Filed by Avantafile.com - The Pulse Beverage Corporation - Exhibit 10.12









SENIOR SECURED
REVOLVING CREDIT FACILITY AGREEMENT


IN
THE MAXIMUM AMOUNT OF US$3,500,000


BY
AND AMONG


THE
PULSE BEVERAGE CORPORATION, 

as Borrower,


AND


TCA
GLOBAL CREDIT MASTER FUND, LP,

as Lender








Dated
as of July 31, 2015


Effective
as of November 6, 2015




 
SENIOR
SECURED REVOLVING CREDIT FACILITY AGREEMENT


This SENIOR SECURED REVOLVING CREDIT FACILITY
AGREEMENT (as amended, restated, modified or supplemented from time to time, this
“Agreement”), dated as of July 31, 2015 and made effective as of November
6, 2015 (the “Effective Date”), is executed by and among: (i)THE
PULSE BEVERAGE CORPORATION, a corporation incorporated under the laws of
the State of Nevada (the “Borrower”); (ii) any Person to
hereafter become a Subsidiary of the Borrower pursuant to Section 10.18 hereof,
and any Person that from time to time may hereafter become liable for the
Obligations, or any part thereof, as joint and several guarantors (together,
jointly and severally, the “Guarantors” and together with the
Borrower, the “Credit Parties”); and (iii) TCA GLOBAL CREDIT
MASTER FUND, LP, a limited partnership organized and existing under the
laws of the Cayman Islands, as lender (the “Lender”).


WHEREAS, Borrower has requested that Lender
extend a senior secured revolving credit facility to Borrower of up to Three Million
Five Hundred Thousand and No/100 United States Dollars (US$3,500,000.00) for
working capital financing for Borrower and for any other the purposes permitted
hereunder; and for these purposes, Lender is willing to make certain loans and
extensions of credit available to Borrower of up to such amount and upon the
terms and conditions set forth herein; and


WHEREAS, as a material inducement for Lender
to make loans and extensions of credit to Borrower pursuant to the terms and
conditions set forth herein: (i) the Guarantors have, inter alia, agreed to
execute Guaranty Agreements in favor of Lender, whereby each Guarantor shall
jointly and severally guarantee any and all of the Borrower’s Obligations owed
under this Agreement and under any other Loan Document; (ii) the Credit Parties
have, inter alia, agreed to execute Security Agreements in favor of Lender,
whereby each Credit Party shall grant to the Lender a first priority security
interest in and lien upon all of its existing and after-acquired tangible and
intangible assets, as security for the payment and performance of any and all
Obligations owed under this Agreement and under any other Loan Document; and
(iii) the Borrower has agreed to execute a Pledge
Agreement in favor of Lender, whereby the Borrower shall pledge to the Lender all
of its right, title and interest in and to, and provide a first priority lien
and security interest on, all of its issued and outstanding shares of
the Guarantor, as security for the payment and performance of any and all
Obligations owed under this Agreement and under any other Loan Document;


NOW, THEREFORE, in consideration of the
premises and the mutual covenants hereinafter contained, and for other good and
valuable consideration, the parties hereto agree as follows:


1.                 
DEFINITIONS.



1.1             
Defined Terms.  For the purposes of this Agreement, the
following capitalized words and phrases shall have the meanings set forth
below.



(a)                     
“Access Details” shall have the meaning given to it
in Section 2.1(e)(i)(3) hereof.



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(b)                    
“Account” shall mean, individually, and “Accounts”
shall mean, collectively, any and all accounts (as such term is defined in the
UCC) of any Credit Party. 

(c)                     
“Advance Calculation Amount” shall mean an amount,
expressed in Dollars, determined by Lender from time to time, and calculated as
follows: (i) the average monthly Receipts collected into the Lock Box Account
for the three (3) calendar months immediately prior to when the calculation is
made by Lender, or for the entire life of the Loans, as determined by Lender in
its sole discretion (such amount hereinafter called the “AMC Amount”);
(ii) then the AMC Amount shall be multiplied by twenty percent (20%) (such
resulting amount hereinafter called the “Collected Amount”); and
(iii) the Collected Amount shall then be multiplied by eight (8), and the
result shall be the Advance Calculation Amount. 

(d)                    
“Advisory Fee” shall have the meaning given to it
in Section 2.2(f) hereof.

(e)                     
“Advisory Fee Shares” shall have the meaning given
to it in Section 2.2(f) hereof.

(f)                     
“Affiliate” (a) of Lender shall mean: (i) any
entity which, directly or indirectly, Controls or is Controlled By or is under
common Control with Lender; and (ii) any entity administered or managed by
Lender, or an Affiliate or investment advisor thereof and which is engaged in
making, purchasing, holding or otherwise investing in commercial loans; and (b)
of any Credit Party shall mean any entity which, directly or indirectly,
Controls or is Controlled By or is under common Control with any Credit Party. 

(g)                    
“Agreement” shall mean this Senior Secured
Revolving Credit Facility Agreement by and among the Credit Parties and the
Lender. 

(h)                    
“Asset Monitoring Fee” shall have the meaning given
to it in Section 2.2(a) hereof.

(i)                      
“Borrower” shall have the meaning given to such
term in the preamble hereof. 

(j)                      
“Borrowing Base Amount” shall mean an amount,
expressed in Dollars, equal the lesser of: (i) eighty percent (80%) of the then
existing Eligible Accounts; or (ii) the Advance Calculation Amount. 

(k)                    
“Borrowing Base Certificate” shall mean a
certificate delivered by Lender to Borrower from time to time in a form
acceptable to Lender, pursuant to which the formula and calculation of the
Borrowing Base Amount is made by Lender. 

(l)                      
“Business Day” shall mean any day other than a Saturday,
Sunday or a legal holiday on which banks are authorized or required to be
closed for the conduct of commercial banking business in the State of Nevada. 

(m)                  
“BSA” shall have the meaning given to it in Section
14.22 hereof.

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(n)                    
“Capital Expenditures” shall mean expenditures
(including Capital Lease obligations which should be capitalized under GAAP)
for the acquisition of fixed assets which are required to be capitalized under
GAAP. 

(o)                    
“Capital Lease” shall mean, as to any Person, a
lease of any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, by such Person as lessee that is, or
should be, in accordance with Financial Accounting Standards Board Statement
No. 13, as amended from time to time, or, if such Statement is not then in
effect, such statement of GAAP as may be applicable, recorded as a “capital
lease” on the balance sheets of any Credit Party prepared in accordance with
GAAP. 

(p)                    
“Change in Control” shall mean any sale,
conveyance, assignment or other transfer, directly or indirectly, of any
ownership interest of any Credit Party, which results in any change in the
identity of the individuals or entities in Control of such Credit Party as of
the Effective Date or the grant of a security interest in any ownership
interest of any Person, directly or indirectly Controlling the Credit Parties,
which could result in a change in the identity of the individuals or entities
in Control of such Credit Party as of the Effective Date. 

(q)                    
 “Collateral” shall mean “Collateral” as defined in
the Security Agreements, and if there is more than one Security Agreement, it
shall mean, as the context so requires, the “Collateral” for each individual
Credit Party, as such term is defined in the Security Agreement for such
applicable Credit Party, and all of the “Collateral,” in the aggregate, for all
Credit Parties, collectively, under each of the Security Agreements. 

(r)                      
“Common Stock” shall mean the common stock of the
Borrower, par value $0.00001 per share. 

(s)                     
“Compliance Certificate” shall mean the covenant
compliance certificate, the form of which is attached hereto as Exhibit “A”.

(t)                      
“Contingent Liability” and “Contingent
Liabilities” shall mean, respectively, each obligation and liability of
the Credit Parties and all such obligations and liabilities of the Credit
Parties incurred pursuant to any agreement, undertaking or arrangement by which
any Credit Party either: (i) guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, dividend, obligation or other liability of any other Person in
any manner (other than by endorsement of instruments in the course of
collection), including without limitation, any indebtedness, dividend or other
obligation which may be issued or incurred at some future time; (ii) guarantees
the payment of dividends or other distributions upon the shares or ownership
interest of any other Person; (iii) undertakes or agrees (whether contingently
or otherwise): (A) to purchase, repurchase, or otherwise acquire any
indebtedness, obligation or liability of any other Person or any property or
assets constituting security therefor; (B) to advance or provide funds for the
payment or discharge of any indebtedness, obligation or liability of any other
Person (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain solvency, assets, level of income,
working capital or other financial condition of any other Person; or (C) to
make payment to any other Person other

3



 than for value received; (iv) agrees to
lease property or to purchase securities, property or services from such other
Person with the purpose or intent of assuring the owner of such indebtedness or
obligation of the ability of such other Person to make payment of the
indebtedness or obligation; (v) to induce the issuance of, or in connection
with the issuance of, any letter of credit for the benefit of such other
Person; or (vi) undertakes or agrees otherwise to assure or insure a creditor
against loss.  The amount of any Contingent Liability shall (subject to any
limitation set forth herein) be deemed to be the outstanding principal amount
(or maximum permitted principal amount, if larger) of the indebtedness,
obligation or other liability guaranteed or supported thereby. 

(u)                    
“Control,” “Controlling,” “Controlled
By,” or words of similar import shall mean the possession, directly or
indirectly, of the power to direct, or cause the direction of, the management
and policies of a Person by contract, voting of securities, or otherwise. 

(v)                    
“Conversion Shares” shall have the meaning given to
it in Section 2.2(g) hereof.

(w)                  
“Credit Card Date” shall have the meaning given to
it in Section 2.1(e) hereof.

(x)                    
“Credit Party(ies)” shall have the meaning given to
such term in the preamble hereof. 

(y)                    
“Credit Party Leases” shall have the meaning given
to it in Section 7.18 hereof.

(z)                     
“Customer” shall mean any Person who is obligated
to any Credit Party for any Receipts. 

(aa)                 
“Default Rate” shall mean a per annum rate of
interest equal to twenty-two percent (22%) per annum. 

(bb)                
“Dollars” or “$” means lawful
currency of the United States of America. 

(cc)                 
“Effective Date” shall have the meaning given to it
in the preamble hereof. 

(dd)               
“Eligible Accounts” means, as applicable for each
Credit Party: 

(A)       all
sales of the Credit Parties arising from Point-of-Sale Transactions which meet each
of the criteria set forth below (any sale that fails to meet the criteria below
can still be deemed an Eligible Account, in Lender’s sole discretion): 

(i)     are genuine in all respects and have arisen in
the Credit Parties’ Ordinary Course of Business from the sale of goods or
performance of services by Credit Parties, which delivery of goods has occurred
or performance of services have been fully performed;

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(ii)    payment for the sale has been made in full by the
Customer at the time of the sale, and such sale is not subject to any chargeback,
credit, setoff, allowance, adjustment, repurchase or return agreement or
obligation of any kind;


(iii)   the Customer on the sale is not a Subsidiary or a
director, officer, employee, agent, parent or Affiliate of any Credit Party;
and


(iv)   the Receipts from the sale are subject to a
perfected, first priority Lien in favor of Lender and not subject to any Lien
whatsoever, other than the Lien of Lender and except for Permitted Liens.


(B)   all Accounts of the Credit
Parties which meet each of the criteria set forth below (an Account that fails
to meet the criteria below can still be deemed an Eligible Account, in Lender’s
sole discretion):


(i)     are genuine in all respects and have arisen in
the Credit Parties’ Ordinary Course of Business from the sale of goods or
performance of services by Credit Parties, which delivery of goods has occurred
or performance of services have been fully performed;


(ii)    are evidenced by an invoice delivered to the
Customer obligated under such Account, are due and payable within thirty (30)
days after the date of the invoice, and are not more than ninety (90) days
outstanding past the invoice date;


(iii)   do not arise from a “sale on approval”, “sale or
return”, “consignment”, “guaranteed sale” or “bill and hold”, or are subject to
any other repurchase or return agreement;


(iv)   have not arisen in connection with a sale to a
Customer obligated under such Account who is not a resident or citizen of, or
an entity organized in, and is principally located within, the United States of
America;


(v)    are not due from a Customer obligated under such
Account which is a Subsidiary or a director, officer, employee, agent, parent
or Affiliate of any Credit Party;


(vi)   do not arise out of contracts with the United
States or any Governmental Authority thereof, unless the a Credit Party has
assigned its right to payment of such Account to Lender pursuant to the Federal
Assignment of Claims Act of 1940 (or analogous statute), and evidence
(satisfactory to Lender) of such assignment has been delivered to Lender;


(vii)  do not arise in connection with a sale to a Customer
obligated under such Account who is located within a state or jurisdiction
which requires any Credit Party, as a precondition to commencing or maintaining
an action in the courts of that state or jurisdiction, either to: (A) receive a
certificate of authority to do business and be in good standing in such state
or jurisdiction; or (B) file a notice of business activities or similar report
with such state’s or jurisdiction’s taxing authority, unless: (I) the applicable
Credit Party has taken one of the actions described in

5



 clauses (A) or (B); (II)
the failure to take one of the actions described in either clause (A) or (B)
may be cured retroactively by the applicable Credit Party at its election; or
(III) the applicable Credit Party has proven to the satisfaction of Lender that
it is exempt from any such requirements under such state’s or jurisdiction’s
laws;


(viii)           do not arise out of a contract or order
which, by its terms, forbids or makes void or unenforceable the assignment to
Lender of the Account arising with respect thereto and are not assignable to
Lender for any other reason;


(ix)   are the valid, legally enforceable and
unconditional obligation of the Customer obligated under such Account, are not
the subject of any setoff, counterclaim, credit, allowance or adjustment by the
Customer obligated under such Account, or of any claim by the Customer
obligated under such Account denying liability thereunder in whole or in part,
and the Customer obligated under such Account has not refused to accept and/or
has not returned or offered to return any of the goods or services which are
the subject of such Account;


(x)    are subject to a perfected, first priority Lien in
favor of Lender and not subject to any Lien whatsoever, other than the Lien of
Lender and except for Permitted Liens;


(xi)   no Proceedings are pending or threatened against
the Customer obligated under such Account which might result in any material
adverse change in its financial condition or in its ability to pay any Account
in full;


(xii)  if the Account is evidenced by chattel paper or an
instrument, the originals of such chattel paper or instrument shall have been
endorsed and/or assigned and delivered to Lender or, in the case of electronic
chattel paper, shall be in the control of Lender, in each case in a manner
satisfactory to Lender; and


(xiii)           there is no bankruptcy, insolvency or
liquidation Proceeding pending by or against the Customer obligated under such
Account, nor has the Customer obligated under such Account gone out of or
suspended business, made a general assignment for the benefit of creditors or
failed to pay its debts generally as they come due, and/or no condition or
event has occurred having a Material Adverse Effect on the Customer obligated
under such Account which would require the Accounts of such Customer to be
deemed uncollectible in accordance with GAAP.


A sale or Account which is an
Eligible Account shall cease to be an Eligible Account whenever it ceases to
meet any one of the foregoing requirements. In addition, any sale or Account that otherwise meets each of
the criteria above for an Eligible Account, may nonetheless be deemed not
to be an Eligible Account, or may be deemed as an Eligible Account for a
discounted value, all in Lender’s sole and absolute discretion.


If Accounts representing Fifty
Percent (50%) or more of the unpaid net amount of all Accounts from any
one Customer fail to qualify as Eligible Accounts, including because
such Accounts are unpaid more than ninety (90) days after the due date of
such Accounts, then all Accounts relating to such Customer shall cease to
be Eligible Accounts.  If Accounts owed by a single Customer exceed
Fifty Percent (50%) of all Eligible Accounts, then all Accounts relating to
such Customer in excess of such amount shall cease to be Eligible
Accounts.

6



 

(ee)                 
“Employee Plan” includes any pension, stock bonus,
employee stock ownership plan, retirement, disability, medical, dental or other
health plan, life insurance or other death benefit plan, profit sharing,
deferred compensation, stock option, bonus or other incentive plan, vacation
benefit plan, severance plan or other employee benefit plan or arrangement,
including, without limitation, those pension, profit-sharing and retirement
plans of the Credit Parties described from time to time in the consolidated financial
statements of the Credit Parties and any pension plan, welfare plan, Defined
Benefit Pension Plans (as defined in ERISA) or any multi-employer plan,
maintained or administered by the Credit Parties or to which is the Credit
Parties are a party or may have any liability or by which the Credit Parties
are bound. 

(ff)                  
“Environmental Laws” shall mean all federal, state,
district, local and foreign laws, rules, regulations, ordinances, and consent
decrees relating to health, safety, hazardous substances, pollution and
environmental matters, as now or at any time hereafter in effect, applicable to
the Credit Parties’ business or facilities owned or operated by the Credit
Parties, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contamination, chemicals, or hazardous,
toxic or dangerous substances, materials or wastes in the environment
(including ambient air, surface water, land surface or subsurface strata) or otherwise
relating to the generation, manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials. 

(gg)                
“ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time. 

(hh)                
“Estimated Over-advance Payment” shall have the
meaning given to it in Section 2.1(d)(i) hereof.

(ii)                    
“Event of Default” shall mean any of the events or
conditions set forth in Section 12 hereof.

(jj)                    
“Financial Statements” shall have the meaning given
to it in Section 7.10 hereof.

(kk)                
“Funded Indebtedness” shall mean, as to any Person, without
duplication: (i) all indebtedness for borrowed money of such Person (including principal, interest and, if not paid
when due, fees and charges), whether or not evidenced by bonds,
debentures, notes or similar instruments; (ii) all obligations to pay the
deferred purchase price of property or services; (iii) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of
credit (whether or not drawn), bankers’ acceptances and similar obligations
issued for the account of such Person (including the Letters of Credit), and all unpaid drawings in respect of such
letters of credit, bankers’ acceptances and similar obligations; and (iv) all
indebtedness secured by any Lien on any property owned by such Person, whether
or not such indebtedness has been assumed by such Person (provided, however,
if such Person has not assumed or otherwise become liable in respect of such
indebtedness, such indebtedness shall be

7



 deemed to be in an amount equal to the
fair market value of the property subject
to such Lien at the time of determination).  Notwithstanding the
foregoing, Funded Indebtedness shall not include trade payables and accrued
expenses incurred by such Person in accordance with customary practices and in
the Ordinary Course of Business of such Person. 

(ll)                    
“GAAP” shall mean United States generally accepted
accounting principles set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the date of determination; provided,
however, that interim financial statements or reports shall be deemed in
compliance with GAAP despite the absence of footnotes and fiscal year-end
adjustments as required by GAAP.

(mm)            
“Governmental Authority” means any
foreign, federal, state or local government, or any political subdivision
thereof, or any court, agency or other body, organization, group, stock market
or exchange exercising any executive, legislative, judicial, quasi-judicial,
regulatory or administrative function of government. 

(nn)                
“Guarantors” shall have the meaning given to it in
the preamble hereof.  If any Guarantor is an individual, then the term “Guarantors”
shall also include such individual’s spouse, if any. 

(oo)                
“Guarantee Agreement(s)” shall mean the guaranty
agreements executed by each Guarantor in favor of the Lender, pursuant to which
the Guarantors shall each guarantee all of the Obligations of the Borrower, the
form of which is attached hereto as Exhibit “B-1” and Exhibit
“B-2”.

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

(qq)                
“Income Projections” shall have the meaning given
to it in Section 10.8 hereof.

(rr)                   
“Insurance Policies” shall have the meaning given
to it in Section 7.23 hereof.

(ss)                  
“Interest Rate” shall mean a fixed rate of interest
equal to Twelve Percent (12.0%) per annum, calculated on the actual number of
days elapsed over a 360-day year. 

8



 
(tt)                   
“IP Rights” shall have the meaning given to it in Section
7.21 hereof.

(uu)                
“Irrevocable Transfer Agent Instructions” shall
mean the Irrevocable Transfer Agent Instructions to be entered into by and
among the Lender, the Borrower and the Borrower’s transfer agent, the form of
which is attached hereto as Exhibit “C”.

(vv)                
“Lender” shall have the meaning given to it in the
preamble hereof. 

(ww)            
“Lender Indemnitee(s)” shall have the meaning given
to it in Section 14.19 hereof.

(xx)                
“License Agreements” shall have the meaning given
to it in Section 7.21 hereof.

(yy)                
“Lien” shall mean, with respect to any Person, any
mortgage, pledge, hypothecation, judgment lien or similar legal process, title
retention lien, or other lien, security interest or encumbrance of any nature
or kind granted by such Person or arising by judicial process or otherwise,
including the interest of a vendor under any conditional sale or other title
retention agreement and the interest of a lessor under a lease of any interest
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, by such Person as lessee that is, or should be, a Capital Lease
on the balance sheet of such Person prepared in accordance with GAAP. 

(zz)                 
“Loan” or “Loans” shall mean the
aggregate of all Revolving Loans made by Lender to Borrower under and pursuant
to this Agreement. 

(aaa)              
“Loan Documents” shall mean those documents listed
in Sections 3.1, 3.2 and 3.3 hereof, and any other documents or
instruments executed in connection with this Agreement or the Revolving Loans
contemplated hereby, and all renewals, extensions, future advances,
modifications, substitutions, or replacements thereof.

(bbb)            
“Lock Box” shall have the meaning given to it in Section
2.1(e) hereof.

(ccc)              
“Lock Box Account” shall have the meaning given to
it in Section 2.1(e) hereof.

(ddd)           
“Lock Box Payments” shall have the meaning given to
it in Section 2.1(e) hereof.

(eee)              
“Mandatory Principal Repayment Amount” shall have
the meaning given to it in Section 2.1(d) hereof.

(fff)               
“Material Adverse Effect” shall mean: (i) a
material adverse change in, or a material adverse effect upon, the assets,
business, prospects, properties, financial condition or results of operations
of any Credit Party; (ii) a material impairment of the ability of any Credit
Party to perform any of its Obligations under any of the Loan Documents; or (iii)
a material adverse effect on: (A) any material portion of the Collateral; (B)
the legality, validity, binding effect or enforceability against any Credit
Party of any of the Loan Documents; (C) the 

9



 perfection or priority (subject to
Permitted Liens) of any Lien granted to Lender under any Loan Document; (D) the
rights or remedies of Lender under any Loan Document; or (E) the Lender’s
ability to sell, without limitation or restriction, if applicable, any Advisory
Fee Shares hereunder or any shares issued to the Lender upon a conversion
pursuant to the Revolving Note.  For purposes of determining whether any of the
foregoing changes, effects, impairments, or other events have occurred, such
determination shall be made by Lender, in its sole and absolute discretion. 

(ggg)            
“Material Contract” shall mean any contract or
agreement to which any Credit Party is a party or by which any Credit Party or
any of its assets are bound and which: (i) must be disclosed to the SEC, the
Principal Trading Market, or any other Governmental Authority pursuant to the
Securities Act, the Exchange Act, the rules and regulations of the SEC, or any
other laws, rules or regulations of any Governmental Authority or the Principal
Trading Market; (ii) involves aggregate payments of Twenty-Five Thousand and
No/100 United States Dollars (US$25,000.00) or more to or from any Credit Party;
(iii) involves delivery, purchase, licensing or provision, by or to any Credit
Party, of any goods, services, assets or other items having a value (or
potential value) over the term of such contract or agreement of Twenty-Five
Thousand and No/100 United States Dollars (US$25,000.00) or more or is
otherwise material to the conduct of the Credit Party’s business as now
conducted and as contemplated to be conducted in the future; (iv) involves a Credit
Party Lease; (v) imposes any guaranty, surety or indemnification obligations on
any Credit Party; or (vi) prohibits any Credit Party from engaging in any
business or competing anywhere in the world. 

(hhh)            
“Material PPC” shall have the meaning given to it
in Section 2.1(e)(i)(3).

(iii)                  
“Material Shareholder” shall have the meaning given
to it in Section 7.31 hereof.

(jjj)                  
“Net Amount” shall have the meaning given to it in Section
2.1(e) hereof.

(kkk)            
“Non-Material PPC” shall have the meaning given to
it in Section 2.1(e)(i)(3).

(lll)                  
“Obligations” shall mean, whether now existing or
hereafter arising, created or incurred: (i) all Revolving Loans, advances
(whether of principal or otherwise) and other financial accommodations (whether
primary, contingent or otherwise) made by Lender to Borrower under any Loan
Documents; (ii) all interest accrued thereon (including interest which would be
payable as post-petition in connection with any bankruptcy or similar
Proceeding, whether or not permitted as a claim thereunder); (iii) any and all
fees, charges or other amounts due to Lender under this Agreement or the other
Loan Documents; (iv) any and all expenses incurred by Lender under, or in
connection with, this Agreement or the other Loan Documents; (v) any and all
other liabilities and obligations of any of the Credit Parties to Lender under
this Agreement and any other Loan Documents; and (vi) the performance by the Credit
Parties of all covenants, agreements and obligations of every nature and kind
on the part of any of the Credit Parties to be performed under this Agreement
and any other Loan Documents. 

10



 
(mmm)       “OFAC”
  shall have the meaning given to it in Section 14.22 hereof.

(nnn)            
“Ordinary Course of Business” means the Ordinary
Course of Business of the Person in question consistent with past custom and
practice (including with respect to quantity, quality and frequency). 

(ooo)            
“Over-advance” shall have the meaning given to it
in Section 2.1(d)(i) hereof.

(ppp)            
“Payment Date” shall have the meaning given to it
in Section 2.1(c) hereof.

(qqq)            
“Payment Direction” shall have the meaning given to
it in Section 2.1(e)(i)(3) hereof.

(rrr)                 
“Payment Processing Companies” shall have the
meaning given to it in Section 2.1(e)(i)(3) hereof.

