Document:

Exhibit 10.2

EXECUTION COPY

SECURITY AGREEMENT

DATED AS OF APRIL 10, 2006

among

THE PRINCETON REVIEW, INC.,

as Borrower,

and

the Guarantors party hereto,

(collectively with the Borrower, as Grantors)

and

GOLUB CAPITAL INCORPORATED,
 as Administrative Agent

TABLE OF CONTENTS

	
   
 	
   
 	
   
 	
   
 	
  
Page
  
	
   
 	
   
 	
   
 	
   
 	
  

  
	
  SECTION 1.
  	
  
 
  	
  
DEFINITIONS   AND ACCOUNTING TERMS
  	
  
2
  
	
  
 
  	
  
 
  	
  
 
  	
   
 
	
  
1.1
  	
  
 
  	
  
Certain   Defined Terms
  	
  
2
  
	
  
1.2
  	
  
 
  	
  
UCC Defined   Terms
  	
  
2
  
	
  
1.3
  	
  
 
  	
  
Other   Definitional Provisions
  	
  
2
  
	
   
 	
  
 
  	
  
 
  	
   
 
	
  SECTION 2.
  	
  
 
  	
  
COLLATERAL
  	
  
3
  
	
  
 
  	
  
 
  	
  
 
  	
   
 
	
  
2.1
  	
  
 
  	
  
Grant of Security   Interest.
  	
  
3
  
	
   
 	
  
 
  	
  
(A)
  	
  
Grant of   Liens in the Collateral
  	
  
3
  
	
   
 	
  
 
  	
  
(B)
  	
  
Grantors   Remain Liable
  	
  
3
  
	
  2.2
  	
  
 
  	
  
Endorsement;   Insurance Claims
  	
  
4
  
	
   
 	
  
 
  	
  
 
  	
   
 
	
  
SECTION 3.
  	
  
 
  	
  
REPRESENTATIONS,   WARRANTIES AND CERTAIN COVENANTS
  	
  
4
  
	
  
 
  	
  
 
  	
  
 
  	
   
 
	
  
3.1
  	
  
 
  	
  
Collateral   Warranties and Covenants.
  	
  
4
  
	
   
 	
  
 
  	
  
(A)
  	
  
Accounts   Warranties and Covenants
  	
  
4
  
	
   
 	
   
  	
  
(B)
  	
  
Inventory   Warranties and Covenants
  	
  
5
  
	
   
 	
  
 
  	
  
(C)
  	
  
Equipment   Warranties and Covenants
  	
  
5
  
	
   
 	
  
 
  	
  
(D)
  	
  
Chattel   Paper Warranties and Covenants
  	
  
6
  
	
   
 	
  
 
  	
  
(E)
  	
  
Instruments   Warranties and Covenants
  	
  
6
  
	
   
 	
  
 
  	
  
(F)
  	
  
Investment   Property Warranties and Covenants
  	
  
6
  
	
   
 	
   
  	
  
(G)
  	
  
Letters of   Credit Warranties and Covenants
  	
  
6
  
	
   
 	
  
 
  	
  
(H)
  	
  
General   Intangibles Warranties and Covenants
  	
  
7
  
	
   
 	
  
 
  	
  
(I)
  	
  
Intellectual   Property Warranties and Covenants
  	
  
7
  
	
   
 	
  
 
  	
  
(J)
  	
  
Commercial   Tort Claims Warranties and Covenants
  	
  
8
  
	
   
 	
  
 
  	
  
(K)
  	
  
Deposit   Accounts; Bank Accounts Warranties and Covenants
  	
  
8
  
	
   
 	
   
  	
  
(L)
  	
  
Bailees
  	
  
8
  
	
   
 	
  
 
  	
  
(M)
  	
  
Collateral   Description; Use of Collateral
  	
  
8
  
	
   
 	
  
 
  	
  
(N)
  	
  
Collateral   Filing Requirements; Collateral Records
  	
  
9
  
	
   
 	
  
 
  	
  
(O)
  	
  
Federal   Claims
  	
  
9
  
	
  
3.2
  	
  
 
  	
  
Names and   Locations
  	
  
9
  
	
  3.3
  	
  
 
  	
  
Title to   Properties; Liens
  	
  
9
  
	
  
3.4
  	
  
 
  	
  
Insurance
  	
  
9
  
	
  
3.5
  	
  
 
  	
  
Amendment of   Schedule
  	
  
10
  
	
   
 	
  
 
  	
  
 
  	
   
 
	
  
SECTION 4.
  	
  
 
  	
  
FURTHER   ASSURANCES
  	
  
11
  
	
  
 
  	
  
 
  	
  
 
  	
   
 
	
  4.1
  	
  
 
  	
  
Further   Assurances
  	
  
11
  
	
  
4.2
  	
  
 
  	
  
[Reserved]
  	
  
11
  

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SECTION 5.
  	
  
 
  	
  
REMEDIES AND   DISPOSITION OF COLLATERAL
  	
  
11
  
	
  
 
  	
  
 
  	
  
 
  	
   
 
	
  5.1
  	
  
 
  	
  
Remedies
  	
  
11
  
	
  
5.2
  	
  
 
  	
  
Appointment   of Attorney-in-Fact
  	
  
12
  
	
  
5.3
  	
  
 
  	
  
Limitation   on Duty of Administrative Agent and Lenders with Respect to Collateral
  	
  
12
  
	
  
5.4
  	
  
 
  	
  
Application   of Proceeds
  	
  
13
  
	
  
5.5
  	
  
 
  	
  
License of   Intellectual Property
  	
  
13
  
	
  5.6
  	
  
 
  	
  
Waivers;   Non-Exclusive Remedies
  	
  
13
  
	
   
 	
  
 
  	
  
 
  	
   
 
	
  
SECTION 6.
  	
  
 
  	
  
MISCELLANEOUS
  	
  
13
  
	
  
 
  	
  
 
  	
  
 
  	
   
 
	
  
6.1
  	
  
 
  	
  
Expenses and   Attorneys’ Fees
  	
  
13
  
	
  
6.2
  	
  
 
  	
  
Indemnity
  	
  
14
  
	
  6.3
  	
  
 
  	
  
Notices
  	
  
15
  
	
  
6.4
  	
  
 
  	
  
Survival of   Representations and Warranties and Certain Agreements
  	
  
15
  
	
  
6.5
  	
  
 
  	
  
Indulgence   Not Waiver
  	
  
15
  
	
  
6.6
  	
  
 
  	
  
Marshaling;   Payments Set Aside
  	
  
15
  
	
  
6.7
  	
  
 
  	
  
Entire   Agreement
  	
  
15
  
	
  6.8
  	
  
 
  	
  
Severability
  	
  
15
  
	
  
6.9
  	
  
 
  	
  
Headings
  	
  
15
  
	
  
6.10
  	
  
 
  	
  
Governing   Law; Waiver of Jury Trial
  	
  
15
  
	
  
6.11
  	
  
 
  	
  
Successors   and Assigns
  	
  
16
  
	
  
6.12
  	
  
 
  	
  
No Fiduciary   Relationship; No Duty; Limitation of Liabilities.
  	
  
16
  
	
   
 	
   
  	
  
(A)
  	
  
No Fiduciary   Relationship
  	
  
16
  
	
   
 	
  
 
  	
  
(B)
  	
  
No Duty
  	
  
16
  
	
   
 	
  
 
  	
  
(C)
  	
  
Limitation   of Liabilities
  	
  
16
  
	
  
6.13
  	
  
 
  	
  
Construction
  	
  
16
  
	
  
6.14
  	
  
 
  	
  
Counterparts;   Effectiveness
  	
  
16
  

-ii-

EXHIBITS

SCHEDULES

	
  
2.1(A)(1)
  	
  
Commercial   Tort Claims
  
	
  
3.1(I)
  	
  
Intellectual   Property
  
	
  
3.1(K)
  	
  
Bank   Accounts
  
	
  
3.1(L)
  	
  
Bailees
  
	
  
3.2
  	
  
Business and   Trade Names (Present and Past Five Years); Location of Principal Place of   Business, Books and Records and Collateral; State (other Jurisdiction) of   Organization and Organizational Identification Number
  

-i-

SECURITY AGREEMENT

          This SECURITY AGREEMENT (this “Agreement”) is dated as of April 10, 2006 and entered into among THE PRINCETON REVIEW, INC., a Delaware corporation (“Borrower”), THE SUBSIDIARIES SIGNATORY HERETO of Borrower (each of such undersigned Subsidiaries being a “Subsidiary Grantor” and collectively “Subsidiary Grantors”) and each ADDITIONAL GRANTOR that may become a party hereto after the date hereof (each of Borrower, each Subsidiary Grantor and each Additional Grantor being a “Grantor” and collectively the “Grantors”) and GOLUB CAPITAL INCORPORATED, as administrative agent for itself as a lender (“Administrative Agent”) and the lenders (each a “Lender” and collectively the “Lenders”) party to that certain Credit Agreement dated as of the date hereof among
Borrower, Administrative Agent and the Lenders.

          WHEREAS, Borrower desires to borrow Loans from the Administrative Agent and the Lenders in the aggregate principal amount of $6.0 million pursuant to the terms of the Credit Agreement and the related Loan Documents; and

          WHEREAS, to secure the Obligations of the Borrower under the Credit Agreement and the related Loan Documents, Grantors grant to Administrative Agent, for the benefit of the Lenders, a security interest in and lien upon all of Grantors’ real and personal property.

          NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Grantors and Administrative Agent agree as follows:

SECTION 1.   DEFINITIONS AND ACCOUNTING TERMS

          1.1          Certain Defined Terms.  The capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in the Credit Agreement.

          1.2          UCC Defined Terms.  The following terms used in this Agreement shall have the respective meanings provided for in the UCC: “Accounts”, “Account Debtor”, “Buyer in Ordinary Course of Business”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit Account”, “Documents”, “Electronic Chattel Paper”, “Equipment”, “Farm Products”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter of Credit”, “Letter-of-Credit Rights”, “Licensee in Ordinary Course of Business”, “Payment Intangibles”, “Proceeds”, “Record”, “Software”, “Supporting Obligations” and
“Tangible Chattel Paper”.

