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ADS TACTICAL, S-1/A Filing

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                                             As filed with the Securities and Exchange Commission on April 28, 2011
                                                                                                                                            Registration No. 333-172118

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



                                                                     AMENDMENT NO. 2
                                                                          TO

                                                                             FORM S-1
                                                             REGISTRATION STATEMENT
                                                          UNDER THE SECURITIES ACT OF 1933

                                                                    ADS TACTICAL, INC.
                                                             (Exact name of registrant as specified in its charter)


                         Delaware                                                     5091                                              27-1083344
                 (State or other jurisdiction of                          (Primary Standard Industrial                                 (I.R.S. Employer
                incorporation or organization)                            Classification Code Number)                                 Identification No.)


                                                               621 Lynnhaven Parkway, Suite 400
                                                                 Virginia Beach, Virginia 23452
                                                                         (757) 481-7758
                                                   (Address, including zip code, and telephone number, including area code,
                                                                  of registrant’s principal executive offices)


                                                                        Charles M. Salle
                                                                        General Counsel
                                                                       ADS Tactical, Inc.
                                                               621 Lynnhaven Parkway, Suite 400
                                                                 Virginia Beach, Virginia 23452
                                                                         (757) 481-7758
                                     (Name, address, including zip code, and telephone number, including area code, of agent for service)

                                                                                Copies to :


                             Kirk A. Davenport, Esq.                                                              Richard Sandler, Esq.
                              Ian D. Schuman, Esq.                                                              Davis Polk & Wardwell LLP
                             Latham & Watkins LLP                                                                 450 Lexington Avenue
                                885 Third Avenue                                                                New York, New York 10017
                            New York, New York 10022                                                                   (212) 450-4000
                                  (212) 906-1200

         Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration
    statement.


        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities
    Act of 1933, check the following box. 

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and
    list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities
    Act registration statement number of the earlier effective registration statement for the same offering. 

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities
    Act registration statement number of the earlier effective registration statement for the same offering. 
    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):

Large accelerated filer                                                                               Accelerated filer 

Non-accelerated filer  (Do not check if a smaller reporting company)                                  Smaller reporting company 

                                                 CALCULATION OF REGISTRATION FEE


                          Title of Each Class of                                 Proposed Maximum Aggregate                 Amount of Registration
                        Securities to be Registered                                   Offering Price(1)(2)                       Fee(2)(3)
Common Stock, par value $0.01 per share                                                  $100,000,000                              $11,610

 (1) Includes shares of common stock issuable upon exercise of the underwriters’ option to purchase additional shares of common stock.

 (2) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act.

 (3) Previously paid.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
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     The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement
     filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not
     soliciting any offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

         PROSPECTUS (Subject to Completion)

         Issued April 28, 2011


                                                                               Shares




                                                               Common Stock

         This is an initial public offering of shares of common stock by ADS Tactical, Inc. We are offering       shares of our
         common stock in this offering and the selling stockholders named in this prospectus are offering        shares of our
         common stock. We will not receive any proceeds from the sale of shares to be offered by the selling stockholders.




         Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial
         public offering price per share of our common stock will be between $     and $      . We will apply to have our
         common stock approved for listing on the New York Stock Exchange under the symbol “ADSI.”




         Investing in our common stock involves risks. See “Risk Factors” beginning on page 11.



                                                                    Price $    a Share




                                                                                       Underwriting                                  Proceeds to
                                                                    Price to           Discounts and           Proceeds to           the Selling
                                                                    Public             Commissions            the Company           Stockholders


         Per Share                                              $                  $                      $                     $
         Total                                                  $                  $                      $                     $


         We and the selling stockholders have granted the underwriters a 30-day option to purchase up to an aggregate
         of       additional shares of common stock on the same terms set forth above. If the underwriters exercise the option in full,
         the total underwriting discounts and commissions payable by us and the selling stockholders will be $ , the total proceeds,
         before expenses, to us will be $     and the total proceeds, before expenses, to the selling stockholders will be $ . See the
         section of this prospectus entitled “Underwriters.”
The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.

The underwriters expect to deliver the shares to purchasers on or about   , 2011.




J.P. Morgan                                                                                 Morgan Stanley
      , 2011
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OPERATIONAL EQUIPMENT & LOGISTICS SOLUTIONS
                                                   TABLE OF CONTENTS


                                                                                                                        Page

Market and Industry Information                                                                                             ii
Trademarks and Tradenames                                                                                                   ii
Non-GAAP Financial Measures                                                                                                 ii
Prospectus Summary                                                                                                          1
Risk Factors                                                                                                               11
Forward-Looking Statements                                                                                                 29
Use of Proceeds                                                                                                            31
Dividend Policy                                                                                                            32
Capitalization                                                                                                             33
Dilution                                                                                                                   34
Selected Consolidated Financial and Other Data                                                                             35
Management’s Discussion and Analysis of Financial Condition and Results of Operations                                      39
Business                                                                                                                   57
Management                                                                                                                 72
Compensation Discussion and Analysis                                                                                       75
Executive Compensation                                                                                                     79
Principal and Selling Stockholders                                                                                         89
Certain Relationships and Related Party Transactions                                                                       90
Description of Certain Indebtedness                                                                                        94
Description of Capital Stock                                                                                               98
Shares Eligible for Future Sale                                                                                           102
Material United States Federal Income Tax Considerations for Non-United States Holders of Our
   Common Stock                                                                                                           104
Underwriters                                                                                                              107
Legal Matters                                                                                                             112
Experts                                                                                                                   112
Where You Can Find More Information                                                                                       112
Index to Financial Statements                                                                                             F-1
  EX-10.1
  EX-10.3
  EX-10.20
  EX-10.21
  EX-10.20
  EX-10.23
  EX-23.2




    We have not authorized anyone to provide any information other than that contained in this prospectus or in any free
writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can
provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and
seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information
contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this
prospectus or any sale of our common stock.

    Until       , 2011 (25 days after the date of this prospectus), all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s
obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.


                                                                 i
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                                                  MARKET AND INDUSTRY INFORMATION

             We obtained the industry and market data in this prospectus from our own research and from information released by the
         Department of Defense, including the Fiscal Year 2011 Budget Request and annual budget press releases. While we believe
         that the information released by the Department of Defense is reliable, we have not independently verified the data contained
         therein. In addition, while we believe that the results and estimates from our internal research are reliable, such results and
         estimates have not been verified by any independent source. Moreover, the Department of Defense may, in the future, alter
         the manner in which it gathers data regarding the markets in which we operate our business. As a result, you should carefully
         consider the inherent risks and uncertainties associated with the industry and market data contained in this prospectus,
         including those discussed under the heading “Risk Factors.”

                                                      TRADEMARKS AND TRADENAMES

             We own or have rights to trademarks and/or tradenames that we use in connection with the operation of our business.
         Certain trademarks and/or tradenames are subject to registrations or applications to register with the United States Patent and
         Trademark Office, while others are not subject to registration but protected by common law rights. These registered and
         unregistered marks include our company, product and website names and logos used herein. Each trademark, tradename or
         service mark by any other company appearing in this prospectus belongs to its owner and is used under permission or license
         from its owner. Some of the trademarks we own or have the right to use include ADS (words and design), OFFICIAL
         GENIII ECWCS (words and design) and WARRIOR EXPO. We also sell products under a number of licensed brands,
         including COMBAT MEDICAL SYSTEMS. Solely for convenience, trademarks, service marks and tradenames referred to
         in this prospectus may appear without the ® , tm or SM symbols, but such references are not intended to indicate, in any way,
         that we will not assert to the fullest extent under applicable law, our rights or the right of the applicable licensor to these
         trademarks, service marks and tradenames.

                                                      NON-GAAP FINANCIAL MEASURES

             EBITDA, as presented in this prospectus, is a supplemental measure of our performance that is not required by, or
         presented in accordance with, generally accepted accounting principles in the United States, or “GAAP.” We define
         EBITDA as net income before interest expense, provision for income taxes and depreciation and amortization. EBITDA
         should not be considered as an alternative to net income as a measure of performance. We believe that EBITDA is a useful
         financial metric to assess our operating performance from period to period by excluding certain items that we believe are not
         representative of our core business, as well as for providing a comparison of our operating performance to that of other
         companies in our industry. Because EBITDA is not determined in accordance with U.S. GAAP and is susceptible to varying
         calculations, EBITDA, as presented, may not be comparable to other similarly titled measures presented by other companies.

             EBITDA has limitations as an analytical tool and you should not consider it in isolation, or as a substitute for analysis of
         our results as reported under GAAP.

             Some of these limitations are:

              •     it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

              •     it does not reflect changes in, or cash requirements for, our working capital needs;

              •     it does not reflect the interest expense or cash requirements necessary to service interest or principal payments on
                    our debt;

              •     it does not reflect any cash income taxes that we may be required to pay;

              •     it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;

              •     assets are depreciated or amortized over differing estimated useful lives and often have to be replaced in the future,
                    and EBITDA does not reflect any cash requirements for such replacements; and

              •     other companies in our industry may calculate EBITDA measures differently than we do, limiting its usefulness as a
                    comparative measure.


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                                                               PROSPECTUS SUMMARY

                  This summary highlights important information regarding our business and the offering contained elsewhere in this
             prospectus. Please review this prospectus in its entirety, including “Risk Factors,” “Selected Consolidated Financial and
             Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our
             consolidated financial statements and the related notes, before you decide to invest. Unless otherwise noted or as the context
             otherwise requires, the terms “company,” “ADS,” “we,” “us” and “our” refer to ADS Tactical, Inc., a Delaware
             corporation, our operating subsidiaries, including Atlantic Diving Supply, Inc., MAR-VEL International, Inc. and the
             consolidated variable interest entities. Unless otherwise noted in this prospectus, any statements with respect to the number
             of items we offer and the number of our customers, vendors and preferred vendors are made as of December 31, 2010. Some
             of the statements in this prospectus constitute forward-looking statements. See “Forward-Looking Statements .”


                                                                    ADS Tactical, Inc.

             Our Company

                 We believe we are a leading provider of value-added logistics and supply chain solutions specializing in tactical and
             operational equipment, based on 2010 sales. We drive sales between a fragmented base of vendors and a decentralized group
             of customers by tailoring our solutions to meet their needs. Most of our approximately 4,000 active customers (in the past
             24 months) are within the Department of Defense and the Department of Homeland Security. Our business model is
             adaptable and scalable to serve other domestic and foreign government agencies. Through our vendor network, we offer our
             customers access to over 160,000 items, which we combine with our broad suite of value-added supply chain management
             services. Our flexible operating model allows us to maintain an asset-light, low-inventory business. We believe our value
             proposition has allowed us to drive the growth in demand for the products and related services we offer while building upon
             the strength of our market position, as evidenced by the compound annual growth rate of our net sales, net income and
             EBITDA from 2006 to 2010 of 61%, 84% and 80%, respectively.

                Our customers need the products we offer for ongoing training and to be prepared for a variety of peacetime operations
             and missions at home and abroad. The products we offer include apparel, expeditionary equipment, optical equipment,
             communications equipment, emergency medical supplies, lighting, eyewear and other items from approximately 1,400 active
             vendors (in the past 24 months) such as Camelbak, FLIR, Hunter Defense Technologies, L-3 Communications, Oakley and
             SureFire. Most of the products we distribute require regular replacement due to wear and tear and technological
             advancements. We combine the distribution of our products with our value-added supply chain management services, which
             enable us to streamline the procurement process for our customers by anticipating their product needs, to achieve on-time
             and accurate delivery and to provide in one place a selection of products to meet specific tactical and operational
             requirements. Our value-added supply chain management services include kitting and assembly, custom sourcing, training,
             product research and development and quality assurance and quality management systems.

                 We seek to be a critical partner to each of our customers and vendors. Our value proposition is driven by the combination
             of three key factors:

                    •   Deep-Rooted Customer Relationships. By utilizing our logistics solutions and access to our broad portfolio of
                        contractual procurement vehicles, our customers may save time and money, which generates repeat business and
                        fosters deep relationships with our customers.

                    •   Strategic Vendor Alliances. Our vendors are able to leverage our experienced sales force, product knowledge,
                        customer relationships and access to contractual procurement vehicles to drive demand for their products and reach a
                        customer base that may otherwise be difficult for them to access independently.

                    •   Broad Portfolio of Contractual Procurement Vehicles. Our contractual procurement vehicles provide multiple
                        channels through which our customers can purchase, and our vendors can sell, any of the over 160,000 items we
                        offer without the need for time-consuming individual contracts or open-market bid


                                                                          1
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                          processes. Our contractual procurement vehicles give our vendors access to customers they may not
                          independently have and enable the U.S. government to realize increased procurement efficiencies.


             Our Market Opportunity

                 We believe our addressable market is approximately $100 billion, of which our current market share is approximately
             1%. Our primary customers include U.S. government agencies whose funds come from, among other sources, the
             Readiness & Support portion of the Operation & Maintenance budget, which is allocated from the larger Department of
             Defense base budget. According to the Department of Defense’s 2011 budget projections, from 2011 through 2015, the
             Operations & Maintenance budget’s share of the total Department of Defense base budget is expected to increase, with an
             expected compound annual growth rate of approximately 5%, compared to 3% for the Department of Defense base budget.
             We believe the Operation & Maintenance budget is stable and growing because it funds ongoing military readiness and
             training and thus is not driven by active and ongoing conflicts.

                 The need for our capabilities and services developed over the last decade, as the U.S. government began to shift away
             from standardized products and equipment built to government specifications, towards readily available, commercial
             off-the-shelf products and equipment. In addition, over the same period, the Department of Defense’s focus has shifted away
             from developing large-scale weapons platforms and towards equipping personnel to engage in ground-based, irregular
             warfare against asymmetric threats. Finally, the role of the U.S. military is expanding beyond the scope of its traditional
             national defense function. We believe that the following trends will increase the demand for our tactical and operational
             equipment and value-added supply chain management services:

                    •   Continuous Commitment to Operational Readiness and Troop Modernization. The U.S. Army has transitioned to a
                        model that rotates units between three levels of deployment readiness—“preparation,” “eligible” and “available.” As
                        new units rotate into each level of readiness, they are issued new and modernized equipment.

                    •   Broader Array of Mission Objectives. Increasingly, the branches of the U.S. military are called upon to undertake
                        missions beyond the scope of their traditional national defense functions, such as assistance with disaster relief,
                        border patrol and nation-building.

                    •   Need for Tightly Integrated and Specialized Equipment. The Department of Defense is focused on ensuring that
                        each soldier is properly equipped with state-of-the art equipment. Consequently, the average spend-per-soldier has
                        increased historically and is expected to continue to grow.

                    •   Need for Increased Manpower to Counter Asymmetrical Threats. The threat of simultaneous, irregular conflicts
                        requires significant numbers of trained and properly equipped troops ready to deploy on short notice.

                    •   Increasing Importance of Expeditionary Warfare Units. The U.S. Army, the U.S. Air Force and the U.S. Navy
                        reorganized to increase the effectiveness and availability of their expeditionary warfare units, which are mobile and
                        self-sufficient units that operate away from established bases and are able to deploy quickly.


             Our Competitive Strengths

                    The following competitive strengths differentiate us from our competitors and are critical to our continued success:

                 Deep-Rooted Customer Relationships. We aim to be a one-stop-shop for our customers’ tactical and operational
             equipment needs by streamlining the procurement process and providing value-added supply chain management services.
             Many of our customers depend on us to manage their procurement process and to introduce them to new products best-suited
             to their particular needs. Our ability to establish, sustain and grow these relationships would be difficult and expensive to
             replicate.


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                 Value-Added Supply Chain Solutions. We are able to effectively manage and coordinate a fragmented supply chain to
             provide complete and on-time delivery of products to our customers at attractive prices. We provide efficient and compelling
             solutions to meet our customers’ needs and requirements. By reducing complexities and increasing efficiencies in their
             procurement processes, we believe we are a critical partner to our customers.

                Scalable Infrastructure. Our recent investment in scalable infrastructure and operations gives us the capacity to build
             upon our past performance with minimal future capital expenditures. As a result of our asset-light operating model, we
             generate significant free cash flow (calculated as cash flow from operations minus capital expenditures) and have relatively
             low capital expenditures and working capital requirements. For example, for the year ended December 31, 2010,
             approximately 51% of our net sales were from orders shipped directly from the vendor.

                 Extensive Vendor Relationships and Preferred Vendor Program. We are the primary avenue into the government sales
             channel for many of our vendors as a result of our familiarity with the complexities of government procurement and our
             access to customers in U.S. government agencies. As a result, new vendors seek to establish relationships with us, allowing
             us to continue to expand the breadth of products we offer. We are able to competitively bid on opportunities as a result of the
             preferential terms and support we receive from our preferred vendors.

                 Broad Portfolio of Contractual Procurement Vehicles. Our access to a broad portfolio of contractual procurement
             vehicles makes the sale and procurement process easier and faster for both our customers and our vendors. We use the term
             “contractual procurement vehicle” to refer to a type of government contract that is awarded to a limited number of suppliers,
             authorizing those suppliers to compete for specific purchase orders from different government entities. Obtaining the type of
             contractual procurement vehicles used by our customers requires a demonstrated track record of past performance, which
             makes our portfolio of contractual procurement vehicles difficult to replicate.

                 Experienced Sales Force. A substantial portion of our sales personnel have extensive military experience. Their
             comprehensive capabilities, including the valuable feedback regarding products they provide to both customers and vendors
             and their ability to identify suitable contractual procurement vehicles, enhance our key relationships while ensuring superior
             customer service.

                 Dedicated and Capable Management Team. With substantial operational experience and functional knowledge, our
             senior management team has successfully led the formation and development of our business model and overseen significant
             growth in our net sales and EBITDA.

             Our Growth Strategy

                Further Penetrate our Primary Customer Base. Our primary customer base is fragmented and characterized by a
             decentralized procurement process. Our sales force currently calls on only a small percentage of the purchasing decision
             makers at both the program and unit levels of the U.S. military. We expect to increase sales to our existing customers and
             add new customers within our primary customer base using the following key growth strategies:

                    •   Continue to Expand our Sales Force. We intend to expand the size of our sales force. In 2010, we increased the
                        overall size of our sales force by 48 representatives, representing a 41% increase from 2009 fiscal year end. With
                        additional sales representatives, we believe we can replicate our prior unit-level successes in currently underserved
                        units.

                    •   Expand our Product Offerings. We continue to expand the breadth of our product offerings as we strive to meet the
                        constantly changing needs of our customers. Our sales force continuously evaluates our customers’ needs in order to
                        design solutions to meet those requirements. We then work directly with our vendor partners to increase the breadth
                        and quality of our available product lines specifically based on our customers’ needs. This enables us to offer the
                        latest and best available commercial off-the-shelf products.


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                    •   Increase Demand for our Value-Added Supply Chain Solutions. We intend to further develop and drive demand for
                        our customer-centric, value-added supply chain solutions and to focus on expanding our kitting and assembly and
                        large integration programs. These solutions increase the readiness and effectiveness of our customers, which we
                        believe will increase demand for the products and related services we offer.

                 Increase the Number, Size and Scope of our Contractual Procurement Vehicles. In order to enhance the flexibility, we
             will continue to compete strategically for new contractual procurement vehicles. We are actively pursuing a number of
             contractual procurement vehicles that are currently in the development stage.

                 Add New Categories of Customers Outside of our Traditional Markets. We believe that we are well positioned to forge
             new relationships with potential customers who are not yet material to our operations, including the Department of
             Homeland Security and other federal agencies. Furthermore, we believe there are opportunities to provide the products and
             related services we offer in the U.S.-assisted equipping of allied foreign militaries and security services.

                Pursue Selected Acquisitions. We may supplement our organic growth by pursuing selected acquisitions aimed at
             augmenting our contractual procurement vehicle portfolio, broadening and diversifying our customer base, expanding our
             product offerings and vendor network or increasing our geographic presence.

             Recent Developments

                 On March 25, 2011, in a transaction exempt from registration under the Securities Act, we issued $275.0 million of
             11.00% senior secured notes due 2018, which we refer to as the “senior secured notes.” Concurrently with the closing of the
             offering of the senior secured notes, we amended and restated our senior secured revolving credit facility to, among other
             things, permit the offering of the senior secured notes and to permit distributions to our stockholders. The proceeds from the
             offering of the senior secured notes, along with amounts drawn from our senior secured revolving credit facility, were used
             (1) to make a distribution of $217.1 million to our stockholders, (2) to repay our 2010 senior secured term loan facility,
             which we refer to as our “term loan facility,” (3) to pay cash bonuses, which we refer to as “transaction bonuses,” to certain
             members of our senior management in an amount not to exceed $9.0 million, $6.6 million of which was paid upon
             consummation of the offering of the senior secured notes and the remainder of which will be paid upon the earlier of (x) the
             consummation of this offering and (y) December 31, 2011 and (4) to pay related transaction fees and expenses. In this
             prospectus, we refer to the offering of the senior secured notes, the prepayment of our term loan facility, the distribution to
             our stockholders, the amendment and restatement of our senior secured revolving credit facility, the payment of the
             transaction bonuses and the payment of fees and expenses in connection with the foregoing transactions collectively as the
             “refinancing transactions.” See “Description of Certain Indebtedness.”

             Risk Factors

                 An investment in our common stock involves substantial risks and uncertainties. We are subject to a number of risks,
             including risks that may prevent us from achieving our business objectives or may adversely affect our business, results of
             operations and financial condition. See “Risk Factors” beginning on page 10 for a discussion of the material risks that
             prospective purchasers should consider before investing in our common stock. Some of the more significant risks relating to
             our business include, among others:

                    •   our business is dependent on maintaining our relationships with our customers and developing relationships with
                        new customers;

                    •   we are a government contractor and rely on U.S. government entities for substantially all of our sales;

                    •   the government contract representing approximately 19% of our total net sales for the year ended December 31,
                        2010 is currently in the final year of its five-year term and the government contract representing approximately 44%
                        of our total net sales for the same period is up for renewal in March 2012;

                    •   our business is dependent on maintaining our relationships with key vendors and developing relationships with new
                        vendors;


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                    •   we are dependent on the performance of our vendors in meeting the needs of our customers;

                    •   we are subject to extensive laws and regulations as a result of our status as a government contractor and as a result of
                        the products we sell and the business we conduct abroad;

                    •   we are dependent on receiving distributions from our subsidiaries due to our status as a holding company;

                    •   we are exempt from certain corporate governance requirements as a result of our status as a “controlled company”
                        within the meaning of the New York Stock Exchange rules;

                    •   upon completion of this offering, the selling stockholders will continue to own a majority of our common stock and
                        therefore will continue to have significant influence over matters submitted to a stockholder vote; and

                    •   our substantial indebtedness could adversely affect our financial flexibility and our competitive position.



             Additional Information

                 We were originally incorporated in Virginia in 1997. We are currently a subchapter S corporation under the rules and
             regulations of the Internal Revenue Service. As a result, income taxes attributable to our federal and state income are payable
             by our stockholders. Distributions have been paid to stockholders to fund their tax obligations related to their ownership of
             ADS Tactical, Inc.

                In connection with this offering, we will convert to a subchapter C corporation. In connection with our conversion from a
             subchapter S corporation to a subchapter C corporation, we will record a tax benefit (estimated to be approximately
             $500,000 as if the conversion occurred on December 31, 2010) to recognize deferred taxes.

                 Our principal executive offices are located at 621 Lynnhaven Parkway, Suite 400, Virginia Beach, Virginia 23452. Our
             telephone number is (757) 481-7758. Our website address is http://www.adsinc.com . Information on our website is not
             considered part of this prospectus.


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                                                                         The Offering

             Issuer                                            ADS Tactical, Inc.

             Shares of common stock offered by us                     shares.

             Shares of common stock offered by the
               selling stockholders                                   shares.

             Common stock to be outstanding after this
              offering                                                shares.

             Use of proceeds                                   We estimate that the net proceeds to us from this offering, after deducting
                                                               underwriting discounts and estimated offering expenses, will be
                                                               approximately $      (or approximately $       million if the underwriters
                                                               exercise their over-allotment option in full), assuming the common stock is
                                                               offered at $    per share, the midpoint of the range set forth on the cover page
                                                               of this prospectus. We intend to use the net proceeds from this offering (1) to
                                                               make a final distribution of $   million to our existing stockholders in
                                                               connection with the termination of our S corporation status, (2) to exercise
                                                               our option to redeem up to 35% of our senior secured notes and (3) to the
                                                               extent any proceeds remain, to repay a portion of the amounts outstanding
                                                               under our senior secured revolving credit facility. We will not receive any
                                                               proceeds from the sale of shares of our common stock by the selling
                                                               stockholders. See “Use of Proceeds.”

             Risk factors                                      See “Risk Factors” and other information included in this prospectus for a
                                                               discussion of factors you should carefully consider before deciding to invest
                                                               in shares of our common stock.

             Listing                                           We will apply to have our common stock listed on the New York Stock
                                                               Exchange under the trading symbol “ADSI.”

                    Except as otherwise indicated, all information in this prospectus:

                    •   excludes option grants expected to occur concurrently with the consummation of this offering and all shares reserved
                        for future issuance pursuant to our 2011 Equity Incentive Award Plan;

                    •   gives effect to the filing of our amended and restated certificate of incorporation, effecting a     -for-1 stock split
                        with respect to our common stock, which will occur prior to the effective date of the registration statement of which
                        this prospectus is a part; and

                    •   assumes no exercise by the underwriters of their option to purchase         additional shares from us and the selling
                        stockholders in this offering. See “Principal and Selling Stockholders.”


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                                                  Summary Consolidated Financial and Other Data

                 The following tables summarize the consolidated financial and other data for our business, as well as certain pro forma
             information that gives effect to our conversion from a subchapter S corporation to a subchapter C corporation as if it
             occurred on January 1 of each period. You should read this summary consolidated financial and other data in conjunction
             with “Use of Proceeds,” “Capitalization,” “Selected Consolidated Financial and Other Data,” “Management’s Discussion
             and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related
             notes, all included elsewhere in this prospectus.

                 We derived the consolidated statements of operations data for the years ended December 31, 2008, 2009 and 2010 from
             our audited consolidated financial statements. Our audited consolidated financial statements as of December 31, 2009 and
             2010 and for the fiscal years ended December 31, 2008, 2009 and 2010 have been included elsewhere in this prospectus.


                                                                                                              Year Ended
                                                                                                             December 31,
                                                                                                2008              2009                2010
                                                                                                  (In thousands, except per share data)


             Consolidated Statements of Operations Data:
             Net sales                                                                      $ 660,535         $ 932,177         $   1,330,840
             Costs and Expenses:
                Cost of goods sold                                                              572,992           809,117           1,166,391
                Selling, general and administrative                                              44,323            60,897              80,945
                Intangible asset impairment                                                          —              2,996                  —
             Income from operations                                                              43,220            59,167              83,504
             Interest income                                                                        225                84                 127
             Interest expense                                                                    (1,481 )          (1,401 )            (5,388 )

             Net income                                                                          41,964            57,850               78,243
             Net income attributable to common stockholders                                 $    42,010       $    57,709       $       77,282

             Pro Forma Data (unaudited) (1) :
             Pro forma provision for income taxes                                           $    16,594       $    22,795       $       30,913
             Pro forma net income                                                           $    25,416       $    34,914       $       46,369
             Pro Forma, As Adjusted Data (unaudited) (2) :
             Pro forma, as adjusted interest expense
             Pro forma, as adjusted net income before income taxes
             Pro forma, as adjusted provision for income taxes
             Pro forma, as adjusted net income
             Pro forma, as adjusted earnings per common share:
               Basic
               Diluted
             Pro forma, as adjusted weighted average common shares outstanding:
               Basic
               Diluted
             Other Data:
             Net cash provided by operating activities                                      $    15,893       $    35,291       $       31,742
             Net cash used in investing activities                                              (14,888 )          (6,586 )             (2,947 )
             Net cash provided by (used in) financing activities                                    492           (29,547 )            (27,340 )
             Depreciation and amortization                                                        2,049             2,140                  974
             Sales representatives at end of period (3)                                              87               118                  166
             Capital expenditures                                                                 8,297             9,181                3,387
             EBITDA (4)                                                                          45,269            61,307               84,478




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                                                                                                                  As of December 31, 2010
                                                                                                                                     Pro Forma,
                                                                                                                 Actual            As Adjusted (5)
                                                                                                                       (In thousands)


             Consolidated Balance Sheet Data:

             Cash and cash equivalents                                                                       $     2,810               $
             Working capital                                                                                      30,647
             Total debt                                                                                          148,825
             Total stockholders’ equity (deficit)                                                                 15,387


              (1) We historically have been treated as a subchapter S corporation for U.S. federal income tax purposes. As a result, our
                  income has not been subject to U.S. federal income taxes or state income taxes in those states where S corporation
                  status is recognized. In general, the corporate income or loss of a subchapter S corporation is allocated to its
                  stockholders for inclusion in their personal federal income tax returns and state income tax returns in those states
                  where S corporation status is recognized. In connection with this offering, we will convert from a subchapter S
                  corporation to a subchapter C corporation. Pro forma provision for income taxes reflects combined federal and state
                  income taxes on a pro forma basis, as if we had been taxed as a subchapter C corporation, using an effective tax rate of
                  39.5% for 2008 and 2009, and an effective tax rate of 40.0% for 2010.

                    Pro forma net income reflects historical net income before income taxes less the pro forma provision for income taxes.
                    Pro forma net income does not give effect to the refinancing transactions or the use of proceeds from this offering.

              (2) Pro forma, as adjusted data give effect to the following transactions as if they had occurred as of the beginning of the
                  period presented: (a) the refinancing transactions, (b) this offering and the use of proceeds therefrom and (c) our
                  conversion from a subchapter S corporation to a subchapter C corporation, using an effective tax rate of 40.0%.

                    The following is a reconciliation of historical net income to pro forma, as adjusted net income for the year ended
                    December 31, 2010:
                                                                                                              Year Ended
                                                                                                           December 31, 2010
                                                                                                             (In thousands)


             Net income                                                                                $              78,243
             Net increase in interest expense (a)
             Pro forma, as adjusted net income before income taxes

             Provision for income taxes (b)
             Pro forma, as adjusted net income (c)




                     (a) See the reconciliation of historical interest expense to pro forma, as adjusted interest expense below.

                     (b) Reflects $    million in income taxes, on a pro forma, as adjusted basis after giving effect to the increase in
                         interest expense as a result of the refinancing transactions described above, as a result of our conversion from a
                         subchapter S corporation to a subchapter C corporation, using an effective tax rate of 40.0%.

                     (c) Pro forma, as adjusted net income for the year ended December 31, 2010, does not give effect to the write-off of
                         approximately $1.7 million of deferred financing costs in connection with the refinancing transactions, the
                         payment of the cash bonuses in connection with the refinancing transactions, and the write-off of approximately
                         $    million of deferred financing costs as a result of the use of proceeds from this offering.

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                          The following is a reconciliation of historical interest expense to pro forma, as adjusted interest expense for the
                          year ended December 31, 2010:
                                                                                                                               Year Ended
                                                                                                                            December 31, 2010
                                                                                                                              (In thousands)


             Interest expense                                                                                           $                 5,388
             Net increase resulting from the refinancing transactions (i)
             Decrease resulting from the use of proceeds of this offering (ii)
             Pro forma, as adjusted interest expense




                           (i) Reflects the difference in interest expense between the historical amounts incurred under our term loan
                               facility and senior secured revolving credit facility, including the amortization of deferred financing costs,
                               and the interest expense that would have been incurred under our 11.00% senior secured notes due 2018 and
                               our amended and restated senior secured revolving credit facility (based on the amount drawn upon
                               consummation of the refinancing transactions of $93.2 million, at an assumed weighted interest rate of %),
                               assuming the refinancing transactions were consummated on January 1, 2010.

                          (ii) Reflects the reduction in interest expense, after giving effect to the refinancing transactions as if they had
                               occurred on January 1, 2010, as a result of the use of proceeds from this offering to repay amounts
                               outstanding under our senior secured revolving credit facility and our senior secured notes. See “Use of
                               Proceeds.”

              (3) Does not include those members of our sales force who primarily serve our state and local law enforcement customers,
                  which were 10, 14 and 14 members of our sales force as of December 31, 2008, 2009 and 2010, respectively, because
                  these members perform fundamentally different functions in the sales process than the other members of our sales
                  force. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Components
                  of Our Consolidated Statements of Operations — Net Sales.”

              (4) We define EBITDA as net income before interest expense, provision for income taxes and depreciation and
                  amortization. EBITDA is not a measure of financial performance under U.S. GAAP and should not be considered as
                  an alternative to net income as a measure of performance. Because EBITDA is not a measurement determined in
                  accordance with U.S. GAAP and is susceptible to varying calculations, EBITDA, as presented, may not be comparable
                  to other similarly titled measures presented by other companies. We believe that EBITDA is a useful financial metric
                  to assess our operating performance from period to period by excluding certain items that we believe are not
                  representative of our core business, as well for providing a comparison of our operating performance to that of other
                  companies in our industry.

                    We use EBITDA in a number of ways, including:

                    •   for planning and budgeting purposes;

                    •   to evaluate the effectiveness of our business strategies;

                    •   in communications with our board of directors concerning our consolidated financial performance; and

                    •   to determine management’s compensation.


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                         The following table reconciles net income, the most directly comparable GAAP financial measure, to EBITDA:


                                                                                                                 Year Ended
                                                                                                                 December 31,
                                                                                                     2008             2009            2010
                                                                                                                (In thousands)


             Net income                                                                           $ 41,964        $ 57,850         $ 78,243
             Interest expense, net(a)                                                                1,256           1,317            5,261
             Depreciation and amortization                                                           2,049           2,140              974
             EBITDA(b)                                                                            $ 45,269        $ 61,307         $ 84,478




                       (a) Interest expense, net for the year ended December 31, 2010 includes amortization of deferred financing costs of
                           $537,143.

                       (b) For the year ended December 31, 2009, EBITDA was negatively impacted by a write off of approximately
                           $3.0 million related to our acquisition of MAR-VEL International, Inc. See “Management’s Discussion and
                           Analysis of Financial Condition and Results of Operations — Acquisition of MAR-VEL International, Inc.” In
                           addition, for the year ended December 31, 2010, EBITDA was negatively impacted by costs consisting
                           principally of legal, accounting and other professional fees incurred in connection with this offering and the
                           pursuit of other strategic opportunities and financings.

                         EBITDA has limitations as an analytical tool and you should not consider it in isolation, or as a substitute for
                    analysis of our results as reported under GAAP. See “Non-GAAP Financial Measures.”

              (5) Pro forma, as adjusted balance sheet data reflects the refinancing transactions described under “— Recent
                  Developments” and further assumes that the net proceeds to us from this offering, after deducting underwriting
                  discounts and estimated offering expenses, will be approximately $        (assuming no exercise by the underwriters of
                  their over-allotment option), assuming the common stock is offered at $        per share, the midpoint of the range set
                  forth on the cover page of this prospectus and gives effect to the use of proceeds from this offering (1) to make a final
                  distribution of $    million to our existing stockholders in connection with the termination of our S corporation status,
                  (2) to exercise our option to redeem up to 35% of our senior secured notes and (3) to the extent any proceeds remain,
                  to repay a portion of the amounts outstanding under our senior secured revolving credit facility. See “Use of Proceeds”
                  and “Capitalization.”


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                                                               RISK FACTORS

             Purchasing our common stock in this offering involves a high degree of risk. You should carefully consider the following
         factors, in addition to the other information contained in this prospectus, in deciding whether to invest in our common stock.
         This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results may differ
         significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include
         those discussed below.


         Risks Related to Our Business

         If we are unable to maintain our relationships with our customers or are unable to develop relationships with new
         customers, it could adversely affect our operating performance and our ability to generate cash flow to fund our
         operations.

            Sales of the products and related services we offer to our five largest customers amounted to 47% of our net sales for the
         year ended December 31, 2010. For the year ended December 31, 2010, our three largest customers were the U.S. Army’s
         Natick Soldier Systems, the United States Army Research, Development and Engineering Command, and the Defense
         Supply Center Philadelphia, which generated approximately 24%, 8% and 6% of our sales, respectively.

             Among the key factors in maintaining our relationships with federal government agencies is our performance on
         individual contracts and purchase orders and the strength of our professional reputation. The loss of, or deterioration in, our
         relations with one or more of our significant customers or our inability to develop relationships with new customers would
         adversely affect our business, results of operations and financial condition.


         We rely on U.S. government entities for substantially all of our sales. A loss of or a failure to obtain new contractual
         procurement vehicles could adversely affect our operating performance and our ability to generate cash flow to fund our
         operations.

             We generate substantially all of our sales from contracts with the U.S. government and its agencies, primarily the
         agencies and offices within the Department of Defense. For the year ended December 31, 2010, approximately 97% of our
         net sales were derived directly or indirectly from sales to U.S. government agencies, including approximately 88% to
         agencies and offices within the Department of Defense. We expect that Department of Defense contracts will continue to be
         our primary source of sales for the foreseeable future. The continuation and renewal of our existing government contracts
         and new government contracts are, among other factors, contingent upon the availability of adequate funding for various
         U.S. government agencies, including the Department of Defense. The loss or significant curtailment of our material
         government contracts, or our failure to renew existing contracts or enter into new contracts would adversely affect our
         business, results of operations and financial condition.

              Total sales under our Special Operational Equipment Tailored Logistics Support Program, or “Spec Ops TLS,” contract
         amounted to approximately 44% of our total net sales for the year ended December 31, 2010, respectively. Total sales under
         our Generation III Extended Cold Weather Clothing System, or “GEN III,” contract amounted to approximately 19% of our
         total net sales for the year ended December 31, 2010. Our GEN III contract typically contributes an equal amount to our
         sales each month. Sales under our three federal supply schedules with the U.S. General Services Administration aggregated
         approximately 9% of our total net sales for the year ended December 31, 2010, respectively. Sales under one or more of
         these contracts could end for a number of reasons, including the completion of the customer’s requirements, the completion
         or early termination of our current contract, the consolidation of our work into another contract where we are not the holder
         of that contract, or the loss of a competitive bid for the follow-on work related to our current contract. For example, our GEN
         III contract is currently in the final year of its five-year term and our Spec Ops TLS contract, which was recently renewed for
         an additional one-year period, is up for another option year renewal in March 2012. If the GEN III contract or the Spec Ops
         TLS contract is not continued, or if they are re-competed and awarded to another bidder, we would no longer have any sales
         under these contracts.


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         The occurrence of any of these events could adversely affect our business, results of operations and financial condition.

         Changes in the spending policies or budget priorities of the U.S. government, and the Department of Defense in
         particular, or delays in the passage of the U.S. government budget, could cause us to lose sales.

              Changes in U.S. government spending could affect our operating performance and lead to an unexpected loss of sales.
         The loss or significant reduction in funding by the Department of Defense for any of the large programs in which we
         participate could also result in a material decrease to our future sales, earnings and cash flows. Congress usually appropriates
         funds to procuring agencies, such as the Department of Defense, who then allocate funds for a given program or contract on
         a September 30 fiscal year basis, even though contract periods of performance may extend over many years. Consequently,
         at the beginning of a program, the contract may be only partially funded, with additional monies committed to the contract
         by the procuring agency only as appropriations are made by Congress for future fiscal years. The factors that could impact
         U.S. government spending and reduce our federal government contracting business include:

              •     policy and/or spending changes implemented by the current administration;

              •     a significant decline in, or reallocation of, spending by the U.S. government, in general, or by the Department of
                    Defense, in particular;

              •     changes, delays or cancellations of U.S. government programs, requirements or policies;

              •     the adoption of new laws or regulations that affect companies that provide services to the U.S. government;

              •     U.S. government shutdowns or other delays in the government appropriations process;

              •     curtailment of the U.S. government’s outsourcing of procurement and logistics services to private contractors;

              •     changes in the political climate, including with regard to the funding or operation of the products and related
                    services we offer;

              •     developments in Iraq or Afghanistan, including the sustained withdrawal of troops, or other geopolitical
                    developments that affect demand for our services and the products we offer; and

              •     general economic conditions, including a slowdown in the economy or unstable economic conditions in the United
                    States or in the countries in which we operate.

             These or other factors could cause U.S. government agencies to reduce their purchases under our contracts, to exercise
         their right to terminate our contracts in whole or in part, or decline to exercise options to renew our contracts.

             A delay in the passage of the U.S. government’s budget could delay procurement of the services and solutions we
         provide and have an adverse effect on our future sales. In years when the U.S. government does not complete its budget
         process before the end of its fiscal year on September 30, government operations are typically funded pursuant to a
         “continuing resolution” that authorizes agencies of the U.S. government to continue to operate, but does not authorize new
         spending initiatives. When the U.S. government operates under a continuing resolution, government agencies may delay or
         cancel funding we expect to receive from customers on work we are already performing and new initiatives and programs
         are likely to be delayed or cancelled, which could materially adversely affect our business, results of operations and financial
         condition.


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         Federal government contracts contain provisions giving government customers a variety of rights that are unfavorable to
         us, including the ability to terminate a contract at any time for convenience.

            Federal government contracts contain provisions and are subject to laws and regulations that give the government rights
         and remedies not typically found in commercial contracts. These provisions may allow the government to:

              •     terminate existing contracts for convenience, as well as for default;

              •     reduce orders under contracts or subcontracts;

              •     cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become
                    unavailable;

              •     decline to exercise an option to renew a multi-year contract;

              •     suspend or debar us from doing business with the federal government or with a governmental agency;

              •     prohibit future procurement awards with a particular agency as a result of a finding of an organizational conflict of
                    interest based upon prior related work performed for the agency that would give a contractor an unfair advantage
                    over competing contractors;

              •     subject the award of contracts to protest by competitors, which may require the contracting agency or department to
                    suspend our performance pending the outcome of the protest;

              •     claim rights in products and systems produced by us; and

              •     control or prohibit the export of the products and related services we offer.

             If the U.S. government terminates a contract for convenience, we may recover only our incurred or committed costs,
         settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for
         default, we may not even recover those amounts and instead may be liable for excess costs incurred by the government in
         procuring undelivered items and services from another source. Our contracts with foreign governments generally contain
         similar provisions relating to termination at the convenience of the customer.

             Some of our U.S. government contracts have an initial term of two years with multiple option periods, exercisable at the
         discretion of the government at previously negotiated prices. The government is not obligated to exercise any option under a
         contract. Furthermore, the government is typically required to open all programs to competitive bidding and, therefore, may
         not automatically renew a contract. In addition, at the time of completion of any of our government contracts, the contract is
         frequently required to be re-opened to competitive bidding.

             If one of our government customers were to unexpectedly terminate, cancel or decline to exercise an option to renew one
         or more of our significant contracts or programs, our failure to replace sales generated from such contracts would result in
         lower sales and have an adverse effect on our earnings, which would adversely affect our business, results of operations and
         financial condition.

         We depend on our relationships with key vendors. If we are not able to maintain these relationships, our net sales,
         profitability and growth prospects could be adversely affected.

             The success of our business depends to a large extent on our strategic relationships with key vendors and our ability to
         maintain a sufficient supply of products to meet our customers’ needs. In 2010, our top ten vendors accounted for
         approximately 52% of the products we purchased for resale, and no vendor accounted for over 11% of the products we
         purchased for resale. Our relationships with our vendors can be terminated by either party at any time. If we lost a vendor
         and were unable to substitute products from another vendor, it would adversely affect our business, results of operations and
         financial condition.
   Additionally, we have instituted a preferred vendor program, comprised of approximately 300 vendors in an effort to
secure preferential terms and support. We rely on these preferred vendor relationships in order to improve the likelihood of
winning bids for new contractual procurement vehicles, to win orders under existing


                                                             13
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         contractual procurement vehicles. In the event that we are unable to maintain those preferred vendor relations, the loss of
         preferential terms and support would adversely affect our business, results of operations and financial condition.

         If our vendors do not meet our needs or expectations, or those of our customers, our business would suffer.

             The success of our business depends on our reputation for providing logistics and supply chain solutions. The products
         we provide to customers are purchased from approximately 1,400 active vendors (in the past 24 months). We do not
         manufacture any of the products we provide to our customers and we rely on third-party vendors to deliver the products that
         we sell to our clients. As a result, we do not directly control the manufacturing or availability of the products provided by
         our vendors. If our vendors do not meet our needs or expectations, or those of our customers, our professional reputation
         may be damaged and our business would be harmed.

              Supply interruptions could arise from shortages of raw materials, labor disputes or weather conditions affecting vendors’
         production, transportation disruptions, or other reasons beyond our control. We may have disputes with our vendors arising
         from, among other things, the quality of products and services or customer concerns about the vendor. If any of our vendors
         fail to timely meet their contractual obligations or have regulatory compliance or other problems, our ability to fulfill our
         obligations may be jeopardized. Economic downturns can adversely affect a vendor’s ability to manufacture or deliver
         products. Further, vendors may also be enjoined from manufacturing and distributing products to us as a result of litigation
         filed by third parties, including intellectual property litigation. If we were to experience difficulty in obtaining certain
         products, there could be an adverse effect on our results of operations and on our customer relationships and our reputation.
         Additionally, our key vendors could also increase pricing of their products, which could negatively affect our ability to win
         contracts by offering competitive prices, which, in turn, would adversely affect our business, results of operations and
         financial condition.


         We generate substantially all of our sales from contracts awarded through competitive procurement processes, which can
         impose significant costs upon us and negatively impact our results of operations and financial condition.

            We generate substantially all of our sales from federal government contracts that are awarded through a competitive
         procurement process. Competitive procurement imposes significant costs and presents a number of risks to us, including:

              •     the substantial cost and managerial time and effort that we spend to prepare bids and proposals for contracts that
                    may not be awarded to us and schedules that may not be used; and

              •     the expense and delay that we may face if our competitors protest or challenge our contract awards, and the risk that
                    any such protest or challenge could result in the rebidding of offers, or in termination, reduction or modification of
                    the awarded contract.

             The government contracts for which we compete typically have multiple option periods, and if we fail to win a contract
         or fail to perform under a contract, we generally will be unable to compete again for that contract for several years. Because
         of the nature of our business, we could lose contracts to competitors during recompete periods. Additionally, some contracts
         reach the end of their terms as projects are completed, funding is terminated or the contract ceiling is reached. If we fail to
         win new contracts, receive renewal options or continue with an existing contract upon recompetition, it may result in
         additional costs and expenses and loss of sales, and we will not have an opportunity to compete for these contract
         opportunities again until such contracts expire.


         Many of our U.S. government customers spend their procurement budgets through multiple-award contracts, under
         which we are required to compete among the awardees for post-award orders. Failure to win post-award orders could
         affect our ability to increase our sales.

            The U.S. government can select multiple winners under multiple-award contracts, federal supply schedules and other
         agency-specific indefinite quantity and indefinite delivery contracts, as well as award subsequent purchase orders among
         such multiple winners. This means that there is no guarantee that these


                                                                          14
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         indefinite quantity and indefinite delivery, multiple-award contracts will result in the actual orders equal to the ceiling value
         under the contract, or result in any actual orders. We are only eligible to compete for work (purchase orders and delivery
         orders) as an awardee pursuant to government-wide acquisition contracts already awarded to us. Our failure to compete
         effectively in this procurement environment could reduce our sales, which would adversely affect our business, results of
         operations and financial condition.


         Our failure to comply with a variety of complex procurement rules and regulations could damage our reputation and
         result in our being liable for penalties, including termination of our U.S. government contracts, disqualification from
         bidding on future U.S. government contracts, suspension or debarment from U.S. government contracting.

            We must comply with laws and regulations relating to the formation, administration and performance of
         U.S. government contracts, which affect how we do business with our customers and may impose added costs on our
         business. Some significant laws and regulations that affect us include:

              •     the Federal Acquisition Regulation, or “FAR,” and supplements, which regulate the formation, administration and
                    performance of U.S. government contracts;

              •     the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with
                    certain contract negotiations;

              •     the Civil False Claims Act, which provides for substantial civil penalties for violations, including for submission of
                    a false or fraudulent claim to the U.S. government for payment or approval;

              •     the Procurement Integrity Act, which requires evaluation of ethical conflicts surrounding procurement activity and
                    establishing certain employment restrictions for individuals who participate in the procurement process; and

              •     the Small Business Act and the Small Business Administration, or the “SBA,” size status regulations, which regulate
                    eligibility for performance of government contracts which are set-aside for, or a preference is given in the evaluation
                    process if awarded to, specific types of contractors such as small businesses and minority-owned businesses.

             The FAR and many of our U.S. government contracts contain organizational conflicts of interest clauses that may limit
         our ability to compete for or perform certain other contracts. Organizational conflicts of interest arise when we engage in
         activities that provide us with an unfair competitive advantage. A conflict of interest issue that precludes our competition for
         or performance on a significant program or contract could harm our prospects and negative publicity about a conflict of
         interest issue could damage our reputation.

            Any failure to comply with applicable laws and regulations could result in contract termination, damage to our
         reputation, price or fee reductions or suspension or debarment from contracting with the government, each of which could
         materially adversely affect our business, results of operations and financial condition.

            In addition, the U.S. government may revise existing contract rules and regulations or adopt new contract rules and
         regulations at any time and may also face restrictions or pressure regarding the type and amount of services it may obtain
         from private contractors. Congressional legislation and initiatives dealing with mitigation of potential conflicts of interest,
         procurement reform and shifts in the buying practices of U.S. government agencies resulting from those proposals could
         have adverse effects on government contractors, including us. Any of these changes could impair our ability to obtain new
         contracts or renew contracts under which we currently perform when those contracts are eligible for recompetition. Any new
         contracting methods could be costly or administratively difficult for us to implement, which would adversely affect our
         business, results of operations and financial condition.


         Our growth strategy requires us to hire qualified employees in order to expand our sales force. If we fail to attract and
         retain skilled personnel, our ability to maintain and grow our business could be limited.

             Our business involves the development of tailored solutions for our customers, a process that relies heavily upon the
         expertise and services of our employees. Our continued success depends on our ability to recruit and retain highly trained
         sales personnel who preferably have military experience and who work well
15
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         with our military and federal civilian government customers. Many of our sales personnel are former members of the
         military and have specific knowledge of and experience with our federal government customers’ operations, and we obtain
         some of our contracts based on that knowledge and experience. The loss of services of key personnel could impair our ability
         to win new business. Competition for personnel in the military industry is intense, and recruiting, training and retention costs
         place significant demands on our resources. If we are unable to recruit and retain a sufficient number of qualified employees,
         in particular, highly trained sales personnel, our ability to maintain and grow our business would be limited.


         Our business is subject to reviews, audits and price adjustments by the U.S. government, which, if resolved unfavorably to
         us, would adversely affect our business, results of operations and financial condition.

             U.S. government agencies, including the Department of Defense and others, routinely audit and review a contractor’s
         performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and
         procurement laws, regulations and standards. Based on the results of such audits, the auditing agency is authorized to adjust
         our unit prices if the auditing agency does not find them to be “fair and reasonable.” The auditing agency is also authorized
         to require us to refund any excess proceeds we received on a particular item over its final adjusted unit price.

             The Department of Defense, in particular, also reviews the adequacy of, and compliance with, our internal control
         systems and policies, including our purchasing, accounting, financial capability, pricing, labor pool, overhead rate and
         management information systems. Our failure to obtain an “adequate” determination of our various accounting and
         management internal control systems from the responsible U.S. government agency could significantly and adversely affect
         our business, including our ability to bid on new contracts and our competitive position in the bidding process. Failure to
         comply with applicable contracting and procurement laws, regulations and standards could also result in the
         U.S. government imposing penalties and sanctions against us, including suspension of payments and increased government
         scrutiny that could delay or adversely affect our ability to invoice and receive timely payment on contracts or perform
         contracts, or could result in suspension or debarment from competing for contracts with the U.S. government. In addition, we
         could suffer serious harm to our reputation if allegations of impropriety were made against us, whether or not true.

              If, as the result of an adverse audit finding, we were suspended or prohibited from contracting with the U.S. government,
         or any significant U.S. government agency, if our reputation or relationship with U.S. government agencies was impaired or
         if the U.S. government otherwise ceased doing business with us or significantly decreased the amount of business it does
         with us, it would adversely affect our business, results of operations and financial condition.


         Our sales will be adversely affected if we fail to receive renewal or follow-on contracts.

             Renewal and follow-on contracts are important because our contracts are typically for fixed terms. The typical term of
         our contracts with the U.S. government is between one and two base years, with three to four option years following. In
         particular, our GEN III contract is currently in the final year of its five-year term and our Spec Ops TLS contract, which was
         recently renewed for an additional one-year period, is up for another option year renewal in March 2012. If the GEN III
         contract or the Spec Ops TLS contract is not continued, or if they are re-competed and awarded to another bidder, we would
         no longer have any sales under these contracts. The loss of sales from our possible failure to obtain renewal or follow-on
         contacts would adversely affect our business, results of operations and financial condition.


         Our sales abroad to U.S. customers and to certain foreign customers expose us to risks associated with operating
         internationally.

             Our sales abroad to non-U.S. customers outside of the United States currently generate a limited portion of our total net
         sales. However, as we seek to expand internationally and increase our sales to foreign


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         governments and allied militaries, our international business operations may be subject to additional and different risks than
         our domestic business, including the following:

              •     compliance with the Arms Export Control Act and Export Administration Regulations, or “EAR”;

              •     compliance with the U.S. Foreign Corrupt Practices Act, or “FCPA,” and equivalent foreign regulations;

              •     compliance with the International Traffic in Arms Regulations, or “ITAR”;

              •     compliance with the trade sanctions laws and regulations administered by the U.S. Department of the Treasury’s
                    Office of Foreign Assets Control, or “OFAC”;

              •     the burden and cost of compliance with foreign laws, treaties and technical standards and changes in those
                    regulations;

              •     contract award and funding delays;

              •     potential restrictions on transfers of funds;

              •     import and export duties and value added taxes;

              •     transportation delays and interruptions;

              •     uncertainties arising from foreign local business practices and cultural considerations; and

              •     potential military conflicts and political risks.

             Failure to comply with U.S. government laws and regulations applicable to transactions abroad would have an adverse
         impact on our business with the U.S. government and could expose us to administrative, civil or criminal penalties, and/or
         suspension and debarment from U.S. government contracting. Failure to comply with applicable foreign laws and
         regulations could also have an adverse impact on our business abroad and could expose us to non-U.S. administrative, civil
         or criminal penalties. Additionally, these risks related to international operations may expose us to potentially significant
         contract losses.

             In some countries, there is increased chance for economic, legal or political changes that may adversely affect the
         performance of our services, sale of our products or repatriation of our profits. We do not know the impact that these
         regulatory, geopolitical and other factors may have on our business in the future and any of these factors would adversely
         affect our business, results of operations and financial condition.

         We may not be able to receive the necessary licenses required for us to sell our export-controlled products overseas. In
         addition, the loss of our registration as either an exporter or a broker under ITAR would adversely affect our business,
         results of operations and financial condition.

             U.S. government agencies, primarily the Directorate of Defense Trade Controls within the State Department and the
         Bureau of Industry Security within the U.S. Department of Commerce, must license every shipment of export-controlled
         products that we export. These licenses are required due to both the products we export and to the foreign customers we
         service. If we do not receive a license for an export-controlled product, we cannot ship that product. We cannot be sure of
         our ability to gain any licenses required to export our products, and failure to receive a required license would eliminate our
         ability to make that sale. A delay in obtaining the necessary licenses to sell our export-controlled products abroad could
         result in delayed deliveries and delayed recognition of revenue, which could cause us reputational damage and could result
         in a customer’s decision not to do business with us in the future.

             In addition to obtaining a license for each of our exports outside of the United States, we are also required to maintain a
         standing registry under ITAR as both a broker and an exporter. We operate as a broker when we facilitate sales between a
         foreign party shipping products directly to a buyer outside the United States or to a foreign customer. We operate as an
         exporter when we ship products to our customers outside the United States. If we were to lose our registration as either a
broker or an exporter under ITAR, we would not be able to facilitate international sales or sell export-controlled products
abroad, respectively, which would adversely affect our business, results of operations and financial condition.


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         We are subject to laws and regulations concerning our international operations, including export restrictions, U.S.
         economic sanctions and the FCPA. If we are not in compliance with applicable legal requirements, we may be subject to
         civil or criminal penalties and other remedial measures, which would adversely affect our business, results of operations
         and financial condition.

             Our international operations are subject to laws and regulations restricting our international operations, including
         activities involving restricted countries, organizations, entities and persons that have been identified as unlawful actors or
         that are subject to U.S. economic sanctions. To the extent that we operate outside the United States, we are subject to the
         FCPA, which prohibits U.S. companies and their intermediaries from bribing foreign officials for the purpose of obtaining or
         keeping business or otherwise obtaining favorable treatment, and other laws concerning our international operations. Any
         violations of these laws and regulations, including any resulting fines, penalties or restrictions on export activities (including
         other U.S. laws and regulations as well as local laws), would adversely affect our reputation and the market for our shares,
         and may require certain of our investors to disclose their investment in our company under certain state laws. If we are not in
         compliance with export restrictions, U.S. economic sanctions or other laws and regulations that apply to our international
         operations, we may be subject to civil or criminal penalties and other remedial measures, which could adversely affect our
         business, results of operations and financial condition.

         Misconduct of our employees, agents and business partners, including security breaches, could result in reputational
         damage, could subject us to fines and penalties and could cause us to lose our ability to contract with the U.S.
         government.

             Misconduct, fraud or other improper activities by our employees, agents or business partners could have a significant
         adverse impact on our business and reputation, particularly because we are a U.S. government contractor. Such misconduct
         could include the failure to comply with U.S. government procurement regulations, regulations regarding the protection of
         classified information, legislation regarding the pricing of labor and other costs in U.S. government contracts, regulations on
         lobbying or similar activities, environmental laws and any other applicable laws or regulations. Misconduct involving data
         security lapses resulting in the compromise of personal information or the improper use of our customers’ sensitive or
         classified information could result in remediation costs, regulatory sanctions against us and serious harm to our reputation.
         Other examples of potential misconduct include falsifying time records and violations of the Anti-Kickback Act or the
         FCPA. Although we have implemented policies, procedures and controls to prevent and detect these activities, these
         precautions may not prevent all misconduct and as a result, we could face unknown risks or losses. Our failure to comply
         with applicable laws or regulations or misconduct by any of our employees, agents or business partners could result in
         reputational damage, could subject us to fines and penalties, suspension or debarment from contracting with the
         U.S. government and loss of security clearance, any of which would adversely affect our business, results of operations and
         financial condition.

         The loss of one or more members of our senior management team could impair our relationships with U.S. government
         customers and our ability to compete, and could disrupt the management of our business.

             We believe that our success depends on the continued contributions of the members of our senior management team. Our
         senior management team has extensive industry experience, and the relationships and reputation that members of our senior
         management team have established and maintain with U.S. government personnel contribute to our ability to maintain good
         customer relations and to identify new business opportunities. The loss of the services of one or more of our senior
         executives could impair our ability to identify and secure new contracts, to maintain good customer and vendor relations and
         to otherwise manage our business, any of which would adversely affect our business, results of operations and financial
         condition.


         We may face difficulties as we expand our operations into countries in which we have limited operating experience.

            We provide operational equipment and logistics solutions to foreign governments and militaries and to our
         U.S. government customers who are operating abroad. We intend to continue expanding our global


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         footprint, which may involve expanding into countries other than those in which we currently operate. Our business outside
         of the United States is subject to various risks, including:

              •     changes in economic and political conditions in the United States and abroad;

              •     compliance with international and domestic laws and regulations and any changes therein;

              •     wars, civil unrest, acts of terrorism and other conflicts;

              •     natural disasters;

              •     changes in tariffs, trade restrictions, trade agreements and taxations;

              •     difficulties in managing or overseeing foreign operations;

              •     limitations on the repatriation of funds because of foreign exchange controls;

              •     less developed and less predictable legal systems than those in the United States; and

              •     intellectual property laws of countries which do not protect our intellectual property rights to the same extent as the
                    laws of the United States.

             The occurrence or consequences of any of these factors may restrict our ability to operate in the affected region and/or
         decrease the profitability of our operations in that region. As we expand our business in foreign countries, we will become
         exposed to increased risk of loss from foreign currency fluctuations and exchange controls as well as longer accounts
         receivable payment cycles. We have limited control over these risks, and if we do not correctly anticipate changes in
         international economic and political conditions, we may not alter our business practices in time to avoid adverse effects on
         our business, results of operations and financial condition.

         If we are unable to manage our growth, our business could be adversely affected.

             We have grown and expanded significantly in recent years. Our net sales grew at a compound annual growth rate of 61%
         from 2006 to 2010 and have we have significantly expanded our employee base, including increasing the weighted average
         number of personnel in our sales force from 57 to 134 between 2007 and 2010. To date, we have relied primarily upon
         organic growth for this expansion, rather than growth through acquisitions. Our future results will depend upon our ability to
         continue to grow organically or to demonstrate the ability to successfully identify and integrate non-dilutive acquisitions. We
         anticipate that we will continue to expand our workforce, primarily through continued expansion of our sales team, and our
         operations, which will place significant demands on our management, as well as on our administrative, operational, and
         financial resources. If we are unable to expand our operational, financial, and management information systems in a manner
         that supports our growth, or are unable to attract, motivate and manage a skilled workforce, we may not be able to continue
         to satisfy our customer demands. If we expand our business too rapidly in anticipation of increased customer demand that
         does not materialize, or in order to compete for contractual procurement vehicles that we are not awarded, the increase in our
         operating expenses could exceed our revenue growth and as a result decrease our net income. If we are unable to manage our
         growth, our business, results of operations or financial condition could be adversely affected.

         We may no longer be able to participate in the federal government’s small business programs which may affect our
         business and our sales.

             We are currently classified as a small business under certain provisions of the Small Business Administration
         regulations. Under our current employee count we are eligible to compete for government contracts set aside for businesses
         designated under certain North American Industry Classification Systems (“NAICS”) codes as small businesses with fewer
         than 500 employees. To calculate the number of our employees under the Small Business Administration regulations, we
         determine the average number of individuals employed on a full-time and part-time basis (including employees of any
         “affiliates” as defined in accordance with Small Business Administration regulations) based upon the number of employees
         in each pay period for the preceding twelve calendar months. As of December 31, 2010, pursuant to this calculation, we had
         413 employees.
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             Although we currently meet the applicable standard for certain small business contracts, if we or our affiliates
         significantly increase the number of our respective employees, we could lose eligibility for new government contracts and
         other awards that are set aside for small businesses under certain NAICS codes. Under the Small Business Administration
         regulations, a concern that is qualified as a small business at the time it receives a contract is considered a small business
         throughout the life of that contract. Therefore, none of our small business set aside contracts will automatically terminate
         should we cease to qualify as a small business. It is within the government contracting officer’s discretion, however, to
         request that we recertify our status as a small business in connection with a contract renewal or to decline to exercise any
         option to renew a contract if we fail to qualify. While we have successfully competed for a number of contractual
         procurement vehicles that are not set aside for small businesses, our Spec Ops TLS contract, which accounted for
         approximately 44% of our total net sales for the year ended December 31, 2010, was awarded to us pursuant to a NAICS
         code designating a small business as having fewer than 500 employees.

            If we are no longer classified as a small business, or if our status as a small business is successfully challenged, we may
         need to modify our competitive strategy going forward in order maintain our rate of government contracts wins, and if not
         successful, our business, results of operations or financial condition could be adversely affected.

         Our failure to obtain and maintain necessary security clearances may limit our ability to perform classified work for
         government customers, which could cause us to lose business.

             Some government contracts require us to maintain facility security clearances and require some of our employees to
         maintain individual security clearances. A number of our employees maintain a top secret clearance level. Obtaining and
         maintaining security clearances for employees involves a lengthy process, and it is difficult to identify, recruit and retain
         employees who already hold security clearances. If our cleared employees lose or are unable to timely obtain security
         clearances or we lose a facility clearance, our U.S. government customers may terminate the contract or decide not to renew
         it upon its expiration. As a result, to the extent we cannot obtain or maintain the required security clearances for a particular
         contract, or we fail to obtain them on a timely basis, we may not generate the sales anticipated from the contract, which
         could harm our operating results. To the extent we are not able to obtain facility security clearances or engage employees
         with the required security clearances for a particular contract, we will be unable to perform that contract and we may not be
         able to compete for or win new awards for similar work.


         Some of our officers and directors have significant ownership interests in other companies, which could cause conflicts
         of interests that result in our not acting on opportunities on which we would otherwise act.

             Some of our officers and directors have significant ownership interests, individually and collectively, in several
         companies with which we have entered into material transactions. The ownership of our directors and officers in these
         companies could create, or appear to create, conflicts of interest with respect to matters involving both us and those
         companies, which could have different implications for those companies than they do for us. As a result, we may not pursue
         certain opportunities on which we would otherwise act. See “Certain Relationships and Related Party Transactions.”


         Our management team has limited experience managing a public company, and regulatory compliance may divert its
         attention from the day-to-day management of our business.

            The individuals who now constitute our management team have limited experience managing a publicly-traded company
         and limited experience complying with the increasingly complex laws pertaining to public companies. Our management
         team may not successfully or efficiently manage our transition into a public company that will be subject to significant
         regulatory oversight and reporting obligations under federal securities laws. In particular, these new obligations will require
         substantial attention from our senior management and divert their attention away from the day-to-day management of our
         business, which could adversely affect our business, results of operations and financial condition.


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         We may not be able to identify suitable acquisition candidates, effectively integrate newly acquired businesses or achieve
         expected profitability from acquisitions.

             We have in the past acquired additional businesses and may in the future choose to supplement our organic growth by
         pursuing strategic acquisitions aimed at augmenting our contractual procurement vehicle portfolio, broadening and
         diversifying our customer base, expanding our product offerings and vendor network or increasing our geographic presence.
         There can be no assurance that suitable candidates for acquisitions can be identified or, if suitable candidates are identified,
         that acquisitions can be completed on acceptable terms, if at all. Even if suitable candidates are identified, any future
         acquisitions may entail a number of risks that could adversely affect our business and the market price of our common stock,
         including the integration of the acquired operations, diversion of management’s attention, risks of entering markets in which
         we have limited experience, adverse short-term effects on our reported operating results, the potential loss of key employees
         of acquired businesses and risks associated with unanticipated liabilities. There is no assurance that we will be able to
         achieve any expected benefits from any acquisition.

             We may use common stock to pay for acquisitions. If the owners of potential acquisition candidates are not willing to
         receive common stock in exchange for their businesses, our acquisition prospects could be limited. Future acquisitions could
         also result in accounting charges, potentially dilutive issuances of equity securities and increased debt and contingent
         liabilities, including liabilities related to unknown or undisclosed circumstances, any of which could materially adversely
         affect our business, results of operations and financial condition.


         Internal system or service failures could disrupt our business and impair our ability to effectively provide the products
         and related services we offer to our customers, which could damage our reputation and adversely affect our business,
         results of operations and financial condition.

             Any system or service disruptions, including those caused by projects to improve our information technology systems, in
         particular our Oracle system, if not anticipated and appropriately mitigated, would have an adverse effect on our business
         including, among other things, an adverse effect on our ability to bill our customers for work performed on our contracts,
         collect the amounts that have been billed, confirm orders within 24 hours as required by many of our government contracts,
         and produce accurate financial statements in a timely manner.

             We could also be subject to systems failures, including network, software or hardware failures, whether caused by us,
         third-party service providers, intruders or hackers, computer viruses, natural disasters, power shortages or terrorist attacks.
         We do not currently have redundant application servers or clustered databases for our Oracle system or our other information
         technology systems. Any such failures could cause loss of data and interruptions or delays in our business, cause us to incur
         remediation costs, subject us to claims and damage our reputation. In addition, the failure or disruption of our
         communications or utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business.
         Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a
         result of any system or operational failure or disruption which would adversely affect our business, results of operations and
         financial condition.


         Because we are a holding company with no operations of our own, we are financially dependent on receiving
         distributions from our subsidiaries and we could be harmed if such distributions could not be made in the future.

             We are a holding company and all of our operations are conducted through subsidiaries. Consequently, we rely on
         dividends or advances from our subsidiaries (including ones that are wholly owned). We do not currently expect to declare
         or pay dividends on our common stock for the foreseeable future; however, to the extent that we determine in the future to
         pay dividends on our common stock, none of our subsidiaries will be obligated to make funds available to us for the payment
         of dividends. The ability of such subsidiaries to pay dividends and our ability to receive distributions on our investments in
         other entities is subject to applicable local law. Such laws and restrictions could limit the payment of dividends and
         distributions to us, which would


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         restrict our ability to continue operations. In addition, Delaware law may impose requirements that may restrict our ability to
         pay dividends to holders of our common stock.

         Our substantial indebtedness could adversely affect our financial flexibility and our competitive position.

             We have a significant amount of indebtedness. As of December 31, 2010, after giving effect to the refinancing
         transactions, our total long-term debt would have been $288.7 million, representing the senior secured notes and other
         long-term debt, and $93.2 million in borrowings outstanding under our senior secured revolving credit facility and we would
         have had commitments under the senior secured revolving credit facility available to us of $106.8 million, subject to
         borrowing base limitations.

             Subject to the limitations contained in the senior secured revolving credit facility and the indenture governing the senior
         secured notes, which we refer to as the “senior secured notes indenture,” we may be able to incur substantial additional debt
         from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we
         do so, the risks related to our high level of debt could intensify. Specifically, our high level of debt could have important
         consequences to the you and significant effects on our business, including:

              •     making it more difficult for us to satisfy our obligations with respect to our debt;

              •     impairing our ability to obtain additional financing for working capital, capital expenditures, product development,
                    debt service requirements, restructuring, acquisitions or general corporate purposes, which could be exacerbated by
                    further volatility in the credit markets;

              •     requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes,
                    thereby reducing the amount of cash flows available for working capital, capital expenditures, product development,
                    restructuring, acquisitions and other general corporate purposes;

              •     increasing our vulnerability to general adverse economic and industry conditions;

              •     exposing us to the risk of increased interest rates as borrowings under the senior secured revolving credit facility will
                    be, and other indebtedness that we incur in the future may be, at variable rates of interest;

              •     limiting our flexibility in planning for and reacting to changes in our business and the industry in which we compete;

              •     placing us at a disadvantage compared to other, less leveraged competitors; and

              •     increasing our cost of borrowing.

             In addition, the senior secured notes indenture and the senior secured revolving credit facility contain restrictive
         covenants that will limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply
         with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all
         our debt.

         We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions
         to satisfy our obligations under our indebtedness, which may not be successful.

            Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and
         operating performance, which are subject to prevailing economic and competitive conditions and to certain financial,
         business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows
         from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

             If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial
         liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material
         assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able
         to effect any such alternative measures on commercially reasonable terms to us or at all and, even if successful, those
         alternative actions may not allow us to meet our scheduled
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         debt service obligations. The senior secured revolving credit facility and the senior secured notes indenture restrict our
         ability to dispose of assets and use the proceeds from those dispositions and also restrict our ability to raise debt or equity
         capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions
         or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

            Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on
         commercially reasonable terms to us or at all, would materially and adversely affect our financial position and results of
         operations.

             If we cannot make scheduled payments on our debt, we will be in default and holders of the senior secured notes could
         declare all outstanding principal and interest to be due and payable, the lenders under the senior secured revolving credit
         facility could terminate their commitments to loan money and could foreclose against the assets securing their borrowings
         and we could be forced into bankruptcy or liquidation. All of these events could result in your losing your investment in our
         common stock.


         Risks Related to Our Common Stock

         There is no existing market for our common stock, and we do not know if one will develop to provide you with adequate
         liquidity.

             Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which
         investor interest in our company will lead to the development of an active trading market on the New York Stock Exchange
         or otherwise or how liquid that market might become. If an active trading market does not develop, you may have difficulty
         selling any of our common stock that you buy. The initial public offering price for the common stock will be determined by
         negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in
         the open market following this offering. Consequently, you may not be able to sell our common stock at prices equal to or
         greater than the price you paid in this offering.


         The price of our common stock may fluctuate significantly, and you could lose all or part of your investment.

             Volatility in the market price of our common stock may prevent you from being able to sell your common stock at or
         above the price you paid for your common stock. The market price of our common stock could fluctuate significantly for
         various reasons, including:

              •     our operating and financial performance and prospects;

              •     the overall performance of the equity markets;

              •     the number of shares of our common stock publicly owned and available for trading;

              •     our quarterly or annual earnings or those of other companies in our industry;

              •     conditions or trends in our industry;

              •     the public’s reaction to our press releases, our other public announcements and our filings with the Securities and
                    Exchange Commission, or “SEC”;

              •     changes in earnings estimates or recommendations by research analysts who track our common stock or the stock of
                    other companies in our industry;

              •     strategic actions by us or our competitors, such as acquisitions or restructurings;

              •     new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

              •     changes in accounting standards, policies, guidance, interpretations or principles;
•   threatened or actual litigation;


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              •     any major change in our board of directors or management;

              •     changes in general conditions in the United States and global economies or financial markets, including those
                    resulting from war, incidents of terrorism or responses to such events; and

              •     sales of common stock by us or members of our management team.

              In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility
         has had a significant impact on the market price of securities issued by many companies across many industries. The
         changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price
         of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these
         fluctuations could materially reduce our share price. Securities class action litigation has often been instituted against
         companies following periods of volatility in the overall market and in the market price of a company’s securities. This
         litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and
         harm our business, operating results and financial condition.


         Provisions in our charter documents and Delaware law may make it difficult for a third party to acquire us and could
         depress the price of our common stock.

            Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change of
         control or changes in our management. Among other things, our certificate of incorporation and bylaws:

              •     authorize our board of directors to issue, without stockholder approval, preferred stock with such terms as the board
                    of directors may determine;

              •     divide our board of directors into three classes so that only approximately one-third of the total number of directors
                    is elected each year;

              •     vest the sole power of a majority of our board of directors to fix the number of directors;

              •     permit directors to be removed only for cause by a majority vote of our stockholders;

              •     prohibit action by written consent of our stockholders or to call special meetings;

              •     give the sole power of our board of directors to fill any vacancy on our board whether such vacancy occurred as a
                    result of an increase in the number of directors or otherwise; and

              •     specify advance notice requirements for stockholder proposals and director nominations.

             In addition, following this offering, we will be subject to the provisions of Section 203 of the Delaware General
         Corporation Law, regulating corporate takeovers and which has an anti-takeover effect with respect to transactions not
         approved in advance by our board of directors, including discouraging takeover attempts that might result in a premium over
         the market price for shares of our common stock. In general, those provisions prohibit a Delaware corporation from
         engaging in any business combination with any interested stockholder for a period of three years following the date that the
         stockholder became an interested stockholder, unless:

              •     the transaction is approved by the board of directors before the date the interested stockholder attained that status;

              •     upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the
                    interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the
                    transaction commenced; or

              •     on or after such date, the business combination is approved by the board of directors and authorized at a meeting of
                    stockholders, and not by written consent, by at least two-thirds of the outstanding voting stock that is not owned by
                    the interested stockholder.
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             In general, Section 203 defines a business combination to include the following:

              •     any merger or consolidation involving the corporation and the interested stockholder;

              •     any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested
                    stockholder;

              •     subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock
                    of the corporation to the interested stockholder;

              •     any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any
                    class or series of the corporation beneficially owned by the interested stockholder; or

              •     the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial
                    benefits provided by or through the corporation.

             In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the
         outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by any such
         entity or person.

             A Delaware corporation may opt out of this provision by express provision in its original certificate of incorporation or
         by amendment to its certificate of incorporation or bylaws approved by its stockholders. However, we have not opted out of,
         and do not currently intend to opt out of, this provision.


         We have no plans to pay dividends on our common stock after this offering, so you may not receive funds without selling
         your common stock.

             We have no plans to pay dividends on our common stock after this offering. We generally intend to invest our future
         earnings, if any, to fund our growth. Any payment of future dividends will be at the discretion of our board of directors and
         will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory
         and contractual restrictions applying to the payment of dividends, and other considerations that our board of directors deems
         relevant. The agreements governing our outstanding indebtedness also include limitations on our payment of dividends.
         Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from your investment.
         You may not receive a gain on your investment when you sell your common stock and you may lose the entire amount of the
         investment.


         You will suffer immediate and substantial dilution.

             The initial public offering price per share of our common stock is substantially higher than our as adjusted net tangible
         book value per common share immediately after the offering. As a result, you will pay a price per share that substantially
         exceeds the book value of our assets after subtracting our liabilities. At the offering price of $  per share, the mid-point of
         the range set forth on the cover of this prospectus, you will incur immediate and substantial dilution in the amount of
         $     per share.


         The requirements of being a public company will increase our costs and may strain our resources and distract
         management.

             We will face increased legal, accounting, administrative and other costs and expenses as a public company that we do not
         incur as a private company. After the consummation of this offering, we will be subject to the following: the reporting
         requirements of the Securities Exchange Act of 1934, which requires that we file annual, quarterly and current reports with
         respect to our business and financial condition, the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act
         of 2002, the Public Company Accounting Oversight Board and the New York Stock Exchange, each of which imposes
         additional reporting and other obligations on public companies. We expect that compliance with these public company
         requirements will increase our legal and compliance costs and make some activities more time-consuming. We may need to
         hire a number of additional employees with public accounting and disclosure experience in order to meet our ongoing
         obligations as a public company. A number of those requirements will require us to carry out
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         activities we have not done previously. For example, we will create new board committees and adopt new internal controls
         and disclosure controls and procedures. In addition, we will incur additional expenses associated with our SEC reporting
         requirements. For example, under Section 404 of the Sarbanes-Oxley Act of 2002, for our annual report on Form 10-K for
         our fiscal year ending December 31, 2012, we will need to document and test our internal control procedures, our
         management will need to assess and report on the effectiveness of our internal control over financial reporting and our
         independent accountants will need to issue an opinion on the effectiveness of our internal control over financial reporting.
         Furthermore, if we identify any issues in complying with those requirements (for example, if we or our accountants identify
         a material weakness or significant deficiency in our internal control over financial reporting), we could incur additional costs
         rectifying those issues, and the existence of those issues would adversely affect us, our reputation or investor perceptions of
         us.

             We also expect that it will be difficult and expensive to obtain director and officer liability insurance, and we may be
         required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar
         coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors
         or as executive officers. Advocacy efforts by stockholders and third parties may also prompt even more changes in
         governance and reporting requirements. We expect that the additional reporting and other obligations imposed on us by these
         rules and regulations will increase our legal and financial compliance costs substantially. These increased costs will require
         us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic
         objectives.

             In order to maintain and improve the effectiveness of our internal control over financial reporting and disclosure controls
         and procedures, significant resources and management oversight will be required. This may divert management’s attention
         from other business concerns, which could materially adversely affect our business, financial condition and results of
         operations. If we are unable to conclude that our internal control over financial reporting and disclosure controls and
         procedures are effective, or if our independent public accounting firm is unable to provide us with an unqualified report as to
         the effectiveness of our internal control over financial reporting in future years, investors may lose confidence in our
         financial reports and our stock price may decline.


         In the past, we have identified significant deficiencies in our internal control over financial reporting.

             In the course of the preparation and external audit of our consolidated financial statements for the years ended
         December 31, 2007, 2008 and 2009, we and our independent registered public accounting firm identified “significant
         deficiencies” in our internal control over financial reporting, as defined in the standards established by the Public Company
         Accounting Oversight Board. A significant deficiency is a deficiency, or combination of deficiencies, in internal control over
         financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible
         for oversight of a company’s financial reporting.

             The significant deficiencies identified were related to: (a) the improper timing of revenue recognition in respect of
         certain product shipments where title did not pass to the customer until delivery, (b) the allocation of purchase price, in
         particular the proper recording of intangible assets, in connection with an acquisition and (c) our controls for indentifying
         and accounting for related party transactions, including the failure to consolidate certain of our affiliates as variable interest
         entities.

