Document:

Exhibit 10.15

                        SHARE SALE AND PURCHASE AGREEMENT

                             dated November 22, 2002

                                between and among

       Hermann Schlosser, Ilse Schlosser, Karen Beck and Rolf Breternitz,

                                   as Sellers,

                   Hohenstaufen Zweihundertsechsundzwanzigste
                           Vermogensverwaltungs GmbH,

                                  as Purchaser,

                                       and

                              Mikron Infrared, Inc.

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                                Table of Contents

                                                                            Page
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Section

1.  DEFINITIONS AND INTERPRETATION ...........................................2
    1.1    Definitions .......................................................2
    1.2    Interpretations ...................................................6

2.  SALE AND PURCHASE OF THE SHARES ..........................................8

3.  PURCHASE PRICE AND PAYMENT ...............................................8

4.  CLOSING AND POST-CLOSING ................................................12

5.  REPRESENTATIONS AND WARRANTIES OF THE FOUNDERS AND THE OTHER SELLERS ....14
    5.1    Power and Authority ..............................................15
    5.2    Accuracy of Information...........................................16
    5.3    Standing of the Companies ........................................16
    5.4    Title to the Shares ..............................................17
    5.5    Other Subsidiaries, Associations and Branches ....................18
    5.6    The Accounts and the Pre-Closing Accounts ........................18
    5.7    Undisclosed Liabilities ..........................................20
    5.8    Conduct of Business since Accounts Date ..........................20
    5.9    Dividends ........................................................21
    5.10   Subsidies etc. ...................................................21
    5.11   Real Property and Other Assets ...................................22
    5.12   Intellectual Property ............................................22
    5.13   Agreements .......................................................23
    5.14   Anti-Competitive Arrangements ....................................24
    5.15   No Powers of Attorney ............................................24
    5.16   Insider Contracts ................................................24
    5.17   Marketing Information ............................................24
    5.18   Customers ........................................................25
    5.19   Litigation and Complaints ........................................25
    5.20   Licenses and Compliance with Laws ................................25
    5.21   Employees ........................................................25
    5.22   Environmental ....................................................27
    5.23   Insurance ........................................................28
    5.24   No Illegal or Improper Transactions ..............................29
    5.25   Tax ..............................................................29
    5.26   Brokers ..........................................................30
    5.27   Indebtedness etc between the Sellers and the Companies ...........30
    5.28   Acquisition of Mikron Shares for Investment Purposes .............31

6.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MIKRON ..............32
    6.1    Power and Authority of the Purchaser .............................32
    6.2    Power and Authority of Mikron ....................................32

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                                Table of Contents

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    6.3    Consents and Approvals ...........................................33
    6.4    Capital Stock ....................................................34
    6.5    SEC Filings; Financial Statements ................................34
    6.6    Absence of Undisclosed Liabilities ...............................34
    6.7    Absence of Certain Changes or Events..............................35
    6.8    No Litigation ....................................................35

7.  INDEMNIFICATION - GENERAL ...............................................35
    7.1    Breach of the Warranties .........................................35
    7.2    Purchaser Claims .................................................36
    7.3    Several Liability ................................................36
    7.4    Limitation of Liability ..........................................36
    7.5    Defending Third Party Claims .....................................38

8.  TAX INDEMNITY ...........................................................39

9.  GUARANTEE ...............................................................40

10. NOTICES .................................................................40

11. MISCELLANEOUS ...........................................................41

12. GOVERNING LAW AND DISPUTES ..............................................42

Schedules

1                 Accounting Principles (previously delivered and deemed annexed
                  hereto)
2                 Material Agreements
5.6.1(b)          Non-conforming financial statement preparation procedures re:
                  Accounts
5.6.1(d)          Unusual, non-recurring items; non-arm's length contracts Re:
                  Accounts
5.6.2(c)          Non-conforming financial statement preparation procedures re:
                  Pre-Closing Accounts
5.6.2(e)          Unusual, non-recurring items; non-arm's length contracts Re:
                  Pre-Closing Accounts
5.6.3             Accounts Date Accounts Receivable Aging
5.6.4             Pre-Accounts Date Accounts Receivable Aging
5.65              Payments Re: post-Closing Date services/expenses
5.82(e)           Sales, assignments, transfers, etc. of material assets
5.8.2(j)          Material investments in fixed assets
5.8.2(k)          Increases in compensation or benefits
5.8.3             Related party payment transactions
5.10              Grants, subsidies and instruments pertaining to the receipt of
                  financial assistance, trade secrets, etc.
5.11.2            Effect of consummation of sale of Shares on Leases
5.11.5            Capital expenditures
5.12.1            Intellectual property infringement claims
5.12.2            Registered intellectual property rights

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                                Table of Contents

5.12.5            Intellectual property rights held by Sellers, Close Relatives
                  and Affiliates
5.13.5            Sole source suppliers; canceled orders and threats to cancel
                  orders
5.15              Powers of attorney
5.16              Insider contracts
5.18              Customers
5.21.1            List of employees
5.21.2            Consulting agreements
5.21.3            Employees giving notice of termination
5.21.4            Commissions and non-salary remuneration
5.21.8            Employee benefit plans
5.21.11           Collective bargaining, shop or similar agreements
5.21.13           Remunerations under Employee Inventions Act
5.23              Insurance
5.25.1            Tax returns and taxes - open items
5.25.3            Tax penalties, fines, interest
5.25.4            Audits
5.27.3            Loan indebtedness owed by the Companies to the Sellers
5.27.4            Guarantees and indemnities
6.4               Mikron securities convertible into or exchangeable for common
                  stock
6.5.2             Exceptions to Mikron's compliance with GAAP in its SEC
                  Documents

Exhibits

A-1         Share Ownership of the Company

A-2         Share Ownership of  IMPAC Systems

A-3         Share Ownership of Infrapoint

B-1         Appreciated Amounts - Schlosser

B-2         Appreciated Amounts - Breternitz

C           Pre-Closing Accounts

D           Redemption Notice

E           Articles of Association of the Companies

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                        SHARE SALE AND PURCHASE AGREEMENT

AMONG

(1)   Hermann Schlosser ("Mr. Schlosser") and Ilse Schlosser ("Mrs. Schlosser"),
      both residing at Kaiser-Friedrich-Promenade, 149, D-61352 Bad Homburg
      v.d.H., Germany, Karen Beck, residing at Urbanstra(beta)e 41, D-14165
      Berlin, Germany ("Mrs. Beck") and Rolf Breternitz, residing at
      Ludwigstra(beta)e 12A, D-61348 Bad Homburg v.d.H., Germany ("Mr.
      Breternitz") (each a "Seller" and jointly the "Sellers");

(2)   Hohenstaufen Zweihundertsechsundzwanzigste Vermogensverwaltungs GmbH, a
      limited liability company duly incorporated, organized and validly
      existing under the laws of Germany, and registered under number HRB 39814
      with the Commercial Register of the Lower Court in Cologne, (the
      "Purchaser"); and

(3)   Mikron Infrared, Inc., a company duly incorporated, organized and validly
      existing in good standing under the laws of the State New Jersey in the
      United States of America, having its principal office located at 16
      Thornton Road, Oakland, New Jersey, USA 07436 ("Mikron").

WHEREAS

A.    IMPAC Electronic GmbH, registered under number HRB 23871 with the
      Commercial Register of the Municipal Court in Frankfurt am Main, (the
      "Company") is a limited liability company incorporated in Germany, having
      a registered share capital of DM1,600,000 divided into the shares as set
      out in Exhibit A-1 (the "IMPAC Shares").

B.    IMPAC Systems GmbH, registered under number HRB 18756 with the Commercial
      Register of the Municipal Court in Dresden ("IMPAC Systems"), is a limited
      liability company incorporated in Germany, having a registered share
      capital of (euro)50,000 divided into the shares as set out in Exhibit A-2
      (the "IMPAC Systems Shares").

C.    infra sensor Spezialpyrometer GmbH, registered under number HRB 2693 with
      the Commercial Register of the Municipal Court in Magdeburg ("Infra
      Sensor"), is a limited liability company incorporated in Germany, having a
      registered share capital of(euro)128,000 (the "Infra Sensor Shares").

D.    INFRAPOINT Messtechnik GmbH, registered under number HRB 4635 with the
      Commercial Register of the Municipal Court in Meiningen ("Infrapoint"), is
      a limited liability company incorporated in Germany, having a registered
      share capital of DM100,000 divided into the shares as set out in Exhibit
      A-3 (the "Infrapoint Shares").

E.    IMPAC France, Sarl, registered under number B 382401230 with RCS
      Strassbourg ("IMPAC France"), is a company incorporated under the laws of
      France, having an issued share capital of FF150,000, divided into 150
      shares of FF1,000 (the "IMPAC France Shares").

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F.    IMPAC Infrared Ltd., registered under number 03624461 with Company's House
      Cardiff ("IMPAC Infrared"), is a company incorporated under the laws of
      the United Kingdom having an issued share capital of (pound)20,000,
      divided into 2,000 shares of (pound)10 (the "IMPAC Infrared Shares").

G.    Mr. Schlosser, Mrs. Schlosser, Mrs. Beck and Mr. Breternitz own all of the
      IMPAC Shares.

H.    The Company owns all of the IMPAC France Shares, all of the IMPAC Infrared
      Shares and all of the Infra Sensor Shares.

I.    The Company and Dr. Christian Schiewe own, respectively, 90% and 10%, of
      the IMPAC Systems Shares.

J.    Mr. Schlosser and Mr. Breternitz own, respectively, 40% and 60% of the
      Infrapoint Shares.

K.    The Companies (as defined below) are engaged in the business of
      developing, manufacturing and selling non-contact infrared temperature
      measurement systems, devices and ancillary equipment.

L.    The Sellers wish to sell and the Purchaser wishes to purchase all the
      shares of the Company and Infrapoint owned by the Sellers, as set forth in
      Exhibits A-1, A-2 and A-3, on the terms and conditions set out in this
      Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.    DEFINITIONS AND INTERPRETATION

1.1   In this Agreement:

      "Accounting Principles" means the accounting principles that have been
      consistently applied for each of the financial years immediately preceding
      the applicable Accounts Date for each of the Companies, such principles
      are set out in the Accounts which were previously delivered to the
      Purchaser, which are annexed as Schedule 1, and are in accordance with
      applicable laws and general accepted accounting principles in Germany;

      "Accounts" means collectively, the Companies Balance Sheets as at, and the
      audited profit and loss statements for the years ended on, the respective
      Accounts Dates of, each of the Companies, together with the respective
      auditor's reports and the notes relating to them, copies of all of which
      have been received by Mikron prior to the date hereof;

      "Accounts Date" means (a) February 28, 2002 with respect to the Company
      and each of the Subsidiaries, (b) December 31, 2001 with respect to Infra
      Sensor and IMPAC Systems; and (c) September 30, 2001 with respect to
      Infrapoint;

      "Affiliate" means, when referring to a person a person that directly or
      indirectly, through one or more intermediaries, controls, is controlled
      by, or is under common control with, the first-mentioned person;

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      "Appreciated Amount" means as of any date of computation, with respect to
      Mr. Schlosser, Mr. Schlosser's Deferred Purchase Price, and with respect
      to Mr. Breternitz, Mr. Breternitz's Deferred Purchase Price, plus, in each
      case, the amount accreted thereon from the Closing Date to the relevant
      date of computation, as provided in Section 3.6.3;

      "Benefit Plan" and "Benefit Plans" have the meanings attributed to such
      terms in Section 5.21.8;

      "Business Day" means a day (other than a Saturday or Sunday) on which
      banks are generally open in Frankfurt am Main, Germany for normal
      business;

      "Cash Balance Adjustment" shall have the meaning attributed to such term
      in Section 3.4;

      "Change in Control" shall have the meaning attributed to such term in
      Section 3.6.3;

      "Close Relative" means any spouse, former spouse, child, step-child,
      adopted child, grandchild, parent or spouse's parent; or any child,
      step-child, adopted child or grandchild of any such person; or any spouse
      of any of the foregoing, and for the purposes of this definition "spouse"
      includes de facto spouse or co-habitee;

      "Closing" means closing of the sale and purchase of the Shares in
      accordance with Section 4;

      "Closing Date" means the date of this Agreement;

      "Closing Date Cash Balances" means the difference between (a) the
      aggregate amount of cash on deposit in the bank accounts maintained by all
      of the Companies as of the close of business on the date immediately
      preceding the Closing Date; and (b) the aggregate amount of all bank loans
      and bank account overdrafts owed by any of the Companies as of the close
      of business on the date immediately preceding the Closing Date;

      "Companies" means collectively, the Company, the Subsidiaries, IMPAC
      Systems and Infrapoint;

      "Companies Balance Sheets" means the audited balance sheets of each of the
      Companies, in each case as at the respective Accounts Dates of each of the
      Companies;

      "Company" means IMPAC Electronic GmbH;

      "Compounding Date" shall have the meaning attributed to such term in
      Section 3.6.2;

      "Contingent Payment" has the meaning attributed to such term in Section
      4.4;

      "Deferred Purchase Price" has the meaning attributed to such term in
      Section 3.2.3;

      "Exchange Act" means the United States Securities Exchange Act of 1934, as
      amended;

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      "Founders" means Mr. Schlosser and Mr. Breternitz;

      "Governmental Entity" has the meaning attributed to such term in Section
      6.3;

      "Initial Payment" means such payment as defined in Section 3.2.1;

      "Intellectual Property Right" means all (i) patents, patent applications,
      patent disclosures and inventions, (ii) trademarks, service marks, trade
      dress, trade names, URL's, logos and corporate names and registrations and
      applications for registration thereof, together with all of the goodwill
      associated therewith, (iii) copyrights (registered or unregistered) and
      copyrightable works and registrations and applications for registration
      thereof, (iv) mask works and registrations and applications for
      registration thereof, (v) computer software, data, data bases and
      documentation thereof, (vi) trade secrets and other confidential
      information (including ideas, formulas, compositions, inventions (whether
      patentable or unpatentable and whether or not reduced to practice),
      know-how, manufacturing and production processes and techniques, research
      and development information, drawings, specifications, designs, plans,
      proposals, technical data, copyrightable works, financial and marketing
      plans and customer and supplier lists and information), (vii) other
      intellectual property rights and (viii) copies and tangible embodiments
      thereof (in whatever form or medium);

      "Lien" means any right which (a) shall entitle any person to terminate,
      amend, accelerate or cancel any agreement, option, license or other
      instrument to which any of the Companies is a party by reason of the
      occurrence of (i) a violation, breach or default thereunder by any of the
      Companies; or (ii) an event which with or without notice or lapse of time
      or both would become a default thereunder; or (b) if exercised by the
      holder thereof, will (i) entitle such person to accelerate the performance
      of any obligations or the payment of any sums owed by any of the Companies
      under any agreement, option, license or other instrument, or (ii) result
      in any loss of any benefit under, or the creation of any pledges, claims,
      equities, options, liens, charges, call rights, rights of first refusal,
      "tag" or "drag" along rights, encumbrances and security interests of any
      kind or nature whatsoever on any of the property or assets of any of the
      Companies;

      "Material Adverse Effect" means (i) any fact, event or circumstance that
      results in or could reasonably be expected to result in an adverse change
      or effect in the financial condition, assets, liabilities, business,
      properties, results of operations or business prospects of the Company
      and/or the Subsidiaries, IMPAC Systems or Infrapoint, considered
      collectively or individually, which change or effect is material with any
      other such changes or effects, to the specified entities or entity, or
      (ii) any event, matter, condition or effect which materially impairs the
      ability of the specified entities or entity to perform on a timely basis
      their or its obligations under this Agreement or the consummation of the
      transactions contemplated hereby;

      "Material Agreement" means each agreement listed in Schedule 2;

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      "Maturity Date" means the fifth anniversary of the Closing Date, or such
      earlier date when the Appreciated Amount shall become due and payable
      pursuant to Section 3.6.4, 3.6.5 or 3.6.6;

      "Maturity Principal Amount" means with respect to Mr. Schlosser, the
      amount set forth on Exhibit B-1, and with respect to Mr. Breternitz, the
      amount set forth on Exhibit B-2;

      "Mikron Common Stock" means the common stock, par value $.003 per share,
      of Mikron;

      "Mikron Financial Statements" means the financial statements included in
      the Mikron SEC Documents;

      "Mikron SEC Documents" has the meaning attributed to such term in Section
      6.5.1;

      "Mr. Breternitz's Deferred Purchase Price" has the meaning attributed to
      such term in Section 3.2.3;

      "Mr. Schlosser's Deferred Purchase Price" has the meaning attributed to
      such term in Section 3.2.2;

      "Parties" means collectively, the Sellers, the Purchaser and Mikron;

      "Payment Designation Notice" has the meaning attributed to such term in
      Section 3.2.2;

      "Payment Date" has the meaning attributed to such term in Section 3.2.1;

      "Person" means a natural person, company, corporation, partnership,
      association, trust or any unincorporated organization;

      "Pre-Closing Accounts" means the unaudited balance sheet of each of the
      Companies as at the Pre-Closing Accounts Date, except for IMPAC Infrared,
      and the unaudited profit and loss report of each of the Companies, except
      for IMPAC Infrared, for the period between its Accounts Dates and the
      Pre-Closing Accounts Date, copies of which have been attached hereto as
      Exhibit C;

      "Pre-Closing Accounts Date" means September 30, 2002;

      "Profit Distributions" means the aggregate amount (before deduction of any
      withholding taxes) of any distribution of dividends, retained profits or
      profit reserves which have been authorized by the shareholders of the
      Company at any time on or after May 1, 2002 with respect to any dividends,
      retained profits or profit reserves relating to time periods prior to
      March 1, 2002 and which have been or will be paid by the Company to the
      Sellers at any time prior to the Closing;

      "Purchase Price" has the meaning attributed to such term in Section 3.1;

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      "Purchaser Claim" has the meaning attributed to such term in Section 7.3;

      "SEC" means the United States Securities and Exchange Commission;

      "Section 5.27.3 Indebtedness" means the aggregate principal amount of all
      loan indebtedness, together with all accrued but unpaid interest thereon,
      owed by any of the Companies to any of the Sellers, as more particularly
      described on Schedule 5.27.3;

      "Section 3.4 Certificate" has the meaning attributed to such term in
      Section 3.4;

      "Securities Act" means the United States Securities Act of 1933, as
      amended;

      "Sellers' Representative" means Mr. Hermann Schlosser;

      "Shares" means collectively, all of the IMPAC Shares, all of the Infra
      Sensor Shares owned by Mr. Breternitz and all of the Infrapoint Shares;

      "Social Security Contributions" mean all payments to be made by any of the
      Companies under applicable law for health (Krankenversicherung),
      unemployment (Erwerbslosenversicherung), retirement (Rentenversicherung),
      disability (Erwerb-sunfahigkeitsversicherung), accident
      (Unfallversicherung), social care (Pflegeversicherung) and any other
      insurance coverage or benefit scheme;

      "Subsidiaries" means IMPAC France, IMPAC Infrared and Infra Sensor;

      "Tax", "Taxes" and "Taxation" mean (a) income taxes, ad valorem taxes,
      excise taxes, withholding taxes, stamp taxes or other taxes of or with
      respect to gross receipts, premiums, real property, personal property,
      windfall profits, sales, use, transfers, licensing, employment, payroll
      and franchises imposed by or under any federal, state, local or foreign
      statute, law, rule or regulation, and such terms shall include any
      interest, fines, penalties, assessments or additions to tax resulting
      from, attributable to or incurred in connection with any such tax or any
      contest or dispute thereof; (b) liability of any of the Companies or any
      fiduciary for the payment of any amounts of the type described in clause
      (a) as a result of being a member of an affiliated, combined consolidated
      or unitary group for any taxable period; and (c) liability of any of the
      Companies for the payment of any amounts of the type described in clauses
      (a) or (b) as a result of any express or implied obligation to indemnify
      any other person;

      "Taxation Authority" means any federal, state, local or foreign
      governmental agency, department or other entity which is authorized by
      applicable law to assess and collect Taxes;

      "Third Party Claim" has the meaning attributed to such term in Section
      7.5; and

      "Warranties" means the warranties and representations set out in Section 5
      below.

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1.2   Interpretation.

      (a) As used in this Agreement and each Schedule hereof and Exhibit hereto,
      unless the context clearly indicates otherwise:

            (i) words used in the singular include the plural and words in the
            plural include the singular;

            (ii) reference to any person includes such person's successors and
            assigns, but only if such successors and assigns are permitted by
            this Agreement or such other Schedule hereof or Exhibit hereto, and
            reference to a person in a particular capacity excludes such Person
            in any other capacity;

            (iii) reference to any gender includes the other gender;

            (iv) whenever the words "include," "includes" or "including" are
            used in this Agreement or any Schedule hereof or Exhibit hereto,
            they shall be deemed to be followed by the words "without
            limitation" or "but not limited to" or words of similar import;

            (v) reference to any Article, Section, Exhibit or Schedule means
            such Article or Section of, or such Exhibit or Schedule to, this
            Agreement, as the case may be, and references in any Section or
            definition to any clause means such clause of such Section or
            definition;

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

            (vii) reference to any agreement, instrument or other document means
            such agreement, instrument or other document as amended,
            supplemented and modified from time to time to the extent permitted
            by the provisions thereof and by this Agreement;

            (viii) reference to any law (including statutes and ordinances)
            means such law (including all rules and regulations promulgated
            thereunder) as amended, modified, codified or reenacted, in whole or
            in part, and in effect at the time of determining compliance or
            applicability, and reference to any particular provision of any law
            shall be interpreted to include any revision of or successor to that
            provision regardless of how numbered or classified;

            (ix) relative to the determination of any period of time, "from"
            means "from and including," "to" means "to but excluding" and
            "through" means "through and including";

            (x) in the event of any conflict between the provisions of the body
            of this Agreement and the Exhibits or Schedules hereto, the
            provisions of the body of this Agreement shall control; and

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            (xi) the titles to Articles and headings of Sections contained in
            this Agreement have been inserted for convenience of reference only
            and shall not be deemed to be a part of or to affect the meaning or
            interpretation of this Agreement.

      (b) This Agreement and each of the Schedules hereof and Exhibits hereto
      were negotiated by the parties with the benefit of legal representation,
      and no rule of construction or interpretation otherwise requiring this
      Agreement or any of the Schedules hereof and Exhibits hereto to be
      construed or interpreted against any party shall apply to any construction
      or interpretation hereof. Subject to Section 12.4, this Agreement shall be
      interpreted and construed to the maximum extent possible so as to uphold
      the enforceability of each of the terms and provisions hereof, it being
      understood and acknowledged that this Agreement was entered into by the
      parties after substantial negotiations and with full awareness by the
      parties of the terms and provisions hereof and the consequences thereof.

      (c) Where a statement in this Agreement (including the schedules) is
      qualified by the expression "to the best of the Sellers' (or Founders')
      knowledge" or "so far as the Sellers (or Founders) are aware" or any
      similar expression shall be deemed to include each of the Seller's or
      Founder's, as the case may be, actual knowledge and what each of the
      Sellers or Founders who are active in the daily management of whichever of
      the Companies is the subject of such statement, should have known after
      due and careful inquiry of the Managing Director, the members of the Board
      of Directors and any relevant person(s) involved in the management of the
      business of each of the respective Companies, such as the controller, the
      human resources manager and the technology and manufacturing management.
      Except for statements qualified by a Founder or Seller after due and
      careful inquiry, in the manner set forth in the first sentence of this
      subsection, each of the Founders or the Sellers, as the case may be, shall
      be liable for any erroneous or untrue statement or Warranty that he or she
      may make in this Agreement (including the schedules), irrespective of
      whether the error contained therein or the untruth thereof shall have
      resulted from negligence or intent on the part of such Founder or Seller.

2.    SALE AND PURCHASE OF THE SHARES

2.1   Subject to (i) payment to the Sellers of the portion of the Purchase Price
      identified under Section 3.2.1 in accordance with the instructions of
      Seller's Representative pursuant to Section 3.3 below; and (ii) delivery
      of certificates evidencing the ownership of the Mikron Shares in
      accordance with Section 3.2.4 below, the Sellers hereby sell and assign
      and the Purchaser hereby purchases and accepts the assignment of the
      Shares under the terms of this Agreement.

2.2   The sale of the Shares by the Sellers to the Purchaser shall include all
      rights of the Sellers thereunder including, but not limited to, all rights
      to profits, as well as, in particular, profit distribution claims and
      profit drawing rights pertaining to all time periods commencing on and
      after March 1, 2002.

3.    PURCHASE PRICE AND PAYMENT

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3.1   The purchase price for the Shares (the "Purchase Price") shall be

      3.1.1 600,000 unregistered shares of Mikron Common Stock (the "Mikron
      Shares");

      3.1.2 plus (euro)4,470,000

            (a) increased by the Cash Balance Adjustment in the amount of
            (euro)167,827.34; and

            (b) reduced by the Section 5.27.3 Indebtedness in the amount of
            (euro)952,200.00.

3.2   The Purchase Price shall be paid as follows:

      3.2.1 (euro)3,670,000 plus the Cash Balance Adjustment, and minus the
      Section 5.27.3 Indebtedness, i.e.,(euro)2,885,627.34, shall be paid within
      four calendar days after Closing ("Payment Date") to the Sellers ("Initial
      Payment");

      3.2.2 (euro)680,000 ("Mr. Schlosser's Deferred Purchase Price") shall be
      paid to Mr. Schlosser pursuant to the terms, and subject to the conditions
      set forth in Section 3.6;

      3.2.3 (euro)120,000 ("Mr. Breternitz's Deferred Purchase Price" which,
      together with Mr. Schlosser's Deferred Purchase Price, is hereinafter
      referred to as the "Deferred Purchase Price") shall be paid to Mr.
      Breternitz pursuant to the terms, and subject to the conditions set forth
      in Section 3.6; and

      3.2.4 certificates evidencing the ownership of the Mikron Shares shall be
      delivered at Closing to the Sellers or the Sellers' Representative.

3.3   The specific amount to be paid to each of the Sellers pursuant to Section
      3.2.1 and the specific number of Mikron Shares to be issued and delivered
      to each of the Sellers pursuant to Section 3.2.4 shall be designated by
      Seller's Representative pursuant to a written notice delivered by him to
      Purchaser not later than three business days prior to the Closing Date
      (the "Payment Designation Notice").

3.4   At the Closing, the Sellers shall deliver a certificate of the Sellers'
      Representative attesting to the aggregate amount of the Closing Date Cash
      Balances (the "Section 3.4 Certificate"). In the event that the Closing
      Date Cash Balances shall be, in the aggregate, greater or less than
      (euro)1.00, the Purchase Price shall be increased or decreased, as the
      case may be, to the extent of the difference thereof (in either case, the
      "Cash Balance Adjustment").

3.5   Each of the Sellers recognizes and agrees that any and all payments and
      deliveries made by the Purchaser to the Sellers' Representative and/or
      pursuant to written instructions received from the Seller's Representative
      shall be in full discharge of the Purchaser's obligations to each of the
      Sellers under this Agreement. The Purchaser has no responsibility
      whatsoever for the allocation of the Purchase Price among the Sellers.
      However, upon request of Purchaser, the Sellers' Representative shall
      without undue delay inform the Purchaser upon the allocation of the
      Initial Payment among the Sellers.

                                       9
<PAGE>

3.6   Terms and Conditions Applicable to the Payment of the Deferred Purchase
      Price

      3.6.1 Purchaser shall pay to Mr. Schlosser and to Mr. Breternitz, and
      their respective successors, heirs and assigns, in lawful currency of the
      Federal Republic of Germany, the Appreciated Amount payable to each of
      them in accordance with the provisions of Section 3.6.2. Unless the
      provisions of Section 3.6.3 shall be applicable, the Appreciated Amount
      shall be due and payable only on the Maturity Date and in the Maturity
      Principal Amount.

      3.6.2 Each of Mr. Schlosser's Deferred Purchase Price and Mr. Breternitz's
      Deferred Purchase Price shall accrete in value at a yield of 9% per annum,
      compounded on each December 31 and June 30, commencing December 31, 2002
      (each a "Compounding Date"). The Appreciated Amount on each Compounding
      Date prior to the Maturity Date payable to Mr. Schlosser and to Mr.
      Breternitz is set forth on Exhibit B-1 and B-2, respectively. The
      Appreciated Amount on a date other than a Compounding Date is the
      Appreciated Amount on the immediately preceding Compounding Date (or the
      Closing Date if the date of computation is prior to the first Compounding
      Date), plus a portion of the difference between the Appreciated Amount as
      of the immediately preceding Compounding Date and the Appreciated Amount
      as of the immediately succeeding Compounding Date calculated by
      multiplying such difference by a fraction the numerator of which is the
      number of days that have elapsed since the immediately preceding
      Compounding Date and denominator of which is the number of days from the
      immediately preceding Compounding Date to the immediately succeeding
      Compounding Date.

      3.6.3 Each of Mr. Schlosser and Mr. Breternitz shall have the right to
      require the Purchaser to prepay the Appreciated Amount which shall be due
      and owing by it pursuant to the terms of this Section 3.6.3 in the event
      that a "Change in Control" (as hereinafter defined) occurs. The amount
      which shall be due and payable by the Company in connection with any such
      prepayment shall equal the Appreciated Amount as of the date selected by
      the Payee for prepayment (as hereinafter provided). For purposes hereof, a
      "Change in Control" shall be deemed to occur if: (a) any "person" or
      "group"(as such terms are defined in the U.S. Securities Exchange Act of
      1934, as amended) other than Mikron Infrared, Inc. ("Mikron") or any of
      its subsidiaries, or a trustee or any fiduciary holding securities under
      an employee benefit plan of Mikron or any of its subsidiaries, acting
      singly or in concert with one or more other persons, acquires securities
      representing 50% or more of the combined voting power of Mikron's then
      outstanding securities; (b) during any one year period, individuals who at
      the beginning of such period constitute the Board of Directors of Mikron
      and any new director whose election by the Board of Directors or
      nomination for election by Mikron's shareholders was approved by a vote of
      at least a majority of the directors then still in office who either were
      directors at the beginning of the period or whose election or nomination
      for election was previously so approved, cease for any reason to
      constitute a majority thereof; (c) the shareholders of Mikron approve a
      merger or consolidation of Mikron with any other corporation, other than
      (i) a merger or consolidation which would result in the voting securities
      of Mikron outstanding immediately prior thereto continuing to represent,
      in combination with the ownership of any trustee or other fiduciary
      holding securities under

                                       10
<PAGE>

      an employee benefit plan of Mikron, at least 50% of the combined voting
      power of the voting securities of Mikron or such surviving entity
      outstanding immediately after such merger or consolidation, or (ii) a
      merger or consolidation effected to implement a recapitalization of Mikron
      (or similar transaction) in which no person acquires more than 50% of the
      combined voting power of Mikron's then outstanding securities; (d) the
      shareholders approve a plan of complete liquidation of Mikron or an
      agreement for the sale or disposition by Mikron of all or substantially
      all of its assets; or (e) Gerald D. Posner shall cease to be a full time
      employee of Mikron. Each of Mr. Schlosser and Mr. Breternitz may exercise
      such right by delivery to the Purchaser, within 20 days of his receipt of
      notice that either a Change in Control or an Event of Default (as
      hereinafter defined) has occurred, of a redemption notice in the form of
      Exhibit D hereto specifying the required date of prepayment, which must be
      at least 10 days after the delivery of such notice to the Purchaser. The
      amount due and payable by the Purchaser on such specified prepayment date
      shall be the Appreciated Amount as of such date. The Purchaser, for
      itself, and on behalf of any successor to the Purchaser by merger,
      consolidation, operation of law or otherwise, covenants to give each of
      Messrs. Schlosser and Breternitz written notice of the occurrence of (x)
      an Event of Default not later than the date when the same shall occur, and
      (y) a Change in Control not later than the date upon which the Purchaser
      acquires actual notice of the occurrence thereof.

