Document:

HSBC
      BANK USA, NATIONAL ASSOCIATION

    

    AND

    

    LUMINESCENT
      SYSTEMS, INC.

    

    
      
        

      

    

    

    LETTER
      OF CREDIT

    REIMBURSEMENT
      AGREEMENT

     

    
      

    

    

    Dated
      as of April 1, 2007

    

    $6,000,000

    Erie
      County Industrial Development Agency

    Variable
      Rate Demand Industrial Development Revenue Bonds

    (Luminescent
      Systems, Inc. Project - Letter of Credit Secured)

    Series
      2007

     

    
      

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    TABLE
      OF CONTENTS

    

    
      	 	 	
              Page

            
	
              SECTION
                1. 

            	
              DEFINITIONS

            	
              1

            
	
              1.1

            	
              Defined
                Terms

            	
              1

            
	
              1.2

            	
              Accounting
                Terms

            	
              1

            
	 	 	
               

            
	
              SECTION
                2.

            	
              APPLICATION

            	
              1

            
	 	 	
               

            
	
              SECTION
                3.

            	
              REIMBURSEMENT
                AND OTHER PAYMENTS

            	
              1

            
	
              3.1

            	
              Letter
                of Credit Draws

            	
              
                1

              

            
	
              3.2

            	
              Letter
                of Credit Fees

            	
              2

            
	
              3.3

            	
              Interest

            	
              2

            
	
              3.4

            	
              Expenses

            	
              2

            
	
              3.5

            	
              Additional
                Costs

            	
              2

            
	
              3.6

            	
              Other
                Amounts

            	
              3

            
	
              3.7

            	
              Form
                of Payments

            	
              3

            
	 	 	
               

            
	
              SECTION
                4. 

            	
              INTEREST
                PAYMENTS AND PREPAYMENTS

            	
              4

            
	
              4.1

            	
              Interest
                Payments

            	
              4

            
	
              4.2

            	
              Mandatory
                Prepayments

            	
              4

            
	
              4.3

            	
              Optional
                Prepayments

            	
              4

            
	 	 	
               

            
	
              SECTION
                5.

            	
              CONDITIONS

            	
              4

            
	
              5.1

            	
              Corporate
                Action

            	
              4

            
	
              5.2

            	
              Bond
                Documents

            	
              5

            
	
              5.3

            	
              Collateral
                Documents

            	
              5

            
	
              5.4

            	
              Opinions

            	
              5

            
	
              5.5

            	
              Other

            	
              5

            
	
              5.6

            	
              Costs

            	
              6

            
	 	 	
               

            
	
              SECTION
                6.

            	
              REPRESENTATIONS

            	
              6

            
	
              6.1

            	
              Organization;
                Power and Authority

            	
              6

            
	
              6.2

            	
              Valid
                and Binding Obligation

            	
              6

            
	
              6.3

            	
              Approvals

            	
              6

            
	
              6.4

            	
              Other
                Documents

            	
              6

            
	
              6.5

            	
              Litigation

            	
              7

            
	
              6.6

            	
              Financial
                Statements

            	
              7

            
	
              6.7

            	
              ERISA
                Matters

            	
              7

            
	
              6.8

            	
              Environmental
                Matters

            	
              7

            
	
              6.9

            	
              Leases
                and Management Agreements

            	
              8

            
	
              6.10

            	
              Good
                Title

            	
              8

            
	
              6.11

            	
              No
                Violations

            	
              
                9

              

            
	
              6.12

            	
              Tax
                Returns

            	
              9

            
	
              6.13

            	
              Federal
                Regulations

            	
              9

            
	
              6.14

            	
              Subsidiaries;
                Affiliates

            	
              9

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

     

    
      	
              6.15

            	
              Fiscal
                Year

            	
              9

            
	
              6.16

            	
              Securities

            	
              9

            
	
              6.17

            	
              Anti-Terrorism
                Laws

            	
              10

            
	 	 	
               

            
	
              SECTION
                7. 

            	
              AFFIRMATIVE
                COVENANTS

            	
              10

            
	
              7.1

            	
              Certain
                Agreements

            	
              10

            
	
              7.2

            	
              Reporting
                Requirements

            	
              11

            
	
              7.3

            	
              Taxes

            	
              12

            
	
              7.4

            	
              Insurance

            	
              12

            
	
              7.5

            	
              Existence;
                Conduct of Business

            	
              12

            
	
              7.6

            	
              Maintenance
                of Properties; Books and Records

            	
              12

            
	
              7.7

            	
              Compliance
                with Law

            	
              13

            
	
              7.8

            	
              Litigation

            	
              13

            
	
              7.9

            	
              Judgments

            	
              13

            
	
              7.10

            	
              Notice

            	
              13

            
	
              7.11

            	
              Pension
                Default

            	
              
                14

              

            
	
              7.12

            	
              Inspections

            	
              14

            
	
              7.13

            	
              Environmental
                Compliance

            	
              14

            
	
              7.14

            	
              Equity
                Contribution

            	
              14

            
	
              7.15

            	
              Other
                Acts

            	
              14

            
	 	 	
               

            
	
              SECTION
                8.

            	
              NEGATIVE
                COVENANTS

            	
              15

            
	
              8.1

            	
              Bond
                Documents

            	
              15

            
	
              8.2

            	
              Borrowed
                Money

            	
              15

            
	
              8.3

            	
              Encumbrances

            	
              15

            
	
              8.4

            	
              Guaranties

            	
              16

            
	
              8.5

            	
              Sale
                of Assets

            	
              16

            
	
              8.6

            	
              Investments
                and Loans

            	
              16

            
	
              8.7

            	
              Merger

            	
              16

            
	
              8.8

            	
              Disposal
                of Hazardous Substances

            	
              16

            
	
              8.9

            	
              Change
                Fiscal Year

            	
              16

            
	 	 	
               

            
	
              SECTION
                9. 

            	
              EVENTS
                OF DEFAULT AND REMEDIES.

            	
              17

            
	
              9.1

            	
              Events

            	
              17

            
	
              9.2

            	
              Remedies

            	
              19

            
	 	 	
               

            
	
              SECTION
                10. 

            	
              MISCELLANEOUS

            	
              20

            
	
              10.1

            	
              Entire
                Agreement; Amendments

            	
              20

            
	
              10.2

            	
              Additional
                Bonds

            	
              20

            
	
              10.3

            	
              Delays
                and Omissions

            	
              20

            
	
              10.4

            	
              Notices

            	
              20

            
	
              10.5

            	
              Governing
                Laws

            	
              21

            
	
              10.6

            	
              Term

            	
              21

            
	
              10.7

            	
              Joint
                and Several

            	
              21

            
	
              10.8

            	
              Counterparts

            	
              21

            
	 	 	
               

            
	
              SECTION
                11.

            	
              INDEMNIFICATION

            	
              21

            

    

     

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

     

    
      	
              SECTION
                12.

            	
              LIMITATION
                OF LIABILITY

            	
              22

            
	 	 	
               

            
	
              SECTION
                13. 

            	
              JURY
                TRIAL WAIVER

            	
              22

            
	 	 	
               

            
	
              SECTION
                14.

            	
              CONSENT
                TO JURISDICTION

            	
              22

            

    

    

    
      	
              EXHIBIT
                A

            	
              LETTER
                OF CREDIT

            
	
              EXHIBIT
                B

            	
              COMPLIANCE
                CERTIFICATE

            
	 	 
	
              SCHEDULE
                1

            	
              DEFINITIONS

            
	
              SCHEDULE
                2

            	
              PENSION
                PLANS

            
	
              SCHEDULE
                3

            	
              LIABILITIES

            
	
              SCHEDULE
                4

            	
              PERMITTED
                ENCUMBRANCES

            

    

     

    
       

      
        -iii-

        
          

        

      

       

    

    
       

      
        LETTER
          OF CREDIT REIMBURSEMENT AGREEMENT

        

        THIS
          LETTER OF CREDIT REIMBURSEMENT AGREEMENT (“Letter of Credit Reimbursement
          Agreement”) dated as of April 1, 2007 is between HSBC
          BANK USA, NATIONAL ASSOCIATION,
          a bank
          organized under the laws of the United States of America (“Bank”),
          and
          LUMINESCENT SYSTEMS, INC., a
          business corporation
          organized under the laws of the State of New York, having an office at
          130 Commerce Way, East Aurora, New York 14052
          (“Applicant”).

        

        RECITALS

        

        The
          Applicant has requested the Agency to issue its Variable Rate Demand Industrial
          Development Revenue Bonds (Luminescent Systems, Inc. Project - Letter
          of Credit Secured) Series 2007 (collectively, “Bonds”) to finance a portion of
          the costs of the Project. As a condition precedent to the issuance and
          sale of
          the Bonds, the Applicant has requested the Bank to issue its irrevocable
          direct
          pay letter of credit in accordance with the terms and conditions of this
          Letter
          of Credit Reimbursement Agreement.

         

        SECTION
          1.   DEFINITIONS.

         

        1.1  Defined
          Terms.
          Terms
          used and not otherwise defined in this Letter of Credit Reimbursement Agreement
          are defined in Schedule 1
          annexed
          hereto and shall have the meanings specified therein or in the Indenture
          or the
          Letter of Credit unless the context otherwise requires.

         

        1.2  Accounting
          Terms.
          Each
          accounting term not defined in Schedule 1
          annexed
          hereto, and each accounting term partly defined therein to the extent not
          defined, shall have the meaning given to it under generally accepted accounting
          principles consistent with those applied in the preparation of the financial
          statements referred to in Section 6.6 hereof.

         

        SECTION
          2.   APPLICATION.

         

        The
          Applicant hereby applies to the Bank and requests the Bank to issue, execute
          and
          deliver on the date of the issuance of the Bonds to the Trustee for its
          account
          an Irrevocable Direct Pay Letter of Credit in substantially the form attached
          hereto as Exhibit A
          (“Letter
          of Credit”). The initial term of the Letter of Credit shall be approximately ten
          (10) years. The Applicant may request the Bank to extend the expiration
          date of
          the Letter of Credit with respect to any period following such initial
          term,
          which request the Bank may approve, reject or condition, in its sole and
          absolute discretion. In the event that the Bank agrees, in its sole and
          absolute
          discretion, to extend the expiration date of the Letter of Credit, each
          of the
          terms, covenants and conditions of this Letter of Credit Reimbursement
          Agreement
          shall apply to each such extension, absent written agreement to the
          contrary.

         

         

        SECTION
          3.   REIMBURSEMENT
          AND OTHER PAYMENTS.

         

        The
          Applicant hereby agrees to pay the Bank (collectively,
“Indebtedness”):

         

        3.1  Letter
          of Credit Draws.
          A sum
          equal to any and all amounts which are drawn under the Letter of Credit,
          payable
          (a) with respect to each portion of the total Indebtedness resulting from a
          Bond Purchase Drawing - Principal (as defined in the Letter of Credit)
          on the earliest of (i) the stated expiration of the Letter of Credit,
          (ii) any earlier date on which the Bank, pursuant to Section 9.2
          hereof, has declared such Indebtedness or portion thereof to be immediately
          due
          and payable, or (iii) any earlier date on which such Indebtedness or
          portion thereof is subject to prepayment pursuant to Sections 4.2 or 4.3
          hereof, and (b) with respect to all other draws on the Letter of Credit, on
          the same Business Day on which the Bank honors any Bond Purchase
          Drawing - Interest, Interest Drawing or Principal Drawing (as those
          terms are defined in the Letter of Credit).

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        3.2  Letter
          of Credit Fees.
          A sum
          equal to (a) the Bank’s reasonable and customary administrative, issuance,
          amendment, drawing and negotiation charges in connection with letters of
          credit,
          which shall be payable upon demand, and (b) a letter of credit fee computed
          from the date of issuance of the Letter of Credit at the rate of seven-tenths
          of
          one percent (0.70%) per annum of the Stated Amount (as defined in the Letter
          of
          Credit), payable in advance for a one-year period on the date of the issuance
          of
          the Letter of Credit and annually in advance on each anniversary of such
          date
          while the Letter of Credit remains in existence, which fee shall be fully
          earned
          upon payment thereof and shall be non-refundable (“Letter of Credit Fee”). Such
          Letter of Credit Fee shall be computed on the basis of a 360-day year for
          the
          actual number of days elapsed and is subject to adjustment as provided
          in
          Section 9.2(v). Upon the occurrence and during the continuance of an Event
          of Default (as hereinafter defined), the Letter of Credit Fee shall be
          increased
          to two percent (2%) per annum of the Stated Amount, payable as
          aforesaid.

         

        3.3  Interest.
          Interest on Indebtedness (a) with respect to any Bond Purchase
          Drawing from the date such Indebtedness is incurred until payment (unless
          such Indebtedness is paid to the Bank on the same Business Day as incurred,
          in
          which case no interest is payable) at a rate per annum equal to the Bank’s Prime
          Rate, payable when and as interest is due and payable on the Bonds, and
          (b) with respect to all other Indebtedness from the date such Indebtedness
          is incurred (unless such Indebtedness is paid to the Bank on the same Business
          Day as incurred, in which case no interest is payable) at a per annum rate
          equal
          to the Bank’s Prime Rate plus two percent (2%), payable on demand.

         

        3.4  Expenses.
          Any and
          all out-of-pocket costs and expenses reasonably incurred by or on behalf
          of the
          Bank in connection with the preparation, negotiation, administration or
          enforcement of this Letter of Credit Reimbursement Agreement, the Letter
          of
          Credit, the Bond Documents and the Collateral Documents, any sale or other
          disposition of the collateral granted to the Bank pursuant to the Collateral
          Documents, and any consent or action requested or necessitated by the Applicant,
          the Agency, the Trustee or any other party in connection with the subject
          transaction, including, without limitation, reasonable attorneys’ fees and
          disbursements, title examination and insurance fees, UCC search fees, appraisal,
          inspecting engineer, environmental report and survey costs, mortgage taxes,
          and
          recording and filing fees, all payable on demand.

         

        3.5  Additional
          Costs.
          If any
          law, regulation, guideline or change in any law or regulation or in the
          interpretation thereof or any ruling, decree, judgment or recommendation
          by any
          regulatory body, court or any administrative or governmental authority
          charged
          or claiming to be charged with the administration thereof, shall either
          (i) impose upon, modify, require, make or deem applicable to the Bank or
          any of its affiliates any reserve requirement based upon the deeming of
          letters
          of credit to be deposits held by the Bank, special deposit requirement,
          insurance assessment or similar costs or requirements against or affecting
          letters of credit issued or to be issued hereunder or (ii) subject the Bank
          or any of its affiliates to any tax (other than taxes based on the overall
          net
          income of the Bank), charge, fee, deduction, withholding or similar costs
          of any
          kind whatsoever or (iii) impose any condition upon or cause in any manner
          the addition of any supplement to or increase of any kind to the Bank’s or an
          affiliate’s capital or cost base for issuing such letters of credit which
          results in an increase in the capital requirement supporting such letters
          of
          credit or (iv) impose upon, modify, require, make or deem applicable to the
          Bank or any of its affiliates any capital requirement, increased capital
          requirement or similar requirement such as the deeming of such letters
          of credit
          to be assets held by the Bank or any of its affiliates for capital calculation
          or other purposes, and the result of any events referred to in (i), (ii),
          (iii)
          or (iv) above shall be to increase the costs or decrease the benefit in
          any way
          to the Bank or any affiliate of issuing, maintaining or participating in
          such
          letters of credit, then the Applicant shall, thirty (30) days after the
          mailing
          of written notice of such increased costs or decreased benefits or both
          to the
          Applicant by the Bank, pay to the Bank all such additional amounts which
          in the
          Bank’s sole good faith calculation, as allocated to such letters of
          credit,

         

        
          
            
            

          

          
            -2-

            
              

            

          

          
            
            

          

        

         

        (a)  in
          the
          case of events referred to in (i) and (ii) above, shall be sufficient to
          compensate the Bank for all such increased costs, decreased benefits or
          both,
          and/or

         

        (b)  in
          the
          case of events referred to in (iii) and (iv) above, shall be an amount
          as the
          Bank shall reasonably determine is necessary to compensate the Bank for
          any
          decreased benefit caused by such events.

         

        For
          any
          amounts arising under (a) and (b) above, the Bank shall deliver to the
          Applicant
          a certificate as to such increased costs or decreased benefit incurred
          or
          suffered by the Bank as a result of such event or events, setting forth
          in
          reasonable detail the basis therefor and the manner of calculation thereof,
          as
          soon as practicable after the Bank becomes aware of such event or events,
          which
          certificate shall be conclusive, absent manifest error, as to any amounts
          set
          forth therein. In determining such amounts, the Bank may use any reasonable
          averaging and attribution methods.

         

        3.6  Other
          Amounts. All
          amounts due to the Bank pursuant to any of the Bond Documents, Collateral
          Documents or SWAP Documents, payable as provided for therein.

         

        3.7  Form
          of Payments.
          All
          payments under this Letter of Credit Reimbursement Agreement shall be in
          lawful
          currency of the United States and in immediately available funds at the
          Bank’s
          office at One HSBC Center, Buffalo, New York 14203 (or such other office
          or
          address as Bank shall direct), with interest calculated on the basis of
          a
          360-day year for the actual number of days elapsed, which will result in
          a
          higher effective annual rate.

         

        
          
            
            

          

          
            -3-

            
              

            

          

          
            
            

          

        

         

        SECTION
          4.   INTEREST
          PAYMENTS AND PREPAYMENTS.

         

        4.1  Interest
          Payments.
          Whenever a payment of interest is due pursuant to Section 3.3 on
          Indebtedness with respect to a Bond Purchase Drawing - Principal, the
          Applicant shall be deemed to have made such payment in full so long as
          the
          payment of interest due on the Bonds held pursuant to the pledge created
          pursuant to the Pledge Agreement has been made and received by the Bank
          on a
          timely basis, and the Applicant has paid to the Bank the difference between
          the
          interest payable pursuant to Section 3.3 and the interest received by the
          Bank on such Bonds.

         

        4.2  Mandatory
          Prepayments.
          On each
          and every date on which principal is payable, whether by means of a redemption
          pursuant to Section 3.1 of the Indenture or otherwise, on any Bonds pledged
          to the Bank pursuant to the Pledge Agreement in connection with Bond Purchase
          Drawings, the Applicant will prepay Indebtedness in an amount equal to
          the total
          of such principal due and payable on such Bonds, together with accrued
          interest
          to the date of such prepayment. The Bank shall release to the Applicant
          or its
          designee from the security interest created under the Pledge Agreement
          a
          principal amount of Bonds equal to the amount of such prepayment and deliver
          such Bonds or, if the Bonds are in book-entry form, cause the beneficial
          ownership of such Bonds to be reflected in the records of DTC or other
          designated securities depository, pursuant to the instructions of the
          Applicant.

         

        4.3  Optional
          Prepayments.
          Indebtedness payable pursuant to Section 3.1(a) hereof, and interest
          thereon, arising from Bond Purchase Drawings may be prepaid by the Applicant
          or
          its designee at any time on three (3) Business Days’ notice to the Bank
          stating the amount to be prepaid (which shall be $100,000 or increments
          of
          $5,000 in excess thereof ) upon payment of immediately available funds
          to the
          Bank of the amount to be prepaid, together with accrued interest to the
          date of
          such prepayment on the amount to be prepaid. The Bank shall release to
          the
          Applicant or its designee from the security interest created under the
          Pledge
          Agreement a principal amount of Bonds equal to the amount of such prepayment
          and
          deliver such Bonds or, if the Bonds are in book-entry form, cause the beneficial
          ownership of such Bonds to be reflected in the records of DTC or other
          designated securities depository, pursuant to the instructions of the
          Applicant.

