Document:

EXHIBIT
4.1

THIS WARRANT WAS ORIGINALLY ISSUED ON NOVEMBER 8,
2006, AND SUCH ISSUANCE WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY COMPARABLE STATE SECURITIES LAWS.  NEITHER THIS WARRANT NOR ANY OF THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, ASSIGNED, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND THE COMPANY HAS RECEIVED EVIDENCE OF SUCH
EXEMPTION REASONABLY SATISFACTORY TO IT.

CHARYS HOLDING
COMPANY, INC.

STOCK PURCHASE WARRANT

	
  Date of Issuance:
  November 8, 2006

  	
  Certificate No.
  W-2006-2

  

 

FOR
VALUE RECEIVED, CHARYS HOLDING COMPANY, INC., a Delaware corporation (the “Company”), hereby grants to NEW STREAM
COMMERCIAL FINANCE, LLC, a Delaware limited liability company, or its
registered successors and/or assigns (the “Registered
Holders”) the right to purchase from the Company 600,000 shares (the
“Warrant Quantity”) of its Common
Stock, at a price per share of four and 0/100 ($4.00) dollars (the “Exercise Price”).  Certain capitalized terms used herein are
defined in Section 1 hereof.  The amount
and kind of securities obtainable pursuant to the rights granted hereunder and
the purchase price for such securities are subject to adjustment pursuant to
the provisions contained in this Warrant.

This
Warrant is subject to the following provisions:

SECTION 1.                   DEFINITIONS.  The following terms have the meanings set
forth below:

“Additional Shares of Common Stock” means
all shares (including treasury shares) of Common Stock issued or sold (or
deemed to be issued) by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than:

(a)           shares issued on the
exercise of this Warrant;

(b)           such number of
additional shares as may become issuable on the exercise of this Warrant by
reason of adjustments required pursuant to the anti-dilution provisions
applicable to this Warrant as in effect on the date hereof;

 

(c)           shares, warrants,
options and other securities issued by the Company at any time to the
Registered Holder or any affiliate thereof;

(d)           in connection with an
Approved Share Plan; and

(e)           issued upon exercise of
any Options or Convertible Securities that are outstanding on the date
immediately preceding the date hereof.

“Approved Share Plan” means any employee
benefit plan that has been approved by the Company’s board of directors,
pursuant to which the Company’s equity securities may be issued to any
employee, officer, consultant or director for services provided to the Company.

“Commission” means the Securities and
Exchange Commission or any other federal agency then administering the
Securities Act and other federal securities laws.

“Common Stock” means the Company’s common
stock, par value $0.001 per share and any other stock into which such common
stock shall have been changed or any stock resulting from any reclassification
of such common stock, and all other stock of any class or classes (however
designated) of the Company the holders of which have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.

“Convertible Securities” means any
evidences of indebtedness, shares of stock (other than Common Stock) or other
securities directly or indirectly convertible into or exchangeable for
Additional Shares of Common Stock.

“Current Market Price” means, on any date
specified herein, the average of the daily Market Price during the 10
consecutive trading days commencing 15 trading days before such date, except
that, if on any such date the shares of Common Stock are not listed or admitted
for trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price shall be the Market Price on
such date.

“Exchange Act” means the Securities
Exchange Act of 1934, as amended, or any similar federal statute, and the rules
and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.

“Fair Value” means, on any date specified
herein (i) in the case of cash, the dollar amount thereof, (ii) in the case of
a security, the Current Market Price, and (iii) in all other cases, the fair
value thereof (as of a date which is within 20 days of the date as of which the
determination is to be made) determined in good faith by the Company; provided
that if the Registered Holders provide written notice to the Company that they
do not agree with the Company’s determination of Fair Value within a reasonable
period of time after receipt of such valuation and the documentation on which
it is based, such Fair Value shall be determined by an appraiser jointly
selected by the Company and the Registered Holders or, if that selection cannot
be made within 10 days, by an appraiser selected by the American Arbitration
Association in accordance with its rules. 
The determination of such appraiser shall be final and binding on the
Company and the Registered Holders, and the fees and expenses of such appraiser
shall be paid by the Company.

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“Market Price” means as to any security the
average of the closing prices of such security’s sales on all domestic
securities exchanges on which such security may at the time be listed, or, if
there have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00
P.M., New York time, on such day, or, if on any day such security is not quoted
in the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, in each
such case averaged over a period of 21 days consisting of the day as of which “Market
Price” is being determined and the 20 consecutive business days prior to such
day; provided that if such security is listed on any domestic securities
exchange the term “business days” as used in this sentence means business days
on which such exchange is open for trading. 
If at any time such security is not listed on any domestic securities
exchange or quoted in the NASDAQ System or the domestic over-the-counter
market, the “Market Price” shall be the Fair Value thereof.

“Options” means any rights, options or
warrants to subscribe for, purchase or otherwise acquire either Additional
Shares of Common Stock or Convertible Securities.

“Other Securities” means any stock (other
than Common Stock) and other securities of the Company or any other Person
(corporate or otherwise) which the holders of this Warrant at any time shall be
entitled to receive, or shall have received, upon the exercise of this Warrant,
in lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of Common
Stock or Other Securities.

“Person” means an individual, a
partnership, a joint venture, a corporation, a limited liability company, a
trust, an unincorporated organization and a government or any department or
agency thereof.

“Registrable Securities” means (i) any of
the shares of Common Stock issuable on the exercise of this Warrant and (ii)
any shares of Common Stock issued or to be issued with respect to the Common
Stock issuable on the exercise of this Warrant by way of a stock dividend or
stock split. As to any particular Registrable Security, such security will
cease to be a Registrable Security when it (A) has been effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering such security, (B) has been transferred through a
broker-dealer in an open market transaction pursuant to Rule 144 (or any
similar provision then in force) or (C) is eligible for sale pursuant to Rule
144(k) (or any similar provision then in force).

 “Securities Act”
means the Securities Act of 1933, as amended, or any similar federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.

SECTION 2.                   EXERCISE OF WARRANT

2A.          Exercise Period.  A Registered Holder may exercise, in whole or
in part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and

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from time to time after the Date of Issuance until
5:00 p.m., Eastern Time, on November 8, 2011 (the “Exercise
Period”).

2B.          Exercise Procedure.

(i)            This Warrant shall be
deemed to have been exercised when the Company has received all of the
following items (the “Exercise Time”):

(a)           a completed Exercise Agreement, as described
in Section 2C below and in the form set forth in Exhibit I hereto, executed by
the Person exercising all or part of the purchase rights represented by this
Warrant (the “Purchaser”);

(b)           this Warrant;

(c)           if this Warrant is not registered in the
name of the Purchaser, an Assignment or Assignments in the form set forth in Exhibit
II hereto evidencing the assignment of this Warrant to the Purchaser
together with reasonably requested supporting documentation and/or information
relating thereto, if theretofore requested, in which case the Registered Holder
shall have complied with the provisions set forth in Section 7 hereof; and

(d)           either (1) a check payable to the Company in
an amount equal to the product of the Exercise Price multiplied by the number
of shares of Common Stock being purchased upon such exercise (the “Aggregate Exercise Price”), (2) if (A) the Commission does
not declare effective a registration statement contemplated by Section 5B of
this Warrant on or before February 24, 2007 or (B) if the Company has not filed
a registration statement with respect to the Registrable Securities on or
before November 26, 2006 and the Initiating Holder (as defined below) requests
that the Company file a registration statement in accordance with Section 5A of
this Warrant and the Commission does not declare that registration statement
effective on or before a date that is 180 days after the date of such request
(the circumstances described in subsections 2B(i)(d)(2)(A) and 2B(i)(d)(2)(B)
of this Warrant being herein called “Triggering Events”),
the surrender to the Company of debt or equity securities of the Company or any
of its wholly-owned subsidiaries having a Market Price equal to the Aggregate
Exercise Price of the Common Stock being purchased upon such exercise (provided
that for purposes of this subsection, the Market Price of any note or other
debt security or any preferred stock shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof plus all
accrued and unpaid interest thereon or accrued or declared and unpaid dividends
thereon) or (3) if a Triggering Event occurs, a written notice to the Company
that the Purchaser is exercising the Warrant (or a portion thereof) by
authorizing the Company to withhold from issuance a number of shares of Common
Stock issuable upon such exercise of the Warrant which when multiplied by the
Market Price of the Common Stock is equal to the Aggregate Exercise Price (and
such withheld shares shall no longer be issuable under this Warrant).

(ii)           Certificates for shares
of Common Stock purchased upon exercise of this Warrant shall be delivered by
the Company to the Purchaser within 10 business days after the date of the
Exercise Time.  Unless this Warrant has
expired or all of the purchase rights represented hereby

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have been exercised, the Company shall prepare a new
Warrant, substantially identical hereto, representing the rights formerly
represented by this Warrant which have not expired or been exercised and shall,
within such 10 business day period, deliver such new Warrant to the Person
designated for delivery in the Exercise Agreement.

(iii)          The Common Stock
issuable upon the exercise of this Warrant shall be deemed to have been issued
to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for
all purposes to have become the record holder of such Common Stock at the
Exercise Time, but if the Company shall have notified the Purchaser, in
writing, that additional documentation and/or information is required to effect
the exercise of this Warrant, for the purpose of Section 2B(i)(c), the “Exercise
Time” shall be the time when the Company receives such documentation and/or
information.

(iv)          The issuance of
certificates for shares of Common Stock upon exercise of this Warrant shall be
made without charge to the Registered Holder or the Purchaser for any issuance
tax in respect thereof or other cost incurred by the Company in connection with
such exercise and the related issuance of shares of Common Stock.  Each share of Common Stock issuable upon
exercise of this Warrant shall upon payment of the Exercise Price therefor, be
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.

(v)           The Company shall not
close its books against the transfer of this Warrant or of any share of Common
Stock issued or issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant.  The Company shall from time to time take all
such action as may be necessary to assure that the par value per share of the
unissued Common Stock acquirable upon exercise of this Warrant is at all times
equal to or less than the Exercise Price then in effect.

(vi)          The Company shall assist
and cooperate with any Registered Holder or Purchaser required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant (including, without limitation,
making any filings required to be made by the Company).

(vii)         Notwithstanding any other
provision hereof, if an exercise of any portion of this Warrant is to be made
in connection with a registered public offering or the sale of the Company, the
exercise of any portion of this Warrant may, at the election of a Registered
Holder hereof, be conditioned on the consummation of the public offering or
sale of the Company in which case such exercise shall not be deemed to be
effective until the consummation of such transaction.

(viii)        The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of issuance upon the exercise of the
Warrants, such number of shares of Common Stock issuable upon the exercise of
all outstanding Warrants.  The Company
shall take all such actions as may be necessary to assure that all such shares
of Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon each such
issuance).  The Company shall not take
any action which would cause

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the number of authorized but unissued shares of Common
Stock to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Warrants.

(ix)           Upon any exercise of
this Warrant, the Company may require customary investment representations from
a Registered Holder and the Purchaser to assure that the issuance of the Common
Stock hereunder shall not require registration or qualification under the
Securities Act or any applicable state securities laws and such Registered
Holder or the Purchaser, as the case may be, agrees promptly to provide such
investment representations to the Company.

2C.          Exercise Agreement.  Upon any exercise of this Warrant, the
Exercise Agreement shall be substantially in the form set forth in Exhibit I
hereto, except that if the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued, and if the number of shares of
Common Stock to be issued does not include all the shares of Common Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be
delivered.  Such Exercise Agreement shall
be dated the actual date of execution thereof.

2D.          Fractional Shares.  If a fractional share of Common Stock would,
but for the provisions of paragraph 2A, be issuable on exercise of the rights
represented by this Warrant, the Company shall, within 10 business days after
the date of the Exercise Time, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the difference
between Market Price of such fractional share as of the date of the Exercise
Time and the Exercise Price of such fractional share.

SECTION 3.                   ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF SHARES.  In order to
prevent dilution of the rights granted under this Warrant, the Warrant Quantity
shall be subject to adjustment from time to time as provided in this Section 3.

3A.          Adjustment of Number
of Shares upon Certain Issuances. 
Subject to the other provisions of this Section 3, in case the Company
at any time or from time to time after the date hereof shall issue or sell
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 3B) without consideration or for
consideration per share less than the Current Market Price in effect immediately
prior to such issue or sale, then, in each such case, the Warrant Quantity
shall be increased, concurrently with such issue or sale, to an amount
determined by multiplying such Warrant Quantity by a fraction:

(i)            the numerator of which
shall be the number of shares of Common Stock outstanding immediately after
such issue or sale, provided that, for the purposes of this
Section 3A(i), (i) immediately after any Additional Shares of Common Stock
are deemed to have been issued pursuant to Section 3B, such Additional Shares
shall be deemed to be outstanding, and (ii) treasury shares shall not be deemed
to be outstanding, and

(ii)           the denominator of
which shall be the sum of (x) the number of shares of Common Stock
outstanding immediately prior to such issue or sale and (y) the number of
shares of Common Stock which the aggregate consideration received by the
Company for the total number of

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such Additional Shares of Common Stock so issued or
sold would purchase at such Current Market Price.

3B.          Treatment of Options
and Convertible Securities.  In case
the Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (whether or not the rights thereunder are
immediately exercisable), then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been fixed, as of the
close of business on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), provided, that, such Additional Shares of Common Stock shall
not be deemed to have been issued unless the consideration per share
(determined pursuant to Section 3D) of such shares would be less than the
Current Market Price in effect on the date of and immediately prior to such
issue, sale, grant or assumption or immediately prior to the close of business
on such record date (or, if the Common Stock trades on an ex-dividend basis, on
the date prior to the commencement of ex-dividend trading), as the case may be,
and provided, further, that in any such case in which Additional
Shares of Common Stock are deemed to be issued:

(i)            whether or not the
Additional Shares of Common Stock underlying such Options or Convertible
Securities are deemed to be issued, no further adjustment of the Warrant
Quantity shall be made upon the subsequent issue or sale of Convertible
Securities or shares of Common Stock upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, except in the case of
any such Options or Convertible Securities which contain provisions requiring
an adjustment, subsequent to the date of the issue or sale thereof, of the
number of Additional Shares of Common Stock issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities by reason
of (x) a change of control of the Company, (y) the acquisition by any Person or
group of Persons of any specified number or percentage of the voting securities
of the Company or (z) any similar event or occurrence, each such case to be
deemed hereunder to involve a separate issuance of Additional Shares of Common
Stock, Options or Convertible Securities, as the case may be;

(ii)           if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the Company, or
decrease in the number of Additional Shares of Common Stock issuable, upon the
exercise, conversion or exchange thereof (by change of rate or otherwise), the
Warrant Quantity computed upon the original issue, sale, grant or assumption
thereof (or upon the occurrence of the record date, or date prior to the
commencement of ex-dividend trading, as the case may be, with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options, or the rights of conversion or exchange
under such Convertible Securities, which are outstanding at such time;

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(iii)          upon the expiration (or
purchase by the Company and cancellation or retirement) of any such Options
which shall not have been exercised or the expiration of any rights of
conversion or exchange under any such Convertible Securities which (or purchase
by the Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall not have
been exercised, the Warrant Quantity computed upon the original issue, sale,
grant or assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be, with
respect thereto), and any subsequent adjustments based thereon, shall, upon
such expiration (or such cancellation or retirement, as the case may be), be
recomputed as if:

(a)           in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common Stock issued or
sold were the Additional Shares of Common Stock, if any, actually issued or
sold upon the exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was the
consideration actually received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus the
consideration actually received by the Company upon such exercise, or for the
issue or sale of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the Company upon such conversion or exchange, and

(b)           in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued or sold
upon the exercise of such Options were issued at the time of the issue or sale,
grant or assumption of such Options, and the consideration received by the
Company for the Additional Shares of Common Stock deemed to have then been issued
was the consideration actually received by the Company for the issue, sale,
grant or assumption of all such Options, whether or not exercised, plus the
consideration deemed to have been received by the Company (pursuant to
Section 3D) upon the issue or sale of such Convertible Securities with
respect to which such Options were actually exercised;

(iv)          no readjustment pursuant
to subdivision (ii) or (iii) above shall have the effect of
decreasing the Warrant Quantity by an amount in excess of the amount of the
adjustment thereof originally made in respect of the issue, sale, grant or
assumption of such Options or Convertible Securities; and

(v)           in the case of any such
Options which expire by their terms not more than 30 days after the date of
issue, sale, grant or assumption thereof, no adjustment of the Warrant Quantity
shall be made until the expiration or exercise of all such Options, whereupon
such adjustment shall be made in the manner provided in subdivision
(iii) above.

3C.          Stock Dividends,
Splits, etc.  In case the Company at
any time or from time to time after the date hereof shall declare or pay any
dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any
such dividend, immediately after the close of business on the record date for
the determination of holders of any class of securities entitled to receive
such

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dividend, or (b) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.

3D.          Computation of
Consideration.  For the purposes of
this Section 3, the consideration for the issue or sale of any Additional
Shares of Common Stock shall, irrespective of the accounting treatment of such consideration,

(i)            insofar as it consists
of cash, be computed at the amount of cash received by the Company, without
deducting any expenses paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to underwriters, dealers
or others performing similar services in connection with such issue or sale,

(ii)           insofar as it consists
of property (including securities) other than cash, be computed at the Fair
Value thereof at the time of such issue or sale, and

(iii)          in case Additional
Shares of Common Stock are issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers
both, the portion of such consideration so received, computed as provided in
clauses (i) and (ii) above, allocable to such Additional Shares of
Common Stock, such allocation to be determined in the same manner that the Fair
Value of property not consisting of cash or securities, is to be determined as
provided in the definition of Fair Value herein;

(iv)          Additional Shares of
Common Stock deemed to have been issued pursuant to Section 3B, relating
to Options and Convertible Securities, shall be deemed to have been issued for
a consideration per share determined by dividing:

(a)           the total amount, if any, received and
receivable by the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in question, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Company upon
the exercise in full of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, in each case computing such
consideration as provided in this subsection (a),

by

(b)           the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of
such Convertible Securities; and

(v)           Additional Shares of
Common Stock deemed to have been issued pursuant to Section 3C, relating
to stock dividends, stock splits, etc., shall be deemed to have been issued for
no consideration.

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3E.           Adjustments for Combinations,
etc.  In case the outstanding shares
of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Quantity
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately decreased.

3F.           Dilution in Case of
Other Securities.  In case any Other
Securities shall be issued or sold or shall become subject to issue or sale
upon the conversion or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other Person referred to in
Section 1) or to subscription, purchase or other acquisition pursuant to
any Options issued or granted by the Company (or any such other issuer or
Person) for a consideration such as to dilute, on a basis consistent with the
standards established in the other provisions of this Section 3, the
purchase rights granted by this Warrant, then, and in each such case, the
computations, adjustments and readjustments provided for in this Section 3
with respect to the Warrant Quantity shall be made as nearly as possible in the
manner so provided and applied to determine the amount of Other Securities from
time to time receivable upon the exercise of this Warrant, so as to protect the
Registered Holders of this Warrant against the effect of such dilution.

3G.          De Minimis
Adjustments.  If the amount of any
adjustment of the Warrant Quantity required pursuant to this Section 3
would be less than 0.5% of the Warrant Quantity in effect at the time such
adjustment is otherwise so required to be made, such amount shall be carried
forward and adjustment with respect thereto made at the time of and together
with any subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate a change in the Warrant
Quantity of at least 0.5% of such Warrant Quantity.  All calculations under this Warrant shall be
made to the nearest 1/10 of a share.

3H.          Abandoned Dividend or
Distribution.  If the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or other distribution (which results in an
adjustment to the Warrant Quantity under the terms of this Warrant) and shall,
thereafter, and before such dividend or distribution is paid or delivered to
shareholders entitled thereto, legally abandon its plan to pay or deliver such
dividend or distribution, then any adjustment made to the Warrant Quantity by
reason of the taking of such record shall be reversed, and any subsequent
adjustments, based thereon, shall be recomputed.

3I.            Reorganization,
Reclassification, Consolidation, Merger or Sale.  Any recapitalization, reorganization, reclassification,
consolidation, merger or sale of all or substantially all of the Company’s
assets or other transaction, in each case which is effected in such a way that
the holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an “Organic Change”.  Prior to the consummation of any Organic
Change, the Company shall make appropriate provision (in form and substance
satisfactory to the Registered Holders of the Warrants representing a majority
of the Common Stock obtainable upon exercise of all Warrants then outstanding)
to insure that each of the Registered Holders of the Warrants shall thereafter
have the right to acquire and receive, in lieu of or addition to (as the case
may be) the shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such Registered Holder’s Warrant, such shares
of stock, securities or assets as would have been issued or payable in

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such Organic Change (if the Registered Holder had
exercised this Warrant immediately prior to such Organic Change) with respect
to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of such Registered Holder’s
Warrant had such Organic Change not taken place.  In any such case, the Company shall make
provision (in form and substance commercially reasonably satisfactory to the
Registered Holders of the Warrants representing a majority of the Common Stock
obtainable upon exercise of all Warrants then outstanding) with respect to such
Registered Holders’ rights and interests to insure that the provisions of this
Section 3 and Section 4 hereof shall thereafter apply to the
Warrants.  The Company shall not effect
any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor entity (if other than the Company) resulting from
consolidation or merger or the entity purchasing such assets assumes by written
instrument (in form and substance commercially reasonably satisfactory to the
Registered Holders of Warrants representing a majority of the Common Stock
obtainable upon exercise of all of the Warrants then outstanding), the
obligation to deliver to each such Registered Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Registered Holder may be entitled to acquire.

3J.           Certain Events.  If any event occurs of the type contemplated
by the provisions of this Section 3 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company’s board of directors shall make an appropriate adjustment in the
Warrant Quantity so as to protect the rights of the Registered Holders of the
Warrants; provided that no such adjustment shall decrease the number of shares
of Common Stock obtainable as otherwise determined pursuant to this Section 3.

3K.          Notices.

(i)            Immediately upon any
adjustment of the Warrant Quantity, the Company shall give written notice
thereof to the Registered Holders, setting forth in reasonable detail and
certifying the calculation of such adjustment.