      3.6.4 The Purchaser shall have the right to prepay the Appreciated Amount
      payable to each of Messrs. Schlosser and Breternitz, in whole, but not in
      part, at any time at its option, without premium or penalty. The amount
      due and payable by the Purchaser on the date when such prepayment shall
      occur shall be the Appreciated Amount as of such date.

      3.6.5 Each of Messrs. Schlosser and Breternitz shall have the right, by
      notice in writing to the Purchaser, to declare the entire Appreciated
      Amount to become immediately due and payable (whereupon such amount shall
      become immediately due and payable) in the event that Mikron pays any cash
      dividend with respect to its common stock at any time prior to the date
      upon which the Purchaser's obligations to each of Messrs. Schlosser and
      Breternitz shall have been fully satisfied (an "Event of Default").
      Interest shall not be payable to Messrs. Schlosser and Breternitz except
      in the case of the failure to pay the Appreciated Amount respectively due
      to them when due, in which case such Appreciated Amount shall thereafter
      bear interest at the rate of 9% per annum until paid in full.

      3.6.6 Anything elsewhere contained in this Agreement to the contrary
      notwithstanding, the Appreciated Amount shall, without demand, notice or
      legal process of any kind, be declared and shall become immediately due
      and payable upon the occurrence of any of the following events (each a
      "Bankruptcy Event"): (i) the entry of a decree or order by a court or
      agency or supervisory authority having jurisdiction in the premises for
      the appointment of a conservator, receiver, trustee, or liquidator for the
      Purchaser or Mikron in any bankruptcy, insolvency, readjustment of debt,
      marshalling of assets and liabilities, or similar decree or order unstayed
      and in effect for a period of thirty (30) consecutive days; (ii) the
      consent by the Purchaser or Mikron to the appointment of a trustee,
      conservator, receiver, or liquidator in any bankruptcy, insolvency,
      readjustment of debt, marshalling of assets and liabilities, or similar
      proceedings of or relating to the Purchaser

                                       11
<PAGE>

      and involving substantially all of its property; or (iii) the Purchaser or
      Mikron shall admit in writing its inability to pay its debts generally as
      they become due, file a petition under any applicable bankruptcy,
      insolvency, or reorganization statute, make an assignment for the benefit
      of its creditors, or voluntarily suspend payment of its obligations.

      3.6.7 If payment of the Appreciated Amount is accelerated upon the
      occurrence of an Event of Default or a Bankruptcy Event, the amount
      immediately due and payable in such event shall equal the Appreciated
      Amount as of such date of acceleration. The Purchaser hereby promises to
      pay all costs and expenses, including reasonable attorneys fees and
      expenses, incurred in the collection of the Appreciated Amount and
      enforcement of the rights of Messrs. Schlosser and Breternitz with respect
      thereto.

      3.6.8 Except to the extent otherwise provided in Section 7.4.1, all
      payments hereunder shall be made without set-off, defense, deduction,
      counterclaim or withholding on account of taxes, levies, duties or any
      other reason whatsoever.

3.7   In the case of default with respect to the payment of the portion of the
      Purchase price identified in Section 3.2.1 the Purchaser shall pay
      interest thereon at a rate of 8% p.a. above the base rate according
      toss.247 of the German Civil Code from Closing Date on.

3.8   For a period of ten calendar days after the Payment Date the Sellers will
      refrain from exercising any statutory or contractual right to rescind this
      Agreement by reason of non-payment of the Initial Payment.

4.    CLOSING AND POST-CLOSING

4.1   Closing shall take place on the Closing Date at such place as the Parties
      shall mutually agree upon. All actions taken at the Closing shall be
      deemed to have been taken simultaneously at the time the last of any such
      actions is taken or completed.

4.2   At Closing the Sellers shall

      4.2.1 deliver to the Purchaser a certificate executed by the Seller's
      Representative confirming the following:

            (a) Each of the representations and warranties of the Founders and
            the other Sellers contained in Section 5 is true, correct and
            complete on and as of the Closing Date.

            (b) All covenants, agreements and conditions contained in this
            Agreement to be performed or complied with by the Companies and the
            Sellers on or prior to the Closing Date have been performed or
            complied with.

            (c) On or prior to the Closing Date, all filings, registrations,
            approvals, notifications etc required by applicable laws in
            connection with the transfer of the Shares to the Purchaser, and the
            consummation of the transactions contemplated by this Agreement have
            been duly obtained by the Companies and the Sellers and shall be
            effective on and as of the date of the Initial Payment.

                                       12
<PAGE>

            (d) No Profit Distributions are due and owing by any of the
            Companies to any Person.

            (e) There has not occurred between the Accounts Date and the Closing
            Date (i) any Material Adverse Effect upon the assets, business,
            operations, employee relations, customer or supplier relations,
            operating results, prospects or condition (financial or otherwise)
            of the Companies taken as a whole and (ii) any material adverse
            Federal or state legislative or regulatory change affecting the
            respective businesses, products or services of the Companies taken
            as a whole.

            (f) All conditions precedent to the assignment of the Shares, have
            been fulfilled, and that the assignment of all of the Sellers'
            respective rights, titles and interests in the Shares therewith will
            become legally effective on and as of the date of the Initial
            Payment.

            (g) Certificates evidencing the ownership of the Mikron Shares have
            been delivered in accordance with Section 3.2.4.

4.2A  Within three calendar days after receipt of the Initial Payment Sellers'
      Representative shall send a confirmation of such receipt to Mikron.

4.3   At the Closing Purchaser and/or Mikron, as the case may be, shall

      4.3.1 deliver to the Sellers a certificate confirming that

            (a) each of the representations and warranties of the Purchaser and
            Mikron contained in Section 6 is true, correct and complete on and
            as of the Closing Date, and all covenants, agreements and conditions
            contained in this Agreement to be performed or complied with by the
            Purchaser and Mikron on or prior to the Closing Date have been
            performed or complied with.

            (b) on or prior to the Closing Date, any authorizations, consents,
            approvals or permits of any Governmental Entity that are required by
            law in connection with the lawful issuance of the Mikron Shares, and
            the consummation of the transactions contemplated by this Agreement
            have been duly obtained by the Purchaser and/or Mikron and are
            effective on and as of the Closing Date.

            (c) Mikron has taken all actions under all applicable U.S.
            securities laws necessary to consummate the issuance of the Mikron
            Shares to the Sellers.

            (d) Mikron has received loan proceeds in the aggregate principal
            amount of US$500,000 from Messrs. Gerald D. Posner and Dennis
            Stoneman which shall be repayable pursuant to capital appreciation
            notes containing substantially the same terms and conditions set
            forth in Section 3.6.

      4.3.2 Upon receipt of the certificate described in Section 4.2.1, pay to
      the Sellers the amount required to be paid pursuant to Section 3.2.1 by
      wire transfer to the accounts of the Sellers identified in the Payment
      Designation Notice, and shall deliver to the Sellers

                                       13
<PAGE>

      certificates evidencing Sellers' ownership of the Mikron Shares in the
      denominations set forth in the Payment Designation Notice, as full
      consideration for the Shares, subject to Purchaser's post-Closing right to
      set-off, pursuant to Section 387 of the German Civil Code, such amount or
      amounts as may be due and payable by any of the Sellers pursuant to
      Article 7 and/or 8 hereof against the Deferred Purchase price, and the
      Sellers' rights to receive the Contingent Payment pursuant to Section 4.4.

4.4   In the event that the Company receives from the German fiscal authorities
      a tax refund with respect to the Profit Distributions, the Purchaser shall
      pay to the Sellers the amount of such refund (the "Contingent Payment")
      not later than 15 business days after the date on which such refund
      payment is received by the Company.

4.5   Upon Closing, Mr. Schlosser hereby sells and transfers and the Purchaser
      hereby purchases and accepts the transfer of each of the loans comprising
      the Section 5.27.3 Indebtedness from the respective lenders who made such
      loans. The purchase price to be paid with respect to each of such loans
      shall be the principal amount thereof, i.e., (euro)952,200.00. Such
      purchase price shall be paid together and at the same time as the Initial
      Payment; Sections 3.2.1, 3.7, 3.8 and 4.2A shall apply accordingly. In the
      event that any bank who, by reason of its provision of financing to
      Purchaser and/or Mikron with respect to the consummation of the
      transactions contemplated herein and hereby, requires Purchaser to
      subordinate its rights with respect to any of the loans comprising the
      Section 5.27.3 Indebtedness that it shall be purchasing pursuant to this
      Section 4.5, Purchaser shall execute and deliver such subordination
      agreements as such bank or banks shall reasonably require.

4.6   At the Closing and from time to time thereafter, the Sellers shall, at no
      additional cost to the Purchaser, execute such additional instruments and
      take such other actions as Purchaser may request in order to effectively
      sell, transfer and assign the Shares to Purchaser and confirm Purchaser's
      title thereto.

4.7   With a view to making available to the Sellers the benefits of certain
      rules and regulations of the SEC which may permit the sale of the Mikron
      Shares to the public without registration, Mikron agrees to use its best
      efforts to: (a) make and keep public information available, as and when
      required of Mikron under U.S. securities laws; (b) file with the SEC, in a
      timely manner at its sole cost and expense, all reports and other
      documents, when and as required of Mikron under the Exchange Act; and (c)
      comply at all times in all material respects with all applicable criteria,
      requirements and rules imposed by the NASDAQ SmallCap Market, or any
      successor thereof, or any national or regional stock exchange upon which
      the Common Stock may, in the future, become listed for trading.

5.    REPRESENTATIONS AND WARRANTIES OF THE FOUNDERS AND THE OTHER SELLERS

      Subject to Article 7 below, each of the Founders severally, but not
      jointly, gives all of the following representations and warranties to the
      Purchaser as of the Closing Date. Subject to Article 7 below, each of the
      Sellers who is not a Founder severally, but not jointly,

                                       14
<PAGE>

      gives to the Purchaser only the representations and warranties contained
      in Section 5.1 (Power and Authority), 5.3 (Standing of the Companies), 5.4
      (Title to the Shares) and 5.28 (Acquisition of Mikron Shares for
      Investment Purposes) which are correct as of the Closing Date.

      In entering into this Agreement, Purchaser and Mikron are relying upon the
      correctness of the representations and warranties as defined in Section
      434 para 1 sentence 1 German Civil Code ("Beschaffenheitsangaben" as
      defined in ss. 434 Absatz 1 Satz 1 BGB) made by the Sellers and Founders
      below. The parties to this Agreement agree that the representations and
      warranties contained in this Article 5 are not given as "Garantien" in the
      meaning of Sections 444 Alt 2 and 443 of the German Civil Code and that
      none of Sellers' and Founders' respective statements in public, especially
      advertisement ("Werbung"), in the meaning of Sections 443 para. 1 and 434
      para 1 sentence 3 of the German Civil Code shall be interpreted as
      representation or warranty. The Founders, as partial debtors
      (Teilschuldner), shall be liable for these representations and warranties
      being correct both as of the Closing Date. The Founders, the Purchaser and
      Mikron acknowledge and agree that the representations and warranties
      contained in this Section 5 and the legal consequences which will result
      pursuant to Article 7 below if any of such representations and warranties
      shall not be correct or shall not be complied with are homogeneous with,
      and an inseparable part of, this Agreement.

      In entering into this Agreement, Purchaser and Mikron are relying upon the
      correctness of the representations and warranties made by the Sellers who
      are not Founders to Purchaser and Mikron pursuant to Sections 5.1 (Power
      and Authority), 5.3 (Standing of the Companies), 5.4 (Title to the Shares)
      and 5.28 (Acquisition of Mikron Shares for Investment Purposes). The
      Sellers who are not Founders shall be liable, as partial debtors
      (Teilschuldner), for these representations and warranties being correct as
      of the Closing Date. The Sellers who are not Founders, Purchaser and
      Mikron acknowledge and agree that the representations and warranties set
      forth in Section 5.1, 5.3, 5.4 and 5.28 and the legal consequences which
      will result pursuant to Article 7 below if any of such representations and
      warranties shall not be correct or shall not be complied with are
      homogeneous with, and an inseparable part of, this Agreement.

      No representations and/or warranties other than those expressly given in
      this Article 5 are given by the Sellers and/or the Founders. Section 434
      para 1 sentences 2 and 3 German Civil Code shall not apply.

      In the event that more than one of the Founders and/or the Sellers are
      liable for one and the same violation or incorrectness of any of the
      Warranties, the individual share of the aggregate liability which shall be
      owed by each of the affected Founders and/or Sellers shall be equivalent
      to the percentage of the Purchase Price that he or she shall receive
      hereunder.

5.1   Power and Authority

      5.1.1 The Sellers have full power and authority to sell, transfer and
      deliver to the Purchaser the Shares respectively owned by each of the
      Sellers and to perform all other

                                       15
<PAGE>

      undertakings hereunder and the execution and performance of this
      Agreement.

      5.1.2 Assuming all filings, registrations, approvals, notifications etc
      required by applicable laws are made, the execution of this Agreement by
      the Sellers, the assignment of the Shares to the Purchaser and the Closing
      of the transactions contemplated hereby:

            (a) will not violate any provision of the respective articles of
            association of any of the Companies;

            (b) will not violate any statute, rule, regulation, order, award,
            judgment, injunction or decree of any public body or authority by
            which the Sellers or any of the Companies or any of their properties
            or assets is bound;

            (c) will not result in a violation or breach of, or constitute a
            default under, any license, franchise, permit, indenture, agreement
            or other instrument to which any of the Sellers or any of the
            Companies is a party, or by which any of the Sellers or any of the
            Companies is bound; and

            (d) will not result in the creation or imposition of any Lien,
            charge or encumbrance of any nature on any of the properties or
            assets of the Companies.

      5.1.3 Except for Mr. Breternitz's 90% ownership of the Kleiber business
      and his 76% interest in MESELA which acts as a supplier and as a
      distributor in East Germany for the Companies and which ownership and
      shareholding are known to the Purchaser and to Mikron, none of the Sellers
      owns, directly or indirectly, any interest in, or is employed by, any
      entity that engages in any business activity that competes directly or
      indirectly with any of the business activities conducted by the Companies.

5.2   Accuracy of Information

      5.2.1 All information supplied in writing by the Companies, the Sellers or
      their agents to the Purchaser or its agents is in all material respects
      correct and not misleading in any material respect. To the best of the
      Founders' knowledge and information, such written information does not
      contain any misrepresentation of, and does not omit to state, any material
      fact regarding the matters set forth therein.

      5.2.2 The particulars relating to the Companies and their respective
      businesses, properties and assets set out in this Agreement, including the
      recitals and the schedules to this Agreement, are correct in all material
      respects.

5.3   Standing of the Companies

      5.3.1 Each of the Companies (except IMPAC France and IMPAC Infrared) is
      duly incorporated, registered and organized, and validly existing under
      the laws of Germany and has the corporate power to own its respective
      properties and carry on its respective business as and where its business
      is now conducted.

      5.3.2 IMPAC France is duly incorporated, registered and organized, and
      validly

                                       16
<PAGE>

      existing under the laws of France and has the corporate power to own its
      property and carry on its respective business as and where its business is
      now conducted.

      5.3.3 IMPAC Infrared is duly incorporated, registered and organized, and
      validly existing under the laws of the United Kingdom and has the
      corporate power to own its property and carry on its respective business
      as and where its business is now conducted.

      5.3.4 All returns, resolutions, minutes, annual reports and other
      documents which the Companies are required by law or regulations to file
      with or deliver to the respective governmental authorities having
      jurisdiction over them have been correctly prepared and duly filed or
      delivered.

      5.3.5 The articles of association (or the similar organizational
      documents) of the Companies, as listed in Exhibit E, are in full force and
      effect in compliance with applicable laws.

      5.3.6 The respective share registers and other statutory books and
      registers of IMPAC France and IMPAC Infrared are complete, properly kept
      and in their possession.

5.4   Title to the Shares

      5.4.1 Each of the Sellers has good and marketable title to the Shares he
      or she respectively owns, free and clear of all Liens, encumbrances,
      claims, options and restrictions of every kind.

      5.4.2 The Shares respectively owned by each of the Sellers as sold under
      this Agreement represent together one hundred per cent (100%) of the
      registered share capital of the Company and Infrapoint. The Shares have
      been validly issued and are fully paid and non-assessable. No repayments
      of share capital of the Company or Infrapoint has been made to any of the
      Sellers and no contribution obligation (Nachschu(beta)verpflichtung)
      exists with regard to the shares held by any of the Sellers in the Company
      or Infrapoint. There are no outstanding obligations, warrants, options,
      pre-emptive rights or other agreements to which any of the Sellers or any
      of the Companies is a party or otherwise bound, providing for the issuance
      of any additional shares, warrants, options or other securities, or for
      the purchase, repurchase, redemption or other acquisition of the Shares,
      except for this Agreement.

      5.4.3 The Company is the owner of one hundred per cent (100%) of the
      registered share capital of each of the Subsidiaries; and ninety percent
      (90%) of the registered share capital of IMPAC Systems. The shares of the
      Subsidiaries and IMPAC Systems issued to the Company have been validly
      issued and are fully paid and non-assessable. No repayments of share
      capital of any of the Subsidiaries or IMPAC Systems have been made to the
      Company and no contribution obligations (Nachschlu(beta)verpflichtungen)
      exist with regard to the shares held by the Company in any of the
      Subsidiaries and/or IMPAC Systems.

      5.4.4 There is no pledge, Lien or other form of security or encumbrance
      on, over or affecting any of the Shares or of any of the shares in the
      Subsidiaries, nor is there any

                                       17
<PAGE>

      commitment to give or create any of the foregoing.

      5.4.5 There are no voting agreements or other shareholder agreements with
      respect to the Sellers or the shares or ownership of any of the Companies.

5.5   Other Subsidiaries, Associations and Branches

      5.5.1 The Companies do not own, and have not agreed to acquire, any
      securities of any other corporation (whether incorporated in Germany or
      elsewhere), or any other entity or business association of whatever kind
      other than the Subsidiaries and IMPAC Systems.

      5.5.2 The Companies have outside of Germany no branch or permanent
      establishment other than the Subsidiaries.

5.6   The Accounts and the Pre-Closing Accounts

      5.6.1 The Accounts:

            (a) have been prepared in accordance with the Accounting Principles
            and applicable laws and regulations, and give a true and fair view
            of the financial condition of the Companies, individually, or on a
            consolidated basis, as the case may be, as at their respective
            Accounts Date and of the profit or loss of each of the Companies for
            the one year periods ending on their respective Accounts Dates;

            (b) have been prepared on bases consistent with the bases employed
            in the Companies' accounts for each of the three immediately
            preceding fiscal years, except as disclosed in Schedule 5.6.1(b);

            (c) contain either provisions adequate to cover, or full particulars
            in notes of, all Taxation and other liabilities and capital
            commitments (whether quantified, contingent or otherwise) of the
            Companies, individually, or on a consolidated basis, as the case may
            be, as at their respective Accounts Dates; and

            (d) are not affected by any unusual or non-recurring items or by any
            contract or arrangement which is not of arm's length nature, except
            as set out in Schedule 5.6.1(d).

      5.6.2 The Pre-Closing Accounts:

            (a) have been included in Exhibit C;

            (b) have been prepared in accordance with the Accounting Principles
            and applicable laws and regulations, with the exception, however,
            that no physical inventory was taken, and give a true and fair view
            of the financial condition of the Companies, individually, as at the
            Pre-Closing Accounts Date and of the profit or loss of each of the
            Companies for the periods commencing on the date immediately
            following their respective Accounts Dates and ending on the
            Pre-

                                       18
<PAGE>

            Closing Accounts Date;

            (c) have been prepared on bases consistent with the bases employed
            in the Companies' accounts for each of the three immediately
            preceding fiscal years, except as disclosed in Schedule 5.6.2(c);

            (d) contain either provisions adequate to cover, or full particulars
            in notes of, all Taxation and other liabilities and capital
            commitments (whether quantified, contingent or otherwise) of the
            Companies, individually as at the Pre-Closing Accounts Date; and

            (e) are not affected by any unusual or non-recurring items or by any
            contract or arrangement which is not of arm's length nature, except
            as shall be set out in Schedule 5.6.2(e).

      5.6.3 Schedule 5.6.3 is a true, correct and complete listing and aging of
      each of the Companies' respective accounts receivable in excess
      of(euro)5,000 as of their respective Accounts Dates determined in
      accordance with the Accounting Principles consistently applied and
      determined in a manner consistent with the presentation in the Accounts.
      All of such accounts receivable have arisen in bona fide arm's length
      transactions in the ordinary course of business and are valid and binding
      obligations of the account debtors. The Founders do not know of any
      circumstances that would make them believe that such accounts receivable
      are not collectible in full in the ordinary course of business within 180
      days of the relevant invoice date, except to the extent that reserves for
      doubtful accounts have been established by the Companies and are set forth
      on Schedule 5.6.3. The reserves for doubtful accounts established by the
      Companies and reflected on Schedule 5.6.3 have been determined in
      accordance with the Accounting Principles consistently applied and are
      consistent with the presentation in the Accounts, it being understood that
      in no event shall the reserve exceed 12.5% of the total face amount of the
      receivables.

      5.6.4 Schedule 5.6.4 sets forth a true, correct and complete listing and
      aging of each of the Companies' respective accounts receivable in excess
      of(euro)5,000 as of the Pre-Closing Accounts Date determined in accordance
      with the Accounting Principles consistently applied and determined in a
      manner consistent with the presentation in the Accounts. All of such
      accounts receivable shall have arisen in bona fide arm's length
      transactions in the ordinary course of business and shall be valid and
      binding obligations of the account debtors. The Founders do not know of
      any circumstances that would make them believe that such accounts
      receivable shall not be collectible in full in the ordinary course of
      business within 180 days of the relevant invoice date, except to the
      extent that reserves for doubtful accounts shall have been established by
      the Companies in the Pre-Closing Accounts and shall be set forth on
      Schedule 5.6.4. The reserves for doubtful accounts established by the
      Companies that shall be reflected in the Pre-Closing Accounts and on
      Schedule 5.6.4 shall be determined in accordance with the Accounting
      Principles consistently applied and shall be consistent with the
      presentation in the Accounts, it being understood that in no event shall
      the reserve exceed 12.5% of the total face amount of the receivables.

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<PAGE>

      5.6.5 Any payments (in the form of retainers or otherwise) from, the
      customers or potential customers of any of the Companies for services to
      be rendered or for expenses to be incurred subsequent to the Closing Date
      are set forth on Schedule 5.6.5 and have been recognized consistent with
      previously applied principles in the books of the Companies.

5.7   Undisclosed Liabilities

      As of the Closing Date, the Companies will not have, any debts,
      liabilities or obligations of any nature (whether accrued, absolute,
      contingent, direct, indirect, unliquidated or otherwise and whether due or
      to become due) arising out of transactions entered into on or prior to the
      Closing Date, or any transaction, series of transactions, action or
      inaction occurring on or prior to the Closing Date, or any state of facts
      or condition existing on or prior to the Closing Date (regardless of when
      such liability or obligation is asserted), except for (a) liabilities and
      obligations under agreements, contracts, leases or commitments disclosed
      in this Agreement or in a Schedule hereof (none of which relates to any
      breach of contract, breach of warranty, tort, injury caused to another,
      infringement, claim, lawsuit or violation of law or the allegation or
      claim thereof), and (b) liabilities and obligations arising in the
      ordinary course of business since the respective Accounts Dates of each of
      the Companies, consistent in form and amount with past practice, none of
      which liabilities or obligations, individually or in the aggregate, would
      have, individually or in the aggregate, a Material Adverse Effect. None of
      the Companies is under any obligation, contingent or otherwise, to refund
      or rebate any amounts paid or payable to any of them for services rendered
      prior to the date hereof, except for the rebate entitlements of certain
      customers as disclosed on Schedule 2, and for such matters for which
      warranty accruals shall have been established and included in the
      Pre-Closing Accounts.

5.8   Conduct of Business since Accounts Date

      5.8.1 The activities of the Companies during the periods from each of
      their respective Accounts Dates through the Closing Date have been
      conducted in a normal and proper manner and with a view to maintaining the
      Companies as going concerns.

      5.8.2 There has not been, arisen or occurred, during the periods between
      the respective Accounts Dates of each of the Companies and the Closing
      Date in respect of the Companies:

            (a) any change in their respective financial conditions or in the
            operations of their respective businesses which would have a
            Material Adverse Effect;

            (b) any amendment or termination of, or any agreement to amend or
            terminate, any material agreement;

            (c) any material obligations or liabilities incurred;

            (d) any waiver of any debts, claims or rights;

                                       20
<PAGE>

            (e) any sale, assignment, transfer, lease or other disposal of any
            material assets, other than as disclosed in Schedule 5.8.2(e);

            (f) any ex gratia payments or promises to any employee, other than
            year-end bonuses for the most recently completed fiscal year,
            respectively, of each of the Companies;

            (g) any loan or advance to any party in excess of (euro)10,000;

            (h) any change of accounting methods, principles or practices,
            except as disclosed in Schedule 5.6.1(b) and 5.6.2(c);

            (i) any change in manner or methods of paying creditors;

            (j) any material investments in fixed assets, other than as
            disclosed in Schedule 5.8.2(j); or

            (k) any increase in compensation or benefits or introduction of new
            benefits to any of the Sellers or any director, officer or employee
            of the Companies, other than as disclosed in Schedule 5.8.2(k).

      5.8.3 Full details of (a) all transactions since the respective Accounts
      Dates of each of the Companies between any of the Companies and each of
      the Sellers (or any person related, affiliated or in any other way
      connected with either of the Sellers); and (b) all payments by any of the
      Companies to the Sellers (or any Close Relative or affiliate of the
      Sellers) since the respective Accounts Dates of each of the Companies, are
      set out in Schedule 5.8.3.

5.9   Dividends

      Except (i) as set out in the Accounts and the minutes from the Companies'
      respective general shareholders' meetings; (ii) for the dividend
      distribution authorized by the Company's shareholders on February 26,
      2002; and (iii) for the Profit Distributions, none of the Companies has
      declared, since the respective Accounts Dates of each of the Companies,
      any dividends or made any other distributions of profits or assets to
      their respective shareholders. Except for such shareholders' resolutions
      as may be necessary to authorize the Companies to make the Profit
      Distributions, no shareholders' resolutions concerning profit
      distributions have been adopted for any of the Companies. All Profit
      Distributions, dividends or other distributions of profits or assets
      declared, made or paid by any of the Companies have been declared made and
      paid in accordance with applicable laws and their respective articles of
      association.

5.10  Subsidies etc.

      Other than as disclosed on Schedule 5.10, the Companies are not, as of the
      Closing Date, subject to any arrangement for receipt or repayment of any
      grant, subsidy or financial assistance from any government department or
      other body.

                                       21
<PAGE>

5.11  Real Property and Other Assets

      5.11.1 The Companies do not own any real property.

      5.11.2 The Company has provided or made available to Purchaser all leases
      for all real property leased by any of the Companies, as lessor or lessee
      (the "Properties"), as of the date hereof (the "Leases"). All such Leases
      are valid and binding in accordance with their respective terms and none
      of the Companies is in default in any respect under any Lease, except for
      such instances of default thereunder that would not individually or in the
      aggregate result in a Material Adverse Effect. Except as set forth in
      Schedule 5.11.2, the execution of this Agreement and the consummation of
      the transactions contemplated hereby, do not and will not result in a
      breach or violation of, or constitute a default or an event that, with the
      passage of time or the giving of notice, or both, would constitute a
      default, give rise to a right of termination, material modification
      (including as to the amount, timing or nature of lease payments),
      cancellation or acceleration or require the consent or approval of any
      party (other than one or more of the Companies (as applicable)) under any
      Lease

      5.11.3 The Companies have good and marketable title or rights as lessees
      to all personal, mixed, tangible and intangible property of any kind or
      nature owned or used by the Companies, and the Companies own each of the
      assets reflected in the Accounts, in each case, except to the extent
      otherwise disclosed in the Accounts or the schedules to this Agreement,
      free and clear of all Liens, claims and encumbrances. The assets and
      properties owned or leased by the Companies are, as at the Closing Date,
      sufficient to operate and conduct the respective businesses of the
      Companies in a manner consistent with at least the same standards of
      quality and reliability as have been achieved as of the date hereof.

      5.11.4 Machinery, equipment and other tangible assets owned by the
      Companies are in fair or good operating condition and repair, reasonable
      wear and tear excepted, are usable in the ordinary course of business and
      are adequate and suitable for the uses to which they are being put. None
      of such items requires any repairs or replacement except for maintenance
      in the ordinary course of business or such other repairs or replacements
      which are not material, individually or in the aggregate, in nature or
      cost. All such assets and property are located at the Properties.

      5.11.5 Except as set forth in Schedule 5.11.5, none of the Companies is
      contemplating, or is obligated to make any capital expenditures other than
      (a) in the ordinary course of their respective businesses; and (b) in
      amounts which in the aggregate, will not exceed (euro)20,000 for any of
      the Companies.

5.12  Intellectual Property

      5.12.1 To the best knowledge of the Founders and except as set forth in
      Schedule 5.12.1, the activities of the Companies (or of any licensee under
      any license granted by the Companies) do not infringe or are not likely to
      infringe on any Intellectual Property Rights of any third party and no
      claim has been made, has been threatened, or is likely to

                                       22
<PAGE>

      be made or threatened, against any of the Companies or any such licensee
      in respect of such infringement.

      5.12.2 Details of all registered Intellectual Property Rights (including
      applications to register the same) and all commercially significant
      unregistered Intellectual Property Rights owned or used by the Companies
      are set out in Schedule 5.12.2.

      5.12.3 The Companies use in their respective businesses no Intellectual
      Property Rights, other than the Intellectual Property Rights identified on
      Schedules 5.12.1 and 5.12.2, and are under no obligation to pay license
      fees or royalties for any Intellectual Property Rights other than those
      identified on said Schedules. The Companies do not carry on business under
      any names other than their respective corporate names.

      5.12.4 The Companies' abilities to use the Intellectual Property Rights
      used by them at the date of this Agreement will not be affected by the
      transactions contemplated hereby.

      5.12.5 Neither the Sellers nor any Close Relatives or affiliates of the
      Sellers, or any third party other than as disclosed in Schedule 5.12.5,
      have any rights to any Intellectual Property Rights used by any of the
      Companies.

      5.12.6 None of the Sellers holds any Intellectual Property Rights which
      are, or could be, used by any of the Companies or has any claim for
      compensation for such Intellectual Property Right.

