Exhibit 10.6


               SECURITIES PURCHASE AGREEMENT (NOTES AND WARRANTS)

         SECURITIES  PURCHASE AGREEMENT (the "AGREEMENT"),  dated as of November
8,  2006,  by  and  among  Maritime  Logistics  US  Holdings  Inc.,  a  Delaware
corporation, with headquarters located at 547 Boulevard,  Kenilworth, New Jersey
("MLI" or the  "COMPANY"),  and the  investors  listed on the Schedule of Buyers
attached hereto (individually, a "BUYER" and collectively, the "BUYERS").

WHEREAS:

         A.  The  Company  and each  Buyer  is  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "1933 ACT"),  and
Rule 506 of Regulation D  ("REGULATION  D") as  promulgated by the United States
Securities and Exchange Commission (the "SEC") under the 1933 Act.

         B. Prior to the Closing (as defined  below) and  immediately  following
the  consummation  of the Share  Exchange (as defined  below),  the Company will
cause ShellCo (as defined below) to authorize a new series of its senior secured
convertible notes, which notes shall be convertible into ShellCo's common stock,
par value $0.001 per share (the "COMMON  STOCK") in accordance with the terms of
such notes.  "SHELLCO" is a corporation organized under the laws of the state of
Delaware  which has made a filing with the SEC on Form 10-SB,  a  subsidiary  of
which ("MERGER SUB") will be merged effective prior to Closing with and into the
Company,  with the Company  continuing as the surviving entity,  pursuant to the
terms of Section 6(o) (the  "MERGER").  ShellCo has  indicated  its intention to
change its name to Summit Global Logistics,  Inc. after the Merger and to effect
a reverse  split in respect of its Common  Stock in which each 11.226  shares of
Common  Stock prior to such reverse  split shall be  exchanged  for one share of
Common Stock after such reverse split (the "REVERSE SPLIT").

         C. The Buyers,  severally,  and not jointly, wish to purchase,  and the
Company  wishes ShellCo to sell,  upon the terms and  conditions  stated in this
Agreement, (i) secured convertible notes, in the form attached hereto as EXHIBIT
A, in an  aggregate  original  principal  amount  of  $65,000,000  (as  amended,
restated,  supplemented and/or modified from time to time in accordance with the
provisions   thereof,   collectively,   the  "NOTES")  and  (ii)  warrants,   in
substantially  the form  attached  hereto as  EXHIBIT B (as  amended,  restated,
supplemented and/or modified from time to time in accordance with the provisions
thereof, the "WARRANTS"), to acquire up to that number of shares of Common Stock
equal to the quotient of (a) 40% of the original  aggregate  principal amount of
the Notes  purchased  by the Buyers at  Closing  (as  defined  in Section  1(a))
divided by the Conversion Price (as defined in the Notes) as of the Closing (the
shares of Common Stock  issuable  upon  exercise of the  Warrants,  the "WARRANT
SHARES").

         D.  Contemporaneously  with the Closing (as defined below),  the Buyers
and  ShellCo  will  execute  and  deliver  a  Registration   Rights   Agreement,
substantially  in the form attached  hereto as EXHIBIT C (as amended,  restated,
supplemented and/or modified from time to time in accordance with the provisions
thereof, the "REGISTRATION  RIGHTS AGREEMENT"),  pursuant to which ShellCo shall
agree to provide certain  registration rights in respect of the shares of Common
Stock into which the Notes are  convertible  (the  "CONVERSION  SHARES") and the
Warrant

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Shares under the 1933 Act and the rules and regulations  promulgated thereunder,
and applicable state securities laws.

         E. The Notes,  the  Conversion  Shares,  the  Warrants  and the Warrant
Shares collectively are referred to herein as the "Securities".

         F.  The  Notes  will  rank  senior  to  all   outstanding   and  future
indebtedness of ShellCo,  subject to Permitted  Indebtedness  (as defined in the
Notes) and will be secured by a second priority  perfected  security interest in
substantially  all of the assets of ShellCo and the Company and in substantially
all of the shares of capital  stock and all the assets of each of ShellCo's  and
the Company's current and future  Subsidiaries (as defined below) other than the
escrowed  funds  referenced  in  subsection  (x) of the  definition of Permitted
Indebtedness set forth in Section 28 of the Note and the Subsidiaries  organized
outside the United States of America,  any of the States thereof or the District
of Columbia  (collectively,  the  "FOREIGN  SUBSIDIARIES"),  as evidenced by the
Pledge  Agreement in the form  attached  hereto as EXHIBIT D (as the same may be
amended, restated,  supplemented and/or modified from time to time in accordance
with the provisions thereof,  the "PLEDGE AGREEMENT") and the Security Agreement
in the form attached hereto as EXHIBIT E (as the same may be amended,  restated,
supplemented and/or modified from time to time in accordance with the provisions
thereof,  the "SECURITY  AGREEMENT")  and the Guaranty from the Company and each
Subsidiary  (other than Foreign  Subsidiaries)  in the form  attached  hereto as
EXHIBIT F (as the same may be amended,  restated,  supplemented  and/or modified
from time to time in accordance with the provisions thereof, the "GUARANTY", and
together with the Pledge  Agreement and the Security  Agreement,  as each may be
amended, restated,  supplemented and/or modified from time to time in accordance
with the provisions thereof, collectively the "SECURITY DOCUMENTS").

         G. In  connection  with the Merger  and the  Acquisitions  (as  defined
below),  (i)  ShellCo  shall  issue  shares of  Common  Stock  (the  "MANAGEMENT
RESTRICTED  STOCK") to certain  members of management  of ShellCo,  the Company,
Targets (as defined below) and their  Subsidiaries  (the "MANAGEMENT  MEMBERS"),
and (ii) each Management Member will execute and deliver a lockup agreement, the
form of which is attached  hereto as Exhibits  G-1, G-2 and G-3 (as the same may
be  amended,  restated,  supplemented  and/or  modified  from  time  to  time in
accordance with the provisions thereof,  the "LOCKUP  AGREEMENTS"),  pursuant to
which the resale of the Management Restricted Stock shall be limited.

         H.   Contemporaneously   herewith,  the  Company  is  entering  into  a
securities purchase agreement, by and among the Company and the buyers listed on
the Schedule of Buyers attached thereto (the "COMMON PIPE BUYERS"), (the "COMMON
PIPE SECURITIES PURCHASE Agreement"), wherein the Company agrees, upon the terms
and subject to the conditions of the Common PIPE Securities  Purchase Agreement,
to cause  ShellCo to issue and sell to the Common  PIPE  Buyers (i) no less than
30,000  shares  (after  giving  effect to the Reverse Split ) of Common Stock of
ShellCo (the  "COMMON  PIPE COMMON  SHARES"),  and (ii)  certain  warrants  (the
"COMMON PIPE WARRANTS"), which will be exercisable to purchase additional shares
of Common Stock (as exercised,  the "COMMON PIPE WARRANT  SHARES") in accordance
with the terms of the Common PIPE Warrants.

         I.  Contemporaneously  with the  Closing,  the Common  PIPE  Buyers and
ShellCo will execute and deliver a  Registration  Rights  Agreement (as amended,
restated,  supplemented and/or

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<PAGE>

modified  from  time to time in  accordance  with the  provisions  thereof,  the
"COMMON PIPE  REGISTRATION  RIGHTS  AGREEMENT"),  pursuant to which ShellCo will
agree to provide  certain  registration  rights in  respect  of the Common  PIPE
Common  Shares and Common PIPE  Warrant  Shares under the 1933 Act and the rules
and regulations promulgated thereunder, and applicable state securities laws.

         J. The Common PIPE Common Shares,  Common PIPE Warrants and Common PIPE
Warrant  Shares  collectively  are  referred  to  herein  as  the  "COMMON  PIPE
SECURITIES", and the offering thereof, the "COMMON PIPE OFFERING".

         K. Immediately prior to the Closing, ShellCo shall enter into a joinder
agreement,  pursuant  to which  ShellCo  shall,  among other  things,  join this
Agreement,  affirm the  representations  and  warranties  hereunder and agree to
perform the  obligations  and  covenants  of the Company  hereunder  in the form
attached hereto as EXHIBIT H (as the same may be amended, restated, supplemented
and/or modified from time to time in accordance with the provisions thereof, the
"JOINDER AGREEMENT").  The Company's obligations  hereunder,  are subject to the
satisfaction of the condition that ShellCo enter into the Joinder Agreement.

         L. Contemporaneously  with the Closing,  ShellCo will enter into a loan
agreement,  by and  among  ShellCo,  the  Company,  Seamaster  Logistics,  Inc.,
Amerussia  Shipping Company Inc., Fashion Marketing Inc., FMI International LLC,
FMI International Corp. (West), FMI International Corp., Freight Management LLC,
FMI Trucking, Inc., FMI Express Corp., Clare Freight, Los Angeles, Inc., Tug New
York, Inc., Summit Global  Logistics,  Inc., TUG USA, Inc., AMR Investments Inc.
and FMI Holdco I, LLC and the lenders listed on the schedule of lenders  thereto
and Fortress Credit Corp. as  administrative  agent (as the same may be amended,
restated,  supplemented and/or modified from time to time in accordance with the
provisions thereof,  the "SENIOR LOAN AGREEMENT";  such loans evidenced thereby,
the "SENIOR  LOAN") under which  ShellCo and certain of its  subsidiaries  shall
have the  ability to obtain  term loans up to the  maximum  principal  amount of
$55,000,000 and revolving loans up to a maximum principal amount which shall not
exceed  $10,000,000 at any one time, in each case, upon the terms and subject to
the conditions set forth in the Senior Loan  Agreement.  The Senior Loan and the
obligations  related thereto shall rank senior to the Notes and shall be secured
by a first priority  perfected  security  interest in  substantially  all of the
assets of  ShellCo  and  substantially  all of the  assets of each of  ShellCo's
subsidiaries (other than Foreign  Subsidiaries),  including,  without limitation
the stock of each  Subsidiary  that is not a Foreign  Subsidiary  and 65% of the
voting stock and each first-tier Foreign Subsidiary.  The respective  priorities
and  preferences  of the Notes and the Senior Loan in respect of the  Collateral
(as  defined in the  Security  Documents  (as  defined  below)) are set forth in
detail in that certain Intercreditor and Subordination  Agreement by and between
Fortress Credit Corp., as collateral agent for the lenders under the Senior Loan
Agreement,  and the  Collateral  Agent (as defined  below) to be dated as of the
Closing Date,  substantially  in the form  attached  hereto as Exhibit I (as the
same may be amended, restated, supplemented and/or modified from time to time in
accordance with the provisions thereof, the "INTERCREDITOR AGREEMENT").

         M. Contemporaneously with, and as a condition, to the Closing, and with
certain of the proceeds of the transactions  contemplated hereby,  ShellCo shall
acquire,  directly or indirectly,  all (or  substantially  all) of the equity of
each  of  (i)  FMI  Holdco  I,  LLC,  a  Delaware  limited   liability   company
headquartered  at 800 Federal Blvd.,  Carteret,  New Jersey 07008 and

                                       3
<PAGE>

certain of its parent companies  (collectively,  "FMI"), (ii) Clare Freight, Los
Angeles, Inc. a California corporation  headquartered at 17979 Arenth Ave., City
of Industry,  CA 91748,  and (iii) TUG New York,  Inc.,  a New York  corporation
headquartered at 13 Hendrickson  Ave.,  Lynbrook,  NY 11563 (together with Clare
Freight,  Los Angeles,  Inc.,  the "TUG  COMPANIES"  and together  with FMI, the
"TARGETS")  and  substantially  all of the assets of the TUG Logistics  group of
companies, including TUG Logistics, Inc., a California corporation headquartered
at 17971 Arenth Ave., City of Industry,  CA 91748, TUG Logistics (Miami), Inc. a
Florida  corporation  headquartered  at 2801 NW 74 Ave.,  Suite 173,  Miami,  FL
33122,  and Glare  Logistics,  Inc., a California  corporation  headquartered at
16905 South Keegan Ave., Carson, Los Angeles, CA 90746  (collectively,  the "TUG
ASSETS",  and the  acquisition of the TUG Assets and the Targets,  collectively,
the "ACQUISITIONS").

         NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

         1. PURCHASE AND SALE OF NOTES AND WARRANTS.

                  (a) PURCHASE NOTES AND WARRANTS.  Subject to the  satisfaction
(or waiver) of the conditions  set forth in Sections 6 and 7 below,  the Company
shall cause ShellCo to issue and sell to each Buyer,  and each Buyer  severally,
but not jointly, agrees to purchase from ShellCo on the Closing Date (as defined
below),  (x) the principal  amount of Notes set forth opposite such Buyer's name
in column (3) on the Schedule of Buyers and (y) the related  Warrants to acquire
up to that number of Warrant  Shares set forth  opposite  such  Buyer's  name in
column (4) on the Schedule of Buyers (the "CLOSING").

                  (b) CLOSING.  The date and time of the Closing  (the  "CLOSING
DATE")  shall be 10:00  a.m.,  New York City  time,  on the first day other than
Saturday,  Sunday or other day on which commercial banks in the City of New York
are authorized or required by law to remain closed (a "BUSINESS  DAY") following
the satisfaction (or waiver) and notification of the Company of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7 below (or
such later or earlier  date as is  mutually  agreed to by the Company and Buyers
holding the right to purchase at least 80% of the aggregate  principal amount of
the  Notes).  The  Closing  shall  occur on the  Closing  Date at the offices of
Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022.

                  (c) PURCHASE PRICE. The aggregate purchase price for the Notes
and the  Warrants  to be  purchased  by each  such  Buyer  at the  Closing  (the
"PURCHASE  PRICE")  shall be the amount set forth  opposite such Buyer's name in
column  (5) of the  Schedule  of Buyers.  Each  Buyer  shall pay $1,000 for each
$1,000 of principal amount of Notes and related Warrants to be purchased by such
Buyer at the Closing.

                  (d) FORM OF PAYMENT. On the Closing Date, (i) each Buyer shall
pay its respective  Purchase Price to ShellCo and/or to one or more designees of
ShellCo  for the Notes and  Warrants  to be issued and sold to such Buyer at the
Closing, by wire transfer of immediately  available funds in accordance with the
Company's  or  ShellCo's  written wire  instructions,  less any amount  withheld
pursuant to Section 4(f), and (ii) the Company shall cause ShellCo to deliver to
each Buyer the Notes  (allocated  in the  principal  amounts as such Buyer shall
request)  representing  such  principal  amount of the Notes which such Buyer is
then  purchasing  hereunder  along  with  warrants   representing  the  Warrants
(allocated  in the  amounts as such  Buyer  shall

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<PAGE>

request) which such Buyer is purchasing, in each case duly executed on behalf of
ShellCo and registered in the name of such Buyer or, subject to compliance  with
applicable securities laws, its designee.

         2. BUYER'S  REPRESENTATIONS  AND WARRANTIES.  Each Buyer represents and
warrants, severally and not jointly, as of the date of this Agreement and on the
Closing Date, with respect to only itself that:

                  (a) NO PUBLIC SALE OR  DISTRIBUTION.  Such Buyer is  acquiring
the Notes,  and the Warrants,  and upon  conversion of the Notes and exercise of
the Warrants will acquire the Conversion  Shares issuable upon conversion of the
Notes and the Warrant  Shares  issuable upon exercise  thereof,  in the ordinary
course of  business,  for its own  account 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 1933 Act and such Buyer does
not have a present  arrangement to effect any  distribution of the Securities to
or  through  any  person  or  entity;  PROVIDED,  HOWEVER,  that by  making  the
representations  herein, such Buyer does not agree to hold any of the Securities
for any minimum or other  specific term and reserves the right to dispose of the
Securities  at any  time  in  accordance  with  or  pursuant  to a  registration
statement  or an  exemption  under the 1933 Act and  pursuant to the  applicable
terms of the Transaction  Documents (as defined in Section 3(b)).  Such Buyer is
acquiring the Securities hereunder in the ordinary course of its business.  Such
Buyer does not  presently  have any  agreement  or  understanding,  directly  or
indirectly,  with any Person (as defined in Section 3(p)) to  distribute  any of
the Securities.

                  (b) ACCREDITED  INVESTOR STATUS.  Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.

                  (c) RELIANCE ON EXEMPTIONS.  Such Buyer  understands  that the
Securities  are 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 the Company is relying,  and ShellCo will rely,  upon, among other
things,  the truth and  accuracy  of,  and such  Buyer's  compliance  with,  the
representations,  warranties, agreements,  acknowledgments and understandings of
such  Buyer set forth  herein in order to  determine  the  availability  of such
exemptions and the eligibility of such Buyer to acquire the Securities.

                  (d)  INFORMATION.  Such Buyer and its  advisors,  if any, have
been  furnished  with all  materials  relating  to the  business,  finances  and
operations  of the Company and the Targets and  materials  relating to the offer
and sale of the Securities  which have been requested by such Buyer.  Such Buyer
and its advisors, if any, have been afforded the opportunity to ask questions of
the Company.  Neither such inquiries nor any other due diligence  investigations
conducted by such Buyer or its advisors,  if any, or its  representatives  shall
modify,   amend  or  affect  such  Buyer's   right  to  rely  on  the  Company's
representations and warranties contained herein. Such Buyer understands that its
investment  in the  Securities  involves  a high  degree  of risk and is able to
afford  a  complete  loss  of  such  investment.  Such  Buyer  has  sought  such
accounting,  legal and tax  advice  as it has  considered  necessary  to make an
informed investment decision in respect of its acquisition of the Securities.

                                       5
<PAGE>

                  (e) NO GOVERNMENTAL  REVIEW.  Such Buyer  understands  that no
United States  federal or state agency or any other  government or  governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Securities.

                  (f) TRANSFER OR RESALE.  Such Buyer understands that except as
provided in the Registration Rights Agreement:  (i) the Securities have not been
and are not being  registered  under the 1933 Act or any state  securities laws,
and may not be  offered  for sale,  sold,  assigned  or  transferred  unless (A)
subsequently  registered  thereunder,  (B) such Buyer  shall have  delivered  to
ShellCo an opinion of counsel,  in a form reasonably  acceptable to ShellCo,  to
the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration,  or (C)
such Buyer provides ShellCo with assurance reasonably acceptable to ShellCo that
such  Securities can be sold,  assigned or  transferred  pursuant to Rule 144 or
Rule 144A  promulgated  under the 1933 Act,  as amended,  (or a  successor  rule
thereto)  (collectively,  "RULE 144");  (ii) any sale of the Securities  made in
reliance on Rule 144 may be made only in  accordance  with the terms of Rule 144
and further,  if Rule 144 is not applicable,  any resale of the Securities under
circumstances  in which the seller (or the Person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) none of ShellCo, the Company or any
other Person is under any obligation to register the  Securities  under the 1933
Act or any state  securities  laws or to comply with the terms and conditions of
any  exemption  thereunder.   Notwithstanding  the  foregoing,  and  subject  to
compliance  with  applicable  securities  laws, the Securities may be pledged in
connection  with  a  bona  fide  margin  account  or  other  loan  or  financing
arrangement secured by the Securities and such pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder,  unless
required by law, and no Buyer effecting a pledge of Securities shall be required
to provide  ShellCo with any notice  thereof or  otherwise  make any delivery to
ShellCo or the  Company  pursuant  to this  Agreement  or any other  Transaction
Document, including without limitation, this Section 2(f).

