Document:

Exhibit 10.21

 

AMENDED AND RESTATED 

REFINANCING AGREEMENT

 

This Amended and
Restated Refinancing Agreement (the “Agreement”) is made as of this 20th
day of May, 2005 by STRATEGIC TECHNOLOGIES, INC., a North Carolina corporation
(“‘Strategic”) and MRA SYSTEMS, INC., d/b/a ACCESS DISTRIBUTION, a
Delaware corporation (“Access”).

 

Recitals

 

A.                       Strategic
and Access are parties to a Refinancing Agreement, dated as of July 31, 2002
(the “Existing Refinancing Agreement”), pursuant to which, among other
things, Strategic is indebted to Access as evidenced by the following notes:
(i) Amended and Restated Promissory Note, dated July 31, 2002, in the original
principal amount of $15,164,283.88 (referred to herein as the “Access Note”),
(ii) Amended and Restated Promissory Note, dated July 31, 2002, in the original
principal amount of $7,278,603.31 (referred to herein as the “CIT Note”).

 

B.                       As
described in the Existing Refinancing Agreement, Strategic also is indebted to
Access pursuant to trade debt due to periodic purchases of goods and services.

 

C.                       Strategic
also is indebted to Access as evidenced by a promissory note, dated November 3,
2003, in the original principal amount of $4,931,000 (the “November 2003
Note”; together with the Access Note and the CIT Note, the “Existing
Notes”).

 

D.                       On March
24, 2004, Strategic and Access entered into a Forbearance Agreement (the “Forbearance
Agreement”), pursuant to the terms and conditions of which, Access agreed
to forbear from exercising its rights and remedies as a result of defaults
under the Existing Refinancing Agreement, the Existing Notes and related
documents and to continue to make available to Strategic purchases of goods and
services in Access’s sole discretion.

 

E.                        Strategic
and Access have agreed to restructure, amend and restate the terms of the
Existing Refinancing Agreement and the Existing Notes, terminate the
Forbearance Agreement, and confirm the agreements relating to the ongoing
relationship between the parties.

 

NOW, THEREFORE, in
consideration of the foregoing and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by each party, the
parties agree as follows:

 

1.                         Definitions.
Capitalized terms not otherwise defined in this Agreement shall have the
following meanings ascribed thereto.

 

“Access
Customer Terms and Conditions” shall mean the GE Access Customer Terms and
Conditions, dated the date of this Agreement, between Access and Strategic, as
the same may from time to time be amended, modified, supplemented or restated.

 

“Access
Note” shall have the meaning given to such term in the Recitals to this
Agreement.

 

 

“Amended
and Restated November 2003 Note” shall have the meaning given to such term
in Section 2.b. of this Agreement.

 

“Approved
Projections” shall mean Projections described in clause (ii) of the
definition thereof that have been provided to Access in accordance with Section
9.e. of this Agreement and that Access has approved in its discretion.

 

“BB&T”
shall mean Branch Banking & Trust Company.

 

“Business
Day” shall mean a day other than a Saturday or Sunday on which commercial
banks are generally open for business in the State of North Carolina and the
State of Connecticut.

 

“Capital
Expenditures” shall mean all payments or accruals (including Capital Lease
Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.

 

“Capital
Lease” shall mean, with respect to any Person, any lease of any property
(whether real, personal or mixed) by such Person as lessee that, in accordance
with GAAP, either would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person or otherwise would be disclosed
as such in a note to such balance sheet, other than, in the case of Strategic,
any such lease under which Strategic is the lessor.

 

“Capital
Lease Obligation” shall mean, with respect to any Capital Lease, the amount
of the obligation of the lessee thereunder that, in accordance with GAAP, would
appear on a balance sheet of such lessee in respect of such Capital Lease or
otherwise be disclosed in a note to such balance sheet.

 

“Capital
Stock” shall mean Strategic’s common stock and any other stock of any
class, whether now or hereafter authorized, which has the right to participate
in the distribution of earnings and assets of Strategic without limit as to
amount or percentage other than pursuant to statutory restrictions.

 

“CIT”
shall have the meaning given to such term in Section 3 of this Agreement.

 

“CIT
Financing Agreement” shall have the meaning given to such term in Section 3
of this Agreement.

 

“CIT
Note” shall have the meaning given to such term in the Recitals to this
Agreement.

 

“Collateral”
shall have the meaning given to such term in Section 3 of this Agreement.

 

“Consolidated
Amended and Restated Note” shall have the meaning given to such term in
Section 2.a. of this Agreement.

 

“Contingent
Obligations” shall mean, as to any Person, any obligation of such Person
guaranteeing or in effect guaranteeing any debt, leases, dividends or other
obligations of any other Person (for purposes of this definition, a “primary
obligation”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, regardless of

 

2

 

whether such obligation
is contingent, (a) to purchase any primary obligation or any property
constituting direct or indirect security therefore, (b) to advance or supply
funds (i) for the purchase or payment of any primary obligation, or (ii) to
maintain working capital or equity capital of any other Person in respect of
any primary obligation, or otherwise to maintain the net worth or solvency of
any other Person, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any primary obligation of the ability
of the Person primarily liable for such primary obligation to make payment
thereof, or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof. The amount of any
Contingent Obligation is deemed to be equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.

 

“Contractual
Obligation” shall mean as to any Person, any provision of any security
issued by such Person or of any agreement, instrument, or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Copyrights”
shall mean all of the following now owned or hereafter acquired by any Person:
(i) all copyrights in any original work of authorship fixed in any tangible
medium of expression, now known or later developed, all registrations and
applications for registration of any such copyrights in the United States or
any other country, including registrations, recordings and applications, and
supplemental registrations, recordings, and applications in the United States
Copyright Office; and (ii) all proceeds of the foregoing, including license
royalties and proceeds of infringement suits, the right to sue for past,
present and future infringements, all rights corresponding thereto throughout
the world and all renewals and extensions thereof.

 

“Copyright
License” means rights under any written agreement now owned or hereafter
acquired by any Person granting the right to use any Copyright or Copyright
registration.

 

“Debt
for Money Borrowed” shall mean all liabilities, obligations and
indebtedness of Strategic to any Person consisting of indebtedness for money
borrowed or the deferred purchase price of property, excluding trade payables,
but including (a) all Indebtedness evidenced by the Notes, (b) all debt
outstanding to BB&T and (c) all obligations and liabilities created or
arising under any Capital Lease or conditional sale with respect to property
used or acquired by Strategic.

 

“Default”
shall have the meaning given to such term in Section 13 of this Agreement.

 

“EBITDA”
shall mean, for any period, the Net Income (Loss) of Strategic (and, if
Strategic has any subsidiaries, its subsidiaries in which case on a
consolidated basis), for such period, plus interest expense, income tax
expense, amortization expense, depreciation expense and extraordinary losses
and minus extraordinary gains, in each case, of Strategic (and, if Strategic
has any subsidiaries, its subsidiaries in which case on a consolidated basis),
for such period determined in accordance with GAAP to the extent included in
the determination of such Net Income (Loss).

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.

 

3

 

“ERISA
Affiliate” shall mean any trade or business (whether or not incorporated)
that, together with Strategic, is treated as a single employer under Section
414(b), (c), (m) or (o) of the IRC, or, solely for the purposes of Section 302
of ERISA and Section 412 of the IRC, is treated as a single employer under
Section 414 of the IRC.

 

“ERISA
Event” shall mean (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(b) of the IRC or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Strategic or any ERISA Affiliate of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by Strategic or any ERISA Affiliate from the PBGC or a plan administrator
of any notice relating to an intention to terminate any Plan or to appoint a
trustee to administer any Plan; (f) the incurrence by Strategic or any ERISA
Affiliate of any liability with respect to any withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by Strategic or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from
Strategic or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

 

“Excess
Cash Flow” shall mean, for any period of determination:

 

(a)
EBITDA for such period, minus

 

(b)
the sum of (i) cash Capital Expenditures of Strategic in such period (i.e.,
Capital Expenditures not funded by the proceeds of debt or marketing
development funds) plus (ii) scheduled payments of principal and interest in
such period made in respect of Debt for Money Borrowed plus (iii) allowed
payments to Sun under the Sun Intercreditor Agreement in such period plus (iv)
increases in such period in Strategic’s net accounts receivable and deferred
support costs plus (v) decreases in such period in Strategic’s accounts payable
and deferred support revenues, plus

 

(c)
the sum of (i) decreases in such period in Strategic’s net accounts receivable
and deferred support costs plus (ii) increases in such period in Strategic’s
accounts payable and deferred support revenues.

 

“Existing
Notes” shall have the meaning given to such term in the Recitals to this
Agreement.

 

“Existing
Refinancing Agreement” shall have the meaning given to such term in the
Recitals to this Agreement.

 

“Financial
Statements” shall mean the consolidated and consolidating income statement,
balance sheet and statement of cash flows of Strategic and its subsidiaries,
internally prepared for each Fiscal Month, and audited for each Fiscal Year,
prepared in accordance with GAAP.

 

“Fixed
Charge Coverage Ratio” shall mean, for any period, the ratio of the
following for Strategic and its subsidiaries on a consolidated basis determined
in accordance with GAAP: (a)

 

4

 

EBITDA for such period
less cash Capital Expenditures (i.e., not funded by the proceeds of debt or
marketing development funds) to (b) sum of (i) interest expense paid or payable
in respect of any debt of Strategic during such period, plus (ii) cash income
taxes paid or payable during such period plus (iii) regularly scheduled
payments of principal paid or that were required to be paid on Debt for Money
Borrowed during such period.

 

“GAAP”
shall mean generally accepted accounting principles set forth in the opinions
and pronouncements of the Public Company Accounting Oversight Board and
statements and pronouncements of the Financial Accounting Standards Board
determined and applied in a manner consistent with past historic practices of
Strategic for the preparation of its financial statements.

 

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

 

“Guarantors”
shall mean Michael Shook, William Shook and Irvin Miglietta, and any Person who
shall hereafter guaranty all or a portion of the Indebtedness.

 

“Highest
Lawful Rate” means the maximum nonusurious interest rate, if any, that at
any time or from time to time may be contracted for, taken, reserved, charged,
or received on the total Indebtedness in accordance with applicable law.

 

“Indebtedness”
shall have the meaning given to such term in Section 2 of this Agreement.

 

“Intellectual
Property” means any and all Licenses, Patents, Copyrights, Trademarks,
trade secrets and customer lists.

 

“IRC”
and “IRS” shall mean respectively, the Internal Revenue Code of 1986 and
the Internal Revenue Service, and any successors thereto.

 

“LIBOR”
shall mean a rate per annum equal to the rate at which deposits in United
States dollars are being offered by prime banks in the London interbank market
for a period of 90 days (3 months) as reported by the Wall Street Journal (or,
if the Wall Street Journal is no longer in publication or does not provide such
rate, a comparable business newspaper), as such rate is in effect as of the
effective date of this Agreement, and then adjusting every three (3) months on
the last day of each calendar quarter (commencing June 30, 2005) to the then
current LBOR rate in effect.

 

“License”
shall mean any Copyright License, Patent License, Trademark License or other
license of rights or interests now held or hereafter acquired by any Person.

 

“Loan
Papers” shall have the meaning given to such term in Section 2 of this
Agreement.

 

“Lockbox”
and “Lockbox Account” shall have the meanings given to such terms in
Section 7 of this Agreement.

 

“Material
Adverse Effect” shall mean any set of circumstances or events which (a) is
or could be expected to become material and adverse to the business condition
(financial or otherwise), operations or prospects of Strategic; or (b) could
reasonably be expected to

 

5

 

materially impair
Strategic’s ability to fulfill its obligations under the Notes, or any of the
other Indebtedness.

 

“Multiemployer
Plan” shall mean a “multiemployer plan,” as defined in Section 4001 (a)(3)
of ERISA, to which Strategic or any ERISA Affiliate is making, is obligated to
make, has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.

 

“Net
Income (Loss)” shall mean with respect to any Person and for any period,
the aggregate net income (or loss) after taxes of such Person for such period,
determined in accordance with GAAP.

 

“Net
Proceeds” shall mean proceeds (including cash receivable (when received) by
way of deferred payment) received by Strategic from the sale, transfer or other
disposition of its real property located at 301 Gregson Street, Cary, North
Carolina, including, without limitation, insurance proceeds and awards of
compensation received with respect to the destruction or condemnation of all or
part of such property, net of: (i) the reasonable costs of such sale, transfer or
other disposition; (ii) any tax liability arising from such transaction; (iii)
amounts applied to repayment of indebtedness secured by a lien on such property
disposed of that is senior to the lien of Access thereon; and (iv) in addition
to the costs and expenses described in the foregoing clauses (i)-(iii), up to a
maximum of $150,000 in the aggregate of all costs actually incurred by
Strategic arising as a consequence of the sale of said real property including,
without limitation, relocation costs, additional security deposits, costs
incurred to prepare, occupy and move to new premises.

 

“Notes”
shall have the meaning given to such term in Section 2.b. of this Agreement.

 

“November
2003 Note” shall have the meaning give to such term in the Recitals to this
Agreement.

 

“Past
Due Trade Debt” shall mean, at any time of determination, Trade Debt that
is unpaid 50 days or more after invoice date at such time.

 

“Patent
License” shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.

 

“Patents”
shall mean all of the following in which any Person now holds or hereafter
acquires any interest: (i) all letters patent of the United States or any other
country, all registrations and recordings thereof, and all applications for
letters patent of the United States or any other country, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State or Territory thereof, or any other country; and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.

 

“PBGC”
shall mean the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Permitted
Encumbrances” shall mean liens on Strategic’s property (i) existing on the
date of this Agreement, (ii) created in favor of Access, (iii) created with the
prior written consent of Access, (iv) in respect of taxes not yet due and
payable, (v) that are mechanic’s, materialmen’s

 

6

 

or similar liens imposed
by law for amounts not yet due and payable or (vi) that are Purchase Money
Liens.

 

“Permitted
Miglietta Redemption” shall mean the redemption of all of the Capital Stock
of Strategic owned by Irvin Miglietta provided the following conditions are
met: (a) no Default shall then exist and be continuing, (b) the purchase price
for such redemption shall not exceed $1,000,000, (c) Strategic shall pay such
purchase price by executing a note not to exceed $1,000,000 to Irvin Miglietta,
the payment of which shall be secured only by the Capital Stock of Strategic
redeemed from Irvin Miglietta and no other assets of Strategic and (d) Irvin
Miglietta and Strategic shall execute and deliver to Access a subordination
agreement acceptable to Access providing for, among other things, the payment
by Strategic to Irvin Miglietta in the first year after such redemption of four
quarterly payments of $37,500 each and no other payments until the Notes are
paid in full.

 

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

 

“Plan”
shall mean any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the IRC or
Section 302 of ERISA, and in respect of which Strategic or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Projections”
shall mean as of any date the balance sheet, statements of income and cash flow
for Strategic (including forecasted Capital Expenditures) (i) by month for the
next fiscal year of Strategic, and (ii) by year for the following five (5)
fiscal years of Strategic, in each case prepared in a manner consistent with
GAAP and accompanied by senior management’s discussion and analysis of such
plan. The Projections shall include Strategic’s good faith estimate of the
number of stock options and warrants Strategic plans to issue in the next
fiscal year of Strategic, the categories of Persons to which Strategic plans to
issue such stock options and warrants (e.g., directors, new hires, incentives
to existing employees, etc.) and the number of such stock options and warrants
that Strategic plans to issue to each such category of Persons.

 

“Purchase
Money Indebtedness” shall mean and includes (i) all liabilities,
obligations and indebtedness (other than the Indebtedness) for the payment of
all or any part of the purchase price of any fixed assets, (ii) any
liabilities, obligations and indebtedness (other than the Indebtedness) incurred
at the time of or within 20 days prior to or after the acquisition of any fixed
assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not
any increases in the principal amounts thereof outstanding at the time.

 

Purchase
Money Lien - a lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such lien.

 

7

 

“Requirement
of Law” shall mean as to any Person, the Certificate or Articles of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding
upon such Person or any of its property or to which such Person or any of its
property is subject.

 

“Sun”
shall mean Sun Microsystems, Inc.

 

“Sun
Intercreditor Agreement” shall mean the Intercreditor Agreement, dated July
14, 2003, between Access and Sun and approved by Strategic, as the same may be
amended, modified, supplemented or restated from time to time.

 

“Trade
Debt” shall mean Indebtedness for goods sold and services rendered by
Access to Strategic, as well as Indebtedness for goods sold and services
rendered by third parties to Strategic for which Access invoices and collects
from Strategic.

 

“Trademark
License” shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.

 

“Trademarks”
shall mean all of the following now owned or hereafter acquired by any Person:
(i) all trademarks, trade names, corporate names, business names, trade styles,
service marks, logos, other source or business identifiers, prints and labels
on which any of the foregoing have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State or Territory thereof, or any other country or any
political subdivision thereof, and (ii) all reissues, extensions or renewals
thereof.

 

“Wachovia”
shall have the meaning given to such term in Section 7 of this Agreement.

 

2.                         Existing
Indebtedness. Strategic agrees, confirms and reaffirms that as of the date
of this Agreement, it is indebted to Access in the total approximate amount of
$31,072,349.79, as follows:

 

a.                         Consolidated
Amended and Restated Note. Strategic owes Access $10,387,648.54 which shall
be evidenced by a promissory note from Strategic payable to the order of Access
in the original principal amount of 10,387,648.54 and dated the date of this
Agreement, in the form and in the principal amount as set forth on the attached
Exhibit A (the “Consolidated
Amended and Restated Note”). Such principal amount is comprised of the
outstanding principal and interest amounts owing under the Access Note and the
CIT Note.

 

b.                         Amended
and Restated November 2003 Note. Strategic owes $4,931,000 in principal to
Access under the November 2003 Note, which shall be amended and restated in the
form and in the principal amount as set forth on the attached Exhibit B (the “Amended and Restated
November 2003 Note” together with the Consolidated Amended and Restated
Note, the “Notes”).

 

c.                          Trade
Debt. Strategic owes to Access $15,753,701.25 outstanding in Trade Debt as
of May 16, 2005, a statement of which is attached hereto as Exhibit C. Such amount includes
discrepancies

 

8

 

in the aggregate amount
of $648,685.38 which Strategic and Access agree to resolve in good faith as
soon as possible. An aging of the Trade Debt from invoice date is as follows:

 

	
  Amount

  	
   

  	
  Number of Days Unpaid 

  After Invoice Date

  	
   

  
	
  $

  	
  6,477,238.69

  	
   

  	
  50 or less

  	
   

  
	
  $

  	
  9,276,462.56

  	
   

  	
  More than 50

  	
   

  

 

Any and all indebtedness
of Strategic to Access which is outstanding from time to time, including all
present and future indebtedness, obligations, and liabilities and all renewals
and extensions thereof, or any part thereof, whether or not set forth in this
Section, and all interest accruing thereon and out of pocket costs, expenses
and reasonable attorney’s fees incurred in the enforcement or collection
thereof, regardless of whether such indebtedness, obligations, and liabilities
are direct, indirect, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, including, but not limited to, the indebtedness,
obligations, and liabilities evidenced, secured, or arising pursuant to this
Agreement or any other agreement entered into with Access from time to time
(such agreements, including any future amendments, modifications, restatements,
renewals or extensions thereof, are referred to herein as the “Loan Papers”),
and all renewals and extensions thereof, or any part thereof, and all present
and future amendments thereto, is referred to herein as the “Indebtedness.”

 

3.                         Collateral.
Strategic acknowledges that all of the above referenced Indebtedness is due and
owing without defense, offset or counterclaim, and is secured by a blanket lien
on all assets of Strategic, as such collateral is described in (a) the Amended
and Restated Security Agreement dated July 31, 2002 between Strategic and
Access, as amended (b) the Financing Agreement dated as of October 17, 2001
between The CIT Group/Business Credit, Inc. (“CIT”) and Strategic, which
interest of CIT was assigned to Access on April 12, 2002 (the “CIT Financing
Agreement”), and (c) the North Carolina Deed of Trust dated June 3, 2003 by
Strategic for the benefit of Access, as amended (such collateral is
collectively referred to herein as the “Collateral”). Payment of the
Indebtedness is also secured by the guarantees of each Guarantor pursuant to
the terms of personal guarantee agreements dated on or about April 9, 2002.

 

4.                         Purchases
of Additional Goods or Services. Strategic may submit purchase orders for
purchase of goods or services from time to time, under the terms of the Access
Customer Terms and Conditions. Strategic understands that Access reserves the
right to modify Strategic’s active account status or trade credit limit in
accordance with the terms of the Access Customer Terms and Conditions.

 

5.                         Interest.

 

a.                         Interest
- Consolidated Amended and Restated Note. Strategic shall pay interest on
the Indebtedness evidenced by the Consolidated Amended and Restated Note at a
floating rate equal to LIBOR plus 4.5% per annum.

 

b.                         Interest
- Amended and Restated November 2003 Note. Strategic shall pay interest on
the Indebtedness evidenced by the Amended and Restated November 2003 Note at a
fixed rate of 12% per annum.

 

c.                          Interest
- Past Due Trade Debt. Strategic shall pay interest on all Past Due Trade
Debt at a fixed rate of 12% per annum; provided, however, Strategic shall not
be required to pay interest on Trade Debt evidenced by invoices with line items
identified to be a valid dispute agreed upon by Strategic and Access. Strategic
agrees to resolve with Access, in good faith and in a manner consistent

 

9

 

with past practices
between Strategic and Access, disputes regarding interest accrual on Trade Debt
in connection with invoices generated by Access prior to the delivery of
products or service contracts to Strategic (or Strategic’s customers, as is the
appropriate case).

 

d.                         Interest
- Default Rate. During the continuance of a Default, at the option of
Access and to the extent not otherwise prohibited by the terms of the Sun
Intercreditor Agreement, interest shall accrue on the Indebtedness at a rate
per annum equal to 2% above the interest rate otherwise applicable thereto.

 

e.                          Computation
of Interest. All interest provided for in this Agreement shall accrue from
the date of this Agreement, shall be calculated daily and shall be computed on
the actual number of days elapsed over a year of 360 days.

 

6.                         Payment.

 

a.                         Required
Monthly Payment. Commencing June 1, 2005 and continuing on the first day of
each calendar month thereafter, Strategic shall pay to Access the amounts set
forth in the following table for the month corresponding thereto, with a final
payment in full on May 1, 2010 of all unpaid principal and interest on the
Notes:

 

	
  Amount

  	
   

  	
  Month(s)

  	
   

  
	
  $

  	
  375,000

  	
   

  	
  Each
  calendar month in the 2005 calendar year

  	
   

  
	
  $

  	
  400,000

  	
   

  	
  Each
  calendar month in the 2006 calendar year

  	
   

  
	
  $

  	
  450,000

  	
   

  	
  Each
  calendar month in the 2007 calendar year

  	
   

  
	
  $

  	
  500,000

  	
   

  	
  Each
  calendar month in the 2008 and 2009 calendar year; January, 2010 through
  April, 2010

  	
   

  

 

b.                         Application
of Required Monthly Payment. The amount paid by Strategic to Access in
accordance with Section 6.a. of this Agreement shall be applied to the
Indebtedness as follows: first, to the payment of accrued interest; second, to
the payment of the principal amount of the Note that is accruing interest at
the lower rate on the date such payment is made; and third, to the payment of
the principal amount of the Note that is accruing interest at the higher rate
on the date such payment is made. Notwithstanding anything appearing in this
Agreement to the contrary, the Past Due Trade Debt will not be required to be
paid prior to January 1, 2006 unless a Default shall occur and be continuing.

 

c.                          Prepayment
of Principal of Notes. In the event Strategic pays the entire principal
amount of the Notes prior to the stated maturity thereof, Strategic shall
simultaneously pay the Past Due Trade Debt owing at such time.

 

d.                         Excess
Cash Flow Recapture. Commencing on the date Access receives Strategic’s
financial statements for the month of June, 2005, and continuing on each date
that Access receives Strategic’s monthly financial statements for each sixth
month thereafter, Strategic shall pay to Access an amount equal to 100% of
Excess Cash Flow for the six month period ending on the last day of such

 

10

 

month, which amount shall
be applied to the Indebtedness in such order as Access shall elect in its
discretion.

 

e.                          Credits.
All credits which are due to Strategic which are issued pursuant to purchases
or other items or which are evidenced by invoices shall be applied to the
Indebtedness evidenced by the invoice to which such credit relates or if such
invoice has previously been paid, to Indebtedness by order of earliest invoice
date.

 

f.                           Net
Proceeds. Strategic shall pay all of the Net Proceeds to Access for
application to the outstanding Indebtedness in such order and manner as Access
shall determine in its discretion, except that if Strategic sells its real
property located at 301 Gregson Street, Cary, North Carolina for an amount in
excess of the fair market value of such property as determined by the appraisal
required to be obtained by Section 8.m.(i) of this Agreement, then Strategic
can pay up to $150,000 of such excess in the aggregate to Michael G. Shook and
William M. Shook to reduce Strategic’s Indebtedness for Money Borrowed owing to
Michael G. Shook and William M. Shook described on Schedule 11.a. attached. If Strategic makes such a payment or
payments, Strategic shall promptly notify Access to whom such payment or
payments was made and in what amount or amounts and shall confirm to Access the
remaining balance of the Indebtedness for Money Borrowed owing to Michael G.
Shook and William M. Shook.

 

7.                         Cash
Dominion; Deposit Accounts.

 

a.                         Lockbox
Account. Strategic has caused to be established and shall maintain with
Wachovia Bank, National Association (“Wachovia”) the blocked account
described on the attached Exhibit D
(the “Lockbox Account”) in connection with the lockbox described on the
attached Exhibit D (the “Lockbox”).
Strategic has instructed and shall continue to instruct all of its customers to
remit to the Lockbox all checks and other items in payment of accounts owing by
them to Strategic and to remit to the Lockbox Account any ACH, wire transfer or
other electronic payment of such accounts. In addition, Strategic shall
promptly cause to be deposited into the Lockbox Account: (i) all proceeds of
any and all of the Collateral received by Strategic, including all amounts
payable to Strategic from credit card issuers and credit card processors; and
(ii) all amounts on deposit in deposit accounts used by Strategic at each of
its locations. Strategic hereby ratifies and reaffirms its agreements contained
in that certain Account Control Agreement (No Notification) dated January 1,
2003 among Wachovia, Strategic and Access.

 

b.                         Transfers
from the Lockbox Account. Access shall cause collected funds in the Lockbox
Account to be disbursed to Strategic only in accordance with the procedures
described in this paragraph. All requests by Strategic for disbursements of
collected funds to Strategic from the Lockbox Account shall be made by
Strategic to Access in writing, and Access shall either notify Strategic that
such disbursement request is being rejected or shall authorize disbursement of
such amounts as requested by Strategic. Notwithstanding the foregoing, Access
shall authorize disbursement requests made by Strategic for the payment of
accrued income and sales taxes, accrued withholding taxes, accrued payroll
(including accrued commissions and accrued amounts payable under Strategic’s
variable compensation plans), accrued employee benefits and insurance premiums
(the “Obligatory Payments”); provided, however, Access shall have the right
during the continuance of a Default to refuse to authorize disbursement
requests to pay Obligatory Payments but only after notifying Strategic during a
month in which Obligatory Payments are accruing that Access will no longer
authorize disbursements to pay Obligatory Payments accruing after such month.
Such authorization for disbursement shall be made or rejected by Access within
48 hours of a written request by Strategic to Access, provided, that if such 48
hour period would end on a non-Business Day, then such period shall be extended
until such same time

 

11

 

on the next Business Day.
In the event that Access fails to approve or reject any such request within
such 48 hour period, the request shall be deemed rejected. If a Default shall
not have occurred and be continuing, collected funds in the Lockbox Account
that are not disbursed to Strategic shall be retained in the Lockbox Account
pending a written request for disbursement from Strategic. If a Default shall
have occurred and be continuing, Collected funds in the Lockbox Account that
are not disbursed to Strategic may be applied by Access as payments of the
Indebtedness described in Section 5 of this Agreement, which payments may be
applied in such order as Access shall elect in its discretion. For the
avoidance of doubt, it is understood and agreed that amounts that may be
applied by Access in accordance with the immediately preceding sentence shall not
include Obligatory Payments accruing in or prior to a month in which Access has
notified Strategic that Access will no longer authorize disbursements to pay
Obligatory Payments. Strategic shall instruct Wachovia to provide Access with
access to any on-line banking or electronic services with which to facilitate
the transfers from the Lockbox Account described in this paragraph. Except as
otherwise specifically set forth in this Section 7.b with respect to
disbursements to pay Obligatory Payments, all decisions by Access to disburse
collected funds to Strategic from the Lockbox Account shall be made by Access
in its sole and absolute discretion, and no such disbursement or disbursements
shall establish a custom or course of dealing between Access and Strategic.

 

c.                          Current
Bank Accounts. Strategic represents and warrants that all its bank accounts
are currently with Wachovia and that a complete listing of the Wachovia bank
accounts and their respective account numbers set forth on the attached Exhibit D. Strategic hereby ratifies and
reaffirms its agreements contained in that certain Account Control Agreement
(With Future Notification) dated January 1, 2003 among Wachovia, Strategic and
Access.

 

8.                         Representations,
Warranties and Affirmative Covenants. To induce Access to enter into this
Agreement, Strategic represents and warrants to Access (each of which
representations and warranties shall survive the execution and delivery of this
Agreement), and promises to and agrees with Access for so long as any of the
Indebtedness shall remain outstanding, as follows:

 

a.                         Corporate
Existence; Compliance with Law. Strategic: (a) is, as of the date of this
Agreement, and will continue to be (i) a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) duly qualified to do business and in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect,
and (iii) in compliance with all Requirements of Law and Contractual
Obligations, except to the extent failure to comply therewith could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and (b) has and will continue to have (i) the requisite
corporate power and authority and the legal right to execute, deliver and
perform its obligations under the Loan Papers, and to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it
operates under lease, and to conduct its business as now, heretofore or
proposed to be conducted, and (ii) all licenses, permits, franchises, rights,
powers, consents or approvals from or by all Persons or Governmental
Authorities having jurisdiction over Strategic that are necessary for the
conduct of its business.

 

b.                         Corporate
Power; Authorization; Enforceable Obligations. The execution, delivery and
performance by Strategic of the Loan Papers to which it is a party: (a) are and
will continue to be within Strategic’s power and authority; (b) have been and
will continue to be duly authorized by all necessary or proper action; (c) are
not and will not be in violation of any Requirement of Law or Contractual
Obligation of Strategic; and (d) do not and will not require the consent or
approval of any Governmental

 

12

 

Authority or any other
Person. As of the date of this Agreement, each of the Loan Papers shall have
been duly executed and delivered on behalf of Strategic, and each of the Loan
Papers upon such execution and delivery shall be and will continue to be a
legal, valid and binding obligation of Strategic, enforceable against it in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting creditors’ rights
generally.

 

c.                          Intellectual
Property. As of the date of this Agreement, all material Intellectual
Property owned or used by Strategic is listed, together with application or
registration numbers, where applicable, in Schedule
8.c. Strategic owns, or is licensed to use, all Intellectual
Property necessary to conduct its business as currently conducted except for
such Intellectual Property the failure of which to own or license could not
reasonably be expected to have a Material Adverse Effect. Strategic will
maintain the patenting and registration of all patented and registered
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office, or other appropriate Governmental Authority and
will promptly patent or register, as the case may be, all new Intellectual
Property which Strategic determines should be patented and registered to
protect its interests therein and notify Access in writing within five (5)
Business Days after the filing any such new patent or registration.

 

d.                         Full
Disclosure. No information contained in any Loan Papers or Financial Statements
delivered to Access or any written statement furnished by or on behalf of
Strategic to Access under any of the Loan Papers, or to induce Access to
execute this Agreement, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.

 

e.                          Insurance.
As of the date of the Agreement, Schedule
8.e. lists all insurance of any nature maintained for current occurrences
or claims by Strategic, as well as a summary of the terms of such insurance.
Strategic shall deliver to Access certified copies and endorsements to all of
its (a) “All Risk” and business interruption insurance policies naming Access
loss payee, and (b) general liability and other liability policies naming
Access as an additional insured. All policies of insurance on real and personal
property will contain an endorsement, in form and substance acceptable to
Access, showing loss payable to Access (Form 438 BFU or equivalent) and extra
expense and business interruption endorsements. Such endorsement, or an
independent instrument furnished to Access, will provide that the insurance
companies will give Access at least 30 days prior written notice before any
such policy or policies of insurance shall be altered or canceled and that no
act or default of Strategic or any other Person shall affect the right of
Access to recover under such policy or policies of insurance in case of loss or
damage. Strategic shall direct all present and future insurers under its “All
Risk” policies of insurance to pay all proceeds payable thereunder directly to
Access. If any insurance proceeds are paid by check, draft or other instrument
payable to Strategic and Access jointly, Access may endorse Strategic’s name
thereon and do such other things as Access may deem advisable to reduce the
same to cash. Access reserves the right at any time, upon review of Strategic’s
risk profile, to require additional forms and limits of insurance as determined
by Access in its reasonable commercial judgment. Strategic shall, from time to
time at the request of Access, deliver to Access a report by a reputable
insurance broker, satisfactory to Access, with respect to Strategic’s insurance
policies. Access shall be entitled to cause copies of Strategic’s insurance
policies and binders to be inspected from time to time by an insurance expert
acceptable to Access at Strategic’s cost.