5.13  Agreements

      5.13.1 None of the Companies is party to any contract, agreement,
      arrangement or obligation of material importance to its respective
      businesses, other than the Material Agreements listed in Schedule 2. Each
      Material Agreement is valid and in full force and effect and has been
      disclosed in full to the Purchaser.

      5.13.2 Except for the request received from Optrotherm GmbH to renegotiate
      the co-operation agreement of 1993 and the framework agreement of May 18,
      1995, which is likely to result in a termination of the co-operation
      agreement with Optrotherm (see Schedule 5.19.1), the Companies have
      neither received nor given notice of termination of any Material
      Agreement. No party to any Material Agreement has the right to terminate
      or modify its obligations as a result of the transactions contemplated by
      this Agreement.

      5.13.3 Neither the Companies, nor the other parties to the Material
      Agreements are in material default under or in breach of any Material
      Agreement.

      5.13.4 Except to the extent set forth in Schedule 2, none of the Companies
      is party to any contract, agreement, arrangement or obligation which was
      not entered into in the ordinary course of their respective businesses, or
      any agreement or arrangement which restricts the Companies' freedom to
      carry on any business in any part of the world in such manner as they deem
      to be fit.

      5.13.5 None of the Companies has since March 1, 2002 received any material
      complaints

                                       23
<PAGE>

      concerning products and/or services resulting in each individual case in a
      cost or other charge for any of the Companies exceeding (euro)1000. Except
      as set out in Schedule 5.13.5, none of the Companies' customers has since
      January 1, 2002 threatened or to the best of the Founders' knowledge
      attempted to cancel or reduce any material purchases from any of the
      Companies. None of the Companies' suppliers has since January 1, 2002
      canceled or reduced or to the knowledge of the Founders is currently
      attempting to cancel or reduce the supply of products or services to any
      of the Companies. None of the Companies' suppliers, with the exception (a)
      of public utility suppliers; (b) suppliers of sensors; and (c) Optrotherm
      GmbH, as disclosed in Schedule 5.13.5, is the sole source of supply
      without any other available source of supply preventing the Companies to
      obtain at substantially equivalent terms and conditions a source of supply
      of products or services.

5.14  Anti-Competitive Arrangements

      5.14.1 The Companies are not, nor have they been, since the respective
      dates of registration of each of the Companies, parties to any agreement,
      arrangement, concerted practice or course of conduct which:

            (a) infringes any law, legislation or regulation (civil or criminal)
            relating to competition, restrictive trade practices, anti-trust,
            monopolies, merger control, fair trading, restraint of trade,
            pricing, anti-dumping or free movement of goods and services in any
            jurisdiction in which the Companies carry on business or have assets
            or sales; or

            (b) is void or unenforceable (whether in whole or in part) or may
            render any of the Companies liable to proceedings under any such
            law, legislation or regulation as is referred to in subparagraph (a)
            above.

5.15  No Powers of Attorney

      Except for the signatory powers for their respective bank accounts and the
      general powers of representation granted to several managerial clerks
      (Prokura) as disclosed in Schedule 5.15, none of the Companies has granted
      any power of attorney or similar authority which remains in force as of
      the date of this Agreement.

5.16  Insider Contracts

      Except for the matters set forth on Schedule 5.16, the Companies are not
      parties to any contract or arrangement in which any of the Founders or any
      Close Relatives of the Founders is interested, directly or indirectly.

5.17  Marketing Information

      The marketing materials produced by or on behalf of the Companies is not
      subject to any restriction which materially and adversely affects the
      Companies' respective abilities to use such information for the purpose of
      their respective businesses.

                                       24
<PAGE>

5.18  Customers

      Schedule 5.18 is a complete anonymous list by volume of billings during
      the period between April 1, 2001 and March 31, 2002 to the 10 largest
      customers of the Companies considered on an aggregate basis. Except as set
      forth on Schedule 5.18, none of the customers to whom the Companies sold
      infrared temperature measurement systems, devices and ancillary equipment
      at any time since March 1, 2002, whether or not the Companies' 10 largest
      customers, has cancelled or otherwise terminated, or, to the knowledge of
      the Founders, threatened to cancel or otherwise terminate, its
      relationship with the Companies or materially reduced, or to the knowledge
      of the Companies and the Founders, has threatened to materially reduce,
      its business with the Companies. Neither any of the Companies nor any of
      the Founders has received any notice and none of them has knowledge or
      reason to believe that any customer intends to cancel or otherwise modify
      its relationship with the Companies on account of the transactions
      contemplated hereby or otherwise.

5.19  Litigation and Complaints

      5.19.1 The Companies are not engaged in any litigation or arbitration
      proceedings, and there are no such proceedings pending or threatened
      against or by any of the Companies. To the best of the Founders'
      knowledge, there are no matters or circumstances which are likely to give
      rise to any litigation or arbitration proceedings by or against the
      Companies.

      5.19.2 The Companies are not subject to any investigation, inquiry or
      enforcement proceedings or processes by any governmental, administrative
      or regulatory body, and to the best of the Founders' knowledge, the
      Founders are not aware of anything which is likely to give rise to any
      such investigation, inquiry, proceedings or process.

5.20  Licenses and Compliance with Laws

      The respective operations of the Companies have been conducted in
      compliance with applicable laws, their respective articles of association,
      and applicable regulations, judgments, orders and the like. Each of the
      Companies has all necessary licenses and permits required for the
      operation of its business; each such license and permit is in full force
      and effect; no violations are or have been recorded in respect of any such
      existing licenses or permits and remain uncorrected; no proceeding is
      pending which seeks the revocation or limitation of any such existing
      licenses or permits or that might prejudice their renewal; and no grounds
      exist for revocation of, or for the commencement of limitation proceedings
      with respect to, any of such licenses or permits.

5.21  Employees

      5.21.1 Schedule 5.21.1 describes the material particulars of the
      employment of each of the Companies' respective employees. Schedule 5.21.1
      also sets forth all outstanding offers (whether accepted or not) of
      employment made to any person by any of the Companies.

                                       25
<PAGE>

      5.21.2 Schedule 5.21.2 describes the material particulars of any agreement
      for the provision of consulting services to any of the Companies by any
      person.

      5.21.3 Except as set out in Schedule 5.21.3, no current employee of any of
      the Companies has given, or has been given, notice of termination of his
      employment or has indicated an intention to terminate his employment.

      5.21.4 Except as otherwise provided on Schedule 5.21.4, there is no scheme
      in operation by or in relation to the Companies under which any employee
      or other person is entitled to a commission or remuneration of any other
      sort arising in relation to the level of and/or calculated by reference to
      the whole or part of the turnover, profits or sales of the Companies.

      5.21.5 Except for statutory obligations under the Termination Protection
      Act (Kundigungsschutzgesetz), the Labor Management Relations Act
      (Betriebsver-fassungsgesetz) and the Statute for the Protection of
      Handicapped Persons (Schwerbehindertengesetz), the Companies have no
      obligation to make any severance payment or pay any compensation for loss
      of office or employment or a redundancy payment to any present or former
      employee (including directors) or other payment beyond payment of salary
      during the period of the notice of termination pursuant to applicable law
      and no such sums have been paid since the respective Accounts Dates of
      each of the Companies.

      5.21.6 The Companies have in all material respects complied with their
      obligations to their respective employees and former employees and any
      relevant trade union or other employee representative body. No claim has
      been made or threatened against any of the Companies or against any person
      to whom the Companies are or may be liable for compensation or
      indemnification and, to the best of the Founders' knowledge, no inquiry or
      investigation has been made or threatened by any governmental body or
      authority in respect of any matter relating to any application for
      employment by any person or the employment or termination of employment of
      any person, and the Sellers are not aware of any circumstance which may
      give rise to any such claim or investigation.

      5.21.7 During the twelve month period which preceded the date of this
      Agreement, none of the Companies (a) gave notice of any redundancies to
      any Governmental Entity or commenced discussions with appropriate employee
      representatives in connection with any proposed redundancies, and (b)
      failed to comply with any obligation, whether legal or otherwise, to
      engage in such discussions.

      5.21.8 Schedule 5.21.8 sets forth a complete list of all "employee benefit
      plans" including, but not limited to, employment contracts, bonus,
      pension, profit sharing, deferred compensation, incentive compensation,
      excess benefit, stock, stock option, severance, termination pay, change in
      control or other employee benefit plans, programs or arrangements,
      including those providing medical, dental, vision, disability, life
      insurance and vacation benefits (other than those required to be
      maintained by law), whether written or unwritten, qualified or
      unqualified, funded or unfunded, foreign or domestic, currently
      maintained, or contributed to, or required to be maintained or

                                       26
<PAGE>

      contributed to, by any of the Companies (each of which is referred to as a
      "Benefit Plan" and all of which are collectively referred to as the
      "Benefit Plans").

      5.21.9 Each of the Companies has made all payments or contributions, as
      required by each of the Benefit Plans, applicable law and generally
      accepted accounting practices in such aggregate amounts as are sufficient
      to cover the full amount of all liabilities, calculated as at the
      respective Accounts Dates of each of the Companies, in respect of the
      present and former directors, officers and employees of the Companies.
      Such payments and/or contributions and the respective obligations of the
      Companies under their respective Benefit Plans have been recorded in their
      respective Accounts or have been reflected in the notes thereto.

      5.21.10 No event has occurred and, to the knowledge of the Founders, there
      exists no condition or set of circumstances in connection with which any
      of the Companies is or would reasonably be expected to be subject to any
      material liability under the terms of any Benefit Plan, employment
      contract or any applicable law, rule or regulation, domestic or foreign.
      No statement, either written or oral, has been made by any of the
      Companies to any person with regard to any Benefit Plan that was not in
      accordance with the terms of the Benefit Plan and that would have a
      Material Adverse Effect.

      5.21.11 Except for the Shop Agreement identified in Schedule 5.21.11, none
      of the Companies is a party to or bound by any collective bargaining, shop
      or similar agreements.

      5.21.12 All Social Security Contributions of any of the Companies which
      shall be due and payable prior to Closing have been paid or shall be paid
      prior thereto in accordance with the applicable laws and statutes.

      5.21.13 Except as otherwise disclosed on Schedule 5.21.13, none of the
      Companies is subject to any obligation to pay remunerations under the
      Employee Inventions Act (Arbeitnehmererfindungsgesetz) and there are no
      circumstances on the basis of which any employee of any of the Companies
      could raise such a claim against any of the Companies.

5.22  Environmental

      5.22.1 For purposes of this Agreement, the term "Environmental Permit"
      means any permit, license, approval or other authorization issued under
      any Environmental Law (as defined below).

      5.22.2 None of the Companies and none of their respective properties,
      assets, businesses, and operations requires any Environmental Permit that
      is material to the business conducted respectively by each of the
      Companies, and each of the Companies and their respective properties,
      assets, businesses and operations is, and has been, in compliance with all
      applicable Environmental Laws (as defined below) and all non-material
      Environmental Permits, except for such violations as would not,
      individually or in the aggregate, have a Material Adverse Effect. The term
      "Environmental Laws" means any federal, state, local or foreign statute,
      code, ordinance, rule, regulation, policy, guideline,

                                       27
<PAGE>

      technical instruction, permit, consent, approval, license, judgment,
      order, writ, decree, injunction or other authorization, including the
      requirement to register underground storage tanks, relating to: (i)
      releases or discharges of "Hazardous Material" (as such term may be
      defined under any of the statutes identified below) into the environment
      or any structure, including into air, ambient air, soil, soil gas,
      sediments, land surface or subsurface, buildings or facilities, surface
      water, groundwater, publicly-owned treatment works, septic systems or
      land; or (ii) the generation, treatment, storage, recycling, disposal,
      use, handling, manufacturing, transportation, distribution in commerce, or
      shipment of Hazardous Material.

      5.22.3 No Environmental Claims or Environmental Liabilities (as such terms
      are defined below) are being asserted against any of the Companies and
      none of the Companies is aware of any acts, omissions, facts, or
      circumstances which would so subject it, arising from or based upon any
      act, omission, event, condition or circumstance occurring or existing on
      or prior to the date hereof or for which any of the Companies is
      responsible, including any such Environmental Claims or Environmental
      Liabilities arising from or based upon the present or former ownership or
      the present or former operation of assets, businesses or properties of any
      of the Companies which, if adversely determined, would individually or in
      the aggregate have a Material Adverse Effect. None of the Companies has
      received any notice of any violation of any Environmental Law or
      Environmental Permit or any Environmental Claim in connection with its
      present or former assets, properties, businesses or operations. No
      environmental assessment reports have been prepared by, or on behalf of,
      any of the Companies since January 1, 1997 (or earlier for any such matter
      which is unresolved) regarding the environmental condition of any of the
      Companies' properties or the environmental compliance of any of the
      Companies. The term "Environmental Claim" means any third party (including
      claims of Governmental Entities, employees or other private parties)
      action, lawsuit, claim, investigation proceeding which seeks to impose
      liability for (i) noise; (ii) pollution or contamination of the air,
      ambient air, surface water, ground water, soil, soil gas or any structure,
      building or facility; (iii) Hazardous Materials Management; (iv) exposure
      to Hazardous Material; (v) the safety or health of employees, consumers,
      customers or vendors; or (vi) any violation of any Environmental Law or
      Environmental Permit. The term "Environmental Liabilities" includes all
      costs arising from any Environmental Claim or violation or alleged
      violation or circumstance or condition which would give rise to a
      violation or liability under any Environmental Permit or Environmental Law
      under any theory of recovery, at law or in equity, and whether based on
      negligence, strict liability or otherwise, including but not limited to:
      remedial, removal, response, abatement, investigative, monitoring,
      personal injury and damage to property, and any other related costs,
      expenses, losses, damages, investigatory remediation or monitoring costs,
      penalties, fines, liabilities and obligations, including reasonable
      attorney's fees and court costs.

5.23  Insurance

      Schedule 5.23 is a correct and complete list and description, including
      policy numbers, of all fire and hazard, general liability, products
      liability, completed operations and workers' compensation insurance
      policies owned or held by the Companies or otherwise covering

                                       28
<PAGE>

      the Companies, their respective employees or assets. Such policies are in
      full force and effect, and the Companies are not in default under any of
      them. Such insurance is of the kind and in the amount not less than
      customarily obtained by entities of established reputation engaged in the
      same or similar business as the businesses respectively conducted by the
      Companies, and similarly situated to them. None of the Companies has
      received any notice of non-renewal, cancellation or intent to cancel,
      intent not to renew or intent to increase premiums or deductibles with
      respect to such insurance policies or, to the best knowledge of the
      Founders, is there any basis for any such action. Schedule 5.23 also
      contains a list of all pending claims with any insurance company and any
      instances within the previous three years of a denial of coverage of the
      Companies by any insurance company.

5.24  No Illegal or Improper Transactions

      None of the Companies, none of the Sellers and none of the Companies'
      respective directors, officers or employees has, directly or indirectly
      used funds or other assets of the Companies, or made any promise or
      undertaking, for (a) illegal contributions, gifts, entertainment or other
      expenses relating to political activity; (b) illegal payments to or for
      the benefit of governmental officials or employees, whether domestic or
      foreign; (c) illegal payments to or for the benefit of any person, firm,
      corporation or other entity, or any director, officer, employee, agent or
      representative thereof; or (d) the establishment or maintenance of a
      secret or unrecorded fund; and there have been no false or fictitious
      entries made in the books or records of the Companies.

5.25  Tax

      5.25.1 Except to the extent disclosed in Schedule 5.25.1, all tax returns,
      notices, computations and other documents relating to any Tax required by
      law to be filed by any of the Companies prior to Closing have been duly
      and properly filed and all requests from any Taxation Authority pertaining
      to any of such filings have been duly and properly answered. Except to the
      extent disclosed in Schedule 5.25.1, all returns, notices, computations
      and other documents and responses, relating to any taxable year challenged
      or which still may be challenged by the Taxation Authorities, are true and
      accurate, are not subject of any material dispute, and to the best
      knowledge of the Founders, are not likely to become subject to any
      material dispute.

      5.25.2 Each Tax with respect to each of the Companies which shall be due
      and payable prior to Closing has been paid or shall be paid prior. No
      assessments for Taxes have been made or proposed which have not been
      provided for in the accounts of the Companies. All Tax relating to the
      period up to and including the respective Accounts Dates of each of the
      Companies, whether due and payable or not, have been paid or accounted for
      in the Accounts.

      5.25.3 The Companies have not paid or become liable to pay, and there are
      not any circumstances which, to the best knowledge of the Founders, are
      likely to arise prior to Closing by reason of which any of the Companies
      is likely to become liable to pay, any penalty, fine, surcharge or
      interest to any Taxation Authority.

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<PAGE>

      5.25.4 Except to the extent otherwise disclosed on Schedule 5.25.4, none
      of the Companies has suffered any on-site investigation, audit or visit by
      any Taxation Authority during the period between January 1, 1997 and the
      date of this Agreement; and Founders are not aware, to the best of their
      knowledge, of any such investigation, audit or visit planned for the next
      twelve months.

      5.25.5 Neither any of the Companies nor the Purchaser shall become liable
      for the payment of any Tax solely by virtue of the execution and/or
      closing of this Agreement.

      5.25.6 No transactions or arrangements involving any of the Companies
      shall have taken place prior to Closing which are such that any Tax
      provision relating to transfer pricing is likely to be invoked by a
      Taxation Authority. Except as provided in the Accounts, the Companies have
      no liability as of their respective Accounts Dates to Taxation on income
      or gains except in respect of and to the extent of income and profits
      actually received, nor shall any arrangements prior to Closing exist which
      might give rise to such a liability.

      5.25.7 The Companies are not and will not become liable to Tax, other than
      Tax which shall have been paid or provided for prior to the Closing, on
      any transfer between any of the Sellers, of shares in the Companies prior
      to Closing.

      5.25.8 The Companies are not and will not become liable to Tax, based on
      circumstances prior to Closing, other than Tax which shall have been paid
      or provided for prior to Closing, in respect of the agreements set forth
      under Schedule 5.21.2 or any previous agreement for the provision of
      consulting services.

5.26  Brokers

      Neither of the Companies nor any of the Sellers has (i) incurred any
      obligation or liability, contingent or otherwise, for brokers' or finders'
      fees or commissions in connection with the transactions contemplated by
      this Agreement or (ii) made any statement or representation or entered
      into any discussion which could give rise to any such obligation or
      liability.

5.27  Indebtedness etc between the Sellers and the Companies

      5.27.1 There is no indebtedness due from the Sellers, any Close Relative
      or any affiliated person to the Companies that shall not have been
      satisfied in full on or prior to the Closing Date.

      5.27.2 None of the Companies has given any guarantees or indemnities in
      respect of any liabilities of the Sellers, any Close Relative or any
      affiliated person.

      5.27.3 Schedule 5.27.3 sets forth, with respect to each loan made by any
      of the Sellers to any of the Companies, the unpaid principal amount
      thereof and any accrued but unpaid interest thereon, Pre-Closing Accounts
      Date, the interest rate payable with respect thereto, the maturity date
      thereof and the terms of repayment applicable thereto. Except for the
      Section 5.27.3 Indebtedness, there is no indebtedness due from any of the
      Companies to any of the Sellers, or to any Close Relative or affiliate of
      any of the Sellers,

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<PAGE>

      that shall not have been satisfied in full on or prior to the Closing
      Date.

      5.27.4 Except as disclosed on Schedule 5.27.4, there are no guarantees and
      indemnities given by the Sellers, or any Close Relative or affiliate of
      the Sellers in respect of any liabilities of the Companies.

5.28  Acquisition of Mikron Shares for Investment Purposes

      5.28.1 Each of the Sellers who shall acquire any of the Mikron Shares
      pursuant to Section 3.2.2 acknowledges that he or she has been furnished
      with copies of Mikron's Annual Report on SEC Form 10-KSB for its fiscal
      year ended October 31, 2001, Mikron's Quarterly Reports on SEC Form 10-QSB
      for its fiscal quarters ended January 31, 2002, April 30, 2002 and July
      31, 2002, and such other documents, materials and information as such
      Seller deemed necessary or appropriate for evaluating his or her decision
      to receive some or all of the Mikron Shares as partial consideration of
      the Purchase Price payable to him or her pursuant to Section 3.1 hereof.
      Such Seller confirms that he or she has made such further investigation of
      Mikron as was deemed appropriate to evaluate the merits and risks of his
      or her decision to acquire the Mikron Shares to be delivered to him or
      her. Such Seller further acknowledges that he or she has had the
      opportunity to ask questions of, and receive answers from, the directors
      and officers of Mikron, and persons acting in Mikron's behalf, concerning
      the terms and conditions pertaining to his or her receipt of such shares.

      5.28.2 Such Seller represents that he or she is acquiring the Mikron
      Shares to be delivered to him or her hereunder for his or her own account
      with the present intention of holding such securities for purposes of
      investment, and that he or she has no intention of selling such securities
      in a public distribution in violation of the federal securities laws of
      the United States of America.

      5.28.3 Such Seller is not a "U.S. person" as such term is defined by the
      provisions of Regulation S promulgated by the SEC under the Securities Act
      ("Regulation S").

      5.28.4 Such Seller understands that (a) the Mikron Shares that he or she
      shall be acquiring hereunder are "Restricted Securities," as defined in
      Regulation S; (b) such securities have not been registered under the
      Securities Act, and are being issued in reliance on exemptions for
      "offshore" private offerings contained in Section 4(2) of the Securities
      Act and the provisions of Regulation S; (c) the Mikron Shares may not be
      re-offered or resold except through a valid and effective registration
      statement or pursuant to a valid exemption from the registration
      requirements under the Securities Act; and (d) until such time as such
      Seller's Mikron Shares become eligible for sale by him or her, either
      pursuant to the registration of such shares under the Securities Act, or
      pursuant to a valid exemption from such registration, the certificates
      evidencing such Seller's ownership of those Mikron Shares shall contain
      the following legend:

            "The securities represented by this certificate have not been
            registered under the Securities Act of 1933, as amended (the "Act").
            The transfer of the securities represented by this certificate is
            subject to the conditions

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<PAGE>

            specified in the share sale and purchase agreement, dated as of
            November 22, 2002, among Hohenstaufen Zweihundertsechsundzwanzigste
            Vermogensverwaltungs GmbH, Mr. Hermann Schlosser and others and
            Mikron Infrared, Inc. Hedging transactions involving the securities
            represented by this certificate may not be conducted unless in
            compliance with the Act and transfer of such securities is
            prohibited, except pursuant to the provisions of Regulation S
            promulgated under the Act, a registration of such securities under
            the Act or pursuant to an available exemption from such registration
            under the Act."

      5.28.5 Such Seller is fully aware of the restrictions on sale,
      transferability and assignment of the Mikron Shares, and that he or she
      must bear the economic risk of retaining ownership of such securities for
      an indefinite period of time. Such Seller is aware that (a) the Mikron
      Shares will not be registered under the Securities Act; and (b) because
      the issuance of the Mikron Shares has not been registered under the
      Securities Act, an investment in the Mikron Shares cannot be readily
      liquidated if such Seller desires to do so, but rather may be required to
      be held indefinitely.

6.    REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MIKRON

      The Purchaser and Mikron hereby give the following representations and
      warranties to the Sellers. Unless otherwise specifically stated, the
      representations and warranties shall be true and accurate as of the date
      of Closing.

6.1   Power and Authority of the Purchaser

      6.1.1 The Purchaser is a limited liability corporation (Gesellschaft mit
      beschrankter Haftung) duly organized and validly existing under the laws
      of the Federal Republic of Germany.

      6.1.2 The Purchaser has full power and authority to purchase the Shares
      and to perform all other undertakings hereunder and the execution and
      performance of this Agreement. The execution, delivery and performance of
      this Agreement and all related agreements, documents and instruments, and
      the consummation of the transactions contemplated herein and therein have
      been duly and validly authorized by all necessary corporate action on the
      part of the Purchaser. This Agreement has been duly and validly executed
      by the Purchaser, and, assuming this Agreement constitutes a valid and
      binding obligation of Mikron and the Sellers, this Agreement constitutes a
      valid and binding agreement of the Purchaser, enforceable against the
      Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
      fraudulent transfer, reorganization, moratorium and similar laws of
      general applicability relating to or affecting creditors' rights and to
      general equity principles.

6.2   Power and Authority of Mikron

      6.2.1 Mikron is a corporation duly organized, validly existing, and in
      good standing under the laws of the State of New Jersey, and has the
      corporate power and authority to

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<PAGE>

      carry on its business as now conducted and to own, lease and operate its
      properties and assets. Mikron is duly qualified or licensed to transact
      business as a foreign corporation in good standing in the states of the
      United States and foreign jurisdictions where the character of its assets
      or the nature or conduct of its business requires it to be so qualified or
      licensed. Mikron has all requisite corporate power and authority to
      execute and deliver this Agreement and each instrument to be executed and
      delivered by Mikron in connection with the Closing, to perform its
      obligations hereunder and thereunder, and to consummate the transactions
      contemplated hereby. The execution and delivery of this Agreement and each
      instrument required hereby to be executed and delivered by Mikron prior to
      or at the Closing and the performance of its obligations hereunder and
      thereunder and the consummation by Mikron of the transactions contemplated
      hereby have been duly and validly authorized by all necessary corporate
      action on the part of Mikron, and no other corporate proceedings on the
      part of Mikron are necessary to authorize this Agreement or to consummate
      the transactions contemplated hereby. This Agreement has been duly and
      validly executed by Mikron, and, assuming this Agreement constitutes a
      valid and binding obligation of Purchaser and the Sellers, this Agreement
      constitutes a valid and binding agreement of Mikron, enforceable against
      Mikron in accordance with its terms, subject to bankruptcy, insolvency,
      fraudulent transfer, reorganization, moratorium and similar laws of
      general applicability relating to or affecting creditors' rights and to
      general equity principles.

6.3   Consents and Approvals

      The execution and performance of this Agreement do not, and the
      consummation of the transactions contemplated hereby and compliance with
      the provisions of this Agreement will not (a) conflict with or violate the
      Certificate of Incorporation or Bylaws of Mikron or the deed of foundation
      or the articles of association of the Purchaser, (b) conflict with or
      violate any statute, ordinance, rule, regulation, judgment, order, writ,
      injunction, decree or law applicable to Mikron or the Purchaser, or by
      which any of them or any of their respective properties or assets may be
      bound or affected, or (c) result in a violation or breach of or constitute
      a default (or an event which with or without notice or lapse of time or
      both would become a default) under, or give to others any rights of
      termination, amendment, acceleration or cancellation of, or result in any
      loss of any benefit under, any contract, agreement or arrangement to which
      Mikron or the Purchaser is a party, or the creation of Liens on any of the
      property or assets of Mikron or the Purchaser. No consent, approval, order
      or authorization of, or registration, declaration or filing with, any
      federal, state or local government or any court, administrative or
      regulatory agency or commission or other governmental authority or agency,
      domestic or foreign (a "Governmental Entity"), is required by Mikron or
      the Purchaser in connection with the execution of this Agreement by Mikron
      and the Purchaser or the consummation by them of the transactions
      contemplated hereby, except for consents, approvals, orders,
      authorizations, registrations, declarations or filings, the failure of
      which to obtain would not individually or in the aggregate have a Material
      Adverse Effect.

                                       33
<PAGE>

6.4   Capital Stock

      The authorized capital stock of Mikron consists of 15,000,000 shares of
      common stock, $.003 par value per share, of which 4,288,200 shares are
      issued and outstanding as of the date of this Agreement. All of the issued
      and outstanding shares of Mikron's capital stock are, and will be, duly
      and validly issued and outstanding and fully paid and non-assessable. None
      of the outstanding shares of Mikron's capital stock has been, and none of
      the shares of Mikron's capital stock to be issued hereunder will be,
      issued in violation of any preemptive rights of the current or past
      shareholders of Mikron. Except as set forth in Schedule 6.4, other than
      Mikron's common stock, there are no shares of any other class of capital
      stock or other equity securities of Mikron outstanding and no outstanding
      equity rights, including securities convertible into or exchangeable for
      capital stock, of Mikron. All outstanding securities of Mikron were issued
      in compliance with applicable federal and state securities laws.

6.5   SEC Filings; Financial Statements

      6.5.1 Mikron has timely filed since November 1, 1999, and made available
      to Sellers, all reports, proxy solicitation materials and other documents
      that Mikron has been required to file with the SEC pursuant to the
      Exchange Act, and the rules and regulations promulgated by the SEC
      thereunder (the "Mikron SEC Documents"). The Mikron SEC Documents (i) at
      the time filed, complied in all material respects with the applicable
      requirements of the Exchange Act and other applicable laws and (ii) did
      not, at the time they were filed (or, if amended or superseded by a filing
      prior to the date of this Agreement, then on the date of such filing)
      contain any untrue statement of a material fact or omit to state a
      material fact required to be stated in such Mikron SEC Documents or
      necessary in order to make the statements in such Mikron SEC Documents, in
      light of the circumstances under which they were made, not misleading.

      6.5.2 Except to the extent disclosed on Schedule 6.5.2, each of the Mikron
      Financial Statements (including, in each case, any related notes)
      contained in the Mikron SEC Documents complied as to form in all material
      respects with the applicable published rules and regulations of the SEC
      with respect thereto, was prepared in accordance with GAAP applied on a
      consistent basis throughout the periods involved (except as may be
      indicated in the notes to such financial statements or, in the case of
      unaudited interim statements, as permitted by Form 10-QSB of the SEC), and
      fairly presented in all material respects the consolidated financial
      position of Mikron and its subsidiaries as at the respective dates and the
      consolidated results of operations and cash flows for the periods
      indicated, except that the unaudited interim financial statements were or
      are subject to normal and recurring year-end adjustments which were not
      material in amount or effect.

6.6   Absence of Undisclosed Liabilities

      Mikron has no liabilities that are reasonably likely to have, individually
      or in the aggregate, a Material Adverse Effect, except liabilities which
      are accrued or reserved against in the consolidated balance sheets of
      Mikron as of October 31, 2001 and July 31,

                                       34
<PAGE>

      2002, included in the Mikron Financial Statements delivered prior to the
      date of this Agreement or reflected in the notes thereto. Mikron has not
      incurred or paid any liability since July 31, 2002, except for such
      liabilities incurred or paid (i) in the ordinary course of business
      consistent with past business practice and which are not reasonably likely
      to have, individually or in the aggregate, a Material Adverse Effect or
      (ii) in connection with the transactions contemplated by this Agreement.

6.7   Absence of Certain Changes or Events

      Since July 31, 2002, except as disclosed in the Mikron Financial
      Statements delivered prior to the date of this Agreement, (i) there have
      been no events, changes or occurrences which have had, or are reasonably
      likely to have, individually or in the aggregate, a Material Adverse
      Effect, and (ii) Mikron has not taken any action, or failed to take any
      action, prior to the date of this Agreement, which action or failure, if
      taken after the date of this Agreement, would represent or result in a
      material breach or violation of any of the covenants and agreements of
      Mikron provided in this Agreement

6.8   No Litigation

      There is no judicial or administrative action, proceeding, investigation
      or arbitration, civil or criminal, pending or, to the best of Mikron's or
      the Purchaser's knowledge, threatened, or any order, injunction or decree
      outstanding, against Mikron or the Purchaser.

