SECURITY AGREEMENT
 

 
LV ADMINISTRATIVE SERVICES, INC.,
 
as Administrative and Collateral Agent
 
THE LENDERS
 
From Time to Time Party Hereto
 

 
NEWMARKET TECHNOLOGY, INC.
 

 
IP GLOBAL VOICE, INC.
 
NETSCO, INC.
 
NEWMARKET INTELLECTUAL PROPERTY, INC.
 
NEWMARKET BROADBAND, INC.
 
and
 

 
NEWMARKET CHINA, INC.
 
Dated: November 30, 2007

 
 

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 1.
General Definitions and Terms; Rules of Construction. 
 1
 2.
Loan Facility. 
 2
 3. Repayment of the Loans
 4
 4. Procedure for Revolving Loans
 4
 5.
Interest and Payments. 
 4
 6. Security Interest.
 6
 7.
Representations, Warranties and Covenants Concerning the Collateral 
 7
 8.
Payment of Accounts. 
 10
 9.
Collection and Maintenance of Collateral. 
 11
 10. Inspections and Appraisals
 11
 11.
Financial Reporting 
 11
 12. Additional Representations and Warranties
 13
 13. Covenants
 24
 14.
Further Assurances 
 32
 15. Representations, Warranties and Covenants of the Lenders
 32
 16. Confidentiality
 34
 17.
Power of Attorney 
 34
 18.
Term of Agreement 
 34
 19. Termination of Lien
 35
 20. Events of Default
 35
 21. Remedies
 37
 22. Waivers
 38
 23. Expenses
 38
 24. Assignment; Register.
 38
 25. No Waiver; Cumulative Remedies
 39
 26.
Application of Payments 
 39
 27.
Indemnity 
 39
 28.
Revival 
 40
 29.
Borrowing Agency Provisions. 
 40
 30.
Notices 
 41
 31. Governing Law, Jurisdiction and Waiver of Jury Trial.
 42
 32.
Limitation of Liability 
 42
 33. Entire Understanding; Maximum Interest
 42
 34. Severability
 43
 35.
Survival 
 43
 36.
Captions 
 43
 37. Counterparts; Telecopier Signatures
 43
 38. Construction
 43
 39. Publicity
 43
 40.
Joinder 
 43
 41. Legends
44
 42.
Agency 
 44
           

 
 
 

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SECURITY AGREEMENT
 
This SECURITY AGREEMENT is made as of November 30, 2007 by and among the lenders
from time to time party hereto (the “Lenders”), LV ADMINISTRATIVE SERVICES,
INC., a Delaware corporation, as administrative and collateral agent for the
Lenders (in such capacity, the “Agent” and together with the Lenders, the
“Creditor Parties”), NEWMARKET TECHNOLOGY, INC., a Nevada corporation (the
“Parent”), and each party listed on Exhibit A attached hereto (each an “Eligible
Subsidiary” and collectively, the “Eligible Subsidiaries”; the Parent and each
Eligible Subsidiary, each a “Company” and collectively, the “Companies”).
 
BACKGROUND
 
The Companies have requested that the Lenders make advances available to the
Companies and purchase term notes from the Companies; and
 
The Lenders have agreed to make such advances and purchase such notes on the
terms and conditions set forth in this Agreement.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the mutual covenants and undertakings and
the terms and conditions contained herein, the parties hereto agree as follows:
 
1.  General Definitions and Terms; Rules of Construction.
 
(a)  General Definitions.  Capitalized terms used in this Agreement shall have
the meanings assigned to them in Annex A.
 
(b)  Accounting Terms.  Any accounting terms used in this Agreement which are
not specifically defined shall have the meanings customarily given them in
accordance with GAAP and all financial computations shall be computed, unless
specifically provided herein, in accordance with GAAP consistently applied.
 
(c)  Other Terms.  All other terms used in this Agreement and defined in the
UCC, shall have the meaning given therein unless otherwise defined herein.
 
(d)  Rules of Construction.  All Schedules, Addenda, Annexes and Exhibits hereto
or expressly identified to this Agreement are incorporated herein by reference
and taken together with this Agreement constitute but a single agreement.  The
words “herein”, “hereof” and “hereunder” or other words of similar import refer
to this Agreement as a whole, including the Exhibits, Addenda, Annexes and
Schedules thereto, as the same may be from time to time amended, modified,
restated or supplemented, and not to any particular section, subsection or
clause contained in this Agreement.  Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the
singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter.  The
term “or” is not exclusive.  The term “including” (or any form thereof) shall
not be limiting or exclusive.  All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations.  All references in this Agreement or in the Schedules, Addenda,
Annexes and Exhibits to this Agreement to sections, schedules, disclosure
schedules, exhibits, and attachments shall refer to the corresponding sections,
schedules, disclosure schedules, exhibits, and attachments of or to this
Agreement.  All references to any instruments or agreements, including
references to any of this Agreement or the Ancillary Agreements shall include
any and all modifications or amendments thereto and any and all extensions or
renewals thereof.
 
 
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2.  Loan Facility.
 
(a)  Revolving Loans.
 
(i)  Subject to the terms and conditions set forth herein and in the Ancillary
Agreements, each Lender, severally and not jointly, may make revolving loans
(the “Revolving Loans”) to the Companies from time to time during the Term
which, in the aggregate at any time outstanding, will not exceed such Lender’s
Revolving Commitment Percentage of the lesser of (x) (I) the Capital
Availability Amount minus (II) the Reserves and (y) an amount equal to (I) the
Accounts Availability minus (II) the Reserves.  The amount derived at any time
from Section 2(a)(i)(y)(I) minus 2(a)(i)(y)(II) shall be referred to as the
“Formula Amount.”  The Companies shall, jointly and severally, execute and
deliver to each Lender on the Closing Date a Secured Revolving Note evidencing
such Lender’s Revolving Commitment Percentage of the Capital Availability
Amount.  The Companies hereby each acknowledge and agree that each Lender’s
obligation to purchase a Secured Revolving Note from the Companies on the
Closing Date shall be contingent upon the satisfaction (or waiver by the Agent)
of the items and matters set forth in the closing checklist provided by the
Agent to the Companies on or prior to the Closing Date.  The Companies hereby
each further acknowledge and agree that, immediately prior to each borrowing
hereunder and immediately after giving effect thereto, the Companies shall be
deemed to have certified to the Lenders that at the time of each such proposed
borrowing and also after giving effect thereto (i) there shall exist no Event of
Default, (ii) all representations, warranties and covenants made by the
Companies in connection with this Agreement and the Ancillary Agreements are
true, correct and complete and (iii) all of each Company’s and its respective
Subsidiaries’ covenant requirements under this Agreement and the Ancillary
Agreements have been met.  The Companies hereby agree to provide a certificate
confirming the foregoing concurrently with each request for a borrowing
hereunder.
 
(ii)  Notwithstanding the limitations set forth above, if requested by any
Company, the Agent may determine in its sole discretion to permit Revolving
Loans in excess of the Formula Amount (the aggregate of Revolving Loans in
excess of the Formula Amount at any time, an “Overadvance”) to be made and/or to
remain outstanding; provided that any Overadvance made on or after the Specified
Assignment Date shall constitute a Permitted Overadvance.  For purposes hereof,
“Permitted Overadvance” means an Overadvance that, as determined by the Agent in
its reasonable discretion, (i) is made solely to maintain, protect or preserve
the Collateral and/or the Lenders’ rights under this Agreement and the Ancillary
Agreements and is necessary in order to avoid a material adverse effect on the
Collateral and/or the Lenders’ rights under this Agreement and the Ancillary
Agreements; (ii) does not exceed fifty percent (50%) of the Formula Amount at
any time; and (iii) remains outstanding for not more than forty-five (45)
consecutive Business Days, unless in case of this clause (iii), the Required
Lenders otherwise agree.  In connection with each such request by one or more
Companies, the Companies shall be deemed to have certified, as of the time of
such proposed borrowing and immediately after giving effect thereto, to the
satisfaction of all Overadvance Conditions.  For purposes hereof, “Overadvance
Conditions” means (i) no Event of Default shall exist and be continuing as of
such date; (ii) all representations, warranties and covenants made by the
Companies in connection with the Security Agreement and the Ancillary Agreements
shall be true, correct and complete as of such date; and (iii) the Companies and
their respective Domestic Subsidiaries shall have taken all action necessary to
grant the Agent “control” over all of the Companies’ and their respective
Domestic Subsidiaries’ Deposit Accounts (the “Control Accounts”), with any
agreements establishing “control” to be in form and substance satisfactory to
the Agent.  “Control” over such Control Accounts shall be released upon the
indefeasible repayment in full and termination of the Overadvance (together with
all accrued interest and fees which remain unpaid in respect thereof).  The
Companies hereby agree to provide a certificate confirming the satisfaction of
the Overadvance Conditions concurrently with the request for same.
 
(iii)  The Companies acknowledge that the exercise of the Agent’s discretionary
rights hereunder may result during the Term in one or more increases or
decreases in the advance percentages used in determining Accounts Availability
and each of the Companies hereby consent to any such increases or decreases
which may limit or restrict advances requested by the Companies.
 
 
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(iv)  If any interest, fees, costs or charges payable to the Credit Parties
hereunder are not paid when due, each of the Companies shall thereby be deemed
to have requested, and each of the Lenders will be deemed to have made and the
Agent will charge to the Companies’ account with a Revolving Loan immediately
due and payable as of such date in an amount equal to such unpaid interest,
fees, costs or charges; provided, however, that the Agent may elect to extend
the maturity of all or a portion of any such Revolving Loan at any time prior to
the Specified Assignment Date to a date that is on or prior to the maturity of
the Loans made other than pursuant to this clause (iv).
 
(v)  If any Company at any time fails to perform or observe any of the covenants
contained in this Agreement or any Ancillary Agreement, the Agent may, but need
not, perform or observe such covenant on behalf and in the name, place and stead
of such Company (or, at the Agent’s option, in the Agent’s name) and may, but
need not, take any and all other actions which the Agent may deem necessary to
cure or correct such failure (including the payment of taxes, the satisfaction
of Liens, the performance of obligations owed to Account Debtors, lessors or
other obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments).  The amount of all monies expended and all costs and expenses
(including reasonable attorneys’ fees and legal expenses) incurred by the Agent
in connection with or as a result of the performance or observance of such
agreements or the taking of such action by the Agent shall be charged to the
Companies’ account as a Loan and added to the Obligations.  To facilitate the
Agent’s performance or observance of such covenants by each Company, each
Company hereby irrevocably appoints the Agent, or the Agent’s delegate, acting
alone, as such Company’s attorney in fact (which appointment is coupled with an
interest) with the right (but not the duty) from time to time to create,
prepare, complete, execute, deliver, endorse or file in the name and on behalf
of such Company any and all instruments, documents, assignments, security
agreements, financing statements, applications for insurance and other
agreements and writings required to be obtained, executed, delivered or endorsed
by such Company.
 
(vi)  The Agent will account to Company Agent monthly with a statement of all
Loans and other advances, charges and payments made pursuant to this Agreement,
and such account rendered by the Agent shall be deemed final, binding and
conclusive absent manifest error unless the Agent is notified by Company Agent
in writing to the contrary within thirty (30) days of the date each account was
rendered specifying the item or items to which objection is made.
 
(vii)  During the Term, the Companies may borrow and prepay Loans in accordance
with the terms and conditions hereof.
 
(viii)  If any Eligible Account is not paid by the Account Debtor within ninety
(90) days after the date that such Eligible Account was invoiced or if any
Account Debtor asserts a deduction, dispute, contingency, set-off, or
counterclaim with respect to any Eligible Account, (a “Delinquent Account”), the
Companies shall jointly and severally (i) reimburse the Lenders for the amount
of the Revolving Loans made with respect to such Delinquent Account or (ii)
immediately replace such Delinquent Account with an otherwise Eligible Account.
 
(b)  Term Loan.  Subject to the terms and conditions set forth herein and in the
Ancillary Agreements, each Lender shall make a term loan to Company Agent (for
the benefit of Companies) in such Lender’s Term Loan Commitment Percentage of
$4,000,000 (the “Term Loan”).  The Term Loan shall be advanced on the Closing
Date and shall be, with respect to principal, payable in consecutive monthly
installments of principal commencing on June 1, 2008 and on the first day of
each month thereafter, subject to acceleration upon the occurrence of an Event
of Default or termination of this Agreement.  The Term Loan shall be evidenced
by the Secured Term Notes.  The Companies hereby acknowledge and agree that each
Lender’s obligation to purchase a Secured Term Note on the Closing Date shall be
contingent upon the satisfaction (or waiver by the Agent) of the items and
matters set forth in the closing checklist provided by the Agent to the
Companies on or prior to the Closing Date.
 
 
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3.  Repayment of the Loans.  The Companies (a) may prepay the Obligations from
time to time in accordance with the terms and provisions of the Notes (and
Section 17 hereof if such prepayment is due to a termination of this Agreement);
(b) shall repay on the Maturity Date (as defined in the Secured Term Notes) (i)
the then aggregate outstanding principal balance of the Term Loan together with
accrued and unpaid interest, fees and charges; and (ii) all other amounts owed
the Lenders under the Secured Term Notes; (c) shall repay on the expiration of
the Term (i) the then aggregate outstanding principal balance of the Revolving
Loans together with accrued and unpaid interest, fees and charges; and (ii) all
other amounts owed the Creditor Parties under this Agreement and the Ancillary
Agreements; and (d) subject to Section 2(a)(ii), shall repay on any day on which
the then aggregate outstanding principal balance of the Revolving Loans are in
excess of the Formula Amount at such time, the Revolving Loans in an amount
equal to such excess.  Any payments of principal, interest, fees or any other
amounts payable hereunder or under any Ancillary Agreement shall be made prior
to 12:00 noon (New York time) on the due date thereof in immediately available
funds.
 
4.  Procedure for Revolving Loans.  Company Agent may by written notice request
a borrowing of Revolving Loans prior to 12:00 noon (New York time) on the
Business Day of its request to incur, on the next Business Day, a Revolving
Loan.  Together with each request for a Revolving Loan (or at such other
intervals as the Agent may request), Company Agent shall deliver to the Agent a
Borrowing Base Certificate in the form of Exhibit B attached hereto, which shall
be certified as true and correct by the Chief Executive Officer or Chief
Financial Officer of Company Agent together with all supporting documentation
relating thereto.  All Revolving Loans shall be disbursed from whichever office
or other place the Agent may designate from time to time and shall be charged to
the Companies’ account on the Agent’s books.  The proceeds of each Revolving
Loan made by the Lenders shall be made available to Company Agent on the
Business Day following the Business Day so requested in accordance with the
terms of this Section 4 by way of credit to the applicable Company’s operating
account maintained with such bank as Company Agent designated to the Agent.  Any
and all Obligations due and owing hereunder may be charged to the Companies’
account and shall constitute Revolving Loans.
 
5.  Interest and Payments.
 
(a)  Interest.
 
(i)  Except as modified by Section 5(a)(iii) below, the Companies shall jointly
and severally pay interest at the Contract Rate on the unpaid principal balance
of each Loan until such time as such Loan is collected in full in good funds in
dollars of the United States of America.
 
(ii)  Interest and payments shall be computed on the basis of actual days
elapsed in a year of 360 days.  At the Agent’s option, the Lenders may charge
the Companies’ account for said interest.
 
(iii)  Effective upon the occurrence of any Event of Default and for so long as
any Event of Default shall be continuing, the Contract Rate shall automatically
be increased as set forth in the Notes (such increased rate, the “Default
Rate”), and all outstanding Obligations, including unpaid interest, shall
continue to accrue interest from the date of such Event of Default at the
Default Rate applicable to such Obligations.
 
 
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(iv)  In no event shall the aggregate interest payable hereunder or under any
Note exceeds the maximum rate permitted under any applicable law or regulation,
as in effect from time to time (the “Maximum Legal Rate”), and if any provision
of this Agreement or any Ancillary Agreement is in contravention of any such law
or regulation, interest payable under this Agreement and each Ancillary
Agreement shall be computed on the basis of the Maximum Legal Rate (so that such
interest will not exceed the Maximum Legal Rate).
 
(v)  The Companies shall jointly and severally pay principal, interest and all
other amounts payable hereunder, or under any Ancillary Agreement, without any
deduction whatsoever, including any deduction for any set-off or counterclaim.
 
(vi)  All payments made by any Company under this Agreement shall be made free
and clear of, and without deduction or withholding for or on account of, any
present or future Taxes now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, other than Excluded Taxes.  If any
Non-Excluded Taxes or Other Taxes are required to be withheld from any amounts
payable to any Creditor Party hereunder, the amounts so payable to such Creditor
Party shall be increased to the extent necessary to yield to such Creditor Party
(after payment of all Non-Excluded Taxes and Other Taxes, including those
imposed on payments made pursuant to this paragraph (vi) of this Section 5(a))
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that no Company shall be
required to increase any such amounts payable to any Lender with respect to any
Non-Excluded Taxes that are directly attributable to such Lender’s failure to
comply with the requirements of paragraph (ix) of this Section 5(a).
 
(vii)  In addition, the Companies shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
 
(viii)  Whenever any Non-Excluded Taxes or Other Taxes are payable by any
Company, as promptly as possible thereafter such Company shall send to the Agent
for its own account or for the account of the relevant Lender, as the case may
be, a certified copy of an original official receipt received by such Company
showing payment thereof (or such other evidence reasonably satisfactory to the
Agent).  If such Company fails to pay any Non-Excluded Taxes or Other Taxes when
due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Companies shall
indemnify the Creditor Parties for any incremental taxes, interest or penalties
that may become payable by any Creditor Party as a result of any such failure.
 
(ix)  Each Lender (or its assignee) that is not a “United States Person,” as
defined in Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver
to the Company Agent and the Agent two completed originals of an appropriate
U.S.  Internal Revenue Service Form W-8, as applicable, or any subsequent
versions thereof or successors thereto, properly completed and duly executed by
such Non-U.S.  Lender.  Such forms shall be delivered by each Non-U.S.  Lender
on or before the date it becomes a party to this Agreement.  In addition, each
Non-U.S.  Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S.  Lender.  Each
Non-U.S.  Lender shall promptly notify the Company Agent at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Company Agent (or any other form of certification
adopted by the U.S.  taxing authorities for such purpose).  Notwithstanding any
other provision of this paragraph, a Non-U.S.  Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S.  Lender is not
legally able to deliver.
 
(x)  The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder
or under any other Ancillary Agreement.
 
 
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(b)  Payment; Certain Closing Conditions.
 
(i)  Payment.  Subject to the terms of Section 5(b)(ii) below, the Companies
shall, jointly and severally, pay (A) to Valens Capital Management, LLC, the
investment manager of the Lenders (“VCM”), a non-refundable payment in an amount
equal to $233,500; (B) to each Lender a non-refundable payment in an amount
equal to one percent (1.00%) of the aggregate principal amount of such Lender’s
Note; and (C) to each Lender an advance prepayment discount deposit equal to one
percent (1.00%) of the aggregate principal amount of such Lender’s Note.  The
payments set forth in clauses (i)(A) and (B) above shall be deemed fully earned
on the Closing Date and shall not be subject to rebate or proration for any
reason.  The payments set forth in clauses (i)(A) (net of any deposits
previously paid by the Companies), (i)(B) and (i)(C) above shall be paid at
closing out of funds held pursuant to a funds escrow agreement and a
disbursement letter executed in connection herewith.
 
(ii)  Overadvance Payment.  Without affecting the Lenders’ rights hereunder,
each Overadvance shall bear additional interest at a rate equal to one percent
(1%) per month of the amount of such Overadvance for all times such amounts
shall be in excess of the Formula Amount.  All amounts that are incurred
pursuant to this Section 5(b)(iii) shall be due and payable by the Companies
monthly, in arrears, on the first business day of each calendar month and upon
expiration of the Term.
 
(iii)  Financial Information Default.  Without affecting the Lenders’ other
rights and remedies, in the event any Company fails to deliver the financial
information required by Section 11 on or before the date required by this
Agreement, the Companies shall jointly and severally pay each Lender its pro
rata share of an aggregate fee in the amount of $500.00 per week (or portion
thereof) for each such failure until such failure is cured to the Agent’s
satisfaction or waived in writing by the Agent.  All amounts that are incurred
pursuant to this Section 5(b)(iv) shall be due and payable by the Companies
monthly, in arrears, on the first business day of each calendar month and upon
expiration of the Term.
 
6.  Security Interest.
 
(a)  To secure the prompt payment to the Creditor Parties of the Obligations,
each Company hereby assigns, pledges and grants to the Agent, for the ratable
benefit of the Creditor Parties, a continuing security interest in and Lien upon
all of the Collateral.  All of each Company’s Books and Records relating to the
Collateral shall, until delivered to or removed by the Agent, be kept by such
Company in trust for the Creditor Parties until the termination of this
Agreement and the payment in full of all Obligations.  Each confirmatory
assignment schedule or other form of assignment hereafter executed by each
Company shall be deemed to include the foregoing grant, whether or not the same
appears therein.
 
(b)  Each Company hereby (i) authorizes the Agent to file any financing
statements, continuation statements or other amendments thereto that (x)
indicate the Collateral (1) as all assets and personal property of such Company
or words of similar effect, regardless of whether any particular asset comprised
in the Collateral falls within the scope of Article 9 of the UCC of such
jurisdiction, or (2) as being of an equal or lesser scope or with greater
detail, and (y) contain any other information required by Part 5 of Article 9 of
the UCC for the sufficiency or filing office acceptance of any financing
statement, continuation statement or other amendment and (ii) ratifies its
authorization for the Agent to have filed any initial financial statements, or
amendments thereto if filed prior to the date hereof.  Each Company acknowledges
that it is not authorized to file, and will not give any authorization to anyone
other than the Agent (including pursuant to Section 9-509(b) of the UCC) to
file, any financing statement or amendment or termination statement with respect
to any financing statement without the prior written consent of the Agent and
agrees that it will not do so without the prior written consent of the Agent,
subject to such Company’s rights under Section 9-509(d)(2) of the UCC.
 