(sss)               
“Permitted Liens” shall mean: (i) Liens for
Taxes, assessments or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by appropriate
proceedings and, in each case, for which adequate reserves are maintained in
accordance with GAAP and in respect of which no Lien has been filed; (ii) Liens
of carriers, warehousemen, mechanics and materialmen arising in the Ordinary
Course of Business; (iii) Liens in the form of deposits or pledges incurred in
connection with worker’s compensation, unemployment compensation and other
types of social security (excluding Liens arising under ERISA or in connection
with surety bonds, bids, performance bonds and similar obligations) for sums
not overdue or being contested in good faith by appropriate Proceedings and not
involving any advances or borrowed money or the deferred purchase price of
property or services, which do not in the aggregate materially detract from the
value of the property or assets of the Credit Parties taken as a whole or
materially impair the use thereof in the operation of the Credit Parties’ business
and, in each case, for which adequate reserves are maintained in accordance with
GAAP and in respect of which no Lien has been filed; (iv) Liens described in
the Financial Statements and acceptable to Lender in its sole and absolute
discretion, and the replacement, extension or renewal of any such Lien upon or
in the same property subject thereto arising out of the extension, renewal or
replacement of the indebtedness secured thereby (without increase in the amount
thereof and without expansion of such Liens upon any other property); (v) attachments,
appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty
Thousand and No/100 United States Dollars (US$50,000.00) arising in connection
with court Proceedings, provided the execution or other enforcement of
such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate Proceedings, and only to
the extent such judgments or awards do not otherwise constitute an Event of
Default; (vi) zoning and similar restrictions on the use of property and
easements, rights of way, restrictions, minor defects or irregularities in
title and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of the Credit Parties; (vii) Liens arising in
connection with Capital Leases (and attaching only to the property being
leased); (viii) Liens that constitute purchase money security interests on any
property securing indebtedness incurred for the purpose of financing all or any
part of the cost of acquiring such property, 

11



 provided that any such Lien
attaches to such property within sixty (60) days of the acquisition thereof and
attaches solely to the property so acquired; (ix) Liens granted to Lender
hereunder and under the Loan Documents; (x) any interest or title of a lessor,
sublessor, licensor or sublicensor under any lease or non-exclusive license
permitted by this Agreement; (xi) Liens arising from precautionary uniform
commercial code financing statements filed under any lease permitted by this
Agreement; and (xii) banker’s Liens and rights of set-off of financial
institutions arising in connection with items deposited in accounts maintained
at such financial institutions and subsequently unpaid and unpaid fees and
expenses that are charged to the Credit Parties by such financial institutions
in the Ordinary Course of Business of the maintenance and operation of such
accounts. 

(ttt)                 
“Permit” means any license, permit, approval,
waiver, order, authorization, right or privilege of any nature whatsoever,
granted, issued, approved or allowed by any Governmental Authority. 

(uuu)            
“Person” shall mean any individual, partnership,
limited liability company, limited liability partnership, corporation, trust,
joint venture, joint stock company, association, unincorporated organization,
government or agency or political subdivision thereof, or other entity. 

(vvv)            
“Pledge Agreement(s)” shall mean the pledge
agreements executed by the Borrower in favor of the Lender, pursuant to which
the Borrower grants a first priority lien and security interest in and to all
of the shares or membership interests (as applicable) owned by the Borrower in
each of the Borrower’s Subsidiaries to the Lender, the form of which is
attached hereto as Exhibit “D”.

(www)       “Point-of-Sale
Transactions” means any sale transactions by any Credit Parties whereby
the purchase price for the sale transaction is paid in full by the Customer at
the time of the sale transaction. 

(xxx)            
“Portals” shall have the meaning given to it in Section
2.1(e)(i)(3) hereof.

(yyy)            
 “Preferred Stock” shall have the meaning given to
it in Section 7.4 hereof.

(zzz)              
“Prepayment Penalty” shall have the meaning given
to it in Section 2.1(d)(ii) hereof.

(aaaa)        “Principal
Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq
Global Market, the Nasdaq Capital Market, the OTCQX, the OTCQB, the OTC Pink,
the NYSE Euronext or the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock. 

(bbbb)        
“Proceeding” means any demand, claim, suit, action,
litigation, investigation, audit, study, arbitration, administrative hearing,
or any other proceeding of any nature whatsoever. 

12



 
(cccc)          
“Public Documents” shall have the meaning given to
it in Section 7.11 hereof.

(dddd)       “Real
Property” means any real estate, land, building, structure,
improvement, fixture or other real property of any nature whatsoever,
including, but not limited to, fee and leasehold interests, any specifically
including the real property listed on Schedule 7.18.

(eeee)          
“Receipts” shall mean all revenues, receipts,
receivables, Accounts, collections or any other funds at any time received or
receivable by the Credit Parties, or otherwise owing to the Credit Parties, in
connection with its sales, business, operations or from any other source. 

(ffff)            
“Receipts Collection Fee” shall mean a surcharge
charged by Lender to the Borrower on a monthly basis, and shall be in an amount
calculated by Lender such that, when added together with any monthly interest
paid by Borrower hereunder, the aggregate amount of the monthly interest and
the monthly Receipts Collection Fee shall not exceed 1.500% of the then
outstanding principal balance of all Loans hereunder, per month. 

(gggg)        
“Reserve Amount” shall mean an amount, expressed in
Dollars, equal to twenty percent (20%) of the then applicable Revolving Loan
Commitment.  The Reserve Amount, or any portion thereof collected and held by
Lender from time to time, whether in the Lock Box Account or otherwise, shall
be deemed additional security for all of the Obligations, and until Lender
delivers written notice to the Credit Parties that such Reserve Amount has been
applied to any of the Obligations then outstanding, such Reserve Amount shall
not be considered a repayment of any of the Obligations (principal, interest,
or otherwise), or otherwise applied against any portion thereof, and shall be
considered part of the outstanding Loans hereunder. 

(hhhh)        
“Revolving Loan” and “Revolving Loans”
shall mean, respectively, each advance, and the aggregate of all such advances,
made by Lender to Borrower under and pursuant to this Agreement or any other
Loan Documents.  Any Net Amount distributed or transferred to Borrower in
accordance with this Agreement shall be deemed a Revolving Loan hereunder. 

(iiii)                
“Revolving Loan Availability” shall mean at any
time, the lesser of: (i) the then applicable Revolving Loan Commitment; or (ii)
the Borrowing Base Amount. 

(jjjj)                
“Revolving Loan Commitment” shall mean, on the Effective
Date, Nine Hundred Thousand and No/100 United States Dollars (US$900,000.00), provided,
however, that Two Hundred Fifty Thousand and No/100 United States
Dollars (US$250,000) of this amount shall remain in Lender’s escrow account
following the Effective Date and shall be thereafter released by the Lender to
the Borrower only upon (a) the Borrower achieving eighty-five percent (85%) of
its financial projections (as presented to the Lender prior to the Effective
Date) within ninety (90) days of the Effective Date, as determined by the
Lender in its sole and absolute discretion, or (b) the Borrower receiving a
substantial purchase order from a third party which is satisfactory to the
Lender in its sole and absolute discretion.  Following the advance of Nine
Hundred Thousand and No/100 United States Dollars (US$900,000.00), in the event 

13



 Borrower requests and Lender agrees to increase the Revolving Loan Commitment
pursuant to Section 2.1(b), thereafter, shall mean the amount to which
Lender agrees to increase the Revolving Loan Commitment, up to Three Million
Five Hundred Thousand and No/100 United States Dollars (US$3,500,000.00), all
as applicable pursuant to Section 2.1(b).

(kkkk)         “Revolving Loan Maturity Date” shall mean the earlier of: (i) twelve (12) months from the Effective Date; (ii) upon prepayment of the Revolving Note by Borrower (subject to Section 2.1(d)(ii)); or (iii) the occurrence of an Event of Default and acceleration of the Revolving Note pursuant to this Agreement, unless the date in clause (i) shall be extended pursuant to Section 2.3 or by Lender pursuant to any modification, extension or renewal note executed by Borrower and accepted by Lender in its sole and absolute discretion in substitution for the Revolving Note.


(llll)                 “Revolving Note” shall mean that certain Revolving Note in the principal amount of the Revolving Loan Commitment of even date herewith made by Borrower in favor of Lender, the form of which is attached hereto as Exhibit “E”, and any renewal, extension, future advance, modification, substitution, or replacement thereof.


(mmmm) “Rule 144”   shall mean Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto).


(nnnn)   “Rule 144 Certificate” shall have the meaning given to it in Section 10.20 hereof.


(oooo)   “Rule 144 Opinion” shall have the meaning given to it in Section 10.20 hereof.


(pppp)   “Sale Reconciliation” shall have the meaning given to it in Section 2.2(g) hereof.


(qqqq)   “SEC” shall mean the United States Securities and Exchange Commission.


(rrrr)               “Securities Act” shall mean the Securities Act of 1933, as amended.


(ssss)             “Securities Being Sold” shall have the meaning given to it in Section 10.20 hereof.


(tttt)               “Security Agreement(s)” shall mean the security agreements executed by the Credit Parties in favor of Lender, pursuant to which each of the Credit Parties grant a first priority lien and security interest in and to all of their respective Collateral as security for the Obligations, the form of which is attached hereto as Exhibit “F-1” and Exhibit “F-2”.


(uuuu)      “Share Reserve” shall have the meaning given to it in Section 10.21 hereof

(vvvv)         “Shell Company” shall have the meaning given to it in Section 10.20 hereof.

14



 
(wwww) “Subsidiary”
  and “Subsidiaries” shall mean, respectively, each and all such
corporations, partnerships, limited partnerships, limited liability companies,
limited liability partnerships or other entities of which or in which a Person
owns, directly or indirectly, fifty percent (50%) or more of: (i) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such entity if a
corporation; (ii) the management authority and capital interest or profits
interest of such entity, if a partnership, limited partnership, limited
liability company, limited liability partnership, joint venture or similar
entity; or (iii) the beneficial interest of such entity, if a trust,
association or other unincorporated organization. 

(xxxx)        
“Sweep Period” shall have the meaning given to it
in Section 2.1(d)(i) hereof.

(yyyy)        
“Transfer Agent” shall have the meaning given to it
in Section 2.2(g) hereof.

(zzzz)          
“UCC” shall mean the Uniform Commercial Code in
effect in Nevada from time to time. 

(aaaaa)       
“Use of Proceeds Confirmation” shall have the
meaning given to it in Section 9.8 hereof.

(bbbbb)     “Validity
Certificates” shall mean the Validity Certificates executed by certain
officers and directors of the Borrower, the form of which is attached hereto as Exhibit “G”.

(ccccc)       
“Valuation Date” shall have the meaning given to it
in Section 2.2(g) hereof.

(ddddd)   “VWAP”
  shall have the meaning given to it in Section 2.2(g) hereof.

1.2             
  Accounting Terms.  Any accounting terms used in this
Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with GAAP.  Calculations and
determinations of financial and accounting terms used and not otherwise
specifically defined hereunder and the preparation of financial statements to
be furnished to Lender pursuant hereto shall be made and prepared, both as to
classification of items and as to amount, in accordance with GAAP as used in
the preparation of the financial statements of Borrower on the date of this
Agreement.  If any changes in accounting principles or practices from those used
in the preparation of the financial statements are hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or any successor thereto or agencies with similar
functions), which results in a material change in the method of accounting in
the financial statements required to be furnished to Lender hereunder or in the
calculation of financial covenants, standards or terms contained in this
Agreement, the parties hereto agree to enter into good faith negotiations to
amend such provisions so as equitably to reflect such changes to the end that
the criteria for evaluating the financial condition and performance of Borrower
will be the same after such changes as they were before such changes; and if
the parties fail to agree on the amendment of 

15



 such provisions, Borrower will
furnish financial statements in accordance with such changes but shall provide
calculations for all financial covenants, perform all financial covenants and
otherwise observe all financial standards and terms in accordance with
applicable accounting principles and practices in effect immediately prior to
such changes.  Calculations with respect to financial covenants required to be
stated in accordance with applicable accounting principles and practices in
effect immediately prior to such changes shall be reviewed and certified by Borrower’s
accountants. 

1.3             
  Other Terms Defined in UCC.  All other words and phrases
used herein and not otherwise specifically defined shall have the respective
meanings assigned to such terms in the UCC, as amended from time to time, to
the extent the same are used or defined therein. 

1.4             
  Other Definitional Provisions; Construction.  Whenever the
context so requires, the neuter gender includes the masculine and feminine, the
single number includes the plural, and vice versa.  In addition: (i) the words
“hereof”, “herein” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and references to Article, Section,
Subsection, Annex, Schedule, Exhibit and like references are references to this
Agreement unless otherwise specified; (ii) wherever the word “include,” “includes”
or “including” is used in this Agreement, it will be deemed to be followed by
the words “without limitation;” (iii) an Event of Default shall “continue” or
be “continuing” until such Event of Default has been cured in Lender’s sole and
absolute discretion, or waived by Lender in accordance with Section 14.3 hereof; (iv) any reference to the Credit Parties shall mean and refer to all
the Credit Parties, collectively, and to each Credit Party, individually, and
accordingly, each representation, warranty, covenant, obligation or other
agreement, term or provision in this Agreement or any other Loan Documents, to
the extent applicable to the Credit Parties, shall be deemed to be applicable
and effective as to all Credit Parties, collectively, and to each Credit Party,
individually, as the context may so require, regardless of the gender,
singular, plural, or other tense used in the applicable provision; (v) references
in this Agreement to any party shall include such party’s successors and
permitted assigns; and (vi) references to any “Section” shall be a reference to
such Section of this Agreement unless otherwise stated.  To the extent any of
the provisions of the other Loan Documents are inconsistent with the terms of
this Agreement, the provisions of this Agreement shall govern. 

2. REVOLVING LOAN FACILITY. 

2.1             
  Revolving Loan.

(a)                     
  Revolving Loan Commitment.  Subject to the terms and
conditions of this Agreement and the other Loan Documents, and in reliance upon
the representations and warranties set forth herein and in the other Loan
Documents, Lender agrees to make Revolving Loans to Borrower from time to time,
pursuant to the terms of this Agreement, until, but not including, the
Revolving Loan Maturity Date, and in such amounts as Lender may determine  from
time to time up to the Revolving Loan Availability (and subject at all times to
the amounts available to be borrowed in accordance with the Borrowing Base
Certificate); provided, however, that the aggregate principal
balance of all Revolving Loans outstanding at any time shall not exceed the
Revolving Loan Availability; and further provided, however, that,

16



 notwithstanding anything contained in this Agreement or any other Loan
Documents to the contrary, each Revolving Loan under this Agreement (including
any Net Amount to be distributed hereunder) shall be subject to Lender’s
approval, which approval may be given or withheld in Lender’s sole and absolute
discretion.  Revolving Loans made by Lender may be repaid and, subject to the
terms and conditions hereof, borrowed again up to, but not including, the
Revolving Loan Maturity Date, unless the Revolving Loans are otherwise
terminated or extended as provided in this Agreement.  The Revolving Loans
shall be used by Borrower for the specific purposes permitted hereunder and for
no other purpose. 

(b)                    
  Increase to Revolving Loan Commitment.  Borrower may
request, from time to time, that the Revolving Loan Commitment be increased to
up to Three Million Five Hundred Thousand and No/100 United States Dollars (US$3,500,000);
and Lender, in its sole and absolute discretion, may make available Revolving
Loan Commitment increases to Borrower.  Lender’s election to increase the
Revolving Loan Commitment from time to time may be granted or denied by Lender
in its sole and absolute discretion, however, at a minimum, the following
conditions must be satisfied, in Lender’s sole and absolute discretion: 

(i)                
  no Event of Default shall have occurred or be continuing, or
result from the applicable increase of the Revolving Loan Commitment; 

(ii)              
  Borrower shall have executed and delivered a new or revised
Revolving Note; 

(iii)            
  after giving effect to such increase, the amount of the aggregate
outstanding principal balance of all Revolving Loans shall not be in excess of
the Revolving Loan Availability; 

(iv)            
  Lender shall have reviewed and accepted, in its sole and absolute
discretion, the amount and type of current and historical Receipts of the Credit
Parties, Eligible Accounts or other Collateral required for the increase; and 

(v)              
  Lender shall have received any and all documents or agreements as
it shall require in its sole and absolute discretion. 

It
is expressly agreed and acknowledged by each of the Credit Parties that,
notwithstanding that this Agreement provides for the opportunity to increase
the Revolving Loan Commitment as hereby provided: (i) Lender has no obligation
of any nature or kind whatsoever to grant or provide any such increase to the
Credit Parties; (ii) the Credit Parties did not enter into this Agreement based
on any promise, express or implied, by Lender or any of its agents or
representatives, or based on any expectation by any of the Credit Parties, that
funds or Loans beyond the Revolving Loans made on the Effective Date would be
made or provided after the Effective Date; and (iii) each of the Credit Parties
hereby fully and unconditionally waives any and all claims, counterclaims, and
defenses any of them may have based on any argument that Lender had any
obligation or otherwise promised to fund additional Revolving Loans beyond the
Revolving Loan funded on the Effective Date, or any argument or implied
covenant of fair dealing and good faith that may in any way imply an obligation
upon Lender to make such additional Revolving Loans.

17



 

(c)             
  Revolving Loan Interest and Payments.  Except as otherwise
provided in this Section, the outstanding principal balance of the Revolving
Loans and all other Obligations shall be repaid on or before the Revolving Loan
Maturity Date.  The principal amount of the Revolving Loans outstanding from
time to time shall bear interest at the Interest Rate. The Receipts Collection
Fee, accrued and unpaid interest on the unpaid principal balance of all
Revolving Loans outstanding from time to time, and other fees and charges due
hereunder, shall be payable on a weekly basis on the weekly anniversary date of
the Effective Date, or such other date as Lender and Borrower may agree upon
(provided, however, if no such other agreement is made or reached, then on the
weekly anniversary date of the Effective Date), commencing on the first such
date to occur after the Effective Date and on the Revolving Loan Maturity Date
(each a “Payment Date”).  Any amount of principal or interest on
the Obligations which is not paid when due, whether at stated maturity, by
acceleration or otherwise, shall at Lender’s option bear interest payable on
demand at the Default Rate. 

(d)            
  Revolving Loan Principal Repayments.

(i)                
  Mandatory Principal Prepayments; Overadvances.  All
Obligations shall be repaid by Borrower on or before the Revolving Loan
Maturity Date, unless payable sooner pursuant to the provisions of this
Agreement.  In the event at any time the aggregate outstanding principal
balance of all Revolving Loans hereunder exceeds the Revolving Loan
Availability (an “Over-advance”), Borrower shall be obligated to
eliminate such Over-advance as follows: (A) if the Over-advance exists as of
the Effective Date, then: (I) Lender shall determine the amount of the
Over-advance, as well as the estimated amount of a payment (“Estimated
Over-advance Payment”) to be made by Borrower on each Payment Date (or
such other time period as Lender may determine, such as a monthly payment) to
be applied against the principal balance of the outstanding Revolving Loans,
such that the Over-advance would be eliminated over a one hundred twenty (120)
day period from the Effective Date (Lender shall have the right to modify the
amount of the Estimated Over-advance Payment from time to time upon notice to
Borrower as necessary to cause the elimination of the Over-advance over the one
hundred twenty (120) day period contemplated hereby); and (II) Lender shall
notify Borrower of the amount of the Estimated Over-advance Payment, and on
each Payment Date (or such other time period selected by Lender), Borrower
shall make the Estimated Over-Advance Payment to Lender, or, at Lender’s
election, notwithstanding the priorities set forth in Section 2.1(e)(ii),
Lender may apply any amounts in the Lock Box Account towards the Estimated
Over-advance Payment required to be made hereby, until the Over-advance is
eliminated in full; or (B) if an Over-advance should occur after the Effective
Date and during the term of this Agreement, then: (I) Lender shall determine,
in its sole discretion, whether: (1) the Over-advance needs to be paid
immediately; or (2) the Over-advance can be cured during a period of time as
determined by Lender, in its sole discretion, and if so, what other conditions
Lender may impose in connection with such cure period.  If Lender elects option
(1), then Borrower shall, upon notice or demand from Lender, immediately make
such repayments of the Revolving Loans or take such other actions as shall be
necessary to immediately eliminate such Over-advance in full (or,
notwithstanding the priorities set forth in Section 2.1(e)(ii), Lender
may immediately apply any amounts in the Lock Box Account from time to time to
eliminate such Over-advance in full).  If Lender elects option (2) above, then
Lender shall determine the amount of the Over-advance, the cure period
available to Borrower in which to eliminate the Over-advance, and any other
conditions to be satisfied by Borrower in connection with the cure period
selected by Lender for

18



 elimination of the Over-advance, as well as the Estimated
Over-advance Payment to be made by Borrower on each Payment Date (or such other
time period as Lender may determine, such as a monthly payment) to be applied
against the principal balance of the outstanding Revolving Loans, such that the
Over-advance would be eliminated over whatever cure period shall have been
elected by Lender, in its sole discretion (Lender shall have the right to
modify the amount of the Estimated Over-advance Payment from time to time upon
notice to Borrower as necessary to cause the elimination of the Over-advance
over the cure period selected by Lender); and (II) Lender shall notify Borrower
of the amount of the Estimated Over-advance Payment, the cure period selected
by Lender during which the Over-advance must be eliminated, and any other conditions
applicable thereto, and on each Payment Date (or such other time period
selected by Lender), Borrower shall make the Estimated Over-Advance Payment to
Lender, or, at Lender’s election, notwithstanding the priorities set forth in Section
2.1(e)(ii), Lender may apply any amounts in the Lock Box Account towards
the Estimated Over-advance Payment required to be made hereby, such that the
Over-advance is eliminated in full in the period of time selected by Lender
therefor.  Credit Parties shall also satisfy whatever other conditions may be
imposed by Lender as conditions to allowing Credit Parties a cure period to
eliminate the Over-advance.  In addition, following collection and payment of
all items and fees as required by Section 2.1(e)(ii)(1) – (6), inclusive (other
than the Mandatory Principal Repayment Amount), on each Payment Date, an amount
equal to fifteen percent (15%) of all amounts collected into the Lock Box
Account since the immediately preceding Payment Date (such a period of time
hereinafter referred to as the “Sweep Period”) shall be paid to
Lender to reduce the then outstanding principal balance of all Revolving Loans
hereunder (the “Mandatory Principal Repayment Amount”).  In
addition, from time to time, Lender shall have the right to review the amount
and type of current and historical Receipts and Eligible Accounts of the Credit
Parties, the value of other Collateral, and other factors determined by Lender,
and based on such review, Lender may, in its sole and absolute discretion,
increase the percentage used for the Mandatory Principal Repayment Amount,
which increase shall become applicable and effective immediately upon notice to
Borrower.  Lender shall apply funds received into the Lock Box Account in
accordance with Section 2.1(e) below.

(ii)              
  Optional Prepayments.  Borrower may from time to time
prepay the Revolving Loan, in whole or in part, provided, however,
that if the Borrower prepays more than eighty percent (80%) of the amount of
the Revolving Loan Commitment within ninety (90) days following the Effective
Date, Borrower shall pay to Lender as liquidated damages and compensation for
the costs of being prepared to make funds available hereunder an amount equal
to two and 50/100 percent (2.50%) of the Revolving Loan Commitment (the “Prepayment
Penalty”).  The Prepayment Penalty owed pursuant to this Section shall
not be applicable with respect to any payment of the Mandatory Principal
Repayment Amount. 

(e)             
  Collections; Lock Box.

(i)                
  Funds Collected.

(1)              
  Wire Transfers.  To the extent any Customers make or pay
any Receipts to any Credit Party by a wire transfer or other form of electronic
funds transfer, effective as of the Effective Date, the Credit Parties shall
direct all of such Customers, in writing,

19



 to make all such wire transfer or
electronic fund transfer payments directly to the Lock Box Account. 

(2)              
  Cash, Checks and Other Payments.  To the extent any
Customers make or pay any Receipts to any Credit Party by any other form other
than wire transfer or other form of electronic funds transfer (such as through
cash or a check), then effective as of the Effective Date, the Credit Parties shall
direct all of its Customers, in writing, to make, deposit, and/or send, as
applicable, all such payments and Receipts directly to the Lock Box Account or a
post office box designated by, and under the exclusive control of, Lender (such
post office box is referred to herein as the “Lock Box”). 

