REVOLVING LINE OF CREDIT AND TERM LOAN AGREEMENT

the following to the extent deducted in calculating such Net Income:

consolidated interest charges for such period,

the amount of depreciation and amortization expense deducted in determining such Net Income,

non-cash charges for stock based compensation,

non-cash extraordinary and unusual or non-recurring writedowns or writeoffs,

(i)

Lender has consented to the Acquisition and the Term Loan Advance in its reasonable discretion;

no Default Event or Event of Default shall exist under the Loan Documents;

(iii)

the Lender shall have received a certificate of an officer of the Borrower demonstrating on a pro forma basis compliance with the financial covenants set forth in Section 5 hereof after giving effect to the consummation of the Acquisition;

(iv)

the Acquired Entity shall have executed and deliver to Lender (A) an unconditional and joint and several guaranty of the Borrower’s obligations under the Loan Documents in substantially the form of the guaranty attached hereto as Exhibit B; (B) a security agreement (in substantially the form attached hereto as Exhibit C) granting to Lender a first-priority security interest in all assets of the Acquired Entity; and (C) an equity pledge of the ownership interests of any Subsidiaries of the Acquired Entity, if applicable and if required by Lender;

(v)

the Lender shall have reviewed and approved such financial information regarding the Acquired Entity as may be reasonably requested by Lender;

(vi)

the Lender shall have reviewed and approved any documents and instruments evidencing, guarantying, and/or securing the Borrower’s obligations to purchase, and the seller’s obligation to sell, the equity interests of the Acquired Entity, including, without limitation, any stock purchase agreements and any documents and instruments evidencing any Seller Financing, if applicable; and

(vii)

if the Borrower shall enter into any Seller Financing in connection with the Acquisition, the holder or holders of such Seller Financing shall execute and deliver to Lender a Seller Subordination Agreement.

no Default Event or Event of Default shall exist under the Loan Documents;

(ii)

the Lender shall have received a certificate of an officer of the Borrower demonstrating on a pro forma basis compliance with the financial covenants set forth in Section 5 hereof after giving effect to the consummation of the Acquisition;

(iii)

the Acquired Entity shall have executed and deliver to Lender: (A) an unconditional and joint and several guaranty of the Borrower’s obligations under the Loan Documents in substantially the form of the guaranty attached hereto as Exhibit B; (B) a security agreement (in substantially the form attached hereto as Exhibit C) granting to Lender a first-priority security interest in all assets of the Acquired Entity; and (C) an equity pledge of the ownership interests of any Subsidiaries of the Acquired Entity, if applicable and if required by Lender; and

(iv)

if the Borrower shall enter into any Seller Financing in connection with the Acquisition, the holder or holders of such Seller Financing shall execute and deliver to Lender a Seller Subordination Agreement.

I

when less than 2.0 to 1.0

15 Basis Points

II

when greater than or equal to 2.0 to 1.0, but less than 3.0 to 1.0

20 Basis Points

III

when greater than or equal to 3.0 to 1.0

25 Basis Points

(1)

Monthly Interest. The Borrower shall make monthly payments of accrued interest in arrears on the outstanding principal balance of each Revolving Advance on (x) each Payment Date, for Revolving Advances accruing interest at the Prime Rate and (y) each Interest Payment Date, for Revolving Advances accruing interest at the LIBOR Option. If interest is due and accrued for a period of more or less than one (1) month on any Payment Date or on any Interest Payment Date, as applicable, such payment shall be increased or decreased to the extent that the amount of interest then due under such payment exceeds or is less than one (1) month’s interest.

(2)

Compliance with Maximum Revolving Credit. The Borrower shall repay the Aggregate Revolving Advances in part from time to time in such principal amounts as may be necessary to ensure that the Aggregate Revolving Advances at no time exceeds the Maximum Revolving Credit.

(3)

Expiration Date. Upon the earlier to occur of (i) the Expiration Date and (ii) such other date as may be required by the terms of Section 6(b) of this Agreement, the Borrower shall pay to Lender the entire then unpaid balance of principal, interest, and other charges due under the Revolving Note.

(4)

Charge to Borrower’s Account. The Borrower hereby authorizes Lender to charge any account maintained by Borrower with Lender for any payment due from Borrower under the Revolving Note or any of the other Loan Documents. In any of the foregoing cases, such authorization, however, does not obligated Lender so to charge nor does it limit the Borrower’s obligation to make any payment when due.

(1)

Availability Period. During the Availability Period, the Borrower shall make monthly payments of accrued interest in arrears on the outstanding principal balance of each Term Loan Advance on (x) each Payment Date, for Term Loan Advances accruing interest at the Prime Rate and (y) each Interest Payment Date, for Term Loan Advances accruing interest at the LIBOR Option. If interest is due and accrued for a period of more or less than one (1) month on any Payment Date or on any Interest Payment Date, as applicable, such payment shall be increased or decreased to the extent that the amount of interest then due under such payment exceeds or is less than one (1) month’s interest.

(2)

Amortization Period. During the Amortization Period, the Borrower shall make, on each Interest Payment Date, monthly payments of accrued interest on the outstanding principal balance of the Term Note, along with monthly payments of principal based upon a five (5) year straight-line amortization schedule as set forth in Schedule A attached to the Term Note.

(3)

Term Loan Maturity Date. On the Term Loan Maturity Date or such earlier date as may be required under the terms of the Loan Documents, the Borrower shall pay to Lender the entire then unpaid balance of principal, interest, and other charges due under the Term Note.