         

        SECTION
          5.   CONDITIONS.

         

        The
          Bank’s agreement to issue the Letter of Credit shall be effective only upon
          the
          fulfillment of the following conditions precedent:

         

        5.1  Corporate
          Action.
          The
          Applicant shall have taken all necessary and appropriate corporate action
          and
          the Board of Directors of the Applicant shall have authorized the execution
          and
          delivery of this Letter of Credit Reimbursement Agreement, the form and
          content
          of the Letter of Credit, the Bond Documents, the Collateral Documents and
          the
          taking of all action required of the Applicant by this Letter of Credit
          Reimbursement Agreement; and the Applicant shall have furnished to the
          Bank
          certified copies of such corporate action and such other corporate documents
          as
          the Bank shall reasonably request.

         

        
          
            
            

          

          
            -4-

            
              

            

          

          
            
            

          

        

         

        5.2  Bond
          Documents.
          The
          Applicant shall have executed and delivered to the Bank the Bond Documents
          to
          which the Applicant is a party, all in form and content satisfactory to
          the
          Bank.

         

        5.3  Collateral
          Documents.
          The
          Applicant shall have executed and delivered to the Bank the Collateral
          Documents
          in form and content satisfactory to the Bank.

         

        5.4  Opinions.
          Counsel
          to the Applicant and the Guarantor shall have executed and delivered to
          the Bank
          a favorable opinion in form and content satisfactory to the Bank and its
          counsel
          as to such matters as the Bank may reasonably request.

         

        5.5  Other.
          The
          Applicant shall have delivered to the Bank such other documents, instruments
          and
          approvals as the Bank may reasonably request, including, but not limited
          to:

         

        
          	 	
                  (a)

                	
                  Evidence
                    of insurance policies in amounts and form and with insurers acceptable
                    to
                    the Bank, including (i) Extended coverage casualty insurance in the
                    form of a “Builder’s Risk” nonreporting policy in an amount to be
                    determined by the Bank as the insurable value of the improvements
                    to the
                    Premises, with a New York Mortgagee endorsement or its equivalent,
                    naming
                    the Bank as mortgagee and loss payee, without subjecting the
                    mortgagee to
                    defenses which may be available against the Applicant and providing
                    for
                    mandatory 30-day notice to the Bank of cancellation; (ii) Public
                    liability and property damage insurance in amounts acceptable
                    to the Bank
                    naming the Bank as an additional insured party; (iii) Worker’s
                    Compensation insurance; (iv) Flood Insurance, naming the Bank as
                    mortgagee, if required; and (v) such other coverage as the Bank may
                    require, including such coverage as is available for similar
                    projects in
                    the same locality;

                
	 	 	 
	 	
                  (b)

                	
                  A
                    Mortgagee title insurance policy in a minimum amount not less
                    than
                    $4,815,484, insuring the Building Loan Mortgage and the Project
                    Loan
                    Mortgage as a $1,184,516 priority lien on the Premises subject
                    only to
                    existing liens and encumbrances satisfactory to the
                    Bank;

                
	 	 	 
	 	
                  (c)

                	
                  A
                    current “As-Built” survey of the Premises acceptable to the Bank, which
                    survey shall be certified to the Bank, together with evidence
                    satisfactory
                    to the Bank that the Premises contains no designated
                    “wetlands;”

                
	 	 	 
	 	
                  (d)

                	
                  A
                    current site plan of the Premises illustrating the Project and
                    showing all
                    required municipal approvals;

                
	 	 	 
	 	
                  (e)

                	
                  A
                    completed Environmental Questionnaire, in form and content satisfactory
                    to
                    the Bank;

                

        

         

        
          
            
            

          

          
            -5-

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  (f)

                	
                  Evidence
                    from the Agency that the Applicant and the Project have been
                    approved by
                    the Agency;

                
	 	 	 
	 	
                  (g)

                	
                  Receipt
                    and approval by the Bank and its counsel of the terms of the
                    Bonds and all
                    Bond documentation; and

                
	 	 	 
	 	
                  (h)

                	
                  The
                    other matters and documents described in the Bank’s November 22, 2006
                    commitment letter to the Applicant.

                

        

        

        5.6  Costs.
          The
          Applicant shall have reimbursed the Bank for or paid all costs and expenses
          incurred by the Bank in connection with the preparation, execution and
          delivery
          of this Letter of Credit Reimbursement Agreement, the Bond Documents and
          the
          Collateral Documents, including, without limitation, reasonable attorneys’ fees
          and disbursements, title examination and insurance fees, UCC search fees,
          appraisal, inspecting engineer, survey costs, mortgage taxes, and recording
          and
          filing fees.

         

        SECTION
          6.   REPRESENTATIONS.

         

        The
          Applicant hereby represents and warrants as follows:

         

        6.1  Organization;
          Power and Authority.
          The
          Applicant is a business corporation duly organized, validly existing and
          in good
          standing under the laws of the State of New York. The Applicant is qualified
          and
          in good standing in each state where the nature of its business or ownership
          of
          its property requires such qualification, except where failure to qualify
          would
          not reasonably be expected to have a Material Adverse Effect; and has all
          necessary power and authority to execute and perform, and to consummate
          all
          transactions contemplated by this Letter of Credit Reimbursement Agreement,
          and
          each of the Bond Documents and Collateral Documents, all of which have
          been duly
          authorized by all proper and necessary corporate and shareholder
          action.

         

        6.2  Valid
          and Binding Obligation.
          This
          Letter of Credit Reimbursement Agreement and each of the Bond Documents
          and the
          Collateral Documents to which the Applicant is a party have been duly executed
          and delivered by the Applicant, constitute the legal, valid and binding
          obligations of the Applicant, enforceable against the Applicant in accordance
          with their respective terms.

         

        6.3  Approvals.
          All
          authorizations, approvals, notices and filings required for the Applicant
          to
          enter into this Letter of Credit Reimbursement Agreement and each of the
          Bond
          Documents and the Collateral Documents and to take all actions contemplated
          hereby or thereby or in connection herewith or therewith, have been obtained,
          copies thereof have been delivered to the Bank, and such authorizations,
          approvals, notices and filings remain in full force and effect.

         

        6.4  Other
          Documents.
          The
          execution, delivery and performance by the Applicant of this Letter of
          Credit
          Reimbursement Agreement do not and will not contravene, conflict with or
          constitute a breach of or default under (i) the Applicant’s organizational
          documents, or (ii) any note, mortgage, borrowing agreement or other
          material instrument or agreement binding on the Applicant, or (iii) any
          order, writ, judgment, injunction or decree of any court of competent
          jurisdiction to which the Applicant is a party or by which the Applicant
          is
          otherwise bound.

         

        
          
            
            

          

          
            -6-

            
              

            

          

          
            
            

          

        

         

        6.5  Litigation.
          There
          are not any actions, suits, proceedings (whether or not purportedly on
          behalf of
          the Applicant) or investigations pending or, to the knowledge of the Applicant,
          threatened against the Applicant or any basis therefor, which, reasonably
          could
          be expected to have a Material Adverse Effect, or which question the validity
          of
          this Letter of Credit Reimbursement Agreement, the Bonds or any of the
          Bond
          Documents or the Collateral Documents.

         

        6.6  Financial
          Statements.
          All
          financial statements of the Applicant heretofore given and hereafter to
          be given
          to the Bank are and will be true and complete in all material respects
          as of
          their respective dates and prepared in accordance with generally accepted
          accounting principles consistently applied, and fairly represent the financial
          conditions of the business to which they pertain, and no materially adverse
          change has occurred in the financial conditions reflected therein since
          the
          respective dates thereof. None of the property or assets shown in the financial
          statements heretofore delivered to the Bank has been materially adversely
          affected as a result of any fire, explosion, accident, flood, drought,
          storm,
          earthquake, condemnation, requisition, statutory or regulatory change,
          act of
          God, or act of public enemy or other casualty, whether or not
          insured.

         

        6.7  ERISA
          Matters.
          All
          Plans to which the Applicant or any Subsidiary is a party are listed on
          Schedule 2
          annexed
          hereto; no Plan has been terminated or partially terminated or is insolvent
          or
          in reorganization, nor have any proceedings been instituted to terminate
          or
          reorganize any Plan; neither the Applicant nor any Subsidiary has withdrawn
          from
          any Plan in a complete or partial withdrawal, nor has a condition occurred
          which
          if continued would result in a complete or partial withdrawal; neither
          the
          Applicant nor any Subsidiary has incurred any withdrawal liability, including
          contingent withdrawal liability, to any Plan pursuant to Title IV of ERISA;
          neither the Applicant nor any Subsidiary has incurred any liability to
          the
          Pension Benefit Guaranty Corporation other than for required insurance
          premiums
          which have been paid when due; no Reportable Event has occurred and no
          Plan or
          other “employee pension benefit plan”, as defined in Section 3(2) of ERISA
          to which the Applicant or any Subsidiary is a party has an “accumulated funding
          deficiency” (whether or not waived) as defined in Section 302 of ERISA or
          in Section 412 of the Code. Each Plan and each other “employee benefit
          plan” as defined in Section 3(3) of ERISA to which the Applicant or any
          Subsidiary is a party is in substantial compliance with ERISA, and no such
          plan,
          nor any administrator, trustee or fiduciary thereof, to the best knowledge
          of
          the Applicant, has engaged in a prohibited transaction described in
          Section 406 of ERISA or in Section 4975 of the Code. 

         

        6.8  Environmental
          Matters.
          To the
          best of Applicant’s knowledge, after due inquiry and investigation:

         

        (a)  Any
          Environmental Questionnaire previously provided to the Bank was and is
          accurate
          and complete and does not omit any material fact the omission of which
          would
          make the information contained therein materially misleading;

         

        
          
            
            

          

          
            -7-

            
              

            

          

          
            
            

          

        

         

        (b)  No
          above
          ground or underground storage tanks containing Hazardous Substances are
          or have
          been located on any property owned, leased or operated by the Applicant
          or any
          Subsidiary, except for storage tanks containing diesel fuel, gasoline or
          waste
          oil, which tanks are in material compliance with all applicable laws, rules
          and
          regulations;

         

        (c)  No
          property owned, leased or operated by the Applicant or any Subsidiary is
          or has
          been used for the storage or Disposal of any Hazardous Substance, except
          in the
          ordinary course of its business in material compliance with applicable
          Environmental Laws, or for the treatment or Disposal of Hazardous
          Substances;

         

        (d)  No
          unpermitted Release of a Hazardous Substance has occurred or is threatened
          on,
          at, from or near any property owned, leased or operated by the Applicant
          or any
          Subsidiary, except where such unpermitted Release does not have, and could
          not
          reasonably be expected to have, a Material Adverse Effect;

         

        (e)  Neither
          the Applicant nor any Subsidiary is subject to any existing, pending or
          threatened suit, claim, notice of material violation or request for information
          under any Environmental Law;

         

        (f)  The
          Applicant and each Subsidiary are in compliance with all Environmental
          Laws,
          except where noncompliance does not have, and could not be reasonably expected
          to have, a Material Adverse Effect;

         

        (g)  All
          Environmental Permits have been obtained and are in full force and effect,
          except where the failure to obtain such Environmental Permit is not likely
          to
          have a Material Adverse Effect; and

         

        (h)  There
          are
          no agreements, consents, orders, decrees, judgment, license or permit conditions
          or other orders or directives of any federal, state or local court, governmental
          agency or authority relating to the past, present or future ownership,
          use,
          operation, sale, transfer or conveyance of any property owned, leased or
          operated by the Applicant or any Subsidiary which required any change in
          condition or any work, repairs, construction, containment, clean up,
          investigation, study, removal or other remedial action or capital
          expenditures.

         

        6.9  Leases
          and Management Agreements.
          The
          Applicant has not entered into (i) any lease with respect to all or any
          portion of the Project, or (ii) any management agreement with respect to
          the operation or management of the Project.

         

        6.10  Good
          Title.
          Each of
          the Applicant and each Subsidiary has good and marketable title to all
          of its
          assets, none of which is subject to any mortgage, indenture, pledge, lien,
          conditional sale contract, security interest, encumbrance, claim, trust
          or
          charge except as set forth on Schedule 4
          annexed
          hereto or in favor of the Bank or HSBC Bank Canada.

         

        
          
            
            

          

          
            -8-

            
              

            

          

          
            
            

          

        

        
           

          6.11  No
            Violations.
            Neither
            the Applicant nor any Subsidiary is in violation of any term of its certificate
            of incorporation or by-laws, or of any mortgage, borrowing agreement
            or other
            instrument or agreement pertaining to indebtedness for borrowed money
            which
            might reasonably be expected to result in a Material Adverse Effect.
            Neither the
            Applicant nor any Subsidiary is in violation of any term of any other
            indenture,
            instrument, or agreement to which it is a party or by which it may be
            bound,
            resulting, or which might reasonably be expected to result, in a Material
            Adverse Effect. Neither the Applicant nor any Subsidiary is in violation
            of any
            order, writ, judgment, injunction or decree of any court of competent
            jurisdiction or of any statute, rule or regulation of any competent governmental
            authority which might reasonably be expected to result in a Material
            Adverse
            Effect. The execution and delivery of this Letter of Credit Reimbursement
            Agreement and other documents required by this Letter of Credit Reimbursement
            Agreement and the performance of all of the same is and will be in compliance
            with the foregoing and will not result in any violation or result in
            the
            creation of any mortgage, lien, security interest, charge or encumbrance
            upon
            any properties or assets except in favor of the Bank. There exists no
            fact or
            circumstance not disclosed in this Letter of Credit Reimbursement Agreement,
            in
            the documents furnished in connection herewith, the Applicant’s filings under
            the Securities Exchange Act of 1934, or in the financial projections
            furnished
            to the Bank which has, or could reasonably be expected to have, a Material
            Adverse Effect, except those facts and circumstances which generally
            affect all
            Persons engaged in the Applicant’s lines of business.

           

        

        6.12  Tax
          Returns.
          The
          Applicant has duly filed all federal and other tax returns required to
          be filed
          for itself and all Subsidiaries except where an extension has been obtained
          and
          has duly paid all taxes required by such returns through its fiscal year
          ending
          [December 31, 2006]. Federal income tax liability of the Applicant and the
          Subsidiaries has been reviewed by the United States Internal Revenue Service
          through its fiscal year ending December 31, 2003, and the Applicant has not
          received any assessments by the Internal Revenue Service or other taxing
          authority for additional unpaid taxes.

         

        6.13  Federal
          Regulations.
          Neither
          the Applicant nor any Subsidiary is engaged principally, or as one of its
          important activities, in the business of extending or arranging for the
          extension of credit for the purpose of purchasing or carrying “margin stock” (as
          defined in Regulation U issued by the Board of Governors of the Federal
          Reserve
          System). Neither the Applicant nor any Subsidiary owns nor intends to carry
          or
          purchase any such “margin stock”, and the Applicant will not use the proceeds of
          the Letter of Credit to purchase or carry (or refinance any borrowing the
          proceeds of which were used to purchase or carry) any such “margin stock”.
          Neither the Applicant nor any Subsidiary is an “investment company” within the
          meaning of the Investment Company Act of 1940, as amended, or a “holding
          company,” or a “subsidiary company” of a “holding company” or of a “subsidiary
          company” of a “holding company,” within the meaning of the Public Utility
          Holding Company Act of 1935, as amended.

         

        6.14  Subsidiaries;
          Affiliates.
          The
          Applicant has no Subsidiaries except Luminescent Systems of Canada
          Inc.

         

        6.15  Fiscal
          Year.
          The
          fiscal year of the Applicant is the year ending December 31.

         

        6.16  Securities.
          Each
          outstanding share of stock, debenture, bond, note and other security of
          the
          Applicant has been validly issued in full compliance with each statute,
          regulation and other law, and, if a share of stock, is fully paid and
          nonassessable.

         

        
          
            
            

          

          
            -9-

            
              

            

          

          
            
            

          

        

         

        6.17  Anti-Terrorism
          Laws.

         

        (a)  General.
          Neither
          the Applicant, the Guarantor, nor any of their Subsidiaries, is in violation
          of
          any Anti-Terrorism Law or engages in or conspires to engage in any transaction
          that evades or avoids, or has the purpose of evading or avoiding, or attempts
          to
          violate, any of the prohibitions set forth in any Anti-Terrorism
          Law.

         

        (b)  Executive
          Order No. 13224.
          Neither
          the Applicant, the Guarantor nor any of their Subsidiaries or their respective
          agents acting or benefiting in any capacity in connection with the Letter
          of
          Credit or other transactions hereunder, is any of the following (each a
“Blocked
          Person”):

         

        (1) a
          Person
          that is listed in the annex to, or is otherwise subject to the provisions
          of,
          the Executive Order No. 13224;

        

        (2) 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, the Executive
          Order No. 13224;

        

        (3) a
          Person
          or entity with which any bank is prohibited from dealing or otherwise engaging
          in any transaction by any Anti-Terrorism Law;

        

        (4) a
          Person
          or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;

        

        (5) a
          Person
          or entity that is named as a “specially designated national” on the most current
          list published by the U.S. Treasury Department Office of Foreign Asset
          Control
          at its official website or any replacement website or other replacement
          official
          publication of such list; or

        

        (6) a
          Person
          or entity who is affiliated or associated with a Person or entity listed
          above.

        

        Neither
          the Applicant, the Guarantor nor any Subsidiary of the Applicant or, to
          the
          knowledge of the Applicant, any of its agents acting in any capacity in
          connection with the Letter of Credit or other transactions hereunder (i)
          conducts any business or engages in making or receiving any contributions
          of
          funds, goods or services to or for the benefit of any Blocked Person, or
          (ii) deals in, or otherwise engages in any transaction relating to, any
          property or interests in property blocked pursuant to the Executive Order
          No.
          13224.

         

        SECTION
          7.   AFFIRMATIVE
          COVENANTS.

         

        Until
          the
          expiration of the Letter of Credit and the payment in full of all sums
          due under
          this Letter of Credit Reimbursement Agreement, the Applicant will:

         

        7.1  Certain
          Agreements.
          Perform
          and comply with all terms, covenants and conditions of each of the Bond
          Documents and the Collateral Documents.

