Document:

Exhibit 10.8

 

LOAN AGREEMENT

 

among

 

PUMPKIN LTD.

 

as Borrower

 

PUMPKIN
MASTERS HOLDINGS, INC.

 

and

 

SECURITY
CAPITAL CORPORATION

 

as Guarantors

 

and

 

BANK ONE, N.A.

 

as Lender

 

June 11,
2004

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE 1.  REVOLVING CREDIT LOANS

  	
   

  
	
  1.1

  	
  Revolving Credit Commitment

  	
   

  
	
  1.2

  	
  Conversion Options

  	
   

  
	
  1.3

  	
  Revolving Credit Note

  	
   

  
	
  1.4

  	
  Cancellation and Reduction of Revolving
  Credit Commitment

  	
   

  
	
  1.5

  	
  Use of Funds

  	
   

  
	
  1.6

  	
  Additional Provisions and Limitations
  Relating to Eurodollar Rate Loans

  	
   

  
	
   

  	
   

  
	
  ARTICLE 2.  LETTERS OF
  CREDIT

  	
   

  
	
  2.1

  	
  Letters of Credit

  	
   

  
	
  2.2

  	
  Conditions Precedent to Issuance of Letters
  of Credit

  	
   

  
	
  2.3

  	
  Reimbursement Payment

  	
   

  
	
  2.4

  	
  Letter of Credit Fees

  	
   

  
	
  2.5

  	
  Additional Amounts

  	
   

  
	
  2.6

  	
  Obligation Unconditional

  	
   

  
	
  2.7

  	
  Demand for Payment under a Letter of Credit

  	
   

  
	
  2.8

  	
  Limitation of Lender’s Liability

  	
   

  
	
  2.9

  	
  Indemnification

  	
   

  
	
   

  	
   

  
	
  ARTICLE 3.  FEES, PAYMENTS, SETOFFS, SECURITY, DEFAULT RATE

  	
   

  
	
  3.1

  	
  Fees

  	
   

  
	
  3.2

  	
  Payments

  	
   

  
	
  3.3

  	
  Setoffs

  	
   

  
	
  3.4

  	
  Security

  	
   

  
	
  3.5

  	
  Default Rate

  	
   

  
	
   

  	
   

  
	
  ARTICLE 4.  CONDITIONS OF BORROWING

  	
   

  
	
  4.1

  	
  Conditions Precedent to the Initial
  Revolving Credit Loan and Issuance of Letters of Credit

  	
   

  
	
  4.2

  	
  Conditions Precedent to Each of the Loan
  Advances

  	
   

  
	
   

  	
   

  
	
  ARTICLE 5.  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  5.1

  	
  Organization and Authority

  	
   

  
	
  5.2

  	
  Qualification

  	
   

  
	
  5.3

  	
  Investments; Guarantees; Liabilities

  	
   

  
	
  5.4

  	
  Tax Returns and Payments

  	
   

  
	
  5.5

  	
  Title to Properties; Liens

  	
   

  
	
  5.6

  	
  Litigation

  	
   

  
	
  5.7

  	
  Compliance with Law and Other Instruments

  	
   

  
	
  5.8

  	
  Financial Statements

  	
   

  
	
  5.9

  	
  Patents, Trademarks and Copyrights

  	
   

  
	
  5.10

  	
  No Margin Activity

  	
   

  
	
  5.11

  	
  ERISA

  	
   

  

 

i

 

	
  5.12

  	
  Adverse Contracts; Defaults

  	
   

  
	
  5.13

  	
  Environmental Laws

  	
   

  
	
  5.14

  	
  Disclosure

  	
   

  
	
  5.15

  	
  Insurance

  	
   

  
	
  5.16

  	
  Events of Default

  	
   

  
	
  5.17

  	
  Guarantor Single Purpose

  	
   

  
	
  5.18

  	
  Projections and Pro Forma Financial
  Statement

  	
   

  
	
  5.19

  	
  Solvency, Etc.

  	
   

  
	
   

  	
   

  
	
  ARTICLE 6.  AFFIRMATIVE COVENANTS

  	
   

  
	
  6.1

  	
  Bank Deposits

  	
   

  
	
  6.2

  	
  Financial Statements and Reports of the
  Borrower and the Guarantors

  	
   

  
	
  6.3

  	
  Unaudited Financial Statements of the
  Borrower

  	
   

  
	
  6.4

  	
  Audited Financial Statements of SCC

  	
   

  
	
  6.5

  	
  Inspection

  	
   

  
	
  6.6

  	
  Insurance

  	
   

  
	
  6.7

  	
  Payment of Taxes and Claims

  	
   

  
	
  6.8

  	
  Compliance with Laws

  	
   

  
	
  6.9

  	
  ERISA

  	
   

  
	
  6.10

  	
  Preservation of Corporate Existence

  	
   

  
	
  6.11

  	
  Maintenance of Tangible Assets

  	
   

  
	
  6.12

  	
  Notices of Certain Events

  	
   

  
	
  6.13

  	
  Records and Books of Account

  	
   

  
	
  6.14

  	
  Performance of Contracts

  	
   

  
	
  6.15

  	
  Notice of Material Litigation

  	
   

  
	
  6.16

  	
  Use of Proceeds

  	
   

  
	
  6.17

  	
  Ownership and Control of Borrower and Guarantors

  	
   

  
	
  6.18

  	
  Other Information

  	
   

  
	
  6.19

  	
  Compliance with the Mezzanine Debt
  Agreements

  	
   

  
	
  6.20

  	
  Compliance with the Intercreditor Agreement

  	
   

  
	
  6.21

  	
  Compliance with LaSalle Termination and
  Indemnification Agreement

  	
   

  
	
   

  	
   

  
	
  ARTICLE 7.  NEGATIVE
  COVENANTS

  	
   

  
	
  7.1

  	
  Indebtedness

  	
   

  
	
  7.2

  	
  Liens and Other Encumbrances

  	
   

  
	
  7.3

  	
  Guaranties and Other Contingent Liabilities

  	
   

  
	
  7.4

  	
  Fundamental Changes

  	
   

  
	
  7.5

  	
  Creation of Subsidiaries

  	
   

  
	
  7.6

  	
  Loans or Advances

  	
   

  
	
  7.7

  	
  Investments

  	
   

  
	
  7.8

  	
  Sale and Leaseback

  	
   

  
	
  7.9

  	
  Disposition of Assets

  	
   

  
	
  7.10

  	
  Transactions with Affiliates

  	
   

  
	
  7.11

  	
  Annual Lease Payments

  	
   

  
	
  7.12

  	
  Sale of Accounts

  	
   

  
	
  7.13

  	
  Capital Expenditures

  	
   

  
	
  7.14

  	
  Tangible Net Worth

  	
   

  

 

ii

 

	
  7.15

  	
  Debt Service Coverage Ratio

  	
   

  
	
  7.16

  	
  Management Fees

  	
   

  
	
  7.17

  	
  Dividends and Payments

  	
   

  
	
  7.18

  	
  Prohibition of Change in Fiscal Year

  	
   

  
	
  7.19

  	
  Government Regulations

  	
   

  
	
  7.20

  	
  Amendment to Other Documents

  	
   

  
	
   

  	
   

  
	
  ARTICLE 8.  EVENTS OF DEFAULT

  	
   

  
	
  8.1

  	
  Event
  of Default

  	
   

  
	
  8.2

  	
  Consequences of Event of Default

  	
   

  
	
   

  	
   

  
	
  ARTICLE 9.  MISCELLANEOUS

  	
   

  
	
  9.1

  	
  Notices

  	
   

  
	
  9.2

  	
  Term of Agreement; Termination; Successors
  and Assigns

  	
   

  
	
  9.3

  	
  No Implied Rights or Waivers

  	
   

  
	
  9.4

  	
  Applicable Law

  	
   

  
	
  9.5

  	
  Modifications, Amendments or Waivers

  	
   

  
	
  9.6

  	
  Counterparts

  	
   

  
	
  9.7

  	
  Headings

  	
   

  
	
  9.8

  	
  Expenses

  	
   

  
	
  9.9

  	
  Accounting Terms

  	
   

  
	
  9.10

  	
  Severability

  	
   

  
	
  9.11

  	
  Waiver of Jury Trial; Consent to Venue

  	
   

  
	
  9.12

  	
  Entire Agreement

  	
   

  
	
  9.13

  	
  Certificates, Etc.

  	
   

  
	
  9.14

  	
  USA Patriot Act Notification

  	
   

  
	
  9.15

  	
  Limitation on Recourse .

  	
   

  
	
   

  	
   

  
	
  ARTICLE 10.  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Signatures

  	
   

  
	
   

  	
   

  
	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Revolving Credit Note

  	
   

  
	
  Exhibit B

  	
  Borrower Security Agreement

  	
   

  
	
  Exhibit C

  	
  Copyright Security Agreement

  	
   

  
	
  Exhibit D

  	
  Guarantor Security Agreement

  	
   

  
	
  Exhibit E-1

  	
  SCC Stock Pledge Agreement

  	
   

  
	
  Exhibit E-2

  	
  Pumpkin Holdings Stock Pledge Agreement

  	
   

  
	
  Exhibit F

  	
  Guaranty

  	
   

  
	
  Exhibit G

  	
  Opinion of Borrower’s and Guarantors’
  Counsel

  	
   

  
	
  Exhibit H

  	
  Definitions

  	
   

  
	
  Exhibit I

  	
  Pro Forma Balance Sheets

  	
   

  
	
  Exhibit J

  	
  Projections

  	
   

  
	
  Exhibit K

  	
  Borrowing Base Certificate

  	
   

  
	
  Exhibit L

  	
  Solvency Certificate

  	
   

  
				

 

iii

 

	
  SCHEDULES:

  	
   

  
	
   

  	
   

  
	
  Schedule 1.1

  	
  Extended Term customers

  	
   

  
	
  Schedule 5.1

  	
  Affiliates, Directors and Officers

  	
   

  
	
  Schedule 5.5

  	
  Leases

  	
   

  
	
  Schedule 5.6

  	
  Litigation

  	
   

  
	
  Schedule 5.9

  	
  Patents, Trademarks and Copyrights

  	
   

  
	
  Schedule 6.1

  	
  Deposit Accounts

  	
   

  
	
  Schedule 7.1

  	
  Certain Leases

  	
   

  
	
  Schedule 7.3

  	
  Guaranties and Contingent Liabilities

  	
   

  
	
  Schedule 7.10

  	
  Transactions with Affiliates

  	
   

  

 

iv

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (this
“Agreement”) is made and entered into in Columbus, Ohio effective as of
June 11, 2004, by and among PUMPKIN LTD., a Delaware corporation, as
borrower (the “Borrower”), PUMPKIN MASTERS HOLDINGS, INC., a Delaware
corporation (“Pumpkin Holdings”), and SECURITY CAPITAL CORPORATION, a Delaware
corporation (“SCC”), as guarantors (individually, a “Guarantor” and
collectively, the “Guarantors”), and BANK ONE, N.A., a national banking
association with its principal offices located in Columbus, Ohio, as lender
(the “Lender”), as follows:

 

WHEREAS, the Borrower, the
Guarantors and the Lender are entering into this Agreement to set forth the
terms and conditions pursuant to which (a) the Lender will provide a revolving
line of credit of up to Seven Million Dollars ($7,000,000) to the Borrower (the
“Revolving Line of Credit”) and (b) the Lender will issue letters of credit
upon the request of the Borrower in an aggregate amount not to exceed One
Million Five Hundred Thousand Dollars ($1,500,000) (“Letters of Credit”); and

 

WHEREAS, the Borrower, the
Guarantors and the Lender desire to establish the security for and the
conditions under which each of the above-described Revolving Line of Credit and
Letters of Credit will be established.

 

NOW THEREFORE, the Borrower,
the Guarantors and the Lender hereby agree as hereinafter set forth.

 

ARTICLE 1.  REVOLVING CREDIT LOANS

 

1.1                               Revolving Credit
Commitment.  The Lender hereby agrees on the terms and
conditions of this Agreement to lend to the Borrower the maximum sum of Seven
Million Dollars ($7,000,000) (the “Revolving Credit Commitment”).  The Revolving Credit Commitment shall be
available to the Borrower, subject to the limitations herein, in whole or part
and from time to time until May 31, 2006, and any amounts borrowed may be
repaid in whole or in part and reborrowed until such date.  Each borrowing under the Revolving Credit
Commitment shall be made in accordance with the provisions of this
Section 1.1, and shall be subject to the conditions of Article 4
hereof, and shall be in the initial principal amount of $100,000 or any
integral multiple of $100,000 (a “Revolving Credit Loan”).

 

Each Revolving Credit Loan to
be made in accordance with the provisions of this Section 1.1 shall, at
the election of the Borrower, be made either in the form of (i) a Revolving
Credit Loan bearing interest at the rate specified in Section 1.3(b)
(individually, a “Variable Rate Loan” and collectively, the “Variable Rate
Loans”) or (ii) a Revolving Credit Loan bearing interest at the rate specified
in Section 1.3(c) (individually, a “Eurodollar Rate Loan” and
collectively, the “Eurodollar Rate Loans”); provided, however, that the
Borrower shall not be permitted to have outstanding at any time more than a
total of eight (8) Eurodollar Rate Loans, except as otherwise permitted by the
Lender in its sole discretion. 
Notwithstanding the foregoing, each Eurodollar Rate Loan shall be in the
initial principal amount of $1,000,000 and any integral multiple of $100,000.

 

 

The aggregate unpaid principal
amount of the Revolving Credit Loans plus the LOC Obligations (excluding any
LOC Obligations that are deemed to be Revolving Credit Loans so as to avoid
duplication thereof) at any one time outstanding shall not exceed the Revolving
Credit Commitment.

 

Each Revolving Credit Loan
shall be made pursuant to the request of the Borrower to the Lender which
request for a Revolving Credit Loan shall specify (i) the total amount of the
Revolving Credit Loan; (ii) the borrowing date (the “Borrowing Date”), which
shall be a Business Day in the case of a Variable Rate Loan and a Eurodollar
Banking Day in the case of a Eurodollar Rate Loan; and (iii) whether the
Revolving Credit Loan is to be a Variable Rate Loan or a Eurodollar Rate Loan
(and in the case of a Eurodollar Rate Loan, the length of the Interest
Period).  Requests for Variable Rate
Loans may be made on the applicable Borrowing Date.  Requests for Eurodollar Rate Loans shall be made at least three
(3) Eurodollar Banking Days prior to the applicable Borrowing Date.

 

In the case of a request for a
Eurodollar Rate Loan, the Lender shall not later than 11:00 a.m., Columbus,
Ohio time two (2) Eurodollar Banking Days prior to the Borrowing Date, give
notice to the Borrower of the Adjusted Eurodollar Rate (including information
as to the calculation thereof) applicable for the period requested by the
Borrower.  The Borrower shall not later
than 11:00 a.m., Columbus, Ohio time one (1) Eurodollar Banking Day prior to
the Borrowing Date, give notice by telephone confirmed in writing to the Lender
whether the Borrower wishes (i) to complete such borrowing in the form of a
Eurodollar Rate Loan; (ii) to complete such borrowing as a Variable Rate Loan;
or (iii) to cancel its request for a Revolving Credit Loan.  Failure by the Borrower to timely deliver
such notice shall constitute cancellation of such request.

 

Notwithstanding the foregoing,
the parties understand and agree that if and to the extent the Borrower
participates in the Lender’s cash management program, Revolving Credit Loans
shall be automatically disbursed and repaid on a daily basis based on the cash
deposits and disbursements in Borrower’s account with the Lender.

 

1.2                               Conversion Options. 
The Borrower may elect from time to time to convert $1,000,000 or any
amount in excess thereof in any integral multiple of $100,000 of the Variable
Rate Loans then outstanding to Eurodollar Rate Loans by giving the Lender
irrevocable telephone notice of such election as provided in this
Section 1.2.  Each Eurodollar Rate
Loan shall automatically convert to a Variable Rate Loan upon its maturity
unless the Borrower elects to continue such Loan as a Eurodollar Rate Loan by
giving the Lender irrevocable telephone notice of such election as provided in
this Section 1.2.  Any such notice
pursuant to this Section 1.2 shall be received by the Lender at least
three (3) Eurodollar Banking Days prior to the proposed conversion date, which
shall be a Eurodollar Banking Day, and shall specify (i) the conversion date
and (ii) the length of the Interest Period. 
If no Event of Default then exists, such conversion shall be made on the
requested conversion date.

 

1.3                               Revolving Credit Note. 
The Revolving Credit Commitment shall be evidenced by a master
promissory note (the “Revolving Credit Note”) of the Borrower executed by a
duly authorized officer thereof, which shall be in the form of Exhibit A
attached hereto.  Each Revolving Credit
Loan made by the Lender and each payment made on account of principal on the
Revolving

 

2

 

Credit Note shall be recorded
by the Lender; provided, however, that the failure of the Lender to make such
notation shall not limit or otherwise affect the obligations of the Borrower
under the Revolving Credit Note or this Agreement.  The Revolving Credit Note shall include the following terms:

 

(a)                                  Term. 
The Revolving Credit Note shall be dated as of the date of this
Agreement and shall be due and payable in full on or before May 31, 2006.

 

(b)                                  Interest Rate on
Variable Rate Loans.  From its date, each Variable Rate Loan shall
bear interest (computed on the basis of the actual number of days elapsed over
a Business Year) on the unpaid principal balance at a fluctuating rate per
annum equal to the Prime Rate.  Any
change in the interest rate due to a change in the Prime Rate shall be
effective immediately upon and after the date of each such change in the Prime
Rate.

 

Interest on the Variable Rate
Loans shall be payable monthly on the last day of each calendar month (each an
“Interest Payment Date”), commencing on the last day of the month of the
initial disbursement of the initial Revolving Credit Loan.

 

(c)                                  Interest Rate on
Eurodollar Rate Loans.  From its date, each Eurodollar Rate Loan
shall bear interest during the period from the date thereof until and including
the maturity date thereof at a rate per annum equal to the Adjusted Eurodollar
Rate plus 2.75%.  The Borrower shall be obligated
to pay with respect to each Eurodollar Rate Loan such additional amounts as
shall be determined pursuant to Section 1.6 hereof.

 

Interest on each Eurodollar
Rate Loan shall be payable on the expiration of the applicable Interest
Period.  Interest on all Eurodollar Rate
Loans shall be calculated on the basis of the actual number of days elapsed
over a Business Year.

 

(d)                                  Optional Repayments. 
Outstanding Revolving Credit Loans may be repaid in whole or in part at
any time, without premium or penalty, in principal amounts not less than the
minimum Revolving Credit Loan for any borrowing under Section 1.1, or any
larger amount permitted thereunder, by tender of payment and delivery of
written, telegraphic or oral notice of payment to the Lender not later than
1:30 p.m., Columbus, Ohio time, on the Business Day on which such repayment is
to be made.  Payments received after
1:30 p.m. shall be deemed tendered on the following Business Day.  Interest accrued to the date of payment
shall be due and payable on the next following Interest Payment Date unless the
Revolving Credit Note is paid in full, in which event, accrued interest shall
become due and payable on the payment date.

 

(e)                                  Mandatory Repayments.  At no time shall the amount of Revolving Credit Loans outstanding plus
the LOC Obligations (excluding any LOC Obligations that are deemed to be
Revolving Credit Loans so as to avoid duplication thereof) exceed the Borrowing
Base.  The Borrower shall make such
repayments of the Revolving Credit Loans and/or the LOC Obligations as are
necessary to reduce the amount of outstanding Revolving Credit Loans to an
amount which does not exceed the Borrowing Base.

 

3

 

1.4                               Cancellation and
Reduction of Revolving Credit Commitment. 
The Borrower shall be entitled to permanently reduce or cancel the
Revolving Credit Commitment from time to time upon ten (10) days’ prior written
notice to the Lender.  In the event of
cancellation of the Revolving Credit Commitment, the principal amount of the
Revolving Credit Note shall be paid in full, together with all accrued interest
thereon, any unpaid Commitment Fee accrued to the date of cancellation, and all
other amounts owing to the Lender by the Borrower hereunder with respect to any
Revolving Credit Loans.  In the event of
the permanent reduction of the Revolving Credit Commitment to a level which is
less than the then outstanding principal amount of the Revolving Credit Note,
the Revolving Credit Note shall be prepaid at the time of such reduction in an
amount equal to the then excess of the unpaid balance of the Revolving Credit
Note over the sum of the Revolving Credit Commitment as so reduced plus the LOC
Obligations (excluding any LOC Obligations that are deemed to be Revolving
Credit Loans so as to avoid duplication thereof).  Accrued interest on the principal amount of the Revolving Credit
Note repaid shall be included in the interest due and payable on the next
Interest Payment Date.

 

1.5                               Use of Funds. 
Revolving Credit Loans shall be used for the general working capital
requirements of the Borrower and may be used to pay the Earnout Consideration
to the Seller.

 

1.6                               Additional Provisions
and Limitations Relating to Eurodollar Rate Loans. 
The additional provisions and limitations set forth below shall apply
with respect to Eurodollar Rate Loans:

 

(a)                                  In the event the Lender shall incur any
loss, cost or reasonable expense (including, without limitation, any loss, cost
or reasonable expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired or contracted to be acquired by the Lender to
fund or maintain or the relending or reinvesting of such deposits or other
funds or amounts paid or prepaid to the Lender) as a result (i) of any payment
or prepayment of a Eurodollar Rate Loan on a date other than the last day of
the then applicable Interest Period for such Eurodollar Rate Loan for any
reason or (ii) any failure by the Borrower to borrow funds as a Eurodollar Rate
Loan after it has given a notice of election with respect thereto for any
reason, whether before or after default, and whether or not such payment is
required by any provisions of this Agreement; then, within three (3) days after
receipt of the written demand of the Lender, the Borrower shall pay to the
Lender such amount as will reimburse the Lender for such loss, cost or
expense.  If the Lender requests such a
reimbursement, it shall provide to the Borrower at the time of demand a
certificate setting forth the computation of the loss, cost or expense giving
rise to the request for reimbursement in reasonable detail and such certificate
shall be conclusive if reasonably determined, absent manifest error.

 

(b)                                 If the Lender shall, in good faith,
determine that it is unable to reasonably ascertain the Eurodollar Rate or to
acquire Eurodollar deposits on reasonable terms in an amount sufficient to meet
a request for a Eurodollar Rate Loan, the Lender shall promptly notify the
Borrower.  In such event, the Borrower
may request a Variable Rate Loan of like amount without regard to the notice
requirement of Section 1.1 or may cancel such request.

 

4

 

(c)                                  The obligation of the Lender to make
Eurodollar Rate Loans hereunder shall be suspended in the event that any change
in any law or regulation or in any interpretation thereof by any governmental
authority charged with its administration shall, in the sole opinion of the
Lender, make it unlawful for the Lender to comply with its obligation to make
or maintain any Eurodollar Rate Loan hereunder for the duration of such
illegality.  The Lender shall promptly
notify the Borrower of such suspension, and, if and when, in the sole opinion
of the Lender, such illegality ceases to exist, such suspension shall cease and
the Lender shall promptly notify the Borrower of the termination of such
suspension.

 

(d)                                 If the Lender has Eurodollar Rate Loans
outstanding and there shall occur any change in applicable law, regulation or
interpretation (including any request, guideline or policy not having the force
of law by any authority charged with the administration or interpretation
thereof) (i) which change directly affects transactions in Eurodollars, (ii)
which involves new or additional taxes, reserves or deposit requirements in
regard to the Eurodollar Rate Loans or changes in the basis of taxation of
payments on such Loans, or (iii) which, if the Eurodollar Rate Loans made
hereunder by the Lender were to have been matched with Eurodollar deposits
corresponding in amounts to such Eurodollar Rate Loans and having maturity
dates which are the same as such Eurodollar Rate Loans regardless of whether or
not such Eurodollar Rate Loans are in fact so matched, increases the cost to
the Lender of making or maintaining the Eurodollar Rate Loans hereunder or
reduces the amount of any payments (whether of principal, interest or
otherwise) receivable by the Lender as to any Eurodollar Rate Loans or requires
the Lender to make any payment on or calculated by reference to the gross
amount of any sum received by it as to such Eurodollar Rate Loans, then where
the amount of any such additional cost, reduction or payment is deemed material
by the Lender:

 

(i)                                     the Lender shall promptly notify the
Borrower of the occurrence of such event;

 

(ii)                                  the Lender shall promptly deliver to the
Borrower a certificate stating the change which has occurred, together with the
date thereof and the amount of and the manner of calculating the increased cost
on any outstanding Eurodollar Rate Loan; and

 

(iii)                               upon receipt of such certificate from
the Lender, the Borrower shall pay to the Lender on demand the amount or
amounts of such additional cost with respect to such outstanding Eurodollar
Rate Loan as additional compensation hereunder.

 

(e)                                  The certificate of the Lender delivered
to the Borrower as to the additional amount payable pursuant to
Section 1.6(d) shall (in the absence of manifest error in the transmission
or calculation) be conclusive evidence of the amount thereof.  The protection of this Section 1.6(e)
shall be available to the Lender regardless of any possible contention of
invalidity or inapplicability of the law, regulation or condition which has
been imposed.  However, if the Borrower
has made a payment of any additional amounts pursuant to Section 1.6(d)
and any subsequent event occurs which reduces the amount of the increased

 

5

 

cost incurred by the Lender,
then the Lender shall promptly refund to the Borrower an amount equal to such
reduction in the amount of increased cost.

 

(f)                                    In addition to the other amounts payable
hereunder, the Borrower shall pay to the Lender such additional amounts as
shall compensate the Lender for increased costs which the Lender, in its sole
discretion, reasonably determines in good faith to be allocable to Eurodollar
Rate Loans.  Additional amounts payable
under this Section 1.6(f) shall be paid by the Borrower to the Lender on
the maturity of the respective Eurodollar Rate Loans, subject to receipt by the
Borrower from the Lender of a certificate showing the amount and certifying as
to the correctness thereof.

 

ARTICLE 2.  LETTERS OF CREDIT

 

2.1                               Letters of Credit. 
Subject to the terms and conditions contained in this Agreement, the
Lender, as issuer of letters of credit, will issue on behalf of or for the
account of the Borrower or any Person designated by the Borrower one or more
Letters of Credit in forms and with expiration dates acceptable to the
Lender.  The aggregate outstanding
amount of the Letters of Credit shall not at any time exceed One Million Five
Hundred Thousand Dollars ($1,500,000). 
Each Letter of Credit shall reduce the then remaining available portion
of the Revolving Credit Commitment and any draws under the Letters of Credit
shall be treated as a Revolving Credit Loan and shall be subject to all of the
terms of this Agreement and the Revolving Credit Note.  Letters of Credit that have not been drawn
upon shall not bear interest.

 

2.2                               Conditions Precedent to
Issuance of Letters of Credit.  Each Letter of Credit shall be issued only
upon submission by the Borrower at least five (5) days prior to the proposed
date of issuance of each Letter of Credit to the Lender of a letter of credit
application, in a form acceptable to the Lender in its sole discretion (the
“LOC Application”), completed to the reasonable satisfaction of the Lender,
together with the proposed form of such Letter of Credit.  Each Letter of Credit shall contain an
expiration date not later than May 31, 2006. 
In no event shall the LOC Obligations (excluding any LOC Obligations
that are deemed to be Revolving Credit Loans so as to avoid duplication
thereof) plus the Revolving Credit Loans exceed the Borrowing Base.

 

2.3                               Reimbursement Payment. 
The Borrower agrees (a) to become a party to any reimbursement agreement
required by the Lender (such agreement to be consistent with the terms hereof)
in connection with the issuance of a Letter of Credit and to reimburse the
Lender, forthwith upon its demand for any expenditure or payment made by the
Lender under any Letter of Credit and (b) to pay interest on any unreimbursed
portion of any such payments from the date of such payment until reimbursement
in full at a rate per annum equal to (i) prior to the day which is one Business
Day after the day on which the Lender demands reimbursement from the Borrower
for such payment, the rate which would then be payable on any outstanding
Variable Rate Loan which is not in default and (ii) thereafter, the rate which
would then payable on any outstanding Variable Rate Loan which is in default as
provided in Section 2.5.  Upon
notice by the Lender, following the occurrence of an Event of Default and the
acceleration of the Revolving Credit Loans hereunder, that all amounts payable
under this Agreement are due and payable, the Lender shall increase the
principal amount of the Revolving Credit Loans by the sum of the amounts
payable under all then outstanding Letters of Credit and shall hold the cash
proceeds represented by such increase in

 

6

 

escrow as security for its
reimbursement in the event that payment or any other expenditure is required
under the terms of any then outstanding Letters of Credit.  To the extent that such cash proceeds are
not required for such reimbursement or to make any payments owed by the
Borrower under the Revolving Credit Note or hereunder, they shall be
distributed to the Borrower, together with interest at the rate paid by the
Lender on money-market deposits, at the expiration of all of such Letters of
Credit.

 

2.4                               Letter of Credit Fees. 
The Borrower shall pay to the Lender such fees with respect to each
Letter of Credit as such parties shall agree. 
In addition, the Lender shall charge and the Borrower hereby agrees to
pay its usual and customary charges with respect to the issuance and
administration of each Letter of Credit.

 

2.5                               Additional Amounts. 
If any change in any law or regulation or in the interpretation thereof
by any court or administrative or governmental authority charged with the
administration thereof shall either (a) impose, modify or deem applicable any
reserve, special deposit or similar requirement against letters of credit
issued by the Lender, or (b) impose on the Lender any other condition regarding
this Agreement or a Letter of Credit, and the result of any event referred to
in (a) or (b) above shall be to increase the cost to the Lender of issuing or
maintaining a letter or credit (which increase in cost shall be the result of
such Lender’s reasonable allocation of the aggregate of such cost increase
resulting form such events), then, upon demand by the Lender, the Borrower
shall immediately pay to the Lender additional amounts, which shall be
sufficient to compensate the Lender for such increased cost relating to such
Letter of Credit from the date of such change. 
A certificate setting forth in reasonable detail such increased cost
incurred by the Lender as a result of any event mentioned in clause (a) or (b)
above, submitted by the Lender to the Borrower, shall be prima facie evidence,
absent manifest error, as to the amount thereof.

 

2.6                               Obligation
Unconditional.  The Borrower hereby absolutely,
unconditionally and irrevocably guarantees and agrees to pay all amounts due to
the Lender pursuant to Sections 2.3, 2.4 and 2.5 hereof, in accordance with the
terms of this Agreement and any reimbursement agreement executed by the
Borrower in connection with the issuance of a Letter of Credit under all
circumstances.

 

2.7                               Demand for Payment
under a Letter of Credit.  Upon receipt from the beneficiary of any
Letter of Credit of any demand for payment under such Letter of Credit, the
Lender shall notify the Borrower as to the amount to be paid by the Lender as a
result of such demand and the proposed payment date.  The responsibility of the Lender to the Borrower shall be only to
determine that the documents (including each demand for payment) delivered
under each Letter of Credit in connection with such presentment shall be in
conformity in all material respects with such Letter of Credit.

 

2.8                               Limitation of Lender’s
Liability.  The Borrower shall hereby be precluded
from asserting any claim for damages suffered by the Borrower except, and only
to the extent, caused by (i) the willful misconduct or gross negligence of the
Lender in determining whether a request presented under any Letter of Credit
issued by it complied with the terms of such Letter of Credit or (ii) the
Lender’s failure to pay under any Letter of Credit issued by it after the
presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit. 
The Borrower

 

7

 

further agrees with the Lender
that the Lender shall not be responsible for, and the Borrower’s obligation to
repay any Revolving Credit Loan arising pursuant to this Article 2 shall
not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even if such document should in fact
prove to be in any or all respects invalid, fraudulent or forged, or any
dispute between or among the Borrower, any of its Affiliates, the beneficiary
of any Letter of Credit or any financing institution or other party to whom any
Letter of Credit may be transferred or any claims or defenses whatsoever of the
Borrower or any of its Affiliates against the beneficiary of any Letter of
Credit or any such transferee.  The
Lender shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit.  The Borrower agrees that any action taken or omitted by the
Lender under or in connection with each Letter of Credit and the related drafts
and documents, if done without gross negligence or willful misconduct, shall be
binding upon the Borrower and shall not put the Lender under any liability to
the Borrower.  The Lender shall be
entitled to rely, and shall be fully protected in relying, upon any Letter of
Credit, draft, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other documents believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Lender.

 

2.9                               Indemnification.  The Borrower hereby agrees to indemnify and hold harmless the Lender
and its directors, officers, agents and employees from and against any and all
claims and damages, losses, liabilities, costs or expenses which the Lender may
incur (or which may be claimed against the Lender by any Person whatsoever) by
reason of or in connection with the issuance, execution and delivery or
transfer of or payment or failure to pay under any Letter of Credit or any
actual or proposed use of any Letter of Credit, including, without limitation,
any claims, damages, losses, liabilities, costs or expenses which the Lender
may incur by reason of or on account of the Lender issuing any Letter of Credit
which specifies the term “Beneficiary” included therein includes any successor
by operation of law of the named Beneficiary, but which Letter of Credit does
not require that any drawing by such successor Beneficiary be accompanied by a
copy of a legal document, satisfactory to the Lender, evidencing the
appointment of such successor Beneficiary; provided that the Borrower shall not
be required to indemnify the Lender for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
(a) the willful misconduct or gross negligence of the Lender in determining
whether a request presented under any Letter of Credit complied with the terms
of such Letter of Credit or (b) the Lender’s failure to pay under any Letter of
Credit after the presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit. 
Nothing in this Section 2.5 is intended to limit the obligations of
the Borrower under any other provision of this Agreement.

 

ARTICLE 3.  FEES, PAYMENTS, SETOFFS, SECURITY, Default Rate

 

3.1                               Fees. 
On the Closing Date, the Borrower shall pay to the Lender a facility fee
(the “Facility Fee”) in the amount of Thirty-Five Thousand Dollars
($35,000).  The Borrower shall also pay
to the Lender an unused commitment fee (the “Commitment Fee”) based on the
daily average amount of the Revolving Credit Commitment not drawn down in
Revolving Credit Loans (the “Unused Commitment”) for the period beginning with
the date hereof and ending May 31, 2006 or on the sooner cancellation in full
of the Revolving Credit Commitment.  The
Commitment Fee shall be payable quarterly in arrears (i) within thirty (30)
days after the last day of March, June,

 

8

 

September and
December of each year commencing with the quarter ending on June 30,
2004, and (ii) within ten (10) days after the date on which the Revolving
Credit Commitment is fully terminated. 
The amount of the Commitment Fee shall be equal to one-half of one
percent (0.50%) per annum of the Unused Commitment (computed on the basis of
the actual number of days elapsed over a Business Year).

 

3.2                               Payments. 
All payments and prepayments by the Borrower to be made in respect of
the Commitment Fee or of principal or interest on the Revolving Credit Note
shall become due at 1:30 p.m., Columbus, Ohio time on the day when due, and
shall be made to the Lender in federal funds or other immediately available
lawful money of the United States of America. 
Whenever any payment to be made hereunder shall be due other than on a
Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time shall in such case be included in the computation of
interest or fees hereunder.

 

3.3                               Setoffs. 
Upon the occurrence and continuance of any Event of Default, the Lender
shall have the right to set off against all obligations of the Borrower to the
Lender under this Agreement and the Revolving Credit Note, whether matured or
unmatured, all amounts owing to the Borrower by the Lender, whether or not then
due and payable, and all funds or property of the Borrower on deposit with or
otherwise held or in the custody of the Lender for the beneficial account of
the Borrower.  Such funds shall be
charged against accrued interest on and/or principal of the Revolving Credit
Note as the Lender may determine in its discretion.

 

3.4                               Security.

 

(a)                                  Borrower Security
Agreement and Copyright Security Agreement. 
As security for the payment of the Revolving Credit Note and the LOC
Obligations and for the performance of, and compliance with all of the terms,
covenants, conditions, stipulations and agreements contained in this Agreement,
the Revolving Credit Note and the other Loan Documents, the Borrower, by a
Borrower Security Agreement in the form attached hereto as Exhibit B and
incorporated herein by this reference (the “Borrower Security Agreement”), by a
separate Security Agreement Re: Patents, Trademarks and Copyrights in the form
attached hereto as Exhibit C and incorporated herein by this reference
(the “Copyright Security Agreement”) and by other instruments contemplated
thereby, shall, as provided in the Borrower Security Agreement and the
Copyright Security Agreement, assign and grant to the Lender a first perfected
security interest in all the collateral described in the Borrower Security
Agreement and the Copyright Security Agreement.

 

(b)                                  Guarantor Security
Agreements.  As security for the payment of the Revolving
Credit Note and for the performance of, and compliance with all of the terms,
covenants, conditions, stipulations and agreements contained in this Agreement,
the Revolving Credit Note and the other Loan Documents, each of the Guarantors,
by a separate Guarantor Security Agreement in the form attached hereto as Exhibit
D and incorporated herein by this reference (individually, a “Guarantor
Security Agreement” and collectively, the “Guarantor Security Agreements”) and by
other instruments contemplated thereby, shall, as provided in the Guarantor
Security Agreement, assign and grant to the Lender a first

 

9

 

perfected security interest in
all the collateral described in the Guarantor Security Agreement.

 

(c)                                  Stock Pledge Agreements. 
As security for the payment and performance of the obligations of the
applicable Guarantor under its Guaranty, (i) SCC, by a Stock Pledge Agreement
in the form attached hereto as Exhibit E-1 and incorporated herein by
this reference (the “SCC Pledge Agreement”) and by other instruments
contemplated thereby, shall, as provided in the SCC Pledge Agreement, grant to
the Lender a security interest in all of the shares of stock owned by SCC in
Pumpkin Holdings; and (ii) Pumpkin Holdings, by a Stock Pledge Agreement in the
form attached hereto as Exhibit E-2 and incorporated herein by this
reference (the “Pumpkin Holdings Pledge Agreement” and collectively with the
SCC Pledge Agreement, the “Pledge Agreements”) and by other instruments
contemplated thereby, shall, as provided in the Pumpkin Holdings Pledge
Agreement, grant to the Lender a security interest in all of the shares of
stock owned by Pumpkin Holdings in the Borrower.

 

(d)                                  Bailee and Landlord Waivers. 
The Borrower shall use its reasonable best efforts to cause its bailee
located in Lawrence, Missouri to execute and deliver to the Lender a bailee
waiver and consent between such bailee and the Lender in form and content
reasonably acceptable to the Lender.  In
addition, prior to entering into any proposed new lease of real property, the
Borrower shall cause the landlord under such lease to execute and deliver a
landlord waiver and consent to the Lender in form and content reasonably
acceptable to the Lender.

 

(e)                                  Unconditional Guaranty
Agreements.  Payment of the Revolving Credit Note, the
LOC Obligations and payment and performance of the Borrower’s obligations under
this Agreement, the Revolving Credit Note and the other Loan Documents shall be
absolutely and unconditionally guaranteed by each of the Guarantors pursuant to
the provisions of separate Unconditional Guaranty Agreements in the form
attached hereto as Exhibit F (individually, a “Guaranty” and
collectively the “Guaranties”) and incorporated herein by this reference.

 

3.5                               Default Rate. 
Overdue principal and, to the extent permitted by law, overdue interest
in respect of any Revolving Credit Loan or LOC Obligations shall bear interest
at a rate equal to the sum of the rate otherwise applicable to such Revolving
Credit Loan or LOC Obligations pursuant to Section 1.3 or Section 2.3
hereof plus three percent (3%) per annum (the “Default Rate”).  The application of this paragraph shall not
constitute a waiver of any Event of Default or an agreement by the Lender to
permit any later payments whatsoever.

 

ARTICLE 4.  CONDITIONS OF BORROWING

 

The obligation of the Lender to
make the Revolving Credit Loans to the Borrower and to issue the Letters of
Credit provided for hereunder shall be subject to the following conditions:

 

4.1                               Conditions Precedent to
the Initial Revolving Credit Loan and Issuance of Letters of Credit.  Prior to the disbursement of the Revolving Credit Loan and the issuance
of any Letters of Credit hereunder, the Borrower and the Guarantors shall
furnish to the Lender the

 

10

 

following, each dated the date
of the Closing Date, or such earlier or later date as may be acceptable to the
Lender, and in form and substance satisfactory to the Lender and counsel for
the Lender:

 

(a)                                  The duly executed Revolving Credit Note
in the form of the attached Exhibit A;

 

(b)                                 The duly executed Borrower Security
Agreement in the form of the attached Exhibit B and the duly executed
Copyright Security Agreement in the form of attached Exhibit C;

 

(c)                                  The duly executed Guarantor Security
Agreements in the form of the attached Exhibit D;

 

(d)                                 The duly executed Pledge Agreements in
the form of the attached Exhibits E-1 and E-2;

 

(e)                                  The duly executed bailee waiver and
consent referenced in Section 3.4(d) hereof in form and substance
reasonably acceptable to the Lender and its counsel, and such landlord waivers
and consents with respect to any Leases as Lender shall request;

 

(f)                                    The duly executed Guaranties in the form
of the attached Exhibit F;

 

(g)                                 A Borrowing Base Certificate dated as of
the date of the initial Revolving Credit Loan containing a calculation of the
Borrowing Base as of such date in detail satisfactory to the Lender and in the
form attached hereto as Exhibit K;

 

(h)                                 Copies of the following documents
certified by the president or a vice president of the Borrower as being true,
correct and complete:

 

(i)                                     The Asset Purchase Agreement;

 

(ii)                                  The Management Advisory Services
Agreement;

 

(iii)                               The Tax Sharing Agreement;

 

(iv)                              The Securities Purchase Agreement, the
Subordinated Note, the Cash Collateral Pledge Agreement and all agreements,
documents and instruments related thereto executed and delivered by the
Borrower, any Guarantor or any Affiliate thereof or to which any such Person is
bound;

 

(v)                                 The certificates of incorporation and
bylaws of each of the Borrower and the Guarantors as in effect on the Closing
Date;

 

(vi)                              Each employment agreement entered into
by the Borrower with its executive officers and key employees;

 

11

 

(vii)                           The Lease(s);

 

(viii)                        The LaSalle Termination and
Indemnification Agreement; and

 

(ix)                                Such other agreements, documents and
instruments executed and delivered pursuant to or in connection with the
Acquisition, the Asset Purchase Agreement or the transactions contemplated
thereby as the Lender may reasonably request;

 

(i)                                     Certified copies of the resolutions of
each of the Guarantors and the Borrower authorizing the execution, delivery and
performance of their respective obligations under this Agreement and the other
Loan Documents;

 

(j)                                     Certificates of the Secretary or an
Assistant Secretary of each of the Guarantors and the Borrower, which shall
certify the names of the officers of each such corporation authorized to sign
this Agreement, the Revolving Credit Note, the other Loan Documents or any
other documents or certificates to be delivered pursuant to this Agreement by
any of the Guarantors or the Borrower, as applicable, or any of their
respective officers, together with the true signatures of such officers.  The Lender may conclusively rely upon each
such certificate until it shall receive a further certificate of the Secretary
or an Assistant Secretary of the applicable corporation canceling or amending
the prior certificate and submitting the signatures of the officers named in
such further certificate;

 

(k)                                  Evidence that the Borrower and each of
the Guarantors have in effect insurance and endorsements of the character and
amount described in Section 6.6 hereof;

 

(l)                                     An opinion of counsel to the Borrower
and the Guarantors addressed to the Lender in form and substance satisfactory
to the Lender and attached as Exhibit G hereto;

 

(m)                               Evidence that no material adverse change
shall have occurred with respect to the credit or financial condition of the
Borrower and the Guarantors taken as a whole;

 

(n)                                 (A) Pro forma projected balance sheets
of the Borrower after giving effect to each of the transactions contemplated by
this Agreement and each of the other Loan Documents, copies of which pro forma
balance sheets are attached hereto as Exhibit I; and (B) projections of
the income and cash flows of the Borrower for the succeeding five (5) Fiscal
Years ending on December 31, 2008, copies of which projections are
attached hereto as Exhibit J;

 

(o)                                 If Borrower has requested the issuance
of a Letter of Credit on the Closing Date, a duly executed LOC Application;

 

(p)                                 A solvency certificate from each of the
chief financial officers (or other officer acceptable to the Lender) of each of
the Guarantors and the Borrower, on behalf of

 

12

 

the Guarantors and the
Borrower, in form and substance as set forth on Exhibit L attached
hereto;

 

(q)                                 An Intercreditor Agreement dated as of
the Closing Date among Whitney, the Lender and SCC duly executed by Whitney and
SCC and in form and content acceptable to the Lender in its sole discretion;
and

 

(r)                                    Such other opinions, certificates,
affidavits, documents and filings as the Lender may deem reasonably necessary
or appropriate.

 

4.2                               Conditions Precedent to
Each of the Loan Advances.  At the time of each Revolving Credit Loan
after the initial Revolving Credit Loan and at the time of the issuance of any
Letter of Credit, each of the Borrower and the Guarantors shall be in
compliance with all of the provisions and covenants contained in this Agreement
and the other Loan Documents with which it is to comply; there shall exist no
Event of Default; no event shall exist or shall have occurred which with the
lapse of time or notice or both would constitute an Event of Default; and all
of the representations and warranties of the Borrower and the Guarantors under
the Loan Documents shall be true and correct in all material respects (except
for those representations and warranties that are expressly made as of an
earlier date in which case such representations and warranties shall have been
true and correct, in all material respects, as of such earlier date).

 

ARTICLE 5.  REPRESENTATIONS AND WARRANTIES

 

The Borrower and the
Guarantors, jointly and severally, hereby represent and warrant to the Lender,
which representations and warranties shall survive the execution and delivery
of this Agreement and the Revolving Credit Note, as follows.

 

5.1                               Organization and
Authority.  Each of the Borrower and the Guarantors is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to execute,
deliver and perform this Agreement and all of the documents executed in
connection with the Loans, to consummate the transactions contemplated in the
Asset Purchase Agreement, and to own and operate its properties and to carry on
its business as now conducted.  The
execution, delivery and performance of this Agreement, the Revolving Credit
Note and the other Loan Documents have been duly authorized by the Borrower and
the Guarantors by all necessary corporate actions; there is no prohibition,
either in law, in its certificate of incorporation, regulations or other
organizational documents, or in any order, writ, injunction or decree of any
court or arbitrator presently in effect having applicability to the Borrower or
the Guarantors which in any way prohibits or would be violated by the execution
and performance of this Agreement, the Revolving Credit Note or the other Loan
Documents in any respect; and this Agreement, the Revolving Credit Note and the
other Loan Documents are and will be valid, binding and enforceable obligations
of the Borrower and the Guarantors, as applicable, except as enforcement
thereof may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and except to the extent enforcement
thereof may be limited by the application of general principles of equity.  Pumpkin Holdings owns beneficially and of
record not less than ninety percent (90%) of the shares of capital stock in the
Borrower, and SCC owns beneficially and of record not less than ninety percent
(90%) of the shares of capital stock in Pumpkin Holdings.  Pumpkin Holdings does not have any direct or
indirect Subsidiaries other than

 

13

 

the Borrower and the Borrower
does not have any Subsidiaries.  Schedule 5.1
attached hereto contains a complete and correct list of all of the Borrower’s
and the Guarantors’ managers and officers.

 

5.2                               Qualification. 
The Borrower is duly qualified or licensed and in good standing as a
foreign corporation duly authorized to do business in Colorado and in each
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted makes such qualification or licensing
necessary and in which the failure to be so qualified would have a Material
Adverse Effect.