          1.3          Other Definitional Provisions.  References to “Sections”, “subsections”, “Riders”, “Exhibits”, “Schedules” and “Addenda” shall be to Sections, subsections, Riders, Exhibits, Schedules and Addenda, respectively, of this Agreement unless otherwise specifically provided.  Any of the terms defined in subsection 1.1 or otherwise in this Agreement may, unless the context otherwise requires, be used in the singular or the plural depending on the reference.  In this Agreement, words importing any gender include the other genders; the words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation”; references to agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only to the extent

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such amendments, assignments and other modifications are not prohibited by the terms of this Agreement or any other Loan Document; references to Persons include their respective permitted successors and assigns or, in the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations.

SECTION 2.   COLLATERAL

          2.1          Grant of Security Interest.

          (A)          Grant of Liens in the Collateral.  To secure the payment and performance of the Obligations, including all renewals, extensions, restructurings and refinancings of any or all of the Obligations, Grantors hereby grant to Administrative Agent, for the benefit of the Lenders, a continuing security interest in, lien and mortgage in and to, right of setoff against and collateral assignment of all of Grantors’ personal property and all rights to such personal and real property, in each case, whether now owned or existing or hereafter acquired or arising and regardless of where located (all being collectively referred to as the “Collateral”), including, without limitation, all:  (1) Accounts; (2) Chattel Paper; (3) Commercial Tort Claims, including those specified on Schedule 2.1(A)(1); (4) Deposit
Accounts and cash and other monies and property of Grantors in the possession or under the control of Administrative Agent and any Lender; (5) Documents; (6) Equipment; (7) Fixtures; (8) General Intangibles (including Intellectual Property); (9) Goods; (10) Instruments; (11) Inventory; (12) Investment Property; (13) Letter-of-Credit Rights and Supporting Obligations; and (14) other personal property whether or not subject to the UCC; and together with all books, Records, ledger cards, files, correspondence, computer programs, tapes, disks and related data processing Software that at any time evidence or contain information relating to any of the property thereon; and Proceeds and products of all or any of the property described above.  Notwithstanding the foregoing, and except with respect to property for which the UCC limits the effectiveness of restrictions on assignment or transfer pursuant to Sections 9-407, 9-408, 9-409 or otherwise, Collateral shall not include any property of Grantors to
the extent that the granting of a security interest in such property requires third party consent without breach or other material adverse consequences to Grantors, and to any such property Grantor hereby irrevocably appoints Administrative Agent as its agent and attorney-in-fact, coupled with an interest, to enforce Grantors’ rights in such property.  

          (B)          Grantors Remain Liable.  Anything herein to the contrary notwithstanding: (1) Grantors shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of their respective duties and obligations thereunder to the same extent as if this Agreement or the other Loan Documents had not been executed; (2) the exercise by Administrative Agent of any of the rights under this Agreement or the other Loan Documents shall not release Grantors from any of their respective duties or obligations to the parties under the contracts and agreements included in the Collateral; (3) Administrative Agent shall have no obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or the other Loan Documents, nor shall
Administrative Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned under this Agreement or the other Loan Documents; and (4) Administrative Agent shall have no liability in contract or tort for Grantors’ acts or omissions.

3

          2.2          Endorsement; Insurance Claims.  Grantors hereby constitute and appoint Administrative Agent and all Persons designated by Administrative Agent for that purpose as Grantors’ true and lawful attorney-in-fact, with power in the place and stead of each Grantor and in the name of such Grantor, (A) to endorse any Grantor’s name to any of the items of payment or proceeds described herein and all proceeds of Collateral that come into Administrative Agent’s possession or under Administrative Agent’s control, including without limitation, with respect to any drafts, Instruments, Documents and Chattel Paper, provided that prior to the occurrence and continuance of an Event of Default, Administrative Agent shall remit all such proceeds received to Grantor, and (B) upon the occurrence and during the continuance of an Event
of Default, to obtain, adjust and settle insurance claims, which are required to be paid to Administrative Agent.  Grantors hereby ratify and approve all acts of Administrative Agent made or taken pursuant to this subsection 2.2.  Both the appointment of Administrative Agent as Grantors’ attorney and Administrative Agent’s rights and powers are coupled with an interest and are irrevocable, until indefeasible payment in full, in cash, of all Obligations.

SECTION 3.   REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS

          To induce Administrative Agent to enter into the Credit Agreement and Loan Documents each Grantor represents, warrants and covenants to Administrative Agent that the following statements are and will be true, correct and complete and, unless specifically limited, shall remain so, until indefeasible payment in full, in cash, of all Obligations.

          3.1          Collateral Warranties and Covenants.

          (A)          Accounts Warranties and Covenants.  Except as otherwise disclosed to Administrative Agent in writing from time to time or as may consistent with Borrower’s past business practices, as to each Grantor’s existing Accounts and each of its hereafter arising Accounts, each Grantor represents and warrants to such Grantor’s knowledge that: at the time of its creation, such Account is a valid, bona fide obligation, representing an undisputed indebtedness incurred by the Account Debtor (and any other Person obligated on such Account) for property actually sold or for services completely rendered or to be rendered in the ordinary course of business; there are no defenses, setoffs, offsets, claims, or counterclaims, genuine or otherwise, against such Account; such Account does not represent a sale to a Subsidiary or an
Affiliate, or a consignment, sale or return or a bill and hold transaction; the amount represented by Grantor to Administrative Agent as owing by each Account Debtor (and by each of the other Persons obligated on such Account) is, or will be, the correct amount actually and unconditionally owing, no agreement exists permitting any other deduction or discount, except as may be consistent with each Grantor’s past business practices, or otherwise on terms which such Grantor in good faith considers advisable; such Grantor is the lawful owner of such Account and has the right to assign the same to Administrative Agent, except to the extent such assignment is limited by the Assignment of Claims Act or similar state law, for the benefit of Administrative Agent; such Account is free of all Liens, other than Permitted Encumbrances, and such Account constitutes, the legally valid and binding obligation of the applicable Account Debtor (and any other Person obligated on such Account) and is due and payable
in accordance with its terms.

4

          Each Grantor shall, at its own expense use commercially reasonable efforts to assure prompt payment of all amounts due or to become due under Accounts.  Administrative Agent, or its designee, shall have the right, at any time or times hereafter, to verify the validity, amount or any other matter relating to any Account, by mail, telephone or in person.  After the occurrence and during the continuance of an Event of Default, Administrative Agent shall have the right at any time (i) to exercise the rights of such Grantor, with respect to the obligation of the Account Debtor (or any other Person obligated on such Account) to make payment or otherwise render performance to such Grantor, and with respect to any property that secures the obligations of the Account Debtor or of any such other Person obligated on such Account; and (ii) to adjust, settle or compromise the amount or payment of any such
Account or release wholly or partly any Account Debtor or obligor thereunder or allow any credit or discount thereon.

          (B)          Inventory Warranties and Covenants.  Except as otherwise disclosed to Administrative Agent in writing from time to time or as may consistent with Borrower’s past business practices, all of Grantors’ Inventory is in all material respects of quality and quantity usable and, with respect to finished goods, saleable in the ordinary course of business, except for obsolete items and items below standard quality which are subject to applicable reserves, such Inventory is not subject to any licensing, patent, trademark, trade name or copyright agreement with any Person that materially restricts Grantors’ ability to manufacture and/or sell the Inventory.  The completion and manufacturing process of such Inventory by a Person other than Grantor would be permitted under any contract (other than any contract with the
United States of America or any State or municipal government or any department, instrumentality or agency thereof) to which a Grantor is a party or to which the Inventory is subject.  To each Grantor’s knowledge, none of Grantor’s Inventory has been or will be produced in violation of the Fair Labor Standards Act and subject to the so-called “hot goods” provisions contained in Title 29 U.S.C. 215 or in violation of any other law.  All inventory and products owned by Persons other than a Grantor or such Grantor’s customers and located on any premises owned, leased or controlled by Grantor, shall be separately and conspicuously identified as such and shall be segregated from such Grantor’s or its customers’ own Inventory located at such premises.

          (C)          Equipment Warranties and Covenants.  Each Grantor has maintained and shall cause all of its Equipment to be maintained in accordance with normal industry practice and is in good operating condition and working order, ordinary wear and tear excepted, and shall promptly make or cause to be made all repairs, replacements and other improvements in connection therewith that are necessary or desirable to such end.  None of Grantor’s Equipment (other than motor vehicles not having a market value in excess of $100,000 in the aggregate) is covered by any certificate of title and Grantor shall promptly notify Administrative Agent to the extent Grantor obtains any Equipment (other than motor vehicles not having a market value in excess of $100,000 in the aggregate) covered by any certificate of title.  Upon written
request of Administrative Agent, each Grantor shall promptly deliver to Administrative Agent to hold, as bailee for the benefit of the Lenders, any and all certificates of title, applications for title or similar evidence of ownership of all of its Equipment and shall cause Administrative Agent to be named as lienholder on any such certificate of title or other evidence of ownership.  No Grantor shall permit any such items to become Fixtures to real estate other than real estate subject to mortgages or deeds of trust in favor of Administrative Agent.

5

          (D)          Chattel Paper Warranties and Covenants.  As of the Closing Date, each Grantor does not hold any Chattel Paper and does not anticipate holding any Chattel Paper in the ordinary course of its business.  To the extent each Grantor holds or obtains any Chattel Paper in an amount in excess of $100,000 in the aggregate, Grantor will promptly (1) deliver to Administrative Agent all such Tangible Chattel Paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Administrative Agent and (2) provide Administrative Agent with Control of all such Electronic Chattel Paper, by having Administrative Agent identified as the assignee of the Records(s) pertaining to the single authoritative copy thereof and otherwise complying with the applicable elements of
Control set forth in the UCC.  Each Grantor will also deliver to Administrative Agent all security agreements securing any Chattel Paper in an amount in excess of $100,000 in the aggregate and authorize UCC financing statement amendments assigning to Administrative Agent any UCC financing statements filed by such Grantor in connection with such security agreements.  Each Grantor will mark conspicuously all Chattel Paper in an amount in excess of $100,000 in the aggregate with a legend, in form and substance satisfactory to Administrative Agent, indicating that such Chattel Paper is subject to the Lien of Administrative Agent.