(ii)           The Company shall give
written notice to the Registered Holder at least 20 days prior to the date on
which the Company closes its books or takes a record (A) with respect to any
pro rata subscription offer to holders of Common Stock or (B) for determining rights
to vote with respect to any Organic Change, dissolution or liquidation.

 11
 

 

SECTION 4.                   PURCHASE RIGHTS.  If at any time the Company issues or sells
any Options, Convertible Securities or rights to purchase stock, warrants or
equity securities pro rata to the record holders of any class of Common Stock
(the “Purchase Rights”), then the
Registered Holders of this Warrant shall be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
Registered Holder could have acquired if such Registered Holder had held the
number of shares of Common Stock acquirable on complete exercise of this
Warrant immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights; provided that such Registered
Holder provides the Company with written notice of its election to acquire such
Purchase Rights within 5 business days of receipt of notice thereof by the
Company.

SECTION 5.                   REGISTRATION RIGHTS

5A.          Required Registration.  If the Company has
not filed a registration statement with respect to the Registrable Securities on
or before November 26, 2006, at any time thereafter and after receipt of a
written request from the Registered Holder (the “Initiating
Holder”), asking the Company to effect a registration (provided that
the Company has previously not been required to effect a registration as
provided below) of Registrable Securities owned by the Initiating Holders under
the Securities Act and specifying the intended method or methods of disposition
thereof and the number of Registrable Securities sought to be registered, the
Company shall promptly notify all Registered Holders of Registrable Securities
in writing of the receipt of such request and each Registered Holder may elect
(by written notice sent to the Company within 10 Business Days from the date of
such Registered Holder’s receipt of the aforementioned Company’s notice) to
have its shares of Registrable Securities included in such registration thereof
pursuant to this Section 5A, but the Company shall only be required to proceed
with a registration pursuant to this Section 5A if the number of Registrable
Securities that the Registered Holders and the Company shall have elected to
include in such registration pursuant to this Section 5A have an aggregate
Market Price in excess of $5,000,000, before deducting any underwriter
commissions or discounts.  Thereupon the
Company shall, as expeditiously as possible, file a registration statement with
respect to, and use its best efforts to effect the registration under the
Securities Act of, all shares of Registrable Securities that the Company has
been so asked by such Registered Holders, subject to the next paragraph, to
register for sale, all to the extent required to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of the Registrable
Securities so registered.  Except as
otherwise provided in Section 5D the Company shall bear all expenses of such
registration.

The
Company shall not be required to effect more than one registration pursuant to
this Section 5A; but the right of the Registered Holders under this Section 5A
to require the Company to effect a registration shall not be deemed to have
been exercised if (x) a registration statement filed pursuant to this Section
5A shall not have become effective under the Securities Act other than at the
request of the Registered Holders or as a result of any action on the part of
the Registered Holders or (y) if a registration statement pursuant to this
Section 5A shall have become effective under the Securities Act and (a) the underwriters,
in the case of an underwritten offering, shall not purchase any Registrable
Securities because of a failure of a condition contained in the underwriting
agreement (other than a condition to be performed by the Registered Holders)
relating to the offering covered by the registration statement or (b) the sale
of the Registrable Securities

 12
 

 

pursuant to the registration statement is not effected
due to any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court (other than a stop order,
injunction, other order or requirement directly attributable to any action or
inaction on the part of the Registered Holders).

If a
registration pursuant to this Section 5A is underwritten and the managing
underwriter or underwriters advise the Company and the Initiating Holder in
writing that, in their good faith opinion, the number of Registrable Securities
requested to be included would adversely affect the marketing or price of the
Registrable Securities to be sold, the Company will include in such
registration pursuant to this Section 5A (i) first, the Registrable Securities
requested to be included in such registration by the Initiating Holder, (ii)
second, the Registrable Securities requested to be included in such
registration by any other Registered Holders and (iii) third, any other
securities that the Company desires to include. A registration shall not be
considered to be a registration pursuant to this Section 5A, and the Company
shall nevertheless pay the expenses of such registration, if (x) as a result of
the foregoing allocation, the requesting Registered Holders are not able to
register and sell in the registration at least 75% of the Registrable
Securities sought to be included in the registration, as specified in the
notices by which the demand was made or (y) the registration statement
requested by the Initiating Holder does not become effective for any reason
other than at the request of the Registered Holders.

The
Company will not be obligated to effect any registration pursuant to this
Section 5A within 9 months after the effective date of any previous
registration statement.  In addition, the
Company will not be obligated to effect any registration pursuant to this
Section 5A if, at the time of such request, the filing of such registration
statement would, as determined in good faith by a majority of the Company’s
board of directors, be materially detrimental to the Company or materially
adversely affect a material Company financing project or a material proposed or
pending acquisition, merger or other material corporate transaction to which
the Company or any of its subsidiaries is or expects to be a party, but the
Company may exercise such right to delay a request for registration not more
than once for not more than 6 months in any 12-month period.

5B.          Piggyback
Registration Rights.  Until such time
as the Registrable Securities may be sold in accordance with Rule 144(k) of the
Commission under the Securities Act, if the Company at any time proposes to
file on its behalf and/or on behalf of any of its security holders (the “Demanding Security Holders”) a registration statement under
the Securities Act on any form (other than a registration statement on Form S-4
or S-8 or any successor form or to the Company’s employees pursuant to any
employee benefit plan, respectively) for the general registration of securities
to be sold for cash with respect to the Common Stock, it will give written
notice to the Registered Holders at least 30 days before the initial filing
with the Commission of the registration statement (or, in the case of a
registration statement that has already been filed with the Commission but has
not yet been declared effective, within 30 days before the filing of an
amendment to the registration statement), which notice shall set forth the
intended method of disposition of the securities that the Company proposes to
register.  The notice shall offer to
include in such filing the aggregate number of Registrable Securities as the
Registered Holder may request.  Nothing
in this Section 5B shall preclude the Company from discontinuing the
registration of its securities being effected on its behalf under this Section
5B at any time and for any reason before the effective date of

 13
 

 

the registration relating thereto; but, in that event,
the Company shall notify the Registered Holders of such discontinuation of the
registration.

Each
Registered Holder desiring to have Registrable Securities registered under this
Section 5B shall advise the Company in writing within 20 days after the date of
receipt of such offer from the Company, setting forth the amount of Registrable
Securities for which registration is being requested.  The Company shall thereupon include in such
filing the number of shares of Registrable Securities for which registration is
so requested, subject to the next sentence. 
If the managing underwriter or underwriters of the proposed public
offering shall advise the Company in writing that, in their good faith opinion,
the number of securities to be included in such registration would materially
and adversely affect the marketing or price of such securities to be sold, the
Company will allocate the securities to be included in such registration (a)
first, the securities to be included in such registration by the holder or
holders initiating the registration and (b) the Registrable Securities
requested to be included in such registration by the Registered Holders and
securities proposed to be sold by the Company for its own account or requested
to be included in such registration by holders of securities other than the
Registered Holders (pro rata based on the number of securities proposed to be
sold by all Registered Holders and the Company). Except as otherwise provided
in Section 5D, the Company shall bear all expenses of such registration.

If
any registration pursuant to this Section 5B is underwritten, the Company will
select investment banker(s) and manager(s) and make other decisions regarding
the underwriting arrangements for the offering.

The
Company has not entered into, and on or after the date of this Warrant, will
not enter into, any agreement that is inconsistent with the rights granted to
the Registered Holders in this Warrant or that otherwise conflicts with its
provisions. The rights granted to the Registered Holders under this Warrant do
not in any way conflict with and are not inconsistent with the rights granted
to the holders of the Company’s other issued and outstanding securities under
any such agreements.  Without limiting
the generality of the foregoing, the Company shall not grant to any Person the
right to request it to register any of its securities under the Securities Act
unless the rights so granted are not in conflict with or inconsistent with the
provisions of this Warrant.

Unless
otherwise consented to in writing by the managing underwriter or underwriters,
neither the Company nor any holder of Registrable Securities will effect any
public sale or distribution of its Common Stock or its Convertible Securities
during the 10 day period before, and during the 60 day period beginning on, the
closing date of each underwritten offering by the Company made pursuant to a
registration statement filed pursuant to this Section 5B or Section 5A (except
as part of such underwritten registration) whether or not the holder
participates in such registration; and, except as may be required under
agreements that the Company enters into before the date hereof, the Company
shall cause each holder of its privately placed Common Stock or Convertible
Securities issued by it at any time on or after the date of this Warrant to
agree not to effect any public sale or distribution of any such securities
during such period, including a sale pursuant to Rule 144 or Rule 144A of the
Commission under the Securities Act.

5C.          Registration
Procedures.  If the Company is
required by the provisions of this Section 5 to use its commercially reasonable
efforts (best efforts if the registration is pursuant to Section 5A)

 14
 

 

to effect the registration of any of its Registrable
Securities under the Securities Act, the Company will, as expeditiously as
possible:

(i)            prepare and file with
the Commission a registration statement with respect to such securities and use
its commercially reasonable efforts (best efforts if the registration is
pursuant to Section 5A) to cause the registration statement to become effective
and remain effective until the earliest to occur of (1) the date on which all
of the securities registered thereunder have been sold, (2) the expiration of
the Exercise Period or (3) the date on which the Registered Holders may sell
the Registrable Securities pursuant to Rule 144(k) of the Commission under the
Securities Act (the “Effectiveness Period”);

(ii)           prepare and file with
the Commission such amendments and supplements to the registration statement
and the prospectus used in connection therewith as may be necessary to keep the
registration statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all securities
covered by the registration statement during the Effectiveness Period;

(iii)          furnish to such selling
security holders such number of copies of a summary prospectus or other
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such selling
security holders may reasonably request;

(iv)          use its reasonable
efforts to register or qualify the securities covered by the registration
statement under such other securities or blue sky laws of such jurisdictions as
each holder of such securities shall request (but, the Company shall not be
obligated to qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it is not then qualified or to file any general
consent to service or process or to subject itself to taxation in any
jurisdiction), and do such other reasonable acts and things as may be required
of it to enable such security holder to consummate the disposition in such
jurisdiction of the securities covered by the registration statement;

(v)           use its reasonable
efforts to cause the securities covered by the registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable such security holder to consummate the
disposition of the securities covered by the registration statement;

(vi)          notify each security
holder of any securities covered by the registration statement, promptly at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of a Discontinuation Event (as defined below)
and each Registered Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
a Discontinuation Event, such Registered Holder will forthwith discontinue
disposition of such Registrable Securities under the applicable registration
statement until such Registered Holder’s receipt of the copies of the
supplemented prospectus and/or amended registration statement or until it is
advised in writing by the Company that the use of the applicable prospectus may
be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such

 15
 

 

prospectus or registration statement.  For purposes of this Section 5C(vi), a “Discontinuation Event” shall mean (1) when
the Commission notifies the Company that there will be a “review” of such
registration statement and whenever the Commission comments in writing on such
registration statement and until the Company has addressed the comments in a
supplemented prospectus and/or amended registration statement and/or
supplementally; (2) any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to such registration
statement or prospectus or for additional information and until the request has
been responded to; (3) the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement covering any or all
of the Registrable Securities or the initiation of any proceedings for that
purpose; (4) the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening, in writing, of any proceeding for such purpose; and/or (5) the
occurrence of any event or passage of time that makes the financial statements
included in such registration statement ineligible for inclusion therein or any
statement made in such registration statement or prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such registration statement,
prospectus or other documents so that, in the case of such registration
statement or prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading;

(vii)         furnish, at the request
of any selling security holder requesting registration of Registrable
Securities pursuant to Section 5A, on the date that such Registrable Securities
are delivered to the underwriters for sale pursuant to such registration or, if
such Registrable Securities are not being sold through underwriters, on the
date that the registration statement with respect to such Registrable
Securities becomes effective, (1) an opinion, dated such date, of the
independent counsel representing the Company for the purposes of such registration,
addressed to the underwriters, or if such Registrable Securities are not being
sold through underwriters, then to any selling security holder making such
request, reasonably satisfactory in form and substance to such underwriters and
to such selling security holder and (2) a letter dated such date from the
Company’s independent certified public accountants, addressed to the
underwriters, or if  such Registrable
Securities are not being sold through underwriters, then to the Company and, if
feasible, to the selling security holder making such request substantially to
the effect that they are independent certified 
public accountants within the meaning of the Securities Act and  that, in the opinion of such accountants, the
Company’s financial statements and other financial data  included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act.  Such letter from the independent
certified public accountants shall additionally cover such other financial
matters (including information as to the period ending not more than 5 business
days prior to the date of such letter) with respect to the registration in respect
of which such letter is being given as is customarily given in an underwritten
public offering;

(viii)        enter into customary
agreements (including an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities;

 16
 

 

(ix)           make available for
inspection by any selling security holder, by any underwriter participating in
any disposition to be effected pursuant to the registration statement and by
any attorney, accountant or other agent retained by any such selling security
holder or any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company’s officers, directors and employees to supply all information
reasonably requested by such selling security holder, underwriter, attorney,
accountant or agent in connection with such registration statement; and

(x)            otherwise use its
reasonable efforts to comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, but not later than 18 months after the effective date of the
registration statement, an earnings statement covering the period of at least
12 months beginning with the first full month after the effective date of the
registration statement, which earnings statements shall satisfy the provisions
of Section 11(a) of the Securities Act.

It
shall be a condition precedent to the Company’s obligation to take any action
pursuant to this Section 5 in respect of the securities that are to be
registered at the request of any Registered Holder that such Registered Holder
shall furnish to the Company such information regarding the securities held by
such Registered Holder, the intended method of disposition thereof and any
other information as the Company shall reasonably request and as shall be
required in connection with the action taken by the Company.  No Registered Holder may participate in any
underwritten registration pursuant to this Warrant unless it (a) agrees to sell
its securities on the basis provided in any underwriting arrangements approved
by the Persons entitled under this Warrant to approve such arrangements; (b)
completes and executes all questionnaires, powers of attorney, lock-up
agreements, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and (c) provides all
such information reasonably requested by the Company in connection with such
registration.

5D.          Expenses.  All expenses incurred in complying with
Section 5, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD, printing expenses,
fees and disbursements of counsel for the Company and its independent public
accountants, including, without limitation, expenses of any special audits
incident to or required by any such registration, fees and expenses incurred in
connection with the listing of the securities on any securities exchange on
which the Common Stock is then listed, the reasonable fees and expenses of one
counsel for the selling security holders (selected by those holding a majority
of the Registrable Securities being registered), fees and expenses of complying
with the securities or blue sky laws of any jurisdictions pursuant to
subsection 5C(iv) and any fees and disbursements of underwriters customarily
paid by the issuers or sellers of securities, shall be paid by the Company,
except that the Company shall not be liable for any underwriting discounts or
commissions or any transfer taxes.

5E.           Indemnification and
Contribution.  In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
this Section 5,

(i)            the Company shall
indemnify and hold harmless the holder of such Registrable Securities, such
holder’s directors and officers, each underwriter who participated in the
offering of such Registrable Securities and each other Person, if any, who
controls such holder or

 17
 

 

underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
such holder, such director or officer or underwriter or controlling Person may
become subject under the Securities Act or any other statute or at common law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based on (a) any alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (b) any alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse such holder or such director,
officer, underwriter or controlling Person for any legal or any other expenses
reasonably incurred by such holder or such director, officer, underwriter or
controlling Person in connection with investigating or defending any such loss,
claim, damage, liability or action; but the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based on (i) any alleged untrue statement or alleged omission made
in such registration statement, preliminary prospectus, prospectus or amendment
or supplement in reliance on and in conformity with written information
furnished to the Company by such holder, director, officer, underwriter or
controlling Person, as the case may be, specifically for use therein or (ii) a
failure by the indemnified party to deliver a copy of the registration
statement or prospectus or an amendment or supplement thereto after the Company
has furnished the indemnified party with a sufficient number of copies of the
same.  Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such holder or such director, officer, underwriter or controlling Person, and
shall survive the transfer of such securities by such holder.

(ii)           Each holder of any
Registrable Securities, by acceptance thereof, agrees to indemnify and hold
harmless the Company, its directors and officers and each other Person, if any,
who controls the Company within the meaning of the Securities Act against any
losses, claims, liabilities, joint or several, to which the Company, any such
director or officer or any such Person may become subject under the Securities
Act or any other statute or at common law, insofar as such losses, claims,
liabilities (or actions in respect thereof) arise out of or are based on
information in writing provided to the Company by such holder of such
Registrable Securities contained, on the effective date thereof, in any
registration statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto; but
such holder’s indemnification obligations under this subsection 5E(ii) shall be
limited to an amount equal to the net proceeds actually received by the holder
from the sale of Registrable Securities covered by the applicable registration
statement.

(iii)          If the indemnification
provided for in this Section 5 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to

 18
 

 

state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties relative intent, knowledge, access to information and opportunity
to correct or prevent such action.  The
amount paid or payable by a party under this Section 5 as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.

The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this subsection 5E(iii) were determined by pro rata allocation or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

(iv)          If any action or
proceeding (including any governmental investigation or inquiry) shall be
brought or asserted against any holder or any Person controlling a holder in
respect of which indemnity may be sought from the Company, such holder or
controlling Person shall promptly notify the Company in writing, and the
Company shall assume the defense thereof, including the employment of counsel
satisfactory to a majority of the holders to be indemnified and the payment of
all reasonable expenses in relation thereto. 
All such holders or such controlling Persons shall have the right to
employ one counsel plus additional local counsel, if reasonably required, in
any such action and to participate in the defense thereof unless, in the
reasonable judgment of such holders or such controlling Persons, a conflict of
interest exists and it is therefore advisable for such holders or controlling
Persons to be jointly represented by separate counsel, and in that event the
Company shall pay the reasonable fees and expenses of such separate
counsel.  The Company shall not be liable
for any settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such action or proceeding, the Company
agrees to indemnify and hold harmless each holder and any such controlling
Person from and against any loss or liability by reason of such settlement or
judgment.

(v)           Indemnification similar
to that specified in subsections (i) and (ii) of this Section 5E shall be given
by the Company and each holder (with such modifications as shall be
appropriate) with respect to any required registration, or other qualification
of the Registrable Securities under any Federal or state law or regulation of
any governmental authority other than the Securities Act.

5F.           Public Availability
of Information.  From and after the
date when any registration statement with respect to the Registrable Securities
becomes effective and as long as required under the Exchange Act, the Company
shall maintain the registration of its Common Stock under Section 12 of the
Exchange Act and shall keep effective such registration and shall timely file such
information, documents and reports as the Commission may require or prescribe
under Section 13 of the Exchange Act, or otherwise.  From and after the date when any registration
statement of the Registrable Securities becomes effective, the Company shall comply
with the reporting requirements of Section 15(d) of the Exchange Act (whether
or not it shall be required to do so pursuant to the provisions of said Section
15(d)) and shall comply with, all other public information reporting

 19
 

 

requirements required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Registrable Securities, presently existing or hereafter adopted, including
Rules 144 and 144A thereunder.

5G.          Supplying Information.  The Company shall cooperate with each holder
of Registrable Securities in supplying such information as may be reasonably
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Registrable Securities.

SECTION 6.                   NO VOTING RIGHTS; LIMITATIONS OF
LIABILITY.  This Warrant shall not
entitle the holder hereof to any rights as a stockholder of the Company.  No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Common Stock, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such holder for the Exercise Price of Common
Stock acquirable by exercise hereof or as a stockholder of the Company.

SECTION 7.                   WARRANT TRANSFERABLE.  Subject to the transfer conditions referred
to in the legend endorsed hereon, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit II hereto) and any other documentation reasonably requested
by the Company in connection therewith, at the principal office of the Company.

SECTION 8.                   WARRANT EXCHANGEABLE FOR
DIFFERENT DENOMINATIONS.  This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. 
The date the Company initially issues this Warrant shall be deemed to be
the “Date of Issuance” hereof regardless of the number of times new
certificates representing the unexpired and unexercised rights formerly
represented by this Warrant shall be issued. 
All Warrants representing portions of the rights hereunder are also
referred to herein as the “Warrants”.

SECTION 9.                   REPLACEMENT.  Upon receipt of evidence reasonably
satisfactory to the Company of the ownership and the loss, theft, destruction
or mutilation of any certificate evidencing this Warrant, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company, or, in the case of any such mutilation upon
surrender of such certificate, the Company shall execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.

SECTION 10.                 NOTICES.  Except as otherwise expressly provided
herein, all notices referred to in this Warrant shall be in writing and shall
be delivered personally, sent by reputable overnight courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered, sent
or deposited in the U.S. Mail (i) to the Company, at its principal executive
offices and (ii) to the Registered Holder of

 20
 

 

this Warrant, at such Registered Holder’s address as
it appears in the records of the Company (unless otherwise indicated by any
such Registered Holder).

SECTION 11.                 AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the Registered
Holders of Warrants representing a majority of the shares of Common Stock
obtainable upon exercise of the Warrants.

SECTION 12.                 DESCRIPTIVE HEADINGS; GOVERNING LAW.  The descriptive headings of the several
Sections and paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. 
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by the internal law of the
State of Delaware, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than
the State of Delaware.

*  *  *  *  *  *

 21

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer and to be dated the Date of Issuance hereof.

	
  

  	
  CHARYS HOLDING COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Billy V. Ray, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Billy V. Ray, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
								

 

Warrant

 

EXHIBIT I

EXERCISE AGREEMENT

	
  To:

  	
  Dated:

  	
   

  

 

The
undersigned, pursuant to the provisions set forth in the attached Warrant
(Certificate No. W-    ), hereby agrees to subscribe for
the purchase of        shares of the Common Stock
covered by such Warrant and makes payment herewith in full therefor [in the
amount of $          (in cash)]
[by surrendering debt or equity securities of the Company or any of its
wholly-owned Subsidiaries having a Market Price equal to                      ][by
authorizing the Company to withhold from issuance a number of shares of Common
Stock issuable upon such exercise of the Warrant which when multiplied by the
Market Price of the Common Stock is equal to                      
(and such withheld shares shall no longer be issuable under this Warrant)].

The
certificate(s) evidencing      shares of Common Stock is to
be issued in the name of                                      ,
whose address is                              
                                           
and whose (SS#)(FEIN#) is            .

