Unassociated Document


    Exhibit
10.3          

     

    EXECUTION
VERSION

     

      
        

      

    

     

    LOAN AND
SECURITY AGREEMENT

     

      
        

      

    

     

    BY AND
AMONG

     

    ISRAEL
DISCOUNT BANK OF NEW YORK, as Agent,

     

    THE
LENDERS PARTY HERETO FROM TIME TO TIME

     

    -AND-

     

    COUNSEL
RB CAPITAL LLC, as Borrower

     

      
        

      

    

     

    June 2,
2009

     

      
        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE OF
CONTENTS

     

    
      
        
          	
                  Section
      1 DEFINITIONS

                	 	
                  1

                
	 
      	 	 
      
	
                  Section
      2 AMOUNTS AND TERMS OF LOAN

                	 	
                  11

                
	 
      	 	 
      
	
                  Section
      3 SECURITY INTEREST AND FINANCING STATEMENT

                	 	
                  16

                
	 
      	 	 
      
	
                  Section
      4 CONDITIONS PRECEDENT

                	 	
                  17

                
	 
      	 	 
      
	
                  Section
      5 REPRESENTATIONS AND WARRANTIES

                	 	
                  18

                
	 
      	 	 
      
	
                  Section
      6 AFFIRMATIVE COVENANTS

                	 	
                  22

                
	 
      	 	 
      
	
                  Section
      7 NEGATIVE COVENANTS

                	 	
                  32

                
	 
      	 	 
      
	
                  Section
      8 EVENTS OF DEFAULT

                	 	
                  35

                
	 
      	 	 
      
	
                  Section
      9 LENDER’S RIGHTS AND REMEDIES

                	 	
                  37

                
	 
      	 	 
      
	
                  Section
      10 LIMITATION ON AGENT’S DUTY IN RESPECT OF COLLATERAL

                	 	
                  40

                
	 
      	 	 
      
	
                  Section
      11 ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

                	 	
                  40

                
	 
      	 	 
      
	
                  Section
      12 MISCELLANEOUS PROVISIONS

                	 	
                  48

                


        

      

    

     

    
      
        
        

      

      
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    LOAN
AND SECURITY AGREEMENT

     

    THIS LOAN
AND SECURITY AGREEMENT dated as of June 2, 2009, is by and among ISRAEL DISCOUNT
BANK OF NEW YORK, a New York banking corporation as agent (in such capacity,
“Agent”) for
itself and the other lenders signatory hereto from time to time (collectively
referred to herein as “Lenders”) and COUNSEL
RB CAPITAL LLC, a Delaware limited liability company (“Borrower”).

     

    The
parties hereto agree as follows:

    


    SECTION
1

    DEFINITIONS

     

    1.1           The
following terms as used in this Loan and Security Agreement shall have the
meanings hereinafter provided:

     

    “Advances”:  Advances
under the Revolving Loan made by Lenders from time to time at their discretion
pursuant to Section 2.1(a).  Any such advances shall be based upon a
percentage (in Required Lender’s discretion) of Borrower’s cost of real estate,
inventory and/or accounts receivable purchased from time to time by Borrower
together with Eligible Assets against which Lenders have made advances
hereunder.  Any such assets must be (a) purchased by Borrower for
resale in bulk, by turnkey sale, private treaty sale, orderly liquidation sale,
webcast sale, timed online auction sale or public auction, (b) saleable by
Borrower within the applicable Holding Period and (c) acceptable to Agent in its
discretion.

     

    “Affiliate”:  Any
—

     

    (a)           Person
that directly or indirectly owns, controls, or holds with power to vote, ten
(10%) percent or more of the membership interests of Borrower;

     

    (b)           Person,
ten (10%) percent or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held with power to vote, by Borrower, or by a
Person that directly or indirectly owns, controls, or holds with power to vote,
ten (10%) percent or more of the membership interests of Borrower, other than a
Person that holds such securities:

     

    (1)           in
fiduciary or agency capacity without sole discretionary power to vote such
securities; or

     

    (2)           solely
to secure a debt, if such Person has not in fact exercised such power to
vote;

     

    (c)           Person
whose business is operated under a lease or operating agreement by Borrower, or
any Person substantially all of whose property is operated under an operating
agreement with Borrower; or

     

    (d)           Person
that operates the business or substantially all of the property of Borrower
under a lease or operating agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Agreement”:  The
contents hereof together with the contents of any and all schedules and exhibits
annexed hereto and all of which are made a part hereof and all other writings
and any amendments, modifications, extensions, renewals and/or supplements
thereto submitted by Borrower to Agent pursuant hereto, all of which are
incorporated herein by reference as though fully set forth herein at
length.

     

    “Bankruptcy
Code”:  Title 11 of the United States Code, 11 U.S.C. §§101 et seq., as amended from
time to time.

     

    “Base
Rate”:  For any day, a floating rate equal to the rate established
from time to time by Israel Discount Bank of New York as its “prime rate”, which is
a reference rate and does not necessarily represent the lowest or best rate
being charged to any customer.  Each change in any interest rate
provided for in the Agreement based upon the Base Rate shall take effect at the
time of such change in the Base Rate.

     

    “Blocked
Account”:  The blocked loan security account maintained by Borrower
with Agent over which Agent alone shall have the power of
withdrawal.

     

    “Board”:  The
Board of Governors of the Federal Reserve System of the United States of
America.

     

    “Borrowing
Availability”: As of any date of determination the lesser of (a) the Maximum
Loan Amount and (b) the Borrowing Base, in each case, less the sum of the
aggregate amount of the Revolving Loan then outstanding.

     

    “Borrowing
Base”: The difference between:

     

    (a)           the
lesser of (i) two times Capital Funds and (ii) the lesser of (1) up to
seventy-five percent (75%) (or such lesser rate as Lender in its sole discretion
may deem appropriate from time to time) of Borrower’s cost for Eligible Assets
or (2) up to eighty-five percent (85%) (or such lesser rate as Agent in its sole
discretion may deem appropriate from time to time) of the Net Orderly
Liquidation Value of Eligible Assets; less

     

    (b)           any
reserves established by Agent from time to time in its sole
discretion.

     

    “Borrowing
Base Certificate”:  The borrowing base certificate in the form of
Exhibit A annexed hereto and made a part hereof.

     

    “Business
Day”:  Any day, other than a Saturday, Sunday or legal holiday in the
State of New York on which banks are open for substantially all their banking
business in New York.

     

    “Capital
Expenditures”:  For any period, with respect to any Person, the
aggregate of all expenditures (by the expenditure of cash or the incurrence of
Indebtedness) by such Person for the acquisition or leasing (pursuant to a
capital lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period) that
should be capitalized under GAAP on the balance sheet of such
Person.

     

    
      
        
        

      

      
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    “Capital
Funds”: The sum of Borrower's Tangible Net Worth plus Subordinated
Indebtedness.

     

    “Capital
Guideline”:  Any law, rule, regulation, policy, guideline or directive
(whether or not having the force of law and whether or not the failure to comply
therewith would be unlawful, and including, without limitation, any law, rule,
regulation, policy, guideline or directive contemplated by the report dated
June, 2004 entitled “International Convergence of Capital Measurement and
Capital Standards, a Revised Framework” issued by the Basle Committee on Banking
Regulations and Supervisory Practices): (a) regarding capital adequacy, capital
ratios, capital requirements, the calculation of a bank’s capital or similar
matters, or (b) affecting the amount of capital required to be obtained or
maintained by a Lender or the manner in which a Lender allocates capital to any
of its contingent liabilities, advances, commitments, assets or
liabilities.

     

    “Capitalized
Lease Obligation”:  An obligation to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real and/or
personal property which obligation is required to be classified and accounted
for as a capital lease on a balance sheet prepared in accordance with GAAP, and
for purposes hereof the amount of such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.

     

    “Change
of Control”:  Any event, transaction or occurrence as a result of
which (a) the current Stockholders cease to own and control all of the economic
and voting rights associated with all of the outstanding capital Stock of
Borrower, (b) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Borrower (together with any new directors whose election was
approved by the board of directors of Borrower or the Stockholders of Borrower)
cease for any reason to constitute a majority of the directors then in office,
or (c) any one or more of Adam Reich and Jonathan Reich shall no longer be a
member of Borrower’s senior management having substantially the same duties and
responsibilities as on the Closing Date.

     

    “Closing
Date”:  The date of this Agreement.

     

    “Collateral”:  All
of the following assets property, interests and/or rights of Borrower on or in
which a Lien is granted to Agent, for the benefit of itself and the Lenders,
whether now owned or existing or hereafter created, acquired or arising and
wheresoever located:

     

    (a)           accounts
and all other forms of obligations owing to Borrower arising out of the sale,
lease, license or assignment of goods or other property;

     

    (b)           chattel
paper (whether tangible or electronic);

     

    (c)           commercial
tort claims;

     

    (d)           computer
hardware and software and all rights with respect thereto, including, without
limitation, any and all licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the
foregoing;

     

    
      
        
        

      

      
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    (e)           deposit
accounts;

     

    (f)           documents;

     

    (g)           equipment;

     

    (h)           fixtures;

     

    (i)           general
intangibles (including all payment intangibles);

     

    (j)           goods
(including inventory, equipment, fixtures and any and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefore);

     

    (k)           instruments
(including promissory notes);

     

    (l)           inventory;

     

    (m)           letter-of-credit
rights (whether or not the letter of credit is evidenced by a
writing);

     

    (n)           securities
and all other investment property, including, without limitation, certificated
securities, uncertificated securities, and security entitlements;

     

    (o)           supporting
obligations; and

     

    (p)           any
other contract rights or rights to the payment of money, insurance claims and
proceeds.

     

    “Controlled
Group”:  As such term is defined in the Internal Revenue Code of 1986,
as amended.

     

    “Counsel
Corporation Letter Agreement”:  The letter agreement dated on or about
the Closing date by Counsel Corporation in favor of Agent, for the benefit of
itself and the Lenders, as the same may be modified, amended, supplemented or
restated from time to time.

     

    “Default”:  Any
condition or the occurrence of any event which after the giving of notice or
lapse of time or both would constitute an Event of Default.

     

    “Default
Rate”:  An annual rate of interest equal to five (5%) percent greater
than the Interest Rate.

     

    “Document
List”:  The document list in the form of Exhibit B attached hereto and
made a part hereof.

     

    “Eligible
Assets”:  Borrower’s interest in used manufacturing or industrial
equipment, industrial inventory and scrap and salvage materials (including
without limitation, machine tools and processing equipment), alone or in
partnership, for resale in bulk, through liquidations, private sale (also known
as private treaty) or in auctions to be conducted by liquidators acceptable to
Agent.  Eligible Assets must be saleable by Borrower within the
applicable Holding Period and must otherwise be acceptable to Agent in its
discretion.  Eligible Assets shall exclude assets having any of the
following characteristics:

     

    
      
        
        

      

      
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    (i)            
assets that are subject to any Lien other than in favor of the Agent for the
benefit of itself and the Lenders;

    


    
      (ii)         
  assets
that are located outside of the continental United States or
Canada;

    

    


    (iii)           assets
in which the Agent, for the benefit of itself and the Lenders, does not hold a
first priority security interest;

    


    (iv)           assets
that are not covered by standard “all risk” insurance for an amount equal to its
forced liquidation value;

    


    (vi)           assets
that require proprietary software in order to operate as intended when such
software is not freely assignable to Agent or any potential purchaser of such
assets, or where such assets can be freely sold without the accompanying
software;

    


    (vii)           assets
for which Agent has not been provided a report prepared by Borrower which
includes the following information: (A) a detailed description of such assets,
(B) Borrower’s cost for such assets, (C) Borrower’s internal appraisal of such
assets, (D) the expected resale price per item, (E) the name of the Person
selling such assets to Borrower, (F) the circumstances giving rise to Borrower’s
purchase (seller bankruptcy or liquidation, for example), (G) Borrower’s selling
strategy including, if applicable, estimated auction or sale dates, (H) location
of such assets from the date of acquisition through such auction or other sale
and (I) such other information as Agent may reasonably request from time to
time;

    


    (viii)           assets
owned by Borrower for more than the applicable Holding Period; and

    


    (ix)             
assets otherwise deemed unacceptable by Agent in its sole
discretion.

    


    “ERISA”:  The
Employee Retirement Income Security Act of 1974.

     

    “Event of
Default”:  Any one or more of the occurrences described in Section
8.

     

    “Fair
Labor Standards Act”:  The Fair Labor Standards Act, 29 U.S.C. §201 et
seq.

     

    “Final
Maturity Date”: June 2, 2010.

     

    
      
        
        

      

      
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    “GAAP”:  Generally
accepted accounting principles in effect from time to time in the United States
of America or Canada, as applicable, applied on a consistent
basis.  In the event that any “Accounting Change” (as defined below)
shall occur and such change results in a change in the method of calculation of
financial covenants, standards or terms in this Agreement, then Borrower and
Agent agree to enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating Borrower’s financial condition shall be
the same after such Accounting Changes as if such Accounting Changes had not
been made.  Until such time as such an amendment shall have been
executed and delivered by Borrower and Agent, all financial covenants, standards
and terms in this Agreement shall continue to be calculated or construed as if
such Accounting Changes had not occurred.  “Accounting Changes”
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the Securities and Exchange Commission.  Unless otherwise
indicated, “GAAP” shall mean generally accepted accounting principles in effect
from time to time in the United States of America.

     

    “Governmental
Authority”:  Any nation or government, any federal, state, city, town,
municipality, county, local or other political subdivision thereof or thereto
and any department, commission, board, bureau, instrumentality, agency or other
Person exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

     

    “Guaranteed
Indebtedness”:  As to any Person, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease,
dividend, or other obligation (“primary obligation”)
of any other Person (the “primary obligor”) in
any manner, including any obligation or arrangement of such Person to (a)
purchase or repurchase any such primary obligation, (b) advance or supply funds
(i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, (d) protect the
beneficiary of such arrangement from loss (other than product warranties given
in the ordinary course of business) or (e) indemnify the owner of such primary
obligation against loss in respect thereof.  The amount of any
Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the
lesser at such time of (x) the stated or determinable amount (as calculated in
accordance with GAAP) of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum stated or determinable
amount (as calculated in accordance with GAAP) for which such Person may be
liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness, or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect
thereof.

     

    “Guarantors”:  Collectively
and individually, (a) Counsel Corporation, an Ontario corporation, (b) Kind Chin
Associates LLC, a California limited liability company, (c) C2 Global
Technologies Inc., a Florida corporation, (d) Forsons Equity, LLC, a New York
limited liability company, (e) Adam Reich, (f) Jonathan Reich, and (g) any other
Person guaranteeing the Obligations of Borrower to Lender from time to
time.

     

    “Guaranty
Agreements”:  Collectively and individually, each guaranty agreement
executed by a Guarantor in favor of Agent, for the benefit of itself and the
Lenders, as the same may be modified, amended, supplemented or restated from
time to time.

     

    
      
        
        

      

      
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    “Holding
Period”:  150 days for Eligible Assets not purchased for sale or other
disposition by Borrower through an orderly liquidation, provided, that Agent
may, in its sole discretion, extend this time period for an additional 30 days,
upon Borrower’s written request and agreement to pay the extension fee described
in Section 2.4(d); and 180 days for Eligible Assets to be sold or disposed of by
Borrower through an orderly liquidation.

     

    “IDB”:
Israel Discount Bank of New York, a New York banking corporation.

     

    “Indebtedness”:  With
respect to any Person at any date, without duplication (a) all indebtedness of
such Person for borrowed money (including, as to Borrower, the Obligations), (b)
all obligations of such Person for the deferred purchase price of property or
services (other than current trade payables incurred in the ordinary course of
such Person’s business that are unsecured and are not overdue by more than six
months unless contested in good faith), (c) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capitalized Lease Obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party under acceptances, letters
of credit or similar facilities, (g) all Guaranteed Indebtedness of such Person
in respect of obligations of the kind referred to in clauses (a) through (f)
above, (h) all obligations of the kind referred to in clauses (a) through (g)
above secured by (or for which the holder of such obligation has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation, (i)
all obligations of such Person under commodity purchase or option agreements or
other commodity price hedging arrangements, in each case whether contingent or
matured, and (j) all obligations of such Person, contingent or otherwise, with
respect to performance bonds, appeal bonds and surety bonds.

     

    “Intangible
Assets”:  The amount of all assets of Borrower required to be
classified as intangible assets in accordance with GAAP, including, without
limitation, goodwill, patents, copyrights, trademarks, trademark rights,
tradenames, licenses, deferred financing fees, and research and development
costs.

     

    “Interest
Payment Date”:  The first Business Day of each calendar month while
such Loan is outstanding and the Termination Date.

     

    “Interest
Rate”:  The greater of (a) the Base Rate plus one and one half percent
(1.5%) per annum and (b) five percent (5.00%) per annum.

     

    “Lenders’
Rights and Remedies”:  All of the rights and remedies of Agent and the
Lenders described in Section 9.

     

    “Liens”:  All
mortgages, liens, judicial liens, encumbrances, security interests, charges,
pledges, hypothecations, assignments, conditional sale or other title retention
agreements, and the like, relating to any real or personal property interest of
Borrower whether legal or equitable.

     

    
      
        
        

      

      
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    “Loan
Documents”:  Collectively and individually, this Agreement, the Notes,
the Guaranty Agreements, the Subordination Agreements, the Counsel Corporation
Letter Agreement and all other documents, instruments, writings and agreements
related thereto.

     

    “Material
Adverse Effect”:  A material adverse effect on (a) the business,
assets, operations, prospects or financial or other condition of Borrower, (b)
Borrower’s ability to pay any of the Obligations in accordance with the terms of
this Agreement, (c) the Collateral, or the Lien of Agent, for the benefit of
itself and the Lenders, on the Collateral or the priority of such Lien, or (d)
Agents and Lenders’ rights and remedies under this Agreement and the other Loan
Documents.

     

    “Maximum
Loan Amount”: Seven Million Five Hundred Thousand Dollars
($7,500,000).

