Document:

Exhibit
10.2

 

THE J.
JILL GROUP, INC.

2005
SPRING SEASON SUPPLEMENTAL EXECUTIVE 

BONUS
PLAN

 

Purpose

 

This 2005 Spring Season
Supplemental Executive Bonus Plan (the “Supplemental Bonus Plan”) is
designed to provide supplemental financial reward to senior executives of The
J. Jill Group, Inc. (the “Company”) for their contribution toward the
Company’s exceeding its financial goals for the two fiscal quarters ending June
25, 2005 (the “Performance Period”).

 

Participation

 

•                  A
“Participating Executive” shall mean each of the following employees of
the Company:  (i) the President and Chief
Executive Officer; and (ii) any Executive Vice President.

 

•                  No
Participating Executive shall be entitled to receive a bonus under this
Supplemental Bonus Plan unless the Participating Executive satisfies the
eligibility criteria set forth below.

 

Eligibility
Criteria

 

•                  A
Participating Executive who is in performance counseling at any time during the
Performance Period will not be eligible for a bonus for the Performance Period.

 

•                  To
be eligible to receive a bonus for the Performance Period, a Participating
Executive must be actively employed by the Company for a minimum of three
months in the Performance Period.  Time
on leave does not count as active employment. 
Employment by a subsidiary of the Company shall be considered employment
by the Company for purposes of this Supplemental Bonus Plan.

 

•                  To
be eligible to receive a bonus for the Performance Period, a Participating
Executive must be employed on the last day of the Performance Period.

 

 

Additional
Bonuses

 

Nothing in this
Supplemental Bonus Plan shall be deemed to limit the authority of the Board of
Directors, the Compensation Committee of the Board of Directors or the
President and CEO to award additional bonuses outside this Supplemental Bonus
Plan in their discretion.

 

Payments

 

Bonus payments under this
Supplemental Bonus Plan will be made promptly following the close of the
Performance Period.

 

Calculation of Supplemental Bonus
Payment

 

•                  Definitions:

 

•                  “Earnings
Per Share Target” for the Performance Period means the Company’s fully
diluted earnings per share target for the Performance Period as set forth in
the Company’s 2005 Financial Plan.

 

•                  “Supplemental
Bonus Earnings Per Share Percentage” for the Performance Period means a
fraction, the numerator of which is the Company’s Supplemental Bonus
Preliminary Earnings Per Share for the Performance Period minus the Company’s
Earnings Per Share Target for the Performance Period and the denominator of
which is $0.25, expressed as a percentage. 

 

•                  The
“Supplemental Bonus Percentage” for a Participating Executive shall be a
percentage assigned to the Participating Executive for the purpose of
calculating the Participating Executive’s bonus, if any, under this Supplemental
Bonus Plan.  Supplemental Bonus
Percentages shall be determined by the Board of Directors or the Compensation
Committee of the Board of Directors. 

 

•                  “Supplemental
Bonus Preliminary Earnings Per Share” for the Performance Period means the
amount the Company’s fully diluted earnings per share for the Performance
Period would be if no bonuses under this Supplemental Bonus Plan were paid for
the Performance Period (but taking into account payment of bonuses for the
Performance Period, if any, under the Company’s 2005 Incentive
Compensation Plan). 

 

•                  Each
“Supplemental Bonus Unit” for a Participating Executive means a
Participating Executive’s Supplemental Bonus Percentage times the base salary
paid to him or her for the Performance Period.

 

2

 

•                  If
the Company’s Supplemental Bonus Preliminary Earnings Per Share for the
Performance Period are less than or equal to the Company’s Earnings Per Share
Target for the Performance Period, no bonuses shall be paid under the
Supplemental Bonus Plan.

 

•                  If
the Company’s Supplemental Bonus Preliminary Earnings Per Share for the
Performance Period are greater than the Company’s Earnings Per Share Target for
the Performance Period, then each eligible Participating Executive shall
receive a bonus under the Supplemental Bonus Plan as follows:

 

	
  Supplemental Bonus Earnings

  Per Share Percentage

  	
   

  	
  Number of Supplemental Bonus Units

  	
   

  
	
  Less than 20%

  	
   

  	
  0

  	
   

  
	
  At least 20% but
  less than 40%

  	
   

  	
  1

  	
   

  
	
  At least 40% but
  less than 60%

  	
   

  	
  2

  	
   

  
	
  At least 60% but
  less than 80%

  	
   

  	
  3

  	
   

  
	
  At least 80% but
  less than 100%

  	
   

  	
  4

  	
   

  
	
  100% or more

  	
   

  	
  5

  	
   

  

 

Example

 

Assume the Participating
Executive’s annual base salary is $400,000, his or her Supplemental Bonus
Percentage is 10% and the Company’s Supplemental Bonus Earnings Per Share
Percentage for the Performance Period is 33%:

 

	
  Salary for 

  Performance

  Period

  	
   

  	
  Supplemental

  Bonus %

  	
   

  	
  Supplemental

  Bonus EPS %

  	
   

  	
  Supplemental

  Bonus Units

  	
   

  	
  Supplemental

  Bonus Amount

  	
   

  
	
  $

  	
  200,000

  	
   

  	
  10%

  	
   

  	
  33%

  	
   

  	
  1

  	
   

  	
  $

  	
  20,000

  	
   

  
												

 

3Exhibit
10.16

 

AGREEMENT IN RESPECT OF SALE
AND TRANSFER

IN DISPOSITION OF COLLATERAL UNDER UNIFORM COMMERCIAL CODE

 

THIS AGREEMENT IN RESPECT OF
SALE AND TRANSFER IN DISPOSITION OF COLLATERAL UNDER UNIFORM COMMERCIAL CODE (“Agreement”)
is made and entered into as of December [__], 2004 (the “Effective Date”)
by and between WELLS FARGO FOOTHILL,
INC., a California corporation (formerly, Foothill Capital Corporation and
hereinafter called “Secured Party”) and KELTIC FINANCIAL
PARTNERS, LP, a Delaware limited partnership (“Buyer”), joined as
provided herein by EQUINOX BUSINESS
CREDIT CORPORATION, a New Jersey corporation (“Debtor”) and, as
follows.

 

RECITALS

 

This
Agreement is made and executed in the following circumstances.

 

A.                                   Debtor
is in the business of originating, funding and servicing loans to borrowers (“Obligors”)
in the ordinary course of business.  On
the Effective Date, Debtor is owner and holder of each of the Loans (defined
below) and the Loan Documents (defined below), respectively.

 

B.                                     Debtor
and Secured Party previously entered into the certain Loan and Security
Agreement dated as of December 19, 2001 (as amended, the “Loan and Security
Agreement”), pursuant to which, subject to the terms thereof, at the
request of Debtor, Secured Party from time to time has made loans and otherwise
extended credit to Debtor for the purpose, among other things, of providing
financing to Debtor for funding the Loans. 
Pursuant to the Loan and Security Agreement, and to secure payment and
performance of all of Debtor’s obligations thereunder, Debtor granted to
Secured Party a first priority, perfected, continuing security interest in,
among other property of Debtor, all of Debtor’s right, title and interest in
all Loans, together with the Loan Documents and the Obligor Collateral,
including, but not limited to, all instruments and promissory notes, drafts,
chattel paper, letters of credit, letter of credit rights, general intangibles,
documents and records and supporting obligations evidencing or relating to the
Loans, and all proceeds thereof, including without limitation, cash proceeds
(collectively, the “Related Collateral”).

 

C.                                     Pursuant
to the express terms of the Loan and Security Agreement:

 

(i)                                     on December 19,
2004 (the “Maturity Date”), all obligations and indebtedness owing by
Debtor to Secured Party thereunder immediately become due and payable without
notice or demand or further action by Secured Party; and

 

(ii)                                  on and after the
Maturity Date, Secured Party has no obligation to make loans or extend credit
to Debtor.

 

D.                                    Secured
Party has previously notified Debtor that:

 

 

(i)                                     Secured Party will
not agree to extend the term for financing, or otherwise extend credit to
Debtor, under the Loan and Security Agreement beyond the Maturity Date; and

 

(ii)                                  In the event all
obligations and indebtedness owing by Debtor to Secured Party under the Loan
and Security Agreement are not timely paid in full on or before the Maturity
Date, Secured Party intends to exercise any and all remedies available to it
pursuant to the Loan and Security Agreement and applicable law.

 

E.                                      In
connection with the recitals set forth in clauses (C) and (D)
preceding:

 

(i)                                     Debtor has made
diligent inquiry and used its best efforts to obtain alternative financing to
replace the financing provided by the Loan and Security Agreement and to
refinance and pay all of Debtor’s obligations and indebtedness thereunder.  Debtor has concluded, in its business
judgment, that Debtor is unable to obtain any such financing;

 

(ii)                                  Debtor is not able to
obtain additional cash contributions from its sole shareholder; and

 

(iii)                               On and after the
Maturity Date, Debtor has no source for cash needed to meet its obligations to
provide financing to Obligors on the Loans or to continue servicing the Loans.

 

F.                                      In
connection with the recitals set forth in clause (E) preceding, Debtor
has made diligent inquiry and used its best efforts to identify prospective
buyers with whom Debtor could negotiate terms for selling the Loans and use the
proceeds thereof to pay all obligations and indebtedness owing by Debtor to
Secured Party under the Loan and Security Agreement.  Notwithstanding its best efforts, Debtor has
been unable to consummate a sale of the Loans and has concluded, in its business
judgment, that it will be unable to do so prior to the Maturity Date.

 

G.                                     In
connection with the recitals set forth in clauses (E) and (F)
preceding, Debtor has determined, in its business judgment, and has notified
Secured Party that:

 

(i)                                     Debtor is, and on
and after the Maturity Date will be, unable to repay all indebtedness owing by
Debtor under the Loan and Security Agreement or otherwise perform its
obligations thereunder, and that therefore, Debtor cannot and will not perform
its obligations under the Loan and Security Agreement; and

 

(ii)                                  Debtor will be
unable, on and after the Maturity Date, to meet its obligations to Obligors to
provide financing to Obligors on the Loans, or to continue servicing the Loans.

 

H.                                    Debtor’s
notification to Secured Party described in clause (G)(i) preceding
constituted a total breach by anticipatory repudiation by Debtor of its
obligations under the Loan and Security Agreement which constituted a default
of the Loan and Security Agreement for purposes of Article 9 of the UCC
(defined below), and, pursuant to Section 9-609 of the UCC,

 

 

Secured Party
therefore has the right to take possession of and sell or otherwise dispose of
the Loans and Related Collateral by private sale pursuant to the UCC.

 

I.                                         Time
is of the essence, in that:

 

(i)                                     Prior to the Maturity
Date, Debtor’s inability to assure Obligors on the Loans that, on and after the
Maturity Date, Debtor will be able to provide financing to Obligors on the
Loans is likely to cause material deterioration in the value of the Related
Collateral;

 

(ii)                                  Debtor’s inability to
provide financing to Obligors on the Loans, or continue servicing the Loans, on
and after the Maturity Date is certain to cause material deterioration in the
value of the Loans and Related Collateral, as well as expose Debtor to a material
risk of liability for claims by Obligors; and

 

(iii)                               The orderly transfer of
servicing of the Loans from Debtor to another servicing agent involves
transition execution which, if deferred until on or after the Maturity Date,
could cause an interruption in servicing of the Loans or otherwise impair the
ability to effectively service the Loans on and after the Maturity Date, which
would cause material deterioration in the value of the Loans and Related
Collateral.

 

J.                                        Debtor
has referred Buyer to Secured Party as a prospective buyer of the Loans and
Related Collateral, with whom Debtor has had previous negotiations but with
respect to whom Debtor was not able to meet required conditions in order to
consummate a sale on or prior to the Maturity Date.