[The
number of shares of Common Stock to be issued does not include all shares of
Common Stock purchasable as provided in the attached Warrant and, accordingly,
a certificate evidencing a new Warrant for          
shares of Common Stock is to be issued in the name of                                      ,
whose address is                              
                                           
and whose (SS#)(FEIN#) is            .]

	
  

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

 

EXHIBIT II

ASSIGNMENT

FOR
VALUE RECEIVED,                               
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant (Certificate No. W-     ) with
respect to the number of shares of the Common Stock covered thereby set forth
below, unto:

	
  Name(s) of Assignee(s)

  	
   

  	
  Address(es)

  	
   

  	
  No. of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  WitnessEXHIBIT
10.1

[Execution]

LOAN
AND SECURITY AGREEMENT

between

NEW
STREAM COMMERCIAL FINANCE, LLC

as
Lender

and

AYIN
TOWER MANAGEMENT SERVICES, INC.

as
Borrower

Dated:
November 8, 2006

 

TABLE
OF CONTENTS

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  AMOUNT AND TERMS OF CREDIT

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Loans

  	
  1

  
	
   

  	
  1.2

  	
  Term and Prepayment

  	
  2

  
	
   

  	
  1.3

  	
  Use of Proceeds

  	
  2

  
	
   

  	
  1.4

  	
  Single Loan

  	
  2

  
	
   

  	
  1.5

  	
  Interest

  	
  2

  
	
   

  	
  1.6

  	
  Cash Management System

  	
  3

  
	
   

  	
  1.7

  	
  Fees

  	
  3

  
	
   

  	
  1.8

  	
  Receipt of Payments

  	
  3

  
	
   

  	
  1.9

  	
  Application and Allocation of Payments

  	
  3

  
	
   

  	
  1.10

  	
  Accounting

  	
  4

  
	
   

  	
  1.11

  	
  Indemnity

  	
  4

  
	
   

  	
  1.12

  	
  Borrowing Base; Reserves

  	
  4

  
	
   

  	
   

  	
   

  
	
  2.

  	
  CONDITIONS PRECEDENT

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Conditions to the Initial Loans

  	
  5

  
	
   

  	
  2.2

  	
  Further Conditions to the Loans

  	
  5

  
	
   

  	
   

  	
   

  
	
  3.

  	
  REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE
  COVENANTS

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Corporate Existence; Compliance with Law

  	
  6

  
	
   

  	
  3.2

  	
  Executive Offices; Corporate or Other Names

  	
  6

  
	
   

  	
  3.3

  	
  Corporate Power; Authorization; Enforceable
  Obligations

  	
  6

  
	
   

  	
  3.4

  	
  Financial Statements and Projections; Books and
  Records

  	
  7

  
	
   

  	
  3.5

  	
  Material Adverse Change

  	
  7

  
	
   

  	
  3.6

  	
  Real Estate; Leasehold Property and Equipment

  	
  7

  
	
   

  	
  3.7

  	
  Ventures, Subsidiaries and Affiliates; Outstanding
  Stock and Indebtedness

  	
  8

  
	
   

  	
  3.8

  	
  Government Regulation; Permits; Margin Regulations

  	
  8

  
	
   

  	
  3.9

  	
  Taxes; Charges

  	
  9

  
	
   

  	
  3.10

  	
  Payment of Obligations

  	
  9

  
	
   

  	
  3.11

  	
  ERISA

  	
  9

  
	
   

  	
  3.12

  	
  Litigation

  	
  10

  
	
   

  	
  3.13

  	
  Intellectual Property

  	
  10

  
	
   

  	
  3.14

  	
  Full Disclosure

  	
  10

  
	
   

  	
  3.15

  	
  Hazardous Materials

  	
  10

  
	
   

  	
  3.16

  	
  Insurance

  	
  11

  
	
   

  	
  3.17

  	
  Deposit and Disbursement Accounts

  	
  11

  
	
   

  	
  3.18

  	
  Accounts

  	
  11

  
	
   

  	
  3.19

  	
  Conduct of Business

  	
  11

  
	
   

  	
  3.20

  	
  Anti-Terrorism Laws

  	
  12

  
	
   

  	
  3.21

  	
  Further Assurances

  	
  12

  

 

 i
 

 

 

	
  

  	
  3.22

  	
  Brokers

  	
  12

  
	
   

  	
  3.23

  	
  Solvency

  	
  12

  
	
   

  	
   

  	
   

  
	
  4.

  	
  FINANCIAL MATTERS; REPORTS

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Reports and Notices

  	
  13

  
	
   

  	
  4.2

  	
  Financial Covenants

  	
  14

  
	
   

  	
  4.3

  	
  Other Reports and Information

  	
  15

  
	
   

  	
   

  	
   

  
	
  5.

  	
  NEGATIVE COVENANTS

  	
  15

  
	
   

  	
   

  	
   

  
	
  6.

  	
  SECURITY INTEREST

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Grant of Security Interest

  	
  17

  
	
   

  	
  6.2

  	
  Lender’s Rights

  	
  18

  
	
   

  	
  6.3

  	
  Lender’s Appointment as Attorney-in-fact

  	
  19

  
	
   

  	
  6.4

  	
  Grant of License to Use Intellectual Property
  Collateral

  	
  19

  
	
   

  	
  6.5

  	
  Leasehold Mortgages

  	
  20

  
	
   

  	
   

  	
   

  
	
  7.

  	
  EVENTS OF DEFAULT: RIGHTS AND REMEDIES

  	
  20

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Events of Default

  	
  20

  
	
   

  	
  7.2

  	
  Remedies

  	
  22

  
	
   

  	
  7.3

  	
  Waivers by Borrower

  	
  23

  
	
   

  	
  7.4

  	
  Proceeds

  	
  23

  
	
   

  	
   

  	
   

  
	
  8.

  	
  SUCCESSORS AND ASSIGNS

  	
  24

  
	
   

  	
   

  	
   

  
	
  9.

  	
  MISCELLANEOUS

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  No Oral Agreement; Complete Agreement;
  Modification of Agreement

  	
  24

  
	
   

  	
  9.2

  	
  Expenses

  	
  24

  
	
   

  	
  9.3

  	
  No Waiver

  	
  25

  
	
   

  	
  9.4

  	
  Severability; Section Titles

  	
  25

  
	
   

  	
  9.5

  	
  Authorized Signature

  	
  25

  
	
   

  	
  9.6

  	
  Notices

  	
  25

  
	
   

  	
  9.7

  	
  Counterparts

  	
  26

  
	
   

  	
  9.8

  	
  Time of the Essence

  	
  26

  
	
   

  	
  9.9

  	
  GOVERNING LAW

  	
  26

  
	
   

  	
  9.10

  	
  SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL

  	
  26

  
	
   

  	
  9.11

  	
  USA Patriot Act Notice

  	
  27

  
	
   

  	
  9.12

  	
  Press Releases

  	
  27

  
	
   

  	
  9.13

  	
  Reinstatement

  	
  27

  
	
   

  	
  9.14

  	
  Maximum Legal Rate

  	
  27

  

 

 ii

 

INDEX
OF EXHIBITS AND SCHEDULES

 

	
  Schedule A

  	
  Definitions

  
	
  Schedule B

  	
  Lender’s and Borrower’s Addresses for Notices

  
	
  Schedule C

  	
  [Intentionally Omitted]

  
	
  Schedule D

  	
  Cash Management System

  
	
  Schedule E

  	
  Fees and Expenses

  
	
  Schedule F

  	
  Schedule of Documents

  
	
  Schedule G

  	
  Financial Covenants

  
	
   

  	
   

  
	
  Disclosure Schedule (3.2)

  	
  Places of Business; Corporate Names

  
	
  Disclosure Schedule (3.6)

  	
  Real Estate

  
	
  Disclosure Schedule (3.7)

  	
  Stock; Affiliates

  
	
  Disclosure Schedule (3.9)

  	
  Taxes

  
	
  Disclosure Schedule (3.11)

  	
  ERISA

  
	
  Disclosure Schedule (3.12)

  	
  Litigation

  
	
  Disclosure Schedule (3.13)

  	
  Intellectual Property

  
	
  Disclosure Schedule (3.15)

  	
  Environmental Matters

  
	
  Disclosure Schedule (3.16)

  	
  Insurance

  
	
  Disclosure Schedule (3.22)

  	
  Broker’s Fees

  
	
  Disclosure Schedule (5(b))

  	
  Indebtedness

  
	
  Disclosure Schedule (5(e))

  	
  Liens

  
	
  Disclosure Schedule (6.1)

  	
  Actions to Perfect Liens

  
	
  Disclosure Schedule (6.5)

  	
  Leasehold Mortgages as of the Closing Date

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Notice of Revolving Credit Advance

  
	
  Exhibit B

  	
  [Intentionally Omitted]

  
	
  Exhibit C

  	
  Form of Borrowing Base Certificate

  
	
  Exhibit D

  	
  Form of Accounts Payable Analysis

  
	
  Exhibit E

  	
  [Intentionally Omitted]

  
	
  Exhibit F

  	
  Form of Revolving Credit Note

  
	
  Exhibit G

  	
  [Intentionally Omitted]

  
	
  Exhibit H

  	
  Form of Secretarial Certificate

  
	
  Exhibit I

  	
  Form of Power of Attorney

  
	
  Exhibit J

  	
  Form of Certificate of Compliance

  

 

 i

This LOAN AND SECURITY AGREEMENT is dated as of
November 8, 2006, and agreed to by and between AYIN TOWER MANAGEMENT SERVICES, INC., a Delaware corporation (“Borrower”),
and NEW STREAM COMMERCIAL FINANCE, LLC,
a Delaware limited liability company (“Lender”).

RECITALS

A.            Borrower desires to
obtain the Loans and other financial accommodations from Lender and Lender is
willing to provide the Loans and accommodations all in accordance with the
terms of this Agreement.

B.            Capitalized terms used
herein shall have the meanings assigned to them in Schedule A and, for
purposes of this Agreement and the other Loan Documents, the rules of
construction set forth in Schedule A shall govern.  All schedules, attachments, addenda and
exhibits hereto, or expressly identified to this Agreement, are incorporated
herein by reference, and taken together with this Agreement, constitute but a
single agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter contained, the parties hereto agree as
follows:

1.             AMOUNT AND TERMS OF CREDIT

1.1           Loans.  (a) 
Subject to the terms and conditions of this Agreement, from the Closing
Date and until the Commitment Termination Date (i) Lender agrees to make
available to Borrower advances (each, a “Revolving Credit Advance”) in an
aggregate outstanding amount not to exceed the Borrowing Availability, and (ii)
Borrower may at its request from time to time borrow, repay and reborrow under
this Section 1.1.  The Revolving Credit
Loan shall be evidenced by, and be repayable in accordance with the terms of,
the Revolving Credit Note and this Agreement.

(b)           Borrower
shall request each Revolving Credit Advance by written notice to Lender
substantially in the form of Exhibit A (each a “Notice of Revolving Credit
Advance”) given no later than 11:00 a.m. New York City time on the Business Day
of the proposed advance.  Lender shall be
fully protected under this Agreement in relying upon, and shall be entitled to
rely upon, (i) any Notice of Revolving Credit Advance believed by Lender to be
genuine, and (ii) the assumption that the Persons making electronic requests or
executing and delivering a Notice of Revolving Credit Advance were duly
authorized, unless the responsible individual acting thereon for Lender shall have
actual knowledge to the contrary.  As an
accommodation to Borrower, Lender may permit telephonic, electronic, or
facsimile requests for a Revolving Credit Advance and electronic or facsimile
transmittal of instructions, authorizations, agreements or reports to Lender by
Borrower.  Unless Borrower specifically
directs Lender in writing not to accept or act upon telephonic, facsimile or
electronic communications from Borrower, Lender shall have no liability to Borrower
for any loss or damage suffered by Borrower as a result of Lender’s honoring of
any requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to it 

 

telephonically,
by facsimile or electronically and purporting to have been sent to Lender by
Borrower and Lender shall have no duty to verify the origin of any such
communication or the identity or authority of the Person sending it.

(c)           In
making any Loan hereunder Lender shall be entitled to rely upon the most recent
Borrowing Base Certificate delivered to Lender by Borrower and other
information available to Lender.  Lender
shall be under no obligation to make any further Revolving Credit Advance or
incur any other Obligation if Borrower shall have failed to deliver a Borrowing
Base Certificate to Lender by the time specified in Section 4.1(e).  At Lender’s option, all principal, interest,
fees, costs, expenses and other charges provided for in this Agreement or the
other Loan Documents may be charged directly to the loan account(s) of Borrower
maintained by Lender.

1.2           Term
and Prepayment.  (a)  Upon the Commitment Termination Date the
obligation of Lender to make Revolving Credit Advances and extend other credit
hereunder shall immediately terminate and Borrower shall pay to Lender in full,
in cash: (i) all outstanding Revolving Credit Advances and all accrued but
unpaid interest thereon; and (ii) all other non-contingent Obligations due to
or incurred by Lender.

(b)           If
the Revolving Credit Loan shall at any time exceed the Borrowing Availability,
then Borrower shall immediately repay the Revolving Credit Loan in the amount
of such excess.

(c)           Borrower
shall have the right, at any time upon thirty (30) days’ prior written notice
to Lender to (i) terminate voluntarily Borrower’s right to receive or benefit
from, and Lender’s obligation to make and to incur, Revolving Credit Advances
and (ii) prepay all of the Obligations. 
The effective date of termination of the Revolving Credit Loan specified
in such notice shall be the Commitment Termination Date.

(d)           No
less than thirty (30) days prior to the Stated Expiry Date, Lender and Borrower
may extend the Stated Expiry Date upon terms and conditions satisfactory and
acceptable to Lender in its discretion. 
Any extension of the Stated Expiry Date shall be for a period of one (1)
year and the Stated Expiry Date may only be extended twice pursuant to the
terms of this Section 1.2(d).  Nothing
contained herein shall be deemed to be a commitment or agreement by Lender to
extend the Stated Expiry Date, which shall be in Lender’s sole discretion.

1.3           Use
of Proceeds.  Borrower shall use the
proceeds of the Loans, in part, to refinance existing indebtedness, for
transaction expenses, for working capital and other general corporate purposes,
and for such other purposes as set forth in the Authorization to Pay Proceeds.

1.4           Single
Loan.  The Loans and all of the other
Obligations of Borrower to Lender shall constitute one general obligation of
Borrower secured by all of the Collateral.

1.5           Interest.  (a) 
Borrower shall pay interest to Lender on the aggregate outstanding
Revolving Credit Advances at a floating rate equal to the LIBOR Rate plus 4.85%
per annum (the “Revolving Credit Rate”). 
All computations of interest shall be made by Lender on the basis of a
three hundred and sixty (360) day year, in each case for the actual number of
days occurring in the period for which such interest or fee is payable.  Each determination by Lender of an interest
rate hereunder shall be 

 2
 

 

conclusive and binding for all purposes, absent
manifest error.  In no event will Lender
charge interest at a rate that exceeds the Maximum Legal Rate.

(b)           Interest
shall be payable on the outstanding Revolving Credit Advances (i) in arrears
for the preceding calendar month on the first day of each calendar month, (ii)
on the Commitment Termination Date, and (iii) if any interest accrues or
remains payable after the Commitment Termination Date, upon demand by Lender.

(c)           Effective
upon the occurrence of any Event of Default under Section 7.1(a) and for so
long as such Event of Default shall be continuing, the Revolving Credit Rate
shall automatically be increased by five percentage points (5%) per annum, and
effective upon any other Event of Default and for so long as such Event of
Default shall be continuing, the Revolving Credit Rate shall automatically be
increased by three percentage points (3%) per annum (each such increased rate,
the “Default Rate”; provided, however, in no event shall the Default Rate
exceed the Maximum Legal Rate), and all outstanding Obligations shall continue
to accrue interest from the date of such Event of Default at the Default Rate
applicable to such Obligations.

(d)           If
any interest or any other payment (including Facility Fees and Collateral
Monitoring Fees) to Lender under this Agreement becomes due and payable on a
day other than a Business Day, such payment date shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension.

1.6           Cash
Management System.  On or prior to
the Closing Date and until the Termination Date, Borrower will establish and
maintain the cash management system described in Schedule D.  All payments in respect of the Collateral
shall be made to or deposited in the blocked or lockbox accounts described in Schedule
D in accordance with the terms thereof.

1.7           Fees.  Borrower agrees to pay to Lender the Fees set
forth in Schedule E.

1.8           Receipt
of Payments.  Borrower shall make
each payment under this Agreement (not otherwise made pursuant to Section 1.9)
without set-off, counterclaim or deduction and free and clear of all Taxes not
later than 12:00 noon New York city time on the day when due in lawful money of
the United States of America in immediately available funds to the Collection
Account.  If Borrower shall be required
by law to deduct any Taxes from any payment to Lender under any Loan Document,
then the amount payable to Lender shall be increased so that, after making all
required deductions, Lender receives an amount equal to that which it would
have received had no such deductions been made. 
For purposes of computing interest and Fees, all payments shall be
deemed received by Lender on the first (1st) Business Day following receipt of immediately
available funds in the Collection Account. 
For purposes of determining the Borrowing Availability, payments shall
be deemed received by Lender upon receipt of immediately available funds in the
Collection Account.

1.9           Application
and Allocation of Payments.  Borrower
irrevocably agrees that Lender shall have the continuing and exclusive right to
apply any and all payments against the then due and payable Obligations in such
order as Lender may deem advisable. 
Lender is authorized to, and at its option may (without prior notice or
precondition and at any time or times), but shall not be obligated to, make or
cause to be made Revolving Credit Advances on behalf of Borrower for: (a)
payment of all 

 3
 

 

Fees, expenses, indemnities, charges, costs,
principal, interest, or other Obligations owing by Borrower under this
Agreement or any of the other Loan Documents, (b) the payment, performance or
satisfaction of any of Borrower’s obligations with respect to preservation of
the Collateral, or (c) any premium in whole or in part required in respect of
any of the policies of insurance required by this Agreement, even if the making
of any such Revolving Credit Advance causes the outstanding balance of the
Revolving Credit Loan to exceed the Borrowing Availability, and Borrower agrees
to repay immediately, in cash, any amount by which the Revolving Credit Loan
exceeds the Borrowing Availability.

1.10         Accounting.  Lender is authorized to record on its books
and records the date and amount of each Loan and each payment of principal
thereof and such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded absent manifest error.  Lender shall provide Borrower on a monthly
basis a statement and accounting of such recordations but any failure on the
part of the Lender to keep any such recordation (or any errors therein) or to
send a statement thereof to Borrower shall not in any manner affect the
obligation of Borrower to repay any of the Obligations.  Except to the extent that Borrower shall,
within thirty (30) days after such statement and accounting is sent, notify
Lender in writing of any objection Borrower may have thereto (stating with
particularity the basis for such objection), such statement and accounting
shall be deemed final, binding and conclusive upon Borrower, absent manifest
error.

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

1.12         Borrowing
Base; Reserves.  The Borrowing Base
shall be determined by Lender (including the eligibility of Accounts) based on
the most recent Borrowing Base Certificate delivered to Lender 

 4
 

 

in accordance with Section 4.1(e) and such other
information available to Lender.  The
Revolving Credit Loan shall be subject to Lender’s continuing right to withhold
from Borrowing Availability reserves, and to increase and decrease such
reserves from time to time, if and to the extent that in Lender’s good faith
credit judgment such reserves are necessary, including to protect Lender’s
interest in the Collateral or to protect Lender against possible non-payment of
Accounts for any reason by Account Debtors or possible diminution of the value
of any Collateral or possible non-payment of any of the Obligations or for any
Taxes or any amounts due any landlord, lessor or any other Person by Borrower
or in respect of any state of facts that could constitute a Default.  Lender may, at its option, implement reserves
by designating as ineligible a sufficient amount of Accounts that would
otherwise be Eligible Accounts so as to reduce the Borrowing Base by the amount
of the intended reserves.

2.             CONDITIONS PRECEDENT

2.1           Conditions
to the Initial Loans.  Lender shall
not be obligated to make any of the Loans perform any other action hereunder,
until the following conditions have been satisfied in a manner satisfactory to
Lender in its sole discretion, or waived in writing by Lender:

(a)           the
Loan Documents to be delivered on or before the Closing Date shall have been
duly executed and delivered by the appropriate parties, all as set forth in the
Schedule of Documents (Schedule F);

(b)           Lender
shall have received evidence satisfactory to it that the insurance policies
provided for in Section 3.16 are in full force and effect, together with
appropriate evidence showing loss payable or additional insured clauses or
endorsements in favor of Lender as required under such Section;

(c)           as
of the Closing Date, Net Borrowing Availability shall be not less than $30,000
after giving effect to the initial Revolving Credit Advance (on a pro forma
basis, with trade payables being paid currently, and expenses and liabilities
being paid in the ordinary course of business and without acceleration of
sales); and

(d)           Lender
shall have received an opinion(s) of counsel to the Borrower with respect to
the Loan Documents in form and substance satisfactory to Lender.

2.2           Further
Conditions to the Loans.  Lender
shall not be obligated to fund any Loan (including the initial Loans), if, as
of the date thereof:

(a)           any
representation or warranty by Borrower contained herein or in any of the other
Loan Documents shall be untrue or incorrect as of such date, except to the
extent that any such representation or warranty is expressly stated to relate
to a specific earlier date, in which case, such representation and warranty
shall be true and correct as of such earlier date; or

(b)           any
event or circumstance that has had or reasonably could be expected to have a Material
Adverse Effect shall have occurred since the Closing Date; or

 5
 

 

(c)           any
Default shall have occurred and be continuing or would result after giving
effect to such Loan; or

(d)           after
giving effect to such Loan, the Revolving Credit Loan would exceed the
Borrowing Availability;

The
request and acceptance by Borrower of the proceeds of any Loan shall be deemed
to constitute, as of the date of such request and the date of such acceptance,
(i) a representation and warranty by Borrower that the conditions in this
Section 2.2 have been satisfied and (ii) a restatement by Borrower of each of
the representations and warranties made by it in any Loan Document and a
reaffirmation by Borrower of the granting and continuance of Lender’s Liens
pursuant to the Loan Documents.