                  (g) LEGENDS.  Such Buyer  understands that the certificates or
other  instruments  representing  the  Notes  and the  Warrants  and  the  stock
certificates  representing the Conversion Shares and the Warrant Shares,  except
as set forth below,  shall bear any legend as required by the "blue sky" laws of
any state and a restrictive  legend in  substantially  the following form (and a
stop-transfer order may be placed against transfer of such certificates):

              [NEITHER THE ISSUANCE AND SALE OF THE  SECURITIES  REPRESENTED
              BY  THIS  CERTIFICATE  NOR THE  SECURITIES  INTO  WHICH  THESE
              SECURITIES  ARE  [CONVERTIBLE]  [EXERCISABLE]  HAVE  BEEN] THE
              SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  HAVE  NOT  BEEN
              REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR
              APPLICABLE  STATE  SECURITIES  LAWS. THE SECURITIES MAY NOT BE
              OFFERED FOR SALE,  SOLD,  TRANSFERRED  OR ASSIGNED  (I) IN THE
              ABSENCE OF (A) AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR THE
              SECURITIES  UNDER THE SECURITIES

                                        6
<PAGE>

              ACT  OF  1933,  AS  AMENDED,  OR  (B) AN  OPINION  OF  COUNSEL
              REASONABLY   SATISFACTORY  TO  THE  ISSUER,   IN  A  GENERALLY
              ACCEPTABLE FORM, THAT  REGISTRATION IS NOT REQUIRED UNDER SAID
              ACT OR (II) UNLESS SOLD PURSUANT TO, AND IN  ACCORDANCE  WITH,
              RULE 144 OR RULE  144A  UNDER  SAID ACT.  NOTWITHSTANDING  THE
              FOREGOING,  SUBJECT TO COMPLIANCE WITH  APPLICABLE  SECURITIES
              LAWS, THE SECURITIES MAY BE PLEDGED IN CONNECTION  WITH A BONA
              FIDE  MARGIN  ACCOUNT OR OTHER LOAN OR  FINANCING  ARRANGEMENT
              SECURED BY THE  SECURITIES.  THIS INSTRUMENT IS SUBJECT TO THE
              TERMS OF A SECURITIES PURCHASE AGREEMENT (NOTES AND WARRANTS),
              DATED AS OF NOVEMBER 8, 2006, BY AND AMONG MARITIME  LOGISTICS
              US  HOLDINGS  INC.,  THE BUYERS  LISTED  THEREIN  AND  AEROBIC
              CREATIONS,  INC.  PURSUANT TO THAT CERTAIN JOINDER  AGREEMENT,
              DATED AS OF NOVEMBER 8, 2006, AND AN  INTERCREDITOR  AGREEMENT
              BY AND BETWEEN LAW  DEBENTURE  TRUST  COMPANY OF NEW YORK,  ON
              BEHALF OF THE HOLDER OF THIS NOTE AND OF THE OTHER NOTES,  AND
              FORTRESS   CREDIT  CORP.   AS  AGENT  (OR  ANY   SUCCESSOR  OR
              REPLACEMENT AGENT),  DATED AS OF NOVEMBER 8, 2006 (AS THE SAME
              MAY BE AMENDED,  SUPPLEMENTED,  RESTATED,  NOVATED OR REPLACED
              (INCLUDING IN CONNECTION WITH  REPLACEMENT  SENIOR  FINANCING)
              FROM TIME TO TIME, THE "INTERCREDITOR AGREEMENT").

The  legend  set  forth  above  shall  be  removed  and  ShellCo  shall  issue a
certificate without such legend to the holder of the Securities upon which it is
stamped or, in the case of Conversion  Shares or Warrant  Shares,  issue to such
holder  by  electronic  delivery  at  the  applicable  balance  account  at  The
Depository  Trust  Company  ("DTC"),  if,  unless  otherwise  required  by state
securities  laws,  (i) such  Securities are registered for resale under the 1933
Act,  provided that (A) upon receipt of notice from ShellCo that the  applicable
registration  statement  is not,  or no longer is  effective  in  respect of the
resale of such Securities,  the Holder will not transfer such Securities  (other
than pursuant to clauses 2(g)(ii) or 2(g)(iii) below) until ShellCo notifies the
Holder that the applicable registration statement becomes effective (again), and
(B) the Holder  hereby  agrees to indemnify  severally  and not jointly and hold
ShellCo  harmless  against any claim of securities laws violations in respect of
any such transfer (from and after the date the Holder  receives the first notice
described  in Section  2(g)(i)(A)  above  through  the date on which such Holder
receives the second notice described in Section 2(g)(i)(A) above) by such Holder
of any  Security as to which such legend has been  removed,  (ii) in  connection
with a sale, assignment or other transfer,  such holder provides ShellCo with an
opinion of counsel reasonably satisfactory to ShellCo, in a generally acceptable
form, to the effect that such sale, assignment or transfer of the Securities may
be made without  registration under the applicable  requirements of the 1933 Act
and that such  legend is no  longer  required,  or (iii)  such  holder  provides
ShellCo with assurances reasonably acceptable to ShellCo that the Securities can
be sold,  assigned or  transferred  pursuant

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<PAGE>

to Rule 144 or Rule 144A,  and such Holder  delivers the legended  Securities to
ShellCo or ShellCo's transfer agent.

                  (h) VALIDITY;  ENFORCEMENT. This Agreement has been, and, when
the other  Transaction  Documents  (as  defined  below) to which such Buyer is a
party are executed and  delivered in  accordance  with the terms and  conditions
contemplated hereby and thereby, such documents shall have been duly and validly
authorized,  executed and delivered on behalf of such Buyer and shall constitute
the legal, valid and binding  obligations of such Buyer enforceable against such
Buyer in accordance with their respective terms,  except as such  enforceability
may be limited  by general  principles  of equity or to  applicable  bankruptcy,
insolvency,  reorganization,  fraudulent  conveyance  or  transfer,  moratorium,
liquidation  and other  similar laws  relating to, or affecting  generally,  the
enforcement of applicable creditors' rights and remedies.

                  (i) NO CONFLICTS.  The execution,  delivery and performance by
such Buyer of this Agreement and the other  Transaction  Documents to which such
Buyer  is a  party  and  the  consummation  by such  Buyer  of the  transactions
contemplated  hereby  and  thereby  will not (i)  result in a  violation  of any
organizational  documents of such Buyer or (ii)  conflict  with, or constitute a
default (or an event  which with notice or lapse of time or both would  become a
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
such  Buyer is a  party,  or  (iii)  result  in a  violation  of any law,  rule,
regulation,  order,  judgment or decree (including  federal and state securities
laws) applicable to such Buyer or by which any property or asset of the Buyer is
bound or affected,  except in the case of clauses (ii) and (iii) above, for such
conflicts,  defaults,  rights or violations which would not,  individually or in
the aggregate,  reasonably be expected to have a material  adverse effect on the
ability of such Buyer to perform its  obligations  hereunder or under any of the
other Transaction Documents. Each Buyer agrees that it has independently,  based
on such documents and  information it deemed  appropriate,  made its decision to
enter into this Agreement and purchase the Notes and Warrants.

                  (j) RESIDENCY.  Such Buyer is a resident of that  jurisdiction
specified below its address on the Schedule of Buyers.

                  (k)  PLACEMENT  AGENT.  Such Buyer  understands  that Rodman &
Renshaw,  LLC (the "AGENT") has acted solely as the agent of the Company in this
placement  of the  Securities,  and that the Agent  makes no  representation  or
warranty with regard to the merits of this  transaction or as to the accuracy of
any information such Buyer may have received in connection therewith. Such Buyer
acknowledges that it has not relied on any information  prepared by the Agent or
advice  furnished  by or on behalf of the Agent.  Such Buyer agrees that it has,
independently  and without  reliance on Agent,  and based on such  documents and
information  as it has  deemed  appropriate,  made its own  credit  analysis  of
ShellCo, the Company and the Targets and has made its own decision to enter into
this Agreement and purchase the applicable Securities.

                                       8
<PAGE>

         3.   REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.   The  Company
represents  and  warrants  to each of the  Buyers on the date  hereof and on the
Closing Date that:

                  (a) ORGANIZATION AND QUALIFICATION. Set forth on SCHEDULE 3(A)
is a true and correct  list of the  entities in which the Company or any Target,
directly  or  indirectly,  owns  capital  stock or holds an  equity  or  similar
interest,  together with their respective  jurisdictions of organization and the
percentage of the  outstanding  capital stock or other equity  interests of such
entity  that is held by the  Company or such  Target or any of their  respective
Subsidiaries.  SCHEDULE  3(A)  also  sets  forth a true  and  correct  corporate
structure of ShellCo and its  Subsidiaries  immediately  following  the Closing,
giving pro forma  effect to the  Acquisitions.  Other  than with  respect to the
entities listed on SCHEDULE 3(A), neither the Company or any Target, directly or
indirectly,  owns any securities or beneficial  ownership interests in any other
Person (including through joint ventures or partnership arrangements) or has any
investment in any other Person.  The Company and its  "SUBSIDIARIES"  (which for
purposes  of this  Agreement  means any entity in which the  Company or ShellCo,
directly  or  indirectly,  owns any of the  capital  stock,  equity  or  similar
interests  or voting  power of such entity at the date of this  Agreement or any
time hereafter, and each of the Targets and their respective subsidiaries) other
than the Foreign  Subsidiaries  are entities duly organized and validly existing
and in good  standing  under  the laws of the  jurisdiction  in  which  they are
formed,  and have the requisite power and authority to own their  properties and
to carry on their  business  as now being  conducted.  To the  knowledge  of the
Company,  each of the Foreign  Subsidiaries  are  entities  duly  organized  and
validly existing and, to the extent legally  applicable,  in good standing under
the laws of the  jurisdiction  in which they are formed,  and have the requisite
power and authority to own their  properties  and to carry on their  business as
now being conducted, except where failure to be so organized,  existing, in good
standing, and/or have such requisite power and authority would not, individually
or in the aggregate, have a Material Adverse Effect. Each of the Company and the
Subsidiaries  is duly  qualified as a foreign  entity to do business and, to the
extent legally  applicable,  is in good standing in every  jurisdiction in which
its  ownership of property or the nature of the  business  conducted by it makes
such  qualification  necessary,  except to the extent  that the failure to be so
qualified or be in good standing would not have a Material  Adverse  Effect.  As
used in this Agreement,  "MATERIAL  ADVERSE  EFFECT" means any material  adverse
effect on the business, properties, assets, operations, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole, or on the transactions  contemplated  hereby and the other  Transaction
Documents or by the agreements and  instruments to be entered into in connection
herewith  or  therewith,  or on the  authority  or ability of the Company or any
Subsidiary  to perform  its  obligations  under the  Transaction  Documents  (as
defined  below).  Except as set forth in  SCHEDULE  3(A),  the  Company and each
Target holds all right,  title and interest in and to 100% of the capital stock,
equity or similar  interests  of each of its  respective  Subsidiaries,  in each
case,  free and clear of any Liens (as defined below) other than Permitted Liens
(as  defined  in the  Notes)  including  any  restriction  on the  use,  voting,
transfer,  receipt of income or other  exercise  of any  attributes  of free and
clear ownership by a current holder other than as set forth in the Intercreditor
Agreement,  and no such  Subsidiary  owns  capital  stock or holds an  equity or
similar interest in any other Person.  As used in this Agreement,  "LIEN" means,
with respect of any asset, any mortgage,  lien, pledge,  hypothecation,  charge,
security interest,  encumbrance or adverse claim of any kind and any restrictive
covenant, condition, restriction or exception of any kind that has the practical
effect of creating a mortgage,  lien,

                                       9
<PAGE>

pledge, hypothecation,  charge, security interest,  encumbrance or adverse claim
of any  kind  (including  any of the  foregoing  created  by,  arising  under or
evidenced  by any  conditional  sale or other  title  retention  agreement,  the
interest  of a lessor  with  respect to a "Capital  Lease" (in  accordance  with
generally  accepted  accounting  principles),  or  any  financing  lease  having
substantially the same economic effect as any of the foregoing).

                  (b) AUTHORIZATION;  ENFORCEMENT; VALIDITY. The Company has the
requisite   corporate  power  and  authority  to  enter  into  and  perform  its
obligations  under  (i) this  Agreement,  the  Guaranty  and  each of the  other
agreements   entered  into  by  the  parties  hereto  in  connection   with  the
transactions  contemplated  by this  Agreement  to  which  it is a  party  (such
documents,  and together with the Notes, the Warrants,  the Registration  Rights
Agreement,  the  Security  Documents,  the  Transfer  Agent  Instructions,   the
Intercreditor  Agreement and each of the other  agreements to be entered into in
connection with the  transactions  contemplated  by this Agreement,  as amended,
restated,  supplemented and/or modified from time to time in accordance with the
provisions  thereof,  collectively,  the  "TRANSACTION  DOCUMENTS") and (ii) the
Acquisition  Documents  (as  defined in Section  3(ii))  and to  consummate  the
transactions contemplated herein and therein in accordance with the terms hereof
and thereof.  The  execution and delivery of the  Transaction  Documents and the
Acquisition  Documents  (to which the Company is a party) by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
have been duly  authorized  by the board of directors of the Company (the "BOARD
OF  DIRECTORS")  and other than as set forth in Section 3(e) hereof,  no further
filing, consent or authorization is required by the Company, its stockholders or
the Board of Directors.  To the extent that a person that is a Subsidiary of the
Company on the date hereof is a party to or bound by a  Transaction  Document or
an Acquisition  Document,  such Subsidiary has the requisite power and authority
to enter into and perform its  obligations  under such  Transaction  Document or
Acquisition Document and the execution and delivery of such Transaction Document
by such Subsidiary and the  consummation by such Subsidiary of the  transactions
contemplated  thereby  have been duly  authorized  by the board of  directors or
equivalent body of such Subsidiary and no further  consent or  authorization  is
required by such  Subsidiary,  its equity  holders or its board of  directors or
equivalent  body.  This  Agreement,  the  other  Transaction  Documents  and the
Acquisition Documents to which the Company and, if applicable,  its Subsidiaries
(existing on the date hereof) is a party have been duly  executed and  delivered
by the Company,  and constitute the legal, valid and binding obligations of such
parties  enforceable  against such parties in accordance  with their  respective
terms,  except as such  enforceability  may be limited by general  principles of
equity  or  applicable  bankruptcy,   insolvency,   reorganization,   fraudulent
conveyance or transfer, moratorium,  liquidation or similar laws relating to, or
affecting  generally,  the  enforcement  of  applicable  creditors'  rights  and
remedies.  As of the Closing,  the  Transaction  Documents  and the  Acquisition
Documents  dated after the date of this Agreement and on or prior to the date of
the Closing  shall have been duly  executed and delivered by the Company and, if
applicable,  those  Persons  who are  Subsidiaries  of the  Company  on the date
hereof, and shall constitute the valid and binding  obligations of such parties,
enforceable  against  such  parties in  accordance  with their  terms  except as
enforceability  may be  limited by general  principles  of equity or  applicable
bankruptcy,  insolvency,  reorganization,  fraudulent  conveyance  or  transfer,
moratorium or similar laws relating to, or affecting generally,  the enforcement
of creditors' rights and remedies.

                                       10
<PAGE>

                  (c) OFFER OF  SECURITIES.  Subject to the  accuracy of Buyer's
representations and warranties  hereunder,  the offer by the Company and ShellCo
of the Securities is exempt from registration under the 1933 Act.

                  (d) NO CONFLICTS.  The execution,  delivery and performance of
the Transaction  Documents by the Company,  and if applicable its  Subsidiaries,
and the consummation by such parties of the transactions contemplated hereby and
thereby and the granting of a security  interest in the Collateral  will not (i)
result in a  violation  of any  certificate  of  incorporation,  certificate  of
formation, any certificate of designations or other constituent documents of the
Company or any of the  Subsidiaries,  any capital stock of the Company or any of
the  Subsidiaries  or bylaws of the Company or any of the  Subsidiaries  or (ii)
conflict  with,  or constitute a default (or an event which with notice or lapse
of time or both would become a default) in any respect under,  or give to others
any rights of termination,  amendment, acceleration or cancellation of, or other
remedy in respect  of,  any  agreement,  indenture  or  instrument  to which the
Company or any of the Subsidiaries is a party, or (iii) result in a violation of
any  Requirements  of Law,  except in the case of clauses (i) (in respect of the
Foreign Subsidiaries),  (ii) and (iii) of this Section 3(d), for such conflicts,
defaults,  rights  or  violations  which  would  not,  individually  or  in  the
aggregate,  have a  Material  Adverse  Effect.  As used in this  Agreement,  (A)
"REQUIREMENTS OF LAW" means, as to any Person, any United States or foreign law,
statute, treaty, rule, regulation, right, privilege,  qualification,  license or
franchise or  determination  of an arbitrator  or a court or other  Governmental
Entity,  in each case  applicable  or  binding  upon  such  Person or any of its
property or to which such Person or any of its property is subject or pertaining
to any or all of the  transactions  contemplated  or  referred to herein and (B)
"GOVERNMENTAL  ENTITY" means the government of any nation, state, city, locality
or  other  political  subdivision  thereof,  any  entity  exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to government and any  corporation or other entity owned or controlled,  through
stock or capital ownership or otherwise, by any of the foregoing.

                  (e) CONSENTS.  Neither the Company nor any of the Subsidiaries
is required to obtain any consent, authorization or order of, or make any filing
or  registration  with,  any court,  governmental  agency or any  regulatory  or
self-regulatory  agency or any other Person in order for it to execute,  deliver
or perform  any of its  obligations  under or  contemplated  by the  Transaction
Documents  to which it is a party,  in each  case in  accordance  with the terms
hereof or thereof,  except for the following consents,  authorizations,  orders,
filings  and  registrations:   (i)  the  filing  of  appropriate  UCC  financing
statements with the  appropriate  states and other  authorities  pursuant to the
Pledge Agreement and the Security  Agreement;  (ii) the Perfection  Requirements
(as defined in the  Security  Agreement);  (iii) the current  report on Form 8-K
required to be filed after  Closing by ShellCo  pursuant to Section 4(h) of this
Agreement;  (iv) the filing of the Schedule  14C  relating to the Reverse  Split
among other  things;  (v) the Form D filing  required to be made  following  the
Closing by ShellCo  with the SEC;  (vi)  filings  required by  applicable  state
securities  laws;  and  (vii)  the  registration  statement  and  related  state
securities  law  filings  required by the  Registration  Rights  Agreement.  All
consents, authorizations, orders, filings and registrations which the Company is
required to have  obtained  prior to the date hereof  pursuant to the  preceding
sentence have been obtained or effected. Notwithstanding the first two sentences
of this Section 3(e),  to the extent that any Foreign  Subsidiary is required to
obtain any consent,  authorization or order, or make any filing or registration,
but has not done so, such failure  shall

                                       11
<PAGE>

not constitute a default hereunder or under the other  Transaction  Documents if
such  failure(s),  individually  or in the aggregate,  would not have a Material
Adverse Effect.

                  (f)  ACKNOWLEDGMENT  REGARDING BUYER'S PURCHASE OF SECURITIES.
The  Company  acknowledges  and agrees  that each Buyer is acting  solely in the
capacity of an arm's length  purchaser in respect of the  Transaction  Documents
and the  transactions  contemplated  hereby and thereby and that,  except as set
forth on SCHEDULE  3(F),  no Buyer is (i) an officer or director of the Company,
(ii) an  "affiliate"  of the  Company  (as  defined in Rule 144) or (iii) to the
knowledge of the Company, a "beneficial owner" of more than 10% of the shares of
Common Stock (as defined for purposes of Rule 13d-3 of the  Securities  Exchange
Act of 1934,  as amended (the "1934  Act")).  The Company  further  acknowledges
that, except as set forth on SCHEDULE 3(F), to the knowledge of the Company,  no
Buyer is acting as a  financial  advisor or  fiduciary  of any of  ShellCo,  the
Company  or any  Subsidiary  (or in any  similar  capacity)  in  respect  of the
Transaction Documents and the transactions  contemplated hereby and thereby, and
any  advice  given  by a  Buyer  or any  of its  representatives  or  agents  in
connection  with the  Transaction  Documents and the  transactions  contemplated
hereby  and  thereby  is  merely  incidental  to such  Buyer's  purchase  of the
Securities.  The Company  further  represents to each Buyer that the decision of
the Company and each of the Subsidiaries to enter into the Transaction Documents
to which  such  Person  is a party  has been  based  solely  on the  independent
evaluation   by  the   Company,   such   Subsidiaries   and   their   respective
representatives.

                  (g) NO GENERAL  SOLICITATION;  PLACEMENT AGENT'S FEES. None of
the Company,  any of its  Affiliates,  or to the  knowledge of the Company,  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) in
connection  with  the  offer or sale of the  Securities.  The  Company  shall be
responsible for the payment of any placement  agent's fees,  financial  advisory
fees, or brokers'  commissions  (other than for persons  engaged by any Buyer or
its  investment  advisor)  relating  to  or  arising  out  of  the  transactions
contemplated  hereby.  The  Company  shall  pay,  and hold each  Buyer  harmless
against,  any  liability,  loss  or  expense  (including,   without  limitation,
attorneys' fees and out-of-pocket  expenses) arising in connection with any such
claim. The Company acknowledges that it has engaged the Agent as placement agent
in connection  with the sale of the Securities.  Other than the Agent,  the fees
and expenses of whom shall be borne by the Company or ShellCo  (pursuant to that
certain Placement Agent Agreement between Agent and the Company dated August 22,
2006),  the  Company  has not  engaged  any  placement  agent or other  agent in
connection with the sale of the Securities.

                  (h)  NO  INTEGRATED   OFFERING.   None  of  the  Company,  the
Subsidiaries, any of their Affiliates, nor, to the knowledge of the Company, any
Person acting on their behalf has made,  directly or  indirectly,  any offers or
sales of any  security  or  solicited  any  offers  to buy any  security,  under
circumstances that would require registration of any of the Securities under the
1933 Act or cause this offering of the Securities to be integrated with prior or
concurrent  offerings  by  the  Company  for  purposes  of the  1933  Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the  securities  of the Company are listed or  designated  other than the
Common PIPE  Offering and the  Acquisitions,  which Common PIPE Offering and the
Acquisitions  have been  undertaken  only in such a manner  as to not  adversely
affect the exemption  from  registration  enjoyed by the sale of the  Securities
pursuant  to  this

                                       12
<PAGE>

Agreement. None of the Company, the Subsidiaries, their Affiliates or any Person
acting  on their  behalf  will  take any  action  or  steps  referred  to in the
preceding  sentence that would  require  registration  of any of the  Securities
under the 1933 Act or cause the offering of the Securities to be integrated with
other offerings. As used in this Agreement,  "AFFILIATE" means any Person who is
an  "AFFILIATE"  as defined in Rule 12b-2 of the General  Rules and  Regulations
under the 1934 Act.