 

K.                                    Buyer
desires to purchase, and Secured Party is willing to transfer and sell to
Buyer, all of Debtor’s right, title and interest in and to the Loans and
Related Collateral, subject to the terms and conditions of this Agreement.

 

L.                                      Debtor
has determined, in its business judgment, that disposition by Secured Party of
the Loans and Related Collateral to Buyer pursuant to the terms of this
Agreement will prevent diminution of value of the Loans and Related Collateral
and maximize the amount of proceeds recoverable in respect thereof, and is in
the best interest of Debtor, its creditors and its shareholder.

 

NOW THEREFORE, for value
received, the receipt and sufficiency of which hereby is acknowledged, and in
consideration of the premises and mutual agreements herein, Debtor and Secured
Party hereby agree as follows:

 

SECTION 1. DEFINITIONS.  For the purposes of this Agreement, the
following terms shall have the meanings specified or referred to in this
Section 1.

 

“Adjusted Purchase Price”
shall mean the purchase price determined, on the Purchase Price Adjustment
Date, as of the Closing Date and calculated as set forth in Section 3.2.

 

“Agreement” has the
meaning prescribed in the preamble to this Agreement.

 

 

“Applicable Law” shall
mean any law, statute, ordinance, rule, regulation, judgment, order,
injunction, writ, decree, ruling, assessment or interpretation of any
governmental authority.

 

“Business Day” shall
mean any day other than a Saturday or Sunday, or a day on which national banks
are authorized by law or executive order to be closed.

 

“Buyer” has the meaning
prescribed in the preamble to this Agreement.

 

“Cash Portion” shall
mean the Estimated Purchase Price less the Hold Back Amount, payable as
required by Section 3.1(b).

 

“Closing Date” means the
date on which the Bill of Sale and Related Agreements have been executed and
delivered by Secured Party to Buyer as provided by Section 4.

 

“Coast” means Coast
Capital Partners, L.L.C., a Delaware limited liability company.

 

“Coast Payment Letter”
means a letter addressed to Secured Party and Buyer and consented to by Debtor,
executed by Coast, acknowledging that Coast has no obligation or commitment to
extend credit to Debtor, that there is no indebtedness or other obligation owed
to Coast by Debtor, and that Secured Party and Buyer are authorized to file UCC
amendments to terminate any UCC Financing Statements of record listing Debtor
as debtor and Coast as Secured Party.

 

“Debtor” has the meaning
prescribed in the preamble to this Agreement.

 

“Deposit” shall mean the
sum of Six Thousand Dollars ($6,000.00) which has previously been delivered to
Buyer by Debtor.

 

“Disputed Matters” shall have the
meaning set forth in Section 3.2(c).

 

“Earnings” shall mean
income received by Buyer on the Portfolio from interest, loan or termination
fees and late charges.

 

“Effective Date” means
the date set forth in the preamble to this Agreement.

 

“Estimated Purchase Price”
shall have the meaning set forth in Section 3.1(b).

 

“Estoppel
Certificates” mean the estoppel certificates,
substantially in the form of Exhibit C, delivered to Secured Party and
Buyer by each Obligor in connection with the Closing of the transaction which
is the subject of this Agreement.

 

“Federal Funds Rate”
shall mean, for any date, the average of the Federal Funds Offer Rate as
published in The Wall Street Journal on each of the five (5) Business
Days ending on the day before the relevant date.

 

 

“Hold Back Amount” shall
mean the sum of Eight Hundred Twenty-Five Thousand Dollars ($825,000.00).

 

“Laurus” means Laurus
Master Fund, Ltd., a Cayman Islands corporation.

 

“Laurus Payment Letter”
means a letter addressed to Secured Party, Buyer and Debtor, executed by Laurus
and consented to by Debtor, providing information and payoff instructions in
respect of payment of indebtedness owing by Debtor to Laurus which is or may be
secured by a subordinate security interest in the Loans, in form and substance
satisfactory to Secured Party.

 

“Letters of Credit”
shall mean any documentary or standby letter of credit issued to or for the
benefit of Debtor, Secured Party or an Obligor with respect to a Loan.

 

“LIBOR” shall mean the
thirty (30) day London Inter-Bank Offered Rate as quoted by CitiBank, N.A. in
New York City at 11:00 a.m. (New York time) based upon CitiBank, N.A.’s or an
affiliated agency’s or branch’s quotes to prime banks in the London Inter-Bank
Euro-currency Market for Eurodollar deposits.

 

“Lien” shall mean any
mortgage, pledge, security interests, lien, charge, liability, encumbrance,
restriction on transfer, claim or option of whatever nature imposed upon any of
the Purchased Assets.

 

“Loans” means the loans identified in
Exhibit A to this Agreement and “Loan” means any one of such Loans.

 

“Loan and Security Agreement”
has the meaning prescribed in the Recitals to this Agreement.

 

“Loan Documents” shall
mean the various loan agreements relating to the Loans as more particularly set
forth in Exhibit B, and commitments to make or increase the principal
amounts of any such Loans, including interests in any such Loans originated or
agented by others, together with any Letters of Credit, promissory notes,
equity participation agreements, guaranties, security agreements, pledges,
mortgages and other collateral, and incidental and supporting documents with respect
thereto and all amendments, modifications, extensions, or renewals thereto, if
any; provided, however, that such term shall not include any fees
earned by Debtor or Secured Party and paid by Obligors prior to the Closing
Date under any such agreements, instruments and documents.

 

“Loan Files” shall mean all documents
in the possession of the Debtor pertaining to the lending relationships of the
Debtor relating to the Loans, including, without limitation:

 

(i) the Loan Documents, general credit information, credit records from
the Debtor, payment histories, appraisals, property insurance policies, title
insurance policies or attorney’s title opinions, all availability reports and
supporting documentation submitted by any Obligor to the Debtor, and all field
examination reports and supporting work papers of the Debtor in possession of
the Debtor;

 

 

(ii)                                  all
sales data, customer lists and customer information relating to the lending
relationships relating to the Loans, including, for the avoidance of doubt, the
Letters of Credit relating thereto;

 

(iii)                               all
of the Records of Debtor (as hereinbelow defined) (whether written, electronic
or otherwise) relating to the Loans, including, for avoidance of doubt, but
without limitation, the Letters of Credit, the Loan Files (subject, however, to
the right of the Secured Party to retain such copies (but not originals) as may
be necessary or advisable for internal tax and accounting purposes and to
satisfy any statutory or regulatory requirement as to the retention of
records), including financial, accounting, tax and loan transaction records;

 

(iv)                              the
Estoppel Certificates; and

 

(v)                                 all
deposit or security accounts, lock box account or other accounts for control of
money which constitutes Related Collateral relating to the Loans assigned to
Buyer.

 

“Loss” or “Losses”
shall mean, as to a Loan, after (i) an Event of Default (as defined in the Loan
Documents) shall have occurred or (ii) a filing by or against  an Obligor of a bankruptcy, reorganization, receivership,
winding up or liquidation proceeding or any other such analogous proceeding
shall have occurred, using the same policies Buyer uses in making such
determination with regard to other loans in its portfolio, the amount (y) Buyer
has reserved, on its books and records, against the obligations incurred
pursuant to the Loan Documents and related obligations as of the date of
determination thereof, and (z) without duplication, of the actual loss
reflected on Buyer’s books and records after the Buyer has completed the
liquidation or abandonment of the Obligor Collateral with respect to such a
Loan.

 

“Loss Adjustment” shall
mean the sum of Forty Thousand Dollars ($40,000.00).

 

“Maturity Date” has the
meaning prescribed in the Recitals to this Agreement.

 

“Notice of Disagreement”
has the meaning set forth in Section 3.2(c.)

 

“Obligor Collateral”
shall mean all accounts receivable, inventory, machinery, equipment, insurance,
instruments and promissory notes, drafts, chattel paper, letters of credit,
letter of credit rights, general intangibles, documents and records and
supporting obligations securing the Loans, and all proceeds thereof, including
without limitation, cash proceeds and all other property of Obligors, or any
other person or entity, pledged to Debtor to secure a Loan.

 

“Obligors” has the
meaning prescribed in the Recitals to this Agreement.

 

“Party in Interest”
means each of Laurus and Coast.

 

“Portfolio” shall mean,
as of the date of determination thereof, all Loans except: (a) those which have
been paid in full and the commitment to lend has expired or been terminated, or
(b) those which have been liquidated such that all of the collateral securing
the particular Loan Documents has been disposed of or abandoned,  (c) those which are not in default and which
Buyer has extended the maturity of the Loan for a period greater than ninety
(90) days from the

 

 

maturity set
forth in the applicable Loan Documents as in effect on September 30, 2004;
provided, however, with respect to the Loan made to Ambassador Publications,
LLC, if the maturity date has been extended beyond January 31, 2006.

 

“Portfolio Yield” shall
mean the Earnings actually received by Buyer in any period on the Portfolio.

 

“Purchase Price” has the
meaning prescribed by Section 3.

 

“Purchase Price Adjustment”
shall mean the sum of $112,478.00.

 

“Purchased Assets” shall mean:

 

(i)                                     the
Loans and any remaining commitments to extend financial accommodations
thereunder or pertaining thereto; and

 

(ii)                                  the
Related Collateral, including, without limitation, the Loan Files.

 

“Records of Debtor” shall mean the
books and records of Debtor related to the Purchased Assets.

 

“Related Agreements” has
the meaning set forth in Section 9.2(a).

 

“Related Collateral has
the meaning prescribed in the Recitals to this Agreement.

 

“Reviewer” shall have the meaning set
forth in Section 3.2(c).

 

“Secured Party” has the
meaning prescribed in the preamble to this Agreement.

 

“Secured Party Payment
Letter” has the meaning set forth in Section 5.2(d).

 

“Tax” or “Taxes”
shall mean all taxes, levies and assessments of any kind or nature imposed by
any governmental authority, including, without limitation, all income, sales,
use, real and personal property, payroll, employment, gross receipts, license,
withholding, transfer, excise, stamp, value added, alternative or add-on
minimum, estimated, franchise, duty or other tax of any kind whatsoever,
together with any interest thereon and any penalties, additions to tax or
additional amounts applicable thereto.

 

“Third Party Consent”
shall mean the consent, authorization, approval, waiver, order, license,
certificate or permit or act of or from or notice to any party to any contract,
agreement, instrument, lease or license to which the Debtor is a party or
subject or by which Debtor or any of the Purchased Assets are bound.

 

“UCC” means the Uniform
Commercial Code as enacted in the State of New Jersey.

 

 

SECTION
2.                              DISPOSITION AND RELATED PROVISIONS

 

1.1                                 Debtor’s
Acknowledgement of Default and Secured Party’s Rights. 
Debtor acknowledges that its notification to Secured Party described in clause
(G)(i) of the Recitals to this Agreement was a total breach by anticipatory
repudiation of Debtor’s obligations under the Loan and Security Agreement,
which constituted a default of the Loan and Security Agreement for purposes of
Article 9 of the UCC.  Debtor
acknowledges that Secured Party has the right to sell or otherwise dispose of
the Loans and Related Collateral by private sale pursuant to the UCC.

 

1.2                                  Sale and Transfer.  Subject to the terms of this Agreement,
Secured Party hereby sells, transfers and conveys to Buyer, and Buyer hereby
purchases, all of Debtor’s right, title, interest in, to and under the
Purchased Assets, together with all payments and rights to payment thereunder,
and all security interests, liens and other rights of Debtor thereunder or in
connection therewith.

 

SECTION 3.                            PURCHASE PRICE

 

Section 3.1                                      Purchase Price.