     

    “Net Cash
Proceeds”:  In connection with any asset sale, the cash proceeds
(including any cash payments received by way of deferred payment whether
pursuant to a note, installment receivable or otherwise, but only as and when
actually received) from such asset sale, net of (i) attorneys’ fees,
accountants’ fees, investment banking fees, brokerage commissions and amounts
required to be applied to the repayment of any portion of the Indebtedness
secured by a Lien not prohibited hereunder on the asset which is the subject of
such sale, (ii) taxes paid or reasonably estimated to be payable as a result of
such asset sale, and (iii) any and all other customary closing
costs.

     

    “Net
Orderly Liquidation Value”:   A professional opinion of the
estimated most probable Net Cash Proceeds which could typically be realized at a
properly advertised and professionally managed liquidation sale, conducted under
orderly sale conditions for an extended period of time (usually six to nine
months), under the economic trends existing at the time of the
appraisal.

     

    “Note” or
“Notes”:  Shall have the meaning provided in Section
2.1(f).

     

    “Obligations”:  All
loans, advances, indebtedness, notes, liabilities, overdrafts, and other
amounts, liquidated or unliquidated, each of every kind, nature and description,
arising under the Loan Documents, including, without limitation, principal and
interest, and whether secured or unsecured, direct or indirect, absolute or
contingent, due or to become due, now existing, presently intended or
contemplated, or hereafter contracted, including, without limitation the
repayment of any amounts that Lenders may advance or spend for the maintenance
or preservation of the collateral and any other expenditures Lenders may make
under the provisions of the Loan Documents or for the benefit of Borrower, and
any of the foregoing that arises after the filing of a petition by or against
Borrower under the Bankruptcy Code, even if the obligations do not occur because
of the automatic stay under § 362 of the Bankruptcy Code or
otherwise.

     

    “OFAC”:  As
defined in Section 6.3(b).

     

    “Patriot
Act”:  As defined in Section 6.3(b).

     

    “PBGC”:  The
Pension Benefit Guaranty Corporation.

     

    “Permitted
Liens”:  The Liens described in Section 7.1.

     

    
      
        
        

      

      
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    “Person”:  An
individual, corporation, company, partnership, association, joint-stock company,
trust, unincorporated organization, joint venture, Governmental Authority,
limited liability company, limited liability partnership or other
entity.

     

    “Plan”:  Any
plan subject to the minimum funding requirements of Section 412 of the Internal
Revenue Code of 1986, as amended.

     

    “Pro Rata
Share”: With respect to all matters relating to any Lender, the percentage
obtained by dividing (a) the portion of the Maximum Loan Amount such Lender has
agreed to fund, as set forth on Schedule 1.1.1 by (b) the Maximum Loan
Amount.

     

    “Qualified
Assignee” means (a) any Lender, any Affiliate of any Lender and, with respect to
any Lender that is an investment fund that invests in commercial loans, any
other investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor, and (b) any commercial bank, savings and loan association or
savings bank or any other entity which is an “accredited investor” (as defined
in Regulation D under the Securities Act of 1933) which extends credit or buys
loans as one of its businesses, including insurance companies, mutual funds,
lease financing companies and commercial finance companies, in each case, which
has a rating of BBB or higher from S&P and a rating of Baa2 or higher from
Moody’s at the date that it becomes a Lender and which, through its applicable
lending office, is capable of lending to Borrower without the imposition of any
withholding or similar taxes; provided that no
Person determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee.

     

    “Reportable
Event”:  As such term is defined in 29 U.S.C.A. §1343.

     

    “Required
Lenders”: Lenders who have agreed to fund more than 66 2/3% of the Maximum Loan
Amount; provided, however, if there are only two (2) Lenders (including IDB),
Required Lenders shall mean all Lenders.

     

    “Revolving
Loan”:  The loan described in Section 2.1(a).

     

    “Solvent”:  With
respect to any Person on a particular date, that on such date (a) the fair value
of the property of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person’s ability to
pay as such debts and liabilities mature, and (d) such Person is not engaged in
a business or transaction, and is not about to engage in a business or
transaction, for which such Person’s property would constitute an unreasonably
small capital.  The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.

     

    
      
        
        

      

      
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    “Stock”:
All shares, options, warrants, general or limited partnership interests,
membership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including common stock, preferred stock or any
other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934).

     

    “Stockholder”:
With respect to any Person, each holder of Stock of such Person.

     

    “Subordinated
Indebtedness”:  Any Indebtedness of Borrower that is expressly
subordinated to the Obligations of Borrower to Agent and the Lenders, on terms
and conditions acceptable to Agent in its discretion.

     

    “Subordination
Agreements”:  Any subordination agreement in favor of Agent, for the
benefit of itself and the Lenders, relating to Subordinated Indebtedness, which
is acceptable to Agent in form and substance, as the same may be modified or
amended from the time to time, the terms of such agreements are incorporated
herein by reference as though fully set forth herein at length.

     

    “Subsidiary”:  Any
corporation more than a majority (by number of votes) of the common stock of
which is at the time owned or controlled by Borrower or a Subsidiary of
Borrower.

     

    “Tangible
Net Worth”:  As to any Person, the sum of (a) members’ or owners’
equity determined in accordance with GAAP, plus (b) Subordinated Indebtedness,
minus (c) Intangible Assets, minus (d) prepaid assets, minus (e) all loans or
advances to Affiliates of such Person and/or related parties, minus (f) at
Lender’s discretion, assets of Subsidiaries or Affiliates of such Person or the
investment of such Person in any Subsidiaries or Affiliates to the extent
reflected on the financial statements of such Person, if such Subsidiary or
Affiliate is the subject of any bankruptcy, dissolution or insolvency
proceeding, or a trustee, receiver or custodian of all or any part of the
properties or assets of such Subsidiary or Affiliate has been
appointed.

     

    “Termination
Date”:  The earlier of (a) the Final Maturity Date or (b) the date on
which Lenders’ agreement to make Advances under the Revolving Loan shall have
terminated.

     

    “Uniform
Commercial Code”: The Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Lender’s
Lien on any Collateral is governed by the Uniform Commercial Code as enacted and
in effect in a jurisdiction other than the State of New York, the term “Uniform
Commercial Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority or remedies and for purposes
of definitions related to such provisions.

     

    1.2           Any
accounting terms used in this Agreement which are not specifically defined shall
have the meanings customarily given thereto in accordance with
GAAP.

     

    
      
        
        

      

      
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    1.3           Terms
such as “account debtors”, “accounts”, “accounts receivable”, “advises”,
“chattel paper”, “contract rights”, “commercial tort claims”, “confirmations”,
“control”, “deposit accounts”, “documents”, “equipment”, “farm products”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letters of credit”, “letter of credit rights”, “payment
intangibles”, “proceeds”, “products”, “supporting obligations” and the like,
shall, unless otherwise specifically defined herein, have the meanings
applicable to them for the purposes of Article 9 (Secured Transactions) of the
Uniform Commercial Code.  All other terms defined in the Uniform
Commercial Code and used herein shall have the same definitions herein as
specified therein.  However, if a term is defined in Article 9 of the
Uniform Commercial Code differently than in another Article of the Uniform
Commercial Code, the term has the meaning specified in Article 9.

     

    SECTION
2

    AMOUNTS
AND TERMS OF LOAN

     

    2.1           Terms of Revolving
Loan.  Subject to the terms and conditions of this Agreement,
and to Borrower’s observance and performance of, and compliance with, all terms,
conditions, warranties, representations and covenants of this Agreement, and the
timely payment of the Obligations of Borrower to Agent and the
Lenders:

     

    (a)           Revolving
Loan.  Lenders may in their discretion lend and re-lend to
Borrower amounts which shall not exceed Borrowing Availability.  Until
the Termination Date, Borrower may borrow, repay and re-borrow under this
Section 2.1(a).  If the aggregate amount of the Revolving Loan at any
time shall exceed Borrowing Availability at such time, Borrower shall
immediately repay the Revolving Loan to the extent required to eliminate such
excess.  The Pro Rata Share of any Lender shall not at any time exceed
the lesser of (i) its Pro Rata Share of the Borrowing Availability and (ii) that
portion of the Maximum Loan Amount which such Lender has agreed to fund as set
forth on Schedule 1.1.1.  The obligations of each Lender hereunder
shall be several and not joint.

     

    (b)           Procedure for
Advances.  Amounts loaned or re-loaned to Borrower pursuant to
the Revolving Loan shall be delivered to Borrower by credit to any general
deposit account maintained by Borrower with Agent or such other method as
Required Lenders and Borrower shall agree upon.  All requests for
Advances under the Revolving Loan made by Borrower must include all required
information needed by Agent to evaluate the assets being purchased by Borrower
in connection with the Advance request.  Agent shall make such
Advance, upon Agent’s satisfaction that it has all necessary information to
perform the evaluation and Agent determines in its discretion that it will
provide an Advance for such assets.  Such notice of borrowing shall be
in the form of Schedule 2.1(b), shall be irrevocable and shall specify the
principal amount of the proposed borrowing and the proposed borrowing date,
which must be a Business Day, and Borrower shall be bound to make a borrowing in
accordance therewith.  Agent may act without liability upon the basis
of written or telephonic notice believed by Agent in good faith to be from
Borrower (or from any officer or employee thereof authorized to make such a
request as designated by Borrower in writing delivered to Agent) and Borrower
hereby waives the right to dispute Agent’s record of the terms of any such
notice of borrowing.

     

    (c)           Method of
Payment.  The outstanding principal amount of the Revolving
Loan and all interest and fees thereon shall be payable by Borrower to Agent,
for the benefit of the Lenders, on or before the Termination Date, in
immediately available funds. Until such time as all Obligations of Borrower to
Agent and the Lenders are fully paid and satisfied and Lenders shall have no
further obligation to make further Advances under the Revolving Loan pursuant to
this Agreement, payment of principal shall occur in accordance with the
provisions of Section 2.1(d).

     

    
      
        
        

      

      
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    (d)           Blocked
Account.  So long as any principal of or interest on the
Revolving Loan (whether or not due) shall remain unpaid or Lenders shall have
any commitment or agreement to lend hereunder, Borrower shall continue to
maintain the Blocked Account with Agent.  Borrower hereby grants to
Agent, for the benefit of itself and the Lenders, a continuing security interest
in (i) the Blocked Account and all funds held in such account, (ii) all
certificates and instruments, if any, from time to time evidencing such account,
(iii) all notes, checks and other instruments from time to time deposited in
such account, (iv) all interest, if any, from time to time received in respect
of such account and (v) all other property of Borrower from time to time in
possession under the control of or in transit to Agent or any
Lender.  Borrower also hereby transfers to Agent, for the benefit of
itself and the Lenders, the exclusive dominion and control of the Blocked
Account and Borrower shall have no right of withdrawal from such
account.  Except as otherwise expressly provided to the contrary in
this Agreement and any other Loan Documents, Borrower shall take all such
actions as Agent in good faith deems necessary or appropriate to ensure that at
all times on and after the Closing Date all proceeds of all Collateral against
which Lenders shall have made Advances under this Agreement are deposited in the
Blocked Account.  Upon receipt by Borrower, or any financial
institution for the account of Borrower, any proceeds from the sale of any
Collateral against which Lenders shall have made Advances hereunder, Borrower
shall, or shall cause such financial institution to, transmit in the form
received, before the close of business on the next succeeding Business Day, all
such proceeds (properly endorsed, where required, so that all items delivered
shall be collected by Agent) to Agent for credit to the Blocked
Account.  Borrower shall not, and shall cause any such financial
institution not to, commingle any such proceeds so received with Borrower’s
other property, and shall hold separate and apart from all other property, all
such proceeds in an express trust for the benefit of Agent and the Lenders until
delivery thereof is made to Agent.  Credit for proceeds deposited in
the Blocked Account shall be given on a daily Business Day basis upon deposit
(credit for proceeds deposited in immediately available funds shall be given on
the Business Day deposited) and shall be conditional upon final payment of the
deposited item.  For purposes of calculating interest only, credit for
proceeds shall be given 2 Business Days after final payment of the deposited
item (credit for proceeds deposited in immediately available funds shall be
given on the Business Day deposited).  Borrower hereby agrees not to
deposit any monies into the Blocked Account, or otherwise permit any moneys to
be deposited into such account or commingled with other funds in such account,
except proceeds of the Collateral.  Payments received after 2:00 p.m.
New York time on any Business Day other than the last Business Day of a calendar
month, payments received after 1:00 p.m. New York time on the last Business Day
of a calendar month, and payments received on a day that is not a Business Day
shall be deemed to have been received on the following Business
Day.  In the event net proceeds from the sale of Eligible Assets
received by Agent shall exceed the principal balance of Advances made by Lenders
against such Eligible Assets, plus accrued and unpaid interest relating thereto,
Borrower may request in the Notice of Borrowing such excess proceeds to be
delivered to Borrower in the manner described in Section 2.1(b).  So
long as no Event of Default has occurred and is continuing, Agent agrees (and
Lenders authorize Agent) to deliver such excess proceeds to
Borrower.

     

    
      
        
        

      

      
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    (e)           Statement of
Account.  At least once each month Agent shall render and send
to Borrower a statement of account showing amounts loaned, all other charges,
expenses and items chargeable to Borrower pursuant to this Agreement, payments
made by Borrower against the Obligations arising pursuant to the Revolving Loan,
proceeds collected and applied to said Obligations, other appropriate debits and
credits and the total of the Obligations of Borrower to Agent and the Lenders as
of the date of the statement for the Revolving Loan, and the statement of
account shall be conclusively presumed to be correct in all respects, except for
specific objections which Borrower makes in writing within thirty (30) days from
the date upon which the statement of account is sent.

     

    (f)           Notes.  The
maximum amount of the Revolving Loan shall be evidenced by the Note, and the
balance due from time to time on the Note shall be conclusively evidenced by
Agent’s records of disbursements and repayments, subject to Section
2.1(e).  Borrower shall execute and deliver to each Lender a note to
evidence the Pro Rata Share of the Maximum Loan Amount of that
Lender.  Each note shall be in the principal amount of the Pro Rata
Share of the Maximum Loan Amount of the applicable Lender, dated the Closing
Date and substantially in the form of Exhibit C (the foregoing, and any
promissory notes in renewal thereof or substitution or replacement therefor,
each a “Note” and, collectively, the “Notes”).  Each Note shall
represent the obligation of the Borrower to pay the amount of the applicable
Lender’s Pro Rata Share of the Maximum Loan Amount or, if less, such Lender’s
Pro Rata Share of the aggregate unpaid principal amount of all Advances to
Borrower together with interest thereon.  The entire unpaid balance of
the aggregate Revolving Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Termination Date

     

    2.2           Interest.

     

    (a)           Borrower
shall pay interest to Agent, for the benefit of the Lenders, in arrears on each
applicable Interest Payment Date, at the Interest Rate, subject to Section
2.2(d).

     

    (b)           If
any payment on any Revolving Loan becomes due and payable on a day other than a
Business Day, the maturity thereof will be extended to the next succeeding
Business Day (except as set forth in the definition of Interest Period) and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.

     

    (c)           All
computations of interest and fees shall be calculated on a per annum basis on
the basis of a 360-day year, in each case for the actual number of days
occurring in the period for which such interest and fees are
payable.  The Base Rate is a floating rate determined for each
day.  Each determination by Agent of an interest rate and fees
hereunder shall be final, binding and conclusive on Borrower, absent manifest
error.

     

    (d)           So
long as an Event of Default has occurred and is continuing, at the election of
Agent confirmed by written notice from Agent to Borrower, the interest rates
applicable to the Revolving Loan shall be increased to the Default Rate, and all
outstanding Obligations shall bear interest at the Default
Rate.  Interest at the Default Rate shall accrue from the initial date
of such Event of Default until that Event of Default is cured or waived and
shall be payable upon demand.

     

    
      
        
        

      

      
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    (e)           Notwithstanding
anything to the contrary set forth in this Section 2.2, if a court of
competent jurisdiction determines in a final order that the rate of interest
payable hereunder exceeds the highest rate of interest permissible under law
(the “Maximum Lawful
Rate”), then so long as the Maximum Lawful Rate would be so exceeded, the
rate of interest payable hereunder shall be equal to the Maximum Lawful Rate;
provided,
however, that if at any time thereafter the rate of interest payable hereunder
is less than the Maximum Lawful Rate, Borrower shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest
received by Lenders is equal to the total interest that would have been received
had the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest  hereunder shall be
paid at the rate(s) of interest and in the manner provided in Sections 2.2(a)
through (d), unless and until the rate of interest again exceeds the Maximum
Lawful Rate, and at that time this paragraph shall again apply.  In no
event shall the total interest received by Lenders pursuant to the terms hereof
exceed the amount that Lenders could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful
Rate.  If the Maximum Lawful Rate is calculated pursuant to this
paragraph, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made.  If, notwithstanding the provisions of this
Section 2.2(e), a court of competent jurisdiction shall finally determine that
Lenders have received interest hereunder in excess of the Maximum Lawful Rate,
Lenders shall, to the extent permitted by applicable law, promptly apply such
excess in the order and manner as Lenders shall determine in their discretion,
or as a court of competent jurisdiction may otherwise order.

     

    2.3           Indemnity.  Borrower
shall indemnify and hold harmless Agent, the Lenders and their respective
Affiliates, and each such Person’s respective officers, directors, employees,
attorneys, agents and representatives (each, an “Indemnified Person”),
from and against any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including reasonable attorneys’ fees and
disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, and any and all reasonable legal costs and
expenses arising out of or incurred in connection with disputes between or among
any parties to any of the Loan Documents (collectively, “Indemnified
Liabilities”); provided, that
Borrower shall not be liable for any indemnification to an Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from that Indemnified Person’s gross negligence or
willful misconduct (as finally determined by a court of competent
jurisdiction).  NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE
TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER, EXCEPT TO THE EXTENT OF SUCH INDEMNIFIED
PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

     

    
      
        
        

      

      
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    2.4           Fees.

     

    (a)           Closing
Fee.  In further consideration of the agreements contained
herein, Borrower shall pay to Lender a closing fee in an amount equal to
Thirty-Seven Thousand Five Hundred Dollars ($37,500), which fee shall be
non-refundable and fully earned as of the Closing Date.  This closing
fee shall be payable as follows: Twenty Thousand Dollars ($20,000) on the
Closing Date and the balance of Seventeen Thousand Five Hundred Dollars
($17,500) upon the earlier of (i) the date the outstanding principal balance of
the Revolving Loan exceeds Four Million Dollars ($4,000,000), (ii) the
occurrence of an Event of Default and (iii) June 2, 2010.

