Document:

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                                                                    Exhibit 10.6

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                               SERVICING AGREEMENT

                            dated as of May 10, 2005

                                      among

                           WERNER FUNDING CORPORATION

                                   WERNER CO.

                                       and

                       THE CIT GROUP/BUSINESS CREDIT, INC.

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     This SERVICING AGREEMENT (as amended, supplemented or otherwise modified
from time to time, this "Agreement") is entered into as of May 10, 2005, among
WERNER FUNDING CORPORATION, a Delaware corporation, as purchaser under the
Account Purchase Agreement (the "Purchaser"), WERNER CO., a Pennsylvania
corporation ("Werner"), as servicer (in such capacity, together with its
successors and permitted assigns in such capacity, the "Servicer") and THE CIT
GROUP/BUSINESS CREDIT, INC., a New York corporation ("CIT"), as agent (in such
capacity, together with its successors and assigns in such capacity, the
"Agent").

     PRELIMINARY STATEMENTS. All terms used herein but not defined herein shall
have the meaning ascribed to such term in the Financing Agreement dated of even
date herewith among Werner Funding Corporation, as borrower, The CIT
Group/Business Credit, Inc, as agent, and the various lenders party from time to
time thereto.

     WHEREAS, pursuant to the Account Purchase Agreement, Werner has agreed to
sell, transfer and assign the Accounts and Related Rights to the Purchaser, and
the Purchaser has agreed to acquire such Accounts and Related Rights.

     WHEREAS, pursuant to the Financing Agreement, CIT and the other lenders
party from time to time thereto have agreed to make loans to the Purchaser, as
borrower thereunder, and the Purchaser, as borrower thereunder, has granted to
the Agent on behalf of the lenders party from time to time thereto, a security
interest in all of its assets, including the Accounts and Related Rights.

     WHEREAS, the parties hereto wish to establish an arrangement with respect
to the servicing of the Accounts and grant the Agent certain rights with respect
thereto.

     NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:

                                   ARTICLE I.
                   REPRESENTATIONS AND WARRANTIES; COVENANTS;
                               TERMINATION EVENTS

     Section 1.1. Representations and Warranties: Covenants. The Servicer hereby
makes the representations and warranties, and hereby agrees to perform and
observe the covenants, set forth below:

     (a)  Representations and Warranties of the Servicer. The Servicer
          represents and warrants as follows:

          (i)  It is a corporation duly incorporated, validly existing and in
               good standing under the laws of the State of Pennsylvania, and is
               duly qualified to do business and is in good standing as a
               foreign corporation in every jurisdiction where the nature of its
               business requires it to be so qualified, except where the failure
               to be so qualified would not have a material adverse effect on
               (A) its assets, operations, business or condition or (B) its

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               ability to perform its obligations under this Agreement and each
               other Transaction Document to which it is a party (a "Material
               Adverse Effect").

          (ii) The execution, delivery and performance by the Servicer of this
               Agreement and the other Transaction Documents to which it is a
               party: (i) are within its corporate powers; (ii) have been duly
               authorized by all necessary corporate action; (iii) do not
               contravene or result in a default under or conflict with: (A) its
               charter or by-laws, (B) any material law, rule or regulation
               applicable to it, (C) any indenture, loan agreement, mortgage,
               deed of trust or other material agreement or instrument to which
               it is a party or by which it is bound, or (D) any order, writ,
               judgment, award, injunction or decree binding on or affecting it
               or any of its property; and (iv) do not result in or require the
               creation of any lien, security interest or other charge or
               encumbrance, or any other type of preferential arrangement upon
               or with respect to any of its properties. This Agreement has been
               duly executed and delivered by the Servicer.

          (iii) No authorization, approval or other action by, and no notice to
               or filing with any nation or government, any state or other
               political subdivision thereof, any central bank (or similar
               monetary or regulatory authority) thereof, any body or entity
               exercising executive, legislative, judicial, regulatory or
               administrative functions of or pertaining to government,
               including any court, and any person owned or controlled, through
               stock or capital ownership or otherwise, by any of the foregoing
               (each, a "Governmental Authority") or other person, is required
               for the due execution, delivery and performance by the Servicer
               of this Agreement or any other Transaction Document to which it
               is a party.

          (iv) Each of this Agreement and the other Transaction Documents to
               which it is a party constitutes the legal, valid and binding
               obligation of the Servicer enforceable against it in accordance
               with its terms, except as enforceability may be limited by
               bankruptcy, insolvency, reorganization or other similar laws from
               time to time in effect affecting the enforcement of creditors'
               rights generally and by general principles of equity, regardless
               of whether such enforceability is considered in a proceeding in
               equity or at law.

          (v)  There is no pending or, to its knowledge, threatened action or
               proceeding affecting it or any of its Subsidiaries or properties
               before any Governmental Authority or arbitrator that is likely to
               result in a Material Adverse Effect.