 

(a)                                  The
purchase price for the Purchased Assets (the “Purchase Price”) shall equal the
amount of (i) the outstanding principal loan balance due under the Loan
Documents as of the close of business on the Closing Date, plus (ii) the unpaid
accrued interest and prorated fees relating to the Loans as of the close of
business on the Closing Date, plus (iii) the Deposit, less the sum of (w) the
Loss Adjustment, (x) the Purchase Price Adjustment, (y) prorated prepaid fees,
and (z) credits due to Obligors of each Loan, including, but not limited to:
deposits, customer cash, and all set-offs due to any Obligor under a Loan.

 

(b)                                 At
the Closing, the Buyer shall pay, on account of the Purchase Price, an amount
equal to (i) the amount provided by Section 3.1(a) estimated on and as of the
Closing Date, the computation of which is set forth on Schedule 3.1(b)
(the “Estimated Purchase Price”), less (ii) the Hold Back Amount.

 

Section 3.2                                      Purchase Price Adjustment.

 

(a)                                  Not
less than five (5) Business Days after the Closing Date (the “Purchase Price
Adjustment Date”), the Buyer shall deliver to Secured Party and Debtor:

 

(i)                                     an updated calculation of the
Purchase Price which shall list the Loans together with the outstanding
principal balance due under the Loan Documents as of the close of business on
the Closing Date;

 

(ii)                                  a statement setting forth the
aggregate interest accrued but unpaid with respect to each of the Loans as of
the close of business on the Closing Date;

 

 

(iii)                               a statement setting
forth all credits due Obligors with respect to each of the Loans, including,
but not limited to: deposits; special credit reserves, customer cash and credit
reserves on Records of Debtor, and all set-offs due to any Obligor under a
Loan; and

 

(v)                                 a statement setting
forth the difference (positive or negative) between the Estimated Purchase
Price and the Purchase Price as of the Closing Date, recalculated on the
Purchase Price Adjustment Date.

 

(b)                                 In the event that the Purchase
Price calculated on the Purchase Price Adjustment Date is greater than the
Estimated Purchase Price, the Buyer shall pay the amount of such shortfall to
the party entitled to payment thereof (as provided by Section 7).  In the event that the Purchase Price
calculated on the Purchase Price Adjustment Date is less than the Estimated
Purchase Price, the Debtor shall pay the amount of such deficiency to the Buyer
or if not paid as herein provided, Buyer shall set off the amount of such
deficiency against any future payments Buyer owes hereunder.  Any payment from the Debtor or the Buyer
pursuant to this Section 3.2(b) shall be made no later than ten (10) Business
Days following (i) the date of the Buyer’s receipt of the documents
described in Section 3.2(a) (collectively, the “Closing Date Documents”)
or (ii) in the event that the Secured Party or Debtor delivers a Notice of
Disagreement to the Buyer pursuant to Section 3.2(c), the date of final
resolution of all Disputed Matters in accordance with Section 3.2(c).  Any such payment shall be made by wire
transfer, together with interest calculated on the amount of the required
payment at the Federal Funds Rate from the Closing Date to (but not including)
the date on which such amount is paid in full.

 

(c)                                  Upon receipt of the Closing Date
Documents, the Secured Party or Debtor, as the case may be, shall be afforded,
at the Secured Party’s or Debtor’s expense, full access to the Records of
Debtor related to the Purchased Assets, any work papers prepared by the Buyer
and any officers, employees or other representatives of the Buyer that
participated in the determination of the Adjusted Purchase Price.  The Secured Party or Debtor, as the case may
be, shall, not more than ten (10) Business Days following Buyer’s delivery of
its calculation of the Adjusted Purchase Price, have the right to notify the
Buyer in writing that it disagrees with the Adjusted Purchase Price (the “Notice
of Disagreement”), specifying to the extent practicable, in reasonable
detail, the items as to which disagreement exists (the “Disputed Matters”).  If the Secured Party or Debtor, as the case
may be, fails to deliver a Notice of Disagreement within said time, it shall be
deemed to have concurred with the Adjusted Purchase Price.  If a Notice of Disagreement shall be
delivered by the Secured Party or Debtor, as the case may be, then the Buyer
and the Secured Party or Debtor, as the case may be, shall negotiate in good
faith to resolve in writing any Disputed Matters.  All Disputed Matters as to which written
agreement has not been reached within thirty (30) days of receipt of a Notice
of Disagreement from the Secured Party or Debtor, as the case may be,  shall be submitted to and reviewed by an
independent accounting firm (other than the accountants of the Buyer and the
accountants of the Debtor and Secured Party, as applicable) mutually agreed to
by the Buyer and the Secured Party or Debtor, as the case may be (the “Reviewer”)
under procedures to be agreed upon by such parties.  The Reviewer shall consider only the Disputed
Matters and shall act promptly to resolve all Disputed Matters, and its
decision with respect thereto shall be final and binding upon the parties.  The fees and expenses of the Reviewer in
connection with its review and determination of any Disputed Matters shall be
borne equally by the Buyer and the Debtor. 
Secured Party shall have

 

 

no
liability for (i) any amounts due on account of the Adjusted Purchase Price or
(ii) the fees and expenses of the Reviewer.

 

Section 3.3                                      Hold Back Amount.  

 

(a)                                  The Hold Back Amount shall be
deducted from the amount of the Purchase Price paid on the Closing Date, as
provided by Section 3.1(b).  The Hold Back
Amount shall be adjusted (the “Adjusted Hold Back”) (a) on January 31,
2006, to an amount equal to seven percent (7%) of the highest outstanding
principal balance of each Loan in the Portfolio on which no Event of Default
(as defined in the Loan Documents) shall have occurred and been declared at
that time (including outstanding but undrawn Letters of Credit) during the
three months preceding January 31, 2006 plus one hundred percent (100%) of the
unpaid principal balance, accrued interest and unpaid fees, expenses and
charges due on any Loans in the Portfolio on which an Event of Default (as
defined in the Loan Documents) shall have occurred and been declared at that
time, and (b) July 31, 2006 and on January 31 and July 31 of
each year thereafter, an amount (not to exceed the Hold Back Amount) equal to
seven percent (7%) of the highest outstanding principal balance of each Loan
remaining in the Portfolio at the time of calculation on which no Event of
Default (as defined in the Loan Documents) (including outstanding but undrawn
Letters of Credit) during the three months preceding January 31 of such year
plus one hundred percent (100%) of unpaid principal balance, accrued interest
and unpaid fees, expenses and charges due on any Loans on which an Event of
Default (as defined in the Loan Documents) shall have occurred and been
declared at that time.  The Buyer shall
pay the amount due pursuant to this Section 3.3(a) in accordance with the
provisions of Section 3.3(d).

 

(b)                                 The Hold Back Amount is intended
to fully compensate Buyer for each Loss recorded by Buyer on Buyer’s books and
records with respect to a Loan in the Portfolio.  With respect to each Loss, the Hold Back
Amount shall be immediately, automatically and permanently debited by the
amount of such Loss (the “Hold Back Reduction”) and the Hold Back
Reduction shall be credited to Buyer.  
For the avoidance of doubt, if a $50,000 Loss occurs with regard to a
Loan, the Hold Back Amount shall be reduced by $50,000 and credited to Buyer to
make Buyer whole.  Upon crediting the
Loss to Buyer, the Buyer’s records shall reflect that the Hold Back Amount has
been permanently reduced by such amount for all purposes.  In the event that a Loss, which previously
resulted in a Hold Back Reduction, is subsequently recovered, Buyer’s records
shall reflect that the Hold Back Amount has been restored by the amount of the
recovery of such Loss at the time the recovery is actually received by Buyer,
less the interest, fees, late charges and expenses (including legal fees) due
to or incurred by Buyer with respect to such Loss or to effectuate such
recovery.  Anything herein to the
contrary notwithstanding, it is understood that the Secured Party and Buyer
have agreed upon the Loss Adjustment to reduce (although not eliminate)
uncertainty regarding the Purchase Price and therefore, (i) Secured Party or
the Debtor, as the case may be, shall not be charged with any Hold Back
Reduction until Buyer has suffered a Loss or Losses which, in the aggregate,
exceed the Loss Adjustment and (ii) in the event Buyer does not experience a
Loss or Losses which, in the aggregate, exceed the Loss Adjustment, then
Secured Party or the Debtor, as the case may be, shall not be entitled and
shall not be refunded any unused portion of the Loss Adjustment.

 

(c)                                  Buyer
shall pay to the party entitled to payment in accordance with the provisions of
Section 7, on account of the Hold Back Amount, a sum calculated by multiplying

 

 

an amount that is eighty-five percent (85%)
of the Portfolio Yield for the period for which the calculation is being made
by a fraction, the numerator of which is the Hold Back Amount, as adjusted from
time to time, and the denominator of which is the total average unpaid
principal balance due on the Portfolio for the month in which the calculation
is made (the “Yield Share”). 
However, in the event that, in any month, the Portfolio Yield actually
received by Buyer shall be less than the amount Buyer is contractually entitled
to receive in accordance with the terms of the Loan Documents, no payment of
the Yield Share shall be paid until all of the Buyer Payments (as defined
below) owed to Buyer shall have been actually received by Buyer.  For the avoidance of doubt, if in any month a
Loan in the Portfolio shall be in default of payment of principal, interest,
fees, late charges or expenses, including legal fees due to Buyer (“Buyer
Payments”) with regard to one or more Loans or if Buyer shall, based upon
its then existing policies, place one or more Loans on non-accrual status on
Buyer’s books and records, the amount of the Portfolio Yield otherwise due as
herein provided shall be withheld and paid to Buyer until such time as Buyer
shall have been paid, in full, all Buyer Payments due to Buyer.  For example, if an Obligor defaults on
payment of $3,000 in Buyer Payments, then, (a) out of the Yield Share, Buyer
shall be paid $3,000 and (b) until Buyer has been paid all Buyer Payments in
full, no payment on account of the Yield Share shall be paid.

 

(d)                                 Buyer shall:

 

(i) on or prior to the 10th day of each
month, provide the party entitled to payment in accordance with the provisions
of Section 7, with (y) a statement of the Portfolio Yield with respect to each
Loan and (z) the Adjusted Hold Back Amount; and

 

(ii) on or prior to the 10th day of February
and August of each year, pay or otherwise account to each party then entitled
to any payments pursuant to Section 7: (y) the Yield Share; and (z) the
adjustment to the Hold Back Amount, if any, calculated pursuant to
Section 3.3(b); provided, however, Buyer shall, subject to Section 3.3(c),
pay only the net amount of (A) the Yield Share and (B) the Hold Back Amount due
for each such period based upon the Portfolio taken as a whole.

 

(e)                                  Anything herein to the contrary
notwithstanding, in addition to Buyer’s rights under Section 3.3(b) or
otherwise provide by law, any payment payable hereunder shall be subject to the
Buyer’s right  to set off all amounts
owed by Buyer to Secured Party or Debtor hereunder, as the case may be,
including, but not limited to, the amounts owing by reason of the
indemnification provisions set forth in Section 14.

 

(f)                                    In the event that Buyer shall
hold all or any portion of the Hold Back Amount during a time after which no
Loans remain in the Portfolio, then from that date until the date upon which
the Adjusted Hold Back Amount is paid in full, Buyer shall pay to the party
entitled to payment thereof (as provided by Section 7) interest on the Adjusted
Hold Back Amount at the rate of LIBOR plus two percent (2%) per annum.  Buyer shall pay such party the interest due
hereunder in accordance with, and at the same times as set forth in, Section
3.3(d)(ii).

