Document:

Cooperation
Agreement

    

    This
Cooperation Agreement (this “Agreement”) is dated as of  January 17,
2011 by and among each of the individuals listed on Schedule
A hereto (the “Controlling Shareholders”); Shandong Haiwang Chemical Co.,
Ltd, a People’s Republic of China company (the “Company”);
and  Chunbin Yang , an individual agreeing to serve as the Controlling
Shareholders’ agent hereunder (the “Agent”).

    

    WHEREAS,
the Controlling Shareholders hold the percentage of shares of the Company listed
on Schedule
A, which constitute in the aggregate a majority of the voting equity of
the Company; and

    

    WHEREAS,
the Controlling Shareholders desire to reorganize the Company (the
“Reorganization”) in preparation for an offering (the “Offering”) of common
shares of Haiwang Resources & Technology Ltd. (“Listing
Company”)

    

    WHEREAS,
the Controlling Shareholders acknowledge and agree that, in connection with the
Reorganization, it may be necessary or advisable to establish a holding company
structure pursuant to which the Company is contractually controlled by the
Listing Company or its subsidiary; and

    

    WHEREAS,
the Controlling Shareholders desire to cause the Company to take all steps
advisable to reorganize the Company as necessary and to ensure that the
financial statements of the Listing Company are consolidated with those of the
Company.

    

    NOW
THEREFORE, the parties agree as follows:

    

    
      	
               
      

            	
              1.

            	
              The
      Controlling Shareholders appoint the Agent to coordinate the
      Reorganization in preparation for the Offering.  The Controlling
      Shareholders acknowledge and agree that the Agent may establish one or
      more companies inside and outside China in connection with the
      Reorganization and that the shareholders of the Company will not become
      shareholders of the Listing Company until the Agent determines that such
      issuances are permissible under applicable laws and
      regulations.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      Agent will take such actions as may be necessary or desirable to the
      Controlling Shareholders in connection with the Reorganization, including
      but not limited to, coordinating with counsel and other service providers
      to complete the establishment and registration of all entities
      contemplated hereunder and to prepare any agreements to cause the Listing
      Company, through its subsidiary, to control the Company by
      contract.  The Controlling Shareholders understand
      that at the conclusion of the Reorganization, the Listing Company may be a
      non-Chinese company that owns all of the equity of one or more companies,
      including a Chinese company that has contracts with the
      Company.

            

    

    

    
      	
               
      

            	
              3.

            	
              The Controlling Shareholders will cause
      the Listing Company and the Company to be operated in cooperation with
      each other.  In particular, the Controlling Shareholders agree
      that they
      will vote in concert on corporate matters in the Company and the Listing Company, to the extent that they intend for the Listing
      Company to be considered under common control with the
      Company.  To the extent the Controlling Shareholders have less
      than unanimity as to any decision among themselves with regard to the
      Company and Listing
      Company, they agree that, during the term of this Agreement, they will act
      in concert with the wishes of the Controlling Shareholders holding a
      majority of the shares of the
Company.

            

    

    

    
      	
               
      

            	
              4.

            	
              The Controlling Shareholders will
      not transfer any shares of the Company or the Listing Company during
      the term of this Agreement other than to another shareholder who
      agrees to be bound by the terms of this
  Agreement.

            

    

    

    
      	
               
      

            	
              5.

            	
              The
      term of this Agreement will begin on the date hereof and will terminate
      automatically on the earlier of such date that the Controlling
      Shareholders determine to terminate the Agreement or such date as the
      Company determines that the Company and the Listing Company have an
      independent basis for consolidating the financial statements of such
      companies.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties have set forth their signatures as of the date
stated opposite their names.

    

    
      
        
          
            	
                    COMPANY

                  
	 
      	 
      
	
                    By:

                  	
                    /s/  Chunbin
      Yang

                  
	 
      	 
      
	
                    Name:

                  	
                    Chunbin
      Yang

                  
	
                    Its:

                  	
                    Chairman

                  
	 
      	 
      
	
                    AGENT

                  
	 
      	 
      
	
                    By:

                  	
                    /s/  Chunbin
      Yang

                  
	
                    Name:

                  	
                    Chunbin
      Yang

                  
	 
      	 
      
	
                    CONTROLLING
      SHAREHOLDERS

                  
	 
      	 
      
	
                    By:

                  	
                    /s/  Chunbin
      Yang

                  
	
                    Name:

                  	
                    Chunbin
      Yang

                  
	 
      	 
      
	
                    By:

                  	
                    /s/   Tongjiang
      Sun

                  
	
                    Name:

                  	
                    Tongjiang
      Sun

                  
	 
      	 
      
	
                    By:

                  	
                    /s/   Tongjiang
      Sun

                  
	
                    Name:

                  	
                    Xiusheng
      Cui

                  
	 
      	 
      
	
                    January
      17, 2011

                  

          

        

      

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Schedule
A

     

    
      
        
          
            
              	
                      Shareholders’ Name 

                    	 	
                      Share Percentage in

                      Shandong Haiwang

                      Chemical Stock Co., Ltd

                    	 	 	
                      Share Percentage in Haiwang

                      Resources & Technology Ltd.

                    	 
	 
      	 	 	 	 	 	 
	
                      Chunbin
      Yang

                    	 	 	46.977	%	 	 	34.160	%
	
                      Tongjiang
      Sun

                    	 	 	13.8675	%	 	 	13.479	%
	
                      Xiusheng
      Cui

                    	 	 	12.3267	%	 	 	11.980	%
	 
      	 	 	73.171	%	 	 	59.619	%

            

          

        

      

    

     

    
      
        
        

      

      
        3REVOLVING
CREDIT AND SECURITY AGREEMENT

     

    THE
LENDERS PARTY HERETO

     

    (LENDERS)

     

    AND

     

    PNC
BANK, NATIONAL ASSOCIATION

     

    (AS
LENDER AND AS AGENT)

     

    WITH

     

    ZANETT,
INC.

    ZANETT
COMMERCIAL SOLUTIONS, INC.

    

    (BORROWERS)

     

    January
27, 2011

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

     

    
      
        
          
            
              	
                      I  DEFINITIONS.

                    	
                      1

                    
	
                      1.1.

                    	 	
                      Accounting
      Terms

                    	
                      1

                    
	
                      1.2.

                    	 	
                      General
      Terms

                    	
                      1

                    
	
                      1.3.

                    	 	
                      Uniform
      Commercial Code Terms

                    	
                      21

                    
	
                      1.4.

                    	 	
                      Certain
      Matters of Construction

                    	
                      21

                    
	 
      	 
      
	
                      II  ADVANCES,
      PAYMENTS.

                    	
                      22

                    
	
                      2.1.

                    	 	
                      Revolving
      Advances.

                    	
                      22

                    
	
                      2.2.

                    	 	
                      Procedure
      for Borrowing Revolving Advances.

                    	
                      23

                    
	
                      2.3.

                    	 	
                      Disbursement
      of Advance Proceeds

                    	
                      25

                    
	
                      2.4.

                    	 	
                      Maximum
      Advances

                    	
                      25

                    
	
                      2.5.

                    	 	
                      Repayment
      of Advances.

                    	
                      26

                    
	
                      2.6.

                    	 	
                      Repayment
      of Excess Advances

                    	
                      26

                    
	
                      2.7.

                    	 	
                      Statement
      of Account

                    	
                      26

                    
	
                      2.8.

                    	 	
                      Letters
      of Credit

                    	
                      27

                    
	
                      2.9.

                    	 	
                      Issuance
      of Letters of Credit.

                    	
                      27

                    
	
                      2.10.

                    	 	
                      Requirements
      For Issuance of Letters of Credit.

                    	
                      28

                    
	
                      2.11.

                    	 	
                      Disbursements,
      Reimbursement.

                    	
                      28

                    
	
                      2.12.

                    	 	
                      Repayment
      of Participation Advances.

                    	
                      29

                    
	
                      2.13.

                    	 	
                      Documentation

                    	
                      30

                    
	
                      2.14.

                    	 	
                      Determination
      to Honor Drawing Request

                    	
                      30

                    
	
                      2.15.

                    	 	
                      Nature
      of Participation and Reimbursement Obligations

                    	
                      30

                    
	
                      2.16.

                    	 	
                      Indemnity

                    	
                      32

                    
	
                      2.17.

                    	 	
                      Liability
      for Acts and Omissions

                    	
                      32

                    
	
                      2.18.

                    	 	
                      Additional
      Payments

                    	
                      33

                    
	
                      2.19.

                    	 	
                      Manner
      of Borrowing and Payment.

                    	
                      33

                    
	
                      2.20.

                    	 	
                      Use
      of Proceeds.

                    	
                      35

                    
	
                      2.21.

                    	 	
                      Defaulting
      Lender.

                    	
                      35

                    
	 
      	 
      
	
                      III  INTEREST
      AND FEES.

                    	
                      36

                    
	
                      3.1.

                    	 	
                      Interest

                    	
                      36

                    
	
                      3.2.

                    	 	
                      Letter
      of Credit Fees.

                    	
                      37

                    
	
                      3.3.

                    	 	
                      Closing
      Fee and Facility Fee.

                    	
                      37

                    
	
                      3.4.

                    	 	
                      Collateral
      Management Fee and Collateral Monitoring Fee.

                    	
                      38

                    
	
                      3.5.

                    	 	
                      Computation
      of Interest and Fees

                    	
                      38

                    
	
                      3.6.

                    	 	
                      Maximum
      Charges

                    	
                      38

                    
	
                      3.7.

                    	 	
                      Increased
      Costs

                    	
                      38

                    
	
                      3.8.

                    	 	
                      Basis
      For Determining Interest Rate Inadequate or Unfair

                    	
                      39

                    
	
                      3.9.

                    	 	
                      Capital
      Adequacy.

                    	
                      40

                    
	
                      3.10.

                    	 	
                      Gross
      Up for Taxes

                    	
                      40

                    
	
                      3.11.

                    	 	
                      Withholding
      Tax Exemption.

                    	
                      41

                    
	 
      	 
      
	
                      IV  COLLATERAL:
      GENERAL TERMS.

                    	
                      42

                    
	
                      4.1.

                    	 	
                      Security
      Interest in the Collateral

                    	
                      42

                    
	
                      4.2.

                    	 	
                      Perfection
      of Security Interest

                    	
                      42

                    

            

          

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  4.3.

                	 	
                  Disposition
      of Collateral

                	
                  42

                
	
                  4.4.

                	 	
                  Preservation
      of Collateral

                	
                  43

                
	
                  4.5.

                	 	
                  Ownership
      of Collateral.

                	
                  43

                
	
                  4.6.

                	 	
                  Defense
      of Agent’s and Lenders’ Interests

                	
                  44

                
	
                  4.7.

                	 	
                  Books
      and Records

                	
                  44

                
	
                  4.8.

                	 	
                  Financial
      Disclosure

                	
                  44

                
	
                  4.9.

                	 	
                  Compliance
      with Laws

                	
                  44

                
	
                  4.10.

                	 	
                  Inspection
      of Premises

                	
                  45

                
	
                  4.11.

                	 	
                  Insurance

                	
                  45

                
	
                  4.12.

                	 	
                  Failure
      to Maintain Insurance

                	
                  46

                
	
                  4.13.

                	 	
                  Payment
      of Taxes

                	
                  46

                
	
                  4.14.

                	 	
                  Payment
      of Leasehold Obligations

                	
                  47

                
	
                  4.15.

                	 	
                  Receivables.

                	
                  47

                
	
                  4.16.

                	 	
                  Inventory

                	
                  49

                
	
                  4.17.

                	 	
                  Maintenance
      of Equipment

                	
                  49

                
	
                  4.18.

                	 	
                  Exculpation
      of Liability

                	
                  49

                
	
                  4.19.

                	 	
                  Environmental
      Matters.

                	
                  50

                
	
                  4.20.

                	 	
                  Financing
      Statements

                	
                  50

                
	 
      	 
      
	
                  V  REPRESENTATIONS
      AND WARRANTIES.

                	
                  50

                
	
                  5.1.

                	 	
                  Authority

                	
                  50

                
	
                  5.2.

                	 	
                  Formation
      and Qualification.

                	
                  51

                
	
                  5.3.

                	 	
                  Survival
      of Representations and Warranties

                	
                  51

                
	
                  5.4.

                	 	
                  Tax
      Returns

                	
                  51

                
	
                  5.5.

                	 	
                  Financial
      Statements.

                	
                  51

                
	
                  5.6.

                	 	
                  Entity
      Names

                	
                  52

                
	
                  5.7.

                	 	
                  O.S.H.A.
      and Environmental Compliance.

                	
                  52

                
	
                  5.8.

                	 	
                  Solvency;
      No Litigation, Violation, Indebtedness or Default.

                	
                  53

                
	
                  5.9.

                	 	
                  Patents,
      Trademarks, Copyrights and Licenses

                	
                  54

                
	
                  5.10.

                	 	
                  Licenses
      and Permits

                	
                  55

                
	
                  5.11.

                	 	
                  Default
      of Indebtedness

                	
                  55

                
	
                  5.12.

                	 	
                  No
      Default

                	
                  55

                
	
                  5.13.

                	 	
                  No
      Burdensome Restrictions

                	
                  55

                
	
                  5.14.

                	 	
                  No
      Labor Disputes

                	
                  55

                
	
                  5.15.

                	 	
                  Margin
      Regulations

                	
                  55

                
	
                  5.16.

                	 	
                  Investment
      Company Act

                	
                  55

                
	
                  5.17.

                	 	
                  Disclosure

                	
                  56

                
	
                  5.18.

                	 	
                  Delivery
      of Subordinated Debt Documents

                	
                  56

                
	
                  5.19.

                	 	
                  Swaps

                	
                  56

                
	
                  5.20.

                	 	
                  Conflicting
      Agreements

                	
                  56

                
	
                  5.21.

                	 	
                  Application
      of Certain Laws and Regulations

                	
                  56

                
	
                  5.22.

                	 	
                  Business
      and Property of Borrowers

                	
                  56

                
	
                  5.23.

                	 	
                  Section
      20 Subsidiaries

                	
                  56

                
	
                  5.24.

                	 	
                  Anti-Terrorism
      Laws.

                	
                  56

                
	
                  5.25.

                	 	
                  Trading
      with the Enemy

                	
                  57

                
	
                  5.26.

                	 	
                  Federal
      Securities Laws

                	
                  57

                

        

      

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  VI  AFFIRMATIVE
      COVENANTS.

                	
                  57

                
	
                  6.1.

                	 	
                  Payment
      of Fees

                	
                  57

                
	
                  6.2.

                	 	
                  Conduct
      of Business and Maintenance of Existence and Assets

                	
                  58

                
	
                  6.3.

                	 	
                  Violations

                	
                  58

                
	
                  6.4.

                	 	
                  Government
      Receivables

                	
                  58

                
	
                  6.5.

                	 	
                  Fixed
      Charge Coverage Ratio

                	
                  58

                
	
                  6.6.

                	 	
                  Execution
      of Supplemental Instruments

                	
                  58

                
	
                  6.7.

                	 	
                  Payment
      of Indebtedness

                	
                  58

                
	
                  6.8.

                	 	
                  Standards
      of Financial Statements

                	
                  59

                
	
                  6.9.

                	 	
                  Federal
      Securities Laws

                	
                  59

                
	
                  6.10.

                	 	
                  Leases

                	
                  59

                
	
                  6.12.

                	 	
                  Landlord
      Waivers and Consents

                	
                  59

                
	
                  6.13.

                	 	
                  DBA
      and DRI

                	
                  59

                
	 
      	 
      
	
                  VII  NEGATIVE
      COVENANTS.

                	
                  59

                
	
                  7.1.

                	 	
                  Merger,
      Consolidation, Acquisition and Sale of Assets.

                	
                  60

                
	
                  7.2.

                	 	
                  Creation
      of Liens

                	
                  60

                
	
                  7.3.

                	 	
                  Guarantees

                	
                  60

                
	
                  7.4.

                	 	
                  Investments

                	
                  60

                
	
                  7.5.

                	 	
                  Loans

                	
                  60

                
	
                  7.6.

                	 	
                  Capital
      Expenditures

                	
                  60

                
	
                  7.7.

                	 	
                  Dividends
      and Distributions

                	
                  61

                
	
                  7.8.

                	 	
                  Indebtedness

                	
                  61

                
	
                  7.9.

                	 	
                  Nature
      of Business

                	
                  61

                
	
                  7.10.

                	 	
                  Transactions
      with Affiliates

                	
                  61

                
	
                  7.11.

                	 	
                  Leases

                	
                  61

                
	
                  7.12.

                	 	
                  Subsidiaries
      and Joint Ventures.

                	
                  61

                
	
                  7.13.

                	 	
                  Fiscal
      Year and Accounting Changes

                	
                  62

                
	
                  7.14.

                	 	
                  Pledge
      of Credit

                	
                  62

                
	
                  7.15.

                	 	
                  Amendment
      of Organizational Documents

                	
                  62

                
	
                  7.16.

                	 	
                  Compliance
      with ERISA

                	
                  62

                
	
                  7.17.

                	 	
                  Prepayment
      of Indebtedness

                	
                  62

                
	
                  7.18.

                	 	
                  Anti-Terrorism
      Laws

                	
                  62

                
	
                  7.19.

                	 	
                  Trading
      with the Enemy Act

                	
                  63

                
	
                  7.20.

                	 	
                  Subordinated
      Debt

                	
                  63

                
	
                  7.21.

                	 	
                  DBA
      and DRI.

                	
                  63

                
	 
      	 
      
	
                  VIII  CONDITIONS
      PRECEDENT.

                	
                  63

                
	
                  8.1.

                	 	
                  Conditions
      to Initial Advances

                	
                  63

                
	
                  8.2.

                	 	
                  Conditions
      to Each Advance

                	
                  67

                
	 
      	 
      
	
                  IX  INFORMATION
      AS TO BORROWERS.

                	
                  68

                
	
                  9.1.

                	 	
                  Disclosure
      of Material Matters

                	
                  68

                
	
                  9.2.

                	 	
                  Borrowing
      Base Certificates

                	
                  68

                
	
                  9.3.

                	 	
                  Agings

                	
                  68

                
	
                  9.4.

                	 	
                  Other
      Documents

                	
                  68

                
	
                  9.5.

                	 	
                  Litigation

                	
                  69

                
	
                  9.6.

                	 	
                  Material
      Occurrences

                	
                  69

                
	
                  9.7.

                	 	
                  Government
      Receivables

                	
                  69

                

        

      

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  9.8.

                	 	
                  Annual
      Financial Statements

                	
                  69

                
	
                  9.9.

                	 	
                  Quarterly
      Financial Statements.

                	
                  70

                
	
                  9.10.

                	 	
                  Monthly
      Financial Statements

                	
                  70

                
	
                  9.11.

                	 	
                  Other
      Reports

                	
                  70

                
	
                  9.12.

                	 	
                  Additional
      Information

                	
                  70

                
	
                  9.13.

                	 	
                  Projected
      Operating Budget

                	
                  71

                
	
                  9.14.

                	 	
                  Variances
      From Operating Budget

                	
                  71

                
	
                  9.15.

                	 	
                  Notice
      of Suits, Adverse Events

                	
                  71

                
	
                  9.16.

                	 	
                  ERISA
      Notices and Requests

                	
                  71

                
	
                  9.17.

                	 	
                  Additional
      Documents

                	
                  72

                
	 
      	 
      
	
                  X  EVENTS
      OF DEFAULT.

                	
                  72

                
	
                  10.1.

                	 	
                  Nonpayment

                	
                  72

                
	
                  10.2.

                	 	
                  Breach
      of Representation

                	
                  72

                
	
                  10.3.

                	 	
                  Financial
      Information

                	
                  72

                
	
                  10.4.

                	 	
                  Judicial
      Actions

                	
                  72

                
	
                  10.5.

                	 	
                  Noncompliance

                	
                  72

                
	
                  10.6.

                	 	
                  Judgments

                	
                  73

                
	
                  10.7.

                	 	
                  Bankruptcy

                	
                  73

                
	
                  10.8.

                	 	
                  Inability
      to Pay

                	
                  73

                
	
                  10.9.

                	 	
                  Affiliate
      Bankruptcy

                	
                  73

                
	
                  10.10.

                	 	
                  Material
      Adverse Effect

                	
                  73

                
	
                  10.11.

                	 	
                  Lien
      Priority

                	
                  73

                
	
                  10.12.

                	 	
                  Subordinated
      Debt Default

                	
                  73

                
	
                  10.13.

                	 	
                  Cross
      Default

                	
                  74

                
	
                  10.14.

                	 	
                  Change
      of Ownership or Control

                	
                  74

                
	
                  10.15.

                	 	
                  Invalidity

                	
                  74

                
	
                  10.16.

                	 	
                  Licenses

                	
                  74

                
	
                  10.17.

                	 	
                  Seizures

                	
                  74

                
	
                  10.18.

                	 	
                  Operations

                	
                  74

                
	
                  10.19.

                	 	
                  Pension
      Plans

                	
                  75

                
	 
      	 
      
	
                  XI  LENDERS’
      RIGHTS AND REMEDIES AFTER DEFAULT.

                	
                  75

                
	
                  11.1.

                	 	
                  Rights
      and Remedies.

                	
                  75

                
	
                  11.2.

                	 	
                  Agent’s
      Discretion

                	
                  76

                
	
                  11.3.

                	 	
                  Setoff

                	
                  76

                
	
                  11.4.

                	 	
                  Rights
      and Remedies not Exclusive

                	
                  77

                
	
                  11.5.

                	 	
                  Allocation
      of Payments After Event of Default

                	
                  77

                
	 
      	 
      
	
                  XII  WAIVERS
      AND JUDICIAL PROCEEDINGS.

                	
                  78

                
	
                  12.1.

                	 	
                  Waiver
      of Notice

                	
                  78

                
	
                  12.2.

                	 	
                  Delay

                	
                  78

                
	
                  12.3.

                	 	
                  Jury
      Waiver

                	
                  78

                
	 
      	 
      
	
                  XIII  EFFECTIVE
      DATE AND TERMINATION.

                	
                  78

                
	
                  13.1.

                	 	
                  Term

                	
                  78

                
	
                  13.2.

                	 	
                  Termination

                	
                  79

                

        

      

    

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  XIV  REGARDING
      AGENT.

                	
                  79

                
	
                  14.1.

                	 	
                  Appointment

                	
                  79

                
	
                  14.2.

                	 	
                  Nature
      of Duties

                	
                  80

                
	
                  14.3.

                	 	
                  Lack
      of Reliance on Agent and Resignation

                	
                  80

                
	
                  14.4.

                	 	
                  Certain
      Rights of Agent

                	
                  80

                
	
                  14.5.

                	 	
                  Reliance

                	
                  81

                
	
                  14.6.

                	 	
                  Notice
      of Default

                	
                  81

                
	
                  14.7.

                	 	
                  Indemnification

                	
                  81

                
	
                  14.8.

                	 	
                  Agent
      in its Individual Capacity

                	
                  81

                
	
                  14.9.

                	 	
                  Delivery
      of Documents

                	
                  81

                
	
                  14.10.

                	 	
                  Borrowers’
      Undertaking to Agent

                	
                  82

                
	
                  14.11.

                	 	
                  No
      Reliance on Agent’s Customer Identification Program

                	
                  82

                
	
                  14.12.

                	 	
                  Other
      Agreements

                	
                  82

                
	 
      	 
      
	
                  XV  BORROWING
      AGENCY.

                	
                  82

                
	
                  15.1.

                	 	
                  Borrowing
      Agency Provisions.

                	
                  82

                
	
                  15.2.

                	 	
                  Waiver
      of Subrogation

                	
                  83

                
	 
      	 
      
	
                  XVI  MISCELLANEOUS.

                	
                  83

                
	
                  16.1.

                	 	
                  Governing
      Law

                	
                  83

                
	
                  16.2.

                	 	
                  Entire
      Understanding.

                	
                  84

                
	
                  16.3.

                	 	
                  Successors
      and Assigns; Participations; New Lenders.

                	
                  85

                
	
                  16.4.

                	 	
                  Application
      of Payments

                	
                  87

                
	
                  16.5.

                	 	
                  Indemnity

                	
                  88

                
	
                  16.6.

                	 	
                  Notice

                	
                  88

                
	
                  16.7.

                	 	
                  Survival

                	
                  90

                
	
                  16.8.

                	 	
                  Severability

                	
                  90

                
	
                  16.9.

                	 	
                  Expenses

                	
                  90

                
	
                  16.10.

                	 	
                  Injunctive
      Relief

                	
                  90

                
	
                  16.11.

                	 	
                  Consequential
      Damages

                	
                  90

                
	
                  16.12.

                	 	
                  Captions

                	
                  91

                
	
                  16.13.

                	 	
                  Counterparts;
      Facsimile Signatures

                	
                  91

                
	
                  16.14.

                	 	
                  Construction

                	
                  91

                
	
                  16.15.

                	 	
                  Confidentiality;
      Sharing Information

                	
                  91

                
	
                  16.16.

                	 	
                  Publicity

                	
                  92

                
	
                  16.17.

                	 	
                  Certifications
      From Banks and Participants; US PATRIOT Act

                	
                  92

                

        

      

    

    
      
         

      

      
        v

        
          

        

      

      
         

      

    

    REVOLVING
CREDIT AND SECURITY AGREEMENT

     

    Revolving
Credit and Security Agreement dated as of January 27, 2011 among ZANETT, INC. a
corporation organized under the laws of Delaware (“Zanett”), ZANETT COMMERCIAL
SOLUTIONS, INC., a corporation organized under the laws of Delaware that is a
wholly-owned subsidiary of Zanett (“ZCS”), all other direct or
indirect subsidiaries of Zanett that may from time to time hereafter become
party hereto as borrowers (Zanett, ZCS and such other subsidiaries collectively
called the “Borrowers” and each a “Borrower”),  the financial
institutions which are now or which may from time to time hereafter become party
hereto as lenders (collectively, the “Lenders” and individually a “Lender”) and
PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for the Lenders (in such
capacity, the “Agent”).

     

    IN
CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrowers, Lenders and Agent hereby agree as follows:

     

    I           DEFINITIONS.

     

    1.1.                 Accounting
Terms.  As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the fiscal year ended December 31,
2009.

     

    1.2.                 General
Terms.  For purposes of this Agreement the following terms
shall have the following meanings:

     

    “Accountants” shall
have the meaning set forth in Section 9.8.

     

    “Acquisition” shall
have the meaning set forth in Section 7.1(a).

     

    “Advance Rates” shall
mean the advance rates specified in clauses (i) and (ii) of Section
2.1(a).

     

    “Advances” shall mean
and include the Revolving Advances and the Letters of Credit.

     

    “Affiliate” of any
Person shall mean (a) any Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with such Person, or (b) any
Person who is a director, managing member, general partner or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above.  For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the Equity Interests having ordinary voting power for the election of
directors of such Person or other Persons performing similar functions for any
such Person, or (y) to direct or cause the direction of the management and
policies of such Person whether by ownership of Equity Interests, contract or
otherwise.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Agent” shall have the
meaning set forth in the preamble to this Agreement and shall include its
successors and assigns.

     

    “Agreement” shall mean
this Revolving Credit and Security Agreement, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

     

    “Alternate Base Rate”
shall mean, for any day, a rate per annum equal to the highest of (i) the Base
Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such
day plus one-half of one percent (0.5%), and (iii) the Eurodollar Rate in effect
on such day for Interest Periods of one month commencing on such day plus one
percent (1%).

     

    “Anti-Terrorism Laws”
shall mean any Applicable Laws relating to terrorism or money laundering,
including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws
comprising or implementing the Bank Secrecy Act, and the Applicable Laws
administered by the United States Treasury Department’s Office of Foreign Asset
Control (as any of the foregoing Applicable Laws may from time to time be
amended, renewed, extended, or replaced).

     

    “Applicable Law” shall
mean all laws, rules and regulations applicable to the Person, conduct,
transaction, covenant, Other Document or contract in question, including all
applicable common law and equitable principles; all provisions of all applicable
state, federal and foreign constitutions, statutes, rules, regulations and
orders of any Governmental Body, and all orders, judgments and decrees of all
courts and arbitrators.

     

    “Applicable Margin”
shall mean (a) with respect to Domestic Rate Loans, one and one-quarter percent
(1.25%) and (b) with respect to Eurodollar Rate Loans, three and a half percent
(3.5%).

     

    “Authority” shall have
the meaning set forth in Section 4.19(d).

     

    “Availability Reserve”
shall mean (a) on the Closing Date, $500,000; (b) from (and including) the date
following the Closing Date and until the Borrowers deliver to the Agent in
accordance with Section 9.8 their audited financial statements for the fiscal
year ending December 31, 2011 (the “2011 Financials Delivery
Date”), $750,000, (c) from the 2011 Financials Delivery Date and until
the Borrowers deliver to the Agent in accordance with Section 9.8 their audited
financial statements for the fiscal year ending December 31, 2012 (the “2012 Financials Delivery
Date”), $500,000, and (d) from and after the 2012 Financials Delivery
Date, $0; provided, however, that the
Availability Reserve shall not be reduced on the 2011 Financials Delivery Date
or the 2012 Financials Delivery Date unless (i) no Default or Event of Default
shall have occurred and be continuing on such date and (ii) the average Undrawn
Availability for the 60-day period immediately preceding such date shall be at
least $1,000,000.

     

    “Base Rate” shall mean
the base commercial lending rate of PNC as publicly announced to be in effect
from time to time, such rate to be adjusted automatically, without notice, on
the effective date of any change in such rate.  This rate of interest
is determined from time to time by PNC as a means of pricing some loans to its
customers and is neither tied to any external rate of interest or index nor does
it necessarily reflect the lowest rate of interest actually charged by PNC to
any particular class or category of customers of PNC.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Billable Hours” shall
mean, as of any date of determination with respect to any Open Contract, the
total number of unbilled hours recorded by the Borrowers’ consultants on
Zanett’s billing system for services rendered under such Open Contract during
the 30-day period immediately preceding such determination date, which the
Borrowers expect in good faith to include in the next invoice they submit under
such Open Contract.

     

    “Blocked Accounts”
shall have the meaning set forth in Section 4.15(h).

     

    “Blocked Account Bank”
shall have the meaning set forth in Section 4.15(h).

     

    “Blocked Person” shall
have the meaning set forth in Section 5.24(b).

     

    “Borrower” or “Borrowers” shall have
the meaning set forth in the preamble to this Agreement and shall extend to all
permitted successors and assigns of such Persons.

