Exhibit 10.6

               SECURITIES PURCHASE AGREEMENT (NOTES AND WARRANTS)

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

WHEREAS:

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

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

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

      D.  Contemporaneously  with the Closing (as defined below), the Buyers and
ShellCo will execute and deliver a Registration Rights Agreement,  substantially
in the form  attached  hereto as EXHIBIT C (as amended,  restated,  supplemented
and/or modified from time to time in accordance with the provisions thereof, the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to

<PAGE>

which ShellCo shall agree to provide certain  registration  rights in respect of
the shares of Common Stock into which the Notes are convertible (the "CONVERSION
SHARES") and the Warrant Shares under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.

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

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

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

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


                                       2
<PAGE>

      I.  Contemporaneously with the Closing, the Common PIPE Buyers and ShellCo
will execute and deliver a Registration Rights Agreement (as amended,  restated,
supplemented and/or modified from time to time in accordance with the provisions
thereof,  the "COMMON PIPE REGISTRATION  RIGHTS  AGREEMENT"),  pursuant to which
ShellCo  will agree to  provide  certain  registration  rights in respect of the
Common PIPE Common Shares and Common PIPE Warrant  Shares under the 1933 Act and
the  rules  and  regulations  promulgated   thereunder,   and  applicable  state
securities laws.

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

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

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


                                       3
<PAGE>

      M.  Contemporaneously  with, and as a condition,  to the Closing, and with
certain of the proceeds of the transactions  contemplated hereby,  ShellCo shall
acquire,  directly or indirectly,  all (or  substantially  all) of the equity of
each  of  (i)  FMI  Holdco  I,  LLC,  a  Delaware  limited   liability   company
headquartered  at 800 Federal Blvd.,  Carteret,  New Jersey 07008 and certain of
its parent companies  (collectively,  "FMI"),  (ii) Clare Freight,  Los Angeles,
Inc. a  California  corporation  headquartered  at 17979  Arenth  Ave.,  City of
Industry,  CA  91748,  and  (iii) TUG New  York,  Inc.,  a New York  corporation
headquartered at 13 Hendrickson  Ave.,  Lynbrook,  NY 11563 (together with Clare
Freight,  Los Angeles,  Inc.,  the "TUG  COMPANIES"  and together  with FMI, the
"TARGETS")  and  substantially  all of the assets of the TUG Logistics  group of
companies, including TUG Logistics, Inc., a California corporation headquartered
at 17971 Arenth Ave., City of Industry,  CA 91748, TUG Logistics (Miami), Inc. a
Florida  corporation  headquartered  at 2801 NW 74 Ave.,  Suite 173,  Miami,  FL
33122,  and Glare  Logistics,  Inc., a California  corporation  headquartered at
16905 South Keegan Ave., Carson, Los Angeles, CA 90746  (collectively,  the "TUG
ASSETS",  and the  acquisition of the TUG Assets and the Targets,  collectively,
the "ACQUISITIONS").

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

      1. PURCHASE AND SALE OF NOTES AND WARRANTS.

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

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

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

            (d) FORM OF PAYMENT.  On the Closing Date,  (i) each Buyer shall pay
its  respective  Purchase  Price to ShellCo  and/or to one or more  designees of
ShellCo  for the Notes and  Warrants  to be issued and sold to such Buyer at the
Closing, by wire transfer of immediately


                                       4
<PAGE>

available  funds in  accordance  with the  Company's or  ShellCo's  written wire
instructions,  less any amount  withheld  pursuant to Section 4(f), and (ii) the
Company shall cause ShellCo to deliver to each Buyer the Notes (allocated in the
principal  amounts as such Buyer  shall  request)  representing  such  principal
amount of the Notes  which such Buyer is then  purchasing  hereunder  along with
warrants representing the Warrants (allocated in the amounts as such Buyer shall
request) which such Buyer is purchasing, in each case duly executed on behalf of
ShellCo and registered in the name of such Buyer or, subject to compliance  with
applicable securities laws, its designee.

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

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

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

            (c)  RELIANCE  ON  EXEMPTIONS.   Such  Buyer  understands  that  the
Securities  are being offered and sold to it in reliance on specific  exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying,  and ShellCo will rely,  upon, among other
things,  the truth and  accuracy  of,  and such  Buyer's  compliance  with,  the
representations,  warranties, agreements,  acknowledgments and understandings of
such  Buyer set forth  herein in order to  determine  the  availability  of such
exemptions and the eligibility of such Buyer to acquire the Securities.

            (d)  INFORMATION.  Such Buyer and its  advisors,  if any,  have been
furnished with all materials  relating to the business,  finances and operations
of the Company and the Targets and  materials  relating to the offer and sale of
the  Securities  which have been  requested  by such  Buyer.  Such Buyer and its
advisors,  if any,  have been afforded the  opportunity  to ask questions of the
Company.  Neither  such  inquiries  nor any other due  diligence  investigations
conducted by such Buyer or its advisors,  if any, or its  representatives  shall
modify,   amend  or  affect  such  Buyer's   right  to  rely  on  the  Company's
representations and warranties contained


                                       5
<PAGE>

herein.  Such Buyer understands that its investment in the Securities involves a
high  degree of risk and is able to afford a complete  loss of such  investment.
Such Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed  investment decision in respect of its acquisition
of the Securities.

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

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

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

            [NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
            CERTIFICATE  NOR THE  SECURITIES  INTO WHICH  THESE  SECURITIES  ARE
            [CONVERTIBLE] [EXERCISABLE] HAVE BEEN] THE SECURITIES REPRESENTED BY
            THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER


                                       6
<PAGE>

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

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


                                       7
<PAGE>

such holder provides ShellCo with an opinion of counsel reasonably  satisfactory
to  ShellCo,  in a  generally  acceptable  form,  to the effect  that such sale,
assignment or transfer of the Securities may be made without  registration under
the  applicable  requirements  of the 1933 Act and that such legend is no longer
required,  or (iii) such holder  provides  ShellCo  with  assurances  reasonably
acceptable to ShellCo that the Securities  can be sold,  assigned or transferred
pursuant  to Rule  144 or Rule  144A,  and such  Holder  delivers  the  legended
Securities to ShellCo or ShellCo's transfer agent.

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

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

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

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


                                       8
<PAGE>

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

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


                                       9
<PAGE>

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

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


                                       10
<PAGE>

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

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

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


                                       11
<PAGE>

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

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

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

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


                                       12
<PAGE>

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

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

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


                                       13
<PAGE>

            (k) ABSENCE OF CERTAIN CHANGES.  Since June 30, 2006, there has been
no change or  development  in the business,  properties,  operations,  condition
(financial  or  otherwise)  results of operations or prospects of the Company or
any Subsidiary  that has had or could  reasonably be expected to have a Material
Adverse Effect.  Except as set forth on SCHEDULE 3(K), since June 30, 2006, (and
before  giving effect to the  transactions  contemplated  under the  Transaction
Documents)  none of the  Company  or any  Target  has (i)  declared  or paid any
dividends other than as would have been permitted under the Notes, (ii) sold any
assets,  individually or in the aggregate,  in excess of $300,000 outside of the
ordinary course of business, (iii) had capital expenditures,  individually or in
the  aggregate,  in excess of  $300,000 or (iv)  waived any  material  rights in
respect of any  Indebtedness  or other rights in excess of $300,000  owed to it.
None of the  Company  or any  Target  has  taken  any  steps to seek  protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason
to believe that its  creditors or the creditors of any Target intend to initiate
involuntary  bankruptcy  proceedings  or any actual  knowledge of any fact which
would  reasonably  lead a  creditor  to do  so.  Neither  the  Company  nor  any
Subsidiary  of the Company is as of the date hereof,  and after giving effect to
the transactions  contemplated hereby to occur at the Closing will be, Insolvent
(as defined  below).  For purposes of this Section 3(k),  "INSOLVENT"  means, in
respect of any Person,  (i) the present  fair  saleable  value of such  Person's
assets (and  including as assets for this purpose at a fair valuation all rights
of  subrogation,   contribution  or  indemnification  arising  pursuant  to  any
guarantees  given by such  Person) is less than the amount  required to pay such
Person's  (after  giving  effect to the  Acquisitions)  total  Indebtedness  (as
defined  in  Section  3(p)),  (ii)  such  Person  is unable to pay its debts and
liabilities,   subordinated,   contingent  or  otherwise,   as  such  debts  and
liabilities  become absolute and matured,  (iii) such Person intends at any time
to incur or  believes  that it will at any time incur debts that would be beyond
its  ability to pay as such debts  mature or (iv) such  Person has  unreasonably
small  capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.