7.    INDEMNIFICATION - GENERAL

7.1   Breach of the Warranties

      7.1.1 If and to the extent any of the representations and warranties set
      forth in Article 5 is incorrect or not complied with, the legal
      consequences set forth in this Article 7 shall apply. The Parties
      acknowledge that the legal consequences set forth in this Article 7 and
      the representations and warranties set forth in Article 5 are homogeneous
      with and an inseparable part of, this Agreement.

      7.1.2 If any of the representations and warranties set forth in Article 5
      is incorrect or not complied with, then Purchaser:

            (a) shall not be entitled to rescind this Agreement in accordance
            with Sections 437 para 2, 440, 323 and 326 para 5 of the German
            Civil Code ("Rucktritt"); and

            (b) shall be entitled to request from Sellers and/or Founders as the
            case may be, depending on the particular representations and
            warranties which are incorrect or not complied with, repayment
            (reduction of the Purchase Price in the meaning of Section 441 of
            the German Civil Code under replacement of Section 441 para. 3 of
            the German Civil Code by the calculation method set forth in this
            sentence) of such portion of the Purchase Price that will be
            necessary to put Purchaser or, at the Purchaser's option, whichever
            of the Companies shall be affected, into the position it would have
            been in if the respective representation and warranty had been
            correct or had been complied with, including the compensation of any

                                       35
<PAGE>

            damages, cost, loss or expense incurred by the affected company or
            the Purchaser as the case my be. The preceding sentence shall apply
            whether or not the representation and warranty which is incorrect or
            not complied with relates to a condition (Beschaffenheit) of any of
            the Companies.

7.2   Purchaser Claims

      7.2.1 As promptly after discovery of any breach or non-fulfillment of any
      of the Warranties as possible, Purchaser shall notify Sellers'
      Representative of an asserted claim for reduction of the Purchase Price
      under this Article 7. Such notice shall include a summary of the facts
      upon which any claim of breach or non-fulfillment by Sellers or Founders,
      as the case may be, of any of the Warranties is based and the amount
      involved, to the extent that such amount has been determined at the time
      when such notice is given (a "Purchaser Claim"). Without prejudice to the
      validity of the Purchaser Claim or alleged claim in question, Purchaser
      shall allow, and shall cause the Companies to allow, Sellers or Founders,
      as the case may be, and their accountants and their professional advisors
      to investigate the matter or circumstance alleged to give rise to such
      Purchaser Claim, and whether and to what extent any amount is payable in
      respect of such Purchaser Claim and, for such purpose, Purchaser shall
      give and shall cause the Companies to give such information and
      assistance, including access to Purchaser's and the Companies' premises
      and personnel and including the right to examine and copy or photograph
      any assets, accounts, documents and records, as Sellers or Founders
      respectively or their accountants or professional advisors may reasonably
      request.

7.3   Several Liability

      Subject to the limitations and conditions set forth in this Article 7 and
      in Article 5, the Sellers and Founders shall be severally but not jointly
      liable for any breach of the Warranties, for the repayment of the Purchase
      Price and/or for any claim for the reduction of the Purchase Price.

7.4   Limitation of Liability

      7.4.1 The liability of the Sellers shall be limited as follows:

            (a) The Sellers shall have no liability in respect of any breach or
            breaches of the Warranties unless the amount of the liability in
            respect of such breach or breaches exceeds in aggregate the sum of
            (euro)30,000 in which case (subject to the other provisions of this
            Section 7.4.1) the whole amount of the liability shall be payable.

            (b) Purchaser agrees that (i) from and after the Closing Date, it
            shall cause the Company to maintain in effect for not less than two
            years from the Closing Date one policy of liability insurance
            covering the Company for aggregate losses of up to (euro) 1,000,000
            that the Company may incur as a result of Environmental Claims or
            Environmental Liabilities based on a potential contamination of the
            site encompassing the Company's premises located at Krifteler Str.
            32, 60326 Frankfurt; and (ii) the Founders shall have no liability
            in respect of the Warranties

                                       36
<PAGE>

            contained in Section 5.22 unless and until the aggregate amount of
            such losses exceeds the total amount of coverage available under
            such policies.

            (c) Liability in respect of the Warranties shall terminate:

                  (i) in respect of matters contained in Section 5.4 (Title),
                  six months after the date the respective statute of limitation
                  for such matters runs;

                  (ii) in respect of matters contained in Section 5.22
                  (Environmental), the fifth anniversary of the Closing Date; or
                  if, prior to that date, any of the Companies ceases to occupy
                  the land, buildings and other facilities presently occupied by
                  each of them (each an "Affected Premises"), the Founders'
                  liability for breach of any of the Warranties contained in
                  Section 5.22 with respect to each Affected Premises shall
                  terminate six months after the date when such occupation
                  terminates;

                  (iii) in respect of matters contained in Section 5.25 (Tax)
                  six months after the date the respective statute of
                  limitations for such matters runs, or six months after the
                  final assessment of any Taxes following a tax audit
                  (Betriebsprufung) for the respective Tax and the respective
                  period, whichever first occurs; and

                  (iv) on the second anniversary of the Closing Date in respect
                  of all others matters contained in Section 5; except in
                  respect of any claim of which notice, as provided in Section
                  7.2.1 is given to the Sellers' Representative before that
                  date.

            (d) The Sellers shall not be obligated to pay any amount to the
            extent any (i) specific allowance, provision or reserve is made in
            the Accounts in respect of the matter giving rise to a claim of
            liability; or (ii) any allowances, provisions or reserves are made
            in the Accounts in respect of other matters but are not needed for
            the purposes for which they have been established.

            (e) The liability of Mr. Schlosser, Mr. Breternitz and each of the
            other Sellers for payment of any amount or amounts that he or she
            may become obligated to pay pursuant to Article 7 and/or 8 hereof
            shall not exceed, in the aggregate:

            (i) as to Mr. Schlosser, the sum of the amount of the Purchase Price
            that he shall receive pursuant to Section 3.2.1 and Mr. Schlosser's
            Deferred Purchase Price if and to the extent Mr. Schlosser's
            Deferred Purchase Price has become due and payable or already been
            paid;

            (ii) as to Mr. Breternitz, the sum of the amount of the Purchase
            Price that he shall receive pursuant to Section 3.2.1 and Mr.
            Breternitz's Deferred Purchase Price if and to the extent Mr.
            Breternitz's Deferred Purchase Price has become due and payable or
            already been paid; and

                                       37
<PAGE>

            (iii) as to any of the other Sellers, the amount of the Purchase
            Price that he or she shall receive pursuant to Section 3.2.1.

      7.4.2 If any deficiency, damage, cost, loss or expense incurred by any of
      the Companies or the Purchaser, as the case may be, in respect of the
      breach of any of the Warranties generates a Tax credit, loss or deduction
      with respect thereto for any of the Companies, the amount of the reduction
      of the Purchase Price or the indemnity to be paid by the Founders shall be
      reduced by an amount equal to the actual reduction in Tax that the
      Companies shall be entitled to receive.

      7.4.3 Sellers or Founders respectively shall not be liable for, and
      Purchaser shall not be entitled to bring any Purchaser Claim or any other
      claim under or in connection with this Agreement if and to the extent
      that:

            (a) the amount of the Purchaser Claim is recovered from a third
            party or under an insurance policy in force on the Closing Date;

            (b) the Purchaser Claim results from a failure of Purchaser or the
            Companies to mitigate damages;

            (c) the matter to which the Purchaser Claim relates was known to
            Purchaser on or prior to the Closing Date, or would have been known
            by Purchaser on or prior to such date, but for the gross negligence
            of its employees, representatives or advisors; or

            (d) the Purchaser Claim results from or is increased by the passing
            of, or any change in, after the Closing Date, any law, statute,
            ordinance, rule, regulation, common law rule or administrative
            practice of any government, governmental department, agency or
            regulatory body including (without prejudice to the generality of
            the foregoing) any increase in the rates of taxes or any imposition
            of taxes or any withdrawal or relief from taxes not actually (or
            prospectively) in effect on the Closing Date.

7.5   Defending Third Party Claims

      If the Companies or Purchaser are sued or threatened to be sued by a third
      party, including without limitation any government agencies, or if the
      Companies or Purchaser are subjected to any audit or examination by any
      Tax Authority (in each case, a "Third Party Claim"), which may give rise
      to a Purchaser Claim, Purchaser shall give Sellers' Representative prompt
      notice of such Third Party Claim. Purchaser shall ensure that Sellers or
      Founders, as the case may be, shall be provided with all materials,
      information and assistance relevant in relation to the Third Party Claim,
      be given reasonable opportunity to comment or discuss with Purchaser any
      measures which Sellers or Founders would propose that Purchaser take or
      omit in connection with a Third Party Claim, and in particular Sellers or
      Founders, as the case may be, shall be given an opportunity to comment on,
      and assist, at their sole cost and expense, Purchaser in connection with
      its response to, opposition of or defense of any Third Party Claim. No
      admission of liability shall be made by or on behalf of the Purchaser or
      of the Companies

                                       38
<PAGE>

      and the Third Party Claim shall not be compromised, disposed of or settled
      without the written consent of Sellers or Founders, as the case may be,
      which consent shall not be unreasonably delayed or withheld. Further,
      Sellers or Founders, as the case may be, shall be entitled to retain
      counsel, at their sole cost and expense, to represent their respective
      interests in connection with, but not to direct or control Purchaser's
      response to, opposition of or defense of any Third Party Claim.

8.    TAX INDEMNITY

8.1   The Founders hereby severally but not jointly undertake and covenant to
      pay to the Purchaser, as a reduction of the Purchase Price:

      8.1.1 such amount as shall be necessary to indemnify any of the Companies
      against any and all liabilities for Taxes other than Taxes levied on the
      income of the Companies for the period up to the Closing Date, or Taxes
      levied on the income of the Companies for the period up to and including
      the Pre-Closing Accounts Date to the extent such Taxes

            (a) are not paid up to such date or reserved against in the
            Pre-Closing Accounts;

            (b) result from a reduction in the Tax refund underlying the
            Contingent Payment; or

            (c) result from any assessment for Taxes imposed upon any of the
            Companies for the period up to the Pre-Closing Accounts Date and
            such assessment is caused by the pure shift of taxable income into
            different Tax years (Phasenverschiebung); and

      8.1.2 an amount equal to all penalties and interest relating to such
      liabilities for Taxes, and all costs and expenses reasonably and properly
      incurred by the Purchaser in claiming any amount under this Article 8.

                                       39
<PAGE>

8.2   The amount of such reduction in the Purchase Price shall be reduced by the
      net present value of the Tax savings related to the matter for which
      indemnification is sought which will occur for a period after the
      Pre-Closing Accounts Date, calculated by application of a discounting
      factor of 5 %.

8.3   This Article shall also apply in the event that any of the Companies would
      have been assessed for Taxes but is not assessed for such taxes because of
      any Tax losses of any of the Companies. The amount of the reduction of the
      Purchase Price in such event shall be equal to the amount of Taxes which
      would have been assessed discounted for five years using the discounting
      factor as set forth above.

8.4   If the Founders become liable in respect of the same Tax amount under this
      Article 8 and also under Section 5.25 and/or Article 7, Purchaser shall be
      entitled to claim and receive a recovery only once, and such recovery
      shall be governed by the provisions of this Article 8.

8.5   Any Tax refund of the Companies, either paid to the Companies or offset
      against any Tax liability of the Companies, is for the benefit of the
      Sellers and shall be credited against any liability of the Sellers under
      this Agreement or, if such liability does not exist at the date of the
      refund, be paid to the Sellers.

8.6   Sections 7.3, 7.4 and 7.5 shall be applied with respect to any payment
      obligation of the Founders under this Article 8.

9.    GUARANTEE

      Mikron hereby guarantees the prompt fulfillment of the obligations of the
      Purchaser under this Agreement and agrees to make payment to the Sellers
      under this Guarantee at Sellers' first demand, if Sellers simultaneously
      state in writing that Purchaser has not performed any of its obligations
      hereunder when due.

10.   NOTICES

10.1  All notices and other communications hereunder shall be in writing and
      shall be deemed given if sent by facsimile transmission (if receipt is
      electronically confirmed) or by a prepaid overnight courier service (if
      receipt is confirmed in writing) addressed to the parties at the following
      addresses (or at such other address for a party as shall be specified by
      like notice):

      (a)   In the case of the Sellers:

            Mr. Hermann Schlosser
            Kaiser-Friedrich-Promenade 149
            D-61352 Bad Homburg v.d.H.
            Germany

            with a copy to

                                       40
<PAGE>

            CMS Hasche Sigle
            Friedrich-Ebert-Anlage 44
            D-60325 Frankfurt am Main,
            Germany
            Attention: Dr. Christoph Schucking
            Facsimile: + 49 69 71701220

      (b)   In the case of the Purchaser or Mikron:

            Mikron Infrared, Inc.
            16 Thornton Road
            Oakland, New Jersey  07436
            Facsimile: + 1 201 405 0090
            Attention: Chief Executive Officer

            with a copy to

            Arent Fox Kintner Plotkin & Kahn, PLLC
            1675 Broadway
            New York, New York  10019
            Facsimile: + 1 212 484 3990
            Attention:  Steven D. Dreyer, Esq.

11.   MISCELLANEOUS

11.1  This Agreement, including the Schedules hereof and the Exhibits hereto,
      contain the entire agreement of the parties hereto with respect to the
      subject matter contained herein and therein. All prior negotiations and
      agreements between the parties hereto with respect to the transactions
      provided for herein are superseded by this Agreement.

11.2  No waiver of any of the provisions of this Agreement shall be effective
      against any party to this Agreement unless reduced in writing and duly
      signed by such party. The waiver by any party of any right hereunder or of
      any breach of any of the terms hereof or defaults hereunder shall not be
      deemed a waiver of any other rights or any subsequent breach or default,
      whether of the same or of a similar nature, and shall not in any way
      affect the terms hereof except to the extent of such waiver.

11.3  This Agreement can not be amended or modified unless made in writing and
      duly signed by or on behalf of the Sellers and the Purchaser. The
      provisions of the immediately preceding sentence shall not apply to the
      extent that a notarial recording of any amendment or modification may be
      required in connection with the consummation of the transactions
      contemplated hereby. In such event, the required amendment or modification
      shall be specifically approved in writing by the Sellers and the Purchaser
      and then notarially recorded.

11.4  Wherever possible, each provision of this Agreement will be interpreted in
      such manner as to be effective and valid under applicable law and in such
      a way as to, as closely as

                                       41
<PAGE>

      possible, achieve the intended economic effect of such provision and this
      Agreement as a whole, but if any provision contained herein is, for any
      reason, held to be invalid, illegal or unenforceable in any respect, such
      provision shall be ineffective to the extent, but only to the extent, of
      such invalidity, illegality or unenforceability without invalidating the
      remainder of such provision or any other provisions hereof, unless such a
      construction would be unreasonable.

11.5  This Agreement may not be transferred, assigned, pledged or hypothecated
      by any party hereto, other than by operation of law, except that the
      Purchaser may assign this Agreement to any of its affiliates. This
      Agreement shall be binding upon and shall inure to the benefit of the
      parties hereto and their respective successors and assignees.

11.6  Except as otherwise expressly provided in this Agreement, each party shall
      pay its, his or her own and its, his or her own advisers' fees and
      expenses (including financial and legal advisors) incurred in connection
      with the negotiation, execution and closing of this Agreement or the
      transactions contemplated herein and the Sellers shall bear the fees and
      expenses of the Companies incurred in connection with the negotiation,
      execution and closing of this Agreement. All notarial fees that may become
      payable with respect to the execution and recording of this Agreement, any
      amendment to or modification of this Agreement, and any additional
      instruments pertaining or ancillary to this Agreement that may be executed
      prior to, at or after the Closing, shall be borne solely by the Purchaser.

11.7  None of the Sellers or the Companies shall make any disclosure regarding
      the terms or conditions of this Agreement or the transfer and sale of the
      Companies to Purchaser without the Purchaser's prior written consent,
      which consent shall not be unreasonable withheld or delayed.

11.8  No failure or delay on the part of any party hereto in the exercise of any
      right hereunder shall impair such right or be construed to be a waiver of,
      or acquiescence in, any breach of any representation, warranty or
      agreement herein, nor shall any single or partial exercise of any such
      right preclude other or further exercise thereof or of any other right.

11.9  The Sellers and each of them hereby appoint Hermann Schlosser as their
      duly authorized representative in their name and on their behalf to act in
      any matter in which the Sellers may act as indicated in this Agreement,
      including without limitation any matter to be taken on, as a condition for
      or otherwise in relation to Closing.

11.10 This Agreement may be executed in any number of counterparts
      (Ausfertigungen), each of which will be considered an original instrument,
      but all of which together will be considered one and the same agreement.

12.   GOVERNING LAW AND DISPUTES

12.1  This Agreement shall be governed by and construed and enforced in
      accordance with the laws of the Federal Republic of Germany excluding the
      conflicts of laws provisions thereof and the provisions of the CISG.

12.2  Any dispute, controversy or claim arising out of or in connection with
      this Agreement, or

                                       42
<PAGE>

      the breach, termination or invalidity thereof, shall be settled by
      arbitration in accordance with the arbitration rules of the DIS e.V. The
      arbitral tribunal shall be composed of three arbitrators. The place of
      arbitration including the making of the award shall be Frankfurt am Main,
      Germany. The language to be used in the arbitral proceedings, and in all
      documents ands submissions made to the arbitral tribunal, shall be
      English. Each party to the arbitral proceedings shall bear its, his or her
      own and its, his or her own advisers' fees and expenses (including
      financial and legal advisors), provided, however, that each of the parties
      to such proceedings shall pay their respective pro rata shares of the fees
      and other charges imposed by the administrator of such proceedings.

                                      [Signatures of parties and Notary omitted]

                                       43Exhibit 10.16

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                                CREDIT AGREEMENT

                                 By and Between

                             MIKRON INFRARED, INC.,
                                   as Borrower

                                       and

                              FLEET NATIONAL BANK,
                                     as Bank

                         Dated: As of November 21, 2002

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                              EDWARDS & ANGELL, LLP
                           51 John F. Kennedy Parkway
                          Short Hills, New Jersey 07078
                        Attn: Michael A. Gallo, Jr., Esq.
<PAGE>

                                TABLE OF CONTENTS

                                    ARTICLE I

                                   DEFINITIONS
                                                                            Page
                                                                            ----
SECTION 1.1  SPECIFIC TERMS DEFINED ......................................     2
SECTION 1.2  RULES OF INTERPRETATION AND CONSTRUCTION ....................    22

                                   ARTICLE II

                        AMOUNT AND TERMS OF THE FACILITY

SECTION 2.1  COMMITMENT TO LEND ..........................................    24
SECTION 2.2  PROCEDURES FOR MAKING THE ADVANCES UNDER THE FACILITY .......    24
SECTION 2.3  THE REVOLVING NOTE ..........................................    25
SECTION 2.4  INTEREST RATE ...............................................    25
SECTION 2.5  PAYMENT OF PRINCIPAL ........................................    25
SECTION 2.6  OPTIONAL PREPAYMENT OF FACILITY PRINCIPAL ...................    26
SECTION 2.7  MANDATORY PREPAYMENTS .......................................    26
SECTION 2.8  CONVERSION AND CONTINUATION OPTIONS .........................    27
SECTION 2.9  MAXIMUM NUMBER OF TRANCHES ..................................    27
SECTION 2.10 INCREASED COST ..............................................    27
SECTION 2.11 ILLEGALITY ..................................................    28
SECTION 2.12 DISASTER ....................................................    28
SECTION 2.13 USE OF PROCEEDS .............................................    29
SECTION 2.14 DEFAULT RATE ................................................    29
SECTION 2.15 LATE CHARGE .................................................    29
SECTION 2.16 TENDER AND APPLICATION OF PAYMENT ...........................    29
SECTION 2.17 TIME OF PAYMENT .............................................    29
SECTION 2.18 USURY .......................................................    29
SECTION 2.19 SECURITY FOR THE FACILITY ...................................    30

                                   ARTICLE III

                          CLOSING; CONDITIONS PRECEDENT

SECTION 3.1  CLOSING .....................................................    32
SECTION 3.2  CONDITIONS TO CLOSING AND INITIAL ADVANCE ...................    32
SECTION 3.2  CONDITIONS TO ALL SUBSEQUENT ADVANCES .......................    36

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

SECTION 4.1  CORPORATE EXISTENCE; GOOD STANDING ..........................    37
SECTION 4.2  CORPORATE AUTHORITY .........................................    37
SECTION 4.3  BINDING EFFECT OF DOCUMENTS .................................    38
SECTION 4.4  NO EVENTS OF DEFAULT ........................................    38
SECTION 4.5  NO GOVERNMENTAL CONSENT NECESSARY ...........................    38
SECTION 4.6  LITIGATION ..................................................    38
SECTION 4.7  NO VIOLATIONS OF LAWS .......................................    38
SECTION 4.8  USE OF PROCEEDS OF THE FACILITY .............................    39
SECTION 4.9  OFFICIAL APPROVAL OF PERMITS ................................    39
<PAGE>

SECTION 4.10 GOVERNMENTAL AUTHORITY RECEIVED .............................    39
SECTION 4.11 NO REPORTABLE EVENT .........................................    39
SECTION 4.12 INFORMATION AND FINANCIAL DATA ACCURATE; FINANCIAL
             STATEMENTS; NO MATERIALLY ADVERSE CHANGES ...................    39
SECTION 4.13 NO REGISTRATION REQUIRED OF THE REVOLVING NOTE ..............    40
SECTION 4.14 TAXES .......................................................    40
SECTION 4.15 NO EXISTING DEFAULTS ........................................    40
SECTION 4.16 TITLE TO PROPERTIES AND COLLATERAL ..........................    41
SECTION 4.17 NO UNTRUE STATEMENTS ........................................    41
SECTION 4.18 BROKERAGE COMMISSIONS .......................................    41
SECTION 4.19 OTHER LIENS .................................................    41
SECTION 4.20 INSURANCE ...................................................    41
SECTION 4.21 LABOR MATTERS ...............................................    41
SECTION 4.22 ENVIRONMENTAL MATTERS .......................................    42
SECTION 4.23 BOOKS AND RECORDS ...........................................    42
SECTION 4.24 NAMES, LOCATION OF OFFICES ..................................    42
SECTION 4.25 CAPITALIZATION; OWNERSHIP OF THE BORROWER ...................    42
SECTION 4.26 INVESTMENT COMPANY ACT OF 1940  .............................    43
SECTION 4.27 MARGIN REGULATION ...........................................    43
SECTION 4.28 SURVIVAL OF REPRESENTATIONS AND WARRANTIES ..................    43

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

SECTION 5.1  NOTIFY BANK .................................................    44
SECTION 5.2  PAY TAXES AND LIABILITIES; COMPLY WITH AGREEMENT ............    44
SECTION 5.3  OBSERVE COVENANTS ...........................................    44
SECTION 5.4  MAINTAIN CORPORATE EXISTENCE AND QUALIFICATIONS .............    44
SECTION 5.5  INFORMATION AND DOCUMENTS TO BE FURNISHED TO THE BANK .......    44
SECTION 5.6  ACCESS TO RECORDS AND PROPERTY ..............................    47
SECTION 5.7  COMPLY WITH LAWS ............................................    47
SECTION 5.8  INSURANCE REQUIRED ..........................................    48
SECTION 5.9  CONDITION OF COLLATERAL; NO LIENS ...........................    49
SECTION 5.10 PAYMENT OF PROCEEDS .........................................    49
SECTION 5.11 PAY FEES AND EXPENSES .......................................    49
SECTION 5.12 RECORDS .....................................................    49
SECTION 5.13 DELIVERY OF DOCUMENTS .......................................    49
SECTION 5.14 NAME CHANGES; LOCATION CHANGES ..............................    49
SECTION 5.15 FURTHER ASSURANCES ..........................................    50
SECTION 5.16 INDEMNIFICATION .............................................    50

                                   ARTICLE VI

                               NEGATIVE COVENANTS

SECTION 6.1  NO CONSOLIDATION, MERGER, ACQUISITION .......................    52
SECTION 6.2  DISPOSITION OF ASSETS OR COLLATERAL .........................    52
SECTION 6.3  OTHER LIENS .................................................    52
SECTION 6.4  OTHER LIABILITIES ...........................................    52
SECTION 6.5  PAYMENT OF DIVIDENDS; REDEMPTION OF STOCK ...................    52
SECTION 6.6  ACCOUNTS ....................................................    52
SECTION 6.7  PREPAYMENT OF OTHER INDEBTEDNESS ............................    52
SECTION 6.8. SALE OR ISSUANCE OF STOCK ...................................    53
SECTION 6.9. INVESTMENTS .................................................    53
SECTION 6.10 LOANS .......................................................    53
SECTION 6.11 GUARANTIES ..................................................    53

                                      - ii
<PAGE>

SECTION 6.12 REMOVE PROPERTY .............................................    53
SECTION 6.13 MODIFICATION OF DOCUMENTS ...................................    53
SECTION 6.14 CHANGE BUSINESS .............................................    53
SECTION 6.15 SETTLEMENTS .................................................    54
SECTION 6.16 CHANGE LOCATION OR NAME .....................................    54
SECTION 6.17 FIXED CHARGE COVERAGE RATIO .................................    54
SECTION 6.18 MAXIMUM LEVERAGE RATIO ......................................    54

                                   ARTICLE VII

                                EVENTS OF DEFAULT

SECTION 7.1. EVENTS OF DEFAULT ...........................................    55
SECTION 7.2. REMEDIES ....................................................    57
SECTION 7.3  SET-OFF .....................................................    57
SECTION 7.4. NO NOTICES ..................................................    58
SECTION 7.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER ..................    58
SECTION 7.6. WAIVER OF JURY TRIAL ........................................    58

                                  ARTICLE VIII

                                  MISCELLANEOUS

SECTION 8.1  REPRESENTATIONS AND WARRANTIES SURVIVE ......................    59
SECTION 8.2  NOTICES .....................................................    59
SECTION 8.3  REMEDIES CUMULATIVE .........................................    60
SECTION 8.4  MODIFICATIONS IN WRITING ....................................    60
SECTION 8.5  SUCCESSORS AND ASSIGNS ......................................    60
SECTION 8.6  SALE OF LOAN INTEREST .......................................    60
SECTION 8.7  PLEDGE TO THE FEDERAL RESERVE ...............................    61
SECTION 8.8  INTEGRATION .................................................    61
SECTION 8.9  GOVERNING LAW, SEVERABILIY ..................................    61
SECTION 8.10 SUBMISSON TO JURISDICTION ...................................    61
SECTION 8.11 WAIVER OF BANKRUPTCY STAY ...................................    62
SECTION 8.12 COUNTERPARTS ................................................    62

                                    SCHEDULES

SCHEDULE "A"       FORM OF BORROWING BASE CERTIFICATE
SCHEDULE "B"       LOCATION OF COLLATERAL
SCHEDULE "C"       LOCATION OF OFFICES

                                     - iii
<PAGE>

                                CREDIT AGREEMENT

      THIS CREDIT AGREEMENT (hereinafter referred to as the "Agreement") is made
as of the 21st day of November, 2002, by and between

      MIKRON INFRARED, INC., a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey, having its principal
office located at 16 Thorton Road, Oakland, New Jersey 07436 (hereinafter
referred to as the "Borrower"),

      AND

      FLEET NATIONAL BANK, a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at 208 Harristown Road, Glen Rock, New Jersey 07452 (hereinafter
referred to as the "Bank").

                              W I T N E S S E T H:

      WHEREAS, the Borrower has requested, and the Bank has agreed, to extend a
certain credit facility to the Borrower (hereinafter referred to as the
"Facility"), subject to the terms and conditions set forth in this Agreement.

      WHEREAS, the Borrower and the Bank now desire to enter into this Agreement
in order to provide for the terms and conditions upon which the Bank will make
the Facility to the Borrower.

      NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of the Borrower and the Bank, each
party binding itself and its successors and assigns, do hereby promise, covenant
and agree as follows:
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

      Section 1.1 Specific Terms Defined. The following terms (including both
the singular and plurals thereof) shall have the meanings respectively assigned
to them directly or by reference below in this Section 1.1;

      "Account Debtor" shall mean any "account debtor", as such term is defined
in Section 9-102(a)(3) of the UCC.

      "Account" and "Accounts Receivable" shall mean any "account", as such term
is defined in Section 9-102(a)(2) of the UCC, whether now owned or hereafter
acquired by the Borrower, and, in any event, includes, without limitation, any
now existing and future, (1) accounts receivable, and any and all instruments,
documents, book debts, notes, drafts, payment intangibles, acceptances, payments
under lease of Inventory or Equipment, or sale of Inventory or Equipment,
Contracts, General Intangibles and other forms of obligations now or hereafter
received by or belonging or owing to the Borrower (other than forms of
obligations evidenced by Chattel Paper or Instruments), including, without
limitation, all accounts created by or arising from all sales or leases of goods
or rendition of services by the Borrower to its customers, and all accounts
arising from sales or rendition of services by the Borrower made under any of
its trade names or styles, or through any of its divisions including, without
limitation, the right to receive the Proceeds of purchase orders and Contracts;
(2) reserves and credit balances arising under any Account; (3) guarantees or
collateral for any of the foregoing; (4) commercial tort claims, insurance
policies or rights relating to any of the foregoing; and (5) cash and non-cash
Proceeds of any and all of the foregoing.

      "Acquisition" shall mean that certain purchase of shares by HOHENSTAUFEN
ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH pursuant to the Share
Purchase Agreement.

      "Acquisition Documentation" shall any and all documents, agreements and/or
instruments executed in connection with the Acquisition.

      "Additional Costs" shall have the meaning assigned and ascribed to such
term as set forth in Section 2.10 of this Agreement.

      "Advance" shall mean any advance of monies or funds to the Borrower by the
Bank in connection with the Facility.

      "Advance Date" shall means in relation to any Advance, the day on which
such Advance is made or to be made to the Borrower.

                                     - 3 -
<PAGE>

      "Advance Limit" shall mean, at any date of determination thereof, an
amount equal to the lesser of (i) Four Million and 00/100 ($4,000,000.00)
Dollars or (ii) the sum of (1) eighty (80%) percent of the face amount of the
Borrower's Eligible Accounts Receivable plus (2) fifty (50%) percent of the face
amount of the Borrower's Eligible Inventory plus twenty-five (25%) of the value
of the Borrower's Eligible PP & E.

      "Affiliate" shall mean, in relation to any corporation, any person that
(directly or indirectly) controls or is controlled by or is under common control
with such corporation. For the purposes of this definition, the term "control",
as used with respect to any person, shall mean the possession (directly or
indirectly) of the power to direct or to cause the direction of the management
or the policies of such person, whether through the ownership of shares of any
class in the capital of such person or by contract or otherwise.

      "Agreement" shall have the meaning assigned and ascribed to such term as
set forth in the Preamble of this Agreement.

      "Bank" shall have the meaning assigned and ascribed to such term as set
forth in the Preamble of this Agreement.

      "Borrower" shall have the meaning assigned and ascribed to such term as
set forth in the Preamble of this Agreement.

      "Borrowing Base Certificate" shall mean an advance request and certificate
duly executed by the Borrower in form and substance satisfactory to the Bank and
substantially in the form as more fully set forth in Schedule "A", attached
hereto and made a part hereof.