(3)              
  Credit/Debit Card Payments.  The parties recognize that in
some instances or from time to time, the Credit Parties may elect to take or
receive payments from Customers through the use of a credit or debit card
(including payments made using a credit or debit card, or other payment
mechanisms, through online re-sellers or systems, such as PayPal, Amazon and
the like).  In the event the Credit Parties shall at any time take or receive
any Receipts through the use of a credit or debit card (including payments made
using a credit or debit card, or other payment mechanisms, through online
re-sellers or systems, such as PayPal, Amazon and the like), then effective as
of the date (the “Credit Card Date”) when the Credit Parties enter
into any agreements with any credit/debit card or other payment processing
companies for the processing of credit and debit card payments (including
payments made using a credit or debit card, or other payment mechanisms,
through online re-sellers or systems, such as PayPal, Amazon and the like) on
behalf of the Credit Parties (the “Payment Processing Companies”),
the Credit Parties shall modify all of its agreements with any such Payment
Processing Companies, so as to authorize, direct and cause: (A) all
credit/debit card payments from any Customers; and (B) any reserves or
holdbacks withheld by any of the Payment Processing Companies, if, as, and when
distributed or paid to the Credit Parties, to be deposited directly into the
Lock Box Account, rather than any other bank accounts of the Credit Parties. 
In this regard, effective as of the Effective Date (or, if there are no
agreements with any Payment Processing Companies as of the Effective Date, then
effective as of the Credit Card Date), the Credit Parties shall obtain from the
each of the Payment Processing Companies and deliver to Lender, an estoppel
certificate, disbursement direction or other similar document in form and
substance acceptable to Lender (the “Payment Direction”), pursuant
to which the Payment Processing Companies confirm and agree, among other things
Lender may require: (I) to the foregoing payment directions; (II) that such
payment instructions and directions shall not be changed, amended or
terminated, except upon written notice from Lender; and (III) that copies of
all statements, notices and other communications sent by any Payment Processing
Companies to the Credit Parties, also be delivered to Lender. At any time prior
to the Payment Direction being effective and in place, any Receipts received by
the Credit Parties from any Payment Processing Companies shall be immediately
(within twenty-four (24) hours) re-directed and deposited by Borrower into the
Lock Box Account; provided, however, that any such re-direction shall not
diminish or abrogate the Credit Parties’ obligation to obtain the Payment
Direction from each of the Payment Processing Companies.  The Credit Parties shall
not enter into any new agreements with any Payment Processing Companies, unless
prior to or contemporaneously with entering into such relationships or
agreements, such Payment Processing Companies execute a Payment Direction in
favor of Lender.  Notwithstanding the foregoing to the contrary, so long as the
Receipts collected by Credit Parties in any calendar year from any particular
Payment Processing 

20



 Company (which amount can be estimated by Lender based on
Receipts collected by Credit Parties in any shorter time period as may be
determined by Lender) are less than ten percent (10%) of the total Receipts
collected by Credit Parties from all sources in any calendar year (which amount
can be estimated by Lender based on Receipts collected by Credit Parties in any
shorter time period as may be determined by Lender) (a Payment Processing
Company that collects Receipts that are below the 10% threshold as hereby
contemplated is sometimes referred to as a “Non-Material PPC” and
a Payment Processing Company that collects Receipts above the 10% threshold as
hereby contemplated is sometimes referred to as a “Material PPC”),
then Credit Parties shall not have an obligation to deliver the Payment
Direction with respect to such particular Payment Processing Company as
contemplated by this Section, but only so long as: (x) no Event of Default
exists under this Agreement or any other Loan Document, and provided no event
has occurred that, with the passage of time, or the giving of notice, or both,
would constitute an Event of Default under this Agreement or any other Loan
Document; (y) Credit Parties instruct the particular Payment Processing Company
to remit all credit/debit card payments from any Customers, any reserves or
holdbacks withheld by such Payment Processing Company, and other Receipts,
directly into the Lock Box Account, rather than any accounts of the Credit
Parties; and (z) to the extent that, despite the foregoing requirement to
instruct such Payment Processing Company to remit all Receipts directly into
the Lock Box Account, any Credit Party receives any Receipts from such Payment
Processing Company directly into an account of the Credit Parties, rather than
the Lock Box Account, then Credit Parties shall notify Lender of the receipt of
such Receipts or other sums within twenty-four (24) hours of receipt of same,
and immediately upon receipt thereof, remit or endorse same to Lender into the
Lock Box Account; provided, however, that any such re-direction shall not
diminish or abrogate Credit Parties’ obligation to direct, instruct and require
all Payment Processing Companies to make all payments and remittances otherwise
due to the Credit Parties directly to the Lock Box Account. 

The
Lender and Credit Parties acknowledge that, in some instances, or if
applicable, the mechanics of the payment processing relationships of the Credit
Parties with some of its Payment Processing Companies is such that
Credit Parties have portals or systems which they access online (the “Portals”)
through administrative usernames, passwords and other input details required to
gain access into such Portals (the “Access Details”), and that
once the Portals are accessed with the Access Details, the Credit Parties then,
through certain user elections and options made by Credit Parties on the Portals,
elects to what bank account and when funds from the Payment Processing
Companies are transferred to Credit Parties.  In this regard, to the extent the
payment mechanics of any Payment Processing Companies use Portals and Access
Details, then on the Effective Date (or, if acceptable to Lender, in Lender’s
sole and absolute discretion, as soon as practicably possible following the
Effective Date), Credit Parties shall provide to Lender the web address for the
Portals and the Access Details for each of the Payment Processing Companies,
and Lender shall have the full right and authority to modify the Access
Details, so that only Lender has access to the Portals and access to control
all payments and remittances to and from such Payment Processing

21



 Companies, and
so that Credit Parties do not have access or authority to change or thereafter
modify the elections made by Lender on the Portals (provided that Lender shall
provide view/read access only to Credit Parties so Credit Parties can see, on a
daily basis, the transactions processed by the Payment Processing Companies and
movement of funds from the Payment Processing Companies to the Lock Box
Account).  Lender shall have the absolute right and authority to designate the
account to which any remittances from the Payment Processing Companies are
made, which account shall be the Lock Box Account.  Credit Parties hereby agree
to undertake any and all required actions, execute any required documents,
instruments or agreements, or to otherwise do any other thing required or
requested by Lender in order to effectuate the foregoing with respect to the
Portals and Access Details.  Credit Parties shall not undertake any action or
give any direction to any Payment Processing Companies that is in conflict
with, changes, or is otherwise in derogation of the requirements and
obligations of Credit Parties set forth in this paragraph. Upon indefeasible
payment in full of all Obligations, and termination of all other commitments of
Lender to advance sums hereunder, Lender shall provide the Access Details and
control of the Portals back to the Credit Parties.


(4)              
  General Collection Terms.  The Credit Parties hereby agree
to undertake any and all required actions, execute any required documents,
instruments or agreements, or to otherwise do any other thing required or
requested by Lender in order to effectuate the requirements of this Section
2.1(e).  Lender shall maintain an account at a financial institution
acceptable to Lender in its sole and absolute discretion (the “Lock Box
Account”), which Lock Box Account is and shall be maintained in
Lender’s (or its Affiliate’s) name, and into which all Receipts, whether
through wires, electronic fund transfers, credit and debit card payments from
any Customers, and all other monies, checks, notes, drafts or other payments or
Receipts of any kind received or receivable by, or due to, the Credit Parties shall
be deposited. Credit Parties acknowledge that the Lock Box Account may be
established by Lender as an “FBO” account, pursuant to which the Lock
Box Account is in the name of Lender (or its Affiliate) “for the benefit of”
the Credit Parties.  Notwithstanding any such designation on the Lock Box
Account, or any documents entered into or executed by the Credit Parties in
connection with the establishment of the Lock Box Account, the Credit Parties
hereby agree and acknowledge that: (i) Lender shall at all times have full
“control” (within the meaning of the UCC) of the Lock Box Account and all funds
deposited therein; (ii) the Credit Parties shall not revoke Lender’s authority
or rights with respect to the Lock Box Account and the funds therein
(notwithstanding any right Credit Parties may have to do so under ancillary
documents executed by the Credit Parties to establish the Lock Box Account);
and (iii) Credit Parties shall not take any action or position contrary to the
intent of the parties as expressed herein that Lender shall at all times be in
full control of the Lock Box Account and the deposits therein.  It is the
intent of the parties that all Receipts, whether through wires, electronic fund
transfers, credit and debit card payments from any Customers, and all other
monies, checks, notes, drafts or other payments or Receipts of any kind
received or receivable by, or due to, the Credit Parties, shall be deposited
directly into the Lock Box Account, rather than any other accounts of Credit
Parties, or if received into any account of the Credit Parties, then the Credit
Parties shall immediately re-direct and deposit same into the Lock Box Account. 
In this regard, if any Credit Parties, any Affiliate or Subsidiary, any
shareholder, officer, director, employee or agent of the Credit Parties or any
Affiliate or Subsidiary, or any other Person acting for or in concert with the
Credit Parties, shall receive any monies, checks, notes, drafts or other
payments or Receipts, the Credit Parties and each such Person shall receive all
such items in trust for, and as the sole and exclusive property of, Lender,
and, immediately upon receipt thereof, shall remit the same (or cause the same
to be remitted) in kind to the Lock Box Account. 

(ii)              
  Distribution of Funds From the Lock Box Account.  The
Credit Parties and Lender agree that all payments made to the Lock Box Account,
whether in respect of Receipts, as proceeds of Collateral, or otherwise, will
be swept from the Lock Box Account to 

22



 Lender on each Payment Date to be applied
according to the following priorities: (1) to unpaid fees and expenses due
hereunder, including any recurring fees due pursuant to Section 2.2
hereof; (2) to any custodian/back-up servicer (if applicable); (3) to accrued
but unpaid interest owed under Sections 2.1(c) and 2.4 hereof; (4) to
the Receipts Collection Fee; (5) if at any time the Lender is not holding or
has reserved, in the Lock Box Account or otherwise, an amount equal to at least
the Reserve Amount, then twenty percent (20%) of all Receipts received into the
Lock Box Account during each Sweep Period shall be withheld and applied by
Lender to amounts required to establish the Reserve Amount, until the Reserve
Amount is reached, which Reserve Amount (or portion thereof) may be kept and
maintained in the Lock Box Account during the duration of this Agreement as
additional security for the Obligations; (6) to amounts payable pursuant to Section
2.1(d), including the Mandatory Principal Repayment Amount, the Estimated
Over-Advance Payment, and other amounts required to eliminate any Over-advance;
and (7) upon the occurrence of an Event of Default, to Lender, to reduce the balance
of the Obligations to zero (each of the foregoing payments, the “Lock Box
Payments”).  The amount remaining in the Lock Box Account following the
payment of the Lock Box Payments on each Payment Date (less any amount in the
Lock Box Account withheld and applied by Lender to the Reserve Amount) shall be
referred to herein as the “Net Amount”.  The Lender agrees that, provided
the Credit Parties are each in good standing under this Agreement and the other
Loan Documents, and provided no Event of Default exists under this Agreement or
any other Loan Document, and provided no event has occurred that, with the
passage of time, or the giving of notice, or both, would constitute an Event of
Default under this Agreement or any other Loan Document, and further provided that
any Estimated Over-advance Payments have been timely made as required by this
Agreement, and subject to the terms and conditions of this Agreement, the Net
Amount will be transferred to Borrower from the Lock Box Account via wire
transfer or electronic funds transfer to an account designated by the Borrower
on the immediately subsequent Payment Date (provided, however, any failure by
Lender to transfer the Net Amount to Borrower by such date shall not in any way
hinder, impair, or otherwise adversely affect Credit Parties’ Obligations, or
Lender’s rights and remedies under this Agreement or any other Loan Documents).
The Credit Parties agree to pay all reasonable fees, costs and expenses in
connection with opening and maintaining of the Lock Box and the Lock Box
Account.  All of such reasonable fees, costs and expenses, if not paid by the
Credit Parties within five (5) Business Days of Lender’s written request, may
be paid by Lender and in such event all amounts paid by Lender shall constitute
Obligations hereunder, shall be payable to Lender by any Credit Party upon
demand, and, until paid, shall bear interest at the Default Rate. 
Notwithstanding anything contained herein to the contrary, in the event the
amounts collected into the Lock Box Account from time to time, whether in
respect of Receipts, as proceeds of Collateral, or otherwise, are at any time
not sufficient to pay the amounts due to Lender on any Payment Date under items
(1) – (6) above of this Section 2.1(e)(ii), then the Credit Parties shall,
without further notice or demand from Lender, pay any such shortfall amounts to
the Lock Box Account within three (3) Business Days from the Payment Date for
which such amounts were due, or notwithstanding the foregoing order and
priority, Lender shall have the right to sweep from the Lock Box Account any
such shortfall amounts immediately upon any Receipts coming into the Lock Box
Account. 

(iii)            
  Power of Attorney.  It is intended that all Receipts, and
all other checks, drafts, instruments and other items of payment or proceeds of
Collateral at any time received, due or owing to the Credit Parties from a
Customer, any other Person, or otherwise,

23



 shall be deposited directly into the
Lock Box Account, and if not deposited directly into the Lock Box Account, shall
be immediately remitted or endorsed by the Credit Parties to Lender into the
Lock Box Account, and, if that remittance or endorsement of any such item shall
not be immediately made for any reason, Lender is hereby irrevocably authorized
to remit or endorse the same on Credit Parties’ behalf.  For purpose of this
Section, the Credit Parties irrevocably hereby make, constitute and appoint
Lender (and all Persons designated by Lender for that purpose) as the Credit
Parties’ true and lawful attorney and agent-in-fact: (A) to endorse the Credit
Parties’ name upon said Receipts or items of payment and/or proceeds of
Collateral and upon any chattel paper, document, instrument, invoice or similar
document or agreement relating to any Receipts of the Credit Parties; (B) to
take control in any manner of any item of payment or proceeds thereof; (C) to
have access to the Credit Parties’ operating accounts, through the Credit
Parties’ online banking system, or otherwise, to make remittances of any
Receipts deposited therein into the Lock Box Account as required hereby; (D) to
have access to any lock box or postal box into which any of the Credit Parties’
mail is deposited, and open and process all mail addressed to the Credit
Parties and deposited therein; and (E) direct and otherwise deal with all
Payment Processing Companies, or other Persons, to insure that all Receipts,
payments and reserves as hereby contemplated are remitted to the Lock Box
Account. 

(iv)            
  Rights Upon Default.  Lender may, at any time and from
time to time after the occurrence and during the continuance of an Event of
Default, whether before or after notification to any Customer and whether
before or after the maturity of any of the Obligations: (A) enforce
collection of any of the Accounts (including all Eligible Accounts) and
Receipts of the Credit Parties or other amounts owed to the Credit Parties by
suit or otherwise; (B) exercise all of the rights and remedies of the Credit
Parties with respect to Proceedings brought to collect any Accounts (including all
Eligible Accounts), Receipts, or other amounts owed to the Credit Parties; (C)
surrender, release or exchange all or any part of any Accounts (including all
Eligible Accounts), Receipts, or other amounts owed to the Credit Parties, or
compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder; (D) sell or assign any Account
(including all Eligible Accounts) or Receipts of the Credit Parties, or other
amount owed to the Credit Parties, upon such terms, for such amount and at such
time or times as Lender deems advisable; (E) prepare, file and sign any Credit
Parties’ name on any proof of claim in bankruptcy or other similar document
against any Customer or other Person obligated to the Credit Parties; and (F)
do all other acts and things which are necessary, in Lender’s sole discretion,
to fulfill the Credit Parties’ obligations under this Agreement and the other
Loan Documents and to allow Lender to collect the Accounts (including all
Eligible Accounts), Receipts, or other amounts owed to the Credit Parties.  In
addition to any other provision hereof, Lender may at any time after the
occurrence and during the continuance of an Event of Default, at the Credit
Parties’ expense, notify any parties obligated on any of the Accounts
(including all Eligible Accounts) and Receipts to make payment directly to
Lender of any amounts due or to become due thereunder. 

(v)              
  Statement.  From time to time, Lender may deliver to
Borrower an invoice and or an account statement showing all Revolving Loans,
charges and payments, which shall be deemed final, binding and conclusive upon
Borrower, unless Borrower notifies Lender in writing, specifying any error
therein, within thirty (30) days of the date such account statement is sent to
Borrower and any such notice shall only constitute an objection to the items
specifically identified. 

24



 
(vi)            
  Authorization to Deduct Amounts in Lock Box. 

(1)              
  Notwithstanding anything contained in this Agreement to the
contrary, any time that any charges, fees, amounts or other Obligations are due
and owing by any Credit Parties to Lender under this Agreement or any other
Loan Document, Lender shall have the right, and is hereby authorized, to deduct
such charges, fees, amounts or other Obligations directly from the Lock Box
Account and from all receipts from time to time deposited therein. 

(2)              
  Notwithstanding anything contained herein to the contrary and in
addition to the amounts provided in Section 2.1(e)(ii), the Lender may
from time to time, in its sole and absolute discretion, retain in the Lock Box
Account any and all amounts deposited into the Lock Box Account by any Customer
that the Lender deems necessary or appropriate (i) to prevent any insecurity by
the Lender with respect to the total value of the Collateral (including, but
not limited to, the amount held in the Lock Box Account at any time) when
compared to the outstanding amount of all Obligations owed to the Lender; and
(ii) to ensure that the Collateral (including, but not limited to the amount
held in the Lock Box Account) is and remains of a value to adequately serve as
appropriate security for the Obligations of the Credit Parties hereunder.

2.2             
  Fees.

(a)                     
  Asset Monitoring Fee. Borrower agrees to pay to Lender an
asset monitoring fee (“Asset Monitoring Fee”) equal to One
Thousand Five Hundred and No/100 United States Dollars (US$1,500.00), which
shall be due and payable on the Effective Date, and thereafter on the first day
of each third (3rd) calendar month during the term of this
Agreement.  The Asset Monitoring Fee shall be increased in increments of Five
Hundred and No/100 United States Dollars (US$500.00) each time the Revolving
Loan Commitment amount is increased pursuant to Section 2.1(b); provided
that the Asset Monitoring Fee shall never exceed Two Thousand Five Hundred and
No/100 United States Dollars (US$2,500.00).

(b)                    
  Transaction Advisory Fee.  In addition to the Advisory Fee
contained in Section 2.2(f) herein, the Borrower agrees to pay to Lender
a transaction advisory fee equal to two percent (2.0%) of the Revolving Loan
Commitment as of the Effective Date, and two percent (2.0%) on the amount of
any increase thereof pursuant to Section 2.1(b), which shall be due and
payable on the Effective Date and on the date of any increase to the Revolving
Loan Commitment pursuant to Section 2.1(b).f

(c)                     
  Due Diligence Fees.  Borrower agrees to pay a due
diligence fee equal to Twelve Thousand Five Hundred and No/100 United States Dollars
(US$12,500.00), which shall be due and payable in full on the Effective Date,
or any remaining portion thereof shall be due and payable on the Effective Date
if a portion of such fee was paid upon the execution of any term sheet related
to this Agreement. 

(d)                    
  Document Review and Legal Fees.  Borrower agrees to pay a
document review and legal fee equal to Fifteen Thousand and No/100 United
States Dollars (US$15,000.00) which shall be due and payable in full on the Effective
Date, or any remaining portion

25



 thereof shall be due and payable on the Effective
Date if a portion of such fee was paid upon the execution of any term sheet
related to this Agreement. 

(e)                     
  Other Fees.  Borrower also agrees to pay to the Lender (or
any designee of the Lender), upon demand, or to otherwise be responsible for
the payment of, any and all other costs, fees and expenses, including the
reasonable fees, costs, expenses and disbursements of counsel for the Lender
and of any experts and agents, which the Lender may incur or which may
otherwise be due and payable in connection with: (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment,
waiver, subordination, or other modification or termination of this Agreement
or any other Loan Documents (provided that there shall be no fees for the
preparation and negotiation of this Agreement other than as specifically set
forth in the closing or settlement statement executed by Borrowers and Lender
on  the Effective Date); (ii) any documentary stamp taxes, intangibles
taxes, recording fees, filing fees, or other similar taxes, fees or charges
imposed by or due to any Governmental Authority in connection with this
Agreement or any other Loan Documents; (iii) the exercise or enforcement
of any of the rights of the Lender under this Agreement or the Loan Documents;
or (iv) the failure by the Credit Parties to perform or observe any of the
provisions of this Agreement or any of the Loan Documents.  Included in the
foregoing shall be the amount of all expenses paid or incurred by Lender in
consulting with counsel concerning any of its rights under this Agreement or
any other Loan Document or under applicable law.  All such costs and expenses,
if not so immediately paid when due or upon demand thereof, shall bear interest
from the date of outlay until paid, at the Default Rate.  All of such costs and
expenses shall be additional Obligations of the Credit Parties to Lender
secured under the Loan Documents.  The provisions of this Subsection shall
survive the termination of this Agreement. 

(f)                     
   Advisory Fees.  The Borrower shall pay to Lender a fee
for advisory services provided by the Lender to the Borrower prior to the Effective
Date in the amount of One Hundred Fifty Thousand and No/100 United States
Dollars (US$150,000.00) (the “Advisory Fee”) by issuing to Lender
two hundred percent (200%) of that number of shares of the Borrower’s Common
Stock equal to the Advisory Fee.  For purposes of determining the number of
shares issuable to Lender under this Section 2.2(f) (the “Advisory
Fee Shares”), the Borrower’s Common Stock shall be valued at price equal
to eighty-five percent (85%) of the lowest volume weighted average price for
the Common Stock for the five (5) Business Days immediately prior to the Effective
Date (the “Valuation Date”), as reported by Bloomberg (the “VWAP”). 
The Lender shall confirm to the Borrower in writing, the VWAP for the Common
Stock as of the Valuation Date, and the corresponding number of Advisory Fee
Shares issuable to the Lender based on such price.  The Borrower shall instruct
its transfer agent (the “Transfer Agent”) to issue certificates
representing the Advisory Fee Shares issuable to the Lender immediately upon
the Borrower’s execution of this Agreement, and shall cause its Transfer Agent
to deliver such certificates to Lender within five (5) Business Days from the Effective
Date.  In the event such certificates representing the Advisory Fee Shares
issuable hereunder shall not be delivered to the Lender within said five (5)
Business Day period, same shall be an immediate default under this Agreement
and the other Loan Documents.  The Advisory Fee Shares, when issued, shall be
deemed to be validly issued, fully paid, and non-assessable shares of the
Borrower’s Common Stock.  The Advisory Fee Shares shall be deemed fully earned
as of the Effective Date, regardless of the amount or number of Revolving Loans
made hereunder. 

26



 
(i)                
  Adjustments.  It is the intention of the Borrower and
Lender that the Lender shall be able to sell (if Lender so elects, in Lender’s
sole and absolute discretion) the Advisory Fee Shares, and generate net proceeds
(net of all brokerage commissions and other fees or charges payable by Lender
in connection with the sale thereof) from such sale equal to the Advisory Fee. 
The Lender shall have the right (but not an obligation) to sell the Advisory
Fee Shares in the Principal Trading Market or otherwise, at any time in
accordance with applicable securities laws, subject to the limitation that its
weekly sales of the Advisory Fee Shares shall not exceed twenty-five percent
(25%) of the average weekly volume for the Borrower’s Common Stock.  At any
time the Lender may elect, the Lender may deliver to the Borrower a
reconciliation statement showing the net proceeds actually received by the
Lender from the sale of the Advisory Fee Shares (the “Sale Reconciliation”). 
If, as of the date of the delivery by Lender of the Sale Reconciliation, the
Lender has not realized net proceeds from the sale of such Advisory Fee Shares
equal to at least the Advisory Fee, as shown on the Sale Reconciliation, then
the Borrower shall immediately take all required action necessary or required
in order to cause the issuance of additional shares of Common Stock to the
Lender in an amount sufficient such that, when sold and the net proceeds
thereof are added to the net proceeds from the sale of any of the previously
issued and sold Advisory Fee Shares, the Lender shall have received total net
funds equal to the Advisory Fee.  If additional shares of Common Stock are
issued pursuant to the immediately preceding sentence, and after the sale of such
additional issued shares of Common Stock, the Lender still has not received net
proceeds equal to at least the Advisory Fee, then the Borrower shall again be
required to immediately take all required action necessary or required in order
to cause the issuance of additional shares of Common Stock to the Lender as
contemplated above, and such additional issuances shall continue until the
Lender has received net proceeds from the sale of such Common Stock equal to
the Advisory Fee.  In the event the Lender receives net proceeds from the sale
of Advisory Fee Shares equal to the Advisory Fee, and the Lender still has Advisory
Fee Shares remaining to be sold, the Lender shall return all such remaining Advisory
Fee Shares to the Borrower.  In the event additional Common Stock is required
to be issued as outlined above, the Borrower shall instruct its Transfer Agent
to issue certificates representing such additional shares of Common Stock to
the Lender immediately subsequent to the Lender’s notification to the Borrower
that additional shares of Common Stock are issuable hereunder, and the Borrower
shall in any event cause its Transfer Agent to deliver such certificates to
Lender within three (3) Business Days following the date Lender notifies the
Borrower that additional shares of Common Stock are to be issued hereunder.  In
the event such certificates representing such additional shares of Common Stock
issuable hereunder shall not be delivered to the Lender within said three (3)
Business Day period, same shall be an immediate default under this Agreement
and the Loan Documents.  Notwithstanding anything contained in this Section to
the contrary, the Borrower shall have the right to redeem any Advisory Fee
Shares then in the Lender’s possession for an amount payable by the Borrower to
Lender in cash equal to the Advisory Fee, less any net cash proceeds received
by the Lender from any previous sales of Advisory Fee Shares.  Upon Lender’s
receipt of such cash payment in accordance with the immediately preceding
sentence, the Lender shall return any then remaining Advisory Fee Shares in its
possession back to the Borrower and otherwise undertake any required actions
reasonably requested by Borrower to have such then remaining Advisory Fee
Shares returned to Borrower.  The Borrower’s obligation to pay the Advisory Fee
contemplated by this Section 2.2(f), whether in cash or thru the sale of
Advisory Fee Shares, shall be an Obligation hereunder, secured by all Loan
Documents, and failure by the Borrower to pay such Advisory Fee in full as 

27



 required by this Section 2.2(f) shall be an immediate Event of Default
hereunder and under the other Loan Documents.  In the event the Lender elects
to increase the Revolving Loan Commitment as permitted by this Agreement, the
Borrower agrees to pay additional advisory fees to Lender either in cash or in
a similar manner as set forth in this Section 2.2(f) through the
issuance of additional Advisory Fee Shares, at Lender’s sole discretion, in an
amount to be mutually agreed upon between Lender and Borrower. 

(ii)              
  Mandatory Redemption.  Notwithstanding anything contained
in this Agreement to the contrary, in the event the Lender has not realized net
proceeds from the sale of Advisory Fee Shares equal to at least the Advisory
Fee by the earlier to occur of: (A) the twelve (12) month anniversary of the Effective
Date; (B) the occurrence of an Event of Default; or (C) the Revolving Loan
Maturity Date, then at any time thereafter, the Lender shall have the right,
upon written notice to the Borrower, to require that the Borrower redeem all Advisory
Fee Shares then in Lender’s possession for cash equal to the Advisory Fee, less
any cash proceeds received by the Lender from any previous sales of Advisory
Fee Shares, if any.  In the event such redemption notice is given by the
Lender, the Borrower shall redeem the then remaining Advisory Fee Shares in
Lender’s possession for an amount of Dollars equal to the Advisory Fee, less
any cash proceeds received by the Lender from any previous sales of Advisory
Fee Shares, if any, payable by wire transfer to an account designated by Lender
within five (5) Business Days from the date the Lender delivers such redemption
notice to the Borrower. 