     

    “Borrowers on a Consolidated
Basis” shall mean the consolidation in accordance with GAAP of the
accounts or other items of the Borrowers and their respective
Subsidiaries.

     

    “Borrowers’ Account”
shall have the meaning set forth in Section 2.7.

     

    “Borrowing Agent”
shall mean Zanett.

     

    “Borrowing Base
Certificate” shall mean a certificate in substantially the form of
Exhibit 1.2 duly executed by the President, Chief Financial Officer or
Controller of the Borrowing Agent and delivered to the Agent, appropriately
completed, by which such officer shall certify to Agent the Formula Amount and
calculation thereof as of the date of such certificate.

     

    “Business Day” shall
mean any day other than Saturday or Sunday or a legal holiday on which
commercial banks are authorized or required by law to be closed for business in
East Brunswick, New Jersey, or New York, New York and, if the applicable
Business Day relates to any Eurodollar Rate Loans, such day must also be a day
on which dealings are carried on in the London interbank market.

     

    “Calculation Period”
shall mean (a) the Borrowers’ fiscal quarter ended September 30, 2010, (b) the
two consecutive fiscal quarters of the Borrowers ending December 31, 2010, (c)
the three consecutive fiscal quarters of the Borrowers ending March 31, 2011,
and (d) each period consisting of four consecutive fiscal quarters of the
Borrowers (irrespective of whether they are part of the same fiscal year),
ending on or after June 30, 2011, taken as a single fiscal period.

     

    “Capital Expenditures”
shall mean with respect to any period, the aggregate of all expenditures
(whether paid in cash or accrued as liabilities and including expenditures for
Capitalized Lease Obligations) by Borrowers during such period that are required
by GAAP to be included in or reflected by the property, plant and equipment or
similar fixed asset accounts (or intangible accounts subject to amortization) on
the balance sheet of Borrowers.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     “Capitalized Lease
Obligation” shall mean any Indebtedness of any Borrower represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

     

    “CERCLA” shall mean
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. §§9601 et seq.

     

    “Change of Control”
shall mean (a) any “person” or “group” (within the meanings of Sections 13(d)
and 14(d) of the Exchange Act), other than Claudio Guazzoni and Bruno Guazzoni,
their immediate family members and heirs, and trusts controlled by Claudio
Guazzoni and Bruno Guazzoni, respectively, and Rockport becomes the “beneficial
owner” (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of ten percent (10%) or more of the outstanding and issued Voting
Stock of Zanett, (b) Zanett ceases to own one hundred percent of the issued and
outstanding Equity Interests of any other Borrower, or (c) any Person, other
than Claudio Guazzoni or Bruno Guazzoni controls (directly or indirectly)
management, major decisions, or day to day operations of any
Borrower.

     

     “Charges” shall mean
all taxes, charges, fees, imposts, levies or other assessments, including all
net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation and property taxes, custom duties, fees, assessments, liens, claims
and charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing or
other authority, domestic or foreign (including the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral, any
Borrower or any of its Affiliates.

     

    “Closing Date” shall
mean January 27, 2011 or such other date as may be agreed to by the parties
hereto.

     

    “Code” shall mean the
Internal Revenue Code of 1986, as the same may be amended or supplemented from
time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.

     

    “Collateral” shall
mean and include:

     

    (a)           all
Receivables;

     

    (b)           all
Equipment;

     

    (c)           all
General Intangibles;

     

    (d)           all
Inventory;

     

    (e)           all
Investment Property;

     

    (f)           all
Real Property;

     

    (g)           all
Subsidiary Stock;

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (h)           the
Leasehold Interests;

     

    (i)           all
of each Borrower’s right, title and interest in and to, whether now owned or
hereafter acquired and wherever located, (i) its respective goods and other
property including, but not limited to, all merchandise returned or rejected by
Customers, relating to or securing any of the Receivables; (ii) all of each
Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic,
artisan, or other lienor, including stoppage in transit, setoff, detinue,
replevin, reclamation and repurchase; (iii) all additional amounts due to any
Borrower from any Customer relating to the Receivables; (iv) other property,
including warranty claims, relating to any goods securing the Obligations; (v)
all of each Borrower’s contract rights, rights of payment which have been earned
under a contract right, instruments (including promissory notes), documents,
chattel paper (including electronic chattel paper), warehouse receipts, deposit
accounts, letters of credit and money; (vi) all commercial tort claims (whether
now existing or hereafter arising); (vii) if and when obtained by any Borrower,
all real and personal property of third parties in which such Borrower has been
granted a lien or security interest as security for the payment or enforcement
of Receivables; (viii) all letter of credit rights (whether or not the
respective letter of credit is evidenced by a writing); (ix) all supporting
obligations; and (x) any other goods, personal property or real property now
owned or hereafter acquired in which any Borrower has expressly granted a
security interest or may in the future grant a security interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;

     

    (j)           all
of each Borrower’s ledger sheets, ledger cards, files, correspondence, records,
books of account, business papers, computers, computer software (owned by any
Borrower or in which it has an interest), computer programs, tapes, disks and
documents relating to (a), (b), (c), (d), (e), (f), (g), (h) or (i) of this
Paragraph; and

     

    (k)           all
proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j) in
whatever form, including, but not limited to:  cash, deposit accounts
(whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including hazard, flood and credit insurance), negotiable
instruments and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds
and tort claim proceeds.

     

    “Commitment
Percentage” of any Lender shall mean the percentage set forth below such
Lender’s name on the signature page hereof as same may be adjusted upon any
assignment by a Lender pursuant to Section 16.3(c) or (d).

     

    “Commitment Transfer
Supplement” shall mean a document in the form of Exhibit 16.3 hereto,
properly completed and otherwise in form and substance satisfactory to Agent by
which the Purchasing Lender purchases and assumes a portion of the obligation of
Lenders to make Advances under this Agreement.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Compliance
Certificate” shall mean a compliance certificate to be signed by the
Chief Executive Officer, President or Chief Financial Officer of Borrowing
Agent, which shall state that, based on an examination sufficient to permit such
officer to make an informed statement, (i) no Default or Event of Default
exists, or if such is not the case, specifying such Default or Event of Default,
its nature, when it occurred, whether it is continuing and the steps being taken
by Borrowers with respect to such default, (ii) each of the representations and
warranties of Borrowers in the Agreement and the Other Documents is true and
correct on the date of such Compliance Certificate except to the extent that
such representation and warranty is made of a of a date certain, in which event
such representation and warranty shall be true and correct as of such date
certain, (iii) to the best of such officer’s knowledge, the Borrowers are in
compliance with all covenants under the Agreement and (iv) the Borrowers’ are in
compliance with the requirements or restrictions imposed by Sections 6.5, 7.5,
7.6, 7.7 and 7.11. The computations used to determine such compliance shall be
appended to the Compliance Certificate.

     

    “Consents” shall mean
all filings and all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Bodies and other third parties,
domestic or foreign, necessary to carry on any Borrower’s business or necessary
(including to avoid a conflict or breach under any agreement, instrument, other
document, license, permit or other authorization) for the execution, delivery or
performance of this Agreement, the Other Documents or the Subordinated Debt
Documents, including any Consents required under all applicable federal, state
or other Applicable Law.

     

    “Controlled Group”
shall mean, at any time, each Borrower and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with any Borrower, are
treated as a single employer under Section 414 of the Code.

     

    “Customer” shall mean
and include the account debtor with respect to any Receivable and/or the
prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with any Borrower, pursuant to which such Borrower
is to deliver any personal property or perform any services.

     

    “Customs” shall have
the meaning set forth in Section 2.10(b).

     

    “DBA” shall mean DBA
Group, LLC, a Georgia limited liability company.

     

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

     

    “Default Rate” shall
have the meaning set forth in Section 3.1.

     

    “Defaulting Lender”
shall have the meaning set forth in Section 2.21(a).

     

    “Depository Accounts”
shall have the meaning set forth in Section 4.15(h).

     

    “Dollar” and the sign
“$” shall mean
lawful money of the United States of America.

     

    “Domestic Rate Loan”
shall mean any Advance that bears interest based upon the Alternate Base
Rate.

     

    “Drawing Date” shall
have the meaning set forth in Section 2.11(b).

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    “DRI” shall mean Data
Road, Inc., a Florida corporation.

     

    “Early Termination
Date” shall have the meaning set forth in Section 13.1.

     

    “EBITDA” shall mean,
with respect to any period and determined on a consolidated basis in accordance
with GAAP, Borrowers’ net income after taxes for such period (excluding any
extraordinary gains or losses) plus all interest
expense, non-cash compensation expense (net of cash payments made for prior
periods), federal, state and local income tax expense, and depreciation and
amortization expense for such period.

     

    “Eligible Prebillings”
shall mean and include as of any date of determination an amount equal to the
product of (a) the aggregate number of Billable Hours as of such date times (b) the average
billing rate per hour or the contracted rate, if applicable, of the Borrowers’
consultants during the six-month period immediately preceding such
date.

     

    “Eligible Receivables”
shall mean and include with respect to each Borrower, each Receivable of such
Borrower arising in the Ordinary Course of Business and which Agent, in its sole
credit judgment, shall deem to be an Eligible Receivable, based on such
considerations as Agent may from time to time deem appropriate; provided, that Agent shall
give Borrowers written notice of any eligibility criteria established by Agent
and not set forth herein. A Receivable shall not be deemed eligible unless such
Receivable is subject to Agent’s first priority perfected security interest and
no other Lien (other than Permitted Encumbrances), and is evidenced by an
invoice or other documentary evidence satisfactory to Agent.  In
addition, no Receivable shall be an Eligible Receivable if:

     

    (a)           it
arises out of a sale made or a service rendered by any Borrower to an Affiliate
of any Borrower or to a Person controlled by an Affiliate of any
Borrower;

     

    (b)           it
is due or unpaid more than ninety (90) days after the original invoice date or
more than 60 days after the original due date;

     

    (c)           fifty
percent (50%) or more of the Receivables from such Customer are not deemed
Eligible Receivables hereunder.  Such percentage may, in Agent’s sole
discretion, be increased or decreased from time to time;

     

    (d)           any
covenant, representation or warranty contained in this Agreement with respect to
such Receivable has been breached;

     

    (e)           the
Customer shall (i) apply for, suffer, or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property or call a meeting of its
creditors, (ii) admit in writing its inability, or be generally unable, to pay
its debts as they become due or cease operations of its present business, (iii)
make a general assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (f)           the
sale is made or service is rendered to a Customer outside the continental United
States of America or Canada, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its sole
discretion;

     

    (g)           the
sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return,
sale on approval, consignment or any other repurchase or return basis or is
evidenced by chattel paper;

     

    (h)           Agent
believes, in its sole judgment, that collection of such Receivable is insecure
or that such Receivable may not be paid by reason of the Customer’s financial
inability to pay;

     

    (i)           the
Customer is the United States of America, any state or any department, agency or
instrumentality of any of them, unless the applicable Borrower assigns its right
to payment of such Receivable to Agent pursuant to the Assignment of Claims Act
of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C.
Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes
or ordinances;

     

    (j)           the
goods giving rise to such Receivable have not been delivered to and accepted by
the Customer and the Agent has not received evidence satisfactory to it that the
applicable Borrower has delayed delivery or performance at the Customer’s
request and such delay shall not subject such Receivable to any offset,
deduction, defense, dispute or counterclaim, or the services giving rise to such
Receivable have not been performed by the applicable Borrower and accepted by
the Customer, or the Receivable otherwise does not represent a final
sale;

     

    (k)           the
Receivables of the Customer exceed a credit limit determined by Agent, in its
sole discretion, to the extent such Receivable exceeds such limit;

     

    (l)           the
Receivable is subject to any offset, deduction, defense, dispute, or
counterclaim, the Customer is also a creditor or supplier of a Borrower or the
Receivable is contingent in any respect or for any reason;

     

    (m)           the
applicable Borrower has made any agreement with any Customer for any deduction
therefrom, except for discounts or allowances made in the Ordinary Course of
Business for prompt payment, all of which discounts or allowances are reflected
in the calculation of the face value of each respective invoice related
thereto;

     

    (n)           any
return, rejection or repossession of the merchandise has occurred or the
rendition of services has been disputed;

     

    (o)           such
Receivable is not payable to a Borrower;

     

    (p)           if
such Receivable is invoiced after the Closing Date, the invoice does not
instruct the account debtor to make payments thereon directly to a Blocked
Account, a Depository Account or a mailbox controlled by Agent;
or

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (q)           such
Receivable is not otherwise satisfactory to Agent as determined in good faith by
Agent in the exercise of its discretion in a reasonable manner.

     

    Eligible
Receivables shall not include Receivables acquired by a Borrower as part of an
Acquisition until Agent has performed such due diligence as it may require in
its sole discretion with respect to such Receivables and shall be satisfied with
the results thereof.

     

    “Environmental
Complaint” shall have the meaning set forth in Section
4.19(d).

     

    “Environmental Laws”
shall mean all federal, state and local environmental, land use, zoning, health,
chemical use, safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances and the rules, regulations, policies,
guidelines, interpretations, decisions, orders and directives of federal, state
and local governmental agencies and authorities with respect
thereto.

     

    “Equipment” shall mean
and include as to each Borrower all of such Borrower’s goods (other than
Inventory) whether now owned or hereafter acquired and wherever located
including all equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories and all replacements and
substitutions therefor or accessions thereto.

     

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

     

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

     

    “Eurodollar Rate”
shall mean for any Eurodollar Rate Loan for the then current Interest Period
relating thereto the interest rate per annum determined by Agent by dividing
(the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of
1% per annum) (a) the higher of (i) the rate of interest determined by Agent in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the average of the London interbank offered rates
for U.S. Dollars quoted by the British Bankers’ Association as set forth on
Moneyline Telerate (or appropriate successor or, if British Banker’s Association
or its successor ceases to provide such quotes, a comparable replacement
determined by Agent) display page 3750 (or such other display page on the
Moneyline Telerate system as may replace display page 3750) two (2) Business
Days prior to the first day of such Interest Period for an amount comparable to
such Eurodollar Rate Loan and having a borrowing date and a maturity comparable
to such Interest Period and (ii) one percent (1%) by (b) a number equal to 1.00
minus the Reserve Percentage.  The Eurodollar Rate may also be
expressed by the following formula:

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Higher of
(i) the average of London interbank offered rates quoted by BBA as shown on
Eurodollar Rate Moneyline Telerate Service display page 3750 or
appropriate successor and (ii) 1%

               1.00
- Reserve Percentage.

     

    The
Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that
is outstanding on the effective date of any change in the Reserve Percentage as
of such effective date.  The Agent shall give prompt notice to the
Borrowing Agent of the Eurodollar Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest
error.

     

    “Eurodollar Rate Loan”
shall mean an Advance at any time that bears interest based on the Eurodollar
Rate.

     

    “Event of Default”
shall have the meaning set forth in Article X.

     

    “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder.

     

    “Executive Order No.
13224” shall mean the Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, as the same has been, or shall hereafter be,
renewed, extended, amended or replaced.

     

    “Federal Funds Effective
Rate” for any day shall mean the rate per annum (based on a year of 360
days and actual days elapsed and rounded upward to the nearest 1/100 of 1%)
announced by the Federal Reserve Bank of New York (or any successor) on such day
as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank
(or its successor) does not announce such rate on any day, the "Federal Funds
Effective Rate" for such day shall be the Federal Funds Effective Rate for the
last day on which such rate was announced.

     

    “Federal Funds Open
Rate” shall mean the rate per annum determined by the Agent in accordance
with its usual procedures (which determination shall be conclusive absent
manifest error) to be the "open" rate for federal funds transactions as of the
opening of business for federal funds transactions among members of the Federal
Reserve System arranged by federal funds brokers on such day, as quoted by
Garvin Guybutler Corporation, any successor entity thereto, or any other broker
selected by the Agent, as set forth on the applicable Telerate display page;
provided, however; that if such day is not a Business Day, the Federal Funds
Open Rate for such day shall be the "open" rate on the immediately preceding
Business Day, or if no such rate shall be quoted by a Federal funds broker at
such time, such other rate as determined by the Agent in accordance with its
usual procedures.

     

    “Fixed Charge Coverage
Ratio” shall mean, with respect to any period, the ratio (calculated for
Borrowers on a Consolidated Basis) of (a) Borrowers’ EBITDA for such period
minus
Borrowers’ unfinanced capital expenditures for such period to (b) cash taxes
paid by Borrowers during such period plus Senior Debt
Payments and Subordinated Debt Payments made by Borrowers during such
period.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    “Foreign Subsidiary”
of any Person, shall mean any Subsidiary of such Person that is not organized or
incorporated in the United States or any State or territory
thereof.

     

    “Formula Amount” shall
have the meaning set forth in Section 2.1(a).

     

     “GAAP” shall mean
generally accepted accounting principles in the United States of America as set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination consistently applied.  If at any time any
change in GAAP would affect the computation of any financial ratio or
requirements set forth in this Agreement or any Other Documents, and Borrowers
shall so request, Agent and Borrowers shall negotiate in good faith to amend
such ratio or requirement to preserve the original intent thereof in light of
such change in GAAP; provided
that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii)
Borrowers shall provide to Agent financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.

     

    “General Intangibles”
shall mean and include as to each Borrower all of such Borrower’s general
intangibles, whether now owned or hereafter acquired, including all payment
intangibles, all choses in action, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
trademark applications, service marks, trade secrets, goodwill, copyrights,
design rights, software, computer information, source codes, codes, records and
updates, registrations, licenses, franchises, customer lists, tax refunds, tax
refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to such Borrower to secure
payment of any of the Receivables by a Customer (other than to the extent
covered by Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).

     

    “Governmental Acts”
shall have the meaning set forth in Section 2.16.

     

    “Governmental Body”
shall mean any nation or government, any state or other political subdivision
thereof or any entity, authority, agency, division or department exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.

     

     “Hazardous Substance”
shall mean, without limitation, any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or Toxic Substances or related materials as defined
in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et  seq.), RCRA, Articles 15 and 27 of the New York
State Environmental Conservation Law or any other applicable Environmental Law
and in the regulations adopted pursuant thereto.

     

    
      
         

      

      
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    “Hazardous Wastes”
shall mean all waste materials subject to regulation under CERCLA, RCRA or
applicable state law, and any other applicable Federal and state laws now in
force or hereafter enacted relating to hazardous waste disposal.

     

    “Hedge Liabilities”
shall have the meaning provided in the definition of “Lender-Provided Interest
Rate Hedge”.

     

    “Indebtedness” of a
Person at a particular date shall mean all obligations of such Person which in
accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without
limitation by reason of enumeration, shall include all indebtedness, debt and
other similar monetary obligations of such Person whether direct or guaranteed,
and all premiums, if any, due at the required prepayment dates of such
indebtedness, and  all indebtedness secured by a Lien on assets owned
by such Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person.  Any indebtedness of such
Person resulting from the acquisition by such Person of any assets subject to
any Lien shall be deemed, for the purposes hereof, to be the equivalent of the
creation, assumption and incurring of the indebtedness secured thereby, whether
or not actually so created, assumed or incurred.

     

    “Ineligible Security”
shall mean any security which may not be underwritten or dealt in by member
banks of the Federal Reserve System under Section 16 of the Banking Act of 1933
(12 U.S.C. Section 24, Seventh), as amended.

     

    “Intellectual
Property” shall mean property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask
work, trade secret or license or other right to use any of the
foregoing.

     

    “Intellectual Property
Claim” shall mean the assertion by any Person of a claim (whether
asserted in writing, by action, suit or proceeding or otherwise) that any
Borrower’s ownership, use, marketing, sale or distribution of any Inventory,
Equipment, Intellectual Property or other property or asset is violative of any
ownership of or right to use any Intellectual Property of such
Person.

     

    “Intercreditor
Agreement” shall mean the Rockport Intercreditor Agreement or the ZOF
Intercreditor Agreement; and “Intercreditor
Agreements” shall mean all of the foregoing, collectively.

     

    “Interest Period”
shall mean the period provided for any Eurodollar Rate Loan pursuant to Section
2.2(b).

     

    “Interest Rate Hedge”
shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap,
adjustable strike corridor or similar agreements entered into by any Borrower or
its Subsidiaries in order to provide protection to, or minimize the impact upon,
such Borrower and/or its Subsidiaries of increasing floating rates of interest
applicable to Indebtedness.

     

    
      
         

      

      
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    “Inventory” shall mean
and include as to each Borrower all of such Borrower’s now owned or hereafter
acquired goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for
sale or lease, all raw materials, work in process, finished goods and materials
and supplies of any kind, nature or description which are or might be used or
consumed in such Borrower’s business or used in selling or furnishing such
goods, merchandise and other personal property, and all documents of title or
other documents representing them.

     

    “Investment Property”
shall mean and include as to each Borrower, all of such Borrower’s now owned or
hereafter acquired securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and
commodities accounts.

     

    “Issuer” shall mean
any Person who issues a Letter of Credit and/or accepts a draft pursuant to the
terms hereof.

     

    “Leasehold Interests”
shall mean all of each Borrower’s right, title and interest in and to any
premises which from time to time may be leased by such Borrower.

     

    “Lender” and “Lenders” shall have
the meaning ascribed to such term in the preamble to this Agreement and shall
include each Person which becomes a transferee, successor or assign of any
Lender.

     

    “Lender-Provided Interest
Rate Hedge” shall mean an Interest Rate Hedge which is provided by PNC or
any of its Subsidiaries or Affiliates and with respect to which the Agent
confirms meets the following requirements: such Interest Rate Hedge (i) is
documented in a standard International Swap Dealer Association Agreement, (ii)
provides for the method of calculating the reimbursable amount of the provider's
credit exposure in a reasonable and customary manner, and (iii) is entered into
for hedging (rather than speculative) purposes.  The liabilities of
any Borrower to the provider of any Lender-Provided Interest Rate Hedge (the
“Hedge Liabilities”) shall be “Obligations” hereunder and otherwise treated as
Obligations for purposes of each of the Other Documents. The Liens securing the
Hedge Liabilities shall be pari passu with the Liens securing all other
Obligations under this Agreement and the Other Documents.

     

    “Letter of Credit
Fees” shall have the meaning set forth in Section 3.2.

     

    “Letter of Credit
Borrowing” shall have the meaning set forth in Section
2.11(d).

     

    “Letter of Credit
Sublimit” shall mean $1,000,000.

     

    “Letters of Credit”
shall have the meaning set forth in Section 2.8.

     

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

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    “Material Adverse
Effect” shall mean a material adverse effect on (a) the condition
(financial or otherwise), results of operations, assets, business, properties or
prospects of any Borrower, (b) any Borrower’s ability to duly and punctually pay
or perform the Obligations in accordance with the terms thereof, (c) the value
of the Collateral, or Agent’s Liens on the Collateral or the priority of any
such Lien or (d) the practical realization of the benefits of Agent’s and each
Lender’s rights and remedies under this Agreement and the Other
Documents.

     

    “Maximum Face Amount”
shall mean, with respect to any outstanding Letter of Credit, the face amount of
such Letter of Credit including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become
effective.

     

    “Maximum Revolving Advance
Amount” shall mean $10,000,000.

     

    “Maximum Undrawn
Amount” shall mean with respect to any outstanding Letter of Credit, the
amount of such Letter of Credit that is or may become available to be drawn,
including all automatic increases provided for in such Letter of Credit, whether
or not any such automatic increase has become effective.

     

    “Modified Commitment Transfer
Supplement” shall have the meaning set forth in Section
16.3(d).

     

    “Multiemployer Plan”
shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of
ERISA.

     

    “Multiple Employer
Plan” shall mean a Plan which has two or more contributing sponsors
(including any Borrower or any member of the Controlled Group) at least two of
whom are not under common control, as such a plan is described in Section 4064
of ERISA.

     

    “Obligations” shall
mean and include any and all loans, advances, debts, liabilities, obligations,
covenants and duties owing by any Borrower to Lenders or Agent or to any other
direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or
nature, present or future (including any interest or other amounts accruing
thereon after maturity, or after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding relating
to any Borrower, whether or not a claim for post-filing or post-petition
interest or other amounts is allowed in such proceeding), whether or not
evidenced by any note, guaranty or other instrument, whether arising under this
Agreement, the Other Documents or any agreement, instrument or document in
connection therewith whether or not for the payment of money, whether arising by
reason of an extension of credit, opening of a letter of credit, loan, equipment
lease or guarantee, under any interest or currency swap, future, option or other
similar agreement, or in any other manner, whether arising out of overdrafts or
deposit or other accounts or electronic funds transfers (whether through
automated clearing houses or otherwise) or out of the Agent’s or any Lenders
non-receipt of or inability to collect funds or otherwise not being made whole
in connection with depository transfer check or other similar arrangements,
whether direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to become due,
now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, including, but not limited to, any and all of any
Borrower’s Indebtedness and/or liabilities under this Agreement, the Other
Documents or under any other agreement in connection therewith between Agent or
Lenders and any Borrower and any related amendments, extensions, renewals or
increases thereof and all obligations of any Borrower to Agent or any Lender to
perform acts or refrain from taking any action under any thereof.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    “Open Contract” shall
mean, with respect to each Borrower, any contract duly entered into by such
Borrower and a Customer located in the continental United States or Canada
providing for the sale of goods or the performance of services by such Borrower
to or for the benefit of such Customer in the ordinary course of such Borrower’s
business; provided, however, that no such
contract shall be deemed to be an “Open Contract” (a)
after it ceases to be in full force and effect (whether by reason of scheduled
expiration, termination by any party for any reason, or otherwise), (b) after
the completion by the Borrower of its obligations thereunder, (c) after the
issuance by the Borrower of invoices totaling the full amount the Customer
agreed to pay for goods and services thereunder or (d) if the Receivables
arising therefrom do not constitute Eligible Receivables.

     

    “Ordinary Course of
Business” shall mean with respect to any Borrower, the ordinary course of
such Borrower’s business as conducted on the Closing Date.

     

     “Other Documents”
shall mean the Revolving Credit Notes, the Questionnaire, the Intercreditor
Agreements, any Lender-Provided Interest Rate Hedge and any and all other
agreements, instruments and documents, including guaranties, pledges, powers of
attorney, consents, interest or currency swap agreements or other similar
agreements and all other writings heretofore, now or hereafter executed by any
Borrower or Subordinated Creditor and/or delivered to Agent or any Lender in
respect of the transactions contemplated by this Agreement.

     

    “Participant” shall
mean each Person who shall be granted the right by any Lender to participate in
any of the Advances and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.

     

    “Participation
Advance” shall have the meaning set forth in Section
2.11(d).

     

    “Participation
Commitment” shall mean each Lender’s obligation to buy a participation of
the Letters of Credit issued hereunder.

     

    “Payment Office” shall
mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816;
thereafter, such other office of Agent, if any, which it may designate by notice
to Borrowing Agent and to each Lender to be the Payment Office.

     

    “PBGC” shall mean the
Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title
IV of ERISA or any successor.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    “Pension Benefit Plan”
shall mean at any time any employee pension benefit plan (including a Multiple
Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code and either (i) is maintained by any member of the Controlled Group for
employees of any member of the Controlled Group; or (ii) has at any time within
the preceding five years been maintained by any entity which was at such time a
member of the Controlled Group for employees of any entity which was at such
time a member of the Controlled Group.

     

    “Permitted
Encumbrances” shall mean (a) Liens in favor of Agent for the benefit of
Agent and Lenders; (b) Liens for taxes, assessments or other governmental
charges not delinquent or being contested in good faith and by appropriate
proceedings and with respect to which proper reserves have been taken by
Borrowers; provided, that, the Lien shall have no effect on the priority of the
Liens in favor of Agent or the value of the assets in which Agent has such a
Lien and a stay of enforcement of any such Lien shall be in effect; (c) Liens
disclosed in the financial statements referred to in Section 5.5, the existence
of which Agent has consented to in writing; (d) deposits or pledges to secure
obligations under worker’s compensation, social security or similar laws, or
under unemployment insurance; (e) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the Ordinary Course of Business; (f) Liens arising by virtue of the
rendition, entry or issuance against any Borrower or any Subsidiary, or any
property of any Borrower or any Subsidiary, of any judgment, writ, order, or
decree for so long as each such Lien (i) is in existence for less than 20
consecutive days after it first arises or is being Properly Contested and (ii)
is at all times junior in priority to any Liens in favor of Agent; (g)
mechanics’, workers’, materialmen’s or other like Liens arising in the Ordinary
Course of Business with respect to obligations which are not due or which are
being contested in good faith by the applicable Borrower; (h) Liens placed upon
fixed assets hereafter acquired to secure a portion of the purchase price
thereof, provided that (x) any such lien shall not encumber any other property
of any Borrower and (y) the aggregate amount of Indebtedness secured by such
Liens incurred as a result of such purchases during any fiscal year shall not
exceed the amount provided for in Section 7.6; (i) other Liens incidental to the
conduct of any Borrower’s business or the ownership of its property and assets
which were not incurred in connection with the borrowing of money or the
obtaining of advances or credit, and which do not in the aggregate materially
detract from Agent’s or Lenders’ rights in and to the Collateral or the value of
any Borrower’s property or assets or which do not materially impair the use
thereof in the operation of any Borrower’s business; and (j) Liens disclosed on
Schedule 1.2.

     

    “Person” shall mean
any individual, sole proprietorship, partnership, corporation, business trust,
joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit
corporation, joint venture, entity or Governmental Body (whether federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof).

     

    “Plan” shall mean any
employee benefit plan within the meaning of Section 3(3) of ERISA (including a
Pension Benefit Plan), maintained for employees of any Borrower or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its
employees.

     

    “PNC” shall have the
meaning set forth in the preamble to this Agreement and shall extend to all of
its successors and assigns.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    “Projections” shall
have the meaning set forth in Section 5.5(a).

     

     “Properly Contested”
shall mean, in the case of any Indebtedness of any Person (including any taxes)
that is not paid as and when due or payable by reason of such Person’s bona fide
dispute concerning its liability to pay same or concerning the amount thereof,
(i) such Indebtedness is being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (ii) such Person has
established appropriate reserves as shall be required in conformity with GAAP;
(iii) the non-payment of such Indebtedness while it is being contested will not
have a Material Adverse Effect and will not result in the forfeiture of any
assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets
with respect to such Indebtedness unless such Lien is at all times junior and
subordinate in priority to the Liens in favor of the Agent (except only with
respect to property taxes that have priority as a matter of applicable state
law) and enforcement of such Lien is stayed during the period prior to the final
resolution or disposition of such dispute; and (v) if such Indebtedness results
from, or is determined by the entry, rendition or issuance against a Person or
any of its assets of a judgment, writ, order or decree, enforcement of such
judgment, writ, order or decree is stayed pending a timely appeal or other
judicial review.