          (vi) It is not in violation of any order of any court, arbitrator or
               Governmental Authority that is likely to result in a Material
               Adverse Effect.

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          (vii) No event has occurred and is continuing that constitutes a
               Termination Event or which, with the giving of notice, the lapse
               of time or both, would constitute a Termination Event.

          (viii) The Servicer has complied in all material respects with the
               receivables credit and collection policies and practices of the
               relevant Originator in effect on the date of this Agreement and
               described in Schedule I to this Agreement, as modified in
               compliance with this Agreement (the "Credit and Collection
               Policies") with regard to each Account and with all of the terms,
               covenants and agreements contained in this Agreement and the
               other Transaction Documents that are applicable to it.

     (b)  Covenants of the Servicer. Until the later of (i) the Termination Date
          and (ii) the date on which all Obligations shall be paid in full and
          all Commitments under the Financing Agreement shall have terminated:

          (i)  Compliance with Laws. Etc. The Servicer shall comply in all
               material respects with all applicable laws, rules, regulations
               and orders, and preserve and maintain its corporate existence,
               rights, franchises, qualifications and privileges, except to the
               extent that the failure so to comply with such laws, rules and
               regulations or the failure so to preserve and maintain such
               existence, rights, franchises, qualifications and privileges
               would not have a Material Adverse Effect; provided that the
               Servicer may contest any law, rule, regulation or order in good
               faith in any reasonable manner which the Agent determines, in the
               exercise of its reasonable business judgment, will not have a
               Material Adverse Effect on the Agent's or the Lenders' rights or
               priorities pursuant to the Financing Agreement in the Accounts
               and Related Rights; provided further that the Purchaser or the
               Servicer, as applicable, shall have set aside on its books all
               appropriate reserves in accordance with generally accepted
               accounting principles in effect from time to time.

          (ii) Offices, Records and Books of Account, Etc. The Servicer shall
               keep its principal place of business and chief executive office
               (as such terms or similar terms are used in the applicable UCC)
               and the office where it keeps its records concerning the Accounts
               at the address of the Servicer set forth under its name on the
               signature page to the Agreement or, upon at least 15 days' prior
               written notice of a proposed change to the Agent, at any other
               locations in jurisdictions where all actions reasonably requested
               by the Agent to protect and perfect the interest of the Agent in
               the Accounts and Related Rights have been taken and completed.
               The Servicer will maintain and implement administrative and
               operating procedures (including an ability to recreate records
               evidencing Accounts and related Contracts in the event of the
               destruction of the originals thereof), and keep and maintain all
               documents, books, records, computer tapes and disks and other
               information reasonably necessary or advisable for the collection
               of all Accounts and Related Rights (including records

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               adequate to permit the daily identification of each Account and
               all collections of and adjustments to each Account).

          (iii) Compliance with Contracts and Credit and Collection Policy. The
               Servicer shall, at its expense, timely and fully (A) perform and
               comply in all material respects with the provisions, covenants
               and other terms required to be observed by it under the Contracts
               related to the Accounts and (B) comply in all material respects
               with the Credit and Collection Policy with regard to each Account
               and related Contract.

          (iv) Extension or Amendment of Accounts. Except as provided in the
               Agreement, the Servicer shall not extend the maturity or adjust
               the outstanding balance or otherwise modify the terms of any
               Account, or amend, modify or waive any term or condition of any
               related Contract.

          (v)  Change in Business or Credit and Collection Policy. The Servicer
               shall not make any material change in the character of its
               business or in any Credit and Collection Policy that would have a
               Material Adverse Effect. The Servicer shall not make any other
               change in any Credit and Collection Policy without giving prior
               written notice thereof to the Agent.

          (vi) Audits. In order to enable the Purchaser to comply with its
               obligations under Section 5.2(a) of the Financing Agreement, the
               Servicer will permit the Agent, and/or any agent representative
               designated by it, (i) access to all books and records in its
               possession or under its control relating to the Accounts and the
               Related Rights, including the related Contracts; and (ii) to
               enter upon its premises for the purpose of examining such
               materials described in clause (i) above, and to discuss matters
               relating to Accounts and the Related Rights or its performance
               hereunder or under the Contracts with any of its officers and
               employees. The foregoing provision shall not be deemed to give
               the Agent any greater rights than it has under said Section
               5.2(a).

          (vii) Change in Lock-Box Banks, Lock-Box Accounts and Payment
               Instructions to Customers. The Servicer and shall not add or
               terminate any bank as a lock-box bank or any account as a
               lock-box account from those permitted or required under the
               Financing Agreement, or make any change in the instructions to
               Customers regarding payments to be made to the Servicer or any
               lock-box account (or related post office box), unless the Agent
               shall have consented thereto in writing and such account shall
               have been established as a Depository Account in accordance with
               the Financing Agreement.

