Unassociated Document


     

    SECURITY
      AGREEMENT

     

    


     

    LV
      ADMINISTRATIVE SERVICES, INC.,

     

    as
      Administrative and Collateral Agent

     

    THE
      LENDERS

     

    From
      Time
      to Time Party Hereto

     

    


     

    NEWMARKET
      TECHNOLOGY, INC.

     

    


     

    IP
      GLOBAL
      VOICE, INC.

     

    NETSCO,
      INC.

     

    NEWMARKET
      INTELLECTUAL PROPERTY, INC.

     

    NEWMARKET
      BROADBAND, INC.

     

    and

     

    


     

    NEWMARKET
      CHINA, INC.

     

    Dated:
      November 30, 2007


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 1.	
              General
                Definitions and Terms; Rules of Construction. 

            	
               1

            
	 2.	
              Loan
                Facility. 

            	
               2

            
	 3.	Repayment
              of the Loans	
               4

            
	 4.	Procedure
              for Revolving Loans	
               4

            
	 5.	
              Interest
                and Payments. 

            	
               4

            
	 6.	Security
              Interest.	
               6

            
	 7.	
              Representations,
                Warranties and Covenants Concerning the
                Collateral 

            	
               7

            
	 8.	
              Payment
                of Accounts. 

            	
               10

            
	 9.	
              Collection
                and Maintenance of Collateral. 

            	
               11

            
	 10.	Inspections
              and Appraisals	
               11

            
	 11.	
              Financial
                Reporting 

            	
               11

            
	 12.	Additional
              Representations and Warranties	
               13

            
	 13.	Covenants	
               24

            
	 14.	
              Further
                Assurances 

            	
               32

            
	 15.	Representations,
              Warranties and Covenants of the Lenders	
               32

            
	 16.	Confidentiality	
               34

            
	 17.	
              Power
                of Attorney 

            	
               34

            
	 18.	
              Term
                of Agreement 

            	
               34

            
	 19.	Termination
              of Lien	
               35

            
	 20.	Events
              of Default	
               35

            
	 21.	Remedies	
               37

            
	 22.	Waivers	
               38

            
	 23.	Expenses	
               38

            
	 24.	Assignment;
              Register.	
               38

            
	 25.	No
              Waiver; Cumulative Remedies	
               39

            
	 26.	
              Application
                of Payments 

            	
               39

            
	 27.	
              Indemnity 

            	
               39

            
	 28.	
              Revival 

            	
               40

            
	 29.	
              Borrowing
                Agency Provisions. 

            	
               40

            
	 30.	
              Notices 

            	
               41

            
	 31.	Governing
              Law, Jurisdiction and Waiver of Jury Trial.	
               42

            
	 32.	
              Limitation
                of Liability 

            	
               42

            
	 33.	Entire
              Understanding; Maximum Interest	
               42

            
	 34.	Severability	
               43

            
	 35.	
              Survival 

            	
               43

            
	 36.	
              Captions 

            	
               43

            
	 37.	Counterparts;
              Telecopier Signatures	
               43

            
	 38.	Construction	
               43

            
	 39.	Publicity	
               43

            
	 40.	
              Joinder 

            	
               43

            
	 41.	Legends	
              44

            
	 42.	
              Agency 

            	
               44

            
	 	 	 
	 	 	 


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    SECURITY
      AGREEMENT

     

    This
      SECURITY AGREEMENT is made as of November 30, 2007 by and among the lenders
      from
      time to time party hereto (the “Lenders”), LV ADMINISTRATIVE SERVICES,
      INC., a Delaware corporation, as administrative and collateral agent for the
      Lenders (in such capacity, the “Agent” and together with the Lenders, the
“Creditor Parties”), NEWMARKET TECHNOLOGY, INC., a Nevada corporation
      (the “Parent”), and each party listed on Exhibit A attached hereto
      (each an “Eligible Subsidiary” and collectively, the “Eligible
      Subsidiaries”; the Parent and each Eligible Subsidiary, each a
“Company” and collectively, the “Companies”).

     

    BACKGROUND

     

    The
      Companies have requested that the Lenders make advances available to the
      Companies and purchase term notes from the Companies; and

     

    The
      Lenders have agreed to make such advances and purchase such notes on the terms
      and conditions set forth in this Agreement.

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and undertakings and the
      terms and conditions contained herein, the parties hereto agree as
      follows:

     

    1.  General
      Definitions and Terms; Rules of Construction.

     

    (a)  General
      Definitions.  Capitalized terms used in this Agreement shall have
      the meanings assigned to them in Annex A.

     

    (b)  Accounting
      Terms.  Any accounting terms used in this Agreement which are not
      specifically defined shall have the meanings customarily given them in
      accordance with GAAP and all financial computations shall be computed, unless
      specifically provided herein, in accordance with GAAP consistently
      applied.

     

    (c)  Other
      Terms.  All other terms used in this Agreement and defined in the
      UCC, shall have the meaning given therein unless otherwise defined
      herein.

     

    (d)  Rules
      of Construction.  All Schedules, Addenda, Annexes and Exhibits
      hereto or expressly identified to this Agreement are incorporated herein by
      reference and taken together with this Agreement constitute but a single
      agreement.  The words “herein”, “hereof” and “hereunder” or other
      words of similar import refer to this Agreement as a whole, including the
      Exhibits, Addenda, Annexes and Schedules thereto, as the same may be from time
      to time amended, modified, restated or supplemented, and not to any particular
      section, subsection or clause contained in this Agreement.  Wherever
      from the context it appears appropriate, each term stated in either the singular
      or plural shall include the singular and the plural, and pronouns stated in
      the
      masculine, feminine or neuter gender shall include the masculine, the feminine
      and the neuter.  The term “or” is not exclusive.  The term
“including” (or any form thereof) shall not be limiting or
      exclusive.  All references to statutes and related regulations shall
      include any amendments of same and any successor statutes and
      regulations.  All references in this Agreement or in the Schedules,
      Addenda, Annexes and Exhibits to this Agreement to sections, schedules,
      disclosure schedules, exhibits, and attachments shall refer to the corresponding
      sections, schedules, disclosure schedules, exhibits, and attachments of or
      to
      this Agreement.  All references to any instruments or agreements,
      including references to any of this Agreement or the Ancillary Agreements shall
      include any and all modifications or amendments thereto and any and all
      extensions or renewals thereof.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    2.  Loan
      Facility.

     

    (a)  Revolving
      Loans.

     

    (i)  Subject
      to the terms and conditions set forth herein and in the Ancillary Agreements,
      each Lender, severally and not jointly, may make revolving loans (the
“Revolving Loans”) to the Companies from time to time during the Term
      which, in the aggregate at any time outstanding, will not exceed such Lender’s
      Revolving Commitment Percentage of the lesser of (x) (I) the Capital
      Availability Amount minus (II) the Reserves and (y) an amount equal to (I)
      the
      Accounts Availability minus (II) the Reserves.  The amount derived at
      any time from Section 2(a)(i)(y)(I) minus 2(a)(i)(y)(II) shall be referred
      to as
      the “Formula Amount.”  The Companies shall, jointly and
      severally, execute and deliver to each Lender on the Closing Date a Secured
      Revolving Note evidencing such Lender’s Revolving Commitment Percentage of the
      Capital Availability Amount.  The Companies hereby each acknowledge
      and agree that each Lender’s obligation to purchase a Secured Revolving Note
      from the Companies on the Closing Date shall be contingent upon the satisfaction
      (or waiver by the Agent) of the items and matters set forth in the closing
      checklist provided by the Agent to the Companies on or prior to the Closing
      Date.  The Companies hereby each further acknowledge and agree that,
      immediately prior to each borrowing hereunder and immediately after giving
      effect thereto, the Companies shall be deemed to have certified to the Lenders
      that at the time of each such proposed borrowing and also after giving effect
      thereto (i) there shall exist no Event of Default, (ii) all representations,
      warranties and covenants made by the Companies in connection with this Agreement
      and the Ancillary Agreements are true, correct and complete and (iii) all of
      each Company’s and its respective Subsidiaries’ covenant requirements under this
      Agreement and the Ancillary Agreements have been met.  The Companies
      hereby agree to provide a certificate confirming the foregoing concurrently
      with
      each request for a borrowing hereunder.

     

    (ii)  Notwithstanding
      the limitations set forth above, if requested by any Company, the Agent may
      determine in its sole discretion to permit Revolving Loans in excess of the
      Formula Amount (the aggregate of Revolving Loans in excess of the Formula Amount
      at any time, an “Overadvance”) to be made and/or to remain outstanding;
provided that any Overadvance made on or after the Specified Assignment
      Date shall constitute a Permitted Overadvance.  For purposes hereof,
“Permitted Overadvance” means an Overadvance that, as determined by the
      Agent in its reasonable discretion, (i) is made solely to maintain, protect
      or
      preserve the Collateral and/or the Lenders’ rights under this Agreement and the
      Ancillary Agreements and is necessary in order to avoid a material adverse
      effect on the Collateral and/or the Lenders’ rights under this Agreement and the
      Ancillary Agreements; (ii) does not exceed fifty percent (50%) of the Formula
      Amount at any time; and (iii) remains outstanding for not more than forty-five
      (45) consecutive Business Days, unless in case of this clause (iii), the
      Required Lenders otherwise agree.  In connection with each such
      request by one or more Companies, the Companies shall be deemed to have
      certified, as of the time of such proposed borrowing and immediately after
      giving effect thereto, to the satisfaction of all Overadvance
      Conditions.  For purposes hereof, “Overadvance Conditions”
means (i) no Event of Default shall exist and be continuing as of such
      date;
      (ii) all representations, warranties and covenants made by the Companies in
      connection with the Security Agreement and the Ancillary Agreements shall be
      true, correct and complete as of such date; and (iii) the Companies and their
      respective Domestic Subsidiaries shall have taken all action necessary to grant
      the Agent “control” over all of the Companies’ and their respective Domestic
      Subsidiaries’ Deposit Accounts (the “Control Accounts”), with any
      agreements establishing “control” to be in form and substance satisfactory to
      the Agent.  “Control” over such Control Accounts shall be
      released upon the indefeasible repayment in full and termination of the
      Overadvance (together with all accrued interest and fees which remain unpaid
      in
      respect thereof).  The Companies hereby agree to provide a certificate
      confirming the satisfaction of the Overadvance Conditions concurrently with
      the
      request for same.

     

    (iii)  The
      Companies acknowledge that the exercise of the Agent’s discretionary rights
      hereunder may result during the Term in one or more increases or decreases
      in
      the advance percentages used in determining Accounts Availability and each
      of
      the Companies hereby consent to any such increases or decreases which may limit
      or restrict advances requested by the Companies.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (iv)  If
      any
      interest, fees, costs or charges payable to the Credit Parties hereunder are
      not
      paid when due, each of the Companies shall thereby be deemed to have requested,
      and each of the Lenders will be deemed to have made and the Agent will charge
      to
      the Companies’ account with a Revolving Loan immediately due and payable as of
      such date in an amount equal to such unpaid interest, fees, costs or charges;
      provided, however, that the Agent may elect to extend the maturity
      of all or a portion of any such Revolving Loan at any time prior to the
      Specified Assignment Date to a date that is on or prior to the maturity of
      the
      Loans made other than pursuant to this clause (iv).

     

    (v)  If
      any
      Company at any time fails to perform or observe any of the covenants contained
      in this Agreement or any Ancillary Agreement, the Agent may, but need not,
      perform or observe such covenant on behalf and in the name, place and stead
      of
      such Company (or, at the Agent’s option, in the Agent’s name) and may, but need
      not, take any and all other actions which the Agent may deem necessary to cure
      or correct such failure (including the payment of taxes, the satisfaction of
      Liens, the performance of obligations owed to Account Debtors, lessors or other
      obligors, the procurement and maintenance of insurance, the execution of
      assignments, security agreements and financing statements, and the endorsement
      of instruments).  The amount of all monies expended and all costs and
      expenses (including reasonable attorneys’ fees and legal expenses) incurred by
      the Agent in connection with or as a result of the performance or observance
      of
      such agreements or the taking of such action by the Agent shall be charged
      to
      the Companies’ account as a Loan and added to the Obligations.  To
      facilitate the Agent’s performance or observance of such covenants by each
      Company, each Company hereby irrevocably appoints the Agent, or the Agent’s
      delegate, acting alone, as such Company’s attorney in fact (which appointment is
      coupled with an interest) with the right (but not the duty) from time to time
      to
      create, prepare, complete, execute, deliver, endorse or file in the name and
      on
      behalf of such Company any and all instruments, documents, assignments, security
      agreements, financing statements, applications for insurance and other
      agreements and writings required to be obtained, executed, delivered or endorsed
      by such Company.

     

    (vi)  The
      Agent
      will account to Company Agent monthly with a statement of all Loans and other
      advances, charges and payments made pursuant to this Agreement, and such account
      rendered by the Agent shall be deemed final, binding and conclusive absent
      manifest error unless the Agent is notified by Company Agent in writing to
      the
      contrary within thirty (30) days of the date each account was rendered
      specifying the item or items to which objection is made.

     

    (vii)  During
      the Term, the Companies may borrow and prepay Loans in accordance with the
      terms
      and conditions hereof.

     

    (viii)  If
      any
      Eligible Account is not paid by the Account Debtor within ninety (90) days
      after
      the date that such Eligible Account was invoiced or if any Account Debtor
      asserts a deduction, dispute, contingency, set-off, or counterclaim with respect
      to any Eligible Account, (a “Delinquent Account”), the Companies shall
      jointly and severally (i) reimburse the Lenders for the amount of the Revolving
      Loans made with respect to such Delinquent Account or (ii) immediately replace
      such Delinquent Account with an otherwise Eligible Account.

     

    (b)  Term
      Loan.  Subject to the terms and conditions set forth herein and in
      the Ancillary Agreements, each Lender shall make a term loan to Company Agent
      (for the benefit of Companies) in such Lender’s Term Loan Commitment Percentage
      of $4,000,000 (the “Term Loan”).  The Term Loan shall be
      advanced on the Closing Date and shall be, with respect to principal, payable
      in
      consecutive monthly installments of principal commencing on June 1, 2008 and
      on
      the first day of each month thereafter, subject to acceleration upon the
      occurrence of an Event of Default or termination of this
      Agreement.  The Term Loan shall be evidenced by the Secured Term
      Notes.  The Companies hereby acknowledge and agree that each Lender’s
      obligation to purchase a Secured Term Note on the Closing Date shall be
      contingent upon the satisfaction (or waiver by the Agent) of the items and
      matters set forth in the closing checklist provided by the Agent to the
      Companies on or prior to the Closing Date.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    3.  Repayment
      of the Loans.  The Companies (a) may prepay the Obligations from
      time to time in accordance with the terms and provisions of the Notes (and
      Section 17 hereof if such prepayment is due to a termination of this Agreement);
      (b) shall repay on the Maturity Date (as defined in the Secured Term Notes)
      (i)
      the then aggregate outstanding principal balance of the Term Loan together
      with
      accrued and unpaid interest, fees and charges; and (ii) all other amounts owed
      the Lenders under the Secured Term Notes; (c) shall repay on the expiration
      of
      the Term (i) the then aggregate outstanding principal balance of the Revolving
      Loans together with accrued and unpaid interest, fees and charges; and (ii)
      all
      other amounts owed the Creditor Parties under this Agreement and the Ancillary
      Agreements; and (d) subject to Section 2(a)(ii), shall repay on any day on
      which
      the then aggregate outstanding principal balance of the Revolving Loans are
      in
      excess of the Formula Amount at such time, the Revolving Loans in an amount
      equal to such excess.  Any payments of principal, interest, fees or
      any other amounts payable hereunder or under any Ancillary Agreement shall
      be
      made prior to 12:00 noon (New York time) on the due date thereof in immediately
      available funds.

     

    4.  Procedure
      for Revolving Loans.  Company Agent may by written notice request
      a borrowing of Revolving Loans prior to 12:00 noon (New York time) on the
      Business Day of its request to incur, on the next Business Day, a Revolving
      Loan.  Together with each request for a Revolving Loan (or at such
      other intervals as the Agent may request), Company Agent shall deliver to the
      Agent a Borrowing Base Certificate in the form of Exhibit B attached
      hereto, which shall be certified as true and correct by the Chief Executive
      Officer or Chief Financial Officer of Company Agent together with all supporting
      documentation relating thereto.  All Revolving Loans shall be
      disbursed from whichever office or other place the Agent may designate from
      time
      to time and shall be charged to the Companies’ account on the Agent’s
      books.  The proceeds of each Revolving Loan made by the Lenders shall
      be made available to Company Agent on the Business Day following the Business
      Day so requested in accordance with the terms of this Section 4 by way of credit
      to the applicable Company’s operating account maintained with such bank as
      Company Agent designated to the Agent.  Any and all Obligations due
      and owing hereunder may be charged to the Companies’ account and shall
      constitute Revolving Loans.

     

    5.  Interest
      and Payments.

     

    (a)  Interest.

     

    (i)  Except
      as
      modified by Section 5(a)(iii) below, the Companies shall jointly and severally
      pay interest at the Contract Rate on the unpaid principal balance of each Loan
      until such time as such Loan is collected in full in good funds in dollars
      of
      the United States of America.

     

    (ii)  Interest
      and payments shall be computed on the basis of actual days elapsed in a year
      of
      360 days.  At the Agent’s option, the Lenders may charge the
      Companies’ account for said interest.

     

    (iii)  Effective
      upon the occurrence of any Event of Default and for so long as any Event of
      Default shall be continuing, the Contract Rate shall automatically be increased
      as set forth in the Notes (such increased rate, the “Default Rate”), and
      all outstanding Obligations, including unpaid interest, shall continue to accrue
      interest from the date of such Event of Default at the Default Rate applicable
      to such Obligations.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (iv)  In
      no
      event shall the aggregate interest payable hereunder or under any Note exceeds
      the maximum rate permitted under any applicable law or regulation, as in effect
      from time to time (the “Maximum Legal Rate”), and if any provision of
      this Agreement or any Ancillary Agreement is in contravention of any such law
      or
      regulation, interest payable under this Agreement and each Ancillary Agreement
      shall be computed on the basis of the Maximum Legal Rate (so that such interest
      will not exceed the Maximum Legal Rate).

     

    (v)  The
      Companies shall jointly and severally pay principal, interest and all other
      amounts payable hereunder, or under any Ancillary Agreement, without any
      deduction whatsoever, including any deduction for any set-off or
      counterclaim.

     

    (vi)  All
      payments made by any Company under this Agreement shall be made free and clear
      of, and without deduction or withholding for or on account of, any present
      or
      future Taxes now or hereafter imposed, levied, collected, withheld or assessed
      by any Governmental Authority, other than Excluded Taxes.  If any
      Non-Excluded Taxes or Other Taxes are required to be withheld from any amounts
      payable to any Creditor Party hereunder, the amounts so payable to such Creditor
      Party shall be increased to the extent necessary to yield to such Creditor
      Party
      (after payment of all Non-Excluded Taxes and Other Taxes, including those
      imposed on payments made pursuant to this paragraph (vi) of this Section 5(a))
      interest or any such other amounts payable hereunder at the rates or in the
      amounts specified in this Agreement, provided, however, that no Company shall
      be
      required to increase any such amounts payable to any Lender with respect to
      any
      Non-Excluded Taxes that are directly attributable to such Lender’s failure to
      comply with the requirements of paragraph (ix) of this Section
      5(a).

     

    (vii)  In
      addition, the Companies shall pay any Other Taxes to the relevant Governmental
      Authority in accordance with applicable law.

     

    (viii)  Whenever
      any Non-Excluded Taxes or Other Taxes are payable by any Company, as promptly
      as
      possible thereafter such Company shall send to the Agent for its own account
      or
      for the account of the relevant Lender, as the case may be, a certified copy
      of
      an original official receipt received by such Company showing payment thereof
      (or such other evidence reasonably satisfactory to the Agent).  If
      such Company fails to pay any Non-Excluded Taxes or Other Taxes when due to
      the
      appropriate taxing authority or fails to remit to the Agent the required
      receipts or other required documentary evidence, the Companies shall indemnify
      the Creditor Parties for any incremental taxes, interest or penalties that
      may
      become payable by any Creditor Party as a result of any such
      failure.

     

    (ix)  Each
      Lender (or its assignee) that is not a “United States Person,” as defined in
      Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to
      the Company Agent and the Agent two completed originals of an appropriate
      U.S.  Internal Revenue Service Form W-8, as applicable, or any
      subsequent versions thereof or successors thereto, properly completed and duly
      executed by such Non-U.S.  Lender.  Such forms shall be
      delivered by each Non-U.S.  Lender on or before the date it becomes a
      party to this Agreement.  In addition, each Non-U.S.  Lender
      shall deliver such forms promptly upon the obsolescence or invalidity of any
      form previously delivered by such Non-U.S.  Lender.  Each
      Non-U.S.  Lender shall promptly notify the Company Agent at any time
      it determines that it is no longer in a position to provide any previously
      delivered certificate to the Company Agent (or any other form of certification
      adopted by the U.S.  taxing authorities for such
      purpose).  Notwithstanding any other provision of this paragraph, a
      Non-U.S.  Lender shall not be required to deliver any form pursuant to
      this paragraph that such Non-U.S.  Lender is not legally able to
      deliver.

     

    (x)  The
      agreements in this Section shall survive the termination of this Agreement
      and
      the payment of the Loans and all other amounts payable hereunder or under any
      other Ancillary Agreement.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (b)  Payment;
      Certain Closing Conditions.

     

    (i)  Payment.  Subject
      to the terms of Section 5(b)(ii) below, the Companies shall, jointly and
      severally, pay (A) to Valens Capital Management, LLC, the investment manager
      of
      the Lenders (“VCM”), a non-refundable payment in an amount equal to
      $233,500; (B) to each Lender a non-refundable payment in an amount equal to
      one
      percent (1.00%) of the aggregate principal amount of such Lender’s Note; and (C)
      to each Lender an advance prepayment discount deposit equal to one percent
      (1.00%) of the aggregate principal amount of such Lender’s Note.  The
      payments set forth in clauses (i)(A) and (B) above shall be deemed fully earned
      on the Closing Date and shall not be subject to rebate or proration for any
      reason.  The payments set forth in clauses (i)(A) (net of any deposits
      previously paid by the Companies), (i)(B) and (i)(C) above shall be paid at
      closing out of funds held pursuant to a funds escrow agreement and a
      disbursement letter executed in connection herewith.

     

    (ii)  Overadvance
      Payment.  Without affecting the Lenders’ rights hereunder, each
      Overadvance shall bear additional interest at a rate equal to one percent (1%)
      per month of the amount of such Overadvance for all times such amounts shall
      be
      in excess of the Formula Amount.  All amounts that are incurred
      pursuant to this Section 5(b)(iii) shall be due and payable by the Companies
      monthly, in arrears, on the first business day of each calendar month and upon
      expiration of the Term.

     

    (iii)  Financial
      Information Default.  Without affecting the Lenders’ other rights
      and remedies, in the event any Company fails to deliver the financial
      information required by Section 11 on or before the date required by this
      Agreement, the Companies shall jointly and severally pay each Lender its pro
      rata share of an aggregate fee in the amount of $500.00 per week (or portion
      thereof) for each such failure until such failure is cured to the Agent’s
      satisfaction or waived in writing by the Agent.  All amounts that are
      incurred pursuant to this Section 5(b)(iv) shall be due and payable by the
      Companies monthly, in arrears, on the first business day of each calendar month
      and upon expiration of the Term.

     

    6.  Security
      Interest.

     

    (a)  To
      secure
      the prompt payment to the Creditor Parties of the Obligations, each Company
      hereby assigns, pledges and grants to the Agent, for the ratable benefit of
      the
      Creditor Parties, a continuing security interest in and Lien upon all of the
      Collateral.  All of each Company’s Books and Records relating to the
      Collateral shall, until delivered to or removed by the Agent, be kept by such
      Company in trust for the Creditor Parties until the termination of this
      Agreement and the payment in full of all Obligations.  Each
      confirmatory assignment schedule or other form of assignment hereafter executed
      by each Company shall be deemed to include the foregoing grant, whether or
      not
      the same appears therein.

     

    (b)  Each
      Company hereby (i) authorizes the Agent to file any financing statements,
      continuation statements or other amendments thereto that (x) indicate the
      Collateral (1) as all assets and personal property of such Company or words
      of
      similar effect, regardless of whether any particular asset comprised in the
      Collateral falls within the scope of Article 9 of the UCC of such jurisdiction,
      or (2) as being of an equal or lesser scope or with greater detail, and (y)
      contain any other information required by Part 5 of Article 9 of the UCC for
      the
      sufficiency or filing office acceptance of any financing statement, continuation
      statement or other amendment and (ii) ratifies its authorization for the Agent
      to have filed any initial financial statements, or amendments thereto if filed
      prior to the date hereof.  Each Company acknowledges that it is not
      authorized to file, and will not give any authorization to anyone other than
      the
      Agent (including pursuant to Section 9-509(b) of the UCC) to file, any financing
      statement or amendment or termination statement with respect to any financing
      statement without the prior written consent of the Agent and agrees that it
      will
      not do so without the prior written consent of the Agent, subject to such
      Company’s rights under Section 9-509(d)(2) of the UCC.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (c)  Each
      Company hereby grants to the Agent, for the ratable benefit of the Creditor
      Parties, an irrevocable, non-exclusive, worldwide license (exercisable upon
      termination of this Agreement following the occurrence of an Event of Default),
      without payment of royalty or other compensation to such Company to use or
      otherwise exploit in any manner as to which authorization of the holder of
      such
      Intellectual Property would be required, and to license or sublicense such
      rights in to and under any Intellectual Property now or hereafter owned by
      or
      licensed to, such Company, and wherever the same may be located, and including
      in such license access to all media in which any of such Intellectual Property
      may be recorded or stored and to all software and hardware used for the
      compilation or printout thereof, and represents, promises and agrees that any
      such license or sublicense is not and will not be in conflict with the
      contractual or commercial rights of any third Person and subject, in the case
      of
      trademarks and service marks, to sufficient rights to quality control and
      inspection in favor of such Company to avoid the risk of invalidation of said
      trademarks and service marks.

