agent, employee (whether
full time or contract) or other Person acting on behalf of Borrower or any
Guarantor has, in the course of its actions for, or on behalf of, Borrower or
such Guarantor: (a) used or authorized the use of any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to commercial or political activity; (b) offered, made or authorized any direct
or indirect unlawful payment to any foreign or domestic government official or
employee (whether full time or contract); or (c) offered, made or authorized any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee (whether full
time or contract).

     

    (c)          With
respect to each Government Contract or Government Bid to which Borrower or such
Guarantor is a party:

     

    (i)           Borrower
and each Guarantor has complied with all terms and conditions of such Government
Contract or Government Bid, including all clauses, provisions and requirements
incorporated expressly, by reference or by operation of law therein, except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect;

    
      
         

      

      
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    (ii)         All
representations and certifications executed, acknowledged or set forth in or
pertaining to such Government Contract or Government Bid were, to the knowledge
of the Borrower, complete and correct in all material respects as of their
effective date;

     

    (iii)        Neither
the United States Government nor any prime contractor, subcontractor or other
Person has notified Borrower or any Guarantor, either in writing or, to the
knowledge of Borrower or such Guarantor, verbally, that Borrower or such
Guarantor has breached or violated any law, regulation, certification,
representation, clause, provision or requirement pertaining to such Government
Contract or Government Bid;

     

    (iv)         No
cure notice or show cause notice is currently in effect pertaining to such
Government Contract, and such Government Contract was not terminated for default
or convenience;

     

    (v)           No
material cost incurred by Borrower or any Guarantor pertaining to such
Government Contract or Government Bid has been formally questioned or
challenged, is the subject of any investigation or has been disallowed by the
United States Government, and no material amount due to Borrower or any
Guarantor pertaining to such Government Contract or Government Bid has been
withheld or set-off nor has any claim been made to withhold or set-off
money;

     

    (vi)         Neither
Borrower or any Guarantor has received any written adverse or negative
assessment of its performance under any Government Contract during the last
three years;

     

    (vii)        Borrower’s
and each Guarantor’s cost accounting system complies with the Cost Accounting
Standards (as defined in the Federal Acquisition Regulations, 48 C.F.R. Chapter
99) to the extent required by such Government Contract, and during the past
three years, Borrower’s and each Guarantor’s bids or proposals for such
Government Contract complied with the Truth in Negotiations Act;

     

    (viii)      Borrower
and each Guarantor is in compliance with, and maintains controls sufficient to
monitor compliance with, all Qualified Products Lists and Qualified Manufacturer
Lists applicable to the products and production facilities of Borrower or such
Guarantor; and

     

    (ix)         Borrower
and each Guarantor is in compliance with, and maintains controls sufficient to
monitor compliance with, the Buy American Act (as implemented in the Federal
Acquisition Regulations, 48 C.F.R. Part 25), and any domestic preference
applicable to such Government Contract, including without limitation, a
preference for domestic specialty metals.

    
      
         

      

      
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    (d)          Except
as set forth in Schedule
9.31:  (a) neither Borrower nor any Guarantor nor any of the
Borrower’s or Guarantors’ employees is, or during the last three years has been,
under administrative, civil or criminal investigation or audit (other than
routine inquiries, audits and reconciliations) by the United States Government,
or is the subject of any internal audit by Borrower or such Guarantor, with
respect to any alleged material irregularity, misstatement or omission arising
under or relating to any Government Contract or Government Bid; (b) during the
last three years, neither Borrower nor any Guarantor has conducted or initiated
any material internal investigation or made a voluntary disclosure to the United
States Government with respect to any alleged irregularity, misstatement or
omission arising under or relating to a Government Contract or Government Bid
and neither Borrower nor any Guarantor is currently subject to any
Administrative Agreement relating to a Government Contract or Government Bid;
(c) during the last three years, neither Borrower nor any Guarantor nor any of
Borrower’s or such Guarantor’s employees has been suspended or debarred from
doing business with the United States Government, has been proposed for
suspension or debarment, or has been the subject of a finding of
non-responsibility on a Government Bid; and (d) during the last three years,
neither Borrower nor any Guarantor nor any of Borrower’s or such Guarantor’s
employees has been named as a defendant in any proceeding brought under the
False Claims Act.  To the knowledge of Borrower, there exist no facts
or circumstances that would warrant the institution of suspension or debarment
proceedings or the finding of non-responsibility on the part of Borrower or any
Guarantor or any of Borrower’s or such Guarantor’s employees.

     

    (e)          To
the knowledge of the Borrower, except as set forth in Schedule 9.34, there
exist: (a) no outstanding material claims against Borrower or any Guarantor
either by the United States Government or by any prime contractor,
subcontractor, vendor or other Person, arising under or relating to any
Government Contract or Government Bid; and (b) no material disputes between
Borrower or any Guarantor and the United States Government under the Contract
Disputes Act or between Borrower or any Guarantor and any prime contractor,
subcontractor or vendor arising under or relating to any Government Contract or
Government Bid.

     

    (f)           Except
for the security interest granted to Agent and liens granted to secure the
Subordinated Debt, neither Borrower nor any Guarantor has assigned or otherwise
conveyed or transferred, or agreed to assign, to any Person, any Government
Contract, or any account receivable relating thereto.

     

    Section
9.32        Export Licenses and
Compliance.

     

    (a)          Except
as set forth in Schedule 9.32,
Borrower and each Guarantor conducts, and has at all times during the past three
years conducted, its export and reexport transactions in all material respects
in accordance with all applicable U.S. export and reexport controls, including
the United States Export Administration Act and Export Administration
Regulations, the Arms Export Control Act and International Traffic in Arms
Regulations and all regulations promulgated and administered by the Treasury
Department’s Office of Foreign Assets Control (collectively “U.S. Export
Controls”).

     

    (b)          Except
as set forth in Schedule 9.32,
neither Borrower nor any Guarantor has received any written notification or
communication (or, to the knowledge of the Borrower, any oral notification or
communication) from any Governmental Authority asserting that Borrower or any
Guarantor is not in compliance, in any material respect, with any U.S. Export
Controls.

    
      
         

      

      
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    (c)           Except
as set forth in Schedule 9.32,
Borrower and each Guarantor has or has applied for all permits, registrations,
licenses, certifications and other approvals (collectively, the “Permits”) from
Governmental Authorities which are required under U.S. Export Controls in order
for Borrower or such Guarantor to conduct its business as presently conducted
and which, if not possessed, would be material to the operations of Borrower or
such Guarantor, considered together.  To the Borrower’s knowledge, (i)
all such issued Permits are valid and in full force and effect and (ii) there is
no formal proceeding pending by a, nor has Borrower or any Guarantor received a
written notice from any Governmental Authority seeking or threatening to,
modify, suspend, revoke, withdraw, terminate or otherwise limit any such
Permit.

     

    (d)           Schedule 9.32 lists
all material export, re-export or transshipment licenses, pending license
applications, authorizations and approved manufacturing license agreements or
technical assistance agreements which are held by Borrower or any Guarantor as
of the date of this Credit Agreement.

     

    (e)           Except
as set forth in Schedule 9.32, during
the last three years, neither Borrower nor any Guarantor has in any material
respect disclosed, disseminated or released to a foreign national in the United
States technology or technical data in a manner that required Borrower or such
Guarantor to obtain a license for deemed export from the United States of
America without obtaining such license.

     

    (f)           Except
as set forth in Schedule 9.32, there
have been no voluntary self disclosures made by Borrower or any Guarantor to the
U.S. Department of State's Directorate of Defense Trade Controls, the U.S.
Department of Commerce's Bureau of Industry and Security, or the U.S. Department
of Treasury’s Office of Foreign Assets Control with respect to any exports,
imports or other transactions by Borrower or any Guarantor in the last three
years.

     

    (g)           To
the knowledge of the Borrower, neither Borrower nor any Guarantor has
participated directly or indirectly in any export, import or other transactions
with a person or entity denied U.S. export privileges or otherwise specially
designated or debarred from exporting or receiving exported products, software,
technology or services by the United States Government, except as authorized by
applicable Law or Permit.

     

    ARTICLE
10.  AFFIRMATIVE COVENANTS OF THE BORROWER.

     

    The
Holding Company, the Borrower and each of the Borrower’s Subsidiaries that
become a party to this Credit Agreement from time to time covenant and agree
that, so long as any Loan, Unpaid Reimbursement Obligations, Letter of Credit,
Foreign Exchange Contract, or Note is outstanding or the Agent or any Lender has
any obligation to make any Loans or to issue, extend or renew any Letters of
Credit or enter into any Foreign Exchange Contract and any and all other amounts
payable under the Loan Documents have been paid in full in cash:

     

    Section
10.1        Punctual
Payment.  The Borrower will duly and punctually pay or cause to
be paid the principal and interest on the Loans, all Reimbursement Obligations,
the Letter of Credit Fees, the Commitment Fee, and all other amounts provided
for in this Credit Agreement and the other Loan Documents to which the Holding
Company or any of its Subsidiaries is a party, all in accordance with the terms
of this Credit Agreement and such other Loan Documents.

    
      
         

      

      
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    Section
10.2         Maintenance of
Office.  The Borrower will maintain its chief executive office
at the location described in Section 9.21, or at such other place in the United
States of America as the Borrower shall designate upon written notice to the
Agent, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents to which the Borrower is a party may be given or
made.

     

    Section
10.3        Records and
Accounts.  The Holding Company and its Subsidiaries
will:  (a) keep true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles and (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties, contingencies, and other
reserves.

     

    Section
10.4         Financial Statements, Certificates
and Information.  The Borrower will deliver to the Agent and
each of the Lenders:

     

    (a)           as
soon as practicable, but in any event not later than one hundred twenty
(120) days after the end of each fiscal year of the Holding Company and its
Subsidiaries, commencing with the fiscal year ending December 31, 2010, and
thereafter, the audited consolidated balance sheet of the Holding Company and
its Subsidiaries and the consolidating balance sheet of the Holding Company and
its Subsidiaries, each as at the end of such year, and the related consolidated
statement of the income and consolidated statement of operations, stockholders’
equity and cash flow and consolidating statement of income and consolidating
statement of cash flow for such year, setting forth in comparative form the
figures for the previous fiscal year and all such consolidated and consolidating
statements to be in reasonable detail, in each case prepared in accordance with
generally accepted accounting principles, and for all such statements, certified
without qualification by CCR LLP or by other independent
certified public accountants reasonably satisfactory to the Agent and the
Required Lenders, together with an opinion of such accountant to the effect that
such financial statements present fairly in all material respects the financial
condition and results of operations of the Holding Company and its Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied and that
the audit by such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards and a written
statement from such accountants to the effect that they have read a copy of this
Credit Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event of
Default under Article 12 hereof, or, if such accountants shall have obtained
knowledge of any then existing Default or Event of Default under Article 12,
they shall disclose in such statement any such Default or Event of
Default;

     

    (b)           as
soon as practicable, but in any event not later than forty-five (45) days
after the end of each fiscal quarter of the Borrower commencing with the fiscal
quarter ending September 30, 2010, copies of the unaudited consolidated
balance sheet of the Holding Company and its Subsidiaries and the unaudited
consolidating balance sheet of the Borrower and its Subsidiaries, each as at the
end of such fiscal quarter, and the related consolidated statement of income and
consolidated statement of cash flow and consolidating statement of income and
consolidating statement of cash flow for the portion of the Borrower’s fiscal
year then elapsed, all in reasonable detail and prepared in accordance with
generally accepted accounting principles, together with a certification by one
of the Borrower’s Key Officers that the information contained in such financial
statements fairly presents in all material respects the financial position of
the Holding Company and its Subsidiaries on the date thereof (subject to the
lack of footnotes and year-end adjustments);

    
      
         

      

      
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    (c)           simultaneously
with the delivery of the financial statements referred to in subsections
(a) and (b) above, a statement certified by the principal financial or
accounting officer of the Borrower, in substantially the form of Exhibit D hereto, and
setting forth in reasonable detail:  (i) computations evidencing
compliance with the covenants contained in Article 12 and (if
applicable) reconciliations to reflect changes in generally accepted
accounting principles since the Balance Sheet Date, together with supporting
documentation used in such calculations or determinations, as the case may be,
and a comparison to:  (x) the Borrower’s results obtained in such
applicable period during the preceding fiscal year and (y) the budget which
was delivered to the Lenders for the then current fiscal year;

     

    (d)           as
soon as practicable, but in any event not later than thirty (30) days after
the end of each calendar month, commencing with the month ending June 30, 2010,
copies of the unaudited consolidated balance sheet of the Holding Company and
its Subsidiaries and the unaudited consolidating balance sheet of the Holding
Company and its Subsidiaries, each as at the end of such calendar month, the
related consolidating statement of income and consolidating statement of cash
flow for the portion of the Borrower’s fiscal year then elapsed, and a
comparison to the results obtained in the preceding fiscal year and to the
budget which was delivered to the Lenders for the then current fiscal year, all
in reasonable detail and prepared in accordance with generally accepted
accounting principals together with a certification by one of the Borrower’s Key
Officers that the information contained in such financial statements fairly
presents in all material respects the financial position of the Borrower and its
Subsidiaries on the date thereof (subject to year-end adjustments and the lack
of footnotes);

     

    (e)           contemporaneously
with the filing or mailing thereof, copies of all material of a financial nature
filed with the Securities and Exchange Commission or sent to the stockholders of
the Borrower or the Holding Company, as the case may be;

     

    (f)           by
not later than fifteen (15) days after the end of each calendar month:
(i) an accounts receivable aging and (ii) Inventory reports in form
satisfactory to the Agent;

     

    (g)           as
soon as practicable, but in any event not later than December 31 of each fiscal
year of the Borrower, projections of the Holding Company and its Subsidiaries
updating those projections delivered to the Lenders and referred to in Section
9.4(b) or, if applicable, updating any later such projections delivered in
response to a request pursuant to this Section 10.4(g) and a proposed
annual detailed business operating budget for the next succeeding fiscal year
prepared on a monthly basis which shall set forth, in detail reasonably
satisfactory to the Required Lenders, the assumptions underlying such business
operating budget;

    
      
         

      

      
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    (h)           by
not later than fifteen (15) Business Days after the end of each calendar
month (or at such earlier time as the Bank may reasonably request), a Borrowing
Base Report setting forth the Borrowing Base as at the end of such calendar
month or other date so requested by the Bank; and

     

    (i)           from
time to time such other financial data and information (including accountants’
management letters) as the Agent or any Lender may reasonably
request.