                  (i) APPLICATION OF TAKEOVER PROTECTIONS; RIGHTS AGREEMENT. The
Company and the Board of Directors have taken all necessary  action,  if any, in
order  to  render   inapplicable   any  control  share   acquisition,   business
combination,  poison pill (including any distribution  under a rights agreement)
or other similar anti-takeover  provision under the Certificate of Incorporation
(as defined in Section  3(o)) or the laws of Delaware  which is or could  become
applicable  to any Buyer as a result of the  transactions  contemplated  by this
Agreement,  including, without limitation,  ShellCo's issuance of the Securities
and any  Buyer's  ownership  of the  Securities.  The  Company has not adopted a
stockholder  rights plan or similar  arrangement  relating to  accumulations  of
beneficial ownership of its Common Stock or a change in control of the Company.

                  (j)   FINANCIAL   STATEMENTS.   The   consolidated   financial
statements  of the  Company  and  each of the  Targets  have  been  prepared  in
accordance with United States generally accepted accounting  principles ("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 present in all
material  respects the  financial  position of the Company,  or such Target,  as
applicable,  as of the dates thereof and the 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 that, to the Company's  knowledge,  are not
material,   individually  or  in  the  aggregate.  Except  for  liabilities  and
obligations incurred in the ordinary course of business and consistent with past
practice,  liabilities and obligations  reflected on or reserved  against in the
June 30, 2006 interim  consolidated balance sheets of the Company or in the June
30, 2006  interim  consolidated  balance  sheets of any Target,  as  applicable,
prepared  in  accordance  with GAAP  delivered  pursuant  to  Section  7(q) (the
"BALANCE SHEETS") and as otherwise contemplated hereby or disclosed herein or in
the disclosure schedules to this Agreement (the "DISCLOSURE  SCHEDULES"),  since
July 1,  2006,  inclusive  of such date,  none of the  Company or any Target has
incurred any  liabilities or obligations  that would be required to be reflected
or  reserved  against  in a balance  sheet of the  Company  or such  Target,  as
applicable,  prepared in accordance  with the principles used in the preparation
of the Balance Sheets. None of the Company or, to the Company's  knowledge,  any
stockholder,  officer or director of the Company has issued any press release or
made any other  public  statement or  communication  on behalf of the Company or
otherwise  relating to the Company or any of its Subsidiaries  that contains any
untrue  statement of a material  fact or omits any  statement  of material  fact
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances under which they were made, not misleading.

                  (k) ABSENCE OF CERTAIN CHANGES. Since June 30, 2006, there has
been no change or development in the business, properties, operations, condition
(financial  or  otherwise)  results of operations or prospects of the Company or
any Subsidiary  that has had or could

                                       13
<PAGE>

reasonably be expected to have a Material Adverse Effect. Except as set forth on
SCHEDULE  3(K),   since  June  30,  2006,  (and  before  giving  effect  to  the
transactions  contemplated under the Transaction  Documents) none of the Company
or any Target has (i)  declared or paid any  dividends  other than as would have
been permitted  under the Notes,  (ii) sold any assets,  individually  or in the
aggregate,  in excess of $300,000  outside of the  ordinary  course of business,
(iii) had capital expenditures,  individually or in the aggregate,  in excess of
$300,000 or (iv) waived any material  rights in respect of any  Indebtedness  or
other rights in excess of $300,000 owed to it. None of the Company or any Target
has taken any steps to seek  protection  pursuant to any bankruptcy law nor does
the Company have any  knowledge  or reason to believe that its  creditors or the
creditors of any Target intend to initiate involuntary bankruptcy proceedings or
any actual  knowledge of any fact which would  reasonably  lead a creditor to do
so.  Neither  the Company  nor any  Subsidiary  of the Company is as of the date
hereof, and after giving effect to the transactions contemplated hereby to occur
at the Closing  will be,  Insolvent  (as defined  below).  For  purposes of this
Section 3(k),  "INSOLVENT" means, in respect of any Person, (i) the present fair
saleable value of such Person's assets (and including as assets for this purpose
at a fair valuation all rights of subrogation,  contribution or  indemnification
arising pursuant to any guarantees given by such Person) is less than the amount
required to pay such Person's  (after giving effect to the  Acquisitions)  total
Indebtedness (as defined in Section 3(p)), (ii) such Person is unable to pay its
debts and liabilities,  subordinated, contingent or otherwise, as such debts and
liabilities  become absolute and matured,  (iii) such Person intends at any time
to incur or  believes  that it will at any time incur debts that would be beyond
its  ability to pay as such debts  mature or (iv) such  Person has  unreasonably
small  capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.

                  (l)  CONDUCT  OF  BUSINESS;  REGULATORY  PERMITS.  None of the
Company or any Subsidiary is in violation of any term of or in default under its
certificate  of  incorporation,  certificate  of formation,  any  certificate of
designations  of any  outstanding  series of preferred  stock of such company or
Bylaws or their organizational charter or other constituent documents or bylaws,
respectively  except  for such  violations  or  defaults  in the case of Foreign
Subsidiaries  which would not,  individually or in the aggregate,  reasonably be
expected  to  have  a  Material  Adverse  Effect.  None  of the  Company  or any
Subsidiary  is in  violation  of any  judgment,  decree or order or any statute,
ordinance, rule or regulation applicable to such entity, and none of the Company
or any Subsidiary  will conduct its  respective  business in violation of any of
the foregoing, except for such violations and/or possible violations which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse  Effect.  The Company  and each  Subsidiary  possess  all  certificates,
authorizations  and permits  issued by the  appropriate  regulatory  authorities
necessary to conduct their  respective  businesses,  except where the failure to
possess  such   certificates,   authorizations   or  permits   would  not  have,
individually or in the aggregate,  a Material  Adverse  Effect,  and none of the
Company or any Subsidiary has received any notice of proceedings relating to the
revocation or  modification  of any such  certificate,  authorization  or permit
except  where such  proceedings,  revocation  or  modification  would not have a
Material Adverse Effect.

                  (m)  FOREIGN  CORRUPT  PRACTICES.  None of the  Company or any
Subsidiary, nor any director, officer, agent, employee or other Person acting on
behalf of any of them has,  in the course of its  actions  for, or on behalf of,
such entity (i) used any corporate  funds for any

                                       14
<PAGE>

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 unlawful  bribe,  rebate,
payoff, influence payment,  kickback or other unlawful payment to any foreign or
domestic government official or employee; except for such actions referred to in
clauses (i) through  (iv) which,  individually  or in the  aggregate,  could not
reasonably be expected to have a Material Adverse Effect.

                  (n)  TRANSACTIONS  WITH  AFFILIATES.  Except  as set  forth in
SCHEDULE 3(N) hereto,  other than the issuance of restricted stock and the other
arrangements  disclosed on SCHEDULE  3(N),  none of the  officers,  directors or
employees  of any of the Company or any  Subsidiary  is presently a party to any
transaction  with any of the Company or any Subsidiary  (other than for ordinary
course  services as employees,  officers or directors),  including any contract,
agreement or other  arrangement  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 such officer,  director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer,  director,  or employee has a substantial interest or is
an officer, director, trustee or partner.

                  (o) EQUITY  CAPITALIZATION.  As of the date  hereof and before
giving effect to the Merger, the Acquisitions,  and the financings  contemplated
in the  Transaction  Documents,  the  authorized  capital  stock of the  Company
consists of one million  shares of Common  Stock,  all of which,  as of the date
hereof,  are issued and outstanding.  All of such  outstanding  shares of Common
Stock  of  the  Company  have  been  validly  issued  and  are  fully  paid  and
nonassessable.  Except as disclosed in SCHEDULE  3(O): (i) none of the Company's
capital stock is subject to preemptive rights or any other similar rights or any
Liens  suffered  or  permitted  by the  Company;  (ii) 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, or
exercisable or exchangeable  for, any capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the  Company  or  any of  its  Subsidiaries  is or may  become  bound  to  issue
additional  capital stock of the Company or any of its  Subsidiaries or options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or  exchangeable   for,  any  capital  stock  of  the  Company  or  any  of  its
Subsidiaries;  (iii) there are no outstanding  debt  securities,  notes,  credit
agreements,  credit  facilities or other  agreements,  documents or  instruments
evidencing  Indebtedness  of the Company or any of its  Subsidiaries or by which
the Company or any of its  Subsidiaries  is or may become  bound except for such
Indebtedness  which  (x)  will  be  paid  or  satisfied  in  full  substantially
concurrently  with the Closing with the  proceeds of the purchase of  securities
hereunder,  of the Common PIPE Offering,  and under the Senior Loan Agreement or
(y) constitutes Permitted Indebtedness (as defined in the Notes); (iv) there are
no financing  statements  securing  obligations in any material amounts,  either
singly or in the aggregate,  filed in connection  with the Company or any of its
Subsidiaries  other than financing  statements  evidencing  Permitted Liens; (v)
there are no  agreements or  arrangements  under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their  securities under
the 1933 Act  (except  pursuant to the  Registration  Rights  Agreement  and the
Common PIPE  Registration  Rights Agreement and registration  rights

                                       15
<PAGE>

the Company has agreed to provide to the Agent, the existing shareholders listed
on  Schedule  2(b) to the  Registration  Rights  Agreement,  certain  members of
management and the current  holders of ShellCo Common Stock);  (vi) there are no
outstanding  securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions,  and there are no contracts,
commitments,  understandings  or arrangements by which the Company or any of its
Subsidiaries  is or may become  bound to redeem a security of the Company or any
of such  Subsidiaries;  (vii) there are no securities or instruments  containing
anti-dilution  or similar  provisions  that will be triggered by the issuance of
the Securities;  (viii) the Company does not have any stock appreciation  rights
or "phantom  stock" plans or agreements  or any similar plan or agreement;  (ix)
all the  Company's  outstanding  options  and  warrants  shall be  cancelled  at
Closing;  and (x) no securities of the Company or any  Subsidiary  are listed or
quoted on any stock exchange or automated quotation system. All of the Company's
outstanding options and warrants shall be canceled at Closing. Immediately after
giving  effect to the Merger,  (i) all of the Company's  issued and  outstanding
stock  shall be owned by  ShellCo  and (ii) all other  securities  issued by the
Company  (including,  without limitation,  any securities  disclosed in SCHEDULE
3(O))  shall have been  exchanged  for shares of  ShellCo's  Common  Stock.  The
Company has made  available to the Buyers true,  correct and complete  copies of
the Company's  Certificate of Incorporation,  as amended and as in effect on the
date hereof (the "CERTIFICATE OF  INCORPORATION"),  and the Company's Bylaws, as
amended and as in effect on the date hereof (the  "BYLAWS"),  and all agreements
relating to securities  convertible  into, or exercisable or  exchangeable  for,
shares of Common Stock and the material rights of the holders thereof in respect
thereof.

                  (p) INDEBTEDNESS  AND OTHER CONTRACTS.  Except as disclosed in
SCHEDULE 3(P),  none of the Company or any  Subsidiary  (i) has any  outstanding
Indebtedness  (as defined  below)  except for  Permitted  Indebtedness  and such
Indebtedness which will be paid or satisfied in full substantially  concurrently
with Closing with the proceeds of the purchase of securities  hereunder,  of the
Common PIPE Offering,  and under the Senior Loan  Agreement,  (ii) is a party to
any contract,  agreement or instrument, the violation of which, or default under
which, by the other  party(ies) to such contract,  agreement or instrument could
reasonably  be  expected  to result in a Material  Adverse  Effect,  (iii) is in
violation  of any  term  of or in  default  under  any  contract,  agreement  or
instrument  relating  to any  Indebtedness,  except  where such  violations  and
defaults  would not  result,  individually  or in the  aggregate,  in a Material
Adverse  Effect,  or (iv) is a party to any  contract,  agreement or  instrument
relating to any  Indebtedness,  the performance of which, in the judgment of the
Company's  officers,  could be  reasonably  expected to have a Material  Adverse
Effect.  Immediately  after giving  effect to the Merger,  none of ShellCo,  the
Company,  any Target,  or Subsidiary  shall have any  outstanding  Indebtedness,
other than the Notes,  the  Permitted  Senior  Indebtedness  (as  defined in the
Notes) and the Permitted Indebtedness (as defined in the Notes). For purposes of
this Agreement:  (x) "INDEBTEDNESS" of any Person means, without duplication (A)
all indebtedness for borrowed money, (B) all obligations  issued,  undertaken or
assumed as the  deferred  purchase  price of  property  or  services,  including
(without  limitation)  "capital  leases" in accordance  with generally  accepted
accounting  principles  (other than trade payables  entered into in the ordinary
course of business),  (C) all reimbursement or payment obligations in respect of
letters  of  credit,  surety  bonds  and  other  similar  instruments,  (D)  all
obligations  evidenced  by notes,  bonds,  debentures  or  similar  instruments,
including  obligations so evidenced  incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any  conditional  sale or  other  title

                                       16
<PAGE>

retention agreement,  or incurred as financing, in either case in respect of any
property or assets acquired with the proceeds of such indebtedness  (even though
the rights and remedies of the seller or bank under such  agreement in the event
of  default  are  limited to  repossession  or sale of such  property),  (F) all
monetary  obligations  under  any  leasing  or  similar  arrangement  which,  in
connection with generally accepted accounting  principles,  consistently applied
for the periods  covered  thereby,  is  classified as a capital  lease,  (G) all
indebtedness  referred to in clauses  (A)  through (F) above  secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured  by) any  mortgage,  lien,  pledge,  charge,  security
interest  or other  encumbrance  upon or in any  property  or assets  (including
accounts and contract rights) owned by any Person,  even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or  obligations  of others of the kinds  referred  to in clauses (A) through (G)
above;  (y)  "CONTINGENT  OBLIGATION"  means,  as to any  Person,  any direct or
indirect  liability,  contingent or otherwise,  of that Person in respect of any
indebtedness,  lease,  dividend  or other  obligation  of another  Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect  thereof,  is to provide  assurance to the obligee of such liability that
such  liability  will be paid or  discharged,  or that any  agreements  relating
thereto will be complied  with,  or that the holders of such  liability  will be
protected  (in  whole or in  part)  against  loss in  respect  thereof;  and (z)
"PERSON" means an individual,  a limited  liability  company,  a partnership,  a
joint venture,  a corporation,  a trust,  an  unincorporated  organization  or a
government or any department or agency thereof.

                  (q)  ABSENCE  OF  LITIGATION.   There  is  no  action,   suit,
proceeding, inquiry or investigation that if adversely determined,  individually
or in the  aggregate,  would have a Material  Adverse  Effect  before or by, any
court,  public board,  government agency,  self-regulatory  organization or body
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary,  any of their respective officers or directors,  or the
Common Stock.

                  (r) INSURANCE.  The Company and each  Subsidiary is insured by
insurers of recognized  financial  responsibility  against such losses and risks
and in such  amounts as  management  of the  Company  believes to be prudent and
customary in the  businesses  in which such  entities  are engaged.  None of the
Company or any  Subsidiary has any reason to believe that it will not be able to
renew its existing  insurance  coverage as and when such coverage  expires or to
obtain  similar  coverage from similar  insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.

                  (s) EMPLOYEE RELATIONS.

                         (i) None of the Company or any Subsidiary is a party to
any  collective  bargaining  agreement  or employs  any  member of a union.  The
Company and its  Subsidiaries  believe  that the  Company's  relations  with its
employees  and  the  relations  of  its   Subsidiaries   with  their  respective
Subsidiaries are good. No executive officer (as defined in Rule 3b-7 promulgated
under the 1934 Act) of the Company or any Subsidiary has notified the Company or
such Subsidiary that such officer intends to leave the Company or Subsidiary, as
applicable, or otherwise intends to terminate such officer's employment with the
Company or Subsidiary.  To the knowledge of the Company, no executive officer of
the Company or any  Subsidiary is, or is now expected to be, in violation of any
material  term  of  any  employment  contract,

                                       17
<PAGE>

confidentiality,    disclosure    or    proprietary    information    agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant and the continued  employment of each such  executive  officer does not
subject the Company or any  Subsidiary to any liability in respect of any of the
foregoing  matters  except such  violations  and/or  liabilities  that would not
individually  or in the  aggregate  be  reasonably  expected  to have a Material
Adverse Effect.

                         (ii) The Company and the Subsidiaries are in compliance
with all  federal,  state,  local and foreign  laws and  regulations  respecting
labor, employment and employment practices and benefits, terms and conditions of
employment  and  wages and  hours,  except  where  failure  to be in  compliance
therewith  would not  result,  either  individually  or in the  aggregate,  in a
Material Adverse Effect.

                  (t) TITLE.  The Company and the  Subsidiaries  (other than the
Foreign  Subsidiaries)  have good and marketable title in fee simple to all real
property and good and valid title to all personal  property  owned by them which
is material to the business of the Company or Subsidiary, as applicable, in each
case free and clear of all Liens except for  Permitted  Liens (as defined in the
Notes).  To the knowledge of the Company,  (i) none of the Foreign  Subsidiaries
owns fee simple  interest in any real property (or the equivalent  thereof under
applicable  law) and (ii) each of the  Foreign  Subsidiaries  has good and valid
title to all personal  property  owned by them which is material to the business
of  such  Subsidiary,  except  where  failure  to have  good  and  valid  title,
individually  or in the  aggregate,  would not be reasonably  expected to have a
Material Adverse Effect, free and clear of all Liens other than Permitted Liens.
Except as set forth on SCHEDULE  3(T),  any real  property and  facilities  held
under lease by the Company or any of the Subsidiaries are held by the applicable
entity under valid,  subsisting and  enforceable  leases with such exceptions as
are not material and do not interfere  with the use made and proposed to be made
of such  property  and  buildings  by the Company and such  Subsidiaries.  Where
failures to have such valid,  subsisting and enforceable  lease(s)  exist,  such
failures, in the aggregate, would not have a Material Adverse Effect.

                  (u)  INTELLECTUAL   PROPERTY  RIGHTS.   The  Company  and  the
Subsidiaries  (other  than  Foreign  Subsidiaries)  own or possess  and,  to the
knowledge  of the Company,  the Foreign  Subsidiaries  own or possess,  adequate
rights or licenses to use all  trademarks,  trade names,  service  marks and all
applications and registrations  therefor,  patents,  patent rights,  copyrights,
original  works of authorship,  inventions,  licenses,  approvals,  governmental
authorizations,   trade   secrets  and  other   intellectual   property   rights
("INTELLECTUAL   PROPERTY   RIGHTS")   necessary  to  conduct  their  respective
businesses as now conducted.  Except as set forth on SCHEDULE 3(U),  none of the
Company's or the Subsidiaries' registered, or applied for, Intellectual Property
Rights have expired or  terminated  or have been  abandoned,  or are expected to
expire or  terminate  or expected to be  abandoned,  within three years from the
date of this Agreement.  The  terminations,  expirations or abandonments of such
registered,  or applied  for,  Intellectual  Property  Rights  would not, in the
aggregate,  have a  Material  Adverse  Effect.  The  Company  does  not have any
knowledge  of any  infringement  by the  Company or any of the  Subsidiaries  of
Intellectual  Property Rights of others except of such  infringement  that would
not have a Material Adverse Effect.  Except as set forth on SCHEDULE 3(U), there
is no claim,  action or proceeding being made or brought, or to the knowledge of
the Company,  being threatened,  against the Company or any Subsidiary regarding
their respective  Intellectual Property Rights and any such claims,  actions and
proceedings being made, brought or threatened would not in the aggregate, have a
Material

                                       18
<PAGE>

Adverse Effect. The Company is unaware of any facts or circumstances which might
give  rise  to  any  of  the  foregoing  infringements  or  claims,  actions  or
proceedings  which  would,  individually  or in the  aggregate,  have a Material
Adverse Effect. The Company and the Subsidiaries have taken reasonable  security
measures  to  protect  the  secrecy,  confidentiality  and value of all of their
Intellectual Property Rights.