          (viii) Deposits to Lock-Box Accounts. The Servicer shall: (i) instruct
               all account debtors to make payments of all Accounts to one or
               more Depository Accounts or Existing Depository Accounts (subject
               to the requirement of Section 5.2(k) of the Financing Agreement
               to have

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               payments of all Accounts made to Depository Accounts within
               forty-five (45) days of the Closing Date) or to any related post
               office boxes (and shall instruct the banks at which such
               Depository Accounts or Existing Depository Accounts are
               maintained to cause all items and amounts relating to the
               Accounts received in any such post office boxes to be removed and
               deposited into the appropriate, related Depository Account or
               Existing Depository Account on a daily basis); and (ii) deposit,
               or cause to be deposited (A) any and all funds that are received
               by any Originator, Werner, the Purchaser or the Servicer in
               payment of any amounts owed in respect of such Accounts
               (including finance charges, interest and all other charges), or
               applied to amounts owed in respect of such Accounts (including
               insurance payments and net proceeds of the sale or other
               disposition of repossessed goods or other collateral or property
               of the related Customer or any other person directly or
               indirectly liable for the payment of such Accounts and available
               to be applied thereon) and (B) all other proceeds of such
               Accounts (the items referred to in clauses (A) and (B) above
               being referred to herein collectively as "Collections") into
               Depository Accounts not later than one Business Day after receipt
               thereof. Each Depository Account shall at all times be subject to
               a Depository Account Control Agreement (and, from the Closing
               Date up until the date on which all Accounts are made payable to
               Depository Accounts (which date shall not be more than forty-five
               days after the Closing Date), the Existing Depository Accounts
               will be daily swept into the PNC concentration account in respect
               of which PNC shall have executed and delivered to the Agent a
               deposit account control agreement pursuant to and in accordance
               with Section 2.1(h) of the Financing Agreement). The Servicer
               will not deposit or otherwise credit, or cause or permit to be so
               deposited or credited, to any Depository Account or Existing
               Depository Account cash or cash proceeds other than Collections.

          (ix) Marking of Records. At its expense, the Servicer shall mark its
               master data processing records relating to Accounts and related
               Contracts to show the Purchaser's ownership thereof.

          (x)  Notice of Termination Events. The Servicer shall promptly notify
               the Agent, to the extent the Agent does not already have notice
               thereof, of the occurrence and continuance of any Termination
               Event (as hereinafter defined).

          (xi) Acknowledgment of Separateness. The Servicer (and any subservicer
               or successor Servicer) acknowledges its status as, and shall
               maintain itself, separate and distinct from the Purchaser, all in
               accordance with the separateness acknowledgment delivered
               pursuant to Section 2.1(j) of the Financing Agreement.

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     Section 1.2. Termination Events. If any of the following (each, a
"Termination Event") shall occur:

     (a)  (i) the Servicer shall fail to perform or observe any term, covenant
          or agreement under this Agreement and, except as otherwise provided
          herein, such failure shall continue for 30 days after knowledge or
          notice thereof, (ii) the Servicer shall fail to make when due any
          payment or deposit to be made by it under this Agreement and such
          failure shall continue unremedied for two Business Days or (iii)
          Werner shall resign as Servicer in contravention of Section 2.1(c)
          hereof and no successor Servicer reasonably acceptable to the Agent
          shall have been appointed by the Agent or Werner (or any affiliate
          thereof) shall fail to transfer to any successor Servicer when
          required any rights pursuant to this Agreement;

     (b)  any representation or warranty made or deemed made by the Servicer
          under or in connection with this Agreement or any other Transaction
          Document to which it is a party, or any information or report
          delivered by the Servicer pursuant to this Agreement or any other
          Transaction Document to which it is a party, shall prove to have been
          incorrect or untrue in any material respect when made or deemed made
          or delivered, and shall remain incorrect or untrue for 30 days after
          notice to the Servicer of such inaccuracy;

     (c)  the Servicer shall generally not pay its debts as such debts become
          due, or shall admit in writing its inability to pay its debts
          generally, or shall make a general assignment for the benefit of
          creditors; or any proceeding shall be instituted by or against the
          Servicer seeking to adjudicate it a bankrupt or insolvent, or seeking
          liquidation, winding up, reorganization, arrangement, adjustment,
          protection, relief or composition of it or its debts under any law
          relating to bankruptcy, insolvency or reorganization or relief of
          debtors, or seeking the entry of an order for relief or the
          appointment of a receiver, trustee, custodian or other similar
          official for it or for any substantial part of its property and, in
          the case of any such proceeding instituted against it (but not
          instituted by it), either such proceeding shall remain undismissed or
          unstayed for a period of 60 days, or any of the actions sought in such
          proceeding (including the entry of an order for relief against, or the
          appointment of a receiver, trustee, custodian or other similar
          official for, it or for any substantial part of its property) shall
          occur; or the Servicer shall take any corporate action to authorize
          any of the actions set forth above in this paragraph;

     (d)  a Change in Control shall occur; or

     (e)  an Event of Default under the Financing Agreement shall have occurred
          and be continuing;

then, in each case, the Agent shall have the right, by notice to the Servicer,
to terminate the rights of the Servicer to collect the Accounts hereunder.
Following such termination, the Agent shall have the right to (i) appoint itself
or another entity as successor Servicer hereunder in accordance with Section
2.1, (ii) direct the Customers to remit all amounts payable in respect of the

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Accounts directly to the Agent or its designee or into a Depository Account and
(iii) take any and all steps in the name of the Purchaser and on behalf of the
Purchaser necessary or desirable, in the determination of the Agent and in
accordance with Section 8.3 of the Financing Agreement, to collect any and all
amounts or portions thereof due in respect of any and all Accounts, Related
Rights and the related Contracts.

