Document:

EXECUTION
      COPY

    

      LOAN
        AND SECURITY AGREEMENT

      

      among

      

      AIRGATE
        INTERNATIONAL CORPORATION

      

      as
        Borrower,

      

      

      the
        GUARANTORS
        from time to time party hereto

      

      and
        

      

      BHC
        INTERIM FUNDING II, L.P.

      

      as
        Lender

      

      

      Dated
         as of July 17, 2007

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

       

      
        	
                 

              	
                 

              	
                 

              	
                Page

              
	
                SECTION
                  1

              	DEFINITIONS	
                1

              
	 	 	 
	
                 

              	
                1.1

              	
                Certain
                  Defined Terms

              	
                1

              
	
                 

              	
                1.2

              	
                Accounting
                  Terms

              	
                13

              
	
                 

              	
                1.3

              	
                Other
                  Definitional Provisions

              	
                13

              
	 	 	 	 
	
                SECTION
                  2

              	 	
                TERM
                  LOAN AND COLLATERAL

              	
                13

              
	 	 	 	 
	
                 

              	
                2.1

              	
                Term
                  Loan

              	
                13

              
	 	 	 	 
	
                 

              	
                2.2

              	
                Use
                  of Proceeds

              	
                14

              
	 	 	 	 
	
                 

              	
                2.3

              	
                Interest.

              	
                14

              
	
                 

              	 	
                (A)

              	
                Rate
                  of Interest

              	
                14

              
	
                 

              	 	
                (B)

              	
                Computation
                  and Payment of Interest

              	
                14

              
	
                 

              	 	
                (C)

              	
                Interest
                  Laws

              	
                14

              
	 	 	 	 
	
                 

              	
                2.4

              	
                Fees.

              	
                15

              
	 	 	 	 
	
                 

              	 	
                (A)

              	
                Transaction
                  Fee

              	
                15

              
	
                 

              	 	
                (B)

              	
                Late
                  Payment Fee

              	
                15

              
	
                 

              	 	
                (C)

              	
                Late
                  Monthly Payment Fee

              	
                15

              
	
                 

              	 	
                (D)

              	
                Maintenance
                  Fee

              	
                15

              
	
                 

              	 	
                (E)

              	
                Unused
                  Facility Fee

              	
                16

              
	
                 

              	 	
                (F)

              	
                Other
                  Fees and Expenses

              	
                16

              
	 	 	 	 
	
                 

              	
                2.5

              	
                Payments
                  and Prepayments.

              	
                16

              
	 	 	 	 
	
                 

              	 	
                (A)

              	
                Manner
                  and Time of Payment

              	
                16

              
	
                 

              	 	
                (B)

              	
                Payments
                  on Business Days

              	
                17

              
	
                 

              	 	
                (C)

              	
                Voluntary
                  Prepayment

              	
                17

              
	
                 

              	 	
                (D)

              	
                Mandatory
                  Repayment

              	
                17

              
	 	 	 	 
	
                 

              	
                2.6

              	
                Grant
                  of Security Interest

              	
                17

              
	 	 	 	 
	
                 

              	
                2.7

              	
                Preservation
                  of Collateral and Perfection of Security Interests Therein

              	
                18

              
	 	 	 	 
	
                 

              	
                2.8

              	
                Possession
                  of Collateral and Related Matters

              	
                19

              
	 	 	 	 
	
                 

              	
                2.9

              	
                Limited
                  License

              	
                19

              
	 	 	 	 
	
                 

              	
                2.10

              	
                Release
                  of Security Interests

              	
                19

              
	 	 	 	 
	
                SECTION
                  3

              	CONDITIONS
                TO TERM LOAN	
                19

              
	 	 	 
	
                 

              	
                3.1

              	
                Conditions

              	
                19

              
	
                 

              	 	
                (A)

              	
                Closing
                  Deliveries

              	
                19

              
	
                 

              	 	
                (B)

              	
                Security
                  Interests

              	
                19

              
	
                 

              	 	
                (C)

              	
                Representations
                  and Warranties

              	
                20

              
	
                 

              	 	
                (D)

              	
                Fees

              	
                20

              
	
                 

              	 	
                (E)

              	
                No
                  Default

              	
                20

              

      

       

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	 	
                (F)

              	
                Performance
                  of Agreements

              	
                20

              
	
                 

              	 	
                (G)

              	
                No
                  Prohibition

              	
                20

              
	
                 

              	 	
                (H)

              	
                No
                  Litigation

              	
                20

              
	
                 

              	 	
                (I)

              	
                No
                  Material Adverse Effect

              	
                20

              
	 	 	 	 
	
                 

              	
                3.2

              	
                Conditions
                  to any Additional Tranche

              	
                20

              
	 	 	 	 
	
                 

              	 	
                (A)

              	
                Request
                  for Additional Tranche

              	
                20

              
	
                 

              	 	
                (B)

              	
                Delivery
                  of Documents

              	
                20

              
	
                 

              	 	
                (C)

              	
                Representations
                  and Warranties

              	
                20

              
	
                 

              	 	
                (D)

              	
                No
                  Prohibition

              	
                21

              
	
                 

              	 	
                (E)

              	
                No
                  Default

              	
                21

              
	
                 

              	 	
                (F)

              	
                No
                  Litigation

              	
                21

              
	 	 	 
	
                SECTION
                  4

              	BORROWER’S
                REPRESENTATIONS AND WARRANTIES	
                21

              
	 	 	 
	
                 

              	
                4.1

              	
                Organization,
                  Powers, Capitalization.

              	
                21

              
	
                 

              	 	
                (A)

              	
                Organization
                  and Powers

              	
                21

              
	
                 

              	 	
                (B)

              	
                Capitalization

              	
                21

              
	 	 	 	 
	
                 

              	
                4.2

              	
                Authorization
                  of Borrowing; No Conflict

              	
                21

              
	 	 	 	 
	
                 

              	
                4.3

              	
                Financial
                  Condition.

              	
                22

              
	 	 	 	 
	
                 

              	
                4.4

              	
                Indebtedness
                  and Liabilities

              	
                22

              
	 	 	 	 
	
                 

              	
                4.5

              	
                Account
                  Warranties

              	
                22

              
	 	 	 	 
	
                 

              	
                4.6

              	
                Names

              	
                23

              
	 	 	 	 
	
                 

              	
                4.7

              	
                Locations;
                  FEIN

              	
                23

              
	 	 	 	 
	
                 

              	
                4.8

              	
                Title
                  to Properties; Liens

              	
                23

              
	 	 	 	 
	
                 

              	
                4.9

              	
                Litigation;
                  Adverse Facts

              	
                23

              
	 	 	 	 
	
                 

              	
                4.10

              	
                Payment
                  of Taxes

              	
                23

              
	 	 	 	 
	
                 

              	
                4.11

              	
                Performance
                  of Agreements

              	
                23

              
	 	 	 	 
	
                 

              	
                4.12

              	
                Employee
                  Benefit Plans

              	
                24

              
	 	 	 	 
	
                 

              	
                4.13

              	
                Intellectual
                  Property

              	
                24

              
	 	 	 	 
	
                 

              	
                4.14

              	
                Broker’s
                  Fees

              	
                24

              
	 	 	 	 
	
                 

              	
                4.15

              	
                Environmental
                  Compliance

              	
                24

              
	 	 	 	 
	
                 

              	
                4.16

              	
                Solvency

              	
                24

              
	 	 	 	 
	
                 

              	
                4.17

              	
                Disclosure

              	
                25

              
	 	 	 	 
	
                 

              	
                4.18

              	
                Insurance

              	
                25

              
	 	 	 	 
	
                 

              	
                4.19

              	
                Compliance
                  with Laws

              	
                25

              
	 	 	 	 
	
                 

              	
                4.20

              	
                Bank
                  Accounts

              	
                25

              
	 	 	 	 
	
                 

              	
                4.21

              	
                Subsidiaries

              	
                25

              
	 	 	 	 
	
                 

              	
                4.22

              	
                Employee
                  Matters

              	
                25

              

      

       

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                4.23

              	
                Governmental
                  Regulation

              	
                26

              
	 	 	 	 
	
                 

              	
                4.24

              	
                Receivables
                  and Payables

              	
                26

              
	 	 	 	 
	
                 

              	
                4.25

              	
                Trade
                  Relations

              	
                26

              
	 	 	 	 
	
                 

              	
                4.26

              	
                Absence
                  of Defaults

              	
                26

              
	 	 	 	 
	
                 

              	
                4.27

              	
                Loans
                  to Shareholders, Directors, Officers or Affiliates

              	
                26

              
	 	 	 	 
	
                 

              	
                4.28

              	
                Projections

              	
                26

              
	 	 	 	 
	
                 

              	
                4.29

              	
                Surety
                  Obligations

              	
                26

              
	 	 	 	 
	
                SECTION
                  5

              	AFFIRMATIVE
                COVENANTS	
                27

              
	 	 	 
	
                 

              	
                5.1

              	
                Financial
                  Statements and Other Reports

              	
                27

              
	
                 

              	 	
                (A)

              	
                Monthly
                  Financials

              	
                27

              
	
                 

              	 	
                (B)

              	
                Quarterly
                  Financials

              	
                27

              
	
                 

              	 	
                (C)

              	
                Year-End
                  Financials

              	
                27

              
	
                 

              	 	
                (D)

              	
                Accountants’
                  Certification and Reports

              	
                28

              
	
                 

              	 	
                (E)

              	
                Management
                  Report

              	
                28

              
	
                 

              	 	
                (F)

              	
                Projections

              	
                29

              
	
                 

              	 	
                (G)

              	
                Financial
                  Statements for Alfred Lam

              	
                29

              
	
                 

              	 	
                (H)

              	
                Revolving
                  Advance Requests

              	
                29

              
	
                 

              	 	
                (I)

              	
                Tax
                  Returns

              	
                29

              
	
                 

              	 	
                (J)

              	
                Government
                  Notices

              	
                29

              
	
                 

              	 	
                (K)

              	
                Events
                  of Default, etc

              	
                29

              
	
                 

              	 	
                (L)

              	
                Trade
                  Names

              	
                30

              
	
                 

              	 	
                (M)

              	
                Locations

              	
                30

              
	
                 

              	 	
                (N)

              	
                Bank
                  Accounts

              	
                30

              
	
                 

              	 	
                (O)

              	
                Certified
                  Public Accountants

              	
                30

              
	
                 

              	 	
                (P)

              	
                Litigation

              	
                30

              
	
                 

              	 	
                (Q)

              	
                Other
                  Information

              	
                30

              
	 	 	 	 
	
                 

              	
                5.2

              	
                Access
                  to Accountants

              	
                30

              
	 	 	 	 
	
                 

              	
                5.3

              	
                Inspection

              	
                31

              
	 	 	 	 
	
                 

              	
                5.4

              	
                Collateral
                  Records

              	
                31

              
	 	 	 	 
	
                 

              	
                5.5

              	
                Account
                  Covenants; Verification

              	
                31

              
	 	 	 	 
	
                 

              	
                5.6

              	
                Endorsement

              	
                31

              
	 	 	 	 
	
                 

              	
                5.7

              	
                Corporate
                  Existence

              	
                31

              
	 	 	 	 
	
                 

              	
                5.8

              	
                Payment
                  of Taxes

              	
                32

              
	 	 	 	 
	
                 

              	
                5.9

              	
                Maintenance
                  of Properties; Insurance

              	
                32

              
	 	 	 	 
	
                 

              	
                5.10

              	
                Compliance
                  with Laws

              	
                32

              
	 	 	 	 
	
                 

              	
                5.11

              	
                Further
                  Assurances

              	
                32

              
	 	 	 	 
	
                 

              	
                5.12

              	
                Collateral
                  Locations

              	
                32

              
	 	 	 	 
	
                 

              	
                5.13

              	
                Bailees

              	
                33

              

      

       

      
        
          
          

        

        
          -iii-

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                5.14

              	
                Use
                  of Proceeds and Margin Security

              	
                33

              
	 	 	 	 
	
                 

              	
                5.15

              	
                Observer
                  and Other Rights

              	
                33

              
	 	 	 	 
	
                 

              	
                5.16

              	
                Revisions
                  or Updates to Schedules

              	
                33

              
	 	 	 	 
	
                 

              	
                5.17

              	
                Accounting
                  Methods and Financial Records

              	
                34

              
	 	 	 	 
	
                 

              	
                5.18

              	
                Life
                  Insurance

              	
                34

              
	 	 	 	 
	
                 

              	
                5.19

              	
                Accuracy
                  of Information

              	
                34

              
	 	 	 	 
	
                 

              	
                5.20

              	
                Notice
                  of Management Changes

              	
                34

              
	 	 	 	 
	
                 

              	
                5.21

              	
                Landlord
                  Waiver

              	
                34

              
	 	 	 	 
	
                 

              	
                5.22

              	
                Landlord
                  and Storage Agreements

              	
                34

              
	 	 	 	 
	
                SECTION
                  6

              	NEGATIVE
                COVENANTS	
                34

              
	 	 	 
	
                 

              	
                6.1

              	
                Indebtedness
                  and Liabilities

              	
                34

              
	 	 	 	 
	
                 

              	
                6.2

              	
                Guaranties

              	
                35

              
	 	 	 	 
	
                 

              	
                6.3

              	
                Transfers,
                  Liens and Related Matters.

              	
                35

              
	
                 

              	 	
                (A)

              	
                Transfers

              	
                35

              
	
                 

              	 	
                (B)

              	
                Liens

              	
                35

              
	
                 

              	 	
                (C)

              	
                No
                  Pledge Restrictions

              	
                35

              
	 	 	 	 
	
                 

              	
                6.4

              	
                Restricted
                  Payments

              	
                35

              
	 	 	 	 
	
                 

              	
                6.5

              	
                Restriction
                  on Fundamental Changes

              	
                36

              
	 	 	 	 
	
                 

              	
                6.6

              	
                Transactions
                  with Affiliates

              	
                36

              
	 	 	 	 
	
                 

              	
                6.7

              	
                Environmental
                  Liabilities

              	
                36

              
	 	 	 	 
	
                 

              	
                6.8

              	
                Conduct
                  of Business

              	
                36

              
	 	 	 	 
	
                 

              	
                6.9

              	
                Compliance
                  with ERISA

              	
                36

              
	 	 	 	 
	
                 

              	
                6.10

              	
                Subsidiaries

              	
                37

              
	 	 	 	 
	
                 

              	
                6.11

              	
                Fiscal
                  Year; Tax Consolidation

              	
                37

              
	 	 	 	 
	
                 

              	
                6.12

              	
                Press
                  Release; Public Offering Materials

              	
                37

              
	 	 	 	 
	
                 

              	
                6.13

              	
                Bank
                  Accounts

              	
                37

              
	 	 	 	 
	
                 

              	
                6.14

              	
                Charter
                  Documents

              	
                37

              
	 	 	 	 
	
                 

              	
                6.15

              	
                No
                  Impairment of Restricted Payments

              	
                38

              
	 	 	 	 
	
                 

              	
                6.16

              	
                Advances,
                  Loans or Investments

              	
                38

              
	 	 	 	 
	
                 

              	
                6.17

              	
                Management
                  or Consulting Fees

              	
                38

              
	 	 	 	 
	
                 

              	
                6.18

              	
                Financial
                  Covenants

              	
                38

              
	
                 

              	 	
                (A)

              	
                Aggregate
                  Indebtedness

              	
                38

              
	
                 

              	 	
                (B)

              	
                Fixed
                  Charge Coverage Ratio

              	
                38

              
	
                 

              	 	
                (C)

              	
                Capital
                  Expenditures

              	
                38

              
	
                 

              	 	
                (D)

              	
                Current
                  Ratio

              	
                38

              

      

       

      
        
          
          

        

        
          -iv-

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	 	
                (E)

              	
                EBITDA

              	
                38

              
	 	 	 	 
	
                 

              	
                6.19

              	
                Executive
                  Compensation

              	
                40

              
	 	 	 	 
	
                 

              	
                6.20

              	
                Certain
                  Payments

              	
                40

              
	 	 	 	 
	
                 

              	
                6.21

              	
                Amendments
                  to Subordinated Debt

              	
                40

              
	 	 	 	 
	
                SECTION
                  7

              	DEFAULT,
                RIGHTS AND REMEDIES	
                40

              
	 	 	 
	
                 

              	
                7.1

              	
                Event
                  of Default

              	
                40

              
	
                 

              	 	
                (A)

              	
                Payment

              	
                40

              
	
                 

              	 	
                (B)

              	
                Default
                  in Other Agreements

              	
                40

              
	
                 

              	 	
                (C)

              	
                Breach
                  of Certain Provisions

              	
                41

              
	
                 

              	 	
                (D)

              	
                Breach
                  of Representation or Warranty

              	
                41

              
	
                 

              	 	
                (E)

              	
                Other
                  Defaults Under Loan Documents

              	
                41

              
	
                 

              	 	
                (F)

              	
                Involuntary
                  Bankruptcy; Appointment of Receiver, etc

              	
                41

              
	
                 

              	 	
                (G)

              	
                Voluntary
                  Bankruptcy; Appointment of Receiver, etc

              	
                41

              
	
                 

              	 	
                (H)

              	
                Liens

              	
                41

              
	
                 

              	 	
                (I)

              	
                Judgment
                  and Attachments

              	
                42

              
	
                 

              	 	
                (J)

              	
                Dissolution

              	
                42

              
	
                 

              	 	
                (K)

              	
                Solvency

              	
                42

              
	
                 

              	 	
                (L)

              	
                Injunction

              	
                42

              
	
                 

              	 	
                (M)

              	
                Invalidity
                  of Loan Documents

              	
                42

              
	
                 

              	 	
                (N)

              	
                Failure
                  of Security

              	
                42

              
	
                 

              	 	
                (O)

              	
                Licenses
                  and Permits

              	
                42

              
	
                 

              	 	
                (P)

              	
                Forfeiture

              	
                42

              
	
                 

              	 	
                (Q)

              	
                Change
                  of Control

              	
                42

              
	
                 

              	 	
                (R)

              	
                Material
                  Adverse Change

              	
                42

              
	 	 	 	 
	
                 

              	
                7.2

              	
                Acceleration

              	
                43

              
	 	 	 	 
	
                 

              	
                7.3

              	
                Remedies

              	
                43

              
	 	 	 	 
	
                 

              	
                7.4

              	
                Appointment
                  of Attorney-in-Fact

              	
                43

              
	 	 	 	 
	
                 

              	
                7.5

              	
                Limitation
                  on Duty of Lender with Respect to Collateral

              	
                44

              
	 	 	 	 
	
                 

              	
                7.6

              	
                Application
                  of Proceeds

              	
                44

              
	 	 	 	 
	
                 

              	
                7.7

              	
                License
                  of Intellectual Property

              	
                44

              
	 	 	 	 
	
                 

              	
                7.8

              	
                Waivers,
                  Non-Exclusive Remedies

              	
                44

              
	 	 	 	 
	
                SECTION
                  8

              	MISCELLANEOUS	
                45

              
	 	 	 
	
                 

              	
                8.1

              	
                Assignments
                  and Participations

              	
                45

              
	 	 	 	 
	
                 

              	
                8.2

              	
                Set
                  Off

              	
                45

              
	 	 	 	 
	
                 

              	
                8.3

              	
                Expenses
                  and Attorneys’ Fees

              	
                45

              
	 	 	 	 
	
                 

              	
                8.4

              	
                Indemnity

              	
                46

              
	 	 	 	 
	
                 

              	
                8.5

              	
                Amendments
                  and Waivers

              	
                47

              
	 	 	 	 
	
                 

              	
                8.6

              	
                Notices

              	
                47

              

      

       

      
        
          
          

        

        
          -v-

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                8.7

              	
                Survival
                  of Warranties and Certain Agreements.

              	
                48

              
	 	 	 	 
	
                 

              	
                8.8

              	
                Indulgence
                  Not Waiver

              	
                48

              
	 	 	 	 
	
                 

              	
                8.9

              	
                Marshaling;
                  Payments Set Aside

              	
                48

              
	 	 	 	 
	
                 

              	
                8.10

              	
                Entire
                  Agreement

              	
                48

              
	 	 	 	 
	
                 

              	
                8.11

              	
                Independence
                  of Covenants

              	
                48

              
	 	 	 	 
	
                 

              	
                8.12

              	
                Severability

              	
                49

              
	 	 	 	 
	
                 

              	
                8.13

              	
                Headings

              	
                49

              
	 	 	 	 
	
                 

              	
                8.14

              	
                APPLICABLE
                  LAW

              	
                49

              
	 	 	 	 
	
                 

              	
                8.15

              	
                Successors
                  and Assigns

              	
                49

              
	 	 	 	 
	
                 

              	
                8.16

              	
                No
                  Fiduciary Relationship; Limitation of Liabilities.

              	
                49

              
	
                 

              	 	
                (A)

              	
                No
                  Fiduciary Relationship

              	
                49

              
	
                 

              	 	
                (B)

              	
                Limitation
                  of Liabilities

              	
                49

              
	 	 	 	 
	
                 

              	
                8.17

              	
                CONSENT
                  TO JURISDICTION

              	
                49

              
	 	 	 	 
	
                 

              	
                8.18

              	
                WAIVER
                  OF JURY TRIAL

              	
                50

              
	 	 	 	 
	
                 

              	
                8.19

              	
                Construction

              	
                50

              
	 	 	 	 
	
                 

              	
                8.20

              	
                Counterparts;
                  Effectiveness

              	
                50

              
	 	 	 	 
	
                 

              	
                8.21

              	
                No
                  Duty

              	
                50

              
	 	 	 	 
	
                 

              	
                8.22

              	
                Communications
                  by Borrower to Lender

              	
                51

              
	 	 	 	 
	
                 

              	
                8.23

              	
                Confidentiality

              	
                51

              
	 	 	 	 
	
                 

              	
                8.24

              	
                Lender’s
                  Disclosure

              	
                51

              
	 	 	 	 
	
                 

              	
                8.25

              	
                Affiliate
                  Guarantor

              	
                51

              
	 	 	 	 
	
                 

              	
                8.26

              	
                Electronic
                  Execution of Loan Documents

              	
                52

              

      

      
         

      

      
        
          
          

        

        
          -vi-

          
            

          

        

        
          
          

        

      

       

      Exhibits
        and Schedules

       

      
        	 
	 
	 
	
                Exhibit
                  A - Form of Subordination Agreement

              
	 
	 
	
                Schedule
                  1.1(A) - Liens

              
	
                Schedule
                  1.1(B) - Pro Forma

              
	
                Schedule
                  3.1(A) - Closing Deliveries

              
	
                Schedule
                  3.1(H) - Litigation

              
	
                Schedule
                  4.1(B) - Capitalization

              
	
                Schedule
                  4.6 - Names

              
	
                Schedule
                  4.7 - Locations; FEIN

              
	
                Schedule
                  4.9 - Litigation; Adverse Facts

              
	
                Schedule
                  4.10 - Payment of Taxes

              
	
                Schedule
                  4.11 - Performance of Agreements

              
	
                Schedule
                  4.13 - Intellectual Property

              
	
                Schedule
                  4.14 - Broker’s Fees

              
	
                Schedule
                  4.15 - Environmental Compliance

              
	
                Schedule
                  4.19 - Compliance with Laws

              
	
                Schedule
                  4.20 - Bank Accounts

              
	
                Schedule
                  4.21 - Subsidiaries

              
	
                Schedule
                  4.22 - Employee Matters

              
	
                Schedule
                  4.24 - Receivables and Payables

              
	
                Schedule
                  4.25 - Trade Relations

              
	
                Schedule
                  4.26 - Absence of Defaults

              
	
                Schedule
                  4.27 - Loans to Insiders

              
	
                Schedule
                  4.28 - Projections

              
	
                Schedule
                  6.2 - Guaranties

              
	
                Schedule
                  6.6 - Transactions with Affiliates

              
	
                Schedule
                  6.19 - Executive Compensation

              
	
                Schedule
                  7.1(R) - Material Adverse Change

              

      

       

      
        
          
          

        

        
          -vii-

          
            

          

        

        
          
          

        

      

      LOAN
        AND SECURITY AGREEMENT

       

      This
        LOAN
        AND SECURITY AGREEMENT is dated as of July 17, 2007 and entered into by and
        among AIRGATE INTERNATIONAL CORPORATION, a New York corporation, as borrower
        (“Borrower”),
        the
        subsidiary guarantors from time to time party to this Agreement (collectively,
        the “Subsidiary
        Guarantors”),
        and
        BHC INTERIM FUNDING II, L.P., a Delaware limited partnership, as lender
        (“Lender”),
        with
        offices at 444 Madison Avenue, New York, New York 10022.

       

      RECITALS

       

      WHEREAS,
        Borrower desires that Lender extend a term loan to Borrower, the proceeds
        of
        which will be used by Borrower to redeem certain Series A Preferred capital
        stock, repurchase certain outstanding warrants and for working capital purposes;
        and

       

      WHEREAS,
        Borrower desires to secure its Obligations under the Loan Documents,
inter
        alia
        by
        granting to Lender, and by causing Subsidiary Guarantors to grant to Lender
        a
        security interest in and lien upon all of Borrower’s and such Subsidiary
        Guarantors’ respective property and assets; and

       

      WHEREAS,
        Subsidiary Guarantors, and Guarantors have each agreed, jointly and severally,
        to guarantee Borrower’s Obligations.