     

    Section
10.5         Notices.

     

    (a)           The
Borrower will promptly notify the Agent and each of the Lenders in writing of
the occurrence of any Default or Event of Default of which it becomes
aware.  If any Person shall give any notice or take any other action
in respect of a claimed default (whether or not constituting an Event of
Default) under this Credit Agreement or any other note or other evidence of
Indebtedness, evidencing an obligation in excess of $100,000, to which or with
respect to which it  or any of its Subsidiaries is a party or obligor,
whether as principal, guarantor, surety or otherwise, the Borrower shall
forthwith give written notice thereof to the Agent and each of the Lenders,
describing the notice or action and the nature of the claimed
default.

     

    (b)           The
Borrower will promptly notify the Agent and each of the Lenders in
writing:  (i) of any violation of any Environmental Law that it
or any of its Subsidiaries reports in writing or is reportable by such Person in
writing (or for which any written report supplemental to any oral report is
made) to any federal, state or local environmental agency and
(ii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency of potential
environmental liability, or any federal, state or local environmental agency or
board, that can reasonably be expected to materially and adversely affect the
assets, liabilities, financial conditions or operations of the Borrower or any
of its Subsidiaries, or security interests or priority thereof pursuant to the
Security Documents.

     

    (c)           The
Borrower will, promptly upon becoming aware thereof, notify the Agent and each
of the Lenders in writing of any setoff, claims (including, with respect to the
Real Estate, environmental claims), withholdings or other defenses to which any
of the Collateral, or the Agent’s rights with respect to the Collateral, are
subject.

     

    (d)           The
Holding Company and the Borrower will, and will cause each of the Borrower’s
Subsidiaries to, give notice to the Agent and each of the Lenders in writing
within fifteen (15) days of becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and proceedings affecting the
Holding Company, the Borrower or any of the Borrower’s Subsidiaries or to which
the Holding Company, the Borrower or any of the Borrower’s Subsidiaries is or
becomes a party involving an uninsured claim against the Borrower or any of its
Subsidiaries that could reasonably be expected to have a Material Adverse Effect
and stating the nature and status of such litigation or
proceedings.  The Holding Company will, and will cause each of its
Subsidiaries to, give notice to the Agent and each of the Lenders in writing, in
form and detail satisfactory to the Required Lenders, within ten (10) days
of any judgment not covered by insurance, final or otherwise, against the
Holding Company, the Borrower or any of the Borrower’s Subsidiaries in an amount
in excess of $100,000.

    
      
         

      

      
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    (e)           The
Borrower will promptly upon receipt thereof, deliver to the Agent and each of
the Lenders copies of all audit reports and management letters, if any,
submitted to the Holding Company or to the Borrower by its accountants and
copies of all financial statements, material reports, material notices and proxy
statements sent by or on behalf of the Holding Company or the Borrower to its
stockholders.

     

    (f)           The
Holding Company and the Borrower will simultaneously with the issuance thereof,
and immediately upon the receipt thereof by or on behalf of the Holding Company
or the Borrower, as applicable, deliver to the Agent and each of the Lenders
copies of all reports, covenant compliance certificates, budgets, projections,
requests for waivers, notices of default, requests for amendments or other
correspondence issued in connection with or relating to the Subordinated Debt
Documents.

     

    (g)           The
Borrower will promptly notify the Agent and each of the Lenders in writing upon
becoming aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any Governmental Authority of any violation of
any laws or any action, pending or threatened regarding any Licenses that can
reasonably be expected to have a Material Adverse Effect.

     

    (h)           The
Borrower will promptly notify the Agent in writing upon a Borrower Key Officer
ceasing to be involved on a full time basis in the day to day management and
operations of the business of the Borrower.

     

    (i)           The
Borrower will within five (5) days of its receipt thereof, deliver to the Agent
a copy of any material notice, document, survey results, report or other written
communication from any Governmental Authority delivered in connection with any
inspection, License renewal or other site visit including, without limitation,
all survey results.

     

    Section
10.6        Legal Existence; Maintenance of
Properties.  The Holding Company will do and will cause each of
the Borrower and the Borrower’s Subsidiaries to do or cause to be done all
things necessary to preserve and keep in full force and effect its legal
existence, rights, and franchises.  The Holding
Company:  (a) will cause all of its properties used or useful in
the conduct of its business or the business of its Subsidiaries to be maintained
and kept in good condition, repair and working order, consistent with past
practice, in all material respects, ordinary wear and tear excepted, and
supplied with all necessary equipment, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Holding Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all time consistent with past practices, and (c) will, and
will cause each of its Subsidiaries to, continue to engage primarily in the
businesses now conducted by them and in related businesses.

     

    Section
10.7        Insurance.  The
Borrower will, and will cause each of its Subsidiaries to, maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall be in
accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such terms, in
such forms and for such period as may be reasonable and prudent and in
accordance with the terms of the Security Agreement.

    
      
         

      

      
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    Section
10.8        Taxes.  The Holding
Company and the Borrower will, and will cause each of the Borrower’s
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges imposed on it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property except for taxes, assessments,
governmental charges, and claims for labor, materials or supplies that are being
contested in good faith by appropriate proceedings and for which the Borrower or
the applicable Subsidiary has set aside on its books adequate reserves and no
Lien has been filed in connection therewith.

     

    Section
10.9         Inspection of
Properties and Books, Etc.

     

    (a)           The
Holding Company and the Borrower shall permit the Lenders, through the Agent, or
any of the Agent’s designated representatives, to visit and inspect any of the
properties of the Holding Company and its Subsidiaries, to examine the books of
account of the Holding Company and its Subsidiaries (and to make copies thereof
and extracts therefrom), and to discuss the affairs, finances and accounts of
the Holding Company and its Subsidiaries with the Holding Company and its
Subsidiaries, officers and accountants, and to be advised as to the same by,
such officers and accountants and to communicate directly with such officers and
accountants, and the Borrower hereby authorizes such officer’s and accountants
to disclose to the Agent for the Lenders any and all financial statements and
other supporting financial documents with respect to the Holding Company and its
Subsidiaries’ financial condition and affairs (other than materials protected by
the attorney-client privilege and materials which may not be disclosed without
violation of a confidentiality obligation binding upon it), all at such
reasonable times and intervals, and so long as no Default exists or Event of
Default has occurred and is continuing, during regular business hours and upon
reasonable prior notice, at the Borrower’s expense, as the Agent may reasonably
request.  So long as no Event of Default has occurred and is
continuing, no more than two (2) such examinations shall be conducted during any
calendar year.

     

    (b)           Upon
the Agent’s reasonable request and at reasonable times, the Holding Company and
its Subsidiaries will permit the Agent’s examiners or independent collateral
auditors selected by the Agent to conduct commercial finance examinations at
such times and intervals as the Agent may request; provided, that so
long as no Default or Event of Default has occurred and is continuing such
audits shall not occur more often than once during each fiscal year and after
the occurrence of any Default or Event of Default which is continuing shall not
occur more often than twice during each fiscal year.  All such
examinations shall be conducted and made at the expense of the
Borrower.

     

    (c)           Upon
the Agent’s reasonable request, the Holding Company and its Subsidiaries will
obtain and deliver to the Agent and each of the Lenders appraisal reports in
form and substance and from appraisers satisfactory to the Agent, stating
(i) the then current fair market, orderly liquidation and forced
liquidation values of all or any portion of the Capital Assets or Real Estate
owned by the Borrower or any of its Subsidiaries and (ii) the then current
business value of the Holding Company and its Subsidiaries.  All such
appraisals shall be at the expense of the Borrower, provided that so long
as no Default or Event of Default has occurred and is continuing such appraisals
shall not occur more often than twice during each fiscal year.  In the
event a Default or Event of Default has occurred and is continuing, there shall
be no such limit.

    
      
         

      

      
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    (d)           No
more frequently than once during any twelve (12) month period, or more
frequently as determined by the Agent if Default or an Event of Default shall
have occurred and be continuing, the Agent may, in its discretion, obtain one or
more environmental assessments or audits of the Real Estate prepared by a
hydro-geologist, an independent engineer or other qualified consultant or expert
approved by the Agent to evaluate or confirm:  (i) whether any
Hazardous Substances are present in the soil or water at such Real Estate and
(ii) whether the use and operation of such real Estate complies with all
Environmental Laws.  Environmental assessments may include without
limitation detailed visual inspections of such Real Estate including any and all
storage areas, storage tanks, drains, dry wells and leaching areas, and the
taking of soil samples, surface water samples and ground water samples, as well
as such other investigations or analyses as the Agent deems
appropriate.  All such environmental assessments shall be conducted
and made at the expense of the Borrower.

     

    (e)           At
the request of the Agent, the Borrower shall deliver a letter addressed to the
accountants referenced in Section 10.9(a) instructing them to comply with the
provisions of such Section.

     

    Section
10.10      Compliance with Laws, Contracts,
Licenses, and Permits.  The Holding Company and the Borrower
will comply with and the Borrower will cause its Subsidiaries to comply
with:  (a) the applicable laws and regulations wherever its
business is conducted, including all Environmental Laws, (b) the provisions
of its Charter Documents, (c) all agreements and instruments by which it or
any of its properties may be bound and (d) all applicable decrees, orders,
and judgments except in the case of (a), (c) and (d) above where such
noncompliance does not have or could not reasonably be expected to have a
Material Adverse Effect.  If any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any
Governmental Authority shall become necessary or required in order that the
Holding Company, the Borrower or any of the Borrower’s Subsidiaries may fulfill
any of its obligations hereunder or any of the other Loan Documents to which the
Holding Company, the Borrower or any of the Borrower’s Subsidiaries is a party,
the Borrower will, or (as the case may be) will cause such Subsidiary to,
promptly take or cause to be taken all reasonable steps within the power of the
Holding Company, the Borrower or any of its Subsidiaries to obtain such
authorization, consent, approval, permit or license and furnish the Agent with
evidence thereof.

     

    Section
10.11      Employee Benefit
Plans.  The Borrower will:  (a) promptly upon
filing the same with the Department of Labor or Internal Revenue Service furnish
to the Agent a copy of the most recent actuarial statement required to be
submitted under §103(d) of ERISA and Annual Report, Form 5500, with all
required attachments, in respect of each Guaranteed Pension Plan and
(b) promptly upon receipt or dispatch, furnish to the Agent any material
notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under §§302, 4041, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect
of a Multiemployer Plan under §§4041A, 4202, 4219, 4242 or 4245 of
ERISA.

    
      
         

      

      
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    Section
10.12      Bank Accounts.  The
Borrower and its Domestic Subsidiaries shall maintain its or their primary
operating and primary deposit accounts and all cash concentration accounts with
the Agent.

     

    Section
10.13     Further
Assurances.  The Holding Company will, and will cause each of
its Subsidiaries to, cooperate with the Lenders and the Agent and execute such
further instruments and documents as the Agent shall reasonably request to carry
out to their satisfaction the transactions contemplated by this Credit Agreement
and the other Loan Documents.

     

    Section
10.14     Use of
Proceeds.  The Borrower will use the proceeds of the Loans
solely:  (a) to provide funds for Permitted Acquisitions,
(b) to pay transaction fees and expenses incurred in connection with the
Loans, (c) for Capital Expenditures, to the extent permitted hereunder, and
(d) for working capital purposes.  The Borrower will obtain
Letters of Credit solely for working capital and general corporate
purposes.

     

    ARTICLE
11.  CERTAIN NEGATIVE COVENANTS OF THE BORROWER.

     

    The
Borrower covenants and agrees that, so long as any Loan, Unpaid Reimbursement
Obligation, Letter of Credit, or Note is outstanding or the Agent or any Lender
has any obligation to make any Loans, or to issue, extend or renew any Letters
of Credit or enter into any Foreign Exchange Contract and any and all other
amounts payable under the Loan Documents have been paid in full in
cash:

     

    Section
11.1       Restrictions on
Indebtedness.  The Borrower will not, and will not permit any
of its Subsidiaries to, create, incur, assume, guarantee or be or remain liable,
contingently or otherwise, with respect to any Indebtedness other
than:

     

    (a)          Indebtedness
to the Lenders arising under any of the Loan Documents;

     

    (b)          Current
Liabilities of the Borrower and its Subsidiaries incurred in the ordinary course
of business not incurred through (i) the borrowing of money, or
(ii) the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal purchases of
goods and services;

     

    (c)          Indebtedness
in respect of taxes, assessments, governmental charges or levies and claims for
labor, materials and supplies to the extent that payment therefor shall not at
the time be required to be made in accordance with the provisions of Section
10.8 or Section 11.2(vi);

     

    (d)          endorsements
for collection, deposit or negotiation and warranties or products or services,
in each case incurred in the ordinary course of business;

     

    (e)          Subordinated
Debt subject to an Agent Approved Subordination Agreement;

     

    (f)           unsecured
Indebtedness of CTSA, including, without limitation under the Intercompany
Agreement, in an amount not to exceed U.S. $1,000,000;

     

    
      
        
        

      

      
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    (g)          purchase
money Indebtedness incurred in connection with the acquisition after the date
hereof of any personal property by the Borrower and its Subsidiaries or
obligations under Capitalized Leases; provided, that the
aggregate principal amount of such Indebtedness and the payment obligations of
the Borrower under such Capitalized Leases shall not exceed the aggregate amount
of $500,000 at any one time;

     

    (h)          deferred
compensation due to employees not to exceed an aggregate $20,000 outstanding at
any time;

     

    (i)           obligations
consisting of financing of insurance premiums in the ordinary course of
business;

     

    (j)           Permitted
Acquisition Indebtedness;

     

    (k)          obligations
arising with respect to customary indemnification obligations incurred in the
ordinary course of business in connection with (b), or
(g) above;

     

    (l)           obligations
incurred in the ordinary course of business with respect to surety and
performance bonds;

     

    (m)         Subordinated
Debt evidenced by the SCP Subordinated Notes in an aggregate principal amount on
the Original Closing Date of $1,000,000 and which principal amount may increase
in accordance with the provisions of the SCP Subordinated Notes which provide
for the compounding of interest;

     

    (n)          Subordinated
Debt evidenced by the Granite Subordinated Notes in an aggregate principal
amount on the Closing Date not to exceed $8,500,000.