                                   ARTICLE II.
                         ADMINISTRATION AND COLLECTIONS

     Section 2.1. Appointment of the Servicer.

     (a)  The servicing, administering and collection of the Accounts and
          Related Rights shall be conducted by the person so designated from
          time to time as the Servicer in accordance with this Section. Until
          the Agent gives notice to Werner (in accordance with this Section) of
          the designation of a new Servicer, Werner is hereby designated as, and
          hereby agrees to perform the duties and obligations of, the Servicer
          pursuant to the terms hereof. Upon the occurrence of a Termination
          Event, the Agent may designate as Servicer any person (including
          itself) to succeed Werner or any successor Servicer, on the condition
          in each case that any such person so designated shall agree to perform
          the duties and obligations of the Servicer pursuant to the terms
          hereof.

     (b)  Upon the designation of a successor Servicer as set forth in clause
          (a), Werner agrees that it will terminate its activities as Servicer
          hereunder in a manner that the Agent determines will facilitate the
          transition of the performance of such activities to the new Servicer,
          and Werner shall cooperate with and assist such new Servicer. Such
          cooperation shall include access to and transfer of related records
          and use by the new Servicer of all licenses, hardware or software
          necessary or desirable to collect the Accounts and the Related Rights.

     (c)  Werner acknowledges that, in making its decision to execute and
          deliver the Financing Agreement, the Agent and the Lenders have relied
          on Werner's agreement to act as Servicer hereunder. Accordingly,
          Werner agrees that it will not voluntarily resign as Servicer.

     (d)  The Servicer may delegate its duties and obligations hereunder to any
          subservicer (each a "Sub-Servicer"); provided, that, in the case of
          each such delegation: (i) such Sub-Servicer shall agree in writing to
          perform the duties and obligations of the Servicer pursuant to the
          terms hereof, (ii) the Servicer shall remain primarily liable for the
          performance of the duties and obligations so delegated, (iii) the
          Purchaser and the Agent shall have the right to look solely to the
          Servicer for performance, and (iv) the terms of any agreement with any
          Sub-Servicer shall provide that the Agent may terminate such agreement
          upon the termination of the Servicer hereunder by giving notice of its
          desire to terminate such agreement to the Servicer (and the Servicer
          shall provide appropriate notice to each such Sub-Servicer); provided
          that if any such delegation is to a person other than an

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          Originator, the Agent shall have consented in writing in advance to
          such delegation.

     Section 2.2. Duties of the Servicer.

     (a)  The Servicer shall take or cause to be taken all such action as may be
          necessary or advisable to administer and collect each Account and
          Related Rights from time to time, all in accordance with this
          Agreement and all applicable laws, rules and regulations, with
          reasonable care and diligence, and in accordance with the Credit and
          Collection Policies. The Servicer may, in accordance with the Credit
          and Collection Policy, extend the maturity of any Account (but not
          beyond 30 days) and extend the maturity or adjust the outstanding
          balance of any defaulted Account as the Servicer may determine to be
          appropriate to maximize Collections with respect thereto, provided,
          however, that: (i) such extension or adjustment shall (A) affect the
          determination whether such Account is or is not an Eligible Account
          and (B) not limit the rights of the Agent under this Agreement and
          (ii) if a Termination Event has occurred and Werner or an affiliate
          thereof is serving as the Servicer, Werner or such affiliate may make
          such extension or adjustment only upon the prior approval of the
          Agent. The Purchaser shall deliver to the Servicer, and the Servicer
          shall hold for the benefit of the Purchaser and the Agent, in
          accordance with their respective interests, all records and documents
          (including computer tapes or disks) with respect to each Account.
          Notwithstanding anything to the contrary contained herein, if a
          Termination Event has occurred and is continuing, the Agent may direct
          the Servicer (whether the Servicer is Werner or any other person) to
          commence or settle any legal action to enforce collection of any
          Account or to foreclose upon or repossess any Related Rights.

     (b)  The Servicer shall, as soon as practicable following actual receipt of
          Collections, deposit or cause such Collections to be deposited in a
          Depository Account or an Existing Depository Account as provided in
          the Financing Agreement.