     

    (b)           Field Examination Fees,
Costs and Expenses.  Borrower shall pay to Lender all
reasonable fees incurred in connection with any such field examination, audit or
inspection of any Collateral or Borrower’s operations or business conducted by
or on behalf of Lender, together with all actual out-of-pocket costs and
expenses incurred in conducting any such field examination, audit or
inspection.  Such fees and expenses shall be due and payable upon
completion of any field examination, audit or inspection.  If any
field examination, audit or inspection is conducted by Lender’s employees, the
fees paid to Lender shall be at the rates established from time to time by
Lender as its field examination fees (which fees are currently assessed at One
Thousand Dollars ($1,000) per day per examiner).  If any field
examination, audit or inspection is conducted by third parties on behalf of
Lender, Borrower shall reimburse Lender for the actual fees and expenses charged
by such third parties.

     

    (c)           Late
Charges.  Should any payment required under this Agreement not
be paid when due, it is recognized by Borrower that Lender will incur extra
expenses for the handling of delinquent payments, the exact amount for such
extra expenses being impracticable or extremely difficult to ascertain, but that
a charge of five percent (5%) of such payment would be a fair approximation of
the expense incurred by Lender.  Therefore, Borrower shall, in such
event, without further notice and without prejudice to any other rights which
Lender may have pursuant to this Agreement or any other Loan Document, pay to
Lender to cover such expenses incurred in handling such delinquent payment a
“late charge” of five percent (5%) of such delinquent payment.

     

    (d)           Extension
Fee.  In the event the Required Lenders agree to grant an
extension of the Holding Period for any Eligible Assets from 150 days to 180
days, Borrower shall pay to Agent, for the benefit of the Lenders, an extension
fee of one half of one percent (0.50%) of the then outstanding principal balance
of the Advance relating to the Eligible Assets subject to such
extension.

     

    2.5           Application and Allocation
of Payments.

     

    (a)           All
payments shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share.  Borrower hereby irrevocably waives
the right to direct the application of any and all payments received from or on
behalf of Borrower, and Borrower hereby irrevocably agrees that Agent shall have
the continuing exclusive right to apply any and all such payments against the
Obligations of Borrower as Agent may deem advisable.  In the absence
of a specific determination by Agent with respect thereto, payments shall be
applied to amounts then due and payable in the following order: (1) to fees and
Agent’s expenses reimbursable hereunder; (2) to interest on the Revolving Loan,
ratably in proportion to the interest accrued as to each Revolving Loan; (3) to
all other Obligations, including expenses of Lenders to the extent reimbursable
under Section 12.16; and (4) to principal payments on the Revolving
Loan.

     

    
      
        
        

      

      
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    (b)           Agent
is authorized to, and at its sole election may, charge to the Revolving Loan
balance on behalf of Borrower and cause to be paid all fees, expenses, charges,
costs (including insurance premiums in accordance with Section 6.6) and
interest, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts
as and when due, even if the amount of such charges would exceed Borrowing
Availability at such time or would cause the aggregate balance of the Revolving
Loan to exceed the Borrowing Base after giving effect to such
charges.  At Agent’s option and to the extent permitted by law, any
charges so made shall constitute part of the Revolving Loan
hereunder.

     

    SECTION
3

    SECURITY
INTEREST AND FINANCING STATEMENT

     

    3.1           In
consideration of Lenders granting to Borrower the Revolving Loan in accordance
with the terms and conditions of this Agreement, Borrower, to secure payment and
performance of all of the Obligations of Borrower to Agent and the Lenders,
hereby grants to Agent, for the benefit of itself and the Lenders, a security
interest in the Collateral, which security interest shall remain in full force
and effect until all of the Obligations of Borrower to Agent and the Lenders are
fully paid and satisfied and Lenders’ agreement to grant Advances under the
Revolving Loan hereunder shall have terminated.

     

    3.2           Borrower
hereby irrevocably authorizes Agent at any time and from time to time to file in
any jurisdiction any initial financing statements and amendments thereto that
(a) indicate the Collateral (i) as all assets of Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code in such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the Uniform Commercial Code for the sufficiency or filing office acceptance of
any financing statement or amendment, including (i) whether Borrower is an
organization, the type of organization and any organization identification
number issued to Borrower, and, (ii) in the case of a financing statement filed
as a fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to which the
Collateral relates.  Borrower agrees to furnish any such information
to Agent promptly upon request.  Borrower also ratifies its
authorization for Agent to have filed in any jurisdiction any like initial
financing statements or amendments thereto if filed prior to the date
hereof.

     

    3.3           Borrower
covenants and agrees with Agent and the Lenders that:

     

    (a)           In
the event that any Collateral, including proceeds, is evidenced by or consists
of negotiable collateral (including without limitation letters of credit,
letter-of-credit rights, instruments, promissory notes, draft documents or
chattel paper (including electronic and tangible chattel paper)), and if and to
the extent that perfection or priority of Agent’s security interest (for the
benefit of itself and the Lenders) is dependent on or enhanced by possession,
Borrower, immediately upon the request of Agent, shall endorse and deliver
physical possession of such negotiable collateral or chattel paper to
Agent.

     

    
      
        
        

      

      
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    (b)           Borrower
shall take all steps reasonably necessary to grant Agent, for the benefit of
itself and the Lenders, control of all electronic chattel paper in accordance
with the Uniform Commercial Code and all “transferable records”
as defined in each of the Uniform Electronic Transaction Act and the Electronic
Signatures in Global and National Commerce Act; and

     

    (c)           If
Borrower retains possession of any chattel paper or instruments with Agent’s
consent, such chattel paper and instruments shall be marked with the following
legend: “This writing and the obligations evidenced or secured thereby are
subject to the security interest of Israel Discount Bank of New York, as agent
for itself and certain lenders of Borrower.”

     

    SECTION
4

    CONDITIONS
PRECEDENT

     

    4.1           Conditions Precedent to the
Initial Advances.  Lenders’ agreement to lend or re-lend
amounts to Borrower pursuant to the Revolving Loan is conditioned upon prior or
simultaneous delivery by Borrower to Agent, and Agent’s satisfactory review, of
the Loan Documents properly executed, and the other information, all as set
forth on the Document List.

     

    4.2           Conditions Precedent to the
All Advances.  The obligation or agreement of Lenders to make
each extension of credit requested by Borrower under this Agreement shall be
subject to the fulfillment, to Agent’s satisfaction, of all of the following
conditions:

     

    (a)           The
representations and warranties contained in this Agreement and in each of the
other Loan Documents, shall be true on and as of the date of the signing of this
Agreement and, except for representations and warranties that refer to a
specific date, on the date of each extension of credit with the same effect as
though such representations and warranties had been made on and as of each such
date, and, on each such date, no Default or Event of Default shall have occurred
and be continuing to exist;

     

    (b)           No
event or circumstance having a Material Adverse Effect has occurred and is
continuing since May 21, 2009 as determined by Agent in its sole
discretion;

     

    (c)           No
Default or Event of Default shall have occurred or would result after giving
effect to the requested Revolving Loan;

     

    (d)           After
giving effect to the requested Advances, the outstanding principal amount of the
aggregate Revolving Loan would not exceed Borrowing Availability;
and

     

    (e)           If
requested by Lender in the event the requested Advance exceeds $500,000, receipt
by Agent of an appraisal of the Eligible Assets, to determine the Net Orderly
Liquidation Value of such Eligible Assets, conducted by an appraiser acceptable
to the Required Lenders in their sole discretion and at Borrower’s cost and
expense.  In the event Lenders have agreed to make any Advances
against real estate, Lenders may also require environmental reports, conducted
by an environmental consultant acceptable to Agent in its sole discretion and at
Borrower’s cost and expense.  Borrower agrees not to intentionally
propose, modify or structure (or permit to be structured) any Advances, whether
as a single Advance or a series of Advances for the purchase of Eligible Assets
that could reasonably be deemed to be part of the same transaction, for the
purpose of evading the requirements of this Section
4.2(e).

     

    
      
        
        

      

      
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    The
request and acceptance by Borrower of the proceeds of the Revolving Loan shall
be deemed to constitute, as of the date thereof, (1) a representation and
warranty by Borrower that the conditions in this Section 4 have been satisfied
and (2) a reaffirmation by Borrower of the granting and continuance of Agent’s
Liens pursuant to the Loan Documents.

     

    SECTION
5

    REPRESENTATIONS
AND WARRANTIES

     

    Borrower
represents and warrants to Agent and the Lenders that:

     

    5.1           Formation, Qualification and
Good Standing.  Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of its state of
organization as set forth on Schedule 5.1 and is duly qualified and in good
standing under the laws of each other jurisdiction in which such qualification
is required.  Borrower’s exact legal name is that indicated on the
signature page hereof, and Borrower’s organizational identification number and
Federal employer identification number are set forth on Schedule
5.1.

     

    5.2           Power and
Authority.  Borrower has the power to execute, deliver, and
perform this Agreement and the other Loan Documents, to borrow hereunder and to
grant the Liens hereunder and under the other Loan Documents, and has taken all
necessary action to authorize (a) the borrowing hereunder on the terms and
conditions of this Agreement, (b) the granting of the Liens hereunder and under
the other Loan Documents and (c) the execution, delivery and performance of this
Agreement and the other Loan Documents.

     

    5.3           Operation of
Business.  Borrower possesses, in full force and effect, all
franchises, patents, licenses, trademarks, trademark rights, trade names, trade
name rights, trade secrets, fictitious name authorizations or certificates and
copyrights to conduct its business as now conducted, without, to the best of
Borrower’s knowledge, any conflict with the franchises, patents, licenses,
trademarks, trademark rights, trade names, trade name rights, trade secrets,
fictitious name authorizations or certificates and copyrights of
others.  All such franchises, patents, licenses, trademarks, trademark
rights, trade names, trade name rights, trade secrets, fictitious name
authorizations or certificates and copyrights, together with the applicable
application and registration number of each, is set forth on Schedule
5.3.

     

    5.4           Ventures and Subsidiaries;
Outstanding Stock and Indebtedness.

     

    (a)             Except
as set forth on Schedule 5.4(a) as the same may be updated from time to time by
Borrower, the Borrower is not engaged in any joint venture or partnership with
any Person and has no Subsidiaries.  All of the issued and outstanding
Stock of Borrower is owned by each of the Stockholders and in the amounts set
forth in Schedule 5.4(a).  Except as set forth in Schedule 5.4(a),
there are no outstanding rights to purchase, options, warrants or similar rights
or agreements pursuant to which Borrower may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries.  All outstanding
Indebtedness and Guaranteed Indebtedness of Borrower as of the Closing Date
(except for the Obligations) is described in Section 7.5 (including Schedule
7.5).

     

    
      
        
        

      

      
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    (b)             As
of the Closing Date, Moving Images NY LLC and Greystone Post Production
Equipment LLC own no property or assets other than those described on Schedule
5.4(b).  It is Borrower’s intent as of the Closing Date to dissolve
Moving Images NY LLC and Greystone Post Production Equipment LLC promptly
following the sale or other disposition (including collection or write-off of
accounts receivables of such assets).

     

    5.5           Nature of
Business.  Borrower is primarily engaged in the business
described on Schedule 5.5 and business relating directly thereto.

     

    5.6           Financial Condition;
Solvency.

     

     (a)           Borrower has provided to Agent a pro forma opening
balance sheet, prepared in accordance with GAAP, which accurately reflects in
all material respects Borrower’s pro forma financial condition as of May 1, 2009
after giving effect to Borrower’s acquisition of Greystone Private Equity LLC,
the funding of the initial Revolving Loan, the equity contributions to be made
to Borrower substantially contemporaneously therewith and the other transactions
occurring on the Closing Date, as if they had occurred on May 1,
2009.

     

     (b)           Both
before and after giving effect to (1) the Advances to be made or incurred on the
Closing Date or such other date as Advances requested hereunder are made or
incurred, (2) the disbursement of the proceeds of such Advances pursuant to the
instructions of Borrower and (3) the payment and accrual of all transaction
costs in connection with the foregoing, the Borrower is and will be
Solvent.

     

    5.7           Taxes.

     

    (a)           All
tax returns, reports and statements, including information returns, required by
any Governmental Authority to be filed by Borrower have been filed with the
appropriate Governmental Authority, all such tax returns, reports and statements
are true, correct and complete in all material respects, and all taxes,
assessments and other charges due with such tax returns, reports and statements
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof (or any such fine, penalty,
interest or late charge has been paid).  There are no Liens for taxes,
assessments or other charges (other than for such amounts not yet due and
payable) upon any assets of Borrower.  No adjustment relating to such
tax returns, reports or statements has been proposed formally (whether verbally
or in writing) or informally (in writing) by any Governmental Authority and, to
the knowledge of Borrower, no basis exists for any such
adjustment.   Proper and accurate amounts have been withheld by
Borrower from its employees, independent contractors, creditors, members,
partners and other third parties for all periods in compliance in all material
respects with all applicable federal, state, local and foreign laws and such
withholdings have been timely paid to the respective Governmental
Authorities.

     

    
      
        
        

      

      
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    (b)           Schedule
5.7 sets forth as of the Closing Date those taxable years for which any tax
returns, reports or statements of Borrower are currently being audited by the
IRS or any other applicable Governmental Authority, and any assessments or to
the knowledge of Borrower, any threatened assessments in connection with such
audit, or otherwise currently outstanding.  Except as described in
Schedule 5.7, Borrower has not executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any taxes,
assessments or other charges.

     

    (c)           Neither
Borrower nor its predecessors, if any, are liable to any Governmental Authority
for any taxes, assessments or charges: (i) under any agreement (including any
tax sharing agreements) or (ii) to Borrower’s knowledge, as a
transferee.  As of the Closing Date, Borrower has not agreed or been
requested to make any adjustment under IRC Section 481(a), by reason of a change
in accounting method or otherwise, which would have a Material Adverse
Effect

     

    5.8           Litigation.  Except
as set forth on Schedule 5.8, there are no outstanding judgments, actions,
proceedings, claims or investigations pending or threatened before any court or
Governmental Authority which, if adversely determined, may have a Material
Adverse Effect.

     

    5.9           Ownership and
Liens.  Borrower has rights in or the power to transfer the
Collateral and it has good and marketable title to all of its properties and
assets, including, without limitation, the Collateral.  The Lien
granted in Section 3.1 constitutes a valid Lien in the Collateral, subject to no
Liens except for Permitted Liens.

     

    5.10           Insurance.  Schedule
5.10 lists all insurance policies of any nature maintained, as of the Closing
Date, for current occurrences by Borrower, as well as a summary of the terms of
each such policy.

     

    5.11           Approvals.  No
consent or approval of any Person, landlord, or mortgagee, no waiver of any Lien
or right of distraint or other similar right, and no consent, license, approval,
or authorization of or registration, qualification, designation, declaration or
filing (except any recordations required in connection with the perfection of
the security interest granted in Section 3.1) with any Governmental Authority on
the part of Borrower is required in connection with the execution, delivery, and
performance of this Agreement or the consummation of any other transactions
contemplated hereby.

     

    5.12           Other Agreements and
Restrictions.  There is no term of any contract, bond, note,
indenture, or other agreement or of any charter or other corporate restriction
or of any judgment, decree, order, statute, rule or regulation which materially
and adversely limits the business, operations, or affairs, as presently
conducted, of Borrower or its assets, and Borrower is not now in violation of
any such term; and the execution, delivery and performance of, and compliance
with, the Loan Documents will not (with or without the giving of notice of lapse
of time, or both) result in any violations of, or be in conflict with, or
constitute a default under, any such term, or result in the creation of any
Liens upon any of the assets of Borrower, except for the Liens created pursuant
to this Agreement.  The operations of Borrower complies with all laws,
statutes, rules, regulations, ordinances, and the like, applicable to
it.

     

    
      
        
        

      

      
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    5.13           Name Change,
Mergers.  Except as set forth on Schedule 5.13, within the last
six (6) years, Borrower has not (a) changed its name, (b) been the surviving
corporation of a merger or consolidation, or (c) acquired all or substantially
all of the assets of any Person.

     

    5.14           Executive Office, Location
of Collateral and Books and Records.  As of the Closing Date,
(a) the current location of Borrower’s chief executive office is set forth on
Schedule 5.14, (b) the warehouses and premises at which any of the Collateral is
located, other than locations where Collateral is expected to be located for
less than 180 days, are set forth on Schedule 5.14 or in the report provided to
Agent and the Lenders pursuant to Section 6.10(a)(i), and (c) none of such
locations has changed within the 12 months preceding the Closing Date or, in the
case of locations described on reports provided to Agent and the Lenders
pursuant to Section 6.10(a)(i), since the date of such report.  All of
the records of Borrower relating to the Collateral, and the other books,
records, journals, orders, receipts, and correspondence are located at
Borrower’s principal place of business set forth on Schedule 5.14, except as to
the corporate minute book and related records which are or may be maintained at
the offices of counsel to Borrower.

     

    5.15           Labor
Matters.  As of the Closing Date (a) no strikes or other
material labor disputes against Borrower are pending or, to Borrower’s
knowledge, threatened, (b) hours worked by and payment made to employees of
Borrower comply in all material respects with the Fair Labor Standards Act and
each other federal, state, local or foreign law applicable to such matters, (c)
all payments due from Borrower for employee health and welfare insurance have
been paid or accrued as a liability on the books of Borrower, (d) except as set
forth in Schedule 5.15, Borrower is not a party to or bound by any collective
bargaining agreement, management agreement, consulting agreement, employment
agreement, bonus, restricted stock, stock option, or stock appreciation plan or
agreement or any similar plan, agreement or arrangement (and true and complete
copies of any agreements described on Schedule 5.15, if any, have been delivered
to Agent and the Lenders), (e) there is no organizing activity involving
Borrower pending or, to Borrower’s knowledge, threatened by any labor union or
group of employees, (f) there are no representation proceedings pending or, to
Borrower’s knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of Borrower has made a pending demand
for recognition, and (g) except as set forth in Schedule 5.15, there are no
material complaints or charges against Borrower pending or, to the knowledge of
Borrower, threatened to be filed with any Governmental Authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by Borrower of any
individual.