     

    “Purchasing CLO” shall
have the meaning set forth in Section 16.3(d).

     

    “Purchasing Lender”
shall have the meaning set forth in Section 16.3(c).

     

    “Questionnaire” shall
mean the perfection certificate and the responses thereto provided by Borrowing
Agent and delivered to Agent.

     

    “RCRA” shall mean the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may
be amended from time to time.

     

    “Real Property” shall
mean all of each Borrower’s right, title and interest in and to the owned and
leased premises identified on Schedule 4.19 hereto.

     

    “Receivables” shall
mean and include, as to each Borrower, all of such Borrower’s accounts, contract
rights, instruments (including those evidencing indebtedness owed to such
Borrower by its Affiliates), documents, chattel paper (including electronic
chattel paper), general intangibles relating to accounts, drafts and
acceptances, credit card receivables and all other forms of obligations owing to
such Borrower arising out of or in connection with the sale or lease of
Inventory or the rendition of services, all supporting obligations, guarantees
and other security therefor, whether secured or unsecured, now existing or
hereafter created, and whether or not specifically sold or assigned to Agent
hereunder.

     

    “Register” shall have
the meaning set forth in Section 16.3(e).

     

    “Reimbursement
Obligation” shall have the meaning set forth in Section
2.11(b)hereof.

     

    “Release” shall have
the meaning set forth in Section 5.7(c)(i).

     

    “Reportable Event”
shall mean a reportable event described in Section 4043(c) of ERISA or the
regulations promulgated thereunder.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    “Required Lenders”
shall mean Lenders holding at least fifty-one percent (51%) of the Advances and,
if no Advances are outstanding, shall mean Lenders holding fifty-one percent
(51%) of the Commitment Percentages; provided, however, if there are fewer than
three (3) Lenders, Required Lenders shall mean all Lenders.

     

    “Reserve Percentage”
shall mean as of any day the maximum percentage in effect on such day as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as “Eurocurrency Liabilities”.

     

    “Revolving Advance”
“Revolving
Advances” shall have the respective meanings specified in Section
2.1(a).

     

    “Revolving Credit
Note” and “Revolving Credit
Notes” shall have the respective meanings specified in Section
2.1(b).

     

    “Revolving Interest
Rate” shall mean an interest rate per annum equal to (a) with respect to
any Domestic Rate Loan for any day, the sum of the Alternate Base Rate for such
day plus the
Applicable Margin and (b) with respect to any Eurodollar Rate Loan for any
Interest Period, the sum of the Eurodollar Rate applicable to such Interest
Period plus the
Applicable Margin.

     

    “Rockport” shall mean
Rockport Investments Ltd., a company organized under the laws of the United
Kingdom.

     

    “Rockport $500,000
Note” shall mean the Subordinated Note dated May 25, 2010 in the
principal amount of $500,000 issued by Zanett to Rockport, as amended by the
First Amendment to Subordinated Promissory Note dated August 25, 2010 and the
Second Amendment to Subordinated Promissory Note dated as of October 10,
2010.

     

    “Rockport Convertible
Note” shall mean the 7.95% Convertible Subordinated Note dated March 31,
2010 in the principal amount of $7,131,983 issued by Zanett to
Rockport.

     

    “Rockport Intercreditor
Agreement” shall mean the Subordination Agreement of even date herewith
made by Rockport in favor of Agent and consented to therein by the
Borrowers.

     

    “Rockport Subordinated
Notes” shall mean the Rockport Convertible Note and the Rockport $500,000
Note.

     

    “SEC” shall mean the
Securities and Exchange Commission or any successor thereto.

     

    “Section 20
Subsidiary” shall mean the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible
Securities.

     

    “Securities Act” shall
mean the Securities Act of 1933, as amended.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    “Senior Debt Payments”
shall mean and include all cash actually expended by any Borrower to make (a)
principal and interest payments on any Advances hereunder, plus (b) payments for
all fees, commissions and charges set forth herein and with respect to any
Advances, plus (c) capitalized lease payments, plus (d) payments (whether in
respect of principal, interest, fees, commissions or other charges) with respect
to any other Indebtedness for borrowed money (other than Subordinated Debt
Payments).

     

    “Settlement Date”
shall mean the Closing Date and thereafter Wednesday or Thursday of each week or
more frequently if Agent deems appropriate unless such day is not a Business Day
in which case it shall be the next succeeding Business Day.

     

    “Subordinated
Creditor” shall mean Rockport, ZOF or any holder of a Zanett Renewable
Unsecured Subordinated Note; and “Subordinated
Creditors” shall mean all of the foregoing, collectively.

     

    “Subordinated Debt”
shall mean any Indebtedness of any Borrower evidenced or governed by the
Subordinated Debt Documents.

     

    “Subordinated Debt
Documents” shall mean the Rockport Subordinated Notes, the Zanett
Renewable Unsecured Subordinated Notes, the ZOF Credit Agreement and all
instruments, documents and agreements executed in connection therewith or
related thereto.

     

    “Subordinated Debt
Payments” shall mean and include all cash actually expended to make
payments of principal or interest on the Subordinated Debt.

     

    “Subsidiary” of any
Person shall mean a corporation or other entity of whose Equity Interests having
ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors
of such corporation, or other Persons performing similar functions for such
entity, are owned, directly or indirectly, by such Person.

     

    “Subsidiary Stock”
shall mean all of the issued and outstanding Equity Interests of any Subsidiary
owned by any Borrower (not to exceed 65% of the Equity Interests of any Foreign
Subsidiary).

     

    “Term” shall have the
meaning set forth in Section 13.1.

     

    “Termination Event”
shall mean (i) a Reportable Event with respect to any Plan or Multiemployer
Plan; (ii) the withdrawal of any Borrower or any member of the Controlled Group
from a Plan or Multiemployer Plan during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the
providing of notice of intent to terminate a Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Plan or Multiemployer Plan; (v) any event or
condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (b) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any
Borrower or any member of the Controlled Group from a Multiemployer
Plan.

     

    
      
         

      

      
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    “Toxic Substance”
shall mean and include any material present on the Real Property or the
Leasehold Interests which has been shown to have significant adverse effect on
human health or which is subject to regulation under the Toxic Substances
Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any
other applicable Federal or state laws now in force or hereafter enacted
relating to toxic substances.  “Toxic Substance” includes but is not
limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.

     

    “Trading with the Enemy
Act” shall mean the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
enabling legislation or executive order relating thereto.

     

    “Transactions” shall
mean the transactions contemplated by this Agreement.

     

    “Transferee” shall
have the meaning set forth in Section 16.3(d).

     

    “Undrawn Availability”
on a particular date shall mean an amount equal to (a) the lesser of (x) the
Formula Amount as of such date or (y) the Maximum Revolving Advance Amount then
in effect, minus (without
duplication) (b) the sum of (i) the principal amount of all Revolving Advances
then outstanding, plus (ii) the face
amount of all Letters of Credit then outstanding, plus (iii) the
balance of all Reimbursement Obligations then outstanding, plus (iv) all amounts
then due and owing to any Borrower’s trade creditors that are 60 days or more
past due, plus
(v) all amounts then due and owing to any Borrower’s subcontractors that are
past due, plus
(vi) any other liquidity reserves deemed appropriate by Agent.

     

    “Uniform Commercial
Code” shall have the meaning set forth in Section 1.3.

     

    “USA PATRIOT Act”
shall mean the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or
replaced.

     

    “Voting Stock” shall
mean with respect to any Person (a) one (1) or more classes of Equity Interests
of such Person having general voting powers to elect at least a majority of the
board of directors, managers or trustees of such Person, irrespective of whether
at the time Equity Interests of any other class or classes have or might have
voting power by reason of the happening of any contingency, and (b) any Equity
Interests of such Person convertible or exchangeable without restriction at the
option of the holder thereof into Equity Interests of such Person described in
clause (a) of
this definition.

     

    “Week” shall mean the
time period commencing with the opening of business on a Monday and ending on
the end of business the following Friday.

     

    “Zanett” shall have
the meaning set forth in the preamble to this Agreement.

     

    “Zanett Renewable Unsecured
Subordinated Notes” shall mean those certain uncertificated, unsecured
subordinated notes offered by Zanett pursuant to a Prospectus dated February 7,
2005 and a Prospectus dated August 9, 2007.

     

    “ZCS” shall have the
meaning set forth in the preamble to this Agreement.

     

    
      
         

      

      
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    “ZOF” shall mean
Zanett Opportunity Fund, Ltd., a company organized under the laws of
Bermuda.

     

    “ZOF Credit Agreement”
shall mean the Revolving Line of Credit Promissory Note dated as of January 27,
2011, between Zanett and ZOF, as it may be amended, restated, supplemented or
otherwise modified from time to time with Agent’s prior written
consent.

     

    “ZOF Intercreditor
Agreement” shall mean the Intercreditor Agreement of even date herewith
among ZOF, Zanett and Agent.

     

    “ZOF/Jefferies
Account” shall mean the securities account maintained by ZOF at Jefferies
and Company, Inc.

     

    1.3.                 Uniform Commercial Code
Terms.  All terms used herein and defined in the Uniform
Commercial Code as adopted in the State of New York from time to time (the
“Uniform Commercial Code”) shall have the meaning given therein unless otherwise
defined herein.  Without limiting the foregoing, the terms “accounts”,
“chattel paper”, “instruments”, “general intangibles”, “payment intangibles”,
“supporting obligations”, “securities”, “investment property”, “documents”,
“deposit accounts”, “software”, “letter of credit rights”, “inventory”,
“equipment” and “fixtures”, as and when used in the description of Collateral
shall have the meanings given to such terms in Articles 8 or 9 of the Uniform
Commercial Code.  To the extent the definition of any category or type
of collateral is expanded by any amendment, modification or revision to the
Uniform Commercial Code, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.

     

    1.4.                 Certain Matters of
Construction.  The terms “herein”, “hereof” and “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision.  All references herein
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this
Agreement.  Any pronoun used shall be deemed to cover all
genders.  Wherever appropriate in the context, terms used herein in
the singular also include the plural and vice versa.  All references
to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.  Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party, including
references to any of the Other Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.  All references herein to the time of day shall mean the time
in New York, New York.  Unless otherwise provided, all financial
calculations shall be performed with Inventory valued on a first-in, first-out
basis. Whenever the words “including” or “include” shall be used, such words
shall be understood to mean “including, without limitation” or “include, without
limitation”.  A Default or Event of Default shall be deemed to exist
at all times during the period commencing on the date that such Default or Event
of Default occurs to the date on which such Default or Event of Default is
waived in writing pursuant to this Agreement or, in the case of a Default, is
cured within any period of cure expressly provided for in this Agreement; and an
Event of Default shall “continue” or be “continuing” until such Event of Default
has been waived in writing by the Required Lenders.  Any Lien referred
to in this Agreement or any of the Other Documents as having been created in
favor of Agent, any agreement entered into by Agent pursuant to this Agreement
or any of the Other Documents, any payment made by or to or funds received by
Agent pursuant to or as contemplated by this Agreement or any of the Other
Documents, or any act taken or omitted to be taken by Agent, shall, unless
otherwise expressly provided, be created, entered into, made or received, or
taken or omitted, for the benefit or account of Agent and Lenders. Wherever the
phrase “to the best of Borrowers’ knowledge” or words of similar import relating
to the knowledge or the awareness of any Borrower are used in this Agreement or
Other Documents, such phrase shall mean and refer to (i) the actual knowledge of
a senior officer of any Borrower or (ii) the knowledge that a senior officer
would have obtained if he had engaged in good faith and diligent performance of
his duties, including the making of such reasonably specific inquiries as may be
necessary of the employees or agents of such Borrower and a good faith attempt
to ascertain the existence or accuracy of the matter to which such phrase
relates.  All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or otherwise
within the limitations of, another covenant shall not avoid the occurrence of a
default if such action is taken or condition exists.  In addition, all
representations and warranties hereunder shall be given independent effect so
that if a particular representation or warranty proves to be incorrect or is
breached, the fact that another representation or warranty concerning the same
or similar subject matter is correct or is not breached will not affect the
incorrectness of a breach of a representation or warranty
hereunder.

    
      
         

      

      
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    II           ADVANCES,
PAYMENTS.

     

    2.1.                 Revolving
Advances.

     

    (a)           Amount of Revolving
Advances.  Subject to the terms and conditions set forth in
this Agreement including Sections 2.1(c) and (d), each Lender, severally and not
jointly, agrees to make revolving credit advances (each a “Revolving Advance”
and, collectively, the “Revolving Advances”) to Borrowers in aggregate amounts
outstanding at any one time equal to such Lender’s Commitment Percentage of the
lesser of (x) the Maximum Revolving Advance Amount less the aggregate Maximum
Undrawn Amount of all outstanding Letters of Credit or (y) the Formula Amount.
For purposes of this Agreement, the term “Formula Amount” shall
mean an amount equal to:

     

    (i)           up
to 85% (subject to adjustment in accordance with the provisions of Section
2.1(d)) of the net face amount of Eligible Receivables, plus

     

    (ii)          up
to the lesser of (A) 75% (subject to adjustment in accordance with the
provisions of Section 2.1(d)), of Eligible Prebillings or (B) $4,000,000, minus

     

    (iii)         the
Availability Reserve then in effect, minus

     

    (iv)        such
other reserves as Agent may deem proper or necessary from time to time, minus

     

    (v)          the
aggregate Maximum Undrawn Amount of all outstanding Letters of
Credit.

    
      
         

      

      
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     During
the Term, the Borrowers may borrow, repay and reborrow Revolving Advances from
the Lenders, subject to the terms and conditions of this Agreement.

     

    (b)           Revolving Credit
Notes.  The Revolving Advances shall be evidenced by one or
more secured promissory notes (each, a “Revolving Credit Note” and,
collectively, the “Revolving Credit Notes”) substantially in the form attached
hereto as Exhibit 2.1(b), which notes shall at no time exceed, in aggregate
principal amount, the Maximum Revolving Advance Amount.

     

    (c)           Obligations of Lenders
Several.  The obligations of the Lenders hereunder to make
Revolving Advances are several and not joint.  The failure of any
Lender to make any Revolving Advance on any date required hereunder shall not
relieve any other Lender of its corresponding obligation to do so on such date,
and no Lender shall be responsible for the failure of any other Lender to so
make a Revolving Advance.

     

    (d)           Discretionary
Rights.  The Advance Rates may be increased or decreased by
Agent at any time and from time to time in the exercise of its reasonable
discretion.  Each Borrower consents to any such increases or decreases
and acknowledges that decreasing the Advance Rates or increasing or imposing
reserves may limit or restrict Advances requested by Borrowing
Agent.  The rights of Agent under this subsection are subject to the
provisions of Section 16.2(b).

     

    2.2.                 Procedure for Borrowing
Revolving Advances.

     

    (a)           Borrowing
Agent on behalf of any Borrower may notify Agent prior to 11:00 a.m. on a
Business Day of a Borrower’s desire to obtain a Domestic Rate Loan
hereunder.  Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or Lenders, or with respect to any other Obligation, become
due, same shall be deemed a request for a Revolving Advance as of the date such
payment is due, in the amount required to pay in full such interest, fee, charge
or Obligation under this Agreement or any other agreement with Agent or Lenders,
and such request shall be irrevocable.

     

    (b)           Notwithstanding
the provisions of subsection (a) above, in the event any Borrower desires to
obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written notice
by no later than 10:00 a.m. on the day which is three (3) Business Days prior to
the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of
the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount of the Advance to be borrowed, which amount shall be at
least $500,000 or any higher amount that is an integral multiple of $250,000,
and (iii) the duration of the first Interest Period
therefor.  Interest Periods for Eurodollar Rate Loans shall be for
one, two or three months; provided, if an Interest Period would end on a day
that is not a Business Day, it shall end on the next succeeding Business Day
unless such day falls in the next succeeding calendar month in which case the
Interest Period shall end on the next preceding Business Day.  No
Eurodollar Rate Loan shall be made available to any Borrower during the
continuance of a Default or an Event of Default.  After giving effect
to each requested Eurodollar Rate Loan, including those which are converted from
a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more
than three (3) Eurodollar Rate Loans, in the aggregate.

    
      
         

      

      
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    (c)           Each
Interest Period of a Eurodollar Rate Loan shall commence on the date such
Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent may
elect as set forth in subsection (b)(iii) above provided that the exact length
of each Interest Period shall be determined in accordance with the practice of
the interbank market for offshore Dollar deposits and no Interest Period shall
end after the last day of the Term.

     

    Borrowing
Agent shall elect the initial Interest Period applicable to a Eurodollar Rate
Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by
its notice of conversion given to Agent pursuant to Section 2.2(d), as the case
may be.  Borrowing Agent shall elect the duration of each succeeding
Interest Period by giving irrevocable written notice to Agent of such duration
not later than 10:00 a.m. on the day which is three (3) Business Days prior to
the last day of the then current Interest Period applicable to such Eurodollar
Rate Loan.  If Agent does not receive timely notice of the Interest
Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have
elected to convert to a Domestic Rate Loan subject to Section 2.2(d)
hereinbelow.

     

    (d)           Provided
that no Event of Default shall have occurred and be continuing, Borrowing Agent
may, on the last Business Day of the then current Interest Period applicable to
any outstanding Eurodollar Rate Loan, or on any Business Day with respect to
Domestic Rate Loans, convert any such loan into a loan of another type in the
same aggregate principal amount provided that any conversion of a Eurodollar
Rate Loan shall be made only on the last Business Day of the then current
Interest Period applicable to such Eurodollar Rate Loan.  If Borrowing
Agent desires to convert a loan, Borrowing Agent shall give Agent written notice
by no later than 10:00 a.m. (i) on the day which is three (3) Business Days’
prior to the date on which such conversion is to occur with respect to a
conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the
day which is one (1) Business Day prior to the date on which such conversion is
to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic
Rate Loan, specifying, in each case, the date of such conversion, the loans to
be converted and if the conversion is from a Domestic Rate Loan to any other
type of loan, the duration of the first Interest Period therefor.

     

    (e)           At
its option and upon written notice given prior to 10:00 a.m. (New York time) at
least three (3) Business Days’ prior to the date of such prepayment, any
Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part
from time to time with accrued interest on the principal being prepaid to the
date of such repayment.  Such Borrower shall specify the date of
prepayment of Advances which are Eurodollar Rate Loans and the amount of such
prepayment.  In the event that any prepayment of a Eurodollar Rate
Loan is required or permitted on a date other than the last Business Day of the
then current Interest Period with respect thereto, such Borrower shall indemnify
Agent and Lenders therefor in accordance with Section 2.2(f).

     

    
      
         

      

      
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    (f)           Each
Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless
from and against any and all losses or expenses that Agent and Lenders may
sustain or incur as a consequence of any prepayment, conversion of or any
default by any Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder.  A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent or any
Lender to Borrowing Agent shall be conclusive absent manifest
error.

     

    (g)           Notwithstanding
any other provision hereof, if any Applicable Law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender (for purposes of this subsection
(g), the term “Lender” shall include any Lender and the office or branch where
any Lender or any corporation or bank controlling such Lender makes or maintains
any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the
obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be
cancelled and Borrowers shall, if any affected Eurodollar Rate Loans are then
outstanding, promptly upon request from Agent, either pay all such affected
Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans
of another type.  If any such payment or conversion of any Eurodollar
Rate Loan is made on a day that is not the last day of the Interest Period
applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon Agent’s
request, such amount or amounts as may be necessary to compensate Lenders for
any loss or expense sustained or incurred by Lenders in respect of such
Eurodollar Rate Loan as a result of such payment or conversion, including (but
not limited to) any interest or other amounts payable by Lenders to lenders of
funds obtained by Lenders in order to make or maintain such Eurodollar Rate
Loan.  A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by Lenders to Borrowing Agent shall be
conclusive absent manifest error.

     

    2.3.                 Disbursement of Advance
Proceeds.  All Advances shall be disbursed from whichever
office or other place Agent may designate from time to time and, together with
any and all other Obligations of Borrowers to Agent or Lenders, shall be charged
to Borrowers’ Account on Agent’s books.  During the Term, Borrowers
may use the Revolving Advances by borrowing, prepaying and reborrowing, all in
accordance with the terms and conditions hereof.  The proceeds of each
Revolving Advance requested by Borrowing Agent on behalf of any Borrower or
deemed to have been requested by any Borrower under Section 2.2(a) shall, with
respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to the applicable Borrower on the day so
requested by way of credit to such Borrower’s operating account at PNC, or such
other bank as Borrowing Agent may designate following notification to Agent, in
immediately available federal funds or other immediately available funds or,
with respect to Revolving Advances deemed to have been requested by any
Borrower, be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request.

     

    2.4.                 Maximum
Advances.  The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving
Advance Amount or (b) the Formula Amount less, in each case, the aggregate
Maximum Undrawn Amount of all issued and outstanding Letters of
Credit.

    
      
         

      

      
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    2.5.                 Repayment of
Advances.

     

    (a)           The
Revolving Advances shall be due and payable in full on the last day of the Term
subject to earlier prepayment as herein provided.

     

    (b)           Each
Borrower recognizes that the amounts evidenced by checks, notes, drafts or any
other items of payment relating to and/or proceeds of Collateral may not be
collectible by Agent on the date received.  In consideration of
Agent’s agreement to conditionally credit Borrowers’ Account as of the next
Business Day following the Agent’s receipt of those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after (i) the Business Day following the Agent’s receipt of
such payments via wire transfer or electronic depository check or (ii) in the
case of payments received by Agent in any other form, the Business Day such
payment constitutes good funds in Agent’s account.  Agent is not,
however, required to credit Borrowers’ Account for the amount of any item of
payment which is unsatisfactory to Agent and Agent may charge Borrowers’ Account
for the amount of any item of payment which is returned to Agent
unpaid.

     

    (c)           All
payments of principal, interest and other amounts payable hereunder, or under
any of the Other Documents shall be made to Agent at the Payment Office not
later than 1:00 P.M. (New York time) on the due date therefore in lawful money
of the United States of America in federal funds or other funds immediately
available to Agent.  Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging Borrowers’
Account or by making Advances as provided in Section 2.2.

     

    (d)           Borrowers
shall pay principal, interest, and all other amounts payable hereunder, or under
any related agreement, without any deduction whatsoever, including, but not
limited to, any deduction for any setoff or counterclaim.

     

    2.6.                 Repayment of Excess
Advances.  The aggregate balance of Advances outstanding at any
time in excess of the maximum amount of Advances permitted hereunder shall be
immediately due and payable without the necessity of any demand, at the Payment
Office, whether or not a Default or Event of Default has occurred.

     

    2.7.                 Statement of
Account.  Agent shall maintain, in accordance with its
customary procedures, a loan account (“Borrowers’ Account”) in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender.  Each month, Agent shall
send to Borrowing Agent a statement showing the accounting for the Advances
made, payments made or credited in respect thereof, and other transactions
between Agent and Borrowers during such month.  The monthly statements
shall be deemed correct and binding upon Borrowers in the absence of manifest
error and shall constitute an account stated between Lenders and Borrowers
unless Agent receives a written statement of Borrowers’ specific exceptions
thereto within thirty (30) days after such statement is received by Borrowing
Agent.  The records of Agent with respect to the loan account shall be
conclusive evidence absent manifest error of the amounts of Advances and other
charges thereto and of payments applicable thereto.

    
      
         

      

      
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    2.8.                 Letters of
Credit.  Subject to the terms and conditions hereof, Agent
shall issue or cause the issuance of standby and/or trade Letters of Credit
(“Letters of Credit”) for the account of any Borrower; provided, however, that Agent
will not be required to issue or cause to be issued any Letters of Credit to the
extent that the issuance thereof would then cause the sum of (i) the outstanding
Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding
Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance
Amount or (y) the Formula Amount.  The Maximum Undrawn Amount of
outstanding Letters of Credit shall not exceed in the aggregate at any time the
Letter of Credit Sublimit. All disbursements or payments related to Letters of
Credit shall be deemed to be Domestic Rate Loans and shall bear interest at the
Revolving Interest Rate for Domestic Rate Loans. Letters of Credit that have not
been drawn upon shall not bear interest.

     

    2.9.                 Issuance of Letters of
Credit.

     

    (a)           Borrowing
Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, prior to
10:00 a.m. (New York time), at least five (5)  Business Days’ prior to
the proposed date of issuance, Agent’s form of Letter of Credit Application (the
“Letter of Credit Application”) completed to the satisfaction of Agent; and,
such other certificates, documents and other papers and information as Agent may
reasonably request.  Borrowing Agent, on behalf of Borrowers, also has
the right to give instructions and make agreements with respect to any
application, any applicable letter of credit and security agreement, any
applicable letter of credit reimbursement agreement and/or any other applicable
agreement, any letter of credit and the disposition of documents, disposition of
any unutilized funds, and to agree with Agent upon any amendment, extension or
renewal of any Letter of Credit.

     

    (b)           Each
Letter of Credit shall, among other things, (i) provide for the payment of sight
drafts, other written demands for payment, or acceptances when presented for
honor thereunder in accordance with the terms thereof and when accompanied by
the documents described therein and (ii) have an expiry date not later than
twenty-four (24) months after such Letter of Credit’s date of issuance and in no
event later than the last day of the Term.  Each standby Letter of
Credit shall be subject either to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 600, and any amendments or revision thereof adhered to by the
Issuer (“UCP 600”) or the International Standby Practices (ISP98-International
Chamber of Commerce Publication Number 600) (the “ISP98 Rules”), as determined
by Agent, and each trade Letter of Credit shall be subject to UCP
600.

     

    (c)           Agent
shall use its reasonable efforts to notify Lenders of the request by Borrowing
Agent for a Letter of Credit hereunder.

    
      
         

      

      
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    2.10.               Requirements For Issuance of
Letters of Credit.

     

    (a)           Borrowing
Agent shall authorize and direct any Issuer to name the applicable Borrower as
the “Applicant” or “Account Party” of each Letter of Credit.  If Agent
is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize and
direct the Issuer to deliver to Agent all instruments, documents, and other
writings and property received by the Issuer pursuant to the Letter of Credit
and to accept and rely upon Agent’s instructions and agreements with respect to
all matters arising in connection with the Letter of Credit and the application
therefor.

     

    (b)           In
connection with all Letters of Credit issued or caused to be issued by Agent
under this Agreement, each Borrower hereby appoints Agent, or its designee, as
its attorney, with full power and authority if an Event of Default shall have
occurred, (i) to sign and/or endorse such Borrower’s name upon any warehouse or
other receipts, letter of credit applications and acceptances, (ii) to sign such
Borrower’s name on bills of lading; (iii) to clear Inventory through the United
States of America Customs Department (“Customs”) in the name of such Borrower or
Agent or Agent’s designee, and to sign and deliver to Customs officials powers
of attorney in the name of Borrower for such purpose; and (iv) to complete in
such Borrower’s name or Agent’s, or in the name of Agent’s designee, any order,
sale or transaction, obtain the necessary documents in connection therewith, and
collect the proceeds thereof.  Neither Agent nor its attorneys will be
liable for any acts or omissions nor for any error of judgment or mistakes of
fact or law, except for Agent’s or its attorney’s willful
misconduct.  This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.

     

    2.11.               Disbursements,
Reimbursement.

     

    (a)           Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from Agent a
participation in such Letter of Credit and each drawing thereunder in an amount
equal to such Lender’s Commitment Percentage of the Maximum Face Amount of such
Letter of Credit and the amount of such drawing, respectively.

     

    (b)           In
the event of any request for a drawing under a Letter of Credit by the
beneficiary or transferee thereof, Agent will promptly notify Borrowing
Agent.  Provided that Borrowing Agent shall have received such notice,
the Borrowers shall reimburse (such obligation to reimburse Agent shall
sometimes be referred to as a “Reimbursement Obligation”) Agent prior to 12:00
Noon, New York time on each date that an amount is paid by Agent under any
Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the
amount so paid by Agent.  In the event Borrowers fail to reimburse
Agent for the full amount of any drawing under any Letter of Credit by 12:00
Noon, New York time, on the Drawing Date, Agent will promptly notify each Lender
thereof, and Borrowers shall be deemed to have requested that a Domestic Rate
Loan be made by the Lenders to be disbursed on the Drawing Date under such
Letter of Credit, subject to the amount of the unutilized portion of the lesser
of Maximum Revolving Advance Amount or the Formula Amount and subject to Section
8.2.  Any notice given by Agent pursuant to this Section 2.11(b) may
be oral if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.

    
      
         

      

      
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    (c)           Each
Lender shall upon any notice pursuant to Section 2.11(b) make available to Agent
an amount in immediately available funds equal to its Commitment Percentage of
the amount of the drawing, whereupon the participating Lenders shall (subject to
Section 2.11(d)) each be deemed to have made a Domestic Rate Loan to Borrowers
in that amount.  If any Lender so notified fails to make available to
Agent the amount of such Lender’s Commitment Percentage of such amount by no
later than 2:00 p.m., New York time on the Drawing Date, then interest shall
accrue on such Lender’s obligation to make such payment, from the Drawing Date
to the date on which such Lender makes such payment (i) at a rate per annum
equal to the Federal Funds Rate during the first three days following the
Drawing Date and (ii) at a rate per annum equal to the rate applicable to
Domestic Rate Loans on and after the fourth day following the Drawing
Date.  Agent will promptly give notice of the occurrence of the
Drawing Date, but failure of Agent to give any such notice on the Drawing Date
or in sufficient time to enable any Lender to effect such payment on such date
shall not relieve such Lender from its obligation under this Section 2.11(c),
provided that such Lender shall not be obligated to pay interest as provided in
Section 2.11(c) (i) and (ii) until and commencing from the date of receipt of
notice from Agent of a drawing.

     

    (d)           With
respect to any unreimbursed drawing that is not converted into a Domestic Rate
Loan to Borrowers in whole or in part as contemplated by Section 2.11(b),
because of Borrowers’ failure to satisfy the conditions set forth in Section 8.2
(other than any notice requirements) or for any other reason, Borrowers shall be
deemed to have incurred from Agent a borrowing (each a “Letter of Credit
Borrowing”) in the amount of such drawing. Such Letter of Credit Borrowing shall
be due and payable on demand (together with interest) and shall bear interest at
the rate per annum applicable to a Domestic Rate Loan.  Each Lender’s
payment to Agent pursuant to Section 2.11(c) shall be deemed to be a payment in
respect of its participation in such Letter of Credit Borrowing and shall
constitute a “Participation Advance” from such Lender in satisfaction of its
Participation Commitment under this Section 2.11.