(4)

Charge to Borrower’s Account. The Borrower hereby authorizes Lender to charge any account maintained by Borrower with Lender for any payment due from Borrower under the Term Note or any of the other Loan Documents. In any of the foregoing cases, such authorization, however, does not obligated Lender so to charge nor does it limit the Borrower’s obligation to make any payment when due.

(1)

the articles of organization of the Borrower, certified by the Florida Secretary;

(2)

the by-laws of the Borrower;

(3)

the articles of organization of each of the Guarantors, certified by the secretary of state of the state of organization for such Guarantors; and

the by-laws of each of the Guarantors.

(i)

within one hundred twenty (120) days after the end of each fiscal year of Borrower and its Subsidiaries, annual unqualified financial statements for the Borrower and it Subsidiaries on a consolidated basis audited by a certified public accountant acceptable to Lender in its reasonable discretion;

(ii)

within sixty (60) days after the end of each fiscal quarter of Borrower and its Subsidiaries, (i) management prepared quarterly financial statements for the Borrower and its Subsidiaries and (ii) a Covenant Compliance Certificate executed by the chief financial officer of Borrower in form and substance reasonably satisfactory to Lender with respect to the Borrower and its Subsidiaries; and

(iii)

such additional financial information regarding the Borrower, the Guarantors, or the Collateral as the Lender may reasonably request from time to time.

Q.4 2007

Q.1 2008

Q.2 2008

Q.3 2008

Q.4 2008

Q.1 2009

Q.2 2009

Q.3 2009

Q.4 2009

Q.1 2010

Q.2 2010

Q.3 2010

Q.4 2007

Q.1 2008

Q.2 2008

Q.3 2008

Q.4 2008

Q.1 2009

Q.2 2009

Q.3 2009

Q.4 2009

Q.1 2010

Q.2 2010

Q.3 2010

LENDER:

RBS CITIZENS, NATIONAL ASSOCIATION

 

By:/s/David Bugbee

Witness

Name: David Bugbee

Title: Senior Vice President

BORROWER:

NATIONAL INVESTMENT MANAGERS INC.

 

By:/s/Steven Ross

Witness

Name: Steven Ross

Title: CEO

By:

Name:

Title:

Amount
($'000)

Net Income

+ Consoliated Interest Charges for such period

+ Provision for Taxes

+ Depreciation & Amortization

+ Non-cash stock based compensation

+ Non-cash extraordinary & unusual or non-recurring writedowns or writeoffs

- extraordinary, unusual, non-recurring or non-operating gains

  

 

Bank Loans

Junior Loan

Seller Financing

Other Indebtedness

 

EBITDA

+ Acquired EBITDA

+ Addback of one-time expenses (allowed per Section 1 of loan agreement)

 

Adjusted EBITDA

- Cash Taxes

- Capital Expenditures

 

Current Portion of Long Term Indebtedness

+ Interest Payments on Indebtedness ^#

 

Adjusted EBITDA less Acquired EBITDA (A)

Interest Payments on Indebtedness ^#

 

Total Assets

- Total Liabilities

+ Accumulated amortization of Intangible Assets subsequent the loan agreement date

 

1.

Identification. This Guaranty (the “Guaranty”) is made as of the ___ day of ________, 200_ by __________________, a ________ corporation with its principal place of business at ______________________________________________ (the “Guarantor”) in favor of RBS Citizens, National Association, having a lending office at 28 State Street, Boston, MA 02109 (the “Lender”).

Background and Reasons for Guaranty.

2.1

Loan. On the date hereof, National Investment Managers Inc., a Florida corporation, having an address of 545 Metro Place South, Suite 100, Dublin, OH 43017 (the “Borrower”) executed and delivered (a) a certain Term Promissory Note dated as of November 30, 2007 from the Borrower to the Lender in the maximum principal amount of up to $13,000,000.00 and (b) a certain Revolving Line of Credit Note dated as of November 30, 2007 from the Borrower to the Lender in the maximum principal amount of $2,000,000.00 (together, the “Notes”). The obligations of the Borrower are further evidenced by a certain Revolving Line of Credit and Term Loan Agreement dated as of November 30, 2007 by and between the Borrower and Lender (the “Loan Agreement”). The Notes are secured by, among other things, a certain Security Agreement dated as of November 30, 2007 from the Borrower to Lender (the “Security Agreement”). In addition, the obligations of Guarantor under this Guaranty shall be secured by a certain Security Agreement of even date herewith from Guarantor to Lender (the “Guarantor Security Agreement”) granting to Lender a first priority security interest in all assets of Guarantor. The Notes, the Loan Agreement, the Security Agreement, this Guaranty, the Guarantor Security Agreement, the Guaranties of the other Guarantors and all other documents executed in connection with or related to such documents are sometimes collectively referred to herein as the “Loan Documents”. The obligations evidenced by the Loan Documents are sometimes collectively referred to herein as the “Loans”. All capitalized terms used herein and not otherwise defined herein shall have the meanings as set forth in the Loan Agreement.

2.2

Requirement of Guaranty. As a condition precedent to the making of the Loan to Borrower, Lender has required that Guarantor execute and deliver this Guaranty to Lender.

2.3

Consideration to Guarantor. Guarantor desires to execute and deliver the Guaranty to Lender because the Borrower has a substantial interest in Guarantor and Guarantor will receive a direct financial benefit from the credit extended to Borrower.

3.