3.             REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE
COVENANTS

To
induce Lender to enter into this Agreement and to make the Loans, Borrower
represents and warrants to Lender (each of which representations and warranties
shall survive the execution and delivery of this Agreement), and promise to and
agree with Lender until the Termination Date as follows:

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

3.2           Executive
Offices; Corporate or Other Names. 
(a) Borrower’s name as it appears in official filings in the state of
its incorporation, (b) the type of entity of Borrower, (c) the organizational
identification number issued by Borrower’s state of incorporation or a
statement that no such number has been issued, (d) Borrower’s state of
incorporation, and (e) the location of Borrower’s chief executive office,
corporate offices, warehouses, other locations of Collateral and locations
where records with respect to Collateral are kept (including in each case the
county of such locations) are as set forth in Disclosure Schedule (3.2).  As of the Closing Date, during the prior five
years, except as set forth in Disclosure Schedule (3.2), Borrower has
been known as or conducted business in any other name (including trade
names).  Borrower has only one state of
incorporation or organization.

 6
 

 

3.3           Corporate
Power; Authorization; Enforceable Obligations.  The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party, and the creation of all
Liens provided for herein and therein: (a) are and will continue to be within Borrower’s
power and authority; (b) have been and will continue to be duly authorized by
all necessary or proper action; (c) are not and will not be in violation of any
Requirement of Law or Contractual Obligation of Borrower (d) do not and will
not result in the creation or imposition of any Lien (other than Permitted
Encumbrances) upon any of the Collateral; and (e) do not and will not require
the consent or approval of any Governmental Authority or any other Person.  As of the Closing Date, each Loan Document
shall have been duly executed and delivered on behalf of Borrower, and each
such Loan Document upon such execution and delivery shall be and will continue
to be a legal, valid and binding obligation of Borrower, enforceable against it
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting creditors’ rights
generally.

3.4           Financial
Statements and Projections; Books and Records.  (a) The Financial Statements delivered by
Borrower to Lender for its most recently ended Fiscal Year and Fiscal Month,
are true, correct and complete in all material respects and reflect fairly and
accurately the financial condition of Borrower as of the date of each such
Financial Statement in accordance with GAAP. 
The Projections most recently delivered by Borrower to Lender have been
prepared in good faith, with care and diligence and use assumptions that are
reasonable under the circumstances at the time such Projections were prepared
and as of the date delivered to Lender and all such assumptions are disclosed
in the Projections.

(b)           Borrower
shall keep adequate Books and Records with respect to the Collateral and its
business activities in which proper entries, reflecting all consolidated and
consolidating financial transactions, and payments and credits received on, and
all other dealings with, the Collateral, will be made in accordance with GAAP
and all Requirements of Law and on a basis consistent with the Financial
Statements.

3.5           Material
Adverse Change.  Between the date of
Borrower’s most recently audited Financial Statements delivered to Lender and
the Closing Date and except as otherwise disclosed in writing to the Lender by
Borrower: (a) Borrower has not incurred any obligations, contingent or
non-contingent liabilities, or liabilities for Charges, long-term leases or
unusual forward or long-term commitments that are not reflected in the
Projections delivered on the Closing Date and which could, alone or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (b) there
has been no material deviation from such Projections; and (c) no events have
occurred that alone or in the aggregate has had or could reasonably be expected
to have a Material Adverse Effect.  No
Requirement of Law or Contractual Obligation of Borrower has or have had or
could reasonably be expected to have a Material Adverse Effect.  Borrower is not in default, and to Borrower’s
knowledge no third party is in default, under or with respect to any of its
Contractual Obligations, that alone or in the aggregate has had or could
reasonably be expected to have a Material Adverse Effect.

3.6           Real
Estate; Leasehold Property and Equipment. 
The Real Property listed in Disclosure Schedule (3.6) constitutes
all of the Real Property owned, leased, or used by Borrower in its business,
and Borrower will not execute any material agreement or contract in respect of
such Real 

 7
 

 

Property after the date of this Agreement, other than
in the ordinary course of business, without giving Lender prompt prior written
notice thereof.  Borrower holds and will
continue to hold good and marketable leasehold title to all of its owned real
estate, and good and marketable title to all of its other properties and
assets, and valid and insurable leasehold interests in all of its leases (both
as lessor and lessee, sublessee or assignee), and none of the properties and
assets of Borrower are or will be subject to any Liens, except Permitted
Encumbrances.  With respect to the Real
Property, Leasehold Property and Equipment, Borrower shall use the Real
Property, Leasehold Property and Equipment with all reasonable care and caution
and in accordance with applicable standards of any insurance and in conformity
with all applicable laws; and Borrower shall assume all responsibility and
liability arising from the use of the Real Property, Leasehold Property and
Equipment.

3.7           Ventures,
Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.  Except as set forth in Disclosure Schedule
(3.7), as of the Closing Date Borrower has no Subsidiaries, and is not
engaged in any joint venture or partnership with any other Person.  All of the issued and outstanding Stock of
Borrower (including all rights to purchase, options, warrants or similar rights
or agreements pursuant to which Borrower may be required to issue, sell,
repurchase or redeem any of its Stock) as of the Closing Date is owned by each
of the Stockholders (and in the amounts) set forth in Disclosure
Schedule (3.7).  All outstanding
Indebtedness of Borrower as of the Closing Date is described in Disclosure
Schedule (5(b)).

3.8           Government
Regulation; Permits; Margin Regulations.

(a)           Borrower
is not subject to or regulated under any Federal or state statute, rule or
regulation that restricts or limits such Person’s ability to incur
Indebtedness, pledge its assets, or to perform its obligations under the Loan
Documents.  The making of the Loans, the
application of the proceeds and repayment thereof, and the consummation of the
transactions contemplated by the Loan Documents do not and will not violate any
Requirement of Law by Borrower.

(b)           Borrower
is not engaged, nor will it engage, in the business of extending credit for the
purpose of “purchasing” or “carrying” any “margin security” as such terms are
defined in Regulation U of the Federal Reserve Board as now and hereafter in
effect (such securities being referred to herein as “Margin Stock”).  Borrower does not own any Margin Stock, and
none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing
or carrying any Margin Stock or reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock.  Borrower will not take or permit to be taken
any action that might cause any Loan Document to violate any regulation of the
Federal Reserve Board.

(c)           Borrower
has obtained all permits, licenses, approvals, authorizations, licenses,
filings, registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings,
consents, certificates, orders or authorizations of any Governmental Authority,
including, without limitation, any certificates of public convenience and all grants,
approvals, licenses, filings and registrations from or to the FCC or any PUC or
any other Communications Regulatory Authority or under Communications Law
necessary for the lawful conduct of its business as presently conducted,
including the provision of the telecommunication services set forth in any
Permits (the “Permits”) unless the failure to have any of the same would not 

 8
 

 

individually
or in the aggregate result in a Material Adverse Effect.  All of the Permits are valid and subsisting
and in full force and effect.  There are
no investigations, actions, claims or proceedings pending or to the best of
Borrower’s knowledge, as the result of the practices of Borrower or any of its
Affiliates pursuant to any violations of or failure to comply with any
Communications Laws or otherwise, or threatened in writing that seek the
revocation, cancellation, non-renewal, suspension or modification of any of the
Permits except where such investigations, actions, claims or proceedings could
not be reasonably expected to have a Material Adverse Effect.  Lender will not, by reason of the execution,
delivery and performance of this Agreement or any of the other Loan Documents,
be subject to the regulation or control of either the FCC or any PUC.

3.9           Taxes;
Charges.  Except as disclosed in Disclosure
Schedule (3.9) all tax returns, reports and statements required by any
Governmental Authority to be filed by Borrower have, as of the Closing Date,
been filed and will, until the Termination Date, be filed with the appropriate
Governmental Authority, except where the failure to file such tax returns,
reports and statements could not reasonably be expected to have a Material
Adverse Effect, and no tax Lien has been filed against Borrower or its
property.  Proper and accurate amounts
have been and will be withheld by Borrower from its employees for all periods
in compliance with all Requirements of Law and such withholdings have and will
be timely paid to the appropriate Governmental Authorities, except where the
failure to comply with such Requirements of Law could not reasonably be
expected to have a Material Adverse Effect. 
Disclosure Schedule (3.9) sets forth as of the Closing Date
those taxable years for which Borrower’s tax returns are currently being
audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding.  Except
as described on Disclosure Schedule (3.9), Borrower or its predecessors
are not liable for any Charges: (a) under any agreement (including any tax
sharing agreements or agreement extending the period of assessment of any
Charges) or (b) to Borrower’s knowledge, as a transferee.  As of the Closing Date, except as described
on Disclosure Schedule (3.9), Borrower has not agreed or been requested
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which could reasonably be expected to have a
Material Adverse Effect.

3.10         Payment
of Obligations.  Borrower will pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all of its Charges and other obligations of
whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of Borrower and
none of the Collateral is or could reasonably be expected to become subject to
any Lien or forfeiture or loss as a result of such contest.

3.11         ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other existing ERISA
Events, could reasonably be expected to result in a liability of Borrower of
more than the Minimum Actionable Amount. 
Except as disclosed in Disclosure Schedule (3.11), the present
value of all accumulated benefit obligations of Borrower under each Plan (based
on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent Financial
Statements reflecting such amounts, exceed the fair market value of the assets
of such Plan by more than the Minimum Actionable Amount, and the present value
of all accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Account Standards No.
87) did not, 

 9
 

 

as of the date of the most recent Financial Statements
reflecting such amounts, exceed the fair market value of the assets of such
underfunded Plans by more than the Minimum Actionable Amount.  Neither Borrower nor any ERISA Affiliate has
incurred or reasonably expects to incur any Withdrawal Liability in excess of
the Minimum Actionable Amount.

3.12         Litigation.  No Litigation is pending or, to the knowledge
of Borrower, threatened by or against Borrower or against Borrower’s properties
or revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect. 
Except as set forth in Disclosure Schedule (3.12), as of the
Closing Date there is no Litigation pending or to the knowledge of Borrower
threatened against Borrower that seeks damages in excess of $250,000 or
injunctive relief or alleges criminal misconduct of Borrower.  Borrower shall notify Lender promptly in
writing upon learning of the existence, threat or commencement of any
Litigation against Borrower, any ERISA Affiliate or any Plan or any allegation
of Criminal misconduct against Borrower.

3.13         Intellectual
Property.  As of the Closing Date,
all material registered Intellectual Property owned or used by Borrower is
listed, together with application or registration numbers, where applicable, in
Disclosure Schedule (3.13). 
Borrower owns, or is licensed to use, all Intellectual Property
necessary to conduct its business as currently conducted except for such
Intellectual Property the failure of which to own or license could not reasonably
be expected to have a Material Adverse Effect. 
Borrower will maintain the patenting and registration of all
Intellectual Property necessary to conduct its business as currently conducted
(except for such Intellectual Property the failure of which to own or license could
not reasonably be expected to have a Material Adverse Effect) with the United
States Patent and Trademark Office, the United States Copyright Office, or
other appropriate Governmental Authority and Borrower will promptly patent or
register, as the case may be, all new Intellectual Property and notify Lender
in writing five (5) Business Days prior to filing any such new patent or
registration.

3.14         Full
Disclosure.  No information contained
in any Loan Document, the Financial Statements or any written statement
furnished by or on behalf of Borrower under any Loan Document, or to induce
Lender to execute the Loan Documents, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.

3.15         Hazardous
Materials.  Except as set forth in Disclosure
Schedule (3.15), as of the Closing Date, (a) each Real Property location
owned, leased or occupied by Borrower is maintained free of contamination from
any Hazardous Material, (b) Borrower is not subject to any Environmental
Liabilities or, to Borrower’s knowledge, potential Environmental Liabilities,
in excess of $250,000 in the aggregate, (c) no notice has been received by
Borrower identifying it as a “potentially responsible party” or requesting
information under CERCLA or analogous state statutes, and to the knowledge of
Borrower, there are no facts, circumstances or conditions that may result in
Borrower being identified as a “potentially responsible party” under CERCLA or
analogous state statutes; and (d) Borrower has provided to Lender copies of all
existing environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to Borrower.  Borrower: (i)
shall comply in all material respects with all applicable Environmental Laws
and environmental permits; (ii) shall notify Lender in writing within seven (7)

 10
 

 

days if and when it becomes aware of any Release, on,
at, in, under, above, to, from or about any of its Real Property; and (iii)
shall promptly forward to Lender a copy of any order, notice, permit,
application, or any communication or report received by it in connection with
any such Release.

3.16         Insurance.  As of the Closing Date, Disclosure
Schedule (3.16) lists all insurance of any nature maintained for current
occurrences by Borrower, as well as a summary of the terms of such
insurance.  Borrower shall deliver to
Lender certified copies and endorsements to all of its and those of its
Subsidiaries (if any) (a) “All Risk” insurance policies naming Lender loss
payee, and (b) general liability and other liability policies naming Lender as
an additional insured.  All policies of
insurance on real and personal property will contain an endorsement, in form
and substance acceptable to Lender, showing loss payable to Lender (Form 438
BFU or equivalent).  Such endorsement, or
an independent instrument furnished to Lender, will provide that the insurance
companies will give Lender at least thirty (30) days’ prior written notice
before any such policy or policies of insurance shall be altered or canceled
and that no act or default of Borrower or any other Person shall affect the right
of Lender to recover under such policy or policies of insurance in case of loss
or damage.  Borrower shall direct all
present and future insurers under its “All Risk” policies of insurance to pay
all proceeds payable thereunder directly to Lender.  If any insurance proceeds are paid by check,
draft or other instrument payable to Borrower and Lender jointly, Lender may
endorse Borrower’s name thereon and do such other things as Lender may deem
advisable to reduce the same to cash.

3.17         Deposit
and Disbursement Accounts. 
Attachment I to Schedule D lists all banks and other financial
institutions at which Borrower maintains deposits and/or other accounts,
including the Disbursement Account, and such Attachment correctly identifies
the name, address and telephone number of each such depository, the name in
which the account is held, a description of the purpose of the account, and the
complete account number.

3.18         Accounts.  Borrower has not made, and will not make, any
agreement with any Account Debtor for any extension of time for the payment of
any Account, any compromise or settlement for less than the full amount
thereof, any release of any Account Debtor from liability therefor, or any
deduction therefrom except a discount or allowance for prompt or early payment
allowed by Borrower in the ordinary course of its business consistent with
historical practice.  With respect to the
Accounts pledged as collateral pursuant to any Loan Document (a) the amounts
shown on all invoices, statements and reports that may be delivered to the
Lender with respect thereto are actually and absolutely owing to Borrower as
indicated thereon and are not in any way contingent; (b) no payments have been
or shall be made thereon except payments immediately delivered to the applicable
accounts described in paragraph 1 to Schedule D or the Lender as
required hereunder; and (c) to Borrower’s knowledge all Account Debtors have
the capacity to contract.

3.19         Conduct
of Business.  Borrower (a) shall
conduct its business substantially as now conducted or as otherwise permitted
hereunder, and (b) shall at all times maintain, preserve and protect all of the
Collateral and Borrower’s other property, used or useful in the conduct of its
business and keep the same in good repair, working order and condition and
make, or cause to be made, all necessary or appropriate repairs, replacements
and improvements thereto consistent with industry practices.

 11
 

 

3.20         Anti-Terrorism
Laws.

(a)           Neither
Borrower nor, to the knowledge of Borrower, any of its Affiliates is in
violation of any laws relating to terrorism or money laundering (“Anti-Terrorism
Laws”), including Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56.

(b)           Neither
Borrower nor, to the knowledge of Borrower, any Affiliate or other agent of
Borrower acting or benefiting in any capacity in connection with the Loans is
any of the following: (i) a person that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order; (ii) a person
owned or controlled by, or acting for or on behalf of, any person that is
listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order; (iii) a person with which the Lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv) a person that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order; or (v) a person that is named as a “specially
designated national and blocked person” on the most current list published by
the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”) at its
official website or any replacement website or other replacement official
publication of such list.

(c)           Neither
Borrower nor, to the knowledge of Borrower, any agent of any Affiliate acting
in any capacity in connection with the Loans (i) conducts any business or
engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any person described in paragraph (b) above, (ii) deals
in, or otherwise engages in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order, or (iii) engages in or
conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law.

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

3.22         Brokers.  Except as set forth on Disclosure Schedule
(3.22), no broker or finder acting on behalf of Borrower or Affiliate
thereof brought about the obtaining, making or closing of the Loans and neither
Borrower nor any Affiliate of Borrower has any obligation to any Person in
respect of any finder’s or brokerage fees in connection therewith.

3.23         Solvency.  Both before and after giving effect to (a)
the Loans to be made or incurred on the Closing Date or such other date as
Loans requested hereunder are made or incurred, (b) the disbursement of the
proceeds of such Loans pursuant to the instructions of Borrower, and (c) the
payment and accrual of all transaction costs in connection with the foregoing,
Borrower is and will be Solvent.  With
respect thereto, Lender shall have received an executed Officer’s Certificate,
in 

 12
 

 

form and substance satisfactory to Lender, certifying
the Borrower is Solvent as of the Closing Date and after giving effect to the
initial transactions contemplated hereunder.

4.             FINANCIAL MATTERS; REPORTS

4.1           Reports
and Notices.  From the Closing Date
until the Termination Date, Borrower shall deliver to Lender:

(a)           within
five (5) days following the end of each Fiscal Month, or such other time as
Lender may request, an accounts receivable aging and accounts payable aging
(and including information indicating the amounts owing to owners and lessors
of leased premises, warehouses, processors and other third parties from time to
time in possession of any Collateral);

(b)           within
fifteen (15) days following the end of each Fiscal Month, an aged trial balance
by Account Debtor (as requested by Lender) and as soon as available but in no
event later than fifteen (15) days following the end of each Fiscal Month, a
reconciliation of the aged trial balance (as the case may be) to the Borrower’s
general ledger and from the general ledger to the Financial Statements for such
Fiscal Month accompanied by supporting detail and documentation as Lender may
request;

(c)           within
fifteen (15) days following the end of each Fiscal Month, an Accounts Payable
Analysis in the Form of Exhibit D (together with an accounts
payable aging), certified as true and correct by the Chief Financial Officer of
Borrower or such other officer as is acceptable to Lender;

(d)           within
thirty (30) days following the end of each Fiscal Month, the Financial
Statements for such Fiscal Month, which shall provide comparisons to budget and
actual results for the corresponding period during the prior Fiscal Year, both
on a monthly and year-to-date basis, and accompanied by a certification in the
form of Exhibit J by the Chief Executive Officer or Chief Financial
Officer of Borrower that such Financial Statements are complete and correct,
that there was no Default (or specifying those Defaults of which he or she was
aware), and showing in reasonable detail the calculations used in determining
compliance with the financial covenants hereunder;

(e)           as
frequently as Lender may request and in any event no later than fifteen (15)
days following the end of each Fiscal Quarter, (i) a Borrowing Base Certificate
in the form of Exhibit C as of the last day of the previous Fiscal
Quarter, certified as true and correct by the Chief Financial Officer of
Borrower or such other officer as is acceptable to Lender and (ii) a detailed
schedule of wireless communications towers owned or leased by Borrower, in form
and substance satisfactory to Lender;

(f)            within
forty-five (45) days following the end of each Fiscal Quarter, the Financial
Statements for such Fiscal Quarter, which shall provide comparisons to budget
and actual results for the corresponding period during the prior Fiscal Year,
both on a quarterly and year-to-date basis, and accompanied by a certification
in the form of Exhibit J by the Chief Executive Officer or Chief
Financial Officer of Borrower that such Financial Statements are complete and
correct, that there was no Default (or specifying those Defaults of which he or
she was aware), and showing in reasonable detail the calculations used in
determining compliance with the financial covenants hereunder;

 13
 

 

(g)           within
one hundred and five (105) days following the close of each Fiscal Year, the
Financial Statements for such Fiscal Year certified without qualification by an
independent certified accounting firm acceptable to Lender, which shall provide
comparisons to the prior Fiscal Year, and shall be accompanied by any
management letter that may be issued and accompanied by a certification in the
form of Exhibit J by the Chief Executive Officer or Chief Financial
Officer of Borrower that such Financial Statements are complete and correct,
that there was no Default (or specifying those Defaults of which he or she was
aware), and showing in reasonable detail the calculations used in determining
compliance with the financial covenants hereunder;

(h)           within
thirty (30) days following the end of each Fiscal Year, an annual operating
plan for Borrower, approved by the Board of Directors of Borrower, for the
following year, which will include a statement of all of the material
assumptions on which such plan is based, will include monthly balance sheets
and a monthly budget for the following year and will integrate sales, gross
profits, operating expenses, operating profit, cash flow projections and
Borrowing Availability projections all prepared on the same basis and in
similar detail as that on which operating results are reported (and in the case
of cash flow projections, representing management’s good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities;

(i)            not
less than thirty (30) days prior to the close of each Fiscal Year, the
Projections, which will be prepared by Borrower in good faith, with care and
diligence, and using assumptions that are reasonable under the circumstances at
the time such Projections are delivered to Lender and disclosed therein when
delivered;

(j)            within
forty-five (45) days following the end of each Fiscal Quarter, the Financial
Statements for such Fiscal Quarter for Parent, which shall provide comparisons
to actual results for the corresponding period during the prior Fiscal Year,
both on a quarterly and year-to-date basis, and accompanied by a certification
in the form of Exhibit J by the Chief Executive Officer or Chief
Financial Officer of Parent that such Financial Statements are complete and
correct;

(k)           within
one hundred and five (105) days following the close of each Fiscal Year for
Parent, the Financial Statements for such Fiscal Year certified without
qualification by an independent certified accounting firm acceptable to Lender,
which shall provide comparisons to actual results for the prior Fiscal Year,
and shall be accompanied by any management letter that may be issued and
accompanied by a certification in the form of Exhibit J by the Chief
Executive Officer or Chief Financial Officer of Parent that such Financial
Statements are complete and correct; and

(l)            all
the reports and other information as Lender may reasonably request from time to
time.

4.2           Financial
Covenants.  Borrower shall not breach
any of the financial covenants set forth in Schedule G.  For purposes of Section 7.1, a breach of a
financial covenant set forth in Schedule G shall be deemed to have
occurred as of any date of determination by Lender or as of the last day of any
specified measurement period, regardless of when the Financial Statements
reflecting such breach are delivered to Lender.

