8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K
                                 CURRENT REPORT

     Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported): March 29, 2007

                              DHB INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


        Delaware                  001-13112                  11-3129361
________________________  ________________________  ____________________________
(State of Incorporation)  (Commission File Number)  (IRS Employer Identification
                                                              Number)

 2102 SW 2nd Street, Pompano Beach, Florida                          33069
____________________________________________                       __________
  (Address of principal executive office)                          (Zip Code)

                                 (954) 630-0900
          __________________________________________________________
              (Registrant's telephone number, including area code)

                                 Not Applicable
          __________________________________________________________
                 (Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
    240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
    Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR 240.13e-4(c))




ITEM     1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On April 3, 2007, DHB Industries, Inc. (the "Company") and its subsidiaries
Point Blank Body Armor Inc., Protective Apparel Corporation of America and NDL
Products, Inc. (together, the "Subsidiaries") entered into an Amended and
Restated Loan and Security Agreement (the "Loan Agreement") with LaSalle
Business Credit, LLC ("LaSalle"). The Loan Agreement provides for a three-year
$35.0 million revolving credit facility available to the Subsidiaries, jointly
and severally, bearing interest at the Prime Rate plus 0.25% or, at the
Company's option, LIBOR plus 2.25%. Borrowings are available in the form of
advances or letters of credit granted or issued against percentages of the
Subsidiaries' aggregate eligible accounts receivable and eligible inventory
(subject to a maximum sub-limit for borrowing against eligible inventory of
$17.5 million and to initial reserves against availability totaling $7.0
million, which reserves are to be eliminated upon implementation of a perpetual
inventory system, upon the Company issuing audited financial statements and upon
the Company and LaSalle entering into an amendment to the Agreement regarding
the financial covenants, as further described in the Agreement). Under the Loan
Agreement, the Company and Subsidiaries, renewed and confirmed the existing
security interest held by LaSalle and granted a new security interest to LaSalle
over substantially all assets of the Company and Subsidiaries. The Loan
Agreement contains certain financial covenants, financial reporting
requirements, other affirmative and negative covenants (including limitations on
indebtedness, liens, investments, dividends and distributions and merger and
acquisition transactions). The Loan Agreement contains certain customary
provisions concerning events of default. Upon the occurrence of any such event
of default, the lenders are permitted, among other things, to accelerate the
maturity of the loans under the revolving credit facility and terminate
LaSalle's commitment to make any further revolving loans or to issue any letters
of credit.

As of the close of business on April 3, 2007, the amount outstanding under the
Loan Agreement was approximately $5 million. Amounts outstanding fluctuate daily
based on shipments to and collections from customers.

The foregoing description of the Loan Agreement is qualified in its entirety by
reference to the text of the Loan Agreement, which is attached hereto as Exhibit
10.1 and is incorporated herein by reference.

A copy of a press release issued by the Company announcing entry into the Loan
Agreement is attached hereto as Exhibit 99.1.

ITEM     2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER
         AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.

(a) The information provided in response to Item 1.01 of this Current Report on
Form 8-K is incorporated by reference into this Item 2.03.

ITEM     5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
         APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
         OFFICERS.

                                       2




(e) On March 29, 2007, the Company entered into a new employment agreement with
Larry R. Ellis, its President and CEO. The agreement, which has an initial term
of four years following the Effective Date, provides for an annual base salary
of $650,000, plus a stipend for living expenses of $5,000 per month. In
addition, Mr. Ellis will be eligible to receive an annual incentive bonus in an
amount to be determined in the discretion of the Compensation Committee of the
Board of Directors of the Company, based on approved performance criteria,
targeted at 100% of base salary. The agreement also provides for the grant to
Mr. Ellis of 900,000 warrants to acquire shares of the Company's common stock,
par value $0.01, at an exercise price equal to $3.46, the closing market price
of such common stock on the Effective Date. The warrants have a 10-year term. As
of the Effective Date, 10% of the warrants will be vested and exercisable, and
30% of the warrants will become vested and exercisable on each of the three
subsequent anniversary dates following the Effective Date, provided that such
future vesting will be accelerated upon the occurrence of a change of control of
the Company, as defined in a warrant award agreement. The employment agreement
also provides for the payment in installments to executive of an aggregate
amount equal to 24 months annual base salary, plus target bonus, in the event
the agreement is terminated prior to the end of the employment term by the
Company without cause or by the executive for good reason, as such terms are
customarily defined in executive employment agreements. As previously disclosed,
under the 2007 board compensation scheme, applicable to only non-employee
directors, Mr. Ellis will no longer receive compensation in his capacity as a
director of the Company.