         

        
          
            
            

          

          
            -10-

            
              

            

          

          
            
            

          

        

         

        7.2  Reporting
          Requirements.
          Furnish, or cause the Trustee or the Guarantor, as applicable, to furnish,
          to
          the Bank the following:

         

        (i)  as
          soon
          as possible and in any event within ten (10) days after the occurrence
          of any
          default or Event of Default, notice of such default or Event of Default
          together
          with a statement of the Applicant describing the facts giving rise to the
          occurrence(s) and the action which the Applicant proposes to take with
          respect
          thereto;

         

        (ii)  as
          soon
          as such notices are required to be given, copies of each of the notices,
          reports
          and certificates which are required to be given (a) to the Trustee by the
          Applicant under any of the Bond Documents and (b) to the Bondholders under
          the Indenture by the Trustee;

         

        (iii)  as
          soon
          as available, and in any event within ninety (90) days after the end of
          each
          fiscal year of the Guarantor, a consolidating and consolidated statement
          of
          financial position for the Guarantor and its Subsidiaries for such fiscal
          year,
          including statements of activities and cash flows through the end of such
          fiscal
          year, all audited by Ernst & Young LLP, Certified Public
          Accountants, or such other independent certified public accountants as
          may from
          time to time be selected by the Guarantor and reasonably approved by the
          Bank,
          together with a satisfactory, unqualified opinion of such
          accountants;

         

        (iv)  within
          forty-five (45) days after the end of each quarter of each of its fiscal
          years,
          unaudited financial statements of the Guarantor and its Subsidiaries, which
          statements shall consist of Consolidated and summary consolidating balance
          sheets as of the end of such quarter, and related statements of income,
          covering
          the period from the end of the Guarantor’s immediately preceding fiscal year to
          the end of such quarter certified to be correct by the President or chief
          fiscal
          officer of the Guarantor;

         

        (v)  within
          twenty-five (25) days after each month-end which is not the end of a fiscal
          quarter of Guarantor, monthly year-to-date consolidating internally prepared
          financial statements of Guarantor and its Subsidiaries;

         

        (vi)  accompanying
          each set of financial statements specified in (iii) and (iv) above, a
          certificate of a responsible officer of the Applicant substantially in
          the form
          of Exhibit B
          attached
          hereto to the effect that (a) the Applicant has complied with and is in
          compliance with all the terms and covenants of this Letter of Credit
          Reimbursement Agreement binding upon it, including, without limitation,
          demonstration of compliance with the financial covenants set forth in the
          Parent
          Guaranty, and (b) there exists no Event of Default, and no event which with
          the giving of notice or passage of time, or both, would constitute such
          an Event
          of Default has occurred or if this is not the case, that one or more specified
          Events of Default has occurred or is occurring and the specific steps the
          Applicant is taking to cure same;

         

        (vii)  promptly
          after their preparation, copies of all such proxy statements, financial
          statements and reports which the Applicant sends to its stockholders, and
          copies
          of all regular, periodic and special reports, as well as all registration
          statements, which the Applicant files with the Securities and Exchange
          Commission; 

         

        
          
            
            

          

          
            -11-

            
              

            

          

          
            
            

          

        

         

        (viii)  promptly
          after the filing thereof with the Pension Benefit Guaranty Corporation,
          a copy
          of each annual report filed with respect to each Plan; 

         

        (ix)  by
          the
          end of each of its fiscal years, a forecast of the statements of income
          and cash
          flows as of and through the close of the following fiscal year of the Applicant
          and its Subsidiaries; and

         

        (x)  such
          other information respecting the business or the condition or operations,
          financial or otherwise, of the Applicant as the Bank may from time to time
          reasonably request.

         

        7.3  Taxes.
          Promptly pay and discharge all of its taxes, assessments and other governmental
          charges (including any charged or assessed on the issuance of the Bonds)
          prior
          to the date on which penalties are attached thereto, establish adequate
          reserves
          for the payment of taxes and assessments and make all required withholding
          and
          other tax deposits; provided, however, that nothing herein contained shall
          be
          interpreted to require the payment of any tax, assessment or charge so
          long as
          its validity is being contested in good faith and by appropriate proceedings
          diligently conducted.

         

        7.4  Insurance.
          (a) Keep, and cause any Subsidiary to keep, all its property insured at all
          times with responsible insurance carriers against fire, theft and other
          risks in
          coverage, in form and amount consistent with industry standards and reasonably
          satisfactory to the Bank; (b) keep, and cause any Subsidiary to keep,
          adequately insured at all times in reasonable amounts with responsible
          insurance
          carriers against liability on account of damage to persons or property,
          and
          under all applicable worker’s compensation laws; (c) promptly deliver to
          the Bank certificates of insurance or any of those insurance policies required
          to be carried by the Applicant pursuant hereto, with appropriate endorsements
          designating the Bank as a named insured, mortgagee and loss payee as requested
          by the Bank; (d) deliver to the Bank evidence of flood insurance, if the
          Project is located in an area identified as a special flood hazard area,
          naming
          the Bank as mortgagee and an additional insured; and (e) cause each such
          insurance policy to contain a notice of cancellation clause providing for
          a
          mandatory 30-day notice to the Bank of cancellation, in form satisfactory
          to the
          Bank.

         

        7.5  Existence;
          Conduct of Business.
          Preserve and maintain, and cause any Subsidiary to preserve and maintain,
          its
          corporate existence, in good standing and all of its rights, privileges
          and
          franchises necessary or desirable in the normal conduct of its operations,
          except where failure to preserve and maintain any such right, privilege
          or
          franchise would not have a Material Adverse Effect.

         

        7.6  Maintenance
          of Properties; Books and Records.
          Keep
          all of its properties in good working condition, keep proper books and
          records
          in accordance with GAAP, and permit representatives of the Bank to inspect
          such
          properties and to examine and make reasonable extracts from its books and
          records during normal business hours upon reasonable prior notice, and
          notify
          the Bank promptly in writing of any proposed change in the location at
          which
          such books and records are maintained.

         

        
          
            
            

          

          
            -12-

            
              

            

          

          
            
            

          

        

         

        7.7  Compliance
          with Law.
          Comply
          with all applicable laws, rules, regulations and orders of all governmental
          authorities, except where failure to so comply does not have, and would
          not
          reasonably be expected to have, a Material Adverse Effect. Maintain all
          licenses, approvals, etc., necessary or proper for the Applicant to construct
          and operate the Project consistent with the Applicant’s past
          operations.

         

        7.8  Litigation.
          Promptly notify the Bank in writing as soon as the Applicant has knowledge
          thereof, of the institution or filing of any litigation, action, suit,
          claim,
          counterclaim, or administrative proceeding against, or investigation of,
          the
          Applicant or any Subsidiary or to which the Applicant or any Subsidiary
          is a
          party by or before any regulatory body or governmental agency (i) the
          outcome of which (A) could reasonably be expected to have a Material
          Adverse Effect or could reasonably be expected to materially and adversely
          affect the Applicant’s ability to fulfill its obligations hereunder, or
          (B) involves more than $1,000,000 and is not covered by insurance carried
          by Applicant in accordance with Section 7.4 hereof, or (ii) which
          questions the validity of this Letter of Credit Reimbursement Agreement,
          the
          Letter of Credit, the Bonds, the Bond Documents or the Collateral Documents,
          or
          any action taken or to be taken pursuant to the foregoing; and furnish
          or cause
          to be furnished to the Bank such information regarding the same as the
          Bank may
          request from time to time.

         

        7.9  Judgments.
          Promptly notify the Bank in writing as soon as the Applicant has knowledge
          thereof, of any judgment, order or award of any court, agency or other
          governmental agency or any arbitrator, (a) the outcome of which could reasonably
          be expected to have a Material Adverse Effect or could reasonably be expected
          to
          materially and adversely affect the Applicant’s ability to fulfill its
          obligations hereunder or which involves more than $1,000,000 unless adequately
          covered by insurance, or (b) renders invalid this Letter of Credit Reimbursement
          Agreement, the Letter of Credit or any action taken or to be taken pursuant
          to
          any of the foregoing, and furnish or cause to be furnished to the Bank
          such
          information regarding the same as the Bank may request.

         

        7.10  Notice.
          Promptly notify the Bank in writing of (a) any pending or future audits of
          the Applicant’s or any Subsidiary’s federal income tax returns by the Internal
          Revenue Service as soon as the Applicant has knowledge thereof, and the
          results
          of each such audit upon its completion; (b) any default by the Applicant or
          any Subsidiary in the performance of, or any material modifications of,
          any of
          the terms or conditions contained in any agreement, mortgage, indenture
          or
          instrument relating to borrowed money to which the Applicant or any Subsidiary
          is a party or which is binding upon the Applicant or any Subsidiary and
          of any
          default by the Applicant or any Subsidiary in the payment of any of its
          indebtedness; (c) any default by the Applicant in the performance of any of
          the terms or conditions contained in any of the Collateral Documents or
          any of
          the Bond Documents. The Applicant shall not, however, be required to so
          notify
          the Bank of potential or actual defaults under, or of modifications of
          terms or
          provisions of, those documents or agreements pertaining to its transactions
          in
          the ordinary course of business which do not have a Material Adverse Effect
          or
          constitute a Potential Default or an Event of Default.

         

        
          
            
            

          

          
            -13-

            
              

            

          

          
            
            

          

        

        
           

          7.11  Pension
            Default.
            With
            respect to each Plan, the Applicant will furnish the following to the
            Bank as
            soon as possible and in any event within thirty (30) days after the Applicant
            knows or has reason to know of (a) the occurrence of any Reportable Event
            with respect to such Plan or (b) the institution of proceedings or the
            taking of any other action by the Pension Benefit Guaranty Corporation
            or the
            Applicant or any Subsidiary to terminate, withdraw or partially withdraw
            from
            any Plan and, with respect to a Multiemployer Plan, the reorganization
            (as
            defined in Section 4241 of ERISA) or insolvency (as defined in
            Section 4245 of ERISA) of such Plan, and in addition to such notice,
            deliver to the Bank whichever of the following may be applicable: (i) a
            certificate of the President or chief fiscal officer of the Applicant
            setting
            forth details known to the Applicant as to such Reportable Event, together
            with
            a copy of any notice thereof that is required to be filed with the Pension
            Benefit Guaranty Corporation, or (ii) any notice delivered by the Pension
            Benefit Guaranty Corporation evidencing its intent to institute such
            proceedings
            or any notice to the Pension Benefit Guaranty Corporation that such Plan
            is to
            be terminated, as the case may be.

           

        

        7.12  Inspections.
          Upon
          request of the Bank, permit any officer, employee, accountant, attorney
          or other
          agent of the Bank upon reasonable notice and during regular business hours
          to
          (a) visit and inspect each of the premises of the Applicant and each
          Subsidiary, (b) examine, audit, copy and make extracts from each accounting
          record of the Applicant, and (c) discuss the business, operations, assets,
          affairs and condition (financial or other) of the Applicant and each Subsidiary
          with a responsible officer of the Applicant and with the independent accountants
          of the Applicant.

         

        7.13  Environmental
          Compliance.

         

        (a) Comply
          with all Environmental Laws except where the failure to comply could not
          reasonably be expected to have a Material Adverse Effect.

        

        (b) Promptly
          notify the Bank in the event of the Disposal of any Hazardous Substance
          at any
          property owned, leased or operated by the Applicant or any Subsidiary,
          or in the
          event of any Release, or threatened Release, of a Hazardous Substance,
          on, at or
          from any such Property, except when such Disposal or Release is in the
          ordinary
          course of the Applicant’s business and in compliance with all applicable
          Environmental Laws or could not reasonably be expected to have a Material
          Adverse Effect.

        

        (c) Deliver
          promptly to the Bank (i) copies of any non-routine, material documents
          received
          from the United States Environmental Protection Agency or any state, county
          or
          municipal environmental or health agency concerning the Applicant’s operations
          except documents of general applicability; and (ii) copies of any documents
          submitted by the Applicant to the United States Environmental Protection
          Agency
          or any state, county or municipal environmental or health agency concerning
          its
          operations, except submissions in the ordinary course of business. 

        

        7.14  Equity
          Contribution.
          Agrees
          to make an equity contribution to the Project equal to the difference between
          the total cost of the Project and the aggregate amount of the Bonds and
          the
          Mortgage Loan with such equity contributions to be made not later than
          the date
          the Project is completed.

        

        7.15  Other
          Acts.
          Execute
          and deliver, or cause to be executed and delivered, to the Bank all further
          documents and perform all other acts and things which the Bank deems necessary
          or appropriate to protect or perfect any mortgage or security interests
          in any
          property directly or indirectly securing payment of any indebtedness, or
          other
          obligations of the Applicant to the Bank, or to otherwise carry out the
          intent
          hereof.

         

        
          
            
            

          

          
            -14-

            
              

            

          

          
            
            

          

        

         

        SECTION
          8.   NEGATIVE
          COVENANTS.

         

        Until
          the
          expiration of the Letter of Credit and the payment in full of all sums
          due under
          this Letter of Credit Reimbursement Agreement, the Applicant shall not,
          and it
          shall cause each Subsidiary of the Applicant not to, without the prior
          written
          consent of the Bank, in each instance:

         

        8.1  Bond
          Documents.
          Enter
          into or consent to any amendments, modifications or changes to any of the
          Bond
          Documents or any of the Collateral Documents.

         

        8.2  Borrowed
          Money.
          Create,
          incur, assume or suffer to exist any liability for borrowed money except
          (i) to the Bank or HSBC Bank Canada, (ii) the Bonds and the Existing
          Bonds, (iii) the liabilities set forth on Schedule
          3
          annexed
          hereto, (iv) indebtedness owed by a Subsidiary of the Applicant or the
          Applicant to the Guarantor or any of the Guarantor’s Subsidiaries,
          (v) indebtedness which when aggregated with the indebtedness of the
          Subsidiaries of Applicant and the Guarantor and the Guarantor’s Subsidiaries
          will not be in excess of $3,000,000 outstanding at any one time incurred
          for
          capital leases of fixed assets or fixed asset purchases, and (vi) unsecured
          indebtedness that is subordinated to the Indebtedness of the Applicant
          to the
          Bank under this Letter of Credit Reimbursement Agreement in a manner reasonably
          satisfactory to the Bank.

         

        8.3  Encumbrances.
          Create,
          incur, assume or suffer to exist any mortgage, lien, security interest,
          pledge
          or other encumbrance on any of its property or assets, whether now owned
          or
          hereafter owned or acquired, except in favor of the Bank or a trustee for
          the
          benefit of the Bank and except for (a) any lease of any asset as a lessor
          in the
          ordinary course of its business and without interference with the conduct
          of its
          business or operations, (b) any pledge or deposit made by the Applicant or
          any Subsidiary of the Applicant in the ordinary course of its business
          (i) in connection with any workers’ compensation, unemployment insurance,
          social security or similar statute, regulation or other law or (ii) to
          secure the payment of any indebtedness, liability or obligation in connection
          with any letter of credit, bid, tender, trade or government contract, lease,
          surety, appeal or performance bond or statute, regulation or other law,
          or of
          any similar indebtedness, liability or obligation, not incurred in connection
          with the borrowing of any money or in connection with the deferral of the
          payment of the purchase price of any asset, (c) any attachment, levy or
          similar lien with respect to the Applicant or any Subsidiary of the Applicant
          arising in connection with any action or other legal proceeding so long
          as
          (i) the validity of the claim or judgment secured thereby is being
          contested in good faith by appropriate proceedings promptly instituted
          and
          diligently conducted, (ii) adequate reserves have been appropriately
          established for such claim or judgment, (iii) the execution or other
          enforcement of such attachment, levy or similar lien is effectively stayed
          and
          (iv) neither such claim or judgment nor such attachment, levy or similar
          lien has a Material Adverse Effect, (d) any statutory lien in favor of the
          United States for any amount paid to the Applicant or any Subsidiary of
          the
          Applicant as a progress payment pursuant to any government contract,
          (e) any statutory lien securing the payment of any tax, assessment, fee,
          charge, fine or penalty imposed by any government or political subdivision
          upon
          the Applicant or any Subsidiary of the Applicant or upon any of its respective
          assets but not yet due to be paid (excluding any lien arising under ERISA),
          (f)
          any statutory lien securing the payment of any claim or demand of any
          materialman, mechanic, carrier, warehouseman, garageman or landlord against
          the
          Applicant or any Subsidiary of the Applicant, but not yet due to be paid,
          (g) any reservation, exception, encroachment, easement, right-of-way,
          covenant, condition, restriction, lease or similar title exception or
          encumbrance affecting title to any real property of the Applicant or any
          Subsidiary of the Applicant but not interfering with the conduct of its
          business
          or operations, (h) liens listed on Schedule
          4
          hereto
          and (i) liens securing indebtedness permitted by clause (v) of
          Section 8.2 hereof.

         

        
          
            
            

          

          
            -15-

            
              

            

          

          
            
            

          

        

         

        8.4  Guaranties.
          Become
          a guarantor, surety or otherwise liable for the debts or other obligations
          of
          any other Person, whether by agreement to purchase the indebtedness of
          any other
          Person, or agreement for the furnishing of funds to any other Person through
          the
          purchase of goods, supplies or services (or by way of stock purchase, capital
          contribution, advance or loan) for the purpose of paying or discharging
          the
          indebtedness of any other Person or otherwise, except (i) as an endorser of
          instruments for the payment of money deposited to its bank account for
          collection in the ordinary course of business, (ii) as related to this
          transaction, (iii) guaranties of indebtedness to the Bank, and
          (iv) guaranties granted in the ordinary course of business by the Applicant
          in connection with ordinary course of business purchase or sale obligations
          of
          Applicant’s Subsidiaries under contracts for the purchase or sale of
          goods.

         

        8.5  Sale
          of Assets.
          Convey,
          sell, transfer, lease, lease and buyback, or sell and lease back during
          the term
          of this Letter of Credit Reimbursement Agreement the Project Facility (as
          defined within the definition of Project) or more than five percent (5%)
          in the
          aggregate of other property, assets or business of the Guarantor and its
          Subsidiaries on a Consolidated basis to any other Person except for the
          sales of
          inventory in the ordinary course of business, and sales of fixed assets
          no
          longer needed or in use.

         

        8.6  Investments
          and Loans.
          Make or
          suffer to exist any investments in, or loans or advances to, any other
          person,
          firm or corporation, including, without limitation, loans or advances to
          members, shareholders, directors, officers or employees, except
          (i) investments in the form of obligations of the United States of America
          or any agency thereof, (ii) advance payments or deposits for purchases in
          the ordinary course of business, (iii) any existing investments in, or
          existing
          or future advances to, any Subsidiary, and (iv) investments which are
          classified as Cash or Cash Equivalents under GAAP.

         

        8.7  Merger.
          Merge
          or consolidate with or into any other Person unless the Applicant or the
          Guarantor is the entity surviving after the merger or consolidation, or
          enter
          into any joint venture or partnership with any other Person. 

         

        8.8  Disposal
          of Hazardous Substances.
          Suffer,
          cause or permit the Disposal of Hazardous Substances at any property owned,
          leased or operated by the Applicant or any Subsidiary of Applicant, except
          in
          the ordinary course of business in accordance with applicable Environmental
          Laws.

         

        8.9  Change
          Fiscal Year.
          Change
          the fiscal year of the Applicant.

         

        
          
            
            

          

          
            -16-

            
              

            

          

          
            
            

          

        

         

        SECTION
          9.   EVENTS
          OF DEFAULT AND REMEDIES.

         

        9.1  Events.
          Any of
          the following events or conditions shall constitute an Event of Default
          hereunder:

         

        (i)  Nonpayment.
          Nonpayment within ten (10) days after the same becomes due, whether by
          acceleration or otherwise, of (A) principal of or interest on the Indebtedness
          or, (B) any fees, expenses or other amounts payable under this Letter of
          Credit
          Reimbursement Agreement.

         

        (ii)  Certain
          Covenants.
          A
          default by the Applicant in the observance of any of the covenants or agreements
          set forth in Section 8 of this Letter of Credit Reimbursement
          Agreement.

         

        (iii)  Insurance.
          A
          default by the Applicant in the performance of any obligation, term or
          condition
          set forth in Section 7.4 of this Letter of Credit Reimbursement
          Agreement.