                  (v)  ENVIRONMENTAL  LAWS. The Company and the Subsidiaries (i)
are in compliance with any and all Environmental Laws (as hereinafter  defined),
(ii) have  received all permits,  licenses or other  approvals  required of them
under  applicable  Environmental  Laws to conduct their  respective  businesses,
(iii)  are in  compliance  with all  terms and  conditions  of any such  permit,
license or approval and (iv) to the  Company's  knowledge,  there are no events,
conditions  or  circumstances  reasonably  likely to result in  liability of the
Company or any Subsidiary  pursuant to Environmental  Laws, except where, in the
foregoing  clauses  (i)  through  (iv)  the  failure  to  so  comply  with  such
Environmental  Laws,  permits,  licenses  or other  approvals  or to obtain such
permits,  licenses  or  approvals  would  not be  reasonably  expected  to have,
individually  or  in  the  aggregate,   a  Material  Adverse  Effect.  The  term
"ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment  (including,  without
limitation,  ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions,  discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic
or hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all  authorizations,  codes,  decrees,  demands  or  demand  letters,
injunctions,  judgments,  licenses,  notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.

                  (w) SUBSIDIARY  RIGHTS. The Company or one of its Subsidiaries
has the  unrestricted  right to vote,  and  (subject to  limitations  imposed by
applicable  law)  to  receive   dividends  and  distributions  on,  all  capital
securities  of  its  Subsidiaries  owned  by the  Company  or  such  Subsidiary,
respectively,   subject  to  the  Transaction  Documents  and  the  Senior  Loan
Documents.  Each  Target  or  one  of  their  respective  Subsidiaries  has  the
unrestricted  right to vote, and (subject to  limitations  imposed by applicable
law) to receive dividends and  distributions  on, all capital  securities of its
Subsidiaries  as  owned  by such  Target  or  such  Subsidiary,  subject  to the
Transaction Documents and the Senior Loan Documents.

                  (x) TAX  STATUS.  Except as set forth on  SCHEDULE  3(X),  the
Company and each  Subsidiary (i) has made or filed all foreign,  federal,  state
and local income and all other tax returns, reports and declarations required by
any  jurisdiction  to which it is  subject,  (ii) has paid all  taxes  and other
governmental  assessments  and charges  that are  material  in amount,  shown or
determined to be due on such  returns,  reports and  declarations,  except those
being  contested  in good faith and for which the Company  has made  appropriate
reserves on its books and (iii) has set aside on its books provision  reasonably
adequate for the payment of all taxes for periods  subsequent  to the periods to
which  such  returns,  reports  or  declarations  apply.  Except as set forth on
SCHEDULE  3(X),  there are no  material  unpaid  taxes  claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim. Each of the claims set forth on SCHEDULE 3(X) is being
contested  in good  faith  or  would  not be  expected,  individually  or in the
aggregate,  to have a Material  Adverse Effect.  Except as

                                       19
<PAGE>

set forth on SCHEDULE  3(X), no liens have been filed  securing  taxes and other
governmental  assessments  and  charges  and no claims are being  asserted by or
against the Company or any of the  Subsidiaries  in respect of any taxes  (other
than liens for taxes not yet due and payable) or other governmental  assessments
or charges.  Except as set forth on SCHEDULE 3(X), none of the Company or any of
the Subsidiaries has received notice of assessment or proposed assessment of any
taxes  claimed  to be owed by it or any other  Person on its  behalf.  Except as
disclosed on SCHEDULE 3(X), none of the Company or any of the  Subsidiaries is a
party to any tax sharing or tax indemnity  agreement or any other agreement of a
similar  nature that remains in effect.  None of the items set forth on SCHEDULE
3(X) would,  individually or in the aggregate,  have a Material  Adverse Effect.
Each of the Company and the Subsidiaries  has complied in all material  respects
with all applicable legal  requirements  relating to the payment and withholding
of taxes and, within the time and in the manner  prescribed by law, has withheld
from wages, fees and other payments and paid over to the proper  governmental or
regulatory authorities all amounts required.

                  (y) INTERNAL ACCOUNTING CONTROLS.  The Company and each of the
Subsidiaries  maintains 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 consolidated financial statements
in  conformity  with GAAP and to maintain  asset and  liability  accountability,
(iii)  access  to assets or  incurrence  of  liabilities  is  permitted  only in
accordance  with  management's  general or specific  authorization  and (iv) the
recorded accountability for assets and liabilities is compared with the existing
assets and liabilities at reasonable  intervals and appropriate  action is taken
in respect of any difference.

                  (z)  DISCLOSURE.   Each  of  this  Agreement   (including  the
Schedules  hereto),  the other  Transaction  Documents and that certain  Private
Placement  Memorandum dated October 23, 2006 (including the various  attachments
thereto),  furnished by or on behalf of the Company  regarding the Company,  the
Targets, their respective businesses and the transactions contemplated hereby is
true and  correct  in all  material  respects  and does not  contain  any untrue
statement  of a material  fact or omit to state any material  fact  necessary in
order to make the  statements  made therein,  in the light of the  circumstances
under which they were made,  not  misleading.  Each press release  issued by the
Company or its  Subsidiaries  (other than the Foreign  Subsidiaries)  during the
twelve (12) months  preceding the date of this  Agreement did not at the time of
release  contain  any untrue  statement  of a  material  fact or omit to state a
material  fact  required to be stated  therein or necessary in order to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading.  To the knowledge of the Company,  no press release issued
by any Foreign  Subsidiary  during the twelve (12) months  preceding the date of
this  Agreement  at the time of  release  contained  any untrue  statement  of a
material fact or omitted to state a material fact required to be stated  therein
or  necessary  in order  to make the  statements  therein,  in the  light of the
circumstances  under  which  they  were  made,  not  misleading.   No  event  or
circumstance has occurred or information exists in respect of the Company or any
of its  Subsidiaries  (other  than  the  Foreign  Subsidiaries)  or its or their
business,

                                       20
<PAGE>

properties, operations or financial condition, which, under applicable law, rule
or regulation,  requires  public  disclosure or  announcement by the Company but
which has not been so publicly  announced or disclosed.  To the knowledge of the
Company,  no event or circumstance has occurred or information exists in respect
of any of the Foreign  Subsidiaries or its business,  properties,  operations or
financial  condition,  which,  under  applicable  Requirements of Law,  requires
public disclosure or announcement by such Person or its parent company but which
has not been so publicly  announced or disclosed except where such failure would
not reasonably be expected to have a Material Adverse Effect.

                  (aa) OTC BULLETIN  BOARD.  The Common Stock is designated  for
quotation on the National  Association of Securities Dealers Inc.'s OTC Bulletin
Board (the "INITIAL  PRINCIPAL  MARKET").  At all times since such  designation,
ShellCo has complied with the rules of the Initial Principal Market.

                  (bb) U.S. REAL PROPERTY  HOLDING  CORPORATION.  The Company is
not, nor has it ever been, a U.S. real property holding  corporation  within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the
Company shall so certify upon any Buyer's request.

                  (cc) NO OTHER AGREEMENTS.  As of the Closing Date, the Company
has not, directly or indirectly, made any agreements with any Buyers relating to
the terms or  conditions of the  transactions  contemplated  by the  Transaction
Documents except as set forth in the Transaction Documents.

                  (dd) ACQUISITION  DOCUMENTS.  To the Company's best knowledge,
the representations  and warranties of each Target in the transaction  documents
applicable to such Target in connection with the Acquisitions  (the "ACQUISITION
DOCUMENTS"),  are true and correct in all  material  respects  (except for those
representations and warranties that are qualified by materiality, which are true
and  correct  in  all   respects)   as  of  the  date  when  made   (except  for
representations  and warranties  that speak as of a specific  date,  each of are
true and  correct  as of such  date).  The  Company  does not have any reason to
believe that such  representations  and warranties shall not be true and correct
in all material respects (except for those  representations  and warranties that
are  qualified  by  materiality,  which are  expected to continue to be true and
correct in all respects) as of the Closing Date as though made at that time.

                  (ee) REGULATIONS T, U AND X. Neither the Company nor any other
Subsidiary  is and will be engaged in the business of  extending  credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
T, U or X of the Board of  Governors  of the Federal  Reserve  System as now and
from time to time hereafter in effect), and no proceeds of any Note will be used
to  purchase  or carry any  margin  stock or to extend  credit to others for the
purpose of purchasing or carrying any margin stock.

                  (ff) ERISA.

                         (i) Except as listed on SCHEDULE 3(FF) hereto,  none of
         the Company,  ShellCo or any of their respective Subsidiaries or any of
         their  ERISA  Affiliates  maintains  or  contributes  to, or within the
         preceding six (6) years has maintained or contributed  to, any Employee
         Benefit Plan. Neither the Company,  ShellCo nor any of their respective
         Subsidiaries  have any current  labor  problems  or disputes  that have
         resulted in, or which such Person reasonably believes could be expected
         to have,  a  Material  Adverse  Effect on the  Company or  ShellCo.  No
         Employee  Benefit Plan has an accumulated or waived funding  deficiency
         or permitted  decrease  which would create a

                                       21
<PAGE>

         deficiency  in its  funding  standard  account  or has  applied  for an
         extension of any amortization  period within the meaning of Section 412
         of the  Internal  Revenue  Code of 1986,  as amended (or any  successor
         statute thereto) and the regulations  thereunder (the "CODE") as of the
         date hereof,  and no Lien imposed  under the Code or ERISA exists or is
         likely to arise on  account of any  Employee  Benefit  Plan  within the
         meaning of Section 412 of the Code.

                         (ii)  Liabilities  under any  Employee  Benefit Plan of
         ShellCo or any of its Subsidiaries have been appropriately reflected on
         the financial  statements of ShellCo and its Subsidiaries in accordance
         with GAAP.

                         (iii) All of the  Employee  Benefit  Plans are and have
         been  established  and  administered in all respects in accordance with
         all applicable  laws,  regulations or orders with respect  thereto,  no
         such failure to comply  therewith has, or could be reasonably  expected
         to have, a Material  Adverse  Effect on ShellCo or the Company.  To the
         extent that any Employee  Benefit Plan  maintained by ShellCo or any of
         its  Subsidiaries  is intended to qualify for  favorable  tax treatment
         under any applicable law,  regulation or order, to the knowledge of the
         ShellCo and the Subsidiaries, no fact or circumstance exists that could
         reasonably  be expected to adversely  affect the  tax-exempt  status of
         such Employee Benefit Plan.

                         (iv) All  obligations  regarding  the Employee  Benefit
         Plans  have  been  satisfied  to the  extent  due and owing on the date
         hereof, there are no outstanding defaults or violations by any party to
         any  Employee  Benefit  Plan and no taxes,  penalties or fees are owing
         under  any  of the  Employee  Benefit  Plans  where  such  obligations,
         defaults,  violations,  unpaid taxes,  unpaid  penalties or unpaid fees
         have or could  reasonably be expected to have a Material Adverse Effect
         on  ShellCo  or the  Company.  Except  as set forth on  SCHEDULE  (FF),
         neither the Company,  ShellCo or any ERISA  Affiliate  has incurred any
         withdrawal  liability  under  ERISA with  respect to any  Multiemployer
         Plan, or is aware of any facts  indicating  that it or any of its ERISA
         Affiliates may in the future incur any such withdrawal liability,  that
         has, or could reasonably be expected to have, a Material Adverse Effect
         on ShellCo or the Company.

                         (v)  ShellCo  and each of its  Subsidiaries  have  made
         available  to the  Buyers  true,  correct  and  complete  copies of all
         material  Employee  Benefit Plans as amended as of the date hereof,  as
         requested by any Buyer.

                         (vi) Each Employee  Benefit Plan is fully funded to the
         extent required by any applicable law, regulation or order.

                         (vii)  Except  as  disclosed  in  SCHEDULE  (EE)  or as
         required by any applicable  law,  including,  without  limitation,  the
         Consolidated  Omnibus Budget  Reconciliation Act of 1986 or any similar
         state law,  regulation  or order,  none of the Employee  Benefit  Plans
         provides  health and welfare  benefits to retired  employees  or to the
         beneficiaries or dependents of retired employees.

                         (viii)  As used in this  Agreement,  "EMPLOYEE  BENEFIT
         PLAN" means an employee benefit plan (other than a Multiemployer  Plan)
         covered by Title IV of

                                       22
<PAGE>

         ERISA and maintained (or that was maintained at any time during the six
         (6) calendar years  preceding the date of any borrowing  hereunder) for
         employees  of any Loan  Party or any of its ERISA  Affiliates;  "ERISA"
         means the Employee  Retirement Income Security Act of 1974, as amended,
         and  any  successor   statute  of  similar   import,   and  regulations
         thereunder, in each case, as in effect from time to time. References to
         sections of ERISA  shall be  construed  also to refer to any  successor
         sections;  and "ERISA  AFFILIATE" means (a) any Person subject to ERISA
         whose  employees  are treated as  employed by the same  employer as the
         employees  of  Parent or any of its  Subsidiaries  under  Code  Section
         414(b),  (b) any trade or business subject to ERISA whose employees are
         treated as employed by the same  employer as the employees of Parent or
         any of its  Subsidiaries  under  Code  Section  414(c),  (c) solely for
         purposes  of  Section  302 of ERISA and  Section  412 of the Code,  any
         organization subject to ERISA that is a member of an affiliated service
         group of which Parent or any of its Subsidiaries is a member under Code
         Section 414(m),  or (d) solely for purposes of Section 302 of ERISA and
         Section 412 of the Code, any Person subject to ERISA that is a party to
         an  arrangement  with  Parent  or  any of its  Subsidiaries  and  whose
         employees  are  aggregated  with the  employees of Parent or any of its
         Subsidiaries under Code Section 414(o).

                  (gg) ANTI-TERRORISM LAWS AND ANTI-MONEY LAUNDERING LAWS.

                         (i) None of the  Company  or its  Subsidiaries  is, and
         after making due inquiry no Person who owns a  controlling  interest in
         or otherwise  controls the Company or any of its  Subsidiaries is or is
         anticipated to be, (i) listed on the Specially Designated Nationals and
         Blocked Persons List maintained by the Office of Foreign Assets Control
         ("OFAC"),  Department of the Treasury, and/or on any other similar list
         (collectively,  the  "LISTS")  maintained  by the OFAC  pursuant to any
         authorizing statute, Executive Order or regulation (collectively, "OFAC
         LAWS AND REGULATIONS"); or (ii) a Person (a "DESIGNATED PERSON") either
         (A) included  within the term  "designated  national" as defined in the
         Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (B) designated
         under Sections 1(a),  1(b),  1(c) or 1(d) of Executive Order No. 13224,
         66  Fed.  Reg.  49079  (published  September  25,  2001)  or  similarly
         designated under any related enabling  legislation or any other similar
         Executive Orders (collectively, the "EXECUTIVE ORDERS").

                         (ii) None of the Company or its  Subsidiaries  (x) is a
         Person or entity  with which any Buyer is  prohibited  from  dealing or
         otherwise  engaging in any transaction by any OFAC Laws and Regulations
         and the Executive Orders  (collectively,  the "ANTI-TERRORISM  LAW") or
         (ii) is a Person or entity that  commits,  threatens  or  conspires  to
         commit or supports  "terrorism"  as defined in the Executive  Orders or
         (y) is affiliated  or associated  with a Person or entity listed in the
         preceding  clause (x) or clause (y). To the  knowledge  of the Company,
         none of the Company or its Subsidiaries or Affiliates,  nor any brokers
         or  other  agents  acting  in  any  capacity  in  connection  with  the
         securities  being  offered  in  connection  herewith  (A)  deals in, or
         otherwise  engages in any  transaction  relating  to, any  property  or
         interests in property  blocked  pursuant to the Executive Orders or (B)
         engages in or  conspires  to engage in any  transaction  that evades or
         avoids,  or has the  purpose of evading or  avoiding,  or  attempts  to
         violate, any of the prohibitions set forth in any Anti-Terrorism Law.

                                       23
<PAGE>

                         (iii)  To  the  knowledge  of  the  Company  after  due
         inquiry,  none of the Company or its  Subsidiaries  nor any holder of a
         direct or indirect  interest in the Company or any of its  Subsidiaries
         (x) is under  investigation by any  governmental  authority for, or has
         been charged with, or convicted  of, money  laundering  under 18 U.S.C.
         ss.ss. 1956 and 1957, drug trafficking, terrorist-related activities or
         other money laundering  predicate  crimes, or any violation of the Bank
         Secrecy Act (31 U.S.C.  Section 5311 et.  seq.),  and its  implementing
         regulations,  Title 31 Part 103 of the U.S. Code of Federal Regulations
         (the  "BSA"),  (y) has been  assessed  civil  penalties  under  any all
         applicable laws,  regulations and government guidance on the prevention
         and detection of money laundering, including 18 U.S.C. Section 1956 and
         1957, (the  "ANTI-MONEY  LAUNDERING  LAWS"),  or (z) has had any of its
         funds seized or forfeited in an action under any Anti-Money  Laundering
         Laws.

         4. COVENANTS.

                  (a) BEST EFFORTS. Each party shall use its best efforts timely
to satisfy each of the  covenants  and the  conditions  to be satisfied by it as
provided in Sections 5, 6 and 7 of this Agreement.

                  (b) FORM D AND BLUE SKY. The Company  agrees to cause  ShellCo
to  timely  file  a Form  D in  respect  of the  Securities  as  required  under
Regulation D and to provide a copy thereof to each Buyer  promptly  upon request
after such filing.  The Company shall,  on or before the Closing Date, take such
action,  or cause ShellCo to take such action,  as the Company shall  reasonably
determine is  necessary  in order to obtain an  exemption  for or to qualify the
Securities  for sale to the Buyers at the  Closing  pursuant  to this  Agreement
under  applicable  securities  or "Blue  Sky" laws of the  states of the  United
States  (or to obtain an  exemption  from such  qualification),  and shall  upon
request  provide  evidence of any such action so taken to the Buyers on or prior
to the Closing Date.

                  (c) REPORTING STATUS. Until the later of the date on which (i)
the Investors (as defined in the Registration  Rights Agreement) shall have sold
all the  Conversion  Shares  and  Warrant  Shares  and (ii) none of the Notes or
Warrants is  outstanding  (the  "REPORTING  PERIOD"),  the  Company  shall cause
ShellCo to timely file all reports required to be filed with the SEC pursuant to
the 1934 Act,  provided that prior to the filing of the  registration  statement
with the SEC as required by the Registration  Rights Agreement,  compliance with
the current public  information  requirements of Rule 144(c) thereunder shall be
sufficient.  The Company shall not permit  ShellCo to terminate its status as an
issuer  required to file reports under the 1934 Act, even if the 1934 Act or the
rules and regulations thereunder would permit such termination.

                  (d) USE OF PROCEEDS.  The Company  will use the proceeds  from
the sale of the Securities for general corporate purposes, including general and
administrative expenses and for the purposes set forth on SCHEDULE 4(D) (and not
for the  redemption  or  repurchase  of any of its or its  Subsidiaries'  equity
securities). For clarification purposes only, the acquisition of securities in a
Permitted Acquisition (as defined in the Notes) pursuant to which the applicable
acquisition  target becomes a Subsidiary (or a joint venture  partner) shall not
be prohibited by this Section 4(d).

                                       24
<PAGE>

                  (e) FINANCIAL INFORMATION. The Company agrees to cause ShellCo
to send the  following to each Investor  during the Reporting  Period (i) unless
the  following are filed with the SEC through EDGAR and are promptly (and in any
event,  within two business  hours)  available  to the public  through the EDGAR
system,  within three (3) Business Days after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K or 10KSB, its Quarterly  Reports on Form
10-Q or 10-QSB or any other interim reports or any consolidated  balance sheets,
income statements,  stockholders'  equity statements and/or cash flow statements
filed with the SEC for any period other than annual, any Current Reports on Form
8-K and any registration statements (other than on Form S-8) or amendments filed
pursuant  to the 1933  Act,  (ii)  promptly  and in any  event,  within  one (1)
Business Day after the release  thereof  (unless such press release is available
on PR Newswire  or Business  Wire),  facsimile  or e-mailed  copies of all press
releases issued by ShellCo, the Company or any of their respective Subsidiaries,
and (iii) copies of any notices and other information made available or given to
the stockholders of ShellCo or the Company generally, contemporaneously with the
making available or giving thereof to the stockholders.

                  (f) FEES. Subject to Section 8 below, at Closing,  the Company
shall pay an expense  allowance  to Angelo  Gordon & Co.,  L.P. (a Buyer) or its
designee(s) (in addition to any other expense amounts paid to any Buyer prior to
the date of this  Agreement) for all reasonable  costs and expenses  incurred in
connection  with the  transactions  contemplated  by the  Transaction  Documents
(including all reasonable legal fees and disbursements in connection  therewith,
documentation  and  implementation  of  the  transactions  contemplated  by  the
Transaction Documents and due diligence in connection  therewith),  in an amount
not to exceed  $100,000  (in addition to any other  expense  amounts paid to any
Buyer prior to the date of this  Agreement),  which  amount shall be withheld by
such Buyer from its Purchase Price at the Closing.  The Company and ShellCo,  as
applicable,  shall pay any placement agent's fees,  financial  advisory fees, or
broker's  commissions  (other than for Persons engaged by any Buyer) relating to
or arising  out of the  transactions  contemplated  hereby,  including,  without
limitation, any fees or commissions payable to the Agent. The Company shall pay,
or cause ShellCo to pay, and hold, or cause ShellCo to hold, each Buyer harmless
against,  any  liability,  loss  or  expense  (including,   without  limitation,
reasonable  attorney's fees and  out-of-pocket  expenses)  arising in connection
with any claim  relating to any such  payment.  Except as otherwise set forth in
the  Transaction  Documents,  each  party to this  Agreement  shall bear its own
expenses in connection with the sale of the Securities to the Buyers.