ITEM     9.01 FINANCIAL STATEMENTS AND EXHIBITS

         (d)  Exhibits

              10.1 Amended and Restated Loan and Security Agreement, dated as of
                   April 3, 2007, by and among Protective Apparel Corporation of
                   America, Point Blank Body Armor Inc., NDL Products, Inc., DHB
                   Industries, Inc., and LaSalle Business Credit LLC, as
                   Administrative Agent and Collateral Agent.

              99.1 Press Release, dated April 5, 2007.


                                       3




                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



                              DHB INDUSTRIES, INC.



By:                                   /s/ THOMAS CANFIELD
                                    ____________________________________________
                                    Thomas Canfield, General Counsel & Secretary

Dated:  April 5, 2007


                                       4




                                  EXHIBIT INDEX

10.1     Amended and Restated Loan and Security Agreement, dated as of April 3,
         2007, by and among Protective Apparel Corporation of America, Point
         Blank Body Armor Inc., NDL Products, Inc., DHB Industries, Inc., and
         LaSalle Business Credit LLC, as Administrative Agent and Collateral
         Agent.

99.1     Press Release, dated April 5, 2007.








                                       5

EX-10.1

                                                                    EXHIBIT 10.1


                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT



                            DATED AS OF APRIL 3, 2007



                                      AMONG



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



                                    AS AGENT,



                                       AND



          THE FINANCIAL INSTITUTIONS FROM TIME TO TIME A PARTY HERETO,



                                   AS LENDERS,



                                       AND



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



                                  AS BORROWERS



                                       AND



                       DHB INDUSTRIES, INC., AS GUARANTOR









                                TABLE OF CONTENTS


                                                                                                                PAGE

                                                                                                           
1.       DEFINITIONS..............................................................................................5

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


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

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

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

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

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

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

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

                                       i



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

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

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

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

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

                                       ii



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

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

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

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

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

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

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

                                      iii



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       iv





EXHIBITS

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

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

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

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

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

SCHEDULES

Schedule 2(a)(ii)          Eligible Inventory Valuation

Schedule 9(b)(iii)         Financial Condition Matters

Schedule 11(g)             Litigation

Schedule 11(h)             Compliance with Laws

Schedule 11(i)             Affiliate Transactions

Schedule 11(j)             Names and Trade Names

Schedule 11(k)             Equipment

Schedule 11(o)             Margin Security

Schedule 11(p)             Parents, Subsidiaries and Affiliates

Schedule 11(u)             Plans

Schedule 11(x)             Government Contracts

Schedule 12(a)             Maintenance of Records

Schedule 13(b)             Indebtedness

Schedule 17(a)             Closing Document Checklist


                                       v



                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


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

                                   WITNESSETH:

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

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

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

         1.       DEFINITIONS.

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

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



limitation, by 0014 Modification P00006.

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

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

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

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

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

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

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

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

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

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

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

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

                                       2



outstanding Revolving Loans and all Letter of Credit Obligations.

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

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

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

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

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

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

         "CLOSING DATE" shall mean April 3, 2007.

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

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

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

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

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

                                       3



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

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

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

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

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

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

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

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

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

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

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

                                       4




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

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

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

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

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

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

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

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

                                       5



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

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

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

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

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

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

                                       6



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

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

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

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

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

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

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

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

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

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

                                       7



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

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

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

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

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

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

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

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

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

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

                                       8



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

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

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

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

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

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

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

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

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

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

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

                                       9



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

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

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

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

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

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

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

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

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

                                       10



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

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

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

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

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

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

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

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

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

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

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

                                       11



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

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

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

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

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

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

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

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

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

                                       12



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

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

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

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

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

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

                                       13



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

         "PRIOR CLOSING DATE" means September 24, 2001.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       14



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

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

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

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

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

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

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

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

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

                                       15




         2.       LOANS.

                  (A)      REVOLVING LOANS.