     (c)  The Servicer's obligations hereunder shall terminate on the later of:
          (i) the Termination Date and (ii) the date on which all Obligations
          shall have been paid in full and all Commitments under the Financing
          Agreement shall have terminated. After such termination, if Werner or
          an affiliate thereof was not the Servicer on the date of such
          termination, the Servicer shall promptly deliver to the Purchaser all
          books, records and related materials that the Purchaser previously
          provided to the Servicer, or that have been obtained by the Servicer,
          in connection with this Agreement.

     Section 2.3. Servicing Fee.

     (a)  Subject to clause (b), the Servicer shall be paid a fee equal to 0.50%
          per annum (the "Servicing Fee Rate") of the daily average aggregate
          outstanding balance of the Accounts. Such fee shall be paid out of
          collections on the Accounts and

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          Related Rights otherwise payable to the Purchaser, to the extent (but
          only to the extent) permitted pursuant to the Financing Agreement.

     (b)  If the Servicer ceases to be Werner or an affiliate thereof, the
          servicing fee shall be the greater of: (i) the amount calculated
          pursuant to clause (a), and (ii) an alternative amount specified by
          the successor Servicer not to exceed 100% of the aggregate reasonable
          costs and expenses incurred by such successor Servicer in connection
          with the performance of its obligations as Servicer.

                                  ARTICLE III.
                                 INDEMNIFICATION

     Section 3.1. Indemnities by the Servicer. Without limiting any other rights
that the Agent or Purchaser or any of their respective affiliates, employees,
officers, directors, counsel, successors, transferees or assigns (each, an
"Indemnified Party") may have hereunder or under applicable law, the Servicer
hereby agrees to indemnify each Indemnified Party from and against any and all
claims, damages, expenses, costs, losses and liabilities (including reasonable
attorney costs) arising out of or resulting from (whether directly or
indirectly): (a) the failure of any representation, warranty or statement made
or deemed made by the Servicer (or any of its officers) under or in connection
with this Agreement to have been true and correct as of the date made or deemed
made in all respects when made, (b) the failure by the Servicer to comply with
any material applicable law, rule or regulation with respect to any Account or
the related Contract, (c) any dispute, claim, offset or defense of the related
account party to the payment of any Account resulting from or related to the
collection activities with respect to such Account, (d) any failure of the
Servicer to perform its duties or obligations in accordance with the provisions
hereof or under the Contracts or (e) the commingling of Collections at any time
with other funds.

                                   ARTICLE IV.
                                  MISCELLANEOUS

     Section 4.1. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, or consent to any departure by the Servicer therefrom, shall be
effective unless in a writing signed by the Agent and (unless an "Event of
Default" has occurred and is continuing under the Financing Agreement) the
Purchaser, and, in the case of any amendment, by the other parties thereto; and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
the Agent to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right.

     Section 4.2. Notices, Etc. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which shall include
facsimile communication) and be sent or delivered to the applicable party hereto
at its address set forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. Notices and communications by facsimile shall be effective
when sent

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(and shall be followed by hard copy sent by first class mail), and notices and
communications sent by other means shall be effective when received.

     Section 4.3. Assignability.

     (a)  This Agreement and the rights and obligations of the Agent hereunder
          shall be assignable by the Agent only to a successor to it in its role
          as agent under the Financing Agreement.

     (b)  Except as provided in Section 2.1, none of the Purchaser, Werner or
          the Servicer may assign its rights or delegate its obligations
          hereunder or any interest herein without the prior written consent of
          the Agent.

     Section 4.3. Confidentiality. The Agent agrees that the confidentiality
provisions of Section 11.7 of the Financing Agreement shall apply to all
information obtained by it or its agents or representatives under this
Agreement.

     Section 4.4. GOVERNING LAW AND JURISDICTION.

     (a)  THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
          GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

     (b)  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
          BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
          FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY
          OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND
          IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
          COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM
          EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
          LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT
          IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
          PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
          DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL
          SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY
          BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

     Section 4.5. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which, when so executed, shall be deemed to
be an original, and all of which, when taken together, shall constitute one and
the same agreement; provided that any executed counterpart that is transmitted
by e-mail or telecopier shall constitute a valid signature for purposes hereof
and shall be deemed to have been validly delivered when received, so long as
such delivery shall be followed by hard copy sent by first class mail in
accordance with Section 4.2 hereof.

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     Section 4.6. Survival of Termination. The provisions of Sections 3.1, 4.4,
4.5 and 4.8 shall survive any termination of this Agreement.

     Section 4.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES
THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

     Section 4.8. Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties hereto, and supersedes all prior or
contemporaneous agreements and understandings of such persons, verbal or
written, relating to the subject matter hereof and thereof.