     

    (d)  Any
      proceeds received by the Agent from the foreclosure, sale, lease or other
      disposition of any of the Collateral shall be paid over to the Agent for
      application in accordance with Section 21.

     

    7.  Representations,
      Warranties and Covenants Concerning the Collateral.  Each Company
      represents, warrants (each of which such representations and warranties shall
      be
      deemed repeated upon the making of each request for a Loan and made as of the
      time of each and every Loan hereunder) and covenants as follows:

     

    (a)  all
      of
      the Collateral (i) is owned by it free and clear of all
      Liens  (including any claim of infringement) except those in the
      Agent’s favor and Permitted Liens and (ii) is not subject to any agreement
      prohibiting the granting of a Lien or requiring notice of or consent to the
      granting of a Lien.

     

    (b)  it
      shall
      not encumber, mortgage, pledge, assign or grant any security interest in or
      Lien
      upon any Collateral or any other assets to anyone other than the Agent and
      except for Permitted Liens.

     

    (c)  the
      Liens
      granted pursuant to this Agreement, upon the filing of UCC-1 financing
      statements in respect of each Company (or the District of Columbia Recorder
      of
      Deeds Office for each Company that is organized under the laws of a jurisdiction
      outside of the United States of America) in favor of the Agent in the applicable
      filing office of the state of organization of such Company (or the District
      of
      Columbia Recorder of Deeds Office for each Company that is organized under
      the
      laws of a jurisdiction outside of the United States of America), the recording
      of the Liens in favor of the Agent in the U.S.  Patent and Trademark
      Office and the U.S.  Copyright Office, as applicable, the taking of
      any actions required under the laws of jurisdictions outside the United States
      with respect to Intellectual Property included in the Collateral which is
      created under such laws, and the completion of the other filings and actions
      listed on Schedule 7(c) (which, in the case of all filings and other
      documents referred to in said Schedule, have been delivered to the Agent in
      duly
      executed form) constitute valid perfected security interests in all of the
      Collateral in favor of the Agent as security for the prompt payment of the
      Obligations, enforceable in accordance with the terms hereof against any and
      all
      of its creditors and purchasers and such security interest is prior to all
      other
      Liens in existence on the date hereof.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (d)  no
      effective security agreement, mortgage, deed of trust, financing statement,
      equivalent security or Lien instrument or continuation statement covering all
      or
      any part of the Collateral is or will be on file or of record in any public
      office, except those relating to Permitted Liens.

     

    (e)  it
      shall
      not dispose of any of the Collateral whether by sale, lease or otherwise, except
      for the sale of Inventory in the ordinary course of business and the disposition
      or transfer in the ordinary course of business during any fiscal year of
      Equipment and/or motor vehicles having an aggregate fair market value of not
      more than $25,000 and only to the extent that (i) the proceeds of any such
      disposition are used to acquire replacement Equipment and/or motor vehicles
      which is subject to the Agent’s first priority security interest or are used to
      repay Loans or to pay general corporate expenses, or (ii) following the
      occurrence of an Event of Default which continues to exist the proceeds of
      which
      are remitted to the Agent to be held as cash collateral for the
      Obligations.

     

    (f)  it
      shall
      defend the right, title and interest of the Agent in and to the Collateral
      against the claims and demands of all Persons whomsoever, and take such actions,
      including (i) all actions necessary to grant the Agent “control” of any
      Investment Property, Deposit Accounts, Letter-of-Credit Rights or electronic
      Chattel Paper owned by it, with any agreements establishing control to be in
      form and substance satisfactory to the Agent, (ii) the prompt (but in no event
      later than five (5) Business Days following the Agent’s request therefor)
      delivery to the Agent of all original Instruments, Chattel Paper, negotiable
      Documents and certificated Equity Interests owned by it (in each case,
      accompanied by stock powers, allonges or other instruments of transfer executed
      in blank), (iii) notification to third parties of the Agent’s interest in
      Collateral at the Agent’s request, and (iv) the institution of litigation
      against third parties as shall be prudent in order to protect and preserve
      its
      and/or the Agent’s respective and several interests in the
      Collateral.

     

    (g)  it
      shall
      promptly, and in any event within five (5) Business Days after the same is
      acquired by it, notify the Agent of any commercial tort claim (as defined in
      the
      UCC) acquired by it and unless otherwise consented to by the Agent, it shall
      enter into a supplement to this Agreement granting to the Agent a Lien in such
      commercial tort claim.

     

    (h)  it
      shall
      place notations upon its Books and Records and any of its financial statements
      to disclose the Agent’s Lien in the Collateral.

     

    (i)  if
      it
      retains possession of any Chattel Paper or Instrument with the Agent’s consent,
      such Chattel Paper and Instruments shall be marked with the following
      legend:  “This writing and obligations evidenced or secured hereby are
      subject to the security interest of LV Administrative Services, Inc., as agent.”
Notwithstanding the foregoing, upon the reasonable request of the Agent, such
      Chattel Paper and Instruments shall be delivered to the Agent.

     

    (j)  it
      shall
      perform in a reasonable time all other steps requested by the Agent to create
      and maintain in the Agent’s favor a valid perfected first Lien in all Collateral
      subject only to Permitted Liens.

     

    (k)  it
      shall
      notify the Agent promptly and in any event within five (5) Business Days after
      obtaining knowledge thereof (i) of any event or circumstance that, to its
      knowledge, would cause the Agent to consider any then existing Account as no
      longer constituting an Eligible Account; (ii) of any material delay in its
      performance of any of its obligations to any Account Debtor; (iii) of any
      assertion by any Account Debtor of any material claims, offsets or
      counterclaims; (iv) of any allowances, credits and/or monies granted by it
      to
      any Account Debtor; (v) of all material adverse information relating to the
      financial condition of an Account Debtor; (vi) of any material return of goods;
      and (vii) of any loss, damage or destruction of any of the
      Collateral.

     

    
      
         

      

      
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    (l)  all
      Eligible Accounts (i) represent complete bona fide transactions which require
      no
      further act under any circumstances on its part to make such Accounts payable
      by
      the Account Debtors, (ii) are not subject to any present, future contingent
      offsets or counterclaims, and (iii) do not represent bill and hold sales,
      consignment sales, guaranteed sales, sale or return or other similar
      understandings or obligations of any Affiliate or Subsidiary of such
      Company.  It has not made, nor will it make, any agreement with any
      Account Debtor for any extension of time for the payment of any Account, any
      compromise or settlement for less than the full amount thereof, any release
      of
      any Account Debtor from liability therefor, or any deduction therefrom except
      a
      discount or allowance for prompt or early payment allowed by it in the ordinary
      course of its business consistent with historical practice and as previously
      disclosed to the Agent in writing.

     

    (m)  it
      shall
      keep and maintain its Equipment in good operating condition, except for ordinary
      wear and tear, and shall make all necessary repairs and replacements thereof
      so
      that the value and operating efficiency shall at all times be maintained and
      preserved.  It shall not permit any such items to become a Fixture to
      real estate or accessions to other personal property.

     

    (n)  it
      shall
      maintain and keep all of its Books and Records concerning the Collateral at
      its
      executive offices listed in Schedule 12(aa).

     

    (o)  it
      shall
      maintain and keep the tangible Collateral at the addresses listed in Schedule
      12(aa), provided, that it may change such locations or open a new location,
      provided that it provides the Agent at least thirty (30) days prior written
      notice of such changes or new location and (ii) prior to such change or opening
      of a new location where Collateral having a value of more than $50,000 will
      be
      located, it executes and delivers to the Agent such agreements as are deemed
      reasonably necessary or prudent by the Agent, including landlord agreements,
      mortgagee agreements and warehouse agreements, each in form and substance
      satisfactory to the Agent, to adequately protect and maintain the Agent’s
      security interest in such Collateral.

     

    (p)  Schedule
      7(p) lists all banks and other financial institutions at which it maintains
      deposits and/or other accounts, and such Schedule correctly identifies the
      name,
      address and telephone number of each such depository, the name in which the
      account is held, a description of the purpose of the account, and the complete
      account number.  It shall not establish any depository or other bank
      account with any financial institution (other than the accounts set forth on
      Schedule 7(p)) without the Agent’s prior written consent.

     

    (q)  On
      the
      date hereof, its exact legal name (as indicated in the public record of its
      jurisdiction of organization), jurisdiction of organization, organizational
      identification number, if any, from the jurisdiction of organization, and the
      location of its chief executive office or sole place of business or principal
      residence, as the case may be, are specified on
Schedule 7(q).  It has furnished to the Agent a certified
      charter, certificate of incorporation or other organization document and
      long-form good standing certificate as of a date which is recent to the date
      hereof.  It is organized solely under the law of the jurisdiction so
      specified and has not filed any certificates of domestication, transfer or
      continuance in any other jurisdiction.  Except as otherwise indicated
      on Schedule 7(q), the jurisdiction of its organization of formation
      is required to maintain a public record showing it to have been organized or
      formed.  Except as specified on Schedule 7(q), it has not
      changed its name, jurisdiction of organization, chief executive office or sole
      place of business or its corporate structure in any way (e.g., by merger,
      consolidation, change in corporate form or otherwise) within the past five
      years
      and has not within the last five years become bound (whether as a result of
      merger or otherwise) as a grantor under a security agreement entered into by
      another Person, which has not heretofore been terminated.

     

    
      
         

      

      
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    (r)  It
      will
      not, except upon 30 days’ prior written notice to the Agent and delivery to the
      Agent of (a) all additional financing statements and other documents reasonably
      requested by the Agent to maintain the validity, perfection and priority of
      the
      security interests provided for herein and (b) if applicable, a written
      supplement to Schedule 12(aa) showing any additional location at
      which Inventory or Equipment in excess of $10,000 in the aggregate shall be
      kept:  (i) change its jurisdiction of organization or the location of
      its chief executive office or sole place of business or principal residence
      from
      that referred to in Section 7(q); (ii) change its name, identity or
      organizational structure; or (iii) permit any of the Inventory or Equipment
      in
      excess of $10,000 in the aggregate to be kept at a location other than those
      listed on Schedule 12(aa).

     

    8.  Payment
      of Accounts.

     

    (a)  Each
      Company will irrevocably direct all of its present and future Account Debtors
      and other Persons obligated to make payments constituting Collateral to make
      such payments directly to the lockboxes maintained by such Company (the
“Lockboxes”) with Sterling Bank and Community Bank of the Bay or such
      other financial institution accepted by the Agent in writing as may be selected
      by such Company (each, a “Lockbox Bank”) pursuant to the terms of the
      certain agreements among one or more Companies, the Agent and/or the Lockbox
      Bank.  On or prior to the Closing Date, each Company shall and shall
      cause each Lockbox Bank to enter into all such documentation acceptable to
      the
      Agent pursuant to which, among other things, such Lockbox Bank agrees
      to:  (a) sweep the Lockbox on a daily basis and deposit all checks
      received therein to an account designated by the Agent in writing and (b) comply
      only with the instructions or other directions of the Agent concerning the
      Lockbox.  All of each Company’s invoices, account statements and other
      written or oral communications directing, instructing, demanding or requesting
      payment of any Account of any Company or any other amount constituting
      Collateral shall conspicuously direct that all payments be made to the Lockbox
      or such other address as the Agent may direct in writing.  If,
      notwithstanding the instructions to Account Debtors, any Company receives any
      payments, such Company shall immediately remit such payments to the Agent in
      their original form with all necessary endorsements.  Until so
      remitted, such Company shall hold all such payments in trust for and as the
      property of the Agent for the ratable benefit of the Creditor Parties and shall
      not commingle such payments with any of its other funds or
      property.

     

    (b)  At
      the
      Agent’s election, following the occurrence of an Event of Default which is
      continuing, the Agent may notify each Company’s Account Debtors of the Agent’s
      security interest in the Accounts, collect them directly and charge the
      collection costs and expenses thereof to Company’s and the Eligible Subsidiaries
      joint and several account.

     

    
      
         

      

      
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    9.  Collection
      and Maintenance of Collateral.

     

    (a)  The
      Agent
      may verify each Company’s Accounts from time to time, but not more often than
      once every three (3) months, unless an Event of Default has occurred and is
      continuing, utilizing an audit control company or any other agent of the Agent
      or the Lenders.

     

    (b)  Proceeds
      of Accounts received by the Agent will be deemed received on the Business Day
      after the Agent’s receipt of such proceeds in good funds in dollars of the
      United States of America to an account designated by the Agent.  Any
      amount received by the Agent after 12:00 noon (New York time) on any Business
      Day shall be deemed received on the next Business Day.

     

    (c)  As
      the
      Agent receives the proceeds of Accounts of any Company, it shall (i) apply
      such
      proceeds, as required, to amounts outstanding under the Notes, and (ii) remit
      all such remaining proceeds (net of interest, fees and other amounts then due
      and owing to Creditor Parties hereunder) to Company Agent (for the benefit
      of
      the applicable Companies) upon request (but no more often than twice a
      week).  Notwithstanding the foregoing, following the occurrence and
      during the continuance of an Event of Default, the Agent, at its option, may
      (a)
      apply such proceeds to the Obligations in such order as the Agent shall elect,
      (b) hold all such proceeds as cash collateral for the Obligations and each
      Company hereby grants to the Agent for the ratable benefit of the Creditor
      Parties a security interest in such cash collateral amounts as security for
      the
      Obligations and/or (c) do any combination of the foregoing.

     

    10.  Inspections
      and Appraisals.  At all times during normal business hours and
      upon at least three (3) Business Days prior notice (provided that no such prior
      notice shall be required, in the event the Agent, in its good faith judgment,
      believes such action is necessary to preserve or protect the Collateral or
      following the occurrence and during the continuance of an Event of Default),
      the
      Agent, and/or any representative of the Agent shall have the right to (a) have
      access to, visit, inspect, review, evaluate and make physical verification
      and
      appraisals of each Company’s properties and the Collateral, (b) inspect, audit
      and copy (or take originals if necessary) and make extracts from each Company’s
      Books and Records, including management letters prepared by the Accountants,
      and
      (c) discuss with each Company’s directors, principal officers, and independent
      accountants, each Company’s business, assets, liabilities, financial condition,
      results of operations and business prospects.  Each Company will
      deliver to the Agent any instrument necessary for the Agent to obtain records
      from any service bureau maintaining records for such Company.  So long
      as no Default or Event of Default has occurred and is continuing, such
      inspection and appraisal rights shall be limited to once per fiscal
      quarter.  If any internally prepared financial information, including
      that required under this Section is unsatisfactory in any manner to the Agent,
      the Agent may request that the Accountants review the same.

     

    11.  Financial
      Reporting.  Company Agent will deliver, or cause to be delivered,
      to the Creditor Parties each of the following, which shall be in form and detail
      acceptable to the Agent:

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (a)  As
      soon
      as available, and in any event within ninety (90) days after the end of each
      fiscal year of the Parent (unless the Company has filed a form 12B-25 with
      the
      SEC in which case it will be one hundred and five (105) days after the end
      of
      the applicable fiscal year), each Company’s audited financial statements with a
      report of Pollard-Kelley Auditing Services, Inc. or such other independent
      certified public accountants of recognized standing selected by the Parent
      and
      reasonably acceptable to the Agent (the “Accountants”), which annual
      financial statements shall be without qualification and shall include each
      of
      the Parent’s and each of its Subsidiaries’ balance sheet as at the end of such
      fiscal year and the related statements of each of the Parent’s and each of its
      Subsidiaries’ income, retained earnings and cash flows for the fiscal year then
      ended, prepared on a consolidating and consolidated basis to include the Parent,
      each Subsidiary of the Parent and each of their respective affiliates, all
      in
      reasonable detail and prepared in accordance with GAAP, together with, if and
      when available, copies of any management letters prepared by the
      Accountants;

     

    (b)  As
      soon
      as available and in any event within forty five (45) days after the end of
      each
      fiscal quarter of the Parent (unless the Company has filed a form 12B-25 with
      the SEC in which case it will be fifty (50) days after the end of the applicable
      fiscal quarter), an unaudited/internal balance sheet and statements of income,
      retained earnings and cash flows of each of the Parent’s and each of its
      Subsidiaries’ as at the end of and for such quarter and for the year to date
      period then ended, prepared on a consolidating and consolidated basis to include
      the Parent, each Subsidiary of the Parent and each of their respective
      affiliates, in reasonable detail and stating in comparative form the figures
      for
      the corresponding date and periods in the previous year, all prepared in
      accordance with GAAP, subject to year-end adjustments;

     

    (c)  As
      soon
      as available and in any event within fifteen (15) days after the end of each
      calendar month, an unaudited/internal balance sheet and statements of income,
      retained earnings and cash flows of each of the Parent and its Subsidiaries
      as
      at the end of and for such month and for the year to date period then ended,
      prepared on a consolidating and consolidated basis to include the Parent, each
      Subsidiary of the Parent and each of their respective affiliates, in reasonable
      detail and stating in comparative form the figures for the corresponding date
      and periods in the previous year, all prepared in accordance with GAAP, subject
      to year-end adjustments;

     

    (d)  Within
      twenty (20) days after the end of each month (or more frequently if the Agent
      reasonably requests), (i) agings of each Company’s Accounts, unaudited trial
      balances and their accounts payable and a calculation of each Company’s Accounts
      and Eligible Accounts, (ii) a detailed schedule of the outstanding intercompany
      loans made by each Company to any Foreign Subsidiary which shall include the
      outstanding principal amount of each such intercompany loan, the aggregate
      amount of Loan proceeds, if any, utilized by such Company to make each such
      intercompany loan and the aggregate amount of Loan proceeds utilized by the
      Companies during the Term to make intercompany loans to the Foreign Subsidiaries
      and (iii) a detailed schedule of the Notes Receivable which shall include the
      name of each Person obligated under each such Note Receivable and the
      outstanding principal amount thereof; provided, however, that if the Agent
      shall
      request the foregoing information more often than as set forth in the
      immediately preceding clauses, each Company shall have fifteen (15) days from
      each such request to comply with the Agent’s demand;

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (e)  Promptly
      after (i) the filing thereof, copies of the Parent’s most recent registration
      statements and annual, quarterly, monthly or other regular reports which the
      Parent files with the Securities and Exchange Commission (the “SEC”), and
      (ii) the issuance thereof, copies of such financial statements, reports and
      proxy statements as the Parent shall send to its stockholders

     

    (f)  Together
      with each delivery of any financial statement pursuant to Section 11(a), 11(b)
      or 11(c), a Compliance Certificate duly executed by the President or Chief
      Executive Officer of the Parent that, among other things, (i) states that such
      financial statements have been prepared in accordance with GAAP, subject to
      year-end audit adjustments, (ii) shows in reasonable detail the calculations
      used in determining each financial covenant contained in Section 13(aa) and
      (iii) states that no Default or Event of Default is continuing as of the date
      of
      delivery of such Compliance Certificate or, if a Default or Event of Default
      is
      continuing, states the nature thereof and the action that the Companies propose
      to take with respect thereto; and

     

    (g)  Each
      Company shall deliver, or cause the applicable Subsidiary of each Company to
      deliver, such other information as the Agent shall reasonably
      request.

     

    12.  Additional
      Representations and Warranties.  Each Company hereby represents
      and warrants to each Creditor Party as follows:

     

    (a)  Organization,
      Good Standing and Qualification.  It and each of its Domestic
      Subsidiaries is a corporation, partnership or limited liability company, as
      the
      case may be, duly organized, validly existing and in good standing under the
      laws of its jurisdiction of organization.  It and each of its Domestic
      Subsidiaries has the corporate, limited liability company or partnership, as
      the  case may be, power and authority to own and operate its
      properties and assets and, insofar as it is or shall be a party thereto, to
      (i)
      execute and deliver this Agreement and the Ancillary Agreements, (ii) to issue
      and sell the Notes and the shares of Common Stock issuable upon conversion
      of
      the Secured Term Notes (the “Note Shares”), (iii) to issue and sell the
      Warrants and the shares of Common Stock issuable upon exercise of the Warrants
      (the “Warrant Shares”), and to (iv) carry out the provisions of this
      Agreement and the Ancillary Agreements and to carry on its business as presently
      conducted.  It and each of its Domestic Subsidiaries is duly qualified
      and is authorized to do business and is in good standing as a foreign
      corporation, partnership or limited liability company, as the case may be,
      in
      all jurisdictions in which the nature or location of its activities and of
      its
      properties (both owned and leased) makes such qualification necessary, except
      for those jurisdictions in which failure to do so has not had, or could not
      reasonably be expected to have, individually or in the aggregate, a Material
      Adverse Effect.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (b)  Subsidiaries.  Each
      direct and indirect Subsidiary of each Company, the direct owner of such
      Subsidiary and its percentage ownership thereof, is set forth on Schedule
      12(b).

     

    (c)  Capitalization;
      Voting Rights.

     

    (i)  The
      authorized capital stock of the Parent, as of the date hereof, consists of
      350,000,000 shares, of which 300,000,000 are shares of Common Stock, par value
      $0.001 per share, 199,478,763 shares of which are issued and outstanding,
      10,000,000 are shares of Series C Preferred stock, par value $0.01 per share
      of
      which 425 shares are issued and outstanding, 10,000,000 are shares of Series
      E
      Preferred stock, par value $0.01 per share of which 51 shares are issued and
      outstanding, 10,000,000 are shares of Series F Preferred stock, par value $0.01
      per share of which 1,700 shares are issued and outstanding, 10,000,000 are
      shares of Series H Preferred stock, par value $0.01 per share of which 1,035
      shares are issued and outstanding and 10,000,000 are shares of Series I
      Preferred stock, par value $0.01 per share of which 541 shares are issued and
      outstanding.  The authorized, issued and outstanding capital stock of
      each other Company and each Subsidiary of each Company is set forth on
Schedule 12(c).

     

    (ii)  Except
      as
      disclosed on Schedule 12(c), other than:  (i) the shares
      reserved for issuance under the Parent’s stock option plans; and (ii) shares
      which may be issued pursuant to this Agreement and the Ancillary Agreements,
      there are no outstanding options, warrants, rights (including conversion or
      preemptive rights and rights of first refusal), proxy or stockholder agreements,
      or arrangements or agreements of any kind for the purchase or acquisition from
      the Parent of any of its securities.  Except as disclosed on
Schedule 12(c), neither the offer or issuance of any of the Notes or the
      Warrants, or the issuance of any of the Warrant Shares or Note Shares, nor
      the
      consummation of any transaction contemplated hereby will result in a change
      in
      the price or number of any securities of the Parent outstanding, under
      anti-dilution or other similar provisions contained in or affecting any such
      securities.

     

    (iii)  All
      issued and outstanding shares of the Parent’s Common Stock:  (i) have
      been duly authorized and validly issued and are fully paid and non-assessable;
      and (ii) were issued in compliance with all applicable state and federal laws
      concerning the issuance of securities.

     

    (iv)  The
      rights, preferences, privileges and restrictions of the shares of the Common
      Stock are as stated in the Parent’s Certificate of Incorporation (the
“Charter”).  The Warrant Shares and the Note Shares have been
      duly and validly reserved for issuance.  When issued in compliance
      with the provisions of this Agreement and the Parent’s Charter, the Securities
      will be validly issued, fully paid and non-assessable, and will be free of
      any
      liens or encumbrances; provided, however, that the Securities may
      be subject to restrictions on transfer under state and/or federal securities
      laws as set forth herein or as otherwise required by such laws at the time
      a
      transfer is proposed.

     

    
      
         

      

      
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    (d)  Authorization;
      Binding Obligations.  All corporate, partnership or limited
      liability company, as the case may be, action on its and its Domestic
      Subsidiaries’ part (including their respective officers and directors) necessary
      for the authorization of this Agreement and the Ancillary Agreements, the
      performance of all of its and its Domestic Subsidiaries’ obligations hereunder
      and under the Ancillary Agreements on the Closing Date and, the authorization,
      issuance and delivery of the Notes and the Warrants has been taken or will
      be
      taken prior to the Closing Date.  This Agreement and the Ancillary
      Agreements, when executed and delivered and to the extent it is a party thereto,
      will be its and its Domestic Subsidiaries’ valid and binding obligations
      enforceable against each such Person in accordance with their terms,
      except:

     

    (i)  as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      other laws of general application affecting enforcement of creditors’ rights;
      and

     

    (ii)  general
      principles of equity that restrict the availability of equitable or legal
      remedies.

     

    The
      issuance of the Notes and the subsequent conversion of the Secured Term Notes
      into Note Shares are not and will not be subject to any preemptive rights or
      rights of first refusal that have not been properly waived or complied
      with.  The issuance of the Warrants and the subsequent exercise of the
      Warrants for Warrant Shares are not and will not be subject to any preemptive
      rights or rights of first refusal that have not been properly waived or complied
      with.

     

    (e)  Liabilities;
      Solvency.

     

    (i)  Neither
      it nor any of its Domestic Subsidiaries has any liabilities, except current
      liabilities incurred in the ordinary course of business and liabilities
      disclosed in any Exchange Act Filings.

     

    (ii)  Both
      before and after giving effect to (a) the Loans incurred on the Closing Date
      or
      such other date as Loans requested hereunder are made or incurred, (b) the
      disbursement of the proceeds of, or the assumption of the liability in respect
      of, such Loans pursuant to the instructions or agreement of any Company, (c)
      the
      payment and accrual of all transaction costs in connection with the foregoing,
      and (d) the consummation of the transactions contemplated herein and in the
      Ancillary Agreements, each Company and each Domestic Subsidiary of each Company,
      is and will be, Solvent.