       

      NOW,
        THEREFORE, in consideration of the premises and the agreements, provisions
        and
        covenants herein contained, Borrower and Lender agree as follows: 

       

      SECTION
        1  DEFINITIONS

       

      1.1  Certain
        Defined Terms.
        The
        following terms used in this Agreement shall have the following
        meanings:

       

      “Accounts”
means
        all of each Credit Party’s now existing and future: (a) accounts (as
        defined in the UCC), and any and all other receivables (whether or not
        specifically listed on schedules furnished to Lender), including, without
        limitation, all accounts created by, or arising from, all of each Credit
        Party’s
        sales, leases, rentals of goods or renditions of services to its customers
        (whether or not they have been earned by performance), including but not
        limited
        to, those accounts arising under any Credit Party’s trade names, logos or
        styles, or through any Credit Party’s divisions; (b) any and all
        instruments, documents, chattel paper (including electronic chattel paper),
        contracts and contract rights (all as defined in the UCC); (c) unpaid
        seller’s or lessor’s rights (including rescission, replevin, reclamation,
        repossession and stoppage in transit) relating to the foregoing or arising
        therefrom; (d) rights to any goods represented by any of the foregoing,
        including rights to returned, reclaimed or repossessed goods; (e) reserves
        and credit balances arising in connection with or pursuant to any of the
        foregoing; (f) guaranties, supporting obligations, payment intangibles and
        letter of credit rights (all as defined in the UCC); (g) insurance policies
        or rights relating to any of the foregoing; (h) General Intangibles
        pertaining to any and all of the foregoing (including all rights to payment,
        including those arising in connection with bank and non-bank credit cards),
        and
        including books and records and any electronic media and software thereto;
        (i) notes, deposits or property of account debtors securing the obligations
        of any such account debtors to the Credit Parties; and (j) cash and
        non-cash proceeds (as defined in the UCC) of any and all of the
        foregoing.

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      “Additional
        Tranche”
has
        the
        meaning assigned to such term in Section
        2.1.

       

      “Affiliate”
means
        any Person (other than Lender): (a) directly or indirectly controlling,
        controlled by, or under common control with any Credit Party; (b) directly
        or indirectly owning, controlling or holding five percent (5%) or more of
        any
        equity interest in any Credit Party; (c) five percent (5%) or more of whose
        voting stock or other equity interest having ordinary voting power for the
        election of directors or the power to direct or cause the direction of
        management, is directly or indirectly owned or held by any Credit Party;
        or
        (d) which has a senior executive officer who is also a senior executive
        officer of any Credit Party. For purposes of this definition, “control”
(including with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”) means the possession directly or indirectly of
        the power to direct or cause the direction of the management and policies
        of a
        Person, whether through the ownership of voting securities or other equity
        interest, or by contract or otherwise.

       

      “Agreement”
means
        this Loan and Security Agreement as amended, restated, supplemented or otherwise
        modified from time to time.

       

      “Asset
        Disposition”
means
        the disposition, in any transaction or series of related transactions, whether
        by sale, lease (including any disposition in connection with a sale-lease
        back
        or synthetic lease transaction), transfer, loss, damage, destruction,
        condemnation or otherwise, of all, or substantially all, of the assets of
        any
        Credit Party (whether such assets are now owned or hereafter acquired) or
        which
        has the effect of selling or otherwise disposing of the whole or a major
        part of
        the business or operations of any Credit Party, in each case, whether or
        not
        consideration therefore consists of cash, securities or other assets owned
        by
        the acquiring Person, except where such disposition is made to another Credit
        Party.

       

      “Book
        Net Worth”
means
        the Parent’s equity in the Credit Parties (excluding the Parent) determined in
        accordance with GAAP.

       

      “Borrower”
has
        the
        meaning assigned to that term in the preamble to this Agreement.

       

      “Business
        Day”
means
        any day excluding Saturday, Sunday and any day which is a legal holiday under
        the laws of the State of New York, or is a day on which banking institutions
        located in such state are permitted to be closed.

       

      “Capital
        Expenditures”
means,
        with respect to any period, the aggregate expenditures (whether paid in cash
        or
        accrued as liabilities and including expenditures for capitalized lease
        obligations) by the Credit Parties and their Subsidiaries during such period
        that are required by GAAP to be included in or reflected by the property,
        plant,
        equipment or similar fixed asset accounts (or intangible accounts subject
        to
        amortization) on the balance sheet of their Subsidiaries.

       

      “Capitalized
        Lease”
means,
        with respect to the Credit Parties and their Subsidiaries: (a) any lease of
        property, real or personal, if the then present value of the minimum rental
        commitment thereunder should, in accordance with GAAP, be capitalized on
        a
        balance sheet of the Credit Parties and their Subsidiaries, and (b) any
        other such lease, the obligations under which are capitalized on the balance
        sheet of the Credit Parties and their Subsidiaries.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      “Capital
        Stock”
        means
        with respect to the Credit Parties, any and all capital stock, membership,
        partnership or other equity interests of the Credit Parties.

       

      “Change
        of Control”
means
        either (a) Alfred Lam ceases to own and control, beneficially and of
        record, directly or indirectly, sixty (60%) percent of the equity interests
        in
        Parent; (b) Pacific CMA ceases to own and control, beneficially and of
        record, directly or indirectly, ninety-nine percent (99%) of the equity
        interests in any of the Credit Parties; (c) Alfred Lam fails to remain
        actively engaged in the management of the Credit Parties and to hold the
        positions held on the Closing Date, including as an officer and director,
        for
        any reason other than his death or Disability; (d) a change in the majority
        of directors of Parent, unless approved by the then majority of directors;
        (e) a change in the majority of directors of any of the Credit Parties,
        unless approved by the then majority of directors; (f) all or substantially
        all of any of the Parent’s, Pacific CMA’s, AGI Logistics (Hong Kong) Limited’s,
        or the Borrower’s assets are sold or transferred, or (g) all, or
        substantially all, of the US Group’s assets are sold or
        transferred.

       

      “Closing
        Date”
means
        July 17, 2007.

       

      “Collateral”
means,
        collectively, any and all assets of any Credit Party on which a Lien in favor
        of
        Lender has been created and/or granted to secure the Obligations under the
        Loan
        Documents, specifically including without limitation, the assets of the
        Credit Parties
        defined
        as “Collateral” in Section
        2.6.
        

       

      “Commitment
        Letter”
means
        the commitment letter issued by Lender to Borrower on November 13, 2006 as
        supplemented by the letter dated February 16, 2007.

       

      “Confidential
        Information”
has
        the
        meaning assigned to that term in Section
        8.23.

       

      “Consolidated”
means
        the consolidation of accounts in accordance with GAAP, including principles
        of
        consolidation.

       

      “Consolidated
        Subsidiaries”
means
        collectively, the Subsidiaries of any Credit Party whose financial condition
        and
        results of operations are Consolidated with such Credit Party in its
        Consolidated financial statements. 

       

      “Corporate
        Guarantors”
means
        Pacific CMA, Parent, Airgate International Corporation (Chicago), an Illinois
        corporation, Paradigm International, Inc., a Florida corporation, and AGI
        Logistics (Hong Kong) Limited, a Hong Kong company.

       

      “Credit
        Parties”
means
        collectively, the Borrower and the US Group. 

       

      “Current
        Assets”
means
        those assets of the Credit Parties and their Subsidiaries which, in accordance
        with GAAP, are classified as current.

       

      “Current
        Liabilities”
means
        those liabilities of the Credit Parties and their Subsidiaries which, in
        accordance with GAAP, are classified as current.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      “Default”
means
        a
        condition, act or event that, after notice or lapse of time or both, would
        constitute an Event of Default.

       

      “Default
        Rate”
has
        the
        meaning assigned to that term in Section 2.3(A).

       

      “Disability”
means,
        with respect to Alfred Lam, if as a result of a physical or mental disability,
        injury or sickness, he is unable to perform the essential functions of his
        duties for Borrower for a period or periods aggregating one hundred twenty
        (120)
        days during any twelve month period, or such longer period as may be required
        by
        applicable employment laws.

       

      “Documents
        of Title”
means
        all present and future documents (as defined in the UCC), and any and all
        warehouse receipts, bills of lading, shipping documents, chattel paper,
        instruments and similar documents, all whether negotiable or not and all
        goods
        and Inventory relating thereto and all cash and non-cash proceeds of the
        foregoing.

       

      “EBITDA”
means,
        for any period, all earnings before all interest, tax obligations and
        depreciation and amortization expense of Borrower for such period, all
        determined in conformity with GAAP on a basis consistent with the latest
        audited
        financial statements of Borrower, but excluding the effect of extraordinary
        and/or nonrecurring gains or losses for such period.

       

      “Employee
        Benefit Plan”
means
        any employee benefit plan within the meaning of Section 3(3) of ERISA which
        (a) is maintained for employees of the Credit Parties and their Subsidiaries
        or
        any ERISA Affiliate or (b) has at any time within the preceding six (6)
        years been maintained for the employees of the Credit Party and their
        Subsidiaries and/or any current or former ERISA Affiliate.

       

      “Environmental
        Claims”
means
        claims, liabilities, investigations, litigation, administrative proceedings,
        judgments or orders relating to Hazardous Materials.

       

      “Environmental
        Laws”
means
        any present or future federal, state and local laws, rules, ordinances and
        regulations (as implemented and as interpreted) governing the control, removal,
        storage, transportation, spill, release or discharge of hazardous or toxic
        wastes, substances and petroleum products, including as provided in the
        provisions of (a) the Comprehensive Environmental Response, Compensation
        and Liability Act of 1980, as amended by the Superfund Amendment and
        Reauthorization Act of 1986, (b) the Solid Waste Disposal Act, (c) the
        Clean Water Act, (d) the Clean Air Act, (e) the Hazardous Materials
        Transportation Act, (f) the Resource Conservation and Recovery Act of 1976,
        (g) the Federal Water Pollution Control Act Amendments of 1972, and
        (h) any and all comparable and/or similar laws of any foreign government
        (whether of any foreign national government or any agency or instrumentality
        of
        or province, county, district, department, subdivision or local unit of any
        such
        foreign national government); and (i) the respective rules, regulations and
        ordinances of the EPA (or any equivalent environmental regulatory or protection
        agency or instrumentality of any foreign government), and any departments
        of
        health services, regional water quality control boards, state water resources
        control boards, and/or cities in which the Credit Parties and their
        Subsidiaries’ assets are located.

       

      “Equipment”
means
        all equipment, whether now owned or hereafter acquired (as defined in the
        UCC),
        including, without limitation (whether or not included in the UCC definition
        of
“equipment”), all furniture, furnishings, fixtures, machinery, motor vehicles,
        trucks, trailers, vessels, aircraft and rolling stock and all parts thereof
        and
        all additions, accessories, motors, engines, and accessions thereto and
        replacements therefor and all cash and non-cash proceeds (as defined in the
        UCC)
        of any and all of the foregoing.

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      “ERISA”
means
        the Employee Retirement Income Security Act of 1974, as amended from time
        to
        time, and any successor statute and all rules and regulations promulgated
        thereunder.

       

      “ERISA
        Affiliate”
as
        applied to the Credit Parties and their Subsidiaries, means any Person who
        is a
        member of a group which is under common control with the Credit Parties and
        their Subsidiaries, who together with the Credit Parties and their Subsidiaries
        is treated as a single employer within the meaning of Section 414(b) and
        (c) of
        the IRC.

       

      “Event
        of Default”
means
        any of the events set forth in Section
        7.1.

       

      “Excess
        Interest”
has
        the
        meaning assigned to that term in Section
        2.3(C).

       

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

       

      “Fiscal
        Quarter”
means
        each period of three months, commencing on the first day of a Fiscal
        Year.

       

      “Fiscal
        Year”
means
        each twelve month period ending on the last day of December in each
        year.

       

      “Fixed
        Charge Coverage Ratio”
means,
        for any period, the ratio for the Credit Parties and their Subsidiaries
        (determined on a consolidated basis, without duplication, in accordance with
        GAAP) of (a) (i) EBITDA for such period minus
        (ii)
        Capital Expenditures to the extent paid in cash during such period minus
        (iii)
        taxes paid (or required to be paid) in cash in respect of such period,
minus
        (iv) tax
        distributions paid (or required to be paid) in cash in respect of net income
        of
        Borrower for such period, to (b) the sum of (i) cash interest payments made
        in
        respect of borrowed money during such period, plus
        (ii) net
        cash payments made (or minus the net cash payments receivable) in respect
        of the
        Hedging Agreements during such period, plus
        (iii)
        cash payments made in respect of fees, including letter of credit fees and
        expenses (but excluding reimbursement of legal fees) incurred hereunder during
        such period, plus
        (iv)
        cash payments of principal in respect of borrowed money (including the principal
        component of any payments in respect of Capital Lease obligations and
        Subordinated Debt, but excluding principal payments made in respect of revolver
        loans advanced under the in the Senior Financing Agreement) during such period.
        

       

      “Foreign
        Subsidiary”
means
        any Subsidiary of the Credit Parties that is organized in a jurisdiction
        outside
        of the United States of America.

       

      “Foreign
        Plan”
means,
        any employee benefit plan or arrangement maintained or contributed to by
        any
        Credit Party or any Subsidiary of any Credit Party that is not subject to
        the
        laws of the United States, or any employee benefit plan or arrangement mandated
        by a government other than the United States for employees of any Credit
        Party
        or any Subsidiary of any Credit Party.

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      “GAAP”
means
        generally accepted accounting principles in effect from time to time in the
        United States, applied on a consistent basis, provided
        that for
        the purpose of Section
        6.18
        hereof
        and the definitions used therein, “GAAP” shall mean generally accepted
        accounting principles in effect on the date hereof and consistent with those
        used in the preparation of the audited financial statements for the Fiscal
        Year
        ended on December 31, 2006, provided,
        further,
        that if
        there occurs after the date of this Agreement any change in GAAP that affects
        in
        any respect the calculation of any covenant contained in Section
        6.18
        hereof,
        Lender and Borrower shall negotiate in good faith amendments to the provisions
        of this Agreement that relate to the calculation of such covenant with the
        intent of having the respective positions of Lender and Borrower after such
        change in GAAP conform as nearly as possible to their respective positions
        as of
        the date of this Agreement and, until any such amendments have been agreed
        upon,
        the covenants in Section
        6.18
        hereof
        shall be calculated as if no such change in GAAP had occurred.

       

      “General
        Intangibles”
means,
        as to each Credit Party, all “general intangibles” as defined in the UCC, now
        owned or hereafter acquired, including, without limitation (whether or not
        included in the UCC definition of “general intangibles”), all of such Credit
        Party’s then owned or existing and future acquired or arising general
        intangibles, choses in action and causes of action and all other intangible
        personal property of such Credit Party of every kind and nature, including,
        without limitation, Intellectual Property, corporate or other business records,
        inventions, designs, blueprints, plans, specifications, trade secrets, goodwill,
        computer software, customer lists, licenses, franchises, tax refund claims,
        reversions or any rights thereto and any other amounts payable to Borrower
        from
        any Employee Benefit Plan, rights and claims against carriers and shippers,
        rights to indemnification, and business interruption, property, casualty
        or any
        similar type of insurance and any proceeds thereof, and all cash and non-cash
        proceeds (as defined in the UCC) of any and all of the foregoing.

       

      “Guaranties”
means,
        collectively, those certain respective unconditional guaranty agreements
        executed by each respective Guarantor in favor of Lender pursuant to which
        such
        Guarantor shall give a continuing and unconditional agreement to guaranty
        and
        stand surety for the Obligations of Borrower under the Loan Documents, whether
        such guaranty agreement shall be executed as of the date hereof or at any
        time
        in the future, as each such agreement may be amended, restated, supplemented
        or
        otherwise modified from time to time.

       

      “Guarantors”
means
        Alfred Lam and the Corporate Guarantors, and each such other Person identified
        as a Guarantor, whose liability shall be joint and several, and any other
        Person
        that may from time to time guaranty the Obligations of Borrower under the
        Loan
        Documents. 

       

      “Guarantor
        Security Documents”
means,
        collectively, those various agreements, instruments and documents, including
        all
        security agreements, charging agreements, mortgages, which may from time
        to time
        be executed by the Guarantors pursuant to which each such Guarantor shall
        grant
        Liens to Lender in substantially all of its assets, real and personal, tangible
        and intangible, as security for the payment and performance of the Obligations,
        as each such agreement, instrument or document may be amended, restated,
        supplemented or otherwise modified from time to time.

       

      “Hazardous
        Material”
means
        all or any of the following: (a) substances that are defined or listed in,
        or otherwise classified pursuant to, any Environmental Laws or regulations
        as
“hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic
        substances” or any other formulation intended to define, list or classify
        substances by reason of deleterious properties such as ignitability,
        corrosivity, reactivity, carcinogenicity, or toxicity; (b) oil, petroleum
        or petroleum derived substances, natural gas, natural gas liquids or synthetic
        gas and drilling fluids, produced waters and other wastes associated with
        the
        exploration, development or production of crude oil, natural gas or geothermal
        resources; (c) any flammable substances or explosives or any radioactive
        materials; and (d) friable asbestos in any form or electrical equipment
        which contains any oil or dielectric fluid containing polychlorinated
        biphenyls.

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      “Hedging
        Agreement”
means
        any interest rate, foreign currency, commodity or equity swap, collar, cap,
        floor or forward rate agreement, or other agreement or arrangement designed
        to
        protect against fluctuations in interest rates or currency, commodity or
        equity
        values (including, without limitation, any option with respect to any of
        the
        foregoing and any combination of the foregoing agreements or arrangements),
        and
        any confirmation executed in connection with any such agreement or
        arrangement.

       

      “Indebtedness”
means,
        as applied to each Credit Party at a particular date, without duplication:
        (a) all obligations of such Credit Party for borrowed money, (b) all
        obligations of such Credit Party evidenced by bonds, debentures, notes or
        similar instruments, (c) all obligations of such Credit Party upon which
        interest charges are customarily paid, (d) all obligations of such Credit
        Party under conditional sale or other title retention agreements relating
        to
        property acquired by such Credit Party, (e) all obligations of such Credit
        Party in respect of the deferred purchase price of property or services
        (excluding current accounts payable incurred in the ordinary course of business
        and excluding installments of premiums payable with respect to policies of
        insurance contracted for in the ordinary course of business), (f) all
        Indebtedness of others secured by (or for which the holder of such Indebtedness
        has an existing right, contingent or otherwise, to be secured by) any Lien
        on
        property owned or acquired by such Credit Party, whether or not the Indebtedness
        secured thereby has been assumed, (g) all guaranties or endorsements by
        such Credit Party of Indebtedness of others, (h) all obligations under
        Capitalized Leases of such Credit Party attributable to the payment of
        principal, (i) all obligations, contingent or otherwise, of such Credit
        Party as an account party in respect of letters of credit and letters of
        guaranty, and (j) all obligations, contingent or otherwise, of such Credit
        Party in respect of bankers’ acceptances. The Indebtedness of such Credit Party
        shall include the Indebtedness of any other entity (including any partnership
        in
        which such Credit Party is a general partner) to the extent such Credit Party
        is
        liable therefor as a result of such Credit Party’s ownership interest in or
        other relationship with such entity, except to the extent the terms of such
        Indebtedness expressly provide that such Credit Party is not liable
        therefor.

       

      “Indemnitees”
has
        the
        meaning assigned to that term in Section
        8.4.

       

      “Indemnified
        Liabilities”
has
        the
        meaning assigned to that term in Section
        8.4.

       

      “Intellectual
        Property”
means
        all present and future (a) designs, patents, patent rights and applications
        therefor, licenses rights, fees, and royalties with respect thereof; (b)
        trademarks, service marks, trade names and registrations and applications
        therefore, licenses, fees and royalties with respect thereof; (c) copyrights,
        renewals and all applications and registrations therefor, licenses, fees
        and
        royalties with respect thereof, (d) software or computer programs, trade
        secrets, methods, processes, know-how, drawings, specifications, and
        descriptions, and (e) all memoranda, notes and records with respect to any
        research and development, whether now owned or hereafter acquired, (f) all
        goodwill associated with any of the foregoing described in subsections (a)
        -
        (e), and proceeds of all of the foregoing, including, without limitation,
        proceeds of insurance policies thereon.

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

       

      “Intercreditor
        Agreement”
means
        the Intercreditor Agreement, dated as of the date hereof, by and among Lender,
        Borrower and the Senior Lender,
        as
        amended, restated, supplemented or otherwise modified from time to
        time.

       

      “Inventory”
means,
        as to such Credit Party, all “inventory” as defined in the UCC including,
        without limitation (whether or not included in the UCC definition of
“inventory”), all of such Credit Party’s then owned or existing and future
        acquired or arising: (a) inventory, merchandise, goods and other personal
        property intended for sale or lease or for display or demonstration; (b)
        inventory and any portion thereof that may be returned, rejected, reclaimed
        or
        repossessed by either Lender or such Credit Party from such Credit Party’s
        customers; (c) work in process; (d) raw materials and other materials and
        supplies, goods, incidentals, packaging materials and labels of every nature
        and
        description used or which might be used in connection with the manufacture,
        packing, shipping, advertising, selling, leasing or furnishing of the foregoing
        or otherwise used or consumed in the conduct of business; (e) documents
        evidencing, and General Intangibles relating to, any of the foregoing; and
        (f)
        all cash and non-cash proceeds (as defined in the UCC) of any and all of
        the
        foregoing.

       

      “Investment
        Property”
means
        a
        security, whether certificated or uncertificated, security entitlement,
        securities account, commodity contract or commodity account.

       

      “IRC”
means
        the Internal Revenue Code of 1986, as amended from time to time, and any
        successor statute and all rules and regulations promulgated
        thereunder.

       

      “Late
        Monthly Payment Fee”
has
        the
        meaning assigned to that term in Section
        2.4(C).

       

      “Lender”
means
        BHC Interim Funding II, L.P., together with its successors and assigns permitted
        pursuant to Section 8.1.

       

      “Liabilities”
shall
        have the meaning given that term in accordance with GAAP and shall include
        all
        Indebtedness.

       

      “Lien”
means
        any lien (whether statutory or otherwise), mortgage, deed of trust, pledge,
        hypothecation, assignment, security interest, charge or encumbrance of any
        kind,
        whether voluntary or involuntary (including any conditional sale or other
        title
        retention agreement, any lease in the nature thereof, and any agreement to
        give
        any security interest).

       

      “Loan
        Documents”
means
        this Agreement, the Term Note, the Guaranties, the Intercreditor Agreement,
        the
        Guarantor Security Documents, and all other instruments, documents, guaranties
        and agreements executed by or on behalf of any Credit Party and delivered
        concurrently herewith or at any time hereafter to or for Lender in connection
        with the Term Loan or any other transaction contemplated by this Agreement,
        all
        as amended, restated, supplemented or modified from time to time.

       

      “Maintenance
        Fee”
has
        the
        meaning assigned to that term in Section
        2.4(D).

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      “Material
        Adverse Effect”
means
        a
        material adverse effect upon (a) the businesses, operations, properties,
        assets or condition (financial or otherwise) of the Credit Parties, taken
        as a
        whole, (b) the ability of any Credit Party to perform its obligations under
        any Loan Document to which it is a party, (c) the value of the Collateral,
        or (d) the ability of Lender to enforce or collect any of the
        Obligations.

       

      “Maturity
        Date”
means
        July 16, 2009.

       

      “Maximum
        Rate”
has
        the
        meaning assigned to that term in Section
        2.3(C).

       

      “Midsummer
        Repurchase Agreement”
means
        that certain Repurchase Agreement With Mutual Release dated as of July 16,
        2007,
        by and between Parent and Midsummer Investments, Ltd., a corporation organized
        under the laws of Bermuda. 

       

      “Net
        Income”
means
        fiscal year-to-date after-tax net income from continuing operations including
        extraordinary losses but excluding extraordinary gains, all as determined
        in
        accordance with GAAP.

       

      “Obligations”
means
        all obligations (including the full and faithful discharge of each and every
        term, condition, agreement, representation and warranty now or hereafter
        made by
        a Credit Party under the Loan Documents), liabilities and indebtedness of
        every
        nature of each Credit Party from time to time owed to Lender under the Loan
        Documents including the principal amount of the Term Loan, all debts, claims
        and
        indebtedness (whether incurred before or after the Maturity Date), accrued
        and
        unpaid interest and all fees, costs and expenses, whether primary, secondary,
        direct, contingent, fixed or otherwise, heretofore, or whether evidenced
        by a
        note or other writing, now and/or from time to time hereafter owing, due
        or
        payable including, without limitation, all interest, fees, costs and expenses
        accrued or incurred after the filing of any petition under any bankruptcy
        or
        insolvency law whether or not a claim for post-petition interest, fees or
        expenses is allowed in any bankruptcy case or proceeding.

       

      “Officer’s
        Certificate”
has
        the
        meaning assigned to that term in Section
        5.1(E).

