10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the calendar year ended December 31, 2005

COMMISSION FILE NO.: 0-10449

TVI CORPORATION

(Exact name of registrant as specified in its charter)

Maryland	52-1085536
(State or other jurisdiction of incorporation or incorporation)	(I.R.S. Employer Identification No.)

7100 Holladay Tyler Road, Glenn Dale, MD 20769

(Address of principal executive offices, including zip code)

(301) 352-8800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock $.01 Par Value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  ¨

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form l0-K or any amendment to this Form l0-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Act).

Large Accelerated Filer  ¨    Accelerated Filer  x    Non-Accelerated Filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes  ¨    No  x

As of June 30, 2005, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $109,805,000 based on the closing price of the common stock on the Nasdaq Stock Market on June 30, 2005. As of March 1, 2006 there were 32,475,478 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Information required by Items 10 through 14 of Part III of this Form 10-K, to the extent not set forth herein, is incorporated herein by reference to portions of the registrant’s definitive proxy statement for the registrant’s 2006 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year ended December 31, 2005. Except with respect to the information specifically incorporated by reference in this Form 10-K, the registrant’s definitive proxy statement is not deemed to be filed as a part of this Form 10-K.

TABLE OF CONTENTS FOR FORM 10-K

	Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	ii
PART I	1
ITEM 1. BUSINESS	1
ITEM 1A. RISK FACTORS	8
ITEM 1B. UNRESOLVED STAFF COMMENTS	14
ITEM 2. PROPERTIES	14
ITEM 3. LEGAL PROCEEDINGS	14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	15
PART II	16
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	16
ITEM 6. SELECTED FINANCIAL DATA	17
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	18
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	27
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	47
ITEM 9A. CONTROLS AND PROCEDURES	47
ITEM 9B. OTHER INFORMATION	49
PART III	50
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	50
ITEM 11. EXECUTIVE COMPENSATION	50
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	50
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	50
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES	50
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	50
SIGNATURES	52

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In this report, the terms “TVI,” “Company,” “we,” “us” and “our” refer to TVI Corporation and its subsidiaries, unless otherwise noted or the context otherwise indicates.

In addition to historical information, this Annual Report on Form 10-K contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. In some cases, you can identify these so-called “forward-looking statements” by words like “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of those words and other comparable words. You should be aware that those statements only reflect our predictions. Actual events or results may differ substantially. Important factors that could cause our actual results to be materially different from the forward-looking statements are disclosed under the heading Item 1A—Risk Factors. Any such statements should be considered in light of various risks and uncertainties that could cause results to differ materially from expectations, estimates or forecasts expressed. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this Form 10-K.

All subsequent written or oral forward-looking statements attributable to TVI are expressly qualified in their entirety by the cautionary statements included in this document. TVI undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I

ITEM 1. BUSINESS

Overview

TVI Corporation, a Maryland corporation formed in 1977, together with its subsidiaries (“TVI”), is a global supplier of rapidly deployable first receiver and first responder systems for homeland security, hospitals, the military, police and fire departments, and public health agencies. We design, fabricate and market products and systems both through distributors and directly to end-users and original equipment manufacturers (“OEMs”). These systems include chemical and biological decontamination systems, hospital surge capacity systems, and infection control systems, all of which integrate our fabric shelter structures. Many of these systems employ our proprietary articulating frame. We also sell a line of powered air-purifying respirators (“PAPRs”) as well as thermal products, which include targets, Identification Friend or Foe (“IFF”) devices, helicopter landing systems, markers and decoys. In addition, we plan to manufacture disposable filter canisters for the first responder, military, healthcare and industrial markets and we are in the process of establishing a high-capacity filter canister manufacturing facility in our Glen Dale, Maryland facility. In 2005, we introduced training services as part of our business and plan to pursue training services as a compliment to our core business.

The first receiver and first responder markets have increased significantly in terms of size and demand over the past few years at all levels of government. Our strategy is to grow by expanding our product offerings to capitalize on the demand of these markets, primarily within the homeland security sector. We plan to diversify our product offerings both by organic development of new products and through acquisitions. Our continually increasing commitment to research and development (“R&D”) is a key component of our diversification strategy to address the operating requirements of our target markets.

In November 2005, we acquired Safety Tech International, Inc. (“STI”), a privately held supplier of PAPRs for chemical, biological, radiological and nuclear (“CBRN”) protection. As a result of the acquisition, STI became a wholly owned subsidiary of TVI. In April 2004, we formed CAPA Manufacturing Corp. (“CAPA”) as a wholly owned subsidiary of TVI. At that time, TVI, through CAPA, acquired substantially all of the assets of CAPA Manufacturing, LLC, a privately held respiratory products research, design and manufacturing company.

Our headquarters are located in Glenn Dale, Maryland where we manufacture most of our products. We also have operations in Frederick, Maryland where we manufacture our PAPR products.

Strategy and Markets

Over the past few years, our increased revenue levels have been primarily attributable to increased homeland security spending at the international, federal, state and municipal government levels, particularly within the first receiver and first responder markets, our target market. We believe that demand within our target market will continue to grow; however, we also believe that these markets have increasingly demanding operating requirements. Our growth strategy is to satisfy the growing demands of these markets by expanding our product lines to address their operating requirements. We will implement this growth strategy by maintaining expertise in our target market, committing to R&D and capitalizing on acquisition opportunities.

The U.S. Department of Homeland Security (“DHS”) allotted $3.6 billion of its fiscal year 2006 budget toward State and local grants for first receiver and first responder support. This is in addition to approximately $14.5 billion in State and local grants from DHS and other federal agencies for first receiver and first responder support over the past four years. The broad DHS reorganization initiated in 2005, however, delayed the release of a significant portion of these funds to state and local emergency response agencies during the first half of the year. Following Hurricane Katrina, government spending for first receiver and first responder equipment and training resumed its upward trend, focused on decontamination, surge capacity and infection control products.

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Our revenue for the year ended December 31, 2005 was derived from the following major markets: the public health market; the first responder market; and the military market. To meet the increasingly demanding operating requirements of our target market, we have expanded our offerings to include Chemical Biological (“Chem/Bio”) Isolation and infection control systems for hospitals and first responders, crime scene investigation systems for police, mobile hospitals, PAPRs, filter canisters, first responder trailers and generators and training services.

Looking forward, we seek to continue to diversify our business offerings both through organic development and through acquisition opportunities. Our R&D spending has increased significantly year over year from 2003 to 2005. Additionally, we are investing significantly in the development of our new filter canister line which we believe will be the only high-capacity filter manufacturing operation in the U.S.

In addition to organic growth, we plan to pursue acquisition opportunities as they arise. We seek acquisition targets that will further our product diversification strategy, better position us with our target market and potentially open opportunities in new markets based on our developed expertise. In support of our consideration of acquisition opportunities, among other things, we established a $10 million revolving credit facility with Bank of America, N.A. at the end of 2005.

Products

We design, manufacture, and market a variety of products including: rapidly deployable first responder systems to the first responder, first receiver, government, military and commercial marketplaces; infection control surge capacity systems comprised of a combination of our shelter and filtration products; infrared (“IR”) targets and identifiers for the military and police; specialized filtration systems and personal protection equipment including PAPRs and related proprietary respiratory products for distributors to the homeland security and other industrial safety-related industries. We are also developing a production line for marketing disposable filter canisters for OEM suppliers to the first responder, military, healthcare and industrial markets.

First Responder Systems

We provide our first responder customers with fully integrated total solution systems for decontamination, command and control, forensic investigation, disaster assistance, communication centers and patient isolation. The core element of our system is our patented articulating frame. Our articulating frame technology is comprised of rigid rods and hinges configured to enable rapid deployment of an extremely strong shelter in a matter of seconds without the need for additional set-up equipment such as air tanks, compressors or blowers. Supporting equipment that completes the system includes lighting, air and water heaters, power generators, flooring, trailers and air filtration elements.

The shelter systems include Decontamination Systems, Chem/Bio Isolation Systems, Infection Control Systems, Mobile Hospital Systems, Command and Control Shelters, and Crime Scene Management and Investigation Systems.

Decontamination Systems

Our decontamination systems facilitate the decontamination of people who have been exposed to toxic compounds, including CBRN agents. Contamination can result from any catastrophic event including natural disasters (e.g., tornadoes or hurricanes), industrial incidents (e.g., chemical spills) or acts of terror.

The structure of our decontamination system is comprised of our patented articulating frame which easily and rapidly expands into a shelter. These shelters are equipped with pre-plumbed shower accessories (body sprays and hand sprayers) and curtains that facilitate rapid cleaning of ambulatory and non-ambulatory casualties. The curtains give privacy to the users, keep the contaminants from traveling from the hot

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(contaminated) side of the shelter to the cold (decontaminated) side of the shelter and promote a more efficient decontamination. Supporting equipment that completes the system includes heaters, lights, air conditioners, basins, pumps, waste containment equipment, stretchers, hoses and patient conveyors (for non-ambulatory victims).

We also market trailerized first responder systems customized to customers’ requirements. These trailer systems provide for portability, on-site power generation, air conditioning, lighting, water and nuclear, biological and chemical (“NBC”) filtration.

Chem/Bio Isolation Systems

We expanded our Chem/Bio Isolation product line to incorporate innovative technology to reduce exposure to contaminants during a chemical and/or biological incident. Targeted at the health care (first receiver) and military markets, the Chem/Bio shelter systems coupled with leading edge military-grade filtration equipment capture airborne biological and chemical contaminants and quickly provide first receivers with the ability to set up and isolate patients at any location.

Infection Control Systems

Our MK-1^TM Infection Control System provides hospitals with the means to convert standard patient treatment rooms into negative pressure isolation rooms. This system enables public health care providers to quickly isolate patients with life threatening communicable diseases from the rest of the hospital patient community.

Mobile Hospital Systems

We offer the first receiver market large, rapidly deployable hospital systems designed to serve as surge capacity or field hospitals. These Mobile Hospital Systems incorporate TVI’s inflatable shelters, generators, air filtration systems, water and lighting, making the hospital mobile and ready for any incident. Mobile hospital systems have become a high priority product as a result of recent concerns regarding the potential for a flu pandemic, as well as in response to Hurricane Katrina, the Indian Ocean tsunami, and the earthquake in Pakistan.

Command and Control Shelters

We sell command and control shelters either stripped down or fully outfitted. The stripped down version offers the user protection from wind and rain. The fully equipped systems include air conditioning, heat, integrated ground cover, twin-insulating walls, lighting, windows with screens and cover and multiple doors both at the ends and on the sides. These shelters are typically designed to incorporate command communications equipment including furniture. They are often attached to mobile hard-sided systems and provide the user with additional space. Customers include the military, police, first responders and others in need of rapidly deployable field facilities, among them the Federal Emergency Management Administration, the American Red Cross and the Disaster Mortuary Operational Response Teams deployed by the U.S. National Guard following Hurricane Katrina.

Crime Scene Management and Investigation Systems

We have designed innovative products to shield victims from media and public view, manage the gathering of evidence and facilitate DUI (driving under the influence) check points for the purpose of assisting law enforcement agencies with management of crime scenes. Our new law enforcement products include command shelters, cyanoacrylate systems (fuming systems), scene/body shields and road signs.

IR Products

Our IR Products Group designs and manufactures infrared marking and signaling devices, including infrared raised angle marking systems (“IRAMS”), thermal targets and thermal range markers, soldier combat identifiers

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and vehicle markers for the military and law enforcement markets. Our thermal targets and thermal range markers are designed for use with thermal sighting systems and have been produced by us since 1977. We are expanding our IR product line with a host of new marking and signaling products that can be used not only with thermal sights and other forward looking infrared (“FLIR”) systems, but also with night vision goggles.

IRAMS

For the U.S. military, we offer IRAMS which are used to aid helicopter landings at Forward Arming and Refueling Points. Our IRAMS product line is designed for use in hostile and difficult landing conditions, such as in Afghanistan or Iraq. Helicopters landing in desert locations can experience dangerous brownout conditions when their rotor blades kick up clouds of dust and sand. IRAMS improve the safety of pilots and crew by providing an IR signature that can be viewed more effectively than visible lighting. IRAMS also support night-time and inclement weather operations.

Thermal Targets and Thermal Range Markers

We are the primary source for thermal targets for virtually all U.S. Military training facilities. Our targets simulate the thermal signature of tanks, personnel and other equipment. They are used for training military personnel, including armored vehicle crews, attack helicopter pilots, anti-tank weapons crews and other personnel on the growing number of weapons systems that incorporate a thermal sight. Our range markers identify range limits and other locations for personnel training with these systems. The U.S. Army is now fielding thermal sighting systems on a much wider group of weapons systems, down to selected individual rifles, which is expected to increase demand for our targets.

Soldier Combat Identifiers

We provide the U.S. Army with near-infrared reflective materials for combat identification of soldiers on the battlefield. The Company’s near-infrared reflective material is sewn directly into the U.S. military’s new Army Combat Uniforms (“ACU”). This initiative represents the Army’s commitment to provide its soldiers with the tools they need to minimize “friendly fire.” The material being supplied by TVI includes an American flag emblem that is an infrared feedback signal and separate infrared squares sewn into the shoulders of the uniform to identify troops at night. These elements reflect infrared signals to communicate with equipment carried by friendly forces. The ACU uniforms are currently in production and are expected to be available to the entire Army by 2007.

Vehicle Identification Systems

Introduced in 2004, our Vehicle Identification Panels (“VIPs”) are used for marking military tanks, high-mobility multipurpose wheeled vehicles, trucks and other vehicles to identify them as friendly to troops and personnel operating attack aircraft and ground vehicles. Our VIPs are visible to both thermal sights and other FLIR systems, as well as night vision goggles already deployed in the field. Our systems have been deployed in Iraq and Afghanistan. We have also designed a Vehicle Marking System for Law Enforcement vehicles.

Personal Protection Equipment

We are expanding our presence in the Personal Protection Equipment market, focusing on PAPRs and disposable filter canisters for the first responder, military, healthcare and industrial markets.

PAPRs

We entered this market in April 2004 by acquiring the assets of CAPA, adding a line of PAPRs and related proprietary respiration products as well as respirator research design and manufacturing capabilities. In

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November 2005, we significantly expanded our presence in the PAPR market by acquiring STI. STI manufactures PAPRs and related proprietary respiration products, enabling us to offer a wide range of powered air products to a variety of market segments. These include the U.S. military, hospitals, first responders, industrial, and laboratory, decontamination and natural catastrophe response markets.

STI PAPR systems, masks, filter cartridges and accessories are currently used by U.S. Special Forces, Fixed and Rotary Wing Aviators, National Guard WMD response teams, Mass Casualty Decontamination teams, and SWAT and special operations personnel, both domestically and internationally. STI also manufactures products on a private label basis for large OEMs. STI is recognized for its ability to meet the next generation of industry standards and has more than 50,000 PAPRs in the field today.

STI maintains a robust product development pipeline, which we believe will enhance our ability to serve the full spectrum of the PAPR market. STI has established close working relationships with its key customer groups, particularly the federal government, first responders and the military. Our plan is to expand STI’s existing distribution network, which, outside of the military market, is primarily through OEMs, to distribute PAPRs and related products in the industrial and hospital markets.

STI has several next-generation products under review with the National Institute for Occupational Safety and Health (“NIOSH”), and has received NIOSH approval for certain of its products in the past. We expect some of these new STI products to enable us to expand our presence in commercial markets including industrial, biotechnology and agriculture. However, NIOSH is currently establishing new CBRN standards for all classes of respirators. We plan to introduce STI products through our established distribution channels in early 2006.

Filter Canisters

In March 2005, we announced plans to construct a new filter canister production line to manufacture disposable filter canisters for the first responder, military, healthcare and industrial markets. These canisters are a necessary component in respirators and powered air respirators that filter chemical, biological, radiological and nuclear agents, inorganic particulates, and toxic gases. The filter canister production line is located at our Glenn Dale, Maryland facility, and we believe that our facility will be the only high-capacity manufacturing operation in the United States. The U.S.’s first responder, military, medical and industrial markets currently rely on foreign manufacturing locations for their canister supply. Although we currently remain in the test cycle for NIOSH approval of our filter canister line, we have allocated staff and resources to the filter plant in order to be in a position to commence volume production. The schedule and outcome of NIOSH review and approval of our filter canister line has been and remains unpredictable, however, following NIOSH and applicable international regulatory approvals and certifications, we anticipate commencing volume production of filter canisters. At this time, we anticipate that we will begin filter canister production in late 2006. We also remain in discussions with potential OEM customers, and have verbal commitments from customers to submit orders, pending NIOSH approval of the related respirator system.

Distribution

Late in 2004 we began an initiative to expand our distribution network. In 2005, we added W.W. Grainger and Cardinal Health to our distributor base as a means of strengthening our distribution channels in the healthcare market. As a result, TVI has developed significant distribution channels within the U.S., covering not only the safety and homeland security markets, but also healthcare. Fisher Scientific, the leading distributor of safety products in the United States, represents the largest portion of our distributor sales. Other U.S. distributor partners include: Aramsco, Global Protection, and EAI Corporation, the holder of a “prime vendor” contract for military safety and anti-terrorism products. In addition to our U.S. distributor partners, as of March 1, 2006, we had seven direct sales personnel located throughout the U.S. providing direct sales in most of the states within the continental U.S.

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Internationally, we maintain relationships with Fisher Scientific and TSL Aerospace to distribute our products in Canada; Professional Protection Systems to distribute our products in Europe; and OPEC Systems to distribute our products in the Pacific and Far East.

Approximately 97% of our sales in 2005 were sales within the U.S. and 3% of our sales in 2005 were outside the U.S. Approximately 68% of our sales in 2005 were made through our U.S. distributors with approximately 60% or our sales in 2005 specifically attributable to Fisher.

Competitors

Rapidly deployable decontamination systems generally employ one of two types of shelter frames, air beam and rigid articulating frame. The products differ in the composition of the skeletal system that provides the rigidity to the fabric skin. A frame comprised of rigid rods and hinges is referred to as an articulating system, while a frame comprised of inflatable air chambers (similar to river rafts or Zodiac^® boats) is referred to as an “air beam system.” We use our patented articulating frame system for our products. We believe our patented articulating frame has significant advantages over an air beam system. Most significantly, it is light-weight and requires no additional set up equipment such as air tanks, compressors or electric blowers, so it requires very little system deployment time. In addition, our articulating frame does not sag over time or require re-inflation. Four of our competitors use an air beam frame: Zumro (domestic), Aireshelta (U.K.), ACD (Netherlands) and Hughes Safety Showers (U.K.). One competitor, DHS Systems, LLC, manufactures an articulating product similar to ours. A third shelter construction-type sold in this industry has a self-supporting shell. The product relies on an accordion style corrugated plastic, and the only manufacturer that uses this system is UniFold.

As part of the mobile hospital market, we also produce large inflatable shelters, which utilize a unique air beam technology offering a durable, clear-span shelter capability. Competitors in this space include Blue-Med Response, Western Shelter and DHS Systems all of which use rigid frame construction for their mobile hospital products.

Our primary competitors with respect to PAPRs are 3-M Products, North Safety Products (North), ILC Dover and Mine Safety Appliances Company (MSA).

Competition in these markets is based on any one or a combination of the following factors: price, functionality and interoperability, manufacturing capability, installation, services, existing business, customer and distribution relationships, scalability and the ability of products and services to meet customers’ immediate and future requirements. Many of our existing and potential competitors have significantly greater financial, technical and marketing resources, and greater manufacturing capacity, as well as better established relationships with distributors and end users than we do.

Manufacturing Operations

We manufacture most of our products, including our shelter systems, at our headquarters facility in Glenn Dale, Maryland. We manufacture our PAPR products at our Frederick, Maryland facility. We use various levels of automation to improve floor space utilization.

Raw Materials

We use only commercially available materials in the manufacture of our products. Many of the component parts of our products, however, are custom designed and single sourced.

Intellectual Property

We hold various patents, trade secrets, trademarks, and other rights for our products, services, and processes. We have received patent protection on our articulating shelter frame, a collapsible display framework,

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a rapidly deployable roller transfer device, a thermal image identification system, and a collapsible and rapidly deployable hazardous material containment device. Additionally, we currently have 32 domestic and foreign patent applications pending for new products ranging from decontamination and infection control equipment to advanced HVAC systems to chemical-biological filtration devices and respiratory systems to thermal products and devices, including 15 domestic and foreign patent applications recently obtained through the STI acquisition the subject matter of which are various systems and subsystems for chemical-biological filtration devices and respiratory systems. We plan to critically assess patent protection to protect our technologies that we believe provide a competitive advantage. There are no active royalty or licensing agreements for our products.

We hold a U.S. federal registration for one of our trademarks. In addition, we have common law rights in certain of our trademarks and have an application currently pending with the U.S. Patent and Trademark Office for one of such trademarks and have applications pending with the Office of Harmonization in the Internal Market (“OHIM”) for two European Community trademarks.

Government Regulations

We are subject to various regulations including Federal Acquisition Regulations, the International Traffic in Arms Regulations (“ITAR”) export restrictions, the Bureau of Alcohol, Tobacco, Firearms and Explosives (“BATF”) import restrictions and certain Occupational Safety and Health Administration (“OSHA”) requirements. Certain switches, blowers and breathing tube assemblies are subject to ITAR, requiring us to obtain export licenses from the U.S. Department of State to sell such products to foreign buyers. We also are registered with the BATF as an Importer of U.S. Munitions Import List Articles to obtain permits for the importation of certain respirators, gas masks and filters.

Our PAPR products are subject to regulation by numerous governmental bodies. The principal source of U.S. federal regulation for PAPRs is the Occupational Safety and Health Act of 1970, which created both OSHA regarding worker safety standards and the National Institute for Occupational Safety and Health (“NIOSH”) for safety-product certification. We currently have several next-generation PAPR products as well as our planned filter production line under review with NIOSH. Our PAPR products may also be subject to foreign laws and regulations.

Research and Development Activities

We spent $1.1 million, $1.0 million and $0.2 million for R&D in the years ended December 31, 2005, 2004 and 2003, respectively. These amounts do not include our investment in the filter canister production line that we are currently developing. Additionally, in conjunction with our acquisition of STI, we entered into a Research and Development Agreement (the “R&D Agreement”) with Safety Tech AG, a Swiss corporation (“STAG”), and Hans Hauser, a principal of STAG, to formalize STAG’s historical R&D relationship with STI. Under the R&D Agreement, STAG provides to STI, on an exclusive basis, research, design, development and other related services in connection with STI’s respiratory products.

We believe that our commitment to R&D is critical to the implementation of our business strategy. To address the changing requirements of our customers in the rapidly emerging military, domestic and international markets, we must continue to invest in innovations that will result in new product offerings.

Seasonality

There are no significant seasonal aspects to our operations. However, military gunnery operations tend to slow down in winter months, and range operations show a noticeable increase during the summer as more Reserve and Guard units engage in summer training.

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Impact of Environmental Laws

We are subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous chemicals used during the manufacturing process. We believe we are in compliance with all federal, state and local environmental laws and have not experienced any significant costs associated with compliance with environmental laws; however, we cannot be certain that violations will not occur which could have a material adverse effect on our financial results.

Employees

As of March 1, 2006, we had 139 full-time employees, inclusive of employees that joined TVI in connection with our acquisition of STI. In connection with the acquisition of STI, on November 8, 2005, 17 employees joined TVI. None of our employees are represented by a union. We consider our relations with our employees to be good.

Available Information

We make available free of charge through our Internet website, www.tvicorp.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.

ITEM 1A. RISK FACTORS

Our business, results of operations and financial condition are subject to a number of risks, including the risks set forth below. You should carefully consider these risks. Additional risks and uncertainties, including those that are not yet identified or that we currently believe are insignificant, may also adversely affect our business, results of operations and financial condition.

A significant portion of our sales are to federal, state and local governmental entities the loss or significant reduction of which would have a material adverse impact on our operating results.

The loss or significant reduction in government funding of programs in which we participate or the funded agency’s decision not to spend appropriated funds could materially adversely affect our future revenues, earnings and cash flows and thus our ability to meet our financial obligations. U.S. government contracts are conditioned upon Congress’ continuing approval of the amount of necessary spending. Congress usually appropriates funds for a given program each fiscal year even though contract periods of performance may exceed one year. Consequently, at the beginning of a major program, the contract is usually partially funded, and additional monies are normally committed to the contract only if Congress makes appropriations for future fiscal years. State contracts are generally subject to the same funding considerations. Therefore, if Congress does not appropriate funds for programs under which the government procures our products, the lack of funds may result in a loss or significant reduction the government procurement of our products. In addition, even if funded, an agency may elect not to spend appropriated funds for various reasons which would have a similar potential adverse effect on our results of operations and financial condition. For example, during 2005 our sales were negatively affected by widespread delays at the state and local agency level in the actual release of appropriated federal funds, in part due to significant organizational changes within the DHS that caused delays in the issuance of needed standardization protocols and directives.

Selling to the U.S. Government subjects us to unfavorable termination provisions and other review and regulation.

Companies such as ours that are engaged in supplying defense-related services and equipment to U.S. government agencies are subject to certain business risks peculiar to the defense industry. These risks include the ability of the U.S. government to unilaterally suspend us from receiving new orders or contracts pending

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resolution of alleged violations of procurement laws or regulations; terminate existing orders or contracts; reduce the value of existing orders or contracts; audit our contract-related costs and fees, including allocated indirect costs; and control and potentially prohibit the export of our products.

Because we rely heavily on a limited number of third party distributors for the marketing, sale and support of our products, the termination or disruption of these relationships may materially adversely affect our revenue.

We sell the majority of our products through a limited number of independent distributors and third party sales agents, such as Fisher Scientific in the U.S. and Canada and Professional Protection Systems Ltd. and OPEC Systems internationally. Approximately 60% of our total 2005 sales were made through Fisher. We anticipate that our distributors will continue to account for most of our sales for the foreseeable future. We have a limited ability to influence our distributors’ marketing efforts and relying on distributors could harm our business for various reasons, including that the agreements with our distributors may contain unfavorable terms, such as exclusivity provisions or early termination rights; such agreements may terminate prematurely or result in litigation due to disagreements; our distributors may not devote sufficient resources to the sale of our products or may be unsuccessful in their efforts to sell our products or otherwise impair our reputation; existing relationships with our distributors may preclude us from entering into new arrangements; and we may not be able to negotiate new distributor agreements on acceptable terms.

Our growth strategy includes capital expenditures and pursuing strategic acquisitions and investments, which may not prove to be successful and may dilute our current stockholders’ percentage ownership.

Our business strategy includes making capital outlays, such as for the construction of our filter line, and acquiring or making strategic investments in other companies with a view to expanding our portfolio of products, expanding into new markets, acquiring new technologies, and accelerating the development of new or improved products. To do so, we may use a significant amount of our cash reserves, incur debt or assume indebtedness or issue equity that would dilute our current stockholders’ percentage ownership. In addition, we may incur significant amortization expense related to intangible assets and depreciation expense related to plant and equipment. We also may incur significant write-offs of goodwill, intangible assets, and property, plant and equipment associated with the companies, businesses or technologies that we acquire. Acquisitions and strategic investments involve numerous risks, including those identified below in connection with the STI acquisition.

In addition, capital expenditures for new product lines, acquisitions and strategic investments may involve risks of entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions and of obtaining insufficient revenues to offset increased expenses associated with acquisitions.

We are subject to economic, political and other risks associated with our international sales, which could materially adversely affect our business.

A portion of our revenue is generated from the international sale of our products through distributors, predominately in Canada, Western Europe and Australia. Net sales outside the United States were approximately 3% and 13% of our total net sales in 2005 and 2004, respectively. We anticipate that international sales will continue to comprise a portion of our revenue in the future. Our international sales are subject to a variety of factors, including changes in the political or economic conditions in a country or region; future fluctuations in exchange rates; trade protection measures and import or export licensing requirements; difficulty in effectively managing our international distributors; and differing tax laws and regulatory requirements, and changes in those laws and requirements. If we are unable to adapt to the requirements of our international customers or the markets in which they operate, we may experience a material adverse effect on our international sales.

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We face integration and other risks related to our recent STI acquisition.

STI is an established presence in the PAPR market, and we believe that our acquisition of STI may accelerate our growth in the personal protection equipment market. The STI acquisition involves various risks, including: difficulties in integrating STI’s operations, technologies, and products; the risk of diverting management’s attention from normal daily operations of the business; potential difficulties in completing projects associated with in-process research and development; risks of entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions; initial dependence on unfamiliar supply chains or relatively small supply partners; insufficient revenues to offset increased expenses associated with the acquisition; and the potential loss of key STI employees.

There can be no assurance that our STI acquisition will be successful and will not materially adversely affect our business, operating results, or financial condition. We must also manage any growth resulting from the acquisition effectively. Failure to manage such growth effectively and successfully integrate STI’s operations could have a material adverse effect on our business and operating results.

The purchase orders and contracts governing the purchase for our products may commit us to unfavorable terms.

We generally sell our shelter, decontamination systems and most other products pursuant to purchase orders issued by the purchasing party. Although we attempt to ensure that the terms of such purchase orders are acceptable to us, some purchase orders may contain unfavorable terms, such as heightened performance or warranty obligations or return rights.

Additionally, we generally provide certain products, including our thermal products, through formal contracts with the U.S. and state governments. These contracts generally can be terminated by the government either for its convenience or if we default by failing to perform under the contract. Termination for convenience provisions provide only for our recovery of costs incurred or committed settlement expenses and profit on the work completed prior to termination. Termination for default provisions provide for the contractor to be liable for excess costs incurred by the U.S. government in procuring undelivered items from another source. These contracts are generally fixed price contracts, as the price we charge is not subject to adjustment based on cost incurred to perform the required work under the contract. Therefore, we fully absorb cost overruns on these fixed price contracts and this reduces our profit margin on the contract. Failure to anticipate technical problems, estimate costs accurately or control costs during performance of a fixed price contract may reduce our profit or cause a loss on such contracts.

We may not be able to obtain critical components.

We purchase a number of critical custom components from single source vendors for which alternative sources may not be available. Delays or interruptions in the supply of these components could result in delays or reductions in product shipments. The purchase of these components from outside suppliers on a single source basis subjects us to risks, including the continued availability of supplies, price increases and potential quality assurance problems. While alternative suppliers may be available, these suppliers must be identified and qualified. We cannot be certain that any such suppliers will meet our required qualifications or that alternative suppliers can be identified in a timely fashion, if at all. Consolidations involving suppliers could further reduce the number of component alternatives and affect the cost of such supplies. An increase in the cost of such supplies could make our products less competitive. Production delays, lower margins or less competitive product pricing could have a material adverse effect on our business and results of operations.

Our future financial performance will depend in large part on the successful development, demand for and acceptance of our products.

The market for our shelter, decontamination, PAPRs and other products and systems may not continue to grow, may grow at a slower rate than we expect or may even diminish. Furthermore, the market may not accept

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our products. If the market fails to perform as we anticipate, or if the market fails to accept our products, our business could suffer.

Additionally, we must enhance the functionality of our products to maintain successful commercialization and continued acceptance of our product offerings. If we are unable to identify and develop new enhancements to existing products on a timely and cost-effective basis, or if new enhancements do not achieve market acceptance, we may experience customer dissatisfaction, reduction or cancellation of orders and loss of revenue. The life cycle of our products is difficult to predict because the market for the majority of our products is new and emerging and is characterized by rapid technological change, changing customer preferences and evolving industry standards. The introduction of products employing new technologies and emerging industry standards could render our existing products obsolete and unmarketable.

We are subject to significant government regulation.

The U.S. legal and regulatory environment governing our products is subject to constant change. Further changes in the regulatory environment relating to the marketing of our shelter, decontamination systems, PAPRs and our other products, that increase the administrative and operational costs associated with the marketing of our systems and other products or that increase the likelihood or scope of competition, could harm our business and financial results.

We currently have several PAPR products and our planned filter production line under review with NIOSH. If regulatory review and approval takes longer than we anticipate or if NIOSH does not grant the approvals that we seek, the delay or lack of regulatory approval may have a material adverse effect on our business and financial results.

The regulation of our shelter, decontamination systems and other products outside the United States will vary by country. Noncompliance with foreign country requirements may include some or all of the risks associated with noncompliance with U.S. regulation as well as other risks.

The planned expansion of our operations will place a significant strain on our management, financial controls, operations systems, personnel, and other resources.

Our ability to manage our future growth, should it occur, will depend in large part upon a number of factors including our ability to rapidly: build and train sales and marketing staff to create an expanding presence in the rapidly evolving market for our decontamination systems and other products and keep them fully informed over time regarding the technical features, issues and key selling points of our products; build, provide incentives for and support strong distribution channel partners and keep them informed regarding technical features, issues and key selling points of our products; develop our customer support capacity for direct and indirect sales personnel so that we can provide customer support without diverting engineering resources from product development efforts; and expand our internal management and financial controls significantly, so that we can maintain control over our operations and provide support to other functional areas as the number of our personnel and size of our organization increases.

We may not succeed with these efforts. Our failure to efficiently expand and develop these areas could cause our expenses to grow, could cause our revenues to decline or grow more slowly than expected and could otherwise impair our growth.

The variable and often long sales cycles of our products could cause significant fluctuation in our quarterly and annual results.

The typical sales cycle of our shelter, decontamination systems and our other products is unpredictable and generally involves a significant commitment of resources by our customers. A customer’s decision to purchase

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our products generally involves the evaluation of the available alternatives by a significant number of personnel in various functional areas and often is subject to delays over which we may have little or no control, including budgeting constraints, internal procurement and other purchase review procedures and the inclusion or exclusion of our products on customers’ approved standards list. Accordingly, we typically must expend substantial resources educating prospective customers about our products. Therefore, the length of time between the date of initial contact with the potential customer or distribution channel partner and the related sale of our products may be as much as one year, with the larger sales generally requiring significantly more time. Additionally, the length of time between the date of initial contact and the sale is often subject to delays over which we may have little or no control, including the receipt of necessary government funding. As a result, our ability to predict the timing and amount of specific sales is limited. If we experience any delay or failure in complete sales, we incur significant expense without generating any associated revenue which, if significant, could have a material adverse effect on our business and could cause operating results to vary significantly from quarter-to-quarter.

Our products rely on intellectual property rights. Any failure by us to obtain and protect these rights could enable our competitors to market products with similar features that may reduce demand for our products which would adversely affect our revenues. Additionally, we could be subject to claims that our products violate the intellectual property rights of others.

Although we seek to protect our shelter, decontamination systems and our other products through a combination of patent, trade secret, copyright, and trademark law, there is no guarantee that our methods of protecting our intellectual property rights in the United States or abroad will be adequate. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our products or technologies. Policing unauthorized use of our products is difficult, and we cannot be certain that the steps we have taken will prevent misappropriation of our technology, particularly in foreign countries where the laws may not protect our intellectual property rights as fully as those in the United States. If we are unable to protect our proprietary technology or that of our customers, our results of operations and any competitive advantage that we may have may be materially and adversely affected.

We generally enter into confidentiality or other agreements with our employees, consultants, channel partners and other corporate partners, and do control access to our intellectual properties and the distribution of our proprietary information. These measures afford only limited protection and may prove to be inadequate. Others may develop technologies that are similar or superior to our technology or design around the intellectual properties we own or utilize.

We expect that products may be increasingly subject to third-party infringement claims as the number of competitors in our industry segment grows and the functionality of products in different industry segments grows and overlaps. Although we are not aware that our products employ technology that infringes any proprietary rights of third parties, there has been significant litigation in recent years in the United States involving patents and other intellectual property rights, and third parties may assert infringement claims against us. Consequently, third parties may claim that we infringe their intellectual property rights. Regardless of whether these claims have any merit, they could be time-consuming to defend; result in costly litigation; divert our management’s attention and resources; cause product shipment delays; or require us to enter into royalty or licensing agreements, which may not be available on terms acceptable to us, if at all.

A successful claim of product infringement against us or our failure or inability to license the infringed or similar technology could damage our business because we would not be able to sell our products without redeveloping them or otherwise incurring significant additional expenses and we may be judged liable for significant damages.

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Our products may contain unknown defects that could result in product liability claims or decrease market acceptance of our products and have a material adverse effect on our business, results of operations and financial condition.

We have offered, and continue to offer, various warranties on our products. Our products may contain unknown defects or result in failures, which are not detected until after commercial distribution and use. Any of these defects could be significant and could harm our business and ongoing results. Any significant defects or errors may result in costly litigation; diversion of management’s attention and resources; loss of sales; delay in market acceptance of our products; increase in our product development costs; or damage to our reputation.

In addition, the sale and support of our products may entail the risk of product liability or warranty claims based on personal injury or other damages due to such defects or failures. Although we maintain reserves for warranty-related claims that we believe to be adequate, we cannot assure you that warranty expense levels or the results of any warranty-related legal proceedings will not exceed our reserves. Additionally, although we carry comprehensive general liability insurance and product liability insurance for damages that may arise from our products, our current insurance coverage may be insufficient to protect us from all liability that may be imposed under these types of claims. Consequently, the marketing of our products entails product liability and other risks and could have a material adverse effect on our business, results of operations and financial condition.

Intense competition in our industry could limit our ability to attract and retain customers.

The market for our shelter, decontamination systems and our other products is intensely competitive; characterized by evolving industry standards, changes in customer needs and preferences and opportunities relating to technological advancement; and is significantly affected by new product introductions and improvements. Many of our existing and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources, greater name recognition, broader product offerings and a larger installed base of customers than us, any of which could provide them with a significant competitive advantage. Increased competition could also result in price reductions for our products and lower profit margins, either of which could materially and adversely affect our business, results of operations and financial condition.

We expect to face increased competition in the future from our current competitors. In addition, new competitors or alliances among existing and future competitors may emerge and rapidly gain significant market share, many of which may possess significantly greater financial, marketing, technical, personnel and other resources.

If we are unable to attract, retain and motivate key management and personnel, we may become unable to operate our business effectively.

We depend to a significant degree on the skills, experience and efforts of our key executive officers and our employees, as well as members of our sales, administrative, technical and services personnel. Qualified personnel are in great demand throughout our industry, and our future success depends in large part on our ability to attract, train, motivate and retain highly skilled employees and the ability of our executive officers and other members of senior management to work effectively as a team. The loss of the services of any executive officer or the failure to attract and retain the highly trained technical personnel that are integral to our sales, product development, service and support teams, could have a material adverse effect on our business.

Our Common Stock is subject to significant price fluctuations.

Effective August 2004, our Common Stock was listed and began trading on the NASDAQ Small Cap Market, now known as the NASDAQ Capital Market. Previously, our Common Stock traded on the OTC Bulletin Board. Historically, there has been a limited public market for our Common Stock.

The trading price of our Common Stock is likely to be volatile and sporadic. The stock market in general and, in particular, the market for small capitalization companies, has experienced extreme volatility in recent

13

years. This volatility has often been unrelated to the operating performance of particular companies. Volatility in the market price of our Common Stock may prevent investors from being able to sell their Common Stock at or above the price such investors paid for their shares or at any price at all. In addition, in the event our operating results fall below the expectations of public market analysts, the market price of our Common Stock would likely be materially adversely affected.

We have adopted certain anti-takeover provisions that could prevent or delay a change in control.

Our Articles of Incorporation and Bylaws contain the following provisions: an “advance notice” provision setting forth procedures governing stockholder proposals and the nomination of directors, other than by or at the direction of the Board or a Board committee; and a “classified” Board structure, generally providing for three-year staggered terms of office for all members of our Board of Directors.

Additionally, in 2003 we adopted a Stockholders Rights Plan, which is designed to enable all TVI stockholders to realize the full value of their investment and to provide for fair and equal treatment for all TVI stockholders in the event that an unsolicited attempt is made to acquire the Company.

Although we believe that each of the above measures are designed to promote both effective corporate governance and orderly Board deliberations of important business matters, these provisions may discourage, delay or prevent a third party from acquiring or merging with TVI, even if such action may be considered favorable to some of TVI’s stockholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

We lease our headquarters facility to house our administrative and manufacturing activities pursuant to a lease that expires on April 30, 2010. As of December 31, 2005, the facility consisted of approximately 118,000 square feet, of which approximately 109,000 square feet were used as manufacturing space. The address of our headquarters facility is 7100 Holladay Tyler Road, Glenn Dale, Maryland 20769.

We also lease our Frederick, Maryland facility pursuant to a lease that expires on June 15, 2008. As of December 31, 2005, our Frederick, Maryland facility was comprised of approximately 22,000 square feet of space, of which approximately 18,000 was used as manufacturing space. The address of our Frederick, Maryland facility is 5703 Industry Lane, Frederick, Maryland 21704.

In connection with the STI acquisition, the Company acquired a residential condominium consisting of approximately 1,150 square feet located in Frederick, Maryland, which has been used in the past to house visiting research and design personnel.

ITEM 3. LEGAL PROCEEDINGS

Seattle Tarp Co., Inc. (“Seattle Tarp”) has filed a claim in arbitration in Seattle, Washington with the American Arbitration Association (Case No. 75-181-Y-00070-05 JISI) against TVI and its wholly owned subsidiary CAPA. Seattle Tarp alleges that TVI’s and CAPA’s hiring of a former Seattle Tarp employee resulted in a breach of a confidentiality agreement and the unauthorized use of Seattle Tarp’s confidential information. Seattle Tarp is seeking unspecified damages. We do not believe that there is any merit to the claim asserted by Seattle Tarp and are vigorously defending ourselves. Due to the early stage of this matter and the unspecified character of the damages, we cannot currently estimate the outcome of this matter.

In a separate but related matter, Seattle Tarp threatened to file a claim in arbitration against an employee of TVI, a former Seattle Tarp employee, alleging that the employee breached the terms of an agreement intended to

14

protect his former employer, Seattle Tarp, by accepting employment with TVI. The employee has filed a petition in the Superior Court of Washington in and for King County (Case No. 04-2-34129-9 SEA) seeking declaratory judgment that no such breach occurred. Seattle Tarp has filed counterclaims alleging that in connection with his employment at TVI the employee is engaging in the unauthorized use of confidential information. Seattle Tarp is seeking unspecified damages. The employee is vigorously pursuing the matter, and TVI is currently bearing the employee’s litigation expenses.

We are, from time to time, a party to disputes arising from normal business activities including various employee-related matters. In the opinion of our management, resolution of these matters will not have a material adverse effect upon our financial position or future operating results.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the stockholders during the fourth quarter of 2005.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our Common Stock trades on the NASDAQ Capital Market (formerly known as the NASDAQ Small Cap Market) under the symbol “TVIN”. Market prices include prices between dealers, may not reflect mark-ups, mark-downs or commissions and may not represent final actual transactions. The following table provides information on market prices for the periods indicated.

	2005
	1st Qtr.		2nd Qtr.		3rd Qtr.		4th Qtr.
Low	$	3.95	$	3.41	$	2.69	$	3.50
High		5.15		5.38		4.49		4.80
	2004
	1st Qtr.		2nd Qtr.		3rd Qtr.		4th Qtr.
Low	$	2.80	$	3.40	$	3.40	$	3.82
High		4.92		5.11		6.71		5.65

Holders

We had an estimated 373 holders of record of our Common Stock as of March 1, 2006. Holders of our Common Stock are entitled to one (1) vote for each share held on all matters submitted to a vote of the stockholders. No cumulative voting with respect to the election of directors is permitted by our Articles of Incorporation. The Common Stock is not entitled to preemptive rights and is not subject to conversion or redemption. Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to stockholders are distributable ratably among the holders of the Common Stock after payment of liquidation preferences, if any, on any outstanding stock that may be issued in the future having prior rights on such distributions and payment of other claims of creditors. Each share of Common Stock outstanding as of the date of this Annual Report is validly issued, fully paid and nonassessable.

Dividends

The holders of outstanding shares of our Common Stock are entitled to receive dividends out of assets legally available therefore at such times and in such amounts as the board of directors from time to time may determine. There have been no dividends declared or paid on our Common Stock during the previous two years. In light of the working capital needs of the Company, it is unlikely that cash dividends will be declared and paid on our Common Stock in the foreseeable future and no payment of any dividends is contemplated by us for the foreseeable future. Additionally, the credit agreement TVI maintains with Bank of America, N.A., imposes significant limitations on our ability to declare and pay dividends.

Pursuant to the terms of our Stockholders’ Rights Agreement, the Board of Directors declared a dividend distribution of one preferred share purchase right (a “Right”) for each outstanding share of our Common Stock to stockholders of record as of the close of business on December 3, 2003 (the “Record Date”).

In addition, one Right will automatically attach to each share of Common Stock issued between the Record Date and the Distribution Date (as defined below). Until a Distribution Date, the Rights are neither exercisable nor traded separately from our Common Stock and the Common Stock certificates represent both the outstanding Common Stock and the outstanding Rights. Generally, Rights will detach from the Common Stock (that is, Rights Certificates will be distributed and will trade separately) and become exercisable shortly after any person

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or group acquires beneficial ownership of 15% or more of our outstanding Common Stock, or in the event that any person or group commences a tender or exchange offer which would result in that person or group beneficially owning 15% or more of our outstanding Common Stock. The date on which the Rights Certificates are distributed and become exercisable is referred to as the “Distribution Date.” Each Right entitles the registered holder thereof to purchase from the Company one one-hundredth of a share of Series A Preferred Stock, subject to adjustment under certain conditions specified in the Stockholders’ Rights Agreement. Upon the occurrence of a Flip-in Event (as defined in the Stockholders’ Rights Agreement) each holder of a Right, other than the acquiring company, will be entitled to purchase our Common Stock at one half of the then current market price.

Recent Sales of Unregistered Securities

As previously reported, in connection with our November 2005 acquisition of STI we issued an aggregate of 2,313,811 shares of our Common Stock to six persons all of whom were former STI stockholders. Of the 2,313,811 shares issued, we placed in escrow 1,348,404 shares to secure our indemnification rights under the merger agreement. The securities issued in connection with the STI merger have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act. We relied on Section 4(2) of the 1933 Act and Rule 506 of Regulation D promulgated thereunder. Each of STI’s former stockholders were given information concerning TVI and represented that the shares were being acquired for investment purposes only. The issuances were made without general solicitation or advertising. The appropriate restrictive legend was placed on the certificates and stop transfer instructions were issued to TVI’s transfer agent.

In April 2004, we purchased substantially all of the assets of CAPA Manufacturing, LLC, a privately-held manufacturer of PAPRs and related respiration products. The purchase price included the net payment of approximately $550,000 in cash and the issuance of 88,780 shares of our Common Stock in a private transaction. In addition to the initial payment, an “earn-out” payment of up to $625,000, payable in our Common Stock, is also payable for fiscal year 2006 if certain operating benchmarks are satisfied.