 

f.                           Taxes.
Except as disclosed on Schedule 8.f.,
all tax returns, reports and statements required by any Governmental Authority
to be filed by Strategic have, as of the date of this Agreement, been filed and
will be filed with the appropriate Governmental Authority and no tax lien has
been filed against Strategic or any of Strategic’s property. Proper and
accurate amounts have been and will be

 

13

 

withheld by Strategic
from its employees for all periods in compliance in all material respects with
all Requirements of Law and such withholding have and will be timely paid to
the appropriate Governmental Authorities. Schedule
8.f. sets forth as of the date of this Agreement those taxable years
for which Strategic’s tax returns are currently being audited by the IRS or any
other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audit, or otherwise currently outstanding.

 

g.                          Litigation.
No litigation is pending or, to the knowledge of Strategic, threatened by or
against Strategic or against any of Strategic’s properties or revenues (a) with
respect to any of the Loan Papers or any of the transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule
8.g., as of the date of this Agreement there is no litigation
pending or threatened against Strategic which seeks damages in excess of
$50,000 or injunctive relief or alleges criminal misconduct of Strategic.
Strategic shall notify Access promptly in writing upon learning of the
existence, threat or commencement of any litigation against Strategic, any
ERISA Affiliate or any Plan or any allegation of criminal misconduct against
Strategic.

 

h.                         Real
Estate; Property. The real estate listed in Schedule 8.h. constitutes all of the real property owned,
leased, or used by Strategic in its business, and Strategic will not execute
any material agreement or contract in respect of such real estate after the
date of this Agreement without giving Access prompt prior written notice
thereof. Strategic holds and will continue to hold good and marketable fee
simple title to all of its owned real estate, and good and marketable title to
all of its other properties and assets, and valid and insurable leasehold interests
in all of its leases (both as lessor and lessee, sublessee or assignee), and
none of its properties and assets are or will be subject to any liens, except
Permitted Encumbrances.

 

i.                             ERISA.
No ERISA Event has occurred or is reasonably expected to occur that, when taken
together with all other existing ERISA Events, could reasonably be expected to
result in a liability of Strategic of more than $50,000. The present value of
all accumulated benefit obligations of Strategic under each Plan (based on the assumptions
used for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the date of the most recent Financial Statements reflecting such
amounts, exceed the fair market value of the assets of such Plan by more than
$50,000, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Account Standards No. 87) did not, as of the date of the most recent
Financial Statements reflecting such amounts, exceed the fair market value of
the assets of such underfunded Plans by more than $50,000. Neither Strategic
nor any ERISA Affiliate has incurred or reasonably expects to incur any
Withdrawal Liability in excess of $50,000.

 

j.                            Examinations;
Appraisals. Strategic shall, with respect to each owned or leased property,
during normal business hours and upon reasonable advance notice (unless a
Default shall have occurred and be continuing, in which event no notice shall
be required and Access shall have access at any and all times): (i) provide
access to such property to Access and any of its officers, employees and
agents, as frequently as Access determines to be appropriate; (ii) permit
Access and any of its officers, employees and agents to inspect, audit and make
extracts and copies (or take originals if reasonably necessary but only if a
Default shall have occurred and be continuing) from all of Strategic’s books
and records; and (iii) permit Access to inspect, review, evaluate and make
physical verifications and appraisals of the Collateral in any manner and
through any medium that Access reasonably considers advisable, and Strategic
agrees to render to Access, at Strategic’s cost and expense, such clerical and
other assistance as may be reasonably requested with regard thereto.

 

14

 

k.                         Ventures,
Subsidiaries and Affiliates; Outstanding Capital Stock. Except as set forth
in Schedule 8.k., as of the
effective date of this Agreement Strategic has no subsidiaries, is not engaged
in any joint venture or partnership with any other Person, and is not an
affiliate of any other Person. Schedule 8.k.
contains a materially complete list of all of the holders of issued and
outstanding Capital Stock of Strategic and of rights to purchase, options,
warrants or similar rights or agreements pursuant to which Strategic may be
required to issue, sell, repurchase or redeem any of its Capital Stock, along
with the respective numbers of shares owned or subject to purchase by each such
Person.

 

l.                             Meetings;
Representation. Strategic will hold, at its principal place of business,
regular meetings of its board of directors at least every calendar quarter
(unless the holding of any such meeting is waived by Access at the request of
Strategic) and of its shareholders at least once a year, and minutes of such
meetings shall be prepared and maintained as a part of the permanent records of
Strategic. Strategic will provide Access with a copy of any and all proposed
agendas prepared by Strategic for all meetings of the shareholders and board of
directors at least 1 week in advance (except in the case of special meetings of
the board of directors, in which case such notice shall be as prompt as
practicable) and copies of all minutes of such meetings within 30 days
following the date of such meetings. Access shall be entitled to have 1
representative present, either telephonically or in person, at each meeting of
the shareholders of Strategic and at each regular and special meeting of the
board of directors of Strategic, in each case, in a non-voting observer
capacity. If Access determines to have its representative physically present at
such meetings, all travel and other out-of-pocket expenses incurred by Access’s
representatives in attending such meetings shall be incurred at Access’s own
expense.

 

m.                     Covenants
Concerning Cary Real Property.

 

(i)                         By no
later than June 30, 2005, Strategic will cause (x) an appraisal of its real
property located at 301 Gregson Street, Cary, North Carolina to be conducted
for Access at Strategic’s cost by an appraiser selected by Strategic and
acceptable to Access and (y) the full report of such appraisal to be delivered
to Access.

 

(ii)                      By no later
than July 31, 2005, Strategic will list its real property located at 301
Gregson Street, Cary, North Carolina for sale with a commercial real estate
broker selected by Strategic and acceptable to Access.

 

(iii)                   If Strategic
receives commercially reasonable offers to purchase its real property located
at 301 Gregson Street, Cary, North Carolina for a cash purchase price at least
equal to the fair market value of such property (with fair market value to be
determined in accordance with the appraisal referenced in clause (i) of this
Section 8.m.), Strategic will consider such offers subject to its reasonable
business discretion and considering other reasonable business considerations
arising as a consequence of the sale of such real property.

 

n.                         Further
Assurances. At any time and from time to time, upon the written request of
Access and at the sole expense of Strategic, Strategic shall promptly and duly
execute and deliver any and all such further instruments and documents and take
such further action as Access may reasonably deem desirable (a) to obtain the
full benefits of this Agreement and the other Loan Papers, (b) to protect,
preserve and maintain Access’s rights in any Collateral, or (c) to enable
Access to exercise all or any of the rights and powers herein granted.

 

9.                         Financial
Statements. For so long as any of the Indebtedness shall remain
outstanding, Strategic shall deliver or cause to be delivered to Access:

 

15

 

a.                         Accounts
Payable Aging. Within 20 days following the end of each fiscal month of
Strategic, an accounts payable aging report as of the last day of such month in
form reasonably satisfactory to Access.

 

b.                         Accounts
Receivable Information.

 

(i)                         Within 20
days following the end of each fiscal month of Strategic, an accounts
receivable aging report as of the last day of such month in form reasonably
satisfactory to Access.

 

(ii)                      By no later
than May 13, 2005, and by no later than June 30 and December 31 of each year
(including 2005), a current list of Strategic’s customers in a form acceptable
to Access, including, without limitation, the latest known addresses of such
customers.

 

c.                          Monthly
Financial Statements. Within 20 days following the end of each fiscal month
of Strategic, Financial Statements for such fiscal month and the portion of
Strategic’s fiscal year then ended (including the last fiscal month of each
fiscal year), which shall set forth Strategic’s revenue from its top 10
customers in such fiscal month and in the portion of Strategic’s fiscal year
then elapsed, provide comparisons to budget and actual results for the
corresponding period during the prior fiscal year of Strategic, both on a
monthly and year-to-date basis, and be accompanied by a certification in the
form of Exhibit E by the Chief
Executive Officer or Chief Financial Officer of Strategic that, to the best
knowledge of the officer signing the certification, such Financial Statements
contain no material misstatement or omission of fact, that there was no Default
(or specifying those Defaults of which he or she was aware), and showing in
reasonable detail the calculations used in determining compliance with the
financial covenants hereunder;

 

d.                         Annual
Financial Statements. By March 15 of each fiscal year of Strategic,
unaudited company-prepared Financial Statements for such fiscal year together
with audit and accounting schedules, and within 180 days following the close of
each fiscal year of Strategic, the Financial Statements for such fiscal year
certified without qualification by an independent certified accounting firm
acceptable to Access, which shall provide comparisons to the prior fiscal year
of Strategic, and shall be accompanied by (i) a statement in reasonable detail
showing the calculations used in determining compliance with the financial
covenants hereunder, (ii) a report from Strategic’s accountants to the effect
that in connection with their audit examination nothing has come to their
attention to cause them to believe that a Default has occurred or specifying
those Defaults of which they are aware, and (iii) any management letter that
may be issued;

 

e.                          Projections.
Prior to the close of each fiscal year of Strategic, the Projections (except
that the Projections for Strategic’s fiscal year ending December 31, 2005 shall
be delivered to Access not later than May 13, 2005), which will be prepared by
Strategic in good faith, with care and diligence, and using assumptions which
are reasonable under the circumstances at the time such Projections are
delivered to Access and disclosed therein when delivered;

 

f.                           Guarantor
Financial Information. By not later than December 1 of each year (including
2005) a current personal financial statement of each Guarantor in a form
reasonably acceptable to Access, and within 30 days after the filing thereof
with the IRS and applicable state taxing authorities, complete, true and
correct copies of each Guarantor’s Federal and state income tax returns;

 

16

 

g.                          Analysis
of Training Business. By no later than June 30, 2005, Strategic will
deliver to Access a complete analysis prepared by Strategic of the value and
profitability of the training component of Strategic’s business, which analysis
shall be in a form reasonably satisfactory to Access and will include, among
other things, a determination by Strategic of whether the training components
of its business should be divested to maximize Strategic’s value and
profitability;

 

h.                         Options
and Warrants Report. Within 20 days following the end of June and December
in each year, a report in form reasonably satisfactory to Access of the number
of stock options and warrants Strategic issued in the 6-month period then
ended, the names of the Persons to which such stock options and warrants were
issued and the number of stock options and warrants issued to each such Person.

 

i.                             Other
Financial Information. Strategic shall advise Access promptly, in
reasonable detail, of: (a) any lien, other than Permitted Encumbrances,
attaching to or asserted against any of the Collateral or any occurrence
causing a material loss or decline in value of any Collateral and the estimated
(or actual, if available) amount of such loss or decline; (b) any material
change in the composition of the Collateral; and (c) the occurrence of any
Default or other event which has had or could reasonably be expected to have a
Material Adverse Effect. Strategic shall, upon request of Access, furnish to
Access such other reports and information in connection with the affairs,
business, financial condition, operations, prospects or management of Strategic
or the Collateral as Access may request, all in reasonable detail.

 

j.                            Amendment
to Sun Intercreditor Agreement. Strategic shall use its best efforts to
cause Sun to agree to amend the Sun Intercreditor Agreement to extend the “Conversion
Date” (as defined in the Sun Intercreditor Agreement) by one or more years.

 

10.                  Financial
Covenants. Unless agreed to in writing by Access to the contrary, for so
long as any of the Indebtedness shall remain outstanding, Strategic covenants
and agrees that it shall:

 

a.                         Fixed
Charge Coverage Ratio. Achieve a Fixed Charge Coverage Ratio of not less
than the ratio shown in the table below for the period corresponding thereto:

 

	
  Ratio

  	
   

  	
  Period

  	
   

  
	
  1.0:1.0

  	
   

  	
  Each of the
  third and fourth fiscal quarters of the 2005 fiscal year

  	
   

  
	
  1.1:1.0

  	
   

  	
  Each fiscal
  quarter in the 2006 fiscal year

  	
   

  
	
  1.15:1.0

  	
   

  	
  Each fiscal
  quarter in the 2007 fiscal year

  	
   

  
	
  1.2:1.0

  	
   

  	
  First fiscal
  quarter in the 2008 fiscal year and each fiscal quarter thereafter

  	
   

  

 

b.                         Capital
Expenditures. Not make aggregate Capital Expenditures in any fiscal year of
Strategic in excess of $300,000; provided, however, Capital Expenditures made
by Strategic for the purchase of a new telephone system (costing approximately
$500,000) and Capital Expenditures made by Strategic with the proceeds of
marketing development funds shall not be taken into account in applying the
foregoing limitation.

 

17

 

c.                          Quarterly
Revenue. Beginning with the fiscal quarter ending March 31, 2005, achieve
for each fiscal quarter of Strategic gross revenue (as set forth on Strategic’s
Financial Statements) in such fiscal quarter at least equal to (i) 60% of the
Approved Projections of revenue provided to Access for such fiscal quarter for
Strategic’s hardware business and (ii) 85% of the Approved Projections of
revenue provided to Access for such fiscal quarter for Strategic’s business
other than its hardware business.

 

d.                         Quarterly
Gross Margin. Beginning with the fiscal quarter ending March 31, 2005,
achieve a gross profit margin (as set forth on Strategic’s Financial
Statements) at least equal to 85% of the Approved Projections of gross profit
margin provided to Access for such fiscal quarter.

 

11.                  Negative
Covenants. Unless agreed to in writing by Access to the contrary, Strategic
covenants and agrees that it shall not:

 

a.                         Debt.
Create, incur, assume or suffer to exist any debt, whether by way of loan or
otherwise; provided, however, the foregoing restriction shall be
exclusive of (i) the Indebtedness, (ii) current accounts payable other than
Trade Debt incurred in the ordinary course of business, (iii) debt outstanding
on the date hereof to BB&T, (iv) Capital Lease Obligations on the date
hereof and additional Capital Lease Obligations up to $50,000 per Capital Lease
not to exceed $300,000 in additional Capital Lease Obligations per calendar
year in the aggregate; provided, however, Capital Lease Obligations related to
the lease of a new telephone systems (costing approximately $500,000) shall not
be taken into account in applying the foregoing limitations, (v) Indebtedness
for Money Borrowed outstanding on the date hereof to shareholders of Strategic
as more specifically listed on Schedule 11.a.
attached hereto and (vi) Indebtedness for Money Borrowed owing to Irvin
Miglietta in connection with the Permitted Miglietta Redemption.

 

b.                         Contingent
Obligations. Create, incur, assume or suffer to exist any Contingent
Obligation; provided, however, the foregoing restriction shall
not apply to trade credit incurred by Strategic, operating leases entered into
by Strategic, performance bonds issued for Strategic’s account or Strategic’s
obligations to subcontractors, in each case, in the ordinary course of
Strategic’s business.

 

c.                          Liens.
Create, incur, assume or suffer to exist any lien on any property of Strategic,
whether now owned or hereafter acquired, other than Permitted Encumbrances.

 

d.                         Sales
of Assets. Except for the sale of Strategic’s real property located at 301
Gregson Street, Cary, North Carolina for cash, Strategic shall not sell,
transfer, issue, convey, assign or otherwise dispose of any of its assets or
properties, including its accounts receivable or any shares of its Capital
Stock, or engage in any sale-leaseback, synthetic lease or similar transaction
(provided, that the foregoing shall not prohibit (i) the sale of inventory or
obsolete or unnecessary equipment in the ordinary course of its business, (ii)
the disposition of uncollectible accounts receivable in the ordinary course of
its business consistent with past practices or (iii) the issuance of Capital
Stock or options to purchase Capital Stock to employees and consultants in the
ordinary course of its business consistent with past practices provided such
issuances have been fully disclosed to Access prior to the making thereof).

 

e.                          Loans
or Advances. Except for (i) currently outstanding loans to Michael G.
Shook, William M. Shook and Steve Jones which are more specifically described
on Schedule 11.e. attached hereto
and (ii) advances to employees in the ordinary course of business which are
required to be repaid within the current payroll period, make or agree to make
or allow to remain outstanding any loans or advances to any person, entity, or
affiliate; provided, however, the foregoing restrictions shall
not apply

 

18

 

to advances or extensions
of credit in the form of accounts receivable incurred in the ordinary course of
business and upon terms common in the industry for such accounts receivable.
Strategic shall not forgive or write-off any of the loans owing by Michael G.
Shook or William M. Shook to Strategic.

 

f.                           Dividends
and Distributions. Except for the Permitted Miglietta Redemption, declare,
pay or make, whether in cash or other property, or set aside or apply any money
or assets to pay or make any dividend or distribution on, or purchase, redeem
or otherwise acquire for value, any share of any class of its Capital Stock.

 

g.                          Cancellation
of Insurance. Allow any insurance policy currently carried by Strategic or
otherwise required to be carried under any of the Loan Papers to be terminated
or lapse or expire without provision for adequate renewal or comparable
substitution.

 

h.                         Mergers
and Consolidations; Changes in Corporate Structure. (i) merge or
consolidate with any party, or permit any such merger or consolidation with
Strategic unless Strategic is the surviving entity of such merger or
consolidation, (ii) form, acquire or become a shareholder, partner or joint
venturer in any corporation, partnership, joint venture or other business
entity in which Strategic does not have a controlling interest; (iii)
discontinue business; (iv) make any material change in the nature of or manner
in which it conducts its business if such change could reasonably be expected
to have a Material Adverse Effect; (v) form any Plan; (vi) liquidate, wind-up
or dissolve; (vii) remove those individuals serving as the Chief Executive
Officer and President of Strategic on the date of this Agreement and/or permit
Michael G. Shook, William M. Shook, Irvin Miglietta and Thomas Colleary to
collectively own less than a majority of the issued and outstanding voting
Capital Stock of Strategic.

 

i.                             Transactions
with Affiliates. Directly or indirectly, enter into any sale, lease or
exchange of property or any contract for the rendering of goods or services or
any loan or advance with an affiliate; provided, however, the
foregoing restrictions shall not apply to advances or extensions of credit in
the form of accounts receivables incurred in the ordinary course of business
and upon terms common in the industry for such accounts receivable.

 

j.                            Lines
of Business. Expand, on its own or through any subsidiary or affiliate,
into any lines of business other than those in which it is engaged as of the
date hereof if such an expansion could reasonably be expected by Strategic to
have a Material Adverse Effect.

 

k.                         Organization
or Acquisition of Subsidiaries. Organize or acquire any subsidiary in
addition to those existing as of the date hereof, if any such organization or
acquisition would have a Material Adverse Effect.

 

12.                  Conditions
Precedent. This Agreement shall become effective and be deemed effective as
of the date hereof upon the satisfaction or waiver in writing by Access of the
following conditions precedent:

 

a.                         Receipt
by Access of this Agreement, together with all completed schedules thereto,
duly executed by Strategic and the Guarantors;

 

b.                         Receipt
by Access of the Notes duly executed by Strategic;

 

c.                          Receipt
by Access of an opinion of counsel to Strategic in form and content
satisfactory to Access;

 

19

 

d.                         Receipt
by Access of the Access Customer Terms and Conditions duly executed by
Strategic;

 

e.                          Receipt
by Access of evidence satisfactory to Access that all defaults by Strategic
under any loan agreements, deeds of trust or other loan documents between
Strategic and BB&T have been cured or waived;

 

f.                           Receipt
by Access of a current personal financial statement of each Guarantor in a form
reasonably acceptable to Access and true and correct copies of each Guarantor’s
2004 Federal and state income tax returns; and

 

g.                          Such
other documents, instruments and agreements as Access shall reasonably request
in connection with the foregoing matters.

 

13.                  Defaults.
The term “Default” as used herein, means the occurrence of any one or
more of the following events (including the passage of time, if any, specified
therefore) provided that if any such event occurs and Access subsequently agrees
in writing that it will not exercise any remedies hereunder as a result
thereof, the occurrence of such event shall no longer be deemed a “Default”
hereunder insofar as the state of facts giving rise to such event is concerned,
but the same shall not operate as or be deemed to be a waiver with respect to
any identical or similar state of facts which occurs thereafter:

 

a.                         Payment
of Indebtedness (Other than Trade Debt). If default is made in the payment
of any Indebtedness other than Trade Debt, in any case, when the same shall be
due and payable, or

 

b.                         Default
on Covenants in this Agreement. If there is any default by reason of the
failure of Strategic to perform any of the covenants or agreements contained in
this Agreement, or if any representation or warranty in this Agreement or any
other Loan Paper, or in any written statement pursuant hereto or thereto, or in
any report, financial statement or certificate made or delivered to Access by
Strategic or any guarantor of the Indebtedness shall be untrue or incorrect as
of the date when made or deemed made, or

 

c.                          Default
on Covenants in Other Agreements. If there is any default by reason of the
failure of Strategic to perform any of the covenants contained in any other
agreement executed by Strategic with or for the benefit of Access (other than
the failure of Strategic to pay Trade Debt when the same shall be due and
payable), whether or not executed in connection with this Agreement, which is
not cured within the cure periods stated therein, if any, or

 

d.                         Default
under Co-Sale Agreements. If there is any default by reason of the failure
of Strategic to perform any of the covenants contained in the Co-Sale
Agreements with certain shareholders of Strategic, each dated October 17, 2001,
which is not cured within the cure periods stated therein, if any, or

 

f.                           Voluntary
Debtor Relief. Strategic shall (a) execute an assignment for the benefit of
creditors, or (b) admit in writing its inability to pay its debts generally as
they become due, or (c) voluntarily seek the benefit or benefits of any Debtor
Relief Law or become a party to any proceeding provided for by any Debtor
Relief Law that could suspend or otherwise affect any of the rights of Access
granted in this Agreement or any other Loan Paper. As used herein “Debtor
Relief Law” means any applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency,

 

20

 

reorganization, or
similar Debtor Relief Laws affecting the rights of creditors generally from
time to time in effect.

 

g.                          Involuntary
Proceedings. Strategic shall involuntarily (a) have an order, judgment, or
decree entered against it by any state, commonwealth, federal, foreign,
territorial, or other court or governmental department, commission, board,
bureau, agency or instrumentality pursuant to any Debtor Relief Law that could
suspend or otherwise affect any of the rights granted to Access in this
Agreement or any other Loan Paper, and such order, judgment, or decree is not permanently
stayed or reversed within 60 days after the entry thereof, or (b) have a
petition filed against it seeking the benefit or benefits provided for by any
Debtor Relief Law that would suspend or otherwise affect any of the rights
granted to Access in this Agreement or any other Loan Paper, and such petition
is not discharged within 60 days after the filing thereof.

 

h.                         Acceleration
of Other Debt. The acceleration, by the holder thereof, of the maturity of
$50,000 or more of any other debt owed by Strategic.

 

i.                             Undischarged
Final Judgments. Except for the judgments listed on Schedule 13.i., the entry of a final
judgment or final judgments against Strategic or any subsidiary for the payment
of money in an amount which, in the aggregate, could have a Material Adverse
Effect, and the same shall remain undischarged for a period of 60 days during
which execution shall not be effectively stayed.

 

j.                            Attachment.
The failure to have discharged within a period of 60 days after the
commencement thereof any attachment, sequestration, or similar proceeding
against any of Strategic’s assets.

 

k.                         Other
Agreements. The occurrence of a default by Strategic under any other
material financial or loan agreement to which Strategic is a party or by which
it or any of its assets is bound but only to the extent such default is
reasonably expected to have a Material Adverse Effect.

 

14.                  Remedies Upon
Default.

 

a.                         Remedies
Upon Default. Should a Default occur and be continuing, Access may, at its
election, do any one or more of the following:

 

i.                              Acceleration.
Declare the entire unpaid balance of the Indebtedness, or any part thereof,
immediately due and payable, whereupon it shall be due and payable.

 

ii.                           Termination.
Terminate any agreement or commitment by Access to lend any funds hereunder or
sell or finance any goods or services.

 

iii.                        Judgment.
Reduce any claim to judgment.

 

iv.                       Foreclosure.
Take such steps as Access may deem appropriate to foreclose or otherwise
enforce the security interests in the Collateral and all liens granted to
Access to secure payment and performance of the Indebtedness.

 

v.                          Rights.
Exercise any and all rights afforded by applicable law, including, but not
limited to, the Uniform Commercial Code, or by any of the agreements with
Strategic, or by law or equity, or otherwise.

 

21

 

b.                         Cumulative
Rights. All rights available to Access under this Agreement or any other
Loan Paper shall be cumulative of and in addition to all other rights granted
to Access at law or in equity, whether or not the Indebtedness is due and
payable and whether or not Access shall have instituted any suit for
collection, foreclosure, or other action in connection with this or any other
agreement.

 

c.                          Expenses.
Any expenses incurred by Access pursuant to the exercise of any right provided
herein shall become part of the Indebtedness and shall bear interest at a fixed
rate of 12% per annum from the date spent until the date repaid by Strategic.

 

d.                         Waivers.
The acceptance by Access at any time and from time to time of part payment on
the Indebtedness shall not be deemed to be a waiver of any Default then
existing. No waiver by Access of any Default shall be deemed to be a waiver of
any other then existing or subsequent Default. No delay or omission by Access
in exercising any right under this Agreement or any other Loan Paper shall
impair such right or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof, or the exercise of any other right under
such agreements or otherwise.

 

15.                  Term.
This Agreement shall continue in full force and effect until the repayment in
full of (a) the accrued interest on and outstanding principal balance of the
Indebtedness evidenced by the Notes and (b) the Indebtedness consisting of Past
Due Trade Debt.

 

16.                  Indemnity.
Strategic agrees to indemnify and hold Access and its affiliates, and their
respective employees, attorneys and agents (each, an “Indemnified Person”),
harmless from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses of any kind or nature whatsoever
(including reasonable attorneys’ fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) that may be
instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Papers or with respect to the execution, delivery,
enforcement, performance and administration of, or in any other way arising out
of or relating to, this Agreement and the other Loan Papers or any other
documents or transactions contemplated by or referred to herein or therein and
any actions or failures to act with respect to any of the foregoing, including
any and all product liabilities, environmental liabilities, taxes and legal
costs and expenses arising out of or incurred in connection with disputes between
or among any parties to any of the Loan Papers (collectively, “Indemnified
Liabilities”), except to the extent that any such Indemnified Liability is
finally determined by a court of competent jurisdiction to have resulted solely
from such Indemnified Person’s gross negligence or willful misconduct.
Notwithstanding Section 15 of this Agreement to the contrary, the
indemnification obligations described in this Section 16 shall survive the
termination of this Agreement. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO STRATEGIC, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY
OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR ANY ACT OR
FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR FOR INDIRECT, PUNITIVE, EXEMPLARY
OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN PAPER
OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

 

22

 

17.                  Miscellaneous.

 

a.                         Notices.
Whenever this Agreement requires or permits any consent, approval, notice,
request, or demand from one party to another, the consent, approval, notice,
request, or demand must be in writing to be effective and shall be deemed to
have been given (a) when received, when sent by confirmed facsimile at the
facsimile numbers provided by the parties from time to time, (b) when received,
when sent overnight delivery via Federal Express or other national overnight
courier service, and (c) on the fifth day after it is enclosed in an envelope,
addressed to the party to be notified at the address stated below (or at such
other address as may have been designated by written notice), properly stamped,
sealed, and deposited in the United States mail. Notwithstanding the foregoing,
notices under Section 7.b. above may be made by facsimile or e-mail, as
approved by Access, and then in each case to the most recent facsimile or
e-mail address provided by one party to the other in writing from time to time.
The address of each party for the purposes hereof is as follows:

 

	
  STRATEGIC:

  	
  Strategic Technologies, Inc.

  301 Gregson Drive

  Cary, NC 27511

  Attention: Karen Bertaux

  Fax No.: 919-379-8100

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Wyrick Robbins Yates &  Ponton LLP

  4101 Lake Boone Trail, Suite 400

  Raleigh, NC 27607

  Attention: Eric A. Vernon, Esq.

  Fax No.: 919-781-4865

  
	
   

  	
   

  
	
  ACCESS:

  	
  MRA Systems, Inc., dba Access Distribution

  11300 Westmoor Circle

  Westminster, CO 80021

  Attn: Account Executive - Strategic Technologies, Inc.

  Fax No.: 303-546-3033

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Hunton & Williams, LLP

  Riverfront Plaza, East Tower

  951 East Byrd Street

  Richmond, VA 23219-4074

  Attention: Peter Partee, Esq.

  Fax No.: 804-788-8218

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  GE Commercial Finance

  Vendor Financial Services

  10 Riverview Drive

  Danbury, CT 06810

  Attention: Account Executive - Strategic Technologies, Inc.

  Fax No.: 203-749-4530

  

 

b.                         Governing
Law; Jurisdiction; Venue; Waiver of Jury Trial. This Agreement is being
executed and delivered, and is intended to be performed, in the State of North
Carolina, and the substantive laws of such state shall govern the validity,
construction, enforcement, and interpretation of the Loan Papers, unless
otherwise specified therein, without regard to its conflict of law provisions.

 

23

 

Each party consents to
the personal jurisdiction of the state and federal courts located in the State
of North Carolina in connection with any controversy related to this Agreement,
waives any argument that venue in any such forum is not convenient and agrees
that any litigation initiated by any of them in connection with this Agreement
shall be venued in either the Superior Court of Wake County, North Carolina or
the United States District Court for the Eastern District of North Carolina,
Raleigh Division. EACH OF STRATEGIC AND ACCESS HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

c.                          Maximum
Interest Rate. Regardless of any provision contained in this Agreement or
any other Loan Paper, Access shall never be entitled to receive, collect, or
apply, as interest on the Indebtedness, any amount in excess of the maximum
amount of interest permitted to be charged by applicable law, and, in the event
Access ever receives, collects, or applies as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial prepayment
of principal and treated hereunder as such; and, if the Indebtedness is paid in
full, any remaining excess shall forthwith be paid to Strategic. In determining
whether or not the interest paid or payable, under any specific contingency,
exceeds the Highest Lawful Rate, Strategic and Access shall, to the maximum
extent permitted under applicable law, (a) characterize any nonprincipal
payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread, in equal parts, the total amount of interest throughout
the entire contemplated term of the Indebtedness so that the interest is
uniform throughout the entire term of the Indebtedness.

 

d.                         Severability.
If any provision of this Agreement or any other Loan Paper is held to be
illegal, invalid, or unenforceable under present or future laws effective
during the term thereof, such provision shall be fully severable; the
appropriate agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part thereof; and the
remaining provisions thereof shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of such
agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and
enforceable.

 

e.                          Survival.
Except as specifically provided herein, all representations, warranties,
covenants and agreements of Strategic contained herein shall continue in full
force and effect so long as any part of the Indebtedness remains unpaid and,
except as otherwise indicated, shall not be affected by any investigation made
by any party.

 

f.                           Further
Assurances. Strategic agrees that at any time and from time to time, upon
the written request by Access, it will execute and deliver such further
documents and do such further acts and things Access may reasonably request in
order to fully effect the purpose of this Agreement and any other Loan Paper
and to provide for the payment of the principal and interest on the
Indebtedness in accordance with the terms and provisions of such agreements.

 

g.                          Costs
and Expenses. Strategic agrees to pay or reimburse Access for all costs and
expenses (including the reasonable fees and expenses of all counsel, advisors,
consultants (including environmental and management consultants) and auditors
retained in connection therewith), incurred in connection with: (a) the
preparation, negotiation, execution, delivery, performance and enforcement of
the Loan Papers and the preservation of any rights thereunder; (b) collection,
including deficiency collections; (c) the forwarding to Strategic or any other
Person on behalf of Strategic by Access of the

 

24

 

proceeds of any cash
advance (including a wire transfer fee of $20 per wire transfer); (d) any
amendment, waiver or other modification with respect to any of the Loan Papers;
(e) any litigation, dispute, suit, proceeding or action (whether instituted by
or between any combination of Access, Strategic or any other Person), and an
appeal or review thereof, in any way relating to the Collateral, any of the
Loan Papers, or any action taken or any other agreements to be executed or
delivered in connection therewith, whether as a party, witness or otherwise;
and (f) any effort (i) to monitor the Indebtedness, (ii) to evaluate, observe
or assess Strategic or its affairs, and (iii) to verify, protect, evaluate,
assess, appraise, collect, sell, liquidate or otherwise dispose of the
Collateral.

 

h.                         Entire
Agreement. This instrument embodies the entire agreement between the
parties and supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof (except documents, agreements and
instruments delivered or to be delivered in accordance with the express terms
hereof, and except for the CIT Financing Agreement, to the extent of the
collateral description and remedies set forth therein).

 

i.                             Successors
and Assigns. The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that Strategic may not assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of Access.

 

j.                            Parties
Bound. This Agreement shall be binding upon and inure to the benefit of
Access and Strategic and their respective successors and assigns; provided that
Strategic may not, without the prior written consent of Access, assign any
rights, powers, duties, or obligations hereunder.

 

k.                         Amendments
and Waivers. This Agreement may be modified or amended only in writing by
an agreement or agreements entered into by Access and Strategic, and Access may
waive compliance by Strategic with any provision of this Agreement; provided,
however, that no such consent, waiver, modification, or amendment shall extend
to or affect any obligation not expressly consented to, waived, modified, or
amended, or impair any right consequent on such obligation.

 

l.                             Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one
instrument. Facsimiles or other photocopies of executed signature pages to this
Agreement shall be considered originals.

 

m.                     Amendment
and Restatement. This Agreement amends, restates and replaces the Existing
Refinancing Agreement in its entirety.

 

n.                         Forbearance
Agreement. The Forbearance Agreement is hereby terminated and of no further
force and effect whatsoever.