             Following the identification of these control deficiencies, we have taken actions and measures to improve our internal
         control over financial reporting. Our remediation efforts may not, however, enable us to avoid material weaknesses or other
         significant deficiencies in the future.

         Future sales of shares of our common stock by existing stockholders could depress the price of our common stock.

             If our existing stockholders sell, or indicate an intent to sell, substantial amounts of our common stock in the public
         market after the 180-day contractual lock-up and other legal restrictions on resale discussed in this prospectus lapse, the
         trading price of our common stock could decline significantly and could decline below the initial public offering price.
         Based on shares outstanding as of December 31, 2010, upon completion of


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         this offering, we will have outstanding approximately        shares of common stock, assuming no exercise of the
         underwriters’ over-allotment option. Of these shares, only shares of common stock sold in this offering by the selling
         stockholders will be immediately freely tradable, without restriction, in the public market.

             After the lock-up agreements pertaining to this offering expire and based on shares outstanding as of December 31, 2010,
         an additional          shares will be eligible for sale in the public market, of which are held by directors, executive officers
         and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act of 1933, or the
         “Securities Act.” In addition,      shares reserved for future issuance under our 2011 Incentive Award Plan become eligible
         for sale in the public market in the future, subject to certain legal and contractual limitations. If these additional shares are
         sold, or if it is perceived that they will be sold, in the public market, the price of our common stock could decline
         substantially.


         We are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a result, will qualify
         for, and intend to rely on, exemptions from certain corporate governance requirements.

             Upon the consummation of this offering, certain of our directors and executive officers will continue to beneficially own
         a majority of our outstanding common stock. As a result, we are a “controlled company” within the meaning of the New
         York Stock Exchange corporate governance standards. Under the New York Stock Exchange rules, a company of which
         more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may
         elect not to comply with certain New York Stock Exchange corporate governance requirements, including:

              •     the requirement that a majority of the board of directors consist of independent directors;

              •     the requirement that we have a nominating/corporate governance committee that is composed entirely of
                    independent directors with a written charter addressing the committee’s purpose and responsibilities;

              •     the requirement that we have a compensation committee that is composed entirely of independent directors with a
                    written charter addressing the committee’s purpose and responsibilities; and

              •     the requirement for an annual performance evaluation of the nominating/corporate governance and compensation
                    committees.

             Following this offering, we intend to utilize each of these exemptions. As a result, we will not have a majority of
         independent directors and our nominating/corporate governance and compensation committees will not consist entirely of
         independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are
         subject to all of the New York Stock Exchange corporate governance requirements.


         Upon completion of this offering, the selling stockholders will continue to have significant influence over all matters
         submitted to a stockholder vote, which will limit your ability to influence corporate activities and may adversely affect the
         market price of our common stock.

             Upon completion of this offering, the selling stockholders will own approximately % of our common stock, or
         approximately % if the underwriters’ option to purchase additional shares is exercised in full. As a result of this
         ownership, the selling stockholders will continue to have substantial influence over the outcome of votes on all matters
         requiring approval by our stockholders, including the election of directors, the adoption of amendments to our certificate of
         incorporation and bylaws and approval of significant corporate transactions. The selling stockholders can also take actions
         that have the effect of delaying or preventing a change in control of us or discouraging others from making tender offers for
         our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if
         other stockholders oppose them. Moreover, this concentration of stock ownership may make it difficult for stockholders to
         replace management. In addition, this significant concentration of stock ownership may adversely affect the trading price for
         our common stock because investors often perceive disadvantages in owning stock in companies with controlling
         stockholders. This concentration of control could be


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         disadvantageous to other stockholders with interests different from those of our officers, directors and principal stockholders
         and the trading price of shares of our common stock could be adversely affected. See “Principal and Selling Stockholders”
         for a more detailed description of our stock ownership.


         If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our
         business, our stock price and trading volume could decline.

             The trading market for our common stock will depend in part on the research and reports that securities or industry
         analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research
         on our company. If no securities or industry analysts commence coverage of our company, the trading price for our stock
         would be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts
         who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would
         likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly,
         demand for our stock could decrease, which might cause our stock price and trading volume to decline.


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                                                      FORWARD-LOOKING STATEMENTS

             This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and
         Analysis of Financial Condition and Results of Operations,” “Business” and “Compensation Discussion and Analysis,”
         contains forward-looking statements. These statements relate to future events or our future financial performance, and
         involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,
         performance or achievements to be materially different from any future results, levels of activity, performance or
         achievements expressed or implied by these forward-looking statements. These risks and other factors include, among other
         things, those listed in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of
         Operations” and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology
         such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,”
         “continue,” “assumption” or the negative of these terms or other comparable terminology. These statements are only
         predictions. Actual events or results may differ materially. All forward-looking statements are subject to risks and
         uncertainties that may cause actual results to differ materially from those that we expected, including:

              •     deterioration in our relationships with our customers or an inability to develop relationships with new customers;

              •     the loss of our contractual procurement vehicles or a failure to obtain new contractual procurement vehicles;

              •     changes in spending policies or budget priorities of the U.S. government and the Department of Defense;

              •     our government contracts, which give our government customers a variety of rights that are unfavorable to us;

              •     the deterioration of our vendor relationships or an inability to develop relationships with substitute vendors;

              •     our reliance on our vendors;

              •     costs associated with the competitive procurement process;

              •     the impact of competing for post-award contract orders;

              •     the failure to comply with extensive procurement rules and regulations;

              •     our growth strategy, which requires us to attract and retain skilled personnel and to identify suitable acquisitions;

              •     the unfavorable resolution of reviews, audits and price adjustments by the U.S. government;

              •     the failure to receive renewal or follow-on contracts;

              •     the risks associated with sales to certain foreign customers;

              •     the failure to comply with the export-control laws and regulations applicable to our business;

              •     the failure to comply with the laws that regulate our international operations, including the FCPA;

              •     employee misconduct;

              •     the loss of any member of our senior management team;

              •     the difficulties of international expansion;

              •     the inability for us to manage our growth;

              •     future ineligibility to participate in the federal government’s small business programs;

              •     the failure to obtain and maintain security clearances;
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              •     possible conflicts of interest presented by some of our officers’ and directors’ ownership interests in other
                    companies;

              •     our management team’s limited experience in managing a public company;

              •     the risks associated with our acquisition strategy;

              •     an internal system or services failure;

              •     the financial dependence on receiving distributions due to our status as a holding company; and

              •     the risks associated with our substantial indebtedness.

             Although we believe that the expectations reflected in the forward-looking statements contained in this prospectus are
         reasonable, we cannot guarantee future results, levels of activity, performance or achievements. These forward-looking
         statements are made as of the date of this prospectus and, except as required under the federal securities laws and the rules
         and regulations of the SEC, we assume no obligation to update or revise them or to provide reasons why actual results may
         differ.

             We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into
         account events or circumstances that occur after the date of this prospectus. Additionally, we do not undertake any
         responsibility to update you on the occurrence of any unanticipated events which may cause actual results to differ from
         those expressed or implied by the forward-looking statements contained in this prospectus.


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                                                             USE OF PROCEEDS

             We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering
         expenses, will be approximately $       million, or approximately $    million if the underwriters exercise in full their
         over-allotment option, based upon an assumed initial public offering price of $       per share, the midpoint of the price range
         set forth on the cover of this prospectus.

             We intend to use the net proceeds from this offering first to make a final distribution of $     million to our existing
         stockholders in connection with the termination of our S corporation status and second to exercise our option to redeem up to
         35% of our senior secured notes at a redemption price of 111% of the principal amount thereof, plus accrued and unpaid
         interest, if any, to the redemption date. We will use the remainder of the net proceeds, if any, to repay a portion of the
         amounts outstanding under our senior secured revolving credit facility. As of March 31, 2011, there was approximately
         $66.0 million outstanding under our senior secured revolving credit facility, which bears interest at a variable rate. In 2010,
         the weighted-average interest rate paid under our senior secured revolving credit facility was 4%. The principal amount
         outstanding of the loans under our senior secured revolving credit facility is due and payable in full on March 25, 2016. See
         “Dividend Policy” and “Description of Certain Indebtedness.”

             We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

             A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) the
         net proceeds to us from this offering by $   million, assuming the number of shares offered by us, as set forth on the cover
         page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and
         estimated offering expenses payable by us and the selling stockholders.


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                                                             DIVIDEND POLICY

             Historically, due to our status as a subchapter S corporation, we have distributed annually to our stockholders a
         substantial portion of our prior year’s taxable income. During fiscal years 2009 and 2010, we declared distributions of
         $31.6 million and $129.0 million, respectively. Distributions to our stockholders in 2010 include a special distribution of
         $50.0 million in February 2010 using funds drawn from our senior secured revolving credit facility and a special distribution
         of $48.6 million on October 22, 2010 using the proceeds of our former term loan facility. The remainder of the distributions
         in 2010 were paid to our stockholders to fund their tax obligations related to their ownership of ADS Tactical, Inc. On
         January 12, 2011, we made a distribution of $10.6 million for estimated taxes for the fourth quarter of 2010. We expect to
         make additional distributions related to taxable income each quarter until the consummation of this offering. On March 25,
         2011, we made a distribution of $217.1 million to our stockholders with proceeds from the sale of the senior secured notes.
         In connection with this offering, we will convert from a subchapter S corporation to a subchapter C corporation, and we do
         not anticipate paying any additional cash dividends on our common stock in the foreseeable future.

             Our future dividend policy is within the discretion of our board of directors and will depend upon various factors,
         including our results of operations, financial conditions, covenants contained in our senior secured revolving credit facility
         and the senior secured notes indenture, capital requirements, future prospects, investment opportunities and other factors
         deemed relevant by our board of directors.


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                                                             CAPITALIZATION

             The following table sets forth our cash and cash equivalents and consolidated capitalization as of December 31, 2010 on
         an actual basis and on a pro forma basis giving effect to the refinancing transactions described under “Prospectus
         Summary — Recent Developments” and to this offering and the use of proceeds therefrom. Pro forma, as adjusted data
         assumes that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering
         expenses, will be approximately $        (assuming no exercise by the underwriters of their over-allotment option), assuming
         the common stock is offered at $       per share, the midpoint of the range set forth on the cover page of this prospectus. Pro
         forma, as adjusted data gives effect to the refinancing transactions and to the use of proceeds from this offering (1) to make a
         final distribution of $   million to our existing stockholders in connection with the termination of our S corporation status,
         (2) to exercise our option to redeem up to 35% of our senior secured notes and (3) to the extent any proceeds remain, to
         repay a portion of the amounts outstanding under our senior secured revolving credit facility.

            You should read this table in conjunction with “Use of Proceeds,” “Selected Consolidated Financial and Other Data,”
         “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain
         Indebtedness” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

                                                                                                                       As of
                                                                                                               December 31, 2010
                                                                                                                              Pro Forma,
                                                                                                            Actual           As Adjusted
                                                                                                                  (in thousands)


         Cash and cash equivalents                                                                      $      2,810

         Line of credit (1)                                                                                   90,155
         Term loan facility                                                                                   45,000
         11% senior secured notes due 2018                                                                        —
         Other long term debt, including current portion                                                      13,670

         Total debt                                                                                         148,825
         Stockholders’ equity (deficit):
         Common stock (no par value; actual, 300,000 shares authorized, 148,140 shares issued
           and outstanding; as adjusted for the -for-1 stock split,     shares
           authorized,       shares issued and outstanding)
         Additional paid-in capital                                                                               63
         Noncontrolling interests                                                                              3,956
         Retained earnings (accumulated deficit) (2)                                                          11,368
         Total stockholders’ equity (deficit) (2)                                                             15,387
         Total capitalization (2)                                                                       $ 164,212



           (1) Line of credit consists of our senior secured revolving credit facility. See “Management’s Discussion and Analysis of
               Financial Condition and Results of Operations — Liquidity and Capital Resources — Senior Secured Revolving
               Credit Facility.”

           (2) Pro forma, as adjusted retained earnings (accumulated deficit), stockholders’ equity (deficit) and total capitalization
               give effect to the distribution of $217.1 million to our stockholders and the payment of approximately $6.6 million for
               the transaction bonuses that we made with the proceeds from the sale of the senior secured notes as if each had
               occurred as of December 31, 2010, and also give effect to the write-off of approximately $1.7 million of unamortized
               deferred financing costs outstanding at December 31, 2010, relating to the amendment and restatement of our senior
               secured revolving credit facility and the repayment of our term loan facility. See “Prospectus Summary — Recent
               Developments” and “Use of Proceeds.” Pro forma, as adjusted retained earnings (accumulated deficit) and
               stockholders’ equity (deficit) do not include distributions to our stockholders of $10.6 million made in January 2011
               principally related to estimated taxes for the fourth quarter of 2010.
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                                                                    DILUTION

              If you buy our common stock in this offering, your interest will be diluted to the extent of the difference between the
         initial public offering price per share and the net tangible book value per share after this offering.

             As of December 31, 2010, our net tangible book value was approximately $               million, or $         per share after
         giving effect to the refinancing transactions and our      -for 1 stock split to be effected prior to the completion of this
         offering. Net tangible book value per share represents total tangible assets less total liabilities, divided by the number of
         shares of common stock outstanding as of December 31, 2010. After giving effect to the issuance and sale of                shares of
         common stock in this offering at an assumed initial public offering price of $           per share, the midpoint of the offering
         range on the cover page of this prospectus and deducting the underwriting discounts and estimated offering expenses that we
         will pay and the application of the proceeds from this offering as described under “Use of Proceeds,” our net tangible book
         value as of December 31, 2010, would have been approximately $          million, or $      per share. This represents an
         immediate increase in net tangible book value of $      per share to existing stockholders and an immediate dilution of
         $     per share to new investors purchasing common stock in this offering. The following table illustrates this dilution on a
         per share basis:


         Assumed initial public offering price per share                                                                            $
           Net tangible book value per share as of December 31, 2010 (after giving effect to the refinancing
              transactions)
           Increase in net tangible book value per share attributable to this offering
         Net tangible book value per share after this offering
         Dilution per share to new investors                                                                                        $


             A $1.00 increase (decrease) in the assumed initial public offering price of $      per share would increase (decrease) our
         net tangible book value by $      million, the net tangible book value per share after this offering by $   per share and the
         dilution to new investors in this offering by $      per share, assuming the common stock is offered at $ , the midpoint of
         the range set forth on the cover page of this prospectus and assuming the number of shares offered by us and the selling
         stockholders, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated
         underwriting discounts and commissions and estimated offering expenses payable by us and the selling stockholders.

             The following table sets forth, as of December 31, 2010, the total number of shares of common stock owned by existing
         stockholders and to be owned by new investors, and the total consideration paid, and the average price per share paid by our
         existing stockholders and to be paid by new investors purchasing shares of common stock in this offering, before deducting
         the underwriting discounts and estimated offering expenses that we will pay:


                                                                                                                                         Average
                                                                   Shares Purchased                  Total Consideration                  Price
                                                                 Number          Percent            Amount            Percent           Per Share
                                                                                 (dollars in millions, except share data)


         Existing stockholders                                                             %     $                              %   $
         New investors
            Total                                                                    100.0 %     $                  $ 100.0 %       $


             The tables and calculations above assume no exercise of:

              •     all option grants expected to occur concurrently with the consummation of this offering and all shares reserved for
                    future issuance pursuant to our 2011 Equity Incentive Award Plan; or

              •     the underwriters’ over-allotment option.

             To the extent any of these options are exercised, there will be further dilution to new investors.
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                                    SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

             The following tables set forth selected historical financial and other data, as well as certain pro forma information that
         gives effect to our conversion from a subchapter S corporation to a subchapter C corporation for tax purposes, as if it had
         occurred on January 1 of each period.

             You should read the following selected historical consolidated financial and other data below in conjunction with
         “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial
         statements and the related notes included elsewhere in this prospectus. The selected consolidated financial data in this
         section are not intended to replace the consolidated financial statements and are qualified in their entirety by the consolidated
         financial statements and the related notes included elsewhere in this prospectus.

             The consolidated statements of operations data for the years ended December 31, 2008, 2009 and 2010 and the
         consolidated balance sheet data as of December 31, 2009 and 2010 have been derived from our audited consolidated
         financial statements included in this prospectus. The consolidated statements of operations data for the years ended
         December 31, 2006 and 2007 and the consolidated balance sheet data as of December 31, 2006, 2007 and 2008 have been
         derived from consolidated financial statements that are not included in this prospectus. The following information does not
         give pro forma effect to the refinancing transactions. See “Prospectus Summary — Recent Developments.”


                                                            Selected Financial Data

                                                                                    Year Ended December 31,
                                                          2006              2007               2008               2009           2010
                                                                              (in thousands, except per share data)


         Consolidated Statements of
            Operations Data:
         Net sales                                    $ 197,611        $ 440,395          $ 660,535          $ 932,177       $   1,330,840
         Costs and Expenses:
            Cost of goods sold                            172,020           386,588           572,992            809,117         1,166,391
            Selling, general and administrative            18,268            31,405            44,323             60,897            80,945
            Intangible asset impairment                        —                 —                 —               2,996                —
         Income from operations                             7,323            22,402            43,220             59,167            83,504
         Interest income                                      127               241               225                 84               127
         Interest expense                                    (566 )          (1,825 )          (1,481 )           (1,401 )          (5,388 )
         Net income                                         6,884               20,818         41,964             57,850            78,243
         Net income attributable to common
           stockholders                               $     6,884      $        20,818    $    42,010        $    57,709            77,282

         Pro Forma Data (unaudited) (1) :
         Pro forma provision for income taxes       $      2,719       $         8,223    $    16,594        $    22,795     $      30,913
         Pro forma net income                              4,165                12,595         25,416             34,914            46,369
         Pro forma earnings per common share:
           Basic
           Diluted
         Pro forma weighted average common
           shares outstanding:
           Basic
           Diluted
         Pro Forma, As Adjusted Data
           (unaudited) (2) :
         Pro forma, as adjusted interest expense
         Pro forma, as adjusted net income before income taxes
         Pro forma, as adjusted provision for income taxes


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                                                                                           Year Ended December 31,
                                                                   2006               2007             2008             2009        2010
                                                                                     (in thousands, except per share data)


         Pro forma, as adjusted net income
         Pro forma, as adjusted earnings per common share (3) :
           Basic
           Diluted
         Pro forma, as adjusted weighted average common
           shares outstanding:
           Basic
           Diluted


                                                                                   Year Ended December 31,
                                                        2006              2007                2008                 2009            2010
                                                                                        (in thousands)


         Other Data:
         Net cash provided by (used in)
           operating activities                     $ (7,049 )       $ 11,617             $    15,893         $    35,291      $    31,742
         Net cash used in investing activities        (1,384 )         (1,662 )               (14,888 )            (6,586 )         (2,947 )
         Net cash provided by (used in)
           financing activities                          6,322            (9,764 )                492             (29,547 )        (27,340 )
         Depreciation and amortization                     645               961                2,049               2,140              974
         Capital expenditures                            1,415               929                8,297               9,181            3,387
         EBITDA (3)                                      7,968            23,363               45,269              61,307           84,478

                                                                                       As of December 31,
                                                        2006              2007                 2008                2009            2010
                                                                                         (in thousands)


         Consolidated Balance Sheet Data:
         Cash and cash equivalents                  $      508       $       699          $     2,197         $     1,355      $     2,810
         Working capital                                19,175            29,031               37,210              59,883           30,647
         Total debt                                     23,434            17,042               41,969              44,665          148,825
         Total stockholders’ equity                      4,705            18,276               38,186              65,455           15,387


           (1) We historically have been treated as a subchapter S corporation for U.S. federal income tax purposes. As a result, our
               income has not been subject to U.S. federal income taxes or state income taxes in those states where S corporation
               status is recognized. In general, the corporate income or loss of a subchapter S corporation is allocated to its
               stockholders for inclusion in their personal federal income tax returns and state income tax returns in those states
               where S corporation status is recognized. In connection with this offering, we will convert from a subchapter S
               corporation to a subchapter C corporation. Pro forma provision for income taxes reflects combined federal and state
               income taxes on a pro forma basis, as if we had been taxed as a subchapter C corporation, using an effective tax rate of
               39.5% for 2006, 2007, 2008 and 2009, and an effective tax rate of 40.0% for 2010.

              Pro forma net income reflects historical net income before income taxes less the pro forma provision for income taxes.
              Pro forma net income does not give effect to the refinancing transactions or the use of proceeds from this offering.

           (2) Pro forma, as adjusted data give effect to the following transactions as if they had occurred as of the beginning of the
               period presented: (a) the refinancing transactions, (b) this offering and the use of proceeds therefrom and (c) our
               conversion from a subchapter S corporation to a subchapter C corporation, using an effective tax rate of 40.0%.

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              The following is a reconciliation of historical net income to pro forma, as adjusted net income for the year ended
              December 31, 2010:
                                                                                                           Year Ended
                                                                                                        December 31, 2010
                                                                                                          (In thousands)


         Net income                                                                                 $              78,243
         Net increase in interest expense (a)
         Pro forma, as adjusted net income before income taxes

         Provision for income taxes (b)
         Pro forma, as adjusted net income (c)




                (a) See the reconciliation of historical interest expense to pro forma, as adjusted interest expense below.

                (b) Reflects $    million in income taxes, on a pro forma, as adjusted basis after giving effect to the increase in
                    interest expense as a result of the refinancing transactions described above, as a result of our conversion from a
                    subchapter S corporation to a subchapter C corporation, using an effective tax rate of 40.0%.

                (c) Pro forma, as adjusted net income for the year ended December 31, 2010, does not give effect to the write-off of
                    approximately $1.7 million of deferred financing costs in connection with the refinancing transactions, the
                    payment of the cash bonuses in connection with the refinancing transactions, and the write-off of approximately
                    $    million of deferred financing costs as a result of the use of proceeds from this offering.

                    The following is a reconciliation of historical interest expense to pro forma, as adjusted interest expense for the
                    year ended December 31, 2010:
                                                                                                                            Year Ended
                                                                                                                         December 31, 2010
                                                                                                                           (In thousands)


         Interest expense                                                                                            $                 5,388
         Net increase resulting from the refinancing transactions (i)
         Decrease resulting from the use of proceeds of this offering (ii)
         Pro forma, as adjusted interest expense




                     (i) Reflects the difference in interest expense between the historical amounts incurred under our term loan
                         facility and senior secured revolving credit facility, including the amortization of deferred financing costs,
                         and the interest expense that would have been incurred under our 11.00% senior secured notes due 2018 and
                         our amended and restated senior secured revolving credit facility (based on the amount drawn upon
                         consummation of the refinancing transactions of $93.2 million, at an assumed weighted interest rate of %),
                         assuming the refinancing transactions were consummated on January 1, 2010.

                    (ii) Reflects the reduction in interest expense, after giving effect to the refinancing transactions as if they had
                         occurred on January 1, 2010, as a result of the use of proceeds from this offering to repay amounts
                         outstanding under our senior secured revolving credit facility. See “Use of Proceeds.”

           (3) We define EBITDA as net income before interest expense, provision for income taxes and depreciation and
               amortization. EBITDA is not a measure of financial performance under U.S. GAAP and should not be considered as
               an alternative to net income as a measure of performance. Because EBITDA is not a measurement determined in
               accordance with U.S. GAAP and is susceptible to varying calculations, EBITDA, as presented, may not be comparable
               to other similarly titled measures presented by other companies. We believe that EBITDA is a useful financial metric
               to assess our operating performance from period to period by excluding certain items that we believe are not
representative of our core


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              business, as well for providing a comparison of our operating performance to that of other companies in our industry.

             We use EBITDA in a number of ways, including:

              •     for planning and budgeting purposes;

              •     to evaluate the effectiveness of our business strategies;

              •     in communications with our board of directors concerning our consolidated financial performance; and

              •     to determine management’s compensation.

             The following table reconciles net income, the most directly comparable GAAP financial measure, to EBITDA:


                                                                                          Year Ended December 31,
                                                                     2006          2007               2008            2009       2010
                                                                                               (in thousands)


         Net income                                                $ 6,884       $ 20,818        $ 41,964           $ 57,850   $ 78,243
         Interest expense, net (a)                                     439          1,584           1,256              1,317      5,261
         Depreciation and amortization                                 645            961           2,049              2,140        974
         EBITDA (b)                                                $ 7,968       $ 23,363        $ 45,269           $ 61,307   $ 84,478




           (a) Interest expense, net for the year ended December 31, 2010 includes amortization of deferred financing costs of
               $537,143

           (b) For the year ended December 31, 2009, EBITDA was negatively impacted by a write off of approximately
               $3.0 million related to our acquisition of MAR-VEL International, Inc. See “Management’s Discussion and Analysis
               of Financial Condition and Results of Operations—Acquisition of MAR-VEL International, Inc.” In addition, for the
               year ended December 31, 2010, EBITDA was negatively impacted by costs consisting principally of legal, accounting
               and other professional fees incurred in connection with this offering and the pursuit of other strategic opportunities and
               financings.

             EBITDA has limitations as an analytical tool and you should not consider it in isolation, or as a substitute for analysis of
         our results as reported under GAAP. See “Non-GAAP Financial Measures.”


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                          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                          AND RESULTS OF OPERATIONS

             You should read the following discussion of our financial condition and results of operations in conjunction with our
         consolidated financial statements and the notes thereto included elsewhere in this prospectus. The following discussion
         contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially
         from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include
         those discussed below and elsewhere in this prospectus, particularly in “Risk Factors.”

         Business Overview

             We believe we are a leading provider of value-added logistics and supply chain solutions specializing in tactical and
         operational equipment, based on 2010 sales. We drive sales between a fragmented base of vendors and a decentralized group
         of customers by tailoring our solutions to meet their needs. Most of our approximately 4,000 active customers (in the past
         24 months) are within the Department of Defense and the Department of Homeland Security. Our business model is
         adaptable and scalable to serve other domestic and foreign government agencies. Through our vendor network, we offer our
         customers access to over 160,000 items, including apparel, expeditionary equipment, optical equipment, communications
         equipment, emergency medical supplies, lighting, eyewear and other tactical items, which we combine with our broad suite
         of value-added supply chain management services. We leverage our established supply chain management and government
         procurement expertise to develop and strengthen key customer and vendor relationships.

         Our Market Opportunity

             Over the last decade, the U.S. government has changed its approach to procurement of operational equipment by shifting
         away from custom-made products and equipment built to precise specifications, towards readily available, commercial
         off-the-shelf products and equipment. Over the same period, the Department of Defense streamlined the procurement
         process by providing increased access to flexible contractual procurement vehicles. As a result, the Defense Logistics
         Agency, or the “DLA,” has increased its reliance upon outside vendors and service providers for the logistics solutions
         necessary to get tactical and operational equipment to military personnel and to handle the supply chain management for a
         diverse and growing array of commercial off-the-shelf products.

             Concurrently with this shift in approach to procurement, the needs of the U.S. military and the nature of modern warfare
         have evolved significantly. The demands of recent conflicts have shifted the Department of Defense’s focus towards
         equipping military personnel to engage in ground-based irregular warfare against asymmetric threats, and away from
         developing large-scale weapons platforms to support traditional air, land and sea campaigns against other major world
         powers. As a result, the Department of Defense now places a greater emphasis on ensuring that each soldier is equipped for
         the needs of modern combat with standardized, state-of-the-art equipment. To increase the combat effectiveness and safety
         of soldiers, the Department of Defense has increased its average spend-per-soldier on equipment from $2,000 per soldier
         during World War II (1941-1946) to $19,000 during the Global War on Terror (2001-2008) (adjusted to 2009 dollars based
         on the consumer price index). This trend is expected to continue as soldiers are provided a broader set of more complicated
         and expensive equipment kits to improve combat effectiveness and prepare for a more diverse range of missions. The
         Department of Defense projects that the amount spent on equipment per soldier will increase substantially in the future.

             Preparing for irregular warfare requires a significant number of trained and equipped personnel ready to deploy. As of
         December 31, 2010, the Department of Defense had approximately 1.4 million active duty military personnel worldwide.
         For example, the recently implemented Army Force Generation model requires that approximately one-third of active-duty
         units and one-sixth of reserve units are available to deploy each year, regardless of whether the United States is at war. In
         addition, all branches of the U.S. military are increasingly called upon to undertake missions beyond the scope of their
         traditional national defense functions, such as assistance with disaster relief, border patrol and nation building. Each of these
         soldiers requires the latest operational equipment for his or her mission, which creates a continual need for new equipment
         for these soldiers.


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             We believe these trends will continue for the foreseeable future. As the U.S. military continues to decentralize its
         approach to procurement and increase the amount of the overall defense budget allocated for equipment for each soldier, and
         as an increasing number of our customers experience the benefits of our supply chain management services, we believe we
         can continue to grow our sales over time, notwithstanding changes in overall U.S. defense spending.

             As a result of these trends, we have grown from $197.6 million of net sales, $6.9 million of net income and $8.0 million
         of EBITDA for the year ended December 31, 2006, to $1,330.8 million of net sales, $78.2 million of net income and
         $84.5 million of EBITDA for the year ended December 31, 2010. This represents a compound annual growth rate of our net
         sales, net income and EBITDA from 2006 to 2010 of 61%, 84% and 80%, respectively. While we continue to be well
         positioned to take advantage of this market opportunity and we expect to continue to experience growth in our net sales, net
         income and EBITDA, there can be no assurance that we will be able to maintain the level of compound annual growth rate in
         the future.

         Components of Our Consolidated Statements of Operations

         Net Sales

                  Contractual Procurement Vehicles

             We derive our net sales from the sale of goods and logistics solutions primarily to branches and units of the U.S. military
         or other federal agencies. In order for the U.S. military and other federal agencies to use budgetary funds to purchase goods
         and services, each acquisition must be executed through an appropriate contractual procurement vehicle. To shorten the
         contracting period, the U.S. government has created broad “indefinite delivery and indefinite quantity,” or “IDIQ,” contracts
         to act as procurement vehicles. These contracts provide regulatory and payment conduits that allow the customer to use
         government funds to purchase equipment and services from a limited number of pre-approved suppliers; however, they do
         not commit any customer to any set volume of purchases. The volume committed in any particular sale is set at the time the
         customer order is established.

             Most of our net sales are derived from individual orders for goods and services through IDIQ contracts. Under these
         contracts, we agree to provide itemized products and related services at fixed prices established at the time a customer order
         is made (or at the time the contract is entered into under some of our single-award IDIQ contracts, as described below).
         Although these contracts include certain parameters defining the types of products that may be purchased through the
         contract and limit the personnel that may use the contract as a vehicle to spend government funds, our contracts typically
         provide us with significant flexibility to source the specified products from multiple vendors. There are generally three
         different types of IDIQ contracts: multiple-award contracts, single-award contracts and federal supply schedules.

              •     Multiple-award IDIQ contracts are awarded to a limited number of pre-approved suppliers and have ceiling
                    limitations on the total amount of government funds that can be used through the contract. The award of particular
                    purchase orders under these contracts requires a second competitive bidding process among that limited number of
                    suppliers (which typically occurs within one day to a week upon submission of a bid). Our Spec Ops TLS contract
                    and Fire and Emergency Services Tailored Logistics Support contract are examples of multiple-award IDIQ
                    contracts.

              •     Single-award IDIQ contracts function very much like multiple-award IDIQ contracts. However, they are awarded to
                    a sole-supplier and often cover a much narrower breadth of products. The particular agency and customers who wish
                    to make purchases under a single-award IDIQ contract commit to a pre-approved sole supplier for the equipment and
                    services to be provided through that contract. Our single-award IDIQ contract vehicles, such as our GEN III
                    contract, are often entered into with a program office within a particular branch of the U.S. military to provide a
                    standardized suite of products that are intended for a broad cross-section of forces in that particular military branch.
                    Through these single-award IDIQ contracts, we commit to fulfill any orders received for goods and services
                    identified in those contracts over a period of time, up to pre-determined volume limitations at fixed prices, which are
                    established at the time the contract is awarded.


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              •     Federal supply schedules, such as our U.S. General Services Administration, or “GSA,” supply schedules, allow all
                    federal government agencies to purchase items identified in the schedule from a list of pre-approved suppliers at
                    pre-determined maximum prices. Unlike multiple-award IDIQ contracts, federal supply schedules do not typically
                    require a second round of bidding to secure a purchase order and do not have ceiling limitations on the total amount
                    of government funds that can be used through the procurement vehicle. Under our federal supply schedules, we may
                    be the only pre-approved supplier for a particular product, while for other products there are multiple pre-approved
                    suppliers, including our vendors.

             We do not commit to provide products at specific prices unless we have reached agreement with one or more of our
         vendors to supply the requisite products at an agreed upon price. For orders scheduled to be delivered over a longer period of
         time, such as in connection with our single-award program sales contracts, we will often negotiate annual price escalator
         provisions into the contract to preserve our margins. None of our sales are generated from time-and-materials or
         cost-reimbursable contracts.

             Although our contracts do not commit our customers to any set amount of purchases, the volume of our sales and our
         growth is partially dependent upon maintaining and increasing the number and size of our contracts. By broadening our
         contract portfolio, we are able to increase the variety of products and services that we may sell and expand our potential
         customer base. In addition, as the federal government changes its procurement strategy for a particular product or service, we
         may need to win new IDIQ and other contracts in order to continue selling those items. As our customers’ procurement
         needs change, we may also need to enter into new single-award IDIQ and other types of contracts in order to continue to sell
         our products to our customers on a sufficient scale and in a manner that meets their requirements.

                  Sales Force

             Although some of our contracts may guarantee a nominal level of sales, our sales volume will continue to be largely a
         function of the size and ability of our sales force. Our sales force generates demand for the products and related services we
         offer by working closely with our customers to match our product offerings to their needs. Our portfolio of contracts is used
         by our sales team to facilitate processing of customer demand generated by their sales efforts. For the year ended
         December 31, 2009, our net sales were derived from over 60,000 customer orders.

              In calculating the total number of sales representatives in our sales force and the amount of net sales and gross profit
         attributable to each sales representative, we do not include those members of our sales force who primarily serve our state
         and local law enforcement customers, which were 10, 14 and 14 members of our sales force as of December 31, 2008, 2009
         and 2010, respectively. We treat sales to state and local law enforcement customers differently because these sales do not
         currently contribute a meaningful amount to our overall net sales and gross profit are derived from a distinct customer set,
         which possesses unique sales cycles and contractual processes. Sales representatives who serve our state and local law
         enforcement customers perform fundamentally different functions in the sales process than the other members of our sales
         force. These representatives focus primarily on marketing and customer service rather than on direct sales. Consequently, the
         activities and headcount of the sales representatives who serve our state and local law enforcement customers do not
         correlate to our financial performance in the same way as the activities and headcount of our other sales personnel. As a
         result, we exclude state and local law enforcement personnel in calculating the weighted average number of sales
         representatives and when reviewing sales force performance and overall financial results.

             For the years ended December 31, 2008, 2009 and 2010, we had a weighted average total of 74, 99 and 134 members in
         our sales force, respectively. We use the following process to calculate our weighted average sales force: first we determine
         the number of sales representatives at the end of each month; we then multiply that number by a factor that is determined by
         where the month falls during the year; finally, we take the average of the sum of the monthly numbers. For example, for a
         full year period, the number of sales representatives at the end of January is multiplied by twelve, the number of sales
         representatives at the end of February is multiplied by eleven, and the factor by which each month-end number of sales
         representatives is multiplied decreases by one for each succeeding month so that the number of sales representatives at the
         end of December is multiplied by one.


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            In 2010, the size of our weighted average sales force increased by an additional 35 members. As of December 31, 2008,
         2009 and 2010 the total number of sales representatives at the end of the period was 87, 118 and 166, respectively.

             As of December 31, 2010, pursuant to the calculation of the number of our employees under the Small Business
         Administration regulations, we had 413 employees. As we continue to grow, we may in the future no longer be eligible to
         compete for government contracts set aside for businesses designated under certain NAICS codes for small businesses with
         fewer than 500 employees. Under the Small Business Administration regulations, a concern that is qualified as a small
         business at the time it receives a contract is considered a small business throughout the life of that contract. Therefore, none
         of our small business set aside contracts will automatically terminate should we cease to qualify as a small business with
         fewer than 500 employees. Approximately 44% of our net sales for the year ended December 31, 2010 were generated under
         contracts awarded to us as a result of our status as a small business with fewer than 500 employees. Substantially all of these
         net sales were generated under our Spec Ops TLS contract.

             The government contracting officer may request that we recertify our status as a small business at the time of renewal of
         a contract. The contracting officer may take into consideration all factors relating to performance under the contract
         including small business status in deciding to renew a contract. According to our internal data management system through
         which we track bids solicited and awards granted to us under our Spec Ops TLS contract, we won approximately 90% of the
         awards granted under the Spec Ops TLS contract in 2010. As a result, to the extent we continue to compete successfully
         under this contract, we believe that our Spec Ops TLS contract will be renewed even in the event we are no longer able to
         recertify as a small business.

             We have also successfully competed for a number of contractual procurement vehicles that are not set aside for small
         businesses and we believe that we will continue to do so effectively. While management does not believe that any future loss
         of our status as a small business will have a material adverse effect on our results of operations, we cannot assure you that
         we will be able to maintain our current results of operations and financial condition if we are no longer able to participate in
         the federal government’s small business programs. See “Risk Factors — Risks Related to Business — We may no longer be
         able to participate in the federal government’s small business programs which may affect our business and our sales.”


               Vendors

             We have established long-term relationships with approximately 1,400 active vendors (in the past 24 months). We have
         also instituted a preferred vendor program, which is comprised of approximately 300 vendors, that enables us to secure
         preferential terms and support on thousands of products. This allows us to generate sales by competitively bidding on
         opportunities for new and existing customers. We have established incentives for our sales team to increase sales of our
         preferred vendors’ products, which further enhances our value proposition to our preferred vendors and allows us to generate
         additional sales on favorable terms. For the year ended December 31, 2010, approximately 90% of our sales were sourced
         from our preferred vendors. As additional vendors come to realize the value proposition provided by our experienced sales
         force, customer relationships and access to contractual procurement vehicles, we expect to continue to expand our preferred
         vendor program.


               Seasonality

             We experience some seasonality in our orders as a result of the timing of U.S. federal government purchasing activity,
         which tends to increase near the end of the U.S. federal government fiscal year on September 30. Most of the funded federal
         government contracts stipulate that the budget allocation must be used during the corresponding fiscal year or be forfeited.
         That often results in increased spending near the end of the U.S. federal government fiscal year. This practice results in an
         increase in our fourth quarter net sales as a percentage of our total net sales for the year, as many of these items are shipped
         during the 90-day period following receipt of the corresponding orders. For the years ended December 31, 2009 and 2010,
         31%


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         and 31% of our net sales were recognized in the fourth quarter, respectively. The seasonality in our results is partially
         mitigated by sales under our GEN III contract, which typically contributes an equal amount to our net sales each month and
         comprised approximately 19% of our net sales for the year ended December 31, 2010. As we continue to grow and as sales
         under our single-award contracts, such as GEN III, account for a smaller percentage of our net sales in the future, we expect
         the seasonality in our results to increase.

             The nature of our business may result in significant fluctuations in sales from quarter-to-quarter. In particular, our sales
         in any period may be impacted by changes in government funding decisions and the average size and product mix of the
         orders shipped during the period. In addition, the timing with respect to the fulfillment of large orders may cause volatility in
         our sales from one period to the next. The timing and composition of future orders and government funding decisions are
         difficult to predict, and we expect to continue to experience these fluctuations in sales in the future.

         Gross Profit

             Our gross profit is a function of the difference between the price our customers pay us for the products and services we
         provide and the price we pay our vendors for those products and services, or our “cost of goods sold.” Cost of goods sold
         consists only of our merchandise costs, and does not include shipping and handling costs, which have not historically
         represented a significant portion of our expenses. As a result, metrics that are a function of cost of goods sold, such as gross
         profit and gross margin, may not be comparable to those of other entities that define cost of goods sold differently from us.

             The factors that affect our gross profit include:

              •     whether we are providing value-added supply chain management services, such as kitting and assembly, custom
                    sourcing solutions, training and product education, product research and development and quality assurance, to our
                    customers in connection with particular product sales. In general, we are able to generate higher gross margins on
                    sales of products where we perform additional value-added services, since we are able to charge higher prices for
                    these bundled products, relative to the sale of stand-alone component parts;

              •     whether the products are being sold to a new customer or are being supplied by vendors with whom we are working
                    to establish a new preferred relationship. From time to time, we will bid for a particular customer order or program
                    award at prices that may initially reflect lower margins in order to establish a relationship with a new customer or
                    vendor or where we believe we will be able to improve our gross margins over the life of the contract through price
                    escalation provisions in those contracts or by working with our vendors to improve pricing terms; and

              •     whether the order size creates a request for a volume-based discount. Similar to the discounts we may receive from
                    our vendors for large orders, from time to time our customers may expect similar volume-based discounts from us
                    on very large orders.

             Before bidding for contract awards and customer orders, we have agreed upon pricing terms with the corresponding
         vendors at levels that allow us to be competitive, while also preserving our gross margins. For commitments to deliver items
         over a longer period of time, such as through our single-award program contracts, we will often negotiate annual price
         escalator provisions as part of the arrangement to preserve our margins. Over the term of a single-award program contract,
         we will often work with our vendors to improve the pricing terms they offer us so that we may realize improved gross
         margins over the life of the program. Our contracts generally afford us with a significant amount of flexibility in sourcing the
         specified items from different vendors. This flexibility maintains competition among our vendors for many of the products
         we sell, which often allows us to obtain additional price improvements over the term of the contract.

             As described above, demand starts with our sales force. By monitoring and controlling the size and profitability of our
         sales force, we can gauge the overall success of our business. In particular, we use gross profit per sales representative as a
         measure to evaluate our performance. Gross profit per sales representative is equal to the gross profit realized during the
         period under consideration, divided by the weighted average number of representatives on our sales force during the period.
         For purposes of calculating gross profit per sales representative, we do not include gross profit attributable to those members
         of our sales


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         force who primarily serve our state and local law enforcement customers. Total gross profit attributable to those members
         who primarily serve our state and local law enforcement customers was $2,649,178, $2,023,133 and $393,456 for the years
         ended December 31, 2008, 2009 and 2010, respectively. For the years ended December 31, 2008, 2009 and 2010, our
         weighted average sales force consisted of 74, 99 and 134 members, respectively. Our gross profit per weighted average sales
         representative for each of the years ended December 31, 2008, 2009 and 2010, was approximately $1,147,000, $1,223,000
         and $1,224,000, respectively. Because it typically takes three to six months to sufficiently train new sales representatives
         before they make a meaningful contribution to our net sales, expanding our sales force has the result of temporarily
         decreasing gross profit per sales representative.

         Selling, General and Administrative Expenses

             Our selling, general and administrative, or “SG&A,” expenses consist primarily of payroll, payroll taxes, freight,
         commissions, travel and advertising and marketing expense. Certain of these expenses, including costs related to our
         infrastructure, payroll expense and travel, do not increase in proportion to increases in sales. In addition, products and other
         value-added services sold through our single-award IDIQ contracts often require less on-going sales effort to sustain and we
         generally incur lower freight, travel, commissions and employee costs per sales dollar received for these products. Since we
         will be a public company after the consummation of this offering, we anticipate that our SG&A expenses will increase due to
         increases in audit fees, professional fees, directors’ and officers’ insurance costs and expenses related to hiring additional
         personnel and expanding our administrative functions.

            Following this offering, we expect to incur additional stock compensation expense in connection with future option
         grants and other awards made in the form of our common stock.

         Taxes

             Prior to the consummation of this offering, we have been taxed under the rules and regulations of Subchapter S of the
         Internal Revenue Code of 1986, as amended (the “Code”). Under those rules and regulations, we do not pay federal or state
         income taxes on our taxable income. Instead, our stockholders are liable for individual federal and state income taxes on
         their respective share of our income or loss. In connection with this offering, we will convert from a subchapter
         S corporation to a subchapter C corporation. In connection with this conversion, we will record a tax benefit (estimated to be
         approximately $500,000 as if the conversion occurred on December 31, 2010) to recognize deferred taxes. Upon conversion
         to a subchapter C corporation, we will be subject to tax in the United States as well as any other tax jurisdictions in which we
         conduct business.

         Interest Expense

             We incurred significant indebtedness in connection with the refinancing transactions. As a result, our annual interest
         expense will increase significantly from prior years’ interest expense. Annual interest expense is expected to increase from
         historical interest expense by approximately $30 million. After further giving effect to the use of proceeds from this offering,
         assuming our common stock is offered at $       per share, the midpoint of the range set forth on the cover page of this
         prospectus, annual interest expense is expected to increase from historical interest expense by approximately $ million,
         assuming redemption of up to 35% of our senior secured notes, the maximum amount permitted to be redeemed under the
         senior secured notes indenture and $ million to repay a portion of the amounts remaining outstanding under our senior
         secured revolving credit facility. See “Prospectus Summary — Recent Developments” and “— Liquidity and Capital
         Resources.”

         Acquisition of MAR-VEL International, Inc.

             In June 2008, we acquired the stock of MAR-VEL International, Inc., or “MAR-VEL.” We acquired MAR-VEL in order
         to gain access to its Prime Vendor multiple-award IDIQ contract, which was the predecessor to our current Spec Ops TLS
         multiple-award IDIQ contract. The acquisition provided us with additional contract capacity to continue our sales growth
         until the award of our Spec Ops TLS contract was obtained. The aggregate purchase price for MAR-VEL was $5.5 million.
         Once we were awarded the Spec Ops TLS contract in 2009, the renewal option on the MAR-VEL Prime Vendor contract
         was not exercised.


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         Therefore, the remaining unamortized portion of the intangible asset related to the MAR-VEL sales contract of $3.0 million
         was recorded as an impairment loss in 2009.

         Results of Operations

            The table below shows our results of operations for the periods presented in dollar amounts (in millions) and as a
         percentage of net sales.

                                                                                      Year Ended December 31,
                                                                     2008                       2009                                2010


         Net sales                                            $ 660.5       100.0 %      $ 932.2           100.0 %          $   1,330.8        100.0 %
         Cost of goods sold                                     573.0        86.7 %        809.1            86.8 %              1,166.4         87.6 %

         Gross profit                                         $   87.5       13.3 %      $ 123.1             13.2 %         $    164.4           12.4 %
         Selling, general and administrative expenses             44.3        6.7 %         60.9              6.5 %               80.9            6.1 %
         Intangible asset impairment                                —          —             3.0              0.3 %                 —              —
         Interest expense, net                                     1.2        0.2 %          1.4              0.2 %                5.3            0.4 %

         Net income                                           $   42.0        6.4 %      $    57.8            6.2 %         $     78.2            5.9 %



                         Comparison of the Year Ended December 31, 2010 and the Year Ended December 31, 2009.


                                                                                                     Year Ended
                                                                                                     December 31,                         % Change
                                                                                                                                          2010 Over
                                                                                              2009                   2010                   2009
                                                                                                     (in millions)


         Net sales                                                                        $ 932.2             $      1,330.8                      43 %
         Cost of goods sold                                                                 809.1                    1,166.4                      44 %

         Gross profit                                                                     $ 123.1             $        164.4                      34 %
         Selling, general and administrative expenses                                        60.9                       80.9                      33 %
         Intangible asset impairment                                                          3.0                         —                       —
         Interest expense, net                                                                1.4                        5.3                     279 %
         Net income                                                                       $     57.8          $         78.2                      35 %



         Net Sales

             Net sales for the year ended December 31, 2010 were $1,330.8 million, compared to $932.2 million for the year ended
         December 31, 2009, which represented a 43% increase. This increase was primarily due to a higher sales volume during
         2010. Our net sales for the year ended December 31, 2010 were positively impacted by the net weighted average addition of
         35 members to our sales force during the year ended December 31, 2010, as compared to the year ended December 31, 2009,
         which resulted in increased sales to existing customers and additional sales to new customers within our customer base.
         Sales growth also resulted from the introduction of new products sold through our multiple-award IDIQ contracts. In
         particular, our TLS contracts generated an additional $436.8 million of incremental sales, offset by the $213.7 million
         decrease in Prime Vendor sales, as our Prime Vendor contract was replaced in 2009 by TLS and sales were phased out. Of
         the net $223.1 million increase in TLS contracts, sales of expeditionary equipment and structures through our Spec Ops TLS
         contract, which began in the first quarter of 2009, contributed $147.5 million of additional sales, sales under our Fire and
         Emergency Services Tailored Logistics Support contract, under which we sell fire-resistant apparel and first-responder
         apparel and equipment, contributed $9.8 million. The remaining $65.8 million of additional sales were generated across
         other various product categories under our TLS contracts. In addition, sales under our GEN III contract were $22.6 million
         higher in 2010, compared to 2009, due to a lapse in full funding of monthly kit shipments in January 2009. In June 2010, we
         began shipping orders under our Fire Resistant Environmental Ensemble, or “FREE,” contract, which contributed
         $95.0 million of additional sales for the year ended December 31, 2010. The remaining $57.9 million increase in net sales
included $37.9 million of additional commercial sales, primarily to defense contractors. Sales through our GSA federal
supply schedules for the year ended December 31, 2010 were


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         $125.7 million, compared to $136.5 million for the year ended December 31, 2009. This decrease was primarily the result of
         our decision to effect certain sales in 2010 under our TLS contracts that were effectuated in 2009 under our GSA federal
         supply schedules.


         Gross Profit

             Gross profit for the year ended December 31, 2010 was $164.4 million, as compared to $123.1 million for the year ended
         December 31, 2009, which represented a 34% increase. The increase in gross profit was primarily attributable to the increase
         in the volume of our sales. Gross profit per sales representative was $1,224,000 for the year ended December 31, 2010, as
         compared to $1,223,000 for the year ended December 31, 2009. Our weighted average sales force for the year ended
         December 31, 2010 was 134 members, as compared to 99 members for the year ended December 31, 2009. Gross profit as a
         percentage of net sales for the year ended December 31, 2010 decreased to 12.4% as compared to 13.2% for the year ended
         December 31, 2009. Consistent with our business model, this decrease was primarily due to lower gross profit as a
         percentage of net sales realized from the sale of new products, in particular expeditionary equipment and structures, from
         new vendors. From time to time, we will execute orders on lower gross margins in order to establish a relationship with a
         new customer or vendor.


         Selling, General and Administrative Expenses

             SG&A expenses for the year ended December 31, 2010 were $80.9 million, compared to $60.9 million for the year
         ended December 31, 2009, which represented a 33% increase. This increase was primarily due to the increase in the volume
         of our sales and the related payroll, commissions, travel, freight and other expenses incurred from expanding our sales force
         and supporting infrastructure. SG&A expenses were 6.1% of net sales for the year ended December 31, 2010, down from
         6.5% of net sales for the year ended December 31, 2009. This decrease was primarily a result of our ability to leverage our
         existing infrastructure through a decrease of 0.6% in payroll and payroll-related expenses as a percentage of net sales. In
         addition, depreciation and amortization decreased by 0.1% of net sales, as a result of the write-off of the unamortized portion
         of the intangible asset related to the acquisition of MAR-VEL. See “—Acquisition of MAR-VEL International, Inc.” These
         decreases were partially offset by an increase of 0.4% in expenses for professional fees as a percentage of net sales primarily
         incurred in connection this offering and the pursuit of other strategic opportunities and financings.


         Net Income

             Net income for the year ended December 31, 2010 was $78.2 million, compared to $57.8 million for the year ended
         December 31, 2009, which represented a 35% increase. This increase was attributable to the factors described above. Net
         income as a percentage of net sales for 2010 decreased to 5.9% as compared to 6.2% for 2009. This decrease was primarily
         the result of our decline in gross profit as a percentage of net sales, as described above, offset slightly by lower SG&A
         expenses as a percentage of net sales. In addition, our interest expense, net for 2010 was $5.3 million, as compared with
         $1.4 million for 2009, primarily as a result of increased borrowings under our senior secured revolving credit facility and our
         former term loan facility. Our interest expense will increase significantly in 2011 as a result of the offering of our senior
         secured notes.


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                        Comparison of the Year Ended December 31, 2009 and the Year Ended December 31, 2008.


                                                                                                 Year Ended
                                                                                                 December 31,                 % Change
                                                                                                                              2009 Over
                                                                                              2008                   2009       2008
                                                                                                     (in millions)


         Net sales                                                                        $ 660.5               $ 932.2               41 %
         Cost of goods sold                                                                 573.0                 809.1               41 %
         Gross profit                                                                     $     87.5            $ 123.1               41 %
         Selling, general and administrative expenses                                           44.3               60.9               37 %
         Intangible asset impairment                                                              —                 3.0               —
         Interest expense, net                                                                   1.2                1.4               17 %
         Net income                                                                       $     42.0            $      57.8           38 %



         Net Sales

             Net sales for the year ended December 31, 2009 was $932.2 million, as compared with $660.5 million for the year ended
         December 31, 2008, which represented a 41% increase. This increase was primarily due to a higher volume of sales during
         2009. Our net sales were positively impacted by the net weighted average addition of 25 members to our sales force during
         2009, or a 34% increase, and the resulting increased sales to existing customers and additional sales to new customers,
         primarily within the U.S. Army and the U.S. Air Force. Sales growth also resulted from the introduction of new products
         sold through multiple-award contracts during 2009. As a result, combined sales through our multiple-award TLS and former
         Prime Vendor contracts increased $181.5 million, over $104.8 million of which was related to the sale of expeditionary
         equipment and structures (which we began selling under these contracts in the first quarter of 2009), partially offset by a
         $15.5 million decrease in sales under our GEN III contract due to a one-time lapse in full funding of monthly kit shipments
         in January 2009. In addition, sales through our GSA federal supply schedules increased by $52.4 million, of which
         $23.3 million resulted from the sale of additional Escalation of Force Kits. In 2009, we also increased our commercial sales
         to defense contractors by approximately $42.0 million.


         Gross Profit

             Gross profit for the year ended December 31, 2009 was $123.1 million, as compared to $87.5 million for the year ended
         December 31, 2008, which represented a 41% increase. The increase in gross profit was primarily attributable to the increase
         in the volume of our sales. Gross profit as a percentage of net sales for 2009 remained relatively constant at 13.2%, as
         compared to 13.3% for 2008. Consistent with our business model, this was largely the result of improved gross profit as a
         percentage of net sales on sales of existing products and solutions. In particular, we experienced improvements on gross
         profit as a percentage of net sales under our GEN III contract, which were offset by lower gross profit as a percentage of net
         sales from the sale of new products, primarily expeditionary equipment and structures. For the year ended December 31,
         2009, we had a weighted average total of 99 members in our sales force as compared to 74 for the year ended December 31,
         2008. Our gross profit per weighted average sales representative was approximately $1,223,000 in 2009, as compared to
         $1,147,000 in 2008, due to expanded product offerings.


         Selling, General and Administrative Expenses

             SG&A expenses for the year ended December 31, 2009 were $60.9 million, as compared with $44.3 million for the year
         ended December 31, 2008, which represented a 37% increase. This increase was primarily due to the increase in the volume
         of our sales and the related payroll, commissions, travel, freight and other expenses incurred from expanding our sales force
         and supporting infrastructure. SG&A expenses were 6.5% of net sales for the year ended December 31, 2009, down from
         6.7% of net sales for the year ended December 31, 2008. This decrease was primarily a result of our ability to leverage our
         existing infrastructure and our customers paying for the freight costs in connection with sales of expeditionary equipment
         and structures. This decrease was partially offset by an increase in payroll and payroll taxes as a percentage of net sales.
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         Net Income

             Net income for the year ended December 31, 2009 was $57.8 million, as compared with $42.0 million for the year ended
         December 31, 2008, which represented a 38% increase. This increase was attributable to the factors discussed above. Net
         income as a percentage of net sales for 2009 decreased to 6.2% as compared to 6.4% for 2008. Improvements in SG&A
         expenses as a percentage of net sales during 2009 were offset by the negative impact of a $3.0 million charge related to the
         write-off of certain intangibles in connection with the MAR-VEL acquisition. See “— Acquisition of MAR-VEL
         International, Inc.”


         Liquidity and Capital Resources

         General

             Our primary liquidity needs are for working capital and capital expenditures. We have historically financed our
         operations through cash from operating activities and borrowings under our revolving credit facilities and expect that these
         will continue to be our principal sources of liquidity in the future. Based on our current level of operations, we believe that
         our cash flow from operations, available cash and available borrowings under our senior secured revolving credit facility
         will be adequate to meet our liquidity needs for at least the next twelve months. We cannot assure you, however, that our
         business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating
         improvements will be realized on schedule or that future borrowings will be available to us under our senior secured
         revolving credit facility in an amount sufficient to enable us to repay our indebtedness or to fund our other liquidity needs.
         See “Risk Factors — Risks Related to Our Common Stock.”

             Our business and growth strategy has historically required only a modest amount of capital expenditures. In 2009, we
         spent $9.2 million on capital expenditures, primarily in connection with the purchase of our current headquarters, and in
         2010 capital expenditures were $3.4 million, primarily in connection with the move to our new corporate offices and the
         construction of a warehouse. Our corporate offices and warehouse are each owned by related entities under the common
         ownership that are consolidated with ADS in our historical financial statements. See “Certain Relationships and Related
         Party Transactions.” We expect our capital expenditures to increase in 2011 to approximately $4.5 million.

            Historically, a substantial portion of our sales have been shipped directly from our vendors. For the year ended
         December 31, 2010, approximately 51% of our net sales were from orders shipped directly from the vendor. While the
         remainder of our shipments go through our warehouse, only a small percentage are held in inventory without a customer
         order. This allows us to minimize capital requirements for merchandise inventory. We may experience future increases in
         merchandise inventory related to new single-award contracts, such as the increase in merchandise inventory that we
         experienced in 2007 in connection with the award of our GEN III contract.

             Historically, our cash flow from operations has been relatively stable in relationship to our net sales as a result of the
         quality of our accounts receivable and the fact that only a small percentage of our net sales are generated from items held in
         inventory without a customer order. As of December 31, 2010, our allowance for doubtful accounts was $400,000. We
         expect this to continue for the foreseeable future, and as we experience growth in our net income, we expect our cash flow
         from operating activities to improve as well.

             As a result of the refinancing transactions, annual interest expense is expected to increase from historical interest expense
         by approximately $30 million. After further giving effect to the use of proceeds from this offering, assuming our common
         stock is offered at $     per share, the midpoint of the range set forth on the cover page of this prospectus, annual interest
         expense is expected to increase from historical interest expense by approximately $ million, assuming redemption of up to
         35% of our senior secured notes, the maximum amount permitted to be redeemed under the senior secured notes indenture,
         and $ million to repay a portion of the amounts remaining outstanding under our senior secured revolving credit facility.
         See “Prospectus Summary — Recent Developments” and “— Liquidity and Capital Resources.”

             ADS Tactical, Inc. is a holding company and all of our operations are conducted through our subsidiaries. Consequently,
         we rely on dividends or advances from our subsidiaries. The ability of such subsidiaries to pay dividends and our ability to
         receive distributions on our investments in other entities is subject to applicable local law. Such laws and restrictions could
         limit the payment of dividends and distributions to us.
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             A summary of operating, investing and financing activities are shown in the following table:


                                                                                                                  Year
                                                                                                           Ended December 31,
                                                                                                    2008           2009             2010
                                                                                                              (in millions)


         Cash provided by operating activities                                                  $     15.9      $    35.3       $     31.7
         Cash used in investing activities                                                           (14.9 )         (6.6 )           (3.0 )
         Cash provided by (used in) financing activities                                               0.5          (29.5 )          (27.3 )
         Net increase (decrease) in cash and cash equivalents                                   $      1.5      $    (0.8 )     $      1.4
         Cash and cash equivalents at the beginning of year                                            0.7            2.2              1.4

         Cash and cash equivalents at the end of year                                           $      2.2      $     1.4       $      2.8


             As of December 31, 2010, we had $2.8 million in cash and cash equivalents and $30.6 million in working capital.


         Cash provided by operating activities.

             For the year ended December 31, 2010, our operating activities generated net cash of $31.7 million, as compared to
         $35.3 million for the year ended December 31, 2009. The $3.6 million decrease in net cash generated from operating
         activities for the year ended December 31, 2010 was primarily due to an increase in net income of $20.4 million offset by an
         increase in inventories of $26.5 million compared to an increase of $8.5 million for the year ended December 31, 2009. In
         addition, the year ended December 31, 2009 included a non-cash charge related to intangible asset impairment of
         $3.0 million. The comparable increases in accounts receivable and accounts payable for the years ended December 31, 2009
         and 2010, were the result of increases in revenue and cost of goods sold for both periods.

             For the year ended December 31, 2009, our operating activities generated net cash of $35.3 million, as compared to
         $15.9 million for the year ended December 31, 2008. The increase was primarily due to the increase in net income of
         $15.8 million during 2009. The increase in cash generated from operating activities was also the result of an increase in
         accounts payable of $32.1 million in 2009, offset by an increase in accounts receivable of $53.1 million during this period.
         The increases in accounts receivable and accounts payable were primarily the result of increases in sales and cost of goods
         sold and the timing of payments and collections.


         Cash used in investing activities.

             For the year ended December 31, 2010, net cash used in investing activities was $3.0 million, as compared to
         $6.6 million of net cash used in investing activities during the year ended December 31, 2009. The use of cash in 2010 was
         primarily due capital expenditures related to the move into our headquarters and the construction of our warehouse. For the
         year ended December 31, 2009, the $7.5 million purchase of our new headquarters, combined with $1.7 million in
         miscellaneous equipment purchases were somewhat offset by $2.1 million in repayment of advances to affiliated companies
         and stockholders.

             For the year ended December 31, 2009, net cash used in investing activities was $6.6 million, as compared to
         $14.9 million of net cash used in investing activities during 2008. In 2009, we used $7.5 million of cash to purchase our
         existing headquarters and $1.7 million to fund other capital expenditures, and received $2.1 million from the repayment of
         advances to affiliated companies. In 2008, we used $4.7 million of cash to acquire MAR-VEL and $7.5 million for the
         purchase of a warehouse. In 2008, we also used $0.8 million to fund other capital expenditures and made advances of
         $1.9 million to affiliated companies.


         Cash provided by (used in) financing activities.

             For the year ended December 31, 2010, net cash used in financing activities was $27.3 million, as compared to
         $29.5 million during the year ended December 31, 2009. Net cash used in financing activities of $27.3 million in 2010 was a
         result of cash distributions to our stockholders of $129.0 million and repayment of debt of $14.3 million, offset primarily by
borrowings of $118.5 million. In 2010, we borrowed $67.0 million under our senior secured revolving credit facility to repay
our former revolving credit facility, $50.0 million under our term loan facility and $1.5 million under our construction loan
related to our new warehouse. We


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         repaid a former term loan with a payment of $9.0 million and made additional payments of $5.3 million on our term loan
         facility and property mortgages. The cash distributions to our stockholders of $129.0 million in 2010 included two special
         distributions totaling $98.6 million and distributions for taxes of $30.4 million.

             For the year ended December 31, 2009, net cash used in financing activities was $29.5 million, as compared to net cash
         provided by financing activities of $0.5 million in 2008. In 2009, we incurred long-term debt of $6.4 million related to the
         purchase of our existing headquarters, incurred $1.6 million under our former revolving credit facility, made cash
         distributions of $33.2 million to our stockholders primarily relating to taxable income and made principal payments on
         long-term debt of $5.3 million. In 2008, we incurred long-term debt of $6.3 million related to the purchase of a warehouse,
         incurred $21.5 million under our former revolving credit facility, made cash distributions of $25.5 million to our
         stockholders primarily relating to taxable income and made principal payments on long-term debt of $3.1 million.

             For the year ended December 31, 2008, net cash provided by financing activities was $0.5 million, as compared to net
         cash used in financing activities of $9.7 million during the comparable period in 2007. In 2007, we made principal payments
         of $3.3 million under our former revolving credit facility, made cash distributions of $3.4 million to our stockholders
         primarily relating to taxable income and made principal payments on long-term debt of $3.1 million.

             In January 2011, we made distributions to our stockholders of $10.6 million principally related to estimated taxes for the
         fourth quarter of 2010. We will continue to make additional distributions related to taxable income each quarter until the
         consummation of this offering. In connection with this offering we will convert from a subchapter S corporation to a
         subchapter C corporation. Tax payments will no longer be distributed to stockholders and will be classified as cash provided
         by (used in) operating activities.


         Senior Secured Revolving Credit Facility

             On February 18, 2010, we refinanced our then-existing credit facility by entering into a $180.0 million senior secured
         revolving credit facility with an optional increase in commitments of up to $25.0 million, which we later amended on
         October 22, 2010 to permit us to enter into our term loan facility. In connection with the refinancing transactions, we
         amended and restated the senior secured revolving credit facility to, among other things, repay our term loan facility, provide
         for up to $200.0 million in borrowings with an optional increase in commitments of up to $50.0 million, and permit the
         offering of the senior secured notes and the distributions to our equity holders. The amended and restated senior secured
         revolving credit facility became effective concurrently with the completion of the offering of the senior secured notes. See
         “Description of Certain Indebtedness — Senior Secured Revolving Credit Facility.”

             Borrowings under the senior secured revolving credit facility bear interest at a rate per annum equal to, at our option,
         either (a) with respect to base rate loans and swingline loans, a base rate determined by reference to the highest of (1) the
         prime rate of Wells Fargo Bank, National Association, (2) the federal funds effective rate plus 0.50% and (3) a LIBOR rate
         determined by reference to the costs of funds for U.S. dollar deposits for an interest period of one month adjusted for certain
         additional costs, plus 1.00% or (b) with respect to Eurodollar rate loans, a LIBOR rate determined by reference to the costs
         of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain eurocurrency
         liabilities established by the Federal Reserve Board, in each case plus an applicable margin. Commencing with the
         completion of the first calendar quarter after June 30, 2011, the applicable margin for borrowings thereunder will be subject
         to adjustment each fiscal quarter, based on the average excess availability.

            As of March 31, 2011, we had $66.1 million drawn under the senior secured revolving credit facility, resulting in
         availability of $133.9 million, subject to borrowing base limitations, under our senior secured revolving credit facility. As of
         March 31, 2011, we had $6.8 million letters of credit outstanding.

             Our senior secured revolving credit facility contains a number of covenants that, among other things and subject to
         certain exceptions, restrict our ability and the ability of our subsidiaries to incur additional indebtedness and alter, modify or
         make payments on certain indebtedness; incur additional liens; make investments, including: purchase of obligations or
         securities, capital contributions, loans, deposits, guarantees, or acquisitions; consolidate, merge, dissolve or liquidate; pay
         dividends on our or our subsidiaries’ capital stock or redeem, repurchase or retire such capital stock or our other
         indebtedness;


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         create restrictions on the payment of dividends or other amounts to us; engage in transactions with our affiliates; make
         accounting changes or amendments to organizational documents; modify material contracts; alter the business we conduct;
         and sell or transfer assets, including capital stock of our subsidiaries.

             Each of the covenants limiting dividends and other restricted payments, investments, loans and acquisitions, incurrence
         of unsecured debt, and prepayments or redemptions of certain indebtedness are expected to permit the restricted actions so
         long as certain payment conditions are satisfied, including certain specified excess availability and fixed charge coverage
         tests. In addition, we are required to maintain, on a monthly basis, a fixed charge coverage ratio of not less than 1.1 to 1.0 if
         either an event of default has occurred and is continuing or the undrawn availability under our senior secured revolving
         credit facility is less than 12.5% of our aggregate commitment, which requirement shall no longer apply after such
         conditions cease to apply for a period of 90 days. The senior secured revolving credit facility contains certain customary
         representations and warranties, affirmative covenants and collateral reporting and covenants. Prior to the effectiveness of the
         amended and restated senior secured revolving credit facility, as of December 31, 2010, we were in compliance with all
         covenants. Noncompliance with certain covenants in the senior secured revolving credit facility, including the failure to meet
         the ratio described above, would result in an event of default as defined in the senior secured revolving credit facility, which
         could result in the acceleration of all amounts outstanding under the senior secured revolving credit facility and/or a
         termination of the commitments thereunder. An event of default under the senior secured revolving credit facility will also
         result in a cross-default under the senior secured notes indenture.

             We are required to make prepayments under the senior secured revolving credit facility at any time when and to the
         extent that, the aggregate amount of outstanding loans and letters of credit under our senior secured revolving credit facility
         exceeds either the borrowing base or the aggregate commitments of the lenders. See “Description of Certain Indebtedness.”


         Senior Secured Notes

             On March 25, 2011, we issued $275.0 million of 11% senior secured notes due April 1, 2018. Interest on the senior
         secured notes is payable on April 1 and October 1 of each year. The proceeds from the offering of the senior secured notes,
         along with amounts drawn from our senior secured revolving credit facility, were used (1) to make a distribution of
         $217.1 million to our stockholders, (2) to repay our term loan facility, (3) to pay the transaction bonuses and (4) to pay
         related transaction fees and expenses, including discounts and commissions to the initial purchasers of the senior secured
         notes. See “Prospectus Summary — Recent Developments.”

             The senior secured notes are secured by a first-priority lien (subject to certain exceptions and permitted liens) on certain
         fixed and intangible assets, capital stock of certain subsidiaries, certain intercompany loans held by us and the guarantors of
         the senior secured notes, proceeds of the foregoing, in each case held by us and the guarantors of the senior secured notes.
         The senior secured notes are also secured by a second-priority lien (subject to certain exceptions and permitted liens) on all
         accounts (other than certain notes accounts), instruments, chattel paper and other contracts evidencing such accounts,
         inventory, certain investment property, cash (other than cash proceeds of the collateral first-priority lien on the senior
         secured notes), general intangibles and instruments related to the foregoing and proceeds of the foregoing, in each case held
         by us and the guarantors of the senior secured notes.

             Prior to April 1, 2015, the senior secured notes may be redeemed in part or in full at a redemption price equal to 100% of
         the principal amount of the senior secured notes, plus a make-whole premium calculated in accordance with the senior
         secured notes indenture and accrued and unpaid interest, if any. In addition, prior to April 1, 2014, up to 35% of the original
         principal amount of the senior secured notes (including any additional notes issued under the senior secured notes indenture)
         may be redeemed with the net proceeds of certain equity offerings completed before April 1, 2014 at 111%, provided that
         after giving effect to such redemption, not less than 50% of the senior secured notes remain outstanding. On or after April 1,
         2015, the senior secured notes may be redeemed in part or in full at the following percentages of the outstanding principal
         amount prepaid: 108.250% prior to April 1, 2016; 105.500% on or after April 1, 2016, but prior to April 1, 2017; and 100%
         on or after April 1, 2017.


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             The senior secured notes indenture contains customary covenants and restrictions on the activities of us and our restricted
         subsidiaries, including, but not limited to, our ability to incur additional indebtedness; pay dividends or make distributions or
         redeem our capital stock; pay or redeem or purchase certain indebtedness; make certain loans and investments; sell assets;
         create liens on certain assets to secure debt; enter into agreements restricting our subsidiaries’ ability to pay dividends;
         consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and engage in transactions with
         affiliates. Certain of these covenants will be suspended if the senior secured notes are assigned an investment grade rating by
         both Standard & Poor’s Rating Services and Moody’s Investor Service, Inc. and no default has occurred or is continuing. If
         either rating on the senior secured notes should subsequently decline to below investment grade, the suspended covenants
         would be reinstated.

             The senior secured notes will not be registered under the Securities Act. See “Description of Certain Indebtedness.”


         Term Loan Facility

             On October 22, 2010, we entered into the term loan facility with Wells Fargo Bank, National Association as
         administrative agent. On March 25, 2011, we fully repaid the term loan facility with a portion of the proceeds from the
         offering of our senior secured notes. See “Prospectus Summary — Recent Developments.”

            The term loan facility provided for a total commitment of $50.0 million in a single borrowing. The proceeds from the
         borrowing under the term loan facility were used to fund permitted dividends and cover related transaction costs, including a
         cash distribution of approximately $48.6 million to our principal stockholders, which was distributed on October 22, 2010.

            The term loan facility was scheduled to mature on February 18, 2013 and bore interest at variable rates based on the
         Eurodollar rate or the bank’s base rate plus an applicable margin of 4.00% and 3.00%, respectively. Interest on the
         Eurodollar rate loan was payable on the last day of each applicable interest period, while interest on the bank’s base rate loan
         was payable monthly in arrears not later than the first day of each calendar month.


         Guarantees

             We guarantee debt in the amount of $7.5 million incurred by one of our affiliates and debt in the amount of $6.1 million
         incurred by another of our affiliates. The financial statements of both of these affiliates have been consolidated with our
         financial statements. We also guarantee two mortgages totaling $2.0 million related to office and warehouse space that we
         lease. For more information, please see “Certain Relationships and Related Party Transactions” and the consolidated
         financial statements included elsewhere in this prospectus.


         Critical Accounting Policies and Significant Accounting Estimates

             The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting
         principles requires management to make certain estimates and assumptions. These estimates and assumptions affect the
         reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
         statements and net sales and expenses during the periods reported. The following accounting policies involve “critical
         accounting estimates” because they are particularly dependent on estimates and assumptions made by management about
         matters that are highly uncertain at the time the accounting estimates are made. In addition, while we have used our best
         estimates based on the facts and circumstances available to us at the time, different estimates reasonably could have been
         used in the current period. Changes in the accounting estimates we used are reasonably likely to occur from period to period,
         which may have a material impact on the presentation of our financial condition and results of operations. We review these
         estimates and assumptions periodically and reflect the effects of revisions in the period that they are determined to be
         necessary. For further information on all of our significant accounting policies, please see note 2 of the accompanying notes
         to our audited consolidated financial statements included elsewhere in this prospectus.


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         Revenue Recognition

             We derive revenue primarily from the sale and distribution of tactical and operational equipment. In order for revenue
         and the related cost of sales from product sales to be recognized there must be (i) persuasive evidence that an arrangement
         exists, (ii) delivery has occurred, (iii) the price to the buyer is fixed or determinable and (iv) collectability of the related
         receivable is reasonably assured. Revenue is recognized depending on the specific terms of the arrangement: either at the
         point of shipment for those sales under FOB shipping point terms, or when it is received by the customer for sales under
         FOB destination terms. For those transactions that are shipped at or near the end of the reporting period for which the sales
         terms are FOB destination, we confirm receipt of the shipment, and if delivery has not occurred, then the revenue is not
         recognized. We evaluate whether it is appropriate to record product sales and related costs on a gross or net basis in
         accordance with ASC 605-45, Principal Agent Considerations . Management uses judgment in this consideration, including
         whether we are primarily obligated in a transaction, subject to inventory risk, has latitude in establishing prices and
         suppliers, and other factors or indicators that support the determination of whether we have acted as a principal or agent in
         the related transaction. Shipping and handling costs billed to customers are included in sales. Many of our products are
         purchased to meet customer specifications, and customer arrangements do not typically involve post-installation or post-sale
         testing and acceptance. There is no significant variation in sales terms geographically, or among product lines and industries.


         Accounts Receivable

             Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The majority of our accounts
         receivable is due from federal, state, and local government agencies. Credit is extended based on an evaluation of a
         customer’s financial condition. We do not require collateral from our customers. Accounts receivable are generally due
         within 30 to 90 days and are stated at amounts due from customers, net of allowances for doubtful accounts, when
         management has determined that the balance is not fully collectible. Accounts receivable outstanding longer than the
         contractual payment terms are considered past due. Amounts collected on trade accounts receivable are included in net cash
         provided by operating activities in the consolidated statements of cash flows. We determine the need for an allowance for
         doubtful accounts by considering the customer’s financial condition, the current receivables aging, and current payment
         patterns. We review on a quarterly basis the need for an allowance for doubtful accounts, which represents our best estimate
         of the amount of probable credit losses in our existing accounts receivable. Past due balances over 90 days and over a
         specified amount are reviewed individually for collectibility. If the financial condition of our customers were to deteriorate
         beyond our estimates, resulting in an impairment of their ability to make payments, we would be required to reserve and
         write off additional accounts receivable balances, which would adversely impact our net earnings and financial condition.
         Actual uncollectible accounts could exceed our estimates, and changes to our estimates will be accounted for in the period of
         change. Account balances are charged against the allowance after all means of collection have been exhausted and the
         potential for recovery is considered remote. We do not have any off-balance-sheet credit exposure related to our customers.
         At December 31, 2010, we recorded a $400,000 allowance in connection with one of our accounts receivable. At
         December 31, 2010, we expect to fully collect substantially all other accounts receivable.


         Inventory

             Inventories consist of tactical and operational equipment produced and manufactured by other parties and are stated at
         the lower of cost or market. Cost is determined by the first-in, first-out basis. For purposes of analyzing the lower of cost or
         market, market is current replacement cost.

             We make purchasing decisions principally based upon firm sales orders from customers, the availability and pricing of
         finished products from our vendors, and projected customer requirements. Future events that could adversely affect these
         decisions and result in significant charges to our operations include slowdown in customer demand, customer delay in the
         issuance of sales orders, miscalculation of customer requirements, loss of customers and/or cancellation of sales orders and
         sales contracts. We consider the need for inventory reserves related to obsolescence and unusable items on a continual basis.


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             Market conditions surrounding products are also considered periodically to determine if there are any net realizable
         valuation matters, which would require a write-down of any related inventories. If market conditions change, it may be
         necessary for inventory reserves and write-downs, which would be accounted for in the period of change. Cash flows from
         the purchase and sale of inventory are included in cash flows from operating activities.


         Long-Lived Assets

             We account for the impairment of long-lived assets and amortizable intangible assets in accordance with standards for
         accounting for the impairment or disposal of long-lived assets. Long-lived assets, such as property, and equipment, and
         purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances
         indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
         measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be
         generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is
         recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Management
         assesses the recoverability of long-lived assets whenever events or changes in circumstance indicate that the carrying value
         may not be recoverable.

             Management must make assumptions regarding estimated future cash flows and other factors to determine the fair value
         of these assets. Other factors could include, among other things, quoted market prices, or other valuation techniques
         considered appropriate based on the circumstances. If these estimates or related assumptions change in the future, an
         impairment charge may need to be recorded. Impairment charges would be included in our consolidated statements of
         operations, and would result in reduced carrying amounts of the related assets on our consolidated balance sheets.


         Contingencies and Litigation

             Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are
         recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be
         reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Such accruals are
         adjusted as further information develops or circumstances change.

             We periodically assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically
         very difficult to determine the timing and ultimate outcome of these actions, we use our best judgment to determine if it is
         probable that we will incur an expense related to a settlement for such matters and whether a reasonable estimation of such
         probable loss, if any, can be made. Given the inherent uncertainty related to the eventual outcome of litigation, it is possible
         that all or some of these matters may be resolved for amounts materially different from any estimates that we may have
         made with respect to their resolution.


         Recent Accounting Developments

             As part of the transition to the Financial Accounting Standards Board Accounting Standards Codification, or “FASB
         ASC,” plain English references to the corresponding accounting policies are provided, rather than specific numeric ASC
         references. The ASC identifies the sources of accounting principles and the framework for selecting the principles to be used
         in the preparation of financial statements of nongovernmental entities that are presented in conformity with the
         U.S. generally accepted accounting principles. The ASC is effective for financial statements issued for interim and annual
         periods ending after September 15, 2009. There was no impact on the consolidated balance sheets, statements of income, or
         cash flows upon the adoption of the ASC.

             In June 2009 the FASB issued updated guidance, which amends guidance for determining whether an entity is a variable
         interest entity, or “VIE,” and requires the performance of a qualitative rather than a quantitative analysis to determine the
         primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to
         direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses
         of the VIE or the right to receive


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         benefits from the VIE that could be significant to the VIE. This guidance is effective for the first annual reporting period that
         begins on January 1, 2010, with early adoption prohibited. The adoption of this guidance did not have a material impact on
         the company’s consolidated financial statements.