 
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(c)  Each Company hereby grants to the Agent, for the ratable benefit of the
Creditor Parties, an irrevocable, non-exclusive, worldwide license (exercisable
upon termination of this Agreement following the occurrence of an Event of
Default), without payment of royalty or other compensation to such Company to
use or otherwise exploit in any manner as to which authorization of the holder
of such Intellectual Property would be required, and to license or sublicense
such rights in to and under any Intellectual Property now or hereafter owned by
or licensed to, such Company, and wherever the same may be located, and
including in such license access to all media in which any of such Intellectual
Property may be recorded or stored and to all software and hardware used for the
compilation or printout thereof, and represents, promises and agrees that any
such license or sublicense is not and will not be in conflict with the
contractual or commercial rights of any third Person and subject, in the case of
trademarks and service marks, to sufficient rights to quality control and
inspection in favor of such Company to avoid the risk of invalidation of said
trademarks and service marks.
 
(d)  Any proceeds received by the Agent from the foreclosure, sale, lease or
other disposition of any of the Collateral shall be paid over to the Agent for
application in accordance with Section 21.
 
7.  Representations, Warranties and Covenants Concerning the Collateral.  Each
Company represents, warrants (each of which such representations and warranties
shall be deemed repeated upon the making of each request for a Loan and made as
of the time of each and every Loan hereunder) and covenants as follows:
 
(a)  all of the Collateral (i) is owned by it free and clear of all
Liens  (including any claim of infringement) except those in the Agent’s favor
and Permitted Liens and (ii) is not subject to any agreement prohibiting the
granting of a Lien or requiring notice of or consent to the granting of a Lien.
 
(b)  it shall not encumber, mortgage, pledge, assign or grant any security
interest in or Lien upon any Collateral or any other assets to anyone other than
the Agent and except for Permitted Liens.
 
(c)  the Liens granted pursuant to this Agreement, upon the filing of UCC-1
financing statements in respect of each Company (or the District of Columbia
Recorder of Deeds Office for each Company that is organized under the laws of a
jurisdiction outside of the United States of America) in favor of the Agent in
the applicable filing office of the state of organization of such Company (or
the District of Columbia Recorder of Deeds Office for each Company that is
organized under the laws of a jurisdiction outside of the United States of
America), the recording of the Liens in favor of the Agent in the U.S.  Patent
and Trademark Office and the U.S.  Copyright Office, as applicable, the taking
of any actions required under the laws of jurisdictions outside the United
States with respect to Intellectual Property included in the Collateral which is
created under such laws, and the completion of the other filings and actions
listed on Schedule 7(c) (which, in the case of all filings and other documents
referred to in said Schedule, have been delivered to the Agent in duly executed
form) constitute valid perfected security interests in all of the Collateral in
favor of the Agent as security for the prompt payment of the Obligations,
enforceable in accordance with the terms hereof against any and all of its
creditors and purchasers and such security interest is prior to all other Liens
in existence on the date hereof.
 
 
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(d)  no effective security agreement, mortgage, deed of trust, financing
statement, equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is or will be on file or of record in
any public office, except those relating to Permitted Liens.
 
(e)  it shall not dispose of any of the Collateral whether by sale, lease or
otherwise, except for the sale of Inventory in the ordinary course of business
and the disposition or transfer in the ordinary course of business during any
fiscal year of Equipment and/or motor vehicles having an aggregate fair market
value of not more than $25,000 and only to the extent that (i) the proceeds of
any such disposition are used to acquire replacement Equipment and/or motor
vehicles which is subject to the Agent’s first priority security interest or are
used to repay Loans or to pay general corporate expenses, or (ii) following the
occurrence of an Event of Default which continues to exist the proceeds of which
are remitted to the Agent to be held as cash collateral for the Obligations.
 
(f)  it shall defend the right, title and interest of the Agent in and to the
Collateral against the claims and demands of all Persons whomsoever, and take
such actions, including (i) all actions necessary to grant the Agent “control”
of any Investment Property, Deposit Accounts, Letter-of-Credit Rights or
electronic Chattel Paper owned by it, with any agreements establishing control
to be in form and substance satisfactory to the Agent, (ii) the prompt (but in
no event later than five (5) Business Days following the Agent’s request
therefor) delivery to the Agent of all original Instruments, Chattel Paper,
negotiable Documents and certificated Equity Interests owned by it (in each
case, accompanied by stock powers, allonges or other instruments of transfer
executed in blank), (iii) notification to third parties of the Agent’s interest
in Collateral at the Agent’s request, and (iv) the institution of litigation
against third parties as shall be prudent in order to protect and preserve its
and/or the Agent’s respective and several interests in the Collateral.
 
(g)  it shall promptly, and in any event within five (5) Business Days after the
same is acquired by it, notify the Agent of any commercial tort claim (as
defined in the UCC) acquired by it and unless otherwise consented to by the
Agent, it shall enter into a supplement to this Agreement granting to the Agent
a Lien in such commercial tort claim.
 
(h)  it shall place notations upon its Books and Records and any of its
financial statements to disclose the Agent’s Lien in the Collateral.
 
(i)  if it retains possession of any Chattel Paper or Instrument with the
Agent’s consent, such Chattel Paper and Instruments shall be marked with the
following legend:  “This writing and obligations evidenced or secured hereby are
subject to the security interest of LV Administrative Services, Inc., as agent.”
Notwithstanding the foregoing, upon the reasonable request of the Agent, such
Chattel Paper and Instruments shall be delivered to the Agent.
 
(j)  it shall perform in a reasonable time all other steps requested by the
Agent to create and maintain in the Agent’s favor a valid perfected first Lien
in all Collateral subject only to Permitted Liens.
 
(k)  it shall notify the Agent promptly and in any event within five (5)
Business Days after obtaining knowledge thereof (i) of any event or circumstance
that, to its knowledge, would cause the Agent to consider any then existing
Account as no longer constituting an Eligible Account; (ii) of any material
delay in its performance of any of its obligations to any Account Debtor; (iii)
of any assertion by any Account Debtor of any material claims, offsets or
counterclaims; (iv) of any allowances, credits and/or monies granted by it to
any Account Debtor; (v) of all material adverse information relating to the
financial condition of an Account Debtor; (vi) of any material return of goods;
and (vii) of any loss, damage or destruction of any of the Collateral.
 
 
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(l)  all Eligible Accounts (i) represent complete bona fide transactions which
require no further act under any circumstances on its part to make such Accounts
payable by the Account Debtors, (ii) are not subject to any present, future
contingent offsets or counterclaims, and (iii) do not represent bill and hold
sales, consignment sales, guaranteed sales, sale or return or other similar
understandings or obligations of any Affiliate or Subsidiary of such
Company.  It has not made, nor will it make, any agreement with any Account
Debtor for any extension of time for the payment of any Account, any compromise
or settlement for less than the full amount thereof, any release of any Account
Debtor from liability therefor, or any deduction therefrom except a discount or
allowance for prompt or early payment allowed by it in the ordinary course of
its business consistent with historical practice and as previously disclosed to
the Agent in writing.
 
(m)  it shall keep and maintain its Equipment in good operating condition,
except for ordinary wear and tear, and shall make all necessary repairs and
replacements thereof so that the value and operating efficiency shall at all
times be maintained and preserved.  It shall not permit any such items to become
a Fixture to real estate or accessions to other personal property.
 
(n)  it shall maintain and keep all of its Books and Records concerning the
Collateral at its executive offices listed in Schedule 12(aa).
 
(o)  it shall maintain and keep the tangible Collateral at the addresses listed
in Schedule 12(aa), provided, that it may change such locations or open a new
location, provided that it provides the Agent at least thirty (30) days prior
written notice of such changes or new location and (ii) prior to such change or
opening of a new location where Collateral having a value of more than $50,000
will be located, it executes and delivers to the Agent such agreements as are
deemed reasonably necessary or prudent by the Agent, including landlord
agreements, mortgagee agreements and warehouse agreements, each in form and
substance satisfactory to the Agent, to adequately protect and maintain the
Agent’s security interest in such Collateral.
 
(p)  Schedule 7(p) lists all banks and other financial institutions at which it
maintains deposits and/or other accounts, and such Schedule correctly identifies
the name, address and telephone number of each such depository, the name in
which the account is held, a description of the purpose of the account, and the
complete account number.  It shall not establish any depository or other bank
account with any financial institution (other than the accounts set forth on
Schedule 7(p)) without the Agent’s prior written consent.
 
(q)  On the date hereof, its exact legal name (as indicated in the public record
of its jurisdiction of organization), jurisdiction of organization,
organizational identification number, if any, from the jurisdiction of
organization, and the location of its chief executive office or sole place of
business or principal residence, as the case may be, are specified on
Schedule 7(q).  It has furnished to the Agent a certified charter, certificate
of incorporation or other organization document and long-form good standing
certificate as of a date which is recent to the date hereof.  It is organized
solely under the law of the jurisdiction so specified and has not filed any
certificates of domestication, transfer or continuance in any other
jurisdiction.  Except as otherwise indicated on Schedule 7(q), the jurisdiction
of its organization of formation is required to maintain a public record showing
it to have been organized or formed.  Except as specified on Schedule 7(q), it
has not changed its name, jurisdiction of organization, chief executive office
or sole place of business or its corporate structure in any way (e.g., by
merger, consolidation, change in corporate form or otherwise) within the past
five years and has not within the last five years become bound (whether as a
result of merger or otherwise) as a grantor under a security agreement entered
into by another Person, which has not heretofore been terminated.
 
 
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(r)  It will not, except upon 30 days’ prior written notice to the Agent and
delivery to the Agent of (a) all additional financing statements and other
documents reasonably requested by the Agent to maintain the validity, perfection
and priority of the security interests provided for herein and (b) if
applicable, a written supplement to Schedule 12(aa) showing any additional
location at which Inventory or Equipment in excess of $10,000 in the aggregate
shall be kept:  (i) change its jurisdiction of organization or the location of
its chief executive office or sole place of business or principal residence from
that referred to in Section 7(q); (ii) change its name, identity or
organizational structure; or (iii) permit any of the Inventory or Equipment in
excess of $10,000 in the aggregate to be kept at a location other than those
listed on Schedule 12(aa).
 
8.  Payment of Accounts.
 
(a)  Each Company will irrevocably direct all of its present and future Account
Debtors and other Persons obligated to make payments constituting Collateral to
make such payments directly to the lockboxes maintained by such Company (the
“Lockboxes”) with Sterling Bank and Community Bank of the Bay or such other
financial institution accepted by the Agent in writing as may be selected by
such Company (each, a “Lockbox Bank”) pursuant to the terms of the certain
agreements among one or more Companies, the Agent and/or the Lockbox Bank.  On
or prior to the Closing Date, each Company shall and shall cause each Lockbox
Bank to enter into all such documentation acceptable to the Agent pursuant to
which, among other things, such Lockbox Bank agrees to:  (a) sweep the Lockbox
on a daily basis and deposit all checks received therein to an account
designated by the Agent in writing and (b) comply only with the instructions or
other directions of the Agent concerning the Lockbox.  All of each Company’s
invoices, account statements and other written or oral communications directing,
instructing, demanding or requesting payment of any Account of any Company or
any other amount constituting Collateral shall conspicuously direct that all
payments be made to the Lockbox or such other address as the Agent may direct in
writing.  If, notwithstanding the instructions to Account Debtors, any Company
receives any payments, such Company shall immediately remit such payments to the
Agent in their original form with all necessary endorsements.  Until so
remitted, such Company shall hold all such payments in trust for and as the
property of the Agent for the ratable benefit of the Creditor Parties and shall
not commingle such payments with any of its other funds or property.
 
(b)  At the Agent’s election, following the occurrence of an Event of Default
which is continuing, the Agent may notify each Company’s Account Debtors of the
Agent’s security interest in the Accounts, collect them directly and charge the
collection costs and expenses thereof to Company’s and the Eligible Subsidiaries
joint and several account.
 
 
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9.  Collection and Maintenance of Collateral.
 
(a)  The Agent may verify each Company’s Accounts from time to time, but not
more often than once every three (3) months, unless an Event of Default has
occurred and is continuing, utilizing an audit control company or any other
agent of the Agent or the Lenders.
 
(b)  Proceeds of Accounts received by the Agent will be deemed received on the
Business Day after the Agent’s receipt of such proceeds in good funds in dollars
of the United States of America to an account designated by the Agent.  Any
amount received by the Agent after 12:00 noon (New York time) on any Business
Day shall be deemed received on the next Business Day.
 
(c)  As the Agent receives the proceeds of Accounts of any Company, it shall (i)
apply such proceeds, as required, to amounts outstanding under the Notes, and
(ii) remit all such remaining proceeds (net of interest, fees and other amounts
then due and owing to Creditor Parties hereunder) to Company Agent (for the
benefit of the applicable Companies) upon request (but no more often than twice
a week).  Notwithstanding the foregoing, following the occurrence and during the
continuance of an Event of Default, the Agent, at its option, may (a) apply such
proceeds to the Obligations in such order as the Agent shall elect, (b) hold all
such proceeds as cash collateral for the Obligations and each Company hereby
grants to the Agent for the ratable benefit of the Creditor Parties a security
interest in such cash collateral amounts as security for the Obligations and/or
(c) do any combination of the foregoing.
 
10.  Inspections and Appraisals.  At all times during normal business hours and
upon at least three (3) Business Days prior notice (provided that no such prior
notice shall be required, in the event the Agent, in its good faith judgment,
believes such action is necessary to preserve or protect the Collateral or
following the occurrence and during the continuance of an Event of Default), the
Agent, and/or any representative of the Agent shall have the right to (a) have
access to, visit, inspect, review, evaluate and make physical verification and
appraisals of each Company’s properties and the Collateral, (b) inspect, audit
and copy (or take originals if necessary) and make extracts from each Company’s
Books and Records, including management letters prepared by the Accountants, and
(c) discuss with each Company’s directors, principal officers, and independent
accountants, each Company’s business, assets, liabilities, financial condition,
results of operations and business prospects.  Each Company will deliver to the
Agent any instrument necessary for the Agent to obtain records from any service
bureau maintaining records for such Company.  So long as no Default or Event of
Default has occurred and is continuing, such inspection and appraisal rights
shall be limited to once per fiscal quarter.  If any internally prepared
financial information, including that required under this Section is
unsatisfactory in any manner to the Agent, the Agent may request that the
Accountants review the same.
 
11.  Financial Reporting.  Company Agent will deliver, or cause to be delivered,
to the Creditor Parties each of the following, which shall be in form and detail
acceptable to the Agent:
 
 
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(a)  As soon as available, and in any event within ninety (90) days after the
end of each fiscal year of the Parent (unless the Company has filed a form
12B-25 with the SEC in which case it will be one hundred and five (105) days
after the end of the applicable fiscal year), each Company’s audited financial
statements with a report of Pollard-Kelley Auditing Services, Inc. or such other
independent certified public accountants of recognized standing selected by the
Parent and reasonably acceptable to the Agent (the “Accountants”), which annual
financial statements shall be without qualification and shall include each of
the Parent’s and each of its Subsidiaries’ balance sheet as at the end of such
fiscal year and the related statements of each of the Parent’s and each of its
Subsidiaries’ income, retained earnings and cash flows for the fiscal year then
ended, prepared on a consolidating and consolidated basis to include the Parent,
each Subsidiary of the Parent and each of their respective affiliates, all in
reasonable detail and prepared in accordance with GAAP, together with, if and
when available, copies of any management letters prepared by the Accountants;
 
(b)  As soon as available and in any event within forty five (45) days after the
end of each fiscal quarter of the Parent (unless the Company has filed a form
12B-25 with the SEC in which case it will be fifty (50) days after the end of
the applicable fiscal quarter), an unaudited/internal balance sheet and
statements of income, retained earnings and cash flows of each of the Parent’s
and each of its Subsidiaries’ as at the end of and for such quarter and for the
year to date period then ended, prepared on a consolidating and consolidated
basis to include the Parent, each Subsidiary of the Parent and each of their
respective affiliates, in reasonable detail and stating in comparative form the
figures for the corresponding date and periods in the previous year, all
prepared in accordance with GAAP, subject to year-end adjustments;
 
(c)  As soon as available and in any event within fifteen (15) days after the
end of each calendar month, an unaudited/internal balance sheet and statements
of income, retained earnings and cash flows of each of the Parent and its
Subsidiaries as at the end of and for such month and for the year to date period
then ended, prepared on a consolidating and consolidated basis to include the
Parent, each Subsidiary of the Parent and each of their respective affiliates,
in reasonable detail and stating in comparative form the figures for the
corresponding date and periods in the previous year, all prepared in accordance
with GAAP, subject to year-end adjustments;
 
(d)  Within twenty (20) days after the end of each month (or more frequently if
the Agent reasonably requests), (i) agings of each Company’s Accounts, unaudited
trial balances and their accounts payable and a calculation of each Company’s
Accounts and Eligible Accounts, (ii) a detailed schedule of the outstanding
intercompany loans made by each Company to any Foreign Subsidiary which shall
include the outstanding principal amount of each such intercompany loan, the
aggregate amount of Loan proceeds, if any, utilized by such Company to make each
such intercompany loan and the aggregate amount of Loan proceeds utilized by the
Companies during the Term to make intercompany loans to the Foreign Subsidiaries
and (iii) a detailed schedule of the Notes Receivable which shall include the
name of each Person obligated under each such Note Receivable and the
outstanding principal amount thereof; provided, however, that if the Agent shall
request the foregoing information more often than as set forth in the
immediately preceding clauses, each Company shall have fifteen (15) days from
each such request to comply with the Agent’s demand;
 
 
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(e)  Promptly after (i) the filing thereof, copies of the Parent’s most recent
registration statements and annual, quarterly, monthly or other regular reports
which the Parent files with the Securities and Exchange Commission (the “SEC”),
and (ii) the issuance thereof, copies of such financial statements, reports and
proxy statements as the Parent shall send to its stockholders
 
(f)  Together with each delivery of any financial statement pursuant to Section
11(a), 11(b) or 11(c), a Compliance Certificate duly executed by the President
or Chief Executive Officer of the Parent that, among other things, (i) states
that such financial statements have been prepared in accordance with GAAP,
subject to year-end audit adjustments, (ii) shows in reasonable detail the
calculations used in determining each financial covenant contained in Section
13(aa) and (iii) states that no Default or Event of Default is continuing as of
the date of delivery of such Compliance Certificate or, if a Default or Event of
Default is continuing, states the nature thereof and the action that the
Companies propose to take with respect thereto; and
 
(g)  Each Company shall deliver, or cause the applicable Subsidiary of each
Company to deliver, such other information as the Agent shall reasonably
request.
 
12.  Additional Representations and Warranties.  Each Company hereby represents
and warrants to each Creditor Party as follows:
 
(a)  Organization, Good Standing and Qualification.  It and each of its Domestic
Subsidiaries is a corporation, partnership or limited liability company, as the
case may be, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization.  It and each of its Domestic
Subsidiaries has the corporate, limited liability company or partnership, as
the  case may be, power and authority to own and operate its properties and
assets and, insofar as it is or shall be a party thereto, to (i) execute and
deliver this Agreement and the Ancillary Agreements, (ii) to issue and sell the
Notes and the shares of Common Stock issuable upon conversion of the Secured
Term Notes (the “Note Shares”), (iii) to issue and sell the Warrants and the
shares of Common Stock issuable upon exercise of the Warrants (the “Warrant
Shares”), and to (iv) carry out the provisions of this Agreement and the
Ancillary Agreements and to carry on its business as presently conducted.  It
and each of its Domestic Subsidiaries is duly qualified and is authorized to do
business and is in good standing as a foreign corporation, partnership or
limited liability company, as the case may be, in all jurisdictions in which the
nature or location of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those jurisdictions in
which failure to do so has not had, or could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
 
 
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(b)  Subsidiaries.  Each direct and indirect Subsidiary of each Company, the
direct owner of such Subsidiary and its percentage ownership thereof, is set
forth on Schedule 12(b).
 
(c)  Capitalization; Voting Rights.
 
(i)  The authorized capital stock of the Parent, as of the date hereof, consists
of 350,000,000 shares, of which 300,000,000 are shares of Common Stock, par
value $0.001 per share, 199,478,763 shares of which are issued and outstanding,
10,000,000 are shares of Series C Preferred stock, par value $0.01 per share of
which 425 shares are issued and outstanding, 10,000,000 are shares of Series E
Preferred stock, par value $0.01 per share of which 51 shares are issued and
outstanding, 10,000,000 are shares of Series F Preferred stock, par value $0.01
per share of which 1,700 shares are issued and outstanding, 10,000,000 are
shares of Series H Preferred stock, par value $0.01 per share of which 1,035
shares are issued and outstanding and 10,000,000 are shares of Series I
Preferred stock, par value $0.01 per share of which 541 shares are issued and
outstanding.  The authorized, issued and outstanding capital stock of each other
Company and each Subsidiary of each Company is set forth on Schedule 12(c).
 
(ii)  Except as disclosed on Schedule 12(c), other than:  (i) the shares
reserved for issuance under the Parent’s stock option plans; and (ii) shares
which may be issued pursuant to this Agreement and the Ancillary Agreements,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or stockholder agreements,
or arrangements or agreements of any kind for the purchase or acquisition from
the Parent of any of its securities.  Except as disclosed on Schedule 12(c),
neither the offer or issuance of any of the Notes or the Warrants, or the
issuance of any of the Warrant Shares or Note Shares, nor the consummation of
any transaction contemplated hereby will result in a change in the price or
number of any securities of the Parent outstanding, under anti-dilution or other
similar provisions contained in or affecting any such securities.
 
(iii)  All issued and outstanding shares of the Parent’s Common Stock:  (i) have
been duly authorized and validly issued and are fully paid and non-assessable;
and (ii) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities.
 