Guaranty. Guarantor, in consideration of Lender entering into the Loan Documents and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the purpose of inducing Lender to enter into the Loan Documents, hereby irrevocably and unconditionally guarantees to Lender (a) the full, punctual and prompt payment of all sums payable under the terms of the Notes and the other Loan Documents, whether at maturity or by acceleration or otherwise, in immediately available coin and currency of the United States which is legal tender for the payment of all public and private debts; (b) the performance of all of Borrower’s other obligations under the Notes and the other Loan Documents; and (c) all other obligations of every kind and description now existing or hereafter arising, direct or indirect, absolute or contingent, secured or unsecured, matured or unmatured, primary or secondary, of Borrower to Lender including, without limitation, any Hedging Obligations (as defined in Rider A to the Notes). The obligations referenced in subsections (a), (b) and (c) above are collectively referred to herein as the “Guaranteed Obligations”.

4.

Warranties and Representations. Guarantor hereby warrants and represents to Lender that:

4.1

The Board of Directors of the Guarantor have determined the execution, delivery and performance of this Guaranty to be necessary or convenient to the conduct, promotion or attainment of the business of the Borrower and the Guarantor, and to be in the best interests of the Guarantor and in pursuance of its corporate purposes as an integral part of the business now conducted and proposed to be conducted by the Guarantor. The Guarantor expects to receive substantial direct and indirect benefits from the making of the Loan to the Borrower. By virtue of the foregoing, after considering the Guarantor’s probable liability hereunder, the Guarantor is receiving at least reasonably equivalent value from Lender for its guaranty and will not be rendered insolvent thereby; and after giving effect to the transactions contemplated hereby, the Guarantor does not, and will not, have an unreasonably small capital for the conduct of its business and has, and will have, the ability to pay its debts from time to time incurred in connection therewith as such debts mature.

4.2

The execution, delivery, and performance by the Guarantor of this Guaranty do not and will not:

(i)

violate any provision of, or require any filings, registration, consent or approval under, any law, rule, regulation (including, without limitation, Regulation U), order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor or the Borrower;

(ii)

result in a breach of or constitute a default or require any consent under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Guarantor is a party or by which Guarantor or any of its properties may be bound or affected;

(iii)

result in, or require, the creation or imposition of any lien, security interest or other encumbrance (other than as created hereunder), upon or with respect to any of the properties now owned or hereafter acquired by the Guarantor; or

(iv)

cause the Guarantor to be in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument.

4.3

The Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the ____________ of _____________ and has the legal power and authority to execute, deliver and fulfill its obligations set forth in this Guaranty. The Guarantor has all requisite corporate power to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted and is duly qualified to do business and in good standing in such other jurisdictions where the failure to so qualify would have a material adverse effect on the Guarantor’s business, prospects, operations or financial condition.

4.4

This Guaranty has been duly authorized by all necessary corporate action and is a legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms.

4.5

Any and all financial statements and other financial data which have previously been furnished to Lender with respect to Guarantor are true and correct in all material respects, fairly, completely and accurately representing the financial condition of Guarantor as of the date thereof and, since the date thereof, there have been no additional borrowings of Guarantor, nor has there been any material adverse change in the financial condition of Guarantor; there are no legal proceedings, material claims or demands pending against, or to the best of Guarantor’s knowledge, threatened against Guarantor or any of Guarantor’s assets; there are no federal or state liens filed or threatened against Guarantor or any of Guarantor’s assets; and Guarantor is not in default or claimed default under any agreement for borrowed money.

4.6

Guarantor has reviewed and approved the Loan Documents to be signed by Borrower in connection with the Loan, and each and every warranty and representation made by Borrower in the Loan Documents is, to the best of Guarantor’s knowledge, true and correct.

4.7

Guarantor shall, within five (5) business days after receipt thereof, deliver to Lender copies of any notices of default served on such Guarantor pursuant to the terms of any other material agreement to which such Guarantor is a party.

5.

Primary Nature of Guaranty. In giving this Guaranty, Guarantor hereby acknowledges that this Guaranty is a guarantee of (i) performance by Borrower under the Loan Documents; and (ii) payment and not of collection, and that the liability of Guarantor hereunder is present, absolute, unconditional, continuing, primary, direct and independent of the obligations of Borrower. Lender shall not be required to pursue any other remedies before invoking the benefits of this Guaranty, including, without limitation, its remedies under the Loan Documents. With regard to any rights which may accrue to Lender under or in connection with the Loan Documents, Lender may, at its option, look to Guarantor for the performance of the Guaranteed Obligations to the extent provided herein, without having first commenced any action or proceeding against Borrower or any other guarantor or any other parties or other security, and without having obtained any judgment against Borrower or against any other guarantor. Enforcement of Lender’s rights against the security given by Borrower for the Loan shall not impair the right of Lender to enforce this Guaranty, Guarantor expressly agreeing that any such action by Lender shall never operate as a release of Guarantor’s liability hereunder. Guarantor shall be conclusively bound, in any jurisdiction, by the judgment rendered in any action by Lender against Borrower or against any other guarantor, wherever instituted, as if Guarantor was a party to such action, even if not actually joined as a party.

6.

Continuing Nature of Guaranty. The liability of Guarantor shall remain and continue in full force and effect notwithstanding:

6.1

The non-liability of Borrower for any reason whatsoever for the payment and performance of the Guaranteed Obligations or any part thereof;

6.2

The voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the property described in the Loan Documents, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment or any similar proceeding, affecting Borrower or any of their assets;

The assignment or transfer of the Notes or other Loan Documents;

6.4

The release of Borrower from the observance of any of the agreements, covenants, terms or conditions contained in the Loan Documents by operation of law;

6.5

Any defenses or rights of set-off or counter-claims which Borrower may have or assert; or

6.6

Any failure by Lender to inform Guarantor of any facts Lender may now or hereafter know about Borrower, the Loan or the transactions contemplated in connection therewith, it being understood and agreed that Lender has no duty so to inform; it being the intention hereof that Guarantor shall remain liable hereunder until the Guaranteed Obligations of Borrower shall have been fully paid, performed and observed by Borrower, notwithstanding any act, omission or thing that might otherwise operate as a legal or equitable discharge of Guarantor.