     

    (o)           any
extension, renewal or replacement of any of the foregoing on terms and
conditions that are, on the whole, no more onerous to the Borrower, Holding
Company and its Subsidiaries than the terms and conditions applicable
immediately before such extension, renewal or replacement, so long as (i) such
Indebtedness is not increased above the amount outstanding immediately prior to
giving effect to any such extension, renewal or replacement, and (ii) to the
extent that the Indebtedness to be extended, renewed or replaced is Subordinated
Debt, such extension, renewal or replacement continues to be subordinated to the
Obligations on terms and conditions reasonably satisfactory to the
Agent.

     

    Section
11.2      Restrictions on
Liens.  The Borrower will not, and will not permit any of its
Subsidiaries to:  (a) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or
the income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option
to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement;
(d) suffer to exist any Indebtedness or claim or demand against it that if
unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over its general creditors; or (e) sell, assign, pledge
or otherwise transfer any accounts, contract right, general intangibles, chattel
paper or instruments, with or without recourse; provided, that the
Borrower or any of its Subsidiaries may create or incur or suffer to be created
or incurred or to exist:

     

    
      
        
        

      

      
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    (i)           liens
to secure taxes, assessments and other government charges in respect of
obligations not overdue;

     

    (ii)         deposits
or pledges made in connection with, or to secure payment of, workmen’s
compensation, unemployment insurance, old age pensions or other social security
obligations or to secure the performance of bids, tenders, contracts (other than
for the repayment of borrowed money) or leases or to secure statutory
obligations or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds in the ordinary course of business;

     

    (iii)        encumbrances
on Real Estate consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects and irregularities in the
title thereto, landlord’s or lessor’s liens under leases to which the Borrower
or any of its Subsidiaries is a party, and other minor liens or encumbrances
none of which in the opinion of the Borrower interferes materially with the use
of the property affected in the ordinary conduct of the business of the Borrower
and its Subsidiaries, which defects do not individually or in the aggregate have
or could reasonably be expected to have, a Material Adverse Effect;

     

    (iv)         liens
to lessors under Capitalized Leases permitted by Section 11.1(g) and
purchase money security interests in or purchase money mortgages on personal
property acquired after the date hereof to secure purchase money Indebtedness of
the type and amount permitted by Section 11.1(g), incurred in connection with
the acquisition of such property, which security interests or mortgages cover
only the personal property so acquired; and

     

    (v)          liens
in favor of the Agent for the benefit of the Lenders under the Loan
Documents;

     

    (vi)         liens
arising in the ordinary course of business out of mechanics’, carriers’,
laborers, material suppliers, workmen’s, repairmen’s or other like liens in
respect of obligations which are not overdue, or making deposits to obtain the
release of such liens or are being contested in good faith and by appropriate
proceedings diligently conducted and for which proper reserve or other provision
has been made in accordance with and to the extent required by GAAP so long as
such liens do not gain priority over any of the liens in favor of the Agent for
any of the Loans or any proceeds thereof;

     

    (vii)        making
deposits to secure replevin, surety, attachment or appeal bonds relating to
legal proceedings to which the Borrower or any of its Subsidiaries is a
party;

     

    
      
        
        

      

      
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    (viii)       bankers’
liens, rights of set-off or similar rights as to accounts maintained with a
financial institution;

     

    (ix)         liens
in favor of vendors of goods arising as a matter of law securing the payment of
the purchase price therefor so long as such liens attach only to the purchased
goods;

     

    (x)           incurring
liens arising out of judgments or awards against the Borrower or any of its
Subsidiaries with respect to which it is currently engaged in proceedings for
review or appeal and with respect to which it shall have secured a stay of
execution pending such proceedings for review or appeal.

     

    (xi)         any
interest of title of a licensor, sublicensor, lessor or sublessor, lessee or
sublessee, in each case under any license or lease agreement in the ordinary
course of business arising solely under a state statute or common law and liens
arising from Uniform Commercial Code financing statements (or equivalent
filings, registrations or agreements in foreign jurisdictions) solely evidencing
a lessor’s interest under leases;

     

    (xii)        liens
on insurance policies and the proceeds thereof securing the financing of the
premiums with respect thereto;

     

    (xiii)      liens
arising solely under a state statute or common law in connection with the
purchase, storage or shipping of goods or assets on the related goods or assets
and proceeds thereof in favor of the seller, or shipper of such goods or assets;
and

     

    (xiv)       liens
arising under the Granite Subordinated Debt Documents.

     

    Section
11.3       
Restrictions on
Investments.  The Borrower will not, and will not permit any of
its Subsidiaries to, make or permit to exist or to remain outstanding any
Investment except Investments in:

     

    (a)           marketable
direct or guaranteed obligations of the United States of America that mature
within one (1) year from the date of purchase;

     

    (b)           demand
deposits, certificates of deposit, bankers acceptances and time deposits of
United States banks having total assets in excess of
$1,000,000,000;

     

    (c)           securities
commonly known as “commercial paper” issued by a corporation organized and
existing under the laws of the United States of America or any state thereof
that at the time of purchase have been rated and the ratings for which are not
less than “P 1” if rated by Moody’s Investors Services, Inc., and not less than
“A 1” if rated by Standard and Poor’s;

     

    (d)           Accounts
receivable created, acquired or made and trade credit extended in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms;

     

    (e)           Investments
consisting of stock, obligations, securities or other property received in
connection with any bankruptcy or reorganization of, or any good faith
settlement of delinquent accounts and disputes with, any customer or supplier
arising in the ordinary course of business;

     

    
      
        
        

      

      
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    (f)           Investments
constituting deposits made in connection with the purchase of goods or services
in the ordinary course of business;

     

    (g)          the
Borrower may make a loan to a Wholly Owned Domestic Subsidiary which is a
Guarantor provided:  (i) the aggregate amount of all of such
loans does not exceed $250,000 outstanding at any time and (ii) such loans
are evidenced by a promissory note which is pledged and delivered to the Agent
for the benefit of the Lenders and is part of the Collateral;

     

    (h)          Permitted
Acquisitions;

     

    (i)           security
deposits in connection with any lease;

     

    (j)           non
cash loans or advances made in connection with a management or employee stock
ownership program;

     

    (k)          Investments
in Wholly Owned Domestic Subsidiaries which are Guarantors; and

     

    (l)           Investments
prior to the date hereof in CTSA.

     

    provided, however, that with
the exception of demand deposits referred to in Section 11.3(b) the
Investments listed in (a), (b) (c) and (e) immediately preceding
will be considered Investments permitted by this Section 11.3 only if all
actions have been taken to the satisfaction of the Agent to provide to the Agent
for the benefit of the Lenders a first priority perfected security interests in
all of such Investments free of all encumbrances other than Permitted
Liens.

     

    Section
11.4        Restricted
Payments.  The Borrower will not and will not permit any of its
Subsidiaries to make any Restricted Payment:

     

    (i)           provided, that: the
Borrower may make a Distribution to the Holding Company to allow the Holding
Company to make a payment of (A) the Management Fee under the Management
Agreement in the amount of such Management Fees and (B) the Consulting Fee under
the Consulting Agreement in the amount of such Consulting Fee, so long as upon
such payments: (x) the aggregate amount of all of such payments made
pursuant to this clause (i) shall not exceed $20,000 in any calendar month,
(y) both at the time of and after giving effect to each such payment no
Default or Event of Default shall have occurred and be continuing or would be
caused if such payment were made and (z) EBITDA for the twelve (12) consecutive
month period ending on the last day of the then most recent month for which
financial statements have been delivered to Agent is not less than the EDITDA
Threshold;

     

    (ii)         provided, that the
Borrower may make a Distribution to the Holding Company to allow the Holding
Company to pay out-of-pocket expenses for accounting, board of director fees and
expenses, investor relations, legal, SEC reporting and other operating costs
(excluding such costs and expenses incurred in connection with this financing
transaction) in an amount not to exceed $500,000 in any fiscal year of the
Borrower;

     

    
      
        
        

      

      
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    (iii)        provided, that any
Subsidiary of the Borrower may make a Distribution to the Borrower;

     

    (iv)         provided, that the
Borrower may make payments on Subordinated Debt permitted under an Agent
Approved Subordination Agreement including, without limitation, an Agent
Approved Subordination Agreement relating to the Granite Subordinated Debt
Documents;

     

    (v)           provided, that the
Borrower may pay to the Seller under the Purchase Agreements net cash proceeds
actually received which it is required to pay to such Sellers from the
litigation described in Section 8.12 of the Purchase Agreement in effect on the
date hereof; and

     

    (vi)         provided, that the
Borrower may make a Distribution to the Holding Company to allow the Holding
Company to pay costs and expenses, including, without limitation, legal fees
incurred in connection with this financing transaction and the transactions
contemplated under the Initial Credit Agreement  so long as:
(x) the aggregate amount of such payment made pursuant to this clause (vi)
shall not exceed $150,000 in any fiscal quarter and the aggregate amount of all
of such payments, so long as Agreement is in effect, shall not exceed
$2,500,000, (y) EBITDA for the twelve (12) consecutive month period ending on
the last day of the then most recent month for which financial statements have
been delivered to the Agent is not less than the EBITDA Threshold and (z) both
at the time of and after giving effect to each such payment, no Default or Event
of Default shall have occurred and be continuing or would be caused if such
payment were made (such permitted payments of such costs and expenses referred
to as “Permitted Holdco Distributions”).

     

    Section
11.5        Merger, Consolidation and
Disposition of Assets.

     

    (a)          The
Borrower will not, nor will it permit any of its Subsidiaries to, become a party
to any merger or consolidation, or agree to or effect any asset acquisition or
stock, membership interest or membership unit or partnership interest
acquisition other than a Permitted Acquisition and merger of a Subsidiary of the
Borrower into the Borrower, provided that the
Borrower survives as the sole remaining entity.

     

    (b)           The
Borrower will not, nor will it permit any of its Subsidiaries to, become a party
to or agree to or effect any disposition of assets except for dispositions of
assets listed in (i)-(iv) of this subsection and in the case of (ii), (iii) and
(iv) below of up to $500,000 in value, in the aggregate in any fiscal year,
unless such proceeds are otherwise reinvested as provided in Section
5.3(a) hereof.  The dispositions permitted under this subsection
(b) are:

     

    (i)           the
sale of Inventory in the ordinary course of business;

     

    
      
        
        

      

      
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    (ii)         disposition
of leased or owned motor vehicles in the ordinary course of
business;

     

    (iii)        the
disposition of assets damaged in a casualty event; and

     

    (iv)         the
disposition of assets which are obsolete or no longer useful in the Borrower’s
or its Subsidiaries’ business.

     

    Section
11.6       Sale and
Leaseback.  The Borrower will not and will not permit any of
its Subsidiaries to, enter into any arrangement, directly or indirectly, whereby
the Borrower or any Subsidiary of the Borrower shall sell or transfer any
property owned by it in order then or thereafter to lease such property or lease
other property that the Borrower or such Subsidiary intends to use for
substantially the same purpose as the property being sold or
transferred.

     

    Section
11.7     Compliance with Environmental
Laws.  The Borrower will not, and will not permit any of its
Subsidiaries to:  (a) use any of the Real Estate or any portion
thereof for the handling, processing, storage or disposal of Hazardous
Substances other than in the ordinary course of business, (b) cause or
permit to be located on any of the Real Estate any underground tank or other
underground storage receptacle for Hazardous Substances, (c) generate any
Hazardous Substances on any of the Real Estate other than in the ordinary course
of business and in accordance with all applicable Environmental Laws,
(d) conduct any activity at any Real Estate or use any Real Estate in any
manner so as to cause a release (i.e. releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous Substances on,
upon or into the Real Estate the liability for the clean up or remediation of
such release or activity would exceed, in the aggregate for all of such
occurrences, could reasonably be expected to have a Material Adverse Effect or
(e) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner, that would violate any Environmental Law or bring such
Real Estate in violation of any Environmental Law if such violation could
reasonably be expected to have a Material Adverse Effect.

     

    Section
11.8        Employee Benefit
Plans.  Neither the Borrower nor any ERISA Affiliate
will:

     

    (a)          engage
in any “prohibited transaction” within the meaning of §406 of ERISA or §4975 of
the Code which could result in a material liability for the Borrower or any of
its Subsidiaries;

     

    (b)          permit
any Guaranteed Pension Plan to incur an “accumulated funding deficiency”, as
such term is defined in §302 of ERISA, whether or not such deficiency is or may
be waived;

     

    (c)          fail
to contribute to any Guaranteed Pension Plan to an extent which, or terminate
any Guaranteed Pension Plan in a manner which, could result in the imposition of
a lien or encumbrance on the assets of the Borrower or any of its Subsidiaries
pursuant to §302(f) or §4068 of ERISA; or

     

    
      
        
        

      

      
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    (d)           permit
to take any action which would result in the aggregate benefit liabilities (the
meaning of §4001 or ERISA) of all Guaranteed Pension Plans exceeding the
value of the aggregate assets of such Plans, disregarding for this purpose of
the benefit liabilities and assets of any such Plan with assets in excess of
benefit liabilities, by more than the amount set forth in Section
9.16(c).

     

    Section
11.9        Modification of
Documents.  The Borrower will not, nor will it permit any of
its Subsidiaries to:  (a) make any amendment or modification to
any indenture, notes or other agreement evidencing or governing any Subordinated
Debt, except as permitted under the applicable Agent Approved Subordination
Agreement, (b) make an amendment or modification to the Management
Agreement which increases any amount the Borrower is required to pay thereunder
or is otherwise adverse to the Lenders or the Holding Company’s or Borrower or
Borrower’s Subsidiaries’ ability to perform its obligations under the Loan
Documents, (c) make any amendment or modification to any terms or
provisions of their respective Charter Documents if the effect of such amendment
or modification shall adversely affect the Lenders, without the prior written
consent of the Agent, (d) issue any Shares, other than in accordance with
that  certain Warrant, a copy of which is attached hereto as Schedule 11.9, or the
issuance of 45,000 Shares to Selway on or about the date hereof, or the
conversion of all or any portion of the Granite Subordinated Debt pursuant to
the terms of Article 3 of the Granite Subordinated Loan Agreement in effect on
the date hereof, or (e) amend, waive, modify or terminate any provision of
the Purchase Agreement.