Repurchase of Securities

We did not repurchase any of our Common Stock or other securities during the fourth quarter of 2005.

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ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements and Notes thereto and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial data included elsewhere in this report. The consolidated statement of income data for the years ended December 31, 2005, 2004 and 2003, and the consolidated balance sheet data as of December 31, 2005 and 2004 have been derived from our audited consolidated financial statements included elsewhere in this report. The consolidated statement of income data for the years ended December 31, 2002 and 2001 and the consolidated balance sheet data as of December 31, 2003, 2002 and 2001 have been derived from our audited consolidated financial statements not included in this report. The historical results are not necessarily indicative of results to be expected in any future period.

Financial Highlights (in thousands, except per share amounts)

	Year Ended December 31,
	2005		2004		2003		2002		2001
Consolidated Statements of Income Data (1):
Net sales	$	32,836	$	37,862	$	27,218	$	11,128	$	4,177
Gross profit		17,458		19,191		14,288		5,889		1,510
Operating income		8,001		10,251		8,040		3,072		154
Net income	$	5,038	$	6,442	$	5,367	$	4,431	$	105
Earnings per common share—basic	$	0.17	$	0.22	$	0.20	$	0.17	$	—
Average number of common shares outstanding—basic		30,325		29,082		27,249		26,321		25,327
Earnings per common share—diluted	$	0.16	$	0.21	$	0.18	$	0.16	$	—
Average number of common shares outstanding—diluted		30,844		30,250		29,470		28,546		27,330
	As of December 31,
	2005		2004		2003		2002		2001
Consolidated Balance Sheet Data (1):
Current assets	$	20,745	$	20,414	$	14,572	$	6,935	$	2,266
Current liabilities		6,794		3,103		3,203		882		761
Working capital		13,951		17,311		11,369		6,053		1,505
Total assets		41,538		23,670		15,343		7,200		2,501
Total liabilities		7,049		3,310		3,203		882		771
Minority interest		22		—		—		—		—
Stockholders’ equity	$	34,467	$	20,360	$	12,140	$	6,318	$	1,730

(1) The Consolidated Statement of Income data for the year ended December 31, 2005 includes the results of operations of STI from its acquisition on November 8, 2005. See Note 3 to the Notes to Consolidated Financial Statements.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and Notes thereto contained herein.

OVERVIEW

We are a global supplier of rapidly deployable first receiver and first responder systems for homeland security, hospitals, police and fire departments, the military and public health agencies. We design, fabricate and market products and systems both through distributors and directly to end-users and OEMs. These shelter systems include chemical and biological decontamination systems, hospital surge capacity systems, and infection control systems, all of which integrate our fabric shelter structure. Many of these shelter systems employ our proprietary articulating frame. We also sell a line of powered air-purifying respirators (“PAPRs”) as well as thermal products, which include targets, Identification Friend or Foe (“IFF”) devices, helicopter landing systems, markers and decoys. In addition, we plan to manufacture disposable filter canisters for the first responder, military, healthcare and industrial markets. We are in the process of establishing the only high-capacity filter canister manufacturing facility located in the United States. Finally, in 2005, we introduced training services as part of our business and plan to pursue training services as a compliment to our core business.

The first receiver and first responder markets have increased significantly in terms of size and demand over the past few years at all levels of government. Our strategy is to grow by expanding our product offerings to capitalize on the demand of these first receiver and first responder markets, primarily within the homeland security sector. We plan to diversify our product offerings both by organic development of new products and through acquisitions. Our continually increasing commitment to R&D is a key component of our diversification strategy to address the operating requirements of our target markets. In 2005, therefore, we continued to invest significantly in R&D activities, and the continued development of our filter canister manufacturing line. In connection with our acquisition of STI, we entered into an exclusive R&D arrangement with Safety Tech AG, which has historically performed STI’s R&D function for its PAPR systems. Most of our efforts are directed toward the realization of products with near-term revenue potential, but we continue to invest in R&D initiatives to ensure our continued competitiveness in the more distant future.

Our most significant expense is cost of goods sold, which consists primarily of direct labor, raw materials and manufacturing overhead costs incurred in the manufacture of our products. During 2005, we continued to monitor our cash position and, at the end of 2005, entered into a $10.0 million revolving credit facility with Bank of America. As of March 1, 2006 we have not drawn down any funds from the facility. Cash and cash equivalents as of December 31, 2005 were $2.6 million. In addition, investment in marketable securities as of December 31, 2005 was $4.1 million. We used approximately $8.4 million in cash in connection with our acquisition of STI and intend to use additional cash and issue shares of our Common Stock to implement our growth strategy.

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Results of Operations

The following table sets forth certain Consolidated Statements of Income data as a percentage of net sales for the years ended December 31:

	2005		2004		2003
NET SALES	100	%	100	%	100	%
COST OF SALES	47		49		47
GROSS PROFIT	53		51		53
OPERATING EXPENSES
Selling, general and administrative expenses	26		21		22
Research and development expenses	3		3		1
Total operating expenses	29		24		23
OPERATING INCOME	24		27		30
Other income (expense)	1		—		—
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST	25		27		30
PROVISION FOR INCOME TAXES	10		10		10
MINORITY INTEREST IN LOSS OF SUBSIDIARY	—		—		—
NET INCOME	15	%	17	%	20	%

Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004

Net sales, gross profit, selling, general and administrative (“SG&A”) expense and net income for the year ended December 31, 2005 include the results of operations of STI for the period November 8, 2005 through December 31, 2005. Such acquisition did not have a material effect on our results of operations for the full year ended December 31, 2005.

Net Sales:

Net sales decreased $5.0 million, or 13.3%, to $32.8 million for the year ended December 31, 2005 from $37.9 million for the year ended December 31, 2004. The sales decrease is primarily attributable to a slowdown among first responder agencies that occurred at both the state and local levels as organizations awaited further standardization protocols and directives from the Department of Homeland Security and the Federal Emergency Management Agency. International sales decreased to approximately $1.1 million in 2005 from $4.8 million in 2004.

Gross Profit:

Gross profit decreased $1.7 million, or 9.0%, to $17.5 million for the year ended December 31, 2005 compared with $19.2 million for the year ended December 31, 2004. Gross margin as a percent of sales was 53% for 2005 compared with 51% for 2004. The increase in the gross margin percentage is primarily related to improved productivity, a change in our product mix and improvement in warranty costs of $0.4 million.

Selling, General and Administrative Expenses:

SG&A expense was $8.4 million for the year ended December 31, 2005, an increase of $0.4 million, or 5.5%, from $7.9 million for the year ended December 31, 2004. As a percent of sales, SG&A increased to 26% for 2005 compared to 21% for 2004. The increase is primarily attributable to increased expenses related to Sarbanes-Oxley regulatory compliance as well as expenses attributable to other legal and corporate governance matters.

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Research and Development:

Our R&D expense was $1.1 million for the year ended December 31, 2005, an increase of $0.1 million, or 7.9%, from $1.0 million for the year ended December 31, 2004. Our R&D expense represents activity focused on the improvement and maintenance of our existing products; developing new uses and applications for our existing products; and the development of new products, particularly in the area of thermal marking infra-red, infection control and PAPR technology. Many of these R&D activities are continued R&D initiatives started in 2004.

Operating Income:

Operating income decreased by $2.3 million, or 22.0%, to $8.0 million for the year ended December 31, 2005, from $10.3 million for the prior year. Operating income as a percent of net sales decreased to 24% for the year ended December 31, 2005 from 27% for the year ending December 31, 2004 primarily due to the increase in SG&A expenses.

Income Tax:

The provision for income taxes decreased $0.7 million, or 16.9%, to $3.2 million for the year ended December 31, 2005, from $3.9 million for the prior year. The effective tax rate (“EFT”) for 2005 was 39%, compared to 38% for 2004. The increase in the EFT for 2005 compared with the prior year is primarily attributable to the reduction of the extraterritorial deduction due to our decrease in international sales and a $0.2 million payment related to an IRS audit of our 2003 year, offset slightly by a newly available 2005 manufacturing deduction.

Net Income:

Net income decreased $1.4 million, or 21.8%, to $5.0 million for the year ended December 31, 2005 from $6.4 million for the prior year as a result of the factors discussed above. Earnings per diluted share were $0.16 for the year ended December 31, 2005, compared with $0.21 for the prior year.

Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003

Net Sales:

Net sales increased $10.6 million, or 39%, to $37.9 million for the year ended December 31, 2004 from $27.2 million for the year ended December 31, 2003. The sales increase primarily related to an increase in domestic decontamination sales. International sales decreased to approximately $4.8 million for the year ended December 31, 2004 from $9.3 million in the prior year, which was largely comprised of sales in the United Kingdom, or the UK, to Her Majesty’s Fire Service through our UK distributor.

Gross Profit:

Gross profit increased $4.9 million, or 34%, to $19.2 million for the year ended December 31, 2004 compared with $14.3 million for the year ended December 31, 2003. Gross margin as a percent of sales was 51% for the year ended December 31, 2004 compared with 53% for the prior year. The decline in the gross margin percentage was primarily attributed to the allocation of costs of sales of certain facilities, and occupancy and insurance expenses, which in 2003 were charged to SG&A expenses, and the incorporation of CAPA into our operations.

Selling, General and Administrative Expenses:

SG&A expense was $7.9 million for the year ended December 31, 2004, an increase of $1.8 million, or 30%, from the year ended December 31, 2003. As a percent of sales, SG&A declined to 21% for the year ended

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December 31, 2004 from 22% for the prior year. A significant amount of the year-over-year dollar increase was attributable to an increase in sales related expenses, such as trade shows, advertising, marketing, sales expenses and employee related costs to support sales growth and expanded product lines. The aforementioned allocation to costs of sales of certain facilities, occupancy and insurance expenses would have decreased the SG&A expense for the year ended December 31, 2003.

Research and Development:

R&D expense was $1.0 million for the year ended December 31, 2004, an increase of $0.8 million from the year ended December 31, 2003. This increase was necessary to support our strategic product development objectives and overall growth strategies that continued into 2005. Due to the significance and magnitude of these initiatives and their related costs, and in order to provide clear and meaningful disclosure, in 2004 we separated R&D expenses and reported them separately from SG&A expenses.

Operating Income:

Operating income increased by $2.2 million, or 27%, to $10.3 million for the year ended December 31, 2004, from $8.0 million for the prior year. Operating income as a percent of net sales decreased to 27% for the year ended December 31, 2004 from 30% for the year ended December 31, 2003 primarily due to the increase in R&D expenses.

Income Tax:

The provision for income taxes increased $1.2 million, or 44%, to $3.9 million for the year ended December 31, 2004, from $2.7 million for the prior year. The EFT for 2004 was 38%, compared with 33% for 2003. The increase in the EFT for 2004 compared to the prior year is primarily attributable to a decline in the extraterritorial deduction to $0.1 million for 2004 from $0.3 million for 2003, as our export sales declined.

Net Income:

Net income increased $1.1 million, or 20%, to $6.4 million for 2004 from $5.4 million for 2003, primarily reflecting the growth in operating earnings attributable to higher net sales. Earnings per diluted share was $0.21 for the year ended December 31, 2004, compared with $0.18 for 2003.

Liquidity and Capital Resources

Management measures our liquidity on the basis of our ability to meet short-term and long-term operational funding needs and fund additional investments, including acquisitions. Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, access to bank lines of credit and our ability to attract long-term capital under satisfactory terms.

Strong internal cash generation, together with currently available cash and investments and an ability to access credit lines if needed, are expected to be sufficient to fund operations, capital expenditures, and any increase in working capital that we would need to accommodate a higher level of business activity. We are actively seeking to expand by acquisitions as well as through organic growth of our business. While a significant acquisition may require additional borrowings, equity financing or both, we believe that we would be able to obtain financing on acceptable terms based, among other things, on our earnings performance and current financial position.

As of December 31, 2005 working capital was $14.0 million, down from the $17.3 million at December 31, 2004. Cash and cash equivalents and available for sale securities as of December 31, 2005 totaled $6.7 million, a decrease of 49% from December 31, 2004. Working capital changes are primarily attributable to the acquisition

22

of STI which used cash of $8.4 million and increased accounts receivable, inventory and accounts payable. During the first quarter of 2005, we implemented an enhanced cash management program to achieve higher yields on our cash. Under this program, we may invest in U.S. Treasury, corporate commercial paper and other interest-bearing securities with various maturities.

Accounts receivable as of December 31, 2005 was $8.0 million, an increase of 81% from December 31, 2004. Days-sales outstanding, or DSO, as of December 31, 2005 was 69 compared to 42 days as of December 31, 2004. The increase in accounts receivable and DSO is primarily attributable to our acquisition of STI, which added $1.7 million in receivables, coupled with some delays in collections related to Katrina hurricane support. Much of the significant STI receivables and delayed collections related to Katrina support were received within the first 45 days of 2006. We do not, therefore, believe that the increase in accounts receivable or DSO as of December 31, 2005 compared to accounts receivable and DSO as of December 31, 2004, respectively, represents a trend of slower collections.

Inventory as of December 31, 2005 was $4.7 million, an increase of 158% from December 31, 2004. Annualized inventory turnover was 4.7 times at December 31, 2005 compared to 9.7 times at December 31, 2004. The increase in inventory and the related inventory turnover reduction are attributable to our acquisition of STI, coupled with some raw materials additions to fulfill future orders.

Accounts payable as of December 31, 2005 was $3.2 million, an increase of 199% from December 31, 2004. This increase was attributable to the acquisition of STI, inventory purchases and business insurance renewals at the end of 2005.

Cash flow from operating activities was $3.6 million for the year ended December 31, 2005, down from $7.2 million for the year ended December 31, 2004. Cash used in investing activities totaled $14.3 million for 2005, including $4.3 million for the purchase of marketable securities, $1.4 million for the purchase of property, plant and equipment, primarily related to the new filter canister manufacturing line and other product expansion initiatives, $0.4 million for the purchase of intangible assets, and $8.4 million for the acquisition of STI. Construction of the filter canister manufacturing line is nearing completion; however, operation of the line remains subject to NIOSH regulatory approval.

In connection with the acquisition of STI, additional earnout consideration may be payable should certain conditions be met by STI’s operations, including the generation of certain income amounts by STI in the fiscal years ending June 30, 2006 and 2007. The maximum amount of earnout payments would be $5.5 million, payable 50% in cash and 50% in the form of restricted Common Stock.

In December 2005, TVI and its three subsidiaries entered into a Credit and Security Agreement and related agreements (the “Credit Agreement”) with Bank of America, N.A. (“Bank”). The Credit Agreement provides for a revolving credit facility (“Credit Facility”) in the maximum principal amount of $10.0 million. Borrowings under the credit facility bear interest at a floating rate equal to LIBOR plus a stated margin of between 1.25% and 1.75% based upon the ratio of TVI’s total funded debt to EBITDA (the “EBITDA Ratio”). The Credit Agreement also provides that the Bank will issue or commit to issue letters of credit for our account in aggregate undrawn amounts of up to $2 million. Annual fees for letters of credit issued for our account will equal 1.25% to 1.75% of the face amount of such letters of credit based upon the EBITDA Ratio. The amount of any outstanding letters of credit issued or committed to be issued by the Bank will reduce, dollar for dollar, the aggregate amount available under the credit facility. We must also pay a commitment fee equal to an annual rate of 0.25% or 0.30% of the unused facility, which rate is based on our EBITDA Ratio at the time such fee is due, times the amount of the unused facility. The obligations under the Credit Agreement are secured by a security interest in all of the personal property of TVI and its subsidiaries.

The Credit Agreement contains customary covenants that will, among other things, limit our ability to incur additional indebtedness, create liens, pay dividends, make certain types of investments, enter into certain types of

23

transactions with affiliates, make certain capital expenditures, sell assets, merge with other companies or enter into certain other transactions outside of the ordinary course of business. The Credit Agreement also requires us to maintain an EBITDA Ratio of 1.75 to 1.0 or less on a rolling 4-calendar quarter basis. The Credit Agreement contains customary events of default, including, but not limited to: (a) non-payment of amounts due; (b) material breach of representations, warranties or covenants under the Credit Agreement or the documents pertaining thereto; (c) cross-default provisions relating to other indebtedness obligations; (d) loss of collateral; (e) bankruptcy or similar proceedings; (f) dissolution; or (g) other certain material adverse changes. Upon the occurrence of an event of default, the amounts outstanding under the credit facility may be accelerated and may become immediately due and payable and the Bank may exercise other remedies available to it under the Credit Agreement, including without limitation, exercising its rights in the collateral.

The Credit Facility will terminate and all amounts owing thereunder will be due and payable on December 31, 2008.

As of March 1, 2006, TVI had not requested any advances under the Credit Facility and had not requested any commitments from BOA to issue letters of credit. The Credit Agreement provides that advances under the Credit Facility can be used only for working capital purposes, to make capital expenditures and to finance acquisitions. We entered into the Credit Facility to provide an alternative source of liquidity, if needed, which may include being a source of capital for strategic acquisitions of complementary businesses or assets. We believe that the cash balance as of March 1, 2006 along with anticipated internally generated funds and the available line of credit will be sufficient to meet our expected cash requirements for at least the next twelve months.

We believe that we have adequate production equipment to support our current level of operations. We spent $1.4 million on plant and equipment in 2005 and $2.0 million in 2004, which was paid from funds generated from operations. These 2005 and 2004 purchases primarily related to the new filter canister manufacturing line and other product expansion initiatives. We will invest in additional equipment to meet efficiency and delivery requirements should our production levels increase significantly. We currently intend to purchase any such equipment from operating funds.

Contractual Obligations, Commitments and Off-Balance Sheet Obligations

Our disclosures regarding contractual obligations and commercial commitments are located in various parts of our regulatory filings. Information in the following table provides a summary of our contractual obligations and commercial commitments as of December 31, 2005 (in thousands):

	Payments Due by Fiscal Period
Contractual Obligations	Total		2006		2007-2008		2009-2010		2011 and thereafter
Operating lease obligations (1)	$	3,213	$	828	$	1,538	$	847	$	—
Purchase obligations (2)		3,172		3,172		—		—		—
Contractual cash obligations	$	6,385	$	4,000	$	1,538	$	847	$	—

(1) As of December 31, 2005, operating lease obligations include future payments related to accrued lease costs of $51 which are included in accrued liabilities on the balance sheet.

(2) As of December 31, 2005, purchase obligations consist of purchases of inventory and equipment in the normal course of business.

Critical Accounting Policies and Estimates

The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

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On an ongoing basis, we re-evaluate our estimates, including those related to revenue recognition, inventory valuation, research and development, intangible assets, credit sales and contingencies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Changes in estimates and assumptions used by management could have a significant impact on our financial results and actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Revenue Recognition

We recognize revenue from sales when the risks and rewards of ownership pass to customers, which may either be at the time of shipment or upon delivery or acceptance by the customer, depending on the terms of the sale. We record sales discounts and allowances in the period in which the sale occurs.

Inventory Valuation

We routinely evaluate the carrying value of our inventories to ensure they are carried at the lower of cost or market value. Such evaluation is based on management’s judgment and use of estimates, including sales forecasts, historical usage, planned dispositions of materials, product lines, technological events and trends. In addition, the evaluation is based on changes in inventory management practices which may influence the timing of exiting products and method of disposing of excess inventory.

Excess inventory is generally identified by comparing historical and future expected inventory usage to actual on-hand quantities. Reserves are provided for on-hand inventory in excess of pre-defined usage forecasts. Forecast usage is primarily determined by projecting historical (actual) inventory usage levels forward to future periods.

Credit and Collections

We maintain allowances for doubtful accounts receivable in order to reflect the potential uncollectibility of receivables related to purchases of products on open credit. If the financial condition of our customers were to deteriorate, resulting in their inability to make required payments, we may be required to record additional allowances for doubtful accounts.

Contingent Liabilities

We are subject to proceedings, lawsuits, warranty and other claims or uncertainties related to environmental, legal, product and other matters. We routinely assess the likelihood of an adverse judgment or outcome to these matters, as well as the range of potential losses. A determination of the reserves required, if any, is made after careful analysis. The required reserves may change in the future due to new developments.

Research and Development

R&D costs are expensed as incurred. These costs include direct labor and materials as well as a reasonable allocation of overhead costs. However, no SG&A costs are included. Equipment which has alternative future uses is capitalized and charged to expense over its estimated useful life.

Goodwill and Other Intangible Assets

Business acquisitions typically result in the recording of goodwill and other intangible assets, which affect the amount of future period amortization expense and possible impairment expense that we will incur. We have

25

adopted Statement of Financial Accounting Standards, or SFAS No. 142, which requires that we, on an annual basis, calculate the fair value of the reporting units that contain the goodwill and other intangible assets and compare that to the carrying value of the reporting unit to determine if impairment exists. Impairment testing must take place more often if circumstances or events indicate a change in the impairment status. Management judgment is required in calculating the fair value of the reporting units. Because of the integral technologies and operations of the acquisitions, during 2005 we had only one corporate-wide reporting entity to which this test applies.

Business Combination

We apply the provisions of SFAS No. 141, “Business Combinations,” whereby the net tangible and separately identifiable intangible assets acquired and liabilities assumed are recognized at their estimated fair market values at the acquisition date. The purchase price in excess of the estimated fair market value of the net tangible and separately identifiable intangible assets acquired represents goodwill. The allocation of the purchase price related to our business combinations involves significant estimates and management judgment that may be adjusted during the allocation period, but in no case beyond one year from the acquisition date. External costs incurred related to successful business combinations are capitalized as costs of business combinations, while internal costs incurred by us for acquisition opportunities are expensed.

Effect of Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R is a revision of FASB Statement No. 123, “Accounting for Stock-Based Compensation” and it supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and its related implementation guidance. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R does not change the accounting guidance for share-based payment transactions with parties other than employees provided in Statement 123 as originally issued and Emerging Issues Task Force (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.” SFAS 123R does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans.

SFAS 123R requires companies to measure compensation expense for all share-based payments (including employee stock options) at fair value and recognize the expense over the related service period. Additionally, excess tax benefits, as defined in SFAS 123R, will be recognized as an addition to paid-in capital and will be reclassified from operating cash flows to financing cash flows in the Consolidated Statements of Cash Flows.

We will transition to fair-value based accounting for stock-based compensation using a modified version of prospective application (“modified prospective application”). Under the modified prospective application, as it is applicable to us, SFAS 123R applies to new awards and to awards modified, repurchased or cancelled after January 1, 2006. Additionally, compensation cost for the portion of awards for which the requisite service has not yet been rendered (generally referring to non-vested awards) that are outstanding as of January 1, 2006 must be recognized as the remaining requisite service is rendered during the period of, or the periods after, adoption of SFAS 123R. The attribution of compensation cost for those earlier awards will be based on the same method and on the same grant-date fair values previously determined for the pro forma disclosures provided by us in our consolidated financial statements.

Upon transitioning to SFAS No. 123(R) in January 2006 using the “modified prospective” method, we do not anticipate recognizing a cumulative effect of a change in accounting principle; however, we do anticipate

26

recognizing compensation expense in 2006 in the aggregate amount of approximately $0.4 million for all share-based payment awards granted prior to January 1, 2006 that remain unvested as of January 1, 2006. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing activity in the Consolidated Statements of Cash Flows.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We had no variable rate debt outstanding as of December 31, 2005.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	28
Financial Statements:
Consolidated Balance Sheets at December 31, 2005 and 2004	29
Consolidated Statements of Income for the years ended December 31, 2005, 2004 and 2003	30
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2005, 2004 and 2003	31
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003	32
Notes to Consolidated Financial Statements	33

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

TVI Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of TVI Corporation and Subsidiaries (the “Company”) as of December 31, 2005 and 2004, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with United States generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 8, 2006 expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

/s/ Stegman & Company

Stegman & Company

March 8, 2006

28

TVI CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2005 and 2004

(In thousands, except per share data)

	2005		2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,589	$	13,054
Marketable securities—available for sale		4,100		—
Accounts receivable—trade (net of allowance for doubtful accounts of $175 and $165 at December 31, 2005 and 2004, respectively)		8,016		4,418
Inventories, net		4,724		1,829
Deferred income taxes		332		434
Prepaid expenses		919		293
Other current assets		65		386
Total current assets		20,745		20,414
PROPERTY, PLANT AND EQUIPMENT, NET		4,346		2,506
OTHER ASSETS:
Goodwill		15,781		554
Intangible assets, net		618		148
Other		48		48
Total other assets		16,447		750
TOTAL ASSETS	$	41,538	$	23,670
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	3,208	$	1,073
Accrued liabilities		2,117		2,030
Income taxes payable		1,469		—
Total current liabilities		6,794		3,103
Deferred income taxes		255		207
TOTAL LIABILITIES		7,049		3,310
Minority interest in equity of subsidiary		22		—
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS’ EQUITY:
Preferred stock—$1.00 par value; 1,200 shares authorized, no shares issued and outstanding at December 31, 2005 and 2004		—		—
Common stock—$0.01 par value; 98,800 shares authorized, 32,470 and 29,771 shares issued and outstanding at December 31, 2005 and 2004, respectively		324		298
Additional paid-in capital		23,676		14,633
Retained earnings		10,467		5,429
TOTAL STOCKHOLDERS’ EQUITY		34,467		20,360
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	41,538	$	23,670

The accompanying notes are an integral part of these consolidated financial statements.

29

TVI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31, 2005, 2004 and 2003

(In thousands, except per share data)

	2005		2004		2003
NET SALES	$	32,836	$	37,862	$	27,218
COST OF SALES		15,378		18,671		12,930
GROSS PROFIT		17,458		19,191		14,288
OPERATING EXPENSES:
Selling, general and administrative expenses		8,368		7,931		6,087
Research and development expenses		1,089		1,009		161
Total operating expenses		9,457		8,940		6,248
OPERATING INCOME		8,001		10,251		8,040
INTEREST AND OTHER INCOME, NET		245		58		18
INCOME BEFORE PROVISION FOR INCOME TAXES		8,246		10,309		8,058
PROVISION FOR INCOME TAXES		3,214		3,867		2,691
INCOME BEFORE MINORITY INTEREST IN NET LOSS OF CONSOLIDATED SUBSIDIARY		5,032		6,442		5,367
MINORITY INTEREST IN NET LOSS OF CONSOLIDATED SUBSIDIARY		6		—		—
NET INCOME	$	5,038	$	6,442	$	5,367
EARNINGS PER COMMON SHARE—BASIC	$	0.17	$	0.22	$	0.20
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING—BASIC		30,325		29,082		27,249
EARNINGS PER COMMON SHARE—DILUTED	$	0.16	$	0.21	$	0.18
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING—DILUTED		30,844		30,520		29,470

The accompanying notes are an integral part of these consolidated financial statements.

30

TVI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years Ended December 31, 2005, 2004 and 2003

(In thousands)

	Preferred Stock			Common Stock			Additional Paid-in Capital			Retained Earnings (Deficit)			Total Equity
BALANCE—DECEMBER 31, 2002	$	53		$	269		$	12,376		$	(6,380	)	$	6,318
Common Shares issued—exercise of options:
200 Common Shares issued to Directors		—			2			6			—			8
170 Common Shares issued to officers		—			2			28			—			30
653 Common shares issued to employees and others		—			6			116			—			122
Income tax benefit—exercise of options		—			—			295			—			295
Net income		—			—			—			5,367			5,367
BALANCE—DECEMBER 31, 2003		53			279			12,821			(1,013	)		12,140
Conversion of Preferred Stock to 106 Common Shares		(53	)		1			52			—			—
89 Common Shares issued in acquisition of CAPA Manufacturing LLC		—			1			359			—			360
Common Shares issued—exercise of options:
525 Common Shares issued to Directors		—			5			65			—			70
449 Common Shares issued to officers		—			4			108			—			112
644 Common Shares issued to employees and others		—			11			383			—			394
36 Common Shares issued to Board of Directors members for retainers		—			—			125			—			125
262 Treasury Shares retired upon exchange in option exercises		—			(3	)		(85	)		—			(88	)
Income tax benefit—exercise of options		—			—			805			—			805
Net income		—			—			—			6,442			6,442
BALANCE—DECEMBER 31, 2004		—			298			14,633			5,429			20,360
Common Shares issued—exercise of options:
225 Common Shares issued to Directors		—			2			66			—			68
117 Common Shares issued to officers and employees		—			1			212			—			213
3 Common Shares granted to employees for services provided		—			—			12			—			12
36 Common Shares granted to Board of Directors members		—			—			125			—			125
2,314 Common Shares issued acquisition of Safety Tech International, Inc.		—			23			8,191			—			8,214
4 Common Shares issued in connection with legal settlement		—			—			18			—			18
Income tax benefit—exercise of options		—			—			419			—			419
Net income		—			—			—			5,038			5,038
BALANCE—DECEMBER 31, 2005	$	—		$	324		$	23,676		$	10,467		$	34,467

The accompanying notes are an integral part of these consolidated financial statements.

31

TVI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2005, 2004 and 2003

(In thousands)

	2005			2004			2003
Operating Activities
Net income	$	5,038		$	6,442		$	5,367
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		617			277			141
Provision for doubtful accounts		73			38			162
Provision for deferred income taxes		52			159			1,267
Minority interest in net loss of subsidiary		(6	)		—			—
Stock-based compensation		374			—			34
Income tax benefit from exercise of stock options		419			805			295
Changes in operating assets and liabilities:
Accounts receivable, trade		(2,383	)		(242	)		(1,412	)
Inventory		(2,151	)		199			(1,142	)
Prepaid expenses and other current assets		(191	)		(138	)		(275	)
Income taxes payable		795			—			—
Accounts payable		1,199			(72	)		565
Accrued liabilities		(264	)		(244	)		1,461
Other		18			—			—
Net cash provided by operating activities		3,590			7,224			6,463
Investing Activities
Purchases of intangible assets		(431	)		(269	)		(36	)
Purchases of marketable securities		(4,300	)		—			—
Proceeds from sale of marketable securities		200			—			—
Purchases of property, plant and equipment		(1,416	)		(1,981	)		(610	)
Acquisition of Safety Tech International, Inc., net of cash and cash equivalents acquired		(8,352	)		—			—
Net cash used in investing activities		(14,299	)		(2,250	)		(646	)
Financing Activities
Payment of bank commitment fee and other		(37	)		—			—
Proceeds from exercise of stock options		281			488			160
Cash provided by financing activities		244			488			160
Net increase (decrease) in cash and cash equivalents		(10,465	)		5,462			5,977
Cash and cash equivalents at beginning of year		13,054			7,592			1,615
Cash and cash equivalents at end of year	$	2,589		$	13,054		$	7,592
Cash payments for income taxes and interest were as follows:
Income taxes	$	1,304		$	3,221		$	1,290
Interest	$	—		$	1		$	—
Non-cash investing and financing activities:
Issuance of Common Stock in connection with acquisition of Safety Tech International, Inc.	$	8,214		$	—		$	—
Acquisition of air shelter property rights in exchange for stock in subsidiary	$	28		$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements.

32

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

1. ORGANIZATION AND BASIS OF PRESENTATION.

Organization

TVI Corporation, a Maryland corporation formed in 1977, together with its subsidiaries (“TVI” or the “Company”), is a global supplier of rapidly deployable first receiver and first responder systems for homeland security, hospitals, the military, police and fire departments, and public health agencies. The Company designs, fabricates and markets products and systems both through distributors and directly to end-users and original equipment manufacturers (“OEMs”). These first responder systems include chemical and biological decontamination systems, hospital surge capacity systems, and infection control systems, all of which integrate its fabric shelter structures. Many of these shelter systems employ the Company’s proprietary articulating frame. The Company also sells a line of powered air-purifying respirators (“PAPRs”) as well as thermal products, which include targets, Identification Friend or Foe (“IFF”) devices, helicopter landing systems, markers and decoys. In 2005, the Company introduced training services as part of our business and plan to pursue training services as a compliment to its core business.

On November 8, 2005, TVI acquired Safety Tech International, Inc. (“STI”), a privately held supplier of PAPRs for chemical, biological, radiological and nuclear (“CBRN”) protection. As a result of the acquisition, STI became a wholly owned subsidiary of TVI. In April 2004, TVI formed CAPA Manufacturing Corp. (“CAPA”) as a wholly owned subsidiary of TVI. At that time, TVI, through CAPA, acquired substantially all of the assets of CAPA Manufacturing, LLC, a privately held respiratory products research, design and manufacturing company.

The Company’s headquarters are located in Glenn Dale, Maryland where it manufactures most of its products. The Company also has operations in Frederick, Maryland where it manufactures its PAPR products.

Basis of Presentation and Use of Estimates

The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles and include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s majority-owned subsidiaries consisted of the following at December 31, 2005:

	Percentage Owned
Safety Tech International, Inc.	100%
CAPA Manufacturing Corp.	100
TVI Air Shelters, LLC	90

Certain reclassifications have been made to previously reported amounts to conform to 2005 amounts.

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company operates in one segment as defined by Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related Information (as amended).”

33

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

Revenue Recognition

Revenue is recognized from sales when the risks and rewards of ownership pass to customers, which may either be at the time of shipment or upon delivery and acceptance by the customer, depending on the terms of sale. Sales discounts and allowances are recorded in the period in which the sale occurs.

Cash and Cash Equivalents

Cash and cash equivalents include demand deposits with financial institutions and short-term, highly liquid investments purchased with original maturities of three months or less. The carrying value of the cash equivalents approximates their estimated fair value.

Marketable Securities

The Company classifies all of its marketable securities as available-for-sale because the Company does not intend to hold them until maturity.

Available-for-sale securities are recorded at fair value, determined at a specific point in time based on quoted market prices. Unrealized gains and losses, net of the related tax effect, on securities classified as available-for-sale are excluded from the determination of net income and are reported as a separate component of stockholders’ equity, within other comprehensive income, until realized. Declines in the fair value of marketable securities below their cost that are other than temporary are reflected in net income as realized losses.

Marketable securities at December 31, 2005 consisted of floating rate municipal government debt securities with a market value of $4,100 and maturities exceeding 10 years. Realized and unrealized gains and losses were not material for any of the periods presented. At December 31, 2005, the carrying value of marketable securities approximated their market value.

Allowance for Doubtful Accounts

Management evaluates the collectibility of accounts receivable based on a combination of factors. In cases where management is aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, a specific allowance against amounts due is recorded to reduce the net recognized receivable to estimated realizable value. For all other customers, management recognizes allowances for doubtful accounts based on the length of time the receivables are outstanding, historical experience and other currently available information.

Inventories

Inventories are valued at the lower of cost, determined by the first-in, first-out (FIFO) method of valuation, or market. Inventories consist primarily of raw material and other components used in the manufacture of goods for sale.

Property, Plant and Equipment, Net

Property, plant and equipment is stated at cost, net of accumulated depreciation. Plant and equipment is depreciated using the straight-line method over the estimated useful lives of the related assets. Depreciation on production equipment under construction is recorded from the date such assets are placed in service.

34

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows that the asset is expected to generate. If such asset is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model.

Goodwill

Goodwill is recorded on a business combination to the extent the cost of an acquired entity exceeds the fair value of the net assets acquired.

The Company does not amortize goodwill but tests goodwill impairment at least on an annual basis, or earlier when events or changes in circumstances suggest the carrying amount may not be fully recoverable. Such evaluation is performed by comparing the implied fair value of a reporting unit to its carrying value, including goodwill. An impairment loss is recognized in the current period if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value. The Company performed its latest annual impairment test with regard to the carrying value of goodwill as of October 1, 2005 and concluded that no impairment to the carrying value of goodwill existed.

Other Intangible Assets, Net

Other intangible assets, net consists of deferred costs and acquired intangible assets. The Company capitalizes and amortizes the cost of acquired intangible assets over their estimated useful lives on a straight-line basis, unless such lives are deemed indefinite. The estimated useful lives of the Company’s other intangible assets are as follows:

Patents	5-7 years
Air shelter property rights	5 years

Warranty Liability

Accruals for product warranty claims are recorded on an undiscounted basis when it is probable that a liability has been incurred and such liability can be reasonably estimated. A reconciliation of the Company’s estimated product warranty liability for the years ended December 31, 2005, 2004 and 2003 is as follows:

	2005			2004			2003
Balance at beginning of year	$	797		$	996		$	44
Settlements in cash and in-kind		(89	)		(738	)		(147	)
Adjustment to estimated liability		(357	)		539			1,099
Balance at end of year	$	351		$	797		$	996

Fair Value of Financial Instruments

The carrying amounts of financial instruments approximate fair value due to the short-term nature of their underlying terms.

35

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

Research and Product Development Costs

Research and product development expenditures are charged to operations as incurred. During the years ended December 31, 2005, 2004 and 2003, research and product development costs amounted to $1,089, $1,009 and $161, respectively.

Advertising Costs

Advertising costs are expensed as incurred. During the years ended December 31, 2005, 2004 and 2003, advertising costs amounted to $94, $669 and $392, respectively.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. The Company evaluates the likelihood of realization of deferred tax assets and provides a valuation allowance where, in management’s opinion, it is more likely than not that the asset will not be realized.

Stock-based Compensation

The Company follows SFAS No. 123, “Accounting for Stock-Based Compensation” which encourages, but does not require companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the fair value of the Company’s stock at the date of the grant over the exercise price of the stock option. The Company has adopted the “disclosure only” alternative described in SFAS No. 123, which requires pro forma disclosures of net income and earnings per share as if the fair value method of accounting has been applied. See Note 10.

Stock Options Granted to Non-Employees

The Company accounts for stock-based awards issued to non-employees in return for services rendered using the fair value method. The fair value of the award is measured using the Black-Scholes option valuation model on the date that services have been completed or on the performance commitment date, whichever is earlier (the “measurement date”). The fair value of the award is estimated on the date of grant and the measurement date and is recognized as an expense over the vesting period.

Earnings Per Share

Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the year. Diluted earnings per share is calculated using the weighted-average number of common shares plus dilutive securities outstanding during the period. Dilutive securities consist of stock options and convertible preferred stock.

36

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued SFAS No. 123(R), “Share-Based Payment (Revised 2004)”. SFAS No. 123(R) establishes standards for the accounting for transactions in which an entity (i) exchanges its equity instruments for goods or services or (ii) incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of the equity instruments. SFAS No. 123(R) eliminates the ability to account for stock-based compensation using APB No. 25 and requires that such transactions be recognized as compensation cost in the income statement based on their fair values on the measurement date, which is generally the date of the grant. SFAS No. 123(R) is effective for the Company on January 1, 2006.

The Company will transition to fair-value based accounting for stock-based compensation using a modified version of prospective application (“modified prospective application”). Under the modified prospective application, as it is applicable to the Company, SFAS No. 123(R) applies to new awards and to awards modified, repurchased or cancelled after January 1, 2006. Additionally, compensation cost for the portion of awards for which the requisite service has not yet been rendered (generally referring to non-vested awards) that are outstanding as of January 1, 2006 must be recognized as the remaining requisite service is rendered during the period of, or the periods after, adoption of SFAS No. 123(R). The attribution of compensation cost for those earlier awards will be based on the same method and on the same grant-date fair values previously determined for the pro forma disclosures provided by the Company.

Upon transitioning to SFAS No. 123(R) in January 2006 using the “modified prospective” method, the Company does not anticipate recognizing a cumulative effect of a change in accounting principle; however, the Company does anticipate recognizing compensation expense in 2006 in the aggregate amount of approximately $425 for all share-based payment awards granted prior to January 1, 2006 that remain unvested as of January 1, 2006. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing activity in the Consolidated Statements of Cash Flows.

3. ACQUISITIONS AND CONTINGENT CONSIDERATION.

On November 8, 2005 the Company acquired by merger STI, a manufacturer of powered air respirators, for acquisition consideration of approximately $17,010 (consisting of $8,217 in cash, 2,314 shares of restricted Common Stock of TVI with an estimated market value of $8,214 and acquisition-related expenses of $579). The Company acquired STI to expand its product line in the homeland security and first responder industry, and generate product and marketing-related synergies with existing businesses. The following table summarizes the allocation of the total acquisition consideration to the net assets acquired:

Current assets	$	2,729
Fixed assets		762
Intangible assets		153
Goodwill		15,176
Total assets acquired		18,820
Current liabilities		(1,702	)
Other liabilities		(108	)
Acquisition consideration	$	17,010

37

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

The acquisition consideration does not include additional earnout consideration that may be payable should certain conditions be met by STI and its stockholders, including the generation of certain income amounts by STI in the fiscal years ending June 30, 2006 and 2007 or (ii) the repayment of a portion of the acquisition consideration by the selling stockholders, should STI not generate certain levels of revenue in the two years following acquisition. The terms of the Agreement and Plan of Merger dated November 8, 2005 provide for a maximum earnout consideration of $5,500 and earnout payments, if any, to be paid 50% in cash and 50% in the form of restricted Common Stock of TVI Corporation. Such amount payable, if any, are expected to be recorded as additional goodwill in the year paid and will be paid using available funds or by borrowing against credit lines. In addition, 1,348 shares of TVI Corporation Common Stock paid in connection with the acquisition were held in escrow as of December 31, 2005 to secure certain obligations of the selling shareholders. None of the goodwill acquired in connection with the acquisition of STI is expected to be deductible for tax purposes. Intangible assets acquired of $153 represent the fair value of certain patent and other rights held by STI as of November 8, 2005. The estimated useful life of the identified amortizable intangible assets acquired in the purchase of STI is 5 years.

During April 2004 the Company purchased substantially all of the tangible and intangible assets of CAPA Manufacturing LLC, a privately-held manufacturer of powered air purifying respirators and related respiration products. The purchase price included the payment of approximately $550 in cash, the issuance of 89 shares of the Company’s Common Stock and the payment of acquisition-related expenses equal to approximately $84. An additional earn-out payment of up to $625, payable in form of shares of the Company’s Common Stock, may be payable in 2006 if CAPA operations satisfy certain benchmarks. The Company recorded goodwill totaling $604 in connection with the acquisition.

The above acquisitions were accounted for as purchase transactions, and accordingly, the assets and liabilities acquired were recorded at their estimated fair values at the dates of acquisition. The Company determines fair value through analyses prepared by management and other information available. The results of operations of all acquired businesses were included in the Company’s consolidated financial statements from their respective dates of acquisition.

Pro Forma Financial Information (Unaudited)

The following table presents unaudited pro forma financial information for the years ended December 31, 2005 and 2004 as though the acquisition of STI took place on January 1, 2004.

	2005		2004
Revenue	$	38,191	$	47,302
Income before provision for income taxes		8,926		12,349
Net income		5,541		7,767
Earnings per Common Share—basic	$	0.17	$	0.25
Earnings per Common Share—diluted	$	0.17	$	0.24

The unaudited pro forma financial information does not include the effects of the additional acquisition consideration, if any, that may be payable to the former stockholders of STI should certain conditions be met in the Agreement and Plan of Merger, including the generation of certain income amounts by STI in the fiscal years ending June 30, 2006 and 2007 or the repayment of acquisition consideration, should STI not generate minimum levels of revenue in the two years following acquisition.

38

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

The above unaudited pro forma financial information has been provided for comparative purposes only and includes certain adjustments, such as additional amortization expense for identified intangible assets and lower interest income at TVI Corporation from reduced cash on hand. The results are not intended to be indicative of the results of operations that actually would have resulted had the acquisitions been completed on January 1, 2004, or of future results of operations.

4. INVENTORIES, NET.

Inventories, net consist of the following at December 31:

	2005		2004
Finished goods	$	1,570	$	136
Work in progress		411		207
Raw materials		2,357		1,337
Other		386		149
	$	4,724	$	1,829

Other inventories consist of field service, demonstration and other sales support inventory. At December 31, 2005 and 2004, inventory reserves for excess and obsolete inventories amounted to $598 and $629, respectively.

5. PROPERTY, PLANT AND EQUIPMENT, NET.

Property, plant and equipment, net consists of the following at December 31:

	Depreciation Period in Years	2005		2004
Furniture and fixtures	7	$	116	$	116
Computers and office equipment	3		461		250
Motor vehicles	5		58		66
Plant, machinery and equipment	7		1,842		805
Tooling	7		246		136
Leasehold improvements and other	5		615		366
Capital equipment not yet placed in service			2,231		1,368
			5,569		3,107
Less accumulated depreciation			1,223		601
		$	4,346	$	2,506

Depreciation expense charged to operations amounted to $338, $240 and $125 for the years ended December 31, 2005, 2004 and 2003, respectively.

39

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

6. INTANGIBLE ASSETS, NET.

Intangible assets, net consists of the following at December 31, 2005:

	Gross Book Value		Accumulated Amortization		Net
Patents	$	346	$	130	$	216
Air shelter property rights		308		31		277
Other including deferred costs		125		—		125
	$	779	$	161	$	618

Intangible assets, net at December 31, 2004 consisted of patents at a carrying value of $148, net of accumulated amortization of $71. Significant intangible asset additions during 2005 included air shelter property rights acquired in connection with the establishment of a joint venture and patents acquired in connection with the acquisition of Safety Tech International, Inc. See Note 3. The air shelter property rights are in effect until such time as the associated joint venture is dissolved or sales generated by the joint venture do not meet specified levels, after which such rights terminate in the following year.

Amortization expense associated with intangible assets was as follows for the years ended December 31:

	2005		2004		2003
Patents	$	60	$	37	$	16
Air shelter property rights		30		—		—
	$	90	$	37	$	16

The estimated future aggregate amortization expense for each of the five succeeding years relating to all intangible assets and deferred costs that are recorded in the December 31, 2005 consolidated balance sheet is as follows:

For the year ending December 31:
2006	$	137
2007		134
2008		128
2009		124
2010		89

7. ACCRUED LIABILITIES.

Accrued liabilities consist of the following at December 31:

	2005		2004
Accrued warranty cost	$	351	$	797
Accrued compensation expense		696		688
Accrued expenses – trade		634		271
Accrued payroll and other taxes		300		197
Other		136		77
	$	2,117	$	2,030

40

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

8. COMMITMENTS AND CONTINGENT LIABILITIES.

Operating Leases

The Company is obligated under operating leases for office and warehouse space and office equipment expiring through April 2010. Certain of these leases are subject to escalation clauses. The following is a schedule of the future minimum rental payments required under operating leases that have initial or remaining lease terms of one year or more as of December 31, 2005:

For the year ending December 31:
2006	$	828
2007		830
2008		708
2009		633
2010		214
Total minimum lease obligations	$	3,213

Total rental expense under all leases amounted to $722, $611 and $343 for the years ended December 31, 2005, 2004 and 2003, respectively.