7.

Certain Rights of Lender. Lender may at any time and from time to time, with or without consideration, without prejudice to any claim against Guarantor hereunder, without in any way changing, releasing or discharging Guarantor from its liabilities and obligations hereunder and without notice to or the consent of Guarantor:

7.1

Exchange, release or surrender all or any part of the security for the Loan which Lender may at any time hold;

7.2

Sell all or any part of the security for the Loan and become the purchaser thereof at any such sale;

7.3

Settle or compromise with Borrower, or any other person primarily or secondarily liable with Borrower, the Guaranteed Obligations or any renewal or extension thereof;

7.4

Renew, rearrange or extend the time, manner, place or terms of payment and performance of the Guaranteed Obligations or any renewal or extension thereof;

7.5

Forbear, extend the time for, or grant indulgences with respect to the enforcement of any of the Guaranteed Obligations or the exercise by Lender of any right or remedy contained in the Loan Documents or available under applicable law, whether such enforcement be fully prosecuted or otherwise;

7.6

Supplement, change, amend, substitute, modify, alter or cancel the Guaranteed Obligations or any other Loan Documents; and

7.7

Take other guarantees, collateral or security with respect to the Guaranteed Obligations.

Certain Waivers by Guarantor. Guarantor hereby waives:

8.1

Any right to require Lender to (i) proceed against Borrower; (ii) proceed against, exhaust or participate in any security held by Lender for the payment and performance of the Guaranteed Obligations, or (iii) pursue any other remedy that Lender has or to which it may be entitled;

8.2

Notice of the acceptance of this Guaranty, presentment, demand, protest and notice of protest, nonpayment, default or dishonor of the Guaranteed Obligations or any renewal or extension thereof and any and all other rights and remedies now or hereafter accorded to guarantors by applicable law;

8.3

Diligence on the part of Lender in the collection of the monetary sums included in the Guaranteed Obligations, notice of intention to accelerate the maturity of any of the Guaranteed Obligations, notice of the failure of Borrower to pay or perform all or any of the Guaranteed Obligations in a timely manner and diligence on the part of Lender in preserving the liability of any person on any of the Guaranteed Obligations; and

8.4

Any right that Guarantor has or to which Guarantor may be entitled to cause a marshaling of Borrower’s assets.

9.

No Waiver by Lender. No failure, omission or delay on the part of Lender in exercising any rights hereunder or in taking any action to collect or enforce payment or performance of the Guaranteed Obligations or in enforcing observance or performance of any agreement, covenant, term or condition to be performed or observed under the Loan Documents, either against Borrower or any other person liable therefor, shall operate as a waiver of any such right or in any manner prejudice the rights of Lender against Guarantor.

10.

Subordination of Subrogation. Guarantor hereby unconditionally and irrevocably agrees that it will not at any time exert or exercise against Borrower, and does hereby subordinate any right of or claim to subrogation, reimbursement, indemnity, contribution or payment (including any right to proceed upon any collateral pledged by Borrower to Guarantor) for or with respect to any amounts which Guarantor may pay or be obligated to pay to Lender, including, without limitation, any right to enforce any remedy which Guarantor now or hereafter shall have against Borrower by reason of obligations which Guarantor may perform, satisfy or discharge under or with respect to this Guaranty. The payment of any amounts due with respect to any indebtedness of the Borrower now or hereafter held by the Guarantor is hereby subordinated to the prior payment in full of the Guaranteed Obligations, provided that so long as no default in the payment or performance of the Guaranteed Obligations has occurred and is continuing, or no demand for payment of any of the Guaranteed Obligations has been made that remains unsatisfied, the Borrower may make, and the Guarantor may demand and accept, payments of principal and interest on such subordinated indebtedness. The Guarantor agrees that after the occurrence of any default in the payment or performance of the Guaranteed Obligations, the Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness of the Borrower to the Guarantor until the Guaranteed Obligations shall have been paid in full. If, notwithstanding the foregoing sentence, the Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by the Guarantor as trustee for the Lender and be paid over to the Lender on account of the Guaranteed Obligations without affecting in any manner the liability of the Guarantor under the other provisions of this Guaranty.

11.

Financial Information and Condition. Guarantor shall furnish to Lender all such financial information as set forth in the Loan Agreement. At any time during the term of the Loan, Guarantor shall provide Lender with any additional financial information reasonably requested by Lender. Guarantor shall immediately notify Lender of any material adverse change in the financial condition of the Guarantor.

12.

Right of Set-Off. Upon the occurrence of a default under the Loan Documents, Lender is hereby authorized, at any time and from time to time, without notice to Guarantor or to any other person, any such notice being hereby expressly waived, to set-off, appropriate and apply any and all deposits (general or special), and any other indebtedness at any time held or owing by Lender to or for the credit or the account of Guarantor (collectively, the “Deposits”), against and on account of any obligations and liabilities of Guarantor hereunder, although said obligations and liabilities, or any of them, shall be contingent or unmatured. The Guarantor hereby grants to Lender a security interest in such Deposits.

13.