 

5.3                               Investments;
Guarantees; Liabilities.  Except as set forth in Schedule 5.3
hereof or as permitted in Sections 7.1, 7.3, 7.7 and 7.10 hereof, the Borrower
and the Guarantors have made no material investments (other than investment by
the Guarantors in the Borrower) in, material advances to or guarantees of the
obligations of any Person other than the Guarantors’ guarantee for the benefit
of the Lender under the Guaranties.  As
of the date hereof, except for Indebtedness hereunder and any Indebtedness
disclosed in Schedule 7.10 attached hereto, the Borrower and the
Guarantors do not have any material Liabilities, direct or contingent, except
for (i) Liabilities reflected in the Balance Sheet or the Guarantor Balance
Sheet, (ii) Liabilities incurred in the ordinary course of business since
March 31, 2004, and (iii) Liabilities which under GAAP are not required to
be reflected or reserved against in the Borrower’s or Guarantors’ financial
statements, but none of which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

5.4                               Tax Returns and
Payments.  Each of the Borrower and the Guarantors has
filed all tax returns required by law to be filed and has paid all taxes,
assessments and other governmental charges of any material nature, either in
amount or effect, levied upon any of its properties, assets, income or
franchises, other than those not yet delinquent or those being contested in
accordance with Section 6.8 hereof. 
The charges, accruals and reserves on the books of the Borrower and the
Guarantors in respect to income taxes for all respective fiscal periods are
adequate in the opinion of the Borrower and the Guarantors, and the Borrower
and the Guarantors know of no unpaid assessment for additional income taxes for
any fiscal period or of any reasonable basis therefor.

 

5.5                               Title to Properties;
Liens.  Each of the Borrower and the Guarantors has
good and marketable title to all of its property and assets (other than
immaterial property and assets having an original cost of less than $50,000 per
item and $250,000 in the aggregate), in each case including, but not limited
to, the property and assets reflected as being owned by it on the Balance Sheet
or the Guarantor Balance Sheet, as applicable, and except such as have been
disposed of in the ordinary course of business since the date of the Balance
Sheet or the Guarantor Balance Sheet, as applicable, and all such property and
assets are free and clear of mortgages, pledges, liens, charges or other
encumbrances except such as are not prohibited by Section 7.2 hereof.  The Borrower enjoys peaceful and undisturbed
possession under the Lease(s) and all other leases under which it is lessee
which are material to the conduct of its business and the Lease(s) and such
other leases are valid, subsisting and in full force and effect in accordance
with their terms.  None of the Lease(s)
and such other leases contains any provision restricting incurrence of
Indebtedness by the Borrower or any Guarantor or any provision which has a
Material Adverse Effect or in the future could reasonably be expected to have a
Material Adverse Effect.

 

14

 

5.6                               Litigation. 
Except as set forth in Schedule 5.6 attached hereto, there
is no court action, other proceeding or investigation pending or threatened
which questions the validity of this Agreement, the Revolving Credit Note, any
of the other Loan Documents or any action taken or to be taken pursuant thereto
or which could reasonably be expected to result, either separately or in the
aggregate, in any materially adverse change in the business, operations,
affairs or condition of the Borrower or the Guarantors, taken as a whole.

 

5.7                               Compliance with Law and
Other Instruments.  Neither the Borrower nor any of the
Guarantors is in violation of, and the execution, delivery and performance of
this Agreement, the Revolving Credit Note and the other Loan Documents, do not
and will not result in a violation of nor a conflict with or default under, any
agreement, instrument, judgment, decree, order, statute or governmental rule or
regulation applicable to the Borrower or the Guarantors or by which any of them
is bound, which now or in the future could reasonably be expected to have a
Material Adverse Effect.

 

5.8                               Financial Statements.

 

(a)                                  The Borrower has furnished to the Lender
financial statements of the Borrower including (i) an audited balance sheet,
statements of income, statement of changes in shares and statement of cash
flows as at and for the Fiscal Years ended December 31, 2002 and 2003, and
(ii) unaudited interim financial statements for the period ending
March 31, 2004, including, without limitation, an unaudited interim
balance sheet of the Borrower as of March 31, 2004 (the “Balance
Sheet”).  Such financial statements are
complete and correct in all material respects and fairly present the
consolidated financial condition of the Borrower as at such dates and the
results of operations of the Borrower as at such dates and for the period ended
on such dates.  Since the date of such
statements, no materially adverse change has occurred in the business,
operations, affairs or condition (financial or otherwise) of the Borrower.

 

(b)                                 SCC has furnished to the Lender
financial statements of SCC including (i) an audited consolidated balance
sheet, statements of income, statement of changes in shares and statement of
cash flows as at and for the Fiscal Years ended December 31, 2002 and
2003, and (ii) unaudited interim consolidated financial statements for the
period ending March 31, 2004, including, without limitation, an unaudited
interim balance sheet of SCC as of March 31, 2004 (the “Guarantor Balance
Sheet”).  Such financial statements are
complete and correct in all material respects and fairly present the
consolidated financial condition of SCC as at such dates and the results of
operations of SCC as at such dates and for the period ended on such dates.  Since the date of such statements, no
materially adverse change has occurred in the business, operations, affairs or
condition (financial or otherwise) of SCC.

 

5.9                               Patents, Trademarks and
Copyrights.  Schedule 5.9 hereto lists all
material patents, patent applications, trademark and service mark registrations
and applications and copyright registrations and applications therefor that are
owned or licensed by the Borrower.  The
Borrower possesses and has made all filings with the United States Patent and
Trademark Office, the United States Copyright Office and the appropriate state
agencies to evidence in the Borrower full and

 

15

 

complete title to all the
patents, trademarks, service marks, trade names, copyrights and licenses and
rights in respect of the foregoing which are essential to the conduct of its
business, without any known conflict with the rights of others except as
otherwise set forth on Schedule 5.9.

 

5.10                        No Margin Activity. 
Neither the Borrower nor any of the Guarantors is engaged in the
business of extending or obtaining credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, as is now and may from time to time
hereafter be in effect) and no part of the proceeds of any Revolving Credit
Loans shall be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock or to reduce or retire any indebtedness incurred for any such
purpose.  No part of the proceeds of the
Revolving Credit Loans hereunder will be used for any purpose which violates,
or which is inconsistent with, the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System.

 

5.11                        ERISA. 
Each Plan maintained by the Borrower or any Guarantor and by each ERISA
Affiliate complies with all material applicable requirements of ERISA and of
the Code and with all material applicable rulings and regulations issued under
the provisions of ERISA and the Code setting forth those requirements.  Neither the Borrower, any of the Guarantors
nor any ERISA Affiliate has engaged in any prohibited transaction (as defined
in Section 406 of ERISA or Section 4975 of the Code) (i) which has
not been corrected within the correction period applicable to it under
Section 502(i) of ERISA or Section 4963(e) of the Code or (ii) for
which an exemption has not been obtained under Section 408 of ERISA or
Section 4975 of the Code.  As of
the date hereof, neither the Borrower, any of the Guarantors nor any ERISA
Affiliate is a participant in (i) any Multiemployer Plan, (ii) any other Plan
which is subject to Title IV of ERISA, or (iii) any money purchase pension
plan.

 

5.12                        Adverse Contracts;
Defaults.  Neither the Borrower nor any Guarantor is a
party to any agreement or instrument or subject to any corporate agreement,
certificate of incorporation or other corporate restriction which could
reasonably be expected to have a Material Adverse Effect.  Neither the Borrower nor any Guarantor is in
default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement
or instrument to which it is a party which default could reasonably be expected
to have a Material Adverse Effect.

 

5.13                        Environmental Laws. 
No release, emission, or discharge into the environment of hazardous
substances, as defined under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, or hazardous waste as defined under
the Solid Waste Disposal Act, as amended, or air pollutants as defined under
the Clean Air Act, or toxic pollutants as defined under the Clear Air Act, or
the Toxic Substances Control Act, has occurred or is presently occurring in
excess of federally permitted releases or reportable quantities, or other
concentrations, standards or limitations under, and which would constitute a
material violation of, the foregoing laws or under any other federal, state or
local laws or regulations, in connection with any aspect of the business of the
Borrower or any Guarantor.  Neither the
Borrower nor any Guarantor has any knowledge of any past or existing
violations, in any material respect, by any of them of any environmental laws,
ordinances or regulations issued by any federal, state or local governmental
authority.

 

16

 

5.14                        Disclosure. 
None of the information (financial or otherwise) furnished by or on
behalf of the Borrower or any of the Guarantors to the Lender in connection
with the negotiation of this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in the light of the
circumstances under which such statements were made.  All financial projections delivered to the Lender in connection
herewith have been prepared on the basis of the assumptions stated therein.  Such projections represent the Borrower’s
and the Guarantors’ good faith estimate, as of the date hereof, of the
Borrower’s future financial performance and, while there can be no assurance
that the performance set forth in such projections will approximate actual
performance, such projections are believed by the Borrower and the Guarantors
to be fair in light of current business conditions as of the date hereof.

 

5.15                        Insurance. 
All of the properties and operations of the Borrower and the Guarantors
of a character usually insured by Persons of established reputation engaged in
the same or similar businesses similarly situated are adequately insured, by
financially sound and reputable insurance companies, against loss or damage of
the kinds and in amounts customarily insured against by such Persons and each
of the Borrower and the Guarantors carries, with such insurers in customary
amounts, such other insurance, including public and product liability, as is
usually carried by Persons of established reputation engaged in the same or
similar businesses similarly situated.  
The insurance required by the provisions of Section 6.6 hereof and
by the other Loan Documents is in force and all premiums due and payable in
respect thereof have been paid.

 

5.16                        Events of Default. 
There does not exist any Event of Default or Default hereunder.

 

5.17                        Guarantor Single
Purpose.  Pumpkin Holdings has no material assets or
material operations other than (i) assets consisting of, or incidental to,
stock ownership of the Borrower’s shares and (ii) operations consisting of the
consummation and performance of the transactions contemplated in the Asset
Purchase Agreement and the Loan Documents or its direct equity ownership
interest in the Borrower.

 

5.18                        Projections and Pro
Forma Financial Statement.

 

(a)                                  Attached hereto as Exhibit J are
true and complete copies of the latest projections of the consolidated income
and cash flows of the Guarantors and their Subsidiaries and of the Borrower and
its Subsidiaries for the Fiscal Years ending through December 31, 2008.  Such projections are based on underlying
assumptions of the Borrower and the Guarantors which, to the knowledge of the
Borrower and the Guarantors, provide a reasonable basis for the projections
contained therein.  Such projections
have been prepared on the basis of the assumptions set forth therein, which
assumptions are, to the knowledge of the Borrower and the Guarantors, fair and
reasonable in light of the historical financial performance of the Borrower and
of current and reasonably foreseeable business conditions, as of the date
hereof, and reflect the reasonable estimate of the Borrower and the Guarantors,
as of the date hereof, of the results of operations and other information
projected therein.

 

17

 

(b)                                 The pro forma projected consolidated
balance sheets of the Guarantors and their Subsidiaries and of the Borrower as
of March 31, 2004, attached hereto as Exhibit I, are complete and
correct in all material respects and present fairly in all material respects
the respective consolidated financial conditions of the Guarantors and the
Borrower as of such date as if the transactions contemplated by this Agreement
had occurred immediately prior to such date, and such balance sheets contain
all pro forma adjustments necessary in order to fairly reflect such assumption.

 

5.19                        Solvency, Etc.  Each of the Borrower, the Guarantors and their respective Subsidiaries
is solvent on a going concern basis as of the date of this Agreement and shall
not become insolvent as a result of the consummation of the transactions
contemplated by this Agreement or the other Loan Documents.  Each of the Borrower, the Guarantors and
their respective Subsidiaries is, and after giving effect to the transactions
contemplated by this Agreement and the other Loan Documents shall be, able to
pay their debts as they become due, and the property of each of the Borrower,
the Guarantors and their respective Subsidiaries now has, and after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents shall have, a fair salable value (on a going concern basis) greater
than the amounts required to pay its debts (including a reasonable estimate of
the amount of all contingent liabilities). 
Each of the Borrower, the Guarantors and their respective Subsidiaries
has adequate capital to carry on its business, and after giving effect to the
transactions contemplated by this Agreement and the other Loan Documents, each
of the Borrower, the Guarantors and their Subsidiaries shall have adequate
capital to conduct their businesses.  No
transfer of property is being made and no obligation is being incurred in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay or defraud either present or
future creditors of the Borrower, the Guarantors or any of their respective
Subsidiaries.

 

ARTICLE 6.  AFFIRMATIVE COVENANTS

 

Until payment in full of the
Revolving Credit Note, the LOC Obligations and performance of all other
obligations of the Borrower and the Guarantors hereunder:

 

6.1                               Bank Deposits. 
Each of the Borrower and the Guarantors covenants that the Lender shall
be the principal bank of account and primary depository for each of the
Borrower and the Guarantors; provided, however, that, the Borrower shall be
permitted to maintain its existing deposit accounts listed on attached Schedule 6.1
hereto and, in the event that Lender does not have a branch office within a
reasonable distance from a particular office of the Borrower or the Guarantors,
such office may maintain a depository account with another bank or conveniently
located in the vicinity of such office provided that the Borrower gives Lender
prior written notice of the maintenance of such account.  The Borrower shall (i) cause any such other
banks to execute and deliver to the Lender account control agreements, in form
and content acceptable to the Lender, perfecting the Lender’s security interest
in such accounts and (ii) enter into an agreement with the Lender to give the
Lender the right to sweep all such other accounts of the Borrower and apply
such amount to the outstanding principal balance of the Revolving Credit Loans.

 

18

 

6.2                               Financial Statements
and Reports of the Borrower and the Guarantors.

 

(a)                                  Not later than thirty (30) days
following the end of each month, the Borrower shall furnish to the Lender the
following items in form and substance satisfactory to the Lender:

 

(i)                                     An unaudited consolidated and unaudited
consolidating income statement for the month and Fiscal Year to date and copies
of the statements for the same periods of the previous year (subject to normal
year-end adjustments);

 

(ii)                                  An unaudited consolidated and unaudited
consolidating balance sheet as of the end of such month and a copy of such
statement as of the end of such month in the previous year;

 

(iii)                               A certificate from the chief financial
officer or treasurer of the Borrower (A) stating, on behalf of the Borrower,
that:  (I) the financial statements are
complete and correct in all material respects and fairly represent the
financial position of the Borrower as of their respective dates and the
consolidated results of the Borrower’s operations for the periods then ended
(subject to normal year-end adjustments); (II) the Borrower has complied with
and is then in compliance, in all material respects, with all terms and
covenants of this Agreement (or, if there is any non-compliance, giving the
details thereof); and (III) there exists no Default or Event of Default (or, if
a Default or Event of Default exists, giving the details thereof); and (B)
setting forth in a detailed computation in a form reasonably satisfactory to
the Lender the financial status of the Borrower (as the end of, or, in the case
of incurrence tests, during such accounting period) in respect of the
restrictions contained in Section 7.11 and Sections 7.13 through 7.16,
inclusive.

 

(b)                                 (i)                                     Not later than ten (10) days following
the end of each month, a Borrowing Base certificate containing (i) a
calculation of the Borrowing Base for each month in detail reasonably
satisfactory to the Lender and in the form attached hereto as Exhibit K,
and (ii) so long as any Revolving Credit Loans or LOC Obligations remain
outstanding, either (A) an affirmative certification (to the extent true) from
the Borrower’s chief executive officer, chief financial officer or treasurer
that the Borrower’s Borrowing Base is equal to or greater than the amount of
Revolving Credit Loans outstanding plus the outstanding LOC Obligations, or (B)
a certification from the Borrower’s chief executive officer, chief financial
officer or treasurer, to the extent (A) is untrue, as to the amount the
Borrower’s Borrowing Base is less than the amount of Revolving Credit Loans
outstanding plus the outstanding LOC Obligations.

 

(ii)                                  Not later than ten (10) days following
the end of each month, the Borrower shall furnish to the Lender a summary aging
report of all Accounts and summary reports of accounts payable and inventory of
the Borrower, each in form and substance satisfactory to the Lender.  In addition, upon the request of the Lender
from time to time, the Borrower shall promptly furnish to the Lender detailed
aging

 

19

 

reports of all Accounts and
detailed listings of all accounts payable and inventory, each in form and
substance satisfactory to the Lender.

 

(c)                                  Each of the Borrower and the Guarantors
shall promptly upon their becoming available, furnish to the Lender one copy of
(i) each financial statement, report, notice or proxy statement sent by the
Borrower or any of the Guarantors to its stockholders generally, and (ii) each
report, each registration statement and each prospectus and all amendments
thereto filed by the Borrower or any of the Guarantors with the Securities and
Exchange Commission and of all press releases and other statements made
available generally by the Borrower or any of the Guarantors to the public
concerning developments that are material.

 

(d)                                 In addition, within forty-five (45) days
following the end of each quarter of each Fiscal Year, the Borrower shall
furnish to the Lender a certificate from the chief financial officer or
treasurer of the Borrower setting forth, on behalf of the Borrower, a detailed
computation, in a form satisfactory to the Lender, of the Borrower’s EBITDA for
the previous quarter and fiscal year to date (subject to normal year-end
adjustments).

 

(e)                                  Not later than forty-five (45) days
following the end of each fiscal quarter, SCC shall furnish to the Lender the
following items in form and substance satisfactory to the Lender:

 

(i)                                     An unaudited consolidated and unaudited
consolidated income statement of SCC for the quarter and fiscal year to date
and copies of the statements for the same periods of the previous year (subject
to normal year-end adjustments);

 

(ii)                                  An unaudited consolidated and unaudited
consolidated balance sheet of SCC as of the end of such fiscal quarter and a
copy of such statement as of the end of such quarter in the previous year; and

 

(iii)                               A certificate from the chief financial
officer or treasurer of SCC (A) stating, on behalf of SCC, that:  (I) the financial statements are complete
and correct in all material respects and fairly represent the financial position
of SCC as of their respective dates and the consolidated results of the SCC’s
operations for the periods then ended (subject to normal year-end adjustments);
(II) SCC has complied with and is then in compliance, in all material respects,
with all terms and covenants of this Agreement (or, if there is any
non-compliance, giving the details thereof); and (III) there exists no Default
or Event of Default (or, if a Default or Event of Default exists, giving the
details thereof); and (B) setting forth in a detailed computation in a form
reasonably satisfactory to the Lender the financial status of SCC (as the end
of, or, in the case of incurrence tests, during such accounting period) in
respect of the restrictions contained in Section 7.11 and Sections 7.13
through 7.16, inclusive;

 

provided, however, that SCC
shall not be required to deliver to Lender the financial statements and
certificate referenced in clauses (i), (ii) and (iii), above, if SCC timely
files the financial statements referenced in clauses (i) and (ii), above, with
the Securities and Exchange Commission in a quarterly report on Form 10-Q in
accordance with Section 13

 

20

 

and/or 15(d) of the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder.

 

(f)                                    At the request of the Lender from time
to time, the Borrower and the Guarantors shall promptly deliver to the Lender
copies of any statements, reports, certificates and any other material
information delivered to Whitney or any other holder of the Subordinated Note
by the Borrower or any Guarantor.

 

6.3                               Unaudited Financial
Statements of the Borrower.

 

Not later than one hundred
twenty (120) days following the end of each Fiscal Year of the Borrower,
beginning with the Fiscal Year ended December 31, 2004, the Borrower shall
furnish to the Lender, in form and substance satisfactory to the Lender,
complete unaudited consolidating and unaudited consolidated financial
statements for the Borrower for such Fiscal Year; provided, however, that if an
Event of Default occurs in any Fiscal Year, then upon the written request of
the Lender received within ten (10) days after the end of such Fiscal Year,
such consolidated (but not consolidating) financial statements shall be audited
and certified by Ernst & Young LLP or another independent certified public
accountant acceptable to the Lender, with an unqualified opinion, accompanied
by a certificate from such accountant, certifying that in examining the
Borrower’s books and records for such period, such accountant has obtained no
knowledge of breaches of Section 7.11 or Sections 7.13 through 7.16,
inclusive.

 

Each of the financial
statements delivered under this Section 6.3 shall be accompanied by a
certificate of the chief financial officer or treasurer of the Borrower
stating, on behalf of the Borrower, that except as disclosed in the certificate
such officer has no knowledge of a Default or an Event of Default hereunder and
setting forth in a detailed computation in form satisfactory to the Lender the
financial status of the Borrower (at the end of, or, in the case of incurrence
tests, during such accounting period) in respect of the restrictions contained
in Section 7.11 and Sections 7.13 through 7.16, inclusive.

 

6.4                               Audited Financial
Statements of SCC.

 

(a)                                  Not later than one hundred twenty (120)
days following the end of each Fiscal Year of SCC, beginning with the Fiscal
Year ended December 31, 2004, SCC shall furnish to the Lender, in form and
substance satisfactory to the Lender, complete unaudited consolidating and
audited consolidated financial statements for SCC for such Fiscal Year,
accompanied by unaudited supporting schedules with respect to Pumpkin Holdings,
the Borrower and any other Subsidiaries of SCC, certified, in the case of the
audited consolidated financial statements, by Ernst & Young LLP or another
independent certified public accountant acceptable to the Lender, with an
unqualified opinion, accompanied by a certificate from such accountant, stating
that in examining SCC’s books and records for such period, such accountant has
obtained no knowledge of any breaches of Section 7.11 or Sections 7.13
through 7.16, inclusive.

 

21

 

(b)                                 Each of the financial statements delivered
under this Section 6.4 shall be accompanied by a certificate of the chief
financial officer or treasurer of SCC stating, on behalf of SCC, that except as
disclosed in the certificate such officer has no knowledge of a Default or an
Event of Default hereunder.

 

(c)                                  Notwithstanding the foregoing, SCC shall
not be required to deliver to Lender the financial statements and certificate
referenced in Sections 6.4(a) and (b) if SCC timely files the financial
statements referenced in Section 6.4(a) with the Securities and Exchange
Commission in an annual report on Form 10-K in accordance with Section 13
and/or 15(d) of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder.

 

6.5                               Inspection.  Upon request of the Lender and upon reasonable prior notice (provided,
however, that no such notice shall be required if an Event of Default shall
have occurred and be continuing), each of the Borrower and the Guarantors shall
make available for inspection by representatives of the Lender any of its books
and records and shall furnish to the Lender information regarding its business
affairs and financial condition within a reasonable time after receipt of
written request therefor.

 

6.6                               Insurance.

 

(a)                                  Each of the Borrower and the Guarantors shall
insure and maintain hazard and other insurance upon all of its assets and
business properties and liability insurance with responsible and reputable
insurers of such character and in such amounts as are usually maintained by
companies engaged in like business.  All
insurance policies shall be written for the benefit of the Borrower and the
Guarantors, as applicable, and the Lender as their interests may appear and
shall contain a provision requiring the insurance company to provide the Lender
not less than thirty (30) days’ written notice prior to cancellation of any
such policy.  All insurance policies or
certificates evidencing the same shall be furnished to the Lender.

 

(b)                                 Without limiting the foregoing
provisions of this Section 6.6, the Borrower shall maintain the following
insurance coverages:

 

(i)                                     the Borrower shall maintain all risk
property insurance against direct physical loss or damage on an all risks
basis, including windstorm and hurricane and comprehensive boiler and machinery
coverage, subject to a maximum deductible of Fifty Thousand Dollars
($50,000).  The property shall be
insured for the full replacement cost and such policy shall contain an agreed
amount endorsement waiving any coinsurance penalty;

 

(ii)                                  at all times on and after the date
hereof, as an extension of the coverage required under Section 6.6(b)(i),
the Borrower shall maintain business interruption insurance with a minimum
period of indemnity of six (6) months subject to a maximum five (5) day waiting
period or Fifty Thousand Dollars

 

22

 

($50,000) deductible and shall
contain an agreed amount endorsement waiving any coinsurance penalty;

 

(iii)                               the Borrower shall maintain commercial
general liability insurance written on an occurrence basis with a limit of not
less than One Million Dollars ($1,000,000) for each occurrence and Three
Million Dollars ($3,000,000) in the aggregate. 
Such coverage shall include, but not be limited to, premises/operations,
blanket contractual liability, independent contracts, broad form products and
completed operations, personal injury, fire, legal liability and employee
benefits liability;

 

(iv)                              the Borrower shall maintain workers’
compensation insurance in accordance with statutory provisions covering
accidental injury, illness or death of an employee of the Borrower while at
work or in the scope of his or her employment with the Borrower and employer’s
liability insurance in an amount not less than Five Hundred Thousand Dollars
($500,000); and

 

(v)                                 the Borrower shall maintain automobile
liability insurance covering owned, non-owned, leased, hired or borrowed
vehicles against bodily injury or property damage.  Such coverage shall have a limit of not less than One Million
($1,000,000).

 

6.7                               Payment of Taxes and
Claims.  Each of the Borrower and the Guarantors
shall pay all taxes, assessments and other governmental charges imposed upon
its properties or assets or in respect of its franchises, business, income or
profits before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a lien or charge upon any of its properties or assets, provided
that (unless any material item of property would be lost, forfeited or
materially damaged as a result thereof) no such charge or claim need be paid if
the amount, applicability or validity thereof is currently being contested in
good faith and if such reserve or other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor.

 

6.8                               Compliance with Laws. 
Each of the Borrower and the Guarantors shall comply in all substantial
respects with all applicable statutes, laws, ordinances and governmental rules,
regulations and orders to which it is subject or which are applicable to its
business, properties and assets if noncompliance therewith would materially
adversely affect such business, including, but not limited to, all applicable
federal, state, regional, county or local laws, statutes, rules, regulations or
ordinances concerning public health, safety or the environment; provided that
(unless such contest or noncompliance would materially adversely affect such
business) the Borrower nor the Guarantors need not so comply if any such
statute, law, ordinance, or governmental rule, regulation or order is currently
being contested in good faith.

 

6.9                               ERISA. 
Each of the Borrower and the Guarantors shall furnish to Lender:  (a) promptly and in any event within thirty
(30) days after the Borrower or any Guarantor, as applicable, knows or has
reason to know of the occurrence of a Reportable Event with respect to a

 

23

 

Plan with regard to which
notice must be provided to the PBGC, a copy of such materials required to be
filed with the PBGC with respect to such Reportable Event and in each such case
a statement of the chief financial officer of the Borrower or the Guarantor, as
applicable, setting forth details as to such Reportable Event and the action
which the Borrower or any Guarantor, as applicable, proposes to take with
respect thereto; (b) promptly and in any event within thirty (30) days after
the Borrower or any Guarantor, as applicable, knows or has reason to know of
any condition existing with respect to a Plan which presents a material risk of
termination of the Plan, imposition of an excise tax, requirement to provide
security to the Plan or incurrence of other liability by the Borrower or any
Guarantor as applicable, or any ERISA Affiliate a statement of the chief
financial officer of the Borrower or any Guarantor, as applicable, or such
ERISA Affiliate describing such condition; (c) at least thirty (30) days prior
to the filing by any plan administrator of a Plan of a notice of intent to
terminate such Plan, a copy of such notice; (d) promptly and in no event more
than ten (10) days after the filing thereof with the Secretary of the Treasury,
a copy of any application by the Borrower or any Guarantor, as applicable, or
an ERISA Affiliate for a waiver of the minimum funding standard under
section 412 of the Code; (e) upon request, and in no event more than
thirty (30) days after the request therefore, copies of each annual report
which is filed on Form 5500 together with certified financial statements for
the Plan (if any) as of the end of such year and actuarial statements on
Schedule B to such form 5500; (f) promptly and in any event within thirty
(30) days after it knows or has reason to know of any event or condition which
might reasonably be expected to constitute grounds under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, a statement of the chief financial officer of the Borrower or any
Guarantor, as applicable, describing such event or condition; (g) promptly and
in no event more than thirty (30) days after receipt thereof by the Borrower or
any Guarantor, as applicable, or any ERISA Affiliate, a copy of each notice received
by the Borrower or any Guarantor, as applicable, or an ERISA Affiliate
concerning the imposition of any withdrawal liability under section 4202
of ERISA; and (h) promptly after receipt thereof a copy of any notice the
Borrower or any Guarantor, as applicable, or any ERISA Affiliate may receive
from the PBGC or the Internal Revenue Service with respect to any Plan or
Multiemployer Plan; provided, however, that this subsection (h) shall not
apply to notices of general application promulgated by the PBGC or the Internal
Revenue Service.

 

6.10                        Preservation of
Corporate Existence.  Each of the Borrower and the Guarantors
shall preserve and maintain and cause each of its Subsidiaries to preserve and
maintain its corporate existence rights, franchises and privileges in the
jurisdiction of its organization or in any other jurisdiction it shall select,
and qualify and remain qualified as a foreign limited liability company or
corporation, as applicable, in each jurisdiction in which such qualification is
necessary in view of its business and operations or the ownership of its
properties.

 

6.11                        Maintenance of Tangible
Assets.  Each of the Borrower and the Guarantors
shall maintain its tangible assets in good condition and repair and shall not
permit any action or omission which might materially impair the value thereof,
normal wear and tear excepted.

 

6.12                        Notices of Certain
Events.  Each of the Borrower and the Guarantors
shall promptly after it becomes aware thereof give notice to the Lender of:

 

(a)                                  Any Default or Event of Default;

 

24

 

(b)                                 Any default or event of default under
any contractual obligation of the Borrower or any Guarantor, as applicable,
that would have a Material Adverse Effect;

 

(c)                                  Any materially adverse change in the
business, operations, affairs or condition (financial or otherwise) of the
Borrower or any Guarantor, as applicable;

 

(d)                                 Any default under the Securities
Purchase Agreement, Subordinated Note or Cash Collateral Pledge Agreement or any
“Event of Default” under or as defined in the Subordinated Note; and

 

(e)                                  Any default under the LaSalle
Termination and Indemnification Agreement.

 

Each notice pursuant to this
Section 6.12 shall be accompanied by a statement of the chief executive
officer or chief financial officer of the respective Borrower or the
Guarantors, as applicable, setting forth details of the occurrence referred to
therein and stating what action the respective Borrower or the Guarantors, as
applicable, proposes to take with respect thereto.

 

6.13                        Records and Books of
Account.  Each of the Borrower and the Guarantors
shall keep adequate records and books of account in which complete entries will
be made in accordance with GAAP, reflecting all financial transactions required
by GAAP to be so reflected.

 

6.14                        Performance of
Contracts.  Each of the Borrower and the Guarantors
shall perform and comply, in all material respects, with, in accordance with
their terms, all provisions of each and every contract, agreement or instrument
now or hereafter binding upon it, except to the extent that it shall contest
the provisions thereof in good faith and by proper proceedings or the failure
to perform could not reasonably be expected to have a Material Adverse Effect.

 

6.15                        Notice of Material
Litigation.  Each of the Borrower and the Guarantors
shall promptly notify the Lender in writing of any litigation, arbitration
proceeding or administrative investigation, inquiry or other proceeding to
which it may hereafter become a party which could reasonably be expected to
have a Material Adverse Effect and which may involve any risk of any judgment
or liability not fully covered by insurance or which may otherwise result in
any materially adverse change in the business, operations, affairs or condition
(financial or otherwise) of the Borrower or any Guarantor or which may impair,
in any material respect, the ability of the Borrower or any Guarantor to
perform its obligations under this Agreement, the Revolving Credit Note or the
other Loan Documents.

 

6.16                        Use of Proceeds. 
The Borrower shall use the proceeds of the Revolving Credit Loans as
provided in Section 1.5 hereof, and the Borrower shall use the portion of
the proceeds of the initial Revolving Credit Loan to be disbursed on the
Closing Date solely for purposes of paying the Earnout Consideration in
accordance with the terms of Section 3.2 of the Asset Purchase
Agreement.  Such uses shall be
consistent with all applicable laws.

 

25

 

6.17                        Ownership and Control
of Borrower and Guarantors.

 

(a)                                  Pumpkin Holdings shall at all times
after the date hereof have direct beneficial and legal ownership, and the right
and power to control the voting and transfer of, and exercise of all other
rights attributable to, at least ninety percent (90%) of the capital stock (and
securities convertible into, or granting rights to acquire, capital stock) of
the Borrower.

 

(b)                                 SCC shall at all times after the date
hereof have direct beneficial and legal ownership and the right and power to
control the voting and transfer of and exercise of all other rights
attributable to, at least ninety percent (90%) of the capital stock (and
securities convertible into, or granting rights to acquire, capital stock) of
Pumpkin Holdings.

 

6.18                        Other Information. 
At the request of the Lender from time to time, the Borrower and the
Guarantors shall promptly deliver to the Lender copies of any statements,
reports, certificates and any other information delivered to the shareholders
of any Guarantor or the Borrower.

 

6.19                        Compliance with the
Mezzanine Debt Agreements.  Each of the Borrower and the Guarantors
shall comply at all times with all covenants and agreements contained in the
Securities Purchase Agreement, the Subordinated Note, the Cash Collateral
Pledge Agreement and the other agreements, documents and instruments related
thereto and take no action prohibited thereby (subject to any applicable grace
periods and waivers).

 

6.20                        Compliance with the
Intercreditor Agreement.  Each of the Borrower and the Guarantors
shall perform all of its duties and obligations (if any) under, and comply with
all terms of, the Intercreditor Agreement.

 

6.21                        Compliance with LaSalle
Termination and Indemnification Agreement. 
The Borrower shall comply at all times with all covenants and agreements
contained in the LaSalle Termination and Indemnification Agreement including,
without limitation, the Borrower’s obligation thereunder to indemnify the
Lender for any obligations incurred by the Lender thereunder.

 

ARTICLE 7.  NEGATIVE COVENANTS

 

Until payment in full of the
Revolving Credit Note and the LOC Obligations, the termination of the Lender’s
obligation to extend further credit to the Borrower and the performance of all
other obligations of the Borrower and the Guarantors hereunder, without the
prior written consent of the Lender:

 

7.1                               Indebtedness. 
Each of the Borrower, Pumpkin Holdings and SCC shall not, nor shall the
Borrower or Pumpkin Holdings permit any of their respective Subsidiaries to,
create, incur, assume or suffer to exist any Indebtedness, except for: (i)
Indebtedness to the Lender; (ii) Subordinated Indebtedness of the Borrower or
SCC; (iii) capitalized lease obligations of the Borrower and purchase

 

26

 

money Indebtedness of the
Borrower reflected on the Balance Sheet or disclosed in Schedule 7.1;
(iv) other capitalized lease obligations of the Borrower and purchase money
Indebtedness of the Borrower incurred after the date hereof up to an aggregate
principal amount of $100,000; (v) credit card debt incurred in the ordinary
course of business; (vi) trade liabilities and accrued expenses incurred in the
ordinary course of business (provided, however, that at no time shall the
Indebtedness of the Borrower to The Lawrence Paper Company exceed $800,000);
(vii) Indebtedness between and/or among the Borrower and its Subsidiaries (if
any); (viii) contingent liabilities permitted under Section 7.3; (ix)
Indebtedness of the Borrower to LaSalle Business Credit, LLC and/or LaSalle
Bank National Association under the LaSalle Termination and Indemnification
Agreement; and (x) Indebtedness of SCC under the Subordinated Note and
Securities Purchase Agreement to the extent not prohibited under the
Intercreditor Agreement.

 

7.2                               Liens and Other
Encumbrances.  Neither the Borrower nor any Guarantor shall
create, incur, assume or suffer to exist any security interest, mortgage,
pledge, lien or other encumbrance of any nature whatsoever on any of its
property or assets whether now owned or hereafter acquired, except: (i) liens
securing the payment of taxes and other governmental charges, either not yet
due or the validity of which is being contested in good faith by appropriate
proceedings (so long as no material item of property would be lost, forfeited
or materially damaged as a result thereof), and as to which it shall, as
appropriate under GAAP, have set aside on its books and records adequate
reserves; (ii) liens of landlords, carriers, warehousemen, mechanics, materialmen
and other similar liens imposed by law, which are incurred in the ordinary
course of business for sums not more than thirty (30) days delinquent or which
are being contested in good faith, provided that an adequate reserve or other
appropriate provisions shall have been made therefor and the aggregate amount
of such liens is less than $250,000; (iii) deposits under workers’
compensation, unemployment insurance, social security and other similar laws or
to secure the performance of bonds, tenders or contracts (other than for the
repayment of purchase price indebtedness or borrowed money) or to secure
statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds, all in the ordinary course of business; (iv)
liens and security interests in favor of the Lender; (v) zoning restrictions,
easements, licenses, rights of way, covenants and other restrictions affecting
the use of real property, so long as its use of, or the value of, its property
subject thereto is not impaired, in any material respect, thereby; (vi) liens
securing purchase money Indebtedness and capital leases referred to in clauses
(iii) or (iv) under Section 7.1, above provided that such liens are
limited to the specific property purchased or leased and the proceeds thereof,
(vii) the licensing of intellectual property in the ordinary course of business
or between and/or among the Guarantors and the Borrower; (viii) liens under the
Cash Collateral Pledge Agreement; (ix) the security interests granted by the
Borrower to LaSalle Business Credit, LLC and LaSalle Bank National Association
pursuant to paragraphs 5 and 6 of the LaSalle Termination and Indemnification
Agreement; and (x) any other existing liens set forth on Schedule 7.2
hereto.  All of the foregoing liens are
hereinafter referred to as “Permitted Liens.”

 

7.3                               Guaranties and Other
Contingent Liabilities.  Neither the Borrower nor any Guarantor shall
become an indemnitor, guarantor or surety or otherwise become liable for any of
the obligations or liabilities of any Person, other than (i) the Guarantors’
obligations under the Guaranties, this Agreement and the other Loan Documents,
(ii) customary indemnification of officers, directors, managers, and
shareholders, (iii) indemnity provisions of leases or other contracts entered
into in the ordinary course of business, (iv) contingent obligations incurred
in the ordinary course of business with respect to surety and appeal bonds,
performance and return-of-money bonds and similar obligations not exceeding at
any time outstanding $200,000 in aggregate

 

27

 

liability, (v) guarantees
incurred in the ordinary course of business (including, without limitation,
guarantees of sales) for an aggregate amount not to exceed $200,000 for any
Borrower or any Guarantor, as applicable, at any one time, (vi) guarantees of
obligations in connection with workmen’s compensation obligations and general
liability exposure of the Borrower and the Guarantors and their respective
subsidiaries, and (vii) other existing guaranties and contingent liabilities
disclosed on attached Schedule 7.3 hereto.

 

7.4                               Fundamental Changes. 
Neither the Borrower nor any Guarantor shall (i) enter into any
transaction of merger or consolidation or amalgamation, (ii) liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution), (iii) convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a series
of transactions, all or any substantial part of its business or assets, except
for (A) the sale of inventory in the ordinary course of business, whether now
owned or hereafter acquired, (B) the sale of obsolete machinery, parts,
equipment and other assets no longer used or useful in the conduct of the
Borrower’s business and (C) the sale of any other assets of the Borrower or the
Guarantor during any twelve (12) month period in an aggregate amount of up to
$50,000, (iv) acquire by purchase or otherwise all or substantially all of the
business or assets of, or stock or other evidence of beneficial ownership of,
any Person (other than the DeMinimis Public Investments) or the purchase of
inventory in the ordinary course of Borrower’s business, or (v) make any
material change in the nature of its business or in the methods by which it
conducts business.  Without limiting the
foregoing, the Borrower and the Guarantors shall not permit to occur any Change
of Control of the Borrower or any Guarantor.

 

7.5                               Creation of
Subsidiaries.  The Borrower shall not create or acquire any
Subsidiaries without the prior written consent of the Lender, which consent
shall not be unreasonably withheld, delayed or conditioned provided that any
such Subsidiaries become co-borrowers under the Loan Documents and the Lender
is granted first priority, perfected security interests in all of the ownership
interests in, and assets of, such Subsidiaries.  The Guarantors shall not create or acquire any Subsidiaries
(other than the Subsidiaries of SCC existing as of the date hereof) without the
prior written consent of the Lender, which consent may be withheld in the
Lender’s sole discretion.

 

7.6                               Loans or Advances. 
Neither the Borrower nor any Guarantor shall make loans or advances to
any Person (other than any distributions permitted hereunder to be made by the
Borrower to the Guarantors and/or by Pumpkin Holdings to SCC), except in the
ordinary course of their respective businesses.

 

7.7                               Investments. 
Neither the Borrower nor any Guarantor shall acquire or purchase the
securities of any Person; provided, however, that the Borrower and the
Guarantors may purchase: (i) U.S. government securities directly or pursuant to
repurchase agreements with (A) Affiliates of Banc One Corporation or (B) other
domestic banks having capital and surplus of at least One Hundred Million
Dollars ($100,000,000); (ii) certificates of deposit of (A) Affiliates of Banc
One Corporation or (B) other domestic banks having a capital and surplus of at
least One Hundred Million Dollars ($100,000,000); and (iii) commercial paper
rated A-1 or P-1 or an equivalent by Moody’s Investors Services, Inc. or
Standard & Poor’s Corporation, both of New York, New York, or their
successors if all of such investments have a maturity of one year or less, (iv)
money market funds all or substantially all of whose assets are invested in
investments permitted under clauses (i)-

 

28

 

(iii) above, (v) the DeMinimis
Public Investments, (vi) loans to employees and officers not to exceed in the
aggregate, at any one time outstanding, Fifty Thousand Dollars ($50,000) and
(vii) intercompany loans permitted under Section 7.1 (vii).  For the avoidance of doubt, it is agreed
that this Section 7.7 shall in no way prohibit or restrict the repurchase
or redemption of the Subordinated Note to the extent permitted by the
Intercreditor Agreement.

 

7.8                               Sale and Leaseback. 
Neither the Borrower nor any Guarantor shall enter into any agreement
with any lender or investor providing for the leasing of (i) real or personal
property which has been or is to be sold or transferred by the Borrower or any
Guarantor to such lender or investor or (ii) other real or personal property
intended to be used for substantially the same purpose as the property sold or
transferred by the Borrower or any Guarantor.

 

7.9                               Disposition of Assets. 
Neither the Borrower nor any Guarantor shall dispose of any of its
assets in any transaction or series or transactions other than those disposed
of in the ordinary course of business and except in connection with the
replacement of assets sold by like assets, or as otherwise permitted under
Section 7.4(iii); provided, however, that Pumpkin Holdings shall be
permitted to transfer, or cause to be issued, to one or more third party
investors, up to ten percent (10%) of the outstanding shares of common stock of
the Borrower, including, without limitation, transfers made pursuant to an
option plan, management or employee stock plan or similar agreement.

 

7.10                        Transactions with
Affiliates.  Except for the execution, delivery and
performance by the applicable parties of the Management Advisory Services
Agreement and each of the agreements listed on Schedule 7.10
attached hereto, neither the Borrower nor any Guarantor shall:  (i) enter into any transaction, including
without limitation, the purchase, sale or exchange of property or the rendering
of any services, with any Affiliate or any officer or director thereof, enter
into, assume or suffer to exist any employment or consulting contract with any
such Affiliate, except any transaction or contract which is in the ordinary
course of its business and which is upon fair and reasonable terms no less
favorable to it than it would obtain in a comparable arms-length transaction;
(ii) make any advance or loan to any Affiliate or any director or officer
thereof or to any trust of which any of the foregoing is a beneficiary, or to
any Person on the guaranty of any of the foregoing (other than permitted under
Sections 7.1 and 7.7); or (iii) pay any fees or expenses to, or reimburse or assume
any obligation for the reimbursement of any expenses incurred by, any Affiliate
or any officer or director thereof except as may be permitted in accordance
with the preceding clauses of this Section or the other Sections of this
Agreement and except for the reimbursement of reasonable expenses incurred in
connection with the provision of services by an officer, director or employee
of the Borrower or any Guarantor to such entity, including expenses for travel,
entertainment and similar items, in accordance with the reimbursement policies
of such Borrower or any Guarantor, as applicable.

 

7.11                        Annual Lease Payments.  Neither the Borrower nor Pumpkin Holdings shall enter into any
operating lease, as that term is construed according to GAAP, as lessee of real
property from another Person if, after giving effect thereto, the aggregate
amount of operating lease payments, exclusive of required insurance, tax or
maintenance payments, under such lease and all other operating leases of real
property in which the Borrower or Pumpkin Holdings is lessee would exceed in
any period of twelve (12) consecutive months the sum of (a) $200,000 plus (b)
the

 

29

 

amount of such operating lease
payments payable under operating leases of real property entered into prior to
the date hereof (including, without limitation, any scheduled increases in such
payments currently provided for in such leases) and replacements thereof
(provided that any rental thereunder that is greater than the amount provided
for in the replaced lease shall be counted against the amount permitted in
clause (a) hereof).  Neither the Borrower nor Pumpkin Holdings shall enter
into any operating lease, as that term is construed according to GAAP, as
lessee of personal property from another Person if, after giving effect
thereto, the aggregate amount of operating lease payments, exclusive of
required insurance, tax or maintenance payments, under such lease and all other
operating leases of personal property in which the Borrower or Pumpkin Holdings
is lessee would exceed $200,000 in any period of twelve (12) consecutive
months.

 

7.12                        Sale of Accounts. 
Neither the Borrower nor Pumpkin Holdings shall sell, assign or exchange
any of its Accounts (except (i) for purposes of facilitating the collection of
Accounts that have been written off by the Borrower in the ordinary course of
business in an aggregate amount not to exceed $50,000 during any 12-month
period, (ii) in connection with the collection of accounts receivable insurance
proceeds and (iii) the assignment of Accounts owed by Kmart pursuant to a
factoring or similar arrangement acceptable to the Lender in its reasonable
discretion) or notes receivable with or without recourse.

 

7.13                        Capital Expenditures. 
Neither the Borrower nor Pumpkin Holdings shall purchase, on a
consolidated basis, fixed or capital assets in an amount in excess of Four
Hundred Fifty Thousand Dollars ($450,000) in the aggregate in any one Fiscal
Year.

 

7.14                        Tangible Net Worth. 
The Borrower shall not permit its Tangible Net Worth to be less than the
amount listed in column (b) of this Section during the period listed
opposite such amount in column (a) of this Section:

 

	
  (a)

  	
   

  	
  (b)

  	
   

  
	
  During
  the period from

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2004 through December 31, 2004

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  Thereafter

  	
   

  	
  $

  	
  1,500,000

  	
   

  

 

7.15                        Debt Service Coverage
Ratio.  The Borrower shall not permit its Debt
Service Coverage Ratio based upon the most recent twelve (12) month period on a
rolling basis to be less than 1.20 to 1.00 at May 31, 2004 or at the end of any
fiscal month of the Borrower ending thereafter.

 

7.16                        Management Fees.  Except as otherwise permitted in this Section 7.16, the Borrower
shall not pay any management fees to SCC, Pumpkin Holdings or their respective Affiliates;
provided, however, that so long as no Event of Default has occurred and is
continuing (or would occur as a result of such payment), the Borrower may pay
management fees to SCC solely and strictly in accordance with the provisions of
the Management Advisory Services Agreement, in an aggregate amount not to
exceed with respect to any Fiscal Year the greater of (i) five percent (5.0%)
of the Borrower’s total consolidated EBITDA for such Fiscal Year and (ii)
$100,000.

 

30

 

7.17                        Dividends and Payments. 
Neither the Borrower nor any Guarantor shall declare or pay on, or make
any distribution to the stockholders of the Borrower or any Guarantor, in their
capacity as such stockholders, or purchase, redeem or otherwise acquire for
consideration any capital stock of the Borrower or any Guarantor of any
class.  Notwithstanding the foregoing,
the Borrower and/or Pumpkin Holdings shall be permitted to make distributions to
their respective stockholders (“Tax Distributions”) (a) in the minimum amount
necessary to enable such stockholders to pay income tax based on the highest
corporate rate and (b) with the prior written consent of the Lender (such
consent not to be unreasonably withheld) in lieu of taxes pursuant to and in
accordance with the terms of the Consolidated Income Tax Sharing Agreement,
dated as of May 17, 1996, by and between Possible Dreams, Ltd. and SCC, as
amended by the Joinder Agreement dated as of June 27, 1997 among SCC,
Pumpkin Holdings and the Borrower, or any successor agreement entered into
among such parties in accordance with the provisions of Section 7.20 (the
“Tax Sharing Agreement”) provided that (i) at the time of payment of any such
distribution under clause (a) or (b) no Event of Default shall have occurred
hereunder at any time; and (ii) the making of any such distribution shall not
cause the aggregate outstanding balance of the Revolving Credit Loans to exceed
the limits set forth in this Agreement or cause the Borrower to be out of compliance
with any covenant or other requirement or obligation contained herein.