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


                                       14
<PAGE>

            (m)  FOREIGN  CORRUPT   PRACTICES.   None  of  the  Company  or  any
Subsidiary, nor any director, officer, agent, employee or other Person acting on
behalf of any of them has,  in the course of its  actions  for, or on behalf of,
such entity (i) used any corporate  funds for any unlawful  contribution,  gift,
entertainment or other unlawful  expenses relating to political  activity;  (ii)
made any  direct  or  indirect  unlawful  payment  to any  foreign  or  domestic
government  official or employee from corporate  funds;  (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended;  or (iv) made any unlawful bribe,  rebate,  payoff,  influence payment,
kickback  or other  unlawful  payment  to any  foreign  or  domestic  government
official or employee; except for such actions referred to in clauses (i) through
(iv) which,  individually or in the aggregate,  could not reasonably be expected
to have a Material Adverse Effect.

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

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


                                       15
<PAGE>

Subsidiaries  other than financing  statements  evidencing  Permitted Liens; (v)
there are no  agreements or  arrangements  under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their  securities under
the 1933 Act  (except  pursuant to the  Registration  Rights  Agreement  and the
Common PIPE  Registration  Rights Agreement and registration  rights the Company
has agreed to provide to the Agent, the existing shareholders listed on Schedule
2(b) to the Registration Rights Agreement, certain members of management and the
current  holders  of  ShellCo  Common  Stock);  (vi)  there  are no  outstanding
securities  or  instruments  of the  Company  or any of its  Subsidiaries  which
contain  any  redemption  or  similar  provisions,  and there are no  contracts,
commitments,  understandings  or arrangements by which the Company or any of its
Subsidiaries  is or may become  bound to redeem a security of the Company or any
of such  Subsidiaries;  (vii) there are no securities or instruments  containing
anti-dilution  or similar  provisions  that will be triggered by the issuance of
the Securities;  (viii) the Company does not have any stock appreciation  rights
or "phantom  stock" plans or agreements  or any similar plan or agreement;  (ix)
all the  Company's  outstanding  options  and  warrants  shall be  cancelled  at
Closing;  and (x) no securities of the Company or any  Subsidiary  are listed or
quoted on any stock exchange or automated quotation system. All of the Company's
outstanding options and warrants shall be canceled at Closing. Immediately after
giving  effect to the Merger,  (i) all of the Company's  issued and  outstanding
stock  shall be owned by  ShellCo  and (ii) all other  securities  issued by the
Company  (including,  without limitation,  any securities  disclosed in Schedule
3(o))  shall have been  exchanged  for shares of  ShellCo's  Common  Stock.  The
Company has made  available to the Buyers true,  correct and complete  copies of
the Company's  Certificate of Incorporation,  as amended and as in effect on the
date hereof (the "CERTIFICATE OF  INCORPORATION"),  and the Company's Bylaws, as
amended and as in effect on the date hereof (the  "BYLAWS"),  and all agreements
relating to securities  convertible  into, or exercisable or  exchangeable  for,
shares of Common Stock and the material rights of the holders thereof in respect
thereof.

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


                                       16
<PAGE>

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

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

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

            (s) EMPLOYEE RELATIONS.

                  (i) None of the  Company or any  Subsidiary  is a party to any
collective  bargaining  agreement or employs any member of a union.  The Company
and its Subsidiaries believe that the Company's relations with its employees and
the relations of its Subsidiaries with


                                       17
<PAGE>

their respective Subsidiaries are good. No executive officer (as defined in Rule
3b-7  promulgated  under  the 1934 Act) of the  Company  or any  Subsidiary  has
notified the Company or such  Subsidiary  that such officer intends to leave the
Company or  Subsidiary,  as applicable,  or otherwise  intends to terminate such
officer's  employment  with the Company or  Subsidiary.  To the knowledge of the
Company,  no executive  officer of the Company or any  Subsidiary  is, or is now
expected to be, in violation of any material  term of any  employment  contract,
confidentiality,    disclosure    or    proprietary    information    agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant and the continued  employment of each such  executive  officer does not
subject the Company or any  Subsidiary to any liability in respect of any of the
foregoing  matters  except such  violations  and/or  liabilities  that would not
individually  or in the  aggregate  be  reasonably  expected  to have a Material
Adverse Effect.

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

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

            (u) INTELLECTUAL  PROPERTY RIGHTS.  The Company and the Subsidiaries
(other than Foreign  Subsidiaries)  own or possess and, to the  knowledge of the
Company, the Foreign Subsidiaries own or possess, adequate rights or licenses to
use  all  trademarks,  trade  names,  service  marks  and all  applications  and
registrations therefor,  patents, patent rights,  copyrights,  original works of
authorship, inventions, licenses, approvals, governmental authorizations,  trade
secrets and other intellectual property rights ("INTELLECTUAL  PROPERTY RIGHTS")
necessary to conduct their respective businesses as now conducted. Except as set
forth on SCHEDULE 3(U), none of the Company's or the  Subsidiaries'  registered,
or applied for,  Intellectual Property Rights have expired or terminated or have
been  abandoned,  or are  expected  to expire or  terminate  or  expected  to be
abandoned, within three years from the date of this Agreement. The terminations,
expirations or abandonments  of such  registered,  or applied for,  Intellectual
Property Rights


                                       18
<PAGE>

would not, in the aggregate,  have a Material  Adverse Effect.  The Company does
not  have  any  knowledge  of  any  infringement  by the  Company  or any of the
Subsidiaries  of   Intellectual   Property  Rights  of  others  except  of  such
infringement that would not have a Material Adverse Effect.  Except as set forth
on SCHEDULE 3(U), there is no claim, action or proceeding being made or brought,
or to the knowledge of the Company, being threatened, against the Company or any
Subsidiary regarding their respective  Intellectual Property Rights and any such
claims,  actions and proceedings being made,  brought or threatened would not in
the aggregate,  have a Material  Adverse  Effect.  The Company is unaware of any
facts  or  circumstances   which  might  give  rise  to  any  of  the  foregoing
infringements or claims, actions or proceedings which would,  individually or in
the aggregate,  have a Material Adverse Effect. The Company and the Subsidiaries
have taken reasonable security measures to protect the secrecy,  confidentiality
and value of all of their Intellectual Property Rights.

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

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

            (x) TAX STATUS.  Except as set forth on SCHEDULE  3(X),  the Company
and each Subsidiary (i) has made or filed all foreign,  federal, state and local
income and all other tax  returns,  reports  and  declarations  required  by any
jurisdiction  to  which  it is  subject,  (ii) has  paid  all  taxes  and  other
governmental assessments and charges that are material in amount, shown or


                                       19
<PAGE>

determined to be due on such  returns,  reports and  declarations,  except those
being  contested  in good faith and for which the Company  has made  appropriate
reserves on its books and (iii) has set aside on its books provision  reasonably
adequate for the payment of all taxes for periods  subsequent  to the periods to
which  such  returns,  reports  or  declarations  apply.  Except as set forth on
SCHEDULE  3(X),  there are no  material  unpaid  taxes  claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim. Each of the claims set forth on SCHEDULE 3(X) is being
contested  in good  faith  or  would  not be  expected,  individually  or in the
aggregate,  to have a Material  Adverse Effect.  Except as set forth on SCHEDULE
3(X), no liens have been filed securing taxes and other governmental assessments
and charges and no claims are being asserted by or against the Company or any of
the Subsidiaries in respect of any taxes (other than liens for taxes not yet due
and payable) or other governmental  assessments or charges.  Except as set forth
on SCHEDULE 3(X),  none of the Company or any of the  Subsidiaries  has received
notice of assessment  or proposed  assessment of any taxes claimed to be owed by
it or any other Person on its behalf. Except as disclosed on SCHEDULE 3(X), none
of the Company or any of the  Subsidiaries  is a party to any tax sharing or tax
indemnity  agreement or any other  agreement of a similar nature that remains in
effect.  None of the items set forth on SCHEDULE 3(X) would,  individually or in
the  aggregate,  have a Material  Adverse  Effect.  Each of the  Company and the
Subsidiaries  has complied in all material  respects with all  applicable  legal
requirements  relating to the payment and  withholding of taxes and,  within the
time and in the manner  prescribed  by law,  has withheld  from wages,  fees and
other  payments  and  paid  over  to  the  proper   governmental  or  regulatory
authorities all amounts required.