Mandatory Refunds. If, for any reason, any payment to Lender on account of the Guaranteed Obligations is required to be refunded to Borrower, or paid over to any other party, including, without limitation, by reason of the operation of bankruptcy laws now or hereafter enacted, Guarantor agrees to pay the amounts so required to be refunded or paid over upon demand, it being acknowledged and agreed that the Guaranteed Obligations shall not be treated as having been discharged by reason of any payment to Lender giving rise to an obligation on the part of Lender to repay the same, and this Guaranty shall be treated as remaining in full force and effect with respect to any such repayment so made by Lender, as well as for any amounts not previously paid to Lender on account of the Guaranteed Obligations.

14.

Multiple Guarantors. If there is more than one guarantor of the Guaranteed Obligations: (a) the obligations, covenants, warranties and representations of each guarantor shall be joint and several; (b) the granting of a written release of liability hereunder of less than all of the guarantors shall be effective with respect to the liability hereunder of only those specifically so released, but shall in no way affect the liability hereunder of any guarantor not so released; and (c) each guarantor waives any right to require Lender to proceed against any other guarantor. Any prior or subsequent guaranty to Lender shall not be deemed to be in lieu of or to supersede or terminate this Guaranty, but shall be construed as an additional or supplementary guaranty unless otherwise expressly provided herein.

15.

Default. Failure of Guarantor to keep, observe or perform any term, covenant or agreement made under this Guaranty by Guarantor or under any other obligations of Guarantor to Lender after the expiration of any applicable cure period shall constitute an Event of Default under this Guaranty and under the Loan Documents, whether or not provision therefor is made in such documents. In addition to the Events of Default described in this Section 15, the following events, after the expiration of any applicable grace periods, shall also constitute “Events of Default” under this Guaranty:

15.1

If any representation or warranty by the undersigned or in any writing furnished by the undersigned in connection with or pursuant to this Guaranty shall be false in any material respect with respect to the undersigned on the date as of which made; or

15.2

If the Guarantor makes an assignment for the benefit of creditors; or

15.3

If the Guarantor petitions or applies to any tribunal for the appointment of a trustee or receiver of the business, estate or assets or of any substantial portion of the business, estate or assets of the undersigned, or commences any proceedings relating to the Guarantor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or

15.4

If any such petition or application is filed or any such proceedings are commenced against the Guarantor and the Guarantor by any act indicates its approval thereof, consent thereto, or acquiescence therein, or any order is entered appointing any such trustee or receiver, or declaring the Guarantor bankrupt or insolvent, or approving the petition in any such proceedings; or

15.5

If the Guarantor shall dissolve, terminate or otherwise fail to maintain its legal existence, as the case may be.

General.

16.1

Costs and Expenses. Guarantor shall pay all reasonable attorneys’ fees and disbursements, costs and expenses incurred by Lender in the enforcement of this Guaranty. “Attorneys’ fees” and “counsel fees” and the like as used herein shall include reasonable fees for the attorneys’ services whether outside or within judicial proceedings, including also appellate and bankruptcy court proceedings.

16.2

Governing Law. This Guaranty shall be enforced and construed in accordance with the laws of the Commonwealth of Massachusetts, and Guarantor waives the right to be sued elsewhere. In the event suit is brought by Lender, Guarantor agrees that service of process may be made, and personal jurisdiction obtained, by service of a copy of the summons, complaint and other pleadings required to commence such litigation upon Guarantor at the address designated in Paragraph 1 above.

16.3

Jury Trial Waiver. GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A JURY IN ANY PROCEEDINGS HEREAFTER INSTITUTED BY OR AGAINST GUARANTOR IN RESPECT OF THIS GUARANTY OR ARISING OUT OF ANY DOCUMENT, INSTRUMENT OR AGREEMENT EVIDENCING, GOVERNING OR SECURING THE NOTES OR GUARANTY, INCLUDING ALL LOAN DOCUMENTS.

16.4

Successors and Assigns. This Guaranty shall be binding upon Guarantor and the successors, assigns and legal representatives of Guarantor, and shall inure to the benefit of Lender and the successors, assigns and legal representatives of Lender. Guarantor may not assign its rights or delegate its duties under this Guaranty. The transfer or assignment by Lender of the Notes shall operate as a transfer or assignment to the transferee or assignee of this Guaranty and all rights and privileges hereunder.

16.5

Cumulative Remedies. All of Lender’s rights, remedies and recourse under the Loan Documents or this Guaranty are separate and cumulative and may be pursued separately, successively or concurrently, are non-exclusive and the exercise of any one or more of them shall in no way limit or prejudice any other legal or equitable right, remedy or recourse to which Lender may be entitled.

16.6

Gender and Number. Whenever the context so requires the masculine gender shall include the feminine and/or neuter and the singular number shall include the plural and conversely in each case.

16.7

Modifications. No provision hereof shall be modified or limited except by a written agreement expressly referring to this Guaranty and to the provision so modified or limited and signed by Guarantor and Lender.

16.8

Severability. In case any one or more of the provisions contained in this Guaranty shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Guaranty shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

16.9

Notices. Any notice, request, demand or other communication required or permitted hereunder shall be given in writing by delivering the same in person to the intended addressee, by overnight courier service with guaranteed next day delivery or by certified United States Mail, postage prepaid or telegram sent to the intended addressee at the applicable address set forth on Page 1 hereof or to such different address as either Guarantor or Lender shall have designated by written notice to the other sent in accordance herewith. Copies of all notices to Lender shall also be sent to Brian F. Plunkett, Esquire, Bartlett Hackett Feinberg P.C., 155 Federal Street, 9^th Floor, Boston, MA 02110. Such notices shall be deemed given when received or, if earlier, in the case of delivery by courier service with guaranteed next day delivery, the next day or the day designated for delivery, or in the case of delivery by certified United States Mail, two days after deposit therein.