       

      “Other
        Collateral”
means:
        

       

      (A)  all
        other
        goods and property, whether or not delivered, including, without limitation,
        such other goods and property: (i) the sale or lease of which gives or
        purports to give rise to any Account or other Collateral, including, but
        not
        limited to, all Inventory and other merchandise returned or rejected by,
        or
        repossessed from, customers; (ii) securing any Account or other Collateral,
        including, without limitation, all rights as a consignor, a consignee, an
        unpaid
        vendor or lienor (including, without limitation, stoppage in transit, replevin
        and reclamation) with respect to such other goods and properties; or
        (iii) any warranty claim relating to goods; 

       

      (B)  all
        substitutes and replacements for, accessories, attachments, and other additions
        to, any of the above and any and all products or masses into which any goods
        are
        physically united such that their identity is lost;

       

      (C)  all
        policies and certificates of insurance relating to any of the foregoing,
        now
        owned or hereafter acquired, evidencing or pertaining to any and all items
        of
        Collateral;

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      (D)  all
        files, correspondence, computer programs, tapes, discs and related data
        processing software which contain information identifying or pertaining to
        any
        of the Collateral or any account debtor, or showing the amounts thereof or
        payments thereon or otherwise necessary or helpful in the realization thereon
        or
        the collection thereof;

       

      (E)  all
        cash
        deposited with Lender or any of its Affiliates, or which Lender or such
        Affiliate is entitled to retain or otherwise possess as Collateral pursuant
        to
        the provisions of this Agreement or any of the other Loan Documents;

       

      (F)  any
        and
        all products and proceeds of the foregoing (including, but not limited to,
        any
        claim to any item referred to in Section
        2.6,
        and any
        claim against any third party for loss of, damage to or destruction of any
        or
        all of, the Collateral or for proceeds payable under, or unearned premiums
        with
        respect to, policies of insurance) in whatever form, including, but not limited
        to, cash, instruments, chattel paper, security agreements and other documents;
        and

       

      (G)  all
        commercial tort claims.

       

      “Pacific
        CMA”
means
        Pacific CMA International, LLC, a Colorado limited liability
        company.

       

      “Parent”
means
        Pacific CMA, Inc., a Delaware company.

       

      “Payment
        Date”
shall
        have the meaning given such term in Section
        2.4(D).

       

      “Permitted
        Encumbrances”
means
        the following types of Liens: 

       

      (A)  Liens
        securing the Obligations;

       

      (B)  Liens
        for
        taxes, assessments or other governmental charges (other than Environmental
        Claims or ERISA) the payment of which is not yet due and payable or is being
        contested in good faith and by appropriate proceedings promptly initiated
        and
        diligently conducted, and a reserve or other appropriate provision, if any,
        as
        shall be required by GAAP shall have been made therefor, provided,
        that
        such liens shall have no effect on the priority of the Liens in favor of
        Lender
        or the value of the assets in which Lender has such Liens and a stay of
        enforcement of any such Liens shall be in effect.

       

      (C)  Liens
        imposed by law, such as carrier’s, warehousemen’s, mechanic’s, materialmen’s and
        other similar Liens arising in the ordinary course of business and securing
        obligations (other than Indebtedness for borrowed money) that are not overdue
        by
        more than thirty (30) days or are being contested in good faith and by
        appropriate proceedings promptly initiated and diligently conducted, and
        a
        reserve or other appropriate provision, if any, as shall be required by GAAP
        shall have been made therefore, and, in the case of judgment Liens that have
        been stayed or bonded, a reserve or other appropriate provision, if any,
        as
        required by GAAP shall have been made therefor;

       

      (D)  Liens
        described on Schedule
        1.1(A),
        but not
        the extension of coverage thereof to other property or assets;

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

      (E)  Liens
        arising under Capital Leases or securing purchase money Indebtedness in favor
        of
        a seller of Equipment; provided,
        however,
        that
        (A) no such Lien shall extend to or cover any other property of any Credit
        Party, and (B) the principal amount of the Indebtedness secured by any such
        Lien
        shall not exceed the lesser of the fair market value or the cost of the property
        so held or acquired;

       

      (F)  deposits
        and pledges of cash securing (i) obligations incurred in respect of workers’
compensation, unemployment insurance or other forms of governmental insurance
        or
        benefits, (ii) the performance of bids, tenders, leases, contracts (other
        than for the payment of money) and statutory obligations or
        (iii) obligations on surety or appeal bonds, but only to the extent such
        deposits or pledges are incurred or otherwise arise in the ordinary course
        of
        business and secure obligations not past due;

       

      (G)  easements,
        zoning restrictions and similar encumbrances on real property and minor
        irregularities in the title thereto that do not (i) secure obligations for
        the payment of money or (ii) materially adversely impair the value of such
        property or its use by any Credit Party in the normal conduct of such Person’s
        business; 

       

      (H)  Liens
        in
        favor of Senior Lender securing Senior Indebtedness up to a maximum amount
        of
        Thirteen Million Five Hundred Thousand Dollars ($13,500,000); and

       

      (I)  other
        Liens permitted to be incurred by any Credit Party pursuant to the terms
        of this
        Agreement or any other Loan Document.

       

      “Permitted
        Indebtedness”
means
        Indebtedness of Borrower used to prepay the Obligations pursuant to Section
        2.5(D)(i).

       

      “Permitted
        Investments”
means:
        (a) investments of Borrower outstanding on the date hereof;
        (b) marketable direct obligations issued or unconditionally guaranteed by
        the United States of America or any agency or any state thereof maturing
        within
        one (1) year from the date of acquisition thereof; (c) commercial paper
        maturing no more than one (1) year from the date of creation thereof and
        having
        the highest rating obtainable from either Standard & Poor’s or Moody’s
        Investor Services, Inc.; (d) certificates of deposit maturing no more than
        one (1) year from the date of investment therein; (e) (A) investments
        in accounts receivable arising and trade credit granted in the ordinary course
        of business and in any securities received in complete or partial satisfaction
        thereof from financially troubled account debtors, and (B) deposits,
        prepayments and other credits to suppliers made in the ordinary course of
        business consistent with Borrower’s past practices; and (f) investments
        made pursuant to or arising under Hedging Agreements entered into in the
        ordinary course of business. 

       

      “Person”
means
        and includes natural persons, corporations, limited partnerships, general
        partnerships, limited liability companies, joint stock companies, joint
        ventures, associations, companies, trusts, banks, trust companies, land trusts,
        business trusts or other organizations, whether or not legal entities, and
        governments and agencies and political subdivisions thereof.

       

      “Pro
        Forma”
means
        the unaudited Consolidated balance sheet of the Credit Parties and their
        Subsidiaries as of the Closing Date after giving effect to the transactions
        contemplated by this Agreement. The Pro Forma balance sheet of the Credit
        Parties and their Subsidiaries as of the Closing Date is annexed hereto as
        Schedule
        1.1(B).

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

       

      “Projections”
shall
        have the meaning given such term in Section
        4.28.

       

      “Restricted
        Payment”
means:
        (a) any dividend or other distribution, direct or indirect, on account of
        any shares of any class of the Capital Stock of any of the Credit Parties
        and
        their Subsidiaries now or hereafter outstanding, except a dividend payable
        solely with shares of the class of stock on which such dividend is declared
        or
        distribution made, (b)  any payment or prepayment of principal of, premium,
        if any, or interest on, or any redemption, conversion, exchange, retirement,
        defeasance, sinking fund or similar payment, purchase or other acquisition
        for
        value, direct or indirect, of any Subordinated Debt or any shares of any
        class
        of the Capital Stock of any Credit Party now or hereafter outstanding, or
        the
        issuance of a notice of an intention to do any of the foregoing (other than
        to
        satisfy Parent’s monetary obligations owing under the Midsummer Repurchase
        Agreement ); (c) any payment made to retire, or to obtain the surrender of,
        any outstanding warrants, options or other rights to acquire shares of any
        class
        of the Capital Stock of any Credit Party now or hereafter outstanding (other
        than to satisfy Parent’s monetary obligations owing under the Midsummer
        Repurchase Agreement and to repurchase certain outstanding warrants in an
        amount
        not to exceed Three Hundred Fifty Thousand Dollars ($350,000); (d) any
        payment by any Credit Party of any management, consulting or similar fees
        to any
        Affiliate, whether pursuant to a management agreement or otherwise; and
        (e) any other payments restricted by the terms of any of the Loan
        Documents.

       

      “Senior
        Indebtedness”
means
        the Indebtedness of the Credit Parties under the Senior Financing
        Agreement.

       

      “Senior
        Lender”
means
        Wells Fargo Bank, National Association.

       

      “Senior
        Financing Agreement”
means
        the Credit and Security Agreement, dated as of April 6, 2007 among Senior
        Lender, the Credit Parties, and the other parties named therein, as amended,
        restated, supplemented or otherwise modified from time to time.

       

      “Subordination
        Agreement”
means
        that certain Subordination Agreement, dated as of the date hereof, between
        Lender and Alfred Lam, as amended, restated, supplemented or otherwise modified
        from time to time.

       

      “Subordinated
        Debt”
means
        any Indebtedness of any of the Credit Parties with respect to which the right
        of
        the holder of such Indebtedness to receive any payments thereon is junior
        and
        subordinated to the prior right of Lender to receive payment in full of all
        Obligations, pursuant to a subordination or intercreditor agreement between
        Lender and such holder.

       

      “Subsidiary”
means,
        if applicable, with respect to any Person, any corporation, association or
        other
        business entity of which more than fifty percent (50%) of the total voting
        power
        of shares of stock, membership interests (or equivalent ownership or controlling
        interest) entitled (without regard to the occurrence of any contingency)
        to vote
        in the election of directors, managers or trustees thereof is at the time
        owned
        or controlled, directly or indirectly, by such Person (or any of its other
        Subsidiaries).

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

       

      “Subsidiary
        Guarantors”
means
        collectively, the indirect or direct Subsidiary of a Credit Party that binds
        itself as a party to this Agreement as contemplated by Section
        6.10
        and that
        guarantees the payment or performance of the Obligations. 

       

      “Taxes”
means
        all federal, state, municipal and other governmental taxes, levies, charges,
        claims and assessments, and all interest, penalties and similar liabilities
        relating thereto, which are or may be due by the Credit Parties with respect
        to
        their business, operations, Collateral or otherwise.

       

      “Term
        Loan”
means
        the unpaid balance of the Term Loan made pursuant to Section 2.1.

       

      “Term
        Note”
means
        the Secured Term Note of Borrower in a form acceptable to Lender, issued
        pursuant to Section
        2.1
        and any
        amendment and restatement thereof. 

       

      “UCC”
means
        the Uniform Commercial Code as in effect on the date hereof in the State
        of New
        York, as amended from time to time, and any successor statute.

       

      “US
        Group”
means
        Parent, Pacific CMA, Airgate International Corporation (Chicago), and Paradigm
        International, Inc. 

       

      1.2  Accounting
        Terms.
        For
        purposes of this Agreement, all accounting terms not otherwise defined herein
        shall have the meanings assigned to such terms in conformity with GAAP.
        Financial statements and other information furnished to Lender pursuant to
        Section
        5.1
        shall be
        prepared in accordance with GAAP, consistently applied.

       

      1.3  Other
        Definitional Provisions.
        References to “Sections”, “subsections”, “Exhibits” and “Schedules” shall be to
        Sections, subsections, Exhibits and Schedules, respectively, of this Agreement
        unless otherwise specifically provided. Any of the terms defined in Section
        1.1
        may,
        unless the context otherwise requires, be used in the singular or the plural
        depending on the reference. In this Agreement, words importing any gender
        include the other genders; the words “including,” “includes” and “include” shall
        be deemed to be followed by the words “without limitation”; except as otherwise
        indicated (e.g., by references to agreements “as in effect as of the date
        hereof” or words to that effect), references to agreements and other contractual
        instruments shall be deemed to include subsequent amendments, assignments,
        and
        other modifications thereto, but only to the extent such amendments, assignments
        and other modifications are not prohibited by the terms of this Agreement
        or any
        other Loan Document; references to Persons include their respective permitted
        successors and assigns or, in the case of governmental Persons, Persons
        succeeding to the relevant functions of such Persons; and all references
        to
        statutes and related regulations shall include any amendments of same and
        any
        successor statutes and regulations.

       

      SECTION
        2  TERM
        LOAN AND COLLATERAL

       

      2.1  Term
        Loan.
        Subject
        to the terms and conditions of this Agreement and in reliance upon the
        representations and warranties of Borrower set forth herein and in the other
        Loan Documents, Lender agrees to lend to Borrower a Term Loan in the aggregate
        original principal amount of up to Five Million Dollars ($5,000,000). The
        Term
        Loan shall be funded as follows: (a) on the Closing Date, and subject to
        the
        conditions set forth in Section
        3.1,
        the sum
        of Three Million Five Hundred Thousand Dollars ($3,500,000) (the “First
        Tranche”);
        and
        (b) subject to the conditions set forth in Section
        3.2,
        at any
        time, on or prior to December 31, 2007, an additional tranche (“Additional
        Tranche”)
        of up
        to One Million Five Hundred Thousand ($1,500,000); provided that
        with
        respect to the Additional Tranche: (i) (x) no Event of Default or Material
        Adverse Effect shall have occurred and be continuing, (y) the Credit Parties
        shall have fully and timely complied with all their obligations under this
        Agreement, including, without limitation, the provisions of Section
        6.18
        of this
        Agreement, and (z) Lender agrees, in its sole discretion, to fund the Additional
        Tranche. The Term Loan shall be due and payable in full on the Maturity Date
        without defense, set off or counterclaim of any sort. Amounts borrowed under
        this Section
        2.1
        and
        repaid may not be reborrowed without Lender’s written consent. On or prior to
        (i) the Closing Date, Borrower shall execute and deliver to Lender a Term
        Note
        to further evidence the Term Loan, and (ii) on or prior to the date upon
        which
        the Additional Tranche is advanced, Borrower shall execute and deliver to
        Lender
        an amended and restated Term Note to reflect Borrower’s then aggregate
        Indebtedness to Lender. 

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

       

      2.2  Use
        of
        Proceeds.
        The
        proceeds of the Term Loan shall be used exclusively to redeem certain Series
        A
        Preferred capital stock, repurchase certain outstanding warrants and for
        other
        strategic purposes approved by the Lender. 

       

      2.3  Interest.

       

      (A)  Rate
        of Interest.
        The
        Term Loan shall bear interest at the rate of twelve percent (12.0%) per annum.
        Commencing five (5) days after the occurrence and during the continuance
        of an
        Event of Default pursuant to Section 7.1(A) hereof, the Term Loan shall bear
        interest at the rate of eighteen percent (18%) per annum (the “Default
        Rate”). 

       

      (B)  Computation
        and Payment of Interest.
        Interest on the Term Loan and all other Obligations shall be computed on
        the
        daily principal balance on the basis of a 360-day year for the actual number
        of
        days elapsed in the period during which it accrues. In computing interest
        on the
        Term Loan, the date of funding of the Additional Tranche shall be included
        and
        the date of payment of the Additional Tranche shall be excluded. Interest
        on the
        Term Loan and all other Obligations shall be payable to Lender monthly in
        arrears on the first Business Day of each month by automatic wire transfer
        to
        Lender’s bank account, and on the date of any prepayment of the Term Loan, and
        at maturity, whether by acceleration or otherwise. As of the Closing Date,
        the
        amount of each monthly installment of interest (based on a 30 day month and
        to
        be adjusted for 29 or 31 days months) shall equal Thirty Five Thousand Dollars
        ($35,000), which amount is subject to change (i) after the occurrence of an
        Event of Default, (ii) in the event of any prepayment of principal of the
        Term Loan, (iii) in the event of any addition to the unpaid principal balance
        of
        the Term Loan of any other Obligations, or (iv) the advance of the Additional
        Tranche.

       

      (C)  Interest
        Laws.
        Notwithstanding any provision to the contrary contained in this Agreement
        or any
        other Loan Document, Borrower shall not be required to pay, and Lender shall
        not
        be permitted to collect, any amount of interest in excess of the maximum
        amount
        of interest permitted by applicable law (“Excess
        Interest”).
        If
        any Excess Interest is provided for or determined by a court of competent
        jurisdiction to have been provided for in this Agreement or in any other
        Loan
        Document, then in such event: (1) the provisions of this Section 2.3
        shall govern and control; (2) neither Borrower nor any other Credit Party
        shall be obligated to pay any Excess Interest; (3) any Excess Interest that
        Lender may have received hereunder shall be, at Lender’s option,
        (a) applied as a credit against the outstanding principal balance of the
        Obligations or accrued and unpaid interest (not to exceed the maximum amount
        permitted by law), (b) refunded to the payer thereof, or (c) any
        combination of the foregoing; (4) the interest rate(s) provided for herein
        shall be automatically reduced to the maximum lawful rate allowed from time
        to
        time under applicable law (the “Maximum
        Rate”),
        and
        this Agreement and the other Loan Documents shall be deemed to have been
        and
        shall be, reformed and modified to reflect such reduction; and (5) neither
        Borrower nor any Credit Party shall have any action against Lender for any
        damages arising out of the payment or collection of any Excess Interest.
        Notwithstanding the foregoing, if for any period of time interest on any
        Obligations is calculated at the Maximum Rate rather than the applicable
        rate
        under this Agreement, and thereafter such applicable rate becomes less than
        the
        Maximum Rate, the rate of interest payable on such Obligations shall remain
        at
        the Maximum Rate until Lender shall have received the amount of interest
        which
        Lender would have received during such period on such Obligations had the
        rate
        of interest not been limited to the Maximum Rate during such
        period.

       

      
        
          
          

        

        
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      2.4  Fees.

       

      (A)  Transaction
        Fee.
        Borrower shall pay to Lender: (i) on the Closing Date a transaction fee in
        the amount of Eighty-Seven Thousand Five Hundred Dollars ($87,500) plus an
        amount equal to all reasonable fees, costs and expenses incurred by Lender
        in
        connection with any matters contemplated by this Agreement which are due
        and
        payable as of the Closing Date, less the sum of $60,944.31 previously paid
        to
        Lender; and (ii) on the date of advance of the Additional Tranche, a
        transaction fee equal to two and one-half percent (2.5%) of the amount advanced
        by Lender on such date, in each case, plus an amount equal to all reasonable
        fees, costs and expenses incurred by Lender in connection
        therewith.

       

      (B)  Late
        Payment Fee.
        In the
        event that the Term Loan has not been paid and satisfied in full on or prior
        to
        the Maturity Date, and if such Event of Default continues without remedy
        for
        fifteen (15) days following the Maturity Date, then, on the sixteenth
        (16th)
        day
        immediately succeeding the Maturity Date, in addition to any other fees or
        amounts payable under this Agreement, a late payment fee in cash equal to
        five
        percent (5%) of the sum of each Additional Tranche, to the extent that such
        Additional Tranches have been advanced, shall be due and payable by Borrower
        to
        Lender. 

       

      (C)  Late
        Monthly Payment Fee.
        In the
        event that any monthly installment of interest referred to in Section
        2.3(B)
        is not
        paid within five (5) Business Days of its due date, a late monthly payment
        fee
        of Five Thousand Dollars ($5,000) (a “Late
        Monthly Payment Fee”)
        shall
        be due and payable by Borrower with respect to such monthly interest installment
        on the sixth (6th)
        day
        following such due date, and for each thirty-day period thereafter during
        which
        such monthly interest installment remains unpaid. Such additional Late Monthly
        Payment Fee shall be due and payable at the end of each such thirty day period
        during which such monthly installment of interest remains past due. 

       

      (D)  Maintenance
        Fee.
        Borrower shall pay to Lender, in addition to any other amounts payable under
        this Agreement, a maintenance fee (the “Maintenance
        Fee”)
        on
        each date (each a “Payment
        Date”)
        on
        which any repayment of principal is made (whether such payment is of all
        or any
        portion of the outstanding principal balance of the Term Loan and whether
        such
        payment is optional or mandatory or results from acceleration or enforcement
        of
        any rights granted hereunder). The Maintenance Fee shall be determined in
        accordance with the schedule hereunder set forth, which is based on an amount
        actually advanced at closing of Five Million Dollars ($5,000,000):

       

      
        
          
          

        

        
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                If
                  the Payment Date is:

              	 	
                Then
                  the amount of the Maintenance Fee shall equal:

              
	
                (i) On
                  or before July 11, 2008

              	 	
                $250,000

              
	
                (ii) After
                  July 11, 2008, but on or before October 9, 2008

              	 	
                $290,000

              
	
                (iii) After
                  October 9, 2008, 2008, but on or before January 7, 2009

              	 	
                $385,000

              
	
                (iv) After
                  January 7, 2009, but on or before April 7, 2009

              	 	
                $480,000

              
	
                (v) Thereafter

              	 	
                $585,000

              
	 	 	 

      

      provided,
        however,
        that
        (i) if a portion of the Term Loan has not been funded, the Maintenance Fee
        shall
        be reduced in the proportion that the amount funded bears to the initial
        principal amount of the Term Loan and if only a portion of the Term Loan
        is
        being repaid, the Maintenance Fee shall be equal to the product of (1) the
        applicable Maintenance Fee set forth above and (2) a fraction, the
        numerator of which is the amount of principal being repaid and the denominator
        of which is the aggregate principal amount of the Term Loan advanced.

       

      (E)  Unused
        Facility Fee.
        Effective from the Closing Date, as long as the Additional Tranche has not
        been
        advanced to Borrower, Borrower shall pay to Lender, a fee equal to three
        quarters of one percent (0.75%) per annum of the amount of the Additional
        Tranche, payable monthly in arrears on the first Business Day of each month,
        commencing August 1, 2007, by wire transfer to Lender’s bank account;
provided,
        however,
        such
        amount shall not accrue or be payable from and after the date on which the
        Lender refuses to fund the Additional Tranche under Section
        2.1
        hereof.

       

      (F)  Other
        Fees and Expenses.
        Borrower shall pay to Lender, for its own account, all reasonable and customary
        charges for returned items and all other bank charges incurred by Lender,
        as
        well as reasonable and customary wire transfer charges incurred by Lender
        for
        each wire transfer made under this Agreement.

       

      2.5  Payments
        and Prepayments.

       

      (A)  Manner
        and Time of Payment.
        All
        payments made by Borrower with respect to the Obligations shall be made by
        wire
        transfer in United States Dollars to Lender’s account, without deduction,
        defense, setoff or counterclaim. All payments by Borrower on account of the
        principal of the Term Loan shall be applied in the following manner: (i)
        first
        to the payment of any fees and charges due under the Loan Documents, (ii)
        second
        to any Obligations for the payment of expenses, costs and indemnities due
        under
        the Loan Documents, (iii) third to the payment of interest due and owing
        under
        the Loan Documents, (iv) fourth to the payment of principal due and owing
        under
        the Loan Documents, (v) fifth to the payment of principal not yet due under
        the
        Loan Documents, and (vi) sixth to any other Indebtedness of the Credit Parties
        and their Subsidiaries owing to Lender.

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

      (B)  Payments
        on Business Days.
        Whenever any payment to be made hereunder shall be stated to be due on a
        day
        that is not a Business Day, the payment may be made on the next succeeding
        Business Day and such extension of time shall be included in the computation
        of
        the amount of interest or fees due hereunder.

       

      (C)  Voluntary
        Prepayment.
        Borrower shall have the right to prepay, at any time and from time to time
        after
        the date hereof, without penalty or premium (other than the Maintenance Fee),
        all or any portion of the outstanding Term Loan, provided that
        each
        such prepayment shall be in an amount equal to or greater than Two Hundred
        and
        Fifty Thousand Dollars ($250,000), and shall be accompanied by payment of
        interest to date of payment on the amount prepaid.

       

      (D)  Mandatory
        Repayment.
        In the
        event Borrower (i) procures financing from any source, whether in the form
        of Indebtedness or equity, or (ii) makes an Asset Disposition (other than
        sales of Inventory and dispositions of obsolete or excess Equipment in the
        ordinary course of business), or (iii) issues or sells any equity or debt
        securities or instruments, or (iv) undergoes a Change of Control, then to
        the
        extent not prohibited under the terms of the Intercreditor Agreement, an
        amount
        equal to the entire net proceeds thereof (after deducting proceeds, if any,
        applied to the Senior Indebtedness), or the portion thereof equal to the
        outstanding balance of the Term Loan plus accrued and unpaid interest and
        Maintenance Fee, and all other amounts then due and owing hereunder, shall
        be
        paid by Borrower to Lender to repay or reduce the Term Loan. All payments
        hereunder shall be applied first, to accrued interest on the Term Loan, second,
        to any outstanding fees (including the Maintenance Fee), costs and/or expenses
        owing, due and payable to Lender, third to the outstanding principal balance
        of
        the Term Loan, and fourth, to any other Obligations then owing.

       

      2.6  Grant
        of Security Interest.
        To
        secure the payment and performance of the Obligations, including all renewals,
        extensions, restructurings and refinancings of any or all of the Obligations,
        each Credit Party hereby assigns and grants to Lender, a continuing first
        priority Lien, subject only to Permitted Encumbrances and to the Intercreditor
        Agreement, in and to all right, title and interest of such Credit Party in
        all
        assets and properties of such Credit Party, whether now owned or existing
        or
        hereafter acquired or arising and regardless of where located, including
        the
        proceeds thereof (all being collectively referred to as the “Collateral”),
        and
        including, without limitation, the following property of such Credit
        Party:

       

      (i)  Accounts;

      (ii)  Deposit
        Accounts (as defined in the UCC);

      (iii)  Documents
        of Title; 

      (iv)  Equipment;

      (v)  General
        Intangibles;

      (vi)  Inventory;
        

      (vii)  Investment
        Property; 

      (viii)  Intellectual
        Property; and

      (ix)  Other
        Collateral.

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

      

      Without
        limiting the generality of the foregoing paragraph, the security interests
        granted hereunder shall extend and attach to:

       

      	(i)  	
              all
                Equipment, whether any Credit Party’s interest in such Equipment is as
                owner, lessee or conditional vendee;

            

       

      	(ii)  	
              all
                Equipment whether the same constituted personal property or fixtures,
                including but without limiting the generality of the foregoing, all
                dies,
                jigs, tools, benches, molds, tables, accretions component parts thereof
                and additions thereto, as well as all accessories, motors, engines
                and
                auxiliary parts used in connection with or attached to Equipment;
                and

            

       

      	(iii)  	
              all
                Inventory and any portion thereof that may be returned, rejected,
                reclaimed or repossessed by either Lender or any Credit Party from
                such
                Credit Party’s customers, as well as to all supplies, goods, incidentals,
                packaging materials, labels and any other items that contribute to
                the
                finished goods or products manufactured or processed by Borrower,
                or to
                the sale, promotion or shipment thereof.