The Company has contingent payments related to acquisitions made in 2004 and 2005 as described further in Note 3. In addition, in the normal course of business, the Company is involved in legal actions arising from the manufacture and sale of products. Management does not anticipate that any liabilities that may result will have a materially adverse effect on our financial position, results of operations or liquidity.

9. INCOME TAXES.

The components of the provision for income taxes by taxing jurisdiction are as follows for the year ended December 31:

	2005		2004		2003
U.S. Federal
Current	$	2,397	$	3,041	$	1,152
Deferred		43		130		1,025
State Income taxes
Current		592		667		272
Deferred		9		29		242
Provision for income taxes on current year income		3,041		3,867		2,691
Tax payment in respect of 2003		173		—		—
Total provision for income taxes	$	3,214	$	3,867	$	2,691

41

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

A reconciliation of the Company’s tax provision to the federal income tax expense calculated at the statutory rate is as follows for the year ended December 31:

	2005			2004			2003
Federal taxes at statutory rate	$	2,804		$	3,505		$	2,740
State income taxes, net of federal benefit		401			365			329
Extraterritorial deduction		(13	)		(131	)		(322	)
Manufacturing deduction		(55	)		—			—
Tax payment in respect of 2003		173			—			—
Other		(96	)		128			(56	)
Provision for income taxes	$	3,214		$	3,867		$	2,691

The components of the deferred tax assets and liabilities are as follows at December 31:

	2005			2004
Deferred tax assets—current
Vacation accrual	$	82		$	62
Inventory reserve		48			—
Allowance for doubtful accounts		66			65
Accrued warranty liability		136			307
		332			434
Deferred tax liability—long term
Depreciation and amortization		(255	)		(207	)
	$	77		$	227

10. STOCKHOLDERS’ EQUITY.

Stockholder Rights Agreement

The Company has a Stockholders’ Rights Agreement pursuant to which certain rights were granted to stockholders of record as of December 3, 2003. Each share of Common Stock entitles the holder to purchase one-one hundredth of a share of Series A Preferred Stock, subject to adjustment under certain conditions. These rights become exercisable shortly after any person or group acquires beneficial ownership of 15% or more of the outstanding Common Stock or in certain other circumstances.

Stock Option Plan

The Company adopted a stock option plan for directors, officers and employees in 1998 (the Amended and Restated 1998 Stock Option Plan or the “Plan”) that provides for non-qualified and incentive stock options to be issued enabling the holder thereof to purchase Common Shares of the Company at predetermined exercise prices. Incentive stock options may be granted to purchase shares of Common Stock at a price not less than fair market value on the date of grant. Only employees may receive incentive stock options; all other qualified participants may receive non-qualified stock options with an exercise price determined by the Company’s Board of Directors.

Options granted vest upon terms determined by the Board of Directors. During the year ended December 31, 2005, the majority of options granted under the Plan vested one-half one year from the date of grant and one-half

42

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

two years from the date of grant. No compensation expense has been recorded for options issued under the Plan for any of the years presented. At December 31, 2005, options to purchase up to 2,938 shares of the Company’s Common Stock remain available to be granted under the Plan. The Plan expires on May 7, 2008.

A summary of the activity under the stock option plan for the years ended December 31, 2003, 2004 and 2005 is as follows:

	Number of Shares		Range of Option Exercise Price Per Share					Weighted Average Option Price
Outstanding at January 1, 2003	2,909		$	0.0750	to	$	0.625	$	0.17
Granted	860			0.6000	to		2.010		1.36
Exercised	(1,023	)		0.0750	to		1.450		0.17
Canceled or expired	(75	)		0.1125	to		1.470		1.02
Outstanding at December 31, 2003	2,671			0.0750	to		2.010		0.52
Granted	642			1.2900	to		5.400		3.73
Exercised	(1,618	)		0.0750	to		1.470		0.34
Canceled or expired	(58	)		1.1900	to		4.130		3.43
Outstanding at December 31, 2004	1,637			0.1125	to		5.500		1.83
Granted	732			3.1600	to		4.770		4.27
Exercised	(342	)		0.1125	to		3.940		0.82
Canceled or expired	(334	)		1.4700	to		5.160		4.22
Outstanding at December 31, 2005	1,693			0.1325	to		4.720		2.63

The following is a summary of stock options outstanding and exercisable at December 31, 2005:

	Options Outstanding				Options Exercisable
	Number	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price
$0.13 - $0.60	383	1.29	$	0.29	383	1.29	$	0.29
1.21 -   1.78	340	2.29		1.40	340	2.29		1.40
2.01 -   3.94	547	6.36		3.46	234	5.38		3.36
4.03 -   5.50	423	8.87		4.56	95	8.57		4.38
	1,693	5.02		2.60	1,052	5.58		3.00

The Company granted options to purchase 100 shares of Common Stock to directors during the year ended December 31, 2005 at an exercise price of $3.50 per Common Share (2004 and 2003 – options to purchase 125 shares). In 2003, options to purchase 20 shares were issued to another company and in 2005, an option to purchase 40 shares was issued in connection with a legal settlement. The remaining options in each year were granted to the Company’s officers and employees.

The Company’s stock option plan allows for the exercise price to be paid in the form of cash or shares of Common Stock held by the option holder. During the year ended December 31, 2004, 262 shares of Common

43

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

Stock with an aggregate fair value of $88 were used as payment for the exercises of options. The resulting treasury shares received were deemed retired.

Pro Forma Stock-Based Compensation Expense

The following table illustrates the effect on net income for the years ended December 31, 2005, 2004 and 2003 if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based compensation.

	2005			2004			2003
Net income as reported	$	5,038		$	6,442		$	5,367
Deduct: Stock-based compensation determine under fair value based methods for all awards, net of related tax effects		(694	)		(535	)		(168	)
Pro forma net income	$	4,344		$	5,907		$	5,199
Earnings per common share as reported:
Basic	$	0.17		$	0.22		$	0.20
Diluted	$	0.16		$	0.21		$	0.18
Pro forma earnings per common share:
Basic	$	0.14		$	0.20		$	0.19
Diluted	$	0.14		$	0.19		$	0.18

The weighed-average fair value of options granted during 2005, 2004 and 2003 was $2.52, $2.75 and $0.87, respectively. The fair values of stock options granted were estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes model was originally developed for use in estimating the fair value of traded options, which have different characteristics from TVI’s employee stock options. The model is also sensitive to changes in assumptions, which can materially affect the fair value estimate.

The following average assumptions were used to determine the fair value of employee options granted during the years ended December 31, 2005, 2004 and 2003:

	2005		2004		2003
Risk-free interest rate	4.16	%	4.13	%	2.47	%
Expected volatility	63.60	%	73.54	%	81.44	%
Expected life (in years)	5.71		8		5
Expected dividend yield	0.00	%	0.00	%	0.00	%

Share Grants

The Company granted 3 shares of Common Stock to certain employees and 36 shares to Board of Directors members for service during the year. The Company recorded compensation expense in its income statement for the year ended December 31, 2005 equal to the fair value of the shares at the date of grant. The Company granted an additional 54 shares of Common Stock to various employees during December 2005 as compensation, which were issued in the first quarter of 2006.

44

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

The total compensation cost recognized in income for stock-based employee compensation awards amounted to $374, $0, and $34 for the years ended December 31, 2005, 2004, and 2003, respectively.

Preferred Stock

The Company is authorized to issue 1,200 shares of Preferred Stock, $1.00 par value, which are convertible into shares of Common Stock at a ratio of two-to-one. During the year ended December 31, 2004, 53 shares of convertible preferred stock were converted to 106 shares of Common Stock. There were no shares of Preferred Stock issued or outstanding during the year ended December 31, 2005.

11. CONCENTRATION OF CREDIT RISK.

The Company’s cash balances in U.S. financial institutions may periodically exceed the federally insured limit. At December 31, 2005 and 2004, the Company’s uninsured cash balances totaled $2,257 and $12,800, respectively. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.

12. SIGNIFICANT CUSTOMERS.

Net sales to the Company’s largest customer totaled approximately $19,686, $16,333 and $11,100 for the years ended December 31, 2005, 2004 and 2003, respectively. These sales represented 60%, 43% and 41% of total net sales for such years, respectively. For the years ended December 31, 2005, 2004 and 2003, net sales to the Company’s second largest customer amounted approximately $1,429, $7,612 and $9,300, respectively. There were no other customers representing more than 10% of net sales for the periods presented.

13. EMPLOYEE BENEFIT PLAN.

The Company has established a 401(k) defined contribution plan for its employees. Eligible employees are able to invest pre-tax contributions into selected investment funds maintained and managed by third-party investment companies. The Company makes matching contributions to the plan up to a fixed percentage of the participants’ compensation. The Company’s matching contributions totaled approximately $33, $70 and $31 for the years ended December 31, 2005, 2004 and 2003, respectively.

14. REVOLVING CREDIT FACILITY.

On December 29, 2005, the Company and its subsidiaries entered into a Credit and Security Agreement (the Credit Agreement) with Bank of America, N.A (BOA). The Credit Agreement provides for a revolving credit facility in the maximum principal amount of $10,000. Borrowings under the credit facility bear interest at a floating rate equal to LIBOR plus a stated margin of between 1.25% and 1.75% based upon the ratio of TVI’s total funded debt to EBITDA (“EBITDA Ratio”).

The Credit Agreement also provides that BOA will issue or commit to issue letters of credit for the account of TVI in aggregate undrawn amounts of up to $2,000. Annual fees for letters of credit issued for the account of TVI will equal 1.25% to 1.75% of the face amount of such letters of credit based upon the EBITDA Ratio. The amount of any outstanding letters of credit issued or committed to be issued by BOA will reduce, dollar for dollar, the aggregate amount available under the credit facility. The obligations under the Credit Agreement are collateralized by a security interest in all of the personal property of TVI and its subsidiaries (the “Collateral”).

45

TVI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

(Amounts in thousands, except per share data)

TVI paid a commitment fee of $25 in connection with the establishment of the credit facility. TVI must also pay a commitment fee equal to an annual rate of 0.25% or 0.30% of the unused facility, which rate is based on TVI’s EBITDA Ratio at the time such fee is due, times the amount of the unused facility.

The Credit Agreement will terminate and all amounts owing thereunder will be due and payable on December 31, 2008. The Credit Agreement provides that advances under the credit facility can be used only for working capital purposes, to make capital expenditures and to finance permitted acquisitions. At December 31, 2005 and 2004, the Company was in compliance with all debt covenants.

15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED).

The following is a summary of operations by quarter for the years ended December 31, 2005 and 2004:

	Mar. 31		June 30		Sept. 30		Dec. 31		Total
Year Ended December 31, 2005
Net sales	$	8,871	$	7,618	$	7,042	$	9,305	$	32,836
Gross profit		4,709		4,019		4,022		4,708		17,458
Income before provision for income taxes		2,435		1,822		1,878		2,111		8,246
Net income	$	1,534	$	1,102	$	1,043	$	1,359	$	5,038
Earnings per Common Share—basic	$	0.05	$	0.04	$	0.03	$	0.04	$	0.17
Earnings per Common Share—diluted	$	0.05	$	0.04	$	0.03	$	0.04	$	0.16
Year Ended December 31, 2004
Net sales	$	8,593	$	10,238	$	9,260	$	9771	$	37,862
Gross profit		4,517		4,922		4,640		5,112		19,191
Income before provision for income taxes		2,602		2,746		2,259		2,702		10,309
Net income	$	1,600	$	1,815	$	1,471	$	1,556	$	6,442
Earnings per Common Share—basic	$	0.06	$	0.06	$	0.05	$	0.05	$	0.22
Earnings per Common Share—diluted	$	0.05	$	0.06	$	0.05	$	0.05	$	0.21

46

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures”, as such term is defined under Securities Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. As of the end of the period covered by this Annual Report on Form 10-K, our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us which is required to be included in our periodic SEC filings and in ensuring that information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported in a timely manner and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2005. To make this assessment, management used the criteria for effective internal control over financial reporting as described in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as the COSO framework. Based on that assessment under the COSO framework, our management concluded that, as of December 31, 2005, our internal control over financial reporting was effective.

In conducting our evaluation of the effectiveness of the Company’s internal control over financial reporting, we have excluded our subsidiary Safety Tech International, Inc., or STI, which the Company acquired in November 2005. Refer to Note 3 of the consolidated financial statements for a discussion of the STI acquisition.

Management’s assessment of the effectiveness of its internal control over financial reporting as of December 31, 2005, has been audited by Stegman & Company, an independent registered public accounting firm and auditors of our consolidated financial statements, as stated in their attestation report which is included herein.

47

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

Stockholders and Board of Directors

TVI Corporation

We have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, that TVI Corporation (the “Company”) maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Safety Tech International, Inc. (“STI”), which is included in the 2005 consolidated financial statements of the Company. Management did not assess the effectiveness of internal control over financial reporting at STI because the Company acquired STI during 2005. STI represented $3.3 million or 13% of consolidated total assets, excluding goodwill, at December 31, 2005 and $1.3 million or 4% of consolidated revenue for the year ended December 31, 2005. Refer to Note 3 to the consolidated financial statements for further discussion of the acquisition of Safety Tech. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of STI.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

48

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2005 and 2004 and the related consolidated statements of income, cash flows and changes in stockholders’ equity for each of the three years in the period ended December 31, 2005 of the Company and our report dated March 8, 2006 expressed an unqualified opinion on those consolidated financial statements.

/s/ Stegman & Company

Baltimore, Maryland

March 8, 2006

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not Applicable.

49

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 of the Form 10-K is hereby incorporated by reference from the Company’s definitive Proxy Statement, which will be filed pursuant to Regulation 14A within 120 days after the Company’s year end for the year covered by this report, under the caption “Nominees for Directors” in the Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 of Form 10-K is hereby incorporated by reference from the Company’s definitive Proxy Statement, which will be filed pursuant to Regulation 14A within 120 days after the Company’s year end for the year covered by this report, under the caption “Executive Compensation” in the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 of Form 10-K is hereby incorporated by reference from the Company’s definitive Proxy Statement, which will be filed pursuant to Regulation 14A within 120 days after the Company’s year end for the year covered by this report, under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 of Form 10-K is hereby incorporated by reference from the Company’s definitive Proxy Statement, which will be filed pursuant to Regulation 14A within 120 days after the Company’s year end for the year covered by this report, under the caption “Certain Relationships and Related Transactions” in the Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 of Form 10-K is hereby incorporated by reference from the Company’s definitive Proxy Statement, which will be filed pursuant to Regulation 14A within 120 days after the Company’s year end for the year covered by this report, under the caption “Principal Accounting Fees and Services” in the Proxy Statement.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. The following exhibits are filed with or incorporated by reference into this report.

Exhibit Number	Exhibit Description
2.1	Agreement and Plan of Merger, dated as of November 8, 2005, among TVI Corporation, TVI Sub, Inc., Safety Tech International, Inc. (“STI”) and the STI stockholders (incorporated by reference to Exhibit 2.1 to our Form 8-K dated November 8, 2005 and filed on November 14, 2005)
3.1	Articles of Amendment and Restatement of the Company (incorporated by reference to Exhibits from our Form 10-KSB for the year ended December 31, 2003)
3.2	Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 to our Form 10-KSB for the year ended December 31, 2004)
4.1	Specimen Common Stock Certificate (incorporated by reference to Exhibits from our Registration Statement on Form S-4, File No. 33-15029)
10.1	Amended and Restated 1998 Incentive Stock Option Plan (incorporated by reference to Exhibit 10.1 to our Form 10-KSB for the year ended December 31, 2004)

50

Exhibit Number		Exhibit Description
10.2		January 31, 2003 Employment Agreement between TVI Corporation and Richard V. Priddy [(incorporated by reference to Exhibits from our Form 10-K for the fiscal year ended December 31, 2002)]
10.3		Rights Agreement, dated as of December 2, 2003, between TVI Corporation and Securities Transfer Corporation which includes the form of Articles of Supplementary of the Series A Preferred Stock of TVI Corporation as Exhibit A, the form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C (incorporated by reference to Exhibits from our Form 8-K dated December 2, 2003)
10.4		Research and Development Agreement, dated as of November 8, 2005, between Safety Tech International, Inc. and Safety Tech AG (incorporated by reference to Exhibit 2.1 to our Form 8-K dated November 8, 2005 and filed on November 14, 2005)
10.5		Employment Agreement, dated November 8, 2005, between Safety Tech International, Inc. and Dale E. Kline (incorporated by reference to Exhibit 2.1 to our Form 8-K dated November 8, 2005 and filed on November 14, 2005)
10.6		Credit and Security Agreement dated December 29, 2005, among TVI Corporation, CAPA Manufacturing Corp., Safety Tech International, Inc., TVI Air Shelters, LLC and Bank of America, N.A.
10.7		Lease dated February 16, 1998 between TVI Corporation and Glenn Dale Business Center, L.L.C. (n/k/a First Potomac Realty Investment Limited Partnership).
10.7.1		First Amendment to Lease dated October 2, 2002 between TVI Corporation and Glenn Dale Business Center, L.L.C. (n/k/a First Potomac Realty Investment Limited Partnership).
10.7.2		Second Amendment to Lease dated October 2, 2002 between TVI Corporation and Glenn Dale Business Center, L.L.C. (n/k/a First Potomac Realty Investment Limited Partnership).
10.7.3		Third Amendment to Lease dated October 2, 2002 between TVI Corporation and Glenn Dale Business Center, L.L.C. (n/k/a First Potomac Realty Investment Limited Partnership).
10.8		Lease dated April 22, 2003 between Micronel Safety, Inc. (n/k/a Safety Tech International, Inc.) and Admar Construction, Inc.
10.8.1		Addendum No. 1 to Lease dated February 26, 2004 between Safety Tech International, Inc. and Admar Construction, Inc.
10.9		Letter Agreement dated April 3, 2002 between TVI Corporation and Fisher Scientific Company LLC.
10.9.1	*	Distributorship Agreement Addendum dated February 25, 2003 between TVI Corporation and Fisher Scientific Company LLC.
10.9.2	*	Distributor Agreement Amendment No. 2 dated as of January 1, 2005 between TVI Corporation and Fisher Scientific Company LLC.
21		Subsidiaries of the Registrant
23		Consent of Stegman & Company
31.1		Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Confidential treatment requested for certain portions of this Exhibit pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended, which portions are omitted and filed separately with the U.S Securities and Exchange Commission.

51

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 8, 2006.

TVI CORPORATION
By:	/S/    RICHARD V. PRIDDY
	Richard V. Priddy President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dated indicated.

Date	Signature/Title
March 8, 2006	/s/    RICHARD V. PRIDDY
	Richard V. Priddy, President, Chief Executive Officer (Principal Executive Officer) and Director
March 8, 2006	/s/    GEORGE J. ROBERTS
	George J. Roberts, Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
March 8, 2006	/s/    MARK N. HAMMOND
	Mark N. Hammond, Chairman of the Board of Directors
March 8, 2006	/s/    JOSEPH J. DUFFY
	Joseph J. Duffy, Director
March 8, 2006	/s/    HARLEY A. HUGHES
	Harley A. Hughes, Director
March 8, 2006	/s/    MATTHEW M. O’CONNELL
	Matthew M. O’Connell, Director
March 6, 2006	/s/    TODD L. PARCHMAN
	Todd L. Parchman, Director
March 8, 2006	/s/    CHARLES L. SAMPLE
	Charles L. Sample, Director
March 8, 2006	/s/    DONALD C. YOUNT, JR.
	Donald C. Yount, Jr., Director

52

EX-10.6

Exhibit 10.6

CREDIT AND SECURITY AGREEMENT

THIS CREDIT AND SECURITY AGREEMENT (this “Agreement”) is made as of December 29, 2005 between TVI CORPORATION, a Maryland corporation (“TVI”), CAPA MANUFACTURING CORP., a Maryland corporation, SAFETY TECH INTERNATIONAL, INC., a Maryland corporation and TVI AIR SHELTERS, LLC, a Maryland limited liability company (together with TVI, collectively, the “Borrowers”) and BANK OF AMERICA, N.A., a national banking association (the “Lender”).

RECITALS

The Borrowers have requested that the Lender make available to the Borrowers a revolving credit facility pursuant to which the Lender will make advances to the Borrowers from time to time in an aggregate principal amount not to exceed Ten Million Dollars ($10,000,000) at any one time outstanding. The Lender has agreed to make such credit facility available to the Borrowers, subject to and upon the terms and conditions hereinafter set forth.

AGREEMENTS

SECTION 1. The Credit Facilities.

1.1. Definitions. All capitalized terms used herein and not otherwise defined shall have the following meanings:

“Account Debtor” means any Person who may become obligated to either of the Borrowers under, with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a Payment Intangible).

“Accounts” has the meaning given to such term in the UCC.

“Additional Financing Documents” has the meaning given to such term in Section 1.3(e) hereof.

“Advances” means advances made by the Lender to the Borrowers under the Revolving Credit Facility.

“Applicable Margin” shall mean the margin added to the LIBOR Rate to obtain the interest rate for the outstanding Advances under the Revolving Credit Facilities set forth in the Table attached hereto as Attachment I. The Applicable Margin during any calendar quarter shall be set based upon the Borrowers’ ratio of Total Funded Debt to EBITDA as of the last day of the immediately prior calendar quarter, and the Applicable Margin shall be determined and adjusted quarterly on the first day of the first month after the date by which the annual and quarterly compliance certificates and related financial statements and information are required in accordance with the provisions of this Agreement.

“AutoBorrow Service Agreement” means any AutoBorrow Service Agreement in effect from time to time between the Borrowers and the Lender.

“Board” means the Board of Governors of the Federal Reserve System of the United States.

“Borrowers” shall mean, collectively, TVI, CAPA Manufacturing Corp., a Maryland corporation, Safety Tech International, Inc., a Maryland corporation and TVI Air Shelters, LLC, a Maryland limited liability company.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the State of Maryland are authorized to close.

“Capital Lease” means any lease that has been or should be capitalized on the books of the Borrowers in accordance with GAAP.

“Chattel Paper” has the meaning given to such term in the UCC.

“Claim” has the meaning given to such term in Section 7.9(a).

“Closing Date” means the date on which all conditions to closing as set forth in Section 2.1 of this Agreement are satisfied.

“Collateral” means all of the Borrowers’ personal property, both now owned and hereafter acquired, including, insofar as any of the following are applicable, but not limited to:

(a) Accounts, including, without limitation, all collateral security of any kind given to any Account Debtor or other Person with respect to any Account;

(b) As-extracted collateral;

(c) Chattel Paper;

(d) Commodity Accounts;

(e) Commodity Contracts;

(f) Deposit Accounts;

(g) Documents;

(h) Equipment;

(i) Farm Products;

(j) Fixtures;

(k) General Intangibles, including, but not limited to, (i) all patents, and all unpatented or unpatentable inventions; (ii) all trademarks, service marks, and trade names; (iii) all copyrights and literary rights; (iv) all computer software programs; (v) all mask works of semiconductor chip products; (vi) all trade secrets, proprietary information, customer lists, manufacturing, engineering and production plans, drawings, specifications, processes and systems;

(l) Goods, and all accessions thereto and goods with which the Goods are commingled;

(m) Health Care Insurance Receivables;

(n) Instruments;

(o) Inventory;

(p) Investment Property;

(q) Letter-of-Credit Rights;

(r) Payment Intangibles;

(s) Promissory Notes;

(t) Software;

(u) The commercial tort claims specifically described on Schedule 1.1, if any.

(v) Letters patent, applications for letters patent, trademarks, applications for trademarks, service marks, trade names, and copyrights, whether registered or unregistered, together with all royalties, fees, and other payments made or to be made with respect to any of the foregoing, and all rights, interests, claims, and demands that the Borrowers have or may have and existing and future profits and damages for past or future infringement thereof; and

(w) all proceeds and products of any of the foregoing.

“Collateral Account” has the meaning set forth in Section 7.5 of this Agreement.

“Collection Account” means the collection account established pursuant to this Agreement.

“Commodity Accounts” has the meaning given to such term in the UCC.

“Commodity Contracts” has the meaning given to such term in the UCC.

“Credit Facilities” means the Revolving Credit Facility, as amended, modified, or supplemented from time to time.

“Default” has the meaning set forth in Section 6 of this Agreement.

“Default Rate” means a floating and fluctuating per annum rate of interest calculated by adding the sum of four percent (4.0%) to the rate of interest otherwise then in effect.

“Deposit Accounts” has the meaning given to such term in the UCC.

“Documents” has the meaning given to such term in the UCC.

“Earn-Out Obligations” means the deferred purchase price payments due from time to time to Persons or their businesses acquired by the Borrowers upon satisfaction of certain performance or other contingencies.

“EBITDA” shall mean (a) net income, after income tax, (b) less income or plus loss from discontinued operations and extraordinary items, (c) plus interest expense on all operations, (d) plus taxes, (e) plus depreciation, (f) plus depletion, and (g) plus amortization (and other non-cash charges), calculated on a trailing twelve-month basis.

“Enforcement Costs” means all reasonable expenses, charges, recordation or other taxes, costs and fees (including reasonable attorneys’ fees and expenses) of any nature whatsoever advanced, paid or incurred by or on behalf of the Lender in connection with (a) the collection or enforcement of this Agreement or any of the other Financing Documents, (b) the creation, perfection, maintenance, preservation, defense, protection, realization upon, disposition, collection, sale or enforcement of all or any part of the Collateral, and (c) the exercise by the Lender of any rights or remedies available to it under the provisions of this Agreement, or any of the other Financing Documents.

“Environmental Laws” means all laws, statutes, rules, regulations or ordinances which relate to Hazardous Materials and/or the protection of the environment or human health.

“Equipment” means all of the Borrowers’ equipment, as such term is defined by the Uniform Commercial Code, together with all additions, parts, fittings, accessories, special tools, attachments, and accessions now and hereafter affixed thereto and/or used in connection therewith, and all replacements thereof and substitutions therefor.

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

“Event of Default” has the meaning set forth in Section 6 of this Agreement.

“Farm Products” has the meaning given to such term in the UCC.

“Field Exam” has the meaning set forth in Section 4.9 of this Agreement.

“Financing Documents” means, collectively, this Agreement, the Note, any Hedge Agreement, any Letter of Credit Agreement, any Additional Financing Documents and any other instrument, document or agreement now or hereafter executed, delivered or furnished by the Borrowers or any other person evidencing, guaranteeing, securing or in connection with this Agreement or all or any part of the Credit Facilities.

“Fixtures” has the meaning given to such term in the UCC.

“GAAP” means generally accepted accounting principles in the United States of America.

“General Intangibles” means all of the Borrowers’ general intangibles, as such meaning is defined by the Uniform Commercial Code, together with all of the Borrowers’ letters patent, applications for letters patent, trademarks, applications for trademarks, service marks, trade names and copyrights, whether registered or unregistered, together with all goodwill of the business of the Borrowers relating thereto, any and all reissues, extensions, divisions or continuations thereof, all royalties, fees and other payments made or to be made to the Borrowers with respect thereto, and all rights, interests, claims and demands that the Borrowers have or may have in existing and future profits and damages for past and future infringements thereof.

“Goods” has the meaning given to such term in the UCC.

“Government Contract” means (i) any contract entered into by the Borrowers with the United States government or any state or local government or any division, department, or instrumentality thereof and (ii) any contract entered into between the Borrowers and any “prime” contractor providing goods and services to the United States government or any state or local government or any division, department, or instrumentality thereof.

“Hazardous Materials” shall mean hazardous wastes, hazardous substances, toxic chemicals and substances, oil and petroleum products and their by-products, radon, asbestos, pollutants or contaminants.

“Hedge Agreement” means any agreement between the Borrowers and the Lender or any affiliate of the Lender now existing or hereafter entered into, which provides for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross-currency rate swap, currency option, or any similar transaction or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging the Borrowers’ exposure to fluctuations in interest or exchange rates, loan, credit, exchange, security or currency valuations or commodity prices.

“Health Care Insurance Receivables “ shall have the meaning given to such term in the UCC.

“Instruments” has the meaning given to such term in the UCC.

“Interest Payment Date” has the meaning set forth in Section 1.2(d) of this Agreement.

“Interest Rate Change Date” shall mean the first day of each one-month period; provided, however, that if any such day is not a Business Day, at Lender’s option, the Interest Rate Change Date shall be the next succeeding Business Day.

“Inventory” means all of the Borrowers’ now owned and hereafter acquired inventory as such term is defined by the Uniform Commercial Code, wherever located and however constituted, including, without limitation, raw materials, work and goods in process, finished goods, goods or inventory returned or repossessed or stopped in transit, supplies, packaging, shipping and other materials, all other goods, merchandise and personal property used or consumed in the business of the Borrowers, and all documents and documents of title relating to any of the foregoing.

“Investment Property” has the meaning given to such term in the UCC.

“Letter of Credit” means any letter of credit issued by the Lender for the account of the Borrowers under the Revolving Credit Facility.

“Letter of Credit Account” has the meaning set forth in Section 1.2(l) of this Agreement.

“Letter of Credit Agreement” means an Application and Agreement for Letter of Credit on the Lender’s standard form, as such form may be revised by the Lender in its discretion at any time and from time to time hereafter.

“Letter of Credit Exposure” means at any time the sum of (x) the undrawn amount of all Letters of Credit outstanding at such time, and (y) all Letter of Credit Obligations outstanding at such time.

“Letter of Credit Fee” has the meaning set forth in Section 1.2(k) of this Agreement.

“Letter of Credit Obligations” means, collectively, (i) the amount of each draft drawn under or purporting to be drawn under a Letter of Credit, (ii) the amount of any and all charges, reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) which the Lender may charge, pay or incur for drawings under a Letter of Credit, transfers of a Letter of Credit, amendments to and extensions of a Letter of Credit and for the prosecution or defense of any action arising out of or in connection with any Letter of Credit, including, without limitation, any action to enjoin full or partial payment of any draft drawn under or purporting to be drawn under any Letter of Credit, including, but not limited to, Letter of Credit Fees, (iii) interest on all amounts payable under (i) and (ii) above from the date due until paid in full at a per annum rate of interest equal at all times to the Default Rate.

“Letter of Credit Rights” has the meaning given to such term in the UCC.

“Lender” shall mean Bank of America, N.A., a national banking association.

“LIBOR-Based Rate” means a per annum rate of interest equal at all times to the sum of the LIBOR Rate plus the Applicable Margin. The LIBOR-Based Rate shall change immediately and contemporaneously with each change in the LIBOR Rate.

“LIBOR Rate” means, at any time, the rate of interest equal to the rate per annum (rounded upwards to the nearest 1/100 of one percent) equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Lender from time to time) as determined for each Interest Rate Change Date at approximately 11:00 a.m. London time two (2) London Banking Days prior to the Interest Rate Change Date, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term of one month, as adjusted from time to time in the Lender’s sole discretion for Reserve Requirements, deposit insurance assessment rates and other regulatory costs. If such rate is not available at such time for any reason, then the rate for that interest period will be the Prime-based Rate.

“London Banking Day” means a day on which the Lender’s London Banking Center is open for business and dealing in offshore dollars.

“Note” means the Revolving Loan Note of even date herewith from the Borrowers made payable to the order of the Lender.

“Obligations” shall mean all present and future indebtedness, liabilities and obligations of any kind and nature whatsoever of the Borrowers to the Lender both now existing and hereafter arising under, as a result of, on account of, or in connection with, this Agreement and any and all amendments, restatements, supplements and modifications hereof made at any time and from time to time hereafter, the Note, any and all extensions, renewals or replacements thereof, amendments thereto and restatements or modifications thereof made at any time or from time to

time hereafter, the Letter of Credit Agreements, or the other Financing Documents, including, without limitation, future advances, principal, interest, indemnities, fees, late charges, Letter of Credit Exposure, Enforcement Costs and other costs and expenses whether direct, contingent, joint, several, matured or unmatured, and the indebtedness owed under any Hedge Agreement.

“Payment Intangibles” has the meaning given to such term in the UCC.

“PBGC” means the Pension Benefit Guaranty Corporation or its successor entity.

“Permitted Acquisition” means the acquisition or purchase of, or investment in, any Person, any operating division or unit of any Person, or the capital stock or operational assets of any Person or the combination with any Person by any Borrower or any Subsidiary (each individually, a “Subject Transaction”) regardless of the structure of the Subject Transaction, provided that such Subject Transaction is either (i) less than $3,000,000 per transaction or (ii) the Subject Transaction is in an amount greater than $3,000,000 and the Borrowers can provide evidence to the Lender’s reasonable satisfaction that the Person that is the target of such Subject Transaction has demonstrated two (2) consecutive calendar quarters of positive cash flow.

“Permitted Liens” has the meaning set forth in Section 5.3 of this Agreement.

“Person” means any natural person, individual, company, corporation, partnership, joint venture, unincorporated association, government or political subdivision or agency thereof, or any other entity of whatever nature.

“Plan” means any pension, employee benefit, multi-employer, profit sharing, savings, stock bonus or other deferred compensation plan.

“Prime-Based Rate” means a floating and fluctuating per annum rate of interest equal at all times to the Prime Rate.

“Prime Rate” shall mean the floating and fluctuating per annum rate of interest of the Lender at any time and from time to time established and declared by the Lender in its sole and absolute discretion as its prime rate, and does not necessarily represent the lowest rate of interest charged by the Lender to borrowers.

“Promissory Notes” has the meaning given to such term in the UCC.

“Reserve Requirements” means the maximum rate (expressed as a decimal) at which reserves (including any marginal, supplemental, emergency or other reserves) are required to be maintained under Regulation D of the Federal Reserve Board or otherwise by any statute or regulation applicable to the class of commercial banks which includes the Lender.

“Revolving Credit Account” means the loan account maintained by the Lender with respect to advances, repayments and prepayments of Advances, the accrual and payment of interest on Advances and all other amounts and charges owing to the Lender in connection with Advances.

“Revolving Credit Amount” means the amount of Ten Million Dollars ($10,000,000).

“Revolving Credit Expiration Date” means December 31, 2008, or such later date as to which the Lender shall, in its discretion, agree to extend the Revolving Credit Expiration Date.

“Revolving Credit Exposure” means, at any time, the sum of the aggregate principal amount of outstanding Advances plus the Letter of Credit Exposure.

“Revolving Credit Facility” means the revolving credit facility established pursuant to Section 1.2 hereof in a maximum principal amount at any one time outstanding equal to the Revolving Credit Amount, made available to the Borrowers pursuant to this Agreement.

“Software” has the meaning given to such term in the UCC.

“Subordinated Debt” means debt of the Borrowers, the payment of which subordinated to the repayment of the Advances on terms satisfactory to the Lender in its sole discretion.

“Subsidiary” means an entity of which the Borrowers directly or indirectly owns or controls securities or other ownership interests representing more than 50% of the ordinary voting power thereof.

“Subsidiary Guaranty” means each guaranty agreement executed and delivered by each Subsidiary of the Borrowers to the Lender, in form and substance reasonably satisfactory to the Lender.

“Subsidiary Security Agreement” means each security agreement executed and delivered by each Subsidiary of the Borrowers to the Lender, in form and substance reasonably satisfactory to the Lender.

“Total Funded Debt” shall mean all outstanding liabilities for borrowed money and other interest-bearing liabilities, including current and long-term debt, Capital Leases and Subordinated Debt, less the non-current portion of Subordinated Debt. For the avoidance of doubt, Total Funded Debt does not include Earn-Out Obligations, unless then earned and due.

“Unused Commitment Fee” shall mean the fee paid by the Borrowers to the Lender pursuant to Section 1.2(e).

“Unused Commitment Fee Percentage” shall mean the percentage upon which the Unused Commitment Fee shall be calculated, as determined in accordance with Attachment I hereto. The Unused Commitment Fee Percentage earned during any calendar quarter shall be determined based upon the Borrowers’ ratio of Total Funded Debt to EBITDA as of the last day of the immediately prior calendar quarter. The Unused Commitment Fee Percentage shall be determined and adjusted quarterly on the first day of the first month after the date by which the annual and quarterly compliance certificates and related financial statements and information are required in accordance with the provisions of this Agreement.

1.2. Revolving Credit Facility.

(a) Advances and Letters of Credit. Subject to and upon the provisions of this Agreement and relying upon the representations and warranties herein set forth, the Lender

agrees at any time and from time to time to make Advances to the Borrowers and issue Letters of Credit for the account of the Borrowers from the date hereof until the earlier of the Revolving Credit Expiration Date or the date on which this Revolving Credit Facility is terminated pursuant to Section 7 hereof, in an aggregate principal amount at any time outstanding not to exceed the Revolving Credit Amount; provided however, that in no event shall the total Letter of Credit Exposure exceed Two Million Dollars ($2,000,000) at any one time.

In no event shall the Lender be obligated to make an Advance or issue a Letter of Credit hereunder if a Default shall have occurred and be continuing. Unless sooner terminated pursuant to other provisions of this Agreement, this Revolving Credit Facility and the obligation of the Lender to make Advances and issue Letters of Credit hereunder shall automatically terminate on the Revolving Credit Expiration Date without further action by, or notice of any kind from, the Lender. Within the limitations set forth herein and subject to the provisions of this Agreement, the Borrowers may borrow, repay and reborrow under this Revolving Credit Facility. The fact that there may be no Advances or Letters of Credit outstanding at any particular time shall not affect the continuing validity of this Agreement.

(b) Use of Proceeds of Advances. Each Advance shall be advanced by the Lender not later than the Business Day following the day (which shall be a Business Day) of the Borrowers’ request therefor. The proceeds of each Advance may be deposited by the Lender in the Borrowers’ demand deposit account with the Lender. The proceeds of the Advances shall be used solely for working capital, for acquisitions permitted by the terms of this Agreement, and for other lawful purposes.

(c) Liability of Lender. Lender shall in no event be responsible or liable to any person other than Borrowers for the disbursement of or failure to disburse Advances or any part thereof, and no other party shall have any right or claim against Lender under this Agreement or the other Financing Documents.

(d) Interest on Advances; Repayment of Advances. Except for any period during which an Event of Default shall have occurred and be continuing, the Borrowers shall pay interest (calculated on a daily basis) on the unpaid principal balance of the Advances until maturity (whether by acceleration, extension or otherwise) at a per annum rate of interest equal at all times to the LIBOR-Based Rate in effect from time to time.

After maturity, or during any period in which an Event of Default exists and remains continuing, the unpaid principal balance of the Advances shall bear interest at a rate equal to the Default Rate.

Notwithstanding any other provision of this Agreement, if the Lender determines in good faith (which determination shall be conclusive) (i) that any applicable law, rule, or regulation, or any change in the interpretation of any such law, rule, or regulation shall make it unlawful or impossible for the Lender to charge or collect interest at the LIBOR-Based Rate, or (ii) that quotations of interest rates for the relevant deposits referred to in the definition of the LIBOR-Based Rate are not being provided in the relevant amounts or for the relevant maturities, then upon notice from the Lender to the Borrowers, the entire outstanding principal balance of the Revolving Credit Facility shall bear interest at the Prime-Based Rate.

Until the maturity of the Revolving Credit Facility, all accrued and unpaid interest on all Advances shall be paid monthly on the first day of each month (each, an “Interest Payment Date”).

If not sooner paid, the entire outstanding principal balance of the Advances, together with all accrued and unpaid interest thereon, shall be due and payable on the Revolving Credit Expiration Date.

(e) Unused Commitment Fee. During the period from the date hereof until the earlier of the Revolving Credit Expiration Date or the date on which the Revolving Credit Facility is terminated pursuant to the provisions hereof, the Borrowers shall pay to the Lender an availability fee in a per annum amount equal to the Unused Commitment Fee Percentage times the average daily unused portion of the Revolving Credit Amount. Such availability fee shall commence to accrue on the date hereof and shall be due and payable by the Borrowers quarterly, in arrears, commencing on March 31, 2006 and on the last Business Day of each third month thereafter, and on the earlier of the Revolving Credit Expiration Date or on the date on which the Revolving Credit Facility is terminated pursuant to Section 7 hereof.

(f) Note; Revolving Credit Account. The Borrowers’ obligation to pay the Advances with interest shall be evidenced by the Note. The Lender will maintain the Revolving Credit Account with respect to advances, repayments and prepayments of Advances, the accrual and payment of interest on Advances and all other amounts and charges owing to the Lender in connection with Advances. Except for demonstrable error, the Revolving Credit Account shall be conclusive as to all amounts owing by the Borrowers to the Lender in connection with and on account of Advances.

(g) Notwithstanding anything contained herein to the contrary, so long as the Borrowers opt to use the Lender’s “AutoBorrow” program and have executed and delivered to the Lender an AutoBorrow Service Agreement (which AutoBorrow Service Agreement remains in full force and effect), all Advances to be made hereunder shall be made in accordance with, and all interest accrued on such Advances and all repayments of such Advances shall be payable at the times and in the manner provided for in, the AutoBorrow Service Agreement. To the extent that any of the provisions of Section 1.2(a) through 1.2(g) hereof are inconsistent with provisions of the AutoBorrow Service Agreement, the provisions of the AutoBorrow Service Agreement shall govern. Any Advances made to the Borrowers under the AutoBorrow Service Agreement shall nonetheless be deemed to be an Advance hereunder, subject to all other terms hereof.

(h) Voluntary Prepayments; Voluntary Termination. The Borrowers may prepay any Advance in whole or in part, from time to time without premium or penalty. Any permitted prepayment need not be accompanied by payment of interest on the amount prepaid except that any prepayment of Advances which constitutes a final payment of all Advances shall be accompanied by payment of all interest thereon accrued through the date of prepayment.

(i) Terms of Letters of Credit. Each Letter of Credit shall (i) be a commercial Letter of Credit or a standby Letter of Credit, (ii) be opened pursuant to a Letter of Credit Agreement duly executed and delivered to the Lender by the Borrowers prior to the issuance of such Letter of Credit, (iii) expire not later than six (6) months after the Revolving Credit Expiration Date (unless such are secured by cash or cash-equivalent collateral satisfactory to the Lender in the Lender’s sole discretion) provided, however, that if the Revolving Credit Facility is not renewed or extended, the Borrower shall provide cash security for all outstanding Letters of Credit scheduled to expire after the Revolving Credit Expiration date, not later than fifteen (15) days prior to the Revolving Credit Expiration Date, (iv) be in an amount not less than $10,000, (v) be issued in the ordinary course of the Borrowers’ business, and (vi) be issued in accordance with the Lender’s then current practices relating to the issuance of letters of credit. All powers, right, remedies and provisions set forth in any Letter of Credit Agreement shall be in addition to those set forth herein. In the event of any conflict between the provisions of this Agreement and the provisions of any Letter of Credit Agreement, the provisions of this Agreement shall prevail and control unless expressly provided otherwise herein or in the Letter of Credit Agreement.

(j) Procedures for Letters of Credit. The Borrowers shall give the Lender written notice of its request for a Letter of Credit at least three (3) Business Days prior to the date on which the Letter of Credit is to be opened by delivering to the Lender a duly executed Letter of Credit Agreement in form and content acceptable to the Lender setting forth (i) the face amount of the Letter of Credit, (ii) the name and address of the beneficiary of the Letter of Credit, (iii) whether the Letter of Credit is irrevocable or revocable, (iv) whether the Letter of Credit requested is a standby or commercial Letter of Credit, (v) the date the Letter of Credit is to be opened and the date the Letter of Credit is to expire, (vi) the purpose of the Letter of Credit, (vii) the terms and conditions for any draws under the Letter of Credit, and (viii) such other information as the Lender may reasonably deem to be necessary or desirable.

(k) Letter of Credit Fees. With respect to each Letter of Credit issued hereunder, the Borrowers shall pay to the Lender a letter of credit fee (the “Letter of Credit Fee”) in an amount per annum set forth in the table attached hereto as Attachment I, payable quarterly in advance, plus the Lender’s then standard fee for the issuance, negotiation, processing and administration of letters of credit of the same type as the Letter of Credit. The amount of the Letter of Credit Fee payable per annum with respect to any Letter of Credit shall be a percentage of the face amount of such Letter of Credit, calculated on the basis of the table included as Attachment I hereto, based upon the Borrowers’ ratio of Total Funded Debt to EBITDA as of the end of the calendar quarter immediately preceding the date of calculation.

(l) Agreement to Pay Letter of Credit Obligations. The Borrowers shall pay to the Lender the Letter of Credit Obligations when due; provided, however, that (a) so long as the Borrowers have availability under the Revolving Credit Facility, the Lender may, and is hereby authorized to, make Advances to itself to pay when due any or all Letter of Credit Obligations incurred in connection with Letters of Credit. The Lender may maintain on its books a letter of credit account (the “Letter of Credit Account”) with respect to the Letter of Credit Obligations paid and payable from time to time hereunder. Except for demonstrable error, the Letter of Credit Account shall be conclusive as to all amounts owing by the Borrowers to the

Lender in connection with and on account of the Letter of Credit Obligations. From the date due until paid in full, all Letter of Credit Obligations shall bear interest at the rate then applicable to Advances.

(m) Agreement to Pay Absolute. The obligation of the Borrowers to pay Letter of Credit Obligations set forth above shall be absolute and unconditional and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, (ii) the existence of any claim, setoff, defense or other right which the Borrowers may at any time have against the beneficiary under any Letter of Credit or the Lender, (iii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue provided that payment by the Lender under such Letter of Credit against presentation of such draft shall not have constituted gross negligence or willful misconduct, and (v) any other events or circumstances whatsoever, whether or not similar to any of the foregoing provided that the payment by the Lender under the Letter of Credit shall not have constituted gross negligence or willful misconduct of the Lender.

(n) Commitment Fee. In consideration for the agreements of the Lender as set forth herein, the Borrowers agree to pay to the Lender at closing the balance remaining of its commitment fee of twenty-five (25) basis points times the Revolving Credit Amount, which fee shall be deemed earned upon its receipt by the Lender.

1.3. Additional Provisions.

(a) Interest Calculation. Other than calculations with respect to the Prime Rate (which shall be computed on the basis of actual days elapsed in a 365/366 day year), all interest and fees payable under the provisions of this Agreement or the Note shall be computed on the basis of actual number of days elapsed over a year of 360 days.

(b) Late Charges. Except for principal, interest and other charges due upon acceleration of the Obligations, if the Borrowers fails to make any payment of principal, interest, prepayments, fees or any other amount becoming due pursuant to the provisions of this Agreement, the Note or any other Financing Document within fifteen (15) days after the date due and payable, the Borrowers shall pay to the Lender a late charge equal to five percent (5%) of the amount of such payment. Such 15-day period shall not be construed in any way to extend the due date of any such payment. Late charges are imposed for the purpose of defraying the Lender’s expenses incident to the handling of delinquent payments, and are in addition to, and not in lieu of, the exercise by the Lender of any rights and remedies hereunder or under applicable laws and any fees and expenses of any agents or attorneys which the Lender may employ upon the occurrence of an Event of Default.