 

Section 3.4                                      Deferred Purchase Price.  Within thirty (30) days of each anniversary
date of the Calculation Date (as defined below), for a period of three (3)
years, Buyer shall advise

 

 

each party then entitled to
payments pursuant to Section 7 of the Portfolio Yield for the immediately
preceding year and deliver to such party or parties a statement setting forth
the calculation of the Portfolio Yield (the “Calculation”).  “Calculation Date” shall mean the anniversary
date of the last day of the first full month following the date on which the
Closing occurs.  Subject to the
provisions of Sections 3.3(c) and 3.3(e), on the 31st
day after the Calculation Date of each year following the period for which the
Calculation is made, Buyer shall pay the party entitled to payment pursuant to
Section 7, the following percentage of the Portfolio Yield (the “Premium” or
“Premiums”):

 

(a)                                  for
the 1st anniversary date  -  three percent (3%),

 

(b)                                 for
the 2nd anniversary date  -  two percent (2%),

 

(c)                                  for
the 3rd anniversary date  -  one percent (1%).

 

After the 3rd anniversary date, no further
Premium payments shall be due under this Agreement.

 

Section 3.5                                      Form of Payment.  All payments required to be made under this
Agreement shall be made in federal or other immediately available funds by wire
transfer in United States dollars to an account or accounts designated in
writing by the Secured Party, Laurus, Debtor or the Buyer, as the case may be.

 

Section 3.6                                      Post-Closing Remittances.  If, after the Closing Date, the Secured
Party, Laurus or Debtor shall receive any remittance of money or communication
with respect to any Purchased Assets, it shall endorse or otherwise transfer or
pay over such remittance to the Buyer and shall forward such remittance or
communication, as applicable, to the Buyer within two (2) Business Days of
receipt in the manner and/or to the account specified by the Buyer from time to
time in writing.  If, after closing,
Buyer receives any payment relating to assets of the Debtor which are not a
part of the Purchased Assets, Buyer shall promptly deliver same to the party
entitled to such payment(s) pursuant to Section 7 hereof.

 

Section 3.7                                      Letters of Credit.  For each existing Letter of Credit previously
issued by Secured Party or any affiliate of Secured Party with respect to a
Loan and which remains outstanding on the Closing Date (“Existing LCs “),
the Buyer shall, at the Buyer’s option, either (i) as of the Closing Date,
deliver to Secured Party (A) one or more backup letters of credit issued to and
for the benefit of Secured Party by a commercial bank acceptable to, and in
form and substance satisfactory to, Secured Party, in an aggregate amount equal
to the aggregate undrawn and unreimbursed amount of all such Existing LCs,
together with (B) a cash deposit in the amount equal to 3.0% of the aggregate
amount of all such Existing LC’s, to be held by Secured Party and applied in
reimbursement of costs, fees and expenses (“LC Charges”) from time to time
charged or incurred by Secured Party or its affiliate associated with the
Existing LCs, or any of them, or (ii) elect that any Letter of Credit
remain outstanding in accordance with its terms; provided Buyer delivers to the
issuer cash collateral in an amount equal to 105% of the undrawn and
unreimbursed amount of such Letter of Credit, but in each instance only until
the next scheduled expiration date applicable thereto. During any time that a
Letter of Credit shall remain outstanding, Secured Party shall (a) not consent
or agree to amend same without the Buyer’s consent and (b) if applicable,
assign same to Buyer.  Buyer agrees to pay Secured
Party,

 

 

on
demand, the amount, if any, by which the aggregate LC Charges exceed the amount
deposited by Buyer pursuant to clause (i)(B) preceding.  As soon as is reasonably practicable after
the expiry date of each undrawn Existing LC, Secured Party shall deliver to the
Buyer (x) the amount of any cash collateral posted in accordance with clause
(ii) above or (y) if the Buyer has elected the option set forth in clause (i)
above, the unused portion of the LC Charges relative to the unused portion of
the expired Existing LC then held by Secured Party and an accounting setting
forth the application of such LC Charges.

 

3.8                                 Liquidation of Portfolio.   Buyer agrees that, until the Portfolio has
been paid in full or liquidated, it shall service the Loans in the same manner
as it services all of its other loans and in accordance with its then existing
credit policies and procedures.  All
payments of principal, interest and fees shall be calculated as set forth in
Section 3.3 and distributed in accordance with Section 7.  Because of draw downs on the Hold Back Amount
or payment by the Obligors or both, there may come a time (the “Buyer Payment
Date”) when payments made on account of the Loans shall effectively be entirely
for the benefit of the party entitled to payments in accordance with Section
7.  From and after that time, the Hold
Back Amount may or may not have been entirely depleted.  Recognizing that Buyer, at that time, would
have no incentive to pursue collection of the remaining balance due on the
Loans, it is agreed that on the Buyer Payment Date and during the continuance
thereof, Buyer shall be paid a fee determined as follows:

 

For each day on which the average aggregate
outstanding principal amount of the Loans within the Portfolio was equal to or
less than the then applicable Hold Back Amount or Adjusted Hold Back, as the
case may be, the amount of each payment to be made as set forth in Section
3.3(d)(ii) shall be reduced by an amount equal to the greater of (a) .00019178
multiplied by the average aggregate principal amount of the Loans within the
Portfolio, and (b) $133.34 multiplied by the number of Loans outstanding within
the Portfolio for each day in the period of determination.

 

3.9                                 Quarterly Report.    At the request of Debtor or Secured Party, Buyer shall
provide quarterly, a report setting forth the calculation by Buyer of all
amounts due pursuant to Section 3.3(a), (b) and (c).  At the request of Debtor or Secured Party and
at Debtor’s sole cost and expense, Debtor or Secured Party, or its respective
agents, servants or employees shall have the right, once in each calendar
quarter, to examine the books and records of Buyer solely with respect to Loans
and Buyer’s calculation of amounts due under Section 3.

 

SECTION 4.                            DELIVERABLES.  Following satisfaction or waiver by the
applicable party of each of the conditions precedent specified by Section 5,
Secured Party shall promptly deliver to Buyer the Bill of Sale, executed by
Secured Party, substantially in form as appears in Exhibit D, and
Secured Party will promptly deliver or cause to be delivered (and in
recognition and acknowledgement of Secured Party’s rights as secured party,
Debtor agrees to deliver) to Buyer the original Loan Files.  At Buyer’s request, Secured Party shall cause
each such promissory note to be properly endorsed without recourse (and in
recognition and acknowledgement of Secured Party’s rights as secured party,
Debtor agrees to endorse each such promissory note) in favor of Buyer (and in
the event Debtor does not do so promptly upon request, Debtor hereby authorizes

 

 

Secured Party to do so on its behalf) as
follows:  “Pay to the order of “Keltic
Financial Partners LP.”

 

SECTION 5.                            CONDITIONS
PRECEDENT.

 

Section 5.1                                      Buyer’s obligation to deliver
the Cash Portion and perform its obligations under this Agreement is
conditioned upon satisfaction of each of the following conditions precedent:

 

i.                                          delivery
to Buyer of a counterpart of this Agreement, executed by Secured Party and
Debtor, and consented to by each Party in Interest in the manner set forth following
the signature pages to this Agreement;

 

ii.                                       delivery
to Buyer of an opinion of Debtor’s Delaware counsel and an opinion of Debtor’s
New Jersey counsel, in each case addressed to Secured Party and Buyer in the
form substantially as appears in Exhibit E attached hereto and executed
by such counsel; and

 

iii.                                    delivery
to Buyer of a counterpart of the Coast Payment Letter executed by Coast, and
the Laurus Payment Letter executed by Laurus, in each case consented to by
Debtor.

 

iv.                                   the
fulfillment of the conditions set forth in clauses (a), (b) and (c) of
Section 5.2;

 

v.                                      such revisions,
if any,  as may be necessary and mutually
acceptable to Buyer and Secured Party of all of the Exhibits and Schedules
being supplied hereunder so that they are accurate and complete as of the
Closing Date;

 

vi.                                   presentation for
delivery, at closing, of the Bill of Sale proposed to be delivered pursuant to
Section 4 and Related Agreements;

 

vii.                                assignments relating to
the Loans and the original agreements, documents and instruments constituting
the Purchased Assets and such endorsements (including insurance endorsements)
as may be necessary or desirable to transfer the Purchased Assets to the Buyer,
in such form as is reasonably satisfactory to Buyer;

 

viii.                             presentation for delivery,
at closing, of evidence reasonably satisfactory to Buyer that financing
statements assigning to Buyer, Debtor’s, right, title and interest in the
Obligor Collateral securing each of the Loans have been duly and properly filed
in all jurisdictions requested by the Buyer or authorization of Debtor, in
writing, authorizing Buyer to file such financing statements;

 

ix.                                     presentation for
delivery, at closing, written acknowledgment of receipt by Secured Party of
the  Estimated Purchase Price as set forth
in Section 3;

 

 

x.                                        Presentation
for delivery, at closing, an executed receipt acknowledging payment of the
amount set forth in the Laurus Payment Letter;

 

xi.                                     delivery to Buyer
of termination statements of all UCC Financing Statements and discharges of
Liens or authorization to terminate UCC Financing Statements held by Coast
against the Purchased Assets in form and substance satisfactory to Buyer;

 

xii.                                  delivery to Buyer of
the Estoppel Certificates; and

 

xiii.                               such other documents,
instruments or certificates as shall be reasonably requested by Buyer or its
counsel.

 

Section 5.2                                      The obligation of Secured Party
to perform its obligations under Section 4 and Debtor’s obligation to
perform its obligations under this Agreement is conditioned upon satisfaction
of each of the following conditions precedent:

 

xiv.                              delivery
to Secured Party of a counterpart of this Agreement, executed by Buyer and
Debtor, together with counterparts of the acknowledgements set forth following
the signature pages to this Agreement, executed by each Party in Interest;

 

xv.                                 delivery
of an opinion of Debtor’s Delaware counsel and an opinion of Debtor’s New
Jersey counsel to Secured Party, in each case addressed to Secured Party and
Buyer and in the form substantially as appears in Exhibit E
attached hereto and executed by such counsel;

 

xvi.                              delivery
to Secured Party of a counterpart of the Coast Payment Letter executed by
Coast, and the Laurus Payment Letter executed by Laurus, in each case consented
to by Debtor;

 

xvii.                           delivery
to Secured Party of termination statements by Laurus and Coast of all UCC
Financing Statements, if any, and discharges of Liens, if any, held by Coast
against the Purchased Assets in form and substance satisfactory to Secured
Party; and

 

xviii.                        payment
by Buyer to Secured Party of an amount equal to the lesser of the amount
payable by Buyer pursuant to: (i) Section 3.1(b) or (ii) the Secured Party
Payment Letter, setting forth the indebtedness due to Secured Party by Debtor
pursuant to the Loan and Security Agreement (the “Secured Party Payment Letter”).

 

SECTION 6.                          ADDITIONAL
DOCUMENTS.  Secured Party and Debtor agree that, at any
time and from time to time after the Closing Date, they will, upon the
reasonable request of the Buyer, do, execute, acknowledge and deliver, or cause
to be done, executed, acknowledged or delivered, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney or assurances as may be
reasonably required for the better assigning, transferring, granting,

 

 

conveying, assuring and confirming to the
Buyer, for aiding and assisting in the reduction to possession by the Buyer of,
or for insuring the enforceability of, the Purchased Assets.

 

SECTION 7.                            APPLICATION OF
PROCEEDS.  Cash proceeds paid or payable by Buyer under Section
3 shall be paid and applied, or paid over, as the case may be, as follows:

 

First, paid to Secured Party and applied to Secured Party’s reasonable
expenses in connection with negotiation, preparation and closing of this
Agreement;

 

Second, paid to Secured Party and applied to satisfaction of the
indebtedness and obligations secured by Secured Party’s security interests in
the Loans, in the manner prescribed by the Loan and Security Agreement to the
extent not inconsistent with the requirements of this Section 7,
until such indebtedness and obligations are paid in full;

 

Third, to the extent of the amount of $124,052.00, paid to Secured
Party and held by Secured Party as cash collateral for Debtor’s indemnity
obligations under the Loan and Security Agreement; which cash collateral shall
constitute “Collateral” under the Loan and Security Agreement to be held
pursuant thereto.  The Secured Party and
Debtor hereby acknowledge and agree that Buyer shall have no responsibility,
liability or obligation with respect to (x) the cash collateral once same has
been paid to Secured Party or (y) the indemnity obligations.