             In May 2009, the FASB issued updated guidance to establish general standards of accounting for and disclosure of
         subsequent events. This guidance, as amended, renames the two types of subsequent events as recognized subsequent events
         or nonrecognized subsequent events and modifies the definition of the evaluation period for subsequent events as events or
         transactions that occur after the balance sheet date, but before the financial statements are issued. This will require
         non-public entities to disclose the date through which an entity has evaluated subsequent events and the basis for that date.
         The company adopted this guidance during 2009. The adoption of this guidance did not have a material impact on the
         company’s consolidated financial statements.


         Effect of Inflation

             Most of our sales are generated from purchase orders under IDIQ contracts that are to be performed within 90 days.
         Some of our sales under our single-award IDIQ contracts contemplate deliveries over a period of six to 12 months at
         pre-determined prices (subject, in some cases, to price escalation provisions). We have generally been able to anticipate
         increases in costs when pricing the products and related services we offer under these contracts. For commitments to deliver
         items over a longer period of time, such as through our single-award IDIQ contracts, we have often been able to negotiate
         annual price escalator provisions as part of the arrangement to preserve our margins. Consequently, net income as a
         percentage of net sales has not been significantly impacted by inflation. There can be no assurance, however, that our sales
         or operating results will not be impacted by inflation in the future.


         Off-Balance Sheet Arrangements

             We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising
         capital, incurring debt or operating our business. We do not have any off-balance sheet arrangements or relationships with
         entities that are not consolidated into or disclosed on our financial statements that have or are reasonably likely to have a
         material current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital
         resources.


         Contractual Obligations

            The following table reflects our contractual obligations and commercial commitments as of December 31, 2010.
         Commercial commitments include lines of credit, guarantees and other potential cash outflows resulting from a contingent
         event that requires our performance pursuant to a funding commitment.


                                                                                      Payments Due by Period
                                                                              Less than                                        More than
         Contractual
         Obligations                                         Total             1 Year           1-3 Years      3-5 Years        5 Years
                                                                                             (in thousands)


         Long-term debt (1)(2)                           $    58,638      $      21,065      $     24,933      $     787      $ 11,853
           Operating leases (3)                                1,956                703               767            486
           Capital leases (4)                                     32                 32                —              —               —
           Interest on long-term debt (5)                     16,598              2,318             2,346          1,610          10,324
         Line of credit (6)                                   90,155             90,155                —              —               —
            Total                                        $ 167,379        $ 114,273          $     28,046      $   2,883      $ 22,177




         (1)    Long-term debt includes obligations for (a) our corporate headquarters in Virginia Beach, VA, which is owned by
                Tactical Office, LLC, a related entity under common ownership that is consolidated with ADS in our historical
                financial statements, and (b) our kitting facility in Virginia Beach, VA, which is owned by Tactical Warehouse, LLC,
                a related entity under common ownership that is consolidated with ADS in our historical financial statements. See
“Certain Relationships and Related Party Transactions” and notes 6, 10 and 11 to our consolidated financial
statements.


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         (2)     Long-term debt as of December 31, 2010 includes our term loan facility, which was repaid on March 25, 2011 with
                 the proceeds from the sale of our senior secured notes. See “Prospectus Summary — Recent Developments.”

         (3)     Operating leases includes lease obligations for our main warehouse in Virginia Beach, VA, our warehouse in San
                 Diego, CA and an office and warehouse in Pennsauken, NJ.

         (4)     Capital leases includes lease obligations for hardware and software equipment at our facilities in Pennsauken, NJ.

         (5)     Includes interest on our term loan facility with estimated interest payments at 4.3%, which represents the weighted
                 average interest rate paid during 2010, as well as interest on other long-term debt and capital leases. This term loan
                 was repaid on March 25, 2011 with the proceeds of our senior secured notes.

         (6)     Line of credit consists of our senior secured revolving credit facility. Does not include interest payments on the senior
                 secured revolving credit facility, which bears interest at a variable rate. We estimate that annual interest payments of
                 $3.6 million would be required based on a weighted-average interest rate of 4% paid during 2010, including a
                 commitment fee, assuming outstanding borrowings of approximately $90 million, which we expect to change in the
                 future as additional borrowings become necessary. Actual interest may vary. See “— Liquidity and Capital
                 Resources — Senior Secured Revolving Credit Facility.”

             The following table summarizes our contractual obligations and commercial commitments as of December 31, 2010 on
         an as adjusted basis to give effect to the refinancing transactions that we completed in March 2011 as if they had occurred on
         December 31, 2010, but does not give effect to this offering and the use of proceeds therefrom.


                                                                                          Payments Due by Period
                                                                              Less than                                         More than
         Contractual
         Obligations                                        Total              1 Year               1-3 Years      3-5 Years     5 Years
                                                                                                 (in thousands)


         As adjusted long-term debt:
         Senior secured notes                            $ 275,000        $          —           $         —       $       —    $ 275,000
         Other long-term debt                               13,638                  295                   703             787      11,853
         Operating leases (1)                                1,956                  703                   767             486          —
         Capital leases (2)                                     32                   32                    —               —           —
         Interest on long-term debt (3)                    226,170               31,042                62,194          62,110      70,824
         Line of credit (4)                                 93,155               93,155
         Total                                           $ 609,951        $ 125,227              $     63,664      $ 63,383     $ 357,677




           (1) Includes lease obligations for a warehouse in Virginia Beach, VA, a warehouse in San Diego, CA and an office and
               warehouse in Pennsauken, NJ.

           (2) Includes lease obligations for hardware and software equipment at our facilities in Pennsauken, NJ.

           (3) Includes interest on our senior secured notes as well as interest on our other long-term debt and capital leases.

           (4) Includes amounts drawn at the closing of the issuance of our senior secured notes to pay certain fees and expenses in
               connection with the refinancing transactions. Does not include interest payments on the senior secured revolving credit
               facility, which bears interest at a variable rate. We estimate that annual interest payments of $3.7 million would be
               required based on a weighted-average interest rate of 4% paid during 2010, including a commitment fee, assuming
               outstanding borrowings of approximately $93 million, which we expect to change in the future as additional
               borrowings become necessary or repayments are made.


         Qualitative and Quantitative Disclosure about Market Risk
    Our exposure to market risk relates to changes in interest rates for borrowings under our term loan facility and our senior
secured revolving credit facility. These borrowings bear interest at variable rates. Based on the amount outstanding under our
term loan facility and our senior secured revolving credit facility on December 31, 2010, a hypothetical one percentage point
increase in interest rates would increase our annual interest expense by approximately $1.5 million. While we may enter into
agreements limiting our exposure to higher interest rates, any such agreements may not offer complete protection from this
risk.


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                                                                    BUSINESS


         Our Company

             We believe we are a leading provider of value-added logistics and supply chain solutions specializing in tactical and
         operational equipment, based on 2010 sales. We drive sales between a fragmented base of vendors and a decentralized group
         of customers by tailoring our solutions to meet their needs. Most of our approximately 4,000 active customers (in the past
         24 months) are within the Department of Defense and the Department of Homeland Security. Our business model is
         adaptable and scalable to serve other domestic and foreign government agencies. Through our vendor network, we offer our
         customers access to over 160,000 items, which we combine with our broad suite of value-added supply chain management
         services. We leverage our established supply chain management and government procurement expertise to develop and
         strengthen key customer and vendor relationships.

             Our customers need the products we offer for ongoing training and to be prepared for a variety of peacetime operations
         and missions at home and abroad. The products we offer include apparel, expeditionary equipment, optical equipment,
         communications equipment, emergency medical supplies, lighting, eyewear and other items from approximately 1,400 active
         vendors (in the past 24 months) such as Camelbak, FLIR, Hunter Defense Technologies, L-3 Communications, Oakley and
         SureFire. Most of the products we distribute require regular replacement due to wear and tear and technological
         advancements. We combine the distribution of our products with our value-added supply chain management services, which
         include kitting and assembly, custom sourcing, training, product research and development and quality assurance and quality
         management systems. Our flexible operating model allows us to maintain an asset-light, low-inventory, scalable business.
         For example, for the year ended December 31, 2010, approximately 51% of our net sales were from orders shipped directly
         from the vendor.

             Many of our dedicated and knowledgeable 166-person sales force are former military personnel who understand the
         changing nature of 21st century security threats and the mission requirements of our customers. The members of our sales
         force utilize their first-hand understanding of our customers’ needs and requirements and the products we offer to help our
         customers select the best available products and supply chain management services for their needs. The members of our
         sales force then draw on their training in and experience with the government procurement process to execute these
         purchases through our comprehensive portfolio of contractual procurement vehicles.

             We seek to be a critical partner to each of our customers and vendors. Our value proposition is driven by the combination
         of three key factors:

              •     Deep-Rooted Customer Relationships. Our customers benefit from our knowledge of, and our ability to provide
                    access to, a wide variety of products and services, which we aim to deliver on time and within budget. By utilizing
                    our logistics solutions and access to our broad portfolio of contractual procurement vehicles, our customers may
                    save time and money, which generates repeat business and fosters deep relationships with our customers.

              •     Strategic Vendor Alliances. Our vendors are able to leverage our experienced sales force, product knowledge,
                    customer relationships and access to contractual procurement vehicles to drive demand for their products and reach a
                    customer base that may otherwise be difficult for them to access independently.

              •     Broad Portfolio of Contractual Procurement Vehicles. Our contractual procurement vehicles provide multiple
                    channels through which our customers can purchase, and our vendors can sell, any of the over 160,000 items we
                    offer without the need for time-consuming individual contracts or open-market bid processes. Our contractual
                    procurement vehicles give our vendors access to customers they may not independently have and enable the U.S.
                    government to realize increased procurement efficiencies.

             We believe our value proposition has allowed us to drive the growth in demand for the products and related services we
         offer while building upon the strength of our market position, as evidenced by the


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         compound annual growth rate of our net sales, net income and EBITDA from 2006 to 2010 of 61%, 84% and 80%,
         respectively.


         Our Market Opportunity

             We believe our addressable market is approximately $100 billion, of which our current market share is approximately
         1%. Our primary customers include U.S. government agencies whose funds come from, among other sources, the
         Readiness & Support portion of the Operation & Maintenance budget, which is allocated from the larger Department of
         Defense base budget. According to information contained in the Department of Defense Fiscal Year 2011 Budget Request
         and annual budget press releases from the Department of Defense, the Operations & Maintenance base budget and the
         Department of Defense base budget have grown at approximately the same compound annual growth rate of 6% from 2005
         to 2010. According to the Department of Defense’s 2011 budget projections, from 2011 through 2015, the Operations &
         Maintenance budget’s share of the total Department of Defense base budget is expected to increase, with an expected
         compound annual growth rate of approximately 5%, compared to 3% for the Department of Defense base budget. We
         believe the Operation & Maintenance budget is stable and growing because it funds ongoing military readiness and training
         and thus is not driven by active and ongoing conflicts.

             The need for our capabilities and services developed over the last decade, when rapid changes in technology, equipment
         and security threats drove the U.S. government to shift away from standardized products and equipment built to government
         specifications, towards readily available, commercial off-the-shelf products and equipment. Over the same period, the
         Department of Defense has enabled increased procurement authority at the unit level by providing increased access to
         flexible contractual procurement vehicles. The increasing variety of missions, both of conventional forces as well as special
         operations forces, has encouraged commanders to utilize their discretionary budgets to acquire more specialized equipment.

             Further, the consumable nature of the products our customers buy from us drives reliable and consistent demand. Our
         customers subject these products to steady wear and tear, necessitating regular replacement. Constant technological
         innovations also force new developments, rendering current products obsolete and generating demand for new and advanced
         products.

             Concurrently with the shift in approach to procurement, the needs of the U.S. military and the nature of modern warfare
         have also changed. The demands of recent engagements have shifted the Department of Defense’s focus away from
         developing large-scale weapons platforms for use in conflicts with other major world powers and towards equipping
         personnel to engage in ground-based, irregular warfare against asymmetric threats. In addition, the role of the U.S. military
         is expanding beyond the scope of its traditional national defense function. We believe that the following trends will increase
         the demand for our tactical and operational equipment and value-added supply chain management services:

              •     Continuous Commitment to Operational Readiness and Troop Modernization. To maintain a constant state of
                    operational readiness, the recently implemented Army Force Generation model rotates units between three levels of
                    deployment readiness—preparation, eligible, and available. The model ensures that approximately one-third of
                    active-duty units and one-sixth of reserve units are available to deploy each year, regardless of whether the United
                    States is at war. As new units rotate into each level of readiness, they are issued new and modernized equipment,
                    creating a continuous need for tactical and operational equipment.

              •     Broader Array of Mission Objectives. Increasingly, the branches of the U.S. military are called upon to undertake
                    missions beyond the scope of their traditional national defense functions, such as assistance with disaster relief,
                    border patrol and nation-building. These non-traditional missions, especially disaster relief, demand sustained
                    operational readiness because they arise unexpectedly in response to natural or manmade disasters, such as the
                    earthquake in Haiti in January 2010 or the recent earthquake and tsunami in Japan. Each of these added functions
                    requires the use of new and different tactical and operational equipment.


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              •     Need for Tightly Integrated and Specialized Equipment. The Department of Defense is focused on ensuring that
                    each soldier is properly equipped with state-of-the art equipment. To increase the effectiveness and safety of
                    soldiers, the Department of Defense has increased its average spend-per-soldier on equipment from approximately
                    $2,000 per soldier during World War II to approximately $19,000 during the Global War on Terror (2001-2008)
                    (adjusted to 2009 dollars based on the consumer price index). This trend is expected to continue, as the Department
                    of Defense projects that the amount spent on equipment per soldier will increase substantially in the future.

              •     Need for Increased Manpower to Counter Asymmetrical Threats. The threat of simultaneous, irregular conflicts
                    requires significant numbers of trained and properly equipped troops ready to deploy on short notice. To counter
                    these threats the U.S. Army and Special Forces have grown their troop levels since 2005. As of September 2009, the
                    estimated total U.S. military troop levels increased to more than two million people, of which approximately 10%
                    were deployed on active missions. We expect that growth to continue upon approval of the 2011 budget, as
                    evidenced by the 2011 proposed budget.

              •     Increasing Importance of Expeditionary Warfare Units. The structure of the U.S. Army was reorganized in 2004
                    from divisions into expeditionary warfare units, called Brigade Combat Teams, to increase its effectiveness. The
                    U.S. Navy and the U.S. Air Force also currently have similar expeditionary warfare units. Expeditionary warfare
                    units are mobile and self-sufficient, operate away from established bases and are able to deploy quickly. Maintaining
                    an expeditionary warfare unit’s high level of mobility, operational readiness, and self-sustainability requires a
                    significant amount of tactical and operational equipment that is frequently updated and replaced.

             As these trends continue, we believe the market opportunity for the products and related services we offer will continue
         to expand. As the U.S. military continues to decentralize its approach to procurement and increase the amount of the overall
         defense budget allocated to tactical and operational equipment for each soldier, we believe we can continue to expand our
         sales over time, notwithstanding fluctuations in military spending.

         Our Competitive Strengths

             We believe we have an attractive and proven business model that allows us to connect a fragmented base of vendors and
         a decentralized group of approximately 4,000 active customers (in the past 24 months), effectively providing our customers
         an outsourced solution for their equipment needs. We have leveraged the over 160,000 items we offer, our value-added
         supply chain management services, our experienced sales force and our broad portfolio of contractual procurement vehicles
         to drive our recent growth, as evidenced by the compound annual growth rate in our net sales of 61% from 2006 to 2010.

             The following competitive strengths differentiate us from our competitors and are critical to our continued success:

              •     Deep-Rooted Customer Relationships. We aim to be a one-stop-shop for our customers’ tactical and operational
                    equipment needs by streamlining the procurement process and providing value-added supply chain management
                    services. As a result of our knowledge, experience, value-added services and excellent customer service, many of
                    our customers have come to depend on us to manage the procurement process for them and to introduce them to new
                    products and provide insight as to those products best-suited to their particular needs. We believe that our ability to
                    establish, sustain and grow these relationships would be difficult and expensive for any one competitor to replicate.

              •     Value-Added Supply Chain Solutions. We are able to effectively manage and coordinate a fragmented supply chain
                    to provide complete and timely delivery of products to our customers at attractive prices. We tailor our services to
                    provide efficient and compelling solutions to meet our customers’ needs and requirements. We have enhanced our
                    customer relationships by reducing complexities and increasing efficiencies in their procurement processes, which
                    we believe makes us a critical partner to our customers.

              •     Scalable Infrastructure. In recent years, we have made key strategic investments in both personnel and
                    infrastructure to build a scalable business that can support continued rapid growth. Our recent


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                    investment in scalable infrastructure and operations, such as Oracle Enterprise Resource Planning, gives us the
                    capacity to build upon our past performance with minimal future capital expenditures. Our Special Operational
                    Logistics & Visibility Solution, or “SOLVS,” system provides our customers with advanced supply chain
                    technology, ensuring that we are able to meet their needs in the best manner available. As a result of our asset-light
                    operating model, we generate significant free cash flow and have relatively low capital expenditures and working
                    capital requirements. For example, for the year ended December 31, 2010, approximately 51% of our net sales were
                    from orders shipped directly from the vendor.

              •     Extensive Vendor Relationships and Preferred Vendor Program. We are the primary avenue into the government
                    sales channel for many of our vendors as a result of our familiarity with the complexities of government
                    procurement and our access to customers in U.S. government agencies. As a result, new vendors seek to establish
                    relationships with us, allowing us to continue to expand the breadth of products we offer, which is critical to our
                    customer base. In response to this dynamic, we developed a preferred vendor program to further enhance certain
                    vendor relationships, while allowing us to benefit from preferential terms and support. Our vendors seek to grow the
                    amount of business they do with us because of our ability to increase their sales, provide them with insightful
                    customer product feedback and facilitate new product introductions, and we are able to competitively bid on
                    opportunities as a result of the preferential terms and support we receive from our preferred vendors.

              •     Broad Portfolio of Contractual Procurement Vehicles. Our access to a broad portfolio of contractual procurement
                    vehicles makes the sale and procurement process easier and faster for both our customers and our vendors. We use
                    the term “contractual procurement vehicle” to refer to a type of government contract that is awarded to a limited
                    number of suppliers, authorizing those suppliers to compete for specific purchase orders from different government
                    entities. Contractual procurement vehicles do not commit the government to buy a set amount of goods or services,
                    but instead, allow the supplier to sell certain goods or services to the government under the particular contract it
                    holds. Because we have already qualified for a number of contracts, we are able to quickly and easily bring
                    incremental supply online by utilizing multiple vendors to meet demand. Our extensive contract portfolio facilitates
                    the procurement process, providing a strong incentive for customers and vendors to utilize us as one of their leading
                    partners. Obtaining the type of contractual procurement vehicles used by our customers requires a demonstrated
                    track record of past performance, which makes our contract portfolio difficult to replicate.

              •     Experienced Sales Force. A substantial portion of our sales personnel has extensive military experience. Our sales
                    representatives’ experience and understanding of our customers is enhanced by their deep product knowledge,
                    expertise with contractual procurement vehicles and broad access to products and vendors. Their comprehensive
                    capabilities, including the valuable feedback regarding products they are able to provide to both customers and
                    vendors, and their ability to identify suitable contractual procurement vehicles, enhance our key relationships while
                    ensuring superior customer service. The ability of our sales force to recommend and provide the appropriate product
                    while identifying and offering suitable contractual procurement vehicles is difficult and costly to replicate.

              •     Dedicated and Capable Management Team. With substantial operational experience and functional knowledge,
                    our senior management team has successfully led the formation and development of our business model. Our senior
                    leadership has been together since 2004 and overseen significant growth in our net sales and EBITDA. In addition,
                    our Chief Executive Officer and Chief Operating Officer are among our largest stockholders, beneficially owning
                    common stock representing an aggregate of 75% of our outstanding equity as of December 31, 2010 and % of our
                    outstanding equity giving pro forma effect to this offering, respectively.


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         Our Growth Strategy

             We strive to meet the constantly changing needs of our customers by providing them with access to the commercial
         off-the-shelf products best suited to their specific needs and combining them with our innovative, value-added supply chain
         management services. Key elements of our growth strategy include:

              •     Further Penetrate our Primary Customer Base. Our primary customer base is fragmented and characterized by a
                    decentralized procurement process. Our sales force currently calls on only a small percentage of the purchasing
                    decision makers at both the program and unit levels of the U.S. military. We expect to increase sales to our existing
                    customers and add new customers within our primary customer base using the following key growth strategies:

                      •   Continue to Expand our Sales Force. Our ability to penetrate our existing customer base is directly
                          correlated to the size of our sales force. Once a member of our sales force calls upon a particular military unit,
                          we typically have won business from that battalion or unit. To further increase our level of penetration, we
                          intend to expand the size of our sales force. In 2010, we increased the overall size of our sales force by
                          48 representatives, representing a 41% increase from 2009 fiscal year end. With additional sales
                          representatives, we believe we can replicate our prior unit-level successes in those currently underserved units.

                      •   Expand our Product Offerings. We continue to expand the breadth of our product offerings as we strive to
                          meet the constantly changing needs of our customers. For example, we recently introduced medical products;
                          tools; maintenance, repair and operations products; and expeditionary equipment, such as tents. Our sales
                          force provides our customers with valuable product knowledge while continuously evaluating our customers’
                          needs in order to design solutions to meet those needs and drive demand for the products and related services
                          we offer. We then work directly with our vendor partners to increase the breadth and quality of our available
                          product lines specifically based on our customers’ needs. This approach is designed to ensure that we offer the
                          latest and best available commercial off-the-shelf products. We believe that our business model provides us
                          the opportunity to easily expand our product offerings to include additional operational items needed by our
                          existing customers.

                      •   Increase Demand for our Value-Added Supply Chain Solutions. We intend to further develop and drive
                          demand for our customer-centric, value-added supply chain solutions and to focus on expanding our kitting
                          and assembly and large integration programs. Our solutions, such as integrated kits containing all of the
                          necessary equipment for a particular mission, increase the readiness and effectiveness of our customers. We
                          believe the significant operational benefits that our customers realize through these solutions will increase
                          demand for the products and related services we offer.

              •     Increase the Number, Size and Scope of our Contractual Procurement Vehicles. In order to enhance the flexibility
                    provided by our existing portfolio of contractual procurement vehicles, we will continue to compete strategically for
                    new contractual procurement vehicles. We are actively pursuing a number of opportunities to obtain contract
                    vehicles that are currently in the development stage, which we believe will supplement and enhance our existing
                    portfolio of contractual procurement vehicles and increase the breadth of our product offerings. We also intend to
                    continue to pursue large-scale system integration programs, including custom-sourcing solutions similar to our GEN
                    III and FREE programs.

              •     Add New Categories of Customers Outside of our Traditional Markets. We have achieved a leading position within
                    our customer base by prioritizing customer service and striving to deliver the best available value to every customer.
                    We believe that we are well positioned to forge new relationships by targeting potential customers that we do not
                    currently serve or who are not yet material to our operations, including the Department of Homeland Security and
                    other federal agencies. Furthermore, we believe there are opportunities to provide the products and related services
                    we offer in the U.S.-assisted equipping of allied foreign militaries and security services.


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              •     Pursue Selected Acquisitions. We may supplement our organic growth by pursuing selected acquisitions aimed at
                    augmenting our contractual procurement vehicle portfolio, broadening and diversifying our customer base,
                    expanding our product offerings and vendor network or increasing our geographic presence.


         Our Corporate Structure

            We are a holding company and all of our operations are conducted through our subsidiaries. The following chart
         summarizes our corporate structure:




             We also do business with certain related parties and other affiliated companies. We analyzed each of these entities to
         determine whether they are a VIE and, if so, whether they should be consolidated in our financial statements. See
         “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Accounting
         Developments,” “Principal and Selling Stockholders,” “Certain Relationships and Related Party Transactions” and notes 10
         and 11 of the accompanying notes to our


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         audited consolidated financial statements included elsewhere in this prospectus. The following chart sets forth the ownership
         structure of our variable interest entities:




         Supply Chain Management Services

             We drive supply chain efficiencies by consistently and critically monitoring the procurement process for areas of
         improvement. The result is a lower cost solution with greater flexibility and faster delivery times. We ship our products
         primarily through third parties, with approximately 51% of our net sales from orders shipped directly from the vendor. As a
         result of our supply chain expertise, we are often selected to serve as the lead integrator on large integration programs, with
         full decision-making authority over the entire supply chain, including selection and management of the vendors that provide
         each component product. Our logistics solutions address every aspect of the supply chain, including sourcing, distribution,
         shipment tracking and on-time delivery.

             The order flow chart below illustrates the operational efficiency we provide through our supply chain management
         services:




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             We have developed a comprehensive suite of value-added supply chain management services that streamline our
         customers’ procurement processes. We integrate these services into the products we distribute to provide efficient and
         compelling solutions tailored to the unique needs of our customers.

         Kitting and assembly

             We leverage the extensive knowledge of our sales force and our broad product offerings to design customized,
         field-ready kits comprised of multiple, hand-selected products that are best suited for the specific operations of our
         end-users. This process, which we refer to as kitting, simplifies the procurement process by allowing our customers to source
         many products simultaneously from us, rather than from numerous separate manufacturers using multiple individual
         purchase orders. We have an experienced team of kitting and assembly experts that ship kits quickly upon receipt of the
         component parts, which results in minimal inventory balances. The value proposition of our kitting and assembly solution
         has fostered strong demand from our customers.

             An example of one of our kits is the Escalation of Force Kit, which we developed in partnership with the Rapid
         Equipping Force of the U.S. Army. The Escalation of Force Kit consists of items, such as a voice response translator and
         portable speed bumps, that are utilized at vehicle checkpoints at home and abroad.

         Custom sourcing solutions

             In conjunction with our preferred vendors, we manage the process to produce textile-based products, including apparel,
         load bearing systems and sleep systems, such as sleeping bags, liners and inflatable mattresses. These customized solutions
         allow us to meet customer specifications in order to improve existing products and develop new products that are otherwise
         unavailable. Our services include prototype design and sourcing of raw materials, including yarns and fabrics, and we
         partner with our vendors to assemble the pieces into finished products. We manage the entire design and third-party
         manufacturing process to produce high quality textile-based products efficiently, resulting in improved margins and product
         lead time for our customers.

         Training and product education

             The equipment we sell is often technically advanced and requires significant training, testing and evaluation to ensure its
         effectiveness and safe application. We routinely evaluate our vendors’ training programs and then arrange personalized
         training sessions between our customers and those vendors whose training approach we find most effective. We also
         coordinate personalized product education sessions, whereby a customer can learn about a particular product from a vendor
         prior to purchase. These training and information sessions help to reduce the man-hours and expense required for equipment
         selection. We also produce our own training aids, such as videos and visual user guides, that assist our customers with the
         proper use and maximum effectiveness of the equipment they purchase.

         Product research and development

             Our subject matter experts and research and development personnel routinely test the suitability of new products for our
         customers’ needs and mission requirements. We are able to provide product improvement suggestions to our vendors based
         on the results of these tests and based on feedback from customers. Both our customers and our vendors seek our expertise
         and advice in determining equipment requirements and new product recommendations.

         Quality assurance and quality management system

             The quality of the products we deliver is critical to the safety and effectiveness of our end users and the success of our
         customers. Our quality assurance team is dedicated to performing ongoing quality control auditing and vendor evaluation.
         We continually solicit feedback from our customers regarding the products and related services we offer and strive to find
         ways to ensure that they receive the highest quality commercial off-the-shelf products available. We measure the
         performance of our vendors using a Supplier Performance Report Card, which provides us with a quantitative and consistent
         process to measure vendor performance. We regularly update our vendors on their performance and suggest improvements
         as appropriate. We became ISO-9001:2008 registered in June 2010. ISO 9001:2008 is an internationally recognized quality
         management system preferred by the U.S. government that focuses on assuring that an organization will meet


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         and exceed its customer’s needs. Besides conforming to U.S. government preferences, we believe the quality standards are
         procedures we implement to maintain our ISO registration give us a competitive advantage, improve our customer service,
         streamline operations and lower costs.

         Web-based supply chain management solution

             As a supplement to our extensive Oracle Enterprise Resource Planning software, we have developed our SOLVS
         software. SOLVS is a secure, web-based logistics solution that enables our customers to track equipment inventory,
         including acquisition dates, costs and quantities, as well as monitor the distribution process at both the individual soldier and
         unit level. SOLVS allows the customer to design, customize and manage the acquisition and distribution process to their
         specific needs. By providing visibility into inventory levels and the supply chain process (including replacement cycles), our
         customers are able to efficiently forecast and fund their tactical and operational equipment requirements.

         Products

             We offer our customers access to over 160,000 product stock-keeping units, or “SKUs,” covering a broad spectrum of
         tactical and operational equipment. The products we offer are commercial off-the-shelf, branded products that we often
         obtain directly from the manufacturer. Representative categories of products we offer include apparel, expeditionary
         equipment, optical equipment, communications equipment, emergency medical supplies, lighting, eyewear and other items
         from vendors such as Camelbak, FLIR, Hunter Defense Technologies, L-3 Communications, Oakley and SureFire. Our key
         product categories for the year ended December 31, 2010 are presented below:


         Key Product Categories:              Representative Products:
         Apparel                              Clothing systems, inner and outer layers, uniforms, headwear, gloves, belts and vests
         Expeditionary Equipment              Shelters, heating and cooling systems, generators, expeditionary tents and sleeping bags
         Optical Equipment                    Binoculars and rangefinders, designators and illuminators, night and thermal vision and
                                              sights and scopes
         Lighting                             Headlamps, flashlights, weapon lights, tactical beacons, safety lights and shelter lights
         Eyewear                              Ballistic goggles, eye shields, sunglasses, safety glasses and cleaning accessories

             The products we distribute tend to be consumable and require regular replacement. They are generally utilized in rugged
         environments, subjecting them to additional wear and tear, and they often quickly become obsolete due to innovations in
         technology and changing mission needs. In order to meet the ongoing need for sustainment and replacement of the types of
         products we offer, we routinely test the suitability of new products for our customers’ needs and mission requirements.

         Customers

             We consider each purchasing decision maker within the Department of Defense, the Department of Homeland Security
         and other domestic and foreign government agencies to be a separate customer. Most of our approximately 4,000 active
         customers (in the past 24 months) are representatives of the Department of Defense purchasing goods and services for use by
         military personnel in their training, peacetime operations and missions at home and abroad. We also serve the Department of
         Homeland Security and other domestic and foreign government agencies. The purchasing authority within our customer base
         is diffuse and decentralized. We also sell products to private corporations, most of whom are defense contractors. For the
         year ended December 31, 2010, our three largest customers were the U.S. Army’s Natick Soldier Systems Center, United
         States Army Research, Development and Engineering Command, and the Defense Supply Center Philadelphia, which
         generated approximately 24%, 8% and 6% of our sales, respectively.

            We believe our commitment to achieving superior customer service and the military experience of our sales force
         enables us to serve as a meaningful and value-added partner to our customers through all phases


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         of the product acquisition cycle. As a trusted partner to our customers, we serve an integral role in their product selection
         process and receive insights into future program requirements. This provides us the opportunity to relay valuable feedback to
         our vendors.

         Vendors

              We have extensive relationships with a fragmented base of approximately 1,400 active vendors (in the past 24 months)
         of tactical and operational equipment. Our deep customer relationships and broad portfolio of contracts allow us to increase
         sales volumes for smaller vendors and typically enable us to streamline operations and drive demand for larger vendors.
         Through our vendors, we offer a wide range of over 160,000 SKUs to our customers, including protective eyewear from
         ESS/Oakley, laser scopes from Insight Technology, hydration systems from Camelbak, tools from Danaher, knives and
         rescue hooks from Benchmade and nylon equipment from London Bridge Trading Company. Given the fragmented nature
         of our vendor base, no one vendor represented more than 11% of our net sales in fiscal 2010 and our top ten vendors
         accounted for approximately 52% of our net sales in that year. Our top ten vendors typically change from year to year as the
         specific product needs of our customers change. We are typically not contractually required to supply specific branded
         products to our customers, which decreases our reliance on any particular vendor. We are able to select secondary and
         tertiary vendors for many of the product categories we provide, allowing us to quickly and easily bring incremental supply
         online or replace the primary vendor if necessary.

             For many of our vendors, we are their primary avenue into the government sales channel. We are an integral component
         of many of our vendors’ corporate strategies because they can leverage our contractual procurement vehicles, experienced
         sales force, extensive customer relationships, marketing programs and product knowledge to reach customers that would
         otherwise be difficult for them to access independently. As the government continues to transition its procurement process,
         favoring the use of commercial off-the-shelf products, our vendors benefit from being a part of our one-stop supply chain
         solution.

             To enhance these extensive relationships, we have developed a preferred vendor program with approximately 300
         vendors as of December 31, 2010, up from 172 as of December 31, 2008. Before a company can qualify as a preferred
         vendor, we verify the quality of its products and establish stringent on-time delivery standards. We incentivize our sales
         force to sell our preferred vendors’ products and, in exchange, we receive preferential terms and support. Our preferred
         vendors benefit by partnering with us on joint sales calls and in the production of tradeshows. In 2010, approximately 90%
         of our net sales came from products sourced through our preferred vendor program.

         Sales and Marketing

             Our dedicated and knowledgeable 166-person sales force, many of whom are former military personnel, understands the
         changing nature of 21st century security threats and the corresponding impact on our customers. Our sales force possesses
         knowledge of and experience with the government procurement process, which enables them to recommend to our
         customers both those products that are best suited to their needs and those procurement vehicles that will best facilitate their
         purchases. By calling on individual units, members of our multi-channel sales force are able to continue serving their former
         colleagues in a critical new capacity. This drives both program sales, which facilitate multi-unit purchases, and unit sales,
         which are individual end-user or unit-level customer purchases. Under many of our contracts, we have to compete for
         specific purchase orders. In order to create demand and generate purchase orders, our sales force calls on and educates our
         customers about the specific products we offer.

             Our ability to penetrate our existing customer base is directly correlated to the size of our sales force. In the military units
         for whom we do have a sales representative, we have often been able to win substantial business. In 2010, we increased the
         overall size of our sales force by 48 sales representatives, in order to further penetrate our customer base. Our training
         program provides hands-on training on the contractual procurement vehicles to which we have access and the tactical and
         operational equipment that we offer.

            Our commitment to achieving superior customer service is one of our core competencies. From the highest level of
         management to our sales support personnel, we maintain a presence with our customers


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         through regular in-person visits to ensure that their needs are fulfilled. Comprehensive customer support is provided 24
         hours per day, seven days per week.

             Our marketing organization creates a direct link between our vendors and our customers by facilitating the flow of
         information between these two groups. We utilize a variety of tools to facilitate this information flow, including Warrior
         Expo, tradeshows and promotional materials such as catalogs, brochures and advertisements in major military publications.

             Warrior Expo

             Warrior Expo is a private tradeshow that we host in Virginia Beach and which is timed to capture the spending increase
         ahead of the U.S. government’s September 30 fiscal year-end. We believe Warrior Expo is one of the most recognized
         tradeshows in the industry focusing on tactical and operational equipment for U.S. government agencies and we have
         structured it as a high profile, invitation-only event that is free for military, federal, state and local agency customers, as well
         as for our preferred vendors. It allows customers from all major bases and territories to preview the latest tactical and
         operational equipment from our preferred vendors. In 2010, more than 1,400 customers and 190 vendors attended Warrior
         Expo. This has become one of our most successful marketing tools, with the event expanding to offer breakout sessions in
         which we and vendor experts educate customers on procurement, inventory management, training, and state-of-the-art
         product technology and innovation. In 2010, we started hosting an annual West Coast-based Warrior Expo in San Diego in
         the spring.

             Regional Tradeshows

             We host regional tradeshows at customer sites to strengthen our customer and vendor relationships. These trade shows
         allow customers to evaluate products at their own sites, while providing vendors with customer access they would be unable
         to achieve independently. They also allow us to be involved with the initial determination of our customers’ future
         equipment needs.

             Industry Tradeshows

            We also attend other industry tradeshows, during which we showcase the latest equipment and technology from our
         vendors. We maintained a highly visible presence at 64 industry tradeshows in 2010. Representative shows include the
         Association of the U.S. Army show, the Shooting, Hunting, Outdoor Tradeshow, the General Services Administration Expo
         and the Special Operations Forces Industry Conference show.

             Catalogs

             We distribute catalogs of our products to showcase the large selection of tactical and operational equipment we offer,
         reinforcing our position as a single-source provider for our customers’ tactical and operational equipment needs. We
         typically utilize advertisements within our catalogs to co-brand a preferred vendor’s product, particularly when we believe
         there is market demand for such products. Our catalogs are an effective marketing tool within our customer base and help to
         foster high brand awareness for us and our vendors. While also making our catalogs available online, in 2010, we distributed
         approximately 238,500 catalogs to existing and new customers.

         Competition

             Our competitors include original equipment manufacturers who sell directly to our customers and specialty distributors
         who operate on a much smaller scale. Depending on a particular contract’s requirements, sometimes we compete with
         vendors with whom we have partnered in pursuit of other opportunities. To a certain extent, we believe the U.S. government
         itself can be viewed as our largest competitor, because it internally sources and provides the tactical and operational
         equipment and logistics solutions to those units within our customer base that we have not penetrated. However, we have
         become a critical partner to large purchasing organizations within the government, such as DLA, by enabling them to
         outsource a significant portion of their procurement supply chain to us. We believe that by managing the


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         purchasing, warehousing and distribution elements of the procurement supply chain for these purchasing organizations, we
         are an integral part of the U.S. government’s procurement process.

            Customers using our various contractual procurement vehicles can also procure equipment through the traditional
         government procurement process. Competition is based on the price, scope and availability of product offerings, the depth,
         breadth and reliability of logistics and distribution capabilities, the quality and suitability of products offered and the ease of
         procurement.

         Contractual Procurement Vehicles

             Our broad and dispersed customer base procures products and services on behalf of individual military personnel. If all
         renewal options are exercised, as of December 31, 2010, we have access to approximately $10.4 billion in aggregate
         available contract capacity, of which approximately $500 million expires prior to 2012. In addition, if all renewal options are
         exercised, three of our contractual procurement vehicles have unlimited contract capacity through 2019.

             We primarily sell the products and related services we offer from vendors or distributors to the U.S. government using
         three different types of IDIQ contracts.

             Our IDIQ contract vehicles permit our customers in the U.S. military and other federal agencies to make purchases from
         us on an as-needed basis from time to time, on pre-established terms and conditions. Our sales force generates demand for
         products and services using IDIQ contracts by providing our customers access to the most appropriate contract. Under these
         IDIQ contracts, products and services are sold at fixed prices that are established at the time a customer order is made (or at
         the time the contract is entered into under some of our single-award program sales contracts, as described below). There are
         generally three different types of IDIQ contracts: multiple-award contracts, single-award contracts and federal supply
         schedules. We are able to drive demand for the products we sell through all types of IDIQ contracts.

             Multiple-award IDIQ contracts are awarded to a limited number of pre-approved suppliers and have ceiling limitations
         on the total amount of government funds that can be used through the procurement vehicle. The award of particular purchase
         orders under those contracts require a second competitive bidding process among that limited number of suppliers (which
         typically occurs within one day to a week upon submission of a bid). Our Spec Ops TLS contract is an example of a
         multiple-award IDIQ contract.

             Single-award IDIQ contracts function very much like multiple-award IDIQ contracts. However, they are awarded to a
         sole-supplier and often cover a much narrower breadth of products. The particular agency and customers who wish to make
         purchases under a single-award IDIQ contract commit to a pre-approved sole supplier for the equipment and services to be
         provided through that contract. Our single-award IDIQ contract vehicles, such as our GEN III contract, are often entered into
         with a program office within a particular branch of the U.S. military to provide a standardized suite of products that are
         intended for a broad cross-section of forces in that particular military branch. Through these single-award IDIQ contracts, we
         commit to fulfill any orders received for goods and services identified in those contracts over a period of time, up to
         pre-determined volume limitations at fixed-prices established at the time the contract is awarded.

              Our federal supply schedules, such as our GSA supply schedules, provide all federal government agencies access to a
         vast selection of commercial off-the-shelf products, allowing the agencies to purchase items identified on the schedules from
         a list of pre-approved suppliers at pre-determined maximum prices. The products and their prices are listed on the schedules,
         and may be updated at least three times per year, on or after the first 12 months of the contract period. Most GSA supply
         schedules have an initial five-year period with three potential five-year renewal options and, similar to other IDIQ contracts,
         the customer is not committed to purchase any set volume. Unlike multiple award IDIQ contracts, federal supply schedules
         do not typically require a second round of bidding to secure a purchase order and do not have ceiling limitations on the total
         amount of government funds that can be spent through the procurement vehicle. Under our federal supply schedules, we may
         be the only pre-approved supplier for a particular product, while for other products there are multiple pre-approved suppliers,
         including, in some cases, our vendors.


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             In addition, we utilize commercial contracts with certain defense contractors. While these are not contractual
         procurement vehicles in our portfolio, they are another channel through which we effect sales of the products and related
         services we offer.

         Employees

             As of December 31, 2010, we had approximately 420 employees. Our employee base reflects alumni from all branches
         of the military, including enlisted personnel, officers and active reservists. Our employees have operational experience with
         the U.S. Navy SEALS, U.S. Army Special Forces, U.S. Marine Corps, U.S. Air Force, U.S. Coast Guard and U.S. Marshals.
         Our employees are not represented by labor unions. We consider our employee relations to be good.

         Environmental

             Our operations are subject to federal, state and local health, safety and environmental laws and regulations, which,
         among other matters, regulate the discharge of pollutants into the environment and the use, handling, generation, emission,
         release, discharge, transportation, clean up, treatment, storage and disposal of, and exposure to, materials, substances and
         wastes. Management is not aware of any prior or ongoing environmental issues that are likely to result in a material cost or
         liability to the company.

         Backlog

            At December 31, 2010, our backlog was $442.1 million. At December 31, 2009, our backlog was $382.8 million. We
         expect that substantially all of our December 31, 2010 backlog will be recognized as net sales prior to December 31, 2011.

             We define backlog as funded orders we have received that we have not yet delivered. Funded orders are those for which
         funding currently is appropriated and allocated to the contract by the purchasing agency or unit or otherwise authorized for
         payment by the customer upon receipt of specified products. The receipt and timing of future net sales is subject to various
         contingencies, many of which are beyond our control. The actual recognition of revenue on sales included in backlog may
         never occur or may change because a sale could be canceled, a contract could be modified or canceled or products ordered
         may no longer be available. In the event of a government contract cancellation, we receive actual expenses incurred, plus
         approved profit. We believe that period-to-period comparisons of backlog are not necessarily indicative of future net sales
         that we may receive.

         Properties

             Our headquarters are located in Virginia Beach, Virginia, where we own approximately 82,250 square feet of office
         space. We lease three commercial facilities and own two commercial facilities used in connection with the various services
         rendered to our customers. Upon expiration of our leases, we do not anticipate any difficulty in obtaining renewals or
         alternative space. See “Certain Relationships and Related Party Transactions.”

            We believe that substantially all of our property and equipment are in good condition, subject to normal wear and tear,
         and that our facilities have sufficient capacity to meet the current and projected needs of our business.

             Our headquarters and material facilities as of December 31, 2010 are shown in the following table:

         Location                                    Use                         Square Feet                      Owned/Leased


         Virginia Beach, VA               Corporate Headquarters                   82,250                           Owned (1)
         Virginia Beach, VA               Main Warehouse                           34,596                           Leased
         Virginia Beach, VA               Kitting Facility                         80,000                           Owned (2)
         San Diego, CA                    West Coast Warehouse                     24,000                           Leased
         Pennsauken, NJ                   Office and Warehouse                     40,000                           Leased


           (1) Our corporate headquarters are owned by Tactical Office, LLC, a related entity under common ownership that is
               consolidated with ADS in our historical financial statements. See “Certain Relationships and Related Party
               Transactions.”
           (2) Our kitting facility is owned by Tactical Warehouse, LLC, a related entity under common ownership that is
               consolidated with ADS in our historical financial statements. See “Certain Relationships and Related Party
Transactions.”


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         Governmental Regulations

             We are heavily regulated in most of the fields in which we operate. We provide services and products to numerous U.S.
         government agencies and entities, including all of the branches of the U.S. military and the Department of Homeland
         Security. When working with these and other U.S. government agencies and entities, we must comply with laws and
         regulations relating to the formation, administration and performance of U.S. government contracts. Among other things,
         these laws and regulations:

              •     mandate compliance with socio-economic rules, the distribution of costs to contracts and non-reimbursement of
                    certain costs such as lobbying expenses;

              •     require reviews by the Defense Contract Audit Agency and other U.S. government agencies of compliance with
                    government accounting standards and management of internal control systems;

              •     restrict the use and dissemination of information classified for national security purposes and the exportation of
                    certain products and technical data;

              •     require us not to compete for or to divest of work if an organizational conflict of interest, as defined by these laws
                    and regulations, related to such work exists and/or cannot be appropriately mitigated; and

              •     may require us to disclose contract or legal compliance issues to the contracting officer and/or agency inspector
                    general.

             The U.S. government may revise its procurement practices or adopt new contract rules and regulations at any time. In
         order to help ensure compliance with these complex laws and regulations, all of our employees are required to complete
         ethics training and other compliance training relevant to their position.

             U.S. government contracts are, by their terms, subject to termination by the U.S. government either for its convenience
         or default by the contractor. Our U.S. government contracts are also conditioned upon Department of Defense approval of
         the amount of necessary spending. Congress usually appropriates funds to procuring agencies, which then allocate funds for
         a given program or contract on a September 30 fiscal year basis, even though contract periods of performance may extend
         over many years.

             Internationally, we are subject to special U.S. government laws and regulations, local government regulations and
         procurement policies and practices (including regulations relating to bribery of foreign officials, import-export control,
         investments, exchange controls and repatriation of earnings) and varying currency, political and economic risks.

             We are subject to the applicable export control laws and regulations of the United States and other countries. U.S. laws
         and regulations that apply to us include: the Arms Export Control Act and ITAR promulgated thereunder; EAR; and the
         trade sanctions laws and regulations administered by OFAC.

             As part of our ongoing export controls compliance program, we retained an outside consulting firm, FD Associates, Inc.,
         in April 2009 to conduct an audit of our export compliance practices and procedures. In response to the preliminary audit
         results, which identified several potential violations of the ITAR, we retained FD Associates to expand the scope of the audit
         and to assist us in implementing FD Associates’ recommended enhancements to our export controls compliance program,
         including conducting training of relevant company personnel. We also submitted an initial voluntary self-disclosure of past
         ITAR violations to the U.S. State Department’s Directorate of Defense Trade Controls in accordance with 22 C.F.R. §
         127.12(c).

             Specifically, on October 6, 2009, we filed a voluntary self-disclosure of past ITAR violations with the Enforcement
         Division of the Directorate of Defense Trade Controls, or DDTC. This voluntary self-disclosure related to overseas
         shipments of 3,256 line items of ITAR-controlled products without authorization by the Department of State, as required by
         the ITAR. The shipments involved the export of ITAR-controlled equipment and did not include the transfer of any technical
         data or defense services. We identified the reason for the self-disclosed violations and our inadvertent failure to comply with
         ITAR as a lack of product classification and a mistaken belief that the export of ITAR-controlled products shipments to and
         in support of U.S. government operations overseas did not require an export license. We have since implemented policies
         and procedures designed to prevent future violations and ensure future compliance with ITAR. On October 13, 2009, the
Chief of the Enforcement Division of the DDTC informed us that, while it determined that violations under ITAR had
occurred and that the matter could be reopened in the future if circumstances warranted, the case was closed and


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         no further action would be taken. In connection with some of the transactions listed in this voluntary self-disclosure, on
         July 29, 2009, we received a subpoena from the U.S. Customs Service requesting information on five past exports in which
         we were listed as the exporter-of-record. We cooperated fully and provided all responsive documents to the Customs
         Service.

             On November 16, 2009, we filed a separate voluntary self-disclosure of past EAR violations with the Office of Export
         Enforcement, U.S. Department of Commerce. This voluntary self-disclosure related to overseas shipments of 36 line items
         of EAR-controlled products without authorization by the Department of Commerce, as required by the EAR. The shipments
         involved the export of tactical and operational equipment and did not include the transfer of any EAR-controlled technology.
         We identified the reason for our failure to comply with the EAR as the lack of product classification and erroneous failure to
         recognize the application of the EAR to shipments of certain products in support of the U.S. government operations
         overseas. We have since implemented policies and procedures designed to prevent future violations and ensure future
         compliance with the EAR. As of the date hereof, we have not received a response from the Department of Commerce
         relating to this voluntary self-disclosure.

             On November 30, 2010, we filed a voluntary self-disclosure with the Enforcement Division of the DDTC relating to two
         incidents that may have required authorization under ITAR. First, while we obtained an export license for the shipment of
         certain defense articles to Unit 30401 of the U.S. European Command in Germany, our freight forwarder inadvertently
         delivered the items to a different unit of the U.S. European Command in a different German location than was listed under
         the terms of the license. Second, we recently determined that one of our employees carried certain defense articles, which
         were his personal property, to Afghanistan when he traveled there on business for us. These items were exported without our
         knowledge or authorization, and have been returned to the United States and are in the possession of the ADS employee. On
         December 9, 2010, the Chief of the Enforcement Division of the DDTC informed us that, while it determined that violations
         under ITAR had occurred, the case was closed and no further action would be taken.

             On February 17, 2011, we filed a preliminary notice of voluntary self-disclosure with the Enforcement Division of the
         DDTC relating to two incidents that may have required authorization under ITAR. First, while we obtained export licenses
         for two different shipments of certain defense articles destined for Iraq and Colombia, prior to shipment, the shipping label
         for the package destined for Iraq and the package destined for Colombia were inadvertently switched. We confirmed that
         both U.S. customers are in possession of the erroneously delivered packages and we have arranged for the return of the items
         to the United States. We have submitted two replacement licenses to DDTC to facilitate the exporting of the requested
         articles to the correct U.S. government customers. The second incident relates to the shipment of 50 pallets of defense
         articles from the United States to Bagram, Afghanistan via Doha, Qatar, pursuant to an export license. Each of the 50 pallets
         arrived in Doha, but only 49 pallets were accounted for in Bagram. We immediately placed a worldwide trace on the missing
         pallet and are working diligently to locate it. As required under the ITAR regulations, we will submit our final voluntary
         self-disclosure report on or before April 29, 2011.

         Legal Proceedings

             From time to time we are also involved in legal proceedings arising in the ordinary course of business. While the
         ultimate liability that could result from these matters cannot be determined presently, we believe that, in the aggregate, they
         will not result in liabilities that are material to our financial condition, results of operations, or cash flows. Our contracts with
         the U.S. government are subject to various legal and regulatory requirements and, from time to time, agencies of the U.S.
         government may investigate the conduct of our operations in accordance with these requirements. U.S. government
         investigations of us, whether related to our federal government contracts or conducted for other reasons, could result in
         administrative, civil or criminal liabilities, including repayments, fines or penalties being imposed upon us, or could lead to
         suspension or debarment from future U.S. government contracting.


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                                                               MANAGEMENT

             The following table provides information regarding our executive officers and directors upon consummation of this
         offering. With respect to our directors, each biography contains information regarding the person’s service as a director,
         business experience, director positions held currently or in the past, information regarding involvement in certain legal or
         administrative proceedings, and the experience, qualifications, attributes or skills that caused our board of directors to
         determine that the person should serve as a director of the company.


         Name                                      Age      Position(s)



         Luke Hillier                              39       Chief Executive Officer, President, Director

         Daniel Clarkson                           40       Chief Operating Officer, Vice President, Treasurer, Secretary, Director

         Patricia Bohlen                           51       Chief Financial Officer

         Jason Wallace                             40       Vice President of Sales and Marketing

         Bruce Dressel                             46       Vice President of Product and Equipment Solutions

         R. Scott LaRose                           43       Director

         William A. Roper, Jr.                     64       Director

             Luke Hillier has served as Chairman of our board of directors since 2000 and as our Chief Executive Officer since 2004.
         In 1999, Mr. Hillier co-founded Mythics, Inc., an Oracle-based information system solutions provider, and concurrently
         served as Chief Executive Officer of Mythics until 2004. Prior to founding Mythics, Mr. Hillier served as a lead sales
         representative in the State and Local Government sales division of the Oracle Corporation, where he was awarded the Sales
         Representative of the Year for Government-DMD. Mr. Hillier started his career in the Outstanding Scholars program in
         Acquisition Management for Naval Air Systems Command in the U.S. Federal Government. Mr. Hillier’s extensive
         experience with the process of government contracting and significant entrepreneurial and management experience has
         proven invaluable to our board of directors.

             Daniel Clarkson has served as our Chief Operating Officer and as a member of our board of directors since 2002. Prior
         to serving at ADS, Mr. Clarkson served as Regional Manager for Sunbelt Rentals, an equipment rental company based in
         South Carolina and owned by U.K.-based Ashtead Group, from 2000 to 2002. Mr. Clarkson started his career in sales and as
         Profit Center Manager for Sunbelt Rentals. As a result of his extensive experience and leadership with the company as we
         have grown over the past nine years, Mr. Clarkson has significant institutional knowledge with respect to our management
         and operations.

             Patricia Bohlen has served as Chief Financial Officer since 2004. She oversees the company’s accounting, treasury and
         strategic financial planning functions. Prior to joining ADS, from 2002 to 2004, Mrs. Bohlen was the Chief Financial Officer
         of PowerPact LLC and the Chief Financial Officer of Fresh Picks, Inc. from 1996 to 2002. Mrs. Bohlen worked for Cadmus
         Communications from 1993 to 1996, first as Director of Accounting and then as Controller. Mrs. Bohlen began her career as
         an auditor for KPMG LLP.

             Jason Wallace has served as our Vice President of Sales and Marketing since 2006 and is responsible for managing our
         sales team. Prior to that, Mr. Wallace served as our Vice President of Inside Sales and Vendor Relations from 2004 until
         2006. Prior to joining ADS, from 1996 to 2004, Mr. Wallace served as the Vice President of Sales and Operations for
         Sunbelt Rentals, where he managed a large sales force and managed more than twenty stores.

             Bruce Dressel is our Vice President of Product and Equipment Solutions. He has been with ADS since 2004. He
         oversees our Vendor Relations Team and our Product Category Management teams. Prior to joining ADS, Mr. Dressel
         served as the President and CEO of Sunbelt Rentals, a multi-location service business, from February 1997 until July 2003.
         Prior to that, he served as the Vice President of Operation for
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         Sunbelt Rentals from February 1996 until January 1997. Mr. Dressel spent the first 12 years of his business career building a
         privately held service business that was acquired by Sunbelt Rentals in 1996.

             R. Scott LaRose has served as a member of our board of directors since 2002. Mr. LaRose has also served as Chairman
         of the Board of Agilex Technologies, Inc. since 2009. From 2004 to 2009, Mr. LaRose served as the President and Chief
         Executive Officer of Mythics, Inc., which Mr. LaRose co-founded with Mr. Hillier in 2000. Prior to serving at Mythics,
         Mr. LaRose served as the regional manager of the state and local government division at Oracle Corporation. Mr. LaRose
         has unique insights into our business as a result of his experience with the process of government contracting. As a result of
         the various leadership positions he has held throughout his career, Mr. LaRose brings a strong strategic vision to our board
         of directors.

             William A. Roper, Jr. has served as a member of our board of directors since February 2011. Since 2008, Mr. Roper has
         served as president of Roper Capital Company, a privately-owned equity firm. Prior to forming Roper Capital, Mr. Roper
         served as president and chief executive officer of VeriSign, Inc. from May 2007 to June 2008, and as a member of
         VeriSign’s board of directors from November 2003 to June 2008. From April 2000 to May 2007, Mr. Roper served as an
         executive vice president of Science Applications International Corporation (SAIC), and as senior vice president and chief
         financial officer of SAIC from 1990 to 2000. Mr. Roper serves as a member of the boards of directors of Internet Content
         Management, Inc., Leap Wireless International, Inc., Regents Bank, N.A. and SkinMedica, Inc. Mr. Roper’s current and
         former board memberships at other public and private companies provide him with extensive corporate governance
         knowledge and his experience as a former chief financial officer of a public company provides him with expertise in the area
         of corporate accounting and finance. Mr. Roper holds a B.A. in mathematics from the University of Mississippi.


         Controlled Company Exception

             Following the consummation of this offering our existing stockholders, as a group, will continue to control a majority of
         our outstanding common stock and voting power, which means we will be a “controlled” company within the meaning of the
         rules of the New York Stock Exchange. As a result, we are not required to have a majority of independent directors on our
         board of directors or have compensation and nominating/corporate governance committees comprised of independent
         directors. We are required, however, to have an audit committee with one independent director during the 90-day period
         beginning on the date of effectiveness of the registration statement filed with the SEC in connection with this offering and of
         which this prospectus is a part. After such 90-day period and until one year from the date of effectiveness of the registration
         statement, we are required to have a majority of independent directors on our audit committee. Thereafter, we are required to
         have an audit committee comprised entirely of independent directors.


         Committees of Our Board of Directors

              Audit Committee. Upon consummation of this offering, the audit committee will consist of              ,      , and  (of
         whom           and         have been deemed independent pursuant to Rule 10A-3 of the Exchange Act by our board of
         directors) and          will be nominated as chair of the audit committee. The duties and responsibilities of the audit
         committee will include recommending the appointment or termination of the engagement of independent accountants,
         overseeing the independent auditor relationship and reviewing significant accounting policies and controls. We intend to
         appoint additional independent directors to our audit committee to replace          as soon as possible following the
         consummation of this offering, but no later than one year after the consummation of this offering. We have determined
         that        satisfies the New York Stock Exchange standard of possessing accounting or related financial management
         expertise and qualifies as an independent audit committee financial expert under the Exchange Act.

              The charter of the audit committee will be available on our website.

              Compensation Committee. Upon consummation of this offering, the compensation committee will consist
         of      ,     , and    . The duties and responsibilities of the compensation committee


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         will include reviewing and approving the compensation of officers and directors, except that the compensation of officers
         serving on any committee is determined by our board of directors. The compensation of all officers other than our chief
         executive officer, Luke Hillier, is approved by our board of directors based on recommendations by Mr. Hillier and the
         compensation committee. Mr. Hillier’s compensation is determined by our board of directors upon the recommendation of
         the compensation committee.

             The charter of our compensation committee will be available on our website.

             Nominating and Corporate Governance Committee. Upon consummation of this offering, the nominating and corporate
         governance committee will consist of         ,       , and      . The duties of the nominating and corporate governance
         committee will include identifying individuals qualified to become members of our board of directors, consistent with
         criteria approved by our board of directors; overseeing the organization of our board of directors to discharge the board’s
         duties and responsibilities properly and efficiently; identifying best practices and recommending corporate governance
         principles, including giving proper attention and making effective responses to stockholder concerns regarding corporate
         governance; and developing and recommending to our board of directors a set of corporate governance guidelines and
         principles applicable to us. We expect other specific duties of the nominating and corporate governance committee to
         include: annually assessing the size and composition of our board of directors; developing membership qualifications for our
         board committees; monitoring compliance with board and board committee membership criteria; annually reviewing and
         recommending directors for continued service; coordinating and assisting management and our board in recruiting new
         members to our board of directors; reviewing governance-related stockholder proposals and recommending board responses;
         and overseeing the evaluation of our board of directors and management.


         Board Structure

             Our board of directors is currently comprised of           directors. Upon consummation of this offering, our board of
         directors will be divided into three classes, each of whose members will serve for staggered three-year
         terms.        and        will serve in the class of directors whose terms will expire at our 2011 annual
         meeting;         and        will serve in the class of directors whose terms will expire at our 2012 annual meeting;
         and       ,        and        will serve in the class of directors whose terms will expire at our 2013 annual meeting. Because
         only one-third of our directors are elected at each annual meeting, two annual meetings of stockholders could be required for
         the stockholders to change a majority of the board.


         Compensation Committee Interlocks and Insider Participation

            None of our executive officers serves, or in the past has served, as a member of the board of directors or compensation
         committee of any entity that has one or more executive officers who serve on our board of directors or compensation
         committee.


         Code of Ethics

             In connection with this offering, our board of directors will adopt a code of ethics that applies to all of our directors,
         officers and employees, including our chief executive officer and chief financial officer. The code addresses, among other
         things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure
         requirements under the federal securities laws, confidentiality, trading on insider information and reporting of violations to
         the code. Once adopted, the code of ethics will be available on our website.


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                                              COMPENSATION DISCUSSION AND ANALYSIS

             The following discussion and analysis of compensation arrangements of our named executive officers for fiscal year
         2010 (as set forth in the Summary Compensation Table below) should be read together with the compensation tables and
         related disclosures set forth below. This discussion contains forward-looking statements that are based on our current plans,
         considerations, expectations and determinations regarding future compensation programs. Actual compensation programs
         that we adopt may differ materially from the currently planned programs summarized in this discussion.


         Named Executive Officers

            Our named executive officers for the fiscal year ended December 31, 2010 were: Luke Hillier, our Chief Executive
         Officer; Patricia Bohlen, our Chief Financial Officer; Daniel Clarkson, our Chief Operating Officer; Bruce Dressel, our Vice
         President of Acquisitions; and Jason Wallace, our Vice President of Sales. Following December 31, 2010, Mr. Dressel’s title
         was revised to be Vice President of Product and Equipment Solutions and Mr. Wallace’s title was revised to be Vice
         President of Sales and Marketing.


         Executive Compensation Philosophy and Objectives

            Our philosophy is that executive compensation should be competitive in the marketplace in which we compete for
         executive talent, but structured to emphasize incentive-based compensation and determined by the achievement of both
         company and individual performance objectives. In principle, we believe that:

              •     our compensation programs should be simple, straightforward and clear;

              •     a significant portion of executive compensation should be based on variable compensation programs measured on a
                    quarterly, annual or longer-term basis;

              •     variable compensation, including bonuses and commissions, should be tied to the achievement of predetermined
                    company-wide and individual performance goals, and should create appropriate rewards for superior performance
                    and penalties for under-performance;

              •     our compensation programs should be flexible and able to evolve with our business;

              •     our compensation programs should be designed to attract, motivate and retain exceptional executives in the markets
                    in which we operate; and

              •     following the completion of this offering, equity-based compensation awards should be utilized to encourage an
                    ownership mentality by our executives and to align the interests of our executives with our stockholders.


         Elements of 2010 Executive Compensation

             Our 2010 compensation program for our named executive officers consisted of the following key elements: an annual
         base salary, quarterly achievement bonuses, a performance-based annual bonus, commissions for our sales personnel
         (including one of our named executive officers, Jason Wallace, our Vice President of Sales), and certain perquisites and
         other benefits, including employer-paid health and welfare plan premiums and employer matching contributions to tax
         qualified retirement plans. In keeping with our philosophy of the importance of simplicity and clarity in compensation
         programs, we did not maintain any non-qualified deferred compensation programs, supplemental retirement programs or
         defined benefit pension plans that cover our named executive officers and we do not anticipate maintaining any such plans or
         programs following the completion of this offering. Historically, all of the incentive compensation payable to our named
         executive officers has been payable in cash based upon the achievement of predetermined performance goals. We believe
         that this approach has best served the interests of our company and the holders of our equity interests by enabling us to meet
         the requirements of the highly competitive environment in which we operate, while ensuring that our named executive
         officers were compensated in a way that advanced both the short-term and long-term interests of our equity holders. We
         have historically been structured as a subchapter S corporation, which has prevented us from granting equity-
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         based compensation awards to any of our named executive officers. The variable quarterly and annual bonuses permitted
         recognition of individual performance and were based, in significant part, on an evaluation of the contribution made by the
         named executive officer to our overall performance.

            In 2010, our board of directors determined the amount and form of compensation for Luke Hillier and Daniel Clarkson.
         The amount and form of each element of our other named executive officers’ compensation for 2010 was determined by
         Mr. Hillier and Mr. Clarkson.

             2010 Base Salary. We determined base salaries for our named executive officers based on their position level and our
         evaluation of the appropriate amount of base salary required to attract and retain executive talent in the markets in which we
         operate, taking into account our philosophy that total compensation should be weighted less towards fixed compensation and
         more towards variable performance-based compensation. Historically, we have not “benchmarked” our named executive
         officers’ base salaries against any defined peer group of companies.

             2010 Incentive Compensation. For fiscal year 2010, each of Patricia Bohlen, Bruce Dressel and Jason Wallace was
         eligible to receive quarterly achievement bonuses based on completion of specific strategic goals as determined by our board
         of directors in advance of each quarter, as described below, as well as a year-end profitability bonus based on the Company’s
         achievement of specified profitability targets and such named executive officer’s aggregate quarterly performance levels, as
         described below. Messrs. Hillier and Clarkson were not eligible to receive quarterly achievement bonuses and year-end
         profitability bonuses in 2010. Additionally, one named executive officer, Jason Wallace, was eligible to receive sales
         commissions in fiscal year 2010, as described below.

             Quarterly Achievement Bonuses. For fiscal year 2010, each of Patricia Bohlen, Bruce Dressel and Jason Wallace was
         eligible to receive quarterly achievement bonuses. The quarterly achievement goals were not based on corporate
         performance, but rather were based on the attainment of goals related to the officer’s individual performance and the
         performance of his or her direct reports during each fiscal quarter during 2010. Each of Ms. Bohlen and Messrs. Dressel and
         Wallace achieved 100% of his or her performance goals for each quarter in 2010 and thus received the full amount of his or
         her target quarterly achievement bonus in each quarter.

             Year-End Profitability Bonuses. For fiscal year 2010, in the event that Atlantic Diving Supply, Inc. attained a specified
         profitability target, each of Patricia Bohlen, Bruce Dressel and Jason Wallace was eligible to receive a year-end bonus. If the
         profitability target was not achieved for 2010, no year-end bonus would have been paid. For fiscal year 2010, this target
         profitability was $91.4 million and Atlantic Diving Supply, Inc.’s actual profitability, as calculated for bonus purposes in
         December 2010, was $92.3 million. Thus, the 2010 profitability target was achieved and the year-end bonuses were paid.
         The amount of the year-end bonus for each of Ms. Bohlen and Messrs. Dressel and Wallace was determined by multiplying
         the amount of the year-end bonus that would have been paid based on Atlantic Diving Supply, Inc.’s 2010 profitability by
         the aggregate percentage of all quarterly achievement bonuses received by the executive during the year. Since each of
         Ms. Bohlen and Messrs. Dressel and Wallace achieved 100% of his or her performance goals for each quarter in 2010, he or
         she received 100% of the amount of the year-end bonus he or she was entitled to receive based on Atlantic Diving Supply,
         Inc.’s 2010 profitability. For purposes of determining 2010 year-end profitability bonuses, profitability was equal to Atlantic
         Diving Supply, Inc.’s gross profit less its total expenses (other than depreciation, profitability bonuses, Domestic
         International Sales Corporation, or DISC, and transaction expenses).

            Commissions. For fiscal year 2010, Jason Wallace, our Vice President of Sales, was eligible to receive sales
         commissions equal to 0.124% of our overall gross margin, with a commission target of $195,920 based on our target gross
         margin of $158.0 million. No other named executive officer was eligible to receive sales commissions in fiscal year 2010.

            The amount of quarterly achievement bonuses and year-end profitability bonuses received by each of Ms. Bohlen,
         Mr. Dressel and Mr. Wallace and the amount of commissions received by Mr. Wallace are set


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         forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table under “Executive
         Compensation — Summary Compensation Table.”

            No 2010 Equity Awards. We have historically been structured as a subchapter S corporation and have not granted
         equity-based compensation awards to any of our named executive officers.

             2010 Perquisites and Other Benefits. Our named executive officers are generally eligible to participate in the same
         benefit plans provided to our other salaried employees, including health and welfare plans. In fiscal year 2010, we paid the
         full cost of the medical plan premiums on behalf of our named executive officers, and our named executive officers were
         entitled to participate in and received employer contributions to our 401(k) plan. We paid for a car or provided a car
         allowance to each of our named executive officers. In addition, we have historically provided supplementary executive
         perquisites to each of our founders and principal owners, including Luke Hillier and Daniel Clarkson, as described in greater
         detail in the Summary Compensation Table and the footnotes thereto.


         New Compensation Programs in Connection with this Offering

         Adoption of Annual Bonus Plan and Equity Award Incentive Plan

             We intend to adopt the Equity Plan and the Executive Bonus Plan in connection with this offering. For a description of
         these new compensation plans, see “Executive Compensation Plans” below. The purpose of these new plans will be to allow
         us to pay annual bonuses (including annual performance-based bonuses) to our named executive officers and other senior
         executives and to make various equity-based compensation awards to our named executive officers and other employees,
         consultants and directors in a manner that is appropriate for a public company and that is intended to allow us to make
         awards that are not subject to the federal income tax deduction limitation set forth in Section 162(m) of the Internal Revenue
         Code. See “— Effect of Accounting and Tax Treatment on Compensation Decisions.”


         Claw-Back Policy

             We intend to include provisions in our Executive Bonus Plan and our Equity Plan that will provide us with the discretion
         after this offering to impose the forfeiture of bonuses and equity compensation and the recovery of bonus amounts and gains
         from equity compensation awarded under those plans with respect to individuals who engage in misconduct or gross
         negligence that results in a restatement of our financial statements or as otherwise required under applicable laws or
         regulations. In addition, if an individual engages in certain other misconduct, we intend to provide for the discretion to
         suspend vesting of all or a portion of any award and/or require the forfeiture or disgorgement to us of any equity award
         (including gains on the sale of the stock, if any) that vested, was paid or settled in the twelve months prior to or any time
         after the individual engaged in such misconduct.


         Policies on Timing of Equity Grants

             We expect that following the completion of this offering it will be our policy not to time the granting of equity awards in
         relation to the release of material, non-public information. Accordingly, we expect that regularly scheduled awards will be
         permitted to be granted at times when there is material non-public information. We expect that we will generally grant
         awards to new-hires at the time of hire, promotion awards at the time of promotion and annual awards at a specified time or
         during a specified period each year. In addition, we expect that it will be our policy not to grant equity awards with effect
         from, or with an exercise price based on market conditions as they existed on, any date prior to the date on which the party in
         which granting authority is vested takes formal action to grant them. We further expect that it will be our policy to promptly
         document any equity awards that we make; we would normally regard documenting to be prompt if we were to communicate
         the terms of the awards to their recipients, and to obtain signed award agreements governing the grants back from them (or
         other electronic confirmation of such awards), within one month of the date formal action is taken to issue them.


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         Owner-Employee Employment Agreements

            In connection with this offering, we intend to enter into employment agreements with each of Luke Hillier and Daniel
         Clarkson, our two current equity owners who are also named executive officers. For a description of the compensation of our
         owners who are named executive officers, see “Executive Compensation — Owner-Employee Compensation.”


         Adoption of Non-Employee Director Compensation Policy

             We intend to adopt a non-employee director compensation policy in connection with this offering. For a description of
         this new policy, see “— Director Compensation — Director Compensation Policies.”


         Effect of Accounting and Tax Treatment on Compensation Decisions

             Section 162(m) of the Internal Revenue Code imposes a limit on the amount of compensation that we may deduct in any
         one year with respect to certain “covered employees,” unless certain specific and detailed criteria are satisfied.
         Performance-based compensation, as defined in the Internal Revenue Code, is fully deductible if the programs are approved
         by stockholders and meet other requirements. Pursuant to applicable regulations, Section 162(m) will not apply to
         compensation paid or stock options or restricted stock granted under the compensation agreements and plans in existence
         prior to the completion of this offering during the reliance transition period ending on the earlier of the date the agreement or
         plan is materially modified or the first stockholders meeting at which directors are elected during 2015. While we will
         continue to monitor our compensation programs in light of Section 162(m), the compensation committee considers it
         important to retain the flexibility to design compensation programs that are in the best long-term interests of our company
         and our stockholders, particularly as we continue our transition from a private to a public company. As a result, we have not
         adopted a policy requiring that all compensation be deductible and the compensation committee may conclude that paying
         compensation at levels that are not deductible under Section 162(m) is nevertheless in the best interests of our company and
         our stockholders.

             Other provisions of the Internal Revenue Code can also affect compensation decisions. Section 409A of the Internal
         Revenue Code, which governs the form and timing of payment of deferred compensation, imposes sanctions, including a
         20% penalty and an interest penalty, on the recipient of deferred compensation that does not comply with Section 409A. The
         compensation committee will take into account the implications of Section 409A in determining the form and timing of
         compensation awarded to our executives and will strive to structure any nonqualified deferred compensation plans or
         arrangements to be exempt from or to comply with the requirements of Section 409A.

             Section 280G of the Internal Revenue Code disallows a company’s tax deduction for payments received by certain
         individuals in connection with a change in control to the extent that the payments exceed an amount approximately three
         times their average annual compensation, and Section 4999 of the Internal Revenue Code imposes a 20% excise tax on those
         payments. The compensation committee will take into account the implications of Section 280G in determining potential
         payments to be made to our executives in connection with a change in control. Nevertheless, to the extent that certain
         payments upon a change in control are classified as excess parachute payments, such payments may not be deductible
         pursuant to Section 280G.


         Transaction Bonuses

             In connection with the offering of our senior secured notes and this offering, certain members of senior management are
         eligible to receive transaction bonuses in recognition of services and contributions to the value of the company. In a majority
         of cases, two-thirds of each individual’s transaction bonus was paid upon consummation of the senior secured notes offering,
         with the remainder to be paid upon the earlier of (x) the consummation of this offering and (y) December 31, 2011, subject
         to each individual’s continued employment through such payment date. The aggregate amount of all transaction bonuses is
         $9.0 million, of which approximately $6.6 million was paid upon consummation of the senior secured notes offering. See
         “Executive compensation — Employment agreements.”


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                                                      EXECUTIVE COMPENSATION

             The tables listed below, which appear in the following sections of this report, provide information required by the SEC
         regarding the compensation we paid for the year ended December 31, 2010 to our named executive officers. Except as noted
         below, we have used captions and headings in these tables in accordance with the SEC regulations requiring these
         disclosures. The footnotes to these tables provide important information to explain the values presented in the tables and are
         an important part of our disclosures related to our executive compensation for the year ended December 31, 2010.


         Summary Compensation Table

            The following table sets forth information regarding compensation earned by our named executive officers for the year
         ended December 31, 2010:


                                                       Summary Compensation Table


                                                                                 Non-Equity
                                                                                Incentive Plan         All Other
                                                               Salary           Compensation         Compensation            Total
         Name and
         Principal
         Position                                                ($)                 ($)                  ($)                 ($)


         Luke Hillier, Chief
           Executive Officer
           and President                                       500,000                     —              51,318 (1)        551,318
         Patricia Bohlen, Chief
           Financial Officer                                   186,186            148,965                 22,823 (2)        357,974
         Daniel Clarkson, Chief
           Operating Officer,
           Secretary and
           Treasurer                                           400,000                     —              73,540 (3)        473,540
         Bruce Dressel, Vice
           President of
           Acquisitions (4)                                    315,000            218,960                 48,538 (5)        582,498
         Jason Wallace, Vice
           President of Sales (6)                              254,100            419,714 (7)             24,349 (8)        698,163


           (1) This number reflects perquisites and other compensation provided to Mr. Hillier, including: medical plan premium
               payments; health and fitness expenses; 401(k) matching contributions; life/LTD insurance premiums; personal use of a
               company-leased automobile and other automobile-related expenses; and country club dues. None of the individual
               perquisites had an incremental cost in excess of the greater of $25,000 or 10% of the total amount of Mr. Hillier’s
               perquisites.

           (2) This number reflects perquisites and other compensation provided to Ms. Bohlen, including: medical plan premium
               payments; 401(k) matching contributions; life/LTD insurance premiums; and an automobile allowance. None of the
               individual perquisites had an incremental cost in excess of the greater of $25,000 or 10% of the total amount of
               Ms. Bohlen’s perquisites.

           (3) This number reflects perquisites and other compensation provided to Mr. Clarkson, including: medical plan premium
               payments; health and fitness expenses; 401(k) matching contributions; life/LTD insurance premiums; personal use of a
               company-owned automobile and other automobile-related expenses; and country club dues. The aggregate incremental
               cost of Mr. Clarkson’s personal use of a company-owned automobile and other automobile-related expenses was
               $25,483. None of the other individual perquisites had an incremental cost in excess of the greater of $25,000 or 10%
               of the total amount of Mr. Clarkson’s perquisites.

           (4) Following December 31, 2010, Mr. Dressel’s title was revised to be Vice President of Product and Equipment
    Solutions.

(5) This number reflects perquisites and other compensation provided to Mr. Dressel, including: 401(k) matching
    contributions; life/LTD insurance premiums; personal use of a company leased automobile;


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                personal use of company aircraft; and per diem payments for nights spent in Virginia Beach. The aggregate
                incremental cost of Mr. Dressel’s personal use of company aircraft was $25,014. None of the other individual
                perquisites had an incremental cost in excess of the greater of $25,000 or 10% of the total amount of Mr. Dressel’s
                perquisites.

           (6) Following December 31, 2010, Mr. Wallace’s title was revised to be Vice President of Sales and Marketing.

           (7) This number reflects Mr. Wallace’s 2010 performance bonuses of $231,931 and the actual commissions of $187,783
               earned by Mr. Wallace for fiscal year 2010.

           (8) This number reflects perquisites and other compensation provided to Mr. Wallace, including: health and welfare
               premiums; 401(k) matching contributions; life/LTD insurance premiums; and personal use of a company-leased
               automobile. None of the individual perquisites had an incremental cost in excess of the greater of $25,000 or 10% of
               the total amount of Mr. Wallace’s perquisites.


         2010 Grants of Plan-Based Awards Table


                                                                                                      Estimated Future Payouts
                                                                                                          Under Non-Equity
                                                                                                      Incentive Plan Awards (1)
                                                                                                                                  Ma
                                                                                                 Threshold          Target         x
         Nam                                                                        Grant
         e                                                    Type of Award         Date            ($)               ($)         ($)


         Luke Hillier                                             —                     —                 —               —           —
         Patricia Bohlen                                  Performance Bonus             n/a               —          148,965          —
         Daniel Clarkson                                          —                     —                 —               —           —
         Bruce Dressel                                    Performance Bonus             n/a               —          218,960          —
         Jason Wallace                                    Performance Bonus             n/a               —          231,931          —
                                                          Commission                    n/a               —          195,920          —


           (1) Amounts in this column for Performance Bonus awards represent the target cash bonus amounts for 2010 under our
               quarterly achievement bonus plan and year-end profitability bonus plan. Amounts in this column for Commission
               awards represent the target cash commissions for 2010 under our annual commission plan. The foregoing plans are
               described more fully in “Compensation Discussion and Analysis — Elements of Executive Compensation” above.
               Performance bonus awards and commission awards have no minimum threshold or maximum cap on payouts. Actual
               bonuses and commissions paid under the plans for fiscal year 2010 are reflected in the Summary Compensation Table.


         Owner-Employee Compensation

            We have not entered into employment agreements with either of Luke Hillier and Daniel Clarkson, our two current
         equity owners who are also named executive officers. Owner compensation is generally reviewed annually in 2010 and
         consisted of base salary and certain perquisites and other personal benefits, as described above in the Summary
         Compensation Table and related footnotes. In addition to compensation received as executive officers, each of our
         owner-employees received distributions in his capacity as a stockholder of the company in 2010. See “Dividend Policy.” In
         connection with this offering, we intend to enter into employment agreements with each of Luke Hillier and Daniel
         Clarkson.


         Employment Agreements

            Patricia Bohlen. Effective January 1, 2010, we entered into a 2010 Executive Compensation Plan with Patricia Bohlen,
         pursuant to which Ms. Bohlen was eligible to receive an annual base salary of $186,186, quarterly achievement bonuses of
         $11,250 per quarter and a year-end profitability bonus of $103,965. In addition, the 2010 Executive Compensation Plan
         provided Ms. Bohlen a monthly car allowance of $650.
   Bruce Dressel. Effective August 1, 2008, we entered into an employment agreement with Bruce Dressel, pursuant to
which Mr. Dressel receives an annual base salary and bonus, to be agreed upon by us and


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         Mr. Dressel from year to year. In addition, Mr. Dressel’s employment agreement entitles him to an automobile for business
         use, along with accompanying insurance and maintenance at our expense.