 14
 

 

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

5.             NEGATIVE COVENANTS

Borrower
covenants and agrees that, without Lender’s prior written consent, from the
Closing Date until the Termination Date, Borrower shall not, directly or
indirectly, by operation of law or otherwise:

(a)           form
any Subsidiary or merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or make any investment
in or, except as provided in Section 5(c) below, loan or advance to, any
Person;

(b)           cancel
any debt owing to it or create, incur, assume or permit to exist any
Indebtedness, except: (i) the Obligations, (ii) Indebtedness existing as of the
Closing Date set forth in Disclosure Schedule (5(b)), (iii) deferred
taxes, (iv) by endorsement of Instruments or items of payment for deposit to
the general account of Borrower, (v) for Guaranteed Indebtedness incurred for
the benefit of Borrower if the primary obligation is permitted by this
Agreement; and (vi) additional Indebtedness (including Purchase Money
Indebtedness) incurred after the Closing Date in an aggregate outstanding
amount not exceeding $500,000;

(c)           enter
into any lending, borrowing or other commercial transaction with any of its
employees, directors or Affiliates (including upstreaming and downstreaming of
cash and intercompany advances and payments by Borrower that are not otherwise
permitted hereunder) other than loans or advances to employees in the ordinary
course of business in an aggregate outstanding amount not exceeding $100,000;

(d)           make
any changes in any of its business objectives, purposes, or operations that
could reasonably be expected to adversely affect repayment of the Obligations
or could reasonably be expected to have a Material Adverse Effect or engage in
any business other than that presently engaged in or proposed to be engaged in
the Projections delivered to Lender on the Closing Date or amend its charter or
by-laws or other organizational documents;

(e)           create
or permit any Lien on any of its properties or assets, except for Permitted
Encumbrances;

(f)            sell,
transfer, issue, convey, assign or otherwise dispose of any of its assets or
properties, including its Accounts or any shares of its Stock or engage in any
sale-leaseback, 

 15
 

 

synthetic
lease or similar transaction (provided, that the foregoing shall not prohibit
the sale of Inventory or obsolete or unnecessary Equipment in the ordinary
course of its business);

(g)           change
(i) its name as it appears in official filings in the state of its incorporation
or organization, (ii) its chief executive office, corporate offices, warehouses
or other Collateral locations, or location of its records concerning the
Collateral, (iii) the type of legal entity that it is, (iv) its organization
identification number, if any, issued by its state of incorporation or
organization, or (v) its state of incorporation or organization, or acquire,
lease or use any real estate after the Closing Date without such Person, in
each instance, giving thirty (30) days prior written notice thereof to Lender
and taking all actions deemed necessary or appropriate by Lender to
continuously protect and perfect Lender’s Liens upon the Collateral;

(h)           establish
any depository or other bank account of any kind with any financial institution
(other than the accounts set forth in Attachment 1 to Schedule D)
without Lender’s prior written consent;

(i)            make
or permit any Restricted Payment except for (i) management, consulting or other
fees for management or similar services of Parent to Borrower for legal,
accounting, insurance (including premiums for such insurance), marketing,
payroll and similar types of services paid for by Parent to or on behalf of
Borrower and (ii) in the event the Borrower files a consolidated income tax
return with Parent, Borrower may make distributions to Parent to permit Parent
to pay federal and state income taxes then due and owing, franchise taxes and
other similar licensing expenses incurred in the ordinary course of business
provided, that the amount of such distribution shall not be greater, nor the
receipt by the Borrower of tax benefits less, than they would have been had the
Borrower not filed a consolidated return with Parent;

(j)            (i)
knowingly conduct any business or engage in making or receiving any
contribution of funds, goods or services to or for the benefit of any Person
described in Section 3.20 above, (ii) knowingly deal in, or otherwise engage in
any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order or any other Anti-Terrorism Law, (iii)
knowingly engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in any Anti-Terrorism Law (and Borrower shall
deliver to the Lender any certification or other evidence requested from time
to time by Lender in its reasonable discretion, confirming Borrower’s
compliance with this Section), or (iv) cause or permit any of the funds of
Borrower that are used to repay the Loans to be derived from any unlawful
activity with the result that the making of the Loans would be in violation of
law; or

(k)           knowingly
cause or permit (i) any of the funds or properties of Borrower that are used to
repay the Loans to constitute property of, or be beneficially owned directly or
indirectly by, any Person subject to sanctions or trade restrictions under
United States law (“Embargoed Person” or “Embargoed Persons”) that is
identified on (A) the “List of Specially Designated Nationals and Blocked
Persons” (the “SDN List”) maintained by OFAC and/or on any other similar list (“Other
List”) maintained by OFAC pursuant to any authorizing statute including, but
not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§
1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Order or regulation promulgated 

 16
 

 

thereunder,
with the result that the investment in the Borrower (whether directly or
indirectly) is prohibited by law, or the Loans made by the Lender would be in
violation of law, or (B) the Executive Order, any related enabling legislation
or any other similar Executive Orders, or (ii) any Embargoed Person to have any
direct or indirect interest, of any nature whatsoever in the Borrower, with the
result that the investment in the Borrower (whether directly or indirectly) is
prohibited by law or the Loans are in violation of law.

6.             SECURITY INTEREST

6.1           Grant
of Security Interest.  (a)  As collateral security for the prompt and complete
payment and performance of the Obligations, Borrower hereby grants to the
Lender a security interest in and Lien upon all of its property and assets,
whether real or personal, tangible or intangible, and whether now owned or
hereafter acquired, or in which it now has or at any time in the future may
acquire any right, title, or interest, including all of the following property
in which it now has or at any time in the future may acquire any right, title
or interest: all Accounts; all Deposit Accounts, all other bank accounts and
all funds on deposit therein; all money, cash and cash equivalents; all
Investment Property; all stock;  all
Goods (including Inventory, Equipment and Fixtures); all Chattel Paper, Documents
and Instruments; all Books and Records; all General Intangibles (including all
Intellectual Property, contract rights, choses in action, Payment Intangibles
and Software); all Letter-of-Credit Rights; all Supporting Obligations; and to
the extent not otherwise included, all Proceeds, tort claims, insurance claims
and other rights to payment not otherwise included in the foregoing and
products of all and any of the foregoing and all accessions to, substitutions
and replacements for, and rents and profits of, each of the foregoing, but
excluding in all events Hazardous Waste (all of the foregoing, together with
any other collateral pledged to the Lender pursuant to any other Loan Document,
collectively, the “Collateral”).

(b)           Borrower
and Lender agree that this Agreement creates, and is intended to create, valid
and continuing Liens upon the Collateral in favor of Lender.  Borrower executing this Agreement represents,
warrants and promises to Lender that: (i) Borrower has rights in and the power
to transfer each item of the Collateral upon which it purports to grant a Lien
pursuant to the Loan Documents, free and clear of any and all Liens or claims
of others, other than Permitted Encumbrances; (ii) the security interests
granted pursuant to this Agreement, upon filing of Uniform Commercial Code financing
statements in the jurisdictions listed on Disclosure Schedule (6.1) will
constitute valid perfected security interests in all of the Collateral (to the
extent such Collateral may be perfected by filing of a financing statement) in
favor of the Lender as security for the prompt and complete payment and
performance of the Obligations, enforceable in accordance with the terms hereof
against any and all creditors of and purchasers from Borrower (other than
purchasers of Inventory in the ordinary course of business) and such security
interests are prior to all other Liens on the Collateral in existence on the
date hereof except for Permitted Encumbrances that have priority by operation
of law; and (iii) no effective security agreement, mortgage, deed of trust,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or
of record in any public office, except those relating to Permitted
Encumbrances.  Borrower promises to
defend the right, title and interest of Lender in and to the Collateral against
the claims and demands of all Persons whomsoever, and each shall take such
actions, including (A) all actions necessary to grant Lender “control” of any
Investment Property, Deposit Accounts, Letter-of-Credit Rights or electronic
Chattel Paper owned by Borrower, with any 

 17
 

 

agreements
establishing control to be in form and substance satisfactory to Lender, (B)
the prompt delivery of all original Instruments, Chattel Paper, negotiable
Documents and certificated Stock owned by Borrower (in each case, accompanied
by stock powers, allonges or other instruments of transfer executed in blank,
(C) notification of Lender’s interest in Collateral at Lender’s request, and
(D) the institution of litigation against third parties as shall be prudent in
order to protect and preserve Borrower’s and Lender’s respective and several
interests in the Collateral.  Borrower
shall mark its Books and Records pertaining to the Collateral to evidence the
Loan Documents and the Liens granted under the Loan Documents.  If Borrower retains possession of any Chattel
Paper or Instrument with Lender’s consent, such Chattel Paper and Instruments
shall be marked with the following legend: 
“This writing and the obligations evidenced or secured hereby are
subject to the security interest of New Stream Commercial Finance, LLC.”  Borrower shall promptly, and in any event
within two (2) Business Days after the same is acquired by it, notify Lender of
any commercial tort claims (as defined in the Code) acquired by it and unless
otherwise consented by Lender, Borrower shall enter into a supplement to this
Loan Agreement granting to Lender a Lien in such commercial tort claim.

6.2           Lender’s
Rights. (a)  Lender may, (i) at any
time in Lender’s own name or in the name of Borrower, communicate with Account
Debtors, parties to Contracts, and obligors in respect of Instruments, Chattel
Paper or other Collateral to verify to Lender’s satisfaction, the existence,
amount and terms of, and any other matter relating to, Accounts, Payment
Intangibles, Instruments, Chattel Paper or other Collateral, and (ii) at any
time after a Default has occurred and is continuing and without prior notice to
Borrower, notify Account Debtors and other Persons obligated on any Collateral
that Lender has a security interest therein and that payments shall be made
directly to Lender.  Upon the request of
Lender, Borrower shall so notify such Account Debtors, parties to Contracts,
and obligors in respect of Instruments, Chattel Paper or other Collateral.  Borrower hereby constitutes Lender or Lender’s
designee as Borrower’s attorney with power to endorse Borrower’s name upon any
notes, acceptance drafts, money orders or other evidences of payment or Collateral.

(b)           Borrower
shall remain liable under each Contract, Instrument and License to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, and Lender shall have no obligation or liability whatsoever to any
Person under any Contract, Instrument or License (between Borrower and any
Person other than Lender) by reason of or arising out of the execution,
delivery or performance of this Agreement, and Lender shall not be required or
obligated in any manner (i) to perform or fulfill any of the obligations of
Borrower, (ii) to make any payment or inquiry, or (iii) to take any action of
any kind to collect, compromise or enforce any performance or the payment of
any amounts which may have been assigned to it or to which it may be entitled
at any time or times under or pursuant to any Contract, Instrument or License.

(c)           Borrower
shall, with respect to each owned, leased, or controlled property, during
normal business hours and upon reasonable advance notice (unless a Default
shall have occurred and be continuing, in which event no notice shall be
required and Lender shall have access at any and all times): (i) provide access
to such property to Lender and any of its officers, employees and agents, as
frequently as Lender determines to be appropriate; (ii) permit Lender and any
of its officers, employees and agents to inspect, audit and make extracts and
copies (or take originals if reasonably necessary) from all of Borrower’s Books
and Records; and (iii) permit Lender to inspect, review, evaluate and make
physical verifications and appraisals of the Inventory and other Collateral in
any 

 18
 

 

manner and
through any medium that Lender considers advisable, and Borrower agrees to
render to Lender, at Borrower’s cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto.

(d)           After
the occurrence and during the continuance of a Event of Default, Borrower, at
its own expense, shall cause the certified public accountant then engaged by
Borrower to prepare and deliver to Lender at any time and from time to time,
promptly upon Lender’s request, the following reports: (i) a reconciliation of
all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv)
test verifications of such Accounts as Lender may request.  Borrower, at its own expense, shall cause its
certified independent public accountants to deliver to Lender the results of
any physical verifications of all or any portion of the Inventory made or
observed by such accountants when and if such verification is conducted.  Lender shall be permitted to observe and
consult with Borrower’s accountants in the performance of these tasks.

6.3           Lender’s
Appointment as Attorney-in-fact.  On
the Closing Date, Borrower shall execute and deliver a Power of Attorney in the
form attached as Exhibit I.  The
power of attorney granted pursuant to the Power of Attorney and all powers
granted under any Loan Document are powers coupled with an interest and shall
be irrevocable until the Termination Date. 
The powers conferred on Lender under the Power of Attorney are solely to
protect Lender’s interests in the Collateral and shall not impose any duty upon
it to exercise any such powers.  Lender
agrees not to exercise any power or authority granted under the Power of
Attorney unless an Event of Default has occurred and is continuing.  Borrower also hereby (i) authorizes Lender to
file any financing statements, continuation statements or amendments thereto that
(A) indicate the Collateral (1) as all assets of the Borrower (or any portion
of Borrower’s assets) or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article
9 of the Code of such jurisdiction, or (2) as being of an equal or lesser scope
or with greater detail, and (B) contain any other information required by Part
5 of Article 9 of the Code for the sufficiency or filing office acceptance of
any financing statement, continuation statement or amendment and (ii) ratifies
its authorization for Lender to have filed any initial financial statements, or
amendments thereto if filed prior to the date hereof.  Borrower acknowledges that it is not
authorized to file any financing statement or amendment or termination
statement with respect to any financing statement without the prior written
consent of Lender and agrees that it will not do so without the prior written
consent of Lender, subject to Borrower’s rights under Section 9-509(d)(2) of
the Code.

6.4           Grant
of License to Use Intellectual Property Collateral.  Borrower hereby grants to Lender an
irrevocable, non-exclusive license (exercisable upon the occurrence and during
the continuance of an Event of Default without payment of royalty or other
compensation to Borrower) to use, transfer, license or sublicense any
Intellectual Property now owned, licensed to, or hereafter acquired by
Borrower, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or
stored and to all computer software and programs used for the compilation or
printout thereof, and represents, promises and agrees that any such license or
sublicense is not and will not be in conflict with the contractual or
commercial rights of any third Person; provided, that such license will
terminate on the Termination Date.

 19

 

6.5           Leasehold Mortgages.

(a)           Disclosure
Schedule (6.5) sets forth each of the Leasehold Properties which are
subject to a Leasehold Mortgage as of the Closing Date.  With respect to all other Leasehold
Properties not set forth on Disclosure Schedule (6.5), on or prior to
December 15, 2006, or at such later date as Lender, in its sole discretion, may
elect, Lender shall have received, upon Lender’s request, duly executed
counterparts of mortgages, in  form and substance reasonably
satisfactory to the Lender (the
“Leasehold Mortgages”) with respect to each Leasehold Property for filing in
the county in which each such Leasehold Property is located, in each case duly
executed and delivered by Borrower, together with:

(i)            evidence of the
completion (or satisfactory arrangements for the completion) of all recordings
and filings of the Leasehold Mortgages as may be necessary or, in the opinion
of the Lender, desirable to create a valid, perfected first priority Lien
against each Leasehold Property purported to be covered thereby; and

(ii)           such other
consents, approvals, opinions, or documents as the Lender reasonably may
request, in form and substance satisfactory to the Lender, including (without
limitation) (A) an opinion of local counsel to Borrower, in form and substance
reasonably satisfactory to Lender, (B) Estoppel Certificates and Consents to
Leasehold Mortgages to be delivered with respect to each Leasehold Property,
(C) evidence that the applicable lease or a memorandum thereof has been
recorded in all locations necessary or desirable, in the Lender’s reasonable
judgment, to give constructive notice to third-party purchasers of such
leasehold interest, or (D) if a leasehold interest was acquired or subleased
from the holder of a recorded leasehold interest, the applicable assignment or
sublease document, executed and acknowledged by such holder, in each case in
form sufficient to give such constructive notice upon recordation and otherwise
in form satisfactory to Lender.

7.             EVENTS OF DEFAULT: RIGHTS AND
REMEDIES

7.1           Events
of Default.  The occurrence of any
one or more of the following events (regardless of the reason therefor) shall
constitute an “Event of Default” hereunder which shall be deemed to be
continuing until waived in writing by Lender in accordance with Section 9.3:

(a)           Borrower shall fail
to make any payment in respect of any Obligations when due and payable or
declared due and payable (and such failure shall continue for a period of five
(5) Business Days with respect to interest and fees); or

(b)           Borrower shall fail
or neglect to perform, keep or observe any of the covenants, promises,
agreements, requirements, conditions or other terms or provisions contained in
this Agreement or any of the other Loan Documents; or

(c)           an event of default
shall occur under any Contractual Obligation of the Borrower (other than this
Agreement and the other Loan Documents), and such event of default (i) involves
the failure to make any payment (whether or not such payment is blocked
pursuant to the terms of an intercreditor agreement or otherwise), whether of
principal, interest or otherwise, and whether due by scheduled maturity,
required prepayment, acceleration, demand or otherwise, in respect of any
Indebtedness (other than the Obligations) of such Person in an aggregate amount
exceeding the 

 20
 

 

Minimum
Actionable Amount, or (ii) causes (or permits any holder of such Indebtedness
or a trustee to cause) such Indebtedness, or a portion thereof, in an aggregate
amount exceeding the Minimum Actionable Amount to become due prior to its
stated maturity or prior to its regularly scheduled date of payment; or

(d)           any representation
or warranty in this Agreement or any other Loan Document, or in any written
statement pursuant hereto or thereto, or in any report, financial statement or
certificate made or delivered to Lender by Borrower shall be untrue or
incorrect in any material respect as of the date when made or deemed made; or

(e)           there shall be
commenced against the Borrower any Litigation seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief that remains unstayed or undismissed for thirty (30) consecutive
days; or Borrower shall have concealed, removed or permitted to be concealed or
removed, any part of its property with intent to hinder, delay or defraud any
of its creditors or made or suffered a transfer of any of its property or the
incurring of an obligation that may be fraudulent under any bankruptcy,
fraudulent transfer or other similar law; or

(f)            a case or
proceeding shall have been commenced involuntarily against Borrower in a court
having competent jurisdiction seeking a decree or order: (i) under the United
States Bankruptcy Code or any other applicable Federal, state or foreign
bankruptcy or other similar law, and seeking either (A) the appointment of a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Person or of any substantial part of its properties, or (B)
the reorganization or winding up or liquidation of the affairs of any such
Person, and such case or proceeding shall remain undismissed or unstayed for
sixty (60) consecutive days or such court shall enter a decree or order
granting the relief sought in such case or proceeding; or (ii) invalidating or
denying any Person’s right, power, or competence to enter into or perform any
of its obligations under any Loan Document or invalidating or denying the
validity or enforceability of this Agreement or any other Loan Document or any
action taken hereunder or thereunder; or

(g)           Borrower shall (i)
commence any case, proceeding or other action under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it or seeking appointment of a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) for
it or any substantial part of its properties, (ii) make a general assignment
for the benefit of creditors, (iii) consent to or take any action in
furtherance of, or, indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in paragraphs (e) or (f) of this Section 7.1 or
clauses (i) and (ii) of this paragraph (g), or (iv) shall admit in writing its
inability to, or shall be generally unable to, pay its debts as such debts
become due; or

(h)           a final judgment or
judgments for the payment of money in excess of the Minimum Actionable Amount
in the aggregate shall be rendered against Borrower, unless the same shall be
(i) fully covered by insurance, or (ii) vacated, stayed, bonded, paid or
discharged within a period of fifteen (15) days from the date of such judgment;
or

 21
 

 

(i)            any provision of
any Loan Document shall for any reason cease to be valid, binding and
enforceable in accordance with its terms, or any Lien granted, or intended by
the Loan Documents to be granted, to Lender shall cease to be a valid and
perfected Lien having the first priority (or a lesser priority if expressly
permitted in the Loan Documents) in any of the Collateral (or Borrower shall so
assert any of the foregoing); or

(j)            a Change of Control
shall have occurred with respect to the Borrower; or

(k)           if Jimmy Taylor is
not the President of Borrower and is not engaged in the day to day business
operations of the Borrower consistent with his responsibilities as an officer
of the Borrower as of the date hereof; or

(l)            the occurrence of
an Event of Default under that certain Loan and Security Agreement dated August
28, 2006 between Lender and Borrower’s Affiliate, Crochet & Borel Services,
Inc. or under any other agreement between Lender and any Affiliate of Parent;
or

(m)          an ERISA Event shall
have occurred that, in the opinion of the Lender, when taken together with all
other ERISA Events that have occurred and are then continuing, could reasonably
be expected to result in liability of Borrower in an aggregate amount exceeding
the Minimum Actionable Amount, or

(n)           the occurrence of
any Regulatory Event.

7.2           Remedies.  (a)  If
any Default shall have occurred and be continuing, then Lender may terminate or
suspend its obligation to make further Revolving Credit Advances.  In addition, if any Event of Default shall
have occurred and be continuing, Lender may, without notice, take any one or
more of the following actions: (i) declare all or any portion of the
Obligations to be forthwith due and payable, whereupon such Obligations shall
become and be due and payable; or (ii) exercise any rights and remedies
provided to Lender under the Loan Documents or at law or equity, including all
remedies provided under the Code; provided, that upon the occurrence of any
Event of Default specified in Sections 7.1(e), (f) or (g), the Obligations
shall become immediately due and payable (and any obligation of Lender to make
further Loans, if not previously terminated, shall immediately be terminated)
without declaration, notice or demand by Lender.

(b)           Without limiting the
generality of the foregoing, Borrower expressly agrees that upon the occurrence
of any Event of Default, Lender may collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or options to purchase or
otherwise dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk.  Lender shall have the right upon any such
public sale, to the extent permitted by law, to purchase for the benefit of
Lender the whole or any part of said Collateral so sold, free of any right of
equity of redemption, which right Borrower hereby releases.  Such sales may be adjourned, or continued
from time to time with or without notice. 
Lender shall have the right to conduct such sales on Borrower’s premises
or elsewhere and shall have the right to use Borrower’s premises without 

 22
 

 

rent or other
charge for such sales or other action with respect to the Collateral for such
time as Lender deems necessary or advisable.