 

Fourth, paid over to Laurus, to the extent of the payment amount
specified in the Laurus Payment Letter, according to the payment instructions
specified for it therein;

 

Fifth, paid over to Coast, to the extent of the payment amount, if any,
specified in the Coast Payoff Letter, according to the payment instructions, if
any, specified for it therein;

 

Sixth, paid over to Debtor.

 

For
avoidance of doubt, it is understood and agreed that, upon payment to Secured
Party of all amounts provided by clauses (a), (b) and (c) preceding, all
payments otherwise payable in accordance with this Agreement shall be paid
pursuant to the provisions of this Section 7.  Secured Party shall have no obligation to
Laurus, Coast or the Debtor for the payment of any amounts specified in the
Laurus Payment Letter or for monies due, if any, hereunder to Coast or the
Debtor.

 

SECTION 8.                            DEFICIENCY.  Debtor shall remain and be liable for any
deficiency, if any, owing by Debtor to Secured Party after payment to Secured
Party and applications as provided by Section 7.  Debtor’s indebtedness and obligations shall
be reduced solely as a result of application of cash proceeds as provided by Section
7.  Nothing herein constitutes an
accord and satisfaction of Debtor’s indebtedness and obligations now or
hereafter owing by Debtor to Secured Party under the Loan and Security
Agreement.

 

 

SECTION 9                               REPRESENTATIONS.

 

Section 9.1                                      Representations
by Buyer.   The Buyer represents and warrants to the
Secured Party as follows:

 

(a)                                  Corporate
Organization.                 Buyer
is a limited partnership duly organized and existing and in good standing under
the laws of the State of Delaware.

 

(b)                                 Authorization.                   The execution,
delivery, and performance by Buyer of this Agreement has been duly authorized
by all necessary action on the part of Buyer.

 

(c)                                  Noncontravention.                                           The
execution, delivery, and performance by Buyer of this Agreement  does not and will not (i) violate Buyer’s
organizational documents or any law applicable to Buyer, (ii) result in a
breach of or constitute (with notice or passage of time or both) a default
under any contractual obligation of Buyer or (iii) require any approval of
any Person other than consents or approvals which have been obtained.

 

(d)                                 Validity.    This Agreement, when executed
and delivered by the parties hereto, will be the legally valid and binding
obligations of Buyer, enforceable against Buyer in accordance with its respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors’ rights generally.

 

(e)                                  Investigation.   Buyer has
completed its own independent investigation of the Purchased Assets.  Except as otherwise expressly provided in
Section 9.2, Buyer is relying solely on the investigation of the Purchased
Assets conducted by it and not on any information (whether written or oral)
provided by Secured Party.  Buyer has
reviewed, or had the opportunity to review, all documentation evidencing or
relating to the Purchased Assets.  Except
as otherwise expressly provided in Section 9.2, no representations or
warranties with regard to the Purchased Assets, verbal or otherwise, have been
made to Buyer by Secured Party or by any agent, employee or affiliate of
Secured Party and in entering into this transaction Buyer is not relying upon
any information other than the results of its own independent investigation.

 

Section 9.2                                      Representations
by Secured Party.   The Secured Party hereby represents and
warrants to the Buyer as follows:

 

(a)                                  Corporate
Organization.  Secured Party is duly organized and existing
and in good standing under the laws of the State of California.

 

(b)                                 Authorization.   The execution, delivery and performance by
Secured Party of this Agreement has been duly authorized by all necessary
action on the part of Secured Party.

 

(c)                                  Debt and Lien.    Secured Party is the sole owner and payee
of the indebtedness and obligations owing by Debtor and the security interests
securing same, under the Loan and Security Agreement, and has not signed or
delivered to any person, corporation, partnership, governmental agency or other
entity, a termination or discharge of all or any part of its security interests
in the Purchased Assets as of the date hereof.

 

 

Section 9.3                                      Representations
by Debtor.  The Debtor hereby represents and warrants to
the Buyer as follows:

 

xix.                                Corporate
Organization.   Debtor is a
corporation duly organized and existing and in good standing under the laws of
the State of New Jersey and in each jurisdiction in which the nature of its
business or the location of its properties relating to the Purchased Assets
requires.

 

xx.                                   Authorization.                     The execution, delivery, and performance by
Debtor of this Agreement has been duly authorized by all necessary action on
the part of Debtor.

 

xxi.                                Noncontravention.                                           The
execution, delivery, and performance by Debtor of this Agreement  does not and will not (i) violate Debtor’s
organizational documents or any law applicable to Debtor, (ii) result in a
breach of or constitute (with notice or passage of time or both) a default
under any contractual obligation of Debtor or (iii) require any approval
of any Person other than consents or approvals which have been obtained.

 

xxii.                             Validity.   This Agreement, when executed and delivered
by the parties hereto, will be the legally valid and binding obligations of
Debtor, enforceable against Debtor in accordance with its respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally.

 

xxiii.                          Ownership.   Debtor is sole owner of the Loans and
Related Collateral, free and clear of any liens or security interests other
than the first and prior security interest of Secured Party and subordinate
security interests granted by Debtor to each of the Parties in Interest.

 

xxiv.                         Recitals.   Each of the statements set forth in the
Recitals to this Agreement is true and correct.

 

xxv.                            Consents
and Approvals.  (i) No order,
license, certificate or permit or act of or from, or declaration or filing
with, any governmental authority (collectively, “Governmental Approvals”),
and (ii) no order, Third Party Consent for the execution, delivery or
performance by the Debtor of this Agreement or any Related Agreement to which
it is or will be a party, is necessary or required for the consummation of the
transactions contemplated hereby or thereby; provided, however, it is
understood that certain Third Party Consents have not yet been received or
obtained, including, but not limited to, landlord waivers, bailee notice
letters, assignments of life insurance policies and assignments of motor
vehicle liens, all of which the Debtor agrees to undertake to obtain for the
benefit of Buyer and cooperate with Buyer to effectuate the transfer,
assignment, conveyance, granting, conveying or confirmation of such Third Party
Consents after the Closing Date as provided for in Section 6 hereof.  Without limiting the generality of the
foregoing, the transactions contemplated hereby comply with all Applicable Laws
and do not constitute a fraudulent conveyance under any state or federal laws
regarding creditors’ rights.  Third Party
Consents include, without limitation, any required notification to, or any
required written consent or acknowledgement from, each Obligor or agent under
the Loan Documents constituting part of the Purchased Assets.

 

 

xxvi.                         Compliance
with Applicable Laws.  The Debtor has
been and will be in compliance with all Applicable Laws to the extent that
failure to do so would adversely affect the 
Purchased Assets or the enforceability of this Agreement or any Related
Agreement, would adversely effect the ability of the Debtor to consummate the
transactions contemplated by this Agreement or the Related Agreements, or would
give any person any claim against the Buyer, or the Purchased Assets.

 

xxvii.                      No
Undisclosed Liabilities.  Except as
set forth in Schedule 9.3(i), the Purchased Assets are not subject to
any liability of which the Debtor has knowledge, whether absolute, contingent,
accrued, unaccrued or otherwise, of a kind required by generally accepted
accounting principles to be set forth on a financial statement or described in
the notes thereto and not otherwise disclosed herein.

 

xxviii.                   Liens,
Claims  (A)  The Liens set forth in the Loan Documents are
valid, existing, perfected priority liens; (B) except for Laurus and Coast,
there are no valid or existing secondary obligations owed by Debtor which are
secured by Liens in the Purchased Assets; (C) there are no claims,
counterclaims, defenses or offsets existing with respect to the payment of any
of the Loans, the Related Collateral or any of the Purchased Assets; and
(D)  the terms of and Liens granted by
the Obligors relating to the Purchased Assets comply with all Applicable Laws.

 

xxix.                           Estoppel
Certificates.                               The
principal balance due on account of each of the Loans, as set forth in the
Estoppel Certificates, is true and correct as of the date set forth in the
Estoppel Certificate.

 

SECTION 10.                     TERMS OF
TRANSFER

 

EXCEPT AS OTHERWISE
SPECIFICALLY STATED IN SECTION 9.2, SECURED PARTY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, VERBAL OR WRITTEN, PAST, PRESENT OR FUTURE, WITH
RESPECT TO THE PURCHASED ASSETS, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR
REPRESENTATION RELATING TO (A) THE PERFECTION, PRIORITY OR EXTENT OF ANY LIEN
OR SECURITY INTEREST, OR THE CONDITION OF ANY COLLATERAL SECURING ANY LOAN, (B)
THE VALIDITY, EXISTENCE OR EXTENT OF ANY SECONDARY OBLIGATION SECURING ANY
LOAN, (C) CLAIM, COUNTERCLAIM, DEFENSE OR OFFSET, IF ANY, RELATING TO THE
PURCHASED ASSETS, (D) THE FINANCIAL CONDITION, CREDIT WORTHINESS OR FUTURE
PERFORMANCE OF ANY OBLIGOR, OR (E) THE COMPLIANCE OF THE PURCHASED ASSETS OR
ANY OF THE LOAN FILES WITH ANY APPLICABLE LAWS; THE SALE AND TRANSFER OF THE
PURCHASED ASSETS AS PROVIDED BY THIS AGREEMENT IS EXPRESSLY MADE BY SECURED
PARTY, AND ACCEPTED BY BUYER, WITHOUT RECOURSE ON AN “AS IS”, “WHERE IS” BASIS,
WITH ALL FAULTS, AND BUYER, BY ACCEPTANCE OF THIS AGREEMENT, EXPRESSLY
ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY STATED IN SECTION 9.2, SECURED PARTY
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AND THAT THERE IS NO
WARRANTY, EXPRESS OR IMPLIED, ARISING UNDER THIS AGREEMENT OR BY OPERATION OF
LAW RELATING TO THE PURCHASED ASSETS OR ANY OTHER MATTER UNDER OR

 

 

IN CONNECTION WITH THIS AGREEMENT, ALL OF
WHICH ARE EXPRESSLY DISCLAIMED.  THERE IS
NO WARRANTY RELATING TO DEBTOR’S TITLE, POSSESSION, QUIET ENJOYMENT OR THE LIKE
IN THIS DISPOSITION.

 

SECTION 11.                     RELEASES

 

(A)                                          IN CONSIDERATION OF THIS
AGREEMENT, BUYER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER
DISCHARGES SECURED PARTY AND ITS AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, OF
AND FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES,
COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, FIXED,
CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ARISING IN ANY WAY IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTIONS OR ACTS IN CONNECTION
THEREWITH, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE EFFECTIVE DATE,
WHICH BUYER MAY NOW OR HEREAFTER MAY HAVE AGAINST ANY SUCH PERSON, IRRESPECTIVE
OF WHETHER ANY SUCH CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSE OR LIABILITIES ARE BASED UPON CONTRACT, TORT, VIOLATION OF LAW OR
OTHERWISE.

 

FOR THE AVOIDANCE OF
DOUBT, THIS RELEASE DOES NOT ENCOMPASS, AND EXPRESSLY EXCLUDES (I) ANY AND ALL
COVENANTS, AGREEMENTS OR OBLIGATIONS OF SECURED PARTY UNDER AND PURSUANT TO
THIS AGREEMENT, AND (II) ANY AND ALL OTHER CLAIMS, DEMANDS, ACTIONS, CAUSES OF
ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ARISING IN ANY WAY IN CONNECTION WITH ANY OTHER AGREEMENT OR TRANSACTION
BETWEEN OR INVOLVING IN ANY WAY, SECURED PARTY AND BUYER, OR ANYONE CLAIMING
THROUGH SUCH PARTIES.