          (E)          Instruments Warranties and Covenants.  Grantor will deliver to Administrative Agent all Instruments in an amount in excess of $100,000 in the aggregate it holds or obtains duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Administrative Agent.  Each Grantor will also deliver to Administrative Agent all security agreements securing any Instruments in an amount in excess of $100,000 in the aggregate and authorize UCC financing statement amendments assigning to Administrative Agent any UCC financing statements filed by such Grantor in connection with such security agreements.

          (F)          Investment Property Warranties and Covenants.  Each Grantor will take any and all actions required or requested by Administrative Agent, from time to time, to cause Administrative Agent to obtain Control of any Investment Property owned by Grantor in a manner acceptable to Administrative Agent, including obtaining from any issuers of such Investment Property and such other Persons, for the benefit of Administrative Agent, written confirmation of Administrative Agent’s Control over such Investment Property upon terms and conditions acceptable to Administrative Agent.  Prior to the occurrence and continuance of an Event of Default, Administrative Agent will not exercise any rights with respect to the Investment Property subject to its Control and will not prevent Grantor from disposing of such Investment Property or
exercising any other rights with respect thereto to the extent not prohibited under this Agreement. 

          (G)          Letters of Credit Warranties and Covenants.  If requested by Administrative Agent, each Grantor will deliver to Administrative Agent all Letters of Credit in an amount in excess of $100,000 in the aggregate under which it is the beneficiary or is otherwise entitled to receive proceeds duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Administrative Agent.  Each Grantor will

6

also deliver to Administrative Agent all security agreements securing any such Letters of Credit and authorize UCC financing statement amendments assigning to Administrative Agent any UCC financing statements filed by Grantor in connection with such security agreements.  Each Grantor will take any and all actions necessary (or required or requested by Administrative Agent), from time to time, to cause Administrative Agent to obtain Control of any Letter-of-Credit Rights owned by Grantor in a manner acceptable to Administrative Agent.

          (H)          General Intangibles Warranties and Covenants.  Each Grantor shall use its best efforts to obtain any consents, waivers or agreements necessary to enable Administrative Agent to exercise remedies hereunder and under the other Loan Documents with respect to any of Grantor’s rights under any General Intangibles constituting Collateral, including Grantor’s rights as a licensee of computer software.

          (I)          Intellectual Property Warranties and Covenants.  Each Grantor owns, is licensed to use or otherwise has the right to use, all Intellectual Property material to the conduct of its business as currently conducted, and all registered Intellectual Property is identified on Schedule 3.1(I).  Except as set forth on Schedule 3.1(I), to Grantors’ and Subsidiaries’ knowledge, there are no restrictions on Grantor’s and each of its Subsidiaries’ right to create a Lien in such Intellectual Property nor in Administrative Agent’s right to perfect and enforce such Lien.  Each Grantor shall concurrently herewith deliver to Administrative Agent the Intellectual Property Security Agreement and all other documents, instruments and other items as may be necessary for Administrative Agent to file
such agreement with the U.S. Copyright Office and the U.S. Patent and Trademark Office.  The Copyrights, Patents and Trademarks listed on the respective schedules to the Intellectual Property Security Agreement constitute all of the material Patents, Trademarks and government registered Copyrights owned by each Grantor and its Subsidiaries.  If, a Grantor acquires or becomes entitled to any new or additional Patents, Trademarks or federally registered Copyrights, or rights thereto, in each case to the extent constituting Collateral, such Grantor shall give to Administrative Agent notice thereof as provided in the Credit Agreement, and shall amend the schedules to the respective security agreements or enter into new or additional security agreements to include any such new Patents or government registered Copyrights or Trademarks.  Each Grantor shall, except as may be consistent with such Grantor’s past business practices, or otherwise as such Grantor in good faith considers
advisable: (1) prosecute diligently any copyright, patent or trademark application at any time pending; (2) make application for registration or issuance of all new copyrights, patents and trademarks as reasonably deemed appropriate by such Grantor; (3) preserve and maintain all rights in the Intellectual Property; and (4) use its best efforts to obtain any consents, waivers or agreements necessary to enable Administrative Agent to exercise its remedies with respect to the Intellectual Property constituting Collateral.  Each Grantor shall not abandon any material right to file a material copyright, patent or trademark application nor shall such Grantor abandon any material pending copyright, patent or trademark application, or any material Copyright, Patent or Trademark without the prior written consent of Administrative Agent.  The execution, delivery and performance of this Agreement by each Grantor will not violate or cause a default under any of the Intellectual Property or any agreement
in connection therewith.

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          (J)          Commercial Tort Claims Warranties and Covenants.  Except for matters disclosed on Schedule 2.1(A)(1), each Grantor does not own any Commercial Tort Claims.  Each Grantor shall advise Administrative Agent promptly upon Grantor becoming aware that it owns any one Commercial Tort Claim in an amount in excess of $100,000 or Commercial Tort Claims in an aggregate amount in excess of $250,000.  With respect to any new Commercial Tort Claim, each Grantor will execute and deliver such documents as Administrative Agent reasonably deems necessary to create, perfect and protect Administrative Agent’s security interest in such Commercial Tort Claim.

          (K)          Deposit Accounts; Bank Accounts Warranties and Covenants.  Schedule 3.1(K) sets forth the account numbers and locations of all Deposit Accounts or other bank accounts of Grantor.  Administrative Agent has a security interest in each such Deposit Account, which security interest shall be perfected by Control in accordance with, and to the extent provided by, the terms of the Credit Agreement.  After the date herein above first written, each Grantor shall not establish any new Deposit Account unless (1) it shall give Administrative Agent written notice of the establishment of any such new Deposit Account within thirty (30) days after the date such new Deposit Account was established, and (2) it shall cause Administrative Agent to obtain Control of such Deposit Account owned by Grantor, if applicable,
pursuant to Section 2.8 of the Credit Agreement.  Administrative Agent agrees with Grantors that Administrative Agent shall not give a Control Notice or any instructions directing the disposition of funds from time to time credited to any Deposit Account or withhold any withdrawal rights from any such Grantor with respect to funds from time to time credited to any Deposit Account unless an Event of Default has occurred and is continuing. 

          (L)          Bailees.  Except as disclosed on Schedule 3.1(L) or any Inventory in transit to customers or any Equipment in transit or out for repair, (1) none of the Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor and (2) no Collateral shall at any time be in the possession or control of any warehouse, bailee or Grantor’s agents or processors, without Administrative Agent’s prior written consent and unless, Administrative Agent, if Administrative Agent has so requested, has received warehouse receipts or bailee lien waivers satisfactory to Administrative Agent prior to the commencement of such possession or control.  If any Collateral with an aggregate value in excess of $100,000 is at any time in the possession or control of any warehouse, bailee or any of
Grantors’ agents or processors (except as permitted in the first sentence of this subsection (L), each Grantor shall, upon the request of Administrative Agent, notify such warehouse, bailee, agent or processor of the Liens in favor of Administrative Agent, for the benefit of Administrative Agent, created hereby, shall instruct such Person to hold all such Collateral for Administrative Agent’s account subject to Administrative Agent’s instructions, and shall obtain such Person’s acknowledgement that it is holding the Collateral for Administrative Agent’s benefit.

          (M)          Collateral Description; Use of Collateral.  Each Grantor will furnish to Administrative Agent, from time to time upon reasonable request, statements and schedules further identifying, updating, and describing the Collateral and such other information, reports and evidence concerning the Collateral, as Administrative Agent may reasonably request, all in reasonable detail.  Grantor will not use or permit any Collateral to be used unlawfully or in violation of any provision of applicable law, or any policy of insurance covering any of the Collateral, except, with respect to such insurance policy, as would not reasonably be expected to result in a Material Adverse Effect.

8

          (N)          Collateral Filing Requirements; Collateral Records.  None of the Collateral is of a type in which Liens may be registered, recorded or filed under, or notice thereof given under, any federal statute or regulation except for Collateral described on the schedules to the Intellectual Property Security Agreement.  Each Grantor shall promptly notify Administrative Agent in writing upon acquiring any interest hereafter in Collateral that is of a type where a Lien may be registered, recorded of filed under, or notice thereof given under, any federal statute or regulation.  Each Grantor shall keep full and accurate books and Records relating to the Collateral and shall stamp or otherwise mark such books and records in such manner as Administrative Agent may reasonably request to indicate Administrative Agent’s Liens
in the Collateral, for the benefit of Administrative Agent.

          (O)          Federal Claims.  Upon the request of Administrative Agent, (1) each Grantor shall notify Administrative Agent of any Collateral which constitutes a claim against the United States of America, or any State or municipal government or any department, instrumentality or agency thereof, the assignment of which claim is restricted by law and (2) each Grantor shall take such steps as may be necessary to comply with any applicable federal assignment of claims laws and other comparable laws.

          3.2          Names and Locations.  Schedule 3.2 sets forth (A) all legal names and all other names (including trade names, fictitious names and business names) under which each Grantor  and each of their Subsidiaries currently conduct business, or has at any time during the past five years conducted business, (B) the name of any entity which each Grantor or any of their Subsidiaries have acquired in whole or in part or from whom each Grantor or any of their Subsidiaries has acquired a significant amount of assets within the past five years, (C) the location of each Grantor’s and each of its Subsidiaries’ principal place of business, (D) the state or other jurisdiction of organization for each Grantor and sets forth each Grantor’s organizational identification number or specifically designates that one does not exist,
and (E) the location of each Grantor’s and each of their Subsidiaries’ books and Records and all Collateral.  The locations designated on Schedule 3.2 are Grantors’ sole locations for their respective businesses and the Collateral.  Each Grantor will give Administrative Agent at least ten (10) days advance written notice of any: (1) change of name of each Grantor, (2) change in the location of any Grantor’s books and records, (3) new location for any Grantor’s books and records, or (4) changes in Grantor’s state or other jurisdiction of organization or its organizational identification number.

          3.3          Title to Properties; Liens  Each Grantor and each of their Subsidiaries has good, sufficient and legal title to all of the Collateral and will have good, sufficient and legal title of all after-acquired Collateral, in each case, free and clear of all Liens except for the Permitted Encumbrances.  Administrative Agent has a valid, perfected and first priority Lien (subject to Permitted Encumbrances) in the Collateral, securing the payment of the Obligations and such Lien is entitled to all of the rights, priorities and benefits afforded by the UCC or other applicable law as enacted in any relevant jurisdiction which relates to perfected Liens.