     

    (e)           Each
Lender’s Participation Commitment shall continue until the last to occur of any
of the following events:  (x) Agent ceases to be obligated to issue or
cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued
or created hereunder remains outstanding and uncancelled and (z) all Persons
(other than the Borrowers) have been fully reimbursed for all payments made
under or relating to Letters of Credit.

     

    2.12.               Repayment of Participation
Advances.

     

    (a)           Upon
(and only upon) receipt by Agent for its account of immediately available funds
from Borrowers (i) in reimbursement of any payment made by the Agent under the
Letter of Credit with respect to which any Lender has made a Participation
Advance to Agent, or (ii) in payment of interest on such a payment made by Agent
under such a Letter of Credit, Agent will pay to each Lender, in the same funds
as those received by Agent, the amount of such Lender’s Commitment Percentage of
such funds, except Agent shall retain the amount of the Commitment Percentage of
such funds of any Lender that did not make a Participation Advance in respect of
such payment by Agent.

    
      
         

      

      
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    (b)           If
Agent is required at any time to return to any Borrower, or to a trustee,
receiver, liquidator, custodian, or any official in any insolvency proceeding,
any portion of the payments made by Borrowers to Agent pursuant to Section
2.12(a) in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Lender shall, on demand of Agent, forthwith return
to Agent the amount of its Commitment Percentage of any amounts so returned by
Agent plus interest at the Federal Funds Effective Rate.

     

    2.13.               Documentation.  Each
Borrower agrees to be bound by the terms of the Letter of Credit Application and
by Agent’s interpretations of any Letter of Credit issued on behalf of such
Borrower and by Agent’s written regulations and customary practices relating to
letters of credit, though Agent’s interpretations may be different from such
Borrower’s own.  In the event of a conflict between the Letter of
Credit Application and this Agreement, this Agreement shall
govern.  It is understood and agreed that, except in the case of gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment), Agent shall not be liable for
any error, negligence and/or mistakes, whether of omission or commission, in
following the Borrowing Agent’s or any Borrower’s instructions or those
contained in the Letters of Credit or any modifications, amendments or
supplements thereto.

     

    2.14.               Determination to Honor
Drawing Request.  In determining whether to honor any request
for drawing under any Letter of Credit by the beneficiary thereof, Agent shall
be responsible only to determine that the documents and certificates required to
be delivered under such Letter of Credit have been delivered and that they
comply on their face with the requirements of such Letter of Credit and that any
other drawing condition appearing on the face of such Letter of Credit has been
satisfied in the manner so set forth.

     

    2.15.               Nature of Participation and
Reimbursement Obligations.  Each Lender’s obligation in
accordance with this Agreement to make the Revolving Advances or Participation
Advances as a result of a drawing under a Letter of Credit, and the obligations
of Borrowers to reimburse Agent upon a draw under a Letter of Credit, shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Section 2.15 under all circumstances,
including the following circumstances:

     

    (i)           any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against Agent, any Borrower or any other Person for any reason
whatsoever;

     

    (ii)          the
failure of any Borrower or any other Person to comply, in connection with a
Letter of Credit Borrowing, with the conditions set forth in this Agreement for
the making of a Revolving Advance, it being acknowledged that such conditions
are not required for the making of a Letter of Credit Borrowing and the
obligation of the Lenders to make Participation Advances under Section
2.11;

     

    (iii)         any
lack of validity or enforceability of any Letter of Credit;

    
      
         

      

      
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    (iv)        any
claim of breach of warranty that might be made by Borrower or any Lender against
the beneficiary of a Letter of Credit, or the existence of any claim, set-off,
recoupment, counterclaim, crossclaim, defense or other right which any Borrower
or any Lender may have at any time against a beneficiary, any successor
beneficiary or any transferee of any Letter of Credit or the proceeds thereof
(or any Persons for whom any such transferee may be acting), Agent or any Lender
or any other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between any Borrower or any Subsidiaries of such Borrower and the
beneficiary for which any Letter of Credit was procured);

     

    (v)         the
lack of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency,
accuracy, enforceability or genuineness of any draft, demand, instrument,
certificate or other document presented under or in connection with any Letter
of Credit, or any fraud or alleged fraud in connection with any Letter of
Credit, or the transport of any property or provisions of services relating to a
Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has
been notified thereof;

     

    (vi)        payment
by Agent under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit;

     

    (vii)       the
solvency of, or any acts or omissions by, any beneficiary of any Letter of
Credit, or any other Person having a role in any transaction or obligation
relating to a Letter of Credit, or the existence, nature, quality, quantity,
condition, value or other characteristic of any property or services relating to
a Letter of Credit;

     

    (viii)      any
failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit
in the form requested by Borrowing Agent, unless the Agent has received written
notice from Borrowing Agent of such failure within three (3) Business Days after
the Agent shall have furnished Borrowing Agent a copy of such Letter of Credit
and such error is material and no drawing has been made thereon prior to receipt
of such notice;

     

    (ix)         any
Material Adverse Effect on any Borrower;

     

    (x)          any
breach of this Agreement or any Other Document by any party
thereto;

     

    (xi)         the
occurrence or continuance of an insolvency proceeding with respect to any
Borrower;

     

    (xii)        the
fact that a Default or Event of Default shall have occurred and be
continuing;

     

    (xiii)       the
fact that the Term shall have expired or this Agreement or the Obligations
hereunder shall have been terminated; and

     

    (xiv)       any
other circumstance or happening whatsoever, whether or not similar to any of the
foregoing.

    
      
         

      

      
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    2.16.               Indemnity.  In
addition to amounts payable as provided in Section 16.5, each Borrower hereby
agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s
Affiliates that have issued a Letter of Credit from and against any and all
claims, demands, liabilities, damages, taxes, penalties, interest, judgments,
losses, costs, charges and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel) which the
Agent or any of Agent’s Affiliates may incur or be subject to as a consequence,
direct or indirect, of the issuance of any Letter of Credit, other than as a
result of (A) the gross negligence or willful misconduct of the Agent as
determined by a final and non-appealable judgment of a court of competent
jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent’s
Affiliates of a proper demand for payment made under any Letter of Credit,
except if such dishonor resulted from any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Body (all
such acts or omissions herein called “Governmental Acts”).

     

    2.17.               Liability for Acts and
Omissions.  As between Borrowers and Agent and Lenders, each
Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of such Letters of
Credit.  In furtherance and not in limitation of the respective
foregoing, Agent shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for an issuance of any such Letter
of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (even if Agent shall have been
notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) the
failure of the beneficiary of any such Letter of Credit, or any other party to
which such Letter of Credit may be transferred, to comply fully with any
conditions required in order to draw upon such Letter of Credit or any other
claim of any Borrower against any beneficiary of such Letter of Credit, or any
such transferee, or any dispute between or among any Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of Agent, including any governmental acts, and
none of the above shall affect or impair, or prevent the vesting of, any of
Agent’s rights or powers hereunder. Nothing in the preceding sentence shall
relieve Agent from liability for Agent’s gross negligence or willful misconduct
(as determined by a court of competent jurisdiction in a final non-appealable
judgment) in connection with actions or omissions described in such clauses (i)
through (viii) of such sentence.  In no event shall Agent or Agent’s
Affiliates be liable to any Borrower for any indirect, consequential,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys’ fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.

    
    

    
      
        
        

      

      
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    Without
limiting the generality of the foregoing, Agent and each of its Affiliates (i)
may rely on any oral or other communication believed in good faith by Agent
or  such Affiliate to have been authorized or given by or on behalf of
the applicant for a Letter of Credit, (ii) may honor any presentation if the
documents presented appear on their face substantially to comply with the terms
and conditions of the relevant Letter of Credit; (iii) may honor a previously
dishonored presentation under a Letter of Credit, whether such dishonor was
pursuant to a court order, to settle or compromise any claim of wrongful
dishonor, or otherwise, and shall be entitled to reimbursement to the same
extent as if such presentation had initially been honored, together with any
interest paid by Agent or its Affiliates; (iv) may honor any drawing that is
payable upon presentation of a statement advising negotiation or payment, upon
receipt of such statement (even if such statement indicates that a draft or
other document is being delivered separately), and shall not be liable for any
failure of any such draft or other document to arrive, or to conform in any way
with the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place
where such bank is located; and (vi) may settle or adjust any claim or demand
made on Agent or its Affiliate in any way related to any order issued at the
applicant’s request to an air carrier, a letter of guarantee or of indemnity
issued to a carrier or any similar document (each an “Order”) and honor any
drawing in connection with any Letter of Credit that is the subject of such
Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such
Letter of Credit.

     

    In
furtherance and extension and not in limitation of the specific provisions set
forth above, any action taken or omitted by Agent under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith and without gross negligence (as
determined by a court of competent jurisdiction in a final non-appealable
judgment), shall not put Agent under any resulting liability to any Borrower or
any Lender.

     

    2.18.               Additional
Payments.  Any sums expended by Agent or any Lender due to any
Borrower’s failure to perform or comply with its obligations under this
Agreement or any Other Document including any Borrower’s obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1, may be charged to Borrowers’
Account as a Revolving Advance and added to the Obligations.

     

    2.19.               Manner of Borrowing and
Payment.

     

    (a)           Each
borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.

     

    (b)           Each
payment (including each prepayment) by any Borrower on account of the principal
of and interest on the Revolving Advances, shall be applied to the Revolving
Advances pro rata according to the applicable Commitment Percentages of Lenders.
Except as expressly provided herein, all payments (including prepayments) to be
made by any Borrower on account of principal, interest and fees shall be made
without set off or counterclaim and shall be made to Agent on behalf of the
Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New York
time, in Dollars and in immediately available funds.

    
      
         

      

      
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    (c)

     

    (i)           Notwithstanding
anything to the contrary contained in Sections 2.19(a) and (b), commencing with
the first Business Day following the Closing Date, each borrowing of Revolving
Advances shall be advanced by Agent and each payment by any Borrower on account
of Revolving Advances shall be applied first to those Revolving Advances
advanced by Agent.  On or before 1:00 P.M., New York time, on each
Settlement Date commencing with the first Settlement Date following the Closing
Date, Agent and Lenders shall make certain payments as follows: (I) if the
aggregate amount of new Revolving Advances made by Agent during the preceding
Week (if any) exceeds the aggregate amount of repayments applied to outstanding
Revolving Advances during such preceding Week, then each Lender shall provide
Agent with funds in an amount equal to its applicable Commitment Percentage of
the difference between (w) such Revolving Advances and (x) such repayments and
(II) if the aggregate amount of repayments applied to outstanding Revolving
Advances during such Week exceeds the aggregate amount of new Revolving Advances
made during such Week, then Agent shall provide each Lender with funds in an
amount equal to its applicable Commitment Percentage of the difference between
(y) such repayments and (z) such Revolving Advances.

     

    (ii)          Each
Lender shall be entitled to earn interest at the applicable Revolving Interest
Rate on outstanding Advances which it has funded.

     

    (iii)         Promptly
following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made during the Week immediately
preceding such Settlement Date.  Such certificate of Agent shall be
conclusive in the absence of manifest error.

     

    (d)           If
any Lender or Participant (a “benefited Lender”) shall at any time receive any
payment of all or part of its Advances, or interest thereon, or receive any
Collateral in respect thereof (whether voluntarily or involuntarily or by
set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender’s Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.  Each Lender so purchasing a portion
of another Lender’s Advances may exercise all rights of payment (including
rights of set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion.

     

    (e)           Unless
Agent shall have been notified by telephone, confirmed in writing, by any Lender
that such Lender will not make the amount which would constitute its applicable
Commitment Percentage of the Advances available to Agent, Agent may (but shall
not be obligated to) assume that such Lender shall make such amount available to
Agent on the next Settlement Date and, in reliance upon such assumption, make
available to Borrowers a corresponding amount.  Agent will promptly
notify Borrowing Agent of its receipt of any such notice from a
Lender.  If such amount is made available to Agent on a date after
such next Settlement Date, such Lender shall pay to Agent on demand an amount
equal to the product of (i) the daily average Federal Funds Rate (computed on
the basis of a year of 360 days) during such period as quoted by Agent, times
(ii) such amount, times (iii) the number of days from and including such
Settlement Date to the date on which such amount becomes immediately available
to Agent.  A certificate of Agent submitted to any Lender with respect
to any amounts owing under this paragraph (e) shall be conclusive, in the
absence of manifest error.  If such amount is not in fact made
available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent’s
right to such recovery shall not prejudice or otherwise adversely affect
Borrowers’ rights (if any) against such Lender.

    
      
         

      

      
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      2.20.               Use of
Proceeds.

       

      (a)           Borrowers
shall apply the proceeds of Advances (i) to repay existing indebtedness owed to
Bank of America, N.A., (ii) to pay fees and expenses relating to the
Transaction, and (iii) to provide for their working capital needs.

       

      (b)           Without
limiting the generality of Section 2.20(a) above, neither the Borrowers nor any
other Person which may in the future become party to this Agreement or the Other
Documents as a Borrower, intends to use nor shall they use any portion of the
proceeds of the Advances, directly or indirectly, for any purpose in violation
of the Trading with the Enemy Act.

       

      2.21.               Defaulting
Lender.

       

      (a)           Notwithstanding
anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations
under this Agreement) to make available its portion of any Advance or (y)
notifies either Agent or Borrowing Agent that it does not intend to make
available its portion of any Advance (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement) (each, a “Lender
Default”), all rights and obligations hereunder of such Lender (a “Defaulting
Lender”) as to which a Lender Default is in effect and of the other parties
hereto shall be modified to the extent of the express provisions of this Section
2.21 while such Lender Default remains in effect.

       

      (b)           Advances
shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which are
not Defaulting Lenders based on their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any Advances
required to be advanced by any Lender shall be increased as a result of such
Lender Default.  Amounts received in respect of principal of any type
of Advances shall be applied to reduce the applicable Advances of each Lender
(other than any Defaulting Lender) pro rata based on the aggregate of the
outstanding Advances of that type of all Lenders at the time of such
application; provided, that, Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender’s
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or
fees).  Amounts payable to a Defaulting Lender shall instead be paid
to or retained by Agent.  Agent may hold and, in its discretion,
re-lend to a Borrower the amount of such payments received or retained by it for
the account of such Defaulting Lender.

      
        
           

        

        
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      (c)           A
Defaulting Lender shall not be entitled to give instructions to Agent or to
approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents.  All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.

       

      (d)           Other
than as expressly set forth in this Section 2.21, the rights and obligations of
a Defaulting Lender (including the obligation to indemnify Agent) and the other
parties hereto shall remain unchanged.  Nothing in this Section 2.21
shall be deemed to release any Defaulting Lender from its obligations under this
Agreement and the Other Documents, shall alter such obligations, shall operate
as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which any Borrower, Agent or any Lender may have against
any Defaulting Lender as a result of any default by such Defaulting Lender
hereunder.

       

      (e)           In
the event a Defaulting Lender retroactively cures to the satisfaction of Agent
the breach which caused a Lender to become a Defaulting Lender, such Defaulting
Lender shall no longer be a Defaulting Lender and shall be treated as a Lender
under this Agreement.

       

      III           INTEREST
AND FEES.

       

      3.1.                 Interest.  The
Borrowers shall pay interest on Domestic Rate Loans at the Revolving Interest
Rate for Domestic Rate Loans and on Eurodollar Rate Loans at the Revolving
Interest Rate for Eurodollar Rate Loans. Interest shall be payable in arrears on
the first day of each month with respect to Domestic Rate Loans and, with
respect to Eurodollar Rate Loans, at the end of each Interest Period or, for
Eurodollar Rate Loans with an Interest Period in excess of three months, at the
earlier of (a) each three months from the commencement of such Eurodollar Rate
Loan or (b) the end of the Interest Period.  Interest charges shall be
computed on the actual principal amount of Advances outstanding during the month
at a rate per annum equal to the applicable Revolving Interest Rate. Whenever,
subsequent to the date of this Agreement, the Alternate Base Rate is increased
or decreased, the Revolving Interest Rate for Domestic Rate Loans shall be
similarly changed without notice or demand of any kind by an amount equal to the
amount of such change in the Alternate Base Rate during the time such change or
changes remain in effect.  The Eurodollar Rate shall be adjusted with
respect to Eurodollar Rate Loans without notice or demand of any kind on the
effective date of any change in the Reserve Percentage as of such effective
date.  Upon and after the occurrence of an Event of Default, and
during the continuation thereof, (i) at the option of Agent or at the direction
of Required Lenders, the Obligations other than Eurodollar Rate Loans shall bear
interest at the Revolving Interest Rate for Domestic Rate Loans plus two (2%)
percent per annum and (ii) Eurodollar Rate Loans shall bear interest at the
Revolving Interest Rate for Eurodollar Rate Loans plus two (2%) percent per
annum (as applicable, the “Default Rate”).

      
        
           

        

        
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      3.2.                 Letter of Credit
Fees.

       

      (a)           Borrowers
shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter
of Credit for the period from and excluding the date of issuance of same to and
including the date of expiration or termination, equal to the average daily face
amount of each outstanding Letter of Credit multiplied by three and one-quarter
percent (3.25%) per annum, such fees to be calculated on the basis of a 360-day
year for the actual number of days elapsed and to be payable quarterly in
arrears on the first day of each quarter and on the last day of the Term, and
(y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per
annum, together with any and all administrative, issuance, amendment, payment
and negotiation charges with respect to Letters of Credit and all fees and
expenses as agreed upon by the Issuer and the Borrowing Agent in connection with
any Letter of Credit, including in connection with the opening, amendment or
renewal of any such Letter of Credit and shall reimburse Agent for any and all
fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing
fees, the “Letter of
Credit Fees”).  All such charges shall be deemed earned in full
on the date when the same are due and payable hereunder and shall not be subject
to rebate or pro-ration upon the termination of this Agreement for any
reason.  Any such charge in effect at the time of a particular
transaction shall be the charge for that transaction, notwithstanding any
subsequent change in the Issuer’s prevailing charges for that type of
transaction.  All Letter of Credit Fees payable hereunder shall be
deemed earned in full on the date when the same are due and payable hereunder
and shall not be subject to rebate or pro-ration upon the termination of this
Agreement for any reason.

       

      On
demand, Borrowers will cause cash to be deposited and maintained in an account
with Agent, as cash collateral, in an amount equal to one hundred five percent
(105%) of the Maximum Undrawn Amount of all outstanding Letters of Credit, and
each Borrower hereby irrevocably authorizes Agent, in its discretion, on such
Borrower’s behalf and in such Borrower’s name, to open such an account and to
make and maintain deposits therein, or in an account opened by such Borrower, in
the amounts required to be made by such Borrower, out of the proceeds of
Receivables or other Collateral or out of any other funds of such Borrower
coming into any Lender’s possession at any time.  Agent will invest
such cash collateral (less applicable reserves) in such short-term money-market
items as to which Agent and such Borrower mutually agree and the net return on
such investments shall be credited to such account and constitute additional
cash collateral.  No Borrower may withdraw amounts credited to any
such account except upon the occurrence of all of the following: (x) payment and
performance in full of all Obligations, (y) expiration of all Letters of Credit
and (z) termination of this Agreement.

       

      3.3.                 Closing Fee and Facility
Fee.

       

      (a)           Closing
Fee.  Borrowers shall pay to Agent for the ratable benefit of
Lenders a closing fee of $50,000, less that portion of the deposit and
commitment fees heretofore paid by Borrowers to Agent remaining after
application thereof to out of pocket expenses (the “Unused Deposit”). The
closing fee shall be deemed earned in full on the Closing Date, shall not be
subject to rebate or proration upon termination of this Agreement for any
reason, and shall be paid in full (less the Unused Deposit, if any) on the
Closing Date.

      
        
           

        

        
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      (b)           Facility
Fee.  If, for any calendar quarter during the Term, the average
daily unpaid balance of the Revolving Advances and undrawn amount of any
outstanding Letters of Credit for each day of such calendar quarter does not
equal the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent
for the ratable benefit of Lenders a fee at a rate equal to one-half of one
percent (.5%) per annum on the amount by which the Maximum Revolving Advance
Amount exceeds such average daily unpaid balance and undrawn
amount.  Such fee shall be payable to Agent in arrears on the first
day of each calendar quarter with respect to the previous calendar
quarter.

       

      3.4.                 Collateral Management Fee
and Collateral Monitoring Fee.

       

      (a)           Collateral Management
Fee.  Borrowers shall pay Agent a collateral management fee
equal to $18,000 per year, which shall be paid in 12 equal monthly installments
of $1,500 each, payable on the first day of each month commencing with the first
day of the month following the Closing Date.  The collateral
management fee with respect to any 12-month period commencing on the Closing
Date or an anniversary thereof shall be deemed earned in full on the first day
of such period and shall not be subject to rebate or proration upon termination
of this Agreement for any reason.

       

      (b)           Collateral Monitoring
Fee.  Borrowers shall pay to Agent on the first day of each
month following any month in which Agent performs any collateral monitoring -
namely any field examination, collateral analysis or other business analysis,
the need for which is to be determined by Agent and which monitoring is
undertaken by Agent or for Agent’s benefit - a collateral monitoring fee in an
amount equal to $850 per day for each person employed to perform such
monitoring, plus all costs and disbursements incurred by Agent in the
performance of such examination or analysis.

       

      3.5.                 Computation of Interest and
Fees.  Interest and fees hereunder shall be computed on the
basis of a year of 360 days and for the actual number of days
elapsed.  If any payment to be made hereunder becomes due and payable
on a day other than a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and interest thereon shall be payable at the
Revolving Interest Rate for Domestic Rate Loans during such
extension.

       

      3.6.                 Maximum
Charges.  In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrowers, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrowers and the provisions hereof
shall be deemed amended to provide for such permissible rate.

       

      3.7.                 Increased
Costs.  In the event that any Applicable Law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term “Lender” shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:

      
        
           

        

        
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      (a)           subject
Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to
Agent or any Lender of principal, fees, interest or any other amount payable
hereunder or under any Other Documents (except for changes in the rate of tax on
the overall net income of Agent or any Lender by the jurisdiction in which it
maintains its principal office);

       

      (b)           impose,
modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of,
advances or loans by, or other credit extended by, any office of Agent or any
Lender, including pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or

       

      (c)           impose
on Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;

       

      and the
result of any of the foregoing is to increase the cost to Agent or any Lender of
making, renewing or maintaining its Advances hereunder by an amount that Agent
or such Lender deems to be material or to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of any of the Advances
by an amount that Agent or such Lender deems to be material, then, in any case
Borrowers shall promptly pay Agent or such Lender, upon its written demand, such
additional amount as will compensate Agent or such Lender for such additional
cost or such reduction, as the case may be, provided that the foregoing shall
not apply to increased costs which are reflected in the Eurodollar
Rate.  Agent or such Lender shall certify in writing the amount of
such additional cost or reduced amount to Borrowing Agent, and such
certification shall be conclusive absent manifest error.

       

      3.8.                 Basis For Determining
Interest Rate Inadequate or Unfair.  In the event that Agent or
any Lender shall have determined that:

       

      (a)           reasonable
means do not exist for ascertaining the Eurodollar Rate for any Interest Period;
or

       

      (b)           Dollar
deposits in the relevant amount and for the relevant maturity are not available
in the London interbank Eurodollar market, with respect to an outstanding
Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion
of a Domestic Rate Loan into a Eurodollar Rate Loan,

       

      then
Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination.  If such notice is given, (i) any such
requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless
Borrowing Agent shall notify Agent no later than 11:00 a.m. (New York City time)
two (2) Business Days prior to the date of such proposed borrowing, that its
request for such borrowing shall be cancelled or made as an unaffected type of
Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which
was to have been converted to an affected type of Eurodollar Rate Loan shall be
continued as or converted into a Domestic Rate Loan, or, if Borrowing Agent
shall notify Agent, no later than 11:00 a.m. (New York City time) two (2)
Business Days prior to the proposed conversion, shall be maintained as an
unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected
Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if
Borrowing Agent shall notify Agent, no later than 11:00 a.m. (New York City
time) two (2) Business Days prior to the last Business Day of the then current
Interest Period applicable to such affected Eurodollar Rate Loan, shall be
converted into an unaffected type of Eurodollar Rate Loan, on the last Business
Day of the then current Interest Period for such affected Eurodollar Rate
Loans.  Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and no Borrower shall have the right
to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate Loan.

      
        
           

        

        
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      3.9.                 Capital
Adequacy.

       

      (a)           In
the event that Agent or any Lender shall have determined that any Applicable
Law, rule, regulation or guideline regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any Lender
(for purposes of this Section 3.9, the term “Lender” shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the
office or branch where Agent or any Lender (as so defined) makes or maintains
any Eurodollar Rate Loans with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or any Lender’s capital as a consequence of its obligations
hereunder to a level below that which Agent or such Lender could have achieved
but for such adoption, change or compliance (taking into consideration Agent’s
and each Lender’s policies with respect to capital adequacy) by an amount deemed
by Agent or any Lender to be material, then, from time to time, Borrowers shall
pay to Agent or such Lender within five (5) Business Days from the date of a
written notice to Borrowers that sets forth the additional amount or amounts as
will compensate Agent or such Lender for such reduction.  In
determining such amount or amounts, Agent or such Lender may use any reasonable
averaging or attribution methods.  The protection of this Section 3.9
shall be available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the Applicable Law,
regulation or condition.

       

      (b)           A
certificate of Agent or such Lender setting forth such amount or amounts as
shall be necessary to compensate Agent or such Lender with respect to Section
3.9(a) when delivered to Borrowing Agent shall be conclusive absent manifest
error.

       

      3.10.               Gross Up for
Taxes.  If any Borrower shall be required by Applicable Law to
withhold or deduct any taxes from or in respect of any sum payable under this
Agreement or any of the Other Documents to Agent, or any Lender, assignee of any
Lender, or Participant (each, individually, a “Payee” and collectively, the
“Payees”), (a) the sum payable to such Payee or Payees, as the case may be,
shall be increased as may be necessary so that, after making all required
withholding or deductions, the applicable Payee or Payees receives an amount
equal to the sum it would have received had no such withholding or deductions
been made (the “Gross-Up Payment”), (b) such Borrower shall make such
withholding or deductions, and (c) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law.  Notwithstanding the foregoing, no
Borrower shall be obligated to make any portion of the Gross-Up Payment that is
attributable to any withholding or deductions that would not have been paid or
claimed had the applicable Payee or Payees properly claimed a complete exemption
with respect thereto pursuant to Section 3.11.

      
        
           

        

        
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      3.11.               Withholding Tax
Exemption.

       

      (a)           Each
Payee that is not incorporated under the Laws of the United States of America or
a state thereof (and, upon the written request of Agent, each other Payee)
agrees that it will deliver to Borrowing Agent and Agent two (2) duly completed
appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of
the Income Tax Regulations (“Regulations”)) certifying its status (i.e., U.S. or
foreign person) and, if appropriate, making a claim of reduced, or exemption
from, U.S. withholding tax on the basis of an income tax treaty or an exemption
provided by the Code.  The term “Withholding Certificate” means a Form
W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and
certifications as required under §1.1441-1(e)(2) and/or (3) of the Regulations;
a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other
certificates under the Code or Regulations that certify or establish the status
of a payee or beneficial owner as a U.S. or foreign person.

       

      (b)           Each
Payee required to deliver to Borrowing Agent and Agent a valid Withholding
Certificate pursuant to Section 3.11(a) shall deliver such valid Withholding
Certificate as follows:  (A) each Payee which is a party hereto on the
Closing Date shall deliver such valid Withholding Certificate at least five (5)
Business Days prior to the first date on which any interest or fees are payable
by any Borrower hereunder for the account of such Payee; (B) each Payee shall
deliver such valid Withholding Certificate at least five (5) Business Days
before the effective date of such assignment or participation (unless Agent in
its sole discretion shall permit such Payee to deliver such Withholding
Certificate less than five (5) Business Days before such date in which case it
shall be due on the date specified by Agent).  Each Payee which so
delivers a valid Withholding Certificate further undertakes to deliver to
Borrowing Agent and Agent two (2) additional copies of such Withholding
Certificate (or a successor form) on or before the date that such Withholding
Certificate expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent Withholding Certificate so delivered by
it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by Borrowing Agent or Agent.

       

      (c)           Notwithstanding
the submission of a Withholding Certificate claiming a reduced rate of or
exemption from U.S. withholding tax required under Section 3.11(b), Agent shall
be entitled to withhold United States federal income taxes at the full 30%
withholding rate if in its reasonable judgment it is required to do so under the
due diligence requirements imposed upon a withholding agent under §1.1441-7(b)
of the Regulations.  Further, Agent is indemnified under §1.1461-1(e)
of the Regulations against any claims and demands of any Payee for the amount of
any tax it deducts and withholds in accordance with regulations under §1441 of
the Code.

      
        
           

        

        
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      IV           COLLATERAL:
GENERAL TERMS.

       

      4.1.                 Security Interest in the
Collateral.  To secure the prompt payment and performance to
Agent and each Lender of the Obligations, each Borrower hereby assigns, pledges
and grants to Agent for its benefit and for the ratable benefit of each Lender a
continuing security interest in and to and Lien on all of its Collateral,
whether now owned or existing or hereafter acquired or arising and wheresoever
located.  Each Borrower shall mark its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent’s security
interest and shall cause its financial statements to reflect such security
interest.  Each Borrower shall promptly provide Agent with written
notice of all commercial tort claims, such notice to contain the case title
together with the applicable court and a brief description of the
claim(s).  Upon delivery of each such notice, such Borrower shall be
deemed to hereby grant to Agent a security interest and lien in and to such
commercial tort claims and all proceeds thereof.