 

o.                         RELEASE
OF CLAIMS. TO INDUCE ACCESS TO ENTER INTO THIS AGREEMENT, EACH OF STRATEGIC
AND EACH GUARANTOR HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES ACCESS AND
ACCESS’S OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, AND
GENERAL ELECTRIC CAPITAL CORPORATION AND ITS OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IN ANY CASE, FROM ALL LIABILITIES, CLAIMS,
DEMANDS, ACTIONS OR CAUSES OF ACTION OF ANY KIND (IF ANY THERE BE), WHETHER
ABSOLUTE OR CONTINGENT, DUE OR TO BECOME DUE, DISPUTED OR UNDISPUTED, AT LAW OR
IN EQUITY, THAT ANY OF THEM NOW

 

25

 

HAS OR EVER HAD AGAINST
ACCESS OR GENERAL ELECTRIC CAPITAL CORPORATION ARISING UNDER OR IN CONNECTION
WITH THE EXISTING REFINANCING AGREEMENT, THIS AGREEMENT, THE EXISTING NOTES,
THE NOTES, ANY RELATED DOCUMENTS BETWEEN OR AMONG ANY OF STRATEGIC AND ANY OF
THE GUARANTORS, ON THE ONE HAND, AND ACCESS OR GENERAL ELECTRIC CAPITAL
CORPORATION, ON THE OTHER HAND, OR OTHERWISE.

 

p.                         Press
Releases. Neither Strategic nor any of its affiliates will in the future
issue any press release or other public disclosure using the name of General
Electric Capital Corporation or its affiliates or referring to this Agreement
or the other Loan Papers without at least two (2) Business Days’ prior notice
to Access, and without the prior written consent of Access unless (and only to
the extent that) Strategic or its affiliate is required to do so under law and
then, in any event, Strategic or its affiliate will consult with Access before
issuing such press release or other public disclosure.

 

q.                         Conflict
Among Loan Papers. Should any term or provision of any of the Loan Papers
other than this Agreement or of the CIT Financing Agreement conflict with any
term or provision of this Agreement, then in any such case the terms and
provisions of this Agreement shall be controlling.

 

[signatures
on next page]

 

26

 

IN WITNESS
WHEREOF, Strategic has caused this Agreement to be duly executed as of the day
and year first above written.

 

 

	
   

  	
   

  	
  STRATEGIC TECHNOLOGIES,
  INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/
  Michael G. Shook

  	
   

  
	
   

  	
   

  	
   

  	
  Its

  	
    President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MRA SYSTEMS, INC., dba
  ACCESS

  DISTRIBUTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/
  Stephen L. Quick

  	
   

  
	
   

  	
   

  	
   

  	
  Its

  	
    Senior
  Director

  	
   

  
							

 

 

The Guarantors
hereby join in the execution of this Agreement for the purposes of consenting
thereto, agreeing to the terms of Section 17.o. thereof and reaffirming the
continuing validity and enforceability of the personal guarantee agreements
executed by each of them on or about April 9, 2002 in accordance with their
respective terms.

 

 

	
   

  	
   

  	
  /s/ Michael G. Shook

  	
   

  
	
   

  	
   

  	
  Michael G. Shook

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ William M. Shook

  	
   

  
	
   

  	
   

  	
  William M. Shook

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Irvin Miglietta

  	
   

  
	
   

  	
   

  	
  Irvin Miglietta

  	
   

  

 

27

 

LIST OF
EXHIBITS/SCHEDULES:

 

	
  Exhibit
  A:

  	
  Consolidated Amended and Restated Note

  
	
   

  	
   

  	
   

  
	
  Exhibit
  B:

  	
  Amended and Restated November 2003 Note

  
	
   

  	
   

  	
   

  
	
  Exhibit
  C:

  	
  Statement of Trade Debt

  
	
   

  	
   

  	
   

  
	
  Exhibit
  D:

  	
  Lockbox Account Description and Listing of other
  Bank Accounts

  
	
   

  	
   

  	
   

  
	
  Exhibit
  E:

  	
  Compliance Certificate 

  
	
   

  	
   

  	
   

  
	
  Schedule
  8.c.:

  	
   

  	
  Intellectual
  Property

  
	
   

  	
   

  	
   

  
	
  Schedule
  8.e.:

  	
   

  	
  Insurance

  
	
   

  	
   

  	
   

  
	
  Schedule
  8.f.:

  	
   

  	
  Taxes

  
	
   

  	
   

  	
   

  
	
  Schedule
  8.g.:

  	
   

  	
  Litigation

  
	
   

  	
   

  	
   

  
	
  Schedule
  8.h.:

  	
   

  	
  Real Estate; Property

  
	
   

  	
   

  	
   

  
	
  Schedule
  8.k.:

  	
   

  	
  Stock & Affiliates

  
	
   

  	
   

  	
   

  
	
  Schedule
  11.a.:

  	
   

  	
  Indebtedness to Shareholders

  
	
   

  	
   

  	
   

  
	
  Schedule
  11.e.:

  	
   

  	
  Indebtedness of William and Michael Shook

  
	
   

  	
   

  	
   

  
	
  Schedule
  13.i.:

  	
   

  	
  Outstanding Judgments

  

 

 

Exhibit A

 

Form of Consolidated Amended and Restated Note

 

CONSOLIDATED AMENDED AND RESTATED

PROMISSORY NOTE

 

	
  $10,387,648.54

  	
   

  	
  May 20, 2005

  

 

For value received,
Strategic Technologies, Inc. (“Maker”) promises to pay to the order of MRA
Systems, Inc. dba Access Distribution (“Holder”) via wire transfer to AT
Bankers Trust, ABA #021001033, Acct. #50261567, or at such other place or
account as designated by Holder in writing to Maker, the principal sum of Ten
Million Three Hundred Eighty-Seven Thousand Six Hundred Forty-Eight and 54/100
Dollars ($10,387,648.54), from the date hereof. Interest on unpaid balances of
principal from the date hereof shall accrue at the floating rate of LIBOR, as
that term is defined in the Agreement, plus four and one half percent (4.5%)
per annum.

 

Payments of principal and
interest under this Note shall be made in accordance with the Amended and
Restated Refinancing Agreement, dated the date hereof, between Maker and Holder
(as from time to time amended, modified, supplemented or restated, the “Agreement”),
the terms of which are incorporated herein for all purposes. All outstanding
principal, and accrued and unpaid interest, which is not paid earlier as set
forth herein, shall be due and payable on May 1, 2010.

 

This Note is secured by a
blanket lien on all assets of Maker pursuant to that certain Amended and
Restated Security Agreement between Maker and Holder dated as of July 31, 2002,
as amended, Financing Agreement dated as of October 17, 2001 between The CIT
Group/Business Credit, Inc. (“CIT”) and Strategic, which interest of CIT was
assigned to Holder on April 12, 2002 and North Carolina Deed of Trust executed
by Maker for the benefit of Holder dated June 3, 2003, as amended.

 

This
Note is a modification, restatement and consolidation of that certain (a)
Amended and Restated Promissory Note executed by Maker to Holder dated July 31,
2002 in the original principal amount of $15,164,283.88 and (b) Amended and
Restated Promissory Note executed by Maker to Holder dated July 31, 2002 in the
original principal amount of $7,278,603.31.

 

Upon a Default, as that
term is defined in the Agreement, then the holder of this Note shall have the
right and option, without notice or demand, to declare the unpaid balance of
principal and accrued interest on this Note at once due and payable.

 

Prepayment.
This Note, at the option of Maker, may be prepaid in whole or
in part at any time without additional interest or penalty, with any such
prepayment being applied first to principal in the inverse order of maturity,
and then applied to outstanding and unpaid interest.

 

Miscellaneous.

 

At any time, any deposit
or other indebtedness credited by or due from the Holder to Maker may be set
off against and applied in payment of any amounts due hereunder (the “Obligations”),
whether due or not, and such deposits or other indebtedness may at all times be
held and treated as collateral security for the payment of the Obligations.

 

1

 

The Maker of this Note
waives demand, presentment for payment, protest and notice of protest, and
non-payment. If this note is not paid when due, and is given to an attorney or
collection agency for collection, or suit filed thereon, Maker agrees to pay
all collection fees and expenses including but not limited to attorneys fees
based upon customary hourly rates and not a statutorily prescribed percentage
of the debt collected.

 

This promissory note
shall be governed by and construed in accordance with the laws of the State of
North Carolina, without regard to its choice of law rules.

 

	
  Strategic
  Technologies, Inc.,

  a North Carolina corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Michael
  G. Shook, President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  301 Gregson Drive

  Cary, North Carolina 27511

  	
   

  	
   

  	
   

  
							

 

 

SUBSCRIBED AND SWORN to
before me this         day of                     ,
2005, in the County of                     ,
State of                     ,
by                     .

 

WITNESS my hand and
official seal.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My commission expires: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

2

 

Exhibit B

 

Form of Amended and Restated November 2003 Note

 

AMENDED AND RESTATED

PROMISSORY NOTE

 

	
  $5,561,000

  	
   

  	
  May 20, 2005

  

 

For value received,
Strategic Technologies, Inc. (“Maker”) promises to pay to the order of MRA
Systems, Inc. dba Access Distribution (“Holder”) via wire transfer to AT
Bankers Trust, ABA #021001033, Acct. #50261567, or at such other place or
account as designated by Holder in writing to Maker, the principal sum of Five
Million Five Hundred Sixty-One Thousand and No/100 Dollars ($5,561,000), from
the date hereof. Interest on unpaid balances of principal from the date hereof
shall accrue at a fixed rate of twelve percent (12%) per annum.

 

Payments of principal and
interest under this Note shall be made in accordance with the Amended and
Restated Refinancing Agreement, dated the date hereof, between Maker and Holder
(as from time to time amended, modified, supplemented or restated, the “Agreement”),
the terms of which are incorporated herein for all purposes. All outstanding
principal, and accrued and unpaid interest, which is not paid earlier as set
forth herein, shall be due and payable on May 1, 2010.

 

This Note is secured by a
blanket lien on all assets of Maker pursuant to that certain Amended and
Restated Security Agreement between Maker and Holder dated as of July 31, 2002,
as amended, Financing Agreement dated as of October 17, 2001 between The CIT
Group/Business Credit, Inc. (“CIT”) and Strategic, which interest of CIT was
assigned to Holder on April 12, 2002 and North Carolina Deed of Trust executed
by Maker for the benefit of Holder dated June 3, 2003, as amended.

 

This
Note is a modification, restatement and consolidation of that certain
promissory note executed by Maker to Holder dated November 3, 2003 in the
original principal amount of $4,931,000.

 

Upon a Default, as that
term is defined in the Agreement, then the holder of this Note shall have the
right and option, without notice or demand, to declare the unpaid balance of
principal and accrued interest on this Note at once due and payable.

 

Prepayment.
This Note, at the option of Maker, may be prepaid in whole or in part at any
time without additional interest or penalty, with any such prepayment being
applied first to principal in the inverse order of maturity, and then applied
to outstanding and unpaid interest.

 

Miscellaneous.

 

At any time, any deposit
or other indebtedness credited by or due from the Holder to Maker may be set
off against and applied in payment of any amounts due hereunder (the “Obligations”),
whether due or not, and such deposits or other indebtedness may at all times be
held and treated as collateral security for the payment of the Obligations.

 

The Maker of this Note
waives demand, presentment for payment, protest and notice of protest, and
non-payment. If this note is not paid when due, and is given to an attorney or
collection agency for

 

1

 

collection, or suit filed
thereon, Maker agrees to pay all collection fees and expenses including but not
limited to attorneys fees based upon customary hourly rates and not a
statutorily prescribed percentage of the debt collected.

 

This promissory note
shall be governed by and construed in accordance with the laws of the State of
North Carolina, without regard to its choice of law rules.

 

	
  Strategic
  Technologies, Inc.,

  a North Carolina corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Michael
  G. Shook, President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  301 Gregson Drive

  Cary, North Carolina 27511

  	
   

  	
   

  	
   

  
							

 

 

SUBSCRIBED AND SWORN to
before me this         day of                     ,
2005, in the County of                     ,
State of                     ,
by                     .

 

WITNESS my hand and
official seal.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My commission expires: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

2

 

Exhibit D

Lock Box Description and Bank Accounts

 

LOCK BOX DESCRIPTION

 

Strategic
Technologies, Inc.

P.O. Box 75550

Charlotte, NC 28275-0550

 

BANK ACCOUNTS

 

	
  1. LOCKBOX

  	
   

  	
  2015000013873

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2. OPERATING

  	
   

  	
  2015080013880

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3. PAYROLL

  	
   

  	
  2015060013897

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4. CAFETERIA PLAN ACCOUNT

  	
   

  	
  2015030014185

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5. PROPERTY TAX ACCOUNT

  	
   

  	
  2015050014178

  	
   

  

 

1

 

Exhibit E

 

FORM OF
CERTIFICATE OF COMPLIANCE

 

[Use
Strategic Letterhead with this Form]

 

[Date]

 

To: Account Manager

 

This is to certify that
in accordance with Section 9 of the Amended and Restated Refinancing Agreement
dated May 20, 2005 (the “Agreement”; capitalized terms are used herein as
defined in the Agreement) that the attached Financial Statements are complete
and true and have been prepared in conformance with GAAP and to the best of my
knowledge do not include any material misstatement or omission of fact. In
addition there are no Defaults continuing as of such date [if  there
are acceptable exceptions, list them].

 

Also attached are the
covenant calculations used in determining compliance with the financial
covenant contained in Section 10.a. to the Agreement.

 

	
  Very truly yours,

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Chief Executive Officer, Strategic Technologies,
  Inc.

  

 

1

 

2005
Exhibit F

 

	
  Exhibit
  F

  	
   

  	
   

  	
  

  Actual

  	
   

  	
  GE
  Access Distribution

  Fixed Charge Coverage Ratio Calculation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Estimated

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Client
  Name:

  	
   

  	
  Strategic Technologies,
  Inc.

  	
   

  	
  Covenant Period(s):

  	
   

  	
  2005

  	
   

  	
  FYE:

  	
  31-Dec

  

 

	
   

  	
   

  	
  EBITDA

  	
   

  	
  UNFUNDED

  CAPEX

  	
   

  	
  TOTAL

  	
   

  	
  TAXES

  	
   

  	
  INTEREST

  	
   

  	
  PRINCIPAL

  	
   

  	
  Dividends
  &

  Stock Redemo

  	
   

  	
  TOTAL

  	
   

  	
  FIXED

  CHARGE

  	
   

  	
  ROLLING

  3 mo FCC

  	
   

  	
  ROLLING

  6 me FCC

  	
   

  	
  Needed

  per Docs

  	
   

  
	
  Jan-05

  	
   

  	
  107,566

  	
   

  	
  19,346

  	
   

  	
  88,220

  	
   

  	
  0

  	
   

  	
  174,010

  	
   

  	
  63,884

  	
   

  	
  0

  	
   

  	
  537,393

  	
   

  	
  0.16

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  Feb-05

  	
   

  	
  173,317

  	
   

  	
  75,723

  	
   

  	
  97,594

  	
   

  	
  0

  	
   

  	
  170,998

  	
   

  	
  358,135

  	
   

  	
  0

  	
   

  	
  529,133

  	
   

  	
  0.18

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  Mar-05

  	
   

  	
  302,645

  	
   

  	
  12,349

  	
   

  	
  290,296

  	
   

  	
  (85,850

  	
  )

  	
  168,031

  	
   

  	
  348,266

  	
   

  	
  0

  	
   

  	
  430,447

  	
   

  	
  0.67

  	
   

  	
  0.32

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  Apr-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  0.40

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  May-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  0.67

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  Jun-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
  0.32

  	
   

  	
   

  	
   

  
	
  Jul-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
  0.40

  	
   

  	
   

  	
   

  
	
  Aug-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
  0.67

  	
   

  	
   

  	
   

  
	
  Sep-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
   

  	
   

  
	
  Oct-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
   

  	
   

  
	
  Nov-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
   

  	
   

  
	
  Dec-05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
  #DIV/01

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1st Quarter FY:
  05

  	
   

  	
  583,528

  	
   

  	
  107,418

  	
   

  	
  476,110

  	
   

  	
  (85,850

  	
  )

  	
  513,039

  	
   

  	
  1,069,784

  	
   

  	
  0

  	
   

  	
  1,496,784

  	
   

  	
  0.32

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2nd Quarter FY:
  05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3rd Quarter FY:
  05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4th Quarter FY:
  05

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  #DIV/01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNUAL TOTALS

  	
   

  	
  583,528

  	
   

  	
  107,418

  	
   

  	
  476,110

  	
   

  	
  (85,850

  	
  )

  	
  513,039

  	
   

  	
  1,069,784

  	
   

  	
  0

  	
   

  	
  1,496,784

  	
   

  	
  0.32

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  In Compliance:

  	
  Accounting Manager or
  CFO

  	
   

  	
   

  	
   

  

 

1

 

SCHEDULE
8.c.

 

Intellectual Property

 

	
  Description

  	
   

  	
  Owner

  	
   

  	
  Licensee (if any)

  	
   

  	
  Type of

  (Trademark,

  Patent,

  Copyright,

  etc.)

  	
   

  	
  Registration #

  
	
  ADIX Phone Switch
  Software

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Adobe Writer

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ADP Payroll

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ADT Alarm System
  Software

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Avaya Octel Unified
  Mesenger

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Blackberry Enterprise
  Server

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DameWare Remote Communications

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Microsoft Licenses
  (NT, 2000, 2003, XP, Exchange, SQL, Client Access, IIS, NET, MSDN)

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Opentext Livelink*

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Oracle Licenses

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pathtech Software
  Solutions, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
   

  	
   

  	
  Trade Mark

  	
   

  	
  No. 1,955,857

  

 

 

	
  Description

  	
   

  	
  Owner

  	
   

  	
  Licensee (if any)

  	
   

  	
  Type of

  (Trade mark,

  patent

  copyright,

  etc.)

  	
   

  	
  Registration #

  
	
  Quest Migration Tool

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Remedy Licenses

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RightFax 

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Strategic Technologies

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
   

  	
   

  	
  Service Mark

  	
   

  	
  No. 2,926,279

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SUN Solaris Licenses

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Symantec Licenses
  (Firewall, AntiVirus, AntiSpam, Ghost)

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TODA Reporter

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Veritas NetBackup

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WebSense

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Strategic Technologies, Inc.

  	
   

  	
  Software License

  	
   

  	
   

  

 

* STI has been using
a demo of the software without entering into a license agreement.

 

 

SCHEDULE
8.e.

 

Insurance

 

1.         Business Property and General
Liability-includes coverage for Business Personal Property at various locations
and building coverage for the Cary location at a limit of $4,000,000. Coverage
also includes Property in transit at a limit of $500,000 and General Liability
at limits of $1,000,000 Occurrence $2,000,000 Aggregate. This package policy
provides a Commercial Umbrella with a limit of $10,000,000. This policy is with
St. Paul Insurance Co with effective dates of April 21, 2005-2006. The policy
number is TEO320194.

 

2.         Workers Compensation-covers all
employees for on the job injuries and lost wages. Policy is written with St.
Paul Insurance Co. with effective dates of October 13, 2004-2005. Policy number
is WVA3204089.

 

3.         Directors and Officers Liability-Limit
of $2,000,000 underwritten by Illinois Union Insurance Co. Policy Number
BM120016325 with effective dates of August 24, 2004-2005.

 

4.         Professional Liability-Limit of
$1,000,000, underwritten by Gulf Underwriters. Policy Number GU6622777 with
effective dates of July 21, 2004-2005.

 

5.         Commercial Crime-covers Employee
Dishonesty for all employees at a limit of $1,000,000 and underwritten by St.
Paul Insurance Co. Policy Number 468CF0344 with effective dates of May 26,
2004-2005.

 

6.         ERISA Bond-Limit of $500,000 provides
coverage for the administrators of the retirement plan.

 

7.         Group Medical Insurance-underwritten by
Blue Cross Blue Shield on a fully insured contract effective January 1,
2005-2006. Group Number 008571.

 

8.         Life, Accidental Death, Short and Long
term Disability-underwritten of UNUM Insurance Co. Contract Number 400823.

 

9.         Auto Insurance-Underwritten by St. Paul
Insurance Co. covering a 2005 BMW and includes Hired and Non Owned Liability
and Physical Damage at liability limits of $1,000,000 and deductibles of $500
on the comprehensive and collision.

 

 

SCHEDULE
8.f.

 

Taxes

 

[List all current Tax Audits and past due Tax Returns]

 

1.                          Welfare
Benefit Plan 5500 filings for Strategic Technologies, Inc for 1998 through 2003
have never been filed.

 

2.                          Tennessee
Sales Tax Lien – Filed December 2004 due to an assessment for sales tax from a
prior sales tax audit.

 

3.                          Alabama
Sales Tax Audit.

 

4.                          New York
Sales Tax Audit.

 

 

SCHEDULE
8.g.

 

Litigation

 

1.         Landlord-Tenant dispute with 104 West
40th Associates in a complaint filed in the State of New York where
plaintiff-landlord claims damages of unpaid rent in the amount of $544,974.18.
STI is actively engaged in negotiating a settlement.

 

2.         Claim of State of Tennessee for
non-payment of sales tax in the amount of approximately $180,000. STI is
actively engaged in negotiating a payment plan.

 

3.         Claim of preferential payment in the
amount of approximately $355,000 by Winstar Communications by complaint dated
July 21, 2004 in U.S. Bankruptcy Court in Delaware. There is no activity in the
case.

 

4.         Complaint of preferential payment by
Enron Corp. by complaint dated November 20, 2003 in U.S. Bankruptcy Court. The
amount claimed is $42,264.00 and STI has offered $5,000 in complete settlement
of all claims.

 

 

SCHEDULE
8.h.

 

Real Estate; Property

 

[Describe
all real property owned or leased or used in business]

 

	
  Address

  	
   

  	
  Type [owned leased warehouse]

  	
   

  	
  County

  
	
  301 Gregson
  Drive, Cary, NC (office

  building on 5 acres with additional 7.94

  acres of land)

  	
   

  	
  Owned

  	
   

  	
  Wake, NC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  400 Northwinds
  Center West, 11605

  Haynes Bridge Rd, Suite 175, Alpharetta,

  GA 30004

  	
   

  	
  Leased

  	
   

  	
  Fulton, GA

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  One Perimeter
  Park South, Suite 138N,

  Birmingham, AL 35243

  	
   

  	
  Leased

  	
   

  	
  Jefferson, AL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Coliseum Centre
  #6, 2815 Coliseum

  Centre Drive, Suite 180, Charlotte, NC

  28217

  	
   

  	
  Leased

  	
   

  	
  Mecklenburg, NC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  550 Cypress
  Creek Road West, Suite 400, 

  Ft. Lauderdale, FL 33309

  	
   

  	
  Leased

  	
   

  	
  Broward, FL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  628 Hebron
  Avenue, Bldg 2, 

  Glastonbury, CT 06033

  	
   

  	
  Leased

  	
   

  	
  Hartford, CT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33 Market Point
  Dr., Greenville, SC 

  29607

  	
   

  	
  Leased

  	
   

  	
  Greenville, SC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6601 Southpoint
  Dr. N, Suite 200, 

  Jacksonville, FL 32216

  	
   

  	
  Leased

  	
   

  	
  Jacksonville, FL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9040 Executive
  Park Dr., Suite 250, 

  Knoxville, TN

  	
   

  	
  Leased

  	
   

  	
  Knox, TN

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3343 Perimeter
  Hill Drive, Suite 102, 

  Nashville, TN 37211

  	
   

  	
  Leased

  	
   

  	
  Davidson, TN

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1890 Preston
  White Drive, Suite 200,

  Reston, VA 20191

  	
   

  	
  Leased

  	
   

  	
  Fairfax, VA

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9030 Stony Point
  Pkwy, Suite 590, 

  Richmond, VA 23235

  	
   

  	
  Leased

  	
   

  	
  Richmond, VA

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WAREHOUSE
  STORAGE:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Storr Office
  Environments, 10800 World 

  Trade Blvd., Morrisville, NC 27560

  	
   

  	
  Leased

  	
   

  	
  Durham, NC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Creative Office
  Interiors, 510 Hudson 

  Street, Hartford, CT 06106

  	
   

  	
  Leased

  	
   

  	
  Hartford, CT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Public Storage,
  8523 Baymeadows Road, 

  Jacksonville, FL 32256

  	
   

  	
  Leased

  	
   

  	
  Jacksonville, FL

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hi-Tech
  Transportation, 2217 

  Distribution Center Drive, Suite E, 

  Charlotte, NC 28269

  	
   

  	
  Leased

  	
   

  	
  Mecklenburg, NC

  

 

 

SCHEDULE
8.k.

 

STOCK
& AFFILIATES

 

Summary

 

	
  Common
  Stock Issued and Outstanding

  	
   

  	
  14,473,872

  	
   

  
	
  Unreconciled
  Common Stock

  	
   

  	
  18,738

  	
   

  
	
  Outstanding
  Stock Options

  	
   

  	
  3,203,912

  	
   

  
	
  The
  Allied Group Building Contingency Options

  	
   

  	
  419,246

  	
   

  
	
  Warrants

  	
   

  	
  3,419,662

  	
   

  
	
  Total Capitalization

  	
   

  	
  21,535,430

  	
   

  

Details

 

	
  Name of Stockholder

  	
   

  	
  Cert No

  	
   

  	
  No. of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Issued and Outstanding Common Stock:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Shook,
  Michael G.

  	
   

  	
  1

  	
   

  	
  4,274,720

  	
   

  
	
  Shook,
  Michael G.

  	
   

  	
  2

  	
   

  	
  751,880

  	
   

  
	
  Shook,
  William M.

  	
   

  	
  3

  	
   

  	
  1,207,674

  	
   

  
	
  Shook,
  William M.

  	
   

  	
  4

  	
   

  	
  150,376

  	
   

  
	
  Berger,
  Martin S.

  	
   

  	
  5

  	
   

  	
  86,600

  	
   

  
	
  Briggs,
  Stan

  	
   

  	
  6

  	
   

  	
  213,300

  	
   

  
	
  Clark
  III, Isham B.

  	
   

  	
  7

  	
   

  	
  159,800

  	
   

  
	
  Davis,
  Gail J.

  	
   

  	
  8

  	
   

  	
  79,900

  	
   

  
	
  Morris,
  Robert

  	
   

  	
  9

  	
   

  	
  0

  	
   

  
	
  Penny,
  Paul S.

  	
   

  	
  10

  	
   

  	
  79,900

  	
   

  
	
  Randolph,
  Rod

  	
   

  	
  11

  	
   

  	
  26,350

  	
   

  
	
  Wooten,
  Joseph M.

  	
   

  	
  12

  	
   

  	
  39,950

  	
   

  
	
  Wynn,
  Carolyn R.

  	
   

  	
  13

  	
   

  	
  0

  	
   

  
	
  Allen,
  James P.

  	
   

  	
  14

  	
   

  	
  59,900

  	
   

  
	
  Fetch,
  Thomas J.

  	
   

  	
  15

  	
   

  	
  19,950

  	
   

  
	
  Fountaine,
  Gregory B.

  	
   

  	
  16

  	
   

  	
  8,000

  	
   

  
	
  Gillespie,
  Donald J.

  	
   

  	
  17

  	
   

  	
  26,350

  	
   

  
	
  Gleason,
  Michael F.

  	
   

  	
  18

  	
   

  	
  8,000

  	
   

  
	
  Hansley,
  Kenneth W.

  	
   

  	
  19

  	
   

  	
  8,000

  	
   

  
	
  Markey
  II, John

  	
   

  	
  20

  	
   

  	
  119,850

  	
   

  
	
  Moore,
  Lee B.

  	
   

  	
  21

  	
   

  	
  26,350

  	
   

  
	
  Russell,
  Daniel C.

  	
   

  	
  22

  	
   

  	
  86,600

  	
   

  
	
  Stup,
  James M.

  	
   

  	
  23

  	
   

  	
  8,000

  	
   

  
	
  Turnburke,
  John H.

  	
   

  	
  24

  	
   

  	
  14,700

  	
   

  
	
  Hellard,
  Dwayne E.

  	
   

  	
  25

  	
   

  	
  239,650

  	
   

  
	
  Sitison,
  James A.

  	
   

  	
  26

  	
   

  	
  1,667

  	
   

  
	
  Michniak,
  Paul

  	
   

  	
  27

  	
   

  	
  1,667

  	
   

  
	
  Fenske,
  Chad

  	
   

  	
  28

  	
   

  	
  1,667

  	
   

  
	
  Weaver,
  Paul

  	
   

  	
  29

  	
   

  	
  1,667

  	
   

  
	
  Stiver,
  Edward

  	
   

  	
  30

  	
   

  	
  1,667

  	
   

  
	
  Crumpler,
  James

  	
   

  	
  31

  	
   

  	
  1,667

  	
   

  

 

 

	
  Issued and Outstanding Common
  Stock:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Foernzler, Richard

  	
   

  	
  32

  	
   

  	
  1,667

  	
   

  
	
  Wilson, James

  	
   

  	
  33

  	
   

  	
  3,950

  	
   

  
	
  Oakley, Timothy

  	
   

  	
  34

  	
   

  	
  0

  	
   

  
	
  Balog, Tarus

  	
   

  	
  35

  	
   

  	
  400

  	
   

  
	
  Knight, Joseph

  	
   

  	
  36

  	
   

  	
  11,225

  	
   

  
	
  Touchton, Robert

  	
   

  	
  37

  	
   

  	
  141,648

  	
   

  
	
  Touchton, Cheryle

  	
   

  	
  38

  	
   

  	
  130,279

  	
   

  
	
  Gunter, Dale

  	
   

  	
  39

  	
   

  	
  120,769

  	
   

  
	
  Wilson, Kenneth

  	
   

  	
  40

  	
   

  	
  91,882

  	
   

  
	
  Hollwarth, Dorothy

  	
   

  	
  41

  	
   

  	
  46,220

  	
   

  
	
  LaMontagne, Michele

  	
   

  	
  42

  	
   

  	
  11,903

  	
   

  
	
  Black, Jeffrey

  	
   

  	
  43

  	
   

  	
  13,282

  	
   

  
	
  Rausch, Steven & Susan

  	
   

  	
  44

  	
   

  	
  86,662

  	
   

  
	
  Page, Maureen

  	
   

  	
  45

  	
   

  	
  11,555

  	
   

  
	
  Wortherly, Clemon

  	
   

  	
  46

  	
   

  	
  14,132

  	
   

  
	
  Alvarez, Steve

  	
   

  	
  47

  	
   

  	
  17,050

  	
   

  
	
  Hagerty, Scott

  	
   

  	
  48

  	
   

  	
  20,798

  	
   

  
	
  Guthart, Joseph

  	
   

  	
  49

  	
   

  	
  25,420

  	
   

  
	
  Prouty, Lori

  	
   

  	
  50

  	
   

  	
  4,693

  	
   

  
	
  Athavale, Niteen

  	
   

  	
  51

  	
   

  	
  2,919

  	
   

  
	
  Brubaker, Heidi

  	
   

  	
  52

  	
   

  	
  2,919

  	
   

  
	
  Egan, Stephanie

  	
   

  	
  53

  	
   

  	
  2,786

  	
   

  
	
  Fitzgerald, Rob

  	
   

  	
  54

  	
   

  	
  2,653

  	
   

  
	
  Givens, Anne

  	
   

  	
  55

  	
   

  	
  2,388

  	
   

  
	
  Milligan, Louise

  	
   

  	
  56

  	
   

  	
  1,725

  	
   

  
	
  Serban, John

  	
   

  	
  57

  	
   

  	
  0

  	
   

  
	
  Serban, John

  	
   

  	
  58

  	
   

  	
  2,653

  	
   

  
	
  Tanner, Brad

  	
   

  	
  59

  	
   

  	
  2,123

  	
   

  
	
  Touchton, Chris

  	
   

  	
  60

  	
   

  	
  1,390

  	
   

  
	
  Auve, Martin

  	
   

  	
  61

  	
   

  	
  1,403

  	
   

  
	
  Braxton, Dallas

  	
   

  	
  62

  	
   

  	
  1,958

  	
   

  
	
  Brown, Bob

  	
   

  	
  63

  	
   

  	
  1,569

  	
   

  
	
  Byrd, Jill

  	
   

  	
  64

  	
   

  	
  1,236

  	
   

  
	
  Ellis, Ryan

  	
   

  	
  65

  	
   

  	
  1,451

  	
   

  
	
  Fowler, Derek

  	
   

  	
  66

  	
   

  	
  1,857

  	
   

  
	
  Gould, Troy

  	
   

  	
  67

  	
   

  	
  1,174

  	
   

  
	
  Kimball, Brad

  	
   

  	
  68

  	
   

  	
  1,749

  	
   

  
	
  Mougey, Julie

  	
   

  	
  69

  	
   

  	
  1,958

  	
   

  
	
  Passalacqua, Sergio

  	
   

  	
  70

  	
   

  	
  1,336

  	
   

  
	
  Ryan, Nancy

  	
   

  	
  71

  	
   

  	
  1,964

  	
   

  
	
  Semel, Gary

  	
   

  	
  72

  	
   

  	
  1,515

  	
   

  
	
  Winton, William

  	
   

  	
  73

  	
   

  	
  1,658

  	
   

  
	
  Arcidiacono, John

  	
   

  	
  74

  	
   

  	
  490

  	
   

  
	
  Browning, Judy

  	
   

  	
  75

  	
   

  	
  771

  	
   

  
	
  Charles, Gaye

  	
   

  	
  76

  	
   

  	
  315

  	
   

  
	
  Devlin, Mike

  	
   

  	
  77

  	
   

  	
  624

  	
   

  
	
  Goodman, Mark

  	
   

  	
  78

  	
   

  	
  901

  	
   

  
	
  Hanna, Susan

  	
   

  	
  79

  	
   

  	
  921

  	
   

  
	
  Helton, Christie

  	
   

  	
  80

  	
   

  	
  380

  	
   

  

 

 

	
  Issued and Outstanding Common
  Stock:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hutchinson, Shawn

  	
   

  	
  81

  	
   

  	
  300

  	
   

  
	
  Joglekar, Pramrod

  	
   

  	
  82

  	
   

  	
  504

  	
   

  
	
  Johnson, Phillip

  	
   

  	
  83

  	
   

  	
  270

  	
   

  
	
  Knappe, Lisa

  	
   

  	
  84

  	
   

  	
  420

  	
   

  
	
  Livingston, Paul

  	
   

  	
  85

  	
   

  	
  360

  	
   

  
	
  Moore, Sue

  	
   

  	
  86

  	
   

  	
  921

  	
   

  
	
  Smith, Charles

  	
   

  	
  87

  	
   

  	
  410

  	
   

  
	
  Phillips, David

  	
   

  	
  88

  	
   

  	
  21,241

  	
   

  
	
  Conroy, Debra

  	
   

  	
  89

  	
   

  	
  1,250

  	
   

  
	
  Cotton, C. David

  	
   

  	
  90

  	
   

  	
  400

  	
   

  
	
  Dufresne, Charles

  	
   

  	
  91

  	
   

  	
  1,667

  	
   

  
	
  Fisher, John

  	
   

  	
  92

  	
   

  	
  1,250

  	
   

  
	
  Gibbs, Jason

  	
   

  	
  93

  	
   

  	
  800

  	
   

  
	
  Kesel, David

  	
   

  	
  94

  	
   

  	
  250

  	
   

  
	
  Koogler, Denise

  	
   

  	
  95

  	
   

  	
  1,000

  	
   

  
	
  Mackie, Sally

  	
   

  	
  96

  	
   

  	
  834

  	
   

  
	
  Murnick, Jonna

  	
   

  	
  97

  	
   

  	
  1,667

  	
   

  
	
  Negley, John

  	
   

  	
  98

  	
   

  	
  400

  	
   

  
	
  Schuck, Andy

  	
   

  	
  99

  	
   

  	
  834

  	
   

  
	
  Smith, Monica

  	
   

  	
  100

  	
   

  	
  500

  	
   

  
	
  Toporek, Stanley

  	
   

  	
  101

  	
   

  	
  250

  	
   

  
	
  BB&T as Nominee

  	
   

  	
  102

  	
   

  	
  0

  	
   

  
	
  BB&T as Nominee

  	
   

  	
  103

  	
   

  	
  0

  	
   

  
	
  BB&T as Nominee

  	
   

  	
  104

  	
   

  	
  0

  	
   

  
	
  Void

  	
   

  	
  105

  	
   

  	
  0

  	
   

  
	
  Howard, Emily

  	
   

  	
  106

  	
   

  	
  800

  	
   

  
	
  Resnick, Todd

  	
   

  	
  107

  	
   

  	
  250

  	
   

  
	
  Tanner, James B.