 

7.18                        Prohibition of Change
in Fiscal Year.  Neither the Borrower, any Guarantor nor any
Subsidiary thereof shall change its Fiscal Year-end for accounting purposes
from December 31 of any year.

 

7.19                        Government Regulations. 
Neither the Borrower nor any Guarantor shall (a) be or become subject at
any time to any law, regulation or list of any government agency (including,
without limitation, the U.S. Office of Foreign Asset Control list) that
prohibits or limits the Lender from making any advance or extension of credit
to the Borrower or from otherwise conducting business with the Borrower or any
Guarantor, or (b) fail to provide documentary and other evidence of the Borrower’s
or any Guarantor’s identity, as applicable, as may be requested by the Lender
at any time to enable the Lender to verify the Borrower’s or any Guarantor’s
identity, as applicable, or to comply with any applicable law or regulation,
including, without limitation, Section 326 of the USA Patriot Act of 2001,
31 U.S.C. Section 5318.

 

7.20                        Amendment to Other
Documents.  Except as otherwise specifically provided in
the Intercreditor Agreement, the Borrower and the Guarantors shall not cause or
permit, directly or indirectly, any amendment, waiver, consent or modification
of the LaSalle Termination and Indemnification Agreement, Securities Purchase
Agreement, Subordinated Note, Tax Sharing Agreement, Management Advisory
Services Agreement or any other agreement, document or instrument contemplated
by, or executed in connection with, the Securities Purchase Agreement;
provided, however, that the foregoing shall not preclude any holder of the
Subordinated Note from waiving any default by SCC under the Securities Purchase
Agreement, the Subordinated Note or any related agreement, document or
instrument or from waiving compliance by SCC with any provisions of the
Securities Purchase Agreement, the Subordinated Note or any related agreement,
document or instrument.

 

31

 

ARTICLE 8.  EVENTS OF DEFAULT

 

8.1                               Event of Default. 
An “Event of Default” shall mean the occurrence of one or more of the
following described events:

 

(a)                                  The Borrower shall default in the
payment of any principal of the Revolving Credit Note or LOC Obligations when
the same shall become due, either by the terms thereof or otherwise as herein
provided;

 

(b)                                 The Borrower shall default in payment of
any Commitment Fee or any interest on the Revolving Credit Note or of any other
payment due the Lender under this Agreement or the LaSalle Termination and
Indemnification Agreement when the same shall become due, either by the terms
thereof or otherwise as herein or therein provided and such default continues
for a period of five (5) days;

 

(c)                                  The Borrower or any Guarantor shall
default (after the expiration of any applicable grace period) in the payment of
any amount due to Lender pursuant to the terms of any promissory note or other
instrument other than the Revolving Credit Note;

 

(d)                                 The Borrower or any Guarantor shall
default (after the expiration of any applicable grace period) in the
performance or observance of any covenant, condition or agreement contained in
the Guaranties, the Borrower Security Agreement, the Copyright Security
Agreement, the Copyright Collateral Agreement, the Guarantor Security
Agreements, the Pledge Agreements or any other security agreement or mortgage
entered into by the Borrower or any Guarantor for the benefit of the Lender;

 

(e)                                  The Borrower or any Guarantor shall
default in the payment of any Indebtedness in excess of $250,000 beyond any
period of grace provided with respect thereto, or the Borrower or any Guarantor
shall default in the performance of any agreement under which such Indebtedness
payment obligation is created if the effect of such default is to cause or
permit the holder or holders of such obligation (or a representative of such
holder or holders) to cause, such payment obligation to become due prior to its
date of maturity;

 

(f)                                    Any representation or warranty made by
the Borrower or any Guarantor herein, in any other Loan Document or in any
report, certificate or writing furnished in connection with or pursuant to this
Agreement shall be false or incorrect in any material respect on the date as of
which made;

 

(g)                                 The Borrower or any Guarantor shall
default in the performance or observation of any covenant, condition or
agreement in Sections 6.1, 6.12, 6.15, 6.16 or 6.17 or in Article 7
hereof;

 

(h)                                 The Borrower or any Guarantor shall
default in the performance or observation of any covenant, condition or
agreement made or required to be observed or performed by it under this
Agreement (other than those referred to in Sections 8.1(a), 8.1(b) or 8.1(g) of
this Agreement) and such default shall continue without cure for thirty (30)
days after written notice thereof shall have been given to the Borrower by the
Lender, or, in the

 

32

 

case of Sections 6.2, 6.3 and
6.4, such default shall continue without cure for ten (10) days (without any
required notice thereof);

 

(i)                                     The Borrower or any Guarantor shall make
an assignment for the benefit of creditors;

 

(j)                                     The Borrower or any Guarantor shall
petition or apply to any tribunal for the appointment of a trustee or receiver
of it, or of any substantial part of its assets, or commence any proceeding
relating to it under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction
whether now or hereafter in effect;

 

(k)                                  Any bankruptcy, insolvency, receivership
or similar petition or application is filed, or any proceedings are commenced
against the Borrower or any Guarantor and the Borrower or any Guarantor by any act
indicates its approval thereof, consent thereto, or acquiescence therein, or
any order is entered appointing a trustee or receiver, or adjudicating the
Borrower or any Guarantor bankrupt or insolvent, or approving the petition in
any such proceedings and such order remains unstayed or undischarged for more
than sixty (60) days; provided, however, that the Lender shall be under no
obligation to make Revolving Credit Loans or issue any Letters of Credit
hereunder during the period that such order is unstayed or undischarged;

 

(l)                                     Any order is entered in any proceedings
against the Borrower or any Guarantor decreeing the dissolution of the Borrower
or any Guarantor and such order remains unstayed or undischarged for more than
sixty (60) days; provided, however, that the Lender shall be under no
obligation to make Revolving Credit Loans or issue any Letters of Credit
hereunder during the period that such order is unstayed or undischarged;

 

(m)                               A final judgment or judgments for the
payment of money in excess of an aggregate of $150,000 shall be rendered
against the Borrower or any Guarantor and such judgment or judgments shall
remain undischarged for a period of sixty (60) consecutive days during which
the execution shall not be effectively stayed;

 

(n)                                 (i) Any Reportable Event or a Prohibited
Transaction shall occur with respect to any Plan; (ii) a notice of intent to
terminate a Plan under section 4041 of ERISA shall be filed; (iii) a
notice shall be received by the plan administrator of a Plan that the PBGC has
instituted proceedings to terminate a Plan or appoint a trustee to administer a
Plan; (iv) any other event or condition shall exist which might, in the opinion
of the Lender, constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; or (v)
the Borrower or any Guarantor or any ERISA Affiliate shall withdraw from a
Multiemployer Plan; provided, however, that none of the foregoing shall
constitute an Event of Default except under circumstances that the Lender
determines could reasonably be expected to have a Material Adverse Effect;

 

(o)                                 The operations of any facility
manufacturing or processing goods for sale by the Borrower are interrupted (i)
for more than ten (10) consecutive Business Days during the

 

33

 

period from April 1
through August 31, both inclusive, of any year, or (ii) at any other time
and such interruption is reasonably to likely have a Material Adverse Effect;

 

(p)                                 The occurrence of a Change of Control;

 

(q)                                 Any material term or provision of the
Intercreditor Agreement shall at any time and for any reason cease to be in
full force and effect or shall be declared null and void (other than by the
Lender), or the validity or enforceability thereof shall be contested by any
party thereto (other than the Lender), or any party thereto (other than the
Lender) shall deny it has any further liability or obligations under the
Intercreditor Agreement or any party thereto (other than the Lender) shall fail
to perform any of its obligations under the Intercreditor Agreement; or

 

(r)                                    There shall occur and be continuing any
“Event of Default” under or as defined in the Subordinated Note.

 

8.2                               Consequences of Event
of Default.

 

(a)                                  If any Event of Default specified under
Section 8.1, other than subsections (i) through (l) thereof, shall occur
and be continuing the Lender shall be under no further obligation to make
Revolving Credit Loans or issue any Letters of Credit hereunder and the Lender
may, by written notice to the Borrower, declare the unpaid balance of all
Commitment Fees and the principal and interest accrued on the Revolving Credit
Note and the LOC Obligations and all other obligations of the Borrower
hereunder and under the other Loan Documents to be forthwith due and payable,
and the same shall thereupon become immediately due and payable, without any
other or further presentment, demand, protest, notice of default, notice of
intent to accelerate or other notice of any kind, all of which are hereby
expressly waived.

 

(b)                                 If an Event of Default specified under
subsections (i) through (l), inclusive, of Section 8.1 shall occur, the
Lender shall be under no further obligation to make the Revolving Credit Loans
or to issue any Letters of Credit hereunder and the unpaid balance of all
Commitment Fees and the principal and interest accrued on the Revolving Credit
Note and the LOC Obligations and all other obligations of the Borrower
hereunder shall be immediately due and payable automatically without
presentment, demand, protest, notice of default, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which
are hereby expressly waived.

 

ARTICLE 9.  MISCELLANEOUS

 

9.1                               Notices. 
All notices, requests and demands to or upon the parties hereto to be
effective shall be in writing or by telecopy or telex and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or when sent by certified or registered mail, postage
prepaid, or, in the case of telecopy notice, when received, or in the case of
telegraphic notice, when delivered to the telegraph company, or in the case of
telex notice, when sent, answerback received, addressed as follows in the case
of the Borrower, the Guarantors and the Lender or to such address or other
address as may be hereafter notified by the parties hereto:

 

34

 

	
  The Borrower or the
  Guarantors:

  	
   

  	
  c/o Capital Partners, Inc.

  Three Pickwick Plaza

  Suite 310

  Greenwich, Connecticut 06830

  
	
   

  	
   

  	
  Attention:

  	
  Brian D. Fitzgerald

  
	
   

  	
   

  	
   

  	
  William P. Schlueter

  
	
   

  	
   

  	
  Facsimile:

  	
  (203) 625-0423

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with copies to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Pumpkin Ltd.

  1905 Sherman Street

  Denver, Colorado 80203

  Attention:  Ms.
  Gay Burke
Facsimile:  (303) 860-9826

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Morgan, Lewis & Bockius
  LLP

  101 Park Avenue

  New York, New York 10178

  Attention:  Christopher T. Jensen,
  Esq.

  Facsimile:  (212) 309-6273

  
	
   

  	
   

  	
   

  
	
  The Lender:

  	
   

  	
  Bank One, N.A.

  100 East Broad Street

  Columbus, Ohio 43271-0171

  
	
   

  	
   

  	
  Attention:

  	
  Mark S. Slayman,

  
	
   

  	
   

  	
   

  	
  First Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Squire, Sanders & Dempsey
  L.L.P.

  1300 Huntington Center

  41 South High Street

  Columbus, Ohio 43215

  Attention:  Anthony J. Sugar, Esq.

  Facsimile:  (614) 365-2499

  

 

Notwithstanding any other
provision hereof to the contrary, the Borrower and each Guarantor has appointed
SCC as its representative to receive and give all notices to or from such
Borrower or Guarantor as applicable, and the Lender shall have acted in
accordance with this Agreement in accepting notices from and giving notice to
SCC as being notices to or from such Borrower or Guarantor as applicable.

 

35

 

9.2                                     Term of Agreement;
Termination; Successors and Assigns.  This Agreement and all covenants,
agreements, representations and warranties made herein and in the reports,
certificates and other writings delivered pursuant hereto shall survive the
execution and delivery of this Agreement, the making by the Lender of each Revolving
Credit Loan and issuance of any Letters of Credit and the execution and
delivery to the Lender of the Revolving Credit Note and shall continue in full
force and effect until terminated.  The
representations of the Borrower and the Guarantors herein are made as of the
date of this Agreement.  This Agreement
shall terminate at such time as the Revolving Credit Commitment and all Letters
of Credit are terminated in full and the Lender has received payment in full of
all amounts owing to the Lender hereunder and under the Revolving Credit Note
and the LOC Obligations.  Whenever in
this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such parties; and all terms
and provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns,
whether so expressed or not; provided, however, that (i) neither the Borrower
nor any Guarantor may assign or transfer its rights or duties under this
Agreement to any Person without the prior written consent of the Lender and
(ii) the Lender may not assign, or participate, this Agreement or the Revolving
Credit Note to a direct competitor of the Borrower.

 

9.3                                     No Implied Rights or
Waivers.  No notice to or demand on the Borrower or
any Guarantor in any case shall entitle the Borrower or any Guarantor to any
other or further notice or demand in the same, similar and other circumstances.  Neither any failure nor any delay on the
part of the Lender in exercising any right, power or privilege hereunder or
under the Revolving Credit Note shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of
the same or the exercise of any other right, power or privilege.

 

9.4                                     Applicable Law. 
This Agreement, the Revolving Credit Note and the other Loan Documents
shall be deemed to be contracts made under and shall be construed in accordance
with and governed by the laws of the State of Ohio.

 

9.5                                     Modifications,
Amendments or Waivers.

 

(a)                                        The Lender, the Borrower and the
Guarantors may from time to time enter into written agreements amending or
changing any provision of this Agreement or the rights of the Lender or the
Borrower and the Guarantors hereunder or give waivers or consents to a
departure from the due performance of the obligations of the Borrower or the
Guarantors hereunder or under the Revolving Credit Note or any reimbursement
agreements related to Letters of Credit.

 

(b)                                       In the case of any such waiver or
consent relating to any provision hereof, the parties shall be restored to
their former positions and rights thereunder, and any Default or Event of
Default so waived or consented to shall be deemed to be cured and not
continuing; but no such waiver or consent shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.

 

9.6                                     Counterparts. 
This Agreement may be signed in any number of counterparts with the same
effect as if the signatures thereto were upon the same instrument.

 

36

 

9.7                                     Headings. 
The headings of the articles and sections of this Agreement are inserted
for convenience only and shall not be deemed to constitute a part hereof.

 

9.8                                     Expenses. 
The Borrower and the Guarantors shall pay or cause to be paid and save
the Lender harmless against liability for the payment of all reasonable
out-of-pocket expenses, including counsel fees and disbursements incurred or
paid by the Lender in connection with the negotiation, development, preparation
and execution of this Agreement, the Revolving Credit Note, the other Loan
Documents and the related transactions. 
The Borrower and the Guarantors shall pay or cause to be paid and save
the Lender harmless against liability for the payment of all reasonable
out-of-pocket expenses, including counsel fees and disbursements incurred or
paid by the Lender in connection with (i) any requested amendments, waivers or
consents pursuant to the provisions hereof and thereof; and (ii) the
enforcement of this Agreement, the Revolving Credit Note and the other Loan
Documents including such expenses as may be incurred by the Lender in
collection of the Revolving Credit Note and all obligations of the Borrower and
the Guarantors hereunder.

 

9.9                                     Accounting Terms. 
All accounting terms not specifically defined herein shall be construed
in accordance with GAAP.

 

9.10                              Severability. 
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or effecting the validity or enforceability of such
provisions in any other jurisdiction.

 

9.11                              Waiver of Jury Trial;
Consent to Venue.  The Lender, the Borrower and each of the
Guarantors, after having had the opportunity to consult with counsel,
knowingly, voluntarily, irrevocably, unconditionally and intentionally waive
any right to a trial by jury in any litigation based upon or arising out of
this Agreement or any related instrument or agreement, or any of the
transactions contemplated by this Agreement, or any course of conduct, dealing,
statements (whether oral or written) or actions of the Borrower, the Guarantors
or the Lender.  The Borrower and each of
the Guarantors shall not seek to consolidate, by counterclaim or otherwise, any
action in which a jury trial has been waived with any other action in which a
jury trial cannot be or has not been waived. 
In the event of a dispute under this Agreement, the Borrower and each of
the Guarantors hereby, jointly and severally, agree that jurisdiction and venue
lies in a court of competent jurisdiction in Franklin County, Ohio.  These provisions shall not be deemed to have
been modified in any respect or relinquished by the Lender except by a written
instrument executed by it.  This
provision is a material inducement to the Lender to enter into the transactions
described in this Agreement.

 

9.12                              Entire Agreement. 
This Agreement and the Exhibits hereto reflect the entire understanding
of the parties with respect to the subject matter hereof and supersede all
prior agreements or understandings with respect thereto in their entirety.

 

9.13                              Certificates, Etc. 
All certificates, reports and other writings submitted by the Borrower
or the Guarantors to the Lender hereunder shall constitute the representations
and warranties of the Borrower or the Guarantors to the Lender as to the truth
and accuracy of all facts,

 

37

 

calculations and other
information set forth therein, as though fully set forth and repeated in this
Agreement.

 

9.14                        USA Patriot Act
Notification.  The following notification is provided
to the Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31
U.S.C. Section 5318:

 

IMPORTANT INFORMATION ABOUT
PROCEDURES FOR OPENING A NEW ACCOUNT. 
To help the government fight the funding of terrorism and money
laundering activities, Federal law requires all financial institutions to
obtain, verify and record information that identifies each person or entity
that opens an account, including any deposit account, treasury management
account, loan, other extension of credit or other financial services
product.  What this means for the

 

38

 

Borrower:  When the Borrower opens an account, if the
Borrower is an individual, the Lender will ask for the Borrower’s name,
taxpayer identification number, residential address, date of birth and other
information that will allow the Lender to identify the Borrower, and if the
Borrower is not an individual, the Lender will ask for the Borrower’s name,
taxpayer identification number, business address and other information that
will allow the Lender to identify the Borrower.  The Lender may also ask, if the Borrower is an individual, to see
the Borrower’s driver’s license or other identifying documents, and if the
Borrower is not an individual, to see the Borrower’s legal organizational
documents or other identifying documents.

 

9.15                        Limitation on Recourse. 
Notwithstanding anything herein to the contrary, the Lender shall have
no recourse to any assets that are included in “Collateral” (as such term is
defined in the Cash Collateral Pledge Agreement).  The Lender shall not pursue any remedies against such assets,
whether by attachment, writ of execution or otherwise.

 

ARTICLE 10.  DEFINITIONS

 

The terms set forth and defined
in Exhibit H hereto shall, for the purposes of this Agreement, have the
meanings assigned to such terms as set forth in Exhibit H.

 

IN WITNESS WHEREOF, the
Borrower, the Guarantors and the Lender have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.

 

	
  LENDER:

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
  BANK ONE, N.A.,

  	
   

  	
  PUMPKIN LTD.,

  
	
    a national
  banking corporation

  	
   

  	
    a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark S. Slayman

  	
   

  	
  By:

  	
    /s/ Paul A.
  Miller

  
	
   

  	
  Mark S. Slayman, First Vice
  President

  	
   

  	
  Name:

  	
    Paul A. Miller

  
	
   

  	
   

  	
  Title:

  	
    Vice
  President

  
	
   

  	
   

  	
   

  
	
  GUARANTORS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PUMPKIN MASTERS HOLDINGS,
  INC.,

  	
   

  	
   

  
	
    a Delaware
  corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Paul A. Miller

  	
   

  	
   

  
	
  Name:

  	
   Paul A. Miller

  	
   

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  	
   

  
										

 

39

 

	
  SECURITY CAPITAL CORPORATION,

  	
   

  	
   

  
	
    a Delaware
  corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Paul A.
  Miller

  	
   

  	
   

  
	
  Name:

  	
   Paul A. Miller

  	
   

  	
   

  
	
  Title:

  	
    Vice President

  	
   

  	
   

  
						

 

40

 

EXHIBIT A

 

REVOLVING
CREDIT NOTE

 

	
   

  	
   

  	
  Columbus,
  Ohio

  
	
  $7,000,000

  	
   

  	
  June 11,
  2004

  

 

On or before May 31, 2006, for
value received, the undersigned (the “Borrower”) hereby promises to pay to the
order of Bank One, N.A., a national banking association with its principal
offices located in Columbus, Ohio (the “Lender”), or its assigns, as further
provided herein, the principal amount of Seven Million Dollars ($7,000,000) or,
if such principal is less, the aggregate unpaid principal amount of all
Revolving Credit Loans made by the Lender to the Borrower pursuant to the
Agreement (as referred to and defined in Section 1 hereof), together with
interest on the unpaid principal balance of all Revolving Credit Loans made
hereunder until paid in full at a fluctuating rate of interest and payable on
the dates as determined in accordance with Article 1 of the
Agreement.  Both principal and interest
are payable in federal funds or other immediately available money of the United
States of America at Bank One, N.A., 100 East Broad Street, Columbus, Ohio
43271-0171.

 

Section 1.                                          Loan Agreement. 
This Revolving Credit Note is the Revolving Credit Note referred to in
the Loan Agreement, dated as of June 11, 2004, by and among the Borrower,
Pumpkin Masters Holdings, Inc., a Delaware corporation and the sole stockholder
of the Borrower, Security Capital Corporation, a Delaware corporation, and the
Lender, as the same may be amended, modified or supplemented from time to time
(the “Agreement”), which Agreement is incorporated herein by reference.  All capitalized terms used herein shall have
the same meanings as are assigned to such terms in the Agreement.  This Revolving Credit Note is entitled to
the benefits of and is subject to the terms, conditions and provisions of the
Agreement.  The Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events, and also for repayments and reborrowings on
account of the principal hereof prior to maturity upon the terms, conditions
and provisions specified therein.

 

Section 2.                                          Endorsements. 
All Revolving Credit Loans made by the Lender to the Borrower pursuant
to the Agreement and all payments made on account of principal hereof shall be
recorded by the Lender; provided, however, that the failure of the Lender or
any holder to record as provided herein shall not limit or otherwise affect the
obligations of the Borrower hereunder or under the Agreement.

 

Section 3.                                          Setoff. 
Any and all moneys now or at any time hereafter owing to the Borrower
from the holder hereof are hereby pledged for the security of this and all
other Indebtedness from the Borrower to the holder hereof, and may, upon the
occurrence and during the continuance of any Event of Default, be paid and
applied thereon whether such Indebtedness be then due or is to become due.

 

Section 4.                                          Confession of Judgment. 
The undersigned hereby irrevocably authorizes an attorney-at-law to
appear for the undersigned in an action on this Revolving Credit Note at any
time after the same becomes due, whether by acceleration or otherwise, in any
court of record in or

 

A-1

 

of the State of Ohio, and to
waive the issuing and service of process against the undersigned and to confess
judgment in favor of the holder of this Revolving Credit Note against the
undersigned for the amount that may be due, with interest at the rate herein
mentioned and cost of suit, and to waive and release all errors in such
proceedings and judgment, and all petitions in error and rights of appeal from
the judgment rendered.  The foregoing
warrant of attorney shall survive any judgment, and, if any judgment be vacated
for any reason, the holder hereof nevertheless may thereafter use the foregoing
warrant of attorney to obtain an additional judgment or judgments against the
undersigned.

 

Section 5.                                          Limitation on Recourse. 
Notwithstanding anything herein to the contrary, the Lender shall have
no recourse to any assets that are included in “Collateral” (as such term is
defined in the Cash Collateral Pledge Agreement).  The Lender shall not pursue any remedies against such assets,
whether by attachment, writ of execution or otherwise.

 

 

WARNING - BY
SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.  IF YOU DO NOT PAY ON TIME A COURT JUDGMENT
MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT
CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST
THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO
COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

 

 

	
   

  	
   

  	
  PUMPKIN LTD., 

  
	
   

  	
   

  	
    a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Paul A.
  Miller

  
	
   

  	
   

  	
  Name:

  	
   Paul A. Miller

  
	
   

  	
   

  	
  Title:

  	
   Vice
  President

  
						

 

A-2

 

EXHIBIT B

 

BORROWER
SECURITY AGREEMENT

 

June 11,
2004

 

THIS SECURITY AGREEMENT (this
“Security Agreement”) is entered into as of the date set forth above by and
between PUMPKIN LTD., a Delaware corporation (the “Debtor” or “Borrower”), and
BANK ONE, N.A., a national banking association with its principal offices
located in Columbus, Ohio (the “Lender”).

 

Background

 

The following
is a mutual statement by the parties of certain factual matters which form the
basis of this Agreement.

 

A.                                    Loans. 
The Debtor, Pumpkin Masters Holdings, Inc., a Delaware corporation and
the sole stockholder of the Debtor, Security Capital Corporation, a Delaware
corporation, and the Lender have entered into a Loan Agreement of even date
herewith (the “Loan Agreement”) pursuant to which the Lender has agreed (i) to
lend to the Debtor the maximum sum of up to Seven Million Dollars ($7,000,000)
under a revolving line of credit (the “Revolving Credit Commitment”) and (ii)
to issue letters of credit in an aggregate maximum amount of One Million
Dollars ($1,000,000) (the “Letters of Credit”).  The Revolving Credit Commitment is evidenced by a promissory note
of the Debtor (the “Revolving Credit Note”). 
The borrowings under the Revolving Credit Commitment are sometimes
hereinafter referred to as the “Revolving Credit Loans”.  The (i) aggregate undrawn stated amount
under all Letters of Credit outstanding at any one time plus (ii) the aggregate
unpaid amount at such time of all obligations of the Debtor then outstanding to
reimburse the Lender for amounts paid by the Lender in respect of any one or
more drawings under any Letters of Credit are sometimes referred to as the “LOC
Obligations”.  Capitalized terms used in
this Security Agreement that are not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement.   

 

B.                                    Security Interest. 
The Lender is willing to make the Revolving Credit Loans to the Debtor
and to issue the Letters of Credit upon the condition that the Debtor grant to
and create in favor of the Lender security interests in certain property of the
Debtor as security for (i) the payment of the Revolving Credit Note and the LOC
Obligations, (ii) the payment of all amounts owing pursuant to this Security
Agreement, the Loan Agreement and the other Loan Documents, and (iii) the
performance by the Debtor of, and compliance with, all of the terms, covenants,
conditions, stipulations and agreements contained in this Security Agreement,
the Loan Agreement, the Revolving Credit Note and the other Loan Documents,
(iv) the repayment of (a) any amounts the Lender may advance or spend for the
maintenance or preservation of the Collateral (as defined hereinafter) and (b)
any other expenditures that the Lender may make under the provisions of this
Security Agreement or for the benefit of the Debtor, (v) all amounts owed under
any modification, renewals or extensions of any of the foregoing obligations,
(vi) any and all obligations, contingent or otherwise, whether now existing or
hereafter arising, of the Debtor to the Lender arising under or in connection
with any Rate Management Transaction, and (vii) any of the foregoing that
arises

 

B-1

 

after the filing of a petition
by or against the Debtor under the Bankruptcy Code, even if the obligations do
not accrue because of the automatic stay under Bankruptcy Code §362 or
otherwise (collectively, the “Secured Obligations”).

 

Statement of
Agreement

 

For and in consideration of the
Revolving Credit Loans made by the Lender to the Debtor and the issuance of the
Letters of Credit by the Lender, and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:

 

Section 1.                                          Creation of Security
Interests.  As security for the Secured Obligations, the
Debtor hereby agrees that there now are or shall be duly executed and filed or
recorded in all appropriate offices all documents necessary to grant and create
in favor of the Lender a perfected security interest under the Uniform
Commercial Code in and to the following, whether now owned or hereafter
acquired by the Debtor, which security interest is hereby granted:

 

(i)                                     All Accounts of the Debtor;

 

(ii)                                  All Chattel Paper (electronic and
tangible) and contract rights of the Debtor;

 

(iii)                               All General Intangibles of the Debtor;

 

(iv)                              All Instruments of the Debtor including
promissory notes;

 

(v)                                 All machinery, Equipment, Goods,
Consumer Goods, Software embedded in Goods, Goods covered by Documents,
furniture, Fixtures and personal property of the Debtor including motor
vehicles;

 

(vi)                              All Inventory of the Debtor;

 

(vii)                           All of the Debtor’s Deposit Accounts
(general or special) with and credits and other claims against the Lender;

 

(viii)                        All Investment Property of the Debtor:

 

(ix)                                All security interests held by the
Debtor;

 

(x)                                   All Documents of the Debtor;

 

(xi)                                All Letter of Credit Rights of the
Debtor;

 

(xii)                             All Supporting Obligations of the
Debtor;

 

(xiii)                          All insurance Proceeds of or relating to
any of the foregoing;

 

(xiv)                         All Accessions and additions to,
substitutions for, and replacements of any of the foregoing; and

 

B-2

 

(xv)                            All Cash and Non-cash Proceeds of the
foregoing, including without limitation the Proceeds in the Collateral Accounts
(as defined hereinafter);

 

Any term used in the Uniform
Commercial Code as adopted in the State of Ohio and not defined in this
Security Agreement has the same meaning as in the Uniform Commercial Code as
adopted in the State of Ohio.  The property
described in this Section 1 is hereinafter collectively referred to as the
“Collateral.”

 

Anything contained herein to
the contrary notwithstanding, the Collateral shall not include any interest of
the Debtor in any contract, license, permit or similar general intangible if
the granting of a security interest therein is prohibited by, or would cause a
termination of all or any material rights of the Debtor under, the terms of the
written agreement creating or evidencing such contract, license, permit or
similar intangible; provided, further, that, notwithstanding anything set forth
in the proviso set forth above to the contrary, to the extent not prohibited by
law, the Lender shall at all times have a security interest in all right of the
Debtor to payments of money due or to become due under any such contract,
license, permit or similar general intangible, and all proceeds thereof, and,
if and when the prohibition which prevents the granting of a security interest
in such property (or would cause such termination) is removed, terminated or
otherwise becomes unenforceable as a matter of law, the Lender will be deemed
to have, and at all times to have had, a security interest in such property and
the Collateral, to the fullest extent permitted by applicable law, will be deemed
to include, and at all times to have included, such property.  

 

Section 2.                                          Lender Has Rights and
Remedies of a Secured Party.  In addition to all rights and
remedies given to the Lender by this Security Agreement, the Lender shall have
all the rights and remedies of a secured party under the Uniform Commercial
Code.

 

Section 3.                                          Provisions Applicable
to the Collateral.  The parties agree that the following
provisions shall be applicable to the Collateral during the term of this
Security Agreement:

 

(a)                                  Chief Executive
Offices; Books and Records.

 

(i)                                     The Debtor shall keep accurate and
complete books and records concerning the Collateral.

 

(ii)                                  The Debtor represents and warrants that,
as of the date hereof, its chief executive office is located at 1905 Sherman
Street, Denver, Colorado 80203.  The
Debtor shall not move its chief executive office except to such new location as
it may establish in accordance with paragraph (v) below.

 

(iii)                               The Debtor represents and warrants that
it is incorporated in the State of Delaware, that its exact legal name is as
set forth in the preamble to this Security Agreement and that its
organizational or charter number is 2761734.

 

(iv)                              The only original books of account and
records of the Debtor relating to all Accounts of the Debtor are, and shall
continue to be, kept at its chief executive

 

B-3

 

office.  The location where such books of account and
records are kept shall not be changed except in accordance with paragraph (v) below.

 

(v)                                 The Debtor shall not establish any new
location for its chief executive office or for the place where such books of
account and records are kept until (A) it shall have given to the Lender
written notice of its intention to do so, clearly describing each such new
location and providing such other information in connection therewith as the
Lender may reasonably request, and (B) with respect to each such new location,
it shall have taken such action, satisfactory to the Lender (including without limitation
all action required by Section 4 hereof) as may be necessary to maintain
the security interest of the Lender in the Accounts granted hereunder at all
times fully perfected and in full force and effect.

 

(vi)                              The Debtor will preserve its corporate existence
and not, in one transaction or a series of related transactions, merge into or
consolidate with any other entity, or sell all or substantially all of its
assets without the prior written consent of the Lender.

 

(vii)                           The Debtor shall not change its state of
incorporation, its organizational or charter number or its legal name without
thirty (30) days prior written consent of the Lender.

 

(viii)                        The Debtor shall not invoice an account
debtor or maintain its records relating to any Account in any name other than
its own proper corporate name.

 

(b)                                  Inspection. 
Upon reasonable prior notice to the Debtor, the Lender shall have the
right to review the books and records of the Debtor concerning the Collateral
and to copy the same and make excerpts therefrom, and to inspect the
Collateral, at all times during regular business hours, so long as such
inspections do not unreasonably interfere with or impede the operations of the
Debtor.

 

(c)                                  Debtor’s Right to
Collect Accounts.  Notwithstanding the security interest in the
Accounts granted hereunder, the Debtor shall have the right to collect its
Accounts at its own cost and expense until such time as the Lender shall have
notified the Debtor pursuant to paragraph (e) below that it has revoked such
right.

 

(d)                                  Cash Collateral
Accounts.  If any Event of Default shall occur and be
continuing, the Lender shall have the right after notice to the Debtor to cause
to be opened and maintained with the Lender one or more non-interest bearing
bank accounts in the name of the Debtor as cash collateral accounts (herein
called “Collateral Accounts”).  Upon
receipt of notice by the Debtor from the Lender that one or more Collateral
Accounts have been opened for the Debtor pursuant to this paragraph, the Debtor
shall cause all cash Proceeds collected by it to be delivered to the Lender
forthwith upon receipt, in the original form in which received, bearing such
endorsements or assignments by the Debtor as may be necessary to permit
collection thereof by the Lender, and for such purpose the Debtor hereby
irrevocably authorizes and empowers the officers and employees of the Lender to

 

B-4

 

endorse and sign the name of
the Debtor on all checks, drafts, money orders or other media of payment so
delivered to it and such endorsements or assignments shall, for all purposes,
be deemed to have been made by the Debtor prior to any endorsement or
assignment thereof by the Lender.  The
Lender may use any convenient or customary means for the purpose of collecting
such checks, drafts, money orders or other media of payment.  Monies in the Collateral Accounts shall be
used by the Lender to reduce the Debtor’s obligations under the Revolving
Credit Note, the Loan Agreement and this Security Agreement.  At such time as the Secured Obligations are
paid in full, the requirement that cash Proceeds be delivered to the Lender
shall terminate.

 

(e)                                  Collection of Accounts
by Lender.  If any Event of Default shall occur and be
continuing, the Lender shall have the right at any time (i) to revoke the right
of the Debtor to collect its Accounts pursuant to paragraph (c) above by
written notice to the Debtor to such effect, (ii) to take over and direct
collection of the Accounts of the Debtor, (iii) to give notice of the Lender’s
security interest in the Accounts to any or all of the account debtors or
makers obligated to the Debtor thereon, (iv) to direct such account debtors to
make payment of the Accounts directly to the Lender (and at the request of the
Lender the Debtor shall indicate on all billings to account debtors that
payments thereon are to be made to the Lender), and (v) to take control of the
Accounts of the Debtor and the Proceeds thereof and to take possession of all
of the Debtor’s books and records relating thereto, with full power and
authority in the name of the Lender or of the Debtor to enforce, collect, sue
for, receive, compromise, settle and receipt for any and all of the
Accounts.  If any Account becomes
evidenced by a promissory note or other instrument for the payment of money,
the Debtor shall at the Lender’s request deliver any such instrument to the
Lender duly endorsed to the order of the Lender as additional Collateral under
this Security Agreement.  It is
understood and agreed by the Debtor that the Lender shall have no liability
whatsoever to the Debtor under this paragraph (e) except for its own gross
negligence or willful misconduct.

 

(f)                                    Funds in Collateral
Accounts; Control.  All cash Proceeds received by the Lender
from the Debtor pursuant to paragraph (d) above or by the Lender directly from
account debtors pursuant to paragraph (e) above shall be deposited in the
Lender’s Collateral Account as further security for the Secured
Obligations.  The Lender shall have sole
dominion and control over all funds deposited in each Collateral Account and
such funds may be withdrawn therefrom only by or at the direction of the
Lender.

 

(g)                                 Account Verification. 
If an Event of Default shall occur and be continuing, the Lender may,
without notice to the Debtor, verify with any account debtor of the Debtor the
status of any accounts payable by such account debtor.  The Debtor from time to time shall execute
and deliver such instruments and take all such action as the Lender may
reasonably request in order to effectuate the purpose of this paragraph (g).

 

(h)                                 Notice of Adverse
Change.  The Debtor shall immediately notify the
Lender of any material adverse change of which it has knowledge which is
reasonably likely to affect the ultimate collectibility of any Account in
excess of One Hundred Thousand Dollars ($100,000).

 

B-5

 

(i)                                    Location of Tangible
Personal Property.  The Debtor represents and warrants that with
respect to the items of tangible personal property described in clauses (v) and
(vi) of Section 1 of this Security Agreement, all of such property, as of
the date hereof, is located as specified in Exhibit A attached
hereto.  The Debtor shall not retain any
property at any location, other than those specified in Exhibit A,
unless prior to moving any property to such a location, the Debtor will have
given five (5) Business Days notice to the Lender.  

 

(j)                                    Sale of Assets. 
Notwithstanding the security interest in the Debtor’s property granted hereunder,
the Debtor shall have the right to sell or otherwise dispose of Collateral to
the extent permitted under Section 7.9 of the Loan Agreement, free and
clear of such security interest, but in such event such security interest shall
continue in the Proceeds of such sales.

 

Section 4.                                          Preservation and
Protection of Security Interests.  The Debtor shall faithfully
preserve and protect the Lender’s security interest in its Collateral and
shall, at its own cost and expense, cause such security interest to be
perfected and continued perfected so long as the Secured Obligations or any
portion thereof is outstanding and unpaid, and for such purpose the Debtor
shall from time to time at the request of the Lender file or record, or cause
to be filed or recorded, such instruments, documents and notices, including
without limitation, financing statements and continuation statements, as the
Lender may deem necessary or advisable from time to time in order to perfect
and continue perfected said security interests.  The Debtor shall do all such other acts and things and shall
execute and deliver all such other instruments and documents, including without
limitation further security agreements, pledges, endorsements, assignments and
notices, as the Lender may deem reasonably necessary or advisable from time to
time in order to perfect and preserve the priority of said security interest as
a perfected first lien security interest in the Collateral prior to the rights
of any other secured party or lien creditor except as otherwise permitted
herein or in the Loan Agreement.  The
Lender, and its officers, employees and authorized agents, or any of them, are
hereby irrevocably appointed the attorneys-in-fact of the Debtor to execute financing
statements or continuation statements without the Debtor’s signature appearing
thereon.

 

Section 5.                                          Application of Moneys. 
Except as otherwise provided herein, if any Event of Default shall occur
and be continuing, all moneys in all Collateral Accounts and all moneys which
the Lender shall receive upon realization of any and all Collateral may be
applied by or at the direction of the Lender in the following manner:

 

(a)                                  First, to the payment or reimbursement
of all reasonable advances, expenses and disbursements of the Lender
(including, without limitation, the reasonable fees and disbursements of its
counsel and agents) incurred in connection with the administration and
enforcement of, or the preservation of any rights under, this Security
Agreement or the Loan Agreement or in the collection of the obligations of the
Debtor under the Revolving Credit Note; and

 

(b)                                 Second, to be applied in any manner
desired by the Lender to the satisfaction of the Secured Obligations.

 

B-6

 

Section 6.                                          Certain Representations
and Covenants.  The Debtor agrees, subject to its right as
provided in paragraph (c) of Section 3 hereof, from and after the date of
this Security Agreement and until payment in full of the Secured Obligations,
as follows:

 

(a)                                  Title and Liens. 
It has and will have good and marketable title to the Collateral from
time to time owned or acquired by it, free and clear of all liens,
encumbrances, pledges and security interests, except such as have been granted
to the Lender and such as have not been prohibited pursuant to Section 7.2
of the Loan Agreement; and the security interests of the Lender in the
Collateral are perfected lien security interests, prior to the rights of any
other secured party or lien creditor except as permitted by Section 7.2 of
the Loan Agreement.  The Debtor shall
defend its title to the Collateral against the claims and demands of all
persons whomsoever.

 

(b)                                  Negative Pledge. 
It shall not, without the prior written consent of the Lender, (i) sell,
assign or transfer any Accounts except as otherwise permitted pursuant to
Section 7.9 of the Loan Agreement, (ii) grant or create or permit to exist
any lien, encumbrance, pledge or security interest on, or in any of the
Collateral or any other personal property, real property or fixtures of the
Debtor except such as have not been prohibited pursuant to Section 7.2 of
the Loan Agreement, (iii) permit any levy or attachment to be made against any
of the Collateral that remains undischarged or unremoved for more than sixty (60)
days, or (iv) file any financing statement with respect to any of the
Collateral, except financing statements in favor of the Lender or by lessors
under true leases of personal property and similar protective filings that do
not secure indebtedness for borrowed funds, and except such as have not been
prohibited pursuant to Section 7.2 of the Loan Agreement.

 

(c)                                  Risk of Loss; Insurance. 
Risk of loss of, damage to, or destruction of, the Collateral is on the
Debtor to the extent that the Debtor now or hereafter owns or acquires such
Collateral.  If the Debtor fails to
effect and keep in full force and effect insurance covering the Collateral in
such amounts, on such terms and to such extent as is commercially customary and
reasonable for such Collateral, or fails to pay the premiums thereon when due,
the Lender may do so for the account of the Debtor and add the cost thereof to
the Secured Obligations.  The Debtor
hereby assigns and sets over unto the Lender all moneys which may become
payable on account of such insurance, including without limitation any return
or unearned premiums which may be due upon cancellation of any such insurance,
and directs the insurers to pay the Lender any amount so due; provided,
however, that in the event that an Event of Default (as defined hereinafter)
has not occurred and is not then continuing, the Debtor shall be entitled to
retain and use such insurance proceeds to repair and replace any and all
damaged or destroyed machinery, Equipment, furniture, fixtures, inventory and
other personal property of Debtor with respect to which such insurance proceeds
relate.  The Lender, its officers,
employees and authorized agents are hereby irrevocably appointed the
attorneys-in-fact of the Debtor to endorse any draft or check which may be
payable to the Debtor in order to collect the proceeds of such insurance or any
return of unearned premiums.  Any
balance of insurance proceeds remaining in the possession of the Lender after
payment in full of the Secured Obligations shall be paid to the Debtor or its
order.  

 

B-7

 

(d)                                  Maintenance of
Machinery and Equipment.  The Debtor agrees that it will maintain the
machinery and equipment which comprises part of the Collateral in good
condition, reasonable wear and tear alone excepted, and will pay and discharge
all taxes, levies and other impositions levied thereon (except such thereof as
are being contested in good faith by appropriate proceedings diligently
conducted) as well as the cost of repairs to or maintenance of the same.  If the Debtor fails to do so, the Lender may
pay such taxes, levies or impositions and the cost of such repairs or
maintenance for the account of the Debtor and add the amount thereof to the
Secured Obligations.  

 

(e)                                  Care of Collateral by
Lender.  The Lender shall be deemed to have exercised
reasonable care in the custody and preservation of such of the Collateral as
may be in the Lender’s possession if the Lender takes such action for that
purpose as the Debtor shall request in writing, provided that such requested
action shall not, in the judgment of the Lender, impair the Lender’s security
interest in such Collateral or its rights in, or the value of, such Collateral,
and provided further that such written request is received by the Lender in
sufficient time to permit the Lender to take the requested action.  

 

Section 7.                                          Events of Default. 
If any one or more of the following events (each an “Event of Default”)
shall occur and be continuing:

 

(a)                                  The Debtor shall default in the due
observation or performance of any of the covenants or agreements of the Debtor
contained in Sections 1, 4 or 6(b) of this Security Agreement; or

 

(b)                                 The Debtor shall default in the due
observance or performance of any of the covenants or agreements of the Debtor
(other than those referred to in Section 7(a) hereof) and such default
shall continue without cure for thirty (30) days after written notice thereof
shall have been given to the Debtor by the Lender; or

 

(c)                                  An Event of Default (as that term is
defined in the Loan Agreement) shall occur and be continuing;

 

then in any such event, the
Lender shall have such rights and remedies in respect of the Collateral or any
part thereof as are provided by the Uniform Commercial Code and such other rights
and remedies in respect thereof which it may have at law or in equity or under
this Security Agreement, including without limitation the right to enter any
premises where any Collateral is located and take possession of the same
without demand or notice and without prior judicial hearing or legal
proceedings, which the Debtor hereby expressly waives, and to sell all or any
portion of the Collateral at public or private sale without prior notice to the
Debtor except as otherwise required by law (and if notice is required by law,
after ten days’ prior written notice) at such place or places and at such time
or times and in such manner and upon such terms, whether for cash or on credit,
as the Lender in its sole discretion may determine.  Upon any such sale of any of the Collateral, the Lender may, to
the extent permitted by applicable law, purchase all or any of the Collateral
being sold, free from any equity or right of redemption.  The Lender shall apply the proceeds of any
such sale and any proceeds received by the Lender from the collection of
Accounts and Proceeds to the

 

B-8

 

obligations of the Debtor as
provided in Section 5 hereof.  If
such proceeds are insufficient to pay the amounts required by law, the Debtor
shall be liable for any deficiency in the amount so realized from the
Collateral.

 

In addition, in any such event,
the Debtor shall promptly upon demand by the Lender assemble the Collateral and
make it available to the Lender at a place to be designated by the Lender which
shall be reasonably convenient to the Lender and the Debtor.  The right of the Lender under this
Section to have the Collateral assembled and made available to it is of
the essence of this Security Agreement and the Lender may, at its election,
enforce such right by a bill in equity for specific performance.

 

The Debtor, to the extent that
it has any right, title or interest in any of the Collateral, waives and
releases any right to require the Lender to collect any of the Secured
Obligations from any other of the Collateral under any theory of marshalling of
assets, or otherwise, and specifically authorizes the Lender to apply any of
the Collateral against any of the Secured Obligations in any manner that the
Lender may determine.

 

Section 8.                                          Amendments, Waivers. 
The provisions of this Security Agreement may from time to time be
waived, modified or amended only by a writing signed by each of the parties
hereto.

 

Section 9.                                          Defeasance. 
Upon payment in full of the Secured Obligations, this Security Agreement
shall terminate and be of no further force and effect; and in such event, the
Lender shall, at the expense of the Debtor, redeliver and reassign the
Collateral to the Debtor and take all action necessary to terminate the security
interests of the Lender in the Collateral. 
Until such time, however, this Security Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.

 

Section 10.                                   Miscellaneous.

 

10.1                        Notices. 
All notices, requests and demands to or upon the parties hereto to be
effective shall be in writing and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered in accordance
with the provisions of Section 9.1 of the Loan Agreement.

 

10.2                        No Implied Rights or
Waivers.  No notice to or demand on the Debtor in any
case shall entitle the Debtor to any other or further notice or demand in the
same, similar and other circumstances. 
Neither any failure nor any delay on the part of the Lender in
exercising any right, power or privilege hereunder or under the Loan Agreement
or the Revolving Credit Note shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of
the same or the exercise of any other right, power or privilege.

 

10.3                        Applicable Law. 
This Security Agreement, the Loan Agreement and the Revolving Credit
Note shall be deemed to be contracts made under and shall be construed in
accordance with and governed by the laws of the State of Ohio without giving
effect to its choice of law provisions.

 

B-9

 

10.4                        Counterparts. 
This Security Agreement may be signed in any number of counterparts with
the same effect as if the signatures thereto were upon the same instrument.

 

10.5                        Headings. 
The headings of this Security Agreement are inserted for convenience
only and shall not be deemed to constitute a part hereof.

 

10.6                        Severability. 
Any provision of this Security Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or effecting the validity or
enforceability of such provisions in any other jurisdiction.

 

10.7                        Assignment. 
This Security Agreement shall bind and inure to the benefit of any
successor or assign of the Lender and if any such assignment is made, the
Debtor shall render performance under this Security Agreement to the
assignee.  The Debtor may not assign its
rights or obligations under this Security Agreement.

 

10.8                        Entire Agreement. 
This Security Agreement and Exhibit A hereto reflect the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements or understandings with respect thereto in their
entirety.

 

B-10

 

IN WITNESS WHEREOF, the parties
hereto, by their officers thereunto duly authorized, have executed and
delivered this Security Agreement the day and year first above written.

 

	
  LENDER:

  	
   

  	
  DEBTOR:

  
	
   

  	
   

  	
   

  
	
  BANK ONE, N.A.

  	
   

  	
  PUMPKIN LTD.,

  
	
   

  	
   

  	
    a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Mark S. Slayman

  	
   

  	
  By:

  	
  /s/ Paul A. Miller

  
	
   

  	
  Mark S. Slayman, First Vice
  President

  	
   

  	
  Name:

  	
  Paul A. Miller

  
	
   

  	
   

  	
  Title:

  	
    Vice President

  
							

 

B-11

 

EXHIBIT A

 

Locations of
Tangible Personal Property

 

	
  1.