     

    Section
11.10      Negative
Pledges.  The Borrower will not and will not permit any of its
Subsidiaries to enter into any agreement (excluding this Credit Agreement, the
other Loan Documents and the Granite Subordinated Debt
Documents) prohibiting the creation or assumption of any lien upon its
properties, revenues or assets or those of any of its Subsidiaries, whether now
owned or hereafter acquired other than agreements with Persons prohibiting any
such lien on assets in which such Person has a prior security interest which is
permitted by Section 11.2.

     

    Section
11.11     Transactions with
Affiliates.  Other than the Intercompany Agreement, the
Services Agreement,  the Management Agreement and the SCP Subordinated
Notes, the Borrower will not, and will not permit any of its Subsidiaries to,
enter into, or cause, suffer or permit to exist (a) any arrangement or
contract with any of its other Affiliates of a nature customarily entered into
by Persons which are Affiliates of each other (including advisory, management or
similar contracts or arrangements relating to the allocation of revenues, taxes
and expenses or otherwise) requiring any payments to be made by the
Borrower or any of its Subsidiaries to any Affiliate unless such arrangement is
fair and equitable to the Borrower or such Subsidiary; or (b) any other
transaction, arrangement, contract with any of their other Affiliates which
would not be entered into by a prudent Person in the position of the Borrower or
such Subsidiary with, or which is on terms which are less favorable than are
obtainable from, any Person which is not one of its Affiliates.

     

    Section
11.12     Upstream
Limitations.  The Borrower will not, nor will the Borrower
permit any of its Subsidiaries to, enter into any agreement, contract or
arrangement (other than this Credit Agreement and the other Loan Documents and
the Granite Subordinated Debt Documents) restricting the ability of any
Subsidiary to pay or make dividends or distributions in cash or kind, to make
loans, advances or other payments of whatsoever nature or to make transfers or
distributions of all or any part of its assets to the Borrower or to any
Subsidiary of such Subsidiary.

     

    
      
        
        

      

      
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    Section
11.13      Inconsistent
Agreements.  The Borrower will not, nor will it permit any of
its Subsidiaries to, enter into any agreement containing any provision which
would be violated or breached by the performance by the Borrower or such
Subsidiary of its obligations hereunder or under any of the Loan
Documents.

     

    Section
11.14      Bank Accounts.  The
Borrower will not:  (a) establish any bank accounts other than
those listed on Schedule 9.20 without
the Agent’s prior written consent or (b) violate directly or indirectly any
bank agency or lock box agreement in favor of the Agent for the benefit of the
Lenders with respect to such account, (c) deposit into any of the payroll
accounts listed on Schedule 9.20 any
amounts in excess of amounts necessary to pay current payroll obligations from
such accounts.

     

    Section
11.15      Restriction on
Subsidiaries.  The Borrower will not nor will it permit any of
its Subsidiaries to form any Subsidiary without the prior written consent of the
Required Lenders other than a Subsidiary formed to hold the assets from a
Permitted Acquisition and no other assets.  In the event that the
Required Lenders, in their sole discretion, consent to, or, if a Subsidiary is
formed to hold the assets of a Permitted Acquisition, the formation or
acquisition of a Subsidiary, any such Subsidiary formed or acquired by the
Borrower or any Subsidiary thereof shall simultaneously with the consummation of
any such formation or acquisition grant to the Agent for the benefit of the
Lenders a first perfected security interest (except as otherwise permitted by
the Required Lenders) in all of its existing and after-acquired assets, and
guaranty of all of the Obligations and all of the ownership interests of such
Subsidiary shall be pledged to the Agent for the benefit of the
Lenders.  All applicable parties shall execute and/or deliver to the
Agent all such documents and instruments requested by the Agent in order to
perfect the Agent’s security interest therein.

     

    Section
11.16      Restrictions on Loans and
Advances.  The Borrower will not make any loans or advances to,
nor acquire the Indebtedness of, any Person except for the
following:

     

    (a)          advance
payments made to the Borrower’s suppliers in the ordinary course of its business
and consistent with past practices;

     

    (b)          advances
to the Borrower’s officers, employees and sales persons with respect to
reasonable expenses to be incurred by such officers, employees and sales persons
for the benefit of the Borrower, which expenses are properly substantiated by
the Person seeking such advance and properly reimbursable by the Borrower and in
any event not to exceed $10,000 in the aggregate outstanding at any one
time;

     

    (c)          
the extension of trade credit in the ordinary course of business consistent with
past practices;

     

    (d)           loans
or advances made under the Intercompany Agreement, provided that such
loans or advances shall not exceed, in the aggregate, $100,000 in any fiscal
year; and

     

    (e)           loans
permitted by Section 11.3.

     

    
      
        
        

      

      
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    Section
11.17      Line of
Business.  The Borrower and its Subsidiaries will engage in no
business other than that of a manufacturer and distributor of chemiluminescent
light and infrared safety, security and training products for use by the
military and homeland security businesses and businesses incidental
thereto.

     

    Section
11.18      Use of
Proceeds.  The Borrower will not use the proceeds of the Loans
for any purpose other than the purposes stated in
Section 10.14.

     

    Section
11.19      Activity of the Holding
Company.  The Holding Company shall conduct no business or
other activity other than holding all of the Shares of the Borrower or any other
Subsidiary.

     

    ARTICLE
12.  FINANCIAL COVENANTS OF THE BORROWER.

     

    The
Borrower covenants and agrees that, so long as any Loan, Unpaid Reimbursement
Obligation, Letter of Credit, Foreign Exchange Contract, or Note is outstanding
or the Agent or any Lender has any obligation to make any Loans, or to issue,
extend or renew any Letter of Credit or enter into any Foreign Exchange
Contract, and any and all other amounts payable under the Loan Documents have
been paid in full in cash:

     

    Section
12.1   
    Coverage Ratios.

     

    (a)           Fixed Charge
Ratio.  As of the last day of the fiscal quarter ending
September 30, 2010, the Fixed Charge Coverage Ratio for the immediately
preceding four (4) fiscal quarters shall not be less than 0.80:1.00, and as of
the last day of the fiscal quarter ending December 31, 2010, the Fixed
Charge Coverage Ratio for the immediately preceding four (4) fiscal quarters
shall not be less than 1.00:1.00 and as of the last day of the fiscal quarter
ending March 31, 2011 and for each fiscal quarter thereafter, the Fixed
Charge Coverage Ratio for the immediately preceding four (4) fiscal quarters
shall not be less than 1.10:1.00.

     

    (b)           Total Debt Service Coverage
Ratio.  As of the last day of the fiscal quarter ending on
September 30, 2010, and for each fiscal quarter thereafter, the Total Debt
Service Coverage Ratio shall not be less than 1.20:1.00.

     

    Section
12.2        Leverage Ratio.

     

    (a)           At
any time during the periods set forth below, the Senior Leverage Ratio shall not
be more than the ratio set forth below during such period:

     

    
      
        	
                Period

              	 
      	
                Ratio

              
	 
      	 
      	 
      
	
                the
      Closing Date, through and including December 31, 2010

              	 
      	
                3.00:1.00

              
	 
      	 
      	 
      
	
                January
      1, 2011, through and including December 31, 2011

              	 
      	
                2.50:1.00

              
	 
      	 
      	 
      
	
                January
      1, 2012, and thereafter

              	
                  

              	
                2.00:1.00

              

      

    

    

    
      
        
        

      

      
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    (b)           At
any time during the periods set forth below, the Total Leverage Ratio shall not
be more than the ratio set forth below during such period:

     

    
      
        	
                Period

              	 
      	
                Ratio

              
	 
      	 
      	 
      
	
                the
      Closing Date, through and including December 31, 2010

              	 
      	
                4.00:1.00

              
	 
      	 
      	 
      
	
                January
      1, 2011, through and including December 31, 2011

              	 
      	
                3.50:1.00

              
	 
      	 
      	 
      
	
                March
      31, 2012

              	 
      	
                3.25:1.00

              
	 
      	 
      	 
      
	
                June
      30, 2012, and thereafter

              	
                  

              	
                3.00:1.00

              

      

    

    

    Section
12.3        Capital
Expenditures.  The Borrower will not make, nor permit any
Subsidiary to make any Capital Expenditures in any fiscal year that exceed
$2,000,000 for any fiscal year.

     

    Section
12.4        Current Ratio.  As
of the last day of any fiscal quarter, the Holding Company and its Subsidiaries
shall not permit the Current Ratio to be less than 1.00:1.00.

     

    Section
12.5        Minimum EBITDA.  At
any time during the periods ending on the dates set forth below the minimum
EBITDA of the Borrower and its Subsidiaries for the four (4) fiscal quarters
then ending shall not be less than the amount set forth below:

     

    
      
        
          
            	
                    Period

                  	 	
                    Minimum EBITDA

                  	 
	 
      	 	 	 
	
                    September
      30, 2010, December 31, 2010, March 31, 2011, June 30, 2011 and
      September 30, 2011

                  	 	$	7,000,000	 
	 
      	 	 	 	 
	
                    December
      31, 2011, March 31, 2012, June 30, 2012 and September 30,
      2012

                  	 	$	7,250,000	 
	 
      	 	 	 	 
	
                    December
      31, 2012 and the last day of each fiscal quarter
thereafter

                  	 	$	7,500,000	 

          

        

      

    

    

    ARTICLE
13.  CLOSING CONDITIONS.

     

    The
obligations of the Lenders to make the Revolving Credit Loans and  to
enter into this Credit Agreement, to issue any Letters of Credit, or to enter
into any Foreign Exchange Contract, shall be subject to the satisfaction of the
following conditions precedent on or prior to the date hereof.

     

    Section
13.1        Loan
Documents.  Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to the
Lenders.  Each of the Lenders shall have received a fully-executed
copy of each such document.

     

    
      
        
        

      

      
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    Section
13.2      
Granite Subordinated
Debt Documents.  Each of the Granite Subordinated Debt
Documents shall have been duly executed and delivered by the respective parties
thereto, shall be in full force and effect and shall be in form and substance
reasonably satisfactory to the Lenders.  Each of the Lenders shall
have received a fully-executed copy of each such document.

     

    Section
13.3       
Certified Copies of
Charter Documents.  The Lenders shall have received from the
Borrower a copy, certified by a duly authorized officer of such Person to be
true and complete on and as of the Closing Date, of its Charter Documents, the
Charter Documents of the Holding Company and each Subsidiary of the
Borrower.

     

    Section
13.4       Corporate
Action.  All corporate action necessary for the valid
execution, delivery and performance by the Borrower of this Credit Agreement and
the other Loan Documents to which it is or is to become a party shall have been
duly and effectively taken, and evidence thereof satisfactory to the Lenders
shall have been provided to the Agent.

     

    Section
13.5       
Incumbency
Certificate.  The Agent shall have received from the Holding
Company and each of its Subsidiaries an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Holding Company and
each of its Subsidiaries and giving the name and bearing a specimen signature of
each individual who shall be authorized:  (a) to sign, in the
name and on behalf of the Holding Company and each of its Subsidiaries, each of
the Loan Documents to which the Holding Company and each of its Subsidiaries is
or is to become a party; (b) Notice of Revolving Credit Loan Borrowing,
Notice of Term Loan Borrowing and to apply for Letters of Credit or a Foreign
Exchange Contract; and (c) to give notices and to take other action on its
behalf under the Loan Documents.

     

    Section
13.6      
Validity of
Liens.  The Security Documents shall be effective to create in
favor of the Agent for the benefit of the Lenders a legal, valid and enforceable
first (except for Permitted Liens entitled to priority under applicable
law) security interest in and lien upon the Collateral.  All
filings, recordings, deliveries of instruments and other actions necessary or
desirable in the opinion of the Agent to protect and preserve such security
interests shall have been duly effected.  The Lenders shall have
received evidence thereof in form and substance satisfactory to the
Lenders.  Agent shall have received in form and substance satisfactory
to the Lenders the Mortgage with evidence of its recording in the applicable
Registry of Deeds creating a first lien priority subject only to such
encumbrances as approved by the Agent in writing.

     

    Section
13.7      
Perfection Certificates
and Lien Search Results.  The Agent shall have received from
the Borrower a completed and fully-executed Perfection Certificate and the
results of UCC searches indicating no liens other than Permitted Liens or liens
to be released prior to Closing and otherwise in form and substance satisfactory
to the Agent.

     

    Section 13.8       
Reserved. 

     

    Section 13.9       
Reserved. 

     

    Section
13.10     Solvency
Certificate.  Each of the Lenders shall have received an
officer’s certificate from the Borrower dated as of the Closing Date as to the
solvency of the Borrower following the consummation of the transactions
contemplated herein and in form and substance satisfactory to the
Agent.

     

    
      
        
        

      

      
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    Section
13.11     Opinion of
Counsel.  The Agent shall have received a favorable legal
opinion dated as of the Closing Date and addressed to each of the Lenders, in
form and substance reasonably satisfactory to each of the Lenders, from
corporate counsel to the Borrower and the Holding Company.

     

    Section 13.12    
Reserved.

     

    Section
13.13     Payment of
Fees.  The Borrower shall have paid to the Agent for
distribution to the Lenders the Amendment Fee which is due and payable on the
Closing Date and all other fees and expenses (including, without limitation, all
legal fees and disbursements, commercial finance examination fees and appraisal
fees incurred prior to the Closing Date) required to be paid as of the
Closing Date.

     

    Section
13.14     Material Adverse
Effect.  No event shall have occurred since the Balance Sheet
Date which had or could reasonably be expected to have a Material Adverse Effect
on the Holding Company and its Subsidiaries, including, without limitation, the
Borrower.

     

    Section
13.15     Consents.  Copies of
the applications to be submitted to the appropriate Governmental Authorities to
transfer and/or apply for federal, state and local licenses, permissions and
consents of all jurisdictions in which the Company conducts business, and all
required consents to the transfer of all material contracts.