              Mr. Dressel’s employment agreement provides that, upon a “Sale of the Company” (as defined below) for a purchase
         price of at least $100,000,000, we will pay Mr. Dressel a bonus equal to 0.5% of the purchase price and we will extend his
         employment agreement for a two-year term from the date of such sale. For these purposes, a “Sale of the Company” will
         occur if either (i) any person or persons or entity or entities (other than family members or family trusts) who do not
         presently own stock in the Company acquire ownership of fifty one percent (51%) or more of the company’s stock or
         (ii) such persons or entities acquire fifty one (51%) or more of the total gross fair market value of the company’s assets,
         during the term of Mr. Dressel’s employment. This offering will not be a “Sale of the Company” for purposes of
         Mr. Dressel’s employment agreement.

              In the event of Mr. Dressel’s termination of employment by us without “Cause” or by him for “Good Reason” (each such
         term as defined below) within two years after the date of a Sale of the Company, Mr. Dressel will be entitled to receive a
         cash amount equal to 200% of his total compensation for the year preceding the date of termination, payable over the
         24-month period following his termination, subject to Mr. Dressel’s continued compliance with the restrictive covenants in
         his employment agreement. For these purposes, (i) “Cause” shall mean: (a) Mr. Dressel shall have been indicted for a felony;
         (b) Mr. Dressel shall have been convicted of (or pleaded “guilty” or “nolo contendre” to or shall have been found guilty of)
         any misdemeanor or summary offense involving fraud, theft, misrepresentation or moral turpitude or any other misdemeanor
         or summary offense that will, in the opinion of the chief executive officer, determined in good faith, adversely affect in any
         material respect the company’s prospects or reputation or Mr. Dressel’s ability to perform his obligations or duties to the
         company; or (c) Mr. Dressel intentionally and continually shall have failed substantially to perform his reasonably assigned
         duties with the company (other than a failure resulting from Mr. Dressel’s incapacity due to physical or mental illness or
         from the assignment to Mr. Dressel of duties that would constitute Good Reason), which failure has continued for a period of
         at least 30 days after a written notice of demand for substantial performance, signed by a duly authorized member of the
         company, has been delivered to Mr. Dressel; (d) willfully or repeatedly engaged in misconduct or gross negligence in the
         performance of his duties to the company that has a material detrimental effect on the company; (e) committed an act of
         fraud, theft, or dishonestly against the company or any act or omission intended to result in the personal enrichment of
         Mr. Dressel or a relative in violation of his duty of loyalty to the company at the expense, directly or indirectly, of the
         company; or (f) violates the non-compete provisions within Mr. Dressel’s employment agreement, and (ii) “Good Reason”
         shall mean the occurrence of any of the following events without Mr. Dressel’s consent: (a) assignment to Mr. Dressel of
         any duties inconsistent in any material respect with Mr. Dressel’s position (including titles and reporting relationships),
         authority or responsibilities as contemplated by Mr. Dressel’s employment agreement; (b) any material failure by the
         company to comply with any of the material provisions regarding Mr. Dressel’s salary, bonus, benefits and amounts payable
         to Mr. Dressel under his employment agreement; or (c) the relocation or transfer of the Mr. Dressel’s principal office outside
         a 20 mile radius of the Mr. Dressel’s personal residence location.

             Under his employment agreement, Mr. Dressel is subject to non-disclosure and non-disparagement obligations in
         perpetuity, as well as certain non-competition and non-solicitation obligations during the term of his employment and during
         the two-year period and one-year period, respectively, following the termination of his employment for any reason.

            Effective January 1, 2010, we entered into a 2010 Executive Compensation Plan with Mr. Dressel, pursuant to which
         Mr. Dressel was eligible to receive an annual base salary of $315,000, quarterly achievement bonuses of $16,250 per quarter
         and a year-end profitability bonus of $153,960, as described above.

            Jason Wallace. Effective January 1, 2010, and as amended on July 27, 2010 we entered into a 2010 Executive
         Compensation Plan with Jason Wallace, pursuant to which Mr. Wallace was eligible to receive an annual base salary of
         $254,100, quarterly achievement bonuses of $17,250 per quarter and a year-end profitability bonus of $162,931, and
         commissions equal to 0.124% of our company’s overall gross margin, with a target commission for 2010 of $195,920.


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         Potential Payments upon Termination of Employment or Change in Control

             Termination Payments. Except as described below in “Change in Control Payments,” none of our named executive
         officers is entitled to receive payments in connection with any termination of employment.

             Change in Control Payments. Prior to January 1, 2011 we were party to bonus award agreements with each of Patricia
         Bohlen and Jason Wallace, pursuant to which Ms. Bohlen and Mr. Wallace would be entitled to receive 0.25% and 0.7%,
         respectively, of our “net proceeds” (as defined below) upon a change in control prior to January 1, 2011. For purposes of the
         bonus award agreements, (i) “net proceeds” is defined as the aggregate value of all cash, securities or other assets or property
         to be received by the company’s stockholders pursuant to a Sale of the Company and with respect to their company capital
         stock (other than any balance sheet adjustment) after payment or satisfaction of (a) any company transaction costs and legal
         and brokers’ fees and expenses incurred in connection with such Sale of the Company, (b) any indebtedness for borrowed
         money or other long term liability, (c) the value of any employment, non-compete or other agreements entered into with
         individuals in connection with the Sale of the Company, and (d) the amount of any employee incentive, retention or other
         bonuses payable in connection with a Sale of the Company; and (ii) “Sale of the Company” is defined as the consummation
         of any of the following prior to January 1, 2011: (a) a sale, disposition or other transfer of all or substantially all of the assets
         of the company to a third party unaffiliated with the company, (b) a merger or consolidation of the company with any
         unaffiliated third party, other than a merger or consolidation effected solely to change the state of incorporation of the
         company or in which the stockholders of the company immediately prior to such merger or consolidation continue to hold at
         least 51% of the voting power of the outstanding securities of the surviving entity immediately after such merger or
         consolidation, or (c) a sale to an unaffiliated third party of at least 51% of the then issued and outstanding shares of capital
         stock of the company. Assuming we had experienced a change in control as of December 31, 2010, Ms. Bohlen and
         Mr. Wallace would respectively have been entitled to receive approximately $               and $        pursuant to their bonus
         award agreements (calculated assuming that our net proceeds would have been $               , which is equal to the aggregate
         equity value of the company based on an initial offering price of $           per share, the midpoint of the price range set forth
         on the cover of this prospectus). The actual amounts that would have been received could only have been determined at the
         time of an actual change in control based on the actual net proceeds received in connection with such change in control
         which likely would have varied from the amounts provided above. The bonus award agreements terminated pursuant to their
         terms on January 1, 2011 and were not replaced. No payments will be made under these agreements.

              As described above in “Employment Agreements,” Bruce Dressel would be entitled to the payment of a bonus in
         connection with a change in control if such change in control constitutes a Sale of the Company for a purchase price of at
         least $100,000,000. Assuming we had experienced a change in control on December 31, 2010, Mr. Dressel would have been
         entitled to receive approximately (calculated assuming that our net proceeds would have been $          , which is equal to the
         aggregate equity value of the company based on an initial offering price of $         per share, the midpoint of the price range
         set forth on the cover of this prospectus). The actual amount that would have been received could only have been determined
         at the time of an actual Sale of the Company based on the actual net proceeds received in connection with such Sale of the
         Company which likely would have varied from the amount provided above. In addition, if Mr. Dressel is terminated without
         Cause or resigns for Good Reason within two years following a Sale of the Company, he would be entitled to receive certain
         severance payments during the 24 months following such termination, as described above. This offering is not a Sale of the
         Company for purposes of Mr. Dressel’s 2010 employment agreement. On March 1, 2011, we amended and restated
         Mr. Dressel’s employment agreement. We intend to further amend and restate Mr. Dressel’s employment agreement in
         connection with this offering. At such time, the change of control provision relating to a Sale of the Company will be
         deleted.

             None of our other named executive officers is entitled to receive payments in connection with a change in control.


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         Executive Compensation Plans

                  2011 Equity Incentive Award Plan

             Prior to completion of the offering, we intend to adopt a 2011 Equity Incentive Award Plan, or the Equity Plan. The
         principal purpose of the Equity Plan will be to attract, retain and motivate selected employees, consultants and directors
         through the granting of stock-based compensation awards and cash-based performance bonus awards. The Equity Plan will
         also be designed to permit us to make equity-based awards and cash-based awards intended to qualify as
         “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code.
         The principal features of the Equity Plan are summarized below.

             Share Reserve. Under the Equity Plan, shares of our common stock will initially be reserved for issuance pursuant to a
         variety of stock-based compensation awards, including stock options, stock appreciation rights, or SARs, restricted stock
         awards, restricted stock unit awards, deferred stock awards, dividend equivalent awards, stock payment awards and
         performance awards and other stock-based awards.

             The following counting provisions will be in effect for the share reserve under the Equity Plan:

              •     to the extent that an award terminates, expires or lapses for any reason or an award is settled in cash without the
                    delivery of shares, any shares subject to the award at such time will be available for future grants under the Equity
                    Plan;

              •     to the extent shares are tendered or withheld to satisfy the grant, exercise price or tax withholding obligation with
                    respect to any award under the Equity Plan, such tendered or withheld shares will be available for future grants
                    under the Equity Plan;

              •     to the extent that shares of our common stock awarded under the Equity Plan are repurchased by us prior to vesting
                    so that such shares are returned to us, such shares will be available for future grants under the Equity Plan;

              •     the payment of dividend equivalents in cash in conjunction with any outstanding awards will not be counted against
                    the shares available for issuance under the Equity Plan; and

              •     to the extent permitted by applicable law or any exchange rule, shares issued in assumption of, or in substitution for,
                    any outstanding awards of any entity acquired in any form of combination by us or any of our subsidiaries will not
                    be counted against the shares available for issuance under the Equity Plan.

             Administration. The compensation committee of our board of directors will administer the Equity Plan unless our board
         of directors assumes authority for administration. Except as otherwise determined by our board of directors, the
         compensation committee will consist of at least two members of our board of directors, each of whom will be intended to
         qualify as an “outside director,” within the meaning of Section 162(m) of the Code, a “non-employee director” for purposes
         of Rule 16b-3 under the Exchange Act and an “independent director” within the meaning of the rules of the New York Stock
         Exchange or other principal securities market on which shares of our common stock are traded. The Equity Plan will provide
         that the compensation committee may delegate its authority to grant awards to employees other than our executive officers
         and certain of our senior executives to a committee consisting of one or more members of our board of directors or one or
         more of our officers, but we expect that our compensation committee charter will prohibit such delegation in the case of
         awards to our executive officers.

            Subject to the terms and conditions of the Equity Plan, the administrator will have the authority to select the persons to
         whom awards are to be made, to determine the number of shares to be subject to awards and the terms and conditions of
         awards, and to make all other determinations and to take all other actions necessary or advisable for the administration of the
         Equity Plan. The administrator will also be authorized to adopt, amend or rescind rules relating to administration of the
         Equity Plan. Our board of directors will have the authority at all times to remove the compensation committee as the
         administrator and revest in itself the authority to administer the Equity Plan. The full board of directors will administer the
         Equity Plan with respect to awards to non-employee directors.


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             Eligibility. The Equity Plan will provide that options, SARs, restricted stock and all other stock-based and cash-based
         awards may be granted to individuals who will then be our officers, employees or consultants or the officers, employees or
         consultants of certain of our subsidiaries. The Equity Plan will further provide that such awards may also be granted to our
         directors, but that only employees of our company or certain of our subsidiaries may be granted incentive stock options, or
         ISOs.

             Awards. The Equity Plan will provide that the administrator may grant or issue stock options, SARs, restricted stock,
         restricted stock units, deferred stock, dividend equivalents, performance awards, stock payments and other stock-based and
         cash-based awards, or any combination thereof. Each award will be set forth in a separate agreement with the person
         receiving the award and will indicate the type, terms and conditions of the award.

              •     Nonqualified Stock Options , or NQSOs, will provide for the right to purchase shares of our common stock at a
                    specified price which may not be less than fair market value on the date of grant, and usually will become
                    exercisable (at the discretion of the administrator) in one or more installments after the grant date, subject to the
                    participant’s continued employment or service with us and/or subject to the satisfaction of corporate performance
                    targets and individual performance targets established by the administrator. The Equity Plan will provide that
                    NQSOs may be granted for any term specified by the administrator that does not exceed ten years.

              •     Incentive Stock Options , or ISOs, will be designed in a manner intended to comply with the provisions of
                    Section 422 of the Code and will be subject to specified restrictions contained in the Code. Among such restrictions,
                    ISOs will have an exercise price of not less than the fair market value of a share of common stock on the date of
                    grant, will only be granted to employees, and will not be exercisable after a period of ten years measured from the
                    date of grant. In the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total
                    combined voting power of all classes of our capital stock, the Equity Plan will provide that the exercise price must
                    be at least 110% of the fair market value of a share of common stock on the date of grant and that the ISO must not
                    be exercisable after a period of five years measured from the date of grant.

              •     Restricted Stock will be granted to any eligible individual selected by the administrator and will be made subject to
                    such restrictions as may be determined by the administrator. Restricted stock, typically, will be forfeited for no
                    consideration or repurchased by us at the original purchase price if the conditions or restrictions on vesting are not
                    met. The Equity Plan will provide that restricted stock generally may not be sold or otherwise transferred until
                    restrictions are removed or expire. Purchasers of restricted stock, unlike recipients of options, will have voting rights
                    and will have the right to receive dividends, if any, prior to the time when the restrictions lapse; however,
                    extraordinary dividends will generally be placed in escrow, and will not be released until restrictions are removed or
                    expire.

              •     Restricted Stock Units will be awarded to any eligible individual selected by the administrator, typically without
                    payment of consideration, but subject to vesting conditions based on continued employment or service or on
                    performance criteria established by the administrator. The Equity Plan will provide that, like restricted stock,
                    restricted stock units may not be sold, or otherwise transferred or hypothecated, until vesting conditions are removed
                    or expire. Unlike restricted stock, stock underlying restricted stock units will not be issued until the restricted stock
                    units have vested, and recipients of restricted stock units generally will have no voting or dividend rights prior to the
                    time when vesting conditions are satisfied.

              •     Deferred Stock Awards will represent the right to receive shares of our common stock on a future date. The Equity
                    Plan will provide that deferred stock may not be sold or otherwise hypothecated or transferred until issued. Deferred
                    stock will not be issued until the deferred stock award has vested, and recipients of deferred stock generally will
                    have no voting or dividend rights prior to the time when the vesting conditions are satisfied and the shares are
                    issued. Deferred stock awards generally will be forfeited, and the underlying shares of deferred stock will not be
                    issued, if the applicable vesting conditions and other restrictions are not met.


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              •     Deferred Stock Units will be awarded to any eligible individual selected by the administrator, typically without
                    payment of consideration, but may be subject to vesting conditions based on continued employment or service or on
                    performance criteria established by the administrator. Each Deferred Stock Unit shall entitle the holder thereof to
                    receive one share of Common Stock on the date the Deferred Stock Unit becomes vested or upon a specified
                    settlement date thereafter. The Equity Plan will provide that, like deferred stock, deferred stock units may not be
                    sold, or otherwise transferred or hypothecated, until vesting conditions are removed or expire. Unlike deferred stock,
                    deferred stock units may provide that shares of stock underlying the deferred stock units will not be issued until a
                    specified date or event following the vesting date. Recipients of deferred stock units generally will have no voting or
                    dividend rights prior to the time when vesting conditions are satisfied and the shares underlying the award have been
                    issued to the holder.

              •     Stock Appreciation Rights , or SARs, will be granted in the administrator’s discretion in connection with stock
                    options or other awards, or separately. SARs granted in connection with stock options or other awards typically will
                    provide for payments to the holder based upon increases in the price of our common stock over a set exercise price.
                    The exercise price of any SAR granted under the Equity Plan will be at least 100% of the fair market value of a
                    share of our common stock on the date of grant. Except as required by Section 162(m) of the Code with respect to an
                    SAR intended to qualify as performance-based compensation as described in Section 162(m) of the Code, there will
                    be no restrictions specified in the Equity Plan on the exercise of SARs or the amount of gain realizable therefrom,
                    although the Equity Plan will provide that restrictions may be imposed by the administrator in the SAR agreements.
                    SARs under the Equity Plan will be settled in cash or shares of our common stock, or in a combination of both, at
                    the election of the administrator.

              •     Dividend Equivalents will represent the value of the dividends, if any, per share paid by us, calculated with reference
                    to the number of shares covered by the award. The Equity Plan will provide that dividend equivalents may be settled
                    in cash or shares and at such times as determined by the compensation committee or board of directors, as
                    applicable.

              •     Performance Awards will be granted by the administrator in its discretion on an individual or group basis.
                    Generally, these awards will be based upon specific performance targets and will be paid in cash or in common
                    stock or in a combination of both. The Equity Plan will provide that performance awards may include “phantom”
                    stock awards that provide for payments based upon the value of our common stock and that performance awards
                    may also include bonuses that may be granted by the administrator on an individual or group basis and which may
                    be payable in cash or in common stock or in a combination of both.

              •     Stock Payments will be authorized by the administrator in its discretion in the form of common stock or an option or
                    other right to purchase common stock as part of a deferred compensation on other arrangement in lieu of all or any
                    part of compensation, including bonuses, that would otherwise be payable in cash to the employee, consultant or
                    non-employee director.

             Change in Control. In the event of a change in control where the acquiror does not assume or replace granted awards,
         prior to the consummation of such transaction, causing such awards to terminate under the Equity Plan upon consummation
         of the transaction, the Equity Plan or the individual award agreement may provide that awards issued under the Equity Plan
         will be subject to accelerated vesting such that 100% of such awards will become vested and exercisable or payable, as
         applicable, upon the consummation of such change in control. In addition, the administrator will also have complete
         discretion to structure one or more awards under the Equity Plan to provide that such awards will become vested and
         exercisable or payable on an accelerated basis in the event such awards are assumed or replaced with equivalent awards but
         the individual’s service with us or the acquiring entity is subsequently terminated within a designated period following the
         change in control event. The Equity Plan will also provide that the administrator may make appropriate adjustments to
         awards under the Equity Plan and will be authorized to provide for the acceleration, cash-out, termination, assumption,
         substitution or conversion of such awards in the event of


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         a change in control or certain other unusual or nonrecurring events or transactions. Under the Equity Plan, a change in
         control will generally be defined as:

              •     the transfer or exchange in a single transaction or series of related transactions by our stockholders of more than
                    50% of our voting stock to a person or group;

              •     a change in the composition of our board of directors over a two-year period such that 50% or more of the members
                    of the board of directors were elected through one or more contested elections;

              •     a merger, consolidation, reorganization or business combination in which we are involved, directly or indirectly,
                    other than a merger, consolidation, reorganization or business combination which results in our outstanding voting
                    securities immediately before the transaction continuing to represent a majority of the voting power of the acquiring
                    company’s outstanding voting securities and after which no person or group beneficially owns 50% or more of the
                    outstanding voting securities of the surviving entity immediately after the transaction;

              •     the sale, exchange, or transfer of all or substantially all of our assets; or

              •     stockholder approval of our liquidation or dissolution.

             Adjustments of Awards. In the event of any stock dividend, stock split, combination or exchange of shares, merger,
         consolidation, spin-off, recapitalization, distribution of our assets to stockholders (other than normal cash dividends) or any
         other corporate event affecting the number of outstanding shares of our common stock or the share price of our common
         stock that would require adjustments to the Equity Plan or any awards under the Equity Plan in order to prevent the dilution
         or enlargement of the potential benefits intended to be made available thereunder, the Equity Plan will provide that the
         administrator will make appropriate, proportionate adjustments to:

              •     the aggregate number and type of shares subject to the Equity Plan;

              •     the number and kind of shares subject to outstanding awards and terms and conditions of outstanding awards
                    (including, without limitation, any applicable performance targets or criteria with respect to such awards); and

              •     the grant or exercise price per share of any outstanding awards under the Equity Plan.

             Amendment and Termination. The Equity Plan will provide that our board of directors or the compensation committee
         (with the approval of the board of directors) may terminate, amend or modify the Equity Plan at any time and from time to
         time. However, the Equity Plan will generally require us to obtain stockholder approval:

              •     to increase the number of shares available under the Equity Plan (other than in connection with certain corporate
                    events, as described above);

              •     to grant options with an exercise price that is below 100% of the fair market value of shares of our common stock on
                    the grant date;

              •     to extend the exercise period for an option beyond ten years from the date of grant; or

              •     to the extent required by applicable law, rule or regulation (including any applicable stock exchange rule).

             The Equity Plan will provide that, notwithstanding the foregoing, an option may be amended to reduce the per share
         exercise price below the per share exercise price of such option on the grant date and that options may be granted in
         exchange for, or in connection with, the cancellation or surrender of options having a higher per share exercise price without
         receiving additional stockholder approval.

             Expiration Date. The Equity Plan will expire on, and no option or other award will be granted pursuant to the Equity
         Plan after, the tenth anniversary of the effective date of the Equity Plan. Any award that will be outstanding on the expiration
         date of the Equity Plan will remain in force according to the terms of the Equity Plan and the applicable award agreement.


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            Securities Laws and U.S. Federal Income Taxes. The Equity Plan will be designed to comply with various securities
         and U.S. federal tax laws as follows:

                      Securities Laws. The Equity Plan will be designed to conform to all provisions of the Securities Act and the
                  Exchange Act and any and all regulations and rules promulgated by the SEC thereunder, including without limitation,
                  Rule 16b-3. The Equity Plan will be administered, and options will be granted and may be exercised, only in such a
                  manner as to conform to such laws, rules and regulations.

                       Section 409A of the Code. The Equity Plan will be designed to comply with the requirements of Section 409A of
                  the Code and, to the extent that awards under the Equity Plan will be considered “nonqualified deferred compensation”
                  for purposes of Section 409A of the Code and will be subject to the additional requirements regarding the payment of
                  deferred compensation imposed by Section 409A of the Code, such awards will be intended to be exempt from or to
                  comply with Section 409A of the Code.

                        Section 162(m) of the Code. The Equity Plan will be designed to provide for awards that are exempt from the
                  requirements of Section 162(m) of the Code which generally provides that income tax deductions of publicly held
                  corporations may be limited to the extent total compensation (including, but not limited to, base salary, annual bonus
                  and income attributable to stock option exercises and other non-qualified benefits) for certain executive officers exceeds
                  $1,000,000 (less the amount of any “excess parachute payments” as defined in Section 280G of the Code) in any
                  taxable year of the corporation, but provides that the deduction limit will not apply to certain “performance-based
                  compensation” established by an independent compensation committee that is adequately disclosed to and approved by
                  stockholders. In particular, stock options and SARs will satisfy the “performance-based compensation” exception if the
                  awards are made by a qualifying compensation committee, the Equity Plan sets the maximum number of shares that can
                  be granted to any person within a specified period and the compensation is based solely on an increase in the stock price
                  after the grant date. Specifically, the option exercise price must be equal to or greater than the fair market value of the
                  stock subject to the award on the grant date. Under a Section 162(m) transition rule for compensation plans of
                  corporations that are privately held and that subsequently become publicly held as a result of an initial public offering,
                  the Equity Plan will not be subject to Section 162(m) until a specified transition date, which is the earliest of:

              •      the material modification of the Equity Plan;

              •      the issuance of all of the shares of our common stock reserved for issuance under the Equity Plan;

              •      the expiration of the Equity Plan; or

              •      the first stockholders meeting at which members of our board of directors are elected during 2015.

             After the transition date, rights or awards granted under the Equity Plan, other than options and SARs, will not qualify as
         “performance-based compensation” for purposes of Section 162(m) unless such rights or awards are granted or vest upon
         pre-established objective performance goals, the material terms of which have been disclosed to and approved by our
         stockholders. Thus, after the transition date, we expect that such other rights or awards under the plan will not constitute
         performance-based compensation for purposes of Section 162(m).

            We intend to file with the SEC a registration statement on Form S-8 covering the shares of our common stock issuable
         under the Equity Plan.


         Executive Bonus Plan

             Prior to the completion of this offering, we intend to adopt an Executive Bonus Plan. The Executive Bonus Plan will be
         designed to provide an incentive for superior work and to motivate covered key executives toward even greater achievement
         and business results, to tie their goals and interests to those of us and our stockholders and to enable us to attract and retain
         highly qualified executives.

             The Executive Bonus Plan will be a performance-based bonus plan under which our designated key executives, including
         our named executive officers, will be eligible to receive bonus payments with respect to a


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         specified period (for example, our fiscal year). Bonuses will generally be payable under the Executive Bonus Plan upon the
         attainment of pre-established performance goals. Notwithstanding the foregoing, we may pay bonuses (including, without
         limitation, discretionary bonuses) to participants under the Executive Bonus Plan based upon such other terms and
         conditions as the compensation committee may in its discretion determine.

             Performance goals under the Executive Bonus Plan will relate to one or more corporate business criteria with respect to
         us or any of our subsidiaries, including but not limited to: net income or loss (either before or after interest, taxes,
         depreciation and/or amortization), EBITDA, sales or revenue, acquisitions or strategic transactions, operating income or loss,
         cash flow (including, without limitation, operating cash flow and free cash flow), return on capital, return on assets
         (including, without limitation, return on net assets), return on stockholders’ equity, economic value added, stockholder
         returns, return on sales, gross or net profit margin, productivity, expenses, margins, operating efficiency, customer
         satisfaction, working capital, earnings or loss per share, price per share of equity securities, market share and number of
         customers, any of which may be measured either in absolute terms or as compared to any incremental increase or decrease,
         or as compared to results of a peer group.

             The Executive Bonus Plan will be administered by the compensation committee. The compensation committee will
         select the participants in the Executive Bonus Plan and the performance goals to be utilized with respect to the participants,
         establish the bonus formulas for each participant’s annual bonus, and certify whether any applicable performance goals have
         been met with respect to a given performance period. The Executive Bonus Plan will provide that we may amend or
         terminate the Executive Bonus Plan at any time in our sole discretion. Any amendments to the Executive Bonus Plan will
         require stockholder approval only to the extent required by applicable law, rule or regulation.


         Compensation Risk Analysis

            Prior to the completion of this offering, we intend to analyze our compensation programs and policies to determine
         whether those programs and policies are reasonably likely to have a material adverse effect on us.


         DIRECTOR COMPENSATION

         2010 Director Compensation

             None of our directors received any compensation in connection with his services as a director in 2010. In 2010, our
         board of directors was comprised of Luke Hillier, Daniel Clarkson and R. Scott LaRose. Mr. Hillier and Mr. Clarkson were
         employees of the company in 2010. For a description of their compensation received as employees of the company please
         see the Summary Compensation Table and related narrative disclosure under “Executive Compensation — Summary
         Compensation Table.” Mr. LaRose was not an employee of the company in 2010 and did not receive any director’s fees or
         other compensation for his services as a director in 2010. Although our directors did not receive any compensation for their
         services as directors in 2010, each of our directors received distributions in his capacity as a stockholder of the company in
         2010. See “Dividend Policy.”


         Director Compensation Policies

             In connection with this offering, we intend to adopt a non-employee director compensation program pursuant to which
         each non-employee director will receive an annual cash retainer, payable in equal quarterly installments, in the amount of
         $40,000; additional annual cash retainer fees of $15,000 to $25,000 for the chairpersons of our audit, compensation and
         nominating and corporate governance committees; and of additional annual cash retainer fees of $5,000 to $10,000 for the
         non-chairperson members of such committees. In addition, we intend that each non-employee director will receive an equity
         or equity-based compensation award with a fair market value of $100,000 upon his or her initial election to our board of
         directors (pro-rated for any partial year of service) and equity or equity-based compensation awards with a fair market value
         of $80,000 each year thereafter that the individual continues to serve as a non-employee director.


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                                                PRINCIPAL AND SELLING STOCKHOLDERS

             The following table provides certain information regarding the beneficial ownership of our outstanding capital stock as
         of December 31, 2010 for:

              •     each of the executive officers named in the Summary Compensation Table;
              •     each of our directors and director nominees;
              •     all of our directors and executive officers as a group;
              •     each person or group who beneficially owns more than 5% of our capital stock on a fully diluted basis; and
              •     each of the selling stockholders.

            The percentage of ownership indicated before this offering is based on 148,140 shares of common stock outstanding on
         December 31, 2010.

             Beneficial ownership of shares is determined under the rules of the SEC and generally includes any shares over which a
         person exercises sole or shared voting or investment power. Except as indicated by footnote, and subject to applicable
         community property laws, each person identified in the table possesses sole voting and investment power with respect to all
         shares of common stock held by them. Shares of common stock subject to options currently exercisable or exercisable within
         60 days of December 31, 2011 and not subject to repurchase as of that date are deemed outstanding for calculating the
         percentage of outstanding shares of the person holding these options, but are not deemed outstanding for calculating the
         percentage of any other person. Unless otherwise noted, the address for each director and executive officer is 621 Lynnhaven
         Parkway, Suite 400, Virginia Beach, Virginia 23452.


                                                          Shares                                                  Shares
                                                   Beneficially Owned            Shares to be               Beneficially Owned
                                                  Prior to This Offering         Sold in This              After This Offering (1)
         Name
         and
         Address
         of
         Owner                                    Number           Percent        Offering              Number                 Percent


         Executive Officers and Directors
         Luke Hillier (2) *                         86,540           58.42 %
         Daniel Clarkson (3) *                      24,640           16.63 %
         Patricia Bohlen                                —               —
         Jason Wallace                                  —               —
         Bruce Dressel                                  —               —
         R. Scott LaRose (4) *                      36,960           24.95 %
         William A. Roper, Jr.                          —               —

         All Executive Officers and Directors
           as a Group                             148,140           100.00 %




            * Beneficial Owners of 5% or More of the Outstanding Common Stock of ADS Tactical, Inc.

           (1) Does not give effect to any exercise of the over-allotment option by the underwriters.

           (2) This amount includes 1,730.8 shares of our common stock that Mr. Hillier transferred to the Luke M. Hillier 2010
               Grantor Retained Annuity Trust, for which Mr. Hillier serves as settlor and trustee. Pursuant to SEC rules, Mr. Hillier
               is deemed to have beneficial ownership of these shares.

           (3) This amount includes 492.8 shares of our common stock that Mr. Clarkson transferred to the Daniel J. Clarkson 2010
               Grantor Retained Annuity Trust, for which Mr. Clarkson serves as settlor and trustee. Pursuant to SEC rules,
               Mr. Clarkson is deemed to have beneficial ownership of these shares.

           (4) This amount includes 554.4 shares of our common stock that Mr. LaRose transferred to the R. Scott LaRose 2010
Grantor Retained Annuity Trust, for which Mr. LaRose serves as settlor and trustee. Pursuant to SEC rules,
Mr. LaRose is deemed to have beneficial ownership of these shares.


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                                CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS


         Our Related Person Transaction Policy

             In connection with this offering, our board of directors will adopt a code of ethics that applies to all of our directors,
         officers and employees, including our chief executive officer. Our code of ethics will prohibit all conflicts of interest unless
         they have been approved or ratified by a majority of the independent directors on our board of directors (or an authorized
         committee of our board of directors). This code of ethics will be available on our website. Our board of directors, upon the
         recommendation of our nominating and corporate governance committee, will adopt a written policy with respect to related
         party transactions prior to the consummation of this offering.

             Pursuant to our related person transaction policy, any Related Person Transaction, including any arrangement or
         transaction existing on the date of this offering that is expected to continue in the future, must be approved or ratified by a
         majority of the independent directors on our board of directors and by our audit committee. In determining whether to
         approve or ratify a transaction with Related Persons, our independent directors and our audit committee may consider,
         among other things: (i) whether the terms of the transaction are fair to us and would apply on the same basis if the other
         party to the transaction did not involve a Related Person; (ii) whether there are compelling business reasons for us to enter
         into the transaction; (iii) whether the transaction would impair the independence of an otherwise independent director; and
         (iv) whether the transaction presents an improper conflict of interest, taking into account the size of the transaction, the
         overall financial position of the Related Person, the direct or indirect nature of his or her interest in the transaction and the
         ongoing nature of any proposed relationship and any other factors our board of directors and our audit committee deem
         relevant.

             Under our related person transaction policy, a “Related Person Transaction” is any transaction, arrangement or
         relationship between us or any of our subsidiaries and a Related Person that involves or is expected to involve more than
         $120,000. A “Related Person” is any of our executive officers, directors or director nominees, any stockholder beneficially
         owning in excess of 5% of our stock or securities exchangeable for our stock, any immediate family member of any of the
         foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is an executive officer, a
         partner or principal or in a similar position or in which such person has a 5% or greater beneficial interest in such entity.


         Transactions with Related Persons That We Believe Will Continue in the Future

             Below are historical transactions with Related Persons that we believe will continue in the future, subject to our Related
         Person Transaction policy and subject to approval or ratification by a majority of the independent directors on our board of
         directors and our audit committee.

            Tactical Distributors, LLC

              Tactical Distributors, LLC, or “Tactical Distributors,” is a wholesale distributor of tactical and operational equipment
         that sells primarily to non-government customers, including small resellers and individuals making purchases for
         recreational use. From time to time, we sell certain of our products to Tactical Distributors, which then resells these products
         to its customers. Occasionally, we purchase some of the products that we sell to our customers from Tactical Distributors.
         Due to restrictions in many of the agreements we have with certain of our vendors, we cannot sell certain products into the
         commercial market using our preferred government prices. To sell to non-government, commercial customers, we would
         have to obtain different pricing terms from our vendors, institute significant internal pricing controls and give our vendors
         audit visibility into our sales records to assure compliance with these vendor restrictions. We determined that implementing
         these operational controls and procedures was not cost-effective for the company and was not aligned with our core business
         strategy. Therefore, our stockholders established Tactical Distributors to transact these sales to non-government customers.
         The items that we sell to Tactical Distributors are limited to those that are not subject to customer restrictions by any vendor
         agreement. Sales to Tactical Distributors and purchases from Tactical Distributors have historically been at cost. In addition,
         in the past, our staff has assisted with the accounting and bookkeeping of Tactical Distributors in exchange for a


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         monthly fee of $1,000. Our staff no longer provides assistance with the accounting and bookkeeping of Tactical Distributors.

             For the years ended December 31, 2008, 2009 and 2010, we had sales to Tactical Distributors in the amounts of
         $1,141,734 and $1,775,451 and $1,793,383 respectively, and purchases from Tactical Distributors in the amounts of
         $147,394, $1,415,843 and $541,834, respectively. At December 31, 2008, 2009 and 2010, we had cash advances to Tactical
         Distributors in the amounts of $13,346, $39,686 and $13,804, respectively. At December 31, 2008, 2009 and 2010, we had
         accounts receivable from Tactical Distributors of $301,898, $253,214 and $227,651, respectively, and accounts payable of
         $4,617, $9,409 and $3,828, respectively. As of the date of this prospectus, all advances to Tactical Distributors have been
         repaid. In 2008, Tactical Distributors was owned by Daniel Clarkson, Luke Hillier, Michael Hillier, Jr. and R. Scott LaRose,
         in the amounts of 16.64%, 50.08%, 16.64% and 16.64%, respectively. From 2009 to the date of this prospectus, Tactical
         Distributors has been owned by Daniel Clarkson, Luke Hillier and R. Scott LaRose in the amounts of 16.63%, 58.42% and
         24.95%, respectively. Daniel Clarkson is our Chief Operating Officer and a member of our board of directors. Luke Hillier is
         our Chief Executive Officer and chairman of our board of directors. Michael Hillier, Jr. is Luke Hillier’s brother. R. Scott
         LaRose is a member of our board of directors.


         Arrangements Relating to Aircraft

            Tactical Air, LLC

             We lease three aircraft from Tactical Air, LLC, or “Tactical Air.” Tactical Air owns the aircraft that we lease in order to
         facilitate our compliance with Federal Aviation Administration rules and regulations. ADS and Mythics are the only entities
         that lease aircraft from Tactical Air. We believe the fees that we paid to Tactical Air were favorable as compared to the fees
         and expenses that would have been incurred for comparable services from an independent third-party provider. For the years
         ended December 31, 2008, 2009 and 2010, we purchased $255,190, $201,786 and $158,954 of services from Tactical Air,
         respectively. At December 31, 2008, 2009 and 2010, we had accounts payable to Tactical Air of $45,790, $670 and $43,108,
         respectively. At December 31, 2009, we had cash advances due from Tactical Air of $16,400 for an invoice that we paid on
         behalf of Tactical Air. At December 31, 2010, we did not have any cash advances due from Tactical Air. We also had
         transactions with Tactical Air for each of the years ended December 31, 2008 and 2009 that we treated as of compensation to
         certain of our executive officers. In 2008, each of Luke Hillier, Michael Hillier, Jr. and R. Scott LaRose owned 33% of
         Tactical Air. In 2009, Tactical Air was owned 50% by Luke Hillier and 50% by R. Scott LaRose. From January 1, 2010 to
         the date of this prospectus, Tactical Air has been owned by Daniel Clarkson, Luke Hillier and R. Scott LaRose in the
         amounts of 16.64%, 41.68% and 41.68%, respectively.


            Tactical Hawker, LLC

             We lease an aircraft from Tactical Hawker, LLC, or “Tactical Hawker.” Tactical Hawker owns the aircraft that we lease
         in order to facilitate our compliance with Federal Aviation Administration rules and regulations. ADS and Mythics are the
         only entities that lease aircraft from Tactical Hawker. We believe the fees that we paid to Tactical Hawker were favorable as
         compared to the fees and expenses that would have been incurred for comparable services from an independent third-party
         provider. For the year ended December 31, 2008, we had cash advances due to Tactical Hawker of $52,005. For the years
         ended December 31, 2008, 2009 and 2010, we had purchases from Tactical Hawker in the amounts of $32,149, $443,160
         and $647,513, respectively. At December 31, 2009 and 2010, we had accounts payable to Tactical Hawker of $120,625 and
         $7,177, respectively. We also had transactions with Tactical Hawker for each of the years ended December 31, 2008 and
         2009 that we treated as compensation to certain of our executive officers. In 2008, Tactical Hawker was owned by Daniel
         Clarkson, Luke Hillier, Michael Hillier, Jr. and R. Scott LaRose in the amounts of 16.64%, 50.08%, 16.64% and 16.64%,
         respectively. From 2009 to the date of this prospectus, Tactical Hawker has been owned by Daniel Clarkson, Luke Hillier
         and R. Scott LaRose in the amounts of 16.63%, 58.42% and 24.95%, respectively.


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            Tactical Pilot Operations, LLC

             We purchase pilot services for chartered aircraft from Tactical Pilot Operations, LLC, or “Tactical Pilot.” This entity
         employs the pilots that operate the planes held by Tactical Air and Tactical Hawker and provides maintenance and other
         operational services in connection with these planes. Tactical Pilot provides services only to ADS and to Mythics. We
         believe the fees that we paid to Tactical Pilot were favorable as compared to the fees and expenses that would have been
         incurred for comparable services from an independent third-party provider. For the years ended December 31, 2008, 2009
         and 2010, we had purchases of $49,208, $134,944 and $202,201 from Tactical Pilot, respectively. At December 31, 2008,
         2009 and 2010, we had accounts payable to Tactical Pilot in the amounts of $33,825, $19,022 and $12,287, respectively. We
         also had transactions with Tactical Pilot for each of the years ended December 31, 2008 and 2009 that we treated as
         compensation to certain of our executive officers. In 2008, each of Luke Hillier, Michael Hillier, Jr. and R. Scott LaRose
         owned 33% of Tactical Pilot. In 2009, each of Luke Hillier and R. Scott LaRose owned 50% of Tactical Pilot. From
         January 1, 2010 to the date of this prospectus, Tactical Pilot has been owned by Daniel Clarkson, Luke Hillier and R. Scott
         LaRose in the amounts of 16.64%, 41.68% and 41.68%, respectively.


         Arrangements Relating to Real Property

            Tactical Warehouse, LLC

             We lease our kitting facility from Tactical Warehouse, LLC, or “Tactical Warehouse,” which owns the building that
         houses our kitting facility. We also guarantee debt in the amount of $7.5 million incurred by Tactical Warehouse to purchase
         the building that houses our kitting facility. We believe that the rent we pay is comparable to that which would be paid by an
         unaffiliated third party leasing the same space. For the years ended December 31, 2008, 2009 and 2010, we paid rent to
         Tactical Warehouse in the amounts of $223,000, $577,125 and $698,435, respectively. In 2008, Tactical Warehouse was
         owned by Daniel Clarkson, Luke Hillier, Michael Hillier, Jr. and R. Scott LaRose in the amounts of 16.64%, 50.08%,
         16.64% and 16.64%, respectively. From 2009 to the date of this prospectus, Tactical Warehouse has been owned by Daniel
         Clarkson, Luke Hillier and R. Scott LaRose in the amounts of 16.63%, 58.42% and 24.95%, respectively. Tactical
         Warehouse is consolidated with ADS in our historical financial statements.


            Tactical Office, LLC

             In the fourth quarter of 2009, we entered into a lease for office space in our corporate headquarters with Tactical Office,
         LLC, or “Tactical Office,” which owns and operates the office building that contains our corporate headquarters as well as
         the offices of several additional, non-affiliated third-party tenants that are located in the same building as our corporate
         headquarters. We also guarantee debt in the amount of $6.1 million incurred by Tactical Office to purchase the building in
         which our corporate headquarters resides. For the years ended December 31, 2009 and 2010, we paid rent to Tactical Office
         in the amounts of $360,000 and $1,392,693, respectively. At December 31, 2009 and 2010, we had cash advances to Tactical
         Office of $704,901 and $0, respectively. These advances were related to an allowance for leasehold improvements, which
         was provided to Tactical Office by us. The rent that we pay to Tactical Office is slightly more per square foot than the rent
         paid by the non-affiliated third-party tenants who reside in the same building because our leased space was recently
         improved while the other space in the building was not. We believe that the rent that we pay to Tactical Office is similar to
         that paid for comparable office space in the area. At December 31, 2010, we had accounts payable to Tactical Office of $0.
         From 2009 to the date of this prospectus, Tactical Office has been owned by Daniel Clarkson, Luke Hillier and R. Scott
         LaRose in the amounts of 16.63%, 58.42% and 24.95%, respectively. Tactical Office is consolidated with ADS in our
         historical financial statements.


         Transactions with Related Persons That We Do Not Expect to Continue in the Future

            Tactical Exporters, Inc.

            We have utilized the services of Tactical Exporters, Inc., or “Tactical Exporters” in connection with the sale of the
         products and related services we offer outside of the United States. Tactical Exporters is a DISC under the Internal Revenue
         Code, which provides a tax savings for transactions that utilize a DISC in order to


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         encourage the export of U.S.-made products. Because we have historically operated as a subchapter S corporation, the
         stockholders of ADS were able to realize tax savings by effecting certain qualifying sales outside of the United States
         through Tactical Exporters. The fees paid by us to Tactical Exporters were calculated in accordance with the IRS guidelines
         governing the use of DISCs and were contributed back to ADS by the stockholders of Tactical Exporters on an annual basis.
         For the years ended December 31, 2008, 2009 and 2010, we made payments to Tactical Exporters of $2,364,635, $4,544,266
         and $0, respectively, in exchange for services provided by Tactical Exporters. In 2008, Tactical Exporters was owned by
         Daniel Clarkson, Luke Hillier, Michael Hillier, Jr. and R. Scott LaRose in the amounts of 16.64%, 50.08%, 16.64% and
         16.64%, respectively. From 2009 to the date of this prospectus, Tactical Exporters was owned by Daniel Clarkson, Luke
         Hillier, and R. Scott LaRose in the amounts of 16.63%, 58.42% and 24.95%, respectively. Tactical Exporters is consolidated
         with ADS in our historical financial statements for fiscal years 2008, 2009 and 2010. Tactical Exporters’ existence will
         terminate upon consummation of this offering.


            Mythics, Inc.

             In 2006, we purchased products and services from Mythics, Inc., or “Mythics,” in connection with the implementation of
         our Oracle Enterprise Resource Planning, or “Oracle ERP,” software system. Prior to engaging Mythics, we evaluated other
         operational and accounting software systems and found that our needs would be best served by implementing Oracle ERP. In
         subsequent years, in order to complete the implementation of our Oracle ERP system, we purchased additional support
         services from Mythics. Our Oracle ERP-related maintenance and support services are now provided by a non-affiliated third
         party on pricing terms similar to those we received from Mythics. For the year ended December 31, 2008, we purchased
         software, development and implementation services from Mythics in the amount of $113,469, and had accounts payable to
         Mythics at the end of this fiscal year in the amount of $102,069. For the year ended December 31, 2010 we purchased
         software, development and implementation services from Mythics in the amount of $30,000. In 2008 and 2009, each of Luke
         Hillier, Michael Hillier, Jr. and R. Scott LaRose owned 33.3% of Mythics. As of the date of this prospectus, Mythics is
         owned by Luke Hillier, Michael Hillier, Jr., R. Scott LaRose and Charles Salle in the amounts of 3.33%, 33.33%, 13% and
         50.33%, respectively. Charles Salle is our General Counsel. At December 31, 2010, we had cash advances due from Mythics
         of $62,462 related to payments we made on behalf of Mythics.


            Tactical Properties, LLC

             We leased two homes from Tactical Properties, LLC, or “Tactical Properties.” For each of the years ended December 31,
         2008, 2009 and 2010, we paid rent and other fees in connection with property management services to Tactical Properties in
         the amount of $180,000, $180,000 and $0, respectively. At December 31, 2009 and 2010, we had cash advances to Tactical
         Properties of $9,015 and $0, respectively. Each of Daniel Clarkson, Luke Hillier, Michael Hillier, Sr., Michael Hillier, Jr., R.
         Scott LaRose and Charles Salle own 16.67% of Tactical Properties. Michael Hillier, Sr. is the father of Luke Hillier. Our
         relationship with Tactical Properties has been discontinued.


            Other

            From time to time, we have made payments on behalf of our stockholders for personal expenses and on behalf of entities
         owned by certain of our stockholders for expenses incurred, for which we were subsequently reimbursed. At December 31,
         2008, 2009 and 2010, we had advances due from affiliates of $2,707,643, $635,361 and $239,687, respectively, including
         advances to certain entities discussed above. All advances have been repaid. After this offering, we do not expect to make
         any advances to, or payments on behalf of, our stockholders or any of our employees for personal expenses.



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                                              DESCRIPTION OF CERTAIN INDEBTEDNESS

            The following is a summary of the material provisions of the instruments evidencing our existing material indebtedness.
         This summary is not a complete description of all of the terms of the agreements governing our material indebtedness.


         Senior Secured Notes

             On March 25, 2011, we issued $275.0 million of 11% senior secured notes due April 1, 2018 at an offering price of
         100% of the face value of the senior secured notes. Interest on the senior secured notes is payable on April 1 and October 1
         of each year. The proceeds from the offering of the senior secured notes were used (1) to make a distribution of
         $217.1 million to our stockholders, (2) to repay our term loan facility, (3) to pay the transaction bonuses and (4) to pay
         related transaction fees and expenses, including discounts and commissions to the initial purchasers of the senior secured
         notes. See “Prospectus Summary — Recent Developments.”

             The senior secured notes are secured by a first-priority lien (subject to certain exceptions and permitted liens) on certain
         fixed and intangible assets, capital stock of certain subsidiaries, certain intercompany loans held by us and the guarantors of
         the senior secured notes, and proceeds of the foregoing, in each case held by us and the guarantors of the senior secured
         notes. The senior secured notes are also secured by a second-priority lien (subject to certain exceptions and permitted liens)
         on all accounts (other than certain notes accounts), instruments, chattel paper and other contracts evidencing such accounts,
         inventory, certain investment property, cash (other than cash proceeds of the collateral subject to a first-priority lien in favor
         of the senior secured notes), general intangibles and instruments related to the foregoing and proceeds of the foregoing, in
         each case held by us and the guarantors of the senior secured notes.

             Prior to April 1, 2015, the senior secured notes may be redeemed in part or in full at a redemption price equal to 100% of
         the principal amount of the senior secured notes, plus a make-whole premium calculated in accordance with the senior
         secured notes indenture and accrued and unpaid interest, if any. In addition, prior to April 1, 2014, up to 35% of the original
         principal amount of the senior secured notes (including any additional notes issued under the senior secured notes indenture)
         may be redeemed with the net proceeds of certain equity offerings completed before April 1, 2014 at 111%, provided that
         after giving effect to such redemption, not less than 50% of the senior secured notes remain outstanding. On or after April 1,
         2015, the senior secured notes may be redeemed in part or in full at the following percentages of the outstanding principal
         amount prepaid: 108.250% prior to April 1, 2016; 105.500% on or after April 1, 2016, but prior to April 1, 2017; and 100%
         on or after April 1, 2017.

             In the event of a “Change in Control” (as defined in the senior secured notes indenture and described in the following
         sentence), we will be required to offer to repurchase the senior secured notes at a price equal to 101% of the principal
         amount, plus accrued and unpaid interest, if any, to the date of repurchase. “Change in Control” under the senior secured
         notes indenture means the occurrence of any of the following: (1) any person or group (other than Permitted Holders (as
         defined in the senior secured notes indenture) or a direct or indirect parent entity) becomes the beneficial owner, directly or
         indirectly, of a majority of the total voting power of the Voting Stock (as defined in the senior secured notes indenture), (2) a
         sale or transfer of all or substantially all of our assets or (3) a change in the majority of our board of directors in certain
         circumstances. In addition, we will be required to offer to repurchase the senior secured notes at a price equal to 100% of the
         principal amount, plus accrued and unpaid interest, if any, with Net Proceeds (as defined in the senior secured notes
         indenture) from certain asset sales (including collateral securing the senior secured notes) as defined under the senior secured
         notes indenture, if such proceeds have not otherwise been used in certain specified manners within 365 days of the date of
         the asset sale.

             The senior secured notes indenture contains customary covenants and restrictions on the activities of us and our restricted
         subsidiaries, including, but not limited to, the incurrence of additional indebtedness; pay dividends or make distributions or
         redeem our capital stock; pay or redeem or purchase certain indebtedness; make certain loans and investments; sell assets;
         create liens on certain assets to secure debt; enter into agreements restricting our subsidiaries’ ability to pay dividends;
         consolidate, merge, sell or otherwise dispose


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         of all or substantially all of our assets; and engage in transactions with affiliates. Certain of these covenants will be
         suspended if the senior secured notes are assigned an investment grade rating by both Standard & Poor’s Rating Services and
         Moody’s Investor Service, Inc. and no default has occurred or is continuing. If either such rating on the senior secured notes
         should subsequently decline to below investment grade, the suspended covenants will be reinstated.

             Events of default under senior secured notes indenture include, but are not limited to, (1) failure to pay principal or
         interest when due; (2) failure to comply with the terms of the senior secured notes indenture after 60 days notice; (3) a
         default with respect to other indebtedness for failure to pay amounts due or which results in the acceleration of such
         indebtedness if the aggregate amount of such indebtedness is $20.0 million or greater; (4) certain bankruptcy events;
         (5) failure to pay final non-appealable judgments entered by a court aggregating in excess of $20.0 million within 60 days;
         and (6) subject to certain exceptions, the documents evidencing our obligations pursuant to the senior secured notes and the
         senior secured revolving credit facility cease to be in effect or are denied or disaffirmed by us or any of the guarantors
         thereunder.

             All obligations under the senior secured notes are unconditionally guaranteed on a senior secured basis by all of our
         existing and future direct and indirect subsidiaries that borrow under or guarantee any obligation under our senior secured
         revolving credit facility or any other indebtedness of us or any other guarantor of the senior secured notes.

             The senior secured notes will not be registered under the Securities Act.


         Senior Secured Revolving Credit Facility

             On February 18, 2010, we refinanced our then-existing credit facility by entering into a $180.0 million senior secured
         revolving credit facility (including an optional increase in commitments of up to $25.0 million) among Atlantic Diving
         Supply, Inc. as borrower, ADS Tactical, Inc. and MAR-VEL as guarantors and Wells Fargo Bank, National Association
         (successor by merger to Wachovia Bank, National Association), as administrative agent (as defined therein) and the other
         parties thereto. On October 22, 2010, we amended our senior secured revolving credit facility to permit us to enter into our
         term loan facility. In connection with the refinancing transactions, we amended and restated the senior secured revolving
         credit facility to, among other things, repay our term loan facility, provide for up to $200.0 million in borrowings with an
         optional increase in commitments of up to $50.0 million, and permit the offering of the senior secured notes and the
         distributions to our equity holders. The amended and restated senior secured revolving credit facility became effective
         concurrently with the completion of the offering of the senior secured notes. In connection with the amendment and
         restatement of our senior secured revolving credit facility, we refinanced our senior secured revolving credit facility with
         certain lenders, Wells Fargo Bank, National Association, as administrative agent, Wells Fargo Capital Finance, LLC, as sole
         lead arranger, manager and bookrunner and each of Suntrust Bank, RBS Business Capital (a division of RBS Asset Finance,
         Inc., a subsidiary of RBS Citizens, N.A.) and Bank of America, N.A. as co-syndication agents and added ADS Tactical, Inc.
         as a borrower.

              The senior secured revolving credit facility, as amended and restated, matures on March 25, 2016 and provides senior
         secured financing of up to $200.0 million, subject to a borrowing base. The senior secured revolving credit facility allows for
         an optional increase in commitments up to an additional $50.0 million. Atlantic Diving Supply, Inc.’s future domestic
         subsidiaries may become co-borrowers with us and Atlantic Diving Supply, Inc., or co-guarantors with MAR-VEL, under
         the senior secured revolving credit facility. Availability under the senior secured revolving credit facility is subject to the
         assets of Atlantic Diving Supply, Inc. and any co-borrowers that are available to collateralize the borrowing and is reduced
         by reserves established by the administrative agent from time-to-time. As of March 31, 2011, we had $66.1 million drawn
         under the senior secured revolving credit facility, resulting in availability of $133.9 million, subject to borrowing base
         limitations. As of March 31, 2011, we had $6.8 million letters of credit outstanding. The borrowing base for the senior
         secured revolving credit facility at any time is expected to equal the (a) sum of 90% of eligible government accounts
         receivable, plus 85% of eligible commercial accounts receivable, plus the lesser of (i) 65% of the value of eligible inventory,
         (ii) 85% of the net recovery percentage of the value of


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         eligible inventory and (iii) $80.0 million and minus (b) reserves established and modified from time to time. The senior
         secured revolving credit facility includes borrowing capacity available for letters of credit up to $50.0 million and for
         swingline loans up to $10.0 million, with same-day notice for borrowings under the senior secured revolving credit facility
         and swingline loans, and is available in U.S. dollars.

             The senior secured revolving credit facility, as amended, provides us with the right to request up to $50.0 million of
         additional commitments under this facility. The lenders under the senior secured revolving credit facility are not under any
         obligation to provide any such additional commitments under this facility, and any increase in commitments is subject to
         customary conditions precedent. If we were to request any such additional commitments and the existing lenders or new
         lenders were to agree to provide such commitments, we expect that the facility size could be increased to up to
         $250.0 million, but our ability to borrow under this facility would still be limited by the amount of the borrowing base.

             Borrowings under the senior secured revolving credit facility bear interest at a rate per annum equal to, at our option,
         either (a) with respect to base rate loans and swingline loans, a base rate determined by reference to the highest of (1) the
         prime rate of Wells Fargo Bank, National Association, (2) the federal funds effective rate plus 0.50% and (3) a LIBOR rate
         determined by reference to the costs of funds for U.S. dollar deposits for an interest period of one month adjusted for certain
         additional costs, plus 1.00% or (b) with respect to Eurodollar rate loans, a LIBOR rate determined by reference to the costs
         of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain eurocurrency
         liabilities established by the Federal Reserve Board (“Adjusted LIBOR”), in each case plus an applicable margin.
         Commencing with the completion of the first calendar quarter after June 30, 2011, the applicable margin for borrowings
         thereunder will be subject to adjustment each fiscal quarter, based on the average excess availability.

             In addition to paying interest on outstanding principal under our senior secured revolving credit facility, we are required
         to pay a commitment fee in respect of the unutilized commitments thereunder, which we initially expect to be equal to 0.5%.
         Commencing with the completion of the first calendar quarter after June 30, 2011, the commitment fee will range between
         0.375% to 0.500% and be subject to adjustment based on the amount of unutilized commitments. We must also pay
         customary letter of credit fees and agency fees.

             If at any time the aggregate amount of all loans, special agent advances (i.e. advances that the agent is entitled to charge
         to the borrower’s account to preserve the collateral), unreimbursed letter of credit drawings and undrawn letters of credit
         under our senior secured revolving credit facility exceeds the lesser of (a) the aggregate commitment amount and (b) the
         borrowing base, we are required to repay the amount of the excess. We are required to prepay loans with 100% of the
         proceeds of the sale of, or insurance recoveries in respect of, our assets constituting collateral, provided that any such
         proceeds in respect of assets constituting collateral other than collateral securing a first-priority lien on the senior secured
         revolving credit facility, so long as no event of default has occurred and is occurring, such mandatory prepayment shall be
         subject to our option to reinvest such proceeds in assets useful to our business for a period of 365 days (which period shall be
         extended by 180 days if we enter into a legally binding commitment to reinvest such proceeds within such 365 day period).

             We may voluntarily reduce the unutilized portion of the commitments under the senior secured revolving credit facility,
         in whole or in part, with prior written notice to the administrative agent. Prepayments of loans may be made without
         premium or penalty other than customary “breakage” costs with respect to Eurodollar rate loans.

             There is no scheduled amortization under our senior secured revolving credit facility. The principal amount outstanding
         of the loans under the senior secured revolving credit facility is due and payable in full on the fifth anniversary of the closing
         date, except for swingline loans, which are payable on demand.

             All obligations under our senior secured revolving credit facility are unconditionally guaranteed by MAR-VEL and our
         future domestic subsidiaries are required to guarantee or become a co-borrower under our senior secured revolving credit
         facility.

             The senior secured revolving credit facility is secured by first priority security interests in the all of our accounts
         receivable, inventory, cash (other than cash proceeds of the collateral securing a first-priority lien on


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         the senior secured notes), general intangibles and instruments related to the foregoing and proceeds of the foregoing and by
         second priority security interests in the collateral securing a first-priority lien on the senior secured notes, which includes all
         equipment, real estate, intellectual property, certain capital stock, general intangibles and instruments related to the foregoing
         and proceeds of the foregoing. See “— Senior Secured Notes.”

             Our senior secured revolving credit facility contains a number of covenants that, among other things and subject to
         certain exceptions, restrict our ability and the ability of our subsidiaries to incur additional indebtedness and alter, modify or
         make payments on certain indebtedness; incur additional liens; make investments, including: purchase of obligations or
         securities, capital contributions, loans, deposits, guarantees, or acquisitions; consolidate, merge, dissolve or liquidate; pay
         dividends on our or our subsidiaries’ capital stock or redeem, repurchase or retire such capital stock or our other
         indebtedness; create restrictions on the payment of dividends or other amounts to us; engage in transactions with our
         affiliates; make accounting changes or amendments to organizational documents; modify material contracts; alter the
         business we conduct; and sell or transfer assets, including capital stock of our subsidiaries.

             Each of the covenants limiting dividends and other restricted payments, investments, loans and acquisitions, incurrence
         of unsecured debt, and prepayments or redemptions of certain indebtedness are expected to permit the restricted actions so
         long as certain payment conditions are satisfied, including certain specified excess availability and fixed charge coverage
         tests. In addition, we are required to maintain, on a monthly basis, a fixed charge coverage ratio of not less than 1.1 to 1.0 if
         either an event of default has occurred and is continuing or the undrawn availability under our senior secured revolving
         credit facility is less than 12.5% of our aggregate commitment, which requirement shall no longer apply after such
         conditions cease to apply for a period of 90 days. The loan and security agreement contains certain customary
         representations and warranties, affirmative covenants and collateral reporting and covenants.


         Events of Default

             The senior secured revolving credit facility includes customary events of default, including, but not limited to, payment
         defaults; material misrepresentations; breaches of certain covenants; bankruptcy; change of control; material judgments;
         certain Employee Retirement Income Security Act of 1974, as amended (“ERISA”) related breaches; and cross-defaults to
         material indebtedness.


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                                                   DESCRIPTION OF CAPITAL STOCK

            The following is a description of the material terms of our amended and restated certificate of incorporation and bylaws.
         We refer you to our amended and restated certificate of incorporation and bylaws, copies of which have been filed as
         exhibits to the registration statement relating to this offering.

             Upon completion of this offering, there will be        shares of common stock outstanding and no shares of preferred
         stock outstanding.

         Common Stock

             Pursuant to our amended and restated certificate of incorporation, we will be authorized to issue up to shares of common
         stock, par value $0.01 per share. Holders of common stock will be entitled to one vote for each share held on all matters
         submitted to a vote of stockholders and will not have cumulative voting rights. Accordingly, holders of a majority of the
         shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election.
         Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors
         out of funds legally available therefor, subject to any preferential dividend rights of outstanding preferred stock. Upon our
         liquidation, dissolution or winding up, the holders of common stock are entitled to receive ratably our net assets available
         after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders
         of our common stock have no preemptive, subscription, redemption or conversion rights. The outstanding shares of common
         stock are, and the shares offered by us hereby will be, when issued and paid for, fully paid and nonassessable. If we issue
         any preferred stock, the rights, preferences and privileges of holders of common stock will be subject to, and may be
         adversely affected by, the rights of the holders of our preferred stock. See “—Preferred Stock.”

         Preferred Stock

             Pursuant to the terms of our amended and restated certificate of incorporation, we will be authorized to issue up
         to       shares of preferred stock, par value $0.01 per share. Our board of directors is authorized, subject to any limitations
         prescribed by law, without further stockholder approval, to issue such shares of preferred stock in one or more series. Each
         such series of preferred stock shall have such rights, preferences, privileges and restrictions, including voting rights,
         dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by our board of
         directors.

             The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to
         eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing
         desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it
         more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, a majority of our
         outstanding voting stock. The existence of the authorized but undesignated preferred stock may have a depressive effect on
         the market price of our common stock.

         Stockholders’ Agreement

             Upon consummation of this offering, our existing stockholders, Luke Hillier, Daniel Clarkson and Robert Scott LaRose
         will enter into a stockholders agreement. The stockholders agreement will provide that so long as Messrs. Hillier, Clarkson
         and LaRose, along with each of their respective affiliates, hold at least 50% of our outstanding common stock, each of
         Messrs. Hillier, Clarkson and LaRose, and each of their respective affiliates, will vote their shares of common stock in favor
         of one director designated by Mr. Clarkson, one director designated by Mr. LaRose and such other directors as may be
         designated by Mr. Hillier. There is no limit on the number of directors that Mr. Hillier may designate. Upon consummation
         of this offering, the parties to the stockholders agreement will continue to own approximately % of our common stock,
         collectively.

             The stockholders agreement will also include customary limitations on transfer such that the parties to the agreement will
         not be permitted to transfer their shares, other than pursuant to a registered public


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         offering or a sale through a broker-dealer pursuant to Rule 144 of the Securities Act, unless they have first made the offer to
         sell such shares to the other stockholders party to the stockholders agreement.

           Under the terms of the stockholders agreement, we will agree to register the shares of our common stock owned by
         Messrs. Hillier, Clarkson and LaRose and their respective affiliates under the following circumstances:

              •     Demand Rights. At any time after the expiration of the lock-up agreements that we signed with the underwriters,
                    upon the written request from any of the parties to the stockholders agreement, we will register shares of our
                    common stock specified in such request for resale under an appropriate registration statement field and declared
                    effective by the SEC. We may defer a demand registration by up to 90 days if our board of directors determines it
                    would be detrimental to us to file a registration statement.

              •     Piggyback Rights. If at any time we file a registration statement for the purposes of making a public offering of our
                    common stock, or register outstanding shares of our common stock for resale on behalf of any holder of our
                    common stock, the parties to the stockholders agreement may elect to include in such registration statement any
                    shares of common such person holds. The managing underwriter in the contemplated offering may exclude all or a
                    part of the shares according to market factors pursuant to an order of priority set forth in the stockholders agreement.

         Certain Corporate Anti-Takeover Provisions

            Our amended and restated certificate of incorporation and bylaws will contain a number of provisions relating to
         corporate governance and to the rights of stockholders. Certain of these provisions may be deemed to have a potential
         “anti-takeover” effect in that such provisions may delay, defer or prevent a change of control of the company. These
         provisions include:

            Preferred Stock. Our board of directors has authority to issue series of preferred stock with such voting rights and other
         powers as the board of directors may determine, as described above.

            Classified Board. Our board of directors will be classified into three classes. Each director will serve a three year term
         and will stand for re-election once every three years.

             Removal of Directors, Vacancies. Our stockholders will be able to remove directors only for cause and only by the
         affirmative vote of the holders of a majority of the outstanding shares of our capital stock entitled to vote in the election of
         directors. Vacancies on our board of directors may be filled only by a majority of our board of directors.

             No Cumulative Voting. Our amended and restated certificate of incorporation will provide that stockholders do not have
         the right to cumulative votes in the election of directors. Cumulative voting rights would have been available to the holders
         of our common stock if our amended and restated certificate of incorporation had not negated cumulative voting.

             No Stockholder Action by Written Consent; Calling of Special Meetings of Stockholders. Our amended and restated
         certificate of incorporation will not permit stockholder action without a meeting by consent except for the unanimous
         consent of all holders of our common stock. They also will provide that special meetings of our stockholders may be called
         only by our board of directors or the chairman of our board of directors.

             Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our bylaws will provide that
         stockholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of
         stockholders must provide timely notice of their proposal in writing to the corporate secretary.

             Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or
         brought before the meeting by or at the direction of our board of directors or by a stockholder of record on the record date
         for the meeting, who is entitled to vote at the meeting and who has delivered timely


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         written notice in proper form to our secretary of the stockholder’s intention to bring such business before the meeting.

             Section 203 of the Delaware General Corporation Law. We are subject to Section 203 of the Delaware General
         Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested
         stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the
         following exceptions:

              •     before such date, the board of directors of the corporation approved either the business combination or the
                    transaction that resulted in the stockholder becoming an interested stockholder;

              •     upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested
                    stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began,
                    excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by
                    the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee
                    stock plans in which employee participants do not have the right to determine confidentially whether shares held
                    subject to the plan will be tendered in a tender or exchange offer; or

              •     on or after such date, the business combination is approved by the board of directors and authorized at an annual or
                    special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2 / 3 % of the
                    outstanding voting stock that is not owned by the interested stockholder.

             In general, Section 203 defines business combination to include the following:

              •     any merger or consolidation involving the corporation and the interested stockholder;

              •     any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested
                    stockholder;

              •     subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock
                    of the corporation to the interested stockholder;

              •     any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any
                    class or series of the corporation beneficially owned by the interested stockholder; or

              •     the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial
                    benefits by or through the corporation.

             In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s
         affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder
         status did own, 15% or more of the outstanding voting stock of the corporation.

         Limitation on Directors’ Liability and Indemnification

             Section 145 of the Delaware General Corporation Law grants each corporation organized thereunder the power to
         indemnify any person who is or was a director, officer, employee or agent of a corporation or enterprise, against expenses,
         including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in
         connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or
         investigative, other than an action by or in the right of the corporation, by reason of being or having been in any such
         capacity, if he acted in good faith in a manner reasonably believed to be in, or not opposed to, the best interests of the
         corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was
         unlawful. A similar standard of care is applicable in the case of expenses, including attorneys’ fees, in actions by or in the
         right of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which
         such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of
         Chancery or the court in which such action was brought determines that, despite adjudication of liability, but in view of all of
         the circumstances of the case, the person is fairly and reasonably entitled to indemnity for expenses that the Delaware Court
         of Chancery or other court shall deem proper.
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             Section 102(b)(7) of the Delaware General Corporation Law enables a corporation in its certificate of incorporation, or
         an amendment thereto, to eliminate or limit the personal liability of a director to the corporation or its stockholders of
         monetary damages for violations of the directors’ fiduciary duty of care as a director, except (i) for any breach of the
         director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve
         intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law
         (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or
         (iv) for any transaction from which a director derived an improper personal benefit.

             Our amended and restated bylaws will indemnify the directors and officers to the full extent of the Delaware General
         Corporation Law and also allow our board of directors to indemnify all other employees. Such indemnification extends to
         the payment of judgments against such officers and directors and to reimbursement of amounts paid in settlement of such
         claims or actions and may apply to judgments in favor of the corporation or amounts paid in settlement to the corporation.
         Such indemnification also extends to the payment of counsel fees and expenses of such officers and directors in suits against
         them where successfully defended by them or where unsuccessfully defended, if there is no finding or judgment that the
         claim or action arose from the gross negligence or willful misconduct of such officers or directors. Such right of
         indemnification is not exclusive of any right to which such officer or director may be entitled as a matter of law and shall
         extend and apply to the estates of deceased officers and directors.

             We will maintain a directors’ and officers’ insurance policy. The policy will insure directors and officers against
         unindemnified losses arising from certain wrongful acts in their capacities as directors and officers and will reimburse us for
         those losses for which we have lawfully indemnified the directors and officers. The policy contains various exclusions that
         are normal and customary for policies of this type.

             The foregoing summaries are subject to the complete text of our amended and restated certificate of incorporation and
         amended and restated bylaws and the Delaware General Corporation Law and are qualified in their entirety by reference
         thereto.

             We believe that our amended and restated certificate of incorporation and amended and restated bylaws and insurance
         are necessary to attract and retain qualified persons as directors and officers. The limitation of liability and indemnification
         provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage
         stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. They may also reduce the likelihood
         of derivative litigation against directors and officers, even though an action, if successful, might benefit us and other
         stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement
         and damage awards against directors and officers as required or allowed by these indemnification provisions.

         Transfer Agent and Registrar

             The transfer agent and registrar for the common stock is         .

         Exchange Listing

             We will apply for listing of our common stock on the New York Stock Exchange under the symbol “ADSI.”



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                                                   SHARES ELIGIBLE FOR FUTURE SALE


             We cannot predict what effect, if any, market sales of shares of common stock or the availability of shares of common
         stock for sale will have on the market price of our common stock. Nevertheless, sales of substantial amounts of common
         stock in the public market, or the perception that such sales could occur, could materially and adversely affect the market
         price of our common stock and could impair our future ability to raise capital through the sale of our equity or equity-related
         securities at a time and price that we deem appropriate.

             Upon the closing of this offering, we will have outstanding an aggregate of approximately            shares of common
         stock, assuming the over-allotment option is not exercised. Of the outstanding shares, the shares sold in this offering will be
         freely tradable without restriction or further registration under the Securities Act, except that any shares held by our
         “affiliates,” as that term is defined under Rule 144 of the Securities Act, may be sold only in compliance with the limitations
         described below. The remaining outstanding shares of common stock will be deemed “restricted securities” as that term is
         defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an
         exemption from registration under Rule 144 under the Securities Act, which are summarized below.

             Rule 144. The availability of Rule 144 will vary depending on whether restricted shares are held by an affiliate or a
         non-affiliate. Under Rule 144 as in effect on the date of this prospectus, once we have been a reporting company subject to
         the reporting requirements of Section 13 or Section 15(d) of the Exchange Act for 90 days, an affiliate who has beneficially
         owned restricted shares of our common stock for at least six months would be entitled to sell within any three-month period
         a number of shares that does not exceed the greater of either of the following:

              •     1% of the number of shares of common stock then outstanding, which will equal           shares immediately after this
                    offering (or     shares if the underwriters’ over-allotment option is exercised in full); and



              •     the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a
                    notice on Form 144 with respect to the sale.

             However, the six month holding period increases to one year in the event we have not been a reporting company for at
         least 90 days. In addition, any sales by affiliates under Rule 144 are also limited by manner of sale provisions and notice
         requirements and the availability of current public information about us.

             The volume limitation, manner of sale and notice provisions described above will not apply to sales by non-affiliates. For
         purposes of Rule 144, a non-affiliate is any person or entity who is not our affiliate at the time of sale and has not been our
         affiliate during the preceding three months. Once we have been a reporting company for 90 days, a non-affiliate who has
         beneficially owned restricted shares of our common stock for six months may rely on Rule 144 provided that certain public
         information regarding us is available. The six month holding period increases to one year in the event we have not been a
         reporting company for at least 90 days. However, a non-affiliate who has beneficially owned the restricted shares proposed
         to be sold for at least one year will not be subject to any restrictions under Rule 144 regardless of how long we have been a
         reporting company.

             Rule 701. Under Rule 701, common stock acquired upon the exercise of certain currently outstanding options or
         pursuant to other rights granted under our stock plans may be resold, to the extent not subject to lock-up agreements, (1) by
         persons other than affiliates, beginning 90 days after the effective date of this offering, subject only to the manner-of-sale
         provisions of Rule 144, and (2) by affiliates, subject to the manner-of-sale, current public information and filing
         requirements of Rule 144, in each case, without compliance with the one-year holding period requirement of Rule 144.

            Form S-8 Registration Statements. We intend to file one or more registration statements on Form S-8 under the
         Securities Act following this offering to register our shares of common stock that are issuable pursuant to our equity
         compensation plans. These registration statements are expected to become effective


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         upon filing. Shares covered by these registration statements will then be eligible for sale in the public markets, subject to any
         applicable lock-up agreements and to Rule 144 limitations applicable to affiliates.

             Lock-Up Agreements. We, our officers, directors and certain of our existing security holders have agreed with the
         underwriters not to sell, dispose of or hedge any of their common stock or securities convertible into or exchangeable for
         shares of common stock, during the period from the date of this prospectus continuing through the date 180 days after the
         date of this prospectus, except with the prior written consent of the representatives of the underwriters.

             The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last
         17 days of the 180-day restricted period we issue an earnings release or announce material news or a material event; or
         (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the
         16-day period beginning on the last day of the 180-day period, in which case, the restrictions described in the preceding
         paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release
         of the announcement of the material news or material event. See “Underwriting.”



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            MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR NON-UNITED STATES
                                     HOLDERS OF OUR COMMON STOCK


              The following is a general discussion of certain material United States federal income tax consequences relating to the
         ownership and disposition of our common stock by a non-United States holder (as defined below) that acquires our common
         stock in this offering and holds such common stock as a capital asset for United States federal income tax purposes
         (generally, property held for investment). This discussion is not a complete analysis of all the potential tax consequences
         relating to the ownership and disposition of our common stock and does not constitute tax advice. For purposes of this
         discussion, a non-United States holder is any beneficial owner of our common stock (other than an entity or arrangement that
         is treated as a partnership for United States federal income tax purposes) that is not, for United States federal income tax
         purposes, a “United States person.” For purposes of this discussion, the term United States person means:

              •     an individual citizen or resident of the United States;

              •     a corporation (or other entity taxable as a corporation for United States federal income tax purposes) created or
                    organized in the United States or under the laws of the United States or any state thereof, including the District of
                    Columbia;

              •     an estate whose income is subject to United States federal income tax regardless of its source; or

              •     a trust (x) if a court within the United States is able to exercise primary supervision over the administration of the
                    trust and one or more United States persons have the authority to control all substantial decisions of the trust or
                    (y) which has made a valid election to be treated as a United States person under applicable United States Treasury
                    Regulations.

             If a partnership (or an entity treated as a partnership for United States federal income tax purposes) holds our common
         stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the
         partnership. Partnerships which hold our common stock and partners in such partnerships should consult their own tax
         advisors.

             This discussion does not address all aspects of United States federal income taxation that may be relevant in light of a
         non-United States holder’s special tax status or special circumstances. Former citizens or residents of the United States,
         insurance companies, tax-exempt organizations, partnerships or other pass-through entities for United States federal income
         tax purposes, dealers in securities, banks or other financial institutions and investors that hold our common stock as part of a
         hedge, straddle or conversion transaction are among those categories of potential investors that are subject to special rules
         not covered in this discussion. Furthermore, this discussion does not address any aspects of United States federal estate or
         gift taxation or tax consequences arising under the laws of any state, local or non-United States taxing jurisdiction.

             This discussion is based on the Internal Revenue Code of 1986, as amended, or the “Code,” and Treasury Regulations
         and administrative and judicial interpretations thereof, all as in effect on the date hereof, and all of which are subject to
         change, possibly with retroactive effect. No ruling has been or will be sought from the Internal Revenue Service, or the
         “IRS,” with respect to the matters discussed below, and there can be no assurance that the IRS will not take a contrary
         position regarding the tax consequences of the ownership or disposition of our common stock, or that any such contrary
         position would not be sustained by a court. Each non-United States holder should consult its own tax advisors regarding the
         United States federal, state, local and non-United States income and other tax consequences of acquiring, holding and
         disposing of our common stock.


         Distributions on common stock

             Distributions on our common stock generally will constitute dividends for United States federal income tax purposes to
         the extent paid from our current or accumulated earnings and profits, as determined under United States federal income tax
         principles. To the extent those distributions exceed our current and accumulated earnings and profits, they will constitute a
         return of capital and will first reduce a holder’s adjusted tax basis in the common stock, but not below zero, and then the
         excess, if any, will be treated as gain from the sale of the common stock, subject to treatment as described below under
         “—Gain on disposition of common stock.”


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             As discussed under “Dividend Policy” above, we do not currently expect to pay dividends. In the event we do pay
         dividends, dividends paid to a non-United States holder generally will be subject to withholding of United States federal
         income tax either at a rate of 30% of the gross amount of the dividends or such lower rate as may be specified by an
         applicable income tax treaty. In order to receive a reduced treaty rate, a non-United States holder must provide to us or our
         paying agent prior to the payment of dividends a valid IRS Form W-8BEN or other successor form certifying qualification
         for the reduced rate.

             Dividends received by a non-United States holder that are effectively connected with a United States trade or business
         conducted by the non-United States holder (and, if a treaty applies, attributable to the non-United States holder’s United
         States permanent establishment or fixed base) are exempt from such withholding tax. In order to obtain this exemption, a
         non-United States holder must provide a valid IRS Form W-8ECI or other successor form properly certifying such
         exemption. However, such effectively connected dividends are generally taxed on a net income basis at the same graduated
         rates that would be applicable if the non-United States holder were a United States person, subject to an applicable treaty
         providing otherwise. In addition to the graduated tax, dividends received by a corporate non-United States holder that are
         effectively connected with a United States trade or business of such holder may also be subject to a branch profits tax at a
         rate of 30% or such lower rate as may be specified by an applicable tax treaty.

             A non-United States holder may obtain a refund of any excess amounts withheld if an appropriate claim for refund is
         filed timely with the IRS. If a non-United States holder holds our common stock through a foreign partnership or a foreign
         intermediary, the foreign partnership or foreign intermediary will also be required to comply with additional certification
         requirements under applicable Treasury Regulations.


         Gain on disposition of common stock

             A non-United States holder generally will not be subject to United States federal income tax on any gain realized upon
         the sale or other disposition of our common stock unless:

              •     the gain is effectively connected with a United States trade or business of the non-United States holder and, if a tax
                    treaty applies, is attributable to a United States permanent establishment or fixed base maintained by such
                    non-United States holder;

              •     the non-United States holder is an individual who is present in the United States for a period or periods aggregating
                    183 days or more during the taxable year in which the sale or other disposition occurs and other conditions are
                    met; or

              •     our common stock constitutes a United States real property interest by reason of our status as a “United States real
                    property holding corporation” (“USRPHC”) for United States federal income tax purposes at any time within the
                    shorter of the five-year period preceding the disposition or the holder’s holding period for our common stock.