            (y)  INTERNAL  ACCOUNTING  CONTROLS.  The  Company  and  each of the
Subsidiaries  maintains a system of internal  accounting  controls sufficient to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded as necessary to permit preparation of consolidated financial statements
in  conformity  with GAAP and to maintain  asset and  liability  accountability,
(iii)  access  to assets or  incurrence  of  liabilities  is  permitted  only in
accordance  with  management's  general or specific  authorization  and (iv) the
recorded accountability for assets and liabilities is compared with the existing
assets and liabilities at reasonable  intervals and appropriate  action is taken
in respect of any difference.

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


                                       20
<PAGE>

preceding the date of this Agreement at the time of release contained any untrue
statement of a material  fact or omitted to state a material fact required to be
stated  therein or necessary  in order to make the  statements  therein,  in the
light of the circumstances under which they were made, not misleading.  No event
or circumstance has occurred or information  exists in respect of the Company or
any of its  Subsidiaries  (other than the Foreign  Subsidiaries) or its or their
business, properties, operations or financial condition, which, under applicable
law, rule or  regulation,  requires  public  disclosure or  announcement  by the
Company  but which  has not been so  publicly  announced  or  disclosed.  To the
knowledge of the Company,  no event or circumstance  has occurred or information
exists  in  respect  of  any  of  the  Foreign  Subsidiaries  or  its  business,
properties,   operations  or  financial   condition,   which,  under  applicable
Requirements of Law,  requires public  disclosure or announcement by such Person
or its parent company but which has not been so publicly  announced or disclosed
except where such failure  would not  reasonably  be expected to have a Material
Adverse Effect.

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

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

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

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

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


                                       21
<PAGE>

            (ff) ERISA.

                  (i)  Except as listed on  SCHEDULE  (EE)  hereto,  none of the
      Company,  ShellCo or any of their respective  Subsidiaries or any of their
      ERISA Affiliates  maintains or contributes to, or within the preceding six
      (6) years has  maintained or  contributed  to, any Employee  Benefit Plan.
      Neither the Company, ShellCo nor any of their respective Subsidiaries have
      any current  labor  problems or disputes  that have  resulted in, or which
      such Person  reasonably  believes  could be  expected to have,  a Material
      Adverse Effect on the Company or ShellCo.  No Employee Benefit Plan has an
      accumulated or waived funding deficiency or permitted decrease which would
      create a deficiency in its funding  standard account or has applied for an
      extension of any amortization  period within the meaning of Section 412 of
      the Internal  Revenue Code of 1986, as amended (or any  successor  statute
      thereto)  and the  regulations  thereunder  (the  "CODE")  as of the  date
      hereof, and no Lien imposed under the Code or ERISA exists or is likely to
      arise on account  of any  Employee  Benefit  Plan  within  the  meaning of
      Section 412 of the Code.

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

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

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

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


                                       22
<PAGE>

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

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

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

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

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

                  (ii) None of the Company or its  Subsidiaries  (x) is a Person
      or entity with which any Buyer is  prohibited  from  dealing or  otherwise
      engaging in any


                                       23
<PAGE>

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

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

      4. COVENANTS.

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

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

            (c) REPORTING  STATUS.  Until the later of the date on which (i) the
Investors (as defined in the Registration  Rights Agreement) shall have sold all
the Conversion  Shares and Warrant Shares and (ii) none of the Notes or Warrants
is  outstanding  (the  "REPORTING  PERIOD"),  the Company shall cause ShellCo to
timely file all reports  required to be filed with the SEC  pursuant to the 1934
Act,  provided that prior to the filing of the  registration  statement with the
SEC as  required  by the  Registration  Rights  Agreement,  compliance  with the
current public


                                       24
<PAGE>

information  requirements  of Rule 144(c)  thereunder  shall be sufficient.  The
Company shall not permit  ShellCo to terminate its status as an issuer  required
to file  reports  under  the 1934  Act,  even if the 1934 Act or the  rules  and
regulations thereunder would permit such termination.

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

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

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


                                       25
<PAGE>

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

            (h) DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION. On or
before 8:30 a.m.,  New York City time,  on the first  Business Day following the
Closing  Date,  the Company  shall cause  ShellCo to file a press  release  (the
"PRESS RELEASE") describing the material terms of the transactions  contemplated
by the  Transaction  Documents.  The Company  shall cause  ShellCo to file, as a
"small  business  issuer" (as defined in Item 10(a) of  Regulation  SB under the
1934 Act), a Current Report on Form 8-K describing the terms of the transactions
contemplated  by the  Transaction  Documents on or prior to the date required by
the  1934 Act and  attaching  the  material  Transaction  Documents  (including,
without  limitation,  this Agreement (and all schedules to this Agreement),  the
form of the Notes, the form of the Warrants,  the Registration  Rights Agreement
and the Security  Documents)  as exhibits to such  filing,  if and to the extent
required by the 1934 Act (including all attachments, the "8-K FILING"). From and
after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession
of any material,  nonpublic  information received from ShellCo, the Company, any
of their respective  Subsidiaries or any of its respective officers,  directors,
employees or agents,  that is not  disclosed in a 8-K Filing.  The Company shall
not, and shall cause  ShellCo and each of their  Subsidiaries  and each of their
respective officers, directors,  employees and agents, not to, provide any Buyer
with any material,  nonpublic  information regarding ShellCo, the Company or any
of their  Subsidiaries  from and after the filing of the 8-K Filing with the SEC
without the express  written  consent of such Buyer. If a Buyer has, or believes
it has,  received  from the  Company or  ShellCo  any such  material,  nonpublic
information regarding ShellCo, the Company or any of the Subsidiaries,  it shall
provide ShellCo and the Company with written notice thereof.  The Company shall,
or shall  cause  ShellCo to,  within  four (4)  Trading  Days (as defined in the
Notes) of receipt of such  notice,  make  public  disclosure  of such  material,
nonpublic  information  unless the Company has in good faith determined that the
matters  relating  to  such  notice  do  not  constitute   material   non-public
information  about  the  Company.  In the  event  of a breach  of the  foregoing
covenant by ShellCo,  the Company,  any of their  Subsidiaries,  or any of their
respective officers,  directors,  employees and agents, in addition to any other
remedy provided herein or in the Transaction  Documents,  a Buyer shall have the
right  to make a  public  disclosure,  in the  form of a press  release,  public
advertisement  or otherwise,  of such material,  nonpublic  information with the
prior  approval by ShellCo or the Company.  No Buyer shall have any liability to
ShellCo,  the Company,  any of their  Subsidiaries,  or any of their  respective
officers, directors, employees,


                                       26
<PAGE>

stockholders or agents for any such disclosure.  Subject to the foregoing,  none
of ShellCo,  the Company, any of their Subsidiaries or any Buyer shall issue any
press  releases or any other public  statements  in respect of the  transactions
contemplated hereby;  PROVIDED,  HOWEVER,  that ShellCo and the Company shall be
entitled,  without the prior approval of any Buyer, to make any press release or
other  public  disclosure  in respect of such  transactions  (i) in  substantial
conformity  with the 8-K Filing and  contemporaneously  therewith and (ii) as is
required by applicable Requirements of Law.