     

    5.16           Reportable
Events.  No Reportable Event has occurred with respect to any
Plan maintained for employees of: (a) Borrower; (b) any Subsidiary of Borrower;
or (c) any member of a Controlled Group of which Borrower is a
part.

     

    5.17           Compliance With
Laws.  Borrower is in compliance with any and all federal laws
and regulations applicable to it including, without limitation, those
established by the Bureau of Alcohol, Tobacco and Fire Arms, ERISA, the
Environmental Protection Agency, and the Federal Occupational Safety and Health
Agency.

     

    
      
        
        

      

      
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    5.18           Government
Regulation.  Borrower is not an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company,” as such terms are defined in the Investment Company Act of
1940.  Borrower is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or any other federal or
state statute that restricts or limits its ability to incur Indebtedness or to
perform its obligations hereunder. The making of the Revolving Loan by Lenders
to Borrower, the application of the proceeds thereof and repayment thereof and
the consummation of the transactions contemplated by this Agreement will not
violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission.

     

    5.19           Margin
Regulations.  Borrower is not engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as
“Margin
Stock”).  Borrower does not own any Margin Stock, and none of
the proceeds of the Advances or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Advances or other extensions of credit under
this Agreement to be considered a “purpose credit” within the meaning of
Regulations T, U or X of the Federal Reserve Board.  Borrower will not
take or permit to be taken any action that might cause any Loan Document to
violate any regulation of the Federal Reserve Board.

     

    5.20           Full
Disclosure.  The representations and warranties of Borrower set
forth in this Agreement are true and correct in all respects.

     

    5.21           No Event of
Default.  Borrower has reviewed this Agreement and represents
that no Default or Event of Default exists and Borrower is not in default under
any other Loan Documents to which it is a party.

     

    5.22           Enforceability of
Agreement.  This Agreement has been duly executed and delivered
and constitutes the valid and legally binding obligation of Borrower,
enforceable in accordance with its terms, subject to applicable Federal and
state bankruptcy and insolvency laws affecting generally the rights of creditors
or other similar laws affecting the rights and remedies of creditors generally
and general principles of equity.

     

    SECTION
6

    AFFIRMATIVE
COVENANTS

     

    Borrower
covenants and agrees with Agent and the Lenders that:

     

    6.1           Maintain
Existence.  Borrower shall preserve and keep in full force and
effect its existence and all franchises, rights, and privileges necessary for
the proper conduct of its business, including, without limitation, all necessary
franchises, patents, licenses, trademarks, trademark rights, trade name rights,
trade secrets, fictitious name authorizations, or certificates and copyrights
without any conflict with such franchises, patents, licenses, trademarks,
trademark rights, trade name rights, trade secrets, fictitious name
authorizations or certificates and copyrights of others.

     

    
      
        
        

      

      
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    6.2           Delivery of Organizational
Documents.  Borrower shall promptly deliver to Agent and the
Lenders copies of any amendments or modifications to its articles of
organization, and operating agreement, certified with respect to (a) the
articles of organization, by the Secretary of State of the state of formation,
(b) the certificate of registration or authorization in any jurisdiction where
Borrower is or may be registered or authorized to conduct business as a foreign
entity, by the Secretary of State of such jurisdiction, and (c) the operating
agreement, by the secretary of Borrower.

     

    6.3           Compliance with
Laws.

     

    (a)           Borrower
shall comply with all laws, ordinances, rules and regulations applicable to it,
now or hereafter in effect.

     

    (b)           Borrower
shall (i) ensure, and cause each Subsidiary to ensure, that none of their
Stockholders, members, partners or other owners shall be listed on the Specially
Designated Nationals and Blocked Person List or other similar lists maintained
by the Office of Foreign Assets Control (“OFAC”), the
Department of the Treasury or included in any Executive Orders, (ii) not use or
permit the use of the proceeds of the Revolving Loan or any other financial
accommodation from Lenders to violate any of the foreign asset control
regulations of OFAC or other applicable law, (iii) comply, and cause each
Subsidiary to comply, with all applicable Bank Secrecy Act laws and regulations,
as amended from time to time, and (iv) otherwise comply with the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Public Law 107-56 (the “Patriot Act”) as
required by federal law and Agent’s and Lenders’ policies and
practices.  Borrower shall deliver to Agent and the Lenders any
certification or other evidence requested from time to time by Agent confirming
Borrower’s compliance with this Section 6.3(b).

     

    6.4           Payment of
Taxes.  Borrower shall pay and discharge, as they become due,
all taxes, assessments, debts, claims and other governmental or non-governmental
charges lawfully imposed upon it or incurred by it or its properties and assets,
including, without limitation, lawful claims for labor, materials and supplies
which, if unpaid might become a Lien or a charge upon any of the assets of
Borrower, including, without limitation, the Collateral, unless Borrower
notifies Agent of such liability and authorizes Agent and the Lenders to reduce
both the Maximum Loan Amount and Borrowing Availability by the amount of any
unpaid liability, provided, however, that Borrower shall remit withholding and
shall pay other payroll taxes to appropriate Governmental Authorities as and
when due, and shall pay any obligations giving rise to such Liens immediately
upon the commencement of any action to foreclose said Lien unless the same shall
be stayed or a surety bond, which is satisfactory to Agent, is delivered to
Agent.  Borrower shall provide Agent, if requested, with evidence of
said taxes, assessments, debts, claims, and charges, and of payment
thereof.

     

    6.5           Maintenance of Properties
and Assets.  Borrower shall maintain, preserve and keep all its
inventories of properties and assets, including, without limitation, the
Collateral, safe from vandalism and theft, in “as is, where is”
condition.

     

    
      
        
        

      

      
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    6.6           Insurance.  Borrower
shall maintain, with reputable insurance companies, such insurance on its
properties and assets, including, without limitation, the Collateral, against
such casualties and in such amounts as is acceptable to Agent and is customarily
maintained by similar businesses including, without limitation, insurance
against fire, casualty, all-risk, general liability, business interruption and
such other risks as are customary to similar businesses, but in no event less
than required by law.  All insurance policies providing for property
insurance coverage and business interruption insurance shall name Agent as a
loss payee and all insurance policies providing for liability coverage shall
name Agent as an additional insured.  All such policies of insurance
shall provide for at least thirty (30) days advance notice in writing to Agent
of any cancellation or modification thereof.  If Borrower fails to pay
the premiums on any such insurance, Agent and the Lenders shall have the right
(but shall be under no duty) to pay such premiums for Borrower’s
account.  Borrower shall repay to Lenders any sums which Lenders shall
have so paid, together with interest thereon at the Default Rate, from the time
of payment by Lenders until repaid.  Borrower shall deliver to Agent
annually, on the anniversary of the Closing Date, and at other times upon
Agent’s request, a certificate evidencing the insurance coverage then in effect,
and a detailed list of insurance then in effect stating the names of the
insurance companies, the amounts and rates of the insurance, dates of expiration
thereof, and the properties and risks covered thereby, and within fifteen (15)
days after notice from Agent, obtain such additional insurance as Agent may
reasonably request.

     

    6.7           Litigation.  Borrower
shall promptly notify Agent of:

     

    (a)           any
litigation, administrative proceedings, audits, actions, proceedings, claims or
investigations pending or threatened, conducted or to be conducted by the
Internal Revenue Service;

     

    (b)           any
other litigation, administrative proceedings, claims or investigations pending
or threatened against Borrower in excess of Fifty Thousand Dollars ($50,000) per
incident, whether or not insured against;

     

    (c)           the
entry of any judgment against Borrower or the entry of any Liens, other than
Permitted Liens, against any of the Collateral, whether or not insured
against;

     

    (d)           any
reportable ERISA events; and

     

    (e)           any
violation of any environmental laws, including, without limitation, any material
violation of laws, rules or regulations promulgated by the Environmental
Protection Agency, which may have an adverse effect upon Borrower.

     

    6.8           Location of Collateral and
Books and Records.

     

    (a)           Unless
notice is given to Agent in advance of, and Agent consents in writing to,
removal of the Collateral, the records relating to the Collateral, and the other
books, records, journals, orders, receipts, and correspondence, to another
location:

     

    (i)           Borrower
shall keep the Collateral at only those locations set forth on Schedule 5.14 or
where located at acquisition or at locations provided in the report to Agent
pursuant to Section 6.10(a)(i), or such other locations as Agent may, in its
reasonable discretion, approve in writing; and

     

    
      
        
        

      

      
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    (ii)           Borrower
shall keep its records relating to the Collateral, and its other books, records,
journals, orders, receipts and correspondence, only at the principal place of
business or such other site(s) set forth on Schedule 5.14, as
appropriate.

     

    (b)           Borrower
shall obtain a landlord’s agreement, mortgagee agreement or bailee letter, as
applicable, from the lessor of each leased or rented real property, mortgagee of
owned real property or bailee with respect to any warehouse, processor or
converter facility or other location where Collateral is stored or located, or
is expected to be stored or located, for more than the applicable Holding
Period, which agreement or letter shall contain a waiver or subordination of all
Liens or claims that the landlord, mortgagee or bailee may assert against the
Collateral at that location, and shall otherwise be reasonably satisfactory in
form and substance to Agent.

     

    6.9           Change of Principal Place of
Business Location.  Borrower shall promptly notify Agent of (a)
any change of location of its existing places of business or Collateral storage
facility, (b) the addition of any new place of business or Collateral storage
facility and (c) the elimination of any existing place of business or Collateral
storage facility.

     

    6.10         Financial Reporting
Requirements.

     

    (a)           Borrower
shall deliver and/or cause to be delivered to Agent and the Lenders the
following:

     

    (i)           Upon
each request for an Advance under the Revolving Loan, a Borrowing Base
Certificate together with (A) a detailed description of the assets to be
purchased with such Advance, (B) Borrower’s cost for such assets, (C) Borrower’s
internal appraisal of such assets, (D) the expected resale price per item, (E)
the name of the Person selling such assets to Borrower, (F) the circumstances
giving rise to Borrower’s purchase (seller bankruptcy or liquidation, for
example), (G) Borrower’s selling strategy including, if applicable, estimated
auction or sale dates, (H) location of such assets from the date of acquisition
through such auction or other sale, (I) evidence that Borrower has paid the
balance of the purchase price above the requested Advance amount (which payment
by Borrower may be made immediately prior to the requested Advance), (J) a
summary of Eligible Assets owned by Borrower as of the date of such request and
the Net Orderly Liquidation Value of such Eligible Assets to be purchased and
(K) such other information as Agent may request from time to time;

     

    (ii)           Within
fifteen (15) days after the end of each calendar month (commencing with the
calendar month in which this Agreement is executed and continuing until all of
the Obligations of Borrower to Agent and the Lenders are fully paid and
satisfied) a Borrowing Base Certificate, properly completed and executed by
Borrower as of the close of the preceding calendar month;

     

    
      
        
        

      

      
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    (iii)           Within
fifteen (15) days after the end of each calendar month (commencing with the
calendar month in which this Agreement is executed and continuing until all of
the Obligations of Borrower to Agent and the Lenders are fully paid and
satisfied) a reconciliation report setting forth, in such form as Agent shall
reasonably require, a summary of all collections, payments and adjustments made
or received by Borrower with respect to its sales of Eligible Assets during such
preceding calendar month;

     

    (iv)           Within
fifteen (15) days after the end of each fiscal quarter of Borrower (commencing
with the quarterly fiscal period in which this Agreement is executed and
continuing until such time as Agent receives notice that such entities have been
dissolved or have become a Guarantor as described in Section 6.22(d)), a
statement in form and substance acceptable to Agent and including the
certification of the principal financial officer of Borrower that neither Moving
Images NY LLC nor Greystone Post Production Equipment LLC have acquired or own
any assets.

     

    (v)           Within
forty-eight (48) days after the end of quarterly fiscal period in each fiscal
year of Borrower during the term of this Agreement (commencing with the
quarterly fiscal period in which this Agreement is executed and continuing until
all of the Obligations of Borrower to Agent and the Lenders are fully paid and
satisfied), an unaudited internally prepared consolidated and consolidating
balance sheet of Borrower and its Subsidiaries and the related consolidated and
consolidating statements of income and cash flows for the (1) quarterly fiscal
period then ended, and (2) period from the beginning of the current fiscal year
to the end of such quarterly fiscal period, all in reasonable detail, prepared
in accordance with GAAP;

     

    (vi)           Within
one hundred twenty (120) days after the end of each fiscal year of Borrower
(commencing with the fiscal year in which this Agreement is executed and
continuing until all of the Obligations of Borrower to Agent and the Lenders are
fully paid and satisfied), a consolidated and consolidating balance sheet of
Borrower and its Subsidiaries, as of the end of such year and the related
consolidated and consolidating statements of income, owners’ equity and cash
flows thereof for such year, all in reasonable detail and prepared on a review
basis, without qualification and in accordance with GAAP, by independent
certified public accountants, reasonably acceptable to Agent (it being
understood that Deloitte & Touche LLP or a nationally recognized independent
certified public accounting firm in the United States of America is as of the
Closing Date acceptable to Agent);

     

    (vii)           Together
with the quarterly and annual financial statements delivered pursuant to this
Section 6.10, a statement in form and substance acceptable to Agent and in
reasonable detail showing the calculations used in determining compliance with
the financial covenants set forth in this Agreement, and including the
certification of the principal financial officer of Borrower that (1) all
financial information provided to Agent and the Lenders during the fiscal
quarter then ended presents fairly in accordance with GAAP (subject to normal
year-end adjustments, as applicable) the financial position, results of
operations of Borrower and its Subsidiaries, on both a consolidated and
consolidating basis as at the end of such fiscal quarter and for that portion of
the fiscal year then ended, (2) any other information provided to Agent and the
Lenders is true, correct and complete in all material respects when provided and
(3) no Default or Event of Default is in existence as of the date of such
statement or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default;

     

    
      
        
        

      

      
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    (viii)        Within
forty-eight (48) days after the end of each fiscal quarter of Counsel
Corporation during the term of this Agreement (commencing with the quarterly
fiscal period in which this Agreement is executed and continuing until all of
the Obligations of Borrower to Agent and the Lenders are fully paid and
satisfied), the internally prepared consolidated and consolidating balance sheet
of Counsel Corporation and its Subsidiaries, and the related consolidated and
consolidating statements of income and cash flows, for the period from the
beginning of the current fiscal year to the end of such quarterly fiscal period,
all in reasonable detail, prepared in accordance with GAAP as in effect in
Canada;

     

    (ix)           Within
forty-eight (48) days after the end of each fiscal quarter of C2 Global
Technologies Inc. during the term of this Agreement (commencing with the
quarterly fiscal period in which this Agreement is executed and continuing until
all of the Obligations of Borrower to Agent and the Lenders are fully paid and
satisfied), the internally prepared consolidated and consolidating balance sheet
of C2 Global Technologies Inc. and its Subsidiaries, and the related
consolidated and consolidating statements of income and cash flows, for the
period from the beginning of the current fiscal year to the end of such
quarterly fiscal period, all in reasonable detail, prepared in accordance with
GAAP;

     

    (x)  Within
one hundred twenty (120) days after the end of each fiscal year of Counsel
Corporation (commencing with the fiscal year in which this Agreement is executed
and continuing until all of the Obligations of Borrower to Agent and the Lenders
are fully paid and satisfied), the audited consolidated and consolidating
balance sheet of Counsel Corporation and its Subsidiaries, as of the end of such
year and the related consolidated and consolidating statements of income,
owners’ equity and cash flows thereof for such year, all in reasonable detail
and prepared in accordance with GAAP as in effect in Canada;

     

    (xi)           Within
one hundred twenty (120) days after the end of each fiscal year of C2 Global
Technologies Inc. (commencing with the fiscal year in which this Agreement is
executed and continuing until all of the Obligations of Borrower to Agent and
the Lenders are fully paid and satisfied), the audited consolidated and
consolidating balance sheet of C2 Global Technologies Inc. and its Subsidiaries,
as of the end of such year and the related consolidated and consolidating
statements of income, owners’ equity and cash flows thereof for such year, all
in reasonable detail and prepared in accordance with GAAP;

     

    (xii)           Such
additional financial statements or information of Borrower and the Guarantors as
Agent shall reasonably require.

     

    (b)           Borrower
authorizes Agent to communicate directly with its independent certified public
accountants and authorizes and, at Agent’s request, shall instruct those
accountants and advisors to disclose and make available to Agent any and all
financial statements and other supporting financial documents, schedules and
information relating to Borrower or any of its Subsidiaries with respect to the
business, financial condition and other affairs of Borrower or any of its
Subsidiaries.  Any statement, report, compilation, tax return or other
document or writing which is the result of professional accounting services
provided by Borrower’s accountant shall be accompanied by a written
communication, in form and substance satisfactory to Agent, signed by Borrower
stating, among other things, that Borrower, as applicable, have knowledge of
Agent’s and the Lenders’ reliance or intended reliance on such statements,
reports, compilations, tax returns and other documents or
writings.  So long as no Event of Default has occurred and is
continuing, Agent agrees to provide reasonable notice to Borrower and an
opportunity for Borrower to consult with Agent prior to Agent communicating with
Borrower’s independent certified public accountants and advisors.

     

    
      
        
        

      

      
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    6.11         Other Reporting
Requirements.  Borrower shall furnish to Agent and the
Lenders:

     

    (a)           promptly,
but not later than three (3) business days, following Agent’s request, a signed
copy of Borrower’s purchase order issued for the purchase of any Eligible
Assets, a bill of sale issued by the seller thereof to Borrower, as purchaser,
and such other confirmation that Borrower’s acquisition of such Eligible Assets
has been consummated as Agent may request from time to time.