(iii)            
  Piggyback Registration Rights.  In the event that the
Borrower files a registration statement with respect to its Common Stock with
the SEC (other than a registration statement on Form S-4 or S-8 or any
successor form thereto) after the Effective Date but before the Lender sells
the Advisory Fee Shares, the Advisory Fee Shares shall be registered pursuant
to such registration statement. 

(g)              
  Matters with Respect to Common Stock.

(i)                
  Issuance of Conversion Shares.  The parties hereto
acknowledge that pursuant to the terms of the Revolving Note, Lender has the
right, after the occurrence of an Event of Default, to convert amounts due
under the Revolving Note into Common Stock in accordance with the terms of the
Revolving Notes.  In the event, for any reason, the Borrower fails to issue, or
cause the Transfer Agent to issue, any portion of the Common Stock issuable
upon conversion of the Revolving Notes (the “Conversion Shares”) to
Lender in connection with the exercise by Lender of any of its conversion
rights under the Revolving Note, then the parties hereto acknowledge that Lender
shall irrevocably be entitled to deliver to the Transfer Agent, on behalf of itself
and the Borrower, a “Conversion Notice” (as defined in the Revolving Note)
requesting the issuance of the Conversion Shares then issuable in accordance
with the terms of the Revolving Note, and the Transfer Agent, provided they are
the acting transfer agent for the Borrower at the time, shall, and the Borrower
hereby irrevocably authorizes and directs the Transfer Agent to, without any
further confirmation or instructions from the Borrower, issue the Conversion
Shares applicable to the Conversion Notice then being exercised, and surrender
to a nationally recognized overnight courier for delivery to Lender at the
address specified in the Conversion Notice, a certificate of the Common Stock of
the Borrower, registered in the name of Lender or its designee, for the number
of Conversion Shares to which Lender shall be then entitled under the Revolving
Note, as set forth in the Conversion Notice. 

28



 
(ii)              
  Issuance of Additional Common Stock.  The parties hereto
acknowledge that the Borrower has agreed to issue, simultaneously with the
execution of this Agreement and in the future, certain shares of the Borrower’s
Common Stock in accordance with Section 2.2(f) above.  In the event, for
any reason, the Borrower fails to issue, or cause its Transfer Agent to issue, any
portion of the Common Stock issuable to Lender hereunder, either now or in the
future, then the parties hereto acknowledge that Lender shall irrevocably be
entitled to deliver to the Transfer Agent, on behalf of itself and the Borrower,
a written instruction requesting the issuance of the shares of Common Stock
then issuable, and the Transfer Agent, provided they are the acting transfer
agent for the Borrower at the time, shall, and the Borrower hereby irrevocably
authorizes and directs the Transfer Agent to, without any further confirmation
or instructions from the Borrower, issue such shares of the Borrower’s Common
Stock as directed by Lender, and surrender to a nationally recognized overnight
courier for delivery to Lender at the address specified in the Lender’s notice,
a certificate of the Common Stock of the Borrower, registered in the name of Lender,
for the number of shares of Common Stock issuable to Lender in accordance herewith. 

(iii)            
  Removal of Restrictive Legends.  In the event that Lender
has any shares of the Borrower’s Common Stock bearing any restrictive legends,
and Lender, through its counsel or other representatives, submits to the
Transfer Agent any such shares for the removal of the restrictive legends
thereon, whether in connection with a sale of such shares pursuant to any exemption to the registration requirements under the Securities Act, or
otherwise, and the Borrower and or its counsel refuses or fails for any reason
to render an opinion of counsel or any other documents, certificates or
instructions required for the removal of the restrictive legends, then: (A) to
the extent such legends could be lawfully removed under applicable laws,
Borrower’s failure to provide the required opinion of counsel or any other
documents, certificates or instructions required for the removal of the
restrictive legends shall be an immediate Event of Default under this Agreement
and all other Loan Documents; and (B) the Borrower hereby agrees and acknowledges
that Lender is hereby irrevocably and expressly authorized to have counsel to Lender
render any and all opinions and other certificates or instruments which may be
required for purposes of removing such restrictive legends, and the Borrower
hereby irrevocably authorizes and directs the Transfer Agent to, without any
further confirmation or instructions from the Borrower, issue any such shares
without restrictive legends as instructed by Lender, and surrender to a common
carrier for overnight delivery to the address as specified by Lender,
certificates, registered in the name of Lender or its designees, representing
the shares of Common Stock to which Lender is entitled, without any restrictive
legends and otherwise freely transferable on the books and records of the Borrower. 

(iv)            
  Authorized Agent of the Borrower.  The Borrower hereby
irrevocably appoints the Lender and its counsel and its representatives, each as
the Borrower’s duly authorized agent and attorney-in-fact for the Borrower for
the purposes of authorizing and instructing the Transfer Agent to process
issuances, transfers and legend removals upon instructions from Lender, or any
counsel or representatives of Lender, as specifically contemplated herein.  The
authorization and power of attorney granted hereby is coupled with an interest
and is irrevocable so long as any Obligations of the Borrower under this
Agreement or any other Loan Documents remain outstanding, and so long as the
Lender owns or has the right to receive, any shares of the Borrower’s Common
Stock hereunder or under the Revolving Notes.  In this regard, the Borrower hereby
confirms to the Transfer Agent and the Lender that it 

29



 can NOT and will NOT give instructions, including stop orders or otherwise, inconsistent with the terms
of this Agreement with regard to the matters contemplated herein, and that the
Lender shall have the absolute right to provide a copy of this Agreement to the
Transfer Agent as evidence of the Borrower’s irrevocable authority for Lender
and Transfer Agent to process issuances, transfers and legend removals upon
instructions from Lender, or any counsel or representatives of Lender, as specifically
contemplated herein, without any further instructions, orders or confirmations
from the Borrower. 

(v)              
  Injunction and Specific Performance.  The Borrower specifically
acknowledges and agrees that in the event of a breach or threatened breach by the
Borrower of any provision of this Section, the Lender will be
irreparably damaged and that damages at law would be an inadequate remedy if this
Agreement were not specifically enforced.  Therefore, in the event of a
breach or threatened breach of any provision of this Section by the
Borrower, the Lender shall be entitled to obtain, in addition to all other
rights or remedies Lender may have, at law or in equity, an injunction
restraining such breach, without being required to show any actual damage or to
post any bond or other security, and/or to a decree for specific performance of
the provisions of this Section 2.2(f).

(h)                    
  Surviving Obligations.  The Credit Parties agree and acknowledge
that notwithstanding the termination of this Agreement, or the payment in full
of all of the Revolving Loans or other obligations hereunder or under any other
Loan Documents, the Credit Parties’ obligations and liability under this
Agreement and the other Loan Documents, and the Lender’s Lien and security
interest on all Collateral, shall survive, shall remain valid and effective and
shall not be released or terminated, until the Lender receives the full amount
of the Advisory Fee in cash, either through the sale of Advisory Fee Shares, or
through cash payments from Borrower as contemplated by Section 2.2(f). 
All of the Credit Parties’ obligations under Section 2.2(f) and Section 2.2(g)
shall survive termination of this Agreement.

(i)                      
  Right to Approve Transfer Agent. The Borrower hereby
represents and warrants that the Borrower’s current Transfer Agent is VStock
Transfer, LLC, whose contact information is as follows: 18 Lafayette Place,
Woodmere, NY 11598.  The Borrower hereby agrees that it shall not change the
Transfer Agent, unless the Lender first approves the proposed new Transfer
Agent, such approval to be in Lender’s sole and absolute discretion. 

2.3             
  Renewal of Revolving Loans; Non-Renewal of Revolving Loans;
Fees.  So long as no Event of Default exists under this Agreement or any
other Loan Documents, and so long as no event has occurred that, with the
passage of time, the giving of notice, or both, would constitute an Event of
Default under this Agreement or any other Loan Documents, Borrower shall have
the option to request a renewal of the Revolving Loan Commitment and extension
of the Revolving Loan Maturity Date for one (1) additional six (6) month
period.  To make such request, Borrower shall give written notice to Lender of
Borrower’s request to renew the Revolving Loan Commitment and extend the
Revolving Loan Maturity Date for an additional six (6) month period on or
before a date that is thirty (30) days prior to the then scheduled Revolving Loan
Maturity Date.  Lender may elect to accept or reject Borrower’s request for a
renewal of the Revolving Loan Commitment and extension of the Revolving Loan
Maturity Date in its sole and absolute discretion, and any acceptance may be
conditioned upon additional obligations, 

30



 terms and conditions, including an
increase in the percentage used to calculate the amount of Mandatory Principal
Repayment Amount. 

2.4             
  Interest and Fee Computation; Collection of Funds. 
  Interest accrued hereunder shall be payable as set forth in Section 2.1(c) hereof.  Except as otherwise set forth herein, all interest and fees shall be
calculated on the basis of a year consisting of 360 days and shall be paid for
the actual number of days elapsed.  Principal payments submitted in funds not
immediately available shall continue to bear interest until collected.  If any
payment to be made by Borrower hereunder or under the Revolving Note shall
become due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day and such extension of time shall be included
in computing any interest in respect of such payment.  Any Obligations which
are not paid when due (subject to applicable grace periods) shall bear interest
at the Default Rate. 

2.5             
  Automatic Debit.  In order to effectuate the timely
payment of any of the Obligations when due, Borrower hereby authorizes and
directs Lender, at Lender’s option, to: (i) debit, or cause or instruct the
debit of, the amount of the Obligations to any ordinary deposit account of
Borrower; or (ii) make a Revolving Loan hereunder to pay the amount of the
Obligations. 

2.6             
  Discretionary Disbursements.  Lender, in its sole and
absolute discretion, may immediately upon notice to Borrower, disburse any or
all proceeds of the Revolving Loans made or available to Borrower pursuant to
this Agreement to pay any fees, costs, expenses or other amounts required to be
paid by Borrower hereunder and not so paid.  All monies so disbursed shall be a
part of the Obligations, payable by Borrower on demand from Lender. 

2.7             
  US Dollars; Currency Risk.  All Receipts will be in
Dollars.  In the event Receipts are not in Dollars, Borrower shall bear the
risk of Lender’s currency losses, and if Lender suffers a currency loss and the
result is to increase the cost to Lender or to reduce the amount of any sum
received or receivable by Lender under this Agreement or under the Revolving
Note with respect thereto, then after demand by Lender (which demand shall be
accompanied by a certificate setting forth reasonably detailed calculations of
the basis of such demand), Borrower shall pay to Lender such additional amount
or amounts as will compensate Lender for such increased cost or such
reduction.  Borrower hereby authorizes Lender to advance or cause an advance of
Revolving Loans to pay for the increased costs or reductions associated with
any such currency losses. 

3. CONDITIONS OF BORROWING. 

Notwithstanding any other provision of this
Agreement, the obligation of Lender to disburse or make all or any portion of
any Loans is subject to satisfaction of all of the following conditions
precedent (unless a condition is waived in writing by Lender) contained in this Article 3.


3.1             
  Loan Documents to be Executed by Borrower.  As a condition
precedent to Lender’s disbursal or making of the Loans pursuant to this
Agreement, Borrower shall have 

31



 executed or cause to be executed and delivered
to Lender all of the following documents, each of which must be satisfactory to
Lender and Lender’s counsel in form, substance and execution: 

(a)                     
  Credit Agreement.  An original of this Agreement, duly
executed by Borrower; 

(b)                    
  Revolving Note.  An original Revolving Note, duly executed
by Borrower; 

(c)                     
  Security Agreement.  An original of the Security Agreements,
duly executed by the Borrower; 

(d)                    
  Validity Certificates. An original of each Validity
Certificate, duly executed by such officers and directors of Borrower as Lender
shall require;

(e)                     
  Irrevocable Transfer Agent Instructions.  An original of
the Irrevocable Transfer Agent Instructions, duly executed by the Borrower and
the Borrower’s Transfer Agent; and 

(f)                     
  Closing Statement.  An original of a closing or settlement
statement, duly executed by the Borrower. 

(g)                    
  Additional Documents.  Such other agreements, documents,
instruments, certificates, financial statements, schedules, resolutions,
opinions of counsel, notes and other items which Lender shall require in
connection with this Agreement. 

3.2             
  Organizational and Authorization Documents.  A certificate
of the corporate secretary, manager, members or other officer, partner, manager
or equivalent authorized Person of each Credit Party certifying and attaching:
(i) copies of each Credit Parties’ respective articles of incorporation
(including any certificates of designation, is applicable), bylaws, operating
agreement, partnership agreement, certificate of organization or other
applicable formation or governing documents; (ii) resolutions of the board of
directors, managers, members, general partners or other Persons with proper
authority to manage the affairs of, and otherwise bind, each Credit Party,
approving and authorizing the execution, delivery and performance of the Loan
Documents to which it is party and the transactions contemplated thereby; (iii)
resolution of the Guarantors’ shareholders (if applicable), approving and authorizing
the execution, delivery and performance of the Loan Documents to which it is
party and the transactions contemplated thereby; and (iv) the signatures and
incumbency of the officers, managers, members, partners or other authorized
Persons of each Credit Party executing any of the Loan Documents, each of which
Borrower hereby certifies to be true and complete, and in full force and effect
without modification, it being understood that Lender may conclusively rely on
each such document and certificate until formally advised by Borrower of any
changes therein. 

3.3             
  Certificates of Good Standing.  Copies of certificates of
good standing with respect to each Credit Party, issued by the Secretary of
State of the state of incorporation of each Credit Party, dated such a date as
is reasonably acceptable to Lender, evidencing the good standing thereof. 

32



 
3.4             
  Search Results.  Copies of UCC search reports dated such a
date as is reasonably acceptable to Lender, listing all effective financing
statements which name each Credit Party, under its present name and any
previous names, as debtors, together with copies of such financing statements. 

3.5             
  Insurance.  Within thirty (30) days of the Effective Date,
evidence satisfactory to Lender of the existence of insurance required to be maintained
pursuant to this Agreement and the Security Agreement, together with evidence
that Lender has been named as additional insured and lender’s loss payee, as
applicable, on all related insurance policies. 

3.6             
  Use of Proceeds.  A detailed summary of the Borrower’s use
of the proceeds being funded hereunder. 

3.7             
  Certificates.  Originals of certificates evidencing the shares
and/or membership interests, as applicable, to be pledged in connection with
the Pledge Agreement. 

3.8             
  Customer Payment Redirection.  Evidence satisfactory to
the Lender that the Credit Parties have irrevocably instructed its Customers to
redirect all Receipts to the Lock Box Account. 

3.9             
  Income Statement / Profit and Loss Statement.  An income statement
or a profit and loss statement showing the consolidated revenues, expenses,
profits and losses of the Credit Parties for the twelve (12) month period
ending the Effective Date, as well as a reasonable projection of the
consolidated revenues, expenses, profits and losses of the Credit Parties for
the twelve (12) month period immediately following the Effective Date. 

3.10         
  Opinion of Counsel.  A customary opinion of Borrower’s
counsel, in form satisfactory to Lender. 

3.11         
  Perfection of Lien on Collateral.  The Credit Parties
shall have duly authorized, executed and delivered any other related
documentation necessary or advisable to perfect the Lien on the Collateral in
the jurisdiction of incorporation of the Credit Parties, including such UCC-1
Financing Statements and any and all documents necessary to complete any
filings which Lender shall require in connection with this Agreement. 

3.12         
  Press Release Authorization.  Evidence satisfactory to the
Lender that the Borrower has authorized the Lender to publish such press
releases with respect to this Agreement and the instant transaction, including
a copy of an e-mail delivered to Marketwire.com by the Borrower whereby the
Borrower authorizes the Lender to use its name and, if applicable, stock
symbol, in connection with current or future press releases. 

3.13         
  Payment of Fees.  Borrower shall have paid to Lender all
fees, costs and expenses, including due diligence expenses, attorney’s fees,
search fees, title fees, documentation and filing fees (including documentary
stamps and taxes payable on the face amount of the Revolving Note). 

3.14         
  Event of Default.  No Event of Default, or event which,
with notice or lapse of time, or both, would constitute an Event of Default,
shall have occurred and be continuing. 

33



 
3.15         
  Adverse Changes.  There shall not have occurred any
Material Adverse Effect. 

3.16         
  Litigation.  No pending claim, investigation, litigation
or other Proceeding shall have been instituted against any Credit Party or any
of their respective officers, shareholders, members, managers, partners, or
other principals of any Credit Party. 

3.17         
  Representations and Warranties.  No representation or
warranty of any of the Credit Parties contained herein or in any Loan Documents
shall be untrue or incorrect in any material respect as of the date of any
Loans as though made on such date, except to the extent such representation or
warranty expressly relates to an earlier date. 

3.18         
  Due Diligence.  The business, legal and collateral due
diligence review performed by Lender, including a review of the Credit Parties’
historical performance and financial information, must be acceptable to Lender
in its sole discretion.  Lender reserves the right to increase any and all
aspects of its due diligence in Lender’s sole discretion. 

3.19         
  Key Personnel Investigations.  Lender shall be satisfied,
in its sole discretion, with results from background investigations conducted
on key members of Borrower’s principals and management teams. 

3.20         
  Repayment of Outstanding Indebtedness.  The Credit Parties
shall have repaid in full all outstanding indebtedness secured by Collateral,
other than indebtedness giving rise to Permitted Liens. 

3.21         
  Loan Documents to be Executed by any Subsidiary following the Effective Date.  Within ten (10) days of any entity becoming a Subsidiary of any
Credit Party, the following documents shall have executed or cause to be
executed and delivered to Lender, each of which must be satisfactory to Lender
and Lender’s counsel in form, substance and execution: 

(a)                   
  Consent and Agreement.  An original of a Consent and
Agreement duly executed by such Subsidiary, pursuant to which such Subsidiary
consents and agrees to become a “Credit Party” hereunder and to be bound by the
terms and conditions of this Agreement and all other Loan Documents; 

(b)                    
  Security Agreement.  An original of a Security Agreement,
duly executed by such Subsidiary; 

(c)                     
  Guaranty Agreement.  An original of a Guaranty Agreement,
duly executed by such Subsidiary; 

(d)                    
  Pledge Agreement.  An original of a Pledge Agreement, duly
executed by the parent of the Subsidiary; 

(e)                   
  Organizational and Authorization Documents. A certificate
of the corporate secretary, manager, members or other officer, partner, manager
or equivalent authorized Person of such Subsidiary certifying and attaching:
(i) copies of such Subsidiary’s articles of incorporation (including any
certificates of designation, is applicable), bylaws, operating agreement,
partnership agreement, certificate of organization or other applicable

34



 formation or governing documents; (ii) resolutions of the board of directors,
managers, members, general partners or other Persons with proper authority to
manage the affairs of, and authorizing the execution, delivery and performance
of the Loan Documents to which it is party and the transactions contemplated
thereby; (iii) resolution of the Subsidiary’s shareholders (if applicable),
approving and authorizing the execution, delivery and performance of the Loan
Documents to which it is or will become a party and the transactions
contemplated thereby; and (iv) the signatures and incumbency of the officers,
managers, members, partners or other authorized Persons of such Subsidiary
executing any of the Loan Documents, each of which Borrower hereby certifies to
be true and complete, and in full force and effect without modification, it
being understood that Lender may conclusively rely on each such document and
certificate until formally advised by Borrower of any changes therein. 

(f)                   
  Additional Documents.  Such other agreements, documents,
instruments, certificates, financial statements, schedules, resolutions,
opinions of counsel, notes and other items which Lender shall require in
connection with this Agreement and the other Loan Documents. 

3.22         
  Loan Documents to be Executed by each Credit Party Upon Each
Subsequent Advance.  As a condition precedent to Lender’s disbursal or
making of additional advances of principal pursuant to this Agreement following
the Effective Date, the Credit Parties shall have executed or caused to be
executed and delivered to Lender all of the documents in this Section 3
applicable thereto, and such documents shall remain in full force and effect as
of the date of the subsequent principal advance.

4. NOTES EVIDENCING LOANS. 

The Revolving Loans shall be evidenced
by the Revolving Note (together with any and all renewal, extension,
modification or replacement notes executed by Borrower and delivered to Lender
and given in substitution therefor) duly executed by Borrower, and consented
and agreed to by the Guarantors, and payable to the order of Lender.  At the
time of the initial disbursement of a Revolving Loan and at each time an
additional Revolving Loan shall be requested hereunder or a repayment made in
whole or in part thereon, an appropriate notation thereof shall be made on the
books and records of Lender.  All amounts recorded shall be, absent
demonstrable error, conclusive and binding evidence of: (i) the principal
amount of the Revolving Loans advanced hereunder; (ii) any unpaid interest
owing on the Revolving Loans; and (iii) all amounts repaid on the Revolving
Loans.  The failure to record any such amount or any error in recording such
amounts shall not, however, limit or otherwise adversely affect the obligations
of Borrower under the Revolving Note to repay the principal amount of the
Revolving Loans, together with all other Obligations. 

5. MANNER OF BORROWING. 

5.1             
  Loan Requests.  Subject to Section 2.1(a) and Article
3 hereof, the Loans shall be made available to Borrower in accordance with
the terms and provisions of this Agreement, up to the then applicable Revolving
Loan Availability; provided, however, that, notwithstanding
anything contained in this Agreement or any other Loan Documents to the
contrary, each Revolving Loan requested by Borrower under this Agreement shall
be subject to Lender’s

35



 approval, which approval may be given or withheld in
Lender’s sole and absolute discretion.  A Revolving Loan may only be made if no
Event of Default shall have occurred or be continuing, and only if no event
shall have occurred that, with the passage of time, the giving of notice, or
both, would constitute an Event of Default under this Agreement or the other
Loan Documents, and shall be subject to: (i) Lender’s preparation of a
Borrowing Base Certificate, showing that there is borrowing availability under
the Revolving Loan Availability and pursuant to a calculation of the Borrowing
Base Amount; and (ii) Receipts deposited into the Lock Box Account, Eligible
Accounts and other Collateral being acceptable to Lender. 

5.2             
  Communications. Lender is authorized to rely on any
written, verbal, electronic, telephonic or telecopy loan requests which Lender
believes in its good faith judgment to emanate from the President or Chief
Executive Officer, or any other authorized representative of Borrower. 
Borrower hereby irrevocably confirms, ratifies and approves all such advances
by Lender and Borrower hereby indemnifies Lender against losses and expenses
(including court costs, attorneys’ and paralegals’ fees) and shall hold Lender
harmless with respect thereto. 

6. SECURITY FOR THE OBLIGATIONS. 

6.1             
  Security Agreement.  To secure the payment and performance
by Borrower of the Obligations hereunder, each of the Credit Parties grants,
under and pursuant to the Security Agreement executed by the Credit Parties dated
as of the Effective Date, to Lender, its successors and assigns, an
unconditional, continuing, first-priority, perfected security interest in, and
does hereby assign, transfer, mortgage, convey, pledge, hypothecate and set
over to Lender, its successors and assigns, all of the right, title and
interest of the Credit Parties in and to the Collateral, whether now owned or
hereafter acquired, and all proceeds (including all insurance proceeds) and
products of any of the Collateral.  At any time upon Lender’s request, the
Credit Parties shall execute and deliver to Lender any other documents,
instruments or certificates requested by Lender for the purpose of properly
documenting and perfecting the security interests of Lender in and to the
Collateral granted hereunder, including any additional security agreements,
mortgages, control agreements, and financing statements.  The Security
Agreement executed by the Credit Parties shall terminate following the full
payment and performance of all of the Obligations hereunder and under any Loan
Document and upon Lender’s express written acknowledgement of such full payment
and performance being received by the Borrower. 

6.2             
  Pledge Agreement.  To secure the payment and performance
by Borrower of the Obligations hereunder, the Borrower shall grant, under and
pursuant to the Pledge Agreement executed by the Borrower dated as of the Effective
Date, to Lender, its successors and assigns, a continuing, first-priority
security interest in, and assignment, transference, mortgage, conveyance,
pledge, hypothecation and set over to Lender, its successors and assigns, all
of the Borrower’s right, title and interest in and to all of the shares of the Guarantor. 
At any time upon Lender’s request, the Borrower shall execute and deliver to
Lender any other documents, instruments or certificates requested by Lender for
the purpose of properly documenting and perfecting the security interests of
Lender in and to the shares of common stock of the Guarantor granted hereunder,
including any additional pledge agreements and financing statements.  The
Pledge Agreement executed by the Borrower shall terminate following the full
payment and performance of all of the Obligations hereunder and under any Loan
Document and upon 

36



 Lender’s express written acknowledgement of such full payment
and performance being received by the Borrower. 

7. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES. 

To induce Lender to make the Loans, the Credit
Parties make the following representations and warranties to Lender, each of
which shall be true and correct in all material respects as of the date of the
execution and delivery of this Agreement and as of the date of each Revolving Loan
made hereunder, except to the extent such representation expressly relates to
an earlier date, and which shall survive the execution and delivery of this
Agreement:


7.1             
  Subsidiaries.  A list of all of the Borrower’s
Subsidiaries and each of the Guarantor’s Subsidiaries are listed on Schedule
7.1 hereto.  All of such Subsidiaries are wholly-owned Subsidiaries of
the Borrower or a Guarantor, as applicable, and except for such Subsidiaries as
listed on Schedule 7.1, no Borrower or Guarantor has any Control
over, any other Person.