  	
  Pumpkin Ltd.

  
	
   

  	
  1905 Sherman Street

  
	
   

  	
  Denver, CO 80203

  
	
   

  	
   

  
	
  2.

  	
  Lawrence Paper Company
  (aka:  Packaging Cafe)

  
	
   

  	
  2400 Lakeview Road

  
	
   

  	
  Lawrence KS 66044

  
	
   

  	
   

  
	
  3.

  	
  Advances Surface Technologies
  (aka:  Front Range)

  
	
   

  	
  6155 W. 54th Avenue

  
	
   

  	
  Arvada, CO 80002

  
	
   

  	
   

  
	
  4.

  	
  T-PlasTech Corporation

  
	
   

  	
  2700 S. Raritan Street

  
	
   

  	
  Englewood, CO 80110

  

 

Paper stock is occasionally
stored (when purchased prior to pattern book production to minimize cost
increases in materials) at:

 

	
  5.

  	
  Sterling Graphics, Inc.

  
	
   

  	
  49 Sherwood Terrace

  
	
   

  	
  Suite L

  
	
   

  	
  Lake Bluff, IL 60044

  

 

A small amount of raw materials
are located at our manufacturer in China at:

 

	
  6.

  	
  Wenlly’s Enterprises, Inc.

  
	
   

  	
  Rm. 302, Police Quarters

  
	
   

  	
  Zhongdeng Village, Beizha
  Humen

  
	
   

  	
  Dongguan City, Guangdong

  
	
   

  	
  China, PC

  

 

B-12

 

EXHIBIT C

 

SECURITY
AGREEMENT

RE:  PATENTS TRADEMARKS AND COPYRIGHTS

 

THIS SECURITY AGREEMENT RE:
PATENTS, TRADEMARKS AND COPYRIGHTS (the “Agreement”) is made and entered into
as of June 11, 2004 by and between PUMPKIN LTD., a Delaware corporation,
with a mailing address at 1905 Sherman Street, Denver, Colorado 80203 (the
“Debtor”), and BANK ONE, N.A, a national banking association with a mailing
address at 100 East Broad Street, Columbus, Ohio 43271-0171 (the “Lender”).

 

Background

 

The following
is a mutual statement by the parties of certain factual matters which form the
basis of this Agreement.

 

A.                                    Loans. 
The Debtor, Pumpkin Masters Holdings, Inc., a Delaware corporation and
the sole stockholder of the Debtor, Security Capital Corporation, a Delaware
corporation, and the Lender have entered into a Loan Agreement of even date
herewith (the “Loan Agreement”) pursuant to which the Lender has agreed (i) to
lend to the Debtor the maximum sum of up to Seven Million Dollars ($7,000,000)
under a revolving line of credit (the “Revolving Credit Commitment”) and (ii)
to issue letters of credit in an aggregate maximum amount of One Million
Dollars ($1,000,000) (the “Letters of Credit”).  The Revolving Credit Commitment is evidenced by a promissory note
(the “Revolving Credit Note”) of the Debtor. 
The borrowings under the Revolving Credit Commitment are sometimes
hereinafter referred to as the “Revolving Credit Loans”.  The (i) aggregate undrawn stated amount
under all Letters of Credit outstanding at any one time plus (ii) the aggregate
unpaid amount at such time of all obligations of the Debtor then outstanding
under and in connection with any Letters of Credit to reimburse the Lender for
amounts paid by the Lender in respect of any one or more drawings under any
Letters of Credit is sometimes referred to as the “LOC Obligations”.  Capitalized terms used in this Agreement
that are not otherwise defined herein shall have the meanings ascribed to them
in the Loan Agreement.   

 

B.                                    Security Interest. 
The Lender is willing to make the Revolving Credit Loans to the Debtor
and to issue the Letters of Credit upon the condition that the Debtor grant to
and create in favor of the Lender security interests in certain property of the
Debtor as security for (i) the payment of the Revolving Credit Note and the LOC
Obligations, (ii) the payment of all amounts owing pursuant to this Agreement,
the Loan Agreement and the other Loan Documents, and (iii) the performance by
the Debtor of, and compliance with, all of the terms, covenants, conditions,
stipulations and agreements contained in this Agreement, the Loan Agreement,
the Revolving Credit Note and the other Loan Documents, (iv) the repayment of
(a) any amounts the Lender may advance or spend for the maintenance or
preservation of the Collateral (as defined hereinafter) and (b) any other
expenditures that the Lender may make under the provisions of this Agreement or
for the benefit of the Debtor, (v) all amounts owed under any modification,
renewals or extensions of any of the foregoing obligations, (vi) any and all
obligations, contingent or otherwise, whether now existing or hereafter
arising, of the Debtor to the Lender arising under or in connection with any
Rate Management Transaction, and (vii) any of the foregoing that arises after
the filing of a petition

 

C-1

 

by or against the Debtor under
the Bankruptcy Code, even if the obligations do not accrue because of the
automatic stay under Bankruptcy Code §362 or otherwise (collectively, the
“Secured Obligations”).  The Debtor has
determined that the execution and delivery of this Agreement is in furtherance
of its corporate purposes and in its best interest and that it will derive
substantial benefit, whether directly or indirectly, from the execution of this
Agreement, having regard for all relevant facts and circumstances.

 

Statement of
Agreement

 

For and in consideration of the
Revolving Credit Loans made by the Lender to the Debtor and the issuance of the
Letters of Credit by the Lender, and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:

 

Section 1.                                          Grant of Security
Interest in the Collateral; Obligations Secured.  (a) The Debtor hereby pledges and grants to the Lender a security
interest in, and acknowledges and agrees that the Lender has and shall continue
to have a continuing security interest in, any and all right, title and
interest of the Debtor, whether now existing or hereafter acquired or arising,
in and to the following:

 

(i)                                    Patents.  Patents, whether now owned or hereafter acquired, or in which Debtor
now has or hereafter acquires any rights (the term “Patent”  means and includes (A) all letters patent
of the United States of America or any other country or any political
subdivision thereof, now existing or hereafter acquired, all registrations and
recordings thereof, and all applications for letters patent of the United
States of America or any other country or any political subdivision thereof,
now existing or hereafter acquired, including without limitation registrations,
recordings and applications therefor in the United States Patent and Trademark
Office or any other country or any political subdivision thereof and (B) all
reissues, continuations, continuations-in-part or extensions thereof), including
without limitation each Patent listed on Schedule A-1 hereto, and
all of the inventions now or hereafter described and claimed in the Debtor’s
Patents;

 

(ii)                                Patent Licenses.  Patent Licenses, whether now owned or hereafter acquired, or in which
the Debtor now has or hereafter acquires any rights (the term “Patent Licenses”  means and includes any written agreement
granting to any person any right to exploit, use or practice any invention on
which a Patent is owned by another person), including without limitation each
Patent License listed on Schedule A-2 hereto, and all royalties and
other sums due or to become due under or in respect of the Debtor’s Patent
Licenses, together with the right to sue for and collect all such royalties and
other sums;

 

(iii)                            Trademarks.  Trademarks, whether now owned or hereafter acquired, or in which the
Debtor now has or hereafter acquires any rights (the term “Trademarks”  means and includes (A) all trademarks,
trade names, trade styles, service marks and logos, all prints and labels on
which said trademarks, trade names, trade styles, service marks and logos have
appeared or appear and all

 

C-2

 

designs and general intangibles
of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including without limitation registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any state thereof or any
other country or any political subdivision thereof and (B) all renewals
thereof), including without limitation each Trademark application and
registration listed on Schedule B-1 hereto, and all of the goodwill
of the business connected with the use of, and symbolized by, each Trademark; 

 

(iv)                               Trademark Licenses.  Trademark Licenses, whether now owned or hereafter acquired, or in
which the Debtor now has or hereafter acquires any rights (the term “Trademark
Licenses”  means and includes any
written agreement granting to any person any right to use or exploit any
Trademark or Trademark registration of another person), including without
limitation the agreements described in Schedule B-2 hereto, and all
of the goodwill of the business connected with the use of, and symbolized by,
each Trademark licensed and all royalties and other sums due or to become due
under or in respect of the Debtor’s Trademark Licenses, together with the right
to sue for and collect all such royalties and other sums;

 

(v)                                   Copyrights.  Copyrights and Copyright registrations, whether now owned or hereafter
acquired, or in which the Debtor now has or hereafter acquires any rights (the
term “Copyrights”  means and
includes (A) all original works of authorship fixed in any tangible medium of
expression, now existing or hereafter adopted or acquired, all registrations
and recordings thereof, and all applications in connection therewith, including
without limitation registrations, recordings and applications in the United
States Copyright Office or in any similar office or agency of the United States
of America, any state thereof or any other country or any political subdivision
thereof and (B) all renewals thereof), including without limitation each
Copyright registration listed on Schedule C-1 hereto;

 

(vi)                               Copyright Licenses.  Copyright Licenses, whether now owned or hereafter acquired, or in
which the Debtor now has or hereafter acquires any rights (the term “Copyright
Licenses”  means and includes any
written agreement granting to any person any right to use or exploit any
Copyright or Copyright registration of another person), including without
limitation the agreements described in Schedule C-2 hereto, and all
royalties and other sums due or to become due under or in respect of the
Borrower’s Copyright Licenses, together with the right to sue for and collect
all such royalties and other sums; and

 

(vii)                           Proceeds and Products.  All  proceeds and products
of the foregoing and all insurance of the foregoing and proceeds thereof,
whether now existing or hereafter arising, including without limitation (A)  any claim of the Borrower against third
parties for damages by reason of past, present or future infringement of any
Patent or any Patent licensed under any Patent License, (B)

 

C-3

 

any claims by the Debtor
against third parties for damages by reason of past, present or future
infringement or dilution of any Trademark or of any Trademark licensed under
any Trademark License, or for injury to the goodwill of the business connected
with the use of, or symbolized by, any Trademark or of any Trademark licensed
under any Trademark License, (C) any claim of the Debtor against third parties
for damages by reason of past, present or future infringement of any Copyright
or any Copyright licensed under any Copyright License, and (D) any claim of the
Debtor against third parties for damages by reason of past, present or future
infringement of any Copyright or any Copyright licensed under any Copyright
License, and (E) any claim by the Debtor against third parties for damages by
reason of past, present or future misappropriation or wrongful use or
disclosure of any trade secret or other property or right described above or of
any such trade secret or other property or right licensed under any license or
agreement described above, and together with the right to sue for and collect
the damages described in the immediately preceding clauses (A), (B), (C) and
(D);

 

all of the foregoing being
herein sometimes referred to as the “Collateral”; provided, however, that the
Collateral described above shall not include any interest of the Debtor in any
contract, license, permit or similar general intangible if the granting of a
security interest therein is prohibited by the terms of the written agreement
creating or evidencing such contract, license, permit or similar intangible,
provided, further,  that,
notwithstanding anything set forth in the proviso set forth above to the contrary,
to the extent not prohibited by law, the Lender shall at all times have a
security interest in all rights of the Debtor to payments of money due or to
become due under any such contract, license, permit or similar general
intangible, and all proceeds thereof, and, if and when the prohibition which
prevents the granting of a security interest in any such property is removed,
terminated or otherwise becomes unenforceable as a matter of law, the Lender
will be deemed to have, and at all times to have had, a security interest in
such property and the Collateral will be deemed to include, and at all times to
have included, such property; and

 

(b)                                     This Agreement, including the security
interest granted hereunder, is made and given to secure, and shall secure, the
prompt payment or performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations.

 

Section 2.                                          Continuing Agreement;
Termination and Release.  This Agreement is made for collateral
purposes only. This Agreement shall be a continuing agreement in every respect
and shall remain in full force and effect until all of the Secured Obligations
shall have been fully paid and satisfied and all of the Lender’s obligations to
provide credit under the Loan Agreement shall have terminated. Upon such
termination of this Agreement, the Lender shall, upon the request and at the
expense of the Debtor, forthwith release, assign and transfer, without
recourse, and, to the extent applicable, deliver, against receipt and without
recourse to the Lender, such of the Collateral as may then be in the possession
of the Lender and as shall not have been sold or otherwise applied pursuant to
the terms hereof to or on the order of the Debtor. Said release, assignment,
transfer and delivery shall include an instrument in form recordable in the
United States Patent and Trademark Office and the United States Copyright
Office by which

 

C-4

 

the Lender shall terminate,
release and, without representation, recourse or warranty, reassign to the
Debtor all rights in each Patent, Patent License, Trademark, Trademark License,
Copyright and Copyright License, including each registration thereof and
application therefor, conveyed and transferred to the Lender pursuant to this
Agreement.

 

Section 3.                                          No Release.  Nothing set forth in this Agreement shall relieve the Debtor from the
performance of any term, covenant, condition or agreement on the Debtor’s part
to be performed or observed under or in respect of any of the Collateral or
from any liability to any party under or in respect of any of the Collateral or
impose any obligation on the Lender to perform or observe any such term,
covenant, condition or agreement on the Debtor’s part to be so performed or
observed or impose any liability on the Lender for any act or omission on the
part of the Debtor relative thereto or for any breach of any representation or
warranty on the part of the Debtor contained in this Agreement or under or in
respect of the Collateral or made in connection herewith or therewith.

 

Section 4.                                          [Reserved]

 

Section 5.                                          Representations and
Warranties of the Debtor.  The Debtor hereby represents and
warrants to the Lender as follows:

 

(a)                                  The Debtor is, and, as to the Collateral
acquired by it from time to time after the date hereof, the Debtor will be, the
owner or, as applicable, licensee of all the Collateral. The Debtor’s rights in
the Collateral are and shall remain free and clear of any lien, pledge,
security interest, encumbrance, assignment, collateral assignment or charge of
any kind, including without limitation any filing of, or agreement to file, a
financing statement as debtor under the Uniform Commercial Code or any similar
statute, except for the lien and security interest created by this Agreement
and Permitted Liens. The Debtor has made no previous assignment, conveyance,
transfer or agreement in conflict with the liens granted hereby. The Debtor
further represents and warrants to the Lender that Schedules A-1, A-2,
B-1, B-2, C-1 and C-2 hereto, respectively, are
true and correct lists of all Patents, Patent Licenses, and all registered
Trademarks, Trademark Licenses, Copyrights and Copyright Licenses owned or used
by the Debtor as of the date hereof and that Schedules A-1, A-2, B-1,
B-2, C-1 and C-2 are true and correct in all material
respects with respect to the matters set forth therein as of the date hereof.

 

(b)                                 The Debtor has made all necessary
filings and recordations to protect its interests in the Collateral in each
case to the extent a failure to do so could reasonably be expected to have a
Material Adverse Effect.

 

(c)                                  The Debtor owns directly or has rights
to use all the Collateral and all rights with respect to any of the foregoing
used in or necessary for the business of the Debtor in the ordinary course as
presently conducted, except where the failure to own or have such rights would
not have a Material Adverse Effect.  The
use of the Collateral and all rights with respect to the foregoing by the
Debtor does not, to the actual knowledge of the Debtor, infringe, in any
material respect, on the rights of any party, nor has any claim of such
infringement been made.

 

C-5

 

(d)                                 Upon appropriate filings and the acceptance
thereof in the appropriate offices under the Uniform Commercial Code, in the
United States Patent and Trademark Office and the United States Copyright
Office, this Agreement will create a valid and duly perfected lien on and
security interest in the Collateral located in the United States of America
effective against purchasers from and creditors of the Debtor, subject to no
prior liens or encumbrances other than Permitted Liens.

 

Section 6.                                          Covenants and
Agreements of the Debtor.  The Debtor hereby covenants and agrees
with the Lender as follows:

 

(a)                                  On a continuing basis, the Debtor will,
at the expense of the Debtor, subject to any prior licenses, encumbrances and
restrictions and prospective licenses, encumbrances and restrictions permitted
hereunder, make, execute, acknowledge and deliver, and file and record in the
proper filing and recording places within the United States of America, all
such instruments, including without limitation appropriate financing and
continuation statements and collateral agreements, and take all such action as
may reasonably be deemed necessary or advisable by the Lender (i) to carry out
the intent and purposes of this Agreement, (ii) to assure and confirm to the
Lender the grant or perfection of the security interest in the Collateral
intended to be created hereby, subject to no prior Liens or encumbrances other
than Permitted Liens, for the benefit of the Lender or (iii) to enable the
Lender to exercise and enforce its rights and remedies hereunder with respect
to the Collateral.

 

(b)                                 Without limiting the generality of the
foregoing paragraph (a) of this Section 6, the Debtor (i) will not enter
into any agreement that would impair or conflict with the Debtor’s obligations
hereunder; (ii) will, promptly following its becoming aware thereof, notify the
Lender of (x) any final adverse determination in any proceeding in the United
States Patent and Trademark Office or the United States Copyright Office that
could reasonably be expected to have a Material Adverse Effect or (y) the
institution of any proceeding or any adverse determination in any federal,
state, local or foreign court or administrative body regarding the Debtor’s
claim of ownership in or right to use any of the Collateral, its right to
register any such Collateral or its right to keep and maintain such
registration, in each case, that could reasonably be expected to have a
Material Adverse Effect; (iii) will preserve and maintain all rights in the
Collateral, unless no longer used in the ordinary course of the Debtor’s
business or no longer deemed necessary to the Debtor’s business; (iv) will not
grant or permit to exist any lien or encumbrance upon or with respect to the
Collateral or any portion thereof except Permitted Liens and will not execute
any security agreement or financing statement covering any of the Collateral
except in favor of the Lender; (v) will not permit to lapse or become abandoned
(unless no longer used in the ordinary course of the Debtor’s business or no
longer deemed necessary to the Debtor’s business), or settle or compromise any
pending or future material litigation or material administrative proceeding
with respect to any Collateral that could reasonably be expected to have a
Material Adverse Effect without the prior written consent of the Lender (which
consent shall not be unreasonably withheld), or, except for licenses of
Collateral in the ordinary

 

C-6

 

course of business, contract
for sale or otherwise sell, convey, assign or dispose of, or grant any option
with respect to, the Collateral or any portion thereof, except for sales
thereof otherwise permitted under the provisions of the Loan Agreement; (vi)
upon the Debtor obtaining knowledge thereof, will promptly notify the Lender in
writing of any event that could reasonably be expected to have a Material
Adverse Effect on the value of any of the Collateral, the ability of the Debtor
or the Lender to dispose of any such Collateral or the rights and remedies of
the Lender in relation thereto, including without limitation a levy or threat
of levy or any legal process against any such Collateral that could reasonably
be expected to have a Material Adverse Effect; (vii) will diligently keep
reasonable records respecting the Collateral; (viii) hereby authorizes the
Lender, in its sole discretion, to file one or more financing or continuation
statements relative to all or any part of the Collateral without the signature
of the Debtor where permitted by law (and the Collateral Agent agrees to provide
the Debtor notice after any such filing is made pursuant to this clause (viii),
provided  the failure to give such
notice shall not affect the validity or enforceability of the relevant filing;
(ix) will furnish to the Lender from time to time statements and schedules
further identifying and describing the Collateral and such other materials
evidencing or reports pertaining to the Collateral as the Lender may reasonably
request, all in reasonable detail; (x) will pay when due any and all taxes,
levies, maintenance fees, charges, assessments, licenses fees and similar taxes
or impositions payable in respect of the Collateral except to the extent being
contested in good faith by appropriate proceedings which prevent the
enforcement of the matter being contested (and for which the Debtor has
established adequate reserves) and do not interfere with the business of the
Debtor in the ordinary course or unless no longer necessary to the Debtor’s
business; and (xi) comply in all material respects with all laws, rules and
regulations applicable to the Collateral.

 

(c)                                  If, before the Secured Obligations shall
have been paid and satisfied in full, the Debtor shall obtain any rights to or
become entitled to the benefit of any new patent, patent application, service
mark, trade name, trademark, trademark application, trademark registration,
copyright, copyright application, copyright registration, license renewal or
extension, or patent for any reissue, division, continuation, renewal,
extension, or continuation-in-part of any Patent or any improvement on any
Patent, the provisions of this Agreement shall automatically apply thereto and
the same shall automatically constitute Collateral and be and become subject to
the assignment, lien and security interest created hereby, as the case may be,
without further action by any party, all to the same extent and with the same
force and effect as if the same had originally been Collateral hereunder. If
the Debtor so obtains or becomes entitled to any of the rights described above
which are material, the Debtor shall promptly give written notice thereof to
the Lender. The Debtor agrees to confirm the attachment of the lien and
security interest created hereby to any such rights described above by
execution of instruments, including, but not limited to, instruments for
recordation with the United States Patent and Trademark Office and the United
States Copyright Office, in form and substance acceptable to the Lender.

 

C-7

 

(d)                                 The Debtor shall promptly notify the
Lender of any future Collateral and, upon receipt of such notice by the Lender,
Schedules A-1, A-2, B-1, B-2, C-1 and C-2
hereto shall be deemed amended to include reference to any such future
Collateral.

 

(e)                                  The Debtor shall prosecute diligently
applications for the Patents, Trademarks and Copyrights now or hereafter
pending and make application on unpatented but patentable inventions and
registrable but unregistered Trademarks and Copyrights, that, in each case, in
the Debtor’s reasonable judgment would be materially beneficial to the business
of the Debtor in the ordinary course as presently, and as now contemplated will
be, conducted, file and prosecute opposition and cancellation proceedings and
perform all acts necessary to preserve and maintain all rights in the
Collateral, unless as to any Patent, Trademark or Copyright, in the reasonable
judgment of the Debtor, such Patent, Trademark or Copyright has become
immaterial or obsolete to such business of the Debtor. Any expenses incurred in
connection with such actions shall be borne by the Debtor.

 

(f)                                    The Debtor will, with respect to the
Collateral, comply with the provisions regarding insurance contained in
Section 6.7 of the Loan Agreement.

 

(g)                                 The Debtor shall not abandon any right
to file any material patent application, trademark application, service mark
application, copyright application, patent, trademark or copyright without the
prior written consent of the Lender, which consent shall not be unreasonably
withheld.

 

Section 7.                                          Supplements; Further
Assurances.  The Debtor (i) agrees that it will join
with the Lender in executing and, at its own expense, file and refile, or
permit the Lender to file and refile, such financing statements, continuation
statements and other instruments and documents (including without limitation
this Agreement) in such offices (including without limitation the United States
Patent and Trademark Office and the United States Copyright Office) as the
Lender may reasonably deem necessary or appropriate in order to perfect and
preserve the rights and interests granted to the Lender hereunder and (ii)
hereby authorizes the Lender to file and refile such instruments and documents
and any other instruments or documents related thereto without the signature of
the Debtor where permitted by law and (iii) agrees to do such further acts and
things, and to execute and deliver to the Lender such additional instruments
and documents, as the Lender may require to carry into effect the purposes of
this Agreement or to better assure and confirm unto the Lender its respective
rights, powers and remedies hereunder. All of the foregoing are to be at the
sole cost of the Debtor. Any reasonable costs of the foregoing incurred by the
Lender shall be payable by the Debtor upon demand, together with interest
thereon from the date of incurrence at the Default Rate until so paid, and
shall constitute additional Secured Obligations.

 

Section 8.                                          The Lender May Perform.  If the Debtor fails to perform any agreement contained herein after
receipt of a written request to do so from the Lender, the Lender may itself
(upon ten (10) days’ prior written notice to the Debtor unless the Lender in
good faith determines that immediate payment or performance is reasonably
necessary to protect or preserve the Collateral), but shall not be obligated
to, perform, or cause performance of, such agreement, and

 

C-8

 

the reasonable expenses of the
Lender, including the reasonable fees and expenses of its counsel, so incurred
in connection therewith shall be payable by the Debtor.

 

Section 9.                                          Remedies.  Upon the occurrence and during the continuation of any Event of
Default, the Lender shall have, in addition to all other rights provided
herein, in the Loan Agreement or by law, the rights and remedies of a Lender
under the Uniform Commercial Code, and further the Lender may, without demand
and without advertisement, notice (except as required by law), hearing or
process of law, all of which the Debtor hereby waives, at any time or times,
sell and deliver any or all of the Collateral at public or private sale, for
cash, upon credit or otherwise, at such prices and upon such terms as the
Lender deems advisable, in its sole discretion. In addition to all other sums
due the Lender hereunder, the Debtor shall pay the Lender all reasonable costs
and expenses incurred by the Lender, including reasonable attorneys’ fees and
court costs, in obtaining, liquidating or enforcing payment of the Collateral
or the Secured Obligations or in the prosecution or defense of any action or
proceeding by or against the Lender or the Debtor concerning any matter arising
out of or connected with this Agreement or the Collateral or the Secured
Obligations.

 

Without in any way limiting the
foregoing, upon the occurrence and during the continuation of any Event of
Default, the Lender may to the full extent permitted by applicable law, with
ten (10) days’ prior notice to the Debtor, and without advertisement, notice,
hearing or process of law of any kind, all of which the Debtor hereby waives,
(i) exercise any and all rights as beneficial and legal owner of the
Collateral, including without limitation any and all consensual rights and
powers with respect to the Collateral and (ii) sell or assign or grant a
license to use, or cause to be sold or assigned or a license granted to use,
any or all of the Collateral or any part hereof, in each case free of all
rights and claims of the Debtor therein and thereto, but subject to any existing
licenses in the Collateral permitted under the terms of this Agreement. In that
connection, the Lender shall have the right to cause any or all of the
Collateral to be transferred of record into the name of the Lender or its
nominee as well as the right to impose (i) such limitations and restrictions on
the sale or assignment of the Collateral as the Lender may deem to be necessary
or appropriate to comply with any law, rule or regulation, whether federal,
state or local, having applicability to the sale or assignment and (ii)
requirements for any necessary governmental approvals.

 

Anything contained herein to
the contrary notwithstanding, the Lender shall not sell, assign or otherwise
transfer any Trademark or Trademark License without also transferring in
connection therewith all of the business and goodwill associated therewith.

 

Failure by the Lender to
exercise any right, remedy or option under this Agreement or any other
agreement between the Debtor and the Lender or provided by law, or delay by the
Lender in exercising the same, shall not operate as a waiver; no waiver shall
be effective unless it is in writing, signed by the party against whom such
waiver is sought to be enforced and then only to the extent specifically
stated. Neither the Lender nor any party acting as attorney for the Lender
shall be liable hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence or willful
misconduct. The rights and remedies of the Lender under this Agreement shall be
cumulative and not exclusive of any other right or remedy which the Lender may
have.

 

C-9

 

Section 10.                                   Power of Attorney.  The Debtor hereby irrevocably appoints the Lender, its nominee, or any
other person whom the Lender may designate as the Debtor’s attorney-in-fact,
with full authority in the place and stead of the Debtor and in the name of the
Debtor, the Lender or otherwise, upon the occurrence and during the
continuation of any Event of Default, or if the Debtor fails to perform any
agreement contained herein within ten (10) days after the Lender’s written
request, then to the extent necessary to enable the Lender to perform such
agreement itself, from time to time in the Lender’s discretion, to take any
action and to execute any instrument which the Lender may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation to record an assignment of the Patents, Patent Licenses, Trademarks
and Trademark Licenses (provided that, in the case of Trademarks and Trademark
Licenses the business and goodwill associated therewith are also assigned), if
any, to the Lender with the United States Patent and Trademark Office, to
record an assignment of the Copyrights and Copyright Licenses to the Lender
with the United States Copyright Office, to prosecute diligently any Patent,
Trademark or Copyright or any application for Patents, Trademarks or Copyrights
pending as of the date of this Agreement or thereafter until the Secured
Obligations shall have been paid in full, to make application on unpatented but
patentable inventions and registrable but unregistered Trademarks or
Copyrights, to file and prosecute opposition and cancellation proceedings, to
do all other acts necessary or desirable to preserve all rights in Collateral
and otherwise to file any claims or take any action or institute any
proceedings which the Lender may deem necessary or desirable to accomplish the
purpose of this Agreement. The Debtor hereby ratifies and approves all acts of
any such attorney and agrees that neither the Lender nor any such attorney will
be liable for any acts or omissions nor for any error of judgment or mistake of
fact or law other than their gross negligence or willful misconduct. The
foregoing power of attorney, being coupled with an interest, is irrevocable
until the Secured Obligations have been fully paid and satisfied.

 

Section 11.                                   Application of Proceeds.  The proceeds and avails of the Collateral at any time received by the
Lender upon the occurrence and during the continuation of any Event of Default
shall, when received by the Lender in cash or its equivalent, be applied by or
at the direction of the Lender in the following manner:

 

(a)                                  First, to the payment or reimbursement
of all reasonable advances, expenses and disbursements of the Lender
(including, without limitation, the reasonable fees and disbursements of its
counsel and agents) incurred in connection with the administration and
enforcement of, or the preservation of any rights under, this Agreement or the
Loan Agreement or in the collection of the obligations of the Debtor under the
Revolving Credit Note; and

 

(b)                                 Second, to be applied in any manner
desired by the Lender to the satisfaction of the Secured Obligations.

 

Section 12.                                   Miscellaneous.  (a)  The Debtor hereby
indemnifies the Lender for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, reasonable costs, reasonable
expenses or disbursements (including reasonable attorneys’ fees) of any kind
and nature whatsoever which may be imposed on, incurred by or asserted against
the Lender, in

 

C-10

 

any way relating to or arising
out of, directly or indirectly, (i) the manufacture, use or sale or other
disposition of products or processes utilizing or embodying any Collateral or
(ii) any transactions contemplated hereby or any enforcement of the terms
hereof, including, but not limited to, any action of, or failure to act by, the
Lender in connection with this Agreement; provided, however,  that the Debtor shall not be liable for
any of the foregoing to the extent they arise from the gross negligence or
willful  misconduct of the Lender.

 

(b)                                 All communications hereunder shall be in
writing and shall be given to the relevant party, and shall be deemed to have
been made when given to the relevant party, in accordance with Section 9.1
of the Loan Agreement.

 

(c)                                  In the event that any provision hereof
shall be deemed to be invalid by reason of the operation of any law or by
reason of the interpretation placed thereon byany court, this Agreement shall be construed as not containing such
provision, but only as to such jurisdictions where such law or interpretation
is operative, and the invalidity of such provision shall not affect the
validity of any remaining provisions hereof, and any and all other provisions
hereof which are otherwise lawful and valid shall remain in full force and
effect.

 

(d)                                 This Agreement shall be deemed to have
been made in this State of Ohio and shall be governed by and construed in
accordance with the laws of the State of Ohio, without regard to principles of
conflicts of law, except as required by mandatory provisions of law and except
to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of Ohio.  The headings in this instrument are for
convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.

 

(e)                                  This Agreement may be executed in any
number of counterparts and by different parties hereto on separate counterpart
signature pages, each constituting an original, but all together one and the
same instrument.

 

(f)                                    Each of the parties hereto hereby, to
the fullest extent permitted by law, waives trial by jury in any action brought
under or in connection with this Agreement or any of the other Loan Documents.

 

C-11

 

IN WITNESS WHEREOF, the Debtor
has caused this Agreement to be duly executed as of the date first above
written.

 

	
   

  	
   

  	
  DEBTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PUMPKIN LTD.,

  
	
   

  	
   

  	
    a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Paul A.
  Miller

  
	
   

  	
   

  	
  Name:

  	
    Paul A. Miller

  
	
   

  	
   

  	
  Title:

  	
    Vice
  President

  
						

 

Accepted and agreed to by the
Lender as of the date first above written.

 

	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK ONE, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Mark S. Slayman

  
	
   

  	
   

  	
   

  	
  Mark S. Slayman, First Vice
  President

  

 

 

	
  STATE OF OHIO

  	
   

  	
  )

  
	
   

  	
   

  	
  ) SS

  
	
  COUNTY OF FRANKLIN

  	
   

  	
  )

  

 

I, the undersigned, a Notary
Public in and for said County, in the State aforesaid, do hereby certify that
Paul A. Miller, Vice President of Pumpkin Ltd., a Delaware corporation, who is
personally known to me to be the same person whose name is subscribed to the
foregoing instrument as such officer, appeared before me this day in person and
acknowledged that he signed and delivered the said instrument as his own free
and voluntary act and as the free and voluntary act and deed of said limited
liability company for the uses and purposes therein set forth.

 

Given under my hand and
notarial seal, this 2nd day of June, 2004.

 

 

	
   

  	
  /s/ Carol R. McCoy

  
	
   

  	
  Notary Public

  
	
  (Notarial Seal)

  	
   

  
	
   

  	
  Carol R. McCoy

  
	
   

  	
  (Type or Print Name)

  
	
   

  	
   

  
	
  My Commission Expires:

  	
  12-25-08

  	
   

  	
   

  
				

 

C-12

 

	
  STATE OF OHIO

  	
   

  	
  )

  
	
   

  	
   

  	
  ) SS

  
	
  COUNTY OF FRANKLIN

  	
   

  	
  )

  

 

I, the undersigned, a Notary
Public in and for said County, in the State aforesaid, do hereby certify that
Mark S. Slayman, First Vice President of Bank One, N.A., a national banking
association, who is personally known to me to be the same person whose name is
subscribed to the foregoing instrument as such officer, appeared before me this
day in person and acknowledged that he signed and delivered the said instrument
as his own free and voluntary act and as the free and voluntary act and deed of
said bank for the uses and purposes therein set forth.

 

Given under my hand and
notarial seal, this 4 day of June, 2004.

 

 

	
   

  	
  /s/ Donna L. Rippl

  
	
   

  	
  Notary Public

  
	
  (Notarial Seal)

  	
   

  
	
   

  	
  Donna L. Rippl

  
	
   

  	
  (Type or Print Name)

  
	
   

  	
   

  
	
  My Commission Expires:

  	
  6-5-08

  	
   

  	
   

  
				

 

C-13

 

SCHEDULE A-1

 

TO SECURITY
AGREEMENT

RE: PATENTS,
TRADEMARKS AND COPYRIGHTS

 

U.S. Patent
Numbers

and Pending
U.S. Patent Application Numbers

 

Patents and
Patent Applications

 

	
  PRODUCT

  	
   

  	
  STATUS

  	
   

  	
  SERIAL NO.

  	
   

  	
  PATENT

  NO.

  	
   

  	
  FILING

  DATE

  	
   

  	
  ISSUE

  DATE

  
	
  Pumpkin Carving Kit

  	
   

  	
  Issued

  	
   

  	
  91,436

  	
   

  	
  4,828,114

  	
   

  	
  8/31/87

  	
   

  	
  5/9/89

  
	
  Hand-Held Scraping Device
  (Scoop)

  	
   

  	
  Issued

  	
   

  	
  07/607,150

  	
   

  	
  5,092,050

  	
   

  	
  10/31/90

  	
   

  	
  3/3/92

  
	
  Method for Decorating
  Surfaces with Transfer Patterns

  	
   

  	
  Issued

  	
   

  	
  08/182,409

  	
   

  	
  6,093,446

  	
   

  	
  7/14/94

  	
   

  	
  7/25/00

  
	
  Hand-Held Drilling Tool
  (Candle Planter)

  	
   

  	
  Issued

  	
   

  	
  08/549,957

  	
   

  	
  5,655,861

  	
   

  	
  10/27/95

  	
   

  	
  8/12/97

  
	
  Hand-Held Cutting Tool with
  Fatigue Resistant Blade (Flex Saw)

  	
   

  	
  Issued

  	
   

  	
  08/763,529

  	
   

  	
  5,832,615

  	
   

  	
  12/12/96

  	
   

  	
  11/10/98

  
	
  Stencil and Kit for
  Transferring Images and Method Therefore (Kid’s Kit)

  	
   

  	
  Issued

  	
   

  	
  09/028,217

  	
   

  	
  6,055,738

  	
   

  	
  2/23/98

  	
   

  	
  5/2/00

  
	
  Safety Saw for Cutting Soft
  Materials (Kid’s Saw)

  	
   

  	
  Issued

  	
   

  	
  09/156,986

  	
   

  	
  6,497,046

  	
   

  	
  9/18/98

  	
   

  	
  12/24/02

  
	
  Illumination Device (Kid’s
  Candle) - Design

  	
   

  	
  Issued

  	
   

  	
  29/094,325

  	
   

  	
  D427,708

  	
   

  	
  9/30/98

  	
   

  	
  7/4/00

  
	
  Illumination Device (Kid’s
  Candle) - Utility

  	
   

  	
  Issued

  	
   

  	
  09/163,744

  	
   

  	
  6,309,092

  	
   

  	
  9/30/98

  	
   

  	
  10/30/01

  

 

C-14

 

	
  PRODUCT

  	
   

  	
  STATUS

  	
   

  	
  SERIAL NO.

  	
   

  	
  PATENT

  NO.

  	
   

  	
  FILING

  DATE

  	
   

  	
  ISSUE

  DATE

  
	
  Creative Art Kit for
  Producing and Viewing Stereoscopic Creative Art Images (3D Glasses with
  Paint/Chalk)

  	
   

  	
  Issued

  	
   

  	
  09/190,356

  	
   

  	
  6,266,186

  	
   

  	
  11/12/98

  	
   

  	
  7/24/01

  
	
  Egg Cleaning and Decorating
  Method and Kit (Easter Kit)

  	
   

  	
  Issued

  	
   

  	
  09/344,475

  	
   

  	
  6,260,480

  	
   

  	
  6/16/99

  	
   

  	
  7/17/01

  
	
  Combination Jump Rope and
  Sidewalk Chalk Holder Toy

  	
   

  	
  Issued

  	
   

  	
  09/340,554

  	
   

  	
  6,113,520

  	
   

  	
  6/28/99

  	
   

  	
  9/5/00

  
	
  Method of Carving Shapes in a
  Pumpkin Shell (Pumpkin Punch Out Kit)

  	
   

  	
  Issued

  	
   

  	
  09/348,850

  	
   

  	
  6,342,175

  	
   

  	
  7/7/99

  	
   

  	
  1/29/02

  
	
  Inflatable Treat Bowl -
  Design

  	
   

  	
  Issued

  	
   

  	
  29/124,617

  	
   

  	
  D452,636

  	
   

  	
  6/8/00

  	
   

  	
  1/1/02

  
	
  Bag with Flashlight Handle
  (Snake Light) - Design

  	
   

  	
  Issued

  	
   

  	
  29/129,419

  	
   

  	
  D456,920

  	
   

  	
  9/15/00

  	
   

  	
  5/7/02

  
	
  Spherical Flashlight Pendant
  (Monster Eyeball Light) - Design

  	
   

  	
  Issued

  	
   

  	
  29/129,420

  	
   

  	
  D453,702

  	
   

  	
  9/15/00

  	
   

  	
  2/19/02

  
	
  Dome-Shaped Illumination
  Device (Dome Light) Design Patent - see
  also “Portable Special Effects Illumination Device (UPL)” Utility
  Patent

  	
   

  	
  Issued

  	
   

  	
  29/131,028

  	
   

  	
  D454,967

  	
   

  	
  10/12/00

  	
   

  	
  3/26/02

  
	
  Pumpkin Decorating Kit and
  Method Using Light Guiding Pegs (Kid’s Fright Lights)

  	
   

  	
  Issued

  	
   

  	
  09/889,338

  	
   

  	
  6,578,710

  	
   

  	
  7/16/01

  	
   

  	
  6/17/03

  

 

C-15

 

	
  PRODUCT

  	
   

  	
  STATUS

  	
   

  	
  SERIAL NO.

  	
   

  	
  PATENT

  NO.

  	
   

  	
  FILING

  DATE

  	
   

  	
  ISSUE

  DATE

  
	
  Portable Special Effects
  Illumination Device {see also Design Patent for Dome-Shaped Illumination
  Device (Dome Light)}

  	
   

  	
  Issued

  	
   

  	
  09/971,786

  	
   

  	
  6,575,613

  	
   

  	
  10/4/01

  	
   

  	
  6/10/03

  
	
  Piercing Tool

  	
   

  	
  Pending

  	
   

  	
  10/401,491

  	
   

  	
   

  	
   

  	
  3/28/03

  	
   

  	
   

  
	
  Tool Handle (Design Patent
  for new saw)

  	
   

  	
  Issued

  	
   

  	
  29/179,502

  	
   

  	
  D483,645

  	
   

  	
  4/9/03

  	
   

  	
  12/16/03

  
	
  Tool with Ergonomic Soft-Grip
  Handle

  	
   

  	
  Pending

  	
   

  	
  10/410,889

  	
   

  	
   

  	
   

  	
  4/9/03

  	
   

  	
   

  
	
  Pumpkin Decorating Kit and
  Method Using Light Guiding Pegs - Divisional Application (Kid’s Fright
  Lights)

  	
   

  	
  Pending

  	
   

  	
  10/464,672

  	
   

  	
   

  	
   

  	
  6/16/03

  	
   

  	
   

  
	
  Garment and Garment
  Accessories Having Luminescent Accents and Fabrication Method Therefor (Neon
  Light Costumes)

  	
   

  	
  Pending

  	
   

  	
  10/754,066

  	
   

  	
   

  	
   

  	
  1/7/04

  	
   

  	
   

  
	
  Piercing Tool - PCT Application

  	
   

  	
  Pending

  	
   

  	
  based on US Ser. No.
  10/401,491

  	
   

  	
  3/25/04

  	
   

  	
   

  
	
  Tool with Ergonomic Soft-Grip
  Handle - PCT Application

  	
   

  	
  Pending

  	
   

  	
  based on US Ser. No.
  10/410,889

  	
   

  	
  4/7/04

  	
   

  	
   

  

 

C-16

 

SCHEDULE A-2

 

TO SECURITY
AGREEMENT

RE: PATENTS,
TRADEMARKS AND COPYRIGHTS

 

Patent
Licenses

 

	
  LICENSOR

  	
   

  	
  LICENSEE

  	
   

  	
  PRODUCT

  	
   

  	
  STATUS

  	
   

  	
  SERIAL NO.

  	
   

  	
  PATENT NO.

  
	
  Jack Holland

  	
   

  	
  Pumpkin Ltd.

  	
   

  	
  Lighted Safety Bucket

  	
   

  	
  Issued

  	
   

  	
  09/420,470

  	
   

  	
  6,270,233

  
	
  Jack Holland

  	
   

  	
  Pumpkin Ltd.

  	
   

  	
  Air-powered Dancing Ghost product

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ringstone, Inc.

  	
   

  	
  Pumpkin Ltd.

  	
   

  	
  Scary Carries line of Trick
  or Treat Bags

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
  5,348,155

  
	
  Pumpkin Ltd.

  	
   

  	
  Martha Stewart Online

  	
   

  	
   

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
  4,828,114

  
	
  Pumpkin Ltd.

  	
   

  	
  Martha Stewart Online

  	
   

  	
   

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
  6,342,175

  
	
  Pumpkin Ltd.

  	
   

  	
  Restoration Hardware, Inc.

  	
   

  	
   

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
  6,342,175

  
	
  Pumpkin Ltd.

  	
   

  	
  Running Press

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pumpkin Ltd.

  	
   

  	
  Paper Magic Group

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4,828,114

  
	
  Pumpkin, Ltd.

  	
   

  	
  Paper Magic Group

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  7/14/03

  	
   

  	
  5,092,050

  

 

Pumpkin Ltd. also has a
non-exclusive cross-license arrangement in place with The Seeds Corps d/b/a
Concept Marketing;

 

C-17

 

SCHEDULE B-1

 

TO SECURITY
AGREEMENT

RE: PATENTS,
TRADEMARKS AND COPYRIGHTS

 

Registered
U.S. Trademarks

and Trademark
Applications

 

Trademarks and
Tradenames:

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  ‘POWER’ TOOLS FOR PUMPKINS®

  	
   

  	
  Registered

  	
   

  	
  2,213,214

  	
   

  	
  8 - pumpkin carving and
  lighting kit comprised of hand held tools, namely, a saw, a scoop, and a
  drill, and a candle

  	
   

  	
  2/16/96

  	
   

  	
  7/30/98

  	
   

  	
  12/22/98

  
	
  BAREBONES® (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,279,335

  	
   

  	
  2 - paints for decorating
  pumpkins

  	
   

  	
  8/7/98

  	
   

  	
  12/22/97

  	
   

  	
  9/21/99

  
	
  BAREBONES® (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,310,954

  	
   

  	
  8 - manually operated hand
  tools for caring pumpkins, namely, saws and drills

  	
   

  	
  8/7/98

  	
   

  	
  11/12/96

  	
   

  	
  1/25/00

  
	
  Boo BagsTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CARVE-O-LANTERN®

  	
   

  	
  Registered

  	
   

  	
  1,476,839

  	
   

  	
  16 - kit for pumpkin carving,
  namely an instruction manual, patterns and hand tools therefor

  	
   

  	
  7/13/87

  	
   

  	
  10/20/86

  	
   

  	
  2/16/88

  
	
  CARVE-O-LANTERN®

  	
   

  	
  Registered

  	
   

  	
  1,465,923

  	
   

  	
  41 - educational services,
  namely, conducting classes and seminars in the field of pumpkin sculpturing

  	
   

  	
  3/23/87

  	
   

  	
  10/31/86

  	
   

  	
  11/17/87

  
	
  Carving PatternsTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Creepy CarriesTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DURASAW®

  	
   

  	
  Registered

  	
   

  	
  2,160,808

  	
   

  	
  8 - hand held tools, namely, saws

  	
   

  	
  2/16/96

  	
   

  	
  10/14/97

  	
   

  	
  5/26/98

  
	
  EASY CARVE®

  	
   

  	
  Registered

  	
   

  	
  2,484,623

  	
   

  	
  16 - Kit for pumpkin
  decorating, consisting of instructions, patterns, hand tools, and a candle,
  all sold as a unit

  	
   

  	
  1/21/00

  	
   

  	
  7/2/99

  	
   

  	
  9/4/01

  
	
  Exceptional EasterTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2000

  	
   

  	
   

  

 

C-18

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  FRIGHT LIGHTSTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2000

  	
   

  	
   

  
	
  HALLOWEEN HARDWARE®

  	
   

  	
  Registered

  	
   

  	
  2,094,288

  	
   

  	
  8 - hand held tools for carving
  pumpkins, namely, saws

  	
   

  	
  2/1/96

  	
   

  	
  4/12/95

  	
   

  	
  9/9/97

  
	
  HALLOWEEN HARDWARE®

  	
   

  	
  Registered

  	
   

  	
  2,094,288

  	
   

  	
  21 - hand held tools for
  carving pumpkins, namely, scoops

  	
   

  	
  2/1/96

  	
   

  	
  4/12/95

  	
   

  	
  9/9/97

  
	
  HALLOWEEN HOST

  	
   

  	
  Pending

  	
   

  	
  78/361,557

  	
   

  	
  16 - Drink coasters

  

  21 - Charms for attachment to beverage glasses to identify drinks; food
  spreaders; swizzle sticks; appetizer forks; bottle covers; reusable plastic
  ice cubes; a house mark for Halloween party kitchenware and giftware

  	
   

  	
  2/3/04

  	
   

  	
  ITU

  	
   

  	
   

  
	
  LANTERNS OF LIBERTY®

  	
   

  	
  Registered

  	
   

  	
  2,591,780

  	
   

  	
  16 - stencils; printed
  instructions and ideas for carving pumpkins and for creating holiday
  decorations with a patriotic theme.