            

       

      2.7  Preservation
        of Collateral and Perfection of Security Interests Therein.
        Each
        Credit Party shall, at Lender’s reasonable request, at any time and from time to
        time, execute and deliver to Lender within ten (10) days of such request,
        such
        financing statements, documents and other agreements and instruments (and
        pay
        the cost of filing or recording the same in all public offices deemed reasonably
        necessary or desirable by Lender) and do such other acts and things as Lender
        may deem necessary or desirable in order to establish and maintain a valid,
        attached and perfected security interest in the Collateral in favor of Lender
        (free and clear of all other liens, claims and rights of third parties
        whatsoever, whether voluntarily or involuntarily created, except Permitted
        Encumbrances) to secure payment of the Obligations, and in order to facilitate
        the collection of the Collateral. Each Credit Party irrevocably hereby makes,
        constitutes and appoints Lender (and all Persons designated by Lender for
        that
        purpose) as such Credit Party’s true and lawful attorney and agent-in-fact to
        execute such financing statements, documents and other agreements and
        instruments and do such other acts and things as may be necessary to preserve
        and perfect Lender’s security interest in the Collateral. Each Credit Party
        further agrees that a carbon, photographic, photostatic or other reproduction
        of
        this Agreement or of a financing statement shall be sufficient as a financing
        statement. Each Credit Party hereby authorizes Lender to prepare and file
        such
        financing statements or amendments thereof (including financing statements
        and
        amendments thereof describing the Collateral as “all assets” or “all personal
        property” or words to that effect) as Lender may from time to time deem
        necessary or appropriate in order to perfect and maintain the security interests
        granted hereunder in accordance with the UCC or the Uniform Commercial Code
        of
        any applicable jurisdiction. Each Credit Party acknowledges and agrees that
        the
        Collateral is intended to encompass all assets and property of such Credit
        Party
        and if at any time such Credit Party acquires any interest in any assets
        or
        property a security interest in which cannot be perfected by the filing of
        a
        financing statement in the appropriate jurisdiction or any assets or property
        a
        security interest in which can be perfected by the filing of a financing
        statement in the appropriate jurisdiction but that are not covered by the
        security interest grant set forth above (e.g., commercial tort claims, it
        being
        certified by such Credit Party that it has no interest in any commercial
        tort
        claims as of the Closing Date), then such Credit Party will promptly notify
        Lender of the same and, if requested by Lender, cause such assets or property
        to
        become part of the Collateral and take such reasonable steps as Lender may
        require in accordance with the first sentence of this Section
        2.7.

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

       

      2.8  Possession
        of Collateral and Related Matters.
        Until
        an Event of Default has occurred and is continuing, each Credit Party shall
        have
        the right, except as otherwise provided in this Agreement, in the ordinary
        course of such Credit Party’s business, to (a) sell or lease any of such
        Credit Party’s Inventory normally held by such Credit Party for any such
        purpose, (b) use and consume any raw materials, work-in-process or other
        materials normally held by such Credit Party for such purpose, or
        (c) dispose of any obsolete or excess equipment in the ordinary course of
        business; provided,
        however,
        that a
        sale in the ordinary course of business shall not include any transfer or
        sale
        in satisfaction, partial or complete, of any debt owed by such Credit
        Party.

       

      2.9  Limited
        License.
        The
        Credit Parties hereby irrevocably grant to Lender, a royalty-free, non-exclusive
        license to use such Credit Party’s trademarks, copyrights, patents and other
        proprietary and intellectual property rights, in connection with the
        (a) advertisement for sale, and the sale or other disposition of, any
        finished goods Inventory by Lender in accordance with the provisions of this
        Agreement, and (b) manufacture, assembly, completion and preparation for
        sale of any unfinished Inventory by Lender in accordance with the provisions
        of
        this Agreement.

       

      2.10  Release
        of Security Interests.
        Upon
        the indefeasible payment and satisfaction in full of the Obligations, and
        at
        each Credit Party’s expense, Lender shall release all liens and security
        interests granted by such Credit Party by execution and/or delivery of
        appropriate documentation, including, but not limited to, UCC termination
        statements, (A) within seven (7) Business Days of such payment or
        (B) concurrently with such payment if such Credit Party gives three (3)
        Business Days advance notice of such payment.

       

      SECTION
        3  CONDITIONS
        TO TERM LOAN

       

      3.1  Conditions.
        The
        obligation of Lender to advance on the Closing Date is subject to satisfaction
        or waiver (in each case, as determined by Lender) of each of the conditions
        set
        forth below:

       

      (A)  Closing
        Deliveries.
        Lender
        shall have received, in form and substance satisfactory to Lender, all
        documents, instruments and information identified on Schedule
        3.1(A)
        and all
        other agreements, notes, certificates, orders, authorizations, financing
        statements, mortgages and other documents which Lender may request. 

       

      (B)  Security
        Interests.
        Lender
        shall have received satisfactory evidence that all security interests and
        Liens
        granted to Lender pursuant to this Agreement or the other Loan Documents
        have
        been duly perfected and constitute valid Liens on the Collateral, with priority
        over all other Liens subject only to Permitted Encumbrances and to the
        Intercreditor Agreement. Without limiting the generality of the foregoing:
        each
        Guarantor, including without limitation all Guarantors that are Foreign
        Subsidiaries, shall have executed and delivered all Guarantor Security Documents
        required by Lender and its counsel (each such document to be in form and
        substance satisfactory to Lender) in order to create and grant Liens in favor
        of
        Lender on substantially all of such Guarantor’s property and all appropriate
        public filings or registrations of or related to such Guarantor Security
        Documents and/or the Liens created and granted thereunder have been
        made.

       

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

       

      (C)  Representations
        and Warranties.
        The
        representations and warranties contained herein and in the Loan Documents
        shall
        be true, correct and complete on and as of the Closing Date to the same extent
        as though made on and as of that date, except for any representation or warranty
        limited by its terms to a specific date.

       

      (D)  Fees.
        Borrower shall have paid
        the fees
        and other amounts payable on the Closing Date referred to in Section 2.4(A).

       

      (E)  No
        Default.
        No
        event shall have occurred and be continuing or would result from the
        consummation of the requested borrowing
        that
        would constitute an Event of Default or a Default.

       

      (F)  Performance
        of Agreements.
        Each
Credit
        Party
        shall have performed all agreements and satisfied all conditions which any
        Loan
        Document provides shall be performed by it on or before the Closing
        Date.

       

      (G)  No
        Prohibition.
        No
        order, judgment
        or
        decree of any court, arbitrator or governmental authority shall purport to
        enjoin or restrain Lender from advancing.

       

      (H)  No
        Litigation.
        Except
        as set
        forth on
Schedule
        3.1(H),
        there
        shall not be pending or, to the knowledge of any Credit Party, threatened,
        any
        action, charge, claim, demand, suit, proceeding, petition, governmental
        investigation or arbitration by, against or affecting any Credit Party or
        any
        property of any Credit Party that has not been disclosed by Borrower in writing,
        and there shall have occurred no development in any such action, charge,
        claim,
        demand, suit, proceeding, petition, governmental investigation or arbitration
        that, in the opinion of Lender, could reasonably be expected to have a Material
        Adverse Effect.

       

      (I)  No
        Material Adverse Effect.
        Lender
        shall have received evidence reasonably satisfactory to it that nothing has
        occurred since December 31, 2006, which reasonably could be expected to
        have a Material Adverse Effect.

       

      3.2  Conditions
        to the Additional Tranche.
        The
        obligation of Lender to advance the Additional Tranche is subject to
        satisfaction (as determined by Lender in its discretion) of each of the
        conditions set forth below:

       

      (A)  Request
        for Additional Tranche.
        Lender
        shall have received from Borrower at least thirty (30) days prior written
        notice
        requesting the advance of the Additional Tranche and shall have furnished
        Lender
        with all such financial records and information, as Lender may
        require. 

       

      (B)  Delivery
        of Documents.
        Lender
        shall have received, in form and substance reasonably satisfactory to Lender,
        all agreements, notes, certificates, authorizations, and other documents
        as
        Lender may reasonably request to evidence the advance of the Additional Tranche
        and Borrower’s corporate authorization to request such Additional
        Tranche.

       

      (C)  Representations
        and Warranties.
        The
        representations and warranties contained herein and in the other Loan Documents
        shall be true, correct and complete on and as of the date of the funding
        of the
        Additional Tranche to the same extent as though made on and as of that date,
        except for any representation or warranty limited by its terms to a specific
        date.

       

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

      

        (D)  No
          Prohibition.
          No
          order, judgment or decree of any court, arbitrator or governmental authority
          shall purport to enjoin or restrain Lender from advancing the Additional
          Tranche.

         

        (E)  No
          Default.
          No
          event shall have occurred and be continuing or would result from the
          consummation of the requested borrowing that would constitute an Event
          of
          Default or a Default.

         

        (F)  No
          Litigation.
          On and
          as of the date of the funding of the Additional Tranche, there shall not
          be
          pending or, to the knowledge of any Credit Party, threatened, any action,
          charge, claim, demand, suit, proceeding, petition, governmental investigation
          or
          arbitration by, against or affecting any Credit Party or any property of
          any
          Credit Party that has not been disclosed by Borrower in writing, and there
          shall
          have occurred no development in any such action, charge, claim, demand,
          suit,
          proceeding, petition, governmental investigation or arbitration that, in
          the
          opinion of Lender, could reasonably be expected to have a Material Adverse
          Effect.

         

        SECTION
          4 BORROWER’S
          REPRESENTATIONS AND WARRANTIES

         

        To
          induce
          Lender to enter into this Agreement, and to fund the Additional Tranche,
          the
          Credit Parties represent and warrant to Lender that the following statements
          are
          true, correct and complete. Such representations and warranties, and all
          other
          representations and warranties made by the Credit Parties herein or in
          the other
          Loan Documents, shall survive the execution and delivery of this Agreement
          and
          the closing contemplated hereby:

         

        4.1    Organization,
          Powers, Capitalization.

         

        (A)  Organization
          and Powers.
          The
          Credit Parties are entities duly organized, validly existing and in good
          standing under the laws of the jurisdiction of their incorporation or formation
          and are qualified to do business as a foreign corporation in each jurisdiction
          where such qualification is required except where failure to be so qualified
          could not be reasonably expected to have a Material Adverse Effect. The
          Credit
          Parties have all requisite power and authority to own and operate their
          properties, to carry on their business as now conducted and proposed to
          be
          conducted and to enter into each Loan Document to which they are a
          party.

         

        (B)  Capitalization.
          The
          Capital Stock of each Credit Party is as set forth on Schedule
          4.1(B).
          All
          Capital Stock of each Credit Party is duly authorized and validly issued,
          fully
          paid, non-assessable, free and clear of all Liens (other than Permitted
          Encumbrances) and such shares of Capital Stock were issued in compliance
          with
          all applicable federal, state and local laws concerning the issuance of
          securities. No Capital Stock of any Credit Party other than those described
          above, are issued and outstanding. There are no preemptive or other outstanding
          rights, options, warrants, conversion rights or similar agreements or
          understandings for the purchase or acquisition from any Credit Party of
          any
          equity interests or securities except as set forth on Schedule
          4.1(B).

         

        4.2   Authorization
          of Borrowing; No Conflict.
          The
          Credit Parties have the power and authority to incur the Obligations and
          to
          grant security interests in the Collateral. The execution, delivery and
          performance of the Loan Documents by the Credit Parties will have been
          duly
          authorized by all necessary company and shareholder action. The execution,
          delivery and performance of the Loan Documents by the Credit Parties and
          the
          consummation of the transactions contemplated by this Agreement and the
          other
          Loan Documents by the Credit Parties, do not contravene and will not be
          in
          contravention of any applicable law, organizational documents of any Credit
          Party or any agreement or order by which they or any of their property
          is bound.
          This Agreement and the other Loan Documents, including the Term Note, when
          executed and delivered, are and will be, the legally valid and binding
          obligations of the Credit Parties, enforceable against the Credit Parties
          in
          accordance with their respective terms except as the enforceability thereof
          may
          be limited by applicable bankruptcy, insolvency, moratorium or other similar
          laws effecting the enforcement of creditors rights generally and subject
          to any
          equitable principles limiting the right to obtain specific performance
          of any
          such obligation.

         

        
          
            
            

          

          
            -21-

            
              

            

          

          
            
            

          

        

         

        4.3    Financial
          Condition. 

         

        (A)  All
          financial statements (other than the Projections) concerning the Credit
          Parties
          which have been or will hereafter be furnished by Borrower to Lender pursuant
          to
          this Agreement (i) have been, or will be, prepared in accordance with GAAP
          consistently applied throughout the periods involved (except as disclosed
          therein); (ii) do, or will present fairly, the financial condition of the
          Credit Parties as at the dates thereof and the results of their operations
          for
          the periods then ended; and (iii) do, or will accurately reflect the
          financial condition of the Credit Parties in all material respects. As
          of the
          Closing Date, after giving effect to all of the transactions contemplated
          to
          occur on such Closing Date, all Subsidiaries of the Credit Parties shall
          be
          Consolidated Subsidiaries as determined in accordance with GAAP.

         

        (B)  Except
          as
          set forth on Schedule
          4.9,
          since
          December 31, 2006, there has been no event or development which has had,
          or is
          reasonably likely to have, a Material Adverse Effect. 

         

        (C)  The
          Pro
          Forma was prepared by Borrower based on the audited Consolidated balance
          sheet
          of Borrower and its Affiliates, dated December 31, 2006. 

         

        4.4    Indebtedness
          and Liabilities.
          As of
          the Closing Date, the Credit Parties have no (a) Indebtedness except as
          reflected on the Pro Forma and the most recent financial statements delivered
          to
          Lender; or (b) Liabilities other than as reflected on the Pro Forma, the
          most recent financial statements or other written information delivered
          to
          Lender on or before the Closing Date or as incurred in the ordinary course
          of
          business following the date of the most recent financial statements delivered
          to
          Lender.

         

        4.5    Account
          Warranties.
          As to
          each Account arising from the sale of Inventory or from services rendered,
          that,
          at the time of its creation, (a) such Account is a valid, bona fide
          account, representing an undisputed indebtedness incurred by the named
          account
          debtor for goods actually sold and delivered or for services completely
          rendered, and substantially in accordance with any purchase order, contract
          or
          other document relating thereto; (b) to the Credit Parties’ knowledge,
          there are no defenses, setoffs, offsets or counterclaims, genuine or otherwise,
          against such Account (other than customary prompt payment discounts, the
          Credit
          Parties’ standard warranty policies and the Credit Parties’ promotional payment
          arrangements with such customers); (c) such Account does not represent a
          sale to an Affiliate (except in accordance with Section
          6.6)
          or a
          consignment, sale or return, or a bill and hold transaction; (d) to the
          Credit Parties’ knowledge, no agreement exists permitting any deduction or
          discount (other than the discount stated on the invoice and deductions
          and
          discounts arising from the Credit Parties’ promotional payment arrangements with
          customers); (e) each Credit Party is the lawful owner of such Account and
          has
          the right to assign the same to Lender; (f) such Account is free of all
          Liens
          other than Permitted Encumbrances; (g) such Account is due and payable
          in
          accordance with its terms; and (h) there are no proceedings or actions
          threatened or pending against any account debtor that could reasonably
          be
          expected to have a Material Adverse Effect on such account debtor’s financial
          condition.

         

        
          
            
            

          

          
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        4.6    Names.
          Schedule
          4.6
          sets
          forth all names, trade names, fictitious names and business names under
          which
          the Credit Parties currently conduct business or have at any time during
          the
          past five (5) years conducted business.

         

        4.7   Locations;
          FEIN.
          Schedule
          4.7
          sets
          forth the jurisdiction of organization of each Credit Party, location of
          each
          Credit Party’s chief executive office, principal place of business, the location
          of each Credit Party’s books and records, the location of all other offices of
          the Credit Parties and all Collateral locations, and such locations are
          the
          Credit Parties’ sole locations for their businesses and the Collateral. Each
          Credit Party’s federal employer identification number and entity identification
          number in its state of incorporation or formation is set forth on Schedule
          4.7.

         

        4.8    Title
          to Properties; Liens.
          The
          Credit Parties have good, sufficient and legal title, to all of their respective
          properties and assets. Except for Permitted Encumbrances, all such properties
          and assets are free and clear of Liens. To the knowledge of the Credit
          Parties,
          there are no actual, threatened or alleged defaults with respect to any
          leases
          of real property under which any Credit Party is lessee or lessor which
          could
          reasonably be expected to have a Material Adverse Effect. All Liens of
          the
          Lender in the Collateral are duly perfected subject only to the Permitted
          Liens
          that are expressly allowed to have priority over the Lender’s
          Liens.

         

        4.9    Litigation;
          Adverse Facts.
          Except
          as set forth on Schedule
          4.9,
          there
          are no judgments outstanding against any Credit Party or affecting any
          property
          of any Credit Party nor is there any action, charge, claim, demand, suit,
          proceeding, petition, governmental investigation or arbitration now pending
          or
          threatened against or affecting any Credit Party or any property of any
          Credit
          Party which could have a Material Adverse Effect. No Credit Party has received
          any opinion, memorandum or legal advice from legal counsel to the effect
          that it
          is exposed to any liability which could reasonably be expected to have
          a
          Material Adverse Effect.

         

        4.10  
            Payment
          of Taxes.
          Except
          as set forth on Schedule 4.10,
          all
          material tax returns and reports of the Credit Parties required to be filed
          by
          them have been timely filed, and all Taxes upon such Persons and upon their
          respective properties, assets, income and franchises which are shown on
          such
          returns as due and payable, have been paid when due and payable. As of
          the
          Closing Date, none of the income tax returns of the Credit Parties is under
          audit. No tax liens have been filed or are being asserted with respect
          to any
          such Taxes. The charges, accruals and reserves on the books of the Credit
          Parties in respect of any Taxes or other governmental charges are in accordance
          with GAAP.

         

        4.11  
            Performance
          of Agreements.
          Except
          as set forth on Schedule
          4.11,
          none of
          the Credit Parties is in default in the performance, observance or fulfillment
          of any of the obligations, covenants or conditions contained in any contractual
          obligation of any such Person, and no condition exists that, with the giving
          of
          notice or the lapse of time or both, would constitute a default, which
          in any
          case could reasonably be expected to have a Material Adverse
          Effect.

         

        
          
            
            

          

          
            -23-

            
              

            

          

          
            
            

          

        

         

        4.12   
            Employee
          Benefit Plans.
          The
          Credit Parties and their Subsidiaries are in compliance in all material
          respects
          with all applicable provisions of ERISA, the IRC and all other applicable
          laws
          and the regulations and interpretations thereof with respect to all Employee
          Benefit Plans and Foreign Plans. No liability which could reasonably be
          expected
          to have a Material Adverse Effect has been incurred and remains unsatisfied
          for
          any funding obligation, taxes or penalties with respect to any Employee
          Benefit
          Plan or Foreign Plan. With respect to the Foreign Subsidiaries of the Credit
          Parties, such Foreign Subsidiaries are in compliance in all material respects
          with all Foreign Plans and applicable provisions of all laws, and all
          regulations and interpretations thereof, of all applicable foreign government(s)
          (whether of any foreign national government or any agency or instrumentality
          of
          or province, county, district, department, subdivision or local unit of
          any such
          foreign national government) regarding employee pension plans or employee
          benefit and welfare plans with respect to each employee pension plan or
          employee
          benefit and/or welfare plans maintained by such Foreign Subsidiary, and
          no
          liability which could reasonably be expected to have a Material Adverse
          Effect
          has been incurred and remains unsatisfied for any funding obligation, taxes
          or
          penalties with respect to any such employee pension plan or employee benefit
          and/or welfare plans maintained by such Foreign Subsidiary.

         

        4.13   
            Intellectual
          Property.
          The
          Credit Parties own, are licensed to use, or otherwise have the lawful right
          to
          use, all Intellectual Property, if any, used in or necessary for the conduct
          of
          their respective businesses as currently conducted, and all such Intellectual
          Property, if any, is identified on Schedule 4.13
          without
          conflict with any rights of others. Except as disclosed on Schedule
          4.13,
          no
          Credit Party pays or owes any royalty or any other compensation to any
          Person
          with respect to any Intellectual Property, if any.

         

        4.14  
            Broker’s
          Fees.
          Except
          as set forth on Schedule
          4.14,
          no
          broker’s or finder’s fee or commissions or investing banking fees will be
          payable by reason of any action of the Credit Parties with respect to any
          of the
          transactions contemplated by the Loan Documents.

         

        4.15  
            Environmental
          Compliance.
          Except
          as set forth on Schedule 4.15,
          the
          Credit Parties have been, and are currently in compliance in all material
          respects with all applicable Environmental Laws, including obtaining and
          maintaining in effect all material permits, licenses or other authorizations
          required by applicable Environmental Laws. Except as set forth on Schedule
          4.15,
          there
          are no claims, liabilities, investigations, litigation, administrative
          proceedings, judgments or orders relating to any Hazardous Materials asserted
          or, to the Credit Parties’ knowledge, threatened against any Credit Party or
          relating to any real property currently or formerly owned, leased or operated
          by
          any Credit Party which could reasonably be expected to have a Material
          Adverse
          Effect, and
          the
          Credit Parties
          have no
          knowledge of any release  or threatened release of
          hazardous substances at any real property currently or formerly owned,
          leased or
          operated by any
          Credit Party
          for
          which a
          Credit
          Party is
          legally
          responsible to remediate under applicable laws or which may be or could
          result
          in a material liability.

         

        4.16 
             Solvency.
          After
          giving effect to the transactions contemplated by the Loan Documents and
          the
          Senior Financing Agreement, and, as of, from and after the date of this
          Agreement, the Credit Parties individually and the Credit Parties and their
          Subsidiaries taken as a whole (a) own and will own assets the fair saleable
          value of which are (i) greater than the total amount of its or their (as
          applicable) liabilities (including contingent liabilities) and (ii) greater
          than the amount that will be required to pay the probable liabilities of
          the
          Credit Parties individually and the Credit Parties and their Subsidiaries
          taken
          as a whole (as applicable) as they mature; (b) has capital that is not
          unreasonably small in relation to its or their (as applicable) businesses
          as
          presently conducted or any contemplated or undertaken transaction; and
          (c) does not intend to incur and does not believe that it or they (as
          applicable) will incur debts beyond its or their (as applicable) ability
          to pay
          such debts as they become due.

         

        
          
            
            

          

          
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        4.17
            Disclosure.
          No
          representation or warranty of the Credit Parties contained in this Agreement,
          the other Loan Documents, the financial statements, or any other document,
          certificate or written statement furnished to Lender by or on behalf of
          the
          Credit Parties for use in connection with the Loan Documents contains any
          untrue
          statement of a material fact or omitted, omits or will omit to state a
          material
          fact necessary in order to make the statements contained herein or therein
          not
          misleading in light of the circumstances in which the same were made. There
          is
          no material fact known to any Credit Party that has had or could reasonably
          be
          expected to have a Material Adverse Effect and that has not been fully
          disclosed
          herein or in such other documents, certificates and statements furnished
          to
          Lender for use in connection with the transactions contemplated by the
          Loan
          Documents.

         

        4.18  
            Insurance.
          The
          Credit Parties maintain insurance policies for public liability, worker’s
          compensation, property damage, larceny, embezzlement or other criminal
          misappropriation insurance for their businesses and properties, product
          liability, and business interruption, of types and in amounts customarily
          maintained by comparable businesses; and, as of the Closing Date, no notice
          of
          cancellation has been received with respect to such policies and the Credit
          Parties are in compliance in all material respects with all conditions
          contained
          in such policies.

         

        4.19   
            Compliance
          with Laws.
          Except
          as set forth on Schedule 4.19,
          the
          Credit Parties are not in violation of any law, ordinance, rule, regulation,
          order, policy, guideline or other requirement of any domestic or foreign
          government or any instrumentality or agency thereof, having jurisdiction
          over
          the conduct of their business or the ownership of their properties, including,
          without limitation, any violation relating to any use, release, storage,
          transport or disposal of any Hazardous Material, which violation would
          subject
          any Credit Party or any of its officers to criminal liability or have a
          Material
          Adverse Effect, and no notice of any such violation has been
          received.

         

        4.20   
            Bank
          Accounts.
          Schedule
          4.20
          sets
          forth the account numbers and locations of all bank accounts of the Credit
          Parties.

         

        4.21  
            Subsidiaries.
          Except
          as set forth on Schedule
          4.21,
          the
          Credit Parties have no Subsidiaries.

         

        4.22  
            Employee
          Matters.
          Except
          as set forth on Schedule
          4.22,
          (a) the Credit Parties’ employees are not subject to any collective
          bargaining agreement, management agreement or consulting agreement, (b) no
          petition for certification or union election is pending with respect to
          the
          employees of Borrower and no union or collective bargaining unit has sought
          such
          certification or recognition with respect to the employees of the Credit
          Parties
          and (c) there are no strikes, slowdowns, work stoppages or controversies
          pending or threatened between the Credit Parties and their employees, other
          than
          employee grievances arising in the ordinary course of business which could
          not
          reasonably be expected to have, either individually or in the aggregate,
          a
          Material Adverse Effect. Except as set forth on Schedule
          4.22,
          the
          Credit Parties are not subject to any employment contracts.