            (i) TRANSACTIONS  WITH  AFFILIATES.  From the date of this Agreement
until the first date  following  the Closing  Date on which no Notes or Warrants
are outstanding, the Company shall not, and shall cause each of its Subsidiaries
not to, without the prior written consent of the Holders representing a majority
of the aggregate amount of the Notes then outstanding (the "REQUIRED  HOLDERS");
PROVIDED,  HOWEVER,  that any Note that is held by an  Affiliate  of the Company
shall not be deemed to be outstanding for the purposes of the  determination  of
Required  Holders  enter  into,   amend,   modify  or  supplement  any  material
transaction, contract, agreement, instrument, commitment, understanding or other
arrangement with any of its or any Subsidiary's officers, directors, Persons who
were  officers  or  directors  at  any  time  during  the  previous  two  years,
stockholders,  or Affiliates of the Company or any of its Subsidiaries,  or with
any individual related by blood,  marriage or adoption to any such individual or
with any  entity  in which  any such  entity  or  individual  owns a  beneficial
interest,  unless such agreement,  amendment,  modification or supplement is (A)
entered into pursuant to arm's length  negotiation  no (B) customary  employment
arrangements and benefit programs on reasonable terms.

            (j) ADDITIONAL NOTES; VARIABLE SECURITIES;  DILUTIVE ISSUANCES.  For
so long as any Buyer  beneficially owns any Securities,  the Company shall cause
ShellCo not to issue any Notes or other  securities that would cause a breach or
default  under  the  Notes.  For  so  long  as  any  Notes  or  Warrants  remain
outstanding,  the Company  shall cause  ShellCo not to, in any manner,  issue or
sell any rights,  warrants or options to subscribe for or purchase  Common Stock
or directly or indirectly  convertible  into or  exchangeable or exercisable for
Common  Stock at a price which  varies or may vary with the market  price of the
Common  Stock,  including  by way of one or more  reset(s)  to any fixed  price,
unless the conversion, exchange or exercise price of any such security cannot be
less than the then  applicable  Conversion  Price (as  defined  in the Notes) in
respect of the  Common  Stock  into  which any Note is  convertible  or the then
applicable  Exercise Price (as defined in the Warrants) in respect of the Common
Stock  into which any  Warrant is  exercisable.  Notwithstanding  the  foregoing
sentence,  ShellCo is permitted hereby to issue the Notes and Warrants  provided
for hereby and the  Warrants  under the Common  PIPE,  which  provide in certain
circumstances  for  adjustments  to their  exercise and  conversion  prices,  as
applicable.  For so long as any Notes or Warrants  remain  outstanding  or until
such time as  Stockholder  Approval has been  obtained,  the Company shall cause
ShellCo not to, in any manner,  enter into or affect any Dilutive  Issuances (as
defined  in the  Notes) if the  effect  of such  Dilutive  Issuance  is to cause
ShellCo to be required to issue upon  conversion  of any Note or exercise of any
Warrant any shares of Common  Stock in excess of that number of shares of Common
Stock which  ShellCo may issue upon  conversion of the Notes and exercise of the
Warrants without breaching ShellCo's  obligations under the rules or regulations
of the Principal Market or the stock exchange or automated quotation system upon
which ShellCo's shares of


                                       27
<PAGE>

Common Stock are traded, including,  without limitation,  any and all discounted
issuance rules, if applicable. As used herein, "STOCKHOLDER APPROVAL" shall mean
the  affirmative  vote by  stockholders  holding no less than a majority  of the
voting  power  of the  Common  Stock  approving  resolutions  providing  for the
Company's  issuance of all of the  Securities  as described  in the  Transaction
Documents in accordance with applicable law and the rules and regulations of the
Principal Market.  "PRINCIPAL MARKET" shall mean the Initial Principal Market or
other  Eligible  Market on which the Common Stock is designated for quotation or
listed and principally trades.

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

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

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

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

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

            (p)  INTEGRATION.  None  of  ShellCo,  the  Company,  any  of  their
affiliates  (as defined in Rule 501(b) under the 1933 Act) or any person  acting
on behalf of ShellCo, the Company or such affiliate will sell, offer for sale or
solicit  offers to buy or  otherwise  negotiate  in respect of any  security (as
defined in the 1933 Act) including the Common PIPE Securities


                                       28
<PAGE>

which  will be  integrated  with the sale of the  Securities  or the  Conversion
Shares in a manner which would  require the  registration  under the 1933 Act of
the Securities or require  stockholder  approval under the rules and regulations
of the applicable  Principal Market and the Company will take all action that is
appropriate or necessary to assure that its offerings of other securities (other
than the Common PIPE Securities) will not be integrated for purposes of the 1933
Act or the rules and  regulations  of the applicable  Principal  Market with the
issuance of Securities contemplated hereby.

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

            (r) COLLATERAL AGENT.

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

                  (ii) The Collateral  Agent may resign from the  performance of
all its  functions  and duties  hereunder at any time by giving at least fifteen
(15) Business  Days' prior written  notice to the Company and each holder of the
Notes.  Such  resignation  shall take effect upon the  acceptance by a successor
Collateral  Agent of  appointment  as  provided  below.  Upon any such notice of
resignation,  the holders of a majority of the  outstanding  principal under the
Notes shall appoint a successor  Collateral  Agent.  Upon the  acceptance of the
appointment as Collateral Agent,  such successor  Collateral Agent shall succeed
to and become vested with all the rights,  powers,  privileges and duties of the
retiring Collateral Agent, and the retiring Collateral Agent shall be discharged
from its  duties and  obligations  under this  Agreement.  After any  Collateral
Agent's resignation  hereunder,  the provisions of this Section 4(r) shall inure
to its


                                       29
<PAGE>

benefit. If a successor Collateral Agent shall not have been so appointed within
said fifteen (15) Business Day period, the retiring  Collateral Agent shall then
appoint a successor Collateral Agent who shall serve until such time, if any, as
the holders of a majority of the outstanding principal under the Notes appoint a
successor Collateral Agent as provided above.

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

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

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

                  (vi) The Collateral  Agent shall  promptly  notify each Holder
any time that the Required  Holders have instructed the Collateral  Agent to act
or refrain from acting pursuant hereto. ShellCo or Fortress Credit Corp. (or any
successor  or  replacement  agent  under  the  Senior  Loan  Agreement)  or  the
Collateral Agent may at any time request instructions from


                                       30
<PAGE>

the  Holders in respect of any actions or  approvals  which by the terms of this
Agreement or of any of the other  Transaction  Documents the Collateral Agent is
permitted or required to take or to grant, and if such instructions are promptly
requested,  the  Collateral  Agent shall be absolutely  entitled to refrain from
taking any  action or to  withhold  any  approval  under any of the  Transaction
Documents  until it shall have  received  such  instructions  from the  Required
Holders.  Without  limiting  the  foregoing,  no Holder  shall have any right of
action  whatsoever  against the  Collateral  Agent as a result of the Collateral
Agent acting or refraining  from acting under this Agreement or any of the other
Transaction  Documents  in  accordance  with the  instructions  of the  Required
Holders unless consent of all Holders is required by the terms of such document.

            (s) OTC BULLETIN BOARD.  The Company shall cause ShellCo to use best
efforts to comply with the rules of the Principal Market and to cause all of the
Registrable Securities (as defined in the Registration Rights Agreement) covered
by a Registration Statement (as defined in the Registration Rights Agreement) to
be quoted  thereon,  unless  listed or quoted on another  Eligible  Market.  The
Company  shall  cause  ShellCo  to  promptly  secure  the  listing of all of the
Registrable  Securities  upon each  national  securities  exchange and automated
quotation  system,  if any,  upon which  shares of Common  Stock are then listed
(subject to official notice of issuance) and shall cause ShellCo to maintain, so
long as any other shares of Common Stock shall be so listed, such listing of all
Registrable  Securities  from  time to time  issuable  under  the  terms  of the
Transaction Documents.  The Company shall cause ShellCo and its Subsidiaries not
to take  any  action  which  would  be  reasonably  expected  to  result  in the
suspension  or  termination  of  trading of the  Common  Stock on the  Principal
Market.  The  Company  shall  cause  ShellCo  to pay all  fees and  expenses  in
connection with satisfying its obligations under this Section 4(s).