     

    (f)  Agreements;
      Action.  Except as set forth on Schedule 12(f) or as
      disclosed in any Exchange Act Filings:

     

    (i)  There
      are
      no agreements, understandings, instruments, contracts, proposed transactions,
      judgments, orders, writs or decrees to which it or any of its Domestic
      Subsidiaries is a party or to its knowledge by which it is bound which may
      involve:  (i) obligations (contingent or otherwise) of, or payments
      to, it or any of its Domestic Subsidiaries in excess of $50,000 (other than
      obligations of, or payments to, it or any of its Domestic Subsidiaries arising
      from purchase or sale agreements entered into in the ordinary course of
      business); or (ii) the transfer or license of any patent, copyright, trade
      secret or other proprietary right to or from it (other than licenses arising
      from the purchase of “off the shelf” or other standard products); or (iii)
      provisions restricting the development, manufacture or distribution of its
      or
      any of its Domestic Subsidiaries’ products or services; or (iv) indemnification
      by it or any of its Domestic Subsidiaries with respect to infringements of
      proprietary rights.

     

    
      
         

      

      
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    (ii)  Since
      December 31, 2006 (the “Balance Sheet Date”), neither it nor any of its
      Domestic Subsidiaries has:  (i) declared or paid any dividends, or
      authorized or made any distribution upon or with respect to any class or series
      of its capital stock; (ii) incurred any indebtedness for money borrowed or
      any
      other liabilities (other than ordinary course obligations) individually in
      excess of $50,000 or, in the case of indebtedness and/or liabilities
      individually less than $50,000, in excess of $100,000 in the aggregate; (iii)
      made any loans or advances to any Person not in excess, individually or in
      the
      aggregate, of $100,000, other than ordinary advances for travel expenses; or
      (iv) sold, exchanged or otherwise disposed of any of its assets or rights,
      other
      than the sale of its Inventory in the ordinary course of business.

     

    (iii)  For
      the
      purposes of subsections (i) and (ii) of this Section 12(f), all indebtedness,
      liabilities, agreements, understandings, instruments, contracts and proposed
      transactions involving the same Person (including Persons it or any of its
      applicable Domestic Subsidiaries has reason to believe are affiliated therewith
      or with any Domestic Subsidiary thereof) shall be aggregated for the purpose
      of
      meeting the individual minimum dollar amounts of such subsections.

     

    (iv)  the
      Parent maintains disclosure controls and procedures (“Disclosure
      Controls”) designed to ensure that information required to be disclosed by
      the Parent in the reports that it files or submits under the Exchange Act is
      recorded, processed, summarized, and reported, within the time periods specified
      in the rules and forms of the SEC.

     

    (v)  The
      Parent makes and keeps books, records, and accounts, that, in reasonable detail,
      accurately and fairly reflect the transactions and dispositions of its
      assets.  It maintains internal control over financial reporting
      (“Financial Reporting Controls”) designed by, or under the supervision
      of, its principal executive and principal financial officers, and effected
      by
      its board of directors, management, and other personnel, to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with GAAP, including
      that:

     

    (1)  transactions
      are executed in accordance with management’s general or specific
      authorization;

     

    (2)  unauthorized
      acquisition, use, or disposition of the Parent’s assets that could have a
      material effect on the financial statements are prevented or timely
      detected;

     

    (3)  transactions
      are recorded as necessary to permit preparation of financial statements in
      accordance with GAAP, and that its receipts and expenditures are being made
      only
      in accordance with authorizations of the Parent’s management and board of
      directors;

     

    (4)  transactions
      are recorded as necessary to maintain accountability for assets;
      and

     

    (5)  the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals, and appropriate action is taken with respect to any
      differences.

     

    
      
         

      

      
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    (vi)  There
      is
      no weakness in any of its Disclosure Controls or Financial Reporting Controls
      that is required to be disclosed in any of the Exchange Act Filings, except
      as
      so disclosed.

     

    (g)  Obligations
      to Related Parties.  Except as set forth on Schedule 12(g),
      neither it nor any of its Subsidiaries has any obligations to their respective
      officers, directors, stockholders or employees other than:

     

    (i)  for
      payment of salary for services rendered and for bonus payments;

     

    (ii)  reimbursement
      for reasonable expenses incurred on its or its Subsidiaries’
behalf;

     

    (iii)  for
      other
      standard employee benefits made generally available to all employees (including
      stock option agreements outstanding under any stock option plan approved by
      its
      and its Subsidiaries’ Board of Directors, as applicable); and

     

    (iv)  obligations
      listed in its and each of its Subsidiary’s financial statements or disclosed in
      any of the Parent’s Exchange Act Filings.

     

    Except
      as
      described above or set forth on Schedule 12(g), none of its officers,
      directors or, to the best of its knowledge, key employees or stockholders,
      any
      of its Subsidiaries or any members of their immediate families, are indebted
      to
      it or any of its Subsidiaries, individually or in the aggregate, in excess
      of
      $50,000 or have any direct or indirect ownership interest in any Person with
      which it or any of its Subsidiaries is affiliated or with which it or any of
      its
      Subsidiaries has a business relationship, or any Person which competes with
      it
      or any of its Subsidiaries, other than passive investments in publicly traded
      companies (representing less than one percent (1%) of such company) which may
      compete with it or any of its Subsidiaries.  Except as described
      above, none of its officers, directors or stockholders, or any member of their
      immediate families, is, directly or indirectly, interested in any material
      contract with it or any of its Subsidiaries and no agreements, understandings
      or
      proposed transactions are contemplated between it or any of its Subsidiaries
      and
      any such Person.  Except as set forth on Schedule 12(g),
      neither it nor any of its Subsidiaries is a guarantor or indemnitor of any
      indebtedness of any other Person.

     

    (h)  Changes.  Since
      the Balance Sheet Date, except as disclosed in any Schedule to this Agreement
      or
      to any of the Ancillary Agreements, there has not been:

     

    (i)  any
      change in its or any of its Subsidiaries’ business, assets, liabilities,
      condition (financial or otherwise), properties, operations or prospects, which,
      individually or in the aggregate, has had, or could reasonably be expected
      to
      have, a Material Adverse Effect;

     

    (ii)  any
      resignation or termination of any of its or its Subsidiaries’ officers, key
      employees or groups of employees;

     

    (iii)  any
      material change, except in the ordinary course of business, in its or any of
      its
      Subsidiaries’ contingent obligations by way of guaranty, endorsement, indemnity,
      warranty or otherwise;

     

    
      
         

      

      
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    (iv)  any
      damage, destruction or loss, whether or not covered by insurance, which has
      had,
      or could reasonably be expected to have, individually or in the aggregate,
      a
      Material Adverse Effect;

     

    (v)  any
      waiver by it or any of its Domestic Subsidiaries of a valuable right or of
      a
      material debt owed to it;

     

    (vi)  any
      direct or indirect material loans made by it or any of its Domestic Subsidiaries
      to any of its or any of its Domestic Subsidiaries’ stockholders, employees,
      officers or directors, other than advances made in the ordinary course of
      business;

     

    (vii)  any
      material change in any compensation arrangement or agreement with any employee,
      officer, director or stockholder;

     

    (viii)  any
      declaration or payment of any dividend or other distribution of its or any
      of
      its Domestic Subsidiaries’ assets;

     

    (ix)  any
      labor
      organization activity related to it or any of its Domestic
      Subsidiaries;

     

    (x)  any
      debt,
      obligation or liability incurred, assumed or guaranteed by it or any of its
      Subsidiaries, except those for immaterial amounts and for current liabilities
      incurred in the ordinary course of business;

     

    (xi)  any
      sale,
      assignment, transfer, abandonment or other disposition of any Intellectual
      Property or other intangible assets owned by the Company or any of its
      Subsidiaries;

     

    (xii)  any
      change in any material agreement to which it or any of its Subsidiaries is
      a
      party or by which either it or any of its Subsidiaries is bound which, either
      individually or in the aggregate, has had, or could reasonably be expected
      to
      have, individually or in the aggregate, a Material Adverse Effect;

     

    (xiii)  any
      other
      event or condition of any character that, either individually or in the
      aggregate, has had, or could reasonably be expected to have, individually or
      in
      the aggregate, a Material Adverse Effect; or

     

    (xiv)  any
      arrangement or commitment by it or any of its Subsidiaries to do any of the
      acts
      described in subsection (i) through (xiii) of this Section 12(h).

     

    
      
         

      

      
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    (i)  Title
      to Properties and Assets; Liens, Etc.  Except as set forth on
Schedule 12(i), it and each of its Subsidiaries has good and
      marketable title to their respective properties and assets (tangible or
      intangible), and good title to its leasehold interests, in each case subject
      to
      no Lien, other than Permitted Liens.  All facilities, Equipment,
      Fixtures, vehicles and other properties owned, leased or used by it or any
      of
      its Domestic Subsidiaries are in good operating condition and repair and are
      reasonably fit and usable for the purposes for which they are being
      used.  Except as set forth on Schedule 12(i), it and each of
      its Domestic Subsidiaries is in compliance with all material terms of each
      lease
      to which it is a party or is otherwise bound.

     

    (j)  Intellectual
      Property.

     

    (i)  Each
      Company and each of its Domestic Subsidiaries owns or possesses sufficient
      legal
      rights to use all Intellectual Property necessary for its business as now
      conducted and, to the Company’s knowledge, as presently proposed to be
      conducted.  There are no settlements or consents, covenants not to
      sue, non-assertion assurances, or releases to which any Company or any of its
      Domestic Subsidiaries is bound which adversely affects its rights to own or
      use
      any Intellectual Property.

     

    (ii)  To
      each
      Company’s knowledge, the conduct of such Company’s and each of its Domestic
      Subsidiaries’ business as now conducted, and as presently proposed to be
      conducted, does not (and will not) result in any infringement or other violation
      of the rights of others.

     

    (iii)  Schedule 12(j)
      (as such schedule may be amended or supplemented from time to time) sets forth
      a
      true and complete list of (i) all registrations and applications for
      Intellectual Property owned by each Company or any of its Domestic Subsidiaries
      filed or issued by any Intellectual Property registry and (ii) all Intellectual
      Property licenses which are either material to the business of any Company
      or
      any of its Domestic Subsidiaries or relate to any material portion of a
      Company’s or any of its Domestic Subsidiaries’ inventory, including licenses for
      standard software having a replacement value of more than
      $10,000.  None of such Intellectual Property licenses are reasonably
      likely to be construed as an assignment of the licensed Intellectual Property
      to
      such Company or any of its Domestic Subsidiaries.

     

    (iv)  There
      are
      no claims pending or, to best of any Company’s knowledge, threatened and neither
      any Company nor any of its Domestic Subsidiaries has received any other
      communications, alleging that, any Company or any of its Domestic Subsidiaries
      has infringed, diluted, misappropriated, or otherwise violated any Intellectual
      Property of any other person or entity, nor is any Company aware of any basis
      therefore.

     

    (v)  No
      Company is aware of any infringement diluted, misappropriated, or other
      violation of its Intellectual Property by any other person or
      entity.

     

    (vi)  No
      Company nor any of its Domestic Subsidiaries utilizes any inventions, trade
      secrets or other Intellectual Property of any of its employees, officers or
      contractors (or former employees, officers, or contractors) except for
      inventions, trade secrets or other Intellectual Property that is owned by a
      Company or any of its Subsidiaries as a matter of law or have been rightfully
      assigned to a Company or any of its Subsidiaries.

     

    
      
         

      

      
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    (k)  Compliance
      with Other Instruments.  Neither it nor any of its Domestic
      Subsidiaries is in violation or default of (x) any term of its Charter or
      Bylaws, or (y) any provision of any indebtedness, mortgage, indenture, contract,
      agreement or instrument to which it is party or by which it is bound or of
      any
      judgment, decree, order or writ, which violation or default, in the case of
      this
      clause (y), has had, or could reasonably be expected to have, either
      individually or in the aggregate, a Material Adverse Effect.  The
      execution, delivery and performance of and compliance with this Agreement and
      the Ancillary Agreements to which it is a party, and the issuance of the Notes
      and the other Securities each pursuant hereto and thereto, will not, with or
      without the passage of time or giving of notice, result in any such material
      violation, or be in conflict with or constitute a default under any such term
      or
      provision, or result in the creation of any Lien upon any of its or any of
      its
      Domestic Subsidiary’s properties or assets or the suspension, revocation,
      impairment, forfeiture or non-renewal of any permit, license, authorization
      or
      approval applicable to it or any of its Domestic Subsidiaries, their businesses
      or operations or any of their assets or properties.

     

    (l)  Litigation.  Except
      as set forth on Schedule 12(l), there is no action, suit, proceeding or
      investigation pending or, to its knowledge, currently threatened against it
      or
      any of its Subsidiaries that prevents it or any of its Domestic Subsidiaries
      from entering into this Agreement or the Ancillary Agreements, or from
      consummating the transactions contemplated hereby or thereby, or which has
      had,
      or could reasonably be expected to have, either individually or in the
      aggregate, a Material Adverse Effect, or could result in any change in its
      or
      any of its Domestic Subsidiaries’ current equity ownership, nor is it aware that
      there is any basis to assert any of the foregoing.  Neither it nor any
      of its Domestic Subsidiaries is a party to or subject to the provisions of
      any
      order, writ, injunction, judgment or decree of any court or government agency
      or
      instrumentality.  There is no action, suit, proceeding or
      investigation by it or any of its Domestic Subsidiaries currently pending or
      which it or any of its Domestic Subsidiaries intends to initiate.

     

    (m)  Tax
      Returns and Payments.  It and each of its Domestic Subsidiaries
      has timely filed all tax returns (federal, state and local) required to be
      filed
      by it.  All taxes shown to be due and payable on such returns, any
      assessments imposed, and all other taxes due and payable by it and each of
      its
      Domestic Subsidiaries on or before the Closing Date, have been paid or will
      be
      paid prior to the time they become delinquent.  Except as set forth on
Schedule 12(m), neither it nor any of its Domestic Subsidiaries has been
      advised:

     

    (i)  that
      any
      of its returns, federal, state or other, have been or are being audited as
      of
      the date hereof; or

     

    (ii)  of
      any
      adjustment, deficiency, assessment or court decision in respect of its federal,
      state or other taxes.

     

    Neither
      it nor any of its Domestic Subsidiaries has any knowledge of any liability
      of
      any tax to be imposed upon its properties or assets as of the date of this
      Agreement that is not adequately provided for.

     

    
      
         

      

      
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    (n)  Employees.  Except
      as set forth on Schedule 12(n), neither it nor any of its Domestic
      Subsidiaries has any collective bargaining agreements with any of its
      employees.  There is no labor union organizing activity pending or, to
      its knowledge, threatened with respect to it or any of its Domestic
      Subsidiaries.  Except as disclosed in the Exchange Act Filings or on
Schedule 12(n), neither it nor any of its Domestic Subsidiaries is a
      party to or bound by any currently effective employment contract, deferred
      compensation arrangement, bonus plan, incentive plan, profit sharing plan,
      retirement agreement or other employee compensation plan or
      agreement.  To its knowledge, none of its or any of its Domestic
      Subsidiaries’ employees, nor any consultant with whom it or any of its Domestic
      Subsidiaries has contracted, is in violation of any term of any employment
      contract, proprietary information agreement or any other agreement relating
      to
      the right of any such individual to be employed by, or to contract with, it
      or
      any of its Domestic Subsidiaries because of the nature of the business to be
      conducted by it or any of its Domestic Subsidiaries; and to its knowledge the
      continued employment by it and its Domestic Subsidiaries of their present
      employees, and the performance of its and its Domestic Subsidiaries contracts
      with its independent contractors, will not result in any such
      violation.  Neither it nor any of its Domestic Subsidiaries is aware
      that any of its or any of its Domestic Subsidiaries’ employees is obligated
      under any contract (including licenses, covenants or commitments of any nature)
      or other agreement, or subject to any judgment, decree or order of any court
      or
      administrative agency that would interfere with their duties to it or any of
      its
      Domestic Subsidiaries.  Neither it nor any of its Domestic
      Subsidiaries has received any notice alleging that any such violation has
      occurred.  Except for employees who have a current effective
      employment agreement with it or any of its Domestic Subsidiaries, none of its
      or
      any of its Domestic Subsidiaries’ employees has been granted the right to
      continued employment by it or any of its Domestic Subsidiaries or to any
      material compensation following termination of employment with it or any of
      its
      Domestic Subsidiaries.  Except as set forth on
Schedule 12(n), neither it nor any of its Domestic Subsidiaries is
      aware that any officer, key employee or group of employees intends to terminate
      his, her or their employment with it or any of its Domestic Subsidiaries, as
      applicable, nor does it or any of its Domestic Subsidiaries have a present
      intention to terminate the employment of any officer, key employee or group
      of
      employees.

     

    (o)  Registration
      Rights and Voting Rights.  Except as set forth on
Schedule 12(o) and except as disclosed in Exchange Act Filings,
      neither it nor any of its Domestic Subsidiaries is presently under any
      obligation, and neither it nor any of its Domestic Subsidiaries has granted
      any
      rights, to register any of its or any of its Domestic Subsidiaries’ presently
      outstanding securities or any of its securities that may hereafter be
      issued.  Except as set forth on Schedule 12(o) and except
      as disclosed in Exchange Act Filings, to its knowledge, none of its or any
      of
      its Domestic Subsidiaries’ stockholders has entered into any agreement with
      respect to its or any of its Domestic Subsidiaries’ voting of equity
      securities.

     

    (p)  Compliance
      with Laws; Permits.  Neither it nor any of its Domestic
      Subsidiaries is in violation of the Sarbanes-Oxley Act of 2002 or any SEC
      related regulation or rule or any rule of the Principal Market promulgated
      thereunder or any other applicable statute, rule, regulation, order or
      restriction of any domestic or foreign government or any instrumentality or
      agency thereof in respect of the conduct of its business or the ownership of
      its
      properties which has had, or could reasonably be expected to have, either
      individually or in the aggregate, a Material Adverse Effect.  No
      governmental orders, permissions, consents, approvals or authorizations are
      required to be obtained and no registrations or declarations are required to
      be
      filed in connection with the execution and delivery of this Agreement or any
      Ancillary Agreement and the issuance of any of the Securities, except such
      as
      have been duly and validly obtained or filed, or with respect to any filings
      that must be made after the Closing Date, as will be filed in a timely
      manner.  It and each of its Subsidiaries has all material franchises,
      permits, licenses and any similar authority necessary for the conduct of its
      business as now being conducted by it, the lack of which could, either
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

     

    
      
         

      

      
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    (q)  Environmental
      and Safety Laws.  There are no pending actions, suits or
      proceedings by or before any arbitrator or Governmental Authority pending,
      or to
      the knowledge of any Company threatened against or affecting any Company or
      any
      of its Domestic Subsidiaries under Environmental Law.  Each Company
      and each of its Domestic Subsidiaries (i) are and have been in full compliance
      with Environmental Law and have no knowledge of any material expenditure that
      will be required to maintain such compliance in the future; (ii) have not
      received any notice or claim alleging that they are not in full compliance
      with
      or otherwise have liability under Environmental Law; and (iii) have no knowledge
      of any facts or circumstances that could reasonably be expected to form the
      basis of any such claim.  No Hazardous Materials are present or are
      used or have been used, stored, or released by any Company or any of its
      Domestic Subsidiaries, or to their knowledge by any other Person, at any
      property currently or formerly owned, leased or operated by any Company or
      any
      of its Domestic Subsidiaries or disposed of at any other location by any Company
      or any of its Domestic Subsidiaries except (i) in compliance with Environmental
      Law; and (2) in quantities and under circumstances that would not require
      investigation or remediation by any Company or any of its Domestic
      Subsidiaries.  No Company nor any of its Domestic Subsidiaries has
      assumed by contract or by operation of law the liabilities arising under
      Environmental Law of any other Person.  Each Company and each of its
      Domestic Subsidiaries have provided to Agent all material reports, audits and
      assessments in their possession or control regarding the environmental condition
      of any property currently or formerly owned or operated by any Company or any
      of
      its Domestic Subsidiaries.

     

    (r)  Valid
      Offering.  Assuming the accuracy of the representations and
      warranties of the Lenders contained in this Agreement, the offer and issuance
      of
      the Securities will be exempt from the registration requirements of the
      Securities Act of 1933, as amended (the “Securities Act”), and will have
      been registered or qualified (or are exempt from registration and qualification)
      under the registration, permit or qualification requirements of all applicable
      state securities laws.

     

    (s)  Full
      Disclosure.  It and each of its Domestic Subsidiaries has provided
      the Lenders with all information requested by the Lenders in connection with
      the
      Lenders’ decision to enter into this Agreement, including all information each
      Company and each of its Domestic Subsidiaries believe is reasonably necessary
      to
      make such investment decision.  Neither this Agreement, the Ancillary
      Agreements nor the exhibits and schedules hereto and thereto nor any other
      document, including without limitation the responses contained in any
      questionnaire provided to any Company by the Agent, delivered by it or any
      of
      its Domestic Subsidiaries to the Agent or their attorneys or agents in
      connection herewith or therewith or with the transactions contemplated hereby
      or
      thereby, contain any untrue statement of a material fact nor omit to state
      a
      material fact necessary in order to make the statements contained herein or
      therein, in light of the circumstances in which they are made, not
      misleading.  Any financial projections and other estimates provided to
      the Lenders by it or any of its Subsidiaries were based on its and its
      Subsidiaries’ experience in the industry and on assumptions of fact and opinion
      as to future events which it or any of its Subsidiaries, at the date of the
      issuance of such projections or estimates, believed to be
      reasonable.

     

    (t)  Insurance.  It
      and each of its Domestic Subsidiaries has general commercial, product liability,
      fire and casualty insurance policies with coverages which it believes are
      customary for companies similarly situated to it and each of its Domestic
      Subsidiaries in the same or similar business.

     

    (u)  SEC
      Reports and Financial Statements.  Except as set forth on
Schedule 12(u), it and each of its Domestic Subsidiaries has filed
      all proxy statements, reports and other documents required to be filed by it
      under the Exchange Act.  The Parent has furnished the Lenders with
      copies of:  (i) its Annual Report on Form 10-K for its fiscal years
      ended December 31, 2006; and (ii) its Quarterly Reports on Form 10-Q for its
      fiscal quarters ended March 31, 2007 and June 30, 2007, and the Form 8-K filings
      which it has made during its fiscal year 2007 to date (collectively, the “SEC
      Reports”).  Except as set forth on Schedule 12(u), each SEC
      Report was, at the time of its filing, in substantial compliance with the
      requirements of its respective form and none of the SEC Reports, nor the
      financial statements (and the notes thereto) included in the SEC Reports, as
      of
      their respective filing dates, contained any untrue statement of a material
      fact
      or omitted to state a material fact required to be stated therein or necessary
      to make the statements therein, in light of the circumstances under which they
      were made, not misleading.  Such financial statements have been
      prepared in accordance with GAAP applied on a consistent basis during the
      periods involved (except (i) as may be otherwise indicated in such financial
      statements or the notes thereto or (ii) in the case of unaudited interim
      statements, to the extent they may not include footnotes or may be condensed)
      and fairly present in all material respects the financial condition, the results
      of operations and cash flows of the Parent and its Subsidiaries, on a
      consolidated basis, as of, and for, the periods presented in each such SEC
      Report.

     

    
      
         

      

      
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    (v)  Listing.  The
      Common Stock is listed or quoted, as applicable, on the Principal Market and
      satisfies all requirements for the continuation of such listing or quotation,
      as
      applicable, and the Parent shall do all things necessary for the continuation
      of
      such listing or quotation, as applicable.  The Parent has not received
      any notice that its Common Stock will be delisted from, or no longer quoted
      on,
      as applicable, the Principal Market or that its Common Stock does not meet
      all
      requirements for such listing or quotation, as applicable.

     

    (w)  No
      Integrated Offering.  Neither it, nor any of its Domestic
      Subsidiaries nor any of its Affiliates, nor any Person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Securities pursuant to this Agreement or any Ancillary
      Agreement to be integrated with prior offerings by it for purposes of the
      Securities Act which would prevent it from issuing the Securities pursuant
      to
      Rule 506 under the Securities Act, or any applicable exchange-related
      stockholder approval provisions, nor will it or any of its Affiliates or
      Domestic Subsidiaries take any action or steps that would cause the offering
      of
      the Securities to be integrated with other offerings.

     

    (x)  Stop
      Transfer.  The Securities are restricted securities as of the date
      of this Agreement.  Neither it nor any of its Domestic Subsidiaries
      will issue any stop transfer order or other order impeding the sale and delivery
      of any of the Securities at such time as the Securities are registered for
      public sale or an exemption from registration is available, except as required
      by state and federal securities laws.

     

    (y)  Dilution.  It
      specifically acknowledges that the Parent’s obligation to issue the shares of
      Common Stock upon exercise of the Warrants is binding upon the Parent and
      enforceable regardless of the dilution such issuance may have on the ownership
      interests of other shareholders of the Parent.