(c)           Upon the occurrence
and during the continuance of an Event of Default and at Lender’s request,
Borrower agrees, to assemble the Collateral and make it available to Lender at
places that Lender shall reasonably select, whether at its premises or
elsewhere.  Until Lender is able to
effect a sale, lease, or other disposition of the Collateral, Lender shall have
the right to complete, assemble, use or operate the Collateral or any part
thereof, to the extent that Lender deems appropriate, for the purpose of
preserving such Collateral or its value or for any other purpose.  Lender shall have no obligation to Borrower
to maintain or preserve the rights of Borrower as against third parties with
respect to any Collateral while such Collateral is in the possession of
Lender.  Lender may, if it so elects,
seek the appointment of a receiver or keeper to take possession of any
Collateral and to enforce any of Lender’s remedies with respect thereto without
prior notice or hearing.  To the maximum
extent permitted by applicable law, Borrower waives all claims, damages, and
demands against Lender, its Affiliates, agents, and the officers and employees
of any of them arising out of the repossession, retention or sale of any
Collateral except such as are determined in a final judgment by a court of competent
jurisdiction to have arisen solely out of the gross negligence or willful
misconduct of such Person.  Borrower
agrees that ten (10) days’ prior notice by Lender to Borrower of the time and
place of any public sale or of the time after which a private sale may take
place is reasonable notification of such matters.  Borrower shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled.

(d)           Lender’s rights and
remedies under this Agreement shall be cumulative and nonexclusive of any other
rights and remedies that Lender may have under any Loan Document or at law or
in equity.  Recourse to the Collateral
shall not be required.  All provisions of
this Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited, to the extent
necessary, so that they do not render this Agreement invalid or unenforceable,
in whole or in part.

7.3           Waivers
by Borrower.  Except as otherwise
provided for in this Agreement and to the fullest extent permitted by
applicable law, Borrower waives: (a) presentment, demand and protest, and
notice of presentment, dishonor, intent to accelerate, acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all Loan Documents, the Notes or any other notes, commercial
paper, Accounts, Contracts, Documents, Instruments, Chattel Paper and
guaranties at any time held by Lender on which Borrower may in any way be
liable, and hereby ratifies and confirms whatever Lender may do in this regard;
(b) all rights to notice and a hearing prior to Lender’s taking possession or
control of, or to Lender’s replevy, attachment or levy upon, any Collateral or
any bond or security that might be required by any court prior to allowing
Lender to exercise any of its remedies; and (c) the benefit of all valuation,
appraisal and exemption laws.  Borrower
acknowledges that it has been advised by counsel of its choices and decisions
with respect to this Agreement, the other Loan Documents and the transactions
evidenced hereby and thereby.

7.4           Proceeds.  The Proceeds of any sale, disposition or
other realization upon any Collateral shall be applied by Lender upon receipt
to the Obligations in such order as Lender may deem advisable in 

 23
 

 

its sole discretion, and after the indefeasible
payment and satisfaction in full in cash of all of the Obligations, and after
the payment by Lender of any other amount required by any provision of law,
including Sections 9-608(a)(1) and 9-615(a)(3) of the Code (but only after
Lender has received what Lender considers reasonable proof of a subordinate
party’s security interest), the surplus, if any, shall be paid to Borrower or
its representatives or to whomsoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.

8.             SUCCESSORS AND ASSIGNS

Each
Loan Document shall be binding on and shall inure to the benefit of Borrower,
Lender, and their respective successors and assigns, except as otherwise
provided herein or therein.  Borrower may
not assign, transfer, hypothecate, delegate or otherwise convey its rights,
benefits, obligations or duties under any Loan Document without the prior
express written consent of Lender.  Any
such purported conveyance by Borrower without the prior express written consent
of Lender shall be void.  There shall be
no third party beneficiaries of any of the terms and provisions of any of the
Loan Documents.  Lender reserves the
right at any time to create and sell participations in the Loans and the Loan
Documents and to sell, transfer or assign any or all of its rights in the Loans
and under the Loan Documents.

9.             MISCELLANEOUS

9.1           No Oral Agreement; Complete Agreement; Modification of
Agreement.  THIS WRITTEN
AGREEMENT AND THE OTHER LOAN DOCUMENTS REFERENCED HEREIN OR CONTEMPLATED HEREBY
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.  This
Agreement and the other Loan Documents constitute the complete agreement
between the parties with respect to the subject matter hereof and thereof,
supersede all prior agreements, commitments, understandings or inducements
(oral or written, expressed or implied). 
No Loan Document may be modified, altered or amended except by a written
agreement signed by Lender and Borrower. 
Borrower shall have all duties and obligations under this Agreement and
such other Loan Documents from the date of its execution and delivery,
regardless of whether the initial Loan has been funded at that time.

9.2           Expenses.  Borrower agrees to pay or reimburse Lender
for all costs and expenses (including the fees and expenses of all counsel,
advisors, consultants (including environmental and management consultants) and
auditors retained in connection therewith), incurred in connection with: (a)
the preparation, negotiation, execution, delivery, performance and enforcement
of the Loan Documents and the preservation of any rights thereunder; (b)
collection including deficiency collections; (c) the forwarding to Borrower or
any other Person on behalf of Borrower by Lender of the proceeds of any Loan
(including a wire transfer fee of $25 per wire transfer); (d) any amendment,
waiver or other modification or waiver of, or consent with respect to any Loan
Document or advice in connection with the administration of the Loans or the rights
thereunder; (e) any litigation, dispute, suit, proceeding or action (whether
instituted by or between any combination of Lender, Borrower or any other
Person), and an appeal or review thereof, in any way relating to the
Collateral, any Loan 

 24
 

 

Document, or any action taken or any other agreements
to be executed or delivered in connection therewith, whether as a party,
witness or otherwise; and (f) any effort to verify, protect, evaluate, assess,
appraise, collect, sell, liquidate or otherwise dispose of the Collateral.

9.3           No
Waiver.  Neither Lender’s failure, at
any time, to require strict performance by Borrower of any provision of any
Loan Document, nor Lender’s failure to exercise, nor any delay in exercising,
any right, power or privilege hereunder, shall operate as a waiver thereof or
waive, affect or diminish any right of Lender thereafter to demand strict
compliance and performance therewith.  No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege.  Any
suspension or waiver of a Default or other provision under the Loan Documents
shall not suspend, waive or affect any other Default or other provision under
any Loan Document, and shall not be construed as a bar to any right or remedy
that Lender would otherwise have had on any future occasion.  None of the undertakings, indemnities,
agreements, warranties, covenants and representations of Borrower to Lender
contained in any Loan Document and no Default by Borrower under any Loan
Document shall be deemed to have been suspended or waived by Lender, unless
such waiver or suspension is by an instrument in writing signed by an officer
or other authorized employee of Lender and directed to Borrower specifying such
suspension or waiver (and then such waiver shall be effective only to the
extent therein expressly set forth), and Lender shall not, by any act (other
than execution of a formal written waiver), delay, omission or otherwise, be
deemed to have waived any of its rights or remedies hereunder.

9.4           Severability;
Section Titles.  Wherever possible,
each provision of the Loan Documents shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of any Loan
Document shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
such Loan Document.  Except as otherwise
expressly provided for in the Loan Documents, no termination or cancellation
(regardless of cause or procedure) of any financing arrangement under the Loan
Documents shall in any way affect or impair the Obligations, duties, covenants,
representations and warranties, indemnities, and liabilities of Borrower or the
rights of Lender relating to any unpaid Obligation, (due or not due,
liquidated, contingent or unliquidated), or any transaction or event occurring
prior to such termination, or any transaction or event, the performance of
which is not required until after the Commitment Termination Date, all of which
shall not terminate or expire, but rather shall survive such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that all indemnity obligations of the Borrower under the Loan
Documents shall survive the Termination Date. 
The Section titles contained in any Loan Document are and shall be
without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties thereto.

9.5           Authorized
Signature.  Until Lender shall be
notified in writing by Borrower to the contrary, the signature upon any
document or instrument delivered pursuant hereto and believed by Lender or any
of Lender’s officers, agents, or employees to be that of an officer of Borrower
shall bind Borrower and be deemed to be the act of Borrower affixed pursuant to
and in accordance with resolutions duly adopted by Borrower’s Board of
Directors, and Lender shall be entitled to assume 

 25
 

 

the authority of each signature and authority of the
person whose signature it is or appears to be unless the person acting in
reliance thereon shall have actual knowledge to the contrary.

9.6           Notices.  Except as otherwise provided herein, whenever
any notice, demand, request or other communication shall or may be given to or
served upon any party by any other party, or whenever any party desires to give
or serve upon any other party any communication with respect to this Agreement,
each such communication shall be in writing and shall be deemed to have been
validly served, given or delivered (a) upon the earlier of actual receipt and
three (3) days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
9.6), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when hand-delivered, all of which shall
be addressed to the party to be notified and sent to the address or facsimile
number indicated in Schedule B or to such other address (or facsimile
number) as may be substituted by notice given as herein provided.  Failure or delay in delivering copies of any
such communication to any Person (other than Borrower or Lender) designated in Schedule
B to receive copies shall in no way adversely affect the effectiveness of
such notice, demand, request or other communication.

9.7           Counterparts.  Any Loan Document may be authenticated in any
number of separate counterparts by any one or more of the parties thereto, and
all of said counterparts taken together shall constitute one and the same
instrument.  Any Loan Document may be
authenticated by manual signature, facsimile or, if approved in writing by
Lender, electronic means, all of which shall be equally valid.

9.8           Time
of the Essence.  Time is of the
essence for performance of the Obligations under the Loan Documents.

9.9           GOVERNING
LAW.  THE LOAN DOCUMENTS AND THE
OBLIGATIONS ARISING UNDER THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.

9.10         SUBMISSION
TO JURISDICTION; WAIVER OF JURY TRIAL. 
(A)  BORROWER AND LENDER HEREBY
CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN CONNECTICUT SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER AND BORROWER ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF CONNECTICUT; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO
REALIZE ON THE 

 26
 

 

COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS,
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER.  BORROWER AND LENDER EXPRESSLY SUBMIT AND
CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND BORROWER AND LENDER HEREBY WAIVE ANY OBJECTION THAT IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS.  BORROWER AND LENDER HEREBY
WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER
OR LENDER AT THE ADDRESS SET FORTH IN SCHEDULE B OF THIS AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER’S
OR LENDER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.

(B)           THE PARTIES HERETO
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
LENDER, AND BORROWER ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THE LOAN DOCUMENTS
OR THE TRANSACTIONS RELATED THERETO.

9.11         USA
Patriot Act Notice.  The Lender
hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)),
it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow the Lender to identify the Borrower in
accordance therewith.

9.12         Press
Releases.  Neither Borrower nor any
of its Affiliates will in the future issue any press release or other public
disclosure using the name of New Stream Commercial Finance, LLC or its
affiliates or referring to this Agreement or the other Loan Documents without at
least two (2) Business Days’ prior notice to Lender and without the prior
written consent of Lender unless (and only to the extent that) Borrower or
Affiliate is required to do so under law and then, in any event, Borrower or
Affiliate will consult with Lender before issuing such press release or other
public disclosure.

9.13         Reinstatement.  This Agreement shall continue to be
effective, or be reinstated, as the case may be, if at any time payment of all
or any part of the Obligations is rescinded or must otherwise be returned or
restored by Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Borrower, or otherwise, all as though such payments had not
been made.

9.14         Maximum
Legal Rate.  It is the intent of the
Borrower and the Lender to conform strictly to all applicable state and federal
usury laws.  The Loan Documents and all
other agreements between Borrower and the Lender whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of acceleration
of the maturity hereof or otherwise, shall the amount contracted for, charged
or received 

 27
 

 

by the Lender for the use, forbearance, or detention
of the money loaned hereunder or otherwise, or for the payment or performance
of any covenant or obligation contained herein or in any other Loan Documents
evidencing, securing or pertaining to the Obligations evidenced hereby which
may be legally deemed to be for the use, forbearance or detention of money,
exceed the Maximum Legal Rate or the maximum amount which the Borrower and any
successors or assigns of the Borrower or any such person (if any) is obligated
to pay and which the Lender is legally entitled to contract for, charge or
collect under applicable state or federal law. 
If from any circumstances whatsoever fulfillment of any provision hereof
or of such other Loan Documents, at the time performance of such provision
shall be due, shall involve transcending the Maximum Legal Rate, then the
obligation to be fulfilled shall be automatically reduced to such limit, and if
from any such circumstance the Lender shall ever receive as interest or
otherwise an amount in excess of the Maximum Legal Rate or the maximum that can
be legally collected, then such amount which would be excessive interest shall
be applied to the reduction of the principal indebtedness hereof and any other
amounts due with respect to the Obligations evidenced hereby or in any other
Loan Document, but not to the payment of interest and if such amount which
would be excess interest exceeds the Obligations and all other non interest
indebtedness described above, then such additional amount shall be refunded to
the Borrower.  If any excess interest in
such respect is provided for in this Agreement, or shall be adjudicated to be
so provided, or in any other Loan Document or otherwise in connection with this
transaction, the provisions of this Section 9.14 shall govern and prevail and
neither the Borrower nor any successors or assigns of the Borrower or any such
person (if any) shall be obligated to pay the excess amount of such interest or
any other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto.  In determining whether
or not all sums paid or agreed to be paid by the Borrower for the use,
forbearance or detention of the Obligations of the Borrower to the Lender,
under any specific contingency, exceeds the Maximum Legal Rate or the maximum
amount permitted by applicable law, the Borrower and the Lender shall to the
maximum extent permitted under applicable law, (a) treat all Obligations as but
a single extension of credit, (b) characterize any non-principal payment as an
expense, fee or premium rather than as sums paid or agreed to be paid by the
Borrower for the use, forbearance or detention of the Obligations of the
Borrower to the Lender, (c) exclude voluntary prepayments and the effect
thereof, and (d) amortize, prorate, allocate and spread in equal parts, the
total amount of such sums paid or agreed to be paid by the Borrower for the
use, forbearance or detention of the Obligations of the Borrower to the Lender
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform through the entire term of the Obligations.  In the event that any of the contract rates
computed under this Agreement or any other Loan Document hereof would exceed
the Maximum Legal Rate, the rate of interest under this Agreement or such other
Loan Agreement for any such period shall be limited to the Maximum Legal Rate,
but any subsequent reductions in the applicable contract rate shall not reduce
the rates of interest under this Agreement or such other Loan Document below
the Maximum Legal Rate until the total amount of interest charged equals the
amount of interest that would have been charged had the applicable contract
rate been charged at all times.  The
Borrower and Lender hereby agree if, despite the provisions of Section 9.9 of
this Agreement, Texas law is deemed to apply, that except for Section 346.004
thereof, the provisions of Chapter 346 of the Texas Finance Code (Vernon’s
Texas Code Annotated), as amended from time to time, shall not apply to this
Agreement or any of the other Loan Documents. 
The terms and provisions of this Section 9.14 shall control and
supersede every other provision hereof, the Loan Documents and all other
agreements between Borrower and Lender

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[SIGNATURE PAGE FOLLOWS]

 29

 

IN WITNESS WHEREOF, this Loan and Security Agreement
has been duly executed as of the date first written above.

 

	
   

  	
  AYIN TOWER MANAGEMENT SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Jimmy R. Taylor

  	
   

  
	
   

  	
  Name:

  	
  Jimmy R. Taylor

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEW STREAM COMMERCIAL FINANCE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James J. McKay

  	
   

  
	
   

  	
  Name: 

  	
  James J. McKay

  	
   

  
	
   

  	
  Title: 

  	
  President

  	
   

  
											

 

 

Loan and Security Agreement

 

SCHEDULE A - DEFINITIONS

Capitalized
terms used in this Agreement and the other Loan Documents shall have (unless
otherwise provided elsewhere in this Agreement or in the other Loan Documents)
the following respective meanings:

“Account Debtor”
shall mean any Person who is or may become obligated with respect to, or on
account of, an Account, Chattel Paper or General Intangible (including a
Payment Intangible).

“Accounts”
means all “accounts,” as such term
is defined in the Code, now owned or hereafter acquired by any Person,
including: (a) all accounts receivable, other receivables, book debts and
other forms of obligations (other than forms of obligations evidenced by
Chattel Paper or Instruments) (including any such obligations which may be
characterized as an account or contract right under the Code); (b) all of
such Person’s rights in, to and under all purchase orders or receipts for goods
or services; (c) all of such Person’s rights to any goods represented by
any of the foregoing (including unpaid sellers’ rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods); (d) all rights to payment due to such Person for Goods
or other property sold, leased, licensed, assigned or otherwise disposed of,
for a policy of insurance issued or to be issued, for a secondary obligation
incurred or to be incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services
rendered or to be rendered by such Person or in connection with any other
transaction (whether or not yet earned by performance on the part of such
Person), and (e) all health care insurance receivables; and (vi) all
collateral security of any kind given by any Account Debtor or any other Person
with respect to any of the foregoing.

“Accounts Payable
Analysis” means a certificate in the form of Exhibit D.

“Affiliate”
means, with respect to any Person: (a) each other Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian
or other fiduciary, ten percent (10%) or more of the Stock having ordinary
voting power for the election of directors of such Person; (b) each other
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person; or (c) each of such Person’s
officers, directors, joint venturers and partners.  For the purpose of this definition, “control”
of a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through
the ownership of voting securities, by contract or otherwise.

“Agreement”
means this Agreement including all appendices, exhibits or schedules attached
or otherwise identified thereto, restatements and modifications and supplements
thereto, and any appendices, exhibits or schedules to any of the foregoing,
each as effect at the time such reference becomes operative; provided, that
except as specifically set forth in this Agreement, any reference to the
Disclosure Schedules to this Agreement shall be deemed a reference to the
Disclosure Schedules as in effect on the Closing Date or in a written amendment
thereto executed by Borrower and Lender.

 A-1
 

 

“Books and Records”
means all books, records, board minutes, contracts, licenses, insurance
policies, environmental audits, business plans, files, computer files, computer
discs and other data and software storage and media devices, accounting books
and records, financial statements (actual and pro forma), filings with
Governmental Authorities and any and all records and instruments relating to
the Collateral or Borrower’s business.

“Borrower”
means the Person identified as such in the preamble of this Agreement.

“Borrowing
Availability” means, at any time, the lesser of (a) the Maximum
Amount or (b) the Borrowing Base, in each case less reserves established by
Lender from time to time.

“Borrowing Base”
means at any time an amount equal to the sum at such time of: (a) the product
of Tower Cash Flow for the immediately preceding Fiscal Quarter multiplied
by four (4), the product of which is multiplied by the Leverage
Multiplier in effect for the then current Fiscal Month less (b) Funded
Debt less (c) Lease Expense.  The
Borrowing Base shall be calculated based upon the most recent Borrowing Base
received by Lender.

“Borrowing Base
Certificate” means a certificate in the form of Exhibit C.

“Business Day”
means any day that is not a Saturday, a Sunday or a day on which banks are
required or permitted to be closed in the State of Connecticut.

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

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

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

“Cash Collateral
Account” has the meaning assigned to it in Schedule C.

“Change of Control”
means, with respect to any Person on or after the Closing Date, that any change
in the composition of such Person’s stockholders as of the Closing Date shall
occur which would result in any stockholder or group acquiring 49.9% or more of
any class of Stock of such Person, or that any Person (or group of Persons
acting in concert) shall otherwise acquire, directly or indirectly (including
through Affiliates), the power to elect a majority of the Board of Directors of
such Person or otherwise direct the management or affairs of such Person by
obtaining proxies, entering into voting agreements or trusts, acquiring
securities or otherwise.

 A-2
 

 

“Charges”
means all Federal, state, county, city, municipal, local, foreign or other
governmental taxes (including taxes owed to PBGC at the time due and payable),
levies, customs or other duties, assessments, charges, liens, and all
additional charges, interest, penalties, expenses, claims or encumbrances upon
or relating to (a) the Collateral, (b) the Obligations, (c) the employees,
payroll, income or gross receipts of Borrower, (d) the ownership or use of any
assets by Borrower, or (e) any other aspect of Borrower’s business.

“Chattel Paper”
means all “chattel paper,” as such term is defined in the Code, including
electronic chattel paper, now owned or hereafter acquired by any Person.

“Closing Date”
means the Business Day on which the conditions precedent set forth in Section 2
have been satisfied or specifically waived in writing by Lender, and the
initial Loan has been made.

“Closing Fee”
has the meaning assigned to it in Schedule E.

“Code”
means the Uniform Commercial Code as the same may, from time to time, be in
effect in the State of Connecticut; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Lender’s Lien on any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of Connecticut, the term “Code” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions of this Agreement relating to such attachment, perfection, priority
or remedies and for purposes of definitions related to such provisions;
provided further, that to the extent that the Code is used to define any term
herein or in any Loan Document and such term is defined differently in
different Articles or Divisions of the Code, the definition of such term
contained in Article or Division 9 shall govern.

“Collateral”
has the meaning assigned to it in Section 6.1.

“Collection Account”
means that certain account of Lender, account number 1050454734 in the name of
Lender at Citibank, F.S.B. in Ridgefield, Connecticut, ABA No. 221172610, or
such other account as may be specified in writing by Lender as the “Collection
Account”.

“Commitment
Termination Date” means the earliest of (a) the Stated Expiry Date,
(b) the date Lender’s obligation to advance funds is terminated pursuant to
Section 7.2, and (c) the date of indefeasible prepayment in full by Borrower of
the Obligations in accordance with the provisions of Section 1.2(c).

“Communications Act”
shall mean the Communications Act of 1934, as the same now exists or may from
time to time hereafter be amended (and including as amended pursuant to the
Telecommunications Act of 1996), modified, recodified or supplemented, together
with all rules, regulations and interpretations thereunder or related thereto.

“Communications Laws”
shall mean the Communications Act and any similar or successor Federal statute
or statutes and any applicable State or foreign law governing the provision of
telecommunications services, as the same now exist or may from time to time
hereafter be amended, 

 A-3
 

 

modified,
recodified or supplemented, together with all rules and regulations thereunder
or related thereto.

“Communications
Regulatory Authority” shall mean the FCC, any PUC and any future
federal, state or local communications regulatory commission, agency,
department board or authority.