  	
   

  	
  10/16/01

  	
   

  	
  10/16/01

  	
   

  	
  7/9/02

  
	
  LANTERNS OF LIBERTY®

  	
   

  	
  Registered

  	
   

  	
  2,591,780

  	
   

  	
  42 - information services,
  namely providing information and ideas for carving pumpkins and for creating
  holiday decorations with a patriotic theme

  	
   

  	
  10/16/01

  	
   

  	
  10/31/01

  	
   

  	
  7/9/02

  
	
  LIGHTS ONTM

  	
   

  	
  Pending

  	
   

  	
  78/190,432

  	
   

  	
  25 - Costumes

  	
   

  	
  12/2/02

  	
   

  	
  ITU

  	
   

  	
   

  
	
  MELON LIGHTS FOR SUMMER
  NIGHTS!®

  	
   

  	
  Registered

  	
   

  	
  1,879,719

  	
   

  	
  16 - kit for watermelon
  carving; namely , an instruction manual, patterns and hand tools therefor

  	
   

  	
  2/14/94

  	
   

  	
  4/1/92

  	
   

  	
  2/21/95

  
	
  Monster EyeTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monster SackTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MONSTER SNOTTM

  	
   

  	
  Allowed

  	
   

  	
  78/086,592

  	
   

  	
  28 - toy and novelty
  pressurized dispenser of plastic stream material; plastic stream material for
  use in a toy an novelty pressured dispenser

  	
   

  	
  10/2/01

  	
   

  	
  6/24/02

  	
   

  	
   

  

 

C-19

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  OK!

  	
   

  	
  Pending

  	
   

  	
  78/387,834

  	
   

  	
  028: Egg decorating kits;
  Easter basket stuffers

  	
   

  	
  3/19/04

  	
   

  	
  ITU

  	
   

  	
   

  
	
  OK!®

  	
   

  	
  Registered

  	
   

  	
  2,212,466

  	
   

  	
  16 - children’s art supplies,
  namely, arts and craft painting kits, chalk, and slideable stickers

  	
   

  	
  6/26/97

  	
   

  	
  2/15/97

  	
   

  	
  12/22/98

  
	
  OUR KIDS

  	
   

  	
  Pending

  	
   

  	
  78/387,823

  	
   

  	
  028: Egg decorating kits;
  Easter basket stuffers

  	
   

  	
  3/19/04

  	
   

  	
  ITU

  	
   

  	
   

  
	
  OUR KIDS®

  	
   

  	
  Registered

  	
   

  	
  2,152,583

  	
   

  	
  16 - children’s art supplies,
  namely, arts and craft painting kits, chalk, and slideable stickers

  	
   

  	
  6/26/97

  	
   

  	
  2/15/97

  	
   

  	
  4/21/98

  
	
  Peek A Boos TM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PRODUCT MASTERSTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
  Trade name cert. filed -
  Colo.

  	
   

  	
  9/14/98

  	
   

  	
   

  	
   

  	
   

  
	
  PUMPKIN MASTERS/AMERICA’S
  PUMPKIN CARVING COMPANY & Design® (Canada)

  	
   

  	
  Registered

  	
   

  	
  489,994

  	
   

  	
  Pumpkin carving and
  decorative products namely, saws, drills, pokers, scoops, candles and candle
  holders, patterns and instructional booklets sold separately and in kits.

  	
   

  	
  8/23/96

  	
   

  	
  1994

  	
   

  	
  2/16/98

  
	
  PUMPKIN MASTERS®

  	
   

  	
  Registered

  	
   

  	
  1,912,503

  	
   

  	
  16 - kit for pumpkin carving,
  instruction manual, patterns and hand tools therefor

  	
   

  	
  12/20/93

  	
   

  	
  5/16/94

  	
   

  	
  8/15/95

  
	
  PUMPKIN MASTERS® (Canada)

  	
   

  	
  Registered

  	
   

  	
  489,360

  	
   

  	
  Pumpkin carving and decorative
  products namely, saws, drills, pokers, scoops, candles and candle holders,
  patterns and instructional booklets sold separately and in kits.

  	
   

  	
  8/23/96

  	
   

  	
  1994

  	
   

  	
  2/5/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom) (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,137,466

  	
   

  	
  4 - Candles; wicks; candles
  adapted for Halloween; lubricants; fuels

  	
   

  	
  6/28/97

  	
   

  	
   

  	
   

  	
  10/9/98

  

 

C-20

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER. 
  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING DATE

  	
   

  	
  FIRST USE DATE

  	
   

  	
  REG. DATE

  
	
  PUMPKIN MASTERS® (United
  Kingdom) (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,137,466

  	
   

  	
  8 - Hand tools and
  implements; axes; blades; razors; cleavers; cutlery; cutters;

  cutting tools; cutting bars; drills; saws; pokers; scoops; drill holders;
  fruit pickers; knives; machetes; files; paring knives; pincers; saw blades;
  saw holders; scrapers; scraping tools; screw drivers; sharpening instruments;
  spatulas; spades; swords; tongs; tweezers; slicers; shredders; wrenches;
  parts and fittings for all the aforesaid goods

  	
   

  	
  6/28/97

  	
   

  	
   

  	
   

  	
  10/9/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom) (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,137,466

  	
   

  	
  16 - Pattern and
  instructional booklets; printed matter; books; publications; stationery;
  parts and fittings for the aforesaid goods

  	
   

  	
  6/28/97

  	
   

  	
   

  	
   

  	
  10/9/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom) (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,137,466

  	
   

  	
  28 - Games; toys; playthings;
  candle holders; parts and fittings for the aforesaid goods

  	
   

  	
  6/28/97

  	
   

  	
   

  	
   

  	
  10/9/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom)

  Series includes:

  PUMPKIN-MASTERS, PUMPKIN MASTERS, PUMPKIN-MASTER, PUMPKIN MASTER

  	
   

  	
  Registered

  	
   

  	
  2,136,895

  	
   

  	
  4 - Candles; wicks; candles
  adapted for Halloween; lubricants; fuels

  	
   

  	
  6/25/97

  	
   

  	
   

  	
   

  	
  2/20/98

  

 

C-21

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER. 
  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING DATE

  	
   

  	
  FIRST USE DATE

  	
   

  	
  REG. DATE

  
	
  PUMPKIN MASTERS® (United Kingdom)

  Series includes:

  PUMPKIN-MASTERS, PUMPKIN MASTERS, PUMPKIN-MASTER, PUMPKIN MASTER

  	
   

  	
  Registered

  	
   

  	
  2,136,895

  	
   

  	
  8 - Hand tools and
  implements; axes; blades; razors; cleavers; cutlery; cutters;

  cutting tools; cutting bars; drills; saws; pokers; scoops; drill holders;
  fruit pickers; knives; machetes; files; paring knives; pincers; saw blades;
  saw holders; scrapers; scraping tools; screw drivers; sharpening instruments;
  spatulas; spades; swords; tongs; tweezers; slicers; shredders; wrenches;
  parts and fittings for all the aforesaid goods

  	
   

  	
  6/25/97

  	
   

  	
   

  	
   

  	
  2/20/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom)

  Series includes:

  PUMPKIN-MASTERS, PUMPKIN MASTERS, PUMPKIN-MASTER, PUMPKIN MASTER

  	
   

  	
  Registered

  	
   

  	
  2,136,895

  	
   

  	
  16 - Pattern and
  instructional booklets; printed matter; books; publications; stationery;
  parts and fittings for the aforesaid goods

  	
   

  	
  6/25/97

  	
   

  	
   

  	
   

  	
  2/20/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom)

  Series includes:

  PUMPKIN-MASTERS, PUMPKIN MASTERS, PUMPKIN-MASTER, PUMPKIN MASTER

  	
   

  	
  Registered

  	
   

  	
  2,136,895

  	
   

  	
  28 - Games; toys; playthings;
  candle holders; parts and fittings for the aforesaid goods

  	
   

  	
  6/25/97

  	
   

  	
   

  	
   

  	
  2/20/98

  
	
  PUMPKIN PORTRAITS®

  	
   

  	
  Registered

  	
   

  	
  2,611,708

  	
   

  	
  40 - electronic imaging,
  scanning, digitizing, alteration, photographic computer imaging of
  photographs, paintings, drawings, computer illustrations and other visual
  media, photographic reproduction of portraits, in the form of carved pumpkins

  	
   

  	
  9/22/00

  	
   

  	
  9/1/99

  	
   

  	
  8/27/02

  

 

C-22

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER. 
  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING DATE

  	
   

  	
  FIRST USE DATE

  	
   

  	
  REG. DATE

  
	
  PUMPKIN PORTRAITS® (Canada)

  	
   

  	
  Allowed

  	
   

  	
  1,096,668

  	
   

  	
  42 - Reproducing images from
  photographs, paintings, drawings, computer illustrations, and other visual
  media in the form of carved pumpkins

  	
   

  	
  3/21/01

  	
   

  	
   

  	
   

  	
   

  
	
  PUMPKIN PORTRAITS® (United
  Kingdom)

  	
   

  	
  Pending

  	
   

  	
  2,265,159

  	
   

  	
  42 - Reproducing images from
  photographs, paintings, drawings, computer illustrations, and other visual
  media in the form of carved pumpkins

  	
   

  	
  3/22/01

  	
   

  	
   

  	
   

  	
   

  
	
  PUT A NEW FACE ON HALLOWEEN®

  	
   

  	
  Registered

  	
   

  	
  1,477,650

  	
   

  	
  16 - kit for pumpkin carving;
  namely, and instruction manual, patterns and hand tools therefor

  	
   

  	
  7/14/87

  	
   

  	
  2/10/87

  	
   

  	
  2/23/88

  
	
  QUICKPatternTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1997

  	
   

  	
   

  
	
  SCARY CARRIES® (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,272,369

  	
   

  	
  16 - Halloween
  trick-or-treating bags

  	
   

  	
  9/22/98

  	
   

  	
  12/26/96

  	
   

  	
  8/24/99

  
	
  Scraper ScoopTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1990

  	
   

  	
   

  
	
  Sensational ShadowsTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1996

  	
   

  	
   

  
	
  Spine TinglersTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2002

  	
   

  	
   

  
	
  STAR STUDDED PUMPKINS

  	
   

  	
  Pending

  	
   

  	
  78/382,029

  	
   

  	
  016: Pumpkin carving kits;
  tools for carving pumpkins

  	
   

  	
  3/10/04

  	
   

  	
  ITU

  	
   

  	
   

  
	
  THE ORIGINAL PUMPKIN CARVER®

  	
   

  	
  Registered

  	
   

  	
  2,093,958

  	
   

  	
  8 - plastic carving knife for
  use in carving pumpkins

  	
   

  	
  3/28/94

  	
   

  	
  2/14/92

  	
   

  	
  9/9/97

  
	
  THE THING YA’ FLING®

  	
   

  	
  Registered

  	
   

  	
  2,430,455

  	
   

  	
  28 - Stuffed toy flying discs
  for playing a toss game

  	
   

  	
  6/1/99

  	
   

  	
  1/30/00

  	
   

  	
  2/20/01

  
	
  ZIPPY CARVE

  	
   

  	
  Pending

  	
   

  	
  78/289,228

  	
   

  	
  16 - Pumpkin carving kits;
  tools for carving pumpkins

  	
   

  	
  8/19/03

  	
   

  	
  ITU

  	
   

  	
   

  
	
  ZOJO®

  	
   

  	
  Registered

  	
   

  	
  2,437,613

  	
   

  	
  28 - Toys, namely, flying
  discs

  	
   

  	
  7/8/99

  	
   

  	
  2/22/00

  	
   

  	
  3/20/01

  

 

C-23

 

SCHEDULE B-2

 

TO SECURITY
AGREEMENT

RE: PATENTS,
TRADEMARKS AND COPYRIGHTS

 

Trademark Licenses

 

 

	
  LICENSOR

  	
   

  	
  LICENSEE

  	
   

  	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  
	
  Pumpkin Ltd.

  	
   

  	
  Impel, Inc,

  	
   

  	
  THE ORIGINAL PUMPKIN CARVER
  (Stylized)

  	
   

  	
  Issued

  	
   

  	
  2,093958

  	
   

  	
   

  	
   

  	
  8/27/99

  

 

Pumpkin Ltd. also has a
non-exclusive license arrangement with Universal Studios dated as of
October 2, 2002 in which it licenses the use of certain character images
and trademarks.

 

C-24

 

SCHEDULE C-1

 

TO SECURITY
AGREEMENT

RE: PATENTS,
TRADEMARKS AND COPYRIGHTS

 

Registered
U.S. Copyrights and Copyright Applications

 

Copyrights:

 

US
Registered Copyrights 

 

	
  Registration

  Number

  	
   

  	
  Copyright Name

  	
   

  	
  Issue Date

  
	
  TX 2-053-558

  	
   

  	
  CARVE-O-LANTERN

  	
   

  	
  2/26/1987

  
	
  TX 3-622-904

  	
   

  	
  CARVE-O-LANTERNTM -
  PUMPKIN CARVING KIT

  	
   

  	
  9/20/1993

  
	
  TX 3 622 903

  	
   

  	
  CARVE-O-LANTERNR -
  PUMPKIN CARVING KIT (1989)

  	
   

  	
  9/20/1993

  
	
  TX 3-750-540

  	
   

  	
  ZIPPY CARVE INSTRUCTION BOOK

  	
   

  	
  2/7/1994

  
	
  TX 3-783-386

  	
   

  	
  ZIPPY CARVE (PACKAGE)

  	
   

  	
  2/7/1994

  
	
  TX 4-607-692

  	
   

  	
  CARVING FOR KIDS

  	
   

  	
  6/23/1997

  
	
  VA 1-052-479

  	
   

  	
  EGG HEAD

  	
   

  	
  7/10/2000

  
	
  VA 1-061-067

  	
   

  	
  BUNNY TRAILS (STENCILS (2))

  	
   

  	
  10/18/2000

  
	
  VA 1-145-120

  	
   

  	
  LET FREEDOM SHINE

  	
   

  	
  11/2/2001

  
	
  VA 1-63-909

  	
   

  	
  INFLATABLE TREAT BOWLS

  	
   

  	
  4/12/2000

  
	
  Vau 498-221

  	
   

  	
  SNAKE FLASHLIGHT HANDLE ON
  BAG

  	
   

  	
  4/14/2000

  
	
  Vau 498-220

  	
   

  	
  EYEBALL FLASHLIGHT

  	
   

  	
  4/14/2000

  
	
  Vau 480-843

  	
   

  	
  SAFETY FLASHLIGHT/BEACON
  PENDANT

  	
   

  	
  09/25/2000

  

 

C-25

 

SCHEDULE C-2

 

TO SECURITY
AGREEMENT

RE: PATENTS,
TRADEMARKS AND COPYRIGHTS

 

Licenses Granted to
Debtor of Intellectual Property Used in the Business

 

Pumpkin Ltd. also has a
non-exclusive license arrangement with Universal Studios dated as of
October 2, 2002 in which it licenses the use of certain character images
and trademarks.

 

C-26

 

EXHIBIT D

 

[THIS SECURITY
AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF AN INTERCREDITOR AGREEMENT
DATED AS OF JUNE 11, 2004 AMONG BANK ONE, N.A., J.H. WHITNEY MEZZANINE
FUND, L.P. AND SECURITY CAPITAL CORPORATION]

 

GUARANTOR
SECURITY AGREEMENT

 

June 11, 2004

 

THIS SECURITY AGREEMENT
(“Security Agreement”) is entered into as of the date set forth above by and
between [SECURITY CAPITAL CORPORATION/PUMPKIN
MASTERS HOLDINGS, INC.], a Delaware corporation (the “Guarantor”),
and BANK ONE, N.A., a national banking association with its principal offices
located in Columbus, Ohio (the “Lender”).

 

Background

 

The following
is a mutual statement by the parties of certain factual matters which form the
basis of this Agreement.

 

A.                                    Loans. 
The Guarantor, Pumpkin Ltd., a Delaware corporation (the “Borrower”), [Pumpkin Masters Holdings, Inc., a Delaware
corporation and the sole stockholder of the Borrower,/ Security Capital
Corporation, a Delaware corporation,] and the Lender have entered
into a Loan Agreement of even date herewith (the “Loan Agreement”) pursuant to
which the Lender has agreed (i) to lend to the Borrower the maximum sum of up
to Seven Million Dollars ($7,000,000) under a revolving line of credit (the
“Revolving Credit Commitment”) and (ii) to issue letters of credit in an
aggregate maximum amount of One Million Dollars ($1,000,000) (the “Letters of
Credit”).  The Revolving Credit
Commitment is evidenced by a promissory note (the “Revolving Credit Note”) of
the Borrower.  The borrowings under the
Revolving Credit Commitment are sometimes hereinafter referred to as the
“Revolving Credit Loans”.  The (i)
aggregate undrawn stated amount under all Letters of Credit outstanding at any
one time plus (ii) the aggregate unpaid amount at such time of all obligations
of the Borrower then outstanding under and in connection with any Letters of
Credit to reimburse the Lender for amounts paid by the Lender in respect of any
one or more drawings under any Letters of Credit is sometimes referred to as
the “LOC Obligations”.  Capitalized terms
used in this Security Agreement that are not otherwise defined herein shall
have the meanings ascribed to them in the Loan Agreement.

 

B.                                    Guaranty.  Pursuant to the terms of the Loan Agreement, the Guarantor has entered
into an Unconditional Guaranty Agreement of even date herewith, pursuant to
which the Guarantor has guaranteed the payment and performance by the Borrower
of its obligations under the Loan Agreement, the Revolving Credit Note and
other Loan Documents (the “Guaranty”).

 

C.                                    Security Interest. 
The Lender is willing to make the Revolving Credit Loans to the Borrower
and to issue the Letters of Credit upon the condition that the Guarantor grant
to and create in favor of the Lender security interests in certain property of
the Guarantor as security for (i) the

 

D-1

 

payment of the Revolving Credit
Note, the LOC Obligations and the Guaranty, (ii) the payment of all amounts
owing pursuant to this Security Agreement, the Loan Agreement and the other
Loan Documents, (iii) the performance by the Guarantor of, and compliance with,
all of the terms, covenants, conditions, stipulations and agreements contained
in this Security Agreement, the Loan Agreement, the Guaranty and the other Loan
Documents, (iv) the performance by the Borrower of, and compliance with all of
the terms, covenants, conditions, stipulations and agreements contained in the
Loan Agreement, the Revolving Credit Note and the other Loan Documents; (v) the
repayment of (a) any amounts the Lender may advance or spend for the maintenance
or preservation of the Collateral (as defined hereinafter) and (b) any other
expenditures that the Lender may make under the provisions of this Security
Agreement or for the benefit of the Guarantor, (vi) all amounts owed under any
modification, renewals or extensions of any of the foregoing obligations, (vii)
any and all obligations, contingent or otherwise, whether now existing or
hereafter arising, of the Borrower to the Lender arising under or in connection
with any Rate Management Transaction, and (viii) any of the foregoing that
arises after the filing of a petition by or against the Guarantor or the
Borrower under the Bankruptcy Code, even if the obligations do not accrue
because of the automatic stay under Bankruptcy Code §362 or otherwise (collectively,
the “Secured Obligations”).

 

Statement of
Agreement

 

For and in consideration of the
Revolving Credit Loans made by the Lender to the Borrower and the issuance of
the Letters of Credit by the Lender, and intending to be legally bound hereby,
the parties hereto covenant and agree as follows:

 

Section 1.                                          Creation of Security
Interests.  As security for the Secured Obligations, the
Guarantor hereby agrees that there now are or shall be duly executed and filed
or recorded in all appropriate offices all documents necessary to grant and
create in favor of the Lender a perfected security interest under the Uniform
Commercial Code in and to the following, whether now owned or hereafter
acquired by the Guarantor, which security interest is hereby granted:

 

(i)                                     All Accounts of the Guarantor;

 

(ii)                                  All Chattel Paper (electronic and
tangible) and contract rights of the Guarantor;

 

(iii)                               All General Intangibles of the
Guarantor;

 

(iv)                              All Instruments of the Guarantor
including promissory notes;

 

(v)                                 All machinery, Equipment, Goods,
Consumer Goods, Software embedded in Goods, Goods covered by Documents,
furniture, Fixtures and personal property of the Guarantor including motor
vehicles;

 

(vi)                              All Inventory of the Guarantor;

 

(vii)                           All of the Guarantor’s Deposit Accounts
(general or special) with and credits and other claims against the Lender;

 

D-2

 

(viii)                        All Investment Property of the
Guarantor;

 

(ix)                                All security interests held by the
Guarantor;

 

(x)                                   All Documents of the Guarantor;

 

(xi)                                All Letter of Credit Rights of the
Guarantor;

 

(xii)                             All Supporting Obligations of the
Guarantor;

 

(xiii)                          All insurance Proceeds of or relating to
any of the foregoing;

 

(xiv)                         All Accessions and additions to,
substitutions for, and replacements of any of the foregoing; and

 

(xv)                            All Cash and Non-cash Proceeds of the
foregoing, including without limitation the Proceeds in the Collateral Accounts
(as hereinafter defined);

 

provided, however, that no
security interest in favor of the Lender is granted in the Collateral (as
defined in the Cash Collateral Pledge Agreement), in the equity interests of WC
Holdings, Inc. or Primrose Holdings, Inc. or in any proceeds thereof.

 

Any term used in the Uniform
Commercial Code as adopted in the State of Ohio and not defined in this
Security Agreement has the same meaning as in the Uniform Commercial Code as
adopted in the State of Ohio.  The
property in which a security interest in granted pursuant to this
Section 1 is hereinafter collectively referred to as the “Collateral.”

 

Anything contained herein to
the contrary notwithstanding, the Collateral shall not include any interest of
the Guarantor in any contract, license, permit or similar general intangible if
the granting of a security interest therein is prohibited by, or would cause a
termination of all or any material rights of the Guarantor under, the terms of
the written agreement (the “Conflicting Agreements”) creating or evidencing
such contract, license, permit or similar intangible; provided, further, that,
notwithstanding anything set forth in the proviso set forth above to the
contrary, to the extent not prohibited by law, the Lender shall at all times
have a security interest in all right of the Guarantor to payments of money due
or to become due under any such contract, license, permit or similar general
intangible, and all proceeds thereof, and, if and when the prohibition which
prevents the granting of a security interest in such property (or would cause
such termination) is removed, terminated or otherwise becomes unenforceable as
a matter of law, the Lender will be deemed to have, and at all times to have
had, a security interest in such property and the Collateral will be deemed to
include, and at all times to have included, such property.

 

[The Company and J. H. Whitney
Mezzanine Fund, L.P., a Delaware limited partnership (“Whitney”), entered into
a certain Securities Purchase Agreement dated January 14, 2004 (as amended
from time to time as permitted under the Intercreditor Agreement, the
“Securities Purchase Agreement”), pursuant to which, among other things,
Whitney purchased a senior subordinated note of the Guarantor of even date
therewith in the original principal amount of $30,000,000 (the “Subordinated
Note”).  To secure the Guarantor’s
obligations under the Securities Purchase

 

D-3

 

Agreement and the Subordinated
Note, the Guarantor, Whitney and the Collateral Agent (defined below) entered
into a certain Cash Collateral Pledge Agreement dated as of January 14,
2004 among the Guarantor, as pledgor, Whitney and U.S. Bank National
Association, as collateral agent (the “Collateral Agent”),  pursuant to which, among other things, (i) the
Guarantor authorized the entire purchase price of the Subordinated Note in the
amount of $30,000,000 to be deposited in the name of the Collateral Agent in a
trust account at the offices of U.S. Bank National Association and (ii) the
Guarantor granted the Collateral Agent for the benefit of the holders of the
Subordinated Note a security interest in such Cash Collateral Account.  In connection with the execution and
delivery of the Loan Agreement, Whitney, the Lender and SCC entered into a
certain Intercreditor Agreement of even date therewith (the “Intercreditor
Agreement”).  Notwithstanding anything
herein to the contrary, as provided in the Intercreditor Agreement, the
Collateral shall not include any of the collateral pledged by the Guarantor to
the Collateral Agent pursuant to the Cash Collateral Pledge Agreement
including, without limitation, the Cash Collateral Account, the Deposit and the
Investments (each as defined in the Cash Collateral Pledge Agreement).]

 

Section 2.                                          Lender Has Rights and
Remedies of a Secured Party.  In addition to all rights and
remedies given to the Lender by this Security Agreement, the Lender shall have
all the rights and remedies of a secured party under the Uniform Commercial
Code.

 

Section 3.                                          Provisions Applicable
to the Collateral.  The parties agree that the following
provisions shall be applicable to the Collateral during the term of this
Security Agreement:

 

(a)                                  Chief Executive
Offices; Books and Records.

 

(i)                                     The Guarantor shall keep accurate and
complete books and records concerning the Collateral.

 

(ii)                                  The Guarantor represents and warrants
that, as of the date hereof, its chief executive office is located at Three
Pickwick Plaza, Suite 310, Greenwich, Connecticut 06930.  The Guarantor shall not move its chief
executive office except to such new location as it may establish in accordance
with paragraph (v) below.

 

(iii)                               The Guarantor represents and warrants
that it is incorporated in the State of Delaware, that its exact legal name is
as set forth in the preamble to this Security Agreement and that its organizational
or charter number is [0882372/2760890].

 

(iv)                              The only original books of account and
records of the Guarantor relating to all Accounts of the Guarantor are, and
shall continue to be, kept at its chief executive office.  The location where such books of account and
records are kept shall not be changed except in accordance with paragraph (v)
below.

 

(v)                                 The Guarantor shall not establish any
new location for its chief executive office or for the place where such books
of account and records are kept until (A) it shall have given to the Lender
written notice of its intention to do so,

 

D-4

 

clearly describing each such
new location and providing such other information in connection therewith as
the Lender may reasonably request, and (B), with respect to each such new
location, it shall have taken such action, satisfactory to the Lender
(including without limitation all action required by Section 4 hereof) as
may be necessary to maintain the security interest of the Lender in the
Accounts granted hereunder at all times fully perfected and in full force and
effect.

 

(vi)                              The Guarantor will preserve its
corporate existence and not, in one transaction or a series of related
transactions, merge into or consolidate with any other entity, or sell all or
substantially all of its assets without the prior written consent of the
Lender.

 

(vii)                           The Guarantor shall not change its state
of incorporation, its organizational or charter number or its legal name
without thirty (30) days prior written consent of the Lender.

 

(viii)                        The Guarantor shall not invoice an
account debtor or maintain its records relating to any Account in any name
other than its own proper corporate name.

 

(b)                                  Inspection. 
Upon reasonable prior notice to the Guarantor, the Lender shall have the
right to review the books and records of the Guarantor concerning the
Collateral and to copy the same and make excerpts therefrom, and to inspect the
Collateral, at all times during regular business hours, so long as such
inspections do not unreasonably interfere with or impede the operations of the
Guarantor.

 

(c)                                  Guarantor’s Right to
Collect Accounts.  Notwithstanding the security interest in the
Accounts granted hereunder, the Guarantor shall have the right to collect its
Accounts at its own cost and expense until such time as the Lender shall have
notified the Guarantor pursuant to paragraph (e) below that it has revoked such
right.

 

(d)                                  Cash Collateral
Accounts.  If any Event of Default (as that term is
defined in the Loan Agreement) shall occur and be continuing, the Lender shall
have the right after notice to the Guarantor to cause to be opened and
maintained with the Lender one or more non-interest bearing bank accounts in
the name of the Guarantor as cash collateral accounts (herein called
“Collateral Accounts”).  Upon receipt of
notice by the Guarantor from the Lender that one or more Collateral Accounts
have been opened for the Guarantor pursuant to this paragraph, the Guarantor
shall cause all cash Proceeds collected by it to be delivered to the Lender
forthwith upon receipt, in the original form in which received, bearing such
endorsements or assignments by the Guarantor as may be necessary to permit
collection thereof by the Lender, and for such purpose the Guarantor hereby
irrevocably authorizes and empowers the officers and employees of the Lender to
endorse and sign the name of the Guarantor on all checks, drafts, money orders
or other media of payment so delivered to it and such endorsements or assignments
shall, for all purposes, be deemed to have been made by the Guarantor prior to
any endorsement or assignment thereof by the Lender.  The Lender may use any convenient or customary means for the
purpose of collecting such

 

D-5

 

checks, drafts, money orders or
other media of payment.  Monies in the
Collateral Accounts shall be used by the Lender to reduce the Borrower’s
obligations under the Revolving Credit Note, the Loan Agreement and this
Security Agreement.  At such time as the
Secured Obligations are paid in full, the requirement that cash Proceeds be
delivered to the Lender shall terminate.

 

(e)                                  Collection of Accounts
by Lender.  If any Event of Default (as that term is
defined in the Loan Agreement) shall occur and be continuing, the Lender shall
have the right at any time (i) to revoke the right of the Guarantor to collect
its Accounts pursuant to paragraph (c) above by written notice to the Guarantor
to such effect, (ii) to take over and direct collection of the Accounts of the
Guarantor, (iii) to give notice of the Lender’s security interest in the
Accounts to any or all of the account debtors or makers obligated to the
Guarantor thereon, (iv) to direct such account debtors to make payment of the Accounts
directly to the Lender (and at the request of the Lender the Guarantor shall
indicate on all billings to account debtors that payments thereon are to be
made to the Lender), and (v) to take control of the Accounts of the Guarantor
and the Proceeds thereof and to take possession of all of the Guarantor’s books
and records relating thereto, with full power and authority in the name of the
Lender or of the Guarantor to enforce, collect, sue for, receive, compromise,
settle and receipt for any and all of the Accounts.  If any Account becomes evidenced by a promissory note or other
instrument for the payment of money, the Guarantor shall at the Lender’s
request deliver any such instrument to the Lender duly endorsed to the order of
the Lender as additional Collateral under this Security Agreement.  It is understood and agreed by the Guarantor
that the Lender shall have no liability whatsoever to the Guarantor under this
paragraph (e) except for its own gross negligence or willful misconduct.

 

(f)                                    Funds in Collateral
Accounts; Control.  All cash Proceeds received by the Lender
from the Guarantor pursuant to paragraph (d) above or by the Lender directly
from account debtors pursuant to paragraph (e) above shall be deposited in the
Lender’s Collateral Account as further security for the Secured
Obligations.  The Lender shall have sole
dominion and control over all funds deposited in each Collateral Account and
such funds may be withdrawn therefrom only by or at the direction of the
Lender.

 

(g)                                 Account Verification. 
If an Event of Default shall occur and be continuing, the Lender may,
without notice to the Guarantor, verify with any account debtor of the
Guarantor the status of any accounts payable by such account debtor.  The Guarantor from time to time shall execute
and deliver such instruments and take all such action as the Lender may
reasonably request in order to effectuate the purpose of this paragraph (g).

 

(h)                                 Notice of Adverse
Change.  The Guarantor shall immediately notify the
Lender of any material adverse change of which it has knowledge which is
reasonably likely to adversely affect the ultimate collectibility of any
Account in excess of $150,000.

 

(i)                                    Location of Tangible
Personal Property.  The Guarantor represents and warrants that
with respect to the items of tangible personal property described in clauses
(v)  and (vi) of Section 1 of this
Security Agreement, all of such property is located, as of the

 

D-6

 

date hereof, as specified in Exhibit
A attached hereto.  The Guarantor
shall not retain any property at any location, other than those specified in Exhibit
A, unless prior to moving any property to such a location, the Guarantor
will have given five (5) Business Days notice to the Lender.

 

(j)                                    Sale of Assets. 
Notwithstanding the security interest in the Guarantor’s property
granted hereunder, the Guarantor shall have the right to sell or otherwise
dispose of Collateral to the extent permitted under Section 7.9 of the
Loan Agreement, free and clear of such security interest, but in such event
such security interest shall continue in the Proceeds of such sales.  For the avoidance of doubt, nothing
contained in this Agreement shall be interpreted or construed to prevent the
Guarantor’s receipt of and distribution to the Guarantor’s members of any
distributions permitted by Section 7.18 of the Loan Agreement.

 

Section 4.                                          Preservation and
Protection of Security Interests.  The Guarantor shall
faithfully preserve and protect the Lender’s security interest in its
Collateral and shall, at its own cost and expense, cause such security interest
to be perfected and continued perfected so long as the Secured Obligations or
any portion thereof is outstanding and unpaid, and for such purpose the
Guarantor shall from time to time at the request of the Lender file or record,
or cause to be filed or recorded, such instruments, documents and notices,
including without limitation, financing statements and continuation statements,
as the Lender may deem necessary or advisable from time to time in order to
perfect and continue perfected said security interests.  The Guarantor shall do all such other acts
and things and shall execute and deliver all such other instruments and documents,
including without limitation further security agreements, pledges,
endorsements, assignments and notices, as the Lender may deem reasonably
necessary or advisable from time to time in order to perfect and preserve the
priority of said security interest as a perfected first lien security interest
in the Collateral prior to the rights of any other secured party or lien
creditor except as otherwise permitted herein or in the Loan Agreement.  The Lender, and its officers, employees and
authorized agents, or any of them, are hereby irrevocably appointed the
attorneys-in-fact of the Guarantor to execute financing statements or
continuation statements without the Guarantor’s signature appearing thereon.

 

Section 5.                                          Application of Moneys. 
Except as otherwise provided herein, if any Event of Default shall occur
and be continuing, all moneys in all Collateral Accounts and all moneys which
the Lender shall receive upon realization of any and all Collateral may be
applied by or at the direction of the Lender in the following manner:

 

(a)                                  First, to the payment or reimbursement
of all reasonable advances, expenses and disbursements of the Lender
(including, without limitation, the reasonable fees and disbursements of its
counsel and agents) incurred in connection with the administration and
enforcement of, or the preservation of any rights under, this Security
Agreement or the Loan Agreement or in the collection of the obligations of the
Borrower under the Revolving Credit Note; and

 

(b)                                 Second, to be applied in any manner
desired by the Lender to the satisfaction of the Secured Obligations.

 

D-7

 

Section 6.                                          Certain Representations
and Covenants.  The Guarantor agrees, subject to its right
as provided in paragraph (c) of Section 3 hereof, from and after the date of
this Security Agreement and until payment in full of the Secured Obligations,
as follows:

 

(a)                                  Title and Liens. 
It has and will have good and marketable title to the Collateral from
time to time owned or acquired by it, free and clear of all liens, encumbrances,
pledges and security interests, except such as have been granted to the Lender
and such as have not been prohibited pursuant to Section 7.2 of the Loan
Agreement; and the security interests of the Lender in the Collateral are
perfected lien security interests, prior to the rights of any other secured
party or lien creditor except as permitted by Section 7.2 of the Loan
Agreement.  The Guarantor shall defend
its title to the Collateral against the claims and demands of all persons
whomsoever.

 

(b)                                  Negative Pledge. 
It shall not, without the prior written consent of the Lender, (i) sell,
assign or transfer any Accounts except as otherwise permitted pursuant to
Section 7.9 of the Loan Agreement, (ii) grant or create or permit to exist
any lien, encumbrance, pledge or security interest on, or in any of the
Collateral or any other personal property, real property or fixtures of the
Guarantor except such as have not been prohibited pursuant to Section 7.2
of the Loan Agreement, (iii) permit any levy or attachment to be made against
any of the Collateral that remains undischarged or unremoved for more than
sixty (60) days, or (iv) file any financing statement with respect to any of
the Collateral, except financing statements in favor of the Lender or by lessors
under true leases of personal property and similar protective filings that do
not secure indebtedness for borrowed funds and except such as have not been
prohibited pursuant to Section 7.2 of the Loan Agreement.

 

(c)                                  Risk of Loss; Insurance. 
Risk of loss of, damage to, or destruction of, the Collateral is on the
Guarantor to the extent that the Guarantor now or hereafter owns or acquires
such Collateral.  If the Guarantor fails
to effect and keep in full force and effect insurance covering the Collateral
in such amounts, on such terms and to such extent as is commercially customary
and reasonable for such Collateral, or fails to pay the premiums thereon when
due, the Lender may do so for the account of the Guarantor and add the cost
thereof to the Secured Obligations.  The
Guarantor hereby assigns and sets over unto the Lender all moneys which may
become payable on account of such insurance, including without limitation any
returned or unearned premiums which may be due upon cancellation of any such insurance,
and directs the insurers to pay the Lender any amount so due; provided,
however, that in the event that an Event of Default (defined below) has not
occurred and is not then continuing, the Guarantor shall be entitled to retain
and use such insurance proceeds to repair and replace any and all damaged or
destroyed machinery, Equipment, furniture, fixtures, inventory and other
personal property of Guarantor with respect to which such insurance proceeds
relate.  The Lender, its officers,
employees and authorized agents are hereby irrevocably appointed the
attorneys-in-fact of the Guarantor to endorse any draft or check which may be
payable to the Guarantor in order to collect the proceeds of such insurance or
any return of unearned premiums.  Any
balance of insurance proceeds remaining in the possession of the Lender after
payment in full of the Secured Obligations shall be paid to the Guarantor or
its order.

 

D-8

 

(d)                                  Maintenance of
Machinery and Equipment.  The Guarantor agrees that it will maintain
the machinery and equipment which comprises part of the Collateral in good
condition, reasonable wear and tear alone excepted, and will pay and discharge
all taxes, levies and other impositions levied thereon (except such thereof as
are being contested in good faith by appropriate proceedings diligently
conducted) as well as the cost of repairs to or maintenance of the same.  If the Guarantor fails to do so, the Lender
may pay such taxes, levies or impositions and the cost of such repairs or
maintenance for the account of the Guarantor and add the amount thereof to the
Secured Obligations.

 

(e)                                  Care of Collateral by
Lender.  The Lender shall be deemed to have exercised
reasonable care in the custody and preservation of such of the Collateral as
may be in the Lender’s possession if the Lender takes such action for that
purpose as the Guarantor shall request in writing, provided that such requested
action shall not, in the judgment of the Lender, impair the Lender’s security
interest in such Collateral or its rights in, or the value of, such Collateral,
and provided further that such written request is received by the Lender in
sufficient time to permit the Lender to take the requested action.

 

Section 7.                                          Events of Default. 
If any one or more of the following events (each an “Event of Default”)
shall occur and be continuing:

 

(a)                                  The Guarantor shall default in the due
observation or performance of any of the covenants or agreements of the
Guarantor contained in Sections 1, 4 or 6(b) of this Security Agreement;

 

(b)                                 The Guarantor shall default in the due
observance or performance of any of the covenants or agreements of the
Guarantor (other than those referred to in Section 7(a) hereof) and such
default shall continue without cure for thirty (30) days after written notice
thereof shall have been given to the Guarantor by the Lender; or

 

(c)                                  An Event of Default (as that term is
defined in the Loan Agreement) shall occur and be continuing,

 

then in any such event, the Lender
shall have such rights and remedies in respect of the Collateral or any part
thereof as are provided by the Uniform Commercial Code and such other rights
and remedies in respect thereof which it may have at law or in equity or under
this Security Agreement, including without limitation the right to enter any
premises where any Collateral is located and take possession of the same
without demand or notice and without prior judicial hearing or legal
proceedings, which the Guarantor hereby expressly waives, and to sell all or
any portion of the Collateral at public or private sale without prior notice to
the Guarantor except as otherwise required by law (and if notice is required by
law, after ten days’ prior written notice) at such place or places and at such
time or times and in such manner and upon such terms, whether for cash or on
credit, as the Lender in its sole discretion may determine.  Upon any such sale of any of the Collateral,
the Lender may, to the extent permitted by applicable law, purchase all or any
of the Collateral being sold, free from any equity or right of redemption.  The Lender shall apply the proceeds of any
such sale and any proceeds received by the Lender from the collection of
Accounts and Proceeds to the obligations of the Borrower as provided in
Section 5 hereof.  If such proceeds
are

 

D-9

 

insufficient to pay the amounts
required by law, the Guarantor shall be liable for any deficiency in the amount
so realized from the Collateral.

 

In addition, in any such event,
the Guarantor shall promptly upon demand by the Lender assemble the Collateral
and make it available to the Lender at a place to be designated by the Lender
which shall be reasonably convenient to the Lender and the Guarantor.  The right of the Lender under this
Section to have the Collateral assembled and made available to it is of
the essence of this Security Agreement and the Lender may, at its election,
enforce such right by a bill in equity for specific performance.

 

The Guarantor, to the extent
that it has any right, title or interest in any of the Collateral, waives and
releases any right to require the Lender to collect any of the Secured
Obligations from any other of the Collateral under any theory of marshalling of
assets, or otherwise, and specifically authorizes the Lender to apply any of
the Collateral against any of the Secured Obligations in any manner that the
Lender may determine.

 

Section 8.                                          Amendments, Waivers. 
The provisions of this Security Agreement may from time to time be
waived, modified or amended only by a writing signed by each of the parties
hereto.

 

Section 9.                                          Defeasance. 
Upon payment in full of the Secured Obligations, this Security Agreement
shall terminate and be of no further force and effect; and in such event, the
Lender shall, at the expense of the Borrower, redeliver and reassign the
Collateral to the Guarantor and take all action necessary to terminate the
security interests of the Lender in the Collateral.  Until such time, however, this Security Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

 

Section 10.                                   Miscellaneous.

 

10.1                        Notices. 
All notices, requests and demands to or upon the parties hereto to be
effective shall be in writing and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered in accordance
with the provisions of Section 9.1 of the Loan Agreement.

 

10.2                        No Implied Rights or
Waivers.  No notice to or demand on the Guarantor in
any case shall entitle the Guarantor to any other or further notice or demand
in the same, similar and other circumstances. 
Neither any failure nor any delay on the part of the Lender in
exercising any right, power or privilege hereunder or under the Loan Agreement
or the Revolving Credit Note shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of
the same or the exercise of any other right, power or privilege.

 

10.3                        Applicable Law. 
This Security Agreement, the Loan Agreement and the Revolving Credit
Note shall be deemed to be contracts made under and shall be construed in
accordance with and governed by the laws of the State of Ohio without giving
effect to its choice of law provisions.

 

D-10

 

10.4                        Counterparts. 
This Security Agreement may be signed in any number of counterparts with
the same effect as if the signatures thereto were upon the same instrument.

 

10.5                        Headings. 
The headings of this Security Agreement are inserted for convenience
only and shall not be deemed to constitute a part hereof.

 

10.6                        Severability. 
Any provision of this Security Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or effecting the validity or
enforceability of such provisions in any other jurisdiction.

 

10.7                        Assignment. 
This Security Agreement shall bind and inure to the benefit of any
successor or assign of the Lender and if any such assignment is made, the
Guarantor shall render performance under this Security Agreement to the
assignee.  The Guarantor may not assign
its rights or obligations under this Security Agreement.

 

10.8                        Entire Agreement. 
This Security Agreement and Exhibit A hereto reflect the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements or understandings with respect thereto in their
entirety.

 

10.9                        Limitation on Recourse. 
Notwithstanding anything herein to the contrary, the Lender shall have
no recourse to any assets that are included in “Collateral” (as such term is
defined in the Cash Collateral Pledge Agreement).  The Lender shall not pursue any remedies against such assets,
whether by attachment, writ of execution or otherwise.

 

IN WITNESS WHEREOF, the parties
hereto, by their officers thereunto duly authorized, have executed and
delivered this Security Agreement the day and year first above written.

 

	
  LENDER:

  	
   

  	
  GUARANTOR:

  
	
   

  	
   

  	
   

  
	
  BANK ONE, N.A.

  	
   

  	
  [SECURITY
  CAPITAL CORPORATION

  /PUMPKIN MASTERS HOLDINGS,

  INC.],

  
	
   

  	
   

  	
    a Delaware
  corporation

  
	
  By:

  	
  /s/ Mark S. Slayman

  	
   

  	
   

  
	
   

  	
  Mark S. Slayman, First Vice
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
    /s/ Paul A.
  Miller

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Paul A. Miller

  
	
   

  	
   

  	
  Title:

  	
   Vice
  President

  
	
   

  	
   

  	
   

  
							

 

D-11

 

EXHIBIT A

 

Locations of
Tangible Personal Property

 

Three Pickwick Plaza

Suite 310

Greenwich, Connecticut 06830

 

D-12

 

EXHIBIT E-1

 

STOCK PLEDGE
AGREEMENT

 

THIS STOCK PLEDGE AGREEMENT
(the “Agreement”) is made and entered into as of June 11, 2004, by and
between SECURITY CAPITAL CORPORATION, a Delaware corporation, as pledgor (the
“Pledgor”), and BANK ONE, N.A., a national banking association, as pledgee (the
“Lender”).

 

Background

 

The following
is a mutual statement by the parties of certain factual matters which form the
basis of this Agreement and are an integral part of this Agreement.

 

A.                                    Loans. 
The Pledgor, Pumpkin Ltd., a Delaware corporation (the “Borrower”),
Pumpkin Masters Holdings, Inc., a Delaware corporation and the sole stockholder
of the Borrower (the “Company”), and the Lender have entered into a Loan
Agreement of even date herewith (the “Loan Agreement”) pursuant to which the
Lender has agreed (i) to lend to the Borrower the maximum sum of up to Seven
Million Dollars ($7,000,000) under a revolving line of credit (the “Revolving
Credit Commitment”) and (ii) to issue letters of credit in an aggregate maximum
amount of One Million Dollars ($1,000,000) (the “Letters of Credit”).  The Revolving Credit Commitment is evidenced
by a promissory note (the “Revolving Credit Note”) of the Borrower.  The borrowings under the Revolving Credit
Commitment are sometimes hereinafter referred to as the “Revolving Credit
Loans”.  The (i) aggregate undrawn stated
amount under all Letters of Credit outstanding at any one time plus (ii) the
aggregate unpaid amount at such time of all obligations of the Borrower then
outstanding under and in connection with any Letters of Credit to reimburse the
Lender for amounts paid by the Lender in respect of any one or more drawings
under any Letters of Credit is sometimes referred to as the “LOC
Obligations”.  Capitalized terms used in
this Agreement that are not otherwise defined herein shall have the meanings
ascribed to them in the Loan Agreement.

 

B.                                    Guaranty.  Pursuant to the terms of the Loan Agreement, the Pledgor has entered
into an Unconditional Guaranty Agreement of even date herewith, pursuant to
which the Pledgor has guaranteed the payment and performance of the Borrower of
its obligations under the Loan Agreement, the Revolving Credit Notes and other
Loan Documents (the “Guaranty”).

 

C.                                    Stock Pledge. 
The Lender is willing to make the Revolving Credit Loans to the Borrower
and to issue the Letters of Credit upon the condition that (i) the Pledgor
grant to the Lender a security interest in all of the shares of common stock
(the “Shares”) in the Company owned by the Pledgor and (ii) the Pledgor pledge
and assign to the Lender all of the stock certificates evidencing the Shares
(the “Certificates”) owned by the Pledgor. 
Exhibit A, which is attached hereto and incorporated herein by
this reference, lists each Certificate held by the Pledgor and the
corresponding number of Shares represented by each such Certificate.

 

E-1-1

 

Statement of
Agreement

 

For and in consideration of the
Revolving Credit Loans made by the Lender to the Borrower and the issuance of
the Letters of Credit by the Lender, and intending to be legally bound hereby,
the parties hereto covenant and agree as follows:

 

§1.                               Pledge.  As security for (i) the payment of the Revolving Credit Note, the LOC
Obligations and the Guaranty,  (ii)
the payment of all amounts owing pursuant to this Agreement, the Loan Agreement
and the other Loan Documents, and (iii) the performance by the Borrower of, and
compliance with, all of the terms, covenants, conditions, stipulations and
agreements contained in this Agreement, the Loan Agreement, the Revolving
Credit Note and the other Loan Documents, (iv) the performance by the Pledgor
of, and compliance with, all of the terms, covenants, conditions, stipulations
and agreements contained in this Agreement, the Loan Agreement, the Guaranty
and the other Loan Documents, (v) the repayment of (a) any amounts the Lender
may advance or spend for the maintenance or preservation of the Shares, and (b)
any other expenditures that the Lender may make under the provisions of this
Agreement or for the benefit of the Pledgor, (vi) all amounts owed under any
modification, renewals or extensions of any of the foregoing obligations, (vii)
any and all obligations, contingent or otherwise, whether now existing or
hereafter arising, of the Borrower to the Lender arising under or in connection
with any Rate Management Transaction, and (vii) any of the foregoing that
arises after the filing of a petition by or against the Pledgor or the Borrower
under the Bankruptcy Code, even if the obligations do not accrue because of the
automatic stay under Bankruptcy Code §362 or otherwise (collectively, the
“Secured Obligations”), the Pledgor hereby grants to the Lender a security
interest in the Shares, together with any additions thereto and proceeds
therefrom, and hereby pledges and assigns the respective Certificates
representing the Shares to the Lender. 
The Pledgor has delivered stock powers with respect to the respective
Certificates endorsed in blank (the “Stock Powers”) to the Lender and hereby
authorizes the Lender, upon the occurrence and continuation of an Event of
Default to transfer the Certificates to the Lender.  The Lender hereby acknowledges receipt of the Certificates as
security for the Secured Obligations. 
The Lender agrees not to transfer, sell, encumber or otherwise dispose
of the Shares except in accordance with the provisions of this Agreement.