         

        (iv)  Noncompliance.
          Other
          than as set forth in subparagraphs (i), (ii) and (iii) above, default by
          the
          Applicant in the performance of any obligation, term or condition of this
          Letter
          of Credit Reimbursement Agreement which is not remedied within thirty (30)
          days
          after notice thereof by the Bank to the Applicant.

         

        (v)  Voluntary
          Insolvency Proceedings.
          If the
          Applicant or any Subsidiary (i) shall file a petition or request for
          liquidation, reorganization, arrangement, adjudication as a bankrupt, relief
          as
          a debtor or other relief under the bankruptcy, insolvency or similar laws
          of the
          United States of America or any state or territory thereof or any foreign
          jurisdiction, now or hereafter in effect; (ii) shall make a general assignment
          for the benefit of creditors; (iii) shall consent to the appointment of a
          receiver or trustee for the Applicant or any Subsidiary or any of the
          Applicant’s or any Subsidiary’s assets, including, without limitation, the
          appointment of or taking possession by a “custodian” as defined in the federal
          Bankruptcy Code; (iv) shall make any, or send notice of any intended, bulk
          sale;
          or (v) shall execute a consent to any other type of insolvency proceeding
          (under
          the federal Bankruptcy Code or otherwise) or any formal or informal proceeding
          for the dissolution or liquidation of, or settlement of claims against
          or
          winding up of affairs of, the Applicant or any Subsidiary.

         

        (vi)  Involuntary
          Insolvency Proceedings.
          The
          appointment of a receiver, trustee, custodian or officer performing similar
          functions for the Applicant or any Subsidiary or any of the Applicant’s or any
          Subsidiary’s assets, including, without limitation, the appointment of or taking
          possession by a “custodian” as defined in the federal Bankruptcy Code; or the
          filing against the Applicant or any Subsidiary of a request or petition
          for
          liquidation, reorganization, arrangement, adjudication as a bankrupt or
          other
          relief under the bankruptcy, insolvency or similar laws of the United States
          of
          America or any state or territory thereof or any foreign jurisdiction,
          now or
          hereafter in effect; or the institution against the Applicant or any Subsidiary
          of any other type of insolvency proceeding (under the federal Bankruptcy
          Code or
          otherwise) or of any formal or informal proceeding for the dissolution
          or
          liquidation of, settlement of claims against or winding up of affairs of
          the
          Applicant or any Subsidiary, and the failure to have such appointment vacated
          or
          such filing, petition or proceeding dismissed within ninety (90) days after
          such
          appointment, filing or institution.

         

        
          
            
            

          

          
            -17-

            
              

            

          

          
            
            

          

        

         

        (vii)  Sale.
          The
          sale, assignment, transfer or delivery of all or substantially all of the
          assets
          of the Applicant; or the cessation by the Applicant as a going business
          concern.

         

        (viii)  Other
          Indebtedness.
          Nonpayment by the Applicant or the Guarantor when due of any indebtedness
          for
          borrowed money owing to the Bank or any indebtedness owing to any third
          party by
          the Applicant or any Subsidiary or the Guarantor in an amount equal to
          or
          exceeding $1,000,000 when due (or, if permitted by the terms of the applicable
          document, within any applicable grace period), whether such indebtedness
          shall
          become due by scheduled maturity, by required prepayment, by acceleration,
          by
          demand or otherwise, or the failure to perform any term, covenant or agreement
          on its part to be performed under any agreement or instrument (other than
          this
          Letter of Credit Reimbursement Agreement) evidencing or securing or relating
          to
          any indebtedness owing by the Applicant or any Subsidiary or the Guarantor
          in an
          amount equal to or exceeding $1,000,000 when required to be performed if
          the
          effect of such failure is to permit the holder to accelerate the maturity
          of
          such indebtedness.

         

        (ix)  Bond
          and Mortgage Loan Documents.
          The
          occurrence of an Event of Default under, or as defined in, any of the Bond
          Documents, any of the Existing Bond Documents, or under any mortgage loan
          documents hereafter entered into between the Applicant and the Bank providing
          for a three-year term loan secured, in whole or in part, by liens on the
          Project
          Facility (as defined within the definition of “Project”).

         

        (x)  Collateral,
          SWAP and Guaranty Documents.
          The
          occurrence of an Event of Default as defined in any of the Collateral Documents,
          any of the SWAP Documents, or the Parent Guaranty or termination of the
          Parent
          Guaranty.

         

        (xi)  Pension
          Default.
          

         

        (i) the
          Applicant or any of its Subsidiaries (or any officer or director thereof)
          shall
          engage in any “prohibited transaction” (as defined in Section 406 of ERISA
          or Section 4975 of the Code) involving any Plan,

        

        (ii) any
          “accumulated funding deficiency” (as defined in Section 302 of ERISA),
          shall exist with respect to any Plan,

        

        (iii) with
          respect to any Multiemployer Plan, the Applicant or any Commonly Controlled
          Entity fails to make a contribution required to be made thereto, or withdraws
          therefrom, where in either event the liability of Applicant or such Commonly
          Controlled Entity is in excess of $100,000.00,

        

        (iv) a
          Reportable Event shall occur with respect to, or proceedings shall commence
          to
          have a trustee appointed, or a trustee shall be appointed, to administer
          or to
          terminate, any Plan which is not a Multiemployer Plan, which Reportable
          Event or
          institution of proceedings is, in the reasonable opinion of the Bank, likely
          to
          result in the termination of such Plan for purposes of Title IV of ERISA
          and, in the case of a Reportable Event, the continuance of such Reportable
          Event
          unremedied for ten (10) days after notice of such Reportable Event pursuant
          to Section 4043(a), (c) or (d) of ERISA is given or the continuance of such
          proceedings for ten (10) days after commencement thereof, as the case may
          be,

         

        
          
            
            

          

          
            -18-

            
              

            

          

          
            
            

          

        

        

        (v) any
          Plan
          shall terminate for purposes of Title IV or ERISA, or

        

        (vi) any
          other
          similar event or condition shall exist which, together with all other events
          or
          conditions in clauses (i) through (v) above, if any, would subject
          Applicant or any of its Subsidiaries to any tax, penalty or other liabilities
          under ERISA which, in the aggregate, are material in relation to the business,
          operations, property or financial or other condition of Applicant and its
          Subsidiaries taken as a whole.

        

        (xii)  Representations.
          If any
          certificate, statement, representation, warranty or financial statement
          furnished by or on behalf of the Applicant or any Subsidiary pursuant to
          or in
          connection with this Letter of Credit Reimbursement Agreement or as an
          inducement to the Bank to enter into this Letter of Credit Reimbursement
          Agreement or any other lending agreement with the Applicant shall prove
          to have
          been false in any material respect at the time as of which the facts therein
          set
          forth were represented, or to have omitted any substantial contingent or
          unliquidated liability or claim against the Applicant or any Subsidiary
          required
          to be stated therein, or if on the date of the execution of this Letter
          of
          Credit Reimbursement Agreement there shall have been any materially adverse
          change in any of the facts disclosed by any such statement or certificate,
          which
          change shall not have been disclosed by the Applicant to the Bank at or
          prior to
          the time of such execution.

         

        (xiii)  Judgments.
          If any
          judgment or judgments (other than any judgment for which it is fully insured)
          against the Applicant or any Subsidiary in an aggregate amount in excess
          of
          $1,000,000 remains unpaid, unstayed on appeal, undischarged, unbonded or
          undismissed for a period of thirty (30) days after entry thereof.

         

        9.2  Remedies.
          Upon
          the happening of any Event of Default:

         

        (i)  The
          Bank
          may deliver to the Trustee, with a copy to the Applicant, a notice stating
          that
          an Event of Default has occurred and has not been cured by the Applicant
          or
          waived by the Bank, which notice will cause the acceleration of the
          Bonds.

         

        (ii)  The
          Bank
          may, in its sole discretion, by notice to the Applicant, declare all amounts
          in
          respect of the Indebtedness not then payable to be forthwith due and payable,
          and the same shall be due and payable without demand, presentment, protest
          or
          further notice of any kind, all of which are hereby expressly waived by
          the
          Applicant.

         

        (iii)  Upon
          the
          happening of an Event of Default under Section 9.1(v) or 9.1(vi) hereof,
          all amounts in respect of the Indebtedness shall immediately become due
          and
          payable without demand, presentment, protest or further notice of any kind,
          all
          of which are hereby expressly waived by the Applicant.

         

        
          
            
            

          

          
            -19-

            
              

            

          

          
            
            

          

        

         

        (iv)  The
          Bank’s rights and remedies with respect to the collateral granted to the Bank
          pursuant to the Collateral Documents shall be those of a secured party
          under the
          Uniform Commercial Code and under any other applicable law, as the same
          may from
          time to time be in effect, in addition to those rights granted herein and
          in any
          other agreement now or hereafter in effect between the Applicant and the
          Bank or
          relating to such collateral.

         

        (v)  The
          letter of credit fee specified in Section 3.2 of this Letter of Credit
          Reimbursement Agreement shall be increased to two percent (2%) of the Stated
          Amount effective as of the date of the occurrence of the Event of Default
          and
          without further notice to the Applicant by the Bank.

         

        SECTION
          10.   MISCELLANEOUS.

         

        10.1  Entire
          Agreement; Amendments.
          This
          Letter of Credit Reimbursement Agreement constitutes the entire agreement,
          and
          supersedes all prior agreements and understandings, both written and oral,
          between the parties with respect to the subject matter hereof and no
          modification, rescission, waiver, release or amendment of any provision
          of this
          Letter of Credit Reimbursement Agreement shall be made except by written
          agreement subscribed by duly authorized officers of the Applicant and the
          Bank.

         

        10.2  Additional
          Bonds.
          The
          Applicant shall not permit the issuance of any additional bonds under the
          Indenture without the prior written consent of the Bank.

         

        10.3  Delays
          and Omissions.
          No
          course of dealing and no delay or omission by the Bank in exercising any
          right
          or remedy hereunder or with respect to any Indebtedness shall operate as
          a
          waiver thereof or of any other right or remedy. The Bank may remedy any
          default
          by the Applicant hereunder or with respect to any other person, firm or
          corporation in a reasonable manner without waiving the default remedied
          and
          without waiving any other prior or subsequent default by the Applicant
          and shall
          be reimbursed for its expenses in so remedying such default. All rights
          and
          remedies of the Bank hereunder are cumulative and shall be in addition
          to any
          other remedy given under this Letter of Credit Reimbursement Agreement,
          any Bond
          Document or Collateral Document, or now or hereafter existing at law or
          in
          equity or by statute.

         

        10.4  Notices.
          Any
          notice or demand to be given hereunder shall be duly given if delivered
          or
          mailed as follows:

         

        
          	
                	To
                  the Applicant -	
                  Luminescent
                    Systems, Inc. 
                    130
                      Commerce Way

                    East
                      Aurora, NY 14052

                    Attn:
                      David C. Burney

                             Vice
                      President-Finance and
                      Treasurer

                  

                

        

        
           

          
            	
                  	with
                    a copy to -	
                    Hodgson
                      Russ LLP 
                      One
                        M&T Plaza, Suite 2000

                      Buffalo,
                        NY 14203

                      Attn:
                        Victoria J. Saxon

                    

                  

          

          
          

          
            
              
              

            

            
              -20-

              
                

              

            

            
              
              

            

          

        

        
           

          
            	
                  	To
                    the Bank -	
                    HSBC
                      Bank USA, National Association 
                      One
                        HSBC Center, Lobby Level

                      Buffalo,
                        NY 14203

                      Attn:
                        Mark F. Zeis

                                Senior
                        Vice President

                    

                  

          

           

          
            	
                  	with
                    a copy to -	
                    Phillips
                      Lytle LLP 
                      3400
                        HSBC Center

                      Buffalo,
                        NY 14203

                      Attn:
                        Raymond H. Seitz

                    

                  

          
 

        and
          shall
          be deemed effective, if delivered, upon delivery, three (3) Business Days
          after
          being delivered to a courier for overnight delivery, or, if mailed, five
          (5)
          Business Days after deposit in an official depository maintained by the
          United
          States Post Office for the collection of mail.

         

        10.5  Governing
          Laws.
          This
          Letter of Credit Reimbursement Agreement, the transaction described herein
          and
          the obligations of the Bank and the Applicant shall be governed by, and
          construed and interpreted in accordance with, the laws of the State of
          New York,
          as in effect from time to time, without regard to principles of conflicts
          of
          law.

         

        10.6  Term.
          This
          Letter of Credit Reimbursement Agreement shall remain in full force and
          effect
          until the later of the payment in full of the Bonds, the Indebtedness,
          any
          accrued and unpaid interest and all costs and expenses incurred by the
          Bank in
          connection with this Letter of Credit Reimbursement Agreement or the expiration
          of the Letter of Credit.

         

        10.7  Joint
          and Several.
          If more
          than one entity executes this Letter of Credit Reimbursement Agreement
          as the
          Applicant, any and all obligations hereunder shall be joint and
          several.

         

        10.8  Counterparts.
          This
          Letter of Credit Reimbursement Agreement may be executed simultaneously
          in two
          or more counterparts, each of which shall be deemed an original, and it
          shall
          not be necessary in making proof of this Letter of Credit Reimbursement
          Agreement to produce or account for more than one such counterpart.

         

        SECTION
          11.   INDEMNIFICATION.

         

        The
          Applicant hereby agrees to indemnify the Bank and hold the Bank harmless
          from
          and against any and all claims, damages, losses, liabilities, costs or
          expenses
          which may arise or be asserted against the Bank in connection with the
          Letter of
          Credit, other than claims, damages, losses, liabilities, costs and expenses
          arising from the Bank’s gross negligence or willful misconduct or arising out of
          a material misrepresentation or omission by the Bank with respect to the
          information set forth under the caption “THE LETTER OF CREDIT” in the Official
          Statement or in Appendix A
          to the
          Official Statement. The Applicant has reviewed and approved the Official
          Statement prepared by Prager, Sealy & Co. LLC and certifies to the Bank and
          Prager, Sealy & Co. LLC that such Official Statement contains no material
          errors or omissions with respect to the Company or the Project.

         

        
          
            
            

          

          
            -21-

            
              

            

          

          
            
            

          

        

         

        SECTION
          12.   LIMITATION
          OF LIABILITY.

         

        The
          Bank
          shall not be liable for:

         

        (i)  the
          validity, sufficiency or genuineness of any document or instrument presented
          to
          the Bank in connection with the Letter of Credit, even if such document
          or
          instrument should in fact prove to be in any or all respects invalid,
          insufficient, fraudulent or forged; or

         

        (ii)  any
          action taken or omitted by the Bank in good faith in connection with making
          or
          not making payment under the Letter of Credit, except if the Bank pays
          a
          materially non-conforming draw under the Letter of Credit.

         

        SECTION
          13.   JURY
          TRIAL WAIVER.

         

        THE
          APPLICANT AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
          WAIVE ANY
          RIGHT TO TRIAL BY JURY THAT THE APPLICANT OR THE BANK MAY HAVE IN ANY ACTION
          OR
          PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS LETTER OF CREDIT
          REIMBURSEMENT AGREEMENT OR THE TRANSACTIONS RELATED HERETO. THE APPLICANT
          REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS
          REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WILL NOT, IN THE EVENT
          OF
          LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. THE APPLICANT ACKNOWLEDGES
          THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS LETTER OF CREDIT REIMBURSEMENT
          AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION 13.

         

        SECTION
          14.   CONSENT
          TO JURISDICTION.

         

        THE
          APPLICANT AND THE BANK AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR
          ARISING
          OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE SUPREME COURT OF NEW YORK
          IN ERIE
          COUNTY, OR IN THE DISTRICT COURT OF THE UNITED STATES IN THE WESTERN DISTRICT
          OF
          NEW YORK, AND THE APPLICANT WAIVES PERSONAL SERVICE OF PROCESS AND AGREES
          THAT A
          SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN ANY SUCH COURT
          SHALL
          BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED BY
          REGISTERED OR CERTIFIED MAIL TO THE APPLICANT, OR AS OTHERWISE PROVIDED
          BY THE
          LAWS OF THE STATE OF NEW YORK OR THE UNITED STATES.

         

        [This
          Space Intentionally Left Blank]

        
          
            
            

          

          
            -22-

            
              

            

          

           

        

        IN
          WITNESS WHEREOF,
          the
          parties hereto have caused this Letter of Credit Reimbursement Agreement
          to be
          duly executed and delivered by their respective officers thereunto duly
          authorized as of the date first above written.

         

        
          	 	 	 
	 	
                  LUMINESCENT
                    SYSTEMS, INC.

                
	 
 	 
 	 
 
	
                	By:  
	 	
                  
                    

                  

                  Name: David
                    C. Burney 
                    Title: Vice
                      President-Finance and
                      Treasurer

                  

                

        

         

        
          
            	 	 	 
	 	
                    
                      HSBC
                        BANK USA, NATIONAL ASSOCIATION

                    

                  
	 
 	 
 	 
 
	
                  	By:  
	 	
                    
                      

                    

                    
                      Name: Mark
                        F. Zeis

                      Title: Senior
                        Vice President

                    

                  

          

           

        

        
          
            
            

          

          
            -23-

            
              

            

          

          
            
            

          

        

         

        EXHIBIT
          A

         

        HSBC
          BANK
          USA, NATIONAL ASSOCIATION

        452
          Fifth
          Avenue, 15th
          Floor

        New
          York,
          NY 10018

        ATTN:
          TRADE SERVICES

        

        IRREVOCABLE
          DIRECT PAY LETTER OF CREDIT NO. SDCMTN552148

        

        April 
             , 2007

         

        HSBC
          Bank
          USA, National Association,

        as
          Trustee under Trust Indenture

        with
          the
          Erie County Industrial Development Agency

        dated
          as
          of April 1, 2007

        452
          Fifth
          Avenue

        New
          York,
          NY 10018-2706

        Attn:
          Issuer Services

        

        (hereinafter
          “you” or “your”)

        

        Dear
          Sirs:

        

        At
          the
          request and on the instructions of our customer, Luminescent Systems, Inc.
          (“Applicant”), as account party, HSBC Bank USA, National Association
          (hereinafter “we” or “us”) hereby establishes this irrevocable letter of credit
          (“Letter of Credit”) in your favor as the trustee for the benefit of the holders
          of $6,000,000 Variable Rate Demand Industrial Development Revenue Bonds
          (Luminescent Systems, Inc. Project - Letter of Credit Secured) Series
          2007 (“Bonds”), issued by the Erie County Industrial Development Agency
          (“Issuer”) pursuant to a Trust Indenture, dated as of April 1, 2007 between
          the Issuer and HSBC Bank USA, National Association, as Trustee (“Indenture”).
          All capitalized terms used but not defined herein shall have the meanings
          set
          forth in the Indenture.