(c) Payments. Whenever any payment to be made by the Borrowers under the provisions of this Agreement, the Note, the Letter of Credit Agreements or any other Financing Document is due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, in the case of any payment which bears interest, such extension of time shall be included in computing interest on such payment. All payments of principal, interest, fees or other amounts to be made by the Borrowers under the provisions of

this Agreement or the Note shall be paid without set-off or counterclaim to the Lender at the Lender’s office at 1101 Wooton Parkway, 4^th Floor, Rockville, Maryland 20852, or to such other place as the Lender shall direct in writing, in lawful money of the United States of America in immediately available funds.

(d) Interest On Overdue Amounts. If the principal of or interest on, the Note or any other amount required to be paid to the Lender hereunder or under the Note or any of the other Financing Documents is not paid within fifteen (15) days after the date when the same becomes due and payable, whether by acceleration or otherwise, the Borrowers shall on demand from time to time pay to the Lender interest on such principal, interest or other amount from the date due until the date of payment (after as well as before any judgment) at a rate per annum equal to the Default Rate.

(e) Collateral and Subsidiary Guarantees. (1) In order to secure the full and punctual payment of the Obligations in accordance with the terms thereof, and to secure the performance of this Agreement and the other Financing Documents, the Borrowers hereby pledge and assign to the Lender, and grant to the Lender a continuing lien and security interest in and to the Collateral, both now owned and existing and hereafter created, acquired and arising and regardless of where located.

(2) Promptly, following the acquisition or creation thereof and in any event within thirty (30) days after a request with respect thereto, the Borrowers shall cause each of the Borrowers’ Subsidiaries formed after the execution of this Agreement to become party to, and to execute and deliver, a Subsidiary Guaranty Agreement, guarantying to the Lender the prompt payment, when and as due, of all Obligations of the Borrowers under the Financing Documents, including all obligations under any Hedge Agreements.

(3) Promptly, following the acquisition or creation thereof and in any event within thirty (30) days after a request with respect thereto, the Borrowers shall cause such Subsidiary to grant to the Lender a first priority lien on all property (tangible and intangible) of such Subsidiary, including, without limitation, all of the capital stock of any of its domestic subsidiaries and 65% of the stock of any of its foreign subsidiaries, upon terms similar to those set forth in the Financing Documents and otherwise reasonably satisfactory in form and substance to the Lender. The Borrowers shall cause such Subsidiary, at its own expense, to become a party to a Subsidiary Security Agreement and any other Financing Document and to execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record in any appropriate governmental office, any document or instrument reasonably deemed by the Lender to be necessary or desirable for the creation and perfection of the foregoing liens (including legal opinion, consents, corporate documents and any additional or substitute security agreements or mortgages). The Borrowers will cause such Subsidiary to take all actions requested by the Lender (including, without limitation, the filing of UCC-1’s) in connection with the granting of such security interests.

(4) The security interests required to be granted pursuant to this Section shall be granted pursuant to such security documentation as is reasonably satisfactory in form and substance to Lender (the “Additional Financing Documents”) and shall constitute valid and

enforceable perfected security interests prior to the rights of all third Persons and subject to no other Liens except Liens permitted hereunder. The Additional Financing Documents and other instruments related thereto shall be duly recorded or filed in such manner and in such places and at such times as are required by law to establish, perfect, preserve and protect the Liens, in favor of the Lender, granted pursuant to the Additional Financing Documents and, all taxes, fees and other charges payable in connection therewith shall be paid in full by the Borrowers. At the time of the execution and delivery of Additional Financing Documents, the Borrowers shall cause to be delivered to Lender such agreements, opinions of counsel, and other related documents as may be reasonably requested by the Lender to assure it that this Section has been complied with.

(5) Automatic Debit. To ensure timely payment of all interest and other sums due hereunder, the Borrowers hereby authorizes and instructs the Lender to either (i) debit, on the due date thereof, demand deposit account no. 00393577 3043 maintained at the Lender for the amount then due, (ii) if the amount in the foregoing demand deposit account is insufficient to satisfy the amount then due, or (iii) if the Borrowers so instruct the Lender, cause an Advance to be made sufficient to pay the amount then due. This authorization shall not affect the obligation of the Borrowers to pay such sums when due, without notice, if there are insufficient funds available to make any payment in full on the due date thereof, or if the automatic debit feature is at any time terminated by the Lender in its discretion.

1.4. The Borrowers’ Representative. Each of the Borrowers hereby represents and warrants to the Lender that each of them will derive benefits, directly and indirectly, from the proceeds of each Advance and Letter of Credit, both in its separate capacity and as a member of the integrated business to which each of the Borrowers belong. For administrative convenience, TVI is hereby irrevocably appointed by each of the Borrowers as agent for each of the Borrowers for the purpose of requesting Advances and Letters of Credit hereunder from the Lender, receiving the proceeds of Advances and disbursing the proceeds of Advances among the Borrowers. In its capacity as such agent, TVI shall have the power and authority through its authorized officer or officers to (i) endorse any check for the proceeds of any Advance for and on behalf of each of the Borrowers and in the name of each of the Borrowers, and (ii) instruct the Lender to credit the proceeds of any Advance directly to a banking account of any of the Borrowers. By reason of the foregoing, the Lender is hereby irrevocably authorized by each of the Borrowers to make Advances to the Borrowers and issue Letters of Credit for the account of the Borrowers pursuant to this Agreement upon the request of any one of the persons who is authorized to do so under the provisions of any applicable corporate resolutions of TVI. The Lender assumes no responsibility or liability for any errors, mistakes and/or discrepancies in any oral, telephonic, written or other transmissions of any instructions, orders, requests and confirmations between the Lender and any one or more of the Borrowers in connection with any Advance, Letter of Credit or other transaction pursuant to the provisions of this Agreement, except for acts of gross negligence and/or willful misconduct.

SECTION 2. Conditions Precedent.

2.1. Initial Advance or Letter of Credit. The Lender shall not be required to make the initial Advance, or issue the initial Letter of Credit hereunder, whichever occurs first, unless the following conditions precedent have been satisfied in a manner reasonably acceptable to the Lender and its counsel:

(a) Borrowers’ Organizational Documents. The Lender shall have received with respect to the Borrowers: (i) a copy, certified as of a recent date by the Maryland State Department of Assessments and Taxation or other jurisdiction of organization, as applicable, of the Borrowers’ Articles of Incorporation or Articles of Organization, as applicable, as well as a copy of the Borrowers’ bylaws, operating agreements and all amendments thereto, as applicable (ii) a Certificate of Good Standing for each of the Borrowers issued by the Maryland State Department of Assessments and Taxation or other jurisdiction of organization, as applicable, and (iii) a copy, certified to the Lender as true and correct as of the date hereof by the Borrowers, of the resolutions of the Borrowers’ boards of directors or managers, as applicable, authorizing the execution and delivery of this Agreement and the other Financing Documents to which the Borrowers are a party and designating by name and title the officer(s) of the Borrowers who are authorized to sign this Agreement and such other Financing Documents for and on behalf of the Borrowers and to make the borrowings hereunder.

(b) Lists of Locations, Etc. The Borrowers shall have delivered to the Lender a list showing the street address, city or county and state of the Borrowers’ chief executive office and of any other location where the Borrowers conducts or has a place of business or where any of the Collateral is or may be located, which list shall include the names of all landlords (and mortgagees) and be accompanied by true and complete copies of all leases, together with all amendments thereto;

(c) Insurance. The Borrowers shall have delivered to the Lender (or shall have made arrangements for delivery within thirty (30) days of closing) an Accord certificate of insurance reflecting the Borrowers’ property and casualty insurance coverage policy from a well-rated and responsible insurance company insuring the Collateral in amounts reasonably satisfactory to the Lender against loss or damage resulting from fire and other risks insured against by extended coverage, that lists the Lender as loss payee;

(d) Searches. The Lender shall have received the results of a search by an attorney or company reasonably satisfactory to the Lender of the Uniform Commercial Code filings with respect to the Borrowers in their jurisdictions of organization and in which the Borrowers conduct or have a place of business or in which any of the Collateral is or will be located, accompanied by copies of such filings, if any, and evidence reasonably satisfactory to the Lender that any security interest or other lien indicated in any such filing has or will be released or is permitted by the Lender so that the Lender’s security interest in the Collateral will be a perfected first security interest and lien on the Collateral subject only to Permitted Liens and such other matters as the Lender may approve;

(e) Opinions. The Lender shall have received the written opinion of counsel of the Borrowers dated on or around the date of this Agreement, reasonably satisfactory in form and content to the Lender, opining, among other things, that the Borrowers are duly organized,

validly existing, and in good standing, that the Financing Documents executed and delivered by the Borrowers have been duly authorized by all requisite corporate action, and that the Financing Documents executed and delivered by the Borrowers constitute the legal, valid, binding, and enforceable obligations of the Borrowers, enforceable against the Borrowers, as applicable, in accordance with the terms thereof, subject to customary exceptions and limitations reasonably acceptable to the Lender.

(f) Financing Documents. The Lender shall have received each of the Financing Documents required by the Lender to be executed and delivered prior to the making of the initial Advance.

(g) Due Diligence. The Lender shall have received and reviewed such financial information and other due diligence reports as the Lender shall reasonably require.

(h) Operating Account; Etc. The Borrowers shall have established an operating account into which Advances shall be paid, and the Borrowers shall maintain its primary accounts with the Lender.

(i) Additional Documents. The Borrowers shall have furnished in form and content reasonably acceptable to the Lender any additional documents, agreements, certifications, record searches, insurance policies or opinions which the Lender may reasonably deem necessary or desirable.

2.2. All Advances and Letters of Credit. The Lender shall not be required to make any Advances, including the initial Advance, or issue any Letter of Credit, until compliance to the satisfaction of the Lender with all of the following conditions at the time of and with respect to each Advance or Letter of Credit:

(a) Representations and Warranties. No representation or warranty made in or in connection with this Agreement and the other Financing Documents shall be untrue, incorrect or incomplete in any material respect on and as of the date of any Advance or Letter of Credit as if made on such date, except for changes in facts or circumstances arising in the ordinary course of business and which do not constitute a breach of any covenant set forth herein; and

(b) Event of Default or Default. No Event of Default or Default shall have occurred and be continuing.

SECTION 3. Representations and Warranties. The Borrowers represents and warrants to the Lender that, except as specifically set forth on Schedule 3 attached hereto, the following statements are true, correct and complete in all material respects as of the date hereof and as of each date any Advance is to be made or any Letter of Credit is to be issued hereunder, except for changes in facts or circumstances arising in the ordinary course of business and which do not constitute a breach of any covenant set forth herein:

3.1. Authority, Etc. TVI is duly incorporated and in good standing under the laws of Maryland under organizational identification number D00737676. CAPA Manufacturing Corp. is duly incorporated and in good standing under the laws of Maryland under organizational identification number D07907413. Safety Tech International, Inc. is duly incorporated and in good standing under the laws of Maryland under organizational identification number D10721777. TVI Air Shelters, LLC is duly organized and in good standing under the laws of Maryland under organizational identification number W10727758. The Borrowers are qualified to do business in all states where the Borrowers do business, except where the failure to be so qualified would not materially adversely affect the business, operations or financial condition of the Borrower. The Borrowers have the full power and authority to execute, deliver and perform this Agreement and the other Financing Documents to which the Borrowers are a party. Neither such execution, delivery and performance, nor compliance by the Borrowers with the provisions of this Agreement and of the other Financing Documents to which the Borrowers are a party will conflict with or result in a breach or violation of the Borrowers’ articles of incorporation or bylaws, or any judgment, order, regulation, ruling or law to which the Borrowers are subject or any contract or agreement to which the Borrowers are a party or to which the Borrowers’ assets and properties is subject, or constitute a default thereunder. The execution, delivery and performance of this Agreement and all other Financing Documents to which the Borrowers are a party have been duly authorized and approved by all necessary action by the Borrowers and constitute the legal, valid and binding obligations of the Borrowers, enforceable in accordance with their terms except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

3.2. Litigation. Except as specified in Schedule 1.1, there is no litigation or proceeding pending or, to the knowledge of any representative of the Borrowers signing this Agreement on behalf of the Borrowers, specifically threatened in writing, against or affecting the Borrowers which might materially adversely affect the business, financial condition or operations of the Borrowers or the ability of the Borrowers to perform and comply with this Agreement or the other Financing Documents to which the Borrowers are a party.

3.3. Subsidiaries. TVI does not currently have any Subsidiaries other than the Subsidiaries executing this Agreement.

3.4. Financial Condition. The Borrowers have heretofore furnished to the Lender certain financial statements. Such financial statements and all other financial statements and information furnished or to be furnished to the Lender hereunder have been and will be prepared in accordance with generally accepted accounting principles (subject to year-end adjustments and the omission of footnote information) and fairly present in all material respects the financial condition of the Borrowers as of the dates thereof and the results of the operations of the Borrowers for the periods covered thereby. No material adverse change in the business, financial condition or operations of the Borrowers (on an aggregated basis) have occurred since the date of such financial statements. The Borrowers do not have any indebtedness or liabilities that are required to be accrued on financial statements prepared in accordance with GAAP other than that reflected on such financial statements or expressly permitted by the provisions of this Agreement, and accounts payable incurred in the ordinary course of business since the date of such financial statements. The Borrowers are not in default under any obligation for borrowed money.

3.5. Taxes. The Borrowers have filed all federal, state and local income, excise, property and other tax returns which are required to be filed and has paid all taxes as shown on such returns or assessments received (including, without limitation, all F.I.C.A. payments and withholding taxes, if appropriate), except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. No tax liens have been filed and no claims are being asserted with respect to such taxes or assessments.

3.6. Title to Properties and Collateral. The Borrowers have good and marketable title to all of the Borrowers’ assets and properties, including, without limitation, the Collateral, and such assets and properties are subject to no liens, security interests or other encumbrances except for those of the Lender or other Permitted Liens.

3.7. Borrowers’ Name, Business Locations, etc. The correct legal names of the Borrowers are those specified on Schedule 3.7. Except as provided on Schedule 3.7, the Borrowers have conducted business under their legal names since their formation. The Borrowers do not do business under any trade or fictitious names. The chief executive office of the Borrowers and the place where records concerning Accounts and other Collateral are kept are as set forth on Schedule 3.7 hereto, and each other location at which the Borrowers conduct business or keeps any of the Collateral is listed on Schedule 3.7 attached hereto. All Equipment is personalty and is not and will not be affixed to real estate in such a manner as to become a fixture and a part of such real estate except for the Equipment described in Schedule 3.7 attached hereto, if any, which is or will be attached to the real estate described in Schedule 3.7 attached hereto. Such real estate, if any, is owned of record by the person or persons specified in Schedule 3.7 attached hereto.

3.8. Compliance with Laws. (a) To the knowledge of the Borrowers, the Borrowers are not in violation of any applicable federal, state or local law, statute, rule, regulation or ordinance and has not received any notice of, and is not the subject of, any pending investigation or complaint alleging that the Borrowers or the Collateral (or any part thereof) or any other property owned, leased, operated or used by the Borrowers are in violation of any such law, statute, rule, regulation or ordinance, including, without limitation, Environmental Laws, other than violations that will not have a material adverse effect on the business, operations or financial condition of the Borrowers.

(b) To the knowledge of the Borrowers, no Hazardous Materials have been used, located, installed, spilled, treated, released or stored on, under or from any property in or on which the Borrowers conduct their operations except for those which have been handled in a manner not prohibited by applicable Environmental Laws or which will not have a material adverse effect on the business, operations or financial condition of the Borrowers.

3.9. Federal Reserve Board Regulations. The Borrowers are not engaged in the business of extending credit for the purpose of purchasing or carrying “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States (the “Board”) and no part of the proceeds of the Advances will be used for any purpose which entails a violation of Regulations U or X of the Board.

3.10. ERISA. No Plan maintained by the Borrowers or any trade or business group with which the Borrowers are affiliated subject to the requirements of ERISA has been terminated, no lien exists against the Borrowers in favor of the PBGC, and no “reportable event” (as such term is defined in ERISA) has occurred with respect to any such Plan. The Borrowers have not incurred any “accumulated funding deficiency” within the meaning of ERISA or any liability to the PBGC in connection with any Plan. Borrowers do not have any withdrawal or other liability (absolute, contingent or otherwise) with respect to any multi-employer plan as defined by Section 3(37) of ERISA. The Borrowers have complied with in all material respects all provisions of ERISA and with all provisions of any Plan sponsored, maintained by, or contributed to, by the Borrowers.

3.11. Licenses, etc. The Borrowers have obtained and now hold all licenses, permits, franchises, patents, trademarks, copyrights and trade names which are necessary to the conduct of the business of the Borrowers as now conducted free, to the knowledge of the Borrowers, of any conflict with the rights of any other person.

3.12. Labor Matters. Except as disclosed in writing to the Lender, the Borrowers are not subject to any collective bargaining agreements or any agreements, contracts, decrees or orders requiring the Borrowers to recognize, deal with or employ any persons organized as a collective bargaining unit or other form of organized labor. There are no strikes or other material labor disputes pending or, to the knowledge of the Borrowers, threatened against the Borrowers. The Borrowers have complied in all material respects with the Fair Labor Standards Act.

3.13. Accuracy of Information. To the knowledge of the Borrowers, no information, exhibit, report, statement, certificate or document furnished by the Borrowers to the Lender in connection with this Agreement or the other Financing Documents or the negotiation thereof contains any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained herein or therein not misleading.

3.14. No Debarment. The Borrowers are not subject to any pending or threatening debarment proceedings.

3.15 Intellectual Property. Schedule 3.15 to this Agreement is a complete list of all patents, trademark and service mark registrations, copyright registrations, mask work registrations, and all applications therefor, in which the Borrowers have any right, title, or interest, throughout the world. The Borrowers will promptly notify the Lender of any acquisition (by adoption and use, purchase, license or otherwise) of any material patent, trademark or service mark registration, copyright registration, mask work registration, and applications therefor, throughout the world, which are granted or filed or acquired after the date hereof or which are not listed on Schedule 3.15. The Borrowers authorizes the Lender, without notice to the Borrowers, to modify this Agreement by adding same to Schedule 3.15 to include any such Collateral.

3.16. Assignment of Government Payments. Borrowers have the right to assign to the Lender all payments due or to become due under all of Borrowers’ U.S. Government Contracts, if any, and there exists no uncanceled assignment of payment rights under any such Government Contract.

3.17. Government Regulation. The Borrowers are not an “investment company” or an “affiliated person” of or “provider” or “principal underwriter” for an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended. The Borrowers are not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or any other federal or state statute that restricts or limits its ability to incur Indebtedness or to perform its obligation hereunder.

3.18. Controlling Interests; Bank Secrecy Act, Etc. (a) No person who owns a controlling interest in or otherwise controls any Borrower is (i) listed on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury, and/or any similar lists maintained by OFAC pursuant to any statute, execution order, or regulation, or (ii) a Person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation, or any similar executive orders, and (b) the Borrowers are in compliance with all Bank Secrecy Act (“BSA”) laws, regulations, and government guidance on BSA compliance and on the prevention and detection of money laundering violations.

SECTION 4. Affirmative Covenants. The Borrowers covenants and agrees with the Lender that so long as any of the Obligations (or commitments therefor) shall be outstanding:

4.1. Payment of Obligations. The Borrowers shall, and shall cause each Subsidiary to, punctually pay the principal of and interest on the Credit Facilities and the other Obligations, at the times and places, in the manner and in accordance with the terms of this Agreement, the Note, and the other Financing Documents.

4.2. Financial Statements and Other Reports. The Borrowers will be required to maintain at all times a system of accounting established and administered in accordance with sound business practices, and will deliver, or cause to be delivered, to the Lender:

(a) Annual Financial Statements. Within one hundred twenty (120) days of the end of each fiscal year of the Borrowers, the annual consolidated financial statement of TVI (including statements of financial condition, income, profits and loss, cash flows and changes in shareholder’s equity) audited by independent certified public accountants reasonably satisfactory to the Lender, prepared in accordance with GAAP;

(b) Quarterly Financial Statements. Within forty-five (45) days after the end of each calendar quarter, the consolidated balance sheets and income statements of the Borrowers prepared by an authorized financial officer of the Borrowers and showing the financial condition of the Borrowers and its Subsidiaries as of the end of such quarter and the results of operations of the Borrowers and its Subsidiaries from the beginning of the current calendar year of the Borrowers to the end of such quarter;

(c ) Compliance Certificates. Concurrent with the delivery of the financial statements described in Sections (a) and (b) above, a written certification, signed by an authorized financial officer of TVI, to the effect that such officer has no knowledge of the existence of any Defaults under the Financing Documents or if such officer has knowledge of the existence of an Event of Default, a statement as to the nature thereof and the action which the Borrowers proposes to take with respect thereto. Such written certification shall include the calculations made by the Borrowers to determine compliance by the Borrowers with each of the financial covenants set forth herein as of the date of the financial statements delivered therewith;

(d) Contract Backlog Report. Within forty-five (45) days after the end of each quarter, a contract backlog report;

(e) Accounts Receivable Aging. Within forty-five (45) days after the end of each quarter, an aging of the Borrowers’ Accounts, in form and substance reasonably satisfactory to the Lender; and

(f) Other Information. Promptly upon request of the Lender such other information, reports or documents respecting the business, properties, operation or financial condition of the Borrowers as the Lender may at any time and from time to time reasonably request.

4.3. Conduct of Business and Maintenance of Existence. The Borrowers and each Subsidiary shall continue to engage in business of the same general type as now being conducted by the Borrowers, and do and cause to be done all things necessary to maintain and keep in full force and effect its corporate existence in good standing in each jurisdiction in which it conducts business.

4.4. Compliance with Laws.

(a) The Borrowers shall, and shall cause each Subsidiary to, comply in all material respects with all laws, statutes, ordinances, orders, rules or regulations applicable to the Borrowers, any Subsidiary, or the Collateral (or any part thereof) or to any other property owned, leased, operated or used by the Borrowers or any Subsidiary, including, without limitation, Environmental Laws.

(b) Neither the Borrowers nor any Subsidiary will use, locate, install, spill, treat, release or store Hazardous Materials on, under or from any property owned, leased, operated or used by the Borrowers or such Subsidiary unless such Hazardous Materials are handled in a manner not prohibited by applicable Environmental Laws and are handled in a manner and in such quantities that would not constitute a hazard to the environment or human health and safety or subject the Borrowers or any Subsidiary to any prosecution or material liability in connection therewith. The Borrowers will, and will cause each Subsidiary to, dispose of all Hazardous Materials only at facilities and/or with carriers that maintain governmental permits under applicable Environmental Laws. The Borrowers shall, and shall cause each Subsidiary to, promptly, at the cost and expense of the Borrowers, take all action necessary or required by Environmental Laws to remedy or correct any violation of Environmental Laws by the Borrowers or any Subsidiary, the Collateral (or any part thereof) or by any other property owned, leased, used or operated by the Borrowers or any Subsidiary.

(c) If the Lender shall have, in the exercise of good faith, reason to believe at any time or from time to time there are or may be Hazardous Materials affecting the Collateral (or any part thereof) or any other property owned, leased, operated or used by the Borrowers or any Subsidiary in violation of applicable Environmental Laws, the Borrowers, upon the request of the Lender and at the cost and expense of the Borrowers, shall furnish to the Lender an environmental assessment of the Collateral and such other property in such detail and content and by an environmental consultant or engineer acceptable to the Lender. The Borrowers shall provide evidence to the Lender within ten (10) business days of the Lender’s request, that such an assessment will be promptly undertaken and completed.

(d) The Borrowers hereby agree to indemnify and hold the Lender and its employees and agents harmless from and against any and all liability, loss, damage, costs and expenses suffered or incurred by the Lender during or after the term of this Agreement arising out of or resulting from a violation of any Environmental Laws by the Borrowers, any Subsidiary, the Collateral (or any part thereof) and any other property owned, leased, used or operated by the Borrowers or any Subsidiary provided, however that the Borrowers shall not be required to indemnify any party for liability, loss, damage, costs, or expenses arising from such party’s own gross negligence or willful misconduct. The obligations and liabilities of the Borrowers under the foregoing indemnity, together with interest thereon commencing ten (10) days after the date written demand is received by the Borrowers until paid in full at the interest rate then applicable to Advances hereunder, shall be paid by the Borrowers to the Lender upon written demand and shall be a part of the Obligations hereunder. The foregoing indemnity shall survive the payment of all other Obligations and the release of the Collateral.

4.5. Payment of Liabilities and Taxes. The Borrowers shall pay, and shall cause each Subsidiary to pay, when due, all of their indebtedness and liabilities, and pay and discharge promptly all taxes, assessments and governmental charges and levies (including, without limitation, F.I.C.A. payments and withholding taxes) upon the Borrowers or any Subsidiary or upon the Borrowers’ or any Subsidiary’s income, profits or property (including, without limitation, the Collateral), except to the extent the amount or validity thereof is contested in good faith by appropriate proceedings so long as adequate reserves have been set aside therefore, in each case unless the failure to do so involves less than $100,000 in the aggregate.

4.6. Contractual Obligations. The Borrowers shall comply, and shall cause each Subsidiary to comply, with any agreement or undertaking to which the Borrowers or any Subsidiary is a party and maintain in full force and effect all contracts and leases to which the Borrowers or any Subsidiary is or become a party, in each case unless the failure to do so would not have a material adverse effect on the business, operation, properties or financial condition of the Borrowers and its Subsidiaries on an aggregated basis.

4.7. Maintenance of Properties; Collateral. The Borrowers shall, and shall cause each Subsidiary to, do all things necessary to maintain, preserve, protect and keep their properties, including the Collateral, in good repair, working order and condition, and make all necessary and

proper repairs, renewals and replacements so that the Borrowers’ and each Subsidiary’s business may be properly conducted at all times, in each case unless the failure to do so would not have a material adverse effect on the business, operation or financial condition of the Borrowers and its Subsidiaries (on an aggregated basis). The Borrowers shall promptly notify the Lender of any event causing deterioration, loss or depreciation in value of any substantial portion of the Collateral and the amount of such loss or depreciation. The Borrowers and each Subsidiary shall perform, observe, and comply with all of the reasonable terms and provisions to be performed, observed or complied with by them under each contract, agreement or obligation relating to the Collateral. The Lender shall have no duty to, and the Borrowers hereby release the Lender from all claims for loss or damage caused by the failure of the Lender to, collect, protect, preserve or enforce any of the Collateral or preserve rights against account debtors and prior parties to the Collateral, except for acts of gross negligence or willful misconduct.

4.8. Insurance. The Borrowers shall maintain, and shall cause each Subsidiary to maintain, with financially sound, well rated and reputable insurance companies insurance in such amounts and covering such risks as is consistent with sound business practice, and in any event as is ordinarily and customarily carried by (and, as implied, economically available to) companies similarly situated and in the same or similar businesses as the Borrowers. The Borrowers will pay, when due, all premiums on such insurance and will furnish to the Lender, upon request, evidence of payment of such premiums and other information as to the insurance carried by the Borrowers. Such insurance shall include, as applicable and without limitation, (a) comprehensive fire and extended coverage insurance on the physical assets and properties of the Borrowers (including, without limitation, the Collateral) against such risks, with such loss deductible amounts and in such amounts conforming to prudent business practices and in such minimum amounts that the Borrowers will not be deemed a co-insurer under applicable insurance laws, regulations, policies and practices, and (b) public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by the Borrowers, and (c) worker’s compensation insurance (as applicable). Each policy of such insurance covering the Collateral shall contain a provision or endorsement reasonably satisfactory to the Lender naming the Lender as loss payee and providing that (a) such policy may not be canceled or significantly altered and the Lender may not be removed as loss payee without at least thirty days prior written notice to the Lender, and (b) no act or default of the Borrowers or any other person shall affect the right of the Lender to recover under such policy. The Borrowers hereby irrevocably (x) assign and grant to the Lender a security interest in any and all proceeds of each such insurance policy covering the Collateral, and during the continuation of an Event of Default, (y) direct each insurance company to pay all such proceeds directly to the Lender, and (z) constitute and appoint the Lender (and all officers, employees or agents designated by the Lender) as the Borrowers’ true and lawful attorney-in-fact (coupled with an interest) with authority and power on behalf of the Borrowers to make, adjust, settle or compromise all claims under each such insurance policy, to collect and receive all proceeds payable under each such insurance policy and to endorse any check, draft or instrument for such proceeds. Any proceeds of such insurance received by the Lender (less the amount of any reasonable costs and settlement of such losses) shall be held and applied, at the option of the Lender, to the Obligations (whether matured or unmatured) in such manner and at such times as the Lender may determine in its sole discretion or to the restoration or replacement of the damaged or destroyed Collateral upon terms and conditions reasonably satisfactory in all material respects to the Lender.

4.9. Inspection. The Borrowers and each Subsidiary shall permit the Lender, by its representatives and agents, to inspect any of the properties, books and financial records of the Borrowers, to examine and make copies of the books of accounts and other financial records of the Borrowers, and to discuss the affairs, finances and accounts of the Borrowers and its Subsidiaries with, and to be advised as to the same by, the Borrowers and each Subsidiary (or its representatives) at such reasonable times and intervals as the Lender may designate. In connection with the foregoing, the Lender and its representatives and agents shall have the right, upon reasonable notice and during regular working hours, to (a) enter any business premises of the Borrowers or any other premises where the Collateral and the records relating thereto may be located and to audit, appraise, examine and inspect the Collateral and all records related thereto and to make extracts therefrom and copies thereof, and (b) verify under reasonable procedures the validity, amount, quality, quantity, value and condition of, and any other matter relating to, the Collateral, including contacting account debtors or any person possessing any of the Collateral. Without limiting the foregoing, the Borrowers specifically agree that upon the occurrence of an Event of Default the Borrowers will permit the Lender to conduct, at the expense of the Borrowers (not to exceed $15,000 per Field Exam), a field exam to be performed by the Lender’s Asset Based Lending Services Group (or similar enterprise) (each, a “Field Exam”) To the extent that the Lender receives any confidential information from or with respect to the Borrowers, as a result of Field Exams or otherwise, (a) the Lender will not reproduce or distribute any such information, or any notes, interpretations or other documents based in whole or in part upon such information, to non-affiliated parties, other than financial or legal advisors also bound by an obligation of confidentiality, and (b) the Lender will keep permanently confidential all such information, except to the extent that (i) such information ceases to be confidential by reason of its being in the public domain, other than as a result of a disclosure by the Lender or its representatives, or (ii) such information was within the Lender’s possession or becomes available to the Lender on a non-confidential basis from a source other than the Borrowers, or any representative of the Borrowers, or (iii) the Lender is legally required to disclose such information to any tribunal or governmental authority.

4.10. Collection of Accounts. The Borrowers and each Subsidiary shall, subject to the provisions of Section 4.14 hereof, collect its Accounts only in the ordinary course of business, and shall not, except in the ordinary course of its business, without the Lender’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, compromise or adjust the amount of any Account or extend the time for payment of any Account, excepting ordinary course trade discounts and other similar adjustments and compromises.

4.11. Sale of Inventory, etc. The Borrowers and each Subsidiary shall sell its Inventory only in the ordinary course of business, and will not, without the prior written consent of the Lender, consign or otherwise dispose of its Inventory.

4.12. Further Assurances. The Borrowers shall defend the security interest and lien of the Lender on the Collateral against all persons and against all security interests and liens on the Collateral adverse to those of the Lender. The Borrowers will, from time to time, at the expense

of the Borrowers, execute, deliver, acknowledge and cause to be duly filed, recorded or registered any statement, assignment, instrument, paper, agreement or other document and take any other action that from time to time may be necessary or desirable, or that the Lender may reasonably request, in order to create, preserve, continue, perfect, confirm or validate the security interest and lien of the Lender on the Collateral or to enable the Lender to obtain the full benefits of this Agreement or to exercise and enforce any of its rights, powers and remedies hereunder or under applicable laws. The Borrowers shall pay all costs of, and incidental to, the filing, recording or registration of any such document as well as any recordation, transfer or other tax required to be paid in connection with any such filing, recordation or registration. The Borrowers hereby covenant to save harmless and indemnify the Lender from and against any liability resulting from the failure to pay any required documentary stamps, recordation and transfer taxes and recording costs incurred by the Lender in connection with this Agreement or the Collateral which covenant shall survive the termination of this Agreement and the payment of all other Obligations. The Borrowers agree that a carbon, photographic, photostatic or other reproduction of this Agreement or of a financing statement signed by the Borrowers in connection with this Agreement shall be sufficient as a financing statement. If, in the reasonable opinion of the Lender, any Equipment is or may become a part of any real estate owned or leased by the Borrowers, the Borrowers will, upon the request of the Lender, furnish to the Lender in form and content satisfactory to the Lender, a landlord’s waiver by the record owner of such real estate and a mortgagee’s waiver by any person who has a security interest or lien on such real estate which is or may be superior to the security interest and lien of the Lender on such Equipment. If any Collateral is or becomes the subject of any registration certificate, certificate of deposit or negotiable document of title, including any warehouse receipt or bill of lading, the Borrowers shall immediately deliver such document to the Lender, together with any necessary endorsement.

4.13. Notice. The Borrowers shall promptly give written notice to the Lender of (a) the occurrence of any Default or Event of Default or any event, development or circumstance specific to any Borrower which might materially adversely effect the business, operations, properties or financial condition of the Borrowers or any Subsidiary, (b) any litigation instituted or threatened in writing against the Borrowers or any Subsidiary or any judgment against the Borrowers or any Subsidiary where claims against the Borrowers or such Subsidiary exceed $250,000 (in the aggregate) and are not covered in full by insurance (subject to any deductible), (c) any notice of a claim against, or investigation of, the Borrowers, any Subsidiary, the Collateral or any other property owned, leased, operated or used by the Borrowers or any Subsidiary alleging a violation of Environmental Laws or the discovery, use, location, installation, spill, treatment, release or storage of any Hazardous Materials by the Borrowers or any Subsidiary or on, under or from the Collateral (or any part thereof) or any other property owned, leased, used or operated by the Borrowers or any Subsidiary which could result in a breach of the provisions of Section 4.4 hereof, (d) the occurrence of any “reportable event” within the meaning of ERISA or any assertion of liability of the Borrowers or any Subsidiary by the PBGC, (e) notice of any suspension or debarment by any governmental authority, or any termination of any Governmental Contract for default and (f) the opening by the Borrowers of a new place of business.

4.14. Collections.

(a) At any time while an Event of Default shall occur and be continuing, the Borrowers shall notify and direct all account debtors promptly following written request by the Lender to make all payments on or in respect of Accounts and/or the sale or lease of Inventory (other than electronic funds transfers) directly to an account in the name of the Borrowers to be maintained at the Lender (the “Collection Account”). So long as no Event of Default has occurred, the Borrowers may continue to permit electronic payments to be made to the Borrowers’ operating accounts (collectively, the “Operating Accounts”).

(b) At any time while an Event of Default shall be continuing, the Lender may (1) terminate the authority of the Borrowers to receive electronic payments into the Operating Accounts, whereupon all account debtors shall be directed to remit all payments directly to the Collection Account, and (2) terminate the authority of the Borrowers to withdraw funds from the Collection Account whereupon (i) the Collection Account will automatically convert into an account over which the Lender has exclusive dominion, control and power of access and withdrawal, and, for that purpose, the Lender is hereby authorized to take all appropriate actions to block the Borrowers’ access to the Collection Account, including without limiting the generality of the foregoing, denying electronic access and returning unpaid any checks, drafts or other instruments theretofore or thereafter issued by the Borrowers and drawn upon the Collection Account, all without any liability whatsoever on the part of the Lender to the Borrowers or to any other person for having done so, (ii) any cash, checks, drafts or other remittances on or in respect of Accounts and/or the sale or lease of Inventory received by the Borrowers and held in trust for the Lender as above provided shall be immediately delivered to the Lender for deposit to the Collection Account in precisely the form received, except for the addition thereto of the endorsement of the Borrowers where required for collection of any such checks, drafts or other remittances which endorsement the Borrowers agree to make and with respect to such checks, drafts and other remittances the Borrowers waives notice of presentment, protest and non-payment and (iii) the Lender shall have the right at any time and from time to time to apply funds held by it in the Collection Account to the payment of all or any part of the Obligations, whether matured or unmatured, in such order and manner as the Lender may determine in its sole discretion.

4.15. Assignment of Payments Under Certain Government Contracts and Government Accounts. At any time while an Event of Default has occurred and is continuing, and thereafter upon the creation of any Government Contract, if so requested by the Lender, the Borrowers shall execute and deliver to the Lender specific assignments of payments due or to become due with respect to any Government Contracts. The Lender may, in its sole and absolute discretion, from time to time exclude from this requirement contracts that (a) provide for payments to Borrowers of less than $500,000, or (b) are less than six (6) months in duration; provided, however that any such exclusion, if granted, shall not release the Borrowers from the obligation to provide such assignments in the future, at the Lender’s discretion. The separate assignment to the Lender of a right to payment under specific Government Contracts, as contemplated under this Section, shall not be deemed to limit the Lender’s security interest to payments under those particular Government Contracts, but rather the Lender’s security interest, as stated above, shall extend to payments under any and all Government Contracts and proceeds thereof, now or hereafter owned or acquired by Borrowers. Borrowers acknowledge that the Lender will be

irreparably harmed if Borrowers fails to assign payments due or to become due under any Government Contract when required by this Agreement, and that the Lender shall have no adequate remedy at law. Therefore, the Borrowers agree that the Lender shall be entitled, in addition to all other remedies allowed by law or under this Agreement, to injunctive or other equitable relief to compel Borrowers’ compliance with the provisions of this Agreement requiring the Borrowers to assign payments due or to become due under any Government Contract.

4.16. Intellectual Property. The Borrowers will, at their expense, diligently prosecute all patent, trademark or service mark or copyright applications pending on or after the date hereof, if any, will maintain in effect all issued patents and will renew all trademark and service mark registrations, if any, including payment of any and all maintenance and renewal fees relating thereto. The Borrowers will at its expense protect and defend all rights in such Collateral against any claims and demands of all persons other than the Lender and will, at their expense, enforce all rights in such Collateral against any and all infringers of the Collateral.

4.17. Primary Operating Accounts. The Borrowers hereby agree to maintain the primary operating account for the business operations of the Borrowers with the Lender. The Borrowers recognize and agree that the pricing for the Revolving Credit Facility set forth herein is based on the assumption that the Borrowers will so maintain their primary operating accounts with the Lender, and that, in the event that the Borrowers fail to do so, the Lender may, among other things, adjust the applicable interest rate or fees in order to maintain its required rate of return.

SECTION 5. Financial and Negative Covenants. The Borrowers covenant and agree with the Lender that so long as any of the Obligations (or commitments therefor) shall be outstanding:

5.1. Total Funded Debt to EBITDA Ratio. The Borrowers shall not permit their consolidated ratio of Total Funded Debt to EBITDA, on a rolling 4-calendar quarter basis, to be greater than 1.75 to 1.0.

5.2 Indebtedness. The Borrowers shall not, and shall not permit any Subsidiary to, create, incur, assume or permit to exist any indebtedness (including Capital Leases) except (a) indebtedness to the Lender, (b) other indebtedness existing on the date hereof or expressly permitted by the provisions hereof (including the indebtedness arising in connection with “earn-out” obligations in connection with Permitted Acquisitions and any other acquisitions otherwise permitted by this Agreement, as itemized on Schedule 5.2 hereof and supplemented in writing from time to time), (c) indebtedness incurred by the endorsement of negotiable instruments for deposit or collection in the ordinary course of business, and (d) indebtedness incurred in the ordinary course of business which is unsecured and consists of open accounts extended by suppliers on normal trade terms in connection with the purchase of goods and services.

5.3. Liens. The Borrowers shall not, and shall not permit any Subsidiary to, create, incur, assume or permit to exist any lien, security interest or encumbrance of any nature whatsoever on the Borrowers’ or any Subsidiary’s property or assets, both now owned and

hereafter acquired and including, without limitation, the Collateral, except for (a) any lien or security interest now or hereafter securing all or any part of the Obligations, (b) any lien, security interest or encumbrance existing on the date hereof which was immediately prior hereto disclosed to, and approved by, the Lender in writing, (including those created to secure the Subordinated Debt), (c) any lien, security interest or other encumbrance subsequently approved by the Lender in writing after the date hereof, (d) liens for taxes not delinquent or for taxes being diligently contested by Borrowers or its Subsidiary in good faith and for which adequate reserves are maintained, (e) mechanic’s, artisan’s, materialmen’s, vendor’s or other similar liens arising in the ordinary course of business, and (f) any deposit of funds made in the ordinary course of business to secure obligations of the Borrowers or a Subsidiary under workers compensation, social security or similar laws or to secure public or statutory obligations or the performance of bids, tenders, contracts, leases, subleases, surety and appeals bonds and the like, (g) zoning or other similar and customary land use restrictions, (h) duly perfected liens securing purchase money indebtedness not prohibited by this Agreement, including duly perfected liens obtained in favor of lessors of tangible personal property arising under operating leases to the extent such leases are recharacterized as sales and (i) licenses or sub-licenses granted in the ordinary course of business. Any lien, security interest or encumbrance permitted by this subsection is called a “Permitted Lien.”

5.4. Loans and Investments. The Borrowers shall not, and shall not permit any Subsidiary to, make or permit to remain outstanding any loan or advance to, provide any guaranty for, or make or own any investment in, any person except (a) reasonable advances for business expenses of the Borrowers’ or such Subsidiary’s employees that would be reimbursable under the Borrowers’ or such Subsidiary’s existing expense reimbursement policy, (b) investments in existing subsidiaries at least 75% owned, directly or indirectly, by the Borrowers, and new subsidiaries purchased in accordance with the terms hereof (including Permitted Acquisitions), (c) investments in obligations of, or guaranteed by, the United States government or any agency thereof, (d) investments in securities issued by entities having an investment-grade rating (or better) by Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (e) transactions incident to and in connection with Permitted Acquisitions.

5.5. Dividends. Neither the Borrowers nor any Subsidiary shall, without the prior written consent of the Lender, declare or pay dividends on account of any class of stock or membership interests in such Borrower or Subsidiary, or make any distribution of assets to such stockholders or members, whether in cash, assets or obligations of such Borrower or Subsidiary, except for any reimbursement to the members of any limited liability company Borrower for pass through income tax liability of such members.

5.6. Mergers, Acquisitions, Etc. The Borrowers shall not, and shall not permit any Subsidiary to, enter into any merger or consolidation or acquire or purchase all or substantially all of the assets, properties or stock of any other person, other than Permitted Acquisitions, without the Lender’s prior written consent. The Lender will consider providing its prior written consent to transactions other than Permitted Acquisitions after its receipt and review of financial information that is, in the Lender’s discretion, adequate, and includes a consolidating forecast or projection that demonstrates pro forma compliance with all terms and conditions after giving effect to such acquisition. In the latter event, the Lender will endeavor to respond to the

Borrowers’ request to consider such an acquisition as soon as possible and in any event will so respond within twenty (20) days of receiving a complete set of such financial information and projections.

5.7. Sale of Assets and Liquidation. The Borrowers shall not sell, and shall not permit any Subsidiary to, lease or otherwise dispose of, in one transaction or a series of transactions, assets or properties, including, without limitation, the Collateral, in an annual amount in excess of $100,000 other than in the ordinary course of the Borrowers’ business, or take any action to liquidate, dissolve or wind up the Borrowers or any Subsidiary or its business.

5.8. Change of Business. The Borrowers shall not, and shall not permit any Subsidiary to, enter into any business other than its business as of the date of closing, and similar, complementary, or related enterprises.

5.9. Change of Name, Location, Etc. The Borrowers shall not (a) change their legal name, identity or structure, (b) change the location of their chief executive office or its chief place of business, or jurisdiction of incorporation, or (c) change the location where they keeps their records concerning the Collateral, unless the Borrowers shall have given the Lender prior written notice thereof and shall at their cost and expense have executed, delivered, acknowledged, filed, recorded or registered all financing statements and other documents as may be required by the Lender in order to create, perfect, continue, preserve, confirm or validate the security interest and lien of the Lender on the Collateral and their priority; provided, that the Borrowers shall not in any event change the location of any Collateral if such change would cause the security interest and lien of the Lender on the Collateral (or the perfection thereof) to lapse, or if required to be perfected prior to such change, to cease to be perfected.

5.10. Fiscal year. The Borrowers shall not change their fiscal year.

5.11. Affiliates. The Borrowers shall not, and shall not permit any Subsidiary to, enter into or participate in any transaction with an affiliate except (a) on terms and at rates no more favorable than those which would have prevailed in an arm’s length transaction between unrelated third parties or (b) any transactions among any of the Borrowers and its Subsidiaries.

5.12. ERISA. The Borrowers shall not, and shall not permit any Subsidiary to, engage in any “prohibited transaction” (as such term is defined by ERISA), incur any “accumulated funding deficiency” (as such term is defined by ERISA) whether or not waived, or terminate any Plan in a manner which could result in the imposition of a lien on any property of the Borrowers or any Subsidiary pursuant to the provisions of ERISA.

5.13. Sale and Leaseback. The Borrowers shall not, and shall not permit any Subsidiary to, enter into any arrangement whereby Borrowers or any Subsidiary sell or transfer all or a substantial part of its fixed assets then owned by them and thereupon, or within one (1) year thereafter, rents or leases the assets so sold or transferred from the purchaser or transferee (or their respective successors and assigns).

5.14. Financing Statements. The Borrowers shall not file or cause to be filed any amendments, correction statements, or termination statements concerning the Collateral without the prior written consent of the Lender.