     

    Section
13.16     Borrowing Base
Report.  The Agent shall have received from the Borrower the
initial Borrowing Base certificate dated as of the Closing Date.

     

    Section
13.17     Granite Subordination Payment and
Documents.  The Granite Subordinated Debt shall have been
issued in an original aggregate principal amount not to exceed Eight Million
Five Hundred Thousand Dollars ($8,500,000) on such terms and conditions as are
acceptable to Agent and the Lenders in their sole discretion with such
documentation as are acceptable to Agent and the Lenders in their sole
discretion.  Borrower shall prepay no less than Seven Million Two
Hundred Thousand Dollars ($7,200,000) of the Term Loan and no less than Five
Hundred Thousand Dollars ($500,000) of the Revolving Credit Loan from the
proceeds derived from the issuance of the Granite Subordinated
Debt.

     

    Section
13.18     Agent Approved Subordination
Agreement.  Borrower, Agent and Lenders shall have entered into
an Agent Approved Subordination Agreement regarding the Granite Subordinated
Debt.

     

    ARTICLE
14.  CONDITIONS TO ALL BORROWINGS.

     

    The
obligations of any Lender to make any Loan, including the Revolving Credit Loan,
and any Term Loan, issue any Letter of Credit, or enter into any Foreign
Exchange Contract, in each case whether on or after the Closing Date, shall also
be subject to the satisfaction of the following conditions
precedent:

     

    
      
        
        

      

      
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    Section
14.1       Representations True; No Event of
Default.  Each of the representations and warranties of the
Holding Company and its Subsidiaries contained in this Credit Agreement, the
other Loan Documents, or in any certificate, document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
the making of such Loan, or the issuance, extension or renewal of such Letter of
Credit, or entry into a Foreign Exchange Contract, with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions permitted by this Credit Agreement and the other Loan Documents,
and to the extent that such representations and warranties relate expressly to
an earlier date) and no Default or Event of Default shall have occurred and
be continuing.

     

    Section
14.2      
No Legal
Impediment.  No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of the Required Lenders would make it illegal for the Lenders to make such
Loan.

     

    Section
14.3      
Governmental
Regulations.  Each Lender shall have received such statements
in substance and form reasonably satisfactory to the Agent as the Agent shall
require for the purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.

     

    Section
14.4      
Proceedings and
Documents.  All proceedings in connection with the transactions
contemplated by this Credit Agreement, the other Loan Documents and all other
documents incident thereto shall be satisfactory in substance and in form to the
Lenders and the Lenders’ Special Counsel, and the Lenders, the Agent and such
counsel shall have received all information and such counterpart originals or
certified other copies of such documents as the Agent may reasonably
request.

     

    Section
14.5      
Borrowing Base
Certificate.  The Agent shall have received the most recent
Borrowing Base Certificate required to be delivered to the Agent in accordance
with Section 10.4(g) and, if requested by the Agent, a Borrowing Base
Certificate dated within five (5) days of the Drawdown Date, or of the date
of issuance, extension, or renewal of such Letter of Credit, or entry into a
Foreign Exchange Contract.

     

    ARTICLE
15.  EVENTS OF DEFAULT; ACCELERATION; ETC.

     

    Section
15.1      Events of Default and
Acceleration.  If any of the following events (“Events of
Default” or, if the giving of notice or the lapse of time of both is required,
then, prior to such notice or lapse of time, “Defaults”) shall
occur:

     

    (a)          the
Borrower shall fail to pay any principal of the Loans or any Reimbursement
Obligation or any amount required to be paid under any Foreign Exchange Contract
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;

     

    
      
        
        

      

      
        76

        
          

        

      

      
        
        

      

       

    

    (b)           the
Borrower shall fail to pay any interest on the Loans within three (3) days such
interest payment is due, the Commitment Fee, any Letter of Credit Fee or other
fees and sums due hereunder or under any of the other Loan Documents, when the
same shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for
payment;

     

    (c)           the
Borrower shall fail to comply with any of its covenants contained in Sections
10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.12, 10.13, 10.14, 11 or
12;

     

    (d)           the
Borrower or any of its Subsidiaries shall fail to perform any term, covenant or
agreement contained herein or in any of the other Loan Documents (other than
those specified elsewhere in this Section 15.1) for thirty (30) days
after written notice of such failure has been given to the Borrower by the
Agent;

     

    (e)           any
representation or warranty of the Borrower or any of its Subsidiaries in this
Credit Agreement or any of the other Loan Documents or in any other document or
instrument delivered pursuant to or in connection with this Credit Agreement
shall prove to have been false in any material respect upon the date when made
or deemed to have been made or repeated;

     

    (f)           the
Borrower or any of its Subsidiaries shall fail to pay at maturity, or within any
applicable period of grace, any obligation for borrowed money or credit received
or in respect of any Capitalized Leases where the principal amount or the
aggregate payments, respectively, exceed $100,000, or fail to observe or perform
any material term, covenant or agreement contained in any agreement by which it
is bound, evidencing or securing such borrowed money or credit received or in
respect of any Capitalized Leases for such period of time as would permit
(assuming the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to accelerate the
maturity thereof;

     

    (g)           the
Borrower or any of its Subsidiaries shall make an assignment for the benefit of
creditors, or admit in writing its inability to pay or generally fail to pay its
debts as they mature or become due, or shall petition or apply for the
appointment of a trustee or other custodian, liquidator or receiver of the
Borrower or any of its Subsidiaries or of any substantial part of the assets of
the Borrower or any of its Subsidiaries or shall commence any Insolvency
Proceeding, or shall take any action to authorize or in furtherance of the
foregoing, or if any such petition or application shall be filed or any such
case or other proceeding shall be commenced against the Borrower or any of its
Subsidiaries and the Borrower or any of its Subsidiaries shall indicate its
approval thereof, consent thereto or acquiescence therein;

     

    (h)           a
decree or order is entered appointing any such trustee, custodian, liquidator or
receiver or adjudicating the Borrower or any of its Subsidiaries bankrupt or
insolvent, or approving a petition in any such case or Insolvency Proceeding, or
a decree or order for relief is entered in respect of the Borrower or any of its
Subsidiaries in an involuntary case under federal bankruptcy laws as now or
hereafter constituted and any such decree or order continues unstayed and in
effect for a period of forty-five (45) days;

     

    (i)           there
shall remain in force, undischarged, unsatisfied and unstayed, for more than
thirty (30) days, whether or not consecutive, any final judgment against the
Borrower or any of its Subsidiaries that, with other outstanding final
judgments, undischarged, against the Borrower or any of its Subsidiaries exceeds
in the aggregate $250,000 and which judgment is not fully covered by insurance
by a financially sound and reputable insurance company which has accepted full
coverage therefor in writing;

     

    
      
        
        

      

      
        77

        
          

        

      

      
        
        

      

       

    

    (j)           a
default shall occur (x) under any of the Subordinated Debt Documents which has a
principal amount in excess of, in the aggregate, $250,000 or any part of the
Subordinated Debt or the Subordinated Debt shall be (or shall be required at
such time to be) prepaid, redeemed or repurchased in whole or in part,
other than in accordance with an Agent Approved Subordination Agreement or (y)
under the Granite Subordinated Debt Documents;

     

    (k)           if
any of the Loan Documents shall be canceled, terminated, revoked or rescinded
otherwise than in accordance with the terms thereof or with the express prior
written agreement, consent or approval of the Required Lenders, or any action at
law, suit or in equity or other legal proceeding to cancel, revoke or rescind
any of the Loan Documents shall be commenced by or on behalf of the Borrower or
any of its Subsidiaries party thereto or any other Governmental Authority or
agency of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance with the terms
thereof;

     

    (l)           the
Borrower or any ERISA Affiliate incurs any liability to the PBGC or a Guaranteed
Pension Plan pursuant to Title IV of ERISA in an aggregate amount exceeding
$100,000, or the Borrower or any ERISA Affiliate is assessed withdrawal
liability pursuant to Title IV of ERISA by a Multiemployer Plan requiring
aggregate annual payments exceeding $100,000, or any of the following occurs
with respect to a Guaranteed Pension Plan: (i) an ERISA Reportable Event,
or a failure to make a required installment or other payment (within the meaning
of §302(f)(1) of ERISA); provided, that the
Agent determines in its reasonable discretion that such
event:  (A) could be expected to result in liability of the
Borrower to the PBGC or such Guaranteed Pension Plan in an aggregate amount
exceeding $100,000 and (B) could constitute grounds for the termination of
such Guaranteed Pension Plan by the PBGC, for the appointment by the appropriate
United States District Court of a trustee to administer such Guaranteed Pension
Plan or for the imposition of a lien in favor of such Guaranteed Pension Plan;
(ii) the appointment by a United States District Court of a trustee to
administer such Guaranteed Pension Plan; or (iii) the institution by the
PBGC of proceedings to terminate such Guaranteed Pension Plan;

     

    (m)         the
Borrower or any of its Subsidiaries shall be enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting any material part of its business and such order shall continue
in effect for more than thirty (30) days;

     

    (n)          there
shall occur any material damage to, or loss, theft or destruction of, any
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty, which in
any such case causes, for more than thirty (30) consecutive days, of
cessation or substantial curtailment of revenue producing activities at any
facility of the Borrower or any of its Subsidiaries if such event or
circumstance is not covered by business interruption insurance and would have a
Material Adverse Effect;

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

       

    

    (o)           the
Borrower or any of its Subsidiaries shall be indicted for a federal crime, a
punishment for which could include the forfeiture of any assets of the Borrower
or such Subsidiary included in any assets of the Borrower or such Subsidiary
having a fair market value in excess of $100,000;

     

    (p)           a
Change of Control shall occur;

     

    (q)           the
Borrower and its Subsidiaries shall have one or more of its material contracts
with its customers cancelled and the effect of such cancellation shall result
directly or indirectly, the loss, in the aggregate of fifteen percent
(15%) of the revenues of the Borrower and its Subsidiaries as such revenue
is shown on the audited financial statement, most recently delivered to the
Agent; or

     

    (r)           more
than two (2) of Borrower’s Key Officers shall cease to be involved in the
management and operations of the business of the Borrower on a full time basis
and no successor reasonably satisfactory to Agent shall have been appointed
within sixty (60) days from the date such Key Officer ceases to be involved in
the management and operations;

     

    Section
15.2        Termination of Total
Commitment

     

    (a)           If
any one or more of the Events of Default specified in Section 15.1(g) or
Section 15.1(h) shall occur, any unused portion of the credit hereunder
shall forthwith terminate and each of the Lenders shall be relieved of all
further obligations to make loans to the Borrower and, to issue, extend or renew
Letters of Credit.  If any other Event of Default shall have occurred
and be continuing, the Agent may, and upon request of the Required Lenders
shall, by notice to the Borrower, terminate the unused portion of the credit
hereunder, and upon such notice being given such unused portion of the credit
hereunder shall terminate immediately and each of the Lenders  shall
be relieved of all further obligations to make Loans.  No termination
of the credit hereunder shall relieve the Borrower of any of the
Obligations.  In addition, if any Event of Default shall have occurred
and be continuing, Agent may, without notice, take any one or more of the
following actions: (i) declare all or any portion of the Obligations to be
forthwith due and payable, whereupon such Obligations shall become and be due
and payable or (ii) exercise any rights and remedies provided to Agent and the
Lenders under the Loan Documents or at law or equity, including all remedies
provided under the Uniform Commercial Code; provided, that upon
the occurrence of any Event of Default specified in Section 15.1(g) or Section
15.1(h), the Obligations shall become immediately due and payable without
declaration, notice or demand by Lender.

     

    (b)           If
any other Event of Default shall have occurred and be continuing, or if on any
Drawdown Date or other date for issuing, extending or renewing any Letter of
Credit the conditions precedent to the making of the Loans to be made on such
Drawdown Date or (as the case may be) to  issuing, extending
or  renewing such Letter of Credit on such other date are not
satisfied, the Bank may, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and TD Bank shall be relieved
of all further obligations to issue, extend or renew Letters of
Credit.

     

    
      
        
        

      

      
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    Section
15.3        Remedies.  In case
any one or more of the Events of Default shall have occurred and be continuing,
and whether or not the Lenders have accelerated the maturity of the Loans
pursuant to Section 15.2, the Agent, if owed any amount with respect to the
Loans, may proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to the Lenders are
evidenced, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of any Lender.  No remedy herein conferred upon any
Lender or the Agent or the holder of any Note is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or any other provision of law.

     

    Section
15.4        Distribution of Collateral
Proceeds.  In the event that all of the Commitments shall have
been terminated or the Loans, all accrued and unpaid interest thereon and all
other amounts owing under the Loan Documents, shall have been declared due and
payable pursuant to the provisions of Section 15.2, any funds received by
any Lender from or on behalf of the Borrower or any of its Subsidiaries shall be
remitted to, and applied by, the Agent in the following manner and
order:

     

    (a)           first, to the payment of
interest on, and then the principal portion of, any Loans which the Agent may
have advanced on  behalf of any Lender for which the Agent has not
then been reimbursed by such Lender or the Borrower or any of its
Subsidiaries;

     

    (b)           second, to reimburse the
Agent and the Lenders, in that order, for any expenses due from the Borrower
under the Loan Documents;

     

    (c)           third, to the payment of the
fees, pro rata according to the fees due and owing to the Lenders;

     

    (d)           fourth, to the payment of any
other fees, expenses or other amounts (other than the principal of and interest
on the Loans) payable by the Borrower or any of its Subsidiaries to the
Lenders under the Loan Documents;

     

    (e)           fifth, to the payment, pro
rata according to the Pro Rata Share of each Lender, of interest due on the
Loans;

     

    (f)           sixth, to the payment to the
Lenders of, pro rata according to the Pro Rata Share of each Lender of, the
unpaid principal amount of the Loans;

     

    (g)           seventh, to all other
Obligations for distribution to the Lenders in accordance with their Pro Rata
Share; and

     

    (h)           eighth, thereafter, any
remaining funds shall be paid to the Borrower or as a court of competent
jurisdiction shall direct.

     

    
      
        
        

      

      
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    Notwithstanding
the foregoing, the Lenders may agree among themselves to an allocation of such
funds that does not comply with the immediately preceding sentence.