7.2             
  Borrower Organization and Name.  Each Credit Party is a
corporation, limited liability company, or other form of legally recognized
entity, as applicable, duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and has the full power and
authority and all necessary Permits to: (i) enter into and execute this
Agreement and the Loan Documents and to perform all of its obligations hereunder
and thereunder; and (ii) own and operate its assets and properties and to
conduct and carry on its business as and to the extent now conducted.  Each
Credit Party is duly qualified to transact business and is in good standing as
a foreign corporation, company or other entity in each jurisdiction where the
character of its business or the ownership or use and operation of its assets
or properties requires such qualification.  The exact legal names of each of
the Credit Parties is as set forth in the first paragraph of this Agreement,
and the Credit Parties do not currently conduct, nor have the Credit Parties
conducted, during the last five (5) years, business under any other name or
trade name, except for Darlington Mines, Ltd. 

7.3             
  Authorization; Validity.  Each Credit Party has full
right, power and authority to enter into this Agreement, to make the borrowings
and execute and deliver the Loan Documents as provided herein and to perform
all of its duties and obligations under this Agreement and the Loan Documents
and no other action or consent on the part of the Credit Parties, its board of
directors, stockholders, members, managers, partners, or any other Person is
necessary or required by the Credit Parties to execute this Agreement and the
Loan Documents, consummate the transactions contemplated herein and therein,
and perform all of its obligations hereunder and thereunder.  The execution and
delivery of this Agreement and the Loan Documents will not, nor will the
observance or performance of any of the matters and things herein or therein
set forth, violate or contravene any provision of law or of the Credit Parties’
articles of incorporation, bylaws, operating agreement, partnership agreement,
or other governing documents.  All necessary and appropriate action has been
taken on the part of the Credit Parties to authorize the execution and delivery
of this Agreement and the Loan Documents and the issuance of the Revolving
Note.  This Agreement and the Loan Documents are valid and binding agreements
and contracts of the Credit Parties, enforceable against the Credit Parties in
accordance with their respective terms, except to the extent that enforcement
thereof may be limited by bankruptcy,

37



 insolvency, reorganization, moratorium
and other laws enacted for the relief of debtors generally and other similar
laws affecting the enforcement of creditors’ rights generally or by equitable
principles which may affect the availability of specific performance and other
equitable remedies.  The Credit Parties do not know of any reason why the
Credit Parties cannot perform any of its obligations under this Agreement, the
Loan Documents or any related agreements. 

7.4             
  Capitalization.  The authorized capital stock or other
capitalization of each Credit Party, as applicable, is as set forth in Schedule
7.4(a) attached hereto.  Schedule 7.4(a) shall specify,
for each Credit Party, the total number of authorized shares of capital stock
or other securities (or functional equivalents thereof in the applicable
jurisdiction), and of such authorized shares or securities, the number which
are designated as Common Stock, the number designated as preferred stock (the “Preferred
Stock”), or any other applicable designations.  Schedule 7.4(a) shall also specify, for each Credit Party, as applicable, as of the date
hereof, the number of shares of Common Stock issued and outstanding and the
number of shares of Preferred Stock issued and outstanding, or, if applicable,
the number and classes of other securities issued and outstanding, and the
names and amounts of such stock other securities owned by each Person who is a
stockholder or owner of other securities in any Credit Party. All of the
outstanding shares of capital stock or other securities of each Credit Party
are validly issued, fully paid and non-assessable, have been issued in
compliance with all foreign, federal and state securities laws and none of such
outstanding shares or other securities were issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities. 
As of the date of this Agreement, no shares of capital stock or other
securities of any Credit Party are subject to preemptive rights or any other
similar rights or any Liens suffered or permitted by any Credit Parties. The
Common Stock is currently quoted by the OTC Markets on the QX under the trading
symbol “PLSB”.  The Borrower has received no notice,
either oral or written, with respect to the continued eligibility of the Common
Stock for quotation on the Principal Trading Market, and the Borrower has
maintained all requirements on its part for the continuation of such quotation.
 Except for the securities to be issued pursuant to this Agreement, and
except as set forth in Schedule 7.4(b), as of the date of this
Agreement: (i) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock or other
securities of any Credit Party, or contracts, commitments, understandings or
arrangements by which any Credit Party is or may become bound to issue
additional shares of capital stock or other securities of any Credit Party, or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock or other securities of any Credit Party; (ii) there are
no outstanding debt securities, notes, credit agreements, credit facilities or
other contracts or instruments evidencing Funded Indebtedness of any Credit
Party, or by which any Credit Party is or may become bound; (iii) there
are no outstanding registration statements with respect to any Credit Party or
any of its securities and there are no outstanding comment letters from any
Governmental Authority with respect to any securities of any Credit Party;
(iv) there are no agreements or arrangements under which any Credit Party is
obligated to register the sale of any of its securities under the Securities
Act or any other laws of any Governmental Authority; (v) there are no financing
statements or other security interests or Liens filed with any Governmental
Authority securing any obligations of any Credit Party, or filed in connection
with any assets or properties of any Credit Party; (vi) there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by this Agreement or any related agreement or the
consummation of the transactions 

38



 described herein or therein; and (vii) there
are no outstanding securities or instruments of any Credit Party which contain
any redemption or similar provisions, and there are no contracts or agreements
by which any Credit Party is or may become bound to redeem a security of any
Credit Party.  Borrower has furnished to the Lender true, complete and correct
copies of, as applicable, each Credit Parties’ respective articles of
incorporation (including any certificates of designation, is applicable),
bylaws, operating agreement, partnership agreement, certificate of organization
or similar organizational and governing documents.  Except for the documents
delivered to Lender in accordance with the immediately preceding sentence,
there are no other shareholder agreements, voting agreements, operating
agreements, or other contracts or agreements of any nature or kind that
restrict, limit or in any manner impose obligations, restrictions or
limitations on the governance of any Credit Party. 

7.5             
  No Conflicts; Consents and Approvals.  The execution, delivery 
and performance of this Agreement and the Loan Documents, and the consummation
of the transactions contemplated hereby and thereby, including the issuance of
the Revolving Note, will not: (i) constitute a violation of or conflict with
the any Credit Parties’ respective articles of incorporation (including any
certificates of designation, is applicable), bylaws, operating agreement,
partnership agreement, certificate of organization or similar governing or
organizational documents; (ii) constitute a violation of, or a default or
breach under (either immediately, upon notice, upon lapse of time, or both), or
conflicts with, or gives to any other Person any rights of termination,
amendment, acceleration or cancellation of, any provision of any contract or
agreement to which any Credit Party is a party or by which any of its or their
assets or properties may be bound; (iii) constitute a violation of, or a
default or breach under (either immediately, upon notice, upon lapse of time,
or both), or conflicts with, any order, writ, injunction, decree, or any other
judgment of any nature whatsoever; (iv) constitute a violation of, or conflict
with, any law, rule, ordinance or other regulation (including foreign and United
States federal and state securities laws); or (v) result in the loss or adverse
modification of, or the imposition of any fine, penalty or other Lien, claim or
encumbrance with respect to, any Permit granted or issued to, or otherwise held
by or for the use of, any Credit Party or any of its assets.  The Credit
Parties are not in violation of any Credit Parties’ respective articles of
incorporation (including any certificates of designation, is applicable),
bylaws, operating agreement, partnership agreement, certificate of organization
or similar governing or organizational documents, as applicable, and the Credit
Parties are not in default or breach (and no event has occurred which with
notice or lapse of time or both could put any Credit Party in default or breach)
under, and the Credit Parties have not taken any action or failed to take any
action that would give to any other Person any rights of termination,
amendment, acceleration or cancellation of, any contract or agreement to which any
Credit Party is a party or by which any property or assets of any Credit Party are
bound or affected. No business of any Credit Party is being conducted, and
shall not be conducted, in violation of any law, rule, ordinance or other
regulation. Except as specifically contemplated by this Agreement, the Credit
Parties are not required to obtain any consent or approval of, from, or with any
Governmental Authority, or any other Person, in order for it to execute,
deliver or perform any of its obligations under this Agreement or the Loan
Documents in accordance with the terms hereof or thereof.  All consents and
approvals which any Credit Party is required to obtain pursuant to the immediately
preceding sentence have been obtained or effected on or prior to the Effective
Date. 

39



 
7.6             
  Issuance of Securities. The Advisory Fee Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be
duly issued, fully paid and non-assessable, and free from all Liens, claims,
charges, taxes, or other encumbrances with respect to the issue thereof, and
will be issued in compliance with all applicable United States federal and
state securities laws and the laws of any foreign jurisdiction applicable to
the issuance thereof.  Any shares issuable upon conversion of the Revolving
Notes, in accordance with the terms of the Revolving Notes, are duly authorized
and, upon issuance in accordance with the terms hereof, shall be duly issued,
fully paid and non-assessable, and free from all Liens, claims, charges, taxes,
or other encumbrances with respect to the issue thereof, and will be issued in
compliance with all applicable United States federal and state securities laws
and the laws of any foreign jurisdiction applicable to the issuance thereof.  The issuance of the Revolving Note, any shares issuable
pursuant to the Revolving Note and the Advisory Fee Shares are and will be
exempt from: (i) the registration and prospectus delivery requirements of the Securities
Act; (ii) the registration and/or qualification provisions of all applicable
state and provincial securities and “blue sky” laws; and (iii) any similar
registration or qualification requirements of any foreign jurisdiction or other
Governmental Authority. 

7.7             
  Compliance With Laws.  The nature and transaction of the
Credit Parties’ business and operations and the use of its properties and
assets, including the Collateral or any real estate owned, leased, or occupied
by the Credit Parties, do not and during the term of the Loans shall not,
violate or conflict with any applicable law, statute, ordinance, rule,
regulation or order of any kind or nature, including the provisions of the Fair
Labor Standards Act or any zoning, land use, building, noise abatement,
occupational health and safety or other laws, any Permit or any condition,
grant, easement, covenant, condition or restriction, whether recorded or not,
except to the extent such violation or conflict would not result in a Material
Adverse Effect. 

7.8             
  Environmental Laws and Hazardous Substances.  Except to
the extent that any of the following would not have a Material Adverse Effect
(including financial reserves, insurance policies and cure periods relating to
compliance with applicable laws and Permits) and are used in such amounts as
are customary in the Ordinary Course of Business in compliance with all
applicable Environmental Laws, the Credit Parties represent and warrant to
Lender that, to the best knowledge of each of the Credit Parties: (i) the
Credit Parties have not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off any of the premises of the Credit Parties (whether or not owned by the
Credit Parties) in any manner which at any time violates any Environmental Law
or any Permit, certificate, approval or similar authorization thereunder; (ii) the
operations of the Credit Parties comply in all material respects with all
Environmental Laws and all Permits certificates, approvals and similar
authorizations thereunder; (iii) there has been no investigation, Proceeding,
complaint, order, directive, claim, citation or notice by any Governmental
Authority or any other Person, nor is any of same pending or, to Credit
Parties’ knowledge, threatened; and (iv) the Credit Parties do not have any
liability, contingent or otherwise, in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Material. 

40



 
7.9             
  Collateral Representations.  No Person other than the
Credit Parties, owns or has other rights in the Collateral, and the Collateral
is valid and genuine Collateral, free from any Lien of any kind, other than the
Lien of Lender and Permitted Liens. 

7.10         
  Financial Statements. The Borrower has delivered to the Lender
an audited consolidated Balance Sheet and Statement of Income for fiscal year
ending December 31, 2014, and an unaudited consolidated Balance Sheet and
Statement of Income as of June 30, 2015 (collectively, together with any
financial statements filed by the Borrower with the SEC, any Principal Trading
Market, or any other Governmental Authority, if applicable, the “Financial
Statements”).  The Financial Statements have been prepared in
accordance with GAAP, consistently applied, 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 exclude footnotes or may be condensed or summary statements), and
fairly and accurately present in all material respects the consolidated
financial position of the Credit Parties as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).  To the best knowledge of the Credit Parties, no other
information provided by or on behalf of the Credit Parties to the Lender,
either as a disclosure schedule to this Agreement, or otherwise in connection
with Lender’s due diligence investigation of the Credit Parties, contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading. 

7.11         
  Public Documents.  The Common Stock of the Borrower is
registered pursuant to Section 12 of the Exchange Act and the Borrower is subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act.  The Borrower
has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC, the Principal Trading Market, or any
other Governmental Authority, as applicable (all of the foregoing filed within
the two (2) years preceding the date hereof or amended after the date hereof
and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being hereinafter
referred to as the “Public Documents”). The Borrower is current
with its filing obligations with the SEC, the Principal Trading Market, or any
other Governmental Authority, as applicable, and all Public Documents have been
filed on a timely basis by the Borrower. The Borrower represents and warrants
that true and complete copies of the Public Documents are available on the SEC
website or the Principal Trading Market website, as applicable (www.sec.gov, or
www.otcmarkets.com) at no charge to Lender, and Lender acknowledges that it may
retrieve all Public Documents from such websites and Lender’s access to such
Public Documents through such website shall constitute delivery of the Public
Documents to Lender; provided, however, that if Lender is unable to obtain any
of such Public Documents from such websites at no charge, as result of such
websites not being available or any other reason beyond Lender’s control, then
upon request from Lender, the Borrower shall deliver to Lender true and
complete copies of such Public Documents.  The Borrower shall also deliver to
Lender true and complete copies of all draft filings, reports, schedules,
statements and other documents required to be filed with the requirements of
the Principal Trading Market that have been prepared but not filed with the
Principal Trading Market as of the date hereof. None of the Public Documents,
at the time they were filed with the SEC, the Principal Trading Market, or
other Governmental Authority, as applicable, contained any untrue statement of
a material fact or

41



 omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  None of the
statements made in any such Public Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have
been amended or updated in subsequent filings prior the date hereof, which
amendments or updates are also part of the Public Documents).  As of their
respective dates, the consolidated financial statements of the Borrower and its
Subsidiaries included in the Public Documents complied in all material respects
with applicable accounting requirements and any published rules and regulations
of the SEC and Principal Trading Market with respect thereto. 

7.12         
  Absence of Certain Changes.  Since the date of the most
recent of the Financial Statements, none of the following have occurred: 

(a)                     
  There has been no event or circumstance of any nature whatsoever
that has resulted in, or could reasonably be expected to result in, a Material
Adverse Effect; or 

(b)                    
  Any transaction, event, action, development, payment, or any
other matter of any nature whatsoever entered into by the Credit Parties other
than in the Ordinary Course of Business of the Credit Parties. 

7.13         
  Litigation and Taxes.  There is no Proceeding pending, or
to the best knowledge of the Credit Parties, threatened, against any Credit
Party or its officers, managers, members, shareholders or other principals, or
against or affecting any of its assets.  In addition, there is no outstanding
judgments, orders, writs, decrees or other similar matters or items against or
affecting the Credit Parties, its business or assets.  The Credit Parties have not
received any material complaint from any Customer, supplier, vendor or employee. 
The Credit Parties have duly filed all applicable income or other tax returns
and has paid all income or other taxes when due.  There is no Proceeding,
controversy or objection pending or threatened in respect of any tax returns of
the Credit Parties. 

7.14         
  Event of Default.  No Event of Default has occurred and is
continuing, and no event has occurred and is continuing which, with the lapse
of time, the giving of notice, or both, would constitute such an Event of
Default under this Agreement or any of the other Loan Documents, and the Credit
Parties are not in default (without regard to grace or cure periods) under any
contract or agreement to which it is a party or by which any of their
respective assets are bound. 

7.15         
  ERISA Obligations.  To the best knowledge of each of the
Credit Parties, all Employee Plans of the Credit Parties meet the minimum
funding standards of Section 302 of ERISA, where applicable, and each such
Employee Plan that is intended to be qualified within the meaning of Section
401 of the Internal Revenue Code of 1986 is qualified.  No withdrawal liability
has been incurred under any such Employee Plans and no “Reportable Event” or
“Prohibited Transaction” (as such terms are defined in ERISA), has occurred
with respect to any such Employee Plans, unless approved by the appropriate Governmental
Authority.  To the best knowledge of each of the Credit Parties, the Credit
Parties have promptly paid and discharged all obligations and liabilities
arising under the ERISA of a character which if unpaid or unperformed might
result in the imposition of a Lien against any of its properties or assets. 

42



 
7.16         
  Adverse Circumstances.  No condition, circumstance, event,
agreement, document, instrument, restriction, litigation or Proceeding (or
threatened litigation or Proceeding or basis therefor) exists which: (i) could
adversely affect the validity or priority of the Liens granted to Lender under
the Loan Documents; (ii) could adversely affect the ability of the Credit
Parties to perform its obligations under the Loan Documents; (iii) would
constitute a default under any of the Loan Documents; (iv) would constitute
such a default with the giving of notice or lapse of time or both; or (v) would
constitute or give rise to a Material Adverse Effect. 

7.17         
  Liabilities and Indebtedness of the Borrower.  The Credit
Parties do not have any Funded Indebtedness or any liabilities or obligations
of any nature whatsoever, except: (i) as disclosed in the Financial Statements;
or (ii) liabilities and obligations incurred in the Ordinary Course of Business
since the date of the last Financial Statements which do not or would not,
individually or in the aggregate, exceed Ten Thousand and No/100 United States Dollars
(US$10,000.00) or otherwise have a Material Adverse Effect. 

7.18         
  Real Estate. 

(a)                     
  Real Property Ownership.  Except for the Credit Party Leases
and as otherwise disclosed in Schedule 7.18, Borrower does not
own any Real Property.

(b)                    
  Real Property Leases.  Except for ordinary leases for
office space from which the Credit Parties conduct its business (the “Credit
Party Leases”), the Credit Parties do not lease any other Real
Property.  With respect to each of the Credit Party Leases: (i) the Credit
Parties have been in peaceful possession of the property leased thereunder and
neither the Credit Parties nor the landlord is in default thereunder; (ii) no
waiver, indulgence or postponement of any of the obligations thereunder has
been granted by the Credit Parties or landlord thereunder; and (iii) there
exists no event, occurrence, condition or act known to the officers or
directors of the Credit Parties which, upon notice or lapse of time or both,
would be or could become a default thereunder or which could result in the
termination of the Credit Party Leases, or any of them, or have a Material
Adverse Effect.  The Credit Parties have not violated nor breached any
provision of any such Credit Party Leases, and all obligations required to be
performed by the Credit Parties under any of such Credit Party Leases have been
fully, timely and properly performed.  The Credit Parties have delivered to the
Lender true, correct and complete copies of all Credit Party Leases, including
all modifications and amendments thereto, whether in writing or otherwise.  The
Credit Parties have not received any written or oral notice to the effect that
any of the Credit Party Leases will not be renewed at the termination of the
term of such Credit Party Leases, or that the Credit Party Leases will be
renewed only at higher rents. 

7.19         
  Material Contracts.  An accurate, current and complete
copy of each of the Material Contracts has been furnished to Lender, and each
of the Material Contracts constitutes the entire agreement of the respective
parties thereto relating to the subject matter thereof.  There are no
outstanding offers, bids, proposals or quotations made by any Credit Party
which, if accepted, would create a Material Contract with any Credit Party. 
Each of the Material Contracts is in full force and effect and is a valid and binding
obligation of the parties thereto in accordance with the terms and conditions
thereof.  To the best knowledge of each Credit Party, all obligations required
to be performed under the terms of each of the Material Contracts by any party
thereto have been fully performed by all parties thereto, and no party to any Material
Contracts is in default with respect to any term or condition thereof, nor has
any event occurred which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or would cause the acceleration
or modification of any obligation of any party thereto or the creation of any Lien,
claim, charge or other encumbrance upon any of the assets or properties of any
Credit Party.  Further, no Credit Party has received any notice, nor does any Credit
Party have any knowledge, of any pending or contemplated termination of any of
the Material Contracts and, no such termination is proposed or has been
threatened, whether in writing or orally. 

43



 
7.20         
  Title to Assets.  The Credit Parties have good and marketable
title to, or a valid leasehold interest in, all of its assets and properties
which are material to its business and operations as presently conducted, free and
clear of all Liens, claims, charges or other encumbrances or restrictions on
the transfer or use of same.  Except as would not have a Material Adverse
Effect, the assets and properties of each Credit Party are in good operating
condition and repair, ordinary wear and tear excepted, and are free of any
latent or patent defects which might impair their usefulness, and are suitable
for the purposes for which they are currently used and for the purposes for
which they are proposed to be used. 

7.21         
  Intellectual Property. The Credit Parties own or possess
adequate and legally enforceable rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and all other intellectual property rights necessary
to conduct its business as now conducted (collectively, the “IP Rights”). 
All IP Rights, and any federal, state, local or foreign patent and trademark
office, or functional equivalent thereof where any such IP Rights may be filed
or registered, is set forth in Schedule 7.21.  All of the IP
Rights are owned by the Credit Parties, except for IP rights licensed by the
Credit Parties, which licensed IP Rights are specifically outlined and
described in Schedule 7.21.  If any IP Rights are licensed by any
Credit Party, the underlying license agreement or other agreement pursuant to
which such IP Rights are licensed (collectively, the “License Agreements”),
permits Lender to encumber such License Agreements without any further consent
or approval of any other Person, including the underlying owner of such IP
Rights, such that if there was an Event of Default and Lender foreclosed on all
Collateral, Lender would have the right to use such IP Rights under the License
Agreements, subject only to Lender’s obligation to comply with the terms of
such License Agreements.  The Credit Parties do not have any knowledge of any
infringement by any Credit Party of any IP Rights of others, and, to the
knowledge of the Credit Parties, there is no claim, demand or Proceeding, or
other demand of any nature being made or brought against, or to any Credit
Party’s knowledge, being threatened against, any Credit Party regarding IP
Rights or other intellectual property infringement; and is the Credit Parties
are not aware of any facts or circumstances which might give rise to any of the
foregoing. 

7.22         
  Labor and Employment Matters.  The Credit Parties are not
involved in any labor dispute or, to the knowledge of the Credit Parties, is
any such dispute threatened. To the knowledge of the Credit Parties and its
officers, none of the employees of any Credit Party is a member of a union and the
Credit Parties believe that its relations with its employees are good.  To the
knowledge of the Credit Parties and its officers, the Credit Parties have complied
in all material respects with all laws, rules, ordinances and regulations
relating to employment matters, civil rights and equal employment
opportunities. 

44



 
7.23         
  Insurance.  The Credit Parties are each covered by valid,
outstanding and enforceable policies of insurance which were issued to it by
reputable insurers of recognized financial responsibility, covering its
properties, assets and business against losses and risks normally insured
against by other corporations or entities in the same or similar lines of
businesses as the Credit Parties are engaged and in coverage amounts which are
prudent and typically and reasonably carried by such other corporations or
entities (the “Insurance Policies”).  Such Insurance Policies are
in full force and effect, and all premiums due thereon have been paid.  None of
the Insurance Policies will lapse or terminate as a result of the transactions
contemplated by this Agreement.  The Credit Parties have complied with the
provisions of such Insurance Policies.  The Credit Parties have not been
refused any insurance coverage sought or applied for and the Credit Parties do
not have any reason to believe that it will not be able to renew its existing Insurance
Policies as and when such Insurance Policies expire or to obtain similar
coverage from similar insurers as may be necessary to continue its business at
a cost that would not materially and adversely affect the condition, financial
or otherwise, or the earnings, business or operations of the Credit Parties. 

7.24         
  Permits.  The Credit Parties possess all Permits necessary
to conduct its business, and the Credit Parties have not received any notice
of, or is otherwise involved in, any Proceedings relating to the revocation or
modification of any such Permits.  All such Permits are valid and in full force
and effect and the Credit Parties are in full compliance with the respective
requirements of all such Permits. 

7.25         
  Lending Relationship.  The Credit Parties acknowledge and
agree that the relationship hereby created with Lender is and has been
conducted on an open and arm’s length basis in which no fiduciary relationship
exists and that Borrower has not relied, nor is relying on, any such fiduciary
relationship in executing this Agreement and in consummating the Loans. 

7.26         
  Compliance with Regulation U.  No portion of the proceeds
of the Loans shall be used by Borrower, or any Affiliates of Borrower, either
directly or indirectly, for the purpose of purchasing or carrying any margin
stock, within the meaning of Regulation U as adopted by the Board of Governors
of the Federal Reserve System. 

7.27         
  Governmental Regulation.  The Credit Parties are not, nor
after giving effect to any Loan, will be, subject to regulation under the
Public Utility Holding Borrower Act of 1935, the Federal Power Act or the Investment
Company Act of 1940 or to any federal or state statute or regulation limiting
its ability to incur indebtedness for borrowed money. 

7.28         
  Bank Accounts.  Schedule 7.28 sets forth,
with respect to each account of the Credit Parties with any bank, broker, Payment
Processing Company, or other depository institution: (i) the name and account
number of such account; (ii) the name and address of the institution where such
account is held; (iii) the name of any Person(s) holding a power of attorney
with respect to such account, if any; and (iv) the names of all authorized
signatories and other Persons authorized to withdraw funds from each such
account.

7.29         
  Places of Business.  The principal place of business of each
of the Credit Parties is set forth on Schedule 7.29 and the
Credit Parties shall promptly notify Lender of any change in such location.  The
Credit Parties will not remove or permit the Collateral to be removed from 

45



 such
locations without the prior written consent of Lender, except for: (i) certain
heavy equipment kept at third party sites when conducting business or
maintenance; (ii) vehicles, containers and rolling stock; (iii) Inventory sold
or leased in the Ordinary Course of Business of the Credit Parties; and (iv)
temporary removal of Collateral to other locations for repair or maintenance as
may be required from time to time in each instance in the Ordinary Course of
Business of the Credit Parties. 

7.30         
  Illegal Payments.  Neither the Credit Parties, nor any
director, officer, member, manager,  agent, employee or other Person acting on
behalf of the Credit Parties has, in the course of his actions for, or on
behalf of, the Credit Parties: (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee. 