(iv)  The rights, preferences, privileges and restrictions of the shares of the
Common Stock are as stated in the Parent’s Certificate of Incorporation (the
“Charter”).  The Warrant Shares and the Note Shares have been duly and validly
reserved for issuance.  When issued in compliance with the provisions of this
Agreement and the Parent’s Charter, the Securities will be validly issued, fully
paid and non-assessable, and will be free of any liens or encumbrances;
provided, however, that the Securities may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.
 
 
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(d)  Authorization; Binding Obligations.  All corporate, partnership or limited
liability company, as the case may be, action on its and its Domestic
Subsidiaries’ part (including their respective officers and directors) necessary
for the authorization of this Agreement and the Ancillary Agreements, the
performance of all of its and its Domestic Subsidiaries’ obligations hereunder
and under the Ancillary Agreements on the Closing Date and, the authorization,
issuance and delivery of the Notes and the Warrants has been taken or will be
taken prior to the Closing Date.  This Agreement and the Ancillary Agreements,
when executed and delivered and to the extent it is a party thereto, will be its
and its Domestic Subsidiaries’ valid and binding obligations enforceable against
each such Person in accordance with their terms, except:
 
(i)  as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors’ rights;
and
 
(ii)  general principles of equity that restrict the availability of equitable
or legal remedies.
 
The issuance of the Notes and the subsequent conversion of the Secured Term
Notes into Note Shares are not and will not be subject to any preemptive rights
or rights of first refusal that have not been properly waived or complied
with.  The issuance of the Warrants and the subsequent exercise of the Warrants
for Warrant Shares are not and will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.
 
(e)  Liabilities; Solvency.
 
(i)  Neither it nor any of its Domestic Subsidiaries has any liabilities, except
current liabilities incurred in the ordinary course of business and liabilities
disclosed in any Exchange Act Filings.
 
(ii)  Both before and after giving effect to (a) the Loans incurred on the
Closing Date or such other date as Loans requested hereunder are made or
incurred, (b) the disbursement of the proceeds of, or the assumption of the
liability in respect of, such Loans pursuant to the instructions or agreement of
any Company, (c) the payment and accrual of all transaction costs in connection
with the foregoing, and (d) the consummation of the transactions contemplated
herein and in the Ancillary Agreements, each Company and each Domestic
Subsidiary of each Company, is and will be, Solvent.
 
(f)  Agreements; Action.  Except as set forth on Schedule 12(f) or as disclosed
in any Exchange Act Filings:
 
(i)  There are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which it or any of its
Domestic Subsidiaries is a party or to its knowledge by which it is bound which
may involve:  (i) obligations (contingent or otherwise) of, or payments to, it
or any of its Domestic Subsidiaries in excess of $50,000 (other than obligations
of, or payments to, it or any of its Domestic Subsidiaries arising from purchase
or sale agreements entered into in the ordinary course of business); or (ii) the
transfer or license of any patent, copyright, trade secret or other proprietary
right to or from it (other than licenses arising from the purchase of “off the
shelf” or other standard products); or (iii) provisions restricting the
development, manufacture or distribution of its or any of its Domestic
Subsidiaries’ products or services; or (iv) indemnification by it or any of its
Domestic Subsidiaries with respect to infringements of proprietary rights.
 
 
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(ii)  Since December 31, 2006 (the “Balance Sheet Date”), neither it nor any of
its Domestic Subsidiaries has:  (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock; (ii) incurred any indebtedness for money borrowed or any
other liabilities (other than ordinary course obligations) individually in
excess of $50,000 or, in the case of indebtedness and/or liabilities
individually less than $50,000, in excess of $100,000 in the aggregate; (iii)
made any loans or advances to any Person not in excess, individually or in the
aggregate, of $100,000, other than ordinary advances for travel expenses; or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its Inventory in the ordinary course of business.
 
(iii)  For the purposes of subsections (i) and (ii) of this Section 12(f), all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same Person (including Persons it or any
of its applicable Domestic Subsidiaries has reason to believe are affiliated
therewith or with any Domestic Subsidiary thereof) shall be aggregated for the
purpose of meeting the individual minimum dollar amounts of such subsections.
 
(iv)  the Parent maintains disclosure controls and procedures (“Disclosure
Controls”) designed to ensure that information required to be disclosed by the
Parent in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized, and reported, within the time periods specified
in the rules and forms of the SEC.
 
(v)  The Parent makes and keeps books, records, and accounts, that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of its assets.  It maintains internal control over financial
reporting (“Financial Reporting Controls”) designed by, or under the supervision
of, its principal executive and principal financial officers, and effected by
its board of directors, management, and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP, including
that:
 
(1)  transactions are executed in accordance with management’s general or
specific authorization;
 
(2)  unauthorized acquisition, use, or disposition of the Parent’s assets that
could have a material effect on the financial statements are prevented or timely
detected;
 
(3)  transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that its receipts and expenditures are
being made only in accordance with authorizations of the Parent’s management and
board of directors;
 
(4)  transactions are recorded as necessary to maintain accountability for
assets; and
 
(5)  the recorded accountability for assets is compared with the existing assets
at reasonable intervals, and appropriate action is taken with respect to any
differences.
 
 
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(vi)  There is no weakness in any of its Disclosure Controls or Financial
Reporting Controls that is required to be disclosed in any of the Exchange Act
Filings, except as so disclosed.
 
(g)  Obligations to Related Parties.  Except as set forth on Schedule 12(g),
neither it nor any of its Subsidiaries has any obligations to their respective
officers, directors, stockholders or employees other than:
 
(i)  for payment of salary for services rendered and for bonus payments;
 
(ii)  reimbursement for reasonable expenses incurred on its or its Subsidiaries’
behalf;
 
(iii)  for other standard employee benefits made generally available to all
employees (including stock option agreements outstanding under any stock option
plan approved by its and its Subsidiaries’ Board of Directors, as applicable);
and
 
(iv)  obligations listed in its and each of its Subsidiary’s financial
statements or disclosed in any of the Parent’s Exchange Act Filings.
 
Except as described above or set forth on Schedule 12(g), none of its officers,
directors or, to the best of its knowledge, key employees or stockholders, any
of its Subsidiaries or any members of their immediate families, are indebted to
it or any of its Subsidiaries, individually or in the aggregate, in excess of
$50,000 or have any direct or indirect ownership interest in any Person with
which it or any of its Subsidiaries is affiliated or with which it or any of its
Subsidiaries has a business relationship, or any Person which competes with it
or any of its Subsidiaries, other than passive investments in publicly traded
companies (representing less than one percent (1%) of such company) which may
compete with it or any of its Subsidiaries.  Except as described above, none of
its officers, directors or stockholders, or any member of their immediate
families, is, directly or indirectly, interested in any material contract with
it or any of its Subsidiaries and no agreements, understandings or proposed
transactions are contemplated between it or any of its Subsidiaries and any such
Person.  Except as set forth on Schedule 12(g), neither it nor any of its
Subsidiaries is a guarantor or indemnitor of any indebtedness of any other
Person.
 
(h)  Changes.  Since the Balance Sheet Date, except as disclosed in any Schedule
to this Agreement or to any of the Ancillary Agreements, there has not been:
 
(i)  any change in its or any of its Subsidiaries’ business, assets,
liabilities, condition (financial or otherwise), properties, operations or
prospects, which, individually or in the aggregate, has had, or could reasonably
be expected to have, a Material Adverse Effect;
 
(ii)  any resignation or termination of any of its or its Subsidiaries’
officers, key employees or groups of employees;
 
(iii)  any material change, except in the ordinary course of business, in its or
any of its Subsidiaries’ contingent obligations by way of guaranty, endorsement,
indemnity, warranty or otherwise;
 
 
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(iv)  any damage, destruction or loss, whether or not covered by insurance,
which has had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
 
(v)  any waiver by it or any of its Domestic Subsidiaries of a valuable right or
of a material debt owed to it;
 
(vi)  any direct or indirect material loans made by it or any of its Domestic
Subsidiaries to any of its or any of its Domestic Subsidiaries’ stockholders,
employees, officers or directors, other than advances made in the ordinary
course of business;
 
(vii)  any material change in any compensation arrangement or agreement with any
employee, officer, director or stockholder;
 
(viii)  any declaration or payment of any dividend or other distribution of its
or any of its Domestic Subsidiaries’ assets;
 
(ix)  any labor organization activity related to it or any of its Domestic
Subsidiaries;
 
(x)  any debt, obligation or liability incurred, assumed or guaranteed by it or
any of its Subsidiaries, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
 
(xi)  any sale, assignment, transfer, abandonment or other disposition of any
Intellectual Property or other intangible assets owned by the Company or any of
its Subsidiaries;
 
(xii)  any change in any material agreement to which it or any of its
Subsidiaries is a party or by which either it or any of its Subsidiaries is
bound which, either individually or in the aggregate, has had, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect;
 
(xiii)  any other event or condition of any character that, either individually
or in the aggregate, has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; or
 
(xiv)  any arrangement or commitment by it or any of its Subsidiaries to do any
of the acts described in subsection (i) through (xiii) of this Section 12(h).
 
 
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(i)  Title to Properties and Assets; Liens, Etc.  Except as set forth on
Schedule 12(i), it and each of its Subsidiaries has good and marketable title to
their respective properties and assets (tangible or intangible), and good title
to its leasehold interests, in each case subject to no Lien, other than
Permitted Liens.  All facilities, Equipment, Fixtures, vehicles and other
properties owned, leased or used by it or any of its Domestic Subsidiaries are
in good operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used.  Except as set forth on Schedule 12(i),
it and each of its Domestic Subsidiaries is in compliance with all material
terms of each lease to which it is a party or is otherwise bound.
 
(j)  Intellectual Property.
 
(i)  Each Company and each of its Domestic Subsidiaries owns or possesses
sufficient legal rights to use all Intellectual Property necessary for its
business as now conducted and, to the Company’s knowledge, as presently proposed
to be conducted.  There are no settlements or consents, covenants not to sue,
non-assertion assurances, or releases to which any Company or any of its
Domestic Subsidiaries is bound which adversely affects its rights to own or use
any Intellectual Property.
 
(ii)  To each Company’s knowledge, the conduct of such Company’s and each of its
Domestic Subsidiaries’ business as now conducted, and as presently proposed to
be conducted, does not (and will not) result in any infringement or other
violation of the rights of others.
 
(iii)  Schedule 12(j) (as such schedule may be amended or supplemented from time
to time) sets forth a true and complete list of (i) all registrations and
applications for Intellectual Property owned by each Company or any of its
Domestic Subsidiaries filed or issued by any Intellectual Property registry and
(ii) all Intellectual Property licenses which are either material to the
business of any Company or any of its Domestic Subsidiaries or relate to any
material portion of a Company’s or any of its Domestic Subsidiaries’ inventory,
including licenses for standard software having a replacement value of more than
$10,000.  None of such Intellectual Property licenses are reasonably likely to
be construed as an assignment of the licensed Intellectual Property to such
Company or any of its Domestic Subsidiaries.
 
(iv)  There are no claims pending or, to best of any Company’s knowledge,
threatened and neither any Company nor any of its Domestic Subsidiaries has
received any other communications, alleging that, any Company or any of its
Domestic Subsidiaries has infringed, diluted, misappropriated, or otherwise
violated any Intellectual Property of any other person or entity, nor is any
Company aware of any basis therefore.
 
(v)  No Company is aware of any infringement diluted, misappropriated, or other
violation of its Intellectual Property by any other person or entity.
 
(vi)  No Company nor any of its Domestic Subsidiaries utilizes any inventions,
trade secrets or other Intellectual Property of any of its employees, officers
or contractors (or former employees, officers, or contractors) except for
inventions, trade secrets or other Intellectual Property that is owned by a
Company or any of its Subsidiaries as a matter of law or have been rightfully
assigned to a Company or any of its Subsidiaries.
 
 
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(k)  Compliance with Other Instruments.  Neither it nor any of its Domestic
Subsidiaries is in violation or default of (x) any term of its Charter or
Bylaws, or (y) any provision of any indebtedness, mortgage, indenture, contract,
agreement or instrument to which it is party or by which it is bound or of any
judgment, decree, order or writ, which violation or default, in the case of this
clause (y), has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.  The execution,
delivery and performance of and compliance with this Agreement and the Ancillary
Agreements to which it is a party, and the issuance of the Notes and the other
Securities each pursuant hereto and thereto, will not, with or without the
passage of time or giving of notice, result in any such material violation, or
be in conflict with or constitute a default under any such term or provision, or
result in the creation of any Lien upon any of its or any of its Domestic
Subsidiary’s properties or assets or the suspension, revocation, impairment,
forfeiture or non-renewal of any permit, license, authorization or approval
applicable to it or any of its Domestic Subsidiaries, their businesses or
operations or any of their assets or properties.
 
(l)  Litigation.  Except as set forth on Schedule 12(l), there is no action,
suit, proceeding or investigation pending or, to its knowledge, currently
threatened against it or any of its Subsidiaries that prevents it or any of its
Domestic Subsidiaries from entering into this Agreement or the Ancillary
Agreements, or from consummating the transactions contemplated hereby or
thereby, or which has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect, or could result in
any change in its or any of its Domestic Subsidiaries’ current equity ownership,
nor is it aware that there is any basis to assert any of the foregoing.  Neither
it nor any of its Domestic Subsidiaries is a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality.  There is no action, suit, proceeding or
investigation by it or any of its Domestic Subsidiaries currently pending or
which it or any of its Domestic Subsidiaries intends to initiate.
 
(m)  Tax Returns and Payments.  It and each of its Domestic Subsidiaries has
timely filed all tax returns (federal, state and local) required to be filed by
it.  All taxes shown to be due and payable on such returns, any assessments
imposed, and all other taxes due and payable by it and each of its Domestic
Subsidiaries on or before the Closing Date, have been paid or will be paid prior
to the time they become delinquent.  Except as set forth on Schedule 12(m),
neither it nor any of its Domestic Subsidiaries has been advised:
 
(i)  that any of its returns, federal, state or other, have been or are being
audited as of the date hereof; or
 
(ii)  of any adjustment, deficiency, assessment or court decision in respect of
its federal, state or other taxes.
 
Neither it nor any of its Domestic Subsidiaries has any knowledge of any
liability of any tax to be imposed upon its properties or assets as of the date
of this Agreement that is not adequately provided for.
 
 
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(n)  Employees.  Except as set forth on Schedule 12(n), neither it nor any of
its Domestic Subsidiaries has any collective bargaining agreements with any of
its employees.  There is no labor union organizing activity pending or, to its
knowledge, threatened with respect to it or any of its Domestic
Subsidiaries.  Except as disclosed in the Exchange Act Filings or on Schedule
12(n), neither it nor any of its Domestic Subsidiaries is a party to or bound by
any currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement.  To its knowledge, none of its or any
of its Domestic Subsidiaries’ employees, nor any consultant with whom it or any
of its Domestic Subsidiaries has contracted, is in violation of any term of any
employment contract, proprietary information agreement or any other agreement
relating to the right of any such individual to be employed by, or to contract
with, it or any of its Domestic Subsidiaries because of the nature of the
business to be conducted by it or any of its Domestic Subsidiaries; and to its
knowledge the continued employment by it and its Domestic Subsidiaries of their
present employees, and the performance of its and its Domestic Subsidiaries
contracts with its independent contractors, will not result in any such
violation.  Neither it nor any of its Domestic Subsidiaries is aware that any of
its or any of its Domestic Subsidiaries’ employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency that would interfere with their duties to it or any of its
Domestic Subsidiaries.  Neither it nor any of its Domestic Subsidiaries has
received any notice alleging that any such violation has occurred.  Except for
employees who have a current effective employment agreement with it or any of
its Domestic Subsidiaries, none of its or any of its Domestic Subsidiaries’
employees has been granted the right to continued employment by it or any of its
Domestic Subsidiaries or to any material compensation following termination of
employment with it or any of its Domestic Subsidiaries.  Except as set forth on
Schedule 12(n), neither it nor any of its Domestic Subsidiaries is aware that
any officer, key employee or group of employees intends to terminate his, her or
their employment with it or any of its Domestic Subsidiaries, as applicable, nor
does it or any of its Domestic Subsidiaries have a present intention to
terminate the employment of any officer, key employee or group of employees.
 
(o)  Registration Rights and Voting Rights.  Except as set forth on
Schedule 12(o) and except as disclosed in Exchange Act Filings, neither it nor
any of its Domestic Subsidiaries is presently under any obligation, and neither
it nor any of its Domestic Subsidiaries has granted any rights, to register any
of its or any of its Domestic Subsidiaries’ presently outstanding securities or
any of its securities that may hereafter be issued.  Except as set forth on
Schedule 12(o) and except as disclosed in Exchange Act Filings, to its
knowledge, none of its or any of its Domestic Subsidiaries’ stockholders has
entered into any agreement with respect to its or any of its Domestic
Subsidiaries’ voting of equity securities.
 
(p)  Compliance with Laws; Permits.  Neither it nor any of its Domestic
Subsidiaries is in violation of the Sarbanes-Oxley Act of 2002 or any SEC
related regulation or rule or any rule of the Principal Market promulgated
thereunder or any other applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.  No governmental
orders, permissions, consents, approvals or authorizations are required to be
obtained and no registrations or declarations are required to be filed in
connection with the execution and delivery of this Agreement or any Ancillary
Agreement and the issuance of any of the Securities, except such as have been
duly and validly obtained or filed, or with respect to any filings that must be
made after the Closing Date, as will be filed in a timely manner.  It and each
of its Subsidiaries has all material franchises, permits, licenses and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
 
 
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(q)  Environmental and Safety Laws.  There are no pending actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending, or to
the knowledge of any Company threatened against or affecting any Company or any
of its Domestic Subsidiaries under Environmental Law.  Each Company and each of
its Domestic Subsidiaries (i) are and have been in full compliance with
Environmental Law and have no knowledge of any material expenditure that will be
required to maintain such compliance in the future; (ii) have not received any
notice or claim alleging that they are not in full compliance with or otherwise
have liability under Environmental Law; and (iii) have no knowledge of any facts
or circumstances that could reasonably be expected to form the basis of any such
claim.  No Hazardous Materials are present or are used or have been used,
stored, or released by any Company or any of its Domestic Subsidiaries, or to
their knowledge by any other Person, at any property currently or formerly
owned, leased or operated by any Company or any of its Domestic Subsidiaries or
disposed of at any other location by any Company or any of its Domestic
Subsidiaries except (i) in compliance with Environmental Law; and (2) in
quantities and under circumstances that would not require investigation or
remediation by any Company or any of its Domestic Subsidiaries.  No Company nor
any of its Domestic Subsidiaries has assumed by contract or by operation of law
the liabilities arising under Environmental Law of any other Person.  Each
Company and each of its Domestic Subsidiaries have provided to Agent all
material reports, audits and assessments in their possession or control
regarding the environmental condition of any property currently or formerly
owned or operated by any Company or any of its Domestic Subsidiaries.
 
(r)  Valid Offering.  Assuming the accuracy of the representations and
warranties of the Lenders contained in this Agreement, the offer and issuance of
the Securities will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.
 
(s)  Full Disclosure.  It and each of its Domestic Subsidiaries has provided the
Lenders with all information requested by the Lenders in connection with the
Lenders’ decision to enter into this Agreement, including all information each
Company and each of its Domestic Subsidiaries believe is reasonably necessary to
make such investment decision.  Neither this Agreement, the Ancillary Agreements
nor the exhibits and schedules hereto and thereto nor any other document,
including without limitation the responses contained in any questionnaire
provided to any Company by the Agent, delivered by it or any of its Domestic
Subsidiaries to the Agent or their attorneys or agents in connection herewith or
therewith or with the transactions contemplated hereby or thereby, contain any
untrue statement of a material fact nor omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.  Any financial projections
and other estimates provided to the Lenders by it or any of its Subsidiaries
were based on its and its Subsidiaries’ experience in the industry and on
assumptions of fact and opinion as to future events which it or any of its
Subsidiaries, at the date of the issuance of such projections or estimates,
believed to be reasonable.
 
(t)  Insurance.  It and each of its Domestic Subsidiaries has general
commercial, product liability, fire and casualty insurance policies with
coverages which it believes are customary for companies similarly situated to it
and each of its Domestic Subsidiaries in the same or similar business.
 
(u)  SEC Reports and Financial Statements.  Except as set forth on
Schedule 12(u), it and each of its Domestic Subsidiaries has filed all proxy
statements, reports and other documents required to be filed by it under the
Exchange Act.  The Parent has furnished the Lenders with copies of:  (i) its
Annual Report on Form 10-K for its fiscal years ended December 31, 2006; and
(ii) its Quarterly Reports on Form 10-Q for its fiscal quarters ended March 31,
2007 and June 30, 2007, and the Form 8-K filings which it has made during its
fiscal year 2007 to date (collectively, the “SEC Reports”).  Except as set forth
on Schedule 12(u), each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and none of
the SEC Reports, nor the financial statements (and the notes thereto) included
in the SEC Reports, as of their respective filing dates, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  Such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed) and fairly present in all material respects the financial condition,
the results of operations and cash flows of the Parent and its Subsidiaries, on
a consolidated basis, as of, and for, the periods presented in each such SEC
Report.
 
 
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(v)  Listing.  The Common Stock is listed or quoted, as applicable, on the
Principal Market and satisfies all requirements for the continuation of such
listing or quotation, as applicable, and the Parent shall do all things
necessary for the continuation of such listing or quotation, as applicable.  The
Parent has not received any notice that its Common Stock will be delisted from,
or no longer quoted on, as applicable, the Principal Market or that its Common
Stock does not meet all requirements for such listing or quotation, as
applicable.
 
(w)  No Integrated Offering.  Neither it, nor any of its Domestic Subsidiaries
nor any of its Affiliates, nor any Person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would cause the offering of
the Securities pursuant to this Agreement or any Ancillary Agreement to be
integrated with prior offerings by it for purposes of the Securities Act which
would prevent it from issuing the Securities pursuant to Rule 506 under the
Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will it or any of its Affiliates or Domestic Subsidiaries take
any action or steps that would cause the offering of the Securities to be
integrated with other offerings.
 