     Section 4.9. Heading. The captions and headings of this Agreement and any
Exhibit, Schedule or Annex hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

                                        WERNER FUNDING CORPORATION

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        Address: 1105 North Market Street, Suite
                                                 1300 Wilmington, New Castle
                                                 County, DE 19801

                                        Attention:
                                                   -----------------------------
                                        Telephone:
                                                   -----------------------------
                                        Facsimile:
                                                   -----------------------------

                                        WERNER CO.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        Address: 109 Woodfield Dr.
                                                 Greenville, PA 16125-9499

                                        Attention:
                                                   -----------------------------
                                        Telephone:
                                                   -----------------------------
                                        Facsimile:
                                                   -----------------------------

                                       I-1

<PAGE>

                                        The CIT Group/Business Credit, Inc., as
                                        Agent

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        Address:
                                                 The CIT Group/Business Credit,
                                                 Inc. 1211 Avenue of the
                                                 Americas New York, NY 11021

                                        Attention: Regional Credit Manager
                                        Telephone:
                                                   -----------------------------
                                        Facsimile:
                                                   -----------------------------

                                       I-2

<PAGE>

                                                                   SCHEDULE I TO
                                                             SERVICING AGREEMENT

                                   SCHEDULE I
                          CREDIT AND COLLECTION POLICY

                              RECEIVABLES OVERVIEW

CUSTOMER BASE

Werner is a manufacturer of ladder products and aluminum extruded products with
manufacturing facilities in Greenville, Pennsylvania; Franklin Park, Illinois;
Carrollton, Kentucky; Merced, California; and Juarez, Mexico. Werner is
headquartered in Greenville, Pennsylvania and had total sales of $446.2 million
in 2004. Werner's business is separated into two distinct segments: the ladder
products segment and the extruded products segment, which comprised 84 and 16
percent of 2004 revenues, respectively. Products for Werner's ladder products
include aluminum, fiberglass and wood ladders, scaffolding, stages and planks
and are sold to three major distribution channels: i) home improvement retail,
ii) hardware and iii) professional. In the extruded products division, Werner
manufacturers and sells aluminum extruded products and complex fabricated
components to several industries, including the automotive, electronics, and
architectural and construction industries. Due to the weather and the nature of
the ladder products, sales are highest between May and October. Sales are lowest
between December and February and begin to increase again in March. The majority
of the largest customers are from the ladder products division.

Werner's largest customer is Lowes, with whom Werner entered into a strategic
alliance in December 2003, giving it exclusive rights to Werner branded climbing
products in the warehouse home center channel.

CREDIT APPROVAL, LIMITS, & FILES

Werner has two credit managers, one for each business segment and both long time
Werner employees. For potential customers, the credit manager references a D&B
database (on CD ROM). If the Credit Manager is not able to obtain sufficient
information from the database, a D&B report is ordered. In instances in which
the D&B history indicates poor payment history and/or outstanding suits or
judgments, the customer is only offered cash in advance terms.

In March 2004, credit limits were removed from the ladder product system, as
most credit limits were out-dated or not established for customers. Currently,
new ladder product orders are compared to the D&B "recommended credit limit" to
establish a credit limit. New limits are generally conservative compared to
those established by D & B, as the limit will be used to monitor initial payment
activity on the part of the customer. All credit applications are approved by
the Credit Managers.

A credit hold status is placed on customers having a questionable payment
history, and the customer order must, therefore, be approved by the Credit Dept.
before the system will permit shipment to take place.

                                  Schedule I-1

<PAGE>

WERNER COMPANY
CREDIT RENEWAL APRIL 2005

Credit files contain D&B reports and trade/bank references. The credit file is
typically updated annually for all customers for whom Werner's sales exceed $5
million per year. Discretion is used based on the length of relationship with
the customer, sales volume, and payment history.

PAYMENT TERMS

Werner has a wide range of credit terms. Based upon past sales, the most heavily
used terms in relation to sales were those bearing Net 45 or Net 30 day terms.
However, many of the terms codes involve discounts, such as the commonly used
1%, 10 days/Net 30 days. Due to special promotions offered by the Sales
department, terms can extend to 120 days. Customers can have invoices that are
subject to more than one type of discount or terms. Approximately 10-15% of
receivables have invoices with terms between 61 and 120 days.

INFORMATION SYSTEMS

Werner currently operates on a JD Edwards computer system for AR, general ledger
and accounts payable. The system is backed up daily. A backup hot site is set up
in Philadelphia, PA. The backup tapes are stored in the Woodfield building in
Greenville and would be transported to Philadelphia for use. In the event of an
emergency, this site can attach all locations to the system. The most recent
test of the disaster recovery plan occurred in September 2002, and there were no
significant issues.

BILLING & COLLECTIONS

Collections are remitted to Werner in three ways. Cash is received via check or
wire transfer through one of three Existing Depository Accounts, wire transfers
directly to a PNC account (the "Cash Concentration Account") in respect of which
a deposit account control agreement will be executed on the Closing Date in
favor of the Agent, and local deposits made to another Existing Depository
Account at First National Bank (less than 1%). Wire transfers typically make up
about 40% of all Collections. The entire balance from Existing Depository
Accounts are swept daily into the Cash Concentration Account.