  	
   

  	
  108

  	
   

  	
  2,373

  	
   

  
	
  Khan, Shabnam

  	
   

  	
  109

  	
   

  	
  250

  	
   

  
	
  Ryan, Nancy

  	
   

  	
  110

  	
   

  	
  2,373

  	
   

  
	
  Mazur, Randall

  	
   

  	
  111

  	
   

  	
  1,667

  	
   

  
	
  Marsh, Hal

  	
   

  	
  112

  	
   

  	
  1,200

  	
   

  
	
  Sample, Michael

  	
   

  	
  113

  	
   

  	
  500

  	
   

  
	
  Prohaska, Anthony

  	
   

  	
  114

  	
   

  	
  750

  	
   

  
	
  Simpkins, Jim

  	
   

  	
  115

  	
   

  	
  300

  	
   

  
	
  Wortherly, Clemon

  	
   

  	
  116

  	
   

  	
  2,373

  	
   

  
	
  Oakley, Timothy

  	
   

  	
  117

  	
   

  	
  0

  	
   

  
	
  VOID

  	
   

  	
  118

  	
   

  	
   

  	
   

  
	
  VOID

  	
   

  	
  119

  	
   

  	
   

  	
   

  
	
  VOID

  	
   

  	
  120

  	
   

  	
   

  	
   

  
	
  VOID

  	
   

  	
  121

  	
   

  	
   

  	
   

  
	
  VOID

  	
   

  	
  122

  	
   

  	
   

  	
   

  
	
  Rogerson, Katherine

  	
   

  	
  123

  	
   

  	
  500

  	
   

  
	
  Barton, Daniel

  	
   

  	
  124

  	
   

  	
  2,400

  	
   

  
	
  Cleary, Theresa

  	
   

  	
  125

  	
   

  	
  250

  	
   

  
	
  Dodson, Don

  	
   

  	
  126

  	
   

  	
  1,200

  	
   

  
	
  LaPlaine, James

  	
   

  	
  127

  	
   

  	
  800

  	
   

  
	
  Minneman, Eric

  	
   

  	
  128

  	
   

  	
  1,000

  	
   

  
	
  Taylor, William

  	
   

  	
  129

  	
   

  	
  800

  	
   

  

 

 

	
  Issued and Outstanding Common Stock:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wang,
  Wei

  	
   

  	
  130

  	
   

  	
  400

  	
   

  
	
  Ward,
  William

  	
   

  	
  131

  	
   

  	
  500

  	
   

  
	
  White,
  Andrew

  	
   

  	
  132

  	
   

  	
  1,200

  	
   

  
	
  Wynn,
  Carolyn R.

  	
   

  	
  133

  	
   

  	
  18,004

  	
   

  
	
  Alvarez,
  Steve

  	
   

  	
  134

  	
   

  	
  7,223

  	
   

  
	
  Arcidiacono,
  John

  	
   

  	
  135

  	
   

  	
  1,032

  	
   

  
	
  Athavale,
  Niteen

  	
   

  	
  136

  	
   

  	
  1,032

  	
   

  
	
  Auve,
  Martin

  	
   

  	
  137

  	
   

  	
  1,032

  	
   

  
	
  Black,
  Jeffrey

  	
   

  	
  138

  	
   

  	
  6,191

  	
   

  
	
  Braxton,
  Dallas

  	
   

  	
  139

  	
   

  	
  1,032

  	
   

  
	
  Brown,
  Bob

  	
   

  	
  140

  	
   

  	
  1,032

  	
   

  
	
  Browning,
  Judy

  	
   

  	
  141

  	
   

  	
  1,032

  	
   

  
	
  Brubaker,
  Heidi

  	
   

  	
  142

  	
   

  	
  1,032

  	
   

  
	
  Byrd,
  Jill

  	
   

  	
  143

  	
   

  	
  1,032

  	
   

  
	
  Charles,
  Gaye

  	
   

  	
  144

  	
   

  	
  1,032

  	
   

  
	
  Devlin,
  Mike

  	
   

  	
  145

  	
   

  	
  1,032

  	
   

  
	
  Egan,
  Stephanie

  	
   

  	
  146

  	
   

  	
  1,032

  	
   

  
	
  Ellis,
  Ryan

  	
   

  	
  147

  	
   

  	
  664

  	
   

  
	
  Fitzgerald,
  Rob

  	
   

  	
  148

  	
   

  	
  1,032

  	
   

  
	
  Fowler,
  Derek

  	
   

  	
  149

  	
   

  	
  1,032

  	
   

  
	
  Givens,
  Anne

  	
   

  	
  150

  	
   

  	
  1,032

  	
   

  
	
  Goodman,
  Mark

  	
   

  	
  151

  	
   

  	
  1,032

  	
   

  
	
  Gould,
  Troy

  	
   

  	
  152

  	
   

  	
  1,032

  	
   

  
	
  Gunter,
  Dale

  	
   

  	
  153

  	
   

  	
  52,097

  	
   

  
	
  Hanna,
  Susan

  	
   

  	
  154

  	
   

  	
  1,032

  	
   

  
	
  Helton,
  Christie

  	
   

  	
  155

  	
   

  	
  664

  	
   

  
	
  Hutchinson,
  Shawn

  	
   

  	
  156

  	
   

  	
  1,032

  	
   

  
	
  Joglekar,
  Pramrod

  	
   

  	
  157

  	
   

  	
  664

  	
   

  
	
  Johnson,
  Phillip

  	
   

  	
  158

  	
   

  	
  1,032

  	
   

  
	
  Kimball,
  Brad

  	
   

  	
  159

  	
   

  	
  1,032

  	
   

  
	
  Knappe,
  Lisa

  	
   

  	
  160

  	
   

  	
  664

  	
   

  
	
  LaMontagne,
  Michele

  	
   

  	
  161

  	
   

  	
  6,191

  	
   

  
	
  Livingston,
  Paul

  	
   

  	
  162

  	
   

  	
  1,032

  	
   

  
	
  Milligan,
  Louise

  	
   

  	
  163

  	
   

  	
  1,032

  	
   

  
	
  Moore,
  Sue

  	
   

  	
  164

  	
   

  	
  1,032

  	
   

  
	
  Mougey,
  Julie

  	
   

  	
  165

  	
   

  	
  1,032

  	
   

  
	
  Passalacqua,
  Sergio

  	
   

  	
  166

  	
   

  	
  1,032

  	
   

  
	
  Phillips,
  David

  	
   

  	
  167

  	
   

  	
  10,264

  	
   

  
	
  Prouty,
  Lori

  	
   

  	
  168

  	
   

  	
  1,032

  	
   

  
	
  Ryan,
  Nancy

  	
   

  	
  169

  	
   

  	
  1,032

  	
   

  
	
  Semel,
  Gary

  	
   

  	
  170

  	
   

  	
  1,032

  	
   

  
	
  Serban,
  John

  	
   

  	
  171

  	
   

  	
  1,032

  	
   

  
	
  Smith,
  Charles

  	
   

  	
  172

  	
   

  	
  1,032

  	
   

  
	
  Tanner,
  Brad

  	
   

  	
  173

  	
   

  	
  1,032

  	
   

  
	
  Touchton,
  Robert

  	
   

  	
  174

  	
   

  	
  60,352

  	
   

  
	
  Touchton,
  Cheryle

  	
   

  	
  175

  	
   

  	
  56,225

  	
   

  
	
  Touchton,
  Chris

  	
   

  	
  176

  	
   

  	
  1,032

  	
   

  
	
  Wilson,
  Kenneth

  	
   

  	
  177

  	
   

  	
  39,204

  	
   

  
	
  Winton,
  William

  	
   

  	
  178

  	
   

  	
  1,032

  	
   

  

 

 

	
  Issued and Outstanding Common Stock:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wortherly,
  Clemon

  	
   

  	
  179

  	
   

  	
  6,191

  	
   

  
	
  Hollwarth,
  Dorothy

  	
   

  	
  180

  	
   

  	
  12,379

  	
   

  
	
  Hollwarth,
  Dorothy

  	
   

  	
  181

  	
   

  	
  8,255

  	
   

  
	
  Rausch,
  Steven & Susan

  	
   

  	
  182

  	
   

  	
  38,686

  	
   

  
	
  Page,
  Maureen

  	
   

  	
  183

  	
   

  	
  5,159

  	
   

  
	
  Hagerty,
  Scott

  	
   

  	
  184

  	
   

  	
  9,283

  	
   

  
	
  Guthart,
  Joseph

  	
   

  	
  185

  	
   

  	
  11,347

  	
   

  
	
  Hagnas,
  Tia

  	
   

  	
  186

  	
   

  	
  116

  	
   

  
	
  Todd,
  Joseph

  	
   

  	
  187

  	
   

  	
  1,750

  	
   

  
	
  Gleason,
  Michael F.

  	
   

  	
  188

  	
   

  	
  700

  	
   

  
	
  Foernzler,
  Richard

  	
   

  	
  189

  	
   

  	
  116

  	
   

  
	
  Foernzler,
  Richard

  	
   

  	
  190

  	
   

  	
  194

  	
   

  
	
  Russell,
  Daniel C.

  	
   

  	
  191

  	
   

  	
  19,950

  	
   

  
	
  Turnburke,
  John H.

  	
   

  	
  192

  	
   

  	
  19,950

  	
   

  
	
  Berger,
  Martin S.

  	
   

  	
  193

  	
   

  	
  73,950

  	
   

  
	
  Gleason,
  Michael F.

  	
   

  	
  194

  	
   

  	
  0

  	
   

  
	
  Wilson,
  James

  	
   

  	
  195

  	
   

  	
  11,850

  	
   

  
	
  Albertson,
  Brett

  	
   

  	
  196

  	
   

  	
  1,600

  	
   

  
	
  Byers,
  Allen

  	
   

  	
  198

  	
   

  	
  2,000

  	
   

  
	
  Eck,
  Darren

  	
   

  	
  199

  	
   

  	
  1,600

  	
   

  
	
  Fisher,
  Allen

  	
   

  	
  200

  	
   

  	
  1,600

  	
   

  
	
  Hupko,
  Sherry

  	
   

  	
  201

  	
   

  	
  1,600

  	
   

  
	
  Johnson,
  Cherri

  	
   

  	
  202

  	
   

  	
  1,667

  	
   

  
	
  Magee,
  Michael

  	
   

  	
  203

  	
   

  	
  1,600

  	
   

  
	
  Meyer,
  John

  	
   

  	
  204

  	
   

  	
  1,600

  	
   

  
	
  Moinet,
  Eric

  	
   

  	
  205

  	
   

  	
  1,600

  	
   

  
	
  Seale,
  David

  	
   

  	
  206

  	
   

  	
  1,600

  	
   

  
	
  Sodano,
  Marc

  	
   

  	
  207

  	
   

  	
  1,600

  	
   

  
	
  Vogt,
  Michael

  	
   

  	
  208

  	
   

  	
  2,000

  	
   

  
	
  Williams,
  Jean

  	
   

  	
  209

  	
   

  	
  3,333

  	
   

  
	
  Woods,
  Steve

  	
   

  	
  210

  	
   

  	
  1,667

  	
   

  
	
  Miglietta,
  Irvin

  	
   

  	
  211

  	
   

  	
  2,993,429

  	
   

  
	
  Page,
  Joseph

  	
   

  	
  212

  	
   

  	
  0

  	
   

  
	
  Colleary,
  Thomas

  	
   

  	
  213

  	
   

  	
  1,140,354

  	
   

  
	
  Moore,
  Thomas

  	
   

  	
  214

  	
   

  	
  293,250

  	
   

  
	
  Whitehouse,
  David

  	
   

  	
  215

  	
   

  	
  102,541

  	
   

  
	
  Bulmer,
  Steve

  	
   

  	
  216

  	
   

  	
  102,541

  	
   

  
	
  Orlando,
  Anthony

  	
   

  	
  217

  	
   

  	
  102,541

  	
   

  
	
  Aiello,
  John

  	
   

  	
  218

  	
   

  	
  4,442

  	
   

  
	
  Smith,
  Michael

  	
   

  	
  219

  	
   

  	
  4,195

  	
   

  
	
  Messes,
  Alexander

  	
   

  	
  220

  	
   

  	
  1,141

  	
   

  
	
  Murphy,
  George

  	
   

  	
  221

  	
   

  	
  700

  	
   

  
	
  Gagnon,
  Karen

  	
   

  	
  222

  	
   

  	
  272

  	
   

  
	
  BB&T
  as Nominee

  	
   

  	
  223

  	
   

  	
  0

  	
   

  
	
  Gleason,
  Michael F.

  	
   

  	
  224

  	
   

  	
  10,625

  	
   

  
	
  Gleason,
  Sharon M.

  	
   

  	
  225

  	
   

  	
  8,875

  	
   

  
	
  Foundation
  of the Heart

  	
   

  	
  226

  	
   

  	
  51,850

  	
   

  
	
  Watts,
  Fiona

  	
   

  	
  227

  	
   

  	
  5,049

  	
   

  
	
  Fox,
  Michael

  	
   

  	
  228

  	
   

  	
  2,054

  	
   

  

 

 

	
  Issued and Outstanding Common
  Stock:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lamarca, Silvana

  	
   

  	
  229

  	
   

  	
  87

  	
   

  
	
  Mclntyre, Pamela

  	
   

  	
  230

  	
   

  	
  315

  	
   

  
	
  Winton, James

  	
   

  	
  231

  	
   

  	
  750

  	
   

  
	
  East, Roger

  	
   

  	
  232

  	
   

  	
  1,600

  	
   

  
	
  Slusher, Jennifer

  	
   

  	
  233

  	
   

  	
  1,000

  	
   

  
	
  Kauffman, James

  	
   

  	
  234

  	
   

  	
  1,000

  	
   

  
	
  Laramay, Lawrence

  	
   

  	
  235

  	
   

  	
  750

  	
   

  
	
  Mangum, Anthony

  	
   

  	
  236

  	
   

  	
  1,200

  	
   

  
	
  Piccicuto, Phillip

  	
   

  	
  237

  	
   

  	
  1,200

  	
   

  
	
  Randolph, Greg

  	
   

  	
  238

  	
   

  	
  1,600

  	
   

  
	
  Hardiman, Rhonda

  	
   

  	
  239

  	
   

  	
  1,000

  	
   

  
	
  Ingram, Kenneth

  	
   

  	
  240

  	
   

  	
  1,000

  	
   

  
	
  Speakman, Toni

  	
   

  	
  241

  	
   

  	
  1,600

  	
   

  
	
  Sproelich, Michael

  	
   

  	
  242

  	
   

  	
  1,600

  	
   

  
	
  Whitaker, Lee

  	
   

  	
  243

  	
   

  	
  1,000

  	
   

  
	
  Sherman, Mark

  	
   

  	
  244

  	
   

  	
  1,000

  	
   

  
	
  Taylor, Gregory S.

  	
   

  	
  245

  	
   

  	
  1,000

  	
   

  
	
  Graves, Richard

  	
   

  	
  246

  	
   

  	
  1,000

  	
   

  
	
  Barrows, Suzanne

  	
   

  	
  247

  	
   

  	
  850

  	
   

  
	
  Ward, Brian

  	
   

  	
  248

  	
   

  	
  1,000

  	
   

  
	
  Keir, Donna

  	
   

  	
  249

  	
   

  	
  1,000

  	
   

  
	
  Cain, Linda

  	
   

  	
  250

  	
   

  	
  1,000

  	
   

  
	
  Messes, Alexander

  	
   

  	
  251

  	
   

  	
  1,107

  	
   

  
	
  Ducharme, Mareka

  	
   

  	
  252

  	
   

  	
  1,000

  	
   

  
	
  Mullaney, Michael

  	
   

  	
  253

  	
   

  	
  1,000

  	
   

  
	
  Wagg, Pamela

  	
   

  	
  254

  	
   

  	
  1,000

  	
   

  
	
  Stilwill, Thomas

  	
   

  	
  255

  	
   

  	
  932

  	
   

  
	
  Coburn, Michael

  	
   

  	
  256

  	
   

  	
  8,904

  	
   

  
	
  Miglietta, Irvin

  	
   

  	
  257

  	
   

  	
  371,174

  	
   

  
	
  Colleary, Thomas

  	
   

  	
  258

  	
   

  	
  141,401

  	
   

  
	
  Total Issues and Outstanding Common
  Stock

  	
   

  	
   

  	
   

  	
  14,473,872

  	
   

  

 

	
  Unresolved Outstanding and Issued
  Common Stock:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Items to be resolved:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phillips, David

  	
   

  	
   

  	
   

  	
  2,374

  	
   

  
	
  Stilwill, Thomas

  	
   

  	
   

  	
   

  	
  606

  	
   

  
	
  Alello, John

  	
   

  	
   

  	
   

  	
  4,422

  	
   

  
	
  Cyr, Tina

  	
   

  	
   

  	
   

  	
  1,747

  	
   

  
	
  Holmes, Barbara

  	
   

  	
   

  	
   

  	
  596

  	
   

  
	
  Kulpa (Hughes), April

  	
   

  	
   

  	
   

  	
  3,398

  	
   

  
	
  Rollend, Christopher

  	
   

  	
   

  	
   

  	
  856

  	
   

  
	
  Seremet, Thomas

  	
   

  	
   

  	
   

  	
  78

  	
   

  
	
  Smith, Michael

  	
   

  	
   

  	
   

  	
  4,195

  	
   

  
	
  Soter, Philip

  	
   

  	
   

  	
   

  	
  466

  	
   

  
	
  Total Discrepancies:

  	
   

  	
   

  	
   

  	
  18,738

  	
   

  

 

 

	
  Stock Options Outstanding:

  	
   

  	
   

  	
   

  
	
  Aiello, John

  	
   

  	
  18,582

  	
   

  
	
  Albert, Barbara

  	
   

  	
  250

  	
   

  
	
  Albertson, Brett

  	
   

  	
  42,000

  	
   

  
	
  Allen, James P.

  	
   

  	
  20,000

  	
   

  
	
  Allerton, Robin

  	
   

  	
  5,000

  	
   

  
	
  Alvarez, Steve

  	
   

  	
  19,873

  	
   

  
	
  Arcidiacono, John S.

  	
   

  	
  1,000

  	
   

  
	
  Ashley, Darrell

  	
   

  	
  2,750

  	
   

  
	
  Askew, Worth

  	
   

  	
  10,000

  	
   

  
	
  Athavale, Nitindra N.

  	
   

  	
  667

  	
   

  
	
  Auble, Andrew Gabriel

  	
   

  	
  2,250

  	
   

  
	
  Austin, James

  	
   

  	
  250

  	
   

  
	
  Auve, Martin C.

  	
   

  	
  1,000

  	
   

  
	
  Ayub, Abdul

  	
   

  	
  1,000

  	
   

  
	
  Baker, Paul

  	
   

  	
  5,000

  	
   

  
	
  Bao, Xiaoyun

  	
   

  	
  2,797

  	
   

  
	
  Barie, Debra

  	
   

  	
  1,000

  	
   

  
	
  Barish, Jay E.

  	
   

  	
  4,750

  	
   

  
	
  Barnes, Curtis Matthew

  	
   

  	
  1,583

  	
   

  
	
  Bauldree, Michael

  	
   

  	
  15,000

  	
   

  
	
  Benitez, Richard

  	
   

  	
  250

  	
   

  
	
  Benshoff, Martin

  	
   

  	
  1,000

  	
   

  
	
  Benson, James

  	
   

  	
  250

  	
   

  
	
  Bertaux, Karen

  	
   

  	
  105,000

  	
   

  
	
  Black, Jeffery T.

  	
   

  	
  1,000

  	
   

  
	
  Blackwood, Christopher

  	
   

  	
  15,000

  	
   

  
	
  Blanton, Joshua

  	
   

  	
  667

  	
   

  
	
  Blumenfeld, Leslie

  	
   

  	
  2,000

  	
   

  
	
  Bobik, John II

  	
   

  	
  4,250

  	
   

  
	
  Boehler, Michael

  	
   

  	
  1,000

  	
   

  
	
  Bogan, Sean

  	
   

  	
  1,500

  	
   

  
	
  Boos, Chad

  	
   

  	
  1,000

  	
   

  
	
  Borg, Lukas

  	
   

  	
  1,000

  	
   

  
	
  Borie, Stuart

  	
   

  	
  1,000

  	
   

  
	
  Boylan, Tim

  	
   

  	
  7,500

  	
   

  
	
  Braden, Michael

  	
   

  	
  11,000

  	
   

  
	
  Braxton, Dallas

  	
   

  	
  2,373

  	
   

  
	
  Braxton, Paul Swain Dallas

  	
   

  	
  1,000

  	
   

  
	
  Brayton, Bradley

  	
   

  	
  250

  	
   

  
	
  Brown, Robert G.

  	
   

  	
  3,373

  	
   

  
	
  Brown, William James

  	
   

  	
  5,500

  	
   

  
	
  Browning, Judy A.

  	
   

  	
  1,000

  	
   

  
	
  Bullock, Janet

  	
   

  	
  5,000

  	
   

  
	
  Bulmer, Steve

  	
   

  	
  22,500

  	
   

  
	
  Burke, Jeffrey L.

  	
   

  	
  30,000

  	
   

  
	
  Burns, Stacey

  	
   

  	
  5,000

  	
   

  
	
  Bush, James

  	
   

  	
  1,000

  	
   

  
	
  Byers, Allen

  	
   

  	
  10,000

  	
   

  

 

 

	
  Stock Options Outstanding:

  	
   

  	
   

  	
   

  
	
  Byrd,
  Barbara J.

  	
   

  	
  1,000

  	
   

  
	
  Cabeen,
  Ronald

  	
   

  	
  1,750

  	
   

  
	
  Cain,
  Linda K.

  	
   

  	
  4,000

  	
   

  
	
  Campbell
  VI, James

  	
   

  	
  1,000

  	
   

  
	
  Carmona,
  Daniel

  	
   

  	
  1,833

  	
   

  
	
  Carpenter,
  Jane

  	
   

  	
  408

  	
   

  
	
  Carter,
  William Duane

  	
   

  	
  1,250

  	
   

  
	
  Casey,
  John M.

  	
   

  	
  3,125

  	
   

  
	
  Catacora,
  Luis

  	
   

  	
  10,000

  	
   

  
	
  Caughron,
  Kenneth O.

  	
   

  	
  3,000

  	
   

  
	
  Charles,
  Gaye H.

  	
   

  	
  1,000

  	
   

  
	
  Cheek,
  Boris

  	
   

  	
  5,500

  	
   

  
	
  Christensen,
  Stephen

  	
   

  	
  2,250

  	
   

  
	
  Clark,
  Isham B.

  	
   

  	
  5,000

  	
   

  
	
  Clark,
  Lonnie Gray

  	
   

  	
  2,375

  	
   

  
	
  Closs,
  Eric

  	
   

  	
  9,539

  	
   

  
	
  Coffey,
  D. David

  	
   

  	
  1,000

  	
   

  
	
  Coleman,
  Thomas

  	
   

  	
  375

  	
   

  
	
  Cooke,
  Richard

  	
   

  	
  5,000

  	
   

  
	
  Cooley,
  Charles

  	
   

  	
  1,000

  	
   

  
	
  Cooper,
  Scott

  	
   

  	
  25,000

  	
   

  
	
  Cox,
  Melvin

  	
   

  	
  1,000

  	
   

  
	
  Crawford,
  Christopher

  	
   

  	
  667

  	
   

  
	
  Creech,
  Lawrence T.

  	
   

  	
  10,500

  	
   

  
	
  Crocker
  III, Archie E.

  	
   

  	
  5,000

  	
   

  
	
  Crow,
  Scott

  	
   

  	
  2,500

  	
   

  
	
  Crumpler,
  James R. Jr.

  	
   

  	
  19,000

  	
   

  
	
  Curtis,
  Bobbi O.

  	
   

  	
  1,000

  	
   

  
	
  Curtis,
  Charles

  	
   

  	
  3,500

  	
   

  
	
  Darden,
  David

  	
   

  	
  1,000

  	
   

  
	
  David,
  Elizabeth

  	
   

  	
  1,000

  	
   

  
	
  David-Ayun,
  Maria Irene

  	
   

  	
  5,612

  	
   

  
	
  Davis
  (Greene), Denise

  	
   

  	
  2,500

  	
   

  
	
  Davis,
  Gail J.

  	
   

  	
  4,000

  	
   

  
	
  Davis,
  Loretta

  	
   

  	
  1,000

  	
   

  
	
  Davis,
  Phyllis

  	
   

  	
  1,000

  	
   

  
	
  Dean,
  Kim J.

  	
   

  	
  1,000

  	
   

  
	
  DeAngelis,
  Mary C.

  	
   

  	
  10,916

  	
   

  
	
  DeClippelaar,
  Robert

  	
   

  	
  250

  	
   

  
	
  Del
  Signore, Anthony

  	
   

  	
  1,000

  	
   

  
	
  Delavega,
  Robert

  	
   

  	
  1,000

  	
   

  
	
  DelSignore,
  Thomas A.

  	
   

  	
  3,416

  	
   

  
	
  DeMartino,
  Joseph

  	
   

  	
  1,000

  	
   

  
	
  Devlin,
  Michael D.

  	
   

  	
  1,000

  	
   

  
	
  Dick,
  Roger

  	
   

  	
  11,500

  	
   

  
	
  Dillon,
  Kelley

  	
   

  	
  250

  	
   

  
	
  Dotterweich,
  Timothy

  	
   

  	
  1,000

  	
   

  
	
  Draggoo,
  Heather

  	
   

  	
  1,000

  	
   

  
	
  Ducharme,
  Mareka

  	
   

  	
  4,000

  	
   

  

 

 

	
  Stock Options Outstanding:

  	
   

  	
   

  	
   

  
	
  Dufresne, Charles E.

  	
   

  	
  6,000

  	
   

  
	
  Dye, Dennis

  	
   

  	
  —

  	
   

  
	
  Eagle, David

  	
   

  	
  1,000

  	
   

  
	
  East, Roger

  	
   

  	
  15,000

  	
   

  
	
  Eck, Darren L.

  	
   

  	
  6,000

  	
   

  
	
  Edge, Forrest

  	
   

  	
  250

  	
   

  
	
  Egan, Stephanie H.

  	
   

  	
  4,750

  	
   

  
	
  Eglin, James

  	
   

  	
  250

  	
   

  
	
  Erler, Jeffrey

  	
   

  	
  39,753

  	
   

  
	
  Everlith, Edward

  	
   

  	
  755

  	
   

  
	
  Faber, Samuel

  	
   

  	
  667

  	
   

  
	
  Fagan, Matt

  	
   

  	
  1,000

  	
   

  
	
  Faulkner, Barbara

  	
   

  	
  250

  	
   

  
	
  Felix, Charles

  	
   

  	
  1,000

  	
   

  
	
  Fenske, Chad

  	
   

  	
  20,000

  	
   

  
	
  Fisher, Allen D.

  	
   

  	
  13,250

  	
   

  
	
  Fitzgerald, Robert J.

  	
   

  	
  6,123

  	
   

  
	
  Flannery, Joseph

  	
   

  	
  1,000

  	
   

  
	
  Foernzler, Richard E.

  	
   

  	
  35,000

  	
   

  
	
  Fogleman, Shaun

  	
   

  	
  1,000

  	
   

  
	
  Folsom, Joseph

  	
   

  	
  3,500

  	
   

  
	
  Ford, Dionna

  	
   

  	
  4,250

  	
   

  
	
  Fortunato, Greg

  	
   

  	
  10,000

  	
   

  
	
  Foster, Daniel

  	
   

  	
  375

  	
   

  
	
  Fowler, John Derek

  	
   

  	
  667

  	
   

  
	
  Fox, Steven

  	
   

  	
  1,000

  	
   

  
	
  Garibay, Bernardo

  	
   

  	
  30,887

  	
   

  
	
  Garnett, Linda

  	
   

  	
  10,000

  	
   

  
	
  Garrett, Donald T.

  	
   

  	
  2,250

  	
   

  
	
  Gibbs, Scott

  	
   

  	
  3,000

  	
   

  
	
  Gillespie, Donald

  	
   

  	
  45,000

  	
   

  
	
  Givens, Anne A.

  	
   

  	
  1,000

  	
   

  
	
  Gleason, Michael

  	
   

  	
  39,500

  	
   

  
	
  Glenn, Robert

  	
   

  	
  667

  	
   

  
	
  Golcher, Shannon

  	
   

  	
  1,250

  	
   

  
	
  Goldberg, Paul

  	
   

  	
  250

  	
   

  
	
  Goodman, Mark

  	
   

  	
  3,373

  	
   

  
	
  Gould, Troy M.

  	
   

  	
  667

  	
   

  
	
  Graves, Richard

  	
   

  	
  13,500

  	
   

  
	
  Gray, James

  	
   

  	
  4,250

  	
   

  
	
  Greer, Eugene

  	
   

  	
  9,500

  	
   

  
	
  Griffey, Vincent

  	
   

  	
  4,750

  	
   

  
	
  Guenther, Robert

  	
   

  	
  1,000

  	
   

  
	
  Gunter, Dale

  	
   

  	
  2,373

  	
   

  
	
  Hagnas, Tia

  	
   

  	
  3,000

  	
   

  
	
  Hall, John

  	
   

  	
  4,000

  	
   

  
	
  Hanna, Susan T.

  	
   

  	
  1,000

  	
   

  
	
  Hansley, Kenneth W.

  	
   

  	
  667

  	
   

  
	
  Hardiman, Rhonda

  	
   

  	
  4,750

  	
   

  

 

 

	
  Stock Options Outstanding:

  	
   

  	
   

  	
   

  
	
  Hardt,
  James

  	
   

  	
  15,000

  	
   

  
	
  Haywood,
  Larry

  	
   

  	
  2,500

  	
   

  
	
  Helton,
  Christie B.

  	
   

  	
  333

  	
   

  
	
  Hiles,
  Mary

  	
   

  	
  750

  	
   

  
	
  Hix,
  William H.