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

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

            (v) GENERAL SOLICITATION. None of the Company, any of its Affiliates
or any person acting within the scope of their delegated  authority on behalf of
the Company or such affiliate will solicit any offer to buy or offer or sell the
Securities by means of any form of general  solicitation or general  advertising
within the meaning of Regulation D, including:  (i) any advertisement,  article,
notice or other communication published in any newspaper, magazine or


                                       31
<PAGE>

similar  medium or broadcast over  television or radio;  and (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.

            (w) LIEN SEARCHES. Prior to the Closing Date, the Company shall have
delivered or caused to be  delivered  to each Buyer (A) copies of UCC  financing
statement  search  results  listing any and all effective  financing  statements
filed in any applicable  jurisdiction (in which a secured party required to file
a  financing  statement  to perfect its  security  interest in the assets of the
Company,  ShellCo or any Subsidiary (other than Foreign  Subsidiaries) that name
the Company,  ShellCo, Merger Sub, or any such Subsidiary as a debtor to perfect
an interest in any of the assets thereof, together with copies of such financing
statements,  none of  which  financing  statements,  except  for  any  financing
statements filed in respect of the escrowed funds referenced in subsection (xiv)
of the definition of Permitted Indebtedness set forth in Section 28 of the Note,
Permitted Senior Indebtedness,  Permitted Priority  Indebtedness,  the Permitted
Liens (as defined in the Notes),  and as  otherwise  agreed to in writing by the
Buyers,  shall cover any of the Collateral,  and the results of searches for any
effective  tax liens and  judgment  liens  filed  against any such Person or its
property in any  applicable  jurisdiction,  which  results,  except as otherwise
agreed to in writing by the Buyers,  shall not show any such effective tax liens
(other than those  permitted  to exist  under the Note) or judgment  liens other
than as set forth in  SCHEDULE  4(W);  and (B) a  perfection  certificate,  duly
completed and executed by the Company and each of the  Subsidiaries  (other than
the Foreign Subsidiaries),  in form and substance reasonably satisfactory to the
Buyers.

      5. REGISTERS; TRANSFER AGENT INSTRUCTIONS.

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

            (b) TRANSFER AGENT INSTRUCTIONS.  The Company shall cause ShellCo to
issue  instructions to its transfer agent in the form attached hereto as EXHIBIT
J, and any subsequent  transfer agent, to issue certificates or credit shares to
the applicable balance accounts at DTC,  registered in the name of each Buyer or
its  respective  nominee(s),  for the  Conversion  Shares and the Warrant Shares
issued  at the  Closing  or upon  conversion  of the  Notes or  exercise  of the
Warrants in such amounts as specified from time to time by each Buyer to ShellCo
upon  conversion of the Notes or exercise of the Warrants in the form of EXHIBIT
J attached hereto (the "TRANSFER AGENT INSTRUCTIONS"). The Company warrants that
no instruction other than the Irrevocable  Transfer Agent Instructions  referred
to in this  Section  5(b),  and stop  transfer  instructions  to give  effect to
Section 2(g) including in the event that the Registration Statement ceases to be
effective  under the  Securities  Act of 1933,  will be given by  ShellCo to its
transfer agent, and that the Securities  shall otherwise be freely  transferable
on the books and  records of  ShellCo,  subject to  compliance  with  applicable
securities law, as and to the extent provided in


                                       32
<PAGE>

this Agreement and the other Transaction  Documents.  If a Buyer effects a sale,
assignment or transfer of the  Securities in accordance  with Section 2(f),  the
Company shall cause ShellCo to permit the transfer and shall  promptly  instruct
its transfer  agent to issue one or more  certificates  or credit  shares to the
applicable  balance  accounts at DTC in such name and in such  denominations  as
specified  by such Buyer to effect  such sale,  transfer or  assignment.  In the
event that such sale,  assignment  or  transfer  involves  Conversion  Shares or
Warrant  Shares  sold,   assigned  or  transferred   pursuant  to  an  effective
registration  statement or pursuant to Rule 144, and Buyer provides  evidence of
compliance  with Rule 144 reasonably  acceptable to ShellCo,  the transfer agent
shall,  subject  to  compliance  with  applicable  securities  laws,  issue such
Securities to the Buyer, assignee or transferee, as the case may be, without any
restrictive  legend.  The Company  acknowledges  on behalf of itself and ShellCo
that a breach by it of its obligations  hereunder will cause irreparable harm to
affected Buyers.  Accordingly,  the Company acknowledges on behalf of itself and
ShellCo  that the  remedy  at law for a breach  of its  obligations  under  this
Section  5(b)  will be  inadequate  and  agrees,  in the  event of a  breach  or
threatened  breach by the Company or ShellCo of the  provisions  of this Section
5(b),  that any  affected  Buyers  shall be  entitled,  in addition to all other
available  remedies,  to an order and/or  injunction  restraining any breach and
requiring  immediate  issuance and  transfer,  without the  necessity of showing
economic loss and without any bond or other security being required.

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

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

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

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


                                       33
<PAGE>

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

            (e) The Merger shall have been consummated.

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

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

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

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

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

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

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

            (g) The Company,  ShellCo and each entity  which is a Subsidiary  of
the Company  immediately prior to the Closing shall have delivered to deliver to
such Buyer a


                                       34
<PAGE>

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

            (h) The representations  and warranties of the Company,  ShellCo and
any  Subsidiary set forth in this  Agreement or any other  Transaction  Document
shall  be  true  and  correct  in  all  material   respects  (except  for  those
representations  and  warranties  that are qualified by  materiality or Material
Adverse Effect,  which shall be true and correct in all respects) as of the date
when made and as of the  Closing  Date as though  made at that time  (except for
representations  and warranties which speak as of a specific date, each of which
shall be true and  correct  as of such  date) and the  Company,  ShellCo or each
Subsidiary, as applicable,  shall have performed,  satisfied and complied in all
material respects with the covenants,  agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by such entity
at or prior to the Closing  Date.  Such Buyer shall have  received a certificate
delivered  and  executed by the  President  of each of the Company and  ShellCo,
dated as of the  Closing  Date,  to the  foregoing  effect  and as to such other
matters as may be reasonably requested by such Buyer in the form attached hereto
as EXHIBIT M.

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

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

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

            (l) The Company shall have filed such financing statements and other
documents  in such  offices as the  Collateral  Agent may request to perfect the
security interests


                                       35
<PAGE>

granted  under  the  Security  Agreement  and the  Pledge  Agreement  (it  being
understood  that the  Collateral  Agent shall not file a financing  statement in
respect of ShellCo until the Security Agreement has been fully executed).

            (m) The Company  shall have  delivered  or caused to be delivered to
such Buyer (A) a  perfection  certificate,  duly  completed  and executed by the
Company  and  each  of  its  Subsidiaries,  in  form  and  substance  reasonably
satisfactory  to the  Buyers and (B) copies of UCC  financing  statement  search
results  listing  any  and  all  effective  financing  statements  filed  in any
applicable  jurisdiction  (in which a secured  party is required to have filed a
financing  statement to perfect its security  interest in the assets of Company,
ShellCo,  any  Target  or any of their  Subsidiaries,  other  than  the  Foreign
Subsidiaries  that  name  the  Company,  ShellCo,  any  Target  or any of  their
respective  Subsidiaries  (other than the Foreign  Subsidiaries)  as a debtor to
perfect an interest in any of the assets  thereof,  together with copies of such
financing  statements,  none  of  which  financing  statements,  except  for any
financing  statements  filed in  respect of the  escrowed  funds  referenced  in
subsection  (x) of  the  definition  of  Permitted  Indebtedness  set  forth  in
subsection 28 of the Notes,  Permitted Senior Indebtedness,  the Permitted Liens
and as  otherwise  agreed to in writing by the  Buyers,  shall  cover any of the
Collateral  and the results of searches for any effective tax liens and judgment
liens  filed  against  any  such  Person  or  its  property  in  any  applicable
jurisdiction,  which  results,  except as otherwise  agreed to in writing by the
Buyers,  shall not show any such  effective  liens  (other than those tax and or
judgment liens described on SCHEDULE 3(X) which liens would not, individually or
in the aggregate, have a Material Adverse Effect).