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

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

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

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

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

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

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

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

                                       16



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

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

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

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

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

                                       17



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

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

                  (B)      REPAYMENTS.

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

                                       18



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

                  (C)      NOTES.

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

                  (D)      BORROWER REPRESENTATIVE.

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

         3.       LETTERS OF CREDIT.

                  (A)      GENERAL TERMS.

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

                                       19



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

                  (B)      REQUESTS FOR LETTERS OF CREDIT.

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

                  (C)      OBLIGATIONS ABSOLUTE.

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

                  (D)      EXPIRATION DATES OF LETTERS OF CREDIT.

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

                                       20



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

                  (E)      PARTICIPATION.

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

         4.       INTEREST, FEES AND CHARGES.

                  (A)      INTEREST RATE.

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

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

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

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

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

                  (B)      OTHER LIBOR PROVISIONS.

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

                                       21



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

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

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

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

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

                                       22



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

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

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

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

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

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

                  (C)      FEES AND CHARGES.

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

                                       23


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

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

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

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

                                       24



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

                  (D)      MAXIMUM INTEREST.

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

         5.       COLLATERAL.

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

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

                                       25



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

                  (B)      OTHER SECURITY.

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

                  (C)      POSSESSORY COLLATERAL.

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

                                       26



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

                  (D)      ELECTRONIC CHATTEL PAPER.

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

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

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

                                       27



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

         7.       POSSESSION OF COLLATERAL AND RELATED MATTERS.

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

         8.       COLLECTIONS.

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

                                       28



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

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

                                       29



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

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

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

                                       30



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

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

         9.       COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.

                  (A)      BORROWING REPORTS.

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

                  (B)      MONTHLY REPORTS AND FINANCIAL STATEMENTS.

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

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

                                       31



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

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

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

                  (C)      QUARTERLY AND ANNUAL FINANCIAL STATEMENTS.

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

                                       32




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

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

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

                  (D)      ANNUAL PROJECTIONS.

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

                                       33



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

                  (E)      EXPLANATION OF BUDGETS AND PROJECTIONS.

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

                  (F)      PUBLIC REPORTING.

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

                  (G)      ERISA.

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

                  (H)      OTHER INFORMATION.

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

         10.      TERMINATION; AUTOMATIC RENEWAL.

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

                                       34



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

                                       35




         11.      REPRESENTATIONS AND WARRANTIES.

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

                  (A)      THE FINANCIAL AND OTHER INFORMATION.

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

                  (B)      LOCATIONS.

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

                  (C)      LOANS BY THE BORROWERS.

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

                  (D)      ACCOUNTS AND INVENTORY.

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

                                       36



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

                  (E)      LIENS.

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

                  (F)      ORGANIZATION, AUTHORITY AND NO CONFLICT.

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

                  (G)      LITIGATION.

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

                                       37



                  (H)      COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.

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

                  (I)      AFFILIATE TRANSACTIONS.

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

                  (J)      NAMES AND TRADENAMES.

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

                  (K)      EQUIPMENT.

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

                  (L)      ENFORCEABILITY.

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

                                       38



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

                  (M)      SOLVENCY.

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

                  (N)      INDEBTEDNESS.

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

                  (O)      MARGIN SECURITY AND USE OF PROCEEDS.

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

                  (P)      PARENT, SUBSIDIARIES AND AFFILIATES.

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

                  (Q)      NO DEFAULTS.

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

                  (R)      EMPLOYEE MATTERS.

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

                                       39



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

                  (S)      INTELLECTUAL PROPERTY.

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

                  (T)      ENVIRONMENTAL MATTERS.

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

                  (U)      ERISA MATTERS.

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

                                       40



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

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

         (V)      LEVY, SEIZURE OR ATTACHMENT.

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

         (W)      FORMER DHB SUBSIDIARIES.

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

         (X)      GOVERNMENT CONTRACTS.

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

                                       41



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

         12.      AFFIRMATIVE COVENANTS.

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

                  (A)      MAINTENANCE OF RECORDS.

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

                  (B)      NOTICES.

         Parent and the Borrowers shall:

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

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

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

                                       42



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

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

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

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

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

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

                                       43



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

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

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

                  (C)      COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.

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

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

                                       44



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

                  (D)      INSPECTION AND AUDITS.

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

                  (E)      INSURANCE.