      "Business Day" shall mean any day other than a Saturday, Sunday or day
which shall be in the State of New Jersey a legal holiday or day on which
banking institutions are required or authorized to close.

      "Capital Assets" shall mean fixed assets, both tangible and intangible, as
such term is defined in accordance with GAAP.

      "Capital Expenditures" shall mean expenditures or obligations incurred for
the acquisition of Capital Assets.

      "Chattel Paper" shall mean any "chattel paper", as such term is defined in
Section 9-102(a)(11) of the UCC, including, without, limitation, all electronic
chattel paper, whether now owned or hereafter acquired by the Borrower.

      "Closing Date" shall mean the date on which the initial Advance is made by
the Bank to the Borrower.

      "Collateral" shall mean, by way of inclusion and not by limitation, all
property and interests in property whether now or hereafter existing or created
or now or hereafter

                                     - 4 -
<PAGE>

acquired by the Borrower, any Subsidiary and/or Affiliate of the Borrower, other
than HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH and
the German Subsidiaries, in or upon which a security interest, lien or mortgage
is granted to or in favor of the Bank, for its benefit, under any of the Loan
Documents, as collateral security for the Obligations. In addition, the term
"Collateral" shall also be deemed to include the Guaranty Agreement.

      "Contracts" shall mean all contracts, licenses, instruments, undertakings,
documents or other agreements in or under which the Borrower may now or
hereafter have any right, title or interest (other than rights evidenced by
Chattel Paper or Instruments), including, without limitation, (i) any claim of
the Borrower arising thereunder from misrepresentation or breach of warranty and
(ii) all such agreements which pertain to the lease, sale, construction, design,
manufacture or other disposition of any Equipment, fixtures, real property or
any interest in real property as any of the same may from time to time be
amended or supplemented (with the prior written consent of the Bank in the event
any such amendments are out of the Borrower's ordinary course of business),
other than such contracts, instruments, undertakings, documents or other
agreements which specifically prohibit their assignment as security, provided,
that notwithstanding any such prohibition, such contracts, instruments,
undertakings, documents or other agreements shall be deemed to be contracts to
the extent that such prohibition is inconsistent with the provisions of Section
9-406 of the UCC.

      "Continue", "Continuation" and "Continued" shall refer to the continuation
of a LIBOR Loan from one Interest Period to the next Interest Period.

      "Convert", Conversion" and "Converted" shall refer to a conversion of any
Prime Rate Loan into a LIBOR Loan or of any LIBOR Loan into a Prime Rate Loan.

      "Copyright Security Agreement" shall mean that certain copyright security
agreement, executed by the Borrower in favor of the Bank, whereby the Borrower
granted to the Bank, a valid perfected first security lien interest, in and to
all Copyrights and other similar property owned by it, for the purpose of
providing the Bank with security for the Facility.

      "Copyrights" shall mean all United States copyrights, registrations and
applications therefor of the Borrower, and any and all (i) renewals and
extensions thereof, (ii) income, royalties, damages and payments now and
hereafter due or payable or both with respect thereto, including, without
limitation, damages and payments for past or future infringements or
misappropriation thereof, (iii) rights to sue for past, present and future
infringements or misappropriation thereof, and (iv) all other rights
corresponding thereto, in each instance, whether now owned or hereafter acquired
by the Borrower.

      "Debt" shall mean with respect to the Borrower at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness for borrowed money including, but
not limited to, obligations evidenced by bonds, debentures, notes or other
similar instruments of any

                                     - 5 -
<PAGE>

such Person, (b) all obligations to pay the deferred purchase price of property
or services of any such Person (including, without limitation, all obligations
under non-competition agreements), (c) all obligations of any such Person as
lessee under any leases to the extent such obligations are required to be
capitalized in accordance with GAAP, (d) all Debt of any other Person secured by
a Lien on any asset of any such Person, (e) all guaranty obligations of any such
Person, (f) all obligations, contingent or otherwise, of any such Person
relative to the face amount of letters of credit, whether or not drawn,
including, without limitation, any Reimbursement Obligation, and banker's
acceptances issued for the account of any such Person, (g) all obligations of
any such Person to redeem, repurchase, exchange, defease or otherwise make
payments in respect of capital stock or other securities or partnership
interests of such Person, and (h) all net payment obligations incurred by any
such Person pursuant to Hedging Agreements.

      "Default" shall mean any of the events of default as defined and described
in Article VII of this Agreement, whether or not any requirement for the giving
of notice, passing of time, or both, or the happening of any other condition,
has been satisfied.

      "Default Rate" shall mean, to the extent permitted by law, whenever there
is any Event of Default under the Loan Documents, or non-payment upon demand,
the rate of interest on the unpaid principal balance of the Facility shall, at
the option of the Bank, be five (5%) percent per annum in excess of the rate of
interest provided for in the Revolving Note. The Borrower acknowledge that: (i)
such additional rate is a material inducement to the Bank to make the Facility;
(ii) the Bank would not have made the Facility in the absence of the agreement
of the Borrower to pay such default rate; (iii) such additional rate represents
compensation for increased risk to the Bank that the Facility will not be
repaid; and (iv) such rate is not a penalty and represents a reasonable estimate
of (a) the cost to the Bank in allocating its resources (both personnel and
financial) to the ongoing review, monitoring, administration and collection of
the Facility and (b) compensation to the Bank for losses that are difficult to
ascertain.

      "Distribution" shall mean the declaration or payment of any dividend on or
in respect of any shares of any class of capital stock of the Borrower, other
than dividends payable solely in the shares of common stock of the Borrower,
directly or indirectly through a Subsidiary or otherwise; the return of capital
by the Borrower of their shareholders as such; or any other distribution on or
in respect of any shares of any class of capital stock of the Borrower.

      "Documents" shall mean any "document," as such term is defined in Section
9-102(a)(30) of the UCC, now owned or hereafter acquired by the Borrower and, in
any event, shall include, without limitation, all bills of lading, warehouse
receipts and other documents of title, in each instance whether now owned or
hereafter acquired by the Borrower.

      "EBITDA" shall mean the Borrower's earnings before interest, taxes,
depreciation and amortization, as such term is computed and construed in
accordance with GAAP.

                                     - 6 -
<PAGE>

      "E(2)T" shall mean a reference to E Square Technology Corporation.

      "Eligible Accounts Receivable" shall mean the Accounts Receivable as to
which the Borrower has furnished to the Bank information adequate to identify
the same, at such times and in such form as has been or, from time to time may
be, requested by the Bank, which meet all of the following criteria on the
origination date of the said accounts and continuing thereafter until collected,
and which is in all other respects acceptable to the Bank:

      (i) The Borrower is the sole owner of the Accounts Receivable and has not
sold, assigned, mortgaged, or hypothecated, or released from the Bank's security
interest, all or any portion thereof, nor are they subject to any claim, lien or
security interest of any persons or entities, including without limitation the
United States, or any agency or instrumentality thereof;

      (ii) They shall be valid and legally enforceable, owing to the Borrower
for the performance of services or the sale of goods arising in the ordinary
course of business for which the Borrower has delivered or, at the time of
origination of the said accounts, if required by the Bank, will deliver to the
Bank, invoices, billings and shipping documents and other documents evidencing
the obligation of the Borrower's customer to pay the Accounts Receivable;

      (iii) No financing statement, other than as may be executed in favor of or
consented to by the Bank, covering any Account Receivable or its proceeds is on
file in any public office, and neither the Borrower nor the Bank has received
any notice of any proposed acquisition, of any account receivable security
interest therein;

      (iv) The original date of the invoice for the Account Receivable is less
than ninety (90) days from the invoice date;

      (v) They are not subject to any offsets, credits, allowances or
adjustments due the account debtor except usual and customary prompt payment
discount, nor has the account debtor returned the goods or indicated any dispute
or complaint concerning them;

      (vi) The Borrower has not received any notice, nor has it any knowledge of
any facts, which adversely affects the credit of the account debtor; and

      (vii) The Bank has not notified the Borrower that either the Account
Receivable or the account debtor is not qualified.

      Notwithstanding the above, the following will be considered ineligible
receivables:

      (a) Accounts Receivable which remain unpaid ninety (90) days after the
date of the original invoice;

                                     - 7 -
<PAGE>

      (b) Accounts Receivable with respect to which the Account Debtor is a
director, officer, employee, Subsidiary or Affiliate of the Borrower;

      (c) Accounts Receivable with respect to which the Account Debtor is a
federal Governmental Authority, the United States of America, or, in each case,
any department, agency or instrumentality thereof;

      (d) Accounts Receivable with respect to which the Account Debtor is any
state or municipal Governmental Authority or any agency or instrumentality
thereof;

      (e) Accounts Receivable not denominated in U.S. dollars;

      (f) Accounts Receivable with respect to which the Account Debtor is not a
resident of the United States of America; unless such Accounts Receivable are
either bonded, insured or backed by a letter of credit naming the Bank as the
sole beneficiary and issued by a financial institution acceptable to the Bank;

      (g) Accounts Receivable that are subject to any dispute, contra-account,
defense, offset or counterclaim, volume rebate or advertising or other
allowance;

      (h) Accounts Receivable with respect to which the Bank does not have a
first and valid fully perfected and enforceable security interest;

      (i) Accounts Receivable with respect to which the Account Debtor is the
subject of a bankruptcy or similar solvency proceeding or has made an assignment
for the benefit of creditors or whose assets have been conveyed to a receiver,
trustee or assignee for the benefit of creditors;

      (j) Accounts Receivable with respect to which the Account Debtor is
located in any jurisdiction which adopts a statute or other requirement with
respect to which any Person that obtains a business from within such
jurisdiction or is otherwise subject to such jurisdiction's tax law requiring
such Person to file a business activity report or make any other required
filings in a timely manner in order to enforce its claims in such jurisdiction's
courts or arising under such jurisdiction's laws;

      (k) Accounts Receivable due from an Account Debtor which exceed twenty
(20%) percent of the net amount of all Eligible Accounts Receivable;

      (l) Accounts Receivable due from any Account Debtor where more than fifty
(50%) percent of such Accounts Receivable have been deemed ineligible;

      (m) Accounts Receivable with respect to which the Account Debtor's
obligation does not constitute its legal, valid and binding obligation,
enforceable against it in accordance with its terms;

                                     - 8 -
<PAGE>

      (n) Accounts Receivable with respect to which the Borrower has not yet
performed the applicable service;

      (o) Accounts Receivable subject to any Lien (except those in favor of the
Bank), or the Inventory, goods, property, services or other consideration of
which such Accounts Receivable constitutes proceeds is subject to any such Lien;

      (p) Accounts Receivable due from any Subsidiary or Affiliate of the
Borrower;

      (q) Accounts Receivable that have been classified by the Borrower as
doubtful or that have otherwise failed to meet established or customary credit
standards of the Borrower, to the extent of such write-down;

      (r) Accounts Receivable evidenced by a promissory note, chattel paper or
other similar instrument;

      (s) Accounts Receivable that are subordinate or junior in right or
priority of payment pursuant to a written agreement between the applicable
Account Debtor and the Borrower to any other obligation or claim; and

      (t) Accounts Receivable that are consigned or otherwise assigned to any
Person (other than the Borrower) for collection or otherwise.

      "Eligible Inventory" shall mean the Inventory as to which the Borrower has
furnished to the Bank information, adequate to identify the same, at such times
and in such form as has been or, from time to time may be, requested by the
Bank, which meet all of the following criteria and which is in all other
respects acceptable to the Bank:

            (i) the Inventory is either (a) finished goods or (b) raw materials
other than supplies; but excluding in all cases work-in-process, any goods which
have been shipped, delivered, sold by or provided to the Borrower on a bill and
hold, consignment sale, guaranteed sale, or sale or return basis; or any other
similar basis or understanding other than an absolute sale;

            (ii) the Inventory is new, of good and merchantable quality;

            (iii) the Inventory is located on premises listed on Schedule "B" to
this Agreement;

            (iv) the Inventory is not stored with a bailee, warehouseman,
consignee or similar party unless the Bank has given its prior written consent
and the Borrower has caused such bailee, warehouseman, consignee or similar
party to issue and deliver to the Bank, in form and substance acceptable to the
Bank, warehouse receipts or similar type documentation therefor in the Bank's
name;

                                     - 9 -
<PAGE>

            (v) the Inventory is subject to the Bank's first prior perfected
security interest and is not subject to any other Lien;

            (vi) the Inventory has not been manufactured in violation of any
federal minimum wage or overtime laws, including, without limitation, the Fair
Labor Standards Act, 29 U.S.C. ss. 215(a)(1); and

            (vii) the Inventory is not, and should not be, disqualified for any
other reason generally accepted in the commercial finance business.

      Notwithstanding the qualification standards specified above, upon prior
notice to the Borrower, the Bank may at any time or from time to time revise
such qualification standards or, in its sole discretion, determine that certain
Inventory is not eligible to be Eligible Inventory.

      "Eligible PP & E" shall mean the net book value of all PP & E to which the
Borrower has furnished to the Bank information, adequate to identify the same,
at such times and in such form as has been or, from time to time may be,
requested by the Bank and which is in all other respects acceptable to the Bank.

      "Environmental Law" or "Environmental Laws" shall mean all federal, state
and local laws, statutes, ordinances and regulations now or hereafter in effect,
and in each case as amended or supplemented from time to time, and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include but are not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss.9601 et seq.)
("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C.
ss.180 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C. ss.136 et seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C. ss.6901 et seq.) ("RCRA"); the Toxic Substance Control
Act, as amended (42 U.S.C. ss.7401 et seq.); the Clean Air Act, as amended (42
U.S.C. ss.740 et seq.); the Federal Pollution Control Act, as amended (33 U.S.C.
ss.1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
ss.651 et seq.); the Safe Drinking Water Act, as amended (42 U.S.C. ss.300f et
seq.); the Food, Drug and Cosmetic Act, as amended (21 U.S.C. ss.301 et seq.);
the Medical Waste Tracking Act of 1988, Pub. L. No. 100-582, 102 Stat. 2950
(1988), and their state and local counterparts or equivalents and any transfer
of ownership, notification or approval statutes such as the New Jersey
Industrial Site Recovery Act (N.J.S.A. ss.13:1K-6 et seq.) ("ISRA"); the New
Jersey Leaking Underground Storage Tank Act (N.J.S.A. ss.58:10a-21 et seq.)
("LUST"); and the Spill Compensation and Control Act (N.J.S.A. ss.58:10-23.11 et
seq.).

      "Environmental Liabilities and Costs" shall mean, as to any Person, all
liabilities obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages,

                                     - 10 -
<PAGE>

consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts and consultants
and costs of investigation and feasibility studies), fines, penalties, sanctions
and interest incurred as a result of any claim or demand by any other Person,
whether based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, including any Environmental Law, permit, order or
agreement with any Governmental Authority or other Person, and which arise from
any environmental, health or safety conditions, or a Release or conditions that
are reasonably likely to result in a Release, and result from the past, present
or future operations of such Person or any of its Subsidiaries.

      "Environmental Lien" shall mean any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.

      "ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.

      "ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b), (c), (m), or (o) of the Tax Code.

      "ERISA Event" shall mean, as to the Borrower, (i) a Reportable Event with
respect to a Title IV Plan, (ii) the withdrawal of the Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section 4063
of ERISA during a plan year in which it was a "substantial employer" as defined
in Section 4001(a) (2) of ERISA, (iii) the complete or partial withdrawal of the
Borrower, any of its Subsidiaries or any ERISA Affiliate from any Multi-employer
Plan, (iv) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Sections 4041 of ERISA, (v)
the institution of proceedings to terminate a Title IV Plan or Multi-employer
Plan by the PBGC, or (vi) any other event or condition grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or the imposition of any liability under Title IV
or ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA.

      "Equipment" shall mean all "equipment", as such term is defined in Section
9-102(a)(33) of the UCC, whether now owned or hereafter acquired by the Borrower
and wheresoever located, and shall also mean and include all personal property,
including that constituting machinery, equipment, plant, furnishings, fixtures
and other fixed assets of any kind, nature and description, whether affixed to
real property or not, including automobiles, trucks and vehicles of every
description, trailers, handling and delivery equipment, fixtures and office
furniture, as well as all additions to, substitutions for, replacements of or
accessions to any of the items recited as aforesaid and all attachments,
components, parts, (including spare parts) and accessories whether installed
thereon or affixed thereto and all fuel for any thereof.

                                     - 11 -
<PAGE>

      "Existing Facility" shall mean that certain credit facility by and between
the Borrower and the Bank in the aggregate principal amount of $1,500,000.00
which, upon the closing the Facility, shall be of no further force and effect.

      "Event of Default" or "Events of Default" shall mean any of the events of
default as defined and described in Section 7.1 of this Agreement; provided that
any requirement for the giving of notice, the passing of time, or both, or the
happening of any other condition, has been satisfied.

      "Facility" shall have the meaning assigned and ascribed to such term as
set forth in the first Recital of this Agreement.

      "Financing Statements" means the UCC-1 Financing Statements to be filed
with applicable Governmental Authorities pursuant to which the Bank shall
perfect its security interest in the Collateral.

      "Fiscal Quarter" shall mean the three (3) month period of each Fiscal Year
(or such other three months as agreed upon by the Borrower and the Bank):

       November 1                   -                     January 31
       February 1                   -                     April 30
       May 1                        -                     July 31
       August 1                     -                     October 31

      "Fiscal Year" shall mean that twelve (12) month period commencing on
November 1 and ending on October 31 of each year (or such other twelve month as
agreed upon by the Borrower and the Bank).

      "Fixed Charge Coverage Ratio" shall mean the ratio which is equivalent to
the sum of the Borrower's EBITDA less any cash taxes, Distributions, Capital
Expenditures and treasury stock purchases divided by the sum of the Borrower's
Current Portion of Long Term Debt plus Interest Expense.

      "GAAP" shall mean Generally Accepted Accounting Principles, consistently
applied.

      "General Intangibles" shall mean any "general intangibles," as such term
is defined in Section 9-102(a)(42) of the UCC, now owned or hereafter acquired
by the Borrower and, in any event, shall include, without limitation, all
rights, interest, choses in action, causes of actions, claims and all other
intangible property of the Borrower of every kind and nature, in each instance
whether now owned or hereafter acquired by the Borrower, including, without
limitation, all corporate and other business records, all loans, royalties, and
all other forms of obligations receivable whatsoever (other than Accounts
Receivable); all trademarks, patents, trade secrets, licenses, copyrights,
goodwill, inventions (whether patented or patentable or not), designs,
registrations, permits, franchises, proprietary or confidential information,
technical information,

                                     - 12 -
<PAGE>

procedures and designs; all knowledge, know-how, skill, expertise and experience
relating to the business conducted by the Borrower; all computer programs,
software, data bases, data, processes, models, drawings, printouts and other
computer materials, customer lists, credit files, and supplier contracts, firm
sale orders, rights under license and franchise agreements; all interests in
partnerships and joint ventures; all tax refunds and tax refund claims; all
right, title and interest under leases, subleases, licenses and concessions and
other agreements relating to personal property; all payment due or made to the
Borrower in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of any property by any Person or Governmental Authority; all
deposit accounts (general or special) with any bank or other financial
institution; all credits with and other claims against third parties (including
carriers and shippers) (other than Accounts Receivable); all rights to
indemnification; all reversionary interests in pension and profit sharing plans
and reversionary, beneficial and residual interests in trusts; all proceeds of
insurance of which the Borrower is the beneficiary; all right, title and
interest which the Borrower may now or hereafter have or under any other
Contracts or contract right, now owned or hereafter acquired by the Borrower;
and all letters of credit, guaranties, liens, security interests and other
security held by or granted to the Borrower; and all other intangible property,
whether or not similar to the foregoing, in each instance, however and wherever
arising.

      "Generally Accepted Accounting Principles" shall mean generally accepted
principles and practices for financial statements as developed and modified by
the American Institute of Certified Public Accountants, the Financial Accounting
Standards Board, the Securities and Exchange Commission, the stock exchanges and
industry practices and custom, applied on a consistent basis.

      "German Subsidiaries" shall mean reference to IMPAC Electronic GmbH, IMPAC
Systems GmbH, infra sensor Spezialpyrometer GmbH, INFRAPOINT Messtechnik GmbH,
IMPAC France, Sarl and IMPAC Infrared Ltd..

      "Governmental Authority" or "Governmental Authorities" shall mean any
federal, state, county or municipal governmental agency, board, commission,
officer, official or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government whose
consent or approval is required as a prerequisite to (i) the continued
uninterrupted operation and occupancy of the Borrower's business operations, or
(ii) the performance of any act or obligation or the observance of any agreement
or condition of the Borrower under this Agreement or the other Loan Documents.

      "Guarantor" shall mean a reference to E(2)T.

      "Guaranty Agreement" shall mean that certain agreement of guaranty,
executed and delivered by the Guarantor, for the benefit of the Bank, with
respect to the Obligations.

                                     - 13 -
<PAGE>

      "Hedging Obligations" shall mean any and all obligations of the Borrower,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, commodity prices, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants or any similar derivative transactions, and (ii) any
and all cancellations, buy backs, reversals, terminations of any of the
foregoing.

      "Instrument" shall mean any "instrument," as such term is defined in
Section 9-102(a)(47) of the UCC, including, without limitation, rights to
proceeds of letters of credit, letter-of-credit rights, supporting obligations
of every kind and description and investment property, whether now owned or
hereafter acquired by the Borrower, other than instruments that constitute, or
are a part of a group of writings that constitute, Chattel Paper.

      "Insurance Policies" shall mean all of the Borrower' right, title and
interest under any policy of insurance affecting the collateral, including,
without limitation, unearned premiums thereon.

      "Interest Period" shall mean, with respect to any LIBOR Loan,

      (i) initially, the period commencing on the date such LIBOR Loan is made
or the Conversion Date and ending one (1), two (2), three (3) or six (6) months
thereafter, as selected by the Borrower in the Notice of Borrowing; and

      (ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Loan and ending one (1), two
(2), three (3) or six (6) months thereafter, as selected by the Borrower in the
Notice of Borrowing, provided, however, that:

      (1) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;

      (2) any Interest Period that would otherwise extend beyond the Maturity
Date shall end on the Maturity Date;

      (3) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar

                                     - 14 -
<PAGE>

month at the end of such Interest Period) shall end on the last Business Day of
a calendar month; and

      (4) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any LIBOR Loan during an Interest Period for such Loan.

      "Inventory" shall mean any "inventory," as such term is defined in Section
9-102(a)(48) of the UCC, now owned or hereafter acquired by the Borrower and, in
any event, shall include, without limitation, all inventory, merchandise, goods
and other tangible personal property now owned or hereafter acquired by the
Borrower (wherever located, whether in the possession of the Borrower or of a
bailee or other person for sale, storage, transit, processing, packaging,
delivery, shipping, use or otherwise and whether consisting of whole goods,
spare parts, components, supplies, materials, or consigned, returned or
repossessed goods) which are held for sale or lease or to be furnished (or have
been furnished) under any contract of service or which constitute raw materials,
work in process or materials used or consumed in the Borrower' businesses or in
the processing, packaging or shipping of same and all finished goods in the
possession of the Borrower.

      "IRS' shall mean the United States Internal Revenue Service.

      "LIBOR" shall mean, as applicable to any LIBOR Loan, the rate per annum as
determined on the basis of the offered rates for deposits in U.S. Dollars, for
an applicable Interest Period, comparable to such LIBOR Loan which appears on
the Telerate page 3750 as of 11:00 a.m. London time on the day that is two
London Banking Days preceding the first day of such LIBOR Loan; provided,
however, if the rate described above does not appear on the Telerate System on
any applicable interest determination date, the LIBOR rate shall be the rate
(rounded upward, if necessary, to the nearest one hundred-thousandth of a
percentage point), determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such LIBOR Loan which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. London time, on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Loan as selected by Bank. The principal London
office of each of the four major London banks will be requested to provide a
quotation of its U.S. Dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable to such
LIBOR Loan offered by major banks in New York City at approximately 11:00 a.m.
New York City time, on the day that is two London Banking Days preceding the
first day of such LIBOR Loan. In the event that Bank is unable to obtain any
such quotation as provided above, it will be deemed that LIBOR pursuant to a
LIBOR Loan cannot be determined. In the event that the Board of Governors of the
Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR
deposits of Bank, then for any period during which such Reserve Percentage shall
apply, LIBOR shall be equal to the amount determined above divided by an amount
equal to 1 minus the Reserve Percentage.

                                     - 15 -
<PAGE>

      "LIBOR Loan" shall mean any Advance or portion of an Advance that bears
interest at a rate determined with reference to LIBOR.

      "LIBOR Interest Rate" shall mean the interest rate charged for each
borrowing under a LIBOR Loan.

      "Licenses" shall mean all license agreements in which the Borrower grants
or receives a grant of any interest in Copyrights, Trademarks, Patents and Trade
Secrets and other intellectual property and any and all (i) renewals,
extensions, supplements, amendments and continuations thereof, (ii) income,
royalties, damages and payments now and hereafter due and/or payable to the
Borrower with respect thereto, including, without limitation, damages and
payments for past or future violations or infringements or misappropriation
thereof, and (iii) rights to sue for past, present and future violations or
infringements thereof, in each instance, whether now owned or hereafter acquired
by the Borrower.

      "Lien" shall mean any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the UCC or comparable
law of any jurisdiction to evidence any of the foregoing).

      "Loan Documents" shall mean any and all agreements, documents,
certificates and instruments executed by the Borrower or any other Person or
delivered by the Borrower to the Bank pursuant to and in connection with the
Facility and this Agreement, including, without limitation, the Revolving Note
and the Financing Statements.

      "Margin Stock" shall mean a reference to "margin stock", as such term is
defined in Regulation G, Regulation T, Regulation U and Regulation X.

      "Master Agreement" shall mean that certain ISDA Master Agreement, executed
by and between the Borrower and the Bank pursuant to which the Borrower and the
Bank may enter into any derivative, interest or currency swap, fixture, option
or other interest rate protection or similar agreement.

      "Maturity Date" shall mean November 20, 2005.

      "Maximum Leverage Ratio" shall mean the ratio which is equivalent to the
Borrower's Total Liabilities less Subordinated Debt divided by the Borrower's
Tangible Net Worth minus the sum of (i) all amounts due and owing from
Affiliates and Subsidiaries plus (ii) Subordinated Debt.

                                     - 16 -
<PAGE>

      "Notice of Borrowing" shall have the meaning assigned and ascribed to such
term as set forth in Section 2.2 of this Agreement.

      "Notice of Conversion" shall have the meaning assigned and ascribed to
such term as set forth in Section 2.8 of this Agreement.

      "Obligation" shall mean any one of the Obligations.

      "Obligations" shall mean, collectively, all of the indebtedness,
obligations, liabilities, and agreements of every kind and nature of the
Borrower to or with the Bank, or to or with any affiliate of the Bank, or of any
guarantor of the Borrower's indebtedness, obligations, liabilities and
agreements to or with the Bank, or to or with any affiliate of the Bank, now
existing or hereafter arising, and now or hereafter contemplated, pursuant to
this Agreement, the Loan Documents or otherwise, whether in the form of
refinancing, letters of credit, bankers acceptances, guaranties, loans,
interest, charges, expenses or otherwise, direct or indirect, (including without
limitation, any participants or interest of the Bank, or of an affiliate of the
Bank in any obligation of the Borrower to others), acquired outright,
conditionally or as collateral security from another, absolute or contingent,
joint or several, liquidated or unliquidated, secured or unsecured, arising by
operation of law or otherwise, including without limitation any future advances,
renewals, extensions or changes in form of, or substitutions for, any of said
indebtedness, obligations or liabilities, the other sums and charges to be paid
to the Bank pursuant to this Agreement or any of the Loan Documents to which the
Borrower is a party, including any indebtedness or liabilities arising from any
derivative, interest or currency swap, fixture, option or other interest rate
protection or similar agreement (including, without limitation, the Hedging
Obligations) and all interest and late charges on any of the foregoing.

      "Patent Security Agreement" shall mean that certain patent security
agreement, executed by the Borrower in favor of the Bank, whereby the Borrower
granted to the Bank, a valid perfected first security lien interest, in and to
all Patents and other similar property owned by it, for the purpose of providing
the Bank with security for the Facility.

      "Patents" shall mean all United States patents and patent applications,
along with any and all (i) inventions and improvements described and claimed
therein and all other technical developments, whether or not patentable, now or
hereafter made, (ii) reissues, divisions, continuations, renewals, extensions,
reexaminations, continuations-in-part and extensions thereof, (iii) income,
royalties, damages and payments now and hereafter due and/or payable to the
Borrower with respect thereto and all proceeds thereof, including, without
limitation, damages and payments for past or future infringements or
misappropriation thereof, (iv) rights to sue for past, present and future
infringements or misappropriation thereof, and (v) all other rights
corresponding thereto, in each instance, whether now owned or hereafter acquired
by the Borrower.

      "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.

                                     - 17 -
<PAGE>

      "Permit" shall mean any permit, approval, authorization, license,
variance, or permissions required from a Governmental Authority under applicable
Requirements of Law.

      "Permitted Encumbrances" shall mean, with respect to the Collateral, the
following: (i) liens for taxes, assessments or governmental charges not then due
and payable or not then delinquent; (ii) liens for taxes, assessments or
governmental charges the validity of which are being contested in good faith by
the Borrower by appropriate proceedings, provided that the Borrower shall have
maintained reasonably adequate reserves and accrued the estimated liability on
the Borrower' balance sheet for the payment of same; (iii) liens created or
contemplated by the Loan Documents; (iv) liens in favor of or consented to by
the Bank, and (v) liens for purchase money equipment financing which, in the
aggregate, does not exceed $100,000.00.

      "Person" or "Persons" shall mean any one or more individuals,
partnerships, corporations (including a business trust), joint stock companies,
trusts, unincorporated associations, joint ventures or other entities, or a
foreign state or political subdivision thereof or any agency of such state or
subdivision.

      "Pledge Agreement" shall mean that certain Pledge Agreement, dated as of
November 21, 2002 executed by the Borrower with respect to the stock interests
owned by it in HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs
GmbH.

      "Pledged Debt" shall mean all instruments, including but not limited to,
promissory notes evidencing any indebtedness due and owing to the Borrower by
any Person, including any Subsidiaries of the Borrower.

      "PP & E" shall mean all property, plant and Equipment, whether now owned
or hereafter acquired by the Borrower and wheresoever located; to which the
Borrower can demonstrate clear title and possession within the United States of
America.

      "Prime Rate" shall mean the rate of interest utilized, from time to time,
by the Bank as its prime lending rate. This rate of interest is a reference rate
and is neither tied to any external rate of interest or index, nor does it
necessarily reflect the lowest rate of interest actually charged by the Bank to
any particular class or category of customers of the Bank. The Prime Rate shall
be set on the Closing Date and is to be adjusted automatically and immediately
thereafter from time to time on the same day as the Prime Rate changes, without
notice to the Borrower, and any other guarantors or endorsers, if any, and any
notice of which they may be entitled is hereby waived. Any such a change in the
Prime Rate shall not affect or alter the terms and condition of this Agreement
or the Revolving Note, all of which shall remain in full force and effect.

      "Prime Rate Loan" shall mean any Advance or portion of an Advance that
bears interest at a rate determined with reference to the Prime Rate.