          3.4          Insurance.  Each Grantor and each of their Subsidiaries maintain and shall continue to maintain adequate insurance policies and shall provide Administrative Agent with evidence of such insurance coverage for public liability, property damage, product liability, and

9

business interruption with respect to their respective business and properties and the business and properties of their Subsidiaries against loss or damage of the kinds customarily carried or maintained by corporations of established reputation engaged in similar businesses and in amounts acceptable to Administrative Agent. Beginning 10 days after the date hereof, each Grantor shall cause Administrative Agent at all times to be named as loss payee on all insurance policies relating to any Collateral and shall cause Administrative Agent at all times to be named as additional insured under all liability policies, in each case pursuant to appropriate endorsements in form and substance reasonably satisfactory to Administrative Agent and hereby collaterally assigns to Administrative Agent, as security for the payment of the Obligations all business interruption insurance.  No notice of cancellation has been received with respect to such policies.  Each
Grantor and each of their Subsidiaries is in compliance with all conditions contained in such policies, except where any such noncompliance would not have a Material Adverse Effect.  Any proceeds received from any policies of insurance relating to any Collateral, shall be applied to the Obligations in accordance with the Credit Agreement.  Each Grantor shall provide Administrative Agent evidence of the insurance coverage and of the assignments and endorsements required by this Agreement promptly upon request by Administrative Agent and upon renewal of any existing policy.  If any Grantor elects to change insurance carriers, policies or coverage amounts, such Grantor shall notify Administrative Agent and provide Administrative Agent with evidence of the updated insurance coverage and of the assignments and endorsements required by this Agreement.  In the event any  Grantor fails to provide Administrative Agent with evidence of the insurance coverage required by this Agreement,
Administrative Agent may, but is not required to, purchase insurance at Grantors’ expense to protect Administrative Agent’s interests in the Collateral.  This insurance may, but need not, protect Grantors’ interests.  The coverage purchased by Administrative Agent may not pay any claim made by any Grantor or any claim that is made against any Grantor in connection with the Collateral.  Grantors may later cancel any insurance purchased by Administrative Agent, but only after providing Administrative Agent with evidence that Grantor has obtained insurance as required by this Agreement.  If Administrative Agent purchases insurance for the Collateral, Grantors will be responsible for the costs of that insurance, including interest thereon and other charges imposed on Administrative Agent in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance, and such costs may be added to the Obligations.  The
costs of the insurance may be more than the cost of insurance Grantor are able to obtain on their own.

          3.5          Amendment of Schedule   Grantors may amend any one or more of the Schedules referred in this Section 3 (subject to prior notice to Administrative Agent, as applicable) and any representation, warranty, or covenant contained herein which refers to any such Schedule shall from and after the date of any such amendment refer to such Schedule as so amended; provided however, that in no event shall the amendment of any such Schedule constitute a waiver by Administrative Agent or any Lender of any Default or Event of Default that exists notwithstanding the amendment of such Schedule.

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SECTION 4.   FURTHER ASSURANCES

          4.1          Further Assurances

          (A)          Collateral Documentation.  Each Grantor covenants and agrees that each Grantor shall perform, and shall cause each of its Subsidiaries to from time to time, execute such guaranties, financing or continuation statements, documents, security agreements, reports and other documents or deliver to Administrative Agent such instruments, certificates of title, or other documents as Administrative Agent at any time may reasonably request to evidence, perfect or otherwise implement the guaranties and security for repayment of the Obligations provided for in the Loan Documents.  Each Grantor shall furnish to the Administrative Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.

          (B)          Authorization of Administrative Agent.  Each Grantor hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, or any similar document in any jurisdictions and with any filing offices as the Administrative Agent may determine, in its sole discretion, are necessary or advisable to perfect or otherwise protect the security interest granted to the Administrative Agent herein and hereby specifically ratifies all such actions previously taken by Administrative Agent. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Administrative Agent may determine, in its sole discretion, is necessary, advisable or
prudent to ensure the perfection of the security interest in the Collateral granted to the Administrative Agent herein, including, without limitation, describing such property as “all assets” or “all personal property, whether now owned or hereafter acquired.”

          4.2          [Reserved]

SECTION 5.   REMEDIES AND DISPOSITION OF COLLATERAL

          5.1          Remedies.  If any Event of Default shall have occurred and be continuing, in addition to and not in limitation of any other rights or remedies available to Administrative Agent at law or in equity, Administrative Agent may, and shall upon the satisfaction of certain conditions set forth in the Loan Documents, exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) and may also (A) require each Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of Administrative Agent forthwith, assemble all or part of the Collateral as directed by Administrative Agent and make it available to
Administrative Agent at a place to be designated by Administrative Agent which is reasonably convenient to both parties; (B)  without notice or demand or legal process, enter upon any premises of Grantors and take possession of the Collateral.  Each Grantor agrees that, to the extent notice of sale of the Collateral or any part thereof shall be required by law, at least ten (10) days notice to Grantor of the time and place of any public disposition or the time after which any private disposition (which notice shall include any other information required by law) is to be made shall constitute reasonable notification.  At any disposition of the Collateral (whether public or private), if permitted by law, Administrative Agent or any Lender may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase, lease,

11

or licensing of the Collateral or any portion thereof for the account of Administrative Agent or such Lender.  Administrative Agent shall not be obligated to make any disposition of Collateral regardless of notice of disposition having been given.  Grantors shall remain liable for any deficiency.  Administrative Agent may adjourn any public or private disposition from time to time by announcement at the time and place fixed therefor, and such disposition may, without further notice, be made at the time and place to which it was so adjourned.  Administrative Agent is not obligated to make any representations or warranties in connection with any disposition of the Collateral.  To the extent permitted by law, each Grantor hereby specifically waives all rights of redemption, stay or appraisal, which it has or may have under any law now existing or hereafter, enacted.  Administrative Agent shall not be required to proceed against any
Collateral but may proceed against each Grantor directly.

          5.2          Appointment of Attorney-in-Fact.  Each Grantor hereby constitutes and appoints Administrative Agent as Grantor’s attorney-in-fact with full authority in the place and stead of each Grantor and in the name of each Grantor, Administrative Agent or otherwise, from time to time in Administrative Agent’s discretion while an Event of Default is continuing to take any action and to execute any instrument that Administrative Agent may deem necessary or advisable to accomplish the purposes of this Agreement: (A) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (B) to enforce the obligations of any Account Debtor or other Person obligated on the Collateral and enforce the rights of Grantors with respect to
such obligations and to any property that secures such obligations; (C) to file any claims or take any action or institute any proceedings that Administrative Agent may deem necessary or desirable for the collection of or to preserve the value of any of the Collateral or otherwise to enforce the rights of Administrative Agent and Lenders with respect to any of the Collateral; (D) to pay or discharge taxes or Liens levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Administrative Agent in its sole discretion, and such payments made by Administrative Agent to become Obligations, due and payable immediately without demand; (E) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, assignments, verifications and notices in connection with Accounts, Chattel Paper or General Intangibles of Grantors and other Documents relating to the Collateral;
and (F) generally to take any act required of any Grantor under Section 3 or Section 4 of this Agreement, and to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Administrative Agent were the absolute owner thereof for all purposes, and to do, at Administrative Agent’s option and Grantors’ expense, at any time or from time to time, all acts and things that Administrative Agent deems necessary to protect, preserve or realize upon the Collateral.  Each Grantor hereby ratifies and approves all acts of Administrative Agent made or taken pursuant to this subsection 5.2.  The appointment of Administrative Agent as Grantors’ attorney and Administrative Agent’s rights and powers are coupled with an interest and are irrevocable, so long as any of the Commitments hereunder shall be in effect and until indefeasible payment in full, in cash, of all Obligations.

          5.3          Limitation on Duty of Administrative Agent and Lenders with Respect to Collateral.  Beyond the safe custody thereof, Administrative Agent and each Lender shall have no duty with respect to any Collateral in its possession (or in the possession of any agent or

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bailee) or with respect to any income thereon or the preservation of rights against prior parties or any other rights pertaining thereto.  Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which Administrative Agent accords its own property.  Neither Administrative Agent nor any Lender shall be liable or responsible for any loss or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehouse, carrier, forwarding agency, consignee, broker or other agent or bailee selected by Grantors or selected by Administrative Agent in good faith.

          5.4          Application of Proceeds.  Notwithstanding anything to the contrary contained in this Agreement, upon the occurrence and during the continuance of an Event of Default, each Grantor irrevocably waives the right to direct the application of any and all payments at any time or times thereafter received by Administrative Agent from or on behalf of Grantors, and Administrative Agent shall have the continuing and exclusive right to apply and to reapply any and all payments received at any time or times after the occurrence and during the continuance of an Event of Default against the Obligations in such manner as Administrative Agent may deem advisable notwithstanding any previous application by Administrative Agent.

          5.5          License of Intellectual Property.  Each Grantor hereby assigns, transfers and conveys to Administrative Agent, for the benefit of Administrative Agent and Lenders, effective upon the occurrence of any Event of Default hereunder, the non-exclusive right and license to use all Intellectual Property owned or used by each Grantor together with any goodwill associated therewith, all to the extent necessary to enable Administrative Agent to realize on the Collateral and any successor or assign to enjoy the benefits of the Collateral.  This right and license shall inure to the benefit of all successors, assigns and transferees of Administrative Agent and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.  Such
right and license is granted free of charge and does not require the consent of any other person.

          5.6          Waivers; Non-Exclusive Remedies.  No failure on the part of Administrative Agent or any Lender to exercise, and no delay in exercising and no course of dealing with respect to, any right under this Agreement or the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise by Administrative Agent or any Lender of any right under this Agreement or any other Obligations, if any, preclude any other or further exercise thereof or the exercise of any other right.  The rights in this Agreement and the other Loan Documents are cumulative and shall in no way limit any other remedies provided by law.