 

§2.                               Dividends and Voting
Rights.  The Pledgor, as record owner of the Shares,
is entitled, prior to the occurrence and continuance of any Event of Default
and the exercise of the Lender’s rights hereunder, to (i) retain all cash
dividends paid on account of the Shares, (ii) exercise all voting rights of the
Shares, and (iii) exercise all other stockholders’ rights and privileges
attributable to the Shares other than the right of sale or other alienation,
except and unless as otherwise provided herein.

 

§3.                               Adjustment. 
As additional security for the Secured Obligations, the Pledgor hereby
grants to the Lender a security interest in all securities, money, funds or
other property received by the Pledgor on account of or in exchange for the
Shares whether as a result of any share dividend, share split,
reclassification, merger or consolidation, reorganization or otherwise, and
agrees to promptly pledge and deliver such securities, together with appropriate
certificates and stock powers endorsed in blank to the Lender.

 

E-1-2

 

§4.                               Representations and
Warranties of the Pledgor.  The Pledgor represents and warrants to the
Lender, which representations and warranties shall survive the execution and
delivery of this Agreement, as follows:

 

(a)                                  The execution, delivery and performance
of this Agreement will not conflict with any order, writ, injunction or decree
of any court or arbitrator presently in effect having applicability to the
Pledgor or with any agreement to which the Pledgor is a party, which in any way
prohibits or would be violated by the execution an carrying out of this
Agreement.

 

(b)                                 The Pledgor owns the Shares free and
clear of all liens and encumbrances and, except as provided by applicable law,
including applicable securities law, there are no other restrictions on the
transfer or sale of any of the Shares, except as disclosed on the Certificates.

 

§5.                               Release of Security
Interest.  Upon payment and satisfaction in full of the
Secured Obligations and termination of the Lender’s obligations under the Loan
Agreement, the Lender agrees to immediately cancel all Stock Powers with
respect to the Certificates and to release its security in the Shares.  Upon payment and satisfaction in full of the
Secured Obligations and termination of the Lender’s obligations under the Loan
Agreement, the Lender hereby agrees to immediately deliver all of the
Certificates to the Pledgor.

 

§6.                               Default. 
Upon the occurrence and continuation of an Event of Default, the Lender
shall have all rights and remedies provided by law, including those under the
Uniform Commercial Code as adopted in Ohio (“UCC”), and may sell the Shares in
any manner which is not inconsistent with the provisions of the UCC.  The proceeds of the sale of the Shares shall
first be applied to the repayment of all amounts owing to the Lender under the
Loans.  These rights shall be in
addition to other remedies now or hereafter existing at law or in equity.  Any failure or delay by the Lender to
exercise any right hereunder shall not be construed as a waiver of the right to
exercise the same or any other right at any time.  Any proceeds remaining after the sale of the Shares, the
repayment of the Loans and payment and satisfaction in full of the other
Secured Obligations shall be paid to the Pledgor.

 

§7.                               Successors and Assigns. 
Except as otherwise expressly provided in this Agreement, the terms and
provisions of this Agreement shall bind and inure to the benefit of the
respective successors and assigns of the parties.

 

§8.                               Assignment. 
The Lender may assign its rights and obligations under this Agreement
only in connection with the assignment of the entire Loan Agreement.

 

§9.                               Agreement Complete. 
This Agreement sets forth all of the agreements, understandings,
warranties, representations and other terms of the parties with respect to the
subject matter hereof.

 

§10.                        Controlling Law;
Severability.  The various provisions of this Agreement
shall be construed under, and the respective rights and obligations of the
parties will be determined with reference to, the laws of the State of
Ohio.  If, and to the extent, that any
court of competent

 

E-1-3

 

jurisdiction holds any
provision (or any part thereof) of this Agreement to be invalid, such holding
will in no way affect the validity of the remainder of this Agreement.

 

§11.                        Construction of
Agreement.  The captions at the beginnings of the
several sections of this Agreement are not part of the context hereof but are
merely labels to assist in locating and reading those sections; and they shall
be ignored in construing this Agreement. 
This Agreement may be executed in several counterparts, and each
executed counterpart shall be considered as an original of this Agreement.

 

§12.                        Limitation on Recourse. 
Notwithstanding anything herein to the contrary, the Lender shall have
no recourse to any assets that are included in “Collateral” (as such term is
defined in the Cash Collateral Pledge Agreement).  The Lender shall not pursue any remedies against such assets,
whether by attachment, writ of execution or otherwise.

 

IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first set forth above.

 

	
  LENDER:

  	
  PLEDGOR:

  
	
   

  	
   

  
	
  BANK ONE, N.A.

  	
  SECURITY CAPITAL CORPORATION,

  
	
   

  	
     a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mark S. Slayman

  	
   

  	
  By:

  	
    /s/ Paul A.
  Miller

  	
   

  
	
   

  	
  Mark S. Slayman, First Vice
  President

  	
  Name:

  	
   Paul A. Miller

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
								

 

E-1-4

 

EXHIBIT A

 

TO

 

STOCK PLEDGE
AGREEMENT

 

	
  Holder of Record

  	
   

  	
  Certificate Number

  	
   

  	
  Number of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Security Capital Corporation

  	
   

  	
  1

  	
   

  	
  800

  

 

E-1-5

 

EXHIBIT E-2

 

STOCK PLEDGE
AGREEMENT

 

THIS STOCK PLEDGE AGREEMENT
(the “Agreement”) is made and entered into as of June 11, 2004, by and
between PUMPKIN MASTERS HOLDINGS, INC., a Delaware corporation, as pledgor (the
“Pledgor”), and BANK ONE, N.A., a national banking association, as pledgee (the
“Lender”).

 

Background

 

The following
is a mutual statement by the parties of certain factual matters which form the
basis of this Agreement and are an integral part of this Agreement.

 

A.                                    Loans. 
The Pledgor, Pumpkin Ltd., a Delaware corporation (the “Borrower”),
Security Capital Corporation, a Delaware corporation, and the Lender have
entered into a Loan Agreement of even date herewith (the “Loan Agreement”)
pursuant to which the Lender has agreed (i) to lend to the Borrower the maximum
sum of up to Seven Million Dollars ($7,000,000) under a revolving line of
credit (the “Revolving Credit Commitment”) and (ii) to issue letters of credit
in an aggregate maximum amount of One Million Dollars ($1,000,000) (the
“Letters of Credit”).  The Revolving Credit
Commitment is evidenced by a promissory note (the “Revolving Credit Note”) of
the Borrower.  The borrowings under the
Revolving Credit Commitment are sometimes hereinafter referred to as the
“Revolving Credit Loans”.  The (i)
aggregate undrawn stated amount under all Letters of Credit outstanding at any
one time plus (ii) the aggregate unpaid amount at such time of all obligations
of the Borrower then outstanding under and in connection with any Letters of
Credit to reimburse the Lender for amounts paid by the Lender in respect of any
one or more drawings under any Letters of Credit is sometimes referred to as
the “LOC Obligations”.  Capitalized
terms used in this Agreement that are not otherwise defined herein shall have
the meanings ascribed to them in the Loan Agreement.

 

B.                                    Guaranty.  Pursuant to the terms of the Loan Agreement, the Pledgor has entered
into an Unconditional Guaranty Agreement of even date herewith, pursuant to
which the Pledgor has guaranteed the payment and performance of the Borrower of
its obligations under the Loan Agreement, the Revolving Credit Notes and other
Loan Documents (the “Guaranty”).

 

C.                                    Stock Pledge. 
The Lender is willing to make the Revolving Credit Loans to the Borrower
and to issue the Letters of Credit upon the condition that (i) the Pledgor
grant to the Lender a security interest in all of the shares of common stock
(the “Shares”) in the Borrower owned by the Pledgor and (ii) the Pledgor pledge
and assign to the Lender all of the stock certificates evidencing the Shares
(the “Certificates”) owned by the Pledgor. 
Exhibit A, which is attached hereto and incorporated herein by
this reference, lists each Certificate held by the Pledgor and the
corresponding number of Shares represented by each such Certificate.

 

E-2-1

 

Statement of
Agreement

 

For and in consideration of the
Revolving Credit Loans made by the Lender to the Borrower and the issuance of
the Letters of Credit by the Lender, and intending to be legally bound hereby,
the parties hereto covenant and agree as follows:

 

§1.                               Pledge.  As security for (i) the payment of the Revolving Credit Note, the LOC
Obligations and the Guaranty,  (ii)
the payment of all amounts owing pursuant to this Agreement, the Loan Agreement
and the other Loan Documents, and (iii) the performance by the Borrower of, and
compliance with, all of the terms, covenants, conditions, stipulations and
agreements contained in this Agreement, the Loan Agreement, the Revolving
Credit Note and the other Loan Documents, (iv) the performance by the Pledgor
of, and compliance with, all of the terms, covenants, conditions, stipulations
and agreements contained in this Agreement, the Loan Agreement, the Guaranty
and the other Loan Documents, (v) the repayment of (a) any amounts the Lender
may advance or spend for the maintenance or preservation of the Shares, and (b)
any other expenditures that the Lender may make under the provisions of this
Agreement or for the benefit of the Pledgor, (vi) all amounts owed under any
modification, renewals or extensions of any of the foregoing obligations, (vii)
any and all obligations, contingent or otherwise, whether now existing or
hereafter arising, of the Borrower to the Lender arising under or in connection
with any Rate Management Transaction, and (vii) any of the foregoing that
arises after the filing of a petition by or against the Pledgor or the Borrower
under the Bankruptcy Code, even if the obligations do not accrue because of the
automatic stay under Bankruptcy Code §362 or otherwise (collectively, the
“Secured Obligations”), the Pledgor hereby grants to the Lender a security
interest in the Shares, together with any additions thereto and proceeds
therefrom, and hereby pledges and assigns the respective Certificates
representing the Shares to the Lender. 
The Pledgor has delivered stock powers with respect to the respective
Certificates endorsed in blank (the “Stock Powers”) to the Lender and hereby
authorizes the Lender, upon the occurrence and continuation of an Event of
Default to transfer the Certificates to the Lender.  The Lender hereby acknowledges receipt of the Certificates as
security for the Secured Obligations. 
The Lender agrees not to transfer, sell, encumber or otherwise dispose
of the Shares except in accordance with the provisions of this Agreement.

 

§2.                               Dividends and Voting
Rights.  The Pledgor, as record owner of the Shares,
is entitled, prior to the occurrence and continuance of any Event of Default
and the exercise of the Lender’s rights hereunder, to (i) retain all cash
dividends paid on account of the Shares, (ii) exercise all voting rights of the
Shares, and (iii) exercise all other stockholders’ rights and privileges
attributable to the Shares other than the right of sale or other alienation, except
and unless as otherwise provided herein.

 

§3.                               Adjustment. 
As additional security for the Secured Obligations, the Pledgor hereby
grants to the Lender a security interest in all securities, money, funds or
other property received by the Pledgor on account of or in exchange for the
Shares whether as a result of any share dividend, share split,
reclassification, merger or consolidation, reorganization or otherwise, and
agrees to promptly pledge and deliver such securities, together with
appropriate certificates and stock powers endorsed in blank to the Lender.

 

E-2-2

 

§4.                               Representations and
Warranties of the Pledgor.  The Pledgor represents and warrants to the
Lender, which representations and warranties shall survive the execution and
delivery of this Agreement, as follows:

 

(a)                                  The execution, delivery and performance
of this Agreement will not conflict with any order, writ, injunction or decree
of any court or arbitrator presently in effect having applicability to the
Pledgor or with any agreement to which the Pledgor is a party, which in any way
prohibits or would be violated by the execution an carrying out of this
Agreement.

 

(b)                                 The Pledgor owns the Shares free and
clear of all liens and encumbrances and, except as provided by applicable law,
including applicable securities law, there are no other restrictions on the
transfer or sale of any of the Shares, except as disclosed on the Certificates.

 

§5.                               Release of Security
Interest.  Upon payment and satisfaction in full of the
Secured Obligations and termination of the Lender’s obligations under the Loan
Agreement, the Lender agrees to immediately cancel all Stock Powers with
respect to the Certificates and to release its security in the Shares.  Upon payment and satisfaction in full of the
Secured Obligations and termination of the Lender’s obligations under the Loan
Agreement, the Lender hereby agrees to immediately deliver all of the
Certificates to the Pledgor.

 

§6.                               Default. 
Upon the occurrence and continuation of an Event of Default, the Lender
shall have all rights and remedies provided by law, including those under the
Uniform Commercial Code as adopted in Ohio (“UCC”), and may sell the Shares in
any manner which is not inconsistent with the provisions of the UCC.  The proceeds of the sale of the Shares shall
first be applied to the repayment of all amounts owing to the Lender under the
Revolving Credit Loans and the LOC Obligations.  These rights shall be in addition to other remedies now or
hereafter existing at law or in equity. 
Any failure or delay by the Lender to exercise any right hereunder shall
not be construed as a waiver of the right to exercise the same or any other
right at any time.  Any proceeds
remaining after the sale of the Shares, the repayment of the Revolving Credit
Loans and the LOC Obligations and payment and satisfaction in full of the other
Secured Obligations shall be paid to the Pledgor.

 

§7.                               Successors and Assigns. 
Except as otherwise expressly provided in this Agreement, the terms and
provisions of this Agreement shall bind and inure to the benefit of the
respective successors and assigns of the parties.

 

§8.                               Assignment. 
The Lender may assign its rights and obligations under this Agreement
only in connection with the assignment of the entire Loan Agreement.

 

§9.                               Agreement Complete. 
This Agreement sets forth all of the agreements, understandings,
warranties, representations and other terms of the parties with respect to the
subject matter hereof.

 

§10.                        Controlling Law; Severability. 
The various provisions of this Agreement shall be construed under, and
the respective rights and obligations of the parties will be determined with
reference to, the laws of the State of Ohio. 
If, and to the extent, that any court of competent

 

E-2-3

 

jurisdiction holds any
provision (or any part thereof) of this Agreement to be invalid, such holding
will in no way affect the validity of the remainder of this Agreement.

 

§11.                        Construction of Agreement. 
The captions at the beginnings of the several sections of this Agreement
are not part of the context hereof but are merely labels to assist in locating
and reading those sections; and they shall be ignored in construing this
Agreement.  This Agreement may be
executed in several counterparts, and each executed counterpart shall be
considered as an original of this Agreement.

 

IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first set forth above.

 

	
  LENDER:

  	
  PLEDGOR:

  
	
   

  	
   

  
	
  BANK ONE, N.A.

  	
  PUMPKIN MASTERS HOLDINGS,
  INC.,

  
	
   

  	
     a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mark S. Slayman

  	
   

  	
  By:

  	
    /s/ Paul A.
  Miller

  	
   

  
	
   

  	
  Mark S. Slayman, First Vice
  President

  	
  Name:

  	
   Paul A. Miller

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
								

 

E-2-4

 

EXHIBIT A

 

TO

 

STOCK PLEDGE
AGREEMENT

 

	
  Holder of Record

  	
   

  	
  Certificate Number

  	
   

  	
  Number of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pumpkin Masters Holdings,
  Inc.

  	
   

  	
  1

  	
   

  	
  855

  

 

E-2-5

 

EXHIBIT F

 

[THIS GUARANTY
IS SUBJECT TO THE TERMS AND CONDITIONS OF AN INTERCREDITOR AGREEMENT DATED AS
OF JUNE 11, 2004 AMONG BANK ONE, N.A., J.H. WHITNEY MEZZANINE FUND, L.P.
AND SECURITY CAPITAL CORPORATION]

 

UNCONDITIONAL  GUARANTY
AGREEMENT

 

THIS UNCONDITIONAL GUARANTY
AGREEMENT (the “Guaranty”) is made and entered into as of June 11, 2004,
by and between [SECURITY CAPITAL
CORPORATION/PUMPKIN MASTERS HOLDINGS, INC.], a Delaware corporation
(the “Guarantor”), and BANK ONE, N.A., a national banking association with its
principal offices located in Columbus, Ohio (the “Lender”).

 

Background

 

The following
is a mutual statement by the parties of certain factual matters which form the
basis of this Guaranty and are an integral part of this Guaranty.

 

A.                                    Loans. 
The Guarantor, Pumpkin Ltd., a Delaware corporation (the “Borrower”), [Pumpkin Masters Holdings, Inc., a Delaware
corporation and the sole stockholder of the Borrower,/Security Capital
Corporation, a Delaware corporation,] and the Lender have entered
into a Loan Agreement of even date herewith (the “Loan Agreement”) pursuant to
which the Lender has agreed (i) to lend to the Borrower the maximum sum of up
to Seven Million Dollars ($7,000,000) under a revolving line of credit (the
“Revolving Credit Commitment”) and (ii) to issue letters of credit in an
aggregate maximum amount of One Million Dollars ($1,000,000) (the “Letters of
Credit”).  The Revolving Credit
Commitment is evidenced by a promissory note (the “Revolving Credit Note”) of
the Borrower.  The borrowings under the
Revolving Credit Commitment are sometimes hereinafter referred to as the
“Revolving Credit Loans”.  The (i)
aggregate undrawn stated amount under all Letters of Credit outstanding at any
one time plus (ii) the aggregate unpaid amount at such time of all obligations
of the Borrower then outstanding under and in connection with any Letters of
Credit to reimburse the Lender for amounts paid by the Lender in respect of any
one or more drawings under any Letters of Credit is sometimes referred to as
the “LOC Obligations”.  Capitalized
terms used in this Guaranty that are not otherwise defined herein shall have
the meanings ascribed to them in the Loan Agreement.

 

B.                                    Guaranty. 
Lender is willing to enter into the Loan Agreement upon the condition
that Guarantor execute and deliver this Guaranty.

 

Statement of
Agreement

 

Guarantor, in consideration of
the premises and for the purpose of inducing Lender to enter into the Loan
Agreement, does hereby covenant and agree to and for the benefit of Lender as
follows:

 

F-1

 

§1.                               Guaranty. Guarantor hereby absolutely and
unconditionally guarantees on a limited recourse basis (i) the full and prompt
payment upon demand, by acceleration or otherwise, of all amounts owing by
Borrower at any time under the Loan Agreement, the Revolving Credit Note or the
other Loan Documents (as such agreements, or any one or more of them, may be
amended, modified, extended or renewed from time to time), however created,
arising or evidenced, whether direct or indirect, absolute or contingent, and
whether now or hereafter existing (including, without limitation, the principal
of and interest on the Revolving Credit Note, the LOC Obligations, any unpaid
Commitment Fees and other unpaid fees owing to Lender by Borrower with respect
thereto), (ii) the Borrower’s performance of, and compliance with, all of the
terms, covenants, conditions, stipulations and agreements contained in the Loan
Agreement, the Revolving Credit Note and the other Loan Documents, and (iii)
any and all obligations, contingent or otherwise, whether now existing or
hereafter arising, of the Borrower to the Lender arising under or in connection
with any Rate Management Transaction (collectively, the “Obligations”).  Guarantor further agrees to pay all reasonable
expenses (including, without limitation, reasonable attorneys’ fees and legal
expenses) paid or incurred by Lender in endeavoring to collect the Obligations
or any part thereof and in enforcing this Guaranty.

 

§2.                               Rescission or Return of
Payments.  Guarantor agrees that, if at any time all or
any part of any payment theretofore applied by Lender to any of the Obligations
is or must be rescinded or returned by Lender for any reason whatsoever
(including without limitation the insolvency, bankruptcy or reorganization of
the Borrower), such Obligations shall, for the purposes of this Guaranty, to
the extent that such payment is or must be rescinded or returned, be deemed to
have continued in existence, notwithstanding such application by Lender, and this
Guaranty shall continue to be effective or reinstated, as the case may be, as
to such Obligations, all as though such application by Lender had not been
made.

 

§3.                               Unconditional
Obligations.  The obligations of Guarantor under this
Guaranty are unconditional and shall not be impaired by any action or omission
to act, with or without notice to Guarantor, of Lender or any other holder of
any of the Obligations, or by reason of any other circumstance (excepting
payment in fact) which might otherwise constitute a discharge or defense of a
guarantor including specifically the right to cure any default of Borrower in
any third party.  Lender may, from time
to time, at its sole discretion and without notice to Guarantor, take any or
all of the following actions without discharging or in any way impairing any of
the obligations of Guarantor hereunder: (i) retain or obtain a security
interest in any collateral (other than the Collateral (as defined in the Cash
Collateral Pledge Agreement), equity interests in WC Holdings, Inc., equity
interests in Primrose Holdings, Inc. or the proceeds thereof) to secure any of
the Obligations or any obligation hereunder, (ii) retain or obtain the primary
or secondary obligation of any obligor or obligors, in addition to Guarantor,
with respect to any of the Obligations, (iii) extend or renew for one or more
periods (whether or not longer than the original period), alter or exchange any
of the Obligations, or release or compromise any obligation of Guarantor
hereunder or any obligation of any nature of any other obligor with respect to
any of the Obligations, (iv) release its security interest in, or surrender,
release or permit any substitution or exchange for, all or any part of any
property securing any of the Obligations or any obligation hereunder, or extend
or renew for one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations of any nature
of any obligor with respect to any such property, and

 

F-2

 

(v) resort to Guarantor for
payment of any of the Obligations, whether or not Lender shall have resorted to
any Collateral or other property securing any of the Obligations or any
obligation hereunder or shall have proceeded against any other obligor
primarily or secondarily obligated with respect to any of the Obligations.

 

§4.                               Financial Statements. 
Throughout the term of this Guaranty, Guarantor shall furnish to Lender,
the financial statements and reports of Guarantor required to be delivered to
Lender under Section 6.3 of the Loan Agreement.

 

§5.                               Set-offs and Claims by
Guarantor.  No set-off, counterclaim, reduction or
diminution of an obligation, or any defense of any kind or nature (excepting
payment in fact) which Guarantor has or may have against Lender shall limit or
in any way affect the obligations of Guarantor hereunder to the extent
permitted by law.

 

§6.                               Application of Payments. 
Any amounts received by Lender from whatsoever source on account of the
Obligations, including without limitation payments received from Guarantor
pursuant to this Guaranty may be applied by Lender toward the payment of such
of the Obligations, and in such order of application, as Lender may from time
to time elect.

 

§7.                               Waivers. 
Guarantor hereby expressly waives diligence, presentment, protest,
notice of dishonor, demand for payment or performance, extension of time of
payment or performance, notice of acceptance of this Guaranty, and indulgences
and notices of every kind under the Loan Agreement and consents to any and all
forbearances and extensions of time thereunder and to any and all changes in
the terms, covenants and conditions thereof, and agrees that Guarantor shall
not be released hereunder by any matter or things whatsoever (excepting payment
in fact) whereby Guarantor as an absolute guarantor and surety otherwise would
or might be released other than a written release delivered by Lender.

 

§8.                               Costs and Expenses. 
Guarantor agrees to pay all the reasonable costs, expenses and fees,
including all reasonable attorneys’ fees, which may be incurred by Lender in
enforcing or attempting to enforce this Guaranty following any default on the
part of Guarantor hereunder, whether the same shall be enforced by suit or
otherwise.  If any such fees and
expenses are not so reimbursed, the amount thereof shall, to the extent
permitted by law, constitute indebtedness secured hereby, and in any action
brought to collect such indebtedness Lender shall be entitled to seek the
recovery of such fees and expenses in such action except as limited by law or
by judicial order or decision entered in such proceedings.

 

§9.                               Representations of
Guarantor.  Guarantor hereby represents and warrants
that Guarantor has not received any promissory note from the Borrower or
entered into any other written or oral agreement with the Borrower stating that
Guarantor will be reimbursed by the Borrower if Guarantor makes any payments
under this Guaranty or any other guaranty and further covenants that Guarantor
has not received any property of the Borrower as security for such
reimbursement.  Guarantor hereby
covenants and agrees that Guarantor will not, at any time prior to the
satisfaction in full of the Obligations, accept any promissory note or enter
into any written or oral agreement with the Borrower which has the effect of
requiring the Borrower to reimburse Guarantor for any payments that Guarantor
may make under this Guaranty or any other guaranty, accept any property

 

F-3

 

of the Borrower as security for
any such reimbursement (whether by agreement, under common law, or otherwise),
or make any claim for the reimbursement, or any claim that Guarantor should be
subrogated to the rights of Lender or any other creditor against the
Borrower.  The waivers, representations,
warranties, covenants, and agreements contained in this paragraph and this
Guaranty are for the benefit of and may be enforced by Lender (or any other creditor)
and Borrower and their respective successors and assigns, including, without
limitation, any trustee in bankruptcy of the Borrower.

 

§10.                        Bankruptcy Action.  Guarantor agrees to repay all monies, including but not limited to
reasonable attorneys’ fees, paid by Lender in defense of any action asserted
against Lender by the Borrower, as a debtor-in-possession, or by a trustee in
bankruptcy in a proceeding brought under 11 U.S.C. Section 547 of the
United States Bankruptcy Code for the recovery of monies received by Lender
from the Borrower as a result of Guarantor’s obligations hereunder.  Guarantor further agrees to repay any monies
paid by Lender in settlement of any such action or in satisfaction of any
judgment rendered against Lender in such an action.

 

§11.                        Excess Liabilities. 
The creation or existence from time to time of Obligations in excess of
the amount evidenced by the Loan Agreement is hereby authorized, without notice
to Guarantor, and shall in no way affect or impair the rights of Lender and the
obligations of Guarantor under this Guaranty.

 

§12.                        Assignment or Transfer
of Liabilities.  Lender may, from time to time, without
notice to Guarantor, assign or transfer any or all of the Obligations or any
interest therein; and, notwithstanding any such assignment or transfer or any
subsequent assignment or transfer thereof, such Obligations shall be and remain
Obligations for the purposes of this Guaranty, and each and every immediate and
successive assignee or transferee of any of the Obligations or of any such
interest therein shall, to the extent of the interest of such assignee or
transferee in the Obligations, be entitled to the benefits of this Guaranty to
the same extent as if such assignee or transferee were the transferor;
provided, however, that, unless the Lender shall otherwise consent in writing,
Lender shall have an unimpaired right, prior and superior to that of any such
assignee or transferee, to enforce this Guaranty, for the benefit of Lender, as
to those of the Obligations which shall not have been assigned or transferred.

 

§13.                        Events of Default. 
Each of the following shall constitute an event of default (“Event of
Default”), whatever the reason for such event and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment
or order of any court or any order, rule or regulation of any governmental or
non-governmental body:

 

(a)                                  Guarantor shall default in the
performance or observance of any agreement or covenant contained in this
Guaranty (other than a covenant or agreement or default in the performance or
observance of which is elsewhere in this §13 specifically dealt with), and such
default shall continue for a period of ten (10) calendar days after written
notice thereof from Lender.

 

(b)                                 An Event of Default as defined in the
Loan Agreement.

 

F-4

 

§14.                        Consequences of Event
of Default.  If any Event of Default shall have occurred
and be continuing, Lender may proceed hereunder against Guarantor and Lender
shall have, in its sole discretion, the right to proceed first and directly
against Guarantor under this Guaranty without proceeding first or concurrently
against the Borrower, exhausting any other remedies it may have (including,
without limitation, any remedies under the Loan Agreement) or without resorting
to any other security held by Lender. 
This is a guaranty of payment and not of collection and Guarantor
further waives any right to require that any action first be brought against
the Borrower or any other person or party or to require that resort be had to
any security.

 

§15.                        Cumulative Remedies,
Delays.  No delay on the part of Lender in the
exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Lender of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or remedy;
nor shall any modification or waiver of any of the provisions of this Guaranty
be binding upon Lender except as expressly set forth in a writing duly signed
and delivered by Lender.  No action of
Lender permitted hereunder shall in any way affect or impair the rights of
Lender and the obligations of Guarantor under this Guaranty.  For the purpose of this Guaranty,
Obligations shall include all Obligations, notwithstanding any right or power
of the Borrower or anyone else to assert any claim or defense as to the
invalidity or unenforceability of any such Obligations, and no such claim or
defense shall affect or impair the obligations of Guarantor hereunder.

 

§16.                        Subordination. 
Guarantor hereby subordinates any and all claims (except for claims
relating to earned salaries and wages) which it now has, or in the future may
acquire, as a creditor of the Borrower, or any of them, to the prior payment
and satisfaction in full of this Guaranty. 
If, prior to the payment and satisfaction of this Guaranty, Guarantor
would, without reference to the provisions of this §16, be entitled to receive
any payment on account of any claim of Guarantor against the Borrower, or any
of them, all such payments shall be made instead to Lender until the
Obligations have been paid and satisfied in full, and Guarantor hereby so
directs.  If Guarantor receives any
payment on account of any claim of Guarantor against the Borrower, then Guarantor
shall immediately pay the same over to Lender to be applied to the payment or
satisfaction of the Obligations, if any. 
Nothing contained herein shall, or shall be interpreted to, limited the
right of the Guarantor to receive and distribute to its members any
distribution permitted by Section 7.17 of the Loan Agreement.

 

§17.                        Notices. 
Each notice, certificate, request or other communication to be given or
made in accordance with this Guaranty shall be deemed to be made or given in
accordance with the provisions of Section 9.1 of the Loan Agreement.

 

§18.                        Amendments,
Modifications, Etc.  No amendment, modification, termination, or
waiver of any provision of this Guaranty nor consent to any departure by
Guarantor therefrom, shall in any event be effective unless the same shall be
in writing and signed by Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  No notice or demand on Guarantor
in any case shall entitle Guarantor to any other or further notice or demand in
similar or other circumstances.

 

F-5

 

§19.                        Applicable Law. 
This Guaranty shall be deemed to be a contract made under the laws of
the State of Ohio and for all purposes shall be governed by and construed in
accordance with the laws of the State of Ohio.

 

§20.                        Severability. 
Any provision of this Guaranty which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.

 

§21.                        Counterparts. 
This Guaranty may be executed simultaneously in several counterparts,
each of which shall be regarded as an original, with the same effect as if the
signatures thereto were upon the same instrument.

 

§22.                        Merger. 
This Guaranty reflects the entire understanding of the parties with
respect to its subject matter and supersedes all prior agreements or
understandings with respect thereto in their entirety.

 

§23.                        Headings. 
Headings of the sections of this Guaranty are for convenience only and
shall not affect the construction of this Guaranty.

 

§24.                        Effective Date. 
This Guaranty shall become effective upon the execution, consent or
acknowledgment of a counterpart hereof by each of the parties.

 

§25.                        Confession of Judgment. 
Guarantor hereby irrevocably authorizes any attorney-at-law to appear
for Guarantor in an action on this Guaranty at any time after the Obligations
or any part thereof become due, whether by acceleration or otherwise, in any
court of record in or of the State of Ohio, or elsewhere, and to waive the
issuing and service of process against Guarantor and to confess judgment in
favor of Lender against Guarantor for the amount that may be due, with interest
at the rate herein mentioned and cost of suit, and to waive and release all
errors in such proceedings and judgment, and all petitions in error and rights
of appeal from the judgment rendered. 
The foregoing warrant of attorney shall survive any judgment, and, if
any judgment be vacated for any reason, Lender nevertheless may thereafter use
the foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned.

 

§26.                        Limitation on Recourse. 
Notwithstanding anything herein to the contrary, the Lender shall have
no recourse to any assets that are included in “Collateral” (as such term is
defined in the Cash Collateral Pledge Agreement).  The Lender shall not pursue any remedies against such assets,
whether by attachment, writ of execution or otherwise.

 

F-6

 

This Guaranty has been executed
and delivered by Guarantor in Franklin County, Ohio and has been acknowledged
by Lender all effective as of the date first written above.

 

WARNING - BY
SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.  IF YOU DO NOT PAY ON TIME A COURT JUDGMENT
MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT
CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST
THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO
COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

 

 

	
   

  	
  [SECURITY
  CAPITAL CORPORATION /PUMPKIN MASTERS HOLDINGS,

  INC.],

     a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul A. Miller

  	
   

  
	
   

  	
  Name:

  	
   Paul A. Miller

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  
	
   

  	
   

  
	
  BANK ONE, N.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mark S. Slayman

  	
   

  	
   

  
	
   

  	
  Mark S. Slayman, First Vice
  President

  	
   

  
								

 

F-7

 

EXHIBIT G

 

[Opinion of
Counsel to the Borrower and the Guarantors]

 

June 11, 2004

 

Bank One, N.A.

100 East Broad Street

Columbus, Ohio 43271

 

Ladies and Gentlemen:

 

We have acted as counsel to
Pumpkin Ltd., a Delaware corporation (the “Borrower”), Security Capital
Corporation, a Delaware corporation (“SCC”), and Pumpkin Masters Holdings,
Inc., a Delaware Corporation (“Pumpkin Holdings” and collectively with SCC, the
“Guarantors”), in connection with the execution and delivery of a certain Loan
Agreement dated June 11, 2004 (the “Loan Agreement”) among the Borrower,
the Guarantors and Bank One, N.A. (“Bank One”).  The Loan Agreement contemplates, among other things, the
following:

 

1.                                       A certain Revolving Credit Note of the
Borrower dated the date hereof in the amount of Seven Million Dollars
($7,000,000) (the “Revolving Credit Note”);

 

2.                                       A certain Borrower Security Agreement
dated the date hereof between the Borrower and Bank One (the “Borrower Security
Agreement”);

 

3.                                       A certain Security Agreement Re:  Patents, Trademarks and Copyrights dated the
date hereof between the Borrower and Bank One (the “Copyright Security
Agreement”) and a certain related Copyright Collateral Agreement dated the date
hereof executed by the Borrower in favor of Bank One (the “Copyright Collateral
Agreement”);

 

4.                                       A certain Guarantor Security Agreement
dated the date hereof between SCC and Bank One (the “SCC Security Agreements”);

 

5.                                       A certain Guarantor Security Agreement
dated the date hereof between Pumpkin Holdings and Bank One (the “Pumpkin
Holdings Security Agreement” and collectively with the SCC Security Agreement,
the “Guarantor Security Agreements”);

 

6.                                       A certain Stock Pledge Agreement dated
the date hereof between SCC and Bank One (the “SCC Pledge Agreement”);

 

7.                                       A certain Stock Pledge Agreement dated
the date hereof between Pumpkin Holdings and Bank One (the “Pumpkin Holdings
Pledge Agreement” and collectively with the SCC Pledge Agreement, the “Pledge
Agreements”);

 

G-1

 

8.                                       A certain Unconditional Guaranty
Agreement dated the date hereof executed and delivered by SCC in favor of Bank
One (the “SCC Guaranty”);

 

9.                                       A certain Unconditional Guaranty
Agreement dated the date hereof executed and delivered by Pumpkin Holdings in
favor of Bank One (the “Pumpkin Holdings Guaranty” and collectively with the
SCC Guaranty, the “Guaranties”);

 

10.                                 A certain Intercreditor Agreement dated
the date hereof among Bank One, Whitney and SCC (the “Intercreditor
Agreement”);

 

11.                                 The LaSalle Termination and
Indemnification Agreement; and

 

12.                                 Certain UCC-1 financing statements
executed and delivered by the Borrower and the Guarantor filed in various
offices (collectively, the “Financing Statements”).

 

The Loan Agreement, Borrower
Security Agreement, Copyright Security Agreement, Copyright Collateral
Agreement, Guarantor Security Agreements, Pledge Agreements, Guaranties,
Intercreditor Agreement, LaSalle Termination and Indemnification Agreement and
Financing Statements are hereinafter collectively referred to as the “Loan
Documents”.  Capitalized terms used in
this opinion that are not otherwise defined herein shall have the meanings ascribed
to them in the Loan Agreement.

 

In connection with this
opinion, we have reviewed the Loan Documents. 
We have investigated such questions of law, and have examined and relied
upon originals, or copies certified or otherwise identified to our satisfaction,
of such corporate documents and records of the Borrower and the Guarantors and
public records as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below.  As
to matters of fact (except facts constituting legal conclusions), we have
relied on certificates and other statements of public officials and corporate
officers or representatives of the Borrower and the Guarantors, which we have
no reason to believe are inaccurate, or with respect to which our reliance would
be unreasonable.

 

In rendering this opinion, we
have assumed the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies, the legal capacity of all persons signing such
documents other than those signing on behalf of the Borrower and the
Guarantors, the genuineness of the signatures of persons signing all documents
examined by us other than those signed on behalf of the Borrower and the Guarantors
and that all parties to the Loan Documents, other than the Borrower and the
Guarantors, are in compliance with all of their obligations and undertakings
arising under the Loan Documents.

 

Based on the foregoing, we are
of the opinion that:

 

(a)                                  Each of the Borrower and the Guarantors
is a corporation duly incorporated, validly existing and in good standing under
the laws of the state of Delaware.  Each
of the Borrower and the Guarantors has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted, and to execute and deliver and to perform all of its obligations
under the Loan Documents.  The
certificates of

 

G-2

 

incorporation and the bylaws of
each of the Borrower and the Guarantors constitute the legal, valid and binding
obligations of the respective Borrower and Guarantors enforceable against them
in accordance with their respective terms.

 

(b)                                 Each of the Borrower and the Guarantors
is duly qualified or licensed and in good standing as a foreign limited
liability company duly authorized to do business in Colorado and each other
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted makes such qualification or licensing
necessary and in which the failure to be so qualified or licensed would have a
materially adverse effect on the conduct of the business of the Borrower or any
Guarantor, as applicable.

 

(c)                                  The execution, delivery and performance
by the Borrower and the Guarantors of the Loan Documents has been duly
authorized by all necessary corporate actions.

 

(d)                                 The execution, delivery and performance
by the Borrower and the Guarantors of the Loan Documents do not and will not
result in any violation of, be in conflict with or constitute a default under,
the certificate of incorporation or regulations of the Borrower or any
Guarantor, or of any agreement or instrument known to us to which the Borrower
or any Guarantor is a party or by which the Borrower or any Guarantor is bound,
or, to our knowledge, any order, writ, injunction, judgment, decree, statute,
or governmental rule or regulation applicable to the Borrower or any Guarantor
or by which the Borrower or any Guarantor is bound.

 

(e)                                  To our knowledge, no authorization,
consent, approval, license or exemption by, or filing or registration with, any
domestic court or governmental department, commission, board, bureau, agency or
instrumentality, is or will be necessary to the valid execution, delivery or
performance by the Borrower or any Guarantor of the Loan Documents, other than
filings necessary to perfect security interests or other liens under the Loan
Documents.

 

(f)                                    The Loan Documents have been duly
executed and delivered by the Borrower and the Guarantors and are the valid and
binding obligations of the Borrower and the Guarantors enforceable against each
of them in accordance with their respective terms and applicable law, except to
the extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, rehabilitation, moratorium, or other similar laws affecting the
enforcement of creditors’ rights generally and general principles of equity,
and except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceedings therefor may be brought.

 

(g)                                 To our knowledge, there is no court
action, other proceedings or investigations pending or threatened which
question the validity of the Loan Documents or any action taken or to be taken,
pursuant thereto or which might result, either separately or in the aggregate,
in any material adverse change in the businesses or operations of the Borrower
or any Guarantor.

 

G-3

 

(h)                                 Each of the Borrower Security Agreement,
the Guarantor Security Agreements, the Pledge Agreements and the Copyright
Security Agreement creates a valid security interest in the right, title and
interest of the Borrower and the Guarantors, as applicable, in the Collateral
or Shares, as applicable, as defined in the respective Borrower Security
Agreement, Guarantor Security Agreements, Pledge Agreements and Leasehold
Mortgage. Upon the filing of the Financing Statements in the appropriate
filings offices, Bank One shall have a valid and perfected security interest in
the items of collateral, as defined in the Borrower Security Agreement, the
Guarantor Security Agreements, the Pledge Agreements, the Copyright Security
Agreement and the Leasehold Mortgage, to the extent that such perfection may be
obtained by filing financing statements in the States of Delaware and Colorado.

 

(i)                                     The Copyright Security Agreement creates
a valid security interest in the right, title and interests of the Borrower in
the Collateral, as that term is defined in the Copyright Security
Agreement.  Recordation of the Copyright
Security Agreement in the United States Patent and Trademark Office and the
United States Copyright Office will provide notice of the existence of the
security interest of Bank One in the Collateral.

 

(j)                                     None of the Borrower nor any of the
Guarantors is or, after giving effect to the making of the initial loans
pursuant to the Loan Agreement, will be, an “investment company” within the meaning
of the Investment Company Act of 1940, as amended (the “1940 Act”), or a
company controlled, directly or indirectly, by any Person which is an
investment company” with the meaning of the 1940 Act.

 

(k)                                  None of the Borrower nor any of the
Guarantors is a “Holding Company” or an “Affiliate” of a “Holding Company” or a
“Subsidiary Company” of a “Holding Company” within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

 

(l)                                     The making of the loans and the
application of the proceeds thereof, as provided in the Loan Agreement, do not
violate Regulations “T”, “U” or “X”, each as amended, of the Board of Governors
of the Federal Reserve System.

 

We express no opinion as to the
laws of any jurisdiction other than the States of Ohio, Colorado and Delaware
and the United States of America (but limited to such federal laws which, in
our experience, are generally applicable to financing transactions of the type
contemplated by the Loan Documents).  This
opinion is furnished as of the date hereof and we undertake no obligation to
advise you of any event occurring after the date hereof which would change any
of the opinions set forth herein.  This
opinion is furnished by us solely for your benefit and no other person shall be
entitled to rely upon the opinions herein expressed.  Except with our prior written consent, this opinion is not to be
used, circulated, quoted or otherwise referred to in connection with any
transaction other than those contemplated by the Loan Documents or by or to any
person.

 

Respectfully submitted,

 

G-4

 

EXHIBIT H

 

DEFINITIONS

 

“Account” and “Accounts”
shall have the meanings provided therefor in the Uniform Commercial Code.

 

“Account Debtor” shall
mean the Person who is obligated on or under an Account.

 

“Acquisition” shall mean
the sale of substantially all of the assets of the Seller to the Borrower and
the assumption by the Borrower of certain liabilities of the Seller and
consummation of the other transactions contemplated in the Asset Purchase
Agreement, all in accordance with the terms and conditions of the Asset
Purchase Agreement.

 

“Adjusted Eurodollar Rate”
shall mean the rate per annum equal to the following:

 

Eurodollar Rate

1 - Eurocurrency Liabilities

 

as adjusted to the next higher
1/16 of one percent.

 

“Affiliate” of a Person
shall mean any other Person directly or indirectly controlling, under common
control with, or controlled by such Person. 
An Affiliate of the Borrower or the Guarantors shall include, without
limitation, Capital Partners, Brian D. Fitzgerald, and any officer, manager or
stockholder (except stockholders who own five percent (5%) or less of all
outstanding shares of capital stock) of the Borrower or the Guarantors.  For purposes of the definition of Affiliate,
“control” when used with respect to any specific Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings relative to the
foregoing.

 

“Agreement” is defined
in the preamble.

 

“Applicable Margin”
shall be determined as provided in Section 1.3(d).

 

“Asset Purchase Agreement”
shall mean that certain Asset Purchase Agreement dated as of June 27, 1997
among the Seller, the Borrower and the Guarantors relating to the Acquisition.

 

“Balance Sheet” is
defined in Section 5.8.

 

“Borrower” is defined in
the preamble hereto.

 

“Borrower Security Agreement”
is defined in Section 3.4(a).

 

H-1

 

“Borrowing Base” shall
mean (i) eighty percent (80%) of Eligible Accounts, plus (ii) fifty percent
(50%) of Eligible Inventory, less (iii) the amount, if any, owed to any bailees
that are in possession of any Eligible Inventory for services performed or
materials provided by such bailees, plus (iv) an allowed overadvance amount
equal to $1,750,000 from the Closing Date through August 31, 2004.

 

“Borrowing Base Certificate”
shall mean a Borrowing Base Certificate in the form attached as Exhibit L
hereto duly executed and delivered by the Borrower to the Lender.

 

“Borrowing Date” is
defined in Section 1.1.

 

“Business Day” shall
mean any day other than Saturdays, Sundays and other legal holidays or days on
which the principal office of the Lender is closed.

 

“Business Year” shall
mean a year of 360 days.

 

“Capital Partners” shall
mean Capital Partners, Inc., a Connecticut corporation and an Affiliate of the
Borrower and the Guarantors.

 

“Cash Collateral Pledge
Agreement” shall mean that certain Cash Collateral Pledge Agreement (as
amended from time to time as permitted by the Intercreditor Agreement) dated as
of January 14, 2004 among SCC, Whitney and U.S. Bank National Association,
as collateral agent thereunder, securing the Subordinated Note.

 

“Change of Control”
means (A) any sale, transfer or issuance or series of sales, transfers or
issuances of shares of capital stock of the Borrower by the Borrower or any
holder or holders thereof, or any merger, consolidation or other transaction
involving the Borrower, immediately after which Pumpkin Holdings no longer
holds record and beneficial ownership of at least 90% of the Borrower’s
outstanding shares of capital stock of each class, on a fully diluted basis,
(B) any sale, transfer or issuance or series of sales, transfers or issuances
of shares of capital stock of Pumpkin Holdings by Pumpkin Holdings or any
holder or holders thereof, or any merger, consolidation or other transaction
involving Pumpkin Holdings, immediately after which (i) SCC no longer possesses
the voting power to elect a majority of the board of directors of Pumpkin
Holdings or (ii) SCC no longer holds record and beneficial ownership of at
least 90% of the issued and outstanding shares of capital stock of Pumpkin
Holdings, (C) any sale of all or substantially all of the Borrower’s, Pumpkin
Holdings’ and each of their Subsidiaries’ assets on a consolidated basis, or
(D) any Subsidiary of the Borrower shall cease to be a wholly owned Subsidiary
of the Borrower (except on account of a merger, liquidation or dissolution
otherwise permitted under this Agreement).

 

“Closing Date” shall
mean the date of this Agreement.

 

“Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time.

 

“Commitment Fee” is
defined in Section 3.1.

 

H-2

 

“Copyright Collateral
Agreement” shall mean individually the Copyright Collateral Agreement
Re:  Patents, Trademarks and Copyrights
between the Borrower and the Lender executed pursuant to the Copyright Security
Agreement.

 

“Copyright Security
Agreement” is defined in Section 3.4(a).

 

“Debt Service Coverage Ratio”
shall mean, with respect to any applicable fiscal period, the ratio of (i) the
sum of the Borrower’s consolidated EBITDA for such period minus (without
duplication) cash payments made by the Borrower in such period of income taxes
(if any) and Tax Distributions, plus/minus increases (decreases) in deferred
taxes, minus any dividends and other distributions made by the Borrower to its
stockholders other than salary, bonuses, and other compensation for services
expended in the applicable fiscal period, minus capital expenditures that are
not financed by long-term debt divided by (ii) the Borrower’s consolidated
Total Debt Service for such period.

 

“Default” shall mean the
occurrence of an event which with the giving of notice, passage of time, or
both would become an Event of Default.

 

“Default Rate” “ is
defined in Section 3.5.

 

“DeMinimis Public
Investments” shall mean investments in publicly traded companies in the
aggregate amount (at original cost) not in excess of $1,000.

 

“Earnout Consideration”
shall mean consideration in the amount of $1,812,116, together with any
accrued, unpaid interest thereon, payable by the Borrower to the Seller
pursuant to the provisions of Section 3.2 of the Asset Purchase Agreement.

 

“EBITDA” shall mean the
Borrower’s consolidated income from operations (plus, to the extent not
included in operating income, interest income) before (i) interest expense
(adjusted for interest rate swaps and including, without limitation, the
interest component of capitalized leases), (ii) income taxes and Tax
Distributions, (iii) amortization and depreciation expense, (iv) gains (and
losses) from the sale or disposition of assets outside the ordinary course of
business and extraordinary items, (v) income (and losses) of any Person (other
than wholly-owned Subsidiaries of the Borrower) in which the Borrower or any of
its Subsidiaries has an ownership interest unless received by the Borrower or
one of its Subsidiaries in a cash distribution, and (vi) income (and losses) of
any Person prior to the date it became a Subsidiary of the Borrower or was
merged into or consolidated with the Borrower or any of its Subsidiaries, all
as determined on a consolidated basis in accordance with GAAP consistently
applied.