  	
   

  	
  250

  	
   

  
	
  Hoadley,
  Christina

  	
   

  	
  2,750

  	
   

  
	
  Hoder,
  Stephen

  	
   

  	
  3,355

  	
   

  
	
  Holland,
  Jason

  	
   

  	
  6,250

  	
   

  
	
  Holtz-Oxley,
  David

  	
   

  	
  6,750

  	
   

  
	
  Honaker,
  David

  	
   

  	
  10,000

  	
   

  
	
  Hood,
  John

  	
   

  	
  5,000

  	
   

  
	
  Houck,
  Debra

  	
   

  	
  750

  	
   

  
	
  Hunt,
  William

  	
   

  	
  1,000

  	
   

  
	
  Hupko,
  Sherry L.

  	
   

  	
  2,000

  	
   

  
	
  Hutchins,
  Gary

  	
   

  	
  1,000

  	
   

  
	
  Hutchison,
  Shawn A.

  	
   

  	
  667

  	
   

  
	
  Hutchison,
  John

  	
   

  	
  2,750

  	
   

  
	
  Ingram,
  Kenneth M.

  	
   

  	
  4,000

  	
   

  
	
  Joglekar,
  Pramod N.

  	
   

  	
  333

  	
   

  
	
  Johnson,
  Cherri R.

  	
   

  	
  2,000

  	
   

  
	
  Johnson,
  Phillip A.

  	
   

  	
  667

  	
   

  
	
  Johnson,
  William

  	
   

  	
  1,000

  	
   

  
	
  Jones,
  Jason

  	
   

  	
  17,500

  	
   

  
	
  Jones,
  Matthew

  	
   

  	
  755

  	
   

  
	
  Jones,
  Steven

  	
   

  	
  5,000

  	
   

  
	
  Kantor,
  Jeffrey

  	
   

  	
  2,500

  	
   

  
	
  Karr,
  Lisa

  	
   

  	
  1,000

  	
   

  
	
  Kauffman,
  James T.

  	
   

  	
  18,375

  	
   

  
	
  Kegle,
  Leah

  	
   

  	
  250

  	
   

  
	
  Keir-White,
  Donna

  	
   

  	
  2,000

  	
   

  
	
  Keltz,
  William

  	
   

  	
  375

  	
   

  
	
  Kimball,
  Kent B.

  	
   

  	
  1,000

  	
   

  
	
  Kirchner,
  Christopher

  	
   

  	
  1,000

  	
   

  
	
  Kizakevich,
  Paul

  	
   

  	
  8,600

  	
   

  
	
  Knudson,
  Cynthia

  	
   

  	
  3,000

  	
   

  
	
  Koogler,
  Denise S.

  	
   

  	
  4,000

  	
   

  
	
  Kulak,
  Keane

  	
   

  	
  375

  	
   

  
	
  Kulke,
  Deanne

  	
   

  	
  7,500

  	
   

  
	
  LaMontagne,
  Christine M.

  	
   

  	
  1,000

  	
   

  
	
  Landers,
  William M.

  	
   

  	
  1,000

  	
   

  
	
  Langhans,
  James

  	
   

  	
  10,000

  	
   

  
	
  Lansigan,
  Primavera

  	
   

  	
  7,000

  	
   

  
	
  Laramay,
  Lawrence

  	
   

  	
  4,000

  	
   

  
	
  LaRiviere,
  Carol

  	
   

  	
  1,278

  	
   

  
	
  Lazerson,
  Eric

  	
   

  	
  1,000

  	
   

  
	
  Leach,
  Ralph W.

  	
   

  	
  5,500

  	
   

  
	
  Leiby,
  Jennifer

  	
   

  	
  1,500

  	
   

  
	
  Limoges,
  Sebastien

  	
   

  	
  1,250

  	
   

  
	
  Livingston,
  Paul E.

  	
   

  	
  1,000

  	
   

  

 

 

	
  Stock Options Outstanding:

  	
   

  	
   

  	
   

  
	
  Locklear,
  H. Raymond

  	
   

  	
  1,000

  	
   

  
	
  Long,
  James

  	
   

  	
  20,375

  	
   

  
	
  Luebke,
  Sarah

  	
   

  	
  1,000

  	
   

  
	
  Mackey,
  Cathy

  	
   

  	
  2,500

  	
   

  
	
  Mackinson,
  Larry

  	
   

  	
  16,000

  	
   

  
	
  MacMillan,
  James

  	
   

  	
  250

  	
   

  
	
  Magee,
  Michael S.

  	
   

  	
  4,000

  	
   

  
	
  Maldonado,
  Carolyn

  	
   

  	
  1,000

  	
   

  
	
  Mangum,
  Anthony B.

  	
   

  	
  2,000

  	
   

  
	
  Mann,
  Rubye C.

  	
   

  	
  1,500

  	
   

  
	
  Marrow,
  Wilma

  	
   

  	
  4,750

  	
   

  
	
  Matera,
  Mark

  	
   

  	
  10,000

  	
   

  
	
  McDaniels,
  Roger

  	
   

  	
  250

  	
   

  
	
  McHenry,
  Marcia

  	
   

  	
  8,000

  	
   

  
	
  McHugh,
  James R.

  	
   

  	
  49,500

  	
   

  
	
  Mclntyre,
  Scott

  	
   

  	
  24,659

  	
   

  
	
  McKinley,
  Tracy

  	
   

  	
  3,000

  	
   

  
	
  McKinstry,
  Alan

  	
   

  	
  755

  	
   

  
	
  McLaughlin,
  Stephen

  	
   

  	
  1,000

  	
   

  
	
  McMillan,
  Karen

  	
   

  	
  333

  	
   

  
	
  McNeill,
  Vickie

  	
   

  	
  375

  	
   

  
	
  Mealy,
  Stephen

  	
   

  	
  10,000

  	
   

  
	
  Medinger,
  Kristina

  	
   

  	
  1,583

  	
   

  
	
  Meehan,
  Robin

  	
   

  	
  1,000

  	
   

  
	
  Messes,
  Alexander

  	
   

  	
  2,248

  	
   

  
	
  Meyer,
  John

  	
   

  	
  21,000

  	
   

  
	
  Miglietta,
  Britt

  	
   

  	
  1,159

  	
   

  
	
  Miller,
  Thomas

  	
   

  	
  1,000

  	
   

  
	
  Milligan,
  Louise M.

  	
   

  	
  1,000

  	
   

  
	
  Milligan,
  Sean

  	
   

  	
  667

  	
   

  
	
  Moinet,
  Eric

  	
   

  	
  9,000

  	
   

  
	
  Monnes,
  Jeff

  	
   

  	
  7,500

  	
   

  
	
  Monteiro,
  Sidney Jr.

  	
   

  	
  1,250

  	
   

  
	
  Moore,
  Lee

  	
   

  	
  1,250

  	
   

  
	
  Moore,
  Susan D.

  	
   

  	
  1,000

  	
   

  
	
  Moran,
  Robert

  	
   

  	
  500

  	
   

  
	
  Morell,
  Peter

  	
   

  	
  1,000

  	
   

  
	
  Morton,
  Eric

  	
   

  	
  6,000

  	
   

  
	
  Mougey,
  Julie A.

  	
   

  	
  1,000

  	
   

  
	
  Mullaney,
  Michael

  	
   

  	
  6,625

  	
   

  
	
  Murnick,
  Jonna

  	
   

  	
  24,583

  	
   

  
	
  Murray,
  Karen

  	
   

  	
  1,000

  	
   

  
	
  Myhera,
  Michael

  	
   

  	
  1,000

  	
   

  
	
  Newcomb,
  Aaron

  	
   

  	
  1,000

  	
   

  
	
  Omerso,
  John

  	
   

  	
  1,000

  	
   

  
	
  Opacak,
  Bruno

  	
   

  	
  1,750

  	
   

  
	
  Orlando,
  Anthony

  	
   

  	
  25,000

  	
   

  
	
  Osborne,
  Maxwell

  	
   

  	
  5,125

  	
   

  
	
  Osuna,
  Jesus

  	
   

  	
  4,500

  	
   

  

 

 

	
  Stock Options Outstanding:

  	
   

  	
   

  	
   

  
	
  Overton,
  Jerry Michael

  	
   

  	
  12,000

  	
   

  
	
  Pace,
  Darryl

  	
   

  	
  250

  	
   

  
	
  Parkash,
  Ravi

  	
   

  	
  1,000

  	
   

  
	
  Pasas,
  John

  	
   

  	
  —

  	
   

  
	
  Paschal,
  David

  	
   

  	
  1,000

  	
   

  
	
  Passalacqua,
  Sergio

  	
   

  	
  3,373

  	
   

  
	
  Patel,
  Anshuman

  	
   

  	
  1,000

  	
   

  
	
  Penny,
  Paul

  	
   

  	
  50,000

  	
   

  
	
  Peoples,
  Shaun

  	
   

  	
  —

  	
   

  
	
  Peterson,
  Karlis

  	
   

  	
  9,830

  	
   

  
	
  Petty,
  Kenneth

  	
   

  	
  2,250

  	
   

  
	
  Pfitzner,
  Deborah

  	
   

  	
  1,000

  	
   

  
	
  Phillips,
  Randal

  	
   

  	
  1,000

  	
   

  
	
  Piccicuto,
  Phillip J.

  	
   

  	
  6,000

  	
   

  
	
  Pischke,
  Kenneth

  	
   

  	
  1,000

  	
   

  
	
  Plantier,
  William S.

  	
   

  	
  1,000

  	
   

  
	
  Poindexter,
  Kevin

  	
   

  	
  1,000

  	
   

  
	
  Potisek,
  Martin

  	
   

  	
  11,500

  	
   

  
	
  Prather,
  Deborah

  	
   

  	
  1,583

  	
   

  
	
  Price,
  Charlotte

  	
   

  	
  10,000

  	
   

  
	
  Price,
  Nancy

  	
   

  	
  1,000

  	
   

  
	
  Querusio,
  James

  	
   

  	
  250

  	
   

  
	
  Randall,
  James R.

  	
   

  	
  16,000

  	
   

  
	
  Randolph,
  Gregory

  	
   

  	
  45,000

  	
   

  
	
  Raphael,
  Guy

  	
   

  	
  10,000

  	
   

  
	
  Rapp,
  Gary

  	
   

  	
  1,000

  	
   

  
	
  Reeves,
  James R.

  	
   

  	
  23,000

  	
   

  
	
  Regittko,
  Bruce

  	
   

  	
  5,500

  	
   

  
	
  Rhodes,
  Earlene

  	
   

  	
  20,000

  	
   

  
	
  Roach,
  Kimberly J.

  	
   

  	
  1,000

  	
   

  
	
  Robinson,
  Randall

  	
   

  	
  750

  	
   

  
	
  Rosa,
  Marlene

  	
   

  	
  1,583

  	
   

  
	
  Royals,
  Patrick T.

  	
   

  	
  708

  	
   

  
	
  Rubins,
  Pam

  	
   

  	
  1,000

  	
   

  
	
  Ryan,
  Nancy J.

  	
   

  	
  1,000

  	
   

  
	
  Sadler-McClain,
  Sonya

  	
   

  	
  500

  	
   

  
	
  Saia,
  Teresa

  	
   

  	
  755

  	
   

  
	
  Samuel,
  John

  	
   

  	
  1,000

  	
   

  
	
  Schafer,
  Raymond

  	
   

  	
  1,000

  	
   

  
	
  Seale,
  David R.

  	
   

  	
  2,000

  	
   

  
	
  Seibert,
  Pamela

  	
   

  	
  2,250

  	
   

  
	
  Sellers,
  Thomas

  	
   

  	
  1,000

  	
   

  
	
  Semel,
  Gary R.

  	
   

  	
  1,000

  	
   

  
	
  Serban,
  John C. III

  	
   

  	
  667

  	
   

  
	
  Sharpe,
  Steven

  	
   

  	
  250

  	
   

  
	
  Sheffey,
  Steven

  	
   

  	
  3,000

  	
   

  
	
  Sheridan,
  Leo

  	
   

  	
  7,500

  	
   

  
	
  Sherman,
  Mark S.

  	
   

  	
  6,000

  	
   

  
	
  Shook,
  Will

  	
   

  	
  1,000,000

  	
   

  

 

 

	
  Stock Options Outstanding:

  	
   

  	
   

  	
   

  
	
  Silberman,
  Steven

  	
   

  	
  1,000

  	
   

  
	
  Silver,
  Fran A.

  	
   

  	
  4,750

  	
   

  
	
  Sitison,
  James A. III

  	
   

  	
  14,500

  	
   

  
	
  Sledge,
  Michael

  	
   

  	
  75,000

  	
   

  
	
  Slusher,
  Jennifer

  	
   

  	
  12,000

  	
   

  
	
  Smith,
  Charles S.

  	
   

  	
  1,000

  	
   

  
	
  Snyder,
  Garland

  	
   

  	
  16,000

  	
   

  
	
  Sodano,
  Marc

  	
   

  	
  4,000

  	
   

  
	
  Speakman,
  Toni

  	
   

  	
  4,000

  	
   

  
	
  Sproehnle,
  Paul

  	
   

  	
  4,750

  	
   

  
	
  Sproelich,
  Michael

  	
   

  	
  31,000

  	
   

  
	
  Stanton,
  Scott

  	
   

  	
  5,000

  	
   

  
	
  Stevens,
  Pamela

  	
   

  	
  2,500

  	
   

  
	
  Stup,
  Michael

  	
   

  	
  5,000

  	
   

  
	
  Sullivan,
  Jeffrey

  	
   

  	
  375

  	
   

  
	
  Ta,
  Nguyen

  	
   

  	
  19,473

  	
   

  
	
  Tabron,
  Debra

  	
   

  	
  1,000

  	
   

  
	
  Tanner,
  James B.

  	
   

  	
  1,000

  	
   

  
	
  Taylor,
  Gregory S.

  	
   

  	
  4,000

  	
   

  
	
  Teixeira,
  Orlando

  	
   

  	
  1,833

  	
   

  
	
  Terrell,
  Kelvin

  	
   

  	
  667

  	
   

  
	
  Thompson,
  Dean

  	
   

  	
  7,500

  	
   

  
	
  Tinsley,
  Scott

  	
   

  	
  10,000

  	
   

  
	
  Todd,
  Joseph M.

  	
   

  	
  4,500

  	
   

  
	
  Togher,
  James

  	
   

  	
  100,000

  	
   

  
	
  Touchton,
  Christopher A.

  	
   

  	
  1,000

  	
   

  
	
  Turnburke,
  John

  	
   

  	
  55,000

  	
   

  
	
  Unrue,
  Terry

  	
   

  	
  1,000

  	
   

  
	
  Valentine,
  Robert

  	
   

  	
  1,333

  	
   

  
	
  Valido,
  Louis

  	
   

  	
  1,000

  	
   

  
	
  Valis,
  Kenneth

  	
   

  	
  2,564

  	
   

  
	
  Vogt,
  Michael

  	
   

  	
  40,000

  	
   

  
	
  Vucish,
  Paul

  	
   

  	
  375

  	
   

  
	
  Wade,
  Carol

  	
   

  	
  3,000

  	
   

  
	
  Wagg,
  Pamela

  	
   

  	
  4,000

  	
   

  
	
  Wagner,
  Jean

  	
   

  	
  250

  	
   

  
	
  Wallace,
  Donald

  	
   

  	
  2,916

  	
   

  
	
  Ward,
  Brian M.

  	
   

  	
  4,000

  	
   

  
	
  Ward,
  William R.

  	
   

  	
  1,000

  	
   

  
	
  Watts,
  Scott

  	
   

  	
  1,000

  	
   

  
	
  Waugh,
  Stephen

  	
   

  	
  5,000

  	
   

  
	
  Weaver,
  Paul G.

  	
   

  	
  4,000

  	
   

  
	
  West,
  Neil

  	
   

  	
  1,000

  	
   

  
	
  Whitaker,
  Lee A.

  	
   

  	
  12,000

  	
   

  
	
  White,
  Elizabeth

  	
   

  	
  1,000

  	
   

  
	
  White,
  Marc

  	
   

  	
  1,000

  	
   

  
	
  White,
  Richard

  	
   

  	
  6,500

  	
   

  
	
  Wilder,
  Richard

  	
   

  	
  1,000

  	
   

  
	
  Wilkinson,
  Mark

  	
   

  	
  1,000

  	
   

  

 

 

	
  Stock Options Outstanding:

  	
   

  	
   

  	
   

  
	
  Williams,
  Henry F.

  	
   

  	
  3,500

  	
   

  
	
  Williams,
  Jean

  	
   

  	
  5,500

  	
   

  
	
  Wilson,
  James P.

  	
   

  	
  14,000

  	
   

  
	
  Winslow,
  Anthony

  	
   

  	
  250

  	
   

  
	
  Winton,
  James

  	
   

  	
  4,000

  	
   

  
	
  Winton,
  William

  	
   

  	
  3,373

  	
   

  
	
  Witek,
  Patricia

  	
   

  	
  500

  	
   

  
	
  Womack,
  Christopher E.

  	
   

  	
  3,000

  	
   

  
	
  Wonycott,
  Ann

  	
   

  	
  2,750

  	
   

  
	
  Woods,
  Steven

  	
   

  	
  4,000

  	
   

  
	
  Wortherly,
  Clemon R.

  	
   

  	
  1,000

  	
   

  
	
  Wotorson,
  Cletus

  	
   

  	
  250

  	
   

  
	
  Zinn,
  Jennifer

  	
   

  	
  5,000

  	
   

  
	
  Total Options

  	
   

  	
  3,203,912

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TAG Building Contingency Options

  	
   

  	
  419,246

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Warrants:

  	
   

  	
   

  	
   

  
	
  GE -
  Promissory Note

  	
   

  	
  1,799,831

  	
   

  
	
  GE -
  CIT Note

  	
   

  	
  1,619,831

  	
   

  
	
  Total Warrants

  	
   

  	
  3,419,662

  	
   

  

 

 

SCHEDULE
11.a.

 

Indebtedness to Shareholders of Strategic

 

1.                          First
Amendment and Restatement of Promissory Note dated April 2, 2001 by Strategic,
as borrower, in favor of Michael G. Shook in the principal amount of Five
Hundred Thousand Dollars ($500,000). Balance is $300,000.00 since October 2001
with GE Access permission. Strategic is making interest payments (approx.
$1200/mo) to Wachovia Bank. GE Access forebears these payments to Wachovia on
the AP Cash Request (comments note “M Shook Loan”). Strategic intends to
continue to pay such interest payments going forward.

 

2.                          First
Amendment and Restatement of Promissory Note dated April 2, 2001 by Strategic,
as borrower, in favor of William M. Shook in the principal amount of Two
Hundred Fifty Thousand Dollars ($250,000). Balance as of 3/7/05 is $72,419.10
per Wachovia statement Strategic is making principal and interest (approx
$1100/mo principal and $335/mo interest) to Wachovia Bank. GE Access forebears
these payments to Wachovia on the AP Cash Request (comments note “W Shook Loan”).
Provided, however, Strategic intends to continue to pay interest payments only
going forward.

 

 

SCHEDULE
11.e.

 

Certain Outstanding Loans of Strategic

 

1.                          Loan
Agreement dated as of April 17, 1998, by and between Strategic, as lender, and
William M. Shook, as borrower, in the aggregate principal amount of Two Hundred
Thousand Dollars ($200,000).

 

2.                          Loan
Agreement dated as of April 17, 1998, by and between Strategic, as lender and
Michael G. Shook, as borrower, in the aggregate principal amount of One Million
Dollars ($1,000,000).

 

3.                          Revolving
Travel Advance to Steve Jones for Three Thousand Dollars ($3,000).

 

 

SCHEDULE
13.1

 

Judgments

 

None

 

 

FIRST AMENDMENT TO

AMENDED AND RESTATED

REFINANCING AGREEMENT

 

THIS
FIRST AMENDMENT TO AMENDED AND RESTATED REFINANCING AGREEMENT
(the “Amendment”), dated as of this 22, day of June, 2006, is made by
and between

 

STRATEGIC
TECHNOLOGIES, INC., a North Carolina corporation (“Strategic”);
and

 

MRA
SYSTEMS, INC. D/B/A ACCESS DISTRIBUTION, a Delaware
corporation (“Access”),

 

to the Amended and
Restated Refinancing Agreement, dated as of May 20, 2005 (as amended, modified,
restated or supplemented from time to time, the “Agreement”), between
Strategic and Access. All capitalized terms used herein without definition
shall have the meanings ascribed to such terms in the Agreement.

 

RECITALS

 

A.       The Agreement contains
various agreements between Strategic and Access regarding indebtedness owing by
Strategic to Access.

 

B.        Various Defaults exist
under the Agreement as a result of Strategic failing to achieve certain
financial covenants contained in the Agreement.

 

C.        Strategic has requested
that Access waive the existing Defaults, and Access has agreed to such requests
pursuant to the terms and conditions described in this Amendment.

 

STATEMENT OF AGREEMENT

 

NOW, THEREFORE, in
consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which are hereby expressly acknowledged,
Strategic and Access hereby agree as follows:

 

ARTICLE I

 

DEFAULT WAIVER

 

On October 13,
2005, October 31, 2005 and January 25, 2006, Access sent Strategic letters
notifying Strategic of the existence of various Defaults under the Agreement
(the “Existing Defaults”). Effective as of the date hereof, Access
hereby waives the Existing Defaults. Nothing contained herein shall constitute
a waiver of any other Default heretofore or hereafter existing under the
Agreement or continued compliance by Strategic with the terms of the Agreement,
as amended by this Amendment.

 

 

ARTICLE II

 

AMENDMENTS TO AGREEMENT

 

The Agreement is
hereby amended as follows:

 

2.1       Definitions. Section 1 of the Agreement is amended as follows:

 

2.1.1    The following new defined terms are added in
their proper alphabetical sequence:

 

“Net Trade Debt” shall mean, at any time of
determination, the amount of Trade Debt at such time less the expected cost to
Strategic at such time of future services to be rendered by Access to Strategic
in respect of products and services already sold by Access to Strategic at such
time.

 

“Positive Excess Cash Flow Quarter” shall mean any period of three consecutive
months ending on June 30, 2006 and the last day of each third month thereafter
for which Strategy’s monthly financial statements evidence positive Excess Cash
Flow.

 

2.1.2    The definition of “Approved Projections” is
amended by adding the following sentence to the end thereof: “The Approved
Projections for Strategic’s fiscal years 2006-2011 are attached hereto as
Exhibit F.”

 

2.2       Required Monthly Payment. Notwithstanding anything that may appear in
Section 6.a. of the Agreement to the contrary, the payments required to be made
by Strategic to Access pursuant to Section 6.a. of the Agreement for each month
in the 2006 calendar year shall be the amounts set forth in the following table
for the month corresponding thereto:

 

	
  Amount

  	
   

  	
  Month(s)

  
	
  Accrued
  interest only for such months on the unpaid principal amount of the Notes and
  the unpaid amount of Past Due Trade Debt

  	
   

  	
  January,
  February and March

  
	
   

  	
   

  	
   

  
	
  An
  amount equal to the sum of (a) accrued interest for such months on the unpaid
  principal amount of the Notes and the unpaid amount of Past Due Trade Debt plus
  (b) $23,000

  	
   

  	
  April,
  May and June

  

 

2

 

	
  Amount

  	
   

  	
  Month(s)

  
	
  An amount equal
  to the sum of (a) accrued interest for such months on the unpaid principal
  amount of the Notes and the unpaid amount of Past Due Trade Debt plus
  (b) $70,000

  	
   

  	
  July, August and September

  
	
   

  	
   

  	
   

  
	
  An amount equal
  to the sum of (a) accrued interest for such months on the unpaid principal
  amount of the Notes and the unpaid amount of Past Due Trade Debt plus
  (b) $85,000

  	
   

  	
  October, November and December

  

 

Commencing in
January, 2007, and continuing thereafter, the required monthly payments
pursuant to Section 6.a. of the Agreement shall be as described in Section 6.a.
of the Agreement for such months.

 

2.3       Excess Cash Flow Recapture. Section 6.d. of the Agreement is amended in
its entirety to read as follows:

 

“d.       Excess Cash Flow Recapture.

 

(i)        On the date that Access receives Strategic’s
financial statements for a Positive Excess Cash Flow Quarter, Strategic shall
(x) pay to Access an amount equal to 50% of positive Excess Cash Flow for such
Positive Excess Cash Flow Quarter, which amount shall be applied to the
Indebtedness in such order as Access shall elect in its discretion, and (y)
retain in escrow for Access the remaining 50% of positive Excess Cash Flow for
such Positive Excess Cash Flow Quarter (the “Reserve Amount”).

 

(ii)       On the
date that Access receives Strategic’s financial statements for a Positive
Excess Cash Flow Quarter that immediately follows a Positive Excess Cash Flow
Quarter, then, in addition to the amount required to be paid in accordance with
the preceding clause (i), Strategic shall pay to Access the Reserve Amount from
the immediately preceding Positive Excess Cash Flow Quarter, which amount shall
be applied to the Indebtedness in such order as Access shall elect in its
discretion.

 

(iii)      In the
event that Strategic experiences negative Excess Cash Flow during any quarter
that immediately follows a Positive Excess Cash Flow Quarter, then Strategic
shall (x) be entitled to release from escrow and permanently retain the portion
of the Reserve Amount from the immediately preceding Positive Excess Cash Flow
Quarter that is equal to the dollar amount of the negative Excess Cash Flow in
such quarter and (y) at the end of such quarter pay to Access the balance of
such Reserve Amount, if any, which amount shall be applied to the Indebtedness
in such order as Access shall elect in its discretion.

 

3

 

2.4       Performance Fee. A new Section 6.g. is added in its proper
alphabetical sequence as follows:

 

“g.       Performance Fee. In the event Strategic does not pay Access
at least $4,800,000 pursuant to Section 6.a. of the Agreement in the 2006
fiscal year, Strategic shall pay Access a fee of $37,500, which fee shall be
fully earned and non-refundable after payment and shall paid by adding the sum
thereof to the Amended and Restated November 2003 Note. Upon Access’s request,
Strategic shall execute an amendment and restatement of the Amended and Restated
November 2003 Note to reflect the payment of such fee, which amendment and
restatement shall constitute the “Amended and Restated November 2003 Note” for
all purposes in the Agreement and the Loan Papers.”

 

2.5       Covenants Concerning Cary Real Property. Section 8.m. of the Agreement is amended by
adding a new clause (iv) thereto in its property numerical sequence as follows:

 

“(iv)        By no later than March 31, 2007, Strategic will sell its real property
and improvements located at 301 Gregson Street, Cary, North Carolina and the
unimproved real property located adjacent thereto (collectively, the “Real
Property”) for a total cash purchase price that is either (a) at least
equal to the fair market value of such Real Property determined by the
appraisal of such Real Property previously delivered to Access, dated August 9,
2005, or (b) acceptable to Access if less than the purchase price described in
the preceding clause (a); provided, however, in the event EBITDA
for the 2006 fiscal year is $4,800,000 or greater, the above deadline for sale
of the Real Property shall be extended to June 30, 2007.”

 

2.6       Fixed Charge Coverage Ratio. Section 10.a. of the Agreement is amended,
in its entirety to read as follows:

 

“a.       Fixed Charge Coverage Ratio. Achieve a Fixed Charge Coverage Ratio of not
less than the ratio shown in the table below for the period corresponding
thereto:

 

	
  Ratio

  	
   

  	
  Period

  
	
  1.0:1.0

  	
   

  	
  First fiscal quarter in the 2006 fiscal year

  
	
   

  	
   

  	
   

  
	
  1.0:1.0

  	
   

  	
  Six months ended on the last day of each of the
  second, third and fourth fiscal quarters in the 2006 fiscal year and on the
  last day of each, fiscal quarter in the 2007 fiscal year

  
	
   

  	
   

  	
   

  
	
  1.15:1.0

  	
   

  	
  Six months ended on the last day of each fiscal
  quarter in the 2008 fiscal year

  
	
   

  	
   

  	
   

  
	
  1.2:1.0

  	
   

  	
  Six months ended on the last day of each fiscal
  quarter in the 2009 fiscal year”

  

 

4

 

2.7       Capital Expenditures.
Section 10.b. of the Agreement is amended in its entirety to read as follows:

 

“b.       Capital Expenditures.
Not make aggregate Capital Expenditures in any fiscal year of Strategic in
excess of $550,000; provided, however, the following Capital Expenditures shall
not be taken into account in applying the foregoing limitation: (x) Capital
Expenditures made by Strategic for the purchase of a new telephone system
(costing approximately $500,000); (y) Capital Expenditures made by Strategic
with the proceeds of marketing development funds; and (z) Capital Expenditures
of up to $285,000 made by Strategic for the purpose of repairing the roof on
Strategy’s real property located at 301 Gregson Street, Cary, North Carolina
and replacing air conditioning and air handling units at such location.”

 

2.8       Quarterly Revenue.
Section 10.c. of the Agreement is amended in its entirety to read as follows:

 

“c.       Quarterly Revenue.
Beginning with the fiscal quarter ending March 31, 2006, achieve for each
fiscal quarter of Strategic gross revenue (as set forth on Strategic’s
Financial Statements and schedules) in such fiscal quarter at least equal to
(i) 75% of the Approved Projections of revenue provided to Access for such
fiscal quarter for Strategic’s combined hardware and software business, (ii)
75% of the Approved Projections of revenue provided to Access for such fiscal
quarter for Strategic’s maintenance manager businesses, and (iii) 75% of the
Approved Projections of revenue provided to Access for such fiscal quarter for
Strategic’s business other than its hardware, software and maintenance manager
business.”

 

2.9       Total Trade Debt to
Accounts Receivable. A new Section 10.e. is added in its proper
alphabetical sequence as follows:

 

“e.       Net Trade Debt to
Accounts Receivable. Not permit (a) Net Trade Debt at any time to be more
than (b) 180% of Strategic’s gross accounts receivable at such time.”

 

2.10     Debt. Section 11.a. of
the Agreement is amended by deleting clause (iii) therefrom and by substituting
the following in lieu thereof:

 

“(iii)    debt outstanding on the date
hereof to BB&T and additional debt to BB&T in the amount of up to
$285,000 incurred on or about the date of the First Amendment to this Agreement
for the purpose of repairing the roof on Strategic’s real property located at
301 Gregson Street, Cary, North Carolina and replacing air conditioning and air
handling units at such location;”.

 

2.11     Past Due Trade Debt. A
new Section 11.1. of the Agreement is added in its proper alphabetical sequence
as follows:

 

“I.        Past Due Trade Debt.
Have Past Due Trade Debt in excess of $13,000,000 at any time.”

 

2.12     Exhibits. Exhibit F
attached hereto is made Exhibit F to the Agreement.

 

5

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Strategic hereby
represents and warrants to Access that:

 

3.1       Compliance With the
Agreement. After giving effect to this Amendment, Strategic is in
compliance with all of the terms and provisions set forth in the Agreement and
the other Loan Papers to be observed or performed by Strategic.

 

3.2       Representations in
the Agreement. The representations and warranties of Strategic set forth in
the Agreement and the other Loan Papers to which Strategic is a party are true
and correct in all material respects except to the extent that such
representations and warranties relate solely to or are specifically expressed
as of a particular date or period which is past or expired as of the date
hereof.

 

3.3       No Default. After
giving effect to this Amendment, no Default exists.

 

ARTICLE IV

 

MODIFICATION OF LOAN PAPERS; CONDITIONS PRECEDENT

 

4.1       Loan Papers. The
Agreement and the other Loan Papers are amended to provide that any reference
therein to the Agreement shall mean, unless otherwise specifically provided,
the Agreement as amended hereby, and as further amended, restated, supplemented
or modified from time to time.

 

4.2       Conditions Precedent.
This Amendment shall, become effective and be deemed effective as of the date
hereof upon the satisfaction or waiver by Access of the following conditions
precedent:

 

(a)       Receipt by Access of this
Amendment, duly executed by Strategic and the Guarantors;

 

(b)       The payment by Strategic of
a $37,500 closing fee, which fee shall be fully earned and non-refundable upon
payment and shall paid by adding the sum thereof to the Amended and Restated
November 2003 Note;

 

(c)       Receipt by Access of an
amendment and restatement of the Amended and Restated November 2003 Note in the
form attached hereto as Exhibit A,
which amendment and restatement shall constitute the “Amended and Restated
November 2003 Note” for all purposes in the Agreement and the Loan Papers; and

 

(d)       Receipt by Access of an
amendment to the Warrant to Purchase Common Stock of Strategic Technologies,
Inc., dated May 20, 2005, executed by Strategic and accepted by Access, in form
and content satisfactory to Access to reduce the number of shares described in
Section 19 thereof.

 

ARTICLE V

 

GENERAL

 

5.1       Full Force and Effect.
As expressly amended hereby, the Agreement and the other Loan Papers shall
continue in full force and effect in accordance with the provisions thereof. As
used in the Agreement and the other Loan Papers, “hereinafter”, “hereto”, “hereof”,
or words of similar import, shall,

 

6

 

unless the context
otherwise requires, mean the Agreement or the other Loan Papers, as the case
may be, as amended by this Amendment.

 

5.2       Applicable Law. This
Amendment shall be governed by and construed in accordance with the internal
laws and judicial decisions of the State of North Carolina.

 

5.3       Counterparts. This
Amendment may be executed in one or more counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute
but one and the same instrument.

 

5.4       Further Assurances.
Strategic shall execute and deliver to Access such documents, certificates and
opinions as Access may reasonably request to effect the amendments contemplated
by this Amendment.