     

    (z)  Patriot
      Act.  It certifies that, to the best of its knowledge, neither it
      nor any of its Subsidiaries has been designated, nor is or shall be owned or
      controlled, by a “suspected terrorist” as defined in Executive Order
      13224.  It hereby acknowledges that each of the Creditor Parties seeks
      to comply with all applicable laws concerning money laundering and related
      activities.  In furtherance of those efforts, it hereby represents,
      warrants and covenants that:  (i) none of the cash or property that it
      or any of its Subsidiaries will pay or will contribute to any Creditor Party
      has
      been or shall be derived from, or related to, any activity that is deemed
      criminal under United States law; and (ii) no contribution or payment by it
      or
      any of its Subsidiaries to any Creditor Party, to the extent that they are
      within its or any such Subsidiary’s control shall cause such Creditor Party to
      be in violation of the United States Bank Secrecy Act, the United States
      International Money Laundering Control Act of 1986 or the United States
      International Money Laundering Abatement and Anti-Terrorist Financing Act of
      2001.  It shall promptly notify the Agent if any of these
      representations, warranties and covenants ceases to be true and accurate
      regarding it or any of its Subsidiaries.  It shall provide any
      Creditor Party with any additional information regarding it and each Subsidiary
      thereof that such Creditor Party deems necessary or convenient to ensure
      compliance with all applicable laws concerning money laundering and similar
      activities.  It understands and agrees that if at any time it is
      discovered that any of the foregoing representations, warranties and covenants
      are incorrect, or if otherwise required by applicable law or regulation related
      to money laundering or similar activities, the Creditor Parties may undertake
      appropriate actions to ensure compliance with applicable law or regulation,
      including but not limited to segregation and/or redemption of any Lender’s
      investment in it.  It further understands that the Creditor Parties
      may release confidential information about it and its Subsidiaries and, if
      applicable, any underlying beneficial owners, to proper authorities if such
      Creditor Party, in its sole discretion, determines that it is in the best
      interests of such Creditor Party in light of relevant rules and regulations
      under the laws set forth in subsection (ii) above.

     

    
      
         

      

      
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    (aa)  Company
      Name; Locations of Offices, Records and
      Collateral.  Schedule 12(aa) sets forth each Company’s name
      as it appears in official filings in the state of its organization, the type
      of
      entity of each Company, the organizational identification number issued by
      each
      Company’s state of organization or a statement that no such number has been
      issued, each Company’s state of organization, and the location of each Company’s
      chief executive office, corporate offices, warehouses, other locations of
      Collateral and locations where records with respect to Collateral are kept
      (including in each case the county of such locations) and, except as set forth
      in such Schedule 12(aa), such locations have not changed during the
      preceding twelve months.  As of the Closing Date, during the prior
      five years, except as set forth in Schedule 12(aa), no Company has been
      known as or conducted business in any other name (including trade
      names).  Each Company has only one state of organization.

     

    (bb)  ERISA.  Based
      upon the Employee Retirement Income Security Act of 1974 (“ERISA”), and
      the regulations and published interpretations thereunder:  (i) neither
      it nor any of its Subsidiaries has engaged in any Prohibited Transactions (as
      defined in Section 406 of ERISA and Section 4975 of the Code); (ii) it and
      each
      of its Domestic Subsidiaries has met all applicable minimum funding requirements
      under Section 302 of ERISA in respect of its plans; (iii) neither it nor any
      of
      its Domestic Subsidiaries has any knowledge of any event or occurrence which
      would cause the Pension Benefit Guaranty Corporation to institute proceedings
      under Title IV of ERISA to terminate any employee benefit plan(s); (iv) neither
      it nor any of its Domestic Subsidiaries has any fiduciary responsibility for
      investments with respect to any plan existing for the benefit of persons other
      than its or such Domestic Subsidiary’s employees; and (v) neither it nor any of
      its Domestic Subsidiaries has withdrawn, completely or partially, from any
      multi-employer pension plan so as to incur liability under the Multiemployer
      Pension Plan Amendments Act of 1980.

     

    (cc)  Status
      of Companies.  Unless all of the Obligations are properly
      classified as debt for U.S.  federal income tax purposes, each Company
      is a corporation for U.S.  federal income tax purposes.

     

    13.  Covenants.  Each
      Company, as applicable, covenants and agrees with the Creditor Parties as
      follows:

     

    (a)  Stop-Orders.  The
      Parent shall advise the Agent, promptly after it receives notice of issuance
      by
      the SEC, any state securities commission or any other regulatory authority
      of
      any stop order or of any order preventing or suspending any offering of any
      securities of the Parent, or of the suspension of the qualification of the
      Common Stock for offering or sale in any jurisdiction, or the initiation of
      any
      proceeding for any such purpose.

     

    (b)  Listing.  The
      Parent shall promptly secure the listing or quotation, as applicable, of the
      shares of Common Stock issuable upon conversion of the Secured Term Notes and
      exercise of the Warrants on the Principal Market upon which shares of Common
      Stock are listed or quoted, as applicable, (subject to official notice of
      issuance) and shall maintain such listing or quotation, as applicable, so long
      as any other shares of Common Stock shall be so listed or quoted, as
      applicable.  The Parent shall maintain the listing or quotation, as
      applicable, of its Common Stock on the Principal Market, and will comply in
      all
      material respects with the Parent’s reporting, filing and other obligations
      under the bylaws or rules of the National Association of Securities Dealers
      (“NASD”) and such exchanges, as applicable.

     

    
      
         

      

      
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    (c)  Market
      Regulations.  The Parent shall notify the SEC, NASD and applicable
      state authorities, in accordance with their requirements, of the transactions
      contemplated by this Agreement, and shall take all other necessary action and
      proceedings as may be required and permitted by applicable law, rule and
      regulation, for the legal and valid issuance of the Securities to the Lenders
      and promptly provide copies thereof to the Agent.

     

    (d)  Reporting
      Requirements.  The Parent shall timely file with the SEC all
      reports required to be filed pursuant to the Exchange Act and refrain from
      terminating its status as an issuer required by the Exchange Act to file reports
      thereunder even if the Exchange Act or the rules or regulations thereunder
      would
      permit such termination.

     

    (e)  Use
      of
      Funds.  It shall use the proceeds of the Loans for general working
      capital purposes only and as otherwise set forth in Schedule 13(e).

     

    (f)  Access
      to Facilities.  It shall, and shall cause each of its Domestic
      Subsidiaries to, permit any representatives designated by the Agent (or any
      successor to the Agent), upon three (3) Business Days prior notice, during
      normal business hours, at Company’s expense and accompanied by a representative
      of Company Agent (provided that no such prior notice shall be required to be
      given and no such representative shall be required to accompany the Agent in
      the
      event the Agent, in its good faith judgment, believes such access is necessary
      to preserve or protect the Collateral or following the occurrence and during
      the
      continuance of an Event of Default), to:

     

    (i)  visit
      and
      inspect any of its or any such Domestic Subsidiary’s properties;

     

    (ii)  examine
      its or any such Domestic Subsidiary’s corporate and financial records (unless
      such examination is not permitted by federal, state or local law or by contract)
      and make copies thereof or extracts therefrom; and

     

    (iii)  discuss
      its or any such Domestic Subsidiary’s affairs, finances and accounts with its or
      any such Domestic Subsidiary’s directors, officers and Accountants.

     

    Notwithstanding
      the foregoing, neither it nor any of its Domestic Subsidiaries shall provide
      any
      material, non-public information to the Agent unless the Agent signs a
      confidentiality agreement and otherwise complies with Regulation FD, under
      the
      federal securities laws.

     

    (g)  Taxes.  It
      shall, and shall cause each of its Subsidiaries to, promptly pay and discharge,
      or cause to be paid and discharged, when due and payable, all lawful taxes,
      assessments and governmental charges or levies imposed upon it and its
      Subsidiaries’ income, profits, property or business, as the case may be;
      provided, however, that any such tax, assessment, charge or levy need not be
      paid currently if (i) the validity thereof shall currently and diligently be
      contested in good faith by appropriate proceedings, (ii) such tax, assessment,
      charge or levy shall have no effect on the Lien priority of the Agent in the
      Collateral, and (iii) if it and/or such Subsidiary, as applicable, shall have
      set aside on its and/or such Subsidiary’s books adequate reserves with respect
      thereto in accordance with GAAP; and provided, further, that it shall, and
      shall
      cause each of its Subsidiaries to, pay all such taxes, assessments, charges
      or
      levies forthwith upon the commencement of proceedings to foreclose any lien
      which may have attached as security therefor.

     

    
      
         

      

      
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    (h)  Insurance.

     

    (i)  It
      shall
      bear the full risk of loss from any loss of any nature whatsoever with respect
      to the Collateral and it and each of its Domestic Subsidiaries will, jointly
      and
      severally, bear the full risk of loss from any loss of any nature whatsoever
      with respect to the assets pledged to the Agent as security for the
      Obligations.  Furthermore, it will insure or cause the Collateral to
      be insured in the Agent’s name as an additional insured and lender loss payee,
      with an appropriate loss payable endorsement in form and substance satisfactory
      to the Agent, against loss or damage by fire, flood, sprinkler leakage, theft,
      burglary, pilferage, loss in transit and other risks customarily insured against
      by companies in similar business similarly situated as it and its Domestic
      Subsidiaries including but not limited to workers compensation, public and
      product liability and business interruption, and such other hazards as the
      Agent
      shall specify in amounts and under insurance policies and bonds by insurers
      acceptable to the Agent and all premiums thereon shall be paid by such Company
      and the policies delivered to the Agent.  If any such Company fails to
      obtain the insurance and in such amounts of coverage as otherwise required
      pursuant to this Section (h), the Agent may procure such insurance and the
      cost
      thereof shall be promptly reimbursed by the Companies, jointly and severally,
      and shall constitute Obligations.

     

    (ii)  No
      Company’s insurance coverage shall be impaired or invalidated by any act or
      neglect of any Company or any of its Domestic Subsidiaries and the insurer
      will
      provide the Agent with no less than thirty (30) days notice prior of
      cancellation;

     

    (iii)  The
      Agent, in connection with its status as a lender loss payee, will be assigned
      at
      all times to a first lien position until such time as all Obligations have
      been
      indefeasibly satisfied in full.

     

    (i)  Intellectual
      Property.  Each Company and each of its Domestic
      Subsidiaries:

     

    (i)  shall
      maintain in full force and effect its existence, rights and franchises and
      all
      licenses and other rights to own or use Intellectual Property including
      registrations and applications therefore, that are necessary to the conduct
      of
      its business, as now conducted or as presently proposed to be conducted, and
      shall not do any act or omit to do any act whereby any of such Intellectual
      Property may lapse, or become abandoned, dedicated to the public, or
      unenforceable, or the Lien therein in favor of the Agent for the benefit of
      the
      Lenders would be adversely affected;

     

    (ii)  shall
      report to the Agent (i) the filing of any application to register a Copyright
      no
      later than ten  (10) days after such filing occurs (ii)
      the  filing of any application to register any other Intellectual
      Property with any other Intellectual Property registry, and the issuance
      thereof, no later than thirty (30) days after such filing or issuance occurs
      and, in each case, shall, simultaneously with such report, deliver to the Agent
      fully-executed documents required to acknowledge, confirm, register, record
      or
      perfect the Lien in such Intellectual Property.  In addition, each
      Company and each of its Domestic Subsidiaries hereby authorize the Agent to
      modify this Agreement by amending Schedule 12(j) to include any
      registrations or applications for Intellectual Property inadvertently omitted
      from such Schedule or filed, registered, acquired by any Company or any of
      its
      Domestic Subsidiaries after the date hereof and will cooperate with the Agent
      in
      effecting any such amendment to include any new item of Intellectual Property
      included in the Collateral;

     

    
      
         

      

      
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    (iii)  shall,
      promptly upon the reasonable request of the Agent, execute and deliver to the
      Agent any document or instrument required to acknowledge, confirm, register,
      record, or perfect the Lien of the Agent in any part of the Intellectual
      Property owned by the Company and its Domestic Subsidiaries; and

     

    (iv)  shall
      not
      sell, assign, transfer, license, grant any option, or create or suffer to exist
      any Lien upon or with respect to Intellectual Property, except for the Liens
      in
      favor of the Agent and Permitted Liens.

     

    (j)  Properties.  It
      shall, and shall cause each of its Subsidiaries to, keep its properties in
      good
      repair, working order and condition, reasonable wear and tear excepted, and
      from
      time to time make all needful and proper repairs, renewals, replacements,
      additions and improvements thereto; and it shall, and shall cause each of its
      Subsidiaries to, at all times comply with each provision of all leases to which
      it is a party or under which it occupies property if the breach of such
      provision could reasonably be expected to have a Material Adverse
      Effect.

     

    (k)  Confidentiality.  No
      Company will, nor will it permit any of its Subsidiaries to, disclose, nor
      will
      it include in any public announcement, the name of any Creditor Party, unless
      expressly agreed to by such Creditor Party or unless and until such disclosure
      is required by law or applicable regulation, and then only to the extent of
      such
      requirement.  Notwithstanding the foregoing, (i) each Company may
      disclose any Creditor Party’s identity and the terms of this Agreement and the
      Ancillary Agreements to its current and prospective debt and equity financing
      sources and (ii) each Company (and each employee, representative, or other
      agent
      of each Company, including, without limitation, any attorney, accountant and/or
      auditor) may disclose to any and all Persons, without limitation of any kind,
      the tax treatment and any facts that may be relevant to the tax structure of
      the
      transactions contemplated by this Agreement and the Ancillary Agreements and
      the
      agreements referred to therein; provided, however, that no Company (and no
      employee, representative or other agent thereof, including, without limitation,
      any attorney, accountant and/or auditor) shall disclose pursuant to this clause
      (ii) any other information that is not relevant to understanding the tax
      treatment or tax structure of such transactions (including the identity of
      any
      party or any information that could lead another to determine the identity
      of
      any party); and, provided, further, that no Company shall disclose or permit
      any
      of its Subsidiaries to disclose any information to the extent that such
      disclosure could reasonably be expected to result in a violation of any U.S.
      federal or state securities law or similar law of another
      jurisdiction.

     

    
      
         

      

      
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    (l)  Required
      Approvals.  It shall not, and shall not permit any of its Domestic
      Subsidiaries to, without the prior written consent of the Agent, (i) create,
      incur, assume or suffer to exist any indebtedness (exclusive of trade debt)
      whether secured or unsecured other than each Company’s indebtedness to the
      Creditor Parties and as set forth on Schedule 13(l)(i) attached hereto
      and made a part hereof; (ii) cancel any debt owing to it in excess of $50,000
      in
      the aggregate during any twelve (12) month period; (iii) assume, guarantee,
      endorse or otherwise become directly or contingently liable in connection with
      any obligations of any other Person, except the endorsement of negotiable
      instruments by it or its Subsidiaries for deposit or collection or similar
      transactions in the ordinary course of business; (iv) directly or indirectly
      declare, pay or make any dividend or distribution on any class of its Stock
      or
      apply any of its funds, property or assets to the purchase, redemption or other
      retirement of any of its or its Subsidiaries’ Stock, or issue any preferred
      stock; (v) purchase or hold beneficially any Stock or other securities or
      evidences of indebtedness of, make or permit to exist any loans or advances
      to,
      or make any investment or acquire any interest whatsoever in, any other Person,
      including any partnership or joint venture, except (w) travel advances, (x)
      loans to its and its Domestic Subsidiaries’ officers and employees not exceeding
      at any one time an aggregate of $10,000, (y) intercompany loans to its existing
      Domestic Subsidiaries so long as such Domestic Subsidiaries are designated
      as
      either a co-borrower hereunder or has entered into such guaranty and security
      documentation required by the Agent, including, without limitation, to grant
      to
      the Agent a first priority perfected security interest in substantially all
      of
      such Domestic Subsidiary’s assets to secure the Obligations, and (z)
      intercompany loans to its Foreign Subsidiaries in an amount not to exceed
      $6,000,000 in the aggregate at any time outstanding; provided, that: (1) the
      amount of Loan proceeds that the Companies may utilize to make such intercompany
      loans shall not exceed $4,000,000 in the aggregate during the Term, of which
      only $2,000,000 in the aggregate during the Term may be utilized to make
      intercompany loans to Foreign Subsidiaries located in South America, (2) each
      Foreign Subsidiary shall have executed and delivered to the applicable Company,
      on the Closing Date, a demand note (collectively, the “Intercompany
      Notes”) to evidence any such intercompany indebtedness owing at any time by
      such Foreign Subsidiary to such Company which Intercompany Notes shall be
      substantially in the form attached hereto as Exhibit D and shall be pledged
      and
      delivered to the Agent as additional collateral security for the Obligations,
      (3) each Company shall record all intercompany transactions on its books and
      records in a manner satisfactory to the Agent, (4) at the time any such
      intercompany loan or advance is made by any Company to any Foreign Subsidiary
      and after giving effect thereto, each such Company shall be Solvent and (5)
      no
      Default or Event of Default would occur and be continuing after giving effect
      to
      any such proposed intercompany loan; (vi) create or permit to exist any Domestic
      Subsidiary, other than any Domestic Subsidiary in existence on the date hereof
      and listed in Schedule 12(b) unless such new Domestic Subsidiary is a
      wholly-owned Domestic Subsidiary and is designated by the Agent as either a
      co-borrower or guarantor hereunder and such Domestic Subsidiary shall have
      entered into all such documentation required by the Agent, including, without
      limitation, to grant to the Agent a first priority perfected security interest
      in substantially all of such Domestic Subsidiary’s assets to secure the
      Obligations; (vii) directly or indirectly, prepay any indebtedness (other than
      to the Agent and in the ordinary course of business), or repurchase, redeem,
      retire or otherwise acquire any indebtedness (other than to the Agent and in
      the
      ordinary course of business) except as expressly permitted by the applicable
      Subordination Agreement; (viii) enter into any merger, consolidation or other
      reorganization with or into any other Person or acquire all or a portion of
      the
      assets or Stock of any Person or permit any other Person to consolidate with
      or
      merge with it, unless (1) such Company is the surviving entity of such merger
      or
      consolidation, (2) no Event of Default shall exist immediately prior to and
      after giving effect to such merger or consolidation, (3) such Company shall
      have
      provided the Agent copies of all documentation relating to such merger or
      consolidation and (4) such Company shall have provided the Agent with at least
      thirty (30) days’ prior written notice of such merger or consolidation; (ix)
      materially change the nature of the business in which it is presently engaged;
      (x) become subject to (including, without limitation, by way of amendment to
      or
      modification of) any agreement or instrument which by its terms would (under
      any
      circumstances) restrict its or any of its Domestic Subsidiaries’ right to
      perform the provisions of this Agreement or any of the Ancillary Agreements;
      (xi) change its fiscal year or make any changes in accounting treatment and
      reporting practices without prior written notice to the Agent except as required
      by GAAP or in the tax reporting treatment or except as required by law; (xii)
      enter into any transaction with any employee, director or Affiliate, except
      in
      the ordinary course on arms-length terms; (xiii) bill Accounts under any name
      except the present name of such Company; (xiv) sell, lease, transfer or
      otherwise dispose of any of its properties or assets, or any of the properties
      or assets of its Subsidiaries, except for (1) sales, leases, transfer or
      dispositions by any Company to any other Company, (2) the sale of Inventory
      in
      the ordinary course of business and (3) the disposition or transfer in the
      ordinary course of business during any fiscal year of Equipment and/or motor
      vehicles having an aggregate fair market value of not more than $25,000 and
      only
      to the extent that (x) the proceeds of any such disposition are used to acquire
      replacement Equipment and/or motor vehicles which are subject to the Agent’s
      first priority security interest or are used to repay Loans or to pay general
      corporate expenses, or (y) following the occurrence of an Event of Default
      which
      continues to exist, the proceeds of which are remitted to the Agent to be held
      as cash collateral for the Obligations; (xv) make any payment or
      distribution in respect of any subordinated indebtedness of any Company or
      any
      of its Domestic Subsidiaries in violation of any subordination or other
      agreement made in favor of any Creditor Party; or (xvi) make any optional
      payment or prepayment on or redemption (including, without limitation, by making
      payments to a sinking fund or analogous fund) or repurchase of any indebtedness
      for borrowed money other than the Obligations.

     

    
      
         

      

      
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    (m)  Reissuance
      of Securities.  The Parent shall reissue certificates representing
      the Securities without the legends set forth in Section 39 below at such time
      as:

     

    (i)  the
      holder thereof is permitted to dispose of such Securities pursuant to Rule
      144(k) under the Securities Act; or

     

    (ii)  upon
      resale subject to an effective registration statement after such Securities
      are
      registered under the Securities Act.

     

    The
      Parent agrees to cooperate with the Lenders in connection with all resales
      pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary
      to
      allow such resales provided the Parent and its counsel receive reasonably
      requested representations from the Lenders and broker, if any.

     

    (n)  Opinion.  On
      the Closing Date, it shall deliver to the Creditor Parties an opinion acceptable
      to the Agent from each Company’s legal counsel.  Each Company will
      provide, at the Companies’ joint and several expense, such other legal opinions
      in the future as are reasonably necessary for the exercise of the Warrants
      and
      conversion of the Secured Term Notes.

     

    (o)  Legal
      Name, etc.  It shall not, without providing the Agent with 30 days
      prior written notice, change (i) its name as it appears in the official filings
      in the state of its organization, (ii) the type of legal entity it is, (iii)
      its
      organization identification number, if any, issued by its state of organization,
      (iv) its state of organization or (v) amend its certificate of incorporation,
      by-laws or other organizational document.

     

    (p)  Compliance
      with Laws.  The operation of each of its and each of its
      Subsidiaries’ business is and shall continue to be in compliance in all material
      respects with all applicable federal, state and local laws, rules and
      ordinances, including to all laws, rules, regulations and orders relating to
      taxes, payment and withholding of payroll taxes, employer and employee
      contributions and similar items, securities, employee retirement and welfare
      benefits, employee health and safety and environmental matters.

     

    (q)  Notices.  It
      and each of its Subsidiaries shall promptly inform the Agent in writing
      of:  (i) the commencement of all proceedings and investigations by or
      before and/or the receipt of any notices from, any governmental or
      nongovernmental body and all actions and proceedings in any court or before
      any
      arbitrator against or in any way concerning any event which could reasonably
      be
      expected to have singly or in the aggregate, a Material Adverse Effect; (ii)
      any
      change which has had, or could reasonably be expected to have, a Material
      Adverse Effect; (iii) any Event of Default or Default; and (iv) any default
      or
      any event which with the passage of time or giving of notice or both would
      constitute a default under any agreement for the payment of money to which
      it or
      any of its Subsidiaries is a party or by which it or any of its Subsidiaries
      or
      any of its or any such Subsidiary’s properties may be bound the breach of which
      would have a Material Adverse Effect.

     

    (r)  Margin
      Stock.  It shall not permit any of the proceeds of the Loans made
      hereunder to be used directly or indirectly to “purchase” or “carry” “margin
      stock” or to repay indebtedness incurred to “purchase” or “carry” “margin stock”
within the respective meanings of each of the quoted terms under Regulation
      U of
      the Board of Governors of the Federal Reserve System as now and from time to
      time hereafter in effect.

     

    
      
         

      

      
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    (s)  Offering
      Restrictions.  Except as previously disclosed in the SEC Reports
      or in the Exchange Act Filings, or stock or stock options granted to its
      employees or directors, neither it nor any of its Domestic Subsidiaries shall,
      prior to the full repayment of the Notes (together with all accrued and unpaid
      interest and fees related thereto) and termination of this Agreement, (x) enter
      into any equity line of credit agreement or similar agreement with a floorless
      pricing feature or (y) issue, or enter into any agreement to issue, any
      securities with a floorless variable/floating conversion and/or pricing feature
      which are or could be (by conversion or registration) free-trading securities
      (i.e.  common stock subject to a registration statement).

     

    (t)  Authorization
      and Reservation of Shares.  The Parent shall at all times have
      authorized and reserved a sufficient number of shares of Common Stock to provide
      for the exercise of the Warrants and the full conversion of the Secured Term
      Notes.

     

    (u)  FIRPTA.  Neither
      it, nor any of its Subsidiaries, is a “United States real property holding
      corporation” as such term is defined in Section 897(c)(2) of the Code and
      Treasury Regulation Section 1.897-2 promulgated thereunder, and it and each
      of
      its Subsidiaries shall at no time take any action or otherwise acquire any
      interest in any asset or property to the extent the effect of which shall cause
      it and/or such Subsidiary, as the case may be, to be a “United States real
      property holding corporation” as such term is defined in Section 897(c)(2) of
      the Code and Treasury Regulation Section 1.897-2 promulgated
      thereunder.

     

    (v)  Investor
      Relations/Public Relations.  The Parent hereby agrees to
      incorporate into its annual budget an amount of funds necessary to maintain
      a
      comprehensive investor relations and public relations program (an “IR/PR
      Program”), which IR/PR Program shall incorporate elements customarily
      utilized by companies of similar size and in a similar industry as the Parent
      and its Domestic Subsidiaries.

     

    (w)  Unione
      Purchase Agreement.  It shall not, without the prior written
      consent of the Agent, amend, modify or in any way alter the terms of the Unione
      Purchase Agreement.

     

    (x)  Subordinated
      Debt Documentation.

     

    (i)  It
      shall
      not, without the prior written consent of the Agent, amend, modify or in any
      way
      alter the terms of any of the Subordinated Debt Documentation except
      as expressly permitted by the applicable Subordination
      Agreement.

     

    (y)  Prohibition
      of Grant of Collateral for Subordinated Debt Documentation.  It
      shall not, without the prior written consent of the Agent, grant or permit
      any
      of its Domestic Subsidiaries to grant to any Person any Collateral of such
      Company or any collateral of any of its Domestic Subsidiaries as security for
      any obligation arising under the Subordinated Debt Documentation.

     

    
      
         

      

      
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    (z)  Prohibitions
      of Payment Under Subordinated Debt Documentation.  Neither it nor
      any of its Subsidiaries shall, without the prior written consent of the Agent,
      make any payments in respect of the indebtedness evidenced by the Subordinated
      Debt Documentation except
      as expressly permitted by the applicable Subordination
      Agreement.

     

    (aa)  Financing
      Right of First Refusal.