SECTION 6.   MISCELLANEOUS

          6.1          Expenses and Attorneys’ Fees.  Whether or not the transactions contemplated hereby shall be consummated, each Grantor agrees to promptly pay all reasonable fees, costs and expenses incurred in connection with any matters contemplated by or arising out of this Agreement including the following, and all such reasonable fees, costs and expenses shall be part of the Obligations payable on demand and secured by the Collateral: (A) fees, costs and expenses incurred by Administrative Agent (including reasonable attorneys’ fees and expenses, the allocated costs of Administrative Agent’s internal legal staff and reasonable fees of 

13

environmental consultants, accountants and other professionals retained by Administrative Agent) incurred in connection with the examination, review, due diligence investigation, documentation and closing of the financing arrangements evidenced by this Agreement; (B) fees, costs and expenses incurred by Administrative Agent (including reasonable attorneys’ fees and expenses, the allocated costs of Administrative Agent’s internal legal staff and reasonable fees of environmental consultants, accountants and other professionals retained by Administrative Agent) incurred in connection with the review, negotiation, preparation, documentation, execution, syndication and administration of this Agreement any amendments, waivers, consents, forbearances and other modifications relating thereto or any subordination or intercreditor agreements, including reasonable documentation charges assessed by Administrative Agent for amendments, waivers, consents and any other
documentation prepared by Administrative Agent’s internal legal staff; (C) fees, costs and expenses (including reasonable attorneys’ fees and allocated costs of internal legal staff) incurred by Administrative Agent in creating, perfecting and maintaining perfection of Liens in favor of Administrative Agent, on behalf of Administrative Agent and Lenders; (D) fees, costs and expenses incurred by Administrative Agent in connection with forwarding to Grantors the proceeds of the Loans including Administrative Agent’s or any Lender’s standard wire transfer fee; and (E) fees, costs, expenses (including reasonable attorneys’ fees and allocated costs of internal legal staff) of Administrative Agent or any Lender and costs of settlement incurred in collecting upon or enforcing rights against the Collateral or incurred in any action to enforce this Agreement or to collect any payments due from Grantors or any of their now or hereafter existing Subsidiaries under this Agreement or
incurred in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement, whether in the nature of a “workout” or in connection with any insolvency or bankruptcy proceedings or otherwise; provided that in the case of reimbursement of counsel for Lenders other than Administrative Agent, such reimbursement shall be limited to one counsel for all such Lenders.

          6.2          Indemnity.  In addition to the payment of expenses pursuant to subsection 6.1, whether or not the transactions contemplated hereby shall be consummated, Grantors agree to indemnify, pay and hold Administrative Agent and each Lender, and the officers, directors, employees, agents, consultants, auditors, persons engaged by Administrative Agent or any Grantors, to evaluate or monitor the Collateral, affiliates and attorneys of Administrative Agent, Lender and such Lenders (collectively called the “Indemnitees”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened, whether or not such Indemnitee shall be designated a party thereto) that may be imposed on, incurred by, or asserted against that Indemnity, in any manner relating to or arising out of this Agreement, the consummation of the transactions contemplated by this Agreement, the use or intended use of the proceeds of any of the Notes or the exercise of any right or remedy hereunder (the “Indemnified Liabilities”); provided that Grantors shall have no obligation to an Indemnitee hereunder with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of that Indemnitee as determined by a final non-appealable judgment by a court of competent jurisdiction.

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          6.3          Notices.  All notices required or permitted to be given under this Agreement shall be in conformance with Section 12.10 of the Credit Agreement.

          6.4          Survival of Representations and Warranties and Certain Agreements.  All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement.  Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of the parties set forth in subsections 6.1, 6.2, 6.6 and 6.10 shall survive the payment of the Obligations and the termination of this Agreement.

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

          6.6          Marshaling; Payments Set Aside.  Neither Administrative Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Grantor or any other party or against or in payment of any or all of the Obligations.  To the extent that any Grantor makes a payment or payments to Administrative Agent and/or any Lender or Administrative Agent and/or any Lender enforces its security interests or exercises its rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the Obligations or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

          6.7          Entire Agreement.  This Agreement and the other Loan Documents embody the entire agreement among the parties hereto and supersede all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof, and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or discussions of the parties hereto.

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

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

          6.10          Governing Law; Waiver of Jury Trial.  THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.  The terms of Sections 12.9 (“Governing Law”) and 12.13 (“Waiver of Jury Trial”) of the Credit Agreement are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.

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          6.11          Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided, however, each Grantor may not assign its rights or obligations hereunder without the written consent of Lenders.

          6.12          No Fiduciary Relationship; No Duty; Limitation of Liabilities.

          (A)          No Fiduciary Relationship.  No provision in this Agreement or in any of the other Loan Documents and no course of dealing between the parties shall be deemed to create any fiduciary duty by Administrative Agent or any Lender to any Grantor.

          (B)          No Duty.  All attorneys, accountants, appraisers, and other professional Persons and consultants retained by Administrative Agent or any Lender shall have the right to act exclusively in the interest of Administrative Agent or such Lender and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever to any Grantor’s shareholders or any other Person.

          (C)          Limitation of Liabilities.  Neither Administrative Agent nor any Lender, nor any affiliate, officer, director, shareholder, employee, attorney, or agent of Administrative Agent or any Lender shall have any liability with respect to, and each Grantor hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by each Grantor in connection with, arising out of, or in any way related to, this Agreement or any of the transactions contemplated by this Agreement.  Grantor hereby waives, releases, and agrees not to sue Administrative Agent or any Lender or any of Administrative Agent’s or any Lender’s affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or any of the transactions contemplated by this Agreement, or any of the transactions contemplated hereby.

          6.13          Construction.  Each Grantor, Administrative Agent and each Lender each acknowledge that it has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement with its legal counsel.  This Agreement shall be construed as if jointly drafted by Grantors and Administrative Agent.

          6.14          Counterparts; Effectiveness.  This Agreement and any amendments, waivers, consents, or supplements may be executed via telecopier or facsimile transmission in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute one and the same instrument. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto.

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          WITNESS the due execution of this Security Agreement by the respective duly authorized officers of the undersigned as of the date first written above.

	
  
 
  	
  
THE PRINCETON REVIEW, INC.,
   a Delaware corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ Andrew   J. Bonanni
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Andrew J.   Bonanni
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer and Treasurer
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
PRINCETON REVIEW OPERATIONS, L.L.C.,
   a Delaware limited liability company
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ Andrew   J. Bonanni
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Andrew J. Bonanni
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer and Treasurer
  

17

	
  
 
  	
  
GOLUB CAPITAL INCORPORATED,
   as Administrative Agent
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ Lawrence   E. Golub
  
	
   
  	
   
  	
  

  
	
   
  	
  Name:
  	
  Lawrence E.   Golub
  
	
   
  	
  Title:
  	
  President
  

18Exhibit 4.50

                                 PROMISSORY NOTE

FACE  AMOUNT                                     $222,000
PRICE                                            $185,000
INTEREST  RATE                                   0%  per  month
NOTE  NUMBER                                     October  -  2005-101
ISSUANCE  DATE                                   October  7,  2005
MATURITY  DATE                                   October  7,  2006

     FOR  VALUE  RECEIVED,  Xtreme  Companies,  Inc.,  a Nevada corporation (the
"Company"),  (OTC  BB:  XTME)  hereby  promises to pay DUTCHESS PRIVATE EQUITIES
FUND,  L.P.  (the  "Holder") within the Maturity Date, or earlier, the Amount of
Two Hundred and Twenty-Two Thousand Dollars ($222,000) U.S., in such amounts, at
such  times  and  on  such  terms  and  conditions as are specified herein (this
"Note").

     Any capitalized term not defined in this Note are defined in the Investment
Agreement  for  the  Equity Line of Credit between Preston Capital Partners, LLC
(the  "Investor")  and  the  Company  (the  "Equity  Line").

ARTICLE  1          METHOD  OF  PAYMENT

     Payments  made  by  the  Company  in  satisfaction  of  this  Note  (each a
"Payment,"  and  collectively,  the "Payments") shall be made from each Put from
the  Equity  Line  of  Credit  with  the  Investor  given  by the Company to the
Investor.   The  Company  shall make payments to the Holder in the amount of One
Hundred  percent (100%) of each Put Amount (the "Payment Amount") until the Face
Amount  is  paid in full, minus any fees due.   First payment will be due at the
successful Closing of the first Put ("Payment Date" or "Payment Dates"), and all
subsequent  payments  will be made at the Closing of every Put thereafter, until
this  Note  is  paid in full.   Notwithstanding any provision to the contrary in
this  Note,  the  Company  may pay in full to the Holder the Face Amount, or any
balance  remaining thereof, in readily available funds at any time and from time
to  time  without penalty.  Failure to do so will constitute an Event of Default
under  this  Agreement  and  the  Holder may immediately seek to take actions as
described  under  Article  4  of  this  Agreement.

     Payments  pursuant  to this Note shall be made directly from the Closing of
each  Put  ("Put  Closing")  and  shall be wired directly to the Holder from the
Investor  on  the  Closing  Date.

     The Company hereby authorizes the Investor to make Payments directly to the
Holder upon Closing of each Put.  The Agreement shall serve as authorization for
disbursement  of  any  funds  from  the  Equity Line until such time as the Face
Amount  is  received.

ARTICLE  2             USE  OF  PROCEEDS

     The  Company  agrees  that  the  use  of funds shall be applied as follows:

Proceeds  for  Operations        $     95,000
NFC                              $     25,000
Wall  Street  Capital  Research  $     14,000
Marketpulse                      $     17,000
The  List  Experts               $     36,000
Admin  Expense                   $     10,000

     In  the  event  the  Company  does  not  use  the funds as outlined in this
Section,  it  shall  constitute  an Event of Default and the Holder may elect to
take  action  under  Article  4

ARTICLE  3             UNPAID  AMOUNTS

     In  the  event  that  on  the  Maturity  Date the Company has any remaining
amounts unpaid on this Note (the "Residual Amount"), the Holder can exercise its
right to increase the Residual Amount by ten percent (10%) as an initial penalty
AND  two  and  one-half  percent  (2.5%)  per  month  paid  as  liquated damages
---
("Liquidated  Damages").  The  Liquated Damages will be compounded daily. If the
---
aforementioned  occurs,  the  Company  will  be  in  Default and the remedies as
described  in  Article  4  may  be  taken at the Holder's discretion.  It is the
intention and acknowledgement of both parties that the Liquidated Damages not be
deemed  as  interest.