16.10

Headings. The headings of sections herein are inserted only for convenience and shall in no way define, describe or limit the scope or intent of any provisions of this Guaranty.

GUARANTOR:

 

 

By:

 

Witness

Name:

Title:

Definitions.

(a)

Certain Definitions. In addition to the words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:

“Collateral” shall mean all personal property of Guarantor including, without limitation, all of the following items, whether now owned or now due, or in which the Guarantor has an interest or hereafter, at anytime in the future, acquired, arising or to become due, or in which the Guarantor obtains an interest, and all products, proceeds, replacements, substitutions and accessions of or to any of the following, which to the extent not defined below, shall have the meanings given to them under the Uniform Commercial Code as enacted in the Commonwealth of Massachusetts or as enacted in the state in which such Collateral is located:

all accounts and accounts receivable;

B.

all inventory (including raw materials, work-in-process, finished goods and supplies);

all contract rights;

D.

all general intangibles (including, without limitation, payment intangibles, software, trademarks, patents, copyrights or other intellectual property rights of Guarantor);

all equipment (including all machinery, furniture and fixtures);

all farm products;

all goods;

all chattel paper (whether tangible or electronic);

all fixtures;

J.

all investment property (including, without limitation, all financial assets, certificated and uncertificated securities, securities accounts and security entitlements);

all letter-of-credit rights;

L.

all rights under judgments, all commercial tort claims and choses in action;

M.

all books, records and information relating to the Collateral and/or to the operation of the Guarantor’s business and all rights of access to such books, records and information and all property in which such books, records and information are stored, recorded and maintained;

N.

all instruments, promissory notes, documents of title, documents, policies and certificates of insurance, securities, deposits, deposit accounts, money, cash or other property;

O.

all federal, state and local tax refunds and/or abatements to which the Guarantor is or becomes entitled no matter how or when arising, including, but not limited to, any loss carryback tax refunds;

P.

all insurance proceeds, refunds and premium rebates, including without limitation proceeds of fire and credit insurance, whether any of such proceeds, refunds and premium rebates arise out of any of the foregoing (A-O) or otherwise;

Q.

all liens, guaranties, rights, remedies and privileges pertaining to any of the foregoing (A-O) including the right of stoppage in transit.

(ii)

“Event(s) of Default” shall mean any default or breach of the terms, conditions or covenants of this Agreement that remains uncured for thirty (30) days after written notice of such default from Lender to Borrower, or any Event of Default under and as defined in the Loan Agreement, the Notes, or the other Loan Documents (as defined in the Loan Agreement).

(iii)

“Loan Agreement” shall mean a certain Revolving Line of Credit and Term Loan Agreement dated as of November 30, 2007 by and between the Borrower and the Secured Party.

(iv)

“Obligations” shall mean the payment and performance of all obligations of Guarantor under the Guaranty.

(b)

Construction. Unless the context of this Agreement otherwise clearly requires, references to the plural include the singular, the singular the plural and the part the whole, and “or” has the inclusive meaning represented by the phrase “and/or”. The words “hereof”, “herein”, “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The section and other headings contained in this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation hereof in any respect. Section, subsection and exhibit references are to this Agreement unless otherwise specified.

Security Interest. Guarantor, on the terms set forth in this Agreement and as security for the full and timely payment of the Obligations in accordance with the terms thereof and of the instruments now or hereafter evidencing the Obligations, hereby grants to the Secured Party a continuing security interest, under the Uniform Commercial Code (as in effect on the date hereof and as amended from time to time hereafter) of each state having jurisdiction from time to time with respect to all or any portion of the Collateral (the “Code”), in and a lien on the Collateral. In addition to all the rights given to the Secured Party by the Loan Agreement, the Notes, the other Loan Documents, and this Agreement, the Secured Party shall have all the rights and remedies of a secured party under the Code. In connection with the grant of security interest made hereby, Guarantor hereby authorizes Secured Party to file or cause to be filed one or more financing statements, amendments to financing statements and/or in lieu financing statements with any filing office for the purpose of perfecting or continuing the perfection of the security interest in the Collateral.

Principles Applicable to the Collateral. The parties agree that, at all times during the term of this Agreement, the following provisions shall be applicable to the Collateral:

(a)

The Guarantor covenants and agrees that it will keep accurate and complete books and records concerning the Collateral owned by it in accordance with generally accepted accounting principles, consistently applied.

(b)

The Secured Party shall have the right to review the books and records of the Guarantor pertaining to the Collateral and to copy and make excerpts therefrom, all at such times and as often as the Secured Party may reasonably request upon three (3) business days’ written notice.

(c)

The Guarantor shall maintain and keep (i) its principal place of business and its chief executive office, (ii) its records concerning the Collateral and (iii) its Collateral at the address set forth on the first page of this Agreement and at no other location, without the prior written consent of the Secured Party.

(d)

Notwithstanding the security interest in the Collateral granted to and created in favor of the Secured Party under this Agreement, the Guarantor shall have the right, until one or more Events of Default shall occur, to sell, lease or otherwise dispose of the Collateral in the ordinary course of the Guarantor’s business.

(e)

Notwithstanding the security interest in the Collateral granted to and created in favor of the Secured Party under this Agreement, the Guarantor shall have the right, until such time as the Secured Party shall have notified the Guarantor that it has revoked such right based upon an Event of Default at its own cost and expense to collect any and all accounts of the Guarantor comprising the Collateral (the “Accounts”).