SECTION 6. Events of Default. The occurrence of any one or more of the following events shall constitute a default under the provisions of this Agreement, and the term “Event of Default” shall mean, whenever it is used in this Agreement, any one or more of the following events (and the term “Default” as used herein means one or more of the following events, whether or not any requirement for the giving of notice, the lapse of time, or both has been satisfied):

6.1. Payment of Obligations. The failure of the Borrowers to pay any of the Obligations as and when the same becomes due and payable in accordance with the provisions of this Agreement, the Note, and/or any of the other Financing Documents, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof;

6.2. Certain Provisions of this Agreement. The failure of the Borrowers to perform any of its obligations under Sections 4.2, 4.5, 4.14 or Section 5 of this Agreement;

6.3. Perform, etc. Provisions of This Agreement. The failure of the Borrowers to perform, observe or comply with any of the provisions of this Agreement other than those covered by Sections 4.17, 6.1 or 6.2 of this Agreement and such failure is not cured within a period of thirty (30) days after the delivery of written notice thereof by the Lender to the Borrowers, it being understood that the Borrowers’ failure to comply with Section 4.17 hereof may result in an adjustment of the applicable interest rate or fees hereunder in order to maintain the Lender’s expected rate of return;

6.4. Representations and Warranties. If any representation and warranty contained herein or any statement or representation made in any certificate or any other written information at any time given by or on behalf of the Borrowers or any guarantor or furnished by the Borrowers or any guarantor in connection with this Agreement or any of the other Financing Documents shall prove to be false, incorrect or misleading in any material respect on the date as of which made;

6.5. Default under Other Financing Documents. The occurrence of a default (as defined and described therein) by the Borrowers, any guarantor, or any other party or parties under the provisions of the Note or any of the other Financing Documents which is not cured within applicable cure periods, if any;

6.6. Liquidation, Termination, Dissolution, etc. If any Borrower or any guarantor or any other Subsidiary shall liquidate, dissolve or terminate its existence, other than a merger or consolidation of any Subsidiary with or into any Borrower or other Subsidiary;

6.7. Default under Other Indebtedness. If any Borrowers or any guarantor shall default in any payment of (a) any other indebtedness owing to the Lender, or (b) an indebtedness in excess of $100,000 owing to any other party beyond the period of grace unless such

indebtedness is in good faith being disputed, if any, provided in the instrument or agreement under which such indebtedness was created, or default in the observance or performance of any other agreement or condition relating to any such indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur, in each case, the effect of which default or other event is to cause or to permit the holder or holders of such indebtedness or beneficiary or beneficiaries of such indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice, if required, such indebtedness to become due prior to its stated maturity;

6.8. Attachment. The issuance of any attachment or garnishment against property or credits of any Borrower serving as Collateral or the issuance of any attachment or garnishment against any other property or credits of any Borrowers or any guarantor, in either case for an amount in excess, singly or in the aggregate, of $100,000 during each calendar year, which shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days after the issuance thereof;

6.9. Judgments. One or more judgments or decrees shall be entered against any Borrowers or any guarantor involving in the aggregate a liability in excess of $250,000 for each calendar year, and all such judgments or decrees shall not have been vacated, discharged (or otherwise paid or settled), stayed or bonded pending appeal within 30 days after the entry thereof;

6.10. Inability to Pay Debts, etc. If any Borrowers or any guarantor shall admit its inability to pay its debts as they mature or shall make any assignment for the benefit of any of its creditors;

6.11. Bankruptcy. If proceedings in bankruptcy, or for reorganization of the Borrowers or any guarantor, or for the readjustment of any of the Borrowers’ or any guarantor’s debts, under the United States Bankruptcy Code (as amended) or any part thereof, or under any other applicable laws, whether state or federal, for the relief of debtors, now or hereafter existing, shall be commenced against or by any Borrowers or any guarantor and, except with respect to any such proceedings instituted by a Borrower or any guarantor, shall not be discharged within sixty (60) days of their commencement;

6.12. Receiver, etc. A receiver or trustee shall be appointed for any Borrower or any guarantor or for any substantial part of the Borrowers’ or any guarantor’s assets, or any proceedings shall be instituted for the dissolution or the full or partial liquidation of any Borrower or any guarantor and, except with respect to any such appointments requested or instituted by the Borrowers or any guarantor, such receiver or trustee shall not be discharged within sixty (60) days of his or her appointment, and, except with respect to any such proceedings instituted by any Borrower or any guarantor, such proceedings shall not be discharged within sixty (60) days of their commencement;

6.13. Change in Ownership or Control. The majority ownership or voting control of any Borrower is directly or indirectly sold, assigned, transferred, encumbered or otherwise conveyed without the prior written consent of the Lender, which consent shall not be unreasonably withheld;

6.14. Financial Condition. The occurrence of any change in the financial condition of the Borrowers (on an aggregated basis) which is materially adverse and not covered by insurance, and any such change is not cured within thirty (30) days after the date of written notice thereof by the Lender to the Borrowers;

6.15. Financing Documents Unenforceable. Any Borrower or any guarantor shall assert in writing that any Financing Document is unenforceable, or the Borrowers or any guarantor shall assert in writing that any security interest purported to be created by any Financing Document and required hereunder or thereunder to be perfected is not (except as otherwise expressly permitted in this Agreement or the other Financing Documents) a valid first lien and prior perfected security interest in the securities, assets or properties purported to be covered thereby.

SECTION 7. Rights and Remedies.

7.1. Rights and Remedies. If any Event of Default shall occur and be continuing, the Lender may (i) declare the Credit Facilities hereunder and any obligation or commitment of the Lender hereunder to make Advances to or issue Letters of Credit for the account of the Borrowers to be terminated, whereupon the same shall forthwith terminate, and (ii) declare the unpaid principal amount of the Note, together with accrued and unpaid interest thereon, and all other Obligations then outstanding to be immediately due and payable, whereupon the same shall become and be forthwith due and payable by the Borrowers to the Lender, without presentment, demand, protest or notice of any kind, all of which are expressly waived by the Borrowers; provided that in the case of any Event of Default referred to in Sections 6.11 or 6.12 above, the Credit Facilities hereunder and any obligation or commitment of the Lender hereunder to make Advances to, or issue Letters of Credit for the account of, the Borrowers shall immediately and automatically terminate and the unpaid principal amount of the Note, together with accrued and unpaid interest thereon, and all other Obligations then outstanding shall be automatically and immediately due and payable by the Borrowers to the Lender without notice, presentment, demand, protest or other action of any kind, all of which are expressly waived by the Borrowers. Upon the occurrence and during the continuation of any Event of Default, then in each and every case, the Lender shall be entitled to exercise in any jurisdiction in which enforcement thereof is sought, the following rights and remedies, in addition to the rights and remedies available to the Lender under the other provisions of this Agreement and the other Financing Documents, the rights and remedies of a secured party under the Uniform Commercial Code and all other rights and remedies available to the Lender under applicable law, all such rights and remedies being cumulative and enforceable alternatively, successively or concurrently:

(a) The Lender shall have the right to take possession of the Collateral, and for that purpose, so far as the Borrowers may give authority therefor or to the extent permitted under applicable laws, to enter upon any premises on which the Collateral or any part thereof may be situated and remove therefrom all or any of the Collateral without any liability for suit, action or other proceeding. THE BORROWERS HEREBY WAIVE ANY AND ALL RIGHTS TO PRIOR NOTICE AND TO JUDICIAL HEARING WITH RESPECT TO REPOSSESSION OF COLLATERAL, and require the Borrowers, at the Borrowers’ expense, to assemble and deliver all or any of the Collateral to such place or places as the Lender may designate.

(b) The Lender shall have the right to operate, manage and control all or any of the Collateral (including use of the Collateral and any other property or assets of the Borrowers in order to continue or complete performance of the Borrowers’ obligations under any contracts of Borrowers), or permit the Collateral or any portion thereof to remain idle or store the same, and collect all rents and revenues therefrom and sell, lease or otherwise dispose of any or all of the Collateral upon such terms and under such conditions as the Lender, in its sole discretion, may determine, and purchase or acquire any of the Collateral at any such sale or other disposition, all to the extent permitted by applicable law. Any purchaser or lessee of any of the Collateral so sold or leased shall hold the property so sold or leased free from any claim or right of the Borrowers and the Borrowers hereby waives (to the extent permitted by law) all rights of redemption, stay or appraisal with respect thereto. The Lender and the Borrowers agree that commercial reasonableness and good faith require the Lender to give to the Borrowers no more than ten (10) days prior written notice of any public sale or other disposition of the Collateral or of the time after which any private sale or other disposition of the Collateral is to be made.

(c) The Lender shall have the right, and the Borrowers hereby irrevocably designate and appoint the Lender and its designees as the attorney-in-fact of the Borrowers, with power of substitution and with power and authority in the Borrowers’ name, the Lender’s name or otherwise and for the use and benefit of the Lender (i) to notify persons obligated to make payments or other remittances on or with respect to the Collateral to make such payments and other remittances directly to the Lender, (ii) to demand, collect, sue for, take control of, compromise, settle, change the terms of, release, exchange, substitute, extend, renew or otherwise deal with, the Collateral or any person obligated on or under the Collateral in any manner as the Lender may deem advisable, (iii) to remove from any place of business of the Borrowers copies of (or, if deemed by the Lender to be reasonably necessary, originals of) all records in respect of the Collateral and, at the cost and expense of the Borrowers, to make use of any place of business of the Borrowers as may be necessary or desirable to administer, control, collect, sell or otherwise dispose of the Collateral, (iv) to receive and endorse the Borrowers’ name on any checks, drafts, money orders or other instruments of payment relating to any of the Collateral, (v) to sign any proofs of claim or loss, (vi) to commence, prosecute or defend any action, suit or proceeding relating to the Collateral or the collection, enforcement or realization upon the Collateral, (vii) to adjust and compromise any claims under insurance policies, and (viii) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with any or all of the Collateral and to do all other acts and things necessary to carry out this Agreement as though the Lender were absolute owner of the Collateral. This power of attorney, being coupled with an interest, is irrevocable and all acts by the Lender and its designees pursuant thereto are hereby ratified and confirmed by the Borrowers. Neither the Lender nor any of its designees shall be liable for any acts of commission or omission, nor for any error of judgment or mistake of fact or law other than acts of actual fraud, willful misconduct or gross negligence. The provisions of this subsection shall not (x) be construed as requiring or obligating the Lender or any designee to take any action authorized hereunder and any action taken or any action not taken hereunder shall not give rise to any liability on the part of the Lender or its designees or to any defense, claim, counterclaim or offset in favor of the

Borrowers, (y) be construed to mean the Lender has assumed any of the obligations of the Borrowers under any instrument or agreement as the Lender shall not be responsible in any way for the performance of the Borrowers of any of the provisions thereof, and (z) relieve the Borrowers of any of its obligations hereunder or in any way limit the exercise by the Lender of any other or further rights it may have hereunder, under the other Financing Documents, by law or otherwise.

7.2. Default Rate. Notwithstanding the entry of any decree, order, judgment or other judicial action, upon the occurrence of an Event of Default hereunder, the unpaid principal amount of the Note and all other monetary Obligations outstanding or becoming outstanding while such Event of Default exists shall bear interest from the date of such Event of Default until such Event of Default has been cured, at a floating and fluctuating per annum rate of interest equal at all times to the Default Rate, irrespective of whether or not as a result thereof, the Note or any of the Obligations has been declared due and payable or the maturity thereof accelerated. The Borrowers shall on demand from time to time pay such interest to the Lender and the same shall be a part of the Obligations hereunder.

7.3. Liens, Set-Off. As security for the payment of the Obligations and the performance of the Financing Documents, the Borrowers hereby grant to the Lender a continuing security interest and lien on, in and upon all indebtedness owing to, and all deposits (general or special), credits, balances, monies, securities and other property of, the Borrowers and all proceeds thereof, both now and hereafter held or received by, in transit to, or due by, the Lender. In addition to, and without limitation of, any rights of the Lender under applicable laws, if any Event of Default occurs and is continuing, the Lender may at any time and from time to time thereafter during the continuance of such Event of Default, without notice to the Borrowers, set-off, hold, segregate, appropriate and apply at any time and from time to time thereafter all such indebtedness, deposits, credits, balances (whether provisional or final and whether or not collected or available), monies, securities and other property toward the payment of all or any part of the Obligations in such order and manner as the Lender in its sole discretion may determine and whether or not the Obligations or any part thereof shall then be due or demand for payment thereof made by the Lender.

7.4. Enforcement Costs. The Borrowers agree to pay to the Lender on demand (a) all Enforcement Costs paid, incurred or advanced by or on behalf of the Lender including, without limitation, reasonable attorneys’ fees, costs and expenses, and (b) interest on such Enforcement Costs from the date payment for the same is demanded until paid in full at a per annum rate of interest equal at all times to the Default Rate. All Enforcement Costs, with interest as above provided, shall be a part of the Obligations hereunder.

7.5 Collateral Account. If any Event of Default shall occur and be continuing, and the Lender shall elect to terminate the Revolving Credit Facility, the Borrowers at any time and from time to time during the continuance of such Event of Default shall upon demand of the Lender deliver to the Lender cash or U.S. Treasury Bills with maturities of not more than thirty (30) days in an amount equal to the amount of issued or pending Letters of Credit as of such time. The Lender may also deposit to the Collateral Account (defined below) any cash, monies or funds received by the Lender from the collection of the Obligations or the sale or other

disposition of the Collateral which the Lender, in its discretion, designates as being held against issued or pending Letters of Credit as of such time. Such cash, monies, funds or U.S. Treasury Bills shall be held by the Lender in an account (the “Collateral Account”) and invested or reinvested (as the case may be) in U.S. Treasury Bills with maturities of no more than thirty (30) days from the date of investment. The Lender shall have the sole power of access and withdrawal from the Collateral Account. As collateral and security for the payment of the Obligations, the Borrowers hereby assigns and pledges to the Lender, and grants to the Lender a security interest in and to, all cash, monies, funds, U.S. Treasury Bills and other securities and instruments at any time and from time to time held by the Lender in the Collateral Account and any interest, income, earnings and proceeds thereof, all of which shall be a part of the Collateral hereunder. If any Event of Default shall occur and be continuing, the Lender is irrevocably authorized to make such withdrawals from the Collateral Account at any time and from time to time and apply the same to any of the Obligations (including, without limitation, Letter of Credit Obligations) in such order and manner as the Lender in its sole discretion may determine. After all Obligations have been indefeasibly paid in full and there are no Letters of Credit outstanding or any commitment on the part of the Lender to open and issue Letters of Credit, any cash, monies, funds, U.S. Treasury Bills or other securities and instruments held by the Lender in the Collateral Account will be turned over to the Borrowers or to such other person who may be entitled to the same under applicable laws.

7.6. Application of Proceeds. During the continuance of any Event of Default, any proceeds of the collection of the Obligations and/or the sale or other disposition of the Collateral will be applied by the Lender to the payment of Enforcement Costs, and any balance of such proceeds (if any) will be applied by the Lender to the payment of the remaining Obligations (whether then due or not), at such time or times and in such order and manner of application as the Lender may from time to time in its sole discretion determine. If the sale or other disposition of the Collateral fails to satisfy all of such Obligations, the Borrowers shall remain liable to the Lender for any deficiency.

7.7. Remedies, etc. Cumulative. Each right, power and remedy of the Lender as provided for in this Agreement or in the other Financing Documents or now or hereafter existing under applicable laws or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power or remedy provided for in this Agreement or in the other Financing Documents or now or hereafter existing under applicable laws or otherwise, and the exercise or beginning of the exercise by the Lender of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by the Lender of any or all such other rights, powers or remedies.

7.8. No Waiver, Etc. No failure or delay by the Lender to insist upon the strict performance of any term, condition, covenant or agreement of this Agreement or of the other Financing Documents, or to exercise any right, power or remedy consequent upon a breach thereof, shall constitute a waiver of any such term, condition, covenant or agreement or of any such breach, or preclude the Lender from exercising any such right, power or remedy at any later time or times. By accepting payment after the due date of any amount payable under this Agreement or under any of the other Financing Documents, the Lender shall not be deemed to waive the right either to require prompt payment when due of all other amounts payable under

this Agreement or under any of the other Financing Documents, or to declare an Event of Default for failure to effect such prompt payment of any such other amount. The payment by the Borrowers or any other person and the acceptance by the Lender of any amount due and payable under the provisions of this Agreement or the other Financing Documents at any time during which an Event of Default exists shall not in any way or manner be construed as a waiver of such Event of Default by the Lender or preclude the Lender from exercising any right of power or remedy consequent upon such Event of Default.

7.9 Arbitration.

(a) This paragraph concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this Agreement (including any renewals, extensions or modifications); or (ii) any document related to this Agreement (collectively a “Claim”). For the purposes of this arbitration provision only, the term “parties” shall include any parent corporation, subsidiary or affiliate of the Lender involved in the servicing, management or administration of any obligation described or evidenced by this Agreement.

(b) At the request of any party to this Agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”). The Act will apply even though this Agreement provides that it is governed by the law of a specified state. The arbitration will take place on an individual basis without resort to any form of class action.

(c) Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (“AAA”), and the terms of this paragraph. In the event of any inconsistency, the terms of this paragraph shall control. If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, any party to this agreement may substitute another arbitration organization with similar procedures to serve as the provider of arbitration.

(d) The arbitration shall be administered by AAA and conducted in Washington, D.C. All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators. All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing. However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide a concise written statement of reasons for the award. The arbitration award may be submitted to any court having jurisdiction to be confirmed, judgment entered and enforced.

(e) The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may dismiss the arbitration on the basis that the Claim is barred. For purposes of the application of the statute of limitations, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit. Any dispute concerning this

arbitration provision or whether a Claim is arbitrable shall be determined by the arbitrator(s). The arbitrator(s) shall have the power to award reasonable legal fees pursuant to the terms of this Agreement.

(f) This paragraph does not limit the right of any party to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies.

(g) The filing of a court action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration.

(h) By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim. Furthermore, without intending in any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim. This provision is a material inducement for the parties entering into this Agreement.

SECTION 8. Miscellaneous.

8.1. Course of Dealing; Amendment. No course of dealing between the Lender and the Borrowers shall be effective to amend, modify or change any provision of this Agreement or the other Financing Documents. The Lender shall have the right at all times to enforce the provisions of this Agreement and the other Financing Documents in strict accordance with the provisions hereof and thereof, notwithstanding any conduct or custom on the part of the Lender in refraining from so doing at any time or times. The failure of the Lender at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or the other Financing Documents or as having in any way or manner modified or waived the same. This Agreement and the other Financing Documents to which the Borrowers are a party may not be amended, modified, or changed in any respect except by an agreement in writing signed by the Lender and the Borrowers.

8.2. Waiver of Default. The Lender may, at any time and from time to time, execute and deliver to the Borrowers a written instrument waiving, on such terms and conditions as the Lender may specify in such written instrument, any of the requirements of this Agreement or of the other Financing Documents or any Event of Default or Default and its consequences, provided, that any such waiver shall be for such period and subject to such conditions as shall be specified in any such instrument. In the case of any such waiver, the Borrowers and the Lender shall be restored to their former positions prior to such Event of Default or Default and shall have the same rights as they had hereunder. No such waiver shall extend to any subsequent or other Event of Default or Default, or impair any right consequent thereto and shall be effective only in the specific instance and for the specific purpose for which given.

8.3. Notices. All notices, requests and demands to or upon the parties to this Agreement shall be deemed to have been given or made when delivered by hand, or when received after being deposited in the mail, postage prepaid by registered or certified mail, return receipt requested, one day after being sent by reputable overnight delivery service, or, in the case of notice by telegraph, telex or facsimile transmission, when properly transmitted, addressed as follows or to such other address as may be hereafter designated in writing by one party to the other:

If to any Borrower:
	TVI CORPORATION
	7100 Holladay-Tyler Road
	Glenn Dale, Maryland 20769
	Attn: President and Chief Executive Officer
	And
	TVI CORPORATION
	7100 Holladay-Tyler Road
	Glenn Dale, Maryland 20769
	Attn: General Counsel
With a copy to:
	Frank S. Jones, Esquire
	Whiteford, Taylor & Preston L.L.P.
	Suite 1400, Seven St. Paul Street
	Baltimore, Maryland 21202
	Fax (410) 347-9478
If to Lender:
	Bank of America, N.A.
	1101 Wooton Parkway
	4th Floor
	Rockville, Maryland 20852
	Attention: Michael Brannan, Senior Vice President

With a copy to:
	Ober, Kaler Grimes & Shriver,
	A Professional Corporation
	1401 H Street, N.W.
	Washington, D.C. 20005
	Attention: Nikolaus F. Schandlbauer, Esquire
	Telecopy No.: 202-408-0640

except in cases where it is expressly herein provided that such notice, request or demand is not effective until received by the party to whom it is addressed.

8.4. Right to Perform. For so long as an Event of Default has occurred and is continuing, then and in each such case, the Lender may (but shall be under no obligation whatsoever to) upon concurrent notice to or demand upon the Borrowers remedy any such failure by advancing funds or taking such action as it deems appropriate for the account and at the expense of the Borrowers. The advance of any such funds or the taking of any such action by the Lender shall not be deemed or construed to cure an Event of Default or waive performance by the Borrowers of any provisions of this Agreement. The Borrowers shall pay to the Lender on demand, together with interest thereon from the date of such demand until paid in full at a per annum rate of interest equal at all times to the Default Rate, any such funds so advanced by the Lender and any costs and expenses advanced or incurred by or on behalf of the Lender in taking any such action, all of which shall be a part of the Obligations hereunder.

8.5. Costs and Expenses. The Borrowers agree to indemnify the Lender against, and promptly pay to the Lender on demand, all such fees, recordation and other taxes, costs and expenses of whatever kind and nature, including reasonable attorney’s fees and disbursements, which the Lender may incur or which are payable in connection with the closing and the administration of the Credit Facilities, including, without limitation, the preparation of this Agreement and the other Financing Documents, the recording or filing of any and all of the Financing Documents and obtaining lien searches. All such fees, costs, recordation and other taxes shall be a part of the Obligations hereunder.

8.6. Consent to Jurisdiction. The Borrowers irrevocably (a) consent and submit to the jurisdiction and venue of any state or federal court sitting in the State of Maryland over any suit, action or proceeding arising out of or relating to this Agreement or any of the other Financing Documents, (b) waives, to the fullest extent permitted by law, any objection that the Borrowers may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum, and (c) consents to the service of process in any such suit, action or proceeding in any such court by the mailing of copies of such process to the Borrowers by certified or registered mail at the Borrowers’ address set forth herein for the purpose of giving notice.

8.7. WAIVER OF JURY TRIAL. THE BORROWERS AND THE LENDER HEREBY VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY

HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THE CREDIT FACILITIES, THIS AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS.

8.8. Certain Definitional Provisions. All terms defined in this Agreement shall have such defined meanings when used in any of the other Financing Documents. Accounting terms used in this Agreement shall have the respective meanings given to them under generally accepted accounting principles in effect from time to time in the United States of America. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. As used herein, the singular number shall include the plural, the plural, the singular and the use of the masculine, feminine or neuter gender shall include all genders, as the context may require. Unless otherwise defined herein, all terms used herein which are defined by the Uniform Commercial Code shall have the same meanings as assigned to them by the Uniform Commercial Code unless and to the extent varied by this Agreement.

8.9. Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall not affect the validity, legality or enforceability of any of the other provisions of this Agreement which shall remain effective.

8.10. Survival. All representations, warranties and covenants contained among the provisions of this Agreement shall survive the execution and delivery of this Agreement and all other Financing Documents.

8.11. Binding Effect. This Agreement and all other Financing Documents shall be binding upon and inure to the benefit of the Borrowers and the Lender and their respective personal representatives, successors and assigns, except that the Borrowers shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender.

8.12. Applicable Law and Time of Essence. This Agreement and the rights and obligations of the parties hereunder shall be construed and interpreted in accordance with the laws of the State of Maryland, both in interpretation and performance. Time is of the essence in connection with all obligations of the Borrowers hereunder and under any of the other Financing Documents.

8.13. Duplicate Originals and Counterparts. This Agreement may be executed in any number of duplicate originals or counterparts, each of such duplicate originals or counterparts shall be deemed to be an original and all taken together shall constitute but one and the same instrument.

8.14. Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only, shall not constitute a part of this Agreement for any other purpose and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

8.15 Public Use of Borrowers’ Name. With the Borrowers’ permission, the Lender may in its discretion use the Borrowers’ corporate name in press releases, public announcements and other promotional items or literature of the Lender. To that end, the Borrowers hereby consent to the creation of one or more items commemorating this transaction and use information related to the transaction in internal communications. In addition, the Borrowers hereby consent to the Lender’s use of the Borrowers name and information related to this transaction in connection with marketing, press releases or other transactional announcements or updates provided to investor or trade publications, but only after Borrowers file an SEC Form 8-K with respect to the Revolving Credit Facility (in form and substance determined to be appropriate by the Borrowers).

8.16 Termination of Security Interest. Upon payment in full of the outstanding Obligations and the termination of the Revolving Loan Commitment, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Borrowers. Upon any such termination, the Lender will execute and deliver to the Borrowers such documents as the Borrowers shall reasonably request to evidence such termination.

8.17 Joint and Several Liability, Etc. The Borrowers shall be jointly and severally liable for the payment and performance of the Obligations. The Lender may, without notice to or consent of any of the Borrowers and with or without consideration, release, discharge, compromise or settle with, waive, grant indulgences to, proceed against or otherwise deal with, any of the Borrowers without in any way affecting, limiting, modifying, discharging or releasing any of the obligations and liabilities under this Agreement or any other Financing Documents of the other Borrowers. Each of the Borrowers consents and agrees that (a) the Lender shall be under no obligation to marshall any assets in favor of such Borrower or against or in payment of any or all of the obligations and liabilities of such Borrower under this Agreement or any of the other Financing Documents, (b) any rights such Borrower may have against the other Borrowers for contribution, exoneration from payment or otherwise, in respect of any amounts paid by such Borrower pursuant to any of the Financing Documents or which continue to be owing pursuant to any of the Financing Documents, shall be postponed until the Obligations have been indefeasibly paid in full and no commitments therefor are outstanding and (c) the Lender may enforce and collect the obligations and liabilities of such Borrower hereunder or under the other Financing Documents irrespective of any attempt, pursuit, enforcement or exhaustion of any rights and remedies the Lender may at any time have to collect the obligations and liabilities hereunder or under the other Financing Documents of the other Borrowers.

[remainder of page left intentionally blank]

IN WITNESS WHEREOF, each of the parties hereto have executed and delivered this Agreement under their respective seals as of the day and year first written above.

WITNESS:	TVI CORPORATION
/s/ Sean Hunt	By:	/s/ Richard V. Priddy	(SEAL)
		Printed Name: Richard V. Priddy
		Title: President and CEO
WITNESS:	CAPA MANUFACTURING CORP.
/s/ Sean Hunt	By:	/s/ Richard V. Priddy	(SEAL)
		Printed Name: Richard V. Priddy
		Title: President
WITNESS:	TVI AIR SHELTERS, LLC
/s/ Sean Hunt	By:	/s/ Richard V. Priddy	(SEAL)
		Printed Name: Richard V. Priddy
		Title: General Manager
WITNESS:	SAFETY TECH INTERNATIONAL, INC.
/s/ Sean Hunt	By:	/s/ Richard V. Priddy	(SEAL)
		Printed Name: Richard V. Priddy
		Title: President
WITNESS:	BANK OF AMERICA, N.A.
/s/ Cynthia Newsome	By:	/s/ Michael Brannan	(SEAL)
		Michael Brannan
		Senior Vice President

Attachment I

Tier	Total Funded Debt to EBITDA	Unused Commitment Fee Percentage	Applicable Margin	Letter of Credit Fee
I	Less than or equal to 1.0 to 1.0	25 bps	125 bps	125 bps
II	Less than or equal to 1.5 to 1.0 but greater than 1.0 to 1.0	25 bps	150 bps	150 bps
III	Less than or equal to 1.75 to 1:0 but greater than 1.5 to 1.0	30 bps	175 bps	175 bps

bps = basis points

Note: to the extent that the results of the calculations required to calculate the Applicable Margin result in a measurement in excess of that specified by Tier III, default pricing ( calculated by adding 400 basis points to such Applicable Margin, resulting in a default Applicable Margin of 575 basis points) shall apply.

EX-10.7

Exhibit 10.7

LANDLORD:

GLENN DALE BUSINESS CENTER, L.L.C.

TENANT:

TVI CORPORATION, a Maryland Corporation

LEASE

Dated: February 16, 1998

GLENN DALE BUSINESS CENTER

Trade Name: TVI Corporation

LEASE BY AND BETWEEN

GLENN DALE BUSINESS CENTER, L.L.C., LANDLORD

and TVI CORPORATION, TENANT

TABLE OF CONTENTS

1.	Payment of Rental	1
2.	Use	1
3.	Utilities	2
4	Assignment and Subletting	2
5.	Loading Capacity	3
6.	Increase in Landlord’s Insurance Rates	3
7.	Insurance Indemnification	3
8.	Alterations	4
9.	Ownership of Alterations	4
10	Repairs and Maintenance	4
11.	Tax Escalation	5
12.	Default	6
13.	Total or Partial Destruction	7
14.	Possession	7
15.	Exterior of Premises — Signs	7
16.	Relocation	8
17	For Rent/Sale Signs	8
18.	Right of Entry	8
19.	Termination of Term	8
20.	Condemnation	8
21.	Subordination/Estoppel/Non-Disturbance	8
22.	Attornment	9
23.	Parking and Common Area	9
24.	Compliance with Laws	10
25.	Notices	11
26.	Non-Waiver	11
27.	Successors and Assigns	11
28.	Security Deposit/Construction	12
29.	Accord and Satisfaction	12
30.	Notices to Mortgagee	12
31.	Estoppel Certificate	13
32.	Mechanic’s Liens	13
33.	Waiver of Jury Trial and Right to Counterclaim	13
34.	Brokerage	13
35.	Tenant Representative	13
36.	No Offer	13
37.	Tenant’s Right To Audit	13
38.	Miscellaneous	14

EXHIBITS

Exhibit A – Plat of Premises

Exhibit B - Construction Specifications

Exhibit C - Common Facilities

THIS LEASE Made this 16^th day of February, 1998, by and between GLENN DALE BUSINESS CENTER, L.L.C. by Continental Realty Corp., Agent, having an address at 17 West Pennsylvania Avenue, Towson, Maryland 21204, (hereinafter called “Landlord”) and TVI CORPORATION, a Maryland corporation. having an address at 7100 Holiday Tyler Road, Glenn Dale Business Center, Glen Dale, Maryland 20769, (herein after called “Tenant”).

WITNESSETH, that in consideration of the rental hereinafter agreed upon and the performance of all the conditions and covenants hereinafter set forth on the part of the Tenant to be performed, the Landlord does hereby lease unto the said Tenant, and the latter does lease from the former, the following Premises (hereinafter sometimes called the “Premises”):

BEING all those Premises crosshatched and outlined on the Plat attached hereto as Exhibit A, which Premises shall be deemed to contain approximately 17,000 square feet, lower level office pod, said Premises being located within a building known as Glenn Dale Business Center, 7100 Holiday Tyler Road, Glen Dale, Maryland 20769, which building contains approximately 310,000 square feet (“Floor Space”),

for the term of five (5) years; beginning on April 1, 1998 (“Commencement Date”), and ending on the last day of March, 2003 at and for the annual rent of Four Dollars and No Cents ($4.00) per square foot or Sixty Eight Thousand ($68,000.00) Dollars per annum, payable in advance, in equal monthly installments, as follows: Five Thousand Six Hundred Sixty Six Dollars and Sixty Seven Cents ($5,566.67), per month on the first day of each and every month during the term of this Lease, without setoff, recoupment, or deduction, for the first year of the Lease; thereafter, effective each April 1 of the term, rent shall increase per annum by three percent (3%) over the rent payable for the preceding lease year. If the term of this Lease shall commence on a date other than the first day of a month, the rental for the period from the date of commencement of the term to the first day of the next full calendar month of the term shall be prorated and shall be payable on the first day of the term; if the term of this Lease shall end on a date other than the last day of month, the rent for the period from the first day of the last month of the term to the date the term ends shall be prorated and shall be payable on the first day of the last month of the term.

Tenant hereby represents and warrants to Landlord that Tenant has made its own investigation and examination of all the relevant data relating to or affecting the Premises and is relying solely on its own judgment in entering into this Lease; specifically, and without limitation, Tenant represents and warrants to Landlord that Tenant has had an opportunity to measure the actual dimensions of the Premises and agrees to the square footage figures set forth hereinabove for all purposes of this lease (except in the event of a condemnation or casualty that decrease the size of the Premises as more fully provided elsewhere in this Lease).

All rentals shall by paid to Landlord at: P.O. Box 10147, Baltimore, Maryland 21285, or at such other place or to such appointee of the Landlord as Landlord may from time to time designate in writing.

THIS LEASE IS MADE SUBJECT TO THE FOLLOWING ADDITIONAL TERMS, COVENANTS AND CONDITIONS:

1. PAYMENT OF RENTAL. Tenant covenants and agrees to pay the rental herein reserved and each installment thereof promptly when and as due, without setoff, recoupment or deduction whatsoever, except as specifically set forth herein.

2. USE. Tenant covenants to use the Premises for the purpose of manufacturing, warehouse, and incidental office use related to its operation as a manufacturing facility, making specialty tents, enclosures, and related products (the “Permitted Use”) and for no other purpose or purposes. Tenant shall operate the Premises in the name of TVI Corporation and under no other name or trade name unless approved in writing by Landlord, which approval shall not be unreasonably withheld.

Tenant agrees to comply with all applicable zoning and other laws, regulations, and requirements of governmental authorities and provide and install at its own expense any additional equipment or alterations required to comply with all such laws, regulations and requirements as may be promulgated from time to time. In addition, if Tenant adds a new function to its operations or changes the use set forth in this Paragraph 2, even with if with Landlord’s consent, Tenant agrees further to comply with any and all requirements of Landlord’s insurance carrier(s) and applicable law(s).

3. UTILITIES. Landlord anticipates that it will, within six (6) months of the commencement of this Lease, meter or sub-meter Tenant’s utilities so that Tenant will pay based on sub-meter readings to Landlord or, based on meter readings directly to the utility company. Until the utilities are successfully split out, however, Tenant agrees to pay, as additional rent, its fair share of the water/rent/sewer charges billed to Landlord, which “fair share” shall be reasonably determined by Landlord.

(a) Water/Sewer. Once Tenant is sub-metered, Tenant shall permit Landlord access to the Premises, at least one (1) time each month, for the purpose of reading the sub-meter. Within thirty (30) days after receipt of written notice from Landlord, Tenant shall pay to Landlord all costs associated with Tenant’s usage of utilities within the Premises, as determined by Landlord in its reasonable discretion.

(b) Gas and Electricity. Until Landlord is able to separately meter the gas and electric service in the building so that each tenant has its own meter or sub-meter to measure its gas and electrical usage, Tenant agrees to pay as additional rent its “fair” share of the gas and electricity charges billed total building which fair share shall be reasonably determined by Landlord. When Tenant’s gas and electrical service is separately metered or sub-metered, Tenant agrees to pay as additional rent all gas and electrical service charges for the Premises based on its meter or sub-meter readings, directly to the utility company in the event of a separate meter being provided, or to the Landlord promptly after Landlord bills the Tenant, in the event of a sub-meter.

(c) Miscellaneous. In addition to the preceding, Tenant shall pay all costs of telephone and any other utilities used and consumed on the Premises, or by the Tenant for Tenant’s operations, together with all taxes, levies or other charges on such utilities, either directly to the utility supplying said services or to the Landlord, if the Landlord supplies said services to Tenant.

Wherever Landlord is required to bill Tenant for any utilities’ charges, Tenant agrees that it shall pay Landlord within thirty (30) days of its receipt of Landlord’s billing, and said charges shall be deemed to be additional rent due.

Landlord shall have the right at anytime and from time to time during the Lease term to either contract for service from a different company or companies providing electric service or gas service or other utilities or to continue to contract for service from the service provider currently providing service (variously, “Utility Service Provider”). In conjunction therewith, Tenant shall cooperate with Landlord and Utility Service Provider at all times and, as reasonably necessary, shall allow Landlord and/or Utility Service Provider reasonable access to the building’s electric lines, feeders, risers, wiring, plumbing lines, and any other machinery or equipment located within the Premises. Landlord shall in no way be liable or responsible for any loss, damage, or expense Tenant may incur or sustain by reason of change, failure, interference, disruption, or defect in the supply or character of the electric energy or gas service or other utility service furnished to the Premises, or if the quantity or character of the electric energy or gas service or other utility service supplied by Utility Service Provider is no longer available or suitable for Tenant’s requirements, and no such change, failure, defect, unavailability or unsuitability shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligation under the Lease. Landlord shall use its best efforts to minimize disruption to Tenant’s use of the Premises.

4. ASSIGNMENT AND SUBLETTING

(a) Tenant covenants and agrees not to assign this Lease, in whole or in part, nor sublet the Premises, or any part or portion thereof, nor grant any license or concession for all or any part thereof, without the prior written consent of the Landlord in each instance first had and obtained, which consent shall not be unreasonably withheld. If such assignment or subletting is permitted, Tenant shall not be relieved from any liability whatsoever under this Lease. In the event that the amount of the rent or other consideration to be paid to the Tenant by any assignee or sublessee is greater than the rent required to be paid by the Tenant to the Landlord pursuant to this Lease, Tenant shall pay to Landlord any such excess as is received by Tenant from such assignee or sublessee. An assignment for the benefit of Tenant’s creditors otherwise by operation of law shall not be effective to transfer to assign Tenant’s interest under this Lease unless Landlord shall have first consented thereto in writing.

(b) In the event this Lease contains a renewal option exercisable by Tenant, Landlord’s consent to an assignment or sublease of the Premises or any portion thereof during the original Lease term shall be deemed to be conditioned upon the agreement of Tenant and such assignee or sublessee that such renewal right or option shall terminate and be of no further force or effect unless Landlord’s consent to such assignment or sublease expressly provides otherwise.

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(c) In the event Tenant desires to assign this Lease or to sublease all or any substantial portion of the Premises, Landlord shall have the right and option to terminate this Lease, which right or option shall be exercisable by written notice from Landlord to Tenant within thirty (30) days from the date Tenant gives Landlord written notice of its desire to assign or sublease.

5. LOADING CAPACITY. Tenant covenants and agrees that it shall not load the Premises beyond its present carrying or loading capacity.

6. INCREASE IN LANDLORD’S INSURANCE RATES. Tenant will not do, or suffer to be done, anything in or about the Premises, or keep or suffer to be kept, anything in or about the Premises which will contravene or affect any policy of insurance, now existing or which the Landlord may hereafter place there on, or which will prevent the Landlord from procuring such policies in companies acceptable to Landlord at standard rates. Tenant will, at Tenant’s sole expense, take all such actions and make any installations or alterations as may be necessary to obtain the greatest possible reduction in the insurance rates for the Premises and the building in which the Premises are located, caused by the occupancy of Tenant, the nature of the business carried on by Tenant in the Premises, or otherwise resulting from any act of Tenant, its agents, servants, employees or customers.

7. INSURANCE INDEMNIFICATION

(a) Tenant shall maintain the following insurance: (i) comprehensive general public liability insurance in respect of the Premises and the conduct and operation of Tenant’s business therein, with Landlord as an additional named insured and at Landlord’s written request with the lessor or any ground or underlying lease of all or any part of the Premises as additional named insured, with limits of not less than $1,000,000 for bodily injury or death to any one person, $2,000,000 for bodily injury or death to any number of persons in any one occurrence, and $1,000,000 for property damage, including water damage and sprinkler leakage legal liability, (if sprinklered); (ii) steam boiler, air conditioning, and machinery insurance, if applicable, protecting Landlord and Tenant, with limits of not less than $500,000, but only if there is a boiler or pressure object or other similar equipment in the Tenant’s Premises; (iii) fire insurance with extended coverage and broad form all risk endorsement covering all of Tenant’s stock and trade, fixtures, furnishings, floor coverings, equipment, signs, and all other property belonging to Tenant or entrusted to Tenant or demised hereby, including installations and improvements of Tenant made in, on or about the Premises in any amounts required by any lender, but not less than the full insurable replacement value of the property covered and out less than the amount sufficient to avoid the effect of the co-insurance provisions of the applicable policy or policies; (iv) business interruption insurance in an amount sufficient to meet any co-insurance requirements, but in no event less than the equivalent of twelve (12) month’s rent (unless Landlord provides rental insurance and bills Tenant for it pursuant to Tenant’s obligations to pay increases in Landlord’s costs of insuring the building, as set forth in Paragraph 23(c)). Tenant shall deliver to Landlord such fully paid for polices or certificates of insurance at least ten (10) days before the Commencement Date of this Lease. Tenant shall procure and pay for renewal of such insurance from time to time before the expiration thereof, and Tenant shall deliver to Landlord and any additional named insured(s) such renewal policy at least thirty (30) days before the expiration of any existing policy. If Tenant fails to comply with any portion of this provision, Landlord may, but shall not be obligated to, obtain insurance for Tenant and keep same in effect and Tenant shall pay Landlord all costs incurred, upon demand, plus 15% for overhead/administrative expenses. Landlord shall not be liable for any damage or loss arising from the bursting, overflowing, or leaking of the roof or of water, sprinkler, sewer, or steam pipes, or for malfunctioning heating, air conditioning or plumbing fixtures or from electric wire or fixtures or arising from any other cause whatsoever, unless caused by Landlord’s negligent or willful misconduct.

(b) Tenant shall and does hereby indemnify and save harmless Landlord, its successors or assigns, from all claims and demands of every kind, that may be brought against it, them or any of them for or on account of any damage, loss or injury to persons or property in or about the Premises or the building and appurtenances in which the Premises are situated, arising from or out of Tenant’s use or occupancy thereof occasioned wholly or in part by any act or omission of Tenant, its agents, servants, contractors, employees or invitees, and from any and all costs and expenses, counsel fees, and other charges which may be imposed upon Landlord, its successors or assigns, or which it or they may be obligated to incur in consequence thereof. All personal property and fixtures in the Premises shall remain at Tenant’s sole risk. Tenant shall insure such property and fixtures against loss or damage by fire and casualties ordinarily included in the extended coverage endorsement in use in Maryland in an amount equal to 100% of the replacement value thereof.

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(c) Landlord may, in its reasonable business judgment, maintain insurance on the property including but not limited to equipment and systems in or pertaining to the building or property and including but not limited to public liability insurance, property damage insurance, automobile insurance, sign insurance, fire and extended coverage insurance, rent insurance, boiler liability and casualty insurance, flood and earthquake insurance, and plate glass insurance. For any insurance maintained by Landlord with respect to the property and/or its equipment, Tenant agrees to pay as additional rent Tenant’s proportionate share of said premiums for any insurance carried on the property or any portion thereof. If this Lease shall be in effect for less than a full insurance year, Tenant shall pay its proportionate share of any insurance premiums based upon the number of months that this Lease is in effect. For purposes of calculating Tenant’s “proportionate share”, the insurance premium bill will be multiplied by a fraction, the numerator of which shall be the Floor Space of the Tenant’s Premises, and the denominator of which shall be the leaseable Floor Space of the building. All computations shall be made in accordance with generally accepted accounting principles and the “Floor Space” referred to herein will be based upon the Floor Space occupied or ready for occupancy (whether or not leased) on the first day of each month during the period in question. The Floor Space of the building at the time of the Lease execution is 310,000 square feet. Any payment due hereunder shall be deemed to be additional rental pursuant to this Lease and shall be paid within (10) days of Landlord’s billing.

8. ALTERATIONS. Tenant shall not make any structural or non-structural alterations to the Premises, or any part thereof, without prior written consent of Landlord in each instance first had and obtained. If Tenant shall desire to make such alterations, plans for the same shall first be submitted to and approved by Landlord, and all work and installations shall be performed by Tenant at its own expense in accordance with approved plans. Tenant agrees that all such work shall be done in a good and workmanlike manner, that the structural integrity of the building shall not be impaired, and that no liens shall attach to the Premises by reason thereof. Tenant agrees to obtain, at Tenant’s expense, all permits required for such alterations.

9. OWNERSHIP OF ALTERATIONS. Unless Landlord shall elect that all or part of any alteration made by Tenant to the Premises (including any alterations consented to by Landlord pursuant to Paragraph 8 hereof) shall remain on the Premises after the termination of this Lease, the Premises shall be restored to their original condition by Tenant before the expiration of this Lease at Tenant’s sole expense. Upon such election by Landlord, any such alterations, improvements, betterments or mechanical equipment, including but not limited to, heating and air conditioning systems, shall become the property of the Landlord at the expiration or sooner of the termination of this Lease, and all right, title and interest thereof of Tenant shall immediately cease, unless otherwise agreed to in writing by Landlord.

Tenant shall repair promptly, at its own expense, any damage to the Premises caused by bringing into the Premises any property for Tenant’s use, or by the installation or removal of such property, regardless of fault or by whom such damage shall be caused.

10. REPAIRS AND MAINTENANCE.

(a) The Premises hereby leased, are leased to Tenant “As Is,” except as specifically provided in Exhibit B. Further, except as herein expressly provided, Landlord shall be under no liability, nor have any obligation to do any work or make any repairs in or to the Premises, and any work which may be necessary to outfit the Premises for Tenant’s occupancy or for the operation of Tenant’s business therein is the sole responsibility of Tenant and shall be performed by Tenant at its own cost and expense. Tenant acknowledges that it has fully inspected the Premises prior to the execution of this Lease, and Tenant further acknowledges that Landlord has made no warranties or representations with respect to the condition or state of repairs of the Premises.

(b) Tenant will, during the term of this Lease, keep the Premises and appurtenances (including windows, doors, plumbing, heating and electrical facilities and installations), in good order and repair and will make all necessary repairs thereof at its own expense, except that Landlord will make all necessary repairs (except painting) to the exterior walls and roof of the building, after being notified in writing by Tenant of the need for such repairs, and shall have a reasonable time in which to complete such repairs. Landlord hereby warrants to Tenant that the HVAC system shall he in good working order for the first year of the Lease Term. Landlord agrees to make any major repairs or replacements to the HVAC system necessary during that year which cost in excess of $500.00 so long as such repair or replacement is not necessitated by Tenant’s negligence or intentional misconduct. Tenant shall be responsible for all day to day maintenance of the HVAC system. Tenant agrees to carry a maintenance and/or service agreement

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or policy on the HVAC system in the Premises. Tenant shall provide Landlord with a copy of such policy or certificate evidencing such coverage. In the event that the repairs required to be made by Landlord are necessitated as a result of negligence or misuse by Tenant, its agents, servants, employees, licensees or guests, or by any contractor engaged by or on behalf of Tenant, such repairs shall be made by and be paid for by Tenant.

Tenant will, at the expiration of the term or at the sooner termination, deliver up the Premises in the same good order and condition as they were at the beginning of the tenancy, reasonable wear and tear and damage by casualty excepted, (where Lease is terminated due to the casualty provision of this Lease). In addition, Tenant must remove all of its trade fixtures and equipment and must fill any and all holes in the floor after removing said trade fixtures and equipment, topping the filled holes with a six inch concrete cap, reinforced with a reinforced steel rebar. Moreover, the Premises must be broom swept and clean and any office area cleaned and straightened out.