     

    (i)  Each
      Company hereby grants to the Lenders a right of first refusal to arrange any
      Additional Financing (as defined below) to be issued by the Parent (the
“Additional Financing Parties”), subject to the following terms and
      conditions.  From and after the date hereof, during the Term, prior to
      the incurrence of any additional indebtedness, including, without limitation,
      any additional indebtedness convertible into any equity interests of the
      Additional Financing Parties (an “Additional Financing”), Company Agent
      shall notify the Agent of such Additional Financing.  In connection
      therewith, Company Agent shall submit a proposed term sheet (a “Proposed Term
      Sheet”) to the Agent setting forth the terms, conditions and pricing of any
      such Additional Financing (such financing to be negotiated on “arm’s length”
terms and the terms thereof to be negotiated in good faith) proposed to be
      entered into by the Additional Financing Parties.  The Lenders shall
      have the right, but not the obligation, to deliver to Company Agent their own
      proposed term sheet (the “Lender Term Sheet”) setting forth the terms and
      conditions upon one or more of the Lenders would be willing to provide such
      Additional Financing to the Additional Financing Parties.  The Lender
      Term Sheet shall be on the same terms and conditions as those outlined in
      Proposed Term Sheet.  The Agent shall deliver to Company Agent the
      Lender Term Sheet within ten Business Days of receipt of each such Proposed
      Term
      Sheet.  If the provisions of the Lender Term Sheet are on the same
      terms and conditions to the Additional Financing Parties as the provisions
      of
      the Proposed Term Sheet, the Additional Financing Parties shall enter into
      and
      consummate the Additional Financing transaction outlined in the Lender Term
      Sheet.

     

    (ii)  It
      shall
      not, and shall not permit its Subsidiaries to, agree, directly or indirectly,
      to
      any restriction with any Person which limits the ability of any Creditor Party
      to arrange for the consummation of an Additional Financing with it or any of
      its
      Subsidiaries.

     

    (bb)  Financial
      Covenants.

     

    (i)  Minimum
      Consolidated EBITDA.  The Companies and their Domestic
      Subsidiaries on a Consolidated basis shall not have, on the last day of each
      calendar month commencing on the calendar month ending December 31, 2008,
      Consolidated EBITDA less than $4,000,000 for the twelve (12) calendar month
      period ending on such day.

     

     

    (ii)  Maximum
      Consolidated Leverage Ratio.  The Companies and their Domestic
      Subsidiaries on a Consolidated basis shall not have, on the last day of each
      calendar month commencing on the calendar month ending December 31, 2008, a
      Consolidated Leverage Ratio greater than 2.50 to 1.00.

     

     

    (iii)  Minimum
      Consolidated Fixed Charge Coverage Ratio.  The Companies and their
      Subsidiaries on a Consolidated basis shall not have, on the last day of each
      calendar month commencing on the calendar month ending December 31, 2008, a
      Consolidated Fixed Charge Coverage Ratio less than 1.25 to 1.00 for the twelve
      (12) calendar month period ending on such day.

     

    
      
         

      

      
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    14.  Further
      Assurances.  At any time and from time to time, upon the written
      request of the Agent and at the sole expense of Companies, each Company shall
      promptly and duly execute and deliver any and all such further instruments
      and
      documents and take such further action as the Agent may reasonably request
      (a)
      to obtain the full benefits of this Agreement and the Ancillary Agreements,
      (b)
      to protect, preserve, perfect and maintain the Agent’s rights in the Collateral
      and under this Agreement or any Ancillary Agreement, and/or (c) to enable the
      Agent to exercise all or any of the rights and powers herein granted or any
      Ancillary Agreement.

     

    15.  Representations,
      Warranties and Covenants of the Lenders.  Each Lender, severally
      and not jointly, hereby represents, warrants and covenants to each Company
      as
      follows:

     

    (a)  Requisite
      Power and Authority.  Such Lender has all necessary power and
      authority under all applicable provisions of law to execute and deliver this
      Agreement and the Ancillary Agreements and to carry out their
      provisions.  All corporate action on such Lenders’ part required for
      the lawful execution and delivery of this Agreement and the Ancillary Agreements
      have been or will be effectively taken prior to the Closing
      Date.  Upon their execution and delivery, this Agreement and the
      Ancillary Agreements shall be valid and binding obligations of such Lender,
      enforceable in accordance with their terms, except (a) as limited by applicable
      bankruptcy, insolvency, reorganization, moratorium or other laws of general
      application affecting enforcement of creditors’ rights, and (b) as limited by
      general principles of equity that restrict the availability of equitable and
      legal remedies.

     

    (b)  Investment
      Representations.  Such Lender understands that the Securities are
      being offered pursuant to an exemption from registration contained in the
      Securities Act based in part upon such Lenders’ representations contained in
      this Agreement, including, without limitation, that such Lender is an
“accredited investor” within the meaning of Regulation D under the Securities
      Act.  Such Lender has received or has had full access to all the
      information it considers necessary or appropriate to make an informed investment
      decision with respect to the Notes to be issued to it under this Agreement
      and
      the Securities acquired by it upon the exercise of the Warrants and the
      conversion of the Secured Term Notes.

     

    (c)  Lender
      Bears Economic Risk.  Such Lender has substantial experience in
      evaluating and investing in private placement transactions of securities in
      companies similar to the Parent so that it is capable of evaluating the merits
      and risks of its investment in the Parent and has the capacity to protect its
      own interests.  Such Lender must bear the economic risk of this
      investment until the Securities are sold pursuant to (i) an effective
      registration statement under the Securities Act, or (ii) an exemption from
      registration is available.

     

    (d)  Investment
      for Own Account.  The Securities are being issued to such Lender
      for its own account for investment only, and not as a nominee or agent and
      not
      with a view towards or for resale in connection with their
      distribution.

     

    (e)  Lender
      Can Protect Its Interest.  Such Lender represents that by reason
      of its, or of its management’s, business and financial experience, such Lender
      has the capacity to evaluate the merits and risks of its investment in the
      Notes, and the Securities and to protect its own interests in connection with
      the transactions contemplated in this Agreement, and the Ancillary
      Agreements.  Further, such Lender is aware of no publication of any
      advertisement in connection with the transactions contemplated in the Agreement
      or the Ancillary Agreements.

     

    
      
         

      

      
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    (f)  Accredited
      Investor.  Such Lender represents that it is an accredited
      investor within the meaning of Regulation D under the Securities
      Act.

     

    (g)  Shorting.  Neither
      such Lender nor any of its Affiliates or investment partners has, will, or
      will
      cause any Person, to directly engage in “short sales” of the Parent’s Common
      Stock as long as any amounts under the Notes shall remain
      outstanding.

     

    (h)  Patriot
      Act.  Such Lender certifies that, to the best of such Lender’s
      knowledge, such Lender has not been designated, and is not owned or controlled,
      by a “suspected terrorist” as defined in Executive Order 13224.  Such
      Lender seeks to comply with all applicable laws concerning money laundering
      and
      related activities.  In furtherance of those efforts, such Lender
      hereby represents, warrants and covenants that:  (i) none of the cash
      or property that such Lender will use to make the Loans has been or shall be
      derived from, or related to, any activity that is deemed criminal under United
      States law; and (ii) no disbursement by such Lender to any Company to the extent
      within such Lender’s control, shall cause such Lender to be in violation of the
      United States Bank Secrecy Act, the United States International Money Laundering
      Control Act of 1986 or the United States International Money Laundering
      Abatement and Anti-Terrorist Financing Act of 2001.  Such Lender shall
      promptly notify the Company Agent if any of these representations ceases to
      be
      true and accurate regarding such Lender.  Such Lender agrees to
      provide the Company any additional information regarding such Lender that the
      Company deems necessary or convenient to ensure compliance with all applicable
      laws concerning money laundering and similar activities.  Such Lender
      understands and agrees that if at any time it is discovered that any of the
      foregoing representations are incorrect, or if otherwise required by applicable
      law or regulation related to money laundering similar activities, such Lender
      may undertake appropriate actions to ensure compliance with applicable law
      or
      regulation, including but not limited to segregation and/or redemption of such
      Lender’s investment in the Parent.  Such Lender further understands
      that the Parent may release information about such Lender and, if applicable,
      any underlying beneficial owners, to proper authorities if the Parent, in its
      sole discretion, determines that it is in the best interests of the Parent
      in
      light of relevant rules and regulations under the laws set forth in subsection
      (ii) above.

     

    (i)  Limitation
      on Acquisition of Common Stock.  Notwithstanding anything to the
      contrary contained in this Agreement, any Ancillary Agreement, or any document,
      instrument or agreement entered into in connection with any other transaction
      entered into by and between such Lender and any Company (and/or Subsidiaries
      or
      Affiliates of any Company), such Lender (and/or Subsidiaries or Affiliates
      of
      such Lender) shall not acquire stock in the Parent (including, without
      limitation, pursuant to a contract to purchase, by exercising an option or
      warrant, by converting any other security or instrument, by acquiring or
      exercising any other right to acquire, shares of stock or other security
      convertible into shares of stock in the Parent, or otherwise, and such options,
      warrants, conversion or other rights shall not be exercisable) to the extent
      such stock acquisition would cause any interest (including any original issue
      discount) payable by any Company to a Non-U.S.  Lender not to qualify
      as portfolio interest, within the meaning of Section 871(h)(2) or Section
      881(c)(2) of the U.S.  Internal Revenue Code of 1986, as amended (the
“Code”) by reason of Section 871(h)(3) or Section 881(c)(3)(B) of the
      Code, as applicable, taking into account the constructive ownership rules under
      Section 871(h)(3)(C) of the Code (the “Stock Acquisition
      Limitation”).  The Stock Acquisition Limitation shall
      automatically become null and void with respect to each Lender, without any
      notice to any Company, the earlier to occur of either (a) the Parent’s delivery
      to such Lender of a Notice of Redemption (as defined in the applicable Secured
      Term Note) or (b) upon the existence of an Event of Default at a time when
      the
      average closing price of the Common Stock as reported by Bloomberg, L.P. on
      the
      Principal Market for the immediately preceding five trading days is greater
      than
      or equal to 200% of the Exercise Price (as defined in the
      Warrants).

     

    
      
         

      

      
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    16.  Confidentiality.  Each
      Lender covenants and agrees with the Company that such Lender will not disclose,
      and will not include in any public announcement, the name of the Company, unless
      expressly agreed to by the Company or unless and until such disclosure is
      required by law or applicable regulation, and then only to the extent of such
      requirement.  Notwithstanding the foregoing, (i) such Lender shall be
      permitted to discuss, distribute or otherwise transfer any non-public
      information of the Company and its Subsidiaries in such Lender’s possession now
      or in the future to (x) its employees, agents, counsel, professional consultants
      and accountants who, in each such case, have a specific need to know such
      information and (y) potential or actual (A) direct or indirect investors in
      such
      Lender and (B) any assignees or transferees of all or a portion of the
      Obligations, to the extent that such investor or assignee or transferee enters
      into a confidentiality agreement for such benefit of the Company in such form
      as
      may be necessary to addresses such Company’s Regulation FD requirements; (ii)
      such Lender (and each employee, representative, or other agent of such Lender)
      may disclose to any and all Persons, without limitation of any kind, the tax
      treatment and any facts that may be relevant to the tax structure of the
      transactions contemplated by this Agreement and the Ancillary Agreements and
      the
      agreements referred to therein; provided, however, that no Lender (and no
      employee, representative or other agent thereof) shall disclose pursuant to
      this
      clause (ii) any other information that is not relevant to understanding the
      tax
      treatment or tax structure of such transactions (including the identity of
      any
      party or any information that could lead another to determine the identity
      of
      any party); and (iii) the Agent or any Affiliate thereof shall be entitled
      to
      post on its website a summary of the transactions contemplated by this
      Agreement, including the names of one or more of the Companies and each of
      their
      Subsidiaries.

     

    17.  Power
      of Attorney.  Each Company hereby appoints the Agent, or any other
      Person whom the Agent may designate as such Company’s attorney, with power
      to:  (a)(i) execute any security related documentation on such
      Company’s behalf and to supply any omitted information and correct patent errors
      in any documents executed by such Company or on such Company’s behalf; (ii) to
      file financing statements and other evidence of Liens granted hereunder against
      such Company covering the Collateral (and, in connection with the filing of
      any
      such financing statements, describe the Collateral as “all assets and all
      personal property, whether now owned and/or hereafter acquired” (or any
      substantially similar variation thereof)); (iii) sign such Company’s name on any
      invoice or bill of lading relating to any Accounts, drafts against Account
      Debtors, schedules and assignments of Accounts, notices of assignment, financing
      statements and other evidence of the Agent’s granted hereunder and other public
      records, verifications of Account and notices to or from Account Debtors; (iv)
      in the case of any Intellectual Property, the Agent may execute and deliver,
      and
      have recorded, any and all agreements, instruments, documents and papers as
      the
      Agent may request to evidence the Agent’s security interest in such Intellectual
      Property and the goodwill and general intangibles of such Grantor relating
      thereto or represented thereby; (v) to do all other things the Agent deems
      necessary to carry out the terms of Section 6 of this Security Agreement and
      (b)
      upon the occurrence and during the continuance of an Event of Default; (vi)
      endorse such Company’s name on any checks, notes, acceptances, money orders,
      drafts or other forms of payment or security that may come into the Agent’s
      possession; (vii) verify the validity, amount or any other matter relating
      to
      any Account by mail, telephone, telegraph or otherwise with Account Debtors;
      (viii) do all other things necessary to carry out this Agreement, any Ancillary
      Agreement and all related documents; and (ix) notify the post office authorities
      to change the address for delivery of such Company’s mail to an address
      designated by the Agent, and to receive, open and dispose of all mail addressed
      to such Company.  Each Company hereby ratifies and approves all acts
      of the attorney.  Neither the Agent, nor the attorney will be liable
      for any acts or omissions or for any error of judgment or mistake of fact or
      law, except for gross negligence or willful misconduct.  This power,
      being coupled with an interest, is irrevocable so long as the Agent has a
      security interest and until the Obligations have been fully
      satisfied.

     

    18.  Term
      of Agreement.  Each Lender’s agreement to make Loans and extend
      financial accommodations under and in accordance with the terms of this
      Agreement or any Ancillary Agreement shall continue in full force and effect
      until the expiration of the Term.  The Agent may, following the
      occurrence of an Event of Default, terminate this Agreement.  The
      termination of the Agreement shall not affect any of the Agent’s or any Lender’s
      rights hereunder or any Ancillary Agreement and the provisions hereof and
      thereof shall continue to be fully operative until all transactions entered
      into, rights or interests created and the Obligations have been irrevocably
      disposed of, concluded or liquidated.  Notwithstanding the foregoing,
      the Agent shall release its security interests at any time after thirty (30)
      days notice upon irrevocable payment to it of all Obligations if each Company
      shall have (i) provided the Agent and each Lender with an executed release
      of
      any and all claims which such Company may have or thereafter have under this
      Agreement and all Ancillary Agreements and (ii) paid to each Lender an early
      payment fee in an amount equal to the Redemption Amount (as defined in the
      applicable Secured Term Note) and such other amounts required to be paid by
      the
      Companies to such Lender at such time pursuant to and in accordance with the
      terms of the applicable Secured Term Note; such fee being intended to compensate
      each Lender for its costs and expenses incurred in initially approving this
      Agreement or extending same.  Such early payment fee shall be due and
      payable jointly and severally by the Companies to each Lender also upon
      termination by acceleration of this Agreement by the Lenders due to the
      occurrence and continuance of an Event of Default.

     

    
      
         

      

      
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    19.  Termination
      of Lien.  The Liens and rights granted to the Agent hereunder and
      any Ancillary Agreements and the financing statements filed in connection
      herewith or therewith shall continue in full force and effect, notwithstanding
      the termination of this Agreement or the fact that any Company’s account may
      from time to time be temporarily in a zero or credit position, until all of
      the
      Obligations have been indefeasibly paid or performed in full and this Agreement
      has been terminated in accordance with the terms of this
      Agreement.  The Agent shall not be required to send termination
      statements or other evidence of the release of the Lien granted hereunder to
      any
      Company, or to file them with any filing office, unless and until this Agreement
      and the Ancillary Agreements shall have been terminated in accordance with
      their
      terms and all Obligations indefeasibly paid in full in immediately available
      funds.

     

    20.  Events
      of Default.  The occurrence of any of the following shall
      constitute an “Event of Default”:

     

    (a)  failure
      to make payment of any of the Obligations when required hereunder, and, in
      any
      such case, such failure shall continue for a period of three (3) Business Days
      following the date upon which any such payment was due;

     

    (b)  failure
      by any Company or any of its Subsidiaries to pay any taxes when due unless
      such
      taxes are being contested in good faith by appropriate proceedings and with
      respect to which adequate reserves have been provided on such Company’s and/or
      such Subsidiary’s books;

     

    (c)  failure
      to perform under, and/or committing any breach of, in any material respect,
      this
      Agreement or any covenant contained herein, which failure or breach shall
      continue without remedy for a period of fifteen (15) days after the occurrence
      thereof;

     

    (d)  any
      representation, warranty or statement made by any Company or any of its
      Subsidiaries hereunder, in any Ancillary Agreement, any certificate, statement
      or document delivered pursuant to the terms hereof, or in connection with the
      transactions contemplated by this Agreement should prove to be false or
      misleading in any material respect on the date as of which made or deemed
      made;

     

    (e)  the
      occurrence of any default (or similar term) in the observance or performance
      of
      any other agreement or condition relating to any indebtedness or contingent
      obligation of any Company or any of its Subsidiaries (including, without
      limitation, the indebtedness evidenced by the Subordinated Debt Documentation)
      beyond the period of grace (if any), the effect of which default is to cause,
      or
      permit the holder or holders of such indebtedness or beneficiary or
      beneficiaries of such contingent obligation to cause, any indebtedness in an
      amount greater than $50,000 to become due prior to its stated maturity or any
      contingent obligation in an amount greater than 50,000 to become
      payable;

     

    (f)  the
      occurrence of any default (or similar term) in the observance or performance
      of
      any agreement or condition by any Company or any of its Subsidiaries under
      the
      Unione Purchase Agreement.

     

    
      
         

      

      
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    (g)  attachments
      or levies in excess of $50,000 in the aggregate are made upon any Company’s
      assets or a judgment is rendered against any Company’s property involving a
      liability of more than $50,000 which shall not have been vacated, discharged,
      stayed or bonded within thirty (30) days from the entry thereof;

     

    (h)  any
      change in any Company’s or any of its Subsidiary’s condition or affairs
      (financial or otherwise) which in the Agent’s reasonable, good faith opinion,
      could reasonably be expected to have a Material Adverse Effect;

     

    (i)  any
      Lien
      created hereunder or under any Ancillary Agreement for any reason ceases to
      be
      or is not a valid and perfected Lien having a first priority interest, other
      than in the event the Agent terminates, or fails to continue, one (1) or more
      UCC financing statements;

     

    (j)  any
      Company or any of its Subsidiaries shall (i) apply for, consent to or suffer
      to
      exist the appointment of, or the taking of possession by, a receiver, custodian,
      trustee or liquidator of itself or of all or a substantial part of its property,
      (ii) make a general assignment for the benefit of creditors, (iii) commence
      a
      voluntary case under the federal bankruptcy laws (as now or hereafter in
      effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
      seeking to take advantage of any other law providing for the relief of debtors,
      (vi) not challenge within ten (10) days of the filing thereof, or fail to have
      dismissed within forty five (45) days, any petition filed against it in any
      involuntary case under such bankruptcy laws, or (vii) take any action for the
      purpose of effecting any of the foregoing;

     

    (k)  any
      Company or any of its Subsidiaries shall admit in writing its inability, or
      be
      generally unable, to pay its debts as they become due or cease operations of
      its
      present business;

     

    (l)  any
      Company or any of its Subsidiaries directly or indirectly sells, assigns,
      transfers, conveys, or suffers or permits to occur any sale, assignment,
      transfer or conveyance of any assets of such Company or any interest therein,
      except as permitted herein;

     

    (m)  any
      “Person” or “group” (as such terms are defined in Sections 13(d) and 14(d) of
      the Exchange Act, as in effect on the date hereof), other than a Lender, is
      or
      becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under
      the Exchange Act), directly or indirectly, of 35% or more on a fully diluted
      basis of the then outstanding voting equity interest of the Parent (other than
      a
“Person” or “group” that beneficially owns 35% or more of such outstanding
      voting equity interests of the Parent on the date hereof),  (ii) the
      Board of Directors of the Parent shall cease to consist of a majority of the
      Board of Directors of the Parent on the date hereof (or directors appointed
      by a
      majority of the board of directors in effect immediately prior to such
      appointment) or (iii) the Parent or any of its Subsidiaries merges or
      consolidates with, or sells all or substantially all of its assets to, any
      other
      person or entity;

     

    (n)  the
      indictment of any Company or any of its Subsidiaries or any executive officer
      of
      any Company or any of its Subsidiaries under any criminal statute, or
      commencement of criminal or civil proceeding against any Company or any of
      its
      Subsidiaries or any executive officer of any Company or any of its Subsidiaries
      pursuant to which statute or proceeding penalties or remedies sought or
      available include forfeiture of any of the property of any Company or any of
      its
      Subsidiaries;

     

    
      
         

      

      
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    (o)  an
      Event
      of Default shall occur under and as defined in any Note or in any other
      Ancillary Agreement;

     

    (p)  any
      Company or any of its Subsidiaries shall breach any term or provision of any
      Ancillary Agreement to which it is a party (including, without limitation,
      Section 7(e) of the Registration Rights Agreement), in any material respect
      which breach is not cured within any applicable cure or grace period provided
      in
      respect thereof (if any);

     

    (q)  any
      Company or any of its Subsidiaries attempts to terminate, challenges the
      validity of, or its liability under this Agreement or any Ancillary Agreement,
      or any proceeding shall be brought to challenge the validity, binding effect
      of
      any Ancillary Agreement or any Ancillary Agreement ceases to be a valid, binding
      and enforceable obligation of such Company or any of its Subsidiaries (to the
      extent such Persons are a party thereto);

     

    (r)  an
      SEC
      stop trade order or Principal Market trading suspension of the Common Stock
      shall be in effect for five (5) consecutive days or five (5) days during a
      period of ten (10) consecutive days, excluding in all cases a suspension of
      all
      trading on a Principal Market, provided that the Parent shall not have been
      able
      to cure such trading suspension within forty five (45) days of the notice
      thereof or list the Common Stock on another Principal Market within sixty (60)
      days of such notice;

     

    (s)  the
      Parent’s failure to deliver Common Stock to any Lender pursuant to and in the
      form required by the Warrants, the Secured Term Notes and this Agreement, if
      such failure to deliver Common Stock shall not be cured within two (2) Business
      Days or any Company is required to issue a replacement Note to any Lender and
      such Company shall fail to deliver such replacement Note within seven (7)
      Business Days; or

     

    (t)  any
      Company, or any of its Domestic Subsidiaries shall take or participate in any
      action which would be prohibited under the provisions of any Subordination
      Agreement or make any payment on the indebtedness evidenced by the Subordinated
      Debt Documentation to a Subordinated Lender that was not entitled to receive
      such payments under the applicable Subordination Agreement.

     

    21.  Remedies.  Following
      the occurrence of an Event of Default, the Agent shall have the right to demand
      repayment in full of all Obligations, whether or not otherwise
      due.  Until all Obligations have been fully and indefeasibly
      satisfied, the Agent shall retain its Lien in all Collateral.  The
      Agent shall have, in addition to all other rights provided herein and in each
      Ancillary Agreement, the rights and remedies of a secured party under the UCC,
      and under other applicable law, all other legal and equitable rights to which
      the Agent may be entitled, including the right to take immediate possession
      of
      the Collateral, to require each Company to assemble the Collateral, at
      Companies’ joint and several expense, and to make it available to the Agent at a
      place designated by the Agent which is reasonably convenient to both parties
      and
      to enter any of the premises of any Company or wherever the Collateral shall
      be
      located, with or without force or process of law, and to keep and store the
      same
      on said premises until sold (and if said premises be the property of any
      Company, such Company agrees not to charge the Agent or any Lender for storage
      thereof), and the right to apply for the appointment of a receiver for such
      Company’s property.  Further, the Agent may, at any time or times
      after the occurrence of an Event of Default, sell and deliver all Collateral
      held by or for the Agent at public or private sale for cash, upon credit or
      otherwise, at such prices and upon such terms as the Agent, in its sole
      discretion, deems advisable or the Agent may otherwise recover upon the
      Collateral in any commercially reasonable manner as the Agent, in its sole
      discretion, deems advisable.  The requirement of reasonable notice
      shall be met if such notice is mailed postage prepaid to Company Agent at
      Company Agent’s address as shown in the Agent’s records, at least ten (10) days
      before the time of the event of which notice is being given.  The
      Agent may be the purchaser at any sale, if it is public.  In
      connection with the exercise of the foregoing remedies, and not without
      limitation of any remedies with respect to Intellectual Property Collateral,
      the
      Agent may exercise the rights and license granted under Section 12(j)
      hereof.  The proceeds of sale shall be applied first to all costs and
      expenses of sale, including attorneys’ fees, and second to the payment (in
      whatever order the Agent elects) of all Obligations.  After the
      indefeasible payment and satisfaction in full of all of the Obligations, and
      after the payment by the Agent of any other amount required by any provision
      of
      law, including Section 9-608(a)(1) of the UCC (but only after the Agent has
      received what the Agent considers reasonable proof of a subordinate party’s
      security interest), the surplus, if any, shall be paid to Company Agent (for
      the
      benefit of the applicable Companies) or its representatives or to whosoever
      may
      be lawfully entitled to receive the same, or as a court of competent
      jurisdiction may direct.  The Companies shall remain jointly and
      severally liable to the Creditor Parties for any deficiency.  Each
      Company and the Creditor Parties acknowledge that the actual damages that would
      be incurred by the Lenders after the occurrence of an Event of Default would
      be
      difficult to quantify and that such Company and the Creditor Parties have agreed
      that the fees and obligations set forth in this Section and in this Agreement
      would constitute fair and appropriate liquidated damages in the event of any
      such termination.  The parties hereto each hereby agree that the
      exercise by any party hereto of any right granted to it or the exercise by
      any
      party hereto of any remedy available to it (including, without limitation,
      the
      issuance of a notice of redemption, a borrowing request and/or a notice of
      default), in each case, hereunder or under any Ancillary Agreement shall not
      constitute confidential information and no party shall have any duty to the
      other party to maintain such information as confidential.