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

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

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

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


                                       36
<PAGE>

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

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

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

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

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

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

            (x) The Common Stock (i) shall be designated for quotation or listed
on an Eligible Market and (ii) shall not have been suspended,  as of the Closing
Date, by the SEC or


                                       37
<PAGE>

such Eligible Market from trading on such Eligible  Market nor shall  suspension
by the SEC or such Eligible Market have been threatened, as of the Closing Date,
either (A) in writing by the SEC or such Eligible Market or (B) by falling below
any minimum maintenance requirements of such Eligible Market.

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

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

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

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

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


                                       38
<PAGE>

requirements set forth in the Senior Loan in respect of financial  statements of
the Company and Targets.

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

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

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

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

      9. MISCELLANEOUS.

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


                                       39
<PAGE>

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

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

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

            (e) ENTIRE  AGREEMENT;  AMENDMENTS.  This  Agreement  supersedes all
other prior oral or written agreements  between the Buyers,  the Company,  their
affiliates  and  Persons  acting  on their  behalf  in  respect  of the  matters
discussed  herein,  and  this  Agreement,  the  Transaction  Documents  and  the
instruments referenced herein contain the entire understanding of the parties in
respect of the matters  covered herein and therein and,  except as  specifically
set forth herein or therein,  none of the  Company,  ShellCo,  their  respective
Subsidiaries  nor any Buyer  makes any  representation,  warranty,  covenant  or
undertaking  in respect of such matters.  No provision of this  Agreement may be
amended other than by an instrument  in writing  signed by the Company,  ShellCo
and the Required Holders, and any amendment to this Agreement made in conformity
with the  provisions  of this  Section  9(e)  shall be binding on all Buyers and
holders of Securities  as  applicable.  No provision  hereof may be waived other
than by an instrument in writing signed by the party against whom enforcement is
sought.  No such  amendment  shall be effective to the extent that it applies to
less than all of the holders of the applicable  Securities then outstanding.  No
consideration  shall be  offered  or paid to any Person to amend or consent to a
waiver or  modification  of any  provision of any of the  Transaction  Documents
unless  the same  consideration  also is  offered  to all of the  parties to the
Transaction Documents,  holders of Notes or holders of the Warrants, as the case
may be. The Company has not,  directly or indirectly,  made any agreements  with
any Buyers relating to the terms or conditions of the transactions  contemplated
by the Transaction  Documents except as set forth in the Transaction  Documents.
Without limiting the foregoing,  the Company confirms that,  except as set forth
in this  Agreement and the  applicable  Transaction  Documents and the documents
relating to the Common PIPE Securities, if a buyer of Common PIPE Securities, no
Buyer has made any commitment or promise or has any other  obligation to provide
any financing to the Company or otherwise.

            (f) NOTICES. Any notices,  consents, waivers or other communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered personally provided same is on a Business Day and, if not, on the next
Business  Day;  (ii)  upon  receipt,  when  sent  by  facsimile  (provided  that
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending  party)  provided  same is on a Business Day and, if
not, on the next Business Day;  (iii) one (1) Business Day after deposit with an
overnight courier service, in each


                                       40
<PAGE>

case  properly  addressed  to the party to receive the same;  or (iv) if sent by
certified mail, return receipt requested,  when received or three (3) days after
deposited in the mails,  whichever  occurs  first.  The  addresses and facsimile
numbers for such communications shall be:

           If to the Company:

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

           with a copy to:

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

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

           with a copy (for informational purposes only) to:

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

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

            (g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure  to the  benefit  of the  parties  and  their  respective  successors  and
permitted  assigns,  including any purchasers of the Notes or the Warrants.  The
Company shall not assign this Agreement or any


                                       41
<PAGE>

rights or  obligations  hereunder  without  the  prior  written  consent  of the
Required  Holders,  including by way of a  Fundamental  Transaction  (unless the
Company is in compliance with the applicable  provisions  governing  Fundamental
Transactions  set forth in the Notes and the  Warrants).  Subject to  compliance
with  applicable  securities  laws, a Buyer may assign some or all of its rights
hereunder and under the other  Transaction  Documents without the consent of the
Company,  in which event such assignee  shall be deemed to be a Buyer  hereunder
and thereunder in respect of such assigned  rights  provided that the Collateral
Agent and/or  Buyer  provide  Company and ShellCo  with  written  notice of such
assignment within ten (10) Business Days after such assignment is consummated.

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

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

            (j) FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed,  all such further acts and things,  and shall execute and
deliver all such other agreements,  certificates,  instruments and documents, as
any other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

            (k) INDEMNIFICATION.

                  (i) In consideration of each Buyer's execution and delivery of
the  Transaction  Documents  and  acquiring  the  Securities  thereunder  and in
addition  to  all of the  Company's  other  obligations  under  the  Transaction
Documents,  unless this  Agreement is  terminated  under  Section 8 hereof,  the
Company on behalf of itself and ShellCo,  shall defend,  protect,  indemnify and
hold  harmless  each Buyer and each other  holder of the  Securities  and all of
their stockholders, partners, members, officers, directors, employees and direct
or  indirect  investors  and  any of the  foregoing  Persons'  agents  or  other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"INDEMNITEES")  from and against any and all actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith  (irrespective of whether any such Indemnitee is a party to
the  action  for which  indemnification  hereunder  is  sought),  and  including
reasonable  attorneys' fees and disbursements  (the "INDEMNIFIED  LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any  misrepresentation  or breach of any  representation or warranty made by the
Company  or  ShellCo  in any  Transaction  Document  or any  other  certificate,
instrument  or document  contemplated  hereby or thereby,  (b) any breach of any
covenant,  agreement or  obligation  of the Company or ShellCo  contained in any
Transaction   Document  or  any  other   certificate,   instrument  or  document
contemplated hereby or thereby or (c) any


                                       42
<PAGE>

investigation,  cause of  action,  suit or claim  brought or made  against  such
Indemnitee by a third party  (including for these  purposes a derivative  action
brought on behalf of the  Company or ShellCo)  and  arising out of or  resulting
from (i) the execution,  delivery, performance or enforcement of any Transaction
Document or any other certificate, instrument or document contemplated hereby or
thereby,  (ii) any  transaction  financed or to be financed in whole or in part,
directly or indirectly,  with the proceeds of the issuance of the Securities, or
(iii) the status of such Buyer or holder of the Securities as an investor in the
Company or ShellCo pursuant to the transactions  contemplated by the Transaction
Documents.  To the extent that the foregoing  undertaking  by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and  satisfaction  of each of the Indemnified  Liabilities  which is
permissible  under  applicable  law  provided  that  the  Company  shall  not be
obligated  to  indemnify  such  Buyer or  Collateral  Agent for any  Indemnified
Liabilities caused by the gross negligence or willful misconduct of any Buyer or
Collateral Agent.

                  (ii) Without limiting Section 9(k)(i) hereof,  the Company and
each non-Foreign Subsidiary,  jointly and severally, defend, indemnify, and hold
harmless the Indemnitees against any and all Environmental Liabilities and costs
and all other claims,  demands,  penalties,  fines,  liability (including strict
liability),  losses,  damages, costs and expenses (including without limitation,
reasonable  legal  fees and  expenses,  consultant  fees and  laboratory  fees),
arising  out of (A) any  releases or  threatened  releases  (x) at any  property
presently or formerly  owned or operated by the Company or any Subsidiary of the
Company,  or any  predecessor  in interest,  or (y) of any  Hazardous  Materials
generated  and disposed of by any the Company or any  Subsidiary of the Company,
or any predecessor in interest;  (B) any violations of  Environmental  Laws; (C)
any  Environmental  cause of action relating to the Company or any Subsidiary of
any the  Company,  or any  predecessor  in  interest;  (D) any  personal  injury
(including  wrongful death) or property damage (real or personal) arising out of
exposure  to  Hazardous  Materials  used,  handled,  generated,  transported  or
disposed by the Company or any Subsidiary of the Company,  or any predecessor in
interest;  and  (E) any  breach  of any  warranty  or  representation  regarding
environmental  matters made by the Company in Section 3(v).  Notwithstanding the
foregoing, the Company and its Subsidiaries shall not have any obligation to any
Indemnitee  under this  subsection  (ii)  regarding any potential  environmental
matter  covered  hereunder  which is caused by the gross  negligence  or willful
misconduct of such Indemnitee, as determined by a final non-appeallable judgment
of a court of competent jurisdiction.