             Gain described in the first bullet point above is generally taxed on a net income basis at the same graduated rates that
         would be applicable if the non-United States holder were a United States person. In addition to the graduated tax, gain
         realized by a corporate non-United States holder that is effectively connected with a United States trade or business of such
         holder may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax
         treaty. Gain described in the second bullet point above (which may be offset by United States source capital losses) will be
         subject to a flat 30% United States federal income tax. Non-United States holders should consult any applicable income tax
         treaties that may provide for different rules.

             With respect to the third bullet point above, we believe that we are not currently and do not anticipate becoming a
         USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our
         United States real property interests relative to the fair market value of our other business assets and our non-United States
         real property interests, there can be no assurance that we will not become a USRPHC in the future. Even if we become a
         USRPHC, as long as our common stock is regularly traded on an established securities market, within the meaning of the
         applicable Treasury Regulations, such common stock will be treated as a United States real property interest with respect to
         a particular non-United


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         States holder only if such non-United States holder actually or constructively holds more than 5 percent of such regularly
         traded common stock during the applicable period.


         Backup withholding and information reporting

             Generally, we must report annually to the IRS and to each non-United States holder the amount of any dividends paid,
         the name and address of the recipient, and the amount of any tax withheld. These information reporting requirements apply
         even if withholding was not required because the dividends were effectively connected dividends or withholding was
         reduced or eliminated by an applicable tax treaty. Pursuant to tax treaties or other agreements, the IRS may make its reports
         available to tax authorities in the recipient’s country of residence.

            Backup withholding will generally not apply to payments of dividends to a non-United States holder if the holder has
         properly certified to us or our paying agent that it is not a United States person, such as by providing a valid IRS
         Form W-8BEN or W-8ECI, or has otherwise established an exemption, provided we or the paying agent have no actual
         knowledge or reason to know that the beneficial owner is a United States person.

             Information reporting and backup withholding generally are not required with respect to the amount of any proceeds
         from the sale or other disposition of our common stock by a non-United States holder outside the United States through a
         foreign office of a foreign broker that does not have certain specified connections to the United States. However, payment of
         the proceeds from a disposition by a non-United States holder of common stock made by or through the United States office
         of a broker may be subject to information reporting and backup withholding will apply unless the non-United States holder
         certifies as to its non-United States holder status under penalties of perjury or otherwise establishes an exemption from
         information reporting and backup withholding, provided that the broker has no knowledge or reason to know that the
         beneficial owner is a United States person.

             Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed
         as a refund or a credit against a non-United States holder’s United States federal income tax liability provided the required
         information is furnished timely to the IRS.


         New Legislation

             Newly enacted legislation may impose withholding taxes on certain types of payments made to “foreign financial
         institutions” and certain other non-United States entities. Under this legislation, the failure to comply with additional
         certification, information reporting and other specified requirements could result in withholding tax being imposed on
         payments of dividends and sales proceeds to foreign intermediaries and certain non-United States holders. The legislation
         imposes a 30% withholding tax on dividends on, or gross proceeds from the sale or other disposition of, our common stock
         paid to a foreign financial institution or to a foreign non-financial entity, unless (i) the foreign financial institution undertakes
         certain diligence and reporting obligations or (ii) the foreign non-financial entity either certifies it does not have any
         substantial United States owners or furnishes identifying information regarding each substantial United States owner. If the
         payee is a foreign financial institution, it must enter into an agreement with the United States Treasury requiring, among
         other things, that it undertake to identify accounts held by certain United States persons or United States-owned foreign
         entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose
         actions prevent it from complying with these reporting and other requirements. The legislation would apply to payments
         made after December 31, 2012. Prospective investors should consult their tax advisors regarding this legislation.

           THE PRECEDING DISCUSSION OF UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS IS FOR
         GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD
         CONSULT ITS OWN TAX ADVISORS REGARDING THE PARTICULAR UNITED STATES FEDERAL, STATE,
         LOCAL, AND NON-UNITED STATES TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF
         OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE
         LAWS.



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                                                               UNDERWRITERS


             Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, between us,
         the selling stockholders and the underwriters named below, for whom J.P. Morgan Securities LLC (“J.P. Morgan”) and
         Morgan Stanley & Co. Incorporated (“Morgan Stanley”) are acting as representatives, the underwriters have severally agreed
         to purchase and we and the selling stockholders have agreed to sell to them, severally, the number of shares indicated below:


         Nam
         e                                                                                                     Number of Shares


         J.P. Morgan Securities LLC
         Morgan Stanley & Co. Incorporated
            Total


             The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,”
         respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from the us
         and the selling stockholders and subject to prior sale. The underwriting agreement provides that the obligations of the several
         underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the
         approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and
         pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters
         are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below.

              The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price
         listed on the cover page of this prospectus and part to certain dealers. After the initial offering of the shares of common
         stock, the offering price and other selling terms may from time to time be varied by the representatives.

             We and the selling stockholders have granted to the underwriters an option, exercisable for 30 days from the date of this
         prospectus, to purchase up to an aggregate of        additional shares of common stock at the public offering price listed on
         the cover page of this prospectus, less underwriting discounts and commissions, to cover over-allotments. The underwriters
         may exercise this option if they sell more shares than the total number of shares set forth in the table above. To the extent the
         option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same
         percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding
         table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.

             If the underwriters’ option is exercised in full, the total price to the public of all the shares of common stock sold would
         be $     , the total underwriting discounts and commissions would be $          , the total proceeds to us would be $    and the
         total proceeds to the selling stockholders would be $ .

            The following table shows the per share and total public offering price, underwriting discounts and commissions, and
         proceeds before expenses to us and the selling stockholders. These amounts are shown assuming both no exercise and full
         exercise of the underwriters’ option to purchase up to an additional      shares of common stock.


                                                                                                           Total
                                                                                      Per Share         No Exercise         Full Exercise


         Public offering price                                                       $                   $                   $
         Underwriting discounts and commissions to be paid by us                     $                   $                   $
         Underwriting discounts and commissions to be paid by the selling
           stockholders                                                              $                   $                   $
         Proceeds, before expenses, to us                                            $                   $                   $
         Proceeds, before expenses, to the selling stockholders                      $                   $                   $


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            The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are
         approximately $ , which includes legal, accounting and printing costs and various other fees associated with registration
         and listing of our common stock.

            The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total
         number of shares of common stock offered by them.

             We intend to apply to list our common stock on the New York Stock Exchange under the trading symbol “ADSI.”

             We and our directors and executive officers and the holders of all of our outstanding stock and stock options have agreed
         that, without the prior written consent of J.P. Morgan and Morgan Stanley on behalf of the underwriters, we and they will
         not, during the period ending 180 days after the date of this prospectus:

              •     offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
                    grant any option, right or warrant to purchase lend or otherwise transfer or dispose of, directly or indirectly, any
                    shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common
                    stock;

              •     file any registration statement with the SEC relating to the offering of any shares of common stock or any securities
                    convertible into or exercisable or exchangeable for common stock; or

              •     enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic
                    consequences of ownership of the common stock,

         whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash
         or otherwise. In addition, we and each such person agrees that, without the prior written consent of J.P. Morgan and Morgan
         Stanley on behalf of the underwriters, it will not, during the period ending 180 days after the date of this prospectus, make
         any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security
         convertible into or exercisable or exchangeable for common stock.

             The restrictions described in the immediately preceding paragraph to do not apply to:

              •     the sale of shares to the underwriters;

              •     transactions by any person other than us relating to shares of common stock or other securities acquired in open
                    market transactions after the completion of the offering of the shares;

              •     transfers of any shares of common stock or any security convertible into common stock as a bona fide gift, provided
                    certain requirements are met;

              •     dispositions to any trust or partnership for the benefit of a director, executive officer or holder of our outstanding
                    common stock or any immediate family member thereof, provided certain requirements are met;

              •     the transfer of common stock to another corporation, partnership, limited liability company or other business entity
                    so long as the transferee is an affiliate of a director, executive officer or holder of our outstanding common stock and
                    such transfer is not for value, provided certain requirements are met;

              •     distributions of shares of common stock or any security convertible into common stock to limited partners or
                    stockholders of such directors, executive officers and the holders of all of our outstanding stock and stock options
                    referred to above, provided certain requirements are met;

              •     the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of
                    common stock;

              •     the filing of a Form S-8 relating to the offering of securities in accordance with the terms of an equity incentive plan
                    in effect on the date hereof;
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              •     the grant of restricted stock, options, long-term incentive units or other securities pursuant to an equity incentive
                    plan in effect on the date hereof, provided certain requirements are met; or

              •     the issuance of up to 5% of the total number of outstanding shares of common stock in connection with bona fide
                    mergers or acquisitions, joint ventures, commercial relationships or other strategic transactions, provided certain
                    requirements are met.

             The 180 day restricted period described in the preceding paragraph will be automatically extended if:

              •     during the last 17 days of the 180 day restricted period we issue an earnings release or announce material news or a
                    material event relating to us occurs, or

              •     prior to the expiration of the 180 day restricted period, we announce that we will release earnings results during the
                    16 day period beginning on the last day of the 180 day period,

         in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18 day
         period beginning on the issuance of the earnings release or the announcement of the material news or material event.

             In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize,
         maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are
         obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short
         position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option.
         The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open
         market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other
         things, the open market price of shares compared to the price available under the over-allotment option. The underwriters
         may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out
         any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the
         underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after
         pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this
         offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the
         common stock. These activities may raise or maintain the market price of the common stock above independent market
         levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in
         these activities and may end any of these activities at any time.

             We, the selling stockholders and the underwriters have agreed to indemnify each other against certain liabilities,
         including liabilities under the Securities Act or to contribute to payments the underwriters may be required to make because
         of any of those liabilities.

             A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling
         group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of
         common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by
         the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

             The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which
         may include securities trading, commercial and investment banking, financial advisory, investment management, investment
         research, principal investment, hedging, financing, cash management and brokerage activities. The underwriters and their
         affiliates have performed and will continue to perform investment banking, commercial banking, hedging, cash management
         and advisory services for us and our affiliates from time to time, including as acting as initial purchasers, book-runners or
         underwriters in our past offerings, for which they have received or may receive customary fees and expenses. In particular,
         affiliates of certain underwriters are lenders under our senior secured revolving credit facility, for which they would be
         entitled to receive their pro rata portion of the proceeds of this offering that are used to repay such facility, as well as certain
         customary breakage fees with respect to Eurodollar rate loans in connection with such


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         repayment. In addition, certain of the underwriters acted as initial purchasers in the issuance of our senior secured notes, for
         which they received customary discounts and commissions. See “Description of Certain Indebtedness.”

         Pricing of the Offering

             Prior to this offering, there has been no public market for our common stock. The initial public offering price was
         determined by negotiations between us and the representatives. Among the factors considered in determining the initial
         public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other
         financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of
         securities, and certain financial and operating information of companies engaged in activities similar to ours.

         Directed Share Program

             At our request, the underwriters will reserve up to five percent of the shares of common stock to be issued by the
         company and offered by this prospectus for sale, at the initial public offering price, to directors, officers, employees,
         business associates and related persons of ADS, Inc. If purchased by these persons, these shares will be subject to a 180-day
         lock-up restriction. The lock-up period will be extended if, during the last 17 days of the lock-up period we issue a release
         about earnings or material news or events relating to us occurs; or, prior to the expiration of the lock-up period, we announce
         that we will release earnings results during the 16-day period beginning on the last day of the lock-up period, in which case
         the restrictions described above will continue to apply until the expiration of the 18-day period beginning on the issuance of
         the release or the occurrence of the material news or material event. The number of shares of common stock available for
         sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares
         that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares
         offered by this prospectus. We have agreed to indemnify           in connection with the directed share program including for
         the failure of any participant to pay for its shares.


         Notice to Prospective Investors in the European Economic Area

             In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive
         (each, a “Relevant Member State”) an offer to the public of any shares which are the subject of the offering contemplated by
         this Prospectus (the “Shares”) may not be made in that Relevant Member State, except that an offer to the public in that
         Relevant Member State of any Shares may be made at any time under the following exemptions under the Prospectus
         Directive, if they have been implemented in that Relevant Member State:

                    (a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

                    (b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD
               Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus
               Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for
               any such offer; or

                    (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer
               of Shares shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3
               of the Prospectus Directive.

             For the purposes of this provision, the expression an “offer to the public” in relation to any Shares in any Relevant
         Member State means the communication in any form and by any means of sufficient information on the terms of the offer
         and any Shares to be offered so as to enable an investor to decide to purchase any Shares, as the same may be varied in that
         Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus
         Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent
         implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member
         State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.


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         Notice to Prospective Investors in the United Kingdom

             Each underwriter has represented and agreed that:

                  (a) it has only communicated or caused to be communicated and will only communicate or cause to be
               communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the
               FSMA) received by it in connection with the issue or sale of the Shares in circumstances in which Section 21(1) of the
               FSMA does not apply to us; and

                     (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it
               in relation to the Shares in, from or otherwise involving the United Kingdom.



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                                                              LEGAL MATTERS

            The validity of the shares sold in this offering will be will be passed upon for us by Latham & Watkins LLP, New York,
         New York. Certain legal matters will be passed upon for the underwriters by Davis Polk & Wardwell LLP, New York, New
         York.


                                                                   EXPERTS

             The consolidated financial statements of ADS Tactical, Inc. and subsidiary as of December 31, 2009 and December 31,
         2010 and for each of the years in the three-year period ended December 31, 2010 have been included herein in reliance upon
         the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority
         of said firm as experts in accounting and auditing.


                                            WHERE YOU CAN FIND MORE INFORMATION

             This prospectus is part of a registration statement on Form S-1 that we have filed with the SEC under the Securities Act
         covering the common stock we are offering. As permitted by the rules and regulations of the SEC, this prospectus omits
         certain information contained in the registration statement. For further information with respect to us and our common stock,
         you should refer to the registration statement and to its exhibits and schedules. We make reference in this prospectus to
         certain of our contracts, agreements and other documents that are filed as exhibits to the registration statement. For
         additional information regarding those contracts, agreements and other documents, please see the exhibits attached to this
         registration statement.

              You can read and copy the registration statement and the exhibits and schedules filed with the registration statement or
         any reports, statements or other information we have filed or file, at the public reference facilities maintained by the SEC at
         100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents from such offices upon payment
         of the prescribed fees. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public
         reference room. You may also request copies of the documents upon payment of a duplicating fee by writing to the SEC. In
         addition, the SEC maintains a web site that contains reports and other information regarding registrants (including us) that
         file electronically with the SEC, which you can access at http://www.sec.gov .

             In addition, you may request copies of this filing and such other reports as we may determine or as the law requires at no
         cost, by telephone at (901) 419-7130, or by mail to ADS, Inc., 621 Lynnhaven Parkway, Suite 400, Virginia Beach, Virginia
         23452. Our website address is http://www.adsinc.com . Information on our website is not considered part of this prospectus.


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                                             ADS TACTICAL, INC. AND SUBSIDIARY
                                                   Financial Statement Index


                                                                                                                Page


         Report of Independent Registered Public Accounting Firm                                                F-2
         Consolidated Financial Statements:
           Consolidated Balance Sheets as of December 31, 2009 and 2010                                         F-3
           Consolidated Statements of Operations for the years ended December 31, 2008, 2009, and 2010          F-4
           Consolidated Statements Stockholders’ Equity for the years ended December 31, 2008, 2009, and 2010   F-5
           Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2009, and 2010          F-6
         Notes to Consolidated Financial Statements                                                             F-7


                                                                  F-1
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         When the transaction referred to in note 13(b) of the notes to consolidated financial statements has been consummated,
         we will be in a position to render the following report.


         /s/ KPMG LLP


                                         Report of Independent Registered Public Accounting Firm


         The Board of Directors
         ADS Tactical, Inc.:

             We have audited the accompanying consolidated balance sheets of ADS Tactical, Inc. and subsidiary (the Company) as
         of December 31, 2009 and 2010, and the related consolidated statements of operations, stockholders’ equity, and cash flows
         for each of the years in the three-year period ended December 31, 2010. 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
         consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial
         position of ADS Tactical, Inc. and subsidiary as of December 31, 2009 and 2010, and the results of their operations and their
         cash flows for each of the years in the three-year period ended December 31, 2010, in conformity with U.S. generally
         accepted accounting principles.


         Norfolk, Virginia
         March 12, 2011, except as to note 13(a), which is as of April 5, 2011
           and note 13(b), which is as of      , 2011


                                                                        F-2
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                                                  ADS TACTICAL, INC. AND SUBSIDIARY

                                                            Consolidated Balance Sheets
                                                            December 31, 2009 and 2010


                                                                                                    2009          2010


                                                                     Assets
         Current assets:
           Cash and cash equivalents                                                          $     1,355,414      2,810,093
           Accounts receivable, net                                                               119,863,686    171,353,312
           Inventories                                                                             60,844,076     87,345,649
           Prepaid expenses and other current assets                                                2,100,513      2,276,871
             Total current assets                                                                 184,163,689    263,785,925
         Property and equipment, net                                                               16,884,085     19,212,282
         Due from affiliates                                                                          635,361        239,687
         Other assets                                                                                 246,307      2,861,606
               Total assets                                                                   $   201,929,442    286,099,500

                                                      Liabilities and Stockholders’ Equity
         Current liabilities:
           Line of credit                                                                     $     23,175,000    90,154,626
           Current portion of long-term debt                                                         9,297,072    21,097,261
           Accounts payable                                                                         86,130,676   115,067,593
           Accrued expenses                                                                          5,173,515     6,680,454
           Deferred revenue                                                                            504,411       139,036
             Total current liabilities                                                            124,280,674    233,138,970
         Long-term debt, excluding current portion                                                 12,193,322     37,573,067
               Total liabilities                                                                  136,473,996    270,712,037
         Stockholders’ equity:
           Common stock (no par value; 300,000 shares authorized; outstanding
             148,140 shares)                                                                                —             —
           Additional paid-in capital                                                                   63,324        63,324
           Retained earnings                                                                        63,097,764    11,368,460
              Total equity attributable to ADS Tactical, Inc.                                       63,161,088    11,431,784
            Noncontrolling interests                                                                 2,294,358     3,955,679
               Total stockholders’ equity                                                           65,455,446    15,387,463
               Total liabilities and stockholders’ equity                                     $   201,929,442    286,099,500


                                            See accompanying notes to consolidated financial statements.


                                                                        F-3
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                                                   ADS TACTICAL, INC. AND SUBSIDIARY

                                                     Consolidated Statements of Operations
                                                  Years ended December 31, 2008, 2009, and 2010


                                                                                2008                2009             2010


         Net sales                                                       $     660,535,126        932,177,116      1,330,839,600
         Cost of goods sold                                                    572,992,387        809,116,969      1,166,391,155
                 Gross profit                                                   87,542,739        123,060,147       164,448,445
         Selling, general, and administrative expenses                          44,322,361         60,897,157        80,944,623
         Intangible asset impairment                                                    —           2,996,025                —
                    Income from operations                                      43,220,378         59,166,965        83,503,822
         Other income (expense):
           Interest income                                                         225,129              84,211           127,306
           Interest expense                                                     (1,481,896 )        (1,401,361 )      (5,388,081 )
                                                                                (1,256,767 )        (1,317,150 )      (5,260,775 )
                Net income                                                      41,963,611         57,849,815        78,243,047
         Net income (loss) attributable to noncontrolling interests                (46,576 )          141,292           961,321
                    Net income attributable to ADS Tactical, Inc.        $      42,010,187         57,708,523        77,281,726

         Pro forma net income and net income per share
           information:
              Net income attributable to ADS Tactical, Inc.              $      42,010,187         57,708,523        77,281,726
              Pro forma provision for income taxes (unaudited)                  16,594,024         22,794,867        30,912,690
                    Pro forma net income (unaudited)                     $      25,416,163         34,913,656        46,369,036

               Pro forma net income per share after giving effect to
                 stock split (note 13(b)):
                 Basic and diluted (unaudited)                           $
               Pro forma weighted average shares outstanding after
                 giving effect to stock split (unaudited)
                 (note 13(b))

                                             See accompanying notes to consolidated financial statements.


                                                                         F-4
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                                                    ADS TACTICAL, INC. AND SUBSIDIARY

                                                  Consolidated Statements of Stockholders’ Equity
                                                   Years ended December 31, 2008, 2009, and 2010

                                                                                            Equity
                                                        Additional                       attributable
                                    Common stock         paid-in        Retained            to ADS            Noncontrolling
                                              Amoun
                                   Shares        t       capital        earnings         Tactical, Inc.          interests          Total


         Balance, January 1,
           2008                    148,140    $    —        63,324        18,212,333          18,275,657                    —        18,275,657
         Net income (loss)              —          —            —         42,010,187          42,010,187               (46,576 )     41,963,611
         Distributions declared
           to stockholders              —          —               —     (23,268,989 )       (23,268,989 )                   —      (23,268,989 )
         Capital contributions —
           noncontrolling
           interests                                                                                                1,215,554         1,215,554

         Balance, December 31,
           2008                    148,140         —        63,324        36,953,531          37,016,855            1,168,978        38,185,833
         Net income                     —          —            —         57,708,523          57,708,523              141,292        57,849,815
         Distributions declared
           to stockholders              —          —               —     (31,564,290 )       (31,564,290 )                   —      (31,564,290 )
         Capital contributions —
           noncontrolling
           interests                    —          —               —               —                      —           984,088           984,088

         Balance, December 31,
           2009                    148,140         —        63,324        63,097,764          63,161,088            2,294,358        65,455,446
         Net income                     —          —            —         77,281,726          77,281,726              961,321        78,243,047
         Distributions paid to
           stockholders                 —          —               —    (129,011,030 )     (129,011,030 )                    —     (129,011,030 )
         Capital contributions —
           noncontrolling
           interests                    —          —               —               —                      —           700,000           700,000

         Balance, December 31,
           2010                    148,140    $    —        63,324        11,368,460          11,431,784            3,955,679        15,387,463



                                             See accompanying notes to consolidated financial statements.


                                                                         F-5
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                                                     ADS TACTICAL, INC. AND SUBSIDIARY

                                                       Consolidated Statements of Cash Flows
                                                    Years ended December 31, 2008, 2009, and 2010


                                                                                           2008            2009            2010


         Cash flows from operating activities:
           Net income                                                                 $   41,963,611      57,849,815        78,243,047
           Adjustments to reconcile net income to net cash provided by
             operating activities:
             Depreciation and amortization                                                  2,049,355       2,140,410          974,476
             Amortization of deferred financing costs                                              —               —           537,143
             Intangible asset impairment                                                           —        2,996,025               —
             Loss (gain) on sale of property and equipment                                         —          (52,439 )         53,580
             Changes in operating assets and liabilities, net of acquisition:
                 Accounts receivable                                                      (12,093,694 )   (53,052,113 )    (51,489,626 )
                 Inventories                                                              (21,467,717 )    (8,497,009 )    (26,501,573 )
                 Prepaid expenses and other assets                                           (394,646 )       (76,941 )       (153,505 )
                 Accounts payable                                                           7,923,746      32,058,689       28,936,917
                 Accrued expenses                                                           1,463,664       1,420,598        1,506,939
                 Deferred revenue                                                          (3,551,190 )       504,411         (365,375 )

                    Net cash provided by operating activities                             15,893,129      35,291,446        31,742,023

         Cash flows from investing activities:
           Purchases of property and equipment                                             (8,297,070 )    (9,181,467 )     (3,386,682 )
           Proceeds from sale of property and equipment                                        11,500         523,161           44,100
           Advances from (to) affiliated companies and stockholders                        (1,852,352 )     2,072,282          395,674
           Purchase of subsidiary, net of cash acquired of $750,387                        (4,749,613 )            —                —

                    Net cash used in investing activities                                 (14,887,535 )    (6,586,024 )     (2,946,908 )

         Cash flows from financing activities:
           Net proceeds from line of credit                                                21,539,000       1,636,000       66,979,626
           Proceeds from long-term debt                                                     6,290,612       6,400,000       51,489,436
           Principal payments on long-term debt                                            (3,072,903 )    (5,339,135 )    (14,309,502 )
           Cash paid for debt issuance costs                                                       —               —        (3,188,966 )
           Cash distributions to stockholders                                             (25,480,689 )   (33,227,590 )   (129,011,030 )
           Capital contributions from stockholders — noncontrolling interests               1,215,554         984,088          700,000

                    Net cash provided by (used in) financing activities                      491,574      (29,546,637 )    (27,340,436 )

                   Net increase (decrease) in cash and cash equivalents                     1,497,168        (841,215 )      1,454,679
         Cash and cash equivalents, beginning of year                                         699,461       2,196,629        1,355,414

         Cash and cash equivalents, end of year                                       $     2,196,629       1,355,414        2,810,093

         Supplemental disclosure of cash flow information:
           Interest paid during year                                                  $     1,482,994       1,388,288        4,533,373

                                             See accompanying notes to consolidated financial statements.


                                                                                F-6
Table of Contents



                                                 ADS TACTICAL, INC. AND SUBSIDIARY

                                                 Notes to Consolidated Financial Statements
                                                     December 31, 2008, 2009, and 2010


         (1)        Organization and Nature of Business

             On October 2, 2009, Tactical Holdcorp, Inc., a Virginia corporation having no separate operations, acquired all the stock
         of Atlantic Diving Supply, Inc. (ADS, Inc.) at which time ADS, Inc. became a wholly owned subsidiary of Tactical
         Holdcorp, Inc. The stockholders of Tactical Holdcorp, Inc. are the same as the stockholders of ADS, Inc. In June 2010,
         Tactical Holdcorp, Inc. changed its name to ADS Tactical, Inc.

             ADS, Inc., a Virginia corporation, was incorporated in 1997 and commenced operations on September 18, 1997 and is a
         leading provider of value-added logistics and supply chain solutions specializing in tactical and operational equipment. ADS,
         Inc. operates between a fragmented base of vendors and a decentralized group of customers. Most of ADS, Inc.’s customers
         are within the Department of Defense and the Department of Homeland Security. The products ADS, Inc. offers include
         apparel, expeditionary equipment, optical equipment, communications equipment, emergency medical supplies, lighting,
         eyewear, and other items.

            On June 7, 2008, all of the outstanding stock of Mar-Vel International, Inc. (Mar-Vel) was purchased by ADS, Inc.
         Mar-Vel, a New Jersey corporation and wholly owned subsidiary of ADS, Inc., sells underwater equipment to
         environmental, commercial, and retail customers, principally in the United States.

            Tactical Exporters, Inc., a Delaware corporation, was incorporated in 2008 to facilitate the foreign distribution of
         products.

             ADS Tactical, Inc., ADS, Inc., Mar-Vel, Tactical Exporters, Inc., and the consolidated variable interest entities (VIEs)
         discussed in note 11 are collectively referred to as ADS or the Company.


         (2)        Summary of Significant Accounting Policies

            (a) Basis of Consolidation

             The consolidated financial statements include the accounts of ADS Tactical, Inc. and its direct and indirect subsidiaries.
         In accordance with the Variable Interest Entity Subsections of Financial Accounting Standards Board (FASB) Accounting
         Standards Codification (ASC) Subtopic 810-10, Consolidation — Overall (FASB Interpretation No. 46(R), Consolidation of
         Variable Interest Entities ), the Company also consolidates any VIEs of which it is the primary beneficiary, as defined. All
         material intercompany transactions and balances have been eliminated in the preparation of these consolidated financial
         statements.


            (b) Revenue Recognition

             The Company recognizes revenue when products are shipped and the customer takes ownership and assumes risk of loss,
         collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and sales price is fixed and
         determinable. Revenue is recognized under contracts only when funding authorization from the U.S. government has been
         received. Shipping and transportation costs charged to customers are recorded in both sales and selling, general, and
         administrative expenses.

             The Company evaluates whether it is appropriate to record product sales and related costs on a gross or net basis in
         accordance with ASC 605-45, Principal Agent Considerations . Management uses judgment in its consideration, including
         whether the Company is primarily obligated in a transaction, subject to inventory risk, has latitude in establishing prices and
         suppliers, and other factors or indicators that support the determination of whether it has acted as a principal or agent in the
         related transaction.

             Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and are
         therefore excluded from net sales in the consolidated statements of operations.
F-7
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                                                ADS TACTICAL, INC. AND SUBSIDIARY

                                         Notes to Consolidated Financial Statements — (Continued)
                                                    December 31, 2008, 2009, and 2010


            Substantially all of the Company’s revenues are derived from net sales of a single major product group, tactical and
         operational equipment. Disclosure of additional information regarding aggregate sales of individual products or categories of
         similar products within this major product group is impracticable.


            (c) Cash and Cash Equivalents

            The Company considers all highly liquid investments with a remaining maturity of three months or less at the time of
         purchase to be cash equivalents. These cash equivalents consist primarily of term deposits and certificates of deposit. Cash
         equivalents are stated at cost, which approximates market value.

             Outstanding checks in excess of funds on deposit (book overdrafts) totaled $7,828,561 and $19,520,370 at December 31,
         2009 and 2010, respectively, and are included in accounts payable in the Company’s consolidated balance sheets. Changes
         in the Company’s book overdraft are included in net cash provided by operating activities in the consolidated statements of
         cash flows.


            (d) Credit Risk

             At various times during the year, the Company has cash deposits in financial institutions in excess of the amount insured
         by agencies of the federal government. In assessing this credit risk, the Company periodically evaluates the stability of these
         financial institutions.


            (e) Business Concentration

             The Company’s revenues are dependent upon the government renewing contracts with the Company and the Company’s
         ability to obtain new contracts. Approximately 95% of the Company’s net sales are derived from multiple federal, state, and
         local government agencies under various contracts that terminate at various times through 2015.


            (f) Accounts Receivable

             Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts
         receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. In
         determining whether an allowance for doubtful accounts is required, management considers the customer’s financial
         condition, the current receivables aging, and current payment patterns. Past due balances over 90 days and over a specified
         amount are reviewed individually for collectibility. The allowance for doubtful accounts was $0 and $400,000 at
         December 31, 2009 and 2010, respectively. The Company does not have any off-balance-sheet credit exposure related to its
         customers.


            (g) Inventories

             Inventories consist of tactical and operational equipment produced and manufactured by other parties and are stated at
         the lower of cost or market. Cost is determined by the first-in, first-out basis.


            (h) Property and Equipment

             Property and equipment are stated at cost. Expenditures for repairs and maintenance are charged to expense as incurred.
         Additions and betterments are capitalized. The cost and related accumulated depreciation on property and equipment sold or
         otherwise disposed of are removed from the accounts, and any gain or loss is reported as current year revenue or expense.
F-8
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                                                    ADS TACTICAL, INC. AND SUBSIDIARY

                                            Notes to Consolidated Financial Statements — (Continued)
                                                       December 31, 2008, 2009, and 2010


            Depreciation is generally provided for using the straight-line method over the estimated useful lives as follows for the
         major classes of assets:


         Software                                                                                                                   3 years
         Transportation equipment                                                                                                   5 years
         Office equipment, furniture, and fixtures                                                                               5-10 years
         Building and improvements                                                                                               5-39 years


            (i) New Accounting Pronouncements

             In June 2009, the FASB issued updated guidance, which amends guidance for determining whether an entity is a VIE
         and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a
         VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that
         most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to
         receive benefits from the VIE that could be significant to the VIE. The Company’s adoption of this guidance on January 1,
         2010 did not have a material impact on the consolidated financial statements.


            (j) Fair Value of Financial Instruments

             During 2008 and 2009, the Company adopted guidance for accounting for fair value measurements of financial assets
         and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in
         the consolidated financial statements. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation
         techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
         for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant
         unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

              •     Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has
                    the ability to access at the measurement date.

              •     Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or
                    liability, either directly or indirectly.

              •     Level 3 inputs are unobservable inputs for the asset or liability.

             The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest
         level input that is significant to the fair value measurement in its entirety.

             Fair value is the price that would be received for an asset or paid to transfer a liability (an exit price) in the Company’s
         principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
         measurement date.

              Management of the Company believes that the carrying amount of its financial instruments, including cash and cash
         equivalents, accounts receivable, prepaid expenses and other assets, accounts payable, and accrued expenses, approximate
         fair value due to the relative short maturity of these instruments. Borrowings under the line of credit bear a variable interest
         rate, and therefore, the carrying amounts of these borrowings approximate fair value. Fair values for long-term debt
         arrangements are not readily available, but the Company estimates that the carrying values for these arrangements
         approximate fair value based on discounted cash flows using current market interest rates for debt with similar terms.


                                                                           F-9
Table of Contents



                                                ADS TACTICAL, INC. AND SUBSIDIARY

                                        Notes to Consolidated Financial Statements — (Continued)
                                                   December 31, 2008, 2009, and 2010


            (k) Long-Lived Assets

             Long-lived assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed
         for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
         recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first
         compares the undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the
         carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized equal to the amount
         by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are not depreciated
         and are reported at the lower of the carrying amount or fair value, less costs to sell.


            (l) Selling, General, and Administrative Expenses

             Selling, general, and administrative expenses include wages, rent, insurance, utilities, delivery costs, warehouse
         distribution costs, repairs and maintenance of equipment, and other general administrative expenses.

            Shipping and handling costs and expenses related to freight of $6,280,480, $7,082,717, and $11,762,205 for
         December 31, 2008, 2009 , and 2010, respectively, are included in selling, general, and administrative expenses.

             During 2008, 2009, and 2010, the Company incurred costs of $0, $874,135, and $7,838,379, which principally consisted
         of professional fees in connection with a proposed initial public offering of common stock and the pursuit of other strategic
         opportunities and financings. These costs are included in selling, general, and administrative expenses.


            (m) Advertising, Marketing, and Promotional Costs

            The Company follows the policy of charging the costs of advertising, marketing, and promotions to expense as incurred.
         These costs were $1,873,463, $2,244,845, and $3,700,087 in 2008, 2009, and 2010, respectively, and are included in selling,
         general, and administrative expenses.


            (n) Use of Estimates

             The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make
         estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
         liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the
         reporting period. Actual results could differ from those estimates and may have an impact on future periods.


            (o) Income Taxes

             The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those
         provisions, the Company does not pay federal or state income taxes on its taxable income. Instead, the stockholders are
         liable for individual federal and state income taxes on their respective share of the Company’s income or loss.


            (p) Subsequent Events

             In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential
         recognition or disclosure through April 5, 2011, the date the consolidated


                                                                      F-10
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                                                  ADS TACTICAL, INC. AND SUBSIDIARY

                                            Notes to Consolidated Financial Statements — (Continued)
                                                       December 31, 2008, 2009, and 2010


         financial statements were available to be issued, and determined that, except as described herein, there are no other items to
         disclose.


         (3)        Property and Equipment

               Property and equipment consist of the following at December 31, 2009 and 2010:


                                                                                                      2009                  2010


         Building and improvements                                                              $    12,833,560            13,467,834
         Land                                                                                         2,979,892             2,979,892
         Software                                                                                     2,575,371             2,646,001
         Transportation equipment                                                                        98,658               183,208
         Office equipment, furniture, and fixtures                                                    1,992,520             2,923,036
         Construction in progress                                                                            —              1,454,395
                                                                                                     20,480,001            23,654,366
         Less — accumulated depreciation                                                             (3,595,916 )          (4,442,084 )
                                                                                                $    16,884,085            19,212,282


               Depreciation expense was $1,212,776, $1,274,983, and $974,476 for 2008, 2009, and 2010, respectively.


         (4)        Intangible Assets

             On June 7, 2008, the Company purchased 100% of the stock of Mar-Vel. The aggregate purchase price was $5,500,000.
         The Company purchased Mar-Vel primarily to obtain available contract capacity under its largest contract. The acquisition
         was accounted for using the purchase price method of accounting in accordance with accounting standards governing FASB
         ASC Topic 805, Business Combinations . The Company’s final purchase allocation related to the Mar-Vel acquisition is as
         follows:


         Fair value of tangible assets:
           Current assets                                                                             $      3,043,987
           Other assets                                                                                          5,182
         Fair value of intangible asset:
           Amortizable sales contract                                                                        4,698,031
                Total assets acquired                                                                        7,747,200
         Current liabilities                                                                                 2,110,360
         Long-term debt                                                                                        136,840
                Total liabilities assumed                                                                    2,247,200
                Total purchase price                                                                  $      5,500,000


             For financial reporting purposes, the intangible asset sales contract of $4,698,031 was being amortized over the
         remaining 38 months (including renewal option) of the contract term. Amortization expense was $836,579, $865,427, and $0
         for 2008, 2009, and 2010, respectively. In 2009, ADS, Inc. was awarded a similar contract; consequently, the renewal option
on the sales contract obtained in the Mar-Vel acquisition was not exercised. Therefore, the remaining unamortized portion of
the Mar-Vel sales contract of $2,996,025 has been recorded as an impairment loss included in operating expenses in 2009.


                                                           F-11
Table of Contents



                                                 ADS TACTICAL, INC. AND SUBSIDIARY

                                         Notes to Consolidated Financial Statements — (Continued)
                                                    December 31, 2008, 2009, and 2010


         (5)        Line of Credit

             ADS, Inc. had a bank operating line of credit providing for borrowings of up to $45,000,000, bearing interest at LIBOR
         plus 2.00% (2.23% at December 31, 2009) and due on demand. The note had a stated maturity of October 13, 2009 and was
         temporarily extended through February 28, 2010. The note was secured by a general security agreement covering all the
         assets of ADS, Inc., the carrying value of which totaled $188,863,034 at December 31, 2009. The outstanding balance on
         this line of credit was $23,175,000 at December 31, 2009. The agreement, among other things, required the maintenance of
         certain specified financial ratios. At December 31, 2009, the Company was in compliance with its financial covenants.

              On February 18, 2010, the Company entered into a senior secured revolving credit facility, which replaced the previous
         line of credit. The new facility has a credit limit of $180,000,000 with an optional increase in commitments of up to an
         additional $25,000,000. The facility bears interest at variable rates based on the Eurodollar rate or the bank’s base rate, and
         in each case includes an applicable margin ranging from 1.25% to 3.25% depending on the average excess availability.
         Interest-only payments are due monthly. The facility matures on February 18, 2013 and was used to repay the outstanding
         balance on the previous line of credit, retire long-term debt (note 6), and is available to fund future operating cash needs of
         the Company. The facility and certain other debt obligations of the Company require the maintenance of certain specified
         financial ratios and provide restrictive covenants that impose other significant operating restrictions, including, but not
         limited to additional indebtedness and distributions to the Company’s stockholders. The Company was in compliance with
         its financial covenants at December 31, 2010. The facility is secured by a general security agreement covering all the assets
         of the Company. The borrowing capacity under this facility is generally limited to 90% of government accounts receivable,
         85% of commercial accounts receivable, and 65% of inventory, in each case subject to certain limitations. On October 22,
         2010, the facility was amended to allow the Company to enter into a senior secured term loan (note 6). As of December 31,
         2010, and after taking into account outstanding letters of credit of $6,011,589, the Company could have borrowed up to an
         additional $68,788,785 under this facility.


                                                                       F-12
Table of Contents



                                                  ADS TACTICAL, INC. AND SUBSIDIARY

                                          Notes to Consolidated Financial Statements — (Continued)
                                                     December 31, 2008, 2009, and 2010


         (6)        Long-Term Debt

               Long-term debt consists of the following:


                                                                                                  2009               2010


         Note payable to bank; monthly interest-only payments at LIBOR plus 2.00%
           (2.23% at December 31, 2009); fully repaid in 2010 (note 5)                       $    9,000,000                  —
         Senior secured term loan; monthly principal and interest payments beginning
           December 31, 2010; first principal payment of $5,000,000 with subsequent
           monthly payments of $1,730,769, plus interest; variable interest rate at
           Eurodollar rate or bank’s base rate plus an applicable margin of 4.00% or
           3.00%, respectively; secured by all assets of ADS, Inc.; due February 18, 2013                —          45,000,000
         Mortgage payable to bank on Tactical Office; monthly principal and interest
           payments of $36,000; variable interest rate at LIBOR plus 2.00% subject to a
           4.50% minimum and a 7.85% maximum (4.50% at December 31, 2010);
           secured by the property with a carrying value of $7,149,969 at December 31,
           2010; due February 2034                                                                6,281,495           6,135,398
         Mortgage payable to bank on Tactical Warehouse; monthly principal and interest
           payments of $41,000; fixed interest rate at 6.03%; secured by the property with
           a carrying value of $8,370,445 at December 31, 2010; due July 2033                     6,132,141           6,012,890
         Mortgage payable to bank on Tactical Warehouse; monthly interest payments
           calculated on the outstanding note balance for the first twelve months, with
           monthly principal and interest payments of $23,000 thereafter; fixed interest
           rate at 7.28%; secured by the property with a carrying value of $8,370,445 at
           December 31, 2010; due July 2036                                                              —            1,489,436
         Capital lease obligation payable in monthly installments of $3,174 including
           imputed interest at 8.40%; matures in December 2012                                       76,758              32,604
                                                                                                 21,490,394          58,670,328
         Less current portion                                                                    (9,297,072 )       (21,097,261 )
                                                                                             $   12,193,322         37,573,067


               Estimated future maturities of long-term debt are as follows:


         2011                                                                                                   $   21,097,261
         2012                                                                                                       21,109,807
         2013                                                                                                        3,823,370
         2014                                                                                                          382,536
         2015                                                                                                          404,468
         Thereafter                                                                                                 11,852,886
                                                                                                                $   58,670,328



                                                                        F-13
Table of Contents



                                                 ADS TACTICAL, INC. AND SUBSIDIARY

                                           Notes to Consolidated Financial Statements — (Continued)
                                                      December 31, 2008, 2009, and 2010


         (7)        Retirement Plan

            ADS, Inc. sponsors a 401(k) retirement plan, which covers substantially all employees, as defined in the plan document.
         The Company matches 50% of an employee’s contribution on the first 4% of salary. The Company made contributions of
         $188,813, $260,362, and $313,741 for 2008, 2009, and 2010, respectively.

             Mar-Vel has a defined contribution 401(k) profit sharing plan. Participants make elective deferrals and catch-up
         contributions, subject to statutory limits. A safe harbor contribution may be made by Mar-Vel based on an annual decision
         and, if made, is required to be 3% of eligible compensation. The profit sharing contribution is discretionary and is computed
         using a class-based formula. Employees with one year of service and having attained the age of 21 are eligible to participate.
         The Company contributed $55,631, $0, and $0 to the Mar-Vel plan in 2008, 2009, and 2010, respectively.


         (8)        Stockholders’ Equity

            (a) Common Stock

             On May 13, 2010, the Company approved a 200-for-1 stock split of the Company’s no par value common stock and
         concurrently increased the number of authorized shares from 5,000 shares to 300,000 shares. As a result, these consolidated
         financial statements have been retroactively adjusted to reflect this stock split.


            (b) Noncontrolling Interests

             On January 1, 2009, the Company adopted FASB Statement No. 160, Noncontrolling Interests in Consolidated
         Financial Statements — an amendment of ARB No. 51 (included in FASB ASC Topic 810, Consolidation ), which requires
         certain changes to the presentation of the consolidated financial statements. This amendment requires noncontrolling
         interests (previously referred to as minority interests) to be classified in the consolidated statements of operations as part of
         consolidated net income (loss) of $(46,576), $141,292, and $961,321 for the years ended December 31, 2008, 2009, and
         2010, respectively, and to include the accumulated amount of noncontrolling interests in the consolidated balance sheets as
         part of stockholders’ equity of $2,294,358 and $3,955,679 at December 31, 2009 and 2010, respectively. The amount
         previously reported as net income is now presented as net income attributable to ADS Tactical, Inc. If a change in ownership
         of a consolidated subsidiary results in a loss of control and deconsolidation, any retained ownership interests are remeasured
         with the gain or loss reported in net income.


            (c) Subsequent Distributions Made to Stockholders

             During January 2011, the Company declared and made distributions to stockholders aggregating $10,648,716, primarily
         for income taxes. These distributions were funded by the Company’s senior secured revolving credit facility (note 5).


                                                                       F-14
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                                                  ADS TACTICAL, INC. AND SUBSIDIARY

                                         Notes to Consolidated Financial Statements — (Continued)
                                                    December 31, 2008, 2009, and 2010


         (9)        Commitments and Contingencies

            (a) Leases

             The Company leases various office and warehouse space under noncancelable operating leases expiring at various dates
         through 2015. Future lease payments due under noncancelable operating leases (with initial or remaining lease terms in
         excess of one year) are as follows:


         2011                                                                                                        $         703,586
         2012                                                                                                                  377,687
         2013                                                                                                                  389,020
         2014                                                                                                                  256,449
         2015                                                                                                                  229,536
                                                                                                                     $       1,956,278


               Rent expense under all leases was $1,364,719, $1,500,726, and $776,248 for 2008, 2009, and 2010, respectively.


            (b) Guarantees

             Mar-Vel is a guarantor on two mortgages totaling approximately $2,000,000 at December 31, 2010 held by one of the
         entities from which the Company leases office and warehouse space.


            (c) Employment Agreement

             The Company has an employment agreement in place that provides for a bonus to an employee in connection with a
         change in control if such change in control is the sale of the company for at least $100,000,000. The bonus payable under the
         agreement is 0.5% of the purchase price over any amounts paid or payable to the employee pursuant to the terms of the
         Transaction Bonus Agreement (note 13(a)).


            (d) Legal Proceedings

             The Company is involved in various claims and legal actions arising in the ordinary course of business. When
         management concludes that it is probable that a liability has been incurred and the amount of the liability can be reasonably
         estimated, it is accrued through a charge to earnings. While the ultimate amount of liability incurred in any of these claims
         and legal actions is dependent on future developments, in management’s opinion, the ultimate disposition of these matters
         will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.


         (10)        Related Party Transactions

             ADS, Inc. sells products to a related wholesale company having common ownership, Tactical Distributors, LLC
         (Tactical Distributors), which are sold to nongovernmental customers. Occasionally, the Company purchases some of its
         products from Tactical Distributors. ADS, Inc. had sales of $1,141,734, $1,775,451, and $1,793,383 to Tactical Distributors
         in 2008, 2009, and 2010, respectively, and purchases from Tactical Distributors of $147,394, $1,415,843, and $541,834 in
         2008, 2009, and 2010, respectively. The Company had accounts receivable of $253,214 and $227,651 and accounts payable
         of $9,409 and $3,828 with Tactical Distributors at December 31, 2009 and 2010, respectively.

             ADS, Inc. is charged for airplane usage, pilots, fuel, and other incidental costs from three related companies, Tactical
         Air, LLC (Tactical Air), Tactical Hawker, LLC (Tactical Hawker), and Tactical Pilot
F-15
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                                                 ADS TACTICAL, INC. AND SUBSIDIARY

                                         Notes to Consolidated Financial Statements — (Continued)
                                                    December 31, 2008, 2009, and 2010


         Operations, LLC (Tactical Pilot), each of which have common ownership. ADS, Inc. purchased $336,547, $779,890, and
         $1,008,668 of services from these three related companies in 2008, 2009, and 2010, respectively. These amounts are
         included in selling, general, and administrative expenses. The Company had accounts payable of $140,317 and $62,572 to
         these three related companies at December 31, 2009 and 2010, respectively.

             ADS, Inc. purchased software from a related software reseller having common ownership, Mythics, Inc. (Mythics), and
         hired this software company to implement and manage a software conversion. ADS, Inc. incurred costs of $113,469, $0, and
         $30,000 for software, development, and implementation services with Mythics in 2008, 2009, and 2010, respectively.

             At times, ADS, Inc. may make short-term advances to Company stockholders and entities owned by Company
         stockholders. Advances to the stockholders and related affiliates do not bear interest and are generally settled on a quarterly
         basis. ADS, Inc. had advances included in due from affiliates of $635,361 and $239,687 at December 31, 2009 and 2010,
         respectively, as a result of these advances.


         (11)       Variable Interest Entities

             The Company evaluates its related parties and other affiliated companies to determine whether such entities may be a
         VIE, and, if a VIE, whether the Company is the primary beneficiary. Generally, an entity is determined to be a VIE when
         either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest,
         (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial
         support, or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities
         of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The primary
         beneficiary is the entity that has both (1) the power to direct matters that most significantly impact the VIE’s economic
         performance and (2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be
         significant to the VIE. The Company considers a variety of factors in identifying the entity that holds the power to direct
         matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct
         financing, the nature and terms of leasing arrangements, and other operating decisions and activities. The obligation to
         absorb losses and the right to receive benefits when a reporting entity is affiliated with a VIE may be based on ownership,
         contractual, and/or other pecuniary interests in that VIE.

             The Company has determined that, although it has no voting interest in Tactical Warehouse and Tactical Office, these
         entities, which have common ownership with the Company, are VIEs. Their assets consist primarily of land and buildings
         leased to, and used in the operations of the Company, and their liabilities consist primarily of mortgage debt related to such
         land and buildings, which is guaranteed by the Company. The assets of the VIEs can be used only to settle the VIEs’
         obligations.

             The Company determined that the guarantees of the related mortgage debt and the present value of the minimum lease
         payments in relation to the fair values of the respective assets exposes it to a majority of the risk of the leased assets over
         their remaining economic life and, accordingly, the VIEs are consolidated and


                                                                       F-16
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                                                 ADS TACTICAL, INC. AND SUBSIDIARY

                                           Notes to Consolidated Financial Statements — (Continued)
                                                      December 31, 2008, 2009, and 2010


         reflected in the accompanying consolidated financial statements. A summary of the VIEs at December 31, 2009 and 2010
         and for the years then ended follows:


                                                                                                     2009                 2010


         Cash and cash equivalents                                                             $      317,453               503,220
         Accounts receivable                                                                            4,857                 1,628
         Property and equipment, net                                                               15,308,105            15,718,716
         Other assets                                                                                 126,114             1,599,361
            Total assets                                                                       $   15,756,529            17,822,925

         Accounts payable and accrued expenses                                                 $      192,021                90,485
         Due to ADS, Inc.                                                                             704,901                    —
         Deferred revenue                                                                             151,614               139,037
         Long-term debt                                                                            12,413,635            13,637,724
           Total liabilities                                                                       13,462,171            13,867,246
         Equity                                                                                     2,294,358             3,955,679
            Total liabilities and equity                                                       $   15,756,529            17,822,925

         Operating income                                                                      $     1,689,529            2,759,358
         Operating expenses                                                                            916,059            1,123,249
           Operating income                                                                           773,470             1,636,109
         Other expenses                                                                               632,178               674,788
            Net income                                                                         $      141,292               961,321


            ADS, Inc. incurred $937,000 and $2,091,000 in lease expense to Tactical Warehouse and Tactical Office for the years
         ended December 31, 2009 and 2010, respectively. These expenses and the related income on Tactical Warehouse and
         Tactical Office have been eliminated in consolidation.

             Management has evaluated its other related party transactions (note 10) and determined that Tactical Air, Tactical
         Hawker, and Tactical Pilot are VIEs; however, the Company is not the primary beneficiary and consolidation is not required
         as the Company does not control these related entities.


         (12)       Pro Forma Information (Unaudited)

            (a) Income Taxes

             The pro forma net income was computed under the assumption that the Company will convert from S Corporation status
         to a taxable C Corporation. Prior to such conversion, the Company was not subject to income taxes. The pro forma net
         income, therefore, includes adjustments for income tax expense as if the Company had been a taxable corporation at an
         effective tax rate of 39.5% in 2008 and 2009 and 40.0% in 2010.


            (b) Net Income Per Share

             Basic and diluted net income per common share are computed using the weighted average number of common shares
         outstanding during the year. For the years ended December 31, 2008, 2009, and 2010, the Company had no dilutive
         securities outstanding, and therefore, diluted net income per share is equal to basic net income per share for each year.
F-17
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                                                ADS TACTICAL, INC. AND SUBSIDIARY

                                        Notes to Consolidated Financial Statements — (Continued)
                                                   December 31, 2008, 2009, and 2010


         (13)       Subsequent Events

            (a) Debt Transactions & Transaction Bonus Agreements

             On March 25, 2011, the Company issued $275,000,000 of 11.00% senior secured notes due 2018. The net proceeds of
         the offering were used to make distributions to stockholders of $217,126,251, to repay the existing term loan facility
         (note 6), and to pay cash bonuses (Transaction Bonuses) in recognition of services and contributions of certain members of
         management of the Company pursuant to agreements entered into on March 1, 2011. The aggregate amount of all
         Transaction Bonuses expected to be paid is $9,000,000. Approximately $6,600,000 was payable upon consummation of the
         debt offering, with the remaining $2,400,000 payable upon the earlier of (x) the consummation of a proposed initial public
         offering of common stock and (y) December 31, 2011.

             On March 25, 2011, the Company amended and restated its senior secured revolving credit facility increasing the
         existing credit limit to $200,000,000, with an optional increase in commitments of up to an additional $50,000,000, and
         extending the maturity date to March 25, 2016. The amended facility bears interest at variable rates based on the Eurodollar
         rate or the bank’s base rate, and in each case includes an applicable margin ranging from 1.25% to 2.75% depending on the
         average excess availability.


            (b) Stock Split

            The consolidated financial statements give retroactive effect to the      for       stock split of the Company’s
         common stock in connection with an initial public offering.


                                                                     F-18
Table of Contents
© 2010 ADS, Inc. The ADS Logo is a registered trademark of ADS, Inc.
Table of Contents
Table of Contents

                                                                    PART II

                                        INFORMATION NOT REQUIRED IN THE PROSPECTUS


         ITEM 13.      Other Expenses of Issuance and Distribution.

            The following table sets forth all expenses other than the underwriting discount, payable by the Registrant in connection
         with the sale of the common shares being registered. All amounts shown are estimates except for the SEC registration fee.


         SEC registration fee                                                                                                $ 11,610
         FINRA fee                                                                                                           $ 10,500
         Legal fees and expenses                                                                                             $      *
         Printing and engraving expenses                                                                                     $      *
         Blue sky fees                                                                                                       $      *
         NYSE fees                                                                                                           $      *
         Transfer agent fees                                                                                                 $      *
         Accounting fees and expenses                                                                                        $      *
         Miscellaneous                                                                                                       $      *
            Total                                                                                                            $        *


         * To be provided by amendment.

         ITEM 14.      Indemnification of Officers and Directors.

             ADS Tactical, Inc. is incorporated under the laws of the state of Delaware.

             Section 145 of the Delaware General Corporation Law, or the “DGCL,” provides that a corporation may indemnify any
         person, including an officer or director, who was or is, or is threatened to be made, a party to any threatened, pending or
         completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in
         the right of such corporation), by reason of the fact that such person is or was a director, officer, employee or agent of such
         corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another
         corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys’
         fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with
         such action, suit or proceeding, provided such person acted in good faith and in a manner such person reasonably believed to
         be in or not opposed to the best interests of such corporation, and, with respect to any criminal actions and proceedings, had
         no reasonable cause to believe that his conduct was unlawful. A Delaware corporation may indemnify any person, including
         an officer or director, who was or is, or is threatened to be made, a party to any threatened, pending or contemplated action
         or suit by or in the right of such corporation, under the same conditions, except that such indemnification is limited to
         expenses (including attorneys’ fees) actually and reasonably incurred by such person, and except that no indemnification is
         permitted without judicial approval if such person is adjudged to be liable to such corporation. Where an officer or director
         of a corporation is successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to above,
         or any claim, issue or matter therein, the corporation must indemnify that person against the expenses (including attorneys’
         fees) which such officer or director actually and reasonably incurred in connection therewith.

             The amended and restated certificate of incorporation of ADS Tactical, Inc. will provide for the indemnification of
         directors, officers and employees to the fullest extent permitted by the DGCL. In addition, as permitted by the DGCL, the
         amended and restated certificate of incorporation of ADS Tactical, Inc. will provide that none of its directors will be
         personally liable to it or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent
         such exemption from liability or limitation thereof is not permitted under the DGCL as currently in effect or as the same may
         hereafter be amended.


                                                                       II-1
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             The amended and restated bylaws of ADS Tactical, Inc. will provide for the indemnification of all of their respective
         current and former directors and current or former officers to the fullest extent permitted by the DGCL.


         Item 15.       Recent Sales of Unregistered Securities.

             Not applicable


         Item 16.       Exhibits and Financial Statement Schedules.

             (a) Exhibits

                    See the Exhibit Index beginning on page II-5, which follows the signature pages hereof and is incorporated by
               reference.

             (b) Financial Statement Schedules

                    Schedules have been omitted because the information required to be set forth therein is not applicable or is shown
               in the consolidated financial statements or notes thereto.


         Item 17.       Undertakings.

             Insofar as indemnification for liabilities arising under the Securities Act may be permitted as to directors, officers and
         controlling persons of the registrant pursuant to the provisions described in Item 14, or otherwise, we have been advised that
         in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore,
         unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
         of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any
         action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being
         registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a
         court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
         Securities Act and will be governed by the final adjudication of such issue.

             The undersigned registrant hereby undertakes that:

                    (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of
               prospectus as filed as part of this registration statement in reliance upon Rule 430A and contained in a form of
               prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
               to be part of this registration statement as of the time it was declared effective.

                    (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that
               contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered
               therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

                     (3) That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the
               initial distribution of the securities:

                         The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant
                    pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the
                    purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications,
                    the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to
                    such purchaser:

                                 (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering
                            required to be filed pursuant to Rule 424;


                                                                         II-2
Table of Contents



                               (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned
                          registrant or used or referred to by the undersigned registrant;

                               (iii) The portion of any other free writing prospectus relating to the offering containing material
                          information about the undersigned registrant or its securities provided by or on behalf of the undersigned
                          registrant; and

                              (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the
                          purchaser.

                     (4) Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other
               than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
               deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.
               Provided, however, that no statement made in a registration statement or prospectus that is part of the registration
               statement or made in a document incorporated or deemed incorporated by reference into the registration statement or
               prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such
               first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of
               the registration statement or made in any such document immediately prior to such date of first use.

             The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting
         agreements, certificates in such denominations and registered in such names as required by the underwriters to permit
         prompt delivery to each purchaser.


                                                                         II-3
Table of Contents

                                                                SIGNATURE

            Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 2 to this
         Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Virginia
         Beach, State of Virginia, on April 28, 2011.


                                                                     ADS Tactical, Inc.



                                                                    By: /s/ LUKE M. HILLIER
                                                                         Luke M. Hillier
                                                                         Chief Executive Officer, President
                                                                         and Director

             Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following
         persons in the capacities and on the dates indicated.


                                 Signature                                                Title                              Date



         /s/ LUKE M. HILLIER                                        Chief Executive Officer, President and              April 28, 2011
         Luke M. Hillier                                            Director
                                                                    (Principal Executive Officer)

         *                                                          Chief Operating Officer, Vice President,            April 28, 2011
         Daniel J. Clarkson                                         Treasurer, Secretary and Director

         *                                                          Chief Financial Officer                             April 28, 2011
         Patricia A. Bohlen                                         (Principal Financial Officer and Principal
                                                                    Accounting Officer)

         *                                                          Director                                            April 28, 2011
         R. Scott LaRose

         *                                                          Director                                            April 28, 2011
         William A. Roper, Jr.



         *By: /s/ LUKE M. HILLIER
               Luke M. Hillier, as Attorney-In-Fact


                                                                      II-4
Table of Contents

                                                                EXHIBIT INDEX


            Exhibit
                        Description of
              No.       Exhibit


               1 .1†    Form of Underwriting Agreement.
               3 .1+    Certificate of Incorporation of ADS Tactical, Inc.
               3 .2+    Bylaws of ADS Tactical, Inc.
               3 .3†    Form of Amended and Restated Certificate of Incorporation of ADS Tactical, Inc.
               3 .4†    Form of Amended and Restated Bylaws of ADS Tactical, Inc.
               4 .1†    Specimen Common Stock Certificate of ADS Tactical, Inc.
               4 .2+    Senior Secured Notes Indenture, dated as of March 25, 2011, among ADS Tactical, Inc., the Guarantors
                        named therein, Wilmington Trust FSB, as Trustee and Wilmington Trust FSB, as Collateral Trustee.
               4 .3+    Form of 11.00% Senior Secured Note due 2018 (included in Exhibit 4.2 above).
               5 .1†    Opinion of Latham & Watkins LLP, special counsel to ADS Tactical, Inc.
              10 .1*    Loan and Security Agreement, dated as of February 18, 2010, among ADS Tactical, Inc. (f/k/a Tactical
                        HoldCorp, Inc.), Atlantic Diving Supply, Inc., Mar-Vel International, Inc., a New Jersey corporation, the
                        lenders party thereto, Wachovia Bank, National Association, as Administrative Agent, SunTrust Bank, RBS
                        Business Capital, a division of RBS Asset Finance, Inc., a subsidiary of RBS Citizens, NA, and Bank of
                        America, N.A., each as a Syndication Agent, and Wells Fargo Capital Finance, LLC as Sole Lead Arranger,
                        Manager and Bookrunner.
              10 .2+    First Amendment to Loan and Security Agreement, as of dated October 22, 2010, among ADS Tactical, Inc.
                        (formerly known as Tactical HoldCorp, Inc.), a Delaware corporation, Atlantic Diving Supply, Inc. (d/b/a
                        ADS, Inc.), a Virginia corporation, the Subsidiaries of the Company identified as “Borrowers” on the
                        signature pages thereto, Mar-Vel International, Inc., a New Jersey corporation, the lenders party thereto, and
                        Wells Fargo Bank, National Association, as Administrative Agent.
              10 .3*    Amended and Restated Loan and Security Agreement, dated as of March 25, 2011, among ADS Tactical,
                        Inc. and Atlantic Diving Supply, Inc., as Borrowers, Certain other Subsidiaries of the Company, as
                        Subsidiary Guarantors, the lenders from time to time party thereto and Wells Fargo Bank, National
                        Association, as Administrative Agent, Suntrust Bank, RBS Business Capital, a division of RBS Asset
                        Finance, Inc., a subsidiary of RBS Citizens, NA and Bank of America, N.A., each, as a Syndication Agent
                        and Wells Fargo Capital Finance, LLC, as Sole Lead Arranger, Manager and Bookrunner.
              10 .4†    Form of Stockholders Agreement among Luke Hillier, Daniel Clarkson, R. Scott LaRose and ADS Tactical,
                        Inc.
              10 .5†    Employment Agreement, dated as of          , 2011, between Luke Hillier and ADS Tactical, Inc.
              10 .6†    Employment Agreement, dated as of          , 2011, between Daniel Clarkson and ADS Tactical, Inc.
              10 .7+    2010 Compensation Plan Details for Patricia Bohlen.
              10 .8+    Employment Agreement, dated as of January 11, 2009, between Bruce Dressel and Atlantic Diving Supply,
                        Inc.
              10 .9+    2010 Compensation Plan Details for Bruce Dressel.
              10 .10+   2010 Compensation Plan Details for Jason Wallace.
              10 .11+   Lease Agreement, dated as of August 1, 2009, between Tactical Office, LLC and Atlantic Diving Supply,
                        Inc.
              10 .12+   Lease Agreement, dated as of May 22, 2007, between Kettler Realty Corp. and ADS, Inc.
              10 .13+   Lease Addendum for Temporary Space, dated as of December 1, 2009, between Kettler Realty Corp. and
                        ADS, Inc.


                                                                     II-5
Table of Contents




            Exhibit
                        Description of
              No.       Exhibit


              10 .14+   Lease Agreement, dated as of July 23, 2008, between Tactical Warehouse, LLC and Atlantic Diving Supply,
                        Inc.
              10 .15+   Lease Agreement, dated as of November 18, 2010, between SEBCO, Inc. and Atlantic Diving Supply, Inc.
              10 .16+   Flex Lease Agreement, dated as of November 30, 2005, between 7115 Airport Highway, LLC and Mar-Vel
                        International, Inc., as amended.
              10 .17+   2011 Compensation Plan Details for Bruce Dressel.
              10 .18+   2011 Compensation Plan Details for Patricia Bohlen.
              10 .19+   2011 Compensation Plan Details for Jason Wallace.
              10 .20*   Form of Indemnification Agreement between ADS Tactical, Inc. and its directors and executive officers.
              10 .21*   Transaction Bonus Letter Agreement for Bruce Dressel.
              10 .22*   Transaction Bonus Letter Agreement for Patricia Bohlen.
              10 .23*   Transaction Bonus Letter Agreement for Jason Wallace.
              21 .1+    Subsidiaries of the Registrant.
              23 .1†    Consent of Latham & Watkins LLP, special counsel to ADS Tactical, Inc. (included in Exhibit 5.1).
              23 .2*    Consent of KPMG LLP, Independent Registered Public Accounting Firm.
              23 .3+    Power of Attorney (included on signature pages attached hereto).


         * Filed herewith.

         † To be filed by amendment.

         + Previously filed.


                                                                  II-6
                                                                      Exhibit 10.1

                                                               EXECUTION VERSION




                           $180,000,000
              LOAN AND SECURITY AGREEMENT
                    Dated as of February 18, 2010
                           by and among
                 TACTICAL HOLDCORP, INC. ,
                        as Holdings,
               ATLANTIC DIVING SUPPLY, INC.
                 and certain of its Subsidiaries,
                          as Borrowers
                                and
               MAR-VEL INTERNATIONAL, INC.
           and certain other Subsidiaries of the Company,
                      as Subsidiary Guarantors,
       THE LENDERS FROM TIME TO TIME PARTY HERETO,

         WACHOVIA BANK, NATIONAL ASSOCIATION ,
                   as Administrative Agent
                      SUNTRUST BANK,
RBS BUSINESS CAPITAL, A DIVISION OF RBS ASSET FINANCE, INC.,
           A SUBSIDIARY OF RBS CITIZENS, NA and
                  BANK OF AMERICA, N.A. ,
                   each, as a Syndication Agent



           WELLS FARGO CAPITAL FINANCE, LLC,
           as Sole Lead Arranger, Manager and Bookrunner
                                                          TABLE OF CONTENTS

                                                                                                                Page
ARTICLE 1 DEFINITIONS                                                                                             1

  Section 1.1 Defined Terms                                                                                       1

ARTICLE 2 CREDIT FACILITIES                                                                                      31

  Section 2.1 Revolving Loans                                                                                    31
  Section 2.2 Swingline Loans                                                                                    32
  Section 2.3 Letters of Credit                                                                                  33
  Section 2.4 Procedure for Advance of Loans                                                                     36
  Section 2.5 Repayments and Prepayments                                                                         37
  Section 2.6 Optional Reduction of Commitments                                                                  39
  Section 2.7 Optional Increase of Commitments                                                                   39
  Section 2.8 Overadvances; Special Agent Advances                                                               40
  Section 2.9 Joint and Several Liability of the Borrowers                                                       41
  Section 2.10 Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and
    Statements                                                                                                   43

ARTICLE 3 GENERAL LOAN PROVISIONS                                                                                44

  Section 3.1 Interest                                                                                           44
  Section 3.2 Fees                                                                                               46
  Section 3.3 Loan Accounts                                                                                      47
  Section 3.4 Pro Rata Treatment, Sharing of Payments, Funding by Lenders, Etc.                                  47
  Section 3.5 Payments Generally                                                                                 49
  Section 3.6 Settlement Procedures                                                                              50
  Section 3.7 Obligations Several; Independent Nature of Lenders’ Rights                                         52
  Section 3.8 Bank Products                                                                                      52
  Section 3.9 Defaulting Lenders                                                                                 53

ARTICLE 4 YIELD PROTECTION                                                                                       53

  Section 4.1 Inability to Determine Applicable Interest Rate                                                    53
  Section 4.2 Changed Circumstances                                                                              54
  Section 4.3 Increased Costs                                                                                    54
  Section 4.4 Capital Requirements                                                                               55
  Section 4.5 Taxes                                                                                              55
  Section 4.6 Breakage Indemnity                                                                                 57
  Section 4.7 Certificates for Reimbursement                                                                     57
  Section 4.8 Delay in Requests                                                                                  57
  Section 4.9 Mitigation; Replacement of Lenders                                                                 57
  Section 4.10 No Requirement of Match Funding                                                                   58

ARTICLE 5 CONDITIONS PRECEDENT                                                                                   58

  Section 5.1 Conditions Precedent to Initial Loans and Letters of Credit                                        58
  Section 5.2 Conditions Precedent to All Loans and Letters of Credit                                            62

                                                                       i
                                                        TABLE OF CONTENTS
                                                             continued

                                                                                         Page
ARTICLE 6 SECURITY INTEREST AND COLLECTION                                                62

 Section 6.1 Grant of Security Interest                                                   62
 Section 6.2 Perfection of Security Interests                                             63
 Section 6.3 Collection of Accounts                                                       67

ARTICLE 7 COLLATERAL REPORTING AND COVENANTS                                              68

 Section 7.1 Collateral Reporting                                                         68
 Section 7.2 Accounts Covenants                                                           69
 Section 7.3 Inventory Covenants; Appraisals                                              69
 Section 7.4 Equipment and Real Property Covenants                                        70
 Section 7.5 Power of Attorney                                                            71
 Section 7.6 Right to Cure                                                                72
 Section 7.7 Access to Premises; Field Audits                                             72

ARTICLE 8 REPRESENTATIONS AND WARRANTIES                                                  72

 Section 8.1 Corporate Existence, Power and Authority                                     72
 Section 8.2 Name; State of Organization; Chief Executive Office; Collateral Locations    73
 Section 8.3 Financial Statements; No Material Adverse Effect                             73
 Section 8.4 Priority of Liens; Title to Properties                                       74
 Section 8.5 Tax Returns                                                                  74
 Section 8.6 Litigation                                                                   74
 Section 8.7 Compliance with Other Agreements and Applicable Laws                         74
 Section 8.8 Environmental Compliance                                                     74
 Section 8.9 Employee Benefits                                                            75
 Section 8.10 Bank Accounts                                                               76
 Section 8.11 Intellectual Property                                                       76
 Section 8.12 Subsidiaries; Affiliates; Capitalization; Solvency                          76
 Section 8.13 Labor Disputes                                                              77
 Section 8.14 Burdensome Restrictions                                                     77
 Section 8.15 Material Contracts and Material Government Contracts                        77
 Section 8.16 Real Property                                                               77
 Section 8.17 Payable Practices                                                           78
 Section 8.18 Accuracy and Completeness of Information                                    78
 Section 8.19 Margin Security and Investment Company Act                                  78
 Section 8.20 Insurance                                                                   78
 Section 8.21 Accounts; Inventory                                                         78
 Section 8.22 Anti-Terrorism Laws                                                         79
 Section 8.23 Senior Indebtedness                                                         79
 Section 8.24 Survival of Warranties; Cumulative                                          79

ARTICLE 9 AFFIRMATIVE COVENANTS                                                           79

 Section 9.1 Maintenance of Existence                                                     79
 Section 9.2 New Collateral Locations                                                     80
 Section 9.3 Compliance with Laws, Regulations, Etc.                                      80

                                                                    ii
                                                          TABLE OF CONTENTS
                                                               continued

                                                                                                     Page
 Section 9.4 Payment of Taxes and Claims                                                              81
 Section 9.5 Insurance                                                                                81
 Section 9.6 Financial Statements and Other Information                                               81
 Section 9.7 Compliance with ERISA                                                                    84
 Section 9.8 End of Fiscal Years; Fiscal Quarters                                                     84
 Section 9.9 Intellectual Property                                                                    85
 Section 9.10 After Acquired Real Property                                                            86
 Section 9.11 Further Assurances                                                                      86
 Section 9.12 Additional Borrowers and Guarantors                                                     86
 Section 9.13 Use of Proceeds                                                                         87
 Section 9.14 Fixed Charge Coverage Ratio                                                             87
 Section 9.15 Post-Closing Conditions                                                                 87

ARTICLE 10 NEGATIVE COVENANTS                                                                         87

 Section 10.1 Limitations on Indebtedness                                                             87
 Section 10.2 Limitations on Liens                                                                    88
 Section 10.3 Limitations on Investments                                                              90
 Section 10.4 Limitations on Fundamental Changes                                                      91
 Section 10.5 Limitations on Asset Dispositions                                                       91
 Section 10.6 Limitations on Restricted Payments                                                      92
 Section 10.7 Transactions with Affiliates                                                            93
 Section 10.8 Limitation on Certain Accounting Changes and Amendments to Organizational Documents     93
 Section 10.9 Limitation on Payments and Modifications of Subordinated Indebtedness                   94
 Section 10.10 Limitation on Modifications of Material Contracts and Material Government Contracts    94
 Section 10.11 No Further Negative Pledges; Restrictive Agreements                                    94
 Section 10.12 Nature of Business                                                                     95
 Section 10.13 Disposal of Subsidiary Interests                                                       95
 Section 10.14 Limitation on Holdings                                                                 95

ARTICLE 11 EVENTS OF DEFAULT AND REMEDIES                                                             95

 Section 11.1 Events of Default                                                                       95
 Section 11.2 Remedies                                                                                97
 Section 11.3 Crediting Payments and Proceeds                                                        100
 Section 11.4 Proofs of Claim                                                                        102

ARTICLE 12 THE ADMINISTRATIVE AGENT                                                                  102

 Section 12.1 Appointment, Powers and Immunities                                                     102
 Section 12.2 Reliance by the Administrative Agent                                                   103
 Section 12.3 Events of Default                                                                      103
 Section 12.4 Wachovia in its Individual Capacity                                                    103
 Section 12.5 Indemnification                                                                        104
 Section 12.6 Non-Reliance on the Administrative Agent and Other Lenders                             104
 Section 12.7 Failure to Act                                                                         104

                                                                  iii
                                                       TABLE OF CONTENTS
                                                            continued

                                                                                              Page
 Section 12.8 Concerning the Collateral and the Related Loan Documents                        105
 Section 12.9 Field Audit, Examination Reports and other Information; Disclaimer by Lenders   105
 Section 12.10 Collateral Matters                                                             105
 Section 12.11 Agency for Perfection                                                          106
 Section 12.12 Successor Administrative Agent                                                 107
 Section 12.13 Other Agent Designations                                                       107

ARTICLE 13 GUARANTY                                                                           107

 Section 13.1 The Guaranty                                                                    107
 Section 13.2 Bankruptcy                                                                      108
 Section 13.3 Nature of Liability                                                             108
 Section 13.4 Independent Obligation                                                          108
 Section 13.5 Authorization                                                                   108
 Section 13.6 Reliance                                                                        109
 Section 13.7 Waiver                                                                          109
 Section 13.8 Contribution                                                                    110
 Section 13.9 Limitation on Enforcement                                                       110
 Section 13.10 Confirmation of Payment                                                        110

ARTICLE 14 MISCELLANEOUS                                                                      110

 Section 14.1 Notices                                                                         110
 Section 14.2 Amendments and Waivers                                                          111
 Section 14.3 Costs and Expenses                                                              114
 Section 14.4 Indemnification                                                                 115
 Section 14.5 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver           116
 Section 14.6 Waiver of Notices                                                               117
 Section 14.7 [INTENTIONALLY OMITTED]                                                         117
 Section 14.8 Partial Invalidity                                                              117
 Section 14.9 Confidentiality                                                                 117
 Section 14.10 Successors                                                                     118
 Section 14.11 Successors and Assigns; Participations                                         119
 Section 14.12 Term                                                                           121
 Section 14.13 Entire Agreement                                                               123
 Section 14.14 USA Patriot Act                                                                123
 Section 14.15 Counterparts, Etc.                                                             123

                                                                   iv
                                   INDEX TO EXHIBITS AND SCHEDULES

EXHIBITS


Exhibit A         Form of Assignment and Assumption
Exhibit B         Form of Borrowing Base Certificate
Exhibit C         Form of Compliance Certificate
Exhibit D         Form of Information Certificate
Exhibit E         Form of Joinder Agreement
Exhibit F         Form of Notice of Borrowing
Exhibit G         Form of Notice of Prepayment
Exhibit H         Form of Notice of Conversion or Continuation
Exhibit I         Form of Note
Exhibit J         Form of Instrument of Assignment
Exhibit K         Form of Notice of Assignment

SCHEDULES


Schedule 1.1(a)   Lenders and Commitments
Schedule 1.1(b)   Existing Cash Equivalents
Schedule 6.1      Commercial Tort Claims
Schedule 6.2(b)   Chattel Paper; Instruments
Schedule 8.2      Name; State of Organization; Chief Executive Office; Collateral Locations
Schedule 8.6      Litigation
Schedule 8.9      Employee Benefits
Schedule 8.10     Deposit Accounts; and Securities Accounts
Schedule 8.11     Intellectual Property
Schedule 8.12     Subsidiaries; Affiliates; Capitalization; Solvency
Schedule 8.13     Labor Disputes
Schedule 8.15     Material Contracts; Material Government Contracts
Schedule 8.16     Real Property
Schedule 9.15     Post-Closing Conditions
Schedule 10.1     Existing Indebtedness
Schedule 10.2     Existing Liens
Schedule 10.3     Existing Investments
Schedule 10.7     Existing Affiliate Transactions
                                                     LOAN AND SECURITY AGREEMENT
   This Loan and Security Agreement dated February 18, 2010 is entered into by and among TACTICAL HOLDCORP, INC., a Delaware
corporation (“ Holdings ”), ATLANTIC DIVING SUPPLY, INC. (d/b/a ADS, Inc.), a Virginia corporation (the “ Company ”) and any
Subsidiary of the Company that becomes a party hereto as a “Borrower” in accordance with the terms hereof (together with the Company, the “
Borrowers ”), MAR-VEL INTERNATIONAL, INC., a New Jersey corporation and each additional Subsidiary of the Company that becomes a
party hereto as a “Guarantor” (collectively, the “ Subsidiary Guarantors ”), the parties hereto from time to time as lenders, whether by
execution of this Agreement or an Assignment and Assumption (collectively, the “ Lenders ,” as hereinafter further defined) and WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as administrative agent for the Lenders (in such capacity,
the “ Administrative Agent ” as hereinafter further defined) and in its capacity as Issuing Lender for letters of credit hereunder (in such
capacity, “ Issuing Lender ” as hereinafter further defined).


                                                                WITNESSETH:
  WHEREAS, the Borrowers have requested that the Administrative Agent and the Lenders enter into financing arrangements with the
Borrowers pursuant to which the Lenders may make loans and provide other financial accommodations to the Borrowers; and
   WHEREAS, each Lender is willing to agree (severally and not jointly) to make such loans and provide such financial accommodations to
the Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth herein and the
Administrative Agent is willing to act as administrative agent for the Lenders on the terms and conditions set forth herein and the other Loan
Documents;
   NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


                                                                    ARTICLE 1
                                                                   DEFINITIONS
   Section 1.1 Defined Terms . For purposes of this Agreement, the following terms have the respective meanings given to them below:
   “ Accounts ” means, as to each Loan Party, all present and future accounts, as defined in the UCC, of such Loan Party.
   “ Acquisition ” means any transaction or series of related transactions for the purpose of resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or all or substantially all of any business unit, division, product line or line of
business of any Person, (b) the acquisition in excess of fifty percent (50%) of all classes of Capital Stock of any Person, or otherwise causing
any Person to become a Subsidiary or (c) a merger or consolidation or any other combination with another Person (other than a Person that is
already a Subsidiary).
   “ Adjusted Eurodollar Rate ” means, with respect to each Interest Period for any Eurodollar Rate Loan comprising part of the same
borrowing (including conversions, extensions and renewals), the rate per annum determined by dividing (a) the LIBOR for such Interest Period
by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, “ Reserve Percentage ” means for any day,
that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to
which the interest rate of Eurodollar Rate Loans is determined), whether or not any Lender has any Eurocurrency liabilities subject to such
reserve requirement at that time. Eurodollar Rate Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed
subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a
Lender. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage.
   “ Administrative Agent ” means Wachovia Bank, National Association, in its capacity as administrative agent on behalf of the Lenders
pursuant to the terms hereof and any replacement or successor agent hereunder.
   “ Administrative Agent Payment Account ” means the account of the Administrative Agent as the Administrative Agent may from time to
time designate to the Administrative Borrower as the Administrative Agent Payment Account for purposes of this Agreement and the other
Loan Documents.
   “ Administrative Borrower ” means the Company, in its capacity as the administrative borrower on behalf of itself and the other Borrowers
pursuant to Section 2.10 and its successors and assigns in such capacity.
   “ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.
   “ Affiliate ” means, with respect to a specified Person, any other Person that directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any
Person which beneficially owns or holds five percent (5%) or more of any class of Voting Stock of such Person or other equity interests in such
Person, (b) any Person of which such Person beneficially owns or holds five percent (5%) or more of any class of Voting Stock or in which
such Person beneficially owns or holds five percent (5%) or more of the equity interests, (c) any director or executive officer of such Person
and (d) solely for purposes of Section 10.7 , any Affiliate (as described in clause (b) above) of any director or executive officer of the
Company. For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.
   “ Aggregate Commitment ” means the aggregate Commitments of all of the Lenders hereunder, as such amount may be increased, reduced
or otherwise modified pursuant to the terms of this Agreement. The Aggregate Commitment on the Closing Date shall be $180,000,000.
    “ Agreement ” means, on any date, this Loan and Security Agreement as originally in effect on the Closing Date and as thereafter from time
to time amended, supplemented, amended and restated or otherwise modified from time to time and in effect on such date.