     

    (b)           as
soon as possible and in any event within thirty (30) days after Borrower or a
duly appointed administrator of a Defined Benefit Plan knows or has reason to
know that any Reportable Event has occurred with respect to any Defined Benefit
Plan, a statement of the chief financial officer of Borrower setting forth
details as to such Reportable Event and the action which Borrower proposes to
take with respect thereto, together with a copy of the notice of such Reportable
Event given to the PBGC or a statement that said notice will be filed with the
annual report to the United States Department of Labor with respect to such
Defined Benefit Plan if required under applicable regulations;

     

    (c)           promptly
after the filing thereof with the United States Department of Labor, the
Internal Revenue Service or the PBGC, copies of each annual and other
report with respect to each Defined Benefit Plan;

     

    (d)           promptly
after receipt thereof, a copy of any notice Borrower or any other member of a
Controlled Group may receive from the United States Department of Labor, the
Internal Revenue Service or the PBGC with respect to any Defined Benefit Plan;
and

     

    (e)           promptly
after the sending of, making available or filing of the same, copies of any
reports, proxy statements and financial statements which Borrower shall send or
make available to all of its Stockholders, and any registration statements and
any reports which Borrower shall file with the Securities and Exchange
Commission.

     

    6.12         Fees and Expenses in
Protecting Rights.  If at any time or times or from time to
time Agent or any Lender employs counsel or any other professionals or
consultants for advice or other representation:

     

    (a)           with
respect to the Collateral, the Obligations of Borrower to Agent and the Lenders,
this Agreement, or any other Loan Document;

     

    (b)           to
represent Agent or Lenders in any litigation, contest, dispute, suit or
proceeding or to commence, defend or intervene or to take any other action in or
with respect to any litigation, contest, dispute, suit or proceeding (whether
instituted by Agent, Borrower or any other Person) in any way or respect
relating to the Collateral, the Obligations of Borrower to Agent and the
Lenders, this Agreement or any other Loan Document;

     

    
      
        
        

      

      
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    (c)           to
protect, collect, sell, liquidate otherwise dispose of the
Collateral;

     

    (d)           to
attempt to or to enforce Agent’s Liens upon any Collateral; and/or

     

    (e)           in
otherwise protecting, enforcing or exercising its interests, Rights or Remedies
created by, connected with or provided in this Agreement, or performance
pursuant to this Agreement;

     

    then, the
reasonable attorneys’ fees, costs and expenses arising from such services, and
all other expenses, costs, charges and other fees of Agent and the Lenders in
any way or respect arising in connection with or relating to any of the events
described in this Section shall be added to the amount of the Obligations of
Borrower to Agent and the Lenders, and shall be payable on
demand.  Any of the amounts payable hereunder by Borrower may be paid
by Agent or any Lender, and if and when so paid, shall be deemed to be advances
under the Revolving Loan.

     

    6.13         Fees and Expenses Incident
to Preparation, Execution and Delivery of Agreement.  Borrower
shall pay on demand all reasonable legal fees, recording expenses and other
reasonable and necessary disbursements of Agent and the Lenders incident to the
preparation, execution and delivery of this Agreement and the other Loan
Documents.

     

    6.14         Financial Records in
Accordance with GAAP.  Borrower shall, at all times and in
accordance with GAAP, keep complete and accurate books and records concerning
its business, affairs and operations and concerning its properties and assets,
including, without limitation, the Collateral.

     

    6.15         Legends on Books and Records
and Collateral.  Borrower shall promptly make, stamp or record
such entries or legends on Borrower’s internal books and records, chattel paper
or on any of the other Collateral as Agent shall request from time to time to
indicate and disclose that Agent has a Lien upon the Collateral.

     

    6.16         Inspection or Examination of
Properties and Assets.  Borrower shall at any time during
regular business hours while no Event of Default has occurred and is continuing
and at any time following the occurrence and during the continuance of an Event
of Default, permit Agent to inspect or examine the properties and assets of
Borrower, including, without limitation, the Collateral, and further to examine,
check, audit, make copies of or extracts from any of Borrower’s books, records,
journals, receipts, orders, correspondence or other data relating to the
Collateral, and to independently verify the orders and accounts receivable of
Borrower.  Any and all costs and expenses incurred by Agent in
connection with any inspection or examination conducted by Agent in accordance
with this Section 6.16 shall be the sole responsibility of
Borrower.

     

    6.17         Use of Loan
Proceeds.  Borrower shall use the initial Advances under this
Agreement to purchase 100% of the membership interests in Greystone Private
Equity LLC and shall use all other loans and advances made pursuant to this
Agreement solely for the acquisition of Eligible Assets. The initial Advances
used to purchase 100% of the membership interests in Greystone Private Equity
LLC in an amount not to exceed $1,364,059.54, shall not be included in
calculating Borrowing Availability.

     

    
      
        
        

      

      
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    6.18         Further
Assurances.  Borrower shall procure and deliver to Agent or
execute any mortgage, security agreement, financing statement or other writing
necessary to evidence, preserve, protect or enforce Agent’s rights and interests
to or in the Collateral (for the benefit of itself and the Lenders) or in any
other collateral agreed to by the parties.

     

    6.19         Change in Financial
Condition.  Borrower shall immediately notify Agent and the
Lenders of any business development or any change in the financial condition of
Borrower, the effect of which may have a Material Adverse Effect on Borrower or
any Guarantor, or of any material loss or damage to, or material diminution in,
or any occurrence which would materially adversely affect, the value of any
Collateral.  In the event that Agent, in its reasonable discretion,
shall determine that there has been any such material loss, damage or diminution
in value, Borrower shall, whenever Agent so requests, pay to Lenders, within
such period as Agent shall specify, such amount as Agent, in its reasonable
discretion, shall have determined represents such material loss, damage or
diminution in value (any such payment, however, not to affect Agent’s Lien (for
the benefit of itself the Lenders) upon the Collateral).

     

    6.20         Additional
Collateral.

     

    (a)           Borrower
hereby grants to Agent, for the benefit of itself and the Lenders, a security
interest and right of setoff, as security for all Obligations to Agent and the
Lenders, upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Agent or any
Lender or any Affiliate of Agent or any Lender, or in transit to any of
them.  At any time, without demand or notice, from and after the
occurrence of an Event of Default, Agent and Lenders may set off the same or any
part thereof and apply the same to any Obligation of the Borrower to Agent and
the Lenders, even though unmatured and regardless of the adequacy of the
Collateral, or any other collateral, securing such Obligations.  ANY
AND ALL RIGHTS TO REQUIRE AGENT OR ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS OF THE
BORROWER TO AGENT AND THE LENDERS, PRIOR TO EXERCISING THEIR RIGHT OF SETOFF
WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.  Without
limiting the generality of the foregoing, if at any time the amount of the loans
or advances by Lenders as allowed by this Agreement shall be exceeded, Borrower
shall pay to Agent for the benefit of the Lenders, in immediately available
funds, the amount of such excess if Agent so requests, or Agent may charge such
amount against any deposit account of Borrower with Agent.

     

    (b)           Borrower
will provide Agent with the documents necessary for Agent to obtain control (for
the benefit of itself and the Lenders) of the Collateral consisting of deposit
accounts, investment property and electronic chattel paper.

     

    (c)           In
the event Borrower shall at any time hold or acquire a commercial tort claim,
Borrower shall immediately notify Agent in a writing signed by Borrower of the
details thereof and grant to Agent (for the benefit of itself and the Lenders)
in such writing a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
satisfactory to Agent.

     

    
      
        
        

      

      
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    (d)           Borrower
shall deliver to Agent (i) all instruments and chattel paper (including all
executed copies thereof, except such executed copies retained by the obligors
thereunder) representing proceeds of Collateral, and (ii) promptly at Agent’s
request, all invoices, original bills of lading, documents of title, original
contracts, and any other writings relating thereto, and other writings or
evidence of performance of contracts or evidence of shipment or delivery of the
merchandise sold or services rendered in connection therewith, and (iii)
promptly at Agent’s request, from time to time, additional copies of any or all
of such papers or writings, and such other information with respect to any of
the Collateral and such schedules of accounts receivable and other writings, as
Agent may in its sole discretion deem to be necessary or effectual to evidence
any loan made pursuant to this Agreement or to evidence, enforce or perfect
Agent’s security interest (for the benefit of itself and the Lenders) in the
Collateral, to facilitate collection of the Collateral, or to carry into effect
the provisions and intent of this Agreement, all at the sole expense of
Borrower.

     

    6.21         Accounts Relating to
Contracts With the United States of America.  If any of the
accounts, chattel paper, general intangibles or instruments constituting
Collateral arise out of contracts with the United States of America or any of
its departments, agencies or instrumentalities, Borrower shall notify Agent and
execute any necessary writings in order that all money due or to become due
under such contracts shall be assigned to Agent, for the benefit of itself and
the Lenders, and proper notice of the assignment given under the Federal
Assignment of Claims Act.

     

    6.22         Subsidiaries.

     

    (a)             Borrower
shall notify Agent (i) within ten (10) business days following the formation or
acquisition of any Subsidiary which has not been formed or acquired to hold
Eligible Assets, and (ii) prior to the formation or acquisition of any
Subsidiary which has been formed or acquired to hold Eligible
Assets.  Borrower shall cause any such newly formed or acquired
Subsidiary which has been formed or acquired to hold Eligible Assets to become a
guarantor of the Obligations of Borrower to Agent and the Lenders and to comply
with terms and conditions reasonably acceptable to Agent and cause any and all
such Subsidiaries to grant Agent, for the benefit of itself and the Lenders, a
Lien upon all assets of such Subsidiary pursuant to a security agreement in form
and substance acceptable to Agent.

     

    (b)             Borrower
shall notify Agent (i) upon dissolution of Moving Images NY LLC and/or Greystone
Post Production Equipment LLC, (ii) in the event it alters its plan and
determines not to dissolve Moving Images NY LLC and/or Greystone Post Production
Equipment LLC as described in Section 5.4(b) and (iii) prior to permitting
Moving Images NY LLC and/or Greystone Post Production Equipment LLC to acquire
any assets after the Closing Date.  In the event of any such asset
purchase shall cause such Subsidiary to become a guarantor of the Obligations of
Borrower to Agent and the Lenders and to comply with terms and conditions
reasonably acceptable to Agent and cause any and all such Subsidiaries to grant
Agent, for the benefit of itself and the Lenders, a Lien upon all assets of such
Subsidiary pursuant to a security agreement in form and substance acceptable to
Agent.

     

    6.23         Information Relating to
Operations of Borrower.  Borrower shall provide to Agent and
the Lenders the following information pertaining to all operations:

     

    
      
        
        

      

      
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    (a)          Copies
of all material permits obtained from any federal, state or local
agency;

     

    (b)          A
description of said operations and of their processes; and

     

    (c)          Any
other information which Lender may reasonably request.

     

    6.24         Notification of Default or
Event of Default.  Borrower shall immediately notify Agent, in
writing, of the occurrence of a Default or an Event of Default, or of any
default under the terms of any other written agreement to which Borrower, any of
the Guarantors or any Subsidiaries of Borrower is party and which (if applicable
to Borrower or its Subsidiaries) involves total aggregate Indebtedness of Fifty
Thousand Dollars ($50,000) or (if applicable to Guarantors) involves total
aggregate Indebtedness of Seven Hundred Fifty Thousand Dollars ($750,000) or
more, and of the nature and period of existence of such Default or Event of
Default under this Agreement, or any such default under any other
agreement.

     

    6.25         Payment of
Obligations.  Borrower shall make full and timely payment of
the principal, interest and other charges due and owing to Agent and the Lenders
pursuant to any Obligations of Borrower to Agent and the Lenders, including,
without limitation, those Obligations arising pursuant to this
Agreement.

     

    6.26         Financial
Covenants.

     

    (a)           Borrower
shall maintain its ratio of Capital Funds to the outstanding principal balance
of Revolving Loans of not less than 1.00 to 2.00 at any time during the term of
this Agreement.  This covenant shall be measured as of the end of each
fiscal quarter of Borrower.  The outstanding principal balance of the
initial Advance used to purchase 100% of the membership interests in Greystone
Private Equity LLC, in an amount not to exceed $1,364,059.54, shall not be
included in calculating the ratio described un this Section
6.26(a).

     

    (b)           Borrower
shall not incur a net loss, calculated in accordance with GAAP, during any
fiscal year.

     

    6.27         Banking
Relationship.  Borrower shall maintain its primary bank
accounts with Agent.

     

    6.28         Compliance With Loan
Documents.  Borrower shall observe, perform and comply with,
and shall continue, until all Obligations of Borrower to Agent and the Lenders
pursuant to this Agreement are fully paid and satisfied, to observe, perform and
comply with, all of the terms and conditions of the Loan Documents.

     

    SECTION
7

    NEGATIVE
COVENANTS

     

    Borrower
covenants and agrees with Agent and the Lenders that:

     

    7.1           Permitted
Liens.  Borrower shall not directly or indirectly permit to
exist any Liens with respect to the Collateral other than the
following:

     

    
      
        
        

      

      
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    (a)           Liens
for taxes not yet due;

     

    (b)           Liens
in favor of Agent (for the benefit of itself and the Lenders);

     

    (c)           Liens
and encumbrances, if any, set forth on Schedule 7.1; and

     

    (d)           Subject
to the limitations set forth in Section 7.7 and so long as there are no uncured
Defaults or Events of Default, purchase money security interests granted by
Borrower in connection with specific Capital Expenditures; provided, however,
that the amount of the purchase money security interest shall not exceed one
hundred (100%) percent of the purchase price of the asset being acquired and no
asset of Borrower other than the acquired asset is used to secure the
purchase.

     

    (e)           Liens
imposed by law such as mechanics’, materialmens’, landlords’ and warehousemen’s
liens, and other similar liens securing obligations incurred in the ordinary
course of business which are not more than 45 days due or which are being
contested in good faith; provided that (i) adequate reserves or other
appropriate provisions are being maintained by the Borrower in accordance with
GAAP; and (ii) Borrower shall immediately pay and satisfy such Lien in the event
there are commenced enforcement proceedings which threaten forfeiture of any
Collateral but may after paying and satisfying such Lien continue to prosecute
any contest relating thereto.

     

    (f)           Attachment
or judgment Liens individually or in the aggregate not in excess of an amount
that would result in an Event of Default hereunder (exclusive of (a) any amounts
that are duly bonded to the satisfaction of Agent in its discretion or (b) any
amount adequately covered by insurance as to which the insurance company has
acknowledged in writing its obligations for coverage); provided that (i)
adequate reserves or other appropriate provisions are being maintained by the
Borrower in accordance with GAAP; and (ii) Borrower shall immediately pay and
satisfy such Lien in the event there are commenced enforcement proceedings which
threaten forfeiture of any Collateral but may after paying and satisfying such
Lien continue to prosecute any contest relating thereto;

     

    (g)           Easements,
rights of way, restrictions and other similar encumbrances which in the
aggregate do not materially interfere with the use of the real property
encumbered thereby;

     

    (h)           Any
renewal or extension of any Lien referred to herein provided that the lien shall
not be expanded to additional property and the debt secured thereby shall not be
increased;

     

    (i)           Liens
subordinated pursuant to Subordination Agreements; and

     

    (j)           Liens
on real estate debt permitted in Section 7.5(a).

     

    7.2           Intentionally
Omitted.

     

    7.3           Nature of
Business.  Borrower shall not engage in any business other than
the businesses described on Schedule 5.5 and business relating
thereto.

     

    
      
        
        

      

      
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    7.4           Eligible
Assets.  Borrower shall not submit or represent to Agent and
Lenders any assets as Eligible Assets which do not meet every requirement in
every respect of Eligible Assets and shall notify Agent promptly, in writing,
when any Eligible Assets cease to meet any of those requirements.

     

    7.5           Prohibited
Transactions.  Without the prior written consent of Agent,
which consent will not be unreasonably withheld, Borrower shall
not:

     

    (a)           Create,
incur or assume any liability for borrowed money, except Indebtedness (i)
heretofore or hereinafter incurred by Borrower to Lenders, (ii) permitted
pursuant to Section 7.1, (iii) incurred in the ordinary course of business to
trade creditors, (iv) existing as of the date hereof acceptable to Agent and set
forth on Schedule 7.5(a), or (v) incurred to acquire real estate which has not
been financed by Lenders;

     

    (b)           Create,
incur, assume or permit to exist any Guaranteed Indebtedness except (i)
liabilities of Borrower resulting from product warranties made by Borrower in
the ordinary course of its business, and (ii) liabilities of Borrower resulting
from its endorsement of items or instruments for deposit or collection in the
ordinary course of its business;

     

    (c)           Sell,
lease, abandon, transfer, or otherwise dispose of, all or any substantial part
of the properties or assets of Borrower other than in the ordinary course of
business of Borrower;

     

    (d)           Sell,
transfer, discount or otherwise dispose of any notes, accounts or accounts
receivable, or other rights to receive payment, whether with or without
recourse, other than in the ordinary course of business of
Borrower;

     

    (e)           Purchase,
lease, or otherwise acquire, the properties or assets, or any interest therein,
of any Person, except purchases, leases or other acquisitions of real or
personal property made by Borrower in the ordinary course of its business in
bona fide arm’s length transactions;

     

    (f)           Enter
into any sale and leaseback arrangement;

     

    (g)           Consolidate
with, merge into, or participate in any joint venture with, or acquire all or
substantially all of the property or assets of, any Person, or permit any Person
to consolidate with, merge into, or participate in, any joint venture with, or
acquire all or substantially all of the property or assets of,
Borrower;

     

    (h)           Create,
acquire or repurchase the obligations, securities or stock of, or make capital
contributions to, any Person, unless otherwise permitted under this
Agreement;

     

    (i)           Permit
a Change of Control to occur;

     

    (j)           Make
loans or advances to any of its officers, directors or Stockholders, or to any
other Person; and

     

    (k)           Change
its name or state of formation or its type of organization.

     

    
      
        
        

      

      
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    (l)           Make
any payments on Subordinated Indebtedness subject to Subordination Agreements,
except as specifically permitted pursuant to the Subordination
Agreements.

     

    7.6           Outstanding Balance of
Loans.  Borrower shall not permit the aggregate outstanding
balance of loans, advances or extensions of credit made by Lenders to or for the
benefit of Borrower under the Revolving Loan to exceed, at any time during this
Agreement, Borrowing Availability.