                  (iii) Promptly after receipt by Indemnitee  under this Section
9(k) of notice of the  commencement  of any action or proceeding  (including any
governmental  action or  proceeding)  involving an Indemnified  Liability,  such
Indemnitee  shall,  if a claim in  respect  thereof  is to be made  against  any
indemnifying  party under this Section 9(k), deliver to the indemnifying party a
written notice of the commencement  thereof,  and the  indemnifying  party shall
have the right to participate in, and, to the extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
control  of the  defense  thereof  with  counsel  mutually  satisfactory  to the
indemnifying  party and the Indemnitee,  as the case may be; PROVIDED,  HOWEVER,
that an Indemnitee  shall have the right to retain its own counsel with the fees
and expenses of not more than one counsel for such  Indemnitee to be paid by the
indemnifying  party,  if, in the reasonable  opinion of counsel  retained by the
indemnifying party, the representation by such counsel of the Indemnitee and the
indemnifying party would be


                                       43
<PAGE>

inappropriate  due to actual  or  potential  differing  interests  between  such
Indemnitee and any other party  represented by such counsel in such  proceeding.
In the case of an  Indemnitee,  legal  counsel  referred  to in the  immediately
preceding  sentence  shall be selected by Required  Holders,  to which the claim
relates.  The Indemnitee  shall cooperate fully with the  indemnifying  party in
connection  with any  negotiation  or defense of any such action or claim by the
indemnifying  party and shall furnish to the indemnifying  party all information
reasonably  available to the  Indemnitee  which relates to such action or claim.
The  indemnifying  party shall keep the  Indemnitee  reasonably  apprised at all
times as to the status of the defense or any settlement  negotiations in respect
thereof. No indemnifying party shall be liable for any settlement of any action,
claim or  proceeding  effected  without  its prior  written  consent;  PROVIDED,
HOWEVER, that the indemnifying party shall not unreasonably  withhold,  delay or
condition its consent.  No indemnifying  party shall,  without the prior written
consent of the  Indemnitee,  consent to entry of any  judgment or enter into any
settlement or other compromise  which does not include as an unconditional  term
thereof the giving by the claimant or plaintiff to such  Indemnitee of a release
from all liability in respect to such claim or litigation,  and such  settlement
shall  not  include  any  admission  as to fault on the part of the  Indemnitee.
Following  indemnification  as provided for hereunder,  the  indemnifying  party
shall be  subrogated  to all  rights of the  Indemnitee  in respect of all third
parties,  firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the  indemnifying  party
within a  reasonable  time of the  commencement  of any such  action  shall  not
relieve such  indemnifying  party of any liability to the Indemnitee  under this
Section  9(k),  except to the extent that the  indemnifying  party is materially
prejudiced in its ability to defend such action.

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

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

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

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


                                       44
<PAGE>

temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages and without posting a bond or other security.

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

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

            (p)  INDEPENDENT  NATURE OF  BUYERS'  OBLIGATIONS  AND  RIGHTS.  The
obligations  of each Buyer under any  Transaction  Document  are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the  performance of the  obligations of any other Buyer under any
Transaction  Document.  Nothing  contained  herein or in any  other  Transaction
Document,  and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to  constitute  the  Buyers as a  partnership,  an  association,  a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group in respect of such obligations or the
transactions   contemplated  by  the  Transaction   Documents  and  the  Company
acknowledges  on behalf of itself and ShellCo  that the Buyers are not acting in
concert  or as a group  in  respect  of  such  obligations  or the  transactions
contemplated  by the  Transaction  Documents.  Each Buyer  confirms  that it has
independently participated in the negotiation of the transaction contemplated by
this Agreement and the Transaction  Documents with the advice of its own counsel
and  advisors,   that  it  has  independently   determined  to  enter  into  the
transactions  contemplated  hereby and  thereby,  that it is not  relying on any
advice  from or  evaluation  by any other  Buyer,  and that it is not  acting in
concert with any other Buyer in making its purchase of  Securities  hereunder or
in monitoring its investment in ShellCo.  The Buyers and, to its knowledge,  the
Company agree that no action taken by any Buyer pursuant  hereto or to the other
Transaction   Documents,   shall  be  deemed  to  constitute  the  Buyers  as  a
partnership,  an  association,  a joint  venture  or any other kind of entity or
group, or create a presumption  that the Buyers are in any way acting in concert
or would deem such  Buyers to be members of a "group"  for  purposes  of Section
13(d) of the 1934 Act.  The Buyers each confirm that they have not agreed to act
together for the purpose of  acquiring,  holding,  voting or disposing of equity
securities of ShellCo. The Company has elected to provide all Buyers with


                                       45
<PAGE>

the same terms and Transaction  Documents for the convenience of the Company and
not because it was  required  or  requested  to do so by any of the Buyers.  The
Company  acknowledges  on behalf of itself and ShellCo  that such  procedure  in
respect of the  Transaction  Documents in no way creates a presumption  that the
Buyers are in any way acting in concert or as a "group" for  purposes of Section
13(d)  of  the  1934  Act  in  respect  of  the  Transaction  Documents  or  the
transactions  contemplated  hereby or  thereby.  Except as  otherwise  set forth
herein  or in the  Transaction  Documents,  each  Buyer  shall  be  entitled  to
independently protect and enforce its rights, including, without limitation, the
rights  arising  out of  this  Agreement,  or out  of  the  Registration  Rights
Agreement,  its Note, its Warrant and the right of set-off under the Guaranties,
and it shall not be necessary  for any other Buyer to be joined as an additional
party in any proceeding for such purpose.

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

                            [SIGNATURE PAGES FOLLOW]


                                       46
<PAGE>

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

                                            COMPANY:

                                            MARITIME LOGISTICS US HOLDINGS INC.


                                            By: ____________________________
                                                Name:
                                                Title:

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

By: LAW DEBENTURE TRUST
COMPANY OF NEW YORK


_______________________________
Name:
Title:


                                       47
<PAGE>

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

                                            BUYERS:

                                            SILVER OAK CAPITAL, L.L.C.


                                            By: ____________________________
                                                Name:
                                                Title:


                                       48
<PAGE>

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

                                            BUYERS:

                                            [INVESTOR NAME]


                                            By: ____________________________
                                                Name:
                                                Title:


                                       49
<PAGE>

                                      SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          (1)                                (2)                     (3)           (4)             (5)                   (6)
------------------------------------------------------------------------------------------------------------------------------------
                                                                    ORIGINAL      NUMBER OF                   LEGAL REPRESENTATIVE'S
                                                                   PRINCIPAL       WARRANT                          ADDRESS AND
             BUYER               ADDRESS AND FACSIMILE NUMBER   AMOUNT OF NOTES    SHARES    PURCHASE PRICE      FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                             <C>                <C>      <C>             <C>
------------------------------------------------------------------------------------------------------------------------------------
Silver Oak Capital, L.L.C.       [              ]                $14,000,000.00     509,091  $14,000,000.00  PAUL, WEISS, RIFKIND,
                                 Attention:                                                                  WHARTON & GARRISON LLP
                                 Facsimilie:                                                                 1285 Avenue of the
                                 Telephone:                                                                  Americas | New York, NY
                                 Residence:                                                                  10019-6064
                                                                                                             Attn: Doug Cifu
------------------------------------------------------------------------------------------------------------------------------------
Alexandra Global Master Fund     c/o Alexandra Investment         $4,000,000.00     145,455   $4,000,000.00
LTD                              Management, LLC
                                 767 Third Avenue,
                                 39th Floor
                                 New York, NY 10019
                                 Attention: Dov Gal
                                            Mikhail Filimonov
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Bay Harbour Management           885 Third Ave, 34th Floor        $2,750,000.00     100,000   $2,750,000.00
                                 New York, NY 10016
                                 Attention: Gaurav Aggarwal
                                            Steven Van Dyke
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
CAMOFI Master LDC                c/o Centrecourt Asset            $7,000,000.00     254,545   $7,000,000.00
                                 Management LLC
                                 350 Madison Avenue, 8th
                                 Floor
                                 New York, NY 10017
                                 Attention: Jeffrey M. Haas
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       50
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          (1)                                (2)                     (3)           (4)             (5)                   (6)
------------------------------------------------------------------------------------------------------------------------------------
                                                                    ORIGINAL      NUMBER OF                   LEGAL REPRESENTATIVE'S
                                                                   PRINCIPAL       WARRANT                          ADDRESS AND
             BUYER               ADDRESS AND FACSIMILE NUMBER   AMOUNT OF NOTES    SHARES    PURCHASE PRICE      FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>               <C>       <C>             <C>
------------------------------------------------------------------------------------------------------------------------------------
Diamond Opportunity Fund, LLC    500 Skokie Blvd, Suite 300         $250,000.00       9,091     $250,000.00
                                 Northbrook, IL 60062
                                 Attention: Richard Marks
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Evolution Master Fund LTD SPC,   c/o Evolution Capital            $7,000,000.00     254,545   $7,000.000.00
Segregated Portfolio M           Management, LLC
                                 1132 Bishop Street, Suite
                                 1880
                                 Honolulu, HI 96813
                                 Attention: Adrian Brindle
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Harvest Capital, LP              Marjorie G. Kellner                $434,000.00      15,782     $434,000.00
                                 c/o Harvest Management LLC
                                 600 Madison Avenue - 11th
                                 Floor
                                 New York, NY 10022
                                 Attention:
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Harvest Offshore Investors,      c/o Harvest Management LLC         $832,000.00      30,255     $832,000.00
Ltd.                             600 Madison Avenue - 11th
                                 Floor
                                 New York, NY 10022
                                 Attention: Marjorie G.
                                 Kellner
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       51
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          (1)                                (2)                     (3)           (4)             (5)                   (6)
------------------------------------------------------------------------------------------------------------------------------------
                                                                    ORIGINAL      NUMBER OF                   LEGAL REPRESENTATIVE'S
                                                                   PRINCIPAL       WARRANT                          ADDRESS AND
             BUYER               ADDRESS AND FACSIMILE NUMBER   AMOUNT OF NOTES    SHARES    PURCHASE PRICE      FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>               <C>       <C>             <C>
------------------------------------------------------------------------------------------------------------------------------------
TE Harvest Portfolio, Ltd.       c/o Harvest Management LLC         $734,000.00      26,691     $734,000.00
                                 600 Madison Avenue - 11th
                                 Floor
                                 New York, NY 10022
                                 Attention: Marjorie G.
                                 Kellner
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
JMG Capital Partners, LP         11601 Wilshire Blvd,             $2,000,000.00      72,727   $2,000,000.00
                                 Ste 2180
                                 Los Angeles, CA 90025
                                 Attention: Nouk Newton
------------------------------------------------------------------------------------------------------------------------------------
JMG Triton Offshore Fund, Ltd    Wickham Cay                      $2,000,000.00      72,727   $2,000,000.00
                                 Road Town Tortola BVI
                                 11601 Wilshire Blvd, Ste
                                 2180
                                 Los Angeles, CA 90025
                                 Attention: Nouk Newton
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Shoshone Partners, L.P.          485 Underhill Blvd.              $1,875,000.00      68,182   $1,875,000.00
                                 Suite 205
                                 Syosset, NY 11791
                                 Attention: Lisa Nigro
                                            Pat Eaton-Buettner
                                            Anthony Campbell
                                            David Jeuda
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       52
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          (1)                                (2)                     (3)           (4)             (5)                   (6)
------------------------------------------------------------------------------------------------------------------------------------
                                                                    ORIGINAL      NUMBER OF                   LEGAL REPRESENTATIVE'S
                                                                   PRINCIPAL       WARRANT                          ADDRESS AND
             BUYER               ADDRESS AND FACSIMILE NUMBER   AMOUNT OF NOTES    SHARES    PURCHASE PRICE      FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>               <C>       <C>             <C>
------------------------------------------------------------------------------------------------------------------------------------
Knott Partners, L.P.             485 Underhill Blvd.              $2,931,000.00     106,582   $2,931,000.00
                                 Suite 205
                                 Syosset, NY 11791
                                 Attention: Lisa Nigro
                                            Pat Eaton-Buettner
                                            Anthony Campbell
                                            David Jeuda
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Finderne LLC                     485 Underhill Blvd.                $119,000.00       4,327     $119,000.00
                                 Suite 205
                                 Syosset, NY 11791
                                 Attention: Lisa Nigro
                                            Pat Eaton-Buettner
                                            Anthony Campbell
                                            David Jeuda
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Mulsanne Partners, L.P.          485 Underhill Blvd.                 $22,000.00         800      $22,000.00
                                 Suite 205
                                 Syosset, NY 11791
                                 Attention: Lisa Nigro
                                            Pat Eaton-Buettner
                                            Anthony Campbell
                                            David Jeuda
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       53
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          (1)                                (2)                     (3)           (4)             (5)                   (6)
------------------------------------------------------------------------------------------------------------------------------------
                                                                    ORIGINAL      NUMBER OF                   LEGAL REPRESENTATIVE'S
                                                                   PRINCIPAL       WARRANT                          ADDRESS AND
             BUYER               ADDRESS AND FACSIMILE NUMBER   AMOUNT OF NOTES    SHARES    PURCHASE PRICE      FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>               <C>       <C>             <C>
------------------------------------------------------------------------------------------------------------------------------------
Matterhorn Offshore Fund Ltd.    485 Underhill Blvd.              $4,592,000.00     166,982   $4,592,000.00
                                 Suite 205
                                 Syosset, NY 11791
                                 Attention: Lisa Nigro
                                            Pat Eaton-Buettner
                                            Anthony Campbell
                                            David Jeuda
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
CommonFund Hedged Equity         485 Underhill Blvd.                $351,000.00      12,764     $351,000.00
Company                          Suite 205
                                 Syosset, NY 11791
                                 Attention: Lisa Nigro
                                            Pat Eaton-Buettner
                                            Anthony Campbell
                                            David Jeuda
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Good Steward Trading Co. s.p.c.  485 Underhill Blvd.                $110,000.00       4,000     $110,000.00
                                 Suite 205
                                 Syosset, NY 11791
                                 Attention: Lisa Nigro
                                            Pat Eaton-Buettner
                                            Anthony Campbell
                                            David Jeuda
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       54
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          (1)                                (2)                     (3)           (4)             (5)                   (6)
------------------------------------------------------------------------------------------------------------------------------------
                                                                    ORIGINAL      NUMBER OF                   LEGAL REPRESENTATIVE'S
                                                                   PRINCIPAL       WARRANT                          ADDRESS AND
             BUYER               ADDRESS AND FACSIMILE NUMBER   AMOUNT OF NOTES    SHARES    PURCHASE PRICE      FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>               <C>       <C>             <C>
------------------------------------------------------------------------------------------------------------------------------------
Radcliffe SPC, Ltd. for and on   c/o RG Capital Management,       $4,000,000.00     145,455   $4,000,000.00
behalf of the Class A            L.P.
Segregated Portfolio             3 Bala Plaza - East
                                 Suite 501
                                 Bala Cynwyd, PA 19004
                                 Attention:  Gerald F.
                                 Stahlecker
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
Wolverine Convertible            c/o Wolverine Asset                $500,000.00      18,182     $500,000.00
Arbitrage Trading, Limited       Management
                                 175 W Jackson #200
                                 Chicago, IL 60604
                                 Attention: Andy Sujdak
                                            Alicia Alvez
                                 Facsimilie:
                                 Telephone:
                                 Residence:
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       55
<PAGE>

                                    EXHIBITS

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

                                    SCHEDULES

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