                                     - 18 -
<PAGE>

      "Proceeds" shall have the meaning assigned to it under the UCC and, in any
event, shall include, but not be limited to, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the Borrower from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to the Borrower from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency or any other Person (whether or not acting under
color of Governmental Authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.

      "Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.

      "Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.

      "Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.

      "Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.

      "Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.

      "Release" shall mean, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration by such Person of a contaminant into the indoor or outdoor
environment or into or out of any property owned by such Person or any of it
Subsidiaries, including the movement of contaminants through or in the air,
soil, surface water, groundwater or property.

      "Remedial Action" shall mean all actions required to (i) clean up, remove,
treat or in any other way address contaminants in the indoor or outdoor
environment; (ii) prevent a Release or condition that is reasonably likely to
result in a Release or minimize further release of contaminants so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care.

      "Reportable Event" means any of the events set forth in Section 4043 (b)
(1), (2), (3), (5), (6), (8) or (9) of ERISA.

      "Requirement of Law" shall mean, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and all federal,
state and local laws, rules, regulations, orders, decrees or other
determinations of an arbitrator, court or other Governmental Authority,
including all disclosure requirements of ERISA

                                     - 19 -
<PAGE>

and the requirements of Environmental Laws, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.

      "Reserve Percentage" shall mean the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves), which is
imposed on member banks of the Federal Reserve System against "Euro-currency
Liabilities", as such term is defined in Regulation D.

      "Responsible Officer" shall mean the chief executive officer, chief
financial officer, corporate controller or any other officer of the Borrower
acceptable to the Bank.

      "Revolving Note" shall mean that certain revolving credit note, dated the
date of this Agreement, in the aggregate principal amount of up to Four Million
and 00/100 ($4,000,000.00) Dollars, executed by the Borrower in favor of the
Bank, evidencing the Facility.

      "Security Agreement" shall mean that certain security agreement executed
by the Borrower in favor of the Bank, whereby the Borrower granted to the Bank a
valid perfected first security lien interest in the Collateral for the purpose
of providing the Bank with security for the Facility.

      "Share Purchase Agreement" shall mean that certain Share Sale and Purchase
Agreement and Assignment of Shares, dated November 21, 2002, executed by and
between HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH, as
purchaser, and Hermann Schlosser, Ilse Schlosser, Karen Beck and Rolf
Breternitz, as sellers, with respect to the shares of Impac Electronic GmbH and
Infrapoint Messtechnik GmbH.

      "Solvent" means, with respect to any Person on a particular date, that on
such date (i) the fair value of the assets of such Person (both at fair
valuation and at present fair saleable value) is, on the date of determination,
greater then the total amount of liabilities, including contingent and
unliquidated liabilities, of such Person, (ii) such Person is able to pay all
liabilities of such Person as they mature, and (ii) such Person does not have
unreasonably small capital with which to carry on its business. In computing the
amount of contingent or unliquidated liabilities at anytime, such liability will
be computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

      "Subordinated Debt" shall mean, at any particular time, all Debt of the
Borrower that shall be expressly subordinated upon written terms and conditions,
satisfactory to the Bank, in right of payment to the prior payment in full of
all of the Obligations.

      "Subsidiary" or "Subsidiaries" shall mean with respect to any Person (i) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such

                                     - 20 -
<PAGE>

Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, or (ii) any other Person (other than a
corporation) in which such Persons and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has at least a
majority ownership interest.

      "Subsidiary Security Agreement" shall mean that certain security agreement
executed by any Guarantor in favor of the Bank, whereby any Guarantor granted in
favor of the Bank a valid perfected first security lien interest in the
Collateral for the purpose of providing the Bank with security for the Facility.

      "Tax Code" shall mean the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time (26 U.S.C. ss.31 et seq.).

      "Trademark Security Agreement" shall mean that certain trademark security
agreement, executed by the Borrower in favor of the Bank, whereby the Borrower
granted to the Bank, a valid perfected first security lien interest, in and to
all Trademarks and other similar property owned by it, for the purpose of
providing the Bank with security for the Facility.

      "Trademarks" shall mean all United States trademarks, service marks, trade
names, fictitious names, corporate names and company names, whether registered
or at common law, and all registrations and applications therefor of the
Borrower, and the entire goodwill of the Borrower's businesses connected
therewith and symbolized thereby, together with any and all (i) renewals
thereof, (ii) income, royalties, damages and payments now and hereafter due
and/or payable or both with respect thereto, including, without limitation,
damages and payments for past or future infringements or misappropriation
thereof, and (iii) rights to sue for past, present and future infringements or
misappropriation thereof, and (iv) all other rights corresponding thereto, in
each instance, whether now owned or hereafter acquired by the Borrower, and
including, without limitation, the Trademarks.

      "Trade Secrets" shall mean all trade secrets of the Borrower, along with
any and all (i) income, royalties, damages and payments now and hereafter due
and/or payable to the Borrower with respect thereto, including, without
limitation, damages and payments for past or future infringements or
misappropriations thereof, and (ii) all other rights corresponding thereof, in
each instance, whether now owned or hereafter acquired by the Borrower.

      "Tranche" shall mean a collective reference to all LIBOR Loans and the
then current Interest Periods with respect to such LIBOR Loans which begin on
the same date and end on the same later date (whether or not such LIBOR Loans
shall originally have been made on the same day).

      "UCC" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New Jersey; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority

                                     - 21 -
<PAGE>

of the Bank's security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New
Jersey, the term "UCC" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions thereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions..

      Section 1.2 Rules of Interpretation and Construction. In this Agreement,
unless the context otherwise requires:

            (i) Articles and Sections mentioned by number only are the
respective Articles and Sections of this Agreement as so numbered;

            (ii) Words importing a particular gender shall mean and include the
other gender and words importing the singular number mean and include the plural
number and vice versa;

            (iii) Words importing persons shall mean and include firms,
associations, partnerships (including limited partnerships), societies, trusts,
corporations or other legal entities, including public or governmental bodies,
as well as natural persons;

            (iv) Each reference in this Agreement to a particular person shall
be deemed to include a reference to such person's successors and permitted
assigns.

            (v) Any headings preceding the texts of the several Articles and
Sections of this Agreement, and any table of contents or marginal notes appended
to copies hereof, shall be solely for convenience of reference and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.

            (vi) If any clause, provision or section of this Agreement shall be
ruled invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any of the remaining
provisions thereof, unless not invalidating or rendering unenforceable the
remaining provisions shall be inequitable;

            (vii) The terms "herein", "hereunder", "hereby", "hereto", and any
similar terms as used in this Agreement refer to this Agreement; the term
"heretofore: means before the date of execution of this Agreement; and the term
"hereafter" means after the date of execution of this Agreement;

            (viii) If any clause, provision or section of this Agreement shall
be determined to be apparently contrary to or conflicting with any other clause,
provision or section of this Agreement, then the clause, provision or section
containing the more specific provisions shall control and govern with respect to
such apparent conflict;

            (ix) Unless otherwise specified, (a) all accounting terms used
herein or in any Loan Document shall be interpreted, (b) all accounting
determinations and

                                     - 22 -
<PAGE>

computations hereunder or thereunder shall be made, and (c) all financial
statements required to be delivered hereunder or thereunder shall be prepared,
in accordance with GAAP; and

            (x) The word "and" when used from time to time herein shall mean
"or" or "and/or" if such meaning is expansive of the rights or interests of the
Bank in the given context.

                        [SPACE INTENTIONALLY LEFT BLANK]

                                     - 23 -
<PAGE>

                                   ARTICLE II

                        AMOUNT AND TERMS OF THE FACILITY

      Section 2.1 Commitment to Lend.

      (i) Subject to the terms and conditions set forth in this Agreement, the
Bank will make advances, from time to time, to the Borrower, in such amounts as
the Borrower may request and the Borrower may borrow, repay, and reborrow from
time to time between the date of this Agreement and the Maturity Date, upon
notice by the Borrower to the Bank given in accordance with Section 2.2 of this
Agreement, such sums as requested by the Borrower up to a maximum aggregate
principal amount outstanding (after giving effect to all amounts requested) at
one time equal to the Advance Limit. Each request for an Advance hereunder shall
constitute a representation by the Borrower that the conditions set forth in
this Agreement have been satisfied on the date of such request.

      (ii) The Bank may, from time to time, in its sole and absolute discretion,
permit the outstanding amount of the Facility, or the aggregate outstanding
amount of all loans, advances and/or other financial accommodations to exceed
the limitations set forth in this Agreement. In any such event, and without
limiting the rights of the Bank to demand payment of the Facility, in whole or
in part, at any time and from time to time, the Borrower shall immediately repay
to the Bank, and/or furnish cash collateral to the Bank, for such portion of the
outstanding loans, advances or other financial accommodations which equals the
amount(s) by which the formulas or the limitations set forth herein have been
exceeded. If the outstanding amount of the loans, advances or other financial
accommodations shall exceed the Advance Limit at any time, such excess shall be
deemed secured by the Collateral and shall be subject to the terms of this
Agreement.

      Section 2.2 Procedures for Making the Advances Under the Facility. Subject
to all of the applicable terms and conditions of this Agreement, Advances shall
be made by the Bank to the Borrower, at such times and in such amounts, as shall
be requested by the Borrower in compliance with this Section 2.2:

            (i) Advances shall be in integral multiples of $100,000.00;

            (ii) In no event shall the sum of (a) the amount of any and all
      Advances requested by the Borrower, and (b) the outstanding principal
      balance of the Facility, on the requested Advance Date, exceed the Advance
      Limit.

            (iii) Each Advance shall be made on notice given by the Borrower to
      the Bank not later than 11:00 a.m. (hereinafter referred to as a "Notice
      of Borrowing"), on the date which is three (3) Business Days prior to the
      proposed Advance Date. Each such Notice of Borrowing shall be by telephone
      or

                                     - 24 -
<PAGE>

      facsimile, in each case confirmed immediately in a signed writing by the
      Borrower specifying therein (a) the requested Advance Date, (b) the amount
      of such Advance and (c) any exceptions to the covenants, representations
      and warranties set forth in this Agreement.

            (iv) Notwithstanding any provision of this Section 2.2 to the
contrary, in no event shall the Bank be obligated, nor shall the Borrower
request the Bank, to make any Advances upon the occurrence of a Default or an
Event of Default.

      Section 2.3 The Revolving Note. The obligation of the Borrower to repay
all monies advanced by the Bank to the Borrower in connection with the Facility
shall be evidenced by the Revolving Note. The Revolving Note, inter alia, shall
(i) be dated the Closing Date, (ii) be payable in the amounts and on the dates
as provided for in Section 2.5 hereof, and (iii) bear interest at the rates and
be payable on the dates and in the manner provided for in Section 2.4 hereof.

      Section 2.4 Interest Rate. (i) Subject to terms and conditions of this
Agreement, interest shall be computed daily on the advanced and unpaid principal
amount of all Advances from the date on which each such Advance is made until
the principal thereof shall be paid in full, hereunder at a rate per annum equal
to:

      (1)   for any Prime Rate Loan, the Prime Rate minus one hundred (100)
            basis points, as in effect from time to time; and

      (2)   for any LIBOR Loan, at all times during the applicable Interest
            Period, one hundred fifty (150) basis points over and above LIBOR
            for such Interest Period for such LIBOR Loan.

            (ii) Interest on all Advances outstanding shall be paid monthly, in
arrears, (a) with respect to any Prime Rate Loan on the first day of each and
every month until the Maturity Date, (b) with respect to any LIBOR Loan, on the
last day of each applicable Interest Period, (c) with respect to any Prime Rate
Loan or LIBOR Loan whose principal balance is to be paid prior to the last day
of any such month, on the date any such loan is paid in full or (d) or such
earlier date as a result of the occurrence of an Event of Default under the Loan
Documents; at which time all unpaid principal and accrued interest, together
with any fees, charges, expenses and other sums, if any, shall be due and
payable to the Bank; which fees shall be deemed to have been earned.

            (iii) All computations of interest called for under the Facility
shall be made on the basis of a 360 day year for the actual number of days
elapsed.

            Section 2.5 Payment of Principal. The aggregate outstanding
principal balance of the Facility shall be due and payable by the Borrower to
the Bank on the Maturity Date or such earlier date as a result of the occurrence
of an Event of Default under the Loan Documents; at which time all unpaid
principal and accrued interest, together with any,

                                     - 25 -
<PAGE>

fees, charges, expenses and other sums, if any, due and owing to the Bank; which
fees shall be deemed to have been earned.

      Section 2.6 Optional Prepayment of Principal. (i) With respect to any
LIBOR Loan under the Facility, the Borrower may prepay a LIBOR Loan only upon at
least three (3) Business Days prior written notice to the Bank (which notice
shall be irrevocable), and any such prepayment shall occur only on the last day
of the Interest Period for such LIBOR Loan. The Borrower shall pay to the Bank,
upon request of the Bank and in addition to the payment of all accrued and
unpaid interest due on the Facility, together with all sums, expenses and fees
due and owing to the Bank, which fees shall be deemed to have been earned, such
amount or amounts as shall be sufficient (in the reasonable opinion of the Bank)
to compensate it for any loss, cost, or expense incurred as a result of: (i) any
payment of a LIBOR Loan on a date other than the last day of the Interest Period
for such Loan; (ii) any failure by the Borrower to borrow a LIBOR Loan on the
date specified by Borrower's written notice; (iii) any failure by the Borrower
to pay a LIBOR Loan on the date for payment specified in the Borrower's written
notice. Without limiting the foregoing, the Borrower shall pay to the Bank a
"yield maintenance fee" in an amount computed as follows: The current rate for
United States Treasury securities (bills on a discounted basis shall be
converted to a bond equivalent) with a maturity date closest to the term chosen
pursuant to the LIBOR Rate Election as to which the prepayment is made, shall be
subtracted from the LIBOR RATE in effect at the time of prepayment. If the
result is zero or a negative number, there shall be no yield maintenance fee. If
the result is a positive number, then the resulting percentage shall be
multiplied by the amount of the principal balance being prepaid. The resulting
amount shall be divided by 360 and multiplied by the number of days remaining in
the term chosen pursuant to the LIBOR Rate Election as to which the prepayment
is made. Said amount shall be reduced to present value calculated by using the
above referenced United States Treasury securities rate and the number of days
remaining in the term chosen pursuant to the LIBOR Rate Election as to which
prepayment is made. The resulting amount shall be the yield maintenance fee due
to the Bank upon the prepayment of a LIBOR Loan. Each reference in this
paragraph to "LIBOR Rate Election" shall mean the election by the Borrower of
the LIBOR Rate. If by reason of an Event of Default, the Bank elects to declare
the Revolving Note to be immediately due and payable, then any yield maintenance
fee with respect to a LIBOR Loan shall become due and payable in the same manner
as though Borrower had exercised such right of prepayment.

      (ii) With respect to any Prime Rate Loan under the Facility, the Borrower
may prepay, in whole or in part, without premium or penalty therefor, the
outstanding principal amount of the Facility, at any time during the term of the
Facility, provided, any prepayment of principal of the Facility shall be
accompanied by payment of all accrued and unpaid interest due on the Facility,
together with all sums, expenses and fees due and owing to the Bank, which fees
shall be deemed to have been earned.

      Section 2.7 Mandatory Prepayments. In the event that at any time during
the term of the Facility, the outstanding principal balance of the Facility
exceeds the Advance Limit, the Borrower, immediately and without delay, shall
make any and all such

                                     - 26 -
<PAGE>

payments necessary to reduce the outstanding principal balance of the Facility
to be less than or equal to the Advance Limit.

      Section 2.8 Conversion and Continuation Options. (i) The Borrower may
elect from time to time to (a) Convert any LIBOR Loan to a Prime Rate Loan or
(b) Convert a Prime Rate Loan to a LIBOR Loan, by giving the Bank at least three
(3) Business Days' prior irrevocable notice of such election (hereinafter
referred to as a "Notice Conversion"), provided that any such Notice of
Conversion provided with respect to a LIBOR Loan may only be made on the last
day of an Interest Period with respect thereto. Any such Notice of Conversion
provided with respect to a LIBOR Loan shall specify the length of the initial
Interest Period or Interest Periods therefor. All or any part of any outstanding
LIBOR Loans and Prime Rate Loans may be Converted as provided herein, provided,
that (i) no Event of Default has occurred, (ii) any such Conversion may only be
made if, after giving effect thereto, Section 2.9 shall not have been
contravened, and (iii) no Prime Rate Loan may be Converted into a LIBOR Loan
after the date that is one month prior to the Maturity Date.

      (ii) Any LIBOR Loan may be Continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Bank, in accordance with the terms and conditions of this Agreement, of
the length of the next Interest Period to be applicable to such Loan, provided,
that no LIBOR Loan may be Continued (i) upon the occurrence of an Event of
Default, (ii) any such Continuation may only be made if, after giving effect
thereto, Section 2.9 shall not have been contravened or (iii) after the date
that is one month prior to the Maturity Date and provided, further, that if the
Borrower shall fail to give such notice or if such Continuation is not permitted
pursuant to this Section 2.8, such LIBOR Loan shall be automatically converted
to a Prime Rate Loan on the last day of such then expiring Interest Period.

      Section 2.9 Maximum Number of Tranches. All Advances, Conversions and
Continuations under the Facility and all selections of Interest Periods under
the Facility shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, in no event shall there be more than five (5)
Tranches outstanding at any time.

      Section 2.10 Increased Cost The Borrower shall pay to the Bank, from time
to time, such amounts as the Bank may determine to be necessary to compensate
the Bank for any costs incurred by the Bank, which the Bank determines are
attributable to its making or maintaining any LIBOR Loan hereunder or its
obligation hereunder, or any reduction in any amount receivable by the Bank
under this Agreement or the Revolving Note in respect of any such LIBOR Loan or
such obligation (such increases in costs and reductions in amounts receivable
shall hereinafter be referred to as "Additional Costs"), resulting from any
change, after the date of this Agreement, in United States Federal, state,
municipal, or foreign laws or regulations, including, but nor limited to
Regulation D of the Board of Governors of the Federal Reserve System or the
adoption or making after such date of any interpretations, directives or
requirements applying to a class of banks including the Bank of or under any
United States Federal, state, municipal or any

                                     - 27 -
<PAGE>

foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof (hereinafter referred to as a "Regulatory Change"),
which: (1) changes the basis of taxation of any amounts payable to the Bank
under this Agreement or the Revolving Note in respect of any of such LIBOR Loan
(other than taxes imposed on the overall net income of the Bank); or (2) imposes
or modifies any reserve, special deposit, or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of the Bank, including, but not limited to, any of LIBOR Loan or
deposits referred to in the definition of the LIBOR Interest Rate; or (3)
imposes any other condition affecting this Agreement or the Revolving Note (or
any of such extensions of credit or liabilities).

      Section 2.11 Illegality. Notwithstanding any other provision in this
Agreement to the contrary, if the adoption of any applicable law, rule, or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive (whether or not having the
force of law) of any such authority, central bank, or comparable agency shall
make it unlawful or impossible for the Bank to (1) maintain its commitment, as
set forth in this Revolving Note, then upon notice to the Borrower by the Bank,
the commitment of the Bank shall terminate; or (2) maintain or fund a LIBOR
Loan, then upon notice to the Borrower by the Bank the outstanding principal
amount of the borrowings based upon the LIBOR Interest Rate, together with
interest accrued thereon, and any and all other fees, charges and other sums, if
any, due and payable to the Bank shall be converted and charged at an interest
rate, determined by the Bank in its sole and absolute discretion (hereinafter
referred to as an "Alternate Base Rate Loan"); which determination shall be
deemed to be conclusive.

      Section 2.12 Disaster Notwithstanding any term or provision of this
Agreement to the contrary, if the Bank determines, in its sole and absolute
discretion, that:

      (a) Quotations of interest rates for the relevant deposits referred to in
the definition of LIBOR Interest Rate are not being provided in the relevant
amounts or for the relative maturities for purposes of determining the rate of
interest on a LIBOR Loan as provided in this Agreement or the Revolving Note; or

      (b) The relevant rates of interest referred to in the definition of LIBOR
Interest Rate, as the case may be, upon the basis of which the rate of interest
for any such type of loan is to be determined do not accurately cover the cost
to the Bank of making or maintaining such type of a LIBOR Loan; then the Bank
shall forthwith give notice thereof to the Borrower, whereupon until the Bank
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, (a) the obligation of the Bank to make a LIBOR Loan shall be
suspended; and (b) all previous advances based upon the LIBOR Interest Rate
shall then be converted to a Prime Rate Loan.

                                     - 28 -
<PAGE>

      Section 2.13 Use of Proceeds The proceeds of each of the Advances will be
to provide working capital to the Borrower. No part of the proceeds of any of
the Advances shall be assignable without the prior written consent of the Bank
and any attempt to make such assignment without such consent shall be void.

      Section 2.14 Default Rate If any amount of principal or other amount due
hereunder or under the Facility and/or the Revolving Note is not paid when due,
whether at stated maturity, by acceleration or otherwise, the Borrower shall pay
to the Bank, to the extent permitted by applicable law, interest on the unpaid
amount at the Default Rate and said unpaid amount shall be payable upon demand.

      Section 2.15 Late Charge In the event that any payment, including, without
limitation, interest or principal, required to be made by Borrower under any of
the Revolving Note shall not be received by the Bank within ten (10) days after
the same shall be due and payable, the Bank may charge, and if so charged, the
Borrower shall pay upon demand, a late charge of five cents ($0.05) for each
dollar ($1.00) of such delinquent payment, for the purpose of defraying the
expenses incident to the handling of such delinquent payments.

      Section 2.16 Tender and Application of Payment. All payments of principal
and interest due under the Revolving Note and all fees shall be made to the Bank
at its principal office or such other place as the Bank shall designate in
writing, in immediately available funds in any coin or currency of the United
States of America which, at the time of payment, is legal tender for the payment
of public and private debts, without counterclaim or set-off and free and clear
of, and without any deduction or withholding for, any taxes or other payments.
All payments so received shall constitute payment to the Bank and shall be
applied first to the payment of all fees, expenses and other amounts due to the
Bank (excluding principal and interest), then to accrued interest, and the
balance on account of outstanding principal; provided, however, that after
demand, payments will be applied to the Obligations of the Borrower to the Bank
as the Bank determines in its sole discretion.

      Section 2.17 Time of Payment If this Agreement, the Revolving Note or any
payment hereunder or thereunder becomes due on a day which is not a Business
Day, the due date or payment shall be extended to the next succeeding Business
Day, and such extension of time shall be included in computing interest and fees
in connection with such payment.

      Section 2.18 Usury. All agreements between the Borrower and any Guarantor
and the Bank are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the
Bank for the use or the forbearance of the indebtedness evidenced hereby exceed
the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof; provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then the Revolving Note shall

                                     - 29 -
<PAGE>

be governed by such new law as of its effective date. In this regard, it is
expressly agreed that it is the intent of the Borrower and the Bank in the
execution, delivery and acceptance of the Revolving Note to contract in strict
compliance with the laws of the New Jersey from time to time in effect. If,
under or from any circumstances whatsoever, fulfillment of any provision hereof
or of any of the Loan Documents at the time of performance of such provision
shall be due, shall involve transcending the limit of such validity prescribed
by applicable law, then the obligation to be fulfilled shall automatically be
reduced to the limits of such validity, and if under or from circumstances
whatsoever the Bank should ever receive as interest an amount which would exceed
the highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced hereby and not to
the payment of interest. This provision shall control every other provision of
all agreements between the Borrower, any Guarantor and the Bank.

      Section 2.19 Security for the Facility. (i) As security for the due and
punctual payment and performance of all of the terms and conditions of the Loan
Documents, the Borrower and such other Person shall execute and deliver, or
cause to be executed and delivered, to the Bank on the Closing Date, the
following Loan Documents:

            (a) This Agreement;

            (b) The Security Agreement;

            (c) The Subsidiary Security Agreement;

            (d) The Pledge Agreement;

            (e) The Patent Security Agreement;

            (f) The Trademark Security Agreement;

            (g) The Copyright Security Agreement;

            (h) The Guaranty Agreement;

            (i) The Financing Statements; and

            (j) All such other documents as the Bank may have reasonably
required.

      (ii) THE BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT AND
THE COLLATERAL DESCRIBED AND SET FORTH IN THIS AGREEMENT AND THE LOAN DOCUMENTS
COVERS, AND IS INTENDED TO COVER, ALL ASSETS OF THE BORROWER AND THE GUARANTOR
AS MORE PARTICULARLY DESCRIBED THEREIN. FOR AVOIDANCE OF DOUBT, IT IS EXPRESSLY
UNDERSTOOD AND AGREED

                                     - 30 -
<PAGE>

THAT, TO THE EXTENT THE UCC IS REVISED SUBSEQUENT TO THE DATE OF THIS AGREEMENT
SUCH THAT THE DEFINITION OF ANY OF THE FOREGOING TERMS INCLUDED IN THE
DESCRIPTION OF COLLATERAL IS CHANGED, ALTERED OR MODIFIED, THE BORROWER AND THE
GUARANTOR, AS APPLICABLE, AND THE BANK HEREBY AGREE THAT ANY PROPERTY WHICH IS
INCLUDED IN SUCH CHANGED DEFINITIONS WHICH WOULD NOT OTHERWISE BE INCLUDED IN
THE FOREGOING GRANT ON THE DATE HEREOF BE INCLUDED IN SUCH GRANT IMMEDIATELY
UPON THE EFFECTIVE DATE OF SUCH REVISION; IT BEING THE INTENTION OF THE
BORROWER, THE GUARANTOR AND THE BANK THAT THE DESCRIPTION OF COLLATERAL SET
FORTH THIS AGREEMENT AND THE LOAN DOCUMENTS BE CONSTRUED TO INCLUDE THE BROADEST
POSSIBLE RANGE OF PROPERTY AND ASSETS AND ALL TANGIBLE AND INTANGIBLE PERSONAL
PROPERTY AND FIXTURES OF THE BORROWER OF EVERY KIND AND DESCRIPTION.

                        [SPACE INTENTIONALLY LEFT BLANK]

                                     - 31 -
<PAGE>

                                   ARTICLE III

                          CLOSING; CONDITIONS PRECEDENT

      Section 3.1 Closing. The closing shall take place at the offices of
Edwards & Angell, LLP, 51 John F. Kennedy Parkway, Short Hills, New Jersey 07078
at 10:00 a.m. on November 21, 2002, or on such other place, date and time as the
parties hereto shall mutually agree.

      Section 3.2 Conditions to Closing and Initial Advance. The obligations of
the Bank to close the Facility and to make the initial Advance are subject to
the satisfaction of each of the following conditions:

      (i) Executed Loan Documents. This Agreement, the Revolving Note, together
      with any other applicable Loan Documents, shall have been duly authorized,
      executed and delivered to the Bank by the parties thereto, shall be in
      full force and effect and no Default or Event of Default shall exist
      thereunder.

      (ii) Closing Certificates; etc.

            (a) Certificate of Secretary of the Borrower and Guarantor. The Bank
      shall have received a certificate of the secretary of each of the Borrower
      and any Guarantor certifying as to the incumbency and genuineness of the
      signature of each officer of the Borrower or such Guarantor executing the
      Loan Documents to which it is a party and certifying that attached thereto
      is a true, correct and complete copy of (1) the certificate of
      incorporation or other organizational document of the Borrower or such
      Guarantor and all amendments thereto, certified as of a recent date by the
      appropriate Governmental Authority in its jurisdiction of incorporation,
      (2) the bylaws or other operative document of the Borrower or such
      Guarantor as in effect on the date of such certifications, (3) resolutions
      duly adopted by the Board of Directors of the Borrower or such Guarantor
      authorizing the borrowings contemplated hereunder and the execution,
      delivery and performance of this Agreement and the other Loan Documents to
      which it is a party, and (4) each certificate required to be delivered
      pursuant to Section 3.1(ii)(b).

            (b) Certificates of Good Standing. The Bank shall have received
      certificates as of a recent date of the good standing of the Borrower and
      any Guarantor under the laws of its jurisdiction of organization and, to
      the extent requested by the Bank in its reasonable judgment, each other
      jurisdiction where the Borrower and any Guarantor is qualified to do
      business and a certificate of the relevant taxing authorities of such
      jurisdiction certifying that such Person has required tax returns and owes
      no delinquent taxes.

                                     - 32 -
<PAGE>

            (c) Opinion of Counsel. The Bank shall have received favorable
      opinions of counsel to the Borrower and any Guarantor addressed to the
      Bank with respect to the Borrower and any Guarantor, the Loan Documents
      and such other matters as the Bank shall reasonably request.

            (d) Borrowing Base Certificate. The Bank shall have received from
      the Borrower, a Borrowing Base Certificate, dated as of the Closing Date
      executed by a Responsible Officer of the Borrower which shall be accurate
      and complete in all material respects.

      (iii) Collateral.

            (a) Filings and Recordings. All filings and recordations that are
      necessary to perfect the security interests of the Bank in the Collateral
      shall have been received by the Bank and the Bank shall have received
      evidence satisfactory to the Bank that upon such filings and recordations
      such security interests constitute valid and perfected first priority
      liens therein.

            (b) Pledged Collateral. The Bank shall have received (A) original
      stock certificates or other certificates evidencing the capital stock or
      other ownership interests pledged pursuant to the Pledge Agreement
      together with an undated stock power for each such certificate duly
      executed in blank by the registered owner thereof and (B) each original
      promissory note pledged pursuant to the Pledge Agreement.

            (c) Lien Search. The Bank shall have received the results of a lien
      search (including a search as to judgments and tax matters) made against
      the Borrower and the Guarantor under the Uniform Commercial Code as in
      effect in any state in which any of its assets are located, indicating
      among other things that it assets are free and clear of any lien except
      for the Permitted Encumbrances.

            (d) Hazard and Liability Insurance. The Bank shall have received
      certificates of insurance, evidence of payment of all insurance premiums
      for the current policy year of each, and, if requested by the Bank, copies
      (certified by a Responsible Officer) of insurance policies in the form
      required under the Loan Documents and otherwise in form and substance
      reasonably satisfactory to the Bank.

            (e) Environmental Assessments. The Bank shall have received the
      environmental assessments and the other environmental reports, if any, set
      forth in this Agreement.

      (iv) Excess Availability. The Bank shall have received, a Borrowing Base
      Certificate, in form and substance acceptable to the Bank, manifesting a
      minimum of $500,000.00 in availability under the Facility (after
      accounting for the

                                     - 33 -
<PAGE>

      financing and closing of the Acquisition) to be utilized by the Borrower
      for unforeseen working capital needs.

      (v) Consent; Defaults.

            (a) Governmental and Third Party Approvals. The Borrower shall have
      obtained all necessary approvals, authorizations and consents of any
      Person and of all Governmental Authorities and courts having jurisdiction
      with respect to the transactions contemplated by this Agreement and the
      Loan Documents.

            (b) No Injunction, Etc. No action, proceeding, investigation,
      regulation or legislation shall have been instituted, threatened or
      proposed before any Governmental Authority to enjoin, restrain, or
      prohibit, or to obtain substantial damages in respect of, or which is
      related to or arises out of this Agreement or the Loan Documents or the
      consummation of the transactions contemplated hereby or thereby, or which,
      in the Bank's sole discretion, would make it inadvisable to consummate the
      transactions contemplated by this Agreement and the Loan Documents.