ARTICLE  4          DEFAULTS  AND  REMEDIES

Section 4.1     Events of Default.  An "Event of Default" or "Default" occurs if
     (a)  the  Company does not make the Payment of the Face Amount of this Note
within  two  (2)  business  days  of  the  Maturity  Date,  as  applicable, upon
redemption  or  otherwise, (b) the Company, pursuant to or within the meaning of
any  Bankruptcy  Law  (as hereinafter defined):  (i) commences a voluntary case;
(ii)  consents  to the entry of an order for relief against it in an involuntary
case;  (iii) consents to the appointment of a Custodian (as hereinafter defined)
of  it  or  for  all  or substantially all of its property; (iv) makes a general
assignment  for  the  benefit  of  its  creditors;  or  (v) a court of competent
jurisdiction  enters  an  order or decree under any Bankruptcy Law that:  (A) is
for  relief against the Company in an involuntary case; (B) appoints a Custodian
of  the  Company  or for all or substantially all of its property; or (C) orders
the  liquidation of the Company, and the order or decree remains unstayed and in
effect  for  sixty (60) calendar days; (c) the Company's $0.001 par value common
stock (the "Common Stock") is suspended or is no longer listed on any recognized
exchange, including an electronic over-the-counter bulletin board, for in excess
of  two (2) consecutive trading days; or (d) the registration statement FILE NO.
333-127825 for the underlying shares in the Investment Agreement does not remain
effective for any reason after such time as declared effective by the SEC or (e)
the Company fails to comply with the Articles of this Agreement as outlined.  As
used in this Article 4.1, the term "Bankruptcy Law" means Title 11 of the United
States  Code or any similar federal or state law for the relief of debtors.  The
term  "Custodian"  means  any receiver, trustee, assignee, liquidator or similar
official  under  any  Bankruptcy  Law.

     In  the  Event  of Default, the Holder may elect to secure a portion of the
Company's  assets  not to exceed 200% of the Face Amount of the Note, including,
but not limited to: accounts receivable, cash, marketable securities, equipment,
building  or  land or inventory.  The Holder may also elect to garnishee Revenue
from  the  Company  in  an  amount  that  will repay the Holder on the schedules
outlined  in  this  Agreement.

     In  the  Event  of  Default,  as outlined in this Agreement, the Holder can
exercise  its  right to increase the Face Amount of the Debenture by ten percent
(10%)  as an initial penalty and for each Event of Default under this Agreement.
In  addition,  the  Holder  may  elect  to  increase  the Face Amount by two and
one-half  percent  (2.5%)  per  month  paid  as  a  penalty for liquated damages
("Liquidated  Damages").  The  Liquated Damages will be compounded daily.  It is
the  intention  and  acknowledgement of both parties that the Liquidated Damages
not  be  deemed  as  interest.

In  the  event  of a Default , the Holder shall also have the right, but not the
obligation,  to  1)  switch  the  Residual  Amount to a three-year ("Convertible
Maturity  Date"),  10%  interest  bearing  convertible  debenture  at  the terms
described in Article 4.2 (the "Convertible Debenture"). At such time of Default,
the  Convertible  Debenture  shall  be  considered  closed ("Convertible Closing
Date").  If  the  Holder chooses to convert the Residual Amount to a Convertible
Debenture,  the Company shall have twenty (20) business days after notice of the
same  (the  "Notice  of Convertible Debenture") to file a registration statement
covering  an  amount  of  shares  equal  to  300%  of  the Residual Amount. Such
registration  statement  shall be declared effective under the Securities Act of
1933,  as  amended  (the  "Securities  Act"),  by  the  Securities  and Exchange
Commission  (the  "Commission")  within 40 business days of the date the Company
files such Registration Statement.   In the event the Company does not file such
registration  statement  within  twenty  (20)  business  days  of  the  Holder's
request,  or such registration statement is not declared by the Commission to be
effective  under the Securities Act within the time period described above , the
Residual  Amount  shall increase by $1,000 per day.  In the event the Company is
given the option for accelerated effectiveness of the registration statement, it
agrees  that it shall cause such registration statement to be declared effective
as  soon  as reasonably practicable.  In the event that the Company is given the
option  for accelerated effectiveness of the registration statement, but chooses
not  to  cause  such  registration  statement  to  be declared effective on such
accelerated  basis,  the  Residual  Amount  shall  increase  by  $1,000  per day
commencing  on  the  earliest date as of which such registration statement would
have  been  declared to be effective if subject to accelerated effectiveness; or
2)  the  Holder  may  increase  the  Payment Amount described under Article 1 to
fulfill  the  repayment  of the Residual Amount.  The Company shall provide full
cooperation  to  the  Holder in directing funds owed to the Holder on any Put to
the  Investor.    The  Company agrees to diligently carry out the terms outlined
in  the  Investment Agreement for delivery of any such shares.  In the event the
Company  is not diligently fulfilling its obligation to direct funds owed to the
Holder  from  Puts  to the Investor, as reasonably determined by the Holder, the
Holder  may,  after  giving the Company two (2) business days' advance notice to
cure  the  same,  elect to increase the Residual Amount of the Note by 2.5% each
day,  compounded  daily.

     Article  4.2  Conversion  Privilege

(a)     The  Holder  shall  have  the right to convert the Convertible Debenture
into  shares  of Common Stock at any time following the Convertible Closing Date
which  is  before  the  close of business on the Convertible Maturity Date.  The
number of shares of Common Stock issuable upon the conversion of the Convertible
     Debenture  shall  be  determined pursuant to Article 4.3, but the number of
shares  issuable shall be rounded up or down, as the case may be, to the nearest
whole  share.

(b)     The Convertible Debenture may be converted, whether in whole or in part,
     at  any  time  and  from  time  to  time.

(c)     In  the  event  all  or any portion of the Convertible Debenture remains
outstanding  on the Convertible Maturity Date (the "Debenture Residual Amount"),
the  unconverted  portion  of  such  Convertible Debenture will automatically be
converted  into  shares  of Common Stock on such date in the manner set forth in
Article  4.3.
     Article  4.3  Conversion  Procedure.

     The Residual Amount may be converted, in whole or in part any time and from
time  to time, following the Convertible Closing Date.  Such conversion shall be
effectuated  by  surrendering  to  the Company, or its attorney, the Convertible
Debenture  to  be  converted together with a facsimile or original of the signed
notice  of  conversion  (the  "Notice  of  Conversion").   The date on which the
Notice  of Conversion is effective ("Conversion Date") shall be deemed to be the
date on which the Holder has delivered to the Company a facsimile or original of
the  signed  Notice  of  Conversion,  as  long  as  the  original  Convertible
Debenture(s)  to  be  converted  are  received  by  the  Company within five (5)
business  days thereafter.  At such time that the original Convertible Debenture
has  been received by the Company, the Holder can elect  whether a reissuance of
the  Convertible  Debenture  is warranted, or whether the Company can retain the
Convertible  Debenture  as  to  a  continual  conversion  by  the  Holder.
Notwithstanding  the  above,  any Notice of Conversion received by 4:00 P.M. EST
shall  be deemed to have been received the following business day (receipt being
via  a  confirmation  of  the  time  such facsimile to the Company is received).

(a)     Common  Stock  to  be Issued.     Upon the conversion of any Convertible
Debentures,  and  upon  receipt by the Company or its attorney of a facsimile or
original of the Holder's signed Notice of Conversion, the Company shall instruct
     its  transfer agent to issue stock certificates without restrictive legends
or  stop  transfer instructions, if at that time the aforementioned registration
statement  described  in Article 4.1 has been declared effective (or with proper
restrictive  legends  if the registration statement has not as yet been declared
effective), in such denominations to be specified at conversion representing the
number  of  shares of Common Stock issuable upon such conversion, as applicable.
In  the event that the Debenture is aged one year and deemed sellable under Rule
144, the Company shall, upon a Notice of Conversion, instruct the transfer agent
to issue free trading certificates without restrictive legends, subject to other
applicable  securities  laws.  The  Company  is responsible to provide all costs
associated  with  the  issuance  of the shares, including but not limited to the
opinion  letter,  FedEx  of the certificates and any other costs that arise. The
Company  shall  act  as  registrar  and  shall  maintain  an  appropriate ledger
containing the necessary information with respect to each Convertible Debenture.
The  Company  warrants that no instructions, other than these instructions, have
been  given  or  will  be  given to the transfer agent and that the Common Stock
shall  otherwise  be freely resold, except as may be set forth herein or subject
to  applicable  law.

(b)     Conversion  Rate.  Holder  is entitled to convert the Debenture Residual
Amount , plus accrued interest, anytime following the Convertible Maturity Date,
     at  the  lesser  of  (i) 75% of the average of the lowest closing bid price
during  the  fifteen  (15)  trading  days  immediately preceding the Convertible
Maturity  Date  or  (ii) 75% of the lowest bid price for the twenty (20) trading
days  immediately  preceding  the  Convertible  Maturity Date ("Fixed Conversion
Price").   No  fractional  shares or scrip representing fractions of shares will
be  issued  on conversion, but the number of shares issuable shall be rounded up
or  down,  as  the  case  may  be,  to  the  nearest  whole  share.

(c)     Nothing  contained  in  the  Convertible  Debenture  shall  be deemed to
establish  or  require the payment of interest to the Holder at a rate in excess
of  the  maximum rate permitted by governing law.  In the event that the rate of
interest  required  to  be  paid exceeds the maximum rate permitted by governing
law,  the rate of interest required to be paid thereunder shall be automatically
reduced  to  the  maximum rate permitted under the governing law and such excess
shall  be  returned  with  reasonable  promptness  by the Holder to the Company.

(d)     It  shall  be the Company's responsibility to take all necessary actions
and  to  bear  all  such  costs  to  issue  the Common Stock as provided herein,
including  the  responsibility and cost for delivery of an opinion letter to the
transfer  agent,  if  so  required.  Holder shall be treated as a shareholder of
record  on  the  date  Common Stock is issued to the Holder. If the Holder shall
designate  another  person  as  the  entity  in  the  name  of  which  the stock
certificates  issuable  upon  conversion  of the Convertible Debenture are to be
issued  prior  to the issuance of such certificates, the Holder shall provide to
the  Company evidence that either no tax shall be due and payable as a result of
such  transfer  or  that  the applicable tax has been paid by the Holder or such
person. Upon surrender of any Convertible Debentures that are to be converted in
     part,  the  Company  shall  issue to the Holder a new Convertible Debenture
equal  to  the  unconverted  amount,  if  so requested in writing by the Holder.