 

“Eligible Account” shall
mean an Account owing to the Borrower which is acceptable to the Lender in its
reasonable discretion for lending purposes. 
The Lender shall consider an Account to be an Eligible Account if it
meets, and so long as it continues to meet, the following requirements:

 

(i)                                     it is genuine and in all respects is
what it purports to be;

 

H-3

 

(ii)                                  it is owned by the Borrower and the
Borrower has the right to subject it to a security interest in favor of the
Lender;

 

(iii)                               it arises from (A) the performance of
services by the Borrower and such services have been fully performed and
acknowledged and accepted by the Account Debtor thereunder or (B) the sale or
lease of Goods by the Borrower, and such Goods have been completed in
accordance with the Account Debtor’s specifications (if any) and delivered to
and accepted by the Account Debtor, and such Account Debtor has not returned or
offered to return any of the Goods which are the subject of such Account, and
the Borrower has possession of, or has delivered to the Lender at the Lender’s
request, shipping and delivery receipts evidencing delivery of such Goods;

 

(iv)                              if the Account Debtor thereunder is not
an Extended Term Customer, it is evidenced by an invoice rendered to the
Account Debtor thereunder, does not remain unpaid more than sixty (60) days
after the stated due date thereof and does not remain unpaid more than ninety
(90) days past the status invoice date thereof; provided, however, that if more
than twenty-five percent (25%) of the aggregate dollar amount of invoices owing
by a particular Account Debtor remain unpaid for more than (A) sixty (60) days
past the respective stated due dates thereof or (B) ninety (90) days past the
respective invoice dates thereof, then all Accounts owing to the Borrower by
that Account Debtor shall be deemed ineligible;

 

(v)                                 if the Account Debtor thereunder is an
Extended Term Customer, it is evidenced by an invoice rendered to the Account
Debtor thereunder and does not remain unpaid more than thirty (30) days after
the stated due date thereof; provided, however, that if more than twenty-five
percent (25%) of the aggregate dollar amount of invoices owing by particular
Extended Term Customer remain unpaid for more than thirty (30) days past the
respective stated due dates thereof, then all Accounts owing to the Borrower by
that Extended Term Customer shall be deemed ineligible;

 

(vi)                              it is not subject to any prior
assignment, claim, lien, security interest, offset or encumbrance whatsoever,
other than those in favor of the Lender; provided, however, that an Account
that has been assigned to a third party in accordance with
Section 7.12(iii) shall constitute an “Eligible Account” if the payment
thereof is guaranteed by such third party and the Borrower has paid all
associated fees and expenses and properly reflected the same in its accounting
records and financial statements;

 

(vii)                           it is a valid, legally enforceable and
unconditional obligation of the Account Debtor thereunder, and is not subject
to setoff, counterclaim, credit, allowance or adjustment by such Account
Debtor, or to any claim by such Account Debtor denying liability thereunder in
whole or in part;

 

(viii)                        it does not arise out of a contract or
order which fails in any material respect to comply with the requirements of
applicable law;

 

H-4

 

(ix)                                the Account Debtor thereunder is not a
director, officer, employee or agent of the Borrower, or a Subsidiary, parent
or Affiliate of the Borrower or any Guarantor;

 

(x)                                   it is not an Account with respect to
which the Account Debtor is the United States of America or any department,
agency or instrumentality thereof, unless the Borrower assigns its right to
payment of such Account to the Lender pursuant to, and in full compliance with,
the Assignment of Claims Act of 1940, as amended;

 

(xi)                                it is not an Account with respect to
which the Account Debtor is located in a state which requires the Borrower, as
a precondition to commencing or maintaining an action in the courts of that
state, either to (A) receive a certificate of authority to do business and be
in good standing in such state, or (B) file a notice of business activities
report or similar report with such state’s taxing authority, unless (x) the
Borrower has taken one of the actions described in clauses (A) or (B), (y) the
failure to take one of the actions described in either clause (A) or (B) may be
cured retroactively by the Borrower at its election, or (z) the Borrower has
proven, to the Lender’s satisfaction, that it is exempt from any such
requirements under any such state’s laws;

 

(xii)                             it is an Account which arises out of a
sale made in the ordinary course of the Borrower’s business;

 

(xiii)                          the Account Debtor is a resident or
citizen of, and is located within, the United States of America, provided that
Accounts as to which the Account Debtor is a resident or citizen of, and is
located within Canada may be included up to a maximum of $1,000,000;

 

(xiv)                         it is not an Account with respect to
which the Account Debtor’s obligation to pay is conditional upon the Account
Debtor’s approval of the Goods or services (unless such approval has been
obtained) or is otherwise subject to any repurchase obligation or return right,
as with sales made on a bill-and-hold, guaranteed sale, sale on approval, sale
or return or consignment basis (it being understood and agreed that (A) only
such portion of any such Account that is subject to such an approval,
repurchase obligation or return right shall not be an Eligible Account and (B)
the remaining portion of any such Account shall be deemed to satisfy the
requirements of this clause (xiv));

 

(xv)                            it is not an Account (A) with respect to
which any representation or warranty contained in this Agreement is untrue or
(B) which violates any of the covenants of the Borrower contained in this
Agreement;

 

(xvi)                         it is not an Account which, when added
to a particular Account Debtor’s other indebtedness to the Borrower, exceeds
the lesser of (A) ten percent (10%) of the aggregate of the Borrower’s Accounts
or (B) a credit limit determined from time to time by the Lender in its
reasonable credit judgment for that Account Debtor; provided, however, that
Accounts excluded from Eligible Accounts solely by reason of this subparagraph
(xvi) shall be Eligible Accounts to the extent of such credit limit; provided,
further, that the

 

H-5

 

Lender shall give the Borrower
written notice from time to time of any credit limits established by the Lender
hereunder for Account Debtors and changes in such credit limits;

 

(xvii)                      it is not an Account with respect to
which the prospect of payment or performance by the Account Debtor is or will
be impaired, as determined by the Lender in its sole and reasonable discretion,
unless such Account is insured in a manner reasonably satisfactory to the
Lender (subject to clause (xxi) below);

 

(xviii)                   it is not an Account arising from
progress billings, invoices for deposits, samples or tooling;

 

(xix)                           it is not an Account with respect to
which the sale is on an installment basis, lease or, except for Extended Term
Customers, other extended payment basis;

 

(xx)                              it is not that portion of an Account
representing late fees, service charges or interest; and

 

(xxi)                           any and all insurance thereon shall have
been assigned to the Lender.

 

“Eligible Inventory”
shall mean Inventory held for sale by the Borrower, normally and currently
saleable in the ordinary course of the Borrower’s business and Inventory
consisting of raw materials of types and quality and in amounts usable by the
Borrower in the production of its finished goods in the ordinary course of the
Borrower’s business, and which in all cases and at all times pertinent hereto
is of good and merchantable quality, free from defects, as to which Inventory
the Lender has a perfected first priority security interest and which Inventory
is subject to no other prior assignment, claim, lien, security interest, offset
or encumbrance whatsoever, other than those in favor of the Lender, and which
is located at the locations set forth in Exhibit A to the Borrower
Security Agreement and is either not in transit or, if in transit, is the
subject of a negotiable document issued by the party in possession thereof
which negotiable document, if so requested by the Lender, has been delivered to
the Lender, as that Exhibit may, from time to time, be amended or supplemented
in accordance with the terms of this Agreement, and as to which the Borrower
has satisfied all terms, conditions, warranties and representations of this
Agreement and the other Loan Documents pertinent thereto; but Eligible
Inventory shall not include any of the following:  (a) catalogs and other promotional materials of any kind; (b)
returned items (other than items the return of which was authorized in advance
by the Borrower and which are free from material defects and able to be sold in
the ordinary course of the Borrower’s business); (c) work-in-process; (d)
damaged, defective or recalled items; (e) obsolete items; (f) items used as
demonstrators, prototypes or salesmen’s samples; (g) items of Inventory which
have been consigned to the Borrower or as to which a Person claims a security
interest, prior assignment, claim, lien or encumbrance whatsoever, other than
those in favor of the Lender; (h) items of Inventory which have been consigned
by the Borrower to a consignee; (i) Inventory located on premises leased by the
Borrower from a landlord with whom the Lender has not entered into a landlord’s
waiver on terms satisfactory to the Lender; (j) Inventory located at a
warehouse premises with respect to which the Lender has not received (1) a
bailee letter, acceptable in all respect to the Lender, executed by the bailee
of such warehouse or (2) evidence satisfactory in all respects to the Lender of
such bailee’s receipt of a bailee letter acceptable in all respects to the
Lender

 

H-6

 

(provided, however, that the
requirement hereunder for such a bailee letter to be in place shall be waived
during the first thirty (30) days after the Closing Date); (k) Inventory which
in the reasonable judgment of the Lender after good faith consultation with the
Borrower is considered to be slow moving or otherwise not merchantable; (l)
Inventory which is subject to a license agreement unless the Lender shall have
entered into a licensor consent letter with the licensor in form and substance
satisfactory to the Lender; and (m) any Inventory that the Lender after good
faith consultation with the Borrower has reasonably determined is not
acceptable due to age, type, category or quantity.

 

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

 

“ERISA Affiliate” shall
mean each trade or business, including the Borrower and the Guarantors, whether
or not incorporated, which together with the Borrower and/or the Guarantors
would be treated as a single employer under Section 4001 of ERISA.

 

“Eurocurrency Liabilities”
means the aggregate of the rates (expressed as a decimal fraction) of reserve
requirements (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto), as now and from time to time hereafter in effect, dealing
with reserve requirements prescribed for eurocurrency funding maintained by a
member of such system.

 

“Eurodollar Banking Days”
shall mean days which are both Business Days and London Banking Days.

 

“Eurodollar Rate” shall
mean with respect to each Interest Period (as hereinafter defined), the offered
rate for U.S. Dollar deposits of not less than One Million Dollars ($1,000,000)
as of 11:00 a.m. City of London, England time on the London Banking Day
preceding the date of such Eurodollar Rate Loan as shown on the display
designated as “British Bankers Assoc. Interest Settlement Rates” on the
Telerate System (“Telerate”), Page 3750 or Page 3740 or such other page or
pages as may replace such pages on Telerate for the purpose of displaying such
rate; provided, however, that if such rate is not available on Telerate, then
such offered rate shall be otherwise independently determined by the Lender
from an alternate substantially similar methodology as that theretofore used to
determine such offered rate in Telerate.

 

“Eurodollar Rate Loan(s)”
is defined in Section 1.1.

 

“Event of Default” is
defined in Section 8.1.

 

“Extended Term Customer”
shall mean any Account Debtor to which the Borrower has granted extended dating
terms acceptable to the Lender and which the Lender has agreed in writing to
treat as an Extended Term Customer hereunder. 
The Extended Term Customers and the extended dating terms approved by
the Lender are listed on Schedule 1.1 attached hereto; provided,
further, that Schedule 1.1 may be amended by the Lender from time
to time to reflect new Extended Term Customers and the approved payment terms
therefor, the deletion of existing Extended Term

 

H-7

 

Customers and the approved
payment terms therefor, the deletion of existing Extended Term Customers or a
change in payment terms for an existing Extended Term Customer.

 

“Facility Fee” is
defined in Section 3.1.

 

“Fiscal Year” shall mean
the Fiscal Year of the Borrower, the Guarantors and each of their respective
Subsidiaries as established from time to time in accordance with the provisions
of this Agreement.

 

“GAAP” means generally
accepted accounting principles consistently applied.

 

“Goods” shall mean all
of Borrower’s tangible assets and tangible properties which are moveable at the
time the security interest attaches or which are fixtures.

 

“Guarantor” and “Guarantors”
are defined in the preamble hereto.

 

“Guarantor Balance Sheet”
is defined in Section 5.8(b).

 

“Guarantor Security
Agreements” is defined in Section 3.4(b).

 

“Guaranty” and “Guaranties”
are defined in Section 3.4(e).

 

“Indebtedness” as
applied to any Person, shall mean all obligations of that Person which are
included in clauses (i), (ii), (iii) and (iv) of the definition of Liabilities
below, irrespective of whether or not any such obligations also would be
included within any other clause of such definition, but including, however,
(a) obligations properly treated as capital lease obligations or their
equivalent under GAAP, (b) any obligation of such Person or an ERISA Affiliate
to a Multiemployer Plan and (c) any indebtedness secured by a lien on a
Person’s assets.

 

“Intangible Assets” of a
Person shall mean the aggregate amount of all assets of such Person classified
as intangible assets under GAAP, including, without limitation, goodwill,
trademarks, patents, copyrights, organizational expenses, prepaid expenses,
franchises, licenses, trade names, brand names, mailing lists, catalogs, excess
of cost over book value of assets acquired and bond discount and underwriting
expenses.

 

“Intercreditor Agreement”
is defined in Section 1 of the Guarantor Security Agreement signed by SCC.

 

“Interest Payment Date”
is defined in Section 1.3(b).

 

“Interest Period means
the period commencing on, as the case may be, the Borrowing Date or conversion
date with respect to a Eurodollar Rate Loan and ending 30, 60, 90, 180 or 360
days thereafter as selected by the Borrower in its notice of borrowing as
provided in Section 1.1; and

 

H-8

 

The foregoing provisions
relating to Interest Periods are subject to the following:

 

(a)                                  any Interest Period that shall commence
on the last London Banking Day of the calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last London Banking Day of the appropriate
subsequent calendar month;

 

(ii)                                  each Interest Period that would
otherwise end on a day which is not a London Banking Day shall end on the next
succeeding London Banking Day, or, if such next succeeding London Banking Day
falls in the next succeeding calendar month, on the next preceding London
Banking Day; and

 

(iii)                               no Interest Period may end after the
maturity date of the Revolving Credit Note.

 

“Inventory” shall have
the meaning provided in the Uniform Commercial Code.

 

“LaSalle Loan Agreement”
shall mean that certain Loan and Security Agreement dated as of June 13,
2001, as amended, by and between the Borrower and LaSalle Business Credit, LLC
(as successor to LaSalle Business Credit, Inc.).

 

“LaSalle Termination and
Indemnification Agreement” shall mean that certain letter agreement dated
as of June 11, 2004 among LaSalle Business Credit, LLC, the Borrower and
SCC relating to the termination of the LaSalle Loan Agreement, including,
without limitation, the agreement executed by the Lender that is a part thereof
providing for the Lender to reimburse and indemnify LaSalle Business Credit,
LLC and LaSalle Bank National Association for certain obligations of the
Borrower.

 

“Lease(s)” shall mean
the leases of real property set forth on Schedule 5.5 hereto to
which the Borrower is a party.

 

“Lender” is defined in
the preamble, hereto.

 

“Letters of Credit” is
defined in the recitals hereto.

 

“Liabilities” as applied
to any Person shall mean:  (i) all
obligations of that Person to repay or pay money borrowed from another Person
or the deferred portion of the purchase price of services or property (other
than inventory purchased in the ordinary course of business unless evidenced by
a note payable); (ii) all obligations of that Person under bankers acceptances
and all obligations of that Person for the principal component of capitalized
leases; (iii) all obligations of that Person under letters of credit; (iv)
obligations of others which that Person has directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business), discounted or sold with recourse or agreed (contingently or otherwise)
to purchase or repurchase or otherwise acquire, or in respect of which that
Person has agreed to supply or advance funds (whether by way of loan, stock
purchase, capital contribution or otherwise) or otherwise to become directly or
indirectly liable; (v) all obligations evidenced or secured by any mortgage,

 

H-9

 

pledge, lien or conditional
sale or other title retention agreement to which any property or asset owned or
held by that Person is subject, whether or not the obligation evidenced or
secured thereby shall have been assumed; and (vi) all other items (except items
of capital stock, capital surplus, general contingency reserves, deferred
income taxes, retained earnings and amounts attributable to minority interest,
if any) which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of that Person as
of the date Liabilities is to be determined; excluding, however, from the foregoing,
obligations of that Person properly treated as capital lease obligations or
their equivalent under GAAP.

 

“Loan Documents” shall
mean collectively this Agreement, the Revolving Credit Note, the Borrower
Security Agreement, the Copyright Security Agreement, the Copyright Collateral
Agreement, the Guarantor Security Agreements, the Guaranties, the LOC
Applications, any reimbursement agreements required by the Lender pursuant to
Section 2.3 of this Agreement, the Pledge Agreements, the UCC financing statements
delivered by the Borrower and the Guarantors in favor of the Lender and all of
the other agreements, documents and instruments evidencing or securing the
Revolving Credit Loans and/or the LOC Obligations.

 

“LOC Application” is
defined in Section 2.2 hereto.

 

“LOC Obligations” shall
mean, at any time, the sum of (i) the aggregate undrawn stated amount under all
Letters of Credit outstanding at such time plus (ii) the aggregate of all
obligations of the Borrower then outstanding under Article 2 of this
Agreement to reimburse the Lender for amounts paid by the Lender in respect of
any one or more drawing under Letters of Credit.

 

“London Banking Days”
shall mean days on which transactions are carried out in the London Interbank
Market.

 

“Management Advisory
Services Agreement” shall mean the Management Advisory Services Agreement
dated as of June 27, 1997, by and between the Borrower and SCC, pursuant
to which the Borrower has agreed to pay to SCC certain management advisory
services fees.

 

“Material Adverse Effect”
shall mean (i) a materially adverse effect on the business or financial
position, results of operations or prospects of the Borrower or any of the
Guarantors, as applicable, and their respective Subsidiaries considered as a
whole, (ii) material impairment of the ability of the Borrower or any of the
Guarantors, as applicable, or their respective Subsidiaries to perform, in any
material respect, any of its obligations under this Agreement or the other Loan
Documents to which it is or will be a party, or (iii) material impairment of
the rights of or benefits available to the Lender under this Agreement.

 

“Multiemployer Plan”
shall mean a Plan described in Section 4001(a)(3) of ERISA to which the
Borrower, the Guarantors or any ERISA Affiliate is required to contribute on
behalf of any of its employees.

 

“PBGC” shall mean the
Pension Benefit Guarantee Corporation established pursuant to Subtitle A of
Title IV of ERISA.

 

H-10

 

“Permitted Liens” is defined
in Section 7.2.

 

“Person” shall mean a
corporation, an association, a partnership, a limited liability company, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.

 

“Plan” shall mean any
plan (other than a Multiemployer Plan) subject to Title IV of ERISA maintained
for employees of the Borrower, the Guarantors or any ERISA Affiliate, and any
such plan no longer maintained by the Borrower, the Guarantors or any of its
ERISA Affiliates to which the Borrower, the Guarantors or any of their ERISA
Affiliates has made or was required to make any contributions within any of the
preceding five (5) years.

 

“Pledge Agreements” is
defined in Section 3.4(c)(ii).

 

“Prime Rate” shall mean
on any day the per annum rate published or announced by the Lender from time to
time as its prime rate, which may not be the Lender’s lowest rate.

 

“Pumpkin Holdings” is
defined in the preamble hereto.

 

“Pumpkin Holdings Pledge
Agreement” is defined in Section 3.4(c)(ii).

 

“Rate Management Transaction”
shall mean any transaction (including an agreement with respect thereto) now
existing or hereafter entered into between the Borrower and the Lender which is
a rate swap, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange transaction, cap transaction,
floor transaction, collar transaction, forward transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of these
transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures.

 

“Reportable Event” shall
mean any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder, a withdrawal from a Plan described in Section 4063
of ERISA, a cessation of operations described in Section 4068(f) of ERISA,
an amendment to a Plan necessitating the posting of security under
Section 401(a)(29) of the Code, or a failure to make a payment required by
Section 412(m) of the Code and Section 302(e) of ERISA when due.

 

“Revolving Credit Commitment”
is defined in Section 1.1.

 

“Revolving Credit Loan”
is defined in Section 1.1.

 

“Revolving Credit Note”
is defined in Section 1.3.

 

“Revolving Line of Credit”
is defined in the recitals hereto.

 

“SCC” is defined in the
preamble hereto.

 

H-11

 

“SCC Pledge Agreement”
is defined in Section 3.4(c)(i).

 

“Securities Purchase
Agreement” is defined in Section 1 of the Guarantor Security Agreement
signed by SCC.

 

“Seller” shall mean
P.G.C. Inc. (formerly known as Pumpkin Ltd. d/b/a Pumpkin Masters, Inc.), a
Colorado corporation.

 

“Subordinated Indebtedness”
shall mean all Indebtedness of the Borrower and/or SCC, as applicable, which is
subordinated to all Indebtedness now or hereafter owed by the Borrower and/or
SCC, as applicable, to the Lender on specific terms and conditions satisfactory
to, and approved in writing by, the Lender.

 

“Subordinated Note”
shall mean that certain Senior Subordinated Promissory Note (as amended from
time to time as permitted under the Intercreditor Agreement) of SCC dated
January 14, 2004 in the original principal amount of $30,000,000, issued
by SCC to Whitney pursuant to the provisions of the Securities Purchase
Agreement.

 

“Subsidiary” of a
corporation or a limited liability company shall mean any corporation or
limited liability company of which more than fifty percent (50%) of the
outstanding equity securities having ordinary voting power to elect a majority
of the board of directors or managers, as applicable, of such corporation or
limited liability company is directly or indirectly owned by such corporation
or limited liability company or by such corporation or limited liability
company and any of its Subsidiaries taken together.

 

“Tangible Net Worth”
shall mean, as of the applicable date of determination, the total assets of the
Borrower minus the sum of (i) the total Intangible Assets of the Borrower, (ii)
the total receivables of the Borrower from its stockholders and Affiliates and
(iii) the total Liabilities of the Borrower, all as determined as of such date
in accordance with GAAP.

 

“Tax Distributions” is
defined in Section 7.17.

 

“Tax Sharing Agreement”
is defined in Section 7.17.

 

“Total Debt Service”
means all principal payments, interest payments (after taking into account
hedging arrangements and including, without limitation, the interest component
of capitalized leases), letter of credit fees and reimbursements, and capital
lease payments (all without duplication) due and payable during the relevant
fiscal period for which such calculation is being made; provided,  however, that Total Debt Service shall not
include (a) the Earnout Consideration and any other amounts payable be the
Borrower under Section 3.2 of the Asset Purchase Agreement and (b) any
reimbursement payments under reimbursement agreements related to direct pay
letters of credit that are used by the Borrower to purchase inventory, which
reimbursement payments are made within five (5) Business Days after the
applicable draw on such letter of credit.  Anything contained herein to the contrary notwithstanding, (i)
principal payments with respect to the Revolving Credit Loans shall be excluded
from principal payments for purposes of this

 

H-12

 

definition and (ii) interest
payments will be calculated on an accrual basis (i.e., the amount of the
interest payment shall be the interest which accrues with respect to the
applicable debt in such relevant fiscal period).

 

“Uniform Commercial Code”
shall mean the Uniform Commercial Code as adopted in the State, as amended from
time to time.

 

“Unused Commitment” is
defined in Section 3.1.

 

“Variable Rate Loan(s)”
is defined in Section 1.1.

 

“Whitney” shall mean
J.H. Whitney Mezzanine Fund, L.P., a Delaware limited partnership.

 

H-13

 

EXHIBIT I

 

PRO FORMA
BALANCE SHEETS

 

[to be provided by Borrower]

 

I-1

 

EXHIBIT J

 

PROJECTIONS

 

[to be provided by Borrower]

 

J-1

 

EXHIBIT K

 

BORROWING BASE
CERTIFICATE

 

BORROWING BASE
REPORT

 

BORROWING BASE
REPORT FOR PERIOD ENDED

              
SHOWING VALUES AS OF THAT DATE

(EXCEPT AS
OTHERWISE INDICATED)

 

	
   

  	
   

  	
   

  	
  (000’s Omitted)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Total Eligible Accounts from
  the Financial Statements

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Exclusions (Eligible
  Accounts)

  	
   

  	
   

  	
   

  
	
   

  	
  (Including, without
  limitation, Accounts more than 60 days past due and in no case more than 90
  days past the invoice date)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Total Eligible Accounts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  (Line 1 minus Line 2)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Total Eligible Inventory

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Raw materials

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Finished goods

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Less any specific Reserves

  	
   

  	
  $

  	
     (

  	
  )

  
	
   

  	
  (iv)

  	
  Less amounts owed to bailees

  	
   

  	
  $

  	
     (

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Borrowing Base(1)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Unpaid Principal Amount of
  Existing Revolving Credit Loans

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  LOC Obligations

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Amount to be borrowed, if
  any.

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Aggregate unpaid principal
  amount of the Revolving Credit Loans, LOC Obligations and any unreimbursed
  payments by Lender thereunder outstanding and to be outstanding

  	
   

  	
   

  	
   

  
	
   

  	
  (Sum
  of Lines 6, 7 and 8)

  	
   

  	
  $

  	
   

  	
   

  

 

(1)  The sum of (a) 80% of Line 3 plus (b) 50% of Line 7.

 

K-1

 

	
  10.

  	
  Excess (Deficiency) in
  Borrowing Base

  	
   

  	
   

  	
   

  
	
   

  	
  (Line 5 minus Line 9)

  	
   

  	
  $

  	
   

  	
   

  
						

 

I certify, on behalf of the
Borrower, that the foregoing is true and correct as shown upon the books and
records of the Borrower as of the date specified above.

 

	
   

  	
  PUMPKIN LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
								

 

K-2

 

EXHIBIT L

 

OFFICER’S
SOLVENCY CERTIFICATE

 

I, the undersigned, the
President and Chief Executive Officer of PUMPKIN LTD., a Delaware corporation
(the “Company”), do hereby certify on behalf of the Company that:

 

1.                                       This Certificate is furnished pursuant
to Section 4.1(s) of the Loan Agreement, dated as of June 11, 2004,
among the Company, Security Capital Corporation, Pumpkin Masters Holdings, Inc.
and Bank One, N.A. (such Loan Agreement, as in effect on the date of this
Certificate, being herein called the “Loan Agreement”).  Unless otherwise defined herein, capitalized
terms used in this Certificate shall have the meanings set forth in the Loan
Agreement.

 

2.                                       For purposes of this Certificate, the
terms below shall have the following definitions:

 

a.                                       “Fair Value”

 

The amount at going concern
values at which the assets, in their entirety, of each of (i) the Company and
its Subsidiaries (taken as a whole) and (ii) the Company (on a stand-alone
basis but taking into account the value of the stock or other equity interests
it holds in its Subsidiaries) would change hands between a willing buyer and a
willing seller, within a commercially reasonable period of time, each having reasonable
knowledge of the relevant facts, with neither being under any compulsion to
act.

 

b.                                      “Present Fair Salable Value”

 

The amount at going concern
values that could be obtained by an independent willing seller from an
independent willing buyer if the assets of each of (i) the Company and its
Subsidiaries (taken as a whole) and (ii) the Company (on a stand-alone basis
but taking into account the value of the stock or other equity interests it
holds in its Subsidiaries) are sold with reasonable promptness under normal
selling conditions in a current market.

 

c.                                       “New Financing”

 

The indebtedness incurred or to
be incurred by the Company and its Subsidiaries under the Loan Agreement, the
Revolving Credit Note and the other Loan Documents.

 

L-1

 

d.                                      “Stated Liabilities”

 

The recorded liabilities
(including Contingent Liabilities that would be recorded on a balance sheet in
accordance with GAAP consistently applied) of the Company and its Subsidiaries
at                                ,
2004, together with (i) the net change in long-term debt (including current
maturities) between
                                    ,
2004 and the date hereof and (ii) without duplication, the amount of all New
Financing.

 

e.                                       “Contingent Liabilities”

 

The maximum estimated amount of
liability, if any, reasonably likely to result from pending litigation,
asserted claims and assessments, guaranties, uninsured risks and other
contingent liabilities of the Company and its Subsidiaries (exclusive of such
Contingent Liabilities to the extent reflected in Stated Liabilities).

 

f.                                         “Will be able to pay its Stated
Liabilities, including Contingent Liabilities, as they mature.”

 

For the period from the date
hereof through the stated maturity of all New Financing, each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis) will have sufficient assets and cash flow to pay (from all
available sources) their respective Stated Liabilities and Contingent
Liabilities as those liabilities mature or otherwise become due.

 

g.                                      “Does not have Unreasonably Small
Capital”

 

For the period from the date
hereof through the stated maturity of all New Financing, each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis), after consummation of all Indebtedness (including under the
Notes) being incurred or assumed and Liens created by the Company and its
Subsidiaries in connection therewith, is a going concern and has sufficient
capital to ensure that it will continue to be a going concern for such period
and to remain a going concern despite moderately negative deviations from the
projections discussed below.

 

3.                                       For purposes of this Certificate, I, or
officers of the Company under my direction and supervision, have performed the
following procedures as of and for the periods set forth below.

 

a.                                       I have reviewed the financial statements
and projections referred to in Sections 4.1(q), 5.8 and 5.18 of the Loan
Agreement.

 

b.                                      I have read the Loan Agreement and the
respective Schedules and Exhibits thereto and the Transaction Documents.

 

L-2

 

c.                                       With respect to Contingent Liabilities,
I, to the extent that a prudent person reasonably would deem necessary:

 

(1)                                  inquired of certain officials of the
Company and its Subsidiaries who have responsibility for legal, financial and
accounting matters as to the existence and estimated liability with respect to
all Contingent Liabilities known to them;

 

(2)                                  confirmed with senior officers of the
Company and its Subsidiaries that, to the best of such officers’ knowledge, (1)
all appropriate items were included in Stated Liabilities or Contingent
Liabilities made known to me in the course of my inquiry and that (2) the
amounts relating thereto were the estimated amount of liability reasonably
likely to result therefrom as of the date hereof;

 

(3)                                  I hereby certify that, to the best of my
knowledge, all material Contingent Liabilities have been considered in making
the certification set forth in paragraph 4 below, and with respect to
each such Contingent Liability the estimated amount of liability reasonably
likely to result therefrom was used in making such certification.

 

4.                                       Based on and subject to the foregoing, I
hereby certify on behalf of the Company that, after giving effect to the
Acquisitions and financing transactions (including the New Financing), it is my
informed opinion that as of the date hereof (x) the Fair Value and Present Fair
Salable Value of the assets of each of (i) the Company and its Subsidiaries
(taken as a whole) and (ii) the Company (on a stand-alone basis) exceed their
respective Stated Liabilities and Contingent Liabilities; (y) each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis) will not have Unreasonably Small Capital; and (z) each of
(i) the Company and its Subsidiaries (taken as a whole) and (ii) the Company
(on a stand-alone basis) will be able to pay each of their respective Stated
Liabilities and Contingent Liabilities as they mature or otherwise become due.

 

IN WITNESS WHEREOF, the Company
has caused its duly authorized President and Chief Executive Officer to execute
and deliver this Officer’s Solvency Certificate this
         day of June, 2004.

 

	
   

  	
  PUMPKIN LTD.,

  
	
   

  	
     a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gay Burke

  	
   

  
	
   

  	
  Name:

  	
  Gay Burke

  	
   

  
	
   

  	
  Title:

  	
  President / CEO

  	
   

  
						

 

L-3

 

OFFICER’S
SOLVENCY CERTIFICATE

 

I, the undersigned, the
President of PUMPKIN MASTERS HOLDINGS, INC., a Delaware corporation (the
“Company”), do hereby certify on behalf of the Company that:

 

1.                                       This Certificate is furnished pursuant
to Section 4.1(s) of the Loan Agreement, dated as of June 11, 2004,
among the Company, Security Capital Corporation, Pumpkin Ltd. and Bank One,
N.A. (such Loan Agreement, as in effect on the date of this Certificate, being
herein called the “Loan Agreement”). 
Unless otherwise defined herein, capitalized terms used in this
Certificate shall have the meanings set forth in the Loan Agreement.

 

2.                                       For purposes of this Certificate, the
terms below shall have the following definitions:

 

a.                                       “Fair Value”

 

The amount at going concern
values at which the assets, in their entirety, of each of (i) the Company and
its Subsidiaries (taken as a whole) and (ii) the Company (on a stand-alone
basis but taking into account the value of the stock or other equity interests
it holds in its Subsidiaries) would change hands between a willing buyer and a
willing seller, within a commercially reasonable period of time, each having
reasonable knowledge of the relevant facts, with neither being under any
compulsion to act.

 

b.                                      “Present Fair Salable Value”

 

The amount at going concern
values that could be obtained by an independent willing seller from an
independent willing buyer if the assets of each of (i) the Company and its
Subsidiaries (taken as a whole) and (ii) the Company (on a stand-alone basis
but taking into account the value of the stock or other equity interests it
holds in its Subsidiaries) are sold with reasonable promptness under normal
selling conditions in a current market.

 

c.                                       “New Financing”

 

The indebtedness incurred or to
be incurred by the Company and its Subsidiaries under the Loan Agreement, the
Revolving Credit Note and the other Loan Documents.

 

d.                                      “Stated Liabilities”

 

The recorded liabilities
(including Contingent Liabilities that would be recorded on a balance sheet in
accordance with GAAP consistently applied) of the Company and its Subsidiaries
at
                                ,

 

L-4

 

2004, together with (i) the net
change in long-term debt (including current maturities) between
                                    ,
2004 and the date hereof and (ii) without duplication, the amount of all New
Financing.

 

e.                                       “Contingent Liabilities”

 

The maximum estimated amount of
liability, if any, reasonably likely to result from pending litigation,
asserted claims and assessments, guaranties, uninsured risks and other
contingent liabilities of the Company and its Subsidiaries (exclusive of such
Contingent Liabilities to the extent reflected in Stated Liabilities).

 

f.                                         “Will be able to pay its Stated
Liabilities, including Contingent Liabilities, as they mature.”

 

For the period from the date
hereof through the stated maturity of all New Financing, each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis) will have sufficient assets and cash flow to pay (from all
available sources) their respective Stated Liabilities and Contingent
Liabilities as those liabilities mature or otherwise become due.

 

g.                                      “Does not have Unreasonably Small
Capital”

 

For the period from the date
hereof through the stated maturity of all New Financing, each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis), after consummation of all Indebtedness (including under the
Notes) being incurred or assumed and Liens created by the Company and its
Subsidiaries in connection therewith, is a going concern and has sufficient
capital to ensure that it will continue to be a going concern for such period
and to remain a going concern despite moderately negative deviations from the
projections discussed below.

 

3.                                       For purposes of this Certificate, I, or
officers of the Company under my direction and supervision, have performed the
following procedures as of and for the periods set forth below.

 

a.                                       I have reviewed the financial statements
and projections referred to in Sections 4.1(q), 5.8 and 5.18 of the Loan
Agreement.

 

b.                                      I have read the Loan Agreement and the
respective Schedules and Exhibits thereto and the Transaction Documents.

 

c.                                       With respect to Contingent Liabilities,
I, to the extent that a prudent person reasonably would deem necessary:

 

L-5

 

(1)                                  inquired of certain officials of the
Company and its Subsidiaries who have responsibility for legal, financial and
accounting matters as to the existence and estimated liability with respect to
all Contingent Liabilities known to them;

 

(2)                                  confirmed with senior officers of the
Company and its Subsidiaries that, to the best of such officers’ knowledge, (1)
all appropriate items were included in Stated Liabilities or Contingent
Liabilities made known to me in the course of my inquiry and that (2) the
amounts relating thereto were the estimated amount of liability reasonably
likely to result therefrom as of the date hereof;

 

(3)                                  I hereby certify that, to the best of my
knowledge, all material Contingent Liabilities have been considered in making
the certification set forth in paragraph 4 below, and with respect to
each such Contingent Liability the estimated amount of liability reasonably
likely to result therefrom was used in making such certification.

 

4.                                       Based on and subject to the foregoing, I
hereby certify on behalf of the Company that, after giving effect to the
Acquisitions and financing transactions (including the New Financing), it is my
informed opinion that as of the date hereof (x) the Fair Value and Present Fair
Salable Value of the assets of each of (i) the Company and its Subsidiaries
(taken as a whole) and (ii) the Company (on a stand-alone basis) exceed their
respective Stated Liabilities and Contingent Liabilities; (y) each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis) will not have Unreasonably Small Capital; and (z) each of
(i) the Company and its Subsidiaries (taken as a whole) and (ii) the Company
(on a stand-alone basis) will be able to pay each of their respective Stated
Liabilities and Contingent Liabilities as they mature or otherwise become due.

 

IN WITNESS WHEREOF, the Company
has caused its duly authorized President to execute and deliver this Officer’s
Solvency Certificate this          day
of June, 2004.

 

	
   

  	
  PUMPKIN MASTERS

  
	
   

  	
  HOLDINGS, INC.,

  
	
   

  	
    a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William R. Schlueter

  	
   

  
	
   

  	
  Name:

  	
  William R. Schlueter

  	
   

  
	
   

  	
  Title:

  	
    President

  	
   

  
						

 

L-6

 

OFFICER’S
SOLVENCY CERTIFICATE

 

I, the undersigned, the Senior
Vice President of SECURITY CAPITAL CORPORATION, a Delaware corporation (the
“Company”), do hereby certify on behalf of the Company that:

 

1.                                       This Certificate is furnished pursuant
to Section 4.1(s) of the Loan Agreement, dated as of June 11, 2004,
among the Company, Pumpkin Masters Holdings, Inc., Pumpkin Ltd. and Bank One,
N.A. (such Loan Agreement, as in effect on the date of this Certificate, being
herein called the “Loan Agreement”). 
Unless otherwise defined herein, capitalized terms used in this
Certificate shall have the meanings set forth in the Loan Agreement.

 

2.                                       For purposes of this Certificate, the
terms below shall have the following definitions:

 

a.                                       “Fair Value”

 

The amount at going concern
values at which the assets, in their entirety, of each of (i) the Company and
its Subsidiaries (taken as a whole) and (ii) the Company (on a stand-alone
basis but taking into account the value of the stock or other equity interests
it holds in its Subsidiaries) would change hands between a willing buyer and a
willing seller, within a commercially reasonable period of time, each having
reasonable knowledge of the relevant facts, with neither being under any
compulsion to act.

 

b.                                      “Present Fair Salable Value”

 

The amount at going concern
values that could be obtained by an independent willing seller from an
independent willing buyer if the assets of each of (i) the Company and its
Subsidiaries (taken as a whole) and (ii) the Company (on a stand-alone basis
but taking into account the value of the stock or other equity interests it
holds in its Subsidiaries) are sold with reasonable promptness under normal
selling conditions in a current market.

 

c.                                       “New Financing”

 

The indebtedness incurred or to
be incurred by the Company and its Subsidiaries under the Loan Agreement, the
Revolving Credit Note and the other Loan Documents.

 

d.                                      “Stated Liabilities”

 

The recorded liabilities
(including Contingent Liabilities that would be recorded on a balance sheet in
accordance with GAAP consistently

 

L-7

 

applied) of the Company and its
Subsidiaries at
                                    ,
2004, together with (i) the net change in long-term debt (including current
maturities) between
                                    ,
2004 and the date hereof and (ii) without duplication, the amount of all New
Financing.

 

e.                                       “Contingent Liabilities”

 

The maximum estimated amount of
liability, if any, reasonably likely to result from pending litigation,
asserted claims and assessments, guaranties, uninsured risks and other
contingent liabilities of the Company and its Subsidiaries (exclusive of such
Contingent Liabilities to the extent reflected in Stated Liabilities).

 

f.                                         “Will be able to pay its Stated
Liabilities, including Contingent Liabilities, as they mature.”

 

For the period from the date
hereof through the stated maturity of all New Financing, each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis) will have sufficient assets and cash flow to pay (from all
available sources) their respective Stated Liabilities and Contingent
Liabilities as those liabilities mature or otherwise become due.

 

g.                                      “Does not have Unreasonably Small
Capital”

 

For the period from the date
hereof through the stated maturity of all New Financing, each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis), after consummation of all Indebtedness (including under the
Notes) being incurred or assumed and Liens created by the Company and its
Subsidiaries in connection therewith, is a going concern and has sufficient
capital to ensure that it will continue to be a going concern for such period
and to remain a going concern despite moderately negative deviations from the
projections discussed below.

 

3.                                       For purposes of this Certificate, I, or
officers of the Company under my direction and supervision, have performed the
following procedures as of and for the periods set forth below.

 

a.                                       I have reviewed the financial statements
and projections referred to in Sections 4.1(q), 5.8 and 5.18 of the Loan
Agreement.

 

b.                                      I have read the Loan Agreement and the
respective Schedules and Exhibits thereto and the Transaction Documents.

 

c.                                       With respect to Contingent Liabilities,
I, to the extent that a prudent person reasonably would deem necessary:

 

L-8

 

(1)                                  inquired of certain officials of the
Company and its Subsidiaries who have responsibility for legal, financial and
accounting matters as to the existence and estimated liability with respect to
all Contingent Liabilities known to them;

 

(2)                                  confirmed with senior officers of the
Company and its Subsidiaries that, to the best of such officers’ knowledge, (1)
all appropriate items were included in Stated Liabilities or Contingent
Liabilities made known to me in the course of my inquiry and that (2) the
amounts relating thereto were the estimated amount of liability reasonably
likely to result therefrom as of the date hereof;

 

(3)                                  I hereby certify that, to the best of my
knowledge, all material Contingent Liabilities have been considered in making
the certification set forth in paragraph 4 below, and with respect to
each such Contingent Liability the estimated amount of liability reasonably
likely to result therefrom was used in making such certification.

 

4.                                       Based on and subject to the foregoing, I
hereby certify on behalf of the Company that, after giving effect to the
Acquisitions and financing transactions (including the New Financing), it is my
informed opinion that as of the date hereof (x) the Fair Value and Present Fair
Salable Value of the assets of each of (i) the Company and its Subsidiaries
(taken as a whole) and (ii) the Company (on a stand-alone basis) exceed their
respective Stated Liabilities and Contingent Liabilities; (y) each of (i) the
Company and its Subsidiaries (taken as a whole) and (ii) the Company (on a
stand-alone basis) will not have Unreasonably Small Capital; and (z) each of
(i) the Company and its Subsidiaries (taken as a whole) and (ii) the Company
(on a stand-alone basis) will be able to pay each of their respective Stated
Liabilities and Contingent Liabilities as they mature or otherwise become due.

 

IN WITNESS WHEREOF, the Company
has caused its duly authorized Senior Vice President to execute and deliver
this Officer’s Solvency Certificate this
         day of June, 2004.

 

	
   

  	
  SECURITY CAPITAL

  
	
   

  	
  CORPORATION,

  
	
   

  	
    a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William R. Schlueter

  	
   

  
	
   

  	
  Name:

  	
  William R. Schlueter

  	
   

  
	
   

  	
  Title:

  	
  Sr. Vice President, Treasurer

  	
   

  
	
   

  	
   

  	
   and
  CFO

  	
   

  
						

 

L-9

 

Schedule 1.1 - Extended Term
Customers

 

[See Attached]

 

1

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  Target Northern Operations

  	
   

  	
  25-Feb

  	
   

  	
   

  
	
  C & S Wholesale Grocers,
  Inc.

  	
   

  	
  10-Apr

  	
   

  	
  Easter dating

  
	
  CTP/Geneva Division

  	
   

  	
  10-Apr

  	
   

  	
  Easter dating

  
	
  Ammar’s, Inc

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Country General Stores

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Coyne Crafts

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Dierberg Markets, Inc.

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Display & Costume Supply

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Display House Inc.

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Drug Town Drugstore

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Foster’s, Inc.

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Halloween Warehouse

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Heritage Crafts

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  House Of Bargains, Inc.

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Hy-Vee Foods

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  McWhorter’s Stationery, Inc.

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Medicine & More Inc.

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Midway Party Supply

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Select Sales

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Skagway Discount Dept Store

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Stitzell Electric Supply

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Veldsma & Sons, Inc.

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  Waccamaw Corporation

  	
   

  	
  10-Oct

  	
   

  	
   

  
	
  A & S Poliquin

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Ann & Hope Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Ben Franklin Crafts

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Bengtson Pumpkin Farm

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Big B Drugs, Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Boscov’s

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Brooks Pharmacy

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Burlington Drug Company

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Fairway Sales Co.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Farm Fresh Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Finke Co., The

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Giant Food Stores Inc

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Halloween Super Store

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  K & B, Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Mangelsen’s

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Marc Glassman, Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Millbrook Distr. Services

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Party America

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Party Barn

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Party Center

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Party City

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Party World

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Price Less Drug Store

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Publix Super Markets, Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Rite Aid Corporation

  	
   

  	
  31-Oct

  	
   

  	
   

  

 

2

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  RKB/C/O Emery Waterhouse

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Shaw’s Corporate

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Star Markets Company, Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Strack & Van Til

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Thrifty PayLess, Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Town Paint & Supply

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Variety Dist Inc

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Variety Supply Co., Inc.

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  Westlake Hardware

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  WIC Marketing

  	
   

  	
  31-Oct

  	
   

  	
   

  
	
  1/2 Off Card Shop

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  1HWI

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  99 Cents Stores Of Oregon

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  A. L. Damman Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Abston Enterprises

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Ace Hardware Corporation

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Acme Markets, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  ACO Hardware

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Adventure Shops Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  AHOLD Financial Services

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Albany Party Warehouse

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Albertson’s

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Allandale Farm

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Allemons Landscape Ctr.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  American Sales Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Ames Department Stores, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Andorra Pharmacy

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Arbor Drugs, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Arett Sales Corp

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Arne Distributors Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Arthur Drug

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Associated Grocers, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Astrup Drug, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Auralee Productions Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  B.E. Atlas Company

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Bartell Drugs

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Bartz Displays, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Bashas Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Ben Franklin Stores

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Bigg’s Hypermarket

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Bi-Mart Corp.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  BMK Central

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  BMK Inc

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Boo Ha Ha LLC

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Bozzutos

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Brendle’s Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Business Answers Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Buttrey Food And Drug

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  C & S Wholesale Grocers

  	
   

  	
  10-Nov

  	
   

  	
   

  

 

3

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  Card & Party Warehouse II

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Carlton Cards Retail, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Cartwright Inc

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  CDMA, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Cedarhurst Paper Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Cee-J Wholesale Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Central Garden & Pet
  Supply

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Chain Drug Mktg Assoc., Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Chernett Cohen Assoc.,
  Inc.-OLD

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  City Market, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Coast Guard Exchange

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Copps

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Corning Consumer Products

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Cosi/COLUMBUS

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Cotter & Company

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Country Gardens

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Craft Mart Super Store

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Craftworks, The #350

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  CVS Distribution, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Dan’s Supreme Supermarkets
  #1545

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Darice/ A-C Supply Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Dillon Stores, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Dillon’s Acct. Services

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Discount Drug Mart

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Discount Party Warehouse

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Do It Best Corp. #5949

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Dominicks

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Dougherty’s Masquerade

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Drug Emporium

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Drug Town

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Duckwall-Alco Stores, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Dupey Management Corporation

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  E. B. Mott Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Eagle Food Centers, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Earl May Seed & Nursery
  L.C.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  EMCO Distributing

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Evan Wholesale

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Evergreen Garden Center

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Evergreen HO/GDN HWI4071

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Express Retail dba Halloween
  Express

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  F Dohmen Co

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  F&D True Value Hwd.
  10-10307-5

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Factory Card Outlet Corp.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Fairway Foods

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Farmer John’s Quality Produce

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  FIM Stores

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  First Paper Corporation

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Fleming Companies, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Food Lion, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  

 

4

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  Frank W Kerr

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Frank’s Nursery & Crafts,
  Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Fred Meyer

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Fruth Pharmacy

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Fullerton H & G Showplace
  H & GS

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Fun In Motion, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Fun Sales Inc dba Halloween
  Express

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Furr’s Supermarkets, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  G. L. Perry Wholesale

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Gags & Games

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Gemmens HWI 356

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  General Distributors

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Giant Of Maryland

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Gibson Products Company Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Gibson’s Discount Centers,
  Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Good Tidings

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Gotta Golf dba Halloween
  Express-F161

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Grand Union Company

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Grandpa’s

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  H. E. Butt Grocery Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Halloween Bootique

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Halloween Express

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Hannaford Bros. Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Happy Harry’s, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Harry Products, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Heinens Fine Foods

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Hills Department Stores

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Hobby Lobby

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Home Farm Comm Builders

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Hy-Vee Foods

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  In Touch, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Independent Pharmacy Coop

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  iParty Corporation

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  J. L. Hammett Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Jamsan Inc dba Halloween
  Express 156

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Javic Wholesale Company, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Jones Stores, Inc,

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Kerr Drug, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  King Soopers, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Kruse Company, The

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Lambertville True Value

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Lash Tamaron Div. Of Toys R
  Us, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Laurel Grocery Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Let’s Party

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Lewis Drugs, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Lowen Corporation

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Lowe’s Co., Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  M. W. Kasch Company

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Mac’s Hobbies

  	
   

  	
  10-Nov

  	
   

  	
   

  

 

5

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  Mail Stop #9060

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Masquerade LLC

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Masters Tuxedo

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  McKesson Canada

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  McKesson Drug Co. - Eagan

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Medic Drug Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Menards

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Merchandise Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Mid-States Dist. Co., Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Mikowen Inc

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Millbrook Distr Services

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Minyard Food Stores

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  MJDesigns

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Modern Magic

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Moonlighting LLC dba

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Murray’s Partytime Supply

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Nash Finch Distributions

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Nash Finch Distributors

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Nash/Harmon Stores Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Navy Exchange Service Comm.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Nobbies

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Noble True Value 03-3358-9

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Nortex Drug. Dist.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Orman Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Osco Drug #32

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Osco Drug #2244

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  P. M. Parties, Inc. dba Party
  City

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  P. M. Place Stores Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Pamida Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Paper Universe

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Paper Warehouse Co., Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Party City Corporate

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Party Depot

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Party Fair

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Party Shops Plus, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Party Supermarket

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Party Universe - 349

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Party Universe

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Partyland, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Penn-Daniels, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Peyton’s, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  PGI Sales

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Phar-Mor, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  PMB 198

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  PMB 198

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Ponemah Farms

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Pretty Party Place

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Pretty Party Place

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Promotions Unlimited Corp.