         Parent and each Borrower shall:

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

                                       45



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

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

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

                                       46



                  (F)      COLLATERAL.

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

                  (G)      USE OF PROCEEDS.

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

                  (H)      TAXES.

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

                                       47




                  (I)      INTELLECTUAL PROPERTY.

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

                  (J)      MANAGEMENT TEAM.

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

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

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

                  (L)      LISTING DEVELOPMENTS.

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

         13.      NEGATIVE COVENANTS.

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

                                       48



                  (A)      GUARANTIES.

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

                  (B)      INDEBTEDNESS.

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

                  (C)      LIENS.

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

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

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

                                       49



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

                  (E)      DIVIDENDS AND DISTRIBUTIONS.

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

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

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

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

                                       50



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

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

                  (F)      INVESTMENTS; LOANS.

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

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

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

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

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

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

                                       51



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

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

                  (G)      FUNDAMENTAL CHANGES, LINE OF BUSINESS.

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

                  (H)      EQUIPMENT.

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

                  (I)      USE OF PROCEEDS.

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

                                       52



                  (J)      AFFILIATE TRANSACTIONS.

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

                  (K)      SETTLING OF ACCOUNTS.

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

(                 L)       SUBORDINATION OF INTERCOMPANY INDEBTEDNESS.

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

                  (M)      TRANSFER OF ASSETS.

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

                                       53



                  (N)      FINANCIAL COVENANT AMENDMENT.

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

                  (O)      OFAC.

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

         14.      FINANCIAL COVENANTS.

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

                  (A)      CAPITAL EXPENDITURES.

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

                  (B)      NET SALES.

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

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

                                       54



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


15.      DEFAULT.

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

                  (A)      PAYMENT.

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

                                       55




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

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

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

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

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

                  (C)      BREACHES OF OTHER OBLIGATIONS.

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

                  (D)      BREACH OF REPRESENTATIONS AND WARRANTIES.

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

                  (E)      LOSS OF COLLATERAL.

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

                                       56



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

                  (F)      BANKRUPTCY OR SIMILAR PROCEEDINGS.

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

                  (G)      APPOINTMENT OF RECEIVER.

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

                  (H)      JUDGMENT.

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

                  (I)      DISSOLUTION OF OBLIGOR.

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

                  (J)      DEFAULT OR REVOCATION OF GUARANTY.

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

                                       57



                  (K)      LEVY, SEIZURE OR ATTACHMENT.

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

                  (L)      CRIMINAL PROCEEDINGS.

         The indictment or conviction of any Obligor for any felony.

                  (M)      CHANGE OF CONTROL.

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

                  (N)      MATERIAL ADVERSE CHANGE.

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

          16.     REMEDIES UPON AN EVENT OF DEFAULT.

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

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

                                       58



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

         17.      CONDITIONS PRECEDENT.

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

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

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

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

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

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

                                       59



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

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

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

                           (E) all Availability Closing Date Reserves; and

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

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

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

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

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

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

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

                                       60



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

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

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

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

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

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

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

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

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

                                       61




18.      SETTLEMENTS, DISTRIBUTIONS AND APPORTIONMENT OF PAYMENTS.

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

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

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

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

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

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

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

                                       62




         19.      AGENT.

                  (A)      APPOINTMENT OF AGENT.

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

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

                  (B)      NATURE OF DUTIES OF AGENT.

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

                  (C)      LACK OF RELIANCE ON AGENT.

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

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

                                       63



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

                  (D) CERTAIN RIGHTS OF AGENT.

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

                  (E)      RELIANCE BY AGENT.

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

                  (F)      INDEMNIFICATION OF AGENT.

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

                                       64



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

                  (G)      AGENT IN ITS INDIVIDUAL CAPACITY.

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

                  (H)      HOLDERS OF NOTES.

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

                  (I)      SUCCESSOR AGENT.

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

                                       65




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

                  (J)      COLLATERAL MATTERS.

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

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

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

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

                                       66



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

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

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

                  (K)      ACTIONS WITH RESPECT TO DEFAULTS.

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

                  (L)      DELIVERY OF INFORMATION.

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

                                       67



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

                  (M)      DEMAND.

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

                  (N)      NOTICE OF DEFAULT.