        

        We
          hereby
          irrevocably authorize you to draw on us in accordance with the terms and
          conditions hereinafter set forth, by one or more sight drafts in the form
          of
Exhibit 1
          (“Draft(s)”) in an aggregate amount not exceeding $6,084,000 as reduced and
          reinstated from time to time in accordance with the provisions hereof (“Stated
          Amount”), of which an aggregate amount not exceeding (i) $6,000,000 may be
          drawn with respect to (a) the unpaid principal amount of Bonds Outstanding,
          whether at maturity, acceleration or upon redemption (“Principal Drawing”) or
          (b) that portion of the purchase price corresponding to principal of Bonds
          Outstanding tendered for purchase or subject to mandatory purchase pursuant
          to
          Section 4.1 or 4.2 of the Indenture (“Bond Purchase Drawing - Principal”)
          and (ii) $84,000 may be drawn with respect to (a) the payment of up to
          fifty-one (51) days accrued interest on Bonds Outstanding calculated at
          the
          maximum interest rate of 10% based on a 365 or 366-day year for the actual
          number of days elapsed (“Interest Drawing”) or (b) that portion of the
          purchase price corresponding to interest on Bonds Outstanding tendered
          for
          purchase or subject to mandatory purchase pursuant to the
          Indenture (individually, a “Bond Purchase Drawing - Interest”,
          and collectively, with a Bond Purchase Drawing - Principal, a “Bond
          Purchase Drawing”).

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        Each
          drawing honored by us shall reduce the Stated Amount, subject only to
          reinstatement with respect to drawings as hereinafter provided.

        

        The
          Stated Amount with respect to an Interest Drawing shall be automatically
          and
          irrevocably reinstated by the amount of a Draft so drawn so long as you
          have not
          received from us, within seven (7) days from the date of the presentation
          to us
          of a Draft, written notice to the effect that an Event of Default under
          the
          Letter of Credit Reimbursement Agreement dated as of April 1, 2007, between
          the Applicant and us (“Reimbursement Agreement”), has occurred, and that the
          Stated Amount is not being reinstated.

        

        Upon
          receipt by us or by the Trustee as our agent of Bonds pledged in connection
          with
          any Bond Purchase Drawing pursuant to Section 4.1 or 4.2 of the Indenture,
          the Stated Amount shall be automatically and irrevocably reinstated by
          the
          amount of such Bond Purchase Drawing, and we will send you written notice
          confirming such receipt and reinstatement.

        

        The
          Stated Amount shall be decreased, and not reinstated, from time to time
          upon
          payment under this Letter of Credit for the redemption of the Bonds as
          provided
          in Article III of the Indenture by (i) with respect to principal, the
          aggregate principal amount of the Bonds so redeemed, and (ii) with respect
          to interest, the amount that bears the same proportion to $6,084,000 as
          the
          amount specified in the immediately preceding clause (i) bears to
          $6,000,000.

        

        Each
          Draft for each drawing under this Letter of Credit must bear on its face
          the
          clause “Drawn under HSBC Bank USA, National Association Irrevocable Direct Pay
          Letter of Credit No. SDCMTN552148,” be dated the Business Day of
          presentation and be accompanied by (i) if the drawing being made is a Bond
          Purchase Drawing pursuant to the Indenture, your completed and signed
          certificate in the form of Exhibit 2,
          dated
          the date of the accompanying Draft; or (ii) if the drawing being made is a
          Principal Drawing or an Interest Drawing, your completed and signed certificate
          in the form of Exhibit 3,
          dated
          the date of the accompanying Draft. Presentation of Draft(s) and such
          Certificate(s) shall be made at our office specified above or at any other
          office as may be designated by us by written notice delivered to you.
          Notwithstanding the provisions of applicable law, if you draw on this Letter
          of
          Credit at or prior to 1:00 p.m., New York City time, on a Business Day, and
          provided that such drawing conforms to the terms and conditions hereof,
          we shall
          pay you the amount specified, in immediately available funds, not later
          than
          1:00 p.m., New York City time, on the immediately following Business Day.
          If you draw on this Letter of Credit after 1:00 p.m., New York City time,
          on a Business Day, and provided that such drawing conforms to the terms
          and
          conditions hereof, we shall pay you the amount specified, in immediately
          available funds, not later than 1:00 p.m. on the second succeeding Business
          Day. Provided, however, if a drawing is a Bond Purchase Drawing, and is
          made by
          11:00 a.m., New York City time, on a Business Day, and conforms to the
          terms and conditions hereof, we shall pay you the amount specified, in
          immediately available funds, not later than 2:00 p.m. on the same Business
          Day.

         

        
          
            
            

          

          
            -2-

            
              

            

          

          
            
            

          

        

         

        Your
          Drafts and Certificates may be presented to us by telecopier if sent to
          telecopier number (212) 525-2186 (or to such other number as may be
          designated by us by written notice to you).

        

        This
          Letter of Credit shall automatically terminate at our aforesaid address
          on the
          close of business on the first to occur of the following dates (“Termination
          Date”): (i) the Stated Expiration Date, (ii) the date of the receipt
          of a certificate signed by the Trustee and the Applicant that none of the
          Bonds
          are Outstanding under the Indenture, (iii) the date a Substitute Letter of
          Credit is delivered to and accepted by the Trustee or (iv) fifteen (15)
          calendar days after the final maturity date of the Bonds. The Stated Expiration
          Date shall initially be April 1, 2017 and may be extended by us in our sole
          discretion at any time or from time to time, by our giving written notice
          of
          such extension to you specifying a new Stated Expiration Date.

        

        If
          a
          drawing by you hereunder does not, in any instance, conform to the terms
          and
          conditions of this Letter of Credit, we shall attempt to give you prompt
          notice
          that the purported drawing was not effected in accordance with the terms
          and
          conditions of this Letter of Credit, stating the reasons therefor and that
          we
          are holding the documents at your disposal or are returning the same to
          you, as
          we may elect. Upon being notified that the purported drawing was not effected
          in
          accordance with this Letter of Credit, you may attempt to correct any such
          nonconforming drawing if, and to the extent that, you are entitled (without
          regard to the provisions of this sentence) and able to do so.

        

        All
          payments by us hereunder will be with our own funds.

        

        This
          Letter of Credit sets forth in full the terms of our undertaking, and such
          undertaking shall not in any way be modified, amended, amplified or limited
          by
          reference to any document, instrument or agreement referred to herein or
          in
          which this Letter of Credit is referred to or to which this Letter of Credit
          relates, except for the draft certificates referred to herein (Exhibits 1,
          2, 3 and 4)
          and,
          for the purpose of certain definitions, the Indenture, and any such reference
          shall not be deemed to incorporate herein by reference, any document, instrument
          or agreement except for such draft certificates and definitions.

        

        This
          Letter of Credit is transferable in its entirety (but not in part) to any
          transferee who has succeeded you as Trustee under the Indenture. Transfer
          of
          this Letter of Credit to such transferee shall be evidenced by the presentation
          to us of this Letter of Credit accompanied by a certificate substantially
          in the
          form of Exhibit 4.

         

        Only
          you
          (or a transferee as permitted by the terms of this Letter of Credit) may
          make a
          drawing under this Letter of Credit.

        

        This
          Letter of Credit is subject to the Uniform Customs and Practice for Documentary
          Credits, (1993 Revision) International Chamber of Commerce Publication
          No. 500 (“UCP”) and, to the extent not in conflict with the UCP, by the
          laws of the State of New York (including, without limitation, the provisions
          of
          the Uniform Commercial Code) from time to time in effect.

         

        
          
            
            

          

          
            -3-

            
              

            

          

          
            
            

          

        

         

        Communications
          and notices with respect to this Letter of Credit shall be in writing and
          shall
          be addressed to us at our office specified above, specifically referring
          to the
          Irrevocable Direct Pay Letter of Credit Number of this Letter of Credit,
          and
          shall be addressed to you at your address specified above.

        

        We
          hereby
          agree with the drawer that each Draft drawn in compliance with the terms
          of this
          Letter of Credit will be duly honored on delivery of documents as specified
          herein if presented at our office indicated above on or before the Termination
          Date.

         

        
          	 	 	 
	 	
                  Very
                    truly yours,

                  

                  HSBC
                    BANK USA, NATIONAL ASSOCIATION

                
	 
 	 
 	 
 
	
                	By:  
	 	
                  
                    

                  
Name:   
	 	
                  Title: 
                    

                

        

        
           

          
            	 	 	 
	 	
                    and

                  
	 
 	 
 	 
 
	
                  	By:  
	 	
                    
                      

                    
Name:   
	 	
                    Title: 
                      

                  

          

           

          
            
              
              

            

            
              -4-

              
                

              

            

            
              
              

            

          

        

         

         EXHIBIT
          1

        

        SIGHT
          DRAFT

        

        
          	TO:	
                  HSBC
                    Bank USA, National Association

                  
                    452
                      Fifth Avenue, 15th
                      Floor

                    New
                      York, NY 10018

                     

                     

                    
                      _____________________,
                        ________

                    

                  

                

        

         

        For
          Value
          Received

        

        Pay
          on
          sight to
          __________________________________________________________________________________
          U.S. ______________________________________________ Dollars (U.S.
          $_____).

        

        Drawn
          under HSBC Bank USA, National Association Irrevocable Direct Pay Letter
          of
          Credit No. SDCMTN552148 dated April __, 2007.

         

        
          	 	 	 
	 	
                  
                    

                  

                  as
                    Trustee

                
	 
 	 
 	 
 
	
                	By:  
	 	
                  
                    

                  

                  Authorized
                    Trust Officer

                

        

        
          
            
            

          

          
            
            

            
              

            

          

           

        

        EXHIBIT
          2

        

        CERTIFICATE
          FOR PURCHASE OF BONDS OUTSTANDING TENDERED FOR PURCHASE OR SUBJECT TO MANDATORY
          PURCHASE PURSUANT TO THE TRUST INDENTURE DATED AS OF APRIL 1, 2007 OF THE
          ERIE
          COUNTY INDUSTRIAL DEVELOPMENT AGENCY WITH RESPECT TO ITS VARIABLE RATE
          DEMAND
          INDUSTRIAL DEVELOPMENT REVENUE BONDS (LUMINESCENT SYSTEMS, INC. PROJECT
          - LETTER
          OF CREDIT SECURED) SERIES 2007, UNDER IRREVOCABLE DIRECT PAY LETTER OF
          CREDIT
          NO. SDCMTN552148

         

        
          

        

        

        Any
          capitalized term used, but not defined herein, shall have its respective
          meaning
          as set forth in the Letter of Credit referred to above.

        

        The
          undersigned, a duly authorized trust officer of
          ________________________________, Trustee under the Trust Indenture (the
          “Trustee”, hereby certifies to HSBC Bank USA, National Association, as issuer of
          the Letter of Credit referred to above (“Bank”), that:

        

        
          	 	
                  (a)

                	
                  The
                    Trustee is the Trustee under the Trust Indenture for the holders
                    of the
                    Bonds.

                

        

        

        
          	 	
                  (b)

                	
                  The
                    Trustee is making a drawing under the Letter of Credit in the
                    amount of
                    (i) $______ with respect to payment of the principal portion of,
                    and
                    (ii) $______ with respect to payment of the interest portion of, the
                    purchase price of Bonds tendered for purchase or subject to mandatory
                    purchase pursuant to the Indenture.

                

        

        

        
          	 	
                  (c)

                	
                  The
                    amount of the Draft accompanying this Certificate does not exceed
                    the
                    Stated Amount in respect of principal or interest as set forth
                    in this
                    Certificate.

                

        

        

        
          	 	
                  (d)

                	
                  The
                    amount of the Draft accompanying this Certificate was computed
                    in
                    accordance with the terms and conditions of the Bonds and the
                    Indenture.

                

        

        

        
          	 	
                  (e)

                	
                  The
                    Letter of Credit referred to above has not expired pursuant to
                    its
                    terms.

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        IN
          WITNESS WHEREOF, the Trustee has executed and delivered this Certificate,
          dated
          the___ day of ______________, 20___.

        
           

          
            	 	 	 
	 	
                    
                      

                    

                  
	 
 	 
 	 
 
	
                  	By:  
	 	
                    
                      

                    

                    
                      [Name
                        and Title]

                    

                  

          

        

        

        * Trustee
          shall send a copy of each certificate to the Applicant at the address specified
          in the Reimbursement Agreement.

         

        
          
            
            

          

          
            -2-

            
              

            

          

          
            
            

          

        

         

        EXHIBIT
          3

        

        CERTIFICATE
          FOR PAYMENT OF PRINCIPAL OR INTEREST ON THE ERIE COUNTY INDUSTRIAL DEVELOPMENT
          AGENCY VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (LUMINESCENT
          SYSTEMS, INC. PROJECT - LETTER OF CREDIT SECURED) SERIES 2007, UNDER IRREVOCABLE
          DIRECT PAY LETTER OF CREDIT NO. SDCMTN552148

      

    

     

    
      

    

     

    Any
      capitalized term used, but not defined herein, shall have its respective meaning
      as set forth in the Letter of Credit referred to above.

    

    The
      undersigned, a duly authorized trust officer of ______________________________,
      as Trustee under the Trust Indenture (the “Trustee”), hereby certifies to HSBC
      Bank USA, National Association, as issuer of the Letter of Credit referred
      to
      above (“Bank”), that:

    

    (a) The
      Trustee is the Trustee under the Trust Indenture for the holders of the
      Bonds.

    

    (b) [Complete
      the applicable Section(s) below and strike the inapplicable
      Sections]

    

    A. Periodic
      Interest Drawing.
      The
      amount of the Interest Drawing is $_______ which equals the amount of interest
      on the Bonds which is due and payable with Letter of Credit proceeds on the
      payment date specified in the Draft accompanying this Certificate.

    

    B. Default
      Interest Drawing.
      An
      Event of Default as defined in the Indenture has occurred, and the amount of
      the
      Interest Drawing is $_________, which is the [lesser of (1) the amount of
      interest that is unpaid on the Bonds or (2)] the maximum amount permitted
      under the Letter of Credit for the payment of interest on Bonds outstanding
      on
      the date of the Draft.

    

    C. Periodic
      Principal Drawing.
      The
      amount of the Principal Drawing is $________,which equals the amount of
      principal of the Bonds which is due and payable on the payment date specified
      in
      the Draft accompanying this Certificate.

    

    D. Default
      Principal Drawing.
      An
      Event of Default as defined in the Indenture has occurred, and the amount of
      Principal Drawing is $___________, which is the amount of the principal of
      the
      Bonds which is due and unpaid.

    

    (c) The
      amount of the Draft accompanying this Certificate does not exceed the Stated
      Amount in respect of principal or interest as set forth in this
      Certificate.

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    

    (d) The
      amount of the Draft accompanying this Certificate was computed in accordance
      with the terms and conditions of the Bonds and the Indenture.

    

    (e) The
      Letter of Credit referred to above has not expired pursuant to its
      terms.

    

    IN
      WITNESS WHEREOF, the Trustee has executed and delivered this Certificate, dated
      the date of the accompanying Draft, to wit the _________ day of
      20__.

     

    
      
        
          	 	 	 
	 	
                  
                    

                  

                
	 
 	 
 	 
 
	
                	By
	 	
                  
                    

                  

                  
                    [Name
                      and Title]

                  

                

        

      

    

     

    
      
        

      

    

    
      
        *  Trustee
          shall send a copy of each certificate to the Applicant at the address specified
          in the Reimbursement Agreement.

      

    

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      4

    

    NOTICE
      OF
      TRANSFER TO SUCCESSOR TRUSTEE

    OF
      IRREVOCABLE DIRECT PAY LETTER

    OF
      CREDIT
      NO. SDCMTN552148

    

    HSBC
      Bank
      USA, National Association

    452
      Fifth
      Avenue, 15th
      Floor

    New
      York,
      NY 10018

    

    Attention: Trade
      Services Department

    

    Ladies/Gentlemen:

    

    Reference
      is made to that certain Irrevocable Direct Pay Letter of Credit
      No. SDCMTN552148 dated April __, 2007 which has been established by
      HSBC Bank USA, National Association, in favor of HSBC Bank USA, National
      Association, as Trustee (“Transferor”).

    

    The
      undersigned Transferor has transferred (and hereby confirms to you said
      transfer) all of its rights and obligations in and under said Letter of Credit
      to [Name and Address of Transferee] and confirms that Transferor no longer
      has
      any rights under or interest in said Letter of Credit.

    

    Transferor
      and Transferee have attached the dated, completed and signed instrument of
      transfer to the Letter of Credit and a copy of said instrument of transfer
      is
      attached hereto.

    

    Transferee
      hereby certifies that it is a duly authorized transferee under the terms of
      said
      Letter of Credit and is accordingly entitled, upon presentation of the documents
      called for therein, to receive payment thereunder.

    
       

      
        
          
            	 	 	 
	 	
                    
                      

                    

                    [Name
                      of Transferor]

                  
	 
 	 
 	 
 
	Dated:________________	By:

	 	
                    
                      

                    

                    
                      
                        [Name
                          and Title of authorized 

                         Trust
                          Officer of
                          Transferor]

                      

                    

                  

          

        

      

      
         

        
          
            
              	 	 	 
	 	
                      
                        

                      

                      [Name
                        of Transferee]

                    
	 
 	 
 	 
 
	Dated:________________	By:

	 	
                      
                        

                      

                      
                        
                          [Name
                            and Title of authorized 

                           Trust
                            Officer of
                            Transferee]

                        

                      

                    

            

          

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    EXHIBIT
      B

    

    COMPLIANCE
      CERTIFICATE

    

    LUMINESCENT
      SYSTEMS, INC.
      (“Applicant’) hereby certifies to HSBC
      BANK USA, NATIONAL ASSOCIATION (“Bank”)
      pursuant to the Letter of Credit Reimbursement Agreement between the Applicant
      and the Bank dated as of April 1, 2007 (“Agreement”), that:

    

    1. Capitalized
      terms not defined herein shall have the meanings set forth in the
      Agreement.

    

    2. The
      Applicant has complied with all the terms, covenants and conditions to be
      performed or observed by it contained in the Agreement.

    

    3. There
      exists no Potential Default or Event of Default on the date hereof.

    

    4. The
      representations and warranties contained in the Agreement, or in any
      certificate, document or financial or other statement furnished at any time
      thereunder are true, correct and complete in all material respects with the
      same
      effect as though such representations and warranties had been made on the date
      hereof, except to the extent that any such representation and warranty relates
      solely to an earlier date (in which case such representation and warranty shall
      be true, correct and complete on and as of such earlier date).

    

    5. There
      is
      no unsatisfied reimbursement obligation of the Applicant in connection with
      the
      Letter of Credit.

    

    6. As
      of the
      date hereof and for the period ending date set forth below, the computations,
      ratios and calculations set forth in this Certificate (which are the financial
      covenants set forth in the Parent Guaranty) are true and
      correct:
 

    Period
      Ending Date: _____________

    

    
      	
              Minimum
                Debt Service Coverage Ratio

            	 	 
	 	 	 
	
              Guarantor’s
                Debt Service Coverage Ratio

            	 	
              =
                _____:1.0

            
	 	 	 
	
              Required: 
                  2.50
                to 1.0

            	 	 
	 	 	 
	
              Maximum
                Debt-to-Worth Ratio

            	 	 
	 	 	 
	
              Consolidated
                Debt-to-Worth Ratio of the

            	 	
              =
                _____:1.0

            
	
              Guarantor
                and its Subsidiaries

            	 	 
	 	 	 
	
              Required:   
2.75
                to 1.0

            	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Minimum
                Interest Coverage Ratio

            	 	 
	 	 	 
	
              Ratio
                of Guarantor’s EBITDA to

            	 	 
	
              Consolidated
                interest expense

            	 	
              =
                _____:1.0

            
	
               

            	 	 
	
              Required:
                   4.00
                to 1.0

            	 	 
	 	 	 
	
              Minimum
                Current Ratio

            	 	 
	 	 	 
	
              Ratio
                of the Guarantor’s Consolidated Current 

            	 	
              =
                _____:1.0

            
	
              Assets
                to Consolidated Current Liabilities 

            	 	 
	 	 	 
	
              Required:    1.25
                to 1.0

            	 	 
	 	 	 
	
              Maximum
                Capital Expenditures

            	 	 
	 	 	 
	
              Capital
                expenditures in the in the aggregate for the 

            	 	
              $__________

            
	
              Guarantor
                and its Subsidiaries

            	 	 
	 	 	 
	
              Required:    In
                Guarantor’s fiscal year 2007: $10,000,000; and in fiscal years 2008 and
                thereafter: $5,000,000 in any one year

            	 	 
	 	 	 
	
              Maximum
                Leverage Ratio

            	 	 
	 	 	 
	
              Guarantor’s
                Leverage Ratio

            	 	
              =
                _____:1.0

            
	 	 	 
	
               Required:    2.50
                to 1.0

            	 	 

    

     

    WITNESS
      the
      signature of a duly authorized officer of the Applicant on __________,
      20__.