     

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    22.  Waivers.  To
      the full extent permitted by applicable law, each Company hereby waives (a)
      presentment, demand and protest, and notice of presentment, dishonor, intent
      to
      accelerate, acceleration, protest, default, nonpayment, maturity, release,
      compromise, settlement, extension or renewal of any or all of this Agreement
      and
      the Ancillary Agreements or any other notes, commercial paper, Accounts,
      contracts, Documents, Instruments, Chattel Paper and guaranties at any time
      held
      by the Agent on which such Company may in any way be liable, and hereby ratifies
      and confirms whatever the Agent may do in this regard; (b) all rights to notice
      and a hearing prior to the Agent’s taking possession or control of, or to the
      Agent’s replevy, attachment or levy upon, any Collateral or any bond or security
      that might be required by any court prior to allowing the Agent to exercise
      any
      of its remedies; and (c) the benefit of all valuation, appraisal and exemption
      laws.  Each Company acknowledges that it has been advised by counsel
      of its choices and decisions with respect to this Agreement, the Ancillary
      Agreements and the transactions evidenced hereby and thereby.

     

    23.  Expenses.  The
      Companies shall jointly and severally pay all of the Agent’s out-of-pocket costs
      and reasonable expenses, including reasonable fees and disbursements of in-house
      or outside counsel and appraisers, in connection with (x) subject to the
      limitations set forth in Section 5(b)(iii), the preparation, execution and
      delivery of this Agreement and the Ancillary Agreements, and (y) in connection
      with the prosecution or defense of any action, contest, dispute, suit or
      proceeding concerning any matter in any way arising out of, related to or
      connected with this Agreement or any Ancillary Agreement.  The
      Companies shall also jointly and severally pay all of the Agent’s reasonable
      fees, charges, out-of-pocket costs and expenses, including fees and
      disbursements of counsel and appraisers, in connection with (a) the preparation,
      execution and delivery of any waiver, any amendment thereto or consent proposed
      or executed in connection with the transactions contemplated by this Agreement
      or the Ancillary Agreements, (b) the Agent’s obtaining performance of the
      Obligations under this Agreement and any Ancillary Agreements, including, but
      not limited to, the enforcement or defense of the Agent’s security interests,
      assignments of rights and Liens hereunder as valid perfected security interests,
      (c) any attempt to inspect, verify, protect, collect, sell, liquidate or
      otherwise dispose of any Collateral, (d) any appraisals or re appraisals of
      any
      property (real or personal) pledged to the Agent by any Company or any of its
      Domestic Subsidiaries as Collateral for, or any other Person as security for,
      the Obligations hereunder and (e) any consultations in connection with any
      of
      the foregoing.  The Companies shall also jointly and severally pay
      each Creditor Party the customary bank charges for any bank services (including
      wire transfers) performed or caused to be performed by it for any Company or
      any
      of its Domestic Subsidiaries at any Company’s or such Domestic Subsidiary’s
      request or in connection with any Company’s loan account with such Creditor
      Party.  All such costs and expenses together with all filing,
      recording and search fees, taxes and interest payable by the Companies to the
      Creditor Parties shall be payable on demand and shall be secured by the
      Collateral.  If any tax by any Governmental Authority is or may be
      imposed on or as a result of any transaction between any Company and/or any
      Subsidiary thereof, on the one hand, and Creditor Party on the other hand,
      which
      such Creditor Party is or may be required to withhold or pay (including, without
      limitation, as a result of a breach by any Company or any of its Subsidiaries
      of
      Section 13(u) herein), the Companies hereby jointly and severally indemnify
      and
      hold such Creditor Party harmless in respect of such taxes, and the Companies
      will repay to such Creditor Party the amount of any such taxes which shall
      be
      charged to the Companies’ account; and until the Companies shall furnish such
      Creditor Party with indemnity therefor (or supply such Creditor Party with
      evidence satisfactory to it that due provision for the payment thereof has
      been
      made), such Creditor Party may hold without interest any balance standing to
      each Company’s credit and the Agent shall retain its Liens in any and all
      Collateral.

     

    24.  Assignment;
      Register.

     

    (a)  Each
      Lender may assign any or all of the Obligations to any Person and, subject
      to
      acceptance and recordation thereof by the Agent pursuant to Section 24(b) and
      receipt by the Agent of a copy of the agreement or instrument pursuant to which
      such assignment is made (each such agreement or instrument, an “Assignment
      Agreement”), any such assignee shall succeed to all of the Lenders’ rights
      with respect thereto; provided that no Lender shall be permitted to effect
      any
      such assignment to a competitor of any Company unless an Event of Default has
      occurred and is continuing.  Each Lender may from time to time sell or
      otherwise grant participations in any of the Obligations and the holder of
      any
      such participation shall, subject to the terms of any agreement between such
      Lender and such holder, be entitled to the same benefits as such Lender with
      respect to any security for the Obligations in which such holder is a
      participant.  Each Company agrees that each such holder may exercise
      any and all rights of banker’s lien, set-off and counterclaim with respect to
      its participation in the Obligations as fully as though such Company were
      directly indebted to such holder in the amount of such
      participation.  No Company may assign any of its rights or obligations
      hereunder without the prior written consent of the Agent.  All of the
      terms, conditions, promises, covenants, provisions and warranties of this
      Agreement shall inure to the benefit of each of the undersigned, and shall
      bind
      the representatives, successors and permitted assigns of each
      Company.

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    (b)  The
      Agent
      shall maintain, or cause to be maintained, for this purpose only as agent for
      each Company, (i) a copy of each Assignment Agreement delivered to it and (ii)
      a
      book entry system, within the meaning of U.S.  Treasury Regulation
      Sections 5f.103-1(c) and 1.871-14(c) (the “Register”), in which it will
      register the name and address of each Lender and the name and address of each
      assignee of each Lender under this Agreement, and the principal amount of,
      and
      stated interest on, the Loans owing to each such Lender and assignee pursuant
      to
      the terms hereof and each Assignment Agreement.  The right, title and
      interest of the Lenders and their assignees in and to such Loans shall be
      transferable only upon notation of such transfer in the Register, and no
      assignment thereof shall be effective until recorded therein.  The
      Companies and each Creditor Party shall treat each Person whose name is recorded
      in the Register as a Lender pursuant to the terms hereof as a Lender and owner
      of an interest in the Obligations hereunder for all purposes of this Agreement,
      notwithstanding notice to the contrary or any notation of ownership or other
      writing or any Note.  The Register shall be available for inspection
      by any Company or Lender, at any reasonable time and from time to time, upon
      reasonable prior notice.

     

    25.  No
      Waiver; Cumulative Remedies.  Failure by any Creditor Party to
      exercise any right, remedy or option under this Agreement, any Ancillary
      Agreement or any supplement hereto or thereto or any other agreement between
      or
      among any Company and such Creditor Party in exercising the same, will not
      operate as a waiver; no waiver by any Creditor Party will be effective unless
      it
      is in writing and then only to the extent specifically stated.  The
      Creditor Parties’ rights and remedies under this Agreement and the Ancillary
      Agreements will be cumulative and not exclusive of any other right or remedy
      which any of the Creditor Parties may have.

     

    26.  Application
      of Payments.  Each Company irrevocably waives the right to direct
      the application of any and all payments at any time or times hereafter received
      by the Agent from or on such Company’s behalf and each Company hereby
      irrevocably agrees that the Agent shall have the continuing exclusive right
      to
      apply and reapply any and all payments received at any time or times hereafter
      against the Obligations hereunder in such manner as the Agent may deem advisable
      notwithstanding any entry by the Agent upon any of the Agent’s books and
      records.

     

    27.  Indemnity.  Each
      Company hereby jointly and severally indemnifies and holds each Creditor Party,
      and its respective affiliates, employees, attorneys and agents (each, an
“Indemnified Person”), harmless from and against any and all suits,
      actions, proceedings, claims, damages, losses, liabilities and expenses of
      any
      kind or nature whatsoever (including reasonable attorneys’ fees and
      disbursements and other costs of investigation or defense, including those
      incurred upon any appeal) which may be instituted or asserted against or
      incurred by any such Indemnified Person as the result of credit having been
      extended, suspended or terminated under this Agreement or any of the Ancillary
      Agreements or with respect to the execution, delivery, enforcement, performance
      and administration of, or in any other way arising out of or relating to, this
      Agreement, the Ancillary Agreements or any other documents or transactions
      contemplated by or referred to herein or therein and any actions or failures
      to
      act with respect to any of the foregoing, including any actual or alleged
      presence or release of Hazardous Materials on or from any property owned or
      operated by any Company or any of its Subsidiaries or any liability under
      Environmental Law related in any way to the Company or any Subsidiary, except
      to
      the extent that any such indemnified liability is finally determined by a court
      of competent jurisdiction to have resulted solely from such Indemnified Person’s
      gross negligence or willful misconduct.  NO INDEMNIFIED PERSON SHALL
      BE RESPONSIBLE OR LIABLE TO ANY COMPANY OR TO ANY OTHER PARTY OR TO ANY
      SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING
      CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
      CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
      EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY ANCILLARY
      AGREEMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
      THEREUNDER.

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    28.  Revival.  The
      Companies further agree that to the extent any Company makes a payment or
      payments to any Creditor Party, which payment or payments or any part thereof
      are subsequently invalidated, declared to be fraudulent or preferential, set
      aside and/or required to be repaid to a trustee, receiver or any other party
      under any bankruptcy act, state or federal law, common law or equitable cause,
      then, to the extent of such payment or repayment, the obligation or part thereof
      intended to be satisfied shall be revived and continued in full force and effect
      as if said payment had not been made.

     

    29.  Borrowing
      Agency Provisions.

     

    (a)  Each
      Company hereby irrevocably designates Company Agent to be its attorney and
      agent
      and in such capacity to borrow, sign and endorse notes, and execute and deliver
      all instruments, documents, writings and further assurances now or hereafter
      required hereunder, on behalf of such Company, and hereby authorizes the Agent
      to pay over or credit all loan proceeds hereunder in accordance with the request
      of Company Agent.

     

    (b)  The
      handling of this credit facility as a co-borrowing facility with a borrowing
      agent in the manner set forth in this Agreement is solely as an accommodation
      to
      the Companies and at their request.  the Agent shall not incur any
      liability to any Company as a result thereof.  To induce the Agent to
      do so and in consideration thereof, each Company hereby indemnifies the Agent
      and holds the Agent harmless from and against any and all liabilities, expenses,
      losses, damages and claims of damage or injury asserted against the Agent by
      any
      Person arising from or incurred by reason of the handling of the financing
      arrangements of the Companies as provided herein, reliance by the Agent on
      any
      request or instruction from Company Agent or any other action taken by the
      Agent
      with respect to this Paragraph 29.

     

    (c)  All
      Obligations shall be joint and several, and the Companies shall make payment
      upon the maturity of the Obligations by acceleration or otherwise, and such
      obligation and liability on the part of the Companies shall in no way be
      affected by any extensions, renewals and forbearance granted by the Agent to
      any
      Company, failure of the Agent to give any Company notice of borrowing or any
      other notice, any failure of the Agent to pursue to preserve its rights against
      any Company, the release by the Agent of any Collateral now or thereafter
      acquired from any Company, and such agreement by any Company to pay upon any
      notice issued pursuant thereto is unconditional and unaffected by prior recourse
      by the Agent to any Company or any Collateral for such Company’s Obligations or
      the lack thereof.

     

    (d)  Each
      Company expressly waives any and all rights of subrogation, reimbursement,
      indemnity, exoneration, contribution or any other claim which such Company
      may
      now or hereafter have against the other or other Person directly or contingently
      liable for the Obligations, or against or with respect to any other’s property
      (including, without limitation, any property which is Collateral for the
      Obligations), arising from the existence or performance of this Agreement,
      until
      all Obligations have been indefeasibly paid in full and this Agreement has
      been
      irrevocably terminated.

     

    (e)  Each
      Company represents and warrants to the Agent that (i) Companies have one or
      more
      common shareholders, directors and officers, (ii) the businesses and corporate
      activities of Companies are closely related to, and substantially benefit,
      the
      business and corporate activities of Companies, (iii) the financial and other
      operations of Companies are performed on a combined basis as if Companies
      constituted a consolidated corporate group, (iv) Companies will receive a
      substantial economic benefit from entering into this Agreement and will receive
      a substantial economic benefit from the application of each Loan hereunder,
      in
      each case, whether or not such amount is used directly by any Company and (v)
      all requests for Loans hereunder by the Company Agent are for the exclusive
      and
      indivisible benefit of the Companies as though, for purposes of this Agreement,
      the Companies constituted a single entity.

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    30.  Notices.  Any
      notice or request hereunder may be given to any Company, Company Agent or the
      Agent at the respective addresses set forth below (or, in the case of any notice
      to any other Creditor Party, at the address set forth opposite its name on
      the
      signature pages hereto) or as may hereafter be specified in a notice designated
      as a change of address under this Section.  Any notice or request
      hereunder shall be given by registered or certified mail, return receipt
      requested, hand delivery, overnight mail or telecopy (confirmed by
      mail).  Notices and requests shall be, in the case of those by hand
      delivery, deemed to have been given when delivered to any officer of the party
      to whom it is addressed, in the case of those by mail or overnight mail, deemed
      to have been given three (3) Business Days after the date when deposited in
      the
      mail or with the overnight mail carrier, and, in the case of a telecopy, when
      confirmed.

     

    Notices
      shall be provided as follows:

     

    
      	
               

            	
              If
                to the Agent:

            	
              LV
                Administrative Services, Inc.

            


      	 	 	
              335
                Madison Avenue, 10th Fl.

            


      	 	 	
              New
                York, New York 10017

            


      	 	
              Attention:

            	
              Portfolio
                Services

            


      	 	
              Telephone:

            	(212)
              541-5800


      	 	
              Telecopier:

            	
              (212)
                581-5037

            


      	 	 	 


      	 	 	 


      	 	
              If
                to any Company, or Company Agent:

            	
              NewMarket
                Technology, Inc.

            


      	 	 	
              14860
                Montfort Drive, Suite 210

            


      	 	 	
              Dallas,
                Texas 75254

            


      	 	Attention:	
              Philip
                J. Rauch

            


      	 	
              Telephone:

            	
              (631)
                393-5130

            


      	 	
              Facsimile:

            	
              (631)
                673-0631

            


      	 	 	 


      	 	 	 


      	 	
              With
                a copy to:

            	
              Burkhart
                Wexler & Hirschberg

            


      	 	 	
              585
                Stewart Avenue

            


      	 	 	
              Garden
                City, New York  11530

            


      	 	
              Attention:

            	
              Errol
                Burkhart, Esq.

            


      	 	
              Telephone:

            	
              (516)
                222-2230

            


      	 	
              Facsimile:

            	
              (516)
                222-8803

            


      	 	 	 


    

    or
      such
      other address as may be designated in writing hereafter in accordance with
      this
      Section 29 by such Person.

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    31.  Governing
      Law, Jurisdiction and Waiver of Jury Trial.

     

    (a)  THIS
      AGREEMENT AND THE ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED AND
      ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
      CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
      CONFLICTS OF LAW.

     

    (b)  EACH
      COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
      IN
      THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
      TO
      HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND,
      AND ANY CREDITOR PARTY, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR
      ANY
      OF THE ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
      AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT EACH
      CREDITOR PARTY AND EACH COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
      MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK,
      STATE
      OF NEW YORK; AND FURTHERPROVIDED, THAT NOTHING IN THIS AGREEMENT
      SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY CREDITOR PARTY FROM BRINGING SUIT
      OR
      TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS,
      TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR
      TO
      ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF ANY CREDITOR
      PARTY.  EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
      JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY
      HEREBY WAIVES ANY OBJECTION THAT IT MAY HAVE BASED UPON LACK OF PERSONAL
      JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.  EACH
      COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
      PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
      SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
      MAIL
      ADDRESSED TO COMPANY AGENT AT THE ADDRESS SET FORTH IN SECTION 29 AND THAT
      SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE COMPANY AGENT’S ACTUAL
      RECEIPT THEREOF.

     

    (c)  THE
      PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
      APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
      BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE
      ALL
      RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
      ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN ANY
      CREDITOR PARTY, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH, RELATED
      OR
      INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
      THIS
      AGREEMENT, ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
      THERETO.

     

    32.  Limitation
      of Liability.  Each Company acknowledges and understands that in
      order to assure repayment of the Obligations hereunder the Creditor Parties
      may
      be required to exercise any and all of the Creditor Parties’ rights and remedies
      hereunder and agrees that, except as limited by applicable law, neither the
      Creditor Parties nor any of their respective agents shall be liable for acts
      taken or omissions made in connection herewith or therewith except for actual
      bad faith.

     

    33.  Entire
      Understanding; Maximum Interest.  This Agreement and the Ancillary
      Agreements contain the entire understanding among each Company, the Lenders
      and
      the Agent as to the subject matter hereof and thereof and any promises,
      representations, warranties or guarantees not herein contained shall have no
      force and effect unless in writing, signed by each Company’s and the
      Agent.  Neither this Agreement, the Ancillary Agreements, nor any
      portion or provisions thereof may be changed, modified, amended, waived,
      supplemented, discharged, cancelled or terminated orally or by any course of
      dealing, or in any manner other than by an agreement in writing, signed by
      the
      party to be charged.  Nothing contained in this Agreement, any
      Ancillary Agreement or in any document referred to herein or delivered in
      connection herewith shall be deemed to establish or require the payment of
      a
      rate of interest or other charges in excess of the maximum rate permitted by
      applicable law.  In the event that the rate of interest or dividends
      required to be paid or other charges hereunder exceed the maximum rate permitted
      by such law, any payments in excess of such maximum shall be credited against
      amounts owed by the Companies to the Creditor Parties and thus refunded to
      the
      Companies.

     

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    34.  Severability.  Wherever
      possible each provision of this Agreement or the Ancillary Agreements shall
      be
      interpreted in such manner as to be effective and valid under applicable law,
      but if any provision of this Agreement or the Ancillary Agreements shall be
      prohibited by or invalid under applicable law such provision shall be
      ineffective to the extent of such prohibition or invalidity, without
      invalidating the remainder of such provision or the remaining provisions
      thereof.

     

    35.  Survival.  The
      representations, warranties, covenants and agreements made herein shall survive
      any investigation made by any Creditor Party and the closing of the transactions
      contemplated hereby to the extent provided therein.  All statements as
      to factual matters contained in any certificate or other instrument delivered
      by
      or on behalf of the Companies pursuant hereto in connection with the
      transactions contemplated hereby shall be deemed to be representations and
      warranties by the Companies hereunder solely as of the date of such certificate
      or instrument.  All indemnities set forth herein shall survive the
      execution, delivery and termination of this Agreement and the Ancillary
      Agreements and the making and repaying of the Obligations.

     

    36.  Captions.  All
      captions are and shall be without substantive meaning or content of any kind
      whatsoever.

     

    37.  Counterparts;
      Telecopier Signatures.  This Agreement may be executed in one or
      more counterparts, each of which shall constitute an original and all of which
      taken together shall constitute one and the same agreement.  Any
      signature delivered by a party via telecopier transmission shall be deemed
      to be
      any original signature hereto.

     

    38.  Construction.  The
      parties acknowledge that each party and its counsel have reviewed this Agreement
      and that the normal rule of construction to the effect that any ambiguities
      are
      to be resolved against the drafting party shall not be employed in the
      interpretation of this Agreement or any amendments, schedules or exhibits
      thereto.

     

    39.  Publicity.  Each
      Company hereby authorizes each Creditor Party to make appropriate announcements
      of the financial arrangement entered into by and among each Company and each
      Creditor Party, including, without limitation, announcements which are commonly
      known as tombstones, in such publications and to such selected parties as the
      Agent shall in its sole and absolute discretion deem appropriate, or as required
      by applicable law.

     

    40.  Joinder.  It
      is understood and agreed that any Person that desires to become a Company
      hereunder, or is required to execute a counterpart of this Agreement after
      the
      date hereof pursuant to the requirements of this Agreement or any Ancillary
      Agreement, shall become a Company hereunder by (a) executing a Joinder Agreement
      in form and substance satisfactory to the Agent, (b) delivering supplements
      to
      such exhibits and annexes to this Agreement and the Ancillary Agreements as
      the
      Agent shall reasonably request and (c) taking all actions as specified in this
      Agreement as would have been taken by such Company had it been an original
      party
      to this Agreement, in each case with all documents required above to be
      delivered to the Agent and with all documents and actions required above to
      be
      taken to the reasonable satisfaction of the Agent.

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    41.  Legends.  The
      Securities shall bear legends as follows;

     

    (a)  The
      Notes
      shall bear substantially the following legend:

     

    “THIS
      NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      ANY APPLICABLE, STATE SECURITIES LAWS.  THIS NOTE MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE
      SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION.  THIS NOTE IS
      REGISTERED WITH THE COMPANY AGENT PURSUANT TO SECTION 24(B) OF THE SECURITY
      AGREEMENT.  TRANSFER OF ALL OR ANY PORTION OF THIS NOTE IS PERMITTED
      SUBJECT TO THE PROVISIONS SET FORTH IN SUCH SECTION 24(B) WHICH REQUIRE, AMONG
      OTHER THINGS, THAT NO TRANSFER IS EFFECTIVE UNTIL THE TRANSFEREE IS REFLECTED
      AS
      SUCH ON THE REGISTRY MAINTAINED WITH THE AGENT PURSUANT TO SUCH SECTION
      24(B).”

     

    (b)  Any
      shares of Common Stock issued pursuant to exercise of the Warrants, shall bear
      a
      legend which shall be in substantially the following form until such shares
      are
      covered by an effective registration statement filed with the SEC:

     

    “THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES
      LAWS.  THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
      HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
      SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH
      REGISTRATION.”

     

    (c)  The
      Warrants shall bear substantially the following legend:

     

    “THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
      STATE SECURITIES LAWS.  THIS WARRANT AND THE COMMON SHARES ISSUABLE
      UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
      HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
      WARRANT OR THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE
      STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION.”

     

    42.  Agency.  Each
      Lender has pursuant to an Administrative and Collateral Agency Agreement hereby
      designated and appointed the Agent as the administrative and collateral agent
      of
      such Lender under this Agreement and the Ancillary Agreements.

     

    [Balance
      of page intentionally left blank; signature page follows.]

    


    
      
         

      

      
        44

        
          

        

      

      
         

      

    

     

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

     

    
      	 	NEWMARKET
              TECHNOLOGY, INC.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Philip
              M. Verges	 
	 	 	Name Philip
              M. Verges	 
	 	 	Title CEO	 
	 	 	 	 


    

     

    
      	 	IP
              GLOBAL VOICE,
              INC.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Peter
              Geddis	 
	 	 	Name Peter
              Geddis	 
	 	 	Title CEO	 
	 	 	 	 


    

    
      	 	NETSCO,
              INC.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Philip
              M. Verges	 
	 	 	Name Philip
              M. Verges	 
	 	 	Title President	 
	 	 	 	 


    

     

    
      	 	NEWMARKET
              CHINA,
              INC.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Philip
              J. Rauch	 
	 	 	Name Philip
              J. Rauch	 
	 	 	Title CFO	 
	 	 	 	 


    

     

    
      	 	NEWMARKET
              INTELLECTUAL PROPERTY, INC.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Philip
              M. Verges	 
	 	 	Name Philip
              M. Verges	 
	 	 	Title President	 
	 	 	 	 


    

     

    
      	 	NEWMARKET
              BROADBAND, INC.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Philip
              M. Verges	 
	 	 	Name Philip
              M. Verges	 
	 	 	Title President	 
	 	 	 	 


    

     

     

     

    
      	 	LV
              ADMINISTRATIVE SERVICES, INC., as Agent	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Scott
              Bluestein	 
	 	 	Name Scott
              Bluestein	 
	 	 	Title Authorized
              Signatory	 
	 	 	 	 


    

    


     

    


    
      
         

      

      
        45

        
          

        

      

      
         

      

    

     

    Annex
      A - Definitions

     

    “Account
      Debtor” means any Person who is or may be obligated with respect to, or on
      account of, an Account.

     

    “Accountants”
      has the meaning given to such term in Section 11(a).

     

    “Accounts”
      means all “accounts”, as such term is defined in the UCC, now owned or hereafter
      acquired by any Person, including:  (a) all accounts receivable, other
      receivables, book debts and other forms of obligations (other than forms of
      obligations evidenced by Chattel Paper or Instruments) (including any such
      obligations that may be characterized as an account or contract right under
      the
      UCC); (b) all of such Person’s rights in, to and under all purchase orders or
      receipts for goods or services; (c) all of such Person’s rights to any goods
      represented by any of the foregoing (including unpaid sellers’ rights of
      rescission, replevin, reclamation and stoppage in transit and rights to
      returned, reclaimed or repossessed goods); (d) all rights to payment due to
      such
      Person for Goods or other property sold, leased, licensed, assigned or otherwise
      disposed of, for a policy of insurance issued or to be issued, for a secondary
      obligation incurred or to be incurred, for energy provided or to be provided,
      for the use or hire of a vessel under a charter or other contract, arising
      out
      of the use of a credit card or charge card, or for services rendered or to
      be
      rendered by such Person or in connection with any other transaction (whether
      or
      not yet earned by performance on the part of such Person); and (e) all
      collateral security of any kind given by any Account Debtor or any other Person
      with respect to any of the foregoing.

     

    “Accounts
      Availability” means ninety percent (90%) of the net face amount of Eligible
      Accounts.

     

    “Administrative
      and Collateral Agency Agreement” means the Administrative and Collateral
      Agency Agreement among the Agent, the Lenders and such other parties thereto
      from time to time, as amended, modified, supplemented and restated from time
      to
      time.