     

    ARTICLE
16.  SETOFF.

     

    Regardless
of the adequacy of any Collateral, during the continuance of any Event of
Default, any deposits or other sums credited by or due from any Lender to the
Borrower or any of its Subsidiaries and any securities or other property of the
Borrower or any of its Subsidiaries in the possession of any Lender may be
applied to or set off by such Lender against the payment of Obligations and any
and all other liabilities, direct, or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, of the Borrower to such
Lender.

     

    Each of
the Lenders agrees with each other Lender that:  (i) if an amount
to be set off is to be applied to obligations of the Borrower or any of its
Subsidiaries to such Lender, other than Obligations evidenced by the Notes held
by such Lender, such amount shall be applied ratably to such other Obligations
and to the Obligations evidenced by all such Notes held by such Lender and if
such Lender shall receive from the Borrower or any of its Subsidiaries, whether
by voluntary payment, exercise of the right of setoff, counterclaim, or offset,
enforcement of the claim evidenced by the Notes held by such Lender by
proceeding against the Borrower or any of its Subsidiaries at law or in equity
or by proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by such Lender any amount in excess of its ratable
portion of the payments received by all of the Lenders with respect to the Notes
held by all of the Lenders, such Lender will make such dispositions and
arrangements with the other Lenders with respect to such excess, either by way
of distribution, assignment of claim, subrogation or otherwise or shall result
in each Lender receiving in on account of the Note or Notes held by it its
proportionate payment as contemplated by this Credit Agreement; provided, that if all
or any part of such excess payment is thereafter recovered from such Lender,
such disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.

     

    ARTICLE
17.  EXPENSES.

     

    The
Borrower agrees to pay:  (a) the reasonable costs of producing
and reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of
the Lenders (other than taxes based upon the Agent’s or any such Lenders’ net
income) on or with respect to the transactions contemplated by this Credit
Agreement (the Borrower hereby agreeing to indemnify the Agent and each Lender
with respect thereto), (c) the reasonable fees, expenses and disbursements
of the Agent’s Special Counsel or any local counsel to the Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(d) the fees, expenses and disbursements of the Agent incurred by the Agent
in connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all commercial
finance examinations and appraisal charges, (e) any fees, costs, expenses
and bank charges, including bank charges for returned checks, incurred by the
Agent in establishing, maintaining or handling accounts for the collection of
any of the Collateral, (f) all reasonable out-of-pocket expenses (including
without limitation reasonable attorneys’ fees and costs, which attorneys may be
employees of the Agent, and reasonable consulting, accounting, appraisal,
investment banking and similar professional fees and charges) incurred by
the Agent or any Lenders in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or any guarantor or the administration thereof after the
occurrence of a Default or Event of Default and (ii) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way related
to the Agent’s or any Lender’s relationship with the Borrower or any of its
Subsidiaries, and (g) all reasonable fees, expenses and disbursements of
the Agent or any Lenders incurred in connection with UCC searches, UCC filings
or mortgage recordings.  The Borrower hereby agrees to reimburse the
Agent on demand for any and all costs, liabilities and obligations incurred by
Agent pursuant to Section 20.14.  The covenants of this Article 17
shall survive payment or satisfaction of all Obligations.

     

    
      
        
        

      

      
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    ARTICLE
18.  INDEMNIFICATION.

     

    The
Borrower and each of its Subsidiaries agree to indemnify and hold harmless the
Agent and each Lender and each of their respective officers, directors,
employees, agents, attorneys and Affiliates from and against any and all claims,
actions and suits whether groundless or otherwise, and from and against any and
all liabilities, losses, damages and expenses of every nature and character
arising out of this Credit Agreement or any of the other Loan Documents or the
transactions contemplated hereby (except due to the indemnified party’s own
willful misconduct or gross negligence) including, without
limitation:  (a) any actual or proposed use by the Borrower or
any of its Subsidiaries of the proceeds of any of the Loans, (b) the
reversal or withdrawal of any provisional credits granted by the Agent upon the
transfer of funds from the bank agency or lock box accounts or in connection
with the provisional honoring of checks or other items, (c) any actual or
alleged infringement of any patent, copyright, trademark, service mark or
similar right of the Borrower or any of its Subsidiaries comprised in the
Collateral, (d) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents or
(e) with respect to the Borrower or any of its Subsidiaries and their
respective properties and assets, the violation of any Environmental Law, the
presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to, claims with respect to wrongful
death, personal injury or damage to property), in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of internal counsel incurred in connection with any such investigation,
litigation or other proceeding brought or asserted by any party, including
without limitation liabilities caused by the negligence of the party seeking
indemnification (collectively, the “Indemnified Liabilities”).  In
litigation, or the preparation therefor, the Agent shall be entitled to select
its own counsel and, in addition to the foregoing indemnity, the Borrower agrees
to pay promptly the reasonable fees and expenses of such counsel.  If,
and to the extent that the obligations of the Borrower under this Article 18 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law.  The covenants contained in this
Article 18 shall survive payment or satisfaction in full of all
Obligations.

     

    
      
        
        

      

      
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    ARTICLE
19.  SURVIVAL OF COVENANTS, ETC.

     

    All
covenants, agreements, representations and warranties made herein, in the Notes,
in any of the other Loan Documents or in any documents or other papers delivered
by or on behalf of the Borrower or any of its Subsidiaries pursuant hereto shall
be deemed to have been relied upon by the Agent and the Lenders, notwithstanding
any investigation heretofore or hereafter made by any of them, and shall survive
the making by the Lenders of any of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this Credit
Agreement or the Notes or any of the other Loan Documents remains outstanding or
any Lender has any obligation to make any Loans, and for such further time as
may be otherwise expressly specified in this Credit Agreement.  All
statements contained in any certificate or other paper delivered to the Agent or
any Lenders at any time by or on behalf of the Borrower or any of its
Subsidiaries pursuant hereto or in connection with the transactions contemplated
hereby shall constitute representations and warranties by the Borrower or such
Subsidiary hereunder.

     

    ARTICLE
20.  AGENT.

     

    Section
20.1        Appointment and Authorization of
Agent.  Each Lender hereby irrevocably appoints, designates and
authorizes the Agent to take such action on its behalf under the provisions of
this Credit Agreement and each other Loan Document and to exercise such powers
and perform such duties as are expressly delegated to it by the terms of this
Credit Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.  Notwithstanding any provision to the
contrary contained elsewhere herein or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any other Loan Document or otherwise exist against the
Agent.  Without limiting the generality of the foregoing sentence, the
use of the term “agent” herein and in the other Loan Documents with reference to
the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable
law.  Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

     

    Section
20.2        Delegation of
Duties.  The Agent may execute any of its duties under this
Credit Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such
duties.  The Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct in such selection.

     

    
      
        
        

      

      
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    Section
20.3        Liability of the
Agents.  The Agent shall:  (a) not be liable for
any action taken or omitted to be taken by it or any agent, employee or
attorney-in-fact under or in connection with this Credit Agreement or any other
Loan Document or the transactions contemplated hereby (except for the Agent’s
own gross negligence or willful misconduct in connection with its duties
expressly set forth herein), or (b) be responsible in any manner to any
Lender or participant for any recital, statement, representation or warranty
made by the Borrower or any Subsidiary or any officer thereof, contained herein
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in
connection with, this Credit Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Credit Agreement or any other Loan Document, or for any failure of the Borrower
or any Subsidiary or any other party to any Loan Document to perform its
obligations hereunder or thereunder.  The Agent shall not be under any
obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Credit Agreement or any other Loan Document, or to inspect the
properties, books or records of Borrower or any of its Subsidiaries or any
Affiliate thereof.

     

    Section
20.4        Reliance by
Agent.

     

    (a)           The
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any writing, communication, signature, resolution, representation, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, electronic mail message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the
Agent.  The Agent shall be fully justified in failing or refusing to
take any action under any Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.  The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Credit Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders (or such greater number of Lenders as may be
expressly required hereby in any instance) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the
Lenders.

     

    (b)           For
purposes of determining compliance with the conditions specified in
Article 5, each Lender that has signed this Credit Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

     

    Section
20.5        Notice of
Default.  The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to the Agent for the account of the Lenders, unless the Agent shall have
received written notice from a Lender or from the Borrower referring to this
Credit Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default.”  The Agent will notify the
Lenders of its receipt of any such notice.  The Agent shall take such
action with respect to such Default or Event of Default as may be directed by
the Required Lenders; provided, however, that unless
and until the Agent has received any such direction, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable or
in the best interest of the Lenders.

     

    
      
        
        

      

      
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    Section
20.6        Credit Decision; Disclosure of
Information by Agent.  Each Lender acknowledges that the Agent
has not made any representation or warranty to it, and that no act by the Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of the Borrower or any Subsidiary or any Affiliate
thereof, shall be deemed to constitute any representation or warranty by the
Agent to any Lender as to any matter, including whether the Agent has disclosed
material information in its possession.  Each Lender represents to the
Agent that it has, independently and without reliance upon the Agent and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower or
any Subsidiary, and all applicable bank or other regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Credit Agreement and to extend credit to the Borrower
hereunder.  Each Lender also represents that it will, independently
and without reliance upon the Agent and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Credit Agreement and the other Loan Documents, and to make such investigations
as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower.  Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent herein, the Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Borrower or any of its
Subsidiaries or any of their respective Affiliates which may come into the
possession of any Person retained by the Agent.

     

    Section
20.7        Indemnification of
Agent.  Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand each of the Agent, its
agents, employees, representatives and attorneys-in-fact (to the extent not
reimbursed by or on behalf of the Borrower and without limiting the obligation
of the Borrower or any Subsidiary to do so), pro rata, and hold harmless each of
the Agent, its agents, employees, representatives and attorneys-in-fact Person
from and against any and all Indemnified Liabilities incurred by it; provided, however, that no
Lender shall be liable for the payment to any of the Agent, its agents,
employees, representatives and attorneys-in-fact of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such of the
Agent, its agents, employees, representatives and attorneys-in-fact own gross
negligence or willful misconduct; provided, however, that no
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section 20.7.  Without limitation of the foregoing, each Lender shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including the reasonable costs and expenses of the
Agent’s Special Counsel) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities
under, this Credit Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower or its
Subsidiaries.  The covenants of this Section 20.7 shall survive
payment or satisfaction of all Obligations, termination of the Revolving Credit
Loan Commitment and the resignation of the Agent.

     

    
      
        
        

      

      
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    Section
20.8        Agent in its Individual
Capacity.  TD Bank and its Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, enter into Foreign
Exchange Contracts with, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Borrower or any Subsidiary and their respective Affiliates as though TD Bank
were not the Agent hereunder and without notice to or consent of the
Lenders.  The Lenders acknowledge that, pursuant to such activities,
TD Bank or its Affiliates may receive information regarding the Borrower or any
Subsidiary or their Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or such Affiliate) and
acknowledge that the Agent shall be under no obligation to provide such
information to them.  With respect to its Loans, TD Bank shall have
the same rights and powers under this Credit Agreement as any other Lender and
may exercise such rights and powers as though it were not the Agent and the
terms “Lender” and “Lenders” include TD Bank, in its individual
capacity.

     

    Section
20.9        Successor
Agent.  The Agent may resign as Agent upon thirty
(30) days’ notice to the Lenders and the Borrower.  If the Agent
resigns under this Credit Agreement, the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which so long as no Default
or Event of Default has occurred and is continuing, shall be with the consent of
the Borrower (which consent of the Borrower shall not be unreasonably withheld
or delayed), provided that, if a
Default or Event of Default has occurred and is continuing no such Borrower
consent is required.  If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and so long as no Default or Event of Default has
occurred and is continuing, a successor agent from among the
Lenders.  Upon the acceptance of its appointment as successor agent
hereunder, the Person acting as such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term “Agent” shall mean
such successor agent, and the retiring Agent’s appointment, powers and duties as
Agent shall be terminated, without any other or further act or deed on the part
of such retiring Agent or any other Lender.  After any retiring
Agent’s resignation hereunder as Agent, the provisions of this Article 20 shall
no longer apply to such resigning agent except Section 20.4 and 20.5 shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Credit Agreement.  If no successor
agent has accepted appointment as Agent by the date which is thirty
(30) days following a retiring Agent’s notice of resignation, the retiring
Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Agent hereunder until such time,
if any, as the Required Lenders appoint a successor agent as provided for
above.

     

    Section
20.10     Agent May File Proofs of
Claim.  In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Borrower or any
Subsidiary, the Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Agent shall have made any demand on the
Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise

     

    (a)           to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans and all other Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders and the Agent (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Lenders
and the Agent and their respective agents and counsel and all other amounts due
the Lenders and the Agent) allowed in such judicial proceeding;
and

     

    
      
        
        

      

      
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    (b)           to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

     

    and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Agent and, in the event that the Agent shall
consent to the making of such payments directly to the Lenders, to pay to the
Agent any amount due for the reasonable compensation, expenses, disbursements
and advances of the Agent and its agents and counsel, and any other amounts due
the Agent hereunder.

     

    (c)           Nothing
contained herein shall be deemed to authorize the Agent to authorize or consent
to or accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights
of any Lender or to authorize the Agent to vote in respect of the claim of any
Lender in any such proceeding.

     

    Section
20.11      Collateral and Guaranty
Matters.  The Lenders irrevocably authorize the Agent, at its
option and in its discretion:

     

    (a)           to
release any lien on any property granted to or held by the Agent under any Loan
Document:  (i) upon termination of the Revolving Credit Loan
Commitments and payment in full of all Obligations (other than contingent
indemnification obligations), (ii) that is sold or to be sold as part of or
in connection with any sale permitted hereunder or under any other Loan
Document, or (iii) if approved, authorized or ratified in writing by the
Required Lenders;

     

    (b)           to
subordinate any lien on any property granted to or held by the Agent under any
Loan Document to the holder of any lien on such property that is permitted by
Section 11.2; and

     

    (c)           to
release any Guarantor from its obligations under a Guaranty if such Person
ceases to be a Subsidiary as a result of a transaction permitted
hereunder.

     

    Upon
request by the Agent at any time, the Required Lenders will confirm in writing
the Agent’s authority to release or subordinate its interest in particular types
or items of property, or to release any Guarantor from its obligations under a
Guaranty pursuant to this Section 20.11.