     

    
      
        
          
            	 	 	 
	 	
                    LUMINESCENT
                      SYSTEMS, INC.

                  
	 
 	 
 	 
 
	
                  	By
	 	
                    
                      

                    
Name:
	 	
                    
                      

                    

                    Title:

                    
                      

                    

                  

          

        

      

      
        

          
            
              
              

            

            
              
              

              
                

              

            

             

          

SCHEDULE
          1

      

    

    

    to

    Letter
      of Credit Reimbursement Agreement

    between

    HSBC
      BANK USA, NATIONAL ASSOCIATION

    and

    LUMINESCENT
      SYTEMS, INC.

    

    Definitions

    

    The
      following terms shall, for all purposes of this Letter of Credit Reimbursement
      Agreement, have the following meanings unless the context otherwise requires
      another meaning:

    

    “Agency”
-
      Erie
      County Industrial Development Agency, a corporate governmental agency
      constituting a body corporate and politic and a public benefit corporation
      of
      the State.

    

    “Agency
      Mortgage”
-
      collectively, the Building Loan Mortgage and the Project Loan
      Mortgage.

    

    “Anti-Terrorism
      Laws”
-
      any
      laws relating to terrorism or money laundering, including Executive Order
      No. 13224, the USA Patriot Act, the laws comprising or implementing the
      Bank Secrecy Act, and the laws administered by the United States Treasury
      Department’s Office of Foreign Asset Control (as any of the forgoing laws may
      from time to time be amended, renewed, extended or replaced).

    

    “Assignment
      of Agreements”
-
      the
      Assignment of Agreements made as of April 1, 2007 from the Applicant to the
      Bank, together with any modifications or amendments thereto.

    

    “Bank”
-
      HSBC
      Bank USA, National Association, and its successors and/or assigns.

    

    “Bank’s
      Prime Rate”
-
      the
      rate of interest publicly announced by the Bank from time to time as its prime
      rate and as a base rate for calculating interest on certain loans. The Bank’s
      Prime Rate may or may not be the most favorable rate charged by the Bank to
      its
      customers from time to time.

    

    “Bond
      Documents”
-
      collectively, the Indenture, the Tax Regulatory Agreement, the Guaranty
      Agreement, the Sale Agreement, the Building Loan Agreement, the Pledge
      Agreement, the Pledge and Assignment, the Agency Mortgage, the Letter of
      Representation and Indemnity Agreement, the Tax Compliance Agreement, the
      Official Statement, and the Bond Purchase Agreement and the Remarketing
      Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    

    “Bond
      Purchase Agreement”
-
      the
      Bond Purchase Agreement dated as of April 23, 2007 among the Agency, the
      Applicant and the Underwriter.

    

    “Bonds”
-
      Variable Rate Demand Industrial Development Revenue Bonds (Luminescent
      Systems, Inc. Project - Letter of Credit Secured) Series 2007, issued
      by the Agency in the aggregate principal amount of $6,000,000.00.

    

    “Building
      Loan Agreement”
-
      the
      Building Loan Agreement among the Agency, the Trustee, the Bank and the
      Applicant, dated as of April 1, 2007, together with any modifications or
      amendments thereto.

    

    “Building
      Loan Mortgage”
-
      the
      Building Loan Mortgage, Assignment of Rents and Security Agreement, dated as
      of
      April 1, 2007, made by the Applicant and the Agency in favor of the Bank,
      together with any modifications or amendments thereto.

    

    “Code”
-
      the
      Internal Revenue Code of 1986, as amended.

    

    “Collateral
      Documents”
-
      the
      Pledge Agreement, the Agency Mortgage, the Assignment of Agreements, the
      Environmental Compliance and Indemnification Agreement and the Security
      Agreement.

    

    “Commonly
      Controlled Equity”
-
      an
      entity, whether or not incorporated, which is under common control with the
      Applicant within the meaning of Section 414(b) or (c) of the
      Code.

    

    “Consolidated” -
      the
      consolidation of the accounts of the Guarantor and its Subsidiaries in
      accordance with GAAP, including principles of consolidation, consistent with
      those applied in the preparation of the Consolidated audited financial
      statements heretofore provided to the Bank.

    

    “Disposal”
-
      the
      intentional or unintentional abandonment, discharge, deposit, injection,
      dumping, spilling, leaking, storing, or placing of any Hazardous Substance
      so
      that such Hazardous Substance or any related constituent thereof may enter
      the
      Environment. The term “Disposal” also means the thermal destruction of the
      Hazardous Substance and the burning of such fuel for the purpose of recovering
      useable energy.

    

    “EBITDA”
      -
      For the
      relevant period, the Guarantor’s Consolidated earnings before interest, taxes,
      depreciation and amortization expenses.

    

    “Environmental
      Questionnaire”
-
      one
      or more questionnaires and all attachments thereto prepared by the Applicant
      and
      heretofore delivered to the Bank concerning (i) activities and conditions
      affecting the environment at the Property or (ii) the enforcement or
      possible enforcement of any of the Environmental Laws against the
      Applicant.

    
      
        
        

      

      
        -2-

        
          

        

      

       

    

    

    “Environmental
      Compliance and Indemnification Agreement”
-
      the
      Environmental Compliance and Indemnification Agreement from the Applicant to
      the
      Bank and the Trustee dated as of April 1, 2007, together with any
      modifications or amendments thereto.

    

    “Environmental
      Laws”
-
      All
      federal, state and local environmental, land use, zoning, health, chemical
      use,
      safety and sanitation laws, statutes, ordinances, regulations, codes and rules
      relating to the protection of the Environment and/or governing the use, storage,
      treatment, generation, transportation, processing, handling, production or
      disposal of Hazardous Substances and the policies, guidelines, procedures,
      interpretations, decisions, orders and directives of federal, state and local
      governmental agencies and authorities with respect thereto to the extent that
      such rules, regulations, policies, guidelines, interpretations, decisions,
      orders and directives are published or otherwise available to the public or
      are
      otherwise known by or available to the Applicant or any of its
      Subsidiaries.

    

    “Environmental
      Permits”
-
      All
      licenses, permits, approvals, authorizations, consents or registrations required
      by any applicable Environmental Laws and all applicable judicial and
      administrative orders in connection with ownership, lease, purchase, transfer,
      closure, use and/or operation of any property for the storage, treatment,
      generation, transportation, processing, handling, production or disposal of
      Hazardous Substances or the sale, transfer or conveyance of any such
      property.

    

    “ERISA”
-
      Employee Retirement Income Security Act of 1974, as amended.

    

    “Event
      of Default”
-
      an
      event or condition as specified in Section 9.1 of this Letter of Credit
      Reimbursement Agreement.

    

    “Executive
      Order No. 13224”
-
      the
      Executive Order No. 13224 on Terrorist Financing, effective
      September 24, 2001, as the same has been, or shall hereafter be, amended,
      renewed, extended or replaced.

    

    “Existing
      Bonds”
-
      the
      following currently outstanding bond issues:

    

    
      	 	
              (i)

            	
              The
                $7,000,000 Adjustable Rate Demand Industrial Development Revenue
                Bonds
                (1999 Luminescent Systems, Inc. Project) issued by the Erie County
                Industrial Development Agency; and

            

    

    

    
      	 	
              (ii)

            	
              The
                $7,250,000 Industrial Facility Revenue Bonds (Luminescent Systems,
                Inc.
                Issue - Series 1998) issued by the Business Finance Authority of
                the State
                of New Hampshire.

            

    

    

    “Existing
      Bond Documents”
-
      the
      bond, collateral, letter of credit reimbursement agreement and other documents
      executed and delivered in connection with the issuance of the Existing
      Bonds.

    

    “Facility”
-
      the
      Premises together with the improvements made thereto and the furniture, fixtures
      and equipment installed thereon in connection with the Project.

    
      
        
        

      

      
        -3-

        
          

        

      

       

    

    

    “GAAP”
-
      as of
      the date of any determination, generally accepted accounting principles as
      promulgated by the Financial Accounting Standard’s Board and/or the American
      Institute of Certified Public Accountants, consistently applied and maintained
      throughout the relevant periods and from period to period.

    

    “Guarantor”
-
      Astronics Corporation.

    

    “Guaranty
      Agreement”
-
      the
      Guaranty Agreement from the Applicant to the Trustee dated as of April 1,
      2007, together with any modifications or amendments thereto.

    

    “Hazardous
      Substance”
-
      without limitation, any explosives, radon, radioactive materials, asbestos,
      urea
      formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum
      products, methane, hazardous materials, hazardous wastes, hazardous or toxic
      substances or related materials as defined in the Comprehensive Environmental
      Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section
      9601, et
      seq.),
      the
      Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801,
      et
      seq.),
      the
      Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901,
      et
      seq.),
      Articles 15 and 27 of the New York State Environmental Conservation Act or
      any other applicable Environmental Law, and in the regulations promulgated
      pursuant thereto.

    

    “Indenture”
-
      the
      Trust Indenture dated as of April 1, 2007 between the Agency and the
      Trustee entered into in connection with the issuance, delivery and payment
      of
      the Bonds and the security for the Bonds, together with any modifications or
      amendments thereto.

    

    “Letter
      of Representation and Indemnity Agreement”
-
      the
      Letter of Representation and Indemnity Agreement dated the date of delivery
      of
      the Bonds by the Applicant to the Agency, the Underwriter, the Trustee and
      the
      Bank.

    

    “Material
      Adverse Effect”
-
      A
      material adverse effect on the business, operations or financial condition
      of
      the Applicant and its Subsidiaries taken as a whole.

    

    “Multiemployer
      Plan”
-
      A
      Plan which is a multiemployer plan as defined in Section 4001(a)(3) of
      ERISA.

    

    “Official
      Statement”
-
      the
      Official Statement dated April 23, 2007 delivered in connection with the
      issuance and delivery of the Bonds.

    

    “Parent
      Guaranty”
-
      The
      guaranty agreement from Astronics Corporation to the Bank dated as of
      April 1, 2007, together with any modifications or amendments
      thereto.

    

    “Person”
-
      Any
      individual, corporation, partnership, limited liability company, joint venture,
      trust, unincorporated association, government or political subdivision or other
      entity, body, organization or group.

    
      
        
        

      

      
        -4-

        
          

        

      

       

    

    

    “Plan”
-
      any
      employee benefits plan which is covered by Title IV of ERISA and in respect
      of which the Applicant or a Common Controlled Entity is an “employer” as defined
      in Section 3(5) of ERISA, each of which Plans is listed on Schedule 2
      to this
      Letter of Credit Reimbursement Agreement.

    

    “Pledge
      Agreement”
-
      the
      Pledge and Security Agreement given by the Applicant to the Bank dated as of
      April 1, 2007, together with any modifications or amendments
      thereto.

    

    “Pledge
      and Assignment”
-
      the
      Pledge and Assignment given by the Agency to the Trustee and the Bank dated
      as
      of April 1, 2007, together with any modifications or amendments
      thereto.

    

    “Potential
      Default”
-
      Any
      event or occurrence which with the giving of notice, or passage of time, or
      both, constitutes an Event of Default.

    

    “Premises”
-
      the
      real property owned by the Agency, and in which Applicant has an interest,
      located at 130 Commerce Way, East Aurora, Erie County, New York, as more
      particularly described in Exhibit ”A”
      to the
      Agency Mortgage.

    

    “Project”
-
      (a)
      (i) the acquisition of an interest in a portion of an approximately
      14.9 acre parcel of improved real property (the “Land”) located at
      130 Commerce Way, in the Village of East Aurora, Erie County, (ii) the
      construction of an approximately 57,600 square foot addition to the existing
      industrial facility located on the Land and expansion of parking areas for
      use
      for the design and manufacturing of aerospace lighting and electronics and
      related purposes (the “Facility”), and (iii) the acquisition of and
      installation in the Facility of various machinery, equipment and furnishings
      (the “Equipment”) (the Land, Facility and Equipment are hereinafter collectively
      referred to as the “Project Facility”); (b) the financing of all or a
      portion of the costs of the foregoing by the issuance of the Agency’s tax-exempt
      and taxable industrial development revenue the bonds; (c) the granting of
      certain other financial assistance in the form of exemptions from real property
      tax, mortgage recording tax and sales and use tax (collectively with the bonds,
      the “Financial Assistance”); and (d) the sale of the Project Facility to
      the Applicant pursuant to an agreement, all for use by the Applicant in the
      manufacture of aircraft lighting and keyboards.

    

    “Project
      Loan Mortgage”
-
      the
      Project Loan Mortgage, Assignment of Rents and Security Agreement, dated as
      of
      April 1, 2007, made by the Applicant and the Agency in favor of the Bank,
      together with any modifications or amendments thereto.

    

    “Release”
-
      Release as defined in Section 101(22) of the Comprehensive Environmental
      Response, Compensation and Liability Act of 1980, 42 U.S.C.
      Section 9601(22), and the regulations promulgated thereunder.

    

    “Remarketing
      Agreement”
-
      the
      Remarketing Agreement dated as of April 1, 2007 between the Applicant and
      the Underwriter.

    
      
        
        

      

      
        -5-

        
          

        

      

       

    

    

    “Reportable
      Event”
-
      any
      event described in Section 4043 of ERISA or in regulations issued
      thereunder.

    

    “Sale
      Agreement”
-
      the
      Installment Sale Agreement dated as of April 1, 2007 between the Agency and
      the Applicant pursuant to which the Agency has agreed to sell substantially
      all
      of its right, title and interest in the Facility to the Applicant, together
      with
      any modifications or amendments thereto.

    

    “Securities”
-
      as
      defined in the Uniform Commercial Code of the State, as in effect from time
      to
      time.

    

    “Security
      Agreement”
-
      the
      Security Agreement, dated as of April 1, 2007, made by the Applicant in
      favor of the Bank, together with any modifications or amendments
      thereto.

    

    “State”
-
      State
      of New York.

    

    “Stated
      Amount” -
      as such
      term is defined in the Letter of Credit, a form of which is attached hereto
      as
Exhibit A.

    

    “Subsidiary”
-
      Any
      corporation of which at least 50% of the voting stock is owned by a Person
      directly or indirectly through one or more Subsidiaries, and any limited
      liability company of which at least 50% of the membership interests are owned
      by
      a Person directly or indirectly through one or more Subsidiaries.

    

    “SWAP
      Documents”
-
      any
      SWAP Agreement now or hereafter entered into between the Bank and the Applicant,
      together with the schedules, exhibits, confirmations and other documents
      executed or delivered in connection therewith.

    

    “Tax
      Compliance Agreement”
-
      the
      Tax Compliance Agreement among the Agency, the Applicant and the Trustee dated
      as of the date of issuance of the Bonds, together with any modifications or
      amendments thereto.

    

    “Trustee”
-
      HSBC
      Bank USA, National Association, in its capacity as trustee.

    

    “Underwriter”
-
      Prager, Sealy & Co., LLC, in its capacity as remarketing agent.

    

    “USA
      Patriot Act”
-
      The
      Uniting and Strengthening America by Providing Appropriate Tools Required to
      Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the
      same has been, or shall hereafter be, renewed, extended, amended or
      replaced.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      2

    

    PENSION
      PLANS

    

    Atro
      Companies Profit Sharing/401K Plan

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3

    

    LIABILITIES

    

    Unsecured
      loan owed by Astronics Corporation to Empire State Development Corporation
      in
      the outstanding principal amount of $65,965.73.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      4

    

    PERMITTED
      ENCUMBRANCES

     

    “Permitted
      Encumbrances”
means
      (A) exceptions to title set forth in the title insurance policy delivered to
      the
      Bank on the date of issuance and delivery of the Bonds including the liens
      securing the Existing Bonds; (B) the Agency Mortgage; (C) the Sale
      Agreement; (D) the Pledge and Assignment; (E) utility, access and
      other easements and rights-of-way, restrictions and exceptions that do not
      materially impair the utility or the value of the property affected thereby
      for
      the purposes for which it is intended; (F) mechanics’, materialmen’s,
      warehousemen’s carriers’ and other similar liens to the extent permitted by
      Section 6.8 of the Sale Agreement; (G) liens and encumbrances that are
      approved in writing by the Bank; and (H) liens for taxes not yet
      delinquent.UNLIMITED
                  CONTINUING GUARANTY

                (Corporation,
                  Individual, Proprietorship, Partnership)

                 

              

      

      

      Date: As
        of April 1,
        2007                         

      
        	 	 
	
                NAME

              	
                STATE
                  OF INCORPORATION, IF APPLICABLE

              
	
                ASTRONICS CORPORATION

              	
                New
                  York

              

      

      
        	
                NO.
                  AND STREET

                 

                130
                  Commerce Way

              

      

      
        	
                CITY,
                  VILLAGE OR TOWN

              	
                COUNTY

              	
                STATE

              	
              
	 	 	 	 
	
                East
                  Aurora

              	
                Erie

              	
                New
                  York

              	
                (GRANTOR)

              

      

      
        	 	
                LENDING
                  OFFICE, DEPARTMENT, OR
                  DIVISION

              
	 	 
	
                HSBC
                  Bank USA, National Association 

              	
                Commercial
                  Banking
                  Department

              

      

      
        	
                NO. AND STREET

              	
                CITY

              	
                STATE

              	 
	 	 	 	 
	One
                HSBC Center	
                Buffalo

              	
                New
                  York

              	
                (BANK)

              

      

       

      
        	1.	
                Guaranty
                  of Payment.

              

      

       

      
        	
              	(a)	
                Guarantor
                  hereby unconditionally guarantees the full and prompt payment to
                  BANK when
                  due, whether by acceleration or otherwise, of any and all Indebtedness
                  (as
                  hereinafter defined) of Luminescent Systems, Inc. (Debtor) to
                  BANK.

              

      

       

      
        	
              	(b)	
                As
                  used in this Guaranty, “Indebtedness” shall mean any and all indebtedness
                  and other liabilities of Debtor to BANK of every kind and character
                  and
                  all extensions, renewals and replacements thereof, including, without
                  limitation, all unpaid accrued interest thereon and all costs and
                  expenses
                  payable as hereinafter provided: (i) whether now existing or
                  hereafter incurred; (ii) whether direct, indirect, primary, absolute,
                  secondary, contingent, secured, unsecured, matured or unmatured,
                  by
                  guarantee or otherwise; (iii) whether such indebtedness is from time
                  to time reduced and thereafter increased, or entirely extinguished
                  and
                  thereafter reincurred; (iv) whether such indebtedness was originally
                  contracted with BANK or with another or others; (v) whether or not
                  such indebtedness is evidenced by a negotiable or non-negotiable
                  instrument or any other writing; and (vi) whether such indebtedness
                  is contracted by Debtor alone or jointly or severally with another
                  or
                  others.