                  (g) PLEDGE OF SECURITIES.  The Company on behalf of itself and
ShellCo   acknowledges  and  agrees,   subject  to  compliance  with  applicable
securities laws, that the Securities may be pledged by an Investor in connection
with a bona fide margin agreement or other loan or financing arrangement that is
secured by the Securities. Except as otherwise required by applicable securities
laws,  the pledge of  Securities  shall not be deemed to be a transfer,  sale or
assignment of the Securities  hereunder,  and no Investor  effecting a pledge of
Securities  shall be required to provide the Company or ShellCo  with any notice
thereof or  otherwise  make any  delivery to the Company or ShellCo  pursuant to
this Agreement or any other Transaction Document, including, without limitation,
Section  2(f);  provided  that an Investor and its pledgee  shall be required to
comply with the  provisions of Section 2(f) in order to effect a sale,  transfer
or  assignment  of  Securities  to such  pledgee.  The Company  hereby agrees to
execute  and  deliver,  and  to  cause  ShellCo  to  execute  and  deliver  such
documentation  as  a  pledgee  of  the

                                       25
<PAGE>

Securities may reasonably  request in connection with a pledge of the Securities
to such pledgee by an Investor.

                  (h) DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION.
On or before 8:30 a.m.,  New York City time, on the first Business Day following
the Closing  Date,  the Company shall cause ShellCo to file a press release (the
"PRESS RELEASE") describing the material terms of the transactions  contemplated
by the  Transaction  Documents.  The Company  shall cause  ShellCo to file, as a
"small  business  issuer" (as defined in Item 10(a) of  Regulation  SB under the
1934 Act), a Current Report on Form 8-K describing the terms of the transactions
contemplated  by the  Transaction  Documents on or prior to the date required by
the  1934 Act and  attaching  the  material  Transaction  Documents  (including,
without  limitation,  this Agreement (and all schedules to this Agreement),  the
form of the Notes, the form of the Warrants,  the Registration  Rights Agreement
and the Security  Documents)  as exhibits to such  filing,  if and to the extent
required by the 1934 Act (including all attachments, the "8-K FILING"). From and
after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession
of any material,  nonpublic  information received from ShellCo, the Company, any
of their respective  Subsidiaries or any of its respective officers,  directors,
employees or agents,  that is not  disclosed in a 8-K Filing.  The Company shall
not, and shall cause  ShellCo and each of their  Subsidiaries  and each of their
respective officers, directors,  employees and agents, not to, provide any Buyer
with any material,  nonpublic  information regarding ShellCo, the Company or any
of their  Subsidiaries  from and after the filing of the 8-K Filing with the SEC
without the express  written  consent of such Buyer. If a Buyer has, or believes
it has,  received  from the  Company or  ShellCo  any such  material,  nonpublic
information regarding ShellCo, the Company or any of the Subsidiaries,  it shall
provide ShellCo and the Company with written notice thereof.  The Company shall,
or shall  cause  ShellCo to,  within  four (4)  Trading  Days (as defined in the
Notes) of receipt of such  notice,  make  public  disclosure  of such  material,
nonpublic  information  unless the Company has in good faith determined that the
matters  relating  to  such  notice  do  not  constitute   material   non-public
information  about  the  Company.  In the  event  of a breach  of the  foregoing
covenant by ShellCo,  the Company,  any of their  Subsidiaries,  or any of their
respective officers,  directors,  employees and agents, in addition to any other
remedy provided herein or in the Transaction  Documents,  a Buyer shall have the
right  to make a  public  disclosure,  in the  form of a press  release,  public
advertisement  or otherwise,  of such material,  nonpublic  information with the
prior  approval by ShellCo or the Company.  No Buyer shall have any liability to
ShellCo,  the Company,  any of their  Subsidiaries,  or any of their  respective
officers, directors, employees,  stockholders or agents for any such disclosure.
Subject  to  the  foregoing,   none  of  ShellCo,  the  Company,  any  of  their
Subsidiaries  or any Buyer  shall issue any press  releases or any other  public
statements  in  respect  of  the  transactions  contemplated  hereby;  PROVIDED,
HOWEVER,  that  ShellCo and the  Company  shall be  entitled,  without the prior
approval of any Buyer,  to make any press release or other public  disclosure in
respect of such  transactions (i) in substantial  conformity with the 8-K Filing
and   contemporaneously   therewith  and  (ii)  as  is  required  by  applicable
Requirements of Law.

                  (i)  TRANSACTIONS  WITH  AFFILIATES.  From  the  date  of this
Agreement  until the first date  following the Closing Date on which no Notes or
Warrants  are  outstanding,  the Company  shall not, and shall cause each of its
Subsidiaries   not  to,  without  the  prior  written  consent  of  the  Holders
representing  a majority of the aggregate  amount of the Notes then  outstanding
(the "REQUIRED HOLDERS");  PROVIDED,  HOWEVER,  that any Note that is held by an

                                       26
<PAGE>

Affiliate of the Company shall not be deemed to be outstanding  for the purposes
of the determination of Required Holders enter into, amend, modify or supplement
any  material  transaction,   contract,   agreement,   instrument,   commitment,
understanding or other arrangement with any of its or any Subsidiary's officers,
directors,  Persons  who were  officers  or  directors  at any time  during  the
previous two years,  stockholders,  or  Affiliates  of the Company or any of its
Subsidiaries,  or with any individual related by blood,  marriage or adoption to
any such  individual  or with any entity in which any such entity or  individual
owns a beneficial interest,  unless such agreement,  amendment,  modification or
supplement  is (A) entered  into  pursuant to arm's  length  negotiation  or (B)
customary employment arrangements and benefit programs on reasonable terms.

                  (j) ADDITIONAL NOTES; VARIABLE SECURITIES; DILUTIVE ISSUANCES.
For so long as any Buyer  beneficially  owns any  Securities,  the Company shall
cause  ShellCo  not to issue any Notes or other  securities  that would  cause a
breach or default under the Notes.  For so long as any Notes or Warrants  remain
outstanding,  the Company  shall cause  ShellCo not to, in any manner,  issue or
sell any rights,  warrants or options to subscribe for or purchase  Common Stock
or directly or indirectly  convertible  into or  exchangeable or exercisable for
Common  Stock at a price which  varies or may vary with the market  price of the
Common  Stock,  including  by way of one or more  reset(s)  to any fixed  price,
unless the conversion, exchange or exercise price of any such security cannot be
less than the then  applicable  Conversion  Price (as  defined  in the Notes) in
respect of the  Common  Stock  into  which any Note is  convertible  or the then
applicable  Exercise Price (as defined in the Warrants) in respect of the Common
Stock  into which any  Warrant is  exercisable.  Notwithstanding  the  foregoing
sentence,  ShellCo is permitted hereby to issue the Notes and Warrants  provided
for hereby and the  Warrants  under the Common  PIPE,  which  provide in certain
circumstances  for  adjustments  to their  exercise and  conversion  prices,  as
applicable.  For so long as any Notes or Warrants  remain  outstanding  or until
such time as  Stockholder  Approval has been  obtained,  the Company shall cause
ShellCo not to, in any manner,  enter into or affect any Dilutive  Issuances (as
defined  in the  Notes) if the  effect  of such  Dilutive  Issuance  is to cause
ShellCo to be required to issue upon  conversion  of any Note or exercise of any
Warrant any shares of Common  Stock in excess of that number of shares of Common
Stock which  ShellCo may issue upon  conversion of the Notes and exercise of the
Warrants without breaching ShellCo's  obligations under the rules or regulations
of the Principal Market or the stock exchange or automated quotation system upon
which  ShellCo's  shares  of  Common  Stock  are  traded,   including,   without
limitation,  any and all  discounted  issuance  rules,  if  applicable.  As used
herein,  "STOCKHOLDER  APPROVAL" shall mean the affirmative vote by stockholders
holding  no less  than a  majority  of the  voting  power  of the  Common  Stock
approving  resolutions  providing  for  the  Company's  issuance  of  all of the
Securities  as  described  in  the  Transaction  Documents  in  accordance  with
applicable law and the rules and regulations of the Principal Market. "PRINCIPAL
MARKET"  shall mean the Initial  Principal  Market or other  Eligible  Market on
which the Common Stock is  designated  for  quotation or listed and  principally
trades.

                  (k)  CORPORATE  EXISTENCE.  So long as any Buyer  beneficially
owns any Notes or Warrants,  as applicable,  the Company shall cause ShellCo not
to be party to any  Fundamental  Transaction  (as  defined in the Notes)  unless
ShellCo is in compliance with the applicable  provisions  governing  Fundamental
Transactions set forth in the Notes and the Warrants.

                                       27
<PAGE>

                  (l)  RESERVATION OF SHARES.  For as long as any Buyer owns any
Notes or Warrants, and contingent on the effectiveness of the Reverse Split, the
Company shall cause ShellCo to take all actions  necessary to at all times after
the Closing Date have authorized,  and reserved for the purpose of issuance,  no
less than 130% of the sum of (i) the number of shares of Common  Stock  issuable
upon conversion of all of the Notes issued at Closing, (ii) the number of shares
of Common Stock  issuable upon  exercise of the Warrants  issued at the Closing,
and (iii) the number of shares of Common  Stock  issuable  upon  exercise of the
Common PIPE  Warrants  (without  taking  into  account  any  limitations  on the
conversion  of the Notes or exercise of the Warrants or Common PIPE Warrants set
forth in the Notes, Warrants and Common PIPE Warrants, respectively).

                  (m) CONDUCT OF BUSINESS.  The business of ShellCo, the Company
and their  Subsidiaries  shall not be conducted in violation of  Requirements of
Law, except where such violations  would not result,  either  individually or in
the aggregate, in a Material Adverse Effect.

                  (n)  COMPLIANCE  WITH NOTES  COVENANTS.  From the date of this
Agreement  until the first date following the Closing Date on which no Notes are
outstanding,  the Company shall comply with and not violate or breach, and shall
cause the Subsidiaries, as applicable, to comply with and not violate or breach,
the  covenants and  agreements  set forth in Section 14 of the Notes as the same
may hereafter be amended, being incorporated herein and made a part hereof.

                  (o) NO ADDITIONAL REGISTERED SECURITIES. From the Closing Date
until the date that is ninety (90) Trading Days following the Effective Date (as
defined in the Registration  Rights Agreement),  neither ShellCo nor the Company
will  file a  registration  statement  under  the 1933  Act,  or allow  any such
registration  statement to become effective,  in respect of any securities other
than  the  Registration   Statement  contemplated  by  the  Registration  Rights
Agreement and the  registration  rights  agreement in respect of the Common PIPE
Offering and/or a registration statement on Form S-8.

                  (p) INTEGRATION.  None of ShellCo,  the Company,  any of their
affiliates  (as defined in Rule 501(b) under the 1933 Act) or any person  acting
on behalf of ShellCo, the Company or such affiliate will sell, offer for sale or
solicit  offers to buy or  otherwise  negotiate  in respect of any  security (as
defined in the 1933 Act)  including  the Common  PIPE  Securities  which will be
integrated with the sale of the Securities or the Conversion  Shares in a manner
which would  require the  registration  under the 1933 Act of the  Securities or
require  stockholder  approval under the rules and regulations of the applicable
Principal  Market and the Company  will take all action that is  appropriate  or
necessary  to assure  that its  offerings  of other  securities  (other than the
Common PIPE  Securities)  will not be integrated for purposes of the 1933 Act or
the rules and regulations of the applicable  Principal  Market with the issuance
of Securities contemplated hereby.

                  (q) NO  INCONSISTENT  AGREEMENT  OR ACTIONS.  From the date of
this Agreement until the first date following the Closing Date on which no Notes
are  outstanding,  the  Company  and its  Subsidiaries  shall not enter into any
contract,  agreement  or  understanding  (other than the Senior Loan  Documents)
which limit or restrict  the  Company's or any of its  Subsidiaries'  ability to
perform under, or take any other voluntary  action to avoid or seek to avoid the
observance or  performance of any of the terms to be observed or performed by it
under, this Agreement or any of the other Transaction Documents.

                                       28
<PAGE>

         (r) COLLATERAL AGENT.

                  (i) Each Buyer hereby (x) appoints Law Debenture Trust Company
of New York, as the collateral  agent for such Buyer hereunder (the  "COLLATERAL
AGENT"),  and (y) each Buyer hereby  authorizes  the  Collateral  Agent (and its
officers, directors,  employees and agents) in such capacity to take any and all
such  actions on its behalf with  respect to the  Collateral  (as defined in the
Security  Documents) and the  Obligations  in accordance  with the terms of this
Agreement,  the Guaranty,  the Security Agreement and the Pledge Agreement.  The
Collateral  Agent  shall  not  have,  by  reason  hereof  or any  of  the  other
Transaction Documents, a fiduciary relationship in respect of any Buyer. Neither
the Collateral  Agent nor any of its officers,  directors,  employees and agents
shall  have any  liability  to any Buyer for any  action  taken or omitted to be
taken in connection herewith or therewith except to the extent caused by its own
gross  negligence  or  willful  misconduct,  and each  Buyer  agrees to  defend,
protect,  indemnify  and  hold  harmless  the  Collateral  Agent  and all of its
officers, directors,  employees and agents (collectively,  the "CA INDEMNITEES")
from and against  any  losses,  damages,  liabilities,  obligations,  penalties,
actions,  judgments,  suits,  fees,  costs  and  expenses  (including,   without
limitation,  reasonable attorneys' fees, costs and expenses) incurred by such CA
Indemnitee,  whether  direct,  indirect  or  consequential,  arising  from or in
connection  with  the  performance  by  such CA  Indemnitee  of the  duties  and
obligations  of  Collateral  Agent  pursuant  hereto,  to the  Guaranty,  to the
Security Agreement and/or to the Pledge Agreement.

                  (ii) The Collateral  Agent may resign from the  performance of
all its  functions  and duties  hereunder at any time by giving at least fifteen
(15) Business  Days' prior written  notice to the Company and each holder of the
Notes.  Such  resignation  shall take effect upon the  acceptance by a successor
Collateral  Agent of  appointment  as  provided  below.  Upon any such notice of
resignation,  the holders of a majority of the  outstanding  principal under the
Notes shall appoint a successor  Collateral  Agent.  Upon the  acceptance of the
appointment as Collateral Agent,  such successor  Collateral Agent shall succeed
to and become vested with all the rights,  powers,  privileges and duties of the
retiring Collateral Agent, and the retiring Collateral Agent shall be discharged
from its  duties and  obligations  under this  Agreement.  After any  Collateral
Agent's resignation  hereunder,  the provisions of this Section 4(r) shall inure
to its benefit. If a successor Collateral Agent shall not have been so appointed
within said fifteen  (15)  Business Day period,  the retiring  Collateral  Agent
shall then appoint a successor Collateral Agent who shall serve until such time,
if any,  as the  holders of a majority of the  outstanding  principal  under the
Notes appoint a successor Collateral Agent as provided above.

                  (iii) Without  limiting the generality of the foregoing,  each
Buyer hereby irrevocably appoints and authorizes Collateral Agent to execute and
deliver the  Intercreditor  Agreement,  the  Security  Agreement  and the Pledge
Agreement (on  substantially  the terms set forth in the forms of such documents
attached as exhibits  hereto) for and on behalf of such Buyer and to perform all
of the obligations and duties of Collateral Agent provided for therein and under
the  Guaranty,  and each Buyer shall be bound by the terms of the  Intercreditor
Agreement,  the Guaranty,  the Security Agreement and the Pledge Agreement as if
such  Buyer  were an  original  signatory  thereto.  As to (x) any  matters  not
expressly  provided for by this  Agreement and the other  Transaction  Documents
(including,  without limitation,  enforcement of any security interests) and (y)
any amendments,  consents or waivers of any Transaction Document, the Collateral
Agent shall not be required to exercise any  discretion or take any

                                       29
<PAGE>

action,  but shall be  required  to act or to refrain  from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required  Holders,  and such  instructions of the Required  Holders shall be
binding upon all Holders.

                  (iv)  The   Collateral   Agent   shall   have  no   duties  or
responsibilities  except those  expressly set forth in this  Agreement or in the
other  Transaction  Documents.  The  duties  of the  Collateral  Agent  shall be
mechanical and  administrative in nature. The Collateral Agent shall not have by
reason  of  this  Agreement  or  any  other  Transaction  Document  a  fiduciary
relationship  in respect of any Holder.  Nothing in this  Agreement or any other
Transaction  Document,  express or implied, is intended to or shall be construed
to impose upon the Collateral Agent any obligations in respect of this Agreement
or any other  Transaction  Document  except  as  expressly  set forth  herein or
therein.

                  (v) If ShellCo or Fortress  Credit Corp.  (or any successor or
replacement agent under the Senior Loan Agreement) seeks the consent or approval
of the  Required  Holders to the  taking or  refraining  from  taking any action
hereunder,  ShellCo shall send notice thereof to each Holder.  Any such consents
shall be solicited and tabulated by ShellCo, or a solicitation and/or tabulation
agent engaged by ShellCo, subject to the Collateral Agent's right to receive all
such consents and satisfy itself as to (x) the authenticity of such consents (y)
receipt of such consents from Holders representing a sufficient principal amount
of Notes,  and (z) any other  matters  that the  Collateral  Agent,  in its sole
discretion  deems  necessary or  advisable.  It shall not be necessary  for such
Holders to approve the particular form of any proposed  amendment or waiver, but
it shall be sufficient if the written  consents of the Required  Holders reflect
the approval of the substance  thereof.  ShellCo  shall  provide the  Collateral
Agent,  and is  permitted  hereby  to  provide  Fortress  Credit  Corp.  (or any
successor or replacement agent under the Senior Loan Agreement),  with copies of
any such written consent(s).

                  (vi) The Collateral  Agent shall  promptly  notify each Holder
any time that the Required  Holders have instructed the Collateral  Agent to act
or refrain from acting pursuant hereto. ShellCo or Fortress Credit Corp. (or any
successor  or  replacement  agent  under  the  Senior  Loan  Agreement)  or  the
Collateral  Agent  may at any time  request  instructions  from the  Holders  in
respect of any actions or approvals  which by the terms of this  Agreement or of
any of the other  Transaction  Documents  the  Collateral  Agent is permitted or
required to take or to grant, and if such  instructions are promptly  requested,
the  Collateral  Agent shall be  absolutely  entitled to refrain from taking any
action or to withhold any approval under any of the Transaction  Documents until
it shall have  received such  instructions  from the Required  Holders.  Without
limiting  the  foregoing,  no Holder  shall have any right of action  whatsoever
against  the  Collateral  Agent as a result of the  Collateral  Agent  acting or
refraining  from acting  under this  Agreement  or any of the other  Transaction
Documents in accordance  with the  instructions  of the Required  Holders unless
consent of all Holders is required by the terms of such document.

         (s) OTC BULLETIN  BOARD.  The Company  shall cause  ShellCo to use best
efforts to comply with the rules of the Principal Market and to cause all of the
Registrable Securities (as defined in the Registration Rights Agreement) covered
by a Registration Statement (as defined in the Registration Rights Agreement) to
be quoted  thereon,  unless  listed or quoted on another  Eligible  Market.  The
Company  shall  cause  ShellCo  to  promptly  secure  the  listing of all of the
Registrable  Securities  upon each  national  securities  exchange and automated
quotation  system,  if any,  upon which  shares of Common  Stock are then listed
(subject to official notice of

                                       30
<PAGE>

issuance)  and shall cause  ShellCo to maintain,  so long as any other shares of
Common Stock shall be so listed, such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents.  The Company
shall cause ShellCo and its  Subsidiaries  not to take any action which would be
reasonably expected to result in the suspension or termination of trading of the
Common Stock on the Principal Market. The Company shall cause ShellCo to pay all
fees and expenses in  connection  with  satisfying  its  obligations  under this
Section 4(s).

         (t)  GUARANTY.  On or  prior  to the  Closing,  the  Company  and  each
Subsidiary  (other than any Foreign  Subsidiary) shall execute a Guaranty in the
form  attached  hereto as EXHIBIT F and shall  execute  and  deliver  the Pledge
Agreement and the Security  Agreement,  in the form attached hereto as EXHIBIT D
and EXHIBIT E, respectively.  In addition,  if ShellCo, the Company or any other
Grantor (as defined in the Security  Documents)  shall  hereafter own, create or
acquire any other  Subsidiary  that is not a Grantor  hereunder  or a party to a
Guaranty, then the Company,  ShellCo or such other Grantor shall promptly notify
the Collateral Agent thereof and ShellCo, the Company or such other such Grantor
shall cause such  Subsidiary  (other than any  Foreign  Subsidiary)  to become a
party  to a  Guaranty  and a party  to the  Pledge  Agreement  and the  Security
Agreement  and  to  duly  execute   and/or   deliver   resolutions,   incumbency
certificates,  opinions of counsel and other  documents,  in form and  substance
reasonably  acceptable to the Collateral  Agent or as the Collateral Agent shall
reasonably request in respect thereof.