7.31         
  Related Party Transactions.  Except for arm’s length
transactions pursuant to which the Credit Parties make payments in the Ordinary
Course of Business of the Credit Parties upon terms no less favorable than the
Credit Parties could obtain from third parties, none of the officers,
directors, managers, or employees of the Credit Parties, nor any stockholders,
members or partners who own, legally or beneficially, five percent (5%) or more
of the ownership interests of the Credit Parties (each a “Material
Shareholder”), is presently a party to any transaction with the Credit
Parties (other than for services as employees, officers and directors),
including any contract providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from, any officer, director or such employee or
Material Shareholder or, to the best knowledge of the Credit Parties, any other
Person in which any officer, director, or any such employee or Material
Shareholder has a substantial or material interest in or of which any officer,
director or employee of Borrower or Material Shareholder is an officer,
director, trustee or partner.  There are no claims, demands, disputes or
Proceedings of any nature or kind between the Credit Parties and any officer,
director or employee of the Credit Parties or any Material Shareholder, or
between any of them, relating to the Credit Parties. 

7.32         
  Internal Accounting Controls.  The Credit Parties maintain
a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. 

7.33         
  Brokerage Fees.  There is no Person acting on behalf of the
Credit Parties who is entitled to or has any claim for any brokerage or
finder’s fee or commission in connection with the execution of this Agreement
or the consummation of the transactions contemplated hereby. 

46



 
7.34         
  Acknowledgment Regarding Lender’s Loans. The Credit
Parties acknowledge and agree that Lender is acting solely in the capacity of
an arm’s length lender with respect to this Agreement and the transactions
contemplated hereby. The Credit Parties further acknowledge that Lender is not
acting as a financial advisor or fiduciary of the Credit Parties (or in any
similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by Lender or any of its representatives
or agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to the making of the Loans hereunder by Lender. The
Credit Parties further represent to Lender that the Credit Parties’ decision to
enter into this Agreement has been based solely on the independent evaluation
by the Credit Parties and its representatives. 

7.35         
  Seniority.  No Funded Indebtedness or other equity or debt
security of the Credit Parties is senior to the Obligations in right of payment,
whether with respect to interest or upon liquidation or dissolution, or
otherwise. 

7.36         
  No General Solicitation.  Neither the Credit Parties, nor
any of its Affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or issuance of the Revolving Note. 

7.37         
  No Integrated Offering.  Neither the Credit Parties, 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 require
registration of the Revolving Note under the Securities Act or any similar laws
of any foreign jurisdiction, or cause this offering of such securities to be
integrated with prior offerings by the Credit Parties for purposes of the
Securities Act or any similar laws of any foreign jurisdiction. 

7.38         
  Private Placement.  Assuming the accuracy of the Lender’s
representations and warranties set forth in Section 8 below, no
registration under the Securities Act or the laws, rules or regulation of any
other Governmental Authority is required for the issuance of the Revolving
Note.

7.39         
  Complete Information.  This Agreement and all financial
statements, schedules, certificates, confirmations, agreements, contracts, and
other materials submitted to Lender in connection with or in furtherance of
this Agreement by or on behalf of the Credit Parties fully and fairly states
the matters with which they purport to deal, and do not misstate any material
fact nor, separately or in the aggregate, fail to state any material fact
necessary to make the statements made not misleading. 

7.40         
  Interpretation; Reliance; Survival.  Each warranty and
representation made by the Credit Parties in this Agreement or pursuant hereto,
or in any other Loan Documents, is independent of all other warranties and
representations made by the Credit Parties in this Agreement or pursuant hereto,
or in any other Loan Documents (whether or not covering identical, related or
similar matters) and must be independently and separately satisfied. 
Exceptions or qualifications to any such warranty or representation shall not
be construed as exceptions or qualifications to any other warranty or
representation.  Notwithstanding any investigation made by Lender or any of its
agents or representatives, or any rights to conduct 

47



 such investigations, and
notwithstanding any knowledge of facts determined or determinable by Lender as
a result of such investigation or right of investigation, the Lender has the
unqualified right to rely upon the representations and warranties made by the Credit
Parties in this Agreement and in the Schedules attached hereto or pursuant
hereto, or in any other Loan Documents.  Each and every representation and
warranty of the Credit Parties made herein, pursuant hereto, or in any other
Loan Documents has been relied upon by Lender, and is material to the decision
of the Lender to enter into this Agreement and to make the Loans contemplated
herein.  All representations and warranties of the Credit Parties made in this
Agreement or pursuant hereto, or in any other Loan Documents, shall survive the
Effective Date, the consummation of any Loans made hereunder, and any
investigation, and shall be deemed and construed as continuing representations
and warranties. 

8. REPRESENTATIONS AND WARRANTIES OF LENDER. 

Lender makes the following
representations and warranties to the Borrower, each of which shall be true and
correct in all material respects as of the date of the execution and delivery
of this Agreement and as of the date of each Loan made hereunder, except to the
extent such representation expressly relates to an earlier date, and which shall
survive the execution and delivery of this Agreement: 

8.1             
  Investment Purpose. Lender is acquiring the Revolving Note
for its own account, for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the Securities Act.

8.2             
  Accredited Investor Status. Lender is an “Accredited Investor”
  as that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act. 

8.3             
  Reliance on Exemptions. Lender understands that the
Revolving Note is being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and
state securities laws and that Borrower is relying in part upon the truth and
accuracy of, and Lender’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Lender set forth herein in
order to determine the availability of such exemptions and the eligibility of
Lender to acquire such securities. 

8.4             
  Information. Lender has been furnished with all materials
it has requested relating to the business, finances and operations of the
Credit Parties and information deemed material by Lender to making an informed
investment decision regarding the Revolving Note. Lender has been afforded the
opportunity to ask questions of the Credit Parties and its management.  Neither
such inquiries nor any other due diligence investigations conducted by Lender
or its representatives shall modify, amend or affect Lender’s right to rely on the
Credit Parties’ representations and warranties contained in Article 7
above or elsewhere in this Agreement or in any other Loan Documents. Lender
understands that its investment in the Revolving Note involves a high degree of
risk. Lender is in a position regarding the Credit Parties, which, based upon
economic bargaining power, enabled and enables Lender to obtain information
from the Credit Parties in order to evaluate the merits and risks of this
investment. Lender has sought such accounting, legal and tax advice, as it has
considered necessary to make an informed investment decision with respect to
the Revolving Note.

48



 
8.5             
  No Governmental Review. Lender understands that no United
States federal or state agency or any other Governmental Authority has passed
on or made any recommendation or endorsement of the Revolving Note, or the
fairness or suitability of the investment in the Revolving Note, nor have such
authorities passed upon or endorsed the merits of the offering of the Revolving
Note.

8.6             
  Transfer or Resale.  Lender understands that: (i) the
Revolving Note has not been and is not being registered under the Securities
Act or any other foreign or state securities laws, and may not be offered for
sale, sold, assigned or transferred unless: (A) subsequently registered
thereunder; or (B) such securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration
requirements; and (ii) neither the Credit Parties nor any other Person is under
any obligation to register such securities under the Securities Act or any
foreign or state securities laws or to comply with the terms and conditions of
any exemption thereunder, except as otherwise set forth in this Agreement. 

8.7             
  Authorization, Enforcement.  This Agreement has been duly
and validly authorized, executed and delivered on behalf of Lender and is a
valid and binding agreement of Lender enforceable in accordance with its terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies. 

8.8             
  Due Formation of Lender. Lender is an entity that has been
formed and validly exists and has not been organized for the specific purpose
of purchasing the Revolving Note and is not prohibited from doing so.

8.9             
  No Legal Advice from Credit Parties. Lender acknowledges
that it had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and investment
and tax advisors. Lender is relying solely on such counsel and advisors and not
on any statements or representations of the Credit Parties or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction; provided, however, the foregoing shall not
modify, amend or affect Lender’s right to rely on the Credit Parties’ representations
and warranties contained in Article 7 above or in any other Loan
Documents.

9. NEGATIVE COVENANTS. 

9.1             
  Indebtedness.  The Credit Parties shall not, either
directly or indirectly, create, assume, incur or have outstanding any Funded
Indebtedness (including purchase money indebtedness), or become liable, whether
as endorser, guarantor, surety or otherwise, for any debt or obligation of any
other Person, except: 

(a)                     
the Obligations; 

(b)                    
  endorsement for collection or deposit of any commercial paper
secured in the Ordinary Course of Business of the Credit Parties; 

49



 
(c)                     
  obligations for taxes, assessments, municipal or other
governmental charges; provided, the same are being contested in good
faith by appropriate Proceedings and are insured against or bonded over to the
satisfaction of Lender;

(d)                    
obligations for accounts payable, other than for money borrowed,
incurred in the Ordinary Course of Business of the Credit Parties; provided that
any fees or other sums, other than salary accrued in the Credit Parties’ Ordinary
Course of Business, payable by the Credit Parties to any officer, director, member,
manager, principal, or Material Shareholder, shall be fully subordinated in
right of payment to the prior payment in full of the Obligations hereunder; 

(e)                     
  unsecured intercompany Funded Indebtedness incurred in the Ordinary
Course of Business of the Credit Parties; 

(f)                     
  Funded Indebtedness existing on the Effective Date and set forth
in the Financial Statements, including any extensions or refinancings of the
foregoing, which do not increase the principal amount of such Funded
Indebtedness as of the date of such extension or refinancing; provided such
Funded Indebtedness is subordinated to the Obligations owed to Lender pursuant
to a subordination agreement, in form and content acceptable to Lender in its
sole discretion, which shall include an indefinite standstill on remedies and
payment blockage rights during any default; 

(g)                    
  Funded Indebtedness consisting of Capital Lease obligations or
secured by Permitted Liens of the type described in clause (vii) of the
definition thereof not to exceed Fifty Thousand and No/100 United States
Dollars (US$50,000.00) in the aggregate at any time; 

(h)                    
  Contingent Liabilities arising with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions permitted hereunder; 

(i)                      
unsecured Funded Indebtedness not to exceed Three Hundred Fifty
Thousand and No/100 United States Dollars (U$350,000.00) with Lender’s prior
written consent, which consent may be granted or withheld by Lender in its sole
and absolute discretion. 

(j)                      
  Contingent Liabilities incurred in the Ordinary Course of
Business with respect to surety and appeal bonds, performance bonds and other
similar obligations; and 

(k)                    
  Contingent Liabilities arising under indemnity agreements to
title insurers to cause such title insurers to issue to Lender title insurance
policies. 

9.2             
  Encumbrances.  The Credit Parties shall not, either
directly or indirectly, create, assume, incur or suffer or permit to exist any
Lien or charge of any kind or character upon any asset of the Credit Parties,
whether owned at the date hereof or hereafter acquired, except Permitted Liens
or as otherwise authorized by Lender in writing. 

9.3             
  Investments.  The Credit Parties shall not, either
directly or indirectly, make or have outstanding any new investments (whether
through purchase of stocks, obligations or otherwise) in, or loans or advances
to, any other Person, or acquire all or any substantial part of the assets,
business, stock or other evidence of beneficial ownership of any other Person,
except following: 

50



 
(a)                     
  The stock or other ownership interests in a Subsidiary existing
as of the Effective Date; 

(b)                    
  investments in direct obligations of the United States or any
state in the United States; 

(c)                     
  trade credit extended by the Credit Parties in the Ordinary
Course of Business of the Credit Parties; 

(d)                    
  investments in securities of Customers received pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of such Customers; 

(e)                     
  investments existing on the Effective Date and set forth in the
Financial Statements; 

(f)                     
  Contingent Liabilities permitted pursuant to Section 9.1;
or

(g)                    
  Capital Expenditures permitted under Section 9.5.

9.4             
  Transfer; Merger.  The Credit Parties shall not, either
directly or indirectly, permit a Change in Control, merge, consolidate, sell,
transfer, license, lease, encumber or otherwise dispose of all or any part of
its property or business or all or any substantial part of its assets, or sell
or discount (with or without recourse) any of its Notes (as defined in the
UCC), Chattel Paper, Payment Intangibles or Accounts; provided, however,
that the Credit Parties may:

(a)                     
  sell or lease Inventory and Equipment in the Ordinary Course of
Business of the Credit Parties; 

(b)                    
upon not less than three (3) Business Days’ prior written notice
to Lender, any Subsidiary of Borrower may merge with (so long as the Borrower
remains the surviving entity), or dissolve or liquidate into, or transfer its
property to Borrower; 

(c)                     
dispose of used, worn‐out or surplus equipment in the Ordinary
Course of Business of the Credit Parties; 

(d)                    
  discount or write-off overdue Accounts for collection in the Ordinary
Course of Business of the Credit Parties; 

(e)                     
  sell or otherwise dispose (including cancellation of Funded
Indebtedness) of any Investment permitted under Section 9.3 in the Ordinary
Course of Business of the Credit Parties; and

(f)                     
grant Permitted Liens. 

51



 
9.5             
  Capital Expenditures.  Without Lender’s prior written consent,
the Credit Parties shall not make or incur obligations for any material Capital
Expenditures. 

9.6             
  Issuance of Stock.  The Credit Parties shall not either
directly or indirectly, issue or distribute any additional capital stock or
other securities (including any securities convertible or exercisable into
capital stock or other securities) of any Credit Party without the prior
written consent of Lender, provided however, notwithstanding anything to the
contrary, the Credit Parties shall be permitted to issue capital stock or other
securities, if following the issuance of such capital stock or other
securities, there does not result in a Change in Control. 

9.7             
  Distributions; Restricted Payments; Change in Management. 
The Credit Parties shall not: (i) purchase or redeem any shares of its capital
stock or other securities, or declare or pay any dividends or distributions,
whether in cash or otherwise, set aside any funds for any such purpose, or make
any distribution of any kind to its shareholders, partners, or members, make
any distribution of its property or assets, or make any loans, advances or
extensions of credit to, or investments in, any Persons, including such Credit
Parties’ Affiliates, officers, directors, members, managers, principals, Material
Shareholders, or employees, without the prior written consent of Lender; (ii)
make any payments of any Funded Indebtedness other than as specifically
permitted under the Use of Proceeds Confirmation and as otherwise permitted
hereunder; (iii) increase the annual salary paid to any officers of the Credit
Parties as of the Effective Date, unless any such increase is part of a written
employment contract with any such officers entered into prior to the Effective Date,
a copy of which has been delivered to and approved by the Lender; or (iv) add,
replace, remove, or otherwise change any officers, managers, senior management
positions or Persons with authority to bind the Credit Parties from the
officers, managers, senior management positions, or other such Persons existing
as of the Effective Date, unless approved by Lender in writing. 

9.8             
  Use of Proceeds.  The Credit Parties shall not use any
portion of the proceeds of the Loans, either directly or indirectly, for the
purpose of purchasing any securities underwritten by any Affiliate of Lender. 
In addition, the Credit Parties shall not use any portion of the proceeds of
the Loans, either directly or indirectly, for any of the following purposes:
(i) to make any payment towards any Funded Indebtedness of the Credit Parties or
any Affiliates thereof, except as specifically permitted under the Use of
Proceeds Confirmation; (ii) to pay any taxes of any nature or kind that may be
due by the Credit Parties or any Affiliates thereof; (iii) to pay any
obligations or liabilities of any nature or kind due or owing to any managers, officers,
directors, employees, members, principals, or Material Shareholders of the
Credit Parties or any Affiliates thereof.  The Credit Parties shall only use
the proceeds of the Loans (or any portion thereof) for the purposes set forth
in a “Use of Proceeds Confirmation” to be executed by Borrower on
the Effective Date, unless Borrower obtains the prior written consent of Lender
to use proceeds of Loans for any other purpose, which consent may be granted or
withheld by Lender in its sole and absolute discretion. 

9.9             
  Business Activities; Change of Legal Status and Organizational
Documents.  The Credit Parties shall not: (i) engage in any line of
business other than the businesses engaged in on the date hereof and business
reasonably related thereto; (ii) change its name, its type of organization, its
jurisdictions of organization or other legal structure; or (iii) permit its articles
of incorporation (including any certificates of designation, is applicable),
bylaws, operating

52



 agreement, partnership agreement, certificate of organization
or similar governing or organizational documents to be amended or modified in
any way which could reasonably be expected to have a Material Adverse Effect. 

9.10         
  Transactions with Affiliates.  The Credit Parties shall not
enter into any transaction with any of its Affiliates, except in the Ordinary
Course of Business of the Credit Parties and upon fair and reasonable terms
that are no less favorable to the Credit Parties than it would obtain in a
comparable arm’s length transaction with a Person not an Affiliate of the
Credit Parties. 

9.11         
  Bank Accounts.  The Credit Parties shall not maintain any
bank, deposit or credit card payment processing accounts with any financial
institution, or any other Person, for the Credit Parties or any Affiliate of the
Credit Parties, other than the accounts of the Credit Parties listed in the
attached Schedule 7.28, and other than the Lock Box Account
established pursuant to this Agreement.  Specifically, the Credit Parties shall
not change, modify, close or otherwise affect the Lock Box Account or any of
the other accounts listed in Schedule 7.28, without Lender’s
prior written approval, which approval may be withheld or conditioned in
Lender’s sole and absolute discretion. 

10. AFFIRMATIVE COVENANTS. 

10.1         
  Compliance with Regulatory Requirements.  Upon demand by
Lender, Borrower shall reimburse Lender for Lender’s additional costs and/or
reductions in the amount of principal or interest received or receivable by
Lender if at any time after the date of this Agreement any law, treaty or
regulation or any change in any law, treaty or regulation or the interpretation
thereof by any Governmental Authority charged with the administration thereof
or any other authority having jurisdiction over Lender or the Loans, whether or
not having the force of law, shall impose, modify or deem applicable any
reserve and/or special deposit requirement against or in respect of assets held
by or deposits in or for the account of the Loans by Lender or impose on Lender
any other condition with respect to this Agreement or the Loans, the result of
which is to either increase the cost to Lender of making or maintaining the
Loans or to reduce the amount of principal or interest received or receivable by
Lender with respect to such Loans.  Said additional costs and/or reductions
will be those which directly result from the imposition of such requirement or
condition on the making or maintaining of such Loans. 

10.2         
  Corporate Existence.  The Credit Parties shall at all
times preserve and maintain its: (i) existence and good standing in the
jurisdiction of its organization; and (ii) its qualification to do business and
good standing in each jurisdiction where the nature of its business makes such
qualification necessary (other than such jurisdictions in which the failure to
be qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect), and shall at all times continue as a going concern in
the business which Borrower is presently conducting. 

10.3         
  Maintain Property.  The Credit Parties shall at all times
maintain, preserve and keep its plants, properties and equipment, including,
but not limited to, any Collateral, in good repair, working order and
condition, normal wear and tear excepted, and shall from time to time, as
Borrower deems appropriate in its reasonable judgment, make all needful and
proper repairs, renewals, replacements, and additions thereto so that at all
times the efficiency thereof shall be

53



 fully preserved and maintained.  The
Credit Parties shall permit Lender to examine and inspect such plant,
properties and equipment, including any Collateral, at all reasonable times
upon reasonable notice during business hours.  During the continuance of any
Event of Default, Lender shall, at the Credit Parties’ expense, have the right
to make additional inspections without providing advance notice. 

10.4         
  Maintain Insurance.  The Credit Parties’ shall at all
times insure and keep insured with insurance companies acceptable to Lender, all
insurable property owned by the Credit Parties which is of a character usually
insured by companies similarly situated and operating like properties, against
loss or damage from environmental, fire and such other hazards or risks as are
customarily insured against by companies similarly situated and operating like
properties; and shall similarly insure employers’, public and professional
liability risks.  Prior to the date of the funding of any Loans under this
Agreement, Borrower shall deliver to Lender a certificate setting forth in
summary form the nature and extent of the insurance maintained pursuant to this
Section.  All such policies of insurance must be satisfactory to Lender in
relation to the amount and term of the Obligations and type and value of the
Collateral and assets of the Credit Parties, shall identify Lender as
sole/lender’s loss payee and as an additional insured.  In the event the Credit
Parties fail to provide Lender with evidence of the insurance coverage required
by this Section or at any time hereafter shall fail to obtain or maintain any
of the policies of insurance required above, or to pay any premium in whole or
in part relating thereto, then Lender, without waiving or releasing any
obligation or default by Borrower hereunder, may at any time (but shall be
under no obligation to so act), obtain and maintain such policies of insurance
and pay such premium and take any other action with respect thereto, which
Lender deems advisable.  This insurance coverage: (i) may, but need not, protect
the Credit Parties’ interest in such property, including, but not limited to,
the Collateral; and (ii) may not pay any claim made by, or against, the Credit
Parties in connection with such property, including, but not limited to, the
Collateral.  The Credit Parties may later cancel any such insurance purchased
by Lender, but only after providing Lender with evidence that the insurance
coverage required by this Section is in force.  The costs of such insurance
obtained by Lender, through and including the effective date such insurance
coverage is canceled or expires, shall be payable on demand by the Credit
Parties to Lender, together with interest at the Default Rate on such amounts
until repaid and any other charges by Lender in connection with the placement
of such insurance.  The costs of such insurance, which may be greater than the
cost of insurance which the Credit Parties may be able to obtain on its own,
together with interest thereon at the Default Rate and any other charges by
Lender in connection with the placement of such insurance may be added to the
total Obligations due and owing to the extent not paid by the Credit Parties. 

10.5         
  Tax Liabilities.

(a)                     
  The Credit Parties shall at all times pay and discharge all
property, income and other taxes, assessments and governmental charges upon,
and all claims (including claims for labor, materials and supplies) against the
Credit Parties or any of its properties, Equipment or Inventory, before the
same shall become delinquent and before penalties accrue thereon, unless and to
the extent that the same are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP are being
maintained. 

54



 
(b)                    
  Borrower shall be solely responsible for the payment of any and
all documentary stamps and other taxes in connection with the execution of the
Loan Documents. 

10.6         
  ERISA Liabilities; Employee Plans.  The Credit Parties shall:
(i) keep in full force and effect any and all Employee Plans which are
presently in existence or may, from time to time, come into existence under
ERISA, and not withdraw from any such Employee Plans, unless such withdrawal
can be effected or such Employee Plans can be terminated without liability to the
Credit Parties; (ii) make contributions to all of such Employee Plans in a
timely manner and in a sufficient amount to comply with the standards of ERISA,
including the minimum funding standards of ERISA; (iii) comply with all
material requirements of ERISA which relate to such Employee Plans; (iv) notify
Lender immediately upon receipt by the Credit Parties of any notice concerning
the imposition of any withdrawal liability or of the institution of any Proceeding
or other action which may result in the termination of any such Employee Plans
or the appointment of a trustee to administer such Employee Plans; (v) promptly
advise Lender of the occurrence of any “Reportable Event” or “Prohibited
Transaction” (as such terms are defined in ERISA), with respect to any such
Employee Plans; and (vi) amend any Employee Plan that is intended to be
qualified within the meaning of Section 401 of the Internal Revenue Code of
1986 to the extent necessary to keep the Employee Plan qualified, and to cause
the Employee Plan to be administered and operated in a manner that does not cause
the Employee Plan to lose its qualified status. 

10.7         
  Financial Statements.  The Credit Parties shall at all
times maintain a system of accounting capable of producing its individual and
consolidated financial statements in compliance with GAAP (provided that
monthly financial statements shall not be required to have footnote disclosure,
are subject to normal year-end adjustments and need not be consolidated), and
shall furnish to Lender or its authorized representatives such information
regarding the business affairs, operations and financial condition of the
Credit Parties as Lender may from time to time request or require, including,
but not limited to: 

(a)                     
  If the Revolving Loan Maturity Date is extended beyond the
original term, as soon as available, and in any event, within ninety (90) days
after the close of each fiscal year, a copy of the annual audited consolidated
financial statements of Borrower, including balance sheet, statement of income
and retained earnings, statement of cash flows for the fiscal year then ended,
in reasonable detail, prepared and reviewed by an independent certified public
accountant reasonably acceptable to Lender, containing an unqualified opinion
of such accountant; 

(b)                    
  as soon as available, and in any event, within forty-five (45) days
after the close of each fiscal quarter, a copy of the quarterly unaudited
consolidated financial statements of Borrower, including balance sheet,
statement of income and retained earnings, statement of cash flows for the
fiscal year then ended, in reasonable detail, prepared and certified as
accurate in all material respects by the President, Chief Executive Officer or Chief
Financial Officer of Borrower; and 

(c)                     
  as soon as available, and in any event, within fifteen (15) days
following the end of each calendar month, a consolidated cash flow report of
the Borrower for the 

55



 month then ended, in reasonable detail, prepared and
certified as accurate in all material respects by the President, Chief
Executive Officer or Chief Financial Officer of Borrower. 

No change with respect to such
accounting principles shall be made by the Credit Parties without giving prior
notification to Lender. The Credit Parties represent and warrant to Lender that
the financial statements delivered to Lender at or prior to the execution and
delivery of this Agreement and to be delivered at all times thereafter
accurately reflect and will accurately reflect the financial condition of the
Credit Parties in all material respects. Lender shall have the right at all
times (and on reasonable notice so long as there then does not exist any Event
of Default) during business hours to inspect the books and records of the
Credit Parties and make extracts therefrom.  


Borrower agrees to advise Lender
immediately, in writing, of the occurrence of any Material Adverse Effect, or
the occurrence of any event, circumstance or other happening that could be
reasonably expected to lead to or become a Material Adverse Effect.