                                                                          2
   “ Applicable Margin ” means for Eurodollar Rate Loans, Base Rate Loans and Letter of Credit Fees, the appropriate applicable percentages
corresponding to the Level of Average Excess Availability determined as of the most recent Calculation Date as shown below:

                                                                                          Applicable                                   Applicable
                                                                                          Margin for                                    Margin
                                                                                                                Applicable            for Letter of
                                          Average Excess                                Eurodollar Rate           Margin                 Credit
                                                                                                               for Base Rate
  Level                                    Availability                                      Loans                 Loans                  Fees
    1                              Greater than $25,000,000                                   2.75 %                1.25 %                 2.75 %

    2           Less than or equal to $25,000,000 but greater than $15,000,000                3.00 %                1.50 %                 3.00 %

    3                          Less than or equal to $15,000,000                              3.25 %                1.75 %                 3.25 %
   The Applicable Margin shall be determined and adjusted quarterly on the date (each a “ Calculation Date ”) five (5) Business Days after the
date on which the Administrative Borrower provides the monthly Borrowing Base Certificate in accordance with the provisions of
Section 7.1(a) for the last month of the applicable quarterly period; provided that (i) the initial Applicable Margin shall be based on Level 2 (as
shown above) and shall remain at Level 2 until the first Calculation Date that occurs after the six-month anniversary of the Closing Date, and,
thereafter, the Level shall be determined by the Average Excess Availability for the applicable quarterly period, and (ii) if the Administrative
Borrower fails to provide the monthly Borrowing Base Certificate to the Administrative Agent as required by and within the time limits set
forth in Section 7.1(a) or an Event of Default shall have occurred and be continuing, the Applicable Margin shall be based on Level 3 until five
(5) Business Days after the applicable monthly Borrowing Base Certificate is provided or such Event of Default is no longer continuing,
whereupon the Level shall be determined by the Average Excess Availability as of the most recent Calculation Date. Except as set forth above,
each Applicable Margin shall be effective from one Calculation Date until the next Calculation Date.
    “ Approved Fund ” means any Person (other than a natural Person), including without limitation, any special purpose entity, that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course
of its business; provided that any such Approved Fund must be administered, managed or underwritten by (a) a Lender, (b) an Affiliate of a
Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
   “ Assignment and Assumption ” means an Assignment and Assumption substantially in the form of Exhibit A hereto (with blanks
appropriately completed) delivered to the Administrative Agent in connection with an assignment of a Lender’s interest hereunder in
accordance with the provisions of Section 14.11 .
   “ Assignment of Claims Act ” means the Assignment of Claims Act of 1940, as it may be amended from time to time, together with all
regulations promulgated from time to time in respect thereof.

                                                                         3
   “ Average Excess Availability ” means, as of the end of each calendar quarter, the daily average amount (calculated for such calendar
quarter) of Excess Availability.
   “ Bank Product Agreement ” means those agreements entered into from time to time by any Loan Party with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.
   “ Bank Product Amount ” has the meaning given to such term in the definition of Bank Products.
   “ Bank Product Obligations ” has the meaning given to such term in the definition of Obligations.
   “ Bank Product Provider ” means any Lender or any of its Affiliates that provides any Bank Products to any Loan Party; provided , that if, at
any time, a Lender ceases to be a Lender under this Agreement, then, from and after the date on which it ceases to be a Lender hereunder,
neither it nor any of its Affiliates shall constitute Bank Product Providers and the obligations with respect to Bank Products provided by such
former Lender or any of its Affiliates shall no longer constitute Obligations.
    “ Bank Products ” means any one or more of the following types or services or facilities provided to a Loan Party by a Bank Product
Provider: (a) credit cards, stored value cards or purchase cards, (b) cash management or related services, including (i) the automated
clearinghouse transfer of funds for the account of a Loan Party pursuant to agreement or overdraft for any accounts of a Loan Party maintained
at the Administrative Agent or any Bank Product Provider that are subject to the control of the Administrative Agent pursuant to any Deposit
Account Control Agreement to which the Administrative Agent or such Bank Product Provider is a party, as applicable, (ii) controlled
disbursement services and (iii) E-payables or comparable services, and (c) Hedge Agreements if and to the extent permitted hereunder. In
connection with any Bank Product, each Bank Product Provider, other than the Administrative Agent and its Affiliates, shall provide written
notice to the Administrative Agent (1) prior to entering into a Bank Product of (x) the existence of such Bank Product, (y) the maximum dollar
amount of obligations arising thereunder (the “ Bank Product Amount ”) and (z) the methodology to be used by such parties in determining the
obligations under such Bank Product from time to time and (2) in connection with any Bank Product that is a Hedge Agreement, from time to
time but no less frequently than monthly, the mark-to-market exposure with respect to Bank Products consisting of Hedge Agreements
provided by such Bank Product Provider, giving effect to any netting with respect to all such Bank Products consisting of Hedge Agreements
provided by such Bank Product Provider to the Loan Parties, as reasonably determined by such Bank Product Provider. The Bank Product
Amount may be changed from time to time upon written notice to the Administrative Agent by the applicable Bank Product Provider. No Bank
Product Amount may be established at any time that a Default or Event of Default exists, or if a reserve in such amount would cause an
Overadvance.
    “ Base Rate ” means, on any date, the greatest of (a) the rate from time to time publicly announced by Wachovia as its prime rate, with the
understanding that the “prime rate” is one of Wachovia’s base rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making reference thereto (and each change in the prime rate shall be effective as
of the opening of business on the day such change in such prime rate occurs), (b) the Federal Funds Rate in effect on such day plus one-half
percent (0.50%) and (c) the LIBOR Rate for a one month Interest Period on such day plus one and one-half percent (1.50%) ( provided that if
the LIBOR Rate is not available on such date as described in Article 4 or otherwise, the most recently available LIBOR Rate for a one month
Interest Period shall be used).
   “ Base Rate Loans ” means any Loan made to a Borrower that bears interest based on the Base Rate.

                                                                         4
   “ Blocked Accounts ” has the meaning given to such term in Section 6.3(a) .
   “ Borrowers ” has the meaning given to such terms in the preamble hereof.
   “ Borrowing Base ” means, as of any date of calculation, the amount equal to:
      (a) up to ninety percent (90%) of Eligible Government Accounts; plus
      (b) up to eighty-five percent (85%) of Eligible Commercial Accounts; plus
     (c) the least of (i) up to sixty-five percent (65%) multiplied by the Value of Eligible Inventory, (ii) up to eighty-five percent (85%) of the
Net Recovery Percentage multiplied by the Value of Eligible Inventory and (iii) $55,000,000; minus
      (d) Reserves.
  The amounts of Eligible Inventory of any Borrower shall, at the Administrative Agent’s option, be determined based on the lesser of the
amount of Inventory set forth in the general ledger of such Borrower or the perpetual inventory record maintained by such Borrower.
   “ Borrowing Base Certificate ” means a borrowing base certificate in substantially the form of Exhibit B hereto.
   “ Business Day ” means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close
under the laws of the State of New York or the State of North Carolina, and a day on which the Administrative Agent is open for the
transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall
also exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market or other applicable Eurodollar
Rate market.
   “ Calculation Date ” has the meaning given to such term in the definition of Applicable Margin.
   “ Capital Expenditures ” means expenditures for the acquisition (including the acquisition by capitalized lease) or improvement of capital
assets, as determined in accordance with GAAP.
   “ Capital Leases ” means, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of
such Person.
   “ Capital Stock ” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of
such Person’s capital stock or partnership, limited liability company or other equity interests at any time outstanding, and any and all rights,
warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is
exchangeable for or convertible into such capital stock).
  “ Cash Dividends ” means, for any applicable period of computation, the aggregate amount of all Restricted Payments paid in cash by the
Company pursuant to Section 10.6(c)(ii) and (e) during such period.
   “ Cash Equivalents ” means, at any time, (a) any evidence of Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America

                                                                         5
or any agency or instrumentality thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;
(b) certificates of deposit or bankers’ acceptances with a maturity of ninety (90) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits of not less than $1,000,000,000; (c) commercial paper
(including variable rate demand notes) with a maturity of ninety (90) days or less issued by a corporation (except an Affiliate of any Loan
Party) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by S&P or at
least P-1 by Moody’s; (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described
in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than
$1,000,000,000; (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and
credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided that the
terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities
Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; (f) investments in money market funds and mutual
funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above; and (g) those investments
identified on Schedule 1.1(b) . For the avoidance of doubt, auction rate securities shall not constitute “Cash Equivalents”.
   “ Cash Taxes ” means, for any applicable period of computation, without duplication, the sum of (a) all federal, state, local and foreign
income taxes paid in cash by the Borrowers during such period (net of all income tax refunds and credits received in cash by the Borrowers
during such period), which number for the applicable period of computation shall not be less than zero, determined on a combined basis in
accordance with applicable law and GAAP and (b) Permitted Tax Distributions paid by the Company during such period.
   “ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any
law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof
by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by
any Governmental Authority.
    “ Change of Control ” means (a) the failure of the Permitted Holders, collectively, to directly own and control in excess of 50% of the
Voting Stock of Holdings on a fully-diluted basis (taking into account all Voting Stock that the Permitted Holders have the right to acquire
pursuant to any option right); or (b) the failure of Holdings to directly own and control one hundred percent (100%) of each class of Capital
Stock of the Company; or (c) except as otherwise permitted pursuant to Section 10.4 or 10.5 , the failure of the Company to, directly or
indirectly, own and control one hundred percent (100%) of each class of the Capital Stock of each Subsidiary Loan Party; or (d) during any
year following the Closing Date, individuals who at the beginning of such year constituted the board of directors of the Company or Holdings
(together with any new directors whose election to the applicable board of directors or whose nomination for election by the equityholders of
the Company or Holdings, as applicable, was approved by a vote of at least a majority of the members of the applicable board of directors then
still in office who were either directors at the beginning of such year or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the board of directors of the Company or Holdings, as applicable, then still in office.
   “ Closing Date ” means the date on which the conditions specified in Section 5.1 are satisfied (or waived in accordance with Section 14.2 ).

                                                                           6
   “ Closing Date Dividend ” has the meaning given to such term in Section 10.6(c)(i) .
   “ Code ” means the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.
   “ Collateral ” has the meaning given to such term in Section 6.1 .
   “ Collateral Access Agreement ” means an agreement in writing, in form and substance reasonably satisfactory to the Administrative Agent,
from a lessor of premises to any Loan Party, or another person to whom any Collateral is consigned or who has custody, control or possession
of any such Collateral or is otherwise the owner or operator of a premises on which any of such Collateral is located, in favor of the
Administrative Agent with respect to the Collateral at such premises or otherwise in the custody, control or possession of such lessor,
consignee or other person.
   “ Commercial Accounts ” means all Accounts other than Government Accounts.
   “ Commitment ” means, at any time, as to each Lender, the principal amount set forth beside such Lender’s name on Schedule 1.1(a) or in
the Assignment and Assumption Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of
Section 14.11 , as the same may be adjusted from time to time in accordance with the terms hereof.
   “ Commitment Fee ” has the meaning given to such term in Section 3.2(a) .
   “ Commitment Fee Rate ” means, on any date of calculation, one-half of one percent (0.50%) per annum.
   “ Company ” has the meaning given to such term in the preamble.
   “ Compliance Certificate ” means a compliance certificate substantially in the form of Exhibit C hereto.
   “ Credit Facility ” means the Loans and Letters of Credit provided to or for the benefit of any Borrower pursuant to Sections 2.1 , 2.2 and
2.3 .
   “ Default ” means an act, condition or event which with notice or passage of time or both would constitute an Event of Default.
    “ Defaulting Lender ” means any Lender that (a) has failed to fund any amounts required to be funded by it under the Agreement within one
(1) Business Day of the date that it is required to do so under the Agreement (including the failure to make available to the Administrative
Agent amounts required pursuant to a Settlement Advance or to make a required payment in connection with a Letter of Credit), (b) notified
any Borrower (and the Borrowers have notified the Administrative Agent), the Administrative Agent or any other Lender (and such Lender has
notified the Administrative Agent) in writing that it does not intend to comply with all or any portion of its funding obligations under the
Agreement, (c) has made a public statement to the effect that it does not intend to comply with its funding obligations under the Agreement or
under other agreements generally (as reasonably determined by the Administrative Agent) under which it has committed to extend credit,
(d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it under the
Agreement within one (1) Business Day of the date that it is required to do so under the Agreement, unless the subject of a good faith dispute,
or (e) (i) becomes or is insolvent or has a parent company that

                                                                        7
has become or is insolvent or (ii) becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or
custodian or appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment.
   “ Default Rate ” means the applicable rate set forth in Section 3.1(c) .
   “ Deferred Revenue Excess ” has the meaning set forth in the definition of “Eligible Government Accounts”.
    “ Deposit Account Control Agreement ” means an agreement in writing, in form and substance reasonably satisfactory to the Administrative
Agent, by and among the Administrative Agent, the Loan Party with a deposit account at any bank and the bank at which such deposit account
is at any time maintained which provides that such bank will comply with instructions originated by the Administrative Agent directing
disposition of the funds in the deposit account without further consent by such Loan Party and has such other terms and conditions as the
Administrative Agent may reasonably require.
    “ Disqualified Capital Stock ” means any Capital Stock that, by its terms (or by the terms of any security or other Capital Stock into which it
is convertible or for which it is exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other
than solely for Qualified Capital Stock), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset
sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior
repayment in full of the Revolving Loans and all other Obligations that are accrued and payable and the termination of the Commitments),
(b) is redeemable at the option of the holder thereof (other than solely for Qualified Capital Stock) (except as a result of a change of control or
asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior
repayment in full of the Revolving Loans and all other Obligations that are accrued and payable and the termination of the Commitments), in
whole or in part, (c) provides for the scheduled payment of dividends in cash or (d) is or becomes convertible into or exchangeable for
Indebtedness or any other Capital Stock that would constitute Disqualified Capital Stock, in each case, prior to the date that is 91 days after the
Maturity Date; provided , that if such Capital Stock is issued pursuant to a plan for the benefit of Holdings, the Company or its Subsidiaries or
by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be
repurchased by Holdings, the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.
   “ Dollars ” means the lawful currency of the United States of America.
   “ Domestic Subsidiary ” means any Subsidiary that is incorporated or organized under the laws of any state of the United States or the
District of Columbia.
    “ EBITDA ” means, for any applicable period of computation, determined on a combined basis for the Borrowers in accordance with
GAAP, (a) Net Income for such period plus (b) without duplication, the sum of the following to the extent deducted in calculating Net Income:
(i) Interest Expense for such period, (ii) income tax expense (including, without limitation, any federal, state, local and foreign income and
similar taxes) of the Borrowers for such period, (iii) depreciation and amortization of the Borrowers for such period, (iv) any non-cash charges
for such period (excluding non-cash charges that are expected to become cash charges in a future period or that are reserves for future cash
charges), (v) non-cash losses for such period from the proposed or actual disposition of material assets, (vi) Transaction Costs for such

                                                                           8
period, (vii) costs and expenses incurred in connection with the relocation of the Company’s headquarters for such period and (viii) financial
advisory and other related fees and expenses for such period in an amount acceptable to the Administrative Agent, minus (c) without
duplication, the sum of the following to the extent included in calculating Net Income: (i) non-cash, extraordinary or non-recurring gains for
such period and (ii) non-cash gains for such period from the proposed or actual disposition of material assets.
   “ Eligible Accounts ” means Accounts created by a Borrower that in each case satisfy the criteria set forth below as reasonably determined
by the Administrative Agent:
     (a) such Accounts arise from the actual and bona fide sale and delivery of goods by such Borrower or rendition of services by such
Borrower in the ordinary course of its business which transactions are completed in accordance with the terms and provisions contained in any
documents related thereto;
       (b) such Accounts (i) are evidenced by an invoice delivered to the related account debtor, (ii) are not unpaid more than sixty (60) days
after the original due date therefor and (iii) are not unpaid more than ninety (90) days after the date of the original invoice thereof;
      (c) such Accounts comply with the following terms and conditions: (i) the amounts shown on any invoice delivered to the Administrative
Agent or schedule thereof delivered to the Administrative Agent shall be true and complete, (ii) no payments shall be made thereon except
payments immediately delivered to the Administrative Agent to the extent required pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor except for credits, discounts,
allowances or extensions made or given in the ordinary course of each Borrower’s business in accordance with practices and policies
previously disclosed to the Administrative Agent and (iv) none of the transactions giving rise thereto will violate any applicable foreign,
Federal, State or local laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all
such documentation will be legally enforceable in accordance with its terms;
     (d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
      (e) such Accounts do not consist of percentage of completion accounts or progress billings (such that the obligation of the account
debtors with respect to such Accounts is conditioned upon such Borrower’s satisfactory completion of any further performance under the
agreement giving rise thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if the Administrative Agent shall
have received an agreement in writing from the account debtor, in form and substance reasonably satisfactory to the Administrative Agent,
confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice;
      (f) such Accounts are not owing by creditors or suppliers;
      (g) there are no facts, events or occurrences which would impair the validity, enforceability or collectability of such Accounts or reduce
the amount payable or materially delay payment thereunder;
      (h) such Accounts are subject to the first priority, valid and perfected security interest of the Administrative Agent;

                                                                          9
      (i) such Accounts are not subject to any other Liens and any goods giving rise thereto are not, and were not at the time of the sale thereof,
subject to any Liens, in each case other than Liens permitted under Section 10.2 that are subordinated to the Lien of the Administrative Agent
pursuant to an intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent;
      (j) neither the account debtor nor any officer or employee of the account debtor with respect to such Accounts is an officer, employee,
agent or Affiliate of any Loan Party;
      (k) there are no proceedings or actions which are pending or, to the knowledge of any Responsible Officer of any Loan Party, threatened
against the account debtors with respect to such Accounts which might result in any material adverse change in any such account debtor’s
financial condition (including, without limitation, any bankruptcy, dissolution, liquidation, reorganization or similar proceeding);
      (l) such Accounts are not owed by an account debtor who has Accounts classified as ineligible under clause (b) above which constitute
more than thirty-five percent (35%) of the total Accounts of such account debtor;
       (m) the account debtor is not located in a state requiring the filing of a “Notice of Business Activities Report” or similar report in order to
permit such Borrower to seek judicial enforcement in such State of payment of such Account, unless such Borrower has qualified to do
business in such state or has filed a “Notice of Business Activities Report” or equivalent report for then current year or such failure to file and
inability to seek judicial enforcement is capable of being remedied without any material delay or material cost;
       (n) such Accounts do not include any billing for interest, fees or late charges (but the portion of the Accounts in excess of such amounts
shall be deemed Eligible Accounts if such Accounts are otherwise Eligible Accounts);
      (o) such Accounts are owed by account debtors deemed creditworthy at all times by the Administrative Agent in good faith; and
      (p) no portion of any such Accounts is evidenced by a promissory note or other instrument or by chattel paper.
The criteria for Eligible Accounts set forth above may be changed and any new criteria for Eligible Accounts may be established by the
Administrative Agent in good faith in order to address either: (i) an event, condition or other circumstance arising after the Closing Date, or
(ii) an event, condition or other circumstance existing on the Closing Date to the extent the Administrative Agent has no written notice thereof
from a Borrower prior to the Closing Date, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to
adversely affect the Accounts in the good faith determination of the Administrative Agent. Any Accounts that are not Eligible Accounts shall
nevertheless be part of the Collateral. Prior to the inclusion of any Accounts acquired in connection with any Permitted Acquisition as Eligible
Accounts, the Administrative Agent or its designee shall have conducted an audit and field examination with respect to such Accounts, the
results of which audit and field examination shall be reasonably satisfactory to the Administrative Agent.
   “ Eligible Assignee ” means (a) any Lender, (b) any Affiliate of a Lender, (c) an Approved Fund or (d) any other Person (other than a
natural person) that is approved by the Administrative Agent (which approval shall not be unreasonably withheld, conditioned or delayed),
provided that neither Holdings, the Company nor any Subsidiary or Affiliate thereof shall qualify as an Eligible Assignee.

                                                                          10
    “ Eligible Commercial Accounts ” means Eligible Accounts consisting of Commercial Accounts that, in each case, satisfy the additional
criteria set forth below as reasonably determined by the Administrative Agent:
       (a) the chief executive office of the account debtor with respect to such Accounts is located in the United States of America or, at the
Administrative Agent’s option, if the chief executive office and principal place of business of the account debtor with respect to such Accounts
is located other than in the United States of America, then if either: (i) the account debtor has delivered to such Borrower an irrevocable letter
of credit issued or confirmed by a bank reasonably satisfactory to the Administrative Agent and payable only in the United States of America
and in Dollars, sufficient to cover such Account, in form and substance reasonably satisfactory to the Administrative Agent and if required by
Section 6.2(f) , the original of such letter of credit has been delivered to the Administrative Agent or the Administrative Agent’s agent and the
issuer thereof, and such Borrower has complied with the other applicable terms of Section 6.2(f) with respect to the assignment of the proceeds
of such letter of credit to the Administrative Agent or naming the Administrative Agent as transferee beneficiary thereunder, as the
Administrative Agent may specify, or (ii) such Account is subject to credit insurance payable to the Administrative Agent issued by an insurer
and on terms and in an amount acceptable to the Administrative Agent, or (iii) such Account, when aggregated with all such other Accounts, is
not in excess of $2,000,000 and is otherwise acceptable in all respects to the Administrative Agent (subject to such lending formula with
respect thereto as the Administrative Agent may reasonably determine), then so long as such Account is otherwise an Eligible Account, such
Account will be included as an Eligible Commercial Account;
      (b) such Accounts are not otherwise subject to any potential offset, counterclaim, dispute, deduction, discount, recoupment, reserve,
defense, chargeback, rebate, credit or allowance ( provided that if such Accounts are otherwise Eligible Commercial Accounts, the portion of
such Accounts in excess of the amount at any time and from time to time owed by such Borrower to such account debtor or claimed owed by
such account debtor may be deemed Eligible Commercial Accounts);
       (c) the aggregate amount of such Accounts owing by a single account debtor do not constitute more than ten percent (10%) of the sum of
(i) the aggregate amount of all otherwise Eligible Commercial Accounts plus (ii) the aggregate amount of all Eligible Government Accounts
(but the portion of the Accounts not in excess of such percentage shall be deemed Eligible Commercial Accounts);
      (d) the account debtors with respect to such Accounts are not any foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof; and
       (e) such Accounts are owed by account debtors whose total indebtedness to such Borrower does not exceed the credit limit with respect
to such account debtors as determined by such Borrower from time to time, to the extent such credit limit as to any account debtor is
established consistent with the current practices and policies of such Borrower as of the Closing Date and such credit limit is reasonably
acceptable to the Administrative Agent (but the portion of the Accounts not in excess of such credit limit may be deemed Eligible Commercial
Accounts if such Accounts are otherwise Eligible Commercial Accounts).
  “ Eligible Government Accounts ” means Eligible Accounts consisting of Government Accounts but excluding any portion of a Government
Account:

                                                                        11
     (a) against which the applicable U.S. Governmental Authority has exercised its right of setoff or deduction or has formally notified a
Borrower of its intention to do so;
      (b) relating to the last payment due to a Borrower under a prime contract between such Borrower and the applicable U.S. Governmental
Authority, unless (i) such contract is a “Fixed Price Contract” (as defined in Federal Acquisition Regulation Part 16.2, or any successor
regulation) which does not include any provision for progress payments, incentive arrangements, or price redetermination or (ii) the
Administrative Agent has otherwise consented in writing to the inclusion of such Account as an Eligible Government Contract;
      (c) to the extent such Government Account is offset by a deferred revenue deposit related to such Government Account (but only to the
extent of such deferred revenue deposit; provided , that to the extent any such deferred revenue deposit exceeds the related Government
Account (such excess, the “ Deferred Revenue Excess ”), such Deferred Revenue Excess shall reduce the related Eligible Inventory related to
such Government Account on a dollar for dollar basis); and
       (d) as to which such Borrower shall not have executed a Notice of Assignment and an Instrument of Assignment with respect to the
underlying Government Contract and any other agreements, instruments and documents and performed all acts that the Administrative Agent
may reasonably require to ensure compliance with the Assignment of Claims Act (or any other similar state laws); provided , however, that the
filing of such Notice of Assignment and Instrument of Assignment with the applicable U.S. Governmental Authority shall not occur until
required pursuant to Section 6.2(h) .
   “ Eligible Inventory ” means, as to each Borrower, Inventory of such Borrower consisting of finished goods held for resale in the ordinary
course of the business of such Borrower, except to the extent consisting of any of the following as determined by the Administrative Agent:
      (a) work-in-process;
      (b) components which are not part of finished goods;
      (c) spare parts for equipment;
      (d) display items, samples, tooling and packaging and shipping materials;
      (e) supplies used or consumed in such Borrower’s business;
      (f) Inventory located on leased premises or in the possession of a warehouseman or processor, unless such lessor, warehouseman or
processor has delivered a Collateral Access Agreement with respect thereto or an appropriate Reserve with respect to rent has been established
with respect thereto;
      (g) Inventory located at any premises if the Value of the Inventory located at such premises is less than $100,000 unless otherwise agreed
by the Administrative Agent in its sole discretion;
       (h) Inventory subject to a Lien of any other Person which Lien is not subordinated to the Lien of the Administrative Agent pursuant to an
intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent;
      (i) bill and hold goods;

                                                                       12
      (j) unsalable, unserviceable, obsolete or slow moving Inventory;
      (k) Inventory that is not subject to the first priority, valid and perfected security interest of the Administrative Agent;
      (l) returned, damaged and/or defective Inventory;
      (m) Inventory subject to a negotiable warehouse receipt or other negotiable Document;
      (n) Inventory purchased or sold on consignment;
      (o) Inventory located outside the United States of America or Inventory that is in transit (other than Inventory that is otherwise Eligible
Inventory and is in transit between domestic locations of the Borrowers); and
      (p) Inventory related to any Government Account to the extent of any Deferred Revenue Excess.
The criteria for Eligible Inventory set forth above may be changed and any new criteria for Eligible Inventory may be established by the
Administrative Agent in good faith in order to address either: (i) an event, condition or other circumstance arising after the Closing Date or
(ii) an event, condition or other circumstance existing on the Closing Date to the extent the Administrative Agent has no written notice thereof
from the Administrative Borrower prior to the Closing Date, in either case under clause (i) or (ii) which adversely affects or could reasonably
be expected to adversely affect the Inventory in the good faith determination of the Administrative Agent. Any Inventory that is not Eligible
Inventory shall nevertheless be part of the Collateral. Prior to the inclusion of any Inventory acquired in connection with any Permitted
Acquisition as Eligible Inventory, the Administrative Agent or its designee shall have conducted an appraisal and field examination with
respect to such Inventory, the results of which appraisal and field examination shall be reasonably satisfactory to the Administrative Agent.
    “ Environmental Laws ” means all foreign, Federal, State, provincial and local laws (including common law), legislation, rules, codes,
licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements
between any Loan Party and any Governmental Authority, (a) relating to pollution and the protection, preservation or restoration of the
environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land,
plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling,
treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened
release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials including, without limitation, (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws
and (iii) any common law, civil law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened
as a result of, the presence of or exposure to any Hazardous Materials.

                                                                          13
   “ Equipment ” means, as to each Loan Party, all of such Loan Party’s now owned and hereafter acquired equipment, as defined in the UCC,
wherever located, including all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and
substitutions and replacements thereof, wherever located.
    “ ERISA ” means the Employee Retirement Income Security Act of 1974, together with all rules, regulations and interpretations thereunder
or related thereto.
   “ ERISA Affiliate ” means any person required to be aggregated with the Company or any of its Subsidiaries under Sections 414(b), 414(c),
414(m) or 414(o) of the Code or Section 4001(b) of ERISA.
   “ ERISA Event ” means (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with
respect to a Pension Plan, other than events as to which the requirement of notice has been waived in regulations by the Pension Benefit
Guaranty Corporation, (b) the adoption of any amendment to a Pension Plan that would require the provision of security pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in
reorganization, (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan, (e) an
event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, (f) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit
Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate in excess of
$500,000 and (g) any other event or condition with respect to a Plan including any Pension Plan subject to Title IV of ERISA maintained, or
contributed to, by any ERISA Affiliate that could reasonably be expected to result in liability of any Borrower in excess of $500,000.
   “ Eurodollar Rate Loans ” means any Revolving Loan made to a Borrower that bears interest based on the Adjusted Eurodollar Rate.
   “ Event of Default ” has the meaning given to such term in Section 11.1 .
    “ Excess Availability ” means the amount, as determined by the Administrative Agent, calculated at any date, equal to (a) the lesser of
(i) the Aggregate Commitment and (ii) the Borrowing Base (as set forth in the Borrowing Base Certificate most recently delivered by the
Administrative Borrower) minus (b) the sum of (i) the Total Outstanding as of such date plus (ii) the aggregate amount of all then outstanding
and unpaid trade payables and other obligations of any Borrower which are outstanding more than thirty (30) days past due as of the end of the
immediately preceding month or at the Administrative Agent’s option, as of a more recent date based on such reports as the Administrative
Agent may from time to time request (other than trade payables or other obligations being contested or disputed by such Borrower in good
faith) plus (iii) without duplication, the amount of checks issued by such Borrower to pay trade payables and other obligations which are more
than thirty (30) days past due as of the end of the immediately preceding month or at the Administrative Agent’s option, as of a more recent
date based on such reports as the Administrative Agent may from time to time request (other than trade payables or other obligations being
contested or disputed by such Borrower in good faith), but not yet sent.
   “ Exchange Act ” means the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related
thereto.

                                                                       14
   “ Excluded Bank Account ” means (a) deposit accounts specifically and exclusively used for, payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of any Loan Party’s employees, (b) that certain deposit account in existence on the Closing
Date with Merrill Lynch Capital Corporation (or any successor thereto) so long as such account (i) does not at any time have more than
$1,000,000 on deposit therein and (ii) is used solely for the purpose of the Company’s credit card program with Merrill Lynch Capital
Corporation, (c) that certain deposit account in existence on the Closing Date with Charter Bank (or any successor thereto) so long as such
account does not at any time have more than $250,000 on deposit therein or (d) any other deposit account or securities account which,
individually or in the aggregate, does not at any time have more than $50,000 on deposit therein.
    “ Excluded Taxes ” means, with respect to the Administrative Agent, Issuing Lender, any Lender or any other recipient of any payment to
be made by or on account of any obligation of any Loan Party hereunder, (a) any taxes imposed on or measured by its overall net income
(however denominated) or net profits of such Person (and franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of which
such recipient (i) is organized or incorporated, (ii) maintains its principal lending office or, in the case of any Lender or Issuing Lender, its
applicable lending office with respect to this Agreement or (iii) has a present or former connection other than a connection resulting from
entering into this Agreement, receiving any payment or enforcing any right under this Agreement; (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction in which such Lender or Issuing Lender is located and (c) in the
case of any Foreign Lender, any withholding tax payable with respect to payments under the Loan Documents under laws (including any
statute, treaty or regulation) in effect on the Closing Date (or, in the case of an Eligible Assignee, the date of the Assignment and Assumption)
or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 4.5(g) , except
to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of assignment, to receive additional amounts from the
Loan Party with respect to such withholding tax pursuant to Section 4.5(b) .
   “ Existing Facility ” means, collectively, (a) the credit facility of the Company evidenced by that certain Loan Agreement dated as of
August 22, 2007 (as amended from time to time prior to the date hereof) by and between the Company, as borrower, and Wachovia Bank,
National Association, as lender and (b) the credit facility of the Company evidenced by that certain Loan Agreement dated as of August 26,
2006 (as amended from time to time prior to the date hereof) by and between the Company, as borrower, and Wachovia Bank, National
Association, as lender.
   “ Facility Increase ” has the meaning given to such term in Section 2.7 .
   “ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of
recognized standing selected by it.
   “ Fee Letter ” means the letter agreement, dated as of January 12, 2010, by and among the Company, Wachovia and Wells Fargo Foothill,
LLC (now known as Wells Fargo Capital Finance, LLC), setting forth certain fees payable by the Borrowers in connection with the Credit
Facility, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

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   “ Filing Threshold Amount ” means $10,000,000 plus proportionate increases thereto to reflect any Facility Increases.
    “ Fixed Charge Coverage Ratio ” means, as of the last day of each fiscal month of the Borrowers, the ratio of (a) (i) EBITDA plus (ii) cash
interest income minus (iii) Unfinanced Capital Expenditures minus (iv) Cash Taxes to (b) Fixed Charges, in each case, computed for the twelve
(12) consecutive fiscal month period then ending. For purposes of calculating the Fixed Charge Coverage Ratio for any applicable period
during which any Permitted Acquisition of a Borrower (or of a Person that becomes a Borrower) or any Asset Disposition is consummated,
(i) income statement items and balance sheet items (whether positive or negative) attributable to the business or Person acquired in such
Permitted Acquisition or the asset(s) subject to such Asset Disposition shall be included or excluded, as applicable, in such calculations to the
extent relating to such applicable period and the Permitted Acquisition or Asset Disposition shall be deemed to have occurred as of the first day
of such applicable period, (ii) EBITDA may be adjusted to include operating and other expense reductions and other adjustments for such
period resulting from such Permitted Acquisition and (iii) Indebtedness of a business or Person that is retired in connection with such Permitted
Acquisition or Asset Disposition shall be excluded from such calculations and deemed to have been retired as of the first day of such applicable
period, in each case, to the extent that such adjustments in clauses (i), (ii) and (iii) of this sentence (A) are identified by the Borrowers and
supported by documentation reasonably acceptable to the Administrative Agent and (b) approved by the Administrative Agent in its sole
discretion. For purposes of this definition, “Asset Disposition” means the disposition of any or all of the assets of any Borrower, whether by
sale, lease, transfer or otherwise.
   “ Fixed Charges ” means, for any applicable period of computation, without duplication, the sum of (a) all Interest Expense paid in cash by
the Borrowers for such period plus (b) Scheduled Indebtedness Payments made by the Borrowers during such period plus (c) Cash Dividends
paid in cash by the Borrowers for such period.
   “ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than that in which a Borrower is resident for
tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.
   “ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.
    “ GAAP ” means generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards Board, which, in each case, are applicable to the circumstances as of the
date of determination consistently applied.
   “ Government Accounts ” means Accounts owing directly by any U.S. Governmental Authority to a Borrower under a prime contract
entered into between such U.S. Governmental Authority and such Borrower.
  “ Government Contract ” means any written agreement, commitment, contract, instrument or other binding arrangement between the
Company or any Subsidiary thereof and any U.S. Governmental Authority.
   “ Governmental Authority ” means any nation or government, any state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

                                                                       16
   “ Guarantors ” means, collectively, Holdings, the Subsidiary Guarantors and any other Person that at any time after the Closing Date
becomes a party hereto pursuant to a joinder agreement in substantially the form of Exhibit E pursuant to which such Person shall become a
party to the Guaranty as a joint and several “Guarantor”.
   “ Guaranty ” means the guaranty made by the Guarantors of the Obligations under Article 13 in favor of the Administrative Agent, for the
benefit of the Secured Parties.
   “ Hazardous Materials ” means any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants
(including materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law
(including any that are or become classified as hazardous or toxic under any Environmental Law).
   “ Hedge Agreement ” means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code.
   “ Holdings ” has the meaning given to such term in the preamble.
   “ Increase Effective Date ” has the meaning given to such term in Section 2.7 .
    “ Indebtedness ” means, with respect to any Person, any liability, whether or not contingent, (a) in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures
or similar instruments, (b) representing the balance deferred and unpaid of the purchase price of any property or services (other than an account
payable to a trade creditor (whether or not an Affiliate) incurred in the ordinary course of business of such Person and payable in accordance
with customary trade practices), (c) all obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases, (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness
described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds
for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition, (e) all obligations of any
such Person in respect of Disqualified Capital Stock, (f) all reimbursement obligations and other liabilities of such Person with respect to surety
bonds (whether bid, performance or otherwise), letters of credit, bankers’ acceptances, drafts or similar documents or instruments issued for
such Person’s account, (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of
another Person otherwise described in this definition which is secured by any consensual lien, security interest, collateral assignment,
conditional sale, mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such obligations, liabilities or
indebtedness is assumed by or is a personal liability of such Person, all as of such time, (h) all net obligations, liabilities and indebtedness of
such Person (marked to market) arising under Hedge Agreements, (i) all obligations owed by such Person under License Agreements with
respect to non-refundable, advance or minimum guarantee royalty payments; (j) indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer to the extent such Person is liable therefor as a result of such Person’s ownership interest in such
entity, except to the extent that the terms of such indebtedness expressly provide that such Person is not liable therefor or such Person has no
liability therefor as a matter of law, (k) the principal and interest

                                                                         17
portions of all rental obligations of such Person under any synthetic lease or similar off-balance sheet financing where such transaction is
considered to be borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP, (l) all obligations of such
Person under conditional sale or other title retention agreements relating to property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), and (m) all obligations of
such person under take or pay or similar arrangements.
   “ Indemnitee ” has the meaning given to such term in Section 14.4 .
   “ Information Certificate ” means a certificate of the Loan Parties substantially in the form of Exhibit D hereto.
  “ Instrument of Assignment ” means each instrument of assignment executed by a Loan Party with respect to any Material Government
Contract to which such Loan Party is a party, substantially in the form of Exhibit J hereto.
   “ Intellectual Property ” means all of the following in any jurisdiction throughout the world: (a) patents, patent applications and inventions,
including all renewals, extensions, combinations, divisions, or reissues thereof, (“ Patents ”); (b) trademarks, service marks, trade names, trade
dress, logos, Internet domain names and other business identifiers, together with the goodwill symbolized by any of the foregoing, and all
applications, registrations, renewals and extensions thereof, (“ Trademarks ”); (c) copyrights and all works of authorship including all
registrations, applications, renewals, extensions and reversions thereof (“ Copyrights ”); (d) all computer software, source code, executable
code, data, databases and documentation thereof; (e) all trade secret rights in information, including trade secret rights in any formula, pattern,
compilation, program, device, method, technique, or process, that (1) derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure
or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; (f) all other intellectual property or
proprietary rights in any discoveries, concepts, ideas, research and development, know-how, formulae, patterns, inventions, compilations,
compositions, manufacturing and production processes and techniques, program, device, method, technique, technical data, procedures,
designs, recordings, graphs, drawings, reports, analyses, specifications, databases, and other proprietary or confidential information, including
customer lists, supplier lists, pricing and cost information, business and marketing plans and proposals and advertising and promotional
materials; and (g) all rights to sue at law or in equity for any infringement or other impairment or violation thereof and all products and
proceeds of the foregoing.
   “ Intellectual Property Agreements ” means all licenses or other written agreements under which any Loan Party’s right to use any
Intellectual Property arose or pursuant to which such Loan Party licenses or otherwise distributes any Intellectual Property to any third party.
  “ Interest Expense ” means, for any applicable period of computation, all interest expense of the Borrowers for such period, determined on a
combined basis in accordance with GAAP.
  “ Interest Period ” means for any Eurodollar Rate Loan, a period of approximately one (1), two (2) or three (3) months duration as the
Administrative Borrower on behalf of any Borrower may elect; provided that:
      (a) the Administrative Borrower on behalf of such Borrower may not elect an Interest Period that will extend beyond the Maturity Date;

                                                                          18
      (b) no such Interest Period shall be less than thirty (30) days;
      (c) the Interest Period shall commence on the date the Revolving Loan is made or continued as, or converted into, a Eurodollar Rate
Loan, and shall expire on the numerically corresponding day in the calendar month at its end;
      (d) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business
Day; and
      (e) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end
of such Interest Period.
   “ Inventory ” means, as to each Loan Party, all present and future inventory, as defined in the UCC, of such Loan Party.
   “ Investment ” means, with respect to a Person, any investment in any other Person, whether by means of (a) purchase or acquisition of
obligations or securities of such other Person, (b) capital contribution to such other Person, (c) loan or advance to such other Person, (d) making
of a time deposit with such other Person, (e) guarantee or assumption of, or providing any collateral or letter of credit for, any obligation of
such other Person, (f) Acquisition or (g) otherwise.
   “ Investment Property Control Agreement ” means an agreement in writing, in form and substance reasonably satisfactory to the
Administrative Agent, by and among the Administrative Agent, any Loan Party (as the case may be) and any securities intermediary that
maintains a securities account of such Loan Party, acknowledging that such securities intermediary has custody, control or possession of such
securities account on behalf of the Administrative Agent, that it will comply with entitlement orders originated by the Administrative Agent
with respect to such securities account, and has such other terms and conditions as the Administrative Agent may require.
   “ Issuing Lender ” means with respect to any Letter of Credit, Wachovia in its capacity as issuer of such Letters of Credit hereunder, or any
successor issuer of such Letters of Credit hereunder.
   “ Leases ” has the meaning given to such term in Section 8.16 .
    “ Lender ” means each financial institution signatory hereto as a Lender and each other Person made a party to this Agreement as a Lender
in accordance with Section 14.11 .
   “ Lending Party ” means the Administrative Agent or any Lender.
    “ Letter of Credit Documents ” means, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents
delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general
in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at
risk with respect to such Letter of Credit or (b) any collateral security for any obligations related to such Letter of Credit.
   “ Letter of Credit Limit ” means $10,000,000.

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   “ Letter of Credit Obligations ” means, at any time, the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such
time, plus (b) the aggregate amount of all drawings under Letters of Credit for which the Issuing Lender has not at such time been reimbursed,
plus (c) without duplication, the aggregate amount of all payments made by each Lender to the Issuing Lender with respect to such Lender’s
participation in Letters of Credit as provided in Section 2.3 for which Borrowers have not at such time reimbursed the Lenders, whether by way
of a Loan or otherwise.
    “ Letters of Credit ” means all letters of credit (whether documentary or stand-by and whether for the purchase of inventory, equipment or
otherwise) issued by the Issuing Lender for the account of any Borrower pursuant to this Agreement, and all amendments, renewals, extensions
or replacements thereof.
    “ LIBOR Rate ” means, for any Eurodollar Rate Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided that if more than one rate is specified on Reuters Screen LIBOR01 Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). If, for any reason, such rate is not available, then
“ LIBOR Rate ” means the rate per annum at which, as determined by the Administrative Agent, Dollars in an amount comparable to the Loans
then requested are being offered to leading banks at approximately 11:00 a.m. (London time), two (2) Business Days prior to the
commencement of the applicable Interest Period for settlement in immediately available funds by leading banks in the London interbank
market for a period equal to the Interest Period selected.
   “ License Agreements ” has the meaning set forth in Section 8.11 .
   “ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention agreement and any Capital Lease having substantially the same
economic effect as any of the foregoing).
   “ Loan Documents ” means, collectively, this Agreement, the Notes, the Letter of Credit Documents, the Pledge Agreement, all Deposit
Account Control Agreements, all Investment Property Control Agreements and all other agreements, documents and instruments now or at any
time hereafter executed and/or delivered by any Loan Party in connection with this Agreement; provided that in no event shall the term “Loan
Documents” be deemed to include any Hedge Agreement or other Bank Product Agreement.
   “ Loan Parties ” means, collectively, Borrowers and the Guarantors.
   “ Loans ” means, collectively, the Revolving Loans and Swingline Loans.
   “ MAR-VEL Bank Account ” means that certain deposit account of MAR-VEL International, Inc. with PNC Bank, National Association in
existence on the Closing Date.
   “ Material Adverse Effect ” means a material adverse effect on (a) the business, properties, operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole; (b) the legality, validity or enforceability of this Agreement or any other Loan
Document; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of the Administrative Agent upon
the Collateral; (d) the Collateral or its value; (e) the ability of any Loan Party

                                                                         20
to repay the Obligations or of any Borrower to perform its obligations under this Agreement or any other Loan Document as and when to be
performed; or (f) the ability of the Administrative Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise
with respect to the rights and remedies of the Administrative Agent and the Lenders under this Agreement or any other Loan Document.
   “ Material Contract ” means (a) any contract or other agreement, written or oral, of the Company or any of its Subsidiaries involving
monetary liability of or to any such Person in an amount in excess of $1,000,000 per annum, or (b) any other contract or agreement, written or
oral, of the Company or any of its Subsidiaries the breach, nonperformance, cancellation or failure to renew of which by any party thereto
could reasonably be expected to have a Material Adverse Effect, in each case, other than Material Government Contracts.
   “ Material Event of Default ” means an Event of Default described in Section 11.1(a) , (b)(i) , (e) , (f) , (g) , (h) , (k) , (l) or (m) .
   “ Material Government Contract ” means any Government Contract, and where applicable, individual delivery and individual task orders
under any Government Contract, (i) listed on Schedule 8.15 or (ii) (A) involving, or which may involve, monetary liability under open orders
or accounts receivable thereunder in an amount in excess of $2,000,000 over the remaining term of such contract and (B) that has a remaining
term of greater than six (6) months.
   “ Material Release or Non-Compliance ” means (a) the occurrence of any event involving the release, spill or discharge of any Hazardous
Material or (b) any investigation, proceeding, complaint, order, directive, claim, citation or notice with respect to any non-compliance with or
violation of any Environmental Law by any Loan Party or the release, spill or discharge of any Hazardous Material if, in the case of each of the
foregoing clauses (a) or (b), the release, spill or discharge, or the alleged or actual non-compliance or violation of Environmental Law by any
Loan Party could reasonably be expected to have a Material Adverse Effect.
   “ Maturity Date ” means the earlier to occur of (a) February 18, 2013, (b) the date of termination of the entire Aggregate Commitment by
the Administrative Borrower pursuant to Section 2.6 or (c) the date on which the Obligations have been accelerated pursuant to Section 11.2(b)
and in connection therewith, the Obligations have become immediately due and payable and the Aggregate Commitment has been terminated.
   “ Maximum Interest Rate ” means the maximum non-usurious rate of interest under applicable Federal or State law as in effect from time to
time that may be contracted for, taken, reserved, charged or received in respect of the indebtedness of a Borrower to the Administrative Agent
or a Lender, or to the extent that at any time such applicable law may thereafter permit a higher maximum non-usurious rate of interest, then
such higher rate.
   “ Moody’s ” means Moody’s Investors Service, Inc., and its successors and assigns.
   “ Multiemployer Plan ” means a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by any Loan Party or any ERISA Affiliate or with respect to which any
Loan Party or any ERISA Affiliate may incur any liability.
   “ Net Income ” means, for any applicable period of computation, the net income (or net deficit) of the Borrowers for such period determined
on a combined basis in accordance with GAAP; provided that

                                                                            21
there shall be excluded from Net Income the net income (or net deficit) of any Person accrued prior to the date it becomes a Borrower or is
merged into or consolidated with a Borrower or that Person’s assets are acquired by a Borrower.
   “ Net Recovery Percentage ” means the fraction, expressed as a percentage, (a) the numerator of which is the amount equal to the amount of
the recovery in respect of the Inventory at such time on a “net orderly liquidation value” basis as set forth in the most recent acceptable
appraisal of Inventory received by the Administrative Agent in accordance with Section 7.3 , net of all associated costs and expenses of such
liquidation, and (b) the denominator of which is the applicable original cost of the aggregate amount of the Inventory subject to such appraisal.
   “ Non-Consenting Lender ” has the meaning given to such term in Section 14.2(c) .
   “ Note ” means any promissory note substantially in the form of Exhibit I hereto made by the Borrowers in favor of a Lender evidencing
such Lender’s Commitment, and any amendments, supplements and modifications thereto and replacements or renewals thereof.
   “ Notice of Borrowing ” has the meaning given to such term in Section 2.4(a) .
   “ Notice of Conversion or Continuation ” has the meaning given to such term in Section 3.1(b)(ii) .
   “ Notice of Default or Failure of Condition ” has the meaning given to such term in Section 12.3(a) .
   “ Notice of Prepayment ” has the meaning given to such term in Section 2.5(b) .
   “ Noticed Bank Product ” means any Bank Product provided by the Administrative Agent or any of its Affiliates and any other Bank
Product for which the applicable Bank Product Provider (a) has disclosed to the Administrative Agent prior to the Closing Date (which
disclosure shall comply with the information provisions set forth in the definition of “ Bank Products ”) or (b) shall have complied with the
notice and other information provisions set forth in the definition of “Bank Products”.
   “ Notices of Assignment ” means each notice of assignment executed by any Loan Party with respect to any Material Government Contract
to which such Loan Party is a party, substantially in the form of Exhibit K hereto.
    “ Obligations ” means (a) any and all Loans, Letter of Credit Obligations, Special Agent Advances and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by any or all of the Loan Parties to the Administrative Agent or any Lender and/or
any of their Affiliates or the Issuing Lender, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any other Loan Document or on account of any Letter of
Credit and all other Letter of Credit Obligations, whether now existing or hereafter arising, whether arising before, during or after the initial or
any renewal term of this Agreement or after the commencement of any case or proceeding with respect to any such Loan Party under the
United States Bankruptcy Code or any similar statute (including, to the extent permitted under applicable law, the payment of interest and other
amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable
in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, or secured or unsecured and (b) subject to the priority in right of payment set forth in Section 11.3 , all obligations,
liabilities and indebtedness of every kind, nature and description owing by any or all of the Loan Parties to any Bank Product Provider arising
under

                                                                         22
or pursuant to any Bank Products, whether now existing or hereafter arising (collectively, the “ Bank Product Obligations ”).
   “ OFAC ” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.
   “ Other Taxes ” has the meaning given to such term in Section 4.5(c) .
   “ Overadvance ” has the meaning given to such term in Section 2.8(a) .
   “ Participant ” has the meaning given to such term in Section 14.11(d) .
   “ Patriot Act ” has the meaning given to such term in Section 14.14 .
   “ Pension Plan ” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which any Loan Party sponsors,
maintains, or to which any Loan Party or ERISA Affiliate makes, is making, or is obligated to make contributions, other than a Multiemployer
Plan.
   “ Permits ” has the meaning given to such term in Section 8.7 .
   “ Permitted Acquisition ” means any Acquisition by any Borrower where:
      (a) the business, assets or division acquired are for use, or the Person acquired is engaged, in a Permitted Line of Business;
       (b) if the Acquisition involves a merger or other combination, such Borrower is the surviving entity or the continuing or surviving entity
shall become a Borrower if and when required to do so under Section 9.9 ;
      (c) immediately before and after giving effect to such Acquisition, no Default or Event of Default shall exist;
     (d) the Permitted Acquisition Consideration to be paid by the Borrowers in connection with (i) such Acquisition and all other
Acquisitions during the twelve month period in which such Acquisition occurs is less than $10,000,000 in the aggregate and (ii) such
Acquisition and all other Acquisitions during the term of this Agreement is less than $25,000,000 in the aggregate;
      (e) immediately after giving effect to such Acquisition, the Borrowers are in pro forma compliance with Section 9.14 ;
      (f) immediately after giving effect to such Acquisition, Pro Forma Excess Availability, as determined by the Administrative Agent, shall
not be less than the Threshold Amount;
       (g) such Acquisition shall be non-hostile and shall have been approved, as necessary, by the target’s board of directors, shareholders or
other requisite Persons;
      (h) reasonably prior to such Acquisition, the Administrative Agent shall have received complete executed or conformed copies of each
material document, instrument and agreement to be executed in connection with such Acquisition together with all Lien search reports and Lien
release letters and other documents as the Administrative Agent may reasonably require to evidence the termination of Liens on the assets or
business to be acquired, other than Liens permitted by Section 10.2 ;

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      (i) not less than ten (10) Business Days prior to such Acquisition, the Administrative Agent shall have received an acquisition summary
with respect to the Person, assets and/or business or division to be acquired, such summary to include a reasonably detailed description thereof
(including financial information) and operating results (including financial statements for the most recent twelve month period for which they
are available and as otherwise available), the terms and conditions, including economic terms, of the proposed Acquisition, and the Company’s
calculation of (A) pro forma compliance with Section 9.14 and (B) pro forma EBITDA relating thereto, in each case, calculated in a manner
reasonably satisfactory to the Administrative Agent;
     (j) any acquired Person has executed and delivered to the Administrative Agent this Agreement and to the extent applicable, the
Guaranty, and the other provisions of Section 9.9 have been satisfied; and
       (k) a certificate, in form, scope and substance acceptable to the Administrative Agent of a senior officer of the Company confirming
satisfaction of each of the foregoing conditions precedent shall have been delivered to the Administrative Agent prior to such Acquisition.
For purposes of this definition and notwithstanding anything contained in this Agreement to the contrary, “ Pro Forma Excess Availability ”
means Excess Availability calculated on a pro forma basis to include (i) any Eligible Accounts and Eligible Inventory to be acquired in
connection with such Acquisition (determined pursuant to field exams, appraisals or other methodologies reasonably acceptable to the
Administrative Agent), (ii) the borrowing of any Loans used to finance such Acquisition, as applicable, and (iii) prepayments of the Loans
occurring on the date of such Acquisition made from the proceeds from the incurrence of Indebtedness or the issuance of Capital Stock of the
Company (or a combination thereof) in excess of the Permitted Acquisition Consideration for such Acquisition.
   “ Permitted Acquisition Consideration ” means the aggregate amount of the purchase price, including, but not limited to, any Indebtedness
incurred or assumed in connection therewith, earnouts (valued at the maximum amounts reasonably expected to be payable thereunder as
determined in good faith by the Company’s board of directors), deferred payments, or Capital Stock of the Company, net of the applicable
acquired company’s cash and Cash Equivalents (as shown on its most recent financial statements delivered in connection with the applicable
Permitted Acquisition) to be paid in connection with any applicable Permitted Acquisition as set forth in the applicable documentation for such
Permitted Acquisition.
   “ Permitted Holder ” shall mean (a) Luke M. Hillier, (b) Robert Scott LaRose, (c) Daniel J. Clarkson and (d) any trust, partnership,
corporation, limited liability company or other lawful entity controlled by any or all of the foregoing. The term “control” for purposes of this
definition shall have the meaning set forth in the definition of “Affiliate”.
   “ Permitted Line of Business ” shall mean businesses in substantially the same fields as the businesses conducted by the Loan Parties and
their Subsidiaries on the Closing Date and business activities reasonably related, ancillary or complementary thereto.
    “ Permitted Refinancing Indebtedness ” means, in respect of any Indebtedness (the “Original Indebtedness”), any Indebtedness that
refinances, refunds, renews, replaces, defeases or extends such Original Indebtedness (or any Permitted Refinancing Indebtedness in respect
thereof); provided that (a) the principal amount of the Permitted Refinancing Indebtedness shall not exceed the principal amount of the Original
Indebtedness except by an amount equal to any premium or other similar amount reasonably determined by the Company to be required to be
paid in connection therewith, accrued and unpaid interest thereon, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized thereunder, (b) the final maturity date and weighted

                                                                        24
average life of such Permitted Refinancing Indebtedness shall not be prior to or shorter than that applicable to the Original Indebtedness,
(c) such Permitted Refinancing Indebtedness shall not be required to be repaid, prepaid, redeemed, repurchased or defeased, whether on one or
more fixed dates, upon the occurrence of one or more events or at the option of any holder thereof (except, in each case, (i) upon the occurrence
of an event of default or a change in control, (ii) upon the sale or other disposition of any assets securing such Permitted Refinancing
Indebtedness, or (iii) as and to the extent such repayment, prepayment, redemption, repurchase or defeasance would have been required
pursuant to the terms of such Original Indebtedness) prior to the earlier of (A) the maturity date of such Original Indebtedness and (B) the date
that is six months after the Maturity Date; (d) such Permitted Refinancing Indebtedness shall not constitute an obligation of any Subsidiary that
shall not have been (or, in the case of after-acquired Subsidiaries, shall not have been required to become) an obligor in respect of such Original
Indebtedness, and shall not constitute an obligation of the Company if the Company shall not have been an obligor in respect of such Original
Indebtedness and, in each case, shall constitute an obligation of such Subsidiary or of the Company only to the extent of their obligations in
respect of such Original Indebtedness; (e) any Permitted Refinancing Indebtedness of any Subordinated Indebtedness shall be on subordination
terms substantially the same as those applicable to the Original Indebtedness or more favorable to the Lenders and (f) such Permitted
Refinancing Indebtedness shall not be secured by any Lien on any asset other than the assets that secured such Original Indebtedness (or would
have been required to secure such Original Indebtedness pursuant to the terms thereof) or by any Lien having a higher priority in respect of the
Obligations than the Lien that secured such Original Indebtedness.
   “ Permitted Tax Distributions ” has the meaning given to such term in Section 10.6(d) .
   “ Person ” or “ person ” means any individual, sole proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint
stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.
  “ Plan ” means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Loan Party sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time during the
immediately preceding six (6) plan years or with respect to which any Loan Party may incur liability.
   “ Pledge Agreement ” means that certain Pledge Agreement dated the date hereof by and between the Administrative Agent and the Loan
Parties thereto, which agreement shall be in form and substance reasonably satisfactory to the Administrative Agent and the Company, as such
agreement may be amended, amended and restated, supplemented or otherwise modified in accordance with the terms thereof.
   “ Pro Forma Excess Availability ” has the meaning given to such term in the definition of “ Permitted Acquisition ”.
    “ Pro Rata Share ” means as to any Lender, the fraction (expressed as a percentage) the numerator of which is such Lender’s Commitment
and the denominator of which is the Aggregate Commitment, as adjusted from time to time in accordance with the provisions of Section 14.11 ;
provided that if the Aggregate Commitment shall have been terminated, the numerator shall be the unpaid amount of such Lender’s Loans and
its interests in the Letters of Credit and Swingline Loans and the denominator shall be the aggregate amount of all unpaid Loans and Letters of
Credit.
   “ Qualified Capital Stock ” means any Capital Stock that is not Disqualified Capital Stock.

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    “ Real Property ” means all now owned and hereafter acquired real property of each Loan Party, including leasehold interests, together with
all buildings, structures, and other improvements located thereon and all rights of any Loan Party in any easements and appurtenances relating
thereto, wherever located.
   “ Records ” means, as to each Loan Party, all of such Loan Party’s present and future books of account of every kind or nature, purchase and
sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and
other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media
and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of any Loan Party with respect to the
foregoing maintained with or by any other person).
   “ Register ” has the meaning given to such term in Section 14.11(c) .
   “ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and
advisors of such Person and of such Person’s Affiliates.
   “ Report ” has the meaning given to such term in Section 12.9(a) .
    “ Required Lenders ” means, at any time, those Lenders whose Pro Rata Shares aggregate in excess of fifty percent (50%) of the Aggregate
Commitments, or if the Aggregate Commitment shall have been terminated, the Lenders to whom in excess of fifty percent (50%) of the Total
Outstandings are owing; provided that the Pro Rata Share of, and the portion of the Total Outstandings, as applicable, owing or deemed owing
to, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
   “ Reserves ” means as of any date of determination, such amounts as the Administrative Agent may from time to time reasonably establish
and revise in good faith reducing the amount of Loans and Letters of Credit that would otherwise be available to any Borrower under the
lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by the Administrative
Agent in good faith, adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) the Collateral, its value or the
amount that might be received by the Administrative Agent from the sale or other disposition or realization upon such Collateral, (ii) the assets,
business obligations, liabilities or prospects of any Loan Party or (iii) the security interests and other rights of the Administrative Agent or any
Lender in the Collateral (including the enforceability, perfection and priority thereof); or (b) to reflect the Administrative Agent’s good faith
belief that any collateral report or financial information furnished by or on behalf of any Loan Party to the Administrative Agent is or may have
been incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state of facts which the Administrative Agent
determines in good faith constitutes a Default or an Event of Default. Without limiting the generality of the foregoing, Reserves may, at the
Administrative Agent’s option, be established to reflect: (A) dilution with respect to the Accounts (based on the ratio of the aggregate amount
of non-cash reductions in such Accounts for any period to the aggregate dollar amount of the sales for such period) as calculated by the
Administrative Agent for any period is or is reasonably anticipated to be greater than five percent (5%); (B) returns, discounts, claims
(including, without limitation, warranty claims), credits and allowances of any nature that are not paid pursuant to the reduction of Accounts;
(C) sales, excise or similar taxes included in the amount of any such Accounts reported to the Administrative Agent; (D) factors that may
negatively impact the Value of Inventory, including, without limitation, change in salability, obsolescence, seasonality, theft, shrinkage,
imbalance, change in composition or mix, markdowns and vendor chargebacks; (E) testing variances identified as part of the Administrative
Agent’s periodic field examinations; (F) a reserve of up to three months’ rent and other charges that could be payable to any owner or lessor of
premises where any Collateral is

                                                                         26
located, other than for those locations where the Administrative Agent has received a Collateral Access Agreement that the Administrative
Agent has accepted in writing; (G) amounts due or to become due to owners and licensors of material Intellectual Property used by any
Borrower; (H) obligations, liabilities or indebtedness (contingent or otherwise) of Loan Parties to the Administrative Agent or any Bank
Product Provider arising under or in connection with any Bank Products or as such Affiliate or Person may otherwise require in connection
therewith to the extent that such obligations, liabilities or indebtedness constitute Obligations as such term is defined herein or otherwise
receive the benefit of the security interest of the Administrative Agent in any Collateral; and (I) reserves with respect to the Service Contract
Act (41 U.S.C. 351, et seq., as amended). The amount of any Reserve established by the Administrative Agent shall have a reasonable
relationship to the event, condition or other matter which is the basis for such reserve and shall be established by the Administrative Agent in
good faith and to the extent that such Reserve is in respect of amounts that may be payable to third parties the Administrative Agent may, at its
option, deduct such Reserve from the Aggregate Commitment, at any time that such limit is less than the amount of the Borrowing Base.
Notwithstanding the foregoing, the Administrative Agent shall establish Reserves against the mark-to-market exposure under all Noticed Bank
Products consisting of Hedge Agreements.
  “ Responsible Officer ” means, for any Loan Party, any of the chief executive officer, chief financial officer, treasurer or controller of such
Loan Party.
   “ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital
Stock of the Company or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Capital Stock or on
account of any return of capital to the Company or such Subsidiary’s stockholders, partners or members (or the equivalent Person thereof), or
payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to
acquire any Capital Stock of the Company or any of its Subsidiaries, or any setting apart of funds or property for any of the foregoing.
   “ Revolving Loans ” means the loans now or hereafter made by or on behalf of any Lender or by the Administrative Agent for the account
of any Lender on a revolving basis (including any Overadvance) pursuant to the Credit Facility (involving advances, repayments and
re-advances) as set forth in Section 2.1 .
   “ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and its successors and assigns.
    “ Sale and Lease-Back Transaction ” means any arrangement whereby the Company or any of its Subsidiaries has sold or transferred, or will
sell or transfer, property (other than the Collateral) to any Person and has or will take back a lease of such property from such Person or its
Affiliates pursuant to which the rental payments are calculated to amortize the purchase price of such property substantially over the useful life
of such property, in all cases, so long as such lease is characterized as an operating lease.
   “ Sanctioned Entity ” means (a) an agency of the government of, (b) an organization directly or indirectly controlled by, or (c) a person
resident in, a country that is subject to a sanctions program identified on the list maintained and published by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/programs, or as otherwise published from time to time as such program may be applicable to
such agency, organization or person.

                                                                        27
   “ Sanctioned Person ” means a person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC
available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise published from time to time.
   “ Secured Parties ” means, collectively, (a) the Administrative Agent, (b) the Issuing Lender, (c) the Lenders, and (d) the Bank Product
Providers.
   “ Settlement Advance ” has the meaning given to such term in Section 3.6(a) .
   “ Scheduled Indebtedness Payments ” means, for any applicable period of computation, the sum of all scheduled payments of principal on
Total Indebtedness for such period (including the principal component of payments due on Capital Leases or under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet financing product during such period), determined on a combined
basis in accordance with GAAP; it being understood that Scheduled Indebtedness Payments shall not include voluntary prepayments or the
mandatory prepayments required pursuant to Section 2.1 .
    “ Solvent ” means, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has
(and has a reasonable basis to believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business
consistent with its practices as of the Closing Date, and (b) the assets and properties of such Person at a fair valuation (and including as assets
for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such
Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which,
such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability
(and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability
of it becoming a matured liability).
   “ Special Agent Advances ” has the meaning given to such term in Section 2.8(b) .
    “ Subordinated Indebtedness ” means Indebtedness of the Company and its Subsidiaries that is subordinate in right of payment to the right
of the Administrative Agent and the Lenders to receive the prior payment in full of all of the Obligations on terms and conditions reasonably
acceptable to the Administrative Agent.
   “ Subsidiary ” or “ subsidiary ” means, with respect to any Person, any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding
Voting Stock of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more Subsidiaries of such Person.
Except as otherwise set forth in this Agreement, all references to a Subsidiary shall be deemed to be a reference to a Subsidiary of the
Company.
   “ Subsidiary Guarantor ” has the meaning given to such term in the preamble hereof and shall include any other Person that at any time after
the Closing Date becomes party to a guarantee in favor of the Administrative Agent, for the benefit of the Secured Parties, with respect to the
Obligations or who is the owner of any property that is security for the Obligations.
  “ Subsidiary Loan Parties ” means, collectively, the Borrowers (other than the Company) and the Subsidiary Guarantors and “Subsidiary
Loan Party” means any such Person.
   “ Swingline Lender ” means Wachovia, in its capacity as swingline lender hereunder, and its successors and assigns.

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   “ Swingline Limit ” means $10,000,000.
   “ Swingline Loans ” has the meaning given to such term in Section 2.2(a) .
   “ Taxes ” has the meaning given to such term in Section 4.5(a) .
   “ Threshold Amount ” means $24,000,000 plus proportionate increases thereto to reflect any Facility Increases.
   “ Total Indebtedness ” means, as of any date of determination, all Indebtedness of the Borrowers, determined on a combined basis in
accordance with GAAP.
   “ Total Outstandings ” means, as of any date of calculation, the aggregate principal amount of all Loans, Special Agent Advances and Letter
of Credit Obligations outstanding as of such date.
   “ Trademark ” has the meaning given to such term in the definition of “Intellectual Property”.
   “ Transaction Costs ” means all arrangement, underwriting, upfront and similar fees and out-of-pocket expenses paid by the Borrowers in
connection with the Credit Facility (including, without limitation, any legal fees and expenses and due diligence fees and expenses), such fees
approved by the Administrative Agent.
   “ Transactions ” means, collectively, (a) the repayment in full of all Indebtedness under the Existing Facility, (b) the initial Loans and
Letters of Credit issued on the Closing Date and (c) the payment of the Transaction Costs in connection with items (a) and (b) above.
   “ UCC ” means the Uniform Commercial Code as in effect in the State of New York, and any successor statute, as in effect from time to
time.
   “ Unfinanced Capital Expenditures ” means, for any applicable period of computation, Capital Expenditures made by the Borrowers during
such period (other than Capital Expenditures related to the relocation of the Company’s headquarters), which Capital Expenditures are not
financed from the proceeds of any Indebtedness (other than the Loans) or any issuance of Capital Stock by any Borrower to fund such Capital
Expenditure.
   “ U.S. Governmental Authority ” means the federal government of the United States of America or any agency or instrumentality thereof or
any state of the United States of America approved by the Administrative Agent or any agency or instrumentality thereof.
    “ Value ” means, as determined by the Administrative Agent in good faith, with respect to Inventory, the lower of (a) cost computed on a
first-in first-out basis in accordance with GAAP or (b) market value, provided that for purposes of the calculation of the Borrowing Base,
(i) the Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the profit earned by any Affiliate on the sale
thereof to any Borrower or (B) write-ups or write-downs in value with respect to currency exchange rates and (ii) notwithstanding anything to
the contrary contained herein, the cost of the Inventory shall be computed in the same manner and consistent with the most recent appraisal of
the Inventory received and accepted by the Administrative Agent prior to the Closing Date, if any.
   “ Voting Stock ” means with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting
powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital
Stock of any other class or classes

                                                                         29
have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition.
   “ Wachovia ” means Wachovia Bank, National Association, in its individual capacity, and its successors and assigns.
   Section 1.2 Interpretative Provisions .
      (a) All terms used herein that are defined in Article 1, Article 8 or Article 9 of the UCC shall have the meanings given therein unless
otherwise defined in this Agreement.
      (b) All references to the plural herein shall also mean the singular and to the singular shall also mean the plural unless the context
otherwise requires.
       (c) All references to any Loan Party, the Administrative Agent and the Lenders pursuant to the definitions set forth in the recitals hereto,
or to any other person herein, shall include their respective successors and assigns.
      (d) The words “hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
     (e) The word “including” when used in this Agreement shall mean “including, without limitation” and the word “will” when used in this
Agreement shall be construed to have the same meaning and effect as the word “shall”.
      (f) An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 14.2 .
      (g) All references to the term “good faith” used herein when applicable to the Administrative Agent or any Lender shall mean,
notwithstanding anything to the contrary contained herein or in the UCC, honesty in fact in the conduct or transaction concerned. The Loan
Parties shall have the burden of proving any lack of good faith on the part of the Administrative Agent or any Lender alleged by any Loan Party
at any time.
       (h) Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given
in accordance with GAAP, and all financial computations hereunder shall be computed unless otherwise specifically provided herein, on a
combined basis in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation
of the financial statements of the Borrowers most recently received by the Administrative Agent prior to the Closing Date. Notwithstanding
anything to the contrary contained in GAAP or any interpretations or other pronouncements by the Financial Accounting Standards Board or
otherwise, the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report
that is unqualified and also does not include any explanation, supplemental comment or other comment concerning the ability of the applicable
person to continue as a going concern or the scope of the audit, except as otherwise specifically prescribed herein. If at any time any change in
GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Administrative Borrower
or the Required Lenders shall so request, the Administrative Agent, the Lenders, the Issuing Lender and Administrative Borrower shall
negotiate in

                                                                         30
good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of
the Required Lenders); provided that until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) Administrative Borrower shall provide to the Administrative Agent and the Lenders financial statements
and other documents required under this Agreement (at the same time as the delivery of any annual, quarterly or monthly financial statements
given in accordance with the provisions of Section 9.6 ) or as reasonably requested hereunder setting forth a reconciliation between calculations
of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any other provision contained
herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to
herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial
Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of any Borrower or any Subsidiary thereof
at “fair value”, as defined therein.
       (i) All time references in this Agreement and the other Loan Documents shall be to Eastern Daylight or Eastern Standard Time, as then in
effect, from time to time unless otherwise indicated. In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including”, the words “to” and “until” each mean “to but excluding” and the word “through” means “to and
including”.
      (j) Unless otherwise expressly provided herein, (i) references herein to any agreement, document or instrument shall be deemed to
include all subsequent amendments, modifications, supplements, extensions, renewals, restatements or replacements with respect thereto, but
only to the extent the same are not prohibited by the terms hereof or of any other Loan Document, and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, recodifying,
supplementing or interpreting the statute or regulation.
     (k) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this
Agreement.
      (l) This Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.
       (m) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the
Administrative Agent and the other parties, and are the products of all parties. Accordingly, this Agreement and the other Loan Documents
shall not be construed against the Administrative Agent or the Lenders merely because of the Administrative Agent’s or any Lender’s
involvement in their preparation.