       

      4.2.                 Perfection of Security
Interest.  Each Borrower shall take all action that may be
necessary or desirable, or that Agent may request, so as at all times to
maintain the validity, perfection, enforceability and priority of Agent’s
security interest in and Lien on the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining such lien waiver agreements as Agent shall
reasonably request, (iii) delivering to Agent, endorsed or accompanied by such
instruments of assignment as Agent may specify, and stamping or marking, in such
manner as Agent may specify, any and all chattel paper, instruments, letters of
credits and advices thereof and documents evidencing or forming a part of the
Collateral, (iv) entering into warehousing, lockbox and other custodial
arrangements satisfactory to Agent, and (v) executing and delivering financing
statements, control agreements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory to Agent, relating
to the creation, validity, perfection, maintenance or continuation of Agent’s
security interest and Lien under the Uniform Commercial Code or other Applicable
Law.  By its signature hereto, each Borrower hereby authorizes Agent
to file against such Borrower, one or more financing, continuation or amendment
statements pursuant to the Uniform Commercial Code in form and substance
satisfactory to Agent.  All charges, expenses and fees Agent may incur
in doing any of the foregoing, and any local taxes relating thereto, shall be
charged to Borrowers’ Account as a Revolving Advance of a Domestic Rate Loan and
added to the Obligations, or, at Agent’s option, shall be paid to Agent for its
benefit and for the ratable benefit of Lenders immediately upon
demand.

       

      4.3.                 Disposition of
Collateral.  Each Borrower will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether
by sale, lease or otherwise except (a) the sale of Inventory in the Ordinary
Course of Business and (b) the disposition or transfer of obsolete and worn-out
Equipment in the Ordinary Course of Business.

      
        
           

        

        
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      4.4.                 Preservation of
Collateral.  Following the occurrence of a Default or Event of
Default, in addition to the rights and remedies set forth in Section 11.1,
Agent: (a) may at any time take such steps as Agent deems necessary to protect
Agent’s interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as Agent
may deem appropriate; (b) may employ and maintain at any of any Borrower’s
premises a custodian who shall have full authority to do all acts necessary to
protect Agent’s interests in the Collateral; (c) may lease warehouse facilities
to which Agent may move all or part of the Collateral; (d) may use any
Borrower’s owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (e) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of Borrower’s owned or leased
property.  Each Borrower shall cooperate fully with all of Agent’s
efforts to preserve the Collateral and will take such actions to preserve the
Collateral as Agent may direct.  All of Agent’s reasonable expenses of
preserving the Collateral, including any expenses relating to the bonding of a
custodian, shall be charged to Borrowers’ Account as a Revolving Advance and
added to the Obligations.

       

      4.5.                 Ownership of
Collateral.

       

      (a)           With
respect to the Collateral, at the time the Collateral becomes subject to Agent’s
security interest:  (i) each Borrower shall be the sole owner of and
fully authorized and able to sell, transfer, pledge and/or grant a first
priority security interest in each and every item of its respective Collateral
to Agent; and, except for Permitted Encumbrances the Collateral shall be free
and clear of all Liens and encumbrances whatsoever; (ii) each document and
agreement executed by each Borrower or delivered to Agent or any Lender in
connection with this Agreement shall be true and correct in all material
respects; (iii) all signatures and endorsements of each Borrower that appear on
such documents and agreements shall be genuine and each Borrower shall have full
authority to execute same; and (iv) each Borrower’s Equipment and Inventory
shall be located as set forth on Schedule 4.5 and shall not be removed from such
location(s) without the prior written consent of Agent except with respect to
the sale of Inventory in the Ordinary Course of Business and Equipment to the
extent permitted in Section 4.3.

       

      (b)           (i)
There is no location at which any Borrower has any Inventory (except for
Inventory in transit) other than those locations listed on Schedule 4.5; (ii)
Schedule 4.5 hereto contains a correct and complete list, as of the Closing
Date, of the legal names and addresses of each warehouse at which Inventory of
any Borrower is stored;  none of the receipts received by any Borrower
from any warehouse states that the goods covered thereby are to be delivered to
bearer or to the order of a named Person or to a named Person and such named
Person’s assigns;  (iii) Schedule 4.5 hereto sets forth a correct and
complete list as of the Closing Date of (A) each place of business of each
Borrower and (B) the chief executive office of each Borrower; and (iv) Schedule
4.5 hereto sets forth a correct and complete list as of the Closing Date of the
location, by state and street address, of all Real Property owned or leased by
each Borrower, together with the names and addresses of any
landlords.

      
        
           

        

        
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      4.6.                 Defense of Agent’s and
Lenders’ Interests.  Until (a) payment and performance in full
of all of the Obligations and (b) termination of this Agreement, Agent’s
interests in the Collateral shall continue in full force and
effect.  During such period no Borrower shall, without Agent’s prior
written consent, pledge, sell (except Inventory in the Ordinary Course of
Business and Equipment to the extent permitted in Section 4.3), assign,
transfer, create or suffer to exist a Lien upon or encumber or allow or suffer
to be encumbered in any way except for Permitted Encumbrances, any part of the
Collateral.  Each Borrower shall defend Agent’s interests in the
Collateral against any and all Persons whatsoever.  At any time
following an Event of Default and upon written demand by Agent for payment of
all Obligations, Agent shall have the right to take possession of the indicia of
the Collateral and the Collateral in whatever physical form contained,
including:  labels, stationery, documents, instruments and advertising
materials.  If Agent exercises this right to take possession of the
Collateral, Borrowers shall, upon written demand, assemble it in the best manner
possible and make it available to Agent at a place reasonably convenient to
Agent.  In addition, with respect to all Collateral, Agent and Lenders
shall be entitled to all of the rights and remedies set forth herein and further
provided by the Uniform Commercial Code or other Applicable Law.  Each
Borrower shall, and Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehousmen or others receiving or holding cash, checks, Inventory,
documents or instruments in which Agent holds a security interest to deliver
same to Agent and/or subject to Agent’s order and if they shall come into any
Borrower’s possession, they, and each of them, shall be held by such Borrower in
trust as Agent’s trustee, and such Borrower will immediately deliver them to
Agent in their original form together with any necessary
endorsement.

       

      4.7.                 Books and
Records.  Each Borrower shall (a) keep proper books of record
and account in which full, true and correct entries will be made of all dealings
or transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including by reason of enumeration, accruals for
premiums, if any, due on required payments and accruals for depreciation,
obsolescence, or amortization of properties), which should be set aside from
such earnings in connection with its business.  All determinations
pursuant to this subsection shall be made in accordance with, or as required by,
GAAP consistently applied in the opinion of such independent public accountant
as shall then be regularly engaged by Borrowers.

       

      4.8.                 Financial
Disclosure.  Each Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
such Borrower’s financial statements, trial balances or other accounting records
of any sort in the accountant’s or auditor’s possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such
Borrower’s financial status and business operations.  Each Borrower
hereby authorizes all Governmental Bodies to furnish to Agent and each Lender
copies of reports or examinations relating to such Borrower, whether made by
such Borrower or otherwise; however, Agent and each Lender will attempt to
obtain such information or materials directly from such Borrower prior to
obtaining such information or materials from such accountants or Governmental
Bodies.

       

      4.9.                 Compliance with
Laws.  Each Borrower shall comply with all Applicable Laws with
respect to the Collateral or any part thereof or to the operation of such
Borrower’s business the non-compliance with which could reasonably be expected
to have a Material Adverse Effect.  The assets of Borrowers at all
times shall be maintained in accordance with the requirements of all insurance
carriers which provide insurance with respect to such assets so that such
insurance shall remain in full force and effect.

      
        
           

        

        
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      4.10.               Inspection of
Premises.  At all reasonable times during normal business hours
(or, upon the occurrence and during the continuance of an Event of Default, at
any time), Agent and each Lender shall have full access to and the right to
audit, check, inspect and make abstracts and copies from each Borrower’s books,
records, audits, correspondence and all other papers relating to the Collateral
and the operation of each Borrower’s business.  Agent, any Lender and
their agents may enter upon any premises of any Borrower at any time during
normal business hours and at any other reasonable time (or, upon the occurrence
and during the continuance of an Event of Default, at any time), and from time
to time, in each case (as long as no Event of Default has then occurred and is
continuing) in a manner that will not interfere with Borrowers’ business
operations, for the purpose of inspecting the Collateral and any and all records
pertaining thereto and the operation of such Borrower’s business.

       

      4.11.               Insurance.  The
assets and properties of each Borrower at all times shall be maintained in
accordance with the requirements of all insurance carriers which provide
insurance with respect to the assets and properties of such Borrower so that
such insurance shall remain in full force and effect.  Each Borrower
shall bear the full risk of any loss of any nature whatsoever with respect to
the Collateral.  At each Borrower’s own cost and expense in amounts
and with carriers acceptable to Agent, each Borrower shall (a) keep all its
insurable properties and properties in which such Borrower has an interest
insured against the hazards of fire, flood, sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Borrower’s including business interruption insurance; (b) maintain
public and product liability insurance against claims for personal injury, death
or property damage suffered by others; (c) maintain all such worker’s
compensation or similar insurance as may be required under the laws of any state
or jurisdiction in which such Borrower is engaged in business; (d) furnish Agent
with (i) copies of all policies and evidence of the maintenance of such policies
by the renewal thereof at least thirty (30) days before any expiration date, and
(ii) appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as a co-insured and loss payee as its interests may appear
with respect to all insurance coverage referred to in clauses (a) and (b) above,
and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that such policy and loss
payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days’ prior written notice is given to Agent.  In the
event of any loss thereunder, the carriers named therein hereby are directed by
Agent and the applicable Borrower to make payment for such loss to Agent and not
to such Borrower and Agent jointly.  If any insurance losses are paid
by check, draft or other instrument payable to any Borrower and Agent jointly,
Agent may endorse such Borrower’s name thereon and do such other things as Agent
may deem advisable to reduce the same to cash.  Agent is hereby
authorized to adjust and compromise claims under insurance coverage referred to
in clauses (a) and (b) above.  All loss recoveries received by Agent
upon any such insurance may be applied to the Obligations, in such order as
Agent in its sole discretion shall determine.  Any surplus shall be
paid by Agent to Borrowers or applied as may be otherwise required by
law.  Any deficiency thereon shall be paid by Borrowers to Agent, on
demand.  Anything hereinabove to the contrary notwithstanding, and
subject to the fulfillment of the conditions set forth below, Agent shall remit
to Borrowing Agent insurance proceeds received by Agent during any calendar year
under insurance policies procured and maintained by Borrowers which insure
Borrowers’ insurable properties to the extent such insurance proceeds do not
exceed $500,000.00 in the aggregate during such calendar year or $100,000.00 per
occurrence.  Agent shall be obligated to remit the insurance proceeds
to Borrowing Agent in excess of the amounts stated in the previous sentence if
Borrowing Agent shall provide Agent with evidence reasonably satisfactory to
Agent that the insurance proceeds will be used by Borrowers to repair, replace
or restore the insured property which was the subject of the insurable
loss.  In the event Borrowing Agent has previously received (or, after
giving effect to any proposed remittance by Agent to Borrowing Agent would
receive) insurance proceeds which equal or exceed $500,000.00 in the aggregate
during any calendar year, then Agent may, in its sole discretion, either remit
the insurance proceeds to Borrowing Agent upon Borrowing Agent providing Agent
with evidence reasonably satisfactory to Agent that the insurance proceeds will
be used by Borrowers to repair, replace or restore the insured property which
was the subject of the insurable loss, or apply the proceeds to the Obligations,
as aforesaid.  The agreement of Agent to remit insurance proceeds in
the manner above provided shall be subject in each instance to satisfaction of
each of the following conditions: (x) No Default or Event of Default shall then
have occurred, and (y) Borrowers shall use such insurance proceeds to repair,
replace or restore the insurable property which was the subject of the insurable
loss and for no other purpose.

      
        
           

        

        
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      4.12.               Failure to Maintain
Insurance.  If any Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor on behalf of such
Borrower, and charge Borrowers’ Account therefor as a Revolving Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the
Obligations.

       

      4.13.               Payment of
Taxes.  Each Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral including real and personal property taxes, assessments
and charges and all franchise, income, employment, social security benefits,
withholding, and sales taxes.  If any tax by any Governmental Body is
or may be imposed on or as a result of any transaction between any Borrower and
Agent or any Lender which Agent or any Lender may be required to withhold or pay
or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Agent’s or any
Lender’s opinion, may possibly create a valid Lien on the Collateral, Agent may
with notice to Borrowers pay the taxes, assessments or other Charges and each
Borrower hereby indemnifies and holds Agent and each Lender harmless in respect
thereof.  Agent will not pay any taxes, assessments or Charges to the
extent that any applicable Borrower has contested or disputed those taxes,
assessments or Charges in good faith, by expeditious protest, administrative or
judicial appeal or similar proceeding provided that any related tax lien is
stayed and sufficient reserves are established to the reasonable satisfaction of
Agent to protect Agent’s security interest in or Lien on the
Collateral.  The amount of any payment by Agent under this Section
4.13 shall be charged to Borrowers’ Account as a Revolving Advance and added to
the Obligations and, until Borrowers shall furnish Agent with an indemnity
therefor (or supply Agent with evidence satisfactory to Agent that due provision
for the payment thereof has been made), Agent may hold without interest any
balance standing to Borrowers’ credit and Agent shall retain its security
interest in and Lien on any and all Collateral held by Agent.

      
        
           

        

        
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      4.14.               Payment of Leasehold
Obligations.  Each Borrower shall at all times pay, when and as
due, its rental obligations under all leases under which it is a tenant, and
shall otherwise comply, in all material respects, with all other terms of such
leases and keep them in full force and effect and, at Agent’s request will
provide evidence of having done so.

       

      4.15.               Receivables.

       

      (a)           Nature of
Receivables.  Each of the Receivables shall be a bona fide and
valid account representing a bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach hereof) with respect to an absolute sale or lease and delivery of goods
upon stated terms of a Borrower, or work, labor or services theretofore rendered
by a Borrower as of the date each Receivable is created.  Same shall
be due and owing in accordance with the applicable Borrower’s standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.

       

      (b)           Solvency of
Customers.  Each Customer, to the best of each Borrower’s
knowledge, as of the date each Receivable is created, is solvent and able to pay
all Receivables on which the Customer is obligated in full when due. If any
Borrower determines that any Customer of such Borrower is not solvent or not
able to pay all Receivables on which such Customer is obligated in full when
due, such Borrower will promptly notify Agent thereof and will set up on its
books and in its financial records bad debt reserves adequate to cover such
Receivables.

       

      (c)           Location of
Borrowers.  The Borrowers’ respective chief executive offices
are both located at 635 Madison Avenue, 15th Floor, New York, New York
10022. Until
written notice is given to Agent by Borrowing Agent of any other office at which
any Borrower keeps its records pertaining to Receivables, all such records shall
be kept at such executive office.

       

      (d)           Collection of
Receivables.  Until any Borrower’s authority to do so is
terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Lenders’ best interest to do so), each Borrower
will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for
Agent’s account, collect as Agent’s property and in trust for Agent all amounts
received on Receivables, and shall not commingle such collections with any
Borrower’s funds or use the same except to pay Obligations.  Each
Borrower shall deposit in the Blocked Account  or, upon request by
Agent, deliver to Agent, in original form and on the date of receipt thereof,
all checks, drafts, notes, money orders, acceptances, cash and other evidences
of Indebtedness.

       

      (e)           Notification of Assignment
of Receivables.  At any time following the occurrence of an
Event of Default or a Default, Agent shall have the right to send notice of the
assignment of, and Agent’s security interest in and Lien on, the Receivables to
any and all Customers or any third party holding or otherwise concerned with any
of the Collateral.  Thereafter, Agent shall have the sole right to
collect the Receivables, take possession of the Collateral, or
both.  Agent’s actual collection expenses, including, but not limited
to, stationery and postage, telephone and telegraph, secretarial and clerical
expenses and the salaries of any collection personnel used for collection, may
be charged to Borrowers’ Account and added to the Obligations.

      
        
           

        

        
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      (f)           Power of Agent to Act on
Borrowers’ Behalf.  Agent shall have the right to receive,
endorse, assign and/or deliver in the name of Agent or any Borrower any and all
checks, drafts and other instruments for the payment of money relating to the
Receivables, and each Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed.  Each Borrower hereby
constitutes Agent or Agent’s designee as such Borrower’s attorney with power (i)
to endorse such Borrower’s name upon any notes, acceptances, checks, drafts,
money orders or other evidences of payment or Collateral; (ii) to sign such
Borrower’s name on any invoice or bill of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign such Borrower’s name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent’s interest in the Collateral and to file same; (v) to demand
payment of the Receivables; (vi) to enforce payment of the Receivables by legal
proceedings or otherwise; (vii) to exercise all of such Borrower’s rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (viii) to settle, adjust, compromise, extend or renew the
Receivables; (ix) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign such Borrower’s name on a
proof of claim in bankruptcy or similar document against any Customer; (xi) to
prepare, file and sign such Borrower’s name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and
(xii) to do all other acts and things necessary to carry out this
Agreement.  All acts of said attorney or designee are hereby ratified
and approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence (as determined
by a court of competent jurisdiction in a final non-appealable judgment); this
power being coupled with an interest is irrevocable while any of the Obligations
remain unpaid.  Agent shall have the right at any time following the
occurrence of an Event of Default or Default, to change the address for delivery
of mail addressed to any Borrower to such address as Agent may designate and to
receive, open and dispose of all mail addressed to any Borrower.

       

      (g)           No
Liability.  Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom.  Following the occurrence of an Event
of Default or Default Agent may, without notice or consent from any Borrower,
sue upon or otherwise collect, extend the time of payment of, compromise or
settle for cash, credit or upon any terms any of the Receivables or any other
securities, instruments or insurance applicable thereto and/or release any
obligor thereof.  Following the occurrence of an Event of Default or
Default, Agent is authorized and empowered to accept the return of the goods
represented by any of the Receivables, without notice to or consent by any
Borrower, all without discharging or in any way affecting any Borrower’s
liability hereunder.

      
        
           

        

        
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      (h)           Establishment of Lockbox
Accounts and Dominion Accounts.  All proceeds of Collateral,
including without limitation all payments on Borrowers’ Receivables (whether or
not they constitute Eligible Receivables) shall be deposited into either (i) a
lockbox account, dominion account or such other “blocked account” (“Blocked Accounts”)
established at a bank or banks (each such bank, a “Blocked Account
Bank”) pursuant to an arrangement with such Blocked Account Bank as may
be selected by Borrowing Agent and be acceptable to Agent or (ii) depository
accounts (“Depository
Accounts”) established at the Agent for the deposit of such
proceeds.  Each applicable Borrower, Agent and each Blocked Account
Bank shall enter into a deposit account control agreement in form and substance
satisfactory to Agent directing such Blocked Account Bank to transfer such funds
so deposited to Agent, either to any account maintained by Agent at said Blocked
Account Bank or by wire transfer to appropriate account(s) of
Agent.  All funds deposited in such Blocked Accounts shall immediately
become the property of Agent and Borrowing Agent shall obtain the agreement by
such Blocked Account Bank to waive any offset rights against the funds so
deposited.  Neither Agent nor any Lender assumes any responsibility
for such blocked account arrangement, including any claim of accord and
satisfaction or release with respect to deposits accepted by any Blocked Account
Bank thereunder.  All deposit accounts and investment accounts of each
Borrower and its Subsidiaries are set forth on Schedule 4.15(h).

       

                  
All invoices of Borrowers shall be properly legended to indicate that payment is
to be made (1) if by check, to a specific lockbox designated and controlled by
Agent and (2) if by wire transfer or other electronic means, to a Blocked
Account or a Depository Account.

      

      (i)           Adjustments.  No
Borrower will, without Agent’s consent, compromise or adjust any material amount
of the Eligible Receivables (or extend the time for payment thereof) or accept
any material returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the business of such Borrower.

       

      4.16.               Inventory.  To
the extent Inventory held for sale or lease has been produced by any Borrower,
it has been and will be produced by such Borrower in accordance with the Federal
Fair Labor Standards Act of 1938, as amended, and all rules, regulations and
orders thereunder.

       

      4.17.               Maintenance of
Equipment.  The Equipment shall be maintained in good operating
condition and repair (reasonable wear and tear excepted) and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and
preserved.  No Borrower shall use or operate the Equipment in
violation of any law, statute, ordinance, code, rule or
regulation.  Each Borrower shall have the right to sell Equipment to
the extent set forth in Section 4.3.

       

      4.18.               Exculpation of
Liability.  Nothing herein contained shall be construed to
constitute Agent or any Lender as any Borrower’s agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause
thereof.  Neither Agent nor any Lender, whether by anything herein or
in any assignment or otherwise, assume any of any Borrower’s obligations under
any contract or agreement assigned to Agent or such Lender, and neither Agent
nor any Lender shall be responsible in any way for the performance by any
Borrower of any of the terms and conditions thereof.

      
        
           

        

        
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      4.19.               Environmental
Matters.

       

      (a)           Borrowers
shall ensure that the Real Property and all operations and businesses conducted
thereon remains in material compliance with all Environmental Laws and they
shall not place or permit to be placed any Hazardous Substances on any Real
Property except as permitted by Applicable Law or appropriate governmental
authorities.

       

      (b)           Borrowers
shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their
respective employees, agents, directors and officers harmless from and against
all loss, liability, damage and expense, claims, costs, fines and penalties,
including attorney’s fees, suffered or incurred by Agent or Lenders under or on
account of any Environmental Laws, including the assertion of any Lien
thereunder, except to the extent such loss, liability, damage and expense is
attributable to or resulting from actions on the part of Agent or any
Lender.  Borrowers’ obligations under this Section 4.19 shall arise
upon the discovery of the presence of any Hazardous Substances at the Real
Property, whether or not any federal, state, or local environmental agency has
taken or threatened any action in connection with the presence of any Hazardous
Substances.  Borrowers’ obligation and the indemnifications hereunder
shall survive the termination of this Agreement.

       

      (c)           For
purposes of Section 4.19 and 5.7, all references to Real Property shall be
deemed to include all of each Borrower’s right, title and interest in and to its
owned and leased premises.

       

      4.20.               Financing
Statements.  Except as respects the financing statements filed
by Agent and the financing statements described on Schedule 1.2, no financing
statement covering any of the Collateral or any proceeds thereof is on file in
any public office.

       

      V           REPRESENTATIONS
AND WARRANTIES.

       

      Each
Borrower represents and warrants as follows:

       

      5.1.                 Authority.  Each
Borrower has full power, authority and legal right to enter into this Agreement
and the Other Documents and to perform all its respective Obligations hereunder
and thereunder.  This Agreement and the Other Documents have been duly
executed and delivered by each Borrower, and this Agreement and the Other
Documents constitute the legal, valid and binding obligation of such Borrower
enforceable in accordance with their terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors’ rights generally.  The execution, delivery and
performance of this Agreement and of the Other Documents (a) are within such
Borrower’s corporate powers, have been duly authorized by all necessary
corporate action, are not in contravention of law or the terms of such
Borrower’s organizational or governance documents or other applicable documents
relating to such Borrower’s formation or to the conduct of such Borrower’s
business or of any material agreement or undertaking to which such Borrower is a
party or by which such Borrower is bound, including the Subordinated Debt
Documents, (b) will not conflict with or violate any law or regulation, or any
judgment, order or decree of any Governmental Body, (c) will not require the
Consent of any Governmental Body or any other Person, except those Consents set
forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or
compiled prior to the Closing Date and which are in full force and effect and
(d) will not conflict with, nor result in any breach in any of the provisions of
or constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of
any agreement, charter document, instrument, by-law, or other instrument to
which such Borrower is a party or by which it or its property is a party or by
which it may be bound, including under the provisions of the Subordinated Debt
Documents.

      
        
           

        

        
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      5.2.                 Formation and
Qualification.

       

      (a)           Each
Borrower is duly organized and in good standing under the laws of the state
listed on Schedule 5.2(a) and is qualified to do business and is in good
standing in the states listed on Schedule 5.2(a) which constitute all states in
which qualification and good standing are necessary for such Borrower to conduct
its business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect on such
Borrower.  Each Borrower has delivered to Agent true and complete
copies of its organizational and governance documents and will promptly notify
Agent of any amendment or changes thereto.

       

      (b)           The
only Subsidiaries of each Borrower are listed on Schedule 5.2(b). Neither DBA
nor DRI conducts any business or owns any assets.

       

      5.3.                 Survival of Representations
and Warranties.  All representations and warranties of such
Borrower contained in this Agreement and the Other Documents shall be true at
the time of such Borrower’s execution of this Agreement and the Other Documents
(except that those representations and warranties made as of a particular date
shall be true and correct as of such date) and shall survive the execution,
delivery and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.

       

      5.4.                 Tax
Returns.  Each Borrower’s federal tax identification number is
set forth on Schedule 5.4.  Each Borrower has filed all federal, state
and local tax returns and other reports each is required by law to file and has
paid all taxes, assessments, fees and other governmental charges that are due
and payable.  Federal, state and local income tax returns of each
Borrower have been examined and reported upon by the appropriate taxing
authority or closed by applicable statute and satisfied for all fiscal years
prior to and including the fiscal year ending December 31, 2001.  The
provision for taxes on the books of each Borrower is adequate for all years not
closed by applicable statutes, and for its current fiscal year, and no Borrower
has any knowledge of any deficiency or additional assessment in connection
therewith not provided for on its books.

       

      5.5.                 Financial
Statements.

       

      (a)           The
financial projections for Borrowers’ fiscal year ending December 31, 2011
heretofore delivered to Agent, copies of which are annexed hereto as Exhibit
5.5(a) (the “Projections”) were
prepared by the Chief Financial Officer of the Borrowing Agent, are based on
underlying assumptions which provide a reasonable basis for the projections
contained therein and reflect Borrowers’ judgment based on present circumstances
of the most likely set of conditions and course of action for the projected
period.

      
        
           

        

        
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      (b)           The
unaudited consolidated and consolidating balance sheets of Borrowers, their
Subsidiaries and such other Persons described therein (including the accounts of
all Subsidiaries for the respective periods during which a subsidiary
relationship existed) as of June 30, 2010, September 30, 2010, and October 31,
2010, and the related statements of income, changes in stockholder’s equity, and
changes in cash flow for the fiscal periods then ended, as furnished to Agent on
or prior to the Closing Date, are accurate, complete and correct and present
fairly the financial condition of Borrowers on a Consolidated Basis as of said
dates and the results of their operations (i) in the case of the June 30 and
September 30 statements, for the six- and nine-month periods then ended and (ii)
in the case of the October 31 statements for the month of October and for the
ten-month period then ended, subject in each case to normal year-end audit
adjustments.

       

      (c)           The
consolidated and consolidating balance sheets of Borrowers, their Subsidiaries
and such other Persons described therein (including the accounts of all
Subsidiaries for the respective periods during which a subsidiary relationship
existed) as of December 31, 2009, and the related statements of income, changes
in stockholder’s equity, and changes in cash flow for the fiscal year then
ended, all accompanied by reports thereon containing opinions without
qualification by independent certified public accountants, copies of which have
been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur) and present fairly the financial position of Borrowers and
their Subsidiaries at such date and the results of their operations for such
fiscal years.

       

      (d)           Since
December 31, 2009 there has been no change in the condition, financial or
otherwise, of Borrowers or their Subsidiaries as shown on the consolidated
balance sheet as of such date and no change in the aggregate value of machinery,
equipment and Real Property owned by Borrowers and their respective
Subsidiaries, except changes in the Ordinary Course of Business, none of which
individually or in the aggregate has been materially adverse.

       

      5.6.                 Entity
Names.  No Borrower has been known by any other corporate name
in the past five (5) years except as set forth in Schedule 5.6.  No
Borrower sells Inventory under any other name except as set forth in Schedule
5.6.  No Borrower has been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets of any Person
during the preceding five (5) years except as set forth in Schedule
5.6.

       

      5.7.                 O.S.H.A. and Environmental
Compliance.

       

      (a)           Each
Borrower has duly complied with, and its facilities, business, assets, property,
leaseholds, Real Property and Equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Environmental Protection Act, RCRA and all other Environmental Laws; there
have been no outstanding citations, notices or orders of non-compliance issued
to any Borrower or relating to its business, assets, property, leaseholds or
Equipment under any such laws, rules or regulations.

      
        
           

        

        
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      (b)           Each
Borrower has been issued all required federal, state and local licenses,
certificates or permits relating to all applicable Environmental
Laws.

       

      (c)           (i)
There are no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under
or within any Real Property or any premises leased by any Borrower; (ii) there
are no underground storage tanks or polychlorinated biphenyls on the Real
Property or any premises leased by any Borrower; (iii) to Borrowers’ knowledge,
neither the Real Property nor any premises leased by any Borrower has ever been
used as a treatment, storage or disposal facility of Hazardous Waste; and (iv)
no Hazardous Substances are present on the Real Property or any premises leased
by any Borrower, excepting such quantities as are handled in accordance with all
applicable manufacturer’s instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of any Borrower or of its tenants.

       

      5.8.                 Solvency; No Litigation,
Violation, Indebtedness or Default.

       

      (a)           After
giving effect to the Transactions, each Borrower will be solvent, able to pay
its debts as they mature, will have capital sufficient to carry on its business
and all businesses in which it is about to engage, and (i) as of the Closing
Date, the fair present saleable value of its assets, calculated on a going
concern basis, is in excess of the amount of its liabilities and (ii) subsequent
to the Closing Date, the fair saleable value of its assets (calculated on a
going concern basis) will be in excess of the amount of its
liabilities.

       

      (b)           Except
as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or, to the best
of the Borrowers’ knowledge, threatened litigation, arbitration, actions or
proceedings which involve claims equal to or exceeding $250,000 (singly or in
the aggregate), which if adversely determined, would have a Material Adverse
Effect, or (ii) any liabilities or indebtedness for borrowed money other than
the Obligations, the Subordinated Debt and as set forth on the balance sheets
referenced in Section 5.5(c), copies of which have been delivered by Borrowers
to Agent.

       

      (c)           No
Borrower is in violation of any applicable statute, law, rule, regulation or
ordinance in any respect which could reasonably be expected to have a Material
Adverse Effect, nor is any Borrower in violation of any order of any court,
Governmental Body or arbitration board or tribunal.