(e)     Within  five  (5)  business  days  after  receipt  of  the documentation
referred  to  above in Article 4.2, the Company shall deliver a certificate, for
the number of shares of Common Stock issuable upon the conversion.  In the event
     the  Company  does  not  make delivery of the Common Stock as instructed by
Holder  within  five  (5)  business days after the Conversion Date, then in such
event the Company shall pay to the Holder one percent (1%) in cash of the dollar
value  of  the  Debenture  Residual  Amount  remaining  after  said  conversion,
compounded  daily, per each day after the fifth (5th) business day following the
Conversion  Date  that  the  Common  Stock  is  not  delivered to the Purchaser.

           The Company acknowledges that its failure to deliver the Common Stock
within five (5) business days after the Conversion Date will cause the Holder to
suffer  damages  in an amount that will be difficult to ascertain.  Accordingly,
the  parties  agree  that it is appropriate to include in this  Note a provision
for  liquidated  damages  The  parties acknowledge and agree that the liquidated
damages  provision  set forth in this section represents the parties' good faith
effort  to quantify such damages and, as such, agree that the form and amount of
such  liquidated  damages are reasonable and will not constitute a penalty.  The
payment of liquidated damages shall not relieve the Company from its obligations
to deliver the Common Stock pursuant to the terms of this Convertible Debenture.

(f)     The  Company  shall  at  all  times reserve (or make alternative written
arrangements  for  reservation or contribution of shares) and have available all
Common  Stock necessary to meet conversion of the Convertible Debentures  by the
Holder  of  the entire amount of Convertible Debentures then outstanding. If, at
any time the Holder submits a Notice of Conversion and the Company does not have
     sufficient  authorized  but unissued shares of Common Stock (or alternative
shares  of  Common  Stock  as may be contributed by stockholders of the Company)
available  to  effect,  in  full,  a conversion of the Convertible Debentures (a
"Conversion  Default,"  the date of such default being referred to herein as the
"Conversion  Default  Date"),  the  Company shall issue to the Holder all of the
shares  of  Common Stock which are available, and the Notice of Conversion as to
any  Convertible  Debentures  requested  to  be converted but not converted (the
"Unconverted  Convertible Debentures"), may be deemed null and void upon written
notice  sent  by the Holder to the Company.  The Company shall provide notice of
such  Conversion  Default  ("Notice  of  Conversion  Default") to the Holder, by
facsimile  within  three  (3)  business  days of such default (with the original
delivered  by  overnight  mail  or  two  day courier), and the Holder shall give
notice  to  the Company by facsimile within five (5) business days of receipt of
the  original  Notice  of  Conversion  Default  (with  the original delivered by
overnight  mail or two day courier) of its election to either nullify or confirm
the  Notice  of  Conversion.

     The  Company  agrees  to  pay  the Holder payments for a Conversion Default
("Conversion  Default  Payments")  in  the amount of (N/365), multiplied by .24,
multiplied  by the initial issuance price of the outstanding or tendered but not
converted  Convertible  Debentures  held  by the Holder, where N = the number of
days  from  the  Conversion  Default Date to the date (the "Authorization Date")
that  the  Company  authorizes  a sufficient number of shares of Common Stock to
effect  conversion  of  all remaining Convertible Debentures.  The Company shall
send  notice  ("Authorization  Notice")  to the Holder that additional shares of
Common  Stock  have  been  authorized, the Authorization Date, and the amount of
Holder's  accrued  Conversion  Default Payments.  The accrued Conversion Default
shall  be  paid  in  cash  or  shall  be  convertible  into  Common Stock at the
conversion  rate set forth in the first sentence of this paragraph, upon written
notice  sent  by  the  Holder  to the Company, which Conversion Default shall be
payable  as follows:  (i) in the event the Holder elects to take such payment in
cash,  cash  payments shall be made to the Holder  by the fifth (5th) day of the
following  calendar  month,  or  (ii)  in  the  event Holder elects to take such
payment  in  stock, the Holder may convert such payment amount into Common Stock
at  the conversion rate set forth in the first sentence of this paragraph at any
time  after  the  fifth  (5th)  day of the calendar month following the month in
which  the  Authorization  Notice  was  received,  until  the  expiration of the
mandatory  three  (3)  year  conversion  period.

     The  Company  acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of  the  Convertible  Debentures  will  cause the Holder to suffer damages in an
amount that will be difficult to ascertain.  Accordingly, the parties agree that
it  is  appropriate  to  include  in  this  Agreement a provision for liquidated
damages.  The  parties  acknowledge  and  agree  that  the  liquidated  damages
provision set forth in this section represents the parties' good faith effort to
quantify  such  damages  and,  as  such,  agree that the form and amount of such
liquidated  damages  are  reasonable  and  will  not  constitute a penalty.  The
payment of liquidated damages shall not relieve the Company from its obligations
to deliver the Common Stock pursuant to the terms of this Convertible Debenture.

(g)     If,  by  the  fifth  (5th) business day after the Conversion Date of any
portion of the Convertible Debentures to be converted (the "Delivery Date"), the
     transfer  agent  fails  for  any  reason  to  deliver the Common Stock upon
conversion  by the Holder and after such Delivery Date, the Holder purchases, in
an  open  market transaction or otherwise, shares of Common Stock (the "Covering
Shares")  solely  in  order to make delivery in satisfaction of a sale of Common
Stock  by the Holder (the "Sold Shares"), which delivery such Holder anticipated
to  make  using  the  Common  Stock  issuable  upon conversion (a "Buy-In"), the
Company  shall pay to the Holder, in addition to any other amounts due to Holder
pursuant  to  this  Convertible  Debenture,  and not in lieu thereof, the Buy-In
Adjustment  Amount  (as  defined  below).  The "Buy In Adjustment Amount" is the
amount  equal  to  the  excess, if any, of (x) the Holder's total purchase price
(including  brokerage  commissions, if any) for the Covering Shares over (y) the
net  proceeds  (after brokerage commissions, if any) received by the Holder from
the sale of the Sold Shares.  The Company shall pay the Buy-In Adjustment Amount
to  the  Holder  in immediately available funds within five (5) business days of
written  demand  by the Holder.  By way of illustration and not in limitation of
the  foregoing,  if  the  Holder purchases shares of Common Stock having a total
purchase  price  (including  brokerage commissions) of $11,000 to cover a Buy-In
with  respect to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Company will be required to pay to the Holder
will  be  $1,000.

     (h)     The  Company shall defend, protect, indemnify and hold harmless the
Holder  and  all  of  its shareholders, officers, directors, employees, counsel,
and  direct  or  indirect  investors and any of the foregoing person's agents or
other  representatives  (including,  without  limitation,  those  retained  in
connection  with the transactions contemplated by this Agreement) (collectively,
the  "Article  4.3(h) Indemnitees") from and against any and all actions, causes
of  action,  suits,  claims,  losses,  costs,  penalties,  fees, liabilities and
damages,  and expenses in connection therewith (irrespective of whether any such
Article  4.3(h)  Indemnitee  is  a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the  "Article  4.3(h) Indemnified Liabilities"), incurred by any Article 4.3(h)
Indemnitee  as  a  result  of,  or  arising  out  of,  or  relating  to  (i) any
misrepresentation  or  breach  of  any  representation  or  warranty made by the
Company  in  the  Transaction  Documents or any other certificate, instrument or
document  contemplated  hereby  or  thereby,  (ii)  any  breach of any covenant,
agreement,  or  obligation of the Company contained in the Transaction Documents
or  any  other  certificate,  instrument,  or  document  contemplated  hereby or
thereby,  (iii) any cause of action, suit, or claim brought or made against such
Article  4.3(h) Indemnitee by a third party and arising out of or resulting from
the  execution,  delivery,  performance,  or  enforcement  of  the  Transaction
Documents  or any other certificate, instrument, or document contemplated hereby
or thereby, (iv) any transaction financed or to be financed in whole or in part,
directly  or  indirectly,  with the proceeds of the issuance of the Common Stock
underlying  the  Convertible  Debenture ("Securities"), or (v) the status of the
Holder or holder of the Securities as an investor in the Company, except insofar
as  any  such  misrepresentation, breach or any untrue statement, alleged untrue
statement,  omission,  or  alleged  omission  is  made  in  reliance upon and in
conformity  with  written  information furnished to the Company by the Holder or
the  Investor which is specifically intended by the Holder or the Investor to be
relied  upon  by  the  Company, including for use in the preparation of any such
registration  statement,  preliminary  prospectus, or prospectus, or is based on
illegal trading of the Common Stock by the Holder or the Investor. To the extent
that  the  foregoing  undertaking  by  the  Company may be unenforceable for any
reason,  the  Company  shall  make  the  maximum contribution to the payment and
satisfaction  of  each  of the Indemnified Liabilities that is permissible under
applicable  law.  The indemnity provisions contained herein shall be in addition
to  any  cause  of  action  or  similar  rights  the  Holder  may  have, and any
liabilities  the  Holder  may  be  subject  to.

ARTICLE  5           REGISTRATION

     The  Company agrees not to file any registration statement (including those
on Form S-8) without the prior written approval of the Holder.  In the event the
Company  does  file a registration statement without the express written consent
of  the Holder, it shall be deemed an Event of Default, and the Holder may elect
to  take  actions  under  Article  4.  The Company must also issue the Holder an
equal  number  of Shares included in the Registration Statement as an additional
penalty  for  liquidated  damages.

ARTICLE  6          MERGERS

          The  Company  shall  not consolidate or merge into, or transfer all or
substantially  all  of  its assets to, any person, unless such person assumes in
writing  the  obligations  of  the Company under this Note and immediately after
such  transaction  no  Event  of  Default  exists.  Any  reference herein to the
Company  shall  refer  to  such  surviving  or  transferee  corporation  and the
obligations of the Company shall terminate upon such written assumption. Failure
to do so will constitute an Event of Default under this Agreement and the Holder
may  immediately  seek  to  take  actions  as  described under Article 4 of this
Agreement.