                                                               ARTICLE 2
                                                            CREDIT FACILITIES
   Section 2.1 Revolving Loans . Subject to and upon the terms and conditions contained herein, each Lender severally (and not jointly) agrees
to make its Pro Rata Share of Revolving Loans in Dollars to the Borrowers from time to time from the Closing Date to the Maturity Date in
amounts requested (or deemed to be requested) by the Administrative Borrower on behalf of the Borrowers; provided that, subject to the terms
of Section 2.8 , after giving effect to any Revolving Loan (a) the Total Outstandings shall not at any time exceed the lesser of (i) the Borrowing
Base and (ii) the Aggregate Commitment and (b) the aggregate outstanding principal amount of all Revolving Loans of each Lender,

                                                                        31
together with such Lender’s Pro Rata Share of the aggregate outstanding principal amount of all Swingline Loans and Letter of Credit
Obligations, shall not exceed such Lender’s Commitment. Subject to the terms and conditions hereof, the Borrowers may borrow, repay and
reborrow Revolving Loans until the Maturity Date.
   Section 2.2 Swingline Loans .
       (a) Availability . Subject to and upon the terms and conditions of this Agreement (including, without limitation, Section 12.3(a) ), the
Swingline Lender may, but shall not be obligated to, make loans to each Borrower in Dollars (each such loan, a “ Swingline Loan ”) from time
to time from the Closing Date to the Maturity Date in amounts requested by the Administrative Borrower on behalf of such Borrower up to the
aggregate principal amount not to exceed at any time outstanding the amount of the Swingline Limit; provided that, subject to the terms of
Section 2.8 , after giving effect to any Swingline Loan, such Swingline Loan shall not cause the Total Outstandings to exceed the lesser of
(i) the Borrowing Base and (ii) the Aggregate Commitment. Subject to the terms and conditions hereof, the Borrowers may borrow, repay and
reborrow the applicable Swingline Loans hereunder. Each such Swingline Loan shall be requested by the Administrative Borrower pursuant to
Section 2.4(a) and shall be made available by the Swingline Lender to the relevant Borrower in accordance with Section 2.4(b) .
      (b) Refunding .
         (i) Swingline Loans shall be refunded by Lenders in accordance with the settlement procedures set forth in Section 3.6(b) .
        (ii) The applicable Borrowers shall pay to the Swingline Lender on demand the amount of such Swingline Loans to the extent
  amounts received from Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. In
  addition, the applicable Borrowers hereby authorize the Administrative Agent to charge any account maintained by such applicable
  Borrowers with the Swingline Lender (up to the amount available therein) in order to immediately pay the Swingline Lender the amount of
  the applicable Swingline Loans to the extent amounts received from Lenders are not sufficient to repay in full the outstanding Swingline
  Loans requested or required to be refunded. If any portion of any such amount paid to the Swingline Lender shall be recovered by or on
  behalf of the applicable Borrowers from the Swingline Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be
  ratably shared among all Lenders in accordance with their respective Pro Rata Share (unless the amounts so recovered by or on behalf of
  such applicable Borrowers pertain to a Swingline Loan extended after the occurrence and during the continuance of an Event of Default of
  which the Swingline Lender has received notice in the manner required pursuant to Section 13.4 and which such Event of Default has not
  been waived by the Required Lenders or the Lenders, as applicable).
         (iii) Each Lender acknowledges and agrees that its obligation to refund Swingline Loans in accordance with the terms of this
  Section 2.2 and Section 3.6 is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without
  limitation, non-satisfaction of the conditions set forth in Article 5 . Further, each Lender agrees and acknowledges that if prior to the
  refunding of any outstanding Swingline Loans pursuant to this Section 2.2 and Section 3.6 , one of the events described in Section 11.1(f),
  (g) or (h) shall have occurred, each Lender will, on the date the applicable Revolving Loan would have been made, purchase an undivided
  participating interest in any Swingline Loan to be refunded in an amount equal to its Pro Rata Share of the aggregate amount of such
  Swingline Loan. Each Lender will immediately transfer to the Swingline Lender, in immediately available funds, the

                                                                       32
  amount of its participation and upon receipt thereof the Swingline Lender will deliver to such Lender a certificate evidencing such
  participation dated the date of receipt of such funds and for such amount. Whenever, at any time after the Swingline Lender has received
  from any Lender such Lender’s participating interest in a Swingline Loan, the Swingline Lender receives any payment on account thereof,
  the Swingline Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest
  payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded).
      (c) Defaulting Lender . Notwithstanding anything to the contrary contained in this Section 2.2 , the Swingline Lender shall not be
obligated to make any Swingline Loans at a time when any other Lender is a Defaulting Lender, unless the Swingline Lender has entered into
arrangements reasonably satisfactory to it to eliminate the Swingline Lender’s risk with respect to any such Defaulting Lender’s funding
obligations hereunder, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of the applicable outstanding Swingline
Loans. On demand by the Swingline Lender or the Administrative Agent from time to time, the Borrowers shall cash collateralize each
Defaulting Lender’s Pro Rata Share of the outstanding Swingline Loans on terms reasonably satisfactory to the Administrative Agent and the
Swingline Lender. Any such cash collateral shall be deposited in a separate account with the Administrative Agent as collateral for the payment
and performance of each Defaulting Lender’s Pro Rata Share of outstanding Swingline Loans. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Swingline Lender immediately for each Defaulting Lender’s Pro Rata Share of any Swingline Loans
which have not otherwise been refunded by the Borrowers or such Defaulting Lender pursuant to the terms of this Section 2.2 .
   Section 2.3 Letters of Credit .
      (a) Letters of Credit . Subject to and upon the terms and conditions contained herein and in the Letter of Credit Documents (including,
without limitation, Section 12.3(a) ), at the request of the Administrative Borrower on behalf of a Loan Party or any Subsidiary thereof, the
Administrative Agent agrees to cause the Issuing Lender to issue, and the Issuing Lender agrees to issue one or more Letters of Credit in
Dollars, for the ratable risk of each Lender according to its Pro Rata Share, containing terms and conditions reasonably acceptable to the
Administrative Agent and the Issuing Lender.
       (b) Requests for Letters of Credit . The Administrative Borrower requesting a Letter of Credit on behalf of a Borrower shall give the
Administrative Agent and the Issuing Lender at least two (2) Business Days’ prior written notice of the Administrative Borrower’s request for
the issuance of a Letter of Credit on such Borrower’s behalf together with an application, in form and substance reasonably satisfactory to the
Issuing Lender and the Administrative Agent, for the issuance of the Letter of Credit and such other Letter of Credit Documents as may be
reasonably required by the Administrative Agent or the Issuing Lender. Such notice shall be irrevocable and shall (i) specify the original face
amount of the Letter of Credit requested (which shall be in a minimum amount of $50,000, unless otherwise agreed to by the Administrative
Agent and the Issuing Lender) or identify the Letter of Credit to be amended, renewed or extended, (ii) the effective date (which date shall be a
Business Day and in no event shall be a date less than ten (10) days prior to the Maturity Date) of issuance of such requested Letter of Credit
(or such amendment, renewal or extension), (iii) whether such Letter of Credit may be drawn in a single or in partial draws, (iv) the date on
which such requested Letter of Credit is to expire (which date shall be a Business Day and shall not be more than one year from the date of
issuance or occur after the Maturity Date; provided that (A) a Letter of Credit may be subject to automatic extension for additional one-year
periods pursuant to the terms of the Letter of Credit Documents reasonably acceptable to the Issuing Lender and (B) such Letter of Credit may
have an expiration date after the Maturity Date if (x) each of the Administrative Agent and the Issuing Lender consent in writing prior to the
issuance thereof, (y) all Letter

                                                                        33
of Credit Obligations associated with any such Letter of Credit are cash collateralized or otherwise supported in a manner reasonably
satisfactory to the Administrative Agent and the Issuing Lender on or prior to the Maturity Date and (z) except with respect to drawings made
under such Letter of Credit on or prior to the Maturity Date, each Lender, other than the Issuing Lender, shall be released on the Maturity Date
from its obligation to participate in such Letter of Credit)), (v) the purpose for which such Letter of Credit is to be issued, (vi) the name and
address of the beneficiary of the requested Letter of Credit, (vii) such other information as shall be necessary to enable the Issuing Lender to
prepare, amend, renew or extend such Letter of Credit and (viii) the proposed terms of the Letter of Credit. In no event shall a Letter of Credit
be issued, amended, renewed or extended unless the forms and terms of the proposed Letter of Credit (as amended, renewed or extended, as the
case may be) are reasonably satisfactory to the Administrative Agent and Issuing Lender. The renewal or extension of, or increase in the
amount of, any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit
hereunder.
       (c) Conditions Precedent . In addition to being subject to the satisfaction of the applicable conditions precedent contained in Article 5
and the other terms and conditions contained herein, no Letter of Credit shall be available unless each of the following conditions precedent
have been satisfied in a manner reasonably satisfactory to the Administrative Agent: (i) the form and terms of the proposed Letter of Credit
shall be reasonably satisfactory to the Administrative Agent and the Issuing Lender, (ii) as of the date of issuance, no order of any court,
arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of
credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally
and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center
banks generally shall prohibit, or request that the Issuing Lender refrain from, the issuance of letters of credit generally or the issuance of such
Letter of Credit, (iii) after giving effect to the issuance of such Letter of Credit, the Letter of Credit Obligations shall not exceed the Letter of
Credit Limit, and (iv) subject to the terms of Section 2.8 , after giving effect to the issuance of such Letter of Credit, the Total Outstandings at
such time shall not exceed the lesser of (A) the Borrowing Base at such time and (B) the Aggregate Commitment at such time.
       (d) Reimbursement . Each Borrower shall reimburse immediately the Issuing Lender for any draw under any Letter of Credit issued for
the account of such Borrower and pay the Issuing Lender the amount of all other charges and fees payable to the Issuing Lender in connection
with any Letter of Credit issued for the account of such Borrower immediately when due, irrespective of any claim, setoff, defense or other
right which such Borrower may have at any time against the Issuing Lender or any other Person. Each drawing under any Letter of Credit or
other amount payable in connection therewith when due, if such drawing is not reimbursed by the Borrowers as provided in the immediately
preceding sentence, shall constitute a request by the Borrower for whose account such Letter of Credit was issued to the Administrative Agent
for a Base Rate Loan in the amount of such drawing or other amount then due, and shall be made by the Administrative Agent on behalf of the
Lenders as a Revolving Loan (or Special Agent Advance, as the case may be). The date of such Revolving Loan (or Special Agent Advance, as
applicable) shall be the date of the drawing or, as to other amounts, the due date therefor. Any payments made by or on behalf of the
Administrative Agent or any Lender to the Issuing Lender and/or related parties in connection with any Letter of Credit shall constitute
additional Revolving Loans to such Borrower pursuant to this Section 2 (or Special Agent Advances as the case may be).
       (e) Assumption of Risk . Each Loan Party assumes all risks with respect to the acts or omissions of the drawer under or beneficiary of
any Letter of Credit. None of the Administrative Agent or any Lender shall be responsible for paying any foreign, Federal, State or local taxes,
duties or levies relating to any goods subject to any Letter of Credit or any documents, drafts or acceptances

                                                                          34
thereunder. The provisions of this Section 2.3 shall survive the payment of Obligations and the termination of this Agreement.
       (f) Inventory . In connection with Inventory purchased pursuant to any Letter of Credit, Loan Parties shall, at the Administrative
Agent’s request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which the Administrative Agent holds a security interest that upon the Administrative Agent’s request, such items
are to be delivered to the Administrative Agent and/or subject to the Administrative Agent’s order, and if they shall come into such Loan
Party’s possession, to deliver them, upon the Administrative Agent’s request, to the Administrative Agent in their original form. Except as
otherwise provided herein, the Administrative Agent shall not exercise such right to request such items so long as no Default or Event of
Default shall exist or have occurred and be continuing. Except as the Administrative Agent may otherwise specify, Loan Parties shall designate
Issuing Lender as the consignee on all bills of lading and other negotiable and non-negotiable documents for Inventory purchased pursuant to
any Letter of Credit.
       (g) Loan Party as Account Party . Each Loan Party hereby irrevocably authorizes and directs Issuing Lender to name such Loan Party as
the account party therein and to deliver to the Administrative Agent all instruments, documents and other writings and property received by the
Issuing Lender pursuant to the Letter of Credit and to accept and rely upon the Administrative Agent’s instructions and agreements with respect
to all matters arising in connection with the Letter of Credit or the Letter of Credit Documents with respect thereto. Nothing contained herein
shall be deemed or construed to grant to any Loan Party any right or authority to pledge the credit of the Administrative Agent or any Lender in
any manner. Loan Parties shall be bound by any reasonable interpretation made in good faith by the Administrative Agent, or the Issuing
Lender under or in connection with any Letter of Credit or any documents, drafts or acceptances thereunder, notwithstanding that such
interpretation may be inconsistent with any instructions of any Loan Party.
      (h) Participations . Immediately upon the issuance or amendment of any Letter of Credit, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received, without recourse or warranty, an undivided interest and participation therein equal to
such Lender’s Pro Rata Share of the liability with respect to such Letter of Credit and the obligations of the applicable Borrowers with respect
thereto (including all Letter of Credit Obligations with respect thereto). Each Lender shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to the Issuing Lender therefor and discharge when due, its Pro Rata Share of all of
such obligations arising under such Letter of Credit. Without limiting the scope and nature of each Lender’s participation in any Letter of
Credit, to the extent that the Issuing Lender has not been reimbursed or otherwise paid as required hereunder or under any such Letter of Credit,
each such Lender shall pay to the Issuing Lender its Pro Rata Share of such unreimbursed drawing or other amounts then due to the Issuing
Lender in connection therewith. If such amount is not made available by a Lender when due, the Administrative Agent shall be entitled to
recover such amount on demand from such Lender with interest thereon, for each day from the date such amount was due until the date such
amount is paid to the Administrative Agent at the interest rate then payable by any Borrower in respect of Loans that are Base Rate Loans.
       (i) Obligations Absolute . The obligations of the Borrowers to pay the applicable Letter of Credit Obligations and the obligations of the
Lenders to make payments to the Administrative Agent for the account of the Issuing Lender with respect to Letters of Credit shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances,
whatsoever, notwithstanding the occurrence or continuance of any Default, Event of Default, the failure to satisfy any other condition set forth
in Article 5 or any

                                                                        35
other event or circumstance. Any reimbursement pursuant to Section 2.3(f) shall not relieve or otherwise impair the obligation of the Borrowers
to reimburse the Issuing Lender under any Letter of Credit or make any other payment in connection therewith.
       (j) Defaulting Lender . Notwithstanding anything to the contrary contained in this Section 2.3 , no Issuing Lender shall be obligated to
issue any Letter of Credit at a time when any other Lender is a Defaulting Lender, unless such Issuing Lender has entered into arrangements
reasonably satisfactory to it to eliminate such Issuing Lender’s risk with respect to any such Defaulting Lender’s reimbursement obligations
hereunder, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of the liability with respect to such Letter of Credit. On
demand by the Issuing Lender or the Administrative Agent from time to time, the Borrowers shall cash collateralize each Defaulting Lender’s
Pro Rata Share of the outstanding Letter of Credit Obligations on terms reasonably satisfactory to the Administrative Agent and the Issuing
Lender which, in any case, is not in excess of an amount equal to one hundred five percent (105%) of such Defaulting Lender’s Pro Rata Share
of the outstanding Letter of Credit Obligations plus such Defaulting Lender’s Pro Rata Share of the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of the Letters of Credit giving rise to such Letter of Credit Obligations. Any
such cash collateral shall be deposited in a separate account with the Administrative Agent as collateral for the payment and performance of
each Defaulting Lender’s Pro Rata Share of the outstanding Letter of Credit Obligations. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Lender immediately for each Defaulting Lender’s Pro Rata Share of any drawing under any
Letter of Credit which has not otherwise been reimbursed by the Borrowers or such Defaulting Lender pursuant to the terms of this Section 2.3
.
   Section 2.4 Procedure for Advance of Loans .
      (a) Requests for Borrowing .
         (i) Requested Loans . To request a Revolving Loan or a Swingline Loan on behalf of a Borrower, the Administrative Borrower shall
  give the Administrative Agent irrevocable prior written notice substantially in the form of Exhibit F hereto (a “ Notice of Borrowing ”) not
  later than 11:00 a.m. (i) on the same Business Day as each Base Rate Loan and each Swingline Loan and (ii) at least three (3) Business Days
  before each Eurodollar Rate Loan, of its intention to borrow, specifying (A) the date of such borrowing, which shall be a Business Day,
  (B) the amount of such borrowing, which shall be, (x) with respect to Base Rate Loans (other than Swingline Loans) in an aggregate
  principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof, (y) with respect to Eurodollar Rate Loans in an aggregate
  principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess thereof and (z) with respect to Swingline Loans in an aggregate
  principal amount of $100,000 or a whole multiple of $100,000 in excess thereof, (C) whether such Loan is to be a Revolving Loan or
  Swingline Loan, (D) in the case of a Revolving Loan, whether the Loans are to be Eurodollar Rate Loans or Base Rate Loans, and (E) in the
  case of a Eurodollar Rate Loan, the duration of the Interest Period applicable thereto. A Notice of Borrowing received after 11:00 a.m. shall
  be deemed received on the next Business Day. Any Loan or any portion thereof as to which the Administrative Borrower has not duly
  specified an interest rate as provided herein shall be deemed a Base Rate Loan in the case of a Revolving Loan, and any Eurodollar Rate
  Loan for which the Administrative Borrower fails to specify an Interest Period shall be deemed to have an Interest Period of one (1) month.
  The Administrative Agent shall promptly notify the Lenders of each Notice of Borrowing.

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         (ii) Revolving Loans Deemed to be Requested .
            (A) Unless payment is timely made by the Company pursuant to Section 3.5(a) or otherwise as set forth in Section 3.5(b) , on the
     date when any Obligation (whether principal, interest, fees, costs, expenses, other charges, Letter of Credit Obligations or Obligations in
     respect of Bank Products) shall become due, the Administrative Borrower shall be deemed to have requested Revolving Loans that bear
     interest based on the Base Rate on such date in the amount of Obligations then due. The proceeds of such Revolving Loans shall be
     disbursed as direct payment of the relevant Obligations. In addition, the Administrative Agent may, at its option, charge such Obligations
     against any operating, investment or other account of the Company maintained with the Administrative Agent or any of its Affiliates.
           (B) If the Company establishes a controlled disbursement account with the Administrative Agent or any Affiliate thereof, then the
     presentation for payment of any check or other item of payment drawn on such account at a time when there are insufficient funds to
     cover such check or other payment shall be deemed to be a request for Revolving Loans that bear interest based on the Base Rate on such
     date of presentation in the amount of the check and items presented for payment. The proceeds of such Revolving Loans may be
     disbursed directly to the controlled disbursement account or to such other appropriate account as determined by the Administrative Agent
     in consultation with the Administrative Borrower.
       (b) Disbursement of Revolving Loans and Swingline Loans . Not later than 1:00 p.m. on the proposed borrowing date, (i) each Lender
will make available to the Administrative Agent, for the account of the applicable Borrower, at the office of the Administrative Agent in funds
immediately available to the Administrative Agent, such Lender’s Pro Rata Share of the Revolving Loans to be made on such borrowing date
and (ii) the Swingline Lender will make available to the Administrative Agent, for the account of the applicable Borrower, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent, the Swingline Loans to be made on such borrowing date.
The Borrowers hereby irrevocably authorize the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this
Section 2.4 in immediately available funds by crediting or wiring such proceeds to the deposit account of such Borrower identified in writing to
the Administrative Agent or as may be otherwise agreed upon in writing by the Administrative Borrower and the Administrative Agent from
time to time. Subject to Section 3.6 , the Administrative Agent shall not be obligated to disburse the portion of the proceeds of any Revolving
Loan requested (or deemed requested) pursuant to this Section 2.4 to the extent that any Lender has not made available to the Administrative
Agent its Pro Rata Share of such Revolving Loan. Revolving Loans to be made for the purpose of refunding Swingline Loans shall be made by
the Lenders as provided in Section 2.2(c) .
      (c) Authorization to Make Loans . The Administrative Agent and the Lenders are authorized to make the Loans based upon telephonic
or other instructions received from anyone purporting to be an officer of the Administrative Borrower or any Borrower or other authorized
person or if such Loans are necessary to satisfy any Obligations. All Loans and Letters of Credit under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of, any Borrower when deposited to the credit of any Borrower or
otherwise disbursed or established in accordance with the instructions of the Administrative Borrower or in accordance with the terms and
conditions of this Agreement.
   Section 2.5 Repayments and Prepayments .

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       (a) Repayment on Maturity Date . The Borrowers hereby agree to repay the outstanding principal amount of (i) all Revolving Loans in
full on the Maturity Date, and (ii) all Swingline Loans in accordance with Section 2.2(c) , together, in each case, with all accrued but unpaid
interest thereon.
       (b) Optional Prepayments . The Borrowers may at any time and from time to time prepay Revolving Loans and Swingline Loans, in
whole or in part, with irrevocable prior written notice to the Administrative Agent substantially in the form of Exhibit G (a “ Notice of
Prepayment ”) given not later than 11:00 a.m. (i) on the same Business Day as each Base Rate Loan and each Swingline Loan and (ii) at least
three (3) Business Days before each Eurodollar Rate Loan, specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Rate Loans, Base Rate Loans, Swingline Loans or a combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender. If any such notice is given, the amount
specified in such notice shall be due and payable on the date set forth in such notice. Partial prepayments shall be in an aggregate amount of
$1,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to Base Rate Loans (other than Swingline Loans), $5,000,000 or a
whole multiple of $1,000,000 in excess thereof with respect to Eurodollar Rate Loans and $100,000 or a whole multiple of $100,000 in excess
thereof with respect to Swingline Loans. A Notice of Prepayment received after 11:00 a.m. shall be deemed received on the next Business Day.
Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 4.6 .
      (c) Mandatory Prepayments .
         (i) Except as provided in Section 2.8 , if at any time the Total Outstandings exceed the lesser of (i) the Borrowing Base and (ii) the
  Aggregate Commitment, the Borrowers shall repay promptly (and in any event within two (2) Business Days or such longer period as the
  Administrative Agent may agree) upon the earlier of (A) any Responsible Officer of the Administrative Borrower obtaining knowledge
  thereof and (B) demand from the Administrative Agent, by payment to the Administrative Agent for the account of the Lenders, an amount
  equal to such excess with each such repayment applied first to the principal amount of outstanding Swingline Loans, second to the principal
  amount of outstanding Revolving Loans and third , with respect to any Letters of Credit then outstanding, to a payment of cash collateral
  into a cash collateral account opened by the Administrative Agent, for the benefit of the Lenders in an amount requested by the
  Administrative Agent which, in any case, will not be in excess of an amount equal to one hundred five percent (105%) of the outstanding
  Letter of Credit Obligations.
         (ii) If at any time any Loan Party or any of its Subsidiaries shall receive proceeds from (A) any insurance or condemnation award
  payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any Collateral or (B) the sale (or
  series of sales) or other disposition of Collateral, the Borrowers shall prepay Loans in an amount equal to one hundred percent (100%) of
  such proceeds, which proceeds shall promptly upon receipt thereof be deposited into a Blocked Account and payments therefrom shall be
  applied by the Administrative Agent for the account of the Lenders first to the principal amount of outstanding Swingline Loans and second
  to the principal amount of outstanding Revolving Loans, without a corresponding reduction of the Aggregate Commitment.
      (d) Limitation on Prepayment of LIBOR Rate Loans . The Borrowers may not prepay any Eurodollar Rate Loan on any day other than
on the last day of the Interest Period applicable thereto unless such prepayment is accompanied by any amount required to be paid pursuant to
Section 4.6 .

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     (e) Hedging Agreements . No repayment or prepayment pursuant to this Section 2.5 shall affect any Loan Party’s obligations under any
Hedging Agreement entered into with a Bank Product Provider.
    Section 2.6 Optional Reduction of Commitments . The Administrative Borrower shall have the right to terminate or permanently reduce the
unused portion of the Aggregate Commitment at any time or from time to time upon not less than three (3) Business Days’ prior written notice
to the Administrative Agent (which shall notify the Lenders thereof as soon as practicable) of each such termination or reduction, which notice
shall specify the effective date thereof and the amount of any such reduction which shall be in a minimum amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and shall be irrevocable and effective upon receipt by the Administrative Agent; provided that no such
reduction or termination shall be permitted if after giving effect thereto, and to any prepayments of the Loans made on the effective date
thereof, the Total Outstandings would exceed the Aggregate Commitment after such proposed reduction.
   Section 2.7 Optional Increase of Commitments . At any time following the Closing Date, the Company shall have the right, from time to
time and upon not less than fifteen (15) Business Days (or such shorter period of time as agreed to by the Administrative Agent in its sole
discretion) prior written notice to the Administrative Agent (which notice shall not obligate the Company to increase the Aggregate
Commitment) to increase the Aggregate Commitment (each such increase, a “Facility Increase”); provided that:
     (a) no Default or Event of Default shall have occurred and be continuing or would result from any such requested Facility Increase or
borrowings thereunder;
      (b) all representations and warranties contained herein and in the other Loan Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made on and as of the date of such Facility Increase and after
giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and correct in all material respects on and as of such earlier date); provided that any
representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after
giving effect to any qualification therein) in all respects on such respective dates;
      (c) each Facility Increase shall be in an aggregate principal amount of at least $5,000,000 or a whole multiple of $1,000,000 in excess
thereof;
      (d) the aggregate amount of all Facility Increases made pursuant to this Section 2.7 shall not exceed $25,000,000;
      (e) Facility Increases shall not increase or otherwise affect the Letter of Credit Limit or the Swingline Limit;
      (f) the Commitment of any Lender shall not be increased without the approval of such Lender;
       (g) in connection with each proposed Facility Increase, the Company shall first provide all then existing Lenders with an opportunity to
commit to such Facility Increase on a ratable basis (provided that no Lender shall have an obligation to commit to all or a portion of the
proposed Facility Increase) and, if, within ten (10) Business Days after the Company has delivered notice thereof to such existing Lenders,
sufficient commitments cannot be obtained from such existing Lenders (it being

                                                                         39
agreed that any Lender that does not deliver a notice of such Lender’s intention to commit to such Facility Increase within such period shall be
deemed to have declined to commit to such Facility Increase), then the Company may seek commitments from other Eligible Assignees that are
reasonably acceptable to both the Administrative Agent and the Company or from existing Lenders in an amount in excess of such Lender’s
ratable share of such Facility Increase;
       (h) in the event that any existing Lender or any new lender commits to such requested Facility Increase, (i) any new lender will execute
an accession agreement to this Agreement, (ii) the Commitment of any existing Lender that has committed to provide any of the requested
increase shall be increased, (iii) the Pro Rata Shares of the Lenders shall be adjusted, (iv) the Borrowers shall make such borrowings and
repayments as shall be necessary to affect the reallocation of the Commitments (and the Borrowers shall pay any amounts due under
Section 4.6 in connection therewith), and (v) other changes shall be made to the Loan Documents as may be necessary to reflect the aggregate
amount, if any, by which the Lenders have agreed to increase their respective Commitments or make new commitments in response to the
Company’s request for an increase pursuant to this Section 2.7 and which other changes do not adversely affect the rights of those Lenders not
participating in the increase other than a change in the Lenders’ Pro Rata Shares to reflect the Facility Increase;
       (i) if the Aggregate Commitment is increased in accordance with this Section 2.7 , the Administrative Agent and the Company shall
determine the effective date (the “ Increase Effective Date ”) and the final allocation of such Facility Increase and the Administrative Agent
shall promptly notify the Administrative Borrower and the Lenders of the final allocation of such Facility Increase and Increase Effective Date;
       (j) the Administrative Agent and the Lenders shall have received any fees and expenses payable by the Loan Parties in respect of such
Facility Increase; and
      (k) each Facility Increase shall be subject to all of the terms and conditions of this Agreement, and shall be secured by the Collateral and
guaranteed by Guarantors pursuant to the terms hereof.
   Section 2.8 Overadvances; Special Agent Advances .
       (a) Additional Loans . No Loan shall be made nor shall any Letter of Credit be provided to any Borrower intentionally and with actual
knowledge that such Loan or Letter of Credit would cause the Total Outstandings to exceed the lesser of (i) the Borrowing Base and (ii) the
Aggregate Commitment (such excess, an “ Overadvance ”), without the prior consent of all of the Lenders, except, that, notwithstanding
anything to the contrary contained herein and unless its authority has been revoked in writing by the Required Lenders or an Event of Default
shall have occurred and be continuing (other than as a result of such Overadvance), the Administrative Agent may require the Lenders to honor
requests for such additional Loans or the Issuing Lender may provide such additional Letters of Credit, intentionally and with actual knowledge
that such Loans or Letters of Credit will cause an Overadvance, as the Administrative Agent may deem necessary or advisable in its discretion;
provided that:
        (i) the aggregate principal amount of all additional Loans and additional Letters of Credit to any Borrower that may be made or
  provided after obtaining such actual knowledge of such Overadvance shall not exceed the lesser of (A) five percent (5%) of the Aggregate
  Commitment and (B) $7,500,000;
        (ii) the sum of (A) the aggregate outstanding principal amount of the Loans and Letters of Credit (including the additional Loans and
  additional Letters of Credit made

                                                                        40
  pursuant to this Section 2.8(a) ), plus (B) the amount of Special Agent Advances made pursuant to Section 2.8(b) then outstanding, shall not
  exceed the Aggregate Commitment; and
        (iii) no such additional Loan or Letter of Credit shall be outstanding more than forty-five (45) days after the date such additional Loan
  or Letter of Credit is made or issued (as the case may be), in each case, except as the Required Lenders may otherwise agree.
Each Lender shall provide the amount of its Pro Rata Share of any such additional Loans or Letters of Credit pursuant to the terms of this
Agreement. Such additional Loans and Letters of Credit shall bear interest at the interest rate then applicable to Base Rate Loans (including any
Default Rate, if then applicable).
       (b) Special Agent Advances . The Administrative Agent may, at its option, from time to time, at any time on or after an Event of Default
and for so long as the same is continuing or upon any other failure of a condition precedent to the Loans and Letters of Credit hereunder, make
such disbursements and advances (“ Special Agent Advances ”) which the Administrative Agent, in its sole discretion, deems necessary or
desirable either (i) to preserve or protect the Collateral or any portion thereof, (ii) to enhance the likelihood or maximize the amount of
repayment by the Loan Parties of the Loans or any other Obligations or (iii) to pay any other amount chargeable to any Loan Party pursuant to
the terms of this Agreement or any of the other Loan Documents consisting of costs, fees and expenses and payments to any Issuing Lender in
respect of any Letter of Credit Obligations; provided that (A) the aggregate principal amount of the Special Agent Advances outstanding at any
time shall not exceed the lesser of (x) five percent (5%) of the Aggregate Commitment and (y) $7,500,000, (B) the aggregate principal amount
of the Special Agent Advances outstanding at any time, plus the then outstanding principal amount of the Loans and Letters of Credit
(including the additional Loans and the additional Letters of Credit made pursuant to Section 2.8(a) ), shall not exceed the Aggregate
Commitment and (C) no such Special Agent Advance shall be outstanding more than forty five (45) days after the date such Special Agent
Advance is made, except as the Required Lenders may otherwise agree. The Special Agent Advances shall be repayable on demand and
together with all interest thereon shall constitute Obligations secured by the Collateral. Special Agent Advances shall not constitute Loans but
shall otherwise constitute Obligations hereunder. Interest on Special Agent Advances shall be payable at the interest rate then applicable to
Base Rate Loans plus two percent (2%), and shall be payable on demand. Each Lender agrees that it shall make available to the Administrative
Agent, upon the Administrative Agent’s demand, in immediately available funds, the amount equal to such Lender’s Pro Rata Share of each
such Special Agent Advance not to exceed such Lender’s Commitment. If such funds are not promptly made available to the Administrative
Agent by such Lender, the Administrative Agent shall be entitled to recover such funds, on demand from such Lender together with interest
thereon for each day from the date such payment was due until the date such amount is paid to the Administrative Agent at the Federal Funds
Rate for each day during such period and if such amounts are not paid within three (3) days of the Administrative Agent’s demand, at the
highest interest rate provided for in Section 3.1 applicable to Base Rate Loans. The Required Lenders may at any time by written notice to the
Administrative Agent (x) revoke the Administrative Agent’s authority to make further Special Agent Advances and (y) instruct the
Administrative Agent to demand repayment of outstanding Special Agent Advances from the Loan Parties. Absent such revocation, the
Administrative Agent’s determination that funding of a Special Agent Advance is appropriate shall be conclusive.
   Section 2.9 Joint and Several Liability of the Borrowers .
      (a) Notwithstanding anything in this Agreement or any other Loan Documents to the contrary, each Borrower, jointly and severally, in
consideration of the financial accommodations to be provided by the Administrative Agent and the Lenders under this Agreement and the other
Loan

                                                                       41
Documents, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to
accept joint and several liability for the Obligations, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations, it being
the intention of the parties hereto that all of the Obligations shall be the joint and several obligations of each Borrower without preferences or
distinction among them. The Borrowers shall be liable for all amounts due to the Administrative Agent and the Lenders under this Agreement,
regardless of which Borrower actually receives the Loans, Letter of Credit Obligations or other extensions of credit hereunder or the amount of
such Loans, Letter of Credit Obligations or other extensions of credit received or the manner in which the Administrative Agent or any Lender
accounts for such Loans, Letter of Credit Obligations or other extensions of credit on its books and records. The Obligations of the Borrowers
with respect to Loans made to one of them, and the Obligations arising as a result of the joint and several liability of one of the Borrowers
hereunder with respect to Loans made to the other of the Borrowers hereunder, shall be separate and distinct obligations, but all such other
Obligations shall be primary obligations of all the Borrowers.
      (b) If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to
perform any of the Obligations in accordance with the terms thereof, then in each such event, the other Borrowers will make such payment with
respect to, or perform, such Obligation.
       (c) Except as otherwise expressly provided herein, to the extent permitted by law, each Borrower (in its capacity as a joint and several
obligor in respect of the obligations of the other Borrower) hereby waives notice of acceptance of its joint and several liability, notice of
occurrence of any Event of Default (except to the extent notice is expressly required to be given pursuant to the terms of this Agreement), or of
any demand for any payment under this Agreement or the other Loan Documents, notice of any action at any time taken or omitted by the
Administrative Agent or any Lender under or in respect of any of the obligations hereunder, any requirement of diligence and, generally, all
demands, notices and other formalities of every kind in connection with this Agreement and the other Loan Documents. Each Borrower hereby
assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by the Administrative Agent or any Lender at any time or times in
respect of any default by the other Borrowers in the performance or satisfaction of any term, covenant, condition or provision of this
Agreement, any and all other indulgences whatsoever by the Administrative Agent or any Lender in respect of any of the obligations
hereunder, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such obligations
or the addition, substitution or release, in whole or in part, of the other Borrowers. Without limiting the generality of the foregoing, each
Borrower (in its capacity as a joint and several obligor in respect of the obligations of the other Borrowers) assents to any other action or delay
in acting or any failure to act on the part of the Administrative Agent or any Lender, including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder which might, but for the
provisions of this Section 2.9 , afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its
obligations under this Section 2.9 , it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied,
the obligations of such Borrower under this Section 2.9 shall not be discharged except by payment or performance and then only to the extent
of such payment or performance. The obligations of each Borrower under this Section 2.9 shall not be diminished or rendered unenforceable by
any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower. The joint
and several liability of each Borrower hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation
or any other change whatsoever in the name, membership, constitution or place of formation of any other Borrower or any of the Lenders.

                                                                         42
       (d) Each Borrower hereby agrees that to the extent that another Borrower shall have paid more than its proportionate share of any
payment made hereunder, such Borrower shall be entitled to seek and receive contribution from and against any other Borrower hereunder
which has not paid its proportionate share of such payment. Each Borrower’s right of contribution shall be subject to the terms and conditions
set forth in clause (g). The provisions of this clause (d) shall in no respect limit the obligations and liabilities of any Borrower to the
Administrative Agent and the other Secured Parties, and each Borrower shall remain liable to the Administrative Agent and the other Secured
Parties for the full amount of the Obligations of such Borrower hereunder.
       (e) The provisions of this Section 2.9 are made for the benefit of the Lenders and their successors and assigns, and subject to Section 11.2
, may be enforced by them from time to time against any Borrower as often as occasion therefor may arise and without requirement on the part
of the Administrative Agent or any Lender first to marshal any of its claims or to exercise any of its rights against the other Borrowers or to
exhaust any remedies available to it against the other Borrowers or to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy.
      (f) Notwithstanding any provision to the contrary contained herein or in any of the other Loan Documents, to the extent the obligations of
a Borrower shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the obligations of such Borrower hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and including, without limitation, the United States Bankruptcy
Code).
       (g) With respect to the Obligations arising as a result of the joint and several liability of the Borrowers hereunder with respect to Loans,
Letter of Credit Obligations or other extensions of credit made to the other Borrowers hereunder, each Borrower waives, until the Obligations
shall have been paid in full (other than indemnities and contingent Obligations which have not yet accrued) and this Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy which the Administrative Agent or any Lender now has or may
hereafter have against any Borrower, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to
participate in, any security or collateral given to the Administrative Agent or any Lender. Any claim which any Borrower may have against any
other Borrower with respect to any payments to the Administrative Agent or the Lenders hereunder or under any of the other Loan Documents
are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising
hereunder or thereunder, to the prior payment in full in cash of the Obligations. Upon the occurrence of any Event of Default and for so long as
the same is continuing, the Administrative Agent and the Lenders may proceed directly and at once, without notice (to the extent notice is
waivable under applicable law), against (i) with respect to Obligations of the Borrowers, any of them or (ii) with respect to Obligations of any
Borrower, to collect and recover the full amount, or any portion of the applicable Obligations, without first proceeding against the other
applicable Borrowers or any other Person, or against any security or collateral for the Obligations. Each Borrower consents and agrees that the
Administrative Agent and the Lenders shall be under no obligation to marshal any assets in favor of Borrower(s) or against or in payment of
any or all of the Obligations.
   Section 2.10 Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and Statements .
      (a) Each Borrower hereby irrevocably appoints and constitutes the Administrative Borrower as its agent and attorney-in-fact to request
and receive Loans and Letters of Credit pursuant to this Agreement and the other Loan Documents from the Administrative Agent or any
Lender in the name

                                                                        43
or on behalf of such Borrower. The Administrative Agent and the Lenders may disburse the Loans to such bank account of the Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide such Letters of Credit to a Borrower as the Administrative
Borrower may designate or direct, without notice to any other Loan Party. Notwithstanding anything to the contrary contained herein, the
Administrative Agent may at any time and from time to time require that Loans to or for the account of any Borrower be disbursed directly to
an operating account of such Borrower.
       (b) The Administrative Borrower hereby accepts the appointment by the Borrowers to act as the agent and attorney-in-fact of the
Borrowers pursuant to this Section 2.10 . The Administrative Borrower shall ensure that the disbursement of any Loans to each Borrower
requested by or paid to or for the account of the Company, or the issuance of any Letter of Credit for a Borrower hereunder, shall be paid to or
for the account of such Borrower.
     (c) Each Loan Party hereby irrevocably appoints and constitutes the Administrative Borrower as its agent to receive statements on
account and all other notices from the Administrative Agent and the Lenders with respect to the Obligations or otherwise under or in
connection with this Agreement and the other Loan Documents.
      (d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any other Loan Party by Administrative
Borrower shall be deemed for all purposes to have been made by such Loan Party, as the case may be, and shall be binding upon and
enforceable against such Loan Party to the same extent as if made directly by such Loan Party.


                                                             ARTICLE 3
                                                      GENERAL LOAN PROVISIONS
   Section 3.1 Interest .
      (a) Interest Rate Options . The Borrowers shall pay to the Administrative Agent, for the benefit of the Lenders, interest on the
outstanding principal amount of the Loans (including, without limitation Overadvances made pursuant to Section 2.8(a) ) and Special Agent
Advances as follows:
         (i) as to Base Rate Loans, a rate equal to the Base Rate plus the Applicable Margin then in effect for Base Rate Loans;
        (ii) as to Eurodollar Rate Loans, a rate equal to the Adjusted Eurodollar Rate plus the Applicable Margin then in effect for Eurodollar
  Rate Loans;
         (iii) as to Swingline Loans, a rate equal to the Base Rate plus the Applicable Margin then in effect for Base Rate Loans; and
         (iv) as to Special Agent Advances, the rate described in Section 2.8(b) .
   All interest accruing hereunder on and after the date of any Event of Default or the Maturity Date shall be payable on demand.
      (b) Base Rate and Eurodollar Rate Loans .
        (i) The Administrative Borrower on behalf of any Borrower shall select Base Rate Loans or Eurodollar Rate Loans and the Interest
  Period applicable thereto at the time a

                                                                        44
  Notice of Borrowing is given pursuant to Section 2.4 or at the time a Notice of Conversion or Continuation is given pursuant to
  Section 3.1(b)(ii) .
         (ii) The Borrowers shall have the option to (A) convert at any time following the third Business Day after the Closing Date all or any
  portion of any outstanding Base Rate Loans (other than Swingline Loans) in a principal amount equal to $1,000,000 or any whole multiple
  of $500,000 in excess thereof into one or more Eurodollar Rate Loans and (B) upon the expiration of any Interest Period, (x) convert all or
  any part of its outstanding Eurodollar Rate Loans in a principal amount equal to $2,000,000 or a whole multiple of $1,000,000 in excess
  thereof into Base Rate Loans (other than Swingline Loans) or (y) continue such Eurodollar Rate Loans as Eurodollar Rate Loans; provided
  that, in the case of a conversion of Base Rate Loans into, or the continuation of, Eurodollar Rate Loans, no Event of Default shall have
  occurred and be continuing. Whenever any Borrower desires to convert or continue Loans as provided above, the Administrative Borrower
  on behalf of such Borrower shall give the Administrative Agent irrevocable prior written notice substantially in the form attached as
  Exhibit H hereto (a “ Notice of Conversion or Continuation ”) not later than 11:00 a.m. three (3) Business Days before the day on which a
  proposed conversion or continuation of such Loan is to be effective specifying (1) the Loans to be converted or continued, and, in the case of
  any Eurodollar Rate Loan to be converted or continued, the last day of the then-current Interest Period therefor, (2) the effective date of such
  conversion or continuation (which shall be a Business Day), (3) the principal amount of such Loans to be converted or continued, and (4) the
  Interest Period to be applicable to such converted or continued Eurodollar Rate Loan. The Administrative Agent shall promptly notify the
  Lenders of such notice.
         (iii) No more than five (5) Interest Periods may be in effect at any one time with respect to Eurodollar Rate Loans.
        (iv) Any Eurodollar Rate Loans shall be automatically continued as a Eurodollar Rate Loan with an Interest Period of one (1) month
  upon the last day of the applicable Interest Period, unless the Administrative Agent has received a request to continue or convert such
  Eurodollar Rate Loan in accordance with the terms hereof.
      (c) Default Rate . Notwithstanding anything to the contrary contained herein, (i) immediately, automatically and without notice to the
Borrowers, upon the occurrence and during the continuance of an Event of Default under Section 11.1(a) , (f) or (g) , or (ii) at Required
Lenders’ option and upon prior written notice by the Administrative Agent to the Administrative Borrower, upon the occurrence and during the
continuance of any other Event of Default, (A) the Borrowers shall no longer have the option to request Eurodollar Rate Loans or Letters of
Credit, (B) all outstanding Eurodollar Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the rate (including the
Applicable Margin) then applicable to Eurodollar Rate Loans until the end of the applicable Interest Period and thereafter at a rate equal to two
percent (2%) in excess of the rate (including the Applicable Margin) then applicable to Base Rate Loans and (z) all outstanding Base Rate
Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent
(2%) in excess of the rate (including the Applicable Margin) then applicable to Base Rate Loans or such other Obligations arising hereunder or
under any other Loan Document. Interest shall continue to accrue on the Obligations after the filing by or against any Borrower of any petition
seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign.
      (d) Maximum Interest . Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, in
no event whatsoever shall the aggregate of all

                                                                        45
amounts that are contracted for, charged or received by the Administrative Agent or any Lender pursuant to the terms of this Agreement or any
of the other Loan Documents and that are deemed interest under applicable law exceed the Maximum Interest Rate (including, to the extent
applicable, the provisions of Section 5197 of the Revised Statutes of the United States of America as amended, 12 U.S.C. Section 85, as
amended). In no event shall any Borrower or Guarantor be obligated to pay interest or such amounts as may be deemed interest under
applicable law in amounts which exceed the Maximum Interest Rate. In the event any interest or deemed interest is charged or received in
excess of the Maximum Interest Rate (“ Excess ”), each Borrower and Guarantor acknowledges and stipulates that any such charge or receipt
shall be the result of an accident and bona fide error, and that any Excess received by the Administrative Agent or any Lender shall be applied,
first, to the payment of then outstanding and unpaid principal hereunder; second to the payment of the other Obligations then outstanding and
unpaid; and third, returned to such Borrower or Guarantor. All monies paid to the Administrative Agent or any Lender hereunder or under any
of the other Loan Documents, whether at maturity or by prepayment, shall be subject to any rebate of unearned interest as and to the extent
required by applicable law. For the purpose of determining whether or not any Excess has been contracted for, charged or received by the
Administrative Agent or any Lender, all interest at any time contracted for, charged or received from any Borrower or Guarantor in connection
with this Agreement or any of the other Loan Documents shall, to the extent permitted by applicable law, be amortized, prorated, allocated and
spread during the entire term of this Agreement in accordance with the amounts outstanding from time to time hereunder and the Maximum
Interest Rate from time to time in effect in order to lawfully charge the maximum amount of interest permitted under applicable laws. The
provisions of this Section 3.1 shall be deemed to be incorporated into each of the other Loan Documents (whether or not any provision of this
Section 3.1 is referred to therein).
      (e) Interest Payment and Computations . Interest on Base Rate Loans shall be payable by the Borrowers to the Administrative Agent, for
the account of the Administrative Agent and the Lenders, monthly in arrears not later than the first day of each calendar month. Interest on any
Eurodollar Rate Loan shall be payable on the last day of each applicable Interest Period. Interest on Base Rate Loans bearing interest based on
the “prime rate” shall be calculated on the basis of actual number of days elapsed over a year of 365 days. All other computations of interest
and fees hereunder shall be made on the basis of actual number of days elapsed over a year of 360 days. The interest rate on non-contingent
Obligations (other than Eurodollar Rate Loans) shall change simultaneously with each change in the Base Rate.
   Section 3.2 Fees .
      (a) Commitment Fee . The Borrowers shall pay to the Administrative Agent, for the account of the Lender (other than any Defaulting
Lender from and after the date such Lender became a Defaulting Lender), a fee on the unused amount of the Aggregate Commitments (a “
Commitment Fee ”), which shall be payable on the first day of each calendar month in arrears, determined by multiplying: (i) the amount, if
any, by which (A) the Aggregate Commitment exceeds (B) the average daily amount of Total Outstandings (other than outstanding Swingline
Loans and Special Agent Advances) during the immediately preceding calendar month (or part thereof) by (ii) the Commitment Fee Rate. The
obligation of the Borrowers to pay any Commitment Fees that remain unpaid shall survive the termination of this Agreement.
       (b) Letter of Credit Fee . In consideration for the issuance of Letters of Credit hereunder, the Borrowers shall pay to the Administrative
Agent, for the account of the Lenders (other than any Defaulting Lender from and after the date such Lender became a Defaulting Lender), a
fee at a per annum rate for each day from the date of issuance thereof to the date of expiration equal to the Applicable Margin then in effect for
Letter of Credit Fees on the average daily maximum amount

                                                                        46
available to be drawn under all of such Letters of Credit for the immediately preceding calendar month (or part thereof), payable in arrears as of
the first day of each succeeding calendar month, computed for each day from the date of issuance to the date of expiration. The obligation of
the Borrowers to pay any letter of credit fees that remain unpaid shall survive the termination of this Agreement.
        (c) Letter of Credit Fronting Fee . In addition to the letter of credit fees provided above, the Borrowers shall pay to the Issuing Lender
for its own account (without sharing with the Lenders) a letter of credit fronting fee of one-fourth percent (0.25%), payable in arrears as of the
first day of each succeeding calendar month, of the average daily maximum amount available to be drawn under each Letter of Credit
computed at a per annum rate for each day from the date of issuance to the date of expiration thereof, negotiation fees agreed to by the
Borrowers and the Issuing Lender from time to time, the customary charges from time to time of the Issuing Lender with respect to the
issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit and in the case of
documentary Letters of Credit, the Issuing Lender’s customary processing fees.
       (d) Other Fees . The Borrowers shall pay to the Administrative Agent and the Lead Arrangers the other fees and amounts set forth in the
Fee Letter in the amounts and at the times specified therein. To the extent payment in full of the applicable fee is received by the
Administrative Agent from the Borrowers on or about the Closing Date, the Administrative Agent shall pay to each Lender its share of such
fees in accordance with the terms of the arrangements of the Administrative Agent with such Lender.
    Section 3.3 Loan Accounts . The Loans made by each Lender (and the purchases by such Lender of participations in Letters of Credit and
Swingline Loans) hereunder shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive
absent manifest error of the amount of the Loans made by the Lenders to the Borrowers (and the purchases by such Lender of participations in
Letters of Credit and Swingline Loans) and the interest and payments thereon. Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the
event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in
respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of
any Lender made through the Administrative Agent, the Borrowers shall execute and deliver to such Lender (through the Administrative
Agent) a Note which shall evidence such Lender’s Commitment in addition to such accounts or records. Each Lender may attach schedules to
its Notes and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.
   Section 3.4 Pro Rata Treatment, Sharing of Payments, Funding by Lenders, Etc .
      (a) Except to the extent otherwise provided in this Agreement or as otherwise agreed by the Lenders: (i) the making and conversion of
Loans shall be made among the Lenders based on their respective Pro Rata Shares as to the Loans and (ii) each payment on account of any
Obligations to or for the account of one or more of the Lenders in respect of any Obligations due on a particular day shall be allocated among
the Lenders (other than Defaulting Lenders) entitled to such payments based on their respective Pro Rata Shares and shall be distributed
accordingly.
       (b) Each Loan Party agrees that, in addition to (and without limitation of) any right of setoff, banker’s lien or counterclaim the
Administrative Agent or any Lender may otherwise have, while any Event of Default exists the Administrative Agent, each Lender and each of
their respective Affiliates shall be entitled, at its option (but subject, as among the Administrative Agent and the Lenders,

                                                                         47
to the provisions of Section 12.3(b) and Section 3.4(c) ), to offset balances held by it for the account of such Loan Party at any of its offices, in
Dollars or in any other currency, against any principal of or interest on any Loans owed to such Person or any other amount payable to such
Person hereunder (regardless of whether such balances are then due to such Loan Party), in which case it shall promptly notify the
Administrative Borrower and the Administrative Agent thereof; provided that such Person’s failure to give such notice shall not affect the
validity thereof.
       (c) Except as otherwise expressly permitted by this Agreement, if any Lender (including the Administrative Agent) shall obtain from any
Loan Party payment of any principal of or interest on any Loan owing to it or payment of any other amount under this Agreement or any of the
other Loan Documents through the exercise of any right of setoff, banker’s lien or counterclaim or similar right or otherwise (other than from
the Administrative Agent as provided herein), and, as a result of such payment, such Lender shall have received more than its Pro Rata Share of
the principal of the Loans or more than its share of such other amounts then due hereunder or thereunder by any Loan Party to such Lender than
the percentage thereof received by any other Lender, it shall promptly pay to the Administrative Agent, for the benefit of the Lenders, the
amount of such excess and simultaneously purchase from such other Lenders a participation in the Loans or such other amounts, respectively,
owing to such other Lenders (or such interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in accordance with their respective Pro Rata Shares or as otherwise
agreed by the Lenders. To such end all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored.
       (d) Each Loan Party agrees that any Lender purchasing a participation (or direct interest) as provided in this Section 3.4 may exercise, in
a manner consistent with this Section 3.4 , all rights of setoff, banker’s lien, counterclaim or similar rights with respect to such participation as
fully as if such Lender were a direct holder of Loans or other amounts (as the case may be) owing to such Lender in the amount of such
participation.
       (e) Nothing contained herein shall require any Lender to exercise any right of setoff, banker’s lien, counterclaims or similar rights or
shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other Indebtedness or
obligation of any Loan Party. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu
of a setoff to which this Section 3.4 applies, such Lender shall, to the extent practicable, assign such rights to the Administrative Agent for the
benefit of Lenders and, in any event, exercise its rights in respect of such secured claim in a manner consistent with the rights of Lenders
entitled under this Section 3.4 to share in the benefits of any recovery on such secured claim.
      (f) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any borrowing that such
Lender will not make available to the Administrative Agent such Lender’s share of such borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with Section 2.4(b) and may, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable
borrowing available to the Administrative Agent, then the applicable Lender and the Borrowers severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made
available to the Borrowers to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such
Lender, the greater of the daily average Federal Funds Rate and a rate determined by the Administrative Agent in accordance with

                                                                          48
banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrowers, the interest rate applicable to
Base Rate Loans. If the Borrowers and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period,
the Administrative Agent shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for such period. If such
Lender pays its share of the applicable borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan
included in such borrowing. Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender
that shall have failed to make such payment to the Administrative Agent.
        (g) Nothing in this Section 3.4 or elsewhere in this Agreement or the other Loan Documents shall be deemed to require the
Administrative Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitment
hereunder or to prejudice any rights that any Borrower may have against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
   Section 3.5 Payments Generally .
       (a) Except as otherwise provided in clause (b) below, each payment by the Borrowers on account of the principal of or interest on the
Loans or of any fee, commission or other amounts payable to the Lenders under this Agreement shall be made not later than 1:00 p.m. on the
date specified for payment under this Agreement to the Administrative Agent Payment Account, in Dollars, in immediately available funds and
shall be made without any set-off, counterclaim or deduction whatsoever. Any payment received after 2:00 p.m. shall be deemed to have been
made on the next succeeding Business Day for all purposes hereunder. If any payment under this Agreement shall be specified to be made upon
a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in
such case be included in computing any interest if payable along with such payment. All principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Loan Documents may be charged directly to the loan account(s) of any applicable
Borrower maintained by the Administrative Agent in the manner set forth in clause (b) below and the Administrative Agent shall notify the
applicable Borrower from time to time or upon the request of any such Borrower, of any charge to such Borrower’s loan account for interest,
fees, costs, expenses and other charges (other than principal).
       (b) All amounts that shall have been swept into the Administrative Agent Payment Account pursuant to Section 6.3(a) as of the end of a
Business Day shall be applied to the Obligations at the beginning of the next Business Day. If, as a result of such application, a credit balance
exists in the Administrative Agent Payment Account, the balance shall not accrue interest in favor of the Company. The Company irrevocably
waives the right to direct the application of any payments or Collateral proceeds, and agrees that the Administrative Agent shall have the
continuing, exclusive right to apply and reapply the same against the Obligations then due and owing, in accordance with the terms of this
Agreement. Except as otherwise provided in Section 11.3 , all amounts applied to repay the Obligations pursuant to this Section 3.5(b) shall be
applied in the manner determined by the Administrative Agent in its sole discretion.
      (c) Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Administrative Borrower, or unless
an Event of Default shall have occurred and be continuing, the Administrative Agent shall not apply any payments which it receives (or any
amounts applied to repay the Obligations pursuant to clause (b) above) to any Eurodollar Rate Loans, except (i) on the expiration date of the
Interest Period applicable to any such Eurodollar Rate Loans or (ii) in the event that there are no outstanding Base Rate Loans; provided that
the Administrative Agent will attempt to honor any written request received from the Administrative Borrower to hold such payment until the

                                                                        49
expiration of the applicable Interest Period, it being understood and agreed that the Administrative Agent shall have no liability for any failure
to do so.
       (d) To the extent that any Loan Party makes a payment or payments to the Administrative Agent for the benefit of the Lenders or the
Administrative Agent receives any payment or proceeds of Collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds repaid, the Obligations or
part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received
by the Administrative Agent. This Section 3.5(d) shall remain effective notwithstanding any contrary action which may be taken by the
Administrative Agent or any Lender in reliance upon such payment or proceeds. This Section 3.5 shall survive the payment of the Obligations
and the termination of this Agreement.
   Section 3.6 Settlement Procedures .
       (a) In order to administer the Credit Facility in an efficient manner and to minimize the transfer of funds between the Administrative
Agent and Lenders, the Administrative Agent may, at its option, subject to the terms of this Section 3.6 , make available, on behalf of Lenders,
the full amount of the Revolving Loans requested or charged to any Borrower’s loan account(s) or otherwise to be advanced by Lenders
pursuant to the terms hereof, without requirement of prior notice to Lenders of the proposed Revolving Loans (each such advance by the
Administrative Agent, a “ Settlement Advance ”).
       (b) With respect to (i) all Swingline Loans and (ii) all Revolving Loans made by the Administrative Agent on behalf of Lenders as
provided in this Section 3.6 , the amount of each Lender’s Pro Rata Share of such outstanding Loans shall be computed weekly, and shall be
adjusted upward or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m. on the Business Day immediately preceding
the date of each settlement computation; provided that the Administrative Agent retains the absolute right at any time or from time to time to
make the above described adjustments at intervals more frequent than weekly. The Administrative Agent shall deliver to each of the Lenders
after the end of each week, or at such lesser period or periods as the Administrative Agent shall determine, a summary statement of the amount
of outstanding Loans for such period (such week or lesser period or periods being hereinafter referred to as a “ Settlement Period ”). If the
summary statement is sent by the Administrative Agent and received by a Lender prior to 12:00 noon, then such Lender shall make the
settlement transfer described in this Section 3.6 by no later than 3:00 p.m. on the same Business Day and if received by a Lender after 12:00
noon, then such Lender shall make the settlement transfer by not later than 3:00 p.m. on the next Business Day following the date of receipt. If,
as of the end of any Settlement Period, the amount of a Lender’s Pro Rata Share of the outstanding Loans is more than such Lender’s Pro Rata
Share of the outstanding Loans as of the end of the previous Settlement Period, then such Lender shall forthwith (but in no event later than the
time set forth in the preceding sentence) transfer to the Administrative Agent by wire transfer in immediately available funds the amount of the
increase. Alternatively, if the amount of a Lender’s (other than a Defaulting Lender) Pro Rata Share of the outstanding Loans in any Settlement
Period is less than the amount of such Lender’s Pro Rata Share of the outstanding Loans for the previous Settlement Period, the Administrative
Agent shall forthwith transfer to such Lender by wire transfer in immediately available funds the amount of the decrease. The obligation of
each of the Lenders to transfer such funds and effect such settlement shall be irrevocable and unconditional and without recourse to or warranty
by the Administrative Agent. The Administrative Agent and each Lender agrees to mark its books and records at the end of each Settlement
Period to show at all times the dollar amount of its Pro Rata Share of the outstanding Loans and Letters of Credit. Each Lender shall only be
entitled to receive interest on its Pro Rata Share of the Loans to the extent such

                                                                         50
Loans have been funded by such Lender. Because the Administrative Agent on behalf of Lenders may be advancing and/or may be repaid
Loans prior to the time when Lenders will actually advance and/or be repaid such Loans, interest with respect to Loans shall be allocated by the
Administrative Agent in accordance with the amount of Loans actually advanced by and repaid to each Lender and the Administrative Agent
and shall accrue from and including the date such Loans are so advanced to but excluding the date such Loans are either repaid by Borrowers
or actually settled with the applicable Lender as described in this Section 3.6 . Each Lender acknowledges and agrees that its obligation to
refund Loans in accordance with the terms of this Section 3.6 is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Article 5 . Further, each Lender agrees and
acknowledges that if prior to the refunding of any outstanding Loans pursuant to this Section 3.6 , one of the events described in
Section 11.1(f), (g) or (h) shall have occurred, each Lender will, on the date the applicable Loan would have been made, purchase an undivided
participating interest in any Loan to be refunded in an amount equal to its Pro Rata Share of the aggregate amount of such Loan.
      (c) To the extent that the Administrative Agent has made any such amounts available and the settlement described above shall not yet
have occurred, upon repayment of any Revolving Loans by a Borrower or with the collected proceeds on deposit in the Administrative Agent
Payment Account as described in Section 3.5(b) , the Administrative Agent may apply such amounts repaid directly to any amounts made
available by the Administrative Agent pursuant to this Section 3.6 . In lieu of weekly or more frequent settlements, the Administrative Agent
may, at its option, at any time require each Lender to provide the Administrative Agent with immediately available funds representing its Pro
Rata Share of each Revolving Loan, prior to the Administrative Agent’s disbursement of such Revolving Loan to Borrower. In such event, all
Revolving Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares.
       (d) If the Administrative Agent is not funding a particular Revolving Loan to a Borrower (or the Administrative Borrower for the benefit
of such Borrower) pursuant to subsections (a) and (b) above on any day, but is requiring each Lender to provide the Administrative Agent with
immediately available funds on the date of such Revolving Loan as provided in subsection (c) above, the Administrative Agent may assume
that each Lender will make available to the Administrative Agent such Lender’s Pro Rata Share of the Revolving Loan requested or otherwise
made on such day and the Administrative Agent may, in its discretion, but shall not be obligated to, cause a corresponding amount to be made
available to or for the benefit of such Borrower on such day. If the Administrative Agent makes such corresponding amount available to a
Borrower and such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent
shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon for each day from the date
such payment was due until the date such amount is paid to the Administrative Agent at the Federal Funds Rate for each day during such period
and if such amounts are not paid within three (3) days of the Administrative Agent’s demand, at the highest interest rate provided for in
Section 3.1 applicable to Base Rate Loans. During the period in which such Lender has not paid such corresponding amount to the
Administrative Agent, notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, the amount
so advanced by the Administrative Agent to or for the benefit of any Borrower shall, for all purposes hereof, be a Revolving Loan made by the
Administrative Agent for its own account. Upon any such failure by a Lender to pay the Administrative Agent, the Administrative Agent shall
promptly thereafter notify the Administrative Borrower of such failure and Borrowers shall pay such corresponding amount to the
Administrative Agent for its own account within five (5) Business Days of the Administrative Borrower’s receipt of such notice.
    (e) Nothing in this Section 3.6 or elsewhere in this Agreement or the other Loan Documents shall be deemed to require the
Administrative Agent to advance funds on behalf of any

                                                                       51
Lender (including, without limitation, a Defaulting Lender) or to relieve any Lender from its obligation to fulfill its Commitment hereunder or
to prejudice any rights that any Borrower may have against any Lender as a result of any default by any Lender hereunder in fulfilling its
Commitment. In the event that a Lender is a Defaulting Lender, the Administrative Agent shall be entitled to refrain from remitting settlement
amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set forth in Section 3.9 .
   Section 3.7 Obligations Several; Independent Nature of Lenders’ Rights . The obligation of each Lender hereunder is several, and no Lender
shall be responsible for any default by any other Lender in the other Lender’s obligation to make a Loan requested (or deemed requested)
hereunder nor shall the Commitment of any Lender be increased or decreased as a result of the default by any other Lender in the other
Lender’s obligation to make a Loan hereunder. Nothing contained in this Agreement or any of the other Loan Documents and no action taken
by the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders to be a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and subject to
Section 12.3 , each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such purpose.
    Section 3.8 Bank Products . Each Bank Product Provider shall be deemed a third party beneficiary hereof and of the provisions of the other
Loan Documents solely for purposes of any reference in a Loan Document to the parties for whom the Administrative Agent is acting. The
Administrative Agent hereby agrees to act as agent for such Bank Product Providers and, by virtue of entering into a Bank Product Agreement,
the applicable Bank Product Provider shall be automatically deemed to have appointed the Administrative Agent as its agent and to have
accepted the benefits of the Loan Documents; it being understood and agreed that the rights and benefits of each Bank Product Provider under
the Loan Documents consist exclusively of such Bank Product Provider’s being a beneficiary of the Liens and security interests (and, if
applicable, guarantees) granted to the Administrative Agent and the right to share in payments and collections out of the Collateral as more
fully set forth herein. In addition, each Bank Product Provider, by virtue of entering into a Bank Product Agreement, shall be automatically
deemed to have agreed that the Administrative Agent shall have the right, but shall have no obligation, to establish, maintain, relax, or release
reserves in respect of the Bank Product Obligations and that if reserves are established there is no obligation on the part of the Administrative
Agent to determine or insure whether the amount of any such reserve is appropriate or not. In connection with any such distribution of
payments or proceeds of Collateral, the Administrative Agent shall be entitled to assume no amounts are due or owing to any Bank Product
Provider (including, without limitation, Bank Product Providers that provide Noticed Bank Products and any other Bank Product Provider)
unless such Bank Product Provider has provided a written certification (setting forth a reasonably detailed calculation) to the Administrative
Agent as to the amounts that are due and owing to it and such written certification is received by the Administrative Agent a reasonable period
of time prior to the making of such distribution. The Administrative Agent shall have no obligation to calculate the amount due and payable
with respect to any Bank Products, but may rely upon the written certification of the amount due and payable from the relevant Bank Product
Provider. In the absence of an updated certification, the Administrative Agent shall be entitled to assume that the amount due and payable to
the relevant Bank Product Provider is the amount last certified to the Administrative Agent by such Bank Product Provider as being due and
payable (less any distributions made to such Bank Product Provider on account thereof). The Loan Parties may obtain Bank Products from any
Bank Product Provider, although no Loan Party is required to do so. Each Loan Party acknowledges and agrees that the providing of Bank
Products by any Bank Product Provider is in the sole and absolute discretion of such Bank Product Provider. Notwithstanding anything to the
contrary in this Agreement or any other Loan Document, no provider or holder of any Bank Product shall have any voting or approval rights
hereunder (or be deemed a Lender) solely by virtue

                                                                        52
of its status as the provider or holder of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such
provider or holder be required (other than in their capacities as Lenders, to the extent applicable) for any matter hereunder or under any of the
other Loan Documents, including as to any matter relating to the Collateral or the release of Collateral or Guarantors.
    Section 3.9 Defaulting Lenders . The Administrative Agent shall not be obligated to transfer to a Defaulting Lender any payments made by
any Loan Party to the Administrative Agent for the Defaulting Lender’s benefit or any collections or proceeds of Collateral that would
otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of such transfer to the Defaulting Lender, the Administrative
Agent shall transfer any such payments (A) first, to the Swingline Lender to the extent of any Swingline Loans that were made by the
Swingline Lender and that were required to be, but were not, repaid by the Defaulting Lender, (B) second, to the Issuing Lender, to the extent
of the portion of the Letter of Credit Obligations that were required to be, but were not, repaid by the Defaulting Lender, (C) third, to each
non-Defaulting Lender ratably in accordance with their Commitments (but, in each case, only to the extent that such Defaulting Lender’s
portion of a Loan (or other funding obligation) was funded by such other non-Defaulting Lender), (D) fourth, to a suspense account maintained
by the Administrative Agent, the proceeds of which shall be retained by the Administrative Agent and may be made available to be
re-advanced to or for the benefit of any Borrower as if such Defaulting Lender had made its portion of such Loans (or other funding
obligations) hereunder, and (E) fifth, from and after the date on which all other Obligations have been paid in full, to such Defaulting Lender in
accordance with Section 11.3 . Subject to the foregoing, the Administrative Agent may hold and, in its sole discretion, re-lend to a Borrower for
the account of such Defaulting Lender the amount of all such payments received and retained by the Administrative Agent for the account of
such Defaulting Lender. The provisions of this Section 3.9 shall remain effective with respect to such Defaulting Lender until the earlier of
(y) the date on which the non-Defaulting Lenders, the Administrative Agent and the Borrowers shall have waived, in writing, the application of
this Section 3.9 to such Defaulting Lender, or (z) the date on which such Defaulting Lender makes payment of all amounts that it was obligated
to fund hereunder, pays to the Administrative Agent all amounts owing by such Defaulting Lender in respect of the amounts that it was
obligated to fund hereunder, and, if requested by the Administrative Agent, provides adequate assurance reasonably acceptable to the
Administrative Agent of its ability to perform its future obligations hereunder. The operation of this Section 3.9 shall not be construed to
increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder or to relieve or excuse the performance by any Borrower of its duties and obligations hereunder
to the Administrative Agent or to the Lenders other than such Defaulting Lender. Any failure by a Defaulting Lender to fund amounts that it
was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle the Loan
Parties, at their option, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender in the manner set forth in
Section 4.9(b) . In the event of a direct conflict between the priority provisions of this Section 3.9 and any other provision contained in this
Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid,
the terms and provisions of this Section 3.9 shall control and govern.


                                                                ARTICLE 4
                                                            YIELD PROTECTION
   Section 4.1 Inability to Determine Applicable Interest Rate . If the Administrative Agent shall determine in good faith (which determination
shall, absent manifest error, be final and conclusive

                                                                         53
and binding on all parties hereto) that on any date by reason of circumstances affecting the London interbank market, adequate and fair means
do not exist for ascertaining the interest rate applicable to Eurodollar Rate Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate, the Administrative Agent shall on such date give notice (such notice, the “Initial Notice”) to the Administrative Borrower and
each Lender of such determination. Thereafter, no Loans may be made as, or converted to, Eurodollar Rate Loans, until such time as the
Administrative Agent notifies the Administrative Borrower and the Lenders that the circumstances giving rise to such Initial Notice no longer
exist (in which case the Administrative Agent shall give prompt notice to the Administrative Borrower and the Lenders). Upon receipt of the
Initial Notice, the Administrative Borrower may revoke any Notice of Borrowing or Notice of Continuation or Conversion then submitted by it.
If the Administrative Borrower does not revoke such notice, the Lenders shall make, convert or continue such Loans, as proposed by the
Administrative Agent, in the amount specified in such notice submitted by the Administrative Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of Eurodollar Rate Loans.
    Section 4.2 Changed Circumstances . Notwithstanding anything to the contrary contained herein, if (i) any change in any law or
interpretation thereof by any Governmental Authority makes it unlawful for a Lender to make or maintain a Eurodollar Rate Loan or to
maintain any Commitment with respect to a Eurodollar Rate Loan, (ii) the Required Lenders determine in good faith (which determination
shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that it has become impracticable as a result of a
circumstance that adversely affects the London interbank market or the position of such Lender in such market or (iii) the Required Lenders
determine that the Adjusted Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not
adequately and fairly reflect the cost to such Lenders of funding such Loan, then, in each case, such Lender or Lenders shall give notice thereof
to the Administrative Agent and the Administrative Borrower and may (A) declare that Eurodollar Rate Loans will not thereafter be made by
such Lender, such that any request for Eurodollar Rate Loans from such Lender shall be deemed to be a request for a Base Rate Loan, unless
such Lender’s declaration has been withdrawn (and it shall be withdrawn promptly upon the cessation of the circumstances described in clause
(i) or (ii) above) and (B) require that all outstanding Eurodollar Rate Loans made by such Lender be converted to Base Rate Loans
immediately, in which event all outstanding Eurodollar Rate Loans of such Lender shall be so converted.
    Section 4.3 Increased Costs . If any Change in Law shall: (a) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any
Lender (except any reserve requirement reflected in the Adjusted Eurodollar Rate) or the Issuing Lender; (b) subject any Lender or the Issuing
Lender to any tax of any kind whatsoever other than any Excluded Tax with respect to this Agreement, any Letter of Credit, any participation
in a Letter of Credit or any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such Lender or the Issuing Lender
in respect thereof (except for Taxes or Other Taxes covered by Section 4.5 or Excluded Taxes and the imposition of, or any change in the rate
of, any taxes payable by such Lender or the Issuing Lender described in Sections 4.5(d) ); or (c) impose on any Lender, the Issuing Lender or
the London interbank market any other condition, cost or expense affecting this Agreement, Eurodollar Rate Loans made by such Lender or
any Letter of Credit or participation therein, and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Lender of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any
Letter of Credit), or to reduce the amount of any sum received by such Lender or the Issuing Lender hereunder (whether of principal, interest or
any other amount) then, upon request of such Lender or the Issuing Lender, Borrowers will pay to such Lender or the Issuing Lender, as the
case may

                                                                        54
be, such additional amount or amounts as will compensate such Lender or the Issuing Lender, as the case may be, for such additional costs
incurred or reduction suffered.
    Section 4.4 Capital Requirements . If any Lender or the Issuing Lender determines in good faith that any Change in Law affecting such
Lender or the Issuing Lender or any lending office of such Lender or such Lender’s or the Issuing Lender’s holding company, if any, regarding
capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Lender’s capital or on the
capital of such Lender’s or the Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitment of such Lender
or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a
level below that which such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or the
Issuing Lender’s holding company with respect to capital adequacy), then from time to time Borrowers will pay to such Lender or the Issuing
Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender’s or the
Issuing Lender’s holding company for any such reduction suffered.
   Section 4.5 Taxes .
        (a) Any and all payments by or on account of any of the Obligations shall be made free and clear of and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, charges, withholdings,
liabilities, restrictions or conditions of any kind imposed by any Governmental Authority, excluding all Excluded Taxes (all such non-excluded
taxes, levies, imposts, fees, deductions, charges, withholdings and liabilities being hereinafter referred to as “ Taxes ”).
        (b) If any Taxes shall be required by law to be deducted from or in respect of any sum payable in respect of the Obligations to any
Lender, the Issuing Lender or the Administrative Agent (i) the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable under this Section 4.5 ), such Lender, the Issuing Lender or
the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made,
(ii) the relevant Loan Party shall make such deductions, (iii) the relevant Loan Party shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law and (iv) the relevant Loan Party shall deliver to the Administrative Agent
evidence of such payment.
      (c) In addition, each Loan Party agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies of the United States or any political subdivision thereof or any applicable foreign jurisdiction, and all liabilities with
respect thereto, in each case arising from any payment made hereunder or under any of the other Loan Documents or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any of the other Loan Documents (collectively, “ Other Taxes ”).
       (d) Each Loan Party shall indemnify each Lender, the Issuing Lender and the Administrative Agent for the full amount of Taxes and
Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 4.5 ) paid by such
Lender, the Issuing Lender or the Administrative Agent (as the case may be) and any liability (including for penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification
shall be made within ten (10) days from the date such Lender, the Issuing Lender or the Administrative Agent (as the case may be) makes
written demand

                                                                          55
therefor. A certificate as to the amount of such payment or liability delivered to the Administrative Borrower by a Lender, the Issuing Lender
(with a copy to the Administrative Agent) or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Lender,
shall be conclusive absent manifest error.
    (e) As soon as practicable after any payment of Taxes or Other Taxes by any Loan Party, such Loan Party shall furnish to the
Administrative Agent, at its address referred to herein, the original or a certified copy of a receipt evidencing payment thereof.
       (f) Without prejudice to the survival of any other agreements of any Loan Party hereunder or under any of the other Loan Documents, the
agreements and obligations of such Loan Party contained in this Section 4.5 shall survive the termination of this Agreement and the payment in
full of the Obligations.
       (g) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which
the applicable Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or
under any of the other Loan Documents shall deliver to the Administrative Borrower (with a copy to the Administrative Agent), at the time or
times prescribed by applicable law or reasonably requested by the Administrative Borrower or the Administrative Agent (in such number of
copies as is reasonably requested by the recipient), whichever of the following is applicable (but only if such Foreign Lender is legally entitled
to do so): (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming exemption from, or a reduction to, withholding tax
under an income tax treaty, or any successor form, (ii) duly completed copies of Internal Revenue Service Form W-8ECI claiming exemption
from withholding because the income is effectively connected with a U.S. trade or business or any successor form, (iii) in the case of a Foreign
Lender claiming the benefits of the exemption for portfolio interest under Sections 871(h) or 881(c) of the Code, a certificate of the Foreign
Lender to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code or a “controlled foreign corporation” described and
Section 881(c)(3)(C) of the Code and duly completed copies of Internal Revenue Service Form W-8BEN claiming exemption from withholding
under the portfolio interest exemption or any successor form or (iv) any other applicable form, certificate or document prescribed by applicable
law as a basis for claiming exemption from or a reduction in United States withholding tax duly completed together with such supplementary
documentation as may be prescribed by applicable law to permit a Borrower to determine the withholding or deduction required to be made.
Unless the Administrative Borrower and the Administrative Agent have received forms or other documents reasonably satisfactory to them
indicating that payments hereunder or under any of the other Loan Documents to or for a Foreign Lender are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, the Borrowers or the Administrative Agent shall
withhold amounts required to be withheld by applicable requirements of law from such payments at the applicable statutory rate.
       (h) Any Lender claiming any additional amounts payable pursuant to this Section 4.5 shall use its reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the jurisdiction of its applicable lending office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts that would be payable or may thereafter accrue and would not,
in the sole determination of such Lender, be otherwise disadvantageous to such Lender.
      (i) If the Administrative Agent, the Issuing Lender or any Lender determines, in its sole discretion, that it has received a refund of an
additional amount from any Loan Party pursuant to Section 4.5(b) , the Administrative Agent, the Issuing Lender or such Lender shall pay to
such Loan Party

                                                                        56
an amount equal to such refund, net of all out-of-pocket expenses of the Administrative Agent, the Issuing Lender or such Lender, as the case
may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund. Each Loan
Party, upon request of the Administrative Agent, the Issuing Lender or such Lender, agrees to repay the amount paid over to such Loan Party
(plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, the Issuing Lender
or such Lender in the event the Administrative Agent, the Issuing Lender or such Lender is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require the Administrative Agent, the Issuing Lender or any Lender to make available its
tax returns (or any other information relating to its taxes which it deems confidential) to any Loan Party or any other Person.
    Section 4.6 Breakage Indemnity . The Borrowers shall pay to the Administrative Agent its customary administrative charge and to each
Lender all losses, expenses and liabilities (including any interest paid by such Lender to the Lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or redeployment of
such) that it sustains (a) if for any reason (other than a default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur on a
date specified therefor in a request for borrowing, or a conversion to, or continuation of, any Eurodollar Rate Loan does not occur on a date
specified therefor in a request for conversion or continuation, (b) if any prepayment or other principal payment of, or any conversion of, any of
its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to such Loan, or (c) if any prepayment of any of
its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by a Borrower (or on its behalf by the
Administrative Borrower). This covenant shall survive the termination or non-renewal of this Agreement and the payment of the Obligations.
    Section 4.7 Certificates for Reimbursement . A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary
to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in Sections 4.3 or 4.4 and delivered
to the Administrative Borrower shall be conclusive absent manifest error. The Borrowers shall pay such Lender or the Issuing Lender, as the
case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.
   Section 4.8 Delay in Requests . Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to
Sections 4.3 or 4.4 shall not constitute a waiver of such Lender’s or the Issuing Lender’s right to demand such compensation; provided that the
Borrowers shall not be required to compensate a Lender or the Issuing Lender pursuant to this such Sections for any increased costs incurred or
reductions occurring more than one hundred eighty (180) days prior to the date that such Lender or the Issuing Lender, as the case may be,
becomes aware of the event giving rise to such Lender’s or the Issuing Lender’s claim for compensation therefor (except that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be
extended to include the period of retroactive effect thereof).
   Section 4.9 Mitigation; Replacement of Lenders .
      (a) If Section 4.2 applies, any Lender requests compensation under Sections 4.2 , 4.3 or 4.4 , or the Borrowers are required to pay any
additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.5 , then such Lender shall
promptly, and in any event if so requested by the Administrative Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate a different lending office for funding or booking its Loans hereunder, to assign its rights and obligations hereunder to
another of its offices, branches or affiliates or to take such other actions as such Lender or the Administrative Agent determines, if, in the
judgment of

                                                                        57
such Lender, such designation, assignment or other action (i) would eliminate or reduce amounts payable pursuant to such Sections in the
future and (ii) would not subject the Administrative Agent or such Lender to any unreimbursed cost or expense and the Administrative Agent
or such Lender would not suffer any economic, legal or regulatory disadvantage. Nothing in this Section 4.9 shall affect or postpone any of the
obligations of the Borrowers or the rights of the Administrative Agent or such Lender pursuant to this Section 4.9 . The Borrowers hereby
agree to pay on demand all reasonable costs and expenses incurred by the Administrative Agent or any Lender in connection with any such
designation or assignment.
        (b) If Section 4.2 applies, any Lender requests compensation under Sections 4.2 , 4.3 or 4.4 , or becomes a Defaulting Lender, or the
Borrowers are required to pay any additional amount to any Lender or Governmental Authority pursuant to Section 4.5 , then within one
hundred twenty (120) days thereafter, the Administrative Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, replace such Lender by requiring such Lender to assign and delegate (and such Lender shall be obligated to assign and
delegate), without recourse (in accordance with and subject to the restrictions contained in Section 14.11 ), all of its interests, rights and
obligations under this Agreement to an Eligible Assignee that shall assume such obligations; provided that (i) the Administrative Borrower has
received the prior written consent of the Administrative Agent and the Issuing Lender, in accordance with, and subject to, the provisions of
Section 14.11 , (ii) the Administrative Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 14.11 ,
(iii) such Lender shall have received payment of an amount equal to the outstanding principal amount of its Loans and participations in Letter
of Credit Obligations and Swingline Loans that it has funded, if any, accrued interest thereon, accrued fees and other amounts payable to it
hereunder (other than, in the case of a Defaulting Lender, Bank Product Obligations owed thereto), from the assignee (to the extent of such
outstanding principal) and the Administrative Borrower (in the case of accrued interest, fees and other amounts, including amounts under
Section 4.6 ), (iv) such assignment will result in a reduction in such compensation and payments, and (v) such assignment does not conflict
with applicable laws or regulations. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Administrative Borrower to require such assignment and delegation cease
to apply. Nothing in this Section 4.9 shall impair any rights that any Borrower or the Administrative Agent may have against any Lender that is
a Defaulting Lender.
    Section 4.10 No Requirement of Match Funding . Notwithstanding anything to the contrary contained herein, the Administrative Agent and
the Lenders shall not be required to acquire Dollar deposits in the London interbank market or any other offshore Dollar market to fund any
Eurodollar Rate Loan or to otherwise match fund any Obligations as to which interest accrues based on the Eurodollar Rate. All of the
provisions of this Article 4 shall be deemed to apply as if the Administrative Agent, each Lender or any Participant had acquired such deposits
to fund any Eurodollar Rate Loan or any other Obligation as to which interest is accruing at the Eurodollar Rate by acquiring such Dollar
deposits for each Interest Period in the amount of the Eurodollar Rate Loans or other applicable Obligations.