Tenant further agrees that it will maintain the Premises at its own expense in a clean, orderly and sanitary condition, free of insects, rodents, vermin and other pests; and that it will not permit undue accumulation of garbage, trash, rubbish or other refuse, but will remove the same an its own expense and will keep such refuse in proper containers inside the Premises until removed. At any time after the commencement of this Lease, Landlord may designate areas outside the Premises for storage of Tenant refuse/garbage. In the event of any Tenant default pursuant to this obligation, Tenant specifically agrees that Landlord can have Tenant’s garbage, trash, rubbish or other refuse removed and Tenant will be required to pay, as additional rental, any costs which Landlord incurs in said removal plus fifteen percent (15%) Landlord administrative/overhead expenses. Tenant further agrees that it will not install any additional electrical wiring or plumbing unless it has first obtained Landlord’s written consent thereto, and, if such consent is given, Tenant will install the same at its own cost and expense, and Tenant shall obtain, at Tenant’s expense, all permits required for such installation.

(c) In the event Tenant shall not proceed promptly and diligently to make any repairs or perform any obligation imposed upon it by subparagraphs (a) and (b) hereof within forty-eight (48) hours, after receiving written notice from Landlord to make such repairs or perform such obligation, then and in such event, Landlord may, at its option, enter the Premises and do and perform the things specified in said notice, without liability on the part of Landlord for any loss or damage resulting from any such action by Landlord, and Tenant agrees to pay promptly upon demand any cost or expense incurred Landlord in taking such action.

(d) Tenant shall keep all of its Premises sufficiently heated during freezing weather in order to keep any water pipes in the Premises or serving the Premises from freezing.

(e) If governmental regulations require recycling of any on all of the trash generated in the Premises, Tenant hereby agrees to participate in any recycling program and to assume any obligation for recycling which may be imposed upon Landlord as the property owner, with respect to the refuse, garbage and trash generated by the Premises’ operation.

11. TAX ESCALATION. As of the Commencement Date of this Lease, the Premises hereby leased comprise approximately five and forty eight/hundredths of a percent (5.48%) of the total land and/or buildings within which the Premises are located. Tenant agrees to pay as additional rent, within thirty (30) days of Landlord billing, Tenant’s proportionate share of any real estate taxes assessed against the land and/or building, as improved. Real estate taxes shall be deemed to include any taxes assessed against the land and/or buildings generally, and not resulting from improvements placed therein by Tenant. In the event of any increases in real estate taxes resulting from improvements, alterations or additions made by Tenant, Tenant shall pay one hundred percent (100%) of the amount of said increase. If this Lease shall be in effect for less than a full fiscal year, Tenant shall pay its proportionate share of the taxes, based upon the number of months that this Lease is in effect. For purposes of calculating Tenant’s “proportionate share”, the real estate tax bill with be multiplied by a fraction, the numerator of which shall be the Floor Space of the Tenant’s Premises, and the denominator of which shall be the leasable Floor Space of the building. All computations shall be made in accordance with generally accepted accounting principles and the “Floor Space” referred to herein will be based upon the Floor Space occupied or ready for occupancy (whether or not leased) on the first day of each month during the period in question. Any payment due hereunder shall be deemed to be additional rental pursuant to this Lease and shall be paid within thirty (30) days of Landlord’s billing. “Taxes” or “real estate taxes” as used herein shall include, but not by way of limitation, all paving taxes, special paving taxes, Metropolitan District [BALANCE INTENTIONALLY LEFT BLANK]

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Charges, and any and all other benefits or assessments which may be levied on the Premises or the land and/or building(s) in which the same are situate, as well as any and all costs or fees incurred by Landlord in contesting any real estate tax assessment, but shall not include any income tax on the income or rent payable hereunder.

12. DEFAULT

(a) Any of the following events shall constitute a default by Tenant:

(i) If the rent (basic or additional) shall be in arrears, in whole or in part; or

(ii) If Tenant shall have failed to perform any other term, condition or covenant of this Lease on its part to be performed for a period of ten (10) days after notice of such failure by Landlord; or

(iii) If the Premises are vacant, unoccupied or deserted for a period of fifteen (15) days or more at any time during the term; or

(iv) If Tenant is adjudicated a bankrupt or insolvent by any court of competent jurisdiction, or if any such court enters any order, judgment or decree finally approving any petition against Tenant seeking reorganization, liquidation, dissolution or similar relief or if a receiver, trustee, liquidator or conservator is appointed for all or substantially all of Tenant’s assets and such appointment is not vacated within thirty (30) days after the appointment, or if Tenant seeks or consents to any of the relief herein above enumerated in this subparagraph (iv) or files a voluntary petition in bankruptcy or insolvency or makes an assignment of all or substantially all of its assets for the benefit of creditors or admits in writing of its inability to pay its debts generally as they become due or files Articles of Dissolution, or similar writing indicating its intention to wind up or liquidate its business, with the appropriate authority of the place of its incorporation; or

(v) If Tenant’s leasehold interest under this lease is sold under execution, attachment or decree of court to satisfy any debt of Tenant, or if any lien (including a mechanic’s lien) is filed against Tenant’s leasehold interest and is not discharged within ten (10) days thereafter.

(b) In the event of default as defined in paragraph (a) hereof, Landlord, in addition to any and all legal and equitable remedies it may have, shall have the following remedies:

(i) To distrain for any rent or additional rent in default; and

Intentionally deleted.

Not withstanding any such reentry and/or termination, Tenant shall immediately be liable to Landlord for the sum of the following: (a) all rent and additional rent then in arrears, without apportionment to the termination date, including but not limited to Tenant’s contribution to taxes and utilities under Paragraphs 3 and 11 and Tenant’s contribution to common area costs under Paragraph 23 for the year of termination; (b) all other liabilities of Tenant and damages sustained by Landlord as a result of Tenant’s default, including, but not limited to, the reasonable costs of reletting the Premises and any broker’s commissions payable as a result thereof; (c) all of Landlord’s costs and expenses (including reasonable counsel fees) in connection with such default and recovery of possession; (d) the rent and additional rent reserved under this Lease at the times herein stipulated for payment of rent and additional rent for the balance of the term, less any amount received by Landlord during such period from others to whom the Premises may be rented on such terms and conditions and at such rentals as Landlord, in its sole discretion, shall deem proper; and (e) any other damages recoverable by law. In the event Landlord brings any action against Tenant to enforce compliance by Tenant with any covenant or condition of this Lease, because of Tenant’s default in performing any such covenant or condition, Tenant shall pay to Landlord all costs and expenses incurred by Landlord and bringing and prosecuting such action against Tenant, including reasonable attorneys’ fees.

(c) In the event Tenant fails to pay Landlord any rental payment or other charge due hereunder within ten (10) days from the date on which such payment was due, Landlord may, an its option, charge Tenant a late charge equal to ten percent (10%) of the rental payment or other such charge, which late charge shall be collectible as additional rent and shall be payable by Tenant to Landlord after written notice from Landlord to Tenant assessing the same. In addition, Tenant shall be liable for an administrative charge of Twenty-Five Dollars ($25.00) for each check or draft which is not honored by the drawee for any reason.

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13. TOTAL OR PARTIAL DESTRUCTION.

(a) Tenant shall give prompt notice to Landlord in case of any fire or other damage to the Premises. If (i) the Premises shall be damaged by fire or other occurrence to the extent of more than seventy-five (75%) of the cost of replacement thereof, or (ii) if the entire building shall be damaged by fire or other occurrence to the extent of more than seventy-five percent (75%) of the aggregate cost of replacement of the entire building, or (iii) the building shall be damaged by fire or other occurrence and the loss shall not be covered by Landlord’s insurance or the net insurance proceeds (after deducting all expenses in connection with obtaining same) shall, by reasonable anticipation, be insufficient to pay for the repair or restoration work to be done by Landlord, or (iv) the Premises shall be damaged by fire or other occurrence to the extent of more than fifty percent (50%) of the cost of replacement thereof during the last two (2) years of the term, then in any such event Landlord may terminate this Lease by notice given within ninety (90) days after such event and upon the date specified in such notice, which shall be not less than thirty (30) days nor more than sixty (60) days after the giving of said notice, this Lease shall terminate. If the Premises shall be damaged by fire or other casualty to the extent of more than fifty (50%) percent of the cost of replacement thereof during the last two years of the term, Tenant may terminate this Lease by notice given before Landlord commences any repair or restoration work and in any event within thirty (30) days after such damage, and this Lease shall terminate upon the giving of such notice.

(b) If this Lease shall not be terminated after damage by fire or other casualty pursuant to the preceding sub-paragraph, Landlord and Tenant shall, promptly after receipt of insurance proceeds for such damage and to the extent that insurance proceeds are available, proceed with the restoration of the Premises and the building to substantially the condition in which the same existed prior to the damage with such changes or additions as Landlord may desire to make. In no event, however, shall Tenant’s stock-in-trade, trade fixtures, furniture, furnishings, removable floor coverings, equipment, signs and other property be Landlord’s responsibility and Tenant shall promptly proceed with restoration or replacement of same together with any alterations or improvements it has made to its Premises and Tenant’s liability for said restoration or replacement shall not be limited to its insurance proceeds.

(c) If this Lease shall not be terminated by fire or other casualty, Landlord’s and Tenant’s restoration shall be completed as promptly as reasonably possible, and, to the extent that the Premises is unusable (on a per square foot basis), rent (but not additional rental such as utilities, taxes or common area charges) reserved hereunder shall abate in proportionate to the area of the Premises damaged until Landlord’s work is completed.

(d) Despite anything contained to the contrary in this Paragraph, and without limiting Landlord’s rights or remedies hereunder, rental shall not be abated under this provision if in Landlord’s opinion, any damage or destruction is caused by any fault, neglect, default, negligent act or negligent omission of Tenant or those for whom Tenant is in law responsible or by any other person entering upon the Premises under express or implied invitation of Tenant.

14. POSSESSION. In case possession of the Premises, in whole or in part, cannot be given to Tenant on or before the commencement date of the term of this Lease, Landlord agrees to abate the rent and additional rent proportionately until possession is given to Tenant, and Tenant agrees to accept such pro rata abatement as liquidated damages for the failure to obtain possession on the commencement date herein specified. The parties hereto covenant and agree that if the term of this Lease commences on a date other than the date herein specified, they will, upon the request of either of them, execute an agreement in recordable form setting forth the new commencement and termination dates of the Lease term. Under no circumstances shall Landlord be under any liability for failure to deliver possession of the Premises to Tenant on the date herein specified.

15. EXTERIOR OF PREMISES - SIGNS.

(a) Tenant covenants and agrees that it will not place or permit any sign or other thing of any kind, in or about the exterior of the Premises or the building in which the Premises are situate, nor paint or make any change in, to or on the exterior of said Premises to change the uniform architecture, paint or appearance of the building, without in each such instance obtaining the prior written consent of Landlord. Landlord will allow Tenant to install Tenant I.D. signs, subject to Landlord approval. Tenant shall not display any “going out of business” sign without prior written consent of Landlord.

(b) Tenant further covenants and agrees not to pile or place anything on the side wa1k, parking lot or other exterior portion of the Premises or building in the front, rear, or sides the building, nor block the sidewalk, parking lot or other exterior portion of the Premises or building, nor do anything that directly

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or indirectly will interfere with any of the rights or ingress or egress or of light from any other tenants, nor do anything which will, in any way, change the uniform and general design of any property of Landlord in which the Premises are situate. Landlord will at all times control all outside areas of the property and exterior portions of the Premises and building including sidewalks and parking lots.

16. RELOCATION. Landlord reserves the right at its option and at Landlord’s sole cost and expense (including all reasonable expenses of Tenant necessarily incurred by Tenant in connection with the relocation) to relocate the Premises hereby leased to another location in the building comparable to that leased hereunder, provided Landlord gives Tenant at least thirty (30) days prior written notice of such relocation.

17. FOR RENT/SALE SIGNS. Landlord shall have the right to place a “For Rent” sign on any portion of said Premises for six (6) months prior to termination of this Lease and to place a “For Sale” sign thereon at any time. During such six-month period, Landlord may show the Premises and all parts thereof to prospective tenants/purchasers between the hours of 9:00 a.m. and 5:00 p.m. any day except Sunday or any legal holiday on which Tenant shall not be open for business.

18. RIGHT OF ENTRY. Landlord and its agents, servants, employees, including any builder or contractor employed by Landlord, shall have the right, license and permission, at reasonable times after reasonable notice to Tenant (except in the event of any emergency), to enter and inspect the Premises or any part thereof, and at the option of Landlord, to make such reasonable repairs and/or changes in the Premises as Landlord may deem necessary or proper and/or to enforce and carry out any provision of this Lease. Landlord’s access to the Premises shall also be subject to Department of Defense security concerns.

19. TERMINATION OF TERM. It is agreed that the term of this Lease shall expire and terminate at the end of the original term hereof (or at the expiration of the last renewal term, if this Lease contains a renewal option and the same is properly exercised), without the necessity of any notice by or to any of the parties hereto, unless otherwise provided herein. If Tenant shall occupy the Premises after such expiration or termination, it is understood that Tenant shall hold the Premises as a tenant from to month-to-month, subject to all the other terms and conditions of this Lease, at an amount equal to double the highest monthly rental installment reserved in this Lease.

20. CONDEMNATION.

(a) If, during the term of this Lease, all or twenty-five percent (25%) or more of the Premises shall be taken by any public or quasi-public authority under power of condemnation, eminent domain, or expropriation, or in the event of conveyance of twenty-five percent (25%) or more of the Premises in lieu thereof, this Lease shall terminate as of the day possession shall be taken by such authority, and the rent (including additional rent) shall be apportioned to and abate from and after, the date of taking. Tenant shall have no right to participate in any award or damages for such taking and hereby assigns all of its right, title and interest therein to Landlord.

(b) If during the Lease term, less than twenty-five percent (25%) of the Premises is taken, this lease shall remain in full force and effect according to its terms and Tenant shall not have the right to participation in any award or damages for such taking and Tenant hereby assigns all of its right, title and interest in and to the award to Landlord. In such event Landlord shall, at its expense, promptly make such repairs and improvements as may be necessary to make the remainder of the Premises adequate to permit Tenant to carry on its business to substantially the same extent and with substantially the same efficiency as before the taking; provided that in no event shall Landlord be required to expend an amount in excess of the award received by Landlord for such taking.

(c) Nothing herein shall be deemed to prevent Tenant from claiming and receiving from the condemning authority, if legally payable, compensation for the taking of Tenant’s own tangible property and such amount as may be payable by statute or ordinance toward Tenant’s damages for Tenant’s loss of business, removal and relocation expenses.

21. SUBORDINATION/NON-DISTURBANCE. Landlord shall have the right to place mortgage or mortgages on the Premises and the property of which the Premises is a part, and this Lease shall be subordinate to any such mortgage or mortgages or superior thereto, as the mortgagee(s) may elect from time to time. Notice of such election shall be given to Tenant in connect with any mortgage foreclosure.

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Within ten (10) days after a written request from time to time made by Landlord, Tenant shall deliver to Landlord a signed and acknowledged statement in writing setting forth: (i) that this Lease is unmodified, in full force and effect, free of existing defaults of Landlord and free of defenses against enforceability (or if there have been modifications or defaults, or if Tenant claims defenses against the enforceability hereof, then stating the modifications, defaults and/or defenses), (ii) the dates to which Rent and Additional Charges have been paid, and the amount of any advance rentals paid, (iii) the commencement and expiration dates of the Term, (iv) whether Tenant has given written notice exercising its rights, if any, to renew this Lease, and if so, the renewal term so opted, and (v) that Tenant has no outstanding claims against Landlord (or if there are any claims, then stating the nature and amount of such claims); it being intended that any such statement may be relied upon by any purchaser or mortgagee of Landlord’s interest in the Premises, or any prospective purchaser or mortgagee.

Anything in the foregoing sections notwithstanding, this Lease is expressly contingent upon Landlord obtaining from Tenant a Subordination, Non-Disturbance and Attornment Agreement from Landlord’s mortgagee, upon satisfaction of the following conditions: submission of Tenant’s financial statement in such form and for such periods as Landlord’s mortgagee may reasonably require; completion and execution by Tenant of a Tenant Estoppel Certificate; payment by Tenant of mortgagee’s fee, if any, for the issuance of such Agreement.

22. ATTORNMENT

(a) If Landlord assigns this Lease or the rents hereunder to a creditor as security for a debt, Tenant shall, after notice of such assignment and upon demand by Landlord or the assignee, pay all sums thereafter becoming due Landlord hereunder either to Landlord or such assignee as designated in written notice to Tenant. Tenant shall also, upon receipt of such notice, have all policies of insurance required hereunder endorsed so as to protect the assignee’s interest as it may appear and shall deliver such policies, or certificates thereof, to assignee.

(b) In the event the Premises are sold at any foreclosure sale or sales, by virtue of any judicial proceedings on otherwise, this Lease shall continue in full force and effect and Tenant agrees, upon request, to attorn to and acknowledge the foreclosure purchaser or purchasers at such sale as the landlord hereunder.

23. PARKING AND COMMON FACILITIES.

(a) Landlord hereby further demises and leases to Tenant the right to use twenty (20) parking spaces within the parking lot adjacent to the building (which parking spaces are outlined and crosshatched on Exhibit A) for the use solely of Tenant’s employees, agents, officers and invitees. Tenant agrees not to use, and not to permit its employees, agents, officers and invitees to use, any other parking spaces except the parking spaces made available to Tenant by Landlord. Tenant agrees that it will, at Landlord’s request, furnish Landlord with a list of license plate numbers of all automobiles regularly used by Tenant’s employees, agents, officers and invitees. Tenant further agrees that if any automobiles of Tenant’s agents employees, officers or invitees are found in parking areas other than those designated for Tenant’s use, Landlord shall have the right to have such improperly parked vehicles towed away by a towing company designated by Landlord, and Tenant shall pay Landlord, upon demand, all costs incurred by Landlord. Landlord reserves the right to relocate any of Tenant’s parking spaces by reassigning to Tenant other parking spaces within the property shown on Exhibit A-1, or on parking lots which Landlord provides on properties adjacent to the building for the use of Tenant’s employees, agents, officers and invitees; provided Landlord gives Tenant written notice of such reassignment at least ten (10) days prior to the effective date thereof. In the event Landlord gives such notice to Tenant, Tenant shall instruct all of its employees, agents, officers and invitees to use only the reassigned spaces and to cease use of the spaces formerly assigned.

(b) As of the Commencement Date of this Lease, the Premises hereby leased comprise approximately five and forty eight/hundredths of a percent (5.48%) of the total land and/or buildings within which the Premises are located. Tenant agrees to pay as additional rent, within thirty (30) days of Landlord’s billing, Tenant’s proportionate share of Landlord’s costs of operating, maintaining, repairing, replacing and insuring the common facilities (as hereinafter defined), including, but not limited to, loading areas, parking areas, pavements and walkways, and the cost of utilities for such common facilities as well as any costs incurred by Landlord in maintaining the leased facilities (as hereinafter defined) but shall not include the cost of any work which Landlord performs specifically for the exclusive use of any tenant of the building, nor any capital improvements which Landlord performs nor cost of executive personnel or services not related to the maintenance of the building in which the Premises is located. For purposes of calculating Tenant’s “proportionate share,” Landlord’s cost of operating the Common Facilities will be

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multiplied by a fraction, the numerator of which shall be the floor space of the Tenant’s Premises, and the denominator of which shall be the leasable floor space of the building. All computations shall be made in accordance with generally accepted accounting principles and the “Floor Space” referred to herein will be based upon the Floor Space occupied or ready for occupancy (whether or not leased) on the first day of each month during the period in question. The Floor Space of the building at the time of the Lease execution is 316,000 square feet. Any payment due hereunder shall be deemed to be additional rental pursuant to this Lease and shall be paid within thirty (30) days of Landlord’s billing.

(c) Tenant shall have the right to the exclusive use of any entrances, exits, storage areas, and loading docks within the leased Premises or exclusively serving the leased Premises (“Leased Facilities”), subject to the condition that Landlord shall at all times have the right and privilege of determining the nature and extent to which such leased facilities may be used.

In addition, Tenant shall have the right to the non-exclusive use of any walkways, entrances, exits, parking areas, outside storage areas or trash areas, if any, outside the leased Premises, serving the building, in common with other tenants, (“Common Facilities”) subject to the condition that Landlord shall at all times have the right and privilege of determining the nature and extent to which such common facilities may be used, and of making such changes, rearrangements, additions or reductions therein or thereto, which in Landlord’s opinion are deemed to be desirable and in the best interests of all tenants of the building, or which are required as the result of any law or regulation. Tenant’s non-exclusive right to use the common facilities is a license and not an easement. Tenant’s non-exclusive license to use the common facilities shall be a license to access over and through the common facilities but not to store anything on the common facilities or to erect any structures, permanent or temporary, or to make any other use of the common facilities except as specifically permitted by Landlord. Where Landlord has designated a portion of the common facilities for any individual tenant’s exclusive use, such as assigning parking spaces in a parking area to an individual tenant or creating a storage or trash disposal area to be used by an individual tenant, that individual tenant shall be deemed to have no further rights with respect to other parking areas and/or other trash removal or storage areas, but such individual tenant shall be limited to the specified areas provided by Landlord and such areas shall still be deemed to be part of the common facilities, although only made available by Landlord to designated tenants.

Tenant agrees that Landlord may establish and from time to time change, alter and enforce against Tenant such reasonable rules and regulations as Landlord may deem necessary or advisable for the proper and efficient use, operation and maintenance of such common facilities. Landlord shall, at all times, have sole and exclusive control, management and direction of such common facilities, and may, at any tine and from time to time, exclude and restrain any person from use or occupancy thereof. It shall be the duty of Tenant to keep all such facilities free and clear of any obstructions created or permitted by Tenant or resulting from Tenant’s use. Tenant shall be fully liable for any damage to any of such facilities resulting from the negligence or misuse by Tenant, its agents, employees, contractors or invitees. Landlord may, at any time and from time to time, either temporarily or permanently, close all or any portion of such common facilities to make repairs or changes, and to do and perform such other acts as, in the exercise of good business judgment, Landlord shall determine to be advisable with a view to the improvement of the convenience and use thereof by tenants, their employees, agents and invitees.

(d) Landlord agrees to permit Tenant’s use of outside areas adjacent to the Premises for testing and display of Tenant’s products. Landlord shall determine the location and duration of such uses after receipt of Tenant’s written request therefor.

24. COMPLIANCE WITH LAWS.

(a) Tenant covenants and agrees that it will, at its own expense, observe, comply with and execute all laws, orders, rules, requirements and regulations of all governmental agencies, and all rules, directions, requirements and recommendations of the local board of fire underwriters and the fire insurance rating organizations having jurisdiction over the area in which the Premises are situated, or other bodies or agencies now or hereafter exercising similar functions in the area in which the Premises are situated, in any way pertaining to the Premises or the use and occupancy there.

(b) The preceding shall include, but not be limited to, the following which Tenant shall not cause or permit to occur (i) any violation of any federal, state, or local law, ordinance or regulation now or hereinafter enacted, related to environmental conditions on, under, or about the Premises, arising from Tenant’s use or occupancy of the Premises, including, but not limited to, soil and ground water conditions; or (ii) the use, generation, release, manufacture, refining, production, processing, storage, or disposal of any “Hazardous Substance” (as defined herein) on, under or about the Premises, or the transportation to or from the Premises of any Hazardous Substance.

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(c) Tenant shall, at Tenant’s own expense, comply with all laws regulating the use, generation, storage, transportation, or disposal of Hazardous Substances and Tenant shall, at Tenant’s own expense, make all submissions to, provide all information required by, and comply with all requirements, of all governmental authorities pursuant to said laws. Should any authority or any third party demand that a clean-up plan be prepared and that a clean-up be undertaken because of any deposit, spill, discharge or other release of Hazardous Substances that occurs as a result of Tenant’s use or occupancy of the Premises, then Tenant shall, at Tenant’s own expense, prepare and submit the required plans and all related bonds and other financial assurances; and Tenant shall carry out all such clean-up plans. Tenant shall promptly provide all information regarding the use, generation, storage, transportation or disposal of Hazardous Substances that is requested by Landlord. If Tenant fails to fulfill any duty imposed under this Paragraph within a reasonable time, Landlord may do so; and in such case Tenant shall cooperate with Landlord in order to prepare all documents Landlord deems necessary or appropriate to determine the applicability of the laws to the Premises and Tenant’s use thereof, and for compliance there with, and Tenant shall execute all documents promptly upon Landlord’s request. No such action by Landlord and no attempt made by Landlord to mitigate damages shall constitute a waiver of any of Tenant’s obligations under this Paragraph and Tenant’s obligations and liabilities hereunder shall survive the expiration of this Lease.

(d) The term “Hazardous Substances” as used in this Lease shall include, without limitation, flammables, explosives, radioactive materials, asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, petroleum and petroleum products, and substances declared to be hazardous or toxic under any law or regulation now or hereafter enacted or promulgated by any governmental authority including without limitation “oil, petroleum products and their by-products” as defined by Maryland Natural Resources Code Ann. Section; 8-1411-(a)(3) as amended from time to time, any “Hazardous Waste” as defined by the Resource Conservation and Recovery Act of 1976 as amend from time to time, and regulations promulgated thereunder; any “Hazardous Substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time; and any “Hazardous Substances” as defined by Maryland Health Environmental Code Ann., Title 7, Subtitle 2, as amended from time to time, and regulations promulgated thereunder).

(c) Tenant shall indemnify, defend, and hold harmless the Landlord, the manager of the property, and their respective officers, directors, beneficiaries, share-holders, partners, agents and employees from all fines, suits, procedures, claims and actions of every kind, and all costs associated therewith (including reasonable attorneys’ and consultants’ fees) arising out of or in any way connected with any deposit, spill, discharge or other release of Hazardous Substances that occurs as a result of Tenant’s use or occupancy of the Premises, or from Tenant’s failure to provide all information, make all submissions, and take all steps required by all governmental authorities under the laws. Tenant’s obligations and liabilities under this sub-paragraph shall survive the expiration of this Lease.

25. NOTICES. Any notice required by this Lease shall be sent by certified mail to Landlord at: 17 West Pennsylvania Avenue, Baltimore, Maryland 21204, Attention: Lawrence Reif, with copy to Legal Department, P.O. Box 10147, Baltimore, Maryland 21285. Any notice required by this Lease shall be sent by certified mail to Tenant at: TVI CORPORATION, having an address at 7100 Holiday Tyler Road, Glenn Dale Business Center, Glenn Dale, Maryland 20769 (if no other address specified, such notices to Tenant shall be addressed no the Leased Premises). Either party may, at any time, or from time to time, designate in writing a substitute address for that above set forth, and thereafter all notices to such party shall be sent by certified mail to such substitute address.

26. NON-WAIVER. It is understood and agreed that nothing herein shall be construed to be a waiver of any of the terms, covenants or conditions herein contained, unless the same shall be in writing, signed by the party to be charged with such waiver and no waiver of the breach of any covenant herein shall be construed as a waiver of such covenant or any subsequent breach thereof. No mention in this Lease of any specific right or remedy shall preclude Landlord from exercising any other right or from having any other remedy or from maintaining any action to which it may be otherwise entitled either at law or in equity.

27. SUCCESSORS AND ASSIGNS. Except as herein otherwise specifically provided, this Lease and the covenants and conditions herein contained shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns.

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In the event of any sale or transfer of the fee of any Premises which includes the Premises demised hereunder (other than a sale with a leaseback to the Grantor) or any assignment of any ground or underlying lease of any Premises which includes the Premises demised hereunder, the Grantor, transferor, or assignor, as the case may be, shall be and hereby is entirely relieved and freed of all obligations under this Lease.

Further, notwithstanding any provision herein to the contrary, Tenant shall look solely to the estate and property of Landlord in and to the property (or the proceeds received by Landlord on the sale of such estate and property, but not the proceeds of any financing or re-financing thereof) in event of any claim against the Landlord arising out of or in connection with this Lease, the relationship of Landlord and Tenant for Tenant’s use of the Premises, and such claim shall be limited to such estate and property of Landlord (or sale proceeds). No other properties or assets of Landlord shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment, (or other judicial process) or for the satisfaction of any other remedy of Tenant arising out of or in connection with this Lease, the relationship of Landlord and Tenant, and Tenant’s use of the Premises, and if Tenant shall acquire a lien on or interest in any other properties or assets by judgment or otherwise, Tenant shall promptly release such lien or interest in such other properties and assets by executing, acknowledging, and delivering to Landlord an instrument to that effect prepared by Landlord’s attorneys.

28. SECURITY DEPOSIT/CONSTRUCTION

(a) Landlord hereby acknowledges receipt from Tenant of Fifteen Thousand Dollars ($15,000.00) to be held by Landlord as security for the faithful performance by Tenant of all of the terms, covenants and conditions of this Lease. The security deposit shall not accrue interest. Landlord may, in Landlord’s sole discretion invest the deposit in interest bearing securities or accounts, and interest earned thereon, if any, shall belong to Landlord. Tenant further agrees that Landlord shall be entitled to co-mingle said security deposit and interest, if any, with its own funds. If, during the term of this Lease, or any renewal or extension thereof, any amount due from Tenant to Landlord as rental or otherwise, shall become past due, Landlord shall have the right, in its sole discretion, to apply the said security deposit, or any portion thereof, to satisfy such obligation and Tenant shall thereafter immediately replenish the security deposit to the sum specified above in this Section with the next payment of rental due hereunder. Further, in the event Tenant fails to comply with any of the terms or conditions contained in this Lease, Landlord shall have the right to apply the security deposit against any brokerage fee paid by Landlord to secure tenant and to repay Landlord for any money it expended in preparing the Premises for Tenant’s occupancy; Tenant shall thereafter immediately replenish the security deposit to the sum specified above in this Section. Within a reasonable time after the termination date of this Lease, the security deposit shall be returned to Tenant, less all costs incurred to Landlord in correcting or satisfying any default under this Lease and all costs incurred by Landlord in returning the Premises to the same condition as it was when delivered to Tenant, excluding reasonable wear and tear. No right or remedy available to Landlord as provided in this Section shall preclude or extinguish any other right or remedy to which Landlord may be entitled under this Lease or at law or in equity.

(b) For a description of Landlord’s Work and Tenant’s Work, see further Exhibit B – Construction Specifications.

29. ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of any lesser amount than the amount stipulated to be paid hereunder shall be deemed other than on account of the earliest stipulated rent or additional charges; nor shall any endorsement or statement on any check of letter be deemed an accord and satisfaction, and Landlord may accept any check or payment without prejudice to Landlord’s right to recover the balance due or to pursue any other remedy available to Landlord.

30. NOTICES TO MORTGAGES. Tenant agrees that a copy of any notice of default from Tenant to Landlord shall also be sent to the holder of any mortgage or deed of trust on the Premises, provided Tenant has been given written notice of the fact that such mortgage or deed of trust has been made; and Tenant shall allow said mortgagee or holder of the deed of trust a reasonable time, not to exceed ninety (90) days from the receipt of said notice, to cure, or cause to be cured, any such default. If such default cannot reasonably be cured within the time specified herein, then such additional time as may be necessary shall be allowed, provided the curing of such default is commenced and diligently pursued (including, but not limited to, commencement of foreclosure proceedings if necessary to effect such cure) in which event this Lease shall not be terminated while such remedies are being thus diligently pursued.

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31. ESTOPPEL CERTIFICATE. Tenant shall, at any time and from time to time during the term of this Lease or any renewal thereof, upon request of Landlord, execute, acknowledge, and deliver to Landlord or its designee, a statement in writing, certifying that this Lease is unmodified and in full force and effect if such is the fact (or if there have been any modifications thereof, that the same is in full force as modified and stating the modifications) and the dates to which the rents and other charges have been paid in advance, if any. Any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser of the estate of Landlord or by the mortgagee or any assignee of any mortgagee or the trustee or beneficiary of any deed of trust constituting a lien on the Premises or upon property in which the Premises are situate.

32. MECHANIC’S LIENS. Nothing contained in this Lease shall be deemed, construed or interpreted to imply any consent or agreement on the part of Landlord to subject Landlord’s interest or estate to any liability under any mechanic’s or other lien law. If Landlord receives any notice to file a mechanic’s or other lien against the building, or any part thereof, or the Premises, or any part thereof, for any work, labor, services or materials claimed to have been performed or furnished for or on behalf of Tenant or anyone holding any part of the Premises through or under Tenant, then Tenant shall act promptly to have such notice withdrawn and to settle any dispute that is the subject of such notice. If any petition to establish a mechanic’s or other lien is filed, or if any mechanic’s or other lien is actually established, against the building, or any part thereof, or the Premises, or any part hereof, or if any mechanics or other lien is actually established, for any work, labor, services or materials claimed to have been performed or furnished for or on behalf of Tenant or anyone holding any part of the Premises through or under Tenant, then Tenant shall cause the same to be canceled and discharged of record by payment, bond or order of court within 20 days after notice by Landlord to Tenant. Tenant shall, at Landlord’s request, give written notice to all of Tenant’s laborers and materialmen that Landlord shall not be responsible for labor on the Premises not at the time of said notice performed, or for materials which have been furnished. Tenant shall be responsible for paying, as additional rent, any attorneys fees that Landlord actually incurs as a result of Landlord receiving any notice of intent to file a mechanic’s, or other, lien described herein; as a result of any such petition to file a mechanic’s or other, lien; or as a result of any such mechanic’s, or other, lien being established against the building, or any part thereof, or against the Premises, or any part thereof.

33. WAIVER OF JURY TRIAL AND RIGHT TO COUNTERCLAIM. This lease shall be construed in accordance with the laws of the state of Maryland. Landlord and Tenant shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought about by either of the parties hereto against the other on any matters arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, and any emergency or other statutory remedy. Tenant further agrees that it shall not interpose any counterclaim(s) in a summary proceeding or in any action based on holdover or non-payment of rent and/or additional charges.

34. BROKERAGE. Tenant and Landlord each covenants and agrees than it has had no dealings with any broker or agent in connection with this Lease, except for Bright Realty Advisors, LLC and each covenants to pay, hold harmless and indemnify the other from and against any and all costs, expenses and liabilities for any compensation, commissions and charges claimed by any broker or agent in respect of this Lease or the negotiation thereof with whom Tenant or Landlord, as the case may, be, is claimed to have had dealings.

35. TENANT REPRESENTATIVE. Name, address and telephone number of Tenant representative to be contacted in the event of emergency:                                                                                                                                                                                         

36. NO OFFER. The submission of this Lease does not constitute a binding or irrevocable option or offer by Landlord to lease the Premises to Tenant on the terms herein set forth, or on any other terms. Neither Landlord nor Tenant shall be bound or legally obligated in any way until such time as this Lease is fully executed by both parties hereto, and executed counterparts there of are delivered to each of the parties. This Lease may be executed in any number of counterparts, each of which shall be an original, but all of which shall together constituted but one Lease.

37. TENANT’S RIGHT TO AUDIT.

(1) Audit Threshold. In the event Tenant’s proportionate share of Common Facilities Costs increases by more than twenty percent (20%) in any Lease Year, Tenant may audit Landlord’s common area operating costs in order to verify the accuracy of Common Facilities Costs charges provided that:

(a) Tenant specifically designates the fiscal year(s) that Tenant intends to audit, which shall be a year within three (3) years of the date of the audit but must be within the Term of this Lease; and

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(b) Such audit will be conducted only during regular business hours at the office where Landlord maintains CAM expense records and only after Tenant gives Landlord fourteen (14) days notice.

(2) Copy of Audit. Tenant shall deliver to Landlord a copy of the results of such audit within fifteen (15) days of its receipt by Tenant. No such audit shall be conducted if any other tenant has conducted an audit for the time period Tenant intends to audit and Landlord furnishes to Tenant a copy of the results of such audit.

(3) Tenant Not in Default, No audit shall be conducted any time that Tenant is in default of any terms of the Lease.

(4) Limits for Subtenants and Assignees. No subtenant shall have any right to conduct an audit and no assignee shall conduct an audit for any period during which such assignee was not in possession of the Premises.

38. MISCELLANEOUS

(a) Except for tenant’s obligation to pay rent and additional rental, the time of Landlord or Tenant, as the case of may be, to perform any of its respective obligations hereunder shall be extended if and to the extent that the performance thereof shall be prevented due to any strike, lockouts, civil commotions, war-like operations, invasions, rebellions, hostilities, military or usurped power, governmental regulations or controls, acts of God, or other causes beyond the control of the party whose performance is required. If Landlord shall be prevented from delivering the Premises to Tenant for causes beyond the control of Landlord, then the commencement and expiration of the Term shall be extended accordingly.

(b) In the event that Tenant shall seek the approval by or consent of Landlord and Landlord shall fail or refuse to give such consent or approval in respect of any matter where Landlord is required, either by this Lease or by law, not to unreasonably withhold its consent or approval, Tenant shall not be entitled to any damages for any withholding delay of such approval or consent of Landlord, but only shall be entitled to bring an action for injunction or specific performance.

(c) This Lease and the Riders and Exhibits attached hereto, if any, set forth all the covenants, promises, assurances, agreements, and understandings between Landlord and Tenant concerning the Premises and supersede and revoke any previous negotiations, arrangements, letters of intent, offers to lease, lease proposals, and information conveyed.

(d) Irrespective of the place of execution or performance, this Lease shall be governed by and construed in accordance with the laws of the State of Maryland. If any provision of this Lease or the application thereof to any person or circumstance shall, for any reason or to any extend, be invalid or unenforceable, the remainder of this Lease and the application of that provision to other persons or circumstances shall not be affected but rather shall be enforced to the extend permitted by law. The table of contents, captions, headings and title in this Lease are solely for convenience of reference and shall not affect its interpretation. This Lease shall be construed without regard to any presumption or other rule requiring construction against the party causing this Lease to be drafted. If any words or phrases in this lease have been stricken out or added, this lease shall be construed as if the words or phrases so stricken out or otherwise eliminated were never included in this Lease and no implication or inference shall be drawn from the fact that said words or phrases were so stricken out or otherwise eliminated. Each covenant, agreement, obligation or other provision of this Lease shall be deemed and construed as a separate and independent covenant of the party bound by, undertaking or making same, not dependent on any other provision of this Lease unless otherwise expressly provided. All terms and words used in this Lease, regardless of the number or gender in which they are used, shall be deemed to include any other number and any other gender as the context may require.

(e) In the event Tenant defaults under any of the terms of this Lease, Tenant shall pay all costs, expenses and reasonable attorney’s fees that may be incurred or paid by Landlord as a result thereof. Tenant shall be liable for such attorney fees whether or not Landlord institutes legal proceedings. However, where legal proceedings are instituted by Landlord against Tenant, and said proceedings result in a monetary judgment in favor or Landlord, those reasonable attorney fees for which Tenant shall be liable to Landlord shall not be less than 15% of said judgment.

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(f) Any and all sums of money required to be paid by Tenant under this Lease, whether or not designated as “additional rent” shall nevertheless be deemed as “additional rent” and shall be collectible as rent.

(g) This written agreement constitutes the entire agreement and understanding of the parties, and there are no other, prior or contemporaneous, written or oral agreements, undertakings, promises, warranties or covenants not contained herein. This Lease cannot be modified or amended except in a writing signed by both parties.

AS WITNESS the hands and seals of the parties hereto the day and year first above written.

WITNESS:	LANDLORD:
	GLENN DALE BUSINESS CENTER, L.L.C.
	By:	Continental Realty Corp., Agent
	By:	/s/ Lawrence G. Rief	(SEAL)
		Lawrence G. Rief, Member
WITNESS:	TENANT:
	TVI CORPORATION
	By:	/s/ Allen E. Bender	(SEAL)
		Allen E. Bender, President

STATE OF MARYLAND, CITY/COUNTY OF MARYLAND, to wit:

On this 16 day of February 1998, before me, the subscriber, a Notary Public of the State of Maryland, personally appeared

LAWRENCE G. RIEF, Member

of the above named Landlord, and he acknowledged the above Lease to be the act of the said Landlord.

IN WITNESS WHEREOF, I have hereunto set my hand and Notarial Seal.

/s/ Suzanne R. Bruno

Notary Public

My Commission Expires: 12/4/01

STATE OF MARYLAND, CITY/COUNTY OF CHARLES, to wit:

On this 14 day of January, 1998, before me, the subscriber, a Notary Public of the state aforesaid, personally appeared

ALLEN E. BENDER, President

of the above named Tenant, and he acknowledged the above Lease to be the act of the said Tenant.

IN WITNESS WHEREOF, I have hereunto set my hand and Notarial Seal.

/s/ Mary Ellen Ginn

Notary Public

My Commission Expires: June 21, 1999

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EXHIBIT A - Plat of Premises

Graphic Omitted

EXHIBIT A-1 – Parking Facilities

Graphic Omitted

EXHIBIT A-2 - Finished Area

Graphic Omitted

GLENN DALE BUSINESS CENTER, L.L.C.

EXHIBIT B

CONSTRUCTION SPECIFICATIONS

A. Landlord will, at its cost and expense, do the following with respect to Premises demised hereunder prior to Commencement Date of the Lease:

1. Renovate and finish office space, restrooms, lunchroom, and related administrative spaces, and designated the “Finished Area” per the attached plan in Exhibit A-2 including new HVAC for the Office Area

2. Install two new gas fired ceiling mounted heaters in the warehouse areas.

3. Tenant shall have exclusive use of existing loading facilities as shown on Exhibit A-2.

B. The following shall be incorporated in the construction of the Premises by the party indicated, but all labor, material and equipment therefor shall be at Tenant’s sole cost and expense: All other items necessary in order to constitute the Premises as a fully tenantable unit.

C. Except as otherwise indicated, Tenant accepts the Premises in “As is” condition as of the date of the execution of this Lease.

All work included in or in addition to the foregoing shall be subject to Landlord’s approval as to design, materials and details.

D. Provisions governing work performed by Tenant.

1. All work performed by Tenant shall be performed in a first class and workmanlike manner and with new materials.

2. Tenant shall be responsible for obtaining all permits required in connection with the performance of its work.

3. Before Tenant or its contractors commence any work, they shall arrange with Landlord for allocation of space for storage of equipment and materials and for access to the site of the work. Storage of all materials and equipment shall be confined to the areas from time to time designated by Landlord, and access to the site of the work by Tenant’s contractors, and their employees and suppliers shall be confined to the routes from time to time designated by Landlord.

4. Connections for utility service for Tenant and its contractors during the construction period shall not be made without prior notice to Landlord and without making arrangements satisfactory to Landlord for payment by Tenant for such connections and service.

5. Tenant shall not engage any contractor for work respecting the Premises without Landlord’s prior written approval of such contractor.

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6. Tenant shall require its contractors to comply with all requirements of Landlord regarding coordination of work in the property.

7. Tenant shall cause its contractors to remove and dispose of debris, rubbish, surplus materials and temporary structures resulting from Tenant’s work in the Premises, as may be necessary to avoid interference with construction or when directed by Landlord.

8. Tenant shall cause its contractors to take all reasonable precautions to protect other work on the property from any damage owing to work performed by Tenant’s contractors; and Tenant shall indemnify Landlord for any damage to any such other work caused by Tenant’s contractors.

9. If required by Landlord, Tenant shall cause it’s contractors to finish performance and labor and material payment bonds from a reputable surety company and which shall include Tenant, Landlord, and other designees of Landlord as obligees, without cost to Landlord or its designees.

10. If, in the opinion of Landlord’s insurer, builder’s risk insurance is required to be carried on the improvements made by Tenant, in order to prevent Landlord or its contractors from being deemed co-insurers under the builder’s risk insurance carried on the improvements constructed by Landlord, Tenant shall carry builder’s risk insurance on the work performed by Tenant in such form and amounts as may be required by Landlord’s insurers.

11. All work performed my Tenant shall be performed in compliance within applicable requirements.

12. Tenant shall cause its contractors to furnish the customary one year warranty against defects in workmanship and materials, and in the event the Term does not commence or is terminated prior to the expiration of the warranty period, Landlord shall be entitled to the benefit of such warranties, which are hereby assigned to Landlord.

13. If any labor dispute is caused by or related to any of Tenant’s contractors, subcontractors, or suppliers, Tenant shall, upon Landlord’s demand, cause the contractor, subcontractor or supplier causing, involved in or related to such labor dispute to immediately cease work and deliveries in the Center until further notice from Landlord.

14. If Tenant shall perform any work or make any improvements in the Premises not conforming to the plans and specifications approved by Landlord, then Tenant shall upon request by Landlord promptly make any changes needed to bring such work or improvements into conformity with approved plans and specs. If Tenant fails to make such requested changes promptly upon request by Landlord, then Landlord may cause such changes to be made at Tenant’s expense; and Tenant shall pay the costs of such work as if such work were assigned to be done by the Landlord under Section B of this Exhibit B.

15. Landlord shall have no responsibility or liability whatever for any materials or equipment stored by Tenant or its contractors either in the Premises or elsewhere in the property pursuant to paragraph 3 above. If Tenant desires insurance protection for such materials and equipment, it shall arrange for coverage at its expense.

16. Landlord acknowledges and agrees that Tenant shall be permitted to install a Paint Spray Booth in the warehouse area which shall be exhausted through the roof, such installation to be done at Tenant’s sole cost and expense, and Tenant to meet all code requirements.

17. Landlord acknowledges and agrees that Tenant shall be permitted to install phone, computer, and data cables in the walls of the Finished Area, and that Tenant shall be given at least 48 hours prior notice to accomplish such cable installation prior to installation of any wall covering. There shall be three cables to each office, each cable terminating in a standard plastic electric receptacle box with one on one wall and two on the opposite wall.

18. Landlord acknowledges and agrees that Tenant shall be permitted at its sole cost to install and suspend from the overhead area a number of fluorescent light fixtures.

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Exhibit B, page 3

E. Other Construction Provisions

1. Tenant may also install phone and data cables and receptacles in the warehouse area at its discretion.

2. Landlord will construct and provide a concrete slab adequately sized for a standard trash dumpster six feet wide and six feet long if this can be done reasonably and without the necessity of constructing a retaining wall. The slab will be sited immediately adjacent to the loading dock area so than it is readily accessible for pick-up and/or emptying by a trash service vehicle.

Page B-3

GLENN DALE BUSINESS CENTER, LLC.