              

      

       

      
        	
              	(c)	
                Guarantor
                  acknowledges that valuable consideration supports this Guaranty,
                  including, without limitation, any commitment to lend, extension
                  of credit
                  or other financial accommodation, whether heretofore or hereafter
                  made by
                  BANK to Debtor; any extension, renewal or replacement of any Indebtedness,
                  any forbearance with respect to any Indebtedness or otherwise;
                  any
                  cancellation of an existing guaranty; any purchase of any of Debtor’s
                  assets by BANK; or any other valuable
                  consideration.

              

      

       

      
        	2.	
                BANK’s
                  Costs and Expenses.
                  Guarantor agrees to pay on demand all costs and expenses of every
                  kind
                  incurred by BANK: (a) in enforcing this Guaranty; (b) in
                  collecting any Indebtedness from Debtor or Guarantor; (c) in
                  realizing upon or protecting any collateral for this Guaranty or
                  for
                  payment of any Indebtedness; and (d) for any other purpose related to
                  the Indebtedness or this Guaranty. “Costs and expenses” as used in the
                  preceding sentence shall include, without limitation, the actual
                  attorneys’ fees incurred by BANK in retaining counsel for advice, suit,
                  appeal, any insolvency or other proceedings under the Federal Bankruptcy
                  Code or otherwise, or for any purpose specified in the preceding
                  sentence.

              

      

       

      
        	3.	
                Nature
                  of Guaranty: Continuing, Absolute and
                  Unconditional.

              

      

       

      
        	
              	(a)	
                This
                  Guaranty is and is intended to be a continuing guaranty of payment
                  of the
                  Indebtedness (irrespective of the aggregate amount thereof and
                  whether or
                  not the Indebtedness from time to time exceeds the amount of this
                  Guaranty, if limited), independent of, in addition and without
                  modification to, and does not impair or in any way affect, any
                  other
                  guaranty, indorsement, or other agreement in connection with the
                  Indebtedness, or in connection with any other indebtedness or liability
                  to
                  BANK, or collateral held by BANK therefor or with respect thereto,
                  whether
                  or not furnished by Guarantor. This Guaranty and Guarantor’s obligations
                  hereunder shall not be modified, terminated, impaired or in any
                  way
                  affected by the execution, delivery or performance by Guarantor,
                  Debtor or
                  any other person of any other guaranty, indorsement or other agreement
                  or
                  the delivery of collateral therefor. Until such time as the Indebtedness
                  has been irrevocably paid in full. Guarantor waives any claim,
                  remedy or
                  other right which Guarantor might now have or hereafter acquire
                  against
                  Debtor or any other person that is primarily or contingently liable
                  for
                  the Indebtedness including, without limitation, any right of subrogation,
                  reimbursement, exoneration, contribution, indemnification, or any
                  right to
                  participate in any claim or remedy of BANK against Debtor or any
                  collateral therefor which BANK now has or hereafter acquires, whether
                  or
                  not such claim, remedy or right arises in equity, or under contract,
                  statute, or common law.

              

      

       

      
        	
              	(b)	
                This
                  Guaranty is absolute and unconditional and shall not be changed
                  or
                  affected by any representation, oral agreement, act or thing whatsoever,
                  except as herein provided. This Guaranty is intended by Guarantor
                  to be
                  the final, complete and exclusive expression of the agreement between
                  Guarantor and BANK. Guarantor expressly disclaims any reliance
                  on any
                  course of dealing or usage of trade or oral representation of BANK
                  including, without limitation, representations to make loans to
                  Debtor or
                  enter into any other agreement with Debtor or Guarantor. No modification
                  or amendment of any provision of this Guaranty and no waiver of
                  any right
                  by BANK shall be effective unless in writing and signed by a duly
                  authorized officer of BANK.

              

      

       

      
        	4.	
                Certain
                  Rights and Obligations.

              

      

       

      
        	
              	(a)	
                Guarantor
                  authorizes BANK, without notice, demand or additional reservation
                  of
                  rights against Guarantor and without affecting Guarantor’s obligations
                  hereunder, from time to time: (i) to renew, refinance, modify,
                  subordinate, extend, increase, accelerate, or otherwise change
                  the time
                  for payment of, the terms of or the interest on the Indebtedness
                  or any
                  part thereof; (ii) to accept from any person or entity and hold
                  collateral for the payment of the Indebtedness or any part thereof,
                  and to
                  exchange, enforce or refrain from enforcing, or release such collateral
                  or
                  any part thereof; (iii) to accept and hold any indorsement or
                  guaranty of payment of the Indebtedness or any part thereof or
                  any
                  negotiable instrument or other writing intended by any party to
                  create an
                  accord and satisfaction with respect to the Indebtedness or any
                  part
                  thereof, and to discharge, terminate, release, substitute, replace
                  or
                  modify any such obligation of any such indorser or guarantor, or
                  any
                  person or entity who has given any security interest in any collateral
                  as
                  security for the payment of the Indebtedness or any part thereof,
                  or any
                  other person or entity in any way obligated to pay the Indebtedness
                  or any
                  part thereof, and to enforce or refrain from enforcing, or compromise
                  or
                  modify, the terms of any obligation of any such indorser, guarantor,
                  person or entity; (iv) to dispose of any and all collateral securing
                  the Indebtedness in any manner as BANK, in its sole discretion,
                  may deem
                  appropriate, and to direct the order or manner of such disposition
                  and the
                  enforcement of any and all indorsements and guaranties relating
                  to the
                  Indebtedness or any part thereof as BANK, in its sole discretion,
                  may
                  determine; and (v) to determine the manner, amount and time of
                  application of payments and credits, if any, to be made on all
                  or any part
                  of any component or components of the Indebtedness (whether principal,
                  interest, costs and expenses, or otherwise), including, without
                  limitation, if this Guaranty is limited in amount, to make any
                  such
                  application to Indebtedness, if any, in excess of the amount of
                  this
                  Guaranty.

              

      

       

      
        	
              	(b)	
                If
                  any default shall be made in the payment of any Indebtedness, Guarantor
                  hereby agrees to pay the same in full: (i) without deduction by
                  reason of any setoff, defense or counterclaim of Debtor; (ii) without
                  requiring protest, presentment or notice of non-payment or notice
                  of
                  default to Guarantor, to Debtor or to any other person; (iii) without
                  demand for payment or proof of such demand; (iv) without requiring
                  BANK to resort first to Debtor (this being a guaranty of payment
                  and not
                  of collection) or to any other guaranty or any collateral which
                  BANK may
                  hold; (v) without requiring notice of acceptance hereof or assent
                  hereto by BANK; and (vi) without requiring notice that any
                  Indebtedness has been incurred or of the reliance by BANK upon
                  this
                  Guaranty; all of which Guarantor hereby
                  waives.

              

      

       

      
        
          
          

        

        
          Page
            1

          
            

          

        

        
          
          

        

      

       

      
        	
              	(c)	
                Guarantor’s
                  obligation hereunder shall not be affected by any of the following,
                  all of
                  which Guarantor hereby waives: (i) any failure to perfect or continue
                  the perfection of any security interest in or other lien on any
                  collateral
                  securing payment of any Indebtedness or Guarantor’s obligation hereunder;
                  (ii) the invalidity, unenforceability, propriety of manner of
                  enforcement of, or loss or change in priority of any such security
                  interest or other lien; (iii) any taking, holding, continuation,
                  collection, modification, leasing, impairment, surrender or abandonment
                  of, or any failure to protect, preserve or insure, any such collateral;
                  (iv) any delay in the exercise or waiver of, any failure to exercise,
                  or any forbearance in the exercise of, any right or remedy of BANK
                  or any
                  person (including, without limitation, those remedies described
                  in
                  Section 4(c)(iii) of this Guaranty) against Guarantor, Debtor or any
                  person or relating to the Indebtedness or any part thereof or the
                  collateral therefore; (v) failure of Guarantor to receive notice of
                  any intended disposition of such collateral; (vi) any defense arising
                  by reason of the cessation from any cause whatsoever of liability
                  of the
                  Debtor including, without limitation, any failure, delay, waiver,
                  forbearance, negligence or omission by BANK in enforcing its claims
                  against the Debtor or any collateral therefor including, without
                  limitation, any failure to make, prove, or vote any claim relating
                  to the
                  Indebtedness or any collateral therefor in any case or proceeding
                  pursuant
                  to the Federal Bankruptcy Code or any similar law, or any satisfaction of
                  the Indebtedness or any part thereof by reason of the failure of
                  BANK to
                  recover against any collateral therefor or the failure of BANK
                  to obtain a
                  judgment for any deficiency; (vii) any release, settlement,
                  composition, adjustment, compromise, replacement, cancellation,
                  discharge,
                  assignment, sale, exchange, conversion, participation or other
                  transfer or
                  disposition of any obligation of Debtor or of any collateral therfor;
                  (viii) the invalidity or unenforceability of any of the Indebtedness;
                  (ix) the creation of any security interest, lien or other encumbrance
                  in favor of any person other than BANK; (x) any refusal or failure of
                  BANK or any other person prior to the date hereof or hereafter
                  to grant
                  any additional loan or other credit accommodation to Debtor or
                  BANK’s or
                  any other party’s receipt of notice of such refusal or failure;
                  (xi) any refusal or failure of BANK or any other person to provide to
                  Guarantor any information relating to Debtor, any other guarantor,
                  indorser, or any person or entity who has given any collateral
                  as security
                  for the payment of the Indebtedness or any information relating
                  to
                  Debtor’s or such guarantor’s, indorser’s, person’s or entity financial
                  condition, business or assets, or if such information is provided,
                  to
                  provide such information completely and accurately; (xii) any change
                  in the ownership or membership of Guarantor or Debtor; (xiii) the
                  expiration of the period of any statute of limitations with respect
                  to any
                  lawsuit or other legal proceeding against Debtor or any person
                  in any way
                  related to the Indebtedness or a part thereof or any collateral
                  therefor;
                  or (xiv) any other thing or circumstance which might otherwise
                  constitute a defense to Guarantor’s obligation
                  hereunder.

              

      

       

      
        	5.	
                Intentionally
                  Omitted.

              

      

       

      
        	6.	
                Guaranty
                  of Performance.
                  Guarantor also guarantees the full, prompt and unconditional performance
                  of all obligations and agreements of every kind owed or hereafter
                  to be
                  owed by Debtor to BANK. Every provision for the benefit of BANK
                  contained
                  in this Guaranty shall apply to the guaranty of performance given
                  in this
                  paragraph.

              

      

       

      
        	7.	
                Termination.
                  This Guaranty shall remain in full force and effect as to each
                  Guarantor
                  until the officer in charge of the Lending Office, Department or
                  Division
                  of BANK indicated above shall actually receive from such Guarantor
                  written
                  notice of its discontinuance, or notice of the death or judicial
                  declaration of incompetency of such Guarantor; provided, however,
                  this
                  Guaranty shall remain in full force and effect thereafter until
                  all
                  indebtedness outstanding, or contracted or committed for (whether
                  or not
                  outstanding), before the receipt of such notice by BANK, and any
                  extensions, renewals or replacements thereof (whether made before
                  or after
                  receipt of such notice), together with interest accruing thereon
                  after
                  such notice, shall be finally and irrevocably paid in full. Discontinuance
                  of this Guaranty as to one Guarantor shall not operate as a discontinuance
                  hereof as to any other Guarantor. Payment of all of the Indebtedness
                  from
                  time to time shall not operate as a discontinuance of this Guaranty,
                  unless notice of discontinuance as above provided has theretofore
                  actually
                  been received by BANK. Guarantor agrees that, to the extent that
                  Debtor
                  makes a payment or payments to BANK on the Indebtedness, or BANK
                  receives
                  any proceeds of collateral to be applied to the Indebtedness, which
                  payment or payments or any part thereof are subsequently invalidated,
                  declared to be fraudulent or preferential, set aside or otherwise
                  are
                  required to be repaid to Debtor, its estate, trustee, receiver
                  or any
                  other party, including, without limitation, under any bankruptcy
                  law,
                  state or federal law, common law or equitable cause, then to the
                  extent of
                  such repayment, the obligation or part thereof which has been paid,
                  reduced or satisfied by such amount shall be reinstated and continued
                  in
                  full force and effect as of the date such initial payment, reduction
                  or
                  satisfaction occurred, notwithstanding any contrary action which
                  may have
                  been taken by BANK in reliance upon such payment or payments. As
                  of the
                  date any payment or proceeds of collateral are returned, the statute
                  of
                  limitations shall start anew with respect to any action or proceeding
                  by
                  BANK against Guarantor under this Guaranty. Guarantor shall defend
                  and
                  indemnify BANK of and from any claim or loss under this paragraph
                  including actual attorneys’ and paralegals’ fees and expenses in the
                  defense of any such action or suit.

              

      

       

      
        	8.	
                Other
                  Parties; Joint and Several
                  Liability.

              

      

       

      
        	
              	(a)	
                BANK
                  shall have the right to discharge or release one or more of the
                  undersigned from any obligation hereunder, in whole or in part,
                  without in
                  any way releasing, impairing or affecting its right against the
                  other or
                  others of the undersigned. The failure of any other person to sign
                  this
                  Guaranty shall not release or affect the obligations or liability
                  of the
                  undersigned.

              

      

       

      
        	
              	(b)	
                If
                  more than one party executes this Guaranty, the obligations of
                  the
                  undersigned hereunder shall be joint and several and the term “Guarantor”
                  shall include each as well as all of
                  them.

              

      

       

      
        	9.	
                Covenants.
                  Until this Guaranty is terminated pursuant to Section 7 hereof,
                  Guarantor
                  will not, without the prior written consent of BANK, in each instance:
                  (for the purpose of this Section 9 and the following Section 10,
                  all
                  capitalized terms used and not defined shall have the meanings
                  given them
                  in the Letter of Credit Reimbursement Agreement dated as of April
                  1, 2007
                  between Debtor and BANK (“Reimbursement
                  Agreement”)):

              

      

       

      
        	
              	(a)	
                Borrowed
                  Money.
                  Create, incur, assume or suffer to exist any liability for borrowed
                  money
                  except (i) to BANK or HSBC Bank Canada, (ii) indebtedness owed
                  by a Subsidiary of Guarantor to Guarantor or to another Subsidiary
                  of
                  Guarantor or by Guarantor to any of its Subsidiaries,
                  (iii) indebtedness which when aggregated with indebtedness of Debtor,
                  Subsidiaries of Debtor and Subsidiaries of Guarantor, will not
                  be in
                  excess of $3,000,000 outstanding at any one time incurred for capital
                  leases of fixed assets or fixed asset purchases, (iv) liabilities
                  previously disclosed to BANK in the Credit Agreement between Guarantor
                  and
                  BANK dated as of January 5, 2007 (“Credit Agreement”) and (v) unsecured
                  indebtedness that is subordinated to the Indebtedness of Guarantor
                  to BANK
                  under any of the Collateral Documents in a manner reasonably satisfactory
                  to BANK.

              

      

      

      
        	
              	(b)	
                Encumbrances.
                  Create, incur, assume or suffer to exist any mortgage, lien, security
                  interest, pledge or other encumbrance on any of its property or
                  assets,
                  whether now owned or hereafter owned or acquired, except in favor
                  of BANK
                  or a trustee for the benefit of BANK and except for (a) any lease
                  of any
                  asset as a lessor in the ordinary course of its business and without
                  interference with the conduct of its business or operations, (b) any
                  pledge or deposit made by Guarantor, or any Subsidiary of Guarantor
                  in the
                  ordinary course of its business (i) in connection with any workers’
                  compensation, unemployment insurance, social security or similar
                  statute,
                  regulation or other law or (ii) to secure the payment of any
                  indebtedness, liability or obligation in connection with any letter
                  of
                  credit, bid, tender, trade or government contract, lease, surety,
                  appeal
                  or performance bond or statute, regulation or other law, or of
                  any similar
                  indebtedness, liability or obligation, not incurred in connection
                  with the
                  borrowing of any money or in connection with the deferral of the
                  payment
                  of the purchase price of any asset, (c) any attachment, levy or
                  similar lien with respect to Guarantor, or any Subsidiary of Guarantor
                  arising in connection with any action or other legal proceeding
                  so long as
                  (i) the validity of the claim or judgment secured thereby is being
                  contested in good faith by appropriate proceedings promptly instituted
                  and
                  diligently conducted, (ii) adequate reserves have been appropriately
                  established for such claim or judgment, (iii) the execution or other
                  enforcement of such attachment, levy or similar lien is effectively
                  stayed
                  and (iv) neither such claim or judgment nor such attachment, levy or
                  similar lien has a Material Adverse Effect, (d) any statutory lien in
                  favor of the United States for any amount paid to Guarantor, or
                  any
                  Subsidiary of Guarantor as a progress payment pursuant to any government
                  contract, (e) any statutory lien securing the payment of any tax,
                  assessment, fee, charge, fine or penalty imposed by any government
                  or
                  political subdivision upon Guarantor, or any Subsidiary of Guarantor
                  or
                  upon any of its respective assets but not yet due to be paid (excluding
                  any lien arising under ERISA), (f) any statutory lien securing
                  the payment
                  of any claim or demand of any materialman, mechanic, carrier,
                  warehouseman, garageman or landlord against Guarantor, or any Subsidiary
                  of Guarantor, but not yet due to be paid, (g) any reservation,
                  exception, encroachment, easement, right-of-way, covenant, condition,
                  restriction, lease or similar title exception or encumbrance affecting
                  title to any real property of Guarantor, or any Subsidiary but
                  not
                  interfering with the conduct of its business or operations, (h)
                  liens
                  previously disclosed to BANK in the Reimbursement Agreement or
                  in the
                  Credit Agreement and (i) liens securing indebtedness permitted by
                  Section 9(a)(iii) hereof.

              

      

       

      
        	
              	(c)	
                Guaranties.
                  Become a guarantor, surety or otherwise liable for the debts or
                  other
                  obligations of any other Person, whether by agreement to purchase
                  the
                  indebtedness of any other Person, or agreement for the furnishing
                  of funds
                  to any other Person through the purchase of goods, supplies or
                  services
                  (or by way of stock purchase, capital contribution, advance or
                  loan) for
                  the purpose of paying or discharging the indebtedness of any other
                  Person
                  or otherwise, except (i) as an endorser of instruments for the
                  payment of money deposited to its bank account for collection in
                  the
                  ordinary course of business, (ii) as related to this transaction,
                  (iii) guaranties of indebtedness to BANK, and (iv) guaranties
                  granted in the ordinary course of business by Guarantor in connection
                  with
                  ordinary course of business purchase or sale obligations of Subsidiaries
                  under contracts for the purchase or sale of
                  goods.

              

      

       

      
        
          
          

        

        
          Page
            2

          
            

          

        

        
          
          

        

      

       

      
        	
              	(d)	
                Sale
                  of Assets.
                  Convey, sell, transfer, lease, lease and buyback, or sell and lease
                  back
                  during the term of this Guaranty more than five percent (5%) in
                  the
                  aggregate of other property, assets or business of Guarantor and
                  its
                  Subsidiaries on a Consolidated basis, to any other Person except
                  for the
                  sales of inventory in the ordinary course of business, and sales
                  of fixed
                  assets no longer needed or in use.