     

    7.7           Fiscal Year
End.  Borrower shall not change its fiscal year end from
December 31.

     

    7.8           Affiliate
Transactions.  Borrower shall not enter into or be a party to
any agreement or transaction with any Affiliate except in the ordinary course of
and pursuant to the reasonable requirements of Borrower’s business and upon fair
and reasonable terms that are no less favorable to Borrower than it would obtain
in a comparable arms length transaction with a Person not an Affiliate of
Borrower, and on terms consistent with the business relationship of Borrower and
such Affiliate prior to the Agreement Date, if any, and fully disclosed to the
Agent.

     

    7.9           Dividends and
Distributions.  Upon the occurrence and during the continuance
of an Event of Default, Borrower will not declare or pay any dividends on any
class of its membership interests, or make any payment on
account of the purchase, redemption or other retirement of any such membership
interests, or other securities or evidence of its Indebtedness or make any
distribution in respect thereof, either directly or
indirectly.  Notwithstanding anything contained in this Agreement to
the contrary, Borrower shall not use the proceeds of any Advance hereunder or
the proceeds of any Collateral while any Advances are outstanding to fund the
payment of any amount described in this Section 7.9

     

    SECTION
8

    EVENTS
OF DEFAULT

     

    There
shall be an Event of Default by Borrower under this Agreement upon the
occurrence of any one or more of the following:

     

    8.1           Borrower’s
failure to pay, when due, on demand or at maturity (whether as stated or by
acceleration), as the case may be, any payment of principal, interest or other
charges due and owing to Lender pursuant to any Obligations of Borrower to Agent
and/or the Lenders, including, without limitation, those Obligations arising
pursuant to this Agreement.

     

    8.2           A
breach by Borrower or the Guarantors of any covenant contained in this Agreement
or in any other Loan Document.

     

    8.3           If
any warranty or representation contained in this Agreement, including, without
limitation, the warranties and representations contained in Section 5, shall be
incorrect in any material respect, or if any certificate, report, financial
statement or instrument given by Borrower or the Guarantors to Agent and/or
Lenders shall be incorrect in any material respect.

     

    8.4           Upon
the occurrence of any one or more of the following:

     

    
      
        
        

      

      
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    (a)           dissolution,
termination of existence, insolvency, business failure, appointment of a
trustee, receiver or custodian of all or any part of the properties or assets of
Borrower or the Guarantors;

     

    (b)           an
assignment for the benefit of creditors by, the calling of a meeting of
creditors of, or the commencement of any proceeding under any bankruptcy or
insolvency laws of any state or of the United States of America by Borrower or
the Guarantors;

     

    (c)           the
commencement of any proceeding under any bankruptcy or insolvency laws of any
state or of the United States of America, against Borrower or the
Guarantors;

     

    (d)           entering
of final judgment, in excess of Fifty Thousand Dollars ($50,000), against
Borrower and/or One Million Dollars ($1,000,000) against the Guarantors, in any
litigation, administrative proceeding, action, proceeding, claim or
investigation, unless such final judgment is discharged, bonded or stayed within
thirty (30) days from the decree thereof;

     

    (e)           the
filing against any of the properties or assets of Borrower, including, without
limitation, the Collateral, or against any of the properties or assets of the
Guarantors of (1) any state or federal tax lien relating to withholding or other
payroll taxes or (2) any other state or federal tax lien in excess of Ten
Thousand Dollars ($10,000);

     

    (f)           the
occurrence of a Reportable Event under ERISA;

     

    (g)           a
Change of Control; or

     

    (h)           dissolution,
termination of existence, insolvency, business failure, appointment of a
trustee, receiver or custodian of all or any part of the properties or assets of
the Guarantors.

     

    8.5           Termination
or breach of any Guaranty or any documents, instruments, writings or agreements
related thereto or any similar agreement executed and delivered to Agent and/or
the Lenders in connection with the Obligations, or if any Guarantor attempts to
terminate or challenges the validity of his, her or its liability under any such
Guarantor or any documents, instruments, writings or agreements related thereto
or any similar agreement.

     

    8.6           Any
Lien created hereunder or under any other Loan Document shall not be a valid and
perfected first priority Lien (except as otherwise permitted herein or therein)
in any of the Collateral purported to be covered thereby.

     

    8.7           The
occurrence of any default or event of default on the part of Borrower or the
Guarantors in connection with any loans, advances or other extensions of credit
by Lender to Borrower or the Guarantors, other than those loans made pursuant to
this Agreement.

     

    8.8           Notification
to Borrower or Guarantors of the occurrence of any default or event of default
on the part of, or the commencing of any rights or remedies against, Borrower or
the Guarantors in connection with any loans, advances, leases or other
extensions of credit in excess of Fifty Thousand Dollars ($50,000) as to
Borrower and One Million Dollars ($1,000,000) as to Guarantors, other than
accounts payable arising in the ordinary course of business of Borrower or
Guarantors, if the effect of such default or event of default permits the
holder(s) of such Indebtedness to accelerate the maturity of such Indebtedness
prior to its stated maturity.

     

    
      
        
        

      

      
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    8.9           If
any warranty or representation whether past, contemporaneous or future made in
writing by Borrower or the Guarantors to Agent and/or the Lenders, other than
the warranties or representations set forth in this Agreement, shall be
incorrect in any material respect.

     

    SECTION
9

    LENDER’S
RIGHTS AND REMEDIES

     

    9.1           Exclusive
of the occurrence of a Default or an Event of Default, Agent may (and shall at
the request of the Required Lenders with respect to Sections 9.1(a) and
9.1(b)):

     

    (a)           Whenever
the Required Lenders deem themselves insecure by reason of a material adverse
change in the financial condition of Borrower or the Guarantors, or of a
material adverse change in the value or condition of the Collateral, terminate
the Lenders’ agreement to make loans or advances to Borrower pursuant to this
Agreement, declare all of the Obligations of Borrower to Agent and the Lenders
to be immediately due and payable, and demand payment of all of the Obligations
of Borrower to Agent and the Lenders;

     

    (b)           Call
at Borrower’s place of business at any reasonable time during regular business
hours while no Event of Default has occurred and is continuing and at any time
following the occurrence and during the continuance of an Event of Default, and,
without hindrance or delay, inspect, audit, check and make extracts or copies
from Borrower’s books, records, journals, orders, receipts, correspondence, and
other data, and inspect the Collateral, the cost of which shall be the sole
responsibility of Borrower;

     

    (c)           Endorse
the name of Borrower upon any and all checks, drafts, money orders and other
instruments for the payment of monies which are payable to Borrower and
constitute proceeds of the Collateral;

     

    (d)           Receive
and have access to printouts and all other information respecting financial
records of Borrower maintained by external computer service
companies;

     

    (e)           Communicate,
in the name of a certified public accountant, public accountant or fictitious
name, with customers and account debtors of Borrower to independently verify
orders and accounts receivable; and

     

    (f)           Sign
financing statements in the name of Borrower, or file financing statements
without Borrower’s signature, in any relevant state or jurisdiction to perfect
or maintain Lender’s security interest in any or all of the
Collateral.

     

    9.2           Upon
the occurrence of an Event of Default the Agent may (and at the written request
of the Required Lenders shall), in addition to all of those rights and remedies
provided otherwise in this Agreement, in the Uniform Commercial Code, under
other applicable law and in equity, exercise any one or more of the following
rights and remedies without further demand, presentation or notice, of any
kind:

     

    
      
        
        

      

      
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    (a)           Terminate
Lenders’ agreement to make any further Advances pursuant to this Agreement, or
otherwise, and declare all of the Obligations of the Borrower to Agent and the
Lenders to be immediately due and payable; provided, that, upon the occurrence
of an Event of Default pursuant to Section 8.4(a), (b) or (c), Lenders’
agreement to make any further Advances pursuant to this Agreement, or otherwise
shall automatically terminate, and all of the Obligations of the Borrower to
Agent and the Lenders shall become immediately due and payable;

     

    (b)           In
protecting, exercising or enforcing its interests, rights or remedies under this
Agreement, receive, open and dispose of mail addressed to Borrower, provided
that Agent shall return to Borrower all mail not related to the Collateral or to
any of the Obligations, and in connection therewith, give such notice to any
office or officials of the United States Postal Service, or any successor
thereof, to effect such changes of address as Agent may deem necessary so that
all mail addressed to Borrower may be delivered directly to Agent;

     

    (c)           Require
Borrower to assemble the Collateral and make it available at the principal place
of business or other places of business of Borrower or other location convenient
to Agent, to allow Agent to take possession or dispose of the
Collateral;

     

    (d)           Take
possession of and, upon notice to Borrower, sell or otherwise dispose of any or
all of the Collateral at public or private sale, Borrower agrees that ten (10)
days notice of any sale or other disposition shall be sufficient, which Agent
and Borrower herewith agree to be commercially reasonable and further provided,
(i) Agent has no obligation to clean-up or otherwise prepare the Collateral for
sale, (ii) Agent may comply with any applicable state or federal law
requirements in connection with a disposition of the collateral and compliance
will not be considered adversely to affect the commercial reasonableness of any
sale of the Collateral and (iii) Agent may specifically disclaim any warranties
of title or the like.

     

    (e)           Subrogate
to all of Borrower’s interests, rights and remedies in respect to the
Collateral, including the right to stop delivery, and (upon notice from Borrower
that the account debtor has returned, rejected, revoked acceptance of or failed
to return the goods or that the goods have been reconsigned or diverted) the
right to take possession of and to sell or dispose of the goods;

     

    (f)           Execute
in the name of Borrower any schedules, assignments, instruments, documents and
statements which Borrower is obligated to give Agent and/or
Lenders;

     

    (g)           Sign
financing statements in the name of Borrower, or file financing statements
without Borrower’s signature, in any relevant state or jurisdiction to perfect
or maintain Agent’s Lien (for the benefit of itself and the Lenders) in any or
all of the Collateral;

     

    (h)           Receive
from all or any accountants and auditors employed by Borrower at any time during
the term of this Agreement copies of any of Borrower’s financial statements,
trial balances or other accounting records of any sort in their possession,
together with any other information concerning the financial status or business
operations of Borrower;

     

    (i)           Charge
interest on the entire outstanding balance of the Revolving Loan at the Default
Rate; and

     

    
      
        
        

      

      
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(j)           Send a
notice of assignment and/or notice of Agent’s Lien (for the benefit of itself
and the Lenders) to any and all account debtors or any Person holding or
otherwise concerned with any of the Collateral, and Agent shall have the sole
right to enforce Borrower’s rights against account debtors and other obligors,
including, without limitation, Borrower waives any right it may have to require
Agent to pursue any third party for any of the Obligations or the Collateral,
collect the accounts receivables and/or take possession of the Collateral and
the books and records relating thereto.

     

    9.3           To
the extent that applicable law imposes duties on Agent to exercise remedies in a
commercially reasonable manner, Borrower acknowledges and agrees that it is not
commercially unreasonable for Agent (a) to fail to incur expenses reasonably
deemed significant by Agent to prepare Collateral for disposition or otherwise
to complete raw material or work in process into finished goods or other
finished products for disposition, (b) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of, (c) to
fail to exercise collection remedies against account debtors or other persons
obligated on Collateral or to remove liens or encumbrances on or any adverse
claims against Collateral, (d) to exercise collection remedies against account
debtors and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
persons, whether or not in the same business as the Company, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure Agent against risks
of loss, collection or disposition of Collateral or to provide to Agent a
guaranteed return from the collection or disposition of Collateral, or (l) to
the extent deemed appropriate by Agent, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist Agent, to
obtain the services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Borrower acknowledges that the purpose of this Section 9.3 is to
provide non-exhaustive indications of what actions or omissions by Agent would
not be commercially unreasonable in Agent’s exercise of remedies against the
Collateral and that other actions or omissions by Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 9.3.  Without limitation upon the foregoing, nothing contained
in this Section 9.3 shall be construed to grant any rights to Borrower or to
impose any duties on Agent that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this Section 9.3.

     

    9.4           In
addition to the rights and remedies specifically set forth herein, Agent and
Lenders shall have all of the rights and remedies of a secured creditor provided
in the Uniform Commercial Code, under other applicable law and in
equity


    
      
         


      

      
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    9.5           Without
limitation of Agent’s rights and remedies under this Agreement, Agent and
Lenders shall have the right, but not the obligation, to exercise any of their
rights set forth in the other Loan Documents at any time.

     

    SECTION
10

    LIMITATION
ON AGENT’S DUTY IN RESPECT OF COLLATERAL

     

    10.1           Agent
shall use reasonable care with respect to the Collateral in its possession or
under its control.  Neither Agent nor any Lender shall have any other
duty as to any Collateral in its possession or control or in the possession or
control of any agent or nominee of Agent or such Lender, or any income thereon
or as to the preservation of rights against prior parties or any other rights
pertaining thereto.

     

    SECTION
11

    ASSIGNMENT
AND PARTICIPATIONS; APPOINTMENT OF AGENT

     

    11.1               Assignment and
Participations.

     

     
(a)           Subject to
the terms of this Section 11.1, any
Lender may make an assignment to a Qualified Assignee of, or sell participations
in, at any time or times, the Loan Documents, Revolving Loan and its Pro Rata
Share in the Maximum Loan Amount or any portion thereof or interest therein,
including any Lender’s rights, title, interests, remedies, powers or duties
thereunder.  Any assignment by a Lender shall: (i) require the consent
of Agent (which consent shall not be unreasonably withheld or delayed with
respect to a Qualified Assignee) and the execution of an assignment agreement
(an “Assignment Agreement”) substantially in the form attached hereto as Exhibit
D and otherwise in form and substance reasonably satisfactory to, and
acknowledged by, Agent; (ii) be conditioned on such assignee Lender representing
to the assigning Lender and Agent that it is purchasing the applicable Revolving
Loan to be assigned to it for its own account, for investment purposes and not
with a view to the distribution thereof; (iii) after giving effect to any such
partial assignment, the assignee Lender shall have a Pro Rata Share in an amount
at least equal to One Million Dollars ($1,000,000) and the assigning Lender
shall have retained a Pro Rata Share of the Maximum Loan Amount in an amount at
least equal to One Million Dollars ($1,000,000); (iv) with respect to any
assignment of its Pro Rata Share in the Maximum Loan Amount or the Revolving
Loan, be for a ratable portion of the assigning Lender’s interest in the Maximum
Loan Amount and the Revolving Loan; (v) include a payment to Agent of an
assignment fee of $3,500 by either assignee Lender or assignor Lender; and (vii)
unless such an assignment is to an Affiliate of such Lender, Lender shall give
notice to the other Lenders of any intent to assign.  Such Lenders
shall be permitted to purchase such assignment on terms agreed to by assignor
Lender and assignee Lender.  If more than one Lender wishes to
purchase the Revolving Loan or a Pro Rata Share in the Maximum Loan Amount from
the assigning Lender, such assignments to Lenders will be allocated on a
pro-rata basis.  In the case of an assignment by a Lender under this
Section 11.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as all other Lenders
hereunder.  The assigning Lender shall be relieved of its obligations
hereunder with respect to its Pro Rata Share or assigned portion thereof from
and after the date of such assignment.  Borrower hereby acknowledges
and agrees that any assignment shall give rise to a direct obligation of
Borrower to the assignee and that the assignee shall be considered to be a
“Lender”.  In all instances, each Lender’s liability to make the
Revolving Loan hereunder shall be several and not joint and shall be limited to
such Lender’s Pro Rata Share of the Maximum Loan Amount.  In the event
Agent or any Lender assigns or otherwise transfers all or any part of the
Obligations, Agent or any such Lender shall so notify Borrower and Borrower
shall, upon the request of Agent or such Lender, execute new Notes in exchange
for the Notes, if any, being assigned.  Notwithstanding the foregoing
provisions of this Section 11.1(a), any Lender may at any time pledge the
Obligations held by it and such Lender’s rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank, and any Lender that is an
investment fund may assign the Obligations held by it and such Lender’s rights
under this Agreement and the other Loan Documents to another investment fund
managed by the same investment advisor; provided, that no
such pledge to a Federal Reserve Bank shall release such Lender from such
Lender’s obligations hereunder or under any other Loan Document.  The
Agent shall maintain at its address referred to in Section 12.14 a copy of each
Assignment Agreement delivered to and accepted by it and a register of the
recordation of the names and addresses of the Lenders and the Pro Rata Share of
each Lender in the Maximum Loan Amount, and principal amounts thereunder owing
to, each Lender from time to time (the “Register”).  The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and the Lenders shall treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement.  The Register shall be available for inspection by Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.


    
      
         


      

      
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(b)           Any
participation by a Lender of all or any part of its Pro Rata Share in the
Maximum Loan Amount shall be made with the understanding that all amounts
payable by Borrower hereunder shall be determined as if that Lender had not sold
such participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Borrower acknowledges and agrees that a
participation shall give rise to a direct obligation of Borrower to the
participant and the participant shall be considered to be a
“Lender”.  Except as set forth in the preceding sentence Borrower
shall have no obligation or duty to any participant.  Neither Agent
nor any Lender (other than the Lender selling a participation) shall have any
duty to any participant and may continue to deal solely with the Lender selling
a participation as if no such sale had occurred.

     

     
(c)           Except as
expressly provided in this Section 11.1, no Lender shall, as between Borrower
and that Lender, or Agent and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Revolving Loan, the Notes
or other Obligations owed to such Lender.


    
      
         


      

      
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(d)           Borrower
shall assist any Lender permitted to sell assignments or participations under
this Section 11.1 as reasonably required to enable the assigning or selling
Lender to effect any such assignment or participation, including the execution
and delivery of any and all agreements, notes and other documents and
instruments as shall be requested and, if requested by Agent, the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants at the cost of the applicable
Lender.  Borrower shall certify the correctness, completeness and
accuracy of all descriptions of Borrower and its affairs contained in any
selling materials provided by them and all other information provided by them
and included in such materials.

     

     
(e)           Any Lender
may furnish any information concerning Borrower in the possession of such Lender
from time to time to assignees and participants (including prospective assignees
and participants); provided that such
Lender shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.