     

    Section
20.12      Lender Pledge.  Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Credit Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that, no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledge or assignee for such Lender as a party
hereto.

     

    
      
        
        

      

      
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    Section
20.13      Return of Payments; Defaulting
Lender.

     

    (a)           If
the Agent pays an amount to a Lender under this Credit Agreement in the belief
or expectation that a related payment has been or will be received by the Agent
from the Borrower or any of its Subsidiaries and such related payment is not
received by the Agent, then the Agent will be entitled to recover such amount
from such Lender on demand without setoff, counterclaim or deduction of any
kind, together with interest accruing on a daily basis at the Defaulting Lender
Rate.

     

    (b)           If
the Agent determines at any time that any amount received by the Agent under
this Credit Agreement must be returned to the Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Credit Agreement or any other Loan Document, the
Agent will not be required to distribute any portion thereof to any
Lender.  In addition, each Lender will repay to the Agent on demand
any portion of such amount that the Agent has distributed to such Lender,
together with interest at such rate, if any, as the Agent is required to pay to
Borrower or such other Person, without setoff, counterclaim or deduction of any
kind.

     

    (c)           Notwithstanding
anything set forth herein to the contrary, a Defaulting Lender shall not have
any voting or consent rights under or with respect to any Loan Document or
constitute a “Lender” (or be included in the calculation of “Required Lenders”
hereunder) for any voting or consent rights under or with respect to any
Loan Document.

     

    (d)           If
any Lender shall obtain any payment or other recovery (whether voluntary,
involuntary, by application of setoff or otherwise) on account of any Loan
in excess of its Pro Rata Share of payments entitled pursuant to the other
provisions of this Section 20.13, such Lender shall purchase from the other
Lenders such participations in extensions of credit made by such other Lenders
(without recourse, representation or warranty) as shall be necessary to
cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided, however, that if all
or any portion of the excess payment or other recovery is thereafter recovered
from such purchasing Lender, the purchase shall be rescinded and each Lender
which has sold a participation to the purchasing Lender shall repay to the
purchasing Lender the purchase price to the ratable extent of such recovery,
without interest.  The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this clause (d) may, to the
fullest extent permitted by law, exercise all its rights of payment with respect
to such participation as fully as if such Lender were the direct creditor of
Borrower in the amount of such participation.  If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this clause (d) applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders entitled under this clause
(d) to share in the benefits of any recovery on such secured
claim.

     

    Section
20.14      Right to Perform, Preserve and
Protect.  If
the Borrower fails to perform any obligation hereunder or under any other Loan
Document beyond any applicable grace period, the Agent itself may, but shall not
be obligated to, cause such obligation to be performed at the Borrower’s
expense.  Following such failure by the Borrower, the Agent is further
authorized by the Borrower and the Lenders to make expenditures from time to
time which the Agent, in its reasonable business judgment, deems necessary or
desirable to:  (a) preserve or protect the business conducted by
the Borrower, the Collateral, or any portion thereof and/or (b) enhance the
likelihood of, or maximize the amount of, repayment of the Loans and other
Obligations.

     

    
      
        
        

      

      
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    Section
20.15      Amendment of
Article 20.  The Borrower hereby agrees that this
Article 20 constitutes an agreement among, and solely for the benefit of,
the Agent and the Lenders, (and the Agent and the Lenders acknowledge that the
Borrower is not a party to such foregoing provisions) and that any and all
of the provisions of this Article 20 and that such agreements among the
Lenders may be amended at any time by the Lenders without the consent or
approval of or notice to the Borrower (other than any requirement of notice to
the Borrower of the resignation of the Agent).

     

    ARTICLE
21.  ASSIGNMENT AND PARTICIPATION.

     

    Section
21.1        Conditions to Assignment by any
Lender.  Except as provided herein, any Lender may assign to
one or more Eligible Assignees all or a portion of its interest, rights and
obligations under this Credit Agreement and the Notes held by it in accordance
with the Assignment and Acceptance form attached hereto as Exhibit
E.

     

    Section
21.2        Participations.  Any
Lender may sell participations to one or more banks or other entities in all or
a portion of any Lender’s rights and obligations under this Credit Agreement and
the other Loan Documents; provided,
that:  (a) any such sale or participation shall not affect the
rights and duties of such Lender hereunder to the Borrower, (b) the
Borrower shall continue to deal with the selling Lender and (c) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce the
principal of or the interest rate on any Revolving Credit Loans, or the Term
Loan, extend the term or increase the amount of the Revolving Credit Loan
Commitment, as it relates to such participant, reduce the amount of any
Commitment Fees to which such participant is entitled or extend any regularly
scheduled payment date for principal or interest.

     

    Section
21.3        Disclosure.   The
Borrower and its Subsidiaries agree that in addition to disclosures made in
accordance with standard and customary banking practices the Lenders may
disclose information obtained by such Lender pursuant to this Credit Agreement
to assignees or participants and potential assignees or participants hereunder;
provided, that
such assignees or participants or potential assignees or participants shall
agree:  (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and
(c) not to make use of such information for purposes of transactions
unrelated to such contemplated assignment or participation.

     

    Section
21.4        Assignee or Participant Affiliated
with the Borrower.  If any assignee of a Lender is an Affiliate
of the Borrower or of any of its Subsidiaries, then any such assignee Lender
shall have no right to vote as a “Lender” hereunder or under any of the other
Loan Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan
Documents.

     

    
      
        
        

      

      
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    Section
21.5        Assignment by the
Borrower.  Neither the Borrower nor any of its Subsidiaries
shall assign or transfer any of its rights or obligations under any of the Loan
Documents without the prior written consent of the Required Lenders and the
Agent.

     

    ARTICLE
22.  NOTICES, ETC.

     

    Except as
otherwise expressly provided in this Credit Agreement, all notices and other
communications made or required to be given pursuant to this Credit Agreement or
the Notes shall be in writing and shall be delivered in hand, mailed by United
States registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, facsimile or telex and
confirmed by delivery via courier or postal service, addressed as
follows:

     

    (a)          if
to the Borrower or any of its Subsidiaries, or at such other address for notice
as the Borrower shall last have furnished in writing to the Person giving the
notice; and

     

    
      
        
          
            	
                    to:

                  	
                    96
      Windsor Street

                  
	 
      	
                    West
      Springfield, MA 01089

                  
	 
      	
                    Attention:  Michael
      Bielonko

                  
	 	 
	
                    with
      a copy to:

                  	
                    Loeb
      & Loeb LLP

                  
	 
      	
                    345
      Park Avenue

                  
	 
      	
                    New
      York, NY 10154

                  
	 
      	
                    Attention:  Mitchell
      Nussbaum, Esq.

                  

          

        

      

    

    

    (b)         if
to the Agent, to 61 Main Street, Andover, Massachusetts  01810,
Attention: Greg Spurr, Senior Vice President, or such other address for notice
as the Agent shall last have furnished in writing to the Person giving the
notice.

     

    
      
        	
                with
      a copy to:

              	
                Choate,
      Hall & Stewart, LLP

              
	 
      	
                Two
      International Place

              
	 
      	
                Boston,
      Massachusetts  02110

              
	 
      	
                Attention:  James
      R. Kane

              

      

    

     

    Any such
notice or demand shall be deemed to have been duly given or made and to have
become effective (i) if delivered by hand, overnight courier or facsimile
to a responsible officer of the party to which it is directed, at the time of
the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid,
on the third Business Day following the mailing thereof.

     

    
      
        
        

      

      
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    ARTICLE
23.  GOVERNING LAW.

     

    THIS
CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF
THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SAID COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW).  EACH PARTY HERETO AGREES THAT ANY SUIT
FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PARTY BY MAIL
AT THE ADDRESS SPECIFIED IN ARTICLE 22.  EACH PARTY HERETO HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.

     

    ARTICLE
24.  HEADINGS.

     

    The
captions in this Credit Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.

     

    ARTICLE
25.  COUNTERPARTS.

     

    This
Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument.  In proving this Credit Agreement it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.

     

    ARTICLE
26.  ENTIRE AGREEMENT, ETC.

     

    The Loan
Documents and any other documents executed in connection herewith or therewith
express the entire understanding of the parties with respect to the transactions
contemplated hereby.  Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
Article 28.

     

    ARTICLE
27.  WAIVER OF JURY TRIAL.

     

    EACH
PARTY HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS CREDIT AGREEMENT,
THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF WHICH RIGHTS AND
OBLIGATIONS.  EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO
IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.  THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE AGENT OR ANY OF THE LENDERS HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE AGENT OR ANY OF THE LENDERS WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS.

     

    
      
        
        

      

      
        91

        
          

        

      

      
        
        

      

       

    

    ARTICLE
28.  CONSENTS, AMENDMENTS, WAIVERS, ETC.

     

    (a)           No
failure to exercise and no delay in exercising, on the part of any Lender, any
right, remedy, power or privilege under any Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers and privileges under the Loan
Documents are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.  No waiver of any provision of any Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by this Article 28, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given.  Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether any Lender may have had notice or knowledge of
such Default at the time.

     

    (b)           Notwithstanding
anything to the contrary contained in any Loan Document, with the written
consent of the Required Lenders, the Agent and the appropriate parties to the
Loan Documents (other than the other Lenders) may, from time to time, enter
into written amendments, supplements or modifications thereof and, with the
consent of the Required Lenders, the Agent on behalf of the other Lenders, may
execute and deliver to any such parties a written instrument waiving or
consenting to the departure from, on such terms and conditions as the Agent may
specify in such instrument, any of the requirements of the Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no such amendment,
supplement, modification, waiver or consent shall:

     

    (i)           extend
or increase the Pro Rata Share of any of the Revolving Credit Loan Commitments,
the Term Loan Commitment or the Real Estate Loan Commitment of any Lender,
without such Lender’s consent;

     

    (ii)          unless
agreed to by each Lender affected thereby:  (A) reduce the
principal amount of any Loan, or reduce the rate of interest thereon, (or change
the manner of computation of any financial ratio (including any change in any
applicable defined term) used in determining the Applicable Margin that
would result in a reduction of any interest rate on any Loan or any fee payable
hereunder) or reduce any fees or other obligations payable under the Loan
Documents or (B) extend any date (including the Revolving Credit Loan
Maturity Date, the Term Loan Maturity Date or the Real Estate Loan Maturity
Date) fixed for the payment or mandatory prepayment of principal or
interest on any Loan, any fees, or any other obligation payable under the Loan
Documents or any scheduled mandatory reduction of the Revolving Credit Loan
Commitments;

     

    (iii)         unless
agreed to by all of the Lenders, (A)  increase the Revolving Credit Loan
Commitments, the Term Loan Commitment or the Real Estate Loan Commitment,
(B) change the definition of “Required Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or make any determination or grant any consent
hereunder, (C) change the order of payments under Section 15.4,
(D) consent to any assignment or delegation by any Borrower of any of its
rights or obligations under any Loan Document, (E) release any Borrower
from its obligations under this Credit Agreement, (F) release any Guarantor
from its obligations under this Credit Agreement or any Guaranty (except as a
result of the termination of the existence of such Guarantor in a transaction
permitted hereunder), or release any of the Collateral from the liens of the
Security Documents (except as may be expressly permitted thereunder or
hereunder, or (G) amend, modify or affect Article 28);

     

    
      
        
        

      

      
        92

        
          

        

      

      
        
        

      

       

    

    (iv)          unless
agreed to by all of the Lenders, shorten the maturity of the Loans;
and

     

    (v)           unless
agreed to by the Agent, amend, modify or otherwise affect the rights or duties
of the Agent under this Credit Agreement or the other Loan
Documents.

     

    Any such
amendment, supplement, modification, waiver or consent shall apply equally to
each Lender and shall be binding upon each Lender and subject to the Borrower’s
execution of such amendment, supplement, modification, waiver or consent the
Borrower and upon all future holders of the Notes.  In the case of any
waiver, the Lender and the Borrower shall be restored to their former position
and rights hereunder and under the outstanding Notes and other Loan Documents to
the extent provided for in such waiver, and any Default or Event of Default
waived shall not extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.

     

    ARTICLE
29.  SEVERABILITY.

     

    The
provisions of this Credit Agreement are severable and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any
jurisdiction.

     

    ARTICLE
30.  RATIFICATION.

     

    (a)           The
terms and provisions set forth in this Credit Agreement shall modify and
supersede all inconsistent terms and provisions set forth in the Original Credit
Agreement and except as expressly modified and superseded by this Credit
Agreement, the terms and provisions of the Original Credit Agreement and the
other Loan Documents are ratified and confirmed and shall continue in full force
and effect. The Borrower and the Agent agree that the Original Credit Agreement
as amended hereby and the other Loan Documents shall continue to be legal,
valid, binding and enforceable in accordance with their respective
terms.  For all matters arising prior to the effective date of this
Credit Agreement, the Original Credit Agreement (as unmodified by this Credit
Agreement) shall control.  The Borrower hereby acknowledges that, as
of the date hereof, the security interests and liens granted to the Agent under
this Credit Agreement and the other Loan Documents are in full force and effect,
are properly perfected and are enforceable in accordance with the terms of this
Credit Agreement and the other Loan Documents.

     

    
      
        
        

      

      
        93

        
          

        

      

      
        
        

      

       

    

    (b)           Representations
and Warranties.  The Borrower hereby represents and warrants to
the Agent that the representations and warranties set forth in this Credit
Agreement and in the other Loan Documents are true and correct in all material
respects on and as of the date hereof, with the same effect as though made on
and as of such date except with respect to any representations and warranties
limited by their terms to a specific date.  All representations and
warranties made in this Credit Agreement shall survive the execution and
delivery of this Credit Agreement, and no investigation by the Agent shall
affect the representations and warranties or the right of the Agent to rely upon
them.

     

    (c)           Release.  In
addition, to induce the Agent to agree to the terms of this Credit Agreement,
the Borrower represents and warrants that as of the date of its execution of
this Credit Agreement  there are no claims or offsets against or
rights of recoupment with respect to or defenses or counterclaims to its
obligations under the Loan Documents and in accordance therewith
it:

     

    (i)           Waives
any and all such claims, offsets, rights of recoupment, defenses or
counterclaims, arising prior to the date of its execution of this Credit
Agreement and

     

    (ii)          Releases
and discharges the Agent and its officers, directors, employees, agents and
affiliates (collectively the “released parties”) from any and all liabilities,
claims, causes of action, in law or equity, which the Borrower or any Guarantor
may have against any released party arising prior to the date hereof in
connection with the Loan Documents or the transactions contemplated
thereby.