              

      

       

      
        	
              	(e)	
                Investments
                  and Loans.
                  Make or suffer to exist any investments in, or loans or advances
                  to, any
                  other person, firm or corporation, including, without limitation,
                  loans or
                  advances to members, shareholders, directors, officers or employees,
                  except (i) investments in the form of obligations of the United
                  States of America or any agency thereof, (ii) advance payments or
                  deposits for purchases in the ordinary course of business, (iii)
                  any
                  existing investments in, or existing or future advances to, any
                  Subsidiary
                  of Guarantor, and (iv) investments which are classified as Cash or
                  Cash Equivalents under GAAP.

              

      

       

      
        	
              	(f)	
                Merger.
                  Merge or consolidate with or into any other Person unless Guarantor
                  is the
                  entity surviving after the merger or consolidation, or enter into
                  any
                  joint venture or partnership with any other Person.
                  

              

      

       

      
        	
              	(g)	
                Disposal
                  of Hazardous Substances.
                  Suffer, cause or permit the Disposal of Hazardous Substances at
                  any
                  property owned, leased or operated by Guarantor, Debtor, or any
                  Subsidiary
                  of Guarantor or Debtor, except in the ordinary course of Guarantor’s or
                  Debtor’s business, as applicable, and in accordance with applicable
                  Environmental Laws.

              

      

       

      
        	
              	(h)	
                Change
                  Fiscal Year.
                  Cause or permit a change of the fiscal year of
                  Guarantor.

              

      

       

      
        	
              	(i)	
                Financial
                  Covenants.

              

      

       

      
        	 	
                (i)

              	
                Minimum
                  Debt Service Coverage Ratio.
                  Permit as of the end of each fiscal quarter, on a Rolling Four-Quarter
                  Basis, Guarantor’s Debt Service Coverage Ratio to be less than 2.50 to
                  1.0. 

              

      

      
        	 	 	 

        	 	
                (ii)

              	
                Maximum
                  Debt-to-Worth Ratio.
                  Permit as of the end of each fiscal year of Guarantor, the Consolidated
                  Debt-to-Worth Ratio of Guarantor and its Subsidiaries to exceed
                  2.75 to
                  1.0.

              

        	 	 	 

      

      
        	 	
                (iii)

              	
                Minimum
                  Interest Coverage Ratio.
                  Permit as of the end of each fiscal quarter on a Rolling Four-Quarter
                  Basis, the ratio of Guarantor’s EBITDA to Consolidated interest expense to
                  be less than 4.00 to 1.00.

              

      

      
        	 	 	 

        	 	
                (iv)

              	
                Minimum
                  Current Ratio.
                  Permit as of the end of each fiscal year of Guarantor, the ratio
                  of
                  Guarantor’s Consolidated Current Assets to Consolidated Current
                  Liabilities to be less than 1.25 to 1.0.

              

        	 	 	 

      

      
        	 	
                (v)

              	
                Maximum
                  Leverage Ratio.
                  Permit as of the end of each fiscal quarter, the ratio of Guarantor’s
                  Total Funded Debt as of the end of such fiscal quarter to EBITDA
                  to exceed
                  2.50 to 1.0 on a Rolling Four-Quarter
                  Basis.

              

      

      
        	 	 	 

        	 	
                (vi)

              	
                Capital
                  Expenditures.
                  Make or incur capital expenditures in Guarantor’s fiscal year 2007 in
                  excess of $10,000,000, and in fiscal years 2008 and thereafter
                  in excess
                  of $5,000,000 in any one year, in each case in the aggregate for
                  Guarantor
                  and its Subsidiaries for such
                  period.

              

      

       

      
        	10.	
                Events
                  of Default. The
                  occurrence of any one or more of the following events shall constitute
                  an
                  event of default (individually, “Event of Default” or, collectively,
                  “Events of Default”). 

              

      

       

      
        	
              	(a)	
                Covenants.
                  Default in the observance of any of the covenants contained in
                  Section 9 of this Guaranty, upon the occurrence thereof, or default
                  in the observance of any other covenants or agreements of Guarantor
                  contained in this Guaranty or in any other agreement with BANK,
                  which is
                  not remedied within thirty (30) days after notice thereof by BANK
                  to
                  Guarantor.

              

      

       

      
        	
              	(b)	
                Voluntary
                  Insolvency Proceedings.
                  If Guarantor or any Subsidiary of Guarantor (i) shall file a petition
                  or
                  request for liquidation, reorganization, arrangement, adjudication
                  as a
                  bankrupt, relief as a debtor or other relief under the bankruptcy,
                  insolvency or similar laws of the United States of America or any
                  state or
                  territory thereof or any foreign jurisdiction, now or hereafter
                  in effect;
                  (ii) shall make a general assignment for the benefit of creditors;
                  (iii) shall consent to the appointment of a receiver or trustee for
                  Guarantor or any Subsidiary of Guarantor or any of Guarantor’s or any of
                  its Subsidiaries’ assets, including, without limitation, the appointment
                  of or taking possession by a “custodian” as defined in the federal
                  Bankruptcy Code; (iv) shall make any, or send notice of any intended,
                  bulk
                  sale; or (v) shall execute a consent to any other type of insolvency
                  proceeding (under the federal Bankruptcy Code or otherwise) or
                  any formal
                  or informal proceeding for the dissolution or liquidation of, or
                  settlement of claims against or winding up of affairs of, Guarantor
                  or any
                  Subsidiary of Guarantor.

              

      

       

      
        	
              	(c)	
                Involuntary
                  Insolvency Proceedings.
                  The appointment of a receiver, trustee, custodian or officer performing
                  similar functions for Guarantor or any Subsidiary of Guarantor
                  or any of
                  Guarantor’s or any of its Subsidiaries’ assets, including, without
                  limitation, the appointment of or taking possession by a “custodian” as
                  defined in the federal Bankruptcy Code; or the filing against Guarantor
                  or
                  any Subsidiary of Guarantor of a request or petition for liquidation,
                  reorganization, arrangement, adjudication as a bankrupt or other
                  relief
                  under the bankruptcy, insolvency or similar laws of the United
                  States of
                  America or any state or territory thereof or any foreign jurisdiction,
                  now
                  or hereafter in effect; or the institution against Guarantor or
                  any
                  Subsidiary of Guarantor of any other type of insolvency proceeding
                  (under
                  the federal Bankruptcy Code or otherwise) or of any formal or informal
                  proceeding for the dissolution or liquidation of, settlement of
                  claims
                  against or winding up of affairs of Guarantor or any Subsidiary
                  of
                  Guarantor, and the failure to have such appointment vacated or
                  such
                  filing, petition or proceeding dismissed within ninety (90) days
                  after
                  such appointment, filing or
                  institution.

              

      

       

      
        	
              	(d)	
                Representations.
                  If any certificate, statement, representation, warranty or financial
                  statement furnished by or on behalf of Guarantor or any Subsidiary
                  of
                  Guarantor pursuant to or in connection with this Guaranty or as
                  an
                  inducement to BANK to enter into this Guaranty or any other lending
                  agreement with Guarantor shall prove to have been false in any
                  material
                  respect at the time as of which the facts therein set forth were
                  represented, or to have omitted any substantial contingent or unliquidated
                  liability or claim against Guarantor or any Subsidiary required
                  to be
                  stated therein, or if on the date of the execution of this Guaranty
                  there
                  shall have been any materially adverse change in any of the facts
                  disclosed by any such statement or certificate, which change shall
                  not
                  have been disclosed by Guarantor to BANK at or prior to the time
                  of such
                  execution.

              

      

       

      
        	
              	(e)	
                Other
                  Indebtedness and Agreements.
                  The occurrence of an event of default under any other agreement
                  between
                  Guarantor and BANK including, without limitation, the Credit Agreement,
                  any document executed in connection therewith, or default by the
                  Guarantor
                  in the performance of the Guarantor’s obligations under the Limited
                  Continuing Guaranty dated as of July 1, 1999 between Guarantor and
                  BANK (“Limited Guaranty”), or nonpayment by Guarantor or any Subsidiary of
                  Guarantor of any indebtedness owing by Guarantor or any Subsidiary
                  of
                  Guarantor in an amount equal to or exceeding $1,000,000 when due
                  (or, if
                  permitted by the terms of the applicable document, within any applicable
                  grace period), whether such indebtedness shall become due by scheduled
                  maturity, by required prepayment, by acceleration, by demand or
                  otherwise,
                  or failure to perform any term, covenant or agreement on its part
                  to be
                  performed under any agreement or instrument (other than this Guaranty
                  or
                  the Limited Guaranty) evidencing or securing or relating to any
                  indebtedness owing by Guarantor or any Subsidiary of Guarantor
                  in an
                  amount equal to or exceeding $1,000,000 when required to be performed
                  if
                  the effect of such failure is to accelerate or to permit the holder
                  to
                  accelerate the maturity of such
                  indebtedness.

              

      

       

      
        	
              	(f)	
                Judgments.
                  If any judgment or judgments (other than any judgment for which
                  it is
                  fully insured) against Guarantor or any Subsidiary of Guarantor
                  in an
                  aggregate amount in excess of $1,000,000 remains unpaid, unstayed
                  on
                  appeal, undischarged, unbonded or undismissed for a period of thirty
                  (30)
                  days after entry thereof.

              

      

       

      
        	11.	
                Effects
                  of an Event of Default. Upon
                  the happening of one or more Events of Default BANK shall have
                  the right
                  to proceed first and directly against Guarantor under this Guaranty
                  without proceeding against Debtor or exhausting any other remedies
                  BANK
                  may have and without resorting to any security held by BANK as
                  security
                  for the Indebtedness.

              

      

       

      
        	12.	
                Miscellaneous.

              

      

       

      
        	
              	(a)	
                “Debtor”
                  and “Guarantor” as used in this Guaranty shall include: (i) any
                  successor individual or individuals, association, partnership or
                  corporation to which all or a substantial part of the business
                  or assets
                  of Debtor or Guarantor shall have been transferred including, without
                  limitation, a debtor in possession under the Federal Bankruptcy
                  Code;
                  (ii) in the case of a partnership Debtor or Guarantor, any new
                  partnership which shall have been created by reason of the admission
                  of
                  any new partner or partners therein or by reason of the dissolution
                  of the
                  existing partnership by voluntary agreement or the death, resignation
                  or
                  other withdrawal of any partner; and (iii) in the case of a corporate
                  Debtor or Guarantor, any other corporation into or with which Guarantor
                  or
                  Debtor (if Debtor is a corporation) shall have been merged, consolidated,
                  reorganized, or absorbed.

              

      

       

      
        	
              	(b)	
                Without
                  limiting any other right of BANK, whenever BANK has the right to
                  declare
                  any Indebtedness to be immediately due and payable (whether or
                  not it has
                  so declared), BANK at its sole election may set off against any
                  of the
                  Indebtedness that is then due and owing any and all moneys then
                  owed to
                  Guarantor by BANK in any capacity, and BANK shall be deemed to
                  have
                  exercised such right of setoff immediately at the time of such
                  election
                  even though any charge therefor is made or entered on BANK’s records
                  subsequent thereto.

              

      

       

      
        
          
          

        

        
          Page
            3

          
            

          

        

        
          
          

        

      

       

      
        	
              	(c)	
                Guarantor’s
                  obligation hereunder is to pay the Indebtedness in full when due
                  according
                  to its terms, and shall not be affected by any extension of time
                  for
                  payment by Debtor, any bar to the enforceability of the Indebtedness,
                  or
                  any limitation on the right to attorneys’ fees, resulting from any
                  proceeding under the Federal Bankruptcy Code or any similar law.
                  Guarantor’s obligation under this Guaranty shall also include payment of
                  interest accrued on the Indebtedness before or after a filing of
                  a
                  petition under the bankruptcy laws and interest on, and principal
                  of,
                  loans made to the debtor in possession after the filing of such
                  a petition
                  by or against Debtor.

              

      

       

      
        	
              	(d)	
                No
                  course of dealing or usage of trade, and no oral or written
                  representations or agreement, between Debtor or Guarantor and BANK,
                  whether or not relied on or acted upon, and no act, delay or omission
                  by
                  BANK in exercising any right or remedy hereunder or with respect
                  to any
                  Indebtedness shall operate as a waiver thereof or of any other
                  right or
                  remedy, and no single or partial exercise thereof shall preclude
                  any other
                  or further exercise thereof or the exercise of any other right
                  or remedy.
                  The giving of notice or a demand by BANK at any time shall not
                  operate as
                  a waiver in the future of BANK’s right to exercise any right or remedy
                  without notice or demand. BANK may remedy any default by Debtor
                  under any
                  agreement with Debtor or with respect to any Indebtedness in any
                  reasonable manner, without waiving the default remedied and without
                  waiving any other prior or subsequent default by Debtor. After
                  Debtor’s
                  failure to pay the Indebtedness in full, or any part thereof, BANK
                  may
                  exercise against Guarantor each right and remedy of a creditor
                  against a
                  principal debtor upon a past due liquidated obligation. All rights
                  and
                  remedies of BANK hereunder are
                  cumulative.

              

      

       

      
        	
              	(e)	
                BANK
                  and Guarantor as used herein shall include the heirs, executors
                  or
                  administrators, or successors or assigns, of those parties. The
                  rights and
                  benefits of BANK hereunder shall, if BANK so directs, inure to
                  any party
                  acquiring any interest in the Indebtedness or any part thereof.
                  If any
                  right of BANK hereunder is construed to be a power of attorney,
                  such power
                  of attorney shall not be affected by the subsequent disability
                  or
                  incompetence of Debtor or
                  Guarantor.

              

      

       

      
        	
              	(f)	
                BANK’s
                  rights and remedies under this Guaranty are assignable and any
                  participation may be granted by BANK herein in connection with
                  the
                  assignment or granting of a participation by BANK in the Indebtedness
                  or
                  any part thereof.

              

      

       

      
        	
              	(g)	
                Captions
                  of the sections of this Guaranty are solely for the convenience
                  of BANK
                  and Guarantor, and are not an aid in the interpretation of this
                  Guaranty.

              

      

       

      
        	
              	(h)	
                GUARANTOR
                  AGREES THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT
                  OF THIS
                  GUARANTY MAY BE COMMENCED IN THE SUPREME COURT OF NEW YORK IN ERIE
                  COUNTY,
                  OR IN THE DISTRICT COURT OF THE UNITED STATES IN THE WESTERN DISTRICT
                  OF
                  NEW YORK, IN WHICH BANK HAS AN OFFICE, AND GUARANTOR WAIVES PERSONAL
                  SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING
                  AN
                  ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE PROPERLY SERVED
                  AND SHALL
                  CONFER PERSONAL JURISDICTION IF SERVED BY REGISTERED MAIL TO GUARANTOR
                  AT
                  THE ADDRESS SPECIFIED ABOVE, OR AS OTHERWISE PROVIDED BY THE LAWS
                  OF THE
                  STATE OF NEW YORK OR THE UNITED
                  STATES.

              

      

       

      
        	
              	(i)	
                If
                  any provision of this Guaranty is unenforceable in whole or in
                  part for
                  any reason, it shall be deemed modified to the extent necessary
                  to make it
                  or the applicable provision enforceable, or if for any reason such
                  provision is not deemed modified, the remaining provisions shall
                  continue
                  to be effective.

              

      

       

      
        	
              	(j)	
                Any
                  payment or other act which results in the extension or renewal
                  of the
                  statute of limitations in connection with any action or proceeding
                  against
                  the Debtor relating to the Indebtedness, shall extend or renew
                  the statute
                  of limitations in connection with any action or other proceeding
                  against
                  Guarantor in connection with this Guaranty whether or not Guarantor
                  had
                  notice of, or consented to, such payment or
                  act.

              

      

       

      
        	
              	(k)	
                Any
                  demand for payment against Guarantor made by BANK under this Guaranty
                  shall be in writing and delivered in person or by first class registered
                  or certified mail postage prepaid at Guarantor’s address first written
                  above (or such other address of which Guarantor has notified BANK
                  in
                  writing), and shall be deemed received: (i) upon delivery, if
                  delivered in person, and (ii) three business days after deposited in
                  the mail or delivered to the post office, if mailed certified or
                  registered mail.

              

      

       

      
        	
              	(l)	
                This
                  Guaranty and the transactions evidenced hereby shall be construed
                  under
                  the laws of New York State without regard to principles of conflicts
                  of
                  law (other than General Obligations Law provisions 5-1401 and
                  5-1402).

              

      

       

      
        	
              	(m)	
                GUARANTOR
                  AND BANK HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE
                  ANY RIGHT
                  TO TRIAL BY JURY GUARANTOR AND BANK MAY HAVE IN ANY ACTION OR PROCEEDING,
                  IN LAW OR IN EQUITY, IN CONNECTION WITH THE GUARANTY OR THE TRANSACTIONS
                  RELATED HERETO. GUARANTOR REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE
                  OR AGENT OF BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
                  BANK WILL
                  NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL
                  WAIVER.
                  GUARANTOR ACKNOWLEDGES THAT BANK HAS BEEN INDUCED TO ENTER INTO
                  THIS
                  GUARANTY BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS
                  SECTION.

              

      

    

    
       

      
        
          
          

        

        
          Page
            4

          
            

          

        

        
          
          

        

      

       

      This
        Guaranty is unlimited in amount unless an amount is inserted in the space
        at the
        end of this paragraph. Only if an amount is so inserted, this Guaranty is
        limited to that amount (hereinafter referred to as the “Maximum Amount”), plus
        the sum of (a) all unpaid interest which accrues on the Maximum Amount
        until payment of the Maximum Amount in full, calculated at the rate provided
        for
        in any instrument, document or agreement evidencing or pertaining to the
        Indebtedness; (b) all costs and expenses payable pursuant to
        Section 2(a) of this Guaranty; and (c) an amount equal to a fraction
        of all costs and expenses payable pursuant to Sections 2(b), 2(c) and 2(d)
        of this Guaranty, the numerator of which fraction is the Maximum Amount and
        the
        denominator of which fraction is the sum of all outstanding Indebtedness
        (less
        any unpaid accrued interest thereon), if such Indebtedness is either
        (i) payable on demand by its terms and for which BANK has made demand for
        payment, or (ii) payable other than on demand by its terms and is presently
        due and owing, whether by maturity, acceleration or otherwise. Maximum
        Amount: Unlimited

       

      
        	 	 	 
	 	ASTRONICS
                CORPORATION
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                

                David
                  C. Burney

                Vice
                  President - Finance and Treasurer

              

      

       

      
        
          	
                  STATE
                    OF NEW YORK

                   

                  COUNTY OF ERIE

                	}	     SS:	 

        

      

          

      On
        this
        twenty-third day of April in the year 2007, before me, the undersigned, a
        Notary
        Public in and for said State, personally appeared David  C. Burney,
        personally known to me or proved to me on the basis of satisfactory evidence
        to
        be the individual whose name is subscribed to the within instrument and
        acknowledged to me that he executed the same in his capacity, and that by
        his
        signature on the instrument the individual, or the person upon behalf of
        which
        the individual acted, executed the instrument.

      
        	 	 	 	 
	 	 	 	 
	 	 	 	
                Notary
                  Public

              

      

       

      
        
          
          

        

        
          Page
            5

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