 

(B)                                            IN CONSIDERATION OF THIS
AGREEMENT, DEBTOR HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER
DISCHARGES SECURED PARTY AND BUYER AND THEIR RESPECTIVE AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, OF AND FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ARISING IN ANY
WAY IN CONNECTION WITH THE PURCHASED ASSETS OR THIS AGREEMENT, OR ANY
TRANSACTIONS OR ACTS IN CONNECTION THEREWITH, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE CLOSING DATE, WHICH DEBTOR NOW OR HEREAFTER MAY HAVE AGAINST
ANY SUCH PERSON, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, OR LIABILITIES ARE BASED UPON
CONTRACT, TORT, VIOLATION OF LAW OR OTHERWISE.

 

SECTION 12.                     ACKNOWLEDGEMENTS
AND CONSENTS BY DEBTOR.

 

Section 12.1                                Debtor consents to disposition
of the Purchased Assets pursuant to the terms of this Agreement.

 

 

Section 12.2                                Debtor expressly agrees and
acknowledges that all aspects of the disposition by Secured Party of the
Purchased Assets pursuant to the terms of this Agreement, including without
limitation the method, manner, time, place and other terms, including without
limitation, the amount of the Purchase Price and terms for payment thereof, are
commercially reasonable.

 

SECTION 13.                     WAIVERS BY
DEBTOR.

 

Section 13.1                                Debtor expressly waives its
rights to notification of disposition of the Purchased Assets.

 

Section 13.2                                Debtor expressly waives all
rights to redeem in respect of the Purchased Assets.

 

Debtor expressly acknowledges that its
waivers under this Section 13 are entered into and authenticated by
Debtor after default as contemplated by Article 9 of the UCC.

 

SECTION 14.                     INDEMNIFICATION
BY DEBTOR.  Debtor hereby agrees to pay, indemnify,
defend and hold Secured Party and Buyer, and their employees and agents (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees and
disbursements and other costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration (including any amendment
or modification with respect hereto) of this Agreement or the transactions
contemplated hereby or thereby and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement or the disbursement or use
of proceeds or payments made hereunder (irrespective of whether any Indemnified
Person is a party thereto), or any act, omission, event, or circumstance in any
manner related thereto (all the foregoing, collectively, the “Indemnified
Liabilities”).  The foregoing to the
contrary notwithstanding, Debtor shall have no obligation to any Indemnified
Person under this Section 14 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the negligence or willful misconduct of such Indemnified
Person.  This provision shall survive the
termination and performance of this Agreement. 
If any Indemnified Person makes any payment to any other Indemnified
Person with respect to an Indemnified Liability as to which Debtor was required
to indemnify the Indemnified Person receiving such payment, the Indemnified
Person making such payment is entitled to be indemnified and reimbursed by
Debtor with respect thereto.  WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.   Debtor hereby indemnifies and holds Secured
Party and Buyer harmless from and against any and all documentary, stamp,
intangible, transfer and other similar taxes, charges or levies imposed on or
asserted against Secured Party in connection with transfer of the Purchased
Assets pursuant to this Agreement.

 

 

SECTION 15.                     INDEMNIFICATION
BY BUYER.   Buyer hereby agrees to pay, indemnify,
defend and hold Debtor and its employees and agents (each, “Debtor Indemnified
Person”) harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings, and
damages, and all reasonable attorneys fees and disbursements and other costs
and expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them in connection with or as a
result of or related to Buyer’s (and only Buyer’s) negligent actions after the
Closing Date with respect to the servicing of any Loan or Loans, provided it is
determined by a final non-appealable order of a court of competent jurisdiction
or other agreed upon dispute resolution proceeding that Buyer’s negligence was
the proximate cause of damages or loss which is the subject matter of the claim
for which indemnification is sought by the Debtor Indemnified Party, and
provided, further, that the Buyer’s obligation to pay or reimburse Debtor for
legal fees, costs and expenses incurred in connection with Debtor’s defense of
such claims shall not exceed $30,000.00 (the “Debtor Indemnified Liability”).  The foregoing to the contrary
notwithstanding, Buyer shall have no obligation to any Debtor Indemnified
Person under this Section 15 with respect to any Debtor Indemnified Liability
that a court of competent jurisdiction finally determines to have resulted from
the negligence or willful misconduct of such Debtor Indemnified Person.  This provision shall survive the termination
and performance of this Agreement.  If
any Debtor indemnified Person makes any payment to any other Debtor Indemnified
Person with respect to a Debtor Indemnified Liability as to which Buyer was
required to indemnify the Debtor Indemnified Person receiving such payment, the
Debtor Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Buyer with respect thereto.

 

SECTION 16.                     AUTHORIZATION
FOR ASSIGNMENT STATEMENTS.

 

Section 16.1                                Debtor hereby authorizes Buyer,
following the effectiveness of this Agreement, to file appropriate assignment
statements in the public records with respect to each effective financing
previously filed in favor of Debtor with respect to any security interest
securing any Loan.

 

Section 16.2                                Laurus hereby authorizes Buyer,
following the effectiveness of this Agreement, to terminate any Liens held or
filed by Laurus against the Debtor with respect to the Purchased Assets.

 

Section 16.3                                Coast hereby authorizes Buyer,
following the effectiveness of this Agreement, to terminate any Liens held or
filed by Coast against the Debtor with respect to the Purchased Assets.

 

SECTION
17.                          MISCELLANEOUS

 

Section 17.1                                Reservation of Rights.  Except as expressly provided herein with
respect to the Purchased Assets, nothing in this Agreement releases or
adversely affects any rights of Secured Party under the Loan and Security
Agreement.  Without limiting the
foregoing, until all indebtedness and obligations now or hereafter owing by
Debtor to Secured Party under the Loan and Security Agreement are paid in full,
all security interests and liens of Secured Party in any and all property of
Debtor other than the Purchased Assets remain in full force and effect.  All

 

 

rights
and remedies under or in connection with the Loan and Security Agreement or
applicable law are expressly reserved.

 

Section 17.2                                Effectiveness.  This Agreement shall be binding and deemed
effective when executed by Buyer, Debtor and Secured Party, and by the Parties
in Interest whose signature is provided for on following the signature pages
hereof.  It is further understood and
agreed that all representations and warranties made hereunder, whether made to
Buyer or another party, shall be deemed to have been made to Buyer with the
intent that Buyer rely upon same in entering into this Agreement.

 

Section 17.3                                Section Headings; Severability.  Headings and numbers have been set forth
herein for convenience only.  Unless the
contrary is compelled by the context, everything contained in each Section
applies equally to this entire Agreement. 
Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.

 

Section 17.4                                Interpretation.  Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Secured Party, Buyer or Debtor,
whether under any rule of construction or otherwise.  On the contrary, each of Secured Party, Buyer
and Debtor has been involved in the negotiation and preparation of this
Agreement and has been represented by counsel of their choice in connection
therewith.

 

Section 17.5                                CHOICE OF LAW AND VENUE; JURY
TRIAL WAIVER.

 

THE VALIDITY OF THIS AGREEMENT AND THE OTHER DOCUMENTS OR AGREEMENTS
EXECUTED IN CONNECTION HEREWITH (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN
SUCH OTHER DOCUMENT OR AGREEMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

 

EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY DOCUMENTS OR AGREEMENT IN CONNECTION HEREWITH OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY REPRESENTS THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 
IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

 

Section 17.6.                             Notices.  Unless otherwise specifically provided in
this Agreement, all notices or demands by any party to another relating to this
Agreement shall be in writing and shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier or telefacsimile to each other party, as the case may be, at
its address set forth below:

 

	
  Buyer:

  	
   

  	
  Keltic Financial Partners, LP

  
	
   

  	
   

  	
  555 Theo. Fremd Avenue

  
	
   

  	
   

  	
  Rye, NY 10580

  
	
   

  	
   

  	
  Attn: Robert N. Laughlin, Managing Partner

  
	
   

  	
   

  	
  Fax No.: (914) 921-1154

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  Pitney Hardin LLP

  
	
   

  	
   

  	
  200 Campus Dr.

  
	
   

  	
   

  	
  Florham Park, NJ 07932

  
	
   

  	
   

  	
  Attn: Peter A. Forgosh, Esq.

  
	
   

  	
   

  	
  Fax No.: (973) 966-1550

  
	
   

  	
   

  	
   

  
	
  Secured Party:

  	
   

  	
  Wells Fargo Foothill, Inc.

  
	
   

  	
   

  	
  2450 Colorado Avenue

  
	
   

  	
   

  	
  Suite 3000 West

  
	
   

  	
   

  	
  Santa Monica, California 90404

  
	
   

  	
   

  	
  Attn: Business Finance Division Manager

  
	
   

  	
   

  	
  Fax No.: 310-453-7413

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wells Fargo Foothill, Inc.

  
	
   

  	
   

  	
  13717 Noel Road

  
	
   

  	
   

  	
  Suite 1020

  
	
   

  	
   

  	
  Dallas, Texas 75240

  
	
   

  	
   

  	
  Attn: Loan Portfolio Manager

  
	
   

  	
   

  	
  Fax No.: 972-387-4375

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  Jenkens & Gilchrist

  
	
   

  	
   

  	
  1445 Ross Avenue, Suite 3200

  
	
   

  	
   

  	
  Dallas, Texas 75202

  
	
   

  	
   

  	
  Attn: Daniel C. Garner, Esq.

  
	
   

  	
   

  	
  Fax No. 214-855-4300

  
	
   

  	
   

  	
   

  
	
  Debtor:

  	
   

  	
  Equinox Business Credit Corporation

  
	
   

  	
   

  	
  1011 Highway 71, Suite 200

  
	
   

  	
   

  	
  Spring Lake, New Jersey 07762

  
	
   

  	
   

  	
  Attn: Walter M. Craig, Jr.

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  St. John & Wayne, L.L.C.

  
	
   

  	
   

  	
  2 Penn Plaza - 10th Floor

  
	
   

  	
   

  	
  Newark, New Jersey 07105

  
	
   

  	
   

  	
  Attn: Lee A. Albanese, Esq.

  
	
   

  	
   

  	
  Fax No.: 973-491-3408

  

 

 

Any party may change the address at which it
is to receive notices hereunder, by notice in writing in the foregoing manner
given to each other party.  All notices
or demands sent in accordance with this Section 17.6, shall be deemed
received on the earlier of the date of actual receipt or three (3) Business
Days after the deposit thereof in the mail.

 

Section 17.7                                Amendments
in Writing.  This Agreement only can
be amended by a writing signed by Secured Party, Buyer and Debtor.

 

Section 17.8                                Counterparts;
Telefacsimile Execution.  This
Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. 
Delivery of an executed counterpart of this Agreement by telefacsimile
or electronic delivery shall be equally as effective as delivery of an original
executed counterpart of this Agreement. 
Any party delivering an executed counterpart of this Agreement by
telefacsimile or electronic delivery also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect
of this Agreement.  The foregoing shall
apply to each other agreement or other document executed in connection with
this Agreement, mutatis mutandis.

 

Section 17.9                                Buyer Practices.  Buyer shall follow its usual and customary
policies and procedures and exercise its prudent business judgment in
connection with any amendments, modifications or extensions it may grant to an
Obligor in connection with any of the Loans.

 

Section 17.10                          Default.  In the event that either Debtor or Buyer
fails to make a payment due pursuant to Sections 3.2(b), 3.3(d), 3.4 and 3.6
within thirty (30) days after receipt of notice, in writing, from the demanding
party, of the failure to make such payment, then, if the demanding party is
successful in its claim, in addition to any other remedy available to the
non-defaulting party, the defaulting party shall pay interest on the sum due
(from its originally scheduled due date) at the rate of LIBOR plus five percent
(5%) and reasonable attorneys’ fees incurred in the collection of same.