(x)  Stop Transfer.  The Securities are restricted securities as of the date of
this Agreement.  Neither it nor any of its Domestic Subsidiaries will issue any
stop transfer order or other order impeding the sale and delivery of any of the
Securities at such time as the Securities are registered for public sale or an
exemption from registration is available, except as required by state and
federal securities laws.
 
(y)  Dilution.  It specifically acknowledges that the Parent’s obligation to
issue the shares of Common Stock upon exercise of the Warrants is binding upon
the Parent and enforceable regardless of the dilution such issuance may have on
the ownership interests of other shareholders of the Parent.
 
(z)  Patriot Act.  It certifies that, to the best of its knowledge, neither it
nor any of its Subsidiaries has been designated, nor is or shall be owned or
controlled, by a “suspected terrorist” as defined in Executive Order 13224.  It
hereby acknowledges that each of the Creditor Parties seeks to comply with all
applicable laws concerning money laundering and related activities.  In
furtherance of those efforts, it hereby represents, warrants and covenants
that:  (i) none of the cash or property that it or any of its Subsidiaries will
pay or will contribute to any Creditor Party has been or shall be derived from,
or related to, any activity that is deemed criminal under United States law; and
(ii) no contribution or payment by it or any of its Subsidiaries to any Creditor
Party, to the extent that they are within its or any such Subsidiary’s control
shall cause such Creditor Party to be in violation of the United States Bank
Secrecy Act, the United States International Money Laundering Control Act of
1986 or the United States International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001.  It shall promptly notify the Agent if any
of these representations, warranties and covenants ceases to be true and
accurate regarding it or any of its Subsidiaries.  It shall provide any Creditor
Party with any additional information regarding it and each Subsidiary thereof
that such Creditor Party deems necessary or convenient to ensure compliance with
all applicable laws concerning money laundering and similar activities.  It
understands and agrees that if at any time it is discovered that any of the
foregoing representations, warranties and covenants are incorrect, or if
otherwise required by applicable law or regulation related to money laundering
or similar activities, the Creditor Parties may undertake appropriate actions to
ensure compliance with applicable law or regulation, including but not limited
to segregation and/or redemption of any Lender’s investment in it.  It further
understands that the Creditor Parties may release confidential information about
it and its Subsidiaries and, if applicable, any underlying beneficial owners, to
proper authorities if such Creditor Party, in its sole discretion, determines
that it is in the best interests of such Creditor Party in light of relevant
rules and regulations under the laws set forth in subsection (ii) above.
 
 
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(aa)  Company Name; Locations of Offices, Records and
Collateral.  Schedule 12(aa) sets forth each Company’s name as it appears in
official filings in the state of its organization, the type of entity of each
Company, the organizational identification number issued by each Company’s state
of organization or a statement that no such number has been issued, each
Company’s state of organization, and the location of each Company’s chief
executive office, corporate offices, warehouses, other locations of Collateral
and locations where records with respect to Collateral are kept (including in
each case the county of such locations) and, except as set forth in such
Schedule 12(aa), such locations have not changed during the preceding twelve
months.  As of the Closing Date, during the prior five years, except as set
forth in Schedule 12(aa), no Company has been known as or conducted business in
any other name (including trade names).  Each Company has only one state of
organization.
 
(bb)  ERISA.  Based upon the Employee Retirement Income Security Act of 1974
(“ERISA”), and the regulations and published interpretations thereunder:  (i)
neither it nor any of its Subsidiaries has engaged in any Prohibited
Transactions (as defined in Section 406 of ERISA and Section 4975 of the Code);
(ii) it and each of its Domestic Subsidiaries has met all applicable minimum
funding requirements under Section 302 of ERISA in respect of its plans; (iii)
neither it nor any of its Domestic Subsidiaries has any knowledge of any event
or occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s); (iv) neither it nor any of its Domestic Subsidiaries has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than its or such Domestic Subsidiary’s employees; and (v)
neither it nor any of its Domestic Subsidiaries has withdrawn, completely or
partially, from any multi-employer pension plan so as to incur liability under
the Multiemployer Pension Plan Amendments Act of 1980.
 
(cc)  Status of Companies.  Unless all of the Obligations are properly
classified as debt for U.S.  federal income tax purposes, each Company is a
corporation for U.S.  federal income tax purposes.
 
13.  Covenants.  Each Company, as applicable, covenants and agrees with the
Creditor Parties as follows:
 
(a)  Stop-Orders.  The Parent shall advise the Agent, promptly after it receives
notice of issuance by the SEC, any state securities commission or any other
regulatory authority of any stop order or of any order preventing or suspending
any offering of any securities of the Parent, or of the suspension of the
qualification of the Common Stock for offering or sale in any jurisdiction, or
the initiation of any proceeding for any such purpose.
 
(b)  Listing.  The Parent shall promptly secure the listing or quotation, as
applicable, of the shares of Common Stock issuable upon conversion of the
Secured Term Notes and exercise of the Warrants on the Principal Market upon
which shares of Common Stock are listed or quoted, as applicable, (subject to
official notice of issuance) and shall maintain such listing or quotation, as
applicable, so long as any other shares of Common Stock shall be so listed or
quoted, as applicable.  The Parent shall maintain the listing or quotation, as
applicable, of its Common Stock on the Principal Market, and will comply in all
material respects with the Parent’s reporting, filing and other obligations
under the bylaws or rules of the National Association of Securities Dealers
(“NASD”) and such exchanges, as applicable.
 
 
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(c)  Market Regulations.  The Parent shall notify the SEC, NASD and applicable
state authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to the Lenders
and promptly provide copies thereof to the Agent.
 
(d)  Reporting Requirements.  The Parent shall timely file with the SEC all
reports required to be filed pursuant to the Exchange Act and refrain from
terminating its status as an issuer required by the Exchange Act to file reports
thereunder even if the Exchange Act or the rules or regulations thereunder would
permit such termination.
 
(e)  Use of Funds.  It shall use the proceeds of the Loans for general working
capital purposes only and as otherwise set forth in Schedule 13(e).
 
(f)  Access to Facilities.  It shall, and shall cause each of its Domestic
Subsidiaries to, permit any representatives designated by the Agent (or any
successor to the Agent), upon three (3) Business Days prior notice, during
normal business hours, at Company’s expense and accompanied by a representative
of Company Agent (provided that no such prior notice shall be required to be
given and no such representative shall be required to accompany the Agent in the
event the Agent, in its good faith judgment, believes such access is necessary
to preserve or protect the Collateral or following the occurrence and during the
continuance of an Event of Default), to:
 
(i)  visit and inspect any of its or any such Domestic Subsidiary’s properties;
 
(ii)  examine its or any such Domestic Subsidiary’s corporate and financial
records (unless such examination is not permitted by federal, state or local law
or by contract) and make copies thereof or extracts therefrom; and
 
(iii)  discuss its or any such Domestic Subsidiary’s affairs, finances and
accounts with its or any such Domestic Subsidiary’s directors, officers and
Accountants.
 
Notwithstanding the foregoing, neither it nor any of its Domestic Subsidiaries
shall provide any material, non-public information to the Agent unless the Agent
signs a confidentiality agreement and otherwise complies with Regulation FD,
under the federal securities laws.
 
(g)  Taxes.  It shall, and shall cause each of its Subsidiaries to, promptly pay
and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon it and
its Subsidiaries’ income, profits, property or business, as the case may be;
provided, however, that any such tax, assessment, charge or levy need not be
paid currently if (i) the validity thereof shall currently and diligently be
contested in good faith by appropriate proceedings, (ii) such tax, assessment,
charge or levy shall have no effect on the Lien priority of the Agent in the
Collateral, and (iii) if it and/or such Subsidiary, as applicable, shall have
set aside on its and/or such Subsidiary’s books adequate reserves with respect
thereto in accordance with GAAP; and provided, further, that it shall, and shall
cause each of its Subsidiaries to, pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor.
 
 
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(h)  Insurance.
 
(i)  It shall bear the full risk of loss from any loss of any nature whatsoever
with respect to the Collateral and it and each of its Domestic Subsidiaries
will, jointly and severally, bear the full risk of loss from any loss of any
nature whatsoever with respect to the assets pledged to the Agent as security
for the Obligations.  Furthermore, it will insure or cause the Collateral to be
insured in the Agent’s name as an additional insured and lender loss payee, with
an appropriate loss payable endorsement in form and substance satisfactory to
the Agent, against loss or damage by fire, flood, sprinkler leakage, theft,
burglary, pilferage, loss in transit and other risks customarily insured against
by companies in similar business similarly situated as it and its Domestic
Subsidiaries including but not limited to workers compensation, public and
product liability and business interruption, and such other hazards as the Agent
shall specify in amounts and under insurance policies and bonds by insurers
acceptable to the Agent and all premiums thereon shall be paid by such Company
and the policies delivered to the Agent.  If any such Company fails to obtain
the insurance and in such amounts of coverage as otherwise required pursuant to
this Section (h), the Agent may procure such insurance and the cost thereof
shall be promptly reimbursed by the Companies, jointly and severally, and shall
constitute Obligations.
 
(ii)  No Company’s insurance coverage shall be impaired or invalidated by any
act or neglect of any Company or any of its Domestic Subsidiaries and the
insurer will provide the Agent with no less than thirty (30) days notice prior
of cancellation;
 
(iii)  The Agent, in connection with its status as a lender loss payee, will be
assigned at all times to a first lien position until such time as all
Obligations have been indefeasibly satisfied in full.
 
(i)  Intellectual Property.  Each Company and each of its Domestic Subsidiaries:
 
(i)  shall maintain in full force and effect its existence, rights and
franchises and all licenses and other rights to own or use Intellectual Property
including registrations and applications therefore, that are necessary to the
conduct of its business, as now conducted or as presently proposed to be
conducted, and shall not do any act or omit to do any act whereby any of such
Intellectual Property may lapse, or become abandoned, dedicated to the public,
or unenforceable, or the Lien therein in favor of the Agent for the benefit of
the Lenders would be adversely affected;
 
(ii)  shall report to the Agent (i) the filing of any application to register a
Copyright no later than ten  (10) days after such filing occurs (ii) the  filing
of any application to register any other Intellectual Property with any other
Intellectual Property registry, and the issuance thereof, no later than thirty
(30) days after such filing or issuance occurs and, in each case, shall,
simultaneously with such report, deliver to the Agent fully-executed documents
required to acknowledge, confirm, register, record or perfect the Lien in such
Intellectual Property.  In addition, each Company and each of its Domestic
Subsidiaries hereby authorize the Agent to modify this Agreement by amending
Schedule 12(j) to include any registrations or applications for Intellectual
Property inadvertently omitted from such Schedule or filed, registered, acquired
by any Company or any of its Domestic Subsidiaries after the date hereof and
will cooperate with the Agent in effecting any such amendment to include any new
item of Intellectual Property included in the Collateral;
 
 
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(iii)  shall, promptly upon the reasonable request of the Agent, execute and
deliver to the Agent any document or instrument required to acknowledge,
confirm, register, record, or perfect the Lien of the Agent in any part of the
Intellectual Property owned by the Company and its Domestic Subsidiaries; and
 
(iv)  shall not sell, assign, transfer, license, grant any option, or create or
suffer to exist any Lien upon or with respect to Intellectual Property, except
for the Liens in favor of the Agent and Permitted Liens.
 
(j)  Properties.  It shall, and shall cause each of its Subsidiaries to, keep
its properties in good repair, working order and condition, reasonable wear and
tear excepted, and from time to time make all needful and proper repairs,
renewals, replacements, additions and improvements thereto; and it shall, and
shall cause each of its Subsidiaries to, at all times comply with each provision
of all leases to which it is a party or under which it occupies property if the
breach of such provision could reasonably be expected to have a Material Adverse
Effect.
 
(k)  Confidentiality.  No Company will, nor will it permit any of its
Subsidiaries to, disclose, nor will it include in any public announcement, the
name of any Creditor Party, unless expressly agreed to by such Creditor Party or
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement.  Notwithstanding the foregoing,
(i) each Company may disclose any Creditor Party’s identity and the terms of
this Agreement and the Ancillary Agreements to its current and prospective debt
and equity financing sources and (ii) each Company (and each employee,
representative, or other agent of each Company, including, without limitation,
any attorney, accountant and/or auditor) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and any facts that may be
relevant to the tax structure of the transactions contemplated by this Agreement
and the Ancillary Agreements and the agreements referred to therein; provided,
however, that no Company (and no employee, representative or other agent
thereof, including, without limitation, any attorney, accountant and/or auditor)
shall disclose pursuant to this clause (ii) any other information that is not
relevant to understanding the tax treatment or tax structure of such
transactions (including the identity of any party or any information that could
lead another to determine the identity of any party); and, provided, further,
that no Company shall disclose or permit any of its Subsidiaries to disclose any
information to the extent that such disclosure could reasonably be expected to
result in a violation of any U.S. federal or state securities law or similar law
of another jurisdiction.
 
 
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(l)  Required Approvals.  It shall not, and shall not permit any of its Domestic
Subsidiaries to, without the prior written consent of the Agent, (i) create,
incur, assume or suffer to exist any indebtedness (exclusive of trade debt)
whether secured or unsecured other than each Company’s indebtedness to the
Creditor Parties and as set forth on Schedule 13(l)(i) attached hereto and made
a part hereof; (ii) cancel any debt owing to it in excess of $50,000 in the
aggregate during any twelve (12) month period; (iii) assume, guarantee, endorse
or otherwise become directly or contingently liable in connection with any
obligations of any other Person, except the endorsement of negotiable
instruments by it or its Subsidiaries for deposit or collection or similar
transactions in the ordinary course of business; (iv) directly or indirectly
declare, pay or make any dividend or distribution on any class of its Stock or
apply any of its funds, property or assets to the purchase, redemption or other
retirement of any of its or its Subsidiaries’ Stock, or issue any preferred
stock; (v) purchase or hold beneficially any Stock or other securities or
evidences of indebtedness of, make or permit to exist any loans or advances to,
or make any investment or acquire any interest whatsoever in, any other Person,
including any partnership or joint venture, except (w) travel advances, (x)
loans to its and its Domestic Subsidiaries’ officers and employees not exceeding
at any one time an aggregate of $10,000, (y) intercompany loans to its existing
Domestic Subsidiaries so long as such Domestic Subsidiaries are designated as
either a co-borrower hereunder or has entered into such guaranty and security
documentation required by the Agent, including, without limitation, to grant to
the Agent a first priority perfected security interest in substantially all of
such Domestic Subsidiary’s assets to secure the Obligations, and (z)
intercompany loans to its Foreign Subsidiaries in an amount not to exceed
$6,000,000 in the aggregate at any time outstanding; provided, that: (1) the
amount of Loan proceeds that the Companies may utilize to make such intercompany
loans shall not exceed $4,000,000 in the aggregate during the Term, of which
only $2,000,000 in the aggregate during the Term may be utilized to make
intercompany loans to Foreign Subsidiaries located in South America, (2) each
Foreign Subsidiary shall have executed and delivered to the applicable Company,
on the Closing Date, a demand note (collectively, the “Intercompany Notes”) to
evidence any such intercompany indebtedness owing at any time by such Foreign
Subsidiary to such Company which Intercompany Notes shall be substantially in
the form attached hereto as Exhibit D and shall be pledged and delivered to the
Agent as additional collateral security for the Obligations, (3) each Company
shall record all intercompany transactions on its books and records in a manner
satisfactory to the Agent, (4) at the time any such intercompany loan or advance
is made by any Company to any Foreign Subsidiary and after giving effect
thereto, each such Company shall be Solvent and (5) no Default or Event of
Default would occur and be continuing after giving effect to any such proposed
intercompany loan; (vi) create or permit to exist any Domestic Subsidiary, other
than any Domestic Subsidiary in existence on the date hereof and listed in
Schedule 12(b) unless such new Domestic Subsidiary is a wholly-owned Domestic
Subsidiary and is designated by the Agent as either a co-borrower or guarantor
hereunder and such Domestic Subsidiary shall have entered into all such
documentation required by the Agent, including, without limitation, to grant to
the Agent a first priority perfected security interest in substantially all of
such Domestic Subsidiary’s assets to secure the Obligations; (vii) directly or
indirectly, prepay any indebtedness (other than to the Agent and in the ordinary
course of business), or repurchase, redeem, retire or otherwise acquire any
indebtedness (other than to the Agent and in the ordinary course of business)
except as expressly permitted by the applicable Subordination Agreement; (viii)
enter into any merger, consolidation or other reorganization with or into any
other Person or acquire all or a portion of the assets or Stock of any Person or
permit any other Person to consolidate with or merge with it, unless (1) such
Company is the surviving entity of such merger or consolidation, (2) no Event of
Default shall exist immediately prior to and after giving effect to such merger
or consolidation, (3) such Company shall have provided the Agent copies of all
documentation relating to such merger or consolidation and (4) such Company
shall have provided the Agent with at least thirty (30) days’ prior written
notice of such merger or consolidation; (ix) materially change the nature of the
business in which it is presently engaged; (x) become subject to (including,
without limitation, by way of amendment to or modification of) any agreement or
instrument which by its terms would (under any circumstances) restrict its or
any of its Domestic Subsidiaries’ right to perform the provisions of this
Agreement or any of the Ancillary Agreements; (xi) change its fiscal year or
make any changes in accounting treatment and reporting practices without prior
written notice to the Agent except as required by GAAP or in the tax reporting
treatment or except as required by law; (xii) enter into any transaction with
any employee, director or Affiliate, except in the ordinary course on
arms-length terms; (xiii) bill Accounts under any name except the present name
of such Company; (xiv) sell, lease, transfer or otherwise dispose of any of its
properties or assets, or any of the properties or assets of its Subsidiaries,
except for (1) sales, leases, transfer or dispositions by any Company to any
other Company, (2) the sale of Inventory in the ordinary course of business and
(3) the disposition or transfer in the ordinary course of business during any
fiscal year of Equipment and/or motor vehicles having an aggregate fair market
value of not more than $25,000 and only to the extent that (x) the proceeds of
any such disposition are used to acquire replacement Equipment and/or motor
vehicles which are subject to the Agent’s first priority security interest or
are used to repay Loans or to pay general corporate expenses, or (y) following
the occurrence of an Event of Default which continues to exist, the proceeds of
which are remitted to the Agent to be held as cash collateral for the
Obligations; (xv) make any payment or distribution in respect of any
subordinated indebtedness of any Company or any of its Domestic Subsidiaries in
violation of any subordination or other agreement made in favor of any Creditor
Party; or (xvi) make any optional payment or prepayment on or redemption
(including, without limitation, by making payments to a sinking fund or
analogous fund) or repurchase of any indebtedness for borrowed money other than
the Obligations.
 
 
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(m)  Reissuance of Securities.  The Parent shall reissue certificates
representing the Securities without the legends set forth in Section 39 below at
such time as:
 
(i)  the holder thereof is permitted to dispose of such Securities pursuant to
Rule 144(k) under the Securities Act; or
 
(ii)  upon resale subject to an effective registration statement after such
Securities are registered under the Securities Act.
 
The Parent agrees to cooperate with the Lenders in connection with all resales
pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to
allow such resales provided the Parent and its counsel receive reasonably
requested representations from the Lenders and broker, if any.
 
(n)  Opinion.  On the Closing Date, it shall deliver to the Creditor Parties an
opinion acceptable to the Agent from each Company’s legal counsel.  Each Company
will provide, at the Companies’ joint and several expense, such other legal
opinions in the future as are reasonably necessary for the exercise of the
Warrants and conversion of the Secured Term Notes.
 
(o)  Legal Name, etc.  It shall not, without providing the Agent with 30 days
prior written notice, change (i) its name as it appears in the official filings
in the state of its organization, (ii) the type of legal entity it is, (iii) its
organization identification number, if any, issued by its state of organization,
(iv) its state of organization or (v) amend its certificate of incorporation,
by-laws or other organizational document.
 
(p)  Compliance with Laws.  The operation of each of its and each of its
Subsidiaries’ business is and shall continue to be in compliance in all material
respects with all applicable federal, state and local laws, rules and
ordinances, including to all laws, rules, regulations and orders relating to
taxes, payment and withholding of payroll taxes, employer and employee
contributions and similar items, securities, employee retirement and welfare
benefits, employee health and safety and environmental matters.
 
(q)  Notices.  It and each of its Subsidiaries shall promptly inform the Agent
in writing of:  (i) the commencement of all proceedings and investigations by or
before and/or the receipt of any notices from, any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any way concerning any event which could reasonably be
expected to have singly or in the aggregate, a Material Adverse Effect; (ii) any
change which has had, or could reasonably be expected to have, a Material
Adverse Effect; (iii) any Event of Default or Default; and (iv) any default or
any event which with the passage of time or giving of notice or both would
constitute a default under any agreement for the payment of money to which it or
any of its Subsidiaries is a party or by which it or any of its Subsidiaries or
any of its or any such Subsidiary’s properties may be bound the breach of which
would have a Material Adverse Effect.
 
(r)  Margin Stock.  It shall not permit any of the proceeds of the Loans made
hereunder to be used directly or indirectly to “purchase” or “carry” “margin
stock” or to repay indebtedness incurred to “purchase” or “carry” “margin stock”
within the respective meanings of each of the quoted terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect.
 
 
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(s)  Offering Restrictions.  Except as previously disclosed in the SEC Reports
or in the Exchange Act Filings, or stock or stock options granted to its
employees or directors, neither it nor any of its Domestic Subsidiaries shall,
prior to the full repayment of the Notes (together with all accrued and unpaid
interest and fees related thereto) and termination of this Agreement, (x) enter
into any equity line of credit agreement or similar agreement with a floorless
pricing feature or (y) issue, or enter into any agreement to issue, any
securities with a floorless variable/floating conversion and/or pricing feature
which are or could be (by conversion or registration) free-trading securities
(i.e.  common stock subject to a registration statement).
 