     

    “Affiliate”
      means, with respect to any Person, (a) any other Person (other than a
      Subsidiary) which, directly or indirectly, is in control of, is controlled
      by,
      or is under common control with such Person, (b) any other Person that, directly
      or indirectly, owns or controls, whether beneficially, or as trustee, guardian
      or other fiduciary, 10% or more of the Equity Interests having ordinary voting
      power in the election of directors of such Person, (c) any other Person who
      is a
      director, officer, joint venturer or partner (i) of such Person, (ii) of any
      Subsidiary of such Person or (iii) of any Person described in clause (a) above
      or (d) in the case of the Companies, the immediate family members, spouses
      and
      lineal descendants of individuals who are Affiliates of such
      Companies.  For the purposes of this definition, control of a Person
      shall mean the power (direct or indirect) to direct or cause the direction
      of
      the management and policies of such Person whether by contract or otherwise;
      providedhowever, that the term “Affiliate” shall specifically
      exclude any Creditor Party.

     

    “Ancillary
      Agreements” means the Notes, the Warrants, the Registration Rights
      Agreements, each Security Document and all other agreements, instruments,
      documents, mortgages, pledges, powers of attorney, consents, assignments,
      contracts, notices, security agreements, trust agreements and guarantees whether
      heretofore, concurrently, or hereafter executed by or on behalf of any Company,
      any of its Subsidiaries or any other Person or delivered to any of the Creditor
      Parties, relating to this Agreement or to the transactions contemplated by
      this
      Agreement or otherwise relating to the relationship between or among any Company
      and any Creditor Party, as each of the same may be amended, supplemented,
      restated or otherwise modified from time to time.

     

    
      
         

      

      
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    “Assignment
      Agreement” has the meaning given such term in Section 24(a).

     

    “Balance
      Sheet Date” has the meaning given such term in Section
      12(f)(ii).

     

    “Books
      and Records” means all books, records, board minutes, contracts, licenses,
      insurance policies, environmental audits, business plans, files, computer files,
      computer discs and other data and software storage and media devices, accounting
      books and records, financial statements (actual and pro forma), filings with
      Governmental Authorities and any and all records and instruments relating to
      the
      Collateral or otherwise necessary or helpful in the collection thereof or the
      realization thereupon.

     

    “Business
      Day” means a day on which the Creditor Parties are open for business and
      that is not a Saturday, a Sunday or other day on which banks are required or
      permitted to be closed in the State of New York.

     

    “Capital
      Availability Amount” means $3,000,000.

     

    “Capital
      Expenditures” means, for any Person for any period, the aggregate of all
      expenditures, whether or not made through the incurrence of Indebtedness, by
      such Person and its Domestic Subsidiaries during such period for the
      acquisition, leasing (pursuant to a capital lease), construction, replacement,
      repair, substitution or improvement of fixed or capital assets or additions
      to
      equipment, in each case required to be capitalized under GAAP on a Consolidated
      balance sheet of such Person.

     

    “Capital
      Lease” means, with respect to any Person, any lease of, or other arrangement
      conveying the right to use, any property (whether real, personal or mixed)
      by
      such Person as lessee that has been or should be accounted for as a capital
      lease on a balance sheet of such Person prepared in accordance with
      GAAP.

     

    “Capitalized
      Lease Obligations” means, at any time, with respect to any Capital Lease,
      any lease entered into as part of any sale/leaseback transaction of any Person
      or any synthetic lease, the amount of all obligations of such Person that is
      (or
      that would be, if such synthetic lease or other lease were accounted for as
      a
      Capital Lease) capitalized on a balance sheet of such Person prepared in
      accordance with GAAP.

     

    “Charter”
      has the meaning given such term in Section 12(c)(iv).

     

    “Chattel
      Paper” means all “chattel paper,” as such term is defined in the UCC,
      including electronic chattel paper, now owned or hereafter acquired by any
      Person.

     

    “Closing
      Date” means the date on which any Company shall first receive proceeds of
      the initial Loans or the date hereof, if no Loan is made under the facility
      on
      the date hereof.

     

    “Code”
      has the meaning given such term in Section 15(i).

     

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

    “Collateral”
      means all of each Company’s property and assets, whether real or personal,
      tangible or intangible, and whether now owned or hereafter acquired, or in
      which
      it now has or at any time in the future may acquire any right, title or
      interests including all of the following property in which it now has or at
      any
      time in the future may acquire any right, title or interest:

     

    (a)  all
      Inventory;

     

    (b)  all
      Equipment;

     

    (c)  all
      Fixtures;

     

    (d)  all
      Goods;

     

    (e)  all
      General Intangibles;

     

    (f)  all
      Accounts;

     

    (g)  all
      Deposit Accounts, other bank accounts and all funds on deposit
      therein;

     

    (h)  all
      Investment Property;

     

    (i)  all
      Equity Interests;

     

    (j)  all
      Chattel Paper;

     

    (k)  all
      Letter-of-Credit Rights;

     

    
      
         

      

      
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    (l)  all
      Instruments;

     

    (m)  all
      Commercial Tort Claims, including without limitation the claims set forth on
      Schedule 1(A);

     

    (n)  all
      Books
      and Records;

     

    (o)  all
      Intellectual Property;

     

    (p)  all
      Documents;

     

    (q)  all
      Supporting Obligations including letters of credit and guarantees issued in
      support of Accounts, Chattel Paper, General Intangibles and Investment
      Property;

     

    (r)  (i)
      all
      money, cash and cash equivalents and (ii) all cash held as cash collateral,
      all
      other cash or property at any time on deposit with or held by the Agent for
      the
      account of any Company (whether for safekeeping, custody, pledge, transmission
      or otherwise); and

     

    (s)  all
      products and Proceeds of all or any of the foregoing, tort claims and all claims
      and other rights to payment including (i) insurance claims against third parties
      for loss of, damage to, or destruction of, the foregoing Collateral and (ii)
      payments due or to become due under leases, licenses,  rentals and
      hires of any or all of the foregoing and Proceeds payable under, or unearned
      premiums with respect to policies of insurance in whatever form.

     

    “Commercial
      Tort Claims” means all “commercial tort claims”, as such term is defined in
      the UCC, now owned or hereafter acquired by any Person.

     

    “Commitment
      Annex” means Annex B to this Agreement.

     

    “Common
      Stock” means the shares of stock representing the Parent’s common equity
      interests.

     

    “Company
      Agent” means the Parent.

     

    “Compliance
      Certificate” means a certificate substantially in the form of
Exhibit C.

     

    “Consolidated”
      means, with respect to any Person, the accounts of such Person consolidated
      in
      accordance with GAAP.

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    “Consolidated
      Cash Interest Expense” means, with respect to any Person for any period, the
      Consolidated Interest Expense of such Person for such period less the sum of,
      in
      each case to the extent included in the definition of Consolidated Interest
      Expense, (a) the amortized amount of debt discount and debt issuance costs,
      (b)
      charges relating to write-ups or write-downs in the book or carrying value
      of
      existing Consolidated Total Debt, (c) interest payable in evidences of
      Indebtedness or by addition to the principal of the related Indebtedness and
      (d)
      other non-cash interest.

     

    “Consolidated
      EBITDA” means, with respect to any Person for any period, (a) the
      Consolidated Net Income of such Person for such period plus (b) the sum of,
      in
      each case to the extent included in the calculation of such Consolidated Net
      Income but without duplication, (i) any provision for United States federal
      income taxes or other taxes measured by net income, (ii) Consolidated Interest
      Expense, amortization of debt discount and commissions and other fees and
      charges associated with Indebtedness (except amortization and expenses related
      to the consummation of the initial Loans on the Closing Date and the payment
      of
      all fees, costs and expenses associated with the foregoing), (iii) any loss
      from
      extraordinary items, (iv) any depreciation, depletion and amortization expense,
      (v) any aggregate net loss on the sale of property (other than Accounts and
      Inventory (as defined under the applicable UCC) outside the ordinary course
      of
      business and (vi) any other non-cash expenditure, charge or loss for such
      period (other than any non-cash expenditure, charge or loss relating to
      write-offs, write-downs or reserves with respect to accounts and inventory),
      including the amount of any compensation deduction as the result of any grant
      of
      Equity Interests to employees, officers, directors or consultants and minus
      (c)
      the sum of, in each case to the extent included in the calculation of such
      Consolidated Net Income and without duplication, (i) any credit for United
      States federal income taxes or other taxes measured by net income, (ii) any
      interest income, (iii) any gain from extraordinary items and any other
      non-recurring gain, (iv) any aggregate net gain from the sale of property (other
      than Accounts and Inventory (as defined in the applicable UCC) out of the
      ordinary course of business by such Person, (v) any other non-cash gain,
      including any reversal of a charge referred to in clause (b)(vi) above by reason
      of a decrease in the value of any Equity Interests, and (vi) any other cash
      payment in respect of expenditures, charges and losses that have been added
      to
      Consolidated EBITDA of such Person pursuant to clause (b)(vi) above in any
      prior
      period.

     

    “Consolidated
      Fixed Charge Coverage Ratio” means, with respect to any Person for any
      period, the ratio of (a) Consolidated EBITDA of such Person for such period
      minus Capital Expenditures of such Person for such period minus the total
      liability for United States federal income taxes and other taxes measured by
      net
      income actually payable by such Person in respect of such period to (b) the
      Consolidated Fixed Charges of such Person for such period.

     

    “Consolidated
      Fixed Charges” means, with respect to any Person for any period, the sum,
      determined on a Consolidated basis, of (a) the Consolidated Cash Interest
      Expense of such Person for such period, (b) the principal amount of Consolidated
      Total Debt of such Person having a scheduled due date during such period, (c)
      all cash dividends payable by such Person on Equity Interests in respect of
      such
      period to Persons other than such Person and (d) all commitment fees and other
      costs, fees and expenses payable by such Person during such period in order
      to
      effect, or because of, the incurrence of any Indebtedness.

     

    “Consolidated
      Interest Expense” means, for any Person for any period, (a) Consolidated
      total interest expense of such Person for such period and including, in any
      event, (i) interest capitalized during such period and net costs under Interest
      Rate Contracts for such period and (ii) all fees, charges, commissions,
      discounts and other similar obligations (other than reimbursement obligations)
      with respect to letters of credit, bank guarantees, banker’s acceptances, surety
      bonds and performance bonds (whether or not matured) payable by such Person
      during such period minus (b) the sum of (i) Consolidated net gains of such
      Person under Interest Rate Contracts for such period and (ii) Consolidated
      interest income of such Person for such period.

     

    “Consolidated
      Leverage Ratio” means, with respect to any Person as of any date, the ratio
      of (a) Consolidated Total Debt of such Person outstanding as of such date
      excluding intercompany loans made by such Person to any Subsidiary of such
      Person to (b) Consolidated EBITDA for such Person for the last period of twelve
      (12) consecutive calendar months ending on or before such date.

     

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    “Consolidated
      Net Income” means, with respect to any Person, for any period, the
      Consolidated net income (or loss) of such Person for such period; provided,
      however, that the following shall be excluded:  (a) the net income of
      any other Person in which such Person has a joint interest with a third-party
      (which interest does not cause the net income of such other Person to be
      Consolidated into the net income of such Person), except to the extent of the
      amount of dividends or distributions paid to such Person , (b) the net income
      of
      any Domestic Subsidiary of such Person that is, on the last day of such period,
      subject to any restriction or limitation on the payment of dividends or the
      making of other distributions, to the extent of such restriction or limitation
      and (c) the net income of any other Person arising prior to such other Person
      becoming a Domestic Subsidiary of such Person or merging or consolidating into
      such Person or its Domestic Subsidiaries.

     

    “Consolidated
      Total Debt” of any Person means all Indebtedness of a type described in
      clause (a), (b), (c)(i), (d), (f), (g) or (i) of the definition thereof, in
      each
      case of such Person on a Consolidated basis.

     

    “Contract
      Rate” has the meaning given such term in the Note.

     

    “Contractual
      Obligation” means, with respect to any Person, any provision of any
      indenture, mortgage, deed of trust, contract, undertaking, agreement or other
      instrument to which such Person is a party or by which it or any of its property
      is bound or to which any of its property is subject.

     

    “Default”
      means any act or event which, with the giving of notice or passage of time
      or
      both, would constitute an Event of Default.

     

    “Deposit
      Accounts” means all “deposit accounts” as such term is defined in the UCC,
      now or hereafter held in the name of any Person, including, without limitation,
      the Lockboxes.

     

    “Disclosure
      Controls” has the meaning given such term in Section 12(f)(iv).

     

    “Documents”
      means all “documents”, as such term is defined in the UCC, now owned or
      hereafter acquired by any Person, wherever located, including all bills of
      lading, dock warrants, dock receipts, warehouse receipts, and other documents
      of
      title, whether negotiable or non-negotiable.

     

    “Domestic
      Subsidiary” means any Subsidiary organized under the laws of the United
      States of America, any State thereof or the District of Columbia.

     

    
      
         

      

      
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    “Eligible
      Accounts” means each Account of each Company which conforms to the following
      criteria:  (a) shipment of the merchandise or the rendition of
      services has been completed; (b) no return, rejection or repossession of the
      merchandise has occurred; (c) merchandise or services shall not have been
      rejected or disputed by the Account Debtor and there shall not have been
      asserted any offset, defense or counterclaim; (d) continues to be in full
      conformity with the representations and warranties made by such Company to
      the
      Agent with respect thereto; (e) the Agent is, and continues to be, satisfied
      with the credit standing of the Account Debtor in relation to the amount of
      credit extended; provided, however, that this clause (e) shall not
      apply in the case of any determination made as to an Account on or after the
      Specified Assignment Date; (f) there are no facts existing or threatened which
      are likely to result in any adverse change in an Account Debtor’s financial
      condition; (g) is documented by an invoice in a form approved by the Agent
      and
      shall not be unpaid more than ninety (90) days from invoice date; (h) not more
      than twenty-five percent (25%) of the unpaid amount of invoices due from such
      Account Debtor remains unpaid more than ninety (90) days from invoice date;
      (i)
      is not evidenced by chattel paper or an instrument of any kind with respect
      to
      or in payment of the Account unless such instrument is duly endorsed to and
      in
      possession of the Agent or represents a check in payment of an Account; (j)
      the
      Account Debtor is located in the United States; provided, however,
      the Agent may from time to time prior to the Specified Assignment Date, in
      the
      exercise of its sole discretion and based upon satisfaction of certain
      conditions to be determined at such time by the Agent, deem certain Accounts
      as
      Eligible Accounts notwithstanding that such Account is due from an Account
      Debtor located outside of the United States; (k) the Agent has a first priority
      perfected Lien in such Account and such Account is not subject to any Lien
      other
      than Permitted Liens; (l) does not arise out of transactions with any employee,
      officer, director, stockholder or Affiliate of any Company; (m) is payable
      to
      such Company; (n) does not arise out of a bill and hold sale prior to shipment
      and does not arise out of a sale to any Person to which such Company is
      indebted; (o) is net of any returns, discounts, claims, credits and allowances;
      (p) if the Account arises out of contracts between such Company, on the one
      hand, and the United States, on the other hand, any state, or any department,
      agency or instrumentality of any of them, such Company has so notified the
      Agent, in writing, prior to the creation of such Account, and there has been
      compliance with any governmental notice or approval requirements, including
      compliance with the Federal Assignment of Claims Act; (q) is a good and valid
      account representing an undisputed bona fide indebtedness incurred by the
      Account Debtor therein named, for a fixed sum as set forth in the invoice
      relating thereto with respect to an unconditional sale and delivery upon the
      stated terms of goods sold by such Company or work, labor and/or services
      rendered by such Company; (r) does not arise out of progress billings prior
      to
      completion of the order; (s) the total unpaid Accounts from such Account Debtor
      does not exceed twenty-five percent (25%) of all Eligible Accounts; (t) such
      Company’s right to payment is absolute and not contingent upon the fulfillment
      of any condition whatsoever; (u) such Company is able to bring suit and enforce
      its remedies against the Account Debtor through judicial process; (v) does
      not
      represent interest payments, late or finance charges owing to such Company,
      and
      (w) it otherwise satisfactory to the Agent as determined by the Agent in the
      exercise of its commercially reasonable discretion, exercised in good faith;
      provided, however, that this clause (w) shall not apply in the
      case of any determination made as to an Account on or after the Specified
      Assignment Date.  In the event any Company requests that the Agent
      include within Eligible Accounts certain Accounts of one or more of such
      Company’s acquisition targets, the Agent shall at the time of such request
      consider such inclusion, but any such inclusion shall be at the sole option
      of
      the Agent, may not first occur on or after the Specified Assignment Date and
      shall at all times be subject to the execution and delivery to the Agent of
      all
      such documentation (including, without limitation, guaranty and security
      documentation) as the Agent may require in its sole discretion.

     

    “Eligible
      Subsidiary” means each Subsidiary of the Parent set forth on Exhibit
      A hereto, as the same may be updated from time to time with the Agent’s
      written consent.

     

    “Environmental
      Law”  means all laws, rules, regulations, codes, ordinances,
      orders, decrees, judgments, injunctions, notices or binding agreements issued,
      promulgated or entered into by any Governmental Authority, relating in any
      way
      to pollution or the environment, preservation or reclamation of natural
      resources, the management, generation, use, handling, treatment, transportation,
      storage, disposal or release or threatened release of or exposure to Hazardous
      Materials, or occupational health and safety.

     

    
      
         

      

      
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    “Equipment”
      means all “equipment” as such term is defined in the UCC, now owned or hereafter
      acquired by any Person, wherever located, including any and all machinery,
      apparatus, equipment, fittings, furniture, Fixtures, motor vehicles and other
      tangible personal property (other than Inventory) of every kind and description
      that may be now or hereafter used in such Person’s operations or that are owned
      by such Person or in which such Person may have an interest, and all parts,
      accessories and accessions thereto and substitutions and replacements
      therefor.

     

    “Equity
      Interests” shall mean, with respect to any Person, any and all shares,
      rights to purchase, options, warrants, general, limited or limited liability
      partnership interests, member interests, units, participations or other
      equivalents of or interest in (regardless of how designated) equity of such
      Person, whether voting or nonvoting, including common stock, preferred stock,
      convertible securities or any other “equity security” (as such term is defined
      in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC
      (or
      any successor thereto) under the Exchange Act).

     

    “ERISA”
      has the meaning given such term in Section 12(bb).

     

    “Event
      of Default” means the occurrence of any of the events set forth in
      Section 19.

     

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended.

     

    “Exchange
      Act Filings” means the Parent’s filings under the Exchange Act made prior to
      the date of this Agreement.

     

    “Excluded
      Taxes” means, with respect to any Creditor Party, taxes imposed on or
      measured by its overall net income and franchise taxes imposed on it in lieu
      of
      net income taxes, by the jurisdiction (or any political subdivision thereof)
      under the laws of which such Creditor Party is incorporated or organized or
      by
      the jurisdiction (or any political subdivision thereof) in which the principal
      place of management or applicable lending office of such Creditor Party is
      located.

     

    “Financial
      Reporting Controls” has the meaning given such term in Section
      12(f)(v).

     

    “Fixtures”
      means all “fixtures” as such term is defined in the UCC, now owned or hereafter
      acquired by any Person.

     

    “Foreign
      Subsidiary” means any Subsidiary of any Company that is not a Domestic
      Subsidiary.

     

    “Formula
      Amount” has the meaning given such term in Section 2(a)(i).

     

    “GAAP”
      means generally accepted accounting principles, practices and procedures in
      effect from time to time in the United States of America.

     

    
      
         

      

      
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    “General
      Intangibles” means all “general intangibles” as such term is defined in the
      UCC, now owned or hereafter acquired by any Person and in any event shall
      include all right, title and interest that such Person may now or hereafter
      have
      in or under any contract, all Payment Intangibles, customer lists, Intellectual
      Property, interests in partnerships, joint ventures and other business
      associations, permits, proprietary or confidential information, inventions
      (whether or not patented or patentable), technical information, procedures,
      designs, knowledge, know-how, Software, data bases, data, skill, expertise,
      experience, processes, models, drawings, materials, Books and Records, Goodwill
      (including the Goodwill associated with any Intellectual Property), all rights
      and claims in or under insurance policies (including insurance for fire, damage,
      loss, and casualty, whether covering personal property, real property, tangible
      rights or intangible rights, all liability, life, key-person, and business
      interruption insurance, and all unearned premiums), uncertificated securities,
      choses in action, deposit accounts, rights to receive tax refunds and other
      payments, rights to received dividends, distributions, cash, Instruments and
      other property in respect of or in exchange for pledged Equity Interests and
      Investment Property, and rights of indemnification.

     

    “Goods”
      means all “goods”, as such term is defined in the UCC, now owned or hereafter
      acquired by any Person, wherever located, including embedded software to the
      extent included in “goods” as defined in the UCC, manufactured homes, fixtures,
      standing timber that is cut and removed for sale and unborn young of
      animals.

     

    “Goodwill”
      means all goodwill, trade secrets, proprietary or confidential information,
      technical information, procedures, formulae, quality control standards, designs,
      operating and training manuals, customer lists, and distribution agreements
      now
      owned or hereafter acquired by any Person.

     

    “Governmental
      Authority” means any nation or government, any state or other political
      subdivision thereof, and any agency, department or other entity exercising
      executive, legislative, judicial, regulatory or administrative functions of
      or
      pertaining to government.

     

    “Guaranty
      Obligation” means, as applied to any Person, any direct or indirect
      liability, contingent or otherwise, of such Person for any Indebtedness, lease,
      dividend or other obligation (the “primary obligation”) of another Person (the
“primary obligor”), if the purpose or intent of such Person in incurring such
      liability, or the economic effect thereof, is to guarantee such primary
      obligation or provide support, assurance or comfort to the holder of such
      primary obligation or to protect or indemnify such holder against loss with
      respect to such primary obligation, including (a) the direct or indirect
      guaranty, endorsement (other than for collection or deposit in the ordinary
      course of business), co-making, discounting with recourse or sale with recourse
      by such Person of any primary obligation, (b) the incurrence of reimbursement
      obligations with respect to any letter of credit or bank guarantee in support
      of
      any primary obligation, (c) the existence of any Lien, or any right, contingent
      or otherwise, to receive a Lien, on the property of such Person securing any
      part of any primary obligation and (d) any liability of such Person for a
      primary obligation through any Contractual Obligation (contingent or otherwise)
      or other arrangement (i) to purchase, repurchase or otherwise acquire such
      primary obligation or any security therefor or to provide funds for the payment
      or discharge of such primary obligation (whether in the form of a loan, advance,
      stock purchase, capital contribution or otherwise), (ii) to maintain the
      solvency, working capital, equity capital or any balance sheet item, level
      of
      income or cash flow, liquidity or financial condition of any primary obligor,
      (iii) to make take-or-pay or similar payments, if required, regardless of
      non-performance by any other party to any Contractual Obligation, (iv) to
      purchase, sell or lease (as lessor or lessee) any property, or to purchase
      or
      sell services, primarily for the purpose of enabling the primary obligor to
      satisfy such primary obligation or to protect the holder of such primary
      obligation against loss or (v) to supply funds to or in any other manner invest
      in, such primary obligor (including to pay for property or services irrespective
      of whether such property is received or such services are rendered); provided,
      however, that “Guaranty Obligations” shall not include (x) endorsements for
      collection or deposit in the ordinary course of business and (y) product
      warranties given in the ordinary course of business.  The outstanding
      amount of any Guaranty Obligation shall equal the outstanding amount of the
      primary obligation so guaranteed or otherwise supported or, if lower, the stated
      maximum amount for which such Person may be liable under such Guaranty
      Obligation.

     

    
      
         

      

      
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    “Hazardous
      Materials” means materials, wastes or pollutants listed or defined as
“hazardous substances”, “hazardous wastes” ,”toxic substances” or by words of
      similar import or any other substance or waste otherwise regulated by applicable
      Environmental Law, including nuclear materials and radioactive substances or
      wastes, petroleum or petroleum distillates, asbestos or asbestos containing
      materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
      and toxic mold.

     

    “Hedging
      Agreement” means any Interest Rate Contract, foreign exchange, swap, option
      or forward contract, spot, cap, floor or collar transaction, any other
      derivative instrument and any other similar speculative transaction and any
      other similar agreement or arrangement designed to alter the risks of any Person
      arising from fluctuations in any underlying variable.

     

    “Indebtedness”
      of any Person means, without duplication, any of the following, whether or
      not
      matured:  (a) all indebtedness for borrowed money (including, without
      limitation, all principal, interest, fees and charges relating thereto), (b)
      all
      obligations evidenced by notes, bonds, debentures or similar instruments, (c)
      all reimbursement and all obligations with respect to (i) letters of credit,
      bank guarantees or bankers’ acceptances or (ii) surety, customs, reclamation or
      performance bonds (in each case not related to judgments or litigation) other
      than those entered into in the ordinary course of business, (d) all obligations
      to pay the deferred purchase price of property or services, other than trade
      payables incurred in the ordinary course of business, (e) all obligations
      created or arising under any conditional sale or other title retention
      agreement, regardless of whether the rights and remedies of the seller or lender
      under such agreement in the event of default are limited to repossession or
      sale
      of such property, (f) all Capitalized Lease Obligations, (g) all obligations,
      whether or not contingent, to purchase, redeem, retire, defease or otherwise
      acquire for value any of its own Equity Interests (or any Equity Interests
      of a
      direct or indirect parent entity thereof) prior to the date that is 180 days
      after the maturity of the Notes, valued at, in the case of redeemable preferred
      Equity Interests, the greater of the voluntary liquidation preference and the
      involuntary liquidation preference of such Equity Interests plus accrued and
      unpaid dividends, (h) all payments that would be required to be made in respect
      of any Hedging Agreement in the event of a termination (including an early
      termination) on the date of determination and (i) all Guaranty Obligations
      for
      obligations of any other Person constituting Indebtedness of such other Person;
      provided, however, that the items in each of clauses (a) through (i) above
      shall
      constitute “Indebtedness” of such Person solely to the extent, directly or
      indirectly, (x) such Person is liable for any part of any such item, (y) any
      such item is secured by a Lien on such Person’s property or (z) any other Person
      has a right, contingent or otherwise, to cause such Person to become liable
      for
      any part of any such item or to grant such a Lien.