 

5.5       Headings. The
headings of this Amendment are for the purpose of reference only and shall not
effect the construction of this Amendment.

 

5.6       Expenses. Strategic
shall reimburse Access for Access’s legal fees and expenses incurred in
connection with the preparation, negotiation, execution and delivery of this
Amendment and all other agreements and documents contemplated hereby.

 

5.7       Waiver of Jury Trial.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, STRATEGIC AND ACCESS EACH
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AMENDMENT, THE
AGREEMENT OR THE OTHER LOAN PAPERS OR THE TRANSACTIONS RELATED HERETO PR
THERETO.

 

7

 

IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be executed and
delivered by their duly authorized officers to be effective on the day and year
first above written.

 

	
   

  	
   

  	
  STRATEGIC:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STRATEGIC
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael G. Shook

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Michael
  G. Shook

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
								

 

 

	
   

  	
   

  	
  ACCESS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MRA
  SYSTEMS, INC. dba ACCESS 

  DISTRIBUTION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Stephen
  L. Quick

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Stephen
  L. Quick

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  SR.
  DIRECTOR

  	
   

  
								

 

[signatures
continued on next page]

 

8

 

The Guarantors
hereby join in the execution of this Amendment for the purposes of consenting
thereto and reaffirming the continuing validity and enforceability of the
personal guaranty agreements executed by each of them on or about April 9,
2002, as from time to time amended, in accordance with their respective terms.

 

	
   

  	
   

  	
   

  	
  /s/ Michael G. Shook

  	
   

  
	
   

  	
   

  	
   

  	
  Michael G. Shook

  	
   

  

 

 

	
   

  	
   

  	
   

  	
  /s/ William M Shook

  	
   

  
	
   

  	
   

  	
   

  	
  William M. Shook

  	
   

  

 

 

	
   

  	
   

  	
   

  	
  /s/ Irvin Miglietta

  	
   

  
	
   

  	
   

  	
   

  	
  Irvin Miglietta

  	
   

  

 

9

 

Exhibit A

 

Form of Amended and Restated November 2003 Note

 

AMENDED AND RESTATED

PROMISSORY NOTE

 

	
  $5,598,500

  	
   

  	
  June [22],  2006

  

 

For value received,
Strategic Technologies, Inc. (“Maker”) promises to pay to the order of MRA
Systems, Inc. dba Access Distribution (“Holder”) via wire transfer to AT
Bankers Trust, ABA #021001033, Acct. #50261567, or at such other place or account
as designated by Holder in writing to Maker, the principal sum of Five Million
Five Hundred Ninety-Eight Thousand Five Hundred and No/100 Dollars
($5,598,500), from the date hereof. Interest on unpaid balances of principal
from the date hereof shall accrue at a fixed rate of twelve percent (12%) per
annum.

 

Payments of principal and
interest under this Note shall be made in accordance with the Amended and
Restated Refinancing Agreement, dated the date hereof, between Maker and Holder
(as from time to time amended, modified, supplemented or restated, the “Agreement”),
the terms of which are incorporated herein for all purposes. All outstanding
principal, and accrued and unpaid interest, which is not paid earlier as set
forth herein, shall be due and payable on May 1, 2010.

 

This Note is secured by a
blanket lien on all assets of Maker pursuant to that certain Amended and
Restated Security Agreement between Maker and Holder dated as of July 31, 2002,
as amended, Financing Agreement dated as of October 17, 2001 between The CIT
Group/Business Credit Inc. (“CIT”) and Strategic, which interest of CIT was
assigned to Holder on April 12, 2002 and North Carolina Deed of Trust executed
by Maker for the benefit of Holder dated June 3, 2003, as amended.

 

This
Note is a modification, restatement and consolidation of that certain amended
and restated promissory note executed by Maker to Holder dated May 20, 2005 in
the original principal amount of $5,561,000.

 

Upon a Default, as that
term is defined in the Agreement, then the holder of this Note shall have the
right and option, without notice or demand, to declare the unpaid balance of
principal and accrued interest on this Note at once due and payable.

 

Prepayment.
This Note, at the option of Maker, may be prepaid in whole or
in part at any time without additional interest or penalty, with any such
prepayment being applied first to principal in the inverse order of maturity,
and then applied to outstanding and unpaid interest.

 

Miscellaneous.

 

At any time, any deposit or
other indebtedness credited by or due from the Holder to Maker may be set off
against and applied in payment of any amounts due hereunder (the “Obligations”),
whether due or not, and such deposits or other indebtedness may at all times be
held and treated as collateral security for the payment of the Obligations.

 

The Maker of this Note
waives demand, presentment for payment, protest and notice of protest, and
non-payment. If this note is not paid when due, and is given to an attorney or
collection agency for collection, or suit filed thereon, Maker agrees to pay
all collection fees and expenses including but not

 

1

 

limited
to attorneys fees based upon customary hourly rates and not a statutorily
prescribed percentage of the debt collected.

 

This
promissory note shall be governed by and construed in accordance with the laws
of the State of North Carolina, without regard to its choice of law rules.

 

	
  Strategic Technologies, Inc.,

  a North Carolina corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Michael
  G. Shook, President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  301 Gregson Drive

  Cary, North Carolina 27511

  	
   

  	
   

  	
   

  
							

 

 

SUBSCRIBED AND SWORN to
before me this      day of June, 2006, in the County of
Wake, State of North
Carolina, by Michael G. Shook.

 

 

WITNESS my hand and
official seal.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My commission expires:

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

2

 

Exhibit F

 

Approved Projections for Strategic’s 

Fiscal Years 2006-2011

 

see attached.

 

 

Strategic
Technologies Inc.

PSL-5 Year Projection 

January 10, 2008

 

	
   

  	
   

  	
  Total
  2006

  	
   

  	
  2006

  Growth

  (w/o

  Wach)

  	
   

  	
  Total
  2007

  	
   

  	
  2007

  Growth

  	
   

  	
  Total
  2008

  	
   

  	
  2008

  Growth

  	
   

  	
  Total
  2009

  	
   

  	
  2009

  Growth

  	
   

  	
  Total
  2010

  	
   

  	
  2010

  Growth

  	
   

  	
  Total
  2011

  	
   

  	
  2011

  Growth

  	
   

  
	
  Revenues

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardware

  	
   

  	
  30,000,000

  	
   

  	
  21.8

  	
  %

  	
  33,000,000

  	
   

  	
  10.0

  	
  %

  	
  36,300,00

  	
   

  	
  10.0

  	
  %

  	
  39,830,000

  	
   

  	
  10.0

  	
  %

  	
  43,923,000

  	
   

  	
  10.0

  	
  %

  	
  48,315,300

  	
   

  	
  10.0

  	
  %

  
	
  Software

  	
   

  	
  10,543,553

  	
   

  	
  8.0

  	
  %

  	
  11,914,221

  	
   

  	
  13.0

  	
  %

  	
  13,463,069

  	
   

  	
  13.0

  	
  %

  	
  15,213,268

  	
   

  	
  13.0

  	
  %

  	
  17,100,693

  	
   

  	
  13.0

  	
  %

  	
  19,425,822

  	
   

  	
  13.0

  	
  %

  
	
  Maint. Agent

  	
   

  	
  7,000,633

  	
   

  	
  15.0

  	
  %

  	
  7,350,665

  	
   

  	
  5.0

  	
  %

  	
  7,718,198

  	
   

  	
  5.0

  	
  %

  	
  8,104,108

  	
   

  	
  5.0

  	
  %

  	
  8,509,213

  	
   

  	
  5.0

  	
  %

  	
  8,934,779

  	
   

  	
  5.0

  	
  %

  
	
  Maint Mgr

  	
   

  	
  24,519,353

  	
   

  	
  12.5

  	
  %

  	
  27,573,575

  	
   

  	
  12.0

  	
  %

  	
  30,882,516

  	
   

  	
  12.0

  	
  %

  	
  34,588,418

  	
   

  	
  12.0

  	
  %

  	
  38,738,029

  	
   

  	
  12.0

  	
  %

  	
  43,387,712

  	
   

  	
  12.0

  	
  %

  
	
  Managad Services

  	
   

  	
  1,380,505

  	
   

  	
  452.2

  	
  %

  	
  2,415,884

  	
   

  	
  75.0

  	
  %

  	
  4,227,797

  	
   

  	
  75.0

  	
  %

  	
  8,341,696

  	
   

  	
  50.0

  	
  %

  	
  7,927,119

  	
   

  	
  25.0

  	
  %

  	
  9,908,898

  	
   

  	
  25.0

  	
  %

  
	
  PS

  	
   

  	
  9,004,860

  	
   

  	
  23.1

  	
  %

  	
  10,355,589

  	
   

  	
  15.0

  	
  %

  	
  11,908,927

  	
   

  	
  15.0

  	
  %

  	
  13,695,260

  	
   

  	
  15.0

  	
  %

  	
  15,749,556

  	
   

  	
  15.0

  	
  %

  	
  18,111,990

  	
   

  	
  15.0

  	
  %

  
	
  OCS

  	
   

  	
  2,410,073

  	
   

  	
  0.1

  	
  %

  	
  2,771,584

  	
   

  	
  15.0

  	
  %

  	
  3,187,322

  	
   

  	
  15.0

  	
  %

  	
  3,666,420

  	
   

  	
  15.0

  	
  %

  	
  4,215,253

  	
   

  	
  15.0

  	
  %

  	
  4,847,518

  	
   

  	
  15.0

  	
  %

  
	
  TR

  	
   

  	
  1,802,316

  	
   

  	
  -27.6

  	
  %

  	
  1,892,431

  	
   

  	
  5.0

  	
  %

  	
  1,987,052

  	
   

  	
  5.0

  	
  %

  	
  2,088,408

  	
   

  	
  5.0

  	
  %

  	
  2,190,725

  	
   

  	
  5.0

  	
  %

  	
  2,300,261

  	
   

  	
  5.0

  	
  %

  
	
  Other

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Revenue

  	
   

  	
  86,761,297

  	
   

  	
  10.5

  	
  %

  	
  97,274,048

  	
   

  	
  12.1

  	
  %

  	
  109,674,881

  	
   

  	
  12.7

  	
  %

  	
  123,624,580

  	
   

  	
  12.7

  	
  %

  	
  138,444,968

  	
   

  	
  12.0

  	
  %

  	
  156,232,280

  	
   

  	
  12.1

  	
  %

  
	
  GM

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardware

  	
   

  	
  3,000,000

  	
   

  	
  10

  	
  %

  	
  3,300,000

  	
   

  	
  10.0

  	
  %

  	
  3,630,000

  	
   

  	
  10.0

  	
  %

  	
  3,993,000

  	
   

  	
  10.0

  	
  %

  	
  4,392,300

  	
   

  	
  10.0

  	
  %

  	
  4,831,630

  	
   

  	
  10.0

  	
  %

  
	
  Software

  	
   

  	
  1,581,534

  	
   

  	
  15

  	
  %

  	
  1,767,133

  	
   

  	
  15.0

  	
  %

  	
  2,019,480

  	
   

  	
  15.0

  	
  %

  	
  2,281,990

  	
   

  	
  15.0

  	
  %

  	
  2,578,649

  	
   

  	
  15.0

  	
  %

  	
  2,813,873

  	
   

  	
  15.0

  	
  %

  
	
  Maint Agent

  	
   

  	
  1,050,095

  	
   

  	
  15

  	
  %

  	
  1,102,600

  	
   

  	
  15.0

  	
  %

  	
  1,157,730

  	
   

  	
  15.0

  	
  %

  	
  1,216,616

  	
   

  	
  15.0

  	
  %

  	
  1,276,387

  	
   

  	
  15.0

  	
  %

  	
  1,340,217

  	
   

  	
  15.0

  	
  %

  
	
  Maint Mgr

  	
   

  	
  8,229,223

  	
   

  	
  33

  	
  %

  	
  9,039,313

  	
   

  	
  33.0

  	
  %

  	
  10,181,230

  	
   

  	
  33.0

  	
  %

  	
  11,414,178

  	
   

  	
  33.0

  	
  %

  	
  12,783,879

  	
   

  	
  33.0

  	
  %

  	
  14,317,045

  	
   

  	
  33.0

  	
  %

  
	
  Managed Services

  	
   

  	
  683,560

  	
   

  	
  42

  	
  %

  	
  990,512

  	
   

  	
  41.0

  	
  %

  	
  1,733,387

  	
   

  	
  41.0

  	
  %

  	
  2,600,095

  	
   

  	
  41.0

  	
  %

  	
  3,250,119

  	
   

  	
  41.0

  	
  %

  	
  4,062,648

  	
   

  	
  41.0

  	
  %

  
	
  PS

  	
   

  	
  3,625,817

  	
   

  	
  40

  	
  %

  	
  4,142,236

  	
   

  	
  40.0

  	
  %

  	
  4,763,671

  	
   

  	
  40.0

  	
  %

  	
  5,478,107

  	
   

  	
  40.0

  	
  %

  	
  6,299,823

  	
   

  	
  40.0

  	
  %

  	
  7,244,796

  	
   

  	
  40.0

  	
  %

  
	
  OCS

  	
   

  	
  795,324

  	
   

  	
  33

  	
  %

  	
  914,623

  	
   

  	
  33.0

  	
  %

  	
  1,051,816

  	
   

  	
  33.0

  	
  %

  	
  1,209,589

  	
   

  	
  33.0

  	
  %

  	
  1,391,027

  	
   

  	
  33.0

  	
  %

  	
  1,599,681

  	
   

  	
  33.0

  	
  %

  
	
  TR

  	
   

  	
  536,829

  	
   

  	
  30

  	
  %

  	
  643,426

  	
   

  	
  34.0

  	
  %

  	
  676,593

  	
   

  	
  34.0

  	
  %

  	
  709,378

  	
   

  	
  34.0

  	
  %

  	
  744,847

  	
   

  	
  34.0

  	
  %

  	
  732,089

  	
   

  	
  34.0

  	
  %

  
	
  Other

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RDF

  	
   

  	
  1,651,742

  	
   

  	
  5

  	
  %

  	
  2,245,711

  	
   

  	
  5.0

  	
  %

  	
  2,488,153

  	
   

  	
  5.0

  	
  %

  	
  2,767,163

  	
   

  	
  5.0

  	
  %

  	
  3,055,700

  	
   

  	
  5.0

  	
  %

  	
  3,387,056

  	
   

  	
  5.0

  	
  %

  
	
  Total GM

  	
   

  	
  21,053,124

  	
   

  	
  18.7

  	
  %

  	
  24,225,554

  	
   

  	
  15.1

  	
  %

  	
  27,710,966

  	
   

  	
  14.4

  	
  %

  	
  31,659,116

  	
   

  	
  14.2

  	
  %

  	
  35,772,740

  	
   

  	
  13.0

  	
  %

  	
  40,479,835

  	
   

  	
  13.2

  	
  %

  
	
   

  	
   

  	
  24.3

  	
  %

  	
   

  	
   

  	
  24.9

  	
  %

  	
   

  	
   

  	
  25.3

  	
  %

  	
   

  	
   

  	
  25.6

  	
  %

  	
   

  	
   

  	
  25.6

  	
  %

  	
   

  	
   

  	
  25.1

  	
  %

  	
   

  	
   

  
	
  SG&A

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Employee Comp/Benefits

  	
   

  	
  12,762,238

  	
   

  	
  -4

  	
  %

  	
  14,303,871

  	
   

  	
  12.1

  	
  %

  	
  15,429,861

  	
   

  	
  7.9

  	
  %

  	
  16,616,889

  	
   

  	
  7.7

  	
  %

  	
  17,465,114

  	
   

  	
  7.5

  	
  %

  	
  19,180,496

  	
   

  	
  7.4

  	
  %

  
	
  Employee Comp

  	
   

  	
  11,748,978

  	
   

  	
   

  	
   

  	
  12,817,089

  	
   

  	
   

  	
   

  	
  13,942,878

  	
   

  	
   

  	
   

  	
  15,129,027

  	
   

  	
   

  	
   

  	
  16.376,332

  	
   

  	
   

  	
   

  	
  17,693,713

  	
   

  	
   

  	
   

  
	
  Employer Taxes (5.4%)

  	
   

  	
  629,953

  	
   

  	
   

  	
   

  	
  692,123

  	
   

  	
   

  	
   

  	
  692,123

  	
   

  	
   

  	
   

  	
  692,123

  	
   

  	
   

  	
   

  	
  682,123

  	
   

  	
   

  	
   

  	
  692,123

  	
   

  	
   

  	
   

  
	
  Employes benefits (6.2%)

  	
   

  	
  733,200

  	
   

  	
   

  	
   

  	
  794,660

  	
   

  	
   

  	
   

  	
  794,660

  	
   

  	
   

  	
   

  	
  794,660

  	
   

  	
   

  	
   

  	
  794,660

  	
   

  	
   

  	
   

  	
  784,660

  	
   

  	
   

  	
   

  
	
  Salaries allocated

  	
   

  	
  (349,893

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other SG&A

  	
   

  	
  4,181,228

  	
   

  	
   

  	
   

  	
  4,599,351

  	
   

  	
  10.0

  	
  %

  	
  6,069,286

  	
   

  	
  10.0

  	
  %

  	
  8,566,214

  	
   

  	
  10.0

  	
  %

  	
  6,121,736

  	
   

  	
  10.0

  	
  %

  	
  6,733,310

  	
   

  	
  10.0

  	
  %

  
	
  Total SG&A

  	
   

  	
  16,943,466

  	
   

  	
  -32.1

  	
  %

  	
  18,903,222

  	
   

  	
  11.5

  	
  %

  	
  20,488,947

  	
   

  	
  8.4

  	
  %

  	
  22,181,024

  	
   

  	
  8.9

  	
  %

  	
  23,988,850

  	
   

  	
  8.1

  	
  %

  	
  25,814,405

  	
   

  	
  8.0

  	
  %

  
	
  SG&A as % of Revenue

  	
   

  	
  19.5

  	
  %

  	
   

  	
   

  	
  19.4

  	
  %

  	
   

  	
   

  	
  18.7

  	
  %

  	
   

  	
   

  	
  17.8

  	
  %

  	
   

  	
   

  	
  17.3

  	
  %

  	
   

  	
   

  	
  18.7

  	
  %

  	
   

  	
   

  
	
  EBITDA

  	
   

  	
  4,103,688

  	
   

  	
  878.7

  	
  %

  	
  5,322,332

  	
   

  	
   

  	
   

  	
  7,222,009

  	
   

  	
   

  	
   

  	
  9,478,092

  	
   

  	
   

  	
   

  	
  11,735,888

  	
   

  	
   

  	
   

  	
  14,565,430

  	
   

  	
   

  	
   

  

 

 

SECOND AMENDMENT TO

AMENDED AND RESTATED

REFINANCING AGREEMENT

 

THIS
SECOND AMENDMENT TO AMENDED AND RESTATED REFINANCING AGREEMENT
(the “Amendment”), dated as of this 1st day of May, 2007, is made by and
between

 

STRATEGIC
TECHNOLOGIES, INC., a North Carolina corporation (“Strategic”);
and

 

AVNET,
INC. (successor by assignment to MRA Systems, Inc. d/b/a
Access Distribution), a Delaware corporation (“Avnet”),

 

to the Amended and Restated Refinancing Agreement, dated as of May 20,
2005 (as amended, modified, restated or supplemented from time to time, the “Agreement”),
between Strategic and Avnet. All capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the Agreement.

 

RECITALS

 

A.       The Agreement contains various agreements
between Strategic and Avnet regarding indebtedness owing by Strategic to Avnet.

 

B.        Strategic and Avnet have agreed to amend the
Agreement as set forth in this Amendment.

 

STATEMENT OF AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, Strategic and Avnet hereby agree as follows:

 

ARTICLE I

 

AMENDMENTS TO AGREEMENT

 

The Agreement is hereby amended as follows:

 

1.1       Interest. Sections 5.a., 5.b. and 5.c. of the Agreement are amended in their
entirety to read as follows:

 

“a.       Interest
- Consolidated Amended and Restated Note. Strategic shall pay interest on the Indebtedness evidenced by the
Consolidated Amended and Restated Note at a fixed rate of 8% per annum.

 

 

b.         Interest - Amended and
Restated November 2003 Note. Strategic shall pay interest on the
Indebtedness evidenced by the Amended and Restated November 2003 Note at a
fixed rate of 8% per annum.

 

c.         Interest - Past Due
Trade Debt. Strategic shall pay interest on all Past Due Trade Debt at a
fixed rate of 8% per annum; provided, however, Strategic shall
not be required to pay interest on Trade Debt evidenced by invoices with line
items identified to be a valid dispute agreed upon by Strategic and Avnet.
Strategic agrees to resolve with Avnet, in good faith and in a manner
consistent with past practices between Strategic and Avnet, disputes regarding
interest accrual on Trade Debt in connection with invoices generated by Avnet
prior to the delivery of products or service contracts to Strategic (or
Strategic’s customers, as is the appropriate case).”

 

1.2       Required Monthly Payment.
Sections 6.a. and 6.b. of the Agreement are amended in their entirety to read
as follows:

 

“a.       Required
Monthly Payment. Commencing
May 2, 2007 and continuing on the first day of each calendar month thereafter,
Strategic shall pay to Avnet an amount equal to three hundred thousand dollars
($300,000), with a final payment in full on May 1, 2010 of all unpaid principal
and interest on the Notes.

 

b.         Application of Required Monthly Payment The amount paid by Strategic to Avnet
pursuant to Section 6.a. of this Agreement shall be applied to the Indebtedness
as follows: first, to the payment of accrued interest; second, to the payment
of the principal amount of the Consolidated Amended and Restated Note on the
date such payment is made; and third, to the payment of the principal amount of
the Amended and Restated November 2003 Note on the date such payment is made.”

 

1.3       Covenants Concerning Cary Real Property. Section 8.m.(iv) of the Agreement is
amended in its entirety to read as follows:

 

“(iv)    By no later
than September 30, 2007, Strategic will sell its real property and improvements
located at 301 Gregson Street, Cary, North Carolina and the unimproved real
property located adjacent thereto (collectively, the “Real Property”)
for a total cash purchase price that is either (a) at least equal to the fair
market value of such Real Property determined by the appraisal of such Real
Property previously delivered to Avnet, dated August 9, 2005, or (b) acceptable
to Avnet if less than the fair market value of such Real Property determined by
the appraisal of such Real Property described in the preceding clause (a); provided,
however, in the event the accrued interest on and outstanding principal
balance of the Indebtedness evidenced by the Notes and the Indebtedness
consisting of Past Due Trade Debt is paid in full prior to August 31, 2007,
this covenant shall be null and void and of no further force and effect.”

 

2

 

1.4       Fixed Charge Coverage
Ratio. Section 10.a. of the Agreement is amended in its entirety, effective
as of March 31, 2007, to read as follows:

 

“a.       Fixed
Charge Coverage Ratio.
Achieve a Fixed Charge Coverage Ratio of not less than the ratio shown in the
table below for the period corresponding thereto:

 

	
  Ratio

  	
   

  	
  Period

  
	
  0.6:1.0

  	
   

  	
  Six months
  ended on the last day of the second, fiscal quarter in the 2007 fiscal year

  
	
   

  	
   

  	
   

  
	
  0.8:1.0

  	
   

  	
  Six months
  ended on the last day of the third fiscal quarter in the 2007 fiscal year

  
	
   

  	
   

  	
   

  
	
  1.0:1.0

  	
   

  	
  Six months
  ended on the last day of the fourth fiscal quarter in the 2007 fiscal year

  
	
   

  	
   

  	
   

  
	
  1.15:1.0

  	
   

  	
  Six months
  ended on the last day of each fiscal quarter in the 2008 fiscal year

  
	
   

  	
   

  	
   

  
	
  1.2:1.0

  	
   

  	
  Six months
  ended on the last day of each fiscal quarter in the 2009 fiscal year and each
  fiscal year thereafter

  

 

1.5       Capital Expenditures. Section l0.b. of the Agreement is amended
in its entirety to read as follows;

 

“b.       Capital
Expenditures. Not make
aggregate Capital Expenditures in the 2007 fiscal year in excess of $800,000
and in any fiscal year thereafter in excess of $550,000; provided, however,
the following Capital Expenditures shall not be taken into account in applying
the foregoing limitation: Capital Expenditures made by Strategic with the
proceeds of marketing development funds.”

 

3

 

1.6       Past Due Trade Debt.
Section 11.1. of the Agreement is amended in its entirety, effective as of
March 31, 2007, to read as follows:

 

“1.       Past
Due Trade Debt. Have Past
Due Trade Debt in excess of $14,000,000 at any time through June 30, 2007 and
$13,000,000 at any time thereafter.”

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES

 

Strategic hereby
represents and warrants to Avnet that:

 

2.1       Compliance with the
Agreement. As of the date of this Amendment, Strategic is in compliance
with all of the terms and provisions set forth in the Agreement and the other
Loan Papers to be observed or performed by Strategic.

 

2.2       Representations in the Agreement. The representations and warranties of
Strategic set forth in the Agreement and the other Loan Papers to which
Strategic is a party are true and correct in all material respects except to
the extent that such representations and warranties relate solely to or are
specifically expressed as of a particular date or period which is past or
expired as of the date hereof.

 

2.3       No Default. As of the date of this Amendment, no Default exists or is continuing.

 

ARTICLE III

 

MODIFICATION OF LOAN PAPERS; CONDITIONS PRECEDENT

 

3.1       References to Access. Effective December 31, 2006, MRA Systems,
Inc. d/b/a Access Distribution sold and assigned substantially all of its
assets to Avnet. All references in the Agreement and the other Loan Papers to “MRA
Systems, Inc. d/b/a Access Distribution” and “Access” shall hereafter mean and
be references to Avnet.

 

3.2       Loan Papers. The Agreement and the other Loan Papers are amended to provide that
any reference therein to the Agreement shall mean, unless otherwise
specifically provided, the Agreement as amended hereby, and as further amended,
restated, supplemented or modified from time to time.

 

3.3       Conditions Precedent. This Amendment shall become effective and
be deemed effective as of the date hereof upon the satisfaction or waiver by
Avnet of the following conditions precedent:

 

(a) Receipt by
Avnet of this Amendment, duly executed by Strategic;

 

4

 

(b)       Receipt by Avnet of an amendment to that
certain Consent, dated October 18, 2006, executed by Strategic and consented to
by Avnet (as amended, the “Consent”), in form and content satisfactory
to Avnet, pursuant to which the cap on professional fees paid by Strategic in
connection with the transactions contemplated by the Merger Documents (as
defined in the Consent) is increased to $1,000,000;

 

(c)       Receipt by Avnet of an amendment to that
certain Rescission Agreement, dated January 22, 2007, among Strategic, Avnet and
the other parties thereto (the “Rescission Agreement”), in form and
content satisfactory to Avnet, pursuant to which the deadline for consummation
of the IPO (as defined in the Rescission Agreement) is extended to August 31,
2007;

 

(d)       Receipt by Avnet of an amendment and
restatement of the Consolidated Amended and Restated Note in the form attached
hereto as Exhibit A, which
amendment and restatement shall constitute the “Consolidated Amended and
Restated Note” for all purposes in the Agreement and the Loan Papers; and

 

(e)       Receipt by Avnet of an amendment and
restatement of the Amended and Restated November 2003 Note in the form attached
hereto as Exhibit B, which
amendment and restatement shall constitute the “Amended and Restated November
2003 Note” for all purposes in the Agreement and the Loan Papers.

 

ARTICLE IV

 

GENERAL

 

4.1       Full Force and Effect. As expressly amended hereby, the Agreement
and the other Loan Papers shall continue in full force and effect in accordance
with the provisions thereof. As used in the Agreement and the other Loan
Papers, “hereinafter,” “hereto,” “hereof,” or words of similar import, shall,
unless the context otherwise requires, mean the Agreement or the other Loan
Papers, as the case may be, as amended by this Amendment.

 

4.2       Applicable Law. This Amendment shall be governed by and
construed in accordance with the internal laws and judicial decisions of the
State of North Carolina.

 

4.3       Counterparts. This Amendment may be executed in one or
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one and the same instrument.

 

4.4       Further Assurances. Strategic shall execute and deliver to
Avnet such documents, certificates and opinions as Avnet may reasonably request
to effect the amendments contemplated by this Amendment.

 

4.5       Headings. The headings of this Amendment are for the purpose of reference only
and shall not effect the construction of this Amendment.

 

5

 

4.6       Expenses. Strategic shall reimburse Avnet for Avnet’s legal fees and expenses
incurred in connection with the preparation, negotiation, execution and
delivery of this Amendment and all other agreements and documents contemplated
hereby.

 

4.7       Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, STRATEGIC AND AVNET EACH WAIVES THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
RELATED TO THIS AMENDMENT, THE AGREEMENT OR THE OTHER LOAN PAPERS OR THE
TRANSACTIONS RELATED HERETO OR THERETO.

 

[signatures
on next page]

 

6

 

IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be executed and
delivered by their duly authorized officers to be effective on the day and year
first above written.

 

	
   

  	
   

  	
  STRATEGIC:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STRATEGIC
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael G. Shook

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Michael
  G. Shook

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AVNET:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AVNET,
  INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  W. R. Crowell

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  W.
  R. CROWELL

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  VP
  & GFO

  	
   

  
								

 

 

[signatures
continued on next page]

 

[Second
Amendment to Amended and Restated Refinancing Agreement]

 

 

The Guarantors
hereby join in the execution of this Amendment for the purposes of consenting
thereto and reaffirming the continuing validity and enforceability of the
personal guaranty agreements executed by each of them on or about April 9,
2002, as from time to time amended, in accordance with their respective terms.

 

 

	
   

  	
   

  	
  /s/ Michael G. Shook

  	
   

  
	
   

  	
   

  	
  Michael G. Shook

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ William M. Shook

  	
   

  
	
   

  	
   

  	
  William M. Shook

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Irvin Miglietta

  	
   

  
	
   

  	
   

  	
  Irvin Miglietta

  	
   

  

 

 

[Consent
of Guarantors to Second Amendment

to Amended and Restated Refinancing Agreement]

 

 

Exhibit A

 

Form of Consolidated Amended and Restated Promissory
Note

 

CONSOLIDATED AMENDED AND RESTATED

PROMISSORY NOTE

 

	
  $10,387,648.54

  	
   

  	
  May       ,
  2007

  

 

For
value received, Strategic Technologies, Inc. (“Maker”) promises to pay to the
order of Avnet, Inc. (“Holder”) via wire transfer to JPMorgan Chase Bank, ABA
#021000021, Acct. #59-37116, or at such other place or account as designated by
Holder in writing to Maker, the principal sum of Ten Million Three Hundred
Eighty-Seven Thousand Six Hundred Forty-Eight and 54/100 Dollars
($10,387,648.54), from the date hereof. Interest on unpaid balances of
principal from the date hereof shall accrue at a fixed rate of eight percent
(8%) per annum.

 

Payments
of principal and interest under this Note shall be made in accordance with the
Amended and Restated Refinancing Agreement, dated May 20, 2005, between Maker
and . Holder (successor by assignment from MRA Systems, Inc. d/b/a Access
Distribution (“Access”)) (as from time to time amended, modified, supplemented
or restated, the “Agreement”), the terms of which are incorporated herein for
all purposes. All outstanding principal, and accrued and unpaid interest, which
is not paid earlier as set forth herein, shall be due and payable on May 1,
2010.

 

This
Note is secured by a blanket lien on all assets of Maker pursuant to that
certain Amended and Restated Security Agreement between Maker and Holder dated
as of July 31, 2002, as amended, Financing Agreement dated as of October 17,
2001 between The CIT Group/Business Credit, Inc. (“CIT”) and Strategic, which
interest of CIT was assigned to Holder on April 12, 2002 and North Carolina
Deed of Trust executed by Maker for the benefit of Holder dated June 3, 2003,
as amended, the right, title and interest to all of the foregoing security documents
having been assigned by Access to Holder.

 

This Note is a modification and restatement of that certain
amended and restated promissory note executed by Maker to Access dated May 20,
2005 in the original principal amount of $10,387,648.54, the right, title and
interest to which has been assigned by Access to Holder.

 

Upon
a Default, as that term is defined in the Agreement, then the holder of this
Note shall have the right and option, without notice or demand, to declare the
unpaid balance of principal and accrued interest on this Note at once due and
payable.

 

 

Prepayment. This Note, at the option of Maker, may be prepaid in whole or in part
at any time without additional interest or penalty, with any such prepayment
being applied first to principal in the inverse order of maturity, and then
applied to outstanding and unpaid interest.

 

Miscellaneous.

 

At
any time, any deposit or other indebtedness credited by or due from the Holder
to Maker may be set off against and applied in payment of any amounts due
hereunder (the “Obligations”), whether due or not, and such deposits or other
indebtedness may at all times be held and treated as collateral security for
the payment of the Obligations.

 

The
Maker of this Note waives demand, presentment for payment, protest and notice
of protest, and non-payment. If this note is not paid when due, and is given to
an attorney or collection agency for collection, or suit filed thereon, Maker
agrees to pay all collection fees and expenses including but not limited to attorneys
fees based upon customary hourly rates and not a statutorily prescribed
percentage of the debt collected.

 

This
promissory note shall be governed by and construed in accordance with the laws
of the State of North Carolina, without regard to its choice of law rules.