(f)

The Secured Party shall have the right after an Event of Default has occurred (i) to revoke the right of the Guarantor granted under subsection (e) of this Section 3 by written notice to the Guarantor to such effect, (ii) to take over and direct collection of any and all Accounts of the Guarantor, (iii) to give notice of the Secured Party’s security interest in such Accounts to any or all persons obligated to the Guarantor thereon, (iv) to direct such persons to make payment of such Accounts directly to the Secured Party and (v) to take control of such Accounts and any proceeds thereof.

(g)

The Secured Party shall have the right after an Event of Default to cause a non-interest bearing bank account entitled “Cash Collateral Account” (the “Collateral Account”) to be opened and maintained for the Guarantor at the principal office of the Secured Party. All cash proceeds received by the Secured Party from the Guarantor pursuant to subsection (h) of this Section 3 or directly from persons obligated on Accounts pursuant to subsection (f) of this Section 3 shall be deposited in the Collateral Account as further security for the payment of the Obligations. The Secured Party shall have sole dominion and control over all funds deposited in the Collateral Account, and such funds may be withdrawn therefrom only by the Secured Party.

(h)

Upon notice by the Secured Party to the Guarantor that the Collateral Account has been opened in accordance with subsection (g) of this Section 3, the Guarantor shall cause all cash proceeds collected by it to be delivered to the Secured Party forthwith upon receipt, in the original form in which received, bearing such endorsements or assignments by the Guarantor as may be necessary to permit collection thereof by the Secured Party, and for such purpose the Guarantor hereby irrevocably authorizes and empowers the Secured Party, its officers, employees and authorized agents, to endorse and sign the name of the Guarantor on all checks, drafts, money orders or other media of payment so delivered and such endorsements or assignments shall, for all purposes, be deemed to have been made by the Guarantor prior to any endorsement or assignment thereof by the Secured Party. The Secured Party may use any convenient or customary means for the purpose of collecting such checks, drafts, money orders or other media of payment.

Certain Covenants. Until payment in full of the Obligations, the Guarantor agrees that:

(a)

The Guarantor has and will have good and marketable title to the Collateral from time to time owned or acquired by it, free and clear of all liens, encumbrances and security interests, except security interests granted to and created in favor of the Secured Party and as otherwise set forth in that certain Revolving Line of Credit and Term Loan Agreement of even date herewith by and between Borrower and Secured Party. The Guarantor shall defend such title against the claims and demands of all persons.

(b)

The Guarantor shall not, without the prior written consent of the Secured Party, (i) borrow against the Collateral from any person, firm or corporation other than the Secured Party, (ii) create, incur, assume or suffer to exist any mortgage, lien, charge or encumbrance on, or security interest in, or pledge of or conditional sale or other title retention agreement with respect to any of the Collateral, except the security interest created hereunder, (iii) permit any levy or attachment to be made against any of the Collateral except a levy or attachment relating to this Agreement, unless removed within sixty (60) days after written notice by Secured Party to Guarantor, (iv) permit any financing statement to be on file with respect to any of the Collateral, except financing statements in favor of the Secured Party, or (v) permit any transfer of Collateral without the consent of the Secured Party.

(c)

The Guarantor shall faithfully preserve and protect the Secured Party’s security interest in the Collateral and shall, at its own cost and expense, cause said security interest to be perfected and continued perfected, and for such purpose, the Guarantor shall from time to time at the request of the Secured Party execute and file or record, or cause to be filed or recorded, or authorize the Secured Party to execute and file or record, such instruments, documents and notices, including, without limitation, financing statements and continuation statements, as the Secured Party may deem necessary or advisable in order to perfect and continue perfected said security interest. The Guarantor shall do all such other acts and things and execute and deliver all such other instruments and documents, including, without limitation, further security agreements, pledges and assignments, as the Secured Party may reasonably deem necessary or advisable from time to time in order to perfect and preserve the priority of said security interest as a first lien security interest in the Collateral prior to the rights of all persons therein or thereto. The Secured Party is hereby appointed attorney-in-fact for the Guarantor to do all acts and things which it may deem necessary or advisable to preserve, perfect and continue perfected its security interest in the Collateral, including, without limitation, the signing and recording of financing and other similar statements.

(d)

Risk of loss of, damage to or destruction of the Collateral is on the Guarantor. The Guarantor shall insure the Collateral against such risks and casualties and in such amounts and with such insurers as acceptable to Secured Party in its reasonable discretion. All such policies of insurance shall contain loss payable clauses in favor of the Guarantor and the Secured Party as their respective interests may appear, and show Secured Party as an additional insured on the liability portion of said policy, and such policies or certificates evidencing the same shall be deposited with the Secured Party immediately upon the request of the Secured Party. If the Guarantor fails to effect and keep in full force and effect such insurance or fails to pay the premiums thereon when due, the Secured Party may do so for the account of the Guarantor and add the cost thereof to the Obligations. The Guarantor hereby assigns and sets over unto the Secured Party all monies which may become payable on account of such insurance, including, without limitation, any return of unearned premiums which may be due upon cancellation of any such insurance, and authorizes the Secured Party to direct the insurers to pay the Secured Party any amount so due. The Secured Party, its officers, employees and authorized agents, are hereby irrevocably appointed attorney-in-fact of the Guarantor to endorse any draft or check which may be payable to the Guarantor in order to collect the proceeds of such insurance or any return of unearned premiums. Such proceeds shall be applied to the payment or prepayment of the Obligations. Any balance of insurance proceeds remaining in the possession of the Secured Party after payment in full of the Obligations shall be paid to the Guarantor or order.