         

        
          
            
            

          

          
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        4.23 
            Governmental
          Regulation.
          The
          Credit Parties are not, and, after giving effect to any borrowing hereunder,
          will not be, subject to regulation under the Public Utility Holding Company
          Act
          of 1935, the Federal Power Act or the Investment Company Act of 1940 or
          to any
          foreign, federal or state statute or regulation limiting their ability
          to incur
          indebtedness for borrowed money.

         

        4.24
             Receivables
          and Payables.
          As of
          the Closing Date the
          Credit Parties’ receivables and payables are as set forth in detail on
Schedule
          4.24,
          all of
          which are respectively collectible and payable in the ordinary course of
          business in accordance with the usual terms and conditions of the Credit
          Parties’ businesses, except for uncollectible receivables arising in the
          ordinary course of business, and the Credit Parties have no knowledge of
          any
          fact or circumstance not already disclosed to Lender in writing which could
          impair the validity or collectibility of any Account.

         

        4.25  
            Trade
          Relations.
          Except
          as set forth on Schedule
          4.25,
          as of
          the Closing Date there exists no actual or, to the knowledge of the Credit
          Parties, threatened, termination, limitation or cancellation of, or any
          material
          adverse modification or change in the business relationship of the Credit
          Parties with any customer or supplier or group of customers or suppliers,
          either
          individually or in the aggregate, material to their operations.

         

        4.26
             Absence
          of Defaults.
          Except
          as set forth on Schedule
          4.26,
          as of
          the Closing Date the Credit Parties are not in default under their respective
          articles/certificates of incorporation, certificates of formation, by-laws,
          operating agreements or similar entity governance documents, and no event
          has
          occurred, which has not been remedied (to the extent expressly permitted
          hereunder) or waived in writing by Lender, which constitutes a Default
          or an
          Event of Default, or which constitutes, or which with the passage of time
          or
          giving of notice or both would constitute, a default or event of default
          by any
          Credit Party under any material agreement or judgment, decree or order
          to which
          such Credit Party is a party or by which any Credit Party’s properties may be
          bound or which would require any Credit Party to make any payment under
          any of
          the foregoing prior to the scheduled maturity date therefor.

         

        4.27  
            Loans
          to Shareholders, Directors, Officers or Affiliates.
          Except
          as set forth in detail on Schedule
          4.27,
          the
          Credit Parties have not made any loans or advances to or for the benefit
          of any
          shareholder, director, officer or Affiliate of the Credit Parties, nor
          will any
          such loans or advances be made while the Obligations are outstanding except
          for
          loans that constitute Permitted Investments.

         

        4.28 
             Projections.
          The
          projections (“Projections”)
          attached hereto as Schedule
          4.28
          (a) fairly represent the Credit Parties’ financial projections for the
          period covered thereby, and (b) were prepared in a manner consistent with
          GAAP. The Projections and pro forma financial information contained in
          such
          materials are based upon good faith estimates and assumptions believed
          by the
          Credit Parties to be reasonable at the time made, it being recognized by
          Lender
          that such projections as to future events are not to be viewed as facts
          and that
          actual results during the period or periods covered by any such projections
          may
          differ from the projected results.

         

        4.29
             Surety
          Obligations.
          None of
          the Credit Parties is obligated as surety or indemnitor under any bond
          or other
          contract that assumes payment or performance of any obligation of any Person,
          except as permitted hereunder.

         

        
          
            
            

          

          
            -26-

            
              

            

          

          
            
            

          

        

         

        SECTION
          5 AFFIRMATIVE
          COVENANTS

         

        The
          Credit Parties covenant and agree that until payment and performance in
          full of
          all monetary Obligations hereunder unless Borrower has received the prior
          written consent of Lender, each Credit Party shall perform and shall cause
          each
          of its Subsidiaries to perform all covenants in this Section
          5
          applicable to such Person.

         

        5.1    Financial
          Statements and Other Reports.
          Credit
          Parties and their Subsidiaries shall maintain a system of accounting and
          keep
          such books, records and accounts (which shall be true and complete in all
          material respects), as may be required or as may be necessary to permit
          the
          performance of an annual audit and the preparation of financial statements
          in
          accordance with GAAP, consistently applied. Credit Parties and their
          Subsidiaries will deliver to Lender the financial statements and other
          reports
          described below until payment and performance in full of all Obligations.
          All
          financial statements to be delivered hereunder may be delivered by facsimile,
          regular or express mail or by hand, but shall also be delivered in electronic
          form using the Microsoft Excel.xls format.

         

        (A)  Monthly
          Financials.
          As soon
          as available and in any event within thirty (30) days after the end of
          each
          month, and including, without limitation, each March, June, September and
          December, the Credit Parties will deliver (1) the consolidated and
          consolidating balance sheet of the Credit Parties as at the end of such
          month
          and the related consolidated and consolidating statements of income,
          stockholder’s or member’s (as the case may be) equity and cash flow for such
          month and for the period from the beginning of the then current Fiscal
          Year to
          the end of such month; provided,
          however,
          that
          for the months of July and August 2007, the Credit Parties shall not be
          required
          to deliver the consolidated balance sheet, statements of income, stockholder’s
          or member’s cash flow (as the case may be) for such month, but shall deliver
          unconsolidated balance sheets, statements of income, stockholders’ or members’
cash flow (as the case may be) for such months, and (2) a schedule of the
          outstanding Indebtedness for borrowed money of the Credit Parties describing
          in
          reasonable detail each such debt issue or loan outstanding and the principal
          amount and amount of accrued and unpaid interest with respect to each such
          debt
          issue or loan. 

         

        (B)  Quarterly
          Financials.
          In
          addition to the relevant monthly financial statements referred to in
Section
          5.1(A),
          as soon
          as available and in any event within fifty (50) days after the end of each
          quarter of each Fiscal Year, the Credit Parties and their Subsidiaries
          will
          deliver the Consolidated and consolidating balance sheet of the Credit
          Parties
          and their Subsidiaries, as adjusted in conformity with GAAP, as at the
          end of
          such period and the related consolidated and consolidating statements of
          income,
          stockholder’s or member’s (as applicable), equity and cash flow for such quarter
          of such Fiscal Year and for the period from the beginning of the then current
          Fiscal Year to the end of such quarter of such Fiscal Year.

         

        (C)  Year-End
          Financials.
          In
          addition to the relevant monthly and quarterly financial statements referred
          to
          in Section
          5.1(A) and 5.1(B),
          as soon
          as available and in any event within one hundred five (105) days after
          the end
          of each Fiscal Year, the Credit Parties and their Subsidiaries will deliver
          to
          Lender: (1) the audited Consolidated and consolidating balance sheet of the
          Credit Parties and their Subsidiaries as at the end of such year and the
          related
          consolidated and consolidating statements of income, stockholder’s or member’s
          (as applicable) equity and cash flow for such Fiscal Year; (2) a schedule
          of the outstanding Indebtedness of the Credit Party and their Subsidiaries
          describing in reasonable detail each such debt issue or loan outstanding
          and the
          principal amount and amount of accrued and unpaid interest with respect
          to each
          such debt issue or loan; (3) a report with respect to the financial
          statements from Virchow, Krouse and Company LLP or another firm of independent
          certified public accountants selected by Borrower and reasonably acceptable
          to
          Lender, which report shall be unqualified as to going concern and scope
          of audit
          of the Credit Parties and their Subsidiaries and shall state (a) that such
          financial statements present fairly the financial position of the Credit
          Parties
          and their Subsidiaries as at the dates indicated and the results of their
          operations and cash flow for the periods indicated in conformity with GAAP
          applied on a basis consistent with prior years and (b)  that the
          examination by such accountants in connection with such financial statements
          has
          been made in accordance with generally accepted auditing standards and
          (c) such accountants acknowledge that Lender is relying on such
          statements.

         

        
          
            
            

          

          
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        (D)  Accountants’
          Certification and Reports.
          Promptly upon receipt thereof, the Credit Parties and their Subsidiaries
          will
          deliver (i) copies of all reports submitted to the Credit Parties and their
          Subsidiaries by their independent public accountants in connection with
          each
          annual, interim or special audit or review of the financial statements
          or
          financial controls of the Credit Parties and their Subsidiaries made by
          such
          accountants, including the comment letter submitted by such accountants
          to
          management or any member or committee of the Credit Parties and their
          Subsidiaries in connection with their annual, interim or special audit
          or
          review, and (ii) a certificate of the independent public accountants who
          performed such annual, interim or special audits or review, to the effect
          that,
          in making the examination necessary for the audits or review, they have
          obtained
          no knowledge of any condition or event which constitutes a Default or Event
          of
          Default, or if such accountants shall have obtained knowledge of any such
          condition or event, specifying in such certificate each such condition
          or event
          of which they have knowledge and the nature and status thereof.

         

        (E)  Management
          Report.
          Together with each delivery of financial statements of the Credit Parties
          pursuant to subsections (A), (B) and (C) of this Section
          5.1,
          except
          as specified otherwise in Section
          5.1 (E)(3)
          below,
          Borrower will deliver a management report: (1) describing the operations
          and
          financial condition of the Credit Parties and their Subsidiaries for the
          month
          then ended and the portion of the current Fiscal Year then elapsed (or
          for the
          Fiscal Year then ended in the case of year-end financials); (2) setting
          forth in
          comparative form (x) the corresponding figures for such monthly and year-to-date
          (or yearly, if applicable) periods as set forth in the Projections (or,
          if
          applicable, the yearly projections delivered to Lender under Section
          5.1(F)
          below)
          and (y) the corresponding figures for the corresponding monthly and year-to-date
          (or yearly, if applicable) period in the previous Fiscal Year, in each
          case
          setting forth the variances between the current figures and the corresponding
          figures from the applicable Projections or projections and prior Fiscal
          Year;
          (3) with respect only to the financial statements to be delivered pursuant
          to
          subdivisions (B) and (C) of this Section
          5.1,
          setting
          forth a schedule showing the calculation of the financial covenants specified
          in
Section
          6.18;
          (4) a
          copy of any written statements or reports made to Senior Lender during
          the
          period under review; and (5) a true and complete copy of the applicable
          month
          end borrowing base certificate delivered by Borrower to Senior Lender.
          The
          information above shall be presented in reasonable detail and shall be
          certified
          (the “Officer’s
          Certificate”)
          (which
          such Officer’s Certificate shall be reasonably satisfactory to Lender in form
          and substance) on behalf of the Credit Parties and their Subsidiaries by
          the
          chief financial officer, director of finance, chief executive officer or
          president of Borrower to the effect that (i) such information is accurate
          and
          complete in all material aspects or, in the case of financial statements,
          fairly
          presents the results of operations and financial condition of the Credit
          Parties
          and their Subsidiaries as at the dates and for the periods indicated, (ii)
          as of
          the date of such certification, there does not exist any Default or Event
          of
          Default or, if an Event of Default or Default existed, describing the nature
          and
          period of existence thereof and the action which the Credit Parties and
          their
          Subsidiaries propose to take or have taken with respect thereto, and (iii)
          the
          representations and warranties contained in this Agreement and in the other
          Loan
          Documents remain in full force and effect and are true and accurate in
          all
          respects as of the date of delivery of the management report, except (x)
          to the
          extent such representations and warranties relate solely and expressly
          to an
          earlier date, (y) for revisions or updates to any Schedule(s) approved
          by Lender
          pursuant to Section
          5.16,
          and (z)
          for such changes in circumstances of the Credit Parties and their Subsidiaries
          that are expressly permitted under this Agreement.

         

        
          
            
            

          

          
            -28-

            
              

            

          

          
            
            

          

        

         

        (F)  Projections.
          At
          least sixty (60) days before the beginning of each Fiscal Year of the Credit
          Parties, the Credit Parties and their Subsidiaries shall deliver to Lender
          the
          projected Consolidated and consolidating balance sheets and income and
          cash flow
          statements of the Credit Parties and their Subsidiaries for each month
          of such
          Fiscal Year, each in reasonable detail, reporting the Credit Parties’ good faith
          projections and certified by the Credit Parties’ chief financial officer as
          being the most accurate projections available and identical to the projections
          used by the Credit Parties and their Subsidiaries for internal planning
          purposes, together with a statement of underlying assumptions and such
          supporting schedules and information as Lender may in its discretion
          require.

         

        (G)  Financial
          Statements for Alfred Lam.
          As soon
          as available, and in any event within one hundred twenty (120) days after
          the
          close of each Fiscal Year, Borrower shall deliver to Lender financial statements
          for Alfred Lam, in form and substance satisfactory to Lender.

         

        (H)  Revolving
          Advance Requests.
          Borrower shall deliver to the Lender, simultaneously with delivery thereof
          to
          Senior Lender, true, complete and accurate copies of each request for Revolving
          Advances (as defined in the Senior Financing Agreement) delivered by Borrower
          to
          Senior Lender from time to time pursuant to the Senior Financing
          Agreement.

         

        (I)  Tax
          Returns.
          Within
          twenty (20) days after the filing thereof, the Credit Parties shall deliver
          to
          Lender a copy of the annual federal (and, if requested by Lender, state
          or
          other) tax return (and any amended return) of the Credit Parties, certified
          by
          the chief financial officer or chief executive officer of such Credit Party
          to
          be accurate and complete in all material respects. 

         

        (J)  Government
          Notices.
          The
          Credit Parties will deliver to Lender promptly after receipt copies of
          all
          notices, requests, subpoenas, inquiries or other writings received from
          any
          governmental agency concerning the violation or alleged violation of any
          Environmental Laws, the storage, use or disposal of any Hazardous Material,
          the
          violation or alleged violation of the Fair Labor Standards Act or the Credit
          Parties’ payment or non-payment of any taxes including any tax
          audit.

         

        (K)    
           Events
          of Default, etc.
          Within
          three (3) Business Days following the day any officer of any Credit Party
          obtains knowledge of any of the following events or conditions, the Credit
          Parties shall deliver to Lender a certificate signed by Borrower’s chief
          executive officer or president specifying the nature and period of existence
          of
          such condition or event and what action the Credit Parties have taken,
          are
          taking, and propose to take, with respect to: (1) any condition or event
          that constitutes an Event of Default or Default; (2) any
          notice
          of material default that any Person has given to any Credit Party or any
          other
          action taken with respect to a claimed material default under any contractual
          or
          other obligation; (3) any matter which has had or could reasonably be
          expected to have a Material Adverse Effect; (4) the resignation or termination
          of Alfred Lam or (5) the chief executive officer or chief financial officer
          resigns, is terminated or ceases to exercise the rights and duties of their
          respective office.

         

        
          
            
            

          

          
            -29-

            
              

            

          

          
            
            

          

        

         

        (L)  Trade
          Names.
          The
          Credit Parties will give Lender at least thirty (30) days advance written
          notice
          of any change of name or of any new trade name or fictitious business name.
          Any
          Credit Party’s use of any trade name or fictitious business name will be in
          compliance with all laws regarding the use of such names.

         

        (M)   
           Locations.
          The
          Credit Parties will give Lender at least thirty (30) days advance written
          notice
          of any change in any Credit Party’s principal place of business or any change in
          the location of their books and records or the Collateral or of any new
          location
          for their books and records or the Collateral.

         

        (N)    
           Bank
          Accounts.
          The
          Credit Parties will give Lender prompt notice of any new bank accounts
          any
          Credit Party intends to establish prior to their opening same, and if required
          by Lender, the Credit Parties will cause such bank accounts to be subject
          to a
          control agreement in favor of Lender.

         

        (O)  Certified
          Public Accountants.
          Within
          three (3) Business Days of the resignation or termination of the Credit
          Parties’
current certified public accountants Virchow, Krouse and Company LLP or
          any
          certified public accountants hereafter engaged by the Credit Parties with
          Lender’s prior written consent, the Credit Parties shall notify Lender in
          writing of such occurrence and the reason(s) therefor.

         

        (P)  Litigation.
          Within
          one (1) day after any officer of any Credit Party obtains knowledge of
          (1) the institution of any action, suit, proceeding, governmental
          investigation or arbitration against or affecting any Credit Party or any
          property of the Credit Parties not previously disclosed by the Credit Parties
          to
          Lender in writing or (2) any material development in any action, suit,
          proceeding, governmental investigation or arbitration at any time pending
          against or affecting the Credit Parties or any property of the Credit Parties
          which, in the case of the preceding clauses (1) or (2), could reasonably
          be
          expected to have a Material Adverse Effect, the Credit Parties will promptly
          give written notice thereof to Lender and provide such other information
          as may
          be reasonably available to them to enable Lender and its counsel to evaluate
          such matter.

         

        (Q)  Other
          Information.
          With
          reasonable promptness, the Credit Parties shall deliver such other information
          and data as may be available to and disclosable by the Credit Parties with
          respect to any Credit Party, or the Collateral as Lender may reasonably
          request
          from time to time.

         

        5.2   
             Access
          to Accountants.
          The
          Credit Parties authorize Lender to discuss the financial condition and
          financial
          statements of the Credit Parties with the Credit Parties’ independent public
          accountants upon reasonable notice to the Credit Parties of Lender’s intention
          to do so, and irrevocably authorize and direct such accountants to respond
          to
          all of Lender’s inquiries relating to the Credit Parties’ financial condition
          and financial statements and furnish Lender with all such documentation
          as
          Lender may reasonably request. The Credit Parties release their independent
          public accountants from any liability for furnishing the information and
          documents required by Lender. On the Closing Date, the Credit Parties shall
          deliver to Lender a written and irrevocable letter addressed to the Credit
          Parties’ accountants directing them to comply with the provisions of this
Section
          5.2.

         

        
          
            
            

          

          
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        5.3    Inspection.
          The
          Credit Parties shall, at the Credit Parties’ cost and expense, permit Lender and
          any authorized representatives designated by Lender to visit and inspect
          any of
          the properties of the Credit Parties, including their financial and accounting
          records, and in conjunction with such inspection, to make copies and take
          extracts therefrom, and to discuss their affairs, finances and business
          with
          their officers and independent public accountants, at such reasonable times
          during normal business hours and as often as may be reasonably
          requested. 

         

        5.4   Collateral
          Records.
          The
          Credit Parties shall keep full and accurate books and records relating
          to the
          Collateral and, promptly after being requested by Lender, shall mark such
          books
          and records to indicate Lender’s security interests in the
          Collateral.

         

        5.5   Account
          Covenants; Verification.
          The
          Credit Parties shall, at their own expense use their best efforts to assure
          prompt payment of all amounts due or to become due under the Accounts.
          No
          discounts, credits or allowances (other than normal prompt payment discounts
          and
          customer promotional arrangements discounts) will be issued, granted or
          allowed
          by the Credit Parties to customers, other than in the ordinary course of
          business, and no returns will be accepted, without Lender’s prior written
          consent, except in the ordinary course of business and to the extent authorized
          under the Senior Financing Agreement or authorized by the Senior Lender.
          The
          Credit Parties will promptly notify Lender in the event that a customer
          alleges
          any material dispute or claim with respect to an Account or Accounts in
          excess
          of Five Thousand Dollars ($5,000) individually or Ten Thousand Dollars
          ($10,000)
          in the aggregate during any fiscal year or of any other circumstances known
          to
          the Credit Parties that may impair, in any material respect, the validity
          or
          collectibility of the Accounts so as to cause a Material Adverse Effect.
          Lender
          shall have the right, at any time or times hereafter, to verify the validity,
          amount or any other matter relating to an Account, by mail, telephone or
          in
          person. After the occurrence and during the continuance of an Event of
          Default,
          the Credit Parties shall not, without the prior consent of Lender, adjust,
          settle or compromise the amount or payment of any Account, or release wholly
          or
          partly any customer or obligor thereof, or allow any credit or discount
          thereon,
          except to the extent authorized by the Senior Financing Agreement or by
          the
          Senior Lender. 

         

        5.6    Endorsement.
          Upon
          the occurrence of and during the continuance of an Event of Default, Borrower
          hereby constitutes and appoints Lender and all Persons designated by Lender
          for
          that purpose as the Credit Parties’ true and lawful attorney-in-fact, with power
          to endorse the Credit Parties’ names to any check or other instrument and all
          proceeds of Collateral that come into Lender’s possession or under Lender’s
          control. Both the appointment of Lender as the Credit Parties’ attorney and
          Lender’s rights and powers are coupled with an interest and are irrevocable
          until payment in full and complete performance of all of the
          Obligations.

         

        5.7    Corporate
          Existence.
          Each
          Credit Party will at all times preserve and keep in full force and effect
          its
          corporate existence and all rights and franchises material to its business.
          Each
          Credit Party will notify Lender within one (1) Business Day of any change
          in its
          ownership or corporate structure.

         

        
          
            
            

          

          
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        5.8    Payment
          of Taxes.
          The
          Credit Parties will pay all Taxes imposed upon them or any of their properties
          or assets or with respect to any of their franchises, businesses, income
          or
          property before any penalty accrues thereon, provided that
          no such
          tax need be paid if the Credit Parties are contesting the same in good
          faith by
          appropriate proceedings promptly instituted and diligently conducted and
          if the
          Credit Parties have established appropriate reserves as shall be required
          in
          conformity with GAAP or as required by the IRC.

         

        5.9    Maintenance
          of Properties; Insurance.
          The
          Credit Parties will maintain or cause to be maintained in good repair,
          working
          order and condition, normal wear and tear excepted, all properties used
          in the
          businesses of the Credit Parties and will make or cause to be made all
          appropriate repairs, renewals and replacements thereof, and will protect
          and
          preserve all material registered or registrable Intellectual Property (now
          or
          hereafter existing). The Credit Parties will maintain or cause to be maintained,
          with financially sound and reputable insurers (rated A+ or better by Best
          Rating
          Guide), public liability, worker’s compensation, property damage, larceny,
          embezzlement, or other criminal misappropriation insurance with respect
          to their
          businesses and properties against loss or damage of the kinds customarily
          carried or maintained by corporations of established reputation engaged
          in
          similar businesses and in amounts reasonably acceptable to Lender. Subject
          to
          the rights of the Senior Lender, the Credit Parties shall cause Lender
          to be
          named as “lender’s loss payee” on all insurance policies relating to any
          Collateral and as “additional insured” under all liability policies, in each
          case pursuant to appropriate endorsements in form and substance reasonably
          satisfactory to Lender and shall, subject to the Intercreditor Agreement,
          collaterally assign to Lender as security for the payment of the Obligations
          all
          business interruption insurance of the Credit Parties. Subject to the rights
          of
          the Senior Lender, the Credit Parties shall apply any proceeds received
          from any
          policies of insurance relating to any Collateral to the Obligations. 

         

        5.10  
            Compliance
          with Laws.
          Except
          to the extent provided in Schedule 4.19,
          the
          Credit Parties will comply with the requirements of all applicable laws,
          rules,
          regulations and orders of any governmental authority as now in effect and
          which
          may be imposed in the future in all jurisdictions in which the Credit Parties
          are now doing business or may hereafter be doing business, except to the
          extent
          that non-compliance with such laws, rules, regulations and orders the
          noncompliance with which could not reasonably be expected to have a Material
          Adverse Effect.

         

        5.11  
            Further
          Assurances.
          The
          Credit Parties will, from time to time, execute such guaranties, financing
          or
          continuation statements, security agreements, reports and other documents
          or
          deliver to Lender such instruments, certificates of title or other documents
          as
          Lender may reasonably request to evidence, perfect or otherwise implement
          the
          guaranties and security for repayment of the Obligations provided for in
          the
          Loan Documents. At Lender’s request, the Credit Parties shall cause any
          wholly-owned or substantially wholly-owned Subsidiaries of Borrower promptly
          to
          guaranty the Obligations and to grant to Lender security interests in the
          real,
          personal and mixed property of such Subsidiary to secure the Obligations
          (it
          being acknowledged that the creation of Subsidiaries is restricted by
Section
          6.10).

         

        5.12   
            Collateral
          Locations.
          The
          Credit Parties will keep the Collateral (other than in-transit Collateral,
          including Inventory, Equipment and supplies and materials or Collateral
          that is
          otherwise moved in the ordinary course of business) at the locations specified
          on Schedule 4.7;
          provided,
          however,
          that
          the Credit Parties may amend Schedule
          4.7
          so long
          as such amendment occurs by written notice to Lender not less than thirty
          (30)
          days prior to the date on which such Collateral is moved. With respect
          to any
          new location (which with respect to Borrower, in any event shall be within
          the
          continental United States), the Credit Parties will execute such documents
          and
          take such actions as Lender deems necessary to perfect and protect the
          security
          interests of Lender in the Collateral prior to the transfer or removal
          of any
          Collateral to such new location.

         

        
          
            
            

          

          
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        5.13   
            Bailees.
          If any
          Collateral is at any time in the possession or control of any warehouseman,
          bailee or any of the Credit Parties’ agents or processors, the Credit Parties
          shall, upon the request of Lender, notify such warehouseman, bailee, agent
          or
          processor of the security interests in favor of Lender created hereby,
          shall
          instruct such Person to hold all such Collateral for Lender’s account subject to
          Lender’s instructions and shall cause such Person to execute an access and
          waiver agreement reasonably acceptable to Lender.

         

        5.14  
            Use
          of
          Proceeds and Margin Security.
          The
          Credit Parties shall use the proceeds of all Loans for proper business
          purposes
          (as described in Section
          2.2)
          consistent with all applicable laws, statutes, rules and regulations. No
          portion
          of the proceeds of any Loan shall be used by the Credit Parties for the
          purpose
          of purchasing or carrying of margin stock within the meaning of Regulation
          U, or
          in any manner that might cause the borrowing or the application of such
          proceeds
          to violate Regulation T or Regulation X or any other regulation of the
          Board of
          Governors of the Federal Reserve System, or to violate the Exchange
          Act.