 

Strategic
Technologies, Inc.,

a North Carolina
corporation

 

 

	
  By:

  	
   

  	
  [EXHIBIT - DO NOT SIGN] 

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Michael G. Shook,
  President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  301 Gregson Drive

  Cary, North Carolina 27511

  	
   

  	
   

  	
   

  

 

 

SUBSCRIBED AND SWORN to
before me this            day
of May, 2007, in the County of Wake, State of North Carolina, by Michael G. Shook.

 

 

WITNESS my hand and
official seal.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My commission expires:

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

2

 

Exhibit B

 

Form of Amended and Restated November 2003 Note

 

AMENDED AND RESTATED

PROMISSORY NOTE

 

	
  $5,598,500

  	
   

  	
  May     ,
  2007

  

 

For
value received, Strategic Technologies, Inc. (“Maker”) promises to pay to the
order of Avnet, Inc. (“Holder”) via wire transfer to JPMorgan Chase Bank, ABA
#021000021, Acct. #59-37116, or at such other place or account as designated by
Holder in writing to Maker, the principal sum of Five Million Five Hundred
Ninety-Eight Thousand Five Hundred and No/100 Dollars ($5,598,500), from the
date hereof. Interest on unpaid balances of principal from the date hereof
shall accrue at a fixed rate of eight percent (8%) per annum.

 

Payments
of principal and interest under this Note shall be made in accordance with the
Amended and Restated Refinancing Agreement, dated May 20, 2005, between Maker
and Holder (successor by assignment from MRA Systems, Inc. d/b/a Access
Distribution (“Access”)) (as from time to time amended, modified, supplemented
or restated, the “Agreement”), the terms of which are incorporated herein for
all purposes. All outstanding principal, and accrued and unpaid interest, which
is not paid earlier as set forth herein, shall be due and payable on May 1,
2010.

 

This
Note is secured by a blanket lien on all assets of Maker pursuant to that
certain Amended and Restated Security Agreement between Maker and Holder dated
as of July 31, 2002, as amended, Financing Agreement dated as of October 17,
2001 between The CIT Group/Business Credit, Inc. (“CIT”) and Strategic, which
interest of CIT was assigned to Holder on April 12, 2002 and North Carolina
Deed of Trust executed by Maker for the benefit of Holder dated June 3, 2003,
as amended, the right, title and interest to all of the foregoing security
documents having been assigned by Access to Holder.

 

This Note is a modification and restatement of that certain
amended and restated promissory note executed by Maker to Holder dated June 22,
2006 in the original principal amount of $5,598,500, the right, title and
interest to which has been assigned by Access to Holder.

 

Upon
a Default, as that term is defined in the Agreement, then the holder of this
Note shall have the right and option, without notice or demand, to declare the
unpaid balance of principal and accrued interest on this Note at once due and
payable.

 

 

Prepayment. This Note, at the option of Maker, may be prepaid in whole or in part
at any time without additional interest or penalty, with any such prepayment
being applied first to principal in the inverse order of maturity, and then
applied to outstanding and unpaid interest.

 

Miscellaneous.

 

At any time, any deposit
or other indebtedness credited by or due from the Holder to Maker may be set
off against and applied in payment of any amounts due hereunder (the “Obligations”),
whether due or not, and such deposits or other indebtedness may at all times be
held and treated as collateral security for the payment of the Obligations.

 

The
Maker of this Note waives demand, presentment for payment, protest and notice
of protest, and non-payment. If this note is not paid when due, and is given to
an attorney or collection agency for collection, or suit filed thereon, Maker
agrees to pay all collection fees and expenses including but not limited to
attorneys fees based upon customary hourly rates and not a statutorily
prescribed percentage of the debt collected.

 

This
promissory note shall be governed by and construed in accordance with the laws
of the State of North Carolina, without regard to its choice of law rules.

 

Strategic Technologies, Inc.,

a North Carolina corporation

 

 

	
  By:

  	
   

  	
  [EXHIBIT - DO NOT SIGN] 

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Michael G. Shook,
  President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  301 Gregson Drive

  Cary, North Carolina 27511

  	
   

  	
   

  	
   

  

 

 

SUBSCRIBED AND SWORN to
before me this            day
of May, 2007, in the County of Wake, State of North Carolina, by Michael G. Shook.

 

 

WITNESS my hand and
official seal.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My commission expires:

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

2

 

STRATEGIC TECHNOLOGIES, INC.

301 Gregson Drive

Cary, North Carolina 27511

 

LETTER OF AGREEMENT

 

August 7, 2007

 

Avnet, Inc.

11300 Westmoor Circle

Westminster, Colorado 80021

 

Ladies and Gentlemen:

 

Reference
is made to that certain Amended and Restated Refinancing Agreement dated May
20, 2005 by and between Strategic Technologies, Inc. (“STI”) and Avnet, Inc.,
the successor to MRA Systems, Inc., dba Access Distribution (“Avnet”), as
amended by that First Amendment to Amended and Restated Refinancing Agreement
dated June 22, 2006 (the “First Amendment”), and that certain Second Amendment
to Amended and Restated Refinancing Agreement dated May 1, 2007 (the “Second
Amendment”) (as amended by the First Amendment and the Second Amendment, the
“Refinancing Agreement”). Capitalized terms used and not otherwise defined
herein will have the meanings set forth in the Refinancing Agreement.

 

STI
and Avnet are in agreement that they will enter into a Third Amendment to
Amended and Restated Refinancing Agreement (the “Third Amendment”) as promptly
as practicable, which Third Amendment will include the following terms and
conditions:

 

1.    Section 8.m.(iv) of the Refinancing
Agreement will be amended to provide that the sale of the Cary Real Property
will occur no later than March 31, 2008.

 

2.    The definition of Fixed Charge Coverage
Ratio will be amended to remove the reduction of capital expenditures from the
calculation of EBITDA and to exclude the non-cash purchase accounting
adjustment required to be made by STI relating to a reduction of deferred revenue.

 

3.    Section 10.a. of the Refinancing Agreement
will be amended by reducing the Fixed Coverage Ratio by 0.2 for each period
beginning with the six months ended on the last day of the third and fourth
fiscal quarters in the 2007 fiscal year, such that the ratio for such period will
be 0.6:1.0 and the ratio for the following period will be 0.8:1.0. The ratio
for the six months ended on the last day of the first and second fiscal
quarters of 2008 will be 1.0:1.0.

 

4.    Section 10.b. of the Refinancing Agreement
will be amended to provide that the maximum aggregate capital expenditures for
2007 will be increased to $875,000.

 

 

5.    Section 11.1 of the
Refinancing Agreement will be amended to provide that Past Due Trade Debt will
be measured using a rolling three-month average. The maximum amount of
outstanding Past Due Trade Debt based on such measurement through December 31,
2007 will be $15,000,000, and the maximum amount through June 30, 2008 will be
$14,000,000.

 

This Letter of Agreement is intended to be a binding on the parties,
but does not purport to include all of the essential terms of the Third
Amendment. It is the intention of the parties that they will be obligated to
prepare and execute the Third Amendment incorporating the agreed upon terms set
forth herein as promptly as practicable.

 

If the terms of our understanding regarding the Third Amendment have
been correctly set forth herein, please indicate your acceptance and agreement
to the terms hereof by signing and returning to us a copy of this Letter of
Agreement to the undersigned.

 

	
   

  	
  Yours very truly,

  
	
   

  	
   

  
	
   

  	
  STRATEGIC TECHNOLOGIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karen
  Bertaux

  	
   

  
	
   

  	
  Name:

  	
  Karen
  Bertaux

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
					

 

 

ACCEPTED AND AGREED, THIS 

7TH DAY OF AUGUST, 2007.

 

AVNET,
INC.

 

 

	
  By:

  	
  /s/ Amy
  Wingate

  	
   

  
	
  Name:

  	
  Amy Wingate

  	
   

  
	
  Title:

  	
  Director

  	
   

  
					

 

THIRD AMENDMENT TO

AMENDED AND RESTATED

REFINANCING AGREEMENT

THIS THIRD AMENDMENT TO AMENDED AND RESTATED
REFINANCING AGREEMENT (the “Amendment”), dated
as of the 10th day of September, 2007, is made by and between

STRATEGIC TECHNOLOGIES, INC.,
a North Carolina corporation (“Strategic”); and

AVNET, INC.
(successor by assignment to MRA Systems, Inc. d/b/a Access Distribution), a
Delaware corporation (“Avnet”),

to the Amended and Restated Refinancing Agreement, dated as of May 20,
2005 (as amended, modified, restated or supplemented from time to time, the “Agreement”),
between Strategic and Avnet. All capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the Agreement.

RECITALS

A.   The Agreement contains
various agreements between Strategic and Avnet regarding indebtedness owing by
Strategic to Avnet.

B.    Strategic and Avnet have
agreed to amend the Agreement as set forth in this Amendment.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, Strategic and Avnet hereby agree as follows:

[remainder of page intentionally left blank]

 

ARTICLE I

AMENDMENTS TO AGREEMENT

The Agreement is hereby amended as follows:

1.1  Definitions. Section 1
of the Agreement is amended as follows:

(a)        The definition of “EBITDA”
is amended in its entirety to read as follows:

“EBITDA”
shall mean, for any period, the sum of (a) the Net Income (Loss) of Strategic
(and, if Strategic has any subsidiaries, its subsidiaries in which case on a
consolidated basis), for such period, plus (b) interest expense, income
tax expense, amortization expense, depreciation expense and extraordinary
losses and minus extraordinary gains, in each case, of Strategic (and, if
Strategic has any subsidiaries, its subsidiaries in which case on a
consolidated basis), for such period determined in accordance with GAAP to the
extent included in the determination of such Net Income (Loss), minus
(c) the non-cash purchase accounting adjustment relating to the reduction of
deferred revenue of Strategic for such period determined in accordance with
GAAP to the extent included in the determination of such Net Income (Loss); provided,
however, that the amount that can be subtracted from EBITDA in each
calendar year pursuant this clause (c) shall not exceed the amount set forth in
the table below corresponding to such calendar year or such greater amount as
requested by Strategic and agreed to by Avnet in its reasonable credit judgment
(which agreement will not be withheld if the greater amount requested by
Strategic is in accordance with and required by GAAP):

 

	
  Calendar

  Year

  	
   

  	
  Amount

  	
   

  
	
  2007

  	
   

  	
  $

  	
  2,250,000

  	
   

  
	
  2008

  	
   

  	
  $

  	
  425,000

  	
   

  
	
  2009

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  2011

  	
   

  	
  $

  	
  10,000

  	
   

  
						

 

(b)        The definition of “Fixed
Charge Coverage Ratio” is amended in its entirety to read as follows:

“Fixed
Charge Coverage Ratio” shall mean, for any period, the ratio of the
following for Strategic and its subsidiaries on a consolidated basis determined
in accordance with GAAP: (a) EBITDA for such period to (b) sum of (i) interest
expense paid or payable in respect of any debt of Strategic during such period,
plus (ii) cash income taxes paid or payable during such period plus (iii)
regularly scheduled payment of principal paid or that were required to be paid
on Debt for Money Borrowed during such period.

 

2

(c)        A new defined term
“Average Quarterly Past Due Trade Debt” is added in its proper alphabetical
sequence as follows:

“Average
Quarterly Past Due Trade Debt” shall mean, on the last Business Day of any
calendar month, (a) the sum of Past Due Trade Debt on such day plus Past Due
Trade Debt on the last Business Day of the two immediately preceding calendar
months divided by (b) three (3).

1.2  Covenants Concerning Cary
Real Property. Section 8.m.(iv) of the Agreement is amended in its entirety
to read as follows:

“(iv)     By no later than March 31, 2008, Strategic
will sell its real property and improvements located at 301 Gregson Street,
Cary, North Carolina and the unimproved real property located adjacent thereto
(collectively, the “Real Property” for a total cash purchase
price that is either (a) at least equal to the fair market value of such Real
Property determined by the appraisal of such Real Property previously delivered
to Avnet, dated August 9, 2005, or (b) acceptable to Avnet if less than the
fair market value of such Real Property determined by the appraisal of such
Real Property described in the preceding clause (a).”

1.3  Fixed Charge Coverage
Ratio. Section 10.a. of the Agreement is amended in its entirety to read as
follows:

“a.        Fixed Charge Coverage Ratio.
Achieve a Fixed Charge Coverage Ratio of not less than the ratio shown in the
table below for the period corresponding thereto:

 

	
  Ratio

  	
   

  	
  Period

  	
   

  
	
  0.6:1.0

  	
   

  	
  Six months
  ended on the last day of the third fiscal quarter in the 2007 fiscal year

  	
   

  
	
  0.8:1.0

  	
   

  	
  Six months
  ended on the last day of the fourth fiscal quarter in the 2007 fiscal year

  	
   

  
	
  1.0:1.0

  	
   

  	
  Six months
  ended on the last day of each of the first and second fiscal quarters in the
  2008 fiscal year

  	
   

  

 

 

3

 

	
  Ratio

  	
   

  	
  Period

  	
   

  
	
  1.15:1.10

  	
   

  	
  Six months
  ended on the last day of each of the third and fourth fiscal quarters in the
  2008 fiscal year

  	
   

  
	
  1.2:1.0

  	
   

  	
  Six months
  ended on the last day of each fiscal quarter in the 2009 fiscal year and each
  fiscal year thereafter

  	
   

  

 

1.4 Capital
Expenditures. Section 10.b. of the Agreement is amended in its entirety to
read as follows:

“b.       Capital Expenditures. Not make
aggregate Capital Expenditures in the 2007 fiscal year in excess of $875,000
and in any fiscal year thereafter in excess of $550,000; provided, however,
the following Capital Expenditures shall not be taken into account in applying
the foregoing limitation: Capital Expenditures made by Strategic with the
proceeds of marketing development funds.”

1.5 Past
Due Trade Debt. Section 11.1. of the Agreement is amended in its entirety
to read as follows:

“1.        Past Due Trade Debt. Have Average
Quarterly Past Due Trade Debt in excess of (a) $15,000,000 on the last day of
each calendar month through and including December 31, 2007, (b) $14,000,000 on
the last day of each month through and including June 30, 2008 and (c)
$13,000,000 on the last day of each calendar month thereafter.”

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Strategic hereby represents and warrants to
Avnet that:

2.1 Compliance
with the Agreement. As of the date of this Amendment, Strategic is in
compliance with all of the terms and provisions set forth in the Agreement and
the other Loan Papers to be observed or performed by Strategic.

2.2 Representations
in the Agreement. The representations and warranties of Strategic set forth
in the Agreement and the other Loan Papers to which Strategic is a party are
true and correct in all material respects except to the extent that such
representations and warranties relate solely to or are specifically expressed
as of a particular date or period which is past or expired as of the date
hereof.

 

4

2.3  No Default. As of the
date of this Amendment, no Default exists or is continuing.

ARTICLE III

GENERAL

3.1  Loan Papers. The
Agreement and the other Loan Papers are amended to provide that any reference
therein to the Agreement shall mean, unless otherwise specifically provided,
the Agreement as amended hereby, and as further amended, restated, supplemented
or modified from time to time.

3.2  Full Force and Effect.
As expressly amended hereby, the Agreement and the other Loan Papers shall
continue in full force and effect in accordance with the provisions thereof. As
used in the Agreement and the other Loan Papers, “hereinafter,” “hereto,”
“hereof,” or words of similar import, shall, unless the context otherwise
requires, mean the Agreement or the other Loan Papers, as the case may be, as
amended by this Amendment.

3.3  Applicable Law. This
Amendment shall be governed by and construed in accordance with the internal
laws and judicial decisions of the State of North Carolina.

3.4  Counterparts. This
Amendment may be executed in one or more counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute
but one and the same instrument.

3.5  Further Assurances.
Strategic shall execute and deliver to Avnet such documents, certificates and
opinions as Avnet may reasonably request to effect the amendments contemplated
by this Amendment.

3.6  Headings. The headings
of this Amendment are for the purpose of reference only and shall not effect
the construction of this Amendment.

3.7  Expenses. Strategic
shall reimburse Avnet for Avnet’s legal fees and expenses incurred in
connection with the preparation, negotiation, execution and delivery of this
Amendment and all other agreements and documents contemplated hereby.

3.8  Waiver of Jury Trial.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, STRATEGIC AND AVNET EACH
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AMENDMENT, THE AGREEMENT
OR THE OTHER LOAN PAPERS OR THE TRANSACTIONS RELATED HERETO OR THERETO.

 

5

            IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be executed and
delivered by their duly authorized officers to be effective on the day and year
first above written.

 

	
  STRATEGIC:

  
	
   

  
	
  STRATEGIC
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael
  G. Shook

  
	
   

  	
  Name: Michael
  G. Shook

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
  AVNET:

  
	
   

  
	
  AVNET,
  INC.

  
	
   

  
	
  By:

  	
  /s/ Jolea A.
  Kidd

  
	
   

  	
  Name: Jolea
  A. Kidd

  
	
   

  	
  Title: Group
  Vice President

  

 

[signatures continued on next page]

 

[Third Amendment to Amended and Restated
Refinancing Agreement]

 

            The Guarantors
hereby join in the execution of this Amendment for the purposes of consenting
thereto and reaffirming the continuing validity and enforceability of the personal
guaranty agreements executed by each of them on or about April 9, 2002, as from
time to time amended, in accordance with their respective terms.

 

	
  /s/ Michael
  G. Shook

  
	
  Michael G.
  Shook

  
	
   

  
	
  /s/ William
  M. Shook

  
	
  William M.
  Shook

  
	
   

  
	
  /s/ Irvin
  Miglietta

  
	
  Irvin
  Miglietta

  

 

 

[Consent of Guarantors to Third Amendment 

to Amended and Restated Refinancing Agreement]

 

STRATEGIC TECHNOLOGIES, INC.

301 Gregson Drive

Cary, North Carolina 27511

 

 

 

LETTER OF AGREEMENT

 

September 26, 2007

 

 

Avnet, Inc.

11300 Westmoor Circle

Westminster, Colorado 80021

 

Ladies and Gentlemen:

 

Reference is
made to that certain Amended and Restated Refinancing Agreement dated May 20,
2005 by and between Strategic Technologies, Inc. (“STI”) and Avnet, Inc., the
successor to MRA Systems, Inc., dba Access Distribution (“Avnet”), as amended
by that First Amendment to Amended and Restated Refinancing Agreement dated
June 22, 2006 (the “First Amendment”), that certain Second Amendment to Amended
and Restated Refinancing Agreement dated May 1, 2007 (the “Second Amendment”),
and that Third Amendment to Amended and Restated Financing Agreement dated
September 10, 2007 (the “Third Amendment”)(as amended by the First Amendment,
the Second Amendment and the Third Amendment, the “Refinancing Agreement”).
Capitalized terms used and not otherwise defined herein will have the meanings
set forth in the Refinancing Agreement.

 

STI and Avnet
are in agreement that they will enter into a Fourth Amendment to Amended and
Restated Refinancing Agreement (the “Fourth Amendment”) as promptly as
practicable, which Fourth Amendment will amend Section 8.m.(iv) of the
Refinancing Agreement to provide that the sale of the Cary Real Property will
occur no later than September 30, 2008.

 

This Letter of
Agreement is intended to be a binding on the parties, but does not purport to
include all of the essential terms of the Fourth Amendment. It is the intention
of the parties that they will be obligated to prepare and execute the Fourth
Amendment incorporating the agreed upon terms set forth herein as promptly as
practicable.

 

 

 

If the terms
of our understanding regarding the Fourth Amendment have been correctly set
forth herein, please indicate your acceptance and agreement to the terms hereof
by signing and returning to us a copy of this Letter of Agreement to the
undersigned.

 

	
   

  	
  Yours very
  truly, 

  
	
   

  	
   

  
	
   

  	
  STRATEGIC
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karen S.
  Bertaux

  
	
   

  	
  Name:

  	
  Karen S.
  Bertaux

  
	
   

  	
  Title:

  	
  CFO,
  Strategic Technologies, Inc.

  

 

 

ACCEPTED AND AGREED, THIS

26th DAY OF SEPTEMBER, 2007.

 

AVNET, INC.

 

 

	
  By:

  	
  /s/ W.R.
  Crowell

  	
   

  
	
  Name:

  	
  W.R. Crowell

  	
   

  
	
  Title:

  	
  VP & CFO

  	
   

  

 

 

2

 

FOURTH
AMENDMENT TO 

AMENDED AND RESTATED 

REFINANCING AGREEMENT

THIS FOURTH
AMENDMENT TO AMENDED AND RESTATED REFINANCING AGREEMENT (the
“Amendment”). dated as of the 8th day of October, 2007, is
made by and between

STRATEGIC
TECHNOLOGIES, INC., a North Carolina corporation (“Strategic”);
and

AVNET, INC.
(successor by assignment to MRA Systems, Inc. d/b/a Access Distribution), a Delaware
corporation (“Avnet”),

to the Amended
and Restated Refinancing Agreement, dated as of May 20, 2005 (as amended,
modified, restated or supplemented from time to time, the “Agreement”),
between Strategic and Avnet. All capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the Agreement.

RECITALS

A.            The Agreement
contains various agreements between Strategic and Avnet regarding indebtedness
owing by Strategic to Avnet.

B.             Strategic and Avnet
have agreed to amend the Agreement as set forth in this Amendment.

STATEMENT
OF AGREEMENT

NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, Strategic and Avnet hereby agree as follows:

ARTICLE I

STATEMENT
OF INDEBTEDNESS;

DISCHARGE AND RESTRUCTURING OF

CERTAIN INDEBTEDNESS

1.1  As of the date of this
Amendment and prior to giving effect to the discharge and restructuring of the
Indebtedness described in Sections 1.2 and 1.3 of this Amendment, the principal
balance of the Indebtedness evidenced by the Consolidated Amended and Restated
Note was in the sum of $6,994,148.04, the principal balance of the Indebtedness
evidenced by the Amended and Restated November 2003 Note was in the sum of
$5,598.500, and the

 

Indebtedness
consisting of Past Due Trade Debt was in the sum of $15,351,442.87 (subject to
the effect of payments in transit and the resolution of open ordinary course
disputes).

1.2           Immediately upon the execution of this Amendment by Strategic
and the Guarantors, the transactions described in the following Sections 1.2.1
and 1.2.2 shall be consummated in consecutive order and shall be deemed to be
consummated immediately prior to giving effect to the amendments to the
Agreement described in Article I1 of this Amendment:

1.2.1      Avnet hereby discharges and forgives $4,842,648.04 of the
principal balance of the Indebtedness evidenced by the Notes and $122,650.96 of
Past Due Trade Debt; and

1.2.2      The principal balance of the Indebtedness evidenced by the
Notes after giving effect to the discharge and forgiveness described in Section
1.2.1 of this Amendment (which principal balance is in the sum of $7,750,000),
together with a portion of the outstanding Past Due Trade Debt in the amount of
$12,300,000, are hereby consolidated into a new loan in the aggregate principal
amount of $20,050,000, which loan shall be evidenced by a note in the form set
forth on the attached Exhibit A (the “Consolidated 2007 Note”).

1.3           Immediately after giving effect to the discharge and
restructuring described in Section 1.2 of this Amendment, the principal balance
of the Indebtedness evidenced by the Consolidated 2007 Note was in the amount
of $20,050,000, the Indebtedness consisting of Past Due Trade Debt was in the
sum of $2,928,791.91 (subject to the effect of payments in transit and the
resolution of open ordinary course disputes) and there was a principal balance
of $0 on both the Consolidated Amended and Restated Note and the Amended and
Restated November 2003 Note, such notes having been paid in full by the
consolidation described in Section 1.2.2 of this Amendment.

1.4           The Indebtedness described in Section 1.3 of this Amendment
is, on and as of the date hereof, absolutely due and owing by Strategic to
Avnet without any defenses, deductions, offsets or counterclaims.

ARTICLE
II

AMENDMENTS
TO AGREEMENT

The Agreement is hereby
amended as follows:

2.1           Definitions. Section 1 of the Agreement is as
follows:

2.1.1       The following new defined terms are added
in their proper alphabetical sequence :

“Consolidated 2007 Note”
shall have the meaning given to such term in Section 1.2.2 of the Fourth
Amendment to this Agreement.

2

 

“Consonus”
shall mean Consonus Technologies, Inc. a Delaware corporation and the owner of
100% of the issued and outstanding capital stock of Strategic.

“Warrant”
shall mean that certain Warrant to Purchase Common Stock of Consonus
Technologies, Inc., dated January 22, 2007, executed by Consonus to Avnet, as
the same may be amended, modified, supplemented or restated from time to time.

2.1.2      Each reference in the Agreement to the
“Notes” shall hereafter be a reference to the Consolidated 2007 Note.

2.2           Existing
Indebtedness. Sections 2a and 2b of the Agreement are amended in their
entirety to read as follows (for the avoidance of doubt, Section 2c is deleted
and the final paragraph in Section 2 is not amended):

“2.           Existing
Indebtedness. Strategic agrees, confirms and reaffirms that, after giving
effect to the transactions described in Article I of the Fourth Amendment to
this Agreement, it is indebted to Avnet in the total principal amount of
$33,043,485.86, as follows:

a.             Consolidated
2007 Note. Strategic owes Avnet $20,050,000 as evidenced by the
Consolidated 2007 Note.

b.             Trade Debt.
Strategic owes Avnet $12,993,485.86 outstanding in Trade Debt, of which
$2,928,791.91 is Past Due Trade Debt.”

2.3           Interest.
Sections 5a and 5b of the Agreement are amended in their entirety to read as
follows:

“a.           Interest - Consolidated 2007 Note.
Strategic shall pay interest on the Indebtedness evidenced by the Consolidated
2007 Note at a fixed rate of 8% per annum;
provided, however, in the event the principal of and accrued interest on
the Consolidated 2007 Note have not been repaid in full by September 30, 2008,
then Strategic shall thereafter pay interest on the Indebtedness evidenced by
the Consolidated 2007 Note at a fixed rate of 12% per annum.”

b.             Reserved.”

2.4           Required Monthly
Payment. Sections 6.a. and 6.b. of the Agreement are amended in their
entirety to read as follows:

“a.           Required Monthly
Payment. Commencing October 1, 2007 and continuing on the first day of each
calendar month thereafter, Strategic shall pay to Avnet an amount equal to
three hundred thousand dollars ($300,000), with a

3

 

final payment in full on September 1, 2010 of all unpaid principal and
interest on the Consolidated 2007 Note.

b.             Application of
Required Monthly Payment. The amount paid by Strategic to Avnet pursuant to
Section 6.a. of this Agreement shall be applied to the Indebtedness as follows:
first, to the payment of accrued interest; and second, to the payment of the
principal amount of the Consolidated 2007 Note on the date such payment is
made.”

2.5           Covenants
Concerning Cary Real Property. Section 8.m.(iv) of the Agreement is amended
by deleting therefrom the date “March 31, 2008” and by substituting in lieu
thereof the date “September 30, 2008.”

2.6           Representations,
Warranties and Affirmative Covenants. Section 8 of the Agreement is amended
by adding new Sections 8.o, 8.p and 8.q thereto as follows:

“o.           Additional
Warrant. In the event the principal of and accrued interest on the
Consolidated 2007 Note have not been repaid in full by September 30, 2008,
Strategic shall cause Consonus to execute an additional warrant providing for
the right of Avnet to purchase 347,720 additional shares of common stock of
Consonus on substantially the same terms as are contained in the Warrant.”

p.             Strategic
Management. As of the date hereof, and continuing subsequent to the
consummation of the initial public offering of the common stock of Consonus,
Strategic will use its best efforts to cause the senior management of Strategic
on such date to remain with Strategic.

q.             Consonus IPO.
Consonus will remit to Avnet, and Strategic will cause Consonus to remit to
Avnet, promptly after the closing of the initial public offering of the capital
stock of Consonus, net proceeds from such initial public offering up to an
amount equal to the unpaid principal of and accrued interest on the Past Due
Trade Debt and the Note on the date of such remittance. For the avoidance of
doubt, it is understood and agreed that the net proceeds from the initial
public offering of any Underlying Shares (as defined in the Warrant) shall not
be counted toward the amount of net proceeds required to be delivered to Avnet
and described in the immediately preceding sentence.”

2.7           Past Due Trade Debt. Section 11.l. of the Agreement is amended in
its entirety to read as follows:

“1.           Past Due Trade
Debt. Have Average Quarterly Past Due Trade Debt in excess of $3,000,000 on
the last day of any calendar month.”

4

 

ARTICLE III

REPRESENTATIONS
AND WARRANTIES

Strategic
hereby represents and warrants to Avnet that:

3.1
          Compliance with the
Agreement. As of the date of this Amendment, Strategic is in compliance
with all of the terms and provisions set forth in the Agreement and the other
Loan Papers to be observed or performed by Strategic.

3.2             Representations
in the Agreement. The representations and warranties of Strategic set forth
in the Agreement and the other Loan Papers to which Strategic is a party are
true and correct in all material respects except to the extent that such
representations and warranties relate solely to or are specifically expressed
as of a particular date or period which is past or expired as of the date
hereof.

3.3           No Default. As of the date of this Amendment,
no Default exists or is continuing.

ARTICLE IV

MODIFICATION
OF LOAN PAPERS; CONDITIONS PRECEDENT; 

OTHER AGREEMENTS

4.1           Loan Papers.
The Agreement and the Loan Papers are amended to provide that any reference therein
to the Agreement shall mean, unless otherwise specifically provided, the
Agreement as amended hereby, and as further amended, restated, supplemented or
modified from time to time.

4.2           Conditions
Precedent. This Amendment shall become effective and be deemed effective as
of the date hereof upon the satisfaction or waiver by Avnet of the following
conditions precedent:

(a)           Receipt by Avnet of
this Amendment, duly executed by Strategic and the Guarantors;

(b)           Receipt by Avnet of the Consolidated
2007 Note, duly executed by Strategic;

(c)           Receipt by Avnet of documentation
satisfactory to Avnet terminating the Rescission Agreement, dated January 22,
2007, among Consonus Acquisition Corp., Strategic, Consonus and Avnet, and
acknowledged and agreed to by Knox Lawrence International, LLC and the Guarantors, which
termination will become effective upon the vote of a majority of the former
shareholders of Strategic and the former shareholders of Consonus Acquisition
Corp., which votes will occur as soon as practicable after the date of this
Amendment; and

5

 

(d)           Receipt by Avnet of an amendment to
the Warrant providing that in the event the initial public offering of the
common stock of Consonus is over-allotted, that an amount of Underlying Shares
(as such term is defined in the Warrant) will be included in such initial
public offering such that the Underlying Shares comprise not less than
thirty-five percent (35%) of the total shares that will be offered as a result
of such over-allotment.

4.3
          Return of Paid Notes.
As soon as practicable after the effectiveness of this Amendment, Avnet shall
deliver the originals of both the Consolidated Amended and Restated Note and
the Amended and Restated November 2003 Note to Strategic marked paid in full or
satisfied. In the event Avnet is unable to locate the originals of such notes
after a reasonably diligent search, Avnet will deliver lost note affidavits to
Strategic that are satisfactory in form and content to Strategic.

4.4
          Termination of
Agreement. Notwithstanding anything that may appear in the Agreement to the
contrary, upon the payment in full by or on behalf of Strategic of all of the
principal of and accrued interest on the Consolidated 2007 Note, the Agreement
shall be deemed to be terminated and of no further force and effect, Avnet’s
lien in and security interest upon the Collateral shall be deemed to be
released, and Avnet shall cause such documents to be filed or recorded as shall
be necessary to evidence the foregoing lien and security interest releases.
Thereafter, Strategic shall grant to Avnet a purchase money security interest
on all goods sold by Avnet to Strategic, and Strategic shall cooperate with
Avnet to facilitate the filing of any and all financing statements and the
sending of any and all notices required to perfect such security interests.

ARTICLE V

GENERAL

5.1
          Full Force and Effect.
As expressly amended hereby, the Agreement and the other Loan Papers shall
continue in full force and effect in accordance with the provisions thereof. As
used in the Agreement and the other Loan Papers, “hereinafter,” “hereto,”
“hereof,” or words of similar import, shall, unless the context otherwise
requires, mean the Agreement or the other Loan Papers, as the case may be, as
amended by this Amendment.

5.2           Applicable Law.
This Amendment shall be governed by and construed in accordance with the
internal laws and judicial decisions of the State of North Carolina.

5.3           Counterparts.
This Amendment may be executed in one or more counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute
but one and the same instrument.

5.4
          Further Assurances.
Strategic shall execute and deliver to Avnet such documents, certificates and
opinions as Avnet may reasonably request to effect the amendments contemplated
by this Amendment.

6

 

5.5           Headings.
The headings of this Amendment are for the purpose of reference only and shall
not effect the construction of this Amendment.

5.6           Expenses.
Strategic shall reimburse Avnet for Avnet’s legal fees and expenses incurred in
connection with the preparation, negotiation, execution and delivery of this
Amendment and all other agreements and documents contemplated hereby.

5.7
          Waiver of Jury Trial.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, STRATEGIC AND AVNET EACH
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AMENDMENT, THE
AGREEMENT OR THE OTHER LOAN PAPERS OR THE TRANSACTIONS RELATED HERETO OR
THERETO.

[signatures on next page]

7

 

            IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered by their duly authorized officers to be effective on the day and
year first above written.