(t)  Authorization and Reservation of Shares.  The Parent shall at all times
have authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of the Warrants and the full conversion of the Secured
Term Notes.
 
(u)  FIRPTA.  Neither it, nor any of its Subsidiaries, is a “United States real
property holding corporation” as such term is defined in Section 897(c)(2) of
the Code and Treasury Regulation Section 1.897-2 promulgated thereunder, and it
and each of its Subsidiaries shall at no time take any action or otherwise
acquire any interest in any asset or property to the extent the effect of which
shall cause it and/or such Subsidiary, as the case may be, to be a “United
States real property holding corporation” as such term is defined in Section
897(c)(2) of the Code and Treasury Regulation Section 1.897-2 promulgated
thereunder.
 
(v)  Investor Relations/Public Relations.  The Parent hereby agrees to
incorporate into its annual budget an amount of funds necessary to maintain a
comprehensive investor relations and public relations program (an “IR/PR
Program”), which IR/PR Program shall incorporate elements customarily utilized
by companies of similar size and in a similar industry as the Parent and its
Domestic Subsidiaries.
 
(w)  Unione Purchase Agreement.  It shall not, without the prior written consent
of the Agent, amend, modify or in any way alter the terms of the Unione Purchase
Agreement.
 
(x)  Subordinated Debt Documentation.
 
(i)  It shall not, without the prior written consent of the Agent, amend, modify
or in any way alter the terms of any of the Subordinated Debt Documentation
except as expressly permitted by the applicable Subordination Agreement.
 
(y)  Prohibition of Grant of Collateral for Subordinated Debt Documentation.  It
shall not, without the prior written consent of the Agent, grant or permit any
of its Domestic Subsidiaries to grant to any Person any Collateral of such
Company or any collateral of any of its Domestic Subsidiaries as security for
any obligation arising under the Subordinated Debt Documentation.
 
 
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(z)  Prohibitions of Payment Under Subordinated Debt Documentation.  Neither it
nor any of its Subsidiaries shall, without the prior written consent of the
Agent, make any payments in respect of the indebtedness evidenced by the
Subordinated Debt Documentation except as expressly permitted by the applicable
Subordination Agreement.
 
(aa)  Financing Right of First Refusal.
 
(i)  Each Company hereby grants to the Lenders a right of first refusal to
arrange any Additional Financing (as defined below) to be issued by the Parent
(the “Additional Financing Parties”), subject to the following terms and
conditions.  From and after the date hereof, during the Term, prior to the
incurrence of any additional indebtedness, including, without limitation, any
additional indebtedness convertible into any equity interests of the Additional
Financing Parties (an “Additional Financing”), Company Agent shall notify the
Agent of such Additional Financing.  In connection therewith, Company Agent
shall submit a proposed term sheet (a “Proposed Term Sheet”) to the Agent
setting forth the terms, conditions and pricing of any such Additional Financing
(such financing to be negotiated on “arm’s length” terms and the terms thereof
to be negotiated in good faith) proposed to be entered into by the Additional
Financing Parties.  The Lenders shall have the right, but not the obligation, to
deliver to Company Agent their own proposed term sheet (the “Lender Term Sheet”)
setting forth the terms and conditions upon one or more of the Lenders would be
willing to provide such Additional Financing to the Additional Financing
Parties.  The Lender Term Sheet shall be on the same terms and conditions as
those outlined in Proposed Term Sheet.  The Agent shall deliver to Company Agent
the Lender Term Sheet within ten Business Days of receipt of each such Proposed
Term Sheet.  If the provisions of the Lender Term Sheet are on the same terms
and conditions to the Additional Financing Parties as the provisions of the
Proposed Term Sheet, the Additional Financing Parties shall enter into and
consummate the Additional Financing transaction outlined in the Lender Term
Sheet.
 
(ii)  It shall not, and shall not permit its Subsidiaries to, agree, directly or
indirectly, to any restriction with any Person which limits the ability of any
Creditor Party to arrange for the consummation of an Additional Financing with
it or any of its Subsidiaries.
 
(bb)  Financial Covenants.
 
(i)  Minimum Consolidated EBITDA.  The Companies and their Domestic Subsidiaries
on a Consolidated basis shall not have, on the last day of each calendar month
commencing on the calendar month ending December 31, 2008, Consolidated EBITDA
less than $4,000,000 for the twelve (12) calendar month period ending on such
day.
 
 
(ii)  Maximum Consolidated Leverage Ratio.  The Companies and their Domestic
Subsidiaries on a Consolidated basis shall not have, on the last day of each
calendar month commencing on the calendar month ending December 31, 2008, a
Consolidated Leverage Ratio greater than 2.50 to 1.00.
 
 
(iii)  Minimum Consolidated Fixed Charge Coverage Ratio.  The Companies and
their Subsidiaries on a Consolidated basis shall not have, on the last day of
each calendar month commencing on the calendar month ending December 31, 2008, a
Consolidated Fixed Charge Coverage Ratio less than 1.25 to 1.00 for the twelve
(12) calendar month period ending on such day.
 
 
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14.  Further Assurances.  At any time and from time to time, upon the written
request of the Agent and at the sole expense of Companies, each Company shall
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as the Agent may reasonably request (a)
to obtain the full benefits of this Agreement and the Ancillary Agreements, (b)
to protect, preserve, perfect and maintain the Agent’s rights in the Collateral
and under this Agreement or any Ancillary Agreement, and/or (c) to enable the
Agent to exercise all or any of the rights and powers herein granted or any
Ancillary Agreement.
 
15.  Representations, Warranties and Covenants of the Lenders.  Each Lender,
severally and not jointly, hereby represents, warrants and covenants to each
Company as follows:
 
(a)  Requisite Power and Authority.  Such Lender has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and the Ancillary Agreements and to carry out their provisions.  All
corporate action on such Lenders’ part required for the lawful execution and
delivery of this Agreement and the Ancillary Agreements have been or will be
effectively taken prior to the Closing Date.  Upon their execution and delivery,
this Agreement and the Ancillary Agreements shall be valid and binding
obligations of such Lender, enforceable in accordance with their terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors’ rights,
and (b) as limited by general principles of equity that restrict the
availability of equitable and legal remedies.
 
(b)  Investment Representations.  Such Lender understands that the Securities
are being offered pursuant to an exemption from registration contained in the
Securities Act based in part upon such Lenders’ representations contained in
this Agreement, including, without limitation, that such Lender is an
“accredited investor” within the meaning of Regulation D under the Securities
Act.  Such Lender has received or has had full access to all the information it
considers necessary or appropriate to make an informed investment decision with
respect to the Notes to be issued to it under this Agreement and the Securities
acquired by it upon the exercise of the Warrants and the conversion of the
Secured Term Notes.
 
(c)  Lender Bears Economic Risk.  Such Lender has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Parent so that it is capable of evaluating the merits
and risks of its investment in the Parent and has the capacity to protect its
own interests.  Such Lender must bear the economic risk of this investment until
the Securities are sold pursuant to (i) an effective registration statement
under the Securities Act, or (ii) an exemption from registration is available.
 
(d)  Investment for Own Account.  The Securities are being issued to such Lender
for its own account for investment only, and not as a nominee or agent and not
with a view towards or for resale in connection with their distribution.
 
(e)  Lender Can Protect Its Interest.  Such Lender represents that by reason of
its, or of its management’s, business and financial experience, such Lender has
the capacity to evaluate the merits and risks of its investment in the Notes,
and the Securities and to protect its own interests in connection with the
transactions contemplated in this Agreement, and the Ancillary
Agreements.  Further, such Lender is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement
or the Ancillary Agreements.
 
 
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(f)  Accredited Investor.  Such Lender represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
 
(g)  Shorting.  Neither such Lender nor any of its Affiliates or investment
partners has, will, or will cause any Person, to directly engage in “short
sales” of the Parent’s Common Stock as long as any amounts under the Notes shall
remain outstanding.
 
(h)  Patriot Act.  Such Lender certifies that, to the best of such Lender’s
knowledge, such Lender has not been designated, and is not owned or controlled,
by a “suspected terrorist” as defined in Executive Order 13224.  Such Lender
seeks to comply with all applicable laws concerning money laundering and related
activities.  In furtherance of those efforts, such Lender hereby represents,
warrants and covenants that:  (i) none of the cash or property that such Lender
will use to make the Loans has been or shall be derived from, or related to, any
activity that is deemed criminal under United States law; and (ii) no
disbursement by such Lender to any Company to the extent within such Lender’s
control, shall cause such Lender to be in violation of the United States Bank
Secrecy Act, the United States International Money Laundering Control Act of
1986 or the United States International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001.  Such Lender shall promptly notify the
Company Agent if any of these representations ceases to be true and accurate
regarding such Lender.  Such Lender agrees to provide the Company any additional
information regarding such Lender that the Company deems necessary or convenient
to ensure compliance with all applicable laws concerning money laundering and
similar activities.  Such Lender understands and agrees that if at any time it
is discovered that any of the foregoing representations are incorrect, or if
otherwise required by applicable law or regulation related to money laundering
similar activities, such Lender may undertake appropriate actions to ensure
compliance with applicable law or regulation, including but not limited to
segregation and/or redemption of such Lender’s investment in the Parent.  Such
Lender further understands that the Parent may release information about such
Lender and, if applicable, any underlying beneficial owners, to proper
authorities if the Parent, in its sole discretion, determines that it is in the
best interests of the Parent in light of relevant rules and regulations under
the laws set forth in subsection (ii) above.
 
(i)  Limitation on Acquisition of Common Stock.  Notwithstanding anything to the
contrary contained in this Agreement, any Ancillary Agreement, or any document,
instrument or agreement entered into in connection with any other transaction
entered into by and between such Lender and any Company (and/or Subsidiaries or
Affiliates of any Company), such Lender (and/or Subsidiaries or Affiliates of
such Lender) shall not acquire stock in the Parent (including, without
limitation, pursuant to a contract to purchase, by exercising an option or
warrant, by converting any other security or instrument, by acquiring or
exercising any other right to acquire, shares of stock or other security
convertible into shares of stock in the Parent, or otherwise, and such options,
warrants, conversion or other rights shall not be exercisable) to the extent
such stock acquisition would cause any interest (including any original issue
discount) payable by any Company to a Non-U.S.  Lender not to qualify as
portfolio interest, within the meaning of Section 871(h)(2) or Section 881(c)(2)
of the U.S.  Internal Revenue Code of 1986, as amended (the “Code”) by reason of
Section 871(h)(3) or Section 881(c)(3)(B) of the Code, as applicable, taking
into account the constructive ownership rules under Section 871(h)(3)(C) of the
Code (the “Stock Acquisition Limitation”).  The Stock Acquisition Limitation
shall automatically become null and void with respect to each Lender, without
any notice to any Company, the earlier to occur of either (a) the Parent’s
delivery to such Lender of a Notice of Redemption (as defined in the applicable
Secured Term Note) or (b) upon the existence of an Event of Default at a time
when the average closing price of the Common Stock as reported by Bloomberg,
L.P. on the Principal Market for the immediately preceding five trading days is
greater than or equal to 200% of the Exercise Price (as defined in the
Warrants).
 
 
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16.  Confidentiality.  Each Lender covenants and agrees with the Company that
such Lender will not disclose, and will not include in any public announcement,
the name of the Company, unless expressly agreed to by the Company or unless and
until such disclosure is required by law or applicable regulation, and then only
to the extent of such requirement.  Notwithstanding the foregoing, (i) such
Lender shall be permitted to discuss, distribute or otherwise transfer any
non-public information of the Company and its Subsidiaries in such Lender’s
possession now or in the future to (x) its employees, agents, counsel,
professional consultants and accountants who, in each such case, have a specific
need to know such information and (y) potential or actual (A) direct or indirect
investors in such Lender and (B) any assignees or transferees of all or a
portion of the Obligations, to the extent that such investor or assignee or
transferee enters into a confidentiality agreement for such benefit of the
Company in such form as may be necessary to addresses such Company’s Regulation
FD requirements; (ii) such Lender (and each employee, representative, or other
agent of such Lender) may disclose to any and all Persons, without limitation of
any kind, the tax treatment and any facts that may be relevant to the tax
structure of the transactions contemplated by this Agreement and the Ancillary
Agreements and the agreements referred to therein; provided, however, that no
Lender (and no employee, representative or other agent thereof) shall disclose
pursuant to this clause (ii) any other information that is not relevant to
understanding the tax treatment or tax structure of such transactions (including
the identity of any party or any information that could lead another to
determine the identity of any party); and (iii) the Agent or any Affiliate
thereof shall be entitled to post on its website a summary of the transactions
contemplated by this Agreement, including the names of one or more of the
Companies and each of their Subsidiaries.
 
17.  Power of Attorney.  Each Company hereby appoints the Agent, or any other
Person whom the Agent may designate as such Company’s attorney, with power
to:  (a)(i) execute any security related documentation on such Company’s behalf
and to supply any omitted information and correct patent errors in any documents
executed by such Company or on such Company’s behalf; (ii) to file financing
statements and other evidence of Liens granted hereunder against such Company
covering the Collateral (and, in connection with the filing of any such
financing statements, describe the Collateral as “all assets and all personal
property, whether now owned and/or hereafter acquired” (or any substantially
similar variation thereof)); (iii) sign such Company’s name on any invoice or
bill of lading relating to any Accounts, drafts against Account Debtors,
schedules and assignments of Accounts, notices of assignment, financing
statements and other evidence of the Agent’s granted hereunder and other public
records, verifications of Account and notices to or from Account Debtors; (iv)
in the case of any Intellectual Property, the Agent may execute and deliver, and
have recorded, any and all agreements, instruments, documents and papers as the
Agent may request to evidence the Agent’s security interest in such Intellectual
Property and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby; (v) to do all other things the Agent deems
necessary to carry out the terms of Section 6 of this Security Agreement and (b)
upon the occurrence and during the continuance of an Event of Default; (vi)
endorse such Company’s name on any checks, notes, acceptances, money orders,
drafts or other forms of payment or security that may come into the Agent’s
possession; (vii) verify the validity, amount or any other matter relating to
any Account by mail, telephone, telegraph or otherwise with Account Debtors;
(viii) do all other things necessary to carry out this Agreement, any Ancillary
Agreement and all related documents; and (ix) notify the post office authorities
to change the address for delivery of such Company’s mail to an address
designated by the Agent, and to receive, open and dispose of all mail addressed
to such Company.  Each Company hereby ratifies and approves all acts of the
attorney.  Neither the Agent, nor the attorney will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law, except for
gross negligence or willful misconduct.  This power, being coupled with an
interest, is irrevocable so long as the Agent has a security interest and until
the Obligations have been fully satisfied.
 
18.  Term of Agreement.  Each Lender’s agreement to make Loans and extend
financial accommodations under and in accordance with the terms of this
Agreement or any Ancillary Agreement shall continue in full force and effect
until the expiration of the Term.  The Agent may, following the occurrence of an
Event of Default, terminate this Agreement.  The termination of the Agreement
shall not affect any of the Agent’s or any Lender’s rights hereunder or any
Ancillary Agreement and the provisions hereof and thereof shall continue to be
fully operative until all transactions entered into, rights or interests created
and the Obligations have been irrevocably disposed of, concluded or
liquidated.  Notwithstanding the foregoing, the Agent shall release its security
interests at any time after thirty (30) days notice upon irrevocable payment to
it of all Obligations if each Company shall have (i) provided the Agent and each
Lender with an executed release of any and all claims which such Company may
have or thereafter have under this Agreement and all Ancillary Agreements and
(ii) paid to each Lender an early payment fee in an amount equal to the
Redemption Amount (as defined in the applicable Secured Term Note) and such
other amounts required to be paid by the Companies to such Lender at such time
pursuant to and in accordance with the terms of the applicable Secured Term
Note; such fee being intended to compensate each Lender for its costs and
expenses incurred in initially approving this Agreement or extending same.  Such
early payment fee shall be due and payable jointly and severally by the
Companies to each Lender also upon termination by acceleration of this Agreement
by the Lenders due to the occurrence and continuance of an Event of Default.
 
 
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19.  Termination of Lien.  The Liens and rights granted to the Agent hereunder
and any Ancillary Agreements and the financing statements filed in connection
herewith or therewith shall continue in full force and effect, notwithstanding
the termination of this Agreement or the fact that any Company’s account may
from time to time be temporarily in a zero or credit position, until all of the
Obligations have been indefeasibly paid or performed in full and this Agreement
has been terminated in accordance with the terms of this Agreement.  The Agent
shall not be required to send termination statements or other evidence of the
release of the Lien granted hereunder to any Company, or to file them with any
filing office, unless and until this Agreement and the Ancillary Agreements
shall have been terminated in accordance with their terms and all Obligations
indefeasibly paid in full in immediately available funds.
 
20.  Events of Default.  The occurrence of any of the following shall constitute
an “Event of Default”:
 
(a)  failure to make payment of any of the Obligations when required hereunder,
and, in any such case, such failure shall continue for a period of three (3)
Business Days following the date upon which any such payment was due;
 
(b)  failure by any Company or any of its Subsidiaries to pay any taxes when due
unless such taxes are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been provided on such Company’s
and/or such Subsidiary’s books;
 
(c)  failure to perform under, and/or committing any breach of, in any material
respect, this Agreement or any covenant contained herein, which failure or
breach shall continue without remedy for a period of fifteen (15) days after the
occurrence thereof;
 
(d)  any representation, warranty or statement made by any Company or any of its
Subsidiaries hereunder, in any Ancillary Agreement, any certificate, statement
or document delivered pursuant to the terms hereof, or in connection with the
transactions contemplated by this Agreement should prove to be false or
misleading in any material respect on the date as of which made or deemed made;
 
(e)  the occurrence of any default (or similar term) in the observance or
performance of any other agreement or condition relating to any indebtedness or
contingent obligation of any Company or any of its Subsidiaries (including,
without limitation, the indebtedness evidenced by the Subordinated Debt
Documentation) beyond the period of grace (if any), the effect of which default
is to cause, or permit the holder or holders of such indebtedness or beneficiary
or beneficiaries of such contingent obligation to cause, any indebtedness in an
amount greater than $50,000 to become due prior to its stated maturity or any
contingent obligation in an amount greater than 50,000 to become payable;
 
(f)  the occurrence of any default (or similar term) in the observance or
performance of any agreement or condition by any Company or any of its
Subsidiaries under the Unione Purchase Agreement.
 
 
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(g)  attachments or levies in excess of $50,000 in the aggregate are made upon
any Company’s assets or a judgment is rendered against any Company’s property
involving a liability of more than $50,000 which shall not have been vacated,
discharged, stayed or bonded within thirty (30) days from the entry thereof;
 
(h)  any change in any Company’s or any of its Subsidiary’s condition or affairs
(financial or otherwise) which in the Agent’s reasonable, good faith opinion,
could reasonably be expected to have a Material Adverse Effect;
 
(i)  any Lien created hereunder or under any Ancillary Agreement for any reason
ceases to be or is not a valid and perfected Lien having a first priority
interest, other than in the event the Agent terminates, or fails to continue,
one (1) or more UCC financing statements;
 
(j)  any Company or any of its Subsidiaries shall (i) apply for, consent to or
suffer to exist the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) not challenge within ten (10) days of the filing thereof, or fail to have
dismissed within forty five (45) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
 
(k)  any Company or any of its Subsidiaries shall admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business;
 
(l)  any Company or any of its Subsidiaries directly or indirectly sells,
assigns, transfers, conveys, or suffers or permits to occur any sale,
assignment, transfer or conveyance of any assets of such Company or any interest
therein, except as permitted herein;
 
(m)  any “Person” or “group” (as such terms are defined in Sections 13(d) and
14(d) of the Exchange Act, as in effect on the date hereof), other than a
Lender, is or becomes the “beneficial owner” (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a
fully diluted basis of the then outstanding voting equity interest of the Parent
(other than a “Person” or “group” that beneficially owns 35% or more of such
outstanding voting equity interests of the Parent on the date hereof),  (ii) the
Board of Directors of the Parent shall cease to consist of a majority of the
Board of Directors of the Parent on the date hereof (or directors appointed by a
majority of the board of directors in effect immediately prior to such
appointment) or (iii) the Parent or any of its Subsidiaries merges or
consolidates with, or sells all or substantially all of its assets to, any other
person or entity;
 
(n)  the indictment of any Company or any of its Subsidiaries or any executive
officer of any Company or any of its Subsidiaries under any criminal statute, or
commencement of criminal or civil proceeding against any Company or any of its
Subsidiaries or any executive officer of any Company or any of its Subsidiaries
pursuant to which statute or proceeding penalties or remedies sought or
available include forfeiture of any of the property of any Company or any of its
Subsidiaries;
 
 
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(o)  an Event of Default shall occur under and as defined in any Note or in any
other Ancillary Agreement;
 
(p)  any Company or any of its Subsidiaries shall breach any term or provision
of any Ancillary Agreement to which it is a party (including, without
limitation, Section 7(e) of the Registration Rights Agreement), in any material
respect which breach is not cured within any applicable cure or grace period
provided in respect thereof (if any);
 
(q)  any Company or any of its Subsidiaries attempts to terminate, challenges
the validity of, or its liability under this Agreement or any Ancillary
Agreement, or any proceeding shall be brought to challenge the validity, binding
effect of any Ancillary Agreement or any Ancillary Agreement ceases to be a
valid, binding and enforceable obligation of such Company or any of its
Subsidiaries (to the extent such Persons are a party thereto);
 
(r)  an SEC stop trade order or Principal Market trading suspension of the
Common Stock shall be in effect for five (5) consecutive days or five (5) days
during a period of ten (10) consecutive days, excluding in all cases a
suspension of all trading on a Principal Market, provided that the Parent shall
not have been able to cure such trading suspension within forty five (45) days
of the notice thereof or list the Common Stock on another Principal Market
within sixty (60) days of such notice;
 
(s)  the Parent’s failure to deliver Common Stock to any Lender pursuant to and
in the form required by the Warrants, the Secured Term Notes and this Agreement,
if such failure to deliver Common Stock shall not be cured within two (2)
Business Days or any Company is required to issue a replacement Note to any
Lender and such Company shall fail to deliver such replacement Note within seven
(7) Business Days; or
 
(t)  any Company, or any of its Domestic Subsidiaries shall take or participate
in any action which would be prohibited under the provisions of any
Subordination Agreement or make any payment on the indebtedness evidenced by the
Subordinated Debt Documentation to a Subordinated Lender that was not entitled
to receive such payments under the applicable Subordination Agreement.
 