  	
   

  	
  10-Nov

  	
   

  	
   

  

 

6

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  R. C. Taylor Wholesale

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Redner’s Markets

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Redner’s Markets, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Roths Markets

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Rural King Supply, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Rust Wholesale Company

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Ruthies Party City #56

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Safeway, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Sangrem Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Save Mart Supermarkets

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Schultz Sav-O Stores, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Seasonal Adventure

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Shaw’s

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Sheerlund Products

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Shopko Store, Inc. A/P

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Smith’s Food & Drug Cntrs.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Snyder Drug Stores

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Snyder Drug/Wstrn Whole

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Southern Distributors, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Southern States Cooperative

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Spag’s Supply, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Spooks R Us

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Three Spooks Inc.  FO81

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Thrift Drug, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Top Of The Town LLC

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Treasure Island, Inc.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Tripate Marketing

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  TruServ Corporation

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  TruServ Home & Grdn
  Showplace

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Truserv Trim-A-Tree

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  TruServ-Holods Hdwe

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  U Say It dba Halloween
  Express-F160

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  U.S. Coast Guard Exchange

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Unified Western Grocers Inc

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  United Hardware Distributing

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Val Corporation

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Valley View Farms

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Valley Wholesale Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Value Drug Co

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Value Drug Company

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  W. E. Aubuchon

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  W. L. Miller & Co LLC

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Wakefern Food Corporation

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Walgreens Co.

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Walker Drug

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Western Grocers

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Wetsel Seed Co

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  Wolf Hill Inc

  	
   

  	
  10-Nov

  	
   

  	
   

  
	
  American Drug Stores, Inc.

  	
   

  	
  30-Nov

  	
   

  	
   

  

 

7

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  Lucky Stores, Inc. OLD

  	
   

  	
  30-Nov

  	
   

  	
   

  
	
  Osco Drug

  	
   

  	
  30-Nov

  	
   

  	
   

  
	
  Osco Drug #2102

  	
   

  	
  30-Nov

  	
   

  	
   

  
	
  HomeBase, Inc.

  	
   

  	
  10-Dec

  	
   

  	
   

  
	
  Wal-Mart Canada Inc

  	
   

  	
  2% 30 Net 60

  	
   

  	
   

  
	
  Sobeys Ontario

  	
   

  	
  2% Net 12/15

  	
   

  	
   

  
	
  Peytons Phoenix

  	
   

  	
  2%, Net 11/10

  	
   

  	
   

  
	
  SuperValu Inc.

  	
   

  	
  2%, Net 11/10

  	
   

  	
   

  
	
  SuperValu-N.E. Region

  	
   

  	
  2%, Net 11/10

  	
   

  	
   

  
	
  GHC Merchandise Distribution

  	
   

  	
  2%, Net 11/10

  	
   

  	
   

  
	
  SuperValu Stores Inc

  	
   

  	
  2%, Net 11/10

  	
   

  	
   

  
	
  Joann Stores Inc

  	
   

  	
  2%/60, Net 61

  	
   

  	
   

  
	
  Valu Merchandisers Co.

  	
   

  	
  2%/60, Net 61

  	
   

  	
   

  
	
  Accents Unlimited

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  BIC Corporation

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Bookspan Inc AP

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Celebration Fantastic, The

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Home Marketplace The

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Kmart Corp

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  MDV/Nash Finch

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Michaels Stores Incorporated

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Papyrus DC

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Topco Associates, Inc.

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Walter Drake Inc

  	
   

  	
  Net 45

  	
   

  	
   

  
	
  Artco #3

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Associated Whlslrs

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Bed Bath & Beyond Corp.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Berlin Orchards

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Big R Stores

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Bonney Lake #5970

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Champions Display &
  Costume

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Clayton Valley Pumpkin Farm

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Community Distributors Inc

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Craf-T

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Crafts Plus+, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Crate & Barrel

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Creative Crafts & Frame
  Shop

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  CVS Meridian Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Dayton Hudson

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Dillon Accounting Services

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  ECE John Van Rooijen

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Eckerd Drug Co. Accts.
  Payable 186502

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  EToys

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Eurest Dining Services

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Everything Halloween

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Factory Card Outlet

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  First Imperial Trading Co.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Genuardi’s

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Geo. W. Hill & Co., Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  

 

8

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  Gollath Falls Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Gordon Companies, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Halloween USA/C.S.M of NY

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Hearn’s + Crafts, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Herr’s, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Holscher & Hackman

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Hyde’s Discount Drug

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Imperial Distributors

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  iParty Retail Stores Corp.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Itz A Party

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Jenson Enterprises, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Jepson Enterprises

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Jeson Enterprises

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Kaneka Far West

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Learning World

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Lechter’s Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Linens ‘N Things

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Mark Stevens

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Master Wholesale

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Meijer Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Miles Kimball Company

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Mobile Fabrics

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Mtn View Marketing

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  National Home Center’s, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Neighborhood Variety Stores
  #1

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Neighborhood Variety Stores
  #10

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Newton Buying Corp.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Nightmare Ventures

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Noodle Kidoodle

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Notions Marketing

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Pacific Craft Supplies

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Pamida Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Pappas Bros. Distributors

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Party Express-P001

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Party Express-P003

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Peoples Drug

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Prinz Mgmt Services, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  QVC Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Rag Shops, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Rascals Toys

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Ray’s #46

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  RCM Investments, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Reading China & More

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  RJK Management

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Rose Crafts

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Salem Fruit Grwrs dba FMO

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Sanford

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Santa Barbara + Crafts

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Singer Retail Marketing Svcs.

  	
   

  	
  Net 60

  	
   

  	
   

  

 

9

 

	
  Company
  Name

  	
   

  	
  Terms

  	
   

  	
   

  
	
  Somody Supply Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Spencer Gifts, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  T.V.I., Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Tall Mouse

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Taycor, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Tay-Cor, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Theis Distributing Company

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Treasure Shoppe Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Trentlage Resources

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  U. R. M. Stores, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  United Grocers Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Wal-Mart Stores

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Winco/Waremart Dist

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Wizard’s Chest, Inc

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  World Wide Distributors, Inc.

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Zany Brainy

  	
   

  	
  Net 60

  	
   

  	
   

  
	
  Ferguson Merchandising L.L.C.

  	
   

  	
  Net 90

  	
   

  	
   

  
	
  SMS

  	
   

  	
  Net 90

  	
   

  	
   

  

 

10

 

Schedule 5.1 - Borrower’s and
Guarantors’ Directors and Officers

 

	
  Pumpkin Ltd.

  
	
   

  	
   

  
	
  Directors:

  	
  Brian D. Fitzgerald

  
	
   

  	
  William R. Schlueter

  
	
   

  	
  A. George Gebauer

  
	
   

  	
  Ryan Bell

  
	
   

  	
  Wendy Bolton

  
	
   

  	
  Kea Bardeen

  
	
   

  	
  John Bardeen

  
	
   

  	
  Gay Burke

  
	
   

  	
   

  
	
  Officers:

  	
  Gay Burke (President and CEO)

  
	
   

  	
  Elizabeth Manguson
  (Secretary)

  
	
   

  	
  William R. Schlueter (Vice
  President and Treasurer)

  
	
   

  	
  Paul A. Miller (Vice
  President)

  
	
   

  	
   

  
	
  Pumpkin Masters Holdings,
  Inc.

  
	
   

  	
   

  
	
  Directors:

  	
  Brian D. Fitzgerald

  
	
   

  	
  William R. Schlueter

  
	
   

  	
  A. George Gebauer

  
	
   

  	
  Ryan Bell

  
	
   

  	
  Wendy Bolton

  
	
   

  	
  Kea Bardeen

  
	
   

  	
  John Bardeen

  
	
   

  	
  Gay Burke

  
	
   

  	
   

  
	
  Officers:

  	
  William Schlueter (President)

  
	
   

  	
  Brian D. Fitzgerald (Vice
  President and Secretary)

  
	
   

  	
  Paul A. Miller (Vice
  President)

  
	
   

  	
   

  
	
  Security Capital Corporation

  
	
   

  	
   

  
	
  Directors:

  	
  A. George Gebauer

  
	
   

  	
  Brian D. Fitzgerald

  
	
   

  	
  M. Paul Kelly

  
	
   

  	
  John H.F. Haskell, Jr

  
	
   

  	
  Samuel B. Fortenbaugh, III

  
	
   

  	
  Edward W. Kelley, Jr.

  

 

 

	
  Officers:

  	
  Brian D. Fitzgerald
  (President and CEO)

  
	
   

  	
  A. George Gebauer (Secretary)

  
	
   

  	
  William R. Schlueter (Senior
  Vice President and Assistant Secretary)

  
	
   

  	
  Ryan D. Bell (Vice President)

  
	
   

  	
  Wendy E. Bolton (Assistant
  Secretary)

  
	
   

  	
  Paul A. Miller (Vice
  President)

  

 

 

Schedule 5.3
- Material Investments

 

None

 

 

Schedule 5.5 - Real Property

 

Owned Property:

 

None.

 

Leased Property:

 

Principal place of business and
chief executive office of Borrower:

 

1905 Sherman Street, Suite
1000, 920 and 925

Denver, CO 80203

 

Showroom Space of Borrower:

 

1107 Broadway

Space G-17, 8th Floor

New York, NY

 

 

Schedule 5.6
- Litigation

 

The Borrower was served with a
lawsuit on May 27, 2004, by Paradigm Marketing International and Stacy Rider in
the United States District Court for the District of Minnesota.  The complaint alleges that the Company’s
Super Poker and Overmolded Saw tools, introduced last year, were taken from two
ideas she gave to us, without her consent, and has three counts: 1) reach of
Contract (Mutual Agreement for Confidentiality), 2) Violation of Colorado’s
Uniform Trade Secrets Act, and 3) Copyright Infringement.

 

The Borrower believes that
these claims have no merit.  Both of the
new carving tools were independently developed by the Company, and the
confidentiality agreement excluded information that was independently developed
or in the Borrower’s possession before disclosure.  The underlying Copyright claims are also inherently flawed.  Nevertheless, in the event that the court
found in favor of the complainant in all respects, such a finding could have a
material adverse effect on the Borrower’s business.

 

1

 

Schedule 5.9 - Patents, Patent
Applications, Trademark and Service Mark Registrations and Applications and

Copyright Registrations and Applications Therefor that are Owned or

Licensed by the Borrower

 

Patents and
patent applications:

 

	
  PATENT NAME

  	
   

  	
  STATUS

  	
   

  	
  SERIAL

  NO.

  	
   

  	
  PATENT

  NO.

  	
   

  	
  FILING

  DATE

  	
   

  	
  ISSUE

  DATE

  
	
  Pumpkin Carving Kit

  	
   

  	
  Issued

  	
   

  	
  91,436

  	
   

  	
  4,828,114

  	
   

  	
  8/31/87

  	
   

  	
  5/9/89

  
	
  Hand-Held Scraping Device
  (Scoop)

  	
   

  	
  Issued

  	
   

  	
  07/607,150

  	
   

  	
  5,092,050

  	
   

  	
  10/31/90

  	
   

  	
  3/3/92

  
	
  Method for Decorating
  Surfaces with Transfer Patterns

  	
   

  	
  Issued

  	
   

  	
  08/182,409

  	
   

  	
  6,093,446

  	
   

  	
  7/14/94

  	
   

  	
  7/25/00

  
	
  Hand-Held Drilling Tool
  (Candle Planter)

  	
   

  	
  Issued

  	
   

  	
  08/549,957

  	
   

  	
  5,655,861

  	
   

  	
  10/27/95

  	
   

  	
  8/12/97

  
	
  Hand-Held Cutting Tool with
  Fatigue Resistant Blade (Flex Saw)

  	
   

  	
  Issued

  	
   

  	
  08/763,529

  	
   

  	
  5,832,615

  	
   

  	
  12/12/96

  	
   

  	
  11/10/98

  
	
  Stencil and Kit for
  Transferring Images and Method Therefore (Kid’s Kit)

  	
   

  	
  Issued

  	
   

  	
  09/028,217

  	
   

  	
  6,055,738

  	
   

  	
  2/23/98

  	
   

  	
  5/2/00

  
	
  Safety Saw for Cutting Soft
  Materials (Kid’s Saw)

  	
   

  	
  Issued

  	
   

  	
  09/156,986

  	
   

  	
  6,497,046

  	
   

  	
  9/18/98

  	
   

  	
  12/24/02

  
	
  Illumination Device (Kid’s
  Candle) - Design

  	
   

  	
  Issued

  	
   

  	
  29/094,325

  	
   

  	
  D427,708

  	
   

  	
  9/30/98

  	
   

  	
  7/4/00

  
	
  Illumination Device (Kid’s
  Candle) - Utility

  	
   

  	
  Issued

  	
   

  	
  09/163,744

  	
   

  	
  6,309,092

  	
   

  	
  9/30/98

  	
   

  	
  10/30/01

  
	
  Creative Art Kit for
  Producing and Viewing Stereoscopic Creative Art Images (3D Glasses with
  Paint/Chalk)

  	
   

  	
  Issued

  	
   

  	
  09/190,356

  	
   

  	
  6,266,186

  	
   

  	
  11/12/98

  	
   

  	
  7/24/01

  

 

1

 

	
  PATENT NAME

  	
   

  	
  STATUS

  	
   

  	
  SERIAL

  NO.

  	
   

  	
  PATENT

  NO.

  	
   

  	
  FILING

  DATE

  	
   

  	
  ISSUE

  DATE

  
	
  Egg Cleaning and Decorating
  Method and Kit (Easter Kit)

  	
   

  	
  Issued

  	
   

  	
  09/344,475

  	
   

  	
  6,260,480

  	
   

  	
  6/16/99

  	
   

  	
  7/17/01

  
	
  Combination Jump Rope and
  Sidewalk Chalk Holder Toy

  	
   

  	
  Issued

  	
   

  	
  09/340,554

  	
   

  	
  6,113,520

  	
   

  	
  6/28/99

  	
   

  	
  9/5/00

  
	
  Method of Carving Shapes in a
  Pumpkin Shell (Pumpkin Punch Out Kit)

  	
   

  	
  Issued

  	
   

  	
  09/348,850

  	
   

  	
  6,342,175

  	
   

  	
  7/7/99

  	
   

  	
  1/29/02

  
	
  Inflatable Treat Bowl -
  Design

  	
   

  	
  Issued

  	
   

  	
  29/124,617

  	
   

  	
  D452,636

  	
   

  	
  6/8/00

  	
   

  	
  1/1/02

  
	
  Bag with Flashlight Handle
  (Snake Light) - Design

  	
   

  	
  Issued

  	
   

  	
  29/129,419

  	
   

  	
  D456,920

  	
   

  	
  9/15/00

  	
   

  	
  5/7/02

  
	
  Spherical Flashlight Pendant
  (Monster Eyeball Light) - Design

  	
   

  	
  Issued

  	
   

  	
  29/129,420

  	
   

  	
  D453,702

  	
   

  	
  9/15/00

  	
   

  	
  2/19/02

  
	
  Dome-Shaped Illumination
  Device (Dome Light) Design Patent - see
  also “Portable Special Effects Illumination Device (UPL)” Utility
  Patent

  	
   

  	
  Issued

  	
   

  	
  29/131,028

  	
   

  	
  D454,967

  	
   

  	
  10/12/00

  	
   

  	
  3/26/02

  
	
  Pumpkin Decorating Kit and
  Method Using Light Guiding Pegs (Kid’s Fright Lights)

  	
   

  	
  Issued

  	
   

  	
  09/889,338

  	
   

  	
  6,578,710

  	
   

  	
  7/16/01

  	
   

  	
  6/17/03

  
	
  Portable Special Effects
  Illumination Device {see also Design Patent for Dome-Shaped Illumination Device
  (Dome Light)}

  	
   

  	
  Issued

  	
   

  	
  09/971,786

  	
   

  	
  6,575,613

  	
   

  	
  10/4/01

  	
   

  	
  6/10/03

  
	
  Piercing Tool

  	
   

  	
  Pending

  	
   

  	
  10/401,491

  	
   

  	
   

  	
   

  	
  3/28/03

  	
   

  	
   

  
	
  Tool Handle (Design Patent
  for new saw)

  	
   

  	
  Issued

  	
   

  	
  29/179,502

  	
   

  	
  D483,645

  	
   

  	
  4/9/03

  	
   

  	
  12/16/03

  
	
  Tool with Ergonomic Soft-Grip
  Handle

  	
   

  	
  Pending

  	
   

  	
  10/410,889

  	
   

  	
   

  	
   

  	
  4/9/03

  	
   

  	
   

  

 

2

 

	
  PATENT NAME

  	
   

  	
  STATUS

  	
   

  	
  SERIAL

  NO.

  	
   

  	
  PATENT

  NO.

  	
   

  	
  FILING

  DATE

  	
   

  	
  ISSUE

  DATE

  
	
  Scary Carries line of Trick
  or Treat Bags (licensed by Ringstone Co. Ltd. to Pumpkin, Ltd.)

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
  5,348,155

  	
   

  	
   

  	
   

  	
   

  
	
  (licensed by Pumpkin, Ltd. to
  Martha Stewart Online; non-exclusive, dated April 10, 2003)

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
  4,828,114

  	
   

  	
   

  	
   

  	
   

  
	
  (licensed by Pumpkin, Ltd. to
  Martha Stewart Online; non-exclusive, dated April 10, 2003)

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
  6,342,175

  	
   

  	
   

  	
   

  	
   

  
	
  (licensed by Pumpkin, Ltd. to
  Restoration Hardware, Inc.; non-exclusive, dated February, 10, 2003)

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
  6,342,175

  	
   

  	
   

  	
   

  	
   

  
	
  (licensed by Pumpkin, Ltd. to
  Running Press; non-exclusive)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  5,832,615

  	
   

  	
   

  	
   

  	
   

  
	
  (licensed by Pumpkin, Ltd. to
  Paper Magic Group; non-exclusive, effective July 14, 2003)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4,828,114

  	
   

  	
   

  	
   

  	
   

  
	
  (licensed by Pumpkin, Ltd. to
  Paper Magic Group; non-exclusive, effective July 14, 2003)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  5,092,050

  	
   

  	
   

  	
   

  	
   

  
	
  (cross-licensing agreement
  with The Seeds Corps, d/b/a Concept Marketing; non-exclusive, dated
  August 3, 1998)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lighted Safety Bucket (Patent
  is Owned by Jack Holland, but under exclusive license with Pumpkin Ltd.)

  	
   

  	
  Issued

  	
   

  	
  09/420,470

  	
   

  	
  6,270,233

  	
   

  	
  10/19/99

  	
   

  	
  8/7/01

  
	
  Garment and Garment
  Accessories Having Luminescent Accents and Fabrication Method Therefor (Neon
  Light Costumes)

  	
   

  	
  Pending

  	
   

  	
  10/754,066

  	
   

  	
   

  	
   

  	
  1/7/04

  	
   

  	
   

  
	
  Piercing Tool - PCT
  Application

  	
   

  	
  Pending

  	
   

  	
  based on US Ser. No.
  10/401,491

  	
   

  	
  3/25/04

  	
   

  	
   

  
	
  Tool with Ergonomic Soft-Grip
  Handle - PCT Application

  	
   

  	
  Pending

  	
   

  	
  based on US Ser. No.
  10/410,889

  	
   

  	
  4/7/04

  	
   

  	
   

  

 

3

 

Trademarks and
Tradenames:

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  ‘POWER’ TOOLS FOR PUMPKINS®

  	
   

  	
  Registered

  	
   

  	
  2,213,214

  	
   

  	
  8 - pumpkin carving and
  lighting kit comprised of hand held tools, namely, a saw, a scoop, and a
  drill, and a candle

  	
   

  	
  2/16/96

  	
   

  	
  7/30/98

  	
   

  	
  12/22/98

  
	
  BAREBONES® (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,279,335

  	
   

  	
  2 - paints for decorating
  pumpkins

  	
   

  	
  8/7/98

  	
   

  	
  12/22/97

  	
   

  	
  9/21/99

  
	
  BAREBONES® (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,310,954

  	
   

  	
  8 - manually operated hand
  tools for caring pumpkins, namely, saws and drills

  	
   

  	
  8/7/98

  	
   

  	
  11/12/96

  	
   

  	
  1/25/00

  
	
  Boo BagsTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CARVE-O-LANTERN®

  	
   

  	
  Registered

  	
   

  	
  1,476,839

  	
   

  	
  16 - kit for pumpkin carving,
  namely an instruction manual, patterns and hand tools therefor

  	
   

  	
  7/13/87

  	
   

  	
  10/20/86

  	
   

  	
  2/16/88

  
	
  CARVE-O-LANTERN®

  	
   

  	
  Registered

  	
   

  	
  1,465,923

  	
   

  	
  41 - educational services,
  namely, conducting classes and seminars in the field of pumpkin sculpturing

  	
   

  	
  3/23/87

  	
   

  	
  10/31/86

  	
   

  	
  11/17/87

  
	
  Carving PatternsTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Creepy CarriesTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DURASAW®

  	
   

  	
  Registered

  	
   

  	
  2,160,808

  	
   

  	
  8 - hand held tools, namely, saws

  	
   

  	
  2/16/96

  	
   

  	
  10/14/97

  	
   

  	
  5/26/98

  
	
  EASY CARVE®

  	
   

  	
  Registered

  	
   

  	
  2,484,623

  	
   

  	
  16 - Kit for pumpkin
  decorating, consisting of instructions, patterns, hand tools, and a candle,
  all sold as a unit

  	
   

  	
  1/21/00

  	
   

  	
  7/2/99

  	
   

  	
  9/4/01

  
	
  Exceptional EasterTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2000

  	
   

  	
   

  
	
  FRIGHT LIGHTSTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2000

  	
   

  	
   

  
	
  HALLOWEEN HARDWARE®

  	
   

  	
  Registered

  	
   

  	
  2,094,288

  	
   

  	
  8 - hand held tools for
  carving pumpkins, namely, saws

  	
   

  	
  2/1/96

  	
   

  	
  4/12/95

  	
   

  	
  9/9/97

  

 

4

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  HALLOWEEN HARDWARE®

  	
   

  	
  Registered

  	
   

  	
  2,094,288

  	
   

  	
  21 - hand held tools for
  carving pumpkins, namely, scoops

  	
   

  	
  2/1/96

  	
   

  	
  4/12/95

  	
   

  	
  9/9/97

  
	
  HALLOWEEN HOST

  	
   

  	
  Pending

  	
   

  	
  78/361,557

  	
   

  	
  16 - Drink coasters

  

  21 - Charms for attachment to beverage glasses to identify drinks; food
  spreaders; swizzle sticks; appetizer forks; bottle covers; reusable plastic
  ice cubes; a house mark for Halloween party kitchenware and giftware

  	
   

  	
  2/3/04

  	
   

  	
  ITU

  	
   

  	
   

  
	
  LANTERNS OF LIBERTY®

  	
   

  	
  Registered

  	
   

  	
  2,591,780

  	
   

  	
  16 - stencils; printed
  instructions and ideas for carving pumpkins and for creating holiday
  decorations with a patriotic theme.

  	
   

  	
  10/16/01

  	
   

  	
  10/16/01

  	
   

  	
  7/9/02

  
	
  LANTERNS OF LIBERTY®

  	
   

  	
  Registered

  	
   

  	
  2,591,780

  	
   

  	
  42 - information services,
  namely providing information and ideas for carving pumpkins and for creating
  holiday decorations with a patriotic theme

  	
   

  	
  10/16/01

  	
   

  	
  10/31/01

  	
   

  	
  7/9/02

  
	
  LIGHTS ONTM

  	
   

  	
  Pending

  	
   

  	
  78/190,432

  	
   

  	
  25 - Costumes

  	
   

  	
  12/2/02

  	
   

  	
  ITU

  	
   

  	
   

  
	
  MELON LIGHTS FOR SUMMER
  NIGHTS!®

  	
   

  	
  Registered

  	
   

  	
  1,879,719

  	
   

  	
  16 - kit for watermelon
  carving; namely , an instruction manual, patterns and hand tools therefor

  	
   

  	
  2/14/94

  	
   

  	
  4/1/92

  	
   

  	
  2/21/95

  
	
  Monster EyeTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monster SackTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MONSTER SNOTTM

  	
   

  	
  Allowed

  	
   

  	
  78/086,592

  	
   

  	
  28 - toy and novelty
  pressurized dispenser of plastic stream material; plastic stream material for
  use in a toy an novelty pressured dispenser

  	
   

  	
  10/2/01

  	
   

  	
  6/24/02

  	
   

  	
   

  

 

5

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  OK!

  	
   

  	
  Pending

  	
   

  	
  78/387,834

  	
   

  	
  028: Egg decorating kits;
  Easter basket stuffers

  	
   

  	
  3/19/04

  	
   

  	
  ITU

  	
   

  	
   

  
	
  OK!®

  	
   

  	
  Registered

  	
   

  	
  2,212,466

  	
   

  	
  16 - children’s art supplies,
  namely, arts and craft painting kits, chalk, and slideable stickers

  	
   

  	
  6/26/97

  	
   

  	
  2/15/97

  	
   

  	
  12/22/98

  
	
  OUR KIDS

  	
   

  	
  Pending

  	
   

  	
  78/387,823

  	
   

  	
  028: Egg decorating kits;
  Easter basket stuffers

  	
   

  	
  3/19/04

  	
   

  	
  ITU

  	
   

  	
   

  
	
  OUR KIDS®

  	
   

  	
  Registered

  	
   

  	
  2,152,583

  	
   

  	
  16 - children’s art supplies,
  namely, arts and craft painting kits, chalk, and slideable stickers

  	
   

  	
  6/26/97

  	
   

  	
  2/15/97

  	
   

  	
  4/21/98

  
	
  Peek A Boos TM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PRODUCT MASTERSTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
  Trade name cert. filed -
  Colo.

  	
   

  	
  9/14/98

  	
   

  	
   

  	
   

  	
   

  
	
  PUMPKIN MASTERS/AMERICA’S
  PUMPKIN CARVING COMPANY & Design® (Canada)

  	
   

  	
  Registered

  	
   

  	
  489,994

  	
   

  	
  Pumpkin carving and
  decorative products namely, saws, drills, pokers, scoops, candles and candle
  holders, patterns and instructional booklets sold separately and in kits.

  	
   

  	
  8/23/96

  	
   

  	
  1994

  	
   

  	
  2/16/98

  
	
  PUMPKIN MASTERS®

  	
   

  	
  Registered

  	
   

  	
  1,912,503

  	
   

  	
  16 - kit for pumpkin carving,
  instruction manual, patterns and hand tools therefor

  	
   

  	
  12/20/93

  	
   

  	
  5/16/94

  	
   

  	
  8/15/95

  
	
  PUMPKIN MASTERS® (Canada)

  	
   

  	
  Registered

  	
   

  	
  489,360

  	
   

  	
  Pumpkin carving and decorative
  products namely, saws, drills, pokers, scoops, candles and candle holders,
  patterns and instructional booklets sold separately and in kits.

  	
   

  	
  8/23/96

  	
   

  	
  1994

  	
   

  	
  2/5/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom) (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,137,466

  	
   

  	
  4 - Candles; wicks; candles
  adapted for Halloween; lubricants; fuels

  	
   

  	
  6/28/97

  	
   

  	
   

  	
   

  	
  10/9/98

  

 

6

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  PUMPKIN MASTERS® (United
  Kingdom) (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,137,466

  	
   

  	
  8 - Hand tools and
  implements; axes; blades; razors; cleavers; cutlery; cutters;

  

  cutting tools; cutting bars; drills; saws; pokers; scoops; drill holders;
  fruit

  

  pickers; knives; machetes; files; paring knives; pincers; saw blades; saw

  

  holders; scrapers; scraping tools; screw drivers; sharpening instruments;

  

  spatulas; spades; swords; tongs; tweezers; slicers; shredders; wrenches;
  parts

  

  and fittings for all the aforesaid goods

  	
   

  	
  6/28/97

  	
   

  	
   

  	
   

  	
  10/9/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom) (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,137,466

  	
   

  	
  16 - Pattern and
  instructional booklets; printed matter; books; publications; stationery;
  parts and fittings for the aforesaid goods

  	
   

  	
  6/28/97

  	
   

  	
   

  	
   

  	
  10/9/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom) (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,137,466

  	
   

  	
  28 - Games; toys; playthings;
  candle holders; parts and fittings for the aforesaid goods

  	
   

  	
  6/28/97

  	
   

  	
   

  	
   

  	
  10/9/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom)

  

  Series includes:

  

  PUMPKIN-MASTERS, PUMPKIN MASTERS, PUMPKIN-MASTER, PUMPKIN MASTER

  	
   

  	
  Registered

  	
   

  	
  2,136,895

  	
   

  	
  4 - Candles; wicks; candles
  adapted for Halloween; lubricants; fuels

  	
   

  	
  6/25/97

  	
   

  	
   

  	
   

  	
  2/20/98

  

 

7

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  PUMPKIN MASTERS® (United Kingdom)

  

  Series includes:

  

  PUMPKIN-MASTERS, PUMPKIN MASTERS, PUMPKIN-MASTER, PUMPKIN MASTER

  	
   

  	
  Registered

  	
   

  	
  2,136,895

  	
   

  	
  8 - Hand tools and
  implements; axes; blades; razors; cleavers; cutlery; cutters;

  

  cutting tools; cutting bars; drills; saws; pokers; scoops; drill holders;
  fruit

  

  pickers; knives; machetes; files; paring knives; pincers; saw

  

  blades; saw holders; scrapers; scraping tools; screw drivers; sharpening
  instruments;

  

  spatulas; spades; swords; tongs; tweezers; slicers; shredders; wrenches;
  parts and fittings for all the aforesaid goods

  	
   

  	
  6/25/97

  	
   

  	
   

  	
   

  	
  2/20/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom)

  

  Series includes:

  

  PUMPKIN-MASTERS, PUMPKIN MASTERS, PUMPKIN-MASTER, PUMPKIN MASTER

  	
   

  	
  Registered

  	
   

  	
  2,136,895

  	
   

  	
  16 - Pattern and
  instructional booklets; printed matter; books; publications; stationery;
  parts and fittings for the aforesaid goods

  	
   

  	
  6/25/97

  	
   

  	
   

  	
   

  	
  2/20/98

  
	
  PUMPKIN MASTERS® (United
  Kingdom)

  

  Series includes:

  

  PUMPKIN-MASTERS, PUMPKIN MASTERS, PUMPKIN-MASTER, PUMPKIN MASTER

  	
   

  	
  Registered

  	
   

  	
  2,136,895

  	
   

  	
  28 - Games; toys; playthings;
  candle holders; parts and fittings for the aforesaid

  

  goods

  	
   

  	
  6/25/97

  	
   

  	
   

  	
   

  	
  2/20/98

  

 

8

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  PUMPKIN PORTRAITS®

  	
   

  	
  Registered

  	
   

  	
  2,611,708

  	
   

  	
  40 - electronic imaging,
  scanning, digitizing, alteration, photographic computer imaging of
  photographs, paintings, drawings, computer illustrations and other visual
  media, photographic reproduction of portraits, in the form of carved pumpkins

  	
   

  	
  9/22/00

  	
   

  	
  9/1/99

  	
   

  	
  8/27/02

  
	
  PUMPKIN PORTRAITS® (Canada)

  	
   

  	
  Allowed

  	
   

  	
  1,096,668

  	
   

  	
  42 - Reproducing images from
  photographs, paintings, drawings, computer illustrations, and other visual
  media in the form of carved pumpkins

  	
   

  	
  3/21/01

  	
   

  	
   

  	
   

  	
   

  
	
  PUMPKIN PORTRAITS® (United
  Kingdom)

  	
   

  	
  Pending

  	
   

  	
  2,265,159

  	
   

  	
  42 - Reproducing images from
  photographs, paintings, drawings, computer illustrations, and other visual
  media in the form of carved pumpkins

  	
   

  	
  3/22/01

  	
   

  	
   

  	
   

  	
   

  
	
  PUT A NEW FACE ON HALLOWEEN®

  	
   

  	
  Registered

  	
   

  	
  1,477,650

  	
   

  	
  16 - kit for pumpkin carving;
  namely, and instruction manual, patterns and hand tools therefor

  	
   

  	
  7/14/87

  	
   

  	
  2/10/87

  	
   

  	
  2/23/88

  
	
  QUICKPatternTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1997

  	
   

  	
   

  
	
  SCARY CARRIES® (stylized)

  	
   

  	
  Registered

  	
   

  	
  2,272,369

  	
   

  	
  16 - Halloween
  trick-or-treating bags

  	
   

  	
  9/22/98

  	
   

  	
  12/26/96

  	
   

  	
  8/24/99

  
	
  Scraper ScoopTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1990

  	
   

  	
   

  
	
  Sensational ShadowsTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1996

  	
   

  	
   

  
	
  Spine TinglersTM

  	
   

  	
  Common Law

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2002

  	
   

  	
   

  
	
  STAR STUDDED PUMPKINS

  	
   

  	
  Pending

  	
   

  	
  78/382,029

  	
   

  	
  016: Pumpkin carving kits;
  tools for carving pumpkins

  	
   

  	
  3/10/04

  	
   

  	
  ITU

  	
   

  	
   

  

 

9

 

	
  TRADEMARK

  	
   

  	
  STATUS

  	
   

  	
  REG. / SER.

  NO.

  	
   

  	
  IC / G&S

  	
   

  	
  FILING

  DATE

  	
   

  	
  FIRST

  USE

  DATE

  	
   

  	
  REG.

  DATE

  
	
  THE ORIGINAL PUMPKIN CARVER®

  	
   

  	
  Registered

  	
   

  	
  2,093,958

  	
   

  	
  8 - plastic carving knife for
  use in carving pumpkins

  	
   

  	
  3/28/94

  	
   

  	
  2/14/92

  	
   

  	
  9/9/97

  
	
  THE THING YA’ FLING®

  	
   

  	
  Registered

  	
   

  	
  2,430,455

  	
   

  	
  28 - Stuffed toy flying discs
  for playing a toss game

  	
   

  	
  6/1/99

  	
   

  	
  1/30/00

  	
   

  	
  2/20/01

  
	
  ZIPPY CARVE

  	
   

  	
  Pending

  	
   

  	
  78/289,228

  	
   

  	
  16 - Pumpkin carving kits;
  tools for carving pumpkins

  	
   

  	
  8/19/03

  	
   

  	
  ITU

  	
   

  	
   

  
	
  ZOJO®

  	
   

  	
  Registered

  	
   

  	
  2,437,613

  	
   

  	
  28 - Toys, namely, flying
  discs

  	
   

  	
  7/8/99

  	
   

  	
  2/22/00

  	
   

  	
  3/20/01

  
	
  Character images and trademarks
  (licensed by Universal Studios to Pumpkin, Ltd.; non-exclusive), executed on
  October 2, 2002

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE ORIGINAL PUMPKIN CARVER
  (Stylized) (licensed by Pumpkin, Ltd. to Impel, Inc.; exclusive), executed on
  August 27, 1999

  	
   

  	
  Issued

  	
   

  	
  2,093,958

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

10

 

Copyrights:

 

US Registered
Copyrights

 

	
  Registration

  Number

  	
   

  	
  Copyright Name

  	
   

  	
  Issue Date

  
	
  TX 2-053-558

  	
   

  	
  CARVE-O-LANTERN

  	
   

  	
  2/26/1987

  
	
  TX 3-622-904

  	
   

  	
  CARVE-O-LANTERNTM
  - PUMPKIN CARVING KIT

  	
   

  	
  9/20/1993

  
	
  TX 3 622 903

  	
   

  	
  CARVE-O-LANTERNR
  - PUMPKIN CARVING KIT (1989)

  	
   

  	
  9/20/1993

  
	
  TX 3-750-540

  	
   

  	
  ZIPPY CARVE
  INSTRUCTION BOOK

  	
   

  	
  2/7/1994

  
	
  TX 3-783-386

  	
   

  	
  ZIPPY CARVE
  (PACKAGE)

  	
   

  	
  2/7/1994

  
	
  TX 4-607-692

  	
   

  	
  CARVING FOR
  KIDS

  	
   

  	
  6/23/1997

  
	
  VA 1-052-479

  	
   

  	
  EGG HEAD

  	
   

  	
  7/10/2000

  
	
  VA 1-061-067

  	
   

  	
  BUNNY TRAILS
  (STENCILS (2))

  	
   

  	
  10/18/2000

  
	
  VA 1-145-120

  	
   

  	
  LET FREEDOM
  SHINE

  	
   

  	
  11/2/2001

  
	
  VA 1-63-909

  	
   

  	
  INFLATABLE
  TREAT BOWLS

  	
   

  	
  4/12/2000

  
	
  VAu 498-221

  	
   

  	
  SNAKE
  FLASHLIGHT HANDLE ON BAG

  	
   

  	
  4/14/2000

  
	
  VAu 498-220

  	
   

  	
  EYEBALL
  FLASHLIGHT

  	
   

  	
  4/14/2000

  
	
  VAu 480-843

  	
   

  	
  SAFETY
  FLASHLIGHT/BEACON PENDANT

  	
   

  	
  09/25/2000

  

 

Notes to
Schedule 5.9:

 

Pumpkin Masters also owns
numerous unregistered copyrights in package designs, various instructional
materials and hundreds of patterns and other material that has been acquired through
contest submissions, and/or by employee or independent contractor
creations.  Pumpkin Masters does not
register these copyrights in the ordinary course of business, as the costs of
registration would exceed the benefits.

 

Borrower is negotiating for the
transfer of three Chinese patents that are currently owned by one of Borrower’s
manufacturers, and which allegedly cover two of Borrower’s current
products.  The Chinese Patent Numbers
are 00342366.2, 00265563.2, and 00348934.5.

 

See also Schedule 5.6.

 

11

 

Schedule 6.1 - Existing Deposit
Accounts

 

	
  1.

  	
  LaSalle Bank

  
	
   

  	
  135 South LaSalle Street

  
	
   

  	
  Chicago, IL 60603

  
	
   

  	
   

  
	
   

  	
  Account Name:  Pumpkin Masters Main Account

  
	
   

  	
  Account Number:  5800336603

  
	
   

  	
   

  
	
  2.

  	
  LaSalle Bank

  
	
   

  	
  135 South LaSalle Street

  
	
   

  	
  Chicago, IL 60603

  
	
   

  	
   

  
	
   

  	
  Account Name:  Pumpkin Masters Control Account

  
	
   

  	
  Account Number:  55900443963

  
	
   

  	
   

  
	
  3.

  	
  LaSalle Bank

  
	
   

  	
  135 South LaSalle Street

  
	
   

  	
  Chicago, IL 60603

  
	
   

  	
   

  
	
   

  	
  Account Name:  Pumpkin Masters, Inc. Commercial Paper
  Account

  
	
   

  	
  Customer Number:  199014859

  
	
   

  	
   

  
	
  4.

  	
  Wells Fargo Bank(2)

  
	
   

  	
  66 West Springer Drive

  
	
   

  	
  Highlands Ranch, CO 80129

  
	
   

  	
   

  
	
   

  	
  Account Name:  Pumpkin Ltd., Pumpkin Masters, Inc.

  
	
   

  	
  Account Number:  269-8020428

  
	
   

  	
   

  
	
   

  	
  Account Description: Local
  Payroll Account

  
	
   

  	
   

  
	
  5.

  	
  Wells Fargo Bank

  
	
   

  	
  66 West Springer Drive

  
	
   

  	
  Highlands Ranch, CO 80129

  
	
   

  	
   

  
	
   

  	
  Account Name:  Pumpkin Ltd.

  
	
   

  	
  Account Number:  269-8017938

  
	
   

  	
   

  
	
   

  	
  Account Description:  Petty cash account with a maintained
  balance of no more than $2,000.00.

  

 

(2) Wells Fargo is also Pumpkin
Masters local payroll account.  Funds
should not be swept from this Wells Fargo account.

 

 

Schedule 7.1 - Capitalized Lease
Obligations and Purchase Money Indebtedness

 

None

 

 

Schedule 7.2
- Liens

 

None

 

 

Schedule 7.3
- Guaranties and Contingent Liabilities

 

Pumpkin Ltd. sells merchandise
to Target stores pursuant to a sales guarantee in which up to 5% of the
contract price could be charged back to Pumpkin Ltd. based on sell-through
percentages by product line.  Such chargeback
is calculated as follows:

 

	
  Sell
  Through Percentage

  	
   

  	
  CHARGEBACK

  
	
   

  	
   

  	
   

  
	
  80% & above

  	
   

  	
   

  	
  0%

  
	
  75-79%

  	
   

  	
   

  	
  1% of landed cost

  
	
  70-74%

  	
   

  	
   

  	
  2% of landed cost

  
	
  65-69%

  	
   

  	
   

  	
  3% of landed cost

  
	
  60-64%

  	
   

  	
   

  	
  4% of landed cost

  
	
  60% & below

  	
   

  	
   

  	
  5% of landed cost

  

 

 

Schedule 7.10
- Indebtedness

 

Borrower is obligated to pay
the Earnout Amount and the Additional Payment pursuant to, and as defined in,
the Asset Purchase Agreement by and among Pumpkin Ltd. d/b/a/ Pumpkin Masters,
Inc., Borrower, Pumpkin Masters Holdings, Inc. and Security Capital Corporation
dated as of June 27, 1997.Exhibit
10.9

 

AMENDED AND
RESTATED

ADVISORY
SERVICES AGREEMENT

 

AGREEMENT
dated as of January 1, 2004 between SECURITY CAPITAL CORPORATION, a Delaware
corporation, (“Security Capital”), and CAPITAL PARTNERS, INC., a Connecticut
corporation (“Capital Partners”).

 

WITNESSETH

 

WHEREAS,
Security Capital and Capital Partners entered into an Advisory Services
Agreement dated as of January 1, 2003 (the “Original Advisory Services
Agreement”) pursuant to which Capital Partners agreed to provide advisory and
other services to Security Capital and its subsidiaries in the areas of
investments, general administration, corporate development, strategic planning,
stockholder relations, financial matters and general business policy;

 

WHEREAS,
Security Capital and Capital Partners entered into a First Amendment to
Advisory Services Agreement dated as of November 4, 2003 (the “First
Amendment”) amending, among other things, the advisory fee payable by Security
Capital to Capital Partners; and

 

WHEREAS,
Security Capital and Capital Partners desire to further amend and restate the
Original Advisory Services Agreement, as amended by the First Amendment.

 

NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree, intending to be legally bound, hereby amend and restate the original
Advisory Services Agreement, as amended by the First Amendment, as follows:

 

1. Advisory
Services. Capital Partners shall, during the periods provided for in
Section 2, provide advisory services to Security Capital and its subsidiaries
in the areas of investments, general administration, corporate development,
strategic planning, stockholder relations, financial matters and general
business policy.

 

2. Advisory
Periods. Capital Partners shall provide the services described in Section 1
for a period of one year commencing on January 1, 2004 and ending on December
31, 2004 and, thereafter, for successive additional one-year periods unless
either party gives written notice of termination to the other party not less
than 60 days 

 

 

prior to
December 31, 2004 or the end of any such additional period in which case the
period during which Capital Partners shall provide such services shall
terminate as of December 31, 2004 or the end of such additional period, as the
case may be.

 

3. Advisory
Fee. Security Capital shall pay to Capital Partners an advisory fee (the
“Fee”) at the rate of $1,550,000 per annum for the services described in
Section 1. The Fee shall be payable in equal quarterly installments, in
advance, with the installment for each quarter payable on the first day of the
first month of such quarter.

 

The Fee shall
be subject to an appropriate adjustment, as reasonably agreed by the parties
pursuant to Section 7, whenever there is the occurrence of any material
unforeseen event, including, but not limited to, any significant change in the
scope of the operations of Security Capital and its subsidiaries, such as, for
example, a significant change in scope which results from any acquisition or
disposition made by Security Capital or any of its subsidiaries.

 

The Fee shall
be exclusive of reasonable out-of-pocket costs incurred by Capital Partners
directly in the performance of the services described in Section 1.

 

4. Costs.
Security Capital shall reimburse Capital Partners for all reasonable
out-of-pocket costs incurred directly in connection with the services described
in Section 1 except for rent, utilities and compensation for any employees of
Capital Partners. In particular, no separate compensation will be paid by
Security Capital to, among any others, Brian D. Fitzgerald, A. George Gebauer,
William R. Schlueter, Diane M. LaPointe or Ryan D. Bell, or their successors,
who serve as officers of Security Capital, and who are also employees of
Capital Partners. Such reimbursement shall be made within a reasonable period
after receipt of invoices therefor submitted by Capital Partners to Security
Capital from time to time.

 

5. Acquisition
Opportunities. From time to time, Capital Partners may present acquisition
opportunities to Security Capital which Capital Partners believes may be
appropriate for Security Capital. However, Capital Partners is under no
obligation to present any or all acquisition candidates of which it is aware to
Security Capital.

 

6. Investment
Banking Advisory Fee. In the event that Security Capital or any of its
subsidiaries completes any acquisition which was presented to Security Capital
by Capital Partners, Security Capital shall pay an investment banking advisory
fee to Capital Partners in an amount which is reasonable and customary for
transactions of such size and complexity as reasonably agreed to in advance by
the parties pursuant to

 

2

 

Section 7.

 

7. Amendment
and Modifications; Further Agreements. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by the written
agreement of Security Capital and Capital Partners. For purposes of this Agreement,
Security Capital shall act only with the approval of its independent directors.

 

8. Headings.
The Section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.

 

9. Execution
in Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.

 

10. Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut.

 

3

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the date first above written.

 

	
   

  	
  SECURITY CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William
  R. Schlueter

  	
   

  
	
   

  	
   

  	
  William R. Schlueter

  
	
   

  	
   

  	
  Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAPITAL PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian D.
  Fitzgerald

  	
   

  
	
   

  	
   

  	
  Brian D. Fitzgerald

  
	
   

  	
   

  	
  President

  

 

4

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