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

         20.      ASSIGNABILITY.

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

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

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

                                       68



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

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

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

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

                                       69



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

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

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

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

         21.      AMENDMENTS, ETC.

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

                                       70



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

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

         22.      NONLIABILITY OF AGENT AND LENDERS.

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

         23.      INDEMNIFICATION.

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

                                       71



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

         24.      NOTICE.

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

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

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

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

                                       72



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

         26.      CONFIRMATION OF EXISTING OBLIGATIONS.

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

         27.      HEADINGS OF SUBDIVISIONS.

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

         28.      POWER OF ATTORNEY.

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

                                       73



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

         29.      CONFIDENTIALITY.

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

         30.      SYNDICATION.

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

                                       74



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

         31.      COUNTERPARTS.

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

         32.      ELECTRONIC SUBMISSIONS.

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

         33.      WAIVER OF JURY TRIAL; OTHER WAIVERS.

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

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

                                       75



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

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

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

34. JOINT AND SEVERAL OBLIGATIONS; GUARANTEES.

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

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

                                       76



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

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

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

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

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

                                       77



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

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

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

         35.      WAIVER OF EXISTING DEFAULTS.

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

                                       78




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

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




                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       79




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

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

                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________

                          REVOLVING LOAN COMMITMENT: $35,000,000






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



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

                          PROTECTIVE APPAREL CORPORATION OF AMERICA, as Borrower


                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________


                          POINT BLANK BODY ARMOR INC., as Borrower


                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________



                          NDL PRODUCTS, INC., as Borrower


                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________



                          DHB INDUSTRIES, INC., as Guarantor


                          By:__________________________________________________

                          Name: ______________________________

                          Its:_________________________________________________



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

EX-99.1

                                                                    EXHIBIT 99.1

[DHB LOGO GOES HERE]

NEWS FROM DHB INDUSTRIES INC.
2102 SW 2nd Street  Pompano Beach, FL  33069
Tel: 954-630-0900   www.dhbindustries.com



                            COMPANY CONTACT:  Media Relations/Investor Relations
                                              Glenn Wiener
                                              212-786-6013
                                              pr@dhbt.com or ir@dhbt.com


FOR IMMEDIATE RELEASE


                    DHB INDUSTRIES ANNOUNCES NEW $35 MILLION
                  CREDIT FACILITY WITH LASALLE BUSINESS CREDIT

POMPANO BEACH, FLORIDA, APRIL 5, 2007 - DHB Industries Inc. (OTC Pink Sheets:
DHBT.PK), a leader in the field of protective body armor, announced today that
the Company and its subsidiaries Point Blank Body Armor Inc., Protective Apparel
Corporation of America and NDL Products, Inc. have entered into a Loan Agreement
with LaSalle Business Credit.

The Loan Agreement  provides a three-year $35 million secured  revolving  credit
facility  available to the  Company's  subsidiaries.  In  addition,  the Company
disclosed  that as of April 3,  2007,  the  amount  outstanding  under  the Loan
Agreement was  approximately  $5 million.  Amounts  outstanding  fluctuate daily
based on shipments and collections.

Larry Ellis,  President and CEO of DHB Industries commented,  "We are pleased to
have closed on this new credit  facility with LaSalle.  Over the past year,  our
financial   position  has  significantly   improved  and  we  continue  to  gain
efficiencies in our operating  processes and capital  structure.  With the added
stability  from this facility and cash generated  from  operations,  we have the
platform  to  drive  business  strategies  and  improve  on our  market  leading
position. We will continue to explore avenues that enhance shareholder value."

ABOUT DHB INDUSTRIES
DHB Industries  Inc.'s highly recognized  subsidiaries,  Point Blank Body Armor,
Inc.  (www.pointblankarmor.com)  and Protective  Apparel  Corporation of America
(PACA) (www.pacabodyarmor.com) are in the protective body armor industry and are
focused on the design,  manufacture,  and  distribution of bullet  resistant and
protective body armor for military, law enforcement, and corrections in the U.S.
and  worldwide.  Company  subsidiary  NDL Products,  Inc.  (www.ndlproducts.com)
produces and markets a comprehensive  line of athletic supports and braces which
are merchandised  through national superstore chains, as well as through private
label distributors.

The Company  maintains  facilities in Deerfield  Beach,  FL,  Oakland Park,  FL,
Pompano Beach,  FL,  Jacksboro,  TN and Washington,  DC. To learn more about DHB
Industries Inc. visit the website at (www.dhbindustries.com).