            (c) No Event of Default. No Default or Event of Default shall have
      occurred.

      (vi) Financial Matters.

            (a) Financial Condition Certificate. The Borrower shall have
      delivered to the Bank a certificate, in form and substance satisfactory to
      the Bank, and certified as accurate by a Responsible Officer, that (A) the
      Borrower and its Subsidiaries taken as a whole are Solvent, (B) the
      Borrower's and its Subsidiaries' payables are not past due beyond
      customary trade terms, (C) attached thereto are calculations evidencing
      compliance basis with the covenants contained in Articles V and VI hereof
      determined on a pro forma basis, as of the Closing Date and after giving
      effect to the proposed Advances to be made on such date, (D) the financial
      projections previously delivered to the Bank represent the good faith
      estimates (utilizing assumptions believed by the Borrower's management to
      be reasonable) of the financial condition and operations of the Borrower
      and its Subsidiaries.

            (b) Payment at Closing. The Borrower shall have paid to the Bank the
      fees and any other accrued an unpaid fees or commissions due hereunder
      (including, without limitation, legal fees and expenses) and to any other
      Person such amount as may be due thereto in connection with the
      transactions contemplated hereby, including all taxes, fees and other
      charges in connection with the execution, delivery, recording, filing and
      registration of any of the Loan Documents.

      (vii) Acquisition Documents.

                                     - 34 -
<PAGE>

            (a) The Bank shall have received the Acquisition Documentation
      (including amendments, modifications, and waivers thereof) relating to the
      Acquisition to be executed by the parties thereto prior to the closing
      thereof (and the Acquisition shall be consummated in accordance with the
      terms of such provided documentation on or before the first Advance Date).
      The Acquisition Documentation shall not permit, inter alia, the
      distribution, payment or advance of any earn out, notes payable or other
      required or contingent payments to be made by the Borrower or any of its
      Subsidiaries and/or Affiliates to any past, present or future shareholder
      of the Borrower or any of its Subsidiaries and/or Affiliates, except (i)
      any deferred payments to be made by the Borrower or any of its
      Subsidiaries and/or Affiliates under the Share Purchase Agreement or (ii)
      payments to be made under any employment agreements entered into by the
      Borrower or any of its Subsidiaries and/or Affiliates pursuant to and in
      connection with the Share Purchase Agreement.

            (b) The Bank shall be satisfied that the maximum amount paid for the
      Acquisition (including the fees and expenses paid in connection with such
      Acquisition) does not exceed $__________________.

            (c) The Bank shall have received copies (i) of each employment
      agreement between the Borrower and its respective key employees and (ii)
      each non-competition agreement entered into by any seller or any member of
      management of the Borrower in favor of the Borrower, each of the foregoing
      in form and substance satisfactory to the Bank.

            (d) The Bank shall have received copies of all loan documentation to
      be executed by and between HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE
      Vermogensverwaltungs GmbH and ING-BHF Bank with respect to the
      Acquisition.

      (viii) Miscellaneous

            (a) Notice of Borrowing. The Bank shall have received a Notice of
      Borrowing, as applicable, from the Borrower in accordance with the terms
      and conditions of this Agreement.

            (b) Existing Facility. The Existing Facility shall be repaid in full
      and terminated and all collateral security therefore shall be released,
      and the Bank shall have received a pay-off letter in form and substance
      satisfactory to it evidencing such repayment, termination, reconveyance
      and release.

            (c) Other Documents. All opinions, certificates and other
      instruments and all proceedings in connection with the transactions
      contemplated by this Agreement shall be satisfactory in form and substance
      to the Bank. The Bank shall have received copies of all other documents,
      certificates and instruments

                                     - 35 -
<PAGE>

      reasonably requested thereby, with respect to the transactions
      contemplated by this Agreement.

      Section 3.3 Conditions to All Subsequent Advances. The obligations of the
Bank to make any Advances, and to convert or continue any Loan are subject to
the satisfaction of the following conditions precedent on the relevant borrowing
continuation, conversion, issuance or extension date:

      (i) Continuation of Representations and Warranties. The representations
      and warranties contained in Article IV shall be true and correct on and as
      of such borrowing or issuance date of continuation or conversion with the
      same effect as if made on and as of such date; except for any
      representation and warranty made as of an earlier date, which
      representation and warranty shall remain true and correct as of such
      earlier date.

      (ii) No Existing Default. No Default or Event of Default shall have
      occurred and be continuing (i) on the borrowing date with respect to such
      Advance or after giving effect to the Advance to be made on such date or
      on such continuation or conversion date after giving effect to such
      continuation or conversion.

      (iii) Notices. The Bank shall have received a Notice of Borrowing or
      Notice of Conversion/Continuation, as applicable, from the Borrower in
      accordance with this terms and conditions of this Agreement.

                        [SPACE INTENTIONALLY LEFT BLANK]

                                     - 36 -
<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

      The Borrower hereby represents and warrants to the Bank, knowing and
intending that the Bank shall rely thereon in making the Facility contemplated
hereby, that:

      Section 4.1 Corporate Existence; Good Standing.

      (i) The Borrower is (a) a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or a
period longer than the term of the Facility, and is duly qualified or has made
application for due qualification, to do business in all states in which its
ownership of property or conduct of business legally requires such
authorization, and (b) has all requisite corporate power and authority and full
legal right to own or to hold under lease its properties and to carry on the
business in which it is presently engaged.

      (ii) The Borrower has adequate corporate power and authority and has full
legal rights to enter into each of the Loan Documents to which it is a party, to
perform, observe and comply with all of its respective agreements and
obligations under each of such documents.

      (iii) As of the Closing Date, E(2)T is the only domestic Subsidiary and/or
Affiliate of the Borrower.

      Section 4.2 Corporate Authority. The execution and delivery by the
Borrower of the Loan Documents to which it is a party, the performance by the
Borrower of all of its respective agreements and obligations under each of such
documents, and the incurring by the Borrower of all of the Obligations
contemplated by this Agreement, have been duly authorized by all necessary
corporate actions on the part of the Borrower and its shareholders and do not
and will not (i) contravene any provision of the Borrower's certificate of
incorporation or by-laws or this Agreement (each from time to time in effect),
(ii) conflict with, or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, or result in the creation of any
mortgage, lien, pledge, charge, security interest or other encumbrance upon any
of the property of the Borrower under any material agreement, mortgage or other
instrument to which the Borrower is or may become a party, (iii) violate or
contravene any provision of any law, regulation, order, ruling or interpretation
thereunder or any decree, order or judgment or any court or governmental or
regulatory authority, bureau, agency or official (all as from time to time in
effect and applicable to such entity), (iv) require any waivers, consents or
approvals by any of the creditors or trustees for creditors of the Borrower, or
(v) require any approval, consent, order, authorization, or license by, or
giving notice to, or taking any other action with respect to, any governmental
or regulatory authority or agency except those actions that have been taken or
will be taken prior to the Closing Date, under any provision of any applicable
law.

                                     - 37 -
<PAGE>

      Section 4.3 Binding Effect of Documents. The Borrower has duly executed
and delivered each of the Loan Documents to which it is a party, and each of
such documents is in full force and effect. The agreements and obligations of
the Borrower as contained in each of the Loan Documents constitutes or upon
execution and delivery thereof will constitute legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms subject as to the enforcement of remedies only, to any
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application at the time in effect..

      Section 4.4 No Events of Default.

      (i) No Event of Default has occurred and is continuing and no event has
occurred and is continuing and no condition exists that would, with notice or
the lapse of time, or both, constitute an Event of Default.

      (ii) The Borrower is not in default in any respect under any contract,
agreement or instrument to which the Borrower is a party or by which the
Borrower is bound, the consequence of which default could materially or
adversely affect the financial condition, assets, operations or property of the
Borrower.

      Section 4.5 No Governmental Consent Necessary. No consent or approval of,
giving of notice to, registration with or taking of any other action in respect
of, any governmental authority or agency is required with respect to the
execution, delivery and performance by the Borrower of this Agreement and the
Loan Documents to which it is a party.

      Section 4.6 Litigation. There is no action, suit, proceeding, inquiry,
hearing or investigation pending or threatened, in any court of law or in
equity, or before or by any federal, state or local Governmental Authority,
wherein there is a reasonable probability that an unfavorable determination,
decision, decree, ruling or finding might (i) result in any material adverse
change in the business, assets, liabilities, financial condition properties or
operations of the Borrower, (ii) adversely affect the transactions contemplated
by this Agreement and the other Loan Documents to which the Borrower is a party
or by which the Borrower is bound in connection with the Facility, and the
ability of the Borrower to perform its respective obligations hereunder and
thereunder, or (iii) adversely affect the validity or enforceability of this
Agreement and other Loan Documents to which the Borrower is a party or by which
the Borrower is bound in connection with the Facility. The Borrower is not in
violation of or in default with respect to any order, writ, injunction, decree
or demand of any such court or Governmental Authority.

      Section 4.7 No Violations of Laws. The Borrower has conducted, and is
conducting, its business, so as to comply in all material respects with all
applicable federal, state, county and municipal statutes and regulations. The
Borrower is not charged with, nor under investigation with respect to, any
violation of any such statutes,

                                     - 38 -
<PAGE>

regulations or orders, which could have a material or adverse effect on the
financial condition, business or operations of the Borrower.

      Section 4.8 Use of Proceeds of the Facility. Proceeds of the Facility
shall be used only for those purposes set forth in this Agreement. No part of
the proceeds of the Facility shall be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U, or for the purpose of purchasing or carrying or trading in any
stock under such circumstances as to involve the Borrower in a violation of
Regulation X or the Bank in a violation of Regulation U. In particular, without
limitation of the foregoing, no part of the proceeds from the Facility are
intended to be used to acquire any publicly-held stock of any kind.

      Section 4.9 Official Approval of Permits. The Borrower has obtained all
material federal, state, county and municipal licenses, certificates,
authorizations, and permits required to be obtained by it with respect to the
conducting of those, relating to water rights, water permits, air emissions,
water discharge, noise emissions, solid or liquid disposal, hazardous waste or
materials or other environmental health or safety matters. All such federal,
state, county and municipal licenses, certificates, authorizations and permits
are valid and sufficient to authorize it to conduct its business and impose no
materially burdensome restrictions on the Borrower.

      Section 4.10 Governmental Authority Received. All timely authorizations,
permits, approvals and consents of Governmental Authorities which may be
required in connection with the carrying out or performance of any of the
Borrower's business activities or transactions required or contemplated
hereunder have been obtained (and remain in full force and effect).

      Section 4.11 No Reportable Event. Each plan maintained by the Borrower is
in compliance with the applicable provisions of ERISA, except for instances of
noncompliance, which, singly or in the aggregate, do not and will not have a
material adverse effect upon the business, properties, assets, liabilities,
profits, financial condition, operations or results of operations, or business
prospects of the Borrower to perform its obligations under this Agreement and
the Loan Documents. The Borrower has met all of the funding standards applicable
to its plans, and there exists no event or condition which would permit the
institution of proceedings to terminate any such plan under Section 4042 of
ERISA.

      Section 4.12 Information and Financial Data Accurate; Financial
Statements; No Materially Adverse Changes. All financial statements, information
and other financial data furnished by the Borrower to the Bank in connection
with this Agreement, which were relied upon by the Bank in connection with
making the Facility, (i) fairly present the financial condition of the Borrower
at the respective dates thereof, (ii) were prepared in accordance with Generally
Accepted Accounting Principles, consistently applied and (iii) manifest the
Borrower as Solvent. No material adverse changes have occurred with respect to
the Borrower's operations or its financial condition since the date

                                     - 39 -
<PAGE>

of the latest financial statements which are not disclosed therein or in the
notes to the financial statements.

      Section 4.13 No Registration Required of the Revolving Note. The Borrower
has taken no action, directly or indirectly, whether by offer to sell or
solicitation of any offer to buy or otherwise negotiated with any person other
than the Bank so as to require registration of the issuance or sale of either
the Revolving Note under Section 5 of the Securities Act of 1993, as amended,
nor under the Trust Indenture Act of 1939, as amended.

      Section 4.14 Taxes. All federal, state, local and foreign tax returns,
reports and statements required to be filed by the Borrower have been filed with
the appropriate Governmental Authorities in all jurisdictions in which such
returns, reports and statements are required to be filed and (ii) all taxes and
other impositions due and payable have been timely paid prior to the date on
which any fine, penalty, interest or late charge may be added thereto for
non-payment thereof, except where contested in good faith, by appropriate
proceedings, if adequate reserves therefor have been established on the books of
the Borrower in accordance with Generally Accepted Accounting Principals. The
Borrower has complied in all material respects with all applicable laws, rules
and regulations relating to the withholding and payment of taxes and has timely
withheld from employee wages and paid over to the proper Governmental
Authorities all amounts required to be so withheld and paid over for all periods
under all applicable law. No issue has been raised in any examination of the
federal income tax returns of the Borrower by the IRS that, by application of
similar principles, reasonably may be expected to result in assertion of a
material deficiency for any taxable year; not so examined that has not been
accrued on the Borrower's audited financial statements. Except for that certain
pending sales tax audit being completed by the State of California, no tax
return of the Borrower is being audited by any Governmental Authority. The
Borrower has not executed or filed with any Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
assessment of collection of any federal, state or local taxes or other
impositions or has any obligation under any written tax sharing agreement. No
property owned by the Borrower is property which such Person is or will be
required to treat as being owned by another Person pursuant to the provisions of
Section 168 (f) (8) of the Tax Code or is "tax-exempt use property" within the
meaning of Section 168 (h) (1) of the Tax Code. The Borrower has not filed a
consent pursuant to Section 341(f) of the Tax Code or agreed to have Section 341
(f) (2) of the Tax Code apply to any disposition of subsection (f) assets (as
such term is defined in Section 341 (f) (4) of the Tax Code) owned by the
Borrower. The Borrower has not agreed to, nor is required to, make any
adjustment pursuant to Section 481(a) of the Tax Code by reason of a change in
accounting method initiated by the Borrower.

      Section 4.15 No Existing Defaults. The Borrower is not in violation of or
default (nor is there any waiver in effect which, if not in effect, would result
in a violation or default) in any material or adverse respect under any
provision of any agreement, indenture, evidence or indebtedness, loan or
financing agreement, certificate, lease or other instrument to which it is a
party, or by which it is bound, or of any law,

                                     - 40 -
<PAGE>

governmental order, rule or regulation, so as to affect adversely in any
material manner its business, assets or financial condition.

      Section 4.16 Title to Properties and Collateral. The Borrower has good and
marketable title to all of its properties and assets listed in the most recent
financial statements delivered to the Bank on or prior to the Closing Date,
subject to the Permitted Encumbrances (except as otherwise expressly described
in said financial statements).

      Section 4.17 No Untrue Statements. All statements, representations and
warranties made by the Borrower in this Agreement, any other Loan Document and
any other agreement, document, certificate or instrument previously furnished or
to be furnished by the Borrower to the Bank under this Agreement, (i) are and
shall be true, correct and complete in all material respects at the time they
were made, (ii) do not and shall not contain any untrue statement of a material
fact, and (iii) do not and shall not intentionally omit to state a material fact
necessary in order to make the information contained herein or therein not
misleading or incomplete. The Borrower understands that all such statements,
representations and warranties shall be deemed to have been relied upon by the
Bank as a material inducement to make the Facility.

      Section 4.18 Brokerage Commissions. No Person is entitled to receive from
the Borrower any brokerage commission, finder's fee or similar fee or payment in
connection with the consummation of the transactions contemplated by this
Agreement.

      Section 4.19 Other Liens. The Borrower owns or shall own all of the
Collateral free and clear of any and all liens, encumbrances, pledges or
security interests whatsoever, except the Permitted Encumbrances. Except as
provided otherwise in this Agreement, none of the Collateral is subject to any
prohibition against encumbering, pledging, hypothecating or assigning same.

      Section 4.20 Insurance. All policies of insurance in effect of any kind or
nature owned by or issued to the Borrower, including policies of life, fire,
theft, product liability, public liability, property damage, other casualty,
employee fidelity, workers' compensation, employee health and welfare, title ,
property and liability insurance, are in full force and effect and are of a
nature and provide such coverage as is customarily carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which the Borrower operates.

      Section 4.21 Labor Matters. There are no strikes or other labor disputes
or grievances pending or threatened against the Borrower. There are no unfair
labor practice charges, charges alleging unlawful employment discrimination or
grievances pending or in process or, to the knowledge of the Borrower,
threatened by or on behalf of any employee or group of employees of the
Borrower. The Borrower is not a party to any collective bargaining agreement.

                                     - 41 -
<PAGE>

      Section 4.22 Environmental Matters.

      (a) The Borrower is in material compliance with all applicable
Environmental Laws;

      (b) The Borrower has obtained all material Permits required by
Environmental Laws necessary for its operations, and all such Permits are in
good standing and the Borrower is in compliance with all terms and conditions of
such Permits;

      (c) Neither the Borrower nor any of its currently or previously owned or
leased property or operations is subject to any outstanding written order from
or agreement with any Governmental Authority or other Person or subject to any
judicial or docketed administrative proceeding respecting (i) Environmental
Laws, (ii) Remedial Action or (iii) any Environmental Liabilities and Costs
arising from a Release;

      (d) There are no conditions or circumstances associated with the currently
or previously owned or leased properties or operations of the Borrower, which
may reasonably be expected to give rise to Environmental Liabilities and Costs,
which are material in amount;

      (e) The Borrower does not operate a treatment, storage or disposal
facility requiring a permit under the Resource Conservation and Recovery Act, as
amended (42 U.S.C. ss.6901 et seq.), regulations thereunder or any state analog;

      (f) The Borrower has not received any notice or claim to the effect that
it is or is reasonably expected to be liable to any Person as a result of the
Release or threatened Release; and

      (g) No Environmental Lien and no unrecorded Environmental Lien, has
attached to any property of the Borrower.

      Section 4.23 Books and Records. The Borrower maintains its books and
records related to its Accounts Receivable and its Inventory at 16 Thornton
Road, Oakland, New Jersey.

      Section 4.24 Names, Location of Offices. Schedule "C" hereto sets forth a
complete and accurate list of all offices and locations at or out of which the
Borrower conducts any of its business or operations, said Schedule "C" to
indicate the Borrower's chief executive office.

      Section 4.25 Capitalization; Ownership of the Borrower. On and as of the
Closing Date, the authorized Capital Stock of the Borrower will consist of
Fifteen Million (15,000,000) authorized shares of common stock, one-third cent
par value. Four Million Two Hundred Eighty Eight Thousand Two Hundred
(4,288,200) shares of common stock are duly issued, are outstanding and are
fully paid and non- assessable.

                                     - 42 -
<PAGE>

      Section 4.26 Investment Company Act of 1940. The Borrower is not an
"investment company": or an "affiliated person" of or "promoter" or "principal
underwriter" for, within the meaning of the Investment Company Act of 1940, as
amended, modified or supplemented. The making of the Facility by the Bank, the
application of the proceeds and repayment thereof by the Borrower and the
consummation of the transactions contemplated by the Loan Documents will not
violate any provisions of such Act or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder.

      Section 4.27 Margin Regulation. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock.

      Section 4.28 Survival of Representations and Warranties. The foregoing
representations and warranties shall survive the execution of this Agreement.

                        [SPACE INTENTIONALLY LEFT BLANK]

                                     - 43 -
<PAGE>

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

      Until payment and performance in full of all Obligations and the
termination of this Agreement, the Borrower hereby covenants and agrees that it
will:

      Section 5.1 Notify Bank. Promptly inform the Bank if any one or more of
the representations and warranties made by the Borrower in this Agreement or in
any document related hereto shall no longer be entirely true, accurate and
complete in any material respect.

      Section 5.2 Pay Taxes and Liabilities; Comply with Agreement. Promptly
pay, when due, all indebtedness, sums and liabilities of any kind now or
hereafter owing by the Borrower to any party however created, incurred,
evidenced, acquired, arising or payable, including without limitation the
Obligations, income and excise taxes and taxes with respect to any of the
Collateral, or any wages or salaries paid by the Borrower or otherwise.

      Section 5.3 Observe Covenants. Observe, perform and comply with the
covenants, terms and conditions of this Agreement, the Loan Documents and any
other agreement or document entered into between the Borrower and the Bank.

      Section 5.4 Maintain Corporate Existence and Qualifications. Maintain and
preserve in full force and effect, its corporate existence and rights,
franchises, licenses and qualifications necessary to continue its business for a
period longer than the term of the Facility, and comply with all applicable
statutes, rules and regulations pertaining to the operation, conduct and
maintenance of its regulations of its existence and business including, without
limitation, all federal, state and local laws relating to benefit plans,
environmental safety, or health matters, and hazardous or liquid waste or
chemicals or other liquids (including use, sale, transport and disposal
thereof).

      Section 5.5 Information and Documents to be Furnished to the Bank.
Furnish, or caused to be furnished, to the Bank:

      (i) Annual Financial Statements. "Audited" financial statements at its own
cost, as soon as available, but in any event within one hundred twenty (120)
days after the close of each Fiscal Year during the term of the Facility. Such
financial statements are to include (a) a detailed consolidated and
consolidating balance sheet for it and its Subsidiaries, as at the end of its
Fiscal Year, (b) a detailed consolidated and consolidating statement of
operations for it and its Subsidiaries, for the twelve (12) months then ended,
and (c) a detailed consolidated and consolidating statement of cash flows for it
and its Subsidiaries, as at the close of the Fiscal Year then ended, all with
respect to the operation of the Borrower and its Subsidiaries. Such financial
statements shall be prepared by management of the Borrower and audited by an
independent certified public

                                     - 44 -
<PAGE>

accountant acceptable to the Bank and in accordance with the Generally Accepted
Accounting Principles and shall be accompanied by a copy of all Accounts
Receivable confirmations completed by the independent certified public
accountant in connection therewith.

      (ii) Quarterly Financial Statements. Financial statements at its own cost
and expense, as soon as available and in any event within sixty (60) days after
the close of the end of each Fiscal Quarter during the term of the Facility.
Such financial statements are to include (a) a detailed consolidated and
consolidating balance sheet for it and its Subsidiaries, as at the end of the
most recent Fiscal Quarter, (b) a detailed consolidated and consolidating
statement of operations for it and its Subsidiaries, for the three (3) months
then ended, and (c) a detailed consolidated and consolidating statement of cash
flows for it and its Subsidiaries, as at the close of the Fiscal Quarter then
ended, all with respect to the operation of the Borrower and its Subsidiaries.
Such financial statements shall be prepared by management and in accordance with
the Generally Accepted Accounting Principles.

      (iii) Tax Returns. Copies of its filed Federal and state Income Tax
Returns, at its own cost and expense, within ten (10) days of filing of same
with such appropriate taxing authorities, provided, however, in no event later
than March 31 of each calendar year during the term of the Facility, except for
an extension filed with such appropriate taxing authority; in which event the
Borrower shall provide the Bank with a copy of such extension filing, evidence
of payment of the estimated tax liability, if any, and, thereafter, pursuant to
and in accordance with such extension filing, the applicable Income Tax Return
within ten (10) days of filing of same with such appropriate taxing authority.

      (iv) Annual Budget. In such form as may be required by the Bank, as soon
as available, but in no event later than November 1 of each calendar year during
the term of the Facility, the proposed annual budget for the Borrower and its
operations for the next succeeding Fiscal Year.

      (v) Accounts Receivable Aging Reports. As soon as available but in any
event within ten (10) days after the close of each month during the term of the
Facility, a detailed aging report setting forth amounts due and owing on
Accounts Receivable on the Borrower books as of the close of the preceding
month, together with a reconciliation report satisfactory to the Bank showing
all sales, collections, payments and adjustments to Accounts Receivable on the
Borrower's books as of the close of the preceding month.

      (vi) Accounts Payable Aging Reports. As soon as available but in any event
within ten (10) days after the close of each month during the term of the
Facility, a detailed aging report setting forth amounts due and owing on
accounts payable on the Borrower's books as of the close of the preceding month,
together with a reconciliation report satisfactory to the Bank showing all
adjustments to accounts payable on the Borrower's books as of the close of the
preceding month. (vii) Borrowing Base Certificate. On or before the tenth (10th)
day of each month during the term of the Facility, a Borrowing Base Certificate,
certified by the Chief Financial Officer of the Borrower.

                                     - 45 -
<PAGE>

      (viii) Inventory Reports. As soon as available but in any event within ten
(10) days after the close of the end of each month during the term of the
Facility, a report of Inventory, in form and substance acceptable to the Bank,
setting forth (i) the total value of finished goods, work-in-progress and raw
materials and (ii) the location of the Inventory.

      (ix) Field Exam. On or before the Closing Date and on or before the yearly
anniversary of the Closing Date, the results of a field audit examination
(hereinafter referred to as "Audit") conducted on behalf of the Bank with
respect to the Borrower's Accounts Receivable and Inventory; such examination to
be conducted by an independent certified public accountant acceptable to the
Bank.

      (x) ERISA Documents. A certificate , upon request of the Bank, stating
that all ERISA reports, notices, returns and all other documents have been filed
as required by or in compliance with ERISA, whether to the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty Corporation or
any other appropriate agency, and all documents and information have been
distributed to participants in any Benefit Plan.

      (xi) Public Securities Filings. As soon as available, but in any event
within fifteen (15) Business Days after the filing of same, all documents,
filings, submissions and other data required to be filed by it, including
without limitation, its Form 10-KSB and Form 10-QSB, in accordance with laws,
regulations, statutes and rules of the United States Securities and Exchange
Commission, NASDAQ and any other such stock exchanges to which it is subject.

      (xii) Compliance Certificate. Concurrently with the delivery of the annual
financial statements required by Section 6.5(i) of this Agreement and the
quarterly financial statements required by Section 6.5(ii) of this Agreement, a
certified report, in form and substance acceptable to the Bank, prepared and
executed by management of the Borrower, with appropriate calculations, if any,
setting forth that the Borrower is in compliance with all representations,
warranties and covenants of this Agreement and certifying as to the fact that
the Borrower has examined the provisions of this Agreement and that no Default
or Event of Default has occurred (or if an Event of Default does exist, a
statement explaining its nature and extent).

      (xiii) Notice of Judgments, Environmental, Health or Safety Complaints.

            (a) Within five (5) days after the occurrence of same, written
notice to the Bank of the entry of any judgment or the institution of any
lawsuit or of other legal or equitable proceedings or the assertion of any
crossclaim or counterclaim seeking monetary damages from the Borrower in an
amount exceeding $50,000.00;

                                     - 46 -
<PAGE>

            (b) Within ten (10) days after the occurrence of same, notice or
copies if written of all claims, complaints, orders, citations or notices,
whether formal or informal, written or oral, from a governmental body or private
person or entity, relating to air emissions, water discharge, noise emission,
solid or liquid waste disposal, hazardous waste or materials, or any other
environmental, health or safety matter. Such notices shall include, among other
information, the name of the party who filed the claim, the potential amount of
the claim, and the nature of the claim.

      (xiii) Other Information. Within five (5) days after the request of same
by the Bank:

            (a) Certificates of insurance for all policies of insurance to be
maintained by the Borrower pursuant hereto;

            (b) An estoppel certificate executed by an authorized officer of the
Borrower indicating that there then exists no Event of Default and no event
which, with the giving of notice or lapse of time, or both, would constitute an
Event of Default under any agreement to which any of the Borrower is a party;

            (c) All original and other documents evidencing right to payment,
including but not limited to invoices, original orders, shipping and delivery
receipts;

            (d) All information received by the Borrower affecting the financial
status or condition of any account debtor; and

            (e) Assignments, in form acceptable to the Bank, of all Eligible
Accounts Receivable, and of the monies due or to become due on specific
contracts relating to the same.

      (xiii) From time to time, such other information as the Bank may
reasonably request, including financial projections and cash flow analysis.

      Section 5.6 Access to Records and Property. At any time and from time to
time, upon request by the Bank, the Borrower shall give any representatives of
the Bank access during normal business hours to, and permit any of them to
examine, audit, copy or make extracts from, any and all books, records and
documents in the possession of the Borrower or any independent contractor
relating to the Borrower's affairs and the Collateral, and to inspect any of its
properties wherever located. Fees and expenses for said examinations and audits
are to be paid by the Borrower to the Bank.

      Section 5.7 Comply with Laws. The Borrower shall comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, compliance with which is necessary to maintain its
corporate existence or the conduct of its business or non compliance with which
would materially or adversely effect its ability to perform its obligations or
any security given to secure its obligations. The Borrower shall comply with all
accounting rules, regulations, promulgations and

                                     - 47 -
<PAGE>

dictates as may be pronounced, adopted, articulated and/or published by the
American Institute of Certified Public Accountants, the Financial Accounting
Standards Board, the Securities and Exchange Commission, the stock exchanges and
such other regulatory body, federal and/or state having jurisdiction over such
matters

      Section 5.8 Insurance Required.

      (i) The Borrower shall cause to be maintained, in full force and effect on
all property of the Borrower including, without limitation, all inventory and
equipment for all Obligations, insurance in such amounts against such risks as
is satisfactory to the Bank, including, but without limitation, fire, boiler,
theft, burglary, pilferage, vandalism, malicious mischief, loss in transit, and
hazard insurance and, if, on the Closing Date, any real property upon which the
Borrower conducts its business is in an area that has been identified by the
Secretary of Housing and Urban Development as having special flood or mudslide
hazards, and on which the sale of flood insurance has been made available under
the National Flood Insurance Act of 1968, then flood insurance. Said policy or
policies shall:

            (a) Be in a form and with insurers which are satisfactory to the
Bank;

            (b) Be for such risks and for such insured values as the Bank or its
assigns may require in order to replace the property in the event of actual or
constructive total loss;

            (c) Designate the Bank and its assignees, as additional insureds and
loss payees as their interests may from time to time appear;

            (d) Contain a "breach of warranty clause" whereby the insurer agrees
that a breach of the insuring conditions or any negligence by the Borrower or
any other person shall not invalidate the insurance as to the Bank and its
assignee;

            (e) Provide that they may not be canceled or materially altered
without ten (10) days prior notice to the Bank and its assigns; and

            (f) Upon demand, be delivered to the Bank;

      (ii) The Borrower shall obtain such additional insurance as the Bank may
reasonably require;

      (iii) The Borrower shall in the event of loss or damage, forthwith notify
the Bank and file proofs of loss with the appropriate insurer. The Borrower
hereby authorize the Bank to endorse any checks or drafts constituting insurance
proceeds;

      (iv) The Borrower shall forthwith upon receipt of insurance proceeds
endorse and deliver the same to the Bank; and

                                     - 48 -
<PAGE>

      (v) In no event shall the Bank be required either to (a) ascertain the
existence of or examine any insurance policy or (b) advise the Borrower in the
event such insurance coverage shall not comply with the requirements of this
Agreement.

      Section 5.9 Condition of Collateral; No Liens. The Borrower shall maintain
all Collateral conveyed to the Bank as collateral security for any Obligations
in good condition and repair at all times, undertake all reasonable efforts to
preserve it against any loss, damage, or destruction of any nature whatsoever
relating to said Collateral or its use, and keep said Collateral free and clear
of any liens, except Permitted Encumbrances created pursuant hereto or disclosed
herein.