10.8         
  Additional Reporting Requirements. Borrower shall provide
the following reports and statements to Lender as follows:

(a)                     
On or prior to the Effective Date, Borrower shall provide to
Lender an income statement or profit and loss statement showing actual results
of the Borrower’s consolidated operations for the prior twelve (12) months, as well
as an income statement projection showing, in reasonable detail, the Borrower’s
consolidated income statement projections for the twelve (12) calendar months
following the Effective Date (the “Income Projections”).  In
addition, on the fifteenth (15th) day of every calendar month after
the Effective Date, the Borrower shall provide to Lender a report comparing the
Income Projections to actual results.  Any variance in the Income Projections
to actual results that is more than ten percent (10%) (either above or below)
will require the Borrower to submit to Lender written explanations as to the
nature and circumstances for the variance. 

(b)                    
  On the seventh (7th) day of every calendar month after
the Effective Date, the Borrower shall provide to Lender a report comparing the
use of the proceeds of the Revolving Loans set forth in the Use of Proceeds
Confirmation, with the actual use of such proceeds.  Any variance in the actual
use of such proceeds from the amounts set forth in the approved Use of Proceeds
Confirmation will require the Borrower to submit to Lender written explanations
as to the nature and circumstances for the variance. 

(c)                     
Borrower shall submit to Lender true and correct copies of all
bank statements (and statements from any other depository accounts, brokerage
accounts, or accounts with any Payment Processing Companies) received by the
Credit Parties within five (5) days after the Credit Parties’ receipt thereof
from its bank. 

(d)                    
  Promptly upon receipt thereof, Borrower shall provide to Lender
copies of interim and supplemental reports, if any, submitted to Borrower by
independent accountants in connection with any interim audit or review of the
books of the Credit Parties. 

(e)                     
  Borrower shall provide Lender view only access to any and all
accounts listed on the attached Schedule 7.28.

56



 
10.9         
  Aged Accounts/Payables Schedules.  If Borrower requires
draws from the facility contemplated hereby at least once a week, then Borrower
shall, on the first (1st) and fifteenth (15th) day of
each and every calendar month, deliver to Lender an aged schedule of the
Accounts of the Credit Parties, listing the name and amount due from each
Customer and showing the aggregate amounts due from: (i) 0-30 days; (ii) 31-60
days; (iii) 61-90 days; (iv) 91-120 days; and (v) more than 120 days, and
certified as accurate by the Chief Financial Officer or the President of
Borrower.  If, however, Borrower requires draws from the facility contemplated
hereby less than once a week, then the aged schedule of Accounts required by
the immediately preceding sentence shall be required to be delivered within
five (5) days after the end of each consecutive calendar month during the term
hereof.  Borrower shall, within five (5) days after the end of each calendar
month, deliver to Lender an aged schedule of the accounts payable of the Credit
Parties, listing the name and amount due to each creditor and showing the
aggregate amounts due from: (v) 0-30 days; (w) 31-60 days; (x) 61-90 days;  (y)
91-120 days; and (z) more than 120 days, and certified as accurate by the Chief
Financial Officer or the President of Borrower.  If the Credit Parties engage
in Point-of-Sale Transaction exclusively, the foregoing requirement to deliver
an aged schedule of the Accounts of the Credit Parties shall not be applicable;
provided, however, in such a circumstance, Lender may request, and the Credit
Parties shall be obligated to deliver to Lender, any other reports or schedules
as Lender may require or request from time to time to evidence or confirm the
Point-of-Sale Transactions. 

10.10      Failure
to Provide Reports.  If at any time during the term of this Agreement,
Borrower shall fail to timely provide any reports required to be provided by any
Credit Party to Lender under this Agreement or any other Loan Document, in
addition to all other rights and remedies that Lender may have under this
Agreement and the other Loan Documents, Lender shall have the right to require,
at each instance of any such failure, upon written notice to Borrower, that the
Borrower redeem 8.33% of the aggregate amount of the Advisory Fee then
outstanding, which cash redemption payment shall be due and payable by wire
transfer of Dollars to an account designated by Lender within five (5) Business
Days from the date the Lender delivers such redemption notice to the Borrower. 

10.11      Covenant
Compliance. Borrower shall, within thirty (30) days after the end of each
calendar month, deliver to Lender a Compliance Certificate showing compliance
by Borrower with the covenants therein, and certified as accurate by the President
or Chief Executive Officer of the Borrower.

10.12      Continued
Due Diligence/Field Audits.  Borrower acknowledges that during the term of
this Agreement, Lender and its agents and representatives undertake ongoing and
continuing due diligence reviews of the Credit Parties and its business and
operations.  Such ongoing due diligence reviews may include, and the Credit
Parties do hereby allow Lender, to conduct site visits and field examinations
of the office locations of the Credit Parties and the assets and records of the
Credit Parties, the results of which must be satisfactory to Lender in Lender’s
sole and absolute discretion.  In this regard, in order to cover Lender’s
expenses of the ongoing due diligence reviews and any site visits or field
examinations which Lender may undertake from time to time while this Agreement
is in effect, the Borrower shall pay to Lender, within five (5) Business Days
after receipt of an invoice or demand therefor from Lender, a fee of up to Five
Thousand and No/100 Dollars (US$5,000.00) per year (based on two (2) expected
field audits and ongoing due diligence of Two Thousand Five Hundred and No/100
Dollars 

57



 (US$2,500) per audit) to cover such ongoing expenses.  Failure to pay
such fee as and when required shall be deemed an Event of Default under this
Agreement and all other Loan Documents.  The foregoing notwithstanding, from
and after the occurrence of an Event of Default or any event which with notice,
lapse of time or both, would become an Event of Default, Lender may conduct
site visits, field examinations and other ongoing reviews of the Credit
Parties’ records, assets and operations at any time, in its sole discretion,
without any limitations in terms of number of site visits or examinations and
without being limited to the fee hereby contemplated, all at the sole expense
of Borrower. 

10.13      Notice
and Other Reports. Borrower shall provide prompt written notice to Lender
if at any time the Credit Parties fail to comply with any of the covenants in Section
11 herein.  In addition, Borrower shall, within such period of time as
Lender may reasonably specify, deliver to Lender such other schedules and
reports as Lender may reasonably require. 

10.14      Collateral
Records. The Credit Parties shall keep full and accurate books and records
relating to the Collateral and shall mark such books and records to indicate
Lender’s Lien in the Collateral including placing a legend, in form and content
reasonably acceptable to Lender, on all Chattel Paper created by the Credit
Parties indicating that Lender has a Lien in such Chattel Paper. 

10.15      Notice
of Proceedings.  Borrower shall, promptly, but not more than ten (10) days
after knowledge thereof shall have come to the attention of any officer of the
Credit Parties, give written notice to Lender of all threatened or pending
actions, suits, and Proceedings before any Governmental Agency or other
administrative agency, or before or involving any other Person, which may have
a Material Adverse Effect. 

10.16      Notice
of Default.  Borrower shall, promptly, but not more than five (5) days
after the commencement thereof, give notice to Lender in writing of the
occurrence of an Event of Default or of any event which, with the lapse of
time, the giving of notice or both, would constitute an Event of Default
hereunder. 

10.17      Environmental
Matters.  If any release or threatened release or other disposal of
Hazardous Substances shall occur or shall have occurred on any real property or
any other assets of the Credit Parties or any Subsidiary or Affiliate of the
Credit Parties, the Credit Parties shall cause the prompt containment and/or
removal of such Hazardous Substances and the remediation and/or operation of
such real property or other assets as necessary to comply with all
Environmental Laws and to preserve the value of such real property or other
assets.  Without limiting the generality of the foregoing, the Credit Parties shall
comply with any Federal or state judicial or administrative order requiring the
performance at any real property of the Credit Parties of activities in
response to the release or threatened release of a Hazardous Substance.  To the
extent that the transportation of Hazardous Substances is permitted by this
Agreement, Borrower shall dispose of such Hazardous Substances, or of any other
wastes, only at licensed disposal facilities operating in compliance with
Environmental Laws. 

10.18      Subsidiaries. 
  Any Subsidiary which is formed or acquired or otherwise becomes a Subsidiary of
the Credit Parties following the date hereof, within five (5) Business Days of
such event, shall become an additional the Credit Party hereto, and the
Borrower shall take any 

58



 and all actions necessary or required by Lender to
cause said Subsidiary to execute a counterpart to this Agreement and any and
all other documents which the Lender shall require, including causing such
party to execute those documents contained in Section 3.21 hereof.

10.19      Reporting
Status; Listing.  So long as this Agreement remains in effect, and for so
long as Lender owns, legally or beneficially, any of the Advisory Fee Shares or
other shares of Common Stock the Borrower shall: (i) file in a timely manner
all reports required to be filed with the Principal
Trading Market, and, to provide a copy thereof to the Lender promptly after
such filing; (ii) if required by the rules and regulations of the
Principal Trading Market, promptly secure the listing of the Advisory Fee
Shares and other shares of the Borrower’s Common Stock issuable to Lender under
any Loan Documents upon the Principal Trading Market (subject to official
notice of issuance) and, take all reasonable action
under its control to maintain the continued listing, quotation and trading of
its Common Stock on the Principal Trading Market, and the Borrower shall
comply in all respects with the Borrower’s reporting, filing and other obligations
under the bylaws or rules of the Principal Trading Market and governmental
authorities, as applicable. The Borrower shall promptly provide to Lender
copies of any notices it receives from the SEC or any Principal Trading Market,
to the extent any such notices could in any way have or be reasonably expected
to have a Material Adverse Effect. 

10.20      Rule
144.  With a view to making available to Lender the benefits of Rule 144
under the Securities Act (“Rule 144”), or any similar rule or
regulation of the SEC that may at any time permit Lender to sell the Advisory
Fee Shares or other shares of Common Stock issuable to Lender under any Loan
Documents to the public without registration, the Borrower represents and
warrants that: (i) Borrower is not an issuer defined as a “Shell Company” (as
hereinafter defined); and (ii) if Borrower has, at any time, been an issuer
defined as a “Shell Company,” Borrower has not been an issuer defined as a
Shell Company for at least six (6) months prior to the Effective Date.  For the
purposes hereof, the term “Shell Company” shall mean an issuer
that meets the description defined under Rule 144.  In addition, so long as
Lender owns, legally or beneficially, any securities of Borrower, Borrower
shall, at its sole expense: 

(a)               
  Make, keep and ensure that adequate current public information
with respect to Borrower, as required in accordance with Rule 144, is publicly
available; 

(b)              
  furnish to the Lender, promptly upon reasonable request: (A) a
written statement by Borrower that it has complied with the reporting
requirements of Rule 144; and (b) such other information as may be reasonably
requested by Lender to permit the Lender to sell any of the Advisory Fee Shares
or other shares of Common Stock acquired hereunder or under the Revolving Notes
pursuant to Rule 144 without limitation or restriction; and 

(c)               
promptly at the request of Lender, give Borrower’s Transfer Agent
instructions to the effect that, upon the Transfer Agent’s receipt from Lender
of a certificate (a “Rule 144 Certificate”)
certifying that Lender’s holding period (as determined in accordance with the
provisions of Rule 144) for any portion of the Advisory Fee Shares or shares of
Common Stock issuable upon conversion of the Revolving Note which Lender
proposes to sell (or any portion of such shares which Lender is not presently
selling, but for which Lender desires to remove any restrictive legends
applicable thereto) (the “Securities Being Sold”) is not less
than the required holding period pursuant to Rule 144, and receipt by the
Transfer Agent of the 

59



 “Rule 144 Opinion” (as hereinafter defined) from Borrower
or its counsel (or from Lender and its counsel as permitted below), the Transfer
Agent is to effect the transfer (or issuance of a new certificate without
restrictive legends, if applicable) of the Securities Being Sold and issue to Lender
or transferee(s) thereof one or more stock certificates representing the
transferred (or re-issued) Securities Being Sold without any restrictive legend
and without recording any restrictions on the transferability of such shares on
the Transfer Agent’s books and records.  In this regard, upon Lender’s request,
Borrower shall have an affirmative obligation to cause its counsel to promptly
issue to the Transfer Agent a legal opinion providing that, based on the Rule
144 Certificate, the Securities Being Sold may be sold pursuant to the
provisions of Rule 144, even in the absence of an effective registration statement,
or re-issued without any restrictive legends pursuant to the provisions of Rule
144, even in the absence of an effective registration statement (the “Rule
144 Opinion”). If the Transfer Agent requires any additional
documentation in connection with any proposed transfer (or re-issuance) by Lender
of any Securities Being Sold, Borrower shall promptly deliver or cause to be
delivered to the Transfer Agent or to any other Person, all such additional
documentation as may be necessary to effectuate the transfer (or re-issuance)
of the Securities Being Sold and the issuance of an unlegended certificate to
any such Lender or any transferee thereof, all at Borrower’s expense.  Any
and all fees, charges or expenses, including, without limitation, attorneys’
fees and costs, incurred by Lender in connection with issuance of any such
shares, or the removal of any restrictive legends thereon, or the transfer of
any such shares to any assignee of Lender, shall be paid by Borrower, and if
not paid by Borrower, the Lender may, but shall not be required to, pay any
such fees, charges or expenses, and the amount thereof, together with interest
thereon at the highest non-usurious rate permitted by law, from the date of
outlay, until paid in full, shall be due and payable by Borrower to Lender immediately
upon demand therefor, and all such amounts advanced by the Lender shall be
additional Obligations due under this Agreement and the Revolving Note and
secured under the Loan Documents.  In the event that the Borrower and/or its
counsel refuses or fails for any reason to render the Rule 144 Opinion or any other
documents, certificates or instructions required to
effectuate the transfer (or re-issuance) of the Securities Being Sold and the
issuance of an unlegended certificate to any such Lender or any transferee
thereof, then: (A) to the extent the Securities Being Sold could be
lawfully transferred (or re-issued) without restrictions under applicable laws,
Borrower’s failure to promptly provide the Rule 144 Opinion or any other
documents, certificates or instructions required to
effectuate the transfer (or re-issuance) of the Securities Being Sold and the
issuance of an unlegended certificate to any such Lender or any transferee
thereof shall be an immediate Event of Default under this Agreement and
all other Loan Documents; and (B) the Borrower hereby agrees and acknowledges
that Lender is hereby irrevocably and expressly authorized to have counsel to Lender
render any and all opinions and other certificates or instruments which may be
required for purposes of effectuating the transfer
(or re-issuance) of the Securities Being Sold and the issuance of an unlegended
certificate to any such Lender or any transferee thereof, and the
Borrower hereby irrevocably authorizes and directs the Transfer Agent to, without
any further confirmation or instructions from the Borrower, transfer or re-issue
any such Securities Being Sold as instructed by Lender and its counsel. 

10.21      Reservation
of Shares.  Borrower shall take all action reasonably necessary to at all
times have authorized, and reserved for the purpose of issuance, such number of
shares of Common Stock as shall be necessary to effect the full conversion of
the Revolving Notes in accordance with its terms (the “Share Reserve”). 
If at any time the Share Reserve is insufficient

60



 to effect the full conversion
of the Revolving Notes then outstanding, Borrower shall increase the Share
Reserve accordingly.  If Borrower does not have sufficient authorized and
unissued shares of Common Stock available to increase the Share Reserve,
Borrower shall call and hold a special meeting of the shareholders within
forty-five (45) days of such occurrence, or take action by the written consent
of the holders of a majority of the outstanding shares of Common Stock, if
possible, for the sole purpose of increasing the number of shares authorized.
Borrower’s management shall recommend to the shareholders to vote in favor of
increasing the number of shares of Common Stock authorized. 

10.22      Natural
Cabana S.A. DE CV.  Within thirty (30) days from the Effective Date,
Natural Cabana S.A. DE CV, a corporation incorporated under the laws of Mexico,
and, shall become an additional party hereto and guarantor of the Borrower’s
Obligations hereunder, and shall execute a counterpart to this Agreement and
any and all other documents which the Lender shall require in its sole and
absolute discretion. 

10.23      Funds
in Escrow.  On the forty-five (45) day anniversary of the Effective Date,
the Lender shall review and determine, in its sole and absolute discretion, if
the Two Hundred Fifty Thousand and No/100 United States Dollars (US$250,000) of
the Revolving Loan Commitment held in Lender’s escrow on the Effective Date
shall be released by the Lender to the Borrower in accordance with the terms of
this Agreement. 

11. FINANCIAL COVENANTS. 

11.1         
  Revenue Covenant.  For each calendar quarter while this
Agreement remains in effect, the Credit Parties shall have net sales revenues
for such calendar quarter that are not less than seventy-five percent (75%) of
the net sales revenues shown for the corresponding calendar quarter on the most
recent of the Financial Statements (i.e. comparing third quarter results to the
prior years’ third quarter results). 

12. EVENTS OF DEFAULT. 

Borrower, without notice or demand of any kind
(except as specifically provided in this Agreement), shall be in default under this
Agreement upon the occurrence of any of the following events (each an “Event
of Default”):


12.1         
  Nonpayment of Obligations.  Any amount due and owing on
the Revolving Note or any of the Obligations, whether by its terms or as
otherwise provided herein, is not paid on the date such amount is due. 

12.2         
  Misrepresentation.  Any written warranty, representation,
certificate or statement of the Credit Parties in this Agreement, the Loan
Documents or any other agreement with Lender shall be false or misleading in
any material respect when made or deemed made. 

12.3         
  Nonperformance.  Any failure to perform or default in the
performance of any covenant, condition or agreement contained in this Agreement
(not otherwise addressed in this Article 12), which failure to perform
or default in performance continues for a period of ten (10) days after any
Credit Party receives notice from Lender of such failure to perform or default
in performance (provided that if the failure to perform or default in
performance is not capable of 

61



 being cured, in Lender’s reasonable discretion,
then the cure period set forth herein shall not be applicable and the failure
or default shall be an immediate Event of Default hereunder). 

12.4         
  Default under Loan Documents.  Any failure to perform or
default in the performance by any Credit Party that continues after applicable
grace and cure periods under any covenant, condition or agreement contained in
any of the other Loan Documents or any other agreement with Lender, all of
which covenants, conditions and agreements are hereby incorporated in this
Agreement by express reference. 

12.5         
  Default under Other Obligations.  Any default by Borrower
in the payment of principal, interest or any other sum for any other obligation
beyond any period of grace provided with respect thereto or in the performance
of any, other term, condition or covenant contained in any agreement (including
any capital or operating lease or any agreement in connection with the deferred
purchase price of property), the effect of which default is to cause or permit
the holder of such obligation (or the other party to such other agreement) to
cause such obligation or agreement to become due prior to its stated maturity,
to terminate such other agreement, or to otherwise modify or adversely affect
such obligation or agreement in a manner that could have a Material Adverse
Effect on any Credit Party. 

12.6         
  Assignment for Creditors.  Any Credit Party makes an
assignment for the benefit of creditors, fails to pay, or admits in writing its
inability to pay its debts as they mature; or if a trustee of any substantial
part of the assets of the Credit Parties is applied for or appointed, and in
the case of such trustee being appointed in a Proceeding brought against any of
the Credit Parties, the Credit Parties, by any action or failure to act
indicates its approval of, consent to, or acquiescence in such appointment and
such appointment is not vacated, stayed on appeal or otherwise shall not have
ceased to continue in effect within sixty (60) days after the date of such appointment. 

12.7         
  Bankruptcy.  Any Proceeding involving any of the Credit
Parties, is commenced by or against any of the Credit Parties under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law or statute of the federal government or any
state government, and in the case of any such Proceeding being instituted
against any of the Credit Parties: (i) the Credit Parties, by any action or
failure to act, indicates its approval of, consent to or acquiescence therein;
or (ii) an order shall be entered approving the petition in such Proceedings
and such order is not vacated, stayed on appeal or otherwise shall not have
ceased to continue in effect within sixty (60) days after the entry thereof. 

12.8         
  Judgments.  The entry of any judgment, decree, levy,
attachment, garnishment or other process, or the filing of any Lien against the
property of any of the Credit Parties, unless such judgment or other
process shall have been, within sixty (60) days from the entry thereof: (i)
bonded over to the satisfaction of Lender and appealed; (ii) vacated; or (iii)
discharged.

12.9         
  Material Adverse Effect.  A Material Adverse Effect shall
occur. 

12.10      Change
in Control.  Except as permitted under this Agreement, any Change in
Control shall occur; provided, however, a Change in Control shall not
constitute an Event of Default if: (i) it arises out of an event or
circumstance beyond the reasonable control of the 

62



 Credit Parties (for example,
but not by way of limitation, a transfer of ownership interest due to death or
incapacity); and (ii) within sixty (60) days after such Change in Control, the
Credit Parties provide Lender with information concerning the identity and
qualifications of the individual or individuals who will be in Control, and
such individual or individuals shall be acceptable to Lender, in Lender’s sole
discretion. 

12.11      Collateral
Impairment.  The entry of any judgment, decree, levy, attachment,
garnishment or other process, or the filing of any Lien against, any of the
Collateral or any collateral under a separate security agreement securing any
of the Obligations, and such judgment or other process shall not have been,
within thirty (30) days from the entry thereof: (i) bonded over to the
satisfaction of Lender and appealed; (ii) vacated; or (iii) discharged, or the
loss, theft, destruction, seizure or forfeiture, or the occurrence of any
material deterioration or impairment of any of the Collateral or any of the
Collateral under any security agreement securing any of the Obligations, or any
material decline or depreciation in the value or market price thereof (whether
actual or reasonably anticipated), which causes the Collateral, in the sole
opinion of Lender acting in good faith, to become unsatisfactory as to value or
character, or which causes Lender to reasonably believe that it is insecure and
that the likelihood for repayment of the Obligations is or will soon be
impaired, time being of the essence.  The cause of such deterioration,
impairment, decline or depreciation shall include, but is not limited to, the
failure by the Credit Parties to do any act deemed reasonably necessary by
Lender to preserve and maintain the value and collectability of the Collateral. 

12.12      Adverse
Change in Financial Condition.  The determination in good faith by Lender
that a material adverse change has occurred in the financial condition or
operations of the any of the Credit Parties, or the Collateral, which change
could have a Material Adverse Effect, or otherwise adversely affect the
prospect for Lender to fully and punctually realize the full benefits conferred
on Lender by this Agreement, or the prospect of repayment of all Obligations. 

12.13      Adverse
Change in Value of Collateral.  The determination in good faith by Lender
that the security for the Obligations is or has become inadequate. 

12.14      Prospect
of Payment or Performance.  The determination in good faith by Lender that
the prospect for payment or performance of any of the Obligations is impaired
for any reason. 

12.15      Lock
Box Account.  (i) The determination in good faith by the Lender that
there has been a failure to perform or default in the performance by a Credit
Party of Section 2.1(e) of this Agreement; or (ii) the failure of the Borrower
to cause sufficient funds to be on deposit in the Lock Box Account to permit the
Lender to withdraw payments at any such time payments are due to Lender by
Borrower pursuant hereto. 

13. REMEDIES. 

(a)                     
Upon the occurrence and during the continuance of an Event of
Default, Lender shall have all rights, powers and remedies set forth in the Loan
Documents, in any written agreement or instrument (other than this Agreement or
the Loan Documents) relating to any of the Obligations or any security
therefor, or as otherwise provided at law or in equity.

63



 Without limiting the
generality of the foregoing, Lender may, at its option, upon the occurrence and
during the continuance of an Event of Default, declare its commitments to Borrower
to be terminated and all Obligations to be immediately due and payable; provided,
however, that upon the occurrence of an Event of Default under either Section
12.6, “Assignment for Creditors”, or Section 12.7, “Bankruptcy”, all
commitments of Lender to Borrower shall immediately terminate and all
Obligations shall be automatically due and payable, all without demand, notice
or further action of any kind required on the part of Lender.  The Credit
Parties hereby waive any and all presentment, demand, notice of dishonor,
protest, and all other notices and demands in connection with the enforcement
of Lender’s rights under the Loan Documents, and hereby consents to, and waives
notice of release, with or without consideration, of the Credit Parties or of
any Collateral, notwithstanding anything contained herein or in the Loan
Documents to the contrary. 

(b)                    
No Event of Default shall be waived by Lender, except and unless
such waiver is in writing and signed by Lender.  No failure or delay on the
part of Lender in exercising any right, power or remedy hereunder shall operate
as a waiver of the exercise of the same or any other right at any other time;
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder.  There shall be no obligation on the part of
Lender to exercise any remedy available to Lender in any order. The remedies
provided for herein are cumulative and not exclusive of any remedies provided
at law or in equity.  The Credit Parties agree that in the event that Borrower
fails to perform, observe or discharge any of its Obligations or liabilities
under this Agreement, the Revolving Note, and other Loan Documents, or any
other agreements with Lender, no remedy of law will provide adequate relief to
Lender, and further agrees that Lender shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages. 

(c)                     
Upon each occurrence of a default or an Event of Default pursuant
to Section 12.15, in addition to any other rights or remedies the Lender may
have under the Loan Documents or applicable law, the Lender shall have the
right, but not the obligation, to cause the Borrower to pay to Lender a penalty
in cash in an amount equal to ten percent (10%) of the outstanding amount of
the Obligations as of the time of each said default or Event of Default. 
The penalty provided in this Section 13(c) shall be applied and be added to the
Obligations: (i) upon the occurrence of each single default or Event of Default
pursuant to Section 12.15 and; (ii) in the event that any single default or
Event of Default continues for a period of longer than thirty (30) days, the penalty
provided in this Section shall be immediately applied upon the expiration of
each subsequent thirty (30) day period and shall continue to be applied upon
the expiration of each subsequent thirty (30) day period until such default or
Event of Default is cured by the Borrower to the satisfaction of the Lender, in
its sole discretion.  In connection with the penalty described herein, the
Lender need not provide, and the Borrower hereby waives, any presentment,
demand, protest or other notice of any kind, and the Lender may immediately and
without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable
law.  Nothing herein shall limit Lender’s right to pursue any other
remedies available to it at law or in equity including a decree of specific
performance and/or injunctive relief with respect to causing Borrower to comply
with the terms and conditions of Section 2.1(e). 