      
        
           

        

        
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      (d)           No
Borrower nor any member of the Controlled Group maintains or contributes to any
Plan other than those listed on Schedule 5.8(d) hereto.  To the extent
that any Borrower maintains a Plan: (i) no Plan has incurred any “accumulated
funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a)
of the Code, whether or not waived, and each Borrower and each member of the
Controlled Group has met all applicable minimum funding requirements under
Section 302 of ERISA in respect of each Plan; (ii) each Plan which is intended
to be a qualified plan under Section 401(a) of the Code as currently in effect
has been determined by the Internal Revenue Service to be qualified under
Section 401(a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501(a) of the Code; (iii) neither any Borrower nor any
member of the Controlled Group has incurred any liability to the PBGC other than
for the payment of premiums, and there are no premium payments which have become
due which are unpaid; (iv) no Plan has been terminated by the plan administrator
thereof nor by the PBGC, and there is no occurrence which would cause the PBGC
to institute proceedings under Title IV of ERISA to terminate any Plan; (v) at
this time, the current value of the assets of each Plan exceeds the present
value of the accrued benefits and other liabilities of such Plan and neither any
Borrower nor any member of the Controlled Group knows of any facts or
circumstances which would materially change the value of such assets and accrued
benefits and other liabilities; (vi) neither any Borrower nor any member of the
Controlled Group has breached any of the responsibilities, obligations or duties
imposed on it by ERISA with respect to any Plan; (vii) neither any Borrower nor
any member of a Controlled Group has incurred any liability for any excise tax
arising under Section 4972 or 4980B of the Code, and no fact exists which could
give rise to any such liability; (viii) neither any Borrower nor any member of
the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has
engaged in a “prohibited transaction” described in Section 406 of the ERISA or
Section 4975 of the Code nor taken any action which would constitute or result
in a Termination Event with respect to any such Plan which is subject to ERISA;
(ix) each Borrower and each member of the Controlled Group has made all
contributions due and payable with respect to each Plan; (x) there exists no
event described in Section 4043(b) of ERISA, for which the thirty (30) day
notice period has not been waived; (xi) neither any Borrower nor any member of
the Controlled Group has any fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons other than employees or
former employees of any Borrower and any member of the Controlled Group; (xii)
neither any Borrower nor any member of the Controlled Group maintains or
contributes to any Plan which provides health, accident or life insurance
benefits to former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code; (xiii) neither any Borrower nor any
member of the Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980 and there exists no fact which would reasonably be
expected to result in any such liability; and (xiv) no Plan fiduciary (as
defined in Section 3(21) of ERISA) has any liability for breach of fiduciary
duty or for any failure in connection with the administration or investment of
the assets of a Plan.

       

      5.9.                 Patents, Trademarks,
Copyrights and Licenses.  All patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
copyrights, copyright applications, design rights, tradenames, assumed names,
trade secrets and licenses owned or utilized by any Borrower are set forth on
Schedule 5.9, are valid and have been duly registered or filed with all
appropriate Governmental Bodies and constitute all of the intellectual property
rights which are necessary for the operation of its business; there is no
objection to or pending challenge to the validity of any such patent, trademark,
copyright, design rights, tradename, trade secret or license and no Borrower is
aware of any grounds for any challenge, except as set forth in Schedule 5.9
hereto.  Each patent, patent application, patent license, trademark,
trademark application, trademark license, service mark, service mark
application, service mark license, design rights, copyright, copyright
application and copyright license owned or held by any Borrower and all trade
secrets used by any Borrower consist of original material or property developed
by such Borrower or was lawfully acquired by such Borrower from the proper and
lawful owner thereof.  Each of such items has been maintained so as to
preserve the value thereof from the date of creation or acquisition
thereof.  With respect to all software used by any Borrower, such
Borrower is in possession of all source and object codes related to each piece
of software or is the beneficiary of a source code escrow agreement, each such
source code escrow agreement being listed on Schedule 5.9
hereto.

      
        
           

        

        
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      5.10.               Licenses and
Permits.  Except as set forth in Schedule 5.10, each Borrower
(a) is in compliance with and (b) has procured and is now in possession of, all
material licenses or permits required by any applicable federal, state or local
law, rule or regulation for the operation of its business in each jurisdiction
wherein it is now conducting or proposes to conduct business and where the
failure to procure such licenses or permits could have a Material Adverse
Effect.

       

      5.11.               Default of
Indebtedness.  Except as set forth in Schedule 5.11, no
Borrower is in default in the payment of the principal of or interest on any
Indebtedness or under any instrument or agreement under or subject to which any
Indebtedness has been issued and no event has occurred under the provisions of
any such instrument or agreement which with or without the lapse of time or the
giving of notice, or both, constitutes or would constitute an event of default
thereunder.

       

      5.12.               No
Default.  No Borrower is in default in the payment or
performance of any of its contractual obligations and no Default has
occurred.

       

      5.13.               No Burdensome
Restrictions.  No Borrower is party to any contract or
agreement the performance of which could have a Material Adverse
Effect.  Each Borrower has heretofore delivered to Agent true and
complete copies of all material contracts to which it is a party or to which it
or any of its properties is subject.  No Borrower has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien which is not a Permitted Encumbrance.

       

      5.14.               No Labor
Disputes.  No Borrower is involved in any labor dispute; there
are no strikes or walkouts or union organization of any Borrower’s employees
threatened or in existence and no labor contract is scheduled to expire during
the Term other than as set forth on Schedule 5.14 hereto.

       

      5.15.               Margin
Regulations.  No Borrower is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect.  No part of the proceeds of any Advance will be
used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of
such Board of Governors.

       

      5.16.               Investment Company
Act.  No Borrower is an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended,
nor is it controlled by such a company.

      
        
           

        

        
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      5.17.               Disclosure.  No
representation or warranty made by any Borrower in this Agreement or the
Subordinated Debt Documents or in any financial statement, report, certificate
or any other document furnished in connection herewith or therewith contains any
untrue statement of fact or omits to state any fact necessary to make the
statements herein or therein not misleading.  There is no fact known
to any Borrower which such Borrower has not disclosed to Agent in writing with
respect to the transactions contemplated by the Subordinated Debt Documents or
this Agreement which could reasonably be expected to have a Material Adverse
Effect.

       

      5.18.               Delivery of Subordinated
Debt Documents.  Agent has received complete copies of the
Subordinated Debt Documents (including all exhibits, schedules and disclosure
letters referred to therein or delivered pursuant thereto, if any) and all
amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof.  None of such documents and
agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Agent.

       

      5.19.               Swaps.  No
Borrower is a party to, nor will it be a party to, any swap agreement whereby
such Borrower has agreed or will agree to swap interest rates or currencies
unless same provides that damages upon termination following an event of default
thereunder are payable on an unlimited “two-way basis” without regard to fault
on the part of either party.

       

      5.20.               Conflicting
Agreements.  No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Borrower or affecting the
Collateral conflicts with, or requires any Consent which has not already been
obtained to, or would in any way prevent the execution, delivery or performance
of, the terms of this Agreement or the Other Documents.

       

      5.21.               Application of Certain Laws
and Regulations.  Neither any Borrower nor any Affiliate of any
Borrower is subject to any law, statute, rule or regulation which regulates the
incurrence of any Indebtedness, including laws, statutes, rules or regulations
relative to common or interstate carriers or to the sale of electricity, gas,
steam, water, telephone, telegraph or other public utility
services.

       

      5.22.               Business and Property of
Borrowers.  Upon and after the Closing Date, Borrowers will not
engage in a new line of business materially different from Borrowers’ current
business.  On the Closing Date, each Borrower will own all the
property and possess all of the rights and Consents necessary for the conduct of
the business of such Borrower.

       

      5.23.               Section 20
Subsidiaries.  Borrowers do not intend to use and shall not use
any portion of the proceeds of the Advances, directly or indirectly, to purchase
during the underwriting period, or for 30 days thereafter, Ineligible Securities
being underwritten by a Section 20 Subsidiary.

       

      5.24.               Anti-Terrorism
Laws.

       

      (a)           General.  Neither
any Borrower nor any Affiliate of any Borrower is in violation of any
Anti-Terrorism Law or engages in or conspires to engage in any
transaction  that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.

      
        
           

        

        
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      (b)           Executive Order No.
13224.  Neither any Borrower nor any Affiliate of any Borrower
or their respective agents acting or benefiting in any capacity in connection
with the Advances or other transactions hereunder, is any of the following (each
a “Blocked Person”):

       

      (i)           a
Person that is listed in the annex to, or is otherwise subject to the provisions
of, the Executive Order No. 13224;

       

      (ii)          a
Person owned or controlled by, or acting for or on
behalf  of,  any  Person  that is listed
in the annex to, or is otherwise subject to the provisions of, the Executive
Order No. 13224;

       

      (iii)         a
Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

       

      (iv)     
   a Person or entity that commits, threatens or conspires to
commit or supports “terrorism” as defined in the Executive Order No.
13224;

       

      (v)         a
Person or entity that is named as a “specially designated national” on the most
current list published by the U.S. Treasury Department Office of Foreign Asset
Control at its official website or any replacement website or other replacement
official publication of such list, or

       

      (vi)        a
Person or entity who is affiliated or associated with a Person or entity listed
above.

       

      Neither
any Borrower nor to the knowledge of any Borrower, any of its agents acting in
any capacity in connection with the Advances or other transactions hereunder (i)
conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Blocked Person, or (ii)
deals in, or otherwise engages in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order No.
13224.

       

      5.25.               Trading with the
Enemy.  No Borrower has engaged, nor does it intend to engage,
in any business or activity prohibited by the Trading with the Enemy
Act.

       

      5.26.               Federal Securities
Laws.  Zanett is required to file periodic reports under the
Exchange Act and has securities registered under the Exchange Act.

       

      VI           AFFIRMATIVE
COVENANTS.

       

      Each
Borrower shall, until payment in full of the Obligations, expiration of the
Letters of Credit and termination of this Agreement:

       

      6.1.                 Payment of
Fees.  Pay to Agent on demand all usual and customary fees and
expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the establishment and maintenance of any Blocked Accounts or
Depository Accounts as provided for in Section 4.15(h).  Agent may,
without making demand, charge Borrowers’ Account for all such fees and
expenses.

      
        
           

        

        
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      6.2.                 Conduct of Business and
Maintenance of Existence and Assets.  (a) Conduct continuously
and operate actively its business according to good business practices and
maintain all of its properties useful or necessary in its business in good
working order and condition (reasonable wear and tear excepted and except as may
be disposed of in accordance with the terms of this Agreement), including all
licenses, patents, copyrights, design rights, tradenames, trade secrets and
trademarks and take all actions necessary to enforce and protect the validity of
any intellectual property right or other right included in the Collateral; (b)
keep in full force and effect its existence and comply in all material respects
with the laws and regulations governing the conduct of its business where the
failure to do so could reasonably be expected to have a Material Adverse Effect;
and (c) make all such reports and pay all such franchise and other taxes and
license fees and do all such other acts and things as may be lawfully required
to maintain its rights, licenses, leases, powers and franchises under the laws
of the United States or any political subdivision thereof where the failure to
do so could reasonably be expected to have a Material Adverse
Effect.

       

      6.3.                 Violations.  Promptly
notify Agent in writing of any violation of any law, statute, regulation or
ordinance of any Governmental Body, or of any agency thereof, applicable to any
Borrower which could reasonably be expected to have a Material Adverse
Effect.

       

      6.4.                 Government
Receivables.  Take all steps necessary to protect Agent’s
interest in the Collateral under the Federal Assignment of Claims Act, the
Uniform Commercial Code and all other applicable state or local statutes or
ordinances and deliver to Agent appropriately endorsed, any instrument or
chattel paper connected with any Receivable arising out of contracts between any
Borrower and the United States, any state or any department, agency or
instrumentality of any of them.

       

      6.5.                 Fixed Charge Coverage
Ratio.  Cause to be maintained as of the end of each
Calculation Period, a Fixed Charge Coverage Ratio of not less than 1.10 to
1.0.

       

      6.6.                 Execution of Supplemental
Instruments.  Execute and deliver to Agent from time to time,
upon demand, such supplemental agreements, statements, assignments and
transfers, or instructions or documents relating to the Collateral, and such
other instruments as Agent may request, in order that the full intent of this
Agreement may be carried into effect.

       

      6.7.                 Payment of
Indebtedness.  Pay, discharge or otherwise satisfy at or before
maturity (subject, where applicable, to specified grace periods and, in the case
of the trade payables, to normal payment practices) all its obligations and
liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.

      
        
           

        

        
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      6.8.                 Standards of Financial
Statements.  Cause all financial statements referred to in
Sections 9.8 through 9.13 as to which GAAP is applicable to be complete and
correct in all material respects (subject, in the case of interim financial
statements, to normal year-end audit adjustments) and to be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as concurred in by such reporting
accountants or officer, as the case may be, and disclosed therein).

       

      6.9.                 Federal Securities
Laws.  Zanett shall promptly file any required periodic reports
under the Exchange Act.

       

      6.10.               Leases.  With
respect to any premises then leased by a Borrower, promptly notify Agent in
writing as to any default under, or amendment or modification to, such lease
which could reasonably be expected to have a Material Adverse Effect, or any
notification to the Borrower of termination (by acceleration or otherwise) of
any such lease by the respective landlord.

       

      6.11.               ZOF Credit
Agreement.  Maintain the ZOF Credit Agreement in full force and
effect until the Permitted Termination Date (as
such term is defined in the ZOF Intercreditor Agreement) with a line of
credit available to Borrowers in a minimum principal amount of $1,000,000 at all
times, and ensure that (a) the fund balance in the ZOF/Jefferies Account is at
least $2,000,000 at all times, and (b) Agent has online access at all times to
ZOF’s fund balance in the ZOF/Jefferies Account for purposes of verifying
Borrowers’ account balances and positions in connection therewith.

       

      6.12.               Landlord Waivers and
Consents.  Within sixty (60) days after the Closing Date,
provide to Agent such landlord, mortgagee or warehouseman agreements
satisfactory to Agent with respect to all premises leased by Borrowers at which
Inventory and books and records are located.

       

      6.13.               DBA and
DRI.  Within thirty (30) days after the Closing Date, provide
to Agent evidence satisfactory to Agent that DBA and DRI have been dissolved or
merged into a Borrower, with such Borrower being the surviving
entity.

       

      6.14.               Bank Accounts. The
Borrowers shall not maintain any deposit account with any financial institution
other than the Agent; provided, however, that the
Borrowers may (a) maintain one or more Blocked Accounts with Blocked Account
Banks in accordance with Section 4.15(h) hereof for up to 120
days after the Closing Date and (b) maintain with Bank of America, N.A.,
operating accounts having no more than $100,000 in aggregate credit balances for
up to 60 days after the Closing Date.

       

      VII           NEGATIVE
COVENANTS.

       

      No
Borrower shall, until satisfaction in full of the Obligations, expiration of the
Letters of Credit and termination of this Agreement:

      
        
           

        

        
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      7.1.                 Merger, Consolidation,
Acquisition and Sale of Assets.

       

      (a)           Enter
into any merger, consolidation or other reorganization with or into any other
Person or acquire all or a substantial portion of the assets or Equity Interests
of any Person or permit any other Person to consolidate with or merge with it
except for a merger or consolidation of a Borrower with another Borrower (any of
the foregoing actions herein called an “Acquisition”).

       

      (b)           Sell,
lease, transfer or otherwise dispose of any of its properties or assets, except
(i) dispositions of Inventory and Equipment to the extent expressly permitted by
Section 4.3 and (ii) any other sales or dispositions expressly permitted by this
Agreement.

       

      7.2.                 Creation of
Liens.  Create or suffer to exist any Lien or transfer upon or
against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.

       

      7.3.                 Guarantees.  Become
liable upon the obligations or liabilities of any Person by assumption,
endorsement or guaranty thereof or otherwise (other than to Lenders) except (a)
as disclosed on Schedule 7.3 and (b) the endorsement of checks in the Ordinary
Course of Business.

       

      7.4.                 Investments.  Purchase
or acquire obligations or Equity Interests of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not more
than 180 days and a published rating of not less than A-1 or P-1 (or the
equivalent rating), (c) certificates of time deposit and bankers’ acceptances
having maturities of not more than 180 days and repurchase agreements backed by
United States government securities of a commercial bank if (i) such bank has a
combined capital and surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, (d) U.S. money market funds that invest solely in
obligations issued or guaranteed by the United States of America or an agency
thereof.

       

      7.5.                 Loans.  Make
advances, loans or extensions of credit to any Person, including any Affiliates
or employees, except with respect to (a) the extension of commercial trade
credit in connection with the sale of Inventory in the Ordinary Course of
Business and (b) loans to its Affiliates or employees in the Ordinary Course of
Business not exceeding $150,000 in aggregate principal amount at any one time
outstanding.

       

      7.6.                 Capital
Expenditures.  Contract for, purchase or make any expenditure
or commitments for Capital Expenditures in any fiscal year in an aggregate
amount for all Borrowers in excess of $350,000.

      
        
           

        

        
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      7.7.                 Dividends and
Distributions.  Declare, pay or make any dividend or
distribution on any Equity Interest of any Borrower (other than dividends or
distributions payable solely in its Equity Interests, or split-ups or
reclassifications of Equity Interests) or apply any of its funds, property or
assets to the purchase, redemption or other retirement of any Equity Interest of
any Borrower; provided, however, that (a) ZCS
may pay dividends and distributions to Zanett and (b) Zanett may pay dividends
on its Equity Interests after delivery to Agent in accordance with Section 9.8
of audited financial statements for any fiscal year (commencing with the fiscal
year ending December 31, 2010) showing a net profit for such fiscal year, so
long as (i) the amount of the dividend payment does not exceed such net profit,
(ii) no Default or Event of Default shall have occurred and be continuing on the
date of such payment, (iii) the average Undrawn Availability for the 30-day
period immediately preceding the date of such payment (determined on a pro forma
basis after giving effect to such payment) is at least $1,500,000, and (iv)
Borrowers are in compliance with the financial covenants contained in this
Agreement, including without limitation the financial covenant set forth in
Section 6.5, both before and after giving effect to such payment.

       

      7.8.                 Indebtedness.  Create,
incur, assume or suffer to exist any Indebtedness (exclusive of trade debt),
except (i) Indebtedness to Agent and Lenders hereunder and under the Other
Documents, (ii) existing Indebtedness listed on Schedule 7.8, (iii) the
Subordinated Debt, and (iv) Indebtedness evidenced by Zanett Renewable Unsecured
Subordinated Notes issued after the date hereof, so long as such Notes that
replace maturing Zanett Renewable Unsecured Subordinated Notes, do not exceed in
principal amount the principal amount of the Notes they are replacing, bear
interest at a rate not exceeding the rate on the Notes they are replacing, and
have maturities that extend at least ninety (90) days beyond the end of the
Term.

       

      7.9.                 Nature of
Business.  Substantially change the nature of the business in
which it is presently engaged or, except as specifically permitted hereby,
purchase or invest, directly or indirectly, in any assets or property other than
in the Ordinary Course of Business for assets or property which are useful in,
necessary for and are to be used in its business as presently
conducted.

       

      7.10.               Transactions with
Affiliates.  Directly or indirectly, purchase, acquire or lease
any property from, or sell, transfer or lease any property to, or otherwise
enter into any transaction or deal with, any Affiliate, except transactions
disclosed to the Agent, which are in the Ordinary Course of Business, on an
arm’s-length basis on terms and conditions no less favorable than terms and
conditions which would have been obtainable from a Person other than an
Affiliate.

       

      7.11.               Leases.  Enter
as lessee into any lease arrangement for real or personal property (unless
capitalized and permitted under Section 7.6) if after giving effect thereto,
aggregate annual rental payments for all leased property would exceed $1,000,000
in any one fiscal year in the aggregate for all Borrowers, subject to reasonable
annual escalations.

       

      7.12.               Subsidiaries and Joint
Ventures.

       

      (a)           Form
any Subsidiary unless (i) such Subsidiary expressly joins in this Agreement as a
borrower and becomes jointly and severally liable for the obligations of
Borrowers hereunder and under the Other Documents and (ii) Agent shall have
received all documents, including legal opinions, it may reasonably require to
establish compliance with each of the foregoing conditions.

      
        
           

        

        
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      (b)           Enter
into any partnership, joint venture or similar arrangement.

       

      7.13.               Fiscal Year and Accounting
Changes.  Change its fiscal year from December 31 or make any
change (i) in accounting treatment and reporting practices except as required by
GAAP or (ii) in tax reporting treatment except as required by law.

       

      7.14.               Pledge of
Credit.  Now or hereafter pledge Agent’s or any Lender’s credit
on any purchases or for any purpose whatsoever or use any portion of any Advance
in or for any business other than such Borrower’s business as conducted on the
date of this Agreement.

       

      7.15.               Amendment of Organizational
Documents.  Amend, modify or waive any term or material
provision of its Articles of Incorporation or By-Laws unless required by
law.

       

      7.16.               Compliance with
ERISA.  (i) (x) Maintain, or permit any member of the
Controlled Group to maintain, or (y) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
“prohibited transaction”, as that term is defined in section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled
Group to incur, any “accumulated funding deficiency”, as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of any Borrower or any member of the Controlled Group or
the imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any
Termination Event, (viii) fail to comply, or permit a member of the Controlled
Group to fail to comply, with the requirements of ERISA or the Code or other
Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member
of the Controlled Group to fail to meet, all minimum funding requirements under
ERISA or the Code or postpone or delay or allow any member of the Controlled
Group to postpone or delay any funding requirement with respect of any
Plan.

       

      7.17.               Prepayment of
Indebtedness.  Except as may be permitted under Section 7.20 of
this Agreement, at any time, directly or indirectly, prepay any Indebtedness
(other than to Lenders or as otherwise expressly permitted under this
Agreement), or repurchase, redeem, retire or otherwise acquire any Indebtedness
of any Borrower.

       

      7.18.               Anti-Terrorism
Laws.  No Borrower shall, until satisfaction in full of the
Obligations and termination of this Agreement, nor shall it permit any Affiliate
or agent to:

       

      (a)           Conduct
any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person.

       

      (b)           Deal
in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order No.
13224.

      
        
           

        

        
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      (c)           Engage
in or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other
Anti-Terrorism Law.  Borrower shall deliver to Lenders any
certification or other evidence requested from time to time by any Lender in its
sole discretion, confirming Borrower’s compliance with this
Section.

       

      7.19.               Trading with the Enemy
Act.  Engage in any business or activity in violation of the
Trading with the Enemy Act.

       

      7.20.               Subordinated
Debt.  At any time, directly or indirectly, pay, prepay,
repurchase, redeem, retire or otherwise acquire, or make any payment on account
of any principal of, interest on or premium payable in connection with the
repayment or redemption of any Subordinated Debt, provided that so long as (i)
no Default or Event of Default shall have occurred and be continuing and (ii)
Borrowers shall be in compliance with the financial covenants contained in this
Agreement, including without limitation the financial covenant set forth in
Section 6.5, both before and after giving effect to such payment, Zanett
may:

       

      (a)           make
payments of principal and interest on the Zanett Renewable Unsecured
Subordinated Notes when due;

       

      (b)           make
interest payments on the Rockport Subordinated Notes when due;

       

      (c)           make
payments of principal on the Rockport $500,000 Note (but not the Rockport
Convertible Note) after delivery to Agent pursuant to Section 9.8 of the
Borrowers’ audited financial statements for the fiscal year ending December 31,
2010, provided that (x) no Default or Event of Default shall have occurred and
be continuing on the date of such payment, (y) the average Undrawn Availability
for the 30-day period immediately preceding the date of such payment (determined
on a pro forma basis after giving effect to such payment) is at least
$1,000,000, and (z) Borrowers are in compliance with the financial covenants
contained in this Agreement, including without limitation the financial covenant
set forth in Section 6.5, both before and after giving effect to such payment;
and

       

      (d)           make
other payments of principal or interest on the Subordinated Debt to the extent
expressly permitted by the Intercreditor Agreements.

       

      (e)           enter
into any material amendment, waiver or modification of any Subordinated Debt
Document or related agreement.

       

      7.21.               DBA and
DRI.  Permit DBA or DRI to engage in any business (other than
tasks related to the dissolution or merger of DBA or DRI in accordance with
Section 6.13) or to own or acquire any assets.

       

      VIII           CONDITIONS
PRECEDENT.

       

      8.1.                 Conditions to Initial
Advances.  The agreement of Lenders to make the initial
Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent, immediately prior to or concurrently with the
making of such Advances, of the following conditions precedent:

       

      
        
           

        

        
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      (a)           Revolving Credit
Note.  Agent shall have received the Revolving Credit Note duly
executed and delivered by an authorized officer of each Borrower;

       

      (b)           Other
Documents.  Agent shall have received all Other Documents, duly
executed and delivered by each Borrower or Subordinated Creditor party thereto
in form and substance satisfactory to Agent;

       

      (c)           Filings, Registrations and
Recordings.  Each document (including any Uniform Commercial
Code financing statement) required by this Agreement or any Other Document, by
law or reasonably requested by Agent to be filed, registered or recorded in
order to create, in favor of Agent for the ratable benefit of the Lenders, a
perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required  or requested, and
Agent shall have received an acknowledgment copy, or other evidence satisfactory
to it, of each such filing, registration or recordation and satisfactory
evidence of the payment of any necessary fee, tax or expense relating
thereto;

       

      (d)           Proceedings of
Borrowers.  Agent shall have received a copy of the resolutions
in form and substance reasonably satisfactory to Agent, of the Board of
Directors or  Management Committee of each Borrower, as the case may
be, authorizing (i) the execution, delivery and performance by such Borrower of
this Agreement and the Other Documents to which it is party and (ii) the
granting by such Borrower of Liens on the Collateral pursuant to this Agreement
and the Other Documents to which it is party, in each case certified by the
Secretary or an Assistant Secretary of each Borrower as of the Closing Date;
and, such certificate shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded as of the date of such
certificate;

       

      (e)           Incumbency Certificates of
Borrowers.  Agent shall have received a certificate of the
Secretary or an Assistant Secretary of each Borrower, dated the Closing Date, as
to the incumbency and signature of the officers of each Borrower executing this
Agreement, the Other Documents, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;

       

      (f)           Certificates.  Agent
shall have received a copy of the organizational documents of each Borrower, and
all amendments thereto, certified by the Secretary of State or other appropriate
official of its jurisdiction of organization, together with copies of the
By-Laws or Operating Agreement, as the case may be, of each Borrower and all
agreements of each Borrower’s shareholders or members certified as accurate and
complete by the Secretary of each Borrower;

       

      (g)           Good Standing
Certificates.  Agent shall have received good standing
certificates for each Borrower dated not more than 10 days prior to the Closing
Date, issued by the Secretary of State or other appropriate official of each
Borrower’s jurisdiction of organization and each jurisdiction where the conduct
of each Borrower’s business activities or the ownership of its properties
necessitates qualification;

      
        
           

        

        
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      (h)          Legal
Opinion.  Agent shall have received the executed legal opinions
of Drinker Biddle & Reath LLP and Mazzeo Song & Bradham LLP, as special
New York counsel to Borrowers, in form and substance satisfactory to Agent which
shall cover such matters incident to the transactions contemplated by this
Agreement and the Other Documents as Agent may reasonably require, and each
Borrower hereby authorizes and directs such counsel to deliver such opinions to
Agent and Lenders;

       

      (i)           No
Litigation.  (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with this Agreement, the Other Documents, the
Subordinated Debt Documents or any of the transactions contemplated hereby or
thereby and which, in the reasonable opinion of Agent, is material or (B) which
could, in the reasonable opinion of Agent, have a Material Adverse Effect; and
(ii) no injunction, writ, restraining order or other order of any nature
materially adverse to any Borrower or the conduct of its business or
inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;

       

      (j)           Financial Condition
Certificates; Capital Structure.  Agent shall have received an
executed Financial Condition Certificate in the form of Exhibit 8.1(j) and shall
be satisfied with Borrowers’ capital structure and financial condition. Without
limiting the generality of the foregoing, Agent shall have received all of the
financial statements referred to in Section 5.5(a), (b), and (c), all of which
shall be satisfactory in all respects to Agent and Lenders;

       

      (k)           Collateral
Examination.  Agent shall have completed Collateral
examinations and field audits, the results of which shall be satisfactory in
form and substance to Agent and Lenders, of the Borrowers’ assets, including
without limitation their Receivables, and all books and records in connection
therewith;

       

      (l)           
Fees.  Agent
shall have received all fees payable to Agent and Lenders on or prior to the
Closing Date hereunder, including pursuant to Article III;

       

      (m)          Projections.  Agent
shall have received copies of the Projections, which shall be satisfactory in
all respects to Agent and Lenders and shall demonstrate the Borrowers’ ability
to service their Obligations;

       

      (n)           Subordinated Debt
Documents.  Agent shall have received (i) evidence satisfactory
to it that (1) the maturity of the Rockport $500,000 Note has been extended to a
date no earlier than April 30, 2014, (2) the ZOF Credit Agreement has been duly
executed and delivered by ZOF and Zanett in form and substance satisfactory to
Agent and is in full force and effect, and (3) the fund balance in the
ZOF/Jefferies Account is at least $2,000,000 and Agent has been provided with
online access to the ZOF/Jefferies Account for the purpose of confirming the
fund’s account balance and positions, and (ii) fully executed copies of all
Subordinated Debt Documents and all related agreements, documents and
instruments as in effect on the Closing Date, all of which shall be satisfactory
in form and substance to Agent;

      
        
           

        

        
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      (o)           Insurance.  Agent
shall have received in form and substance satisfactory to Agent, certificates of
insurance evidencing Borrowers’ casualty insurance policies, together with loss
payable endorsements on Agent’s standard form of loss payee endorsement naming
Agent as loss payee, and certificates of insurance evidencing Borrowers’
liability insurance policies, together with endorsements naming Agent as a
co-insured;

       

      (p)           Payment
Instructions.  Agent shall have received written instructions
from Borrowing Agent directing the application of proceeds of the initial
Advances made pursuant to this Agreement;

       

      (q)           Pay-Off.  A
pay-off letter from Bank of America, N.A., setting forth the total amount of
principal, interest and fees owed by the Borrowers or any of them to Bank of
America, N.A. on the Closing Date, together with (1) a letter of authorization
duly executed by Bank of America, N.A. authorizing Agent to file such Uniform
Commercial Code amendments, releases and terminations as Agent may require to
terminate all initial financing statements heretofore filed by Bank of America,
N.A. or any of its predecessors in interest against any Borrower, and to
terminate any security interests registered by Bank of America, N.A. or any of
its predecessors in interest against intellectual property of any Borrower in
the U.S. Copyright Office or the U.S. Patent and Trademark Office, (2) all
original certificates representing Equity Interests in any Borrower heretofore
delivered to Bank of America, N.A. or any of its predecessors in interest, (3)
terminations satisfactory in form and substance to Agent, terminating all
control agreements in favor of Bank of America, N.A. or any of its predecessors
in interest with respect to Borrowers’ deposit, securities or commodities
accounts;

       

      (r)           Blocked
Accounts.  Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts for the collection or
servicing of the Receivables and proceeds of the Collateral, all of which shall
be established with Agent or with financial institutions acceptable to
Agent;

       

      (s)           Consents.  Agent
shall have received any and all Consents necessary to permit the effectuation of
the transactions contemplated by this Agreement and the Other Documents; and,
Agent shall have received such Consents and waivers of such third parties as
might assert claims with respect to the Collateral, as Agent and its counsel
shall deem necessary;

       

      (t)           No Material Adverse
Change.  (i) Since December 31, 2009 there shall not have
occurred any event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect and (ii) no representations made or
information supplied to Agent or Lenders shall have been proven to be inaccurate
or misleading in any material respect;

       

      (u)           Contract
Review.  Agent shall have reviewed all material contracts of
Borrowers including leases, union contracts, labor contracts, employee
contracts, contracts with subcontractors, vendor supply contracts, license
agreements and distributorship agreements and such contracts and agreements
shall be satisfactory in all respects to Agent;

       

      (v)           Closing
Certificate.  Agent shall have received a closing certificate
signed by the Chief Financial Officer of each Borrower dated as of the date
hereof, stating that (i) all representations and warranties set forth in this
Agreement and the Other Documents are true and correct on and as of such date,
(ii) Borrowers are on such date in compliance with all the terms and provisions
set forth in this Agreement and the Other Documents and (iii) on such date no
Default or Event of Default has occurred or is continuing;

      
        
           

        

        
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      (w)           Borrowing
Base.  Agent shall have received a Borrowing Base Certificate
duly executed and completed by Borrowing Agent, showing that the aggregate
amount of Eligible Receivables and Eligible Prebillings is sufficient to support
Advances in the amount requested by Borrowers on the Closing Date and that after
giving effect to such Advances Borrowers shall have Undrawn Availability in the
amount specified below;

       

      (x)           Undrawn
Availability.  After giving effect to the initial Advances, the
Undrawn Availability as at the Closing Date shall be at least $650,000 plus
accrued payroll as of such date;

       

      (y)           Tax Liens. Agent
shall have received evidence satisfactory to it that (1) all amounts owed by the
Borrowers to the Internal Revenue Service have been paid in full and all related
tax liens have been released and (2) all amounts owed by the Borrowers to the
New York City Department of Finance have been paid in full and the Department of
Finance is required to release all related tax liens;

       

      (z)           Compliance with
Laws.  Agent shall be reasonably satisfied that each Borrower
is in compliance with all pertinent federal, state, local or territorial
regulations, including those with respect to the Federal Occupational Safety and
Health Act, the Environmental Protection Act, ERISA and the Trading with the
Enemy Act, and that each Borrower is properly licensed in each jurisdiction in
which it does business; and

       

      (aa)         Other.  All
corporate and other proceedings, and all documents, instruments and other legal
matters in connection with the Transactions shall be satisfactory in form and
substance to Agent and its counsel.