                                    - MORE -




SAFE HARBOR  STATEMENT  UNDER THE PRIVATE  SECURITIES  LITIGATION  REFORM ACT OF
1995: THE  STATEMENTS  WHICH ARE NOT  HISTORICAL  FACTS  CONTAINED IN THIS PRESS
RELEASE ARE FORWARD-LOOKING STATEMENTS, WHICH ARE BASED LARGELY ON THE COMPANY'S
EXPECTATIONS  AND ARE  SUBJECT  TO  VARIOUS  BUSINESS  RISKS AND  UNCERTAINTIES,
CERTAIN OF WHICH ARE  BEYOND THE  COMPANY'S  CONTROL.  WORDS SUCH AS  "EXPECTS,"
"ANTICIPATES,"  "TARGETS," "GOALS," "PROJECTS,"  "INTENDS," "PLANS," "BELIEVES,"
"SEEKS,"  "ESTIMATES,"  VARIATIONS OF SUCH WORDS,  AND SIMILAR  EXPRESSIONS  ARE
INTENDED TO IDENTIFY  SUCH  FORWARD-LOOKING  STATEMENTS.  THESE  FORWARD-LOOKING
STATEMENTS ARE ONLY PREDICTIONS THAT SPEAK AS OF THE DATE HEREOF AND ARE SUBJECT
TO  RISKS,   UNCERTAINTIES  AND  ASSUMPTIONS  THAT  ARE  DIFFICULT  TO  PREDICT.
THEREFORE,  ACTUAL  RESULTS  MAY  DIFFER  MATERIALLY  AND  ADVERSELY  FROM THOSE
EXPRESSED  IN ANY  FORWARD-LOOKING  STATEMENTS.  FACTORS  THAT  MIGHT  CAUSE  OR
CONTRIBUTE  TO  SUCH  DIFFERENCES  INCLUDE,  BUT  ARE NOT  LIMITED  TO,  (1) THE
COMPANY'S  LACK OF  AUDITED  FINANCIAL  STATEMENTS  AND ITS  ABILITY TO FILE ITS
PERIODIC REPORTS WITH THE SECURITIES AND EXCHANGE  COMMISSION ON A TIMELY BASIS,
(2)  IMPROVEMENT  IN THE COMPANY'S  INTERNAL  CONTROL  STRUCTURE  OVER FINANCIAL
REPORTING,  (3) DE-LISTING FROM THE AMERICAN STOCK EXCHANGE,  (4) UNCERTAINTY OF
FUTURE FINANCIAL RESULTS, (5) ADDITIONAL FINANCING REQUIREMENTS, (6) DEVELOPMENT
OF NEW PRODUCTS,  (7) GOVERNMENT APPROVAL  PROCESSES,  INCLUDING APPROVAL OF THE
SETTLEMENT BY THE COURT, (8) THE IMPACT OF COMPETITIVE  PRODUCTS OR PRICING, (9)
TECHNOLOGICAL  CHANGES,  (10) THE EFFECT OF POLITICAL  AND ECONOMIC  CONDITIONS,
(11) THE  OUTCOME AND IMPACT OF  LITIGATION  TO WHICH THE COMPANY IS A PARTY AND
THE SECURITIES AND EXCHANGE  COMMISSION AND OTHER  INVESTIGATIONS  REGARDING THE
COMPANY, AND (12) OTHER UNCERTAINTIES DETAILED IN THE COMPANY'S FILINGS WITH THE
SECURITIES  AND  EXCHANGE  COMMISSION.  YOU ARE  CAUTIONED  NOT TO  PLACE  UNDUE
RELIANCE  ON THESE  FORWARD-LOOKING  STATEMENTS  THAT  SPEAK ONLY AS OF THE DATE
HEREOF.  THE COMPANY  UNDERTAKES NO OBLIGATION TO REVISE OR UPDATE  PUBLICLY ANY
FORWARD-LOOKING  STATEMENTS  TO REFLECT  ANY CHANGE IN THE  EXPECTATIONS  OF OUR
MANAGEMENT  WITH  REGARD  THERETO  OR  ANY  CHANGE  IN  EVENTS,  CONDITIONS,  OR
CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED.


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