         (u)  REGULATION  M. The Company will not take any action  prohibited by
Regulation  M under the 1934 Act, in  connection  with the  distribution  of the
Securities contemplated hereby.

         (v) GENERAL SOLICITATION. None of the Company, any of its Affiliates or
any person acting within the scope of their delegated authority on behalf of the
Company or such  affiliate  will  solicit  any offer to buy or offer or sell the
Securities by means of any form of general  solicitation or general  advertising
within the meaning of Regulation D, including:  (i) any advertisement,  article,
notice or other  communication  published in any newspaper,  magazine or similar
medium or broadcast  over  television or radio;  and (ii) any seminar or meeting
whose  attendees  have been  invited  by any  general  solicitation  or  general
advertising.

         (w) LIEN  SEARCHES.  Prior to the Closing Date,  the Company shall have
delivered or caused to be  delivered  to each Buyer (A) copies of UCC  financing
statement  search  results  listing any and all effective  financing  statements
filed in any applicable  jurisdiction (in which a secured party required to file
a  financing  statement  to perfect its  security  interest in the assets of the
Company,  ShellCo or any Subsidiary (other than Foreign  Subsidiaries) that name
the Company,  ShellCo, Merger Sub, or any such Subsidiary as a debtor to perfect
an interest in any of the assets thereof, together with copies of such financing
statements,  none of  which  financing  statements,  except  for  any  financing
statements filed in respect of the escrowed funds referenced in subsection (xiv)
of the definition of Permitted Indebtedness set forth in Section 28 of the Note,
Permitted Senior Indebtedness,  Permitted Priority  Indebtedness,  the Permitted
Liens (as defined in the Notes),  and as  otherwise  agreed to in writing by the
Buyers,  shall cover any of the Collateral,  and the results of searches for any
effective  tax liens and  judgment  liens  filed  against any such Person or its
property in any  applicable  jurisdiction,  which  results,  except as otherwise
agreed to in writing by the Buyers,  shall not show any such effective tax liens
(other than those  permitted  to exist  under the Note) or judgment  liens other
than as set forth in  SCHEDULE

                                       31
<PAGE>

4(W);  and (B) a  perfection  certificate,  duly  completed  and executed by the
Company and each of the Subsidiaries (other than the Foreign  Subsidiaries),  in
form and substance reasonably satisfactory to the Buyers.

         5. REGISTERS; TRANSFER AGENT INSTRUCTIONS.

                  (a) REGISTERS.  The Company shall cause ShellCo to maintain at
its principal executive offices (or such other office or agency of ShellCo as it
may  designate),  a register for the Notes and a register for the  Warrants,  in
which  ShellCo shall record the name and address of the Person in whose name the
Notes or the Warrants,  respectively,  have been issued  (including the name and
address of each transferee),  the principal amount of Notes held by such Person,
the number of  Conversion  Shares  issuable upon  conversion  of the Notes,  and
Warrant Shares  issuable upon exercise of the Warrants held by such Person.  The
Company  shall cause  ShellCo to keep the  registers  open and  available at all
times  during   business  hours  for  inspection  of  any  Buyer  or  its  legal
representatives.

                  (b)  TRANSFER  AGENT  INSTRUCTIONS.  The  Company  shall cause
ShellCo to issue  instructions to its transfer agent in the form attached hereto
as EXHIBIT J, and any subsequent transfer agent, to issue certificates or credit
shares to the applicable balance accounts at DTC, registered in the name of each
Buyer or its respective  nominee(s),  for the Conversion  Shares and the Warrant
Shares issued at the Closing or upon  conversion of the Notes or exercise of the
Warrants in such amounts as specified from time to time by each Buyer to ShellCo
upon  conversion of the Notes or exercise of the Warrants in the form of EXHIBIT
J attached hereto (the "TRANSFER AGENT INSTRUCTIONS"). The Company warrants that
no instruction other than the Irrevocable  Transfer Agent Instructions  referred
to in this  Section  5(b),  and stop  transfer  instructions  to give  effect to
Section 2(g) including in the event that the Registration Statement ceases to be
effective  under the  Securities  Act of 1933,  will be given by  ShellCo to its
transfer agent, and that the Securities  shall otherwise be freely  transferable
on the books and  records of  ShellCo,  subject to  compliance  with  applicable
securities  law, as and to the extent  provided in this  Agreement and the other
Transaction Documents.  If a Buyer effects a sale, assignment or transfer of the
Securities in accordance  with Section 2(f),  the Company shall cause ShellCo to
permit the transfer and shall promptly  instruct its transfer agent to issue one
or more certificates or credit shares to the applicable  balance accounts at DTC
in such name and in such denominations as specified by such Buyer to effect such
sale,  transfer  or  assignment.  In the event  that such  sale,  assignment  or
transfer  involves  Conversion  Shares  or  Warrant  Shares  sold,  assigned  or
transferred pursuant to an effective  registration statement or pursuant to Rule
144,  and  Buyer  provides  evidence  of  compliance  with  Rule 144  reasonably
acceptable to ShellCo,  the transfer  agent shall,  subject to  compliance  with
applicable  securities  laws,  issue such  Securities to the Buyer,  assignee or
transferee,  as the case may be,  without any  restrictive  legend.  The Company
acknowledges  on  behalf  of  itself  and  ShellCo  that a  breach  by it of its
obligations   hereunder  will  cause   irreparable   harm  to  affected  Buyers.
Accordingly,  the Company  acknowledges on behalf of itself and ShellCo that the
remedy at law for a breach of its  obligations  under this  Section 5(b) will be
inadequate  and  agrees,  in the event of a breach or  threatened  breach by the
Company or ShellCo of the  provisions  of this Section  5(b),  that any affected
Buyers shall be entitled,  in addition to all other  available  remedies,  to an
order and/or injunction  restraining any breach and requiring immediate issuance
and  transfer,  without the  necessity of showing  economic loss and without any
bond or other security being required.

                                       32
<PAGE>

         6.  CONDITIONS TO THE COMPANY'S AND SHELLCO'S  OBLIGATION TO SELL.  The
obligation of the Company and ShellCo  hereunder to issue and sell the Notes and
the  related   Warrants  to  each  Buyer  at  the  Closing  is  subject  to  the
satisfaction,  at  or  before  the  Closing  Date,  of  each  of  the  following
conditions,  reasonably  satisfactory to the Company and ShellCo,  provided that
these  conditions are for the Company's and ShellCo's  benefit and may be waived
by the  Company and ShellCo at any time in their sole  discretion  by  providing
each Buyer with prior written notice thereof:

                  (a) Each Buyer and  Collateral  Agent shall have executed each
of the  Transaction  Documents to which it is a party and  delivered the same to
the Company, and/or ShellCo, as applicable.

                  (b)  Each  Buyer  shall  have  delivered  to  ShellCo  or  its
designee(s)  the Purchase Price (less the amounts  withheld  pursuant to Section
4(f)) for the Notes and the related  Warrants  being  purchased by such Buyer at
the Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by ShellCo.

                  (c) The  representations and warranties of such Buyer shall be
true and correct in all material respects (except for those  representations and
warranties that are qualified by materiality or Material  Adverse Effect,  which
shall be true and  correct in all  respects)  as of the date when made and as of
the Closing  Date as though made at that time  (except for  representations  and
warranties  that speak as of a specific  date,  each of which  shall be true and
correct as of such date),  and such Buyer shall have  performed,  satisfied  and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be performed,  satisfied or complied with by such
Buyer at or prior to the Closing Date.  For  clarification  purposes  only,  the
conditions set forth in Sections 6(a) and (b) must be satisfied in all respects,
or waived as provided for in this Section 6.

                  (d) ShellCo  shall have  executed  and  delivered  the Joinder
Agreement.

                  (e) The Merger shall have been consummated.

         7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation of
each Buyer  hereunder  to  purchase  the Notes and the  related  Warrants at the
Closing is subject to the  satisfaction,  at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole  discretion
by providing the Company and ShellCo with prior written notice thereof:

                  (a)  Each  of  the   Company,   ShellCo   and  each  of  their
Subsidiaries,  to the extent each is a party  thereto,  shall have  executed and
delivered to such Buyer (i) each of the  Transaction  Documents,  (ii) the Notes
(in such principal  amounts as such Buyer shall request) being purchased by such
Buyer at the Closing  pursuant to this Agreement and (iii) the Warrants (in such
denominations  as such Buyer shall request) being purchased by such Buyer at the
Closing pursuant to this Agreement.

                                       33
<PAGE>

                  (b) ShellCo  shall have  delivered to such Buyer a copy of the
Transfer Agent  Instructions,  in the form of EXHIBIT J attached  hereto,  which
instructions  shall  have been  delivered  to and  acknowledged  in  writing  by
ShellCo's transfer agent.

                  (c) Such  Buyer  shall have  received  the  opinions  of Brown
Rudnick  Berlack  Israels LLP, the  Company's  and  ShellCo's  outside  counsel,
Brownstein, Hyatt & Farber, FMI International Inc.'s outside counsel and the Law
Offices of Cecilia L. Yu & Associates,  the Tug Companies' outside counsel, each
dated as of the Closing  Date, in  substantially  the form of EXHIBIT K attached
hereto.

                  (d) The Company and ShellCo shall have delivered to such Buyer
a copy of a certificate evidencing incorporation,  partnership or the formation,
as  applicable,  and  good  standing  of the  Company,  ShellCo  and each of the
Subsidiaries (other than the Foreign Subsidiaries) in such entity's jurisdiction
of formation  issued by the  Secretary of State (or  comparable  office) of such
jurisdiction,  as of a date within the 30 days prior to the Closing Date,  which
in the case of the Company and ShellCo  shall be certified  by the  Secretary of
State of the State of Delaware.

                  (e) The Company and ShellCo shall have delivered to such Buyer
a   certificate   evidencing   the   Company's,   each  Target's  and  ShellCo's
qualification  as a foreign entity and good standing  issued by the Secretary of
State of the State (or comparable office) of each jurisdiction in which ShellCo,
the Company or such Target is required to qualify as a foreign  entity,  each as
of a date within 30 days prior to the Closing Date.

                  (f) The Board of  Directors  shall  have  adopted  resolutions
consistent with Section 3(b) above and in a form  reasonably  acceptable to such
Buyer (the "RESOLUTIONS").

                  (g) The Company, ShellCo and each entity which is a Subsidiary
of the Company  immediately prior to the Closing shall have delivered to deliver
to such Buyer a secretary's  certificate in the form attached  hereto as EXHIBIT
L,  executed by the  secretary of such Person and dated as of the Closing  Date,
certifying (A) that the attached  resolutions  adopted by the board of directors
of such Person in connection with the Transaction  Documents are true,  complete
and correct  and remain  unamended  and in full force and  effect,  (B) that the
attached  certificate  of  incorporation  or  certificate  of  formation of such
Person,  certified  as of a date  within  30 days of the  Closing  Date,  by the
secretary  of state of the state of the  jurisdiction  of its  organization,  is
true,  complete and correct and remains  unamended and in full force and effect,
(C) that the attached bylaws or limited liability company agreement or operating
agreement of such Person are true, complete and correct and remain unamended and
in full force and effect and (D) as to the incumbency and specimen  signature of
each officer of such Person  executing  this  Agreement,  the other  Transaction
Documents and any other document  delivered in connection  herewith on behalf of
such Person.

                  (h) The representations and warranties of the Company, ShellCo
and any Subsidiary set forth in this Agreement or any other Transaction Document
shall  be  true  and  correct  in  all  material   respects  (except  for  those
representations  and  warranties  that are qualified by  materiality or Material
Adverse Effect,  which shall be true and correct in all respects) as of the date
when made and as of the  Closing  Date as though  made at that time  (except for
representations  and warranties which speak as of a specific date, each of which
shall be true and

                                       34
<PAGE>

correct  as of such  date)  and the  Company,  ShellCo  or each  Subsidiary,  as
applicable,  shall  have  performed,  satisfied  and  complied  in all  material
respects  with  the  covenants,   agreements  and  conditions  required  by  the
Transaction Documents to be performed, satisfied or complied with by such entity
at or prior to the Closing  Date.  Such Buyer shall have  received a certificate
delivered  and  executed by the  President  of each of the Company and  ShellCo,
dated as of the  Closing  Date,  to the  foregoing  effect  and as to such other
matters as may be reasonably requested by such Buyer in the form attached hereto
as EXHIBIT M.

                  (i)  ShellCo  shall have  delivered  to such Buyer a copy of a
letter from ShellCo's  transfer agent  certifying the number of shares of Common
Stock  outstanding  as of a date within the five (5) Business  Days prior to the
Closing Date.

                  (j) The  Company  and  ShellCo  shall  have (i)  obtained  all
governmental, regulatory or third party consents and approvals, if any, and (ii)
made all filings under all applicable  federal and state securities laws (to the
extent such  filings  must be made on or prior to the Closing Date in each case)
necessary to consummate the issuance and the sale of the Securities.

                  (k) On or prior to Closing ShellCo, Fortress Credit Corp., the
Company and certain  Subsidiaries  party to the Senior Loan Agreement shall have
entered into the Senior Loan  Agreement on the terms set forth on EXHIBIT O, and
Fortress Credit Corp., the Company,  ShellCo and the Collateral Agent shall have
entered into and delivered the Intercreditor Agreement in the form of EXHIBIT I,
and each Buyer shall have received copies of each Senior Lien Creditor Agreement
(as  defined in the  Intercreditor  Agreement)  in effect on the  Closing  Date,
certified by the Company as being true, correct and complete.

                  (l) The Company shall have filed such financing statements and
other  documents in such offices as the Collateral  Agent may request to perfect
the  security  interests  granted  under the Security  Agreement  and the Pledge
Agreement  (it  being  understood  that the  Collateral  Agent  shall not file a
financing  statement in respect of ShellCo until the Security Agreement has been
fully executed).

                  (m) The Company shall have delivered or caused to be delivered
to such Buyer (A) a perfection  certificate,  duly completed and executed by the
Company  and  each  of  its  Subsidiaries,  in  form  and  substance  reasonably
satisfactory  to the  Buyers and (B) copies of UCC  financing  statement  search
results  listing  any  and  all  effective  financing  statements  filed  in any
applicable  jurisdiction  (in which a secured  party is required to have filed a
financing  statement to perfect its security  interest in the assets of Company,
ShellCo,  any  Target  or any of their  Subsidiaries,  other  than  the  Foreign
Subsidiaries  that  name  the  Company,  ShellCo,  any  Target  or any of  their
respective  Subsidiaries  (other than the Foreign  Subsidiaries)  as a debtor to
perfect an interest in any of the assets  thereof,  together with copies of such
financing  statements,  none  of  which  financing  statements,  except  for any
financing  statements  filed in  respect of the  escrowed  funds  referenced  in
subsection  (x) of  the  definition  of  Permitted  Indebtedness  set  forth  in
subsection 28 of the Notes,  Permitted Senior Indebtedness,  the Permitted Liens
and as  otherwise  agreed to in writing by the  Buyers,  shall  cover any of the
Collateral  and the results of searches for any effective tax liens and judgment
liens  filed  against  any  such  Person  or  its  property  in  any  applicable
jurisdiction,  which  results,  except as otherwise  agreed to in writing by the
Buyers,  shall not show any such  effective  liens  (other than those tax and or
judgment liens described on

                                       35
<PAGE>

SCHEDULE 3(X) which liens would not,  individually  or in the aggregate,  have a
Material Adverse Effect).

                  (n) The Company and each non-Foreign Subsidiary holding equity
interests  shall have delivered a Pledge  Agreement duly executed by the Company
and  such   Subsidiaries,   together  with  evidence  that  any  original  stock
certificates,   certificate  or  other  instrument  or  document  evidencing  or
representing  the equity  interests  subject to such Pledge  Agreement have been
delivered to the agent under the Senior Loan  Agreement,  and the Company  shall
have delivered to the Collateral Agent of undated instruments of transfer as the
Collateral Agent may request  representing (A) one hundred (100%) percent of the
common stock of the  Company's or such  Subsidiaries'  Subsidiaries  (other than
those  representing  the shares of AmeRussia  and  SeaMaster  Hong Kong) and (B)
sixty five (65%)  percent of the common stock of AmeRussia  and  SeaMaster  Hong
Kong.

                  (o) The Company shall have delivered a second  mortgage,  duly
executed by each  applicable  Guarantor  in respect of the leased real  property
located at 3178 and 3355 Dulles  Drive,  Mira Loma,  California  and 800 Federal
Drive, Carteret, New Jersey.

                  (p) The Company shall have delivered a Title Insurance  Policy
or bring-down of the existing  Title  Insurance  Policy in respect of the second
mortgages listed in Section 7(o), dated as of the Closing Date.

                  (q)  The   Company   shall   have   delivered   a  UCC  filing
authorization   letter  duly  executed  by  the  Company  and  each  non-Foreign
Subsidiary,  together with  appropriate UCC financing  statements,  in each case
duly filed in such office or offices as may be  necessary  or, in the opinion of
the  Collateral  Agent,  desirable to perfect the liens and  security  interests
purported to be created by the Security Agreement and Pledge Agreement.

                  (r)  The   Company   shall  have   delivered   all   releases,
terminations,  registrations, filings and such other documents as the Collateral
Agent may reasonably  request to evidence and effectuate the  termination by the
Existing  Lenders (as defined in the Senior Loan  Agreement) of their  financing
arrangements  with the Company or any non-Foreign  Subsidairy  (other than as to
certain letters of credit issued in connection with such financing  arrangements
on  terms  and  conditions   satisfactory  to  the  Collateral  Agent)  and  the
termination  and  release  by them,  of any  interest  in and to any  assets and
properties of the Company or such Subsidiary (other than certain cash collateral
pledged to GMAC on the Closing Date) duly authorized,  executed and delivered by
it, including,  but not limited to, (A) the authorization by or on behalf of the
Existing  Lenders  for the agent  under the Senior  Loan  Agreement  to file UCC
discharge and termination statements for all UCC financing statements previously
filed by any of them or their predecessors,  as secured party and the Company or
any non-Foreign  Subsidiary,  as debtor and (B)  satisfactions and discharges of
any mortgage,  deed of trust, deed to secure debt or similar  instruments by the
Company or any non-Foreign  Subsidairy in favor of any of the Existing  Lenders,
in form  acceptable for recording with the appropriate  Governmental  Authority,
and the Collateral Agent is hereby authorized to file all such UCC discharge and
termination statements.

                  (s) The Company shall have delivered  such opinion  letters of
counsel to the Company in respect of the  effectiveness  of the Merger as of the
Closing Date.

                                       36
<PAGE>

                  (t) The  Company  shall have  delivered  a  certificate  of an
officer of the  Company and each  non-Foreign  Subsidiary  certifying  as to the
Solvency of the Company or such Subsidiary.

                  (u) The Company shall have delivered a pro forma balance sheet
of ShellCo and its Subsidiaries reflecting the initial transactions contemplated
hereunder,   including,  but  not  limited  to,  (A)  the  consummation  of  the
Acquisitions  and  the  other  transactions   contemplated  by  the  Acquisition
Documents (B) the consummation of the Merger, (C) the loans provided pursuant to
the  Senior  Loan  Agreement  and the use of the  proceeds  thereof  and (D) the
issuance  of the  Notes on the  Closing  Date and use of the  proceeds  thereof,
accompanied  by a  certificate,  dated the Closing Date, of the chief  financial
officer of the Company stating that such pro forma balance sheet  represents the
reasonable,  good faith opinion of such officer as to the subject matter thereof
as of the date of such certificate.

                  (v) The Company shall have delivered evidence  satisfactory to
the Buyers of the insurance  coverage  required by Section 3(r) and the terms of
the Security  Agreement,  including  evidence as to the naming of the Collateral
Agent as a named insured or loss payee thereunder.

                  (w) All  proceedings  in  connection  with the issuance of the
Notes and the other  transactions  contemplated  by this Agreement and the other
Transaction Documents, and all documents incidental hereto and thereto, shall be
reasonably  satisfactory  to the Buyers,  and the Buyers shall have received all
such information and such counterpart  originals or certified or other copies of
such documents as the Collateral Agent may reasonably request.

                  (x) The Common Stock (i) shall be designated  for quotation or
listed on an Eligible Market and (ii) shall not have been  suspended,  as of the
Closing Date,  by the SEC or such Eligible  Market from trading on such Eligible
Market  nor  shall  suspension  by the SEC or such  Eligible  Market  have  been
threatened,  as of the  Closing  Date,  either (A) in writing by the SEC or such
Eligible Market or (B) by falling below any minimum maintenance  requirements of
such Eligible Market.