64



 
14. MISCELLANEOUS. 

14.1         
  Obligations Absolute.  None of the following shall affect
the Obligations of the Credit Parties to Lender under this Agreement or
Lender’s rights with respect to the Collateral: 

(a)                     
  acceptance or retention by Lender of other property or any
interest in property as security for the Obligations; 

(b)                    
  release by Lender of all or any part of the Collateral or of any
party liable with respect to the Obligations (other than Borrower); 

(c)                     
  release, extension, renewal, modification or substitution by
Lender of the Revolving Note, or any note evidencing any of the Obligations; or 

(d)                    
  failure of Lender to resort to any other security or to pursue the
Credit Parties or any other obligor liable for any of the Obligations before
resorting to remedies against the Collateral. 

14.2         
  Entire Agreement.  This Agreement and the other Loan
Documents: (i) are valid, binding and enforceable against the Credit Parties and
Lender in accordance with its provisions and no conditions exist as to their legal
effectiveness; (ii) constitute the entire agreement between the parties; and
(iii) are the final expression of the intentions of the Credit Parties and
Lender.  No promises, either expressed or implied, exist between the Credit
Parties and Lender, unless contained herein or in the Loan Documents.  This
Agreement and the Loan Documents supersede all negotiations, representations,
warranties, commitments, offers, contracts (of any kind or nature, whether oral
or written) prior to or contemporaneous with the execution hereof. 

14.3         
  Amendments; Waivers.  No amendment, modification,
termination, discharge or waiver of any provision of this Agreement or of the
Loan Documents, or consent to any departure by the Credit Parties therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Lender, and then such waiver or consent shall be effective only for the
specific purpose for which given. 

14.4         
  WAIVER OF DEFENSES. THE CREDIT PARTIES WAIVE EVERY PRESENT
AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE CREDIT
PARTIES MAY HAVE AS OF THE DATE HEREOF TO ANY ACTION BY LENDER IN ENFORCING
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.  THE CREDIT PARTIES WAIVE ANY
IMPLIED COVENANT OF GOOD FAITH AND RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO
PURSUANT TO THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AS OF THE
DATE OF THIS AGREEMENT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER
GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER. 

14.5         
  WAIVER OF JURY TRIAL. LENDER AND CREDIT PARTIES, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS 

65



 AGREEMENT, THE REVOLVING NOTE, ANY LOAN DOCUMENT OR ANY
OF THE OBLIGATIONS, THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE
OF CONDUCT OR COURSE OF DEALING IN WHICH LENDER AND CREDIT PARTIES ARE ADVERSE
PARTIES.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY
FINANCIAL ACCOMMODATION TO BORROWER. 

14.6         
  MANDATORY FORUM SELECTION.  TO INDUCE LENDER TO MAKE
THE LOANS, CREDIT PARTIES IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER,
RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR
RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT
ANY OTHER LOAN DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED
UPON BREACH OF CONTRACT OR TORT) SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE
SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL
COURTS LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, LENDER MAY, AT LENDER’S
SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION.  THIS
PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND
GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. BORROWER HEREBY
CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT
HAVING ITS SITUS IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF
LENDER SO ELECTS), AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. CREDIT
PARTIES HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO BORROWER, AS SET FORTH HEREIN OR IN THE MANNER PROVIDED
BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE. 

14.7         
  Usury Savings Clause. Notwithstanding any provision in
this Agreement or the other Loan Documents, the total liability for payments of
interest and payments in the nature of interest, including, without limitation,
all charges, fees, exactions, or other sums which may at any time be deemed to
be interest, shall not exceed the limit imposed by the usury laws of the
jurisdiction governing this Agreement or any other applicable law.  In the
event the total liability of payments of interest and payments in the nature of
interest, including, without limitation, all charges, fees, exactions or other
sums which may at any time be deemed to be interest, shall, for any reason
whatsoever, result in an effective rate of interest, which for any month or
other interest payment period exceeds the limit imposed by the usury laws of
the jurisdiction governing this Agreement, all sums in excess of those lawfully
collectible as interest for the period in question shall, without further
agreement or notice by, between, or to any party hereto, be applied to the
reduction of the outstanding principal balance of this Agreement immediately
upon receipt of such sums by the Lender, with the same force and effect as
though the Borrower had specifically designated such excess sums to be so
applied to the reduction of such outstanding principal balance and the Lender
hereof had agreed to accept such sums as a penalty-free payment of principal;
provided, however, that the Lender may, at any time and from time to time,
elect, by notice in writing to the Borrower, to waive, reduce, or limit the
collection of any 

66



 sums in excess of those lawfully collectible as interest
rather than accept such sums as a prepayment of the outstanding principal
balance.  It is the intention of the parties that the Borrower do not intend or
expect to pay nor does the Lender intend or expect to charge or collect any
interest under this Agreement greater than the highest non-usurious rate of
interest which may be charged under applicable law. 

14.8         
  Assignability. Lender may at any time assign Lender’s
rights in this Agreement, the Revolving Note, any Loan Documents, the
Obligations, or any part thereof, and transfer Lender’s rights in any or all of
the Collateral, all without the Credit Parties’ consent or approval, and Lender
thereafter shall be relieved from all liability with respect to such instrument
or Collateral so transferred.  In addition, Lender may at any time sell one or
more participations in the Loans, all without the Credit Parties’ consent or
approval. The Credit Parties may not sell or assign this Agreement, any Loan
Document or any other agreement with Lender, or any portion thereof, either
voluntarily or by operation of law, nor delegate any of its duties of
obligations hereunder or thereunder, without the prior written consent of
Lender, which consent may be withheld in Lender’s sole and absolute discretion. 
This Agreement shall be binding upon Lender and the Credit Parties and their
respective legal representatives, successors and permitted assigns.  All
references herein to a Credit Party shall be deemed to include any successors,
whether immediate or remote.  In the case of a joint venture or partnership,
the term “Borrower” or “Credit Party” shall be deemed to include all joint
venturers or partners thereof, who shall be jointly and severally liable
hereunder. 

14.9         
  Confidentiality. Each of the Credit Parties shall keep
confidential any information obtained from Lender (except information publicly
available or in Credit Parties’ domain prior to disclosure of such information
from Lender, and except as required by applicable laws) and shall promptly
return to the Lender all schedules, documents, instruments, work papers and
other written information without retaining copies thereof, previously
furnished by it as a result of this Agreement or in connection herewith. 

14.10      Publicity. 
Lender shall have the right to approve, before issuance, any press release or
any other public statement with respect to the transactions contemplated hereby
made by the Credit Parties; provided, however, that the Credit Parties shall be
entitled, without the prior approval of Lender, to issue any press release or
other public disclosure with respect to such transactions required under
applicable securities or other laws or regulations.  Notwithstanding the foregoing,
the Credit Parties shall use its best efforts to consult Lender in connection
with any such press release or other public disclosure prior to its release and
Lender shall be provided with a copy thereof upon release thereof.  Lender
shall have the right to make any press release with respect to the transactions
contemplated hereby without the Credit Parties’ approval.  In addition, with
respect to any press release to be made by Lender, Borrower hereby authorizes
and grants blanket permission to Lender to include the Borrower’s stock symbol,
if any, in any press releases.  Borrower shall, promptly upon request, execute
any additional documents of authority or permission as may be requested by
Lender in connection with any such press releases. 

14.11      Binding
Effect.  This Agreement shall become effective upon execution by the Credit
Parties and Lender. 

67



 
14.12      Governing
Law.  Except in the case of the Mandatory Forum Selection Clause in Section
14.6 above, which clause shall be governed and interpreted in accordance with
Florida law, this Agreement, the Loan Documents and the Revolving Note shall be
delivered and accepted in, and shall be deemed to be contracts made under and
governed by, the internal laws of the State of Nevada, and for all purposes
shall be construed in accordance with the laws of the State of Nevada, without
giving effect to the choice of law provisions of such State.  The governing law
provisions of this Section 14.12 are a material inducement for Lender to
enter into this Agreement, and the Borrower hereby agrees, acknowledges and
understands that the Lender would not have entered into this Agreement, nor
made or provided the Loans, without the full agreement and consent of the Credit
Parties, with full knowledge and understanding, that except in the case of the
Mandatory Forum Selection Clause in Section 14.6 above, which clause
shall be governed and interpreted in accordance with Florida law, this
Agreement, and each of the Loan Documents, shall be governed by the internal
laws of the State of Nevada, and for all purposes shall be construed in
accordance with the laws of the State of Nevada, without giving effect to the
choice of law provisions.  In this regard, each of the Credit Parties hereby
acknowledges that it has reviewed this Agreement and all Loan Documents, and
specifically, this Section 14.12, with competent counsel selected by the
Credit Parties, and in that regard, each of the Credit Parties fully
understands the choice of law provisions set forth in this Section.  In
addition, each of the Credit Parties agrees, and acknowledges that it has had
an opportunity to negotiate the terms and provisions of this Agreement and the
other Loan Documents with and through its counsel, and that the Credit Parties
have sufficient leverage and economic bargaining power, and have used such
leverage and economic bargaining power, to fairly and fully negotiate this
Agreement and the other Loan Documents in a manner that is acceptable to the
Credit Parties. Moreover, because of the material nature of this choice of law
provision in inducing Lender to enter into this Agreement and to make the Loans
to the Credit Parties, each of the Credit Parties hereby fully and absolutely waives
any and all rights to make any claims, counterclaims, defenses, to raise or make
any arguments (including any claims, counterclaims, defenses, or arguments
based on grounds of public policy, unconscionability, or implied covenants of
fair dealing and good faith), or to otherwise undertake any litigation strategy
or maneuver of any nature or kind that would result in, or which otherwise
seeks to, invalidate this choice of law provision, or that would otherwise
result in or require the application of the laws of any other State other than
the State of Nevada in the interpretation or governance of this Agreement or
any other Loan Documents (except for the Mandatory Forum Selection clause in Section
14.6 hereof).  Each of the Credit Parties has carefully considered this Section
14.12 and has carefully reviewed its application and effect with competent
counsel, and in that regard, fully understands and agrees that Lender would not
have entered into this Agreement, nor made the Loans, without the express agreement
and acknowledgement of each of the Credit Parties to this choice of law provision,
and the express waivers set forth herein.

14.13      Enforceability. 
  Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by, unenforceable or invalid
under any jurisdiction, such provision shall as to such jurisdiction, be
severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Agreement or affecting
the validity or enforceability of such provision in any other jurisdiction. 

68



 
14.14      Survival
of Borrower’s Representations.  All covenants, agreements, representations
and warranties made by the Credit Parties herein shall, notwithstanding any
investigation by Lender, be deemed material and relied upon by Lender and shall
survive the making and execution of this Agreement and the Loan Documents and
the issuance of the Revolving Note, and shall be deemed to be continuing
representations and warranties until such time as the Credit Parties have fulfilled
all of its Obligations to Lender, and Lender has been indefeasibly paid in
full. Lender, in extending financial accommodations to Borrower, is expressly
acting and relying on the aforesaid representations and warranties. 

14.15      Extensions
of Lender’s Commitment and the Revolving Note.  This Agreement shall secure
and govern the terms of any extensions or renewals of Lender’s commitment
hereunder and the Revolving Note pursuant to the execution of any modification,
extension or renewal note executed by Borrower, consented and agreed to by the
Guarantors, and accepted by Lender in its sole and absolute discretion in
substitution for the Revolving Note. 

14.16      Time
of Essence.  Time is of the essence in making payments of all amounts due
Lender under this Agreement and in the performance and observance by the Credit
Parties of each covenant, agreement, provision and term of this Agreement. 

14.17      Execution. 
This Agreement may be executed in one or more counterparts, all of which taken
together shall be deemed and considered one and the same Agreement.  In the
event that any signature of this Agreement or any other Loan Documents is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
file or other similar format file, such signature shall be deemed an original
for all purposes and shall create a valid and binding obligation of the party
executing same with the same force and effect as if such facsimile or “.pdf”
signature page was an original thereof.  Notwithstanding the foregoing, Lender
shall not be obligated to accept any document or instrument signed by facsimile
transmission or by e-mail delivery of a “.pdf” format file or other similar
format file as an original, and may in any instance require that an original
document be submitted to Lender in lieu of, or in addition to, any such document
executed by facsimile transmission or by e-mail delivery of a “.pdf” format
file or other similar format file. 

14.18      Notices. 
Any notices, consents, waivers, or other communications required or permitted
to be given under the terms of this Agreement must be in writing and in each
case properly addressed to the party to receive the same in accordance with the
information below, and will be deemed to have been delivered: (i) if mailed by
certified mail, return receipt requested, postage prepaid and properly
addressed to the address below, then three (3) Business Days after deposit of
same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by
Federal Express, UPS or other nationally recognized overnight courier service, overnight
delivery, then one (1) Business Day after deposit of same in a regularly
maintained receptacle of such overnight courier; or (iii) if hand delivered,
then upon hand delivery thereof to the address indicated on or prior to 5:00
p.m., EST, on a Business Day.  Any notice hand delivered after 5:00 p.m., EST,
shall be deemed delivered on the following Business Day.  Notwithstanding the
foregoing, notice, consents, waivers or other communications referred to in
this Agreement may be sent by facsimile, e-mail, or other method of delivery,
but shall be deemed to have been delivered only when the sending party has
confirmed (by reply e-mail or some other form of written confirmation) that the
notice has been received by the other party.  The addresses and 

69



 facsimile
numbers for such communications shall be as set forth below, unless such
address or information is changed by a notice conforming to the requirements
hereof.  No notice to or demand on Borrower in any case shall entitle Borrower
to any other or further notice or demand in similar or other circumstances: 

	
  If
  to any Credit Party:  	
  The
  Pulse Beverage Corporation  
	 	
  11680
  N Huron Street  
	 	
  Northglenn,
  CO 80234  
	 	
  Attention:  	
  Robert
  E. Yates  
	 	
  E-Mail:  	
  ryates@pulsebeverage.com  
	 	 
	
  With
  a copy to:  	
  Stanley
  J. Myers, P.C.  
	 	
  1325
  S. Colorado Blvd., Suite 503  
	 	
  Denver,
  CO 80222  
	 	
  Attention:
  Stanley J. Myers  
	 	 E-Mail:  
  stanmyerspc@yahoo.com 
	 	 
	
  If
  to the Lender:  	
  TCA
  Global Credit Master Fund, LP  
	 	
  3960 Howard Hughes Parkway, Suite 500  
	 	
  Las Vegas, Nevada 89169  
	 	
  Attention:  	
  Robert
  Press, Director  
	 	
  E-Mail:  	
  bpress@tcaglobalfund.com  
	 	 
	
  With
  a copy to:  	
  Lucosky
  Brookman LLP  
	 	
  101
  Wood Avenue South, 5th Floor  
	 	
  Woodbridge,
  NJ 08830  
	 	
  Attention:  	   
  Seth Brookman, Esq.: 
	 	
  E-Mail:  	
  sbrookman@lucbro.com  










14.19      Indemnification. 
  As a material inducement for Lender to enter into this Agreement, the Credit
Parties agree to defend, protect, indemnify and hold harmless Lender, and its
parent companies, Subsidiaries, Affiliates, divisions, and their respective
attorneys, officers, directors, agents, shareholders, members, partners, employees,
and representatives, and the predecessors, successors, assigns, personal
representatives, heirs and executors of each of them (including those retained
in connection with the transactions contemplated by this Agreement) (each, a “Lender
Indemnitee” and collectively, the “Lender Indemnitees”)
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, Proceedings, suits, claims, costs, expenses and
distributions of any kind or nature (including the disbursements and the
reasonable fees of counsel and paralegals for each Lender Indemnitee thereto
throughout all trial and appellate levels, bankruptcy Proceedings, mediations,
arbitrations, administrative hearings and at all other levels and tribunals),
which may be imposed on, incurred by, or asserted against, any Lender
Indemnitee (whether direct, indirect or consequential and whether based on any
federal, state or local laws or regulations, including securities,
Environmental Laws and commercial laws and regulations, under common law or in
equity, or based on contract, tort, or otherwise) in any manner relating to or arising
out of this Agreement or any of the Loan Documents, or any act, event or
transaction related or attendant thereto, the preparation,

70



 execution and
delivery of this Agreement and the Loan Documents, including the making or
issuance and management of the Loans, the use or intended use of the proceeds
of the Loans, the enforcement of Lender’s rights and remedies under this
Agreement, the Loan Documents, the Revolving Note, any other instruments and
documents delivered hereunder, or under any other agreement between Borrower
and Lender.  To the extent that the undertaking to indemnify set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, the Credit Parties shall satisfy such undertaking to the maximum extent
permitted by applicable law.  Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Lender
Indemnitee on demand, and, failing prompt payment, shall, together with
interest thereon at the Default Rate from the date incurred by each Lender
Indemnitee until paid by Borrower, be added to the Obligations of Borrower and
be secured by the Collateral.  The provisions of this Section shall survive the
satisfaction and payment of the other Obligations and the termination of this
Agreement. 

14.20      Release. 
In consideration of the mutual promises and covenants made herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, each Credit Party hereby
agrees to fully, finally and forever release and forever discharge and covenant
not to sue the Lender Indemnitees, and each one of them, from any and all
debts, fees, attorneys’ fees, liens, costs, expenses, damages, sums of money,
accounts, bonds, bills, covenants, promises, judgments, charges, demands,
claims, causes of action, Proceedings, suits, liabilities, expenses,
obligations or contracts of any kind whatsoever, whether in law or in equity,
whether asserted or unasserted, whether known or unknown, fixed or contingent,
under statute or otherwise, from the beginning of time through the Effective Date,
including any and all claims relating to or arising out of any financing
transactions, credit facilities, notes, debentures, security agreements, and
other agreements, including each of the Loan Documents, entered into by the
Credit Parties with Lender and any and all claims that the Credit Parties do
not know or suspect to exist, whether through ignorance, oversight, error, negligence,
or otherwise, and which, if known, would materially affect their decision to
enter into this Agreement or the related Loan Documents. The provisions of this
Section shall survive the satisfaction and payment of the other Obligations and
the termination of this Agreement. 

14.21      Interpretation. 
If any provision in this Agreement requires judicial or similar interpretation,
the judicial or other such body interpreting or construing such provision shall
not apply the assumption that the terms hereof shall be more strictly construed
against one party because of the rule that an instrument must be construed more
strictly against the party which itself or through its agents prepared the
same.  The parties hereby agree that all parties and their agents have participated
in the preparation hereof equally. 

14.22      Compliance
with Federal Law.  The Credit Parties shall: (i) ensure that no Person who
owns a controlling interest in or otherwise controls the Credit Parties is or
shall be listed on the Specially Designated Nationals and Blocked Person List
or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”),
the Department of the Treasury, included in any Executive Orders or any other
similar lists from any Governmental Authority; (ii) not use or permit the use
of the proceeds of the Loans to violate any of the foreign asset control
regulations of OFAC or any enabling statute or Executive Order relating thereto,
or any other similar national or foreign governmental regulations; and (iii)
comply with all applicable Lender Secrecy 

71



 Act (“BSA”) laws and
regulations, as amended.  As required by federal law and Lender’s policies and
practices, Lender may need to obtain, verify and record certain customer
identification information and documentation in connection with opening or
maintaining accounts or establishing or continuing to provide services. 

14.23      Consents. 
With respect to any provisions of this Agreement or any other Loan Documents
which require the consent or approval of Lender, unless expressly otherwise
provided in any such provision, such consent or approval may be granted,
conditioned, or withheld by Lender in its sole and absolute discretion.  In any
event, when any consent or approval of Lender is required under this Agreement
or any other Loan Documents, the Credit Parties shall not be entitled to make
any claim for, and the Credit Parties hereby expressly waives any claim for,
damages incurred by the Credit Parties by reason of Lender’s granting,
conditioning or withholding any such consent or approval, and the Credit
Parties’ sole and absolute remedy with respect thereto shall be an action for
specific performance.  To the extent any consent or approval is given by Lender
under any provision hereunder or under any other Loan Documents, such consent
or approval shall only be applicable to the specific instance to which it
relates and shall not be deemed to be a continuing or future consent or
approval, and any such consent or approval shall not impose any liability or
warranty obligation on the Lender. 

14.24      Non-U.S.
Status. THE LENDER IS A NON-U.S. PERSON AS THAT TERM IS DEFINED IN THE
UNITED STATES INTERNAL REVENUE CODE. IT IS HEREBY AGREED AND UNDERSTOOD THAT
THE OBLIGATIONS HEREUNDER MAY BE SOLD OR RESOLD ONLY TO NON-U.S. PERSONS. THE
INTEREST PAYABLE HEREUNDER IS PAYABLE ONLY OUTSIDE THE UNITED STATES. ANY U.S.
PERSON WHSO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE
UNITED STATES INCOME TAX LAW. 

[REMAINDER
OF PAGE LEFT BLANK, SIGNATURE PAGE FOLLOWS]


72



 
IN WITNESS WHEREOF, Borrower and Lender
have executed this Credit Agreement as of the date first above written.


BORROWER: 


THE PULSE BEVERAGE CORPORATION


By:      /s/ Robert E. Yates
Name:  Robert E. Yates
Title:    Chief Executive Officer


	STATE
OF ________________	 )
	 	) 
SS.
	COUNTY
OF ______________	 )


The
undersigned, a Notary Public in and for the said County, in the State
aforesaid, DO HEREBY CERTIFY that Robert E. Yates, Chief Executive Officer of The
Pulse Beverage Corporation, a Nevada corporation, who is personally known to me
to be the same person whose name is subscribed to the foregoing, appeared
before me this day in person and acknowledged that he/she signed and delivered
the said instrument as his/her own free and voluntary act and as the free and
voluntary act of said corporation, for the uses and purposes therein set forth.


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


                                                            ______________________________________

                                                                                      Notary
Public


                                                                        My
Commission Expires:


                                                            ______________________________________


73



 
LENDER:


TCA GLOBAL CREDIT MASTER FUND, LP


By:      TCA Global Credit Fund GP, Ltd.
Its:       General Partner


By:      ___________________________
Name:  Robert Press
Title:    Director


74



 
INDEX
OF EXHIBITS


Exhibit A                    Form of Compliance
Certificate
Exhibit B-1                 Form of Guaranty (Corporate)
Exhibit B-2                 Form of Guaranty (Personal)
Exhibit C                    Form of Irrevocable Transfer
Agent Instructions
Exhibit D                    Form of Pledge Agreement
Exhibit E                    Form of Revolving Note
Exhibit F-1                 Form of Security Agreement (Borrower)
Exhibit F-2                 Form of Security Agreement
(Subsidiary/Guarantor)
Exhibit G                   Form of Validity Certificate


INDEX OF SCHEDULES


Schedule 7.1               Subsidiaries
Schedule 7.4               Capitalization
Schedule 7.18             Real Property
Schedule 7.21             IP Rights
Schedule 7.28             Bank Accounts and Deposit
Accounts
Schedule 7.29             Places of Business


75



 
Exhibit
A


Form
of Compliance Certificate


76



 
Exhibit
B-1


Form
of Guaranty Agreement (Corporate)


77



 
Exhibit
B-2


Form
of Guaranty Agreement (Personal)


78



 
Exhibit
C


Form
of Irrevocable Transfer Agent Instructions


79



 
Exhibit
D


Form
of Pledge Agreement


80



 
Exhibit
E


Form
of Revolving Note


81



 
Exhibit F-1


Form of Security
Agreement – Borrower


82



 
Exhibit F-2


Form of Security
Agreement – Subsidiaries


83



 
Exhibit G


Form of Validity
Certificates


84



 
Schedule 7.1


Subsidiaries


Natural Cabana S.A. de CV


85



 
Schedule 7.4


Capitalization


THE PULSE BEVERAGE CORPORATION is a publicly-traded
corporation. 


Preferred Stock, 1,000,000 shares authorized, par value
$0.001, none issued.


Common Stock, 100,000,000 shares authorized, par value
$0.00001, 65,076,037 issued and outstanding.


86



 
Schedule 7.18


Real Property


None


87



 
Schedule 7.21


IP Rights


THE
PULSE BEVERAGE CORPORATION holds the following Intellectual Property: 


	the
    right from Baxter Healthcare Corporation to use the following side panel
    (label) statement for PULSE® Heart & Body HealthTM: “PRODUCT FORMULATION DEVELOPED
    UNDER LICENSE FROM BAXTER HEALTHCARE CORPORATION”;
	water-based
    beverage formulations, specifications, manufacturing methods and related
    Canadian and US unregistered trademark for PULSE® - Heart HealthyTM. These
    trademarks are current in that they are being used currently and will not
    expire as long as we continue to use them;
	registered
    trademarks: “PULSE” – USA & CANADA (a water-based beverage) U.S. No.
    2698560, Canada: TMA 622,432 and “PULSE: NUTRITION MADE SIMPLE” – USA ONLY.
    U.S. No. 2819813. In general, trademark registrations expire 10 years from the
    filing date or registration date, with the exception in Canada, where trademark
    registrations expire 15 years from the registration date. All trademark
    registrations may be renewed for a nominal fee; and
	the
    trademark Natural Cabana® in connection with our Natural Cabana® Lemonade,
    Limeade and Coconut Water.


88



 
Schedule 7.28


Bank Accounts and
Deposit Accounts


Name of Bank:  Chase Bank


Name of Account:  The Pulse Beverage Corporation


Routing Number:  102001017


Account Number:  947733291


Name of Bank:  Chase Bank


Name of Account:  The Pulse Beverage Corporation


Routing Number:  102001017


Account Number:  3092668929


89



 
Schedule 7.29


Places of Business


11678 N. Huron
Street

Northglenn, CO 80234


4812-1661-8535, v.  4-8333-4182, v.  1
90