         

        5.15  
            Observer
          and Other Rights.
          The
          Credit Parties shall hold regularly scheduled meetings of the directors
          at least
          quarterly, and Lender shall have the right from time to time (i) to
          designate a representative to attend and serve as an observer at such meetings
          and who shall have the right to receive twenty-eight (28) days prior notice
          of
          any quarterly meeting (specifying the matters to be discussed or acted
          upon) of
          the directors of the Credit Parties, and (ii) to receive on a timely basis
          and simultaneously with receipt thereof by directors, copies of all written
          information provided to the directors of the Credit Parties. Borrower agrees
          to
          reimburse Lender for all of its reasonable hotel, travel, meals and other
          out-of-pocket expenses incurred by Lender’s representative in attending any
          meeting of directors of any Credit Party, if any, upon presentation of
          invoices
          or other documentation of such expenses. The first meeting of the directors
          of
          Borrower shall be held on or about September 1, 2007.

         

        5.16 
            Revisions
          or Updates to Schedules.
          Should
          any of the information or disclosures provided on any of the Schedules
          originally attached hereto become outdated or incorrect in any material
          respect,
          the Credit Parties shall deliver to Lender, along with the Officer’s Certificate
          required under Section
          5.1(E),
          such
          revisions or updates to such Schedule(s) as may be necessary or appropriate
          to
          update or correct such Schedule(s), provided,
          that
          no such
          revisions or updates to any Schedule(s) shall be deemed to have amended,
          modified or superseded such Schedule(s) as originally attached hereto,
          or to
          have cured any breach of warranty or representation resulting from the
          inaccuracy or incompleteness of any such Schedule(s), unless and until
          Lender,
          in the exercise of its reasonable credit judgment, shall have accepted
          in
          writing such revisions or updates to such Schedule(s). Without limiting
          the
          generality of the foregoing or of Section
          5.1(E),
          each
          representation and warranty contained in this Agreement and the other Loan
          Documents shall be continuous in nature and shall remain accurate, complete
          and
          not misleading in all material respects at all times during the term of
          this
          Agreement, except for revisions or updates to any Schedule(s) approved
          by Lender
          pursuant to the preceding sentence and such changes in the circumstances
          of the
          Credit Parties that are expressly permitted under this Agreement.

         

        
          
            
            

          

          
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        5.17   
            Accounting
          Methods and Financial Records.
          The
          Credit Parties shall maintain a system of accounting, and keep such books,
          records and accounts (which shall be true and complete in all material
          respects), as may be required or as may be necessary to permit the performance
          of an annual audit and the preparation of financial statements in accordance
          with GAAP, consistently applied.

         

        5.18 
             Life
          Insurance.
          Borrower shall obtain and thereafter maintain a life insurance policy on
          the
          life of Alfred Lam in the amount of One Million Dollars ($1,000,000), and
          collaterally assign and deliver such policy to Lender (in form and substance
          satisfactory to Lender) as additional Collateral for the Obligations within
          Thirty (30) days of the Closing Date. Without the prior written consent
          of
          Lender, Borrower shall not cancel, terminate, modify or amend said life
          insurance policy or the coverages thereunder, nor shall it borrow against
          same,
          further assign, hypothecate or alienate its interest in same. 

         

        5.19   
            Accuracy
          of Information.
          All
          written information, reports, statements and other papers and data furnished
          to
          Lender, whether pursuant to this Section 5
          or any
          other provision of this Agreement or of any other Loan Document, shall
          be, at
          the time the same is so furnished, complete and correct in all material
          respects
          (subject to the provisions regarding Projections set forth in Section 4.28)
          to the
          extent necessary to give Lender true and accurate knowledge of the subject
          matter thereof.

         

        5.20  
            Notice
          of Management Changes.
          The
          Credit Parties shall provide notice to Lender via e-mail and telephone
          to one of
          the managing partners of Lender within one (1) Business Day following the
          occurrence of the following: Alfred Lam leaves his office for whatever
          reason or
          ceases to exercise the rights and duties of such office. After such notice,
          the
          Credit Parties shall, within three (3) Business Days, provide written notice
          in
          accordance with Section
          8.6
          of this
          Agreement of any of the foregoing occurrence.

         

        5.21  
            Landlord
          Waiver.
          Borrower shall deliver to Lender, a landlord
          waiver (together with copy of the related lease), in form and substance
          satisfactory to Lender, for the premises located at 153-04 Rockaway Blvd,
          Jamaica, New York 11434.

         

        5.22  
            Landlord
          and Storage Agreements.
          Borrower
          shall deliver to Lender copies of all existing agreements, and promptly
          after
          execution thereof, provide the Lender with copies of all future agreements,
          between any Credit Party and any landlord, warehouseman, processor, shipper,
          bailee or other Person that owns any premises at which any Collateral may
          be
          kept or that otherwise may possess, control or handle any
          Collateral. 

         

        SECTION
          6 NEGATIVE
          COVENANTS

         

        The
          Credit Parties covenant and agree that until payment and performance in
          full of
          all monetary Obligations hereunder unless Borrower has received the prior
          written consent of Lender, each Credit Party shall perform and shall cause
          each
          of its Subsidiaries to perform all covenants in this Section
          6
          applicable to such Person. 

         

        6.1    Indebtedness
          and Liabilities.
          The
          Credit Parties shall not directly or indirectly create, incur, assume,
          guaranty,
          or otherwise become or remain directly or indirectly liable, on a fixed
          or
          contingent basis, with respect to any Indebtedness except: (a) the
          Obligations; (b) Capital Leases and purchase money financing for Equipment
          entered into in the ordinary course of business (subject to Section
          6.18);
          (c) trade payables and normal accruals in the ordinary course of business
          not yet due and payable or with respect to which the Credit Parties are
          contesting in good faith the amount or validity thereof by appropriate
          proceedings and then only to the extent that the Credit Parties have established
          adequate reserves therefor, if appropriate under GAAP, (d) shareholder
          debt, so long as each obligee of shareholder debt, prior to or contemporaneously
          with the incurrence of the shareholder debt, shall have subordinated the
          right
          of such obligee to receive payments thereon pursuant to a subordination
          agreement in favor of Lender in form and substance satisfactory to Lender,
          and
          subordinated debt permitted under Section
          6.10
          below,
          (e) Indebtedness described in Section
          4.4(a)
          hereof,
          (f) Permitted Indebtedness, and (g) the Senior Indebtedness.

         

        
          
            
            

          

          
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        6.2    Guaranties.
          Except
          as set forth on Schedule
          6.2
          and
          except for the Guaranties and endorsements of instruments or items of payment
          for collection in the ordinary course of business, the Credit Parties shall
          not
          guaranty, endorse, or otherwise in any way become or be responsible for
          any
          obligations of any other Person, whether directly or indirectly, by agreement
          to
          purchase the Indebtedness of any other Person or through the purchase of
          goods,
          supplies or services, or maintenance of working capital or other balance
          sheet
          covenants or other financial conditions, or by way of stock purchase, capital
          contribution, advance or loan for the purpose of paying or discharging
          any
          indebtedness or obligation of such other Person or otherwise.

         

        6.3    Transfers,
          Liens and Related Matters.

         

        (A)  Transfers.
          The
          Credit Parties shall not sell, assign (by operation of law or otherwise)
          or
          otherwise dispose of, or grant any option with respect to any of the Collateral
          or other assets, except that the Credit Parties may (i) sell Inventory and
          dispose of obsolete or excess Equipment in the ordinary course of business;
          and
          (ii)  make other Asset Dispositions (subject to Section
          2.5(D)
          above)
          if all of the following conditions are met: (1) the aggregate market value
          of assets sold or otherwise disposed of does not exceed Seventy-Five Thousand
          Dollars ($75,000) in the aggregate during any period of twelve consecutive
          month; (2) the consideration received is at least equal to the fair market
          value of such assets; (3) the sole consideration received is cash; and
          (4) no Default or Event of Default shall then exist or shall result from
          such Asset Disposition. 

         

        (B)  Liens.
          Except
          for Permitted Encumbrances, the Credit Parties shall not directly or indirectly
          create, incur or assume (or agree to create, incur or assume) or permit
          to exist
          any Lien on or with respect to any of the Collateral or other assets or
          any
          proceeds, income or profits therefrom.

         

        (C)   No
          Pledge Restrictions.
          The
          Credit Parties shall not enter into or assume any agreement (other than
          the Loan
          Documents, the Senior Financing Agreement, and any document evidencing
          or
          governing Permitted Indebtedness) restricting the creation or assumption
          of any
          Lien upon any of their properties or assets, whether now owned or hereafter
          acquired.

         

        6.4    Restricted
          Payments.
          The
          Credit Parties and their Subsidiaries shall not directly or indirectly
          declare,
          order, pay, make or set apart any sum for any Restricted Payment, except
          as
          expressly permitted in this Agreement or any other Loan Document, except
          that as
          long as no Event of Default has occurred and is continuing or would occur
          hereunder as a result of such payment(s), Borrower may make distributions
          to its
          directors in an aggregate amount equal to each director’s actual federal, state
          and local income tax liability for any applicable tax year (or applicable
          portion thereof) attributable to each such director’s taxable income, for each
          taxable year (or portion thereof) of the Credit Parties and their Subsidiaries,
          provided further
          that
          (x) as a condition precedent to any such payment, the Credit Parties and
          their Subsidiaries shall (1) deliver to Lender a letter, in form and
          substance reasonably satisfactory to Lender, from their independent public
          accountants, detailing the amount necessary to be applied to the applicable
          period with respect to which such tax payment is to be made, and (2) such
          payment or distribution shall be limited to amount(s) specified in said
          letter;
          and (y) after any redetermination of the Credit Parties and their
          Subsidiaries’ taxable income for such period, each of the Credit Parties’
directors shall be obligated to repay to such Credit Party the aggregate
          amount
          (if any) by which such distribution exceeded the allocable amount of such
          director’s actual tax liability.

         

        
          
            
            

          

          
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        6.5    Restriction
          on Fundamental Changes.
          The
          Credit Parties shall not: (a) undergo a Change of Control; or
          (b) except with thirty (30) days prior written notice to Lender, change
          their jurisdiction of incorporation, type of organization (as defined in
          the
          UCC) tax, charter or other organizational number, or their legal name/s;
          or
          (c) acquire by purchase or otherwise all or substantially all of the assets
          of, or stock or other evidence of beneficial ownership, of any Person or
          any
          business division of any Person without Lender’s prior written consent; or
          (d) merge into or consolidate with any other Person, except that any
          Subsidiary of Borrower may merge into or consolidate with Borrower or any
          other
          wholly-owned Subsidiary of Borrower; or (e) liquidate, wind up their affairs
          or
          undergo any dissolution. 

         

        6.6    Transactions
          with Affiliates.
          Except
          as set forth on Schedule
          6.6,
          the
          Credit Parties shall not directly or indirectly, enter into or permit to
          exist
          any transaction (including the purchase, sale or exchange of property or
          the
          rendering of any service) with any Affiliate or with any officer, director
          or
          employee of any Credit Party, except for (subject to Section
          6.17)
          transactions in the ordinary course of and pursuant to the reasonable
          requirements of the Credit Parties’ businesses and upon fair and reasonable
          terms which are fully disclosed to Lender and which are no less favorable
          to the
          Credit Parties than they would obtain in a comparable arm’s length transaction
          with an unaffiliated Person.

         

        6.7    Environmental
          Liabilities.
          The
          Credit Parties shall not: (a) except to the extent provided in Schedule 4.19,
          violate
          in any material respect any applicable Environmental Law; (b) dispose of
          any Hazardous Materials (except in accordance with applicable law) into,
          onto or
          from, any real property owned, leased or operated by any Credit Party;
          or
          (c) permit any Lien imposed pursuant to any Environmental Law to be imposed
          or to remain on any real property owned, leased or operated by any Credit
          Party.

         

        6.8    Conduct
          of Business.
          The
          Credit Parties shall not engage in any business other than businesses of
          the
          type engaged in by the Credit Parties on the Closing Date and any businesses
          reasonably related thereto without the prior consent of Lender which consent
          shall not be unreasonably withheld, conditioned or delayed.

         

        6.9    Compliance
          with ERISA.
          The
          Credit Parties shall not establish any new Employee Benefit Plan or Foreign
          Plan
          or amend any existing Employee Benefit Plan or Foreign Plan after the Closing
          Date if the liability or increased liability resulting from such establishment
          or amendment could reasonably be expected to have a Material Adverse Effect.
          The
          Credit Parties shall establish, maintain and operate each Employee Benefit
          Plan
          and Foreign Plan in compliance in all material respects with the provisions
          of
          ERISA, the IRC and all other applicable laws and the regulations and
          interpretations thereof. No Foreign Subsidiary of Borrower shall establish
          any
          employee pension plan or employee benefit and/or welfare plans or amend
          any
          existing employee pension plan or employee benefit and/or welfare plans
          if the
          liability or increased liability resulting from such establishment or amendment
          could reasonably be expected to have a Material Adverse Effect, and each
          Foreign
          Subsidiary shall establish maintain and operate each employee pension plan
          or
          employee benefit and/or welfare plans in compliance in all material respects
          with all applicable provisions of all laws, and all regulations and
          interpretations thereof, of all applicable foreign government(s) (whether
          of any
          foreign national government or any agency or instrumentality of or province,
          county, district, department, subdivision or local unit of any such foreign
          national government) regarding such employee pension plans or employee
          benefit
          and welfare plans with respect to each employee pension plan or employee
          benefit
          and/or welfare plans maintained by such Foreign Subsidiary.

         

        
          
            
            

          

          
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        6.10  
            Subsidiaries.
          The
          Credit Parties shall not establish, create or acquire any Subsidiaries
          after the
          Closing Date unless (i) Lender grants its prior written consent thereto
          (such consent not to be unreasonably withheld, conditioned, or delayed);
          (ii) the Credit Parties shall have given Lender not less than twenty (20)
          days prior written notice of the proposed establishment, creation or acquisition
          which notice shall include, in reasonable detail, (x) a description of the
          proposed transaction including all relevant financial information, and
          (y) a subordination agreement to and in favor of Lender of any Indebtedness
          to be incurred by the Credit Parties in making the proposed transaction;
          (iii) such Subsidiary conducts substantially the same business as is being
          conducted by the Credit Parties; (iv) such transaction otherwise complies
          with the provisions of this Agreement; (v) no Event of Default shall have
          occurred and remain outstanding at the time such transaction occurs, or
          would
          occur after giving effect to such transaction; (vi) such Subsidiary shall
          have bound itself as a party to this Agreement or as guarantor of the
          Obligations of the Credit Parties, on such terms and conditions as Lender
          may
          reasonably require; and (vii) such Subsidiary shall have granted to Lender,
          and Lender shall have perfected, a first priority lien on, and security
          interest
          in, all of its personal property and real property (if so requested by
          Lender),
          subject to Permitted Encumbrances and to the Intercreditor
          Agreement. 

         

        6.11  
            Fiscal
          Year; Tax Consolidation.
          The
          Credit Parties shall not change their Fiscal Year or adopt a Fiscal Year
          other
          than the Fiscal Year for tax or accounting purposes. The Credit Parties
          shall
          not file or consent to the filing of any Consolidated income tax return
          with any
          Person other than the Credit Parties and their Subsidiaries.

         

        6.12  
            Press
          Release; Public Offering Materials.
          The
          Credit Parties shall not disclose the name of Lender in any press release
          or in
          any prospectus, proxy statement or other materials filed with any governmental
          entity relating to a public offering of the Capital Stock of any Credit
          Party,
          except as may be required by law or with Lender’s prior written
          approval.

         

        6.13  
            Bank
          Accounts.
          The
          Credit Parties shall not establish any new bank accounts, or amend or terminate
          any blocked account or lockbox agreement without Lender’s prior written consent
          (such consent not to be unreasonably withheld, conditioned or
          delayed).

         

        6.14        
          Charter
          Documents.
          The
          Credit Parties shall not amend or otherwise modify their articles of
          incorporation or bylaws (or equivalent charter documents) or any existing
          shareholder’s agreement or similar agreement (all of such agreements having been
          previously delivered to Lender) in a manner which could impact Lender’s rights
          under the Loan Documents or enter into any new shareholder’s agreement or
          similar agreement.

         

        
          
            
            

          

          
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        6.15  
            No
          Impairment of Restricted Payments.
          The
          Credit Parties shall not directly or indirectly enter into or become bound
          by
          any agreement, instrument, indenture or other obligation (other than this
          Agreement and the other Loan Documents, the Senior Financing Agreement
          and any
          agreement evidencing or governing Permitted Indebtedness) which could directly
          or indirectly restrict, prohibit or require the consent of any Person with
          respect to the making of any Restricted Payment by the Credit
          Parties. 

         

        6.16 
             Advances,
          Loans or Investments.
          Except
          for Permitted Investments and as otherwise expressly permitted hereunder,
          the
          Credit Parties shall not make any advance or loan to, or any investment
          in, or
          purchase or acquire all or substantially all of the stock, equity, assets
          or
          Accounts of any Person or any business division of any Person.

         

        6.17  
            Management
          or Consulting Fees.
          Except
          as expressly permitted hereunder, the Credit Parties shall not pay any
          management, consulting or other similar fees to any Affiliate.

         

        6.18  
            Financial
          Covenants.
          The
          Credit Parties, and their Subsidiaries, as applicable, shall not fail to
          maintain or keep in full force and effect, any of the financial covenants
          set
          forth below. The calculation and determination of each such financial covenant,
          and all accounting terms contained therein, shall be so calculated and
          construed
          in accordance with GAAP, applied on a consistent basis with the financial
          statements of the Credit Parties, and their Subsidiaries, as applicable,
          delivered on or before the Closing Date: 

         

        (A)  Aggregate
          Indebtedness.
          The
          aggregate principal amount of all Indebtedness of the Credit Parties, including
          the Obligations shall not exceed (Eleven Million Dollars ($11,000,000)
          and, in
          the case of the Credit Parties and their Subsidiaries, Twenty-Two Million
          Five
          Hundred Thousand Dollars ($22,500,000) at any time.

         

        (B)  Fixed
          Charge Coverage Ratio.
          The
          Credit Parties and their Subsidiaries, on a Consolidated basis, shall maintain
          a
          Fixed Charge Coverage Ratio (a) during each Fiscal Quarter of not less
          than .80
          to 1.00, and (b) during each period of four consecutive Fiscal Quarters
          of not
          less than 1.15 to 1.00.

         

        (C)  Capital
          Expenditures.
          The
          Credit Parties and their Subsidiaries, on a Consolidated basis, shall not
          make
          any Capital Expenditures during any Fiscal Year, if after giving effect
          thereto,
          the aggregate amount of all such expenditures made by the Credit Parties
          and
          their Subsidiaries, on a Consolidated basis, exceeds One Million Five Hundred
          Thousand Dollars ($1,500,000) for each trailing twelve month period. 

         

        (D)  Current
          Ratio.
          The
          Credit Parties and their Subsidiaries, on a Consolidated basis, shall maintain
          a
          ratio of Current Assets to Current Liabilities of not less than 1.10 to
          1.00 at
          all times. 

         

        (E)  Minimum
          Book Net Worth.
          The
          Credit Parties (excluding Parent), on a Consolidated basis, shall maintain,
          for
          each period described below, Book Net Worth, determined as of the end of
          each
          month, in an amount not less than the amount set forth for each such period
          (numbers appearing between “< >” are negative): 

         

        
          
            
            

          

          
            -38-

            
              

            

          

          
            
            

          

        

         

        
          	
                  Period
                    Ending

                	 	
                  Minimum
                    Book Net Worth

                	 
	
                  As
                    of September 30, 2007

                	 	
                  $

                	
                  530,000

                	 
	
                  As
                    of December 31, 2007

                	 	
                  $

                	
                  1,165,000

                	 
	
                  As
                    of March 31, 2008

                	 	
                  $

                	
                  1,200,000

                	 
	
                  As
                    of June 30, 2008 

                	 	
                  $

                	
                  2,133,000

                	 
	
                  As
                    of September 30, 2008

                	 	
                  $

                	
                  2,040,000

                	 
	
                  As
                    of December 31, 2008

                	 	
                  $

                	
                  2,635,000

                	 

        

        

         

        (F)  Minimum
          Book Net Worth.
          The
          Credit Parties, on a Consolidated basis, will maintain, for each period
          described below, Book Net Worth, determined as of the end of each month,
          in an
          amount not less than the amount set forth for each such period (numbers
          appearing between “< >” are negative): 

         

        
          	
                  Period
                    Ending

                	 	
                  Minimum
                    Book Net Worth

                	 
	
                  As
                    of September 30, 2007

                	 	
                  $

                	
                  3,375,000

                	 
	
                  As
                    of December 31, 2007

                	 	
                  $

                	
                  4,725,000

                	 
	
                  As
                    of March 31, 2008

                	 	
                  $

                	
                  4,575,000

                	 
	
                  As
                    of June 30, 2008 

                	 	
                  $

                	
                  5,165,000

                	 
	
                  As
                    of September 30, 2008

                	 	
                  $

                	
                  6,360,000

                	 
	
                  As
                    of December 31, 2008

                	 	
                  $

                	
                  7,620,000

                	 

        

        

         

        (G)    
           Minimum
          Net Income.
          The
          Credit Parties (excluding the Parent), on a Consolidated basis, will achieve,
          for each period described below, Net Income of not less than the amount
          set
          forth for each such period (numbers appearing between “< >” are
          negative):

         

        
          	
                  Quarter
                    Ending

                	 	
                  Minimum
                    Net Income

                	 
	
                  Nine
                    months ending September 30, 2007

                	 	
                  $

                	
                  675,000

                	 
	
                  Twelve
                    months ending December 31, 2007

                	 	
                  $

                	
                  1,300,000

                	 
	
                  Three
                    months ending March 31, 2008

                	 	
                  $

                	
                  185,000

                	 
	
                  Six
                    months ending June 30, 2008 

                	 	
                  $

                	
                  375,000

                	 
	
                  Nine
                    months ending September 30, 2008

                	 	
                  $

                	
                  1,030,000

                	 
	
                  Twelve
                    months ending December 31, 2008

                	 	
                  $

                	
                  1,620,000

                	 

        

        

         

        (H)  Minimum
          Net Income.
          The
          Credit Parties, on a Consolidated basis, will achieve, for each period
          described
          below, Net Income of not less than the amount set forth for each such period
          (numbers appearing between “< >” are negative): 

         

        
          	
                  Quarter
                    Ending

                	 	
                  Minimum
                    Net Income

                	 
	
                  Nine
                    months ending September 30, 2007

                	 	 	
                  <$2,390,000>

                	 
	
                  Twelve
                    months ending December 31, 2007

                	 	 	
                  <$790,000>

                	 
	
                  Three
                    months ending March 31, 2008

                	 	
                  $

                	
                  480,000

                	 
	
                  Six
                    months ending June 30, 2008 

                	 	
                  
                  

                  $

                	
                  
                  

                  1,070,000

                	 
	
                  Nine
                    months ending September 30, 2008

                	 	
                  $

                	
                  2,265,000

                	 
	
                  Twelve
                    months ending December 31, 2008

                	 	
                  $

                	
                  3,525,000

                	 

        

         

        
          
            
            

          

          
            -39-

            
              

            

          

          
            
            

          

        

         

        6.19 
             Executive
          Compensation.
          The
          maximum annual cash remuneration, whether as salary, bonus, expenses,
          distributions or in any other form, payable by the Credit Party and their
          Subsidiaries, if any, shall not exceed that set forth on Schedule
          6.19
          to the
          persons named thereon. 

         

        6.20  
            Certain
          Payments.
          The
          Credit Parties shall not make any payment on all or part of the Subordinated
          Debt or any other Indebtedness subordinated to the Obligations other than
          in
          strict compliance with the applicable written subordination
          agreement.

         

        6.21 
            Amendments
          to Subordinated Debt.
          The
          Credit Parties shall not amend, supplement or otherwise modify any document,
          instrument or agreement relating to any Subordinated Debt, if such modification
          (a) increases the principal of such Subordinated Debt, or increases any
          required
          payment of principal or interest; (b) accelerates the date on which any
          installment of principal or any interest is due, or adds any additional
          redemption, put or prepayment provisions; (c) shortens the final maturity
          date
          or otherwise accelerates amortization, (d) increases the interest rate,
          (e)
          increases or adds any fees or charges, (f) modifies any covenant in a manner
          or
          adds any representation, covenant or default that that is more onerous
          or
          restrictive in any material respect for any Credit Party, or that is otherwise
          materially adverse to any Credit Party or the Lender, or (g) results in
          the
          Obligations not being fully benefited by the subordination provisions
          thereof.