 

Section 17.11                          Integration.  This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

 

[Signature
Page Follows]

 

 

IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the Effective Date.

 

	
   

  	
  SECURED
  PARTY:

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO
  FOOTHILL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  KELTIC FINANCIAL PARTNERS, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEBTOR:

  
	
   

  	
   

  
	
   

  	
  EQUINOX
  BUSINESS CREDIT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

 

EXHIBIT A

 

to

 

TRANSFER AND
SALE AGREEMENT

 

LOANS

 

BORROWERS OF EQUINOX AS OF DECEMBER 16, 2004

 

1.                                       The Crowell
Corporation

Loan and Security Agreement dated August 15, 2002 evidenced by
Promissory Note in the face amount of $1,000,000.

 

2.                                       North American
Cable Equipment, Inc.

Loan and Security Agreement dated March 29, 2002 evidenced by
Promissory Note dated $1,000,000.

 

3.                                       Kirby and Allen,
Inc.

Loan and Security Agreement dated January 24, 2002 evidenced by
Promissory Note in the face amount of $3,000.000.

 

4.                                       Ambassador
Publications, LLC

Loan and Security Agreement dated January 29, 1993 evidenced by
Promissory Note in the face amount of $2,000,000.

 

5.                                       Ace Surgical
Supply Co., Inc. and IHW, Inc.

Loan and Security Agreement dated June 19, 2003 evidenced by Promissory
Note in the face amount of $2,000,000, executed by Ace Surgical Supply Co.,
Inc., and a Promissory Note in the amount of $2,000,000, executed by IHW, Inc.

 

 

EXHIBIT B

 

to

 

TRANSFER AND
SALE AGREEMENT

 

LOAN DOCUMENTS

 

LIST OF LOAN DOCUMENTS AS OF DECEMBER 16,
2004

 

THE CROWELL CORPORATION (Borrower)

 

1.                                       Loan and
Security Agreement dated August 15, 2002

2.                                       Promissory
Note by Borrower in the face amount of $1,000,000

3.                                       Accountant’s
Access Letter

4.                                       Payment
Direction Letter

5.                                       Side Letter
re:  Advances

6.                                       Post Closing
Letter

7.                                       Lockbox
Agreement with Hudson United Bank

8.                                       Bank Account
Letter

9.                                       Trademark
Collateral Security Agreement

10.                                 Assignment of
Trademark

11.                                 Power of Attorney

12.                                 Letter of Direction to
Post Office and Post Office Change of Address Card

13.                                 Opinion of Borrower’s
Counsel (Young Conaway Stargatt & Traylor, LLP)

14.                                 Mortgagee Waiver by
Stancorp Mortgage Investors, LLC

15.                                 Subordination
Agreement among Borrower, Equinox and Herbert B. Adelman

16.                                 Subordination
Agreement among Borrower, Equinox and Joan E. Adelman

17.                                 Subordination
Agreement among Borrower, Equinox and Robert W. Adelman

18.                                 Guaranty Agreement by
Herbert Adelman

19.                                 Reliance Letter from
Equipment Appraisers re:  Equipment
Appraisal by Thomas Industries Appraisal Corporation

20.                                 Cash Collateral
Deposit Letter

21.                                 UCC-1 Financing
Statement against Borrower (DE)

22.                                 UCC-1 Financing
Statement against Borrower (New Castle County)

23.                                 Secretary’s
Certificate

24.                                 Mortgage

25.                                 Title Commitment

26.                                 Zoning Compliance

27.                                 Reliance Letter from
Environmental Engineer re:  Phase I
Environmental Report

28.                                 Settlement Statement

 

 

AMBASSADOR PUBLICATIONS, LLC (Borrower)

 

1.                                       Loan and
Security Agreement dated January 29, 2003

2.                                       Promissory Note
by Borrower in the face amount of $2,000,000

3.                                       Accountant’s
Access Letter

4.                                       Accountant’s
Acknowledgement Letter

5.                                       Payment
Direction Letter

6.                                       Side Letter
re:  Advances

7.                                       Tradestyle
Letter

8.                                       Borrowing Base
Certificate

9.                                       Lockbox
Agreement with Hudson United Bank

10.                                 Deposit Account
Control Agreement re:  Credit Card
Collections

11.                                 Bank Account Letter

12.                                 Collateral Assignment
of Keyman Life Insurance Policy on the life of Kathryn A. Hipple

13.                                 Opinion of Borrower’s
Counsel (Berkowitz, Trager & Trager, LLC)

14.                                 Subordination
Agreement among Borrower, Equinox and Kathryn Hipple

15.                                 Lien Subordination
Agreement with R.R. Donnelly & Sons and R.R. Donnelley Receivables

16.                                 Guarantee of Validity of
Collateral by Kathryn Hipple

17.                                 Post Office Change of
Address Card

18.                                 Post Closing Letter

19.                                 UCC-1 Financing
Statement against Borrower (DE) (blanket)

20.                                 UCC-1 Financing
Statement against Borrower (DE) (commercial tort claims)

21.                                 Certificate of Incumbency
and Resolutions

22.                                 Consent of the Holders
of the Convertible Preferred Units

23.                                 Amendment No. 1 to
Loan and Security Agreement dated November 1, 2003

 

KIRBY AND ALLEN, INC.  (Borrower)

 

1.                                       Loan and
Security Agreement dated January 24, 2002

2.                                       Promissory Note
by Borrower in the face amount of $3,000,000

3.                                       Accountant’s
Access Letter

4.                                       Payment
Direction Letter

5.                                       Side Letter
re:  Exercising Remedies

6.                                       Supplement
Letter of Credit Security Agreement

7.                                       Lockbox
Agreement

8.                                       Blocked Account
Termination Letter

9.                                       Trademark
Collateral Security Agreement

10.                                 Assignment of
Trademarks

11.                                 Power of Attorney

12.                                 Post Office Change of
Address Card

13.                                 Collateral Assignment
of Keyman Life Insurance Policy on Charles Ellis

14.                                 Collateral Assignment
of Keyman Life Insurance Policy on Chul Woo Lee

15.                                 Releases of Prior
Assignments of Keyman Life Insurance Policy for Charles Ellis

 

 

16.                                 Releases of Prior
Assignments of Keyman Life Insurance Policy for Chul Woo Lee

17.                                 Opinion of Borrower’s
Counsel re:  MA Mortgage (Bernkopf,
Goodman & Baseman LLP)

18.                                 Opinion of Borrower’s
Counsel

19.                                 Landlord Waiver for
1330 Livingston Avenue, N. Brunswick, NJ

20.                                 Guaranty Agreement by
Charles Ellis

21.                                 Guaranty Agreement by
Chul Woo Lee

22.                                 Limited Recourse
Guaranty Agreement by Jung Eun Lee

23.                                 Subordination
Agreement with Choolim Park

24.                                 Post Closing Letter

25.                                 UCC-1 Financing
Statements

26.                                 Payoff Letter by Wells
Fargo

27.                                 Assistant Secretary’s
Certificate

28.                                 Mortgage for property
located at 700 Main Street, Hingham, MA

29.                                 Mortgage for property
located at 19 Gladstone Drive, E. Brunswick, NJ

30.                                 Title Commitment for
MA Property

31.                                 Title Commitment for
NJ Property

32.                                 Survey for MA Property

33.                                 Survey for NJ Property

34.                                 Release of Prior
Mortgage(s) for MA Property

35.                                 Release of Prior
Mortgage(s) for NJ Property

36.                                 Amendment No. 1 to
Loan and Security Agreement dated June 18, 2002

37.                                 Subordination and
Intercreditor Agreement among Equinox, Hemanshu Doshi and Borrower dated March
17, 2003

 

NORTH
AMERICAN CABLE EQUIPMENT, INC. (Borrower)

 

1.                                       Loan and
Security Agreement dated March 29, 2002

2.                                       Promissory Note
by Borrower in the face amount of $1,000,000

3.                                       Accountant’s
Access Letter

4.                                       Payment
Direction Letter

5.                                       Borrowing Base
Certificate

6.                                       Supplement
Letter of Credit Security Agreement

7.                                       Credit Card
Processor Agreements with American Express

8.                                       Credit Card
Processor Agreement with Nova (Visa)

9.                                       Credit Card
Processor Agreement with Nova (Mastercard)

10.                                 Lockbox Agreement

11.                                 Bank Account Letter

12.                                 Intellectual Property
Security Agreement

13.                                 Collateral Assignment
of Keyman Life Insurance Policy on Aaron Starr

14.                                 Opinion of Borrower’s
Counsel (O’Neill, Bragg & Staffin, P.C.)

15.                                 Landlord Waiver with
Andrews Bridge Associates LP (West Chester, PA)

16.                                 Landlord Waiver with
Tennis Partners, Inc. (Margate, FL)

17.                                 Landlord Waiver with
Development Associates, Inc. (Henderson, NV)

 

 

18.                                 Landlord Waiver with
Bales-Meyer Partnership (St. Peters, Missouri)

19.                                 Guaranty Agreement by
Aaron Starr

20.                                 Post Office Change of
Address Cards

21.                                 Post Closing Letter

22.                                 UCC-1 Financing
Statements

23.                                 Payoff Letter by
Finova Capital Corporation

24.                                 Sony Electronics
Termination Letter

25.                                 Secretary’s
Certificate

26.                                 Amendment No. 1 to
Loan and Security Agreement dated April 9, 2003

27.                                 Amendment No. 2 to
Loan and Security Agreement dated October, 2003

28.                                 Amendment No. 3 to
Loan and Security Agreement dated December 2, 2003

29.                                 Collateral Pledge
Agreement by Aaron Star in favor of Penn SE Mezzanine Fund, L.P. dated May 24,
2002

30.                                 Security Agreement by
Borrower to Penn SE Mezzanine Fund, L.P. dated May 24, 2002

31.                                 Promissory Note by
Borrower to Penn SE Mezzanine Fund, L.P. dated May 24, 2002 in the face amount
of $400,000.00

32.                                 Disclosure for
Confession of Judgment by Borrower dated May 24, 2002

 

ACE SURGICAL SUPPLY CO., INC. and IHW, Inc.
(Borrower)

 

1.                                       Loan and
Security Agreement dated June 19, 2003

2.                                       Promissory Note
by Borrower

3.                                       Promissory Note
by IHW, Inc.

4.                                       Accountant’s
Access Letter

5.                                       Payment
Direction Letter

6.                                       Side Letter
re:  Advances

7.                                       Borrowing Base
Certificate

8.                                       Supplement
Letter of Credit Security Agreement

9.                                       Letter of Credit
Application

10.                                 Bank Account Letters

11.                                 Trademark Collateral
Security Agreement

12.                                 Assignment of Security

13.                                 Power of Attorney

14.                                 Tradestyle Letter

15.                                 Collateral Assignment
of Keyman Life Insurance policy on life of David Guttman

16.                                 Release of Prior
Assignment of Keyman Life Insurance policy on life of David Guttman

17.                                 Opinion of Borrower’s
Counsel (Ellenoff Grossman & Schole LLP)

18.                                 Landlord Waiver by
Atlantic Paste & Glue (170 53rd Street, Brooklyn, NY)

19.                                 Landlord Waiver by
Segut (170 53rd Street, Brooklyn, NY)

20.                                 Warehouseman Waiver by
Eric Storage & Handling (742 Old Post Rd., Edison, NJ)

21.                                 Limited Guaranty
Agreement by David Guttman

22.                                 Guaranty Agreement by
Creative Technologies Corp.

 

 

23.                                 Guaranty Security
Agreement by Creative Technologies Corp.

24.                                 Post Office Change of
Address Cards

25.                                 Post-Closing Letter

26.                                 UCC-1 Financing
Statements

27.                                 Payoff Letter by Wells
Fargo Credit, Inc.

28.                                 Secretary’s
Certificate of Borrower

29.                                 Secretary’s
Certificate of IHW, Inc.

30.                                 Secretary’s
Certificate of Creative Technologies Corp.

31.                                 Amendment No. 1 to
Loan and Security Agreement dated October 18, 2004

 

 

EXHIBIT C

to

TRANSFER AND
SALE AGREEMENT

 

FORM OF
ESTOPPEL CERTIFICATE

 

BORROWER’S ESTOPPEL CERTIFICATE

 

In order to
induce Wells Fargo Foothill, Inc., a
California corporation, and its assigns, including Keltic Financial Partners,
LP, a Delaware limited partnership (collectively, “Foothill”) to accept an
assignment of the Loan Documents (the “Loan Documents”) from Equinox Business Credit Corp., a New Jersey corporation (“Equinox”),
evidencing and securing the financial accommodations extended by Equinox to                                       
(“Borrower”), which Loan Documents are more fully described on Exhibit A,
annexed hereto and made a part hereof, Borrower hereby certifies, represents,
warrants and agrees as follows:

 

(a)                                 I
am the President of Borrower and am duly authorized to make and execute this
Certificate.