21.  Remedies.  Following the occurrence of an Event of Default, the Agent shall
have the right to demand repayment in full of all Obligations, whether or not
otherwise due.  Until all Obligations have been fully and indefeasibly
satisfied, the Agent shall retain its Lien in all Collateral.  The Agent shall
have, in addition to all other rights provided herein and in each Ancillary
Agreement, the rights and remedies of a secured party under the UCC, and under
other applicable law, all other legal and equitable rights to which the Agent
may be entitled, including the right to take immediate possession of the
Collateral, to require each Company to assemble the Collateral, at Companies’
joint and several expense, and to make it available to the Agent at a place
designated by the Agent which is reasonably convenient to both parties and to
enter any of the premises of any Company or wherever the Collateral shall be
located, with or without force or process of law, and to keep and store the same
on said premises until sold (and if said premises be the property of any
Company, such Company agrees not to charge the Agent or any Lender for storage
thereof), and the right to apply for the appointment of a receiver for such
Company’s property.  Further, the Agent may, at any time or times after the
occurrence of an Event of Default, sell and deliver all Collateral held by or
for the Agent at public or private sale for cash, upon credit or otherwise, at
such prices and upon such terms as the Agent, in its sole discretion, deems
advisable or the Agent may otherwise recover upon the Collateral in any
commercially reasonable manner as the Agent, in its sole discretion, deems
advisable.  The requirement of reasonable notice shall be met if such notice is
mailed postage prepaid to Company Agent at Company Agent’s address as shown in
the Agent’s records, at least ten (10) days before the time of the event of
which notice is being given.  The Agent may be the purchaser at any sale, if it
is public.  In connection with the exercise of the foregoing remedies, and not
without limitation of any remedies with respect to Intellectual Property
Collateral, the Agent may exercise the rights and license granted under Section
12(j) hereof.  The proceeds of sale shall be applied first to all costs and
expenses of sale, including attorneys’ fees, and second to the payment (in
whatever order the Agent elects) of all Obligations.  After the indefeasible
payment and satisfaction in full of all of the Obligations, and after the
payment by the Agent of any other amount required by any provision of law,
including Section 9-608(a)(1) of the UCC (but only after the Agent has received
what the Agent considers reasonable proof of a subordinate party’s security
interest), the surplus, if any, shall be paid to Company Agent (for the benefit
of the applicable Companies) or its representatives or to whosoever may be
lawfully entitled to receive the same, or as a court of competent jurisdiction
may direct.  The Companies shall remain jointly and severally liable to the
Creditor Parties for any deficiency.  Each Company and the Creditor Parties
acknowledge that the actual damages that would be incurred by the Lenders after
the occurrence of an Event of Default would be difficult to quantify and that
such Company and the Creditor Parties have agreed that the fees and obligations
set forth in this Section and in this Agreement would constitute fair and
appropriate liquidated damages in the event of any such termination.  The
parties hereto each hereby agree that the exercise by any party hereto of any
right granted to it or the exercise by any party hereto of any remedy available
to it (including, without limitation, the issuance of a notice of redemption, a
borrowing request and/or a notice of default), in each case, hereunder or under
any Ancillary Agreement shall not constitute confidential information and no
party shall have any duty to the other party to maintain such information as
confidential.
 
 
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22.  Waivers.  To the full extent permitted by applicable law, each Company
hereby waives (a) presentment, demand and protest, and notice of presentment,
dishonor, intent to accelerate, acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all of
this Agreement and the Ancillary Agreements or any other notes, commercial
paper, Accounts, contracts, Documents, Instruments, Chattel Paper and guaranties
at any time held by the Agent on which such Company may in any way be liable,
and hereby ratifies and confirms whatever the Agent may do in this regard; (b)
all rights to notice and a hearing prior to the Agent’s taking possession or
control of, or to the Agent’s replevy, attachment or levy upon, any Collateral
or any bond or security that might be required by any court prior to allowing
the Agent to exercise any of its remedies; and (c) the benefit of all valuation,
appraisal and exemption laws.  Each Company acknowledges that it has been
advised by counsel of its choices and decisions with respect to this Agreement,
the Ancillary Agreements and the transactions evidenced hereby and thereby.
 
23.  Expenses.  The Companies shall jointly and severally pay all of the Agent’s
out-of-pocket costs and reasonable expenses, including reasonable fees and
disbursements of in-house or outside counsel and appraisers, in connection with
(x) subject to the limitations set forth in Section 5(b)(iii), the preparation,
execution and delivery of this Agreement and the Ancillary Agreements, and (y)
in connection with the prosecution or defense of any action, contest, dispute,
suit or proceeding concerning any matter in any way arising out of, related to
or connected with this Agreement or any Ancillary Agreement.  The Companies
shall also jointly and severally pay all of the Agent’s reasonable fees,
charges, out-of-pocket costs and expenses, including fees and disbursements of
counsel and appraisers, in connection with (a) the preparation, execution and
delivery of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by this Agreement or the Ancillary
Agreements, (b) the Agent’s obtaining performance of the Obligations under this
Agreement and any Ancillary Agreements, including, but not limited to, the
enforcement or defense of the Agent’s security interests, assignments of rights
and Liens hereunder as valid perfected security interests, (c) any attempt to
inspect, verify, protect, collect, sell, liquidate or otherwise dispose of any
Collateral, (d) any appraisals or re appraisals of any property (real or
personal) pledged to the Agent by any Company or any of its Domestic
Subsidiaries as Collateral for, or any other Person as security for, the
Obligations hereunder and (e) any consultations in connection with any of the
foregoing.  The Companies shall also jointly and severally pay each Creditor
Party the customary bank charges for any bank services (including wire
transfers) performed or caused to be performed by it for any Company or any of
its Domestic Subsidiaries at any Company’s or such Domestic Subsidiary’s request
or in connection with any Company’s loan account with such Creditor Party.  All
such costs and expenses together with all filing, recording and search fees,
taxes and interest payable by the Companies to the Creditor Parties shall be
payable on demand and shall be secured by the Collateral.  If any tax by any
Governmental Authority is or may be imposed on or as a result of any transaction
between any Company and/or any Subsidiary thereof, on the one hand, and Creditor
Party on the other hand, which such Creditor Party is or may be required to
withhold or pay (including, without limitation, as a result of a breach by any
Company or any of its Subsidiaries of Section 13(u) herein), the Companies
hereby jointly and severally indemnify and hold such Creditor Party harmless in
respect of such taxes, and the Companies will repay to such Creditor Party the
amount of any such taxes which shall be charged to the Companies’ account; and
until the Companies shall furnish such Creditor Party with indemnity therefor
(or supply such Creditor Party with evidence satisfactory to it that due
provision for the payment thereof has been made), such Creditor Party may hold
without interest any balance standing to each Company’s credit and the Agent
shall retain its Liens in any and all Collateral.
 
24.  Assignment; Register.
 
(a)  Each Lender may assign any or all of the Obligations to any Person and,
subject to acceptance and recordation thereof by the Agent pursuant to Section
24(b) and receipt by the Agent of a copy of the agreement or instrument pursuant
to which such assignment is made (each such agreement or instrument, an
“Assignment Agreement”), any such assignee shall succeed to all of the Lenders’
rights with respect thereto; provided that no Lender shall be permitted to
effect any such assignment to a competitor of any Company unless an Event of
Default has occurred and is continuing.  Each Lender may from time to time sell
or otherwise grant participations in any of the Obligations and the holder of
any such participation shall, subject to the terms of any agreement between such
Lender and such holder, be entitled to the same benefits as such Lender with
respect to any security for the Obligations in which such holder is a
participant.  Each Company agrees that each such holder may exercise any and all
rights of banker’s lien, set-off and counterclaim with respect to its
participation in the Obligations as fully as though such Company were directly
indebted to such holder in the amount of such participation.  No Company may
assign any of its rights or obligations hereunder without the prior written
consent of the Agent.  All of the terms, conditions, promises, covenants,
provisions and warranties of this Agreement shall inure to the benefit of each
of the undersigned, and shall bind the representatives, successors and permitted
assigns of each Company.
 
 
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(b)  The Agent shall maintain, or cause to be maintained, for this purpose only
as agent for each Company, (i) a copy of each Assignment Agreement delivered to
it and (ii) a book entry system, within the meaning of U.S.  Treasury Regulation
Sections 5f.103-1(c) and 1.871-14(c) (the “Register”), in which it will register
the name and address of each Lender and the name and address of each assignee of
each Lender under this Agreement, and the principal amount of, and stated
interest on, the Loans owing to each such Lender and assignee pursuant to the
terms hereof and each Assignment Agreement.  The right, title and interest of
the Lenders and their assignees in and to such Loans shall be transferable only
upon notation of such transfer in the Register, and no assignment thereof shall
be effective until recorded therein.  The Companies and each Creditor Party
shall treat each Person whose name is recorded in the Register as a Lender
pursuant to the terms hereof as a Lender and owner of an interest in the
Obligations hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary or any notation of ownership or other writing or any Note.  The
Register shall be available for inspection by any Company or Lender, at any
reasonable time and from time to time, upon reasonable prior notice.
 
25.  No Waiver; Cumulative Remedies.  Failure by any Creditor Party to exercise
any right, remedy or option under this Agreement, any Ancillary Agreement or any
supplement hereto or thereto or any other agreement between or among any Company
and such Creditor Party in exercising the same, will not operate as a waiver; no
waiver by any Creditor Party will be effective unless it is in writing and then
only to the extent specifically stated.  The Creditor Parties’ rights and
remedies under this Agreement and the Ancillary Agreements will be cumulative
and not exclusive of any other right or remedy which any of the Creditor Parties
may have.
 
26.  Application of Payments.  Each Company irrevocably waives the right to
direct the application of any and all payments at any time or times hereafter
received by the Agent from or on such Company’s behalf and each Company hereby
irrevocably agrees that the Agent shall have the continuing exclusive right to
apply and reapply any and all payments received at any time or times hereafter
against the Obligations hereunder in such manner as the Agent may deem advisable
notwithstanding any entry by the Agent upon any of the Agent’s books and
records.
 
27.  Indemnity.  Each Company hereby jointly and severally indemnifies and holds
each Creditor Party, and its respective affiliates, employees, attorneys and
agents (each, an “Indemnified Person”), harmless from and against any and all
suits, actions, proceedings, claims, damages, losses, liabilities and expenses
of any kind or nature whatsoever (including reasonable attorneys’ fees and
disbursements and other costs of investigation or defense, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement or any of the Ancillary
Agreements or with respect to the execution, delivery, enforcement, performance
and administration of, or in any other way arising out of or relating to, this
Agreement, the Ancillary Agreements or any other documents or transactions
contemplated by or referred to herein or therein and any actions or failures to
act with respect to any of the foregoing, including any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by any Company or any of its Subsidiaries or any liability under
Environmental Law related in any way to the Company or any Subsidiary, except to
the extent that any such indemnified liability is finally determined by a court
of competent jurisdiction to have resulted solely from such Indemnified Person’s
gross negligence or willful misconduct.  NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY COMPANY OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
 
 
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28.  Revival.  The Companies further agree that to the extent any Company makes
a payment or payments to any Creditor Party, which payment or payments 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 act, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, the
obligation or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if said payment had not been made.
 
29.  Borrowing Agency Provisions.
 
(a)  Each Company hereby irrevocably designates Company Agent to be its attorney
and agent and in such capacity to borrow, sign and endorse notes, and execute
and deliver all instruments, documents, writings and further assurances now or
hereafter required hereunder, on behalf of such Company, and hereby authorizes
the Agent to pay over or credit all loan proceeds hereunder in accordance with
the request of Company Agent.
 
(b)  The handling of this credit facility as a co-borrowing facility with a
borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to the Companies and at their request.  the Agent shall not incur
any liability to any Company as a result thereof.  To induce the Agent to do so
and in consideration thereof, each Company hereby indemnifies the Agent and
holds the Agent harmless from and against any and all liabilities, expenses,
losses, damages and claims of damage or injury asserted against the Agent by any
Person arising from or incurred by reason of the handling of the financing
arrangements of the Companies as provided herein, reliance by the Agent on any
request or instruction from Company Agent or any other action taken by the Agent
with respect to this Paragraph 29.
 
(c)  All Obligations shall be joint and several, and the Companies shall make
payment upon the maturity of the Obligations by acceleration or otherwise, and
such obligation and liability on the part of the Companies shall in no way be
affected by any extensions, renewals and forbearance granted by the Agent to any
Company, failure of the Agent to give any Company notice of borrowing or any
other notice, any failure of the Agent to pursue to preserve its rights against
any Company, the release by the Agent of any Collateral now or thereafter
acquired from any Company, and such agreement by any Company to pay upon any
notice issued pursuant thereto is unconditional and unaffected by prior recourse
by the Agent to any Company or any Collateral for such Company’s Obligations or
the lack thereof.
 
(d)  Each Company expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which
such Company may now or hereafter have against the other or other Person
directly or contingently liable for the Obligations, or against or with respect
to any other’s property (including, without limitation, any property which is
Collateral for the Obligations), arising from the existence or performance of
this Agreement, until all Obligations have been indefeasibly paid in full and
this Agreement has been irrevocably terminated.
 
(e)  Each Company represents and warrants to the Agent that (i) Companies have
one or more common shareholders, directors and officers, (ii) the businesses and
corporate activities of Companies are closely related to, and substantially
benefit, the business and corporate activities of Companies, (iii) the financial
and other operations of Companies are performed on a combined basis as if
Companies constituted a consolidated corporate group, (iv) Companies will
receive a substantial economic benefit from entering into this Agreement and
will receive a substantial economic benefit from the application of each Loan
hereunder, in each case, whether or not such amount is used directly by any
Company and (v) all requests for Loans hereunder by the Company Agent are for
the exclusive and indivisible benefit of the Companies as though, for purposes
of this Agreement, the Companies constituted a single entity.
 
 
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30.  Notices.  Any notice or request hereunder may be given to any Company,
Company Agent or the Agent at the respective addresses set forth below (or, in
the case of any notice to any other Creditor Party, at the address set forth
opposite its name on the signature pages hereto) or as may hereafter be
specified in a notice designated as a change of address under this Section.  Any
notice or request hereunder shall be given by registered or certified mail,
return receipt requested, hand delivery, overnight mail or telecopy (confirmed
by mail).  Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any officer of the party to whom it
is addressed, in the case of those by mail or overnight mail, deemed to have
been given three (3) Business Days after the date when deposited in the mail or
with the overnight mail carrier, and, in the case of a telecopy, when confirmed.
 
Notices shall be provided as follows:
 
 
If to the Agent:
LV Administrative Services, Inc.

   
335 Madison Avenue, 10th Fl.

   
New York, New York 10017

 
Attention:
Portfolio Services

 
Telephone:
(212) 541-5800

 
Telecopier:
(212) 581-5037

     

     

 
If to any Company, or Company Agent:
NewMarket Technology, Inc.

   
14860 Montfort Drive, Suite 210

   
Dallas, Texas 75254

  Attention:
Philip J. Rauch

 
Telephone:
(631) 393-5130

 
Facsimile:
(631) 673-0631

     

     

 
With a copy to:
Burkhart Wexler & Hirschberg

   
585 Stewart Avenue

   
Garden City, New York  11530

 
Attention:
Errol Burkhart, Esq.

 
Telephone:
(516) 222-2230

 
Facsimile:
(516) 222-8803

     

or such other address as may be designated in writing hereafter in accordance
with this Section 29 by such Person.
 
 
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31.  Governing Law, Jurisdiction and Waiver of Jury Trial.
 
(a)  THIS AGREEMENT AND THE ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
 
(b)  EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY,
ON THE ONE HAND, AND ANY CREDITOR PARTY, ON THE OTHER HAND, PERTAINING TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT
EACH CREDITOR PARTY AND EACH COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW
YORK, STATE OF NEW YORK; AND FURTHERPROVIDED, THAT NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY CREDITOR PARTY FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS,
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF ANY CREDITOR PARTY.  EACH
COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANY
OBJECTION THAT IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON CONVENIENS.  EACH COMPANY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO COMPANY AGENT AT THE ADDRESS SET FORTH
IN SECTION 29 AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
COMPANY AGENT’S ACTUAL RECEIPT THEREOF.
 
(c)  THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN ANY CREDITOR PARTY,
AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY
ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
 
32.  Limitation of Liability.  Each Company acknowledges and understands that in
order to assure repayment of the Obligations hereunder the Creditor Parties may
be required to exercise any and all of the Creditor Parties’ rights and remedies
hereunder and agrees that, except as limited by applicable law, neither the
Creditor Parties nor any of their respective agents shall be liable for acts
taken or omissions made in connection herewith or therewith except for actual
bad faith.
 
33.  Entire Understanding; Maximum Interest.  This Agreement and the Ancillary
Agreements contain the entire understanding among each Company, the Lenders and
the Agent as to the subject matter hereof and thereof and any promises,
representations, warranties or guarantees not herein contained shall have no
force and effect unless in writing, signed by each Company’s and the
Agent.  Neither this Agreement, the Ancillary Agreements, nor any portion or
provisions thereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be
charged.  Nothing contained in this Agreement, any Ancillary Agreement or in any
document referred to herein or delivered in connection herewith shall be deemed
to establish or require the payment of a rate of interest or other charges in
excess of the maximum rate permitted by applicable law.  In the event that the
rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum rate permitted by such law, any payments in excess of such
maximum shall be credited against amounts owed by the Companies to the Creditor
Parties and thus refunded to the Companies.
 
 
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34.  Severability.  Wherever possible each provision of this Agreement or the
Ancillary Agreements shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement or the
Ancillary Agreements shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
thereof.
 
35.  Survival.  The representations, warranties, covenants and agreements made
herein shall survive any investigation made by any Creditor Party and the
closing of the transactions contemplated hereby to the extent provided
therein.  All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Companies pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Companies hereunder solely as of the date
of such certificate or instrument.  All indemnities set forth herein shall
survive the execution, delivery and termination of this Agreement and the
Ancillary Agreements and the making and repaying of the Obligations.
 
36.  Captions.  All captions are and shall be without substantive meaning or
content of any kind whatsoever.
 
37.  Counterparts; Telecopier Signatures.  This Agreement may be executed in one
or more counterparts, each of which shall constitute an original and all of
which taken together shall constitute one and the same agreement.  Any signature
delivered by a party via telecopier transmission shall be deemed to be any
original signature hereto.
 
38.  Construction.  The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments, schedules or
exhibits thereto.
 
39.  Publicity.  Each Company hereby authorizes each Creditor Party to make
appropriate announcements of the financial arrangement entered into by and among
each Company and each Creditor Party, including, without limitation,
announcements which are commonly known as tombstones, in such publications and
to such selected parties as the Agent shall in its sole and absolute discretion
deem appropriate, or as required by applicable law.
 
40.  Joinder.  It is understood and agreed that any Person that desires to
become a Company hereunder, or is required to execute a counterpart of this
Agreement after the date hereof pursuant to the requirements of this Agreement
or any Ancillary Agreement, shall become a Company hereunder by (a) executing a
Joinder Agreement in form and substance satisfactory to the Agent, (b)
delivering supplements to such exhibits and annexes to this Agreement and the
Ancillary Agreements as the Agent shall reasonably request and (c) taking all
actions as specified in this Agreement as would have been taken by such Company
had it been an original party to this Agreement, in each case with all documents
required above to be delivered to the Agent and with all documents and actions
required above to be taken to the reasonable satisfaction of the Agent.
 
 
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41.  Legends.  The Securities shall bear legends as follows;
 
(a)  The Notes shall bear substantially the following legend:
 
“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE, STATE SECURITIES LAWS.  THIS NOTE MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN EXEMPTION FROM SUCH REGISTRATION.  THIS NOTE IS REGISTERED WITH THE COMPANY
AGENT PURSUANT TO SECTION 24(B) OF THE SECURITY AGREEMENT.  TRANSFER OF ALL OR
ANY PORTION OF THIS NOTE IS PERMITTED SUBJECT TO THE PROVISIONS SET FORTH IN
SUCH SECTION 24(B) WHICH REQUIRE, AMONG OTHER THINGS, THAT NO TRANSFER IS
EFFECTIVE UNTIL THE TRANSFEREE IS REFLECTED AS SUCH ON THE REGISTRY MAINTAINED
WITH THE AGENT PURSUANT TO SUCH SECTION 24(B).”
 
(b)  Any shares of Common Stock issued pursuant to exercise of the Warrants,
shall bear a legend which shall be in substantially the following form until
such shares are covered by an effective registration statement filed with the
SEC:
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES
LAWS.  THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION.”
 
(c)  The Warrants shall bear substantially the following legend:
 
“THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS.  THIS WARRANT AND THE COMMON SHARES ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT OR THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION.”
 
42.  Agency.  Each Lender has pursuant to an Administrative and Collateral
Agency Agreement hereby designated and appointed the Agent as the administrative
and collateral agent of such Lender under this Agreement and the Ancillary
Agreements.
 
[Balance of page intentionally left blank; signature page follows.]

 
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IN WITNESS WHEREOF, the parties have executed this SECURITY AGREEMENT as of the
date first written above.
 

  NEWMARKET TECHNOLOGY, INC.          
 