During April 2004, Werner began outsourcing the cash application function to a
third party vendor (Creditek LLC). Under this arrangement, Creditek has remote
access to the Werner system and applies cash daily. See "Duties of Creditek LLC"
for a description of Creditek's activities as they relate to Werner.

DELINQUENCY & WRITE-OFFS

The credit managers monitor delinquent accounts, as does Creditek for the ladder
product customers. Creditek will pursue collection to the point that it believes
the issue must be resolved by either the Werner LP Credit Manager or Werner
upper management. For certain accounts that are past due but not of such size
that they justify management intervention, the accounts are called to the
attention of the Credit Manager for placement with a credit agency. Balances are
typically written off after customers file for bankruptcy, bank foreclosures
occur, or collection action has been attempted through a collection agency and
failed.

Creditek has also assumed responsibility for researching short payments for
Werner's ladder products division.

DILUTION

Dilution consists of cash discounts, returns, volume rebates and advertising
allowances (which are accrued for in a separate reserve on the balance sheet of
Werner), and general credit memos (shipping errors, price adjustments, etc.).
Returns can occur several months after the sale given the nature of the ladder
product. When a return occurs, an RMA is generated by the system and a credit

                                        2

<PAGE>

WERNER COMPANY
CREDIT RENEWAL APRIL 2005

is created to receivables. In the case of shipping errors, Werner requires a
copy of the invoice and proof of delivery from the customer to verify the error.
Credits for advertising rebates and other rebates typically relate to an entire
quarter of sales and the credit is not issued until after the end of the
quarter.

                                        3EX-10.1

 

Exhibit 10.1

Hartville Group, Inc.

3840 Greentree Avenue SW

Canton, Ohio 44706

July 29, 2005

	 	 	 
	Via Facsimile
	 	 
	 
	 	 
	Islandia, L.P.

	 	Midsummer Investment, Ltd.
	c/o John Lang, Inc.

	 	c/o Midsummer Capital LLC
	485 Madison Avenue, 23rd Floor

	 	485 Madison Avenue, 23rd Floor
	New York, NY 10022

	 	New York, NY 10022
	Attn: Richard O. Berner

	 	Attn: Scott D. Kaufman
	 
	 	 
	Satellite Strategic Finance Associates, LLC

	 	Bristol Investment Fund, Ltd.
	c/o Satellite Asset Management, L.P.

	 	c/o Bristol Capital Advisors, LLC
	623 Fifth Avenue, 20th Floor

	 	10990 Wilshire Blvd., Suite 1410
	Attn: Charles Gassenheirner

	 	Los Angeles, CA 90024
	 

	 	Attn: Amy Wang, Esq.
	 
	 	 
	Crescent International Ltd

	 	Palisades Master Fund, L.P.
	c/o Greenlight (Switzerland SA)

	 	200 Mansell Court East, Ste. 550
	84, ay. Louis-Casai

	 	Roswell, GA 30076
	CH 1216 COINTRIN, Geneva, Switzerland

Mannion, Jr. Attn: Mel Craw/Maxi Brezzi

	 	Attn: Paul T. 

     Re: Extension of Registration Obligations and Forbearance

Dear Purchasers:

     Reference is made to that certain Securities Purchase Agreement, dated November 11, 2004, by
and among Hartville Group, Inc., a Nevada corporation (“we” or the “Company”), and the purchasers
signatory thereto, as amended (the “November 11 Purchasers” and the agreement, the “November 11
Purchase Agreement”) and the Securities Purchase Agreement, dated November 26, 2004, by and among
the Company and the purchasers signatory thereto, as amended (the “November 26 Purchasers” and the
agreement, the “November 26 Purchase Agreement”) (collectively, the November 11 Purchasers and the
November 26 Purchasers shall be the “Purchasers” and the November 11 Purchase Agreement and the
November 26 Purchase Agreement, the “Purchase Agreements”). Capitalized terms used and not
otherwise defined herein that are defined in the Purchase Agreements or the other Transaction
Documents (as defined in the Purchase Agreements) shall have the meanings given such terms in the
Purchase Agreements or the other Transaction Documents, as applicable.

     Pursuant to the Registration Rights Agreement entered into by and among the Company and the
November 11 Purchasers, dated November 11, 2004, as amended (the “November 11

1

 