                  (y) The Company or ShellCo shall have filed a  Certificate  of
Merger with the Delaware  Secretary of State  whereby  Merger Sub will be merged
with and into the Company, pursuant to which the holders of equity securities of
the Company will receive,  in the aggregate,  12,854,893  shares of Common Stock
(prior to giving effect to the Reverse Split) (the "SHARE  EXCHANGE"),  and, the
shareholders  of the Company,  immediately  prior to the Merger,  will own, on a
fully-diluted  basis  following  completion of the Merger,  not less than 51% of
ShellCo's common equity.

                  (z) The Company  shall have  delivered to each Buyer a copy of
the consolidated  audited financial  statements of the Company and a copy of the
consolidated  audited financial statements of the Targets prepared in accordance
with  GAAP for the  periods  ended  December  31,  2004 and  December  31,  2005
(provided  that in the case of Tug,  no balance  sheet  shall be  provided as of
December 31, 2004), which financial  statements shall contain an opinion of such
auditor prepared in accordance with generally accepted auditing standards (which
opinion shall be without (x) a "going concern" qualification or exception or (y)
any qualification or exception as to the scope of such audit. ShellCo shall have
delivered  to  each  Buyer  a  copy  of

                                       37
<PAGE>

the consolidated pro forma financial statements of ShellCo for the periods ended
the periods  ended  December 31, 2004 and December  31,  2005,  which  financial
statements  shall contain an opinion of such auditor prepared in accordance with
generally  accepted  auditing  standards  (which  opinion  shall be without  any
qualification or exception as to the scope of such audit).

                  (aa) Each executive officer and officer of ShellCo who assumes
the  duties of any such  executive  officer  after the date  hereof  shall  have
entered into  employment  agreements with the Company and ShellCo in the form of
EXHIBIT N and the Lockup Agreement in the form of EXHIBIT G.

                  (bb)  Since June 30,  2006,  there  shall not have  developed,
occurred,  or come into  effect or  existence  any  change,  or any  development
involving a prospective  change,  in or affecting the position of the Company or
ShellCo  or any  Target,  financial  or  otherwise,  that has  had,  or would be
expected to have, a Material Adverse Effect.

                  (cc)  ShellCo  shall have  executed  and  delivered  a joinder
agreement to this  Agreement,  in the form of EXHIBIT H, dated as of the Closing
Date (the "JOINDER AGREEMENT"),  to the effect that upon the Closing (i) each of
the  representations  and warranties  made by the Company set forth in Section 3
hereof, MUTATIS MUTANDIS,  shall be true and correct as if each reference to the
Company  in such  representations  and  warranties  was a  reference  to ShellCo
(unless  otherwise  expressly  provided  therein),   (ii)  ShellCo  assumes  all
covenants and  obligations of ShellCo set forth herein and (iii) ShellCo assumes
all  covenants  and  obligations  of the  Company set forth  herein  (including,
without limitation,  all  indemnification  obligations) as if each obligation of
the  Company  and each  reference  thereto  contained  elsewhere  herein  was an
obligation of and a reference to ShellCo. These requirements shall be amended to
reflect the  requirements  set forth in the Senior Loan in respect of  financial
statements of the Company and Targets.

                  (dd) The  Merger  shall  have been  consummated,  on terms and
conditions  satisfactory to the Buyer,  prior to or  contemporaneously  with the
occurrence of the Closing Date.

                  (ee) The Company  shall not have made any public  announcement
regarding the transactions contemplated by the Agreement prior to the Closing.

                  (ff) The Company shall have delivered to such Buyer such other
documents  relating to the  transactions  contemplated by this Agreement as such
Buyer or its counsel may reasonably request.

         8.  TERMINATION.  In the event that the Closing shall not have occurred
in respect of a Buyer on or before the fifth  (5th)  Business  Day from the date
hereof due to the  Company's or such Buyer's  failure to satisfy the  conditions
set forth in  Sections 6 and 7 above (and the  nonbreaching  party's  failure to
waive such  unsatisfied  condition(s)),  the  nonbreaching  party shall have the
option to terminate  this  Agreement in respect of such  breaching  party at the
close of  business  on such  date  without  liability  of any party to any other
party;  PROVIDED,  HOWEVER,  if this  Agreement is  terminated  pursuant to this
Section 8 (other than due to a breach by Angelo Gordon & Co., L.P.), the Company
shall remain  obligated to reimburse  Angelo Gordon & Co., L.P. for the expenses
described in Section 4(f).

                                       38
<PAGE>

         9. MISCELLANEOUS.

                  (a) GOVERNING  LAW;  JURISDICTION;  JURY TRIAL.  All questions
concerning the construction,  validity,  enforcement and  interpretation of this
Agreement  shall be  governed  by the  internal  laws of the  State of New York,
without  giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other  jurisdictions)  that would cause
the  application  of the laws of any  jurisdictions  other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York,  Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection  herewith or with
any transaction  contemplated hereby or discussed herein, and hereby irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit, action or proceeding is brought in an inconvenient  forum or that the
venue of such  suit,  action  or  proceeding  is  improper.  Each  party  hereby
irrevocably  waives  personal  service of process and consents to process  being
served in any such suit,  action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient  service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve  process in any manner  permitted by law. The Company  hereby  appoints
Corporation  Service  Company  as its agent for  service of process in New York.
EACH PARTY HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE,  AND AGREES NOT TO
REQUEST,  A JURY  TRIAL FOR THE  ADJUDICATION  OF ANY  DISPUTE  HEREUNDER  OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

                  (b)  COUNTERPARTS.  This  Agreement  may be executed in two or
more identical  counterparts,  all of which shall be considered one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered to the other  party;  provided  that a facsimile  signature
shall be  considered  due  execution  and shall be  binding  upon the  signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

                  (c)  HEADINGS.   The  headings  of  this   Agreement  are  for
convenience  of  reference  only and  shall  not form  part of,  or  affect  the
interpretation of, this Agreement.

                  (d) SEVERABILITY.  If any provision of this Agreement shall be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

                  (e) ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement  supersedes
all other prior oral or written  agreements  between the  Buyers,  the  Company,
their  affiliates  and Persons  acting on their behalf in respect of the matters
discussed  herein,  and  this  Agreement,  the  Transaction  Documents  and  the
instruments referenced herein contain the entire understanding of the parties in
respect of the matters  covered herein and therein and,  except as  specifically
set forth herein or therein,  none of the  Company,  ShellCo,  their  respective
Subsidiaries  nor any Buyer  makes any  representation,  warranty,  covenant  or
undertaking  in respect of such matters.  No provision of this  Agreement may be
amended other than by an instrument  in writing  signed

                                       39
<PAGE>

by the Company,  ShellCo and the  Required  Holders,  and any  amendment to this
Agreement  made in conformity  with the provisions of this Section 9(e) shall be
binding on all Buyers and holders of  Securities  as  applicable.  No  provision
hereof may be waived other than by an instrument in writing  signed by the party
against whom enforcement is sought.  No such amendment shall be effective to the
extent  that it  applies  to less  than  all of the  holders  of the  applicable
Securities then  outstanding.  No consideration  shall be offered or paid to any
Person to amend or consent to a waiver or  modification  of any provision of any
of the Transaction  Documents unless the same  consideration  also is offered to
all of the parties to the Transaction Documents,  holders of Notes or holders of
the Warrants,  as the case may be. The Company has not,  directly or indirectly,
made any agreements  with any Buyers  relating to the terms or conditions of the
transactions  contemplated by the Transaction  Documents  except as set forth in
the Transaction Documents.  Without limiting the foregoing, the Company confirms
that,  except  as set forth in this  Agreement  and the  applicable  Transaction
Documents and the documents  relating to the Common PIPE Securities,  if a buyer
of Common PIPE  Securities,  no Buyer has made any  commitment or promise or has
any other obligation to provide any financing to the Company or otherwise.

                  (f)  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 will be deemed to have been delivered: (i) upon
receipt,  when delivered  personally  provided same is on a Business Day and, if
not,  on the next  Business  Day;  (ii) upon  receipt,  when  sent by  facsimile
(provided that  confirmation of  transmission is mechanically or  electronically
generated and kept on file by the sending party)  provided same is on a Business
Day and, if not, on the next  Business  Day;  (iii) one (1)  Business  Day after
deposit with an overnight  courier service,  in each case properly  addressed to
the party to receive the same; or (iv) if sent by certified mail, return receipt
requested,  when  received  or three  (3) days  after  deposited  in the  mails,
whichever   occurs  first.   The  addresses  and  facsimile   numbers  for  such
communications shall be:

                  If to the Company:

                  Maritime Logistics US Holdings Inc.
                  547 Boulevard
                  Kenilworth, NJ 07033
                  Telephone: (908) 497-0280
                  Facsimile: (908) 497-0295
                  Attention: Robert Agresti

                  with a copy to:

                  Brown Rudnick Berlack Israels LLP
                  One Financial Center
                  Boston, MA 02111
                  Telephone: (617) 856-8200
                  Facsimile: (617) 856-8201
                  Attention: Raymer McQuiston, Esq.
                             John G. Nossiff, Jr., Esq.

                                       40
<PAGE>

If to a Buyer, to its address and facsimile  number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,

                  with a copy (for informational purposes only) to:

                  Schulte Roth & Zabel LLP
                  919 Third Avenue
                  New York, New York 10022
                  Telephone: (212) 756-2000
                  Facsimile: (212) 593-5955
                  Attention: Eleazer N. Klein, Esq.

or to such other address and/or facsimile number and/or to the attention of such
other Person as the  recipient  party has  specified by written  notice given to
each  other  party  five (5) days  prior to the  effectiveness  of such  change.
Written  confirmation  of receipt  (A) given by the  recipient  of such  notice,
consent,  waiver or other  communication,  (B)  mechanically  or  electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile  number  and an image of the first  page of such  transmission  or (C)
provided  by an  overnight  courier  service  shall be  rebuttable  evidence  of
personal  service,  receipt by facsimile  or receipt  from an overnight  courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

                  (g)  SUCCESSORS AND ASSIGNS.  This Agreement  shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted  assigns,  including any purchasers of the Notes or the Warrants.  The
Company shall not assign this Agreement or any rights or  obligations  hereunder
without the prior written consent of the Required Holders, including by way of a
Fundamental Transaction (unless the Company is in compliance with the applicable
provisions  governing  Fundamental  Transactions  set forth in the Notes and the
Warrants).  Subject to compliance with applicable  securities  laws, a Buyer may
assign  some or all of its  rights  hereunder  and under  the other  Transaction
Documents without the consent of the Company, in which event such assignee shall
be deemed to be a Buyer  hereunder  and  thereunder  in respect of such assigned
rights  provided  that the  Collateral  Agent and/or Buyer  provide  Company and
ShellCo with written  notice of such  assignment  within ten (10)  Business Days
after such assignment is consummated.

                  (h) NO THIRD PARTY  BENEFICIARIES.  This Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns,  and is not for the  benefit of, nor may any  provision  hereof be
enforced by, any other Person except to the extent set forth in Section 9(k).

                  (i)  SURVIVAL.  Unless  this  Agreement  is  terminated  under
Section 8, the  representations  and  warranties  of the  Company and the Buyers
contained in Sections 2 and 3, and the  agreements  and  covenants  set forth in
Sections 4, 5, 8 and 9 shall  survive the Closing and the  delivery,  conversion
and exercise of the Securities,  as applicable.  Each Buyer shall be responsible
only  for  its  own  representations,   warranties,   agreements  and  covenants
hereunder.

                  (j) FURTHER  ASSURANCES.  Each party shall do and perform,  or
cause to be done and  performed,  all such  further  acts and things,  and shall
execute and deliver all such other  agreements,  certificates,  instruments  and
documents,  as any other party may reasonably  request

                                       41
<PAGE>

in order to carry out the intent and  accomplish  the purposes of this Agreement
and the consummation of the transactions contemplated hereby.

         (k) INDEMNIFICATION.

                         (i) In  consideration  of each  Buyer's  execution  and
delivery of the  Transaction  Documents and acquiring the Securities  thereunder
and in addition to all of the Company's other  obligations under the Transaction
Documents,  unless this  Agreement is  terminated  under  Section 8 hereof,  the
Company on behalf of itself and ShellCo,  shall defend,  protect,  indemnify and
hold  harmless  each Buyer and each other  holder of the  Securities  and all of
their stockholders, partners, members, officers, directors, employees and direct
or  indirect  investors  and  any of the  foregoing  Persons'  agents  or  other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"INDEMNITEES")  from and against any and all actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith  (irrespective of whether any such Indemnitee is a party to
the  action  for which  indemnification  hereunder  is  sought),  and  including
reasonable  attorneys' fees and disbursements  (the "INDEMNIFIED  LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any  misrepresentation  or breach of any  representation or warranty made by the
Company  or  ShellCo  in any  Transaction  Document  or any  other  certificate,
instrument  or document  contemplated  hereby or thereby,  (b) any breach of any
covenant,  agreement or  obligation  of the Company or ShellCo  contained in any
Transaction   Document  or  any  other   certificate,   instrument  or  document
contemplated  hereby or thereby or (c) any investigation,  cause of action, suit
or claim brought or made against such Indemnitee by a third party (including for
these purposes a derivative  action brought on behalf of the Company or ShellCo)
and arising out of or resulting from (i) the execution, delivery, performance or
enforcement of any Transaction Document or any other certificate,  instrument or
document  contemplated hereby or thereby, (ii) any transaction financed or to be
financed in whole or in part,  directly or indirectly,  with the proceeds of the
issuance of the  Securities,  or (iii) the status of such Buyer or holder of the
Securities as an investor in the Company or ShellCo pursuant to the transactions
contemplated  by the  Transaction  Documents.  To the extent that the  foregoing
undertaking  by the Company  may be  unenforceable  for any reason,  the Company
shall make the maximum  contribution to the payment and  satisfaction of each of
the Indemnified  Liabilities  which is permissible under applicable law provided
that the Company  shall not be obligated to indemnify  such Buyer or  Collateral
Agent for any Indemnified  Liabilities caused by the gross negligence or willful
misconduct of any Buyer or Collateral Agent.

                         (ii)  Without  limiting  Section  9(k)(i)  hereof,  the
Company  and  each  non-Foreign  Subsidiary,   jointly  and  severally,  defend,
indemnify,  and hold harmless the Indemnitees  against any and all Environmental
Liabilities and costs and all other claims, demands, penalties, fines, liability
(including strict liability),  losses,  damages,  costs and expenses  (including
without  limitation,  reasonable  legal fees and expenses,  consultant  fees and
laboratory fees),  arising out of (A) any releases or threatened releases (x) at
any  property  presently  or  formerly  owned or  operated by the Company or any
Subsidiary  of  the  Company,  or any  predecessor  in  interest,  or (y) of any
Hazardous  Materials  generated  and  disposed  of by  any  the  Company  or any
Subsidiary of the Company, or any predecessor in interest; (B) any violations of
Environmental  Laws;  (C) any  Environmental  cause of  action  relating  to the
Company or any

                                       42
<PAGE>

Subsidiary of any the Company, or any predecessor in interest;  (D) any personal
injury (including  wrongful death) or property damage (real or personal) arising
out of exposure to Hazardous Materials used, handled, generated,  transported or
disposed by the Company or any Subsidiary of the Company,  or any predecessor in
interest;  and  (E) any  breach  of any  warranty  or  representation  regarding
environmental  matters made by the Company in Section 3(v).  Notwithstanding the
foregoing, the Company and its Subsidiaries shall not have any obligation to any
Indemnitee  under this  subsection  (ii)  regarding any potential  environmental
matter  covered  hereunder  which is caused by the gross  negligence  or willful
misconduct of such Indemnitee, as determined by a final non-appeallable judgment
of a court of competent jurisdiction.

                         (iii) Promptly  after receipt by Indemnitee  under this
Section  9(k)  of  notice  of the  commencement  of  any  action  or  proceeding
(including  any  governmental  action or  proceeding)  involving an  Indemnified
Liability,  such  Indemnitee  shall, if a claim in respect thereof is to be made
against  any  indemnifying  party  under  this  Section  9(k),  deliver  to  the
indemnifying  party  a  written  notice  of the  commencement  thereof,  and the
indemnifying  party shall have the right to  participate  in, and, to the extent
the indemnifying  party so desires,  jointly with any other  indemnifying  party
similarly  noticed,  to assume  control  of the  defense  thereof  with  counsel
mutually satisfactory to the indemnifying party and the Indemnitee,  as the case
may be; PROVIDED, HOWEVER, that an Indemnitee shall have the right to retain its
own  counsel  with the fees and  expenses  of not more than one counsel for such
Indemnitee to be paid by the indemnifying  party, if, in the reasonable  opinion
of counsel  retained  by the  indemnifying  party,  the  representation  by such
counsel of the Indemnitee and the indemnifying  party would be inappropriate due
to actual or potential differing interests between such Indemnitee and any other
party  represented  by  such  counsel  in  such  proceeding.  In the  case of an
Indemnitee,  legal counsel  referred to in the  immediately  preceding  sentence
shall  be  selected  by  Required  Holders,  to which  the  claim  relates.  The
Indemnitee shall cooperate fully with the indemnifying  party in connection with
any negotiation or defense of any such action or claim by the indemnifying party
and shall furnish to the indemnifying party all information reasonably available
to the Indemnitee which relates to such action or claim. The indemnifying  party
shall keep the Indemnitee  reasonably  apprised at all times as to the status of
the defense or any settlement  negotiations in respect thereof.  No indemnifying
party  shall be liable for any  settlement  of any action,  claim or  proceeding
effected  without  its  prior  written  consent;  PROVIDED,  HOWEVER,  that  the
indemnifying  party shall not  unreasonably  withhold,  delay or  condition  its
consent.  No indemnifying party shall,  without the prior written consent of the
Indemnitee,  consent to entry of any  judgment or enter into any  settlement  or
other  compromise  which does not include as an  unconditional  term thereof the
giving by the  claimant or plaintiff  to such  Indemnitee  of a release from all
liability in respect to such claim or litigation,  and such settlement shall not
include  any  admission  as to fault on the  part of the  Indemnitee.  Following
indemnification  as provided  for  hereunder,  the  indemnifying  party shall be
subrogated  to all rights of the  Indemnitee  in  respect of all third  parties,
firms or corporations  relating to the matter for which indemnification has been
made. The failure to deliver written notice to the  indemnifying  party within a
reasonable  time of the  commencement  of any such action shall not relieve such
indemnifying  party of any liability to the Indemnitee  under this Section 9(k),
except to the extent that the indemnifying party is materially prejudiced in its
ability to defend such action.

                                       43
<PAGE>

                         (iv) The indemnification  required by this Section 9(k)
shall be made by periodic  payments of the amount  thereof  during the course of
the  investigation  or defense,  as and when bills are  received or  Indemnified
Liabilities are incurred.

                         (v) (iii) The  indemnity  agreements  contained  herein
shall  be in  addition  to (A) any  cause  of  action  or  similar  right of the
Indemnitee against the indemnifying party or others, and (B) any liabilities the
indemnifying party may be subject to pursuant to the law.

                  (l)  NO  STRICT   CONSTRUCTION.   The  language  used  in  the
Transaction Documents will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.

                  (m)  REMEDIES.  Each Buyer and each  holder of the  Securities
shall have all rights and remedies set forth in the  Transaction  Documents  and
all rights and  remedies  which such holders have been granted at any time under
any other  agreement  or contract  and all of the rights which such holders have
under  any law.  Any  Person  having  any  rights  under any  provision  of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other  security),  to  recover  damages by reason of any breach of any
provision of this  Agreement  and to exercise  all other rights  granted by law.
Furthermore,  the Company recognizes on behalf of itself and ShellCo that in the
event  that  it  fails  to  perform,  observe,  or  discharge  any or all of its
obligations under the Transaction  Documents,  any remedy at law may prove to be
inadequate  relief to the Buyers.  The Company  therefore agrees that the Buyers
shall be entitled to seek temporary and permanent  injunctive relief in any such
case without the necessity of proving actual damages and without  posting a bond
or other security.