       

      8.2.                 Conditions to Each
Advance.  The agreement of Lenders to make any Advance
requested to be made on any date (including the initial Advance), is subject to
the satisfaction of the following conditions precedent as of the date such
Advance is made:

       

      (a)           Representations and
Warranties.  Each of the representations and warranties made by
any Borrower in or pursuant to this Agreement, the Other Documents and any
related agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement, the
Other Documents or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such
date;

       

      (b)           No
Default.  No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; provided, however that Agent, in
its sole discretion, may continue to make Advances notwithstanding the existence
of an Event of Default or Default and that any Advances so made shall not be
deemed a waiver of any such Event of Default or Default; and

      
        
           

        

        
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      (c)           Maximum
Advances.  In the case of any type of Advance requested to be
made, after giving effect thereto, the aggregate amount of such type of Advance
shall not exceed the maximum amount of such type of Advance permitted under this
Agreement.

       

      Each
request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been
satisfied.

       

      IX           INFORMATION
AS TO BORROWERS.

       

      Each
Borrower shall, or shall cause Borrowing Agent on its behalf to, until
satisfaction in full of the Obligations, the expiration of all Letters of Credit
and the termination of this Agreement:

       

      9.1.                 Disclosure of Material
Matters.  Immediately upon learning thereof, report to Agent
all matters materially affecting the value, enforceability or collectibility of
any portion of the Collateral, including any Borrower’s reclamation or
repossession of, or the return to any Borrower of, a material amount of goods or
claims or disputes asserted by any Customer or other obligor.

       

      9.2.                 Borrowing Base
Certificates.  Deliver to Agent no later than Wednesday of each
week (or more often if necessitated by availability constraints) (a) a Borrowing
Base Certificate (which shall be calculated as of Friday of the prior week and
which shall not be binding upon Agent or restrictive of Agent’s rights under
this Agreement) and (b) supporting documentation satisfactory in form and detail
to Agent with regard to Borrowers’ Eligible Prebillings as of the date of the
Borrowing Base Certificate.

       

      9.3.                 Agings.  Deliver
to Agent on or before the fifteenth (15th) day of each month as of the last day
of and for the prior month (a) accounts receivable agings inclusive of
reconciliations to the general ledger and (b) accounts payable schedules
inclusive of reconciliations to the general ledger, each of which shall be in
form satisfactory to Agent and executed by each Borrower and delivered to Agent
from time to time solely for Agent’s convenience in maintaining records of the
Collateral, and any Borrower’s failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect
to the Collateral.

       

      9.4.                 Other
Documents.  Deliver to Agent at such intervals as Agent may
require:  (i) confirmatory assignment schedules, (ii) copies of
Customers’ invoices, (iii) evidence of shipment or delivery, and (iv) such
further schedules, documents and/or information regarding the Collateral as
Agent may require including trial balances and test
verifications.  Agent shall have the right to confirm and verify all
Receivables by any manner and through any medium it considers advisable and do
whatever it may deem reasonably necessary to protect its interests
hereunder.  The items to be provided under this Section are to be in
form satisfactory to Agent and executed by each Borrower and delivered to Agent
from time to time solely for Agent’s convenience in maintaining records of the
Collateral, and any Borrower’s failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect
to the Collateral.

      
        
           

        

        
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      9.5.                 Litigation.  Promptly
notify Agent in writing of any claim, litigation, suit or administrative
proceeding affecting any Borrower, whether or not the claim is covered by
insurance, and of any litigation, suit or administrative proceeding, which in
any such case affects the Collateral or which could reasonably be expected to
have a Material Adverse Effect.

       

      9.6.                 Material
Occurrences.  Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Subordinated Debt Documents; (c) any event which with the giving of
notice or lapse of time, or both, would constitute an event of default under the
Subordinated Debt Documents; (d) any event, development or circumstance whereby
any financial statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of any Borrower as of the
date of such statements; (e) any accumulated retirement plan funding deficiency
which, if such deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Borrower to a tax
imposed by Section 4971 of the Code; (f) each and every default by any Borrower
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (g) any other development in the business or affairs of any Borrower, which
could reasonably be expected to have a Material Adverse Effect; in each case
describing the nature thereof and the action Borrowers propose to take with
respect thereto.

       

      9.7.                 Government
Receivables.  Notify Agent immediately if any of its
Receivables arise out of contracts between any Borrower and the United States,
any state, or any department, agency or instrumentality of any of
them.

       

      9.8.                 Annual Financial
Statements.  Furnish to Agent within ninety (90) days after the
end of each fiscal year of Borrowers, financial statements of Borrowers on a
consolidating and consolidated basis including, but not limited to, statements
of income, retained earnings and cash flow for such fiscal year and balance
sheets as at the end of such fiscal year, all prepared in accordance with GAAP
applied on a basis consistent with prior practices, and in reasonable detail and
reported upon without qualification by an independent certified public
accounting firm selected by Borrowers and satisfactory to Agent (the “Accountants”).  The
report of the Accountants shall be accompanied by any management letters from
the Accountants to any Borrower or to the Chief Executive Officer, President or
Chief Financial Officer of any Borrower, and a statement of the Accountants
certifying that (i) they have caused this Agreement to be reviewed, (ii) in
making the examination upon which such report was based either no information
came to their attention which to their knowledge constituted an Event of Default
or a Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Default or Event of
Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth
Borrowers’ compliance with the requirements or restrictions imposed by Sections
6.5, 7.5, 7.6, 7.7 and 7.11.  In addition, the reports shall be
accompanied by a Compliance Certificate.

      
        
           

        

        
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      9.9.                 Quarterly Financial
Statements.

       

      (a)           Furnish
Agent within forty-five (45) days after the end of each fiscal quarter of the
Borrowers, unaudited balance sheets of Borrowers on a consolidated and
consolidating basis and unaudited statements of income, retained earnings and
cash flow of Borrowers on a consolidated and consolidating basis, reflecting
results of operations for such fiscal quarter and from the beginning of the
fiscal year to the end of such fiscal quarter, prepared on a basis consistent
with prior practices and complete and correct in all material respects, subject
to normal and recurring year-end adjustments that individually and in the
aggregate are not material to Borrowers’ business.  The foregoing
shall be accompanied by a Compliance Certificate and consolidating schedules on
all of the Borrowers’ Affiliates.

       

      (b)           Furnish
Agent within ninety (90) days after the end of each fiscal year of ZOF, an
audited balance sheet of ZOF and audited statements of income, retained earnings
and cash flow of ZOF, reflecting results of operations for such fiscal year,
prepared on a basis consistent with prior practices and complete and correct in
all material respects.

       

      9.10.               Monthly Financial
Statements.  Furnish Agent within twenty (20) days after the
end of each month, unaudited balance sheets of Borrowers on a consolidated and
consolidating basis and unaudited statements of income, retained earnings and
cash flow of Borrowers on a consolidated and consolidating basis reflecting
results of operations from the beginning of the fiscal year to the end of such
month and for such month, prepared on a basis consistent with prior practices
and complete and correct in all material respects, subject to normal and
recurring year end adjustments that individually and in the aggregate are not
material to Borrowers’ business, accompanied by consolidating schedules on all
of the Borrowers’ Affiliates.

       

      9.11.               Other
Reports.  Furnish Agent as soon as available, but in any event
within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Borrower shall send to its
equity holders and (ii) copies of all notices, reports, financial statements and
other materials sent pursuant to the Subordinated Debt Documents.

       

      9.12.               Additional
Information.  Furnish Agent with such additional information as
Agent shall reasonably request in order to enable Agent to determine whether the
terms, covenants, provisions and conditions of this Agreement and the Revolving
Credit Notes have been complied with by Borrowers including, without the
necessity of any request by Agent, (a) copies of all environmental audits and
reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower’s
opening of any new office or place of business or any Borrower’s closing of any
existing office or place of business, and (c) promptly upon any Borrower’s
learning thereof, notice of any labor dispute to which any Borrower may become a
party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which any Borrower is a
party or by which any Borrower is bound.

      
        
           

        

        
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      9.13.               Projected Operating
Budget.  Furnish Agent, no later than thirty (30) days prior to
the beginning of each fiscal year of the Borrowers commencing with the fiscal
year ending December 31, 2011, a month by month projected operating budget and
cash flow of Borrowers on a consolidated and consolidating basis for such fiscal
year (including an income statement for each month and a balance sheet as at the
end of the last month in each fiscal quarter), such projections to be
accompanied by a certificate signed by the Chief Executive Officer, President or
Chief Financial Officer of Borrowing Agent to the effect that such projections
have been prepared on the basis of sound financial planning practice consistent
with past budgets and financial statements and that such officer has no reason
to question the reasonableness of any material assumptions on which such
projections were prepared.

       

      9.14.               Variances From Operating
Budget.   Furnish Agent, concurrently with the delivery of
the financial statements referred to in Sections 9.8, 9.9 and 9.10, a written
report summarizing all material variances from budgets submitted by Borrowers
pursuant to Section 9.13 for the immediately preceding fiscal year and a
discussion and analysis by management with respect to such
variances.

       

      9.15.               Notice of Suits, Adverse
Events.  Furnish Agent with prompt written notice of (i) any
lapse or other termination of any Consent issued to any Borrower by any
Governmental Body or any other Person that is material to the operation of any
Borrower’s business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by any Borrower with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of any Borrower, or if copies thereof are requested by Lender, and
(iv) copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to any
Borrower.

       

      9.16.               ERISA Notices and
Requests.  Furnish Agent with immediate written notice in the
event that (i) any Borrower or any member of the Controlled Group knows or has
reason to know that a Termination Event has occurred, together with a written
statement describing such Termination Event and the action, if any, which such
Borrower or any member of the Controlled Group has taken, is taking, or proposes
to take with respect thereto and, when known, any action taken or threatened by
the Internal Revenue Service, Department of Labor or PBGC with respect thereto,
(ii) any  Borrower or any member of the Controlled Group knows or has
reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which such Borrower or any member of
the Controlled Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Borrower or any member of the Controlled
Group was not previously contributing shall occur, (v) any Borrower or any
member of the Controlled Group shall receive from the PBGC a notice of intention
to terminate a Plan or to have a trustee appointed to administer a Plan,
together with copies of each such notice, (vi) any Borrower or any member of the
Controlled Group shall receive any favorable or unfavorable determination letter
from the Internal Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Code, together with copies of each such letter; (vii) any
Borrower or any member of the Controlled Group shall receive a notice regarding
the imposition of withdrawal liability, together with copies of each such
notice; (viii) any Borrower or any member of the Controlled Group shall fail to
make a required installment or any other required payment under Section 412 of
the Code on or before the due date for such installment or payment; (ix) any
Borrower or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.

      
        
           

        

        
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      9.17.               Additional
Documents.  Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.

       

      X           EVENTS
OF DEFAULT.

       

      The
occurrence of any one or more of the following events shall constitute an “Event
of Default”:

       

      10.1.               Nonpayment.  Failure
by any Borrower to pay any principal or interest on the Obligations when due,
whether at maturity or by reason of acceleration pursuant to the terms of this
Agreement or by notice of intention to prepay, or by required prepayment or
failure to pay any other liabilities, or make any other payment, fee or charge
provided for herein when due or in any Other Document.

       

      10.2.               Breach of
Representation.  Any representation or warranty made or deemed
made by any Borrower in this Agreement, any Other Document or any related
agreement or in any certificate, document or financial or other statement
furnished at any time in connection herewith or therewith shall prove to have
been misleading in any material respect on the date when made or deemed to have
been made.

       

      10.3.               Financial
Information.  Failure by any Borrower to (i) furnish financial
information when due or when requested which is unremedied for a period of
fifteen (15) days, or (ii) permit the inspection of its books or records in
accordance with Section 4.10 hereof.

       

      10.4.               Judicial
Actions.  Issuance of a notice of Lien, levy, assessment,
injunction or attachment against any Borrower’s Inventory or Receivables or
against a material portion of any Borrower’s other property.

       

      10.5.               Noncompliance.  (i)
Failure or neglect of any Borrower to perform, keep or observe any term,
provision, condition or covenant contained in Sections 6.1, 6.3, 6.4, 9.4 or
9.6, which failure or neglect continues unremedied for a period of 10 days after
notice thereof (“Initial Notice”) from
Agent to Borrowing Agent (provided, however, that if
(A) prior to the expiration of such 10 day period, Borrowing Agent notifies
Agent in writing that (1) it believes such breach can be cured within 30 days of
the date of Initial Notice and (2) it is diligently pursuing such cure, and (B)
Agent in its sole judgment agrees with such assertions, Agent may in its sole
discretion extend the cure period (by written notification to Borrowing Agent)
to a date which is no later than 30 days after the date of the Initial Notice),
or (ii) failure or neglect of any Borrower to perform, keep or observe any other
term, provision, condition, covenant contained herein or in any Other Document
or any other agreement or arrangement now or hereafter entered into between any
Borrower and Agent or any Lender (other than a term, provision, condition or
covenant covered by Section 10.1 or 10.3).

      
        
           

        

        
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      10.6.               Judgments.  Any
judgment or judgments are rendered against one or more Borrowers for an
aggregate amount in excess of $250,000 and (i) enforcement proceedings are
commenced by a creditor upon such judgment, or (ii) there is any period of forty
(40) consecutive days during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect, or (iii) any such
judgment results in the creation of a Lien upon any of the Collateral (other
than a Permitted Encumbrance).

       

      10.7.               Bankruptcy.  Any
Borrower shall (i) apply for, consent to or suffer the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or similar
fiduciary of itself or of all or a substantial part of its property, (ii) make a
general assignment for the benefit of creditors, (iii) commence a voluntary case
under any state or federal bankruptcy laws (as now or hereafter in effect), (iv)
be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) acquiesce
to, or fail to have dismissed, within forty-five (45) days, any petition filed
against it in any involuntary case under such bankruptcy laws,  or
(vii) take any action for the purpose of effecting any of the
foregoing.

       

      10.8.               Inability to
Pay.  Any Borrower shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business.

       

      10.9.               Affiliate
Bankruptcy.  Any Affiliate or any Subsidiary of any Borrower
shall (i) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (ii) admit in writing
its inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business, (iii) make a general assignment for
the benefit of creditors, (iv) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a
bankrupt or insolvent, (vi) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesce to, or fail to
have dismissed, within forty-five (45) days, any petition filed against it in
any involuntary case under such bankruptcy laws, or (viii) take any action for
the purpose of effecting any of the foregoing.

       

      10.10.             Material Adverse
Effect.  Any change in any Borrower’s results of operations or
condition (financial or otherwise) which in Agent’s opinion has a Material
Adverse Effect.

       

      10.11.             Lien
Priority.  Any Lien created hereunder or provided for hereby or
under any related agreement for any reason ceases to be or is not a valid,
enforceable and perfected Lien having a first priority interest.

       

      10.12.             Subordinated Debt
Default.  An event of default shall occur under any of the
Subordinated Debt Documents, which default shall not be cured or waived within
any applicable grace period.

      
        
           

        

        
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      10.13.             Cross
Default.  Any Borrower shall fail to make any payment due by it
on any Indebtedness aggregating at least $250,000, or any Indebtedness of any
Borrower aggregating at least $250,000 shall be accelerated or shall be required
to be paid prior to the stated maturity thereof or prior to any regularly
scheduled dates of payment, or any Borrower shall default in the performance of
any term contained in, or any event or condition shall exist under, any
agreement or instrument pursuant to which it has outstanding any Indebtedness if
the effect of such default, event or condition is to cause, or permit its
creditors to cause, Indebtedness aggregating at least $250,000 to become due and
payable prior to its stated maturity or regularly scheduled dates of payment, or
any default of the obligations of any Borrower under any other agreement to
which it is a party shall occur which adversely affects its condition, affairs
or prospects (financial or otherwise) which default is not cured within any
applicable grace period.

       

      10.14.             Change of Ownership or
Control.  Any Change of Ownership or Change of Control shall
occur.

       

      10.15.             Invalidity.  Any
material provision of this Agreement or any Other Document shall, for any
reason, cease to be valid and binding on Borrower, or any Borrower shall so
claim in writing to Agent or any Lender;

       

      10.16.             Licenses.  (i)
Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify
any license, permit, patent trademark or tradename of any Borrower, the
continuation of which is material to the continuation of any Borrower’s
business, or (B) commence proceedings to suspend, revoke, terminate or adversely
modify any such license, permit, trademark, tradename or patent and such
proceedings shall not be dismissed or discharged within sixty (60) days, or (c)
schedule or conduct a hearing on the renewal of any license, permit, trademark,
tradename or patent necessary for the continuation of any Borrower’s business
and the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; (ii) any agreement which is
necessary or material to the operation of any Borrower’s business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement would reasonably be expected
to have a Material Adverse Effect;

       

      10.17.             Seizures.  Any
portion of the Collateral shall be seized or taken by a Governmental Body, or
any Borrower or the title and rights of any Borrower or any shareholder which is
the owner of any material portion of the Collateral shall have become the
subject matter of claim, litigation, suit or other proceeding which might, in
the opinion of Agent, upon final determination, result in impairment or loss of
the security provided by this Agreement or the Other Documents; or

       

      10.18.             Operations.  The
operations of any Borrower are interrupted at any time for more than any period
of five (5) consecutive days, unless such Borrower shall (i) be entitled to
receive for such period of interruption, proceeds of business interruption
insurance sufficient to assure that its per diem cash needs during such period
is at least equal to its average per diem cash needs for the consecutive
three-month period immediately preceding the initial date of interruption and
(ii) receive such proceeds in the amount described in clause (i) preceding not
later than thirty (30) days following the initial date of any such interruption;
provided, however, that notwithstanding the provisions of clauses (i) and (ii)
of this Section, an Event of Default shall be deemed to have occurred if such
Borrower shall be receiving the proceeds of business interruption insurance for
a period of thirty (30) consecutive days; or

      
        
           

        

        
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    10.19.             Pension
Plans.  An event or condition specified in Sections 7.16 or
9.16 shall occur or exist with respect to any Plan and, as a result of such
event or condition, together with all other such events or conditions, any
Borrower or any member of the Controlled Group shall incur, or in the opinion of
Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both)
which, in the reasonable judgment of Agent, would have a Material Adverse
Effect.

     

    XI          LENDERS’
RIGHTS AND REMEDIES AFTER DEFAULT.

     

    11.1.               Rights and
Remedies.

     

    (a)           Upon
the occurrence of (i) an Event of Default pursuant to Section 10.7 all
Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated; and (ii) any
of the other Events of Default and at any time thereafter (such default not
having previously been cured), at the option of Required Lenders all Obligations
shall be immediately due and payable and Lenders shall have the right to
terminate this Agreement and to terminate the obligation of Lenders to make
Advances.  Upon the occurrence of any Event of Default, Agent shall
have the right to exercise any and all rights and remedies provided for herein,
under the Other Documents, under the Uniform Commercial Code and at law or
equity generally, including the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process.  Agent may enter any of any
Borrower’s premises or other premises without legal process and without
incurring liability to any Borrower therefor, and Agent may thereupon, or at any
time thereafter, in its discretion without notice or demand, take the Collateral
and remove the same to such place as Agent may deem advisable and Agent may
require Borrowers to make the Collateral available to Agent at a convenient
place.  With or without having the Collateral at the time or place of
sale, Agent may sell the Collateral, or any part thereof, at public or private
sale, at any time or place, in one or more sales, at such price or prices, and
upon such terms, either for cash, credit or future delivery, as Agent may
elect.  Except as to that part of the Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrowers reasonable notification of such
sale or sales, it being agreed that in all events written notice mailed to
Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable
notification.  At any public sale Agent or any Lender may bid for and
become the purchaser, and Agent, any Lender or any other purchaser at any such
sale thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and all such
claims, rights and equities are hereby expressly waived and released by each
Borrower.  In connection with the exercise of the foregoing remedies,
including the sale of Inventory, Agent is granted a perpetual nonrevocable,
royalty free, nonexclusive license and Agent is granted permission to use all of
each Borrower’s (a) trademarks, trade styles, trade names, patents, patent
applications, copyrights, service marks, licenses, franchises and other
proprietary rights which are used or useful in connection with Inventory for the
purpose of marketing, advertising for sale and selling or otherwise disposing of
such Inventory and (b) Equipment for the purpose of completing the manufacture
of unfinished goods.  The cash proceeds realized from the sale of any
Collateral shall be applied to the Obligations in the order set forth in Section
11.5.  Noncash proceeds will only be applied to the Obligations as
they are converted into cash.  If any deficiency shall arise,
Borrowers shall remain liable to Agent and Lenders therefor.

    
      
         

      

      
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    (b)           To
the extent that Applicable Law imposes duties on the Agent to exercise remedies
in a commercially reasonable manner, each Borrower acknowledges and agrees that
it is not commercially unreasonable for the Agent (i) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for disposition
or otherwise to complete raw material or work in process into finished goods or
other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against Customers or other Persons
obligated on Collateral or to remove Liens on or any adverse claims against
Collateral, (iv) to exercise collection remedies against Customers and other
Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as any Borrower, for expressions of interest
in acquiring all or any portion of such Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the Collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral. Each Borrower acknowledges
that the purpose of this Section 11.1(b) is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially
unreasonable in the Agent’s exercise of remedies against the Collateral and that
other actions or omissions by the Agent shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section
11.1(b).  Without limitation upon the foregoing, nothing contained in
this Section 11.1(b) shall be construed to grant any rights to any Borrower or
to impose any duties on Agent that would not have been granted or imposed by
this Agreement or by Applicable Law in the absence of this Section
11.1(b).

     

    11.2.              Agent’s
Discretion.  Agent shall have the right in its sole discretion
to determine which rights, Liens, security interests or remedies Agent may at
any time pursue, relinquish, subordinate, or modify or to take any other action
with respect thereto and such determination will not in any way modify or affect
any of Agent’s or Lenders’ rights hereunder.

     

    11.3.             
Setoff.  Subject
to Section 14.12, in addition to any other rights which Agent or any Lender may
have under Applicable Law, upon the occurrence of an Event of Default hereunder,
Agent and such Lender shall have a right, immediately and without notice of any
kind, to apply any Borrower’s property held by Agent and such Lender to reduce
the Obligations.

    
      
         

      

      
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    11.4.               Rights and Remedies not
Exclusive.  The enumeration of the foregoing rights and
remedies is not intended to be exhaustive and the exercise of any rights or
remedy shall not preclude the exercise of any other right or remedies provided
for herein or otherwise provided by law, all of which shall be cumulative and
not alternative.

     

    11.5.               Allocation of Payments After
Event of Default.  Notwithstanding any other provisions of this
Agreement to the contrary, after the occurrence and during the continuance of an
Event of Default, all amounts collected or received by the Agent on account of
the Obligations or any other amounts outstanding under any of the Other
Documents or in respect of the Collateral may, at Agent’s discretion, be paid
over or delivered as follows:

     

    FIRST, to
the payment of all reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees) of the Agent in connection with enforcing its rights
and the rights of the Lenders under this Agreement and the Other Documents and
any protective advances made by the Agent with respect to the Collateral under
or pursuant to the terms of this Agreement;

     

    SECOND,
to payment of any fees owed to the Agent;

     

    THIRD, to
the payment of all reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees) of each of the Lenders to the extent owing to such
Lender pursuant to the terms of this Agreement;

     

    FOURTH,
to the payment of all of the Obligations consisting of accrued fees and
interest;

     

    FIFTH, to
the payment of the outstanding principal amount of the Obligations (including
the payment or cash collateralization of any outstanding Letters of
Credit);

     

    SIXTH, to
all other Obligations and other obligations which shall have become due and
payable under the Other Documents or otherwise and not repaid pursuant to
clauses “FIRST” through “FIFTH” above; and

     

    SEVENTH,
to the payment of the surplus, if any, to whoever may be lawfully entitled to
receive such surplus.

     

    In
carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any
amounts available for distribution pursuant to clause “FIFTH” above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses “FIFTH” and
“SIXTH” above in the manner provided in this Section 11.5.

    
      
         

      

      
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    XII          WAIVERS
AND JUDICIAL PROCEEDINGS.

     

    12.1.               Waiver of
Notice.  Each Borrower hereby waives notice of non-payment of
any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.

     

    12.2.               Delay.  No
delay or omission on Agent’s or any Lender’s part in exercising any right,
remedy or option shall operate as a waiver of such or any other right, remedy or
option or of any Default or Event of Default.

     

    12.3.               Jury
Waiver.  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.

     

    XIII        EFFECTIVE
DATE AND TERMINATION.

     

    13.1.               Term.  This
Agreement, which shall inure to the benefit of and shall be binding upon the
respective successors and permitted assigns of each Borrower, Agent and each
Lender, shall become effective on the date hereof and shall continue in full
force and effect until January 27, 2014 (the “Term”) unless sooner
terminated as herein provided.  Borrowers may terminate this Agreement
at any time upon ninety (90) days’ prior written notice upon payment in full of
the Obligations.  In the event that the Obligations are prepaid in
full prior to the last day of the Term (the date of such prepayment hereinafter
referred to as the “Early Termination Date”), Borrowers shall pay to Agent for
the benefit of Lenders an early termination fee (the “Early Termination
Fee”) in an amount equal to (x) $150,000 if the Early Termination Date
occurs on or before the first anniversary of the Closing Date, (y) $75,000 if
the Early Termination Date occurs after the first anniversary of the Closing
Date but before the second anniversary of the Closing Date, and (z) $25,000 if
the Early Termination Date occurs after the second anniversary of the Closing
Date but before the last day of the Term.

    
      
         

      

      
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    13.2.               Termination.  The
termination of the Agreement shall not affect any Borrower’s, Agent’s or any
Lender’s rights, or any of the Obligations, and the provisions hereof shall
continue to be fully operative until all transactions entered into, rights or
interests created or Obligations have been fully and indefeasibly paid, disposed
of, concluded or liquidated.  The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrowers’ Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of each Borrower have been indefeasibly paid and performed in full
after the termination of this Agreement or each Borrower has furnished Agent and
Lenders with an indemnification satisfactory to Agent and Lenders with respect
thereto.  Accordingly, each Borrower waives any rights which it may
have under the Uniform Commercial Code to demand the filing of termination
statements with respect to the Collateral, and Agent shall not be required to
send such termination statements to each Borrower, or to file them with any
filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations have been indefeasibly paid in
full in immediately available funds.  All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination
hereof until all Obligations are indefeasibly paid and performed in
full.

     

    XIV        REGARDING
AGENT.

     

    14.1.               Appointment.  Each
Lender hereby designates PNC to act as Agent for such Lender under this
Agreement and the Other Documents.  Each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and the Other Documents and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and, unless specifically stated otherwise, Agent
shall hold all Collateral, payments of principal and interest, fees, charges and
collections (without giving effect to any collection days) received pursuant to
this Agreement, for the ratable benefit of Lenders.  Agent may perform
any of its duties hereunder by or through its agents or employees.  As
to any matters not expressly provided for by this Agreement (including
collection of the Revolving Credit Notes) Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or Applicable Law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.

    
      
         

      

      
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    14.2.               Nature of
Duties.  Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Other
Documents.  Neither Agent nor any of its officers, directors,
employees or agents shall be (i) liable for any action taken or omitted by them
as such hereunder or in connection herewith, unless caused by their gross (not
mere) negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment), or (ii) responsible in any
manner for any recitals, statements, representations or warranties made by any
Borrower or any officer thereof contained in this Agreement, or in any of the
Other Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection
with, this Agreement or any of the Other Documents or for the value, validity,
effectiveness, genuineness, due execution, enforceability or sufficiency of this
Agreement, or any of the Other Documents or for any failure of any Borrower to
perform its obligations hereunder.  Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any of the Other Documents, or to inspect the properties, books or
records of any Borrower.  The duties of Agent as respects the Advances
to Borrowers shall be mechanical and administrative in nature; Agent shall not
have by reason of this Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.