Registration Rights Agreement”), and Registration Rights Agreement entered into by and among
us and the November 26 Purchasers, dated November 26, 2004, as amended (the “November 26
Registration Rights Agreement”; collectively, the “Registration Rights Agreements”), each of which
was entered into in connection with the Purchase Agreements, we were obligated to (i) file a
Registration Statement with the Securities and Exchange Commission (the “SEC”) by the
40th calendar day following the date of the November 11 Purchase Agreement, December 21,
2004 (the “Original Filing Date”) and (ii) cause such Registration Statement to be declared
effective by the SEC no later than the 120th calendar day following the date of the
November 11 Purchase Agreement, March 11, 2005 (the “Original Effectiveness Date”). Pursuant to
the letter dated January 14, 2005, the Purchasers agreed to extend the Original Filing Date of the
Registration Statement until January 21, 2005 (the “January 2005 Letter Agreement”). Pursuant to
the letter agreement dated February 17, 2005, the Purchasers agreed to extend the Original Filing
Date and Original Effectiveness Date of the Registration Statement until June 30, 2005 (the
“February 2005 Letter Agreement”). By executing this letter agreement, each Purchaser hereby
approves, agrees to be bound by and becomes a party to the January 2005 Letter Agreement and the
February 2005 Letter Agreement, with the same effect as if such Purchaser executed such agreements
on the respective dates of such agreements.

     As of the date hereof, the Registration Statement, on Form SB-2, was filed by the Company with
the SEC on June 2, 2005 (the “Form SB-2”), but such Registration Statement has not been declared
effective.

     Each Purchaser acknowledges and agrees that (i) by filing the Form SB-2, the Company
satisfied its obligations pursuant to the Transaction Documents to file the Registration Statement
by the Filing Date, as such date was extended pursuant to the January 2005 Letter Agreement and
the February 2005 Letter Agreement, and (ii) the Original Effectiveness Date, as modified by the
January 2005 Letter Agreement and the February 2005 Letter Agreement, shall hereby be extended
until September 30, 2005 (the “Revised Effectiveness Date”).

     Each Purchaser further agrees (x) that any failure to cause the Registration Statement to
become effective prior to the Revised Effectiveness Date shall not constitute an Event of Default
under the Debentures, (y) to forbear the demand of partial liquidated damages as set forth in
Section 2(b) of the Registration Rights Agreements for the period through the Revised
Effectiveness Date and (z) to release the Company from any other liabilities, damages or
obligations pursuant to the Transaction Documents resulting from the extensions, agreements and
forbearances contemplated by the January 2005 Letter Agreement, the February 2005 Letter Agreement
and this Agreement; provided that the Company shall use commercially reasonable efforts to cause
such Registration Statement to be declared effective as soon as possible prior to the Revised
Effectiveness Date. If the Registration Statement has not been declared effective on or before
the Revised Effectiveness Date, each Purchaser, acting individually, may demand payment of the
partial liquidated damages as set forth in Section 2(b) of the Registration Rights Agreements
retroactively for the period commencing with the Original Filing Date and take any other actions
to which the Purchasers are entitled as provided for under the Transaction Documents, including
declaring an Event of Default, if applicable.

     As consideration for the extension of the registration obligations and forbearance of each

2

 

Purchaser’s rights, (a) the Conversion Price of the Debentures issued pursuant to the
Purchase Agreements shall be automatically and forever reduced to be equal to $0.75 per share,
subject to further adjustment therein and (b) the Exercise Price of the Warrants issued pursuant
to the Purchase Agreements shall be automatically and forever reduced to be equal to $0.75 per
share, subject to further adjustment therein. Such reductions shall be effective immediately and
require no further action by the Purchasers.

     The Company hereby agrees that upon its receipt from each of you of the original Debenture and
Warrant, it shall promptly issue and send to you an amended and restated Debenture and Warrant
reflecting the revisions made herein.

     Except as specifically amended by the terms of this letter agreement, the Transaction
Documents shall remain unmodified and in full force and effect, and shall not be in any way
changed, modified or superseded by the terms set forth herein.

     The Company acknowledges and agrees that no consideration other than the consideration set
forth herein has been or shall be offered or paid to any other person to obtain your agreement to
enter into this letter agreement. The first sentence of this paragraph and the simultaneous
distribution of this letter agreement to you is intended to treat the Purchasers as a class and
shall not in any way be construed as the Purchasers acting in concert or as a group with respect to
the purchase, disposition or voting of the Company’s securities or otherwise. For clarification
purposes, the Company agrees and acknowledges that each Purchaser’s agreement to the terms
hereunder constitutes a separate and independent decision by such Purchaser.

     Except as otherwise specifically set forth by the terms of this letter agreement, this letter
agreement shall be governed by and construed in accordance with Sections 5.3, 5.4, 5.5, 5.6, 5.7,
5.8, 5.9, 5.11, 5.12 and 5.18 of the Purchase Agreements as if such provisions are made a part
hereof.

	 	 	 
	 

	 	Sincerely,
	 

	 	 
	 

	 	Hartville Group, Inc.
	 

	 	 
	 

	 	Dennis C. Rushovich
President
& CEO

3

 

	 	 	 	 	 
	Agreed to and accepted by:	 	 
	 
	 	 	 	 
	Islandia, L.P.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Midsummer Investment, Ltd.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Satellite Strategic Finance Associates, LLC	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Bristol Investment Fund, Ltd.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Crescent International Ltd	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Palisades Master Fund, L.P.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 

4

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