	
   

  	
  STRATEGIC:

  
	
   

  	
   

  
	
   

  	
  STRATEGIC TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael G. Shook

  
	
   

  	
   

  	
  Name:

  	
  Michael G. Shook

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVNET:

  
	
   

  	
   

  
	
   

  	
  AVNET, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. R. Crowell

  
	
   

  	
   

  	
  Name: 

  	
  W. R. Crowell

  
	
   

  	
   

  	
  Title:

  	
  V. P. and C.F.O.

  

 

 

            Consonus
hereby joins in the execution of this Amendment solely for the purpose of
agreeing to be bound by the covenant contained in Section 8.q of the Agreement.

	
   

  	
  CONSONUS
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nana Baffour

  
	
   

  	
   

  	
  Name:

  	
  Nana Baffour

  
	
   

  	
   

  	
  Title:

  	
  Chairman

  

 

[signatures continued on next page]

 

            The
Guarantors hereby join in the execution of this Amendment for the purposes of
consenting thereto and reaffirming the continuing validity and enforceability
of the personal guaranty agreements executed by each of them on or about April
9, 2002, as from time to time amended, in accordance with their respective
terms.

	
   

  	
  /s/ Michael
  G. Shook

  
	
   

  	
  Michael G.
  Shook

  
	
   

  	
   

  
	
   

  	
  /s/ William M. Shook

  
	
   

  	
  William M.
  Shook

  
	
   

  	
   

  
	
   

  	
  /s/ Irvin
  Miglietta

  
	
   

  	
  Irvin Miglietta

  

 

[Consent of Guarantors to
Fourth Amendment

to Amended and Restated Refinancing Agreement]

 

Exhibit A

Form of
Consolidated 2007 Note

PROMISSORY NOTE 

	
  $20,050,000

  	
  October 8, 2007

  

 

For
value received, Strategic Technologies, Inc. (“Maker”) promises to pay to the
order of Avnet, Inc. (“Holder”) at such place or account as designated by
Holder in writing to Maker, the principal sum of Twenty Million Fifty Thousand and
No/100 Dollars ($20,050,000). Interest on unpaid balances of principal from the
date hereof shall accrue at the fixed rate of eight percent (8%) per annum,
subject to increase as set forth in the Agreement (as defined below).

This
is the Consolidated 2007 Note described in the Agreement. Payments of principal
and interest under this Note shall be made in accordance with the Amended and
Restated Refinancing Agreement, dated May 20, 2005, between Maker and MRA
Systems, Inc. dba Access Distribution (“MRA”), the right, title and interest in
which of MRA has been assigned to Holder (as amended by First Amendment
thereto, dated as of June 22, 2006, by Second Amendment thereto, dated as of
May 1, 2007, by Third Amendment, dated as of September 10, 2007 and by Fourth
amendment thereto, dated of even date herewith, and as from time to time
hereafter further amended, modified, supplemented or restated, the
“Agreement”), the terms of which are incorporated herein for all purposes. All
outstanding principal, and accrued and unpaid interest, which is not paid
earlier as set forth herein, shall be due and payable on September 1, 2010.

This
Note is secured by a blanket lien on all assets of Maker pursuant to that
certain (a) Amended and Restated Security Agreement between Maker and MRA,
dated as of July 31, 2002, as amended, the right, title and interest
in which of MRA has been assigned to Holder, (b) Financing Agreement dated as
of October 17, 2001 between The CIT Group/Business Credit, Inc. (“CIT”) and
Strategic, the right, title and interest in which of CIT was assigned to MRA
and subsequently assigned to Holder, and (c) North Carolina Deed of Trust
executed by Maker for the benefit of MRA dated June 3, 2003, as amended, the
right, title and interest in which of MRA has been assigned to Holder.

Upon
a Default, as that term is defined in the Agreement, then the holder of this
Note shall have the right and option, without notice or demand, to declare the
unpaid balance of principal and accrued interest on this Note at once due and
payable.

Prepayment.
This Note, at the option of Maker, may be prepaid in whole or in part
at any time without additional interest or penalty, with any such prepayment
being applied first to principal in the inverse order of maturity, and then
applied to outstanding and unpaid interest.

Miscellaneous.

At any time, any deposit or other indebtedness
credited by or due from the Holder to Maker may be set off against and applied
in payment of any amounts due hereunder (the “Obligations”), whether due or
not, and such deposits or other indebtedness may at all times be held and
treated as collateral security for the payment of the Obligations.

 

The Maker of this Note
waives demand, presentment for payment, protest and notice of protest, and
non-payment. If this note is not paid when due, and is given to an attorney or
collection agency for collection, or suit filed thereon, Maker agrees to pay
all collection fees and expenses including but not limited to attorneys fees
based upon customary hourly rates and not a statutorily prescribed percentage
of the debt collected.

This promissory note shall
be governed by and construed in accordance with the laws of the State of North
Carolina, without regard to its choice of law rules.

Strategic
Technologies, Inc., 

a North Carolina
corporation

	
  By:

  	
   

  	
   

  
	
   

  	
  Michael G. Shook,
  President

  	
   

  
	
   

  	
   

  
	
  Address:
  

  	
  301 Gregson
  Drive

  	
   

  
	
   

  	
  Cary, North Carolina 27511

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SUBSCRIBED AND SWORN to
  before me this       day of October, 2007, in
  the County of

  
	
                       ,
  State
  of                          
  , by                           .

  
	
   

  
	
   

  
	
  WITNESS my hand and
  official seal.

  
	
   

  
	
   

  	
   

  
	
  Notary Public

  	
   

  
	
   

  	
   

  
	
  My commission expires:LICENSE AGREEMENT

Exhibit 10.1

 

Confidential Materials Omitted and Filed Separately With the

US Securities and Exchange Commission. Asterisks denote omissions.

LICENSE AGREEMENT

This Agreement is entered into between the U.S. Government, as represented by the U.S. Department of Agriculture, Agricultural Research Service (hereinafter referred to as “USDA”) and HepaLife Technologies, Inc., a Florida corporation having offices at 60 State Street, Suite 700, Boston, Massachusetts (hereinafter referred to as “HEPALIFE”).

WHEREAS, USDA has performed research to develop novel hepatocyte cell lines derived from the epiblast of pig blastocysts for use in artificial liver devices and in-vitro toxicological testing platforms and has received by assignment certain valuable patent rights thereon; and

WHEREAS, USDA and HEPALIFE have jointly performed research to develop an improved fetal pig hepatocyte cell line denoted “ARS-PICM-19H” and owns certain valuable property rights thereon; and

WHEREAS, such research was performed under the terms of Cooperative Research and Development Agreement No. 58-3K95-3-0967 (the “CRADA”), and the invention resulting from said research constitutes a Subject Invention as defined in the CRADA; and

WHEREAS, USDA and HEPALIFE are continuing to perform joint research on improved fetal pig hepatocyte cell lines for use in artificial liver devices and in-vitro toxicological testing platforms under the terms of Cooperative Research and Development Agreement No 58-3K95-8-1238 (the “CRADA 2”); and

WHEREAS, HEPALIFE desires to exercise its option to an exclusive license to the Subject Invention pursuant to the provisions of the CRADA; and

WHEREAS, USDA desires, in the public interest, that said inventions be perfected, marketed, and practiced so that the benefits are readily available for widest possible utilization in the shortest time possible; and

WHEREAS, HEPALIFE represents that it has access to the cell-based technologies and products markets and has the necessary business expertise as described in their license application to bring the invention to the point of practical application and make the invention available to the public; and

WHEREAS, HEPALIFE intends to enter into agreements with one or more manufacturing and/or clinical testing partners to test, develop and manufacture the invention; and

WHEREAS, USDA is willing to grant a license to HEPALIFE contingent upon HEPALIFE raising the necessary investment capital to carry out its business plan; and

WHEREAS, USDA is willing to provide reasonable assistance to HEPALIFE to help bring the invention to the point of practical application

NOW, THEREFORE, in consideration of the foregoing and pursuant to 35 USC 207 and 37 CFR 404 and the mutual promises and obligations hereinafter set forth, USDA and HEPALIFE, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

1.1

Licensed Patents means U.S. Patent No. 5,532,156, entitled “Hepatocyte Cell Line Derived From the Epiblast of Pig Blastocysts”, which issued on July 2, 1996, all reissues, reexaminations, and patent term extensions of this patent; U.S. Patent No. 5,866,420, entitled “Artificial Liver Device”, which issued on February 2, 1999, all reissues, reexaminations and patent term extensions of this patent; and any U.S. Patent Applications and resulting issued patents encompassed by ARS Invention Disclosure Docket ****, all continuations, divisions, reissues, reexaminations, patent term extensions of such patents, any continuations-in-part that have complied with the requirements set forth in 37 CFR 404.7 and any foreign equivalents thereof.

1.2

Licensed Materials means any and all of the fetal pig hepatocyte cell line(s) described in the Licensed Patents, including, but not limited to “ARS-PICM-19” and “ARS-PICM-19H”, and all progeny, subclones and modified and/ or unmodified derivatives thereof.

1.3

Licensed Products I means any and all in vitro toxicological testing platforms for determining the potential toxicity and metabolism of new pharmacological compounds in the liver using the Licensed Materials and/or the isolated cell line of normal pluripotent parenchymal hepatocytes derived from a primary culture of pig epiblast cells as encompassed by the claims of the Licensed Patents.

1.4

Licensed Products II means any bioartifical liver device for use in human patients as encompassed by the claims of the Licensed Patents or which directly incorporates the Licensed Materials.

1.5

Licensed Products includes Licensed Products I and Licensed Products II.

 

1.6

Licensed Territory means the United States of America, its possessions and territories and any other jurisdiction in which a Valid Claim of a licensed patent exists during the term of this Agreement..

1.7

Manufacturing or Distribution Partner means any person, corporation, university, government laboratory or other entity which has the technical expertise and material resources 

necessary to assist HEPALIFE in the testing, development, manufacture, sale or distribution of Licensed Products, in accordance with the business plan submitted by HEPALIFE with its license application.

1.8

Financial Partner means any person, corporation, firm, partnership or other entity which agrees to provide capital and/or other resources for the development, scale-up, production, clinical and field trials of Licensed Products, in accordance with the business plan submitted by HEPALIFE with its license application.

1.9

Affiliate means any company, corporation, partnership, or other entity controlled by, controlling, or under common control with HEPALIFE, directly or indirectly, where control means the ownership of at least fifty percent (50%) of the voting stock or other ownership interest of an entity.  For purposes of this Agreement, all references to HEPALIFE shall be deemed to include its Affiliates.

1.10

Net Sales means the gross sales of Licensed Products by HEPALIFE or its sublicensees to an independent third party (excluding Affiliates) less the sum of the following:

(a)

discounts, in amounts customary in the trade, for quantity purchases, cash payments, wholesalers, and distributors;

(b)

amounts repaid or credited by reason of rejection or returns; and

(c)

any freight or other transportation costs, insurance, duties, tariffs and sales and excise taxes based directly on sales or turnover or delivery of material produced under this Agreement.

No deductions shall be made for commissions paid to sales persons or agents or for the cost of collections.  Licensed Products produced by HEPALIFE for its own use shall be included for the purposes of computing Net Sales, except such Licensed Products used for non-revenue producing activity such as promotional items or market trials.  Licensed Products shall be considered sold when billed or invoiced.

1.11

Valid Claim means all pending and issued claims of the Licensed Patents which have not been held invalid or unenforceable in a decision rendered by a tribunal of competent jurisdiction. In the event that a decision invalidating or revoking an issued Licensed Patent is overturned on appeal with the effect to reinstate the patent, such claim shall again be considered a Valid Claim as of the date of such decision.

1.12

Effective Date means the later date on which this Agreement is executed by a party to the Agreement.

ARTICLE II

GRANT

2.1

USDA grants to HEPALIFE, subject to the terms and conditions herein, an exclusive license in the Licensed Territory under the Licensed Patents to make, have made, use, have used, sell and have sold Licensed Products for the term of this Agreement.

2.2

USDA grants to HEPALIFE, subject to the terms and conditions herein, an exclusive license in the Licensed Territory to make, have made, use, have used, sell and have sold Licensed Materials for the term of this Agreement.

2.3

USDA grants to HEPALIFE the right to grant sublicenses subject to the provisions of this Agreement and to the prior submission to and approval by USDA of the proposed sublicense, which approval shall not be unreasonably withheld.  All sublicenses shall make reference to this Agreement, including the rights retained by the U.S. Government in accordance with the provisions of Article III below.  HEPALIFE shall provide USDA with a copy of all executed sublicense agreements.

ARTICLE III

RESERVATION OF RIGHTS

3.1

The licenses granted in Article II above are subject to the reservation by USDA of an irrevocable, nonexclusive, nontransferable, royalty-free license for the practice of the Licensed Patents throughout the world by or on behalf of the U.S. Government, and on behalf of any foreign government pursuant to any existing or future treaty or agreement to which the United States is a signatory, including the right to engage in research, either alone or with one or more third parties, on inventions covered by the Licensed Patents.

3.2

USDA reserves the right to require HEPALIFE to grant sublicenses to responsible applicants, on reasonable terms, under any of the following circumstances:

(a)

such grant is necessary to fulfill health or safety needs; or

(b)

such grant is necessary to ensure that a specific commercial use for the Licensed Patent, which is not being actively brought to practical application by HEPALIFE in the United States, is made available for utilization by the United States public.  

ARTICLE IV

FEES, ROYALTIES, AND PAYMENTS

4.1

HEPALIFE shall pay to USDA a license execution fee of ****. The first installment of **** shall be due and payable within thirty (30) days of the Effective Date of the Agreement.  The second installment of **** shall be due and payable one (1) year from the Effective Date of the Agreement.  No part of the license execution fee shall be refunded for any reason.  

4.2

HEPALIFE shall pay to USDA an annual license maintenance fee in accordance with the following schedule:

****

****

****

****

****

****

****

****

****

****

****

****

An annual maintenance fee of **** shall be due on March 1 of each calendar year thereafter for the term of the Agreement.  The annual license maintenance fee shall be credited against royalties owed to USDA under Paragraph 4.3 below during the same calendar year.  The annual license maintenance fee paid in a given calendar year shall not be credited against royalties owed in subsequent calendar years.  No part of the annual license maintenance fee shall be refunded for any reason.  

4.3

HEPALIFE shall pay USDA royalties **** on the Net Sales of Licensed Products I by HEPALIFE and its sublicensees.  HEPALIFE shall pay USDA royalties **** on the Net Sales of Licensed Products II by HEPALIFE and its sublicensees.  Royalties shall be due and payable upon submission of each royalty report, in accordance with the provisions of Paragraph 5.2 below.

4.4

HEPALIFE shall pay to USDA **** of any payments other than royalties payable under Paragraph 4.3 above received from a sublicensee as consideration for the rights granted to the sublicensee under the Licensed Patents.  Such payments may include, but are not limited to, license execution fees, milestone payments, and license maintenance fees.  Payments specifically committed to further research on the Licensed Products or payments received as consideration for the sale of HEPALIFE, in whole or in part, are excluded and shall not be considered part of this calculation.

4.5

HEPALIFE shall pay USDA a milestone payment upon completion of each of the following milestone events:

Milestone Event

****

I.  FDA Approval to Initiate a Phase I Clinical Trial

****

    Using Licensed Products in the United States

II. FDA Approval to Initiate a Phase III Clinical Trial

****

     For Licensed Products in the United States

III. Grant of Final FDA Approval to Manufacture, Use

****

      Market and Sell Licensed Products in the United States

Milestone payment(s) shall be due within thirty (30) days of receiving an approval or grant from FDA.  Milestone payments will not be creditable against royalties. No part of the milestone payment(s) shall be refunded for any reason.  

4.6

 USDA shall prosecute and maintain the Licensed Patents in the Licensed Territory during the term of this Agreement subject to the conditions set forth herein.  HEPALIFE shall reimburse USDA for all fees and expenses, including reasonable legal fees, incurred by USDA in filing, prosecuting and maintaining the Licensed Patents in the Licensed Territory during the term of this Agreement.  USDA shall keep HEPALIFE advised as to the status of the prosecution of the Licensed Patents., USDA will provide HEPALIFE with cost estimates before costs are incurred and will provide HEPALIFE with timely notice of any changes in cost estimates.  HEPALIFE shall be entitled to review all actions undertaken in the prosecution of the Licensed Patents and shall be given the opportunity to make reasonable requests as to the conduct of such prosecution, provided that all such requests are made in writing to USDA.  USDA shall provide HEPALIFE a statement of all such fees and expenses on a quarterly basis, and reimbursement shall be due within thirty (30) days of receipt of such statement.  In the event that HEPALIFE decides not to continue to support the filing, prosecution or maintenance of any patent application or patent included within the Licensed Patents, then HEPALIFE shall reimburse all fees and expenses incurred up to the date of receipt of such notification by USDA.  USDA shall terminate the HEPALIFE license in the country(ies) where patent filing, prosecution and/or maintenance is not supported by HEPALIFE, effective on the date of receipt by USDA of written notification by HEPALIFE.  

4.7

USDA shall not abandon the Licensed Patents without first giving HEPALIFE notice and opportunity to assume full responsibility for the filing and continued prosecution and maintenance of the Licensed Patents.  HEPALIFE shall have the right, but not the obligation, to assume responsibility for the filing, prosecution and maintenance of the Licensed Patents, on a patent-by-patent and country-by-country basis, at its own expense with counsel of its own choice.  Upon written notice from HEPALIFE indicating its election to assume such responsibility, USDA shall transfer or cause to be transferred the complete prosecution file for such patent(s), including all correspondence and filings with patent authorities with respect to such patent(s), whereupon such patent(s) shall remain part of the Licensed Patents hereunder, but HEPALIFE shall be solely responsible for all costs and expenses associated with the filing, prosecution and maintenance of the same.

 

4.8

All payments due USDA under this Article IV shall be payable in United States dollars for the account of USDA/Agricultural Research Service, License No. 1154-002.  All checks and bank drafts shall be drawn on United States banks.  A late payment of a license fee or royalty shall automatically raise said fee or royalty by an amount equal to one percent (1%) of the amount due for each month beyond the due date of such late payment.  Conversion of foreign currency to United States dollars shall be made on the last business day of the applicable reporting period for the purchase of United States dollar bank wire transfers for settlement of such payment obligations.  Any and all loss of exchange, value, taxes, or other expenses incurred in the transfer or conversion of other currency to United States dollars shall be paid entirely by HEPALIFE.

ARTICLE V

REPORTS AND RECORDS

5.1

HEPALIFE shall provide written annual reports within sixty (60) days of the end of each calendar year detailing progress being made to bring the Licensed Patents to practical application.  No further annual progress reports will be required after notification of the first commercial sale of Licensed Products unless otherwise requested by USDA.

5.2

After notification of the first commercial sale of Licensed Products, HEPALIFE shall submit to USDA within sixty (60) days after each calendar half year ending June 30th and December 31st, reports setting forth for the preceding six (6) month period the amount of Licensed Products made, used, or sold or otherwise disposed of by HEPALIFE, and its sublicensees, the Net Sales thereof and the royalties due pursuant to Paragraph 4.3 above.  The report shall include an itemized accounting of the number of units of Licensed Products sold, price per unit, and each deduction taken from the gross sales for the purpose of calculating Net Sales.  A written report shall be due for each reporting period whether or not any royalties are due to USDA.

5.3

HEPALIFE, and its sublicensees, shall keep accurate and complete records as are required for the determination of royalties owed to USDA pursuant to this Agreement.  Such records shall be retained for at least five (5) years following a given reporting period. Upon reasonable notice and at the expense of USDA, such records shall be available during normal business hours for inspection and audit by an independent certified public accountant selected by USDA for the sole purpose of verifying reports and payments hereunder.  Such accountant may be required to sign a confidentiality agreement and shall not disclose to USDA any information other than information relating to the accuracy of reports and payments made under this Agreement.  HEPALIFE, and its sublicensees, shall provide full cooperation in such inspection and audit.  Such cooperation shall include, but not limited to, providing sufficient time for such examination and convenient access to relevant personnel and records.  If an inspection and audit show an underreporting or underpayment in excess of five percent (5%) for any twelve (12) month period, then HEPALIFE shall reimburse USDA for the cost of the inspection at the time HEPALIFE pays the unreported royalties, including any late charges as required by Paragraph 4.8 of this Agreement.  Any overpayments shall be fully creditable against amounts payable in subsequent payment periods. All payments required under this Paragraph 5.3 shall be due within thirty (30) days of the date USDA provides HEPALIFE notice of the payment due.  In no event, however, shall such audits be conducted more frequently than once every twelve (12) months.  

ARTICLE VI

LICENSEE PERFORMANCE

6.1

HEPALIFE shall expend reasonable efforts and resources to carry out the development and marketing plan submitted with HEPALIFE’s application for a license and to bring the Licensed Patents to the point of practical application as defined in Title 37 of the Code of Federal Regulations, Section 404.3(d).  HEPALIFE shall submit appropriate applications for regulatory approval for the Licensed Products to the Food and Drug Administration (“FDA”) 

within five (5) years of the Effective Date of the Agreement and HEPALIFE shall offer Licensed Products for sale in the U.S. within one (1) year of receiving regulatory approval from FDA, unless this period is extended by mutual agreement of the parties.  USDA shall not unreasonably withhold approval of any request by HEPALIFE to extend this period if such request is supported by evidence of reasonable efforts by HEPALIFE to bring the Licensed Patents to practical application, including any reasonable and diligent application for regulatory approvals required by any U.S. Government agency.

6.2

HEPALIFE shall enter into an agreement with one or more Financial Partners to secure the additional funding necessary to accomplish the milestones identified in HEPALIFE’s license application within five (5) years of the Effective Date of this Agreement.  This period may be extended for an additional one (1) year period upon written request by HEPALIFE.  No further extensions shall be granted by USDA, except under extraordinary circumstances and by mutual agreement of the parties.

6.3

HEPALIFE shall acquire or lease suitable production facilities or enter into an agreement with Manufacturing or Distribution Partner(s) within one (1) year from receiving regulatory approval from FDA unless this period is extended by mutual agreement of the parties.  USDA shall not unreasonably withhold approval of any request by HEPALIFE to extend this period if such request is supported by evidence of reasonable efforts by HEPALIFE to execute such an agreement.

6.4

HEPALIFE shall notify USDA in writing within fifteen (15) days after the first commercial sale of Licensed Products I and Licensed Products II by HEPALIFE, or its sublicensees.

6.5

Licensed Materials used in Licensed Products sold or otherwise disposed of in the United States by HEPALIFE, or its sublicensees, shall be manufactured substantially in the United States.

6.6

After bringing the Licensed Patents to the point of practical application in the United States, HEPALIFE shall keep Licensed Products reasonably available to the United States public during the term of this Agreement.

ARTICLE VII

DURATION, MODIFICATION, AND TERMINATION

7.1

This Agreement shall commence on the Effective Date and, unless sooner terminated as provided under this Article VII, shall remain in effect until the expiration of the last to expire Licensed Patents.

7.2

This Agreement may be modified or terminated by USDA, subject to the provisions of Paragraphs 7.3 and 12.4 below, if it is determined that any one of the following has occurred:

(a)

HEPALIFE, or its sublicensees, fails to meet the obligations set forth in Article VI above;

(b)

Such action is necessary to meet requirements for public use specified by Federal regulations issued after the date of this Agreement and such requirements are not reasonably satisfied by HEPALIFE, or one of its sublicensees;

(c)

HEPALIFE has willfully made a false statement or willfully omitted a material fact in the license application or in any report required by this Agreement;

(d)

HEPALIFE, or its sublicensees, commits a substantial breach of a covenant or provision contained in this Agreement;

(e)

HEPALIFE has been found by a court of competent jurisdiction to have violated the Federal antitrust laws in connection with its performance under this Agreement;

(f)

HEPALIFE is adjudged bankrupt or has its assets placed in the hands of a receiver or makes any assignment or other accommodation for the benefit of creditors; or

(g)

HEPALIFE, or its sublicensees, misuses the Licensed Patents.

7.3

Prior to modification or termination of this Agreement, USDA shall furnish HEPALIFE and any sublicensees of record a written notice of intention to modify or terminate, and HEPALIFE shall be allowed thirty (30) days after the date of such notice to remedy any breach or default of any covenant or agreement of this Agreement or to show cause why this Agreement should not be modified or terminated.

7.4

HEPALIFE may terminate this Agreement at any time upon ninety (90) days written notice to USDA.  If HEPALIFE terminates this Agreement in accordance with the provisions of this Paragraph 7.4, HEPALIFE shall provide USDA with a summary report of the reasons for termination, whether of a business or technical nature. 

7.5

Upon termination of this Agreement, all sums that have accrued and are due to USDA pursuant to Article IV hereunder shall become immediately payable.  In all other respects, the rights and obligations of the parties hereto concerning the Licensed Patents included in such termination shall cease as of the effective date of such termination.  HEPALIFE may, however, sell all Licensed Products completed and in inventory provided that royalties are paid on any such sales in accordance with the provisions of Article IV. 

7.6

In the event of termination of this Agreement, any sublicense of record granted pursuant to Paragraph 2.3, may either be converted to a license directly between sublicensee and USDA or be terminated, at the option of the sublicensee.

ARTICLE VIII

PATENT ENFORCEMENT

8.1

The U.S. Government is not obligated to enforce the Licensed Patents against infringers.  HEPALIFE shall continue to make all payments accruing to USDA pursuant to Article IV hereunder until such time as this Agreement is terminated by either party, even if the Government elects not to enforce the Licensed Patents against infringers.

8.2

HEPALIFE is granted the first option at its own expense, in its own name, to enforce the Licensed Patents against a specific party who may be infringing the Licensed Patents, subject to the following conditions:

(a)

The right of enforcement granted under this Paragraph 8.2 shall constitute the rights provided under Title 35, Chapter 29, of the U.S. Code.

(b)

If HEPALIFE elects the option to enforce the Licensed Patents against a specific party, the Government shall not be entitled to bring an enforcement action against such party except if it chooses to join with HEPALIFE.

(c)

Prior to enforcement against a specific party, HEPALIFE shall submit a written request to elect the option to enforce the Licensed Patents, and USDA must approve the election before HEPALIFE may bring an enforcement action against such party.  Such enforcement actions may include, but are not limited to, notifying such party, either verbally or in writing, to cease and desist the alleged infringing activity or filing an infringement suit against such party.

(i)

If USDA does not approve the election, and cannot reasonably establish non-infringement, within ninety (90) days of HEPALIFE’s request for approval, HEPALIFE shall not be obligated to pay royalties or fees that begin to accrue at the end of the ninety (90) day period.

(ii)

If USDA grants approval after the end of the ninety (90) day period, HEPALIFE shall be obligated to pay royalties and fees that accrue beginning with the day of subsequent approval, but shall not be obligated to pay royalties or fees that previously accrued during the time extending from the end of the ninety (90) day period to the day of subsequent approval.

(d)

If USDA requests in writing that HEPALIFE decide whether to elect the option to enforce the Licensed Patents against a specific party, HEPALIFE shall submit its decision within sixty (60) days of the date of request.  In 

the absence of a written response during the sixty (60) day period, the U.S. Government may enforce the Licensed Patents without HEPALIFE.

8.3

The following conditions apply to court awards and sublicensing revenues and other considerations as to the Licensed Patents, if HEPALIFE elects the enforcement option against a specific party.

(a)

HEPALIFE is not required to share, with USDA, court awards from such party, but is required to share sublicensing revenues and other considerations from such party pursuant to Article IV hereunder.

(b)

HEPALIFE’s reasonable attorney’s fees for attempting to sublicense or enforce the Licensed Patents against a specific party may be deducted from payments due to USDA under a sublicense to such party, provided that such reasonable attorney’s fees are not recouped as part of a court award for infringement of the Licensed Patents by such party, and provided that any such deductions do not exceed fifty percent (50%) of the payments due to USDA during any single reporting period.

8.4

In the absence of prior written consent from USDA, HEPALIFE shall not be entitled to waive any rights in the Licensed Patents as part of an agreement with a party who may be infringing the Licensed Patents.

ARTICLE IX

CONFIDENTIALITY, MARKING AND NON-USE OF NAMES

9.1

HEPALIFE, and its sublicensees, shall mark Licensed Products or packages containing Licensed Products with all applicable patent numbers.

9.2

HEPALIFE shall not use the name of the U.S. Government, the name of any department or agency of the U.S. Government, the name of any U.S. Government employee, or any adaptation of the above in any promotional activity without prior written approval from USDA.

9.3

HEPALIFE’s business and financial information shall be held in strict confidence and shall not subject to disclosure pursuant to 37 C.F.R. §404.14.  Any unauthorized disclosure of HEPALIFE’s confidential information may subject the violator to personal, civil and/or criminal penalties pursuant to 18 U.S.C. §1905.

9.4

HEPALIFE may disclose confidential information, including the existence of this Agreement, to the extent (and only to the extent) such disclosure is reasonably necessary in order to comply with applicable law or regulation (including any securities law or regulation or the rules of a securities exchange) or with the judicial process, if in the reasonable opinion of HEPALIFE’s counsel, such disclosure is necessary for such compliance and to Affiliates, potential and future collaborators (including sublicensees of HEPALIFE), permitted acquirers or 

assignees, research collaborators, subcontractors, investment bankers, investors, and/or lenders under the terms of a Confidentiality Agreement.

ARTICLE X

REPRESENTATIONS AND WARRANTIES

10.1

USDA represents and warrants that the entire right, title and interest in the Licensed Patent has been assigned to the United States of America as represented by the Secretary of Agriculture and that USDA has the authority to issue licenses under the Licensed Patents.

10.2

USDA does not warrant the patentability or validity of the Licensed Patents and makes no representations whatsoever with regard to the scope of the Licensed Patent or that such Licensed Patents may be exploited without infringing other patents.  USDA makes no warranty that the Licensed Materials may be exploited without infringing other patents.  USDA FURTHER MAKES NO WARRANTIES AS TO THE MERCHANTABILITY OR FITNESS OF THE LICENSED PATENTS, THE LICENSED MATERIALS OR THE LICENSED PRODUCTS FOR ANY PARTICULAR PURPOSE, OR ANY OTHER WARRANTIES EXPRESS OR IMPLIED.

ARTICLE XI

NOTICES

Written notices and reports required to be given under this Agreement, and submission of license execution and maintenance fees and royalties, shall be mailed by first class mail, postage prepaid and addressed as follows:

If to USDA

If to HEPALIFE

Assistant Administrator

Frank Menzler, President & CEO

USDA, ARS, Office of Technology Transfer

HepaLife Technologies, Inc.

5601 Sunnyside Avenue, 4-1159

60 State Street, Suite 700

Beltsville, Maryland 20705-5131

Boston, Massachusetts 02109

ARTICLE XII

MISCELLANEOUS PROVISIONS

12.1

This Agreement shall not be transferred or assigned by HEPALIFE to any party other than to an Affiliate or to a successor or assignee of the entire business interest of HEPALIFE relating to the Licensed Patents, without the prior written approval of USDA, such approval not to be unreasonably withheld.  In no event, however, shall HEPALIFE assign or transfer this Agreement to a party not a citizen or resident of the United States of America.  HEPALIFE shall notify USDA in writing prior to any such transfer or assignment.  This Agreement shall inure to the benefit of, and be binding upon, the legal representatives, successors and permitted assigns of HEPALIFE.

12.2

The interpretation and application of the provisions of this Agreement shall be governed by the laws of the United States as interpreted and applied by the Federal courts in the District of Columbia.

12.3

Neither party may waive or release any of its rights or interest in this Agreement except in writing.  The failure of a party to assert a right hereunder or to insist on compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other party.

12.4

The parties shall make every reasonable effort to resolve amicably any dispute concerning a question of fact arising under this Agreement.  In accordance with the requirements of 37 CFR 404.11, USDA has established an administrative procedure for resolving disputes not settled amicably between the parties.  Any such disputes shall be decided by the Assistant Administrator, Office of Technology Transfer, Agricultural Research Service (ARS), who shall reduce such decision to writing and mail or otherwise furnish a copy thereof to HEPALIFE.  Any decision of the Assistant Administrator, ARS, whether it be a question of fact, or to modify or terminate this Agreement, may be appealed to the Administrator, ARS, whose decision shall be administratively final and conclusive.  This shall not preclude HEPALIFE from taking additional legal action once all administrative avenues have been exhausted.  Pending final decision of a dispute hereunder, HEPALIFE shall proceed diligently with the performance of its obligations under this Agreement.

12.5

Nothing relating to the grant of this license, nor the grant itself, shall be construed to confer upon HEPALIFE or its sublicensees any immunity from or defenses under the antitrust laws or from a charge of patent misuse, and the acquisition and use of rights pursuant to this license shall not be immunized from the operation of state or Federal law by reason of the source of the grant.

12.6

The provisions of this Agreement are severable, and the illegality or invalidity of any provision of this Agreement shall not impair, affect, or invalidate any other provisions of this Agreement.

12.7

This Agreement constitutes the entire agreement and understanding between the parties, and neither party shall be obligated by any condition, promise or representation other than those expressly stated herein or as may be subsequently agreed to by the parties hereto in writing.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives.

FOR THE UNITED STATES DEPARTMENT OF AGRICULTURE:

/s/ Richard J. Brenner

November 2, 2007

Signature

Date

RICHARD J. BRENNER

Assistant Administrator, Agricultural Research Service

FOR HEPALIFE TECHNOLGIES, INC.:

/s/ Frank Menzler

November 2, 2007

Signature

Date

FRANK MENZLER

President and Chief Executive Officer, HepaLife Technologies, Inc.

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