By:
/s/ Philip M. Verges       Name Philip M. Verges       Title CEO          

 

  IP GLOBAL VOICE, INC.          
 
By:
/s/ Peter Geddis       Name Peter Geddis       Title CEO          

  NETSCO, INC.          
 
By:
/s/ Philip M. Verges       Name Philip M. Verges       Title President          

 

  NEWMARKET CHINA, INC.          
 
By:
/s/ Philip J. Rauch       Name Philip J. Rauch       Title CFO          

 

  NEWMARKET INTELLECTUAL PROPERTY, INC.          
 
By:
/s/ Philip M. Verges       Name Philip M. Verges       Title President          

 

  NEWMARKET BROADBAND, INC.          
 
By:
/s/ Philip M. Verges       Name Philip M. Verges       Title President          

 
 
 

  LV ADMINISTRATIVE SERVICES, INC., as Agent          
 
By:
/s/ Scott Bluestein       Name Scott Bluestein       Title Authorized Signatory
         

 

 
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Annex A - Definitions
 
“Account Debtor” means any Person who is or may be obligated with respect to, or
on account of, an Account.
 
“Accountants” has the meaning given to such term in Section 11(a).
 
“Accounts” means all “accounts”, as such term is defined in the UCC, now owned
or hereafter acquired by any Person, including:  (a) all accounts receivable,
other receivables, book debts and other forms of obligations (other than forms
of obligations evidenced by Chattel Paper or Instruments) (including any such
obligations that may be characterized as an account or contract right under the
UCC); (b) all of such Person’s rights in, to and under all purchase orders or
receipts for goods or services; (c) all of such Person’s rights to any goods
represented by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (d) all rights to payment due to such
Person for Goods or other property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Person or in connection with any other transaction (whether or
not yet earned by performance on the part of such Person); and (e) all
collateral security of any kind given by any Account Debtor or any other Person
with respect to any of the foregoing.
 
“Accounts Availability” means ninety percent (90%) of the net face amount of
Eligible Accounts.
 
“Administrative and Collateral Agency Agreement” means the Administrative and
Collateral Agency Agreement among the Agent, the Lenders and such other parties
thereto from time to time, as amended, modified, supplemented and restated from
time to time.
 
“Affiliate” means, with respect to any Person, (a) any other Person (other than
a Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, (b) any other Person that, directly
or indirectly, owns or controls, whether beneficially, or as trustee, guardian
or other fiduciary, 10% or more of the Equity Interests having ordinary voting
power in the election of directors of such Person, (c) any other Person who is a
director, officer, joint venturer or partner (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in clause (a) above
or (d) in the case of the Companies, the immediate family members, spouses and
lineal descendants of individuals who are Affiliates of such Companies.  For the
purposes of this definition, control of a Person shall mean the power (direct or
indirect) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise; providedhowever, that the term
“Affiliate” shall specifically exclude any Creditor Party.
 
“Ancillary Agreements” means the Notes, the Warrants, the Registration Rights
Agreements, each Security Document and all other agreements, instruments,
documents, mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, trust agreements and guarantees whether
heretofore, concurrently, or hereafter executed by or on behalf of any Company,
any of its Subsidiaries or any other Person or delivered to any of the Creditor
Parties, relating to this Agreement or to the transactions contemplated by this
Agreement or otherwise relating to the relationship between or among any Company
and any Creditor Party, as each of the same may be amended, supplemented,
restated or otherwise modified from time to time.
 
 
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“Assignment Agreement” has the meaning given such term in Section 24(a).
 
“Balance Sheet Date” has the meaning given such term in Section 12(f)(ii).
 
“Books and Records” means all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral or otherwise necessary or helpful in the
collection thereof or the realization thereupon.
 
“Business Day” means a day on which the Creditor Parties are open for business
and that is not a Saturday, a Sunday or other day on which banks are required or
permitted to be closed in the State of New York.
 
“Capital Availability Amount” means $3,000,000.
 
“Capital Expenditures” means, for any Person for any period, the aggregate of
all expenditures, whether or not made through the incurrence of Indebtedness, by
such Person and its Domestic Subsidiaries during such period for the
acquisition, leasing (pursuant to a capital lease), construction, replacement,
repair, substitution or improvement of fixed or capital assets or additions to
equipment, in each case required to be capitalized under GAAP on a Consolidated
balance sheet of such Person.
 
“Capital Lease” means, with respect to any Person, any lease of, or other
arrangement conveying the right to use, any property (whether real, personal or
mixed) by such Person as lessee that has been or should be accounted for as a
capital lease on a balance sheet of such Person prepared in accordance with
GAAP.
 
“Capitalized Lease Obligations” means, at any time, with respect to any Capital
Lease, any lease entered into as part of any sale/leaseback transaction of any
Person or any synthetic lease, the amount of all obligations of such Person that
is (or that would be, if such synthetic lease or other lease were accounted for
as a Capital Lease) capitalized on a balance sheet of such Person prepared in
accordance with GAAP.
 
“Charter” has the meaning given such term in Section 12(c)(iv).
 
“Chattel Paper” means all “chattel paper,” as such term is defined in the UCC,
including electronic chattel paper, now owned or hereafter acquired by any
Person.
 
“Closing Date” means the date on which any Company shall first receive proceeds
of the initial Loans or the date hereof, if no Loan is made under the facility
on the date hereof.
 
“Code” has the meaning given such term in Section 15(i).
 
 
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“Collateral” means all of each Company’s property and assets, whether real or
personal, tangible or intangible, and whether now owned or hereafter acquired,
or in which it now has or at any time in the future may acquire any right, title
or interests including all of the following property in which it now has or at
any time in the future may acquire any right, title or interest:
 
(a)  all Inventory;
 
(b)  all Equipment;
 
(c)  all Fixtures;
 
(d)  all Goods;
 
(e)  all General Intangibles;
 
(f)  all Accounts;
 
(g)  all Deposit Accounts, other bank accounts and all funds on deposit therein;
 
(h)  all Investment Property;
 
(i)  all Equity Interests;
 
(j)  all Chattel Paper;
 
(k)  all Letter-of-Credit Rights;
 
 
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(l)  all Instruments;
 
(m)  all Commercial Tort Claims, including without limitation the claims set
forth on Schedule 1(A);
 
(n)  all Books and Records;
 
(o)  all Intellectual Property;
 
(p)  all Documents;
 
(q)  all Supporting Obligations including letters of credit and guarantees
issued in support of Accounts, Chattel Paper, General Intangibles and Investment
Property;
 
(r)  (i) all money, cash and cash equivalents and (ii) all cash held as cash
collateral, all other cash or property at any time on deposit with or held by
the Agent for the account of any Company (whether for safekeeping, custody,
pledge, transmission or otherwise); and
 
(s)  all products and Proceeds of all or any of the foregoing, tort claims and
all claims and other rights to payment including (i) insurance claims against
third parties for loss of, damage to, or destruction of, the foregoing
Collateral and (ii) payments due or to become due under leases,
licenses,  rentals and hires of any or all of the foregoing and Proceeds payable
under, or unearned premiums with respect to policies of insurance in whatever
form.
 
“Commercial Tort Claims” means all “commercial tort claims”, as such term is
defined in the UCC, now owned or hereafter acquired by any Person.
 
“Commitment Annex” means Annex B to this Agreement.
 
“Common Stock” means the shares of stock representing the Parent’s common equity
interests.
 
“Company Agent” means the Parent.
 
“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.
 
“Consolidated” means, with respect to any Person, the accounts of such Person
consolidated in accordance with GAAP.
 
 
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“Consolidated Cash Interest Expense” means, with respect to any Person for any
period, the Consolidated Interest Expense of such Person for such period less
the sum of, in each case to the extent included in the definition of
Consolidated Interest Expense, (a) the amortized amount of debt discount and
debt issuance costs, (b) charges relating to write-ups or write-downs in the
book or carrying value of existing Consolidated Total Debt, (c) interest payable
in evidences of Indebtedness or by addition to the principal of the related
Indebtedness and (d) other non-cash interest.
 
“Consolidated EBITDA” means, with respect to any Person for any period, (a) the
Consolidated Net Income of such Person for such period plus (b) the sum of, in
each case to the extent included in the calculation of such Consolidated Net
Income but without duplication, (i) any provision for United States federal
income taxes or other taxes measured by net income, (ii) Consolidated Interest
Expense, amortization of debt discount and commissions and other fees and
charges associated with Indebtedness (except amortization and expenses related
to the consummation of the initial Loans on the Closing Date and the payment of
all fees, costs and expenses associated with the foregoing), (iii) any loss from
extraordinary items, (iv) any depreciation, depletion and amortization expense,
(v) any aggregate net loss on the sale of property (other than Accounts and
Inventory (as defined under the applicable UCC) outside the ordinary course of
business and (vi) any other non-cash expenditure, charge or loss for such period
(other than any non-cash expenditure, charge or loss relating to write-offs,
write-downs or reserves with respect to accounts and inventory), including the
amount of any compensation deduction as the result of any grant of Equity
Interests to employees, officers, directors or consultants and minus (c) the sum
of, in each case to the extent included in the calculation of such Consolidated
Net Income and without duplication, (i) any credit for United States federal
income taxes or other taxes measured by net income, (ii) any interest income,
(iii) any gain from extraordinary items and any other non-recurring gain, (iv)
any aggregate net gain from the sale of property (other than Accounts and
Inventory (as defined in the applicable UCC) out of the ordinary course of
business by such Person, (v) any other non-cash gain, including any reversal of
a charge referred to in clause (b)(vi) above by reason of a decrease in the
value of any Equity Interests, and (vi) any other cash payment in respect of
expenditures, charges and losses that have been added to Consolidated EBITDA of
such Person pursuant to clause (b)(vi) above in any prior period.
 
“Consolidated Fixed Charge Coverage Ratio” means, with respect to any Person for
any period, the ratio of (a) Consolidated EBITDA of such Person for such period
minus Capital Expenditures of such Person for such period minus the total
liability for United States federal income taxes and other taxes measured by net
income actually payable by such Person in respect of such period to (b) the
Consolidated Fixed Charges of such Person for such period.
 
“Consolidated Fixed Charges” means, with respect to any Person for any period,
the sum, determined on a Consolidated basis, of (a) the Consolidated Cash
Interest Expense of such Person for such period, (b) the principal amount of
Consolidated Total Debt of such Person having a scheduled due date during such
period, (c) all cash dividends payable by such Person on Equity Interests in
respect of such period to Persons other than such Person and (d) all commitment
fees and other costs, fees and expenses payable by such Person during such
period in order to effect, or because of, the incurrence of any Indebtedness.
 
“Consolidated Interest Expense” means, for any Person for any period, (a)
Consolidated total interest expense of such Person for such period and
including, in any event, (i) interest capitalized during such period and net
costs under Interest Rate Contracts for such period and (ii) all fees, charges,
commissions, discounts and other similar obligations (other than reimbursement
obligations) with respect to letters of credit, bank guarantees, banker’s
acceptances, surety bonds and performance bonds (whether or not matured) payable
by such Person during such period minus (b) the sum of (i) Consolidated net
gains of such Person under Interest Rate Contracts for such period and
(ii) Consolidated interest income of such Person for such period.
 
“Consolidated Leverage Ratio” means, with respect to any Person as of any date,
the ratio of (a) Consolidated Total Debt of such Person outstanding as of such
date excluding intercompany loans made by such Person to any Subsidiary of such
Person to (b) Consolidated EBITDA for such Person for the last period of twelve
(12) consecutive calendar months ending on or before such date.
 
 
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“Consolidated Net Income” means, with respect to any Person, for any period, the
Consolidated net income (or loss) of such Person for such period; provided,
however, that the following shall be excluded:  (a) the net income of any other
Person in which such Person has a joint interest with a third-party (which
interest does not cause the net income of such other Person to be Consolidated
into the net income of such Person), except to the extent of the amount of
dividends or distributions paid to such Person , (b) the net income of any
Domestic Subsidiary of such Person that is, on the last day of such period,
subject to any restriction or limitation on the payment of dividends or the
making of other distributions, to the extent of such restriction or limitation
and (c) the net income of any other Person arising prior to such other Person
becoming a Domestic Subsidiary of such Person or merging or consolidating into
such Person or its Domestic Subsidiaries.
 
“Consolidated Total Debt” of any Person means all Indebtedness of a type
described in clause (a), (b), (c)(i), (d), (f), (g) or (i) of the definition
thereof, in each case of such Person on a Consolidated basis.
 
“Contract Rate” has the meaning given such term in the Note.
 
“Contractual Obligation” means, with respect to any Person, any provision of any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which such Person is a party or by which it or any of its property
is bound or to which any of its property is subject.
 
“Default” means any act or event which, with the giving of notice or passage of
time or both, would constitute an Event of Default.
 
“Deposit Accounts” means all “deposit accounts” as such term is defined in the
UCC, now or hereafter held in the name of any Person, including, without
limitation, the Lockboxes.
 
“Disclosure Controls” has the meaning given such term in Section 12(f)(iv).
 
“Documents” means all “documents”, as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including all bills of
lading, dock warrants, dock receipts, warehouse receipts, and other documents of
title, whether negotiable or non-negotiable.
 
“Domestic Subsidiary” means any Subsidiary organized under the laws of the
United States of America, any State thereof or the District of Columbia.
 
 
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“Eligible Accounts” means each Account of each Company which conforms to the
following criteria:  (a) shipment of the merchandise or the rendition of
services has been completed; (b) no return, rejection or repossession of the
merchandise has occurred; (c) merchandise or services shall not have been
rejected or disputed by the Account Debtor and there shall not have been
asserted any offset, defense or counterclaim; (d) continues to be in full
conformity with the representations and warranties made by such Company to the
Agent with respect thereto; (e) the Agent is, and continues to be, satisfied
with the credit standing of the Account Debtor in relation to the amount of
credit extended; provided, however, that this clause (e) shall not apply in the
case of any determination made as to an Account on or after the Specified
Assignment Date; (f) there are no facts existing or threatened which are likely
to result in any adverse change in an Account Debtor’s financial condition; (g)
is documented by an invoice in a form approved by the Agent and shall not be
unpaid more than ninety (90) days from invoice date; (h) not more than
twenty-five percent (25%) of the unpaid amount of invoices due from such Account
Debtor remains unpaid more than ninety (90) days from invoice date; (i) is not
evidenced by chattel paper or an instrument of any kind with respect to or in
payment of the Account unless such instrument is duly endorsed to and in
possession of the Agent or represents a check in payment of an Account; (j) the
Account Debtor is located in the United States; provided, however, the Agent may
from time to time prior to the Specified Assignment Date, in the exercise of its
sole discretion and based upon satisfaction of certain conditions to be
determined at such time by the Agent, deem certain Accounts as Eligible Accounts
notwithstanding that such Account is due from an Account Debtor located outside
of the United States; (k) the Agent has a first priority perfected Lien in such
Account and such Account is not subject to any Lien other than Permitted Liens;
(l) does not arise out of transactions with any employee, officer, director,
stockholder or Affiliate of any Company; (m) is payable to such Company; (n)
does not arise out of a bill and hold sale prior to shipment and does not arise
out of a sale to any Person to which such Company is indebted; (o) is net of any
returns, discounts, claims, credits and allowances; (p) if the Account arises
out of contracts between such Company, on the one hand, and the United States,
on the other hand, any state, or any department, agency or instrumentality of
any of them, such Company has so notified the Agent, in writing, prior to the
creation of such Account, and there has been compliance with any governmental
notice or approval requirements, including compliance with the Federal
Assignment of Claims Act; (q) is a good and valid account representing an
undisputed bona fide indebtedness incurred by the Account Debtor therein named,
for a fixed sum as set forth in the invoice relating thereto with respect to an
unconditional sale and delivery upon the stated terms of goods sold by such
Company or work, labor and/or services rendered by such Company; (r) does not
arise out of progress billings prior to completion of the order; (s) the total
unpaid Accounts from such Account Debtor does not exceed twenty-five percent
(25%) of all Eligible Accounts; (t) such Company’s right to payment is absolute
and not contingent upon the fulfillment of any condition whatsoever; (u) such
Company is able to bring suit and enforce its remedies against the Account
Debtor through judicial process; (v) does not represent interest payments, late
or finance charges owing to such Company, and (w) it otherwise satisfactory to
the Agent as determined by the Agent in the exercise of its commercially
reasonable discretion, exercised in good faith; provided, however, that this
clause (w) shall not apply in the case of any determination made as to an
Account on or after the Specified Assignment Date.  In the event any Company
requests that the Agent include within Eligible Accounts certain Accounts of one
or more of such Company’s acquisition targets, the Agent shall at the time of
such request consider such inclusion, but any such inclusion shall be at the
sole option of the Agent, may not first occur on or after the Specified
Assignment Date and shall at all times be subject to the execution and delivery
to the Agent of all such documentation (including, without limitation, guaranty
and security documentation) as the Agent may require in its sole discretion.
 
“Eligible Subsidiary” means each Subsidiary of the Parent set forth on Exhibit A
hereto, as the same may be updated from time to time with the Agent’s written
consent.
 
“Environmental Law”  means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to pollution or the environment, preservation or reclamation of natural
resources, the management, generation, use, handling, treatment, transportation,
storage, disposal or release or threatened release of or exposure to Hazardous
Materials, or occupational health and safety.
 
 
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“Equipment” means all “equipment” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including any and all
machinery, apparatus, equipment, fittings, furniture, Fixtures, motor vehicles
and other tangible personal property (other than Inventory) of every kind and
description that may be now or hereafter used in such Person’s operations or
that are owned by such Person or in which such Person may have an interest, and
all parts, accessories and accessions thereto and substitutions and replacements
therefor.
 
“Equity Interests” shall mean, with respect to any Person, any and all shares,
rights to purchase, options, warrants, general, limited or limited liability
partnership interests, member interests, units, participations or other
equivalents of or interest in (regardless of how designated) equity of such
Person, whether voting or nonvoting, including common stock, preferred stock,
convertible securities or any other “equity security” (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC (or
any successor thereto) under the Exchange Act).
 
“ERISA” has the meaning given such term in Section 12(bb).
 
“Event of Default” means the occurrence of any of the events set forth in
Section 19.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Exchange Act Filings” means the Parent’s filings under the Exchange Act made
prior to the date of this Agreement.
 
“Excluded Taxes” means, with respect to any Creditor Party, taxes imposed on or
measured by its overall net income and franchise taxes imposed on it in lieu of
net income taxes, by the jurisdiction (or any political subdivision thereof)
under the laws of which such Creditor Party is incorporated or organized or by
the jurisdiction (or any political subdivision thereof) in which the principal
place of management or applicable lending office of such Creditor Party is
located.
 
“Financial Reporting Controls” has the meaning given such term in Section
12(f)(v).
 
“Fixtures” means all “fixtures” as such term is defined in the UCC, now owned or
hereafter acquired by any Person.
 
“Foreign Subsidiary” means any Subsidiary of any Company that is not a Domestic
Subsidiary.
 
“Formula Amount” has the meaning given such term in Section 2(a)(i).
 
“GAAP” means generally accepted accounting principles, practices and procedures
in effect from time to time in the United States of America.
 
 
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“General Intangibles” means all “general intangibles” as such term is defined in
the UCC, now owned or hereafter acquired by any Person and in any event shall
include all right, title and interest that such Person may now or hereafter have
in or under any contract, all Payment Intangibles, customer lists, Intellectual
Property, interests in partnerships, joint ventures and other business
associations, permits, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, Software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials, Books and Records, Goodwill
(including the Goodwill associated with any Intellectual Property), all rights
and claims in or under insurance policies (including insurance for fire, damage,
loss, and casualty, whether covering personal property, real property, tangible
rights or intangible rights, all liability, life, key-person, and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit accounts, rights to receive tax refunds and other
payments, rights to received dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Equity Interests and
Investment Property, and rights of indemnification.
 
“Goods” means all “goods”, as such term is defined in the UCC, now owned or
hereafter acquired by any Person, wherever located, including embedded software
to the extent included in “goods” as defined in the UCC, manufactured homes,
fixtures, standing timber that is cut and removed for sale and unborn young of
animals.
 
“Goodwill” means all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
 
“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
 
“Guaranty Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person for any Indebtedness, lease,
dividend or other obligation (the “primary obligation”) of another Person (the
“primary obligor”), if the purpose or intent of such Person in incurring such
liability, or the economic effect thereof, is to guarantee such primary
obligation or provide support, assurance or comfort to the holder of such
primary obligation or to protect or indemnify such holder against loss with
respect to such primary obligation, including (a) the direct or indirect
guaranty, endorsement (other than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with recourse
by such Person of any primary obligation, (b) the incurrence of reimbursement
obligations with respect to any letter of credit or bank guarantee in support of
any primary obligation, (c) the existence of any Lien, or any right, contingent
or otherwise, to receive a Lien, on the property of such Person securing any
part of any primary obligation and (d) any liability of such Person for a
primary obligation through any Contractual Obligation (contingent or otherwise)
or other arrangement (i) to purchase, repurchase or otherwise acquire such
primary obligation or any security therefor or to provide funds for the payment
or discharge of such primary obligation (whether in the form of a loan, advance,
stock purchase, capital contribution or otherwise), (ii) to maintain the
solvency, working capital, equity capital or any balance sheet item, level of
income or cash flow, liquidity or financial condition of any primary obligor,
(iii) to make take-or-pay or similar payments, if required, regardless of
non-performance by any other party to any Contractual Obligation, (iv) to
purchase, sell or lease (as lessor or lessee) any property, or to purchase or
sell services, primarily for the purpose of enabling the primary obligor to
satisfy such primary obligation or to protect the holder of such primary
obligation against loss or (v) to supply funds to or in any other manner invest
in, such primary obligor (including to pay for property or services irrespective
of whether such property is received or such services are rendered); provided,
however, that “Guaranty Obligations” shall not include (x) endorsements for
collection or deposit in the ordinary course of business and (y) product
warranties given in the ordinary course of business.  The outstanding amount of
any Guaranty Obligation shall equal the outstanding amount of the primary
obligation so guaranteed or otherwise supported or, if lower, the stated maximum
amount for which such Person may be liable under such Guaranty Obligation.
 