         

        SECTION
          7 DEFAULT,
          RIGHTS AND REMEDIES

         

        7.1   Event
          of Default.
“Event
          of Default” means the occurrence or existence of any one or more of the
          following:

         

        (A)  
            Payment.
          Failure
          to make payment of any of the Obligations when due, and, in the case of
          fees,
          interest, costs or expenses, such failure shall not be remedied within
          five (5)
          days of the applicable due date; or

         

        (B) 
              Default
          in Other Agreements.
          (1) Failure of Borrower or any other Credit Party to pay when due (or
          within any applicable grace period) any principal or interest on any
          Indebtedness (other than the Obligations) specifically including the Senior
          Indebtedness, or (2) default by Borrower or any other Credit Party under
          any agreement or agreements evidencing any Indebtedness, in either case
          in
          excess of Five Hundred Thousand Dollars ($500,000) in the aggregate (other
          than
          the Obligations) or pursuant to which such Indebtedness was issued or governed,
          specifically including the Senior Financing Agreement, if the effect of
          such
          default is to enable the holder of such Indebtedness to accelerate the
          payment
          of such Person’s obligations which are the subject thereof prior to the maturity
          date thereof or prior to the regularly-scheduled date of payment thereof,
          and
          such default continues beyond any applicable grace or cure period (whether
          or
          not the holder of such Indebtedness actually accelerates such payment);
          or

         

        
          
            
            

          

          
            -40-

            
              

            

          

          
            
            

          

        

         

        (C)   Breach
          of Certain Provisions.
          Failure
          of any Credit Party to perform or comply with any term or condition contained
          in
Sections
          5.1
          through
5.5
          or
          contained in Sections 5.7 through 5.22 or contained in Section
          6;
          or

         

        (D)  Breach
          of Representation or Warranty.
          Any
          representation, warranty, certification or other statement made by any
          Credit
          Party in any Loan Document or in any statement or certificate at any time
          given
          by such Person in writing pursuant to or in connection with any Loan Document
          is
          false or misleading in any material respect on the date made or reaffirmed;
          or

         

        (E)  Other
          Defaults Under Loan Documents.
          Any
          Credit Party defaults in the performance of or compliance with any term,
          provision, covenant or agreement contained in this Agreement or the other
          Loan
          Documents (other than occurrences described in other provisions of this
          Section
          7.1);
          or

         

        (F)  Involuntary
          Bankruptcy; Appointment of Receiver, etc.
          (1) A court enters a decree or order for relief with respect to Borrower or
          any other Credit Party or any of their respective properties in an involuntary
          case under the Bankruptcy Code or any applicable bankruptcy, insolvency
          or other
          similar law now or hereafter in effect; or (2) Subject to Section
          7.1(G),
          the
          continuance of any of the following events for sixty (60) days unless dismissed
          or discharged: (a) an involuntary case is commenced against Borrower or any
          other Credit Party, under any applicable bankruptcy, insolvency or other
          similar
          law now or hereafter in effect; or (b) a decree or order of a court for the
          appointment of a receiver, liquidator, sequestrator, trustee, custodian
          or other
          officer having similar powers over Borrower or any other Credit Party,
          or over
          all or a substantial part of their respective property, is entered; or
          (c) an interim receiver, trustee or other custodian is appointed without
          the consent of Borrower or any other Credit Party, for all or a substantial
          part
          of the property of any such Person; or

         

        (G)  Voluntary
          Bankruptcy; Appointment of Receiver,
          etc.
          (1) An
          order for relief is entered with respect to Borrower or any other Credit
          Party
          or any of their respective properties or Borrower or any other Credit Party
          commence a voluntary case under any applicable bankruptcy, insolvency or
          other
          similar law now or hereafter in effect, or consent to the entry of an order
          for
          relief in an involuntary case or to the conversion of an involuntary case
          to a
          voluntary case under any such law or consent to the appointment of or taking
          possession by a receiver, trustee or other custodian for all or a substantial
          part of their property; or (2) Borrower or any other Credit Party make any
          assignment for the benefit of creditors; or (3) the manager of Borrower or
          any other Credit Party adopt any resolution or otherwise authorizes action
          to
          approve any of the actions referred to in this Section
          7.1(G);
          or

         

        (H)  Liens.
          Any
          Lien, levy or assessment is filed or recorded with respect to or otherwise
          imposed upon all or any part of the Collateral or the assets of Borrower
          or any
          other Credit Party by the United States or any department or instrumentality
          thereof or by any state, county, municipality or other governmental agency
          (other than Permitted Encumbrances) and such lien, levy or assessment is
          not
          stayed, vacated, paid or discharged within thirty (30) days; or

         

        
          
            
            

          

          
            -41-

            
              

            

          

          
            
            

          

        

         

        (I)   Judgment
          and Attachments.
          Any
          money judgment, writ or warrant of attachment, or similar process involving
          an
          amount in the aggregate in excess of Fifty Thousand Dollars ($50,000) (not
          adequately covered by insurance as to which the insurance company has
          acknowledged coverage or undertaken the defense thereof subject only to
          customary reservation of rights) is entered or filed against any Credit
          Party or
          any of their respective assets and remains unsatisfied, undischarged, unvacated,
          unbonded or unstayed for a period of sixty (60) days or in any event later
          than
          five (5) days prior to the date of any proposed sale thereunder; or

         

        (J)   Dissolution.
          Any
          order, judgment or decree is entered against Borrower or any other Credit
          Party
          decreeing the dissolution or split up of such Person and such order remains
          undischarged or unstayed for a period in excess of sixty (60) days;
          or

         

        (K)  Solvency.
          Borrower or any other Credit Party, individually, ceases to be solvent
          (as
          defined in Section
          4.16
          with
          respect to Borrower) or admit in writing the present or prospective inability
          to
          pay such Persons’ or Person’s debts as they become due; or

         

        (L)  Injunction.
          Borrower or any other Credit Party is enjoined, restrained or in any way
          prevented by the order of any court or any administrative or regulatory
          agency
          from conducting all or any material part of its business and such order
          continues for more than sixty (60) days; or

         

        (M)   
           Invalidity
          of Loan Documents.
          Any of
          the Loan Documents for any reason ceases to be in full force and effect
          (except
          pursuant to the express terms thereof) or is declared to be null and void,
          or
          any Credit Party denies that it has any further liability under any Loan
          Documents to which it is party, or gives notice to such effect or any Guarantor
          who is a natural person shall die; or

         

        (N)  Failure
          of Security.
          Lender
          does not have or ceases to have a valid and perfected first priority security
          interest in the Collateral (subject only to the priority of Permitted
          Encumbrances), in each case, for any reason other than the failure of Lender
          to
          take any ministerial action within its control; or

         

        (O)  Licenses
          and Permits.
          The
          loss, suspension or revocation of, or failure to renew, any license or
          permit
          now held or hereafter acquired by the Credit Parties, if such loss, suspension,
          revocation or failure to renew could reasonably be expected to have a Material
          Adverse Effect; or

         

        (P)  Forfeiture.
          There
          is filed against Borrower or any other Credit Party any civil or criminal
          action, suit or proceeding under any federal or state racketeering statute
          (including, without limitation, the Racketeer Influenced and Corrupt
          Organization Act of 1970), which action, suit or proceeding (1) is not
          dismissed
          within one hundred twenty (120) days; and (2) could result in the confiscation
          or forfeiture of any material portion of the Collateral or other assets
          of such
          Person; or

         

        (Q)  Change
          of Control.
          A
          Change of Control shall have occurred as to Borrower; or

         

        (R)  Material
          Adverse Change.
          Except
          as disclosed on Schedule
          7.(R)
          attached hereto, any other event, development or condition which has had
          or
          could reasonably be expected to have a Material Adverse Effect. 

         

        
          
            
            

          

          
            -42-

            
              

            

          

          
            
            

          

        

         

        7.2    Acceleration.
          Upon
          the occurrence of any Event of Default described in the foregoing Sections
          7.1(F) or 7.1(G)
          with
          respect to Borrower or any other Credit Party, all Obligations shall
          automatically become immediately due and payable, without presentment,
          demand,
          protest or other requirements of any kind, all of which are hereby expressly
          waived by Borrower. Upon the occurrence of any other Event of Default,
          Lender
          may declare all Obligations to be immediately due and payable, without
          presentment, demand, protest or other requirements of any kind, all of
          which are
          hereby expressly waived by Borrower.

         

        7.3   Remedies.
          If any
          Event of Default shall have occurred and be continuing, in addition to
          and not
          in limitation of any rights or remedies available to Lender at law or in
          equity,
          Lender may exercise in respect of the Collateral, in addition to all other
          rights and remedies provided for herein or in any of the Guarantor Security
          Documents or otherwise available to it, all the rights and remedies of
          a secured
          party on default under the UCC (whether or not the UCC applies to the affected
          Collateral) and may also (a) notify any or all obligors on the Accounts to
          make all payments directly to Lender; (b) require the Credit Parties to,
          and each Credit Party hereby agrees that it will, at its expense and upon
          request of Lender forthwith, assemble all or part of the Collateral as
          directed
          by Lender and make it available to Lender at a place to be designated by
          Lender
          which is reasonably convenient to both parties; (c) without notice or
          demand or legal process, enter upon any premises of the Credit Parties
          and take
          possession of the Collateral; and (d) without notice except as specified
          below, sell the Collateral or any part thereof in one or more parcels at
          public
          or private sale, at any of Lender’s offices or elsewhere, at such time or times,
          for cash, on credit or for future delivery, and at such price or prices
          and upon
          such other terms as Lender may deem commercially reasonable. Each Credit
          Party
          agrees that, to the extent notice of sale shall be required by law, at
          least ten
          (10) days notice to Borrower of the time and place of any public sale or
          the
          time after which any private sale is to be made shall constitute reasonable
          notification. At any sale of the Collateral, if permitted by law, Lender
          may bid
          (which bid may be, in whole or in part, in the form of cancellation of
          indebtedness) for the purchase of the Collateral or any portion thereof
          for the
          account of Lender and/or disclaim all warranties. Lender shall not be obligated
          to make any sale of Collateral regardless of notice of sale having been
          given.
          Borrower and each of the Guarantors shall remain liable for any deficiency.
          Lender may adjourn any public or private sale from time to time by announcement
          at the time and place fixed thereof, and such sale may, without further
          notice,
          be made at the time and place to which it was so adjourned. To the extent
          permitted by law, each Credit Party hereby specifically waives all rights
          of
          redemption, stay or appraisal which it has or may have under any law now
          existing or hereafter enacted. Lender shall not be required to proceed
          against
          any Collateral but may proceed against any Credit Party directly.

         

        7.4   Appointment
          of Attorney-in-Fact.
          Each
          Credit Party hereby constitutes and appoints Lender as such Credit Party’s
          attorney-in-fact with full authority in the place and stead of such Credit
          Party
          and in the name of such Credit Party, Lender or otherwise, from time to
          time in
          Lender’s discretion while an Event of Default is continuing to take any action
          and to execute any instrument that Lender may deem necessary or advisable
          to
          accomplish the purposes of this Agreement, including: (a) to ask, demand,
          collect, sue for, recover, compound, receive and give acquittance and receipts
          for moneys due and to become due under or in respect of any of the Collateral;
          (b) to adjust, settle or compromise the amount or payment of any Account,
          or
          release wholly or partly any customer or obligor thereunder or allow any
          credit
          or discount thereon; (c) to receive, endorse, and collect any drafts or
          other
          instruments, documents and chattel paper, in connection with clause (a)
          above; (d) to file any claims or take any action or institute any proceedings
          that Lender may deem necessary or desirable for the collection of any of
          the
          Collateral or otherwise to enforce the rights of Lender with respect to
          any of
          the Collateral; and (e) to sign and endorse any invoices, freight or express
          bills, bills of lading, storage or warehouse receipts, assignments,
          verifications and notices in connection with Accounts and other documents
          relating to the Collateral. The appointment of Lender as each Credit Party’s
          attorney and Lender’s rights and powers are coupled with an interest and are
          irrevocable until payment in full and complete performance of all of the
          Obligations.

         

        
          
            
            

          

          
            -43-

            
              

            

          

          
            
            

          

        

         

        7.5    Limitation
          on Duty of Lender with Respect to Collateral.
          Beyond
          the safe custody thereof, Lender shall have no duty with respect to any
          Collateral in its possession or control (or in the possession or control
          of any
          agent or bailee) or with respect to any income thereon or the preservation
          of
          rights against prior parties or any other rights pertaining thereto. Lender
          shall be deemed to have exercised reasonable care in the custody and
          preservation of the Collateral in its possession if the Collateral is accorded
          treatment substantially equal to that which Lender accords its own property.
          Lender shall not be liable or responsible for any loss or damage to any
          of the
          Collateral, or for any diminution in the value thereof, by reason of the
          act or
          omission of any warehouseman, carrier, forwarding agency, consignee or
          other
          agent or bailee selected by Lender in good faith.

         

        7.6    Application
          of Proceeds.
          Upon
          the occurrence and during the continuance of an Event of Default, (a) each
          Credit Party irrevocably waives the right to direct the application of
          any and
          all payments at any time or times thereafter received by Lender from or
          on
          behalf of such Credit Party, and each Credit Party hereby irrevocably agrees
          that Lender shall have the continuing exclusive right to apply and to reapply
          any and all payments received at any time or times after the occurrence
          and
          during the continuance of an Event of Default against the Obligations in
          such
          manner as Lender may deem advisable notwithstanding any previous entry
          by Lender
          upon any books and records and (b) the proceeds of any sale of, or other
          realization upon, all or any part of the Collateral shall be applied: first,
          to
          all fees, costs and expenses incurred by Lender with respect to this Agreement,
          the other Loan Documents or the Collateral; second, to all fees due and
          owing to
          Lender; third, to accrued and unpaid interest on the Obligations; fourth,
          to the
          principal amounts of the Obligations outstanding; and fifth, to any other
          indebtedness or obligations of Borrower owing to Lender.

         

        7.7    License
          of Intellectual Property.
          The
          Credit Parties hereby assign, transfer and convey to Lender, the non-exclusive
          right and license to use all Intellectual Property, if any, owned or used
          by the
          Credit Parties together with any goodwill associated therewith, all to
          the
          extent necessary to enable Lender, after the occurrence and during the
          continuance of any Event of Default hereunder and in connection with Lender
          exercising its rights with respect to all of the Collateral, to realize
          on all
          of the Collateral and any successor or assign to enjoy the benefits of
          such
          Collateral. This right and license shall inure to the benefit of all successors,
          assigns and transferees of Lender and its successors, assigns and transferees,
          whether by voluntary conveyance, operation of law, assignment, transfer,
          foreclosure, deed in lieu of foreclosure or otherwise. Such right and license
          is
          granted free of charge, without requirement that any monetary payment whatsoever
          be made to the Credit Parties by Lender.

         

        7.8   Waivers,
          Non-Exclusive Remedies.
          By
          making the advance of the Term Loan hereunder, Lender does not thereby
          waive a
          breach of any warranty or representation made by the Credit Parties hereunder
          or
          under any of the other Loan Documents or a breach under any agreement,
          document,
          or instrument delivered to Lender or otherwise referred to herein, and
          all of
          Lender’s claims and rights resulting from any breach or misrepresentation by the
          Credit Parties is specifically reserved by Lender. No failure on the part
          of
          Lender to exercise, and no delay in exercising and no course of dealing
          with
          respect to, any right under this Agreement or the other Loan Documents
          shall
          operate as a waiver thereof; nor shall any single or partial exercise by
          Lender
          of any right under this Agreement or any other Loan Document preclude any
          other
          or further exercise thereof or the exercise of any other right. The rights
          in
          this Agreement and the other Loan Documents are cumulative and are not
          exclusive
          of any other remedies provided by law.

         

        
          
            
            

          

          
            -44-

            
              

            

          

          
            
            

          

        

         

        SECTION
          8 MISCELLANEOUS

         

        8.1    Assignments
          and Participations.
          Lender
          may assign its rights and delegate its obligations under this Agreement
          and
          further may assign, or sell participations in, all or any part of the Term
          Loan
          or any other interest herein to an Affiliate or to another Person. In the
          case
          of an assignment authorized under this Section
          8.1,
          the
          assignee shall have, to the extent of such assignment, the same rights,
          benefits
          and obligations as it would if it were a Lender hereunder and Lender shall
          be
          relieved of its obligations hereunder with respect to the commitments or
          assigned portion thereof. The Credit Parties hereby acknowledge and agree
          that
          any assignment will give rise to a direct obligation of the Credit Parties
          to
          the assignee and that the assignee shall be deemed to be a “Lender”. Lender
          shall act as agent of each assignee for the sole purpose (and not for any
          other
          purpose) of perfecting and maintaining a security interest in the Collateral
          to
          the extent that perfection of a security interest in the Collateral is
          achieved
          by means of filing a financing statement in the applicable jurisdiction.
          Lender
          may furnish any information concerning the Credit Parties in its possession
          from
          time to time to assignees and participants (including prospective assignees
          and
          participants), provided
          that any
          such assignee or participant or prospective assignee or participant agrees
          to
          maintain the confidentiality of such information pursuant to a confidentiality
          agreement reasonably acceptable to Borrower. All communications by the
          Credit
          Parties with Lender and every assignee shall be required to be sent or
          given to
          only Lender or one of the assignees in place of Lender.

         

        8.2   Set
          Off.
          In
          addition to any rights now or hereafter granted under applicable law and
          not by
          way of limitation of any such rights, upon the occurrence, and during the
          continuance, of any Event of Default, Lender, each assignee of Lender’s
          interest, and each participant is hereby authorized by Borrower at any
          time or
          from time to time, without notice to Borrower or to any other Person, any
          such
          notice being hereby expressly waived, to set off and to appropriate and
          to apply
          any and all balances held by it at any of its offices for the account of
          Borrower (regardless of whether such balances are then due to Borrower)
          and any
          other property at any time held or owing by that Lender or assignee to
          or for
          the credit or for the account of Borrower against and on account of any
          of the
          Obligations then outstanding, provided,
          that no
          participant shall exercise such right without the prior written consent
          of
          Lender. The Credit Parties hereby agree, to the fullest extent permitted
          by law,
          that any Lender, assignee or participant may exercise their right of setoff
          with
          respect to amounts in excess of its pro rata share of the Obligations (or,
          in
          the case of a participant, in excess of its pro rata participation interest
          in
          the Obligations) and that such Lender, assignee or participant, as the
          case may
          be, shall be deemed to have purchased for cash in the amount of such excess,
          participations in each other Lender’s or holder’s share of the
          Obligations.

         

        8.3    Expenses
          and Attorneys’ Fees.
          Whether
          or not the transactions contemplated hereby shall be consummated, Borrower
          agrees to promptly pay all reasonable fees, costs and expenses incurred
          by
          Lender in connection with any matters contemplated by or arising out of
          this
          Agreement or the other Loan Documents including the following, and all
          such
          fees, costs and expenses shall be part of the Obligations, payable on demand
          and
          secured by the Collateral: (a) fees, costs and expenses (including
          reasonable attorneys’ fees, and fees of environmental consultants, accountants
          and other professionals retained by Lender) incurred in connection with
          the
          examination, review, due diligence investigation, documentation and closing
          of
          the financing arrangements evidenced by the Loan Documents; (b) fees, costs
          and expenses (including reasonable attorneys’ fees, reasonable allocated costs
          of internal counsel and reasonable fees of environmental consultants,
          accountants and other professionals retained by Lender) incurred in connection
          with the review, negotiation, preparation, documentation, execution and
          administration of the Loan Documents, the Term Loan, and any amendments,
          waivers, consents, forbearance and other modifications relating thereto
          or any
          subordination or intercreditor agreements; (c) fees, out of pocket costs
          and expenses incurred in creating, perfecting and maintaining perfection
          of
          Liens in favor of Lender including title insurance premiums, real estate
          survey
          costs and mortgage or recording taxes and fees; (d) fees, out of pocket
          costs and expenses incurred in connection with forwarding to Borrower the
          proceeds of Loans including Lender’s standard wire transfer fee; (e) fees,
          out of pocket costs, expenses and bank charges, including bank charges
          for
          returned checks, incurred by Lender in establishing, maintaining and handling
          lock box accounts, blocked accounts or other accounts for collection of
          the
          Collateral; (f) fees, costs, expenses (including reasonable attorneys’ fees
          and reasonable allocated costs of internal counsel) and costs of settlement
          incurred in collecting upon or enforcing rights against the Collateral
          or
          incurred in any action to enforce this Agreement or the other Loan Documents
          or
          to collect any payments due from Borrower or any other Credit Party under
          this
          Agreement or any other Loan Document or incurred in connection with any
          refinancing or restructuring of the credit arrangements provided under
          this
          Agreement, whether in the nature of a “workout” or in connection with any
          insolvency or bankruptcy proceedings or otherwise; (g) Lender’s reasonable
          out of pocket expenses and internal costs and disbursements, whenever incurred,
          in monitoring and administering the Term Loan; and (h) the cost of
          procuring background checks or updating background checks previously obtained
          by
          Lender relating to officers of Borrower (Borrower shall use its best efforts
          to
          obtain the consent of all officers to such checks or updated
          checks).

         

        
          
            
            

          

          
            -45-

            
              

            

          

          
            
            

          

        

         

        8.4    Indemnity.
          In
          addition to the payment of expenses pursuant to Section
          8.3,
          whether
          or not the transactions contemplated hereby shall be consummated, each
          Credit
          Party agrees to indemnify, pay and hold Lender, its participants and assignees
          and their respective officers, directors, employees, agents, consultants,
          auditors, persons engaged by any of them to evaluate or monitor the Collateral,
          affiliates and attorneys of any of them (collectively called the “Indemnitees”)
          harmless from and against any and all liabilities, obligations, losses,
          damages,
          penalties, actions, judgments, suits, claims, costs, expenses and disbursements
          of any kind or nature whatsoever (including the reasonable fees and
          disbursements of counsel for such Indemnitees in connection with any
          investigative, administrative or judicial proceeding commenced or threatened,
          whether or not such Indemnitee shall be designated a party thereto) that
          may be
          imposed on, incurred by, or asserted against that Indemnitee, in any manner
          relating to or arising out of this Agreement or the other Loan Documents,
          the
          consummation of the transactions contemplated by this Agreement, the statements
          contained in the Commitment Letter(s), if any, delivered by Lender, Lender’s
          agreement to make the Term Loan hereunder, the use or intended use of the
          proceeds of any of the Term Loan or the exercise of any right or remedy
          hereunder or under the other Loan Documents (the “Indemnified
          Liabilities”),
          provided
          that
          Borrower shall have no obligation to an Indemnitee hereunder with respect
          to
          Indemnified Liabilities directly arising from the gross negligence or willful
          misconduct of that Indemnitee as finally determined by a court of competent
          jurisdiction.

         

        
          
            
            

          

          
            -46-

            
              

            

          

          
            
            

          

        

         

        8.5    Amendments
          and Waivers.
          No
          amendment, modification, termination or waiver of any provision of this
          Agreement or of the other Loan Documents, or consent to any departure by
          Borrower therefrom or any of the terms, conditions, or provisions thereof,
          shall
          be effective unless the same shall be in writing and signed by Lender and
          Borrower. Each amendment, modification, termination or waiver shall be
          effective
          only in the specific instance and for the specific purpose for which it
          was
          given.

         

        8.6    Notices.
          Unless
          otherwise specifically provided herein, all notices shall be in writing
          addressed to the respective party as set forth below and may be personally
          served, telecopied or sent by overnight courier service or United States
          mail
          and shall be deemed to have been given: (a) if delivered in person, when
          delivered; (b) if delivered by telecopy, on the date of transmission if
          transmitted on a Business Day before 4:00 p.m. Eastern standard time or,
          if not,
          on the next succeeding Business Day; (c) if delivered by overnight courier,
          two
          (2) days after delivery to such courier properly addressed; or (d) if by
          U.S.
          Mail, four (4) Business Days after depositing in the United States mail,
          with
          postage prepaid and properly addressed.

         

        
          	
                  If
                    to any 

                  Credit
                    Party:

                	
                  c/o
                    Airgate International Corporation

                  153-04
                    Rockaway Boulevard

                  Jamaica,
                    New York 11434

                  Attention:
                    Alfred Lam, Chairman

                  Facsimile:
                    (212) 391-5288

                
	 	 
	
                  With
                    copies to:

                	
                  Gusrae,
                    Kaplan & Bruno & Nusbaum, PLLC.

                  120
                    Wall Street

                  New
                    York, New York 10005

                  Attention:
                    Lawrence Nusbaum, Esq.

                  Facsimile:
                    (212) 809-5449

                
	 	 
	
                  If
                    to Lender:

                	
                  BHC
                    Interim Funding II, L.P.

                  444
                    Madison Avenue, 25th
                    Floor

                  New
                    York, New York 10022

                
	 	
                  Attention:
                    Gerald H. Houghton, Managing Partner 

                
	 	
                  Facsimile:
                    (212) 753-7730

                
	 	
                  Telephone:
                    (212) 753-1991

                
	 	 
	
                  With
                    a copy to:

                	
                  Blank
                    Rome LLP

                
	 	
                  The
                    Chrysler Building

                
	 	
                  405
                    Lexington Avenue

                
	 	
                  New
                    York, NY 10174

                
	 	
                  Attention:
                    George N. Abrahams, Esq.

                
	 	
                  Facsimile:
                    (212) 885-5001

                

        

         

        or
          to
          such other address as the party addressed shall have previously designated
          by
          written notice to the serving party, given in accordance with this Section
          8.6.

         

        
          
            
            

          

          
            -47-

            
              

            

          

          
            
            

          

        

         

        8.7    Survival
          of Warranties and Certain Agreements.

         

        (A)  All
          representations and warranties made hereunder and in any other Loan Document
          or
          other document delivered pursuant hereto or thereto or in connection herewith
          or
          therewith shall survive the execution and delivery hereof and thereof.
          Such
          representations and warranties have been or will be relied upon by Lender
          regardless of any investigation made by Lender or on its behalf and
          notwithstanding that Lender may have had notice or knowledge of any breach
          of a
          representation or warranty, and shall continue in full force and effect
          as long
          as any Obligation shall remain outstanding.