ARTICLE  7             ADDITIONAL  FINANCING

          The  Company  will  not enter into any additional financing agreements
without  prior  expressed  written  consent  from the Holder, which shall not be
unreasonably  withheld.  In  the  Event  the  Company  does  enter  into another
financing  arrangement  without  written  consent it will constitute an Event of
Default under this Agreement and the Holder may immediately seek to take actions
as  described  under  Article  4 of this Agreement. Proceeds from any additional
Financing  will  immediately  be  used  toward  a  Payment.

ARTICLE  8             NOTICE

     Any  notices,  consents,  waivers  or  other  communications  required  or
permitted  to  be given under the terms of this Note must be in writing and will
be  deemed  to  have been delivered (i) upon receipt, when delivered personally;
(ii)  upon  receipt,  when  sent  by  facsimile  (provided  a  confirmation  of
transmission is mechanically or electronically generated and kept on file by the
sending  party); or (iii) one (1) day after deposit with a nationally recognized
overnight  delivery  service,  in  each  case properly addressed to the party to
receive  the  same.  The addresses and facsimile numbers for such communications
shall  be:

If  to  the  Company:

Xtreme  Companies,  Inc.
300  Westlink  Dr
Washington,  MO  36090
Telephone:  (636)  390-9000
Facsimile:  (636)  390-2556

If  to  the  Holder:

Dutchess  Private  Equities  Fund,  LP
Douglas  Leighton
50  Commonwealth  Ave,  Suite  2
Boston,  MA  02116
(617)  301-4700
(617)  249-0947

     Each  party  shall provide five (5) business days prior notice to the other
party  of  any  change  in  address,  phone  number  or  facsimile  number.

ARTICLE  9            TIME
     Where  this  Note  authorizes  or  requires  the  payment  of  money or the
performance of a condition or obligation on a Saturday or Sunday or a holiday in
which  the United States Stock Markets ("US Markets") are closed ("Holiday"), or
authorizes or requires the payment of money or the performance of a condition or
obligation  within,  before  or  after  a period of time computed from a certain
date,  and such period of time ends on a Saturday or a Sunday or a Holiday, such
payment  may be made or condition or obligation performed on the next succeeding
business  day,  and  if the period ends at a specified hour, such payment may be
made  or condition performed, at or before the same hour of such next succeeding
business  day,  with  the  same  force  and  effect  as  if made or performed in
accordance  with  the  terms of this Note.  A "business day" shall mean a day on
which  the  US  Markets  are  open  for  a  full  day  or  half  day of trading.

ARTICLE  10            NO  ASSIGNMENT
     This  Note  shall  not  be  assigned.

ARTICLE  11           RULES  OF  CONSTRUCTION.
     In  this Note, unless the context otherwise requires, words in the singular
number  include the plural, and in the plural include the singular, and words of
the  masculine gender include the feminine and the neuter, and when the tense so
indicates,  words of the neuter gender may refer to any gender.  The numbers and
titles  of  sections  contained  in  the  Note  are  inserted for convenience of
reference  only,  and  they  neither form a part of this Note nor are they to be
used  in  the  construction or interpretation hereof.  Wherever, in this Note, a
determination of the Company is required or allowed, such determination shall be
made  by  a majority of the Board of Directors of the Company and, if it is made
in  good  faith,  it  shall  be  conclusive and binding upon the Company and the
Holder.

ARTICLE  12            GOVERNING  LAW
     The  validity,  terms,  performance  and  enforcement of this Note shall be
governed  and construed by the provisions hereof and in accordance with the laws
of  the  Commonwealth  of  Massachusetts  applicable  to  agreements  that  are
negotiated,  executed,  delivered  and  performed  solely in the Commonwealth of
Massachusetts.

ARTICLE  13          LITIGATION

     The  parties  to this agreement will submit all disputes arising under this
agreement  to arbitration in Boston, Massachusetts before a single arbitrator of
the  American Arbitration Association ("AAA").  The arbitrator shall be selected
by  application  of the rules of the AAA, or by mutual agreement of the parties,
except that such arbitrator shall be an attorney admitted to practice law in the
Commonwealth  of  Massachusetts.  No  party to this agreement will challenge the
jurisdiction  or  venue  provisions  as  provided  in  this  section.

ARTICLE  14           STRUCTURING  EXPENSE

     The Company shall pay fees associated with the transaction in the amount of
ten  thousand  dollars  ($10,000)  directly  from  the  Closing  of  this  Note.

ARTICLE  15             INDEMNIFICATION

     In  consideration  of the Holder's execution and delivery of this Agreement
and  the  acquisition  and  funding  by  the Holder of the Note hereunder and in
addition  to  all  of  the  Company's  other  obligations  under  the  documents
contemplated  hereby,  the  Company  shall  defend,  protect, indemnify and hold
harmless the Holder and all of its shareholders, officers, directors, employees,
counsel,  and  direct  or  indirect  investors and any of the foregoing person's
agents  or  other representatives (including, without limitation, those retained
in  connection  with  the  transactions  contemplated  by  this  Agreement)
(collectively,  the  "Indemnities") from and against any and all actions, causes
of  action,  suits,  claims,  losses,  costs,  penalties,  fees, liabilities and
damages,  and expenses in connection therewith (irrespective of whether any such
Indemnitee  is  a  party  to  the  action for which indemnification hereunder is
sought),  and  including  reasonable  attorneys'  fees  and  disbursements  (the
"Indemnified  Liabilities"  ),  incurred  by  any  Indemnitee as a result of, or
arising  out  of,  or  relating  to  (i)  any misrepresentation or breach of any
representation  or  warranty  made  by  the  Company  in  the Note, or any other
certificate,  instrument  or  document  contemplated  hereby or thereby (ii) any
breach  of any covenant, agreement or obligation of the Company contained in the
Note  or  any  other certificate, instrument or document  contemplated hereby or
thereby,  except  insofar  as  any  such misrepresentation, breach or any untrue
statement,  alleged  untrue  statement,  omission or alleged omission is made in
reliance  upon  and  in  conformity  with  written  information furnished to the
Company  by,  or  on behalf of, the Holder or is based on illegal trading of the
Common  Stock by the Holder. To the extent that the foregoing undertaking by the
Company  may be unenforceable for any reason, the Company shall make the maximum
contribution  to  the  payment  and  satisfaction  of  each  of  the Indemnified
Liabilities  that  is permissible under applicable law. The indemnity provisions
contained  herein  shall be in addition to any cause of action or similar rights
the  Holder  may  have,  and  any  liabilities  the  Holder  may  be subject to.

ARTICLE  16            WAIVER

     The  Holder's  delay  or  failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants shall
not  waiver, affect, or diminish any right of the Holder under this Agreement to
demand  strict  compliance and performance herewith. Any waiver by the Holder of
any  Event  of  Default  shall  not  waive or affect any other Event of Default,
whether  such Event of Default is prior or subsequent thereto and whether of the
same  or a different type. None of the undertakings, agreements and covenants of
the  Company  contained  in  this  Agreement,  and no Event of Default, shall be
deemed  to  have  been  waived by the Holder, nor may this Agreement be amended,
changed  or  modified,  unless such waiver, amendment, change or modification is
evidenced  by an instrument in writing specifying such waiver, amendment, change
or  modification  and  signed  by  the  Holder.

ARTICLE  17            WAIVER  OF  JURY  TRIAL

     AS  A  MATERIAL  INDUCEMENT  FOR  EACH  PARTY  HERETO  TO  ENTER  INTO THIS
AGREEMENT,  THE  PARTIES  HERETO  HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
LEGAL  PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OF THE
OTHER  DOCUMENTS  ASSOCIATED  WITH  THIS  TRANSACTION.

ARTICLE  18            SENIOR  OBLIGATION

     The  Company  shall  cause  this  Note  and  all  other  existing Notes and
Debentures with the Holder ("Holder's Debt") to be senior in right of payment to
all  other  Indebtedness  of  the  Company.

     Any  misrepresentations  shall  be considered a breach of contract and will
constitute  an  Event  of  Default  under  this  Agreement  and  the  Holder may
immediately seek to take actions as described under Article 4 of this Agreement.

ARTICLE  20  PRIOR  NOTES  WITH  HOLDER

     At such time as this Note is paid off in full, the Company agrees to resume
and  maintain  the schedule of Payments for Prior Notes as outlined in Article 1
("Method  of  Payment")  of  THIS  Note  (October  2005  -  101)

WHILE THERE IS AN OUTSTANDING BALANCE ON THIS NOTE AND ALL PRIOR NOTES WITH THE
HOLDER, THE TERMS AND CONDITIONS DEFINED IN THE ARTICLES HEREIN SHALL SUPERCEDE
ALL OTHER AGREEMENTS AND REPRESENTATIONS, WHETHER WRITTEN AND ORAL, BETWEEN THE
   HOLDER AND THE COMPANY SPECIFICALLY WITH RESPECT TO ARTICLE 1 ("METHOD OF
   PAYMENT") DEFINED IN PRIOR NOTES AND THE COMPANY SHALL INSTEAD COMPLY WITH
 ARTICLE 21 DEFINED ABOVE WITH RESPECT TO ALL FUTURE PAYMENTS. THE HOLDER SHALL
 HAVE THE RIGHT TO DIRECT PAYMENTS TOWARD THIS NOTE OR ANY OTHER NOTE WHILE ANY
                             NOTES ARE OUTSTANDING.

                                      *****

IN WITNESS WHEREOF, the Company has duly executed this Note as of the date first
written  above.
                         XTREME  COMPANIES,  INC.

                         By:    /s/  Kevin  Ryan
                                ----------------
                       Name:       Kevin  Ryan
                      Title:       Chief  Executive  Officer

                              DUTCHESS  PRIVATE  EQUITIES  FUND,  L.P.
                              BY  ITS  GENERAL  PARTNER  DUTCHESS
                              CAPITAL  MANAGEMENT,  LLC

                         By:    /s/  Douglas  H.  Leighton
                                --------------------------
                       Name:  Douglas  H.  Leighton
                      Title:  A  Managing  Member

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]