     

    “Interest
      Rate Contracts” means all interest rate swap agreements, interest rate cap
      agreements, interest rate collar agreements and interest rate
      insurance.

     

    “Instruments”
      means all “instruments”, as such term is defined in the UCC, now owned or
      hereafter acquired by any Person, wherever located, including all certificated
      securities and all promissory notes and other evidences of indebtedness, other
      than instruments that constitute, or are a part of a group of writings that
      constitute, Chattel Paper.

     

    
      
         

      

      
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    “Intellectual
      Property” means any and all of the following, throughout the
      world,  patents, trademarks tradenames, corporate names, fictitious
      business names, Internet domain names, trade styles, service marks, logos,
      and
      other source of  business identifiers and the goodwill symbolized by
      and connected with the use thereof; copyrights, mask works, designs, inventions,
      trade secrets, information, databases, rights of publicity, software, and any
      other proprietary rights and processes; any licenses to use any of the foregoing
      owned by a third party;  registrations, applications and recordings
      pertaining to any of the foregoing; and rights to sue for past, present and
      future infringement, dilution, misappropriation, or other violation of any
      of
      the foregoing.

     

    “Inventory”
      means all “inventory”, as such term is defined in the UCC, now owned or
      hereafter acquired by any Person, wherever located, including all inventory,
      merchandise, goods and other personal property that are held by or on behalf
      of
      such Person for sale or lease or are furnished or are to be furnished under
      a
      contract of service or that constitute raw materials, work in process, finished
      goods, returned goods, or materials or supplies of any kind, nature or
      description used or consumed or to be used or consumed in such Person’s business
      or in the processing, production, packaging, promotion, delivery or shipping
      of
      the same, including all supplies and embedded software.

     

    “Investment
      Property” means all “investment property”, as such term is defined in the
      UCC, now owned or hereafter acquired by any Person, wherever
      located.

     

    “Lender”
      has the meaning given such term in the preamble.

     

    “Letter-of-Credit
      Rights” means “letter-of-credit rights” as such term is defined in the UCC,
      now owned or hereafter acquired by any Person, including rights to payment
      or
      performance under a letter of credit, whether or not such Person, as
      beneficiary, has demanded or is entitled to demand payment or
      performance.

     

    “Lien”
      means any mortgage, security deed, deed of trust, pledge, hypothecation,
      assignment, security interest, lien (whether statutory or otherwise), charge,
      claim or encumbrance, or preference, priority or other security agreement or
      preferential arrangement held or asserted in respect of any asset of any kind
      or
      nature whatsoever including any conditional sale or other title retention
      agreement, any lease having substantially the same economic effect as any of
      the
      foregoing, and the filing of, or agreement to give, any financing statement
      under the UCC or comparable law of any jurisdiction.

     

    “Loans”
      means collectively, the Revolving Loans and the Term Loan.

     

    “Lockboxes”
      has the meaning given such term in Section 8(a).

     

    
      
         

      

      
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    “Material
      Adverse Effect” means a material adverse effect on (a) the business, assets,
      liabilities, condition (financial or otherwise), properties, operations or
      prospects of any Company or any of its Subsidiaries (taken individually and
      as a
      whole), (b) any Company’s or any of its Subsidiary’s ability to pay or perform
      the Obligations in accordance with the terms hereof or any Ancillary Agreement,
      (c) the sufficiency and/or value of the Collateral, the Liens on the Collateral
      or the priority of any such Lien or (d) the practical realization of the
      benefits of the Creditor Parties’ rights and remedies under this Agreement and
      the Ancillary Agreements.  Without limiting the foregoing, any event
      or occurrence adverse to a Company which results or could reasonably be expected
      to result in costs and/or liabilities or loss of revenues, individually or
      in
      the aggregate to such Company in excess of 30% of such Company’s revenue shall
      constitute a Material Adverse Effect.

     

    “NASD”
      has the meaning given such term in Section 13(b).

     

    “Non-Excluded
      Taxes” means all Taxes other than (i) Excluded Taxes and (ii) Other
      Taxes.

     

    “Notes”
      means the Secured Revolving Notes and the Secured Term Notes.

     

    “Note
      Shares” has the meaning given to such term in Section 12(a).

     

    “Notes
      Receivable” means, collectively, (a) the 6% Promissory Note dated March 31,
      2006 made by Sensitron, Inc., a Delaware corporation, in favor of the Parent
      in
      the original principal amount of $411,400, (b) the Convertible Promissory Note
      dated October 1, 2006 made by VirtualHealth Technologies, Inc., a Delaware
      corporation, in favor of the Parent in the original principal amount of
      $900,000, (c) the Promissory Note dated August 18, 2006 made by Vera Technology
      Corporation in favor of the Parent in the original principal amount of
      $1,300,000 and (d) each other instrument, agreement and/or document evidencing
      indebtedness owing by any Person to a Company.

     

    “Obligations”
      means all Loans, all advances, debts, liabilities, obligations, covenants and
      duties owing by each Company and each of its Subsidiaries to any Creditor Party
      (or any corporation that directly or indirectly controls or is controlled by
      or
      is under common control with any of them) of every kind and description (whether
      or not evidenced by any note or other instrument and whether or not for the
      payment of money or the performance or non-performance of any act), direct
      or
      indirect, absolute or contingent, due or to become due, contractual or tortious,
      liquidated or unliquidated, whether existing by operation of law or otherwise
      now existing or hereafter arising including any debt, liability or obligation
      owing from any Company and/or each of its Subsidiaries to others which any
      Creditor Party may have obtained by assignment or otherwise and further
      including all interest (including interest accruing at the then applicable
      rate
      provided in this Agreement after the maturity of the Loans and interest accruing
      at the then applicable rate provided in this Agreement after the filing of
      any
      petition in bankruptcy, or the commencement of any insolvency, reorganization
      or
      like proceeding, whether or not a claim for post-filing or post-petition
      interest is allowed or allowable in such proceeding), charges or any other
      payments each Company and each of its Subsidiaries is required to make by law
      or
      otherwise arising under or as a result of this Agreement, the Ancillary
      Agreements or otherwise, together with all reasonable expenses and reasonable
      attorneys’ fees chargeable to the Companies’ or any of their Subsidiaries’
accounts or incurred by any Creditor Party in connection therewith.

     

    
      
         

      

      
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    “Other
      Taxes” means any and all present or future stamp or documentary taxes or any
      other excise or property taxes, charges or similar levies arising from any
      payment made hereunder or from the execution, delivery or enforcement of, or
      otherwise with respect to, this Agreement or any other Ancillary
      Agreement.

     

    “Overadvance”
      has the meaning given such term in Section 2(a)(ii).

     

    “Parent”
      has the meaning given such term in the preamble.

     

    “Payment
      Intangibles” means all “payment intangibles” as such term is defined in the
      UCC, now owned or hereafter acquired by any Person, including, a General
      Intangible under which the Account Debtor’s principal obligation is a monetary
      obligation.

     

    “Permitted
      Liens” means (a) Liens of carriers, warehousemen, artisans, bailees,
      mechanics and materialmen incurred in the ordinary course of business securing
      sums not overdue; (b) Liens incurred in the ordinary course of business in
      connection with worker’s compensation, unemployment insurance or other forms of
      governmental insurance or benefits, relating to employees, securing sums (i)
      not
      overdue or (ii) being diligently contested in good faith provided that adequate
      reserves with respect thereto are maintained on the books of the Companies
      and
      their Subsidiaries, as applicable, in conformity with GAAP; (c) licenses of
      Intellectual Property granted by the Company prior to the date hereof, Licenses
      of Intellectual Property granted in the ordinary course of business consistent
      with past practices on convincingly reasonable terms; (d) Liens in favor of
      the
      Agent; (e) Liens for taxes (i) not yet due or (ii) being diligently contested
      in
      good faith by appropriate proceedings, provided that adequate reserves with
      respect thereto are maintained on the books of the Companies and their
      Subsidiaries, as applicable, in conformity with GAAP; and which have no effect
      on the priority of Liens in favor of the Agent or the value of the assets in
      which the Agent has a Lien; (f) Purchase Money Liens securing Purchase Money
      Indebtedness to the extent permitted in this Agreement and (f) Liens specified
      on Schedule 2 hereto.

     

    “Person”
      means any individual, sole proprietorship, partnership, limited liability
      partnership, joint venture, trust, unincorporated organization, association,
      corporation, limited liability company, institution, public benefit corporation,
      entity or government (whether federal, state, county, city, municipal or
      otherwise, including any instrumentality, division, agency, body or department
      thereof), and shall include such Person’s successors and assigns.

     

    “Principal
      Market” means the NASD Over The Counter Bulletin Board, NASDAQ Capital
      Market, NASDAQ National Market System, American Stock Exchange or New York
      Stock
      Exchange (whichever of the foregoing is at the time the principal trading
      exchange or market for the Common Stock).

     

    “Proceeds”
      means “proceeds”, as such term is defined in the UCC and, in any event, shall
      include:  (a) any and all proceeds of any insurance, indemnity,
      warranty or guaranty payable to any Company or any other Person from time to
      time with respect to any Collateral; (b) any and all payments (in any form
      whatsoever) made or due and payable to any Company from time to time in
      connection with any requisition, confiscation, condemnation, seizure or
      forfeiture of any Collateral by any governmental body, governmental authority,
      bureau or agency (or any person acting under color of governmental authority);
      (c) any claim of any Company against third parties (i) for past, present or
      future infringement of any Intellectual Property or (ii) for past, present
      or
      future infringement or dilution of any trademark or trademark license or for
      injury to the goodwill associated with any trademark, trademark registration
      or
      trademark licensed under any trademark License; (d) any recoveries by any
      Company against third parties with respect to any litigation or dispute
      concerning any Collateral, including claims arising out of the loss or
      nonconformity of, interference with the use of, defects in, or infringement
      of
      rights in, or damage to, Collateral; (e) all amounts collected on, or
      distributed on account of, other Collateral, including dividends, interest,
      distributions and Instruments with respect to Investment Property and pledged
      Equity Interests; and (f) any and all other amounts, rights to payment or other
      property acquired upon the sale, lease, license, exchange or other disposition
      of Collateral and all rights arising out of Collateral.

     

    
      
         

      

      
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    “Purchase
      Money Indebtedness” means (a) any indebtedness incurred for the payment of
      all or any part of the purchase price of any fixed asset, including indebtedness
      under capitalized leases, (b) any indebtedness incurred for the sole purpose
      of
      financing or refinancing all or any part of the purchase price of any fixed
      asset, and (c) any renewals, extensions or refinancings thereof (but not any
      increases in the principal amounts thereof outstanding at that
      time).

     

    “Purchase
      Money Lien” means any Lien upon any fixed assets that secures the Purchase
      Money Indebtedness related thereto but only if such Lien shall at all times
      be
      confined solely to the asset the purchase price of which was financed or
      refinanced through the incurrence of the Purchase Money Indebtedness secured
      by
      such Lien and only if such Lien secures only such Purchase Money
      Indebtedness.

     

    “Register”
      has the meaning given such term in Section 24(b).

     

    “Registration
      Rights Agreements” means that certain Registration Rights Agreement dated as
      of the Closing Date by and between the Parent and the Agent and each other
      registration rights agreement by and between the Parent and the Agent, as each
      of the same may be amended, modified and supplemented from time to
      time.

     

    “Reserves”
      means (a) until the occurrence of the Specified Assignment Date, such reserves
      as the Agent may reasonably in its good faith judgment deem proper and necessary
      from time to time and (b) on and after the Specified Assignment Date, the Agent
      may institute reserves in the following amounts:

     

    (i)  if
      on the
      last day of any calendar month commencing on the calendar month ending November
      30, 2007, the Consolidated EBITDA of the Companies and their Domestic
      Subsidiaries on a Consolidated basis is less than $4,000,000 but greater than
      or
      equal to $3,000,000 for the twelve (12) calendar month period ending on such
      day, reserves against the Formula Amount in an amount not greater than
      twenty-five percent (25%) of the Formula Amount;

     

    (ii)  if
      on the
      last day of any calendar month commencing on the calendar month ending November
      30, 2007, the Consolidated EBITDA of the Companies and their Domestic
      Subsidiaries on a Consolidated basis is less than $3,000,000 for the twelve
      (12)
      calendar month period ending on such day, reserves against the Formula Amount
      in
      an amount not greater than fifty percent (50%) of the Formula
      Amount;

     

    (iii)  if
      on the
      last day of any calendar month commencing on the calendar month ending November
      30, 2007, the Consolidated Leverage Ratio of the Companies and their Domestic
      Subsidiaries on a Consolidated basis is greater than 2.50 to 1.00 but less
      than
      or equal to 3.00 to 1.00, reserves against the Formula Amount in an amount
      not
      greater than twenty percent (20%) of the Formula Amount;

     

    (iv)  if
      on the
      last day of any calendar month commencing on the calendar month ending November
      30, 2007, the Consolidated Leverage Ratio of the Companies and their Domestic
      Subsidiaries on a Consolidated basis is greater than 3.00 to 1.00, reserves
      against the Formula Amount in an amount not greater than forty percent (40%)
      of
      the Formula Amount;

     

    
      
         

      

      
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    (v)  if
      on the
      last day of any calendar month commencing on the calendar month ending November
      30, 2007, the Consolidated Fixed Charge Coverage Ratio of the Companies and
      their Domestic Subsidiaries on a Consolidated basis is less than 1.25 to 1.00
      but greater than or equal to 1.15 to 1.00, reserves against the Formula Amount
      in an amount not greater than twenty percent (20%) of the Formula Amount;
      or

     

    (vi)  if
      on the
      last day of any calendar month commencing on the calendar month ending November
      30, 2007, the Consolidated Fixed Charge Coverage Ratio of the Companies and
      their Domestic Subsidiaries on a Consolidated basis is less than 1.15 to 1.00,
      reserves against the Formula Amount in an amount not greater than forty percent
      (40%) of the Formula Amount.

     

    “Revolving
      Commitment Amount” means, as to any Lender, the dollar amount set forth
      opposite such Lender’s name on the Commitment Annex under the column “Revolving
      Commitment Amount” (if such Lender’s name is not so set forth thereon, then the
      dollar amount on the Commitment Annex for the Revolving Commitment Amount for
      such Lender shall be deemed to be zero), as such amount may be adjusted from
      time to time by any amounts assigned (with respect to such Lender’s portion of
      Revolving Loans outstanding and its commitment to make Revolving Loans) pursuant
      to the terms of any and all effective Assignment Agreements to which such Lender
      is a party.

     

    “Revolving
      Commitment Percentage” means, as to any Lender, (i) on the Closing Date, the
      percentage set forth opposite such Lender’s name on the Commitment Annex under
      the column “Revolving Commitment Percentage” (if such Lender’s name is not so
      set forth thereon, then, on the Closing Date, such percentage for such Lender
      shall be deemed to be zero) and (ii) on any date following the Closing Date,
      the
      percentage equal to the Revolving Commitment Amount of such Lender on such
      date
      divided by the Capital Availability Amount on such date.

     

    “Revolving
      Loans” has the meaning given such term in Section 2(a)(i) and shall include
      all other extensions of credit hereunder and under any Ancillary
      Agreement.

     

    “SEC”
      means the Securities and Exchange Commission.

     

    “SEC
      Reports” has the meaning given such term in Section 12(u).

     

    “Secured
      Revolving Notes” means those certain Secured Revolving Notes dated as of the
      Closing Date made by the Companies in favor of the Lenders in the aggregate
      original face amount of $3,000,000, as each may be amended, supplemented,
      restated and/or otherwise modified from time to time.

     

    “Secured
      Term Notes” means those certain Secured Term Notes dated as of the Closing
      Date made by the Companies in favor of the Lenders in the aggregate original
      face amount of $4,000,000, as each may be amended, supplemented, restated and/or
      otherwise modified from time to time.

     

    “Securities”
      means the Notes and the Warrants and the shares of Common Stock which may be
      issued pursuant to exercise of such Warrants.

     

    “Securities
      Act” has the meaning given such term in Section 12(r).

     

    “Security
      Documents” means all security agreements, mortgages, cash collateral deposit
      letters, pledges and other agreements which are executed by any Company or
      any
      of its Subsidiaries in favor of the Agent for the ratable benefit of the
      Creditor Parties.

     

    
      
         

      

      
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    “Software”
      means all “software” as such term is defined in the UCC, now owned or hereafter
      acquired by any Person, including all computer programs and all supporting
      information provided in connection with a transaction related to any
      program.

     

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

     

    “Specified
      Assignment Date” means the first date on which any Person that is not a
“United States Person” as defined in Section 7701(a)(30) of the Code acquires
      any Loan, portion thereof or interest therein, by assignment or otherwise,
      unless such Person has provided to the Agent on or prior to such date a duly
      completed Internal Revenue Service Form W-8ECI (or successor form).

     

    “Subordinated
      Debt Documentation” means, collectively, (a) the Guaranty dated July 19,
      2006 by NewMarket Technology, Inc. in favor of Ingram Micro Inc., (b) that
      certain Security Agreement dated as of August 31, 2005 between IP Global Voice,
      Inc. and Ingram Micro Inc. and (c) all other notes, documents, instruments
      and
      agreements now or any time hereafter executed and/or delivered by any Company
      with or in favor of any Subordinated Lender which evidences the indebtedness
      owed by such Company to such Subordinated Lender.

     

    “Subordinated
      Lenders” means, collectively, Ingram Micro Inc. and any other Person who
      enters into a Subordination Agreement with the Agent with respect to amounts
      owed by any Company to such Person.

     

    “Subordination
      Agreements” means, collectively, the Subordination Agreement executed by
      Ingram Micro Inc. in favor of the Agent and acknowledged by the Companies,
      and
      any and all other subordination and/or intercreditor agreements accepted by
      the
      Agent from time to time with respect to indebtedness of any
      Company.

     

    “Subsidiary”
      means, with respect to any Person, (i) any other Person whose shares of stock
      or
      other ownership interests having ordinary voting power (other than stock or
      other ownership interests having such power only by reason of the happening
      of a
      contingency) to elect a majority of the directors or other governing body of
      such other Person, are owned, directly or indirectly, by such Person or (ii)
      any
      other Person in which such Person owns, directly or indirectly, more than 50%
      of
      the equity interests at such time.

     

    “Supporting
      Obligations” means all “supporting obligations” as such term is defined in
      the UCC.

     

    “Taxes”
      means any and all present or future taxes, duties, levies, imposts, deductions,
      assessments, fees, withholdings or similar charges, and all liabilities with
      respect thereto.

     

    
      
         

      

      
        61

        
          

        

      

      
         

      

    

    “Term”
      means the Closing Date through the close of business on the day immediately
      preceding the third anniversary of the Closing Date, subject to acceleration
      at
      the option of the Agent, acting at the direction of the Required Lenders, upon
      the occurrence of an Event of Default hereunder or other termination
      hereunder.

     

    “Term
      Loan” has the meaning given such term in Section 2(b).

     

    “Term
      Loan Commitment Percentage” means, as to any Lender, (i) on the Closing
      Date, the percentage set forth opposite such Lender’s name on the Commitment
      Annex under the column “Term Loan Commitment Percentage” (if such Lender’s name
      is not so set forth thereon, then, on the Closing Date, such percentage for
      such
      Lender shall be deemed to be zero) and (ii) on any date following the Closing
      Date, the percentage equal to the principal amount of Term Loan held by such
      Lender on such date divided by the aggregate principal amount of Term Loan
      on
      such date.

     

    “UCC”
      means the Uniform Commercial Code as the same may, from time to time be in
      effect in the State of New York; provided, that in the event that, by reason
      of
      mandatory provisions of law, any or all of the perfection or priority of, or
      remedies with respect to, the Agent’s Lien on any Collateral is governed by the
      Uniform Commercial Code as in effect in a jurisdiction other than the State
      of
      New York, the term “UCC” shall mean the Uniform Commercial Code as in
      effect in such other jurisdiction for purposes of the provisions of this
      Agreement relating to such perfection, priority or remedies and for purposes
      of
      definitions related to such provisions; provided further, that to the extent
      that UCC is used to define any term herein or in any Ancillary Agreement and
      such term is defined differently in different Articles or Divisions of the
      UCC,
      the definition of such term contained in Article or Division 9 shall
      govern.

     

    “Unione
      Purchase Agreement” shall mean that certain Quota Purchase and Sale
      Agreement made and entered into as of January 31, 2006 by and among Flavio
      Firmino Da Silva, Marcio Archimedes Pissardo, Mind Information Services Ltda.,
      Celso Souza Isberner, Alexandre Dias Couto and Parent.

     

    “Warrant
      Shares” has the meaning given such term in Section 12(a).

     

    “Warrants”
      means each of the Common Stock Purchase Warrant dated as of the Closing Date
      made by the Parent in favor of the Lenders and each other warrant made by the
      Parent in favor the Lenders, as each of the same may be amended, restated,
      modified and/or supplemented from time to time.

    


    
      
         

      

      
        62

        
          

        

      

      
         

      

    

     

    Annex
      A

     

    


     

    Commitment
      Annex

     

    (as
      of the Closing Date)

     

    


     

    


    
      	
              Lender

            	
              Revolving
                Commitment Amount

            	
              Revolving
                Commitment Percentage

            	
              Term
                Loan Commitment Amount

            	
              Term
                Loan Percentage

            
	
              Valens
                U.S. SPV I, LLC

            	
              $3,000,000

            	
              100%

            	
              $2,100,000

            	
              52.5%

            
	
              Valens
                Offshore SPV II, LLC

            	
              $0

            	
              0%

            	
              $1,900,000

            	
              47.5%

            
	
              TOTALS

            	
              $3,000,000

            	
              100%

            	
              $4,000,000

            	
              100%

            


    

     

    


    
      
         

      

      
        63

        
          

        

      

      
         

      

    

    


     

    Exhibit
      A

     

    


     

    Eligible
      Subsidiaries

     

    IP
      Global
      Voice, Inc., a Delaware corporation

     

    NewMarket
      China, Inc., a Nevada corporation

     

    Netsco,
      Inc., a North Carolina corporation

     

    Newmarket
      Intellectual Property, Inc., a Nevada corporation

     

    NewMarket
      Broadband, Inc., a Nevada corporation

     

    


    
      
         

      

      
        64

        
          

        

      

      
         

      

    

    


     

    Exhibit
      B

     

     

    


     

     

    Borrowing
      Base Certificate

     

     

    As
      of                      ,
      200  

     

    
      	
              ACCOUNTS
                RECEIVABLE per __________ Aging

            	 	 	 	
              0.00

            
	
              Ineligible
                Accounts:

            	 	 	 	 
	
              Accounts
                over 90 days from Invoice Date

            	 	
              0.00

            	 	 
	
              Credit
                Balances Over 90 days from Invoice Date

            	 	
              0.00

            	 	 
	
              Intercompany
                and Affiliate Accounts

            	 	
              0.00

            	 	 
	
              __%
                Concentration Cap

            	 	
              0.00

            	 	 
	
              Contra
                Accounts

            	 	
              0.00

            	 	 
	
              Cash
                Sales and COD Accounts

            	 	
              0.00

            	 	 
	
              Foreign
                Receivables

            	 	
              0.00

            	 	 
	
              Government
                Receivables (without Assignment of Claims)

            	 	
              0.00

            	 	 
	
              Discounts,
                Credits and Allowances

            	 	
              0.00

            	 	 
	
              Cross-age
                (__% Past Due)

            	 	
              0.00

            	 	 
	
              Bill
                and Hold Invoices

            	 	
              0.00

            	 	 
	
              Finance/Service/Late
                Charges

            	 	
              0.00

            	 	 
	
              Other:

            	 	
              
                0.00

              

            	 	
              
                0.00

              

            
	 	 	 	 	 
	
              ELIGIBLE
                ACCOUNTS RECEIVABLE

            	 	 	 	 
	 	 	 	 	 
	
              Accounts
                Receivable Advance Rate

            	
              90%

            	 	 	 
	 	 	 	 	 
	
              ACCOUNTS
                RECEIVABLE AVAILABILITY

            	 	 	 	
              
                0.00

              

            
	 	 	 	 
	
              Less
                Reserves

            	 	 	 	
              0.00

            
	 	 	 	 	 
	
              NET
                AVAILABILITY

            	 	 	 	
              0.00

            
	 	 	 	 	 
	
              REVOLVING
                CREDIT LINE

            	 	
              $3,000,000

            	 	 
	 	 	 	 	 
	
              NET
                BORROWING AVAILABILITY  (Lesser of Line or Net
                Availability)

            	 	
              0.00

            
	 	 	 	 	 
	
              Less:  Lender
                Loans

            	 	 	 	
              0.00

            
	 	 	 	 	 
	
              EXCESS/(DEFICIT)
                AVAILABILITY

            	 	 	 	
              
                0.00

              

            


    

     

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

     

    NEWMARKET
      TECHNOLOGY, INC.,

     

    Borrowing
      Agent

     

    
      	
              By:

            	 	 


    

     

    
      	
               

            	
              Name:

            


    

     

    
      	
               

            	
              Title:

            


    

     

    
      
         

      

      
        65

        
          

        

      

      
         

      

    

    Exhibit
      C

     

    Compliance
      Certificate

     

    


     

    [See
      attached]

    


    
      
         

      

      
        66

        
          

        

      

      
         

      

    

     

    
      	
               

            	
              Exhibit
                D

            


    

     

    
      	
               

            	
              Form
                of Intercompany Note

            


    

    


    


    


    
      
         

      

      
        67