 
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“Hazardous Materials” means materials, wastes or pollutants listed or defined as
“hazardous substances”, “hazardous wastes” ,”toxic substances” or by words of
similar import or any other substance or waste otherwise regulated by applicable
Environmental Law, including nuclear materials and radioactive substances or
wastes, petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
and toxic mold.
 
“Hedging Agreement” means any Interest Rate Contract, foreign exchange, swap,
option or forward contract, spot, cap, floor or collar transaction, any other
derivative instrument and any other similar speculative transaction and any
other similar agreement or arrangement designed to alter the risks of any Person
arising from fluctuations in any underlying variable.
 
“Indebtedness” of any Person means, without duplication, any of the following,
whether or not matured:  (a) all indebtedness for borrowed money (including,
without limitation, all principal, interest, fees and charges relating thereto),
(b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all reimbursement and all obligations with respect to (i)
letters of credit, bank guarantees or bankers’ acceptances or (ii) surety,
customs, reclamation or performance bonds (in each case not related to judgments
or litigation) other than those entered into in the ordinary course of business,
(d) all obligations to pay the deferred purchase price of property or services,
other than trade payables incurred in the ordinary course of business, (e) all
obligations created or arising under any conditional sale or other title
retention agreement, regardless of whether the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of such property, (f) all Capitalized Lease Obligations,
(g) all obligations, whether or not contingent, to purchase, redeem, retire,
defease or otherwise acquire for value any of its own Equity Interests (or any
Equity Interests of a direct or indirect parent entity thereof) prior to the
date that is 180 days after the maturity of the Notes, valued at, in the case of
redeemable preferred Equity Interests, the greater of the voluntary liquidation
preference and the involuntary liquidation preference of such Equity Interests
plus accrued and unpaid dividends, (h) all payments that would be required to be
made in respect of any Hedging Agreement in the event of a termination
(including an early termination) on the date of determination and (i) all
Guaranty Obligations for obligations of any other Person constituting
Indebtedness of such other Person; provided, however, that the items in each of
clauses (a) through (i) above shall constitute “Indebtedness” of such Person
solely to the extent, directly or indirectly, (x) such Person is liable for any
part of any such item, (y) any such item is secured by a Lien on such Person’s
property or (z) any other Person has a right, contingent or otherwise, to cause
such Person to become liable for any part of any such item or to grant such a
Lien.
 
“Interest Rate Contracts” means all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements and interest rate insurance.
 
“Instruments” means all “instruments”, as such term is defined in the UCC, now
owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
 
 
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“Intellectual Property” means any and all of the following, throughout the
world,  patents, trademarks tradenames, corporate names, fictitious business
names, Internet domain names, trade styles, service marks, logos, and other
source of  business identifiers and the goodwill symbolized by and connected
with the use thereof; copyrights, mask works, designs, inventions, trade
secrets, information, databases, rights of publicity, software, and any other
proprietary rights and processes; any licenses to use any of the foregoing owned
by a third party;  registrations, applications and recordings pertaining to any
of the foregoing; and rights to sue for past, present and future infringement,
dilution, misappropriation, or other violation of any of the foregoing.
 
“Inventory” means all “inventory”, as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including all inventory,
merchandise, goods and other personal property that are held by or on behalf of
such Person for sale or lease or are furnished or are to be furnished under a
contract of service or that constitute raw materials, work in process, finished
goods, returned goods, or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in such Person’s business
or in the processing, production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.
 
“Investment Property” means all “investment property”, as such term is defined
in the UCC, now owned or hereafter acquired by any Person, wherever located.
 
“Lender” has the meaning given such term in the preamble.
 
“Letter-of-Credit Rights” means “letter-of-credit rights” as such term is
defined in the UCC, now owned or hereafter acquired by any Person, including
rights to payment or performance under a letter of credit, whether or not such
Person, as beneficiary, has demanded or is entitled to demand payment or
performance.
 
“Lien” means any mortgage, security deed, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including any conditional sale or other title retention
agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the UCC or comparable law of any jurisdiction.
 
“Loans” means collectively, the Revolving Loans and the Term Loan.
 
“Lockboxes” has the meaning given such term in Section 8(a).
 
 
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“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, liabilities, condition (financial or otherwise), properties, operations
or prospects of any Company or any of its Subsidiaries (taken individually and
as a whole), (b) any Company’s or any of its Subsidiary’s ability to pay or
perform the Obligations in accordance with the terms hereof or any Ancillary
Agreement, (c) the sufficiency and/or value of the Collateral, the Liens on the
Collateral or the priority of any such Lien or (d) the practical realization of
the benefits of the Creditor Parties’ rights and remedies under this Agreement
and the Ancillary Agreements.  Without limiting the foregoing, any event or
occurrence adverse to a Company which results or could reasonably be expected to
result in costs and/or liabilities or loss of revenues, individually or in the
aggregate to such Company in excess of 30% of such Company’s revenue shall
constitute a Material Adverse Effect.
 
“NASD” has the meaning given such term in Section 13(b).
 
“Non-Excluded Taxes” means all Taxes other than (i) Excluded Taxes and (ii)
Other Taxes.
 
“Notes” means the Secured Revolving Notes and the Secured Term Notes.
 
“Note Shares” has the meaning given to such term in Section 12(a).
 
“Notes Receivable” means, collectively, (a) the 6% Promissory Note dated March
31, 2006 made by Sensitron, Inc., a Delaware corporation, in favor of the Parent
in the original principal amount of $411,400, (b) the Convertible Promissory
Note dated October 1, 2006 made by VirtualHealth Technologies, Inc., a Delaware
corporation, in favor of the Parent in the original principal amount of
$900,000, (c) the Promissory Note dated August 18, 2006 made by Vera Technology
Corporation in favor of the Parent in the original principal amount of
$1,300,000 and (d) each other instrument, agreement and/or document evidencing
indebtedness owing by any Person to a Company.
 
“Obligations” means all Loans, all advances, debts, liabilities, obligations,
covenants and duties owing by each Company and each of its Subsidiaries to any
Creditor Party (or any corporation that directly or indirectly controls or is
controlled by or is under common control with any of them) of every kind and
description (whether or not evidenced by any note or other instrument and
whether or not for the payment of money or the performance or non-performance of
any act), direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, whether existing by
operation of law or otherwise now existing or hereafter arising including any
debt, liability or obligation owing from any Company and/or each of its
Subsidiaries to others which any Creditor Party may have obtained by assignment
or otherwise and further including all interest (including interest accruing at
the then applicable rate provided in this Agreement after the maturity of the
Loans and interest accruing at the then applicable rate provided in this
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, whether or not a claim for
post-filing or post-petition interest is allowed or allowable in such
proceeding), charges or any other payments each Company and each of its
Subsidiaries is required to make by law or otherwise arising under or as a
result of this Agreement, the Ancillary Agreements or otherwise, together with
all reasonable expenses and reasonable attorneys’ fees chargeable to the
Companies’ or any of their Subsidiaries’ accounts or incurred by any Creditor
Party in connection therewith.
 
 
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“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Ancillary Agreement.
 
“Overadvance” has the meaning given such term in Section 2(a)(ii).
 
“Parent” has the meaning given such term in the preamble.
 
“Payment Intangibles” means all “payment intangibles” as such term is defined in
the UCC, now owned or hereafter acquired by any Person, including, a General
Intangible under which the Account Debtor’s principal obligation is a monetary
obligation.
 
“Permitted Liens” means (a) Liens of carriers, warehousemen, artisans, bailees,
mechanics and materialmen incurred in the ordinary course of business securing
sums not overdue; (b) Liens incurred in the ordinary course of business in
connection with worker’s compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (i) not
overdue or (ii) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of the Companies and
their Subsidiaries, as applicable, in conformity with GAAP; (c) licenses of
Intellectual Property granted by the Company prior to the date hereof, Licenses
of Intellectual Property granted in the ordinary course of business consistent
with past practices on convincingly reasonable terms; (d) Liens in favor of the
Agent; (e) Liens for taxes (i) not yet due or (ii) being diligently contested in
good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Companies and their
Subsidiaries, as applicable, in conformity with GAAP; and which have no effect
on the priority of Liens in favor of the Agent or the value of the assets in
which the Agent has a Lien; (f) Purchase Money Liens securing Purchase Money
Indebtedness to the extent permitted in this Agreement and (f) Liens specified
on Schedule 2 hereto.
 
“Person” means any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person’s successors and assigns.
 
“Principal Market” means the NASD Over The Counter Bulletin Board, NASDAQ
Capital Market, NASDAQ National Market System, American Stock Exchange or New
York Stock Exchange (whichever of the foregoing is at the time the principal
trading exchange or market for the Common Stock).
 
“Proceeds” means “proceeds”, as such term is defined in the UCC and, in any
event, shall include:  (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Company or any other Person from time to
time with respect to any Collateral; (b) any and all payments (in any form
whatsoever) made or due and payable to any Company from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any Collateral by any governmental body, governmental authority,
bureau or agency (or any person acting under color of governmental authority);
(c) any claim of any Company against third parties (i) for past, present or
future infringement of any Intellectual Property or (ii) for past, present or
future infringement or dilution of any trademark or trademark license or for
injury to the goodwill associated with any trademark, trademark registration or
trademark licensed under any trademark License; (d) any recoveries by any
Company against third parties with respect to any litigation or dispute
concerning any Collateral, including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral; (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Equity Interests; and (f) any and all other amounts, rights to payment or other
property acquired upon the sale, lease, license, exchange or other disposition
of Collateral and all rights arising out of Collateral.
 
 
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“Purchase Money Indebtedness” means (a) any indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, including
indebtedness under capitalized leases, (b) any indebtedness incurred for the
sole purpose of financing or refinancing all or any part of the purchase price
of any fixed asset, and (c) any renewals, extensions or refinancings thereof
(but not any increases in the principal amounts thereof outstanding at that
time).
 
“Purchase Money Lien” means any Lien upon any fixed assets that secures the
Purchase Money Indebtedness related thereto but only if such Lien shall at all
times be confined solely to the asset the purchase price of which was financed
or refinanced through the incurrence of the Purchase Money Indebtedness secured
by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.
 
“Register” has the meaning given such term in Section 24(b).
 
“Registration Rights Agreements” means that certain Registration Rights
Agreement dated as of the Closing Date by and between the Parent and the Agent
and each other registration rights agreement by and between the Parent and the
Agent, as each of the same may be amended, modified and supplemented from time
to time.
 
“Reserves” means (a) until the occurrence of the Specified Assignment Date, such
reserves as the Agent may reasonably in its good faith judgment deem proper and
necessary from time to time and (b) on and after the Specified Assignment Date,
the Agent may institute reserves in the following amounts:
 
(i)  if on the last day of any calendar month commencing on the calendar month
ending November 30, 2007, the Consolidated EBITDA of the Companies and their
Domestic Subsidiaries on a Consolidated basis is less than $4,000,000 but
greater than or equal to $3,000,000 for the twelve (12) calendar month period
ending on such day, reserves against the Formula Amount in an amount not greater
than twenty-five percent (25%) of the Formula Amount;
 
(ii)  if on the last day of any calendar month commencing on the calendar month
ending November 30, 2007, the Consolidated EBITDA of the Companies and their
Domestic Subsidiaries on a Consolidated basis is less than $3,000,000 for the
twelve (12) calendar month period ending on such day, reserves against the
Formula Amount in an amount not greater than fifty percent (50%) of the Formula
Amount;
 
(iii)  if on the last day of any calendar month commencing on the calendar month
ending November 30, 2007, the Consolidated Leverage Ratio of the Companies and
their Domestic Subsidiaries on a Consolidated basis is greater than 2.50 to 1.00
but less than or equal to 3.00 to 1.00, reserves against the Formula Amount in
an amount not greater than twenty percent (20%) of the Formula Amount;
 
(iv)  if on the last day of any calendar month commencing on the calendar month
ending November 30, 2007, the Consolidated Leverage Ratio of the Companies and
their Domestic Subsidiaries on a Consolidated basis is greater than 3.00 to
1.00, reserves against the Formula Amount in an amount not greater than forty
percent (40%) of the Formula Amount;
 
 
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(v)  if on the last day of any calendar month commencing on the calendar month
ending November 30, 2007, the Consolidated Fixed Charge Coverage Ratio of the
Companies and their Domestic Subsidiaries on a Consolidated basis is less than
1.25 to 1.00 but greater than or equal to 1.15 to 1.00, reserves against the
Formula Amount in an amount not greater than twenty percent (20%) of the Formula
Amount; or
 
(vi)  if on the last day of any calendar month commencing on the calendar month
ending November 30, 2007, the Consolidated Fixed Charge Coverage Ratio of the
Companies and their Domestic Subsidiaries on a Consolidated basis is less than
1.15 to 1.00, reserves against the Formula Amount in an amount not greater than
forty percent (40%) of the Formula Amount.
 
“Revolving Commitment Amount” means, as to any Lender, the dollar amount set
forth opposite such Lender’s name on the Commitment Annex under the column
“Revolving Commitment Amount” (if such Lender’s name is not so set forth
thereon, then the dollar amount on the Commitment Annex for the Revolving
Commitment Amount for such Lender shall be deemed to be zero), as such amount
may be adjusted from time to time by any amounts assigned (with respect to such
Lender’s portion of Revolving Loans outstanding and its commitment to make
Revolving Loans) pursuant to the terms of any and all effective Assignment
Agreements to which such Lender is a party.
 
“Revolving Commitment Percentage” means, as to any Lender, (i) on the Closing
Date, the percentage set forth opposite such Lender’s name on the Commitment
Annex under the column “Revolving Commitment Percentage” (if such Lender’s name
is not so set forth thereon, then, on the Closing Date, such percentage for such
Lender shall be deemed to be zero) and (ii) on any date following the Closing
Date, the percentage equal to the Revolving Commitment Amount of such Lender on
such date divided by the Capital Availability Amount on such date.
 
“Revolving Loans” has the meaning given such term in Section 2(a)(i) and shall
include all other extensions of credit hereunder and under any Ancillary
Agreement.
 
“SEC” means the Securities and Exchange Commission.
 
“SEC Reports” has the meaning given such term in Section 12(u).
 
“Secured Revolving Notes” means those certain Secured Revolving Notes dated as
of the Closing Date made by the Companies in favor of the Lenders in the
aggregate original face amount of $3,000,000, as each may be amended,
supplemented, restated and/or otherwise modified from time to time.
 
“Secured Term Notes” means those certain Secured Term Notes dated as of the
Closing Date made by the Companies in favor of the Lenders in the aggregate
original face amount of $4,000,000, as each may be amended, supplemented,
restated and/or otherwise modified from time to time.
 
“Securities” means the Notes and the Warrants and the shares of Common Stock
which may be issued pursuant to exercise of such Warrants.
 
“Securities Act” has the meaning given such term in Section 12(r).
 
“Security Documents” means all security agreements, mortgages, cash collateral
deposit letters, pledges and other agreements which are executed by any Company
or any of its Subsidiaries in favor of the Agent for the ratable benefit of the
Creditor Parties.
 
 
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“Software” means all “software” as such term is defined in the UCC, now owned or
hereafter acquired by any Person, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
 
“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
and unreasonably small capital.  The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can reasonably be expected to
become an actual or matured liability.
 
“Specified Assignment Date” means the first date on which any Person that is not
a “United States Person” as defined in Section 7701(a)(30) of the Code acquires
any Loan, portion thereof or interest therein, by assignment or otherwise,
unless such Person has provided to the Agent on or prior to such date a duly
completed Internal Revenue Service Form W-8ECI (or successor form).
 
“Subordinated Debt Documentation” means, collectively, (a) the Guaranty dated
July 19, 2006 by NewMarket Technology, Inc. in favor of Ingram Micro Inc., (b)
that certain Security Agreement dated as of August 31, 2005 between IP Global
Voice, Inc. and Ingram Micro Inc. and (c) all other notes, documents,
instruments and agreements now or any time hereafter executed and/or delivered
by any Company with or in favor of any Subordinated Lender which evidences the
indebtedness owed by such Company to such Subordinated Lender.
 
“Subordinated Lenders” means, collectively, Ingram Micro Inc. and any other
Person who enters into a Subordination Agreement with the Agent with respect to
amounts owed by any Company to such Person.
 
“Subordination Agreements” means, collectively, the Subordination Agreement
executed by Ingram Micro Inc. in favor of the Agent and acknowledged by the
Companies, and any and all other subordination and/or intercreditor agreements
accepted by the Agent from time to time with respect to indebtedness of any
Company.
 
“Subsidiary” means, with respect to any Person, (i) any other Person whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors or other
governing body of such other Person, are owned, directly or indirectly, by such
Person or (ii) any other Person in which such Person owns, directly or
indirectly, more than 50% of the equity interests at such time.
 
“Supporting Obligations” means all “supporting obligations” as such term is
defined in the UCC.
 
“Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto.
 
 
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“Term” means the Closing Date through the close of business on the day
immediately preceding the third anniversary of the Closing Date, subject to
acceleration at the option of the Agent, acting at the direction of the Required
Lenders, upon the occurrence of an Event of Default hereunder or other
termination hereunder.
 
“Term Loan” has the meaning given such term in Section 2(b).
 
“Term Loan Commitment Percentage” means, as to any Lender, (i) on the Closing
Date, the percentage set forth opposite such Lender’s name on the Commitment
Annex under the column “Term Loan Commitment Percentage” (if such Lender’s name
is not so set forth thereon, then, on the Closing Date, such percentage for such
Lender shall be deemed to be zero) and (ii) on any date following the Closing
Date, the percentage equal to the principal amount of Term Loan held by such
Lender on such date divided by the aggregate principal amount of Term Loan on
such date.
 
“UCC” means the Uniform Commercial Code as the same may, from time to time be in
effect in the State of New York; provided, that in the event that, by reason of
mandatory provisions of law, any or all of the perfection or priority of, or
remedies with respect to, the Agent’s Lien on any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions of this Agreement
relating to such perfection, priority or remedies and for purposes of
definitions related to such provisions; provided further, that to the extent
that UCC is used to define any term herein or in any Ancillary Agreement and
such term is defined differently in different Articles or Divisions of the UCC,
the definition of such term contained in Article or Division 9 shall govern.
 
“Unione Purchase Agreement” shall mean that certain Quota Purchase and Sale
Agreement made and entered into as of January 31, 2006 by and among Flavio
Firmino Da Silva, Marcio Archimedes Pissardo, Mind Information Services Ltda.,
Celso Souza Isberner, Alexandre Dias Couto and Parent.
 
“Warrant Shares” has the meaning given such term in Section 12(a).
 
“Warrants” means each of the Common Stock Purchase Warrant dated as of the
Closing Date made by the Parent in favor of the Lenders and each other warrant
made by the Parent in favor the Lenders, as each of the same may be amended,
restated, modified and/or supplemented from time to time.

 
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Annex A
 

 
Commitment Annex
 
(as of the Closing Date)
 

 

Lender
Revolving Commitment Amount
Revolving Commitment Percentage
Term Loan Commitment Amount
Term Loan Percentage
Valens U.S. SPV I, LLC
$3,000,000
100%
$2,100,000
52.5%
Valens Offshore SPV II, LLC
$0
0%
$1,900,000
47.5%
TOTALS
$3,000,000
100%
$4,000,000
100%

 

 
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Exhibit A
 

 
Eligible Subsidiaries
 
IP Global Voice, Inc., a Delaware corporation
 
NewMarket China, Inc., a Nevada corporation
 
Netsco, Inc., a North Carolina corporation
 
Newmarket Intellectual Property, Inc., a Nevada corporation
 
NewMarket Broadband, Inc., a Nevada corporation
 

 
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Exhibit B
 
 

 
 
Borrowing Base Certificate
 
 
As of                      , 200  
 
ACCOUNTS RECEIVABLE per __________ Aging
     
0.00
Ineligible Accounts:
       
Accounts over 90 days from Invoice Date
 
0.00
   
Credit Balances Over 90 days from Invoice Date
 
0.00
   
Intercompany and Affiliate Accounts
 
0.00
   
__% Concentration Cap
 
0.00
   
Contra Accounts
 
0.00
   
Cash Sales and COD Accounts
 
0.00
   
Foreign Receivables
 
0.00
   
Government Receivables (without Assignment of Claims)
 
0.00
   
Discounts, Credits and Allowances
 
0.00
   
Cross-age (__% Past Due)
 
0.00
   
Bill and Hold Invoices
 
0.00
   
Finance/Service/Late Charges
 
0.00
   
Other:
 
0.00
 
0.00
         
ELIGIBLE ACCOUNTS RECEIVABLE
                 
Accounts Receivable Advance Rate
90%
               
ACCOUNTS RECEIVABLE AVAILABILITY
     
0.00
       
Less Reserves
     
0.00
         
NET AVAILABILITY
     
0.00
         
REVOLVING CREDIT LINE
 
$3,000,000
             
NET BORROWING AVAILABILITY  (Lesser of Line or Net Availability)
 
0.00
         
Less:  Lender Loans
     
0.00
         
EXCESS/(DEFICIT) AVAILABILITY
     
0.00

 
The undersigned hereby certifies that all of the foregoing information regarding
the Eligible Accounts are true and correct on the date hereof and all Eligible
Accounts listed as eligible are eligible within the meaning given such term in
the Security Agreement dated November 30, 2007 among the Borrowing Agent
signatory below, the other companies named therein, the purchasers party thereto
from time to time and LV Administrative Services, Inc., as administrative and
collateral agent for such purchasers.
 
NEWMARKET TECHNOLOGY, INC.,
 
Borrowing Agent
 
By:
   

 
 
Name:

 
 
Title:

 
 
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Exhibit C
 
Compliance Certificate
 

 
[See attached]

 
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Exhibit D

 
 
Form of Intercompany Note

 
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