     

    11.2             Appointment of
Agent.  IDB is hereby appointed to act on behalf of all Lenders
as Agent under this Agreement and the other Loan Documents.  The
provisions of this Section 11.2 are solely for the benefit of Agent and the
Lenders and neither Borrower nor any other Person shall have any rights as a
third party beneficiary of any of the provisions hereof.  In
performing its functions and duties under this Agreement and the other Loan
Documents, Agent shall act solely as an agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower or any other Person.  Agent shall
have no duties or responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents.  The duties of Agent shall be
mechanical and administrative in nature and Agent shall not have, or be deemed
to have, by reason of this Agreement, any other Loan Document or otherwise a
fiduciary relationship in respect of any Lender.  Except as expressly
set forth in this Agreement and the other Loan Documents, Agent shall not have
any duty to disclose, and shall not be liable for failure to disclose, any
information relating to Borrower or any of its Subsidiaries or any Account
Debtor that is communicated to or obtained by IDB or any of its Affiliates in
any capacity.  Neither Agent nor any of its Affiliates nor any of
their respective officers, directors, employees, agents or representatives shall
be liable to any Lender for any action taken or omitted to be taken by it
hereunder or under any other Loan Document, or in connection herewith or
therewith, except for damages caused by its or their own gross negligence or
willful misconduct.

     

    If Agent
shall request instructions from Required Lenders or all affected Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Required Lenders or all affected Lenders, as the case may be,
and Agent shall not incur liability to any Person by reason of so
refraining.  Agent shall be fully justified in failing or refusing to
take any action hereunder or under any other Loan Document (a) if such action
would, in the opinion of Agent, be contrary to law or the terms of this
Agreement or any other Loan Document, (b) if such action would, in the opinion
of Agent, expose Agent to environmental liabilities or (c) if Agent shall not
first be indemnified to its satisfaction against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action.  Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of Required Lenders or all affected Lenders, as
applicable.


    
      
         


      

      
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    11.3               Agent’s Reliance,
Etc.  Neither Agent nor any of its Affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for damages caused by its or
their own gross negligence or willful misconduct.  Without limiting
the generality of the foregoing, Agent:  (a)  may treat the
payee of any Note as the holder thereof until Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form reasonably
satisfactory to Agent; (b) may consult with legal counsel, independent certified
public accountants, chartered accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (d) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of Borrower or to inspect the Collateral (including the
books and records) of Borrower; (e) shall not be responsible to any Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or the other Loan Documents or any other instrument
or document furnished pursuant hereto or thereto; and (f) shall incur no
liability under or in respect of this Agreement or the other Loan Documents by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.

     

    11.4               IDB and
Affiliates.  With respect to its Pro Rata Share of the Maximum
Loan Amount hereunder, IDB shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise the
same as though it were not Agent; and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated, include IDB in its individual
capacity.  IDB and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, Borrower, any of its Affiliates
and any Person who may do business with or own securities of Borrower or any
such Affiliate, all as if IDB were not Agent and without any duty to account
therefor to Lenders.  IDB and its Affiliates may accept fees and other
consideration from Borrower for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.  Each
Lender acknowledges the potential conflict of interest between IDB as a Lender
holding disproportionate interests in the Revolving Loan and IDB as
Agent.  None of the Lenders identified on the facing page or signature
pages of this Agreement as a “syndication agent” or “documentation agent”, if
any, shall have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Lenders as such. Without
limiting the foregoing, none of the Lenders so identified as a “syndication
agent” or “documentation agent”, if any, shall have or be deemed to have any
fiduciary relationship with any Lender.  Each Lender acknowledges that
it has not relied, and will not rely, on any of the Lenders so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.

     

    11.5               Lender Credit
Decision.  Each Lender acknowledges that it has, independently
and without reliance upon Agent or any other Lender and based on the financial
statements referred to in Section 5.6(a) and such other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of Borrower and its own decision to enter into this
Agreement.  Each Lender also acknowledges that it will, independently
and without reliance upon Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this
Agreement.  Each Lender acknowledges the potential conflict of
interest of each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.


    
      
         


      

      
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    11.6               Indemnification.  Lenders
agree to indemnify Agent (to the extent not reimbursed by Borrower and without
limiting the obligations of Borrower hereunder), ratably according to their
respective Pro Rata Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any action taken or omitted to
be taken by Agent in connection therewith; provided, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent’s gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable counsel
fees) incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by
Borrower.

     

    11.7               Successor
Agent.  Agent may resign at any time by giving not less than 30
days’ prior written notice thereof to Lenders and Borrower.  Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Agent.  If no successor Agent shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the resigning Agent’s giving notice of resignation, then the resigning
Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a
Lender, if a Lender is willing to accept such appointment, or otherwise shall be
a commercial bank, commercial finance company or financial institution or a
subsidiary of a commercial bank, commercial finance company or financial
institution if such commercial bank, commercial finance company or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000.  If no successor Agent has been appointed pursuant to
the foregoing, within 30 days after the date such notice of resignation was
given by the resigning Agent, such resignation shall become effective and the
Required Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Required Lenders appoint a successor Agent as
provided above.  Any successor Agent appointed by Required Lenders
hereunder shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such
approval shall not be required if a Default or an Event of Default has occurred
and is continuing.  Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent.  Upon the earlier of the acceptance of any appointment as Agent
hereunder by a successor Agent or the effective date of the resigning Agent’s
resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents, except that any
indemnity rights or other rights in favor of such resigning Agent shall
continue.  After any resigning Agent’s resignation hereunder, the
provisions of this Section 11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was acting as Agent under this Agreement
and the other Loan Documents.


    
      
         


      

      
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    11.8               Confidentiality.  Agent
and each Lender agree to use reasonable efforts to maintain as confidential all
confidential information provided to them by Borrower for a period of 1 year
following receipt thereof, except that Agent and any Lender may disclose such
information on a confidential “need to know” basis (a) to Persons employed or
engaged by Agent or such Lender (including, without limitation, field examiners,
appraisals and consultants),  (b) to any assignee or participant or
potential assignee or participant that has agreed to comply with the covenant
contained in this Section 11.8, (c) as
required or requested by any Governmental Authority or reasonably believed by
Agent or such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process, (d) as, on the advice of Agent’s or such
Lender’s counsel, is required by law, (e) in connection with the exercise of any
right or remedy under the Loan Documents, (f) in connection with any action,
claim, lawsuit, demand, investigation or proceeding before any Governmental
Authority or before any arbitrator or panel of arbitrators, (g) that ceases to
be confidential through no fault of Agent or any Lender, or (h) to Persons that
are approved in writing by Borrower.

     

    11.9               Setoff and Sharing of
Payments.  In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default and subject to
Section 11.10(f), each Lender is hereby authorized at any time or from time to
time, without notice to Borrower or to any other Person, any such notice being
hereby expressly waived, to offset and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrower
(regardless of whether such balances are then due to Borrower) and any other
properties or assets at any time held or owing by that Lender or that holder to
or for the credit or for the account of Borrower against and on account of any
of the Obligations that are not paid when due.  Subject to the
application of any amounts received as a result of this Section 11.9, any Lender
exercising a right of setoff or otherwise receiving any payment on account of
the Obligations in excess of its Pro Rata Share thereof shall purchase for cash
(and the other Lenders or holders shall sell) such participations in each such
other Lender’s or holder’s Pro Rata Share of the Obligations as would be
necessary to cause such Lender to share the amount so offset or otherwise
received with each other Lender or holder in accordance with their respective
Pro Rata Shares.  Borrower agrees, to the fullest extent permitted by
law, that (a) any Lender may exercise its right to offset with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amounts so offset to other Lenders and holders and (b)
any Lender so purchasing a participation in the Revolving Loan made or other
Obligations held by other Lenders or holders may exercise all rights of offset,
bankers’ lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of the Revolving Loan
and the other Obligations in the amount of such
participation.  Notwithstanding the foregoing, if all or any portion
of the offset amount or payment otherwise received is thereafter recovered from
the Lender that has exercised the right of offset, the purchase of
participations by that Lender shall be rescinded and the purchase price restored
together with interest at such rate, if any, as such Lender is required to pay
to Borrower or such other Person, without setoff, counterclaim or deduction of
any kind.


    
      
         


      

      
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    11.10   Advances; Payments;
Non-Funding Lenders; Information; Actions in Concert.

     

    (a)           Advances;
Payments.

     

    (i)           Agent
shall notify Lenders, promptly after receipt of a Notice of Borrowing and in any
event prior to 1:00 p.m. (New York time) on the date such notice is received, by
telecopy, telephone or other similar form of transmission.  Each
Lender shall make the amount of such Lender’s Pro Rata Share of such Advance
available to Agent in same day funds by wire transfer to Agent’s account as set
forth in Schedule 11.10(a) not later than 2:00 p.m. (New York time) on the
requested funding date.  After receipt of such wire transfers (or, in
the Agent’s sole discretion, before receipt of such wire transfers), subject to
the terms hereof, Agent shall make the requested Advance to the
Borrower.  All payments by each Lender shall be made without setoff,
counterclaim or deduction of any kind.  In the event Agent makes any
Advance available to Borrower after 2:00 p.m. (New York time) on the requested
funding date, on behalf of any Lender who is unable to make the amount of such
Lender’s Pro Rata Share of such Advance available to Agent in a timely manner in
accordance with this Agreement, then the Lender or Lenders on whose behalf Agent
makes such Advance shall repay the amount of such Advance to Agent (prior to any
other repayment or reimbursement obligations arising under this Agreement) in
full no later than the next Business Day on the terms set forth in this
Agreement, regardless of the occurrence of any subsequent Default or Event of
Default, and in such event Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable
Lender.

     

    (ii)           On
the 2nd Business Day of each calendar week or more frequently at Agent’s
election (each, a “Settlement Date”), Agent shall advise each Lender by
telephone, or telecopy of the amount of such Lender’s Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan.  Provided that each Lender has funded all
payments or Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Settlement Date, Agent shall pay to each Lender such
Lender’s Pro Rata Share of principal, interest and Fees paid by Borrower since
the previous Settlement Date for the benefit of such Lender on the Revolving
Loan held by it (promptly upon receipt by Agent of Borrower’s
payments).  To the extent that any Lender (a “Non-Funding Lender”) has
failed to fund all such payments and Advances or failed to fund the purchase of
all such participations, Agent shall be entitled to set off the funding
shortfall against that Non-Funding Lender’s Pro Rata Share of all payments
received from Borrower.  Such payments shall be made by wire transfer
to such Lender’s account (as specified by such Lender in Schedule 11.9(a) or the
applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on the
next Business Day following each Settlement Date.

     

    (b)           Availability of Lender’s Pro
Rata Share.  Agent may assume that each Lender will make its
Pro Rata Share of each Advance available to Agent on each funding
date.  If such Pro Rata Share is not, in fact, paid to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without setoff, counterclaim or deduction of any kind.  If
any Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent’s
demand, Agent shall promptly notify Borrower and Borrower shall immediately
repay such amount to Agent.  Nothing in this Section 11.10(b) or
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its agreement to make Advances hereunder or to
prejudice any rights that Borrower may have against any Lender as a result of
any default by such Lender hereunder.  To the extent that Agent
advances funds to Borrower on behalf of any Lender and is not reimbursed
therefor on the same Business Day as such Advance is made, Agent shall be
entitled to retain for its account all interest accrued on such Advance until
reimbursed by the applicable Lender.


    
      
         


      

      
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    (c)           Return of
Payments.

     

     (i)           If
Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent from
Borrower and such related payment is not received by Agent, then Agent will be
entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind.

     

     (ii)           If
Agent determines at any time that any amount received by Agent under this
Agreement must be returned to Borrower or paid to any other Person pursuant to
any insolvency law or otherwise, then, notwithstanding any other term or
condition of this Agreement or any other Loan Document, Agent will not be
required to distribute any portion thereof to any Lender.  In
addition, each Lender will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender, together with interest at such rate,
if any, as Agent is required to pay to Borrower or such other Person, without
setoff, counterclaim or deduction of any kind.

     

    (d)           Non-Funding
Lenders.  The failure of any Non-Funding Lender to make any
Advance or any payment required by it hereunder on the date specified therefor
shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its
obligations to make such Advance or purchase such participation on such date,
but neither any Other Lender nor Agent shall be responsible for the failure of
any Non-Funding Lender to make an Advance, purchase a participation or make any
other payment required hereunder.  Notwithstanding anything set forth
herein to the contrary, a Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Loan Document or constitute a
“Lender” or a “Lender” (or be included in the calculation of “Required Lenders”
hereunder) for any voting or consent rights under or with respect to any Loan
Document.  At Borrower’s request, Agent or a Person reasonably
acceptable to Agent shall have the right with Agent’s consent and in Agent’s
sole discretion (but shall have no obligation) to purchase from any Non-Funding
Lender, and each Non-Funding Lender agrees that it shall, at Agent’s request,
sell and assign to Agent or such Person, the Pro Rata Share of the Maximum Loan
Amount of that Non-Funding Lender for an amount equal to the principal balance
of the Revolving Loan held by such Non-Funding Lender and all accrued interest
and fees with respect thereto through the date of sale, such purchase and sale
to be consummated pursuant to an executed Assignment Agreement.

     

    (e)           Dissemination of
Information.  Agent shall provide Lenders with any notice of
Default or Event of Default received by Agent from, or delivered by Agent to,
Borrower, with notice of any Event of Default of which Agent has actually become
aware and with notice of any action taken by Agent following any Event of
Default.


    
      
         


      

      
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    (f)           Actions in
Concert.  Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Required Lenders (except as
otherwise provided below), it being the intent of Lenders that any such action
to protect or enforce rights under this Agreement and the Notes shall be taken
in concert and at the direction or with the consent of Agent or Required
Lenders, as applicable, in accordance with the terms hereof; provided, however,
that each Lender may, upon 15 Business Days’ prior written demand on Agent and
Agent’s failure or refusal to commence to take commercially reasonable
enforcement actions within such 15-day period, commence an action against
Borrower and obtain a judgment against any such Person, but in no event shall
any Lender take any action to execute on such judgment or to enforce such
judgment in any manner, whether against Borrower or any Collateral, without the
prior written consent of Agent.

     

    SECTION
12

    MISCELLANEOUS
PROVISIONS

     

    12.1      Obligations and Liabilities
of Lenders.  Neither Agent nor any Lender shall be deemed to
have assumed any liability or responsibility to Borrower or any Person for the
correctness, validity or genuineness of any instruments or documents that may be
released or endorsed to Borrower by Agent or any Lender (which shall
automatically be deemed to be without recourse to Agent or any Lender in any
event), or for the existence, character, quantity, quality, condition, value or
delivery of any goods purporting to be represented by any such documents; and
neither Agent nor Lender, by accepting such security interest in the Collateral,
or by releasing any Collateral to Borrower, shall be deemed to have assumed any
obligation or liability to any supplier or account debtor or to any other
Person, and Borrower agrees to indemnify and defend Agent and the Lenders and
hold them harmless in respect to any claim or proceeding arising out of any
matter referred to in this Section 12.1.

     

    12.2      Waiver of
Notices.  Notice of default and presentment, demand, protest
and notice of dishonor as to any provision of the Loan Documents or any other
agreement or instrument, notice of acceptance of this Agreement, notice of loans
made, credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of any description is hereby
waived by Borrower, except as may be otherwise specifically provided in this
Agreement.  With respect to both the Obligations and the Collateral,
Borrower assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of or failure to
perfect any security interest in any Collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as Agent and/or the
Lenders may deem advisable.  Neither Agent nor any Lender shall have
any duty as to the collection or protection of the Collateral or any income
thereon, nor as to the preservation of rights against prior parties, nor as to
the preservation of any rights pertaining thereto beyond the safe custody
thereof as set forth specifically in this Agreement.  Borrower further
waives any and all other suretyship defenses.


    
      
         


      

      
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    12.3           Increased Costs and Reduced
Return.

     

    (a)               If
any Lender shall have determined in its sole judgment that the adoption,
implementation of, or any change in, any law, rule, treaty or regulation, or any
policy, guideline or directive of, or any change in the interpretation or
administration thereof by, any court, central bank or other administrative
authority or Governmental Authority, or compliance by such Lender with any
directive of or guideline from any central bank or other administrative
authority or Governmental Authority or the introduction of or change in any
accounting principles applicable to Lender (in each case, whether or not having
the force of law), shall (i) change the basis of taxation of payments to such
Lender of any amounts payable hereunder (except for taxes on the overall net
income of such Lender), (ii) impose, modify or deem applicable any reserve,
special deposit or similar requirement against any of the Obligations of
Borrower to such Lender or against assets of or held by, or deposits with or for
the account of, or credit extended by, such Lender, or (iii) impose on such
Lender any other condition regarding this Agreement or any of the Obligations of
Borrower to such Lender, and the result of any event referred to in clauses (i),
(ii) or (iii) above shall be to increase the cost to such Lender of making any
Revolving Loan or maintaining its agreement to make any Revolving Loan or to
reduce any amount received or receivable by such Lender hereunder, then, upon
demand by Agent, Borrower shall pay to such Lender, in immediately available
funds, such additional amounts as will compensate such Lender for such increased
costs or reductions in amount, together with interest on such additional
amounts.

     

    (b)               If
any Lender shall have determined in its sole judgment exercised reasonably that
any Capital Guideline or adoption or implementation of, or any change in, any
Capital Guideline by the Governmental Authority charged with the interpretation
or administration thereof, or compliance by such Lender with any Capital
Guideline or with any request or directive of any such Governmental Authority
with respect to any Capital Guideline, of the implementation of, or any change
in, any applicable accounting principles (in each case, whether or not having
the force of law), either (i) affects or would affect the amount of capital
required or expected to be maintained by such Lender, and such Lender determines
that the amount of such capital is increased as a direct or indirect consequence
of any Revolving Loan made or maintained, or any commitment or agreement to make
Advances, or such Lender’s other obligations hereunder, or (ii) has or would
have the effect of reducing the rate of return on such Lender’s capital to a
level below that which such Lender could have achieved but for such
circumstances as a consequence of any Revolving Loan made or maintained or the
commitment or agreement to make Advances, or such Lender’s other obligations
hereunder (in each case, without limitation, taking into consideration such
Lender’s policy with respect to capital adequacy), then, upon demand by Agent,
Borrower shall pay to such Lender from time to time such additional amounts as
will compensate such Lender for such cost of maintaining such increased capital
or such reduction in the rate of return on such Lender’s capital.