EXHIBIT C

COMMON FACILITIES COSTS

Operating costs for the common facilities shall mean, for the purpose of Paragraph 23 of the Lease, the total expenses incurred in operating and maintaining the common facilities and any appurtenances thereto and facilities thereof (or in or on unpaved outdoor areas of the property or adjacent public streets or rights of way) or operating and maintaining leased facilities not for the exclusive use of any tenant of the building, including but not limited to the following:

1. Gardening, landscaping, and maintenance of grass, trees, and shrubbery;

2. All premiums for all insurance carried by the Landlord on the property, and on any equipment and systems in or pertaining to the building or property, including but not limited to public liability insurance, property damage insurance, automobile insurance, sign insurance, fire and extended coverage insurance, boiler liability and casualty insurance, and plate glass insurance (may be billed separately if fiscal year end and insurance year differ);

3. Watchman service and other security service(s) and security equipment (but not for individual leased premises);

4. Water and sewer charges for the property;

5. Any costs, charges, and expenses incurred by Landlord in connection with any change of any company providing any utility service to the Premises, including, without limitation, maintenance, repair, installation, and service costs associated therewith;

6 Building, repairs, replacements and maintenance which is the responsibility of the Landlord and all other repairs, replacements and maintenance in and to the property, including but not limited to: paving, plate glass, sprinkler system (if applicable), restroom facilities (if any) (and utility conduits and plumbing fixtures pertaining thereto) vehicle area lighting facilities, energy saving installations of any nature, drainage facilities and other utility conduits and facilities in the vehicle areas, and in unpaved areas of the property or adjacent public streets, pumping stations and force mains (on and/or off site) utilized for sanitary sewer and water service in the property, signs and wiring, retaining walls, curbs, gutters, fences, sidewalks, steps, escalators, elevators and ramps (if any) in the property or other outdoor areas or public streets; exclusive of casualty loss replacements covered by insurance, and exclusive of capital improvements;

7. Cleaning;

8. Utility charges (if any) for lighting the vehicle areas, signs, and operating pumping stations, force mains and other like facilities;

9. Vehicle area line painting, and removal of snow and ice;

10. Collection and removal of trash from the common facilities and outdoor areas, (if undertaken by Landlord);

11. Power and fuel for operating equipment and systems and for operating vehicles and equipment used for cleaning, maintenance and snow removal;

12. Salaries of personnel directly engaged in operating, cleaning and maintaining the property (including security personnel and parking attendants), and all related payroll charges and taxes.

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EX-10.7.1

Exhibit 10.7.1

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE is made this 2^nd day of October, 2002, by and between GLENN DALE BUSINESS CENTER, L.L.C (the “Landlord”) and TVI CORPORATION (the “Tenant”).

RECITAL

A. Landlord and Tenant entered into a Lease dated February 16, 1998 (the “Lease”) for certain premises containing approximately 17,000 square feet (the “Existing Premises”) which are located within a building known as Glenn Dale Business Center, 7100 Holiday Tyler Road, Glen Dale, Maryland.

B. Tenant desires to relocate to a larger area comprising approximately 30,696 square feet within the Glenn Dale Business Center (the “New Premises”).

C. Landlord and Tenant desire to amend and extend the Lease to permit Tenant to relocate to the New Premises upon the terms and conditions set forth in this First Amendment.

NOW, THEREFORE, for and in consideration of the premises and of other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Recitals. The Recitals noted above are hereby incorporated into and made a part of this First Amendment to Lease.

2. Relocation. Landlord and Tenant agree that Tenant shall vacate the Existing Premises and relocate to the New Premises, as indicated on First Amendment Exhibit A, attached hereto and made a part hereof. The effective date of such relocation (the “Relocation Commencement Date”) shall be the later of November l8, 2002, or the delivery of the New Premises to Tenant by Landlord (which Landlord estimates shall be forty five (45) days after this First Amendment to Lease has been fully executed), and thereafter the New Premises shall be deemed the ‘Premises” under the Lease.

3. Lease Term. The Lease term is scheduled to expire March 1, 2003; it shall be amended to extend for a period of five (5) years thereafter (unless the Relocation Commencement Date is a date other than the first day of a calendar month, in which case the Lease term shall continue for the balance of the month in which the Relocation Commencement Date occurs and for a period of five (5) years thereafter), unless the lease term is terminated earlier in accordance with the provisions of the Lease.

4. Rent. Commencing upon the Relocation Commencement Date, Tenant agrees to pay Landlord the annual rent of Four Dollars and Fifty Cents ($4.50) per square foot or One Hundred Thirty Eight Thousand One Hundred Thirty Two Dollars ($138,132.00) per annum payable in advance, in equal monthly installments, as follows: Eleven Thousand Five Hundred Eleven Dollars ($11,511.00), per month, on the first day of each and every month during the term of this Lease, without setoff, recoupment, or deduction, for the first lease year thereof; thereafter, effective upon each anniversary of the Relocation Commencement Date, rent shall increase per annum by two percent (2%) over the rent payable for the preceding lease year. If the Relocation Commencement Date shall commence on a date other than the first day of a month, the rental for the period from the Relocation Commencement Date to the first day of the next full calendar month of the term shall be prorated and shall be payable on the first day of the term.

5. Landlord Work. Landlord agrees, at its cost and expense, to perform the following with respect to the New Premises (collectively, “Landlord’s Work”) prior to delivering the New Premises to tenant:

1. Clean and paint existing office;

2. Replace existing carpet;

3. Clean and paint restrooms, and service, as needed, plumbing fixtures;

4. Service all heating, ventilation, and air conditioning equipment;

5. Demo portion of office in warehouse area;

6. Clean and seal warehouse floor;

7. Create warehouse access to break room;

8. Install one (1) sink in the break room;

9. Existing electrical service (no upgrade)

Except for the work specifically enumerated above, Landlord shall have to obligation to perform any work in the New Premises in connection with Tenant’s initial build-out as such work shall be the sole obligation of Tenant at Tenant’s sole cost and expense.

6. Additional Charges. Tenant currently pays its proportionate share of real Estate Taxes, Common Facilities Costs and Insurance pursuant to the Lease. As of the Relocation Commencement Date, Tenant’s proportionate share shall be increased to 30,696/310,000 or 9.902%.

7. Broker. Each of the parties represents and warrants that there are no claims brokerage commissions or finder’s fees in connection with the execution of this First Amendment to Lease, and each of the parties agrees to indemnify and save harmless the other party from and against all liabilities arising from any such claim including, without limitation, the cost of attorney’ fees in connection therewith.

8. Signage. Within fifteen (15) days of the Relocation Commencement Date, Tenant shall at its sole cost and expense install signage indicating the name of its business above the front entrance and rear door of the New Premises. The size and lettering thereof shall be in building standard color and subject to Landlord’s prior written approval.

9. Right of First Refusal. Before entering into any lease for the 10,000 square feet adjacent to the New Premises (as shown on First Amendment Exhibit B as “Right of First Refusal Premises”), and so long as Tenant is not then in default under the lease, Landlord will notify Tenant of the availability of the Right of First Refusal Premises amid shall offer to lease the same to Tenant at the same per square foot rate Tenant is then paying for the New Premises, subject the same subsequent rental increases as noted herein for the New Premises. If within five (5) business days after receipt of Landlord’s notice, Tenant agrees in writing to lease the said space, Landlord and Tenant will amend the Lease for such space within ten (10) business days, after Landlord’s receipt of Tenant’s notice of intent to lease on all the same terms as this Lease except for matters dependent upon the size of the premises such as the amount of common area expense and security deposit. If Tenant does not deliver its notice of intent to lease such space offered in Landlord’s notice within such five (5) business day period, or if Landlord and Tenant do not enter into a fully executed amendment far such space within such ten (10) business day period, then this right of first refusal to lease the space will lapse and be of no further force and effect, and Landlord will have the right to lease the space to a third party on the same or other terms and conditions. Once Tenant accepts Landlord’s offer (whether for all of the Right at First Refusal Premises or only a portion), this right of first refusal will lapse and be of no further force and effect with respect to the entire First Right & Refusal Premises. This right of first refusal is personal to TVI Corporation and is non-transferable. Time is of the essence.

10. Parking. Tenant shall have the use of fifty (50) parking spaces. Twenty (20) spaces will be on the front parking lot and thirty (30) spaces will be on the lower lot, as marked on First Amendment Exhibit C, attached hereto and made a part hereof

11. General. Except as otherwise expressly amended herein, all other terms and Conditions of the Lease shall remain unchanged and in full force and effect. In the event of any conflict between the terms of the Lease and the terms of this First Amendment, the terms of this First Amendment shall control. All undefined capitalized terms contained herein shall have the definitions assigned to them in the Lease.

BALANCE OF PAGE INTENTIONALLY BLANK

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Lease under their respective hands and seals as of the day and year first above written.

WITNESS	LANDLORD GLENN DALE BUSINESS CENTER, L.L.C.
	By:		(SEAL)
WITNESS	TENANT TVI CORPORATION
	By:	/s/ Richard Priddy	(SEAL)
	Name:	Richard Priddy
	Title:	CEO

STATE OF MARYLAND, COUNTY OF BALTIMORE, to wit:

On this             day of                      , 2002, before me, the subscribed, a Notary Public of the state aforesaid, personally appeared LAWRENCE G. RIEF, Member of the above-named Landlord, and he acknowledged the above First Amendment to Lease to be the act of the Landlord.

IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.

My commission expires:                     

STATE OF MARYLAND, COUNTY OF PRINCE GEORGES, to wit:

On this 2^nd day of October, 2002, before me, the subscribed, a Notary Public of the state aforesaid, personally appeared RICHARD PRIDDY, [insert name and title] of the above-named Tenant, and he acknowledged the above First Amendment to Lease to be the act of the Tenant.

IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.

/s/ Portia Power

Portia Power

My commission expires: May 1, 2005

FIRST AMENDMENT EXHIBIT A – Plan Showing Leased Premises

Graphic Omitted

FIRST AMENDMENT EXHIBIT B – Plan Showing Right of First Refusal Premises

Graphic Omitted

FIRST AMENDMENT EXHIBIT C – Plan Showing Parking Lot

Graphic Omitted

EX-10.7.2

Exhibit 10.7.2

SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE (hereinafter, the “Second Amendment”) is made this 16th day of January, 2004, by and between GLENN DALE BUSINESS CENTER, L.L.C., a Maryland limited liability company, having an office at c/o Continental Realty Corporation, 1427 Clarkview Road, Suite 500, Baltimore, Maryland 21209-2100, as landlord (the “Landlord”) and TVI CORPORATION, a Maryland corporation, having an office at 7100 Holiday Tyler Road, Glenn Dale, Maryland 20769, as tenant (the “Tenant”).

RECITALS:

A. Landlord and Tenant entered into a Lease dated February 16, 1998 (as amended by a First Amendment to Lease dated December 10, 2002, the “Lease”) for certain premises containing 63,839 square feet and known as Suite 200 (7100 Holiday Tyler Road, Suite 200, Glenn Dale, Maryland 20769, the “Premises”) which are located in the Glenn Dale Business Center.

B. Landlord and Tenant desire to expand the Premises to include the adjacent space containing 20,797 square feet and to further amend the Lease based upon the terms and conditions set forth in this Second Amendment. The total square footage of the Premises as of the Expansion Commencement Date (as herein (defined) shall be 84,636 square feet.

NOW, THEREFORE, for and in consideration of the premises and of other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Recitals. The Recitals noted above are hereby incorporated into and made part of this Second Amendment,

2. Expansion of Premises. Tenant agrees that it shall expand the Premises to include the 20,797 square feet of space immediately adjacent to Suite No. 200 (the “Expansion Premises”), which is shaded with diagonal lines on the drawing attached hereto as Second Amendment Exhibit A and made a part hereof. The expansion shall be effective on the date the Landlord delivers the Expansion Premises to Tenant, which Landlord estimates shall be March 1, 2004 (the “Expansion Commencement Date”). Landlord shall (1) demise the Expansion Premises, (2) paint the interior walls, and (3) open up two (2) 10 foot by 10 foot knock out panels in the demising wall at its sole cost and expense prior to delivering the Expansion Premises to Tenant. All other work necessary to prepare the Expansion Premises for Tenant’s use shall be the sole responsibility of Tenant at Tenant’s sole cost mid expense. Tenant shall obtain Landlord’s written approval of Tenant’s plans and specifications for any Tenant work in the Expansion Premises before commencing any such work; such approval shall not be unreasonably withheld or delayed by Landlord. Effective as of the Expansion Commencement Date, all references in the Lease to the “Premises” shall be deemed to include the Expansion Premises.

3. Extension of Existing Lease Term. The existing Lease Term, currently scheduled to expire on March 31, 2008, shall be extended as of the Expansion Commencement Date to terminate on February 28, 2009 (the “Extended Term”), unless terminated earlier in accordance with the provisions of the Lease. The Extended Term shall be on the same terms, covenants and conditions as the original term, except that the Minimum Rent shall be adjusted as provided herein, and there shall be no further right of renewal after the Extended Term except as specifically provided for herein.

4. Minimum Rent. Commencing on the Expansion Commencement Date, the Minimum Rent for the Premises for the Extended Term shall be as shown on the table below.

(a) For the 63,839 square feet of space in Suite 200, Tenant agrees to pay Landlord:

Payment Period	Minimum Rent Per Square Foot		Annual Minimum Rent		Monthly Minimum Rent Payment
Expansion Commencement Date Through 01/31/05	$	4.59	$	293,021.01	$	24,418.42
02/01/05 – 01/31/06	$	4.68	$	298,766.52	$	24,897.21
02/01/06 – 01/31/07	$	4.77	$	304,512.03	$	25,376.00
02/01/07 – 01/31/08	$	4.87	$	310,895.93	$	25,908.00
02/01/08 – 02/28/09	$	4.97	$	317,279.83	$	26,439.99

(b) For the 20,797 square feet of space in the Expansion Premises, tenant agrees to pay Landlord:

Payment Period	Minimum Rent Per Square Foot		Annual Minimum Rent		Monthly Minimum Rent Payment
Expansion Commencement Date Through 02/28/05	$	5.50	$	114,384.50	$	9,531.96
03/01/05 – 02/28/06	$	5.61	$	116,671.17	$	9,722.60
03/01/06 – 02/28/07	$	5.72	$	118,958.84	$	9,913.24
03/01/07 – 02/29/08	$	5.83	$	121,246.51	$	10,103.88
03/01/08 – 02/28/09	$	5.95	$	123,742.15	$	10,311.85

(c) Therefore, the Tenant’s monthly payment obligation pursuant to (a) and (b) above for the Lease Term shall be as follows:

Payment Period	Monthly Minimum Rent Payment
Expansion Commencement Date Through 01/31/05	$	33,950.38
02/01/05 – 02/28/05	$	34,429.17
03/01/05 – 01/31/06	$	34,619.81
02/01/06 – 02/28/06	$	35,098.60
03/01/06 – 01/31/07	$	35,289.24
02/01/07 – 02/28/07	$	35,821.24
03/01/07 – 01/31/08	$	36,011.88
02/01/08 – 02/29/08	$	36,543.87
03/01/08 – 02/28/09	$	36,751.84

5. Security Deposit. Landlord hereby acknowledges that it currently holds Twenty Three Thousand Nine Hundred Thirty Nine and 63/100 Dollars ($23,939.63) previously paid by Tenant as security for the faithful performance by Tenant of all of the terms, covenants and conditions of the Lease. Tenant agrees to pay Landlord an additional security deposit at Nine Thousand Five Hundred Thirty One Dollars ($9,531 .00) contemporaneously with its execution of this Second Amendment. Upon Landlord’s receipt of such payment, the total security deposit on account for Tenant under the Lease shall be Thirty Three Thousand Four Hundred Seventy and 63/100 Dollars ($33,470.63).

6. Additional Charges. Tenant currently pays its proportionate share of Real Estate Taxes Common Facilities Costs and Insurance pursuant to the Lease. As at the Expansion Commencement Date, Tenant’s proportionate share shall be increased to 84,636/310,000, or 27.3%.

7. Parking. Tenant shall have the use of seventy (70) parking spaces, as marked on Second Amendment Exhibit B, attached hereto and made a part hereof.

8. Broker. Each of the parties represents and warrants that there are no claims for brokerage commissions or finder’s fees in connection with the execution of this Second Amendment, and each of the parties agrees to indemnify and save harmless the other party from and against all liabilities arising from any such claim including, without limitation, the cost at attorneys’ fees in connect ion therewith.

9. General. Except as otherwise expressly amended herein, all other terms and conditions of the lease shall remain unchanged and in full force and effect. In the event of any conflict between the terms of the Lease and the terms of this Second Amendment, the terms of this Second Amendment shall control. All undefined capitalized terms cant a med herein shall have the definitions assigned to them in the Lease.

BALANCE OF PAGE INTENTIONALLY BLANK

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment a Lease under their respective hands and seals as of the day and year first above written.

WITNESS:	LANDLORD: GLENN DALE BUSINESS CENTER, L.L.C.
	By:	GDBC Manager. Inc., its Manager
/s/ Shanna M. Hayward	By:	/s/ Lawrence G. Rief	(SEAL)
		Lawrence G. Rief, Vice President
WITNESS:	TENANT:
	TVI CORPORATION
	By:	/s/ Richard V. Priddy	(SEAL)
	Name:	Richard V. Priddy
	Title:	President and CEO

STATE OF MARYLAND, COUNTY OF BALTIMORE, to wit:

On this 21^st day of January, 2004, before me, the subscribed, a Notary Public of the State aforesaid, personally appeared

LAWRENCE RIEF,

Vice President of the Manager for the above-named Landlord, and he acknowledged the above Second Amendment to lease to be the act of the Landlord.

IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.

/s/ Shanna M. Hayward

My commission expires: 11/1/2007

STATE OF MARYLAND, COUNTY OF BALTIMORE, to wit:

On this 16th day of January, 2004, before me, the subscribed, a Notary Public of the State aforesaid personally appeared

Richard J. Priddy [Name], President and CEO [Title]

of the above-named Tenant, and s/he acknowledged the above Second Amendment to Lease to be the act of the Tenant.

IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.

/s/ Madeline M. McCormick

My commission expires: Sept. 25, 2007

SECOND AMENDMENT EXHIBIT A – Plan Showing Expansion Premises

Graphic Omitted

SECOND AMENDMENT EXHIBIT B– Plan Showing Parking Lot

Graphic Omitted

EX-10.7.3

Exhibit 10.7.3

THIRD AMENDMENT TO LEASE

THIS THIRD AMENDMENT TO LEASE (hereinafter, the “Third Amendment” is made this 29th day of March, 2004, by and between GLENN DALE BUSINESS CENTER, L.L.C., a Maryland limited liability company, having an office at c/o Continental Realty Corporation, 1427 Clarkview Road, Suite 500, Baltimore, Maryland 21209-2100, as landlord (the “Landlord”) and TVI CORPORATION, A Maryland corporation, having an office at 7100 Holladay Tyler Road, Suite 200, Glenn Dale, Maryland 20769, as tenant (the “Tenant”).

RECITALS:

A. Landlord and Tenant entered into a Lease dated February 16, 1998 (as amended by a first Amendment to Lease dated December 10, 2002, and a Second Amendment to Lease dated January 16, 2004, collectively, the “Lease”) for certain premises containing 84,636 square feet and known as Suite 200 (7100 Holladay Tyler Road, Suite 200, Glenn Dale, Maryland 20769, the “Premises”) which are located in the Glenn Dale Business Center.

B. Landlord and Tenant desire to expand the Premises to include the adjacent space containing 33,637 square feet and to further amend the Lease based upon the terms and conditions set forth in this Third Amendment. The total square footage of the Premises as of the Third Amendment Expansion Commencement Date (as herein defined) shall be 118,273 square feet.

NOW, THEREFORE, for and in consideration of the premises and of other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Recitals. The Recitals noted above are hereby incorporated into and made part of this Third Amendment.

2. Expansion of Premises. Tenant agrees that it shall expand the Premises to include the 33,637 square feet of space immediately adjacent to Suite No 200 (the “Third Amendment Expansion Premises”), which is shaded with diagonal lines on the drawing attached hereto as Third Amendment Exhibit A and made a part hereof. The expansion shall be effective on May 1, 2004 (the “Third Amendment Expansion Commencement Date”). Effective as of the Third Amendment Expansion Commencement Date, all references in the Lease in the “Premises”, shall be deemed to include the Third Amendment Expansion Premises.

3. Landlord Work. Landlord shall, at its sole cost and expense, perform the following work in the Third Amendment Expansion Premises prior to delivering the Third Amendment Expansion Premises to Tenant: (1) clean and paint the warehouse walls, (2) clean, service and paint the existing bathrooms and install new bathroom fixtures, (3) open up knock out panels in the demising walls, and (4) upgrade the lighting to 400 watt metal halide. Notwithstanding the foregoing, Tenant shall have access to the Third Amendment Expansion Premises during the month of April, 2004, for purposes of set up. All other work necessary to prepare the Third Amendment Expansion Premises for Tenant’s use shall be the sole responsibility of Tenant at Tenant’s sole cost and expense. Tenant shall obtain landlord’s written approval of Tenant’s plans and specifications for any Tenant work in the Third Amendment Expansion Premises before commencing any such work; such approval shall not be unreasonably withheld or delayed by Landlord.

4. Extension of Existing Lease Term. The existing Lease Term for the 63,839 square feet in Suite 200, the 20,797 square feet in the Expansion Premises per the Second Amendment to Lease, and the 33,637 square feet in the Third Amendment Expansion Premises (collectively, the Premises), currently scheduled to expire on February 28, 2009, shall be extended as of the Third Amendment Expansion Commencement Date to terminate on April 30, 2010 (the “Third Amendment Extended Term”), unless terminated earlier in accordance with the provisions of the Lease. The Third Amendment Extended Term shall be on the same terms, covenants and conditions as the original term, except that the Minimum Rent shall be adjusted as provided herein, and there shall be no further right of renewal after the Third Amendment Extended Term except as specifically provided for herein.

5. Minimum Rent. Commencing on May 1, 2004, the rent or minimum rent (hereinafter, the “Minimum Rent”) for the Premises for the Third Amendment Extended Term shall be as shown on the tables below.

(a) for the 63,839 square feet of space in Suite 200, Tenant agrees to pay Landlord:

Payment Period	Minimum Rent Per Square Foot		Annual Minimum Rent		Monthly Minimum Rent Payment
02/01/04-01/31/05	$	4.59	$	293,021.01	$	24,418.42
02/01/05-01/31/06	$	4.68	$	298,766.52	$	24,897.21
02/01/06-01/31/07	$	4.77	$	304,512.03	$	25,376.00
02/01/07-01/31/08	$	4.87	$	310,895.93	$	25,908.00
02/01/08-02/28/09	$	4.97	$	317,279.83	$	26,439.99
02/01/09-02/28/10	$	5.07	$	323,663.73	$	26,971.98
02/01/10-04/30/10	$	5.17	$	330,047.63	$	27,503.97

(b) For the 20,797 square feet of space in the Expansion Premises as set forth in the Second Amendment to Lease hereinafter, the “Second Amendment Expansion Premises”), Tenant agrees to pay Landlord:

Payment Period	Minimum Rent Per Square Foot		Annual Minimum Rent		Monthly Minimum Rent Payment
03/01/04-02/28/05	$	5.50	$	114,384.50	$	9,531.96
03/01/05-02/28/06	$	5.61	$	116,671.17	$	9,722.60
03/01/06-02/28/07	$	5.72	$	118,958.84	$	9,913.24
03/01/07-02/29/08	$	5.83	$	121,246.51	$	10,103.88
0/01/08-02/28/09	$	5.95	$	123,742.15	$	10,311.85
03/01/09-02/28/10	$	6.07	$	126,237.79	$	10,519.82
03/01/10-04/30/10	$	6.19	$	128,733.43	$	10,727.79

(c) For the 33,637 square feet of space in the Third Amendment Expansion Premises, Tenant agrees to pay Landlord:

Payment Period	Minimum Rent Per Square Foot		Annual Minimum Rent		Monthly Minimum Rent Payment
05/01/04-02/28/05	$	5.00	$	168,185.00	$	14,015.42
03/01/05-02/28/06	$	5.10	$	171,548.70	$	14,295.73
03/01/06-02/28/07	$	5.20	$	174,912.40	$	14,576.03
03/01/07-02/29/08	$	5.30	$	178,276.10	$	14,856.34
03/01/08-02/28/09	$	5.41	$	181,976.17	$	15,164.68
03/01/09-02/28/10	$	5.52	$	185,676.24	$	15,473.02
03/01/10-04/30/10	$	5.63	$	189,376.31	$	15,781.36

(d) Therefore, Tenant’s monthly payment obligation pursuant to (a), (b) and (c) above for the Lease Term shall be as follows:

Payment Period	Annual Minimum Rent		Monthly Minimum Rent Payment
05/01/04-01/31/05	$	575,590.51	$	47,965.88
02/01/05-02/28/05	$	581,336.02	$	48,444.67
03/01/05-01/31/06	$	586,986.39	$	48,915.53
02/01/06-02/28/06	$	592,731.90	$	49,394.33
03/01/06-01/31/07	$	598,382.87	$	49,865.24
02/01/07-02/28/07	$	604,767.17	$	50,397.26
03/01/07-01/31/08	$	610,418.54	$	50,868.21
02/01/08-02/29/08	$	616,802.44	$	51,400.20
03/01/08-02/28/09	$	622,998.15	$	51,916.51
03/01/09-02/28/10	$	635,577.76	$	52,964.81
03/01/10-04/30/10	$	648,157.37	$	54,013.11

6. Minimum Rent Abatement. Notwithstanding anything Section 5 above to the contrary, as partial inducement for Tenant to execute this Third Amendment, Landlord agrees to abate Minimum Rent for the Third Amendment Expansion Premise only (the “Abatement”) as follows: for the period commencing May 1, 2004 through August 31, 2004, Minimum Rent shall be abated in full. Tenant acknowledges that the Abatement does not pertain to the additional charges and that Tenant shall be responsible for its pro rata share of Real Estate Taxes, Common Facilities Costs and

Insurance as set forth in the Lease. Landlord and Tenant agree that the Abatement is expressly conditioned upon Tenant remaining free of default under the Lease (after written notice from Landlord and beyond any applicable cure period), for the entire Lease Term. Upon the occurrence of an event of default on the part of Tenant which is uncured beyond any applicable cure period, Landlord may rescind the Abatement, and promptly upon demand by Landlord Tenant shall pay as rent hereunder, the full amount of the Abatement.

7. Security Deposit. Landlord hereby acknowledges that it currently holds Thirty Three Thousand Four Hundred Seventy and 63/100 Dollars ($33,470.63) previously paid by Tenant as security for the faithful performance by Tenant of all of the terms, covenants and conditions of the Lease. Tenant agrees to pay Landlord an additional security deposit of Fourteen Thousand Five Hundred Dollars ($14,500.00) contemporaneously with its execution of this Third Amendment. Upon Landlord’s receipt of such payment, the total security deposit on account for Tenant under the Lease shall be Forty Seven Thousand Nine Hundred Seventy and 63/100 Dollars ($47,970.63).

8. Additional Charges. Tenant currently pays its proportionate share of Real Estate Taxes, Common Facilities Costs and Insurance pursuant to the Lease. Effective May 1, 2004, Tenant’s proportionate share shall be increased to 118,273/310,000, or 38.2%.

9. Parking. Tenant shall have the use of one hundred twenty five (125) parking spaces, as marked on Third Amendment Exhibit B attached hereto and made a part hereof.

10. Broker. Each of the parties represents and warrants that there are no claims for brokerage commissions or finders fees in connection with the execution of this Third Amendment, and each of the parties agrees to indemnity and save harmless the other party from and against all liabilities arising from any such claim including, without limitation, the cost of attorneys’ fees in connection therewith.

11. Financial Statements. From time to time Landlord may request, and Tenant hereby agrees to provide, within ten (10) days after the receipt of any such request, the financial statements of Tenant. Tenant represents and warrants to Landlord that all financial statements delivered to Landlord are or will be (if delivered in the future) true and accurate in all material respects. If Tenant shall deliver to Landlord any such financial statements which are materially inaccurate, then such delivery shall be deemed to be a default under the Lease.

12. Access to Overhead Door. Tenant shall have drive in access to one (1) overhead door in the Third Amendment Expansion Premises.

13. General. Except as otherwise expressly amended herein, all other terms and conditions of the Lease shall remain unchanged and in full force and effect. In the event of any conflict between the terms of the Lease and there terms of this Third Amendment, the terms of this Third Amendment shall control. All undefined capitalized terms contained herein shall have the definitions assigned to them in the Lease. Landlord and Tenant agree and intend that (a) the Lease constitutes a contract under seal, and (b) the twelve (12) year statute of limitations period under Section 5-102 of the Courts & Judicial Proceedings Article of the Annotated Code of Maryland (“Courts Article”) shall govern the limitations period under the Lease rather than the three (3) year limitations period under Section 5-101 of the Courts Article.

BALANCE OF PAGE INTENTIONALLY BLANK

IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to Lease under their respective hands and seals as of the day and year first above written.

WITNESS:	LANDLORD: GLENN DALE BUSINESS CENTER L.L.C.
Shanna M. Hayward	By:	GDBC Manager, Inc., its Manager
	By:	/s/ Lawrence G. Rief	(SEAL)
		Lawrence G. Rief, Vice President
WITNESS:	TENANT: TVI CORPORATION
Madeline M. McCormick	By:	/s/ Richard V. Priddy	(SEAL)
		Richard V. Priddy, President and CEO

STATE OF MARYLAND, COUNTY OF BALTIMORE, to-wit:

On this 14th day of April, 2004, before me, the subscribed, a Notary Public of’ the State aforesaid, personally appeared

LAWRENCE G. RIEF,

Vice-President of the Manager for the above-named Landlord, and he acknowledged the above Third Amendment to Lease to be the act of the Landlord.

IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.

/s/ Shanna M. Hayward

My commission expires: 11/1/2007

STATE OF MARYLAND , COUNTY OF BALTIMORE, to-wit:

On this 29th day of March, 2004, before me, the subscribed, a Notary Public of’ the State aforesaid, personally appeared

RICHARD V. PRIDDY,

President and CEO of the above-named Tenant, and he acknowledged the above Third Amendment to Lease to be the act of the Tenant.

IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.

/s/ Madeline M. McCormick

My commission expires: September 25, 2007

THIRD AMENDMENT EXHIBIT A – Plan Showing Expansion Premises

Graphic Omitted

SECOND AMENDMENT EXHIBIT B– Plan Showing Parking Lot

Graphic Omitted

EX-10.8

Exhibit 10.8

THIS LEASE is made and entered into this 22 day of              2003 by and between ADMAR CONSTRUCTION, INC. (hereinafter referred to as the “Landlord”) and MICRONEL INC (hereinafter referred to as “Tenant”).

WITNESSETH, that for and in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto do hereby mutually agree as follows:

1. Demised Premises. Landlord does hereby lease to Tenant, and Tenant does hereby lease from Landlord, for the term and upon the conditions hereinafter provided, approximately 11,880 office/warehouse square feet of space in the ADMAR BUILDING 2 (hereinafter referred to as the “Building”) situated at 5703 INDUSTRY LANE FREDERICK, MD 21704 (such space being hereinafter referred to as the “Demised Premises”). The Demised Premises (better known as A, Am, B, C, D, E, F, G, H, I and J) is outlined in red on the plan attached hereto and made a part hereof as Exhibit A.

2. Term. The term of this Lease shall be for a period of Five years commencing upon the Lease commencement Date (hereinafter defined and expiring at midnight on June 15, 2008. The Lease Commencement Date shall be June 15, 2003.

3. Rent. The Tenant shall pay as rent for the Demised Premises the sum of One hundred seventeen thousand six hundred Dollars $117,600.00 annually, payable in equal monthly installments, in advance of Nine thousand eight hundred Dollars ($ 9,800.00) on the first day of each and every calendar month during the term hereof. If the Term of this Lease begins on a date other than on the first day of a month, rent from such date until the first day of the following month shall be prorated at the rate of one-thirtieth (1/30) of the fixed monthly rental for each day payable in advance. The Tenant will pay said rent to Landlord, at the office of: ADMAR CONSTRUCTION, INC. 5705 INDUSTRY LANE FREDERICK, MD 21704, or to such other party or to such other address as Landlord may designate from time to time by written notice to Tenant, without demand deduction, set-off or counterclaim. If Landlord shall at any time accept said rent after it shall become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute, or be construed as, a waiver of any or all of the Landlord’s rights hereunder.

4. Use of Demised Premises. Tenant will use and occupy the Demised Premises solely for Design & Production of Personnel Protection Equipment and in accordance with the use permitted under applicable zoning regulations. Without the prior written consent of Landlord, the Demised Premises will not be used for any other purpose. Tenant will not use or occupy the Demised Premises for any unlawful purpose, and will comply with all present and future laws, ordinances, regulations, and orders of the United States of America, the State of Maryland and any other public authority having jurisdiction over the Demised Premises.

5. Assignment and Subletting. Tenant will not assign, transfer, mortgage or encumber this Lease or sublet or rent (or permit occupancy or use of) the Demised Premises, or any part thereof, without obtaining the prior written consent of Landlord; nor shall any assignment or transfer of this Lease be effectuated by operation of law or otherwise without the prior written consent of Landlord. The consent by Landlord to any assignment or subletting shall

not be construed as a waiver or release of Tenant from the terms of any covenant or obligation under this Lease, nor shall the collection or acceptance of rent from any such assignee, subtenant or occupant constitute a waiver or release of Tenant of any covenant or obligation contained in this Lease, nor shall any such assignment or subletting be construed to relieve Tenant from obtaining the consent in writing of Landlord to any further assignment or subletting. In the event that Tenant defaults hereunder, Tenant hereby assigns to Landlord the rent due from any subtenant Landlord.

6. Maintenance by Tenant. Tenant will keep the Demised Premises and the fixtures and equipment therein in clean, safe and sanitary condition, will take good care thereof, will suffer no waste or injury thereto, and will, at the expiration or other termination of the term of this Lease, surrender the same, broom clean, in the same order and condition in which they are on the commencement of the term of this Lease, ordinary wear and tear and damage by the elements excepted.

7. Alterations. Tenant will not make or permit anyone to make any alterations, decorations, additions or improvements, structural or otherwise, in or to the Demised Premises or the Building without the prior written consent of Landlord. As a condition precedent to such written consent of Landlord, Tenant agrees to obtain and deliver to Landlord written and unconditional waivers of mechanics’ liens upon the real property of which the performed, and materials to be unconditional waivers of mechanics’ liens upon the real property of which the Demised Premises are a part, for all work, labor, and services to be performed, and materials to be furnished, by them in connection with such work, signed by all contractors, subcontractors, materialmen and laborers to become involved in such work. If notwithstanding the foregoing, any mechanics’ lien is filed against the Demised Premises, or the real property of which the Demised Premises are a part, for work claimed to have been done for, or materials claimed to have been furnished to, Tenant, such mechanics’ lien shall be discharged by Tenant within ten (10) days thereafter, at Tenant’s sole cost and expensed by the payment thereof or by filing any bond required by law. If Tenant shall fail to discharge any such mechanics’ lien, Landlord may, at its option, discharge the same and treat the cost thereof as additional rent payable with the monthly installment of rent next becoming due; it being hereby expressly covenanted and agreed that such discharge by Landlord shall not be deemed to waive, or release the default of Tenant in not discharging the same. Tenant will indemnify and hold Landlord harmless from and against any and all expenses, liens, claims or damages to person or property which may or might arise by reason of the making of any such alterations, decorations, additions or improvements. If any such alteration, decoration, addition or improvement is made without the prior written consent of Landlord, Landlord may correct or remove the same, the Tenant shall be liable for any and all expenses incurred by Landlord in the performance of this work. All alterations, decorations, additions or improvements in or to the Demised Premises or the Building made by either party shall immediately become the property of Landlord and shall remain upon and be surrendered with the Demised Premises as a part thereof at the end of the term hereof without disturbance, molestation or injury; provided, however, that if Tenant is not in default in the performance of any of its obligations under this Lease, Tenant shall have the right to remove, prior to the expiration or termination of the term of this Lease, all movable furniture, furnishings or equipment installed in the Demised Premises at the expense of Tenant, and if such property of Tenant is not removed by Tenant prior to the expiration or termination of this Lease, the same shall become the property of Landlord and shall be surrendered with the Demised Premises as a part thereof.

8. Signs; Furnishings. No sign, advertisement or notice shall be inscribed, painted, affixed or displayed on any part of the outside or the inside of the Building except on the directories and the doors of offices, and then only in such place, number, size, color and style as is approved by Landlord, and if any such sign, advertisement or notice is exhibited, Landlord shall have the right to remove the same and Tenant shall be liable for any and all expenses incurred by Landlord by said approval. Any such permitted use, including directories and name plates, shall be at the sole expense and cost of the Tenant. Landlord shall have the right to prohibit any advertisement of Tenant which in its opinion tends to impair the reputation of the Building or its desirability as a high quality office building, and, upon written notice from Landlord, Tenant shall immediately refrain from and discontinue any such advertisement

Any and all damage or injury to the Demised Premises or the Building caused by moving the property of Tenant into, in or out of the Demised Premises, or due to the same being on the equipment or other bulky matter of any description will be received into the Building or carried in the elevators except as approved by Landlord. Tenant agrees promptly to remove from the sidewalks adjacent to the Building any of the Tenant’s furniture, equipment or other material there delivered or deposited.

9. Inspection. Tenant will permit Landlord, or its representative, to enter the Demised Premises, without charge therefor to Landlord and without diminution of the rent payable by Tenant, to examine, inspect and protect the same, and to make such alterations and/or repairs as in the judgment of Landlord may be deemed necessary, or to exhibit the same to prospective tenants during the last one hundred twenty (120) days of the Term of this Lease.

10. Insurance Rating. Tenant will not conduct or permit to be conducted any activity, or place any equipment in or about the Demised Premises, which will, in any way, increase the rate of fire insurance or other insurance on the Building; and if any increase in the rate of fire insurance or other insurance is stated by any insurance company or by the applicable Insurance Rating Bureau to be due to activity or equipment in or about the Demised Premises, such statement shall be conclusive evidence that the increase in such rate is due to such activity or equipment, and as a result thereof, Tenant shall be liable for such increase and shall reimburse Landlord therefore. The Tenant shall be responsible for carrying insurance on the contents of its rented unit and shall be responsible for securing its own liability insurance.

11. Tenant’s Equipment. Tenant will not install or operate in the Demised Premises any equipment other than that which is necessary to conduct Tenant’s operation as Manufacture of Personnel Protection Equipment, without first obtaining the prior written consent of Landlord, who may condition such consent upon the payment by Tenant of additional rent in compensation for such excess consumption of utilities and for the cost of additional wiring as may be occasioned by the operation of said equipment or machinery. Tenant shall not install any other equipment of any kind or nature whatsoever which will or may necessitate any changes, replacements or additions to, or in the use of, the water system, heating system, plumbing system, air conditioning system, or electrical system of the Demised Premises or the Building

without first obtaining the prior written consent of Landlord. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a degree as to be objectionable to Landlord or to any tenant in the Building shall be installed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate such noise vibration.

12. Indemnity. Tenant will indemnify and hold harmless Landlord from and against any loss, damage or liability occasioned by or resulting from any default hereunder or any willful or negligent act on the part of Tenant, its agents, employees, or invitees, or persons permitted on the Demised Premises by Tenant. Tenant agrees to procure and keep in force, at its expense, public liability insurance coverage on the Demised Premises. If requested by Landlord, a certificate of such coverage from the insurer providing thirty (30) days’ notice to Landlord prior to cancellation or termination shall be furnished to Landlord.

13. Common Area. Tenant shall pay their pro rata share of common area maintenance. Common area maintenance costs shall include all costs and expenses of every kind and nature as may be paid or incurred by Landlord in operating, policing, protecting, managing, equipping, lighting, repairing, replacing and maintaining the common areas and common facilities, including, but not limited to, the cost and expenses of:

a. gardening, landscaping and maintenance of grass, trees and shrubbery;

b. utility charges and other costs of lighting the common areas, the vehicle areas, building signs and other like facilities;

c. designated parking spaces line painting, and removal of snow and ice;

d. collection and removal of trash from all outdoor areas in and around the building.

The tenant’s share of this cost is $761.00 per month in addition to said rent; subject to yearly review.

14. Services and Utilities: The Tenant is aware that its rented unit has its own individually controlled heating units and utility meters and that it is responsible for the payment of those charges.

15. Insolvency or Bankruptcy of Tenant. In the event Tenant makes an assignment for the benefit of creditors, or a receiver of Tenant’s assets is appointed, or Tenant files a voluntary petition in any bankruptcy or insolvency proceeding, or an involuntary petition in any bankruptcy or insolvency proceeding is filed against Tenant and the same is not discharged within sixty (60) days, or Tenant is adjudicated a bankrupt, Landlord shall have the option of terminating this Lease by sending written notice to Tenant of such termination; and, upon such written notice being given by Landlord to Tenant, the term of this Lease shall, at the option of Landlord, end and Landlord shall be entitled to immediate possession of the Demised Premises and to recover damages from Tenant in accordance with the provisions of Article 17 thereof.

16. Liability of Landlord. Landlord shall not be liable to Tenant, its employees, agents, business invitees, licensees, customers, clients, family members, guests, or trespassers for

any damage, compensation or claim arising from the necessity of repairing any portion of the Building, the interruption in the use of the Demised Premises, accident or damage resulting from the use or operation (by Landlord, Tenant, or any other person or persons whatsoever) of heating, cooling, electrical or plumbing equipment or apparatus, or the termination of this Lease by reason of the destruction of the Demised Premises, or from any fire, robbery, theft and/or any other casualty, or from any leakage in any part or portion of the Demised Premises or the Building, or from water, rain or snow that may leak into, or flow from, any part of the Demised Premises of the Building, or from drains, pipes or plumbing work in the Building or from any other cause whatsoever.

17. Damage to the Demised Premises. If the Demised Premises shall be partially damaged by fire or other cause without the fault or neglect of Tenant, Landlord shall diligently and as soon as practicable after such damage occurs (taking into account the time necessary to effectuate a satisfactory settlement with any insurance company) repair such damage at the expense of the Landlord and the rent, prorated to the extent that the Demised Premises are rendered untenantable, shall be suspended until such repairs are completed, provided. however, that if the Building is damaged by fire or other cause to such extent that the damage cannot be fully repaired within sixty (60) days from the date of such damage, Landlord shall have the option of terminating this Lease by giving written notice to Tenant of such decision and the term of this Lease shall terminate on the day such notice is given.

18. Default of Tenant. If Tenant shall fail to pay any monthly installment of rent as aforesaid (although no legal or formal demand has been made therefor), or shall violate or fail to perform any of the other conditions, covenants or agreements herein made by Tenant, and such failure to pay rent or such violation or failure shall continue for a period often (10) days after written notice thereof to Tenant by Landlord, then and in any of said events this Lease shall, at the option of Landlord, cease and terminate and shall operate as a notice to quit, any notice to quit, or of Landlord’s intention to re-enter, being hereby expressly waived, and Landlord may proceed to recover possession under and by virtue of the provisions of the laws of the State of Maryland, or by such other proceedings, including re-entry and possession, as may be applicable. If Landlord elects to terminate this Lease, everything herein contained on the part of Landlord to be done and performed shall cease without prejudice, however, to the right of Landlord to recover from Tenant all rental accrued up to the time of termination or recovery of possession by Landlord, whichever is later. Should this Lease by reason of Tenant’s default as hereinabove provided, or if Tenant shall abandon or vacate the Demised Premises before the expiration or termination of the Term of this Lease, the Demised premises may be relet by Landlord for such rent and upon such terms as are not unreasonable under the circumstances and, if the full rental hereinabove provided shall not be realized by Landlord, Tenant shall be liable for all damages sustained by Landlord, including, without limitation deficiency in rent, reasonable attorneys’ fees, brokerage fees, and expenses of placing the Demised Premises in first class rentable condition. Any damage or loss of rental sustained by in separate actions, from time to time, as said damage shall have been made more easily ascertainable by successive relettings, or, at Landlord’s option, may be deferred until the expiration of the term of this Lease, in which event the cause of action shall not be deemed to have accrued until the date of expiration of said term. If Landlord should commence any summary proceeding for non-payment of rent by Tenant, Tenant shall not interpose any counterclaim of any nature or description in any such proceeding.

The provisions contained in this paragraph shall be in addition to and shall not prevent the enforcement of any claim Landlord may have against Tenant for anticipatory breach of the unexpired term of this Lease. In the event that Tenant continues to occupy the Demised Premises after the expiration of the term of this Lease, with the express or implied consent of Landlord, such tenancy shall be from month-to-month and shall not be renewal of the term of this Lease or tenancy from year-to year. All rights and remedies of Landlord under this Lease shall be cumulative and shall not be exclusive of any other rights and remedies provided to Landlord under applicable law.

19. Waiver. If under the provisions hereof Landlord shall institute proceedings and a compromise or settlement thereof shall be made, the same shall not constitute a waiver of any covenant herein contained nor of any of Landlord’s rights hereunder. No waiver by Landlord of any breach of any covenant, condition or agreement herein contained shall operate as a waiver of such covenant, condition, or agreement itself, or of any subsequent breach thereof. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installments of rent herein stipulated shall be deemed to other than the monthly installments of rent herein stipulated shall be deemed to other than on account of the earliest stipulated rent nor shall any endorsement or statement on any check or letter accompanying a check for payment of rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or to pursue any other remedy provided in this Lease. No re-entry by Landlord, and no acceptance by Landlord of keys from Tenant, shall be considered an acceptance of a surrender of the Lease.

20. Subordination. This Lease is subject and subordinate to the lien of all and any mortgages (which term “mortgages” shall include both construction and permanent financing and shall include deeds of trust and similar security instruments) which may now or hereafter encumber or otherwise affect the real estate (including the Building of which the Demised Premises form a part, or Landlord’s leasehold interest therein, and to all and any renewals, extensions, modifications, recastings or refinancings thereof. In confirmation of such subordination, Tenant shall, at Landlord’s request, promptly execute any requisite or appropriate certificate or other document. Tenant hereby constitutes and appoints Landlord as Tenant’s attorney-in-fact to execute any such certificate or certificates for or on behalf of Tenant. Tenant agree that in the event that any proceedings are brought for the foreclosure of any such mortgage, Tenant shall atone to the purchaser at such foreclosure sale, if requested to do so by such purchaser, and to recognize such purchaser as the Landlord under this Lease, and Tenant waives the provisions of any statute or rule of law, nor or hereafter in effect, which may give or purport to give Tenant any right to terminate or otherwise adversely affect this Lease and the obligations of Tenant hereunder in the event that any such foreclosure proceeding is prosecuted or completed. Tenant agrees that this Lease shall subordinate to any mortgages or deeds of trust that may be placed upon any building, structure and/or any part thereof, or the land and to any and all advances to be made thereunder, and to the interest thereon, and to all renewals, replacements, and extensions thereof by Landlord. Should any mortgage or deed of trust executed by Tenant, it shall be subordinate to this Lease. Within ten (10) days after request from Landlord, or in the event that upon any sale, assignment or hypothecation of the Premises and/or land thereunder by Landlord, an estoppel certificate shall be required from Tenant, Tenant agrees to deliver to any proposed mortgagee or purchase or to the Landlord, in recordable form, a certificate certifying (if such be the case) that this Lease is in full force and effect, that there are no defenses or offsets thereto, or stating those claimed by Tenant.