                  (n) RESCISSION AND WITHDRAWAL RIGHT.  Notwithstanding anything
to the contrary  contained in (and without  limiting any similar  provisions of)
the  Transaction  Documents,  whenever  any Buyer  exercises a right,  election,
demand or option  under a  Transaction  Document and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Buyer may rescind or  withdraw,  in its sole  discretion  from time to time upon
written notice to the Company, any relevant notice,  demand or election in whole
or in part without prejudice to its future actions and rights

                  (o)  PAYMENT  SET  ASIDE.  To the extent  that the  Company or
ShellCo  makes a payment or payments to the Buyers  hereunder or pursuant to any
of the other  Transaction  Documents or the Buyers or the Collateral  Agent,  as
applicable,  enforce or exercise their rights hereunder or thereunder,  and such
payment or payments or the proceeds of such  enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside,  recovered from, disgorged by or are required to be refunded,  repaid
or otherwise  restored to the Company,  a trustee,  receiver or any other Person
under any law (including, without limitation, any bankruptcy law, foreign, state
or federal law, common law or equitable cause of action),  then to the extent of
any such  restoration the obligation or part thereof  originally  intended to be
satisfied  shall be revived  and  continued  in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

                  (p) INDEPENDENT NATURE OF BUYERS'  OBLIGATIONS AND RIGHTS. The
obligations  of each Buyer under any  Transaction  Document  are several and not
joint with the obligations of any

                                       44
<PAGE>

other Buyer, and no Buyer shall be responsible in any way for the performance of
the  obligations  of any other Buyer  under any  Transaction  Document.  Nothing
contained herein or in any other  Transaction  Document,  and no action taken by
any Buyer pursuant  hereto or thereto,  shall be deemed to constitute the Buyers
as a partnership,  an association,  a joint venture or any other kind of entity,
or create a presumption that the Buyers are in any way acting in concert or as a
group in respect of such  obligations or the  transactions  contemplated  by the
Transaction  Documents  and the  Company  acknowledges  on behalf of itself  and
ShellCo  that the  Buyers  are not acting in concert or as a group in respect of
such obligations or the transactions  contemplated by the Transaction Documents.
Each Buyer confirms that it has independently participated in the negotiation of
the transaction  contemplated  by this Agreement and the  Transaction  Documents
with the  advice of its own  counsel  and  advisors,  that it has  independently
determined to enter into the transactions  contemplated hereby and thereby, that
it is not relying on any advice from or evaluation by any other Buyer,  and that
it is not  acting in concert  with any other  Buyer in making  its  purchase  of
Securities hereunder or in monitoring its investment in ShellCo. The Buyers and,
to its  knowledge,  the Company agree that no action taken by any Buyer pursuant
hereto or to the other Transaction Documents,  shall be deemed to constitute the
Buyers as a partnership,  an  association,  a joint venture or any other kind of
entity or group,  or create a presumption  that the Buyers are in any way acting
in concert or would deem such Buyers to be members of a "group" for  purposes of
Section 13(d) of the 1934 Act. The Buyers each confirm that they have not agreed
to act together for the purpose of  acquiring,  holding,  voting or disposing of
equity securities of ShellCo. The Company has elected to provide all Buyers with
the same terms and Transaction  Documents for the convenience of the Company and
not because it was  required  or  requested  to do so by any of the Buyers.  The
Company  acknowledges  on behalf of itself and ShellCo  that such  procedure  in
respect of the  Transaction  Documents in no way creates a presumption  that the
Buyers are in any way acting in concert or as a "group" for  purposes of Section
13(d)  of  the  1934  Act  in  respect  of  the  Transaction  Documents  or  the
transactions  contemplated  hereby or  thereby.  Except as  otherwise  set forth
herein  or in the  Transaction  Documents,  each  Buyer  shall  be  entitled  to
independently protect and enforce its rights, including, without limitation, the
rights  arising  out of  this  Agreement,  or out  of  the  Registration  Rights
Agreement,  its Note, its Warrant and the right of set-off under the Guaranties,
and it shall not be necessary  for any other Buyer to be joined as an additional
party in any proceeding for such purpose.

                  (q)  INTERCREDITOR  AGREEMENT.  This Agreement and each of the
provisions hereof shall be subject to the Intercreditor Agreement.

                  (r)  DEFINITIONS:  For  purposes of this  Securities  Purchase
Agreement and the Notes, the following terms shall have the following meanings:

                  "CONSOLIDATED  EBITDA"  means,  with respect to any Person for
any period,  (i) the Consolidated Net Income of such Person and its Subsidiaries
for such period, plus (ii) without  duplication,  the sum of all or a portion of
the  following  amounts of such  Person  and its  Subsidiaries  for such  period
determined on a consolidated  basis in accordance with GAAP, in each case to the
extent deducted in determining  Consolidated  Net Income of such Person for such
period:  (a) Consolidated Net Interest  Expense,  (b) income tax expense paid or
accrued by such  Person and its  Subsidiaries,  (c)  depreciation  expense,  (d)
amortization  expense, and (e) cash payments to each of Robert Lee and Robert Wu
pursuant to the TUG China Bonus Agreement

                                       45
<PAGE>

among Sea Master Hong Kong,  Robert Lee and Robert Wu not to exceed an aggregate
amount of $500,000 in any Fiscal Year.

                  "CONSOLIDATED  INDEBTEDNESS" means, with respect to any Person
at any date, all Indebtedness of such Person and its Subsidiaries  determined on
a consolidated basis in accordance with GAAP, and, in any event, with respect to
Shellco  and its  Subsidiaries,  shall  include,  but not be limited to, (a) the
Indebtedness  of  Shellco  evidenced  by or  arising  under the  Notes,  (b) the
Obligations  under the Senior Loan  Agreement,  (c) any  obligations  arising in
connection with any factoring  arrangements or other arrangements  involving the
sale of  receivables,  and (d) all  Indebtedness  arising in connection with any
letters of credit, banker's acceptances,  bank guarantees or similar facilities;
PROVIDED,   THAT,  the  term  "Consolidated   Indebtedness"  shall  include  (i)
Contingent  Obligations  specified in clauses (c) and (d) of this definition and
(ii)  other   Contingent   Obligations  to  the  extent  such  other  Contingent
Obligations  are required to be included on the balance  sheet of such Person in
accordance with GAAP consistently applied.

                  "CONSOLIDATED  NET INTEREST EXPENSE" means, for any period, as
to any Person,  as determined in accordance  with GAAP, the amount equal to: (a)
total  interest  expense of such Person and its  Subsidiaries  on a consolidated
basis for such period, whether paid or accrued (including the interest component
of any Capitalized Lease for such period), and in any event, including,  without
limitation, (1) all bank fees, commissions, discounts and other fees and charges
owed with respect to letters of credit or any factoring or similar arrangements,
(2) interest  payable by addition to principal or in the form of property  other
than cash and any other  interest  expense not payable in cash, (3) the costs or
fees for such  period  associated  with  hedging  agreements  (to the extent not
otherwise  included  in such  total  interest  expense)  and  (4)  the  non-cash
component of the expense  arising  from the  valuation of the Notes and warrants
issued pursuant to the Noteholder Documents and the PIPE Documents  constituting
"embedded  derivatives",  MINUS (b) the sum of (i) any net payments  received by
such Person and its  Subsidiaries on a consolidated  basis during such period as
interest  income  received in respect of its investments in cash, and (ii) gains
for such period on hedging  agreements  (to the extent not  included in interest
income above and excluding any non-cash gains),  PLUS (c) losses for such period
on hedging  agreements  (to the extent not deducted in the  calculation  of such
total interest expenses and excluding any non-cash losses).

                  "CONSOLIDATED  NET INCOME"  means,  with respect to any Person
for any period,  the net income (loss) of such Person and its  Subsidiaries  for
such period, determined on a consolidated basis and in accordance with GAAP, but
excluding  from  the   determination   of   Consolidated   Net  Income  (without
duplication) (a) any  extraordinary or non-recurring  (i) gains or (ii) non-cash
losses (and  including in any event any non-cash  losses from asset sales),  (b)
non-cash  restructuring  charges,  (c) non-cash write-offs of goodwill and other
intangible  assets  during such period which are required  under  Statement  142
issued by the Financial  Accounting  Standards Board and non-cash  write-offs of
equipment  during such period which are required  under  Statement 144 issued by
the Financial  Accounting Standards Board, (d) non-cash gains or non-cash losses
due to foreign  currency  translation  adjustments  during such period which are
required under Statement 52 of the Financial Accounting Standards Board, (e) the
effect of any change in accounting principles adopted by (or applicable to) such
Person or its  Subsidiaries  after the date  hereof  (including  any  cumulative
effects  resulting  from changes in purchase

                                       46
<PAGE>

accounting principles, except as reflected in adjustments pursuant to clause (b)
of the  definition  of the term "GAAP" but only to the extent that the amendment
referred to therein has been executed and delivered by the parties hereto);  and
(f) the net income (if positive) of any majority-owned  Subsidiary to the extent
that the  declaration or payment of dividends or similar  distributions  by such
majority-owned  Subsidiary  to  such  Person  or  to  any  other  majority-owned
Subsidiary of such Person is not at the time permitted by operation of the terms
of its charter or any agreement,  instrument,  judgment, decree, order, statute,
rule or governmental  regulation  applicable to such majority-owned  Subsidiary.
For the purpose of this  definition,  net income  excludes any gain (or non-cash
loss)  together with any related  provision for taxes for such gain (or non-cash
loss)  realized  upon the sale or other  disposition  of any assets that are not
sold  in  the  ordinary  course  of  business  (including,  without  limitation,
dispositions  pursuant  to sale and  leaseback  transactions)  or of any capital
stock of such Person or a Subsidiary of such Person.

                  "CONVERSION LIMITATIONS" shall mean conversion limitations.

                  "CURRENT VALUE" shall mean current value.

                  "FISCAL  YEAR"  means  the  fiscal  year  of  Shellco  and its
Subsidiaries ending on or about December 31 of each year.

                  "FIXED  CHARGE  COVERAGE  RATIO"  means,  with  respect to any
Person for any period,  the ratio of (a) Consolidated  EBITDA of such Person and
its  Subsidiaries  for  such  period,  to (b) the sum of (i)  all  principal  of
Indebtedness of such Person and its Subsidiaries scheduled to be paid or prepaid
during such period  without  duplication,  plus (ii)  Consolidated  Net Interest
Expense of such Person and its Subsidiaries for such period (provided, that, for
purposes of Section 14(l)(iii)  hereof,  Consolidated Net Interest Expense shall
not include the non-cash  component of the expense arising from the valuation of
the Notes and warrants issued pursuant to the Noteholder  Documents and the PIPE
Documents constituting "embedded derivatives"),  plus (iii) income taxes paid or
payable by such  Person and its  Subsidiaries  during such period plus (iv) cash
dividends or distributions paid by such Person and its Subsidiaries (other than,
in the case of Shellco or any  Guarantor,  dividends  or  distributions  paid by
Shellco or any Guarantor to Shellco or any other Guarantor)  during such period,
plus (v) capital  expenditures  made by such Person and its Subsidiaries  during
such period to the extent not (A) financed by any Permitted  Indebtedness or (B)
funded with the proceeds of any  issuance of Equity  Interests  permitted  under
Notes.

                  "INTELLECTUAL  PROPERTY"  has the  meaning  set  forth  in the
Security Agreement.

                  "MLI" means Maritime Logistics US Holdings Inc.

                  "NOTEHOLDER   DOCUMENTS"   means   the   Securities   Purchase
Agreement,  the Notes,  and all agreements,  documents and instruments  executed
and/or delivered in connection  therewith,  as all of the foregoing now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

                  "PIPE  DOCUMENTS"  means  the  Securities  Purchase  Agreement
(Common Shares and Warrants), dated on or about the date hereof, between MLI and
the buyers party thereto, and all agreements, documents and instruments executed
and/or delivered in connection  therewith,

                                       47
<PAGE>

as all of the  foregoing  now  exist  or may  hereafter  be  amended,  modified,
supplemented, extended, renewed, restated or replaced.

                  "PRINCIPAL AMOUNT" shall mean the Principal (as defined in the
Notes) amount.

                  "RECORD DATE" shall mean record date.

                  "REDEMPTION  PERIOD END DATE" shall mean redemption period end
date.

                  "SOLVENT"  means,  with  respect to any Person on a particular
date,  that on such date i) the fair value of the property of such Person is not
less than the total amount of the  liabilities  of such Person (and including as
assets  for  this  purpose  at a  fair  valuation  all  rights  of  subrogation,
contribution or indemnification arising pursuant to any guarantees given by such
Person,  to the extent  such amount is readily  ascertainable),  ii) the present
fair  salable  value of the assets of such Person (and  including  as assets for
this purpose at a fair  valuation  all rights of  subrogation,  contribution  or
indemnification  arising pursuant to any guarantees given by such Person, to the
extent  such amount is readily  ascertainable)  is not less than the amount that
will be required to pay the  probable  liability  of such Person on its existing
debts as they become  absolute and matured,  iii) such Person is able to realize
upon its assets and pay its debts and other liabilities,  contingent obligations
and other commitments as they mature in the normal course of business,  iv) such
Person  does not intend to, and does not  believe  that it will,  incur debts or
liabilities  beyond such Person's  ability to pay as such debts and  liabilities
mature,  and v) such Person is not engaged in business or a transaction,  and is
not  about to engage in  business  or a  transaction,  for which  such  Person's
property would constitute unreasonably small capital.

                            [SIGNATURE PAGES FOLLOW]


                                       48
<PAGE>

         IN  WITNESS  WHEREOF,  each Buyer and the  Company  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed as of the date first written above.

                                            COMPANY:

                                            MARITIME LOGISTICS US HOLDINGS INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:

ACKNOWLEDGED AND AGREED as of the date first
written above solely as to Sections 4(r) and
4(t), and 7(k), 7(l), 7(n), 7(q), 7(r), 7(v)
and  7(w)  and  9(g),  9(k) and 9(o) of this
Securities Purchase Agreement

By:  LAW DEBENTURE TRUST
COMPANY OF NEW YORK



-------------------------------
Name:
Title:


                                       49
<PAGE>

         IN  WITNESS  WHEREOF,  each Buyer and the  Company  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed as of the date first written above.

                                            BUYERS:

                                            SILVER OAK CAPITAL, L.L.C.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:



                                       50
<PAGE>

         IN  WITNESS  WHEREOF,  each Buyer and the  Company  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed as of the date first written above.

                                            BUYERS:

                                            [INVESTOR NAME]


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:



                                       51
<PAGE>

                                    EXHIBITS

Exhibit A      Form of Notes
Exhibit B      Form of Warrant
Exhibit C      Form of Registration Rights Agreement
Exhibit D      Form of Pledge Agreement
Exhibit E      Form of Security Agreement
Exhibit F      Form of Guaranty
Exhibit G      Form of Lockup Agreement
Exhibit H      Form of Joinder Agreement
Exhibit I      Form of Intercreditor Agreement
Exhibit J      Form of Transfer Agent Instructions
Exhibit K      Form of Opinions of Counsel
Exhibit L      Form of Secretary's Certificate
Exhibit M      Form of Officer's Certificate
Exhibit N      Form of Employment Agreements
Exhibit O      Form of Senior Loan Agreement


                                    SCHEDULES

Schedule 3(a)       Organization and Qualification
Schedule 3(f)       Acknowledgement Regarding Buyer's Purchase of Securities
Schedule 3(k)       Absence of Certain Changes
Schedule 3(n)       Transactions with Affiliates
Schedule 3(o)       Equity Capitalization; Debt
Schedule 3(p)       Indebtedness and Other Contracts
Schedule 3(t)       Title
Schedule 3(u)       Intellectual Property Rights
Schedule 3(x)       Tax Status
Schedule 3(ff)      ERISA
Schedule 4(d)       Use of Proceeds

<PAGE>


      FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT (NOTES AND WARRANTS)

        THIS  FIRST  AMENDMENT  TO  SECURITIES  PURCHASE  AGREEMENT  (NOTES  AND
WARRANTS) dated as of January 5, 2007 (the "AMENDMENT"),  is entered into by and
between Maritime Logistics US Holdings Inc. (the "COMPANY"),  Aerobic Creations,
Inc. ("SHELLCO") and Law Debenture Trust Company of New York, in its capacity as
collateral  agent for and on behalf of the  Buyers (as  defined  below) (in such
capacity,  "COLLATERAL  AGENT").  Capitalized  terms used but not defined herein
shall have the meanings ascribed to them in the Agreement (as defined below).

        WHEREAS, the Company, ShellCo, Collateral Agent and the investors listed
on the  Schedule  of Buyers  attached  to the  Agreement  (together  with  their
successors and assigns,  the "BUYERS") have entered into that certain Securities
Purchase  Agreement  (Notes and  Warrants)  dated as of November 8, 2006 (as the
same now exists or may hereafter be amended, modified,  supplemented,  extended,
renewed, restated or replaced, the "AGREEMENT").

        WHEREAS,  Company and ShellCo have  requested that Buyers and Collateral
Agent amend the Agreement in certain respects as provided herein;

        WHEREAS, the consent of the holders of the Notes representing a majority
of the aggregate amount of the Notes now outstanding (the "REQUIRED HOLDERS") is
required to amend the Agreement as provided herein;

        WHEREAS,  ShellCo  solicited  and  obtained  the consent of the Required
Holders to amend the Agreement as provided herein; and

        WHEREAS, as a result of receiving the consent of the Required Holders to
the  amendments  set  forth  herein,  the  Collateral  Agent  has  agreed to the
foregoing subject to the terms and conditions hereof.

        NOW,  THEREFORE,  in  consideration of the premises and the other mutual
covenants contained herein, the receipt and sufficiency are hereby acknowledged,
the parties hereto agree as follows:

        SECTION 1. AMENDMENT TO AGREEMENT.  The following Section 9(s) is hereby
added to the Agreement in numerical order:

                "(s) COMPLIANCE WITH FINANCIAL  COVENANTS.  Notwithstanding  any
                other  provisions  set forth in the Notes,  except as  otherwise
                expressly  provided  herein,  for the  purposes  of  determining
                compliance  with the  financial  covenants set forth in 14(l) of
                the Notes, a business,  operating company or assets purchased as
                part of an  Acquisition  or a  Permitted  Acquisition  shall  be
                included in the  calculation of such  financial  covenants as if
                such  Acquisitions  or the  Permitted  Acquisition(s)  had  been
                consummated on the first day of the applicable  period (measured
                for financial  covenant purposes) during which such Acquisitions
                or Permitted Acquisition(s) occurs."

                                       1
<PAGE>


        SECTION 2. MISCELLANEOUS.

        (a)     The  execution,  delivery and  effectiveness  of this  Amendment
shall not, except as expressly  provided herein, be deemed to be an amendment or
modification  of, or operate as a waiver of, any  provision of the  Agreement or
any right, power or remedy thereunder,  nor constitute a waiver of any provision
of the Agreement or any other document,  instrument and/or agreement executed or
delivered in connection therewith.

        (b)     This  Amendment  may be executed  in any number of  counterparts
(including by facsimile),  and by the different parties hereto or thereto on the
same or separate  counterparts,  each of which shall be deemed to be an original
instrument  but  all of  which  together  shall  constitute  one  and  the  same
agreement.  Each  party  agrees  that  it  will be  bound  by its own  facsimile
signature and that it accepts the facsimile  signature of each other party.  The
descriptive  headings of the various sections of this Amendment are inserted for
convenience  of reference  only and shall not be deemed to affect the meaning or
construction  of any of the provisions  hereof or thereof.  Whenever the context
and  construction  so  require,  all words  herein and in the  Agreement  in the
singular number herein shall be deemed to have been used in the plural, and vice
versa,  and the  masculine  gender shall include the feminine and neuter and the
neuter shall include the masculine and feminine.

        (c)     This  Amendment and the  Agreement may not be changed,  amended,
restated, waived, supplemented,  discharged,  canceled,  terminated or otherwise
modified  orally or by any  course of  dealing  or in any  manner  other than as
provided  in the  Agreement.  This  Amendment  shall be  considered  part of the
Agreement.

        (d)     This Amendment and the Agreement  constitute  the final,  entire
agreement  and  understanding  between the parties  with  respect to the subject
matter  hereof  and  thereof,  may not be  contradicted  by  evidence  of prior,
contemporaneous  or subsequent  oral  agreements  between the parties,  shall be
binding  upon and inure to the  benefit  of the  successors  and  assigns of the
parties  hereto  and  thereto  and  supersede  all other  prior  agreements  and
understandings,  if any,  relating to the subject  matter  hereof.  There are no
unwritten oral agreements between the parties with respect to the subject matter
hereof or thereof.

        (e)     The validity of this Amendment, its construction, interpretation
and enforcement, the rights of the parties hereunder, shall be determined under,
governed by, and construed in accordance  with the choice of law  provisions set
forth in the Agreement.

                      REMAINDER OF PAGE INTENTIONALLY BLANK

                                       2
<PAGE>


                                        SIGNATURE  PAGE TO  FIRST  AMENDMENT  TO
                                        SECURITIES PURCHASE AGREEMENT (NOTES AND
                                        WARRANTS)

        IN WITNESS  WHEREOF,  the  parties  have  caused  this  Amendment  to be
executed by their respective officers thereunto duly authorized,  as of the date
first written above.

COMPANY:                                MARITIME LOGISTICS US HOLDINGS INC.

                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------


SHELLCO:                                AEROBIC CREATIONS, INC.

                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------


COLLATERAL AGENT:                       LAW DEBENTURE TRUST COMPANY OF NEW YORK

                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------