(e)

The Guarantor assumes full responsibility for taking any and all necessary steps to preserve its rights in the Accounts against account debtors. The Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of such of the Collateral as may be in its possession if it takes such action for that purpose as the Guarantor shall request in writing, provided that such requested action shall not, in the reasonable judgment of the Secured Party, impair the Secured Party’s security interest in the Collateral or its rights in, or the value of, the Collateral, and provided further that such written request is received by the Secured Party in sufficient time to permit it to take the requested action.

(f)

The Guarantor shall maintain each item of Collateral in good condition and repair and shall pay and discharge all taxes, levies and other impositions levied or assessed thereon as well as the cost of repairs to or maintenance of the same. If the Guarantor fails to do so, the Secured Party may pay the cost of such repairs or maintenance and such taxes, levies or other impositions for the account of the Guarantor and add the amount thereof to the Obligations.

Events of Default.

(a)

If one or more Events of Default shall occur, then, and in any such event, the Secured Party may forthwith proceed to exercise any one or more of the rights and remedies afforded a secured party by the Code and such other rights and remedies which it may have at law or in equity, under this Agreement, all of which rights and remedies shall, to the full extent permitted by law, be cumulative. Without limitation upon the foregoing, the Secured Party shall have the right without demand or prior notice to the Guarantor or any other person, except as otherwise required by law (and if notice is required by law, after ten (10) days’ prior written notice to the Guarantor at its address hereinafter set forth) and without prior judicial hearing or legal proceedings, all of which the Guarantor hereby expressly waives:

(i)

to enter any premises where Collateral is located and to take possession and control of the same;

(ii)

to enforce collection, at the Guarantor’s expense and either in the name of the Secured Party or the name of the Guarantor, of any or all of the Accounts by suit or otherwise, to surrender, release or exchange all or any part thereof, or to compromise or extend or renew (whether or not longer than the original period) any indebtedness thereunder;

(iii)

to take over and perform any contract of the Guarantor and to take control of any and all Accounts and proceeds arising therefrom;

(iv)

to sell all or any portion of the Collateral at public or private sale at such place or places and at such time or times and in such manner and upon such terms, whether for cash or credit, as the Secured Party in its sole discretion may determine; and

(v)

to endorse in the name of the Guarantor any instrument, howsoever received by the Secured Party, representing proceeds of any of the Collateral.

(b)

Upon the occurrence of any Event of Default, the Guarantor shall promptly upon demand by the Secured Party assemble the Collateral and make it available to the Secured Party at a place to be designated by the Secured Party which shall be reasonably convenient to both parties. The right of the Secured Party under this Section to have the Collateral assembled and made available to it is the essence of this Agreement, and the Secured Party may, at its election, enforce such right by a bill in equity for specific performance.

Defeasance. Upon payment in full of the Obligations, this Agreement shall terminate and be of no further force or effect. Until such time, however, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

Subrogation and Marshaling. The Guarantor hereby waives, surrenders and agrees not to claim or enforce, so long as the Obligations or any portion thereof remains outstanding, (a) any right to be subrogated in whole or in part to any right or claim of the holder of any part of the Obligations and (b) any right to require marshaling of any assets of the Guarantor which right of subrogation or marshaling might otherwise arise from any payment to the holder of any part of the Obligations arising out of the enforcement of the security interest granted hereby, or any other mortgage or security interest granted by the Guarantor or any other person to the Secured Party, or the liquidation of or the realization upon the Collateral, any other collateral granted by the Guarantor or any other person to the Secured Party, or any part thereof.

Severability. If any provision of this Agreement shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

No Waiver; Rights Cumulative. No failure or delay on the part of the Secured Party in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power or privilege hereunder; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or of any other right, remedy, power or privilege. The rights and remedies of the Secured Party under this Agreement are cumulative and not exclusive of any rights or remedies which it may otherwise have. No modification or waiver of any provision of this Agreement nor consent to any departure by the Guarantor therefrom shall be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specified instance and for the specific purpose for which given.

Notices. Any notice, request, demand or other communication required or permitted hereunder shall be given in writing by delivering the same in person to the intended addressee, by overnight courier service with guaranteed next day delivery or by certified United States Mail, postage prepaid or telegram sent to the intended addressee at the applicable address set forth on Page 1 hereof or to such different address as either Guarantor or Secured Party shall have designated by written notice to the other sent in accordance herewith. Such notices shall be deemed given when received or, if earlier, in the case of delivery by courier service with guaranteed next day delivery, the next day or the day designated for delivery, or in the case of delivery by certified United States mail, two days after deposit therein.

Governing Law. The Code shall govern the attachment, perfection and the effect of attachment and perfection of the Secured Party’s interest in the Collateral, and the rights, duties and obligations of the Guarantor and the Secured Party with respect thereto. This Agreement shall be deemed to be a contract under the laws of the Commonwealth of Massachusetts, and the execution and delivery hereof and, to the extent not inconsistent with the preceding sentence, the terms and provisions hereof, shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

Survival. All representations, warranties, covenants and agreements contained herein or made in writing in connection herewith shall survive the execution and delivery of this Agreement and the extension of the Loans.

GUARANTOR:

 

 

By:

 

Witness

Name:

Title:

SECURED PARTY:

RBS CITIZENS, NATIONAL ASSOCIATION

 

By:

 

Witness

David J. Bugbee, Senior Vice President