     

    (c)               All
amounts payable under this Section 12.3 shall bear interest from the date of
demand by Agent until payment in full to the applicable Lender at the Default
Rate.  A certificate of any Lender claiming compensation under this
Section 12.3 shall be submitted by such Lender to Borrower, setting forth the
amount due and such Lender’s reasons for invoking the provisions of this Section
12.3, and shall be final and conclusive (absent manifest
error).


    
      
         


      

      
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    12.4                 Taxes.  All
payments made by Borrower under or in respect to this Agreement, the other Loan
Documents shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority
in connection with the transactions contemplated by the Loan Documents,
excluding, in the case of the Lenders, net income taxes and franchise taxes
imposed on the Lenders, as a result of a present or former connection between
the jurisdiction of the government or taxing authority imposing such tax and
Lenders or any political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings for the purposes of this Section 12.4 being hereinafter called
“Taxes”).  If any Taxes are required to be withheld from any amounts
payable to Lenders hereunder or under or in respect of the Advances, the amounts
so payable to Lenders shall be increased to the extent necessary to yield to
Lenders (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, the other
Loan Documents.  Whenever any Taxes are payable by Borrower, as
promptly as possible thereafter Borrower shall send to Agent and the Lenders a
certified copy of an original official receipt received by Borrower showing
payment thereof.  If Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to Agent and the Lenders the
required receipts or other required documentary evidence, Borrower shall
indemnify Lenders for any incremental taxes, interest or penalties that may
become payable by Lenders as a result of any such failure.  The
agreements in this Section 12.4 shall survive the termination of this Agreement
and full payment and satisfaction of all Obligations of Borrower to Agent and
the Lenders.

     

    12.5           Reserved.

     

    12.6           Patriot Act
Notice.  Agent hereby notifies the Borrower that pursuant to
the requirements of the Patriot Act, Agent and the Lenders may be required to
obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow Agent and the Lenders to identify the Borrower in accordance
with the Patriot Act.  Agent and each Lender shall be required (at its
sole cost and expense) to conduct its own due diligence with respect to
Borrower’s compliance with the Patriot Act and Borrower agrees to cooperate with
Agent and each Lender with respect thereto, provided no cost is incurred by
Borrower.

     

    12.7           Reference to
Parties.  “Agent”, “Lender” and “Borrower” as used in this
Agreement shall include the successors, representatives, and assigns of those
parties, and shall bind all persons who become bound pursuant to this Agreement,
provided, however, that Borrower shall not assign or delegate any of its rights,
remedies, warranties, representations or covenants arising under this Agreement
without the prior written consent of Agent and the Lenders, and any purported
assignment or delegation without such consent shall be void.  It is
expressly understood and agreed, however, that Lenders shall have the right to
sell, transfer or otherwise assign this Agreement or enter into a participation
agreement relating to this Agreement with any other lender.


    
      
         


      

      
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    12.8        Governing Law; Consent to
Jurisdiction.

     

    (a)           This
Agreement is to be executed and delivered within the State of New York is to be
principally performed within the State of New York and Borrower, Agent and the
Lenders elect that the laws of the State of New York shall govern the
construction of this Agreement and the rights, remedies, warranties,
representations, covenants, and provisions hereof without giving effect to the
conflict of laws rules of the State of New York, except to the extent the
Uniform Commercial Code from time to time provides for the application of the
law of the state of Borrower’s formation.

     

    (b)           Any
legal action or proceeding with respect to this Agreement or any other Loan
Document, may be brought in the courts of the State of New York or of the United
States District Court for the Southern District of New York and, by execution
and delivery of this Agreement, Borrower hereby irrevocably accepts for itself
in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts.  Borrower further irrevocably consents to the
service of process out of any of the aforementioned courts and in any action or
proceeding by the mailing of copies thereof by registered or certified mail,
return receipt requested, postage prepaid, to Borrower at its address for
notices contained in Section 12.14, such service to become effective thirty (30)
days after such mailing.  Borrower hereby irrevocably appoints the
Secretary of the State of New York as its agent for service of process in
respect of any action or proceeding.  Nothing contained herein shall
affect the right of Agent and the Lenders to service of process in any other
manner permitted by law or to commence any legal proceedings or otherwise
proceed against Borrower in any jurisdiction.

     

    (c)           Borrower
hereby waives any rights it may have to transfer or change the venue of any
litigation brought against it by Agent and the Lenders which is in any way
related to this Agreement or any other Loan Document.

     

    (d)           The
provisions of this Section 12.8 shall survive the repayment of the Obligations
of Borrower to Lender and the termination of this Agreement.

     

    12.9     Severability.  If
any of the provisions of this Agreement shall contravene or be held invalid
under the laws of any jurisdiction, this Agreement shall be construed as if not
containing such provisions and the rights, remedies, warranties,
representations, covenants, and provisions hereof shall be construed and
enforced accordingly in such jurisdiction and shall not in any manner affect
such provision in any other jurisdiction, or any other provisions of this
Agreement in any jurisdiction.

     

    12.10   Rights and Remedies,
Etc.  The Events of Default, rights, remedies, warranties,
representations, covenants, and provisions set forth in this Agreement, or as
may be provided by applicable law, shall be cumulative and not alternative or
exclusive, and Agent’s and the Lenders’ Rights and Remedies may be exercised by
Lender at such time or times, in such order of preference, as Agent and the
Lenders in their sole discretion may determine.

     

    12.11   No Party Deemed
Drafter.  Borrower, Agent and the Lenders agree that (a) no
party hereto shall be deemed to be the drafter of this Agreement, and (b) if
this Agreement is ever construed by a court of law, such court shall not
construe this Agreement or any provision of this Agreement against any party
hereto as the drafter of this Agreement.


    
      
         


      

      
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    12.12   Entire Agreement, No Waiver,
Etc.  This Agreement embodies the entire agreement and
understanding between Borrower, Agent and the Lenders and supersedes all prior
agreements and understandings relating to the subject matter
hereof.  All warranties, representations and covenants imposed or made
herein shall survive the execution and delivery of this Agreement.  No
delay or omission of Agent or the Lenders in exercising or enforcing any of
their Rights and Remedies hereunder shall constitute a waiver thereof; and no
waiver by Agent or the Lenders of any Default or Event of Default should operate
as a waiver of any other Default or Event of Default.  No term or
provision hereof shall be waived, altered or modified except in writing and such
writing is signed by both parties.  Except as provided in the
preceding sentence, no other agreement or transaction, of whatsoever nature,
entered into between Agent, Lenders and Borrower at any time (whether before,
during or after the effective date or terms of this Agreement), shall be
construed in any particular as a waiver, modification or limitation of any of
the Agent’s and Lenders’ Rights and Remedies under this Agreement nor shall
anything in this Agreement be construed as a waiver, modification or limitation
of any of such Rights and Remedies, not only under the provisions of this
Agreement, but also of any such other agreement or
transaction.  Borrower waives and will not assert against any assignee
of any Lender any claim defenses or set-offs which Borrower could assert against
such Lender (which claims, defenses or set-offs are not waived) except defenses
which cannot be waived.

     

    12.13   Reference to
Days.  Any and all references to “days” in this Agreement shall
mean calendar days except as otherwise specifically provided in this Agreement
or by law.

     

    12.14   Notices.

     

    (a)           All
notices, requests, and other communications pursuant to this Agreement, shall be
in writing and, except as otherwise provided in this Section 12.14, delivered by
hand, certified mail return receipt requested, overnight delivery service or
telecopier (at the telecopier number set forth on Schedule 12.14), addressed to
Agent, Lenders or to Borrower (as the case may be) at the address set forth on
Schedule 12.14, or at such other address as either may give notice to the other
as herein provided.

     

    (b)           All
notices or requests by Borrower for Advances under the Revolving Loan may be
made by telephonic instructions to Agent at the telephone number set forth on
Schedule 12.14, but shall nevertheless be made in writing, delivered and
addressed to Agent as set forth above, or at such other address or telephone or
telecopier number as Agent may give notice to Borrower as herein
provided.

     

    (c)           Any
notice, request or communication hereunder addressed as aforesaid shall be
deemed to have been given (i) in the case of delivery by mail, three (3) days
after its deposit in the mails, postage prepaid, or (ii) in the case of delivery
by overnight delivery service, one (1) day after its deposit with a reputable
overnight delivery service, postage prepaid or (iii) in the case of delivery by
hand, when delivered or (iv) in the case of delivery by telecopier, when
transmitted and receipt confirmed by the sender obtaining a printed confirmation
that the entire document has been properly transmitted to recipient; provided,
however, that notice of a change of address, telephone number or telecopier
number shall be deemed to have been given only when actually received by the
party to which it is addressed.


    
      
         


      

      
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    (d)           Notices
and other communications to Agent and the Lenders hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet
websites) pursuant to procedures approved by Agent.  Unless Agent
otherwise requires, (i) notices and other communications sent to an e-mail
address shall be deemed received upon the sender’s receipt of an acknowledgement
from the intended recipient (such as by the “return receipt requested” function,
as available, return e-mail or other written acknowledgement), provided, that,
if such notice or other communication is not given during the normal business
hours of the recipient, such notice shall be deemed to have been sent at the
opening of business on the next Business Day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communications is available and identifying the website address
therefor.

     

    12.15   Ambiguity Between
Agreements.  In the event of ambiguity or inconsistency between
this Agreement and any other Loan Document, then the terms of this Agreement
will govern.

     

    12.16   Attorneys’ Fees and
Expenses.  If Agent or any Lender retains the services of
counsel by reason of a claim of a Default or an Event of Default hereunder or
under any of the other Loan Documents, or on account of any matter involving
this Agreement, or for examination of matters subject to Agent’s and/or any
Lender’s approval under the Loan Documents, all costs of suit and all reasonable
attorneys’ fees and such other reasonable expenses so incurred by Agent and the
Lenders (expressly including all post-judgment collection expenses and costs)
shall forthwith, on demand, become due and payable and shall be evidenced
hereby.

     

    12.17   Press Releases and Related
Matters.  Borrower agrees that neither it nor its Affiliates
will in the future issue any press releases or other public disclosure using the
name of Agent, any Lender or any of the Affiliates of Agent or any Lender or
referring to this Agreement or the other Loan Documents without at least two (2)
Business Days' prior written notice to Agent and such Lender and without the
prior written consent of Agent and such Lender unless (and only to the extent
that) Borrower is required to do so under law and then, in any event, Borrower
will consult with Agent and such Lender before issuing such press release or
other public disclosure.  Borrower consents to the publication by
Agent and such Lender of advertising material relating to the financing
transactions contemplated by this Agreement using Borrower's name, product
photographs, logo or trademark.   Agent and each Lender reserves
the right to provide to industry trade organizations generic information
necessary and customary for inclusion in league table measurements.

     

    12.18   Counterparts.  This
Agreement may be executed in any number of counterparts, each of which, when
taken together, shall be deemed to be one and the same
instrument.  Delivery of an executed counterpart of a signature page
of this document by facsimile shall be effective as delivery of a manually
executed counterpart of this document.

     

    12.19   Headings.  Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.


    
      
         


      

      
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    12.20   WAIVER OF JURY
TRIAL.

     

    (a)           AGENT,
LENDERS AND BORROWER HEREBY ACKNOWLEDGE THAT DISPUTES ARISING UNDER THIS
AGREEMENT OR OTHERWISE RELATING TO THE OBLIGATIONS OF BORROWER TO AGENT AND
LENDERS ARE LIKELY TO BE COMPLEX AND THEY DESIRE TO STREAMLINE AND MINIMIZE THE
COST OF RESOLVING SUCH DISPUTES.  THEREFORE, AGENT, LENDERS AND
BORROWER IRREVOCABLY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
COUNTERCLAIM, DISPUTE OR PROCEEDING BASED UPON, OR RELATED TO THE SUBJECT MATTER
OF THIS AGREEMENT OR OTHERWISE RELATING TO THE OBLIGATIONS OF BORROWER TO
LENDER.  WITHOUT LIMITING THE FOREGOING, THIS WAIVER AND COVENANT
APPLIES:

     

     
(i)           TO ALL
CLAIMS AGAINST ALL PARTIES TO SUCH DISPUTES, ACTIONS AND PROCEEDINGS INCLUDING
THOSE INVOLVING AGENT, LENDERS, BORROWER OR ANY OF THEIR RESPECTIVE PARENTS,
SUBSIDIARIES, AFFILIATES OR RELATED ENTITIES, OR ANY OFFICER, DIRECTOR,
SHAREHOLDER, MEMBER, ATTORNEY OR PARTNER OF ANY OF THEM;

     

     
(ii)           IRRESPECTIVE
OF WHETHER SUCH DISPUTE, ACTION OR PROCEEDING ARISES UNDER THIS AGREEMENT OR ANY
OTHER AGREEMENT, NOTE, PAPER, INSTRUMENT OR DOCUMENT HERETOFORE OR HEREAFTER
EXECUTED RELATING TO ANY OF THE OBLIGATIONS OF BORROWER TO AGENT AND THE
LENDERS;

     

     
(iii)           IRRESPECTIVE
OF WHETHER SUCH DISPUTE, ACTION OR PROCEEDING ARISES IN CONNECTION WITH OR IS
BASED UPON INTENTIONAL OR UNINTENTIONAL CONDUCT, FRAUD, IMPROPER ACTION OR
FAILURE TO ACT, OR ANY OTHER CIRCUMSTANCES.

     

    (b)           THIS
WAIVER IS KNOWINGLY, AND VOLUNTARILY MADE BY BORROWER, AGENT AND LENDERS, AND
BORROWER, AGENT AND LENDERS ACKNOWLEDGE THAT NEITHER OF THEM, NOR ANY PERSON
ACTING ON BEHALF OF EITHER OF THEM, HAS MADE ANY REPRESENTATIONS TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS
EFFECT.  BORROWER, AGENT AND LENDERS FURTHER ACKNOWLEDGE THAT THEY
HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN
CONNECTION WITH THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER
BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL.  BORROWER, AGENT AND LENDERS FURTHER ACKNOWLEDGE THAT THEY
HAVE READ, AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF, THIS
WAIVER.


    
      
         


      

      
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    (c)           BORROWER,
AGENT AND LENDERS ACKNOWLEDGE THAT THEY HAVE BEEN INFORMED BY EACH OTHER THAT
THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH EACH HAS RELIED IN
ENTERING INTO THIS AGREEMENT, AND THAT THIS WAIVER PARAGRAPH SHALL BE DEEMED
ENFORCEABLE INDEPENDENTLY OF ALL OTHER PROVISIONS OF THIS
AGREEMENT.  EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OF THIS
SECTION AS WRITTEN EVIDENCE OF THE CONSENT BY EITHER OF THEM TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.  THE PROVISIONS OF THIS SUBSECTION SHALL
SURVIVE THE REPAYMENT OF THE OBLIGATIONS OF BORROWER TO AGENT AND THE LENDERS
AND THE TERMINATION OF THIS AGREEMENT.

     

    [SIGNATURES
ON NEXT PAGE]


    
      
         


      

      
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                          COUNSEL
      RB CAPITAL LLC

                        
	 
      	 
      	 
      
	 
      	
                          By:

                        	 
      
	 
      	
                          Print Name:

                        	 
      	 
      
	 
      	
                          Print Title:

                        	 
      	 
      


                

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    ISRAEL
      DISCOUNT BANK OF NEW

                                    YORK,
      as Agent and as a Lender

                                  
	 
      	 
      
	
                                    By:

                                  	 
      
	
                                    Print Name:

                                  	 
      	 
      
	
                                    Print Title:

                                  	 
      	 
      
	 
      
	
                                    By:

                                  	 
      
	
                                    Print Name:

                                  	 
      	 
      
	
                                    Print Title:

                                  	 
      	 
      


                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
        56

        
          

        

      

      
         


      

    

     

    Exhibit
List

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        	
                                                                A.

                                                              	
                                                                Borrowing
      Base Certificate

                                                              
	 	 
	
                                                                B.

                                                              	
                                                                Document
      List

                                                              
	 	 
	
                                                                C.

                                                              	
                                                                Form
      of Note

                                                              
	 	 
	
                                                                D.

                                                              	
                                                                Form
      of Assignment Agreement

                                                              
	 	 
	
                                                                E.

                                                              	
                                                                Process
      Agent Appointment Form

                                                              
	 	 
	
                                                                Schedule List

                                                              
	 
	
                                                                1.1.1

                                                              	
                                                                Commitments

                                                              
	 	 
	
                                                                2.1(b)

                                                              	
                                                                Notice
      of Borrowing

                                                              
	 	 
	
                                                                5.1

                                                              	
                                                                Formation,
      Qualification and Good Standing

                                                              
	 	 
	
                                                                5.3

                                                              	
                                                                Franchises,
      Patents, etc.

                                                              
	 	 
	
                                                                5.4(a)

                                                              	
                                                                Subsidiaries,
      Joint Ventures and Borrower Ownership

                                                              
	 	 
	
                                                                5.4(b)
      Property and Assets of Moving Images NY LLC and Greystone Post Production
      Equipment LLC

                                                              
	 
	
                                                                5.5

                                                              	
                                                                Nature
      of Business

                                                              
	 	 
	
                                                                5.7

                                                              	
                                                                Pending
      IRS audits

                                                              
	 	 
	
                                                                5.8

                                                              	
                                                                Litigation
      and Contingent Liabilities

                                                              
	 	 
	
                                                                5.10

                                                              	
                                                                List
      of Insurance Policies

                                                              
	 	 
	
                                                                5.13

                                                              	
                                                                Acquisitions
      of All or Substantially All Assets

                                                              
	 	 
	
                                                                5.14

                                                              	
                                                                Places
      of Business and Inventory Storage Facilities

                                                              
	 	 
	
                                                                5.15

                                                              	
                                                                Employment
      Agreements, Consulting Agreements

                                                              
	 	 
	
                                                                7.1

                                                              	
                                                                Permitted
      Encumbrances

                                                              
	 	 
	
                                                                7.5(a)

                                                              	
                                                                Existing
      Indebtedness

                                                              
	 	 
	
                                                                11.10(a)  Lender’s
      Account

                                                              
	 
	
                                                                12.14

                                                              	
                                                                Notices