     

    14.3.               Lack of Reliance on Agent
and Resignation.  Independently and without reliance upon Agent
or any other Lender, each Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of each
Borrower in connection with the making and the continuance of the Advances
hereunder and the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of each
Borrower.  Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall
be provided by any Borrower pursuant to the terms hereof.  Agent shall
not be responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Borrower,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Revolving Credit Notes, the Other Documents or the financial condition of any
Borrower, or the existence of any Event of Default or any Default.

     

    Agent may
resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent
and upon such resignation, the Required Lenders will promptly designate a
successor Agent reasonably satisfactory to Borrowers.

     

    Any such
successor Agent shall succeed to the rights, powers and duties of Agent, and the
term “Agent” shall mean such successor agent effective upon its appointment, and
the former Agent’s rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former
Agent.  After any Agent’s resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.

     

    14.4.               Certain Rights of
Agent.  If Agent shall request instructions from Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any Other Document, Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from the Required Lenders; and Agent shall not incur liability to
any Person by reason of so refraining.  Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.

    
      
         

      

      
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    14.5.               Reliance.  Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or entity, and, with respect to all legal matters
pertaining to this Agreement and the Other Documents and its duties hereunder,
upon advice of counsel selected by it.  Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct of any
such agents or attorneys-in-fact selected by Agent with reasonable
care.

     

    14.6.               Notice of
Default.  Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder or under the
Other Documents, unless Agent has received notice from a Lender or Borrowing
Agent referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a “notice of
default”.  In the event that Agent receives such a notice, Agent shall
give notice thereof to Lenders.  Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of
Lenders.

     

    14.7.               Indemnification.  To
the extent Agent is not reimbursed and indemnified by Borrowers, each Lender
will reimburse and indemnify Agent in proportion to its respective portion of
the Advances (or, if no Advances are outstanding, according to its Commitment
Percentage), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any Other Document; provided
that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment).

     

    14.8.               Agent in its Individual
Capacity.  With respect to the obligation of Agent to lend
under this Agreement, the Advances made by it shall have the same rights and
powers hereunder as any other Lender and as if it were not performing the duties
as Agent specified herein; and the term “Lender” or any similar term shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity as a Lender.  Agent may engage in business with any Borrower
as if it were not performing the duties specified herein, and may accept fees
and other consideration from any Borrower for services in connection with this
Agreement or otherwise without having to account for the same to
Lenders.

     

    14.9.               Delivery of
Documents.  To the extent Agent receives financial statements
required under Sections 9.8 through 9.13 or Borrowing Base Certificates from any
Borrower pursuant to the terms of this Agreement which any Borrower is not
obligated to deliver to each Lender, Agent will promptly furnish such documents
and information to Lenders.

    
      
         

      

      
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    14.10.             Borrowers’ Undertaking to
Agent.  Without prejudice to their respective obligations to
Lenders under the other provisions of this Agreement, each Borrower hereby
undertakes with Agent to pay to Agent from time to time on demand all amounts
from time to time due and payable by it for the account of Agent or Lenders or
any of them pursuant to this Agreement to the extent not already
paid.  Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Borrower’s obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this
Agreement.

     

    14.11.             No Reliance on Agent’s
Customer Identification Program.  Each Lender acknowledges and
agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s,
participant’s or assignee’s customer identification program, or other
obligations required or imposed under or pursuant to the USA PATRIOT Act or the
regulations thereunder, including the regulations contained in 31 CFR 103.121
(as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items
relating to or in connection with any Borrower, its Affiliates or its agents,
this Agreement, the Other Documents or the transactions hereunder or
contemplated hereby: (1) any identity verification procedures, (2) any
record-keeping, (3) comparisons with government lists, (4) customer notices or
(5) other procedures required under the CIP Regulations or such other
laws.

     

    14.12.             Other
Agreements.  Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to any Borrower or any deposit
accounts of any Borrower now or hereafter maintained with such
Lender.  Anything in this Agreement to the contrary notwithstanding,
each of the Lenders further agrees that it shall not, unless specifically
requested to do so by Agent, take any action to protect or enforce its rights
arising out of this Agreement or the Other Documents, it being the intent of
Lenders that any such action to protect or enforce rights under this Agreement
and the Other Documents shall be taken in concert and at the direction or with
the consent of Agent or Required Lenders.

     

    XV       
BORROWING AGENCY.

     

    15.1.               Borrowing Agency
Provisions.

     

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

    
      
         

      

      
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    (b)          The
handling of this credit facility as a co-borrowing facility with a borrowing
agent in the manner set forth in this Agreement is solely as an accommodation to
Borrowers and at their request.  Neither Agent nor any Lender shall
incur liability to Borrowers as a result thereof.  To induce Agent and
Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Agent or any Lender on any request or instruction
from Borrowing Agent or any other action taken by Agent or any Lender with
respect to this Section 15.1 except due to willful misconduct or gross (not
mere) negligence by the indemnified party (as determined by a court of competent
jurisdiction in a final and non-appealable judgment).

     

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

     

    15.2.               Waiver of
Subrogation.  Each Borrower expressly waives any and all rights
of subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Borrower may now or hereafter have against the other Borrowers
or other Person directly or contingently liable for the Obligations hereunder,
or against or with respect to the other Borrowers’ property (including, without
limitation, any property which is Collateral for the Obligations), arising from
the existence or performance of this Agreement, until termination of this
Agreement and repayment in full of the Obligations.

     

    XVI   
    MISCELLANEOUS.

     

    16.1.               Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against any Borrower with respect to any of the Obligations, this
Agreement, the Other Documents or any related agreement may be brought in any
court of competent jurisdiction in the State of New York, United States of
America, and, by execution and delivery of this Agreement, each Borrower accepts
for itself and in connection with its properties, generally and unconditionally,
the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees
to be bound by any judgment rendered thereby in connection with this
Agreement.  Each Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
registered mail (return receipt requested) directed to Borrowing Agent at its
address set forth in Section 16.6 and service so made shall be deemed completed
five (5) days after the same shall have been so deposited in the mails of the
United States of America, or, at the Agent’s option, by service upon Borrowing
Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the
purpose of accepting service.  Nothing herein shall affect the right
to serve process in any manner permitted by law or shall limit the right of
Agent or any Lender to bring proceedings against any Borrower in the courts of
any other jurisdiction.  Each Borrower waives any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non
conveniens.  Each Borrower waives the right to remove any judicial
proceeding brought against such Borrower in any state court to any federal
court.  Any judicial proceeding by any Borrower against Agent or any
Lender involving, directly or indirectly, any matter or claim in any way arising
out of, related to or connected with this Agreement or any related agreement,
shall be brought only in a federal or state court located in the City of New
York, State of New York.

    
      
         

      

      
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    16.2.               Entire
Understanding.

     

    (a)           This
Agreement and the documents executed concurrently herewith contain the entire
understanding between each Borrower, Agent and each Lender and supersedes all
prior agreements and understandings, if any, relating to the subject matter
hereof.  Any promises, representations, warranties or guarantees not
herein contained and hereinafter made shall have no force and effect unless in
writing, signed by each Borrower’s, Agent’s and each Lender’s respective
officers.  Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged.  Each
Borrower acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.

     

    (b)          The
Required Lenders, Agent with the consent in writing of the Required Lenders, and
Borrowers may, subject to the provisions of this Section 16.2 (b), from time to
time enter into written supplemental agreements to this Agreement or the Other
Documents executed by Borrowers, for the purpose of adding or deleting any
provisions or otherwise changing, varying or waiving in any manner the rights of
Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms
thereof or waiving any Event of Default thereunder, but only to the extent
specified in such written agreements; provided, however, that no such
supplemental agreement shall, without the consent of all Lenders:

     

    (i)           increase
the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Revolving Advance Amount,

     

    (ii)          extend
the maturity of any Revolving Credit Note or the due date for any amount payable
hereunder, or decrease the rate of interest or reduce any fee payable by
Borrowers to Lenders pursuant to this Agreement,

     

    (iii)         alter
the definition of the term Required Lenders or alter, amend or modify this
Section 16.2(b),

     

    (iv)          releasing
all or substantially all of the Collateral,

     

    (v)          change
the rights and duties of Agent,

    
      
         

      

      
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    (vi)          permit
any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula Amount for
more than sixty (30) consecutive Business Days or exceed one hundred and five
percent (105%) of the Formula Amount, or

     

    (vii)          increase
the Advance Rates above the Advance Rates in effect on the Closing
Date.

     

    Any such
supplemental agreement shall apply equally to each Lender and shall be binding
upon Borrowers, Lenders and Agent and all future holders of the
Obligations.  In the case of any waiver, Borrowers, Agent and Lenders
shall be restored to their former positions and rights, and any Event of Default
waived shall be deemed to be cured and not continuing, but no waiver of a
specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.

     

    In the
event that Agent requests the consent of a Lender pursuant to this Section 16.2
and such Lender shall not respond or reply to Agent in writing within five (5)
days of delivery of such request, such Lender shall be deemed to have consented
to the matter that was the subject of the request.  In the event that
Agent requests the consent of a Lender pursuant to this Section 16.2 and such
consent is denied, then PNC may, at its option, require such Lender to assign
its interest in the Advances to PNC or to another Lender or to any other Person
designated by the Agent (the “Designated Lender”), for a price equal to (i) the
then outstanding principal amount thereof plus (ii) accrued and unpaid interest
and fees due such Lender, which interest and fees shall be paid when collected
from Borrowers.  In the event PNC elects to require any Lender to
assign its interest to PNC or to the Designated Lender, PNC will so notify such
Lender in writing within forty five (45) days following such Lender’s denial,
and such Lender will assign its interest to PNC or the Designated Lender no
later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated
Lender, as appropriate, and Agent.

     

    16.3.   
           Successors and Assigns;
Participations; New Lenders.

     

    (a)           This
Agreement shall be binding upon and inure to the benefit of Borrowers, Agent,
each Lender, all future holders of the Obligations and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of Agent and each Lender.

     

    (b)          Each
Borrower acknowledges that in the regular course of commercial banking business
one or more Lenders may at any time and from time to time sell participating
interests in the Advances to other financial institutions (each such transferee
or purchaser of a participating interest, a “Participant”).  Each
Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations
payable hereunder as fully as if such Participant were the direct holder thereof
provided that Borrowers shall not be required to pay to any Participant more
than the amount which it would have been required to pay to Lender which granted
an interest in its Advances or other Obligations payable hereunder to such
Participant had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder and in no event shall Borrowers be required
to pay any such amount arising from the same circumstances and with respect to
the same Advances or other Obligations payable hereunder to both such Lender and
such Participant.  Each Borrower hereby grants to any Participant a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Participant as security for the Participant’s
interest in the Advances.

    
      
         

      

      
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    (c)           Any
Lender, with the consent of Agent which shall not be unreasonably withheld or
delayed, may sell, assign or transfer all or any part of its rights and
obligations under or relating to Revolving Advances under this Agreement and the
Other Documents to one or more additional banks or financial institutions and
one or more additional banks or financial institutions may commit to make
Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less
than $1,000,000, pursuant to a Commitment Transfer Supplement, executed by a
Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for
recording.  Upon such execution, delivery, acceptance and recording,
from and after the transfer effective date determined pursuant to such
Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender thereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose.  Such Commitment
Transfer Supplement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such Purchasing Lender
and the resulting adjustment of the Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents.  Each Borrower hereby consents to the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents.  Borrowers shall execute and deliver such further
documents and do such further acts and things in order to effectuate the
foregoing.

     

    (d)           Any
Lender, with the consent of Agent which shall not be unreasonably withheld or
delayed, may directly or indirectly sell, assign or transfer all or any portion
of its rights and obligations under or relating to Revolving Advances under this
Agreement and the Other Documents to an entity, whether a corporation,
partnership, trust, limited liability company or other entity that (i) is
engaged in making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and (ii) is
administered, serviced or managed by the assigning Lender or an Affiliate of
such Lender (a “Purchasing CLO” and together with each Participant and
Purchasing Lender, each a “Transferee” and collectively the “Transferees”),
pursuant to a Commitment Transfer Supplement modified as appropriate to reflect
the interest being assigned (“Modified Commitment Transfer Supplement”),
executed by any intermediate purchaser, the Purchasing CLO, the transferor
Lender, and Agent as appropriate and delivered to Agent for
recording.  Upon such execution and delivery, from and after the
transfer effective date determined pursuant to such Modified Commitment Transfer
Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the
extent provided in such Modified Commitment Transfer Supplement, have the rights
and obligations of a Lender thereunder and (ii) the transferor Lender thereunder
shall, to the extent provided in such Modified Commitment Transfer Supplement,
be released from its obligations under this Agreement, the Modified Commitment
Transfer Supplement creating a novation for that purpose.  Such
Modified Commitment Transfer Supplement shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the addition of such
Purchasing CLO.  Each Borrower hereby consents to the addition of such
Purchasing CLO.  Borrowers shall execute and deliver such further
documents and do such further acts and things in order to effectuate the
foregoing.

    
      
         

      

      
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    (e)           Agent
shall maintain at its address a copy of each Commitment Transfer Supplement and
Modified Commitment Transfer Supplement delivered to it and a register (the
“Register”) for the recordation of the names and addresses of each Lender and
the outstanding principal, accrued and unpaid interest and other fees due
hereunder.  The entries in the Register shall be conclusive, in the
absence of manifest error, and each Borrower, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement.  The Register
shall be available for inspection by any Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior
notice.  Agent shall receive a fee in the amount of $3,500 payable by
the applicable Purchasing Lender and/or Purchasing CLO upon the effective date
of each transfer or assignment (other than to an intermediate purchaser) to such
Purchasing Lender and/or Purchasing CLO.

     

    (f)           Each
Borrower authorizes each Lender to disclose to any Transferee and any
prospective Transferee any and all financial information in such Lender’s
possession concerning such Borrower which has been delivered to such Lender by
or on behalf of such Borrower pursuant to this Agreement or in connection with
such Lender’s credit evaluation of such Borrower.

     

    16.4.               Application of
Payments.  Agent shall have the continuing and exclusive right
to apply or reverse and re-apply any payment and any and all proceeds of
Collateral to any portion of the Obligations.  To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Borrower’s benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.

    
      
         

      

      
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    16.5.               Indemnity.  Each
Borrower shall indemnify Agent, each Lender and each of their respective
officers, directors, Affiliates, attorneys, employees and agents from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including reasonable fees and disbursements of counsel) which
may be imposed on, incurred by, or asserted against Agent or any Lender in any
claim, litigation, proceeding or investigation instituted or conducted by any
Governmental Body or instrumentality or any other Person with respect to any
aspect of, or any transaction contemplated by, or referred to in, or any matter
related to, this Agreement or the Other Documents, whether or not Agent or any
Lender is a party thereto, except to the extent that any of the foregoing arises
out of the willful misconduct of the party being indemnified (as determined by a
court of competent jurisdiction in a final and non-appealable
judgment).  Without limiting the generality of the foregoing, this
indemnity shall extend to any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including fees and disbursements of counsel) asserted
against or incurred by any of the indemnitees described above in this Section
16.5 by any Person under any Environmental Laws or similar laws by reason of any
Borrower’s or any other Person’s failure to comply with laws applicable to solid
or hazardous waste materials, including Hazardous Substances and Hazardous
Waste, or other Toxic Substances.  Additionally, if any taxes
(excluding taxes imposed upon or measured solely by the net income of Agent and
Lenders, but including any intangibles taxes, stamp tax, recording tax or
franchise tax) shall be payable by Agent, Lenders or Borrowers on account of the
execution or delivery of this Agreement, or the execution, delivery, issuance or
recording of any of the Other Documents, or the creation or repayment of any of
the Obligations hereunder, by reason of any Applicable Law now or hereafter in
effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for
payment of) all such taxes, including interest and penalties thereon, and will
indemnify and hold the indemnitees described above in this Section 16.5 harmless
from and against all liability in connection therewith.

     

    16.6.               Notice.  Any
notice or request hereunder may be given to Borrowing Agent or any Borrower or
to Agent or any Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section.  Any notice, request, demand,
direction or other communication (for purposes of this Section 16.6 only, a
“Notice”) to be given to or made upon any party hereto under any provision of
this Loan Agreement shall be given or made by telephone or in writing (which
includes by means of electronic transmission (i.e., “e-mail”) or facsimile
transmission or by setting forth such Notice on a site on the World Wide Web (a
“Website Posting”) if Notice of such Website Posting (including the information
necessary to access such site) has previously been delivered to the applicable
parties hereto by another means set forth in this Section 16.6) in accordance
with this Section 16.6.  Any such Notice must be delivered to the
applicable parties hereto at the addresses and numbers set forth under their
respective names on Section 16.6 or in accordance with any subsequent unrevoked
Notice from any such party that is given in accordance with this Section
16.6.  Any Notice shall be effective:

     

    (a)          In
the case of hand-delivery, when delivered;

     

    (b)          If
given by mail, four days after such Notice is deposited with the United States
Postal Service, with first-class postage prepaid, return receipt
requested;

     

    (c)          In
the case of a telephonic Notice, when a party is contacted by telephone, if
delivery of such telephonic Notice is confirmed no later than the next Business
Day by hand delivery, a facsimile or electronic transmission, a Website Posting
or an overnight courier delivery of a confirmatory Notice (received at or before
noon on such next Business Day);

     

    (d)          In
the case of a facsimile transmission, when sent to the applicable party’s
facsimile machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile
machine;

    
      
         

      

      
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    (e)         
 In the case of electronic transmission, when actually
received;

     

    (f)        
  In the case of a Website Posting, upon delivery of a Notice of such
posting (including the information necessary to access such site) by another
means set forth in this Section 16.6; and

     

    (g)          If
given by any other means (including by overnight courier), when actually
received.

     

    Any
Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently
send a copy thereof to the Agent, and the Agent shall promptly notify the other
Lenders of its receipt of such Notice.

     

    (A)     
   If to Agent or PNC at:

     

    PNC
Business Credit

    340
Madison Avenue, 11th floor

    New York,
NY 10173

    Attention:      John
Trott

    Telephone:    (212)
752-6079

    Facsimile:    
(212) 303-0060

    

    with a copy to:

     

    PNC Bank,
National Association

    PNC
Agency Services

    PNC
Firstside Center

    500 First
Avenue, 4th Floor

    Pittsburgh,
Pennsylvania 15219

    Attention:     Lisa
Pierce

    Telephone:   (412)
762-6442

    Facsimile:    (412)
762-8672

    

    with an additional copy
to:

     

    Windels
Marx Lane & Mittendorf, LLP

    156 West
56th
Street

    New York,
New York 10019

    Attention:
Michael J. Clain

    Telephone:
(212) 237-1035

    Facsimile:  (212)
262-1215

    

    (B)          If
to a Lender other than Agent, as specified on the signature pages
hereof

    
      
         

      

      
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    (C)          If
to Borrowing Agent or any Borrower:

     

    Zanett,
Inc.

    635
Madison Avenue, 15th
Floor

    New York,
New York 10022

    Attention:        Dennis
Harkins

    Telephone:      (212)
583-0300

    Facsimile:       (212)
583-0221

    

    with a
copy to:

    

    
      	
               
      

            	
              Drinker
      Biddle & Reath LLP

            

    

    
      	
               
      

            	
              One
      Logan Square, Suite 2000,

            

    

    
      	
               
      

            	
              Philadelphia,
      PA 19103-6996

            

    

    
      	
               
      

            	
              Attn:
      Stephen T. Burdumy, Esq.

            

    

    
      	
               
      

            	
              Telephone:
      (215) 988-2880

            

    

    
      	
               
      

            	
              Facsimile:  (215)
      988-2757

            

    

    

    16.7.               Survival.  The
obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(b), 16.5 and
16.9, and the obligations of Lenders under Section 14.7, shall survive
termination of this Agreement and the Other Documents and payment in full of the
Obligations.

     

    16.8.               Severability.  If
any part of this Agreement is contrary to, prohibited by, or deemed invalid
under Applicable Laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.

     

    16.9.               Expenses.  All
costs and expenses, including without limitation reasonable attorneys’ fees
(including the allocated costs of in-house counsel) and disbursements incurred
(a) by Agent in connection with the entering into, modification, amendment or
administration of this Agreement or any Other Document, any consents or waivers
hereunder or thereunder, or any related agreements, documents and instruments,
or (b) by Agent on its behalf or on behalf of any Lender (i) in all efforts made
to enforce payment of any Obligation or effect collection of any Collateral, or
(ii) in instituting, maintaining, preserving, enforcing and foreclosing on
Agent’s security interest in or Lien on any of the Collateral, or maintaining,
preserving or enforcing any of Agent’s or any Lender’s rights hereunder under
any Other Document and under any related agreements, documents and instruments,
whether through judicial proceedings or otherwise, or (iii) in defending or
prosecuting any actions or proceedings arising out of or relating to Agent’s or
any Lender’s transactions with any Borrower or Subordinated Creditor, may be
charged to Borrower’s Account and shall be part of the Obligations.

     

    16.10.             Injunctive
Relief.  Each Borrower recognizes that, in the event any
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, or threatens to fail to perform, observe or
discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate
remedy.

     

    16.11.             Consequential
Damages.  Neither Agent nor any Lender, nor any agent or
attorney for any of them, shall be liable to any Borrower (or any Affiliate of
any such Person) for indirect, punitive, exemplary or consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations or as a result of
any transaction contemplated under this Agreement or any Other
Document.

    
      
         

      

      
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    16.12.             Captions.  The
captions at various places in this Agreement are intended for convenience only
and do not constitute and shall not be interpreted as part of this
Agreement.

     

    16.13.             Counterparts; Facsimile
Signatures.  This Agreement may be executed in any number of
and by different parties hereto on separate counterparts, all of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement.  Any signature delivered by a
party by facsimile transmission shall be deemed to be an original signature
hereto.

     

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

     

    16.15.             Confidentiality; Sharing
Information.  Agent, each Lender and each Transferee shall hold
all non-public information obtained by Agent, such Lender or such Transferee
pursuant to the requirements of this Agreement in accordance with Agent’s, such
Lender’s and such Transferee’s customary procedures for handling confidential
information of this nature; provided, however, Agent, each Lender and each
Transferee may disclose such confidential information (a) to its examiners,
Affiliates, outside auditors, counsel and other professional advisors, (b) to
Agent, any Lender or to any prospective Transferees, and (c) as required or
requested by any Governmental Body or representative thereof or pursuant to
legal process; provided, further that (i) unless specifically prohibited by
Applicable Law or court order, Agent, each Lender and each Transferee shall use
its reasonable best efforts prior to disclosure thereof, to notify the
applicable Borrower of the applicable request for disclosure of such non-public
information (A) by a Governmental Body or representative thereof (other than any
such request in connection with an examination of the financial condition of a
Lender or a Transferee by such Governmental Body) or (B) pursuant to legal
process and (ii) in no event shall Agent, any Lender or any Transferee be
obligated to return any materials furnished by any Borrower other than those
documents and instruments in possession of Agent or any Lender in order to
perfect its Lien on the Collateral once the Obligations have been paid in full
and this Agreement has been terminated.  Each Borrower acknowledges
that from time to time financial advisory, investment banking and other services
may be offered or provided to such Borrower or one or more of its Affiliates (in
connection with this Agreement or otherwise) by PNC (whether as Agent, a Lender
or otherwise) or by one or more Subsidiaries or Affiliates of PNC and each
Borrower hereby authorizes PNC to share any information delivered to it by such
Borrower and its Subsidiaries pursuant to this Agreement, or in connection with
the decision of PNC to enter into this Agreement, to any such Subsidiary or
Affiliate of PNC, it being understood that any such Subsidiary or Affiliate of
PNC receiving such information shall be bound by the provisions of this Section
16.15 as if it were a Lender hereunder.  Such authorization shall
survive the repayment of the other Obligations and the termination of this
Agreement.

    
      
         

      

      
        91

        
          

        

      

      
         

      

    

    16.16.             Publicity.  Subject
to the provisions of Section 16.15 of this Agreement, each Borrower and each
Lender hereby authorizes Agent to make appropriate announcements of the
financial arrangement entered into among Borrowers, Agent and Lenders, including
announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall in its sole and absolute discretion deem
appropriate.

     

    16.17.             Certifications From Banks
and Participants; US PATRIOT Act.  Each Lender or assignee or
participant of a Lender that is not incorporated under the Laws of the United
States of America or a state thereof (and is not excepted from the certification
requirement contained in Section 313 of the USA PATRIOT Act and the applicable
regulations because it is both (i) an affiliate of a depository institution or
foreign bank that maintains a physical presence in the United States or foreign
country, and (ii) subject to supervision by a banking authority regulating such
affiliated depository institution or foreign bank) shall deliver to the Agent
the certification, or, if applicable, recertification, certifying that such
Lender is not a “shell” and certifying to other matters as required by Section
313 of the USA PATRIOT Act and the applicable regulations: (1) within 10 days
after the Closing Date, and (2) as such other times as are required under the
USA PATRIOT Act.

     

    [Remainder
of page intentionally left blank; signature page follows]

    
      
         

      

      
        92

        
          

        

      

      
         

      

    

    [Signature
Page to Revolving Credit and Security Agreement]

    

    Each of
the parties has signed this Agreement as of the day and year first above
written.

     

    
      
        
          
            	
                    ATTEST:

                  	 
      	
                    ZANETT,
      INC.

                  
	 
      	 
      	 
      
	
                       

                  	 
      	
                    By: 

                  	
                    /s/ Dennis Harkins

                  
	 
      	 
      	
                    Name:  Dennis
      Harkins

                  
	 
      	 
      	
                    Title:  Chief
      Financial Officer

                  
	 
      	 
      	 
      
	 
      	 
      	
                    ZANETT
      COMMERCIAL SOLUTIONS, INC.

                  
	 
      	 
      	 
      
	 
      	 
      	
                    By:

                  	
                    /s/ Dennis Harkins

                  
	 
      	 
      	
                    Name:  Dennis
      Harkins

                  
	 
      	 
      	
                    Title:  Secretary

                  
	 
      	 
      	 
      
	 
      	 
      	
                    PNC BANK, NATIONAL
      ASSOCIATION,

                  
	 
      	 
      	
                    as
      Lender and as Agent

                  
	 
      	 
      	 
      
	
                       

                  	 
      	
                    By:

                  	
                    /s/ Sara V. Traberman

                  
	 
      	 
      	
                    Name:  Sara
      V. Traberman

                  
	 
      	 
      	
                    Title:  Senior
      Vice President

                  
	 
      	 
      	 
      	 
      
	 
      	 
      	
                       

                  
	 
      	 
      	
                       

                  

          

        

      

    

    
      
        
          
            	 
      	 
      	
                    Attention: 

                  	
                       

                  
	 
      	 
      	 
      	 
      
	 
      	 
      	
                    Commitment
      Percentage:  100%

                  

          

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    [Acknowledgement
to Revolving Credit and Security Agreement]

    

    
      	
              STATE
      OF NEW YORK

            	
              )

            

    

    
      	
               
      

            	
              )
      ss.

            

    

    
      	
              COUNTY
      OF NEW YORK

            	
              )

            

    

    

    On this
28th day of
January, 2011,
before me personally came Dennis Harkins, to me
known, who, being by me duly sworn, did depose and say that s/he is the CFS of ZANETT, INC.,
the corporation described in and which executed the foregoing instrument; and
that s/he signed her/his name thereto by order of the board of directors of said
corporation.

    

    
      
        
          
            	
                    [Notary
      seal affixed here]

                  	
                    /s/ Mary Elizabeth Coyle

                  
	 
      	
                    Notary
      Public

                  

          

        

      

    

       

    
      
        

      
   

    
      	
              STATE
      OF NEW YORK

            	
              )

            

    

    
      	
               
      

            	
              )
      ss.

            

    

    
      	
              COUNTY
      OF NEW YORK

            	
              )

            

    

    

    On this
28th day of
January, 2011,
before me personally came Dennis Harkins, to me
known, who, being by me duly sworn, did depose and say that s/he is the Secretary of ZANETT
COMMERCIAL SOLUTIONS, INC., the corporation described in and which executed the
foregoing instrument; and that s/he signed her/his name thereto by order of the
board of directors of said corporation.

    

    
      
        	
                [Notary
      seal affixed here]

              	
                /s/ Mary Elizabeth Coyle

              
	 
      	
                Notary
      Public

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    LIST
OF EXHIBITS AND SCHEDULES

     

    
      
        	
                Exhibits

              	 
      	 
      
	 
      	 
      	 
      
	
                Exhibit
      1.2

              	 
      	
                Borrowing
      Base Certificate

              
	
                Exhibit
      2.1(b)

              	 
      	
                Form
      of Revolving Credit Note

              
	
                Exhibit
      5.5(a)

              	 
      	
                Financial
      Projections

              
	
                Exhibit
      8.1(j)

              	 
      	
                Financial
      Condition Certificate

              
	
                Exhibit
      16.3

              	 
      	
                Commitment
      Transfer Supplement

              
	 
      	 
      	 
      
	
                Schedules

              	 
      	 
      
	 
      	 
      	 
      
	
                Schedule
      1.2

              	 
      	
                Permitted
      Encumbrances

              
	
                Schedule
      4.5

              	 
      	
                Equipment
      and Inventory Locations

              
	
                Schedule
      4.15(h)

              	 
      	
                Deposit
      and Investment Accounts

              
	
                Schedule
      4.19

              	 
      	
                Real
      Property

              
	
                Schedule
      5.1

              	 
      	
                Consents

              
	
                Schedule
      5.2(a)

              	 
      	
                States
      of Qualification and Good Standing

              
	
                Schedule
      5.2(b)

              	 
      	
                Subsidiaries

              
	
                Schedule
      5.4

              	 
      	
                Federal
      Tax Identification Number

              
	
                Schedule
      5.6

              	 
      	
                Prior
      Names

              
	
                Schedule
      5.8(b)

              	 
      	
                Litigation

              
	
                Schedule
      5.8(d)

              	 
      	
                Plans

              
	
                Schedule
      5.9

              	 
      	
                Intellectual
      Property, Source Code Escrow Agreements

              
	
                Schedule
      5.10

              	 
      	
                Licenses
      and Permits

              
	
                Schedule
      5.11

              	 
      	
                Default
      on Indebtedness

              
	
                Schedule
      5.14

              	 
      	
                Labor
      Disputes

              
	
                Schedule
      7.3

              	 
      	
                Guarantees

              
	
                Schedule
      7.8

              	
                  

              	
                Indebtedness

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