“Contracts”
means all the contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Person may now or hereafter have any right, title or interest, including any
agreement relating to the terms of payment or the terms of performance of any
Account.

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

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

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

“Default”
means any Event of Default or any event that, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.

“Default Rate”
has the meaning assigned to it in Section 1.5(c).

“Deposit Accounts”
means all “deposit accounts” as such term is defined in the Code, now or
hereafter held in the name of any Person.

“Documents”
means all “documents,” as such term is defined in the Code, now owned or
hereafter acquired by any Person, wherever located, including all bills of
lading, dock warrants, dock receipts, warehouse receipts, and other documents
of title, whether negotiable or non-negotiable.

“EBITDA”
means, for any period, the Net Income (Loss) of Borrower and its Subsidiaries
on a consolidated basis for such period, plus interest expense, income tax
expense, amortization expense, depreciation expense and extraordinary losses
and minus extraordinary gains, in each case, of Borrower and its Subsidiaries
on a consolidated basis for such period determined in accordance with GAAP to
the extent included in the determination of such Net Income (Loss); except,
that, (a) (i) for any Fiscal Month prior to November 1, 2006, EBITDA for
any 

 A-4
 

 

such
period shall mean Pro Forma Monthly EBITDA, and (ii) for any Fiscal Quarter
prior to January 31, 2007, EBITDA for any such period shall mean Pro Forma
Quarterly EBITDA; and (b) from the date hereof through March 31, 2007, for the
purposes of calculating the Borrowing Base only, EBITDA shall be calculated for
the respective twelve (12) Fiscal Month periods ending on the dates hereinafter
set forth as follows:

(i)                                     for
the twelve (12) Fiscal Month period ending October 31, 2006, EBITDA shall mean
the EBITDA for the six (6) Fiscal Month period ending October 31, 2006
multiplied by 2;

(ii)                                  for
the twelve (12) Fiscal Month period ending November 30, 2006, EBITDA shall mean
the EBITDA for the seven (7) Fiscal Month period ending November 30, 2006
multiplied by 12/7;

(iii)                               for
the twelve (12) Fiscal Month period ending December 31, 2006, EBITDA shall mean
the EBITDA for the eight (8) Fiscal Month period ending December 31, 2006
multiplied by 12/8;

(iv)                              for
the twelve (12) Fiscal Month period ending January 31, 2007, EBITDA shall mean
the EBITDA for the nine (9) Fiscal Month period ending January 31, 2007
multiplied by 12/9;

(v)                                 for
the twelve (12) Fiscal Month period ending February 28, 2007, EBITDA shall mean
the EBITDA for the ten (10) Fiscal Month period ending February 28, 2007
multiplied by 12/10; and

(vi)                              for
the twelve (12) Fiscal Month period ending March 31, 2007, EBITDA shall mean
the EBITDA for the eleven (11) Fiscal Month period ending March 31, 2007
multiplied by 12/11.

“Eligible Equipment”
shall mean Equipment consisting of cell towers owned and operated by Borrower
that meets all of the following criteria:

(a)           Lender
shall have a perfected first-and-only priority lien on and security interest in
such Equipment;

(b)           such
Equipment shall be located at a premises owned or leased by Borrower, provided
that, if such Equipment is located at premises leased by Borrower, Lender shall
have received an agreement in writing from the owner of such premises in form
and substance satisfactory to Lender acknowledging Lender’s first priority
security interest in the Equipment, waiving security interests and claims by
such person against the Equipment and permitting Lender access to, and the right
to remain on, the premises so as to exercise Lender’s rights and remedies and
otherwise deal with the Equipment;

(c)           such
Equipment is acceptable to Lender in good faith as Collateral; and

(d)           if
requested by Lender, Borrower shall have delivered to Lender a copy of a bill
of sale, invoice or other instrument evidencing that the vendor of such
Equipment has transferred good and absolute title thereto to Borrower for the
purchase price set forth therein, and if applicable, any 

 A-5
 

 

deferred
payment terms given to Borrower in connection with such sale.  The criteria for Eligible Equipment shall be
subject to Lender’s continuing satisfaction and may be revised by Lender from
time to time in its sole judgment.  Any
Equipment that is not Eligible Equipment shall nevertheless be and remain at
all times part of the Collateral.

“Environmental Laws”
means all Federal, state and local laws, statutes, ordinances and regulations,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, and any applicable judicial or administrative interpretation
thereof relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation).

“Environmental
Liabilities” means all liabilities, obligations, responsibilities,
remedial actions, removal costs, losses, damages of whatever nature, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim,
suit, action or demand of whatever nature by any Person and which relate to any
health or safety condition regulated under any Environmental Law, environmental
permits or in connection with any Release, threatened Release, or the presence
of a Hazardous Material.

“Equipment”
means all “equipment” as such term is defined in the Code, now owned or
hereafter acquired by any Person, wherever located, including any and all
machinery, apparatus, equipment, fittings, furniture, fixtures, cell towers,
communication equipment, motor vehicles and other tangible personal property
(other than Inventory) of every kind and description that may be now or
hereafter used in such Person’s operations or which are owned by such Person or
in which such Person may have an interest, and all parts, accessories,
attachments and accessions thereto and substitutions and replacements therefor.

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

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

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

 A-6
 

 

withdrawal
or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt
by Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

“Event of Default”
has the meaning assigned to it in Section 7.1.

“FCC”
shall mean the Federal Communications Commission of the United States of
America, and any successor, in whole or in part, to its jurisdiction.

“Fees”
means the fees due to Lender as set forth in Schedule E.

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

“Fiscal Month”
means any of the monthly accounting periods of Borrower.

“Fiscal Quarter”
means any of the quarterly accounting periods of Borrower.

“Fiscal Year”
means the 12 month period of Borrower ending April 30 of each year.  Subsequent changes of the fiscal year of
Borrower shall not change the term “Fiscal Year” unless Lender shall consent in
writing to such change.

“Fixtures”
means all “fixtures” as such term is defined in the Code, now owned or
hereafter acquired by any Person.

“Funded Debt”
shall mean, with respect to any Person, all Indebtedness for borrowed money
evidenced by notes, bonds, debentures, or similar evidences of Indebtedness and
which by its terms matures more than one year from, or is directly or
indirectly renewable or extendible at such Person’s option under a revolving credit
or similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from the date of creation thereof, and
specifically including Capital Lease Obligations, current maturities of
long-term debt, revolving credit and short-term debt extendible beyond one year
at the option of the debtor, and also including, in the case of Borrower, the
Obligations and, without duplication, Guaranteed Indebtedness consisting of
guaranties of Funded Debt of other Persons.

“GAAP” means
generally accepted accounting principles in the United States of America as in
effect from time to time, consistently applied.

“General Intangibles”
means all “general intangibles,” as such term is defined in the Code, now owned
or hereafter acquired by any Person, including all right, title and interest
that such Person may now or hereafter have in or under any Contract, all
Payment Intangibles, customer lists, Licenses, Intellectual Property, interests
in partnerships, joint ventures and other business associations, permits,
proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how,
software, data bases, 

 A-7
 

 

data,
skill, expertise, experience, processes, models, drawings, materials, Books and
Records, Goodwill (including the Goodwill associated with any Intellectual
Property), all rights and claims in or under insurance policies (including
insurance for fire, damage, loss, and casualty, whether covering personal
property, real property, tangible rights or intangible rights, all liability,
life, key-person, and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit accounts,
rights to receive tax refunds and other payments, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in
exchange for pledged Stock and Investment Property, and rights of
indemnification.

“Goods”
means all “goods,” as such term is defined in the Code, now owned or hereafter
acquired by any Person, wherever located, including embedded software to the
extent included in “goods” as defined in the Code, manufactured homes, standing
timber that is cut and removed for sale and unborn young of animals.

“Goodwill”
means all goodwill, trade secrets, proprietary or confidential information,
technical information, procedures, formulae, quality control standards,
designs, operating and training manuals, customer lists, and distribution
agreements now owned or hereafter acquired by any Person.

“Governmental
Authority” shall mean any nation or government, any state, province,
or other political subdivision or department thereof, including, without
limitation, any Communications Regulatory Authority, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

“Guaranteed
Indebtedness” means, as to any Person, any obligation of such Person
guaranteeing any indebtedness, lease, dividend, or other obligation (“primary
obligations”) of any other Person (the “primary obligor”) in any manner,
including any obligation or arrangement of such guaranteeing Person (whether or
not contingent): (a) to purchase or repurchase any such primary
obligation; (b) to advance or supply funds (i) for the purchase or payment
of any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor; (b) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation; or (d) to indemnify the owner
of such primary obligation against loss in respect thereof.

“Guarantor”
means each Person that executes a guaranty or a support, put or other similar
agreement in favor of Lender in connection with the transactions contemplated
by this Agreement.

“Guaranty”
means any agreement to perform all or any portion of the Obligations on behalf
of Borrower, in favor of, and in form and substance satisfactory to, Lender,
together with all amendments, modifications and supplements thereto, and shall
refer to such Guaranty as the same may be in effect at the time such reference
becomes operative.

“Hazardous Material”
means any substance, material or waste that is regulated by or forms the basis
of liability now or hereafter under, any Environmental Laws, including any
material or 

 A-8
 

 

substance
that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,”
“hazardous substance,” “extremely hazardous waste,” “restricted hazardous
waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic
substance” or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB’s), or any radioactive substance.

“Hazardous Waste”
has the meaning ascribed to such term in the Resource Conservation and Recovery
Act (42 U.S.C. §§ 6901 et. seq.).

“Indebtedness”
of any Person means:  (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (including reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers’
acceptances, whether or not matured, but not including obligations to trade
creditors incurred in the ordinary course of business and not paid in the
ordinary course of Borrower’s business consistent with past practices);
(b) all obligations evidenced by notes, bonds, debentures or similar
instruments; (c) all indebtedness created or arising under any conditional
sale or other title retention agreements with respect to property acquired by
such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property); (d) all Capital Lease Obligations; (e) all Guaranteed
Indebtedness; (f) all Indebtedness referred to in clauses (a), (b), (c),
(d) or (e) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness; (g) the Obligations; and (h) all liabilities under
Title IV of ERISA.

“Indemnified
Liabilities” and “Indemnified
Person” have the respective meanings assigned to them in
Section 1.11.

“Instruments”
means all “instruments,” as such term is defined in the Code, now owned or
hereafter acquired by any Person, wherever located, including all certificated
securities and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.

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

“Interest Coverage
Ratio” shall mean, with respect to any Person for any period, the
ratio of Tower Cash Flow to Interest Expense.

“Interest Expense”
shall mean, with respect to any Person for any fiscal period, interest expense
(whether cash or non-cash) of such Person determined in accordance with GAAP
for the relevant period ended on such date, including, in any event, interest
expense with respect to any Funded Debt of such Person and interest expense for
the relevant period that has been capitalized on the balance sheet of such
Person.

 A-9
 

 

“Inventory”
means all “inventory,” as such term is defined in the Code, now owned or
hereafter acquired by any Person, wherever located, including all inventory,
merchandise, goods and other personal property that are held by or on behalf of
such Person for sale or lease or are furnished or are to be furnished under a
contract of service or that constitute raw materials, work in process, finished
goods, returned goods or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in such Person’s
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including all supplies and embedded software.

“Investment Property”
means all “investment property,” as such term is defined in the Code, now owned
or hereafter acquired by any Person, wherever located.

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

“Lease Expenses”
shall mean, with respect to any Person for any fiscal period, the aggregate
rental obligations of such Person determined in accordance with GAAP which are
payable in respect of such period under leases of real and/or personal property
(net of income from subleases thereof, but including taxes, insurance,
utilities, maintenance and similar expenses which the lessee is obligated to
pay under the terms of such leases), whether or not such obligations are
reflected as liabilities or commitments on a consolidated balance sheet of such
Person or in the notes thereto, excluding, however, any such obligations under
Capital Leases.

“Leasehold Mortgages”
has the meaning assigned to it in Section 6.5.

“Leasehold Property”
means, with respect to any Person, such Person’s present and future leasehold
estate in any Real Property

“Lender”
means New Stream Commercial Finance, LLC and, if at any time Lender shall
decide to assign or syndicate all or any of the Obligations, such term shall
include such assignee or such other members of the syndicate.

“Letter-of-Credit
Rights” means “letter-of-credit rights” as such term is defined in
the Code, now owned or hereafter acquired by any Person, including rights to
payment or performance under a letter of credit, whether or not such Person, as
beneficiary, has demanded or is entitled to demand payment or performance.

“Leverage Multiplier” shall
mean from the Closing Date through and including September 30, 2007, 10.0.  Commencing October 1, 2007 and on the first
day of each month thereafter, the Leverage Multiplier shall be reduced on a
monthly basis by the amount of .125. 
When the Leverage Multiplier is reduced to 8.5, it shall remain at 8.5
unless Lender agrees otherwise in its sole discretion.

“Leverage Ratio”
shall mean, as to any Person and its Subsidiaries, on a consolidated basis, the
ratio of (a) Indebtedness of such person as of the last day of such period to
(b) EBITDA of such Person during such period

 A-10
 

 

“LIBOR Rate”
means, a fluctuating rate of interest determined on a monthly basis equal to
the one-month rate of interest appearing on Telerate Page 3750 (or any
successor page) as the one-month London interbank offered rate for deposits in
U.S. Dollars on the first (1st) Business Day of each month.  If for any reason such rate is not available,
“LIBOR” shall mean the fluctuating rate of interest calculated on a daily basis
equal to the one-month rate of interest appearing on Reuters Screen Page LIBO
Page as the one-month London interbank offered rate for deposits in U.S.
Dollars on the first (1st)
Business Day; provided, however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such
rates.  “Telerate Page 3750” means the
British Bankers Association Libor Rates (determined as on the first (1st) Business Day of each month)
that are published by Moneyline Telerate (or any successor thereto).  As used in this definition, the term “Business
Day” means a day on which commercial banks are open for international business
(including dealings in U.S. Dollar deposits in London, England).

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

“Lien”
means any mortgage, security deed or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
security title, easement or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security
interest under the Code or comparable law of any jurisdiction).

“Litigation”
means any claim, lawsuit, litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority.

“Loan Documents”
means this Agreement, the Financial Statements, each Guaranty, the Power of
Attorney, the Lock Box Account Agreements, and the other documents and
instruments listed in Schedule F, and all security agreements, mortgages
and all other documents, instruments, certificates, and notices at any time
delivered by any Person (other than Lender) in connection with any of the
foregoing.

“Loans”
means the Revolving Credit Loan.

“Lock Box Account”
and “Lock Box Account Agreement”
have the meanings assigned to such terms in Schedule D.

“Material Adverse
Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or financial or other condition of Borrower or the
industry within which Borrower operates, (b) Borrower’s ability to pay or
perform the Obligations under the Loan Documents to which it is a party in
accordance with the terms thereof, (c) the Collateral or Lender’s Liens on
the Collateral or the priority of any such Lien, or (d) Lender’s rights
and remedies under this Agreement and the other Loan Documents.

“Maximum Amount”
means $14,000,000.

 A-11
 

 

“Maximum Legal Rate”
shall mean the maximum lawful interest rate which may be contracted for,
charged, taken, received or reserved under this Agreement or the other Loan
Documents by Lender in accordance with applicable state or federal law
(whichever provides for the highest permitted rate), taking into account all
items contracted for, charged or received in connection with the Obligations
evidenced hereby which are treated as interest under the applicable state or
federal law, as such rate may change from time to time. The Maximum Legal Rate
shall be calculated in a manner that takes into account any and all fees,
payments and other charges in respect of the Loan Documents that constitute
interest under applicable law.  Each
change in any interest rate provided for herein based upon the Maximum Legal
Rate resulting from a change in the Maximum Legal Rate shall take effect
without notice to the Borrower at the time of such change in the Maximum Legal
Rate.  If, despite the provisions of
Section 9.9 of this Agreement, Texas law is deemed to apply, for purposes of
determining the Maximum Legal Rate under Texas law, the applicable rate ceiling
shall be: (a) the “weekly ceiling” described in and computed in accordance with
the provisions of Section 303.003 of the Texas Finance Code, as amended; or (b)
if the parties subsequently contract as allowed by Texas law, the quarterly
ceiling or the annualized ceiling computed pursuant to Section 303.008 of the
Texas Finance Code, as amended; provided, however, that at any time the “weekly
ceiling”, the quarterly ceiling or the annualized ceiling shall be less than
18% per annum or more than 24% per annum, the provisions of Section 303.009(a)
and Section 303.009(b) of the Texas Finance Code, as amended, shall control for
purposes of such determination, as applicable.

“Minimum Actionable
Amount” means $250,000.

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

“Net Borrowing
Availability” means at any time the Borrowing Availability less the
Revolving Credit Loan.

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

“Notes”
means the Revolving Credit Note.

“Notice of Revolving
Credit Advance” has the meaning assigned to it in Section 1.1(b).

“Obligations”
means all loans, advances, debts, expense reimbursement, fees, liabilities, and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or amounts are liquidated or determinable) owing by Borrower to
Lender, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, whether arising under any of the Loan
Documents or under any other agreement between Borrower and Lender, and all
covenants and duties regarding such amounts. 
This term includes all principal, interest (including interest accruing
at the then applicable rate provided in this Agreement after the maturity of
the Loans and interest 

 A-12
 

 

accruing
at the then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), Fees, Charges, expenses, attorneys’
fees and any other sum chargeable to Borrower under any of the Loan Documents,
and all principal and interest due in respect of the Loans and all obligations
and liabilities of any Guarantor under any Guaranty.

“Parent”
shall mean Charys Holding Company, Inc. and its permitted successors and
assigns.

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

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

“Payment Intangibles”
means all “payment intangibles” as such term is defined in the Code, now owned
or hereafter acquired by any Person.

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

“Permitted Encumbrances”
means the following encumbrances: (a) Liens for taxes or assessments or other
governmental Charges or levies, either not yet due and payable or to the extent
that nonpayment thereof is permitted by the terms of Section 3.10; (b)
pledges or deposits securing obligations under worker’s compensation,
unemployment insurance, social security or public liability laws or similar
legislation; (c) pledges or deposits securing bids, tenders, contracts
(other than contracts for the payment of money) or leases to which Borrower is
a party as lessee made in the ordinary course of business; (d) deposits
securing public or statutory obligations of Borrower; (e) inchoate and
unperfected workers’, mechanics’, or similar liens arising in the ordinary
course of business so long as such Liens attach only to Equipment, fixtures or
real estate; (f) carriers’, warehousemans’, suppliers’, landlords’ or other
similar statutory liens arising in the ordinary course of business and securing
indebtedness not yet due and payable; (g) deposits of money securing, or
in lieu of, surety, appeal or customs bonds in proceedings to which Borrower is
a party; (h) zoning restrictions, easements, licenses, or other restrictions on
the use of real property or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such real estate; (i) Purchase Money Liens
securing Purchase Money Indebtedness (or rent) to the extent permitted under
Section 5(b)(vi); (j) Liens in existence on the Closing Date as disclosed
on Disclosure Schedule (5(e)) provided that no such Lien is spread to
cover additional property after the Closing Date and the amount of Indebtedness
secured thereby is not increased.; (k) Liens in favor of Lender securing
the Obligations; and (l) other Liens in an aggregate amount not to exceed
$50,000 at any time outstanding.

 A-13
 

 

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

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

“Proceeds”
means “proceeds,” as such term is defined in the Code and, in any event, shall
include: (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to Borrower with respect to any Collateral; (b) any and
all payments (in any form whatsoever) made or due and payable to Borrower in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any Collateral by any governmental body, authority, bureau or
agency (or any person acting under color of governmental authority);
(c) any claim of Borrower against third parties (i) for past, present
or future infringement of any Intellectual Property or (ii) for past,
present or future infringement or dilution of any Trademark or Trademark
License or for injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License; (d) any
recoveries by Borrower against third parties with respect to any litigation or
dispute concerning any Collateral, including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral; (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock; and (f) any and all other amounts, rights to payment or other
property acquired upon the sale, lease, license, exchange or other disposition
of Collateral and all rights arising out of Collateral.

“Pro Forma Monthly
EBITDA” means, (a) for the Fiscal Month ended May 2006; $55,667, (b)
for the Fiscal Month ended June 2006, $55,667, (c) for the Fiscal Month ended
July 2006, $55,667, (d) for the Fiscal Month ended August 2006, $56,000, (e)
for the Fiscal Month ended September 2006 $56,000, and (f) for the Fiscal Month
ended October 2006, $56,000.

“Pro Forma Quarterly
EBITDA” means, (a) for the Fiscal Quarter ended July 2006, $167,000
and (b) for the Fiscal Quarter ended October 2006 $168,000.

“Projections”
means as of any date the consolidated and consolidating balance sheet,
statements of income and cash flow for Borrower and its Subsidiaries (including
forecasted Capital Expenditures and Net Borrowing Availability) (a) by
month for the next Fiscal Year, and (b) by year for the following three Fiscal
Years, in each case prepared in a manner consistent with GAAP and accompanied
by senior management’s discussion and analysis of such plan.

“PUCs”
shall mean, collectively, the public utilities commissions or boards for any
State or any other jurisdiction in which Borrower operates its
telecommunications business or any successor agency, and any successor, in
whole or in part, to its functions or jurisdictions, sometimes being referred
to herein individually as a “PUC”.

 A-14
 

 

“Purchase Money
Indebtedness” means (a) any Indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset,
(b) any Indebtedness incurred for the sole purpose of financing or
refinancing all or any part of the purchase price of any fixed asset, and
(c) any renewals, extensions or refinancings thereof (but not any
increases in the principal amounts thereof outstanding at that time).

“Purchase Money Lien”
means any Lien upon any fixed assets which secures the Purchase Money Indebtedness
related thereto but only if such Lien shall at all times be confined solely to
the asset the purchase price of which was financed or refinanced through the
incurrence of the Purchase Money Indebtedness secured by such Lien and only if
such Lien secures only such Purchase Money Indebtedness.