     

    (d)           Reference
to Agreement.  Each of the Loan Documents, including the
Original Credit Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Original Credit Agreement as amended hereby, are
hereby amended so that any reference in such Loan Documents to the Original
Credit Agreement shall mean a reference to the Original Credit Agreement as
amended hereby.

     

    (e)           Expenses
of the Agent.  As provided in this Credit Agreement, the
Borrower agrees to pay all reasonable costs and expenses incurred by the Agent
in connection with the preparation, negotiation, and execution of this Credit
Agreement, including without limitation, the reasonable costs and fees of the
Agent’s legal counsel.

     

    (f)           Entire
Agreement.  This Credit
Agreement embodies the entire agreement among the parties hereto with respect to
the subject matter thereof, and supersedes any and all prior representations and
understandings, whether written or oral, relating to this Credit
Agreement.  There are no oral agreements among the parties hereto with
respect to the subject matter hereof.

     

    [ The remainder of this page is
intentionally left blank. ]

    
      
         

      

      
        94

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the undersigned have duly executed this Amended and Restated
Revolving Credit and Term Loan Agreement as a sealed instrument as of the date
first set forth above.

     

    
      
        
          	
                  CYALUME
      TECHNOLOGIES

                  HOLDINGS,
      INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/ Derek Dunaway

                
	 
      	
                  Chief
      Executive Officer (Title)

                
	 
      
	
                  CYALUME
      TECHNOLOGIES, INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/ Michael Bielonko

                
	 
      	
                  Chief
      Financial Officer (Title)

                
	 
      
	
                  TD
      BANK, N.A.

                
	 
      
	
                  By:

                	
                  /s/ Greg Spurr

                
	 
      	
                  Senior
      Vice President (Title)

                

        

      

    

     

    
      
         

      

      
        95Unassociated Document

     

    THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE TRANSFERRED UNTIL
(i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "
1933
ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR
(ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE 1933 ACT
IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH TRANSFER
IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE
ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT OR ANY SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT.

     

    WARRANT
TO PURCHASE COMMON STOCK

     

    OF

     

    CYALUME
TECHNOLOGIES HOLDINGS, INC.

    __________

     

    This
is to Certify That, FOR VALUE RECEIVED, Granite Creek FlexCap I, L.P., or its
assigns ("Holder"),
is entitled to purchase, subject to the provisions of this Warrant, from Cyalume
Technologies Holdings, Inc., a Delaware corporation (the "Company"),
94,118 shares of fully paid, validly issued and nonassessable shares of the
common stock of the Company ("Common
Stock") at a price of $2.00 per share. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for each share of Common Stock may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share Common Stock in effect at any
time and as adjusted from time to time is hereinafter sometimes referred to as
the "Exercise
Price."

     

    (a) EXERCISE OF
WARRANT.

     

    (1) This
Warrant may be exercised in whole or in part at any time or from time to time
from the date hereof up to and including July ___, 2015 (the "Exercise
Period"); provided, however, that (i) if either such day is a day on
which banking institutions in the State of New York are authorized by law to
close, then on the next succeeding day which shall not be such a day, and (ii)
in the event of any merger, consolidation or sale of substantially all the
assets of the Company as an entirety, resulting in any distribution to the
Company's stockholders, prior to termination of the Exercise Period, the Holder
shall have the right to exercise this Warrant commencing at such time through
the termination of the Exercise Period into the kind and amount of shares of
stock and other securities and property (including cash) receivable by a holder
of the number of shares of Common Stock into which this Warrant might have been
exercisable immediately prior thereto. This Warrant may be exercised by
presentation and surrender hereof to the Company at its principal office with
the Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such form. As soon
as practicable after each such exercise of this Warrant, but not later than
seven (7) days following the receipt of good and available funds, the Company
shall issue and deliver to the Holder a certificate or certificates for the
Warrant Shares issuable upon such exercise, registered in the name of the Holder
or its designee. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the balance
of the Warrant Shares purchasable hereunder. As of the end of business on the
date of receipt by the Company of this Warrant at its office in proper form for
exercise, the Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares shall not then be physically delivered to the
Holder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (2) At
any time during the Exercise Period, the Holder may, at its option, exercise
this Warrant on a cashless basis by exchanging this Warrant, in whole or in part
(a "Warrant
Exchange"), into the number of Warrant Shares determined in accordance
with this Section (a)(2), by surrendering this Warrant at the principal office
of the Company or at the office of its stock transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Warrant Shares to be exchanged and the date on which the Holder requests that
such Warrant Exchange occur (the "Notice of
Exchange"). The Warrant Exchange shall take place on the date specified
in the Notice of Exchange or, if later, the date the Notice of Exchange is
received by the Company (the "Exchange
Date"). Certificates for the shares issuable upon such Warrant Exchange
and, if this Warrant should be exercised in part only, a new Warrant evidencing
the rights of the Holder thereof to purchase the balance of the Warrant Shares
purchasable hereunder, shall be issued as of the Exchange Date and delivered to
the Holder within seven (7) days following the Exchange Date. In connection with
any Warrant Exchange, this Warrant shall represent the right to subscribe for
and acquire the number of Warrant Shares equal to (i) the number of Warrant
Shares specified by the Holder in its Notice of Exchange (the "Total
Number") less (ii) the number of Warrant Shares equal to the quotient
obtained by dividing (A) the product of the Total Number and the existing
Exercise Price by (B) Fair Market Value of a share of Common Stock. "Fair Market
Value" shall equal the 5 trading day average closing trading price of the
Common Stock on the relevant market or exchange for the 5 trading days preceding
the date of determination or, if the Common Stock is not listed or admitted to
trading on any market or exchange, and the average price cannot be determined as
contemplated above, the Fair Market Value of the Common Stock shall be as
reasonably determined in good faith by the Company's Board of Directors with the
concurrence of the Holder.

     

    (b) REPRESENTATIONS
OF HOLDER.  The Holder (i) is an
“accredited investor,” as defined in Rule 501 promulgated under the Securities
Act of 1933, as amended (the “1933 Act”), (ii) understands the risks of, and
other considerations relating to, a purchase of this Warrant, (iii) understands
that the Warrants and/or the Warrant Shares may not be sold, transferred,
hypothecated or pledged, except pursuant to an effective registration statement
under the 1933 Act and under any applicable state securities law, or pursuant to
an available exemption from the registration requirements of the 1933 Act and
any applicable state securities laws, in all cases established to the
satisfaction of the Company, and (v) the Holder has been given the opportunity
to obtain such additional information that it believes is
necessary.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) RESERVATION
OF SHARES.  The Company shall at all times reserve for issuance
and/or delivery upon exercise of the this Warrant such number of shares of
Common Stock as shall be required for issuance and delivery upon exercise of
this Warrant.

     

    (d) FRACTIONAL
SHARES.  No fractional shares or strips representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the Fair
Market Value of a share of Common Stock.

     

    (e) LOSS OR
DESTRUCTION OF WARRANT.  Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.

     

    (f) RIGHTS OF
THE HOLDER.  The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth
herein.

     

    (g) ANTI-DILUTION
PROVISIONS. In case the Company shall hereafter (i) declare a dividend or
make a distribution on its outstanding Common Stock in shares of Common Stock,
(ii) subdivide or reclassify its outstanding Common Stock into a greater number
of shares, or (iii) combine or reclassify its outstanding Common Stock into a
smaller number of shares, the Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
The number of shares of Common Stock that the Holder shall thereafter, on the
exercise hereof, be entitled to receive shall be adjusted to a number determined
by multiplying the number of shares of Common Stock that would otherwise (but
for the provisions of this Section (f)) be issuable on such exercise by a
fraction of which (a) the numerator is the Exercise Price that would otherwise
(but for the provisions of this Section (f)) be in effect, and (b) the
denominator is the Exercise Price in effect on the date of such exercise (taking
into account the provisions of this Section (f)). Notwithstanding the foregoing,
in no event shall the Exercise Price be less than the par value of the Common
Stock. Adjustment pursuant to this Section shall be made successively whenever
any event listed above shall occur.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (h) NOTICES TO
WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the
Company shall pay any dividend or make any distribution upon the Common Stock or
(ii) if the Company shall offer to the holders of Common Stock for subscription
or purchase by them any share of any class or any other rights or (iii) if any
capital reorganization of the Company, reclassification of the capital stock of
the Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the property
and assets of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then in
any such case, the Company shall cause to be mailed to the Holder, at least
fifteen days prior the date specified in (x) or (y) below, as the case may be, a
notice containing a brief description of the proposed action and stating the
date on which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed, as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.

     

    (i) RECLASSIFICATION,
REORGANIZATION OR MERGER. In case of any reclassification, capital
reorganization or other change of outstanding Common Stock of the company, or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary in which merger the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding Common Stock of the class
issuable upon exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an entirety,
the Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, capital reorganization and other
change, consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock that might have been purchased upon exercise of this
Warrant immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section (h) shall similarly apply to successive reclassifications, capital
reorganizations and changes of Common Stock and to successive consolidations,
mergers, sales or conveyances. In the event that in connection with any such
capital reorganization or reclassification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for a security of the
Company other than Common Stock, any such issue shall be treated as an issue of
Common Stock covered by the provisions of Section (f)
hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (j) NO NET-CASH
SETTLEMENT.  In no event will the Holder be entitled to receive
a net-cash settlement or other consideration in lieu of physical settlement in
securities.

     

    (k) MODIFICATION
OF AGREEMENT.  The provisions of this Warrant may from time to
time be amended, modified or waived, by the Company and the holder of this
Warrant.

     

    (l) TRANSFER OF
WARRANT. This
Warrant shall inure to the benefit of the successors to and assigns of the
Holder; provided,
however,
this Warrant may not be pledged, sold, assigned or otherwise transferred,
directly or indirectly, by operation of law, change of control, or otherwise,
without the prior written consent of the Company, except to an affiliate of the
Holder.  This Warrant and all rights hereunder are registrable at the
office or agency of the Company referred to below by the Holder in person or by
its duly authorized attorney, upon surrender of this Warrant properly endorsed
accompanied by an assignment form in a form approved by the Company, duly
executed by the transferring Holder and the transferee.

     

    (m) REGISTER OF
WARRANTS. The
Company shall maintain, at the principal office of the Company (or such other
office as it may designate by notice to the Holder), a register in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each successor and
prior owner of such Warrant.  The Company shall be entitled to treat
the Person in whose name this Warrant is so registered as the sole and absolute
owner of this Warrant for all purposes.

     

    (n) WARRANT
AGENT. The
Company may, by written notice to the Holder, appoint the transfer agent and
registrar for the Common Stock as the Company’s agent for the purpose of issuing
Common Stock (or other securities) on the exercise of this Warrant pursuant to
paragraph(a), and the Company may, by written notice to the Holder, appoint an
agent having an office in the United States of America for the purpose of
replacing this Warrant pursuant to paragraph (d), or any of the foregoing,
and thereafter any such replacement shall be made at such office by such
agent.

     

    (o) NOTICES,
ETC. All
notices and other communications from the Company to the Holder shall be mailed
by first class certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by the Holder or at the address shown for
the Holder on the register of Warrants referred to in paragraph
(l).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (p) REGISTRATION
RIGHTS. The
Holder and the Company are parties to a Registration Rights Agreement of even
date herewith.

     

    [Signatures
appear on the following page.]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Warrant on the _____ day
of July, 2010.

    
       

       

      
        
          	 	      
                  HOLDER:

                	 
	 	 	 
	 	      
                  GRANITE
      CREEK FLEXCAP I, L.P., a Delaware limited
    partnership

                	 
	 	 	 	 
	 	      
                  By:
      

                	Granite
      Creek GP FlexCap I, L.L.C.,	 
	 	Its:  	General
      Partner	 
	 	 	 	 
	 	 	 	 
	
                	
                  By:
      

                	 	 
	 	Name: 	 	 
	 	Title:    	 	 

        

      

       

       

      
        
          	 	      
                  COMPANY:

                	 
	 	 	 
	 	CYALUME TECHNOLOGIES
      HOLDINGS, INC.	 
	 	 	 	 
	 	 	 	 
	
                	
                  By:
      

                	 	 
	 	Name:  	 	 
	 	Title:   	 	 

        

      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    PURCHASE
FORM

     

    
      	
              (1)

            	
              The
      undersigned hereby irrevocably elects to exercise the within Warrant to
      the extent of purchasing shares of Common Stock of Cyalume Technologies
      Holdings, Inc. (or such number of shares of Common Stock or other
      securities or property to which the undersigned is entitled in lieu
      thereof or in addition thereto under the provisions of the
      Warrant).

            

    

     

    (2)           The
undersigned hereby elects to make payment (Please check one):

     

    ___         on
a cashless basis pursuapnt to the provisions of Section (a)(2) of the
Warrant.

     

    
      	
               
      

            	
              ___

            	
              with
      the enclosed bank draft, certified check or money order payable to the
      Company in payment of the exercise price determined under, and on the
      terms specified in, the Warrant.

            

    

     

    
      	
              (3)

            	
              The
      undersigned hereby irrevocably directs that the said shares be issued and
      delivered as follows:

            

    

     

    
      	
              Name(s) in
      Full

            	
              Address(es)

            	
              Number of
      Shares

            	
              S.S. or IRS
    #

            
	 
      	 
      	 
      	 
      

    

     

    (4)           If
the Warrant was not exercised in full, please check the following:

     

    The
undersigned hereby irrevocably directs that any remaining portion of the warrant
be issued and delivered as follows:

     

    
      	
              Name(s) in
      Full

            	
              Address(es)

            	
              Number of
      Shares

            	
              S.S. or IRS
    #

            
	 
      	 
      	 
      	 
      

    

     

     

    
      
        
          	
                	
                	 	 
	 	 	      
                  Signature
      of Holder

                	 
	 	 	
                	 
	 	 	 
       	 
	 	 	      
                  Print
      Name

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]