21. Condemnation. If the whole or a substantial part of the Demised Premises shall be taken or condemned by any governmental authority for any public or quasi-public use or in such governmental authority, and Tenant shall have no claim against Landlord (or otherwise) for any portion of the amount that may be awarded as damages as a result of such taking or condemnation or for the value of any unexpired term of the Lease. The annual rental, however, shall be abated on the date when such title vests in such governmental authority. lf less than a substantial part of the Demised Premises is taken or condemned by any governmental authority for any public or quasi-public use or purpose, the rent shall be equitably adjusted on the date when title vests in such governmental authority and the Lease shall otherwise continue in full force and effect. For purposes of this Article 20, a substantial part of the Demised Premises shall be considered to have been taken if more than fifty percent (50%) of the Demised Premises are unusable by Tenant.

22. Covenants of Landlord. Landlord covenants that it has the right to make this Lease for the term aforesaid, and that if Tenant shall pay the rental and perform all of the covenants, terms and conditions of this Lease to be performed by Tenant. Tenant shall, during the term hereby created, freely, peaceably and quietly occupy and enjoy the full possession of the Demised Premises without molestation or hindrance by Landlord or any party claiming through or under Landlord.

23. No Partnership. Nothing contained in this Lease shall be deemed or construed to create a partnership or joint venture of or between Landlord and Tenant, or to create any other relationship between the parties hereto other than that of Landlord and Tenant.

24. No Representations by Landlord. Neither Landlord nor any agent or employee of Landlord has made any representations or promises with respect to the Demised Premises or the Building except as herein expressly set forth, and no rights, privileges, easements or licenses are acquired by Tenant except as herein expressly set forth. The Tenant, by taking possession of the Demised Premises, shall accept the same “as is,” and such taking of possession shall be conclusive evidence that the Demised Premises and the Building are in good and satisfactory condition at the time of such taking of possession.

25. Brokers. Landlord and Tenant each represent and warrant one to another that neither of them has employed any broker in carrying on the negotiations relating to this Lease. Landlord shall indemnify and hold Tenant harmless, and Tenant shall indemnify and hold Landlord harmless from and against any claim or claims for brokerage or other commission arising from or out of any breach of the foregoing representation and warranty by the respective indemnitors.

26. Waiver of Jury Trial. Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on or in respect of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant hereunder, Tenant’s use or occupancy of the Demised Premises, and/or claim by injury or damage.

27. Notices. All notices or other communications hereunder shall be in writing and shall be deemed duly given if delivered in person or by the United States Postal Service, Certified or Registered Mail, Return Receipt Requested, First Class, Postage Prepaid, (i) if to Landlord to: Admar Construction, Inc. 5705 Industry Lane Frederick, MD and (ii) if to Tenant, at Suite A at 5703 Industry Lane Frederick, MD unless notice of a change of address is given pursuant to the provisions of this article.

28. Estoppel Certificates. Tenant agrees, at any time and from time to time, upon not less than five (5) days prior written notice by Landlord, to execute, acknowledge and deliver to Landlord a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modifications), (ii) stating the dates to which the rent and other charges hereunder have been paid by Tenant, (iii) stating whether or not to the best knowledge of Tenant, Landlord is in default in the performance of any covenant, agreement or condition contained in this Lease, and, if so, specifying each such default of which Tenant may have knowledge, and (iv) stating the address to which notices to Tenant should be sent pursuant to Article 28 hereof. Any such statement delivered pursuant hereto may be relied upon by any owner of the Building, any prospective purchaser of the Building, any mortgagee of prospective mortgagee of the Building or of Landlord’s interest, or any prospective assignee of any such mortgage.

29. Security Deposit. Simultaneously with the execution of this Lease, Tenant shall deposit with Landlord the sum of $2000.00 as a security deposit. Such security deposit (which shall not bear interest to Tenant) shall be considered as security for the payment and performance by Tenant of all of Tenant’s obligations, covenants, conditions and agreements under this Lease. Upon the expiration of the term hereof, Landlord shall (provided that Tenant is not in default under the terms hereof) return and pay back such security deposit to Tenant, less such portion thereof as Landlord shall have appropriated to make good any default by Tenant with respect to any of Tenant’s aforesaid obligations, covenants, conditions or agreements. In the event of any default by Tenant hereunder, Landlord shall have the right but shall not be obligated, to apply all or any portion of the security deposit to cure such default, in which event Tenant shall be obligated to promptly deposit with Landlord the amount necessary to restore the security deposit to its original amount. In the event or the sale or transfer of Landlord’s interest in the Building, Landlord shall have the right to transfer the security deposit to such purchaser or transferee, in which event Tenant shall be entitled to look to the new Landlord for the return of the security deposit and Landlord shall thereupon be released from all liability to Tenant for the return of such security deposit.

30. Holding Over. Tenant shall give the Landlord notice in writing at least three (3) months prior to the expiration of the term of this Lease of Tenant’s intention to vacate the Demised Premises. In the event that Tenant shall not immediately surrender the Demised Premises on the date of expiration of the term hereof, Tenant shall, by virtue of the provisions hereof, become a Tenant by the month at the monthly rental in effect during the last month of the term of this Lease, which said monthly tenancy shall commence with the first day next after the

expiration of the term of this Lease. The Tenant as a monthly tenant shall be subject to all the conditions and covenants of this Lease as though the same had originally been a monthly tenancy. Tenant shall give to Landlord at least thirty (30) days’ written notice of any intention to quit the Demised Premises, and Tenant shall be entitled to thirty (30) days’ written notice to quit the Demised Premises, except in the event of nonpayment of rent in advance or of the breach of any other covenant by the Tenant, in which event Tenant shall not be entitled to any notice to quit, the usual thirty’ (30) days’ notice to quit being hereby expressly waived. Notwithstanding the foregoing provisions of this article 31, in the event that Tenant shall hold over after the expiration of the term hereby created, and if Landlord shall desire to regain possession of the Demised Premises promptly at the expiration of the term of this Lease, then at any time prior to Landlord’s acceptance of rent from Tenant as a monthly tenant hereunder, Landlord, at its option, may forthwith re-enter and take possession of the Demised Premises without process, or by any legal process in force in Maryland.

31. Right of Landlord to Cure Tenant’s Default. If Tenant defaults in the making of any payment or in the doing of any act herein required to be made or done by Tenant, then Landlord may, but shall not be required to, make such payment or do such act, and the amount of the expense thereof, of made or done by Landlord, with interest thereon at the rate of eight percent (8%) per annum from the date paid by Landlord, shall be paid by Tenant to Landlord and shall constitute additional rent hereunder due and payable with the next monthly installment of rent; but the making of such payment or the doing of such act by Landlord shall not operate to cure such default or to stop Landlord from the pursuit of any remedy to which Landlord would otherwise be entitled. Any installment of rent which is not paid by Tenant within ten (10) days after the same becomes due and payable (in addition to the late charge penalty) shall bear interest at the rate of eight percent (8%) per annum from the date such installment became due and payable to the date of payment thereof by Tenant, and such interest shall constitute additional rent hereunder due and payable with the next monthly installment of rent.

32. Benefit and Burden. The provisions of this Lease shall be binding upon, and shall inure to the benefit of the parties hereto and each of their respective representatives, successors and assigns. Landlord may freely and fully assign its interest hereunder.

33. Annual Increase. At the end of every year, the yearly rent computed as set forth in Number 3 shall be increased by three percent (3%).

34. Late Charge. A late charge of five percent (5%) will be assessed on any rent received after the tenth (10th) day of the month. If Tenant’s rental is paid by check, Tenant agrees to pay Landlord additional rent of five percent (5%) if Tenant’s bank refuses, on second demand, to pay any such rental check.

35. First Right of Refusal. Landlord grants tenant First Right of Refusal on additional spaces shown by dotted red line on Exhibit A with the same rates for Units L, M, N, O and P when they become available. Tenant to render decision within one week of First Right of Refusal offer.

Witness/Attest:	Landlord:
	ADMAR CONSTRUCTION, INC.
	BY:	/s/ Farhad Memarsadeghi                                                     4/8/03
		FARHAD MEMARSADEGHI                                           DATE
		PRESIDENT
Witness/Attest:		Tenant:
		MICRONEL, INC
	BY:	/s/ Dale Kline                                                                     4/12/03
		DALE KLINE                                                                     DATE
		PRESIDENT

EX-10.8.1

Exhibit 10.8.1

ADDENDUM NO. 1

Special provisions attached to and hereby made apart thereof, the contract of lease dated April 22, 2003, between ADMAR CONSTRUCTION, INC. (Landlord) and MICRONEL SAFETY. INC. (Tenant).

1. Name change. Micronel Safety, Inc. is now doing business as Safety Tech International, Inc.

2. Demised Premises. Starting April 15, 2004, demised premises to extend and include Units K, L, M, N, O, P and Pm (entire building at 5703 Industry Lane).

3. Rent. Base rent to increase to One hundred ninety-two thousand dollars ($192,000) per year, to be paid in equal monthly installments, in advance, of Sixteen thousand ($16,000) on the first day of each and every calendar month.

4. Annual Increase. The annual increase shall be subject to that of item 33 in the lease.

5. Common Area. Tenant’s share of the common area charges to increase to Fifteen thousand twelve dollars ($15,012) a year, which is a four hundred ninety dollars per month increase, to be paid in equal monthly installments, in advance, of One thousand two hundred fifty-one dollars ($1,251) on the first day of each and every calendar month.

Witness/Attest:	Landlord:
	ADMAR CONSTRUCTION, INC.
/s/ Linda M. Canale	BY:	/s/ Farhad Memarsadeghi                                                   2/16/04
		FARHAD MEMARSADEGHI                                           DATE
		C.E.O.
Witness/Attest:	Tenant:
	SAFETY TECH INTERNATIONAL, INC.
/s/ Sandra Hamilton	BY:	/s/ Dale Kline                                                                     2/26/04
		DALE KLINE                                                                     DATE
		President

EX-10.9

Exhibit 10.9

[TVI Corporation Letter head]

April 3, 2002

RE: Distributor Agreement

Dear Bob:

When countersigned below, this Letter Agreement will confirm our formal agreement regarding the terms whereby Fisher Safety, a division of Fisher Scientific Company LLC., Inc. (referred to herein as “Distributor”) agrees to act as the non-exclusive agent for TVI Corporation (referred to herein as “TVI”) for the sale and distribution of TVI’s line of integrated soft shelter systems for use in the hospital, military, and public safety markets (collectively referred to herein as the “Products”) to end user customers (referred to herein as “End Users”).

1. Relationship of the Parties. The relationship between TVI and Distributor shall be that of seller and buyer and nothing in this Agreement shall be construed as establishing a partnership or fiduciary relationship of any kind between the parties.

2. Prices. The minimum prices payable for the Products are listed on Exhibit A attached hereto, as amended from time to time. Any prices on Exhibit A are subject to increase from time to time by TVI, provided that no change in prices shall be effective with respect to any Orders already accepted by Distributor or TVI. In addition to the minimum prices listed on Exhibit A, as amended from time to time, Distributor shall also collect any sales, use, value added or other taxes or governmental charges attributable to the sale and distribution of the Products. Prices are FOB Glenn Dale, MD, and distributor pays all shipping and insurance related costs.

3. Submission of Orders. Distributor shall submit all orders for any of the Products (“Orders”) in writing to TVI at least thirty (30) days in advance of the requested delivery date. If TVI is unable to satisfy any Order within the time required or is otherwise unable to accept the order, it shall notify Distributor within five (5) business days after receipt of the Order. Distributor understands and agrees that any terms and conditions on its purchase order form will be superceded by this Letter Agreement, and in the event such terms and conditions conflict with the terms and conditions of this Letter Agreement, the terms and conditions of this Letter Agreement shall control.

4. Payment. The payment for all Products ordered by Distributor from TVI, and all other charges payable by Distributor, shall be due net thirty (30) days from the date of shipment by TVI. Distributor shall pay interest on all payments for payment received more than thirty (30) days after the date of shipment at the lesser of ONE AND ONE-HALF PERCENT(l-l/2%) PER MONTH, or the maximum rate permitted by applicable law. Distributor shall make payment to TVI for all Orders, regardless of whether or not Distributor has received payment from the End User.

5. Termination. Either party shall have the right to terminate this Agreement if the other party breaches a material term of this Agreement, and fails to cure such a breach within sixty (60) days from receipt of written notice from the non-breaching party. In addition, either party may terminate this Agreement for convenience upon sixty (60) days prior written notice to the other party. In the event of termination of this Agreement for any reason, Distributor will pay, within 60 days of any such termination, TVI for all Orders that have been submitted to TVI prior to such termination. Upon receipt of payment for all Orders, TVI shall ship to Distributor all applicable Products. Neither Party shall incur any liability whatsoever for any damage, loss, or expense of any kind suffered or incurred by the other arising from or incident to any terminations or expiration of this Agreement.

7. Use of TVI Trademarks. During the term of this Agreement, Disturber may use TVI’s names, marks, logos, designs, and other brand designations used by TVI in connection with the Products (collectively, the “TVI Trademarks”), on a nonexclusive basis solely in connection with its bona fide marketing and promotion of the products pursuant to this Agreement. Such use must comply with TVI’s trademark use policy, which may be

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updated from time to time in TVI’s sole and absolute discretion; provided, however, that notice of any updates or other changes to such use policy are provided to Distributor within a reasonable period in advance of their effective date and such changes do not negatively impact the rights granted to Distributor under this Agreement. All right, title and interest to the TVI Trademarks, and the goodwill pertaining to Distributor’s use of the TVI Trademarks, are reserved and shall at all times vest and remain in TVI.

8. Intellectual Property Rights. TVI shall retain all right, title and interest in the Products, and Distributor will not obtain any rights in the Products as a result of its responsibilities hereunder.

9. Product Warranty. The warranty with respect to the Products is as described in the warranty agreement provided with each Product (“Warranty Agreement”). This is the only warranty offered by TVI with respect to the Products. TVI does not warrant that the Product will meet the requirements of any Customer. THE WARRANTIES CONTAINED IN THE WARRANTY AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THOSE OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

10. Distributor Warranties. Distributor represents and warrants that it: (a) will conduct business in manner that reflects favorably at all times on TVI and the good name, goodwill and reputation of the Products; (b) will not engage in any deceptive, misleading, or unethical practices; (c) will not make any false or misleading representations, with regard to TVI or the Products; and (d) will be responsible for any representations, warranties, or guarantees to End Users with respect to the features or capabilities of the Products that are inconsistent with the literature distributed by TVI.

11. Indemnity. Distributor agrees to defend, indemnify, and hold TVI, and its officers, directors, agents, and employees, harmless against all costs, expenses and losses (including reasonable attorney fees and costs) incurred through claims of third parties against TVI based on Distributor’s breach of any representations or warranties contained herein or as a result of any of Distributor’s actions or inactions. Distributor will not be held responsible for manufacturing defects of Products.

12. Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY CLAIM FOR INDIRECT, CONSEQUENTIAL, OR SPECIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOST PROFITS (WHETHER DIRECT OR INDIRECT), LOST REVENUES (WHETHER DIRECT OR INDIRECT), LOSS OF GOODWILL, OR PUNITIVE DAMAGES, WHETHER ARISING UNDER TORT OR CONTRACT, EVEN IF THE PARTY HAS BEEN MADE AWARE OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL TVI’S CUMULATIVE AND TOTAL LIABILITY FOR ALL CLAIMS RELATING TO THIS AGREEMENT, EXCEED THE THEN-CURRENT TOTAL AMOUNT OF FEES PAID BY DISTRIBUTOR TO TVI PURSUANT TO THIS AGREEMENT.

13. Confidentiality. It is recognized that during the course of its work with TVI, Distributor may have occasion review information that is considered by TVI to be confidential or proprietary, including information relating to the Products, including inventions, patent, trademark, and copyright applications, improvements, know-how, specifications, drawings, cost data, process flow diagrams, customer and supplier lists, bills, ideas, and/or any other written material referring to same (the “Confidential Information”). Both during the term of this Agreement and thereafter, Distributor agrees to maintain in confidence such Confidential Information. Distributor further agrees to use all reasonable precautions to ensure that all such Confidential Information is properly protected and kept from unauthorized persons or disclosure. Distributor agrees that it will not, without first obtaining the prior written permission of TVI directly or indirectly utilize such Confidential Information in its own business, manufacture and/or sell any product that is based in whole or in part on such Confidential Information, and disclose such Confidential Information to any third party. TVI will honor all confidential information disclosed and identified by the distributor.

14. Miscellaneous. This Letter Agreement, including any Exhibits attached hereto, constitutes the entire Letter Agreement and supersedes all prior agreements, negotiations, representations and proposals, written and oral, relating thereto. This Letter Agreement may be amended or modified only in writing executed by both parties. The waiver or failure of any party to exercise any rights pursuant to this Letter Agreement shall not be deemed a waiver or other limitation of any right or future right. Distributor may not assign this Letter Agreement without the prior

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written consent of TVI, which consent may be withheld in TVI’s sole discretion. Except as expressly set forth herein, each party shall bear its own costs, expenses, taxes and other charges whatsoever incurred in connection with the execution and performance of this Letter Agreement. In the event that any action is filed in relation to this Letter Agreement, the party which does not prevail in such action shall pay the reasonable attorneys’ fees and other costs and expenses including investigation costs, incurred by the prevailing party in such proceedings. This Letter Agreement shall be interpreted and construed in accordance with the laws of the State of Maryland, without regard to principles of conflicts of the law thereof, and any disputes arising hereunder shall be adjudicated in the federal or state courts of Maryland, to whose jurisdiction Distributor hereby irrevocably submits and as to venue Distributor hereby waives all objections. Each of the parties hereto represent that it has read this Letter Agreement, that it understands fully all of its terms and that it enters into this Letter Agreement voluntarily and of its own free will and fully and completely accepts the terms of this Letter Agreement. This Letter Agreement may be executed and delivered by email, facsimile or other electronic transmission. The operation of Sections 5, 8, 11, 12, 13 and 14 hereof shall survive the execution and any termination or expiration of this Letter Agreement and remain in full force and effect at all times thereafter.

If this is consistent with your expectations and objectives, please so indicate by signing this letter where indicated below and returning one copy to us at your earliest convenience.

Very truly yours,
TVI CORPORATION
By:
	Richard Priddy, President and CEO

ACCEPTED AND AGREED BY: FISHER SCIENTIFIC COMPANY, LLC.
By:	/s/ Karl Shaw
Name:	Karl Shaw
Title:	Director
Date:	May 1, 2002

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[Fisher Scientific Letterhead]

GUARANTY

A. TVI Corporation (hereinafter referred to as “Seller”), having its principal place of business at 7100 Holladay Tyler Road, Glen Dale, Maryland, hereby represents and warrants that all Products (including their packaging, labeling and shipping) comprising each shipment or other delivery hereinafter made by Seller (hereinafter referred to as “Products”) to or on the order of Fisher Scientific L.L.C., a Delaware limited liability company, having its principal place of business at 2000 Park Lane, Pittsburgh, PA 15275 or to any of its branches, divisions, subsidiaries, affiliates, or any of their customers (hereinafter collectively referred to as “Fisher”), as of the date of such shipment or delivery, conform to representations and warranties made by Seller in its advertising, product labeling and literature.

B. Intentionally Omitted

C. Seller hereby agrees that it will reimburse Fisher for all reasonable out-of-pocket costs and expenses incurred in connection with any product corrective action or recall relating to the Products which is requested by Seller or required by any governmental entity.

D. Seller agrees to procure and maintain on an occurrence form basis product liability insurance with respect to the Products with insurer(s) having Best’s rating(s) of A-or better, naming Fisher as an additional insured (Broad Form Vendors Endorsement), with minimum limits in each case of $1,000,000. Seller shall promptly furnish to Fisher a certificate of insurance and renewal certificates of insurance evidencing the foregoing coverages and limits. The insurance shall not be canceled, reduced or otherwise changed without providing Fisher with at least ten (10) days prior written notice.

E. Seller agrees to and shall protect, defend, indemnify and hold harmless Fisher from any and all claims, actions, costs, expenses and damages, including reasonable attorney’s fees and expenses arising out of: (i) any actual or alleged infringement of a United States patent, trademark or copyright in the design, composition, use, sale, advertising or packaging of the Products; (ii) any breach of the representations or warranties set forth in this Guaranty; (iii) the sale or use of the Products where such liability results from the act or omission of Seller (whether for breach of warranty, strict liability in tort, negligence or otherwise).

F. Intentionally Omitted

G. Intentionally Omitted

H. If the Products to be furnished by Seller are to be used in the performance of a U.S. Government contract or subcontract those clauses of the applicable U.S. Government procurement regulation which are mandatory required by Federal Statute to be included in U.S. Government subcontracts shall be incorporated herein by reference including, without limitation, the Fair Labor Standards Act of 1938, as amended.

I. Intentionally Omitted

J. The agreements and obligations of Seller set forth in this Guaranty are in consideration of purchases made by Fisher from Seller and said obligations are in addition to any obligations of Seller to Fisher or Fisher to Seller. This Guaranty shall be effective upon the first sale to Fisher of any Product by Seller, and the obligations of Seller under this Guaranty shall be in effect until the termination of the Distributor Agreement between Seller and Fisher. In the event that any of the terms and conditions of this Guaranty conflict with the terms and conditions of the Distributor Agreement between Seller and Fisher, the terms and conditions of the Distributor Agreement shall control.

SELLER	FISHER SCIENTIFIC COMPANY
TVI Corporation	/s/ Karl Shaw
Name Under Which Seller’s Business is Conducted	Signature of Authorized Representative
/s/ Richard Priddy	Director                                                                              5/1/02
Signature of Authorized Representative	Title                                                                                      Date
CEO                                                                                  4/26/02
Title                                                                                      Date

EX-10.9.1

Exhibit 10.9.1

DISTRIBUTORSHIP AGREEMENT ADDENDUM

This Distributorship Agreement Addendum (“Addendum”) is made and entered into effective the      day of             , 2003 (“Effective Date”), between TVI Corporation, a corporation having a principal place of business et 1100 Holladay Drive, Suite 300, Glenn Dale, MI) 20769 (“SUPPLIER”) and Fisher Scientific Company L.L.C., a limited liability company having a principal place of business at 2000 Park Lane, Pittsburgh, PA 15275 (“DISTRIBUTOR”).

1. DISTRIBUTOR AGREEMENT

1.1 The parties agree that this Addendum hereby modifies the Distributorship Agreement between SUPPLIER and DISTRIBUTOR dated April 3, 2002, and signed by Karl Shaw on May 1, 2002 (“Agreement”). Notwithstanding the foregoing, any and all terms and conditions in the Agreement not modified by this Addendum shall remain in full force and effect. Any defined terms in this Addendum that are not defined herein, shall have the same messing as set forth in the Agreement.

1.2 Section 2 of the Agreement shall be deleted in its entirety and replaced with the following language:

2. Prices. The prices payable for the Products shall be the then-current manufacturer’s suggested retail price for such Products (“Minimum Prices”), subject to the discounts set forth in Sections 3.5 and 3.6, below. All Minimum Prices are subject to increase from time to time by SUPPLIER, provided that no change in Minimum Prices shall be effective with respect to any Orders already accepted by DISTRIBUTOR or SUPPLIER. In addition to the Minimum Prices, DISTRIBUTOR shall also collect any sales, use, value added or other taxes for governmental charges attributable to the sale and distribution of the Products. Prices are FOB Glen Dale, MD and DISTRIBUTOR shall pay all shipping and insurance related costs. In no case shall the Minimum Prices, net of discounts, charged Distributor for Products sold by and through Distributor exceed those prices for the same Products, net of discounts, charged to the other distributors set forth in Section 3.3, below.

2. PRODUCT AND MARKETS AND CUSTOMER TYPE (MARKET)

2.1 Products: The Products covered by this Agreement are those products identified in Appendix A—COMMERCIAL PRODUCTS hereto, manufactured by or on behalf of SUPPLIER any improved or updated versions thereof, including accessories designed for such products, and any new products subsequently introduced by SUPPLIER for sale to the MARKET AND CUSTOMER TYPES (as such term is defined below).

2.2 MARKET AND CUSTOMER TYPES. This Agreement covers all domestic markets supporting homeland security (primarily decontamination) including first responders, public safety, and hospitals, law enforcement, military, and federal agencies.

2.3 Similar or Related Products: Any goods similar or related to the Products, and sold to the MARKET AND CUSTOMER TYPES, that may be developed by SUPPLIER during the term of this Agreement must offered by SUPPLIER to DISTRIBUTOR, and DISTRIBUTOR must offer and represent the same to its customer base on the same terms as set forth herein.

3. GRANT OF RIGHTS

3.1 SUPPLIER hereby appoints DISTRIBUTOR and DISTRIBUTOR accepts the appointment as SUPPLIER’s “Exclusive” Distributor of the Products in the United Stares (the “Territory”) for the MARKET AND CUSTOMER TYPES, during the term of this Agreement and pursuant to the provisions of this Agreement. The Term of this Agreement will be for three (3) years from the Effective Date of this Addendum, and it will renew annually thereafter unless either party provides written termination notification to the other party, at least thirty (30) days prior to the expiration of the Term, of its intention not to renew. SUPPLIER AND DISTRIBUTOR shall retain the right to market and sell the Products directly to the [OMITTED]*.

3.2 EXISTING DISTRIBUTION FOR MARKET AND CUSTOMER TYPES: Except for those sales relationships and distribution agreements with the third parties set forth in Section 3.3 below, SUPPLIER agrees to terminate, or transfer to DISTRIBUTOR, its other existing distribution agreements for the MARKET AND CUSTOMER TYPES. DISTRIBUTOR shall provide adequate coverage of the Territory. In the event that DISTRIBUTOR does not provide adequate coverage within the Territory and fails to cure such deficiency alleged by SUPPLIER within sixty (60) days of receiving notice from SUPPLIER, SUPPLIER may quote orders directly to customers in the Territory pursuant to the terms and conditions set forth in Section 3.5 below.

3.3 Except with respect to the terms of Section 3.1 and 3.2 above, SUPPLIER shall retain no right to sell, and distribute the Products directly to end user customers. SUPPLIER shall be permitted to maintain the following distribution and sales relationships and agreements with the following third parties:

• REC

3.4 The minimum sales goal for the Products for 2003 shall be [OMITTED]* (“2003 Goal”).

3.5 [OMITTED]*.

IF DISTRIBUTOR fails to provide the quote directly to customer or contact is not made directly with customer, within 2 working days of receiving a request from SUPPLIER, SUPPLIER will proceed to contact and/or quote directly to such customer, and such order shall not be eligible for, or subject to, the Discount.

* MATERIAL NOTED AS [OMITTED] IS CONFIDENTIAL AND HAS BEEN OMITTED, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT, AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

3.6 For the orders that DISTRIBUTOR does not quote directly and fulfill, but are quoted by Supplier, processed by Distributor, and fulfilled by Supplier (per section 3.5), DISTRIBUTOR will receive a [OMITTED]* discount on the Minimum Prices for such orders. In situations where DISTRIBUTOR is obligated to provide terms of FOB destination to customers, SUPPLIER and DISTRIBUTOR will share freight costs. It is the spirit and intention of this agreement to minimize the number of “direct quoted” orders by SUPPLIER.

4. SALES AND MARKETING SUPPORT

4.1 Training: SUPPLIER shall provide to DISTRIBUTOR’S sales personnel, at DISTRIBUTOR’s premises or such other location as the parties may agree, such training in the demonstration and use of the Products as is mutually agreed upon by DISTRIBUTOR and SUPPLIER, and for such training purposes SUPPLIER shall make available, at SUPPLIER’s expense, all necessary instructors and training personnel for the training of DISTRIBUTOR representatives by SUPPLIER. DISTRIBUTOR shall provide transportation and lodging expenses for DISTRIBUTOR personnel for the training of DISTRIBUTOR representatives by SUPPLIER.

4.2 Technical Support: SUPPLIER shall provide technical support to DISTRIBUTOR’S sales personnel and customers, and promptly provide to DISTRIBUTOR such additional technical information developed or acquired by SUPPLIER. SUPPLIER shall provide at its own expense a toll free long distance telephone service for sales and customer support during normal east coast business hours and provide for after hours emergency contacts.

4.3 Literature: The cost of literature development (instruction manuals and point of sale literature) for use in connection with the marketing, sale and distribution of the Products shall be [OMITTED]*. The content and quantities of literature produced and consumed shall be reasonable and agreed upon by both parties and the cost shall be born by the consuming party.

4.4 Subject to DISTRIBUTOR’s and SUPPLIER’S prior written approval, DISTRIBUTOR’S name may be incorporated in SUPPLIER’s advertising literature intended for distribution by DISTRIBUTOR’s or SUPPLIER’s sales representatives and visa versa.

4.5 Marketing: SUPPLIER and DISTRIBUTOR shall cooperate in good faith to develop joint marketing materials and efforts to promote SUPPLIER’s Products, [OMITTED]*. The marketing effort will include for 2003, at a minimum, the initiative detailed in Attachment B - Joint Advertising and Sales Promotion Plan. All marketing materials and the annual advertising and promotion plan shall be subject to the approval of each of the parties, which shall not be unreasonably withheld.

4.6 DISTRIBUTOR shall use its best efforts to actively, and in good faith, a) promote the Products as its primary offering in the products category as a Fisher Alpha Preferred Supplier and b) to meet the 2003 goal and subsequent yearly goals. The Confidentiality clause contained in the Agreement

shall be mutual and protect the respective confidential information of both parties hereto. DISTRIBUTOR agrees to not hire any SUPPLIER employees until after 2 years from any termination of employment.

* MATERIAL NOTED AS [OMITTED] IS CONFIDENTIAL AND HAS BEEN OMITTED, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT, AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

4.7 SUPPLIER and DISTRIBUTOR agree that they will develop a business process to regularly communicate to the parties sales & marketing strategies, tactics and other business issues / metrics related to the relationship. Such information will include at minimum volume goals, lead sharing, market intelligence, and target accounts. This process will also provide the forum for SUPPLIER to identify and communicate coverage and performance issues as outlined in 3.2 and for the development of mutually agreeable initiatives to cure deficiencies in coverage and performance to the reasonable satisfaction of the parties. Should DISTRIBUTOR be unable to substantially “cure” the alleged deficiencies, within ninety (90) days after notice from SUPPLIER, SUPPLIER shall have the right to terminate the agreement. DISTRIBUTOR and SUPPLIER will jointly develop sales goals by region / industry / market as outlined above.

4.8 In the event of a dispute with respect to the rights and obligations of either party to this Agreement, resolution thereof shall be conducted pursuant to the rules for commercial Arbitration of the American Arbitration Association by a panel of three (3) arbitrators selected pursuant to such rules.

4.9 Each party hereto waives its right to recover indirect, special or consequential damages from the other party hereto as a result of the other party’s performance or default hereunder.

IN WITNESS WHEREOF, the parties have executed their signature the day and year first written above.

FISHER SCIENTIFIC COMPANY, L.L.C.		TVI CORPORATION
By:	/s/ Tim Zeh	By:	/s/ Richard Priddy
Name:	Tim Zeh	Name:	Richard Priddy
Title:	Product Manager	Title:	CEO

APPENDIX A - COMMERCIAL PRODUCTS

Hospital:

• Two-Line Hospital Staff Decontamination Shelter

• Two-Line Hospital Decontamination Shelter

• Individual Decontamination Shelter

• Mass Casually Decontamination Shelter

• Three-Line HazMat Decontamination Shelter

• Temporary Morgue

Public Safety:

• Command Post

• Command Logistics Shelter

• First Response

• Squad Decontamination Shelter

• Individual Decontamination Shelter

• Two-Line Hospital Decontamination Shelter

• Three-Line HazMat Decontamination Shelter

• Four-Line Mass Decontamination Shelter

• Six-Line Mass Decontamination Shelter

• Casualty Management Shelter

• Temporary Morgue

Accessories:

• FIash Water Heater

• Decontamination Solution Injector

• Double Shower Boom

• Diesel Water Pump

• Litter Conveyor System

• Collapsible HazMat Basin

• Portable Diesel Generator

• Chem-Bio Isolation System

• Field Hardened Air Conditioner

• Forced Air Heater

• Portable Fluorescent Light Fixture

• Portable Barricade and Signage

APPENDIX B - JOINT ADVERTISING AND SALES PROMOTION PLAN

[OMITTED]*

* MATERIAL NOTED AS [OMITTED] IS CONFIDENTIAL AND HAS BEEN OMITTED, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT, AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

EX-10.9.2

Exhibit 10.9.2

DISTRIBUTOR AGREEMENT

AMENDMENT NO. 2

This Amendment No. 2 is entered into as of January 1, 2005 (the “Amendment No. 2 Effective Date”) by and between Fisher Scientific Company L.L.C., having a place of business at 2000 Park Lane, Pittsburgh, Pennsylvania 15275, on behalf of itself, its parent, subsidiaries and affiliates (collectively, “Distributor”) and TVI Corporation (“Supplier” or “TVI”), with offices at 7100 Holladay Tyler Road, Suite 300, Glenn Dale, Maryland 20769. In consideration of the mutual promises and covenants hereinafter set forth, the parties acknowledge and agree that the Distributor Agreement entered into as of April 3, 2002, by and between the parties (the “Original Agreement”), as amended in the Distributorship Agreement Addendum, dated February 25, 2003 (“Amendment No. 1”) (collectively, the “Agreement”), is hereby amended as follows, but that such Agreement shall otherwise continue in full force and effect:

1. The parties agree to amend Section 1.2 of Amendment No. 1 as follows:

a. Replace the first sentence with the following:

“Prices. The prices payable for the Products shall be the then-current manufacturer’s suggested retail price for such Products (“Minimum Prices”), subject to the applicable discount described in Section 14, “Supplier Warranties.”

b. Delete the last sentence and add the following sentences:

“Minimum Prices may be increased by Supplier [OMITTED]^*, provided that such increases are reasonably commensurate with increases in the costs of manufacturing such Products. TVI, in its sole discretion, may make documentation supporting such increases available to Distributor upon request. Shipments shall be billed at the price in effect at time of order placement.”

2. The parties agree to amend Section 5, “Termination,” of the Original Agreement by replacing the second occurrence of “sixty (60)” with “ninety (90)” and by adding the following sentence at the end thereof:

“For the avoidance of ambiguity, Supplier shall continue to honor Distributor’s purchase orders for Products submitted prior to the effective date of termination, pursuant to all of the terms of the Agreement.”

3. The parties agree to amend Section 2. “Product and Markets and Customer Type (Market),” as described in Amendment No. 1, as follows:

a. Delete Section 2.1, “Products” in its entirety and replace it with the following provision:

“2.1 Products. The products covered by this Agreement are those Decontamination Products and Infection Control Products (collectively, the “Products”) identified in Appendix A, and any improved or updated versions thereof, including accessories designed for such Products.”

b. Delete Section 2.2, “Market and Customer Types” in its entirety.

c. Amend the section reference of “Similar or Related Products,” from Section 2.3 to Section 2.2.

The parties further agree that the attached Appendix A shall replace Exhibit A to the Original Agreement and Appendix A to Amendment No. 1.

* MATERIAL NOTED AS [OMITTED] IS CONFIDENTIAL AND HAS BEEN OMITTED, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT, AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

4. The parties agree to delete Section 3, “Grant of Rights,” as described in Amendment No. 1, in its entirety and replace it with the following provisions:

“3. Grant of Rights.

3.1 Supplier hereby appoints Distributor and Distributor hereby accepts the appointment as a non-exclusive distributor of the Decontamination Products in the Territory during the term of this Agreement and pursuant to the terms of this Agreement. Additionally, Supplier hereby appoints Distributor and Distributor hereby accepts the appointment as a non-exclusive distributor of the Infection Control Products during the term of this Agreement and pursuant to the terms of this Agreement, also in the Territory. The term of this Agreement will be effective until December 31, 2005, and it will renew annually thereafter unless either party provides written termination notification to the other party at least sixty (60) days prior to the expiration of the term of its intention not to renew. “Territory” means the United States of America, Puerto Rico, Guam and the U.S. Virgin Islands. For purposes of selling to the U.S. Government, including without limitation any or all of the branches of the U.S. Military there shall be no territorial restrictions; provided that any U.S. Military order is invoiced to, and paid from, a continental U.S. mailing address.

3.2 Distributor shall exercise its good faith efforts to meet the minimum sales goal for the Products for 2005 of [OMITTED]*.

3.3 In the event that Supplier receives a request for the Products from a potential applicable customer, Supplier may ask Distributor to quote or contact such potential customer on Supplier’s behalf. For all orders in which Distributor provides quotes directly to a customer, whether or not referred to Distributor by Supplier, and successfully secures the order from Customer, Distributor shall be entitled to the applicable discount as described in Section 14, “Supplier Warranties.”

5. The parties agree to delete the third and fourth sentences in Section 4.7, “Sales and Marketing Support” in Amendment No. 1.

6. The parties agree to insert the following section and language immediately following Section 3, “Grant of Rights,” as described in Amendment No. 1 and amended herein:

“6. TVI GSA Contracts and Customers.

6.1 The parties agree that Supplier has established the following U.S. General Services Administration Contracts to increase its customer base in the government market: [OMITTED]* (collectively, the “TVI GSA Contracts”).

6.2 [OMITTED]*

6.3 [OMITTED]*

6.4 [OMITTED]*

* MATERIAL NOTED AS [OMITTED] IS CONFIDENTIAL AND HAS BEEN OMITTED, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT, AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

7. The parties agree to insert the following new section and language immediately following Section 10 “Distributor Warranties,” in the Original Agreement, effective as of the Amendment No. 2 Effective Date:

“Supplier Warranties. Supplier represents and warrants that (i) the Supplier’s discount available to Distributor is and will be [OMITTED]* (the “Ordinary Discount”); and (ii) with regard to any and all sales resulting from contracts that are awarded from [OMITTED]*, the Supplier’s Discount available to Distributor is and will be [OMITTED]*. In addition, Supplier also represents and warrants that during the term of this Agreement, if Supplier enters into an agreement or selling arrangement with any other distributor with discounts that are more favorable than the Ordinary Discount and/or the [OMITTED]*, as applicable, made available to Distributor pursuant to this Agreement, Supplier will immediately notify Distributor of such fact in writing and will immediately adjust the Discount to Distributor to [OMITTED]*, and this Agreement will be deemed to be amended to reflect the new Ordinary Discount and/or [OMITTED]*.”

8. Supplier agrees to participate in the Alpha Program and the Point Team Program during the calendar year 2005, under the terms of the Agreement and the letters attached hereto as Appendix B. The parties shall work in good faith to negotiate and mutually agree to Supplier’s participation in differentiated programs during any renewed term(s) of this Agreement.

9. The parties agree to amend Section 12, “Limitation of Liability,” of the Original Agreement by replacing the second sentence thereof with the following:

EXCEPT IN THE CASE OF A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF ITS CONFIDENTIALITY OBLIGATIONS HEREUNDER, AND/OR TVI’S INDEMNIFICATION OBLIGATIONS UNDER THE MAY 1, 2002 GUARANTY WITH REGARD TO INTELLECTUAL PROPERTY MATTERS, IN NO EVENT SHALL EITHER PARTY’S CUMULATIVE AND TOTAL LIABILITY FOR ALL CLAIMS RELATING TO THIS AGREEMENT, EXCEED THE PRIOR TWELVE MONTHS TOTAL AMOUNT OF FEES PAID BY DISTRIBUTOR TO TVI PURSUANT TO THIS AGREEMENT.

10. During the term of this Agreement, Distributor shall have the right upon reasonable notice and during normal business hours to audit the books and records of Supplier as reasonably necessary in order to ensure compliance with the terms of this Agreement; provided that Distributor shall use commercially reasonable efforts to minimize any inconvenience to Supplier as a result of such audit.

* MATERIAL NOTED AS [OMITTED] IS CONFIDENTIAL AND HAS BEEN OMITTED, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT, AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

11. From the date of the execution of this Amendment No. 2 and continuing throughout the term of this Agreement and for six (6) months thereafter (the “Restricted Period”), Supplier, whether for its own account or the account of any other person or entity, shall not actively solicit, other than a general solicitation through a public medium, for employment, any person who is (or was during the Restricted Period) an employee of Distributor.

12. Neither party shall issue or cause to be issued any press release, public announcement or disclosure of any kind or nature whatsoever or otherwise disclose the existence of this Agreement or the transactions contemplated hereby except as and to the extent that both parties jointly agree to such press release, public announcement or disclosure previously and in writing; provided however that this provision shall not preclude Distributor from promoting and marketing Supplier’s Products in its advertising and selling efforts consistent with its obligations under the Agreement.

13. The last sentence of Section 14, “Miscellaneous” of the Original Agreement shall be deleted in its entirety and replaced with the following language: “The operation of Sections 9, 11, 15, 16, 17, and 20 hereof shall survive execution and any termination or expiration of this Agreement and remain in full force and effect at all times thereafter.”

14. For avoidance of doubt and in accordance with Amendment No. 1 and this Amendment No. 2:

14.1 Subsection 1.2, entitled “Prices,” of Section 1, entitled “Distributor Agreement” (as described in Amendment No. 1 and amended herein) replaces Section 2, “Prices” of the Agreement.

14.2 Section 2, entitled “Product and Markets and Customer Type (Market)” (as described in Amendment No. 1 and amended herein); Section 3, entitled “Grant of Rights” (as described in Amendment No. 1 and amended herein); and Section 4, entitled “Sales and Marketing Support” (as described in Amendment No. 1 and amended herein) are hereby designated as Sections 3, 4 and 5 respectively of the Agreement.

14.3 Section 6, entitled “TVI GSA Contracts and Customers” of this Amendment No. 2 is hereby designated as Section 6 of the Agreement.

14.4 Section 3, entitled “Submission of Orders”; Section 4, entitled “Payment”; Section 5, entitled “Termination”; Section 7, entitled “Use of TVI Trademarks”; Section 8, entitled “Intellectual Property Rights”; Section 9, entitled “Product Warranty”; and Section 10, entitled “Distributor Warranties” (as collectively described in the Agreement), are hereby designated as Sections 7, 8, 9, 10, 11, 12 and 13 respectively of the Agreement.

14.5 Section 7, entitled “Supplier Warranties” of this Amendment No. 2 is hereby designated as Section 14 of the Agreement.

14.6 Section 11, entitled “Indemnity”; Section 12, entitled “Limitation of Liability” (as amended herein); and Section 13, entitled “Confidentiality” (as collectively described in the Original Agreement) are hereby designated as Sections 15, 16 and 17 of the Agreement.

14.7 Section 8 of this Amendment No. 2 regarding the Alpha and Team Point Programs is hereby designated as Section 18 of the Agreement.

14.8 Section 10 of this Amendment No. 2 regarding auditing rights, Section 11 of this Amendment No. 2 regarding non-solicitation and Section 12 of this Amendment No. 2 regarding public disclosures are hereby designated as Sections 19, 20 and 21 of the Agreement.

14.9 Section 14, entitled “Miscellaneous”, as described in the Original Agreement and amended herein, is hereby designated as Section 22 of the Agreement.

14.10 All references to other sections of the Agreement are hereby numerically adjusted as necessary in order to logically reflect and refer to the section designations set forth in this section.

15. Except as modified above, all terms and conditions of the Agreement shall remain in full force and effect.

16. All capitalized words not defined herein shall have the meaning set forth in the Agreement.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Amendment No. 2 as of the day and year first written above.

FISHER SCIENTIFIC COMPANY L.L.C.		TVI CORPORATION
By:	/s/ Tim Zeh	By:	/s/ Richard Priddy
Title:	Vice President	Title:	CEO
Date:	7/25/05	Date:	7/19/05

Appendix A - Products

DECONTAMINATION PRODUCTS

Product	Minimum Price
Decontamination Systems At-A-Glance
Decontamination Systems
MP Decontamination System
First Responder & Hospital System (3 Line System)
Compact System (2 Line System)
Professional Individual System
Decontamination Shelters
Individual Decon Shelter
2 Line Decon Shelter
Mass Casualty
3 Line Hazmat Shelter
USAR Shelter
Consequence Response Shelter
MP High Capacity Shelter
Command Control Shelters
Field Hospital Shelter
Command Post Shelter
Command / Logistics Shelter
First Response Shelter
Casualty Management Shelter
Temporary Morgue

INFECTION CONTROL PRODUCTS

Product	Minimum Price
ISO-POD
Inflatable Infection / Isolation Indoor Shelter
Outdoor Infection / Isolation Control Shelters
Filtration System- 400 HEPA
Filtration System- 400 CHEM / BIO
Filtration System- 1500 HEPA
Filtration System- 1500 CHEM / BIO
Trailer System
MK-1

EX-21

Exhibit 21

List of Subsidiaries

The registrant owns 100% of the capital stock of the following subsidiaries:

Name of Subsidiary	Jurisdiction of Organization
CAPA Manufacturing Corp.	Maryland
Safety Tech International, Inc.	Maryland

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-106717) of our report dated March 8, 2006 with respect to the consolidated financial statements of TVI Corporation, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting included in the Annual Report on Form 10-K for the year ended December 31, 2005.

                                         /s/ Stegman & Company

Baltimore, Maryland

March 10, 2006

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard V. Priddy, certify that:

1. I have reviewed this Annual Report on Form 10-K of TVI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 8, 2006	/s/    RICHARD V. PRIDDY
	Richard V. Priddy President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, George J. Roberts, certify that:

1. I have reviewed this Annual Report on Form 10-K of TVI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 8, 2006	/s/    GEORGE J. ROBERTS
	George J. Roberts Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of TVI Corporation (the “Company”) on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard V. Priddy, Chief Executive Officer of the Company, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated March 8, 2006	/s/    RICHARD V. PRIDDY
	Richard V. Priddy President and Chief Executive Officer

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of TVI Corporation (the “Company”) on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George J. Roberts, Chief Financial Officer of the Company, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated March 8, 2006	/s/    GEORGE J. ROBERTS
	George J. Roberts Senior Vice President and Chief Financial Officer

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.