      Section 5.10 Payment of Proceeds. Upon the occurrence of an Event of
Default, the Borrower shall forthwith upon receipt of all proceeds of
Collateral, other than any such proceeds received by the Borrower in the
ordinary course of its business as a result of the sale of Inventory or
collection of Accounts Receivable, pay such proceeds over to Bank, and such
proceeds shall thereupon become the Bank's sole property.

      Section 5.11 Pay Fees and Expenses. The Borrower shall pay on demand all
expenses of the Bank in connection with the preparation, administration,
default, collection, waiver or amendment of loan terms, or in connection with
Bank's exercise, preservation or enforcement of any of its rights, remedies or
options under this Agreement and the Loan Documents, including, without
limitation, fees of outside legal counsel or the allocated costs of in-house
legal counsel, accounting, consulting, brokerage or other similar professional
fees or expenses, and any fees or expenses associated with travel or other costs
relating to any appraisals or examinations conducted in connection with the loan
or any collateral therefor, and the amount of all such expenses shall, until
paid, bear interest at the Default Rate and be a part of the Obligations.

      Section 5.12 Records. The Borrower shall at all times keep accurate and
complete records of the Collateral and the status of each Account Receivable.

      Section 5.13 Delivery of Documents. If any proceeds of Accounts Receivable
shall include or any of the Accounts Receivable shall be evidenced by notes,
trade acceptances or instruments or documents, or if any Inventory is covered by
documents of title or chattel paper, whether or not negotiable, the Borrower
waive protest regardless of the form of the endorsement. If the Borrower fail to
endorse any instrument or document, the Bank is authorized to endorse it on the
Borrower behalf.

      Section 5.14 Name Changes; Location Changes.

      (i) The Borrower shall immediately notify the Bank if the Borrower is
known by or conducting business under any names other than in the name of the
Borrower or in the name of any of its Subsidiaries and/or Affiliates;

                                     - 49 -
<PAGE>

      (ii) Immediately notify the Bank if the Borrower is conducting any of its
business or operations at or out of offices or locations other than those set
forth in this Agreement, or any change to the location of their chief executive
office; and

      (iii) Immediately notify the Bank (a) in the event E(2)T is not the only
domestic Subsidiary and/or Affiliate of the Borrower and (b) any addition or
deletion to and/or change in the name of any of the German Subsidiaries. In the
event that there exists, at any time during the term of the Facility, a
Subsidiary other than E(2)T, the Borrower shall cause or suffer to cause any
such Subsidiary to execute and deliver, in favor of the Bank, an agreement of
guaranty, whereby the Subsidiary shall guaranty the complete payment and
performance of all Obligations.

      Section 5.15 Further Assurances. The Borrower shall at any time or from
time to time upon request of the Bank take such steps and execute and deliver
such financing statements and other documents all in the form of substance
satisfactory to the Bank relating to the creation, validity or perfection of the
security interests provided for herein, under the UCC or other laws of the State
of New Jersey or of another state or states.

      Section 5.16 Indemnification. The Borrower shall indemnify, protect,
defend and save harmless the Bank, as well as the Bank's directors, officers,
trustees, employees, agents, attorneys and shareholders (hereinafter referred to
collectively as the "Indemnified Parties" and individually as an "Indemnified
Party") from and against (i) any and all losses, damages, expenses or
liabilities of any kind or nature and from any suits, claims or demands, by
third parties including reasonable counsel fees incurred in investigating or
defending such claim, suffered by any of them and caused by, relating to,
arising out of, resulting from, or in any way connected with the Facility and
the transactions contemplated herein, and (ii) any and all losses, damages,
expenses or liabilities sustained by the Bank in connection with any
environmental sampling or cleanup of any property which constitutes part of the
Collateral required or mandated by any federal, state or local law, ordinance,
rule or regulation, including, without limitation, the Environmental Laws or
from an action or claim by the Borrower against the Indemnified Party. In case
any action shall be brought against an Indemnified Party based upon any of the
above and in respect to which indemnity may be sought against the Borrower, the
Indemnified Party against whom such action was brought, shall promptly notify
the Borrower in writing, and the Borrower shall assume the defense thereof,
including the employment of counsel selected by the Borrower and reasonably
satisfactory to the Indemnified Party, the payment of all costs and expenses and
the right to negotiate and consent to settlement. Upon reasonable determination
made by the Indemnified Party, the Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof; provided, however that the Indemnified Party shall pay the costs and
expenses incurred in connection with the employment of separate counsel. The
Borrower shall not be liable for any settlement of any such action effected
without its consent, but if settled with the Borrower consent, or if there be a
final judgment for the claimant in any such action, the Borrower agrees to
indemnify and save harmless said Indemnified Party against whom such action was
brought from and against any loss or liability by reason of such settlement or
judgment,

                                     - 50 -
<PAGE>

except as otherwise provided above. The provisions of this Section 5.16 shall
survive the termination of this Agreement and the final repayment of the
Facility.

                        [SPACE INTENTIONALLY LEFT BLANK]

                                     - 51 -
<PAGE>

                                   ARTICLE VI

                               NEGATIVE COVENANTS

      Until payment and performance in full of all Obligations, the Borrower
covenants and agrees that:

      Section 6.1 No Consolidation, Merger, Acquisition. The Borrower will not
consolidate with, merge with, or acquire the stock or assets of any person,
firm, joint venture, partnership, corporation, or other entity, whether by
merger, consolidation, purchase of stock or otherwise except (i) with prior
express written consent of the Bank, which consent shall not be unreasonably
withheld, delayed or conditioned, (ii) in the event of a consolidation and/or
merger, if the surviving entity shall be the Borrower and (iii) in the event of
any domestic acquisition, the newly acquired entity, shall provide to the Bank,
a guaranty, in form and substance and on such terms as are acceptable to the
Bank, of all Obligations of the Borrower to the Bank.

      Section 6.2 Disposition of Assets or Collateral. The Borrower will not
sell, lease, transfer, convey, or otherwise dispose of substantially all or all
of its assets or the Collateral except in the ordinary course of its business.

      Section 6.3 Other Liens. The Borrower will not incur, create or permit to
exist any mortgage, assignment, pledge, hypothecation, security interest, lien
or other encumbrance on any of their property or assets, whether now owned or
hereafter acquired, except for the Permitted Encumbrances.

      Section 6.4 Other Liabilities. The Borrower will not incur, create, assume
or permit to exist any Indebtedness or liability on account of either borrowed
money or the deferred purchase price of property, except (a) Obligations to the
Bank; or (b) Indebtedness subordinated to payment of the Obligations on terms
approved by the Bank in writing; or (c) the Permitted Encumbrances.

      Section 6.5 Payment of Dividends; Redemption of Stock. Upon the occurrence
of a Default or an Event of Default, the Borrower will not pay any dividends,
make any withdrawal from its capital, make any other distributions and/or
repurchase, redeem, or otherwise acquire or set aside reserves to acquire, any
of their outstanding stock, partnership or other equity interests.

      Section 6.6 Accounts. The Borrower will not sell, assign, transfer or
dispose of any of its Account or notes receivable, with or without recourse,
except to the Bank.

      Section 6.7. Prepayment of Other Indebtedness. The Borrower will not
prepay any amounts not required to be prepaid, except to the Bank or any
Affiliate or in the ordinary course of business of the Borrower, or cause or
permit to be accelerated any amounts on any outstanding indebtedness now
existing or hereafter arising.

                                     - 52 -
<PAGE>

      Section 6.8. Sale or Issuance of Stock. The Borrower will not sell, issue,
or agree to sell or issue, any shares and/or securities (voting, non-voting,
preferred, convertible. warrant or common) of the Borrower, or purchase such
shares and/or securities if the sale, issuance or purchase of such shares and/or
securities would result in a liability to the Borrower.

      Section 6.9. Investments. Except as may be permitted by the terms and
conditions of this Agreement, the Borrower will not purchase or make any
investment in the stock, securities or evidences of indebtedness of or loan to
any other person or entity (including, without limitation, entities owned or
controlled by any officers, directors, shareholders, principals, partners or
affiliates of the Borrower) except (i) the United States Government or its
agencies, or (ii) certificates of deposit of United States domestic banks having
a ratio of qualifying total capital to weighted risk assets of not less than
eight (8%) percent, at least four (4%) percent of which is Tier I capital, and
total capital and surplus in excess of $50,000,000. "Qualifying total capital"
and Tier I capital" shall be defined from time to time pursuant to regulations
published by the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation.

      Section 6.10 Loans. The Borrower will not make loans to any Person, firm
or entity.

      Section 6.11 Guaranties. Except for its guaranty of that certain loan by
and between HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwal-tungs
GmbH and ING-BHF Bank, the Borrower will not assume, guaranty, endorse,
contingently agree to purchase or otherwise become liable upon the obligation of
any Person, firm or entity except (a) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; (b) contingent obligations under letters of credit entered
into in the ordinary course of business for the purchase of merchandise for
resale.

      Section 6.12 Remove Property. The Borrower will not remove, or cause or
permit to be removed, without the Bank's prior written consent, any of its
Collateral or assets from those locations as more fully set forth in Schedule
"B", attached hereto and made a part hereof, except (i) for sales of Inventory
in the ordinary course of the Borrower business or (ii) removal (and return) of
any Collateral for use in the normal course of business of the Borrower.

      Section 6.13 Modification of Documents. The Borrower will not change,
alter or modify, or permit any change, alteration or modification of its
Certificate of Incorporation, By-Laws or other governing documents, without the
Bank's prior written consent.

      Section 6.14 Change Business. The Borrower will not change or alter the
nature of its business.

                                     - 53 -
<PAGE>

      Section 6.15 Settlements. The Borrower will not compromise, settle or
adjust any claims in a material amount relating to any of the Collateral,
without the prior written consent of the Bank.

      Section 6.16 Change Location or Name. The Borrower, without the prior
express written consent of the Bank, which consent shall not be unreasonably
withheld, delayed or conditioned, will not change the place where their books
and records are maintained or change its name or transact business under any
other name, from that location set forth in Schedule "C" of this Agreement.

      Section 6.17 Fixed Charge Coverage Ratio. The Borrower shall not permit,
cause nor suffer to permit, at any time during the term of the Facility, its
Fixed Charge Coverage Ratio to be less than than the amount set forth below
opposite such period:

               Period                       Ratio
               ------                       -----

      Closing Date through
         July 31, 2003                      1.25 to 1.0

      August 1, 2003 and thereafter         1.50 to 1.0

      In each case, the ratio shall be determined as of the last day of each
Fiscal Quarter for the four-quarter period ending on such day.

      Section 6.18 Maximum Leverage Ratio. The Borrower shall not permit, cause
nor suffer to permit, at any time during the term of the Facility, its Maximum
Leverage Ratio, to be greater than 1.50 to 1.0. The ratio shall be determined as
of the last day of each Fiscal Quarter for the four-quarter period ending on
such day.

                        [SPACE INTENTIONALLY LEFT BLANK]

                                     - 54 -
<PAGE>

                                   ARTICLE VII

                                EVENTS OF DEFAULT

      Section 7.1 Events of Default. The occurrence of any of the following
events with the passing of any applicable notice and cure periods shall
constitute an "Event of Default" under this Agreement (hereinafter referred to
as an "Event of Default")

            (i) Any representation or warranty made by the Borrower or any
Guarantor in the Revolving Note or in any other Loan Document furnished in
connection herewith shall prove to have been false, incorrect or misleading in
any substantial and material respect on the date as of which made;

            (ii) The Borrower shall have failed to make any payment of any
installment of interest on the Revolving Note on its due date;

            (iii) The Borrower shall have failed to make any payment of
principal on the Revolving Note on its due date;

            (iv) The Borrower or any Guarantor shall have failed to duly observe
or perform any covenant, condition or agreement with respect to the payment of
moneys on the part of the Borrower or any Guarantor to be observed or performed
pursuant to the terms of the Loan Documents, other than the payment of principal
and interest which shall be governed by (ii) and (iii) above;

            (v) The Borrower or any Guarantor shall have failed to duly observe
or perform any covenant, condition or agreement on the part of the Borrower or
any Guarantor to be observed or performed pursuant to the terms of the Loan
Documents other than the payment of moneys which shall be governed by (ii),
(iii) and (iv) above;

            (vi) The Borrower shall have transferred, or caused to have been
transferred, title to or possession of any interest in the Collateral, or any
part thereof, to any party, whether voluntarily, involuntarily or by operation
of law, other than (i) the sale of its Inventory in the ordinary course of its
business and (ii) the sale of its PP & E, provided the Borrower has replaced
such sold item with one of similar value;

            (vii) The Borrower shall have entered into any additional financing
or shall have consented to the placing of any lien on the Collateral;

            (viii) The Borrower or any Guarantor shall have applied for or
consented to the appointment of a custodian, receiver, trustee or liquidator of
all or a substantial part of their assets; a custodian shall have been appointed
with or without consent of the Borrower or any Guarantor, as may be applicable;
the Borrower or any Guarantor shall have made a general assignment for the
benefit of their respective creditors; the Borrower or any Guarantor shall have
filed a voluntary petition in bankruptcy, or a petition or an

                                     - 55 -
<PAGE>

answer seeking an arrangement with their creditors, or shall have taken
advantage of any insolvency law, or shall have filed an answer admitting the
material allegations of a petition in bankruptcy, or insolvency proceeding; or a
petition in bankruptcy shall have been filed against the Borrower or any
Guarantor and shall not have been dismissed for a period of thirty (30)
consecutive days, or if an Order for Relief has been entered under the
Bankruptcy Code; or an order, judgment or decree shall have been entered without
the application, approval or consent of the Borrower or any Guarantor by any
court of competent jurisdiction appointing a receiver, trustee, custodian or
liquidator of the Borrower or any Guarantor of a substantial part of their
assets and such order, judgment or decree shall have continued unstayed and in
effect for any period of thirty (30) consecutive days;

            (ix) A writ of execution or attachment or any similar process shall
be issued or levied against all or any part of or interest in any of the
properties or assets of the Borrower pledged to the Bank or any partnerships,
corporations or other entities in which the Borrower or any Guarantor are the
principal controlling partner or shareholder, or any judgment in excess of
$50,000.00, involving monetary damages shall be entered against the Borrower or
any Guarantor or any partnerships, corporations or other entities in which the
Borrower or any Guarantor are the principal controlling partner or shareholder,
which shall become a lien on the Borrower or any Guarantor's properties or
assets or any portion thereof or interest therein and such execution, attachment
or similar process is not released, bonded, satisfied, vacated or stayed;

            (x) Seizure or foreclosure of any of the properties or assets which
secure the Facility of the Borrower or any partnerships, corporations or other
entities in which the Borrower or any Guarantor are the principal controlling
partner or shareholder, pursuant to process of law or by respect of legal
self-help and/or debt;

            (xi) A default by the Borrower or any Guarantor or any partnerships,
corporations or other entities in which the Borrower or any Guarantor are the
principal or controlling partner or shareholder, in any of the terms or
conditions of any agreement covering the payment of borrowed money and/or debt,
in excess of $50,000.00;

            (xii) A material deterioration in the financial condition of the
Borrower or any Guarantor or the occurrence of any event, which in the sole and
absolute opinion of the Bank, impairs the financial responsibility of the
Borrower or any Guarantor;

            (xiii) Any material change in the nature or character of the
business or the voluntary permanent closing of the business or ceasing of
operations of the Borrower or any Guarantor;

            (xiv) In the event that Gerald D. Posner is no longer (a) an officer
and/or shareholder of the Borrower, (b) a managing director of HOHENSTAUFEN
ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH or any of the German
Subsidiaries or (c) an officer and/or director of any Guarantor;

                                     - 56 -
<PAGE>

            (xv) The occurrence of a default under any documents, agreements
and/or instruments executed by and between HOHENSTAUFEN
ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH and ING-BHF Bank;

            (xvi) The dissolution, merger, consolidation or reorganization of
the Borrower, HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs
GmbH or any Guarantor; and/or

            (xvii) The failure to notify the Bank of the occurrence of an event
of default by the Borrower or any Guarantor under any terms and/or conditions of
any agreement covering the payment of borrowed money.

      Section 7.2 Remedies. Upon the occurrence of an Event of Default and at
any time thereafter during the continuance of such Event of Default, the Bank
may take one or more of the following remedial steps in any order of priority:

            (i) Declare immediately due and payable the outstanding principal
balance of the Revolving Note, together with all accrued and unpaid interest,
fees and other sums or expenses payable hereunder, if any, and accordingly
accelerate payment thereof notwithstanding contrary terms of payment stated
therein, without presentment, demand or notice of any kind, all of which are
expressly waived, notwithstanding anything to the contrary contained herein or
elsewhere;

            (ii) Take any action at law or in equity against the Borrower (a) to
collect the payments then due and thereafter to become due under the Loan
Documents, or (b) to enforce performance and observance of any obligation,
agreement or covenant of the Borrower under the Loan Documents;

            (iii) Exercise any and all rights and remedies of a secured party
under the UCC with respect to the Collateral owned by the Borrower; and

            (iv) Exercise any and all rights and remedies provided for in the
Loan Documents as they relate to the Collateral or the Borrower.

      Section 7.3 Set-Off. The Borrower and any Guarantor hereby grant to the
Bank, a continuing lien, security interest and right of setoff as security for
all liabilities and obligations to the Bank, whether now existing or hereafter
arising, upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of the Bank or any
entity under the control of Fleet Boston Financial Corporation and its
successors and assigns or in transit to any of them. At any time, without demand
or notice (any such notice being expressly waived by the Borrower), the Bank may
setoff the same or any part thereof and apply the same to any liability or
obligation of the Borrower and any Guarantor even though unmatured and
regardless of the adequacy of any other collateral securing the Facility. ANY
AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES

                                     - 57 -
<PAGE>

WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

      Section 7.4 No Notices. In order to entitle the Bank to exercise any
remedy available to it under Article VII of this Agreement, it shall not be
necessary for the Bank to give any notice, other than such notice as may be
required expressly in this Agreement or by applicable law.

      Section 7.5 No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Agreement should be breached by any party and
thereafter waived by the other parties, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.

      Section 7.6 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK (BY ACCEPTANCE
OF THIS AGREEMENT) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE FACILITY
OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, THE BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO ACCEPT THIS
AGREEMENT AND MAKE THE FACILITY.

                        [SPACE INTENTIONALLY LEFT BLANK]

                                     - 58 -
<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS

      Section 8.1 Representations and Warranties Survive. All representations
and warranties contained herein or made in writing by or on behalf of the
Borrower in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Agreement, any investigation at any time made
by or on behalf of the Bank, the making of the Facility contemplated hereby and
the acquisition and any disposition of the Revolving Note. All statements
contained in financial statements referred to in this Agreement and any
certificate or other instrument delivered by or on behalf of the Borrower
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower hereunder.

      Section 8.2 Notices. Unless otherwise indicated differently, all notices,
payments, requests, reports, information or demands which any party hereto may
desire or may be required to give to any other party hereunder, shall be in
writing and shall be personally delivered or sent by telecopier, a nationally
recognized overnight courier service or first-class certified or registered
United States mail, postage prepaid, return receipt requested, and sent to the
party at its address appearing below or such other address as any party shall
hereafter inform the other party hereto by written notice given as aforesaid:

      If to the Borrower:       Mikron Infrared, Inc.
                                16 Thorton Road
                                Oakland, New Jersey 07426
                                Attn: Gerald D. Posner
                                      President
                                Telecopier No.: (201) 405-0090

      with a copy to:           Arent Fox Kintner Plotkin & Kahn, PLLC
                                1675 Broadway
                                New York, New York 10019
                                Attn: Steven D. Dreyer, Esq.
                                Telecopier No.: (212) 484-3990

      If to the Bank:           Fleet National Bank
                                208 Harristown Road
                                Glen Rock, New Jersey 07452
                                Attn: Michael G. Vondras
                                      Vice President
                                Telecopier No.: (201) 251-6041

                                     - 59 -
<PAGE>

      with a copy to:           Edwards & Angell, LLP
                                51 John F. Kennedy Parkway
                                Short Hills, New Jersey 07078
                                Attn: Michael A. Gallo, Jr., Esq.
                                Telecopier No.: (973) 376-3380

All notices, payments, requests, reports, information or demands so given shall
be deemed effective upon receipt or, if mailed, upon receipt or the expiration
of the third day following the date of mailing, whichever occurs first, except
that any notice of change in address shall be effective only upon receipt by the
party to whom said notice is addressed. A failure to send the requisite copies
does not invalidate an otherwise properly sent notice to the Borrower and/or the
Bank.

      Section 8.3 Remedies Cumulative. No remedy herein conferred upon or
reserved to the Bank is intended to be exclusive of any other remedy or
remedies; but each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder, or now or hereafter existing at
law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any Event of Default continuing as aforesaid, shall impair
any such right or power or shall be construed to be a waiver of any such Event
of Default, or acquiescence therein; and every such right and power may be
exercised from time to time and as often as may be deemed expedient.

      Section 8.4 Modifications In Writing. Neither this Agreement nor any term
or provision hereof may be changed, waived, discharged or terminated except by
an instrument in writing signed by the Bank and the Borrower.

      Section 8.5 Successors and Assigns. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of, and be enforceable
by, the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of, and be
enforceable by, any holder of the Revolving Note issued hereunder or any part
thereof.

      Section 8.6 Sale of Loan Interest. The Bank shall have the unrestricted
right at any time and from time to time, and without the consent of or notice to
the Borrower or any Guarantor, to grant to one or more banks or other financial
institutions (each, a "Participant") participating interests in the Bank's
obligations to lend hereunder and/or any or all of the loans held by the Bank
hereunder. In the event of any such grant by the Bank of a participating
interest to a Participant, whether or not upon notice to the Borrower, the Bank
shall remain responsible for the performance of its obligations hereunder and
the Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations hereunder. The Bank may
furnish any information concerning the Borrower in its possession from time to
time to prospective Participants, provided that the Bank shall require any such
prospective Participant to agree in writing to maintain the confidentiality of
such information.

                                     - 60 -
<PAGE>

      Section 8.7 Pledge to the Federal Reserve. The Bank may at any time pledge
or assign all or any portion of its rights under the Loan Documents, including
any portion of the Revolving Note to any of the twelve (12) Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or assignment or enforcement thereof shall release the Bank
from its obligations under any of the loan documents.

      Section 8.8 Integration. This Agreement is intended by the parties as the
final, complete and exclusive statement of the transactions evidenced by this
Agreement. All prior or contemporaneous promises, agreements and understandings,
whether oral or written, are deemed to be superceded by this Agreement, and no
party is relying on any promise, agreement or understanding not set forth in
this Agreement. This Agreement may not be amended or modified except by a
written instrument describing such amendment or modification executed by the
Borrowers and the Bank.

      Section 8.9 GOVERNING LAW, SEVERABILITY. THIS AGREEMENT AND THE REVOLVING
NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
JERSEY WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREUNDER. WHEREVER
POSSIBLE, EACH PROVISION OF THIS AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER
AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS
AGREEMENT SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
AGREEMENT.

      Section 8.10 SUBMISSION TO JURISDICTION

            (A) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
THE REVOLVING NOTE OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW JERSEY OR OF THE UNITED STATES OF AMERICA FOR THE DISTRICT
OF NEW JERSEY, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

                                     - 61 -
<PAGE>

            (B) THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFORESAID COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER
AT ITS ADDRESS PROVIDED HEREIN.

            (C) NOTHING CONTAINED IN THIS SECTION 9.7 SHALL AFFECT THE RIGHT OF
THE BANK OR ANY HOLDER OF THE REVOLVING NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE BORROWER IN ANY OTHER JURISDICTION.

      Section 8.11 WAIVER OF BANKRUPTCY STAY. IN CONSIDERATION OF THE TERMS,
CONDITIONS AND AGREEMENTS SET FORTH IN THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, THE BORROWER HEREBY KNOWINGLY, WILLINGLY AND INTENTIONALLY WAIVES ANY
PROVISIONS APPLICABLE IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY
INSOLVENCY, BANKRUPTCY, REORGANIZATION, FRAUDULENT CONVEYANCE OR SIMILAR
PROCEEDING INVOLVING THE BORROWER (OR OTHERWISE AFFECTING THE PREMISES) UNDER
ANY STATE OR FEDERAL LAW REGARDING CREDITORS' RIGHTS OR DEBTORS' OBLIGATIONS
IMPOSING AGAINST THE BANK, OR OTHERWISE PROVIDING FOR, AN AUTOMATIC STAY UNDER
SECTION 362(A) OF THE BANKRUPTCY CODE OR ANY OTHER PROHIBITION AGAINST THE
BANK'S COMMENCING, MAINTAINING OR COMPLETING ANY PROCEEDINGS IN CONNECTION WITH
OR THE EXERCISE OR ENFORCEMENT OF ANY OF THE BANK'S RIGHTS HEREUNDER OR UNDER
ANY OF THE OTHER LOAN DOCUMENTS OR ANY APPLICABLE LAW. IN FURTHERANCE THEREOF,
THE BORROWER FURTHER COVENANTS AND AGREES (I) THAT, IN THE EVENT OF THE
IMPOSITION OF ANY SUCH STAY OR OTHER PROHIBITION, THE BANK MAY SEEK TO LIFT ANY
SUCH STAY OR OTHER PROHIBITION OR SEEK EXEMPTION THEREFROM, (II) NOT TO CONTEST
ANY MOTION MADE BY THE BANK FOR THE LIFTING THEREOF OR FOR EXEMPTION THEREFROM
AND (III) TO COOPERATE WITH THE BANK, IN ANY MANNER REQUESTED BY THE BANK, IN
ITS EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION.

      Section 8.12 Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. When counterparts have been executed by
all of the parties hereto, this Agreement shall be effective as of its date.

                                     - 62 -
<PAGE>

      IN WITNESS WHEREOF, the Borrower has duly executed and delivered this
Agreement, all as of the day and year first above written.

                                        MIKRON INFRARED, INC.

                                        By:___________________
                                           Dennis L. Stoneman
                                           Executive Vice President

                                     - 63 -
<PAGE>

                                  SCHEDULE "A"

ATTACHED TO AND MADE A PART OF THAT CERTAIN CREDIT AGREEMENT, BY AND BETWEEN
MIKRON INFRARED, INC., AS THE BORROWER, AND FLEET NATIONAL BANK, AS THE BANK,
DATED AS OF NOVEMBER 21, 2002

                      FORM OF BORROWING REQUEST CERTIFICATE

                                     - 64 -
<PAGE>

                                [LOGO](SM) Fleet

                              Mikron Infrared, Inc.
                           Borrowing Base Certificate
                            (Due Monthly by the 10th)

Date: _____________

To Fleet National Bank (the "Bank") under a certain line of credit letter
agreement dated November 20, 2002 which, when taken together with other loan
documents between the Bank and Mikron Infrared, Inc. (the "Borrower") constitute
the "Loan Agreement".

Defined terms used in this certificate shall have the same meaning as ascribed
thereto in the Loan Agreement.

I.    Computation of Borrowing Base

A.    Gross Accounts Receivable                                      ___________
B.    Less: Ineligible Accounts Receivable (see attached schedule)   ___________
C.    Total Eligible Accounts Receivable                             ___________
D.    80% of Line C                                                  ___________

E.    Total Inventory                                                ___________
F.    Less: Ineligible Inventory (see attached schedule)             ___________
G.    Total Eligible Inventory                                       ___________
H.    Less: Reserve of $-0-                                          ___________
I.    50% of Line H                                                  ___________

J.    Net Property Plant and Equipment                               ___________
K.    25% of Line J.                                                 ___________

L.    Borrowing Base (Line D + Line I + Line K)                      ___________

II.   Aggregate Principal Balance of Loans                           ___________

III.  Excess Availability or Amount Due (Line L - Line II)           ___________

If amount on line III is positive, result indicates remaining availability.

                                     - 65 -
<PAGE>

If amount on line III is negative, result indicates amount due to Bank.

The undersigned officer of the Borrower certify that the information furnished
herein as of _________________________ is true and correct. In addition, the
signer certifies that; (i) as of the date hereof no Event of Default, or event
which after notice or lapse of time or both would be an Event of Default, exists
under the Loan Agreement; (ii) there exists no violation of any covenant, term,
condition or agreement contained in the Loan Agreement; (iii) no condition or
event has occurred which would constitute a Default or Event of Default under
the Loan Agreement; (iv) each of the representations and warranties contained in
the Loan Agreement is true and correct, except to the extent such
representations and warranties specifically relate to an earlier date and were
true and correct at such earlier date and; (v) the Borrower is in compliance
with all of the covenants, terms, conditions, and agreements of each loan
agreement and obligation to which it is party.

Mikron Infrared, Inc.

By: ____________________________
Name:
Title:

Ineligible Accounts Receivable

1.    Amounts Aged Over 90 Days Past Invoice Date
2.    Due From Affiliates
3.    Conditional Accounts
4.    Progress Billings, Deposits, Rebillings
5.    Foreign Accounts - Uninsured
6.    Installment Accounts
7.    Government Accounts
8.    Amounts Excluded Under 50% Rule
9.    Accounts Not Liened
10.   Disputed Accounts
11.   Amounts Uninsured
12.   Bankrupt Accounts
13.   Contra Accounts
14.   Accounts Excluded At Bank Discretion
15.   Total Lines 1 Through 184
16.   Less:
17.   Amounts Due From Shonac Less Than 31 Days Past Invoice**
18.   Plus:
19.   Foreign Accounts Supported By Approved Irrevocable Letter Of
      Credit
20.   Equals:
21.   Ineligible Accounts Receivable                                 ___________

                                     - 66 -
<PAGE>

22.   Ineligible Inventory
23.   Work In Process
24.   Catalogs And Promotional Items
25.   Rented and / or Demo Items
26.   Returned Items Not Saleable
27.   Damaged, Defective, Recalled Items
28.   Samples And Demonstration Items
29.   Consignment Items
30.   Items Liened By Others
31.   Packing And Shipping Materials
32.   Excluded - Lack Of Landlord Lease Waiver
33.   Accounts Not Liened
34.   Total Lines 27 Through 36:
35.   Equals:
36.   Ineligible Inventory                                           ___________
37.

                                     - 67 -
<PAGE>

                                  SCHEDULE "B"

ATTACHED TO AND MADE A PART OF THAT CERTAIN CREDIT AGREEMENT, BY AND BETWEEN
MIKRON INFRARED, INC., AS THE BORROWER, AND FLEET NATIONAL BANK, AS THE BANK,
DATED AS OF NOVEMBER 21, 2002

                             LOCATION OF COLLATERAL

16 Thornton Road
Oakland, New Jersey

3101 Elevation Street
Hancock, Michigan

4475 Dupont Court
Ventura, California

                                     - 68 -
<PAGE>

                                  SCHEDULE "C"

ATTACHED TO AND MADE A PART OF THAT CERTAIN CREDIT AGREEMENT, BY AND BETWEEN
MIKRON INFRARED, INC., AS THE BORROWER, AND FLEET NATIONAL BANK, AS THE BANK,
DATED AS OF NOVEMBER 21, 2002

                               LOCATION OF OFFICES

16 Thornton Road
Oakland, New Jersey

3101 Elevation Street
Hancock, Michigan

4475 Dupont Court
Ventura, California

                                     - 69 -

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