         

        (B)  This
          Agreement and the Loan Documents shall remain in full force and effect
          until
          such time as the Obligations have been indefeasibly paid and satisfied
          in full,
          at which time this Agreement shall be terminated; provided,
          however,
          that
          the agreements set forth in Sections
          8.3
          and
8.4
          (and any
          guaranty by the Guarantors of the Obligations of Borrower with respect
          to such
Sections
          8.3
          and
8.4)
          shall
          survive termination of this Agreement. Notwithstanding the foregoing, this
          Agreement and the Loan Documents shall continue to be effective or be
          automatically reinstated, as the case may be, if at any time payment, in
          whole
          or in part, of any of the Obligations is rescinded or must otherwise be
          restored
          or returned by Lender as a preference, fraudulent conveyance or otherwise,
          all
          as though such payment had not been made.

         

        8.8    Indulgence
          Not Waiver.
          No
          failure or delay on the part of Lender in the exercise of any power, right
          or
          privilege shall impair such power, right or privilege or be construed to
          be a
          waiver of any default or acquiescence therein, nor shall any single or
          partial
          exercise of any such power, right or privilege preclude other or further
          exercise thereof or of any other right, power or privilege.

         

        8.9    Marshaling;
          Payments Set Aside.
          Lender
          shall not be under any obligation to marshal any assets in favor of any
          Credit
          Party or any other party or against or in payment of any or all of the
          Obligations. To the extent that any Credit Party makes a payment or payments
          to
          Lender or Lender enforces its security interests or exercise its rights
          of
          setoff, and such payment or payments or the proceeds of such enforcement
          or
          setoff or any part thereof are subsequently invalidated, declared to be
          fraudulent or preferential, set aside and/or required to be repaid to a
          trustee,
          receiver or any other party under any bankruptcy law, state or federal
          law,
          common law or equitable cause, then to the extent of such recovery, the
          Obligations or part thereof originally intended to be satisfied, and all
          Liens,
          rights and remedies thereof, shall be revived and continued in full force
          and
          effect as if such payment had not been made or such enforcement or setoff
          had
          not occurred.

         

        8.10  
            Entire
          Agreement.
          This
          Agreement, the Term Note, and the other Loan Documents referred to herein
          embody
          the final, entire agreement among the parties hereto and supersede any
          and all
          prior commitments, agreements, representations, and understandings, whether
          written or oral, relating to the subject matter hereof (including, without
          limitation, the Commitment Letter) and may not be contradicted or varied
          by
          evidence of prior, contemporaneous, or subsequent oral agreements or discussions
          of the parties hereto. There are no oral agreements among the parties
          hereto.

         

        8.11  
            Independence
          of Covenants.
          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 be otherwise within the limitations
          of, another covenant shall not avoid the occurrence of a Default or an
          Event of
          Default if such action is taken or condition exists.

         

        
          
            
            

          

          
            -48-

            
              

            

          

          
            
            

          

        

         

        8.12  
            Severability.
          The
          invalidity, illegality or unenforceability in any jurisdiction of any provision
          in or obligation under this Agreement or the other Loan Documents shall
          not
          affect or impair the validity, legality or enforceability of the remaining
          provisions or obligations under this Agreement, or the other Loan Documents
          or
          of such provision or obligation in any other jurisdiction.

         

        8.13 
             Headings.
          Section
          and subsection headings in this Agreement are included herein for convenience
          of
          reference only and shall not constitute a part of this Agreement for any
          other
          purpose or be given any substantive effect.

         

        8.14 
             APPLICABLE
          LAW.
          THIS
          AGREEMENT AND ALL MATTERS RELATING HERETO AND ARISING HEREFROM (WHETHER
          ARISING
          UNDER CONTRACT LAW, TORT LAW OR OTHERWISE) SHALL BE GOVERNED BY, AND SHALL
          BE
          CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
          OF NEW
          YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

         

        8.15   Successors
          and Assigns.
          This
          Agreement shall be binding upon and inure to the benefit of the parties
          hereto
          and their respective successors and assigns except that Borrower may not
          assign
          its rights or obligations hereunder without the prior written consent of
          Lender.

         

        8.16   No
          Fiduciary Relationship; Limitation of Liabilities.

         

        (A)  No
          Fiduciary Relationship.
          Except
          in the instance of gross negligence or willful misconduct, no provision
          in this
          Agreement or in any of the other Loan Documents and no course of dealing
          between
          the parties shall be deemed to create any fiduciary duty by Lender to Borrower
          or any other Credit Party.

         

        (B)  Limitation
          of Liabilities.
          Neither
          Lender, nor any Affiliate, officer, director, shareholder, employee, attorney,
          or agent of Lender shall have any liability with respect to, and the Credit
          Parties hereby waive, release, and agree not to sue any of them upon, any
          claim
          for any special, indirect, incidental, or consequential damages suffered
          or
          incurred by the Credit Parties in connection with, arising out of, or in
          any way
          related to, this Agreement or any of the other Loan Documents, or any of
          the
          transactions contemplated by this Agreement or any of the other Loan Documents.
          The Credit Parties hereby waive, release, and agree not to sue Lender or
          any of
          Lender’s Affiliates, officers, directors, employees, attorneys, or agents for
          punitive damages in respect of any claim in connection with, arising out
          of, or
          in any way related to, this Agreement or any of the other Loan Documents,
          or any
          of the transactions contemplated by this Agreement or any of the transactions
          contemplated hereby.

         

        8.17   CONSENT
          TO JURISDICTION.
          EACH
          CREDIT PARTY HEREBY
          CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
          THE
          COUNTY OF NEW YORK, STATE OF NEW YORK, AND IRREVOCABLY AGREES THAT, SUBJECT
          TO
          LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
          AGREEMENT, THE TERM NOTE, OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED
          IN SUCH
          COURTS. EACH CREDIT PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
          PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION
          OF THE
          AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
          AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH
          THIS
          AGREEMENT, THE TERM NOTE, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
          IF ANY
          CREDIT PARTY PRESENTLY IS, OR IN THE FUTURE BECOMES, A NONRESIDENT OF THE
          STATE
          OF NEW YORK, EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND
          ALL
          PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH
          PERSON
          BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
          SUCH
          PERSON, AT SUCH PERSON’S ADDRESS AS SET FORTH IN SECTION
          8.6
          OR AS
          MOST RECENTLY NOTIFIED BY SUCH PERSON IN WRITING PURSUANT TO SECTION
          8.6
          AND
          SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN
          POSTED
          AS AFORESAID.

         

        
          
            
            

          

          
            -49-

            
              

            

          

          
            
            

          

        

         

        8.18  
            WAIVER
          OF JURY TRIAL.
          EACH
          CREDIT PARTY AND
          LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
          OR
          CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE TERM NOTE
          OR
          THE OTHER LOAN DOCUMENTS. EACH CREDIT PARTY AND LENDER ACKNOWLEDGE THAT
          THIS
          WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
          THAT EACH
          HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE TERM
          NOTE
          AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE
          WAIVER
          IN THEIR RELATED FUTURE DEALINGS. EACH CREDIT PARTY SIGNATORY HERETO AND
          LENDER
          FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS
          LEGAL
          COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
          RIGHTS
          FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

         

        8.19  
            Construction.
          Borrower and each Credit Party signatory hereto and Lender each acknowledge
          that
          it has had the benefit of legal counsel of its own choice and has been
          afforded
          an opportunity to review this Agreement and the other Loan Documents with
          its
          legal counsel and that this Agreement and the other Loan Documents shall
          be
          construed as if jointly drafted by Borrower and each Credit Party signatory
          hereto and Lender.

         

        8.20  
            Counterparts;
          Effectiveness.
          This
          Agreement and any amendments, waivers, consents, or supplements may be
          executed
          in any number of counterparts and by different parties hereto in separate
          counterparts, each of which when so executed and delivered shall be deemed
          an
          original, but all of which counterparts together shall constitute but one
          and
          the same instrument. This Agreement shall become effective upon the execution
          of
          a counterpart hereof by each of the parties hereto. Delivery of an executed
          counterpart of a signature page to this Agreement, any amendments, waivers,
          consents or supplements, or to any other Loan Document by Facsimile shall
          be as
          effective as delivery of a manually executed counterpart thereof.

         

        8.21  
            No
          Duty.
          All
          attorneys, accountants, appraisers, and other professional Persons and
          consultants retained by Lender shall have the right to act exclusively
          in the
          interest of Lender and shall have no duty of disclosure, duty of loyalty,
          duty
          of care, or other duty or obligation of any type or nature whatsoever to
          the
          Credit Parties or any of Borrower’s shareholders or the shareholders (or
          members, as applicable) of Borrower’s Subsidiaries or any other
          Person.

         

        
          
            
            

          

          
            -50-

            
              

            

          

          
            
            

          

        

         

        8.22  
            Communications
          by Borrower to Lender.
          Nothing
          contained in any letter, email, written notification, financial statement
          or
          other communication, written or oral, from Borrower to Lender, shall be
          deemed
          to be binding on Lender, unless Lender acknowledges same in writing and
          expressly agrees to be bound thereby.

         

        8.23  
            Confidentiality.
          For the
          purposes of this Section 8.23,
          “Confidential
          Information”
means
          all financial projections and all other information delivered to Lender
          by or on
          behalf of Borrower or any of the other Credit Parties in connection with
          the
          transactions contemplated by or otherwise pursuant to this Agreement that
          is
          proprietary in nature or that is clearly marked or labeled (or otherwise
          adequately identified) as being confidential information of Borrower or
          the
          other Credit Parties, provided,
          that
          such term does not include information that (a) was publicly known or
          otherwise known to Lender prior to the time of such disclosure,
          (b) subsequently becomes publicly known through no act or omission by
          Lender or any Person acting on its behalf, (c) otherwise becomes known to
          Lender other than through disclosure by Borrower or any of the other Credit
          Parties, or (d) constitutes financial statements delivered hereunder that
          are otherwise publicly available. Lender will maintain the confidentiality
          of
          such Confidential Information in accordance with commercially reasonable
          procedures adopted by Lender in good faith to protect confidential information
          of third parties delivered to it, provided,
          that
          Lender may deliver or disclose Confidential Information to:

         

        (i)  
            its
          directors, officers, employees, agents, attorneys and affiliates (to the
          extent
          such disclosure reasonably relates to the administration of the Term
          Loan);

         

        (ii)    
            its
          financial advisors and other professional advisors who are advised to hold
          confidential the Confidential Information substantially in accordance with
          the
          terms of this Section 8.23;

         

        (iii)   
            any
          other
          Lender; or

         

        (iv)   
           any
          other
          Person (including auditors and other regulatory officials) to which such
          delivery or disclosure may be necessary or appropriate (A) to comply with
          any applicable law, rule, regulation or order, (B) in response to any
          subpoena, examination, or other legal process, (C) in connection with any
          litigation to which Lender is a party or (D) if an Event of Default shall
          have occurred and remain outstanding, to the extent Lender may reasonably
          determine such delivery and disclosure to be necessary or appropriate in
          the
          enforcement or for the protection of the rights and remedies hereunder.
          Each
          assignee and participant of Lender’s interest, by its execution and delivery of
          documents to evidence its assignment or participation (as the case may
          be), will
          be deemed to have agreed to be bound by, and to be entitled to the benefits
          of,
inter
          alia,
          this
Section 8.23.

        

        8.24  
           
Lender’s
          Disclosure.
          Borrower and each Credit Party signatory hereto acknowledge that one or
          more
          members of Blank Rome LLP are limited partners of Lender.

         

        8.25  
            Affiliate
          Guarantor.
          The
          Affiliate Guarantor, although not a borrower hereunder, has signed this
          Agreement to indicate its acknowledgment of, and agreement to be bound
          by, the
          representations, warranties and covenants contained herein (to the extent
          such
          representations, warranties and covenants apply to the Affiliate Guarantor)
          and
          to assign and grant to Lender the Lien on its assets and properties as
          set forth
          in Section
          2.6
          hereof.

         

        
          
            
            

          

          
            -51-

            
              

            

          

          
            
            

          

        

         

        8.26   
            Electronic
          Execution of Loan Documents.
          The
          words “execution,” “signed,” “signature,” and words of like import in any Loan
          Document shall be deemed to include electronic signatures or the keeping
          of
          records in electronic form, each of which shall be of the same legal effect,
          validity or enforceability as a manually executed signature or the use
          of a
          paper-based recordkeeping system, as the case may be, to the extent and
          as
          provided for in any applicable law, including the Federal Electronic Signatures
          in Global and National Commerce Act, the New York State Electronic Signatures
          and Records Act, or any other similar state laws based on the Uniform Electronic
          Transactions Act.

         

        This
          space intentionally left blank - signature page follows.

        
          
            
            

          

          
            -52-

            
              

            

          

          
            
            

          

        

        Witness
          the due execution hereof by the respective duly authorized officers of
          the
          undersigned as of the date first written above.

        

        
          	 	 
	 	 
	
                  LENDER:

                	
                  BHC
                    INTERIM FUNDING II, L.P.

                
	 	 
	 	
                  By:
                    BHC Interim Funding Management, L.L.C.,

                
	 	
                  its
                    General Partner

                
	 	 
	 	
                  By:
                    BHC Investors II, L.L.C.,

                
	 	
                  its
                    Managing Member

                
	 	 
	 	
                  By:
                    GHH Holdings, L.L.C.

                
	 	 
	 	
                  By:

                	
                  /s/
                    Gerald Houghton

                
	 	
                  Name:
                    Gerald H. Houghton

                  Title:
                    Managing Member

                
	 	 
	 	 
	
                  BORROWER:

                	
                  AIRGATE
                    INTERNATIONAL CORPORATION

                
	 	 
	 	
                  By:

                	
                  /s/
                    Scott Turner

                
	 	
                  Name:
                    Scott Turner

                  Title:
                    Vice President

                
	 	 

        
Signature Page
        to Loan and Security Agreement
        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Joinder

         

        Each
          of
          the undersigned, intending to be legally bound hereby, joins in the
          representations, warranties and covenants and consents to be bound by the
          terms
          and conditions applicable to the undersigned as set forth in the foregoing
          Loan
          and Security Agreement, by and among Airgate International Corporation,
          the
          Guarantors and BHC International Funding II, L.P. dated July __,
          2007.

        
          	 	 	 
	 	
                  PACIFIC
                    CMA, INC.

                
	 
 	 
 	 
 
	 	By:  	/s/ Scott
                  Turner
	 	
                  

                  Name:
                    Scott
                    Turner

                
	 	
                  Title:
                    Vice
                    President

                

        

        
          	 	 	 
	 	
                  AIRGATE
                    INTERNATIONAL CORPORATION (Chicago)

                
	 
 	 
 	 
 
	
                	By:  	/s/ Scott
                  Turner
	 	
                  

                  Name:
                    Scott Turner

                
	 	
                  Title:
                    Vice President

                

        

        
          	 	 	 
	 	
                  PACIFIC
                    CMA INTERNATIONAL, LLC

                
	 
 	 
 	 
 
	 	By:  	/s/ Ling
                  Kwok
	 	
                  

                  Name:
                    Ling Kwok

                
	 	
                  Title:
                    Agent

                

        

        
          	 	 	 
	 	PARADIGM INTERNATIONAL, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Scott
                  Turner
	 	
                  

                  Name:
                    Scott
                    Turner

                
	 	
                  Title:
                    Vice
                    President

                

        

        
          	 	 	 
	 	
                
	 
 	 
 	 
 
	 	By:  	/s/ Alfred
                  Lam
	 	
                  

                  Name:
                    Alfred Lam

                
	 	
                  Title:
                    DirectorThis
      Note
      is subject to the terms of a Subordination and Intercreditor Agreement (the
      “Intercreditor Agreement”) dated as of July 17, 2007 by and among BHC Interim
      Funding II, L.P. (“BHC”), Wells Fargo Bank, National Association (“Wells
      Fargo”), acting through its Wells Fargo Business Credit operating division, the
      Borrower and the Guarantors, which Intercreditor Agreement is incorporated
      herein by reference. Notwithstanding any statement to the contrary in this
      Note,
      (i) no payment on account of principal, interest, fees or other amounts shall
      become due or be paid except in accordance with the terms of the Intercreditor
      Agreement, and (ii) any security interest, lien, pledge or encumbrance granted
      to BHC shall be subordinate to the security interest, lien, pledge or
      encumbrance granted to Wells Fargo and shall be enforceable only in accordance
      with the terms of the Intercreditor Agreement until such time when the Senior
      Debt (as defined in the Intercreditor Agreement) has been paid in
      full.

     

    THIS
      NOTE
      HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
      STATE SECURITIES LAWS. NO TRANSFER OF THIS NOTE SHALL BE VALID OR EFFECTIVE
      UNLESS MADE IN ACCORDANCE WITH THE APPLICABLE REQUIREMENTS OF THE SECURITIES
      ACT
      OF 1933, AS AMENDED, AND STATE SECURITIES LAWS, OR ANY AVAILABLE EXEMPTION
      THEREUNDER.

     

    SENIOR
      SECURED TERM NOTE

     

    
      	
              $3,500,000.00

            	
              July
                17, 2007

            

    

     

    FOR
      VALUE
      RECEIVED, Airgate International Corporation, a New York corporation (the
“Borrower”),
      hereby promises to pay to the order of BHC
      INTERIM FUNDING II, L.P.
      (together with its successors in interest or assigns, if any, the “Lender”),
      the
      principal sum of Three Million Five Hundred Thousand Dollars ($3,500,000),
      together with interest thereon at the interest rates and at the times
      hereinafter provided. 

     

    1. Loan
      Agreement.
      This
      Senior Secured Term Note (“Term
      Note”)
      is
      delivered pursuant and subject to the Loan and Security Agreement (as the same
      may be amended, restated, supplemented or otherwise modified from time to time,
      the “Loan
      Agreement”),
      dated
      as of the date hereof, by and among the Borrower, the Guarantors and the Lender.
      All terms and conditions of the Loan Agreement are hereby incorporated by
      reference into this Term Note, and reference is made to the Loan Agreement
      for,
      among other things, the security for this Term Note, Events of Default
      hereunder, and the Lender’s rights and remedies upon the occurrence of any Event
      of Default. All capitalized terms used herein shall have the same meanings
      ascribed to them in the Loan Agreement unless otherwise expressly
      stated.

     

    2. Interest
      and Fees.

     

    (a) Rates
      of Interest; Computation.
      The
      Term Loan shall bear interest on the unpaid principal balance thereof from
      the
      date of the borrowing thereof to the date of payment thereof, as set forth
      in
Section
      2.3
      of the
      Loan Agreement. All interest payable hereunder shall be computed on the basis
      of
      a 360-day year for the actual number of days elapsed in the period during which
      it accrues.

     

    (b) Interest
      Payments.
      The
      Borrower shall pay interest on the unpaid principal balance of the Term Loan
      at
      the interest rates set forth in Section
      2.3
      of the
      Loan Agreement. Interest shall be paid by the Borrower monthly in arrears on
      the
      first Business Day of each month by automatic wire transfer to the Lender’s bank
      account commencing on [August] 1,
      2007,
      and on
      the date of any prepayment of the Term Loan and at maturity, whether by
      acceleration or otherwise.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) Post
      Default Interest.
      Any
      installment of principal of the Term Loan not paid when due and, to the extent
      permitted by applicable law, any installment of interest thereon not paid when
      due at any time, whether by acceleration, after commencement of bankruptcy
      or
      insolvency proceedings or otherwise, shall continue to bear interest payable
      on
      demand at the Default Rate.

     

    (d) Fees.
      The
      Borrower shall pay, when due, all fees set forth in the Loan Agreement and
      the
      other Loan Documents.

     

    3. Payments
      of Principal; Optional Prepayments.
      The
      Term Loan shall be due and payable in full on the Maturity Date. The Borrower
      shall have the obligation to make mandatory payments of principal of the Term
      Loan, and the right to make voluntary prepayments of principal of the Term
      Loan,
      in accordance with Section
      2.5
      of the
      Loan Agreement.

     

    4. Acceleration.
      The
      outstanding principal balance of, and any accrued and unpaid interest on, the
      Term Loan shall be payable in full upon the occurrence and during the
      continuance of an Event of Default and acceleration of the Obligations pursuant
      to Section
      7.2
      of the
      Loan Agreement.

     

    5. Payments.
      All
      payments of principal, interest, fees, costs and expenses hereunder shall be
      made by the Borrower without defense, set off or counterclaim and in same day
      funds and delivered to the Lender at its office (or wire transferred to the
      Lender’s bank account) specified in the Loan Agreement. The Borrower hereby
      authorizes the Lender, at the Lender’s option, to draw against any deposit or
      disbursement account of the Borrower and maintained with the Lender (or subject
      to a control agreement in favor of the Lender), on account of such amounts,
      when
      any payment of same shall be due.

     

    6. Invalidity.
      The
      invalidity, illegality or unenforceability in any jurisdiction of any provision
      in or obligation under this Term Note shall not affect or impair the validity,
      legality or enforceability of the remaining provisions or obligations under
      this
      Term Note or of such provision or obligation in any other
      jurisdiction.

     

    7. Collection
      Costs.
      Without
      limiting the generality of Section
      8.3
      of the
      Loan Agreement, the Borrower shall pay, on demand, all reasonable fees, costs
      and expenses incurred by the Lender after an Event of Default in connection
      with
      any action, proceeding or effort taken or commenced by the Lender to enforce
      this Term Note, including, without limitation, reasonable attorney’s fees and
      expenses.

     

    8. Waivers;
      Amendments.
      The Borrower hereby waives presentment, demand, protest and notice of
      nonpayment. The liabilities and obligations of the Borrower hereunder shall
      be
      unconditional without regard to the liability or obligations of any other party.
      No failure or delay on the part of the Lender in the exercise of any power,
      right or privilege shall impair such power, right or privilege or be construed
      to be a waiver of any Default or acquiescence therein, nor shall any single
      or
      partial exercise of any such power, right or privilege preclude other or further
      exercise thereof or of any other right, power or privilege. No amendment,
      modification or waiver of any provision of this Term Note, or consent to any
      departure by the Borrower therefrom, shall be effective unless the same shall
      be
      in writing and signed by the Lender and the Borrower. Each amendment,
      modification or waiver shall be effective only in the specific instance and
      for
      the specific purpose for which the same was consented to by the
      Lender.

     

    
      
         

      

      
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          2
          -

        
          

        

      

      
         

      

    

     

    9. Security.
      The
      payment of this Term Note is secured as provided in the Loan
      Agreement.

     

    10. Seniority.
      The
      payment of this Term Note is senior (other than as provided in the Intercreditor
      Agreement) to all other obligations of the Borrower, whether now existing or
      hereinafter incurred.

     

    11. GOVERNING
      LAW; CONSENT TO JURISDICTION.
      THE
      VALIDITY AND EFFECT OF THIS TERM NOTE SHALL BE GOVERNED BY AND SHALL BE
      CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
      NEW
      YORK WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES. THE BORROWER HEREBY
      CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
      COUNTY OF NEW YORK, STATE OF NEW YORK, AND IRREVOCABLY AGREES THAT, SUBJECT
      TO
      THE LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO
      THIS TERM NOTE, OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
      THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
      AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS
      AND
      WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
      BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS TERM NOTE, THE OTHER
      LOAN DOCUMENTS OR THE OBLIGATIONS. IF THE BORROWER PRESENTLY IS, OR IN THE
      FUTURE BECOMES, A NONRESIDENT OF THE STATE OF NEW YORK, THE BORROWER HEREBY
      WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
      OF PROCESS MAY BE MADE UPON THE BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN
      RECEIPT REQUESTED, DIRECTED TO THE BORROWER, AT THE BORROWER’S ADDRESS SET FORTH
      IN SECTION
      8.6
      OF THE
      LOAN AGREEMENT OR AS MOST RECENTLY PROVIDED BY THE BORROWER TO THE LENDER IN
      WRITING, AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME
      HAS
      BEEN POSTED AS AFORESAID.

     

    12. JURY
      TRIAL WAIVER.
      THE
      BORROWER AND THE LENDER
      HEREBY
      WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
      BASED UPON OR ARISING OUT OF THIS TERM NOTE OR ANY OTHER DOCUMENTS EXECUTED
      IN
      CONNECTION WITH THIS TERM NOTE OR ANY DEALINGS BETWEEN THE BORROWER AND THE
      LENDER RELATING TO THIS TERM NOTE. THE BORROWER AND THE LENDER ACKNOWLEDGE
      THAT
      THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
      THAT
      EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS TERM NOTE AND THE
      OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN ITS
      RELATED FUTURE DEALINGS. THE BORROWER AND THE LENDER WARRANT AND REPRESENT
      THAT
      EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
      CONSULTATION WITH LEGAL COUNSEL. 

     

    
      
         

      

      
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          3
          -

        
          

        

      

      
         

      

    

     

    13. Successors
      in Interest or Assigns.
      All of
      the Lender’s rights hereunder shall accrue for the benefit of the Lender, its
      successors in interest or assigns.

     

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
         

      

      
        -
          4
          -

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, and intending to be legally bound hereby, the Borrower has
      executed this Term Note the day and year first above written.

     

    
      	 	 	 
	 	
              AIRGATE
                INTERNATIONAL CORPORATION

            
	 
 	 
 	 
 
	
            	By:  	
              /s/Scott
                Turner

            
	 	
              

              Name:
                Scott
                Turner

            
	 	
              Title:
                Vice
                President

            

    

     

    HONG
      KONG, SAR: ss.:

     

    On
      the
      ___ day of July in the year 2007 before me, the undersigned, personally appeared
      Alfred Lam, known to me or proved to me on the basis of satisfactory evidence
      to
      be the individual whose name is subscribed to the within instrument and
      acknowledged to me that he executed the same in his capacity as an authorized
      officer of the Borrower (as defined in the within instrument), and that by
      his
      signature on the instrument, he executed the instrument.

     

    
      	 	 
	 	
              Notary
                Public

            

    

     

    
      Signature
        Page to Senior Secured Term Note

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