                                                                ARTICLE 5
                                                          CONDITIONS PRECEDENT
   Section 5.1 Conditions Precedent to Initial Loans and Letters of Credit . The obligation of the Lenders to make the initial Loans or of
Issuing Lender to issue the initial Letters of Credit hereunder is subject to the satisfaction of, or waiver of, immediately prior to or concurrently
with the making of such Loan or the issuance of such Letter of Credit of each of the following conditions precedent:
     (a) the Administrative Agent shall have received (i) counterparts of this Agreement, (ii) for the account of each Lender requesting a
promissory note, a Note and (iii) counterparts of all other

                                                                          58
Loan Documents and all instruments and documents (including, without limitation, the Information Certificate) required to be delivered
hereunder, in each case conforming to the requirements hereunder and thereunder and executed by a duly authorized officer or director of each
party thereto or of the general partner of any partnership party thereto, and in each case in form and substance reasonably satisfactory to the
Lenders;
       (b) the Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent, (i) all releases,
terminations and such other documents as the Administrative Agent may request to evidence and effectuate the termination of the Existing
Facility, including, but not limited to, a payoff letter, and (ii) the termination and release by each of the lenders under the Existing Facility of
any interest in and to any assets and properties of each Loan Party, duly authorized, executed and delivered by it or each of them, including, but
not limited to, (A) UCC termination statements for all UCC financing statements previously filed by it or any of them or their predecessors, as
secured party and any Loan Party, as debtor and (B) satisfactions and discharges of any mortgages, deeds of trust or deeds to secure debt by
any Loan Party in favor of it or any of them, in form acceptable for recording with the appropriate Governmental Authority;
       (c) all requisite corporate action and proceedings in connection with this Agreement and the other Loan Documents shall be satisfactory
in form and substance to the Administrative Agent, and the Administrative Agent shall have received all information and copies of all
documents, including records of requisite corporate action and proceedings which the Administrative Agent may have requested in connection
therewith, such documents where requested by the Administrative Agent or its counsel to be certified by appropriate corporate officers or
Governmental Authority (and including a copy of the certificate of incorporation or formation of each Loan Party which shall set forth the same
complete corporate name of such Loan Party as is set forth herein and certificates of good standing in (i) the state of organization, (ii) the state
where such Loan Party’s principal place of business is located and (iii) each state where such Loan Party owns material real property, in each
case, certified by the Secretary of State (or equivalent Governmental Authority), the bylaws or articles of each Loan Party and resolutions of
the board of directors (or equivalent governing body) of each Loan Party approving and authorizing the Loan Documents and the transactions
contemplated thereby);
      (d) the Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent, all consents, approvals,
waivers, acknowledgments and other agreements from third persons (including any Governmental Authorities) which the Administrative Agent
may deem necessary or desirable in order to permit, protect and perfect its security interests in and Liens upon the Collateral or to effectuate the
provisions or purposes of this Agreement and the other Loan Documents, including, without limitation, Collateral Access Agreements;
      (e) the Borrowers shall have a cash management system in a place that is reasonably satisfactory to the Administrative Agent and, except
as otherwise required by Schedule 9.15 , the Administrative Agent shall have received, in form and substance satisfactory to the Administrative
Agent, (i) Deposit Account Control Agreements by and among the Administrative Agent, each Loan Party and each bank where such Loan
Party has a deposit account (other than an Excluded Bank Account) and (ii) Investment Property Control Agreements by and among the
Administrative Agent, each Loan Party and each securities intermediary, commodity intermediary or other person that maintains a securities
account (other than an Excluded Bank Account) of such Loan Party, in each case, duly authorized, executed and delivered by the
Administrative Agent, such Loan Party and such bank, intermediary or other person, as applicable;
    (f) the Administrative Agent shall have received (i) all filings and recordations that are necessary to perfect the security interest of the
Administrative Agent in the Collateral and (ii)

                                                                         59
evidence, in form and substance reasonably satisfactory to the Administrative Agent, that upon such filings and recordations, the
Administrative Agent will have a valid perfected first priority Lien upon all of the Collateral;
       (g) the Administrative Agent shall have received and reviewed Lien and judgment search results for the jurisdiction of organization of
each Loan Party; and the jurisdiction of the chief executive office of each Loan Party, which search results shall be in form and substance
satisfactory to the Administrative Agent;
      (h) the Administrative Agent shall have received a duly completed and executed Instruments of Assignments and Notice of Assignment
for each Material Government Contract;
      (i) the Administrative Agent shall have received originals of certificates representing all of the issued and outstanding shares of the
Capital Stock of each Loan Party (other than Holdings) and each Subsidiary of each Loan Party, in each case, together with an undated stock
power for each such certificate duly executed in blank by the registered owner thereof;
      (j) the Administrative Agent shall have received evidence of insurance and loss payee endorsements required hereunder and under the
other Loan Documents, in form and substance satisfactory to the Administrative Agent, and certificates of insurance policies and/or
endorsements naming the Administrative Agent as loss payee and additional insured;
       (k) the Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent, an opinion letter of
legal counsel to the Loan Parties, with respect to the Loan Parties, which such opinions shall permit reliance by successors and permitted
assigns of each of the Administrative Agent and the Lenders;
       (l) the Administrative Agent shall have received a certificate, in form and substance satisfactory to the Administrative Agent, executed
by an authorized officer of the Company certifying that (i) no action, suit, investigation or proceeding is pending or, to the knowledge of such
officer, threatened in any court or before any arbitrator or governmental instrumentality that purports to affect any Loan Party or any
transaction contemplated by the Loan Documents, which action, suit, investigation or proceeding could reasonably be expected to have a
Material Adverse Effect and (ii) immediately after giving effect to this Agreement (including the initial extensions of credit hereunder), the
other Loan Documents, and all the transactions contemplated therein or thereby to occur on such date, (A) no Default or Event of Default
exists, (B) all representations and warranties contained herein and in the other Loan Documents are true and correct, (C) Holdings and its
Subsidiaries, taken as a whole, are Solvent and (D) each Borrower is Solvent;
       (m) the Administrative Agent shall have received (i) a bring-down field exam with respect to the Collateral in form and substance, and
with results, reasonably satisfactory to the Administrative Agent and (ii) an initial Borrowing Base Certificate including, inter alia , calculations
demonstrating that Excess Availability as of the Closing Date is not less than the Threshold Amount, in each case, after giving pro forma effect
to (A) the payment of fees and expenses of the Transactions, (B) the initial Revolving Loans made or to be made and Letters of Credit issued or
to be issued in connection with the Transactions and (C) the payment of the Closing Date Dividend;
      (n) (i) the pro forma capital and ownership structure, the shareholding arrangements and the management of the Company and its
Subsidiaries (and all agreements relating thereto) shall be reasonably satisfactory to the Administrative Agent and (ii) the Administrative Agent
will be reasonably

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satisfied with the terms and amounts of any intercompany loans among the Loan Parties and the flow of funds in connection with the closing;
       (o) the Administrative Agent shall have received, in form and substance reasonably satisfactory thereto, all financial information,
projections, budgets, business plans, cash flows of the Borrowers and such other financial information as the Administrative Agent may
request, including, without limitation, (i) an opening pro forma balance sheet of the Borrowers as of the Closing Date, (ii) (A) projected
monthly balance sheets, income statements, and statements of cash flows for the Borrowers and Excess Availability for the period from the
Closing Date through the end of the fiscal year ending December 31, 2011 and (B) projected quarterly balance sheets, income statements, and
statements of cash flow for the Borrowers and Excess Availability for all periods thereafter during the term of this Agreement, in each case for
subclauses (A) and (B) above, with the results and assumptions set forth therein in form and substance satisfactory to the Administrative Agent
(and not inconsistent with information provided to the Lenders prior to the Closing Date), (iii) any updates or modifications to the projected
financial statements of the Borrowers delivered to the Administrative Agent prior to the Closing Date, (iv) current agings of Accounts, current
perpetual Inventory records and roll forwards of Accounts and Inventory through the Closing Date, together with supporting documentation,
each in form and substance satisfactory to the Administrative Agent and (v) copies of unaudited financial statements of the Borrowers for the
fiscal monthly period ended December 31, 2009;
       (p) the Administrative Agent shall have completed, to its satisfaction, all legal, tax, business and other due diligence with respect to the
business, assets, liabilities, operations and condition (financial or otherwise) of the Company and its Subsidiaries (including, without limitation,
(i) receipt and review of third party inventory appraisals, in form and containing assumptions and appraisal methods satisfactory to the
Administrative Agent by an appraiser acceptable to the Administrative Agent on which the Administrative Agent and the Lenders are permitted
to rely, (ii) field exams of the business and collateral of the Company and its Subsidiaries in accordance with the Administrative Agent’s
customary procedures and practices and as otherwise required by the nature and circumstances of the businesses of the Company and its
Subsidiaries and (iii) receipt and review of all Material Contracts and Material Government Contracts) in scope and determination satisfactory
to the Administrative Agent in its sole discretion;
      (q) the Administrative Agent shall have received, in form and substance reasonably satisfactory thereto, statements demonstrating that
the accounts payable of the Company and its Subsidiaries are at a level and in a condition consistent with historical practices;
       (r) the Administrative Agent shall have received a certificate provided by the Company that sets forth information required by the Patriot
Act including, without limitation, the identity of each Loan Party, the name and address of each Loan Party and other information that will
allow the Administrative Agent or any Lender, as applicable, to identify each Loan Party in accordance with the Act, in form and substance
satisfactory to the Administrative Agent and the Lenders;
      (s) the Administrative Agent shall have received a table setting forth the sources and uses of the initial Revolving Loans or initial Letters
of Credit, accompanied by payment instructions;
      (t) all fees and expenses required to be paid hereunder, including without limitation, under the Fee Letter and all fees and expenses
invoiced on or before the Closing Date shall have been paid in full in cash or will be paid on the Closing Date; and

                                                                         61
       (u) all other documents and legal matters in connection with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Administrative Agent and its counsel.
The Administrative Agent shall notify the Administrative Borrower and the Lenders that the conditions specified in Section 5.1 have been
satisfied or waived and that the Closing Date has occurred, and such notice, absent manifest error, shall be conclusive and binding.
    Section 5.2 Conditions Precedent to All Loans and Letters of Credit . The obligation of the Lenders to make the Loans, including the initial
Loans, or of the Issuing Lender to issue any Letter of Credit, including the initial Letters of Credit, is subject to the further satisfaction of, or
waiver of, immediately prior to or concurrently with the making of each such Loan or the issuance of such Letter of Credit of each of the
following conditions precedent:
       (a) all representations and warranties contained herein and in the other Loan Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Loan or
providing each such Letter of Credit and after giving effect thereto, except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and warranties shall have been true and correct on and as of such earlier
date); provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be
true and correct (after giving effect to any qualification therein) in all respects on such respective dates;
      (b) no Default or Event of Default shall exist or have occurred and be continuing on and as of the date of the making of such Loan or
providing each such Letter of Credit and after giving effect thereto; and
      (c) Total Outstandings (after giving effect to such requested Loan or Letter of Credit) shall not exceed the lesser of (i) the Borrowing
Base and (ii) the Aggregate Commitment.


                                                             ARTICLE 6
                                                 SECURITY INTEREST AND COLLECTION
   Section 6.1 Grant of Security Interest . To secure payment and performance of all Obligations, each Loan Party hereby grants to the
Administrative Agent, for itself and the benefit of Secured Parties, a continuing security interest in, a Lien upon, and a right of set off against,
and hereby pledges to the Administrative Agent, for itself and the benefit of Secured Parties, as security, of each Loan Party’s right, title and
interest in and to the following, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral
security for the respective Obligations at any time granted to or held or acquired by the Administrative Agent or any Secured Party,
collectively, the “Collateral”):
      (a) all Accounts;
      (b) all Inventory;
      (c) all deposit accounts and securities accounts;
      (d) all tax refunds, rebates or other similar payments or credits;

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     (e) all contracts, contract rights, general intangibles, including, without limitation, all payment intangibles and Intellectual Property,
commercial tort claims described on Schedule 6.1 , chattel paper (including tangible and electronic chattel paper), documents, instruments and
supporting obligations;
      (f) all goods, including, without limitation, Equipment (including all vehicles and related certificates of title);
      (g) all Real Property and fixtures;
      (h) all books and records and related data processing software; and
      (i) all documents;
      (j) all letters of credit, banker’s acceptances and similar instruments and including all letter-of-credit rights;
      (k) all supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of
other Collateral, including (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, other Collateral, including returned, repossessed and reclaimed goods, and (iv) deposits by and property of account
debtors or other persons securing the obligations of account debtors;
       (l) all (A) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (B) monies, credit balances, deposits and other property of any Loan Party now or hereafter
held or received by or in transit to the Administrative Agent, any Lender or its Affiliates or at any other depository or other institution from or
for the account of any Loan Party, whether for safekeeping, pledge, custody, transmission, collection or otherwise; and
       (m) all accessions to, substitutions for and all replacements, products and proceeds of any of the items described in clauses (a) through
(l) above, in any form, including without limitation insurance proceeds, all claims against third parties for loss or damage to or destruction of or
other involuntary conversion of any kind or nature of any or all of the other Collateral, letters of credit and letter of credit rights.
   Section 6.2 Perfection of Security Interests .
      (a) Each Loan Party irrevocably and unconditionally authorizes the Administrative Agent (or its agent) to prepare and file at any time
and from time to time such financing statements, together with any amendments and continuations with respect thereto, with respect to the
Collateral naming the Administrative Agent or its designee as the secured party and such Loan Party as debtor, as the Administrative Agent
may require, and including any other information with respect to such Loan Party or otherwise as the Administrative Agent may determine, and
as may be required by Article 9 of the UCC to perfect the security interest granted by such Loan Party to the Administrative Agent under this
Agreement which authorization shall apply to all financing statements filed on, prior to or after the Closing Date, including, without limitation,
any financing statement that describes the Collateral as “all personal property” or “all assets” of such Loan Party or that describes the Collateral
in some other manner as

                                                                           63
the Administrative Agent reasonably deems necessary. Each Loan Party hereby ratifies and approves all financing statements naming the
Administrative Agent or its designee as secured party and such Loan Party, as the case may be, as debtor with respect to the Collateral (and any
amendments with respect to such financing statements) filed by or on behalf of the Administrative Agent prior to the Closing Date and ratifies
and confirms the authorization of the Administrative Agent to file such financing statements (and amendments, if any). Each Loan Party hereby
authorizes the Administrative Agent to adopt on behalf of such Loan Party any symbol required for authenticating any electronic filing. In the
event that the description of the Collateral in any financing statement naming the Administrative Agent or its designee as the secured party and
any Loan Party as debtor includes assets and properties of such Loan Party that do not at any time constitute Collateral, whether hereunder,
under any of the other Loan Documents or otherwise, the filing of such financing statement shall nonetheless be deemed authorized by such
Loan Party to the extent of the Collateral included in such description and it shall not render the financing statement ineffective as to any of the
Collateral or otherwise affect the financing statement as it applies to any of the Collateral. In no event shall any Loan Party at any time file, or
permit or cause to be filed, any continuation, amendment or termination with respect to any financing statement naming the Administrative
Agent or its designee as secured party and such Loan Party as debtor.
       (b) No Loan Party has any chattel paper (whether tangible or electronic) or instruments as of the Closing Date, except as set forth on
Schedule 6.2(b) . In the event that any Loan Party shall be entitled to or shall receive any chattel paper or instrument after the Closing Date,
Loan Parties shall promptly (and in any event within two (2) Business Days or such longer period as the Administrative Agent may agree)
notify the Administrative Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any Loan Party (including by any agent
or representative), such Loan Party shall deliver, or cause to be delivered, to the Administrative Agent, all such tangible chattel paper and
instruments, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to
time specify, in each case except as the Administrative Agent may otherwise agree. At the Administrative Agent’s option, each Loan Party
shall, or the Administrative Agent may at any time on behalf of any Loan Party, cause the original of any such instrument or chattel paper to be
conspicuously marked in a form and manner acceptable to the Administrative Agent with the following legend referring to chattel paper or
instruments as applicable: “This [chattel paper][instrument] is subject to the security interest of Wachovia Bank, National Association, as the
Administrative Agent and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured
party.”
       (c) In the event that any Loan Party shall at any time hold or acquire an interest in any electronic chattel paper or any “transferable
record” (as such term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such Loan Party shall promptly (and in any event within two
(2) Business Days or such longer period as the Administrative Agent may agree) notify the Administrative Agent thereof in writing. Promptly
upon the Administrative Agent’s request, such Loan Party shall take, or cause to be taken, such actions as the Administrative Agent may
request to give the Administrative Agent control of such electronic chattel paper under Section 9-105 of the UCC and control of such
transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be,
Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.
       (d) No Loan Party owns or holds, directly or indirectly, beneficially or as record owner or both, any deposit account, as of the Closing
Date, or other similar account with any bank or other financial institution, as of the Closing Date, in each case except for the deposit accounts
identified on Schedule 8.10 . Subject to Section 6.3(a) , Loan Parties shall not, directly or indirectly, after the Closing Date open, establish or
maintain any deposit account (other than an Excluded Bank Account)

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unless on or before the opening of such deposit account, such Loan Party shall have obtained a Deposit Account Control Agreement with
respect to such deposit account, duly authorized, executed and delivered by such Loan Party and the bank at which such deposit account is
opened and maintained.
      (e) No Loan Party owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the
Closing Date, or have any investment account, securities account, commodity account, futures account or other similar account with any bank
or other financial institution or other securities intermediary, commodity intermediary or futures intermediary as of the Closing Date, in each
case except for investment, securities and commodities accounts identified on Schedule 8.10 and securities identified on Schedule 8.12 .
         (i) In the event that any Loan Party shall be entitled to or shall at any time after the Closing Date hold or acquire any certificated
  securities, such Loan Party shall promptly (and in any event within five (5) Business Days) endorse, assign and deliver the same to the
  Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may
  from time to time specify. If any securities, now or hereafter acquired by any Loan Party are uncertificated and are issued to such Loan Party
  or its nominee directly by the issuer thereof, such Loan Party shall promptly (and in any event within five (5) Business Days) notify the
  Administrative Agent thereof and shall as the Administrative Agent may specify, either cause the issuer to agree to comply with instructions
  from the Administrative Agent as to such securities, without further consent of any Loan Party or such nominee, or arrange for the
  Administrative Agent to become the registered owner of the securities.
         (ii) Loan Parties shall not, directly or indirectly, after the Closing Date open, establish or maintain any investment account, securities
  account, commodity account, futures account or any other similar account (other than an Excluded Bank Account) with any securities
  intermediary, commodity intermediary or futures intermediary unless each of the following conditions is satisfied: the Administrative Agent
  shall have received prior written notice of the intention of such Loan Party to open or establish such account which notice shall specify in
  reasonable detail and specificity the name of the account, the owner of the account, the name and address of the securities intermediary,
  commodity intermediary or futures intermediary at which such account is to be opened or established, the individual at such intermediary
  with whom such Loan Party is dealing and the purpose of the account, the securities intermediary or commodity intermediary (as the case
  may be) where such account is opened or maintained shall be reasonably acceptable to the Administrative Agent, and on or before the
  opening of such investment account, securities account or other similar account with a securities intermediary, commodity intermediary or
  futures intermediary, such Loan Party shall as the Administrative Agent may specify either (A) execute and deliver, and cause to be
  executed and delivered to the Administrative Agent, an Investment Property Control Agreement with respect thereto duly authorized,
  executed and delivered by such Loan Party and such securities intermediary, commodity intermediary or futures intermediary or (B) arrange
  for the Administrative Agent to become the entitlement holder with respect to such investment property on terms and conditions acceptable
  to the Administrative Agent.
       (f) Loan Parties are not the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker’s acceptance or
similar instrument as of the Closing Date. In the event that any Loan Party shall be entitled to or shall receive any right to payment under any
letter of credit, banker’s acceptance or any similar instrument whether as beneficiary thereof or otherwise after the Closing Date, such Loan
Party shall promptly (and in any event within two (2) Business Days or such longer period as the Administrative Agent may agree) notify the
Administrative Agent thereof in writing.

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Such Loan Party shall immediately, as the Administrative Agent may specify, either (i) deliver, or cause to be delivered to the Administrative
Agent, with respect to any such letter of credit, banker’s acceptance or similar instrument, the written agreement of the issuer and any other
nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and substance
reasonably satisfactory to the Administrative Agent, consenting to the assignment of the proceeds of the letter of credit to the Administrative
Agent by such Loan Party and agreeing to make all payments thereon directly to the Administrative Agent or as the Administrative Agent may
otherwise direct or (ii) cause the Administrative Agent to become, at the Borrowers’ expense, the transferee beneficiary of the letter of credit,
banker’s acceptance or similar instrument (as the case may be).
        (g) The Loan Parties do not have any commercial tort claims as of the Closing Date. In the event that any Loan Party shall at any time
after the Closing Date have any such commercial tort claims (excluding any commercial tort claim where a Responsible Officer of such Loan
Party has reasonably determined that the amount likely to be recovered in respect of such claim will not exceed $500,000), such Loan Party
shall promptly (and in any event within two (2) Business Days or such longer period as the Administrative Agent may agree) notify the
Administrative Agent thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort
claim and (ii) include the express grant by such Loan Party to the Administrative Agent of a security interest in such commercial tort claim
(and the proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by such Loan
Party to the Administrative Agent shall be deemed to constitute such grant to the Administrative Agent. Upon the sending of such notice, any
commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein. Without limiting the
authorization of the Administrative Agent provided in Section 6.2(a) or otherwise arising by the execution by such Loan Party of this
Agreement or any of the other Loan Documents, the Administrative Agent is hereby irrevocably authorized from time to time and at any time
to file such financing statements naming the Administrative Agent or its designee as secured party and such Loan Party as debtor, or any
amendments to any financing statements, covering any such commercial tort claim as Collateral. In addition, each Loan Party shall promptly
upon the Administrative Agent’s request, execute and deliver, or cause to be executed and delivered, to the Administrative Agent such other
agreements, documents and instruments as the Administrative Agent may reasonably require in connection with such commercial tort claim.
      (h) Material Government Contracts .
         (i) No Loan Party is party to any Material Government Contract except for Material Government Contracts identified on
  Schedule 8.15 (as such schedule may be updated from time to time after the Closing Date to reflect (x) the addition of any new Material
  Government Contracts entered into after the Closing Date and (y) the deletion of any Material Government Contracts upon the expiration or
  termination thereof after the Closing Date or if any scheduled Government Contract is no longer a Material Government Contract). In the
  event that any Loan Party shall at any time after the Closing Date become a party to any Material Government Contract, such Loan Party
  shall promptly (and in any event within five (5) Business Days) deliver to the Administrative Agent (A) a copy of such Material
  Government Contract and (B) a duly executed and completed Instrument of Assignment and Notice of Assignment with respect to such
  Material Government Contract. In addition, in the event that any Material Government Contract is terminated or amended in any manner
  materially adverse to the Company and its Subsidiaries, the Loan Parties shall promptly (and in any event within five (5) Business Days)
  notify the Administrative Agent thereof in accordance with Section 9.6(b)(ii) .
        (ii) If (A) at any time, Excess Availability is less than the Filing Threshold Amount, (B) a Material Event of Default shall have
  occurred and be continuing or (C) any other

                                                                        66
   Event of Default (other than a Material Event of Default) shall have occurred and be continuing without waiver or cure for sixty
   (60) consecutive days after the occurrence thereof (which sixty (60) consecutive days shall be inclusive of any applicable grace period with
   respect to such Event of Default required to elapse in order for the corresponding Default, if any, to mature into such Event of Default), then,
   in any such case, the Administrative Agent may deliver all Instruments of Assignment and all Notices of Assignment to the applicable U.S.
   Governmental Authority for each Material Government Contract and the Loan Parties shall use their commercially reasonable efforts to
   have such Notices of Assignment acknowledged in writing by the applicable U.S. Governmental Authority.
      (i) Except as set forth in Schedule 8.2 , the Loan Parties do not have any goods, documents of title or other Collateral in the custody,
control or possession of a third party as of the Closing Date, except for goods located in the United States in transit to a location of a Loan
Party set forth in Schedule 8.2 in the ordinary course of business of such Loan Party in the possession of the carrier transporting such goods. In
the event that any goods, documents of title or other Collateral are at any time after the Closing Date in the custody, control or possession of
such carriers, Loan Parties shall promptly (and in any event within two (2) Business Days or such longer period as the Administrative Agent
may agree) notify the Administrative Agent thereof in writing. Promptly upon the Administrative Agent’s request, Loan Parties shall take all
reasonable steps to deliver to the Administrative Agent a Collateral Access Agreement duly authorized, executed and delivered by such person
and the Loan Party that is the owner of such Collateral.
       (j) Loan Parties shall take any other actions reasonably requested by the Administrative Agent from time to time to cause the attachment,
perfection and first priority of, and the ability of the Administrative Agent to enforce, the security interest of the Administrative Agent in any
and all of the Collateral (subject only to the Liens permitted under Section 10.2 ), including, without limitation, (i) executing, delivering and,
where appropriate, filing financing statements and amendments relating thereto under the UCC and other applicable law, to the extent, if any,
that any Loan Party’s signature thereon is required therefor, (ii) causing the Administrative Agent’s name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Administrative Agent
to enforce, the security interest of the Administrative Agent in such Collateral, (iii) complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or
ability of the Administrative Agent to enforce, the security interest of the Administrative Agent in such Collateral, and (iv) obtaining the
consents and approvals of any Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other
person obligated on Collateral.
   Section 6.3 Collection of Accounts .
      (a) The Borrowers shall promptly (and in any event within two (2) Business Days or such longer period as the Administrative Agent may
agree) deposit and direct their respective account debtors to directly remit all payments on Accounts and all payments constituting proceeds of
Inventory or other Collateral in the identical form in which such payments are made, whether by cash, check or other manner, into one or more
deposit accounts of the Borrowers subject to a Deposit Account Control Agreement (the “ Blocked Accounts ”). Each Deposit Account Control
Agreement entered into with respect to a Blocked Account shall provide that all payments to the Blocked Accounts shall be swept daily to the
Administrative Agent Payment Account. Each Loan Party agrees that all payments made to such Blocked Accounts or other funds received and
collected by the Administrative Agent or any Lender, whether in respect of the Accounts, as proceeds of Inventory or other Collateral or
otherwise shall be treated as payments to the Administrative Agent and the Lenders in respect of the Obligations and

                                                                           67
therefore shall constitute the property of the Administrative Agent and the Lenders to the extent of then outstanding Obligations. All payments
to the Blocked Accounts shall be swept daily to the Administrative Agent Payment Account and applied to repay the Obligations in the manner
set forth in Section 3.5 . Notwithstanding the foregoing, amounts on deposit in the MAR-VEL Bank Account shall not be required to be swept
to the Administrative Agent Payment Account until an Event of Default shall have occurred and be continuing.
      (b) For purposes of calculating (i) the amount of the Loans available to each Borrower and (ii) interest on the Obligations, such payments
will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by the Administrative Agent of
immediately available funds in the Administrative Agent Payment Account provided such payments and notice thereof are received in
accordance with the Administrative Agent’s usual and customary practices as in effect from time to time and within sufficient time to credit
such Borrower’s loan account on such day, and if not, then on the next Business Day.
       (c) The Borrowers, promptly (and in any event within two (2) Business Days or such longer period as the Administrative Agent may
agree) upon the request of the Administrative Agent, shall deliver to the Administrative Agent a schedule of all deposit accounts (other than
deposit accounts described in clause (A) of the definition of Excluded Bank Account), that are maintained by the Loan Parties, which schedule
shall include, with respect to each depository (i) the name and address of such depository, (ii) the account name and number(s) maintained with
such depository and (iii) a contact person at such depository.
       (d) Each Loan Party and their respective employees, agents and Subsidiaries shall, acting as trustee for the Administrative Agent,
receive, as the property of the Administrative Agent, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of
Collateral which come into their possession or under their control and immediately upon receipt thereof, shall deposit or cause the same to be
deposited in a Blocked Account, or remit the same or cause the same to be remitted, in kind, to the Administrative Agent. In no event shall the
same be commingled with any Loan Party’s other funds. The Borrowers agree to reimburse the Administrative Agent on demand for any
amounts owed or paid to any bank or other financial institution at which a Blocked Account or any other deposit account or investment account
is established or any other bank, financial institution or other person involved in the transfer of funds to or from the Blocked Accounts arising
out of the Administrative Agent’s payments to or indemnification of such bank, financial institution or other person. The obligations of the
Borrowers to reimburse the Administrative Agent for such amounts pursuant to this Section 6.3 shall survive the termination of this
Agreement.


                                                         ARTICLE 7
                                            COLLATERAL REPORTING AND COVENANTS
   Section 7.1 Collateral Reporting .
    (a) The Administrative Borrower shall provide the Administrative Agent with the following documents in a form satisfactory to the
Administrative Agent:
         (i) as soon as available after the end of each month (but in any event within ten (10) Business Days after the end thereof), on a
  monthly basis (A) a Borrowing Base Certificate, (B) perpetual inventory reports and inventory reports by location and category (and
  including the amounts of Inventory and the Value thereof at any leased locations and at premises of warehouses, processors or other third
  parties), (C) agings of accounts receivable (together with

                                                                       68
  a reconciliation to the previous month’s aging and general ledger) and agings of accounts payable (and including information indicating the
  amounts owing to owners and lessors of leased premises, warehouses, processors and other third parties from time to time in possession of
  any Collateral) and (D) schedules of sales made, credits issued and cash received, as well as purchases made; and
         (ii) such other reports as to the Collateral as the Administrative Agent shall reasonably request from time to time.
       (b) If any Loan Party’s records or reports of the Collateral are prepared or maintained by an accounting service, contractor, shipper or
other agent, such Loan Party hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such records, reports, and
related documents to the Administrative Agent and to follow the Administrative Agent’s instructions with respect to further services at any
time that an Event of Default exists or has occurred and is continuing.
       (c) If Excess Availability falls below the Threshold Amount or an Event of Default exists or has occurred and is continuing, the
Administrative Agent will require more frequent reporting of certain of the foregoing information set forth in this Section 7.1 , such frequency
to be determined in the Administrative Agent’s reasonable discretion (including, without limitation, delivery of weekly Borrowing Base
Certificates).
   Section 7.2 Accounts Covenants .
       (a) The Administrative Borrower shall notify the Administrative Agent promptly of: (i) any material delay in any Borrower’s
performance of any of its material obligations to any account debtor or the assertion of any material claims, offsets, defenses or counterclaims
by any account debtor, or any material disputes with account debtors, in each case, where the amount in controversy is $500,000 or more, or
any settlement, adjustment or compromise thereof, (ii) all material adverse information known to any Loan Party relating to the financial
condition of any account debtor obligated in respect of Accounts having an aggregate value of $500,000 or more and (iii) any event or
circumstance which, to the knowledge of any Responsible Officer of any Loan Party, would cause the Administrative Agent to consider any
then existing Accounts having a value of $500,000 or more as no longer constituting Eligible Accounts. No credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account debtor, except in the ordinary course of a Loan Party’s business
in accordance with practices and policies or as otherwise disclosed to the Administrative Agent. So long as no Event of Default has occurred
and is continuing, Loan Parties may settle, adjust or compromise any claim, offset, counterclaim or dispute with any account debtor. At any
time that an Event of Default has occurred and is continuing, the Administrative Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account debtors or grant any credits, discounts or allowances.
      (b) The Administrative Agent shall have the right at any time or times, in the name of any applicable Loan Party, in the Administrative
Agent’s name or in the name of a nominee of the Administrative Agent, to verify the validity, amount or any other matter relating to any
Accounts or other Collateral, by mail, telephone, facsimile transmission or otherwise; provided , that so long as no Default or Event of Default
has occurred and is continuing, prior to conducting any such verifications, the Administrative Agent shall consult with the Borrowers and the
Administrative Agent may use third party government billing systems (“My Invoice”) or another similar system to make such verifications.
   Section 7.3 Inventory Covenants; Appraisals. With respect to the Inventory :

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      (a) each Loan Party shall at all times maintain inventory records reasonably satisfactory to the Administrative Agent, keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity of Inventory and such Loan Party’s cost therefore and daily
withdrawals therefrom and additions thereto;
      (b) Loan Parties shall conduct a physical count of the Inventory at least once each year but at any time or times as the Administrative
Agent may request upon the occurrence and during the continuation of an Event of Default or if Excess Availability falls below the Threshold
Amount, and promptly following such physical inventory shall supply the Administrative Agent with a report in the form and with such
specificity as may be satisfactory to the Administrative Agent concerning such physical count;
       (c) Loan Parties shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of the
Administrative Agent, except for sales of Inventory in the ordinary course of its business and except to move Inventory directly from one
location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Loan
Party which is in transit to the locations set forth or permitted herein;
      (d) From time to time as requested by the Administrative Agent, at the cost and expense of the Borrowers, the Administrative Agent shall
be entitled to obtain an Inventory appraisal, which appraisal shall be in form, scope and methodology acceptable to the Administrative Agent
and such appraisal shall be addressed to the Administrative Agent and shall expressly permit reliance thereon by Administrative Agent and the
Lenders; provided , that the Borrowers shall be required to incur the costs and expenses of not more than one (1) such appraisal during any
twelve (12) consecutive fiscal month period; provided , further , that if Excess Availability is less than the Threshold Amount or upon the
occurrence and during the continuation of an Event of Default, there shall be no limit on the number of appraisals which may be requested by
the Administrative Agent, each at the Borrowers’ expense;
      (e) Loan Parties shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with applicable laws (including the requirements of the Federal Fair Labor Standards
Act of 1938, as amended and all rules, regulations and orders related thereto);
      (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof;
      (g) each Loan Party assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the
Inventory;
      (h) Loan Parties shall keep the Inventory in good and marketable condition;
     (i) Loan Parties shall not sell Inventory to any customer on approval, or any basis which entitles the customer to return or may obligate
any Loan Party to repurchase such Inventory; and
      (j) Loan Parties shall not, without prior written notice to the Administrative Agent or the specific identification of such Inventory in a
report with respect thereto provided by the Administrative Borrower to the Administrative Agent pursuant to Section 7.1(a) , acquire or accept
any Inventory on consignment or approval.
  Section 7.4 Equipment and Real Property Covenants . With respect to the Equipment and Real Property: (a) Loan Parties shall keep the
Equipment in good order, repair, running and marketable

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condition (ordinary wear and tear excepted); (b) Loan Parties shall use the Equipment and Real Property with all reasonable care and caution
and in accordance with applicable standards of any insurance and in conformity with all applicable laws; (c) the Equipment is and shall be used
in the business of Loan Parties and not for personal, family, household or farming use; (d) Loan Parties shall not remove any Equipment from
the locations set forth or permitted herein, except to the extent necessary to have any Equipment repaired or maintained in the ordinary course
of its business or to move Equipment directly from one location set forth or permitted herein to another such location and except for the
movement of motor vehicles used by or for the benefit of such Loan Party in the ordinary course of business; (e) the Equipment is now and
shall remain personal property and Loan Parties shall not permit any of the Equipment to be or become a part of or affixed to real property; and
(f) each Loan Party assumes all responsibility and liability arising from the use of the Equipment and Real Property.
    Section 7.5 Power of Attorney . Each Loan Party hereby irrevocably designates and appoints the Administrative Agent (and all persons
designated by the Administrative Agent) as such Loan Party’s true and lawful attorney-in-fact, and authorizes the Administrative Agent, in
such Loan Party’s or the Administrative Agent’s name, to: (a) at any time an Event of Default has occurred and is continuing (i) demand
payment on Accounts or other Collateral, (ii) enforce payment of Accounts by legal proceedings or otherwise, (iii) exercise all of such Loan
Party’s rights and remedies to collect any Account or other Collateral, (iv) sell or assign any Account upon such terms as permitted by
applicable law, for such amount and at such time or times as the Administrative Agent deems advisable, (v) settle, adjust, compromise, extend
or renew an Account, (vi) discharge and release any Account, (vii) prepare, file and sign such Loan Party’s name on any proof of claim in
bankruptcy or other similar document against an account debtor or other obligor in respect of any Accounts or other Collateral, (viii) notify the
post office authorities to change the address for delivery of remittances from account debtors or other obligors in respect of Accounts or other
proceeds of Collateral to an address designated by the Administrative Agent, and open and dispose of all mail addressed to such Loan Party and
handle and store all mail relating to the Collateral; (ix) endorse such Loan Party’s name upon any chattel paper, document, instrument, invoice,
or similar document or agreement relating to any Account or any goods pertaining thereto or any other Collateral, including any warehouse or
other receipts, or bills of lading and other negotiable or non-negotiable documents, (x) clear Inventory the purchase of which was financed with
a Letter of Credit through U.S. Customs or foreign export control authorities in such Loan Party’s name, the Administrative Agent’s name or
the name of the Administrative Agent’s designee, and to sign and deliver to customs officials powers of attorney in such Loan Party’s name for
such purpose, and to complete in such Loan Party’s or the Administrative Agent’s name, any order, sale or transaction, obtain the necessary
documents in connection therewith and collect the proceeds thereof; (xi) sign such Loan Party’s name on any verification of Accounts and
notices thereof to account debtors or any secondary obligors or other obligors in respect thereof and (xii) do all acts and things which are
necessary, in the Administrative Agent’s determination, to fulfill such Loan Party’s obligations under this Agreement and the other Loan
Documents and (b) at any time, to (i) take control in any manner of any item of payment in respect of Accounts or constituting Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise received by the Administrative Agent or any Lender, (ii) have access
to any lockbox or postal box into which remittances from account debtors or other obligors in respect of Accounts or other proceeds of
Collateral are sent or received, and (iii) endorse such Loan Party’s name upon any items of payment in respect of Accounts or constituting
Collateral or otherwise received by the Administrative Agent and any Lender and deposit the same in the Administrative Agent Payment
Account for application to the Obligations. Each Loan Party hereby releases the Administrative Agent and the Lenders and their respective
officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except to the extent resulting from the Administrative Agent’s or any Lender’s own gross negligence or
willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

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    Section 7.6 Right to Cure . The Administrative Agent may, upon notice to the Administrative Borrower and upon the occurrence and during
the continuation of an Event of Default, (a) cure any default by any Loan Party under any material agreement with a third party that affects the
Collateral, its value or the ability of the Administrative Agent to collect, sell or otherwise dispose of the Collateral or the rights and remedies of
the Administrative Agent or any Lender therein or the ability of any Loan Party to perform its obligations hereunder or under any of the other
Loan Documents, (b) pay or bond on appeal any judgment entered against any Loan Party, (c) discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the Collateral and (d) pay any amount, incur any expense or perform any act
which, in the Administrative Agent’s judgment, is necessary or appropriate to preserve, protect, insure or maintain the Collateral and the rights
of the Administrative Agent and the Lenders with respect thereto. The Administrative Agent may add any amounts so expended to the
Obligations and charge any Borrower’s account therefor, such amounts to be repayable by the Borrowers on demand. The Administrative
Agent and the Lenders shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of any Loan Party. Any payment made or other action taken by the Administrative Agent or any Lender
under this Section 7.6 shall be without prejudice to any right to assert an Event of Default hereunder and to proceed accordingly.
   Section 7.7 Access to Premises; Field Audits . From time to time as requested by the Administrative Agent, at the cost and expense of the
Borrowers, (a) the Administrative Agent or its designee shall have complete access to all of each Loan Party’s premises during normal business
hours and after reasonable prior notice to the Administrative Borrower, or at any time and without notice to the Administrative Borrower if an
Event of Default has occurred and is continuing, for the purposes of inspecting, verifying and auditing the Collateral and all of each Loan
Party’s books and records, including the Records, and (b) each Loan Party shall promptly furnish to the Administrative Agent such copies of
such books and records or extracts therefrom as the Administrative Agent may request, and the Administrative Agent or any Lender or the
Administrative Agent’s designee may use during normal business hours such of any Loan Party’s personnel, equipment, supplies and premises
as may be reasonably necessary for the foregoing and, if an Event of Default has occurred and is continuing, for the collection of Accounts and
realization of other Collateral. In addition to the foregoing, the Administrative Agent shall be permitted to conduct no more than two (2) field
examinations (it being understood that for the purposes hereof a single field examination may consist of examinations conducted at multiple
relevant sites and involving each of the relevant Loan Parties and their assets) during any twelve (12) consecutive fiscal month period, each at
the Borrowers’ expense; provided that if Excess Availability is less than the Threshold Amount or upon the occurrence and during the
continuation of an Event of Default, there shall be no limit on the number of field examinations which may be conducted by the Administrative
Agent, each at the Borrowers’ expense.


                                                           ARTICLE 8
                                                 REPRESENTATIONS AND WARRANTIES
   Each Loan Party, on behalf of itself and each of its Subsidiaries, hereby represents and warrants to the Administrative Agent, the Lenders
and the Issuing Lender the following (which shall survive the execution and delivery of this Agreement):
   Section 8.1 Corporate Existence, Power and Authority . Each Loan Party and each Subsidiary thereof is a corporation, limited liability
company, limited partnership or other legal entity duly organized and in good standing under the laws of its jurisdiction of organization and is
duly qualified as a foreign corporation, limited liability company, limited partnership, or other legal entity and in good standing in all states or
other jurisdictions where the nature and extent of the business transacted by it or the ownership of assets makes such qualification necessary,
except for those jurisdictions in which the

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failure to so qualify would not have a Material Adverse Effect. The execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereunder and thereunder (a) are all within each Loan Party’s corporate,
limited liability company, limited partnership or other comparable powers, (b) have been duly authorized, (c) are not in contravention of law or
the terms of any Loan Party’s certificate of incorporation, certificate of formation, bylaws, operating agreement, limited partnership agreement
or other organizational documentation, or any indenture, agreement, undertaking or Material Contract to which any Loan Party is a party or by
which any Loan Party or its property are bound and (d) will not result in the creation or imposition of, or require or give rise to any obligation
to grant, any Lien upon any property of any Loan Party (other than Liens in favor of the Administrative Agent on behalf of itself and the
Secured Parties). This Agreement and the other Loan Documents to which any Loan Party is a party constitute legal, valid and binding
obligations of such Loan Party enforceable in accordance with their respective terms; provided that the enforceability hereof and thereof is
subject in each case to general principles of equity and to bankruptcy, insolvency and similar laws affecting the enforcement of creditors’ rights
generally.
   Section 8.2 Name; State of Organization; Chief Executive Office; Collateral Locations .
      (a) The exact legal name of each Loan Party as of the Closing Date is as set forth on the signature page of this Agreement and in
Schedule 8.2 . No Loan Party has, during the five (5) year period ending on the date of this Agreement, been known by or used any other
corporate or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or
acquired any of its property or assets out of the ordinary course of business, except as set forth in Schedule 8.2 .
      (b) As of the Closing Date, each Loan Party is an organization of the type and organized in the jurisdiction set forth in Schedule 8.2 .
Schedule 8.2 accurately sets forth as of the Closing Date the organizational identification number of each Loan Party or accurately states that
such Loan Party has none and accurately sets forth the federal employer identification number of each Loan Party.
      (c) As of the Closing Date, the chief executive office and primary mailing address of each Loan Party and each Loan Party’s Records
concerning Accounts and all other Collateral locations are set forth in Schedule 8.2 .
    Section 8.3 Financial Statements; No Material Adverse Effect . All financial statements relating to the Borrowers which have been or may
hereafter be delivered by any Borrower to the Administrative Agent and the Lenders have been prepared on a combined basis in accordance
with GAAP (except as to any (a) monthly financial statements and (b) quarterly financial statements, to the extent such quarterly statements are
subject to normal quarter-end and year-end adjustments and do not include any notes) and fairly present in all material respects the combined
financial condition and the results of operation of the Borrowers as at the dates and for the periods set forth therein. Since December 31, 2008,
there has been no act, condition or event having, or that could reasonably be expected to have, a Material Adverse Effect. The projections that
have been delivered to the Administrative Agent pursuant to Section 5.1(o) or any projections hereafter delivered to the Administrative Agent
have been prepared in light of the past operations of the businesses of Borrowers and are based upon estimates and assumptions stated therein,
all of which the Borrowers have determined to be reasonable and fair in light of then current conditions and current facts and reflect the good
faith and reasonable estimates of the Borrowers of the future financial performance of the Borrowers and of the other information projected
therein for the periods set forth therein (it being understood that actual results may differ from those set forth in such projections).

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   Section 8.4 Priority of Liens; Title to Properties . The Liens granted to the Administrative Agent under this Agreement and the other Loan
Documents constitute valid and perfected first priority Liens and security interests in and upon the Collateral, subject only to the Liens
permitted under Section 10.2 . Each Loan Party has good and marketable fee simple title to or valid leasehold interests in all of its Real
Property and good, valid and merchantable title to all of its other properties and assets, subject only to the Liens permitted under Section 10.2 .
    Section 8.5 Tax Returns . Each Loan Party and each Subsidiary thereof has filed, or caused to be filed, in a timely manner all Federal and all
material State, county, local and foreign income, excise, property and other material tax returns which are required to be filed by it. All
information in such tax returns, reports and declarations is complete and accurate in all material respects. Each Loan Party and each Subsidiary
thereof has paid or caused to be paid all taxes due and payable or claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to such Loan Party or such
Subsidiary and with respect to which adequate reserves have been set aside on its books. Adequate provision has been made for the payment of
all accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed.
   Section 8.6 Litigation . Except for matters existing on the Closing Date and as set forth in Schedule 8.6 , (a) there is no investigation by any
Governmental Authority pending, or to the knowledge of any Responsible Officer of any Loan Party threatened, against or affecting any Loan
Party, its or their assets or business and (b) there is no action, suit, proceeding or claim by any Person pending, or to the best of any Loan
Party’s knowledge threatened, against any Loan Party or any Subsidiary thereof or its or their assets or goodwill, or against or affecting any
transactions contemplated by this Agreement before any court or arbitrator or any governmental body, agency or official, in each case, which if
adversely determined against such Loan Party has or could reasonably be expected to have a Material Adverse Effect.
   Section 8.7 Compliance with Other Agreements and Applicable Laws .
      (a) The Loan Parties and their Subsidiaries are not in default in any respect under, or in violation in any respect of the terms of, any
Material Contract or any Material Government Contract. Loan Parties are in compliance with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority relating to their respective businesses, including, without limitation, those set forth in or
promulgated pursuant to the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended,
ERISA, the Code, as amended, and the rules and regulations thereunder, and all Environmental Laws, except for noncompliance which could
not reasonably be expected to have a Material Adverse Effect.
      (b) The Loan Parties and their Subsidiaries have obtained all permits, licenses, approvals, consents, certificates, orders or authorizations
of any Governmental Authority required for the lawful conduct of its business (the “ Permits ”), except for those the failure to obtain could not
reasonably be expected to have a Material Adverse Effect. All such Permits are valid and subsisting and in full force and effect. There are no
actions, claims or proceedings pending or, to the knowledge of any Responsible Officer of any Loan Party, threatened that seek the revocation,
cancellation, suspension or modification of any such Permits.
   Section 8.8 Environmental Compliance .
      (a) No Loan Party and no Subsidiary thereof has generated, used, stored, treated, transported, manufactured, handled, produced or
disposed of any Hazardous Materials, on or off its

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premises (whether or not owned by it) in any manner which at any time violates in any respect any applicable Environmental Law or Permit,
except any violation which could not reasonably be expected to have a Material Adverse Effect. The operations of each Loan Party and each
Subsidiary thereof comply with all Environmental Laws and all Permits, except for noncompliance which could not reasonably be expected to
have a Material Adverse Effect.
       (b) There has been no investigation by any Governmental Authority or any proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person nor is any pending or, to the knowledge of any Responsible Officer of any Loan
Party, threatened, with respect to any non-compliance with or violation of the requirements of any Environmental Law by any Loan Party or
any Subsidiary thereof or the release, spill or discharge, threatened or actual, of any Hazardous Material or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials or any other environmental, health or
safety matter, which adversely affects or could reasonably be expected to adversely affect in any respect any Loan Party or its or their business,
operations or assets or any properties at which such Loan Party has transported, stored or disposed of any Hazardous Materials and which is
likely to result in costs or liabilities to the Loan Parties in excess of $500,000.
       (c) Neither any Loan Party nor any of its Subsidiaries has any material liability (contingent or otherwise) in connection with a release,
spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials.
       (d) Loan Parties and their Subsidiaries have all Permits required to be obtained or filed in connection with the operations of the Loan
Parties under all Environmental Laws and all of such licenses, certificates, approvals or similar authorizations and other Permits are valid and
in full force and effect, except, in each case where the failure to so obtain or maintain such Permits could not reasonably be expected to have a
Material Adverse Effect.
   Section 8.9 Employee Benefits .
       (a) As of the Closing Date, each Plan is set forth in Schedule 8.9 . Each Plan is in compliance with the applicable provisions of ERISA,
the Code and other Federal or State law, except where any noncompliance could not reasonably be expected to have a Material Adverse Effect.
Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the Internal
Revenue Service and to the knowledge of any Responsible Officer of any Loan Party, nothing has occurred which would cause the loss of such
qualification. Each Borrower and its ERISA Affiliates have made all required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect
to any Plan.
      (b) There are no pending, or to the knowledge of any Responsible Officer of any Loan Party, threatened claims, actions or lawsuits, or
action by any Governmental Authority, with respect to any Plan. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that could reasonably be expected to result in material liability to any Loan Party.
        (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) except as set forth in Schedule 8.9 , based on the latest
valuation of each Pension Plan and on the actuarial methods and assumptions employed for such valuation (determined in accordance with the
assumptions used for funding such Pension Plan pursuant to Section 412 of the Code), the aggregate current value of accumulated benefit
liabilities of such Pension Plan under Section 4001(a)(16) of ERISA does not exceed

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the aggregate current value of the assets of such Pension Plan; (iii) each Loan Party, and their ERISA Affiliates, have not incurred and do not
reasonably expect to incur, any liability under Title IV of ERISA with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) each Loan Party, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any
liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) each Loan Party, and their ERISA Affiliates, have not engaged
in a transaction that would be subject to Section 4069 or 4212(c) of ERISA.
   Section 8.10 Bank Accounts . As of the Closing Date, all of the deposit accounts, investment accounts, securities accounts, commodity
accounts, futures accounts or any other similar accounts in the name of or used by any Loan Party maintained at any bank or other financial
institution or securities intermediary are set forth in Schedule 8.10 .
    Section 8.11 Intellectual Property . Each Loan Party owns or licenses or otherwise has the right to use all Intellectual Property necessary for
the operation of its business as presently conducted or presently proposed by its management to be conducted. As of the Closing Date, Loan
Parties do not have any Intellectual Property registered, or subject to pending applications, in the United States Patent and Trademark Office or
any similar office or agency in the United States, any State thereof, any political subdivision thereof or in any other country, other than those
described in Schedule 8.11 and have not granted any licenses with respect thereto other than as set forth in Schedule 8.11 . To the knowledge of
the Responsible Officers of the Loan Parties, no event has occurred which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. To the knowledge of the Responsible Officers of the Loan Parties, no slogan or other
advertising device, product, process, method, substance or other Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by any Loan Party infringes any patent, trademark, servicemark, tradename, copyright,
license or other Intellectual Property owned by any other Person presently and no claim or litigation is pending or threatened against or
affecting any Loan Party contesting its right to sell or use any such Intellectual Property. Schedule 8.11 sets forth all of the agreements or other
arrangements of each Loan Party pursuant to which such Loan Party has a license or other right to use any trademarks, logos, designs,
representations or other Intellectual Property owned by another person as in effect on the Closing Date and the dates of the expiration of such
agreements or other arrangements of such Loan Party as in effect on the Closing Date (collectively, together with such agreements or other
arrangements as may be entered into by any Loan Party after the Closing Date, collectively, the “License Agreements” and individually, a
“License Agreement”). No trademark, servicemark, copyright or other Intellectual Property at any time used by any Loan Party which is owned
by another person, or owned by such Loan Party subject to any Lien in favor of any person other than the Administrative Agent, is affixed to
any Eligible Inventory, except (a) to the extent permitted under the term of the license agreements listed on Schedule 8.11 and (b) to the extent
the sale of Inventory to which such Intellectual Property is affixed is permitted to be sold by such Loan Party under applicable law (including
the United States Copyright Act of 1976).
   Section 8.12 Subsidiaries; Affiliates; Capitalization; Solvency .
      (a) As of the Closing Date, no Loan Party has any direct or indirect Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 .
      (b) Each Loan Party is the record and beneficial owner of all of the issued and outstanding shares of Capital Stock of each of its
Subsidiaries listed in Schedule 8.12 as being owned by such Loan Party and there are no proxies, irrevocable or otherwise, with respect to such
shares and, except as set forth in Schedule 8.12 , no equity securities of any of the Loan Parties are or may become

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required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Loan Party is or may become bound to issue additional shares of it
Capital Stock or securities convertible into or exchangeable for such shares.
      (c) As of the Closing Date, all of the issued and outstanding shares of Capital Stock of each Loan Party are directly and beneficially
owned and held by the persons indicated in Schedule 8.12 , and in each case all of such shares have been duly authorized, in the case of
corporations, and are fully paid and non-assessable, and are free and clear of all claims, liens, pledges and encumbrances of any kind, except as
disclosed in writing to the Administrative Agent prior to the Closing Date.
       (d) (i) Holdings and its Subsidiaries, taken as a whole, are Solvent and (ii) each Borrower is Solvent and, in each case, will continue to be
Solvent immediately after the creation or incurrence from time to time of the Obligations, the security interests of the Administrative Agent and
the other transactions contemplated hereunder.
   Section 8.13 Labor Disputes .
      (a) Set forth in Schedule 8.13 is a list (including dates of termination) of all collective bargaining or similar agreements between or
applicable to each Loan Party and any union, labor organization or other bargaining agent in respect of the employees of any Loan Party on the
Closing Date.
       (b) There is (i) no significant unfair labor practice complaint pending against any Loan Party or, to the knowledge of any Responsible
Officer of any Loan Party, threatened against it, before the National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining agreement is pending on the Closing Date against any Loan Party or, to
the knowledge of any Responsible Officer of any Loan Party, threatened against it, and (ii) no significant strike, labor dispute, slowdown or
stoppage is pending against any Loan Party or, to the knowledge of any Responsible Officer of any Loan Party, threatened against any Loan
Party.
    Section 8.14 Burdensome Restrictions . Except as permitted in Section 10.7 , there are no contractual or consensual restrictions on any Loan
Party or any of its Subsidiaries that (a) prohibit or otherwise restrict the transfer of cash or other assets (i) between any Loan Party and any of
its Subsidiaries or (ii) between any Subsidiaries of any Loan Party or (b) prohibit or otherwise restrict the ability of any Loan Party or any of its
Subsidiaries to incur Indebtedness or grant Liens to the Administrative Agent or any Lender in the Collateral.
   Section 8.15 Material Contracts and Material Government Contracts . Schedule 8.15 (as such schedule may be updated from time to time
after the Closing Date) sets forth all Material Contracts and Material Government Contracts to which any Loan Party is a party or is bound. The
Loan Parties have delivered true, correct and complete copies of all Material Contracts and Material Government Contracts (in each case, with
redactions as deemed appropriate) in existence on the Closing Date to the Administrative Agent. No Loan Party is in breach of or in default
under any Material Contract or Material Government Contract.
  Section 8.16 Real Property . Schedule 8.16 contains a list of all Real Property owned or leased by any Loan Party as of the Closing Date.
Each Loan Party has (a) good and marketable fee simple title to or valid leasehold interests in all of its Real Property and (b) good and
marketable title to all of its other

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property (including without limitation, all property in each case as reflected in the financial statements delivered to the Administrative Agent
hereunder), and in case of each (a) and (b) subject to no Liens other than permitted Liens pursuant to Section 10.2 . Each Loan Party and its
Subsidiaries enjoy peaceful and undisturbed possession of all its Real Property and there is no pending or, to the knowledge of any Responsible
Officer of any Loan Party, threatened condemnation proceeding relating to any such Real Property. No material default exists under any leases
evidencing any leasehold interests of the Loan Parties (the “Leases”). All of the Real Property owned, leased or used by each Loan Party or any
of its Subsidiaries in the conduct of their respective businesses is (i) structurally sound with no known defects which could reasonably be
expected to have a Material Adverse Effect, (ii) in good operating condition and repair, subject to ordinary wear and tear, (iii) not in need of
maintenance or repair except for ordinary, routine maintenance and repair the cost of which is immaterial, (iv) sufficient for the operation of the
businesses of each Loan Party and its Subsidiaries as currently conducted, and (v) in compliance with all applicable laws, ordinances, orders,
regulations and other requirements (including applicable zoning, environmental, motor vehicle safety, occupational safety and health laws and
regulations) relating thereto, except where any noncompliance could not reasonably be expected to have a Material Adverse Effect.
   Section 8.17 Payable Practices . No Loan Party has made any material change in its historical accounts payable practices from those in
effect immediately prior to the Closing Date.
    Section 8.18 Accuracy and Completeness of Information . All information furnished by or on behalf of any Loan Party in writing to the
Administrative Agent or any Lender in connection with this Agreement or any of the other Loan Documents or any transaction contemplated
hereby or thereby is, and all such information thereafter furnished will be, true, accurate and complete in every material respect on the date as
of which such information is dated or certified and does not omit any material fact necessary in order to make such information not misleading.
No event or circumstance has occurred which has had or could reasonably be expected to have a Material Adverse Effect, which has not been
fully and accurately disclosed to the Administrative Agent in writing prior to the Closing Date.
   Section 8.19 Margin Security and Investment Company Act . No Loan Party owns any margin stock and no portion of the proceeds of any
Loans or Letters of Credit shall be used by any Borrower for the purpose of purchasing or carrying any “margin stock” (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) or for any other purpose which violates the provisions or
Regulation T, U or X of said Board of Governors or for any other purpose in violation of any applicable statute or regulation, or of the terms
and conditions of this Agreement. No Loan Party is subject to regulation under the Investment Company Act of 1940, as amended. In addition,
none of the Loan Parties is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as
amended, or is, directly or indirectly, controlled by such a company.
    Section 8.20 Insurance . The properties of the Loan Parties are insured with financially sound and reputable insurance companies not
Affiliates of any Loan Party, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged
in similar businesses and owning similar properties in localities where the Loan Parties operate.
    Section 8.21 Accounts; Inventory . Each Account (a) is genuine and enforceable in accordance with its terms except for such limits thereon
arising from bankruptcy and similar laws relating to creditor’s rights; (b) is not subject to any deduction or discount (other than as stated in the
invoice and disclosed to the Administrative Agent in writing), defense, set off, claim or counterclaim of a material nature against any Loan
Party except as to which the Loan Parties would have notified the Administrative Agent in writing; (c) is not subject to any other circumstances
that would impair the validity, enforceability or a material amount of such Collateral except as to which the Loan Parties have notified

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the Administrative Agent in writing; (d) arising from a bona fide sale of goods or delivery of services in the ordinary course and in accordance
with the terms and conditions of any applicable purchase order, contract or agreement; (e) is free of all Liens except Liens permitted by
Section 10.2 ; and (f) is for a liquidated amount maturing as stated in the invoice therefor. To the knowledge of the Responsible Officers of
each Loan Party, each Account included in any Borrowing Base Certificate, report or other document as an Eligible Account meets all the
requirements of an Eligible Account set forth in this Agreement and each item of Inventory included in the Borrowing Base as Eligible
Inventory meets all of the requirements of Eligible Inventory set forth in this Agreement.
   Section 8.22 Anti-Terrorism Laws . Neither the making of the Loans hereunder nor the Borrowers’ use of the proceeds thereof will violate
the Patriot Act, OFAC, the Trading with the Enemy Act, as amended, any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended), or any enabling legislation in force in the United States or executive order relating
thereto, or is in violation of any Federal statute or Presidential Executive Order, including without limitation Executive Order 13224 66 Fed.
Reg. 49079 (September 25, 2001) (Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit or Support
Terrorism), in each case, to the extent applicable to any Borrower. None of the Borrowers, any Subsidiary of any Borrower or any Affiliate of
any Borrower: (a) is a Sanctioned Person, (b) has any of its assets in Sanctioned Entities, or (c) derives any of its operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned Entities, in each case, that would constitute a violation of applicable
laws. The proceeds of any Loan will not be used and have not been used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity.
   Section 8.23 Senior Indebtedness . The monetary Obligations hereunder rank at least pari passu in right of payment (to the fullest extent
permitted by law) with all other senior indebtedness of the Borrowers; provided that the prior secured claims of any other senior indebtedness
solely with respect to particular collateral will not be deemed to result in such Obligations not being at least pari passu in right of payment to
such other senior indebtedness.
   Section 8.24 Survival of Warranties; Cumulative . All representations and warranties contained in this Agreement or any of the other Loan
Documents shall survive the execution and delivery of this Agreement and shall be deemed to have been made again to the Administrative
Agent and the Lenders on the date of the making of a Loan or the issuance of a Letter of Credit (and on the effective date of any Facility
Increase) and shall be conclusively presumed to have been relied on by the Administrative Agent and the Lenders regardless of any
investigation made or information possessed by the Administrative Agent or any Lender. The representations and warranties set forth herein
shall be cumulative and in addition to any other representations or warranties which any Loan Party shall now or hereafter give, or cause to be
given, to the Administrative Agent or any Lender under any other Loan Documents.


                                                              ARTICLE 9
                                                        AFFIRMATIVE COVENANTS
   Section 9.1 Maintenance of Existence .
       (a) Except as otherwise permitted pursuant to Section 10.4 or 10.5 , each Loan Party shall, and shall cause each of its Subsidiaries to, at
all times (i) preserve, renew and keep in full force and effect its legal existence and, (ii) except those that expire or otherwise terminate in
accordance with their terms, maintain in full force and effect all registrations, approvals, authorizations, consents and Permits necessary to
carry on the business as presently or from time to time proposed to be conducted.

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      (b) No Loan Party shall change its name, its type of organization, its jurisdiction of organization or its legal structure unless each of the
following conditions is satisfied: (i) the Administrative Agent shall have received prior written notice from the Administrative Borrower of
such proposed change in its name, which notice shall accurately set forth the new name, type of organization, jurisdiction or structure, as
applicable; and (ii) not more than 30 days following the effectiveness of such change, the Administrative Agent shall have received a copy of
the amendment to the certificate of incorporation, certificate of formation or other organizational document of such Loan Party providing for
such change certified by the Secretary of State or other applicable government official of the jurisdiction of incorporation or organization of
such Loan Party or other similar Governmental Authority as soon as it is available.
      (c) No Loan Party shall change its chief executive office or its primary mailing address or organizational identification number (or if it
does not have one, shall not acquire one) unless the Administrative Agent shall have received prior written notice from the Administrative
Borrower of such proposed change, which notice shall accurately set forth such change and the Administrative Agent shall have received such
agreements as the Administrative Agent may reasonably require in connection therewith.
  Section 9.2 New Collateral Locations . From time to time, each Loan Party may open new locations owned or leased by such Loan Party on
which Collateral is stored or located only within the continental United States or Canada provided such Loan Party gives the Administrative
Agent prior written notice of the intended opening of any such new location.
   Section 9.3 Compliance with Laws, Regulations, Etc .
      (a) Each Loan Party shall, and shall cause each of its Subsidiaries to, at all times, comply with all laws, rules, regulations, licenses,
approvals, orders and other Permits applicable to it and duly observe all requirements of any Governmental Authority in each case, except
where the failure to so comply or observe could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall
not apply with respect to Intellectual Property (which is the subject of Section 9.9 below).
        (b) The Loan Parties shall give written notice to the Administrative Agent immediately upon any Loan Party’s receipt of any notice of, or
any Loan Party’s otherwise obtaining knowledge of, (i) the occurrence of any event involving the release, spill or discharge, threatened or
actual, of any Hazardous Material is likely to result in costs or liabilities to the Loan Parties in excess of $500,000 or (ii) any investigation,
proceeding, complaint, order, directive, claims, citation or notice with respect to: any non-compliance with or violation of any Environmental
Law by any Loan Party or the release, spill or discharge, threatened or actual, of any Hazardous Material if the threatened or actual release,
spill or discharge, or the alleged or actual non-compliance or violation of Environmental Law by any Loan Party is likely to result in costs or
liabilities to the Loan Party in excess of $500,000 (collectively for purposes of this Section 9.3 , a “ Material Release or Non-Compliance ”).
Upon request of the Administrative Agent, copies of all environmental surveys, audits, assessments, feasibility studies and results of remedial
investigations (if any) shall be promptly furnished, or caused to be furnished, by such Loan Party to the Administrative Agent. Each Loan Party
shall take prompt action to respond to any Material Release or Non-Compliance and shall regularly report to the Administrative Agent on such
response, if so requested by the Administrative Agent.
     (c) Each Loan Party shall indemnify and hold harmless the Administrative Agent and Lenders and their respective directors, officers,
employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims, damages, liabilities, costs, and
expenses (including reasonable attorneys’ fees and expenses) directly or indirectly arising out of or

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attributable to the use, generation, manufacture, reproduction, storage, release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair, cleanup or other remedial work with respect to any property of any
Loan Party and the preparation and implementation of any closure, remedial or other required plans. All representations, warranties, covenants
and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination of this Agreement.
    Section 9.4 Payment of Taxes and Claims . Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay and discharge all
Federal taxes and all other material taxes, assessments and other similar governmental charges upon or against it or its properties or assets,
except for taxes, assessments and governmental charges the validity of which is being contested in good faith by appropriate proceedings
diligently pursued, as the case may be, and with respect to which adequate reserves have been set aside on its books to the extent required by
GAAP.
    Section 9.5 Insurance . Each Loan Party shall, and shall cause each of its Subsidiaries to, at all times, maintain with financially sound and
reputable insurers insurance against loss or damage and all other insurance of the kinds and in the amounts customarily insured against or
carried by Persons of established reputation engaged in the same or similar businesses and similarly situated (including, without limitation,
hazard and business interruption insurance). Said policies of insurance shall be reasonably satisfactory to the Administrative Agent as to form,
amount and insurer. Loan Parties shall furnish certificates, policies or endorsements to the Administrative Agent as the Administrative Agent
shall reasonably require as proof of such insurance, and, if any Loan Party fails to do so, the Administrative Agent is authorized, but not
required, to obtain such insurance at the expense of the Borrowers. All policies insuring loss or damage to Collateral shall provide for at least
thirty (30) days prior written notice to the Administrative Agent of any cancellation or reduction of coverage and that the Administrative Agent
may act as attorney for each Loan Party in obtaining, and at any time an Event of Default has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. The Loan Parties shall cause the Administrative Agent to be named as a lender’s loss payee on any
policies of property insurance covering the Collateral and an additional insured on any policies of general liability insurance (but without any
liability for any premiums) and the Loan Parties shall obtain non-contributory lender’s loss payable endorsements to all insurance policies for
property insurance covering the Collateral in form and substance reasonably satisfactory to the Administrative Agent. Such lender’s loss
payable endorsements shall specify that the proceeds of such insurance shall be payable to the Administrative Agent as its interests may appear
and further specify that the Administrative Agent and the Lenders shall be paid regardless of any act or omission by any Loan Party or any of
its Affiliates. Without limiting any other rights of the Administrative Agent or Lenders, any insurance proceeds received by the Administrative
Agent at any time with respect to Collateral shall be applied to payment of the Obligations, whether or not then due, in accordance with
Section 2.5(c)(ii) . Upon application of such proceeds to the applicable Revolving Loans, such Revolving Loans may be available subject and
pursuant to the terms hereof to be used for the costs of repair or replacement of the Collateral lost or damages resulting in the payment of such
insurance proceeds.
   Section 9.6 Financial Statements and Other Information .
      (a) Each Loan Party shall, and shall cause any Subsidiary to, keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and the business of such Loan Party and its Subsidiaries in accordance
with GAAP (other than the books and records of Foreign Subsidiaries (if any) that are kept in accordance with local accounting rules and
converted to GAAP monthly). The Borrowers shall furnish or cause to be furnished to the Administrative Agent and the Lenders, the
following:

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       (i) promptly upon becoming available and in any event within ninety (90) days after the end of each fiscal year of the Borrowers, an
audited combined and combining balance sheet of the Borrowers as at the end of such fiscal year and the related audited combined and
combining statements of income and loss, statements of cash flow and statements of shareholders’ equity for such fiscal year and a report
containing management’s discussion and analysis of such financial statements for the fiscal year then ended, including the accompanying
notes thereto, all in reasonable detail, fairly presenting in all material respects the combined financial position and the results of the
operations of the Borrowers as of the end of and for such fiscal year, in each case, setting forth in comparative form the figures for the
corresponding period or periods of the preceding fiscal year certified by the chief financial officer, treasurer, or corporate controller of the
Company as fairly presenting, in all material respects, the combined financial condition and results of operations of the Borrowers, together
with the unqualified opinion of Goodman & Company, LLP or other independent certified public accountants of nationally recognized
standing selected by the Administrative Borrower and acceptable to the Administrative Agent, that such audited combined and combining
financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and
financial condition of the Borrowers as of the end of and for the fiscal year then ended. Each of the foregoing shall be accompanied by (A) a
Compliance Certificate, along with a schedule in form reasonably satisfactory to the Administrative Agent of the calculation of the Fixed
Charge Coverage Ratio (computed for the twelve (12) consecutive fiscal month period then ending) and (B) a representation by the chief
financial officer, controller or treasurer of the Company that no Event of Default has occurred or is continuing;
      (ii) promptly upon becoming available and in any event thirty (30) days after the end of each fiscal month of the Borrowers, an
unaudited combined and combining balance sheet of the Borrowers for such fiscal month, and the related unaudited combined and
combining statements of income and loss and a summary of cash flow items for such fiscal month in substantially the same form as
delivered to the Administrative Agent prior to the Closing Date (or such other form as may be mutually agreed to by the Administrative
Agent and the Administrative Borrower), fairly presenting in all material respects the combined financial position and the results of the
operations of the Borrowers as of the end of and through such fiscal month, in each case setting forth in comparative form the figures for the
corresponding period or periods of the preceding fiscal year, accompanied by (A) a Compliance Certificate, along with a schedule in form
reasonably satisfactory to the Administrative Agent of the calculation of the Fixed Charge Coverage Ratio (computed for the twelve
(12) consecutive fiscal month period then ending) and (B) a representation by the chief financial officer, controller or treasurer of the
Company that no Event of Default has occurred or is continuing;
       (iii) promptly upon becoming available, but in any event at least thirty (30) days before the end of each fiscal year (commencing with
the fiscal year of the Borrowers ending December 31, 2010) of the Borrowers, a projected combined financial budget (including forecasted
balance sheets, statements of income and loss and summary cash flow items) of the Borrowers for the immediately following fiscal year, all
in reasonable detail, and in a format reasonably acceptable to the Administrative Agent, together with such supporting information as the
Administrative Agent may reasonably request. Such projected financial budget shall also include projected borrowings and Letter of Credit
usage and pro forma calculations of Excess Availability and the Fixed Charge Coverage Ratio. Such projected combined financial budget
shall be prepared on a monthly basis for the period commencing on January 1, 2011 through December 31, 2011 and on a quarterly basis for
each succeeding fiscal year thereafter. Such projected combined financial budget shall represent the reasonable best estimate by the
Borrowers of the future combined financial performance of the Borrowers for the periods set

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  forth therein and shall have been prepared on the basis of the assumptions set forth therein that the Borrowers believe are fair and reasonable
  as of the date of preparation in light of current and reasonably foreseeable business conditions (it being understood that actual results may
  differ from those set forth in such projected financial budget). The Borrowers shall provide to the Administrative Agent a quarterly update to
  such projected combined financial budget for each upcoming quarter or, at any time a Default or Event of Default exists or has occurred and
  is continuing or if Excess Availability falls below the Threshold Amount, more frequently as the Administrative Agent may request; and
         (iv) promptly upon becoming available, but in no event later than ten (10) days after the end of each fiscal quarter or, as otherwise
  requested by the Administrative Agent, a contract backlog report of all Government Contracts and all other Material Contracts (in form and
  substance reasonably satisfactory to the Administrative Agent but including, without limitation, such contract’s end date, the tenor of such
  contract, the renewal options of such contract, the type of contract and whether the applicable Loan Party party thereto is a prime contractor
  or a sub-contractor with respect thereto).
       (b) The Loan Parties shall, and shall cause each Subsidiary thereof to, promptly (and in any event within two (2) Business Days or such
longer period as the Administrative Agent may agree) notify the Administrative Agent in writing of the details of (i) any loss, damage,
investigation, action, suit, proceeding or claim relating to Collateral having a value of more than $750,000 or which if adversely determined
would result in any Material Adverse Effect, (ii) any Material Contract or Material Government Contract being terminated or amended in any
manner materially adverse to the Company and its Subsidiaries or any new Material Contract or new Material Government Contract entered
into (in which event the Loan Parties shall provide the Administrative Agent with (x) a copy of such Contract, if requested by the
Administrative Agent, (y) an updated Schedule 8.15 and (z) with respect to any new Material Government Contract, a Notice of Assignment
and Instrument of Assignment with respect to such Material Government Contract in accordance with Section 6.2(h)(i) ), (iii) any order,
judgment or decree in excess of $750,000 shall have been entered against any Loan Party or any of its Subsidiaries or any of its or their
respective properties or assets, (iv) any notification of a violation of laws or regulations received by any Responsible Officer of a Loan Party
that could reasonably be expected to have a Material Adverse Effect, (v) any ERISA Event, and (vi) upon any Responsible Officer having
knowledge thereof, the occurrence of any Material Release or Non-Compliance and (vii) upon any Responsible Officer having knowledge
thereof, the occurrence of any Default or Event of Default.
      (c) Promptly (and in any event within two (2) Business Days or such longer period as the Administrative Agent may agree) after the
sending or filing thereof, the Borrowers shall send to the Administrative Agent copies of (i) all reports which the Company or any of its
Subsidiaries sends to its security holders generally, (ii) all reports and registration statements which the Company or any of its Subsidiaries files
with the Securities Exchange Commission, any national or foreign securities exchange or the National Association of Securities Dealers, Inc.,
and such other reports as the Administrative Agent may hereafter specifically identify to the Administrative Borrower that the Administrative
Agent will require be provided to the Administrative Agent, (iii) all press releases and (iv) all other statements concerning material changes or
developments in the business of a Loan Party made available by any Loan Party to the public.
       (d) Promptly (and in any event within two (2) Business Days or such longer period as the Administrative Agent may agree) upon receipt
thereof, the Borrowers shall send to the Administrative Agent copies of any letter, notice, subpoena, court order, pleading or other document
issued, given or delivered by any U.S. Governmental Authority or by any prime contractor to any Loan Party or any Subsidiary thereof
asserting or seeking to investigate any alleged fraud, malfeasance or other

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willful misconduct of any Loan Party or any Subsidiary thereof with respect to any Material Government Contract or any subcontract with
remaining payments of at least $750,000.
      (e) Each Loan Party shall, and shall cause each Subsidiary to, furnish or cause to be furnished to the Administrative Agent such budgets,
forecasts, projections and other information respecting the Collateral and the business of Loan Parties, as the Administrative Agent may, from
time to time, reasonably request.
       (f) The Administrative Agent is hereby authorized to deliver a copy of any financial statement or any other information relating to the
business of Loan Parties to any court or other Governmental Authority or to any Lender or Participant or prospective Lender or Participant or
any Affiliate of any Lender or Participant. Each Loan Party hereby irrevocably authorizes and directs all accountants or auditors to deliver to
the Administrative Agent, at Borrowers’ expense, copies of the financial statements of any Loan Party and any final reports or management
letters prepared by such accountants or auditors on behalf of any Loan Party and to disclose to the Administrative Agent and Lenders such
information as they may have regarding the business of any Loan Party; provided that the Loan Parties shall notify the Administrative Agent of
any such reports or management letters received and, upon the Administrative Agent’s request, shall use its commercially reasonable efforts to
cause such reports or management letters to be delivered to the Administrative Agent in accordance with this clause (e). Any documents,
schedules, invoices or other papers delivered to the Administrative Agent or any Lender may be destroyed or otherwise disposed of by the
Administrative Agent or such Lender one (1) year after the same are delivered to the Administrative Agent or such Lender, except as otherwise
designated by the Administrative Borrower to the Administrative Agent or such Lender in writing.
       (g) Information required to be delivered pursuant to this Section 9.6 shall be deemed to have been delivered if such information, or one
or more annual or other reports containing such information, shall have been posted by the Administrative Agent on an IntraLinks, SyndTrak
Online or similar site to which the Lenders have been granted access; provided that the Company shall deliver paper copies of such information
to the Administrative Agent or any Lender that requests such delivery.
    Section 9.7 Compliance with ERISA . Each Loan Party shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal and State law, except to the extent that
noncompliance would not result in a material liability to such Loan Party or such ERISA Affiliate; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) not terminate any Pension Plan so as to incur any material liability to the Pension
Benefit Guaranty Corporation; (d) not allow or suffer to exist any prohibited transaction involving any Plan or any trust created thereunder
which would subject such Loan Party or such ERISA Affiliate to a material tax or other liability on prohibited transactions imposed under
Section 4975 of the Code or ERISA; (e) make all required contributions to any Plan which it is obligated to pay under Section 302 of ERISA,
Section 412 of the Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated funding deficiency, whether or not waived,
with respect to any such Pension Plan; (g) not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA; or (h) not
allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents a material risk of termination by the
Pension Benefit Guaranty Corporation of any Plan that is a single employer plan, which termination could result in any material liability to the
Pension Benefit Guaranty Corporation.
  Section 9.8 End of Fiscal Years; Fiscal Quarters . Each Loan Party shall, for financial reporting purposes, cause its, and each of its
Subsidiaries’ (a) fiscal years to end on December 31 of each year and (b) fiscal quarters to end on March 31, June 30, September 30, and
December 31 each year.

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   Section 9.9 Intellectual Property .
      (a) Each Loan Party (either itself or through licensees) shall refrain from taking any act that knowingly uses any owned Intellectual
Property to infringe the Intellectual Property rights of any other third party.
       (b) Each Loan Party (either itself or through licensees) will (i) not abandon any Trademark used in connection with any goods and
services reflected in current catalogs, brochures and price lists unless the Loan Party discontinues the associated goods or services or
determines to change the Trademark used in connection therewith, (ii) maintain as in the past the quality of products and services offered under
such Trademark, (iii) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable
law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of any such Trademark unless the Administrative
Agent, shall obtain a perfected Lien upon such Trademark pursuant to this Agreement, and (v) not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby such Trademark may become abandoned or dedicated to the public; other than
where the Loan Party has determined, in its reasonable business judgment, to abandon or cancel such Trademark.
     (c) Each Loan Party (either itself or through licensees) will not do any act, or knowingly omit to do any act, whereby any material Patent
may become abandoned or dedicated to the public other than where the Loan Party has determined, in its reasonable business judgment, to
abandon or cancel such Patent.
     (d) Each Loan Party (either itself or through licensees) will not do any act or knowingly omit to do any act, whereby any material
Copyright may become abandoned or dedicated to the public other than where the Loan Party has determined, in its reasonable business
judgment, to abandon or cancel such Copyright.
       (e) Each Loan Party will notify the Administrative Agent and Lenders immediately if it knows, or has reason to know, that any of the
registered Intellectual Property is the subject of any order of any Governmental Authority declaring that the Loan Party does not own the
registered Intellectual Property or the registered Intellectual Property is invalid or unenforceable.
      (f) Concurrently with the next delivery of financial statements of such Loan Party pursuant to Section 9.6 , the Loan Parties shall provide
an update as to all registered Intellectual Property then owned by the Loan Parties, including therewith the information described in
Section 8.11(b) . Upon the request of the Administrative Agent, such Loan Party shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent’s
and Lenders’ Lien upon such registered Intellectual Property and the goodwill and general intangibles of such Loan Party relating thereto or
represented thereby consistent with the terms of this Agreement.
       (g) In the event that a Loan Party becomes aware that any owned Intellectual Property is infringed upon or misappropriated or diluted by
a third party, such Loan Party shall (i) take such actions as such Loan Party shall reasonably deem appropriate under the circumstances to
protect such owned Intellectual Property and (ii) if such owned Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns of its infringement, misappropriation or dilution and, to the extent such Loan Party determines in its
reasonable business judgment it appropriate under the circumstances, sue for infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution.

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   Section 9.10 After Acquired Real Property . Subject to the last sentence of this Section 9.10 , if any Loan Party hereafter acquires any Real
Property or fixtures and such Real Property or fixtures has a fair market value in an amount greater than $500,000 (or if a Default or Event of
Default exists, then regardless of the fair market value of such assets), without limiting any other rights of the Administrative Agent or any
Lender, or duties or obligations of any Loan Party, promptly upon the Administrative Agent’s request, such Loan Party shall execute and
deliver to the Administrative Agent a mortgage, deed of trust or deed to secure debt, as the Administrative Agent may determine, in form and
substance reasonably satisfactory to the Administrative Agent and, as to any provisions relating to specific state laws, reasonably satisfactory to
the Administrative Agent and in form appropriate for recording in the real estate records of the jurisdiction in which such Real Property or
other property is located granting to the Administrative Agent a valid Lien and mortgage on such Real Property or fixtures and such other
agreements, documents and instruments as the Administrative Agent may require in connection therewith.
   Section 9.11 Further Assurances . At the request of the Administrative Agent at any time and from time to time, each Loan Party shall, and
shall cause each of its Subsidiaries to, at its expense, duly execute and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further acts as the Administrative Agent may reasonably determine to
be necessary or proper to evidence, perfect, maintain and enforce the Liens and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Loan Documents.
   Section 9.12 Additional Borrowers and Guarantors .
        (a) Within 30 days (or such later date as may be agreed to by the Administrative Agent in its sole discretion) of any Person becoming a
direct or indirect Subsidiary of the Company, the Administrative Borrower will provide the Administrative Agent with written notice thereof
setting forth information in reasonable detail describing all of the assets of such Person and shall (a) cause such Subsidiary to execute and
deliver to the Administrative Agent a joinder agreement in substantially the form of Exhibit E , causing such Subsidiary to become a party to
(i) this Agreement, as a joint and several “Borrower” ( provided that only a wholly-owned Subsidiary shall be permitted to be a Borrower),
granting a first priority Lien upon its Collateral, subject to permitted Liens under Section 10.2 and (ii) the Pledge Agreement, as a joint and
several “Pledgor”, causing all of its issued and outstanding shares of Capital Stock, together with all of the issued and outstanding shares
Capital Stock of its Subsidiaries and sixty-five percent (65%) of the issued and outstanding shares of the Capital Stock of each of its first-tier
Foreign Subsidiaries to be delivered to the Administrative Agent (together with undated stock powers signed in blank and pledged to the
Administrative Agent) (b) cause any such Subsidiary that is added as a Borrower to execute and deliver to the Administrative Agent Notes in
favor of the Lenders, if so requested by the Lenders, and, if it owns any Real Property that has a fair market value in an amount greater than
$500,000, a mortgage or deed of trust thereon in favor of the Administrative Agent, and (c) deliver such other documentation as the
Administrative Agent may reasonably request in connection with the foregoing, including, without limitation, appropriate UCC-1 financing
statements, Deposit Account Control Agreements, Investment Property Control Agreements, certified resolutions and other organizational and
authorizing documents of such Subsidiary and upon the request of the Administrative Agent favorable opinions of counsel to such Subsidiary
(which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above), all in
form, content and scope reasonably satisfactory to the Administrative Agent; provided that in lieu of the foregoing, at the option of the
Administrative Agent (and so long as the Company has consented to the exercise of such option in lieu of joining such Person as a Borrower),
Loan Parties shall cause such Subsidiary to execute and deliver to the Administrative Agent a joinder agreement in substantially the form of
Exhibit E causing such Subsidiary to become a party to the Guaranty as a joint and several

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“Guarantor”, and each of the documents described in clauses (a)(ii), (b) and (c) above, as applicable, and with the same effect set forth above,
all as the Administrative Agent reasonably shall request.
   Section 9.13 Use of Proceeds . Loans made or Letters of Credit provided to or for the benefit of any Borrower pursuant to the provisions
hereof shall be used by such Borrower only for general corporate purposes of such Borrower not otherwise prohibited by the terms hereof,
including to finance Permitted Acquisitions, the refinancing of the Existing Facility and to make the distributions permitted pursuant to
Section 10.6(c) . None of the proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock or for the
purposes of reducing or retiring any indebtedness which was originally incurred to purchase or carry any Margin Stock or for any other purpose
which might cause any of the Loans to be considered a “purpose credit” within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
   Section 9.14 Fixed Charge Coverage Ratio . The Borrowers shall, as of the end of each fiscal month, maintain a Fixed Charge Coverage
Ratio of not less than 1.20 to 1.00.
   Section 9.15 Post-Closing Conditions . The Borrowers sh