 

(b)                                I
have reviewed the terms of the Loan Documents, and have made, or have caused to
be made under my supervision, a review in reasonable detail of the loan
transactions with Equinox and the financial condition of the Borrower during
the immediately preceding year.  Except
as set forth in Exhibit B, there are no amendments, modifications,
waivers, forbearance or other alteration of the terms of the Loan Documents.

 

(c)                                 The
review described in paragraph (b) above did not disclose the existence during
or at the end of such period, and I have no knowledge of the existence as of
the date hereof, of any condition or event which constitutes a Default or an
Event of Default, except as set forth in Exhibit C.

 

(d)                                All
of Borrower’s representations and warranties in the Loan Documents are, except
as set forth on Exhibit D annexed hereto and made a part hereof, true
and correct as of the date of this Certificate and ratified and confirmed
without condition as if made anew.

 

(e)                                 As
of the date of this Certificate, (a) all obligations and conditions under the
Loan Documents to be performed to date by Equinox have been performed and
satisfied; (b) no event has occurred which, with the passage of time or the
giving of notice or both, would constitute an event of default by Equinox under
the Loan Documents; and (c) Borrower has no defenses, right of off-set,
counterclaim, right of recoupment, discount or claims of any kind or nature
against Equinox under or relating to the Loan Documents or otherwise.

 

(f)                                   I
have reviewed or caused to be reviewed under my supervision the Borrowing Base
Certificate dated                                ,
2004 (the “BBC”), annexed hereto and made a part hereof as Exhibit E.

 

 

(g)                                As
of                           ,
2004, the outstanding obligation of Borrower to Equinox was $                                     .

 

(h)                                The
review described in paragraph (f) above did not disclose the existence of any
errors or omissions in the BBC and the BBC represents a true and accurate state
of the matters set forth therein as of the date set forth in the BBC.

 

(i)                                    The
Borrower has not changed its name or transacted business under any trade name,
style, or fictitious name, other than those set forth in the Loan Documents.

 

(j)                                    The
Borrower has not changed its state of formation, changed the location of its
chief executive office, or changed the location of its books and records, or
changed the location of or disposed of any of its assets (other than as
permitted under the Loan Documents) or established any new inventory or
equipment locations, other than as previously disclosed to Equinox in writing
or as set forth in Exhibit F annexed hereto and made a part hereof.

 

(k)                                 The
Borrower has not permitted or suffered to exist any liens or encumbrances on
any of its properties, whether real, personal, or mixed, other than as
specifically permitted in the Loan Documents.

 

(l)                                    Without
limiting the generality of the foregoing provisions, Borrower certifies as
follows: (a) Borrower has received no notice by any governmental authority or
person claiming a violation of, or requiring compliance with, any federal,
state or local statute, ordinance, rule, regulation or other requirement of
law; (b) there is no action, suit or proceeding at law or in equity by or
before any court, governmental instrumentality or other agency now pending, or
to the best of Borrower’s knowledge, threatened against Borrower or any of its
respective properties or rights, wherein an unfavorable decision, ruling or
finding would materially impair its right to carry on its business
substantially as now conducted or would materially adversely affect its
financial condition or ability to carry out its obligations under or the
validity or enforceability of the Loan Documents; and (c) Borrower is not in
breach of the performance, observance or fulfillment of any of its obligations,
covenants or conditions contained in any agreement or instrument to which it is
a party, and further, no Default or Event of Default has occurred which would
permit the holder of any money obligation to declare such obligation due prior
to its stated date of maturity.

 

All of the capitalized terms not expressly defined in this Certificate
shall have the meanings ascribed to such terms in the Loan Documents.

 

The foregoing statements are made with the express understanding and
agreement of Borrower that Foothill and Foothill’s successors and assigns may
and are authorized to rely upon this Certificate in consummating the proposed
and any future assignment of the Loan Documents.  This Certificate shall be deemed made to any
subsequent assignee as if such assignee were the original assignee to whom this
Certificate is delivered.

 

WITNESS AND SIGNATURE PAGE FOLLOWS

 

 

IN WITNESS WHEREOF, intending to be legally
bound herby, the undersigned has caused this Certificate to be duly executed
and delivered this                
day of                                  ,
2004.

 

	
  WITNESS:

  	
   

  	
  Borrower:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Company
  Name:

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT A

 

LIST OF LOAN DOCUMENTS

 

 

EXHIBIT B

 

AMENDMENTS, MODIFICATIONS, WAIVERS,
FORBEARANCE OR OTHER

ALTERATION OF THE TERMS OF THE LOAN DOCUMENTS

 

 

EXHIBIT C

 

DEFAULTS AND EVENTS OF DEFAULT

 

 

EXHIBIT D

 

REPRESENTATIONS AND WARRANTIES

 

 

EXHIBIT E

 

BORROWING BASE CERTIFICATE

 

 

EXHIBIT F

 

NEW LOCATIONS

 

 

EXHIBIT D

to

TRANSFER AND
SALE AGREEMENT

 

FORM OF BILL
OF SALE

 

BILL OF SALE

 

This BILL OF
SALE, dated as of December           ,
2004, by Wells Fargo Foothill, Inc. (“Secured Party”) in favor of Keltic
Financial Partners, LP (“Buyer”).

 

BACKGROUND

 

This Bill of
Sale is being executed and delivered pursuant to that certain Agreement in
Respect of Sale and Transfer in Disposition of Collateral under Uniform
Commercial Code, dated as of December           ,
2004, among Wells Fargo Foothill, Inc., Keltic Financial Partners, LP and
Equinox Business Credit Corporation (the 
“Agreement”).  All capitalized
terms used but not defined herein shall have the meanings ascribed to said
terms in the Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration more particularly described in the Agreement, the
receipt and sufficiency of which is hereby acknowledged, and pursuant to
Section 9-610 of the Uniform Commercial Code, as enacted and as amended in the
State of New Jersey, Secured Party does hereby grant, bargain, sell, assign,
transfer and convey unto the Buyer, its successors and assigns, all right,
title and interest of Debtor in and to the Purchased Assets, including, without
limitation, all of the Loans, Loan Documents, Loan Files and Estoppel
Certificates described on Exhibit A hereto, upon and subject to the
terms described in the Agreement, the terms of which are incorporated herein by
reference as though set forth fully at length.

 

Buyer hereby
assumes all of the obligations of Debtor in connection with or arising out of
the Loan Documents and accruing from and after the date hereof.

 

This Bill of
Sale is made subject to the terms of the Agreement and is made without recourse
and without any representations or warranties of any kind whatsoever, except as
expressly provided therein, but subject to the provisions of Section 10
thereof.  Without limiting the foregoing,
the sale and transfer of the Purchased Assets as provided by this Bill of Sale
is expressly made by Secured Party, and accepted by Buyer, without recourse on
an “as is”, “where is” basis, with all faults, and Buyer, by acceptance of this
Bill of Sale, expressly acknowledges that, except as expressly stated in
Section 9.2 of the Agreement, Secured Party makes no warranty or
representation, express or implied, and that there is no warranty, express or
implied, arising under this Bill of Sale or by operation of law relating to the
Purchased Assets, all of which are expressly disclaimed.  There is no warranty relating to Debtor’s
title, possession, quiet enjoyment or the like in this disposition.

 

[END OF TEXT; SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS
WHEREOF, Secured Party, intending to be legally bound hereby, has executed this
Bill of Sale as of the date first above written.

 

	
   

  	
   

  	
  Secured
  Party:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO
  FOOTHILL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Agreed to:

  
	
   

  	
   

  	
   

  
	
  Acknowledged
  and consented to this            
  day of December, 2004.

  	
   

  	
  Buyer:

  
	
   

  	
   

  	
  Keltic
  Financial Partners, LP

  
	
  Equinox
  Business Credit Corp.

  	
   

  	
  By: Keltic
  Financial Services, LLC

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
														

 

 

ACKNOWLEDGMENT

 

	
  STATE OF

  	
  :

  
	
   

  	
  :SS

  
	
  COUNTY OF

  	
  :

  

 

On this, the           
day of December, 2004, before me, the subscriber, a notary public for the
aforesaid State and County, personally appeared                                                                     ,
who I am satisfied is the person who executed the foregoing instrument as the                                         of
Wells Fargo Foothill, Inc., the secured party named in the foregoing instrument
and who acknowledge that he/she, as such officer, being authorized to do so,
executed the foregoing instrument as such corporation’s voluntary act and deed
for the purposes therein contained by signing on behalf of said corporation as
such officer.

 

IN WITNESS
WHEREOF, I hereunto set my hand and official seal.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public

  

 

 

EXHIBIT A

To Bill of Sale

 

 

EXHIBIT E

to

TRANSFER AND
SALE AGREEMENT

 

FORM OF
OPINIONS OF DEBTOR’S DELAWARE COUNSEL

(attached)

 

FORM OF
OPINIONS OF DEBTOR’S NEW JERSEY COUNSEL

(attached)

 

 

SCHEDULE
3.1(b)

to

TRANSFER AND
SALE AGREEMENT

 

ESTIMATED
PURCHASE PRICE

 

The Estimated
Purchase Price is computed as follows:

 

	
  (a)

  	
  Aggregate outstanding principal loan
  balance due under the Loan Documents

  	
   

  	
  $

  	
  7,056,982.65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  Unpaid accrued interest relating to the
  Loans

  	
   

  	
  $

  	
  27,504.13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  Deposit

  	
   

  	
  $

  	
  6,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
  Accrued but unpaid fees (prorated)

  	
   

  	
  $

  	
  5,153.03

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
  Accrued but unpaid LC fees (prorated)

  	
   

  	
  $

  	
  352.60

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
   

  	
  $

  	
  7,095,992.41

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less:

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
  Loss Adjustment

  	
   

  	
  $

  	
  40,000.00

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
  Purchase Price Adjustment

  	
   

  	
  $

  	
  112,478.00

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
  Unearned portion (proceeds) of prepaid fees

  	
   

  	
  $

  	
  2,662.50

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
  Aggregate credits due to the Obligors

  	
   

  	
  $

  	
  0

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
   

  	
  $

  	
  155,140.50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Estimated Purchase Price (before the Hold
  Back Amount):

  	
   

  	
  $

  	
  6,940,851.91

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less:

  	
   

  	
   

  	
   

  	
   

  
	
  Hold Back Amount:

  	
   

  	
  $

  	
  (825,000.00

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Estimated Purchase Price to be paid
  by Buyer to Secured Party

  	
   

  	
  $

  	
  6,115,851.91

  	
   

  
														

 

 

SCHEDULE
9.3(i),

to

TRANSFER AND
SALE AGREEMENT

 

UNDISCLOSED
LIABILITIES OF DEBTOR

 

None

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