“Real Property”
means, with respect to any Person, such Person’s present and future right,
title and interest (including, without limitation, any leasehold estate) in:

(a)           any
plots, pieces or parcels of land;

(b)           any
improvements, buildings, structures and fixtures now or hereafter located or
erected thereon or attached thereto of every nature whatsoever (the rights and
interest described in clauses (a) and (b) being the “Premises”);

(c)           any
other interests in property constituting appurtenances to the Premises, or
which hereafter shall in any way belong, relate or be appurtenant thereto; and

(d)           all
other rights and privileges thereunto belonging or appertaining and all
extensions, additions, improvements, betterments, renewals, substitutions and
replacements to or of any of the rights and interests described in clause (c)
above.

“Regulatory Event”
shall mean any of the following events: (a) Lender becomes subject to
regulation as a “carrier”, a “telephone company”, a “common carrier”, a “public
utility” or otherwise under any applicable liability or common carrier law or
governmental regulation, Federal, State or local, solely as result of the
transactions contemplated by this Agreement and the other Financing Agreements,
or (b) Borrower becomes subject to a statute or regulation by any Governmental
Authority different from the statutes or regulations existing as of the date
hereof and that could have a Material Adverse Effect, or (c) the FCC, any PUC
or any other Communications Regulatory Authority issues an order or other
statement revoking, denying or refusing to renew, or recommending the
revocation, denial or non-renewal of, any material Permit (except for any such
order or statement that is being appealed or contested in good faith by
Borrower by appropriate proceedings diligently pursued and available to
Borrower, so long as during such appeal or contest, Borrower may continue to
receive the benefit of, and operate pursuant to, such Permit) except where the
failure to have such a Permit does not or could not reasonably be expected to
result in a Material Adverse Effect.

“Release”
means as to any Person, any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, dumping, leaching or
migration of Hazardous Materials in the 

 A-15
 

 

indoor
or outdoor environment by such Person, including the movement of Hazardous
Materials through or in the air, soil, surface water, ground water or property.

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

“Restricted Payment”
means, after the Closing Date: (a) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets on or in respect of Borrower’s
Stock; (b) any payment or distribution made in respect of any subordinated
Indebtedness of Borrower in violation of any subordination or other agreement
made in favor of Lender; (c) any payment on account of the purchase,
redemption, defeasance or other retirement of Borrower’s Stock or Indebtedness
or any other payment or distribution made in respect of any thereof, either
directly or indirectly; other than (i) that arising under this Agreement or
(ii) interest and principal, when due without acceleration or modification of
the amortization as in effect on the Closing Date, under Indebtedness (not
including subordinated Indebtedness, payments of which shall be permitted only
in accordance with the terms of the relevant subordination agreement made in
favor of Lender) described in Disclosure Schedule (5(b)) or otherwise
permitted under Section 5(b)(vi); or (iii) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder
of such Person which is not expressly and specifically permitted in this
Agreement; provided, that no payment to Lender shall constitute a Restricted
Payment.

“Revolving Credit
Advance” has the meaning assigned to it in Section 1.1(a).

“Revolving Credit
Loan” means at any time the sum of (a) the aggregate amount of
Revolving Credit Advances then outstanding, plus (b) the amount of
accrued but unpaid interest thereon, plus (c) the amount of accrued but
unpaid costs, fees and expenses payable hereunder.

“Revolving Credit
Note” means the promissory note of Borrower dated the Closing Date,
substantially in the form of Exhibit F.

“Revolving Credit
Rate” has the meaning assigned to it in Section 1.5(a).

“Software”
means all “software” as such term is defined in the Code, now owned or
hereafter acquired by any Person, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.

“Solvent”
means, with respect to any Person on a particular date, that on such date (a)
the fair value of the property of such Person is greater than the total amount
of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; 

 A-16
 

 

and
(d) such Person is not engaged in a business or transaction, and is not about
to engage in a business or transaction, for which such Person’s property would
constitute an unreasonably small capital. 
The amount of contingent liabilities (such as litigation, guaranties and
pension plan liabilities) at any time shall be computed as the amount that, in
light of all the facts and circumstances existing at the time, represents the
amount that can be reasonably be expected to become an actual or matured
liability.

“Stated Expiry Date”
means November 8, 2008.

“Stock”
means all certificated and uncertificated shares, options, warrants, membership
interests, general or limited partnership interests, participation or other
equivalents (regardless of how designated) of or in a corporation, partnership,
limited liability company or equivalent entity whether voting or nonvoting,
including common stock, preferred stock, or any other “equity security” (as
such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934).

“Stockholder”
means each holder of Stock of Borrower.

“Subsidiary”
means, with respect to any Person, (a) any corporation of which an aggregate of
more than 50% of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of
whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person and/or one or more Subsidiaries of such Person, or
with respect to which any such Person has the right to vote or designate the
vote of 50% or more of such Stock whether by proxy, agreement, operation of law
or otherwise, and (b) any partnership or limited liability company in
which such Person or one or more Subsidiaries of such Person has an equity
interest (whether in the form of voting or participation in profits or capital
contribution) of more than 50% or of which any such Person is a general partner
or manager or may exercise the powers of a general partner or manager.

“Supporting
Obligations” means all “supporting obligations” as such term is
defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.

“Tangible Net Worth”
means, with respect to any Person, at any date, the total assets (excluding any
assets attributable to any issuances by such Person of any Stock after the
Closing Date and excluding any intangible assets) minus the total liabilities,
in each case, of such Person at such date determined in accordance with GAAP.

“Taxes”
means taxes, levies, imposts, deductions, Charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on or measured by the
net income of Lender.

“Termination Date”
means the date on which all Obligations under this Agreement are indefeasibly
paid in full, in cash, and Borrower shall have no further right to borrow any
moneys or obtain other credit extensions or financial accommodations under this
Agreement.

 A-17
 

 

“Tower Cash Flow”
shall mean, for any given period, EBITDA less Capital Expenditures.

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

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

“Transaction Summary”
means the Transaction Summary set forth in the Recitals to this Agreement.

“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.

Any
accounting term used in this Agreement or the other Loan Documents shall have,
unless otherwise specifically provided therein, the meaning customarily given
such term in accordance with GAAP, and all financial computations thereunder
shall be computed, unless otherwise specifically provided therein, in accordance
with GAAP consistently applied; provided, that all financial covenants and
calculations in the Loan Documents shall be made in accordance with GAAP as in
effect on the Closing Date unless Borrower and Lender shall otherwise
specifically agree in writing.  That
certain items or computations are explicitly modified by the phrase “in
accordance with GAAP” shall in no way be construed to limit the foregoing.  All other undefined terms contained in this
Agreement or the other Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code.  The words “herein,” “hereof” and “hereunder”
or other words of similar import refer to this Agreement as a whole, including
the exhibits and schedules thereto, as the same may from time to time be
amended, modified or supplemented, and not to any particular section,
subsection or clause contained in this Agreement.

For
purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated to
the contrary: (a) wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular and the
plural; (b) the term “or” is not exclusive; (c) the term “including” (or
any form thereof) shall not be limiting or exclusive; (d) all references
to statutes and related regulations shall include any amendments of same and
any successor statutes and regulations; and (e) all references to any
instruments or agreements, including references to any of the Loan Documents,
shall include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.

 A-18

 

SCHEDULE B

LENDER’S AND BORROWER’S ADDRESS FOR NOTICES

	
  Lender’s Address

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  NEW STREAM COMMERCIAL FINANCE, LLC

  
	
  Address:

  	
  38C Grove Street

  
	
   

  	
  Ridgefield, Connecticut 06877

  
	
  Attn:

  	
  Dennis Diczok

  
	
  Telephone:

  	
  (203) 431-0330

  
	
  Facsimile:

  	
  (203) 702-5377

  
	
   

  	
   

  
	
   

  	
   

  
	
  Borrower’s Address

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  AYIN TOWER MANAGEMENT SERVICES, INC.

  
	
  Address:

  	
  17314 State Highway 249, Suite 230

  
	
   

  	
  Houston, Texas 77064

  
	
  Attn:

  	
  Jimmy Taylor, President

  
	
  Telephone:

  	
  (281) 807-1441

  
	
  Facsimile:

  	
  (281) 807-4188

  
	
   

  	
   

  
	
   

  	
  and:

  
	
   

  	
   

  
	
  Name:

  	
  CHARYS HOLDING COMPANY, INC.

  
	
  Address:

  	
  1117 Perimeter Center, Suite N 415

  
	
   

  	
  Atlanta, Georgia 30338-5417

  
	
  Attn:

  	
  Billy V. Ray, Jr.

  
	
  Telephone:

  	
  (678) 443-2300

  
	
  Facsimile:

  	
  (678) 443-2320

  

 

 B-1

 

SCHEDULE C

[INTENTIONALLY OMITTED]

 C-1

 

SCHEDULE D - CASH MANAGEMENT

Borrower
agrees to establish, and to maintain, until the Termination Date, the cash
management system described below:

1.             Borrower: (i) shall not (nor shall
it permit any of its Subsidiaries to) open or maintain any deposit, checking,
operating or other bank account, or similar money handling account, with any
bank or other financial institution except for those accounts identified in
Attachment I hereto (to include a petty cash account not to exceed $5,000
during any Fiscal Month, and a payroll account not to exceed an amount equal to
one regular payroll at any time); and (ii) shall close or permit to be closed
any of the accounts listed in Attachment I hereto, in each case
without Lender’s prior written consent, and then only after Borrower has
implemented agreements with such bank or financial institution and Lender
acceptable to Lender.

2.             Commencing on the Closing Date and
until the Termination Date, Borrower shall cause to be deposited directly all
cash, checks, notes, drafts or other similar items relating to or constituting
proceeds of or payments made in respect of any and all Collateral into blocked
accounts or lock box accounts in Borrower’s or Lender’s name (collectively, the
“Lock Box Accounts”) set forth in paragraph 1 of Attachment I
hereto.

3.             On or before the Closing Date, each
bank at which the Lock Box Accounts are held shall have entered into tri-party
lock box agreements (the “Lock Box Account Agreements”) with Lender and
Borrower, in form and substance acceptable to Lender.  Each such Lock Box Account Agreement shall
provide, among other things, that (a) such bank executing such agreement
has no rights of setoff or recoupment or any other claim against such Lock Box
Account, other than for payment of its service fees and other charges directly
related to the administration of such account, and (b) such bank agrees to
sweep on a daily basis all amounts in the Lock Box Account to the Collection
Account.

4.             On the Closing Date, (a) the lock
box and blocked account arrangements shall immediately become operative at the
banks at which the Lock Box Accounts are maintained, and (b) amounts
outstanding under the Revolving Credit Loan (for purposes of the Borrowing
Availability) shall be reduced through daily sweeps, by wire transfer, of the
Lock Box Accounts into the Collection Account. 
Borrower acknowledges that it shall have no right to gain access to any
of the moneys in the Lock Box Accounts until after the Termination Date.

5.             Borrower may maintain, in its name,
accounts (the “Disbursement Accounts”) at a bank or banks acceptable to
Lender into which Lender shall, from time to time, deposit proceeds of
Revolving Credit Advances made pursuant to Section 1.1 for use solely in
accordance with the provisions of Section 1.3. 
All of the Disbursement Accounts as of the Closing Date are listed in
paragraph 2 of Attachment I hereto.

6.             Upon the request of Lender,
Borrower shall forward to Lender, on a daily basis, evidence of the deposit of
all items of payment received by Borrower into the Lock Box Accounts and copies
of all such checks and other items, together with a statement showing the
application of those items 

 D-1
 

 

relating
to payments on Accounts to outstanding Accounts and a collection report with
regard thereto in form and substance satisfactory to Lender.

 D-2
 

 

ATTACHMENT I TO SCHEDULE D

LIST OF BANK ACCOUNTS

1.                                       Lock Box Accounts.

Blocked
Account at:

TrustMark
National Bank

3715
FM 1960 W

Houston,
TX 77068

Account# [XXXXXXXX]

2.                                       Disbursement Accounts.

J P Morgan Chase Bank, N
A

18143 Blanco Rd

San Antonio, TX 78232

Account#: [XXXXXXXX]

3.                                       Petty Cash Account (not to exceed $5,000).

NONE

4.                                       Payroll Account (not to exceed one regular payroll).

NONE

 D-3

 

SCHEDULE E - FEES

1.             FACILITY
FEE:  For each day from the
Closing Date, and through and including the Termination Date, an amount equal
to the Revolving Credit Loan for such day multiplied by sixty-five one
hundredths (.65%) percent, the product of which is then divided by 360.  The Facility Fee for each month (except for
the month in which the Termination Date occurs) is payable in arrears on the
first day of each calendar month following the Closing Date; the final monthly
installment of the Facility Fee is payable on the Termination Date.  Notwithstanding the foregoing, any unpaid
Facility Fee is immediately due and payable on the Commitment Termination Date.

2.             COMMITMENT
FEE; CLOSING FEE:  A
non-refundable commitment fee of $350,000, less the amount of such commitment
fee previously received by Lender prior to the Closing Date, which commitment
fee shall be paid at closing.  A
non-refundable closing fee of $350,000, payable and fully earned at closing
(the “Closing Fee”).

3.             MAKE
WHOLE  SUCCESS FEE: On
the Commitment Termination Date, a non-refundable success fee of $420,000 (the “Make
Whole Success Fee”).  The Make Whole
Success Fee shall be fully earned on the Closing Date, and shall be payable on
the Commitment Termination Date.

4.             COLLATERAL
MONITORING FEE:  A fully
earned and non-refundable collateral monitoring fee of $12,500 per quarter,
payable in advance on the Closing Date and on the first day of each calendar
quarter thereafter, commencing January 1, 2007.

5.             AUDIT
FEES:  Borrower will reimburse
Lender per person per day at the then prevailing rate (which rate as of the
Closing Date is $800), plus out of pocket expenses, for the audit reviews,
field examinations and collateral examinations conducted by Lender.

 E-1

 

SCHEDULE F

SCHEDULE OF
DOCUMENTS

The
obligation of Lender to make the initial Revolving Credit Advances and extend
other credit is subject to satisfaction of the condition precedent that Lender
shall have received the following, each, unless otherwise specified below or
the context otherwise requires, dated the Closing Date, in form and substance
satisfactory to Lender and its counsel:

PRINCIPAL LOAN DOCUMENTS

1.             Agreement.  The Loan and Security Agreement duly executed
by Lender, Borrower and Parent.

2.             Note(s).  Duly executed Note(s) to the order of Lender
evidencing the Loan(s).

3.             Borrowing Base Certificate.  An original Borrowing Base Certificate duly
executed by a responsible officer of Borrower(s).

4.             Notice of Revolving Credit
Advance.  An original Notice of
Revolving Credit Advance duly executed by a responsible officer of Borrower(s).

COLLATERAL DOCUMENTS

1.             Acknowledgment Copies of
Financing Statements.  Acknowledgment
copies of proper Financing Statements (Form UCC-l) (the “Financing Statements”)
duly filed under the Code in all jurisdictions as may be necessary or, in the
opinion of Lender, desirable to perfect Lender’s Lien on the Collateral.

2.             UCC Searches.  Certified copies of UCC Searches, or other
evidence satisfactory to Lender, listing all effective financing statements
which name Borrower(s) (under present name, any previous name or any trade or
doing business name) as debtor and covering all jurisdictions referred to in
paragraph (1) immediately above, together with copies of such other financing
statements.

3.             Other Recordings and Filings.  Evidence of the completion of all other
recordings and filings (including UCC-3 termination statements and other Lien
release documentation) as may be necessary or, in the opinion of and at the
request of Lender, desirable to perfect Lender’s Lien on the Collateral and
ensure such Collateral is free and clear of other Liens..

4.             Power of Attorney.  Power of Attorney duly executed by Borrower.

5.             Leasehold Mortgages.  Leasehold Mortgages for each of the Leasehold
Properties listed on Disclosure Schedule (6.5).

 F-1
 

 

THIRD PARTY AGREEMENTS

1.             Cash Management System.  Duly executed Lock Box Account Agreements
and, if required by Lender, pledged account agreements in respect of the
Disbursement Accounts as contemplated by Schedule D.

2.             Pledge Agreement.  Pledge Agreement and related stock powers
executed by Parent.

3.             Warrant.  Warrant executed by Parent for Lender to
purchase 250,000 shares of Parent. 
Warrant to be exercisable for a five (5) year period following the
Closing Date.

OTHER DOCUMENTS

1.             Secretary Certificate.  A Secretary Certificate in the form of Exhibit
H to the Agreement duly completed and executed by the Secretary of
Borrower, together with all attachments thereto.

2.             Financial Statements and Projections.  Copies of the Financial Statements and
Projections, which Projections shall include a business plan and operating
Projections for the Borrower for six (6) years) and shall include capital
expenditures budget for Borrower in form and substance satisfactory to Lender.

3.             Insurance Policies.  Certified copies of insurance policies
described in Section 3.16, together with evidence showing loss payable or
additional insured clauses or endorsements in favor of Lender.

4.             Existing Lease Agreements.  Copies of any existing real property leases
and equipment leases to which (each) Borrower is a party and any other document
or instrument evidencing or relating to existing Indebtedness of Borrower(s),
together with all certificates, opinions, instruments, security documents and
other documents relating thereto, all of which shall be satisfactory in form
and substance to Lender, certified by an authorized officer of Borrower(s) as
true, correct and complete copies thereof.

5.             Officer’s Certificate.  Lender shall have received an executed
Officer’s Certificate, in form and substance satisfactory to Lender, certifying
the Borrower is Solvent as of the Closing Date and after giving effect to the
initial transactions contemplated hereunder.

6.             Leasehold Mortgages.  Copies of any existing real property leases
and equipment leases to which Borrower is a party and any other document or
instrument evidencing or relating to existing Indebtedness of Borrower,
together with all certificates, opinions, instruments, security documents,
leasehold mortgages and other documents relating thereto, all of which shall be
satisfactory in form and substance to Lender, certified by an authorized
officer of Borrower as true, correct and complete copies thereof.

7.             Material Contracts.  Copies of the Borrower’s contract with
[Cingular Wireless] and [Other Material Contracts To Be Designated]

 F-2
 

 

8.             Real Property/Leasehold Property
Documents.  Copies of any existing
title insurance policies and searches, surveys and environmental reports for
all Real Property and Leasehold Property.

9.             Opinion of Counsel.  An original opinion of counsel for Borrower
and Guarantor which shall be in form and substance acceptable to Lender.  Such opinion letter shall provide, among
other things, that no consent by any regulatory and governmental agencies is
required in connection with the pledge to Lender of all Equipment consisting of
cell phone towers and the contracts and agreements related thereto owned by
Borrower.

 F-3

 

SCHEDULE
G

FINANCIAL
COVENANTS

1.             Minimum Tower Cash Flow.  Borrower shall have cumulative Tower Cash
Flow at the end of each Fiscal Quarter set forth below of not less than the
amounts set forth below:

	
  Fiscal Quarter Ending

  	
   

  	
  Minimum Tower Cash Flow

  	
   

  
	
  January 31, 2007

  	
   

  	
  $

  	
  425,000

  	
   

  
	
  April 30, 2007

  	
   

  	
  $

  	
  570,000

  	
   

  
	
  July 31, 2007

  	
   

  	
  $

  	
  600,000

  	
   

  
	
  October 31, 2007

  	
   

  	
  $

  	
  635,000

  	
   

  
	
  January 31, 2008

  	
   

  	
  $

  	
  665,000

  	
   

  
	
  April 30, 2008

  	
   

  	
  $

  	
  700,000

  	
   

  
	
  July 31, 2008

  	
   

  	
  $

  	
  730,000

  	
   

  
	
  October 31, 2008

  	
   

  	
  $

  	
  760,000

  	
   

  

 

2.             Minimum Interest Coverage Ratio.  Borrower shall have at the end of each Fiscal
Quarter set forth below, an Interest Coverage Ratio for the prior four (4)
Fiscal Quarters then ended of not less than the following:

	
  Fiscal Quarter Ending

  	
   

  	
  Minimum Interest Coverage

  Ratio

  	
   

  
	
  January 31, 2007

  	
   

  	
  2.30

  	
   

  
	
  April 30, 2007

  	
   

  	
  2.10

  	
   

  
	
  July 31, 2007

  	
   

  	
  1.60

  	
   

  
	
  October 31, 2007

  	
   

  	
  1.35

  	
   

  
	
  January 31, 2008

  	
   

  	
  1.55

  	
   

  
	
  April 30, 2008

  	
   

  	
  1.70

  	
   

  
	
  July 31, 2008

  	
   

  	
  1.85

  	
   

  
	
  October 31, 2008

  	
   

  	
  1.95

  	
   

  

 

 

3.             Maximum Capital Expenditures.  Borrower shall not make Capital Expenditures
as at the end of each Fiscal Quarter set forth below that exceed in the
aggregate the amounts set forth opposite each of such Fiscal Quarter:

	
  Period

  	
   

  	
  Maximum Capital

  Expenditures Per Period

  	
   

  
	
  January 31, 2007

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  April 30, 2007

  	
   

  	
  $

  	
  30,000

  	
   

  
	
  July 31, 2007

  	
   

  	
  $

  	
  45,000

  	
   

  
	
  October 31, 2007

  	
   

  	
  $

  	
  60,000

  	
   

  
	
  January 31, 2008 and
  for all Fiscal Quarters thereafter

  	
   

  	
  $

  	
  60,000

  	
   

  

 

4.             Maximum Leverage Ratio.  Borrower shall have, at the end of each
Fiscal Quarter set forth below, a Leverage Ratio as of the last day of such
Fiscal Quarter and for the prior four (4) Fiscal Quarters then ended of not
more than the following 

	
  Fiscal Quarter Ending

  	
   

  	
  Maximum Leverage Ratio

  	
   

  
	
  January 31, 2007

  	
   

  	
  10.0:1.0

  	
   

  
	
  April 30, 2007

  	
   

  	
  10.0:1.0

  	
   

  
	
  July 31, 2007

  	
   

  	
  10.0:1.0

  	
   

  
	
  October 31, 2007

  	
   

  	
  10.0:1.0

  	
   

  
	
  January 31, 2008

  	
   

  	
  9.625:1.0

  	
   

  
	
  April 30, 2008

  	
   

  	
  9.25:1.0

  	
   

  
	
  July 31, 2008

  	
   

  	
  8.875:1.0

  	
   

  
	
  October 31, 2008

  	
   

  	
  8.50:1.0

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]